APRIL 21, 2014
CBN TO HOLDING COMPANIES:
Maintain controlling interest in subsidiaries or lose license BY BABAJIDE KOMOLAFE
ny financial Holding Company (HoldCo) that loses controlling interests in its banking subsidiaries will have its license cancelled by the Central Bank of Nigeria (CBN). This is one of the highlights of new restrictions imposed on HoldCos in the financial sector in order to protect depositors’ funds in the banking industry. In an Exposure Draft on Guidelines for Licensing and Regulation of Financial Holding companies in Nigeria, CBN also banned HoldCos from participating in the loan administration or approval process of their banking subsidiaries. Following the banking crisis
occasioned by poor corporate governance and abuse of depositors’ funds for funding investment activities of their subsidiaries, CBN cancelled the universal banking model and replaced it with holding company model. The purpose was to make banks operate on stand-alone basis such that depositors’ funds will be used solely for banking activities as stipulated by regulatory requirements. Consequently, banks were given till 2012 to either divest from their non bank subsidiaries or evolve into a holding company in order to maintain their ownership. They were also to return their universal banking license for new license. Out of the 24 banks, five banks namely First City Monument Bank (FCMB) Plc, First Bank of Nigeria (FBN) Plc,
Stanbic IBTC Bank Plc, United Bank for Africa (UBA) Plc and Union Bank of Nigeria (UBN) Plc adopted the HoldCo structure, while Access Bank Plc, Diamond Bank Plc, Fidelity Bank Plc, Guaranty Trust Bank (GTBank) Plc, Skye Bank Plc, Zenith Bank and Wema Bank chose to divest from non-banking subsidiaries. The guidelines issued by the CBN last week defined a financial holding company as a “a company whose principal object includes the business of a holding company set up for the purpose of making and managing (for its own account) equity investment in two or more companies, being its subsidiaries, engaged in the provision of financial services, one of which must be a bank.” It stated that, “For any financial holding company structure to emerge
there shall be at least, two subsidiaries and the focus of the conglomerate shall be in the financial services sector.” The apex bank however insists that the HoldCo must always have controlling interest in these subsidiaries otherwise its license would be cancelled. The guidelines stated, “Where a financial holding company loses its Controlling Interest in the only banking subsidiary in the group, for a period that exceeds six consecutive months, the financial holding company shall cease to be a financial holding company and will be required to return its licence to the Central Bank of Nigeria for cancellation. “Where a financial holding company that has only two subsidiaries loses its Controlling Interest in either of the subsidiaries, for a period that exceeds six consecutive months, the financial holding company shall cease to be a financial holding company and will be required to return its licence to the Central Bank of Nigeria for cancellation. For the purpose of these Guidelines, ‘control’ is gauged by the holding of more than 50 per cent of the voting shares of the subsidiary." The guidelines also banned
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109.76 +0.16 104.59 +0.54 CURRENCY BUYING CENTRAL SELLING DOLLAR POUNDS EURO FRANC YEN CFA WAUA RENMINBI
President Goodluck Jonathan(4th left), President, ICAN, Alhaji Kabir Mohammed, (4th right), ICAN Vice President, Mr. Chidi Ajaegbu, (3rd left), 2nd Dep. Vice President, Deacon Titus Soetan, FCA(2nd left), Minister of Trade and Investment, Dr. Olusegun Aganga(left), Immediate Past President-ICAN, Mr. Doyin Owolabi, FCA(2nd right) and ICAN Registrar/CE, Mr. Rotimi Omotoso, FCA(left) during the visit by ICAN team to President Jonathan in Abuja. C M Y K
RIYA KRONA SDR
154.73 260.1166 214.5022 176.1498 1.5141 0.3067 238.7745 24.8781 41.2569 28.7234 240.0017
155.23 260.9572 215.1953 176.719 1.519 0.3167 239.5461 24.959 41.3903 28.8162 240.7773
155.73 261.7977 215.8885 177.2883 1.5239 0.3267 240.3177 25.0398 41.5236 28.909 241.5528
CBN Exchange rate as at 18/04/2014
18 — Vanguard, MONDAY, APRIL 21, 2014
Breaking the Nigerian Poverty Cycle through Entrepreneurial Revolution. Part 3
Maintain controlling interest in subsidiaries or lose license Continued from page 17 HoldCos from direct and indirect involvement in the day to day running of their subsidiaries. It stated: “No financial holding company shall: Arrogate to itself any of the powers or functions of the Board of Directors, or internal management responsibilities and obligations of any of its subsidiaries or associates of any such subsidiary; Interfere in the day-to-day activities of the subsidiaries; Be involved in credit administration and approval process of its subsidiaries; Require its subsidiaries (including any organ, servant, employee, staff, manager, officer or director thereof) to take directives or act on the instructions of the financial holding company in its decision making process, or in relation to the conduct of its business in any way whatsoever. Have any of its officers or employees, while in the employment of the financial holding company, work for any subsidiar y, except employees engaged in shared services arrangements; vi. Engage the services of any employee of any of its subsidiaries; Enter into any technical or management service contract with any of its subsidiaries except as stipulated in Section 5.2 of this Guidelines; Purchase/dispose assets from/ to its subsidiaries without the prior written approval of the CBN and any other relevant regulator.” The guidelines also restrict financial dealings between HoldCos and their subsidiaries. It stated, “No financial holding company shall: Engage in any transaction or maintain any business relationship with any of its subsidiaries, except C M Y K
such transaction is conducted at arms- length; Borrow from the Nigerian banking system for the purpose of capitalizing itself or any of its subsidiaries; Obtain a loan based on the guarantee of its banking subsidiary/associate, except where the loan is secured by dividend income or Service Level Agreements by the financial holding company for services to its banking subsidiaries. Credit by a banking subsidiary to its Holding Company would be
regarded as a return of capital and deducted from the capital of the bank in computing the bank’s capital adequacy ratio; Any bank lending to subsidiaries within its financial holding company group would attract 100 per cent risk weight (if it is fully secured) otherwise it would be removed from the capital of the bank when computing capital adequacy ratio.”
AfDB boosts climate change projects with N1bn fund
he African Development Bank (AfDB) has created a N1 billion fund to support climate change projects in African countries. Known as creation of the Africa Climate Change Fund (ACCF), the Fund is bilateral thematic trust fund to support African countries in their transition to climate-resilient and low-carbon development. A statement announcing the Fund said, “The AfDB will host and manage the ACCF, which was created with a 4.725 million euro contribution from Germany for an initial three-year period. The aim is to scaleup to a multi-donor trust fund as soon as at least one new donor commits to join. Following the Board’s decision, the Director of the AfDB’s Energy, Environment and Climate Change Department and Chairman of the Bank’s Climate Change Coordination Committee, Alex Rugamba, explained how critical the ACCF will be for African countries. “Africa is the most vulnerable
continent to the impacts of climate change, yet the region receives a very small share of climate finance as compared to other continents. I strongly believe it is the responsibility of the bank to help African countries access international climate finance to support their transition towards climate smart development. This fund will help facilitate countries’ access to the financing they need to protect their economies and environmental assets in the face of climate change,” he said. “At the international level, the Green Climate Fund (GCF) has confirmed that 50% of its total allocation should target adaptation to climate change, and that the most vulnerable countries – primarily in African countries – will be given priority. “There is a great opportunity for the Bank to
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From Left;Adeleke Adekoya;Head,E-Business Stanbic IBTC Bank;Ernest Obi,Head,E-Business & Channels Keystone Bank;With Churks Iku,Group Head,E-Channels Skye Bank,And Benedict Anyalenkeya,Group Head,E-Business Unity Bank.At the Press Conference of Committe of E-Banking Industry heads[CeBIH] held at Victoria Crown Plaza Hotel victoria island Lagos.PHOTO BY AKEEM SALAU
he difference lies in the presence of a critical mass of entrepreneurs that triggers an entrepreneurial revolution with all its multiplier effect. It is this entrepreneurial spirit that is empowering China, India, along with Russia and the former Soviet satellite countries in Eastern Europe and the Baltic States, to rise above the gravity of years of underemployment. The entrepreneurs in these societies are creating new wealth and generating income-yielding opportunities for so many with their vision, daring, sense of innovation and passion for results. Even in the United States, which has been the world’s leading economic power for so long, the new creators of America wealth are the young entrepreneurs in the realm of information technology
I believe that the present economic problems and restiveness in Nigeria can be significantly addressed by growing the numbers and strengthening the capabilities of local entrepreneurs who pursue the business opportunities available in our country
There is, you see, a valuable lesson here that we should never miss. The most effective way to get closer to the threshold of prosperity and to be removed farther from the weight of poverty is through an entrepreneurial revolution. Yes, an entrepreneurial revolution. Such a revolution requires a point of convergence when and where a great number of entrepreneurs will set into motion an irreversible chain reaction of productive ventures outside of the limits of cynicism and fear. Of course, as true of any successful revolution, no radical changes happens overnight. No society can leapfrog from a stage of being a mere supplier of raw materials to on capable of orchestrating great tasks and events. There are no shortcuts. To develop a nation of entrepreneurs, there must be a multi-sectoral, multi-level and
multi-phase undertaking that begins with a collective resolve to get out of the old mould of doing things. We need passionate promoters of the entrepreneurial spirit that can inspire others. And government, too, must be equally entrepreneurial in its outlook and overall economic policy framework, and create an atmosphere that would inspire and make it easy for ordinary Nigerians to start their own enterprises, large or small. Such an entrepreneurial revolution can make winners of everyone. Think of what you can do for yourself and the country and not what the country can do for you. Let us go and together we will win. Putting into practice my vision for entrepreneurial development in Nigeria, I have established Success in Your Business a UK registered charity committed to eradicate poverty by empowering citizens with the right skill, and through the development of an entrepreneurial spirit. I believe that the present economic problems and restiveness in Nigeria can be significantly addressed by growing the numbers and strengthening the capabilities of local entrepreneurs who pursue the business opportunities available in our country. This entrepreneurial development will create selfemployment and grow the labour market helping to alleviate poverty and social unrest. For example, there is a strong potential for developing new niche st markets of the 21 century – green, organic, fair trade, our overseas communities. In order to widen privatesector employment opportunities, we must improve the access of rural and low income women and youth to business development resources; improve the abilities of entrepreneurs to manage their business and market their goods and services; grow agriculture-based rural business pursuing opportunities for valueadded processing, and expand government assistance programs for MSMEs.
Vanguard, MONDAY, APRIL 21, 2014 — 19
When will the drum beats of revolution start in Nigeria? line, the situation has changed dramatically and the reverse is the case. Banks are now asking for second class upper or first class degrees as minimum job entry requirement. They are also demanding that such graduates should not be older than 26 years. Now, Nigerian graduates are not even acceptable for employment in Nigeria. American degrees that were looked down upon 25 years ago are what most employers are now searching for. It is not that there are no jobs in the country; it is the lack of the required skills that has prevented many Nigerians from accessing jobs. There are several banks and companies employing people with requisite skills from abroad. The question is; how did we come so low in value while others have improved so much? So much that jobs are now only available to relations of the dead? What a tragedy! Each year, Nigerian leaders tout figures of economic growth of about six or seven per cent, but the level of unemployment keeps rising by the day. Perhaps, many have thought that the unemployment situation was exaggerated by media hype until Saturday when 4,000 job openings in Nigeria Immigration Service, attracted over 60,000 applicants for a written test in Abuja alone. Maybe the
hen some of us were in secondary school, a grade one WAEC certificate will make you unacceptable for employment in a Nigerian bank and most companies in Nigeria. The thinking then was that with grade one, the holder will in a matter of one year gain admission into the university. There was no need to waste resources training him. Those who got jobs easily in banks in those days were WAEC certificate holders of grade three. Also during the same period, a degree from any Nigerian university was a precious possession. Employers of labour in Nigeria questioned many of the certificates obtained by those who went abroad especially to the USA to study. While at the University of Benin in the late 70s to early 80s, a lecturer who had his PhD from an American university was forced out of our class because he could not stand the demand for advanced macro-economics. She entered the class one fateful Monday and said; ‘You know all of us cannot be good in calculation. Before she finished the sentence, the class rose in unison and asked her what she was doing there if she could not express her know-how in figures. That day, the class met with the HOD and she was removed from the class. Twenty-five years down the
Minister of Internal Affairs wanted this government to see the magnitude of the unemployment issue in Nigeria, by allowing all the applicants to show up the same day for the test. Or how else can it be explained that any reasonable employer will gather that number in a stadium to write a test? Did the minister have any sense of crowd behaviour? The unfortunate event brings to mind the 2012 lamentation of President Goodluck Jonathan. On that occasion, he had lamented the growing unemployment situation in the country stating that it may lead to some social unrest in
It is not that there are no jobs in the country; it is the lack of the required skills that has prevented many Nigerians from accessing jobs. There are several banks and companies employing people with requisite skills from abroad
the near future. Every Nigerian, in low or high places, knows this simple fact.
This government has not shown to the people anything that will suggest that it is tackling unemployment. What Nigerians need to see is how far this administration has gone to tackle the problem. Since the days of the ill-fated Structural Adjustment Programme, or the Shehu Shagari Austerity Measures of 1982, unemployment has been a phenomenon that has refused to go away in Nigeria. Unemployment in Nigeria has become one of the most critical problems the country is facing. Many years of corruption, mismanagement of the economy, civil war, military rule, etc., have hindered economic development of the country. Nigeria is endowed with diverse and infinite resources, both human and material. However, years of negligence and adverse policies have led to the underutilisation of these resources. This is one of the primary causes of unemployment in the country. Analysis of employment data shows that the rate of new entrants into the labour market has not been uniform. The rate was on the increase from 2007 to 2009 but declined significantly between 2009 and 2010. The rate increased again from 2010 to date. Within the period, there has been an average of about 1.8 million new entrants into the active labour market per year. In 2011, Nigeria’s estimated population stood at 164.3 million, 92.3 million are said
to be economically active, labour force - 67.25 million, employed - 51.18 million, unemployed - 16.07 million and newly employed - 2.13 million. 2010 statistics showed that about 10 million Nigerians were unemployed in Nigeria as at March, 2009. The 2011 survey showed that the national unemployment rate is 23.9 per cent compared to 21.1 per cent in 2010 and 19.7 per cent in 2009. The Federal Government since 2009 has been singing the tune of tackling unemployment but so far, there has been no serious sign of improvement. Today in Nigeria, almost half of 15-24 year olds living in urban areas are jobless, yet reducing unemployment and enhancing economic productivity are top priorities for the National Economic Management team. It is sad that year in, year out, billions are budgeted for recurrent with little for capital expenditure that will lead to job creation. Fortunately, the buck stops at the President’s table. He is the one who has the key to unlock and unleash the nation’s economic potentials for the benefit of all Nigerians. The President has no one to cry to other than putting on a thinking cap and getting the job of the office of the President done creditably. With what happened that Saturday, Nigeria is ripe for a change, a revolution. Who will cast the first stone for the drum of revolution to sound?
Business & Economy
AfDB boosts climate change projects with N1bn fund Continued from page 18 catalyze and channel more climate finance to Africa. The Bank will continue supporting the African members of the GCF Board ahead of its next meeting in May, and we are already working on designing a partnership with the GCF for supporting African countries to prepare to access climate finance,” Rugamba added. “Many countries on the continent are ill-prepared to access international climate finance and need to devise plans to build a more climateresilient and low carbon future. The scope of the ACCF is broad enough to allow for a variety of activities that countries need for the transition to climate smart
development, with the aim of generating transformational change in the medium to long term. Specific areas of intervention include: climate finance readiness; climate change and green growth mainstreaming; preparation and financing of adaptation and mitigation projects; knowledge management and information sharing related to climate change; capacity building; preparation of climate resilient and low carbon strategies and policies; analytical work related to green growth; advocacy; and outreach. The first call of proposals is expected to take place within the next two months, and will focus on climate finance readiness.
“ACCF grant recipients may include African Governments, NGOs, research institutions, and regional institutions; grants will be either executed by the recipients themselves, or by the Bank on their behalf. In line with the AfDB’s
strategy for mobilizing additional resources, the ACCF will complement the Bank’s own resources as well as the multilateral funds for which the Bank is an implementing agency. The Bank is progressively
mainstreaming climate change mitigation and adaptation into its development activities. In addition, its 2013-2022 strategy places an emphasis on promoting inclusive and transition to green growth.”
