Fin30112015

NOVEMBER 30, 2015

ECOWAS businessmen seek court on trade disputes

By OMOH GABRIEL

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usinessmen and traders of member states of the Economic Community of West Africa States worried by lack of sanctity of contract and respect for the protocol of the community are seeking legal option to settle trade and related dispute among members.

They are in agreement that an ECOWAS Court of Justice is a potential forum for the adjudication of trade related regional instruments and are of the view that there is need for

advocacy towards the expansion of the jurisdiction of the ECOWAS Court of Justice hitherto limited to human rights to cover trade related issues as part of economic rights.

At a two day public-private sector dialogue on Nigeria/ECOWAS trade litigation group organized by the Association of Nigerian Traders in collaboration with the EU and German International Cooperation meeting, it was agreed that stakeholders should advocate the amendment of the ECOWAS Treaty to allow for suprantionality of the body as obtained in the UEMOA system.

According to a communiqué issued after the meeting and signed by Ken UKAOHA, Esq, Secretariat President, National Association of Nigerian Traders, the body agreed that similarly, advocacy should be geared towards persuading member states to domesticate ECOWAS instruments in countries where domestication applies.

Ukaoh said: “This Public-Private Sector dialogue was organised by NANTS with support from the European Union and the German International Cooperation (GIZ) under the Strengthening Nigeria’s Trade

COMMISSIONING — From left: Dr. (Mrs) Lami Amodu, Principal, Queens College, Head Girl, Miss Angel TonyAtidie & Bukky Latunji, at the commissioning of a 500 KVA Generator donated to the college by Zenith Bank recently.

Support Institutions (SNTSi) Programme. The dialogue was convened to examine avenues towards promoting redress for traders and other business actors in cases of violation of ECOWAS Treaty and Protocols relating to freedom of movement, rights of residence and establishment within the region.

“Specifically, the event focused on identifying possible strategies towards the expansion of the jurisdiction of the ECOWAS Court of Justice to cover issues relating to infraction of regional instruments regarding trade and other forms of business activities, especially the possibility of using strategic litigation in this regard. The event also explored strategies towards advocating for political action on the part of member States with a view to amending the Protocol setting up the ECOWAS Court of Justice.

"Participants were drawn from various stakeholder groups cutting across the relevant MDAs, regional institutions, private sector, cross border traders, legal profession, law students, media, etc.

"The two-day event had presentations from various experts which focused on the practical experiences and issues that call for litigation along the ECOWAS border routes, the possible legal avenues for cross border business operators to obtain legal redress in cases of infraction of regional instruments and the limitations of these avenues, proposals for addressing the challenges, etc. Presentations were followed by lively debates among participants which brought to the fore, some experiences and frustrations from the field, intricacies of the jurisdiction of the ECOWAS Court of Justice, legal postulations on

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22 — Vanguard, MONDAY, NOVEMBER 30, 2015

Cover

The Basic Guide to Starting Your Business (4)

MEETING - From left: Thiery Mbimi, Head Financial Risk Management, KPMG; Olumide Olayinka, Partner and Head, Risk Consulting; Tokunbo Martins, Director, Banking Supervision, Central bank of Nigeria and Kabir Okunlola, Partmer. Financial Services Practice, KPMG at the KPMG breakfast meeting on Implementing IFRS 9 in Nigeria held in Lagos.

ECOWAS businessmen seek Court on trade disputes Continued from page 21 the applicability/enforceability of ECOWAS legal instruments in the Nigerian courts, etc.”

At the end of the two-day event, participants arrived at some conclusions and resolved as follows: “That the free movement of persons, goods, services and capital within the region is fundamental to the realisation of collective prosperity within the region, therefore, national governments must take all necessary actions towards complying with the regional instruments aimed at achieving a common economic space within the region. That the current lack of enforcement of regional instruments by the member States occasion untold hardship for the community citizens who derive their livelihood from cross border business activities, hence the need for alternative strategies of enforcement.”

The communiqué said: “Since the domestic courts of member states are incompetent to adjudicate on contraventions of regional instruments, there is need to have an effective regional platform for the adjudication of those infractions/ infringements.” It further said “that Non-State Actors should explore the option of Strategic Litigation by bringing cases before the ECOWAS Court of Justice that seek to test the extent of the human rights jurisdiction of the Court, especially since some of the trade related infractions have human rights undertone”.

Nigeria, the traders' body C M Y K

said, “needs to play a more proactive role in shaping the regional integration agenda especially by complying with regional instruments and using its political and economic weight to ensure that other countries do the same.

Stakeholders, they argued “should liaise with and seek collaboration of public interest lawyers to initiate cases at the ECOWAS Court of Justice on possible pro bono basis and that they should also explore advocacy towards the establishment of specialised courts with trade law competence to adjudicate over trade related issues (such as customs valuation, certification, etc) at the national levels.

