Issuu on Google+

OCTOBER 8, 2012

Cautious optimism as monetary tightening buoys Q3 economic performance

Experts attributed these developments to a number of factors, particularly the measures introduced by the CBN in the second quarter to further tighten money supply, the inclusion of Nigeria in the JP Morgan Government Bond Index-Emerging Market (GBI-EM), renewed interest by foreign investors in the Nigerian capital market and the commencement of a number of new initiatives by the NSE designed to enhance market efficiency.

APITAL MARKET: SWF, retail bond trading and improved results fuel optimism

C

A significant improvement was recorded in transactions in the Nigerian Stock Exchange, NSE, in the third quarter, as the key indices for measuring performance in the Continues on page 17

169.00

-5.55

2,385.00

-10.00

21.48

-0.12

*From left: Mr. Edem Vindah, Media& Public Relations Manager, Nigerian Breweries Plc (NB); Mrs Nkechi AlliBalogun, former Chairman, Nigerian Institute of Public Relations (NIPR) Lagos, and Mr. Vivien Ikem, Corporate & Social Responsibility Manager, NB Plc at the media briefing on the 2012 Nigerian Breweries' Golden Pen Prize in Lagos. Photo by Sylva Eleanya. BY BABAJIDE KOMOLAFE, MICHAEL EBOH, NKIRUKA NNOROM, FRANKLIN ALLI & NAOMI UZOR

E

conomic experts have called for cautious optimism following significant improvement recorded in some economic indices in the third quarter of the year as a result of the tight monetary policy measures of the Central Bank of Nigeria (CBN). Reviewing the performance of the economy in the third quarter, experts C M Y K

who spoke to Financial Vanguard said that though most economic indices performed positively during the period with possibility of doing better in the fourth quarter, there are still factors in the global and local economy which pose serious threats to future economic performance. In the third quarter, the official exchange rate dropped by 12 kobo to N155.78, while inflation rate dropped to 11.7 per cent. Also, cost of funds in the interbank money market moderated downwards by 500 basis points. These

improvements facilitated inflow of foreign exchange which prompted the nation’s external reserve to rise to $41.16 billion from $36.77 billion in the second quarter. The nation’s capital market also recorded its highest growth with market indices growing by more than 20 per cent. Market capitalization rose by 20.12 to close the third quarter at N8.282 trillion, while the All-share index rose by 20.43 per cent or 4,412.07 basis points to close the quarter at 26,011.64 points from 21,599.57.

111.41

-1.17

89.47

-2.24

CURRENCY BUYING CENTRAL SELLING DOLLAR STERLING EURO FRANC YEN CFA WAUA RENMINBI RIYAL KRONA SDR

154.77 250.5572 201.3712 166.0979 1.9726 0.2854 237.4943 24.6244 41.2698 26.9982 238.9958

155.27 251.3666 202.0218 166.6345 1.979 0.2954 238.2616 24.7044 41.4031 27.0854 239.7679

155.77 252.1761 202.6723 167.1711 1.9853 0.3054 239.0288 24.7844 41.5365 27.1727 240.54

CBN Exchange rate as at 05/10/2012 C M Y K


18 — Vanguard, MONDAY, OCTOBER 8, 2012

Cover Story

Youth restiveness and unemployment in Nigeria: The way out Part 1

Cautious optimism as monetary tightening buoys Q3 economic performance

C M Y K

basis, Onosode said, the NSE Index appreciated in seven months, while it depreciated in two months, noting that the highest gain was recorded in September 2012, with a

,

Continued from page 17 secondary segment of the capital market appreciated by 20 per cent. In particular, the value of listed equities appreciated by N1.387 trillion as the market capitalization rose by 20.12 to close the third quarter at N8.282 trillion from N6.895 trillion at which it opened. The All-share index, another key performance indicator rose by 20.43 per cent or 4,412.07 basis points to close the quarter at 26,011.64 points from 21,599.57 points at which it opened. This is compared to a loss of 17.75 per cent recorded in the corresponding period of 2011. With this development, the capital market has recorded an appreciation of about 27 per cent since the beginning of the year. The value of listed equities, represented by the market capitalization grew by 26.64 per cent or N1.742 trillion from N6.54 trillion at which it started the year, while the Index has garnered 25.47 per cent or 5,281.01 basis points since the beginning of the year from 20,730.63 points recorded in the beginning of the year. The improvement was occasioned by renewed interest by foreign investors in the Nigerian capital market, impressive results declaration by companies in the market and the commencement of a number of new initiatives by the NSE designed to enhance market efficiency. According to analysts at FSDH Securities Limited, led by its Managing Director/ Chief Executive Officer, Mr. Ese Onosode, looking at the All-share index on a quarterto-quarter basis, it appreciated by 20.43 per cent in third quarter, 4.19 per cent in the second quarter, but dropped by 0.38 per cent in the first quarter of 2012, adding that as at September 28, 2012, the Index attained 26,001.63 points, the highest in the last 19 months. On a month-on-month

The restrictive monetary policy stance of the Central Bank of Nigeria, CBN, maintained high yields on Federal Government of Nigeria (FGN) Bonds in the market and attracted investors into that segment of the capital market

,

growth of 9.52 per cent. According to him, the restrictive monetary policy stance of the Central Bank of Nigeria, CBN, maintained high yields on Federal Government of Nigeria (FGN) Bonds in the market and attracted investors into that segment of the capital market. In addition, he explained that the announcement by JP Morgan of the inclusion of FGN Bonds on the JP Morgan Government Bond Index-Emerging Market (GBI-EM) generated foreign investor ’s interest in the Bond, causing yields to drop towards the end of the quarter. e said, “Some of the factors that drove performance in the capital market include: impressive company earnings from quoted companies, good company corporate actions (dividends and bonuses), attractive valuation of quoted companies, commencement of

H

Market Making activities, Securities Lending and the Short Selling initiatives. “Other factors are: stability in foreign exchange rate, a moderation in the inflation rate, increase in external reserves and increase in the price of oil (Bonny Light) at the international market.” Also, analysts at Asset & Resource Management Company Limited, ARM, said the Nigerian capital market performed well ahead of its global peers, adding, however, that foreign investors accounted for 81 per cent of trading in the NSE, supported by cheap capital finding its way into Emerging Markets on the back of continued quantitative easing from major central banks across the globe. They said, “Despite the NSEASI tepid performance in half year 2012 (4.2 per cent), a resurgence ensued in third quarter, as most sectors rallied. In our past reports, we had noted that part of our positive outlook for the rest of the year were partly hinged on some market catalyst, such as the timing of NSE reforms as well as low fixed income yields – which began in the third quarter, due to the announcement of Nigerian Bonds included on the JP Morgan Bond Index. “Coincidentally, these factors materialized in Q3, further reinforcing our overall view of the market. “The Banking sector had an impressive +24.8 per cent return buoyed by attractive valuations as GTB, Zenith Bank and First Bank posted better-than-expected results; further boosting institutional interest.” Also speaking, Managing Director/CEO, Cowry Asset Management Limited, Mr. Johnson Chukwu, expressed optimistm that by the time the National Bureau of Statistics, NBS, published the third quarter macroeconomic report, the Nigerian economy Continues on page 20

T

he words ‘ youth’ and ‘ restiveness’ have become so commonly used together in the last couple of years that it seems to have taken on a life of its own. In the last decade and more there has been a proliferation of cases all over the country and indeed the world, of youth agitations which have tons of people dead and valuable infrastructure as well as personal properties lost and destroyed. A sustained protestation embarked upon to enforce a desired outcome from a constituted authority by an organised body of youths, fits the label of youth restiveness. It is also a combination of any action or conduct that constitutes unwholesome, socially unacceptable activities engaged in by the youths in any community. It is a phenomenon which in practice has led to a near breakdown of law and order, low productivity due to disruption of production activities, increasing crime rate, intra-ethnic hostilities, and harassment of prospective developers and other criminal tendencies. This scourge has been around for a long time and it looks as though it is defying solutions. Maybe the question that needs to be asked is what is truly responsible for this expression of dissatisfaction by the youth? Have their complaints over the years not been heard or attended to? Is there more to the killings and destruction than just drawing attention to the needs they want met? Are the youths trying to draw society ’s attention to themselves more than the issues they appear to be fronting? These and more are the questions we would try to tackle head on today. In Nigeria for instance, the Niger Delta region which is unarguably the bedrock of the oil industry in Nigeria permeated the news for a lengthy period of time as the youths of that region tried various means of getting government and oil companies to pay attention to their dire conditions of living and alleviate their sufferings since according to them, the resources which is building the nation is flowing from their land so by virtue of that they

should also be partakers of its benefits. This strife led to a rise in kidnapping and vandalization of oil pipelines as well as other vices that were being perpetrated. After a period of years, the Nigerian government intervened and the Amnesty program was created to help deliver some of the promises which government had made to the youths in those areas. The baton was soon handed over to the Eastern Nigeria. Increase in the rate of armed robbery attacks, kidnappings as well as unbridled thuggery became the order

,

From left:Managing Director Arik Air, Mr Chris Ndulue; Mr. Andrew Jurd of TAG Aviation (UK) Ltd; President TAG Aviation Europe, Mr. Graham Williamson; and Chairman Arik Air, Sir Joseph Arumemi-Ikhide when officials of TAG Aviation paid a business visit to Arik Air corporate head office in Lagos.

A sustained protestation embarked upon to enforce a desired outcome from a constituted authority by an organised body of youths, fits the label of youth restiveness

,

of the day. Today the Northern part of Nigeria has literally erupted with unrivalled violence. Bomb blasts, kidnaps and killings of Nigerians and others have become the prevailing trend. Despite beefing up of security in these areas, the problems still looms. This situation begs the questions, ‘’what is the government of the day willing to do to put a permanent end to these problems. STATISTICS The National Population Commission (NPC) has said the country’s population has risen from the 140,431,790 it was five years ago when the last national headcount was taken, to 167,912,561 as at October 2011.This represents an annual population growth rate of 5.6 million people.


Vanguard, MONDAY, OCTOBER 8, 2012 — 19

T

When the ongoing reforms in the banking sector started, many Nigerians expressed reservations as to the fairness of the exercise. Two years down the line, many still entertain those fears. The Central Bank of Nigeria, CBN has not been able to remove the doubts in the minds of many. Expectations were that once the list of chronic debtors in these banks was published, they will rush and pay up, the banks will be better off. Some did pay and one in particular had the assets confiscated. Today, as the banks sign transaction implementation arrangement with would-be core investors who fortunately are local banks, the question of the recovered and forfeited funds are begging for answers. The case of Oceanic Bank comes out stronger than many others. The Economic and Financial Crimes Commission had prosecuted the ex-CEO on a 25-count charge of financial crimes before she entered a plea bargain deal with the anti-graft agency in October 2010. The Chief Judge of the Federal High Court, Justice Dan Abutu, convicted the CEO on a threecount charge and ordered the forfeiture of N191 billion assets comprising 49 properties in Nigeria, United States and Dubai, United Arab Emirates, to a Federal Government agency, the Assets Management Corporation of Nigeria which was yet to take off and it did effectively in December 2010. The forfeited properties include shares in over 100 firms some of which are listed and some not listed on the Nigerian Stock Exchange. The anti-graft body had earlier told the court that there was an agreement and urged the court to forfeit the

Where are the forfeited N191bn assets from Oceanic recapitalisation? properties attached to section VI of the settlement agreement to AMCON. The assets set out in section VI of the settlement agreement are herby forfeited to AMCON. To the ordinary mind who is not a banker, Oceanic Bank has had an injection of N602 billion into it whereas the non-performing loans for which the CBN intervened in the bank was N278 billion. The assets forfeited amounted to N191 billion. The non- performing loans the bank was carrying was N278 billion by CBN books. It is this amount that eroded the shareholders' funds to negative position. Now, the CBN intervened in the bank and rescued it with N100 billion. AMCON bought the bank’s non-performing loans to the tune of N200 billion in bonds. The bank in November 2010, said that it had recovered N111.4bn from bad debts as at the end of the third quarter and had written back N14.8bn. It made a profit of N10.247 billion which was retained. Going by the figures that are in public domain, even if the CBN continues to hold onto the N191 billion forfeitures, what has happened in the last one year seems to suggest that the bank should be on sound footing. The N200 billion sale of nonperforming loans to AMCON effectively reduced the bank’s bad debt to N78 billion. If it recovered N111.4 billion which is now profit due to the previous provisions for nonperforming loans, then it would have further reduced the nonperforming loans from the outstanding N78 billion to a

his article was first published in this column on 9 th August 2011. Due to recent development, it is being re-published

The case of Oceanic Bank comes out stronger than many others; the Economic and Financial Crimes Commission had prosecuted the ex-CEO on a 25-count charge of financial crimes before she entered a plea bargain deal with the anti-graft agency in October 2010

positive figure of N33 billion. The retained profit increased its holding to N43 billion. What the bank said it needed as fresh capital was N25 billion minimum required by the CBN. It would have had more than that; about N43 billion. I am not talking about the CBN N100 billion injections which are tier two capitals that should take some five years to pay back. According to John Aboh, the CBN-appointed Managing Director of the bank, the nonperforming loans to total loans and advances of the bank dropped from 73 per cent to 69 per cent, while loans and advances plus advances under finance lease stood at N420.2bn as at September 30, 2010, up by 7.5 per cent from N391bn in December, 2009. John Aboh had also said; “Our turnaround programme continues to yield good results; we are keeping operating costs in check, pursuing NPL recoveries aggressively and focusing on risk management."

