financial vanguard july 29 2013

CMYK

JULY 29, 2013

From Left: Dr. Joseph Odumodu, Director General, Standards Organisation of Nigeria (SON), Ini Onuk, CEO,ThistlePraxis Consulting Limited, and Jim Obazee, CEO, Financial Reporting Council of Nigeria (representing the

Hon. Minister for Trade & Industry) at the launch of NIS: ISO 26000 in Lagos, recently.

GLAXOSM I THK L INE

Consumer Nigeria Plc, GSKhas resolved to commence

fresh negotiation with shareholdersover plans by its United Kingdomparent company, to increase itsmajority stake in the company.

Meanwhile, shareholders have listedconditions for accepting the bid byGSK United Kingdom to raise itsshareholding to 75 per cent from 46.4per cent.

Ownership tussle: GSK in freshnegotiation with shareholders… Shareholders list conditions for acceptance

Continues on page 18

By JONAH NWOKPOKU“There must be something for both

to take away from the table at the endof the day. That is what we are in theprocess of arranging now that we areto resume talks afresh”, said Mr.Olusegun Osunkeye, Chairman, andBoard of Directors.

He spoke at a media parley at theend of the court-ordered meeting heldlast week Tuesday. “We feel it will bemutually beneficial for all shareholdersto withdraw the scheme to allow forfurther consultations. We are goingback to the drawing board, that is, GSKUK and GSK Nigeria to look at the new

Scheme of Arrangement and to lookagain at the terms; so that with thosetwo when concluded, furtherannouncements will be made,”Osunkeye said.

The original agenda of the meetingwas a resolution to consider andapprove the Scheme of Arrangementfor GSK U.K to increase itsshareholding from 46.4 per cent to 75per cent. But the company bulked anddecided to withdraw the scheme dueto opposition from shareholders.Alternatively, the company decided touse the meeting to formally announce

the withdrawal of the scheme, engage,and interact with shareholders onacceptable options for GSK U.K toachieve its intention.

Osunkeye admitted that the thornyissues revolve around the right priceto sell and willingness of shareholdersto sell as well. He said that while theright price offered by GSK UK as atNovember, 2012 was reasonable andfair, it has become expedient to reviewthe price to reflect the currenteconomic realities.

“The price has now movedincidentally from what GSK UKoriginally offered the shareholders. Atthe time it was announced, it was at aprice that most people considered fair.But since then, a few things havehappened, the price on the StockExchange has moved in the range ofN50 to N58. So it is a question of nowhaving to revise and so dialogue andconsultations are taking place.

“We could not conclude on whereGSK UK who is the one offeringshould approximately pitch the price.We have recommended that the priceshould move up. So the question nowis at what level. This is where we are,”he said.

He further explained that, “When inNovember GSK proposed N48, it was

CURRENCY BUYING CENTRAL SELLING

CBN Exchange rate as at 26/07/2013

108.65 +0.92

105.60 +0.69

122.65 -2.15

2,340.00 -7.00

16.42 0.03

DOLLAR 154.76 155.26 155.76POUNDS 238.3923 239.1625 239.9327EURO 205.3201 205.9834 206.6468FRANC 166.6057 167.1439 167.6822YEN 1.5694 1.5745 1.5796CFA 0.292 0.302 0.312WAUA 232.7076 233.4595 234.2113RENMINBI 25.2253 25.3072 25.3892RIYA 41.2649 41.3983 41.5316KRONA 27.4013 27.4899 27.5784SDR 233.5483 234.3029 235.0574

Cover Story

CMYK

18 — Vanguard, MONDAY, JULY 29, 2013

Continued from page 17

Continues on page 19

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Daring

A successful business man has a mindset that is willing to take

risks and tread on places people would not ordinarily wantto tread. He would not chicken out at the slightest threat, so if youintend to start and own your business, you must have a die-hardmentality, otherwise you would quit before you even get started. It isalso very important to consider the risks involved and your ability tohandle them properly, since every business involves risks. Most businesspeople are very comfortable with modest risk but quite uncomfortablewith big risks. Although they are unwilling to gamble on long shots,they are more willing to take chances if their individual skills canaffect the probability of success. Then will they have the courage tostep out into the unknown and pursue their personal dreams.

Goal getter

A successful business man has the mindset of not just setting goals

but also achieving the desired result. He does not settle forless but always has his eyes on the prize. To him there are noimpossibilities and failure is just part of the game. He does not believein half measures but believes that he can go all the way and thismentality inspires a lot of confidence in clients and customers and willkeep them coming. A high level of energy also keeps the businessmantrudging through road blocks because he has his eyes fixed on longterm goals. It is important you are very energetic and vibrant as it willensure that your business is up and running. You need to have amotivation from within and from those around you. The man whoinvented electricity, tried ninety-nine times and failed; he got it rightthe 100th time! I dare say, that is the spirit you must possess, no matterhow many times you fail, you keep trying it out until you get it

The Basic Guide to StartingYour Business Part 4

right….bottom line you must delete the word IMPOSSIBLE from yourdictionary. Period!

It’s very important you move with the right people and read booksand materials that will prepare your mind and reposition your mindsettowards positivity, because “if you can think it then you can be it”.Never forget “you are a product of your thoughts.” This reminds me ofa Nigerian drama series that aired on the Nigerian national televisionnetwork (NTA) in the early 90s, BASSEY& COMPANY. The lead actwas fond of saying “if you want to be a millionaire, think like amillionaire”! As funny as it sounded then, it is still very true and appliesto business. So permit me to say if you want to be a successful businessman, then think like one!

If you are going to run a business of your own, you should findsomething that makes you really happy. This should be at the core ofwhy you are even looking at going into business of your own, because ifyou try and make something work and you have no passion for it, itprobably won’t work out. If you have passion for the industry that youare working in, you will have a good chance of making it work out.

What make a business great are the people that run it and the passionthat they have for it. Keep this in mind when you are thinking of startinga business of your own.

From experience, many just jump into business because they areexcited about an idea and haven’t really thought about the ‘whys andwherefores’. Taking a moment to reflect on your motivations anddefining your purpose will be time well spent.

A lot of people go into business for the sole reason of making money;this is not a good idea. It’s not a good idea because the main ingredientfor success is missing. The main ingredient for success is passion,and it’s virtually impossible to maintain high-levels of energy whenyou’re doing something you don’t love. There will always bechallenges in owning a business. Your love and passion is whattakes you through those challenges.

Without that passion, you probably won’t make it.

,

,Your love and passion is

what takes you through thosechallenges

From Left; Company Secretary, Mr Uche Uwechia, Chairman, Board of Directors Chief Seg-

un Osunkeye and Finance Director, Mr Simon Hodge all of GSK Consumer Nigeria Plc at theCourt Ordered Meeting for GSK Consumer Nigeria Shareholders Meeting Held on Thursday

25-7-2013, in Lagos.. PHOTO; Kehinde Gbadamosi.

Ownership tussle: GSK in freshnegotiation with shareholders

a fair price because it has apremium built into it but sixmonths later, that was nolonger tenable because afterNovember we had publishedour December AnnualAccount and have made moreprofits and paid dividends.

“If the company continues togrow profitably, therefore wewould rather be looking againat this point in time at theprice which will move upwardbecause that is what hashappened on the StockExchange. It is important tonote that it is yet to pitch atthe right price in the principleof fairness and thediscussions will be going on,on that.

He however denied thatthere was any element ofcompulsion in the ownershipbid, saying that noshareholder would be forcedto part with his shares.

“We understand that theconcern of shareholders is thatnothing should be bycompulsion, so we are alsolooking at that seriously andto know what the best optionis,” he said.

Recall that the troublestarted brewing for thecompany over who shouldown what when GSK Nigeriareceived signal from its parentcompany, GSK UK informingit of an intention to support itthrough upgrade of facilitiesbut in order to do that on asustained basis, it would liketo increase its shareholdingsin Nigeria.

GSK UK shareholding atpresent is 46.4 percent but itintends to increase it to 80percent. And that was wherethe problem started.

Mr. Osunkeye recalls howGSK Nigeria reacted initiallyto the proposal.

According to him, “We saidfine, if you are going tosupport us more, make furtherinvestments, upgrade offacilities, support onmarketing and all areas, wewill go along with you. Theynow said they will prefer ascheme of arrangement whichis more certain in the sense

that in the scheme ofarrangement, they willpropose to buy from existingshareholders such that theywill get up to 80 percent.

“So we got our advisers,Chapel Hill and Ighodalo, butwhen we got to a point theysaid it will be N48. This wasway back in November and theshare price at the StockExchange at that time wasN37, so there was premium.When we held our annualgeneral meeting in May, weput this proposal of 80 percent

at N48 to our shareholders butthere were lots of oppositionsfrom the shareholders inNigeria and also from some ofour institutional investorsabroad.

“First, our shareholderssaid, 80 percent is too muchfor GSK UK to have. At thatpoint in time in May we didn’ttalk much about the pricebecause the price was stillfairly stable between N48. Ifit moved at all, it wasupwards. So we went back toGSK UK and told them thefeelings of the generality ofthe shareholders, that 80percent is too high for themto absorb in view of certainexperiences that ourshareholders in Nigeria havehad in the past with othercompanies.

“The shareholders also hadthis fear that 80 percent willlead next to delisting. So wewent back to GSK UK and afterconferring with them, raisingthe concerns with them, theycame down to 75 percent andalso made it clear that it wasnever the current intention tode-list from the StockExchange which means thatthey will continue to list aslong as there is growth, andevery shareholder willbenefit.”

These concerns were stillfresh in the minds of theshareholders during the courtordered meeting. Some ofthem who spoke to Vanguardsaw it simply as a brazenattempt to rip them off theirinvestments. Hence theycalled for completeabandonment of the scheme,arguing that it was inspiredby greed.

N i g e r i a ’ sc u r r e n te c o n o m i cdevelopmentand evolutionwould notallow for theglobal bestpractices thatt h eshareholdersare calling for

CMYK

Vanguard, MONDAY, JULY 29, 2013 — 19

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What makes economics an interesting science of behaviour is its attemptto predict the behaviour of economic agents. In the attempt to predict

how certain economic actors will behave in a given situation, economicstatisticians introduced the theory of probability. Using probability andpermutations, the concept of zero-sum game emerged. In the game of zero-sum, the winner takes all.

Looking at the practice of politics in Nigeria, it was initially politics of sharing

Nigeria’s politics of zero-sum gameby allocation. It is nowabsolutely a zero-sum game.Political actors in Nigeriatoday are involved in the gameto benefit themselves only. Itis a situation in which onepolitician’s gain comes onlyfrom another politician’slosses. The net balance in totalwealth allocation is now zero,meaning that the resourcesthat should have been used todevelop the nation are takenover by political actors for theiruse.

The nation’s wealth issimply shifting from onepolitician to another. In theattempt to make it, they stopshort at nothing. Whoever getsin their way is an enemy thatmust be crushed to death.They act like moving train,whose path no human mustcross when it is approaching.They have renderedinstitutions of stateunworkable.

Nigerian politicians are

deadly. They employevery means available to clingto power, not for service, butto dispense favour, enrichthemselves and secure thefuture of their unborn babies.It is only in Nigeria thatpolitics is big business. Themore you sow either inresources or violence todiminish your opponent, themore the benefit.

In economics, allocation ofresources is key to achievingeconomic well-being of all,which is the ultimate goal ofgood governance.

This is because what isavailable cannot go round all;bring to the doorstep of everycitizen the dividend of

democracy. The overall well-being of society is premised onefficient allocation of scarceresources. When such arerightly allocated andexecution carefully monitored,it ensures value for money.

But what you find in Nigeriais war between politicalfriends and foes. Nigerianpoliticians are friends as longas they agree to a sharingformula. The moment there isdisagreement on sharing, thewar starts. No Nigerianpolitician wants to lose a koboto any other. Ask yourself, whywill 36 state governors enterinto a room to vote only tocome out to disagree and it hasnow become an open war? Isthis war between thegovernors’ forum and thePresidency because of theNigerian electorate? Certainlynot! Nigerian politicians do notdisagree on principles as it isin other places. Not evenalong party line; they do so onwhat they seem to be losingout from. The budget war aboutconstituency projects is allabout what comes to me in thebudget.

Is the war between the

Rivers Statelegislators and the governorabout the people? No, it isabout the desire of the centerto cling to power! Is PatienceJonathan’s involvement aboutthe welfare of the people ofRivers State? Not at all! It isabout fighting the enemy, who

wants to stop me from being afirst lady, having access topower, access to the purse ofNiger- Delta states. It is aboutthe perception that if 2015comes and my bread winneris stopped, I will be in the cold.In decent and sane societies,with her confession, she wouldhave been picked up forquestioning, but alas, the

machinery of state will notallow that in Nigeria.

Is the in-fighting within thePDP about the wellbeing ofNigerians? Of course not. It ispositioning and repositioningto lay hands on the nationalcake. It is to scheme out thoseopponents in the zero-sumpolitical games politiciansplay in Nigeria. Have you notheard that Nigerianpoliticians, who find their wayto political offices earn thehighest wages in the world?Yet, in comparison, Nigerianeconomy is under-performingcompared to those of other

countries. It is only in Nigeriayou go into politics not to servebut to be served. Nigeriapolitics is about makingunjustifiable wealth. How doyou explain that a kilometerof road in Nigeria isconstructed at $1million? Howdo you explain that thePresident or Minister ofPetroleum Resources can on

their own award oil blocks towhoever they wish? Why willpoliticians not kill, maim or doanything to become president?

Why is every region fightingto have their own as the nextpresident of Nigeria? So thatthe few that have access canmake it. Is it not why selfishpoliticians, who were aroundUmaru Yar’adua did not wanthim out of office when it wasobvious the man wasincapacitated? How come thatat 80, Papa Anenih is still outthere struggling in the nameof politics? In more decentsocieties, he should be resting,

Business & Economy

waiting for the ultimate call.What value is an 85-year-oldman adding to the polity? Whyare these men still paradingthemselves as people, whohave things to offer other thanto share the nation’s cake?

Why must Nigerianyouths allow

themselves to be used by theseno good politicians to kill,maim and destroy, all becausethey want access to power in2015? Is it not time Nigerianyouths and the middle classbegin a movement to rescueNigeria from thesescavengers, who callthemselves indispensablepoliticians?

A politician, who performscreditably in office, hasnothing to fear about re-election. Nigerians are nofools. They know who isserving their interest. If Mr.President has performedcreditably, he has nothing tofear about 2015. But thequestion to ask him is, Mr.President in your mind andconscience, have youdelivered on your promises?Politics of zero-sum game willnot help this nation calledNigeria; it will only set us back.All of you involved in thisunwholesome act of zero-sumpolitics are doing Nigeria adisservice. The economy islosing massively in terms ofinvestment flow due to thismindless war. It has to stopnow.

A politician, whoperforms creditably in

office, has nothing to fearabout re-election.

Nigerians are no fools.

Continued from page 18

Ownership tussle: GSK in fresh negotiation with shareholders

“The market in Europe iscrumbling and African marketis where the opportunities are.They have seen that the futureof African market is verybright. That is the reason forthis hostile attempt for indirectownership increase. Thisproposal is a pure attempt todeprive us of what is our rightbut I must say that no Nigerianmust be forced to part with hisshare,” a shareholder, NonahAwoh said.

Adebayo Adeleke, theSecretary General ofIndependent ShareholdersAssociations, whilecondemning the proposalcalled on the company ’s

management to strive to followdue process and allow the lawto take its course in their bidto reach a common groundwith their shareholders.

But Mr. Osunkeye saidnothing was being doneoutside the law. He recalledthat the Stock Exchangeapproves that a foreigncompany according to itsregulation can get up to 80percent share increase.

He said, “GSK has decidedthat they want to do this withinthe laws of the country butNigerian shareholders in viewof their experiences in the pastand so on decided that that 80percent is too much.”

In the meantime, theshareholders have decried

subtle compulsion andunfairness in the entireprocess and are thereforespecifically asking that if theyare going to sell at all, it wouldbe at their chosen price of N75.They are also asking thatglobal best practices beobserved in the processwhereby GSK UK, the biddingcompany be forbidden fromvoting.

But Osunkeye said fairnesshas been the principlehallmark upon which theprocess has been built andargued that Nigeria’s currenteconomic development andevolution would not allow forthe global best practices thatthe shareholders are calling for.This idea, he said, might scare

away willing and capableentrepreneurs who would havelisted on the Stock Exchangeand enhance economic growth.

“You see, in the UK, GSK UKas a UK company, under theirpractice, will not be allowed tovote in that scheme, soNigerian shareholders are nowsaying that, that practice mustbe observed here in Nigeria.But my personal view is that,even though it is called globalbest practice, and we subscribeto global best practice, wemust not forget that in everycountry, they have theirdeflections and adaptations tosuit their conditions.

“After all, this idea that acompany in UK will not beallowed to vote in shares has

not been there forever, it’ssomething that started aboutlast ten years. So it is areflection of their economicdevelopment. They feel theycan now move to that area.Maybe there are no majorityshareholders anyway. So thereis diffused ownership and thesystem in our country shouldrather be to encourage the fewentrepreneurs who have thewherewithal to list on theexchange. There is dichotomythere. Our interest in respectto the state of our economicdevelopment is not yet in linewith the interest in UK becausethey are more advanced andtheir environment is verymuch different,” he explained.


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Business & Economy

THE Federal Government

has reiterated itscommitment to diversify theeconomy from reliance on theoil sector to the agriculturesector. Mr Greyne Anosike, theDirector (Press and PublicRelations), Ministry ofAgriculture and RuralDevelopment stated this in astatement issued in Abuja.According to the statement, theminister stated this when Prof.Oyewole Tomori, President,Nigeria Academy of Science(NAS) led a delegation to hisoffice. It quoted Tijani as sayingthat the country should beginto marshal an economic plan ascrude oil and gas dwindle in theglobal economic calculations.

‘’The repeated call fordiversifying the economy is nota political gimmick, but a purelyeconomic forecast. Nationsshould begin to evolve longterm master plans as oil beginsto play less critical role in theaffairs of nations in the nextdecade,’’ the statement said. Itadded that the ministerobserved that most countrieshave found alternative sourcesof energy and aggressivelyembarking on agriculture usingmodern technology. It is alsosaid that the minister called onthe association to evaluate therole it will play to resolve thesechallenges and come up with acomprehensive proposal to theministry.

The statement said that the

association should takeadvantage of its agriculturalresearch findings to move thecountry forward. It stated thatthe Federal Government hasstarted planning ahead withthe approval of 13 airportsacross the country as perishable

cargo terminals and creation ofStaple Crop Processing Zones(SCPZ).

The statement quoted Tomorias saying that the associationwas in the ministry to help withevidence based data driven andscientifically verifiable materials

that could help the agriculturesector. It said that theassociation was capable ofevaluating facilities, surveyavailable manpower needs andexpertise in the area ofdocumentation, cassavautilisation among others.

BUREAU of Public

Enterprises (BPE) ,has said that the 17 PowerHolding Company of Nigeria(PHCN) successor companieswill be listed on the floor of theNigerian Stock Exchange(NSE).