Schneider aining Schneider,, FSD sign MoU on vocational tr training Schneider Electric has signed a Memorandum of Understanding with Field of Skills and Dreams (FSD), a vocational and technical training academy in Lagos to train Nigerians in electrical installation and maintenance. The partnership is aimed at developing local skilled workforce to compete effectively with foreign technicians as well as curb
unemployment. Executive Director of FSD, Mrs. Omowale Ogunride, said the training to be carried out at the academy will involve an interactive teaching methodology that focuses on practical experience at a laboratory fully equipped with Schneider Electric training solutions to enable students to acquire hands-on practical skills in a safe and efficient way.
“Schneider is one of the world’s leading energy management companies with notable expertise in vocational training brought into the development of this programme whereas FSD has been offering effective technical and vocational training for ten years. With international recognitions and awards, FSD’s capacity has been tested and proven to be effective. C M Y K
20 — Vanguard, MONDAY, APRIL 21, 2014
Business & Economy BY TUNJI AFOLABI
BlackBerry OS 10.2.1 upgrade boosts customer experience BY EMEKA AGINAM
arely few months after the initial release of BlackBerry OS 10.2.1 upgrade into the mobile phone ecosystem system, the new version of the software has long generated a lot of excitements as a result of the new features and refinements to BlackBerry’s latest generation of smartphone handsets. Highlighting the new features and enhancements in a telephone interview recently with Vanguard HiTech, Nader Henein, Regional Director, Advanced Security Solutions, Advisory Division of BlackBerry explained many reasons why customers who wants to be more productive and stay better connected should upgrade. Update, according to him includes hundreds of new enhancements and refinements which have already been rolled out to customers through carriers around the world. According to him, the software upgrade is available for the entire line of smartphones running BlackBerry 10 including the Porsche Design P’9982, Z30, Z10, Q10, Q5 respectively. Although BlackBerry plans to reverse its fortunes by focusing on providing secure communication services and building business products, he assured that the new upgrade will help customers to do things faster and easier: One major improvement in the new version, Henein explained is the ability to swipe left to take and swipe right to drop an incoming call, or to send an automated message explaining why it’s not possible to take the call. Another key feature appearing on BlackBerry phones, he added is the offline browser. This allows users read cached web content without an Internet connection, he explained. For BlackBerry Z30, BlackBerry Q10 or BlackBerry Q5 smartphone users, the new software update he said unlocks the built-in FM radio in those handsets. With this, they can listen to local FM stations, which does not require any network connection.
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economic activities across the country, a Polytechnic lecturer has lamented. The lecturer, who teaches at a Polytechnic in Ibadan, Oyo State, in an interview, described the power supply in Nigeria, especially in Oyo State as terrible, saying all social and economic activities in the state had been paralyzed by worsening supply of power by Ibadan Electricity Distribution Company. Adediji who spoke with Vanguard expressed surprise that some parts of the state could experience 48 hours uninterrupted supply of power because of President Goodluck Jonathan visit to state last week. It would be recalled that President Goodluck Jonathan was expected at the thanksgiving service of centenary birthday of Oba Samuel Odulana Odugade1, the Olubadan of Ibadanland, but he could not attend, as a result of last week's Nyanya, Abuja, bomb blast that claimed several lives. The President who was represented by the information Minister, Mr. Labaran Marku, was however in Ibadan on Tuesday, but as soon as he left, the power situation returned to the status quo. Lamenting the situation, Adediji said, “Unbelieveable!
From left: Human Resources Manager, Honeywell Flour Mills Plc, Mr. Sunday Sopitan; Unit Commander (Ojota), Federal Road Safety Corps, Kehinde Hamzat; Divisional Managing Director, HFMP, Dr. Nino Ozara, Public Enlightenment Officer, FRSC, Mrs. Stella Omeje; and Logistics and Supplies Manager, HFMP, Mr. Olayinka Shodeinde, during FRSC/ Honeywell Easter public enlightenment campaign, in Ojota, Lagos.
Irregular power supply crippling economic activities – Don We had uninterrupted power supply at the Airport in Alakia for 48 hours. I can’t remember when last we had this opportunity, no thanks to Ibadan Electricity Distribution Company, IBEDC; it was because Mr. President was here for the centenary birthday of the Olubadan of Ibadanland. “This was indeed a royal blessing; it means IBEDC had deliberately been punishing the citizens and charging them heavily for darkness.
President Jonathan should please relocate to Airport Alakia Ibadan, so that we can continue to enjoy constant and stable power supply and our death traps called roads in the area can receive Presidential blessing.” Also speaking, Mr. Paul Folarin, another resident of the area, also complained about the deplorable power supply in the country and Ibadan in particular, saying the new owners had been making life unbearable for
Nigerians. According to Adediji, “if there is sincerity of purpose, we can make things work properly in Nigeria. This same Ibadan that is being neglected is a historical city in Nigeria, and largest city in Africa. The Federal government should provide social amenities, infrastructure and employment opportunity to make life conducive for the citizenry”
Bayelsa budgets over N500m to host world SME conference ...1,500 participants from around the world
BY FAVOUR NNABUGWU
he Bayelsa state government has budgeted over N500million to host the 20th World Association for Small and Medium Enterprises, WASME, a global nongovernmental organization situated in Noida, India with members spread across the world. President Goodluck Jonathan is expected to declare the conference open in his home on 30 April 2014 with keynote addresses from Liberian President, Dr Ellen Johnson Sirleaf, former Brazilian President. Inacio Lula Da-Silva and the Chairman of African Union Commission, Dr Nkosazana Dlamini-Zuma. Disclosing the readiness of Bayelsa State Government to host the conference after 10
years, chairman, local organizing committee, Dr. Ebiekure Jasper Eradirii told Journalists in Abuja on Thursday, that Bayelsa State is well prepared in terms of security and facilities to make both local and foreign participants comfortable in the state. Eradirii said the budget for the four-day conference is a less less that N600 which will be sourced from the state government, institutions corporate and individuals with enough hotels to accommodate the 1,500 participants, adding that a vibrant private sector is essential for promoting growth and development of the Gross State Product, GSP and by extension, the Gross Domestic Product if the country. Resource persons at the conference, he mentioned include the host Minister, Nigeria’S Minister of
Industry, Trade and Investment, Dr Olusegun Aganga, Dr Khaled Nagaty, c h a i r m a n , MetropolitanConsulting, Egypt; Mr Themba Khumala, Chief Operation Executive of MTN Group; Stephane Hogan, Delegation of European Union to African Union, Ethiopian and Nigeria’s chief Folorunsho Alakija, Chairman, Famfa Oil &Gas Ltd among others. He elucidated that the vision behind establishment of WASME was to build a world private community of small business, their supporting and financial institutions as a non-governmental organization, not influenced by any government. According to him, “The 20th WASME International Conference on SME will examine past and current challenges of the global SMEs, especially challenges
to start-ups on the African continent and best global practices for their upgrade across the value-chain. Issues to be examined include: What paths have different countries adopted to grow and upgrade their SMEs and what can African start-ups learn from them? What importance do different nations now place on the role of SMEs as the engine of growth of any economies? What policies, strategies and programmes are being adopted to place small business at the centre of sustained economic growth? How can the bottlenecks to SME Development be addressed?”. “We are pleased to be the host of 20th WASME edition of International Conference of SME’s (ICSME) holding in Yenagoa City, Bayelsa State, a 30km drive from the Port Harcourt International Airport.
Vanguard, MONDAY, APRIL 21, 2014 — 21
Insurance Stories by ROSEMARY ONUOHA
hana’s insurance sector has taken a cue from its Nigerian counterpart to commence implementation of the ‘no premium, no cover ’ policy initiated by the National Insurance Commission, NAICOM, in Nigeria last year. Ghana’s National insurance Commission (NIC) on first of April enacted a ‘no premium, no cover’ directive with the hope that bad corporate practices will be brought to an end in Ghana. Concerns about Ghana’s insurance industry’s stability came to the fore as companies issuing non-life insurance products recorded high amounts of unpaid premiums, 50 per cent of which were bad debts. Companies then found themselves having difficulties paying claims because of the lack of liquidity. According to experts, the regulation will mean that insurers will no longer be able to offer products that allow customers to pay their premium over a period of time, as has been the case for years. According to the Head of NIC, Ms. Lydia Bawa, local insurance companies are owed roughly GHc130million ($47.8m) in premium debts as of 2012. Claims paid for the same period are about GHc99.8m. Bawa, who took up the position less than a year ago, said that the unpaid premiums of policyholders have an effect on reinsurers as insurance companies themselves are unable to pay their own reinsurance
Nigeria Railway to implement pension report BY JONAH NWOKPOKU
President of the Nigerian Council of Registered Insurance Brokers (NCRIB), Mr Ayodapo Shoderu (2nd left) in a handshake with Mr Adeyemi Adetunji, Lead Consultant of Netherwoods Consulting, after the commencement of IFRS training for NCRIB members in Lagos. With them is Mr. Fatai Adegbenro, Executive Secretary of the NCRIB (right) and Mr Egwu Kenneth of the National Insurance Commission
Ghana emulates Nigeria's ‘no premium, no cover’ policy premiums. This then means that the reinsurers cannot pay their retrocessionaires. The domino effect of the rolling debt has increased the credit risk of the sector and uncertainty for all involved parties. “They realised that this could actually bring the industry down to its knees,” Bawa stated. Vice President of Databank,
Armah Akotey, said “Market players would do whatever it takes in order to ensure we survive and make progress. The regulator is playing catch up.” But the Commission is poorly resourced and has a tough time regulating the sector. Many of the larger insurance companies have more staff than that of the
NCRIB trains members on IFRS I
n order to comply with the new global accounting reporting format, the Nigerian Council of Registered Insurance Brokers, NCRIB, has commenced training of its members on the International Financial Reporting Standards (IFRS). Declaring open the pilot training in Lagos, President of the NCRIB, Mr. Ayodapo Shoderu disclosed that the Council engaged the services of leading IFRS consultants under its shared services scheme to reduce the cost burden on individual operators. He noted that the first tranche of the training incorporated brokers operating mostly in the Lagos axis, while the remaining tranches will hold in other zones, namely Abuja, Lagos
and Enugu, and enjoined its members to check the website of the Council for their names and periods when their training falls due. Shoderu opined that the IFRS was designed as a common global language for business affairs so that companies’ accounts are understandable and comparable across international boundaries. “IFRS is a consequence of growing international shareholding and trade and are important for companies that have, or angling to have dealings in several countries, of which insurance brokers are critical interest groups to comply with the new trend,” Shoderu said. He said the IFRS behoves on accountants in broking firms to maintain books of accounts which are
comparable, understandable and relevant, saying that the scheme required that operators be more transparent and meticulous in their financial accounting formats. He said “We are all aware that the global environment in which we operate has posed greater challenges to us to be more ethical and eschew unprofessional conducts if we want to remain in business.” In his remarks, the Commissioner for Insurance, Mr. Fola Daniel who spoke through an Assistant Director of the National Insurance Commission, Mr. Egwu Kenneth, commended the NCRIB for being the first insurance group in the country to take the initiative of shared services scheme under which its members are being trained for the IFRS.
NIC, thus enforcing the new regulation could prove difficult. Vice President and Head of Research for Databank, Ms. Doris Aggrey Ahiati, predicts that the directive will open the way for micro-finance companies to fill in the gap and insure people who are unable to afford to pay high premiums upfront. “It encourages companies to come up with creative products that are less expensive and have more flexible payment terms and also allow the insured to access claims at a faster pace,” she said. Though she expects that the rate of growth of the industry may not continue as it has in recent years – growth has been between 13 per cent to15 per cent. “The country has an insurance penetration rate of less than 2 per cent and some 80 per cent of the working population is said to work in the informal sector, a potentially large market in which micro-insurers could operate,” she said. “I think in the long term it will be profitable. Currently the probability of the insured event occurring and you being required to cover these occurring events with only half of the premiums that you should have received against these payments, puts a strain on these insurance companies.” Ahiati explained.
he board of the Nigerian Railway Corporation has directed an immediate adoption and implementation of the report and recommendations of a subcommittee set up by the corporation’s management on its pension fund. This was the result of an emergency board meeting of the corporation last week in Lagos under its new chairman, Alhaji Bamanga Tukur. The board said, “After a thorough and drastic review of the reports and recommendations of the subcommittee, the board took corrective administrative decisions aimed at preventing any further inadequacies and miscalculations in future.” Speaking during the meeting, the Chairman of the Board, Alhaji Bamanga Tukur directed that from henceforth the Board of Trustee Members should meet regularly in accordance with the law and the mandate of the Board of Trustees of the Pension Fund. He pledged his preparedness and that of his fellow board members to return back the Nigeria Railway to its original status as the number one employer of labour in the country and the most economically viable federal government establishment.
Pa. advisor accused of stealing more than $180K from 97-year-old
n elderly Meadville woman’s financial adviser has been charged with stealing more than $180,000 worth of her money over a nearly three-year period. David E.A. Seagren, 69, of 455 Wendy Way, Franklin, was arraigned before Magisterial District Judge Michael Rossi on more than 50 felony charges filed by Meadville Police. Seagren is accused of 22 counts each of theft by deception and theft by unlawful taking plus seven counts of forgery for allegedly taking a total of $183,786.86 from the 97-year-old woman’s two checking accounts. Seagren has been the woman’s insurance agent and financial adviser, according to the arrest affidavit filed in the case. C M Y K
22 — Vanguard, MONDAY, APRIL 21, 2014
Fidson boss urges healthcare companies to embrace listing
anaging Director Fidson Healthcare Plc, Dr. Fidelis Ayebae has joined other stakeholders in the health sector and capital market in urging Healthcare and Pharmaceutical companies in Nigeria to embrace the idea of listing on the Nigeria Stock Exchange in order to grow their businesses. Dr. Ayebae made this remark while addressing guests at the Nigerian Stock Exchange CEOs’ Dinner for Health sector held recently at the Federal Palace Hotel, Lagos. While emphasizing the benefits of companies listing on the NSE, he said “ Listing is a planned, deliberate and strategic decision companies must make if they must expand their business. He went ahead to make a 10-point case, highlighting the benefits of listing on the exchange.
Forex Time hosts free empowerment conference
nternational forex broker, Forex Time (FXTM) is hosting a professional empowerment conference and workshop at the Lamonde Hotel in Jos from 22-25 April to help support traders in knowing how to make informed and strategic trading decisions. The fourday event aims to help unlock the hidden opportunities in forex trading and educate participants about how to make the most out of their investments. With forex trading rapidly growing in popularity in Nigeria, FXTM wants to emphasize the fact that the key to success is understanding how the market works and knowing the fundamental principles of investing. The FXTM conference is structured so that each day participants have the opportunity to learn from expert traders at the Empowerment Conference from 10am until 1pm and then put their newfound knowledge into practice C M Y K
From left : United States Consul General, Mr. Jeffery Hawkins; Chief Executive Officer, The Nigerian Stock Exchange (NSE), Mr. Oscar Onyema; United States Ambassador to Nigeria, Amb. James F. Entwistle and Head, Corporate Services Division, Mr. Bola Adeeko on a courtesy visit to the Nigerian Stock Exchange.
