shareholders sew cbn over cost of reforms, recoveries from cecilia

JUNE 4 , 2012

CURRENCY BUYING CENTRAL SELLING

CBN Exchange rate as at 01/06/2012

98.54 -3.33

83.61 -2.92

158.40 -2.25

2,067.00 -16.00

19.15 -0.27

CFA 0.2744 0.2844 0.2944KRONER 25.6468 25.7297 25.8125EURO 190.6365 191.2525 191.8684POUNDS 236.8604 237.6257 238.391RIYAL 41.2623 41.3956 41.5289SDR 233.0845 233.8376 234.5907FRANC 158.7179 159.2308 159.7436DOLLAR 154.75 155.25 155.75WAUA 233.1661 233.9195 234.6728YEN 1.9809 1.9873 1.9937RENMINBI 24.2927 24.3716 24.4505

INDICATIONS emerged,weekend, that the Central Bankof Nigeria (CBN) forced some

banks to sell performing loans at aloss to Asset ManagementCorporation of Nigeria (AMCON)and this partly explains the hugeloan loss provisioning posted bybanks for the operating year endedDecember 31st, 2011. Meanwhile, agroup of shareholders have draggedthe CBN to court to compel the apexbank to disclose how much it hasspent on the reform of the bankingsector; the whereabouts of fundsfrom the recovered properties as wellas cash from Cecilia Ibru and howmuch it is paying to professionalshandling cases on its behalf amongother demands. The ProgressiveShareholders Association of Nigeria(PSAN) is acting under the recentlyenacted Freedom of Information(FoI) Act.

The hint that the CBN forced banksagainst their wish to sell performingloans to AMCON emerged at the44th annual general meeting of FirstBank Plc last week, where the GroupManaging Director/Chief ExecutiveOfficer, Mr. Bisi Onasanya,explained to shareholders how theapex bank forced the bank to sellN100 billion performing loans to

From left Vice-President, Euronet Worldwide and Managing Director for Middle East, Mr. Mohammed Abdallah;Group Managing Director/Chief Executive Officer, FirstBank of Nigeria Plc, Mr. Bisi Onasanya and Director, Busi-ness Development, Euronet Africa and Middle East, Mr. Mohammed Mackway; during the launch of FirstBank RIAMoney International Transfer Services in Lagos.

Shareholders sue CBN over cost ofreforms, recoveries from Cecilia

By OMOH GABRIEL &BABAJIDE KOMOLAFE

*As CBN forces banks to sell performing loans at a loss to AMCON

Continues on page 18

AMCON at a 10 per cent loss. “Our headline loan growth rate of

just 9.2 per cent does not take intoaccount active switching of asubstantial portion of intra-groupand money market lines intocorporate loans and the sale of overN100 billion of eligible performingloans to the Asset Management

Corporation of Nigeria (AMCON),including 100 per cent of ourexposure to Seawolf Oilfield Services(an action driven at reducingportfolio concentration andaddressing single obligor concerns).Consequently, we recordednormalised loan growth of around40.6 per cent year on year”, he saidwhile reviewing the operations of thebank in the operating year endedDecember 31st 2011.”

When pressed by a shareholder on

the SeaWolf Oil Services transaction,he explained that the company wasdoing well and that the loan wasperforming but the CBN insisted thatthe loan should be sold to AMCOMdue to its size because of the possibleimpact on the bank and the industryif the loans become non-performing.“So they forced us to sell the loan toAMCON and we took a haircut

18 — Vanguard, MONDAY, JUNE 4, 2012

Cover Story

Continues from page 17

Continues on page 26

THE ROOT CAUSES OFYOUTH RESTIVENES?Unemployment:

Unemployment is ahydra-headed monster

which exists among the youthin all developing countries.The unemployment rate inNigeria was last reported at23.9 percent in 2011. TheNational Bureau of Statistics(NBS) has put the figure ofunemployed Nigerians in thefirst half of the year at 23.9 percent, up from 21.1 per cent in2010 and 19.7 per cent in2009.

Minister for Agriculture, Dr.Akinwumi Adesina noted thatNigeria’s unemployment rateis spiralling upwards,growing at 11 per cent yearly,According to him “Youthunemployment rate is over 50per cent. “Our unemploymentrate is spiralling, driven bythe wave of four Million youngpeople entering the workforceevery year with only a smallfraction able to find formalemployment.

The rising tide ofunemployment and the fear ofa bleak future among theyouth in African countrieshave made them vulnerable tothe manipulations of agents’provocateurs”. These includeaggrieved politicians,religious demagogues, andgreedy multinationals thatemploy these youths toachieve their selfishambitions. It is clearly evidentthat the absence of jobopportunities in developingcountries is responsible foryouth restiveness withdisastrous consequences.

This leaves in its trails; lowproductivity, intra-ethnichostilities, unemployment,poverty, prostitution andenvironmental degradation.

• Exuberance: Very often,the youth are described as fullof youthful exuberance. Thisraw energy has of late beenchannelled into unwholesomeand socially unacceptableventure that threaten the veryfabrics of the community. Alsothe issue of availability andaccessibility of drugs in streetcorners which predispose theyouth to abnormal behaviourswhen they come under theirinfluence adds to youthrestiveness.

It is also believed that some

Youth Restiveness AndUnemoployment In Nigeria:The Way Out (Part Two)

disgruntled leaders, eldersand politicians in our societyresort to recruiting youth forsettling scores or using themagainst perceived enemies.With this trend, the activitiesof these youth havedegenerated to outrightcriminality. Once these youthget mobilized for thesenefarious activities theybecome uncontrollable and thesociety suffers.

• Poverty: Poverty connotesinequality and social injusticeand this traumatizes the poor.More than 70 percent ofpeople in Nigeria are in abjectpoverty, living below thepoverty line, and one- thirdsurvive on less than US $1dollar a day.

This figure includes anarmy of youth in urban

centres in Nigeria whostruggle to eke out a living byhawking chewing sticks,bottled water, handkerchiefs,belts, etc. The sales-per-dayand the profit margin on suchgoods are so small that theycan hardly live above thepoverty line. Disillusioned,frustrated, and dejected, theyseek an opportunity to expresstheir anger against the state.Scholars have overtime agreedthat there is a link amongpoverty, loss of livelihood,inequality, and youthrestiveness as evidenced bythe numerous violent protestsagainst the wielders of powerin Nigeria.

• Inadequate EducationalOpportunities and Resources:Quality education has a directbearing on national prestige,greatness, and cohesion. Theknowledge and skill that youngpeople acquire help determinetheir degree of patriotism andcontribution to nationalintegration and progress.Between 2000 and 2004, about30 percent of Nigerian youthbetween 10 and 24 were notenrolled in secondary school(Population Reference Bureau,2006). Perhaps the prohibitivecost of acquiring education isresponsible. The after effect ofthis situation is that thousandsof young people roam thestreets in cities in Nigeria.Those who manage to completesecondary school have noopportunities for tertiaryeducation.

L-R: Group managing director, Diamond Bank Plc, Dr Alex Alex Otti exchanging views with

chairman Diamond Bank Plc, Igwe Nnaemeka Achebe at the 21st annual general meeting of

Diamond Bank in Lagos.

(loss) of 10 per cent. Theloan was sold withoutrecourse to First Bank”, hestated.

Meanwhile, the action byPSAN against CBN seems tobe the first major test of theFreedom of Information Act.In an affidavit supportingthe suit filed at the LagosHigh Court on behalf ofBoniface Okezie, President,Progressive ShareholdersAssociation of Nigeria, byBarrister ChuksNwachukwu, it said that theshareholders’ group hadwritten to the CBN on the26th day of January 2012demanding for theinformation but got noresponse from the apexbank.

The letter to the CBNreads “We act for Mr.

Boniface Okezie, thepresident of ProgressiveShareholders Association ofNigeria, which is anassociation of shareholdersof major quoted companiesin Nigeria, including banks.We have his instruction torequest the followinginformation from you inaccordance with theprovisions of the Freedom ofInformation Act: the cost toCentral Bank of Nigeria(CBN) and the Governmentand people of Nigeria so farof the banking reformsinstituted by the CBN andparticularly; the amount oflegal fees and other feespaid and to be paid to

Shareholders sue CBN over cost ofreforms, recoveries from Cecilia

professionals andprofessional bodies. Howmuch of the amount in (a)above represents fees paidand to be paid to the firmsof: Olaniwun Ajayi LP ofAdunola, Plot L2, 401 Close,Banana Island, Ikoyi, Lagos,and Kola Awodein & Co of6th Floor UBA House, 57Marina, Lagos. Our clientobserves that the two lawfirms mentioned above havealmost completelydominated representation ofCBN and its related bodies

prosecution of Cecilia Ibru,former Managing Director ofOceanic Bank Plc and howmuch of this sum was in theform of Commissions on theproperties recovered fromher? The total cash and valueof properties recovered fromCecilia Ibru; thewhereabouts of the moneyand properties recovered;what part of this cash andproperties has been returnedto Oceanic Bank and/or itsshareholders.

“The bases for the above

in the litigations sparked offby the reforms. The samelaw firms have beenengaged by the CBN inother capacities such asadvisers to the banks theCBN intervened in andconsultants to the CBN andother related bodies and alsofor the criminal prosecutionof the former executives ofthe said banks.

“What is the total sum paidto the firm of Olaniwun AjayiLP in respect of the

request are that: It is the taxpayer ’s money that is beingused for the prosecution ofthe ex-banks’ chiefs and thereform processes.

Our client also believesthat this whole reform

process has become a drainpipe on the economybenefiting only a few. We,expect your response to thisrequest within seven days in

,

,

What is the total sum paid tothe firm of Olaniwun Ajayi

LP in respect of the prosecutionof Cecilia Ibru, formerManaging Director of OceanicBank Plc and how much of thissum was in the form ofCommissions on the propertiesrecovered from her

Vanguard, MONDAY, JUNE 4, 2012 — 19

,

,

President Goodluck Jonathan on Tuesday stirred the hornet nest with hisDemocracy day broadcast. He raised fundamental issues of the economy,some of which are mere wishes as usual with Nigeria leaders. He said

“We must use our population to create markets for what we produce. We mustgrow local, buy local and eat local. To promote this, I have directed that allofficial functions of government serve local foods, especially our local rice and

Nigeria needs value added production,not import substitution

cassava bread and other foods.In the State House, I amfaithfully keeping to mypromise of eating cassavabread and local rice.”

Yes, Nigeria has a hugepopulation that couldconstitute a big market, but outof the 160 million Nigeriansalive today, official figures put112 million as poor. It is thepurchasing power in thehands of the individual, thedisposable income, thatconstitute a market. A largeproportion of the adult andyouth population areunemployed; yes, the marketpotential is here but notrealistically the way thepresident wants us to see it.

Rice and cassava farming inNigeria today is constrainedby access to finance and thesmall holding nature of thefarmers as well as thetraditional technology appliedto farming. Besides, the landtenure system and itsavailability make commercialfarming a mirage.

The expectation was that thepresident’s speech would haveidentified out-of- the-boxinnovative technology optionsthat would add significantvalue for smallholder farmersin agriculture by reducinginefficiencies in the valuechains, especially the harvestand post-harvest value chainelements. The roadmap totransforming the economy ismassive investment, local orforeign.

The key driver in PresidentGoodluck Jonathan’stransformation agenda isinvestment in agriculture. Thisis why the Ministries ofCommerce and Industry weremerged to form Ministry ofTrade and Investment. Whileit is important to seek to attractforeign direct investment intothe country, creating theministry and Presidentialdirectives to buy Nigeria andeat Nigeria menus are no baitsfor foreign investors to wantto come to Nigeria.

Globally, investors areinterested in places

where their return oninvestments is high. Nigeriacertainly qualifies as investorshave found out that they reaphigher benefits if they investin Nigeria. The few that havedone so, despite thechallenges of infrastructure,have found this to be true. Yet,Nigeria is not a haven toforeign investors. There mustbe reasons why they shy awayfrom Nigeria. Many investorsout there who speak privatelyto Nigerians at investmentfora are quick to point out that

in Nigeria there is no sanctityof contract and property rightsare not clearly defined.

Most foreign investors seethis as the most inhibitingfactor that scares away wouldbe investors. They are notworried about f the lack ofinfrastructure as is alwaysclaimed by those who explainaway the Nigeria situation.Shell, Mobil, Chevron, MTN,UACN and others know toowell the infra structuraldeficiency in the country, yetthey invested and are reapingthe benefits.

The truth is that both localand foreign investors are waryof investing in Nigeriabecause the state and itsagents have no respect forproperty rights and sanctity ofcontract. They are worried thatif they invest in Nigeria theirinvestment can be taken overby the state. Contracts havebeen breached with impunityby federal and states agentsand servants who out rightlydisregard or disobey courtsorders. Bi-Courtney AviationService Limited and MaevisNigeria Limited are twoexamples of the majorconcessionaires in the aviationsector with complaints onbreach of contracts. The twocompanies have said theFederal Airport Authority ofNigeria (FAAN) is to be

blamed for the confusion andcontroversy that have trailedtheir concession pacts.Fagbemi who managesMaevis said “We are hereunder what you will refer toas PPP project in which wedeploy assets that arerequired to keep theoperations of FAAN atinternationally acceptablestandard”.

I f the government isserious on its

transformation agenda, itshould have given theinfrastructure concessioncommission the opportunity tomidwife projects that will fasttract the nation’s economy.The Central Bank in one of itsmonetary policy committeesaid that banks were notusually disposed to lending

to the real sector given currentefforts being made to de-riskthe industry and get banks tolend to the real economybecause, a bank would onlylend if it was satisfied with therisk criteria. Investors anywhere in the world look forenvironment where there iscertainty, enduring economicpolicies and standard rulesthat are not changed overnight as in Nigeria and wherethey can perm the riskassociated in a given projector investment.

Normally, before anyforeign investor

commits his capital into aproject, he will want to beassured that there shall bestability in the investmentregime. That is to say, thewhole or key aspects of theagreement will be respectedby the host state and that therules of the game will not bechanged unilaterally. Theforeign investor needs such anassurance not only as a meansof ensuring that he realises the

expected benefits for hisshareholders, but also toconvince other sponsors of theproject that the project willgenerate enough capital to payoff their loans and meet theirsupply requirements. Theseobjectives may only be realisedif the terms of the investmentagreement are respected by thehost state. Hence, for thatreason, the principle ofsanctity of contract is regardedas one of the most importantlegal concepts in theinvestment process.

The President dream of atransformed economy will belargely illusory exceptagriculture is seen as abusiness that is private sectordriven and one that cangenerate wealth and createmeaningful jobs. What everreforms are being carried out

in the sector must be targetedat private investors. Importsubstituting policy has neverworked in Nigeria. The nationmust begin to pursue valuedadded production in everysector of the economy. This isthe true path to economictransformation.

BRIEFS

Investors are not worried aboutthe lack of infrastructure as isalways claimed by those whoexplain away the Nigeriasituation. Shell, Mobil, Chevron,MTN, UACN and others know toowell the infra structural deficiencyin the country, yet they investedand are reaping the benefits.

Nigeria FXreserves at 21-month high

N igeria’s foreignexchange reserves

rose to a 21-month high of$37.64 billion by May 28 andwere up 3 per cent from amonth earlier, the latestfigures from the central bankshowed. Nigeria’s foreignexchange reserves stood at$36.52 billion at the end ofApril and $32.08 billion a yearago. They have not been thishigh since Aug. 19, 2010,when they stood at $37.67billion. The central bankattributed the increase to therise in capital flows fromoffshore investors andfavourable oil prices in theinternational market.

FIDA recommendsgender-basedbanking for ruralwomen

The InternationalFederation of Women

Lawyers (FIDA) hasrecommended gender basedbanking as a means ofencouraging rural women toparticipate more in economicactivities in the country.FIDA’s National PresidentHauwa Shekarau told the NewsAgency of Nigeria (NAN) inAbuja on Thursday that ruralwomen were usually faced withdifficulty while trying toseek business loans.Shekarau said that ruralwomen neededencouragement from thebanking sector through thereduction of requirements foropening bank accounts andseeking bank loans. She said,“Women are a driving force inthe economy, but their accessto finance is still far too small.

“Gender based bankingshould be encouraged toaddress stringent accountopening conditions, whichcurrently exist.”

Goodluck Jonathan


Business & Economy

BRIEFS

The Federal Governmentis set to improve the

Small and GrowingBusinesses’ access to bothlocal and internationalmarkets in its drive to boost thegrowth and development ofthe sector.

The Minister of Trade andInvestment, Mr. OlusegunAganga, disclosed this duringthe Market Access InteractiveSession organised by theEnterprise DevelopmentCentre of the Pan- AfricanUniversity in collaborationwith Etisalat Nigeria, inAbuja.

Aganga said, “One of themajor challenges that havecurtailed the growth ofoperators of SGBs in Nigeriais access to competitivemarkets both locally,regionally and globally andseveral deliberateinterventions in the past havenot had any significant andsustainable impact.

“Therefore, a new impetusmust be generated to expandthe market horizon of the SBGsin Nigeria.” He noted thedeliberate usage of SGBs asopposed to SMEs, saying,“Please note the deliberateuse of SGBs as opposed toSMEs. This is because forSMEs, the mentality, fromnow on, has to change from‘just starting’, to starting andgrowing businesses. Thisevent is one of those newstrategies for confronting thisfundamental challenge.”

According to him, the themeof the interactive session,‘Facilitating Market Access forSmall and GrowingBusinesses’ is aimed at keyingthe SGBs into the value chainof Large Enterprises for thepurpose of empowering andstrengthening them to be inthe best position to createemployment, generate wealthand reduce poverty in Nigeria.

“Specifically, the session isaimed at creating marketaccess for credible SGBs inNigeria, bridging the gapbetween Large Enterprisesand SGBs, fosteringnetworking and partnershipopportunities, enabling localcontent development andparticipation in various sectorsof the Nigerian economy bySGBs, and creating a platformfor structured networkingbetween SBGs, amongothers,” the minister noted.

He further said that thestrategy for job creation

in most developed economieswas based on the SME sector,adding that the FederalGovernment had therefore

FG moves to enhance SGBs’ accessto local, Int markets

developed a new strategy,policy and programmesdocument, which was still inthe consultation process.

Aganga explained thatthe event was a platform

expected to bring togetherSGBs and LEs for the purposeof networking, exchangingideas, starting relationshipsand creating opportunities formutual benefits, amongothers.

“The significance of SGBsfor growth, productivity and

competitiveness of theeconomies of developingcountries is unquestionable,”he stressed. He added that,with this interactive session,Nigeria had reached anothermilestone in the collectiveeffort at achieving a conduciveenvironment for SGBs tooperate profitably andsustainably.

According to the Director-General, Small and MediumEnterprises DevelopmentAgency of Nigeria, AlhajiUmar Nadada, the programme

will give a platform for match-making and outsourcing ofSMEs in the country. Heexplained that every aspect ofSME was an area that wouldmake Nigeria a peaceful anddeveloped country.

“Interlocking, which is thepurpose of this event is thebest way to achieve a greaterresult in the SME sector,”Nadada said. He urged otherservice providers to takeadvantage of the opportunityin order to fully developnetworking among the SMEs.

BY PROVIDENCE OBUH

Poor performances of thepower sector has been a

significant barrier to privateinvestment and to the overalldevelopment and economicgrowth of this nation, saysComrade Wakili Tijani, DeputyPresident/Chairman, Non-Academic Staff Union (NASU)Research and Projects TradeGroup Council.

Tijani made this statement ,while x-raying the challengesin almost all the sectors of theeconomy during the NASUResearch and Projects TradeGroup Council Meeting hostedby the Institute of CharteredAccountants of Nigeria (ICAN)Lagos Chapter.

According to him, “It has beenon record; Nigeria has one ofthe most problematic electricitysectors in the world, with anestimated installed capacity of8644 mega watts (MW) andavailable capacity of only 3200MW, to cater for the needs of

Inefficient power sector bane of privateinvestment, national devt

the entire population.” He pointed out that recently,

the Minister of power, Prof.Barth. Nnaji ordered aninvestigation into the causes ofcontinuous epileptic powersupply, especially after hisannouncement that Kainjipower supply plant which wasearlier shut down to avoid itstotal collapse has begunoperation.

Continuing, he said, “on theoverall, no Nigerian can boastof four hours electricity supplyper day. Nigerians expectimprovement in supply, butrather, supply continues todeteriorate making Nigerians tosleep in perpetual darkness.”

Speaking on Rail transportsystem, he noted that there isneed to revive the railwaytransport in the country, as thiswill further generate jobs, easethe burden on Nigeria’s badroads and save live that areunduly terminated daily bythese bad roads

“Nigeria, in those good old

days, used to take pride in therailway network, the largest onthe continent at independence.However, the Nigerianrailways have been comatosein the last three decades. Yearsof neglect and lack ofinvestments have severelyhampered the capacity of therail network to act as a masstransit vehicle.

“Therefore promoting railtransport means promotingemployment opportunities forour army of unemployedyouths. State governmentsshould in turn develop theirown light rail system withinand outside their states.”

In his address, NASU ICANBranch Chairman, Com. WoleBodunde lamented that thereare reports of billions of nairaspent on improving food in acountry where grass can growout of cracks in a concrete floor,stating that trillions of naira arespent on refined crude importsand allied products that can beavailable if the crude isprocessed here.

World Bankurges Africa tomanage gaswealth

East African countriesthat have made major

gas discoveries need to setup institutional frameworksto manage their new-foundwealth effectively and use itto diversify their economies,a senior World Bank officialsaid. The east Africancoastline is fast becoming amajor energy hub withsignificant discoveries of gasand oil in Mozambique,Tanzania, Uganda and mostrecently Kenya. TheW a s h i n g t o n - b a s e ddevelopment lender saidTanzania, east Africa’ssecond-biggest economy, isexpected to see an increasein revenue of up to $3 billiona year following majoroffshore gas discoveries inthe country.

“The discoveries will have amassive impact. If I take thecase of Tanzania, once the gasproject is in place, we expectaround $2-$3 billion ofrevenue a year,” newlyappointed World Bank vicepresident for Africa, MakhtarDiop, told Reuters in aninterview.