Director General of BPE, Mr.Ezra Dikki disclosed thisduring a courtesy visit to theNSE and also ring the tradeclosing bell of the exchangeyesterday in Lagos.

Dikki envisaged that in thenext few years, as the Nigerianelectricity supply sector movesinto the hands of private sectorowners and matures, the 17PHCN successor companieswill list on the exchange.

According to him, this isbecause the remaininggovernment shareholdings inthe DISCOs that are currentlybeing privatised through coreinvestor sale strategy, will bedivested through theexchange.

“The GESCOs will come bydiffered public offer latter. Wealso expect many of them tocome to the capital market toraise long term finance”, hesaid. He affirmed that,Preszident Goodluck Jonathan

a d m i n i s t r a t i o n ' stransformation agenda iscommitted to growing andincreasing the depth of thecapital market. The BPE bossstressed that the FederalGovernment recognises therole of the capital market inproviding long term fundingthat will drive investments inthe transport sector that willresult from the reformsinitiatives in the sector.Soon theroads, railways, inland

waterways and the portsharbour bills will be presentedto the Federal Exceutivecouncil for approval andtransmission to the NationalAssembly for enactment, hesaid. He believed that onceenacted and relevantregulatory agencies set up, itwill create an enablingenvironment for private sectorinvestment in concession andPPP contracts. Similar reforminitiatives in the housing

sectors and agricultural sectorthrough the privatisation of theAbuja Commodities and StockExchange will all throw up vastinvestment oppourtunities forthe capital market to finance,he stated.

He therefore promise that theBPE will continue to supportand recommend initiatives tothe Federal Government toensure listing of enterprisesthrough reforms andprivatisation to deepen andimprove the liquidity in thecapital market.

Privatization: 17 PHCN successor

companies to list on NSE

By PETER EGWUATU

FG reiterates commitmentto diversify economy

The commissioner said the gesture was aimed atencouraging more farmers to produce more foodfor both local consumption and export.

Similarly, the state government has approvedthe tarring of the road networks and parking spacesat the Usman Faruk Secretariat at the cost of N225.6million. Alhaji Ahmed Aliyu, the Commissioner for Health said the council also approved thereconstruction of the 1.5 kilometre Unguwar Rogo-Police Station-Minanata-Tudunwada road at the cost of N154.96 million. Aliyu said the council hadapproved the construction of new General Hospitalsin Kware and Dange/Shuni local government areas at the cost of N172.26 million each.

SOKOTO State Government said it

would disburse N1.6 billionagricultural loans to farmers in the state.The commissioner for solid minerals in thestate, Alhaji Dahiru Maishanu, said thiswhile briefing newsmen on the outcome ofthe state executive council meeting.

The commissioner said the stategovernment would provide N512 million,while Zenith Bank Plc would providedthe balance. “The loan facility wasapproved by the council and it will be distributed to rice and tomato farmers inthe 23 local government areas of the state.”

Sokoto govt, Zenith Bank to disburseN1.6bn agric loan to farmers

L-R: Mrs.Sewa Ayodeji,Group Head.Learning & Development,Chartered Institute of Bankersof Nigeria(CIBN);Mr.Reginald Akujobi-Roborts,MA Consultant,Member Consultative

Committee;Mr.Ebenerzer Onyeagwu,ED,Zenith Bank & Chairman Consultative Committee, 7thAnnual Banking & Finance Conference;and Dr. Uju Ogubunka,FCIB,Registrar/CEO CIBN,

during a media briefing in Lagos on Friday on the Upcoming 7th Annual Banking & FinanceConference of the Institute.

WSI-Axon sets newstandard in internetmarketing

AS part of efforts toprovide innovative

digital marketing solutions forclients, developing andexecuting results-orientedmarketing strategies, WSI-Axon has set new standards forinternet marketing in Nigeria.

The Head Digital Marketing,WSI-Axon Nigeria, Ms. AmaraNwankwo, said “if you haveinvested in a traditionalmarketing strategy but haven’tfully explored the possibilitiesof digital marketing and youwant to earn its benefits, WSI-Axon is the way to go”

“As a business owner,perhaps you have an existingInternet marketing campaignyou’d like to augment, or a coredigital strategy that works foryou but you’re missing a pieceof the puzzle, such as socialmedia or mobile marketing. Nomatter where you are on thespectrum of digital marketing,WSI-Axon can help,” she said.

She added that whether it’sa dynamic website design,search engine optimization,email marketing, or theemerging and exciting worldsof social media and mobilemarketing, WSI-Axon is on thecutting edge of what’s possibleto discover what works for yourorganization.

CSR: Falcon sets upevaluation team

FALCON PetroleumLimited said it will set up

an evaluation team to monitorthe impact of its CorporateSocial Responsibility (CSR)initiative that seeks to empowerindigent women in its area ofoperation in Ikorodu.

The company will beempowering 58 women withinthe community through itsvocational skills acquisitionprogram.

The CSR program entails a 3-month vocational training infour key areas (Bead making &wire works, catering, decoration& events management anddress making & design), amandatory one-monthindustrial placement and anendowment pack to start-upand run gainful businessventures all on the bill of FalconPetroleum.

Speaking during thegraduation ceremony of thebeneficiaries, the ManagingDirector, of the company,Professor Joseph Ezigbo,described the initiative as thecompany’s way of giving backto the society by empoweringthe less privileged women, aswell as to entrench a betterrelationship with its hostcommunity.

BRIEF


CMYK

Banking & Finance

BRIEFS

L-R: Head, Mobile Financial Services, First Bank of Nigeria Limited, Mr. Mike Ogbalu;

Head, Technology & Services, FirstBank, Mr. Akin Fanimokun; Director, Regulatory Affairs &Special Projects, Airtel Nigeria, Mr. Osondu Nwokoro and Group Head, E-Business FirstBank,

Mr. Chuma Ezirim at the formal launch of FirstMonie Talkmore Campaign, a partnershipbetween FirstBank of Nigeria’s FirstMonie and Airtel Network, which took place at the bank’s

Head Office recently.

ECONOMIC analystshave predicted sharp

increase in interest rates, ashigh as four per cent, andincreased inflow of hot money(foreign portfolio investment)into the country.

This prediction is inresponse to the decision of theMonetary Policy Committee ofthe Central bank of Nigeria(CBN) to raise cash reserverequirement (CRR) on publicsector deposits to 50 per centfrom 12 per cent.

“The liquidity gap createdat the market is expected toresult in a 3-4 per cent spikein interest rates, which arecurrently at an average of11.2 per annum. There willalso be a reduction in the useof Open Market Operationsauctions as a mop-upstrategy, which will beunnecessary in an illiquidmarket”, said analysts atFinancial Derivates Company(FDC) Limited. A similar viewwas expressed by Mrs. RaziaKhan of Standard Charteredbank. “By raising the costsassociated with public-sectorliability mobilisation, itencourages the bankingsector to raise deposit rates tocompete for other, non-public,liabilities.”

According to ConsolidatedDiscount House Limited,“Deposits rates will go up asbanks resume fight overdeposit liabilities.

MPC: Analysts predict 4%rise in interest rates

By BABAJIDEKOMOLAFE

At the end of its MPCmeeting on Tuesday, the CBNthough maintained itsbenchmark interest rate, theMonetary Policy rate (MPR)at 12 per cent, and CRR onprivate sector deposit at 12per cent, it jerked up CRR onpublic sector deposits to 50per cent .

Explaining the rationale forthis radical decision in acommuniqué issued at theend of the meeting, the CBNsaid, “The Committeeobserved the build-up inexcess liquidity in thebanking system, andexpressed concern over the

rising cost of liquiditymanagement as well as thesluggish growth in privatesector credit, which was tracedto DMB’s appetite forgovernment securities. Thissituation is made moreserious by the perverseincentive structure underwhich banks source hugeamounts of public sectordeposits and lend same to theGovernment (throughsecurities) and the CBN (viaOMO bills) at high rates ofinterest’.

Analysts were of the viewthat the increase in interestrates prompted by the MPCdecision, will occasion rise inbond yields. This coupledwith appreciation of the naira,facilitated by the decision, willmake investment in Nigerianfixed income instrumentsmore attractive to foreigninvestors.

Consequently this willenhance increased inflow offoreign portfolio investment(hot money) into the economy.

Reviewing this developmentin the company’s Bi-monthlyEconomic and Businessupdate, FDC analysts said,“The anticipated increase ininterest rates due to thefunding gap created wouldmake interest rates in Nigeriamore attractive relative to itsemerging market peers. Thiswe project would result to anincrease in hot money ofapproximately $1-2 billion.Hot money inflows intoNigeria were estimated at$12bn in Q1’13, which hasdeclined to a current estimateof $10 billion”.

FIRST Bank Limited hasc o m m e n c e d

implementation of strategiesto dominate the fledgingmobile money business in thecountry.

Last week, the bank lunchedan international mobile moneytransfer platform, as well as acampaign to attract mobilesubscribers to Firstmonie, itsmobile money platform.

The new international mobilemoney transfer platform iscalled Trans-Fast and it is thefirst to target internationalcustomers in Nigeria. Itenables customers to accessthe Trans-Fast platform througha direct link from the First BankDiaspora banking website andtransfer money in multiplecurrencies including Euro,Great Britain pounds Sterling,Us Dollars and the Naira.

This followed the signing ofan agreement in Lagos lastweek, between executives of

First Bank unveils strategies to dominate mobile money business

By JONAHNWOKPOKU

First Bank and the provider ofthe money platform, Trans-fastRemittance Incorporated.Trans-fast RemittanceIncorporated will make its over200, 000 global networkavailable for First Bankcustomers to transfer moneydirectly via the internet whilealso allowing beneficiaries ofinternational money transferget money directly into theiraccounts in any currencythrough any of the first bankbranches nationwide.

Speaking at the launch of theevent, the Group ManagingDirector, First Bank of Nigeria,Plc, Chief Bisi Onosanya said,“We have extended our frontierto Trans-Fast to leverage the e-platform capabilities to furtherprovide a convenient andsecure funds transfer service toour numerous customers in theDiaspora who seek to sendmoney home for varioustransactions.”

He added that, “Trans-Fastwill contribute in fostering theCBN driven cash-lite andfinancial inclusion policies, as

the self-service money transferenables senders transfermoney directly via theinternet, eliminating the useof agents and allowsbeneficiaries of internationaltransfer get money directlyinto their accounts with anybank in any currency, throughFirst Bank.”

For head of marketing andcorporate communications,First Bank, Plc, Mrs. FolakeAni-Mumuney, “With theTrans-Fast platform, customerswill have the options of sendingmoney directly to the receiversaccounts, online transfers andas well as cash pick up at anyof the first bank branches.”

On his part, the CEO, Trans-Fast Remittance, LLC SamishKumar, “Trans-Fast has alwaysoffered excellence in theproducts and services weprovide. This new partnershipelevates quality andconvenience of service for ourcustomers, to provide valuethat is resoundinglyunquestionable.”

UBS will pay$885 million

UBS will pay $885 millionin a settlement with a

U.S. regulator overallegations the Swiss bankmisrepresented mortgage-backed bonds during thehousing bubble, paving theway for billions more to bepaid by other banks.

European and U.S.lenders such as CreditSuisse and Deutsche Bankhave set aside money tocover the cost of any lossesarising from the dispute withthe Federal Housing FinanceAgency but estimates varywidely.

Shares in Royal Bank ofScotland, which had risen bya quarter since July 3 havingslumped following theousting of chief executiveStephen Hester in June,dropped over three percenton Friday after the UBSsettlement was revealed.

The FHFA said late onThursday UBS will pay $415million and $470 millionrespectively to government-sponsored housingenterprises Fannie Mae andFreddie Mac to resolveclaims related to securitiessold to the companiesbetween 2004 and 2007.

UBS is just one of 18 banksthe FHFA pursued in 2011 forallegedly misrepresentingthe quality of the collateralbacking securities during therun-up to the financial crisis.

EMP sponsors AITECbanking & mobilebanking conference

EMERGING MarketsPayments (EMP)

featured as a platinumsponsor of the AITECBanking & Mobile BankingWest Africa 2013 Conference.The two-day event was heldat the Accra InternationalConference Center, Ghana.

Managing Director, EMPWest Africa, Tunde Coker,who was one of the keynotespeakers at the occasionspoke on converting theAfrican economy from cash toelectronic payments.

According to the ChairmanEMP, Paul Edwards, “Just asthe countries of Africa aredynamically changing anddeveloping, so is thepayment card industry. EMPis delighted to participate inAITEC 2013 as a platinumsponsor, particularly as anevent of this caliber offers avibrant regional platform todiscuss trends and issuesaffecting the industry.


Banking & Finance

BRIEF

THE Chartered Institute ofBankers of Nigeria (CIBN)

has concluded plans to meetgovernment functionaries,bankers and other stakeholderson its policy advocacy drive thatwould engender growth anddevelopment of the economy.

The institute noted thatgovernment has started givingattention to some of therecommendations made fromits previous conferences suchas: enactment of laws thatsupport the banking industry,infrastructure enhancement,tax incentives issues etc.

The institute, disclosed thatits 7th Annual Banking andFinance conference has beenscheduled to hold fromSeptember 10-11, 2013 inAbuja, where variousstakeholders including theCentral Bank of Nigeria, otherregulators in the banking andFinance industry , policymakers from both private andpublic sectors of the economyand students are expected todiscuss issues that affect thebanking industry and theeconomy in general.

Speaking at the pressconference heralding theconference in Lagos at theweekend, Chairman,Consultative Committee on the7TH Annual Banking and

Policy initiative: CIBN set to engageregulators, bankers, other stakeholders

Finance Conference, Mr.Godwin Emefiele said, CIBNis constantly championing theneed to enshrine best practicesand ensure strong commitmentto ethical and professionalstandards in order to ensurecontinuous confidence withinthe banking industry. Asbankers, we know that theFinancial Services Industryoccupies a vital position in thedevelopment of Nigeria andAfrican economy as it facilitateseconomic growth anddevelopment.” To thisdevelopment, he noted that

CIBN is set to maintain andsustain the positioning of theFinancial Services Industry asthe bedrock of the Nigerianeconomy through advocacy forprofessionalism.

The theme for the conferencetitled “Upholdingprofessionalism in the financialservices industry: Supportingthe economy”, according to theChairman of the committee hasbeen suitably chosen for theconference. According to him,“ This will afford policy makers,regulators and operators in thefinancial services industry the

platform and leverage to shareexperience, network andexchange ideas oncontemporary relevant issuesaffecting the financial ServicesSector.

The Registrar/ChiefExecutive Officer, CIBN, Dr.Uju Ogubunka, said “President Goodluck Jonathanis expected to declare theconference open and the CBNGovernor, Sanusi LamidoSanusi will deliver the keynoteaddress , while the ChiefHost, Mr. Segun Aina willreceive all special guests.

Stories byPETER EGWUATU

Commissioner of Justice, Kaduna State, Mr. Jonathan Kish Adamu and Managing Director,UBA Trustees, Mrs. Oluwatoyin Sanni at the Meeting of Bond Holders of the state’s N8.5bn

Series 1 Bond, packaged by UBA Trustees in Lagos on Friday.

banks, financial sectorregulators and developmentagencies with such services asmarket analysis, strategy andpolicy development,segmentation, valueproposition development,operating model optimisation,pricing and evaluationstudies.The firm has been doing this ona per-project basis, butincreasing demand hasresulted in the decision toexpand the in-country team inorder to provide clients with amore comprehensive service.Networked into the firm’s officesthroughout Africa, the MiddleEast and India, the Nigeriaoffice will be increasing itscapacity to provide whatGenesis Analytics is known for,namely rigorous analysis andadded-value output.“We have been working withbanks and related companies inNigeria for 12 years, and aredelighted to be able to

Genesis Analytics expands capacity in Nigeria

South African bankingstrategy firm, GenesisAnalytics, has said that

it is expanding its capacity inNigeria. This comes with theappointment of Ada Phil-Ugochukwu, who has a far-reaching businessdevelopment mandate, asCountry Director.Phil-Ugochukwu will focus onexpanding and consolidatingthe firm’s presence in Africa’ssecond-largest economy bydeepening relationships withexisting Genesis Analyticsclients and expanding itspresence into non-bankingfinancial services. She willalso focus on enabling clientsto benefit from leveraging offthe firm’s sector andcontinental knowledge inorder to improve businessperformance.Genesis Analytics has beenoperating in Nigeria since2001, where it has beenadvising and supporting

announce the increase in ourcapacity to serve this market,”said Richard Ketley, Head of theGenesis Analytics FinancialInstitutions Practice. “He said, "Nigeria is by far themost significant market forgrowth-phased financialservices institutions on thecontinent, and a strongerbanking sector will play a keyrole in facilitating both economicgrowth and social development.“For Genesis Analytics, astronger local presence willsignificantly expand our abilityto support clients in the bankingand other financial servicesindustries, as well as regulatorsand donors.” Phil-Ugochukwu on her partsaid that, “As banks adjust to theworldwide restructuring of thefinancial services sector, they arefacing many significantchallenges particularly indeveloping economies. “Most importantly, they needto stabilise operations, invest in

solutions that will help them tointegrate business units, explorealternative channels andincome streams, and benchmarkprocesses to meet globalbanking standards. Achievingall of this while running a bankon a day-to-day basis putsenormous pressure onexecutive and managementteams and this is where GenesisAnalytics has such a significantrole to play.“The firm is well-resourced withresearch and analytical capacity,and can provide the invaluableintelligence needed for banks tomake informed decisions in adifficult trading climate. Using a knowledge basedeveloped by working withmore than 50 banks on theAfrican continent, as well aswith many regulators and donoragencies, Genesis is able to offerits clients best-of-breed analysisand innovative solutions to thechallenges they are facing.”

Nigeria to hoststudents' globalentrepreneurshipcompetition

PRESIDENT of Studentsfor Advancement of Global

Entrepreneurship (SAGE) Mr Agwu Amogu said thatNigeria had been chosen tohost the 2013 world students’global entrepreneurshipcompetition in Abuja.

Amogu told newsmen inAbuja that the competitionwhich was the 11

th in the series

was tagged “The SAGE WorldCup”. According to Amogu, thecompetition is scheduled tohold between Aug. 6 and 12.He said that Nigeria earnedthe right to host the prestigiousSAGE completion edging outUkraine and South Korea.

“SAGE mission is to create thenext generation ofentrepreneurial leaders whoseinnovations and socialenterprises are to address themajor needs of our globalcommunity. It engages youngpeople in hands-on learningprocess on how to createwealth and also on how to helpothers and their communities.This is an honour andopportunity for Nigeria andAfrica, as some of the worldbrightest young people willcome to Nigeria andexperience Africa’s businessenvironment, culture andhospitality, ‘’he said.