NSE assures FG of developing tourism sector •Tourism accounts for N32bn market value Stories By PETER EGWUATU
he Nigerian Stock Exchange, NSE has assured the Federal Government of its commitment to developing the tourism sector, just as the sub sector accounts for N32 billion of the total value of securities listed on the exchange. The Chief Executive Officer, NSE, Mr. Oscar Onyema, who gave the assurance last week in Lagos during the inauguration of the board and planning committee of the presidential summit on tourism said, “The NSE is committed to the development of the tourism sector in Nigeria and we believe that the national discourse will set the tone for a higher level of interest and investment in the sector than ever witnessed before now. We currently have nine quoted companies in the tourism sector with a total market cap of over N32 billion. We stand ready to provide our platform for capital raising, both equity and debt, for companies in the sector.” He also appealed to other private sector bodies to consider partnering with government in various areas of our national economy, as government alone cannot develop the
economy. According to him “We request that government continue to create a level playing field and initiate investment friendly policies that will encourage publicprivate partnership in the country. The NSE will continue to collaborate with government and its various agencies for further development of our national
economy.” He noted that the Minister of Culture, Tourism & National Orientation, Chief Edem Duke had during his last visit to the NSE in October 2013 requested that the exchange partner with his ministry in organizing a national discourse on tourism in 2014, to help stir up interest and generate investment
towards culture and tourism in Nigeria. In his own remark, the Minister of Culture, Tourism & National Orientation, Chief Duke said “In the last few weeks there have been a robust debate concerning the rebasing of the nation’s economy and for over two years I have been trying to advocate especially among my colleagues and the managers of our economy that tourism sector is a new frontier both in diversifying the economy for wealth creation opportunity for individual and more importantly creating job for our country.” Continuing, he said “Quite a long time it sounded like a very lone voice and there was a time I thought something was wrong with me but when the issue of rebasing of the economy came up it became obvious that the issue the lonely voice raised earlier became something that we now celebrate. “I believed that there is a lot of brand that has not been covered, therefore the Presidential summit and tourism and investment prospects is something that will yield quite a lot of positive result. With the report which came from the World Traveling and Tourism Council working in collaborating with World Bank, Ministry of Aviations, Ministry of Trade and Development, in fact part of the report vindicate that in 184 countries around the world Nigeria is the second most likely destination for growth and investment between the year 2012 and 2013.”
L’Oreal joins ne w global com pact 1 00 st ock inde new compact 100 stock indexx
’Oreal has been included in the new global compact 100 stock index, and listed among the world’s most ethical companies. The inclusion of the company in the new global compact index is also an indication of its attractiveness to international investors. The Chief Ethics Officer of L’Oreal, Mr. Emmanuel Lulin, who disclosed this at a press briefing with some selected business editors in the media said, “The company is a signatory of the United Nations Global Compact since 2003 and one of the 100 companies included in the new Global Compact 100 stock index. The company has recently signed the Women’s Empowerment Principles, an initiative of UN Women and the Global Compact. In its effort to take corporate ethics to new heights, the company organizes an annual Ethics Day where employees anywhere in the world can chat online with L’Oreal’s Chairman and CEO about ethics.” He unveiled the secret behind the company’s recognition by the Ethisphere Institute as one of the World’s Most Ethical Companies, saying “The consistent effort to uphold the company’s ethical principles of
Integrity, Respect, Courage and Transparency, wherever they operate in the world, was very strategic in their clinching this coveted award. “We are conscious of these principles any time we make a decision, big or small,” Lulin stressed. Speaking further, he said: “A company’s values and behaviours are as important as its economic performance or the quality of its products which is why L’Oreal integrates ethics into the core of its business practices. Because it is fundamental for our success to obtain results with respect and integrity, L’Oreal puts ethics at the heart of its strategy.” Continuing, he said “This is the fifth time that L’Oreal has been honoured with this award which recognises organizations that continue to raise the bar on ethical leadership and corporate behaviour. The awarding institution, Ethisphere Institute, is an independent centre of research, promoting best practices in corporate ethics and governance, as well as a leading international think-tank for business ethics, corporate social responsibility and sustainability.
Vanguard, MONDAY, APRIL 21, 2014 — 23
UBA loan book grows to N1trn in Q1 By NKIRUKA NNOROM
nited Bank for Africa, UBA, has announced 16 percent growth in its loan book to N1.067 trillion from N937.6 billion for period ended December 31, 2013. The unaudited first quarter financial statement for the period ended March 31, 2014, also showed that gross earnings rose by 8.2 percent to N68 billion in Q1, 2014 compared to N63 billion in the corresponding period of 2013. Other details showed that quarter-on-quarter (QoQ) profit-after-tax recorded a significant 36.37 percent increase from N9.23 billion as at fourth quarter 2013 to N12.59 billion in the first quarter of 2014. The first quarter unaudited results also showed an operating income of N45.5 billion in the period, a marginal two percent increase on N44.6 billion in the first quarter of 2013. Speaking on the result, Mr. Phillips Oduoza, UBA’s Group Managing Director and Chief Executive Officer, said the bank has focused on a number of strategic initiatives aimed at increasing its market share in the Nigerian and African markets.
“We are optimistic that the gains of our improved electronic banking channels and financial inclusion initiatives will materialise in successive quarters during the year. We remain confident that we have the right tools to achieve our business goals for the year whilst ensuring we
continue to improve our customer service delivery and further consolidate our growth momentum.” said Oduoza. Also in the quarter under review, UBA’s net interest margin (NIM), which shows the quality of the bank’s earning on its lending activities, remained stable at
5.9 percent Quarter on Quarter (QoQ). Cost of funds also remained stable at 3.6 percent, QoQ, while return on assets remained stable at 1.9 percent QoQ, just as Return on equity improved to 22.1 percent QoQ from 21.3 percent.
From left: Sekou Coulibaly, General Manager Consumer Products Division, L'Oreal Central and West Africa; Tara Fela Durotoye, Chief Executive Officer, House of Tara; Idorenyen Enang, Managing Director, L'Oreal Central and West Africa; Bukola Balogun, Brand Manager Maybelline Clear Smooth Powder at the media launch of Maybelline Clear Smooth All in One Powder in Lagos on Tuesday. Photo by Lamidi Bamidele.
Riggs Ventures to increase production capacity By NKIRUKA NNOROM
iggs Ventures West Africa Plc, a polypropylene sacks manufacturing company, said it is set to further expand the installed production capacity of its plant to increase output to 100 million sacks. The company had in 2012 ramped up
production from 9 million sacks to over 60 million sacks. Addressing shareholders at the company’s Annual General Meeting, AGM, in Lagos, the Managing Director/CEO, Mr. Yomi Tokosi, said that having completed the first phase of the expansion programmes, there was need to harness the company’s potential by increasing once again, the
installed capacity due to rising demand from its clients, which comprise mostly of all major cement manufacturers in the country. Consequently, he said that the company has concluded plans to dispose its unissued shares to reputable institutional investors, adding that the exercise will facilitate the commencement of the next
CWG records 81% growth in PAT BY EMEKA AGINAM
omputer Warehouse Group Plc last month released its audited financial results for the year ended December 31, 2013 to the Nigerian Stock Exchange, NSE, with the results showing a strong and positive performance across all financial indices. Accordingly, the company’s revenues grew by 10 percent to N20.7billion from N18.7billion, while profit after tax increased by 81 percent to N612million from N339million in 2012, showing strong operation efficiency. The result further revealed a Return-on-Equity of 13 percent in 2013, as against 11 percent in 2012 and Returns on Capital Employed (ROCE) of 13 percent against seven percent in 2012. The company’s asset increased by N2 billion to N13.4 billion as at 2013 year end, while shareholders’ equity increased by 66 percent to
N5.0 billion n in the same period. The company finished with a strong cash position of over N1.1 billion, with a 38 percent increase in cash from operation over 2012. Based on this improved performance, the directors have recommended a 33 percent increase in dividend to 8k per share from 6k paid in 2012. While reviewing the results, the Chief Executive Officer, Austin Okere, said the company consolidated its operations in 2013 by investing in new systems and processes, which culminated in the cost efficiencies which has, in turn, resulted in the percentage growth in the bottom line. He said this would give CWG a cost leadership position whilst delivering superior service to its customers.
phase of the expansion, which will entail the acquisition of additional state-of-the-art machines from the company’s equipment suppliers and technical partners, Bags Solutions worldwide, Australia. Speaking, the chairman, Chief Rasheed Wiliams, said that previous expansion was undertaken with the assistance of both African Export Import Bank and Nigerian Export Import Bank between 2012 and 2013. “The expansion led to the diversification of the company’s production lines with addition of cement and industrial sack to the agro sacks line, which existed prior to the expansion exercise," he said. Speaking on behalf of other shareholders, Mr. Boniface Okezie, lauded the management for steering the ship of the company successfully through the arduous task of the initial restructuring and expansion exercise.
Nestle records 4.2% organic growth
estle Group released its first quarter financial statement showing organic growth of 4.2 percent composed of 2.6 percent real internal growth and 1.6 percent pricing. Sales were CHF 20.8 billion, impacted by substantial negative foreign exchange of 8.6 percent, and acquisitions. Net of divestitures further reduced sales growth by 0.7 percent. As a result the total evolution of sales was -5.1 percent. Paul Bulcke, Nestlé CEO, said: “Our organic growth in the first months of the year was in line with expectations and driven by volume rather than price. The continued roll-out of new products, along with good execution, sustained this growth in difficult market conditions. We will keep up the pace of innovation, while further strengthening support for our brands. We confirm our outlook for the full year: performance weighted to the second half, outperforming the market, with organic growth around 5% and improvements in margins, underlying earnings per share in constant currencies and capital efficiency."
Access Bank wins credit card award
ccess Bank emerged overall winner in the ‘Credit Card Product of the Year’ category at the annual Card and e-Payment Africa Awards ceremony held at Sandton Johannesburg, South Africa recently. In emerging winner in that category, Access Bank’s Credit Card was adjudged to offer the most value to customers in relation to that of FBMA Bank, Tanzania, ABASA Bank, South Africa and Banco De Fomemto (BFA) Angola nominated alongside the Bank in the Awards category. The Bank emerged winner of the prestigious award through an online voting by members of the public after its nomination by a penal of judges comprising of individuals with knowledge of the cards and payment services drawn across Africa. Commenting on the Award, Segun Ogbonnewo, Group Head, Channel Services, Access Bank, said: “the award is recognition for the bank’s investment in its card products and channel services, creativity, innovation and value to its customers”.
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24 — Vanguard, MONDAY, APRIL 21, 2014
Banking & Finance
IMF launches statistical center in GCC countries
Enterprise Bank partners Okpekpe International Road Race
nterprise Bank Limited has extended its Corporate Social Responsibility (CSR) vote for wellness and physical fitness of Nigerians to the 10kilometre Okpekpe Road Race as the Official Banker. The annual international event, which has been endorsed by the Edo State Gover nor, Comrade Adams Oshiomhole and the International Association of Athletic Federation (IAAF) is on its second edition and will take place on May 3, 2014 in Okpekpe Town of Etsako Council, Edo State. The bank’s sponsorship of the 2014 version of the race stems from its desire to promote a healthy lifestyle amongst Nigerians through a programme of eating right and engaging in physical fitness, a position which complements the CSR initiative of the race organizers, Pamodzi Marketing Company Limited, to promote good health in the Okpekpe environs through its malaria eradication programme. C M Y K
Herbert Wigwe, CEO, Access Bank
Timothy Oguntayo, CEO Designate, Skye Bank
Peter Amangbo, CEO Designate Zenith Bank
Nnamdi Okonkwo, CEO , Fidelity Bank
Can new CEOs re-energise banking? BY BABAJIDE KOMOLAFE
he Nigeria banking industry is set to enter another era with the appointment of new chief executives by four banks. The banks are Access Bank Plc, Fidelity Bank Plc, Zenith Bank Plc and Skye Bank Plc. In Access Bank, Herbert Wigwe took over as Managing Director/Chief Executive from Mr. Aigboje Aig-Imoukhuede, while in Fidelity Bank, Mr Nnamdi Okonkwo took over from Mr. Reginald Ihejiahi. In Zenith Bank, the appointment of Mr. Godwin Emefiele as Governor of Central Bank of Nigeria (CBN) paved the way for the appointment of Mr. Peter Amangbo as Managing Director, the third since the inception of the bank in 1990. Skye Bank joined the trail last week, when it announced the appointment of Mr. Timothy Oguntayo as successor to the incumbent Managing Director/Chief Executive Officer, Mr. Kehinde Durosinmi- Etti, who will retire by July 31st, 2014. These changes have profound implications for the industry in many respects. First, the four new chief executive officers are assuming responsibility over a huge chunk of the banking industry. Together, they will be overseeing N7.175 trillion banking assets, which represent 28 percent of the total assets of the industry in 2012. Further, they are now in charge of N5.23 trillion of deposit, which represents 36 percent of the total deposit of the industry in 2012. Finally, the four men will be responsible for loans and advances worth N2.774 trillion or 37 percent of the total loans and advances of the industry in 2012.
he statistical community in the Middle East received an important boost last week with the launch of a statistical center for the countries of the Gulf Cooperation Council (GCC) in Muscat, Sultanate of Oman.. GCC-Stat was established on April 8 by the GCC to serve as the official provider of national statistics and other data for its six member states (United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar, and Kuwait). It is an independent supranational institution dedicated to the collection, analysis, and dissemination of official data on member states for the benefit of decision makers, researchers, and other users. Deputy Managing Director Min Zhu of the Interantional Monetary Fund (IMF) welcomed the initiative, saying that “the IMF looks forward to collaborating closely with the regional center across the range of our activities. The creation of GCC-Stat will undoubtedly contribute to strengthening data collection and dissemination in the GCC countries and enhance cooperation among regional and international institutions in the area of statistics.” ”I would like to congratulate the GCC for establishing this regional statistical center, GCC-Stat,” said Louis Marc Ducharme, Director of the IMF’s Statistics Department.
Together, they will be overseeing N7.175 trillion banking assets, which represent 28 percent of the total assets of the industry in 2012
Furthermore two of these banks, namely Zenith Bank and Access Bank are among the top five banks in the industry. The top five banks account for 51 percent of the total assets of the industry and 53 percent of total deposits in 2012. The remaining two banks, Skye Bank and Fidelity Bank are among the tier two banks and are listed among the top ten banks in the country. Thus these men are assuming enormous responsibilities with significant impact on depositors and activities in the industry. The four new CEOs are however not novices to banking. Put together, they have over 60 years banking experience. Herbert Wigwe for example has over 20 years experience in banking, which include 11 years as Deputy Managing Director of Access Bank. Prior to this, he worked in Guaranty Trust Bank, where he rose to become Executive Director, corporate banking. On his part, Okonkwo of Fidelity Bank was previously Executive Director in charge of South Directorate of the
bank. He has over 24 years experience. He spent a huge chunk of his career in UBA where he rose to become CEO of UBA Ghana, and later doubled as the Regional Chief Executive Officer for UBA West African Monetary Zone, with responsibility for Ghana, Liberia and Sierra Leone. The Zenith Bank CEO designate, Peter Amangbo also has a banking experience spanning over two decades. He had been an Executive Director of the bank and its subsidiaries since 2005. As an Executive Director of Zenith Bank for the last nine years, Amangbo was responsible for the supervision of corporate and commercial banking, corporate finance, trade services and all the subsidiaries of the bank. Timothy Oguntayo, the Skye Bank CEO designate also has in his kitty banking experience of over two decades. Prior to his appointment, Timothy was the bank’s Executive Director responsible for the supervision of Corporate and Investment Banking Group, Commercial Banking in the South – West Region and all the international banking subsidiaries of the bank. He became an executive director of the bank and its subsidiaries in 2009, and was the pioneer MD/CEO of Skye Financial Services Limited (the investment banking arm of Skye Bank) before the bank’s divestment from it in 2012. So, the four men have not only been tested and proven in terms of responsibilities, they have also been running their banks from behind in various critical operations. It is however pertinent to note that, though eminently qualified, their emergence is
courtesy of the implementation of the tenure limit of two tenure of five years each for banks’ CEOs and executive directors. But for this limit, these men would have remained and probably ended their career as executive directors. But beyond this, the new CEOs are coming on board at a time of increased challenges and unprecedented changes in the industry. The tight money supply policy of the CBN is the first of these challenges. With the CBN sterilising about N2 trillion of public sector and private sector deposits, the era of cheap deposit for banks might be gone forever. In addition to this is the elimination or reduction of some fees. These include the elimination of Commission on Turn Over (CoT), a major source of cheap income for banks. These implied the four new helmsmen would have to work harder to sustain the profitability growth of their banks. There is also the transition to a cashless economy, with all its challenges and opportunities for banks. Most importantly, this has introduced another dimension to the intense competition in the industry. Now banks have to compete for income and fees via electronic payment channels, while also mindful of the risk of electronic fraud which has cost some banks millions of naira. In addition is the push for financial inclusion and the opportunities it offers for deposit attraction. While they would be expected to grow the deposit base of their banks, they will also be faced with the challenge of deploying these deposits in an efficient manner
Continues on page 25
Vanguard, MONDAY, APRIL 21, 2014 — 25
Banking & Finance
ECB launches programme to prepare Balkan central banks for EU
he European Central Bank (ECB) last week launched a euro system co-operation programme with the Bank of Albania (BoA), the Central Bank of the Republic of Kosovo (CBRK) and the National Bank of the Republic of Macedonia (NBRM). The programme aims to prepare
the three central banks to join the European System of Central Banks (ESCB), once the countries qualify for European Union (EU) membership. The EU has allocated €500,000 to the programme from its instrument for preaccession sssistance. The programme will be implemented by the ECB in
partnership with the Deutsche Bundesbank, the Banque de France, the Banca d’Italia, the Central Bank of Malta, The Netherlands Bank, the Austrian National Bank, Bank of Portugal, Bank of Slovenia and the National Bank of Slovakia. Experts will also be provided by the Bulgarian National Bank and
the Czech National Bank. The programme will first prepare ‘needs assessment reports’ for the Albanian and Kosovan central banks, identifying further progress needed to meet EU central banking standards. A similar assessment was completed in July last year for the Macedonian central bank – finding over a nine-month
Can new CEOs re-energise banking? Continued from page 24 that will enhance net interest income and minimise bad loans. In this regard, the financing opportunities offered by the power sector reforms and infrastructure needs of the country will come handy for the new CEOs and their team. But they will have to compete for these financing opportunities too. Then is the challenge of shareholders’ expectation for increased returns on their investment, and customers’
expectation of improved services. The two are related. Their ability to meet shareholders’ expectation is determined by their ability to retain and attract new customers through quality and efficient service delivery. All these challenges and expectations combined with the fierce competition in the industry makes the job of banks’ CEOs tasking and stressful. Lots of sleepless nights attending meetings, pursuing deals and strategising imposes lots of risks to the health of the average CEO in the banking
industry, and this is always visible in their countenance. Yet these new CEOs have to succeed. Fortunately, unlike their predecessors, they are not going to be faced with profound challenges like universal banking, consolidation, and the global financial crisis, which their predecessors had to contend with. They are running banks that have withered these storms and have solid structures in place to compete favourably. Depending on the emerging scenario and unforeseen changes in the
industry, the appointment of these men, is not expected to affect the strategic focuses of their banks. But given their career backgrounds, which indicate they are not men that romance failure, each of them is expected to come on board with hunger and passion to succeed and surpass the achievements of their predecessors. This is the common factor which would greatly define how they drive their team, the innovations they would likely introduce and the way they would influence banking in the next five years.