That there is need to widen the conversation to include all those working on the rule of law and regional integration, as well as members of the judiciary and political leaders at the national and regional levels.

That the identified gaps in trade litigation should be brought to the notice of the relevant Community

The current lack of enforcement of regional instruments by the member States occasion untold hardship for the community citizens who derive their livelihood from cross border business activities

Institutions and member States as a way of advocating for the necessary legal changes. They also said that “business actors and law enforcement agencies who ply their trade across the borders should be continuously sensitised through workshops, seminars, publications and road shows about ECOWAS as well as the rules and procedures for transacting business within the region, including products that are contraband”. More over they said “there is need to establish a mechanism to collate complaints from the business community on the infractions of regional instruments as it concerns them. This could be done through the various market traders associations. Also Nigerian traders in other countries should form or register with National Association of Nigerian Traders in those countries as a platform for obtaining information and seeking redress where the need arises.

They said: “Government should develop a conscious policy towards integrating international trade law into the curriculum of Nigerian Universities as a way of developing more domestic capacity in trade law, while also recognizing the role of trade lawyers in government institutions”. On the CET, they said that “the national authority responsible (Federal Ministry of Finance) should enact the CET into a national tariff regulation to allow for smooth implementation as this may contribute to reducing debates and entanglements associated with the ratification or otherwise of the CET”.

Daring successful business man has a mindset that is willing to take risks and tread on places people would not ordinarily want to tread. He would not chicken out at the slightest threat, so if you intend to start and own your business, you must have a die-hard mentality, otherwise you would quit before you even get started. It is also very important to consider the risks involved and your ability to handle them properly, since every business involves risks. Most business people are very comfortable with modest risk but quite uncomfortable with big risks. Although they are unwilling to gamble on long shots, they are more willing to take chances if their individual skills can affect the probability of success. Then will they have the courage to step out into the unknown and pursue their personal dreams.

Goal getter A successful business man has the mindset of not just setting goals but also achieving the desired result. He does not settle for less but always has his eyes on the prize. To him there are no impossibilities and failure is just part of the game. He does not believe in half measures but believes that he can go all the way and this mentality inspires a lot of confidence in clients and customers and will keep them coming. A high level of energy also keeps the businessman trudging through road blocks because he has his eyes fixed on long term goals. It is important you are very energetic and vibrant as it will ensure that your business is up and running. You need to have a motivation from within and from those around you. The man who invented electricity, tried ninety-nine times and failed; he th got it right the 100 time! I dare say, that is the spirit you must possess, no matter how many times you fail, you keep trying it out until you get it right….bottom line you must delete the word IMPOSSIBLE from your dictionary. Period!

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

If you are going to run a business of your own, you should find something that makes you really happy. This should be at the core of why you are even looking at going into business of your own, because if you try and make something work and you have no passion for it, it probably won’t work out. If you have passion for the industry that you are working in, you will have a good chance of making it work out. What make a business great are the people that run it and the passion that they have for it. Keep this in mind when you are thinking of starting a business of your own.

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

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

Your love and passion is what takes you through those challenges. Without that passion, you probably won’t make it.

A

Vanguard, MONDAY, NOVEMBER 30, 2015 — 23

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ast week I talked about the technological opportunity the so-called illegal refineries is offering the nation that is being thrown away. There were many Nigerians who felt the same way. But one particular reader suggested a part 2 that should focus on the danger the destruction of tons of illegally refined products is having on the coastal, as well as the entire NigerDelta region. Federal government law enforcement agents have engaged in an endless battle with crude oil thieves. The joint military task force set up by government in this regard is to arrest and prosecute these thieves. I am not so sure that considering the impact oil spill has on the environment, the task force was empowered to destroy crude oil and products recovered from these so-called illegal refiners. But regular reports have it that such recovered products are usually destroyed.

The most recent report by the Central Naval Command said its operatives have destroyed eight illegal refineries and about 300 metric tons of products suspected to be Automated Gas Oil and Crude Oil at Akassa in Brass Local Government Area of Bayelsa State. The spokesman of the command, Lieutenant Commander E.D Yeibo said the raid was led by the Commanding Officer, Forward Operating Base (FOB) FORMOSO, Captain Musa Katagum following intelligence report on the activities of suspected oil thieves in the area. The team, he said, was made up of personnel from Naval Base Brass and soldiers attached to Nigerian Agip Oil Company.

Yeibo said: “A total of eight refineries and about 300 metric tons of products suspected to be Automated Gas Oil and Crude Oil were destroyed during the raid.

“The destruction was in accordance with extant regulations of destroying in-situ when arrest was not effected.

The question being asked is: how were these products destroyed? Were they buried?

Where they burnt? Three hundred metric tons of oil spilled in a region will permanently deface the surface on which it is poured.