"Nigeria billsthreaten CBN'srole"Two bills being proposed

in Nigeria’s parliamentthat would give legislatorspowers to vet the centralbank’s budget and appointits board are a serious menaceto the bank’s independenceif passed, its governor toldReuters. Analysts see thecentral bank as one ofNigeria’s few reformistinstitutions in an oil stateplagued by corruption.Governor Lamido Sanusiargues that the central bank’sindependence from politicalinterference is crucial for themacroeconomic stability ofAfrica’s second biggesteconomy. “We think this billwill ultimately undermine theautonomy and independenceof the central bank, andpotentially confidence in theeconomy and the financialsystem,” Sanusi told Reutersby phone from an AfricanDevelopment Bankconference in Tanzania onThursday. One bill was tabledin the senate in anextraordinary session onMonday. The bank shallcause its budget to besubmitted to the NationalAssembly,” a copy obtained byReuters on Thursday says.

Sales Director; all of Nigerian Breweries Plc and Mr Dan Esiekpe, MD, Goldberg CreativeAgency during the re-launch of Goldberg Beer in Ibadan, Oyo State.


BRIEFS

Business & Economy

CBN cashless policy benchmarks Nigeria’seconomy in Africa –MasterCard

BY PROVIDENCE OBUH

MasterCard Worldwidehas said that the

Central Bank of Nigeria’s(CBN) Cash-less Nigeriainitiative will set the standardfor economies across Africaand globally.

According to a report madeavailable to Vanguard byMastercard's, CountryManager, West Africa, MrsOmokehinde Ojomuyide,said, “The decision to changethe way that Nigerian citizensconduct their paymentsbehaviour is a brave one, andthe CBN is blazing the trailahead of its Africancounterparts in itscommitment to reduce theamount of cash circulating inthe economy.

“Cash is expensive to print,secure and distribute, itreduces the transparency ofan economy, and it cannegatively impact thegovernment’s focus, which inturn reduces government’sability to deliver services to itscitizens

“Businesses that depend oncash transactions cannot growtheir customer base beyondthe individuals who can visitthem in person to deliver cashpayments. Similarly, they arelimited to purchasing rawmaterials from suppliers towhom they can physicallyhand their payment. When abusiness is geared forelectronic payments, it cangrow its customer base – andits resource pool – far beyondthe limitations of itsimmediate geographic area.”

“Many business owners

seek the short term gains of acash business, but in the longterm, a dependence on cashprevents the enduring growthand the exponential successthat is the goal of everycommitted entrepreneur.”

Ojomuyide pointed out thatthe key partners in the successof the cash-less initiative arethe financial sector,consumers and businesses.

To this end he said, “Thesestakeholders are the cogsaround which the wheels ofgrowth and development inNigeria turn, andMasterCard hasput strategicinitiatives in place for eachstakeholder in order tosupport the CBN in its questto drive the development andmodernization of the Nigerianpayment system.”

Continued, she said,“MasterCard has a sharedobjective with the CBN, in thatour global vision is of a worldbeyond cash. We believe thatwith a pioneering initiativelike Cash-less Nigeria inplace, the country will soonreach a tipping point whereinnovative electronic paymentsystems will leapfrog thehistorical systems that havehindered economic growthhistorically.”

On the other hand,Associate Vice President,Account Management forWest African Business,MasterCard Worldwide, Mr.Kamil Olufowobi said “Attimes it was really difficult toavoid using cash, however,where I was able to avoidusing cash, I enjoyed theconvenience and security thatcame with making purchaseswith a MasterCard paymentcard. The experience was avaluable one – and I willcontinue to work on reducingmy use of cash in my day today transactions.”

Olufowobi further stated,“We remain unwavering inour commitment to supportthe Central Bank of Nigeriain its drive to significantlyreduce the use of cash in thecountry’s economy. We lookforward to working withNigerian banks and retailersto facilitate the reduction ofcash within their paymentsystems by offeringinnovative, safe andconvenient paymentalternatives to theircustomers.”

Finance Minister NgozieOkonjo-Iweala says the

Federal Government willrelease a forbearance packageto stockbrokers as part ofmeasures to stimulateconfidence in the Nigeriancapital market and increaseliquidity. The minister saidthis at the Annual GeneralMeeting (AGM) of the AfricanDevelopment Bank (ADB) inArusha, Tanzania.

The Nigerian capitalmarket since the onset of theglobal financial depression in2008 to March 2012 lost N4.6trillion due mainly to theeffects of bankingconsolidation and investorsloss of confidence.

In the same, estimated debtoverhang, arising frommargin loans incurred bystockbrokers also stood atabout N300 million. Okonjo-Iweala said that whilegovernment, through theAssets ManagementCorporation of Nigeria(AMCON), had intervened

FG will release forbearance package tostockbrokers, says Finance Minister

successfully and safe guardedthe banks, the request forforbearance package by thestockbrokers would also begranted.

“We are working on theforbearance; we have nowagreed on it, and that we aregoing to implement it. We arehaving discussions about howto do it. Must remember thatwe don’t want any moralhazard, we don’t want thosestockbrokers who did the rightthing to think that they are notappreciated or that they havebeen neglected. So we musthonour them too by looking atthe type of forbearance to beaccorded to the stockbrokerswho are having difficulty. Butthere would be forbearanceand there would be someconditions attached to thatand we would spell that out.”

The minister, however, didnot disclose when theforbearance package would bereleased to the stockbrokers,but assured that “the nation’scapital market will rebound”.

According to her, while itappears that it is takinggovernment a long period,“our commitment is to makesure that we providesustainable policy guidelinesfor growth and wealth creationfor both the investors andstockbrokers”. Stakeholdersin the capital market had inthe two years insisted thatforbearance remains the onlyfinancial instrument neededto re-stimulate marketconfidence and provideliquidity at the Nigerian stockexchange.

Mr Emeka Madubuike,Chairman of the Associationof Stockbroking firms, hadtold NAN earlier thatforbearance was the oilneeded to compliment thenew trading regulationsintroduced by the regulatoryauthorities. According toMadubuike, stockbroking hasbecome an endangeredprofession after the nearcollapse of capital market.

New Baselrules to impactSA policy

New global liquidityrequirements do not

suggest a need to changeSouth Africa’s monetarypolicy implementationframework but will have animpact on monetary policyand interest rates, ReserveBank Deputy GovernorDaniel Mminele said. “The... requirements may resultin South African banksreducing their lending, andtherefore the availability ofcredit to the real economy,”Mminele said in a speechposted on the Bank’swebsite. This will mostcertainly have negativeconsequences for economicgrowth and employmentcreation, which will furtherreduce available savings.”

L-R: Alh. Kabir Mohammed,Vice President, ICAN; Mr. Doyin Owolabi, 48th ICAN President,Chidi Ajaegbu, 1st Deputy Vice President, ICAN and Prof. Francis Ojaide, Immediate PastPresident, ICAN, during the Investiture of the 48th ICAN President in Lagos.

PHCN CEOsresponsible forinefficiency inpower sector

A committee set upto look into metering andelectricity supply in Nigeriahas faulted chief executiveofficers of PHCN forthe “inefficiency and lack ofaccountability in the sector.’’The committee was set up bythe Nigerian Electricity Reg-ulatory Commission (NERC)in December, 2011. Present-ing the committee’s report toNERC in Abuja on Wednes-day, the chairman, MrBamidele Aturu, said: “thecommittee discovered thatless than 50 per cent of theregistered customers in theNigerian electricity sector aremetered.

“And this has led to the prev-alent practice of arbitrarycharges based on unscientif-ic estimation of electricity con-sumed by customers. Distribu-tion Companies responsiblefor distributing electricity toconsumers in order to meetup with their overhead costsin an environment of ineffi-ciency and dwindling supplyof electricity, have to use es-timation to ensure they makemore profits.’’ Aturu saidthat customers captured inthe records of electricity sup-pliers was 5,172,979 whichrepresented 18.7 per cent ofthe nation’s total householdsof 28,900,492 by 2006 of Na-tional Bureau of Statistics re-port.


Banking & Finance

BRIEFS

FEDERAL Inland RevenueService (FIRS) has grant-

ed tax exemption to bankholding companies to avoidthe incidence of double taxa-tion.

Meanwhile, Shareholders ofFirst Bank of Nigeria (FBN)have approved dividend of 80kobo per share for the oper-ating year ended December31st 2012.

Addressing shareholders atthe 44th annual general meet-ing of the Bank , Group Man-aging Director/Chief Execu-tive of the Bank, Mr. BisiOnasanya disclosed that theformation of a bank holdingcompany, which would serveas parent company to the bankand all its subsidiaries wasslowed down by the need toget tax exemption for bankholding companies so that theholding companies would notpay tax on profit for which thesubsidiaries have alreadypaid.

He said, “We have kickstarted the process. The goodnews is that the FIRS has re-leased operating circular toclear the issue of double taxa-tion. We are awaiting the Min-istry of Finance to officiallygazette it. Already we drafteda Scheme of Arrangement forSEC and CBN’s approval.Thereafter, we will hold AGMlater in the year to seek yourapproval. We are followingdue process and we are clear-ly on course,” he said.

At the meeting, the share-holders also endorsed theplan by the management toset up a HoldCo in line withCentral Bank of Nigeria(CBN) directive. Onasanyasaid the board had decided ona new structure before theCBN directive, stating that thedevelopment would benefitthe shareholders.

He said that the manage-ment decided not to sell off thesubsidiaries as they were do-ing well and could contributepositively to the HoldCo bot-tom line. He said the bank wasfollowing due process to reg-ister the new company, notingthat shareholders will ex-change one for one share inthe new holding company.

According to the President,Nigerian Shareholders Soli-darity Association (NSSA),Mr. Timothy Adesiyan, theshareholders are impressedwith the way the bank is be-

FIRS grants tax exemption tobanks’ holding companies*As First Bank pay 80k dividend

ing run, stating that the im-pressive result posted for theyear end was a testimony thatthe bank was on the righttrack. He noted that with theimpressive 2012 first quarterresult released by the bank re-cently, the shareholderswould reap higher dividendin this year end.

In his contribution, GeneralSecretary, IndependentShareholders Association ofNigeria (ISAN), Mr. AdebayoAdeleke, lauded the prudent

nature the bank is being run,stating that the performance atthe key financial indices waslaudable.

In his words:” Our bank hasnot only been regenerated butalso rejuvenated. The boardand management must becommended for this. We arealso impressed with the divi-dend paid to us. We believe itcould be better.”

On his part, a shareholder,Nonah Awoh, while express-ing satisfaction with the result

posted, he expressed dissat-isfaction over the performanceof the bank’ shares on thetrading floor of the NigeriaStock Exchange (NSE), advis-ing the management to put onhold further issuance of bonusshares to shareholders.

The financial results of thebank shows that the Group’sbalance sheet increased by 32per cent for the year. Totalassets were N2.8 trillion andtotal assets and contingentswere over N4.4 trillion.

THE Institute of CharteredAccountants of Nigeria

(ICAN) said it would prepareand present a Whistleblow-er’s Bill to the National As-sembly for consideration andpassage as part of its contri-butions to the fight againstcorruption.

Newly elected President ofthe Institute, Mr. AdedoyinOwolabi, said this in his in-augural speech during hisInvestiture as the 48th ICANPresident at the Institutes.

“Criminals are now becomingmore ingenious and scientificin their approaches to fraudand related crimes. As profes-sionals, we must be many stepsahead of them such that crimi-nals are precluded from bene-fiting from their crimes.

Six banks partnerGlo on mobilebankingMAINSTREET Bank Lim

ited and five other bankshave sealed up a partnershipwith Glo to lend greater depthto the on-going campaign for acashless society through theprovision of seamless mobilebanking services to their cus-tomers. Last week Thursday thesix banks banded with the tel-ecom giants, Glo, to roll out theQuick Teller Mobile Bankingproduct (QTM) at the corporatehead office of Glo in VictoriaIsland, Lagos.

Speaking at the formal pres-entation of the product, the Ex-ecutive Director of Glo, Mr.Adewale Shongowawa ex-plained that the launch of theQuick Teller Mobile banking(QTM) product was Glo’s re-sponse to the cashless societypolicy of the Federal Govern-ment even though the compa-ny had been working on itsmobile banking solution longbefore the CBN policy came onstream. According to him, thecompany hopes to leverage onthe combined strength of thepartnering banks and its enor-mous network of outlets acrossthe country to make bankingservices easier to access for allGlo customers who run an ac-count with the partner banks.

Access Bankretains “BigTick” award

ACCESS Bank’s globallyacclaimed responsible

business programme combatingHIV/AIDS, Tuberculosis andMalaria has retained its ‘BigTick’ status in Business in Com-munity’s (BITC) Awards forExcellence for the second yearrunning. The ‘Big Tick’ awardis the first level of award avail-able to entrants of nationalAwards for Excellence whichcommends the best examples ofbusiness as a force for good. The Bank received the re-ac-creditation for contribution tosustainability through innova-tion at the BITC 2012 Awardsfor Excellence gala dinner heldin the United Kingdom recent-ly. The award underscores theBank’s continuous efforts at pro-moting the doctrine of respon-sible business practices throughinitiatives and programmes thataddress economic, social andenvironmental challenges. TheBITC award for excellence isone of the most credible and es-tablished independent corpo-rate responsibility awards thatrecognize and celebrate organ-izations that have demonstrat-ed innovation, creativity andsustained commitment to corpo-rate social responsibility.

ICAN to present Whistle Blowers' billto National Assembly

By PROVIDENCEOBUH

“Thus, as we step up ourstrategic capacity building ef-forts in the areas of Investiga-tions, Digital Audit, Fraudand Forensic Accounting, wewill continue to partner withother professional bodies andagencies of government to ridthe nation of corruption, sharpand unethical practices.

As professionals, we willcontinue to walk our talk byproactively delivering on ourmandate as the conscience ofthe nation. Pursuant to this, wewould, during the year, pre-pare and present a Whistle-blower’s Bill to the NationalAssembly for considerationand passage as part of ourcontributions to the fightagainst corruption.

“We would step up aggres-sive campaigns to enforcecompliance with subsistinglegislations designed to pro-mote accountability in govern-

ance like the Nigerian Extrac-tive Industries TransparencyInitiative (NEITI) Act 2007,the Fiscal Responsibility Act2007, the Public ProcurementAct 2007, Freedom of Informa-tion Act 2011, Financial Re-porting Council (FRC) of Ni-geria Act 2011, Money Laun-dering (Prohibition) Act, 2011,etc. “We intend to be activelyinvolved and indeed, be onthe driving seat of the proc-ess for the renaissance of ournation’s value systems. Wewill continue to expose ethi-cal compromises and sanctiondeviants whose conduct,which, if not checked, can de-mean and bring the hard-earned and towering good-will/image of the Accountan-cy Profession to disrepute. Asprofessionals, we must standup and be counted on the sideof equity and justice both inwords and in actions.”

By BABAJIDEKOMOLAFE

L-R: Vice-President, Euronet Worldwide and Managing Director for Middle East, Mr. Mo-hammed Abdallah; Group Managing Director/Chief Executive Officer, FirstBank of NigeriaPlc, Mr. Bisi Onasanya and Director, Business Development, Euronet Africa and Middle East,Mr. Mohammed Mackway; during the launch of FirstBank RIA Money International TransferServices in Lagos…recently.


Banking & Finance

BRIEFSkye Bank:Performancedriven by focusand strongfundamentals

*Durosinmi-Etti, GMD, Skye Bank

,

,

THE financial performanceof Skye Bank for the oper-

ating year ended December31st 2011 further attest to theefficacy of focus as catalyst forimproved performance.

During the year, the Bank,in spite of the pressures to dootherwise, chose to focus onits core business areas andupgrade its facilities to en-hance service delivery. Thisdecision coupled with thestrong fundamentals carriedover from the 2010 operatingyear, helped the bank to at-tract more business patronagein terms of deposit takingsand lending to businesses andindividuals. This occasionedgrowth in asset base and im-proved earnings.

2011 Financial ResultAccording to the 2011 audit-

ed financial result of the SkyeBank Group total asset grewby 31.3 per cent to N927.1 bil-lion, from N705.9 billion re-corded in 2010 financial year.

Reflecting increased publicconfidence, the bank’s depositbase grew by 22.5 per cent toN658.1 billion during the yearfrom N507.6 billion in the pre-vious year.. This propelledthe Group’s operating incometo grow by 22.5 per cent fromN60.8 billion in 2010 to N74.4billion. The Bank also record-ed 24.8 per cent growth ingross earnings (from N83.9billion to N104.8 billion), rep-resenting growth in interestincome and fee commissionincome. Similarly, other ma-jor growth areas included oiland gas commercial banking,retail banking, treasury, cor-porate and investment bank-ing. This growth trajectoryreflected in a 29.6 per cent increase in deposit volumes inthe year, from N507.6 billionto N658.1 billion, and a 22.3per cent growth in gross loansand advances from N424.8billion to N519.7 billion.

This increased business pa-tronage was however not re-flected in its profitability asprofit before tax dropped by48.9 per cent from N12.7 bil-lion to N6.5 billion due to ad-ditional provisions of N15.9billion for diminution in as-sets value.

By BABAJIDEKOMOLAFE

Group Managing Director/Chief Executive Officer, SkyeBank, Mr. Kehinde Durosin-mi-Etti, attributed the im-proved performance of thebank to power of focus.

He said the Bank maintained its focus on cer-

tain business segments inwhich it has had good trackrecords, in addition to newsegments where it exploitedbusiness opportunities. Hesaid that the pattern of re-duction of the non-performingloan (NPL) ratio remainedconsistent in 2011, as the ra-tio dropped significantly to 4.9per cent, from 11.9 per centreported last year’.

“In pursuit of efficiency, wefocused on reinforcing ourbranch network by upgradingfacilities, deepening deploy-ment of products and servic-es, and ensuring optimal hu-man resource input for im-proved customer service.

“We reaped good returnsfrom the deepening of ourtreasury activities, which re-sulted in 545.9% and 274.2%growth in foreign exchangeincome and investment in-come, from N1.2 billion andN1.4 billion in 2010 to N7.8billion and N5.1 billion re-spectively”, he said.

Durosinmi-Etti said the bankin the 2012 operating year willconclude the process of divest-ment from non-core bankingsubsidiaries, as approved bythe Board of Directors andregulators, during the secondquarter of 2012. “This willenable us focus on our mainintermediation role in Niger-ia and in our three foreignbanking subsidiaries”. Headded that the bank wouldgrow its business in existingsegments, while seeking to

expand into new markets anddeploy new products andservices.

He revealed that the bankwould in the new financialyear, affirm its focus on diver-sifying its income streamstoward non-interest income,in anticipation of interest rateand inflationary pressures,largely from the external en-vironment in addition to re-invigorating its cost manage-ment and efficiency apparatustoward attaining optimal re-turns.

On the the ‘Cashless/Cash-lite’ policy, the Skye Bankboss said it would provide amajor vista for the Bank in2012 and beyond, consideringits well regarded footprints intechnology-based infrastruc-ture over the years.

2012 Q1 PerformanceThe Bank’s financial results

in the first quarter of 2012show that the Bank is not onlyconsolidating on the gains of2011, it is also leveraging onit to deliver better results forthe whole year. The Bank re-corded a total gross earningsof N27.8 billion during thefirst quarter ended March 31,2012. The performance showsan increase of 12.6 per centover the N24.7 billion grossedduring the corresponding pe-

riod in 2011.Similarly, the group’s total

assets during the review pe-riod grew moderately toN996.7 billion from N939 re-corded in 2011.

Other positive growth indi-ces include the deposit port-folio which rose from N651.3at the end of the first quarterin March 2011 to N725 billionat the end of March 2012.

The group’s profit before taxwas also impressive, fallingmarginally to N4.08 billion asagainst N4.2 recorded duringthe same period in 2011.

Also, the group’s IFRScompliant result sent to

the floor of the Nigerian StockExchange showed that its loanportfolio increased from N518billion in 2011 to N520 billionduring the review period. TheNet Interest Income after loanimpairment charges grew by18.1% to N12.4 billion asagainst N10.4 billion record-ed in the previous year.

Dividend reward for share-holders

At the annual general meet-ing of the bank held lastmonth, the N3.3 billion divi-dend proposed by the Boardwas approved by sharehold-ers This translates to 25 kobo dividend per share for theperiod ended December 31,2012.

Chairman of the Skye Bank,Mr. Olatunde Ayeni, said thedividend payout was in fur-therance of the bank’s com-mitment to deliver optimal re-turns to shareholders.

He said that in arriving atthe dividend sum, the boardalso took into account theneed to have reasonable re-serves to maintain the goingconcern status of the bank.

In his address at the AGM,Kehinde Durosinmi-Etti,promised that the bank wouldcontinue to do all within itspower to enhance sharehold-ers’ value and returns on in-vestment. He said the bankhas been positioned for lead-ership role in the nation’sbanking industry and hasbeen strengthened by capitalinjection and good corporategovernance policy.

Some of the shareholdercommended the managementof the bank for the improvedperformance despite the toughoperating environment.

The bank recorded total grossearnings of N27.8 billion duringthe first quarter ended March31, 2012, the performance showsan increase of 12.6 per cent overthe N24.7 billion grossed duringthe corresponding period in2011

Top bankershonoured atAfDB annualmeetings

AFRICA’S Top Bankersgathered in Arusha, Tan-

zania, to celebrate the 6th

edition of the African BankerAwards, under the patronageof the African DevelopmentBank.

Olusegun Agbaje, Manag-ing Director of Guaranty TrustBank, Nigeria scooped theprize for African Banker ofthe year. He was presentedwith his Trophy by Tim Turn-er, Director of the Private Sec-tor Operations of the AfricanDevelopment Bank at the pic-turesque Frangipani Gardens,where the Awards ceremonytook place. Ecobank beattough competition posed by six other contestants in itscategory to come out on topas African Bank of the Year.The Bank was given particu-lar credit for its continued ex-pansion throughout MiddleAfrica as the pan Africanbank. Ecobank got a strongendorsement when SouthAfrica’s Public InvestmentCorporation officially signedthe $250m investment agree-ment in the Group.

The Best Regional Bank cat-egory named a winner fromeach of the five regions of Af-rica: Attijariwafa Bank, Mo-rocco for North Africa; BGFI,Gabon for Central Africa;Bank of Kigali, Rwanda forEast Africa; Access Bank, Ni-geria for West Africa; andBCI, Mozambique for South-ern Africa – thus highlightingAfrica’s diversity but strengthas one continent.