AMCON by its charter is supposed to bring the negative Shareholders Funds (SHF) of the rescued banks to zero, to allow for injection of fresh capital from strategic investors. It was in furtherance of this that the bank concluded the sale of some of its nonperforming loan portfolio to AMCON and received bonds worth over N200 billion in exchange. But the curious thing is that the N191 billion forfeiture is hanging somewhere, ostensibly warehoused by AMCON. For what reason, nobody except the CBN and EFCC can explain. If the N191 billion is given directly to Oceanic Bank, it would require no additional capital to be fully back to business. Lawyers and other stakeholders have faulted Central Bank of Nigeria’s (CBN) decision to hand over the asset forfeited by the bank’s former chief executive officer to Asset Management Corporation of Nigeria (AMCON), saying

AMCON has no business in the recovered funds. John Aboh had said that the bank will pursue a fourpronged recapitalisation plan to achieve the N25 billion minimum capitalisation required for national commercial banks. These include: organic means through profit from operations, sale of assets to the Asset Management Corporation of Nigeria. If CBN/EFCC/ AMCON have not held on to the N191 billion forfeiture of the former MD of the bank will the bank not have achieved the N25 billion required by Aboh to retain national bank status without the sale of the bank to Ecob a n k ? Ordinarily, the said forfeited assets were appropriated from the bank as opposed to her personal property and as such, should be returned to Oceanic Bank to add up to the bank’s liquid assets. AMCON in the first place was not in existence when the crime was allegedly committed and the fund recovered should be paid back to the bank’s vault to further boost its liquidity. Shareholders of the bank had warned the Economic and Financial Crimes Commission (EFCC) and CBN to stay off the funds, warning that the yet to takeoff AMCON has no moral or legal basis to appropriate the recovered funds. Ibru was sacked by the CBN along with the managing directors of four other banks on August 14, 2009 following allegations of corruption, bad corporate governance practices and mismanagement of public funds. The CBN, EFCC and AMCON have a lot of explaining to do.

Business & Economy Enterprise Bank’s staff protest, disrupts operation ...Bank blames contract staff for crisis BY MICHAEL EBOH TAFF of Enterprise Bank Limited, weekend, staged a protest at the corporate head office of the bank, disruption activities at the bank. The staff, numbering about 200, barricaded the entrance to the head office, carrying placards with various inscriptions and chanting solidarity songs amidst tight security by officers of the Nigerian Police Force who were on hand to maintain

S

law and order. The staff, mainly in the junior cadre, accused the management of the bank of reneging on the agreement it had with staffers of the bank, despite several months of negotiations and discussion. In reaction to the protest, the bank blamed the crisis on the staff of First Spring Franchise Services, FSFS, a human resource service provider of Enterprise Bank Limited, saying the staff of the company reneged on an agreement bro-

kered by the bank with their organisation to disrupt operations at the bank’s Head Office. According to Mrs. Sola LongeOkenimkpe, Head, Corporate Communications, Enterprise Bank, following a long negotiation involving representatives of national officers of Nigeria Union of Banks, Insurance and Financial Institutions Employees, NUBIFIE and the Nigeria Labour Congress, NLC, the bank and the FSFS representatives, agreements were reached as to matters of dispute, which the

workers later decided to renege on. She said, “It became a surprise to management of the bank that the FSFS staff will recant and resort to picketing the financial institution, disallowing staff and customers access to the offices and banking halls respectively, while carrying placards with denigrating remarks. “Appeals to the picketing staff by the management of the bank for more time to look at the issues have fallen on deaf ears as they have continued

with the illegality which began without due notice of the required minimum of seven days.” However, Mr. Moruf Adesanya, Chairman, NUBIFIE, Enterprise Bank Chapter, said the decision of the staff to embark on the protest is as a result of the refusal of the management of the bank to honour the agreement between both parties, adding that the management failed to honour a meeting, scheduled for Friday, October 5, 2012, between the staff and the bank. C M Y K


20 — Vanguard, MONDAY, OCTOBER 8, 2012

Cover Story Continued from page 19 would report further improvements in the major economic indicators. His optimism was hinged on the country’s daily oil production which he said averaged above 2.2 million barrels per day during the third quarter. According to him, “foreign exchange reserve has risen to $41.2 billion as at the end of September, inflation rate dropped to 11.7 per cent in August and is expected to drop further in September. Power supply has been improving and this is expected to impact on both the cost of goods and household disposable income.” Wale Oluwo, Head, Investment banking Group, BGL Securities Limited observed that at six per cent, the economic growth for third quarter was robust. He added that foreign investment inflows also appeared to have increased based on the CBN data that Nigeria recorded up to $3 billion in foreign direct inflow. However, “There is still a huge debate about the reliability of the growth data being published by the federal bureau of statistics,” he said. However, the analysts are of the view that the Sovereign Wealth Fund, the commencement of retail bond trading on the Nigerian Stock Exchange, market making and improved results expected from companies will help drive activities in the capital market in the fourth quarter. According to Onosode, the release of Q3 results by quoted companies, expectation of good 2012 financial year corporate actions, macroeconomic stability and the activities of market makers to provide liquidity for the equities market. He

said, “Also, commencement of the activities of the Sovereign Wealth Fund (SWF) as some of the fund will be invested in FGN bond and Nigerian equities. The drop in yields on fixed income securities should boost activities in the equities market. “Another major factor to expect is the commencement of retail bond trading on the floors of the NSE. The equities market still has upside potential and we expect the market to appreciate by 5.2 per cent in Q4 2012, culminating in a return of 32.05 per cent for the year 2012.” Speaking in the same vein, Wale Oluwo, said, the market is likely to benefit indirectly from the recent JP Morgan inclusion of Nigerian bonds in their emerging market index, saying that as international investors buy into Nigerian bonds, they are also likely to take advantage of the equities market window. In their own view, the analysts at ARM said, “Indeed while global markets are still C M Y K

From left: Mr Stanley Muoneke, Business Development Director; Mr. Olubunmi Ekundare, Country Manager and Mr Robinson Babatunde, Channel Development manager, all of Intel Corporation Nigeria at the launch of 'Create Your Tomorrow' campaign in Lagos. PHOTO; Kehinde Gbadamosi

Cautious optimism as monetary tightening buoys Q3 economic performance per cent but today it is at 11 driven by fundamentals, sentiments are increasingly becoming a larger factor in this risk on/risk off environment. “In our view, this increases the likelihood of an ‘event risk’ throwing markets into turmoil in Q4 2012. Thus, even as we expect continued uptick on the local bourse, looming global macro headwinds in the background could irrupt into the scene with little warning changing market perception and sparking a sell-off. “In such an environment, we believe that while quality will not be immune to such a development, they still provide better downside protection, especially if central banks respond in a concerted manner to such an event as they likely will. “As our prescription for equities will incorporate a balanced approach that maintains substantial exposure to high quality stocks but with tactical allocation to best positioned value stocks that have the strongest short-term earnings growth prospects.”

ONEY MARKET: Operators want tight monetary stance retained

M

Despite the appreciation of the naira and decline in inflation rate recorded in the third quarter of the year, money market operators said that the CBN should maintain the measures put in place to tighten money supply in the economy. It would be recalled that the apex bank in a bid to further tighten money supply in July raised the cash reserve

Nigeria is still an import dependent economy, so if we are able to pin down the naira, there won’t be imported inflation

requirement of banks to 12 per cent from 8.0 per cent. Also to reduce foreign exchange speculation the CBN reduced the amount of foreign exchange banks can hold per time or the Net Open Position (NOP) limit to 1.0 per cent of shareholder’s fund In addition to these the CBN banned banks indebted to it from trading in the interbank foreign exchange market and the interbank money market. These measures according to money market operators, though unpopular with banks were effectively in stabilizing the exchange rate and reducing the inflation rate. The exchange rate not only stabilised but also appreciated in the three segment of the market namely official, interbank and parallel market. At the official market the naira appreciated by 12 kobo as the official exchange rate dropped to N155.78 from N155.9. The naira also appreciated by N4.45 at the interbank market and by N5 at the parallel market. The inflation rate defied general expectation s as it fell to 11.7 per cent in August as against 12.8 per cent in July. “I want to say Q3 was good to us. And I am looking at the economy from two perspectives, the inflation rate and the exchange rate,

,

because these two prices are major players in any economy that depends on importation like ours”, said Mr. E. Ola, a Fixed Income and Currency analyst. He said. “In the last two months we have seen the exchange rate stabilized, we give kudos to the CBN for all its measures to stabilize the exchange rate. This has been a major driver of the inflow into the government securities that we have seen recently, because any foreign investor that wants to invest in your economy will look at the stability of the exchange rate so that by the time he wants to take exit his investment, his money is still intact. So this is what the CBN has been able to assure investors, it has said come, in the next two to three months, this is the amount of stability you are going to see in the exchange rate. This is what people require before they put their money into any economy, and if you observe, in Q3 the exchange rate was really stable and that was when we had the July MPC and the September MPC, and this has help to grow the economy. And again looking at the inflation rate, it has actually beaten everybody to it. Nobody expected it to be at 11 per cent today. We were all thinking it will be at 13 or 12.5

per cent. Nigeria is still an import dependent economy, so if we are able to pin down the naira, there won’t be imported inflation. That is why to me, Q3 was very good to us, and if we are able to gauge the inflow (of foreign exchange) that we had in Q3 compared to other quarters, we will see that inflow was quite high and that was what impacted the external reserves currently at $41.34 billion, and you will observe that we had a lot of accretion to the reserves in Q3. So if you look at it the economy, Q3 was really good and that is why I am expecting growth rate of above 7.0 per cent for the quarter.” Speaking on the outlook for the fourth quarter, Ola said, “Q4 is always very interesting. People start making preparation in October against December and again we may see some investors exiting the market towards December. Some guys will want to take their profit and exit for the year and say lets see what will happen in January. So may be after January MPC, they may want to come back. So we feel we may see a lot of volatility, and that is why we are waiting for next month’s MPC now, to see what will happen. But we are going to see a lot of pressure on the foreign exchange, because people will start opening Letters of Credits, LCs, lot of importation by manufacturers against December. So we are going to see a lot of pressure on the foreign exchange market. I don’t see the CBN dropping the MPR, in fact that is going to be the cue. If the CBN should drop the MPR there is going to be a run on the foreign exchange Continues on page 22


Vanguard, MONDAY, OCTOBER 8, 2012 — 21

C M Y K


22 — Vanguard, MONDAY, OCTOBER 8, 2012

Business & Economy

European Development Fund finances N178bn worth of projects in Nigeria STORIES BY FRANKLIN ALLI

T

he European Development Fund (EDF) is financing 890 million Euros (about N178 billion) worth of projects (trade, political and infrastructure) in Nigeria for the period 2009-2013. “This represents the largest allocation granted to an ACP country by the EU and makes the EU the biggest donor to Nigeria,” Ambassador/ Head of the delegation of the European Union to Nigeria Dr. David Macre, told journalists in Lagos. The Ambassador gave the breakdown of the above figure as follows: “EU’s support is focused in three strategic areas: peace and security, governance and human rights, trade and regional integration with 677 million euro for the periods 2009-2013; 98 million euro to support justice, anticorruption and drugs sector in Nigeria and an additional 35 million euro contract financing agreement in support of the Nigerian government’s efforts at

R-L:Head, Events & Sponsorship, Etisalat Nigeria, Ms. Modupe Thani; Chairman, Local Organising Committee, Governors Cup Lagos Tennis, Chief Pius Akinyelure, and Group head, Corporate Communication, FCMB, Mr. Ikechukwu Kalu, at the Etisalat sponsored 12th Governors Cup Lagos Tennis Press Conference, held at the Lagos Lawn Tennis Club, Lagos.

preventing and fighting corruption was signed on 19 March, 2012. “The EU is spending 80 million euro, about N16 billion

to finance the implementation of the second phase of the Water Supply and Sanitation Sector Reform Project (WSSSRP) in

Anambra, Cross River, Jigawa and Kano; Osun and Yobe. “The EU is also funding the micro-project programme in the nine Niger Delta states

with a grant of N9.2 billion under the European Development Fund. As you know stocks of EU investments in Nigeria alone amounted to no less than 30 billion euros in 2010,” he said. On why the EU was spending so much money on Nigeria, Ambassador Macare, said they want to make the country a better place, safer place, firmly anchored on the ideals of democracy and good governance. “The EU has watched with interest as Nigeria surmounts one problem after another as it grapples with challenge of development and nation building. Our interest in the affairs of the country is an abiding one, and it is rooted in the long history we share together and as well as our common aspirations for a better Nigeria where every citizens can attain their potentials. The EU will continue to support Nigeria in its quest to transit from its present state to a desired one; Nigeria has remained EU’s key partner on the African continent. For these reasons, EU’s commitment to Nigeria has been on the ascendancy in recent years,” he said. Meanwhile, the EU comprises 27 different nations, namely, France, Italy, Belgium, etc.

Cover Story Cautious optimism as monetary tightening buoys Q3 economic said that, “Going by the stability performance interbank. Since then the we have seen in power Continued from page 20 rate. What is happening in Kenya today is a good example of what we should expect. When Kenya cuts its MPR by 300 bases points to 13 per cent, we saw a run on their exchange rate. So I am very sure the CBN will be very careful about saying they want to drop the MPR. But if they maintain the MPR at 12 per cent then we should expect a full scaling for the naira.” senior bank treasurer, who spoke on anonymity, also commended the tight monetary policy stance of the CBN. He said, “The economy recorded positive performance in Q3. This is because of some policy measures put in place by the CBN which were not popular to banks but has worked. The reduction in the Net Open Position (NOP) at the meeting before the last of the MPC, the NOP was reduced from three to one per cent. We saw the effect and we have seen relative stability of the exchange rate at the

A

C M Y K

naira has not traded above N158 per dollar and CBN has also been doing N155.73, and the black market also came down to N158 from N160 and it has been there for about two months now. So this means that policy has worked. On the interest rate, yes, if you look at the securities market, they have been relatively good. Treasury bills rate have been coming down and bonds as well, rates have also been coming down. But what has majorly affected the market is the CRR, which was moved from 8.0 to 12 per cent. And what we have seen is that it has increased the cost of risk assets because it has also reduced the ability of banks to create risk assets, though I don’t think that is what we want to encourage, but somehow it has helped. We have seen that inflation is coming down because their motive is that they want to target inflation by tightening liquidity in the system and that has helped. So relatively, I think third quarter was a very good quarter. We also had a very good development, the JP Morgan Bond Index. Nigeria has been listed, the

second country in Africa, only South Africa has been listed, and on the basis of that there are indications that about $1.5 billion dollars might be coming into the Nigerian market as a form of foreign investment. So there are so many serious indications that as a result of the exchange rate that have been improving, there have been a lot of this supply, because as these investors are coming in with dollars, it is increasing the supply of foreign exchange in the market and that is why we are having this appreciation. So when you look at what happened generally, I also share the view that third quarter was very good for the country, there was a whole lot of improvement. Foreign reserves have also improved from $34 billion in the second quarter to $41 billion. That is a big jump. So there were lots of improvements.”

