stock market capitalisation records 26.6% growth, hits n11.533trn

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SEPTEMBER 16, 2013

Continues on page 22

Stock market capitalisationrecords 26.6% growth, hitsN11.533trn•Stakeholders lament CBN’s high interest rate•Say it will affect market performance in 2nd half

CURRENCY BUYING CENTRAL SELLING

CBN Exchange rate as at 13/09/2013

112.07 -0.56

107.90 -0.70

115.70 -0.55

2,574.00 +31.00

17.09 -0.09

DOLLAR 154.76 155.26 155.76

POUNDS 245.4184 246.2113 247.0042

EURO 206.0939 206.7597 207.4256

FRANC 166.6057 167.1439 167.6822

YEN 1.5552 1.5602 1.5653

CFA 0.2934 0.3034 0.3134WAUA 234.4369 235.1943 235.9517

RENMINBI 25.2908 25.373 25.4551

RIYA 41.2638 41.3971 41.5305

KRONA 27.6283 27.7176 27.8068

SDR 235.0804 235.8399 236.5994

The positive sentiment at theNigerian stock market at thebeginning of the year has

continued to impact on performanceof the market which has recorded a26 per cent growth in the last eightmonths. The market indicators, whichare the barometer of the health of thefinancial market, as at the end of thirdquarter of 2013 showed that shareprices of most of the companies listedin the exchange have risen by 26.6

BY PETER EGWUATU &NKIRUKA NNOROM

per cent. The average of all the pricesgained during the period has causedthe value of all shares listed at thestock exchange to hit N11.533 trillionat the end of trading last Thursday,September 12, 2013, compared to theN9.109 trillion it started the year with.

Also during the period, the shareprice of Nestle NigeriaPlc crossed the N1, 000 marks for thefirst time in the history of Nigerianstock market to close at N1, 088 pershare, following high demand bydomestic and foreign investors, a markof the growing confidence by both localand foreign investors in the Nigerian

economy.The Index had opened in the first

day of trading in January at 28,078.81points to close Thursday September12, 2013 at 36,224.44 points, showinga gain of 29 per cent. Similarly, themarket capitalisation rose by 26.6 percent from N9.109 trillion it openedwith in January to N11.533 trillion asat the close of business on Thursday.The stock market ended Thursdaywith investors trading 150.58 millionordinary shares valued at N1, 732,683.

However, the market had reached anew high of above N12 trillion thisyear before dropping due to the

vagaries of demand and supply of themarket.

Notwithstanding the positivegrowth, operators and otherstakeholders in the financial markethave raised fresh alarm over thecontinuous retention of MonetaryPolicy Rate (MPR) at 12 per cent bythe Central Bank of Nigeria (CBN),saying it will affect quoted companies’performance and capital marketindices for the remaining part of theyear.

Analysis of the performance of thecapital market showed that the monthof August closed at 36,248.53 points,a loss of 151.85 points. Month-to Date-showed a total loss stands at 2,102points or 4.40 per cent. ThaddeusInvestment Advisors & ResearchLimited in its opinion of the Nigerianstock market as at August, 2013 said“The top 25 stocks (category A) areinstitutional interest-driven stockswith minimal retailparticipation. Category B has a betterbalance of institutional and retailinterest-driven investorparticipation. We put the ratio at 2:1with the greater portion going toinstitutional interest; Category Cconsists of retail interest-driven stocks

*From Left; Alhaji Aliko Dangote, President, Dangote Group, Alhaji Bala Mohammed Getso, Managing Director,Giwa Dynamic Ventures Ltd, as First Distributors of the Year, and Alhaji Sanni Dangote, Vice-President of DangoteGroup, during the 2013 Awards Ceremony of Dangote Cement Distributors Night, with the theme; 'CementingParternships,' held on Wednesday September 11, at Eko Hotel, Victoria Island Lagos PHOTO; Kehinde Gbadamosi

Cover Story

CMYK

22 — Vanguard, MONDAY, SEPTEMBER 16, 2013

Continues on page 23

Continued from page 21

a)What is not business?One might wonder the

importance of knowing whatis not business, but this isnecessary because you needto know the kind of businessyou should not go into, andbusinesses that are prohibitedby law. Not every business isa genuine one and I will betaking you through a list ofbusinesses you must not befound doing.

b)The mentality of abusinessman:

There’s a saying in the goodbook which reads thus “bytheir fruits you shall knowthem”. The same applies tobusinessmen; they possesscertain qualities and mindsets that make them stand out.Consequently, before youstart a business, you need tobe adequately sure that youpossess the die-hardmentality of an entrepreneurto withstand the challengesthat will arise.

c)Who is an entrepreneur?Over time, various

definitions have been givento the term, but I will beteaching you the differencebetween an entrepreneur anda businessman, the boundlessand countless opportunitiesopen to an entrepreneur, thetraits and characteristics of asuccessful entrepreneur. Inshort, everything you need toknow if you want to be notjust a businessman but alsoan entrepreneur.

d)Your readiness to beyour own boss:

A lot of people embark on ajourney without fullypreparing for it, and as such,they are knocked off balanceby the slightest wind thatblows. No warrior goes to warwithout his arms and it’s onlya stupid farmer that goes tofarm without his hoe. At theend of this topic, you wouldknow if you are ready to starta business and peradventureyou are not, you would betaught steps that will helpyou to be both mentally andfinancially ready.

e)The basic steps:In this part, I will be taking

you through the steps that youcannot overlook, if you wantto have a successful business.These include: conceiving anidea, planning, funding,structuring, location, trainingand so much more.

I am of the sincere opinion

The Basic Guide to Startingyour Business Part 2

that this would be more thanjust a book for you and yourloved ones; it will be acompass that will guide youon your journey into theworld of entrepreneurs.There is no better time tostart your own business thannow. These same steps haveworked for me and I daresay are still working for me,and I am confident they willwork for you and everyonethat reads this book.

WHAT IS BUSINESS?Before you start a

business, it is veryimportant to understandwhat a business is in orderto avoid making mistakesthat can be very detrimental.The term business is verybroad and can be vague; forsome it is any activity ortrade with the sole aim ofmaking profits. On the onehand, it can be said to be theoccupation, work or trade inwhich a person is engagedin. On the other hand, abusiness can be defined as“an organisation thatprovides goods and servicesto people who want or needthem”. When many peoplethink of business careers,they often think of jobs inlarge wealthy corporations,but for the entrepreneur, abusiness is any activityaimed at creating andkeeping customers. Thereare basically two ways tocarry out a business:

1.Sell goods (physicalthings like books, toys, cars,houses, etc).

2.Sell services (intangiblethings like nurseryeducation, legal services,health care, insurance, etc).

Many business-relatedcareers though, exist insmall businesses, non-profitorganisations, governmentagencies, and educationalsettings. Conversely, yourbusiness may consist ofselling both goods andservices. For example, if youare a computer dealer, youmay sell goods (hardwareand software) and services( m a i n t e n a n c e ,troubleshooting, orconsulting). While it is veryimportant to get a degree orsome level of academicqualification, you can still gointo business if you do nothave one. Starting andgrowing your business isvery much like having a babyand bringing up the child.

with minimal institutionalparticipation. For Category A,price performances (Year-to-August 30th) are better thanthe Nigerian All-Share Index(29.09 per cent) as marketvalue decreases. Only fourstocks in the top 10 mostcapitalised companies haveprice performances betterthan the market, while eightof the last 15 in Category Ahave price performancesbetter than the overallmarket. In a nutshell, asmarket value decreases, priceappreciation improves amongNigeria’s 25 most capitalisedcompanies.”

It also noted that stocksoutside of the top 75 are muchless actively traded comparedto the top 75 and therefore arelargely stagnant in terms ofprice movement. The averageprice performance as atreference date of August 30thwas six per cent for CategoryD relative to the overallmarket at 29 per cent.

“Retail investors drive stockvolatility and stocks that havea decent level (in excess of 30per cent),” adding that retailinvestor participation basedon value not volume will onaverage have a better priceperformance than stocks thathave retail investor interestless than 30 per cent. Retailinvestors participate more instocks that are cheap on anabsolute basis. This hasnothing to do with valuation”it added.

Also commenting on theperformance of the stockmarket for the period underreview, Tola Odukoya,President, Dunn LorenMerrifield, an independentequity research and analyticalcompany, said; “ Overall,activities in the capital market

during the review period waslifted by secondary marketactivities in equities with afew primary issues.

He explained thatcompanies’ results were alsoencouraging, especially forbanks, “although this may notbe sustained for the rest of theyear based on new guidelinesand regulations from theCBN.

He stated that the slowdownin activities in the bondmarket persisted followingthe federal government’s shiftto the international financialmarket for its borrowing,whilst the monetary andinterest rate environmentcontinued to deter states andcorporate organisations fromraising funds in the market.

Also speaking, Mr. DavidAdonri, Managing Director/CEO, Lambeth Trust &Investment CompanyLimited, noted that year-to-date, the equities marketappreciated by 29.10 per cent,led by the industrial goodssector, which rose by 54.69per cent.

He stated that the onlysector that declined withinthe period was the AlternativeSecurities Market, ASeM,which lost 1.92 per cent, whilesaying that the recently re-activated platform for retailbond trade had been veryactive.

However, the equitiesmarket is not expected to beupbeat for the remaining partof the year. It maymomentarily firm up whenquarter three financial resultsare released, but the usualseason trend would prevailthereafter, he affirmed.

Also, in its review of theeconomy and capital marketperformance for the first halfof the year, titled, NigeriaStrategy Report, ARM

Research noted that Nigeriahad a difficult second half,2013, with the strains whichshowed up simultaneously inboth asset market andcurrency performancepointing clearly to the sourceof ongoing pressures on bothfronts just like otheremerging markets.

“Remarkably, as we hadanticipated, a surge indomestic interest, which putthe spotlight on the lessfancied market segmentshelped limit the damage onoverall equity indices, thougha harried defense of the Nairaput up by the CBN in thewake of surge in portfoliooutflows may not have hadthe commensurate impact onbond prices despitesubstantial recovery inreserves across the period.However, there were positivedevelopments on manyfronts, the most importantbeing the emergence of arobust recovery in thebanking sector and asustained run of single digitinflation, which we believesignals the onset of a muchmore stable backdrop forpolicy and market outlook.

The Nigerian stock marketended the first half of the yearon a positive note, returning28.8 per cent gain in overallmarket performance as the AllShare Index (ASI) closed at36,164.31 points. It is about80 per cent higher than theprevious year’s level. Theindex also had crossed the40,000 points mark beforeretreating to close last weekThursday at 36,476.30 points.Market value as at the end ofthe half year peaked at N12.84trillion, surpassing theprevious year before alsoretreating to N11.61 trillion at

Stock market capitalisation records 26.6%growth, hits N11.533trn

From left Mr Christopher Leitl, President, Austrian Federal Economic Chamber; Iyalode Al-aba Lawson, Deputy President, NACCIMA presenting a gift to Ambassador Joachim Oppinger,

Austrian Ambassador to Nigeria during a signing of Memorandum of Understanding at theAustrian-Nigerian Business Forum held in Lagos... recently.

CMYK

Vanguard, MONDAY, SEPTEMBER 16, 2013 — 23

Cover,

,

Continued from page 22

Last week, I wrote on this column that Nigerians' penchant for foreigngoods has continued to put pressure on the nation’s external reservesand the exchange rate. In the article, I asked for how long the CBN will

continue to defend the naira. Some readers wrote in to say that the article wasmore of a question and did not suggest solution. I said that between the monthof April and August 2013, a total of $14.95billion left the shores of Nigeria aspayments made by the Central Bank of Nigeria on behalf of the public. Of thisamount, cash sales to Bureaux de Change, where those who purchase foreignexchange in small quantity buy from, amounted to $2.2 billion while letters ofcredit for direct importation amounted to $157.5million. Direct remittances were

Let every company sourceits own foreign exchange

put at $983.7 million and salesto banks through thewholesale Dutch auctionamounted to $11.5 billion.Debt service/payment duringthe period took the sum of$93.62 million out of theexternal reserves of thecountry. Ironically, Bureau dechange is where the informalsector operators buy foreignexchange. The over $2.2 billionfrom the source went mainlyto those who are now havinga field day in the importationof either substandard productsor contrabands.

“These payments are madefor purchases of goods andservices that are non-essentialto the economy. Nigeriansimport toothpicks, rice,second-hand cars andvirtually anything under thesun. Nigeria since thediscovery of oil, has becomean import-dependenteconomy. It is not producinggoods and services for export.The only commodity thatNigeria depends on forforeign exchange earnings iscrude oil. Imagine if the overone billion dollars that flow outof the country on weekly basisis invested in local production;the multiplier effect on theeconomy will be tremendous.Besides, Nigeria monetises itsforeign exchange earningsfrom oil through constitutionalrequirement that the nation’srevenue go into one accountfor the three arms ofgovernment to share. The actof sharing revenue from oilhas made the economyunproductive as every arm ofgovernment depends onmonthly federal allocation.Nigeria’s earnings from oilwhich is monetised monthlyand shared among the three

tiers of government nowbecomes the property of theCBN. It has been sharedamong the three tiers ofgovernment and cannot bespent the send time exceptthose who want to import thatwill now buy back the dollarwith naira.

This is not the practice inother economies.Manufacturing companies andother economic agents earnforeign exchange and use itto further their production.Most of their earnings areeither reinvested within theeconomy or distributed asincome to investors. Suchearnings aid companies toexpand their production,create new jobs and ensurereal economic growth. Thereverse is the case withNigeria. Nigeria is not

manufacturing locally. It hasto import virtually everythingit needs. As a result, for everynaira spent in the country,about 90 kobo goes out forimportation, meaning thatonly about 10 kobo is spentlocally as it is significantlyimport-dependent.

The CBN is involved in theforeign exchange marketbecause it has purchased closeto 95 per cent of Nigeria’sforeign exchange earnings innaira. CBN is currentlydefending the naira throughits regular auction sale in theforeign exchange market outof fear that any currencydepreciation could haveadverse effect on the cost ofgoods and services in Nigeriathat could trigger anotherbanking crisis. The CBN's fearalso is that if it allows the nairato depreciate massively, the

economy will be in traumawhich could worsen theunemployment situation inthe country.