Skye Bankposts N71bngross earningsin Q2

Skye Bank Plc has recordedtotal gross earnings of

N71.1 billion for the secondquarter ended June 30, 2013as against N59.7 billionduring the same period in2012, showing an increase of19 per cent.Similarly, the bank’s profitbefore tax rose to N10.5 billionduring the review periodcompared to N9.9 billionduring the correspondingperiod in 2012, representingan increase of 6 per cent.The IFRS compliant resultsubmitted on the floor of theNigerian Stock Exchange,NSE showed that profit aftertax for the period stood atN8.4 billion as against N7.9billion the previous year. Other highlights of the resultincluded substantial increasein operating income whichrose from N33.1 billion in2012 to N41.4 billion duringthe period being reviewed,showing efficiency in resourceutilization.


CMYK

Corporate Finance

U.S. charges six incredit card,Nasdaq hackingcase

U.S. prosecutors chargedsix foreign nationals

with hacking crimes,including credit and debitcard thefts that authorities saycost U.S. and Europeancompanies more than $300million in losses, andcharged one of them withbreaching Nasdaqcomputers.

Prosecutors said theindictments unsealed lastweek for the payment cardhacking were the biggestcyber fraud case filed in U.S.history.

The long list of victimsinclude financial firmsCitigroup Inc, Nasdaq OMXGroup Inc, PNC FinancialServices Group Inc and a VisaInc licensee, Visa Jordan.Others include retailersCarrefour SA and J.C.Penney Co along withJetBlue Airways Corp,prosecutors said as theyannounced indictments.

Prosecutors said theyconservatively estimate that agroup of five men stole atleast 160 million credit cardnumbers, resulting in lossesin excess of $300 million.

Wakanow

debuts in Dubai

IN its bid to facilitatemovement around the

globe, Wakanow.com hasmade it easier for travelers tomake quick bookings with thedebut of an office in Dubai.The Dubai office is set to maketraveling to the iconic cityeven easier and affordable astravelers get to save more offtheir trips.

In a statement madeavailable to Vanguard,Wakanow, said thousands offun seekers, travel lovers andadventure enthusiasts aretrooping to Dubai this monthfor the summer. While it mayseem a daunting task tryingto book flights, hotels andtours this peak season, wewill make it easier.”

“Each year, millions ofNigerians visit Dubai withfriends and family for the solepurpose of exploring thenumerous sights andattractions the city is famousfor like Burj Khalifa, DesertSafari, Dhow Cruise, or theFerrari World in Abu Dhabi”said Ralph Tamuno, DeputyManaging Director forWakanow.com. “But nowhereelse do you get suchpersonalized service as withus here.

THE Nigerian capital

market will seeimproved activities in thesecond half (H2) of the yearas a result of interimdividends expected to bedeclared by blue chipcompanies.

In a review of the capitalmarket activities for the firsthalf(H1) of the year, 2013 andoutlook for third and fourthquarter, Cowry AssetsManagement Limited, saidthat positive expectations from2013 year end results wouldalso be an added boost.

“We retain our bullish outlookfor the equities market in H22013 as the bourse presentattractive opportunities for bothforeign and local participants;Expectations from interimdividend declaration by bluechips such as Nestle, GuarantyTrust Bank, Okomu Oil PalmCompany will keep the tempoupbeat in second half of theyear.

“Also, investors’ positioningahead for year 2013 end resultswill drive the marketnorthward in Q3 and Q42013,” the company said in thereview.

It, however, stated that thecapital inflows of ForeignPortfolio Investments, FPIsmight be curbed if quantitativeeasing was effectively haltedas planned by the UnitedStates.

On the bonds market, thereport stated that primarysegment of the market wasexpected to be auctioned athigher discounts given higherexpectations of both interest

rates and decline in foreignportfolio inflows.

It added that theestablishment of the selfregulating FMDQ OTC Plc,for the hitherto unregulatedOTC bonds market, expectedto commence operation inAugust, would fosterimprovement in the OTC bondmarket, as well as boostconfidence in the entire bondmarket, saying, ‘Hence, weanticipate higher volumes oftransactions in the bondspace.’

The equities market wasbullish in most parts of sixmonths of the year,culminating in a year-to-datehigh of 40,012.66 basis pointsand N12.85 trillion for the NSEAll Share Index, ASI, andmarket capitalisationrespectively.

Cowry Asset Managementattributed the positive

performance during the periodto large capital inflows fromforeign investors’ patronageenjoyed by the Exchange.

“In the months of Januaryand February, FPIs scrambledfor opportunities in theemerging market space andthe Nigerian stock marketpositioned herself as a choiceinvestment destination.

Consequently, the NSE ASIappreciated by 17.79 percentas at the end of February. Thebulls run was sustained inMarch, albeit, mild as thebenchmark index, NSE ASI,advanced by 1.39 percent inthe month as investors took abreather to cash in onaccumulated gains.“Also,sustained profit taking ensuredthat the market closed lower inApril with the ASI retreatingby 0.29 percent.

Following a temporal pricecorrection post result season,

bargain hunting assumed thecenter stage in May. However,the announcement by theUnited States Federal ReserveBank to reduce ‘QuantitativeEasing’ in early June sparkeda bearish run driven by thegradual funds pull out byforeign participants,culminating a total marketdecline of N648.97 billion inthe month of June.

“Despite the sell pressurefaced by the NSE in the lasttrading month of first half of2013, previous months ofimpressive bull run, helped liftthe equities benchmark index,ASI rising significantly by28.80 percent year-to-date asagainst 4.19 percent recordedin first half of 2012. In the samevein, market capitalizationgrew by 27.32 percent or N2.45trillion compared to a growthof 5.55 percent or N362.71billion in the same period of2012.”

BERGER Paints Nigeria

Plc has launchedproducts of KCC Corporationof South Korea into theNigerian marine andprotective coating market.

The launch is sequel to therecent partnership agreementbetween both companies tojointly serve the Nigerianpaint and coating market inthe first instance andthereafter, the broaderbusiness community of WestAfrican States (ECOWAS).

Under the partnership,Berger Paints will provideKCC with ease of access it

requires to operate in Nigeriaas well as a strong platformto access the growing marineand protective coating marketin Nigeria while KCCCorporation will contributeadvanced technology,technical and trainingsupport as well as researchand development. Itsproducts are internationallycertified and qualified tooperate in the Nigerian oiland gas industry.

Addressing stakeholders atthe product presentation inLagos recently, ManagingDirector of Berger Paints, Mr.

Tor Nygard stated that thecompany decided to partnerwith KCC Corporation, thelargest coatingsmanufacturer in Asia, to offerthe growing Nigerianmaritime market superiorproducts that are comparableto competition.

He noted that theintroduction of KCC brandswas a demonstration ofBerger ’s commitment toproviding customers with realchoice and widest range ofmarine and heavy dutycoatings that meet the specificneeds of their vessels, ship,

fleets, offshore andmainstream operations.

Also speaking, the NationalSales and MarketingCoordinator of Berger Paints,Mr. Yomi Odunaiya, said theintroduction of KCC brandsinto the Nigerian marketwould deliver demonstrableand transparentimprovements inperformance, efficiency andcost saving for vessels andship operators in Nigeria.

According to him, KCCproduct offering, whichinclude anti-fouling, Epoxyprotective coatings, zinc richcoatings amongst others areof high performance, whichwill deliver quantifiableadded value for ship owners,indigenous and internationaloil and gas operators alike.

Berger Paints launches KCC’sproducts into Nigerian market

By NKIRUKA NNOROM

Interim dividends to boost stock

market activities in H2

Mr Tor Nygard, MD/CEO, Mr Yomi Odunaiya National Sales & Marketing Coordinator, both ofBerger Paints Nigeria Plc and Dr Nwosu Personal Assistant to Chairman, Comet Shipping at thepresentation of KCC’s products in Lagos recently.

BRIEFS

CMYK


Corporate Finance

BRIEF

F i r s t B a n kpartners AIRTELon mobile moneyservices

In furtherance to its

commitment to ensurethat a vast number of Nigeriansenjoy superior financialservices, First Bank of NigeriaLimited, through its mobilepayment solution FirstMonieis partnering with AirtelNetworks Limited (AirtelNetworks).

The partnership aptly titledthe ‘Firstmonie TalkmoreCampaign’ was formallylaunched on Tuesday, July 16,2013 and it will enable AirtelNetwork’s subscribers whosign up to the FirstMonieplatform to send money,receive money, buy airtime,pay bills and so much morewith the use of their mobilephones without the need of abank account. Duly registeredAirtel subscribers who registerfor the FirstMonie service willreceive N100 e-value and willbe eligible for N240 bonusAirtel airtime.

Dangote Sugarposts N27.4 bnsales in Q2

Dangote Sugar Refinery

has reportedN27.4billion and Profit Aftertax, PAT of N2.5billion for thefirst half,Q2 of 2013Sequentially, sales were alsoflattish, according to FBNcapital report.

According to FBN Capital,“Pending managementcomments, it appears thatsales from Savannah SugarCompany (SSC) earmarked forQ2 2013 did not comethrough; if they did, thecontribution was probablymodest. Although grossmargin expanded 260 basispoints, bps, a significantincrease of 57.4 percent yearon year , y/y in opex toN2.8billin limited PBT growthto 10.1 percent y/y. We believethe marked increase in opexis most likely related to theacquisition of SSC; however,we would need managementto confirm this. Sequentially,with sales coming in flattishlike we earlier stated, a 45.9percent quarter on quarter q/q rise in opex and 18 percentq/q decline in other income ledto PBT falling 19.2 percent q/q; the decline in PAT wasgreater (26.6 percent q/q)because of a 582bps q/q risein the tax rate.

Compared with ourestimates, while sales were 7.4percent behind our forecast,Profit Before Tax PBT missedby 20.9 percent mainly due toopex negatively surprising by36 percent. PAT of N2.5bilionnwas 29.8 percent behind theN3.6bilion we were lookingfor.”

OANDO’s Plcs h a r e h o l d e r shave endorsed

proposal by its Board ofDirectors to increase itsauthorized share capital fromN750 million divided into 1.5billion ordinary shares of 50kobo each to N1.2 billion bycreation of additional shares of900 million ordinary shares of50 kobo each , ranking in pari-passu in all respect with theexisting ordinary shares.

The shareholders at the 14thAnnual General Meeting(AGM) held last week in Lagosgave their approval to increasein authorized share capitaland also requested that rightsissue be floated to shore up thecompany’s capital base.

Some of the shareholderswho spoke the minds ofshareholders present at themeeting having endorsed allthe resolutions put before themat the AGM, commended thecompany for the 12 kobo pershare dividend declared for2012, which translated to atotal of N180 million as against10 kobo per share declared inthe year 2011, totaling N150million.

Specifically, Michael Colefrom National IndependentShareholders Association ofNigeria, ISAN, YakubuTitilayo, Alex Okoh and hostof other shareholders said,“We commend our board andmanagement for giving us 12kobo dividend given the harshoperating environment thecompany operated upon.However, we hope that the

dividend will be higher nextyear to say N1.00 per share.We also commend efforts bythe company in ensuring thatour products are available inmost pharmaceutical stores inthe country. The attendance ofmeetings by the directors isalso okay, which is inaccordance with goodcorporate governance. Ourexpenses are also goingdown.” The shareholderscautioned management to

increase its effort atrecovering more debts anddemanded that hard copies ofAnnual Report be giving tothem in subsequent AGMsrather than the electroniccopy. “We will prefer a rightsissue than any other optionof raising the capital basesince our company is doingwell. We will all support theoffer,” the shareholdersechoed. Speaking, theChairman of Fidson, said,

“We commend theshareholders for your supportand every issues raised will belooked upon. Fidson recordeda turnover of N7.168 billion,about the same for the 18months ended December31,2011. Profit After Tax (PAT)was N206.889 million,Earnings Per Share (EPS)grew from 4 kobo in 2011(International FinancialReporting Standard ) to 14kobo in 2012.”

Oando shareholders approveN5.1bn dividend

Stories by PETEREGWUATU

L-R: Mr. Remi Oni, Head Origination & Client Coverage, Standard Chartered Bank, Nigeria;Mr. David Adepoju, Head Global Markets, SCB; Mrs. Stella Ojekwe-Onyejeli, Chief Risk Offic-er & Executive Director, Nigeria Sovereign Investment Authority; Mr. Leke Ogunlewe, MD/

CEO Standard Chartered Securities and Mrs Yemi Owolabi, Chief Financial Officer (CFO),WestAfrica & Executive Director, SCB, Nigeria, during the Standard Chartered Bank Finance Mas-

ter Class 2013, held in Lagos...on Thursday.

Oando’s shareholders approveN5.1bn dividend

and is subject to closingadjustments and exchangerate movements.

Headquartered in Kenya,Fina Bank operates in Kenyaas well as in Rwandathrough its 92 percentowned subsidiary Fina BankRwanda Ltd and in Ugandathrough its fully ownedsubsidiary Fina Bank(Uganda) Ltd. Based on itsunaudited consolidatedfinancials as of 31 March2013, Fina Bank had totalassets of US$338 million,gross customer loans ofUS$184 million and customerdeposits of US$285 million.The Group currently operatesthrough 38 branches andemploys 550 people across thethree countries.

Meanwhile, It will berecalled that GTBank, recently,released its audited financialresults for the December 2012financial year to operators ofthe Nigerian Stock Exchangeand reported a Profit Before

GTBank synergy with Fina Bank to boost shareholders value

GUARANTY Trust BankPlc, GTBank proposed

acquisition of Fina Bank isexpected to boost Nigeria’sshareholders’ value whenthe bank enters East Africathrough a multi country andscalable platform, saysanalysts from capital market

The shareholders of FinaBank Limited Kenya (“FinaBank”) recently reached in-principle agreement for theacquisition by GTBank of a70 percent shareholding inFina Bank. The agreement issubject to customaryregulatory approvals inKenya, Nigeria, Rwandaand Uganda.

GTBank will acquire the 70percent shareholding in FinaBank through a combinationof (a) a capital injection inFina Bank, and (b) anacquisition of shares fromthe current shareholders.The total consideration to bepaid by GTBank is estimatedat around US$100 million

Tax of N103 billion, thehighest for any NigerianBank.

Commenting on theresults, Mr. Segun Agbaje,Chief Executive Officer ofGuaranty Trust Bankattributed the Bank’s successto its adherence to a definedgrowth plan, high corporategovernance standards andthe cultural values for whichit is known. He said thesefactors, coupled with aresourceful board, an in-depthunderstanding of the marketand the passion of GTBankemployees have enabled theBank grow market share andcontinue to avail itsstakeholders with valueadding services.

According to analysts at theNigerian bourse, thisperformance and an in-depthanalysis of the results, whichwere recently approved by theCentral Bank of Nigeria,confirm GTBank as the firstand only Nigerian bank to

cross the N100 billion ProfitBefore Tax milestonefromContinuing Operationsat both Bank and Grouplevels. The Group’s resultsalso show improved GrossEarnings of N221.9 billion,66% growth in Profit BeforeTax to N103 billion (2011:N66.08 billion) and 69percent improvement in ProfitAfter Tax to N87.3 billion;(2011: N51.7 billion).

The Bank closed the 2012financial year with an On-Balance Sheet size of N1.73trillion (2011: N1.608 trillion)while Total Assets andContingents stood at N2.26trillion (2011: N2.14 trillion)representing a growth ofeight percent and 6 percentrespectively. Further analysisshows that deposit liabilitiesof the Group grew by 12% toN1.15 trillion in 2012,reflecting a decent growth ofN120 billion from the N1.03trillion closing position in thecorresponding period of 2011.

26 —Vanguard, MONDAY, JULY 29, 2013

CMYK


CMYK

Winners emerge in Diageo AfricaBusiness Reporting Awards

DIAGEO, the world’s leading premium DrinksCompany, has announced the winners of the

2013 Diageo Africa Business Reporting Awards.The Awards, held in commemoration of its tenth

anniversary, showcases journalists and media outletswho have delivered excellent business journalism fromand about Africa.

Winners from the ten categories came mainly fromthe UK and West Africa including Nigeria. AnthonyAkaeze won the award for the Best Tourism Featurewhile Olu Omoyele also won in the Best FinancialFeature category. Davies, a BBC correspondent, wasnamed Journalist of the Year while the Best Newcomertitle was awarded to Sherelle Jacobs, a journalist forAfrican Business magazine.

Micro-Finance

Bio-nergy provides alternative power formicro entrepreneurs

TO enhance

productivity, Bio-nergy Limited, a Biomasselectricity solutionscompany has said that it willmake power available formicro entrepreneurs, as analternative power solution.

This will only be possibleif micro-entrepreneurs whoare willing to get Biomasselectricity supply could perinto group of cooperativesto enable them acquire themachine, ManagingDirector, Bio-nergy, Mr.Ernest Onyenze, said,explaining, “Biomass is aprocess of putting driedagricultural waste intoenergy, while biomassenergy is the power that youget from that process.”

Onyenze said this at anexhibition of Biomass powerGeneration solution, statingthat the essence of theinitiative is to ensure powersupply gets to rural areas,where there are artisans andmicro entrepreneurs whosebusinesses depends onelectricity.

He said, “We want peopleto come together and writeus. There are interventionalagencies, foundations thatcan give grants. Somebusinesses depend largely onelectricity supply whichaffects their income welfare.

“Darkness representspoverty and is a setback toany business and withoutlight we cannot drive thechange we want in thiscountry.”

Calling for governmentsupport, he called on theFederal Government to actas an intervention partner to

the project, saying, “Thesituation in Nigeriarequires radical alternativeto get what we want. Thesituation has gotten usthinking, is a project ofabout eight years since westarted working with ourpartners in US, on howNigeria agricultural wastecan be transformed intoenergy.

“Today we have about 500units of that all over theworld, only five in Africa,one in Kenya, three inLiberia and one in Nigeria,this is the only single unit inNigeria and we are trying tosee how we can get thegovernment to know thatthis has its potential to sortour power problem,particularly the rural areas,within the schools,universities, places wherepower is required and needsolution.

Stories byPROVIDENCEOBUH

TO meet bakers

increasing ordersfor its flour brand,Honeywell Flour MillsNigeria Plc (HFMP) said, itis expanding its capacity,graduating more bakersfrom its baking school.

Speaking at theCertificate Award Ceremonyof the Regular Course 22,HFMP Baking School,Executive Vice Chairman/CEO of the company, Mr.Babatunde Odunayo saidthat the school has trainedand graduated over 300master bakers across thecountry in 22 regularcourses and one executivecourse.

Odunayo said, “TheHoneywell Baking Schoolis a corporate investmentaimed at empoweringbakers by equipping themwith modern baking skilland flour handlingprocedures that they can useto maximize yield from flourand run their bakeryo p e r a t i o n s m o r ep r o f e s s i o n a l l y a n d

profitably. “It is anexperimental programmedesigned to give bakersfirsthand baking training ina world class environment.”

He noted that the 13graduands, nine male andfour female, trained withinan interval of three weeks,were taught the science ofbaking ingredients,common bread faults and

how to solve them, how tomaximize bakery outputthrough the production ofdifferent bread varieties,basic selling, marketing,finance and peoplemanagement skills.