n the outlook for the f o u r t h quarter, he said, “I expect the Q4 to close the way we closed at Q3 because may see more improvement. The $1.5 billion JP Morgan money we are expecting is just beginning to come in. so by the time that comes

O

in, we expect that foreign exchange will improve as well. The money is coming from investors that are coming to invest in Nigeria, because we are listed on that index, which means our bond is now out there trading, and that is a boost for us, and that is why you now see foreign investors coming, because there is market for our bonds. And we have seen it happen. Bonds that were trading at a price of N98, N70, are trading at a premium now, they have gone over N100. So prices have been appreciating. I still believe it is too early in time, given that the inflationary pressure is still there, for them to drop policy rates. I think they will still keep the policy rate up there, they should still keep the policy rate. We should close the year at 12 per cent MPR, because if you act now based on this positive indices and then drop the policy rate, and we are looking at this energy cost and all that is still going to come, which means these can still take inflation up, and then you will begin to hike interest rates again. So I think they will still close the year at 12 per cent.” Reviewing the economy in the third quarter, Mr Bababtunde Obaniyi, an economic expert

generation and distribution whereby micro economic agents are beginning to reap the benefits of stable power supply, meaning that for Q3 performance, especially for manufacturing, if you had constant power, your own cost of generating should actually drop. So that boosts the profit margins for micro economic agents such as the small businesses, and they will feel the impact of this in the bottom line. So looking at macroeconomics from Q2 to Q3 this year, I think Q3 was the best, going by the statistics that has been put out, and I think the economy has the potential to sustain this growth or even surpass it in the fourth quarter because we still expect the IPPs to bring on board about 4000 mega watt. So we are very optimistic on the outlook. So I will say the economic performed really well in Q3, we were able to save more, we were able to keep the interest rate at a good level, we were able to defend our currency, and the naira gained more, we were able to keep the inflation rate. So all these key parameters showed that the economy fared well in Q3 compared to Q1 and Q3. Continued on page 27


Vanguard, MONDAY, OCTOBER 8, 2012 — 23

C M Y K


24 — Vanguard, MONDAY, OCTOBER 8, 2012

Corporate Finance BRIEFS Customer Service Week: Mainstreet Bank gets commendation

A

ctivities marking this year's Customer Service Week, CSW, of Mainstreet Bank have received accolades from its customers across the country who experienced an improvement in customer service. Customers at the various branches of the bank during the week enjoyed interaction with the bank’s top management staff as they were offered the opportunity to air their views about how to service them better and bring various requests to management's attention. Speaking on the bank’s activities in celebration of this year’s CSW, Mrs. Faith TuedorMatthews, Group Managing Director/Chief Executive Officer, Mainstreet said; “we have tagged this year ’s exercise in the bank, It’s all about US. The acronym ‘US’ means ‘Unbeatable Standards’, which is the bank’s culture change campaign slogan.

Nigerian banks’ profit to equal 10% of European counterparts — Aig-Imoukhuede

G

roup Managing Director/ Chief Executive Officer of Access Bank Plc, Mr. Aigboje Aig-Imoukhuede, has projected that Nigerian banks, by the end of year 2012, would post a total profit, which would be equivalent to about 10 per cent of the aggregate profit of all the banks in the European Union. Aig-Imoukhuede made this disclosure while addressing international investors in Lagos at the ongoing Nigeria International Investment Forum (NIIF)-sponsored by the bank in conjunction with the Commonwealth Business Council, Ministry of Trade and Investment. Explaining the comparative trend in profit bewteen Nigeria and Europe, the Access Bank MD said about five years ago when the total profit posted by all European banks was about $60 billion, all the Nigerian banks posted a combined profit of $386 million. C M Y K

*From left; Dr. Rob Haydn Davies, Minister of Trade and Industry, South Africa, Dr. Olusegun Aganga, Minister of Trade and Investment, Federal Republic of Nigeria and Aigboje Aig-Imoukhuede, Group Managing Director/CEO, Access Bank Plc at the 2nd Nigeria International Investment Forum in Lagos.

CMA to showcase opportunities in Nigeria's capital market … Partners Proshare, NSE on training BY PETER EGWUATU

T

he Capital Market Academy (CMA) London, has indicated interest to showcase opportunities and benefits that abound in the Nigerian financial system and the economy in general. The Managing Director, CMA, London, Mr. Delme Thompson in an interactive session with financial journalists disclosed that arrangement has been concluded to hold its maiden workshop in collaboration with the Nigerian Stock Exchange (NSE) and Proshare Nigeria as part of their contribution towards developing the skills of operators and investors and regulators in the Nigerian capital market and the entire financial system. The workshop which he said will start on October 8, and end on October 10, 2012 at the Lagos floor of the NSE, will cover core elements of capital markets, opportunities for Nigerian firms, foreign exchange markets, money markets, interest rates and central banks' operations, bond markets, new equity listings, exchange traded funds, financial risk management among others. According to him; “There are a lot of opportunities in the capital market and the country in general and it is my

belief that when my team interact with the operators and regulators in the capital market, we would come out with remarkable development. “We set up the Capital Market Academy as an instrument or vehicle to come alongside people in emerging markets, to help them develop their business expertise, structures and the opportunities that they want in the local market place. “This is not just going to be another training company

from London, the programme that we run is developed and designed with and for the local market place. Our vision is to come alongside emerging markets, engage the local communities, find out their needs and work alongside them to be able to have access to global standard learning so as to help them develop their potentials in their respective business areas,” he affirmed. Speaking also at the interactive session, Taba Peterside, General Manager,

Listing, Sales & Retention at the NSE said the NSE has been talking with Thompson for a while on the workshop. She stated that on the part of the NSE; “The workshop is a welcome development and no country can build up its capital market without education across the board of all market stakeholders. We at the Exchange realised that we can’t build up the market without education right across the board of the operators in the market, investors, and regulators.”

FBN Heritage Fund promises to reward investors, records 13.1% growth F

BN Heritage Fund has disclosed its readiness to ensure further reward for investors as the Fund had in the past restructured the portfolio to help investors harness the opportunities available in the equities market and money market. According to the fund manager, Mr. Michael Oyebola; “Investors in the FBN Heritage Fund should by now be counting on the gains accruing from their return on investment following an impressive price growth recorded by the fund in the last two years as well as projections for future growth by market watchers.”

An analysis of the fund’s performance since listing on the Nigerian Stock Exchange (NSE) in April 2008 at N100, showed that the fund moved from a bid price of N89.28 in 2010 to N101.01 at the close of business last week. This represents a growth of N11.73 or 13.13 per cent price appreciation. A further review of its price movement showed that the fund closed the 2011 financial year with a bid price of N90.10 compared to the corresponding year ’s bid price of N89.28. In that year, the fund outperformed the NSE All-Share Index by about 6.1 per cent, generating a

return of 0.92 per cent as opposed to the NSE ASI, which declined by 5.18 per cent. Oyebola explained that the restructuring facilitated the freeing up of investment capital for application to other investment assets. “For the money market, we positioned ourselves to take advantage of the high interest rates on both tenured deposits as well as Treasury Bills and continue to ensure that we achieve the best return possible on investments made within the confines of the asset allocation as prescribed by the Trust deed and the investment policy of the fund.”


Vanguard, MONDAY, OCTOBER 8, 2012 — 25

C M Y K


C M Y K

1.61

1.33 5.52 1.15 5.81 40.00

27.50 10.22

Livestock/Animal Specialities Livestock Feeds Plc

CONGLOMERATES Diversified Industries A.G. Levents Nigeria Plc SCOA Nigeria Plc Transnational Corporation Chellarams Plc UACN Plc

CONSTRUCTION/REAL ESTATE Non-Building/Heavy Construction Julius Berger Nig Plc Roads Nigeria Plc

10.03 36.19 3.06 2.88

25.30 42.11

8.62 0.64 0.57 3.45 11.12 1.76 0.50 14.50 3.20 19.15 1.07 0.70 1.15 3.18 0.88 7.20 1.60 4.50 7.51 0.50 0.50 16.30

0.57 0.71 0.50 0.50 0.50 1.40 0.50 0.50 0.50 1.55 0.50 0.61 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.54 0.52 0.50 0.50 0.50 0.50 0.50

0.50 0.50

0.50 2.02 0.60

Household Durables Beta Glass Co Plc Nigerian Enamelware Plc Vitafoam Nig. Plc Vono Products Plc

Personal/Household Products PZ Cussons Nigeria Plc Unilever Nigeria Plc

FINANCIAL SERVICES Banking Access Bank Plc Afribank Nigeria Plc Bank PHB Plc Diamond Bank Nigeria Plc Ecobank TRANSNATIONAL INCORPORATION Fidelity Bank Plc FinBank Plc First Bank of Nig. Plc First City Monument Bank Plc Guaranty Trust Bank Plc NPF Micro-Finance Bank Plc Intercontinental Bank Plc Oceanic Bank International Plc Skye Bank Plc Spring Bank Plc Stanbic IBTC Bank Plc Sterling Bank Plc UBA Plc Union Bank Nig. Plc Unity Bank Plc Wema Bank Plc Zenith Bank Plc

Insurance Carriers, Brokers and Sector AIICO Insurance Plc Continental Reinsurance Plc African Alliance Insurance Cornerstone Insurance Company Consolidated Hallmark Insurance Custodian and Allied Insurance Plc Equity Assurance Plc Goldlink Insurance Plc Great (Nig) Insurance Plc Guaranty Trust Assurance Plc Guinea Insurance Plc Intercontinental Wapic Insurance Plc International Energy Insurance Plc Investment and Allied Assurance LASACO Assurance Plc Law Union & Rock Insurance Plc Linkage Assurance Plc Mutual Benefits Assurance Plc NEM Insurance Co. (Nig) Ltd Niger Insurance Co. Plc OASIS Insurance Plc. Prestige Assurance Co. Plc Regency Alliance Insurance Sovereign Trust Insurance Staco Insurance Plc Standard Alliance Insurance UNIC Insurance Plc Universal Insurance Plc

Mortgage Carrier, Broker and Sector Aso Savings and Loans Plc Resort Savings & Loans Plc

Other Financial Institutions Crusader (Nigeria) Plc Deap Capital Management & Trust Plc Royal Exchange Assurance

0.50 2.02 0.63

0.50 0.50

0.68 0.76 0.50 0.50 0.50 1.38 0.50 0.50 0.50 1.60 0.50 0.61 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.52 0.50 0.50 0.50 0.50 0.50 0.50

8.51 0.64 0.55 3.60 11.00 1.87 0.50 14.85 3.15 20.15 1.07 0.70 1.15 3.26 0.88 7.30 1.59 4.70 8.41 0.50 0.50 17.10

25.77 41.81

10.03 34.39 3.40 2.88

27.56 615.00

0.50

23.95 580.00

Food Products-- Diversified Cadbury Nigeria Plc Nestle Nigeria Plc

8.25 5.25 64.99 2.30 5.91 0.70

39.00

0.50

8.55 4.99 61.67 2.28 5.77 0.79

Food Products Dangote Flour Mills Plc Dangote Sugar Refinery Plc Flour Mills Nigeria Plc Honeywell Flour Mill Plc National Salt Co. Nig Plc UTC Nigeria Plc

5.19

39.00

Beverages-Non-Alcoholic 7-UP Bottling Company Plc

3.62 277.20 14.00 139.85 0.89

0.50

100.00

10.92

29.00 10.60

1.38 5.42 1.15 5.81 40.06

1.58

0.50 35.70 15.28

0.50

Closing Price (N)

5.46

3.44 260.00 12.98 137.00 0.89

Beverages-Brewers/Distillers Champion Breweries Plc Guinness Nigeria Plc International Breweries Plc Nigerian Brew Plc Premier Breweries Plc

HEALTHCARE Medical Supplies Morison Industries Plc Healthcare Providers Union Diagnostics & Clinicals Services

0.50

100.00

Real Estate Investment Trusts Skye Shelter Funds CONSUMER GOODS Automobile/Auto Parts DN Tyres & Rubber Plc

10.92

0.50 37.01 15.00

1st fTier Securities AGRICULTURE Crop Production FTN Cocoa Processors Plc Okomu Oil Palm Plc Presco Plc

Real Estate Development UACN Property Development

0.50

Oil and Gas and Products Petroleum Products Capital Oil Plc

Company

Opening Price (N)

Capital Market

300,000

50,000

78,000 60,000 1,223,967

100 1,011,000

17,873,306 11,437,800 1,000 7,100 6,200 23,064,000 11,000 32,561,494 2,000,000 1,698,475 20,000 1,172,778 2,749 1,670,890 12,600 20,590 1,000 800,000 3,145,112 100,300 40,000 1,763,468 55,000 40,000 50,200 100 1,000 533,100

91,554,358 646,608 13,287,533 13,050,731 462,662 14,167,856 1,000 42,426,490 2,218,755 2,218,755 56,000 73,200 91,000 8,932,847 1,006,032 1,707,215 4,571,930 8,611,612 3,782,171 9,000 450,000 5,003,932

1,330,522 289,440

225 10,620 4,127,844 11,923

2,060,923 78,398

4,415,217 8,502,782 414,192 772,467 687,103 269,000

34,883

104,948 275,739 251,400 2,109,411 1,000

49,515

2,000,000

102,000

298,140 15,500

707,127 264 30,436,700 100 2,209,687

1,082,800

909 366,621 192,000

20,000

Quantity Traded

0.50

10.54

0.61 2.02 0.66

0.50 0.50

1.06 1.20 0.50 0.50 0.50 3.51 0.50 0.69 0.50 0.95 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.90 0.50 2.50 0.50 0.50 0.50 0.50 0.50 0.50

11.10 3.39 2.30 9.27 4.30 3.20 9.50 16.12 8.30 20.50 1.78 1.78 13.50 10.17 2.18 11.38 2.91 11.70 5.38 1.92 1.75 16.70

43.50 31.25

15.58 42.66 6.75 3.67

29.20 470.00

19.90 16.20 95.00 6.60 6.70 0.88

51.49

0.50

9.52

0.50 2.02 0.50

0.50 0.50

0.50 0.85 0.50 0.50 0.50 2.00 0.50 0.50 0.50 0.95 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 1.90 0.50 0.50 0.50 0.50 0.50 0.50

4.26 0.64 0.53 2.05 1.65 1.20 0.00 7.95 3.60 11.64 0.00 0.87 0.00 3.90 0.73 6.30 0.95 2.17 1.96 0.50 0.52 11.45

27.00 22.56

12.71 36.19 4.78 2.66

10.17 367.83

4.31 4.02 57.00 2.31 3.80 0.50

,39.00

2.23 186.00 5.23 72.50 0.93

4.63

0.50

97.00

11.59

32.96 3.01

1.45 5.52 0.50 6.43 28.70

0.48

0.50 14.53 6.40

Year Low

255.00 7.10 100.00 1.01

0.50

100.00

20.15

62.26 8.28

2.54 8.28 1.82 7.60 42.50

0.66

0.64 24.58 8.30

Year High

0.00

0.00

0.00 0.00 0.03

0.00 0.00

0.09 0.10 0.00 0.00 0.06 0.43 0.00 0.00 0.00 0.08 0.00 0.00 0.00 0.02 0.06 0.10 0.00 0.36 0.36 0.01 0.01 0.14 0.03 0.07 0.00 0.00 0.00 0.00

0.80 0.00 0.00 0.00 0.28 0.22 0.00 1.34 0.69 1.61 0.00 0.18 0.00 0.85 0.50 0.54 0.22 0.13 7.59 0.11 1.34 1.57

1.29 1.32

3.90 1.61 0.70 0.00

0.28 15.94

0.54 0.71 4.50 0.26 0.73 0.06

3.70

12.12 0.35 4.50 0.00

0.00

0.00

11.75

1.66

3.26 3.66

0.28 0.35 0.22 0.31 7.03

0.04

0.01 7.94 1.80

E.P.S.