Arnold Ekpe, one of themost well recognised faces inthe African banking commu-nity, was honoured with theLifetime Achievement Awardand received a standing ova-tion from the audience. Dr.Eleni Gabre-Mahdin, Found-er and Managing Director ofthe Ethiopia CommoditiesExchange follows in the foot-steps of Ngozi Okonjo-Iwea-la and Adebayo Ogunlesi towin the African Banker IconAward. This prestigious panAfrican evening was the big-gest ever, with Hon. Mam-bury Njie, Minister of Fi-nance for Gambia, Hon. JohnRwangombwa, Minister ofFinance for Rwanda, Dr Mus-tapha Kamel Nabli, CentralBank Governor for Tunisia,Professor Njuguna Ndung’u,Central Bank Governor forKenya, Arunma Oteh, Direc-tor General of the Securitiesand Exchange Commission(SEC), Nigeria, and BBCWorld News presenter, Zein-


Corporate Finance

BRIEF

From Left: Mrs. Yemi Adeyinka, Zonal Coordinator, Unity Bank Plc Aim & Win Promo; Mr.Umar Adabara, Regional Manager, Victoria Island and Mr. Lanre Fagbohun, Executive Director,Lagos & West at the 1st zonal draw of the bank’s Aim, Save & Win promo in Lagos.

The value of mutual fundson the Nigerian Stock

Exchange, NSE, depreciatedby N135 million in one week.

Particularly, according todata obtained from theSecurities and ExchangeCommission, SEC, the NetAsset Value, NAV, of mutualfunds listed on theMemorandum Quotation

Mutual funds value dips byN135m in one week

BY MICHAEL EBOH segment of the NSE, dippedby 0.15 per cent from N89.555billion recorded May 18, 2012to N89.419 billion as at May28, 2012.

However, the NAV of thefunds appreciated by N1.319billion in one month, rising by1.5 per cent from N88.1 billionin April 2012 to N89.419billion in May.

Equity based funds recordedthe highest NAV of N41.422

billion in the week ending,May 25, 2012, droppinghowever, by 0.51 per cent fromN41.635 billion recordedpenultimate week ending,May18, 2012.

Real Estate Funds followedwith a NAV of N16.272 billion,depreciating by 0.36 per centfrom N16.331 billion recordedin penultimate week, whileBalanced Based Fundsrecorded NAV of N12.39

billion.Union Homes Real Estate

Investment Trust Scheme,managed by Union HomesSavings and Loans Plc,recorded the highest NAV ofN14.036 billion, followed byStanbic IBTC Nigerian EquityFund, managed by StanbicIBTC Asset ManagementLimited with a NAV ofN12.522 billion and StanbicIBTC Money Market Fundalso managed by Stanbic IBTCAsset, with a NAV of N7.51billion.

ARM Discovery Fund,managed by Asset andResources Management,ARM, Company Limitedrecorded a NAV of N4.719billion; FBN Heritage Fund,managed by First Bank ofNigeria Plc, recorded NAV ofN4.197 billion; SIM CapitalAlliance Fund, managed bySIM Capital AllianceLimited’s NAV stood at N3.548billion and Zenith EquityFund, managed by ZenithBank Plc posted NAV ofN3.447 billion.

Others are: Coral GrowthFund, managed by FSDHAsset Management Limited -N3.309 billion; KakawaGuaranteed Income Fund,managed by Kakawa AssetManagement CompanyLimited - N2.954 billion andStanbic Ethical Fund,managed by Stanbic IBTCAsset - N2.864 billion amongothers.

To calculate a CollectiveInvestment schemes Net AssetValue or NAV, the value of thetotal assets of the fund issubtracted by its liabilities, thisamount is then divided by thetotal number of shares in thefund to give the unit price.

BY NKIRUKA NNOROM

The Chairman of NationalSalt Company of Nigeria

Plc (NASCON), Alhaji AlikoDangote, has reaffirmed themanagement’s commitmenttowards retaining a leadingedge over other competitors inthe salt industry.

Making the remark in hisaddress to shareholders of thecompany in the yearly generalmeeting, in Lagos, Dangotesaid the management wouldalso commit itself to deliveringimproved returns to allstakeholders in the currentyear.

Dangote explained that thecompany will within the yearexpand its business to include

…posts N2.2bn profitsvegetable oil refinery andtomato packaging in order toretain key role in the sector.

“We continue to becommitted to improving ourupward trend, and we willensure your companycontinues to grow and remaincompetitive so as to deliverincreasing dividend to allstakeholders.

“To this end, your Board andmanagement are working onestablishing a seasoningbusiness, vegetable oilrefinery and tomato packagingoperations, whichunfortunately has beendelayed for a while,” hestated.

He noted that theestablishment of the newbusiness line was in keepingwith the company’s vision ofbecoming a frontline foodsbusiness in the country.

He further explained thatthe company achieved profitafter tax of N2.2 billion for theyear ended 31st December2011, which reflects 30.7 percent growth over N1.65 billionposted in the same period of2010. Turnover grew bymarginal 8.9 per cent to N9.7billion from N8.89 billionreported in 2010, whileoperating profit rose to N3.1billion from the previousN2.06 billion.

According to him, theperformance is a reflection ofthe efforts of the board,management and staff inresponse to the difficultiesexperienced in the year, thusleading to a stronger andmore profitable business.

Speaking on the challengesencountered by the companywithin the year, Dangote saidthat problems pertaining to

energy, poor infrastructure aswell as uncoordinated taxadministration contributed inpreventing NASCON andother manufacturers inreaching their full potential,adding “most importantly,NASCON was severallyimpacted by the global raw saltshortages that characterizedthe year leading to a 20 percent reduction in our normalimport level.”

The shareholders at themeeting approved thedistribution of N1.89 billion,which represents 70 kobo pershare dividends for the period.

Other highlights of theresults showed thatshareholders fund grew toN5.78 billion from N4.96billion, while the earnings pershare rose to N81 from N61 in2010.

NASCON resolves to maintain industryleadership

MorganStanley movesto lift stake inbrokerage

MORGAN Stanley said itwould buy another 14

percent of joint ventureMorgan Stanley SmithBarney, starting what sourceshave said could become anegotiation to purchase therest of Citigroup Inc’s 49percent stake in the retailbrokerage.

The two parties will seek afair price for the 14 percentstake, which Morgan Stanleyhas an option to buy this year.But because the banks willalready be discussing a valuefor the business, MorganStanley may press Citigroupto sell its entire stake now,people familiar with thematter have said.

In the past, analysts haveestimated the 49 percent staketo be worth about $10 billion,but those appraisals canchange quickly as marketstank and the outlook for theretail brokerage businesssours. The downturn of themarkets may also temperMorgan Stanley’s desire tobuy the rest of the venture itdoes not already own.

WELLS Fargo & Cowhich has been

renewing its appetite foracquisitions lately, isinterested in buyinginsurance sales businesses,its chief executive said onThursday.“I love theinsurance distributionbusiness,” John Stumpf saidat a Sanford C. Bernsteinconference for investors.

Wells Fargo’s insurancebrokerage business is alreadyone of the biggest in the worldand the largest affiliated witha bank.

The fourth-largest U.S. bankby assets is the biggest sellerof mortgages, used car loansand middle-market loans inthe United States and thoseborrowers “all needinsurance,” Stumpf said.

The CEO also repeatedremarks from bankexecutives on May 22 thatWells wants to build its retailbrokerage and wealthmanagement businesses.

He issued the standardwarning, however, that thebank will be “very, verycareful” on not paying toomuch for any purchases.

Wells Fargo eyesinsurance salesacquisitions

26 —Vanguard, MONDAY, JUNE 4, 2012

Cover Story

Continues from page 18

Shareholders sue CBN over cost of reforms, recoveries from Cecilia

accordance with the Law. Thesuit filed at the Ikeja HighCourt said that “this actionwas commenced byoriginating summonswherein the Plaintiff seeksan order of the courtdirecting the defendant torelease to the Plaintiff therequested information asdemanded by the plaintiffthrough his Solicitors letterto the CBN dated 26th

January 2012.

The shareholders claimedthat the CBN “acknowledgedthe receipt of the letter on 3rd

February 2012 and hasneglected, refused or failedto make available therequested information to thePlaintiff. As a result, the suitwas filed to cause the CBNto release the information. Itsaid “Whether having regardto the provisions of theFreedom of Information Act2011, the defendant is notunder a duty to makeavailable to the plaintiff the

information requested in thesaid plaintiff ’s letter of 26tln

January, 2012.

The Shareholdersargued that they have

a right under the Freedom ofInformation Act 2011 torequest information from theCBN which is an agency ofGovernment establishedunder the Central Bank ofNigeria Act Cap C4 laws ofthe Federation of Nigeria2007. The CBN is boundwithin 7 days to make the

information available ordecline with stated reasons.The requested information iswithin the custody of theCBN and it has neglected,refused or failed to releasethe said information to theshareholders or to declinewith reasons.

“Section 25 of the Freedomof Information Act 2011, givesthe shareholders the right tomandatory order of courtcompelling the defendant torelease requestedinformation. The statutory

right to a mandatory orderobviated or makesunnecessary anyconsideration of conditions forgrant of such order undercommon law. The court isbound to grant a mandatoryorder where it is satisfied thatthe demand for informationhas been made and the publicbody has refused or failed tocomply.” They are urging thecourt to uphold theoriginating summons andgrant the mandatory order asrequested.


Corporate Finance

BRIEFS

From left Otunba Adekunle Ojora, Chairman, NCR Nigeria PLC; Ambassador Hamzat Ah-madu, Director; Mr Stelios Atalianis, Director and Mr. Sadiq Onilenla, Acting Country Man-ager at the NCR Nigeria PLC 60th Annual General Meeting held in Lagos. Photo by LamidiBamidele.

A significant decline was recorded in investment val-

ue on the Nigerian Stock Ex-change, last week, as the mar-ket capitalization of listed eq-uities dipped by N85.625 bil-lion.

Specifically, the market cap-italization, representing in-vestment value, depreciated by1.21 per cent to close the weekat N7.005 trillion from N7.090trillion at which it opened theweek.

The All-share index, anoth-er major indicator for measur-ing market trend, dipped by1.21 per cent or 268.49 basispoints to close the week at21,963.87 points from22,232.36 points.

Nigerian Breweries Plc led32 other stocks in the price los-ers category, dropping by 2.78per cent to close the week atN105 per share; UAC NigeriaPlc followed with a share pricedepreciation of 4.83 per centor N1.69 to close at N33.31 pershare and Zenith Bank Plcdipped by N1.35 or 9.12 percent to close at N13.45 pershare.

Other share price losers in-clude: Lafarge Cement WAP-CO Plc N1.14, Flour Mills Ni-geria Plc N1.04, Julius BergerNigeria Plc N0.99, Okomu OilPalm Plc N0.87, National SaltCompany Plc N0.69, NCR Ni-geria Plc N0.68, First CityMonument Bank Plc N0.65among others.

On the contrary, PZ CussonsNigeria Plc led 21 other com-panies in the price gainers’category, rising by 5.22 percent to close at N24.20 pershare; Glaxo Smithkline Con-sumer Plc followed with a shareprice appreciation of five percent to close at N21 per shareand Unilever Nigeria Plc gar-nered N0.70 or 2.47 per centto close at N29 per share.

Other share price gainersinclude: Presco Plc

N0.65, International BreweriesPlc N0.49, Access Bank PlcN0.23, Stanbic IBTC Bank PlcN0.21,Union Bank Nigeria PlcN0.20, May & Baker NigeriaPlc N0.18 and Cement Com-pany of Northern Nigeria PlcN0.12 among others.

Equity trading also dippedby 25.23 per cent in the weekunder review, as a turnover of1.301 billion shares valued atN9.46 billion was recorded in14,792 deals, in contrast topenultimate week’s turnover ofN1.74 billion shares valued atN15.108 billion in 19,754

NSE: Declining trend persists, asinvestment value dips by N86bn

By MICHAEL EBOH &CHINEDU IBEABUCHI

deals. The Financial Servicessector recorded the highest pa-tronage, accounting for 56.73per cent of the total marketturnover, with 737.805 millionshares valued at N5.896 billionin 8,553 deals. The Conglom-erates Sector followed withwith 269.168 million sharesvalued at N314.298 million

traded in 692 deals.Banks’ stocks were the most

sought after in the week un-der review, as investors trad-ed 642.493 million banks’shares valued at N5.832 billionin 8,258 deals. Transaction int he sub-sector was driven byGuaranty Trust Bank Plc, FirstBank of Nigeria Plc and Unit-

ed Bank for Africa Plc. Trad-ing in the shares of the threebanks accounted for 367.294million shares, representing57.17 per cent, 49.78 per centand 28.23 per cent of the turn-over recorded by the sector,sub-sector and total equitiesturnover for the week, respec-tively.

ERNST &Young (EY) hasdecried the wrong impres-

sion of some investors aboutinvestment climate in Africa,even as Foreign Direct Invest-ment (FDI) projects on thecontinent grew by 27 per centfrom 2010 to 2011.

The Regional ManagingPartner for West Africa, Ernst&Young (EY), Mr. Henry Eg-biki, who disclosed this at thelaunch of Ernst & Young’s2012 attractiveness survey,weekend, said, “Many inves-tors still view Africa as beinga more challenging place to dobusiness than other emergingmarket regions; despite thefact that in the World Bank’smost recent Ease of DoingBusiness rankings, 14 Africancountries ranked ahead ofRussia, 16 ahead of Brazil,and 17 ahead of India.”

He further disclosed that Af-rica is often perceived as be-

FDI inflow to Africa grows by 27%— Ernst & Young

ing inherently corrupt, saying,“While corruption no doubtremains a big challenge inAfrica, 14 African countriesrank higher than India, and35 higher than Russia, inTransparency International’sCorruption Perceptions In-dex.”

While commenting on EY’sfindings in its “2012 attractive-ness survey”, Egbiki said,“The number of Foreign DirectInvestment (FDI) projects inAfrica grew 27 per cent from2010 to 2011, and have grownat a compound rate of close to20 per cent since 2007. De-spite this growth, there remainlingering negative percep-tions of the continent, but onlyamong those who are not yetdoing business in Africa. Thestory of Africa’s progress, notjust in economic but also insocio-political terms needs tobe told more confidently andconsistently. This broad-basedprogress is underscored by asubstantial shift in mindset

and activities among Africanthemselves, with increasingself confidence and continuedstrong growth in intra-AfricanFDI (which has expanded by42 per cent since 2007).”

According to the survey byErnst & Young, seven Africancountries are among the 10fastest growing economies inthe world, with 5.5 per cent ofAfrica’s share of global FDIprojects.

The survey noted that FDIflowed into diverse range ofsectors, with manufacturingand infrastructure related ac-tivity accounting for a signifi-cant proportion of FDI.

However, Egbiki, noted thatregional integration is criticalto accelerated and sustainablegrowth in Africa, saying, “Cre-ating larger markets withgreater critical mass will notonly enhance the African in-vestment proposition, it is alsothe only way for Africa to com-pete effectively in the globaleconomy.

Aig-Imoukhuede,Linkedln boss, eyeErnst & Young’saward

ACCESS Bank Plc GroupManaging Director, Mr.

Aigboje Aig-Imoukhuede is setfor what could be described as‘battle of the titans’ as he joins50 other exceptional entrepre-neurs, including Reid Hoffman,Chairman and co-founder ofLinkedln, from around theworld in Monte Carlo, Mona-co, from June 7-10, to vie forErnst & Young’s World Entre-preneur of The Year Award.

The Award was created byErnst & Young to recognize theaccomplishments of entrepre-neurs around the world. Itbuilds on Ernst & Young’s 26years of success in runningEntrepreneur of The YearAward programmes in manycountries.

This year, 59 Entrepreneur OfThe Year country winners, rep-resenting 51 countries, will beinducted into the World Entre-preneur Of The Year Hall ofFame and compete for the Ernst& Young’s World EntrepreneurOf The Year title in Monte Car-lo. For the first time, Kenya(Eastern Africa), Nigeria (WestAfrica), Oman, Qatar, UnitedArab Emirates and Vietnam areparticipating in the programme.

Agbaje emergesAfrican Bankerof the Year

MANAGING Director/CEO of Guaranty Trust

Bank Plc, Mr. Segun Agbaje,has been conferred with the2012 African Banker of the YearAward by African Banker Mag-azine.

The African Banker Awardrecognizes key financial indus-try leaders across the continent,who through good vision andleadership, have led their in-stitutions to become industryleaders and trend setters. Win-ners of the coveted Award musthave consistently guided theirorganization to strong financialperformance and contributedsignificantly to the quality ofservice offered by the financialservices industry in their coun-try, Africa and abroad.

Commenting at the 2012 Af-rican Banker Awards Dinner,which held on Wednesday,May 30, 2012 in Arusha, Tan-zania, Mr. Segun Agbaje attrib-uted his receipt of the award andthe Bank’s varied achievementsover the years to discipline, adefined operating strategy,hands on knowledge about thevarious markets the Bank oper-ates in and the passion of GT-Bank employees.

By PETER EGWUATU


BRIEF

Corporate Finance

Financial expert lists importanceof leasing for economic growth

Renesasinvestorswary overrestructuringplan

Mobil eyes increased investment in facilities upgrade

From left: Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema;Managing Director/CEO, Nigerian Aviation Handling Company (NAHCO) Plc, Mr. OlukayodeOluwasegun-Ojo; Deputy General Manager, Transformation and Change, NSE, Mr. OlumideLala and Head, Corporate Communications, NAHCO, Mr. Sanya Onayoade at the Bell RingingCeremony on the NSE in Lagos.

EQUIPMENT leasing has been described as an im-

portant tool to help organiza-tions acquire equipment aspaucity of investible fundscontinues to be the nation’seconomic albatross.

Managing Director/CEO,Rosabon Financial ServicesLimited, Mr. ChukwumaOchonogor, stated this dur-ing an economic interactivesession in Lagos at the week-end.

He said‘‘In some cases, you

By PETER EGWUATUcan include the full cost of theequipment, as well as theservice, shipping, installationcosts and maintenance in thelease. This spreads the costout evenly over the term of thelease freeing up cash flow forother vital business expens-es.”

He, however, highlightedkey reasons why Nigerian en-trepreneurs should cultivatethe habit of leasing; stressingthat ‘’Leases allow you to re-tain capital strength by allow-ing you to buy the equipmentyou need today while spread-

ing out your paymentsthroughout the life of yourequipment. Thus allowingyou to save your capital forother expenses such as add-ing sales personnel, increas-ing marketing, or taking ad-vantage of quantity discounts(a 2% discount each monthcan really add up), whichmeans that you will have moremoney to invest in revenue-generating activities’’.

He added that ‘One gener-al rule is to invest your work-ing capital on things that ap-preciate or accumulate in val-

ue such as employees or realestate, and lease items whichdepreciate or lose value suchas equipment and machinery.In addition to these advantag-es, a lease allows the lesseeto acquire more of the prod-uct or more high-end equip-ment than they would if theypurchased.

Mr. Ochonogor reiterated the sound Balance

Sheet Management advan-tage of Leases explaining that‘’a lease is not considered along-term debt or liability, andtherefore does not appear asdebt on your financial state-ment, making your companymore attractive to investors.

The Financial expert notedthat payments are treated asoperating expenses on thecompany’s balance sheet, andtherefore do not have to bedepreciated over the life of theequipment.

‘’As your business growsand your needs change, youcan add to or upgrade yourlease at any point throughadd-on leases or master leas-es. There are a number ofleasing structures available toallow you to tailor the leasethat best accommodates yourneeds and requirements: suchas cash flows, budget, trans-action structure, and season-al or cyclical fluctuations.Many leases also allow you agreat deal of end-of-term flex-ibility, allowing you to pur-chase the equipment, renewyour lease, or simply returnthe equipment once the leasehas expired’’

He added that Tax agenciesdo not consider an operatinglease to be a purchase, butrather a tax-deductible over-head expense, stressing that‘’therefore you can deduct thelease payments from your cor-porate income and are nottaxed on them’’.

By NKIRUKA NNOROM& KUNLE KALEJAIYE

MOBIL Oil Nigeria Plchas assured that it will

continue to evolve strategiesthat will ensure delivery ofsuperior performance to allstakeholders of the companyin the coming year.

The chairman, Mr. AdetunjiOyebanji, made thedeclaration while laying thefinancial results for the yearended 31st December, 2011,before the shareholders at the34th annual general meeting inLagos. To this end, he said thecompany will continue toinvest in logistics and cuttingedge technology as part ofefforts to facilitate its facilitiesupgrade.

Oyebanji noted that in 2011,it completed therefurbishment of a storage

tank, while work commencedin a new tank, adding thatadditional investments intanks and loading facilities areplanned to further strengthenthe company’s logistics.

“We made some modestinvestments in the retail chainand UAC, our alliance partnercontinued to invest in theback-court food offering. Westarted a project to upgradeour Blending Control Softwareand once completed, this willprovide us increasedefficiency and productioncapacity in our blendingoperations. Similarly, we planto install additional testingequipment to keep up withadvancements in laboratorytechnology, implement aneven more stringent qualitytesting regime for theproducts we market and

maintain our industryleadership in qualitymanagement,” he said.

“We completed a majorinvestment programme thathas enhanced the value of ourMobil House office complex inVictoria Island. We are nowstarting the refurbishment ofMobil Court. At the end of theupgrade, the property will berestored to world-classstandards. A long-term leasehas been put in place that willguarantee a steady stream ofincome in the future,” headded.

The Mobil boss explainedthat the turnover for the periodgrew to N62.1 billion fromN53.3 billion, translating to sixper cent increase over theprevious figure. The profitbefore tax dipped to N5.52billion in comparison to N5.72

billion in 2010, while profitafter tax depreciated to N3.75billion from N3.89 billion in2010, showing three per centdecrease in both PBT and PATrespectively.

Total assets grew by 29 percent to N30.76 billion fromN23.88 billion. However, thedividend declared for theperiod slumped by 29 per centto N5.00 from N9.60.

Oyebanji explained theincrease in turnover was dueto higher pricing across ofPMS and the higher lubricantsales which were partiallyoffset by lower gasoline sales.

He said “Gasoline volumewere affected by supplydisruption to our retail outletsin some part of the countryand increased competitionfrom new entrants in themarket.

MAJOR share-h o l d

ers of Japanesechipmaker Renesas Elec-tronics Corp received thefirm’s restructuring planon Friday, but reiteratedtha t they were s t i l l no twilling to provide capitalsupport, sources familiarwith the matter said.