If burnt, it will send a lot of carbonmonoxide into the

Is there nothing good about the so called illegal refineries? (2)

atmosphere. Vegetation, fish and other aquatic lives in that area are thus destroyed. This inflicts permanent damage to the means of livelihood of those living in that area.

It is doubtful if the Nigerian military task force is aware of the global campaign on climate change.

It is equally doubtful if the Federal Government of Nigeria is really concerned about the environment and ready to go along with the global trend. Global warming resulting from emission of carbon into the atmosphere has caused climate change that the entire world is worried that if nothing is done to change the situation, lives on planet earth will be seriously endangered.

Nigeria today is experiencing unusual rainfall and uncontrollable flooding.

Flooding has sacked many villages and towns in various parts of the country, yet the

military boasts of open destruction of tons of illegally refined products.

It is important to draw the attention of the military to the ongoing preparation for climate change meeting starting today in Paris.

Preparatory to the UN Climate Change Conference in Paris between Nov. 30 and Dec. 11, 2015, UN SecretaryGeneral, Ban Ki-moon has reiterated the need for an urgent global response to climate change. He said: “Why do I care so much about this issue? First, like any grandfather, I want my grandchildren to enjoy the beauty and bounty of a healthy planet. And, like any human being, it grieves me to see that floods, droughts and fires are getting worse, that island nations will disappear, and uncounted species will become extinct. Second, as the head of the United Nations, I

have prioritised climate change because no country can meet this challenge alone.

Climate change carries no passport; emissions released anywhere contribute to the problem everywhere.

“It is a threat to lives and livelihoods everywhere.

Economic stability and the security of nations are under threat. Only through the UN can we respond collectively to this quintessentially global issue.

“The negotiation process has been slow and cumbersome.

But we are seeing results. In response to the UN’s call, more than 166 countries, which collectively account for more than 90 per cent of emissions, have now submitted national climate plans with targets.

“If successfully implemented, these national plans bend the emissions curve down to a projected global temperature rise of approximately three

degrees Celsius by the end of the century.” Is the Nigerian military authority aware of the disaster caused by uncontrolled fire and carbon emission on the environment and the lives of Nigerians? Are these gallant armed men aware that climate change is a threat to lives and livelihoods everywhere in Nigeria and beyond? Are they not grieved to see that floods, droughts and fires are getting worse within Nigeria? Even if they are not affected directly by flood, are they not concerned that their fellow countrymen are internally displaced as a result of floods? Are these men not aware that some coastal towns in the country will be submerged one day and lots of lives and property will be lost as a result of global warming?

This administration prides itself as a government whose economic policy is to elevate Nigerians and alleviate poverty. Nigeria has the habit of missing out on great opportunities. Nations are working hard with others to reduce green house gas emission, Nigeria is here announcing to the world how many illegal refineries its military has destroyed and the volume of crude oil as well as refined products its has destroyed through no other means than setting them ablaze.

They are not asking what the environmental implications of setting such amount of products on fire are. Nigerian leaders need to put on a thinking cap and think out of the box to save the nation the pains of flooding, drought, desert encroachment and fire disasters.

Business & Economy Why Nigeria ranks poorly in ease of paying taxes

By JONAH NWOKPOKU

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igeria’s high cost of tax compliance has been identified as one of the reasons for its poor ranking in ease of paying taxes when compared to other economies around the world.

Recall that Nigeria ranked 181 out of 189 economies covered by the ‘2016 Paying Taxes Survey’ conducted by PricewaterhouseCoopers and the World Bank Group.

This was a decline from its 179th ranking in 2014.

According to the report,

electronic tax filing and payments were the most common tax reforms undertaken by countries worldwide during the past year. As a result, paying taxes became easier for medium sized companies globally, and the focus has moved from reducing tax rates for companies to embracing technology and relieving their compliance burden. The report also shows that low income economies continue to face the biggest reform

challenges.

The report said: “Paying taxes 2016 finds that on average, the model company has a Total Tax Rate of 40.8 per cent of commercial profits, down by just 0.1 percentage point from last year. It makes 25.6 tax payments per year and takes 261 hours to comply with its tax requirements, a drop or two hours compared to last year.”

It said: “Nigeria ranks 181 out of 189 economies covered by the survey. By contrast, the Total Tax Rate for the model

company in Nigeria is 33.3 per cent up by 0.9 percentage point from last year’s 32.4 per cent. It makes 59 tax payments per year and takes 908 hours to comply with its tax requirements.”

Speaking on the report at a forum organised by PwC for stakeholders and tax administrators in Lagos recently, West Africa Market Tax Leader, PwC, Taiwo Oyedele said: “The tax burden in terms of cost of compliance in Nigeria is very high. In some cases, the cost in terms

of time and money is more than the tax payable. Nigeria is not doing well by ranking 181 out of 189. This means we have a long way to go especially because our tax to GDP ratio is very low at about 8 per cent. Worldwide and looking at countries in Africa, we are looking at 25 per cent.