“This is the only bakingschool course worthy of notein this country, we aregradually trying to improvebaking skills in this country.

Honeywell harps on expansion plan,graduates more bakers

L-R: Director of Strategy, All Power Labs , Mr. Tom Price; Founder/President, Bio-NergyLtd, Mr. Ernest Onyenze; QA Engineer, All Power Labs, Mr. Bill Bayer; and BiofuelSupport Partner, Rev. Francis Akinpelu, at the exhibition of Biomass Power GenerationSolution.


Interview

designed for all strata of thepopulace for which anybody cantake advantage of. We placeemphasis on mass housing sincethis will impact positively on thehousing gap in the country.

Things are really getting betterin the areas of mortgage bankingand housing finance. The FederalMortgage Bank of Nigeria isbetter organised and theiroperation is impacting on theoperation of serious mortgagebanks and this is expected to bemore felt in the foreseeable future.

What are your thoughtsabout the reforms in the

mortgage banking sub-sectorand what are the likely outcomesin the industry?

The reform in the sector is awelcome development. Whatcan a mortgage bank do withN100m capital base? Theoutcome of this reform is havingbetter capitalised mortgage banksthat can really do the business ofmortgage. I see some mergers,acquisitions and dissolution butthe future is very bright for thesector of financial system. Therehas been so much hype about theMortgage Refinancing Company.

Reports are rife in the mediaabout RSL’s plan to upgrade ITinfrastructure and roll out ATMsin six states. The mortgage bankis also said to be issuing out debitcards to customers. All of theseactivities do not really fit thedescription of what a mortgagebank should be doing. Does itnot look like you are trying tocompete with commercialbanks?

The essence of InformationTechnology is to ensureseamless service. ResortSavings & Loans Plc is at thevanguard of changing theface of mortgage bankingoperation in Nigeria andserve as template for ourpeers. The world is goinghigh-tech and we cannotafford to be follower all thetime. Resort Savings &Loans Plc is just using the sixlocations as springboardsince the ultimate is to coverthe country in due course.

The Bank presently issuesdebit cards to its customersin the spirit of encouragingcashless policy, makingmortgage servicing seamlessand giving services in

qualitative manners to ourteaming customers. Financialservices is the same irrespectiveof the name giving to thesystem and the services we areproviding is not only in linewith mortgage bankingoperations but equally astimulant for its effectivenessand this will have positive resultto show. There is nothing tocompete with other financialinstitutions since we aredealing with real products thatare mainstay of any system.

Only recently, RSL floated

an IPO and Rightsissue; how successful havethese offers been?

The IPO has ended but theRights issue is still on. The

players about this MRC andhow can mortgage firmsleverage it?

The Mortgage RefinancingCompany is one ofgovernment's efforts towardsgiving depth to mortgagebanking operation in thecountry. The institution is toprovide liquidity on turnkeyand turnaround model tomortgage carriers or mortgagebanks. The liquidity providedthrough this method will beused to create other mortgages,thereby improving activitieswith consequence on wealthcreations for everybody.

The players are yearning forthe commencement ofoperations of the company.

Reports say your company isplanning to invest N200 millionin the MRC; and then otherreports say you may actuallybe investing N400 million.Kindly clear the air on whatthe actual figure is and howyou would be making theinvestment.

The Bank is planning to investN400 million on the company.

The Bank is a leader in theindustry and is poised toremain this. Beside this, webelieve the level of investmentin the company may affect thelevel of exposure the companymay want to have in anymortgage bank among manyother criteria that themanagement of that companywill be using. We equallybelieve the investment in thatcompany will give goodreturns in the foreseeablefuture considering theoperations in view.

There has been so muchcontroversy about the NHFand how contributors arebeing short-changed. Whatactually are the issues and howclean is the Federal MortgageBank of Nigeria in all ofthese?

National Housing Fund isone of the best schemes and thecheapest finance source in thiscountry. People are beingmade to save for old age andat the same time being enabledto get mortgage finance. Letit be noted that the amountbeing deducted by theemployers is not another tax asbeing view by someemployees. It is savings,which can be collected onreaching certain age and thesame value can be collected atthat time to offset the loan (ifany). I am bold to say that it isdisservice to any employer notto deduct this amount fromemployee in their payrollbeside the legal requirementthat this should be done. It isgreat injustice for employer notto remit the amount deductedto FBMN and I believemachinery would soon be putin place to address thissituation.

Managing Director and Chief Executive Officerof Resort Savings & Loans Plc, Mr.Abimbola Olayinka, in this exclusive interview

with Vanguard, explains the modalities for its proposedN400 million investment in the Mortgage RefinancingCompany (MRC) as well as the ongoing IT infrastructureupgrade being embarked upon by his company.

Olayinka said the current reforms in the sector willherald a new refinace of affordable housing, not just forthe middle class, but for all Nigerians.

Excerpts.

What, in your opinion, are the major challenges ofproviding affordable housing in the country and howcan these challenges be overcome?

Provision of housing in the country has been affectedby availability of housing finance, land and propertydocumentation, dearth of information on mortgageoperations and inadequate government support foroperators. In the recent past, however, the Governmenthas shown some commitment to provision of housing tothe masses. Although some of these efforts are still atconceptual stage, we believe this will be concretised soon.

Our Bank has been at the vanguard of creatingawareness on mortgage banking operations in Nigeria. We did a successful promo tagged “Achieve Your Goal,”during which we educated the populace all over thecountry on mortgage opportunities. durng the promo, theBank gave out some cars, landed properties, houses andsome other gifts. We are presently enlightening peopleon the fact that mortgage banking can be doneelectronically, hence we have the jingle “Go

cashless, Go Resort.” Other strategies and products arebeing developed to educate the populace on the mortgagebanking as peculiar to our situation in the country. Thesewe have done and will continue to do.

One major challenge with housing is the complexityof the schemes, in terms of access to loans. Are thingsreally getting better in this regard?

Resort Savings & Loans Plc has many mortgage products

Mortgage sector ready fortransformation, mergers andacquisitions imminent

feedback we have received onthe offer has been veryencouraging and workingtowards ensuring we reach allour shareholders since theygave the nod in the firstinstance. We are very sure that,by the time the offer is closed,we would have recorded over-subscription. The exercise hasbeen very interesting andgreat.

How is the bank faringoperationally, and in terms ofprovision of housing inNigeria?

The bank has performedcreditably well in provision ofhousing, but more needs to bedone. We have projects in allstates where we have presencethat is Adamawa, Taraba,Lagos, Ogun (States) andAbuja. We are presently lookingat increasing the stock byputting more in the presentlocations and even commenceoperation in other parts of thecountry. We are presentlyworking on Kwara, Abia, Oyo,Rivers, Niger, just to mentionfew of the states.

How confident are industry

,

,There has been so much

controversy about the NHFand how contributors are

being short-changed.

•Mr. Abimbola Olayinka


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Insurance

BRIEF

THE National InsuranceC o m m i s s i o n ,NAICOM, has

frowned at the spate ofbuilding collapse across thecountry and the absence ofinsurance compensation tovictims.

Accordingly, NAICOM hasurged all state governments toinitiate the process of enactinglegislation to ensure that allbuildings used by third partieswithin their states areadequately insured so as togive relief to victims ofcollapsed buildings wheneverthey occur.

The absence of insurancecompensation is in spite of thelaw which makes insurance ofpublic buildings compulsoryunder the insurance Act of2003.

According to NAICOM, inLagos alone, it is reported thatwell over 20 lives have beenlost to building collapse in thelast six months with no form ofcompensation.

In a statement, the regulatorybody said “NAICOM deeplysympathises with victims andfamily members of those thatlost their lives in the recentcollapsed buildings in Lagosand Kaduna States.

“Most painful is the fact that

majority of those injured haveto bear the treatment coststhemselves while the familiesof those that lost their breadwinners have no form ofcompensation, except maybe,the little that the stategovernment could providefrom the scarce resources of thestate. The Commission is sadwith this avoidable burden on

government and victims if onlythese buildings are adequatelyinsured,” NAICOM stated.

It will be recalled that theFederal Government throughthe Insurance Act 2003, madeit compulsory for all buildingsused by third parties to beinsured against the risks ofcollapse, fire, earthquakes,storm or flood such that in the

INSURERS under the

auspices of theNigerian Insurers

Association, NIA, the umbrellabody of underwriters hasopposed the initiative in theproposed pension bill todomicile annuity funds withPension Fund Custodians,PFCs.

Director-General of NIA,Sunday Thomas in aninterview, said the Associationexpressed its misgivings on theissue at a public hearing for thereview of the Pension ReformAct 2004, in Abuja recently. Henoted that the Association isopposing the initiative becausethe management of annuity istotally different fromprogrammed withdrawal,hence, the fund should not beleft in the hands of PFCs.

He said, “The Pension reportis dealing with differentaspects, one of them is the factthat life annuity funds shouldbe domiciled with pensioncustodians. We have said thatis not in practice in any knownjurisdiction, and we do notthink it should be so becausethe management of pensionannuity is entirely differentfrom programmed withdrawal.The bases of the liability from

NIA to assembleinvestigators for large claims

A pool of independent investigators to investigate thegenuineness of claims above N500 million is being assembled,the Director General of Nigerian Insurers Association, NIA,Mr. Sunday Thomas, has said.

Thomas said in an interview that the NIA is working hard toensure that the pool is made up of experienced people, addingthat the task is beyond the capacity of few individuals.

He said, “The first point of call is to have a pool of investigatorsthat would carry out that assignment on behalf of theAssociation. That is the stage that we are. We are trying tohave a pool of investigators that would handle the task, for theassignment is beyond what a person can handle.”

He said the decision to institute the investigative pool wasreached at the Association’s Chief Executive Officers (CEOs)retreat held early in the year, stressing that the initiative wouldhelp operators learn from mistakes made in underwriting andclaims handling.

THE full cost of a 6.5-magnitude earthquake

that shook Wellingtonrecently may not be known forweeks, according to theInsurance Council of NewZealand.

“It appears a lot ofcommercial property has beenaffected,” the council’sInsurance Manager JohnLucas said. Four people wereinjured in the quake, whichlasted one minute.

Some insurers are imposing“stand-down” periods,during which they will notprovide new cover in parts ofthe country, he says. “Whatthey are trying to avoid ispeople insuring uninsuredproperties that have alreadybeen damaged.” Insurancecompanies are “gearing uptheir staff ” to handle claims.

But it was not a catastrophicevent, Lucas said. “This wasa moderate quake that hascaused some damage. Fromour perspective, it is not a bigevent, but people are nervousand respond differently sinceChristchurch.”

POST-financial crisis

regulatory reforms,distribution challenges anddiminishing investmentreturns are transforming theinsurance industry, accordingto a survey for US businessconsultant State Street.

“No single route to thefuture will be right for everycompany,” State Street says.“However, it is clear theindustry has reached a periodof far-reaching structuralchange.”

The Economist IntelligenceUnit surveyed 307 executivesworldwide for the survey.About 53 per cent ofrespondents were from lifeinsurers, 19 per cent werefrom property and casualtygroups, 12 per cent were fromdiversified insurers and therest were reinsurers andhealth insurers. “Fully 29 percent of survey respondentsglobally report that theircompanies have sold lines ofbusiness as a direct result ofnew capital requirements orrisk managementconsiderations, and thisfigure rises to 39 per cent inEurope,” State Street says.

both pension arrangements aretotally different.”

The proposed bill seeks tonegate the operationalguideline entitled, ‘Regulationon Annuity under Section 4.1(B) of the Pension Reform Act2004, issued by the NationalInsurance Commission(NAICOM) and NationalPension Commission(PenCom), which provides thatwhere a retiree chooses theretirement life annuity, theretiree shall based on theRetirement Saving Account(RSA) balance projected to thedate of retirement, obtainquotes from life annuity fromlist of approved eligibleinsurance companies, as will beprovided every quarter by theNAICOM.’

The guideline also states thatthe PFA managing the accountof the would-be annuitantshall, within seven days fromthe receipt of application fromthe retiree, seek approval fromPenCom to transfer the agreedpremium to the insurer and therequests should beaccompanied with a copy of aprovisional agreement. Andthe PFA shall instruct the PFCto issue cheque for thepremium in favour of the

insurance company withinseven working days of receiptof approval.

It noted that upon receipt ofthe cheque from the PFC, thelife insurance company shallwithin seven days notify theproposed annuitant of suchreceipt, adding that theannuitant and his chosen lifecompany shall jointly executean annuity contract within 21days from the date of receipt ofpayment. Thereafter, the life

insurance company shall causea schedule of all policieswritten to be forwarded toNAICOM not later than 30days of its execution. And thatNAICOM shall forward a copyof the schedule to PenCom ona quarterly basis.

The Life Insurance Companyis also mandated to issue astanding payment order to itsbanker to credit the designatedbank account of the retiree forthe amount of monthly/quarterly payments.

Building collapse: NAICOM urges stategovts to enact compulsory legislation

event of any of these riskscrystalising, adequatecompensation would be paid toboth victims and families ofthose who may lose their lives.

NAICOM stated “Membersof the public are herebyreminded that non-compliancewith this provision of the lawattracts a penalty ofN100,000.00 or one yearimprisonment or both. Let usall give hope to victims andfamily members of those wholose their bread winners incollapsed building incidencesacross the country.”

Insurers oppose domicile of annuity fund with PFCs

NZ awaitsdamage reportsfrom Wellingtonquake

Insurers face far-reaching change,State Street says

From left, National Coordinator, Nestle Health Kids Programme , Prof. Tola Atimo, Manag-ing Director, Chief Executive Officer, Nestle Nigeria Plc, Mr. Dharnesh Gordhon and VicePresident, Athletic Federation of Nigeria (AFN) Mr. Tade Abdulkareem during the flag off

ceremony of Nestle Nigeria and IAAF Kids Athletic Programme held at Opebi Primary Schoolon Thursday in Lagos.


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le

By EBUN SESSOU

Lagos State House ofAssembly has approved

the request by the executivefor the re-ordering of the 2013budget on internal loans tosupport the Lagos HomeOwnership Mortgage Schemeto enable the StateGovernment addressproblems of housing deficit inthe State.

The House approved therequest at plenary afteradopting therecommendations of the jointCommittees on EconomicPlenary and Budget andLands and Housing whichwere mandated to look intothe request.

The committee in its findingamong other things said theState Government would notbe able to realize its target onthe capital receipts which wasto support the capitaldevelopment in the budgetand that the initial CapitalExpenditure of the Ministryof Housing is N10billionwhich has been increased toN17 billion.

ONDO State government

has disbursed N62million housing loan to civilservants in the state at areduced interest rate of 3percent, under the State StaffHousing Loans Scheme.

Governor OlusegunMimiko, during thepresentation of cheques tobeneficiaries, said thedisbursement of the loanunderscores the commitmentof his administration toimprove the welfare ofworkers in the state with aview to repositioning civilservants for effective servicedelivery. He said the loanwould be paid back over aperiod of 15 years at 3 percentinterest rate.

Mimiko pledged continuousimplementation of theaffordable housing loanscheme for the state publicservice that will guaranteeaccess to financial assistancefrom government to enablethem build or buy houses oftheir own. He recalled that hisadministration approved anddisbursed the sum of N118million in 2010 and the sumof N50 million in 2011 ashousing loans to workers atthree percent interest rate.

LSHA re-ordersbudget tosupport HOMS

Ondo releasesN62m housingloan to civilservants

Homes & Housing Finance

SHELTER Afrique hassaid that most Africangovernments are not

giving due attention to theprovision of housing, notingthat that they have failed toprovide meaningful incentivesto investors in low-incomehousing.

Kenya-based Shelter Afriqueis a pan African HousingFinance institution establishedby 44 African membergovernments and AfricanDevelopment Bank, AfricanReinsurance Corporation andUnited Kingdom’sDevelopment FinanceInstitution with the mandate ofmobilising resources forhousing development inAfrica.

Director of Business

Development and Operations,Shelter Afrique, Mr. A. M.Adewole, made the remark inhis presentation on primarymortgage market innovationsand their role for housingsupply, at the 9th InternationalHousing Finance Workshopheld recently in Abuja.

The forum brought togethersome of the foremost and mostenterprising of minds in realestate, construction andhousing finance within andoutside Nigeria to deliberate onvarious challenges affecting thehousing and housing financesectors and how thesechallenges could be tackled toensure development in thesector.

According to Adewole,“Shelter Afrique is committed

to financing housinginitiatives across the varioushousing market segments andthat includes social housingwhich had come to fore in thelast couple of years.” He saidthat one of Shelter Afrique’splatforms of intervention isthrough lines of credit tofinancial institutionparticularly financialinstitutions for on lending topeople on very low income tobuild or improve their ownhomes. He described the low-income groups as the mostforgotten of Nigeria’spopulation, noting that theprivate sector housing marketcurrently caters for the upper-middle income and high-income groups, leaving thelower middle and low-income

unattended. “The middle andlow-income earners in Nigeriarepresent over 85 percent of theoverall population. These arepart of the target groups which Istrongly encourage investors toturn their attention to, andengage with all manner ofdecent, stylish and affordablehousing concepts.”

He asserted that theprohibitive cost of constructinga house has made it difficult tooffer affordable housing inNigeria. “Single minded largescale housing programme isrequired as current approaches,while well intended, are notsufficient and if we must buildat an unprecedented scale, thechallenges of technology,economic viability, and capacitymust be overcome to succeed. Adecisive shift towardsmanufacturing based housingsolutions offer the best chance ofmeeting the challenges,” hesaid.

In a communiqué issued at theend of the workshop, real estateexperts unanimously declaredthat the housing situation inNigeria requires more complexsolutions in order to beeffectively tackled.

They suggested that a large-scale market solution is requiredto roll out viable and profitablemodels to serve lower incomegroups of the nation’s workforce.The forum noted that in additionto development finance andefficient land administrationrequired for low-cost housing,sound governance, professionalstandards and norms,transparency, and goodconsumer protection are neededin the industry.

AGAINST the backdrop ofthe recent collapse of

buildings in Lagos andKaduna, and many otherprevious such occurrencesacross the country withattendant loss of lives, a Lagos-based lawyer, Mr. Femi Falana,has called for prosecution ofprofessionals found culpable insuch incidences.

According to the legalpractitioner, any professionalwhose negligence is found tohave led or contributed to theincidence of building collapseshould be put behind bars toserve as deterrent unto others.

Falana stated this at a forum,in Lagos, organised by the

Building Collapse PreventionGuild (BCPG) in the quest tominimise cases of buildingcollapse in the country.Pledgeing his support for theefforts of the group, he said,“As far as the law is concerned,if you put up a building that isstructurally defective and liableto collapse, you are liable forthe loses and that can wipe youoff your profession.

"The beauty of yourcommitment to this project isthat you want to weed out thosedestroying this profession. Inthis regard, I want to pledge tooffer my service Pro Bono toyou. We live in a country thathas no regards for the rule of

law. If we were in other climes,all those involved in collapsedbuildings would have been inprison. But we cannot allowquacks and unprofessionalbuilders to destroy thisprofession.”