process the NBRM already has practices and policies in place that are “equal or close to EU standards in many areas”, though further work remained to be done. To lay the foundations for this co-operation programme, the first interim report was signed in Tirana today by Yves Mersch, member of the executive board of the ECB; Ardian Fullani, governor of the BoA; Bedri Hamza, governor of the CBRK; and Fadilj Bajrami, vice-governor of the NBRM. Announcing the launch of the programme, Mersch said: “Strong central banks are key for monetary and financial stability in Europe and around the world. With this joint initiative, the central banking community in the EU stands ready to support our colleagues in the western Balkans in their endeavour to introduce the highest standards, for the benefit of their countries and people.” Fullani added: “The ultimate goal of the ECB’s technical assistance goes beyond the transfer of expertise.
C M Y K
C M Y K Company Oil and Gas and Products Petroleum Prod ucts Capital Oil Plc 1st fTier Securities AGRICULTURE Crop Production FTN Cocoa Processors Plc Okomu Oil Palm Plc Presco Plc
Opening Price (N) 0.50
Daily Stock Market Report Closing Price (N) 0.50
Opening Price N
Quantity Traded 5,000
Year High 0.50
Year Low 0.50
0.50 36.02 42.00
3,000 784,234 63,000
0.50 24.58 8.30
0.50 14.53 6.40
0.10 7.33 2.75
50.00 2.77 4.37
1.44 3.86 1.19 5.06 3.55 59.00
1.58 3.95 1.21 5.06 3.83 59.21
116,726 4,500 452 850 16,543,498 182,339
2.54 7.60 8.82 8.28 1.82 42.50
1.45 6.43 5.89 5.52 0.50 28.70
0.16 0.31 0.00 0.35 0.24 6.89
5.18 20.74 0.00 15.77 3.64 4.14
CONSTRUCTION/REAL ESTATE Building Construction/Structure ARBICO Plc Constain (WA) Plc
CONSTRUCTION/REAL ESTATE Non-Building/Heavy Construction Julius Berger Nig Plc Roads Nigeria Plc
CONGLOMERATES Diversified Industries A.G. Levents Nigeria Plc Chellarams Plc John Holt Plc SCOA Nigeria Plc Transnational Corporation UACN Plc
Real Estate Development UACN Property Development Real Estate Investment Trusts Skye Shelter Funds Union Homes Real Estate Investment CONSUMER GOODS Automobile/Auto Parts DN Tyres & Rubber Plc
3.72 2.12 2.90 70.00 1.72 1.26 7.36 1.57
3.72 2.12 2.90 70.00 1.80 1.36 7.36 1.57
162 29,012 289,583 166,642 380,659 529 2,150 10
5.31 1.45 3.20 23.11 5.61 1.96 12.91 200
5.31 0.70 0.83 2.58 3.61 0.95 0.95 4.28
0.19 0.44 2.62 0.20 0.09 0.00 0.00
ICT Computer Based Systems Courteville Investment Plc
Computers and Peripherals Omatek Ventures Plc
17.00 8.90 39.60 9.00 234.77 0.50 1.16 106.00 4.10 1.64 10.00
17.00 8.90 40.00 9.00 234.80 0.52 1.16 110.01 4.10 1.64 11.00
190,566 12,026 452,463 115,896 139,371 100,000 49,332 295,677 131 500 123,564
30.00 12.57 43.98 15.49 132.51 0.75 3.51 48.05 5.28 3.36 13.40
12.00 8.10 15.16 4.16 95.00 0.50 1.02 36.58 5.11 0.51 10.93
2.14 1.09 2.28 1.47 7.56 0.00 0.00 4.10 0.44 0.23 0.00
7.86 4.97 8.88 2.31 13.17 0.00 0.00 42.86 14.19 2.89 0.00
13.79 180.00 26.50 150.00 0.77
20 18,221 26,805 525,007 10,000
4.63 255.00 7.10 100.00 1.01
2.23 186.00 5.23 72.50 0.93
0.00 9.95 0.41 5.08 0.00
0.00 19.98 16.29 22.22 0.00
Beverages-Non-Alcoholic 7-UP Bottling Company Plc
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
Tools and Machinery Nigerian Ropes Plc
8.13 9.63 67.35 3.81 11.71 0.53
8.00 9.60 67.35 3.94 11.55 0.53
416,596 737,153 464,541 3,670,815 499,647 38,647
19.90 16.20 95.00 6.60 6.70 0.88
4.31 4.02 57.00 2.31 3.80 0.50
0.00 0.91 4.09 0.39 1.01 1.13
16.91 14.38 16.89 16.92 5.75 8.83
NATURAL RESOURCES Chemicals BOC Gases Plc
Food Products-- Diversified Cadbury Nigeria Plc Nestle Nigeria Plc
Household Durables Nigerian Enamelware Plc Vitafoam Nig. Plc Vono Products Plc
32.27 4.20 1.66
32.27 4.20 1.66
60 687,694 11,000
36.19 5.54 2.88
33.96 2.91 2.88
13.89 0.61 0.00
2.44 7.07 0.00
Personal/Household Products PZ Cussons Nigeria Plc Unilever Nigeria Plc
FINANCIAL SERVICES Banking Access Bank Plc Diamond Bank Nigeria Plc Ecobank Transnational Incorporated Fidelity Bank Plc First City Monument Bank Plc Guaranty Trust Bank Plc Skye 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 African Alliance Insurance AIICO Insurance Plc Continental Reinsurance Plc Cornerstone Insurance Company Consolidated Hallmark Insurance Custodian and Allied Insurance Plc Equity Assurance Plc Goldlink Insurance Plc Great (Nig) Insurance Plc Guinea Insurance Plc International Energy Insurance Plc Investment and Allied Assurance LASACO Assurance Plc Law Union & Rock Insurance Plc Linkage Assurance Plc Mansard Insurance 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 Unity Kapital Plc Universal Insurance Plc Wapic Insurance Plc Microfinance Banks Fortis Micro-Finance Bank Plc NPF Micro-Finance Bank Plc Mortgage Carrier, Broker and Sector Abbey Building SOC Aso Savings and Loans Plc Resort Savings & Loans Plc Union Homes Savings Plc Other Financial Institutions Africa Prudential Plc Crusader (Nigeria) Plc Deap Capital Management & Trust Plc FBN Holdings Plc Nigeria Energy Sector Fund Royal Exchange Assurance
8.22 6.20 13.15 2.00 4.75 27.41 3.50 2.29 7.00 10.00 0.50 0.95 22.42
8.26 6.10 13.15 1.97 4.75 27.20 3.47 2.40 7.05 10.27 0.50 0.97 22.50
0.50 0.79 0.95 0.50 0.50 2.00 0.50 0.50 0.50 0.50 0.62 0.50 0.50 0.50 0.50 2.25 0.50 0.76 0.50 0.59 0.58 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.70
0.50 0.79 0.97 0.50 0.50 2.06 0.50 0.50 0.50 0.50 0.62 0.50 0.50 0.50 0.50 2.32 0.50 0.78 0.50 0.57 0.58 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.70
1.35 0.50 0.50 0.50
1.35 0.50 0.50 0.50
3.00 0.50 0.99 12.25 552.20 0.62
3.01 0.50 0.99 12.27 552.20 0.62
7,267,172 11,333,762 196,538 5,942,442 865,336 8,955,124 6,232,720 6,232,720 565,267,112 824,851 12,000 1,636,332 12,727,859 100 130,020 245,313 1,368,812 150 9,054,578 1,500 93,000 10,000 1,100 20,000 1,670,890 10,500 3,200 8,000 557,503 217,500 2,889,345 10,000 108,000 497,000 250 1,000 1,000 30,000 28,000 810,000 300 1,620,154
12.39 7.51 14.04 3.47 5.70 26.09 6.50 3.05 7.69 10.60 1.22 1.75 21.49
4.70 1.92 9.90 1.13 2.90 13.02 2.65 0.80 1.64 2.34 0.50 0.52 11.96
1.42 0.90 2.81 0.43 0.00 2.10 0.71 0.54 0.67 0.00 0.00 1.34 2.09
8.73 8.34 5.00 7.93 0.00 12.39 9.15 5.43 11.19 0.00 0.00 0.43 10.24
0.50 1.11 1.03 0.54 0.50 2.44 0.50 0.68 0.50 0.50 0.50 0.50 0.50 0.60 0.50 2.59 0.54 0.81 0.61 0.50 1.01 0.50 0.56 0.50 0.50 0.50 0.50 0.50 1.08
0.50 0.50 0.58 0.50 0.50 1.08 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 1.06 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50
0.00 0.50 0.14 0.02 0.50 0.28 0.01 0.00 0.03 0.01 0.00 0.02 0.00 0.00 0.03 0.16 0.00 0.37 0.02 0.03 0.06 0.04 0.09 0.00 0.00 0.00 0.02 0.00 0.07
0.00 22.20 6.79 27.30 10.00 7.43 50.00 0.00 16.67 50.00 0.00 25.00 0.00 0.00 16.67 16.19 0.00 2.19 26.00 16.67 15.50 12.50 5.65 0.00 0.00 0.00 25.00 0.00 15.43
500 2,400 10,200,000 109,000
1.57 0.50 0.50 0.50
1.37 0.50 0.50 0.50
0.19 0.02 0.00 0.00
47.6 7 25.00 0.00 0.00
1,494,014 22,000 200 21,841,175 98,400
0.75 0.50 2.02 20.00 250 0.78
0.00 0.50 2.02 8.57 552.20 0.50
0.19 0.00 0.00 2.03 12.68 0.13
9.16 0.00 0.00 9.85 43.55 6.00
13.79 188.00 26.50 149.99 0.77
Beverages-Brewers/Distillers Champion Breweries Plc Guinness Nigeria Plc International Breweries Plc Nigerian Brew Plc Premier Breweries Plc
9.71 18.03 6.71
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
ICT Telecommunications Starcomms Plc
103.50 21.36 2.60
10.56 0.87 0.21
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
103.50 20.45 2.60
103.50 10.64 0.03
IT Services NCR (Nig) Plc Tripple Gee and Company Plc Processing Systems Chams Plc 4.11 4.73
Closing Price N
103.50 15.69 1.41
HEALTHCARE Medical Supplies Morison Industries Plc Healthcare Providers Union Diagnostics & Clinicals Services
0.50 39.90 42.00
Livestock/Animal Specialities Livestock Feeds Plc
Sim Capital Alliance Plc Stanbic IBTC Bank Plc UBA Capital Plc
as at Thursday, April 17, 2014
Packaging/Containers Avon Crowncaps & Container Nigerian Bags Manufacturing Company
0.5 0.25 0.00
88.50 0.00 3.07 9.05 14.13 0.00 0.00
39.60 9.16 0.00
Metals Aluminium Extrusion Ind Plc
Non-Metalic Mineral Mining Multiverse Plc
Paper/Forest Products Thomas Wyatt Nig. Plc
Electronic and Electrical Products Cutix Plc Nigerian Wire & Cable Plc
3.98 18.97 12.68 4.30 1.05 2.92 0.63
3.98 19.95 12.68 4.30 1.05 2.78 0.66
6,888 119,520 10 29,198 200 84,311 2,749,340
3.98 15.58 15.03 4.30 1.86 2.92 0.63
3.98 12.71 13.97 3.60 1.05 2.92 0.63
0.00 3.90 0.90 1.22 0.30 0.07 0.00
0.00 3.26 0.00 3.52 6.18 41.71 0.00
Mortgage Carriers, Brokers and Se Abbey Building Society Plc 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 OIL AND GAS Energy Equipment and Services Japaul Oil & Maritime Service
Intergrated Oil and Gas Services Oando Plc
20.50 0.50 49.20 148.99 122.00 54.44 171.50
20.50 0.50 49.20 148.99 123.00 51.72 171.50
82,191 561 39,690 20,376 50,636 103,149 33,143
37.10 0.70 5.59
0.50 0.50 3.89
4.93 0.00 0.61
7.40 0.00 6.99
163.50 2,100 240.00
141.00 63.86 195.50
6.11 2.98 14.63
11.11 19.23 17.07
Petroleum and Petroleum Products African Petroleum Plc Beco Petroleum Plc Conoil Forte Oil Nig Plc Mobil Oil Nigeria Plc MRS Oil Nigeria Plc Total Nigeria Plc Hospitality Tantalisers Plc SERVICES Afromedia Plc Automobile/Auto Part Retailers RT Briscoe Plc
Courier/Freight/Delivery Red Star Express Plc Trans-Nationalwideide Employment Solutions C & I LEASING PLC
Hotels/Lodging Capital Hotel Ikeja Hotel Plc
0.90 3.00 1.33
0.04 0.34 0.92
11.25 34.09 2.12
Media/Entertainment Daar Communications Plc
Printing & Publishing. Academy Press Plc Learn Africa Plc Studio Press Nig. Plc University Press
1.80 1.77 2.40 4.05
1.80 1.70 2.40 4.05
1,000 145,500 2,000 29,300
3.17 0.30 0.00 3.60
Road Transportation Associated Bus Company Plc
Speciality Interlinked Technologies Plc
Transport-Related Services Airline Services and Logistics Plc Nigerian Aviation Handling Company
26 â€”Vanguard, MONDAY, APRIL 21, 2014
Vanguard, MONDAY, APRIL 21, 2014 — 27
C M Y K
28 —Vanguard, MONDAY, APRIL 21, 2014
Interview By OMOH GABRIEL, Business Editor
t the just-concluded IMF/World Bank Spring Meetings, the Minister of Finance and the Coordinating Minister of the Economy, Dr. OkonjoIweala and the Acting Governor of the CBN, Dr. Sarah Alade took time off their back-to-back meetings with global financial leaders and officials of the IMF/World Bank to brief the press on what transpired at the various sessions of the global financial caucus meetings. In fact, Okonjo-Iweala spent just about 30 minutes with the media before rushing to attend a session she co-chaired with the World Bank President saying it would be rude for her to stay back while the World Bank President waits for her to come in. Here are excerpts of the briefing. What was the focus of this easing out of the liquidity the year’s Spring Meetings? US authorities are putting into The focus of this year ’s the US economy is an issue. spring meetings has been to This implies that the era of look at the global economic low interest rate is over in the recovery, the groups of US. This has a very important countries and what needed to implication for Nigeria as a be done by each set, either for country as it will have impact them to strengthen their on portfolio investment flows, positions and make sure that as well as impact on Nigeria whatever the circumstance, Eurobond. they are able to prevail with a How participants reacted to strong economy under the Nigeria rebased GDP present global economic For us, the Nigerian circumstances. delegates, we came into the The good news is that Spring Meetings strong; we recovery is on; the global came at the time Nigeria just economy is recovering. The announced its rebased GDP recovery in the US seems to and this was very favourably be stronger but the one in the accepted, particularly as the Euro zone is seen as quite institutions themselves fragile. participated in the work and The reason for the fragility also the quality control. The is that they are going through fact that Nigeria now has a what may be termed an better measurement of its GDP, extended period of low and the base is stronger, was inflation. Low inflation is not well received. It elicited a lot regarded as a good thing. It of interest among participants means that the demand for and even some private sector goods and services are operators who were coming to suppressed and there is say ‘talk to us about it,’ told almost the fear of deflation. us they “are interested in Why recovery in Europe is investing” and one of them is fragile: Bumberg Green. They said Falling prices in Europe, as they have already sent a team happened in Japan, if these to Nigeria that is working with countries start suffering from the Minister of Agriculture to continuous low prices, make Nigeria the hub for internally-driven demand for grain and cold storage. They goods and services will be low want to invest $250 million. and that would mean that the They were looking around countries in Africa to see chances of those countries’ economies recovering will either be slower or reversed. The message is that yes, recovery is on, there is fragility particularly in Europe and therefore, countries have to look at this and strengthen their positions. The second reason for the fragility: The other t h i n g happening in the US is tapering. The g r a d u a l withdrawal or
Dr Sarah Alade
C M Y K
We are worried about growth without impact on lives of Nigerians
where they could set up the hub. The fact that Nigeria now has the largest economy in Africa is making them feel that the hub should be in Nigeria, if we handle this well, and that decision is made. So we met them here with the Minister of Agriculture. That is just an example of interest the rebased GDP is generating at the Meetings. Nigeria has strong economic fundamentals:
We also came into the meeting with very strong economic fundamentals, that also has played to our benefit. What do I mean? Our budget that has now been passed, even though they added a little, our fiscal deficit has moved from 1.9 per cent to 2.1 per cent of GDP. I think our parameters look good. What does the uncertainty in the global economy mean for Nigeria?