So, if we are looking at say, moving from 8 to 25 per cent, that is 300 per cent increase, we should not make the process of paying taxes very complicated.

C M Y K

24— Vanguard, MONDAY, NOVEMBER 30, 2015

Business & Economy

NBC’s graduate trainee scheme produces 4,500 engineers

By PRINCE OKAFOR

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igerian Bottling Company (NBC) Limited has so far produced over 4,500 competent engineers under its graduate trainee scheme, and thus stimulating economic growth, youth development and empowerment This was disclosed by the company’s Managing Director, Ben Langat on the occasion of graduation ceremony for 39 trainee graduates from its Technical Training Centre in Ikeja, Lagos. Langat stated that the objective of the Technical Training Centre is to consistently provide a pool of resourceful competent engineers and technicians who are in tune with the highly demanding technology and operating environment in the beverage industry.

He added that graduates from the Technical Training Centre have remarkably demonstrated high technical and leadership competencies over the years and have been rewarded with accelerated career progression.

Also speaking at the event, Acting Head, Public Affairs and Communications, NBC Limited, Sade Morgan said, “The Technical Training Centre is one of the key pillars of NBC’s commitment to stimulate human performance, improve productivity and induce value-added production capacity.”

She added that the place of technicians is very vital in securing the already existing standard heritage of our organization, as well as safeguarding and upholding our world class manufacturing models and processes.

NBC Technical Training Centre was established in 1996 to continually train and empower technical personnel in the company.

However, the Training Centre is open to young Nigerians from other institutions with an aspiration to build a sound career in the beverage bottling industry. Till date, the Technical Training Centre has concluded distinctive technical programs for over 4,500 participants, staying committed to producing competent and enterprising engineers, as well as equipping technicians with the required skills necessary for the operating and technological requirements in a challenging industry environment.

C M Y K

VISIT: From left, Acting Head, Public Affairs & Communication, Nigerian Bottling Company (NBC) Limited, Mrs. Sade Morgan; Director, NBC, Alhaji Ahmed Mantey; Managing Director, NBC, Ben Langqat; Director, NBC, Laolu Akinkugbe and Executive Governor of Kwara State, Dr Abdulfatah Ahmed during a courtesy visit to the Kwara State Government House by the NBC delegation.

Recapitalisation: Acorn to raise N5bn via private placement

By PROVIDENCE OBUH

significant milestone in its recapitalization process and

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corn Petroleum Plc is set to raise N5 billion through private placement following an approval of the basis of allotment of its Rights Issue by the Securities and Exchange Commission, SEC. The company has during its last AGM obtained approval from its shareholders to raise additional equity by way of Rights to existing shareholders and placement with new investors.

In a statement, the company said that capital raising exercise represents a

As part of its strategic plans to give liquidity and exit options to shareholders, the company has commenced the process of listing its existing shares with NASD

that it has commenced the second phase of the capital raising exercise which will be a combination of Special/ Private Placement to selected investors during which the company hopes to raise additional N5billion in new equity. The company hinted that approval was obtained at its last AGM from shareholders to raise additional equity by way of Rights to existing shareholders and placement with new investors.

Accordingly, the company said, “we will focus on the core downstream activities of

distribution of petroleum products hence capital raised will be deployed towards corporate restructuring, working capital and investment in critical infrastructures like construction of storage depots at Lagos, Port Harcourt and Abuja airports, construction of a lubricants blending plant, expansion of its retail outlets chain, LPG Plants and the development of an ultramodern oil terminal.”

As part of its strategic plans to give liquidity and exit options to shareholders, the company has commenced the process of listing its existing shares with NASD via listing by introduction and this is expected to be concluded in December 2015.

Meanwhile, the company also debunked rumors about the reported sale of its assets

by AMCON, “we do not have any assets encumbered by AMCON. During 2013, we entered into an agreement with AMCON wherein one of our assets was sold to AMCON in full and final payment of indebtedness.

“This asset was in turn leased back to the company for a period of time with an option to buy back if the company desires. So it is erroneous to report that the company asset was put up for sale when in actual fact the asset in question does not belong to the company and not carried in its books. The company is not in dispute with AMCON and the company has the right of first refusal to buy back the facility which the company may decide to exercise if it so desires,” the company said.

Liquidity: BDC chairman lauds CBN for cuts in lending rate

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he Chairman, Sokoto State Chapter of the Association of Bureau De Change Operators, Alhaji Aliyu Yar-abba, has commended the Central Bank of Nigeria (CBN) for reducing the banks’ lending rates from 13 to 11 per cent. he said: “This singular, highly commendable act would certainly boost liquidity in Nigeria’s economy, boost domestic commerce and trade."

Yar-Abba told newsmen in Sokoto last week that the gesture by the apex bank was capable of enabling local manufacturers to bolster their activities across the nation.