Central bank's fears aregenuine hence it is morefocused on price stability andfinancial system stabilitydespite its avowedcommitment to developing thereal sector of the economy. Thetruth is that the CBN shouldnot be the major supplier offoreign exchange to themarket. Nigeria as a country,should stop deceiving itself bycontinuing to own oil blocks.Oil blocks should be ownedand developed by individualswho in turn should pay tax togovernment. Governmentsaround the world are run ontaxes not on free money fromoil wells. It is the desire to geta share of the free money thathas made Nigerians mentallylazy. Governmentfunctionaries have longstopped thinking, all becauseof the belief that Nigeria willsell oil and share. The fightbetween the seven aggrievedPDP governors and thepresidency is not about anypolicy disagreement, it isabout access to free money. IfNigerians collectively decideto save all earnings from oiltoday or invest it ininfrastructure and every stateand local government agree tosource funds inwardly tofinance its recurrentexpenditure, the fight among

the geo-political zones of whobecomes the president ofNigeria will fade away. Crudeoil is the bane; foreignexchange earned from it issquandered because it is freemoney.

In other parts of the world,the central banks enter theforeign exchange marketeither to buy or sell just likeany other economic agent.Companies that earn foreignexchange keep them. Insteadof defending the naira,federal, state and localgovernments shouldencourage commercial farmersto grow rice; resuscitateexisting industries to producegoods at affordable prices,patronise locally made goods.Nigerians should buy locallymade goods, eat our homegrown food. Aso Rock andhotels in the country shouldlead by example and mustbegin to serve food made outof cassava, yam, coconut andgroundnut. Corporateinstitutions should collaboratewith research institutions anduniversities to develop newproducts as investment in suchproducts will bring abouteconomic expansion,increased production andGross Domestic Product(GDP), and createemployment in the country.

Rather than do this,Nigerians continue to exportjobs to other countries byimporting what can easily beproduced locally. The fewcompanies operating in thecountry have stock of finishedinventories in theirwarehouses becauseNigerians do not patroniselocally made goods. CBNshould stop being the solesupplier of foreign exchangeto the market. Companies andindividuals should sourcetheir foreign exchange.

Ironically, Bureau de changeis where the informal sectoroperators buy foreignexchange; the over $2.2billion from the source wentmainly to those who are nowhaving a field day in theimportation of eithersubstandard products orcontrabands

the close of trading onThursday. This was attributedto profit takers.

Operators and otherstakeholders in the markethave appreciated the level ofperformance when theyconsidered the 2012performance under review.Market value was singularlyenhanced by the listing ofDangote Cement whichaccounts for 25 per cent of totalmarket capitalisation. Analysisshows that average dailytransaction in the half year is475 million shares; this ishigher than 360 million sharesaverage daily transactionrecorded in the entire 2012period.

Sectoral review revealed thatthe Banking sub-sectorremained the most active as itwitnessed a lot of activityboth in the first and secondquarter of 2013. The NSEInsurance Index led thesectoral indices with a returnof 30.4 per cent, followed byNSE Oil and Gas with 28.61per cent return. Expectationswere high that insurancestocks will rally as earnings ofthe insurance companies beginto pour in the second half ofthe year. Insurance stockswere worst hit by the pricecorrection. Consequently, theInsurance Index ended thequarter with a negative returnof 10.36 per cent, while the Oiland Gas Index took the leadamongst losers with a drop of

13.45 per cent.Meanwhile, in reaction to

the MPR, the CBN hadexplained that its monetarypolicy committee was facedwith three choices, namely,increase in interest rates inresponse to the ‘upward trend’in headline and food inflation;a reduction in interest rates inview of declining coreinflation and Gross DomesticGrowth, and retaining currentmonetary policy stance in viewof conflicting price signals andglobal uncertainties.

The committee apparentlyrejected option one, as being“potentially pro-cyclical,considering the structuralnature of recent inflationarypressures”. Option two wasequally rejected on the

grounds that it was “likely tosend wrong signals of apremature termination of an‘appropriately’ tight monetarystance. The committee had,therefore, resolved to retainthe MPR, which determinesthe rate at which banks lendto their customers at 12percent.

Speaking to Vanguard whileassessing the performance ofthe stock market for the firsthalf of the year, Mr. AdebayoAdeleke, a Director of May &Baker Plc and NationalSecretary of IndependentShareholders Association ofNigeria (ISAN), said; “Thefirst half of the year is goodfor the stock market. Theresults from the companies sofar released are good,

showing improved liquidity.However, going forward, thepolicy thrust of the CBN onMPR is going to adverselyaffect the capital market at theend of the second half. In thethird quarter, if this MPRremains unchanged, the effectmight not show significantly.The reason is that interestpayable and other expenseswill be on the rise and this willaffect the bottom line of thesecompanies quoted on theNSE.” Continuing, he said,“How can companies survivewith high lending rate of 20and 25 per cent from thebanks. We are likely to seecompanies take precautionarymeasures from borrowingbecause the cost of goods willbe high and consumersdemand would definitelydrop.

Stock market capitalisation records 26.6% growth, hits N11.533trn


CMYK

CMYK


Business & Economy

BRIEFS

*From left: Aggrey Maposa, Regional Director, TNS Connect, Africa and Middle East,TNS; Adeola Tejumola, XEO, West, East and Central Africa, TNS RMS; Eddington Danda,MD, TNS RMS; Dayo Elegbe, CEO, Sponge Ltd and Mayor Esiaba, Consumer EngagementManager, West Aftica, Nokia at the launch of Mobile Life 2013. Photo by Lamidi Bamidele.

Entrepreneurs laud Dangotefor siting refinery at Olokola

More entrepreneursh a v elauded Alhaji Aliko

Dangote, President of theDangote Group ofCompanies, for siting arefinery at Olokola in OndoState.

They said in Lagos that thepenetration of the businessmogul into the project that isexpected to mitigate theimportation of petroleumproducts was commendable.

Mr Boniface Okezie,President, ProgressiveShareholders Association ofNigeria, urged otherindigenous entrepreneurs toemulate Dangote, who investsat home. Okezie hailedDangote as a good risk takerin business, adding that theventure would generateemployment for many in thestate and beyond.

“ Every entrepreneur needsto see risk-taking in businessas one of the processes thatthey will encounter beforethey break even. Risk-takingshows clearly that against allodds, one can achieve a featand this demonstrates clearlythe difference in the class ofentrepreneurs in the country,”he said.

Mr. Nnaemeka Obiaraeri,Managing Director, TaurusCapital and Advisory Ltd.,Lagos, described Dangote asa shrewd entrepreneur.According to Obiaraeri,Dangote is a focusedbusinessman who hasnurtured his businesses overthe years.

“Time is required innurturing a business, as it isoften not possible to get to thezenith in one day. Withpatience and commitment, ina given time, one’s dreamswill be achieved,” obiaraeriadded. Mr Gbenro Adetunji,an entrepreneur, said that allorganisations managed byDangote were successfulbecause he had adopted theentity concept.

“By this, I mean thatDangote, as the chief

executive of an organisation,is a different personality fromthe business,” he said.

Another entrepreneur, MrsPrecious Aremu, said thebusiness mogul was able todiversify into the petroleum

sector because of his access tolarge funds. Aremu, ChiefExecutive Officer of PreciousCakes and Confectionery,Lagos, said that access tofunds was a challenge tomany indigenous

businessmen and women. “Most of the banks do

not grant loans toentrepreneurs, except theentrepreneur is in the classof Dangote,” she noted.

Operators blame TICT for low scanningof containers

BY GODFREYBIVBERE

Operators have blamedthe management of the

Tin-can Island ContainerTerminal (TICT) for the lowvolume of containers scanned

daily at the terminal.The operators stated that the

company’s inability to providetrucks to convey containers tothe scanning site isresponsible for low level ofscanned boxes at the terminal.

Investigation revealed thatthe service provider hadasked for scanning to be donetwo weeks ago, which resultedin an experimental scanningwork and a total of 275 boxeswere scanned.

The amount is about fourtimes the number ofcontainers scanned by theservice provider on daily basisbefore the weekendexperimental work.

A clearing agent at theterminal, Mr AboduranOluwatobi, said that TICT hasabout five trucks dedicated tomovement of containers forscanning thereby restrictingthe number of containersprovided by the TICTmanagement.

He explained that thesituation has made theCustoms resort to providing100 per cent examination ofcontainers that have beenhitherto earmarked forscanning.

Vanguard gathered that ameeting between officials ofthe TICT management,Nigeria Customs Service(NCS) and Cotecna, serviceproviders in charge of theterminal, was held early last

week to proffer solution tolow container scanning atthe terminal.

At the said meeting,Customs officials weresaid to have complainedabout the buildingcongestion following thetransfer of containersmeant for scanning tophysical examination.

A source at the meetingtold Vanguard that boththe Customs and theservice provider stressedthe need for the terminaloperator to increase thenumber of trucks dedicatedfor movement ofcontainers.

The source said thatofficials of the terminaloperator had complainedthat should they deploymore trucks for movementof containers for scanning,other aspect of theiroperation such asdischarging and stackingof containers will suffer.

The source furtherdisclosed that personnel ofthe terminal operator,however promised todeploy about 10 to 15trucks more for thatpurpose. Despite thatpromise, however,Vanguard gathered that asat Wednesday last week,they were yet to deploymore trucks, leading to lessthan 60 containersscanned as at 3pm.

Minister to meet airline operatorsin Ghana over threats to stopoperations

Joyce Bawa-M o g t a r i , G h a n a ’ s

Deputy Transport Minister,says the ministry will soonmeet with officials of the twoairlines operating in thecountry, which threatened topull out of its aviationindustry. Antrak and Starbowairlines have threatened topull out of Ghana followingwhat they described asunfavourable marketconditions.

The airlines had raisedissues such as poorinfrastructure in the sectorand the high cost of aviationfuel in thecountry when compared totheir counterparts operating inother countries in the region,as issues which must beaddressed by the authorities.

NAN reports that the airlineshad also urged the

government to reduce the rateat which it issues licences todomestic airlines.

According to them, theissuance of more licences hasaffected the business of theexisting airlines. An onlinestatement issued by theminister said the meetingwould be used to address thegrievances of the airlines. Itquoted Bawa-Mogtari assaying that though thegovernment was not officiallyinformed about the issuesbeing raised, it was aware ofthe threats to pull out.“If theyare considering pulling out,the question to ask is, havethey officially brought theissue to us or theofficials concerned? We haveonly heard about all thesefrom the media, we have notreceived any of thesecomplaints formally."

CBN earmarksN220bn forSMEs, saysController

The Central Bank ofNigeria (CBN ) said it

has earmarked N220 billionfor disbursement tooperators of Small andMedium Enterprises (SMEs)in the country.

The Controller of thebank in SokotoState , Mr MohammedIdris, said this at theinauguration of the statechapter of the NationalAssociation of Small andMedium Scale Enterprises.

Idris, who wasrepresented by AlhajiMainasara Mohammed, theHead, Debt Unit of thebank, said 60 per cent ofthe funds had beendedicated to women andthe the remaining 40 percent to other interestedpersons. “CBN is ready tocollaborate with otherentrepreneurs andcooperatives acrossNigeria through various financingschemes suchas Agricultural CreditGuarantee Schemes. Theseare part of efforts to furtherboost the socio-economicdevelopment of Nigeria andcurb the menace of povertyand unemployment.”

Policemortgage bankto providehousing loansfor officers

The rank and file of theNigeria Police Force

will soon begin to enjoypersonal housing loans ofup to N15 million, with amaximum repayable periodof 30 years. DSP OlabisiClet-Ilobanafor, the PolicePublic Relations Officer(PPRO) in Oyo State,disclosed this inOgbomoso, whileaddressing the officers ofthe Ogbomoso AreaCommand.

She was briefing theofficers about the currentefforts of the Policeheadquarters to provide thehousing needs of policeofficers and men.

Clet-Ilobanafor stressedthat the police force, underthe leadership of theInspector-General of Police,Muhammed Abubakar, wasset to improve the welfareof its men, particularly bytackling their housingchallenges.

“This is the first IG whowants us to access thehousing fund because hebelieves every police officerneeds and deserves, not justtemporary shelter, but amodest home of his or herown."

BY BABAJIDEKOMOLAFE

,

,


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Banking & Finance

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financial institution has beenadjudged the “Best NigerianBank Website in CustomerExperience” at the 2013 Web-Jurist 11.0 Awards held at theEko Hotels and Suites, Lagos.

The Web-Jurist Awards,which is in its 11th edition, isorganised by PhillipsConsulting and has becomethe standard for rankingwebsite effectiveness for theBanking, Insurance and

StandardCharteredforesees strongAfrica retailprospects

Standard CharteredPlc, the U.K. bankthat earns most of its

profit in Asia, expects toopen 100 new branches inAfrica by 2016 to benefitfrom the continent’s $1trillion of annual retailspending.

The lender opened 27 newoutlets last year and willalso “invest heavily ” indigital technology over thenext four years, RaheelAhmed, Dubai-based headof consumer banking for theMiddle East, Africa andPakistan, said in e-mailedcomments yesterday. Thebank will focus on small andmedium-sized companiesand private banking, hesaid.

“There is so much growthpotential, particularly whereeconomies are growingrapidly,” Ahmed said. “InNigeria, only 14 or 15 percent of the people have bankaccounts,” he said.

Standard Chartered’soperating revenue at itsAfrica consumer bankingunit rose 9.4 per cent in thefirst half to $257 million.Economic growth in Sub-Saharan Africa willaccelerate to 5.1 per centthis year and 5.9 per centnext year from 4.9 per centin 2012, according to theInternational MonetaryFund.

Africa's robusteconomicgrowth raiseshopes

Africa’s robust economicgrowth over the past

decade has raised hopes theworld’s poorest continentcan reduce reliance on aid.

The problem with thisscenario is its failure toconsider the role aid may beplaying in the “AfricaRising” narrative.

Looking for a link betweenaid and growth, anunmistakable patternemerges from the numbers.

World Bank data showsforeign donor aid to Africafrom the OECD group ofwealthy countries was justunder $13 billion in 2000and soared to $41 billion in2006, and then slipped,before rebounding andhitting over $46 billion in2011.