0.00

0.00

0.00 0.00 16.67

0.00 0.00

5.56 10.20 0.00 0.00 8.33 4.88 0.00 0.00 0.00 17.25 0.00 0.00 0.00 25.00 8.33 5.00 0.00 1.39 1.39 50.00 50.00 6.43 16.67 7.14 0.00 0.00 0.00 0.00

5.83 0.00 0.00 0.00 25.91 6.68 0.00 6.96 6.20 8.74 0.00 5.44 0.00 5.07 5.44 14.81 4.68 19.23 0.28 4.82 0.43 7.83

20.93 20.46

3.26 22.48 7.34 0.00

37.57 27.96

16.91 14.38 16.89 16.92 5.75 8.83

13.92

19.98 16.29 22.22 0.00

0.00

0.00

8.51

7.33

10.11 2.26

5.18 15.77 3.64 20.74 4.14

15.00

50.00 2.77 4.37

P.E. Ratio

0.50

Processing Sysetms Chams Nigeria Plc

0.59 11.60 20.50 0.50 19.70 2.42 10.50 115.00 32.29 130.00

OIL AND GAS Energy Equipment and Services Japaul Oil & Maritime Service Intergrated Oil and Gas Services Oando Plc Petroleum and Petroleum Products African Petroleum Plc Beco Petroleum Plc Conoil Eterna Oil and Gas Plc Forte Oil Nig Plc Mobil Oil Nigeria Plc MRS Oil Nigeria Plc Total Nigeria Plc

4.90 2.17 5.75

Speciality Interlinked Technologies Plc Transport-Related Services Airline Services and Logistics Plc Nigerian Aviation Handling Company

0.50

1.57 2.01 4.20 4.55 Road Transportation Associated Bus Company Plc

0.50 Printing & Publishing. Academy Press Plc Learn Africa Plc Longman Nigeria Plc University Press

6.50 1.04

0.50

3.00

1.97 1.86

0.50

Media/Entertainment Daar Communications Plc

Hotels/Lodging Capital Hotel Ikeja Hotel Plc

Courier/Freight/Delivery Red Star Express Plc Employment Solutions C & I LEASING PLC

Automobile/Auto Part Retailers Incar Nig. Plc RT Briscoe Plc

Afromedia Plc

SERVICES

0.50

3.98 12.71 13.28 4.30 1.05 2.92 0.66

INDUSTRIAL GOODS Packaging/Containers Abplast Products Plc Beta Glass Co. Plc Greif Nigeria Plc Nampak Nigeria Plc Poly Products (Nig) Plc Studio Press (Nig) Plc W.A. Glass Ind. Plc

Hospitality Tantalisers Plc

1.44 0.50

Mortgage Carriers, Brokers and Se Abbey Building Society Plc Union Homes Savings and Loans

2.21 0.50

1.38

Paper/Forest Products Thomas Wyatt Nig. Plc

Electronic and Electrical Products Cutix Plc Nigerian Wire & Cable Plc

0.50

Non-Metalic Mineral Mining Multiverse Plc

5.98 10.55

Metals Aluminium Extrusion Ind Plc

8.26

2.09 1.91

15.10 8.01 28.90 4.90 123.00 0.50 1.06 56.00 3.18 1.90 10.93

NATURAL RESOURCES Chemicals BOC Gases Plc

Tools and Machinery Nigerian Ropes Plc

Packaging/Containers Avon Crowncaps & Container Nigerian Bags Manufacturing Company

INDUSTRIAL GOODS Building Materials Ashaka Cement Plc Berger Paints Plc CAP Plc Cement Co. of Northern Nig. Plc Dangote Cement Plc First Aluminium Nigeria Plc DN Meyer Plc Lafarge WAPCO Plc Portland Paints & Products Nig Plc Paints & Coatings Manufacturers Premier Paints Plc

0.50

0.50 13.77 2.41

IT Services NCR (Nig) Plc Tripple Gee and Company Plc ICT Telecommunications Starcomms Plc

0.50

Computers and Peripherals Omatek Ventures Plc

5.05 1.15 1.09 36.00 1.65 1.15 8.59 3.02

ICT Computer Based Systems108 Courteville Investment Plc

Pharmaceuticals Ekocorp Plc Evans Medical Plc Fidson Healthcare Plc Glaxo Smithkline Consumer Nig May & Baker Nigeria Plc Neimeth International Pharm Nigeria-German Chemicals Plc Pharma-Deko Plc

Opening Price N

2.16 5.92

4.90

0.50

1.94 2.11 4.20 4.11

0.50

6.60 1.17

0.50

3.00

1.97 1.71

0.50

0.50

20.50 0.50 20.68 2.21 10.20 115.00 30.68 130.00

12.74

0.61

3.98 9.53 13.28 4.30 1.05 2.78 0.66

1.44 0.50

2.23 0.58

0.50

1.38

0.50

10.55

5.69

7.85

1.99 1.81

16.75 8.01 29.00 5.20 118.50 0.50 1.27 56.26 3.15 1.95 10.93

0.50

13.77 2.41

0.50

0.50

5.05 1.19 1.14 38.00 1.61 1.38 8.85 3.02

Closing Price N

12,000 374,917

20

81,232

266,815 119,125 4,322 201,741

10,000

800 344,722

1,657,120

278,000

240 187,900

1,570

50

82,191 200 38,795 199,240 221,608 36,656 60,000 17,312

2,129,747

3,298,317

6,888 1,047,843 100 29,198 200 84,311 2,749,340

2,000 1,000

439,148 15,000

13,870

1,000

5,000

5,000

70,000

10,000

55,484 2,357,539

1,198,240 9,656 25,851 457,525 61,935 10,374 13,456 343,627 3,167,600 50,000 1,000

2,307,692

14,498 5,011

103,400

767,300

1,000 250,667 4,066,830 36,060 355,225 423,782 1,927 100

Quantity Traded

Stock Market Report

0.51

2.78 11.75

5.15

0.80

1.57 6.50

4.90

0.50

3.17 4.60 3.60

3.68

0.48

3.00 1.33

0.90

2.65

1.97 1.30

8.00 6.82

0.50

400 2.07

1.64

3.67

4.33 3.65

0.72

539,000

141.00 63.86 195.50

163.50 2,100 240.00

27.99 0.50 0.50 5.71 3.89

1.87

3.98 12.71 13.97 3.60 1.05 2.92 0.63

1.33 0.50

1.62 2.58

0.50

1.38

0.50

10.70

6.80

8.26

5.94 1.47

12.00 8.10 15.16 4.16 95.00 0.50 1.02 36.58 5.11 0.51 10.93

0.50

3.25 3.25

0.50

0.50

5.31 0.70 0.83 2.58 3.61 0.95 0.95 4.28

Year Low

37.10 0.70 32.60 5.59

78.97

0.97

3.98 15.58 15.03 4.30 1.86 2.92 0.63

1.51 0.99

2.50 2.58

0.50

1.38

0.50

12.39

9.20

8.69

6.91 3.60

30.00 12.57 43.98 15.49 132.51 0.75 3.51 48.05 5.28 3.36 13.40

1.47

9.31 3.59

0.50

0.52

5.31 1.45 3.20 23.11 5.61 1.96 12.91 200

Year High

0.87

0.51 0.80

0.00

0.00

0.00 0.13

0.26

0.00

0.22 0.69

0.08

0.54

0.00 0.16

0.04

13.32 3.32 11.91

4.93 0.00 6.02 0.67

6.95

0.16

0.00 3.90 0.00 1.22 0.17 0.07 0.00

0.05 0.00

0.13 0.00

0.00

0.00

0.00

0.13

0.93

0.00

0.15 0.19

1.59 1.71 1.76 1.80 8.01 0.00 0.00 1.05 0.36 0.18 0.00

0.00

6.49 0.00

0.04

0.05

0.06 0.00 0.27 8.88 0.21 0.08 0.00 0.00

E.P.S

4.22 8.75

0.00

0.00

0.00 27.69

12.19

0.00

34.09 2.12

11.25

4.91

0.00 8.19

12.75

11.11 19.23 17.07

6.99

7.40 0.00

4.17

6.06

0.00 3.26 0.00 3.52 6.18 41.71 0.00

28.80 0.00

13.15 0.00

0.00

0.00

0.00

85.77

7.37

0.00

39.60 9.16

7.86 4.97 8.88 2.31 13.17 0.00 0.00 42.86 14.19 2.89 0.00

0.00

1.43 0.00

12.50

10.00

9.05 14.13 0.00 0.00

88.50 0.00 3.07

P.E Ratio

as at Friday, October 5, 2012

26 — Vanguard, MONDAY, OCTOBER 8, 2012


Vanguard, MONDAY, OCTOBER 8, 2012 — 27

Cover Story Cautious optimism as monetary tightening buoys Q3 economic performance Continued from page 22

EAL SECTOR: NACCIMA scores R trade & investment sector low

Nigeria Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), scored the performance of Trade and Investment sector of the economy abysmally low, saying: “The sector has not reached the desired potential in the past thirteen years. In a review of the economy in nd the third quarter/52 independence anniversary of Nigeria, the National President of NACCIMA, Dr. Ademola Ajayi, noted: “Critical analysis of Nigeria’s trade & investment sector since 1999 till-date, showed that despite government’s efforts the sector is yet to meet the expectations of Nigerians and the business community. “For over 13 years of Nigeria’s democracy, the trade & investment sector has not reached the desired potential as about 50 per cent of the population still languish in abject poverty as they live below the poverty line of US$ 1.25 a day, while Nigeria is still ''fire fighting'' in meeting the several provisions of the Millennium Development

Goals (MDGs), including ensuring gradual reduction of poverty by 50 percent come year 2015.” “Available information to us revealed that while the nation witnessed various Government’s initiatives, programmes and reforms at the three levels of Governance to drive their Agenda, a lot of energy was dissipated on self inflicted crisis management while at the same time we continue to struggle with the “bubble-bust” pattern characteristic of past oil price cycles, the resultant impact on the national economy is yet to translate to the favourable result/outcome expected by the business community and the masses at large.” On development that impacted on the sector, he pointed to macro-economic development, saying:” The following indicators speak for themselves: Exchange Rate, since 2012 stabilized within a band of N155 and N161: US Dollar; inflation rate went up from 10.3 per cent in December 2011 to 11.7 percent in August, 2012. Similarly, interest rate remained double digit, hovering between 17 percent and 28 percent as against a single digit

rate anticipated by business operators. Some Banks are already offering single digit interest rate to SMEs; and capacity utilisation in real sector manufacturing production hovers around 45 per cent. “NACCIMA believes that the on-going economic reforms programmes of the Federal government and state government when fully

implemented would definitely open up numerous trade and investment opportunities. "Already, foreign investors have taken advantage of the reforms in such areas as the telecommunication sector, and the power and energy sector. NACCIMA and other chambers of commerce are willing and prepared to provide relevant business

information and assistance on the request to foreign investors visiting and wishing to do business with the Nigerian counterparts, in promoting such mutually rewarding business relationships; NACCIMA hopes to work in partnership with any willing research institutions, equipment and line manufacturers to drive their initiatives to success,” he said.

From left: Chaiman, Marketing and Sponsorship of the 18th National Sport Festival Eko 2012, Chief Omolade Okoya Thomas, Managing Director/CEO, Nigerian Breweries Plc, (NB) Mr. Nicolaas Vervelde and Corporate Affiars Adviser, NB, Mr. Yusuf Ageni, during the presentation of Sponsorship cheque of N10,000,000 to suport the 18th National Sport Festival Eko 2012 by NB Plc, held in Lagos.

C M Y K


28 — Vanguard, MONDAY, OCTOBER 8, 2012

Interview

CBN should con on workability o economy — Ug EMEKA Ugwu-Oju is an economist, a former bank executive and the President of South-East/South-South Professionals of Nigeria, SSPN.

*Mr. Emeka Ugwu-Oju...Corruption will always thrive in an environment that tolerates cronyism and arbitrariness

By CHARLES KUMOLU

A

London-based Tax Justice Network recently released a report saying that Nigeria recorded N233.9 billion in capital flight in the last four decades. What is your view on this, especially when viewed against various issues capable of eroding investors’ confidence, like the fuel subsidy scam? Corruption is presently endemic in Nigeria and most proceeds of corrupt acts end up as foreign assets in Swiss Bank accounts and Real estate in Dubai,etc. The purported attempt to bribe the former Chairman of EFCC by a former state governor with the sum of $15 million in cash which resurfaced recently in the news, highlights our level of degeneration. Corruption C M Y K

will always thrive in an environment that tolerates cronyism and arbitrariness. The fuel subsidy scam is therefore not surprising; it should be removed now. We should find transparent means of subsidizing the needy instead of enriching the fat cats in the guise of fuel subsidy. Corruption in our nation will be minimized through greater accountability, transparency and value reorientation.