The Senior Advocate ofNigeria (SAN) recalled that theLagos State government haspassed a law setting up coronerinquests which ensures thatwhen people die throughunnatural causes, includingbuilding collapse, an inquiry beconducted and those foundliable will be brought to book.“The laws are there and theyare for all of us, and if we arenot careful in handling building

projects, we may run intoproblems,” he stated.

Also speaking at the forum,Special Adviser to Lagos StateGovernor on ProjectsImplementation andMonitoring, Mr. SulaimonYusuf, said the stategovernment is interested inensuring that the right thing isdone by the rightprofessionals. He urged theguild and other professionalsin the built environment torespect one another,demonstrate integrity in theirpractice without compromise,build capacity especially withthe artisans and strive to beexcellent in the execution oftheir duties.

Most African governments don’t takehousing seriously — Shelter Afrique

*No incentives for low-income housing

Building collapse: Falana wants prosecutionof culpable professionals

By YINKA KOLAWOLE

BRIEFS

President Goodluck Jonathan handling the keys of a flat to a Police Corporal and beneficiaryof the Goodluck Jonathan Housing Estate, Idimu, Lagos at the unveiling of the estate financedby ASO Savings & Loans Plc. With them from left: Chairman, ASO Savings, Mr. OlatundeAyeni; Oba of Lagos, HRH Rilwan Akiolu; Aide de Camp to the President, Lt. Col. OgogbaneAdegbe; and Inspector General of Police, Muhammed Abubakar.


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Homes & Housing Finance

BRIEFS

•Housing development in a natural habitat

IN the quest to provideaffordable housing for

Nigerians, a call has togovernment to formulatepolicies that will ensure thatresources are deployed toprovide the highest number ofhouses to the highest numberof people.

National President,Nigerian Institute of QuantitySurveyors (NIQS), Mr. AgeleAlufohai, made the call at the5th annual distinguishedlecture of the Lagos Statechapter of the Institute heldrecently in Lagos. He said anyconcept of housingaffordability should bear inmind questions ofsustainability and socialjustice.

“It is better for N20 billionof government input in cashand kind to provide houses to10,000 Nigerians over 20years at N2 million eachrather than 1,500 Nigerians atN250,000. The latter scenariois of course affordable butdoesn’t boost the supply ofhousing as the element ofgovernment subsidy is toohigh and extended to only afew citizens,” he said.

He submitted that creatingincentives that wouldstimulate and enable privateinvestment and transactionsshould be the focus ofgovernment intervention inhousing, rather than provideunderpriced inputs such asland or finance.

In a keynote address,Minister of Lands, Housing

‘Housing policy should targetmost houses for most people’

By YINKAKOLAWOLE

and Urban Development, Ms.Ama Pepple, who wasrepresented by FederalController of Lands, Housingand Urban Development,Lagos State, Mr. TemitopeOnayekan, said affordablehousing would continue to bethe pre-occupation ofgovernment until the requiredresults are achieved. She

asserted that lack of access todecent and affordablehousing is the worst form ofpoverty, adding that it is agross violation of the rights ofhomeless or inadequatelyhoused individual andfamilies.

Pepple declared that the keyto sustainable and affordablehousing delivery is the active

participation of allstakeholders in buildingeffective partnerships andleveraging on resources andtalents to reinvigorate thehousing sector for optimumcontribution to sustainablenational development.

“The 1999 Constitution ofthe Federal Republic ofNigeria, in Section 16(1),urges the three tiers ofgovernment to direct statepolicy towards the provisionof sustainable and adequateshelter for all citizens.Affordable housing is alwaystargeted at those residentswho, based on their incomesand assets, as in the case ofNigeria, housing isconsidered to be affordablewhen it costs no more than 30per cent of a household’sincome,” she stated.

The minister said herministry was working outplans aimed at addressingsome of the basic componentsof housing affordability,including access to land,location and land use density,funding, building materials,approval process, planningdata and policy direction.“Our goal is to makeaffordable housing delivery inNigeria a reality and therebyraise home ownership to about50 per cent, improveNigeria’s humandevelopment index ranking,and make the housing sectorcontribute over 20 per cent toNigeria’s Gross DomesticProduct as envisioned inVision 2020,” she said.

THE National Assembly iserecting a 32 state-of-the-

art buildings occupying 80square meter land in Abujafor the permanent site of theNational Institute ofLegislative Studies (NILS).

The project whichis expected to be completedby Julius Berger Nigeria in2015 at the cost of N51 billioninclude the conventioncentre, administrativebuilding, library, lecturetheatre, hotel, clinic andresidences. Otherinfrastructure includespreparation of roads andparking areas, undergroundservices, as well asconstruction of severaltechnical buildings on an areaof more than 80, 000 metres.

Senate President, DavidMark and Speaker of theHouse of Representatives,

NASS to build 32 buildings forlegislative institute

By FAVOURNNABUGWU

Aminu Tambuwal, laid thefoundation stone for theconstruction of permanent sitein Abuja. Mark said theproject was the first of its kindto be initiated by thelegislative arm of government.“This is the first time we areembarking on a project that ispurely a National Assemblyproject from conception to thisstage. The importance cannotbe over-emphasised, NILS isour own creation and hasgrown to the level we want it.We know it is an expensiveproject because we want it tomeet international standard,”he said.

Mark said the currentleadership of the NationalAssembly would like tocommission the first phase ofthe project before the end ofthe present administration.He noted that the project wasconceptualised to meetinternational standard andsaid the institute wouldprovide training in conduct of

legislative business uponcompletion. “I am not a partyto white elephant project andI won’t be a person to lead agroup that will embark onwhite elephant project, but iffor any reason all the partiesare not able to meet theirobligation, Julius Berger don’tstop work.”

He said that on completion,the institute was expected toboost training and researchas well as advocacyin legislative business at thefederal, state and localgovernment levels.

Also speaking at the groundbreaking ceremony, Tambuwaldescribed the commencementof the project as a historicmarch towards deepening ofdemocracy in the country. Henoted that the institute hasdone a great deal insupporting the work oflegislature in the country andwas also increasing its supportfor legislative business in thesub-region.

FG to conducthousing census

IN its bid to ascertainhousing deficit in the

country, the FederalGovernment will conducthousing census, Minister ofLand, Housing and UrbanDevelopment, Ms AmalPepple, has said.

The minister announced thisin Abuja when she met withmembers of the steeringcommittee on the restructuringand commercialisation of theFederal Housing Authority(FHA).

According to her, the censuswill determine what had beenachieved and what needed tobe done in the housing sector,noting that much has beendone in the sector since 2011.She said that in spite of thechallenges and measures takenby FHA in housing delivery,other means initiated by theFederal Government hadboosted the housing sector.The minister said the censuswould expose states that hadnot met the minimumexpectation in the housingsector and serve as avenue tocommend those that hadachieved the minimumstandard.

Pepple said the 36 statecommissioners as well as theFCT had been requested tosubmit the number of housingprojects delivered and thosestill in progress from 2011 todate. She added that somestates had started collating dataon the housing projects theyembarked on. (NAN)

Fashola tasks NASSon mortgage culture

LAGOS State Governor, Mr.Babatunde Fashola, has

charged the National Assemblyto initiate legislations that willlead to deepening themortgage culture in the country,concentrate on research anddevelopment as well aseducation to improve buildingmethods as part of strategies insolving the nation’s housingproblems.

The governor said theFederal Government must alsoaddress the cost of demurrageof landing imported buildingmaterials, noting thatNigerians know how to buildhouses but that the problem isthat they can’t afford to buy it.

Fashola told the SenateCommittee on Land, Housingand Urban Development whichpaid him a courtesy visit, thatdeepening the mortgageculture would enable Nigeriansobtain loan that they could paywithin the productive period oftheir life at minimal interestrate.


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People in Business

IT has been proved over and over

again that Small and MediumEnterprises (SMEs) are the way to goif a nation wants to grow its economy.The reason is that SMEs are knownto create more jobs than governmentsand with job creation, crime rate isreduced as more people and gainfullyemployed. With this at the back oftheir mind, MTN Nigeria, through itsMTN Next Business Titan, a proudlyNigerian Entrepreneurial Reality TVShow for young NigerianEntrepreneurs, sought to empowerentrepreneurs who will create themuch needed jobs for the teemingyouths of Nigeria and help grow thenation’s economy.

At the end of the 13 weeks MTNNext Business Titan reality contestwhich featured 16 contestants, 27-year-old Iroghama Ogbeifun, ChiefExecutive Officer of Hairven Hair careproducts, a London-based, emergedwinner and went away with the N5mjackpot in addition to a 2013 FordFocus plus a four-year free post-

presentation service of the car byBriscoe Ford.

Born in Port Harcourt, Nigeria,Iroghama studied in the UK and laterreturned to Nigeria for the one yearcompulsory National Youth Service.After her youth service, she went backto the UK for her Master’s degree. Shestarted the hair care products businessin London as a result of her passionfor stylish hair and today, she hascontinued to build upon the businessin Nigeria.

According to Iroghama, she tookpart in the MTN Next Business Titanshow because she felt it was theperfect platform to realise her“burning desire to take Nigerianyouths off vices by providing themwith employment opportunities.”

The contest:

MTN Next Business Titan ranfor a period of 13 weeks,

featuring 16 bright young Nigeriancontestants, competing to earnsupport and investments for theirbusiness ideas. The 16 contestantswere selected from thousands whowent for auditioning in three majorcities in Nigeria.

Every week, the contestants workedin two teams, each under the guidanceof a project manager, to compete inbusiness-driven tasks around Lagos,Nigeria. With each week coming withits own unique tasks, each teamdeployed ideas, creativity andbusiness acumen to surmountchallenges. Contestants weresubjected to long hours, toughdeadlines, intellectual challenges,personality clashes and intenseanalysis under the alert observationof their supervisors and judges. Theend of each boardroom session sawthe eviction of those contestants whowere not strong enough to take theheat.

As the weeks rolled by, it seemed

the female contestants weretaking the lead, proving that theAfrican woman is, indeed, no longera push-over or one to be relegatedto the kitchen. The performance ofwomen challenged viewers to realisethe undeniable role of women in theworld economy. One of thecontestants, Zion, confessed that in thehouse, he met “women who acted likeladies but thought and fought like

men.”

On week 12, only three of the

contestants were left -Olanrewaju Tinuade, Iroghama andEjeke Emeka.

At the grand finale, which held atthe Grand Ball Room of Oriental HotelLekki, the final three contestants, inexecuting their final tasks, displayedthe creativity, zeal and viability of theirpersonal business ideas. Theyslugged it out before hundreds ofguests who came to watch the titansbattle. Each presented anddefended their business ideas.

After their presentation, EjekeEmeka was voted out as the weakestlink while Ogbeifun Iroghama wasdeclared the winner.

Speaking at the grand finale, theGeneral Manager, Enterprise Sales,MTN, Onyinye Ikenna-Emeka,noted that the show was committed toexposing young Nigerians to businessand entrepreneurial experiencesinherent in our environment, therebysupporting and building upon the enterprising spirit embedded in theaverage young Nigerian.

The contestants confessed that MTNNext Business Titan had made apositive impact on them, noting thattheir stay in the academy had madethem stronger and put in them thefaith that they could achieve theirdreams.

Female entrepreneur emerges asMTN’s Next Business Titan

• Iroghama Ogbeifun standing by her 2013 Ford Focus, displaying her N5 million cheque

By EBELE ORAKPO


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Agric

The Managing Director/ChiefExecutive Officer of the Bank ofAgriculture (BOA) Limited, Dr.Mohammed Santuraki during therecently held Agriculture councilmeeting in Abeokuta took time outto talk on agriculture lending inthe country, mechanization andwhy the bank remains the choicelending house for smallholderfarmers in the country.

Here is an excerpt from theinterview with JIMOHBABATUNDE

On access to funds byfarmers through Bank ofAgricultureThe requirement in agricultural

sector in terms of funding is toolarge for one player to meet, butwith the advent of AgricultureTransformation Agenda (ATA)and the Nigerian Incentive basedRisk Sharing for AgriculturalLending (NIRSAL) program,which seeks to encourage banksto lend to agriculture, things arelooking up as commercial banksare coming in.

You know the commercialbanks have the largest pool of fund, so they are doing that but theyneed to do more like the Ministerof Agriculture pointed out.

At the level of Bank ofAgriculture, (BOA), as adevelopment bank and fullyowned by the government, we arealso doing our best, but things arebeginning to look up.

Part of the challenges we hadwas lack of lending resources, butthis is being addressed like theminister pointed out. ThePresident has approved therecapitalization of the bank ofagriculture to the tune of N15b.

Even before this money wasannounced, we had also been re-engineering the bank, we haverepositioned the bank into a moreformidable institution and we aresupporting farmers.

It is an ongoing thing. On theaverage, using our own resources,we do about N5b every year, wecan do more, but the resources arenot just there. We want to scale thatup to about N20b in a year , so theN15b capitalization we are goingto receive is going to support whatwe are doing.

We are working with otherpartners, this figures I have givenyou is just the fund on the part ofthe bank , we also have a schemewhere we collaborate withgovernments. We are intopartnership with most of the stategovernments in the federation. Wejust signed up with Lagos.

We are going to flag off withLagos, we have done Sokoto state, we are in Osun state, FCT andother states. What we do in thesestates are matching fundsarrangement. Government put inmoney and we put in additionalresources . We then use the moneyto support there farmers.

On supportfor mechanizationBeyond that also, critically for

the first time, BOA is also workingvery closely with the mandateministry, which is the ministry of

agriculture.As you know, the ministry has a

very big ambitiousmechanization program worthabout N3.6b. This is actuallybeing driven by the ministry , weare a collaborator in this case .Soon , we are going to roll out.

Part of the problems ofagriculture in this country is lackof mechanization. The fact thatyou use hoe and cutlass infarming is not farming butpunishment. We need to scale upour farming and need to do theright thing as far asmechanization is concern.

We are supporting the ministryto do a mechanization programworth N3.6b in about 80

because you don’t have issue ofweather, pest and so on .

But most of the lending we aredoing up to this moment is forproduction and we are lending tosmall farmers, so ourdemographics are bit different .

In the past there used to bepolitical interference in what wedo and now it has significantlyreduced because of the level of professionalism that we have inthe ministry as nobody is givingnotes to farmers saying give thisperson loan. If you want loan,you come and we assess you .

We have now strengthened therisk management of the bank interms of who gets a loan and thecondition they have to meet, butagain you need to balance it between access and security forthe loans. So what we have doneis to make sure that farmers areproperly identified .

One of the things we are alsousing is the co-operative approach, as you know our small holderloans are not secured byproperties, they are secured bypersonal guarantees and peerpressure and so on.

Increasingly , we are improvingthis through cooperatives as theyknow each others and they bringpressure to bear and so on . So inour experience some of thesemethods have paid off because thelevel of defaults has significantlyreduced in the last two years ascompared to what obtained in thepast.

On routing agric loans through commercial banksI don’t think it is right to do so,

because the evidence does notsupport that. Last year, theCentral Bank of Nigeria and thefederal ministries of finance andagriculture went into agreement with the commercialbanks to deliver N30b worth ofcredits and they had guaranteesbut I am not sure what theydisbursed was up to N5m

So it is not true the commercialbanks can do it better as theconditions for accessingcommercial loans is very tightand most farmers can not getthrough.

We are the only one in thiscountry that can give loans atmicro level based on cash flowsand without physical collaterals.So I believe the space is wideenough for everyone to makeits impact felt.

For the large farmers thecommercial banks can do thatbecause the big farmers havecollaterals but for mediumscale agriculture, the Bank ofAgriculture is the place to go to.

On the adeni pilot programThe adeni programme is based

on the concept of ware housing ,where farmer will bring theirproduce , because you know at thebeginning of harvesting season,prices usually crash so that isnot the best time to sell.

Most farmers sell then becausethey need money either to payloan or do other things. So theadeni program was a pilot schemethat we used to say let us do theware housing scheme .

In the developed country theydo it a lot. You go and put yourproduce in a warehouse and thenthe ware house issue you a receiptand banks can provide lendingagainst that. What we did in thepast was a pilot, but what we aretrying to do now is to widen it , butto do that we must put in place therequired warehousinginfrastructure.

That is why we are working withthe commodities exchange. Youknow the law that will requirethe acceptance of ware housereceipt as a bank security has notbeen passed. So what we arewaiting for is for that law to bepassed. We are working with thecommodities exchange commission to support thepassage of that law , but we arenot resting on our oars as we havea bilateral committee now that islooking on what we can do beforethese loans are approved.

So,it is something we are alsovery passionate about. It is awarehouse receipt kind of lending.We want to do it in a bigger way.

,

,mechanization supports sites.Although it is going to be drivenby the private sector, but thegovernment is supporting theinitial creation.

We are going to have about 40such centres throughout thecountry , we are going to provideabout 400 tractor implements inthe first stage and that project isalready on going and it is part ofthe ministry program.

It is hiring scheme, but in adifferent way. You know in the pastgovernment import tractors andgive to farmers or set up hiringservices that are neversustainable. So, what ishappening in this case, is that weare going to have pools, we aregoing to have mechanizationservice providers which will holdat least five set of implement andthey are going to be private sector.It is not government. Thegovernment will set it up, thepromoters will pay someamounts, the bank will alsocontribute, the suppliers oftractors will also provide sometrade finance.

We are going to empower tractor

hiring providers to provide theservices, the reason being that theaverage farm land holding isusually too small to make iteffective for a farmer to go andbuy a tractor. So the approach ofpool services is very attractivewhen you have cases like this.

On loan recoveryYou know agricultural lending

is a very important space , but itis also a space that is a bit risky.Now, what they are talking aboutis the inputs supply arrangement with agro dealers and so on.

You know it is a value chain ,inputs to outputs . Now the top endof the value chain, which is inputssupply , is with a minimal risk

•Dr. Santuraki with Minister of Agriculture, Dr. Akinwumi Adesina

'Commercial banks can’t finance agric as BOA'

ZENITH Bank Plc inconjunction with Sokoto

state government have concludedarrangements to provideN1,536,000,000.00 agric loan

facility for rice and tomatoesfarmers in the state.

Commissioners of Information,

Danladi Bako; Solid MineralsResources, Dahiru Maishanu andHealth, Ahmed Aliyu briefed news

men shortly after the state’sExecutive Council meeting, whichtook place on Wednesday.

According to Bako, “We havereceived an offer of agric loanfacility from Zenith Bank Plc for

the promotion of the productionof rice and tomatoes to the tuneof N1,536,000,000.00.”

“Of the amount, Sokoto stategovernment would provide thesum of N512 million as

counterpart funding; 9% interestrate and 2.5% processing fee

would apply while 3% Credit RiskGuarantee (CRG) has been paidby government,” Bako said.

A leading Agriculturist in

Delta State, Dr. PhilipOkwuada, has called onNigerians to embraceagriculture as a viable platformfor employment generation andwealth creation.

Okwuada who is theManaging Director and ChiefExecutive Officer of PhedBreeder Farm and HatcheryLimited, Agbor, Ika South LocalGovernment Area of the state,spoke in Agbor.