The Central Bank ofNigeria, CBN said atend of June 2013 , the

total amount released underthe Commercial AgricultureCredit Scheme (CACS) to the19 participating banks fordisbursement to agriculturesector stood at N217.4 billion(for 288 projects).

The beneficiaries included30 state governments.Available data from CBN’ssecond quarter indicated thatthe second quarter of 2013experienced increase andwidespread rainfall in mostparts of the country. This ledto increased level ofagricultural activities,especially cultivation andharvesting of crops such asmaize and vegetables. In thelivestock sub- sector, farmersconcentrated on sanitisingpoultry houses and theirsurroundings to avoidexposure to livestock-relateddiseases.

The apex bank stated that atotal of N932.6 million wasguaranteed to 7,591 farmersunder the Agricultural CreditGuarantee Scheme (ACGS) inthe second quarter of 2013.This represented a decline of50.7 and 41.4 per cent belowthe levels in the precedingquarter and thecorresponding quarter of 2012respectively.

A sub -sectoral analysis ofthe loans guaranteedindicated that the food cropssub-sector received the largestshare of N 601.8 million (64.5per cent) for 6,014beneficiaries, while thelivestock sub-sector got

CBN disburses N217.4bn to 19 banksfor Agric sector in Q2

By PETER EGWUATU N241.6 million ( 26.0 percent) for 1,056 beneficiaries.Fisheries sub -sectorobtained N60.7 million (6.5per cent) for 348beneficiaries; while cashcrop sub-sector receivedN11.6 million (1.2 per cent)guaranteed to 101beneficiaries. Mixed cropsobtained N10.6 million (1.1per cent) for 40 beneficiaries,while other sub-sectorsobtained N6.3 million (0.7percent) guaranteed to 32beneficiaries.

Further analysis showedthat 30 states benefited fromthe scheme during thequarter, with the highest and

lowest sums of N137.3million (14.7 per cent) andN0.2 million (0.02 per cent)guaranteed to farmers in Edoand Borno states,respectively.

However, on the industrialproduction sector, the CBNrevealed that industrialactivities during the secondquarter of 2013 indicated animproved performancerelative to the level in thepreceding quarter.

According to CBN, “At13,869, the estimated indexof industrial production roseby 1.7 and 1.8 per centabove the levels in thepreceding quarter and the

corresponding period of2012, respectively. Thedevelopment wasattributed to theimprovement in activities inthe electricity andmanufacturing sub-sectors.”

The estimated index ofmanufacturing production,at 110.56, rose by 3.9 percent above the levels in thepreceding quarter and thecorresponding period of 2012 respectively. Theestimated capacityutil isation also rosemarginally by 0.6percentage point (57.99 percent). The development wasattributed to the improvedelectricity generation withinthe quarter.

Wema Bank wins best customersexperience website banking award

Telecoms industries inNigeria.

Speaking on Wema Bank’sperformance in the 2013 Web-Jurist, Kemi Aina, Head ofBrand & MarketingCommunications at WemaBank, attributed the award toa dedicated focus on ensuringan immersive userexperience and relevantcontent delivery across allservice touch-points –whether physical or virtual.She further stated that inaddition to the bank’s team of

u s e r - e x p e r i e n c edesigners,the development ofthe bank’s service touch-points are backed by thoroughresearch, extensiveconsultation and relying onend-user feedback in order toensure customers have adelightful service experiencewith Wema Bank at all times.

The Web-Jurist ranking isthe result of researchconducted into website bestpractices and effectiveness. Itis aimed at identifying thestrengths and weaknesses ofwebsites as a business

platform in the digital worldand determines the extent towhich a website is successfulin achieving the essence of itse-business strategy.

Established in 1945, WemaBank boasts of a robust digitalfinancial services strategyacross various alternativechannels and platformsenabling the provision ofcutting-edge, value-addingtransactional and non-transactional services in themost simple, effective mannerto its discerning customers.

*From left; Ambassador Musiliu Obanikoro, Chairman, Board of ITF, Hon. Minister of Industry,Trade and Investment, Olusegun Aganga, Deputy Governor, Cross River State, Mr. EfiokCobham and President of the Manufacturers Association of Nigeria (MAN), Chief Kolawole B.Jamodu at the 19th Biennial National Training Conference held at the Tinapa Business &Leisure Resort, Calabar.


Corporate Finance

BRIEFS Quoted companies: NSE bars marketmakers from exercising voting rights

BY NKIRUKA NNOROM

The Nigerian StockExchange, NSE,has warned Market

Makers against exercisingvoting right in companiesin whose securities theymake market in, sayingthat severe sanctions willbe meted out to offenders.

The NSE also warnedthe Market Makersagainst exerting any formof influence on themanagement of thecompanies concerned orexert any influence onthem to buy back theirshares or back the shareprice.

In a circular to theDealing member firms,signed by OlufemiSobanjo, Head, Broker/Dealer Regulation, theNSE stated that thepurpose of the circular wasto provide marketparticipants with a briefguide on acceptableconduct in relation toShort Selling, MarketMaking and SecuritiesL e n d i n g .

It further stated thatMarket Makers arerequired to disclose anycorporate involvementsuch as directorships orsubstantial shareholding,above five percent, incompanies in whosesecurities they engage inmarket making activities,adding, “Market Makersare required to establish,maintain and enforcewritten policies andprocedures reasonablydesigned, taking intoconsideration the nature ofmarket making business toprevent the misuse ofmaterial non-publici n f o r m a t i o n . ”

Setting out additionalrules on Short Selling, theExchange said, “Nakedshort selling - the practiseof selling a security thatone does not own and hasnot borrowed- is strictlyprohibited. No DealingMember other than aMarket Maker mayexecute a short saletransaction on the basis ofa bona- fide arrangementto borrow the securities.”

“All Market Makers mayexecute a short saletransaction provided thatthey have borrowed thesecurities or have enteredinto a bona-fidearrangement to borrow thesecurities which will beavailable on the date ofdelivery. All other DealingMembers must haveborrowed the securitiesbefore executing a shortsale transaction,” theExchange added.

The NSE further stated

in the circular, that onlySecurities Lending Agents(SLAs) duly registered by theSecurities and ExchangeCommission, SEC, arepermitted to engage insecurities lending, saying thatduring the roll out period,only the securities ofQualified InstitutionalInvestors (QII) could be madeavailable for borrowingpursuant to appropriateagreements with SLAs.

It added, “DealingMembers must not borrow or

make arrangements to borrowsecurities directly frominvestors without theintermediation of SLAs.”

It will be recalled thatalready, there are 13 existingPrimary Market Makers andanother 13 SupplementalMarket Makers in theNigerian capital market,whose role it is to createliquidity in the stocks theymake market in.

For each stock in theportfolio of market makers,two PMMs and additional two

SMMs were appointed.Under extant law of market

making, the market makersare required to stabilise themarket by ensuringcontinuous liquidity andsynchronising buy and selltransactions; must have thecapacity for continuous two-way quotes in the relevantstocks throughout the tradingsession in a minimum quotesize to be specified by theNSE with the approval ofSEC.

*From Left: Chief Education Officer, Guardian and Counseling, Lagos State Ministry of Ed-ucation District II Headquarters, Mrs. Oluwatoyin Abosede Williams; Executive Director, Cor-porate Services, UAC of Nigeria (UACN) Plc , Mr. Joseph I. Dada; Principal, Lanre AwolokunHigh School, Mrs. Adams Ibironke, and Corporate Marketing Services Manager, UACN Plc,Mr. Olaseni Fawehinmi, at the closing ceremony of the 2013 UACN Goodness League freeweekend classes, as part of UAC’s Corporate Social Responsibility (CSR) activities,held atGbagada Senior Grammar School, Gbagada, Lagos…at the weekend.

PHOTO; Kehinde Gbadamosi

POWER: Flour Mills awaits FG’s approvalto sell electricity

BY MICHAEL EBOHand WILLIAM JIMOH

Flour Mills of Nigeria Plchas stated that it is

awaiting the approval of theFederal Government to enableit deliver a portion of its 50mega watts of electricity tobusinesses around Apapa andalso to the national grid.

Mr. Paul Gbededo, GroupManaging Director, FlourMills Nigeria, who disclosedthis at a press conference inLagos, said the 50 megawattscurrently generated by its gasand diesel power generatorsis in excess of its 32 megawatts requirements and itintends to sell the excesscapacity to its neighboursaround Apapa, while theothers will be supplied to thenational grid.

He said, “If we get theapproval from the FederalGovernment, we will supply

to our environment and ifthere is excess, we will deliverit to the national grid.”

He further stated that thecompany plans to increase itsearning capacity in the yearsahead with continuousinvestment in new millingtechnology and newacquisitions.

According to him, thecompany is determined toensure that its agro-alliedstrategy provides sustainablereturns on capital invested bymaximising local content ingroup products.

He stated that the companyintends to produce its rawmaterials locally to ensurethat high quality products aredeveloped through the foodsupply chain.

He said, “We will leverageon the unassailable quality ofour flagship product, GoldenPenny Flour; the growingpopularity and marketacceptability of our sugarbrand; our continuous

investment in new millingtechnology; our majorinvestment in a greenfieldpasta factory at Agbara;synergies arising from recentgroup restructuring and newacquisitions; developmentand introduction of newproducts in response toevolving consumerexpectations; and ourstrengthened pan Nigeriaproducts distribution networkto generate improvedearnings and deliver superiorshareholder value.”

Gbededo said thecompany ’s US$65 million(N10.4 billion) millingcomplex, named West Mills’has helped increase its millingproduction by over 8,000metric tonnes of wheat daily.

He disclosed that the newmill with a 2,250 metrictonnes capacity will helppromote its objective ofconsolidating andmaintaining its leadershipposition in the food industry.

GTBank gets2013 bestbanking group

US stocksfluctuate asinvestorsweigh Fedplans, Syria

U.S. stocks fluctuated,following a seven-day

win streak for the Standard& Poor ’s 500 Index, asmaterials producersplunged while investorsweighed the prospects forFederal Reserve stimuluscuts and watcheddevelopments on Syria.

Barrick Gold Corp.dropped 4.5 per cent as theprecious metal slumped themost in nine weeks.Newmont Mining Corp.(NEM), the largest U.S.gold producer, lost 3.5percent. LululemonAthletica Inc. (LULU)tumbled 3.4 per cent aftercutting its earnings forecast.Walt Disney Co. rallied 2.9percent after saying it wouldbuy back as much as $8billion in shares. PandoraMedia Inc. jumped 13percent after namingdigital-advertising veteranBrian McAndrews as itsnew chief executive officer.

Guaranty Trust Bank Plchas once again led the

way by winning the ‘2013 BestBanking Group – Nigeria’ inthe 2013 Annual World Fi-nance Banking Awards in anannouncement made on Fri-day, 13th September, 2013.Also, the Bank’s ManagingDirector/CEO , Segun Agba-je was named the 2013 Bank-er of the Year . The World Finance Bankerof the Year - Africa Award isconferred on outstandingbankers who have achievedthe most with regards to in-novation, profitability and sus-tainability of their organisa-tion. The award also takes intorecognition an individual thathas been an influential andinspirational leader, has over-seen strong financial perfor-mance for his organisationand has successfully guidedhis institution to new heightsin its industry. Outlining the rationale forGTBank winning the ‘2013Best Banking Group – Nige-ria award’, judges comment-ed that the bank scored highmarks in innovation and prod-uct offering in the financialservices industry, regionalreach to cover high growth.markets, significant proof ofcontinuous development,good corporate governanceand corporate social respon-sibility.

CMYK


30 —Vanguard, MONDAY, SEPTEMBER 16, 2013

CMYK

Corporate Finance

BRIEF

This week, interestedinvestors will begin tojostle for the three

nationalised banks startingwith Enterprise Bank Limited.

Two weeks ago, theAMCON-appointed financialadvisers, Citibank and VetivaCapital, set this Friday,September 20, as deadline forinvestors to submitExpression of Interest for theAcquisition (EOI) ofAMCON’s shareholding inEnterprise Bank.

Enterprise Bank was one ofthe three bridge banks createdby the Central Bank ofNigeria (CBN) and NigeriaDeposit InsuranceCorporation (NDIC) toassume the assets of the threetroubled banks whose licenceswere revoked due to inabilityto meet the September 30th2011 deadline forrecapilisation. EnterpriseBank assumed the assets ofSpring Bank, MainstreetBank assumed the assets ofAfribank, while KeystoneBank assumed the asset ofBank PHB. The threenationalised banks were latersold to AMCON, whoappointed new managementsand promised to stabilise thebanks and sell them toinvestors after three years.

By the end of 2012 operatingyear, the three banks hadreturned to profitability.Enterprise recorded N11.3billion profit; Keystonerecorded N2.8 billion whileMainstreet recorded N24.1billion profit. This made thebanks more attractive forinvestment and set the stagefor AMCON to divest fromthem. But the corporationdecided to start withEnterprise Bank and in July,it appointed financial andlegal adviser for the sale of thebank. Citibank GlobalMarkets Limited wasappointed as financialadvisers, while G.Ellias &Company emerged as thelegal adviser.

During a visit to VanguardNewspaper, ManagingDirector/Chief ExecutiveAMCON, Chike-Obiexplained that the decision tostart with Enterprise Bank isbecause it is the smallest ofthe three, and that lessonsfrom the sale of the bankwould come handy in the saleof the two remainingnationalised banks. In itsattempt to sell Enterprise, twofactors are very instructive.

The first is the troubledhistory of the bank. Thepredecessor of EnterpriseBank, Spring Bank, wasformed by the merger of sixbanks that could not meet theN25 billion new capital basedeadline of December 31st

Sale of Enterprise Bank andthe lessons of history

By BABAJIDEKOMOLAFE

,

,

Custodian &Allied explainsdelay inrelease ofquarterlyresults

By NKIRUKA NNOROM

Custodian & Allied Plchas attributed thedelay in submission

of its 2012 quarter one andtwo financial statements toadopt full InternationalFinancial ReportingStandard, IFRS.

In a notice, Friday, to theNigerian Stock Exchange,NSE, the company said effortsare being made to ensure thatthree of its companies,including the subsidiaries keyinto IFRS reporting standardand harmonise the results ofthose companies.

It, however, stated that theindividual results of thesubsidiaries - CrusaderGeneral Insurance Ltd andCrusader Life Insurance Ltd-were recently approved by theregulators.