W

hat do you think is the economic implication of the controversy generated over the move by CBN to restructure the currency and the fact that it has been suspended? In my personal view, the debate about the N5,000 note was an unnecessary distraction, most especially to Mr. President. A simple administrative matter that

It is very obvious to any discerning observer that the South East economy is currently public sector driven. The state and local governments are the main employers of labour in the formal economy and this is of course an aberration in an area where the people are very entrepreneurial and market oriented

should be handled by the CBN had through miscommunication, turned into a major political problem for the President. An impression was created that whether most Nigerians like it or not, the President has approved the issuance of the N5, 000 denomination. The present reality in our political environment is the presence of trust deficit between the people and the

,

government which was exacerbated by the manner the attempt to remove fuel subsidy was handled by the Federal Government in January. Most Nigerians, including my humble self, supported the removal of fuel subsidy, but the problem is the manner the removal was handled. The Federal Government was beginning to regain some

credibility with the improvement in the power supply, then this distraction. Most Nigerians rightly or wrongly believe that the introduction of the N5,000 notes at the moment is wrong, since in their view, the CBN should concentrate on ensuring the workability of the transition to a cashless economy which is presently facing major implementation problems. To make matters worse, the CBN Governor publicly castigated a former President of the Federal Republic of Nigeria for speaking against the introduction of the N5,000 note. I really wonder if the Chairman of the US Federal Reserve Bank would publicly talk to a former President of USA in that manner. Coming back to my view about major distractions to the President, I am really beginning to wonder what is really happening. First was the handling of fuel subsidy removal.Then the politics of 2015 even before Mr. President had spent one year in office by some misguided folks who should know better. Most recently, the Governor of Jigawa State could not accompany the President during his visit to Malawi even though it was public information that he and the Governor of Edo State were to be on the entourage. We heard that an official at the Presidency made it impossible for him to accompany the President because of his rumoured intention to vie for the office of the President in 2015 with the Governor of Rivers State. I sincerely hope that these unnecessary distractions should stop so that the President will focus on his transformation agenda.

H

ow do you rate the


Vanguard, MONDAY, OCTOBER 8, 2012 — 29

Interview

ncentrate of cashless gwu-Oju

economy is way below its potential and this is a situation that should be reversed. However, I know that the organised private sector and the various state governments in the South- East are strategizing on ways to grow the economy. A South-East Economic Summit is scheduled to take place soon. Also, the setting up of the South-East Nigeria Economic Commission (SENEC), which will be a major vehicle for public and private sector collaboration, is progressing.

W

We should find transparent means of subsidizing the needy instead of enriching the fat cats in the guise of fuel subsidy. Corruption in our nation will be minimized through greater accountability, transparency and value reorientation

,

economy of the South-East vis’a vis the allegation that it contributes only about five per cent to the country’s economy, especially as you are the President of the SSPN? It is very obvious to any discerning observer that the South-East economy is currently public sectordriven. The state and local governments are the main employers of labour in the formal economy and this is of course an aberration in an area where the people are very entrepreneurial and market-oriented. Amy Chua, the famous Yale economist in her New York Times Bestseller book, World on Fire, published in 2003, noted that the Igbo (indigenous ethnic group of South-East Nigeria) were known as the “Jews of Nigeria” and ‘are famous the world over for being an unusually driven and enterprising “trader” minority.’ It follows that for the SouthEast which is inhabited mostly by the Igbos to have its economy dependent mostly on the public sector, something must be fundamentally wrong. The main reason for this anomaly is that majority of Igbo entrepreneurs are no longer resident in the SouthEast as a result of the unfavourable local business environment. The main driver of the

Nigerian economy at the moment is the production and sale of crude oil and gas controlled by the Federal Government whose plans and policies have over time adversely affected the SouthEast and many other parts of Nigeria. Recently, an Enugu State association of professionals named the Hill Top Club placed an advertorial in major dailies detailing how the proposed Nigeria Gas Infrastructure Master-plan will bypass the South-East if implemented as it is. The result will be that energy-intensive industries will not be located in the South-East. Another reason for the poor state of the SouthEast economy is the preponderance of dead capital in the form of real estate that could not generate income or used as collateral. Many houses costing billions of Naira are decaying in many villages in the South- East because the owners live outside the zone and the houses in most cases, cannot be let out. This huge amount of money could have been invested in productive activities that will boost the South-East economy. The prevalence of this huge unproductive real estate is as a result of the bitter experience of many Igbos who were forced to return to the South-East during the 1966 crisis and could not find homes to stay. In my view, the South-East

hat are the implications of the recent commissioning of the Onitsha seaport by the President to the economic growth of the South-East? Water transportation is the cheapest mode of moving goods and people and any means of lowering the cost of production has the potential of impacting positively on economic growth. The Onitsha River Port was commissioned in 1983 by the then President of Nigeria, Alhaji Shehu Shagari, but was not put to use. In line with the Transformation Agenda of the current Federal Government, the Onitsha River Port was upgraded and renovated, hence the recent commissioning by Dr. Goodluck Ebele Jonathan, President of the Federal Republic of Nigeria. If properly utilised, the port will enhance economic growth in the South-East. The challenge becomes the usability. If there is a river port and the complementary road and rail network are nonexistent or inadequate, the port will not realise its potential. The present road network in the South-East, most especially the federal roads, are in very deplorable state and the rail network is virtually nonexistent. I met with the F e d e r a l Minister o f

Works, Arc Mike Onelememen during the commissioning of the port, he confirmed that the contracts for the rehabilitation of Onitsha - Enugu road and Port Harcourt - Enugu road has been awarded and the contractors are waiting for the rain to stop before commencing work. We will wait and see. The Federal Government is planning to finance the reconstruction of dilapidated roads and erosion projects in the South-East under concessionaire arrangement whereby the money will be recouped from tolls. Can you comment on this? Road, bridge and tunnel tolling are global but vary from country to country. A common feature is that tolling should be affordable to majority of users and nontolled alternatives provided. It is in that context

that we would examine road and bridge concessions in the South-East, be it federal, state or local government owned. I am yet to see the details of the South-East federal roads concession arrangement, so it will be inappropriate to make any specific comment. Your organisation in 2005 adopted a comprehensive framework for the Lower Niger Basin Development. What has happened to the plan? The Lower Niger Basin Development Initiative being promoted by the South-East/ South-South Professionals of Nigeria is very much on course. We have been consulting with all the major stakeholders in both the public and private sectors in the South-East and SouthSouth zones and by the first quarter of next year, we will be hosting a South-East/ South-South Development Forum tagged From Talk to Action, which will crystallize the SouthEast/South-South Development Integrated Action Plan. The SouthEast Nigeria Economic Commission (SENEC) and the BRACED Commission, the major drivers of publicprivate partnership in the two zones, are on the same page with us.

*Mr. Emeka Ugwu-Oju C M Y K


30 —Vanguard, MONDAY, OCTOBER 8, 2012

Housing Finance BRIEFS FG committed to Festac Town restoration inister of Lands, Housing and Urban Development, Ms Ama Pepple has raised fresh hopes of presidential intervention towards restoring Festac Town in Lagos to its former glory. Leading a team of officials, including the Managing Director of Federal Housing Authority (FHA), Mr. Terver Gemade, on an inspection of the sprawling housing estate recently, Pepple said President Goodluck Jonathan was disturbed by reports of the decay of the estate. She said the inspection was to enable her team assess the situation and report back to the President. The minister expressed concern over the collapse of the central sewage system in the estate and the total takeover by squatters of the buffer zone meant to shield the estate from the busy Lagos-Badagry Expressway. She however expressed delight that the roads in the estate were being gradually rehabilitated through collaboration between the Federal Housing Authority (FHA) and the Amuwo Odofin Local Government.

M

US mortgage rates slide continues ortgage rates reached an all-time low for the second consecutive week in US amid the Federal Reserve’s purchase of securities and “indicators of a weakening economy”. According to Freddie Mac, the weekly average for the 30year fixed-rate mortgage in the U.S. fell to 3.36 percent for the week ending Oct. 4, down from 3.4 percent the previous week and 3.94 percent a year ago. The 15year fixed-rate mortgage dropped to 2.69 percent from 2.73 percent last week and 3.26 percent a year ago. Last month, the Federal Reserve announced a stimulus measure of quantitative easing, saying it anticipates low interest rates through mid-2015. “Fixed mortgage rates fell again this week to all-time record lows due to the mortgage securities purchases by the Federal Reserve and indicators of a weakening economy,” said Frank Nothaft, vice president and chief economist of Freddie Mac, in a statement. Those economic indicators included a lower-thanexpected revision of growth in GDP, down to 1.3 percent for the second quarter.

M

C M Y K

Mortgage system in Nigeria works only on paper – Bode Adediji these things originated are to go by, an average landlord and tenant who pay the land use charge, should be able to be told specifically the benefits that are derivable in terms of what the government spend these money upon with specific reference to the locality of points of connection. In my home in London, annually they will tell you how much they are paying to collect refuse dumps, to sweep the streets, to cut the trees in the summer and to maintain security. And where these costs rise, my tenement rates rise and if these costs come down, my tenement rates come down. Unfortunately, you pay land use charge when you are still the provider of your refuse collection, your water, your security etc. that is the inherent social injustice in the entire context of the land use charge.

By YINKA KOLAWOLE

I

n this interview with Vanguard, Mr. Bode Adediji; Managing Partner, Bode Adediji Partnership, a firm of estate surveyors and valuers, also a former National President of Nigerian Institution of Estate Surveyors and Valuers (NIESV), spoke on sundry issues relating to the built environment. Excerpts: Should government be directly involved in housing development? A nation that has been confronted with the quantum of housing problems we now face, epitomised by 15 million housing deficit, cannot ignore any approach from whatever source that can ameliorate the ugly situation. In recent past, the clamour has been for government to hands off direct housing provision. But to the extent that the state governments have not created the enabling environment that will enable the private sector to solve this problem, to be in the acceptable time frame and price regime, then, it will not be out of place if the much talked about public private partnership is put in the front burner of housing delivery.

A

part from availability of land, what other roles can government play? I want to re-emphasize that even though the present housing minister has succeeded in rolling out a new national housing policy, the problem of Nigeria with housing has nothing to do with paper work like having quality land tenure system etc. It is a wide range of issues, for instance, it is within the capacity of any government anywhere in the world to roll out a workable, liberal, non-elitist and virile mortgage system. Has Nigeria done so? No. The mortgage system in Nigeria works on paper and governmental sloganeering than anything tangible you and I can access and verify. So, a nation of 150 million people lacking a virile mortgage system will only continue to lament about housing crisis. Your view about Lagos HOMS The Lagos state Home Ownership Mortgage Scheme (Lagos HOMS) is a workable development. And that is why I keep telling people that even if the Lagos state government meant well in that, there are a whole lot of issues that must be executed simultaneously. For

L

Bode Adediji, former NIESV President

A nation of 150 million people lacking a virile mortgage system will only continue to lament about housing crisis

example, what has this country done by way of revolution to bring down the cost of construction? Nothing, apart from talking about it. That is, even if you have a serious mortgage instrument operating in the country. Unless we are able to build houses that the generality of Nigerians can afford, by way of combined equity and mortgage, solution to housing will remain elusive. Another issue is that every construction planning in the country is so bureaucratic, extensive and discouraging. And from one regime to another, pronouncements have been made but nothing tangible has been done to dismantle the appalling regimes of bureaucratic cases of construction and housing law. s the Lagos State land use charge good for property investment? There is nothing wrong, abnormal or novel about the land use charge. What happened was that the way it was done some years back, people like me and other

I

,

serious minded professionals, complained bitterly about it. But thank goodness, today many aspects of our complaint have been addressed. You have a situation where a civil servant borrow money to build a house in Vitoria Island, and now occupies a wing of a duplex, and the land use charge being demanded at the inception of this law was ten times the annual income, because the adviser and originator of the land use charge is a foreigner, who have little or no knowledge at all as to the contemporary practices of land administration in Nigeria and the income spectrum of the people. The only issue we complained about is that the assessment and the administration should not be a matter to be left in the hand of government officials alone. The input of the people in terms of the collection and the administration of this charges, is important to the success of the programme. Also, if the experiences of the western world where many of

agos tenancy law, a year after The Lagos state governor, Mr. Raji Fasola, meant well for the state by attempting to intervene in the tenant/ landlord environment largely peculiar to Lagos state. However, the lawmakers failed to make wider consultations and in specific terms, there was no solid involvement of the professional body called the Nigerian Institution of Estate Surveyors and Valuers {NIESV) in that regard until that law was passed. Unfortunately the first seminar held by this noble body, and attended by our respected Attorney General of Lagos state, it was obvious that if such professional body had been carried along, all the areas of abnormality which today have hindered the smooth implementation and operation of that law would have been avoided. However, like an open minded government that the Lagos state government is, we have been assured that the law will be amended within a very short time. It is only incumbent on the pressure groups and all stakeholders to ensure that all these areas are presented to the government for timely consideration and amendment. But I must reemphasize that as a professional person, I am a supporter of the principle behind the law, even certain aspects of it are still tenuous and debatable. In view of recent cases of ocean surge, how safe is Victoria Island? In terms of my knowledge regarding the cycle of ocean surge in VI in the last 31 yrs, I will say that VI is relatively safe to a large extent.


Vanguard, MONDAY, OCTOBER 8, 2012 — 31


32— Vanguard, MONDAY, OCTOBER 8, 2012

Housing Finance BRIEFS Nasarawa set to issue new C of O asarawa State government will commence the issuance of new Certificates of Occupancy (C of O) to property owners this month, as part of the ongoing reforms of administration and management of lands in the state. Commissioner for Lands and Housing, Mr. Sonny Agassi, noted that the recertification is in line with the plan to completely phaseout the old system of land administration and management in the state. He said that the new C of O is a single sheet with security features, and will have the governor ’s signature only once, as that of the Deeds Registrar. Agassi said Nigerian Security and Printing Company is handling the printing of the new certificates, which will eliminate the old and bogus certification where the governor had to sign about thirteen places on about seven pages. “The new certificate will make it easy for the governor to sign hundreds in a day, without feeling it. It will also make physical records keeping neater, and easier, unlike now when we are compelled to carry bogus files because of several pages of the certificate”, Agassi said.