R e n e s a s , t h e w o r l d ’ sf i f t h l a r g e s t c h i p m a k e rand a product of succes-sive mergers of the chipd i v i s i o n s o f M i t s u b i s h iElectric Corp (6503.T), Hi-t a c h i L t d ( 6 5 0 1 . T ) a n dNEC Corp, plans to raisemore than 100 billion yen( $ 1 . 2 6 b i l l i o n ) i n f r e s hcapi ta l and cu t a t l eas t12,000 jobs, sources toldReuters last month.

S o u r c e s s a i d R e n e s a sp res iden t Yasu s h i Aka ovis i ted a l l three compa-nies personally and pre-sented the firm’s plan onFr i d a y, w h i c h i n c l u d e ss w e e p i n g j o b c u t s a n dfund raising.

Mitsubishi Electric andNEC are not consideringproviding capital supportto Renesas a t th is t ime,sources said.

A s o u r c e s a i d H i t a c h iw o u l d n o t d i s c l o s e i t sstance on the matter.

NEC, which has strug-gled with steep losses inits mobile handset and IThardware businesses, haspreviously said that it wasnot considering addition-al capital support for Re-nesas.

M i t s u b i s h i E l e c t r i c ,w h o s e e a r n i n g s a l o n gwi th Hi tach i have beenb o l s t e r e d b y s t r o n g r e -sults in the infrastructurebusiness and by l imi tede x p o s u r e t o c o n s u m e re l e c t r o n i c s , s a i d l a s tm o n t h t h a t R e n e s a s ’s h a r e h o l d e r s w e r e p r e -pared to offer support.

The three companies willdiscuss the restructuringplan this month and Re-nesas a ims to announcethe final turnaround planby July.

Renesas, which logged abigger-than-expected netloss fo r the yea r endedMarch 31, is struggling tosurvive as it faces highercos ts and s t i f f overseascompetition.


Interview

MAZI OkechukwuUnegbu is theManaging Direc-

tor/Chief Executive, MaxifundInvestment and SecuritiesLimited and President ofChartered Institute of Bank-ers of Nigeria (CIBN) from2002 to 2004. In his over 30years career in banking andfinance he has worked inprominent financial institu-tions including First Bank,defunct African MerchantBank, Progress Bank (rose tobecome Chairman/Chief Ex-ecutive), Broad Bank and Cit-izens Bank (as Chief Execu-tive in 2005). As the guestspeaker at the Zenith Banksponsored Bi-monthly Dis-course of Finance Corre-spondents Association of Ni-geria (FICAN) held last week,he barred his mind on recentdevelopment in the nation’sfinancial sector especially theplanned removal of the au-tonomy of the central Bank ofNigeria (CBN) by the Nation-al Assembly, the recent probeof the near collapse of the na-tion’s capital market by theHouse of Representatives andthe demutualization of theNigeria Stock Exchange.Excerpts

Considering the fact thatthe capital market collapsedin 2008, What is your takeon the timing of the probe ofthe near collapse of the cap-ital market by the House ofRepresentatives? Is the tim-ing right and is it properlyfocused on the necessary is-sues?

I do not agree with you thatthe timing of the probe waswrong. If you realize at sometime most of us weresaying let the gov-ernment inter-vene in themarket not bygiving moneybut by review-ing the struc-ture. For in-stance, the Se-c u r i t i e sa n d

BRIEF Exchange Commission (SEC)is set up by law, the structurein that place is not correct.There was lack of proper co-ordination between the capi-tal market regulator and theplace that provide the plat-form. The Nigerian Stock Ex-change is what we call a selfregulatory organization pro-viding the platform that ena-bles market to be conductedand the license is regulatedby the SEC. And we werecalling for proper restructur-ing of the SEC the way it wasand we can see that comingout very vital during theprobe. So, I think some of theissues raised were also apt,even if everything was notsuch. It was only spoiledthrough what I may call in-experience of the legislatorsthat is to some decree and theimpunity role of the SEC. Theregulators made a mistake ofgoing to issues and then raisethem when the issues havenot being genuinely touched.If the regulators have takentime, let us go. You don’t dothings with a preconceivedidea to find somebody guilty.That is why the problem aroseand that was what happenedthat almost diverted attentionfrom the real issues. Some ofthe issues that came up thatwere not suppose to be there.I mean that is my advice tothat and I tell you also thatthat is why I am calling for are-thought in financial regu-lation. There should be a re-thought. Financial regulationshould not be base on impu-nity but be based on facts.

On the ongoing debateabout the quest of the Nation-

al Assemble remove theautonomy of CBN, you

said the problem isthat the we have aweak CBN but astrong CBN Gover-nor and that whatis needed is tostrengthen the

CBN. But

By BABAJIDEKOMOLAFE

what measures can be put inplace to ensure that whoev-er becomes the CBN Gover-nor does not use the CBN topursue what might be per-ceived in some quarters asreligious or political inter-est?

Then the CBN autonomy,I think I have even an-

swered that during my pres-entation. I said that all weneed to do is to set up stronginstitutions. Let the institu-

tions be strong. Let it be, ifyou go there tomorrow whatyou see on ground will deter-mine how you are going to dothe job. You see that in theUS Federal Reserve the manthere now is still followingwhat was there before. But inour own system I was talkingabout I think I talk financialfriction, I have talked aboutthe US- UK model; I havetalked about the euro zonemodel. I said we don’t knowwhat model we are followinghere and this model we needto look at what the situationis because as far as we areconcerned conservatism is the

Diasporaremittance,microfinancekey toproposedAfricanfinancialinclusionAGNES Soucat, African

Development Bank(AfDB), human developmentDirector, has said thatremittances and microfinancewere the two key componentsof the bank’s inclusivefinancial services. “Access tofinance is a key component ofour new human capitaldevelopment strategy.Increasing opportunities forthe poor and marginalisedand particularly for the Africanyouth is crucial in order toensure social inclusion as wellas job creation,” Soucat saidat one of the seminars at theongoing AFDB, annualgeneral meeting (AGM).

With an estimated Africa’sDiaspora fund of 40 billiondollars annually, 21 .5 billiondollars were remitted to Sub-Saharan Africa in 2011.Participants at the seminarsaid remittances not onlyhelped African communities tocope with crisis and lack ofeconomic prospects but alsocontributed to enterprisedevelopment and humancapital. They alsosaid remittances was a majordriver in African povertyreduction scheme.

“There is no doubt thatremittance inflow has been animportant factor in Africa’seconomic development, asignificant proportion of thatis handled by Dahabshiil, anAfrican web-based moneytransfer system. Microfinanceinitiatives are equallyenabling some of Africa’spoorest to plan for the future,”said Abdirashid Duale, theCEO of Dahabshiil. Council totrain 10,000 freight forwardersAlhaji Hakeem Olanrewaju,the Chairman, Council forRegulation of FreightForwarding in Nigeria(CRFFN), said on Wednesdaythat it would trainabout 10,000 freightforwarders in the country.Olanrewaju said this in Lagosat the closing of a seven-dayTraining of the Trainers (TOT)programme organised by thecouncil. The chairmansaid there must be attitudinalchange in the practice offreight forwarding.Olanrewaju said thatNigerians in the professionshould be able to competewith their counterparts inJapan and Korea.

Autonomy is impCBN needs to reitself — Unegbu


Interview

BRIEF,

,

essence of regulation both forthe capital market and thebanking sector or money mar-ket. So it is important thatwhoever is at the Head ofthat institution should first ofall sit down, study the insti-tution before you start talk-ing.. That is why most of themanaging directors of banksthat I know, those that werethere when the banks were introuble, and the moment theygot there they started talking, we are going to raise it to ahigh level. That is all balder-dash, because you don’t knowwhere you are. Before youstart making that comment

start talking. That isthe problem that wehave. So for any-body, conservatismis a very importantaspect of our busi-ness.

Let me tell you why au-

tonomy is very im-portant. In times ofcrises, let me giveyou the example, Iremember I was inbanking when theCBN reports to the

you must first of all know your environ-ment, get the environment working fine,take appropriate note; get to know thepeople that are working with you be-fore you start commenting. I remem-ber when I was appointed the man-aging director of Citizens Bank andone of you complained that I was nottalking, saying it is unlike you. I toldhim what you want me to say. I havejust spent one month. I don’t evenknow where I am. I told him tocome back after nine months be-cause by then I would have knownthe system and I would be talk-ing from the experience of whatI have done rather than getting

there and after one month

they removed the CBN fromthe stranglehold of the min-istry of finance, we all ap-plauded it. Then it was nowgoing through the presiden-cy and all that. There was atime when they had the in-strument autonomy and thenthey also have the policy au-tonomy. Initially they grant-ed them the instrument au-tonomy which made it easyfor them to relate quickly withthe banks and deal with themfast. Before that time youhave to go through ministryof finance before you canclose the bank. So, do wantus to continue with that?

I have told you why the autonomy issue is coming. It

is because there is one strongindividual holding forth in avery weak and disorderlystructured institution. So whynot let us ask that the institu-tion should restructure itselfto take care of the imbalancesin its structure, the lack offoresight in the regulation. Ifthey can do that, then who-ever goes there, things willkeep going. I tell you, let megive you example, in FirstBank that is why the bank isstill growing. I don’t knowwhat it is now but at that timeif you like come from the airwith all those razz mantas orgrammar or you do it likethis, you do it like that, thereis a system that has been setin place, that this bottom-upapproach to situations andonce the middle say it agreeswith the bottom, that thisthing is not right to do, nomanaging director canchange it. That is the system,a strong institution. You seebefore Even CBN talkedabout tenure limit for bankchief executives, there wasalready a tenure limit in FirstBank. You can’t spend morethan two terms, three years orso and once you scalethrough that you are up andanother person is beinggroomed to take over. Thathas being the system and itis working for them perfectly.For me we should not disturbthe autonomy of the centralbank as that will be draggingus back to the 80s.

You said there is need formore Exchanges before theNigeria Stock Exchange isdemutualised. An you elab-orate on this?

I did say that the danger ofdemutualising is convertinga mutual institution to a onenow owned by private busi-nesses. Now, it is not paral-lel exchange, even if they callit parallel, let them come, letthem compete among them-selves. Competition is thefuel of business so that theycan have services. When itcame up the former stock ex-change authority kickedagainst it and some of uswere called names for sup-

porting it. Because I remem-ber I became a member of theAbuja Stock Exchange, I amstill a member of the AbujaCommodity Exchange, I stillbelong. The reason is this; itis dangerous to have one mo-nopoly, that monopoly wouldhold all the power. Take it orleave it.

Secondly if you now thinkthat if we demutualize thatparticular monopoly withoutother competing organiza-tions, we are going to face aproblem. And I did say thatsupposing something hap-pens to that privately ownedbusiness like some banksfailed, in your korokoro eyesmany banks failed in thiscountry.

Supposing those banksthat fell and there is no

NDIC to pay you N100,000 orN200,000 as insure depositand there is no other bankthat you can go to what willhappen? The system willground to a halt. So that iswhy we are calling for moreexchanges, so that if we de-mutualise the current Niger-ia Stock Exchange and some-thing goes wrong with, thereis an alternative. Now assum-ing you have the share ofFirst Bank and they demutu-alised the Nigeria Stock Ex-change and because of thegreed of capitalism and be-cause of the greed of direc-tors, because of the greed ofstaffers, and because of somany externalities that affectthat business, and becausewe have to compete with oth-er exchanges outside Niger-ia and something happens toit and you have First Bankcertificate or shares to selland there is no platform andthere is no other platform foryou to do that. If there be is astruggle, are you not going tohave financial difficulty evenwhen you have something thatcan bring you money.

And secondly if those thingshappen, people wanting toraise money cannot raise mon-ey because the Exchange hasfailed. So you face problem ofilliquidity and also you faceproblem of not being able toraise a development capitalfrom the market. But if thereis an alternative you don’tneed to depend on that be-cause you can take your shareto another exchange, maybein Ibadan or somewhere toraise money with your share.So that is what am saying ifyou want to demutualize I amnot against it, I know you peo-ple are not against it but weare saying there is a dangerif you should demutualiseand there is no other alterna-tive competing exchanges,we would have problemshould there be collapse ofthat particular exchange.

portant butestructureu

ministry of financeand to the presiden-cy. I was then giv-en a mandate inFirst Bank then toset up FBN Mer-chant Banker. My-self and four otherpeople and that waswhen Atedo Peter-side was also goingfor his own bank asa merchant bankthen and each timewe go, the ministry

of finance was here in Ikoyiand the other arms havemoved to Abuja. It was a veryterrible thing because in theministry of finance, to movefiles; it could take you threemonths. To get license thattime was like going throughhell and coming back. So thefiles will never moved andyou want to know, at that timebribery is not the way it isknown now because you can-not come back to tell the yourMD, they say I should bringmoney. You dare not say it.At that time things were stillgood but it took time. So thatis a strong reason, so when

BY PROVIDENCE OBUH

Indian HighC o m m i s s i o nto Nigeria, Mr. Mahesh

Sachdev has emphasisedthe need for increasedcollaborat ion betweenNigeria and India to booste c o n o m i cg r o w t h .

In a statement madeavailable to Vanguard bythe Lagos Business School(LBS), he said this at therenewal of a Memorandumof Understanding betweenthe LBS and the IndianCouncil Cultural Relations(ICCR) on theestablishment of ICCR’sChair of IndianManagement Studies inLagos.

Sachdev, who alsorepresented the ICCR saidit has become imperativefor Nigeria, India toidentify their core areas ofstrength for both countriesto leverage on.

“Under the MOU, anIndian academician willhead a rotating Chair ofIndian ManagementStudies at LBS which willbe utilised for teaching andresearch in managementand related subjects such asmarketing, strategy andfinance, with strongemphasis on Indianexperience.

“The overall context ofIndia-Nigeria t ies hascontinued to boomfol lowing the recenteconomic cr is is . Thispartnership provides anextra dimension to India’sgrowing bilateral synergywith Nigeria,” he added.

Commending the movesto foster relat ionshipbetween Nigeria and India,Dean, LBS, Dr EnaseOkonedo said the level ofdevelopment of Indianacademics over the years issuch that is worthy ofemulation.

Okonedo said, “Webelieve that LBS will beable to reap some of thebenef i ts of thisdevelopment to improveour standards.”

Nigeria-India:increasedcollaborationto driveeconomicgrowth

I have told you why the autono-my issue is coming. It is becausethere is one strong individualholding forth in a very weak anddisorderly structured institution.So why not let us ask that theinstitution should restructureitself to take care of the imbal-ances in its structure, the lack offoresight in the regulation

*Mazi Okechukwu Unegbu


Homes & Housing Finance

People who rent theirhomes in UK are

increasingly likely to be inarrears, a debt charity hassaid.

Consumer CreditCounselling Service(CCCS) says it received justover 10,000 requests forhelp with rent arrears lastyear, a 27 percent rise on2010. The charity blamedthe increase on the fact thatrents have been rising whileearnings have stagnated.The average client with arent problem was £760 inarrears, with the arrears ofprivate tenants standing at£924. “A very large number

Housing finance: FG seeksprivate sector collaborationStories by YINKAKOLAWOLE

The federal governmentneeds the support of the

private sector in order tosuccessfully fund housingdelivery in the country.

Minister of Housing andUrban Development, Ms AmaPepple, said this recently inAbuja, in a seminar paperpresented on “How to reachthe Millennium DevelopmentGoals for Housing in Nigeriaand How to Encourage thePrivate Sector’’.

Pepple who was representedby Mrs Morenike Babalola,Deputy Director, TownPlanning in the ministry, saidevery opportunity must beexplored to reduce housingdeficit in the country throughcollaborative effort. “Moreefforts should be gearedtowards mobilisation ofbilateral and multilateralfunds in form of grants andinterest-free loans for housingdevelopment. The issue ofsovereign guarantee shouldbe addressed as this is arequirement to attract foreigninvestors to the sector,” shestated.

In addition, the ministersaid the ministry wouldensure the usage ofalternative buildingtechnologies that will ensurefaster and cheaper productionof houses, such as theIndustrial Building System.She said government would

assist the private sector topurchase building materialsdirectly from manufactures toreduce cost of construction.

The minister also promisedthat preventive measureswould be taken to check thegrowth of slums through

proper planning, adding thatfunding of slum upgradingshould be continuous andpredictable at all levels.

Ogun set to build new workers’ estateOgun State government is

set to build a newhousing estate to ensureprovision of affordable housingfor workers in the state atKemta, Idi-Aba, AbeokutaSouth Local Government Area.

Commissioner for Housing,Mr. Daniel Adejobi, said inAbeokuta that provision ofaffordable housing and urbanrenewal was one of the fivecardinal programmes of theIbikunle Amosunadministration in the state.

He asserted that governmentwas taking every necessarystep to ensure that the housingneeds of people are met, withemphasis on provision ofaffordable housing to thelargest number of people inthe state.

The commissioner addedthat in line with the belief thatgovernment is a continuum,the Amosun administation istaking steps to ensure the alluncompleted housing estatesfrom the immediate pastadministration in the state arecompleted, while efforts are intop gear to commenceconstruction of new schemesacross the state. He thereforecalled on interested civilservants to apply online for thenew scheme stating the typeof housing unit desired, as thiswould enable the ministry to

ascertain the number andtype of housing units to bebuilt in the proposed estate.

In a related development,allegations that the stategovernment has taken overthe operations of Ogun StateProperty and InvestmentCorporation (OPIC) due toinsolvency has beendebunked by the ManagingDirector of the Corporation,Mr. Kola Omobo. Accordingto him, OPIC is maintainingits position as a leadingagency in the housing sector,

noting that government wasrather putting up strategies toboost the activities of thecorporation.

According to Omobo, OPICis still a self-sustainingagency that is meeting itsfinancial obligationsincluding regular payment ofstaff salaries as at when due,adding that no portion of thecorporation’s land in Ikejaearmarked for theconstruction of a five starhotel had been tampered withas being alleged.

UK tenants face more debt problemsof people are struggling tokeep up with their rentpayments - and with rentsnear record highs, theproblem is getting worse, notbetter,” Delroy Corinaldi ofCCCS said.

Some 12 percent of CCCSclients last year who rentedtheir homes had problemspaying their rent. That was upfrom a 10 percent figure theyear before. The CCCS saidhousing association tenantswho were struggling withtheir rents had averagearrears of £705, while thosebehind with the rent on theircouncil accommodation hadaverage arrears of £622.

•Housing development for high-end users

BRIEFSDelta rakesN1.5trn fromland charges in5yrs

Delta State governmenthas realised over

N1.5 trillion as revenuefrom land related chargesin the state within the lastfive years.

Commissioner forMinistry of Lands, Surveysand Urban Development,Mr. Patrick Ferife, speakingrecently in Asaba, said that4,196 applications have sofar been received for privatelands while 11,907applications were receivedfor government lands.

He warned that owners ofland with certificates ofoccupancy who refused todevelop their property riskforfeiting them, adding thatonly 4,587 certificates ofoccupancy were issued forboth government andprivate lands.

The commissioner said thegovernment is presentlyimplementing theautomation of all land andlanded properties throughthe Geographic/LandInformation System,stressing that the processwould enable the ministrybuild a robust property database.

TUC plans lowcost housingscheme

Trade Union Congressof Nigeria (TUC) has

revealed plans to build lowcost housing schemeacross the country.

President-General of theunion, Peter Esele,disclosed this in Lagosrecently during the launchof 150 mass transit busesacquired by TUC. “Afterthe provision of buses,plans are underway forlow cost housing. Thehouses would be leasedout for N9 million andpayable in 9 years. We areworking together with ourpartner, TheInfrastructural Bank (TIB)to make this dream asuccessful project,” hesaid.

He explained that theunion purchased the busesfrom China in order tochange the world oftransportation in majorcities of the country.


Homes & Housing Finance

BRIEFPoor concreting major cause ofbuilding collapse —NBRRI

By YINKA KOLAWOLE

Nigerian Buildingand Road ResearchInstitute (NBRRI)

has identified poor concretingas a major cause of collapseof buildings in Nigeria.

In a paper reviewing casesof building collapse recordedin 2011, Director General ofNBRRI, Danladi SlimMatawal, noted that themanner of collapse where inmost cases the structures andloads came down withoutprior warning and thedeformation movements sofast with no time to evacuate,is an indication of improperconcreting. He further notedthat 70 percent, 23.3 percentand 6.7 percent of collapsebuildings belong to private,public and corporateorganisations, respectively.

Matawal saidnotwithstanding other factorsthat may have precipitated thecollapse, such as deficienciesof foundations, columns,beams or other structuralelements and use of inferiormaterials, the sudden failureof the structures denoted thatthere was poor concreting onthe various sites. “There isclear evidence that thereinforcement for allstructural elements (floors,beams and columns) haddissociated from the concreteduring demolition. Expertopinion is that this isevidence of poor concretingi.e. lack of bond between steeland concrete. The inspectionalso reveals that coarseaggregate size as large as40mm may have been used inthe batching process.

“In NBRRI investigations,there has been no convincingevidence to suggest thatstructural designs werelacking though in most of thesituations, especially inLagos and Enugu, it was arisk to the lives of ourresource personnel to insist onobtaining these documents.Nonetheless, it is important toemphasize that care shouldbe taken not only to ensurethat there should be structuraldesigns for each project, butalso to request that allultimate and serviceabilitylimit states are properlychecked and complied with.

“Site supervision onconstruction sites is both aprofessionally mandatoryfunction as well as aregulatory role. It is veryimportant that sitesupervision should be takenseriously on all sites. Thus thetown planning and/or

development controlauthorities should insist thatall mandatory documentsnecessary for the successfulexecution of a project aremade available before thecommencement ofconstruction and that propersupervision machinery is setup on every site.

“In the projects that NBRRIhas visited as a result offailures, there were no projectsign boards to state name ofproject, the client, thearchitects, the structuralengineers, and the quantitysurveyors. It is therefore verysafe to say that there was nosupervision which wouldhave corrected anomalousdesigns and ensure that alldesign specifications areimplemented on site.

“In nature generally,failures could happen due tofaulty construction sequence,scaffolding and formworkfaults and early striking offormwork, extra-ordinaryloads and unexpectedfailures. Failures can also bedue to a combination ofreasons of known causes likedesign faults, foundationincapacities, etc. The issue offaulty construction isnoteworthy because so manystructures in Nigeria arestanding not because they aretechnically safe but becausethe block-work, rather thanthe structural framing, ishelping them to stand.