The company assured thatthe results would be madepublic as soon it getsnecessary regulatoryapprovals, while appealing toits shareholders and otherstakeholders forunderstanding.

Following regulatory andlegal approvals of thebusiness combinationbetween Custodian andAllied Insurance Plc andCrusader Nigeria Plc, themerged entity known asCustodian and Allied Plc,recently said it has embarkedon restructuring of theorganisation.

Custodian and AlliedInsurance Plc had reported aprofit after tax of N1.4 billionfor the financial year endedDecember 2011.

This represents a drop ofN642 million or 34.43 percentwhen compared with theprofit after tax of N2.042billion achieved in thecomparative period of 2010.

According to the auditedresults, the company’s grossearnings went down byN3.663 billion or 26.69percent to N10.061 billionfrom N13.724 billion achievedin the preceding year.

The company proposed adividend payout of eight kobofor every shareholder whosename appeared on theregister before the closingdate, May 2, 2012.

2006. The banks wereCitizens International Bank,ACB International Bank,Fountain Trust Bank,Guardian Express Bank,Omega Bank, and TransInternational Bank. But thebank was later engulfed bywhat the CBN described asirreconcilable differencesamong board members. Thisled to the sack of theAgbetuyi- led management bythe CBN and the appointmentof the Ndanusa-ledmanagement. The crisis wastriggered by the outcome of acapital verification exercise ofthe CBN, which revealed that

for the resignation ofProfessor Soludo, the thenCBN Governor.

Despite the assurances ofthe regulators and theirappointed management,Spring Bank never recoveredfrom the impact of the crisis.Thus, it was not surprising itwas among the eight troubledbanks.

Furthermore, and inaddition to this is thecontroversy that trailed effortto recapitalise Spring Bankby the CBN-appointedmanagement. On June 14, thebank issued a statementsaying that it was inrecapitalisation talks withsome institutions includingICICI and U.S-based privateequity firm, CloudleapPartners. But the followingday, ICICI issued a statementsaying it was not in anyinvestment discussion withthe management of SpringBank.

The import of this is thatEnterprise Bank is built onfinancial institutions thathave always been doggedwith crisis, and thus AMCONneeds to ensure that thishistory is not repeated in thesale of the bank.

Also instructive are thelessons from therecapitalisation of five of theeight troubled banks. Four ofthem solved theirrecapitalisation challengethrough acquisition by localbanks. Intercontinental Bankwas acquired by Access Bank,Oceanic by Ecobank; Finbankwas acquired by First CityMonument Bank, andEquitorial Trust Bank (ETB)by Sterling Bank. Union Bankon its par embraced the coreinvestor approach to resolveits recapitalisation challenge.A consortium of investors ledby African Capital Alliance(ACA) formed Union GlobalPartners which recapitalised

the bank by injecting $500million to acquire 65 per centof the bank’s share. But therecapitalisation was at somepoint stalled due to the refusalof the Securities andExchange Commission (SEC)to approve the bank’s rightissue, which was a conditionfor the injection of capital bythe ACA consortium. Inaddition to these, theconsortium initially delivered$300 million as against the$500 million it promised. Itwas the intervention ofAMCON that saved thesituation. Though nowhistory, as the promisedcapital had been injected,new management appointed,and the bank now back toprofitability, the process whencompared to that of the otherfour troubled banks shouldserve as a lesson to the CBNand AMCON in the sale ofEnterprise Bank.

Shortly after his assumptionof office, the CBN Governor,Mallam Sanusi Lamidoexpressed his preference forforeign banks and investorsfor the resolution of thetroubled banks, but theresolution of IntercontinentalBank, Oceanic Bank, Finbankand ETB indicates that it maybe better to put faith in thelocal banks. According to theAMCON advisers, investorsinterested in Enterprise muststate their strategic rationalefor the acquisition ofEnterprise Bank; haverelevant financial servicesindustry experience and/ordemonstrate ability to managea bank like Enterprise; andshow evidence of financingcapacity. Definitely, the 150branches and 154 ATMnetwork of Enterprise Bankwould be strategic to a numberof local banks and whowithout doubt have therequired experience andability, as well as the financingcapacity. These includeDiamond Bank, Skye Bank,Sterling Bank Stanbic IBTCand the latest entrant,Heritage Bank. Themanagement of these banksare looking for opportunity toexpand their branch networkso as to boost their customerbase and enhance theirmarket share and profitability.Thus, while ensuring that thenecessary criteria are notcompromised and the processis transparent and devoid ofcontroversy, it would beinstructive for AMCON in itsbid to sell Enterprise to deferto the adage that says charitybegins at home.

only two of the legacy banks(Guardian Express and ACBInternational) contributedpositive capital to the merger.But the erstwhile Chairman ofthe bank, Reverend Agbetuyi,who was also former ChiefExecutive of Omega Bank,accused the CBN of helpingGuardian Express andCitizens Bank to overstatetheir capital contributions tothe merger. In a letter widelypublished, Agbetuyi accusedthe CBN of ignoring warningof fraudulent activities of theMike Chukwu-ledmanagement, and also called

The import ofthis is thatEnterprise Bank

is built onfinancialinstitutions thathave always beendogged withcrisis, and thusAMCON needs toensure that thishistory is notrepeated in thesale of the bank

•Mustapha Chike-Obi , AMCON boss


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Homes & Housing Finance

FG netsN4.3bn fromground rents,C of O in 2012

The FederalG o v e r n m e n t

generated N4.3 billion,through the Ministry ofHousing and UrbanDevelopment, from groundrents and issuance ofCertificates of Occupancyin 2012.

Immediate past Ministerof Housing and UrbanDevelopment, Ms AmaPepple, disclosed this inAbuja before she wasrelieved of her post lastweek. She also said that2,800 housing units havebeen developed throughestate development loan inthe country, as part ofefforts by government toreduce the nation’s hugehousing deficit.

According to her, 626housing units weredelivered under the publicprivate partnership schemeand another 850 units bythe Federal HousingAuthority (FHA). These arein addition to 3,529housing units which hadbeen developed throughloans obtained from theFederal Mortgage Bank ofNigeria (FMBN), shenoted.

Nasarawatargets N5bnmonthly landrevenueW

ith computerisationof its lands

contiguous to the FederalCapital Territory (FCT),Nasarawa Stategovernment is targeting N5billion monthly revenuefrom land transactions.

Nasarawa StateCommissioner for Lands,Survey and TownPlanning, Sonny Agassi,stated this while briefingmembers of NasarawaState House of Assembly(NSHA) StandingCommittee on Lands whowere at Mararaba, thegateway to the FederalCapital Territory (FCT), toinspect the execution of thecomputerised lands systemcalled NasarawaGeographic InformationSystems (NAGIS).

He said through NAGIS,the state governmentintends to turn Karu into abusiness district, addingthat by the end of the 24months the execution of theproject is expected to last,Nasarawa can boast of arevenue base of nothingless than N5 billionmonthly from the land sizeof 27,000 squarekilometers.

BRIEFS

By YINKA KOLAWOLE

Mortgage creation: MBAN scribeadvocates holistic approach

Achieving effectivecreation of mortgagesin Nigeria that will

guarantee easy access toaffordable housing requires aholistic approach bygovernment and otherstakeholders in the mortgage/housing finance sector.

Executive Secretary/CEO,Mortgage BankingAssociation of Nigeria(MBAN), Mr. KayodeOmotosho, stated this in apaper presented at anInternational Conference onAffordable Housing in Abuja.He noted that though accessto housing is very readily

available through mortgagesin developed countries, it hascontinued to remain a majorchallenge in some emergingeconomies like Nigeria due topoor legal and regulatoryframework, high costs oftitling, dearth of long termfinance and absence offoreclosure laws.

According to him, “Over thelast 20 years, the mortgagesector has focused primarilyon the creation of affordablehousing as a means toempower Nigerians of allincome groups with tradable/transferrable instruments forwealth creation. The ongoingreform/recapitalisation of themortgage banking sector andthe creation of a MortgageRefinance Company with theaim to strengthen and create

liquidity in the sector aremoves in the right direction.However much would stillneed to be done to improvethe legal and regulatoryframeworks in order toachieve effective creation ofmortgages in Nigeria.”

Omotosho remarked that thesector would develop morerapidly with a reform of theland tenure system since,according to him, originatorsof mortgages wouldultimately rely on land titlesas collateral in the form ofacceptable and tradableinstruments. He said efforts tocreate a large number ofhousing units throughmortgages would requirelong-term funding/liquidityin the mortgage sector, notingthat recapitalisation of

primary mortgage banks(PMBs) and the evolution ofa Mortgage RefinanceCompany (MRC) areinitiatives towards creation ofliquidity in the sector. He alsosaid there is the need forconcerted efforts by FederalMortgage Bank of Nigeria(FMBN), PMBs and MBANto enhance the NationalHousing Fund (NHF)contributions/collectionsystem to deepen the NHFScheme in order to createmore mortgages.

The MBAN scribe furthercalled on PMBs and othermortgage originators to worktogether to form Syndicate/Consortia/Club Arrangementsto share risks and expand thescope of project execution forlarge scale housingdevelopment. He also saidprimary mortgage originators/lenders and estate developersneed to collaborate withgovernments and employersof labour to work outmodalities for bridging theaffordability gap in home-ownership financing atoptimal interest rates, toensure that loanable funds foraffordable housing areavailable to wider incomegroups.

Other measuresrecommended by Omotoshoinclude: fast-tracking thepassage of the foreclosure billinto law; reduction in highcosts of titling whichconstitute major impedimentsto perfection of legal titles andaccess to mortgages;automation of mortgage loanprocesses to improveefficiency and effectivenesstowards creating moremortgages and introduction ofnew building systems forproduction of housing projectson large scale. He alsoidentified the Land Use Act of1978 as primary impedimentto the development of a virilemortgage banking/housingfinance sector, calling foramendments to the Act in themain area of obtainingGovernor ’s consent tomortgage for every transactionand subsequently worktowards removing the Actfrom the Constitution. Headded that government needsto promote the reduction incosts and increase in thequality of building materials,noting that this would ensurethat housing units would lastlonger with minimalmaintenance measures.

“Considering thatmortgages are crucial to theprovision of affordablehousing on a large scale inNigeria, MBAN is workinghard and collaborating withthe three tiers of governmentand other key stakeholderstowards creating the enablingenvironment for the Sector tothrive. It is however importantthat all players in the builtenvironment should worktogether to increase thehousing units available toNigerians through large scaleproduction on economies ofscale and virile mortgagefinance arrangements,” hestated.

Housing development using local building materials

UK property sector jobs soar to record high

*Analysts fear new housing bubbles

The number of estateagents has soared to

a record high with one infour jobs created in thepast year in the propertysector, according to officialfigures.

According to the Officefor National Statistics, thenumber of jobs in thesector rose to 562,000 inthe second quarter of theyear, exceeding the 2008peak and the most since itsrecords began in the late1970s.

The figure was up by77,000 compared with thesame period last year. Thestatistics suggest thatBritain’s current growth isbeing driven by a newhousing boom. The sector,which includes estate

agents and propertydevelopers, is growing soquickly it has amounted to thefastest growing segment ofnational workforce in the threemonths ending in June. Thetotal number of new jobs inthe economy during the sameperiod was 334,000. data willadd to fears that the countryis heading for a house pricebubble.

Danny Gabay, director ofeconomics consultancyFathom, said: ‘We’re nolonger a nation ofshopkeepers; we’re becominga nation of estate agents. Iwould certainly agree that theeconomy has turned a corner;my concern is about howsustainable this recovery willbe, given that it is based onusing government subsidies

to encourage already over-extended households to takeon even more debt to financetheir consumption.’

Concerns over the housingmarket boom were echoed byBusiness Secretary VinceCable, who urged ChancellorGeorge Osborne to rethink hisHelp to Buy scheme. Thescheme, announced inMarch’s Budget, is designedto help first-time buyers geton the property ladder andenable existing homeownersto “trade up” to largerproperties by giving banksgreater confidence to lend.Under the second phase ofthe scheme, the governmentwill guarantee a proportion ofthe loan for purchases of upto £600,000 for those able toput down a deposit of between5 percent and 20 percent.


Micro - Finance

As the struggle to achieve global financialinclusion by 2020 continues, Centre forFinancial Inclusion, CFI is set to host the

Financial Inclusion 2020 Global Forum.The forum scheduled to hold from October 28 to

30, 2013 is focusing on achieving global financialinclusion by the year 2020.

The forum will be hosted by the Center forFinancial Inclusion (CFI), which was founded in

2008 in Washington, DC, by US-based NGO,Accion and will be attended by leaders in publicpolicy, mainstream and specialised financialsectors, technology and corporate sectors andinternational non-profits.

Financial Vanguard gathered from a statementthat the forum will explore strategies for expandingglobal financial inclusion.

According to the statement, “the organiser of theevent seeks to bring about the conditions to achievefull financial inclusion worldwide by promotingcollaboration among a variety of industries. Itoperates under a core belief that financial inclusionrequires that everyone has access to a range ofquality financial services at affordable prices,delivered by a range of providers in a competitivemarket.

“Financial Inclusion 2020 (FI2020) is amovement that rallies stakeholders to achieve full

financial inclusion and proposes 2020 as theapex for action.”

When banks fail as small

business advisersStories byPROVIDENCE OBUH

One of the rolesof banks asmandated by

the regulatory body,Central Bank ofNigeria, CBN is to actas advisory body tosmall business owners.

To this end, Secretary,Association of MicroEntrepreneurs ofNigeria, AMEN, Mr.Frederick Okeleme, in atelephone conversationsaid that the Small andMedium Enterprises,(SMEs) sector issuffering as a result oflack of properorientation.

Okeleme said; “Whatdo you expect from asector that has beenabandoned by thebanks? The sector willcollapse, they will notdo well, the banks havenot been playing theiradvisory role asmandated by the CBN.

“That is why we arehaving challenges inthis sector, becausebanks keep organisingc a p a c i t y - b u i l d i n gprogrammes withinthemselves, forgettingthat the micro-entrepreneurs have arole to play in thissociety.”

Meanwhile, a surveycarried out by Optionisreveals that only one infive small businessesreceived pro-active helpand advice from theirbank, also thatentrepreneurs seequality advice fromtheir bank as more

important than access tofinance when it comes tosupporting growth.