N

UK house prices fell in September ouse prices fell for the third month in a row in September according to Halifax, one of the UK’s biggest mortgage lenders. Its latest monthly survey suggests that average prices dipped by 0.4 percent last month compared with August. This latest fall means that the average UK house now costs £159,486, which is 1.2 percent lower than at the same point a year ago. Halifax said the recession was the main reason for the market’s doldrums. “Overall, there has been very little change in the average UK house price so far this year. There is, nonetheless, evidence of a slight deterioration in the trend recently with prices in the three months to September 0.5 percent lower than in the previous quarter. We expect house prices to be broadly unchanged over the rest of this year and into 2013,” said Martin Ellis, Halifax’s housing economist The recent market survey by Nationwide Building Society portrayed a very similar picture. It said prices were now £159,486 on average and were 1.2 percent lower than a year ago.

H

C M Y K

A seaside estate

Lagos builders seek safety of construction workers By MIKE EFFIONG

T

he Lagos State chapter of Nigerian Institute Of Builders (NIOB) is seeking concerted efforts to ensure the health and safety of workers at various construction sites in the state. This was the focus of the annual general meeting of the institute recently held in Lagos, with the theme: ‘Health and Safety in Construction’. Experts, who spoke at the AGM, emphasised the need for stakeholders to look into health and safety issues before, during and after construction. Chairman of the occasion and Oyo State Commissioner for Agriculture, Natural Resources and Rural Development, Mr Bimbo Kolawole, remarked that every effort must be made to ensure safety consciousness on the part of everyone involved in the construction industry. He called attention of all professionals within the building environment to engender pro-active measures that will facilitate safety among construction workers, investigate the current state of compliance with health and safety standards and rules on sites, as well as encourage

everyone involved in building to strive towards achieving zero tolerance for hazards and looses. He also called for the study of the rules of builders on health and safety as stated by the National Building Code (NBC). In his opening speech, chairman of the Institute, Mr Jelili Akinpelu, stressed the need for new ideas to be injected in to health and safety practices to reposition the

construction industry. “I have keenly observed with interest the current state of health and safety (H/S) management practices in the construction industry, and therefore, it becomes apparent and imperative for a paradigm shift in attitude, and for everyone to quickly inject new ideas and reposition the H/S practices in the construction industry in line with the vision and mission of the built

environment and professionals for the benefit of our nation,” he said. Akinpelu further declared that the danger in the construction industry should prompt strict adherence to health and safety measures. “Construction is a very hazardous industry, every year a lot of workers, both skilled and unskilled, lose their lives and many are maimed and injured on construction sites.

Estate surveyors tasked to imbibe ethical practices By YINKA KOLAWOLE state surveyors, under the aegis of the Nigerian Institution of Estate Surveyors& Valuers (NIESV) Lagos branch, have been urged to imbibe ethical practices, professionalism and responsibility in their service delivery. Some senior members of the professional body remarked, at a conference in Lagos, that this was necessary to improve their worth in the eye of the public, and to checkmate increasing activities of quacks and impostors in estate surveying practice which has created a credibility crisis in

E

the profession. Mr Yinka Omotosho, a fellow of UK’s Royal Institute of Chartered Surveyors, observed that the practice of estate surveying in Nigeria seems to differ from what is obtainable in the United Kingdom. Presenting a paper on “Professionalism, Ethics and Responsibility Essentials of the 21st century ”, he lamented that unethical behaviour seems to have crept into the profession through big firms, frontiers, pioneers and senior professionals in the name of meeting targets or making more money. He warned that if necessary actions are not taken to promptly address the situation, the estate surveying

profession in the country is under serious threat. According to Omotosho, surveying firms in the United Kingdom, carry out its work with skill, care, diligence and proper regard for technical standards expected of it. He however lamented that the same could not be said of the practice in Nigeria where clients lose their cash in transaction, pay more than the value of a property and sometimes have their documents withheld by surveyors. “We cannot shy away from the fact that unethical behaviour is eating deep into the credibility fabrics and continuity of our vocation," he stated


Vanguard, MONDAY, OCTOBER 8, 2012 — 33


34 — Vanguard, MONDAY, OCTOBER 8, 2012

Insurance BRIEF Prestige Assurance eyes opportunity in power sector reforms By RITA OBODOECHINA restige Assurance Plc said it intends to participate actively in the power sector reforms, infrastructure development and other areas of emergent opportunities with-focused product and service solutions. The company’s Chairman, Mr. Charles Sankey who disclosed this to shareholders at its 42nd annual general meeting in Lagos last week, said, as the company expects the local content policy to significantly improve business volumes for the domestic insurance industr y, they believe they have the capacity and expertise to offer best- in- class service to its existing and prospective clientele. According to him, the key challenges for the insurance industry in 2012 is to leverage the momentum gained from the implementation of Market Development and Restructuring Initiative (MDRI), in 2011 to drive business volumes and improve insurance penetration to at least the African continental average of 3.6 per cent from its current levels. Sankey said, “We are very committed to this initiative and have set up the structure to tap into the opportunities available from MDRI, especially with regard to our retail insurance products” The Chairman said one of the greatest strengths of Prestige Assurance is its stable, experienced and wellfocused Board of Directors, drawn from a considerable wealth of professional backgrounds. On the Financial performance of the company, Sankey stated that underwriting profit grew by 17 per cent from 2010, with the company earning N1.07 billion against the preceding year’s N912.3 million. He said, Net operating income at N1.7 billion was up six per cent from the N1.6 billion in 2010, noting, however, that the company made a provisioning of N630 million for bad/doubtful debt in line with the new prudential guidelines from the National Insurance Commission, NAICOM. According to him, after tax profit dropped to N256 million from the N488 million of the previous financial year, the provisions however have further improved the quality of the company ’s balance sheet.

P

C M Y K

From left: Dr Anand Mittal, MD/CEO, Prestige Assurance Plc; Dr Charles Sankey, Chairman; Mr Abayomi Odulana, Company Secretary during the 42nd annual general meeting of the company in Lagos.

Nigerian insurance market leaders are fronts to international insurers —Report Stories by ROSEMARY ONUOHA

N

igerian insurance market leaders have continued to serve as fronts for international insurers, a report by A.M Best Company has revealed. According to the report, the maximum amount of individual risks that Nigerian insurers are prepared to retain tends to be between USD 5 million and USD 10 million which is relatively low by international standards. The report said “In Nigeria, for example, market leaders Custodian and Allied Insurance and Leadway Assurance Co. have total Gross Premiums Written (GPW) of less than USD 110.5 million. Other non-life insurers underwrite GPW markedly below this level. The maximum amount of individual risk that insurers, including Custodian and Leadway, typically are prepared to retain tends to be between USD 5 million and USD 10 million – relatively low by international standards.” “Custodian and Allied Insurance’s retention level in 2010 was 40.35 per cent. Considering the scale of corporate risks such as oil and energy projects in the region, and the desire for additional expertise, Nigerian insurers tend to act as fronting companies, retaining less than five per cent of each risk.” Nigeria’s insurance regulator, the National Insurance Commission (NAICOM), and the Nigerian Oil & Gas Industry Content

Development Act of 2010 are encouraging increased domestic retentions for energy risks. However, given the high values of these risks, insurers cannot retain significantly greater levels, the report stated. According to the report,

insurers operating within Africa rely heavily on reinsurance in particular for corporate risks, although some regulators are encouraging higher retention ratios. The report stated thus “As in other emerging insurance

markets, such as those in the Middle East, insurers in Africa commonly act as fronting vehicles, ceding the majority of risks. African insurers rely on local, regional and international reinsurers. Regional reinsurers include Africa Re and ZEP-RE. Some African countries have a national reinsurer, including Morocco (Societe Centrale de Reassurance – SCR), Algeria (Compagnie Centrale de Reassurance), Kenya (Kenya Re), Tunisia (Societe Tunisienne de Reassurance) and Ghana (Ghana Reinsurance Co.).” In some countries, according to the report, national reinsurers benefit from compulsory cessions, although to some extent these are being phased out in the region. Subsequently, reinsurers are attempting to expand their portfolios internationally. For example, Ghana Re, which is wholly owned by the Ghanaian government, saw its market share fall from 92 per cent in 2008 to 86 per cent in 2010 following the repeal of its compulsory legal cessions in 2008. Before 2008, Ghanaian cedants were obligated to cede 20 per cent of all treaty business to Ghana Re, the report said. According to the report, despite compulsory cessions being removed in some African countries, reliance on reinsurance for corporate risks in the region remains high. “High cession rates are also common in Kenya.

“N1 trillion GPI mark unrealisable as insurers still chase after same accounts” lthough the National Insurance Commission, NAICOM, has set a gross premium income mark of N1 trillion for year 2012 by operators, insurers might be unable to meet the mark, according to Ganiyu Musa, Managing Director of Cornerstone Insurance Plc. According to Musa, insurers have continued to run after the same set of business, year in year out, ignoring the Market Development and Restructuring Initiative, MDRI, of NAICOM which serves as a platform to reach the trillion naira mark. It will be recalled that NAICOM had projected that through its MDRI, total industry premium would climb to the N1 trillion mark from the over N200 billion by the end of 2012. Musa said “One of the objectives of the MDRI is to attain one trillion naira industry premium income in the short to medium term. I don’t believe it is an unrealistic target if you look at the current level of insurance penetration. So, the

A

question is, why have we not been able to move from the N200 billion to N1 trillion or more. The reason is that there are only few individual companies on a stand alone basis with the financial muscle to invest in developing those areas of the business that will move us from the N200 billion as an industry to the trillion naira mark.” “We all run after the same NNPC business; head of service account and such major accounts. So the investment in infrastructure, technology that is needed to build a sustainable business model is not focused on because we don’t have the money to do that. So, there is the potential for business volume far beyond the level of capital that we have,” Musa said. According to Musa, there is gross under-utilisation of capital if the N200 billion annual industry premiums is compared to the total industry shareholders’ fund of about N347 billion. He said “The regulatory

capital requirement is N5 billion, but the truth is that if you have N5 billion there is only so much that you can do because you have to look at what you need to invest in infrastructure, technology, people, etc. If in a number of these things you have to make the investment up front before the income flow will come in, you probably require to have more than N5 billion. Secondly, if you are going to play in some segments of the market, corporate, oil and gas, multinational sector, if you have a capital of N5 billion and you want to insure a major industrial risk for instance, they are not going to take you serious. At N5 billion, you have to make heavy use of Reinsurance which will reduce your retained income and the rest. According to Musa, the insurance industry today in its current structure is still very fragmented despite the significant progress with the successful recapitalisation in 2007.


Vanguard, MONDAY, OCTOBER 8, 2012 — 35

Insurance

Non payment of genuine claims could lead to suspension of license —NAICOM Stories by ROSEMARY ONUOHA

T

he Commissioner for Insurance Fola Daniel has said prompt claims settlement remains the best instrument for insurance awareness and growth as non payment of genuine claims is enough ground to suspend or cancel the operational certificate of an insurer. Daniel also said that the consumer protection unit of the commission has been properly positioned to handle such complaints with dispatch. According to him, any defaulting company will be required to pay such claims because non payment of genuine claims is enough ground to suspend or cancel the operational certificate of a registered insurance company. Daniel said that the National Insurance Commission, NAICOM will continue to

C M Y K

ensure that operators live up to their claims responsibility, adding that the commission had received 86 claims complaints this year, which 52 have been resolved and 34 are in court. Daniel noted that operators who consistently fail to settle discharged claims promptly would loss their license, adding that insurers have been mandated to henceforth administer claims in accordance to standard insurance practice and it should be considered as a sole responsibility. He stated that discharged claims should be settled immediately as prescribed by the Insurance Act 2003, adding that failure to do so would attract sanctions as stipulated by section 70 (2) of the Insurance Act 2003. He said, “Failure to settle discharged claims shall attract sanctions as stipulated by Section 70 (2) of the Insurance Act 2003. Consistent failure to settle

discharged claims promptly may lead to the withdrawal of the licence of the insurer as stipulated by Section 8 (1) (m) of the Insurance Act 2003 and the insurer may be wound up by the commission in accordance with the provisions of section 8 and 32 (1) (b) of the Insurance Act 2003. “No foreign loss adjuster shall attend to any claims in Nigeria oil and gas sector without the express permission of the commission

on such terms and conditions as may be stipulated in the approval. Similarly, the foreign loss adjuster shall handle the assignment with and in collaboration with at least one loss adjusters registered under the Insurance Act, 2003.” Daniel said that NAICOM views failure or undue delay of claims settlement as an aberration. He said individuals, corporate bodies or government establishments

that have genuine unsettled claims against any insurance company are advised to lay the complaint to NAICOM. “This is why NAICOM advises policy holders to ensure that they obtain their policies from NAICOMregistered insurance companies only. A policy obtained from a fake insurance institution has no liability attached and no compensation can be received if such complaints are made to the commission,” Daniel added.

12 states in Nigeria lack brokers’ presence here is complete absence of insurance brokers in 12 out of 36 states of Nigeria, a study conducted by Riskguard Africa Limited, has

T

revealed. The study noted that 79 per cent of the existing brokers are fringe players who can be deployed into the underwriting or partner agency model under microinsurance. They observed that there seems to be a legendary apprehension at the Nigerian Council of Registered Insurance Brokers, NCRIB, that anything coming from National Insurance Commission (NAICOM) may not be in their best interest and called on NAICOM to address the issue. The report said, “There is complete absence of insurance brokers in 12 out of 36 states of Nigeria. NAICOM will still have to open up the agency system, relax the entry points and provide close supervision.” “The existing operators don’t see any incentive for new markets and competition only leads to market growth but not market expansion. There seems to be a legendary apprehension at the NCRIB that anything coming from NAICOM may not be in their best interest – NAICOM needs to work on this,” the report noted. “Our study of other countries has shown that insurance brokers have never served as a successful channel for microinsurance distribution. Our other studies have however shown that 79 per cent of the existing insurance brokers in Nigeria are fringe players who can be deployed into the underwriting or partner agency model under microinsurance.” Corporate Affairs Manager NCRIB, Tope Adaramola, said the council is working assiduously to address the issue, adding that the present leadership of the council has taken steps in recent time to

Fola Daniel ensure that brokers’ services are extended to all parts of the country. “The report may not be entirely far from reality. It further affirms the steps the NCRIB is taking especially under the regime of our new president Mrs. Laide Osijo. The reality confronted her, and that was why she made the empowerment of the Area Committee and Chapters of the Council one of her priority and focus,” Adaramola said. “Of course, what she had done in recent time far exceed what past president did. She is the only president that has gone round all our Area Committees to ensure that they are properly constituted. Note that you do not get results immediately you start something.” He said the council is encouraging members to extend their operations to all the part of the country, adding that insurance thrives on numbers and that the larger the clientele of brokers, the better their business.