“Apart from huge corporateorganisations that employwell-trained professionals todesign and supervise their

constructions, privateindividuals and manygovernment departments andarms of government (like localand state governments) don’tconsult appropriateprofessionals and where thereis design, no supervision isavailable to ensure thatimplementation is well done.To complicate the situation,town planning and municipalregulatory authoritiestraditionally endowed withthe responsibility of checkingall plans before approval fordevelopment is approved nolonger undertake their rolesand development is nowhaphazard not only resultingin building collapse but alsogiving rise to manydevelopments without accessroads, water supply,sewerage, electricity and vitalservices.”

Land registry confirms house price drop

House prices inEngland andWales fell last

month following the end ofthe stamp duty holiday forfirst-time buyers, according tothe Land Registry.

The fall in house priceswasconfirmed by the latestdata from the .said prices inEngland and Wales droppedby 0.3 percent in April, takingaverage price down to£160,417, one percent lowerthan a year ago.

The drop confirms the

downward price movementsseen in recent surveys by theHalifax, Nationwide and theRoyal Institution of CharteredSurveyors.

The Land Registry’s figuresagain showed thewidespread variation in pricesand trends in England andWales. in London shot up by5.1 percent during April, toleave them also 5.1 percenthigher than a year ago.theWest Midlands experiencedthe largest monthly drop, at2.7 percent.

Meanwhile the biggestannual drop in prices wasrecorded in Yorkshire andHumberside, where theaverage house price is now5.6 percent lower than a yearago. “The divergencebetween house prices inLondon and those of the restof the country has increasedsharply this month,” the LandRegistry said.”The averageprice of property in the capitalis £360,721 in comparisonwith the average for Englandand Wales of £160,417.”

Borno to build1000 housingunitsBorno State government

is set to build 1,000additional housing units inthe state to give out in anOwner Occupier HousingScheme.

Commissioner for Housingand Rural Electrification,Alhaji Sugum Mai Mele,said the move is in line withthe effort of the stategovernment to achieve theUnited Nations’ MillenniumDevelopment Goals (UN-MDGs) on housing for all bythe year 2015.

The commissioner said outof the targeted housing unitsto meet the UN-MDGstarget, government hasalready built and allocated1,280 housing units,including the 777 houses atthe Moromti HousingEstates. He added that thecompleted 1,000 housingunits at Tashan Journey and540 units in the 27 councilareas are yet to be allocatedon OOHS. Mai Melehowever noted that when the1, 000 housing units projectis completed, the totalnumber of houses will hit3,822.

US mortgagerates hit recordlowMortgage rates for 30-

year U.S. loans fell toa record low for a fifth straightweek as concern aboutEurope’s worsening financialcrisis drove investors to thesafety of the governmentbonds that guide borrowingcosts.

The average rate for a 30-year mortgage dropped to3.75 percent in the weekended today from 3.78percent, Freddie Mac said ina statement. It is the lowestsince 1971. The average 15-year rate declined to 2.97percent, also a record, from3.04 percent.

Yields for 10-year UStreasuries, a benchmark forhome loans, hit an all-timelow as Spain struggled torescue its troubled banks,adding to signs that theEuropean debt crisis isspreading to the region’slarger economies. Lowborrowing costs are helpingto provide a foundation forthe stabilising US real estatemarket after a six-year slidein home prices.

•Self-contained bungalow


InsuranceTalkingInsurance

WITH

Yinka Bolarinwa

Reforms and theinsurance industry (4)

It is expectedthat dominationof the non-life

business togradually re-duce in the

medium to longterm in line

with global andAf rica averages

THE Nigerian Insurance sector has grown inabsolute terms by a CAGR of 26.9% in thelast five years. Pre-consolidation, the indus-

try grew by an average rate of 21.2% annually. Wenote that a large chunk of capital injection into theindustry in the consolidat ion era came from domestic sources. In our view, the Nigerian Insurance sec-tor has remained “unattractive” to foreign capital asa result of weak regulat ion as well as the unpopu-larity of insurance culture in Nigeria.

Growing premium baseNigeria’s Life Insurance premiums grew by a CAGR

of 33.1%, higher than the 24.4% CAGR in non-lifeinsurance and 25.9% combined industry gross pre-mium between 2005 and 2009. This has pushed thelife insurance share of total premiums to an all timehigh of 19.5%. Similarly, life insurance penet rat ionrate stands at c.0.2% of nominal GDP as life premi-ums grew in absolute terms by 70.4% in 2009. Wenote that in spite of this phenomenal growth, thereis a considerable depthof unexploited potentialin the life insurance seg-ment.

In our view, the lack ofconsciousness of Nigeri-ans about life insuranceis a drag on the growthof this segment . Howev-er, the development of anon-existent social secu-rity system will serve toboost the growth of lifeinsurance premiums inthe medium to long term.On the back of Nigeria’sfavorable demographics(with a growing youthful populat ion), we expectNigeria’s life insurance penet rat ion to convergerapidly towards the Af rican average.

Non Life premium dominatesThe Non-Life Insurance segment is growing at a

annual rate of 24.4%. Despite the introduct ion ofcompulsory insurance policies in a few classes ofthe non-life segment which has fuelled premiumgrowth, the segment’s penet rat ion has grown slow-ly. In addition, the loose regulation of the industryand excessive price wars among fragmented play-ers have limited the growth of the non-life insur-ance business. The non-life insurance subsector isprincipally driven by the motor insurance premiums,which cont ributed c.20.8% to indust ry gross premi-ums in 2009. With a penetration rate of 0.7%, theshare of non-life premiums to aggregate premiumsfell from 85.9% in 2003 to 75.0% in 2009. It is ex-pected that domination of the non-life business togradually reduce in the medium to long term in linewith global and Af rica averages. Non–Life share ofinsurance premiums current ly stands at 34.2% inAf rica and 42.4% globally.

Third party premium remains kingThe Nigerian insurance market is dominated by

non-life segment, driven by mandatory third-partymotor insurance. Motor insurance premium grewby 22.5% between 2005 and 2009. The growth inmotor insurance premium (especially third partypolicies) has also been fueled by the rapidly emerg-ing middle class in Nigeria as private cars are fastbecoming a necessity rather than luxury. We expectthis growth momentum to steadily increase as com-pliance for compulsory motor insurance level in-creases. Fire insurance, another compulsory gener-al insurance policy, also showed an impressiveCAGR of 18.7% between 2003 and 2009 owing togreater awareness of the policy, as well as the in-creased spate of real estate development in the econ-omy.

L-R Bala Zakkariya’u, Chairman Niger Insurance Plc, Fola Daniel, Commissioner for Insurance,(NAICOM), Ms. Prisca Soares, Executive Secretary, African Insurance Organisation (AIO), at the 39thAIO Conference and General Assembly in Khartoum, Sudan

INSURANCE operators have decriedthe low level of trust on the sector from

the public saying that such attitude iscrippling the growth of the industry inthe country.

According to Managing Director ofFBN Life Assurance Plc, Mr. Val Ojumahinsurance is based on trust but the abuseof trust by insurers resulted in the poorpublic perception which is adverselyaffecting the sector.

Ojumah said “When insurance startedin this country, it was based on onekeyword, ‘trust’ but that trust wasabused. In the early days wheninsurance agents with motorcycles weregoing all over the place marketing

Stories byROSEMARY ONUOHA

Operators urge public to changeperception on insurance

insurance and people partedwith a lot of money. But didthe early companies payclaims as they promised? Theanswer is no. Not a few agentswent away with the moneythey collected and whathappened? Many of thoseinsurance companies wentdown. Consequently, thatcreated a snowball and a bigproblem for the insuranceindustry. People w ill notforget in a hurry whathappened in the past.”

Other challenges which theinsurance sector is battlingwith, according to Ojumah, isthat insurance is still alien toNigerians coupled with the

fact that practitioners have notbeen innovative enough increating new products.

He said “In our traditionalway of life, insurance is not aprimary security. As a familymember when somethinggoes wrong with anyindividual family member, wedo not look at insurance. As atraditional African family wecontribute to help ourmember. So insurance is stillalien to our way of life.”

On the lack of innovation inregards to new productdevelopment, Ojumah said“On the parts of practitionerstoday our products have notbeen particularly innovative.Our administrations ofinsurance companies havenot been particularlyinteresting. Claimsadministration process is stilla problem in this market. Yesthey will pay eventually butas they said justice delayedis justice denied.”

O jumah called for achange of attitude on

the part of practitionersadding “If we need to growthis business there are thingswe need to do as operatorsand there are things we needto do as regulators.”

He said “Not many peopleare prepared to put theirmoney into life insurancecompanies and wait for one,two, three, four, five yearsbefore they get the return.How many people in Nigeriawill prefer to do that? That iswhy FBN Life isinstitutionalised and notindividualised.”

INSURANCE practitioners are set tobrainstorm on the topic New Tunes for

Lean Times, an encapsulation of theimperatives for the management andcontrol of lean resources for sustainablegrowth and development.

The topic is the theme for the 2012international Education Conference of theChartered Insurance Institute of Nigeria,CIIN.

Described as the flagship of the CIINEducational programmes, the annualconfab is the gathering of the top echelonpractitioners who hold the reins in theirrespective organisations.

Dr. Wole Adetimehin who spoke at apress briefing said that the conferencetheme could not be more apt, stating thatbusiness governance today had been inthe searchlight and that it was becomingincreasingly necessary for the managersof business to rethink their roles and

Insurance practitioners to brainstorm onchallenges of operational environment

responsibilities, in securing thesurvival of their organizations.Dr. Adetimehin further saidthat the CIIN in line with itsstatutory responsibilities wasconcerned more than ever toprovide the platform forknowledge sharing in therealm of paradigm shifts in theglobal economy.

Dr. Christohper kolade,Nigeria’s former HighCommissioner to the UnitedKingdom and current Pro-Chancellor of the Pan AfricanUniversity will lead othereminent speakers at theConference. Dr. Kolade is alsothe current Chairman of theSubsidy Reinvestment andEmpowerment Programme(SURE-P).


Insurance

BRIEF

Cross section of participants at the World Bank/Bankers' Committee Power Sector CapacityBuilding Session held in Lagos.

IN Africa, approximatelyone billion people live in

the continent of which anestimated 60 per cent areclassified as poor. With amicroinsurance market ofapproximately 700 millionpeople, only 2.6 per cent ofthe target population iscurrently usingmicroinsurance products.

It was based on this thatdelegates at the justconcluded Africa InsuranceOrganisation, AIO, in Sudancalled for an improved andefficient microinsurancemarket in the continent.

Delivering a paper titled‘Takaful and PovertyAlleviation,’ a representativeof the InternationalCooperative and MutualInsurance Federation saidthat the poorest citizens of thepoorest countries aretypically exposed to thegreatest risks. Earthquakes,floods, drought, disease,crime all tend to hit the poorhardest. Vulnerability andpoverty go hand in hand, butmicroinsurance holds out thepromise of breaking a part ofthe cycle that ties themtogether, he said.

He defined microinsuranceto be the protection of low-income people againstspecific perils in exchange forregular premium paymentsproportionate to the likelihoodand cost of the risk involved.

Also, the term“microinsurance” accordingto him typically refers toadapting insurance servicesmainly to clients with lowincome and no access tomainstream insuranceservices.

Giving a third definition ofmicroinsurance, therepresentative of theInternational Cooperative andMutual Insurance Federationadded “Microinsurance isinsurance that is accessed bylow-income population,provided by a variety ofdifferent entities, but run inaccordance with generallyaccepted insurance practices(which should include theInsurance Core Principles).”

He said that Cooperativesand Mutuals are the hiddengiants of the world economy,adding that the largest 300Cooperatives and Mutualshave a turnover of 1 trillionUSD.

On the potentials forcooperatives to providemicroinsurance, he said thatthey have history of

Microinsurance as a tool foreconomic change

By ROSEMARYONUOHA

organising the poor; haveoperated in the interest ofmembers by the members;have the principle of trust;there is ownership andloyalty; peer pressure whileany surplus is reinvested orredistributed.

According to him, thevalues in Cooperative

and Mutual include self-help,s e l f - r e s p o n s i b i l i t y ,democracy, equality, equity,solidarity, honesty, openness,social responsibility as well ascaring for others.

On whether Cooperativeand Mutual insurance canshow the way, he said that acooperative is an autonomousassociation of persons unitedvoluntarily to meet theircommon economic, social,and cultural needs andaspirations through a jointly-owned and democraticallycontrolled enterprise.

Speaking on the topic,

Microinsurance as stimulusfor microfinance “Sudanview” Omer Elfarowg Ahmedlisted the microinsurancechallenges to includemicrofinance awareness;efficient risk managementtools; lack of creditinformation; moral hazard;reinsurance capacity as wellas insurance productsexpansion.

However, the benefits ofmicroinsurance, according toAhmed are loan guarantee forfinance providers; policyholders entitled to surplus;reduce insurance cost;policyholders benefits fromloss prevention services;reduce economic waste; socialresponsibility; help povertyalleviation while also servingas a method of co-operationbetween participants.

For Dr. Nureldym MukhtarOsman Fageery whopresented a paper on ‘Criticalreview of microinsurance in

Sudan,’ he said that theCentral Bank of Sudanstarted in cooperation withthe Sudanese InsuranceUnion to introduce loanprotection to cover the loss thata lending bank may incurupon the death, disability orsickness of a low- incomeborrowers or as a result oftheir assets loss especiallystanding crops damage, lossof animals and a house.

According to him, a coinsurance pool wasestablished by the membersinsurance companies in 2011with objectives to promote thespread of innovativeinsurance policies in Sudanagainst loan linked risks inaccordance with the terms ofthe Central Bank of Sudan; toreduce the cost of operation;to overcome the capacityproblem of the market as wellas to promote the exchangeof information with similarpools.

Australianbusinesses keento understandrisk maturity

Aon says it is“impressed” with the

number of Australiancompanies wanting to havetheir risk maturity assessed aspart of the company’s globalrisk maturity index project.

Global Head of RiskConsulting Joerg Schmitz saysa significant number of largeAustralian companiesparticipated in the project togain an understanding of thedevelopmental level of theirrisk management frameworksand how these can beimproved.

“Since we opened up the AonRisk Maturity Index toAustralian participants, wehave been impressed with thenumber of companies wantingto take part ahead of thedeadline for the next round ofanalysis due out in July,” hesaid. The results show that formultinationals with operationsin Australia and New Zealand,logistics and geographic factorsare a significant challenge toinstituting a consistent riskmanagement approach.

The risk maturity assessmentinvolves a 30-minutequestionnaire on areas such ascorporate governance,management decisionprocesses and riskmanagement processes. Thecompanies are then given a riskmaturity rating andsuggestions for potentialimprovements. The assessmentis available free to businesses,which do not have to be Aonclients.

In the US, a Wharton Schoolanalysis of the risk maturityindex found a significantrelationship between anorganisation’s riskmanagement developmentand its financial performance.

SUNCORP CommercialInsurance CEO Anthony

Day has attacked threecommonly believed publicattitudes that he says aredamaging the insuranceindustry’s reputation.

In a speech in Brisbane lastweek, he said several mythsabout insurance are “havinga serious negative impact” onstakeholders’ views ofinsurance and thecontribution the industrymakes to the wider economy.

He says commentators,looking to place blame forrising premiums, have latchedon to one such myth – thatreinsurance is a villain. Mr.Day defended reinsurance,

Suncorp hits back at insurance ‘myths’

describing it as an “enabler”.He says that withoutreinsurance, Australiangeneral insurers would find itdifficult to operate, and thatreinsurance actually lowersthe cost of insurance for theend purchaser.

“The cost of meeting claimswould be impossible withoutreinsurance. The spate ofmajor disasters heavilyimpacted on insurers’ costs,but without the support ofreinsurance the increase incosts could have been evensteeper.” Mr. Day says themyth that insurers do not pay

claims is, in part, perpetuatedby the industry failing todemonstrate its worth. “Weare often reactive rather thanproactively educating thepublic, governments andother stakeholders of thebenefits the insuranceindustry brings to thecommunity and the economicsustainability of insurance,”he said.

He says the level of deniedclaims within Suncorp’scommercial division is so lowthat the company doesn’t evenbother tracking them because“the effort required to monitor

them is counter-productive”.He says tracking complaints

and dispute resolutions is amore instructive indicator ofinsurer performance. Thefinal damaging myth Mr. Dayidentified is that peopleworking in insurance are notseen as professionals.

He says insuranceprofessionals are highlyskilled and required a rangeof proficiencies in areas asdiverse as legal, financial,actuarial, risk assessment,management, projectmanagement andcommunications.


"This is what the truth is. Going behind what you

hear first. Asking a hundredquestions until you make upyour own mind on the basisof real evidence”. James AMichener in Hawai.

James Michener was foryears an editor before hebecame a writer of historicalnovels; he wrote over 20 booksand he is one of my mentors –even in death. When in 1994,I first started writing generalcommentary, the first thingwas to find out the cardinalprinciple of journalism and toapply it at all times to allsituations and issues. It stillboils down to finding the factsand not being swayed bypopular opinions. I am stillnot a journalist, and will neverbe, but the issue of AsabaAirport, which to me is stillbasically an economic matterhas driven me to the farthestlength in recent times ingetting to the bottom of astory. I thank the privatedonors who are onlyinterested in the investmentopportunities the airport willprovide. May be one day, I

FDI: Our own worst enemy (Asaba Airport as case study) – 3will be able to do the same forUyo and Gombe Airports.These are “gold mines”waiting to be mined.

In part two of this series, twotext messages receivedconcerning Asaba Airportwere published. The firstclaimed that N40 billion hadbeen spent on the project; thesecond asked me to go andfind out things for myself.That challenge by the secondreader was accepted on thispage and I went out in searchof evidence. First , I virtually“gate-crashed” into a retreatorganized by the Delta StateGovernment, in Warri, for itsCommissioners, PermanentSecretaries and SpecialAdvisers. I requested for andgot and appointment todiscuss with anybody andeverybody who could provideinformation about the airport.The Governor granted therequest on a Saturday and Iwas scheduled to arrive Asabathe following Thursday for theofficial appointment.

Unknown to the Governor, Idashed to Lagos Sunday andreturned to Asaba on Monday

with a retired Airforce pilotfriend in tow; he knows a lotabout airports having flowninto over 300 worldwide. Wewanted to conduct our owninvestigation before theofficials took over. Wereturned to Lagos onWednesday with independentinformation; most of whichwill be shared with ourreaders. The only parts left outwill be those pertaining tosecurity – for obvious reasons.There is probably no mediapractitioner in Nigeria todaywho knows more about theairport than me. I even nowknow a few things theGovernor does not know;because the establishment ofan international airportinduces more economic,social, cultural,environmental and politicalchanges than a feasibilitystudy can capture.

At this point let me providethe answer to the questionsasked about feasibility studyand increased cost. Yes therewas a feasibility study whenthe airport was first conceivedas a purely a domestic airport.

It was amended when it wasdecided to scale it up to aninternational airport. Surely,everybody can understandthat when you alter an airportdesigned to accommodatesmall aircraft to one which canservice the biggest in theworld, 747s and Airbuses, thecost of construction must goup. So there was no “economicterrorism” involved –onlyunderstandable economics ofscale and scope.

However, before goinginto the “heart of the

matter”, let me make a fewnecessary observations whichwill assist non-Deltans, aswell as Deltans themselves, tounderstand the state a little bitbetter. In summary, ethnicityand politics are combining tomake cooperation for overalldevelopment of the statevirtually impossible. The“Pull-Him-Down, PHD”syndrome is probably highestin Delta State than in moststates of Nigeria. Thus,assessment of every project, orinitiative of government, isfiltered through those prisms

first making objectiveappraisals almost impossible.

Garibaldi, 1807-1882, theFather of modern Italy wasonce quoted saying that, “wehave created Italy, now wemust create Italians”.President Ibrahim BadamasiBabangida, IBB, whencreating Delta state shouldalso have announced that “wehave created Delta State, nowwe have to create Deltans”.Few states in Nigeria emulatethe Tower of Babel more thanthose ethnic groups, mainly,Urhobo, Itsekiri, Ijaw, Isoko,Igbo and Ika, in Delta State.Each of them holds primaryallegiance to their ethnicgroup first and to Delta Statenext. Thus when Babangida’sgovernment selected Asaba asthe state capital, a choiceallegedly influenced by hiswife Maryam, the coupleincurred the everlastingenmity of the “real Deltans” –defined as Urhobo, Itsekiri,Ijaw and Isoko. Makingmatters worse was the fact thatoil production in the statetakes place mainly in the “realDelta”.


Deceptive faces of IMF andWorld Bank: What peoplemust know

Economy

By TONY NAVAHOKONMAHA

THE IMF and theWorld Bank enjoys

the false global messiah-ice image they are oftengiven by the ignorantmajority of the globalcommunity who thinkthat these institutionsare international charityagencies. Many peopledo not understand thatthe IMF and the WorldBank are not not–for-profit or charity organi-sations. The Washingtonfinancial institutions arefully fledged profit ori-ented organisations withboards whose first alle-giance and obligation isto their shareholderswhose interests in turnare primarily to makeprofit.

The Boards of these or-ganisations have ethicsand codes that guides ordictates their businessprinciples. They setrules and standards thatare strictly adhered.Their area of business isfinance and economicmatters. Membership tothese institutions is sup-posedly global and free.However, the selectioncriteria are heavily lop-sided and favour onlythe super rich countries.The poor countries evenwhen admitted are thereto swell the number andfor other clandestine rea-sons. They rarely exer-cise any rights and canhardly influence or ini-tiate a policy.

Their admittance oftentimes is used as smoke-screen to cover the neg-ative and unnecessarypress attractions. Notthat these institutionscare anyway about pressimages but they cannotafford to be distractedfrom the false and decep-tive cover as ‘the caringempire’ and the hope ofthe hopeless. “A lenderof last resort”?

This phrase may onlybe relevant to the devel-oped economy and thesuper rich countries.The poor countries andthe developing econo-mies will continually re-main the milking cow ofthe Washington financialinstitutions. They pay forthe needs of the superrich through the agen-cies of Washington’s fi-

nance houses (IMF andthe World Bank). Africaand the other develop-ing economies will con-tinue to struggle tostand firmly on their feetbecause of the deceptivefaces of the IMF and theWorld Bank.

I genuinely sympathise with the gov-

ernments of the develop-ing economies who arestruggling to cope or tounderstand the dynam-

degree without makingexcuses for most Africangovernments), becausethe IMF and WorldBank gives the impres-sion that they are therealways for any govern-ment who are strugglingand needs help. Thepeople do not under-stand why the govern-ments lacked the capac-ity then to initiate nec-essary progressive de-velopments. To them, itis as simple as A, B, C.,if you lack money to de-velop infrastructure, goto the IMF and theWorld Bank and drawdown as much as youneed. It is fairly straightforward most of themthink.