According to him, the call hadbecome imperative asagriculture remained oneviable sector in the Nigerianeconomy that had the capacityof reducing the increasing rateof unemployment in thecountry, noting that God hadendowed Nigeria with a goodarable land and climate thatfavoured agriculturalproductivity, saying that “if theagricultural potentials of thecountry are maximallyharnessed, Nigeria will be ableto produce enough food fordomestic consumption and forexport.”

Okwuadaurges Nigeriansto embraceagriculture

BY VICTORAHIUMA-YOUNG

Rice, tomatoesfarmers toaccess N1.5bnagric loanfacility

By ABDALLAHEL-KUREBE

BRIEFS

We are the only one in thiscountry that can give loans atmicro level based on cash flowsand without physical collaterals.


ICT

Managing Director, Levant and Emerging Africa Region, EMC, Mr. Nazim Fraijat; Vice

President and Global Chief Technology Officer (CTO) for EMC Sales , Patricia Florissi; andRegional Manager for English-speaking West Africa, EMC, Rasheed Jimoh, at the EMC Fo-

rum held recently in Lagos and hosted by EMC to chart the course for IT Transformation inNigeria recently.

Resourcery, Cisco prescribevideo solution to Oil & Gasoperations

By PRINCE OSUAGWU

Resourcery Plc, a systems integrating company and its network-

ing partners, Cisco have ad-vised to oil and gas executivesto embrace videon solutions toimprove their operations. This

advise was given at a one-daybusiness seminar or businessexecutives in the Oil and Gassector.

This C-level business gather-ing held at Novotel Hotel inPort-Harcourt. Tagged “Break-ing down the wall of commu-nication;” The event aimed at

addressing the business bene-fits of the effective applicationof Cisco Video conferencing,WebEx, Internet Protocol (IP)telephony and digital mediasignage as it relates to the pe-culiar oil and gas sector of ourbusiness environment.

According to the Eastern Re-

gional Manager, Resourcery,Mr. Ifeanyi Ikoro, consideringthat the oil and gas workforcehad become more mobile, busi-ness executives should alsoposition themselves to appre-ciating the benefits andgrowing impact of video as anintegral component of the de-velopment of their organiza-tions.

He told the gathering that,“whether you are an indige-nous or international oil andgas company growing your in-formation technology infra-structure to support the use ofvideo as an effective businesstool, this meeting provides youa veritable opportunity to seeand test how this is applicableto your business environment.With competent professionalsfrom Cisco and Resourcery, weaim to fully explore some of thetechnical applications of thesebusiness solutions as it affectsour local businesses here in Ni-geria.”

“The Cisco video conferenc-ing solution that started out asa technology that would alterthe way we meet has evolvedinto something much more. Itis transforming the very waythat organizations do business.Forever changing how petro-leum rig operator in the JubileeOilfield at Cape Three Pointsin the Western Region of Gha-na seeks subject matter exper-tise from an engineer in Niger-ia.” he added.

Meanwhile, BusinessSolution Manager, (voice andvideo) Resourcery, Mr. GbengaAdanlawo added; “ werecognize the shift in globalwork practices which also af-fects how we do business herein Nigeria. We also know thattechnology needs to evolve toallow people communicate andcollaborate in a more social,more virtual, more mobile, andmore visual way. That is whywe are providing this opportu-nity for our oil and gas sectorcustomers to experience howseamless business video com-munication can enhance theirinternal and external servicedelivery.”

LG Electronics has said that

its recent visit to SOSchildren’s village in Isolo,

Lagos, was not only toexpress its commitment to

Corporate Social Responsibil-ity (CSR) but also to put

smiles on the faces of thechildren.

General Manager, HomeAppliance division, of the

company, Mr. HyunwooJung, said that the childrenhad dreams and aspirations

and it was a high timesomebody supported them to

realising it He added that “as a

leading global brand we arecommitted to making a real

difference in improvingsociety and helping address

poverty problem in the com-munities we operate in. for us

at LG Electronics, CSR is anatural inclination. Children

are the future leaders, and forthat reason, they deserve all

the love and attention in orderto ensure that their

development is not in anywaydisturbed.”

Also Managing Director ofFouani Nigeria Limited,

partners to the company, Mr.Mohammed Fouani, addedthat “Children, as we all know,

are the leaders of tomorrow,and in order to ensure that

they are able to live their livesin the best way possible, de-

void of any form of limitation,they deserve to be given all

the love and care we canprovide. It is my firm belief

that the items we are donatingwill make everyday life

enjoyable as well asameliorate the perplexities of

the children in the home. Ithas been proven that young-

sters thrive and grow in calmand nurturing environment

devoid of need and distress.”

LG donates tech

products to SOSchildren

By ADEBADE ADEJIMI

THE First Lady of theFederal Republic of

Nigeria, Dr Dame PatienceGoodluck Jonathan, who wasrecently appointed as ITU-IMPACT Champion on ChildOnline Protection (COP) andformer Prime Minister ofIsrael, Ehud Barack will nextweek be keynote speakers atthe 2013 World CybersecurityConference slated for July 30

Jonathan drags Ehud Barack to CybersecurityConfab in Abuja

By PRINCE OSUAGWUat the State House,Presidential Villa in Abuja.

The conference with thetheme: ‘Cyber Insecurity- ALatent Threat to NationalSecurity and EconomicDevelopment’ is beingorganised by Office of theFirst lady of Nigeria,International MultilateralPartnerships Against CyberThreat (IMPACT), NigerianC o m m u n i c a t i o n sCommission, NCC, NationalInformation Technology

Development Agency, NITDAand Technology TrainingInstitute, New HorizonsNigeria.

The conference is expectedto map out new strategies tosecuring government assetsand individual security on thecyberspace. Mrs Jonathanwill highlight her programmefor Nigeria and Africa as awhole with regards to ChildOnline Protection andsecurity.

BRIEF

THE Federal Governmenthas empowered 29 local

inventors and innovators witha financial grant of N18 mil-lion.

The grant presented throughthe Presidential StandingCommittee on Inventions andInnovations, PSCII was meantto assist them in creativity,inventions and innovation thatwill further boost national de-velopment, economic growthand global competitiveness.

Presenting the cheques tothe beneficiaries in Abuja, the

FG empowers 29 inventorswith N18m grant

•Prof. Ewa: Science & Tech

Minister

By EMMANUEL ELEBEKEMinister of Science and Tech,Professor Ita Okon BasseyEwa, charged them to be morecreative in their inventionsand innovation. “I challengeall the beneficiaries to work to-wards further creativity, inven-tions and innovations, usingthis grant”

He stated that a total numberof 103 inventors andinnovators have so farbenefited from the grant acrossthe six geo-political zones,since the inauguration of thecommittee in October, 2005.

The minister disclosed thatthe committee was makingefforts at improving thefunding level of the grant,disclosing that “collaborationswith relevant stakeholderssuch as the Education TrustFund, ETF, the PetroleumTechnology DevelopmentFund, PTDF, and others wouldassist in achieving theultimate goal of providing asolid foundation for a techno-logical breakthrough in thecountry.

Prof. Ewa also encouragedNigerians to see Science,Technology and Innovation asthe tools for national develop-ment.

The Chairperson of the

Presidential Standing Com-mittee on Inventions and In-novation, and Permanent Sec-retary, Federal Ministry ofScience and Technology, Mrs.Rabi Jimeta, congratulated thebeneficiaries and advisedthem on the need to ploughback the funds into their work,

Responding, Mr. EkpoCletus who spoke on behalf ofthe beneficiaries promisedthat they would plough themoney into the businesses toensure improvement in thework.

The DG NAFDAC held a press conference in Lagos on activities of the Agency in recent

times . Px shows right Prof John Ibu,Chairman,NAFDAC Governing Council Board, Dr PaulOrhii,DG NAFDAC and Mrs Stella Denloye, Director Laboratory Services NAFDAC during the

briefing in Lagos yesterday. Px Biodun Ogunleye.

Aviation

newsmen at the MurtalaMuhammed Airport, Lagos.

According to Alhaji Tukur, themajor reason for the scarcity ofaviation fuel is that, it is onlyone fuel marketer that issupplying the product at themoment stressing that if thegovernment should allow otherindependent marketers into thesystem, the scarcity of aviationfuel will become a thing of thepast.

He said “The major reason forthe scarcity of aviation fuel isthat, it is only one marketer thatis supplying fuel at present asI am talking to you. So the


BRIEFS

NIGERIAN AirForce, NAF, has re

affirmed its commitment tocontinue to work with theNigerian AirspaceManagement Agency, NAMAto ensure that the security ofthe nation’s airspace is notcompromised.

The Chief of Air Staff ,AirMarshal Alex Badeh madethis commitment when he played host to themanagement of NAMA led by its Managing Director,Engr.Mazi Nnamdi Udoh inAbuja . Air Marshal Badehsaid NAF would continue tocollaborate with the agencyon issues bordering onsecurity, surveillance andpersonnel training.

According to Supo

NAF, NAMA collaborateon Air safety

By LAWANI MIKAIRU Atobatele ,General Manager,Public Affairs, NAMA, “AirMarshal Badeh ,whoappreciated the coverage andoperation of the new radar

in the country, said that thesystem has improved thesurveillance of the airspacetremendously. He lauded theinitiative of the agency on its

proposed deployment ofAutomatic DependentSurveillance Broadcast-ADS

-B multilateration to capturelow flying aircraft likehelicopters in the Niger Deltaarea “.

Atobatele further said “Earlier in his speech,Engr.Udoh acknowledgedthe current partnershipbetween the twoorganisations, pointing outthat such effort has enhancedthe smooth running of thenation’s airspace under thejoint civil/military joint users’collaboration.”

“NAMA’s boss, assured theChief of Air Staff that theagency would always bewilling to make available itsfacilities for NAF personneltraining necessary for theirpractical exposure ,especiallyon engineering and air trafficcontrol.”

On the courtesy visit were:the director of engineeringservices, Engr.IfeanyiNwankwo, director of financeand accounts, Mrs ClaraAliche, director of humanresources, Dr Dr.UwemAkangson,Director ofadministration, Dr.YahayaSaleh,Company Secretary,Mrs AnastasiaG b e m , E n g r . M u y i w aAdegorite ,SA to the MD,and Engr. IkennaAnyaegbunam.

FAAN says low activity in KanoAirport due to insecurity

By LAWANI MIKAIRU

THE Federal AirportsAuthority of Nigeria,

FAAN, has attributed the lowactivity in Mallam Aminu KanoInternational Airport, Kano toinsecurity in the historical city,which has affected socioeconomic activities in the state.

The agency said it is not truethat the airport was dormant,

as the airport is being affectedby the impact of the insecuritywhich has stifled mosteconomic activities in the state.

The General Manager,Corporate Communications ofFAAN, Yakubu Dati, who madethis explanation in Lagos saidthat media attacks against theproject, especially the reportthat the international terminalof the Mallam Aminu KanoAirport has not been put to use

after its remodeling was merelyto score cheap political goals asthe criticism stemmed fromignorance and mischief of someanti- progressive elements.

‘This report alleged thatthere was sabotage by FAANand the Ministry of Aviationto make the terminal andperhaps the airport dormant,but this is not true. We wish tostate that Kano has been andwill continue to be one of themajor airports in Nigeria andit is because of the importanceattached to the airport thatFAAN embarked on rebuildingthe domestic terminal whichwas commissioned in early2011.”

Dati explained that theviability and utilisation ofairport is dependent onpassenger movement, addingthat it would be difficult foreconomic activities to go onunder threat to lives andproperty.

“If the terminal or the airportis alleged to be dormant, itmeans that there is lowpassenger movement and it isnot the responsibility of FAANor the Ministry of Aviation toattract the passengers to theairport.

Scarcity of aviation fuel: FG urged to give licenseto more independent marketers

By DANIEL ETEGHE

THE Federal Governmenthas been urged to give

more license to independentfuel marketers in the aviationindustry to allow them importJET A1 otherwise known asaviation fuel as a fast remedyto the problem of scarcity ofthe products before it gets outof hand.

Out-going Secretary Generalof the Airline Operators ofNigeria (AON), AlhajiMohammed Tukur made thecall while speaking with

government should give morehands and allow othermarketers to supply aviationfuel and with that I think thisproblem of scarcity of theproduct will be a thing of thepast”

“So what the governmentshould do, is that they shouldallow everybody to go andimport the fuel and bring it orthey should give people morelicense to come into the system,Sahara oil and other oilmarketers, they have madesome difference and that is whythey have not increase the priceof aviation fuel, because in

Etihad Airways , KoreanAir sign codeshareagreement

ETIHAD Airways, thenational airline of the

United Arab Emirates, hassigned a new codeshareagreement with Korean Air,South Korea’s largest airline.The partnership subject toregulatory approval, brings to46 the number of codesharesoperated by the Abu Dhabi-based flag carrier.

In the first phase ofcooperation, Korean Air willplace its ‘KE’ code on EtihadAirways’ daily services betweenSeoul (Incheon) and AbuDhabi. Members of EtihadAirways’ Etihad Guest andKorean Air’s SKYPASS loyaltyprogrammes will also enjoy fullreciprocity. These reciprocitybenefits include lounge access,priority check-in and excessbaggage allowances for top tierprogramme members and theability to earn and burnfrequent flyer points on allEtihad Airways and Korean Airflights. Etihad Airways’President and Chief ExecutiveOfficer James Hogan said thenew commercial partnershipwith Korean Air was asignificant development for theairline, in both strategic andcommercial terms.

Overland Airwaysrewards customerson Asaba route

OVERLAND Airways hasintroduced a special fare

on its Asaba- Lagos and Asaba - Abuja routes to reward her customers for theirpatronage. This started onJuly 18, 2013 when passengersstarted paying N18,000 forflight services from Asaba to Abuja and Lagos.

According to the ChiefOperating Officer of OverlandAirways, Mrs. Aanu Benson, asthe pioneer airline to Asaba International Airport, theintroduction of the special fareoffer on Asaba route is toappreciate and reward customers for their patronage since Overland Airwayscommenced flight operations atAsaba Airport.

Mrs. Benson furthersaid Overland Airways isdetermined to continue offeringexcellent and satisfactory services to her customers andwill not compromise in thedelivery of effective andcomfortable services at alltimes.

She said for the convenience of customers,Overland Airways has alsoadjusted its flight times onthe Asaba Abuja and Asaba Lagos route.


scorched the top of the outerskin of the fuselage justforward of the vertical tail fin.The Dreamliner’s fuselage ismade of carbon-fibercomposite, a material thatburns at a lower temperaturethan the aluminum alloy usedin traditional aircraft designs.

The fire has set up the firsttest of a major repair of the jet,which industry experts sayairlines will be watching closelyto determine both the length oftime required and the cost tofix the jet’s body.

“We believe that ifmanufacturing is made easyand less cumbersome by wayof accessibility of loans,manufacturers will obviously beencouraged and this could actas a stop-gap measure formilitating the high rate ofunemployment. We have thecapacity to do so, all we needis encouragement,” Agoyeadded.

Going forward, he said thatthe association would form a

Ma n u f a c t u r e r sAssociation ofNigeria, MAN

Ikeja branch, has expressedconcern over numerouscharges their members aremade to pay to secure the Bankof Industry, BoI, loans, callingfor immediate review andpossible reduction.

Expressing this position at abusiness luncheon for chiefexecutives and managingdirectors of manufacturingcompanies under the chapter,the chairman, Rev. Isaac AdeAgoye, said the problem has

the capacity of inhibiting theircollective growth asmanufacturers, as well ashamper the survival of the realsector if unattended.

He noted that in all,manufacturers pay as much as21.125 percent interest on BoI’sloans, saying, ‘We considerthese surcharges as toocumbersome and demanding,hence we invited the BoImanagement forenlightenment.”

working committee that wouldcollaborate with themanagement of BoI to fathomways of either eliminating orreducing those surcharges tothe barest minimum.

He implored themanagement of BoI to look atthe various surcharges with aview of doing away with someof them that are inimical andirrelevant to the exercise oflending, adding that, ‘asituation where charges onloans amount to 21.215 percentand above is certainlyworrisome.

Speaking on the theme of theprogramme, “Bridging the Gapbetween Manufacturing andthe Bank of Industry”, theManaging Director, BoI, MsEvelyn Oputu, represented byMohammed Alkali, ED,Operations, said that interestcharges on loans do notconstitute as much problem asinfrastructural problem,generating own power and lackof incentives.

She assured that as part ofincentivising the real sector,the BoI is engaging incontinuous advocacy with allstakeholders towardsimproving the operationalenvironment, adding that thebank leverages internationalresources for the developmentof the real sector in the countrythrough collaboration withUNIDO, UNDP and AGOAamong others.

Manufacturers raise concern overcharges on BoI loans

GHANA plans to sell its

second Eurobond afterinvestor meetings in Europeand the U.S. this week, withyields priced over Nigeria’slatest dollar-bond issuance,three people with knowledgeof the transaction said. Theyield for the 10-year, dollar-denominated notes will bearound 8.125 percent,according to the people, whoasked not to be named as thedetails are private. Thatcompares with 6.63 percentyielded in Nigeria’s sale of 10-year bonds on July 2. Ghana isplanning $1 billion ofEurobonds after stops inLondon, Frankfurt and LosAngeles, Adams Nyinaku, head

of treasury at the Accra-based

Bank of Ghana, said July 11.

The planned bond sale in theworld’s second-biggest cocoaproducer follows Rwanda andNigeria as African nations tapappetite for assets from theworld’s fastest growing regionafter developing Asia. Ghanais rated five steps belowinvestment grade at B byStandard & Poor’s, comparedwith BB-for Nigeria, which isthree steps away. Emerging

borrowers have raised at least$13 billion since July 10, whencomments from FederalReserve Chairman Ben S.Bernanke temperedspeculation the U.S. wouldscale back stimulus.

Developing-nation yieldshad soared to 5.54 percent June24, the highest since 2011, asBernanke signaled he mayreduce bond buying that fueledgains in emerging assets.Yields were at 4.87 percent ye,

the Bloomberg USD EmergingMarket Sovereign Bond Indexshows. “At first glance, thenew bond looks cheap, but thissuggests that Ghana is offeringa decent premium tocompensate investors for therisks associated with thecountry ’s fiscal andmacroeconomic imbalances,”Samir Gadio, an emerging-markets strategist at StandardBank Group Ltd. in London,said.

Ghana’s budget deficitjumped to 12.1 percent of grossdomestic product in 2012 from4.3 percent the previous yearas the government boostedsalaries for civil servants. TheFinance Ministry is forecastingthe gap will narrow to 9percent this year. In the firstfour months of 2013, theshortfall was 3.8 percent of GDP,compared with a forecast of 3percent, the central bank saidin May.

evidence of heat or moisture.The agency is now alignedwith Boeing, which advisedairlines last week to inspect orremove the device, known asan emergency locatortransmitter or ELT.