36 — Vanguard, MONDAY, OCTOBER 8, 2012

People in Business

I’m passionate about building tomorrow’s leaders — Peter Harrison Achievements

By EBELE ORAKPO

O

D

r. Peter Harrison is he Proprietor of Victory Comprehensive College, Elelenwo, Port Harcourt and the president of National Association of Proprietors of Private Schools, NAPPS, Rivers State chapter. In this chat with Financial Vanguard, Harrison who holds a diploma, Higher National Diploma, postgraduate diploma and Master’s in Accounting; post-graduate diploma in Education, diploma in Missions, and PhD in Divinity and Religion, speaks on why he ventured into private school business, the challenges and how he tries to overcome. Excerpts:

Mission According to Dr. Peter Harrison, he decided to set up a school because he wanted a school that will indeed be a centre of academic excellence. “I started Victory Comprehensive College in 1995 with the aim of making the school a centre of academic excellence and by the grace of God, the school is approved by the Rivers State Ministry of Education, and the various external examination councils like West African Examinations Council, National Examinations Council and National Business and Technical Examination Board. The idea of starting a school came when I was a classroom teacher and I have this passion for building up tomorrow’s leaders, to inculcate in them good ethical values." The school which started with only two students "now has over 200 students with student-teacher ratio of 1:30 and has produced over 200 graduates some of who have gone on to become engineers, lawyers, academics and many in private sector," said Harrison. Continuing, Harrison said the school has been able to employ and retain experienced teachers by highly motivating them. “We employ experienced hands and we have a monthly contribution which we float to help teachers. We encourage the hardworking teachers to go for refresher C M Y K

•Dr. Peter Harrison...Just like every other profession is regulated, we want intending players to be registered with Teachers Registration Council of Nigeria, TRCN, and NAPPS. courses and update their knowledge and the cost is borne by the school.”

Challenges On the challenges he has faced as a businessman in the education sector, Harrison who is a member of various professional bodies including the Chartered Institute of Personnel Management, Institute of Commerce, National Association of Business Educators, and fellow, Institute of Administration, noted that finance has been a major issue. “Finance was a major issue. There were times I wanted to

We employ experienced hands and we have a monthly contribution which we float to help teachers. We encourage the hardworking teachers to go for refresher courses and update their knowledge and the cost is borne by the school

give up when all hopes seemed to have been lost, parents were not paying regularly because of their lack of economic power and you have to pay teachers, fuel the generators, and pay other

,

bills.” However, he said he was able to overcome, as over time, “we developed consistency and credibility and were able to get soft loans to run the school.”

n his achievements as NAPPS president, Rivers State chapter, Harrison who attributed his election to favour from God said; “Within the past three years, we have been able to buy land for the association and the building is ongoing. We have an office space with all the necessary equipment. We have 33 units of NAPPS in the state, working harmoniously with the Ministry of Education. We have been co-opted into the monitoring team for WAEC and NECO.” Speaking on how government can empower NAPPS to be more effective, he said; “The Rivers State House of Assembly is setting up an agency called Rivers State Education Quality Assurance Agency. The agency is going to monitor closely and supervise the activities of private and public schools; it is also going to be saddled with the function of the Inspectorate Division of the Ministry of Education including Universal Basic Education. We are asking that this new board should work in synergy with NAPPS. “Government should check the multiple taxations. If we are empowered, we can, in partnership with any human rights group and tax agents, collect this tax on behalf of Local governments, Sanitation, Ministry of Environment, and this will stop them from harassing our members. If granted the permission, we want to also come up with a sticker in partnership with human rights groups to give schools with buses. This, we believe, will stop touts from harassing school buses.” Harrison noted that there was need to regulate the education business sector. “A situation where every Tom, Dick and Harry will enter into education business is like waking up and seeing on your table, a plate of food you know nothing about and eating it without asking questions. As an association, we have told the government that there is need to regulate the setting up of schools. In Port Harcourt today, every sitting room is now a school. Just like every other profession is regulated, we want intending players to be registered with Teachers Registration Council of Nigeria, TRCN, and NAPPS. We hope the new formed agency will implement this," he said.


Vanguard, MONDAY, OCTOBER 8, 2012 — 37

Micro-Finance StoriesbyPROVIDENCEOBUH

T

he intervention fund for Microfinance Banks (MfBs) also known as Micro Small and Medium Enterprise (MSME) Fund would be launched this month as promised by the Central Bank of Nigeria (CBN) for refinancing of the sub-sector and on-lending to the poor but economically active people. MfBs were introduced to help small-scale entrepreneurs enlarge their businesses, especially market men and women. However, inadequate funding is a major threat that has bedeviled the sub-sector, posing a great challenge that needs to be addressed urgently if microfinance scheme is to achieve the objective for which it was established. Operators’ expectations are now high but whether the Fund would be launched or not, is a question waiting to be answered by the CBN as no specific date was given by the apex bank. During the 5th Annual Microfinance Conference and Entrepreneurship Awards in 2011, Kingsley Moghalu, the Deputy Governor, Financial System Stability, said that the CBN would establish a Microfinance Development Fund to promote accessibility to financial services for low income earners. Today, MfBs in Lagos alone have a toxic asset of about N14 billion, says Mr. Valentine Whensu, Chairman, National Association of Microfinance

Intervention fund:

BRIEFS

A necessity for Microfinance Banks Banks (NAMB), Lagos State chapter. The chapter is making arrangement to constitute the Microfinance Money Market Association (MMMA), aimed at providing short-term liquidity for its members. The Chairman, Board of Directors, King Solomon Microfinance Bank, Mrs. Angela Adegboyega, also lamented that people fail to

realise that microfinance banks are set up by individuals who put their money together to help others. “MfBs in the country have a major role to play and what they need is support from the CBN and the Federal Government by providing fund,” she said. Adegboyega advised the CBN to put out fund and make it available and identify the

microfinance banks that they want to partner with in disbursing the fund. “SMEs are globally recognised as key instrument for development and poverty alleviation and microfinancing is critical to any economy as a result of its contribution to growth and serving over 70 per cent of the population,” she said.

CIBN partners EFCC, CBN on banking restoration

I

n a bid to ensure that the Nigerian banking profession is not only restored to its leading position but also placed at par with other leading economies, the Chartered Institute of Bankers of Nigeria (CIBN) is partnering with key stakeholders and institutions in the country. Among the key organisations are the Economic and Financial Crimes Commission (EFCC); Central Bank of Nigeria, Unity Bank Plc and other government and private bodies within and outside the country with a view to taking the Institute and the banking profession to greater heights. In a statement made available to Vanguard, President/Chairman of Council of the Institute, Mr. Segun Aina, emphasised the need to partner with relevant stakeholders on capacitybuilding and training of staff in the banking industry as well as other sectors of the economy in order to enable the country realise her millennium development goals.

90% microfinance loans are for consumption —BoZ

*Mallam Sanusi Lamido, CBN Governor

Industry captains to brainstorm on African SMEs T I

ndustry heads and eminent leaders in Africa are to converge on Johannesburg, South Africa for the SME Africa 2012 conference, to brainstorm on how the Small and Medium Enterprises (SMEs) ecosystem works in Africa. The two days conference billed for 17 th and 18th October 2012, aims to establish SMEs through various mechanisms, government initiatives towards boosting the SME sector and key projects lined up for SMEs to grow their businesses. Endorsed by the Pan African Chamber of Commerce & Industry (PACCI), and supported by Micro Finance South Africa (MFSA) and the Banking Association of South Africa, topics for discussion include: The challenges of C M Y K

business start ups, best practices and successful stories in the region’s SME sector, among others. Alhaji Sanusi Maijama’a Ajiya from PACCI and the Executive Council Member, National Vice-President of the Nigerian Association of Chambers of Commerce, Industry, Mines & Agriculture (NACCIMA), will open the conference and as well give the keynote address. The keynote speech is expected to highlight some of the African SME landscape, and the contribution of SMEs in the economic growth and the current challenges faced by this sector and how regulations can work in coping with such challenges. Over 20 speakers will bring forth related presentations, relevant case studies and expert advisory panel

discussions to understand business strategies, identify complexities, derive commerce solutions and work in correlation with each other

to enhance business processes towards a substantial economic growth through SMEs.

Government should give SMEs access to intellectual property

A

top academic, innovator and serial entrepreneur has called on Government to give small and medium sized businesses open access to the intellectual property (IP) created in UK universities. Professor Andy Hopper, CBE, has this week become the new President of Europe’s largest professional society for engineers and technicians, the Institution of Engineering and Technology (IET). “Tax payers are already funding the creation of innovative intellectual property in our universities,

so it seems reasonable to make it more freely available to UK SMEs that are best positioned to add value and commercialise it,” he said. “Universities should be encouraged and incentivised to kick-start the development of new technologies and products by openly assigning the required IP to dynamic British businesses at minimal extra cost. In return, maybe the university could get a one or two per cent shareholding or more of a goodwill gesture than a conventional transaction.”

he Bank of Zambia (BoZ) has called on microfinance institutions to expand their lending to the productive sectors of the economy and alter the concentration of their loans away from personal to business loans. Speaking at the launch of a new microfinance institution called Microfinance Zambia in Lusaka, the bank’s Deputy Governor, Operations, Dr. Bwalya N’gandu, said that the microfinance institutions sector makes up the largest non-bank financial institutions sub-sector with asset holdings of K1, 172.2 billion as at June this year. N’gandu explained that this represents 45.5 per cent of overall assets of nonbanking financial institutions, but that the bulk of these assets are in form of payrollbased personal loans which are largely for consumption purposes.


38 — Vanguard, MONDAY, OCTOBER 8, 2012

ICT BRIEF Galaxy Backbone partners Kano State on improved revenue generation with ICT

C

ommissioner for Science and Technology, Kano State, Alhaji Bala Mohammud Gwagwarma last week expressed the commitment of the State Government to increase its internally generated revenue using the benefits of Information and Communications Technology, ICT. The commissioner who was on a courtesy visit to Galaxy Backbone in Abuja, said that Kano State had embarked on a reform programme that will modernize its governance processes for improved revenue generation and more efficiency in the delivery of public services to its citizens. According to him, the visit was based on the desire of the State Governor to forge a sustainable partnership with Galaxy Backbone towards the implement of its egovernment initiatives which includes the automation of IGR system, educational programmes for secondary schools, health care delivery and poverty reduction policy. Responding, Galaxy Backbone’s Group Head, Customer Operations & Services, Yusuf Kazaure, commended the Kano State Government and described the visit as a demonstration of the State Government’s commitment to leverage the benefits of ICT to reposition the state as the most populous and cosmopolitan state in northern Nigeria. He assured that Galaxy Backbone is well resourced to partner with the state by automating its IGR processes, provide data hosting services as well as support Kano State Government ICT park project. Contributing, Usman Mohammed Umar, Head of Regional Operations, Galaxy Backbone said that by partnering with Galaxy, Kano State Government will be benefitting from the investment already made by the Federal Government in ICT infrastructure nationwide through Galaxy Backbone. He assured the Commissioner that Galaxy will support the State Governor’s determination to increase its IGR to N10 Billion monthly within two years. C M Y K

…..This is now possible aboard Emirates A380

Emirates damns EMR scare, allows phone calls onboard STORIES BY PRINCE OSUAGWU

O

rdinarily, the standard rule for p a s s e n g e r s travelling in air planes is that mobile phones and other devices are permanently switched off until the flight touches down. Part of the reasons always given is that the mobile signals sometimes, have a way of jamming and incidentally disrupting the performance of the aircraft. In fact a study sometime, cited an electromagnetic instance, concluding that mobile phones used in the cabin could exceed the aircraft manufacturer’s rated allowable emission levels for some avionics. However in advancement to its series of onboard mobile services, Emirates Airline, at the weekend, broke the tradition with an introduction of mobile phone services on its A380 Aircraft. Emirates announced that with the support of its connectivity partner, OnAir, passengers aboard its A380 aircraft will now be able to stay in touch via phone calls or through the mobile data link on their personal devices with their family, friends and colleagues while inflight. The service, according to the airline is in addition to the OnAir WiFi service already available on Emirates A380 aircraft. However, this is not the first time Emirates is coming

up with such an inflight connectivity innovation. Since 1993 it has almost on yearly basis introduced one connectivity idea or the other on board. In 1993 the airline equipped its entire Airbus fleet with inflight phones. In1994, it added the in-flight fax machines in its entire Airbus fleet. Also in 2003, Emirates announced the introduction of live BBC text news headlines on its aircraft. The airline in 2006 also deployed personal in-seat email and SMS services in all classes of its fleet. Incidentally, the airline had

introduced part of this service in 2008 when it announced that passengers can get onboard mobile telephone services and in 2011also launched Wi-Fi internet access on A380 in conjunction with OnAir. The latest development seems to be a merger and improvement on the two services it introduced in 2008 and 2011 respectively. According to the Vice President Corporate Communications Product, Publishing, Digital and Events at Emirates, Mr Patrick Brannelly, the OnAir system allows passengers to

use their own mobile phones to make and receive phone calls and text messages aboard the A380 aircraft, just as they would on the ground, using EDGE/GPRS connections from their service providers. He said that Emirates first A380 aircraft equipped with the full suite of OnAir connectivity departed from Dubai international Airport to Munich International Airport last Tuesday and the first recorded inflight call was placed to China while the aircraft cruised at 11,500 metres flying across the Gulf.

NCC denies frequency racketeering

T

he Nigerian Commission at the weekend denied reports from one of the national dailies alleging that the commission had sold the 450MHz frequency band allocated and occupied by the police since 2009, to Open Skys Ltd in a racketeering manner.