What does this mean to Nigeria, that is the uncertainty in the global environment? It means we must continue to build fiscal buffers, because they are telling us they are not sure which direction the Euro economy is heading, although the European Bank has said it will do the necessary, and if needed, inject more stimulus into the economy. They have told us that each country should build its buffer and it means Nigeria has to build its reserves and excess crude account, which is what we are doing, we have to maintain our macro economic framework, we must continue on that. Sarah Alade cuts in: For us at the Central Bank, we have talked about the quantitative easing. It has implications for Nigeria. Once we start rebuilding our reserves and excess crude account and get our policies right, we are on the right path. Throughout the Meetings, the emphasis was for emerging market
Vanguard, MONDAY, APRIL 21, 2014 — 29
economies to get their policies right. What about Nigeria’s GDP/ inequality in the country? Okonjo-Iweala: On Nigeria’s economic growth path that has been assessed as strong, we have been talking to participants and officials at the Meetings about inequality and job creation in Nigeria. I am very happy to announce that based on our own suggestions to the Fund (IMF) that we are worried about growth (without impact on the lives of Nigerians) and that we must have better quality growth. What I mean is growth that will create the jobs we need. Actually, they have launched some good work, several pieces of analytical work on how each country could cope with job creation, redistributive taxes through the budget. Nigeria not alone in growth without jobs Nigeria is not the only country in this, eventually all the emerging markets are suffering the same thing. Brazil, South Africa, Mexico, everybody. Mexico’s GDP is 4.1 per cent and they are suffering the same problem as Nigeria, Indonesia also. The Fund and the Bank are looking at these issues; the World Bank is coming to support Nigeria on how to build a social safety net programme to cater for those at the bottom end of the ladder. It is interesting that so many other countries are asking for the same thing and the Bank and the Fund are offering a series of suggestions on how to create more jobs. Call for help to stop illicit financial outflows from Africa We, group of African Finance Ministers also requested that the Bank and the Fund should look into the issue of illicit financial transactions. We have persisted in this demand and African Finance Ministers are saying based on a finding of a panel chaired by former South African President, Thabo Mbeki that about $50 billion a year is disappearing from the continent, we asked the World Bank and the Fund to talk to the receiving countries and help through capacitybuilding. How the money is disappearing from Africa How is the money going, it goes through those companies that should be paying taxes that are finding good ways to avoid taxes, something called transfer pricing, their profits are exported to jurisdiction where they pay less tax and we cannot tax them. Pricing through over-invoicing and under-invoicing of goods and services that they bring into our countries and corruption of officials in the continent especially as it relates to natural resources, almost every country in the continent has one mining activity or the other and the contracts are not favourable to us. They will help in two ways; one is capacity, you need specialised skills to be able to deal with transfer pricing, over-invoicing and missed pricing and they are also to share information. Developed countries now have automatic tax information
The reason for the fragility is that they are going through what may be termed an extended period of low inflation. Low inflation is not regarded as a good thing. It means that the demand for goods and services are suppressed and there is almost the fear of deflation
exchange; they get tax information automatically if you request, for people operating within their jurisdiction. We are not included; we are asking to be included so that developing countries can also get this information. And they should also help us with their authorities to repatriate
support us, they support us, and if they are not able and they have some other view, we tell them thank you very much and it has been working very well. So, with regard to the austerity, what I noticed in the IMF meetings is that they are not promoting austerity everywhere. They are actually telling the
World Bank and we were able to get $49.6 billion. They’ve done a bit better this time ($52 billion) and they are going to use it to support the poorer countries. I believe that they are trying to do so based on the needs of those countries for infrastructure, health, education spending and to support good policies. Those policies are on country by country basis and the country has to discuss with them. In our own (Nigeria’s) case, we don’t have any IMF programme, so, we are not in any kind of discussion with the Fund and we are not borrowing. So, the relationship we have with the IMF is based on policy issues. They ’ve been very supportive of Nigeria. If you read the Articles 1V, which was concluded before this meeting, you will discover
Dr. Okonjo-Iweala identified illicit financial outflows. World Bank announced that there is more funding amounting to about $52milllion now. Are they using these funds rightly for developing countries or pursuing policies that are making poorer countries poor? First of all, let me preface this by saying that we are at a stage of our development. We are in control of what we want to do and we should not discuss this issue of promotion of ideology. If somebody comes to promote something you don’t believe in, you tell them to go away and say this is what I want to do. So, we do not feel that any country is coming to promote such in Nigeria. The experience we have had is that we table what we want to do and if they are able to
Euro zone that they may need to ease off because of the expected low inflation. They are telling them they need to stimulate their economy more, that is not austerity. They were even criticizing the UK previously for pursuing austerity and telling them they need to promote the economy and stimulate it more. Then where they feel that the fundamentals are not strong enough, which is country specific, they can advise. So, basically, they are looking for places where the demand is still very low- to pump it up and where demand is high – to tighten it. So, that is the impression. Secondly, the $52 billion you talked about is the IDA – the soft loan arm of the World Bank. They had replenishment. Recall that the last one was IDA 16, which I chaired when I was at the
that the IMF feels that we are moving in the right direction. The World Bank is also supporting us on the energy front. The World Bank Group is investing in Azura power plant in Nigeria. They are supporting transmission with $700 million. So, infrastructure, health and water are the areas they have focused on.
Dr. Okonjo leaves for her next meeting, CBN Acting Governor, Sarah Alade steps in: Is the $50 billion financial illicit fund also affecting Nigeria and which areas are we prone to, since the country is now the largest economy in Africa? The Minster has explained that these funds include transfer pricing for instance.
When companies do transfer pricing, it means that when they import, they import at a higher price than they should have and when they are sending the money back, they send back more than they should have sent. So, it is across the continent, it not peculiar to Nigeria. This applies to different sectors of the economy and it has to do with over-invoicing and tax evasion. So, the $50 billion identified is for the entire African continent. What we have requested is for the World Bank’s cooperation in stopping it and our own capacity too to stop it when we know what is happening. Is it not ironical that they are talking of low interest rates, while there is high interest rate in Nigeria. Also, we are keeping our foreign reserves abroad when we need it for our economy. What is the CBN doing to reduce interest rates so that entrepreneurs can have access to cheap funds? We just talked about quantitative easing in the US. When the United States for instance, stops pumping in the money it is pumping into its economy, which has helped our economy stabilize, then there will be issues. That means foreign portfolio investors will withdraw their money from the Nigerian economy and invest it here (in the US). So, you need a high interest rate to attract portfolio investments into the country. That is why interest rates in Nigeria are high. But that does not mean that we have not been trying to persuade the banks to also do things that will ensure that customers have lower interest rates. In terms of cost to accessing loans, CBN has gone ahead to do shared services with banks. CBN had partnered with banks to make sure that the cost of services they have, which would have been ordinarily passed on to customers, is becoming low. Banks now share back office facilities instead of each bank having its own. So, I think it’s a matter of time; we will see interest rates come down eventually. But it is also important to say that before interest rates come down, fiscal buffers must be up. We will not be depending on portfolio investment or other inflows to run our economy. Once we have our Excess Crude Account (ECA) coming back up and we have the foreign reserves going up and a substantial part of those reserves belongs to us in the country, then we will not need to raise interest rate to attract portfolio investments. C M Y K
30 — Vanguard, MONDAY, APRIL 21, 2014
Homes & Housing Finance
Poor planning bane of Nigeria’s housing sector
he housing challenge currently being confronted by Nigerians has been attributed to poor planning on the part of government. A retired town planning officer, Mr. Yacoob Abiodun, said this during the launch of a book titled: ‘Affordable Housing and Urban Planning in Nigeria: Advocacy for Change’, in Lagos. He noted that government’s investments in housing had continued to fail because the country’s housing plan was not up to standard. “Even with the stupendous financial resources at government’s disposal, it is so disturbing that the Nigerian government cannot provide or create an enabling environment for the provision of affordable housing for her teeming population. It is unthinkable why the provision of affordable housing should be a daunting task for us as a nation when a less-endowed country like Sri Lanka was able to provide houses for majority of her citizens under the United Nations’ award winning one million housing programme,” he stated.
FG charges labour on mass housing
he Federal Government has charged the labour movement in the country to invest in mass housing for the benefit of workers and the less privileged in the society. Minister of Labour and Productivity, Emeka Nwogu, said this during the inauguration of the 22bedroom Health Workers Lodge in Abuja. He said such a measure would reduce the estimated 17 million units of housing deficit in the country. The property, valued at over N300 million, was built by the Medical and Health Workers Union of Nigeria, an affiliate of the Nigeria Labour Congress, and is located at Life Camp Area of the Federal Capital Territory (FCT). Nwogu also advised organised labour to be prudent in the utilisation of public funds for the benefit of its members and mankind in general. “This is a positive step towards keying into the transformation agenda of the Goodluck Jonathan administration. On behalf of the President and the government of C M Y K
“Affordable housing delivery requires efficient power sector” By YINKA KOLAWOLE
iscussants at the r e c e n t l y concluded Lagos Economic Summit tagged, EHINGBETI 2014, submitted that efficient and stable power supply will facilitate the delivery of affordable housing in Nigeria. At one of the sessions of the summit with the topic: ‘Harnessing Electricity to Grow Agriculture, Transportation and Housing Sector’, experts in the housing sector noted that unstable power supply in the country has hampered the real estate sector’s growth through inability of indigenous industries to produce cheap local building materials. They lamented that six months after the official handover of the of the successor companies carved out of the defunct Power Holding Company of Nigeria (PHCN) to private investors, the nation’s economy including the housing sector, was yet to show signs of growth. The expectation, according to them, was that the privatisation of the PHCN successor firms would lead to the growth of the housing sector through steady supply of power to local industries and, consequently, lower prices of locally-produced building materials. Mr. Hassan Usman, Managing Director, ASO Savings and Loans, said efficient power system in Nigeria could guaranty more affordable houses, saying the high cost of building components had left developers with no choice but to import building materials. “We can’t deliver affordable housing with consistent importation of building materials, hence, we need an efficient power system in the country to enable our manufacturing firms to produce building components at cheaper rates to make affordable homes a reality. With an efficient power supply, it’s easier to deliver affordable housing,” he said. According to him, if power supply was stable, industries which specialised in producing building materials such as tiles, sanitary wares, etc, would be producing at cheaper rates, thereby enabling property developers to deliver affordable houses to middle and low-income earners. This he however
noted is not the case as most developers have continued to patronise the seemingly cheaper imported building materials despite the high exchange rate of the naira to foreign currencies. In his presentation, Olumide Olusanya, a professor of Architecture at University of Lagos, said to meet its estimated demand of
two million housing units, Lagos State needs faster alternative building techniques such as sustainable prefabricated building systems for quicker construction. He however pointed out that lack of steady power supply to steel industries makes such unachievable. Lagos State commissioner
for Housing, Bosun Jeje, attributed the inability of the state to build miniapartments in high-rise buildings to epileptic power supply. “Currently, our highrise buildings are limited to four floors and not the usual 10 floors or more we see in other parts of the world,” he added. According to him, the state lacks adequate power supply, while high-rise buildings demand constant power supply to power some amenities such as escalators for their occupants.
•Artist impression of Good Shepherd estate
Developer flags off 70-unit Good Shepherd estate in Lagos BY KINGSLEY ADEGBOYE
essrs SF Engineering Limited has flagged off the development of a 70-unit mixed residential housing estate in Ketu area of Kosofe Local Government Area to afford prospective home owners the opportunity of becoming landlords and landladies in the next one year. The housing estate known as Shepherd Estate, sits on 5.7 acres of land owned by The Apostolic Church, LAWNA Territory Lagos. Comprising 12 units of 4bedroom semi-detached houses and 58 units of 4bedroom terrace houses, the project is expected to be delivered in 12 months. Mr. Sesan Obe, Managing Director and Chief Executive Officer, SF Engineering Ltd disclosed that the estate offers a safe, secure and serene environment for family’s living. Besides, exceptional ancillary facilities and infrastructure in the estate include 24-hours power supply, central waste disposal system, CCTV camera, 24 hours security service, constant water supply, recreational facilities and fitness centre. Others facilities are passable road
network, functional drainage system, street lighting, swimming pool, mini mart and ample parking space. He said the estate being financed by First Bank of Nigeria (FBN) Plc, is also to offer mortgage facility from the mortgage for prospective subscribers who need mortgage financing. According to him,
members of the public would have opportunity to subscribe for the accommodation, adding however, that preference will be given to the church members. “The houses will be affordable and all members of the Public are eligible to acquire a residential space of their dream in the estate” said Obe, adding that construction works will commence on the site as soon as the building approval are being finalised by the state government.
FCT, developer seal N2.85trn housing project deal
he Federal Capital Territory (FCT) administration has entered into an agreement with a private investor, Centenary City Plc, to develop a $18.3 billion (about N2.854 trillion) mega housing project in Kuje, off Nnamdi Azikiwe Airport Road, Abuja. Minister of Federal Capital Territory, Sen. Bala Mohammed, said that the project which is to commemorate the centenary celebration of Nigeria’s corporate existence was initiated by the Federal Government to provide qualitative houses for Abuja’s rapidly growing population. He added that the project would provide more than 800,000 indirect and 2,050 direct jobs during the construction period. Mohammed said the project would be carried out in seven phases within 60 months completion period, to be ready in 2019. He said under the agreement, FCTA has allocated 1,264.8 hectares of land to the investor, with 80 per cent reserved for commercial and mixed use purposes, including a five-star hotel and convention centre, while 20 per cent would be for residential development. The minister said FCTA has handed over the Certificate of Occupancy (C of O) for the land to the investor to enable the company access funds to accelerate development of infrastructure on the land. According to him, the project will create wealth and development to our economy.