It is time to unmask theroles of the IMF as a de-velopmental agency andshow why Africa and oth-er developing econo-mies are still struggling.It is time to educate ourpeople of the real strug-gles facing successivegovernments in Africaand the dearth of infra-structural development.It is time Africa calls thebluff of Washington’s fi-nancial institutions andfinds ways (internal) toliberate itself.

Watch out in this col-umn for part 2, as I un-cover the deceptive fac-es of the IMF and theWorld Bank.

*Okonmah Tony, finan-cial consultant and an-alyst wrote from London.

•Christine Lagarde

,

,ics of the demands of theIMF and World Bankpolicies, but their vastmajority do not under-stand the politics of in-ternational finance andeconomics. To the vastmajority, their govern-ments have failed them(fair enough to a great

Poor coun-tries evenwhen admit-ted are thereto swell thenumber andfor otherclandestiner e a s o n s .They rarelyexercise anyrights andcan hardly in-fluence or in-itiate a policy


Appointments & [email protected]

BRIEF

President of National Association of Political Science Students, NAPSS, Obafemi AwolowoUniversity, Ile-Ife, Mr. Ayedun Charles, presenting an award of recognition for good govern-ance and progressive to Governor Rauf Aregbesola of Osun State, represented by Deputy Chiefof Staff Osun State, Mr. Gbenga Adegbusuyi, at a lecture organized by NAPSS in ObafemiAwolowo University, Ile-Ife.

STANDARD Bank Grouphas named

Mr. Babatunde Macaulay itsHead of transactional productsand services for West Africa.

The group in a statementsaid the appointment is bol-stered its plans to secure agreater share of transactionalbanking business in Africa.

Hasan Khan, StandardBank’s Head of TransactionalProducts and Services in Afri-ca, said Macaulay, who willbe based in Lagos, will havethe core responsibility of exe-

Macaulay heads Standard Bankproducts, services for West Africa

cuting the growth strategy fortransactional banking servic-es in the West Africa region.

Before joining StandardBank, Tunde was the Divi-sional Head of TransactionServices at First City Monu-ment Bank plc in Nigeria,where he was responsible fortransactional banking, alter-nate channels, structuredcommodity and trade financeand value chain financing.

He has over 15 years’ ex-perience spanning the bank-ing and manufacturing sec-

tors. His banking experience

spans; operations, cash man-agement, commercial bank-ing, transaction banking andhuman resources.

According to Mr. Khan”Weare particularly pleased tohave Tunde join the team, ashe has a strong profile in theregion and is well-qualified todrive the growth of our trans-actional banking business inWest Africa to higher levels.West Africa provides attractivegrowth prospects for ourtransactional business and weplan to roll-out additionalproducts and services acrossthe region from the Lagos of-fice.”

DR Mimiko will be decorated with award at an

Investiture ceremony sched-uled for Abuja on June 8th.

The town planners remarkedthat with a little over threeyears in office, the Mimikoadministration has been ableto transform the state capitalwhich has also become a tour-ist delight.

“Roads in the metropolis arewell asphalted while majorroads in the city are beingexpanded into four lanes evenas beautiful landscaping hasemerged. Apart from the manybeautifications going on atdifferent parts of the state, acovered pedestrian bridge hasbeen erected at the popularOba Adesida road thus givingthe popular area a befittinglook coupled with the welldefined vehicular markedroutes”

Also commending thestreet lights adorning the long stretch of Fiwasaye toFUTA areas of the city aswell as those erected at Ondoroad and other areas in thecity, the Town planners men-tioned that the manner inwhich the state capital hasbeen transformed in such alittle period of time is worthyof commendation.

Mimiko getsfellowship award

*Mimkotion of the community.The leaders of the Ogbor

Ikpe Ogboli na Ibusa askedall well meaning indigenes ofthe town to join forces with thetraditional ruler in order tobring about speedy develop-ment of the town.

The communiqué appealedto aggrieved members of theIbusa Community Develop-ment Union ICDU to sink theirdifferences and bury thehatchet saying that theyshould not allow parochialinterest to subsume the collec-tive development aspirationof the people as epitomizedby the Obuzor traditional in-stitution.

It enjoined the members ofthe ICDU to shun unguardedstatements capable of deni-grating the revered tradition-al institution, saying that ObiNwaoboshi should be accord-ed the highest respect befit-

NSITF has recruited over 1,400new staff to help implement theEmployees Compensation Act.At the commencement of thePension Reform Act in 2004,NSITF had to shed almost allits staff and now that we havethe Employee CompensationScheme coming on board, thereis the need to recruit new staffthat will drive the process. Whatwe are doing today is to initiate45 officers from principal man-ager to general managers intothe operations of the fund.These staff will soon be de-ployed to various states of thefederation to begin the full im-plementation of the scheme inall the states of the federation.”

The MD noted that since the

NSITF recruits to boost ECS operations

NIGERIA Social Insurance Trust Fund, NSITF,

has employed more than 1, 400workers to fully commence theEmployees CompensationScheme, ECS.

Managing Director, AlhajiAbubakar Munir, announcedthis development in Abuja at aninduction workshop for some ofthe new employees on the man-agerial cadre.

The Managing Director, whowas represented by Mr. Ibra-him Wakawa, NSITF’s Execu-tive Director, Administration,said other cadres of the newlyemployed staff would be trainedsoon at various locations in thecountry.

According to him, “The

full implementation began inJuly 2011, the number of inju-ries and deaths recorded by con-struction companies contribut-ing to the fund had been on theincrease. He said the develop-ment might make the fund toreview the contributions of con-struction companies to accom-modate all reported cases.

Munir said some claims thatwere reported to NSITF werebeing looked into and that ef-fective structures had been putin place to pay the claims.

He reiterated the Federal Gov-ernment’s commitment to ensur-ing the success of the schemeas well as the organised privatesector for its steady contributionsinto the fund, saying.

Ibusa community pledges support for ruler

THE people of Ibusa havepledged their total loyal-

ty, commitment and supportfor the traditional ruler of thecommunity, Professor LouisNwaoboshi.

In a communiqué by ChiefAwele Nwaezigwe, MikeNwabuoku and four others, atthe end of the Executive Com-mittee meeting of Ogbor IkpeOgboli na Ibusa, the umbrel-la group of the community,noted that Ibusa had wit-nessed tremendous develop-ment since Nwaoboshi as-cended the throne.

The leaders drawn from the10 quarters in Ibusa attribut-ed the prevailing peace anddevelopment of the communi-ty to the leadership qualitiesof Nwaoboshi and describedhim as an upright and honestmonarch who is irrevocablycommitted to improving thesocio-economic transforma-

ting of a first class traditionalruler.

ICEMcongratulatesILO’s DG-elect

THE world of labour is celebrating the election vic-

tory of Guy Ryder as the tenthDirector-General of the Inter-national Labour Organisation,ILO, the trilateral United Na-tions agency charged withprotecting workers around theworld.

The election last Monday bythe ILO governing bodymarks the first time someonefrom a trade union back-ground has been chosen tolead the organisation.

Several rounds of secret-bal-lot voting reduced the list ofcandidates from 8, and ap-pointed Ryder on a five-yearterm.

International Federation ofChemical, Energy, Mine andGeneral Workers’ Unions,ICEM, General Secretary,Manfred Warda, congratulat-ed Guy Ryder on behalf of theglobal union, looking forwardto the ILO now building onpast successes and collabora-tion, placing decent jobs andproper trade union rights atthe heart of the global agen-da, in the spirit of tripartitism.

“Our duty to the poorest andthe most vulnerable must beparamount in the journeyahead,” stated Ryder.

The 56 titular members ofthe ILO Governing Body areeligible to vote in the election;half are from governments,and a quarter each from em-ployers and workers’ groups.

ICEM affiliates lobbiedtheir home governments tosupport Ryder.


Tax Platform

National Tax policyguidelines and rules (5)

�Ifueko Omoigui-Okauru

,

,

STATE Governors would beexpected to ensure co-op-

eration among State Boards ofInternal Revenue, the Feder-al Inland Revenue Service,the Nigeria Customs Serviceand other revenue agenciesfor the development of the Ni-gerian tax system in areassuch as information sharing,improved structure and effi-ciency in tax administration,elimination of multiple taxa-tion and adoption of a nation-wide Unique Taxpayer Iden-tification Numbering (U-TIN)system.

Federal Executive Councilin general and the FederalMinistries of Finance, Educa-tion and Information in Par-ticular The Federal ExecutiveCouncil (FEC) is the highestFederal level decision makingbody in Nigeria and is re-sponsible for decisions, whichimpact all levels of Govern-ment in Nigeria. In addition,the Minister of Finance whoexercises oversight functionson tax and fiscal issues is amember of the FEC. In thisregard, the FEC shall be re-sponsible for approving allmatters, which will ensure ef-fective oversight of tax policyand administration. The FECwould be expected to givenecessary direction to otherlevels and tiers of Governmentin this respect as may be rele-vant. Tax and fiscal mattersshall be treated with priority,given the important role theyplay in the economic and na-tional development of thecountry.

The executive arm of Gov-ernment is responsible for en-couraging voluntary compli-ance by taxpayers. An effec-tive mechanism for achievinghigh compliance is by leadingby example as well as by mak-ing the most efficient use ofthe tax revenue collected bythe Government. Accordingly,all members of the FEC shallon an annual basis ensurethat they fully disclose allsources of income and ensurethe right taxes are computedculminating in the publicationof their tax clearance certifi-cate by the 30th of June an-nually. The FEC shall in ad-dition ensure in all of its de-cisions and actions that taxrevenue is judiciously allocat-ed and utilised for the benefitof the entire citizenry.

The FEC shall also ensure that on a monthly

basis taxpayers are informedof the use to which tax mon-ies are being applied. In thiswise, the FEC shall ensurethat matters of taxation andrevenue generation in gener-al form an intrinsic part of thedeliberations and decisionsaround the annual appropri-ation budget as well as in dis-cussions at the Federal Exec-utive Council meetings on atleast a quarterly basis.

The FEC shall co-operatewith the Legislature in initi-ating legislation on tax mat-ters and shall provide the nec-essary approvals required tospeedily implement legisla-tion, which is passed by theLegislature. The FEC shallalso ensure a cordial relation-ship with the Judiciary andthat the independence andintegrity of the Judiciary ismaintained at all times. Thereshall be co-operation amongstall the members of the FEC inrelation to tax and fiscal mat-ters especially with regard toinformation sharing. All Fed-eral Ministries, Departmentsand Agencies are required toprovide and share all infor-mation that would assist inthe accurate assessment andcollection of the relevant tax-es. This would includeamongst others: Having a rev-enue generation (as distinctfrom an expenditure) mind-set. Strict implementation oftax laws including overt andexplicit support through refer-rals of major cases to tax au-thorities (Federal and State)on a continuous basis and in-tegration of tax “psyche” inthe day to day business ofgovernment: Ensuring prop-er assessment, collection andprompt remittance of taxes todesignated government ac-counts; Ensuring fiscal com-pliance of every person thatthey deal with;

* Ensuring that every data-base maintained in govern-ment has a compulsory fieldfor the inclusion of the uniquetaxpayer identification numberfor every company, enterprise,individual and other regis-tered organisation

*Use of e-payment systemsin all transactions inclusive ofdirect remittance to the ac-

counts of the taxauthorities;Use of technologyand related systems in theway business is done - e.g.electronic cash registers, au-tomated land registries, etcand linkage of databases andsuch systems maintained ingovernment to that Federaland State tax authority data-bases

*Ensuring tax is a major con-sideration in the evaluationprocess of individuals and or-ganisations such that the lackof payment of taxes is seen asan affront on government anda crime.

*Ensuring that all TaxClearance Certificates andother tax documents used ingovernment transactions arereferred back to the relevantrevenue authority for authen-tication.

* Have primary responsibil-ity for tax policy matters, in-cluding initiating proposalsfor amendments to tax laws bythe National Assembly.

*The FMF shall coordinateall requests from other Fed-eral Ministries and Agenciesrelating to fiscal issues aswould ensure harmonisationof the fiscal policy issues ofgovernment. In this regard,no other Federal Ministry orGovernment agency shallhave the right to commit gov-

ernment through the signingof agreements, writing of let-ters, or other communicationregarding fiscal policy issueswithout the authority or con-sent of the Federal Ministryof Finance.

* The FMF and the relevantGovernment agency, whichwill administer the tax, shallseek recommendations fromthe relevant stakeholders toensure that enactments areregularly reviewed and sub-stantially meet the principlesof good taxation and the ob-jectives of Nigeria’s tax sys-tem as stated in this document.

*The FMF shall partner withthe State Ministries of Financeand other State and LocalGovernment agencies to en-sure the development of Ni-geria’s tax system and a taxculture amongst Nigerian cit-izens.

*The FMF shall in this role,work closely with the Federalinland Revenue Service, theJoint Tax Board and the Ni-geria Customs Service (in thecase of import and excise du-ties) who have secondary re-sponsibilities to support theFMF on all tax policy issuesaffecting the country.

*The FMF shall support theFederal Inland RevenueService and the Nigeria Cus-toms Service (in the case ofduties) on all tax administra-tion matters as would comple-ment the efforts of those agen-cies. Such support shall cov-

er amongst others:*Ensuring that taxpayers

monies collected are effective-ly accounted for and judi-ciously utilised

*Communicating to the taxpayer the use to which taxpayer monies are being put

*Demonstrating in actionand words that the taxpayeris a priority of governmentand is well appreciated

The Federal Ministry ofEducation (FME)

Shall provide support to theFederal Ministry of Financeand the relevant tax and rev-enue authorities in develop-ing a tax culture amongst Ni-gerians. The Ministry throughits relevant organs shall beresponsible for ensuring the

inclusion of taxation in thecurricula of Nigerian educa-tional institutions from prima-ry to tertiary institutions basedon a cradle to grave concept.

The Federal Ministry ofInformation (FMI)

Shall provide support to theFederal Ministry of Financeand the relevant tax and rev-enue authorities in carryingout public enlightenment cam-paigns on tax and revenuematters affecting the country.It shall support the process ofproviding accurate and time-ly information flow to Nigeri-ans on all tax and revenuematters decided at the Feder-al Executive level. In this re-gard, it shall co-operate withthe Federal Ministry of Fi-nance and the relevant taxal)d revenue authorities toobtain the required informa-tion for dissemination to thepublic.

The SEC shall co-operatewith the State Houses of As-sembly in initiating legislationon tax and revenue matters,which are within the jurisdic-tion of the State Houses ofAssembly and also providethe necessary approvals re-quired to implement legisla-tion, which is passed by theHouse of Assembly.

The SEC shall ensure acordial relationship with

the Judiciary and that the in-dependence and integrity ofthe Judiciary is maintained atall times. There shall beco-operation amongst all themembers of the SEC in rela-tion to revenue matters.

State Executive Council ingeneral and the Ministries ofFinance, Education and In-formation in particular

The State Executive Coun-cil (SEC) shall playa role sim-ilar to that of the Federal Ex-ecutive Council as the high-est decision making body atState level. In this regard, itshall be responsible for ap-proving all matters pertainingto policy development as wellas the implementation andenforcement of taxes at Stateand Local Government level.It is also expected to give thenecessary leadership and di-rection to Local Governmentsin respect of revenue genera-tion matters. Tax and revenuematters shall be treated with.•. priority, given the impor-tant role they play in the eco-nomic development of theStates.

All State Government (SG)Ministries, Departments andAgencies are required to pro-vide and share all informationthat would assist in the accu-rate assessment and collectionof the relevant taxes. Thiswould include amongst oth-ers:

Having a revenue genera-tion (as distinct from an ex-penditure) mindset.

The executive arm of Government is re-sponsible for encouraging voluntarycompliance by taxpayers. An effectivemechanism for achieving high compli-ance is by leading by example as wellas by making the most efficient use ofthe tax revenue collected by the Gov-ernment.


ICT

PRESIDENT and CEO ofResearch In Motion Lim-

ited, RIM, makers of the pop-ular Blackberry device, MrThorsten Heins, last week,provided a business update ofthe company, painting a pic-ture of hope for a companyseverally reported to havebeen a bit under stress.

But the most interesting as-pect of his outing was the an-nouncement of the company’sreadiness to launch Blackber-ry 10 before year end.

Updates“During the Q4 2012 and fis-

cal year-end financial resultsconference call on March 29,I said that I would provide ourshareholders with candid andtimely updates when possibleon the progress and challeng-es RIM is experiencing. Whilewe are no longer giving quan-titative financial guidance, Iwanted to provide a brief busi-ness update at this time, andwill provide more detailswhen our Q1 financial resultsfor the quarter ended June 2,2012 are released on June 28.

In terms of challenges, as Imentioned on the March fi-nancial results conferencecall, RIM is going through asignificant transformation aswe move towards the Black-Berry 10 launch, and our fi-nancial performance will con-tinue to be challenging for thenext few quarters. The on-go-ing competitive environmentis impacting our business inthe form of lower volumes andhighly competitive pricingdynamics in the marketplace,and we expect our Q1 resultsto reflect this, and likely re-sult in an operating loss forthe quarter. We are continu-ing to be aggressive as wecompete for our customers’business – both enterprise andconsumer – around the world,and our teams are workinghard to provide cost-competi-tive, feature-rich solutions toour global customer base. Onthe positive side, we expect tofurther increase our cash po-sition in Q1 from the approxi-mately $2.1 billion we had atthe end of fiscal 2012.

Progress and challengesDespite the current chal-

lenges, we have made signif-icant progress on a number offronts in the past few months.Our annual BlackBerry Worldconference and BlackBerry 10Jam took place earlier lastmonth and both were tremen-dously successful. More than5,000 developers, partners,

*Thorsten Heins

RIM ready to launch Blackberry 10*Peeps into future with hope

Stories byPRINCE OSUAGWU

carriers and enterprise cus-tomers from 115 differentcountries saw the first glimps-es of our next-generationBlackBerry 10 platform andtheir response was encourag-ing. Our developer partnershave been enthusiastic withthe BlackBerry 10 Dev Alphaprototype unit we distributedat BlackBerry World and manyare well underway in devel-oping applications to be readyfor the launch of BlackBerry10 in the latter part of calen-

dar 2012.The support and enthusiasm

from our developer communi-ty is also reflected in our appgrowth, where we now featuremore than 80,000 apps, whichrepresents a 220% increasefrom one year ago, and morethan 15,000 apps for PlayBookcompared to less than 2,000last year. We believe thisbodes well for our ecosystemas we get set to launch Black-Berry 10.

We are also making steady

progress with the innovationof our next generation Black-Berry 10 mobile computingplatform, which is still on trackto launch in the latter part ofcalendar 2012.

Our global subscriber basecontinued to grow this quar-ter to approximately 78 million,driven primarily by growth ininternational markets, which ispartially offset by high churnin the United States, and ourBBM user base has grown toapproximately 56 million us-ers globally.

Our strong brand interna-tionally was recently en-hanced with the successfullaunch of two new BlackBerry7 phones in India and LatinAmerica.

Strategic changesWe continue to make strate-

gic changes to RIM’s seniormanagement team with thehiring of two key new mem-bers to RIM’s executive lead-ership team. Kristian Tear, ourChief Operating Officer, whosebackground also includes ex-tensive experience in interna-tional sales in Europe, Asia andLatin America, and Frank Boul-ben, our Chief Marketing Of-ficer, who will provide our teamwith deep experience in themobile computing and commu-nications industry. Both willassist me and the existing ex-ecutive team as we continue tomake the organizational chang-es necessary to position RIMfor the future and prepare forthe launch of our new Black-Berry 10 platform.

Telecom operatorsneed govt support— Onuegbu

NOTABLE experts in theInformation and Com-

munications Technology, ICTindustry are taking turns inexpressing concern over theraging war between the tele-communications operators inNigeria and the regulatoryagency, the Nigerian Com-munications Commission,NCC, over poor telecom serv-ice provision.

The latest is the ManagingDirector of one of Nigeria’sfrontline IT systems integra-tors, Signal Alliance, Mr Col-lins Onuegbu, who last weekadvocated for a massive gov-ernment investment in infra-structure and power supply asa solution.

Onuegbu’s take in thewhole issue was that both thetelecom operators and thegovernment have importantroles to play to ensure satis-faction of consumers’expectation,which he alsosaid were sometimes out ofproportion.

According toOnuegbu,”sometimes weblame these telecom operatorsfor poor quality of service, butwe refuse to also look at theenvironment in which theyare operating. We should askourselves if they are operat-ing under basic acceptableparameters of providing qual-ity of service? Are they enjoy-ing the needed environmentby government which ensuresthey provide grade A servic-es ? I think, there are funda-mental issues that we shouldlook at before heaping blameson these operators”.

He noted that for the coun-try to have the kind of highgrade QoS Nigerians areclamouring for, the govern-ment needed to invest mas-sively on telecom infrastruc-ture and also improve on itspower system,.

“Right now, we are talkingof three sub_marine fibres(SAT_3, MainOne and Glo1)in operation in the country.Shortly, WACS,another un-dersea cable would join themand there is even expectationthat a fifth one would join be-fore 2015. But all these fibreshave not in anyway improvedbroadband application in Ni-geria because they are all inLagos and their effects are notexperienced in the hinther-lands.

“This is where governmentneeds to come in and investmassively in the provision ofinfrastructure to boost broad-band intake throughout thecountry,” he added.

CHAIRMAN of ZinoxGroup, Leo Stan Ekeh,

over the weekend led theGroup’s Executive Manage-ment comprising of the Man-aging Directors of Zinox Com-puters, Technology Distribu-tions and Task Systems todonate items worth over N50mto the Lagos State Govern-ment.

These items include, fourunits of fully equipped Secu-rity Vans, 150 units of DigitalRadio, 150 units of DigitalSolar lamp and 150 units ofSolar Torch meant to enhancethe efficiency and digital com-fort of the Police and othersecurity organizations in La-gos State while on duty.

The donations were made asthe group paid a courtesy callon the Executive Governor ofLagos State, Mr. Babatunde

CSR: ZINOX doles out overN50m to Lagos state

Raji Fashola.At the visit the Zinox Group

The Zinox Group also prom-ised to use four schools inLagos state as DIGITAL CON-TENT CENTRES for its newdigital Product - the ZINOXWHIZKID Version 11, whichis said to have helped manystudents to achieve excellentresult in GCE, WASCE,JAMB and Post UME nation-wide.