Managing Director,Optionis, Derek Kelly,said; “Emergingentrepreneurs and smallbusiness owners seem tobe having anincreasingly remoterelationship with theirbanks.

“This is perhapsunsurprising, given thepopularity of online

banking amongst thisbusy section of society,for whom ‘anytime andanywhere’ services havetremendous appeal.

“However, banks needto work harder to findways to offer advice andsupport to thesecustomers, particularlyon an issue such as cashflow that is crucial tobusinesses surviving thedifficult first few monthsand years.”

Ac c i o nMicrofinance

has expanded its reachto Ikorodu, to furtherdeepen access tofinance for low incomeearners and smallbusiness owners inLagos State.

This is following therecently launched N220billion, Central Bank ofNigeria (CBN) Micro,Small and MediumE n t e r p r i s e sDevelopment Fund,MSMED.

In a document madeavailable to Vanguardand signed by Head,E x t e r n a lCommunications, Mrs.Oluwayemisi Mafe, thebank's issued and fullypaid-up share capital ofN1.205 billion as wellas total asset of N3billion gives it the

CFI holds financialinclusion 2020 globalforum

Accion expands to Ikorodurobust financial base toservice its increasingcustomers. This is evenas it disbursed overN18.7 billion in loans toabout 97,000 customerssince 2007 when itstarted operations.

With 20 branches andcounting, the bankassured microentreprenuers and lowincome earners of safetyand security of itsactivities.

Mafe said; “driven bypassion for ensuring abrighter future forcustomers, AccionMicrofinance Bankoffers a broad range ofproducts to customers,whether it is a personalloan product, savingsaccount for transactionalpurposes, loan productsfor micro entrepreneurs,to the fixed deposit

account for individualsand organisations whoseek a safe purse at acompetitive interest rate.

“Having consistentlydelivered on its promisefrom inception to date,customers know thatwhatever their businessneeds, the bank canassist in the growth oftheir businesses,ensuring that theirfamilies are well takencare of and theirchildren are able to havean education byproviding access toquality banking servicesand consistentlydelivering on itspromise of easy accessto its products andservices while ensuringthe security ofcustomer’s funds.”


Insurance

BRIEF

By ROSEMARY ONUOHA

Recently, theadministration ofPresident Goodluck

Jonathan announced thatbudgetary allocations to theNational InsuranceCommission, NAICOM, theregulatory body for insurancepractice in the country, willstop from next year.

Minister of State forFinance, Dr. Yerima Ngama,who made the disclosure, saidthat the sector needed urgentsteps to reposition it to playits roles in the nation’seconomy.

According to Ngama “Thisis the last time NAICOM willget one kobo from thebudget.”

However, theannouncement has thrown upa lot of uncertainties in theinsurance sector even asstakeholders are beginning toquery whether NAICOM ismatured enough to regulateactivities in the sector withoutgovernment assistance.

NAICOM as a regulatorThe Nigeria insurance

industry started in 1921. Thefirst major step at regulatingthe activities of insurancebusiness in Nigeria was as aresult of the fallout of thereport of J.C. ObandeCommission of 1961, whichresulted in the establishmentof the Department ofInsurance in the FederalMinistry of Trade. TheDepartment was latertransferred to the Ministry ofFinance. The report also ledto the enactment of theInsurance Companies Act of1961, which came into effecton May 4, 1967.

Insurance business inNigeria is regulated by twomain Acts and supervised bythe National InsuranceCommission (NAICOM). TheInsurance Act No. 1 of 2003(1A) governs the licensingand the operation of insurers,reinsurers, intermediariesand other providers of relatedservices. The second Actwhich is an omnibus one - theCompanies and AlliedMatters Act (CAMA) 1990governs all companies,except those that have theirrespective enabling Acts suchas the National InsuranceCorporation of Nigeria(NICON) and the NigeriaReinsurance Corporation.

The National InsuranceCommission Decree No. 1 of1997 (NA) establishedNAICOM and vested it with

Attitude ofinsurancebuyers notencouraging– Adetimehin

By ANGELA OKPE

Managing Directorof Jully InsuranceBrokers and

Immediate past President ofChartered Insurance Instituteof Nigeria, CIIN, Mr. WoleAdetimehin has said that theattitude of insurance buyersin Nigeria is not encouragingas most people are yet to fullyembrace the values ofinsurance and the few that arebuying insurance are eithercompelled under a contract orstatutory requirement.

Speaking with Vanguard,Adetimehin said some ofthese militating factors couldinclude drastically low percapita income,unemployment and highincidence of job losses, poordwindling economicenvironment and activities, aswell as poor pay and rewardsystem within the Nigerianlandscape including failureor ignorance of insurancebuyers to appreciate theessence of premium paymentand the implications of non-payment under an insurancecontract among several otherfactors.

He said that the recent “Nopremium no cover” policy ofthe National InsuranceCommission, NAICOM, is forthe benefit of all stakeholdersand the insurance buyingpublic, investors in the sector,and the Nigerian economy atlarge.

Adetimehin said themeaning and interpretation of‘No premium no cover’ as itapplies to all stakeholdersoperating in the insuranceindustry simply means giveand take which implies thatwithout payment of premiumto insurers or brokers as thecase may be, there will be nocover to such insuringpublics. He further said it ismeant to forbid the issuanceof any insurance policy orcontract documents byinsurance firms invalid exceptwhere premium has beenpaid by the insured orcollected by the brokerhandling the transaction. Hesaid, “In cases where brokersare involved, the regulationallows the broker access topolicy documents from theinsurers on the issuance anddelivery of a credit note for thepremium already collectedbut awaiting remittance to theinsurers within a period of 30days.

Halt of budgetary allocation to NAICOM:

Government must create specialfund for insurance — Operators

the responsibilities ofensuring the effectiveadministration, supervision,regulation and control ofinsurance business in Nigeriaand protection of insurancepolicyholders, beneficiariesand third parties to insurancecontracts.

Operators’ reactionIt will be recalled that the

strategic objectives to beachieved by the insurancesector as articulated inNigeria vision 2020 are toensure insurance credibilityand protect policy holders;embarked on risk-basedcapitalisation of insurancecompanies; embed thegovernance and riskmanagement framework forthe insurance companies andto diversify and integrateinsurance products intofinancial services for longterm financing.

In order to achieve theforegoing objectives it wasenvisaged that there will beincreased financial literacyand awareness, humancapital development andattraction of expertise,integrated and linked ITsystems, improved legal andregulatory framework.

According to ManagingDirector of Risk Guard Africa,Mr. Yemi Soladoye, inconsidering theannouncement on the onehand, it is safe to say that thefederal government is ontrack to stop allocation to theinsurance sector if NAICOMis to continue with its day today routine of meresupervision of the insurancesector.

According to him, ifNAICOM will remain thesame autonomous agencythat generates its funds frominsurance operations alonejust to oversee insuranceactivities, then the decision tostop allocation to NAICOM ison track.

According to Soladoye,insurance contribution toGDP has remained at one percent after all these years,although NAICOM is doinga good work on marketdevelopment in recent times,as such the announcementcould lead to more stringentsupervision.

Soladoye however said thatthe task of developing the

should see the announcementas a positive challenge rathera threat. The point of strengthfor NAICOM is that the retailmarket is growing; also thepercentage of levies whichNAICOM can generate frominsurers is unlimited andindefinite.

“But government itself mustfund a financial marketdevelopment plan or a longterm fund for the insurancesector if it wants the sector tocommit into mortgagefinancing and infrastructuraldevelopment. This will helpthe sector to increase itscontribution to GDP to overthree per cent probably in thenext six years. Hence,

financial system of anycountry is always a federalgovernment project.

“If government wantsinsurance to stimulate thegrowth of other sectors of theNigerian economy as well asgenerating funds to othersectors and increase itscontribution to GDP, then thesector should have a sort ofnational financial systemproject or plan that is similarto vision 20:2020.

“If government is not goingto reverse itself, NAICOM

government must create aspecial fund for NAICOM.”

Managing Director ofLinkage Assurance Plc, Mr.Gus Wiggle said thatNAICOM is matured enoughto stand on its own.

He said “I think it is apositive development becauseit will aid NAICOM to attractinternational agencies tosupport them. For the federalgovernment to take such adecision it must have foundit necessary to do so.”

,

,“If government wants insurance to

stimulate the growth of other sectors ofthe Nigerian economy as well asgenerating funds to other sectors andincrease its contribution to GDP, thenthe sector should have a sort ofnational financial system project orplan that is similar to vision 20:2020.

•Fola Daniel, Comm. for Insurance •Gus Wiggle, Linkage Assurance MD


“Budget: Oil production

estimates short by N1.1 tr”.Daily Trust, September 9,2013.

“Rising debt profile: Insearch of solution”. DailyTrust, same day.

The first story continuedby informingNigerians that “About

65 million barrels of crude oilworth N1.1 trillion was shortin the first half of this year,using the 2013 estimate bygovernment”.

The second story was thereal wake up call to Nigeriansabout our dismal economicfuture if we continue with ourover-reliance on crude oil forour survival. According to thepaper, “the country [Nigeria]began a new journey into theshackles of foreign anddomestic indebtedness inwhich by 2011, statisticsindicated its total foreign debtsoared to the tune of US$47.9while the domestic debtplatform rose to about US$42.3billion, much higher thaneven before the debt relief”.

Nigerians who have not losttheir memory would recall

End Of Oil Dependent Economy — 1that Dr Ngozi Okonjo-Iweala,was the Minister of Financeunder Obasanjo who came,preached to us the virtues ofavoiding debts; took $24billion of our external reservesto help get Nigeria out of ourprevious debt trap. It is oneof the great ironies ofNigeria’s contemporaryhistory that it is the sameMinister who is supervisingour gradual but inexorablereturn into the debt trap.Three reasons account for this.

One, the 65million barrelsshortfall which Nigeria hadexperienced, so far, would bythe end of the year haveescalated to close to 100million barrels shortfall. The2013 Budget had since beenreduced to something like apiece of soiled toilet paper –already used and to bediscarded. It is a fact, whichthe government of Nigeria isreluctant to admit, that thisyear’s budget has failedmiserably and should bediscarded as a guide togovernment action from nowon.

As a corollary damage to the

collapse of the current year’sbudget, the projections for2014, in the three pearsrolling plan, must also bediscarded. There is nomeasure known to anyonethat the Federal governmenthad taken to stem thegrowing tide of stolen crudeoil. So, it is safe to assume thatthe revenue shortfall fromcrude exports will continueuntil next year. Myexperience with budgetinghad taught me that next year’sprojections must take heavilyinto account the actual for thecurrent year. With this year inshambles, and no plan toreverse the trend, next year’scalamity is a foregoneconclusion.

The Minister of Financeduring the opening of anotherconference of the NationalCouncil on Finance andEconomic Development,NACOFED, with the theme“Reconstructing Nigeria’sPublic Finance” announcedthat: “Clearly we have to dosomething about our risinglevel of domestic debt”, as ifwe don’t know the options

available to us. Nobody needs a Ph. D in

economics from Harvard orMIT to know that with ourdebt stock at such frighteninglevels, reduced Federalgovernment revenue, nextyear, will dictate one of twounpleasant options – none ofwhich will do us any good.Nigeria will either spend anincreasing percentage of itsrevenue servicing debt, if ithonours its obligations, or itwill have to default on someof its payments and suffer theconsequences of a severedrop in credit rating. Bluntlystated, our sources of loansand credits will begin to dryup and the interest we will beforced to pat, if we receive anycredit at all, will go up.Nigeria will return to thevicious cycle of debt — fromwhich we escaped whenOkonjo-Iweala was here thelast time.

The most important reasonwe are in this mess and whythe future is so bleak is relatedto our stubborn refusal todiversify our economy andmultiply our revenue base.

The first National EconomicSummit Group, NESG,workshop was held in 1992when Chief Shonekan was theHead of Government undermilitary President Babangida.That workshop addressed,extensively, the issue ofdiversification intoagriculture, manufacturingand exports. I was in thegroup discussingDiversification. I stoppedattending the NESG seminarwhen it became a mere talk-shop; we talked; passedresolutions; wrotecommuniqué whichgovernments sinceBabangida ignored becauseoil was flowing at a higherrate and the price of crudewas going up. The attitudewas “why bother to do the hardwork when easy money couldbe made in oil?”

Last week, twenty one yearsafter the first, the NESG wasstill discussing diversificationwith agriculture taking centrestage. But, every person atthat seminar knows thatagriculture alone will not getus there. We need to developother sources of revenue, veryquickly, or we are doomed. Oilis beginning to fail us; or arewe failing oil?


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Sep

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2013


Until Africans learn tolook inwards and tapinto the great

potentials the continent isendowed with, it will continueto be the least developedcontinent in the world. Thiswas contained in a statementmade available to Vanguard

by Dr. Henry Herbert Lartey,a presidential candidate inGhana’s last elections on theplatform of the GreatConsolidated Popular Party(GCPP).

Lartey harped on the needfor Africans to unite in whathe termed a sustainablerenaissance Africa. “As thefirst African nation to achieveindependence, Ghanaiansovereignty brought with itboth the challenge andresponsibility of proving tothe world that the Blackmanis capable of managing hisown affairs. Yet, 53 years after,in the midst of abundance inboth human intellect andGod-given natural resources,we prefer to go begging cap-in-hand at the doors of othernations soliciting for helpwhich is never forthcoming,”he stated.

Lartey said that the conceptof domestication, which hisparty preaches, is the answerto Africa’s myriad problems.“The late Dan Lartey, founderof the GCPP, sought toreawaken the spirit ofunification and economicempowerment through theimplementation of OperationFeed Yourself in which heintroduced the concept ofdomestication: ‘Eat what yougrow and grow what you eat;feed your industry and exportwhat is left.' Domestication isabout using your ownresources for development.Unfortunately, this principlestill has not been embraced byAfrican governments eventhough it has successfullyturned India, Brazil, andChina into economicpowerhouses on the globalstage. In 2013, we still haveproblems with housing,sanitation, water, education,food, and electrical energy -which is necessary to supportour industries,” he noted.