Vanguard, MONDAY, APRIL 21, 2014 — 31
C M Y K
32 — Vanguard, MONDAY, APRIL 21, 2014
Finance InternationalMicro Business News Group targets 300 teenagers for entrepreneurial skill Stories by PROVIDENCE OBUH
E C A’ s Network o f Entrepreneurial Women (NNEW) has put together an initiative called teenpreneurship, with a view to training about 300 students on entrepreneurial skills. NNEW will hold workshop for teenagers between ages 13 to19 on April 24 and 25th 2014. It is the second edition since inception in 2013. Speaking at a media briefing in Lagos, Head, committee, Mrs. Kenny Omojola, said that the initiative was born out of the need to engender the entrepreneurial spirit in teens, adding that it is crucial to nurture
and develop young people so they become the kind of leaders that Nigeria and the world will need in the near future. “The objective of the workshop is to help teenagers d e v e l o p entrepreneurial mindsets and skills early in life, with a view to fighting the high rate of unemployment and underemployment in the country. “We want to be able to accommodate as many students as possible because in Lagos State alone, we have about ten million students, if we can work towards one million,
out of the ten million, then we have done something,” she said. The students would be engaged in Jewelry making, web design, photography Make-up, Gale tieing, among other vocation, Teens & PreTeens Entrepreneurial & Financial Management coach, Mrs. Yomade Jemirade, said, stating, “we have facilitators who run this workshop, they are members of NNEW who are in those industries. They come and run the workshop. “There is team on grand to facilitate the workshop to ensure orderliness of the students, teens are in order when they are in school same thing applies here,” she said. NNEW was established in 2005 under the aegis of Nigeria Employers’ Consultative Association, NECA, to promote and nurture entrepreneurship amongst women, a forum for women entrepreneurs to focus on issues that are crucial to the thriving of their businesses.
BoI vets creative industry’s proposal for funding here is a strong Mr. Mike Dada, The Managing Director of indication that Olagunju recalled T AFRIMA, Mr. Mike Dada, the BoI has started screening business proposal submitted to it by the creative industry in the country under the Africa Music Award (AFRIMA), for funding consideration because of its multiplier effects on the economy. “We are ready to look at the proposal by the AFRIMA team and find ways of supporting the creative industry,” said Mr. Waheed Olagunju, Acting Managing Director of the bank. At a meeting with the AFRIMA team led by the Managing Director of AFRIMA,
that the creative industry presently contributes about 1.42 per cent under the revised GDP that placed Nigeria at the number one position in Africa. “This means that the creative industry can also have a multiplier effect on other value chains,” he said. He said that in order to support creative industry in Africa, especially in Nigeria, the bank has entered into partnership with AFRIMA to further enhance their contribution to the country’s GDP.
disclosed that Nigeria had been billed to host the awards which indicate additional opportunity to promote the cultures of Africa, for three consecutive years. “It is a platform to communicate the cultures of Africa and to see how we can use this opportunity to add to the GDP of Africa. “There is need for us to strengthen the sector even though it is presently booming and this is the best time to make an impact.” Also speaking, the Country Director of AFRIMA, Mr. Kingsley James, explained that the idea behind the award is to tell a story that Africa is not about joblessness, poverty homelessness, or diseases but that it has a great culture that it export to the world.
Vitafoam appoints Adewakun board member
ITAFOAM Nigeria Plc has announced the appointment of Mrs. Adeola Adewakun as a Non-Executive Director of the company. Her appointment was unanimously confirmed by Shareholders at the Annual General Meeting, AGM, of the Company held in Lagos. Mrs. Adeola Adewakun holds a Masters of Pharmacy Degree from the University of Portsmouth, Hampshire, United Kingdom. She is a member of the Royal C M Y K
Pharmaceutical Society of Great Britain and the G e n e r a l Pharmaceutical Council of Great Britain. A United Kingdom registered pharmacist Mrs. Adewakun has held various m a n a g e m e n t positions in different Pharmaceutical companies in the United Kingdom. Mrs. Adeola Adewakun
Vanguard, MONDAY, APRIL 21, 2014 — 33
E-commerce startups must embrace business rules to succeed – Afaedor
About three months ago, the two of you left Jumia.com which you cofounded, and now you have created another online store. Can you share the story of your journey to this online store, how it works, the model and what makes it different from what you have done at Jumia.com? Fagbure: Supermartng.com is an online grocery service based in Lagos. It’s a unique model where you can order over twenty thousand grocery items. These include items like fresh meat, vegetables, milk, rice, wine, sugar, etc. They are basically most of the items you can find in a supermarket. Currently we are partnering with Park ‘n’ Shop and SPAR and then we are able to deliver these items to our customers across Lagos state. Our focus primarily is on grocery items that you can find in supermarkets. At the moment we are partnering with these two stores but as we move on, we will partner with more stores for wider assortments but still within grocery. Afaedor: Over the last two years of building Jumia, we came to see how much value we can add by creating a service like Supermart that enables people to shop more conveniently for basic groceries and every day essentials that they need. A Lagosian has to battle with massive traffic jams in order to get from one place to the other. To do their grocery shopping they have to spend three to four hours hopping from one shop to the other. And they could get stuck in traffic, and on getting to the shop, they spend at least 20 to 30 minutes looking for parking space and spend about another 30 minutes at the shop waiting to pay. All these are inconveniences. We know we can actually solve
some part of this problem using the internet. Another point of differentiation is the fact that the traditional ecommerce market delivers within a week on the average. At Supermart, we deliver within three hours. Delivering very fast is important to us because at the end of the day, if someone wants water to drink, he will not want wait for a week. So we leveraged on the knowhow that we acquired over the last two years to set up this service that will be able to deliver within such short timeframe, providing convenience to the people and saving them time. With the complex traffic situation in Lagos city, how do you intend to achieve this delivery timeframe? Afaedor: We are lucky to have the experience we have acquired over the last two years delivering goods to customers. We used all the lessons learnt to engineer the operations such that we are able to deliver within such a short time frame. This a crucial part of the service we are providing. We use wellstructured partners Park ‘n’ Shop and SPAR, which helps us keep our delivery promise Fagbure: Another unique feature of the site, www.supermartng.com, is that for the first time in Nigeria, a customer can select when he would receive his goods. They would have to choose their delivery time. For example, for us we deliver seven days a week, Mondays to Sundays. Nobody else does that. And we deliver in three slots, you can place your order and we deliver between, 12-3pm, 3-6pm and 6 – 9pm. And that includes weekends. This is because, in traditional retails, you open as long as your customers want you to be open. We have brought some of those offline strategies into this online model. Afaedor: This delivery window is an important feature of our model. The customers know exactly when we are bringing their products to them. And this is very important because the customer is free to go about their business without having to wait at home expectantly for days. You will tell us, 6-9 pm on
Tuesday bring my product to me. And we will knock on your door exactly within that delivery window. Fagbure: Right now what we have launched is to cover the areas where we are in. And that is Ikoyi, VI, Lekki, Marina and Lagos Island. That is the initial regions but very soon we will expand to other parts of Lagos. We can’t say we are expanding today or tomorrow because we have to approach
upermartng.com is an online grocery store that was launched in Lagos recently by Raphael Afaedor and Gboalahan Fagbure. The duo were behind the creation and success of Nigeria’s online retailer, Jumia.com. In this interview with JONAH NWOKPOKU, they share the story of their journey to creating a unique online shopping model that addresses the challenges of delivery and payment systems. They also shared their experience on success strategies for tech startups. Excerpts
The bottom line is to treat it the way you would any other business. But once you feel that different rules apply, you have missed it
it with cautious optimism because we need to stabilize our operations and get the necessary feedbacks from customers that will help us to determine what we need to do better in other locations that we are moving into before we begin to talk of operational expansion. Does this uniqueness of your model extend to payment system? Fagbure : Yes. Our payment system is unique in several ways. First is the creation of an e-wallet system. For instance, if for any reason, an item is available on our website and between the times you place an order and the time we get to shop, the item is no longer available at the physical shop, we have provided an option where we can replace an item with a close substitute or store that money in your electronic wallet. This wallet system is where customers can store their discounts, balance, and rebates. This means that a customer can have money in his wallet for future purchases. Afaedor: The ewallet system is interesting because today if you pay online and you want to have your money refunded, it has to go through the channel that it came in and traditionally it will take two to five days for you to get your money back. So what we have done with the e-wallet is to put a structure in place that refunds your money to you instantly. This is because we understand that customers do not
want their money to be stuck anywhere, not for hours let alone for days. They want to be able to use that money. So with the e-wallet, you have the money in your wallet instantly and you are able to shop again. Lots of e-commerce startups come on board every year but within a short time, they bow to pressures of challenges and close shops. Given your experience in the industry, what must startups do, if they must survive in this business? Fagbure: Some of us talk about this in the industry and we agree that first of all you need to understand that the same rules that apply to regular business applies to an e-commerce company whether you are a startup or not. I think sometimes some people get carried away by what they think is the sexiness of the business. You know it’s cool to say, 'I have a website and I am a tech startup' even if you are the only employee. However, the truth remains you can still call it a business if you have a website and you have something to offer. But then the same rules apply. It is the same rules that apply to banking, telecommunications, internet café, street traders, supermarkets that also applies to tech firms. So get the business right. Monitor your cost, expenses. Make sure you are developing the business and offering services that people want and at the level that satisfy customers. You must make sure you have the level of caliber of people doing the right things. The bottom line is to treat it the way you would any other business. But once you feel that different rules apply, you have missed. For instance you think you can come to the office by 10 ‘O Clock, have a drink at midday, you go for a three hour lunch, then very quickly you will realize that what you call a business is just a hobby that is putting a big hole in your pocket. Afaedor: Actually what you call a business remains a hobby unless you have customers who are paying for your products. The second thing is that these customers have to come back. If they are coming back it means you are giving them good service and they will tell other people about you who will then become customers. A startup goes by the same rules that apply to the other businesses but it’s more fragile. So you have to be frugal and get paying customers very quickly and treat those paying customers in a way that makes them feel very appreciated so that they will keep coming back.
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34 — Vanguard, MONDAY, APRIL 21, 2014
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Fenog emerges best indigenous oil company
Okere now IIM Africa fellow
IGERIA Oil and Gas, NOG organizing committee has crowned Fenog, a wholly owned N i g e r i a company as the ‘Indigenous Company of the year in the oil and gas sector, in view of its “innovation and excellence.” NOG also said Fenog is h o n o u r e d because of the giant strides it has recorded in the industry. As a pioneer use of CHDD rigs, Fenog Director, Gas, TOTAL, Mr. Bunmi Obembe (right), presenting the award to partners the Executive Director, Fenog Nigeria Limited, Mr. Mathew Tonlagha. government and o t h e r stakeholders in other inherent values over and the minister “as the task of eliminating sharp PD500 HDD rig unrepentant supporters of practices associated with The Executive Director of local content in the oil crude oil, especially illegal oil the company, M r. Mathew industry.” bunkering and pipeline Tonlagha, said he dedicated According to him, their vandalism. the award first to God, and support and encouragement To sustain its innovative then President Goodluck served as catalysts for the local content strides and place Jonathan and the Minister of local companies to strive for it ahead of other operators, it Petroleum, Mrs. Mrs. Deziani excellence in a sector hitherto was also gathered that Fenog Alison-Madueke. dominated by foreign has seven HDD rigs in the He described the President players. categories of PD 150, 250, 350 and 500 HDD rigs as well as an Offshore and Deep Water Barge (Akpevweoghene), with the capacity to lay pipes from 2" to 60" offshore/ deepwater. BOUT 35 young Nigerian cadets who are The latest of the HDD Nigerians have been interested in pursuing technology acquired by the admitted as pioneer students careers in the seafaring company is PD 350 HHD rig of the Science and Technical profession. designed to Fenog’s College set up by the Nigerian Disclosing this to Vanguard management specifications by Maritime Administration in Okoloba, Principal of the the German manufacturers. and Safety Agency College, Mr. Nenepamo In addition to its installed (NIMASA). Williams said that the school drilling capacity, PD 350 th The College was up to train HDD rig, the company has actually took off on the 6 of 2014 with about 35 students just as plans for a supplementary admission into the institution has been concluded. Williams who spoke to Micro Credit Scheme by the Vanguard during an HE member Central Bank of Nigeria inspection of the College by representing Ndokwa/ (CBN) and the Personality members of the Senate Ukwuani Federal Man of 2013 by the Sun Constituency in the House of Committee on Marine Newspaper. Representatives, Hon. Transport, also said that The lawmaker who was a Nicholas Ossai has felicitated former Majority Leader in the construction on the with Governor Emmanuel Delta State House of permanent site of the College Uduaghan on the recent Assembly noted that the has commenced. Vanguard Personality of the awards given to the governor He explained that the school year 2013 award given to him were testimonies of his is the first of its kind in Nigeria by the Vanguard Newspaper. commitment to the rapid adding that with time the Ossai who spoke in Abuja development of Delta State. College will become a world on several awards the While saying that the class institution with facilities governor had received in awards given to the governor recent times, described him as to train seafarers. were acknowledgement of his a doyen of development and He said “The school phenomenal landmark leadership initiative. achievements in all sectors of officially commenced th He recalled that Governor the state economy, Ossai, operation on the 6 of Uduaghan had, also, been urged Deltans to support the January 2014 and since then honoured with the governor in his future , we have ran the school for International Outstanding political ambition, adding that over six weeks and students Leadership Award by Metro the governor’s achievements have commenced the midEireann Republic of Ireland; would forever remain a term. the Best State Governor on reference point for posterity.
NIMASA's technical college takes off with 35 students
Ossai hails Uduaghan on Vanguard award
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OUNDER and Chief Executive Officer, CEO, Computer Warehouse Group, CWG, Mr. Austin Okere, has been inducted as an honorary fellow of the Institute of Information Management, IIM, Africa. The honour was bestowed on him at the maiden induction and investiture ceremony of the institute, held in Lagos. The IIM-Africa honorary fellow membership is the most prestigious award the
institute confers on individuals in recognition of their accomplishments and their contribution to the growth of the nation. Okere’s nomination was said to have been well received across the industry because of his contribution in information technology and entrepreneurial development in Africa. The conferment adds to his several awards and recognitions both on the national and international stage. Not long ago, he was inducted into the African Digital Awards Hall of fame, an award given to individuals who have excelled in their fields of endeavor. He also received a certificate of achievement as a “Master entrepreneur ”, from Ernst and Young, as a finalist in the Master Entrepreneur of the year award category in 2013.
James gets African Leaders of Indus tr ward Industr tryy and Commerce a aw
IRECTOR General of the Center for Research, Information Management and Media Development, CRIMMD, Dr. Raphael James, has been honoured with the African Leaders of Industry and Commerce award. The award was given to him by the African Institute of Enterprise Development and Management. Also honoured is Senator Domingo Obende, a senator representing Edo North senatorial district of Edo State. He was honoured with African Global Enterprise Achiever Award for his immense impact in African Political and Parliamentary Enterprise development in
Nigeria and Africa at large. The Managing Director of Bodyline Fitness and Gym Limited, Mr. Bankole Opashi was similarly, inducted as a fellow of the institute and conferred with African Global Achiever award in recognition of his achievement and investment in fitness and gym industry in Nigeria. They were honoured during an investiture and award ceremony at the Lagos Chambers of Commerce & Industry, LCCI, Conference and Exhibition Centre, Alausa. During the event, Dr. Emmanuel Yomi Ogunmola was made the President while Otunba Lawrence Kayode Adesina became the Deputy Vice President.
Dr. Emmanuel Yomi Ogunmola, President, African Institute of Enterprise Development and Management, AIEDM (right), presenting a certificate to Dr. Raphael James.