The Zinox Chairman, LeoStan Ekeh, explained that Zi-nox will deploy the equipmentand content, train the Teach-ers in its digital laboratory inGbagada and certify themready to challenge the bestTeachers in the world. Thiswill revolutionize education intandem with PresidentJonathan’s TransformationAgenda.

Presenting the items , Ekehsaid that Lagos State has donewell to merit the ‘A’ list of theZinox CSR portfolio. He de-scribed Governor Fashola’sleadership of Lagos State asexemplary, robust and world-

*Leo-stan Ekeh

BRIEF


ICT

BRIEF

L-R:- Claire Alexander, Oracle PR Manager for Africa ; Layo Ajayi, Oracle Country Manag-er, Nigeria and Gbemisola Aruwayo-Obe, Oracle Applications Manager for Nigeria, as Oracleannounced the Research report on the Challenges of Corporate Financial Reporting, in Lagos.

NIGERIA joined othercounterparts in the

World business community,January 1, 2012, in the adop-tion of International FinancialReporting Standards (IFRS).However, reports are thatbarely six months after, manycompanies still face challeng-es of complying with the re-quirements of that law, par-ticularly, that of closing, re-porting and filing their finan-cial accounts accurately.

50 Nigerian companieswere included in a global sur-vey of 1123 medium to largeorganisations conducted inApril 2012, to establish theirlevel of investment in, anduse of financial close, report-ing and filing software sys-tems. The results of the sur-vey will show that while Ni-geria invested heavily in allthree areas of the process lit-tle more than two years ago,companies today do not yethave adequate control of theirsystems.

The survey also shows thatmost companies anticipate thecost of reporting to rise overthe next five years, and that40% of those interviewed be-lieved their job was at stakeif there were errors or dead-lines missed.

The report released Thurs-day, from Oracle and Accen-ture revealed that companiesin Nigeria are not followingthe global trend of investingin financial reporting systemsintended to improve theirclose, reporting and filingprocesses, leaving business-es with ineffective solutionsand a lack of visibility, quali-ty and confidence in their fi-nancial data.

The research report, titled“Challenges of Corpo-

rate Financial Reporting,”highlighted that businesseswere unable to fully under-stand the cost of their finan-cial reporting, with 74% of fi-nance professionals unable toidentify the total cost. Unfor-tunately this percentage is re-markably higher than the glo-bal average of 60%

The report suggested that alack of investment in propersoftware and an over-relianceon spreadsheets and e-mailsincreases costs and results inineffectual financial reportingand missed key deadlines.

The report surveyed about1,123 finance professionals inlarge organizations in 12countries, including Nigeria,South Africa, the UAE, UK,USA, Germany and Russia.

Nigeria’s adoption of IFR shaky*As companies falter on global trend

,

,

Research HighlightsThe report also highlighted

that businesses in Nigeria rec-ognize the need to invest innew financial reporting sys-tems to address efficiencychallenges. 80 % of surveyedcompanies have made chang-es over the last three years totheir close, filing and report-ing processes. Meanwhile,only 18% have invested sub-

reporting and filing process-es. Importantly, the situationis so opaque that managersacross the finance function areunable to fully understand thefinancial impact/cost implica-tions of managing and publi-cizing their company’s finan-cial results. 74% of Nigerianrespondents admitted they didnot know the total cost of man-aging and publicizing finan-

•Decreased effectiveness:Despite the challenges pre-sented by unreliable andopaque data, finance teamsare sanguine about how effec-tively they can do their jobs.72% of finance managers feeltheir effectiveness is limitedin some way by data analy-sis-related issues, most admit-ting they did not have ade-quate visibility of reportingprocesses. Failure to meet for-mal reporting deadlines wasmost common in Nigeria, with32% of businesses indicatingthat they have missed statu-tory filings.

•Addressing the challenge:Encouragingly, businessesare intending to take steps toimprove financial reportingmethods, with 86% of compa-nies likely to make a signifi-cant investment over the nextfive years, an approach whichmay address many of the chal-lenges they currently face,and bring their reportingprocesses into line with theirperformance expectations.38% of businesses are due tooverhaul all three phases ofreporting, a slightly lowerpercentage than the globalaverage (46%)

Evaluating the report, VicePresident EPM Product Mar-keting at Oracle, Mr JohnO’Rourke, said that “it is clearfrom the report that business-es are well aware that finan-cial reporting needs tochange. The good news isthat many are doing some-thing positive about this by in-vesting in new reporting sys-tems.

cial results, whereas 60% ofcompanies globally confessedthat they were unable to put afigure to the cost.

•Persistent challenges: Dueto inadequate reporting sys-tems, the majority of business-es reported that they still facesignificant problems with fi-nancial reporting. 88% of re-spondents admitted that theyhave inadequate visibility ofreporting processes as com-pared with 68% globally, while82% of finance managers re-ported that they find it diffi-cult to control the quality offinancial data across thecourse of their reporting,highlighting that additionalattention should be paid toperformance management.

stantially in at least one ofthese three areas over the past12 months, the lowest in thesurvey along with the MiddleEast.

•Insufficient, Ineffectiveinvestments: Whilst 16% ofbusinesses in the survey haveinvested in just one of thethree financial reporting phas-es (close, reporting and fil-ings); only 2% have investedin all three.

It noted that 68 percent ofspreadsheets and 36 percentof emails are heavily used totrack and manage reportingon a daily basis.

•Increased costs and uncer-tainty: 28%of finance teamsclaim to have seen their costsrise across the financial close,

By PRINCE OSUAGWU

Lagos Statecommencesmast regulation

THERE are every indications that the Lagos State

Government has, again, com-menced regulation of masts inthe state. This time around,through another agencychristened Urban FurnitureRegulatory Unit (UFRU).

Commissioner, Ministry ofPhysical Planning and UrbanDevelopment, OlutoyinAyinde dropped the hint at aconsultative forum organisedby the ministry Wednesday.

According to him, the es-sence of the regulation was toensure safety of lives andproperty and to avoid a repeatof the February 23 rain stormthat pulled down severalmasts belonging to Banks andInternet Service Providers(ISPs), killing people at dif-ferent locations.

He added that “henceforth,mast operators must seek per-mit of approval from UFRU forevery new mast to be installedin the state, while inventoryof existing masts will be tak-en,”

However, he noted that theministry was not going to is-sue new specifications formast installations, but wouldensure strict compliance ofexisting specifications as re-leased by the Nigerian Com-munications CommissionNCC and other regulatorybodies.

The consultative forum,were attracted the presence ofmembers of the Association ofTelecoms Company ofNigeria,ATCON, the Associ-ation of Licensed TelecomsOperators ofNigeria,ALTON, telecoms op-erators, ISPs, NCC, mastbuilders, among others.

Ayinde advised all users ofmasts in the state to obtain aplanning information formwith which they will processapproval for new mast instal-lation in the state.

“Our integrity is in creatinga conducive environment forbusinesses to thrive in thestate and we are concernedabout safety of lives and prop-erty, hence the need to super-vise mast installation in thestate,” he added.

Meanwhile, Head, Compli-ance Monitoring for NCC,Mr. Ephraim Nwokonneyatold the Commissioner thatNCC as a regulator, respectsenvironmental laws and hasintroduced infrastructuresharing among telecoms op-erators in order to reduce thenumber of masts, which areestimated to be over 6,500 inLagos alone.

Report released from Oracleand Accenture revealed thatcompanies in Nigeria are notfollowing the global trend ofinvesting in financial report-ing systems


Agric

BRIEFS

HE tells you proudly thathe is a farmer in a soci-

ety when many are shy to beassociated with the profes-sion, but who would not be ifyou are in the position of Al-haji Tafida Mafindi, thechairman of FAMAG-JALfarms.

One of the farms is sitting onan expanse of 15,000 hectaresof land in Jikwoyi, a suburbof Abuja and the other farmin Taraba state is over 36, 000hectares. The farm is host toover 1,500 cattle and over 50staff engaged for differentactivities in the farm.

On a visit to the Jikwoyi farmrecently, Mafindi took outtime to have a chat with JI-MOH BABATUNDE as he su-pervised work on the modernabattoir that is being erectedat the farm by some Chinese.Here is an excerpt .

On reason for investing inmodern abattoir and animalhusbandry

We are investing in thismodern abattoir, because thedemand for meat in the coun-try has not been meant. Theprotein needs of the countryis in the region of 20% andthere is up to 80% left to bemeant, so it is a market that isreadily available and anybodythat ventures into it will nothave any problem.

The only problem you willhave is how to sort out your-self by producing what thepeople want hygienically,then it will fly and the sky isthe limit.

If you go to any cocktail par-ty, and you see ten trays offood items brought in, four outof these food items are proten-ious food like meat , fish andbefore the other six trays areconsumed, these four are gonebecause the demands are veryhigh.

On the funding of the abat-toir project

Those of us who have invested in the agricultur-

al sector are very few becauseof low support from govern-ment and related agencies. Isingle-handedly finance myproject here without any sup-port whatsoever from anybodyor government except for ag-ric loan I got and it’s for theproposed abattoir market.

We started modestly, we ac-cessed commercial agricultur-al loan to the tune of N250mfrom the First bank , then Iintroduced my own personalmoney to the tune of N600mand that is what has gone in

There is still wide gap in Nigerian meatmarket — Mafindi...plans multi million naira modern abattoir

and I hope at the end of theday we come out with what cantake care of Nigerians.

On the facilities at the abat-toir

The challenges are real.What we have here are twolines and three receiving fa-cilities. This line you see hereare for processing rams andgoats. And the other linethere is for processing cows,goats and the middle line is asplitter unit where the cow willbe processed , then you havea filter where they are select-ed for consumption.

Those that will be certifiedfor consumption and those thatwill not be certified for hu-man consumption go in forfeeding of dogs and if not cer-tified for consumption at allthey go into the incinerator.

After that, we have fourchilling rooms, the floors

are being done and the chill-ing rooms are for reducing themeat to minus 30 degreeswithin 30min so that you don’tloss the nutrient, the contentand everything.

We also have the processingunits after the cold roomswhere the meat is split to whatis demanded whether fillet,mince meat or any other typeof meat that is demanded forwill be done there.

What we are going to pro-duce here are going into in-ternational market, so we haveto cold store it and get it tothe costumer in the right qual-ity .Even the local consumermight want to pick his meatwell processed for his table

On the sources of goat,

sheep and cowNigeria has enough sheep ,

goat or cow for any company,the materials are there , theonly thing we are creating isthe environmentally hygien-ic processing. That is what weare selling to the customers.

If you visit any abattoir inNigeria today, you may dis-like meat forever. That is thedifference we are creating.What we are going to give theconsumer at the end of the dayis hygienically processed, cer-tified meat, because we aregoing to be certified here inNigeria and all internationalfood certifying bodies. Theyare going to come here to cer-tify us so that we can haveaccess to different markets.

On how to get the privatesector involved in processing

It is to cluster and invest-ment in farm availability, thiswhen you use the availableland we have today, that isproperly cleared, root re-moved, stump surveyed.

I know under the govern-

ment of Babaginda there wasan organisation for provisionof farm lands, we need to re-activate it and that cannot bedone commercially, it has tobe done as a venture capitalfor a long time investmentfrom government for whoeverdecides to have a commercial-ly viable farm, because for youto harvest, you need to har-vest everything at a time, nowastage and no loss

If you are going to plantmaize, you need the pop-

ulation , because if you havean hectare and you are plant-ing one meter apart thatmeans there will be 100 plantsby 100 plants that means youhave 1000 stuck to producecomb, but if you have six inch-es which is 150cm, you have600 by 600 in one hectarewhich will give you 360,000cobs of maize in one hectare,that will allow you to produce15 tonnes per hectare and thetraditional one allows you toproduce one tonne per hec-tare.

You cannot compare the re-sult of the two. What about theby-products? the grass thatcomes out of this that youprocess into cattle feed, if youhave 1000, an hectare will notgive you one tonne but if youhave 360,000, an hectare cangive you five tones of hay,then you don’t need to see themagic there for the productionof cattle when you mix the by-products with molasses, andother additives like palm ker-nel cake, ground nut cake,cotton seed cake and you feedyour cattle.

*Alhaji Tafida Mafindi

*The modern abattoir underconstruction

Empowerment:Lagos Senatordistributes farm inputs to residents

By OLASUNKANMIAKONI

SENATOR Gbenga Ashafa,representing Lagos East

Senatorial District at theweekend marked his first yearstewardship at the senate withthe distribution of various em-powerment materials includ-ing farm inputs as part of “op-eration back to farm” pro-gramme.

The crop farming inputs do-nated were: 10 bags of ferti-lizers, cassava stalks, plantainsucker, maize seeds, herbi-cides, knapsack sprayer, hoeand cutlasses.

Ashafa, who noted that thegesture was in fulfilment of hiselectoral promises, stressedthat the challenge plaguingthe polity was the imbalanceof resources centralizationversus responsibility decen-tralisation.

He said that the mantra onfood and food security has notchanged;” a country that cannot feed her citizens can notprotect them. Human dignityderives its root from descentmeal from the body.”

Ashafa maintained that withthe over 18 million people ofthe state, the state faces thechallenge of food productionand distribution hence, theneed to go back to farm asmany people have shifted towhite collar jobs that werenonexistent.

Jigawa govtreleases N709.6mto procure fertiliser

THE Jigawa governmenthas released N709.6 million

for the procurement of 6,000metric tonnes of assorted ferti-lisers for farmers in the state.The State Commissioner for In-formation, Youth and Sports,Alhaji Babandi Ibrahim, dis-closed in an interview recentlyin Dutse.

Ibrahim explained that thefertilisers would be distributedto farmers for this year’s farm-ing season at subsidised rates.

He said that N47million hadalso been approved for irrigationfacilities in Miga Local Govern-ment Area of the state.

The commissioner noted thatthe aim was to boost dry seasonfarming in the area. Ibrahim alsodisclosed that N31.1 million wasset aside for the ministry of agri-culture and natural resources toembark on agricultural extensionprogramme in the state.


People in Business

BRIEF

MR. Leke Olufade is theChief Executive Offic-

er/Team Leader of TotalBusiness Solutions (TBS)Consulting Limited, an out-fit set up to help organisationsmove to a higher level of cor-porate performance throughcustomised, cost effective andtimely business solutions us-ing technology and people.The graduate of Chemistryfrom the University ofIbadan, who is also a quali-fied Chartered Accountantand a Fellow of the Instituteof Chartered Accountants ofNigeria (ICAN), spoke toVanguard in Lagos during aone-day workshop with thetheme: Training on Trial, or-ganised by the firm in con-junction with Centre for Man-agement Development re-cently. Excerpts

According to Mr. LekeOlufade, TBSConsulting is into

management consulting andcapacity-building to help or-ganisations to become morecompetitive.

Speaking on the choice ofthe theme of the workshop,Olufade said: “Training onTrial, the idea came becausewe suddenly found out fromour interactions over the yearsthat we are no longer payingattention to training. Trainingbudget just became a welfarebudget in which case we justspend it without expectingmuch from it and so we getnothing from it. But now, it isgetting to a complaint levelwhere people no longer wantto budget, they no longer wantto train people and it isaffecting productivity in manyorganisations. You see peoplewith very high degrees -MBA, MSc., etc. but they arenot as productive as the oldermanagers with only school certand the difference is training.

There are no coaches, nomentors in the work-

place and so we just felt weshould throw it open as a na-tional discussion so that webegin to see where we got itwrong, what they do in otherclimes and how we can getback on track. In other climesthey still spend money ontraining, they still develop

Training budget isbecomingwelfare budget— Leke Olufade

,

,

By EBELE ORAKPO their people,” he noted. He regretted that in the so-

called computer age, so manypeople cannot use the compu-ter and this does not help pro-ductivity.

“Now, you get to some or-ganisations and you find outthat people cannot even usethe computer. It affects theirproductivity and yet, they willtell you ‘we spend money ontraining people on computerand they cannot use it.’ So ifyou train someone on compu-ter and he cannot use it, train-ing cannot be one off. Thereare different stages so if thereare specific competencies youknow are important to yourproductivity in the workplace,you need to focus on themuntil the person becomes bet-ter or you change him. Youhave to train him to be able todo what you have engagedhim to do,” he stated.

Continuing, he said: “Peopleare complaining, especiallybanks, that they have hugetraining budget but there is noreturn on investment or theycould not measure the returnon investment. And we say

‘fine, you will get to that levelbecause you have really notdesigned your training budg-et to focus on need and if it isnot focused on need, then youcannot evaluate the return oninvestment. So what we wantto do at this workshop is tocome up with all those issuesand then discuss the way for-ward and put it in a documentthat we can make available toall Nigerians.”

Decrying the situation wherepeople are just sent on train-ing without taking into consid-eration the needs of the organ-isation, Olufade said: “How dowe come about the trainingneeds of our people? Are wedoing it well or somebody justsits down and says ‘oh, I havethis request for training, ok,you go.’ Or you sit down andsay ‘ok, for this person to per-

form this assignment credita-bly, he needs this skill so wesend him on training so whenhe comes back, if he still can-not do that job better, then weknow he is either not trainableor the training was not the rightone so you take a decision. Iffor example I have an account-ant who is supposed to be us-ing an accounting package andI send him on training and hecomes back and still cannot usethat package, then somethingis wrong. But you find out thatit is not so. At the senior level,you have executive training,people go for MBA and come

back and cannot apply thosethings because they need fol-low-up discussions and en-gagements which they don’tget because they just look attraining as means of makingmoney. “ On whether the timeallocated to most training isadequate, Olufade said:

“It is how you design thetraining. For example, thereare skills you need to acquire,I can design it in modules soyou can do one day training,go back to your work, put it intopractice, come back may be onemonth after to do module two.So I can design it that way butif it is not properly planned, aone day or three-day trainingis not just adequate. You willnot learn enough to apply butif somebody had planned thatyou need this skill, even if it istaking you six months, he

knows that it is six months.

But here, because we arenot planning and be-

cause we just felt we are help-ing people, we say ‘ok, threedays training, who is available?Ok he is a nice guy, you go.’So that will not be adequate.We have seen instances wherepeople come for training andwe ask them questions, theysay, ‘I’ve attended this train-ing before, but because theysaid I should come I’m here.’Let us change that, let us usetraining to drive national pro-ductivity, It’s a capacity-build-ing thing, either in civil serv-ice or private sector, you needto have a focus in making thatstaff a better staff and that iswhat training is all about. Eventhough training alone cannotdo it, there is what we call per-formance management aspectof it because if you are welltrained and somebody is notmanaging your performance,you may still not be productive.For example, a good driver iswell trained, you don’t need tosend him on training but if youare not managing his perform-ance, he could just be a use-less driver. He may not comeon time, he may be carelessabout something and you arenot checking that and you sayhe needs training, no it is nottraining, it is performancemanagement. Give him tar-gets, see whether he is com-plying with those targets andthen evaluate him and givehim feedback on how he is do-ing. That is performance man-agement. But if he has noskills, doesn’t know the high-way code; that is where we getto a T-junction and he doesn’tknow what to do. Then sendhim on training and when hecomes back, you see whetherwhen he sees those signs he isable to react.”

*Leke Olufade

AfDB loans,grantscommitmentsgrow by 36% in2011 — report

THE African DevelopmentBank (AfDB) approved

loans worth about 8.5 billiondollars in 2011 representingabout 36 per cent increaseover the figures in 2010. Thebank’s overall loans and grantsapprovals in 2010 stood atabout 6.2 billion dollars.Statistics from the continentalbank showed thatinfrastructure accounted forover 38 per cent of loans andgrants. Multi-sector loans andgrants followed with about 21per cent while developmentfinancing got over 19 per centof the loans and grants outlay.

The multi-sector approvalscover funds for public sectormanagement, goodgovernance and anti-corruption programmes,industrial import facilitationand export promotion.

The finance operationincludes finances todevelopment banking,commercial banking, non-bankfinancial intermediation, re-insurance and microfinancefunds. According to AfDB, theprofile of funds towardinfrastructure stemmed fromthe fact that it remains one ofthe four main pillars of thecontinental bank’s strategy forassisting the development ofAfrica. The other three areinvesting in the private sector,education and the promotion ofgood governance.

Mr Pierre Van Peteghem,AfDB’s Treasurer said that thebank’s investment ininfrastructure have beenrewarding and worthwhile.According to him, the bank’s23 million dollar ruralelectrification project in Guineawould boost electricity supplyfrom three per cent to 20 percent by 2015. Peteghem alsosaid that the construction of 82million dollar Kazungulabridge linking Zambia andBotswana would slash the manhour time spent on the roadfrom 30 hours to sixhours when completed in2018. Between 2009 and 2011,he said, 12.5 million peoplebenefited from new or improvedaccess to water and sanitationprogramme of the bank acrossAfrica. Similarly, about 11million people enjoyed betteraccess to transportation throughAfDB investments during theperiod under review. TheTreasurer said that in the threeyears, the bank invested in theconstruction, maintenance orrehabilitation of 25,000 km ofroads.

You get to some organisations and youfind out that people cannot even use thecomputer; it affects their productivityand yet, they will tell you ‘we spendmoney on training people on computerand they cannot use it.


Aviation

Aviation recordedno significantdevelopment inlast one year,says Ore

President of AviationRound Table ,ART,

Captain Dele Ore hasaffirmed that the Nigerianaviation industry has notrecorded any significantdevelopment in the last oneyear of President GoodluckJonathan’s administration.

Disclosing thisdevelopment to newsmen onthe 13 years of uninterrupteddemocracy in the country,Captain Ore pointed out thatwhat is going on in theaviation industry at themoment was just to furtherconsolidate on the gains ofthe erstwhile ministers ofaviation Mrs. Fidelia Njeze.

“The only thing that hasbeen achieved in the last oneyear is the consolidation ofpast gains and efforts put inplace in the last four years byerstwhile minister of aviation,Mrs. Fidelia Njeze” henoted.

Captain Ore howeverdecried that the on goingairport remodelling project bythe Federal Governmentunder the Minister of AviationPrinces Stella Oduah was atotal flop .

Peacock Travelopens 5 newsubsidiaries inUK

Fast growing NigerianTravel Management

Company, Peacock Travelsand Tours Limited, has openedfive new subsidiaries in theUnited Kingdom. The five newsubsidiaries are PeacockTravels and Tours, PeacockCollege, Peacock AviationTraining Centre, PeacockBureau De Change, andPeacock Property.