The issue arose after firebroke out on a 787 owned byEthiopian Airlines after it hadbeen parked for eight hours ata remote stand at London’sHeathrow airport. The firecaused extensive damage inthe rear of the plane and

Ghana said to plan 10-Year Eurobond priced above Nigeria

THE U.S. Federal Aviation

Administration hasinstructed airlines to remove orinspect emergency beacons inBoeing Co’s 787 Dreamliners,following a fire earlier thismonth that was traced to oneof the units, made byHoneywell International Inc.

The airworthiness directivegoes farther than the guidancefrom the FAA last week, whenit said airlines should inspectthe units on 787s for pinchedwires in the casing and

BRIEFBy NKIRUKA

NNOROM

FAA to airlines:remove or inspect Boeing 787 beacons

Head, Research, Planning and Development, Soyem Osakwe; CEO, Chief Edirin Abamwa;

and Head, Digital Marketing, Amara Nwankwo, all from WSI-Axon West Africa at a mediabriefing held in Lagos recently.

IDL spends N150mon distributors

INTERCONTINENTALDistillers Limited (makers

of Chelsea Dry Gin) rewardedcustomer’s loyalty by givingmore than 150million in cashand prizes during her annualdistributors’ award held recentlyin Lagos.

The award ceremony was wellattended by distributors from allover the country with SirMathew Ugwueze of BlessedMattex emerged overallwinner, with a Platinum awardworth N7.2million and a 3 tontruck. Other platinum awardwinners Asizebu Enterprisesand Merdian Marketing wenthome with N6.4million andN5.19million respectivelyalongside the 3 ton truck

The Managing Director ofIDL, Engr. Patrick Anegbe, inhis address acknowledged thehard work and success recordedby the distributors in theprevious year despite hardbusiness terrain in Nigeria. Heannounced that the factoryexpansion project will becompleted and commissioned inSeptember this year.

He noted that in the previousyear, two distributors werecaught aiding and abetting thefaking and adulteration of theirproducts.

Business & Economy

Uturn holds 2013

Forum

ALL is now set for the 2013Uturn Africa stakeholders

Forum tagged: “Alluvion,Creating Momentum, DrivingChange”. The forum will attractseveral corporations,foundations and donororganizations. Featuredspeakers include Andrew Alli,President/CEO Africa FinanceCorporation, Paul NoumbaUm, Finance &Private SectorDevelopment for West andCentral Africa (AFTFW), TheWorld Bank, GodfreyMwindaare, Director, AcumenFund West Africa; ChinyereAlmona, Head, AfricaCorporate GovernanceProgram, IFC SustainableBusiness Advisory;BisiLamikanra, Partner, KPMGProfessional Services, and awhole lot more.

Focusing on the Extractive,Energy & InfrastructureSectors, Uturn Africa Forumsengages the region’s mostinfluential leaders and thosewith interest in Africa in criticaldiscussions designed to createpartnerships, networks,knowledge and collaborativepathways to achieve effectivesocial change and impact inthe region; to work towards acohesive operationalframework.


“When the housewife announcesthat “the soup in the pot is totallyburnt”, she is telling the family thatthere will be no dinner”, Old Unclein Lagos.

“We are losing revenue; 400,000barrels of crude oil are lost on adaily basis due to illegalbunkering, vandalism andproduction shut in”. Dr NgoziOkonjo-Iweala, Federal Minister ofFinance.

Madam Ngozi, who is in chargeof our kitchen, has in a manner ofspeaking, told us that the “pot ofsoup” is on fire. She has done herwork, as expected; what we dowith the information is our affair.But, it will be in our interest if welisten carefully to what she says.The fate of the Federal Republicof Nigeria might depend on it. Asharp and sudden downturn incrude oil revenues next year willinduce deep budget cuts, increaseunemployment and provoke massanger given nothing positive in thepolity to reduce the impact.Governors now parading jetsmight find their people are nolonger amused.

Perhaps because she knew thatshe was addressing a nation ofalmost deaf people, includingtheir political leaders, the Ministeradded that “the Federalgovernment may not be able toimplement the budget”.Economists and financial experts,as well as, keen observers of theglobal oil market were aware ofthe dangers all along and theconsequences for the 2013 Budgetas well as the Nigerian economy.Certainly, Gross DomesticProductivity, GDP, will drop; sowill allocations to states and localgovernments. States, which hadembarked on ambitious projects,without taking a glance at thefuture, will have a great deal oftrouble continuing with some ofthose projects. The era of“abandoned projects” might bewith us again. If 2013 is bad, and

it is, 2014 could be worse – for alot of reasons that we alreadyknow but which the President, theGovernors, the Minister andCommissioners of Finance chooseto ignore.

For once, we have a potentialnational calamity, almostinevitable, which should engageour collective attention in a non-partisan manner. We all stand tolose – PDP, APC, oil-producing andnon-oil producing states. We areall in the same leaking boat. Andright now, I want to join theHonourable Minister of Financein raising the alarm. This isbecause, the President and theNational Assembly, NASS, arecurrently engaged in a contest ofwills which will lead us straightinto economic catastrophe andthe poor woman is becoming thesacrificial lamb for the collectiveabsence of leadership on thismatter.

Although she also said, “I haveto clarify that it is not the entire400,000 barrels that is stolen, no.What happens is that whenever thepipelines are attacked and oil istaken, there is a total shutdown.All the quantity of oil producedthat day will be lost because itmeans government cannot sell itand it means a drop in revenue”,she actually exposed theimpotence and incompetence ofthe Federal Government, theArmed Forces of Nigeria,especially, the Nigerian Navy andthe Security agencies (SSS andNIA) when it comes to protectingthe national interest againstsaboteurs. It is simply impossiblefor sabotage of this magnitude –400,000 barrels a day at $100 perbarrel comes to $40 million perday and N2.4 trillion per annum.Can any responsible governmenton earth find time for anything

else other than finding a solutionto the loss of almost 40% of itsannual budget? If we cannot findthe answer ourselves, why notengage internationalorganizations which can help usfind the answers?

However, before we inviteforeigners into the affair, there isa need for the Federal governmentto level with the people of Nigeria.It is impossible for a group offoreigners who had never been toNigeria, or a Nigerian group notconversant with the Niger Deltaand the routes of the pipelines tobring a boat into Nigeria andsmuggle our crude. So, thecriminals are our own people orforeigners working with oilcompanies or oil supplycompanies in Nigeria. Some ofthem might even be peopleworking with owners of marginalfields stealing oil from thepipelines of Shell, Chevron.Mobil etc. Furthermore, it isvirtually impossible for sabotageof this magnitude to continue forso long without the activeconnivance of corrupt Navyofficers and the same securityagents assigned to guard ournational interests.

For some reasons still difficultto understand, the loss of

crude keeps increasingperiodically. In 2011, theannouncement was 160,000barrels per day of crude oil stolenor lost; last year the figure climbedto 200,000 and now we are beingtold it has jumped to 400,000barrels a day. The obviousquestion is: what is the Joint TaskForce in the Niger Delta doingwhile all these thefts andvandalisation is going on? Whatis the Navy doing while stolencrude is increasingly exported?Why has the President not sacked

the military officers and thesecurity agents in the region as awarning to other that he wants toget results?

However, there is more to theMinister’s inadvertent disclosurethan she realizes. When oilpipelines and gas pipelines jointlyowned by government and foreignfirms are wantonly vandalizednow, which foreigner will befoolish enough to invest in anyproject in the region on his own?As it is, none of the majourinvestors in Nigeria depends onpublic power supply because theyare forced to generate the powerthey need for operations. Mobil,literally, had to build Eket andQ.I.T in Akwa Ibom to be able todrill oil. Companies operating inthis country are forced toundertake for themselves whatother nations provide for them atlower cost. They endured the insultbecause the returns werefavourable. But, as more countriesare discovering oil and shippingit, it will soon become a buyers’market and Nigeria will have togo begging for investors to comeand for buyers as well. Next yearmight be the beginning of a longand tedious journey for thiscountry down the road to oil glutand economic disaster.

The Minister did not say this;and she cannot really. But, thereis no doubt in my mind that she isaware of the dangers ahead.

The obvious question is: whatneeds to be done? The short answeris: Jonathan should spend moretime on economic policy than hespends on politics. The criticalMinistries are: National Planning,International Trade andInvestment, Agriculture, Powerand Works – in addition toFinance. The reason is simple. Ifwe are ever going to avert thedisaster that will result from sharp

drop in oil revenue from now on,these are the people who willprovide the soft landing. Politics,for Jonathan, is alreadypoisonous – if the economy getsworse. If budgets are slashed bygovernments this year or nextyear; and if salaries are delayedor unpaid in many states; and ifASUU again proceeds on anotherindefinite strike, nothing andnobody can save the President. Ifanything, he needs to find his wayback to peace with most of thepeople who provided the coalitionwhich brought him to office.

Difficult, as it is for him toaccept, now more than ever, heneeds the governors; and theyneed him. When federallyallocated revenue dwindles, everyelected official faces monumentalproblems at his own level. ThePresident nationally and thegovernors in their states will findthe voters totally united againstthem. Irrespective of politicalparty or affiliation, any possibleupheaval will affect all becausemost politics is really local.

What then should be the firstorder of priority for the Presidentand the governors? That is simple.They should start with themselvesto cut down on the cost of runningtheir offices and significantlydownsize their cabinets. ThePresident should set the exampleby scaling down to no more thantwenty four Ministers and no stategovernor should engage morethan fifteen. Similarly, the numberof Special Advisers should bereduced by at least sixty percent.Most of them are assignedresponsibilities which should behandled by career civil servantsanyway. They only help to get thepayroll bloated for politicalreasons. Now, and in the nearfuture we cannot afford them –unless our leaders really want theeconomy to crash. Madam hadraised the fire alarm, I support her.We must act now.

that under the Small and mediumenterprises equity investmentscheme (SMEEIS) over N55b wasset aside yet only N28b wasdisbursed. Undoubtedly, lack ofmanagerial skills and affordablebusiness development servicesproviders were some of the myriadof reasons for the failure of thescheme. Aside from financing ofthe right temperament, smallbusiness owners requiremotivational, entrepreneurialand business skills to survive andoperate profitably on the long run.

While providing financial andbusiness support services to smalland medium enterprises is alreadyone of the missions of the BOI, itis believed that with a defineddivision of labour, the fullyfledged subsidiary will be in abetter position to offer theseservices to the survivalists andmicro enterprises rather than thebank itself.

3. The subsidiary will alsoensure that there is morededicated and effectivemonitoring of beneficiaries. It isnot unlikely that many of the BOIofficers on the states financingscheme also work on other inhouse projects, thereby dividingtheir time, attention and technicalskills. There is no gainsaying thatit’s more expensive and timeconsuming to monitor a loan of

current financing range for thestates financing scheme). Andmore importantly ensure that theethos and firm credit principles ofthe parent bank are sustained.

My reasons for advocating thesetting up of this subsidiaryincludes the following;

1. There are currently 20 statesinvolved in the states SMEfinancing scheme, which meansthere is already an existingportfolio/funds available of atleast N20b. While most statescontributed N500m ascounterpart funding, states likeBayelsa contributed N2.5b.Furthermore, forward lookingstates like Ogun have indicateddesire to make available anotherround of financing based on thesuccess of the current scheme.

2. The new DFI will ensureregular and effective enterprisesupport and managerial skillstraining/mentoring forbeneficiaries. For instance, theinstitution could develop a preloan support programme forprospective beneficiaries inpartnership with SMEDAN. Numerous studies have shownthat a dearth of managerial skillsby small business owners tooperate profitably for longperiods was a bigger threat to thesurvival of the enterprise than alack of funding. It will be recalled

However, while the modalitiesand the time frame for release offunds are still been worked out bythe Ministry of Finance and theCentral Bank of Nigeria, thewriter wishes to suggest to thebank management, governmentand various other stakeholders toconsider a change in its operatingmodel, especially as it concernsfinancing of co-operatives andmicro enterprises. In line with this,I propose that for greaterdevelopment impact, inclusive jobcreation, desired industrialisationand economic growth, the BOIshould consider spinning off theunit that handles the statescounterpart SME financingscheme into a fully fledgedsubsidiary.

Taking a cue from the SmallEnterprise Finance Agency (SEFA)model, which was established asa result of the merger, of the smallbusiness activities of the IndustrialDevelopment Corporation (IDC)of South Africa, Khula EnterpriseFinance and the South AfricanMicro Apex Fund. This newlyformed DFI subsidiary of the Bankof Industry will handle allfinancing for co-operatives,survivalist, micro small andmedium enterprises nationwide.The financing model will rangefrom a minimum of N10m to amaximum of N100m. (which is the

IN recent times there has beencheering news about the Bank

of Industry and its profitableoperations. As eagerlyanticipated, the government hasfinally given the nod for therecapitalisation of the bank to thetune of N750b. Currently theDevelopment Finance Institution(DFI) manages variousintervention funds for the CentralBank and one of its moresuccessful programmes is thestates counterpart SME financingschemes in conjunction with about20 forward looking states.

Information made publiclyavailable by the bank indicatesthat in Ondo state for instance,over N600m has been disbursedto successful beneficiaries. Thewriter can also confidently attestto the success of the scheme inOgun state, as the sole consultantcontracted by the state to pilot thescheme. To date the bank hasdisbursed over N400m in Ogunstate to about 40 co-operativessocieties thereby creating/sustaining over 3000 jobs.

There is no gainsaying that theunder capitalisation of the BOIhas limited the vast potentials ofthe bank in achieving its mandateand hindered its developmentalimpacts. This notwithstanding, theperformance of the bank underthe firm leadership of theManaging Director, Ms EvelynOputu, is nothing short ofcommendable.

N10m than N1b. Cooperativesand small enterprises in mostcases, have no structures unlikethe well established SMEs.

4. A dedicated DFI for providingfinance with a minimum andmaximum range of N10m toN100m respectively willdefinitely be more nimble andensure swift turnaround times.Loan approvals will go throughthe institution’s credit processesand not have to wait for the creditcommittee of the BOI to sit. Smallbusiness owners are veryparticular about timing becauseof their inability to retain pricequotes especially from suppliersand manufacturers for too long.

5. The operations of the DFI arein line with the objectives of theBOI and will enable the bankhave an even greater developmentimpact with the multiplier effectsof poverty alleviation and jobcreation through a sustainedgrass roots financing. This willinvariably enhance the social andeconomic conditions of Nigerianson the long run.

6. The ambitious NEDEPprogramme of the Ministry ofTrade and Industry will also bebetter implemented through thenewly established DFI. Thesubsidiary will be better tuned towork closely with SMEDAN andthe ITF to ensure the success ofthe programme and creation ofjobs.

Olatunde Akande is a Partnerat Carson Capital Limited.

[email protected]

Fire alarm from finance minister

Re - recapitalising the Bank of Industry

R I G H T O F R E P L YBy OLATUNDE AKANDE

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tobacco smoking in the public.Today, GATS report has lent

credence to Dosumu’s views asa cardinal factor of modern life,which is the adoption ofconstitutions by nations of theworld and one of the reasonsfor adopting same is to put inproper perspective ways andmanners of peaceful co-existence among the citizens ofthe particular country. Onebasic inclusion in suchconstitution is human rightsand freedom of choice. Even

RECENTLY, a report by

Global Audit onTobacco Survey (GATS)indicated that incidence oftobacco use in Nigeria is low, areport that may not go downwell with the civil societygroups that campaignedagainst tobacco smoking,advertisement and production.

Tobacco smoking in variousparts of the world had been atopical issue leading to its banin some public places in manyparts of the world.

Not until recently, the LagosState House of Assemblyproposed the Non-TobaccoSmoking Bill, which seeks atotal ban on smoking in publicplaces.

The Bill, however, did not getthe nod of the Trade UnionCongress, TUC, led By Mr.Anthony Ibafor, representativeof hotel and club owners andtobacco distributors, whoargued that the Bill would leadto unemployment, if tobaccosmoking was totally banned.

Reacting to the proposed bill,the Head of Regulatory Affairsof British American Tobacco ofNigeria (BATN), Mr. SolaDosumu, expressed thecompany’s support for thepassage of a balanced andevidence-based Bill for theindustry. He also stated that itwas in the interest ofstakeholders to ensure thepassage of a balanced,workable and evidence-basedBill, adding that it would helpto reduce the impact of tobaccoon public health in the country.

Dosumu went further to saythat BATN had alwayssupported appropriateregulation for the industry inNigeria and had co-operatedand collaborated withgovernment agencies towardsensuring that existingregulations were enforced.

On the other hand,Representative of NigeriaTobacco Control Alliance andother CSOs, NurudeenOgbara, sought for total ban of

guard this by having theappropriate laws that is suitedto our local context in place andnot simply copy one that willcause more problem in thecountry.

Given Nigeria’s peculiarity,coupled with the physiologicalmake up of the human mind tocrave that which is shroudedin mystery, the chances thatover flogging the issue, assome anti-tobacco campaignersare clamouring for are high. Inorder not to regress in thetobacco use roll back campaign,anti-tobacco use advocates andthe government in particularshould thread softly, Mr.Tomiwa Alegusi, a tobaccodistributor, said.

The reality of the modernworld is that stringent lawsinexplicably grow interests inthe particular habit that it seeksto discourage. The more thelaw around a practice getsstringent, the more the curiosityaround it grows, leading toincreased indulgence in theact. We should be mindful ofthis in formulating morestringent anti-tobaccolegislation.

While the push for publichealth must be sought, weshould, however, avoidsensationalism for the sake ofadvocacy. It is also pertinent todo a reality check on the anti-tobacco measures and laws thatseveral countries have adoptedover the years with a view toascertain if they are achievingresults or not.

Arguably, countries that haveadopted harsh regulations asanti-tobacco laws are feelingthe effect of increased tobaccosmuggling leading toastronomical rise in the salesand purchase of illegalproducts and funding ofcriminal groups. Among suchcountries are Ireland, Canadaand South Africa. On the otherhand, countries that haveadopted moderate laws whichare well balanced andapplicable and enforceablelocally have little incidence ofsmuggling, examples areGhana and Russia.

Stories by

PRINCEWILL EKWUJURU

GATS report & tobacco use in Nigeria

WOM and WOW!

Let’s start by unravelling the acronyms in the headlineof this write-up. WOM stands for Word of Mouth.

It sounds familiar and it simply means what the wordssay – what one person tells another. On the other hand,WOW stands for Word of Web (I’d thought it was anoriginal coinage from this writer until I came across awebsite bearing that as its domain name!) It means whatone person tells another through the web. WOW is justWOM via the web!

In recent times, word of mouth has gained muchcurrency in (services) marketing circles. Marketers aregetting more and more interested in what customers telltheir relations, friends, colleagues or even othercustomers. Studies indicate that people tend to believewhat they hear from other people more than theadvertisements from organisations. It is also proven thatthe more involving and expensive a service is, the greaterthe reliance of potential customers on word of mouthrecommendations.

It is important to note, however, that word of mouth is adouble-edged sword. It could be negative or positive. Ifcustomers are happy with your organisation they are morelikely to spread positive word of mouth. If they are not,you know what to expect. You may want to believe,however, that there is a limit to the number of people onecan easily reach through word of mouth – if that’s anyconsolation.