Vanguard, MONDAY, APRIL 21, 2014 â€” 35
Laws and processes for payment of taxes collectible by the Federal Inland Revenue Service (2) WITHHOLDING (WHT)
EDUCATION TAX (EDT) Applicable tax law for persons subject to the Education Tax All companies liable to Companies Income Tax are also liable to Education Tax. In other words, all companies registered or resident in Nigeria are liable to pay Education Tax. Where to pay the Education Tax: Education Tax is paid at the point of payment of Companies Income Tax or Petroleum Profits Tax. How to pay the Education Tax As part of the annual Companies Income Tax selfassessment returns, taxable persons also compute and submit their Education Tax liabilities and make payment at the designated bank. STAMP DUTIES (STD) Applicable tax laws for
pplicable tax law : Withholding Tax (WHT) is not a distinct tax type and therefore has no legislation of its own. It is only a mechanism for the collection of other taxes. Consequently, its application is provided for in the enabling law of other tax types i.e. Section 81 of Company Income Tax Act, Section 54 of Petroleum Profit Tax Act, Section 73 of Personal Income Tax Act and Section 13 of Value Added Tax Act Persons subject to the Withholding Tax : Persons subject to the various tax types may be subject to Withholding Tax deductions for the purpose of offsetting their tax liabilities. WHT deductions are regarded as advance payments (or payments on account) of the relevant tax liability that will arise from the tax returns of the period concerned. Where to pay the Withholding Tax: Where the person benefiting from the payment and the income are taxable, Withholding Tax (WHT) is paid (deducted) at the point of making payment. It is withheld by the payee and the net amount is then paid to the beneficiary through the designated bank(s). How to pay Withholding Tax The amount deducted at the point of payment is remitted directly to FIRS through a designated bank in a prescribed format in the name of the person subject to the deduction.
Education Tax is paid at the point of payment of Companies Income Tax or Petroleum Profits Tax. How to pay the Education Tax As part of the annual Companies Income Tax selfassessment returns, taxable persons also compute and submit their Education Tax liabilities and make payment at the designated bank
persons subject to Stamp Duties The items and persons subject to stamp duties are instruments (written documents) relating to matters executed between a company and an individual, group or body of individuals. Instruments which may be subject to stamp duties include financial instruments/transactions, company memorandums and articles of association, statements of share capital ownership, bonds, conveyances on sale, depositions, lease agreements, mortgage bonds, debentures, etc. Where to pay Stamp Duties;
Stamp duties on eligible instruments can be paid through designated banks. How to pay the Stamp Duties Companies and persons issuing or dealing with all chargeable instruments shall submit such instruments to the Stamp Duties Office for stamping. The Commissioner of Stamp Duties shall then assess the instruments submitted in line with the provisions of the Stamp Duties Act and specify the duties payable. The duties are then paid to FIRS at the designated bank. CAPITAL GAINS TAX (CGT) Applicable tax laws to persons and properties
subject to the Capital Gains Tax All companies incorporated in Nigeria which earns any capital gains or gains on the disposal of all forms of assets. All forms of property (whether situated in Nigeria or not) that are liable to capital gains tax include: Options, debts and incorporeal property generally; Any currency other than Nigerian currency; and Any form of property created by the person disposing of it, or otherwise coming to be owned without being created Where to pay the Capital Gains Tax Capital Gains Tax is paid at the designated at which the company making the chargeable capital gain pays its Companies Income Tax. How to pay the Capital Gains Tax In line with the provisions of the Capital Gains Tax Act and the selfassessment regulations presently in operation, a company shall compute the gains on the disposal of all forms of assets in each year of assessment and submit same together with its Companies Income Tax returns. The returns shall also be accompanied by evidence of the payment of the full amount or first installment of the tax due. Payment is made
to the designated bank. N A T I O N A L I N F O R M A T I O N T E C H N O L O G Y DEVELOPMENT FUND (NITDF) LEVY National Information Technology Development Agency Act, 2007 for persons subject to the NITDF Levy Companies and enterprises with an annual turnover of N100,000,000.00 and above operating as: GSM Service Providers or telecommunications companies; Cyber companies and internet providers; Pensions managers and pension related companies; Banks and other financial institutions; Insurance companies. Where to pay the NITDF Levy The levy is paid through the designated bank at which the chargeable companies pay their Companies Income Tax How to pay the NITDF Levy As part of its Companies Income Tax returns, a company shall compute 1% of the profit before tax of each year of assessment. The tax due shall then be paid to FIRS through the designated bank.
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36 — Vanguard, MONDAY, APRIL 21, 2014
Rebased economy and Jonathan’s burden T
he base year for computing Nigeria’s GDP has now been officially shifted from 1990 to 2010. By 2016 government says the base year would shift to 2015 and every five years thereafter. In a country devoid of good news there was palpable excitement on the part of Nigerians and the federal government. Something positive is coming out of ‘Bethlehem’. With the excitement over, the time for sober reflection and introspection is here. Following the rebasing of the GDP the estimated size of the Nigerian economy in 2013 is now US$510 billion (N80.22 trillion) with a per capita income of US$2,688. The rebased nominal GDP for 2013 represents an increase of 89.22% over the nominal GDP using the old base year. This rebased GDP makes Nigeria the 26th largest economy in the world and in terms of GDP per capita it is the 121st in the world. By rebasing the economy the composite sectors of the economy increased from 37 to 46 meaning that more sectors like telecommunications, entertainment, motion pictures, vehicle assembly, ICT and a few others were added. It is gratifying to note that the structure of the Nigerian economy is changing and the dramatic rise in the share of services in the nominal GDP has displaced the old belief that agriculture was the largest contributor to Nigeria’s GDP. In the 2013 human development report Nigeria is ranked 153 out of 186 countries in the world. Despite the rebased GDP Nigeria, according to the World Bank, is one of the five countries with the largest concentration of poor people in the world. In Nigeria 60% of its people or over 100 million Nigerians live on less than $1.25 per day which has become the measure for extreme poverty. With the rebased economy, in the best of times Nigeria generates about 4,000 megawatts or less of public electricity to power the 26th biggest economy in the world. While announcing results of the rebasing, the National Bureau of Statistics announced that growth in GDP is not synonymous with increase in job creation and that increase in the overall economic output of a country does not necessarily mean increase in incomes of individuals. Actually the Statistician-General of Nigeria was actually referring to the contradictions inherent in the Nigerian situation because all over the world the experience is exactly the opposite of what he said. The rebased economy ran shy of telling Nigerians the unemployment rate in the country but even without taking the trouble to give us the estimate we know that the composite unemployment rate is about 30% while the youth unemployment rate is nearly 50%. Nigeria is now the
largest economy in Africa beating South Africa to a distant second but Nigeria’s newly derived GDP per capita of US$2,688 still lags behind South Africa, Egypt and Tunisia. Let me quickly add that the last base year used to compute the GDP of the South African economy was 1998. But does this all mean that the rebased Nigerian GDP is meaningless? Not really but it weighs President Jonathan’s burden. Nigerians already knew that the country is blessed with bountiful resources but with corrupt and unsympathetic leaders. The rebased GDP is not a gimmick. It truly represents the Nigerian economy using prices of 2010. In 2014 the 2010 prices have changed already. So the economy is even bigger now than it was in 2010. To arrive at the new GDP data every known and respectable organisation was involved. The UN, IMF, World Bank, ADB, local and international economists and a painstaking National Bureau of Statistics were involved. It was therefore a job well done. However, it Goodluck Jonathan is the best case yet of what classical economics calls growth without better tackle the challenges of growing development. This expression is a the economy and fighting poverty. It fundamental measure of the wellbeing is vital that Nigerians know what it is of a society. Having rebased its GDP to be the 26th largest economy in the Nigerian economy became larger than world by GDP. It means Nigeria has the economy of Austria, Malaysia and an economy bigger than Austria’s. Indonesia amongst others. The South Austria is a European economy and it Africans have jeered at our new size is one of the ten most comfortable and have described the economy as a countries in the world. Let us look at big house on faulty foundation. The Austria so that the Nigerian President Nigerian economy remains empty and his government know what without infrastructure. An economy Nigerians expect from an economy that has no intra-city rail service, an with Nigeria’s new GDP. In 2012, economy where no city can boast of Austria was one of the countries portable water across the length and surveyed by the OECD on life satisfaction index. Out of breadth of its city the OECD countries in limits, an economy Asia, Europe, America that accounts for and Australia ten 10% of global infant countries were selected as and maternal the world’s happiest mortality rate cannot countries and their in good conscience citizens as the world’s relish at a huge size most satisfied citizens. devoid of quality. Seven parameters were The rebased applied viz: life Nigerian GDP is like satisfaction, employment the situation of a rate, self-reported good supposedly wealthy health, employees man whose house working long hours, leaks from every disposable income, corner and the educational attainment children cannot eat, and life expectancy. These cannot go to school, measures of quality cannot visit the further examined hospital when ill, homicide rate, sense of have no clothes to feeling safe walking wear and have no home at night, quality of water to drink and drinking water etc. Ten yet the man is countries stood out as the described as rich. happiest in the world namely Denmark, he National Norway, Netherlands, Bureau of Switzerland, Austria, Statistics Israel, Finland, Australia, says that rebasing Canada and Sweden. In will give the the case of Austria, whose N i g e r i a n GDP is way below government tools to Nigeria’s rebased GDP,
BY CHIEF LAWSON A. OMOKHODION
The federal and state governments should clear the streets of unemployed graduates of Universities, Polytechnics and Colleges of Education immediately
its life satisfaction score was 7.5 out of 10 meaning that 75% of its people were happy with their life conditions. 82% of Austrians were happy with the level and quality of educational attainment and a self- reported good health score of 69%. Life expectancy of the Austrian in 2012 was 80.7 years with a feel safe factor of 70%, a homicide rate of 2.1 murders per 100,000, and 5% unemployment rate. Yet Austria’s GDP is less than Nigeria’s rebased GDP. The challenge for President Jonathan is to better the lot of Nigerians on the heels of the rebased GDP. Reporting a huge GDP cannot be an end in itself. GDP must mean growth and development. It must mean good health, good roads, good education, good electricity supply, good housing, good food and extremely low corruption. John Adams, the 18 th century American statesman says that “The happiness of society is the end of government”. Arguing further, Eleanor Roosevelt, author, speaker and wife of a former American President Franklin D. Roosevelt said “Happiness is not a goal; it’s a byproduct”. Therefore for Nigerian citizens to appreciate their rebased status the government must invest considerable energy and resources in building and developing systems and structures that would guarantee the happiness they seek. Nigerians must benefit from the growth of their economy. A GDP of US$510billion must translate into a better society for Nigerians. The federal government should develop a list of quick wins or low hanging fruits to harvest on the strength of a rebased economy. The unemployment rate should be the first casualty of a rebased GDP. The Nigerian constitution provides that the federal government shall operate a mixed economy model of development. It means both the public and private sectors must play a role in its development. The federal government and other state governments should borrow a leaf from the Lagos state government to see how a government can gainfully engage in the productive sector of the economy. The business of government is both in business and government. Government has business in business. As it provides enabling environment to the private sector, it must make the public sector responsive to society. The federal and state governments should clear the streets of unemployed graduates of Universities, Polytechnics and Colleges of Education immediately. In 1986/87, faced with a crushing unemployment problem, the federal government under President Ibrahim Babangida opened up the civil service and ordered mass recruitment of staff into the service. In no time unemployment ceased to be a problem and some of those recruited graduates today are directors in the federal service. To start, all establishment positions in the MDAs should be filled. For every ghost worker fished out, a true person must be recruited in its place. Nigerians must be allowed to guide the growth of this economy by supervising, regulating, monitoring and overseeing different aspects of the system. The ministries must be alive to their mandate because they were not set up to simply award contracts.
Vanguard, MONDAY, APRIL 21, 2014 — 37
Why we encourage cultivation of more fish species — Areola O
fficials of the Federal Department of Fisheries were in Lagos last week to supervise the destructions of unwholesome fish worth millions of Naira. The team was led by the acting Director of Fisheries in the ministry, Mrs. Foluke Areola, who took time out to chat with journalists on the aim of the exercise and what the government is doing to make the country self sufficient in fish production. Jimoh Babatunde presents excerpt from the interview. On the essence of the destruction The federal government has come to a point that it has become important to protect human health which is more important than any form of economic gain that any could be seeking after. So we have decided that it is important that Nigerians should eat quality products at all times, so because of this the responsibility of the federal government is to ensure that what ever product is going out into the market is of high quality Even the labelling and packaging are all part of quality issues and what we are seeing here, the fish, apart from the product, we can see some wet cartons, we can see some are torn, all these are part of quality issues that we are trying to enforce. So the field officers of the federal department of fisheries have been going round on their normal inspection of cold rooms to ensure strict compliance to quality standards that must be maintained at any cold store or along the supply chain. In doing that we discovered that there were some products that ought not to have been
in the premises where other quality products are and the decision has been taken to dispose of them according to the regulations that guards our operations. On the synergy between ministry and other agencies at the boarders We are all agencies of the federal government and we are working together to protect the integrity of the country and to ensure that good quality products, fish in particular get to the consumers, On the alleged collaboration between the cold room owners and FDF to get the fish destroyed What happened is that when we do our inspection and discovered that a product is not wholesome. We lock up the place and let the company know the reason why we are locking up the place. All the places we have gone to, samples have been brought out and people saw it, even in a company we had to do 100% inspection and it was not carried by us alone but by the inspectors and the company.
Mrs. Foluke Areola leading other officials of Federal Department of fisheries to inspect expired fish in Lagos
After the inspections the documents were signed by the company, so it is not as if we told them to stay away and do it alone, it was done together and so they saw what we had seen and immediately they just agreed to go on with the destruction. I don’t accept that there is a bit of understanding on this destruction like you have said it, the federal government has the responsibility to protect her citizens from eating what is not of the highest quality and that is what we are doing. It is not only this company that the cold rooms have been put under seal but they want to move forward quickly, I want to assume that is why they are collaborating with us on this destruction. It is not the issue of an agreement; it is an issue of responsibility on the side of government to protect her citizens. You will notice in the last few years, there have been upsurge of diseases in the country and when you talk of any form of diseases it has to do with nutrition which everybody knows that there is a correlation between incidences of diseases and nutrition. When you give people food that are not wholesome there is a problem, then you see cancer will be on increase. We are not totally saying frozen fish is bad, but we are saying there is the need that when you are bringing in frozen fish that the inspection agencies will ensure you follow the rules.
On the effect of the destruction on aquaculture in Nigeria For aqua culture that is what we are promoting, Nigeria is so bless with water bodies, we have the long coast body, and we have two of the big rivers in Africa. We have swarms, we have blackish water environment. So we are blessed as a country. And we have many culturable fish species that we could go into. So what we are trying to do is to maximize the opportunities that God has given to us, so we want to unlock the potentials in this area. So, we are going into a number of investment in this sector, we want to diversify from a monoculture specie into a multi-culture species and that is why the ministry is diversifying into the Tilapia culture. We are going to enhance their production, because of the flesh and for the fact that they grow very big and we are also going to use other blackish species and develop them even the mullet that we have in our coastal waters attract high markets values. Those are the things we want to do like backward integration and grow them to make sure we have varieties for people to eat so that it is not only catfish. But going ahead from there it is how you brand whatever you have that others will brand it for you. We have been able to develop the catfish to different forms that you will not even know that it is catfish. We have it in crumps, we have it in fillet forms, and we have it like fingers that you will not know except you are told it is catfish. That aside, in trying to satisfy everybody and take into consideration religious biases concerning cat fish as not having scales, we are going into tilapia culture. We want to encourage more farmers to go into farming fish that have scales and many other local species that grow fast and are culturable to give people opportunities to
IRRI marks 150th harvest of world’s longestrunning rice experiment
he International Rice Research Institute (IRRI) is marking the 150th harvest of its Long-Term Continuous Cropping Experiment (LTCCE), the world’s longest-running rice research project. This living field laboratory offers humanity a firsthand glimpse into the wonders of how rice production can be sustained in a changing climate without adversely affecting the soil and the productivity of a rice ecosystem. According to Dr. Roland Buresh and Mr. Teodoro Correa, Jr., who both manage the LTCCE , the production of rice has been sustained after 150 rice crops in 52 years. Soil organic matter, a measure of soil fertility, has not declined in the past 30 years. This has been achieved without the application of crop residues and organic fertilizer.