The opening ceremony of thecompanies was held in Londonat a grand event attended bytop UK government officialsincluding the Speaker of theLondon Borough of Hackney,Ms Susan Fajana-Thomas; anda representative of HerMajesty, the Queen ofEngland, Deputy Lieutenant ofHackney, Col. Roderick Morris.The launching of the five UKsubsidiaries, which isheadquartered in a sprawlingedifice located at 13, RamsgateStreet, Hackney, London, E82FD, came barely 24 monthsafter the fastest growingNigerian travel managementcompany extended itsoperations to South Africa.

Stories By LAWANIMIKAIRU & DANIELETEGHE

Chairman of Bi-Courtney Aviation

Services Limited, Dr WaleBabalakin has faulted theFederal Government for notkeeping to the terms of theconcession agreemententered into by both partiesin 2003.

Speaking during the 5thyear anniversary of Bi-Courtney Aviation ServicesLimited at a press conferenceat the Murtala MuhammedAirport Lagos, Dr. Babalakinsaid that he was evensurprise to hear insinuationsthat Bi- Courtney AviationServices Limited was givenN30billion by the FederalGovernment to construct theterminal.

According to him, Bi-Courtney Aviation ServicesLimited did not receive anymoney from the FederalGovernment to construct theMMA2 terminal adding thatthe government was not eventruthful to respect the termsof agreement that wassigned.

He further explained thatwithin a few years, thecompany was able toconstruct and delivered anairport terminal that hasbecome a reference point inthe Nigerian aviationindustry.

Dr. Babalakin howeveradded that the dwindling

Babalakin faults FG over concession agreement...says govt didn’t contribute money to construction of MMA2

clientele at the MMA2terminal was a result of thenon-compliance of thegovernment to the terms of theconcession agreementstressing that most of theorganisations doing businessat the terminal had towithdraw because theirfinancial projections couldnot be captured by theavailable passenger traffic atthe terminal.

“Government has derailedfrom the vision of theagreement. That is why weare calling on all stakeholders

to support us to achieve PPPin Nigeria. But, we havefound out that something ispeculiar about the concept ofPPP in Nigeria. There isreluctance by newentrants,which is largely dueto our bad experience. We willstill welcome more Nigeriansinto PPP” he affirmed.

He also pointed out that thefinancial institutions wherethe funds for the constructionwere sourced have shownconsiderable understandingover the slow repayment of the

loans, which they haverealised stems fromdwindling revenues at theterminal.

Babalakin said : “ We are notraking in sufficient revenuesfrom MMA2,which is a far cryfrom our projections andexpectations.’’

He said that the situationhad led to the banks gettingworried over the returns.‘’The banks even wrote aletter detailing how the non -compliance of the agreementby government is affectingour operations’’

The Nigerian AviationHandling Company,

NAHCo aviance PLC, hascontributed over US$70billionin improving the economicgrowth of Nigeria as anation. Deputy ViceChairman of the Board ofDirectors of the company ,Alhaji Suleiman Yahyahmade this disclosureyesterday to newsmenduring the commissioning ofthe company’s modern cargowarehouse valued atN1.9billion.

Alhaji Yahyah pointed outthat the warehouse has thecapacity to handle about 270million tonnes of cargo asagainst the 17 milliontonnes the previouswarehouse was handling.According to him, Nacho has

NAHCo contributes over $70billion toNigeria economy

invested over US$70billionin the Nigerian economyand the company ’s nexttarget is to embark on anexpansion plans. He furthersaid that ‘’ between 2006and 2011, we paidN1.9billion as concessionfees to the Federal AirportAuthority of Nigerian(FAAN) , we paid N2.2billionto the Federal Governmentas tax, we paid N2.9billionto shareholders andN9.6billion to our staffs” headded.

He further noted thatLagos airport should bedeveloped as a hub inNigeria as well as the WestAfrica Sub-region addingthat passengers can fly forclose to six to seven hoursfrom Lagos to other parts of

the world.Also speaking at the

event,the Minister ofAviation, Princes StellaOduah who was representedby the Managing Director ofthe Federal Airport Authorityof Nigeria, (FAAN), Mr.Goerge Uresi said that theconstruction of a massiveterminal by Nacho aviancewas part of thetransformation agenda ofPresident GoodluckJonathan. He further notedthat the presentadministration of PresidentGoodluck Jonathan waspoised towards transformingNigerian airports into aworld class airport.

She said”Let me use thisopportunity to reiterate thecommitment of the Federal

Government and theministry of aviation totransforming all the airportsin this country. We havecompleted the 1st phase of11 airports, we are movinginto the 2nd phase by Juneand the 3rd phase will entailthe expansion andremodelling of fourinternational airports whichare in Lagos, Abuja, PortHarcourt and Kano”

“What we are doing goesbeyond remodelling of theairports, we are actuallydoing restructuring andreconstructing of theairports. As you have seen,we are just starting to goround the airport. we aredoubling the sizes of thoseterminals and changing allthe facilities and utilitieswithin the airport” sheadded.

L-R, Director, Flight Operations, Arik Air, Capt. Ado Sanusi looks on while Managing Direc-tor, Arik Air, Mr. Chris Ndulue receiving the (MOU) certificate from Rector/Chief Excutive,Nigerian College of Aviation Technology (NCAT) Zaria , Capt. Mrs. Chinyere Kalu during thesigning of Memorandum Of Understanding (MOU) agreement between Arik Air and NCATheld yesterday at NCAT, Zaria .

BRIEFS

Media & Advertising


BRIEFS

IN recent times the tobaccoindustry bill has been in

discourse in the NationalAssembly in a chat withPrincewill Ekwujuru, BassemBekdache, Corporate&Regulatory Affairs(CORA)Director , W/Africa, ofBATN spoke on the bill,BATN’s developmentalprojects and other sundryissues in the industry. Excerpt.

History/overview oftobacco market

British American Tobacco ofNigeria (BATN) establishedits presence in Nigeria over100 years ago and has beenhere, since then in one formor the other, as part of theformer Nigerian TobaccoCompany (NTC) and now asa fully owned subsidiary ofthe BATcompany.

Before our entrance into theNigerian market as BAT, thetobacco market in Nigeria was80 percent of illicit productand 20 percent legal product.We collaborate withappropriate governmentagencies to fight against illicittrade in the country. Today, wehave been able to reduce illicittrade to at least about 12 to 15percent illicit product and thatalone is a huge contributionto the government and to theNigerian market. Ourproducts are manufactured inline with approved qualitystandards and we market ourproducts responsibly to adultswho have made an informedchoice to consume ourproducts.

We also manufacture forexport in Nigeria, wecurrently export to about 12 to14 countries depending onthe point in time. So rightnow, our factories in Ibadanand Zaria have become theexport hub for our business inWest Africa.

A key aspect of our businessis our corporate responsibilityframework which dictates howwe work, making sure we areresponsible at all times,especially recognising whatstakeholders think and want,and also making sure that weare in full compliance withlocal laws and internalstandards where local lawsare not in existence.

An example of this, is whenwe work with others to try andstop youth access to ourproducts. We carry outcampaigns in partnershipwith our retailers at the retail

BATN not againstregulating tobaccoindustry— CORA Director

point. There iscurrently no lawthat preventsretailers fromselling to underaged persons, so inline with ourCorporate SocialR e s p o n s i b i l i t yframework wemake sure that wedo all we can todeter under age access tothese products. There arechallenges, but we areworking hard at it with ourpartners.

About BATNF The Foundation is a

company limited by guaranteeand it operates as anindependent charitableorganisation. BATNFoundation focuses on fourmain areas which are: Sustainable AgriculturalDevelopment, SustainableProvision of Portable Water,Sustainable EnvironmentalProtection and Vocationalskills development. Webasically support national andglobal objectives in areas ofdevelopment for our differentcommunities.

BATNF’s scorecardSince inception, we have

completed over 108 projects inthe 36 states in Nigeriaincluding the Federal CapitalTerritory. We aim topositively impact thedevelopment of the

communities where we work.The projects we work on are fedto us through stakeholderdialogue, throughcommunities, groups or nonprofit organisations’ requests.The feedback we have receivedfrom the beneficiaries andthrough the impact assessmentwe carried out is positive.

What informs decision forthe Foundation to embark ona project (s) within the countryas the country is divided intodifferent geo-political zones.Also, with regards to thehandover of any CSR project,is there any fixed timeline asregards BATNF and the hostcommunity?

What we look after is theability of the communities totake full charge of the projectson completion. We keepworking together up to a stagewhereby we feel that thecommunities can take over theproject. Therefore, the timingvaries, some projects take upto 3 years and others areconsiderably shorter.

In terms of choosing location,we receive requests fromdifferent communities and asis normally done with mostcorporate social investments,we align ourselves to nationaland state objectives especiallywhere they fit into our focusareas. We don’t want to say thatwe are in one part of thecountry or the other. It is nothow it works; it is based on needby the host community. So wework across board and aretherefore present in everyState. Every community hasa need and our intervention isbased on meeting this need ifit falls within our focus areas.

These requests are sent to theFoundation’s technicalcommittee which looks at it onthe basis of focus,sustainability, impact andresources. So, very goodplanning is put intoconsideration before anyproject is done by theFoundation.

Regulatory issues/enactmentThere is a belief that BAT is

against regulating theindustry, this is not true. Weare very supportive ofregulation, by this, we havealways said that we mean abalanced regulation that isevidence based and willachieve the health advocatesobjectives, whilst maintainingthe ability of the legal industryto operate as opposed toencouraging illicit trade.

The bill in its present formcontains ambiguities andinconsistencies. This will causeconfusion and will make itunenforecable. we are notagainst the bill, we are for abalanced regulation that doesnot contain any form ofambiguities, will not causeconfusion , will be enforceableand will not encourage illicittrade.

SAMSUNG Electronics andSpinlet hosted a

collaborated launch party forthe Samsung Galaxy Pocket aspart of the on-going Industrynite series.

Spinlet, a mobile musicdownload and streamingapplication companypartnered SamsungElectronics to launch thebrand’s new Samsung GalaxyPocket S5300 in Nigeria. TheGalaxy Pocket comes with apre-installed Spinletapplication loaded with fivesongs and enough credit forconsumers to purchase fiveadditional songs from musiccatalogue available throughthe Spinlet app.

Speaking, Daesong Ra,Business Manager, Mobile

Samsung, Spinlet partner on galaxypocket smartphone launch

Division Samsung ElectronicsWest Africa, said that thecompany’s proposition offersconsumers a smart phoneexperience that is not onlyaffordable but ‘ClearlyDifferent, Clearly Smart.” TheSamsung Galaxy pocketcomes packed with over400,000 free apps, fasterinternet connectivity at a lowretail pricing in addition toone month free internet dataif on MTN network.

In addition, Eric Idiahi,Spinlet Chairman, said themarket for digital music inAfrica has been untapped byany of the major musicservices to date. Thus theopen door for the partnershipwith Samsung.

According to him, “the

Spinlet model allowsindependent musicians andbands in Africa to sell theirmusic alongside other moreprominent artists in Africa andfrom around the world. Spinletalso provides artists with toolsto better understand their fanbase and interact with themthrough social media. Byproviding the application pre-installed, Samsungsignificantly increases theamount of listeners andpotential buyers of these artists’music. “In a country riddled bypiracy, the free streaming andpay per download model thatSpinlet and Samsung areproviding to the market reallyhelps create value in fans eyesand a revenue stream forartists,” says Idiahi.

NIM cautionson 2015The President and

Chairman of Council,Nigerian Institute ofManagement, Dr. MichaelOlawale-Cole, has called onNigerians and especiallypoliticians who have beenurging the incumbentPresident, GoodluckJonathan, to either re-contestin 2015 or take a position onthe next general elections totread cautiously.

In a statement issued by theInstitute and signed by him,he admonished politiciansand other Nigerians who areengaged in the raging debateto desist from their nefariousactivity and allow thePresident to concentrate ondelivering dividends ofdemocracy to Nigerians whocommitted their future into hishands by voting him intooffice.

According to him, “I honestlythink that those engaged inthis campaign and debate areneither being fair to Mr.President nor the Nigerianelectorate who are yet to reapthe dividends of the democracyfrom the pools held barely ayear ago”. “If anything, thosewho are engaging in thisunnecessary and unwarrantedexercise have not onlysucceeded in overheating thepolity but have also beendistracting the President fromfocusing on real issues ofgovernance”, he added.

Cartier partnersPolo toreposition brandsFrench watch maker and

jeweler, CartierInternational SA. Geneva hasentered into strategicpartnership with Polo NigeriaLimited to reposition itsproducts in the country.

Polo Nigeria is a collectorand marketer of luxury itemslike watches, jewelry, leatheraccessories, eye-wear, etc formanufacturers worldwide.

Bruno Carraz, ExportDirector, while speaking onthe partnership, said theywere in Nigeria to discusswith Polo how they can betterattract Nigerians to thebrands.

Bruno who was in the countrywith Vincent Decoopman, AreaManager, said: “Cartier has300 boutiques worldwide andfour in Nigeria (Lagos andAbuja). Cartier is 165 years inexistence and operatingglobally. In Africa, we are inTunisia, Angola, South Africa;Ivory Coast, Zimbabwe,Mozambique as well asNigeria and Congo.

•Bassem Bekdache


Omoh Gabriel - Group Business EditorBabajide Komolafe - Acting Finance EditorClara Nwachukwu - Energy EditorPeter Egwuatu - Head, Capital MarketYinka Kolawole - Snr Bus. CorrespondentFavour Nnabugwu - Insurance CorrespondentGodwin Oritse - Maritime CorrespondentGodfrey Bivbere - Maritime CorrespondentYemi Adeoye - Energy CorrespondentOscarline Onwuemenyi - Energy CorrespondentFranklin Alli - Industry ReporterMichael Eboh - Capital Market ReporterAmaka Abayomi - Money market ReporterEbele Orakpo - Energy ReporterIfeyinwa Obi - Maritime Reporter

CONTRIBUTORSPrincewill Ekwujuru - Media/MarketingNaomi Uzor - IndustryProvidence Obuh - Capital MarketLAYOUT - Graphics Department

0817 002 3569

THE issue of fuel subsidy removal has be-

come recurrent in oureconomy. The followingare answers to salientquestions on the benefi-cent resolution of this di-lemma:

1. Is There a Relation-ship Between Fuel Sub-sidy and the Naira Ex-change Rate?

In reality, there will beno need for fuel subsidyif Central Bank (CBN)adopts a naira and peo-ple friendly frameworkfor infusing dollar com-ponent of monthly allo-cations into the econo-my. If we cast our mindsback, we will recognizethat the bogey of fuel sub-sidy evolved from thedastardly blows to nairaand welfare of Nigeriansby Babangida’s recklessdevaluation of the nairain consonance withIMF’s prescribed Struc-tural Adjustment Pro-gramme in the late1980s.

The reason for this in-verse relationship be-tween naira value andfuel price is obvious; fuelprices, like most com-modity prices are denom-inated in dollars; thus, iffor example, the interna-tional ex-refinery priceof P.M.S. (petrol) isabout 50 U.S. cents, then,our domestic price will beN75/litre (@ N150=$1)plus shipping/transpor-tation and clearingcharges, plus reasonableprofit margin for the im-porter.

It should be obviousfrom above that naira val-ue vis-à-vis dollar is asignificant determinant oflocal price of fuel. Un-fortunately, neither themedia nor Labour Un-ions, nor indeed, govern-ment seem to recognizethis reality! Consequent-ly, Nigerians are misledinto searching for solu-

The bogey of fuel subsidiestions to fuel subsidy re-moval everywhere elsebut this one!

Incidentally, if thenaira, for example, con-versely appreciates to,say, N75=$1, when ex-refinery price of petrolremains at $0.5/litre,then, of course, our do-mestic pump price willfall in nominal terms toN36.5/litre plus shippingand clearing, plus a mar-gin for the importer! Insuch scenario, petrolprice will become cheap-er than the current sub-sidized rate of N65/li-tre. Thus, instead of allthe furore on subsidy re-moval, the governmentcan in fact levy a tax ofN10/litre or more on eachof the 30 million litresreportedly consumed byNigerians daily. In ad-dition to projected sav-ings of N1000bn fromsubsidy removal, almostN400bn can also accrueto government as tax rev-enue annually.

2. Will Infrastructur-al Enhancement andEconomic Growth be theProduct of Subsidy Re-moval?

If one believes govern-ment’s promise of infra-structural enhancementfrom savings from erst-while subsidy leakages,then one will believe an-ything; Nigerians arevery familiar with govern-ment’s failure to deliveron such promises in thepast. For example, thehuge infrastructural andsocial welfare enhance-ment promised after theParis/London Clubs debtexit have remained a mi-rage; meanwhile, wegleefully parted withabout $18bn on this falsepremise of huge debtservice charges becom-

ing available for revamp-ing our economy!

Indeed, a fortuitous re-serve base in excess of$60bn was whittled downto just over $30bn withinfour years, and yet, suchexpenditure has not re-sulted in any major im-provement on our socialwelfare and infrastruc-ture; if anything, Nigeri-ans have become poorerthan we were 12 yearsago!

Besides, even if asclaimed that the

abolition of subsidymight indeed generatesavings of aboutN1000bn a year for gov-ernment, the reality isthat the impact of a de-regulated pump price ofover N150/litre for fuelwill create a poisonousripple that will furtherdeepen the extent ofpoverty nationwide asthe purchasing power ofall naira income earnersplummet from its al-ready precarious level. Ultimately, Nigerianswill not witness any sig-nificant improvement ininfrastructural and socialwelfare enhancement,while they will continueto slip further into pov-erty as their paltry nairaincomes buy less andless in the market place.

3. What is the Impedi-ment to the Establish-

,

,

ment ofMore Refin-eries?

We recallthat about 20licences havebeen grantedfor privatesector spon-sored refiner-ies, but un-derstandably,none of theselicencees hasshown muchseriousness toprogress theproject tocompletion. In reality,preva i l inghigh cost of

borrowing, no business-man is so trusting as toborrow between $500m to$1bn and above with ris-ing cost of funds for abusiness, whose successdepends on govern-ment’s usually unreliableand undefined schedulefor payback of subsidydifferentials from actualmarket selling price.

On the other hand, thefestering sore of corrup-tion, and the eternally ris-ing cost of maintenanceof existing refineriesshould be a warning todesist from pouring more

public funds into what ispatently a wasteful esca-pade to build more refin-eries; besides, there is noevidence of any majorgovernment utility thathas been efficiently andprofitably managed, sowhy should we trust thatgovernment’s fresh for-ays into such projects willbe successful this timearound? In any case, therelevant question is whatwould be the impact ofsubsidy removal on Ni-gerians and nationalgrowth and develop-ment. How wouldN150/litre price affect thestandard of living of mostNigerians, who live onless than $2 a day?

A combination of thepervasive impact of fuelprice hike of such mag-nitude, with lending ratewell over 20% (as can beexpected withMPR currently at 12%!)and a naira that is underpressure and widely

speculated to fall to aboutN200=$1, will deal adeadly blow to the wel-fare of Nigerians as ourincomes rapidly losemore value because of theunmitigated rage of in-flation. The volatile mixmay spur an inflation rateabove 20% and reducethe profitability and se-curity of any investmentincluding that of buildingnew refineries.

4. In the Event that Ni-geria is a Major Export-er of Crude Oil, is it NotFair That NigeriansShould Enjoy Subisdy?

My position and rec-ommendation on the ap-propriate handling ofpetrol pricing is well ar-ticulated in several arti-cles and interviews inboth print and electronicmedia. The concept offuel subsidy in the Nige-rian context is a promo-tion of waste and an in-stigation to spiraling in-flation with devastatingconsequences on thewelfare of Nigerians.

IFC, a member of theWorld Bank Group,

and the AfricanDevelopment Bank(AfDB) today signed anISDA Master Agreementto enter into cross-currency swaptransactions to facilitatelocal currency lendingand bond issuance inAfrica. It is the first ISDAMaster Agreement eitherinstitution has signedwith another multilateralfinancial institution.

The agreement willenable IFC and the AfDBto collaborate and benefitfrom each other’s localcurrency bond issues,enhancing their localcurrency fundingcapacity to support theirclients’ developmentprojects. Local-currencybond markets providelong-term, local currencyfinance for projects,protecting them fromforeign exchange risks.These markets are a vitalpotential source offinance, particularly inthe wake of the globalfinancial crisis, whenforeign capital inflows toAfrica have diminished.

Last year, the Group of20 called for a concertedeffort to develop and

IFC, AfDB sign ISDA agreement toexpand local currency finance

strengthen local currencybond markets inemerging markets. Theagreement is the firststep in an initiative forgreater collaborationamong multilateralinstitutions to acceleratelocal capital marketdevelopment andincrease local currencyfinancing options.

”Expanding long-termcurrency initiatives is acornerstone of IFC’sstrategy to strengthencapital markets indeveloping countries,”said IFC Vice Presidentand Treasurer, JingdongHua. “Helping toestablish and strengthensuch markets allows us towork with regulators andlocal institutions toensure that capitalmarket regulations areeffective andentrepreneurs are able togrow and create jobs.”

AfDB Vice President forFinance CharlesBoamah said:“Promoting thedevelopment of localcapital markets in Africais paramount tosuccessful, sustainableeconomic development.This agreement supportsour African Financial

Markets Initiative, whichaims to further thedevelopment of domesticAfrican capital markets,enlarge the investorbase, and reduce Africancountries’ dependenceon foreign currencydenominated debt.”

In Africa, IFC hasissued local currencybonds in Morocco, theWestern CFA zone, andthe Central CFA zone,and has obtainedapprovals to issue localcurrency bonds in Kenyaand Nigeria. Under itsPan-African DomesticMedium-Term NoteProgram, IFC is workingwith authorities inBotswana, Ghana,Kenya, South Africa,Uganda, and Zambia toobtain consent to issuelocal currency bonds. IFCis also working witheight members of theWest African Economicand Monetary Union toestablish local currencybond programs.

Since 2007, IFC hascommitted more than$650 million in 17different local Africancurrencies through acombination of swaps,bonds, and structuredfinance products.

SAVE THE NAIRA,SAVE NIGERIANS!

If we cast our minds back, we willrecognize that the bogey of fuelsubsidy evolved from the dastardlyblows to naira and welfare of Nige-rians by Babangida’s reckless de-valuation of the naira in conso-nance with IMF’s prescribed Struc-tural Adjustment Programme

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