According to him, "The domestic manufacturers would now be able to draw more facilities from the banks, resuscitate ailing and

collapsed industries and establish new ones. They will also be able to get more funds at reduced interest rates to establish new factories,as well as small-scale enterprises across the country.

"Consequently, the nation’s hard-earned foreign reserves would be saved; create more employment locally and curb poverty and its attendant negative consequences."

The Bureau De Change Operators further praised the CBN for directives to BDC operators across the country to collate the details of all those seeking to buy the U.S. Dollars. Yar-Abba explained that the measure had helped to drastically reduce the incidences of money laundering.

He said: "It has also reduced the nefarious acts by some

Nigerians using Automated Teller Machines ( ATMs) abroad to launder money, as well as engage in illicit transactions in foreign currencies. I am, however, appealing to the apex bank to relax the requirements that all BDC operators were directed to receive from their prospective customers. These include photocopies of international passports with valid visas, Bank Verification Number( BVN) and air tickets."

He appealed to the CBN to increase the ceiling on the amount of dollars the BDCs were allowed to sell to a single customer from $5,000 to $10,000.

Similarly, he called for the relaxation of the requirements for purchasing foreign currencies for customers seeking below

$10,000, urging the Federal Government to initiate policies to force Nigerians and other nationals and multinational corporations to transact their businesses only in the Naira as "This is also capable of boosting the strength of the Nigerian legal tender, facilitate trade and investments. I am also calling on all Nigerians to patronise more Made-InNigeria goods, to encourage more local production of goods.

"In the same vein, I am appealing to the Federal Government to sustain the current commendable reforms of the power sector.

This would also help in the revamping of the collapsed industries, as well as facilitate the springing up of new ones across Nigeria,’’ Yar-Abba, explained.

Vanguard, MONDAY, NOVEMBER 30, 2015 — 25

Corporate Report

Flour Mills Nigeria: One step away from loss

By MIKE UZOR

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lour Mills Nigeria showed an exceptional rise in profit at the end of its second quarter trading yet it is facing operating pressure that leaves it just one step away from a loss. The company’s 450% rise in after tax profit in the second quarter is an exceptional earnings record in a year of a general corporate earnings lull. With an after tax profit of N24.02 billion at half year, the company has already made about three times the full year profit figure it posted at the end of the preceding financial year.

The company’s impressive profit show however came almost exclusively from profit realised from disposal of investment in associates.

Without the windfall, Flour Mills would have reported a meager profit of N287 million in the second quarter. That is the only contribution from the company ’s nor mal operations to the otherwise robust bottom line picture displayed at the end of the second quarter. That was all the company saved for shareholders out of sales revenue of N177.58 billion generated at the end of the second quarter. The company faces intense operating pressure from rising cost of sales and huge interest charges that have undermined profit capacity considerably. Last financial year, sale of investment equally yielded a windfall of N14.28 billion, which enabled the company to escape a loss that could have resulted from huge interest expenses of N18.70 billion. Two major cost elements have eroded profit margin in the core business of the company and the structure for profitable operations appears to be missing presently.

One is cost of sales, which accounts for 90% of sales revenue. The other is interest expenses, which rose by 21.1% at the end of the second quarter to N12.33 billion - close to three times as fast as sales revenue.

The company’s operating profit was insufficient to meet finance cost in the second quarter.

The company’s operations run on huge balance sheet debts. Despite a significant reduction, the company still has term loans of N63.74 billion and a bank overdraft of N39.42 billion. There are also short-term loans of N46.58 billion and unsecured fixed rate bond of N9.23 billion. The company will need to free itself of much of these borrowings for it to regain the capacity to convert revenue into profit.

The company generated sales revenue of N177.58 billion in the second quarter, which is an increase of 7.3% year- on-year. Full year turnover is projected at N359 billion for Flour Mills Nigeria in the 2015/ 16 financial year. That would be a growth of 16.6% against a decline of 5.2% last financial year. Without the gain from disposal of investment, the company stood only a thin line

MASTERCLASS -From left: Sola Adepetu, Non-Executive Director, Standard Chartered Bank Nigeria; Yemi Owolabi, Executive Director, Finance, Standard Chartered Bank Nigeria; Bismarck Rewane, CEO, Financial Derivatives Co. Ltd; and Leke Ogunlewe, CEO, Standard Chartered Capital and Advisory Nigeria, at Finance MasterClass 2015 event organised by Standard Chartered Bank at the bank's Head Office, Victoria Island, Lagos. between profit and loss at the end of the second quarter. Profit capacity was further constrained by major drops of 32.7% in other income and 76.4% in investment income during the review period. Given the costincome structure the company is operating, no reasonable addition to the profit figure is anticipated from Flour Mills Nigeria for the rest of the financial year. After tax profit is is therefore expected to amount to N24.31 billion at full year - only marginally higher than the second quarter closing figure. This will nevertheless be an outstanding growth of 187% over the preceding year ’s closing net profit figure of

N8.47 billion.