FG inaugurates c’mtte to establish more grazing reserves THE Federal Government at the weekend inaugurated a technical committee to establish more grazing reserves across the country. The committee is expected to work out modalities for establishing the additional grazing reserves to forestall future clashes between herdsmen and farmers. It also mandated the committee to produce a report on how to address the challenges within two weeks. The Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, who formally inaugurated the committee at the ministry’s headquarters in Abuja, said the committee was made up of representatives from the Federal Ministries of Environment, Works, Science and Technology, Interior, and Water Resources. Other representatives include officials from the National Orientation Agency, International Institute of Livestock Agency and commissioners of agriculture from the affected states, amongst others. Adesina said there was need for additional reserves
38 — Vanguard, MONDAY, APRIL 21, 2014
Vanguard, MONDAY, APRIL 21, 2014 — 39
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Hostesses of the morning talk show on TVC E on set
Star: Growing equity through music & entertainment
he Star Trek is here again, Nigerian Breweries Plc has expressed its preparedness to stage this year’s edition, Princewill Ekwujuru takes a cursory look at the brand and its marketing propositions, its commitment to entertainment and connection with consumers. When the consumption pattern to a brand is in millions, the feeling consumers have is important to the brand’s growth. This may be reasons promoters of the Star brand stay glued with Nigerian youths through the entertainment platform. In 2006, the brand started leveraging on some marketing activities like the Star Quest, Star Trek and Star Mega Jam to position itself in the mind of consumers. This invariably has placed the brand’s promotional strategy ahead of its advertising and media marketing campaign. Having realised this, the creative egg heads in charge of its advertising had quickly adjusted and took a cue from the promotional efforts, and developed the concept of “Music in Every Bottle” against the peculiar background of live entertainment. With the brand’s success through this platform, it is imperative for its creative agency to keep up the momentum. Another step along this line was the introduction in 2013, of Star Music App - a revolutionary music tool and a first for any brand in Nigeria. In line with this, Nigerian Breweries rolled out the drum last week by flagging off the thirteenth edition of the country’s most popular multi city concert, Star Music Trek 2014. To brands’ analysts, the event was a confirmation of the company’s commitment to the growth and development of the Nigerian youth. The official unveil of Star Music Trek 2014 occurred before a select audience comprising Nigerian Breweries management, members of the press and other guests in Lagos.
Reiterating the brand’s commitment to continue offering a veritable platform that positively engages, nurtures and promotes Nigerian youth through music, Corporate Media and Brand PR Manager, Nigerian Breweries, Edem Vindah, said the brand recognises how powerful this tool is; and always strives to ensure that it positively promotes the strong values the brand is well known for. ”Over the years, Star Music Trek has evolved rapidly with exciting facets to appeal to its ever-burgeoning youth market. This year, we chose an exciting theme, My City Rocks, reflective of the great diversity within the country and the fascinating things that make each city unique and endear them to young Nigerians.” ”The impressive response has been gratifying; it’s inspiring to know that young Nigerians are so in tune with their cities and are willing to proudly represent them any way they can.” ”This year, we’re even more inspired by our theme My City Rocks as we tour areas within the country that this immensely popular music platform has never visited before. It is a significant opportunity to once again connect with our fans and we look forward to It.” he added. To add colour to the event, many corporate players and celebrities, including; Chief Marketing Officer MTN, Larry Anetts, Olisa Adibua, Bolanle Okhiria and Tony Kan were present to endorse the initiatives. Others are; TeeY Mix, Gbemi, Olori Supergal, Peju Akande, D’Tunes, Tunde Ednut and Uti Nwachukwu. One after the other, artists were invited to the podium to append their signature and take bows before hundreds of fans. The list include; 2face, Tiwa Savage, M.I, Olamide, Davido, Wizkid and Wande Coal. Others are; Sound Sultan, Pasuma, Mr Raw, Dr Sid, Naeto C, KCee, Sean Tizzle, Phyno and May D. The pan Nigerian concert,
which has been in existence since early 90’s, has become the country’s most anticipated yearly music festival with Nigeria’s biggest artistes offering exciting performances every year to the delight of thousands of fans across the country. With several years of consistently delivering on its platform the brand has been able to reach millions of young Nigerians all across the country, furthering reaffirming its brand values and successfully dictating the pace of music entertainment Among other cities, the Trek 2014 will perform in Nsukka, Makurdi, Onitsha, Benin and Ado Ekiti. Global examples… Star’s bonding with music will not be a surprise to discerning minds that are in tune with the current trend on the global scene. Findings have revealed that 80 percent of brands that appeal to consumers between the ages of 18 and 24 often see music as a way to connect the market. And for Star that is out to appeal to those young people who are witty, daring and bold, music becomes a compelling tool. One of such brands is the American Express that used “Unstaged a live stream experience of concert performances by major musical acts to appeal to the market. The program, which started in 2010, boasts highquality production, with the brand bringing in notable directorial talents to shoot the shows. AmEx partners with Vevo and YouTube on the events, which air on amexunstaged.com. The results were intriguingly positive. Another brand that has grown in recent time through music is Redbull. Through music, promoters of the brand proved that Red Bull isn’t just for energy. The brand is today known for its creative, outside-the-box marketing. For over a decade it has run the Red Bull Music Academy, a festival underwritten by the brand.
o you interact w i t h customers often? If you do, you must have discovered that there are some expressions that touch the right chord with them. They are very simple expressions which help build excellent relationships with customers. Each time I hear them, I know I am dealing with a pro. We shall look at some of them shortly. But let me warn that using any of these e x p r e s s i o n s cosmetically may not achieve the desired effect. You must show that you mean it. If you’re not sure these expressions make a difference, just put yourself in the shoes of the customer. How will you respond? Thank you Never get tired of sincerely thanking your customers. In the course of a day, every business (person) will have a lot to thank customers for – their b u s i n e s s , suggestions, visit, referrals or even complaints. Yes, complaining customers deserve our thanks because they are the ones who give us an opportunity to improve. Others quietly take their business elsewhere. I appreciate you This expression, used sincerely, will build a bond. Other variants of this are: “We appreciate you” and “ we appreciate your business.” To my mind, using “we” in a one-on-one context sounds rather too impersonal and formal – who are the “ we”? Of course, some situations may warrant the use of “ we.” As for appreciating “ your business” what do you think? Isn’t it smarter to appreciate the one who brings the business? How may I help you? A lot of the time we
hear: “Can I help you?” Honestly, if you can’t help I wonder why you’re in business. It’s not a question of whether you can help, but of “how.” It’s amazing that many people still hurl “can I help you?” at customers. Is there any other thing I can do for you? This is a good way to end a service encounter, especially one following the resolution of a complaint. It reminds the customer that you’re ready to go the extra mile to keep them happy. I can…. Customers love upbeat people who use positive expressions. On the other hand, they are put off by those who always talk of what “cannot” be done. Who says anything cannot be done if you’re determined to do it? But then, even when certain things appear impossible, focus on what can be done. If a customer wants you to deliver their goods at 8.00 am but you know the goods won’t be available until two hours later, it’s better to tell them “I can deliver at 10 am” instead of “I cannot deliver at 8 am.” I will do it right away This expression embodies speed, commitment, willingness to help. Just be sure to do as you have promised. It’s of no use expressing such commitment only to turn round to do something else. That way, the expression loses its value. I’m sorry… Sometimes, you need to admit that something has gone wrong and apologize. Note that I didn’t say you need to admit guilt. Saying “I’m sorry ” may not necessarily mean that you’re responsible for whatever happened. It only shows you feel for the customer. You should, however, try to organize your business in such a way that “I’m sorry” doesn’t become a daily chant! If you earn a reputation for disappointing customers, apologies become empty, hollow rituals that can further annoy people. Does this sound like Customer Service 101? It does – for a reason. To serve customers well, we need to be “brilliant on the basics.” Many of us don’t pay enough attention to the simple things in business; that’s why customers perceive our service as poor. We just need to get back to the basics.
40 — Vanguard, MONDAY, APRIL 21, 2014
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n keeping with our regrettable tradition of late enactment of Appropriation Bills, the 2014 budget was belatedly approved by the legislature, in April; i.e. well over three months into the fiscal year. In this event, this year’s budget, just like previous ones, will only be partially implemented, despite the adverse social impact of partial implementation. However, late passage is not our only challenge with annual budgets. Nigerians must be disappointed that the Honourable Finance Minister and the Coordinating Minister of the Economy, Dr. Ngozi OkonjoIweala, is obviously unable to fulfill her promise to steadily tilt government’s expenditure in favour of capital development. Indeed, with the relatively paltry value of the 2014 infrastructure budget of N1.12tn, government’s expressed intentions to improve social welfare and create jobs may now appear to be mere propaganda to our countrymen, especially when the total expenditure budget was also reduced despite the urgent need to stimulate demand and create more employment opportunities, with increased government spending. Indeed, the primary objectives and policy thrust of government can usually be discerned from the size of sectoral allocations in each year’s budget. For example, in view of the critical significance of human capacity building to economic growth, the recommendation of the United Nations Educational, Scientific and Cultural Organisation (UNESCO), is that, about 26% of a nation’s total budget must be devoted to the
Budget Don Kpafuka Again education sector. Regrettably, however, the consolidated sums of N373bn and N51bn allocated for recurrent and capital expenditures respectively, for the education sector, is still below 50% of UNESCO’s recommendation. Furthermore, the 2014 increased budget allocation of N712bn for servicing our debts is disturbingly high at 70% of the total allocation for capital expenditure. Worse still, actual debt service charges may exceed this monstrous value, if the cost of servicing CBN’s expensive borrowings to remove systemic “surplus cash” from the economy is also captured. Indeed, despite the oppressive debt service charges, the recently rebased higher Gross Domestic Output figure of $510bn may induce complacency that we are still under-borrowed, and such a flattering perception may unfortunately instigate increasing debt accumulation that will further crowd out the real sector from funds and also impoverish our people. Unfortunately, unlike the tangible impact and the easy optical presence of the infrastructural interventions from the erstwhile Petroleum Trust Fund, one may need to strenuously look out to identify the benefits of the high vote of over N268.3bn for SUREP programme in 2014. Curiously, the SUREP allocation is not technically appropriated in the budget figure, and the disbursement remains solely the prerogative
of the Finance Ministry. Indeed, if the SUREP vote is also captured as expenditure, the value of the projected 2014 deficit will rise and also increase government borrowings at atrocious rates of interest. Furthermore, besides the frequent allegations of lack of transparency and equity in the management of SUREP funds, some observers have recommended that the huge sum of N268.3bn would have been better applied for funding local manufacture of domestic gas stove and cylinders, which would be steadily distributed free of charge, to all households in Nigeria. Not only would the masses enjoy cleaner domestic fuel for cooking, Nigeria would also save hundreds of billions annually from the abolition of the very wasteful current kerosene subsidy! Nonetheless, in spite of the above observations, the legislature also discountenanced the cogent reservations of the Minority Leader, Honourable Femi Gbajabiamila, that the House should not rubber-stamp a budget that seeks to borrow more money at ridiculously high rates that will further impoverish the countryIt is regrettable that the House out-rightly rebuffed the Minority Leader’s passionate plea that ”We cannot, in good conscience, support a budget that comes with a benchmark that siphons away
30% of the country’s revenue into an illegal excess crude account, in violation of the provisions of Section 162 of the Constitution, which we individually swore to defend, with the resultant effect of short-changing the state, we also all individually swore to defend.” Nonetheless, the most significant predicators of failure in the 2014 budget are the adopted monetary benchmarks; for example, the projected Inflation rate of 9.5% is already about 2% higher than the 2013 disenabling rate of 7.5%, a level which was already clearly antagonistic to sustenance of social welfare, as static incomes, particularly those of pensioners, for example, would lose almost 40% of purchasing value every five years, alongside deepening poverty nationwide . Furthermore, if the naira exchange rate continues to depreciate below the budget benchmark of N160/$1, fuel prices will invariably also rise and further increase current subsidy payments of trillions of naira by at least 5%; ultimately, wasteful subsidy payments may exceed 50% of the consolidated 2014 expenditure budget of N4.6tn. Surprisingly, however, the 2014 budget does not also seem to recognize the critical impediment of high cost of funds to the growth of the real sector, job creation and improved social welfare; in reality, interest rates will remain above the oppressive and destabilizing rate of over 20%, so long as banks have to borrow from CBN at the high monetary policy rate of 12%. Consequently, the real sector will continue to struggle, while unemployment will remain distressingly high, so long as CBN’s evidently
failed Monetary Policy strategy continues to engender an unusually wide disparity between savings/ deposit rates of 5% against much higher commercial lending rates above 20%. Besides, the curious contradiction of alleged systemic surplus cash, which is inexplicably taboo for funding real sector growth, also appears inconsequential to the legislators. Furthermore, the lawmakers disturbingly seem to be inappropriately comfortable with the ugly practice in which government keeps its money at zero per cent with the banks, only to return to borrow back the money at over 12% for the sake of reducing perceived surplus cash from the system; it is unlikely that the lawmakers would so eagerly adopt such a careless strategy for their own individual or corporate investments, and nothing suggests that this is best practice management to grow an impoverished economy. Nonetheless, as an act of “patriotism”, according to the House Committee Chairman, Honourable Zakari Mohammed, the House agreed to pass the budget, in spite of protestations by some members that the Appropriation Bill be rejected “until parliament received details of the spending proposals of government ministries, departments and agencies, in line with section 21 of the Fiscal Responsibility Act”. When, we may ask, does it become patriotic to violate our laws? The answer must be blowing in the wind! Happy Easter Monday! PS/Kindly remember all the female students kidnapped in the Boko Haram insurgency in your prayers. SAVE THE NAIRA, SAVE NIGERIANS!!
Business & Economy 'Clearance By JONAH NWOKPOKU
HE Executive Secretary, Nigerian Shippers’ Council, NSC Mr. Hassan Bello has said that despite several indicators of Nigerian ports’ performance and efficiency, clearance procedures are yet to meet up with basic technological advancement. He made the observation when he received a delegation of Integrated Logistics Services, INTELS who paid a courtesy visit to the council’s headquarters in Lagos. He said the procedures for clearing goods in the nation’s ports are outdated and called for adoption of new technological innovations that will bring the ports to par with any modern port in
procedures the world. Bello said, “We should guide the port system to where it ought to be because despite other indicators of port performance and efficiency, there are still certain areas that need to be supervised and streamlined. We are particularly worried about the cumbersome clearance procedures in Nigerian ports which are near primitive. We have to encourage the deployment of automation and technologies so that our ports become modern and are comparable to other ports anywhere in the world.” He said the council as an economic regulator is also concerned with the port’s tariffs for operators in Nigeria, noting that it should be scientifically determined as that will affect the quality of service delivery.
On INTELS’ visit, Bello said it is a continuation of the shippers’ councils’ foray into the economic regulation of ports’ activities. He said the council has visited the terminal operators and also engaged the shipping companies and agents. “We are in continuous consultation with principal stakeholders in this industry. This is because economic regulations simply means that government wants to create a balance and fair playing field, encourage fair trade practice and see that there is co-ordination and supervision, as you know, there are so many interests, the port is a miasma of interests. It is therefore important for government to set a coordinator.” He said The NSC boss said the council will continue to be
fair and transparent in discharge of responsibilities as economic regulator of ports bearing in mind
the its an the the
tremendous private investments made in the sector that needs to be sustained.
Omoh Gabriel Babajide Komolafe Clara Nwachukwu Peter Egwuatu Yinka Kolawole Favour Nnabugwu Godwin Oritse Godfrey Bivbere Michael Eboh Franklin Alli Ebele Orakpo Ifeyinwa Obi Rosemary Onuoha
Group Business Editor Deputy Business Editor Energy Editor Asst. Business Editor Snr Bus. Correspondent Insurance Correspondent Maritime Correspondent Maritime Correspondent Energy Reporter Industry/Agric. Reporter Energy Reporter Maritime Reporter Insurance Reporter
CONTRIBUTORS Princewill Ekwujuru Nkiruka Nnorom Jonah Nwokpoku Naomi Uzor Providence Obuh LAYOUT
Media/Marketing Capital Market E-Commerce Industry Micro Finance Graphics Department
Published on Apr 21, 2014