Enter word of web. Today, a customer doesn’t have tostep outside his living room to inflict substantial damageon an organisation. The options for him are too many.He may start a blog overnight to thrash an erringorganisation. You can bet he will pull many sympathisers.He may also post details of poor service encounters onsocial networking sites – Facebook, Myspace or Nairaland.

Some five years ago, I stumbled on a debate bynairalanders on which bank in Nigeria delivers the bestcustomer service. (I was quite surprised recently to findthe posts still there, although some of the banks no longerexist in the way they did then. Take a look, especially ifyou work in the banking industry: http://www.nairaland.com/nigeria/topic-116748.0.html. Alsocheck out http://www.nairaland.com/nigeria/topic-59709.0.html.) You’ll find the exchanges very intriguing

What’s more? In world that sends over 400 milliontweets daily, a twitterer (someone who uses

Twitter) with a good following can hit hard on anorganisation, using less than 140 characters! There mayalso be numerous retweets (tweets forwarded) if peoplefeel strongly about whatever went amiss.

Make no mistake about this. Technology has made iteasier for dissatisfied customers to bash you! But thegood news is that your truly happy customers can alsoeasily root for you (don’t bank on this, anyway). So whatto do?

Let’s get back to the basics. To avoid negatives WOMand WOW, you need to deliver exceptional service – thatis service with speed, courtesy, empathy, fairness and,yes, a smile.

In addition, when things go wrong, take a smart step toresolve matters “out of court.” You may not easily win inthe court of the mouth or web!

You may also want to take the proactive step of findingout what people are saying about your organisation. Ifyou manage customer service or a brand, I suggest yougoogle your company (or brand) name at least twice aweek to find out what people are saying. Search forsomething like “complaints about XYZ” (assuming that’sthe name of your company). Someone also said youshould look out for “XYZ sucks.” That way you may catchand fix some negative WOM that turned WOW beforethey do much damage.

Now think about it. What can you do to encourage yourcustomers to spread positive WOM and WOW? That’syour challenge. Savvy organisations are beginning tolook for ways of moulding the WOM and WOW fromcustomers.

FROM LEFT: Patrick Anegbe Managing Director, Intercontinental Distillers Limited , DorothyAnegbe , Rev Odeyemi, Director in IDL, Mike Murray Bruce, Director in IDL at the distributors

award held in Lagos recently.

though those rights areenshrined in the constitution,the authors are mindful of theneed to restrict the exercise ofthose rights to persons ofcertain age and above.

One of such rights is the

universal adultsuffrage, which empowersadults of 18 years old andabove the right to vote in anelection so long as the personis of sound of mind. This ispremised on the thought thatat 18, and barring any mentaldeficiency, the person iscapable of making an informedand reasonable judgment. Thesame is the issue of alcoholicbeverage and tobaccoconsumption in manycountries, Nigeria inclusive.

If the report of the survey isright that “Nigeria has arelatively low rate of tobaccosmoking compared to othercountries, then we must safe

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Advertising, Media& Marketing

A r g u a b l y ,countries thathave adoptedh a r s hregulations asanti-tobacco lawsare feeling theeffect ofi n c r e a s e dt o b a c c os m u g g l i n gleading toastronomical risein the sales


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Advertising, Media& Marketing

Expert challenges experiential marketing agencies on business model

Stories byPRINCEWILLEKWUJURU

Chief ExecutiveOfficer of EXPNigeria and

organiser of the AfricaExperiential MarketingSummit (AEMS), WoleOlagundoye has chargedagencies in experientialmarketing business andothers to continuallychallenge conservative

clients to embrace newthinking in the professionrather than being scaredof doing anythingbeyond traditionalrealms.

Olagundoye, whospoke recently at anAfrica ExperientialMarketing Summit inLagos, also promised toconsolidate on thesuccesses recorded at themaiden edition of thesummit in Nigeria.

He said “Whereas wecannot do all thesethings, the clients on thebrand side need to beginto develop the courage tobe able to do these thingsbecause they are alwaysscared of doing anythingthat is beyond traditionalrealms. We have to startto challenge thesefrontiers and push theseboxes as well.”

Highlighting thesuccesses of the

programme, the CEO ofEXP Nigeria said “On amore serious note, as youcan see for yourself Ithink we’ve had a fullhouse. Why the summitstarted slowly wasbecause it rained in themorning but gradually itfilled up, and we havediverse audience ragingfrom people from fastmoving consumer goods(FMCG), banking,telecoms, manufacturing

as well as agencies. So Ithink, for a very firstevent, we’ve done verywell and what we arelooking at doing is thatwe are looking atbuilding on the success ofthis first one and takingthat to subsequent years.”

Olagundoye saidthe goal of the

company is todifferentiate itself in themarketplace. “For us,this is how todifferentiate ourselves inthe market. “Things areevolving, he said but weneed to get into the mix,and as you can see fromthe case studies that arebeing shown, the worldis moving on a fast paceand we cannot be leftbehind.

Speaking on whetherNigerian market wouldbe able to accommodatesome of the experientialmarketing case studiesshown at the event, thefrontline experientialmarketer said thatNigerian market issophisticated enough tobegin to demonstratesome of those caseshighlighted at theprogramme. “Yes ofcourse, and to put things

in proper perspective,some of the things thatthe facilitator showcasedin some way or formhave happened here andhas been done herealready but we haven’tchronicled themproperly, so we don’thave the documentationof them such that we canshow them. People don’thave faith that it’s goingto happen like this orjust haven’t reallyfollowed the processproperly, but some ofthese things havehappened here and totell you the truth, a lot ofthose things can be donehere too,” he said.

On technology, hesaid “ we have thetechnology and we cando them but what weneed is collaborationwith clients, and brandmanagers to take the bullby the horn and dothings that have notbeen done before. Everybody fears for theircareer and they fear thatif anything goes wrongtheir careers will be on theline so because of thatthey stay with things thatare normal and usual tobe on a safer side.”

SOUTH AfricanMaster Distiller of

Bain’s Cape MountainWhisky, Andy Watts, hasattributed the globalrecognition of the Whiskyto the capacity of Africanbusinesses toconceptualize, design,and develop brands thatcan compete on the globalstage.

He also noted that thebrand utilized availablelocal material resourcesand naturally endowedenvironment to grow itsmarket share.

It will be recalled thatAfrica’s first single grainwhisky, Bain’s CapeMountain Whisky, wasvoted the World’s BestGrain Whisky at theannual WhiskyMagazine’s WorldWhisky Awards (WWA)held in London a fewweeks ago.

Andy Watts, who was inLondon to personallyreceive the award, said

African businesses responsiblefor Bain’s Whisky growth— S/African distiller

the win wasoverwhelming news notonly for the brand andSouth Africa, but for thewhole Africa continent.

According to him,Bain’s Cape MountainWhisky became the firstSouth African whisky tobe awarded this covetedaccolade, ahead of thosefrom traditional whisky-producing countries suchas Ireland, Scotland andthe USA. The whiskieswere assessed blind,based on three tastingrounds, by anindependent panel ofjudges that includedsome of the foremostinternational whiskypalates.

Bain’s Cape MountainWhisky Distiller, JeffGreen also shared hisexcitement on the award,noting that: “This isn’tjust a win for Bain’s CapeMountain Whisky but forSouth African whisky-making.


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Business &Economy

NUBIFIE, without dueprocess as well aswithout paying theirentitlements.

The management ofDiamond and leaders ofNUBIFIE have beenengaged in a runningbattle over the sack ofabout 100 workersincluding all the unionofficers in the bank sinceJune.

Earlier in July,

NLC plans assault on Diamond Bank over workers’ sack...ASSBIFI’s Labour Radio hits air wave

By VICTORAHIUMA-YOUNG

NIGERIA LabourCongress, NLC, is

planning a massiveassault on DiamondBank Plc, over allegedsack of workers includingofficials of the NationalUnion of Banks,Insurance and FinancialInstitutions Employees,

NUBIFIE, Association ofSenior Staff of Banks,Insurance and FinancialInstitutions, ASSBIFI,NLC and civil societyallies picketed the banksfor about two days beforeLabour Minister, ChiefEmeka Wogu, intervenedand invited the partiesincluding ASSBIFI to ameeting.

When the problemstarted, the bank was

said to have taken thematter to Abuja Divisionof the National IndustrialCourt, NIC, which wassaid to have referred thecase to the Lagosdivision since both thehead office of the bankand headquarters of theunions are in Lagos.

It was gathered that thecourt had earlier advisedthe bank against thetermination of the

appointments of theworkers without dueprocess.

Similarly, the Lagosoffice of the FederalMinistry of Labour wasalso said to have advisedthe bank against the sackwithout due process tono avail.

However, during thepicketing, the bank wassaid to have gone back tothe NIC for protection.

It was gathered that thecourt at its recent sittingadjourned the case tillSeptember, but thisseems not have gonedown well with labourleaders.

Their grouse is that thesacked workers havebeen out on the street forabout two months nowwithout anything and bySeptember, it will be overthree months, meaningthe workers be left in thecold without job andbenefits for such longtime.

As an affiliate of NLC,NUBIFIE was said tohave reported itschallenge to theleadership of NLC.

Vanguard gatheredthat NLC has alreadytaken over the matter andis planning to bring itsweight to bear to ensurethat the workers getjustice.

Vanguard gatheredthat leaders of NLCconsider the action of thebank as an attack onlabour and are said to beplanning to use the bankto sound a note ofwarning to others in theindustry that the era ofmanagement impunity isover.

President of NLC,Abdulwaheed Omar,while addressingaffiliates and statecouncils last week, atRain School in Uyo,Akwa Ibom State, saidcongress would meet inthe next two weeks to takedecisive action againstDiamond Bank.Headvised all affiliates andstate councils to be on thealert and get ready for amassive action againstDiamond Bank to ensurethat the sacked workerswere recalled.

Meanwhile, efforts bythe Labour Ministry toresolve the issue has hita brick wall as onlyNUBIFIE and ASSBIFIhave been attendingmeetings called by theministry.

It was gathered that themanagement of the bankis of the opinion thatthere is no need to attendsuch meetings since thematter is before the NIC.

Meantime, ASSIBFIhas announced that itsradio station, christenedASSBIFI Labour Radiowill hit the air wavebefore the end of theyear.

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

Tel:0805 220 1997


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,

Omoh Gabriel - Group Business Editor

Babajide Komolafe - Finance EditorClara Nwachukwu - Energy EditorPeter Egwuatu - Head, Capital MarketYinka Kolawole - Snr Bus. CorrespondentFavour Nnabugwu - Insurance CorrespondentGodwin Oritse - Maritime CorrespondentGodfrey Bivbere - Maritime CorrespondentMichael Eboh - Capital Market ReporterFranklin Alli - Industry/Agric. ReporterEbele Orakpo - Energy ReporterIfeyinwa Obi - Maritime Reporter

CONTRIBUTORSPrincewill Ekwujuru - Media/MarketingNaomi Uzor - IndustryProvidence Obuh - Micro FinanceLAYOUT - Graphics Department

O U R T E A M

Cover

THE Central Bank ofNigeria, CBN, said that

Deposit Money Bank’s(DMB’s) credit to theagricultural sector has risen toover 3.7 per cent.

A statement from the CBNreveal that the figure, whichis for 2012, indicates anincrease of 85 per cent over thetwo per cent growth of theagricultural sector share ofbanks’ credit five years ago.Also, data obtained recentlyfrom the Bankers Committeeshow that between July andNovember last year, thecountry’s lenders issued overN6 billion in credit guaranteesto farmers. The loans camewith the following broadparameters: Average loan

Banks’ loans to agric sector rise by 3.7%, says CBN

By PETER EGWUATUguaranteed amounting to N397million, with a range of N4million to N1.5billion andaverage duration of loans at285 days. “It is anticipated thatunder Nigerian Incentive-Based Risk Sharing System forAgricultural Lending NIRSAL,collaboration between banksand counterparties will pushloans under guarantee inexcess of N20 billion by end ofthe first quarter of this year,”the CBN said. The increase hasbeen linked to the N200 billionagriculture credit scheme andN600 billion (NIRSAL).

Some of the banks toldreporters that regulator plansto spend an estimated $500million to create furtherincentives for the banks tosustain the flow of agric credit.The NIRSAL initiative, whichis brainchild of the CBN, the

Bankers’ Committee and theFederal Ministry ofAgriculture & RuralDevelopment (FMARD), seeksto create incentives andcatalyse processes toencourage the growth of formalcredit, direct and indirect, forthe agriculture value chain, asa mechanism for driving wealthcreation among value chainparticipants. The NIRSALguarantees up to 75 per centof bank loans to the sector.According to the apex bank,NIRSAL is also expected to bea catalyst for innovative riskmanagement strategies, long-term financing for agribusinessand significant job creation bynew entrepreneurs.

“The mandate of NIRSAL isto act as the custodian of allcredit guarantee schemes,interest draw back schemes,

and commercialisationinitiatives related to anintegrated value chainapproach to agriculture and

agribusiness in Nigeria,” theCBN said. Under NIRSAL,there are five pillars to beaddressed by an estimated $500million that will be invested bythe CBN, according to theprogramme document.

“…First of all, you have gotliquidity surplus in thebanking industry; … there isover N1.3tn or so sitting inbanks and belonging togovernment agencies. Nowbasically, they (these funds)are at zero percent interest andthe banks are lending aboutN2tn to the government andcharging 13 to 14%! Now, thatis a very good business model,isn’t it? Give me your moneyfor free and I lend it to you at14%; so why would I go andlend to anyone?”

The above text, whichcorroborates views

regularly canvassed in thiscolumn, is surprisingly from anaddress to journalists by noneother than Lamido Sanusi,Governor of the Central Bank ofNigeria after the recent two-dayMonetary Policy Committee(MPC) meeting in Abuja, lastweek.

The statement is in defence ofCBN’s attempt to containharmful credit expansion withthe introduction of a 50% CashReserve requirement on allpublic funds domiciled incommercial banks! Prior to thisdevelopment, the prevailingrequirement was 12% reserve forall deposits!

Evidently, larger cash depositscreate liberal opportunities forbanks to leverage on thesedeposits to expand credit andincrease public and private sectorspending, which mayinadvertently instigate aninjurious rise in the price levelof goods and services.

Thus, the latest requirement forhigher cash reserves is really anadmission that the existing 12%CRR has failed to contain thediscomforting inflationary push.

However, some critics mayregard the higher cash reserverequirement by CBN asinappropriate, since it wouldfurther reduce the already

How banks make free money fromgovernment funds, by CBN governorinadequate credit to a cashbeleaguered real sector.

This column has consistentlydrawn attention to the obviousreckless strategy of bankslending so-called surplus fundsat atrocious interest rate to thesame CBN, which inexplicablyinstigated the excess cash in thesystem in the first place.

Thankfully, Sanusi has finallyrecognised that “If you want todiscourage such perversebehaviour, part of it is to basicallytake away some of this money,and therefore, reservesrequirement is suppose to makesure that the excess liquidity inthe banks’ balance sheet, isevenly distributed”. The criticalquestion, however, is how CBNcan satisfactorily monitor banks’compliance with the newdirective. In the absence of strictcompliance, surplus cash will stillpersist in the system and inflationwill still remain untamed withdisastrous consequences for theeconomy!

The CBN Governor’s fear thateven the higher reserverequirement may not adequatelycage inflation is probably alsoembedded in his warning that “ifspending continues, and we areconcerned about the liquidityconditions, we foresee in thenearest future, continuedincrease in the CRR (CashReserve Ratio) across theboard….” In other words, ifsurplus cash deposits persist inspite of the new measure, CBNwould further increase itsoppressive interest ratebenchmark beyond 12%, andultimately instigate interest ratesto the real sector, to about 30%!However, what options other

than further increases inMonetary Policy Rate, areavailable to control excessmoney supply?

We had consistently decriedthe foolhardiness ofgovernment’s borrowing back

its own cash deposits in thebanks, at extortionist interestrates (see www.lesleba.com for“Will you Borrow Back YourOwn Money and Pay 17%Interest? ...Ask Cbn!”, 27/12/2004 and “MPR Hike: Failure ofCBN’s Monetary Framework”,01/08/2011); we advised that itwould be more businesswise, forministries, departments and

agencies to domicile their monthlynaira allocations with the CBNitself. Obviously, it makes nosense, as Sanusi rightly observed,to borrow back your own non-interest-yielding savings at a cost,even though a similar borrowingstrategy applied also to Nigeria’sexternal borrowings!

If our advice had been adoptedin 2005, the perennial issue ofexcess funds would have beeneliminated with hundreds ofbillions of naira savings. Indeed, a move was made todomicile all government fundswith CBN under former PresidentOlusegun Obasanjo’s tenure , butintense pressure frombeneficiaries of the free cashtradition quickly killed thisinitiative!

Consequently, Sanusi’snew directory of 50% CRR

for government deposits, is clearlyan uneasy half way measure, andcritics may wonder why the CBNGovernor cannot in hischaracteristic style, take the bullby the horns, and demand thatall government funds should bebanked with the CBN! Withouta doubt, such intervention willlead to a significant contractionin the cash available, and it willbecome possible to better controlinflation in the system;regrettably, however, ifgovernment still remainsactively in competition with thereal sector in the market for longterm loans, cost of funds may notfall.

Ultimately, an enduringsolution to the high cost of fundsand unyielding inflation is totackle the root cause of excessliquidity; i.e. first recognize that

excess cash is the direct productof CBN’s monthly substitution ofnaira allocations for dollarrevenue, and secondly, to ensurethat beneficiaries of the federationpool receive dollar certificates fortheir share of monthly dollarrevenue. Such an arrangementwould immediately finallyeliminate the perennial burden ofexcess liquidity and its train ofadverse consequences.

In its place, lower single digitrate of interest will becomeavailable to the real sector, with aminimal socially and industriallysupportive rate of inflation in tow! The naira will become extremelystronger, and eliminate anyremote possibility of subsidizingfuel prices, thus achieving theerstwhile impossible task ofbenignly deregulating thedownstream sector. The resultanttrillions of naira fuel subsidysavings can then be ploughedinto social infrastructure andpositive welfare programs.

Furthermore, purchasingpower of all income earners willimprove and stimulate increasingconsumer demand, whichindustrialists and entrepreneurswould hasten to satisfy profitably,with the prevailing low interestrate and stronger naira. For now,I sincerely congratulate LamidoSanusi for his bold step in theright direction; however, myabiding hope is that, shortlyhereafter, the CBN Governor willbe on the same page with theposition of this column on thismatter also.

SAVE THE NAIRA, SAVE

NIGERIANS!!

S a n u s i ’ snew directory of50% CRR forg o v e r n m e n tdeposits, is clearlyan uneasy halfway measure, andcritics maywonder why theCBN Governorcannot in hischarac ter i s t icstyle, take the bullby the horns, anddemand that allgovernment fundsshould be bankedwith the CBN!

financial vanguard july 29 2013

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