The company remains under cash flow pressure, as net cash generated from operating activities could not cover debt repayments and interest expenses. Cash generated from sale of investment enabled the company to meet substantially a net cash utilisation of over N27 billion from financing activities. Without it, the company would have piled more debts to meet serious cash flow pressure. Despite the windfall, the company still carries a cash deficit in excess of N23 billion.

In the midst of the cash flow difficulties facing the company, it is not certain if shareholders can hope

to share from the big harvest by way of a decent dividend. The company’s directors declared a dividend holiday last financial year but whether the bigger windfall from sale of investment this year may end the holiday isn’t foreseeable for now.

Nestle Nigeria: profit flat on slow sales, rising costs Nestle Nigeria is unable to push sales volume so far this year and rising operating cost have encroached on margins and kept profit flat. The food and beverages company suffered a slight decline in profit last year with an increase of 7.7% in turnover. This year, sales revenue isn’t likely to grow as fast as happened last year but a moderate improvement in profit may be possible at full year. Some cost saving is helping the company to defend profit margin and that is the key operating strength for the company this year. Sales revenue amounted to N108 billion at the end of the third quarter, which is an improvement of 5.2% year-on-year.

Full year projection indicates sales revenue of over N145 billion for Nestle Nigeria at the end of 2015.

This will be a marginal increase of 1.4% - the slowest revenue improvement in many years. The growth rate in the third quarter is therefore expected to slow down at full year.

The ability to grow sales revenue is bound to be constrained as long as the company is unable to appeal to consumers’ low cost sentiments.

A low price response is needed to stimulate the consumer market at a time of low spending capacity. The company said increased cost of input induced by the devaluation of the naira is the problem. The

Continues on page 26

26 — Vanguard, MONDAY, NOVEMBER 30, 2015

Corporate Report

Flour Mills Nigeria: One step away from loss Continues from page 25 inability to transfer the cost increase to the market is hurting sales as well as profit.

The company ended third quarter operations with after tax profit of N17.24 billion, which is a flat growth of 2.2% year-on-year. After tax profit is projected at N23.8 billion for Nestle Nigeria in 2015.

The flat growth in the third quarter is expected to step up to an increase of 7% at the end of the year.

Nestle Nigeria implemented efficiency and cost saving initiatives that enabled it to contain rising cost of sales and therefore improve gross profit ahead of sales. Cost of sales increased by 2.8% against the 5.2% increase in sales revenue.

That improved gross profit margin from 43.2% in the same period last year to 44.5% at the end of the third quarter. Further cost management success happened in respect of administrative expenses and marketing cost. This enabled the company to raise operating profit by 11.6% more than twice as fast as sales revenue.

However most of the cost saved was claimed by finance charges, which nearly doubled at the end of the third quarter. Finance charges amounted to N3.86 billion, which claimed 15.6% of operating profit against 8.8% in the same period last year.

The ability to defend profit margin is the key strength of the company this year. Net profit margin is slightly up from 15.5% at the end of last year to 16% at the end of the third quarter. That informs an expectation of a moderate improvement in after tax profit at the end of 2015.

Nestle Nigeria has not achieved a reasonable growth in profit over the past three years.

Management needs to recharge the company ’s growth momentum by focusing on low cost high margin products, which will be an appropriate response to the present conditions of the consumer market in Nigeria.

The company has declared an interim cash dividend of N10 per share. The register of shareholders closed on 20th November and payment th is scheduled for 7 December 2015.

•Mike Uzor is a financial analyst based in Lagos.

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Vanguard, MONDAY, NOVEMBER 30, 2015— 27

Banking & Finance

MPC measures not sufficient for economic growth — Analysts •To reduce FG’s debt service burden •Inject N771bn liquidity into interbank market •Trigger capital flight, increased inflation authorities to de-risk the sector. However, with the restriction on all cheap income lines, we expect a significant medium term expansion in Credit to the private sector (currently at N19.1tn in October 2015 and up 6.8 percent Y-o-Y) by DMBs. This will necessitate banks to improve on their risk management framework to identify opportunities and earn a relatively higher margin (compared to the cheap rates in the fixed income market) and buoy assets turnover and shareholders’ return.”

By BABAJIDE KOMOLAFE

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HE decisions of the Monetary Policy Committee (MPC) to reduce the Monetary Policy Rate (MPR) to 11 percent and cut the Cash Reserve Requirement of banks to 20 percent will not automatically translate to economic growth, said economic analysts.

Faced with the slow economic growth in the three quarters of the year, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) at the end of its meeting on Tuesday decided to relax monetary policy in a bid to boost growth.