Speaking further, Larteysaid; “In this global economybased upon computers andhigh technology, electricalenergy is one of the mostimportant and valuablecommodities in the worldtoday. Africa has an

"With what is

happening in thePower sector, soon, wemight see another bigtransformation in thatindustry because when theelectricity distributioncompanies (DISCOs),motivated by business andprofit, take over, you will besure that they will bedemanding power to begiven to them in order todistribute to citizens andalso that everybody payshis/her bill." This was thesubmission of Engr. ErnestNdukwe, former ExecutiveVice-chairman, NigerianC o m m u n i c a t i o n sCommission at the 5thanniversary of BusinessJournal magazine in Lagos.Ndukwe who chaired theoccasion advised theelectricity regulator toensure that everybody has ametre. "This question ofestimated bill cannotcontinue; and I am surepeople will resist it when theprivate operators come onstream. I believe that nomatter how much the tariffis, once you can have light,you can control how muchyou spend so if you have 20bulbs, you can reduce it tofive but any time you needlight, let it be there. Sometering is so critical so thatpeople will not just pay forwhat they don’t use," hesaid.

He praised the efforts ofAlhaji Aliko Dangote inplanning to build a refineryin the country saying it is "amajor, major investment.For the first time, there is aprivate sector initiative inbuilding refineries inNigeria and I know that willtransform that industry. SoI think Nigeria is movingforward despite ourpolitical challenges hereand there."

He asked Nigerians topray that the politicalsituation should be suchthat it does not affect theprogress of the country."Japan sometimes in oneyear has about three primeministers but it doesn’taffect their economybecause the place isestablished and things aregoing on. Thailand canchange prime ministers twotimes in a year but thatdoesn’t change theprogress of the nation.Established economies runalmost on autopilot. We arepraying for the same thingin Nigeria, that despitewhatever happens in thepolitical environment, thepolicies, programmes andstrategies for developmentare maintained in such away that we will continueto move forward," he said.

Africa must embrace domesticationto achieve greatness —Lartey

,

,abundance of energy in theform of the sun, wind, andother renewable sources. Letus apply the principles ofdomestication towards theseresources so that we canproduce sustainable energyfor ourselves and the world.Let us domesticate advancesmade in the internationalcommunity in areas ofscience, technology, medicaland engineering services, sothat we can achievesustainable homes and

communities, sustainablehealth care and sanitation,sustainable agriculture andeconomies, as well as anempowered people.

"It was the dreams andhopes of our founders thatGhana would be a Black Starleading the peoples of Africatowards a powerful andunited Africa; this is thereason why the foundingconstitution of the FirstRepublic of Ghana has a

clause which states thatGhana shall surrender itssovereignty to the UnitedStates of Africa. It statedthat 'the union of Africashould be striven for byevery lawful means and,when attained, should befaithfully preserved' and'That the Independence ofGhana should not besurrendered or diminishedon any grounds other thanthe furtherance of Africanunity.'

“It is time for a sustainablerenaissance in Africa: Asustainable renaissance ofeconomic, cultural andpolitical empowerment thatwill last from one generationto the next."

This picture isvery poor plschange it

Nigeria maywitness hugetransformationin Power,Petroleumsectors

*Dr. Henry Lartey .... It's time for a sustainable renaissance of economic, cultural andpolitical empowerment

Stories byEBELE ORAKPO

People in Business

Domestication is about usingyour own resources fordevelopment; this principle hassuccessfully turned India, Brazil,and China into economicpowerhouses


Business News

BRIEFSWhy SWF investment is delayed — Orji

The Managing Directorof the NigeriaSovereign Investment

Authority, Mr. Uche Orji hassaid that what appeared to bea delay by the organization inkick-starting investmentactivities was to enable histeam under-take water-tightdeals that would guaranteegood returns. The authorityhad earlier promised tocommence investment in Junethis year, meaning that aboutthree months have alreadybeen lost. Speaking at theSecurity and ExchangeCommission’s LearningSeries, at the weekend inAbuja, the MD said “it takes14 months to incubate a deal.I will not rush to invest yourmoney and then come out toregret later”.

According to Mr. Orji, theNSIA would be run as publicsector enterprise with aprivate sector philosophy andthat his team would complyfully with Santiago Principles,including transparency ofinvestment processes andindependence of decisionmaking. He added that theNSIA would be a financiallyself-sustaining public sectorenterprise with a privatesector philosophy as itsexpenses would be paid fromreturns investment and has topay a dividend to thefederation account after fiveyears of profitability.

Vehicle for attractingforeign investment

The authority’s boss saidthat the fund would be acatalyst for other SovereignWealth Funds across the globeto invest in the Nigerianeconomy. His words, the“presence of co-investmentpartners is a key componentof our infrastructureinvestment process. So

Far, we have receivedpositive feedback frompotential partners, includingother SWFs and private equityfirms”

Case studiesAccording to Mr. Orji, the

Norway’s GovernmentPension Fund Global whichwas established with an initialseed fund of $ 300 million in1996 has been grown to$665.30 billion. The fundplayed a key role in Norway’sability to weather Euro Crises.He added that the Abu DhabiInvestment Authority of theUnited Arab Emirates, UAE,which also started 1976 hasgrown to $627.00 billion. TheNSIA boss also revealed thatin spite of the Libyan crisis,the Libyan InvestmentAuthority which wasestablished in August 2006has maintained $65.0 billionfund; while Angola’s FundoSoberano Angolano whichbegan 2012 now has $5.0billion.

The NSWF he assuredwould “help increase themacro-economic credibility ofNigeria and to act as

a buffer against short term

macro-economic instability.“Assets will be investedconservatively, striking abalance between generatinga modest positive return andpreserving capital in nominalterms. Given theunpredictable and short-termnature of the Fund’s potentialliabilities, immediateliquidity is required”. Mr.Orji also revealed that thetarget returns would be aboutUnited States ConsumerPrice Index + 4 per cent asthe Stabilisation Fund’s basecurrency would bedenominated is the US dollar.

On sectors to be

considered for investment,the MD indentifiedtransportation, waterresources, rail, aviation,power transmission, mining,gas pipeline, storage &processing, oil refining andreal estate. In order toaccelerate developmentacross the country, the fundwould also be invested inagriculture, healthcare, ports,roads, as well as, Free TradeZones & Industrial Parks.

According to him, theimmediate areas ofinvestment would beagriculture, toll roads,Healthcare ( Diagnostic

centres) rail, real estate,aviation and water resources,where the management wouldconsider investing in damfrom where power could begenerated while providingcrops irrigation, as well as,fishing opportunities tofarmers. Mr Orji revealedthat the organization wouldsupport power generation anddistribution , as well as,communications which heconsidered as opportunities topioneer the development ofnew infrastructure securities toattract conservative capital,from within and outside thecountry.

The FederalGovernment hasexplained that it

established the ElectricityManagement ServicesLimited, EMS, to take overthe responsibilities of somenon-core professional andsubsidiary services of thedefunct PHCN and itssuccessor companies.

Minister of Power,Professor Chinedu Nebo whosaid this during theinauguration of EMS team inAbuja, said further that theEMS was a professional andtechnical agency to close upgaps which might have beencreated in the wake of reformcarried out in the powersector.

The EMS he said wouldalso to provide all neededancillary and support servicesto the Nigerian Electricitysupply Industry Limited,NESI. Prof. Nebo noted that,“the post privatisationchallenges of the rapidlyevolving private sector ledpower industry cannot beover emphasized, hence theestablishment EMS as aplayer in providing sectorwide services.

EMS established to replace PHCN,says FG

StandardCharteredsees strongAfrica retailprospects ongrowth

Standard Chartered Plc(STAN), the U.K. bank

that earns most of its profitin Asia, expects to open 100new branches in Africa by2016 to benefit from thecontinent’s $1 trillion ofannual retail spending.

The lender opened 27 newoutlets last year and willalso “invest heavily” indigital technology over thenext four years, RaheelAhmed, Dubai-based headof consumer banking for theMiddle East, Africa andPakistan, said in e-mailedcomment to. The bank willfocus on small and medium-sized companies and privatebanking, he said.

“There is so much growthpotential, particularly whereeconomies are growingrapidly,” Ahmed said. “InNigeria, only 14 or 15percent of the people havebank accounts,” he said.

Standard Chartered’soperating revenue at itsAfrica consumer bankingunit rose 9.4 percent in thefirst half to $257 million.Economic growth in Sub-Saharan Africa willaccelerate to 5.1 percent thisyear and 5.9 percent nextyear from 4.9 percent in2012, according to theInternational MonetaryFund.

Umpquaagrees to buySterlingFinancial for$2bn

Umpqua HoldingsCorp. (UMPQ),

Oregon’s biggest bank,agreed to pay about $2billion in stock and cash tobuy Sterling FinancialCorp., the lender backed byWarburg Pincus LLC andThomas H. Lee Partners LP.

Sterling holders willreceive 1.671 shares ofUmpqua stock and $2.18 incash for each of their shares,the companies said in astatement. That valuesSpokane, Washington-based Sterling at $30.52 ashare, 26 percent more thanits $24.20 close on Aug. 30,when Bloomberg reportedSterling was for sale.

“With our size, sharedcultures and financialstrength, our combinedorganisation will beuniquely positioned todeliver value,” UmpquaChief Executive Officer,Raymond P. Davis, who willlead the combinedcompany, said in thestatement.

BY CHRIS OCHAYI

“The importance ofestablishing EMS is thereforeinformed by the need to havea professional and technicalagency of government at thiscrucial stage of power sectorreform to close up technicalgaps which might have beencreated. The EMS is thereforeto take over theresponsibilities of some non-core professional andsubsidiary services of thedefunct PHCN and itssuccessor companies,” hesaid. According to him, “theseservices include engineeringlaboratory, meter teststations, central storessystem, testing andcertification of major electricalpower equipment. Otheractivities will includeproviding the platform forstandardisation in theindustry, archiving the powersector data and informationmanagement.

“What this means is that,your mandated functions is torespond to the need forsustenance and improvementof power supply and servicedelivery. At the same time,you must ensure quality andstandardisation of materials,equipment and machinesused for electricitygeneration, transmission anddistribution networks in

Nigeria. Finally, let meremind you that themanagement team isexpected, with the formalinauguration today, toreposition EMS into atechnical and financialefficient, sustainable, andcommercially viable company.It must be able, after today, toprovide the needed servicesto drive support and sustainthe emerging private sectorlead electricity industry inNigeria.”

The minister who recalledthe EMS was established asone of the successorcompanies unbundled fromthe Power Holding Companyof Nigeria, PHCN, inaccordance with the ElectricityPower Sector Reform, EPSR,Act 2005. He added, it wastherefore, as expected,incorporated into agovernment owned limitedliability company under thepurview of the Ministry ofPower. In his remarks,Managing Director of EMS,Engineer Peter Ewesor saidthe team was determined toreposition the agency into aworld class commerciallyviable organisation, to providethe needed services to drive,support and sustain theemerging private sector ledelectricity industry in Nigeria.

FCMB's 30th anniversary celebrations


e-Commerce

Apple fires biometrics intomainstream

By adding af i n g e r p r i n tscanner to its

newest mobile phone,Apple Inc is offering atantalising glimpse of afuture where yourfavourite gadget mightbecome a biometric passto the workplace, mobilecommerce or real-worldshopping and events.

Although Apple’sexecutives said that itsTouch ID technologyembedded into theiPhone 5S’ home buttonwould only providefingerprint access to thephone and its ownonline stores, analystssaid Apple’s embrace ofsuch technology, called

Lack of proper retailstructure drives e-commercein Nigeria — Nwaozuzu

The MD/CEO,G i r l y e s e n t i a l s

Nigeria Ltd, an e-commerce retailer,Chinma Nwaozuzu, hasattributed the rapidgrowth of e-commerce inNigeria to non-existence of properretail structure in thecountry.

She stated this whilespeaking to Vanguardon how pure-clickcompanies, especially e-commerce retailers arerevolutionising theretail structure inNigeria.

She said the growth ofe-commerce in thecountry is as a result ofpeople’s response to theconvenience andproduct availability thate-commerce retailersoffer.

According to her,“Besides the fact thatNigerians likeshopping, it is alsobecause before the e-

biometrics, would be keyto wider adoption.

“It really propelsbiometrics into themainstream,” saidspecialist, Alan Goode,the UK-based managingdirector of researchconsultancy, GoodeIntelligence.

Jonathan Ive, Apple’ssenior vice-president ofdesign, hinted of itsfuture in a video

presentation at thelaunch.

“Touch ID defines thenext step of how you useyour iPhone,” he said,“making something asimportant as security soeffortless and sosimple.”

Passwords andpersonal identificationnumbers (PINs) havelong been the mainstayof access to devices,

bank accounts andonline services, despitetheir poor record. Manypasswords can easily beguessed, while otherscan be hacked by brute-force attacks - essentiallya computer programrunning through allpossible permutations.

They also involve onetoo many steps for lots ofusers: Apple said thathalf of smartphone usersdon’t bother topassword-protect theirdevices.

Hence the appeal of

biometrics, which takesomething unique to theindividual - afingerprint, an iris,voice or facial features -as authentication.

Apple’s move may nothave an immediateimpact beyondimproving the way usersunlock their devices andinteract with Appleservices like iTunes andits App Store.

But that is itself asignificant step. Applehas more than 500million iTunes accounts.Anything that increasessecurity and removessteps in the paymentprocess is bound toboost online purchases.

It will also raise thecomfort levels ofcompanies supplyingthe content to a mobilecommerce sectorexpected to reach $40billion next year in theUnited States alone,according toEuromonitor estimates.

Users afraid of usingtheir mobile device tomake purchases onlineor in the real worldbecause they fear it willbe stolen or theirpassword seen may feelliberated using afingerprint, saidMichael Chasen, CEOof SocialRadar, which isbuilding location-basedmobile applications forsocial networking. For

mobile commerce, hesaid, that could “be themissing piece”. Beyondthe web, Apple couldcombine the Touch IDwith its existing“Passbook” app thatstores coupons, tickets toevents and boardingpasses on an iPhone andallow event organizersand airline companies tovalidate thosedocuments, saidSebastien Taveau, chieftechnology officer atC a l i f o r n i a - b a s e dValidity Sensors, whichmakes sensors for othermanufacturers.