Dr Eugene Juwah

In fact, according to the paper, (not Vanguard), NCC had sold the spectrum for a paltry $6 million as against the over $50 million the spectrum is reportedly worth. But in a swift reaction, the commission dismissed the report as lacking depth and provable facts, urging the public to regard it as so. According to the Commission’s Head, Public Relations, Mr Reuben Muoka., "The Commission has been inundated by calls from concerned citizens over a story in one newspaper on Thursday, October 4, 2012 which alleged frequency racketeering, with an insinuation that the management of the

Commission has sold a frequency slot belonging to the Nigerian police to a private firm, Open Skys. The story also insinuated that the current leadership of the Commission has issued frequencies to Smile Communications without due process. There is no truth in both allegations. However, we wish, for the benefit of the Nigerian public and all the industry stakeholders to state that the story in its entirety lacks basic understanding of frequency allocation and its processes involved, resulting in unsubstantiated information capable of misleading the public and industry stakeholders.


Vanguard, MONDAY, OCTOBER 8, 2012 — 39

Advertising, Media & Marketing

Unilever’s Lipton ties alertness to tea drinking culture...begins promo STORIES BY PRINCEWILL EKWUJURU

C M Y K

Cogniko now in Nigeria, introduces new marketing tool ogniko Nigeria, a branch of Cogniko US, an analytic and digital intelligence company has announced its presence in Nigeria with the introduction of a new tool: Analytic solutions. The company said its introducing the platform to help to meet the increasing demands of marketers seeking to understand and maximize return on investments (RoI). Cogniko, which involved in the delivery of marketing analytics, research, and strategic advisory to institutions in developed markets and Africa have companies like Chase, Pfizer, Diageo, Verizon, AT&T, Dell and General Mills have used Cogniko services.under its portfolio According to the Country Director, Mr. Yemi Ibironke, “Cogniko Marketing Analytics Services helps marketers establish accurate performance targets based on their investment outlay, define performance indicators aligned to objectives – measure what matters, understand drivers of inmarket campaign performance, and how to best align these drivers for optimal marketing effectiveness.” Speaking further, he said, “These are exciting times for Nigerian marketers. They now have the same tools at their fingertips that their counterparts in leading global organizations in developed markets leverage to drive continued marketing excellence, accountability and profitability. By combining proven evaluation methods with our expertise and integrated view of consumer intentions, attitudes and behavior, we can now deliver objective measurement and analysis to drive meaningful improvement in campaign strategy and return on investment.” Ibironke also explained that Cogniko Research, Data and Digital Intelligence Services is key for marketers seeking better and more accurate insights into consumer trends, attitudes and behaviors to drive profitable growth. Cogniko offers a wealth of specialized digital intelligence solutions with best-in-breed methodologies and technology to ensure marketers have access to Real, Actionable and Timely customer insights. “Besides the ability to conduct custom research using our proprietary online panel of consumers who have opted into Cogniko’s research community.

C

T

he success of every business depends largely on the ability of those at the helm to make apt and timely decisions. So, for businesses to succeed, managers must be at alert, they must acquire stability. If they want to lead effectively, they need to be able to make good decisions. If they can learn to do this in a timely and well considered way then they can lead their team to spectacularly deserved success. However, if they dither, or make poor decisions, the team risks failure and the managers time as a leader becomes affected. These were what Mrs. Ifueko Omogui- Okauru, Lead Speaker at the Lipton Switch on ‘ n’ win promo where she addressed youths who gathered at the Lipton Tea Party organised by Unilever Nigeria Plc’s Lipton brand, which also saw her tutoring young business managers on the need to be at alert and clear headed to achieve their aims and objectives. She was not alone and was accompanied by Toyosi Akerele,Funke Bucknor Obruthe, Mai Atafo and Gbenga Sesan – all successful professionals in their chosen fields.. But how can one make the kind of decisions that would take a business to greater heights when the mind is so stressed up that it cannot articulate itself.? Scientific research confirms that theanine, naturally found in tea, improves mental clarity. According to the company’s Managing Director, Thabo Mabe, who said the brand with over 100 years of tasting, buying and blending expertise has revolutionized tea culture in the society, especially among professionals. Continuing, he said that just like good habits, Lipton tea is pleasurable, invigorating and uplifting – qualities that endears it to millions of its fans across the world. “These qualities of Lipton tea endear it to us, which is why from the moment our tea leaves are picked, to when the tea is brewed, we go extraordinary lengths to deliver natural goodness,” he noted, adding that, “we are on a mission to unlock the goodness of tea, hence allowing you to drink better and to live positively – a cup of Lipton will kick start your day and switch on your mind.” However, health conscious consumers affirmed the goodness of tea, especially

BRIEF

From Right: Mr. Okechuku Uchegbu, National Sales Manager, Euro Global Foods and Distilleries Limited and team members at the company’s activation campaign for Tempranillo in Lagos.

as it affects mental alertness and ability to aid reasoning. Mr. Gbenga Mimiko, is an Engineer, at the event, told this reporter that since he became aware of the health benefits of tea as regards

mental alertness and its attendant effect on decision making. “I have made it a habit to have my tea to start my day at work.” Motunrayo Olaleye, a marketer with an IT firm in

Lagos, said she also imbibed the tea culture and has become addicted to Lipton particularly. As a marketer she has to keep up with appointment and business meetings and decisions.

Legend, when quality attracts gold medal

I

n the marketplace, we intermittently, see winning brands transform their knack for excellence into a fiery pace of brand-driven “mindshare momentum” that leaves runners-up gasping for breath. To keep the pace as a market leader, delivering on value proposition over the long term cannot be negotiated. When a product has brand value; it is an indication that the product means something to consumers. They value it, and will therefore buy it. When that product is renowned and internationally recognized, it means it has completed the full product circle of quality. This was the feat Legend Extra Stout from the stable of Nigerian Breweries Plc achieved when it was awarded the Gold Quality Award at the 51st Monde award ceremony in Athens, Greece. True to its style of always putting its consumers first, the brand held an elaborate celebration party at the Niteshift Coliseum, which featured rap artiste MI, to officially present the

award to the consumers. Speaking at the event, Mr. Walter Drenth, Marketing Director of Nigerian Breweries said every time Legend calls, it does so to share and celebrate good news. “You are all living witnesses to the tremendous strides the Legend brand has made over the years, establishing itself as a real stout on many counts and refreshing its outlook uniquely. Over the past 20 years, the Legend brand has continued to position itself as a credible choice of stout, full brewed the way an original stout should, giving Legend the credibility to be called the ‘Real Deal,’ a sincere proposition that has sustained the brand s’ growth since the re-launch and acceptance in 2009.” He reminded the consumers that the campaigns at the relaunch further rides on the brands’ real brewed positioning with emphasis on the production processes considered desirable for a real stout. This innovation, according to him, has had a tremendous positive impact on the brand’s volume, market share and overall equity.

Today, “Legend has an unprecedented story of being the fastest growing stout brand in the Nigerian stout market, extremely outclassing others in the category. Thanks to the loyal consumers for their patronage and steadfastness. I have no doubt that you are aware of our high performances over the years both in blind tests and several other testimonies from consumers;Legend has remained remarkably unique in taste and quality.” Drenth said. Not done with what stands the brand out after such a short time playing in a market where there is a dominant brand that has been around for more than a century, the Marketing Director stressed that the brand custodians passion for consistent quality check over the years pushed Legend to taking another bold step to validate its quality by participating in an internationally recognized taste and quality evaluation Panel named MONDE Selection Institute, independently evaluating for quality since 1961 and based in Brussels, the capital of Europe.


40 — Vanguard, MONDAY, OCTOBER 8, 2012

0817 002 3569

A

report nd in the October 2 edition of the Vanguard newspaper confirmed that two men are now helping Economic and Financial Crimes Commission (EFCC) operatives with information on how they came about $986,000 found on them at Lagos and Kano International Airports respectively. The duo, Nkem Sebastian and Alhaji Tasiu Kura, were apparently arrested in separate operations as they were about to board their flights to Dubai. Alhaji Kura was nabbed with the sum of $700,000 in Kano while Sebastian was arrested with $286,000 in Lagos. The two arrests, according to the Vanguard report, came barely 48 hours after EFCC arrested 24-year old Abubakar Tijani Sherif, whom EFCC described as a bulk money smuggler, with over $7 million at the Murtala Mohammed International Airport, Lagos, en route the United Arab Emirate. In a related report, the EFCC noted that “globally, bulk cash smuggling is usually associated with proceeds of crime, where illegitimately earned funds are processed outside the banking system”. Instructively, travelers leaving Nigeria are statutorily required to declare cash in excess of $10,000; however, under the provision of the Money Laundering Act, the onus is on the person making the declaration to explain the source of the excess cash and the reason for the export.

practices in the banks. In successfully run economies everywhere, it would be apocryphal for public sector dollars to be liberally sold to BDCs, whose cash flows are traditionally derived from the tourist market.

Currency Trafficking, BDCS & CBN

,

The more recent series of arrests confirm that currency smuggling and money laundering are still thriving businesses in Nigeria

Incidentally, such arrests are not uncommon; for example, in December 2009, a Bank PHB Manager, Mrs. Emem Etuk, was apprehended at the airport with about $3 million, which she claimed was sourced from Bureau De Change (BDC); she was alleged to also be the account officer for Akwa Ibom State’s account with Bank PHB. Later in October 2010, a Nigerian family was also apprehended at a London airport with over £500,000. rd In a statement on the 3 of November 2010, the incumbent CBN Corporate Affairs Manager, Mohammed Abdulahi, noted that “CBN had been inundated with complaints from foreign countries that some Nigerian travellers indulge in cross boarder transportation of large sums of foreign currencies in cash, and that Nigerian Customs

,

Service’s returns show that large amounts of up to $3 million cash had been taken out of Nigeria by individuals in single trips.” (See business Punch 4/11/2010, pg. 15). The more recent series of arrests confirm that currency smuggling and money laundering are still thriving businesses in Nigeria. However, such CBN sanctimonious posturing may just have been a subtle form of image laundering for the apex bank, whose misguided policies liberally fund the foreign exchange sources for currency traffickers, smugglers and money launderers. The truth, of course, is that the huge sums of moneys trafficked would most probably have been purchased from various BDCs, to whom

The above EFCC arrests suggest that BDCs may have graduated from merely meeting the retail requirements of travellers to becoming hard-core suppliers of foreign exchange to major money launderers and smugglers! In other words, CBN’s ill-advised liberal dollar allocations have become a supportive tool for national economic sabotage! For example, the near collapse of our industrial landscape is partly the result of porous inflow of contrabands from aggressive industrial economies.

CBN regularly disburses hundreds of millions of dollars every month! Indeed, liberal market dollar supply was one of the policy support instruments demanded by the IMF and the London and Paris Credit Clubs before Nigeria’s controversial debt exit, which fleeced over $12bn from our tattered pockets in 2006, in the name of debt relief. Our monetary authorities had cleverly put a positive spin on this IMF directive, by suggesting that such free dollar supply would reduce the existing huge gap between the official and the black market rates of exchange. Although the black market and the official rates are much closer, some analysts believe that the liberal supply of official dollars to BDCs for better exchange rate management may, in reality, be akin to smashing a cockroach on a glass table with a sledge hammer, when a less destructive repellant or insecticide could have been applied.

Similarly, the motivation for money laundering and currency trafficking is facilitated by free access to public sector dollars made available to BDCs by CBN. Ultimately, adoption of IMF conditionality on liberal dollar supply to BDCs has evidently done much harm to the economy. It remains inexplicable that IMF did not recommend that issue of multiple exchange rates, a weaker naira, inflation, non-productive economy can be more benignly resolved if CBN’s monopoly of the foreign exchange market is immediately dismantled.

Incidentally, the difference between official and black market exchange rates continue to be between N5 and N10, a margin, which is still attractive enough to encourage underhand

SAVE THE NAIRA, SAVE NIGERIANS!!

Business Economy

Group installs 240 CPU to boost hydrocarbon exploration BY KUNLE KALEJAYE

T

o assist hydrocarbon exploration and production companies in Nigeria to discover crude oil, Verity Geosolution Limited has successfully installed 240 Central Processing Unit in its Lagos office. The installation is expected to create value, optimise cost and improve oil well placements. Verity Geosolutions is an integrated geophysical solutions provider to hydrocarbon exploration and production companies in the oil and gas industry. The 240 Central Processing Unit consists of power edge dual core servers, several high-end workstations, high capacity two phase Uninterrupted Power Supply and Cisco-based C M Y K

telecommunication systems. The 240 CPU is expected to provide avenue for oil and gas reserves increment and reduction in the overall cost of exploration development and production of oil fields. Speaking with newsmen in Lagos, the Group Managing Director of the company, Mr. Yomi Adejonwo, said the technology would also boost local development of advanced geophysical solutions to the oil and gas business in the country. “With the installation of this equipment, we are moving closer to the realization of our vision to be the leading provider of geophysical services in Nigeria and West Africa as well as meeting the increasing demand for our technologies”, he said. The equipment, according him, would give adequate provision of timely highquality services in support of

customers’ exploration and production activities. “This is the first hundred percent Nigerian geophysical data processing company to provide its seismic imaging, interpretation, reservoir modeling and subsurface data management services to its customers in Nigeria and the West Africa sub-region. “With the installation of this equipment, we are moving closer to the realization of our vision to be the leading provider of geophysical services in Nigeria and West Africa as well as meeting the increasing demand for our technologies”, he said. The equipment, he added, would give adequate provision of timely highquality services in support of customers’ exploration and production activities. Adejonwo said the company was established to provide leading-edge integrated

geophysical technologies and develop capacity in Nigeria within the hydrocarbon exploration and development sector, adding that it offers

2D, 3D and 4D seismic acquisition support services as well as integrated geophysical processing and inversion services.

Omoh Gabriel Babajide Komolafe Clara Nwachukwu Peter Egwuatu Yinka Kolawole Favour Nnabugwu Godwin Oritse Godfrey Bivbere Yemi Adeoye Oscarline Onwuemenyi Franklin Alli Michael Eboh Amaka Abayomi Ebele Orakpo Ifeyinwa Obi

-

Group Business Editor Acting Finance Editor Energy Editor Head, Capital Market Snr Bus. Correspondent Insurance Correspondent Maritime Correspondent Maritime Correspondent Energy Correspondent Energy Correspondent Industry Reporter Capital Market Reporter Money market Reporter Energy Reporter Maritime Reporter

CONTRIBUTORS Princewill Ekwujuru Naomi Uzor Providence Obuh LAYOUT

-

Media/Marketing Industry Capital Market Graphics Department


financial vanguard October 8th edition