Consequently the MPC reduced the MPR from 13.0 percent to 11.0 percent; reduced the Cash Reserve Requirement (CRR) from 25.0 percent to 20.0 percent; and fixed the Asymmetric corridor of +2.0 percent and 7.0 percent around the MPR. Commenting on this development, Razi Khan of Standard Chartered said, “The easing measures are aimed at boosting Nigeria’s real economy. How successful they are will depend on how much other bottlenecks, currently constraining realsector activity, can be overcome”.

Kunle Ezun of Ecobank Treasury Research team expressed similar views. He said, “While this effort from the monetary authority to boost growth is commendable, it is not automatic and might require complementary efforts and strategic policy decision from the fiscal authority in the area of infrastructural renewal and security to transform the economy”.

Similarly, Financial Derivative Company (FDC) in its reaction stated, “Though the new changes made to the policy rate and CRR indicate the apex bank’s concern with the slowing economic growth, the exchange rate and its policy implications is still an issue that the CBN will need to answer. All eyes will now move to the January meeting and the 2016 budget of the FGN to see what the economic direction of Nigeria is likely to be.”

*CBN Governor, Mr. Godwin Emefiele To reduce FG’s debt service burden According to the FDC, the decision of the MPC will lead to 50 percent reduction in the debt service burden of the federal government. The company noted, “But more importantly is the adjustment of the corridor around the MPR to an asymmetric corridor of +2 percent and -7 percent. What this effectively means is that the CBN will borrow at 4 percent p.a and lend at 13 percent p.a. By this significant move, the CBN will be reducing the FGN debt service burden by about a half.

The Federal government debt service burden in 2014 was in excess of N1 trillion.”

N771bn liquidity injection Meanwhile, Afrinvest Plc in its comment stated that the decision to reduce the CRR to 20 percent will inject N771.4 billion additional liquidity into the interbank market.

Commenting on how the MPC decision will impact interbank liquidity and interest rates, the company stated, “The 200 basis points (bps) cut in MPR and introduction of an asymmetric corridor around the MPR at +200bps and 700bps is the most significant of the policy decisions reached today as this brings the Standing Lending Facility (SLF) and Standing Deposit Facility (SDF) rates to 13.0 percent and 4.0 percent from 15.0 percent and 11.0 percent respectively. Prior to the MPC decision, there has been a

regulatory maximum on the remunerable SDF placement by each bank at N7.5 billion.

The MPC’s decision to complement this by a further 5.0 percent cut in CRR will add approximately N771.4 billion to liquidity level based on October data from the CBN. ” Afrinvest however noted that the increased liquidity will not immediately translate to increased lending by banks.

It stated,” In the short term, we do not expect the ease in monetary policy to immediately translate to increase lending to the real sector, especially given the high risk retail/SME loans segment.

Structural bottlenecks, weak quality of infrastructure and the current slowdown in economic activities constitute high risk to real sector lending, which would require more adjustments by the fiscal

In the short term, we do not expect the ease in monetary policy to immediately translate to increased lending to the real sector

Capital flight & Increased Inflation Analysts at Afrinvest and FDC believe that the MPC measures could lead to capital flight from Nigeria’s fixed income markets and also increased inflationary pressures. FDC analysts stated, “Already Nigerian Treasury bills are yielding less than 4 percent p.a, much lower than the inflation rate. As interest rates have been reduced, there may be capital flight from the Nigerian fixed income market, especially in light of the anticipated rate hike by the US Fed in December. The growth in M2, which is -5 percent (annualised), gives some room for increasing money supply without stoking inflation. However, the refund of CRR and the lower MPR will definitely lead to increase in anticipated inflation.”

According to Afrinvest, “The relaxed monetary stance of the MPC after its last meeting for the year, though positive for stimulating short-term economic growth, may not come without negative implications for the economy in the medium term. With the reduction in interest rate, Nigeria is likely to face increased capital flight consequences in the medium to long term, more so if the Fed raises its benchmark interest rate at its next meeting in December.

“Equally, the spike in financial market liquidity resulting from the reduction in CRR to 20.0 percent as well as the expansionary 2016 fiscal year is expected to further trigger inflationary pressure.”

CeBIH retreat examines mobile payments for financial inclusion

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he Deputy Governor, Operations, Central Bank of Nigeria, Alhaji Suleiman Barau will lead banking and electronic payment experts and service providers to examine the prospects and challenges of using mobile payments to drive financial inclusion at the 5thannual retreat of the Committee of e-Banking Industry Heads (CeBIH).

The theme of the two day retreat is “Mobile Payments for Financial Inclusion in Nigeria - Prospects & Challenges” and is scheduled to hold from Thursday 2nd to Friday 3rd December 2015 in Uyo, Akwa Ibom State.

The retreat which will be declared open by the Governor of Akwa Ibom State, His Excellency Udom Emmanuel will feature keynote addresses by the Deputy Governor and the Managing Director/Chief Executive Officer, Wema Bank Plc, Mr Segun Oloketuyi.