“Apple wants to makedeals with music ande n t e r t a i n m e n tcompanies with verystrong opinions ondigital rightsmanagement,” Taveausaid. The fingerprintscanner, when used intransactions with thesecompanies, could“ reassure all theseindustries”. Biometricsecurity should alsoappeal to enterprisesnervous about allowingthe personal devices ofemployees on the officenetwork, analysts andindustry insiders said.

“If this has beenimplemented right,every enterprise thatenforces a password orPIN lock on the devicewill begin using thefingerprint sensorinstead,” said SongChuang, Singapore-based research directorat Gartner.

Apple is not the first to

commerce industry tookoff, there was not a realstructured retail chain.For instance, before now,when you want to buysomething, you don’teven know where to getthings from. All theshops tried to offergeneral merchandisegoods and had to offersimilar products; so onehad to go from shop toshop searching for aparticular product.There was no properstructure in place.

“That is completelyopposite of what obtainsin the e-commerceindustry whereeverything isstreamlined. If you go toan online shop's website for instance, and youwant to buy electronics,everything is conciseand clear to navigateand it makes thingseasier. It’s moreconvenient and alsotries to help youcompare prices easier asyou can access differentsites through the samemedium,” she said.

BY JONAHNWOKPOKU


Tax Matters

By MICHAEL OLULENU

Taxes are the enforcedp r o p o r t i o n a lcontributions from

persons and property, leviedby the state by virtue of itssovereignty for the support ofgovernment and for all publicneeds. From the abovedefinition, it is seen that taxesare contributions to a commonpool by the people for the useof the people. Governmentsall over the world need taxesin order to sustain theirrelevance and to provide forthe needs of its citizenry.

Features of a good taxsystem

A tax system is expected tobe fair and non-discriminatory. For a taxsystem to meet theserequirements, it must have thefollowing attributes.

1. Neutral – A Neutral taxmust be unbiased acrosseconomic activities, and notoverly penalise work in favourof leisure, nor tax incomeused for saving andinvestment more heavily thanincome used for consumption.

2. Visibility – A very largesegment of the populationmust be keenly aware thatgovernment costs money,government spending shouldbe held at levels at which itsbenefits match its costs. Thisis a critical factor in mostdeveloping countries(including Nigeria) where thecitizenry believe that taxrevenues are not beingexpeditiously administered.

3. Fairness – This isoften stated as making therich pay higher share of theirincome in taxes than the poor.There should be some amountof income exempt from tax toshelter the poorest citizens.

4. Simplicity– A taxsystem should be easy for thegovernment to administer andenforce, and be easy andinexpensive for taxpayers tocomply with. The eliminationof multiple layers of tax wouldalso create a system that ismuch simpler and easier toadminister, enforce andcomply with. These arecritical issues in Nigeria taxsystems that require urgentattention. Our tax laws are oldand complex, giving room forvaried interpretations andapplications.

5. Convenience – A goodtax system should beconvenient in terms of timeand mode of payment to thetaxpayer.

6. A d m i n i s t r a t i v eEfficiency – The process oflevying and collecting taxesmust be administrativelyefficient, transparent andeconomical without anydistortion.

7. Productive – A taxsystem should be such that

,

,

Addressing tax evasion and compliance

brings in sufficient revenue tothe Government. Since taxpayment involves the outflowof money from taxpayers,some taxpayers have adoptedmany strategies to evade tax.Tax evasion is defined as “thewilful attempt to defeat orcircumvent the tax law inorder to legally reduce one’stax liability.” Tax evasion ispunishable by both civil andcriminal penalties.

Tax avoidance on the orderhand, is defined as “the actof taking advantage of legallyavailable tax planningopportunities in order tominimize one’s tax liability.While tax evasion is criminal,tax avoidance is legal. Thiswas aptly supported by thecelebrated case of AyrshirPullman Motor Services &

D.U. Ritche V.CIR (1929). Thefact of the case and thejudgement is as follows:-

The taxpayer changed thestructure of its business fromsole proprietorship topartnership with five of hischildren to minimise tax. Heappealed to the Court ofSession against anassessment which failed torecognise the change.Allowing the appeal, LordClyde held:

No man in this country is

under the smallest obligation,moral or other, to so arrangehis legal relations to his

business or property as toenable Revenue to put thelargest possible shovel into

his stores. The InlandRevenue is not slow.... andquite rightly to take every

advantage which is open toit under the taxing statutes forthe purpose of depleting the

taxpayer’s pocket. And thetaxpayer in like manner, isentitled to be astute to

prevent, so far as he honestlycan, the depletion of his

means by the Revenue.Tax compliance toolsIn order to encourage

taxpayers to continue tocomply and bring non-compliant taxpayers into thetax net, to increase the tax baseand revenue, governments allover the world have put inplace some compliancestrategies backed byappropriate legislations.

Section 26(1) of the FederalInland Revenue ServiceEstablishment Act (FIRSEA)26(1) gives the Service to callfor returns, books, documentsand information.

FIRSEA 27- Givesadditional power to the

returns specifying:-(a) In the cases of an

individual, all transactionsinvolving the sum ofN5,000,000.00 and above

(b) In the case of a bodycorporate, all transactionsinvolving the sum ofN10,000,000.00 and above,the names and address of allcustomers of the bankconnected with thetransactions and deliver thereturns to the Service.

(c) Section 28 (3) –Provides sanction to any bankthat contravenes aboveprovisions.

FIRSEA 29 – Gives powerto access lands, buildings,books and documents.

FIRSEA 32 - Gives power ofaddition for non-payment oftax and enforcement ofpayment.

FIRSEA 33 - TaxInvestigation; this sectionempowers the Service toemploy special purpose Taxofficers to assist any relevantlaw enforcement agency inthe investigation of anyoffence under this Act.

FIRSEA 47- Gives theService powers to prosecuteany of the offences under thisAct subject to the powers ofthe Attorney–General of theFederation.

The role of tax auditIn addition to all the tax

provisions mentioned above,FIRSEA S:26(4) and S.60(4)CITA went further to state:-

“Nothing in any otherprovision of this Act shall beconstructed as precluding theService from verifying by taxaudit or investigation into anymatter relating to any returnor entry in any book,document, accounts includingthose stored, on a computer,in digital, magnetic, optical orelectronic media as may, from

time to time, be specified inany guideline by the Service”.

All the above provisions,among others, are compliancetools meant to ensure that ataxpayer does not pay less ormore than what he is requiredto pay by law. This objectiveis achieved through tax auditexercises.

The purposes of tax auditare to;

*To educate taxpayers*Maintain self assessment

system*Collect taxes as imposed

by the laws through theencouragement of voluntarycompliance

*Maintain publicconfidence in the integrity oftax system.

*Provide deterrent effectson other taxpayers not yetaudited, as they may quicklyfile their returns in order toavoid sanctions.

Most taxpayers will bewilling to pay their taxes asand when due, if governmentis transparent andaccountable. It is thecommon experience in thedeveloping countries thatgovernments have notdemonstrated enoughcommitment towardsproviding the citizenry withrequired facilities andinfrastructure that wouldencourage an averagetaxpayer to be voluntarilycompliant. Roads, electricity,education and health facilitiesare in short supply, facilitiesthat are already in place arenot properly maintained.There is growing apathyamong the taxpayers aboutthe commitment ofgovernment to use the taxespaid to provide for theirneeds. These are the issuesthat need to be addressed inorder to improve the level ofcompliance. Both thegovernment and the taxpayersmust resolve to work incollaboration and meet mid-way for the society todevelop and enjoy peaceand security.

A government must havethe trust of its citizens.Government that cannot betrusted may not have moralthe courage anddetermination to maximizeits tax potential. Total taxrevenue, which is the tax ratemultiplied by the tax base,can be increased whengovernment is physicallypresent in every nook andcranny of the country bymeans of provision of socialamenities.

The citizenry is gettingimpatient and agitated. Thetime for the government to dothe right thing is now.Tomorrow may be too late.

Service to call for furtherreturns and payment of taxdue.

FIRSEA 28–Requires everybank upon demand by theService, to provide quarterly

Both thegovernmentand thetaxpayersmustresolve towork incollaborationand meetmid-way forthe societyto developand enjoypeace andsecurity.

Acting Exec. Chairman, FIRS, Alh. Kabir Mashi


Aviation

Dana Air negotiating newBoeing planes acquistion

By LAWANI MIKAIRU

Dana Air Head ofCommercial, ObialorMbanuzuo has

revealed that negotiations toacquire new airplanes fromBoeing, airplanemanufacturer, has reachedadvanced stage as the airlineis determined to increase itsfleet to seven planes before theend of the year. The airlinecurrently operate fiveairplanes.

Mbanuzuo made thisrevelation during theofficial inauguration of Calabar-Uyo-Abuja dailyflights by the airline at theMuritala Muhammed Airport,Lagos . He said the airlinewill acquire new Boeingclassics before December tomeet the demands of the newroutes it is opening. Hefurther explained that therehas been clamour bypassengers for the airline toresume the Calabar –Uyoroute.

The airline Head ofCorporate Communication,Tony Usidamen explained

NAMA begins calibration of navigational aids

Nigerian AirspaceManagement Agency,

NAMA, has commencedcalibration of navigationalequipment at some airportsand en route stations acrossthe country to enhance airsafety. NAMA GeneralManager, Public Affairs ,Supo Atobatele, said thecalibration exercise started atthe weekend in Lagos withthe routine calibration of thetwo Instrument LandingSystems [ILS] , Very HighOmni-directional RadioRange/Distance MeasuringEquipment [VOR/DME] and the Path ApproachPrecision Indicator(PAPI)ofthe Murtala Muhammed

New securityequipmentinstalled atall airports

By DANIEL ETEGHE

The Federal AirportsAuthority of Nigeria,

FAAN, has taken furthersteps to improve safety andsecurity at the airports byinstalling additional and moremodern security equipment,in line with the on-goingtransformation in the aviationsector.

According to Yakubu Dati General Manager, CorporateCommunications, FAAN, theAuthority has alreadyinstalled seven brand new X-ray scanning machines at theMurtala Muhammed Airport,Lagos, five at the cargobasement of the internationalterminal, one at the Hajj andCargo terminal and another atthe airport’s domestic terminal1. This is in addition toexisting security equipmentat the airport.

All the other airports in thecounty are also benefittingfrom the installation of thesenew scanning machines.

that the daily flights willoriginate from Calabar,through Uyo, beforedeparting to Abuja . He saidthe airline will offercompetitive fares on thenew routes. He howevercalled on government tointervene in the high cost ofaviation fuel which constitutemore than Thirty percent

operating cost of airlines.Affordable low cost aviationfuel, according to him, willenable airline reduce airfare.

On viability of the routes,Usidamen noted that mostroutes are currently underserviced as most airlinescannot cope with the volumeof passenger traffic . Hefurther noted that “ Dana is

ready to compete with otherairlines as it has thecompetitive edge of renderingquality service “

On safety and security ofpassengers, Dana Head ofSafety and Security, AdilBourmaki said the airline ismaking conscious efforts tomeet international safetystandard in line with IATArules. He further saidsecurity measures have beenput in place by the airline tocheck the recent upsurge inairside invasion by potentialstowaway.

International Airport.“ Equipment being

calibrated include- therecently installed ILS/DME,CVOR/DME at Enuguairport, Makurdi and Kanji.The newly installed air fieldlighting system at Makurdi will equally be flight-checked by Flight CalibrationServices of the UnitedKingdom using DA42 multi-purpose platform aircraft.”

” Other navigational aids being calibrated are-Conventional Omni-Directional Radio Frequency[CVOR], Instrument LandingSystem[ILS], DistanceMeasuring Equipment[DME]Very High Omni-DirectionalRadio Frequency [VOR] all

located in ,Uyo Abuja , Kanoand Portharcourt.”

“Similarly ,Communicationradio coverage check forLagos and Kano area controlcentres will be undertakenduring the calibrationexercise.”

The Managing Director ofthe Agency Engineer MaziNnamdi Udoh , disclosedthat the exercise would last forfourteen days, explaining thatthe calibration of thenavigational aids would assistin putting all the navigationalaids in proper shape at theseairports and en-route stations.

Udoh said NAMA spendsabout N200milion annually tocalibrate navigational aids at26 airports across the country.


Advertising, Media& Marketing

Stories byPRINCEWILL EKWUJURU

I’ll fund my education withStar promo proceed —Winner

James Enikuomehuin Oladimeji, winner of N200,000,posing with hisdummy cheques, while Gbenga Adeyinka, show compere, addressesthe audience at the first Star Win & Shine National ConsumerPromotion raffle draws held in Lagos.

Since the NationalLottery RegulatoryCommission, NLRC

and the Consumer ProtectionCouncil, CPC, wereestablished by the FederalGovernment to regulate,monitor and control theactivities of companiesengaged in promotionalactivities, the situation haschanged.

Today, promo organiserspay attention to smallestdetails to what they havepromised, failing, theydefinitely will attract thewrath of the regulatingagencies.

Promos have been held andpledges fulfilled, presently,Star larger beer is running anon-going national consumerpromotion, NCP, tagged: ‘StarWin & Shine promo,’ wheresurprises abound, fewminutes before September 7,2013, James Oladimejibecame N200,000 richer, hadhe been told earlier definitelyhe wouldn’t have believed it.

That however turned out tobe the life changing story ofthe Ilaje born, 200 LevelChemical Science student ofOlabisi Olabanjo University.

The 26 year-old who runs aviewing centre within hisenvironment in Gbagada,Lagos, was convinced by afriend to attend the first Star‘Win and Shine’ party held atDe Marquee restaurant andbar located atop Mega Plaza,Victoria Island, Lagos.

The party which featuredtwo sessions of the Win &

SERAs unveils new statuette

The organisers of theSocial Enterprise

Reporting Awards (TheSERAs) have announced theunveiling of a new Gold andSilver statuette to replace theformer one.

In a move aimed at makingSERAs a truly Gold Standardaward, the organizerscontracted the re-designingand manufacture of the newstatuette to R.S. Owens, acompany based in NewJersey, USA. This is thecompany that produces theworld renowned Oscars andGolden Globes statuette.

According to thecoordinator of the SERAs,Ken Egbas “our new statuetteis priceless and a massiveimprovement on the previousversion. This is the statuetteto have and own. Egbasadded that: “we are sure thatorganizations who will takehome the statuette onSeptember 21st will cherishthis masterpiece and derivegreat pride in theirachievement.

The organizers of theSERAs believe that the newstatuette will inspire morecompanies to commencetheir sustainability journeys

ADVAN revamps marketers’ excellence awards

Shine promo raffle drawskicked off at 7:30pm andlasted till the followingmorning.

No sooner had Oladimejiand his friends ordered theirStar Larger through anattendant who explained tothem what to do with theircrown corks to participate inthe raffle draws during thecourse of the party.

Oladimeji and his friends

decided to take advantage of Star’sdiscount and bought several bottles ofStar lager beer, keeping the crowncorks. He said: “I started having hopeswhen I got two crown corks withdifferentiated codes which I sent to30383 and my line was instantlyrecharged with N200.”

Now, he does not only plan to getthe LED TV which eluded him earlier,he plans to use part of his winningmoney to fund his third year in schoolas he also plans to help his youngersiblings who are presently at variousstages of their education.

and to participate in TheSERAs 2014. The SERAs 2013event is slated for the 21st ofSeptember at the MusonCentre. The Special guests ofhonour are Executivegovernor of Osun State,

Ogbeni Rauf Aregbesola and theExecutive governor of Katsina state,Dr. Ibrahim Shehu Shema. Thekeynote address will be given byProfessor Pat Utomi, founding faculty,Pan-Atlantic University in Lagos.

The Advertisers Association ofNigeria (ADVAN) has

revamped the annual Advertisersaward as the association putsmachinery in motion for this year’sedition.The association which isdetermined to stimulate and promotemarketing profession in Nigeria saidAward ceremony will take place inOctober 26, in Lagos promise tohighlight the fundamental positionmarketing occupies in business andthe public sector.

Entry for the awards which theassociationaa has thrown open toboth members and non- memberswill be a celebration of hardwork andingenuity in the marketingprofession, Yomi Ifaturoti,chairperson of the award committeetold Journalists in Lagos.Submission of entries has sinceopened and will close on September20.Giving details of the award, shesaid the 2013 marketing excellenceaward will recognize outstandingand effective marketing in Nigeria.The 11 categories for award are

consumer insights, CSR,experiential, consumerpromotions, new brand of the year,digital marketing, brand of theyear, innovation of the year,campaign of the year, brandmanager of the year andmarketing professional of theyear.

In a bid to adequately awardmarketing excellence in its trueform, there has been a completeoverhaul by the association of theaward categories, judgingcriteria, and selection process forthe 2013 edition.

“All entries will be judged by ateam of the marketingprofessional in the nation andverified by the nation’s leadingindependent marketing researchorganizations, to ensure atransparent selection process”.

In the former editions, theselection process was based solelyon the merit of entries sent in byparticipants without third partyauthentication.

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CONTINUED FROM LAST WEEK

Almost 21 years ago, I had an encounter witha big, first-generation Nigerian Bank. I was

then a Youth Corps member in Maiduguri, BornoState. I had gone to open an account with the bankfor the payment of my wretched N350 monthlyallowance. Two weeks later, I went to withdrawthe first allowance that ought to have been paidinto the bank. The teller nonchalantly told me thatan account had not yet been opened for me becausesomebody had misplaced the two passportphotographs I had submitted a fortnight earlier. Iwas then asked to bring a fresh set of pictures. Icomplied (did I have much choice?). But I knewthat a bank that could afford to throw away myphotographs just like that wasn’t worth a secondlook. Moreover, the service of the bank was sohorrible that the corps members that had accountswith it were always the last to receive theirallowances. Ever since, I have never thought ofbeing a customer to that bank – I don’t ever plan tobe! Somehow, each time I pass by a branch of thatbank, the encounters of two decades ago simplyrush through my memory. Even the logo of thebank, to me, is a symbol of poor service!

I once had the misfortune of being on a NigerianAirways flight from Lagos to Port-Harcourt. It wasactually a combined flight to Port-Harcourt andDouala, Cameroun. The creaking noises from theaircraft left too many butterflies flapping in mystomach. Moreover, the air conditioning systemwas in such a wonderful state that by the time wegot to Port-Harcourt, every passenger had beenthoroughly drenched by their own sweat. You cansee I have had my more-than-fair share of poorcustomer experience. As soon as I got to Port-Harcourt, I thanked God for the safe trip but madeup my mind to travel by road rather than board aNigerian Airways flight again. Those were thedying days of the airline, anyway. But how longago was that? I still remember the experience as ifit happened only yesterday. One question I wouldlike answered some day is: To what extent did poorservice contribute to the demise of NigerianAirways?

What’s the message? If your service was poorsome two, five, 10 or 15 years ago, you alreadyhave some negative perception baggage to contendwith. And you probably have a few elephants outthere who haven’t forgotten. They may never dobusiness with you again in spite of the great stridesyou have made in service excellence since then.They may also persuade others not to do businesswith you. They may even start a website to thrashyour business. (For a seemingly extreme case,please see what Jeremy Dorosin, a dissatisfiedStarbucks customer, does on www.starbucked.com).Time, they say, heals every wound. In the worldof customer experience, however, the wound maysimply fester if it’s deep enough. But all hope isnot lost. If you begin to give customers a greatexperience each time they do business with you,you might just have a few other elephants thatwould remember your good deeds and spread theword.

There is a lot of good sense in thinking long-term. Each encounter you have with a customer isan opportunity to make a lasting impression. Howwould you want the encounter to be rememberedfive or 10 years down the line? Some encounters,owing to their perceived significance, get deeplyetched in people’s memory. Also related is theissue how far we are willing to go to make thingsright for a complaining customer. Would you bewilling to invest a thousand Naira today to keep acustomer happy knowing or hoping that the samecustomer could make you twenty thousand nextyear? As we always say in this column, you shoulddo what is right by your customers, not because ofwhat you stand to gain tomorrow (for sure youshould reap what you sow) but because it’s simplythe right thing to do.

CONCLUDEDComments are welcome.

Customers as Elephants - 2


Email:[email protected], [email protected] page:www.lesleba.com/blog2Website: www.lesleba.com

Tel:0805 220 1997

Business & Economy

Omoh Gabriel - Group Business EditorBabajide Komolafe - Finance EditorClara Nwachukwu - Energy EditorPeter Egwuatu - Head, Capital Market

Yinka Kolawole - Snr Bus. CorrespondentFavour Nnabugwu - Insurance CorrespondentGodwin Oritse - Maritime CorrespondentGodfrey Bivbere - Maritime Correspondent

Michael Eboh - Capital Market ReporterFranklin Alli - Industry/Agric. ReporterEbele Orakpo - Energy ReporterIfeyinwa Obi - Maritime Reporter

CONTRIBUTORSPrincewill Ekwujuru - Media/Marketing

Naomi Uzor - IndustryProvidence Obuh - Micro FinanceLAYOUT - Graphics Department

O U R T E A M

,

,

It is bad enough to ever bein a position where one

borrows one’s money back,but for our Central Bank tohave done so for so manyyears at rates of between 13and 14 per cent, as admittedrecently by Governor LamidoSanusi, can at best bedescribed as an unfortunatemoral hazard, which mayborder on economicsabotage.

Indeed, according to AlhajiSuleman Barau, DeputyGovernor at the CBN, whocorroborated Sanusi’sobservation, the three tiers ofgovernment had almostN2.384tn lodged incommercial banks in zerointerest accounts by June2013. Barau also revealedthat such liquidity instigatedgovernment borrowing, andmay have already improvedthe profitability of banks byabout N300bn, even whenthey added no value to theeconomy; thus, in spite of oureconomic and infrastructuralhemorrhage, banks may haveenjoyed a bonanza of overN3000bn for doing nothing inthe last 10 years. It is evenworse that despite the hugecost of service, fundsborrowed were simply keptidle (sterilised) by the apexbank, in order to controlexcess cash supply in thesystem.

The easy money to be madefrom warehousing freegovernment funds, producedmarketing strategies, whichincluded ambitious targets fordelectable mini-clad youngwomen, called relationshipofficers, as foot soldiers toattract deposits! Inevitably,salaries and budgetedprojects of MDAs weredeliberately delayed so thatpublic officers could earn off-

CBN’s management of surplus cash as economic sabotage

the-record kickbacks fromthose banks, which kept freegovernment funds.

Thus, Sanusi’s recentdirective that banks must keep50% of government depositsinert, as reserves, is obviouslyan attempt to stem the follyaaznd the obvious fraud ingovernment borrowing backits own money at horrendouscosts.

However, there is nopositive change since the

CBN’s directive, as the DebtManagement Office and theCBN have since borrowedabout N300bn with treasurybills and bonds, whilesimultaneously paying outover N200bn to redeem suchmatured government debts, tothe same banks. Furthermore, the average costof lending to the real sectorhas also risen above 25%,while the naira exchange ratehas paradoxically come underheavy downward pressure.The latest addition of theaccounts of such MDAs asNNPC, Customs and FederalInland Revenue Service, tothe 50% Cash ReserveRequirement will not achieveany meaningful purpose, butmay, in fact, becounterproductive, as furtherreduction of the extant cash

surplus will only lead to stillhigher cost of funds, whichwill in turn reduce prospectsof economic growth, whileincreasing the rate ofunemployment and theimpact of ravaging inflation onthe poor.

It is inexplicable that boththe Federal Executive and theNational Assembly appearunperturbed by such asuffocating predicament, butit is, worse still, that civil

deposits at a mere 1%, butthen, proceeded thereafter, tomop up the resultant cashsurfeit by committinggovernment to heavyborrowing at double-digitinterest rates from the samebanks. Interestingly, theCBN mischievously blamesexcessive governmentspending for its own inabilityto bring about lower single-digit rates of interest andinflation. In contrast,international best practice isto increase governmentspending, so as to createdemand, and boost industrialactivities and jobopportunities, in anyeconomy plagued with massunemployment like ours.Incidentally, the Guardiannewspaper editorial of August28, observes that “If publicsector deposits in June 2013constituted 20% of the N15tn

bank deposit base…, wherethen is the touted public sectordominance?” The editorial,therefore, rightly concludedthat “There remains a furtherN12tn of private deposits that

(with CRR at 12%) endows thebank with a maximumlending capacity of N96tn.”

Whether anyone chooses toagree with this analysis is notimportant; the truth remainsclear that CBN instigates theoppressive burden of excesscash in the system, when itcaptures our dollar earningsand substitutes same withmonthly naira allocations. That is why CBN’s self-styled“own dollar reserves” grow asnaira liquidity also increases,and propels government toborrow back its own funds atan oppressive cost, to cagespiraling inflation! It isunusual for any central bankto make a claim to its own

society, including Nigeriansof great intellect worldwide,and the experts in CBN’sMonetary Policy Committeeappear insensitive to theapparent fraud of governmentborrowing back its own moneyat ridiculously high interestrates for over 30 years. Indeed, the label of fraud forsuch reckless management ofpublic funds is probably apoor euphemism of a morevicious crime of economicsabotage.

How, for example, does oneexplain that, in spite ofhundreds of billions of nairagovernment’s free funds inthe hands of the banks in2009, the CBN,simultaneously, curiouslymaintained Cash ReserveRatio (CRR) for all deposits,including government

foreign reserves, which existoutside a nation’sconsolidated revenue fund. To be fair, Sanusi inheritedand sustained this fraudulentshenanigan in monetarypolicy management;nonetheless, this oppressivesystem continues to createample room for corruptenrichment in themanagement of public funds. For example, fuel subsidypayments and the oddity ofgovernment borrowing backits own money at ridiculousrates of interest, cost ournation over N2tn annually,with no value added! Undoubtedly, our severeindustrial and economicdeprivations will continue foras long as we all close oureyes, while CBN’s monetarypolicies continue to make uspoorer, just as CBN’s ownreserves conversely swell.

Curiously, on the fiscalfront, the same vein ofeconomic sabotage is alsodiscernible in the mannerprojected revenue in annualbudgets is deliberatelyunderstated, with extremelyconservative crude exportprice/output benchmarks, sothat heavy governmentborrowing become necessaryto fund the ‘ghost’ deficitsdeliberately created in annualbudgets! It is of noconsequence to our experteconomic managers thatexisting so-called surplus orexcess public funds remaindomiciled in zero interestaccounts, while governmentsustains unnecessary heavydebt accumulation atobnoxious interest rates tofund the non-existent deficits.

SAVE THE NAIRA, SAVE

NIGERIANS.

Thus, Sanusi’s recent directivethat banks must keep 50% ofgovernment deposits inert, asreserves, is obviously anattempt to stem the folly aazndthe obvious fraud ingovernment borrowing back itsown money at horrendouscosts.

FG chides terminal operators over inadequate cargo handling equipment

By GODFREY BIVBERE &PROVIDENCE OBUH

Federal Governmentweekend issued a 30day ultimatum to port

terminal operators to addressthe observed lapses in cargoclearing at the ports. Theterminal operators were alsoreprimanded for theirinconsiderate attitude togovernment operativesworking at the ports. This iscoming on the heels ofcomplaints leveled againstport terminals by stakeholdersin the maritime industry overmaltreatment to port users intheir efforts to take delivery of

...as APMT gets 30 days ultimatum

cargoes the ports.Speaking during a visit to

the Apapa container terminal,APMT and Tin-can IslandContainer Terminal (TICT),Apapa, Senior SpecialAssistant to the President onMaritime, Mr. Leke Oyewole,and expressed shock over thescanning machines left idle atthe terminals.

Oyewole identifiedinadequate equipment as thebiggest challenge facing boththe TICT and APMT, saying,“APMT is similar to TICT interms of these inadequacy ofequipment, they do not haveenough equipment to positioncargo for inspection, no

adequate equipment to movecargoes for scanning, itsurprised me to find out thatscanners are virtually idle. Itis not the fault of the peopleworking here, it is not the faultof the customs officers, it isthe fault of terminal operators.“In the cause of the tour of Tin-can, we did not see anybodymove truck for scanning andthey have lot of things waitingto be scanned, that is contraryto what we thought ishappening at the port,” hestated.

For APMT, he explained,“the thirty days ultimatumwas coming as a result of thefact that Ministers have metwith them and had agreementwith this people, and all theypromise to do, uptil now theyhave not done. If you cannot

honour the Minister, how canyou honour somebody like me,

however, am taking this to thePresident.

stock market capitalisation records 26.6% growth, hits n11.533trn

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