Technical sessions would be anchored by renown experts in the electronic and mobile payments space such as Mr Valentine Obi, Managing Director, eTranzact International Plc, Mr Eric Muriuki Njagi from the Commercial Bank of Africa, Kenya and Mr. Frederik Eijkman, Chief Executive Officer, PEP Intermedius, Kenya.

Commenting on the retreat, CeBIH Chairman, Mr. Tunde Kuponiyi said, “The theme of the retreat was informed by the recognition of the increasing role of mobile payments in removing traditional barriers to financial inclusion, which is also one of the aims of the cashless policy introduced three years ago.

According to available statistics over 36million Nigerians are financially excluded i.e. they have no access to formal financial or banking services. The CBN and all the banks however seek to ensure that this figure is reduced to the barest minimum by the year 2020.

He said further, “Having deployed various channels of payments – PoS, Web, ATM and Mobile, it very obvious that the most suitable channel for targeting and penetrating the massive unbanked population is the mobile and this is easy to understand considering the rate of adoption of mobile.

28— Vanguard, MONDAY, NOVEMBER 30, 2015

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Vanguard, MONDAY, NOVEMBER 30, 2015 — 29

30— Vanguard, MONDAY, NOVEMBER 30, 2015

Corporate Finance

Guinness shareholders approve N5bn dividends

By NKIRUKA NNOROM

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dividend of N4.8 billion has been approved by shareholders of Guinness Nigeria Plc for the period ended June 30, 2015 with a pledge by the board and management to maintain sustainable growth for the business through good business strategies and quality products.

The dividends approved translated N3.20 per 50 kobo ordinary share.

The Chairman of the company, Babatunde Savage, speaking at the 65th Annual General Meeting, said although the operating environment remained daunting during the period under review, the company recorded a credible performance in its full year results and is now poised for better performance in the 2016 financial year and beyond.

“Going into the 2016 financial year, the board and management are resolute in their commitment to improve the performance of the company and deliver greater value and return on investments to shareholders,” he stated.

Guinness Nigeria and its parent company, Diageo, Savage said, remain strongly committed to supporting Nigeria’s developmental aspirations through strengthening the country’s manufacturing base, employment creation, manpower development and fuelling overall economic growth.

In the area of corporate social responsibility, the Chairman stated that the company has continued to maintain a strong focus on impactful projects across its host communities, be it in the area of health, water provision, environmental protection or road safety.

Responding to questions on the issue of sanctions on the company announced by the National Agency for Food and Drugs Administration and Control (NAFDAC) over alleged infractions, Savage emphasized that Guinness would continue to explore every path for a fair resolution of the matter. “We have had very robust relationship with NAFDAC for as long as I can remember. We intend to maintain that relationship.

Africa needs innovation to bridge unemployment gap – SIYA XUSA The 2015 Stanbic IBTC Business Leadership Series was a unique one. It featured two renowned innovators and guest speakers. And one of these speakers was an internationally acclaimed rocket scientist, Siyabulela Xusa. Driven by an uncommon mission and strong belief in self-actualization, he set out very early in life to make a difference in his chosen area of interest. At only 26, Xusa, has a planet named after him in recognition of his technological exploits. He spoke to newsmen at the sideline of the event on what Africa must do to achieve sustainable development.

NKIRUKA NNOROM was entrepreneurs to do business there and captured the in Africa. For instance, the interview for Vanguard. movement of goods and services in Africa is hindered Success in building a new by the visa regulations we generation of leaders in have in place. Americans are business depends to a large more welcomed in Africa than extent on the existence of an our African brothers. We could effective system, defined by change that to make it easy appropriate policy direction for Africans to move and and existence of an enabling innovate across Africa. More environment. Have you seen importantly, we should shift any signs that we are on the our mindsets as Africans on path of creating that kind of what is possible. History has model in Africa? not being in our favour. So, The bottom line is that Africa, we need to project our right now, is faced with two achievements, the positives fundamental forces. Firstly, is about Africa. the fact that we can’t over-rely You have been at the on resources. If you take a vanguard of transformation look at the economy, we have in Africa. During your lower commodity prices and presentation, you mentioned that is very fundamental. The the next revolution, which second fundamental point I could be economic as well as have seen is that Africa is a innovation. What factors very young population. About underscore your line of 625 million Africans are thought? between the ages of 16 and 25. So, there is a huge Most Africans population that is young and are tired of the will be entering the labour force. aid; we don’t Those two fundamental want to be forces have now made seen as governments and businesses to be more conscious of the accepting aid, fact that the future of Africa and we want to would have to be based on innovations because we need be seen as to be independent of standing resources and we need to competitively have young people innovating because the and with companies we have in veracity when existence today won’t be enough to give the jobs that it comes to are needed. Those two forces trade. have now shaped governments to take entrepreneurship more The line of thought comes seriously. from looking at history and Governments are taking the analyzing history. The biggest young generation more constraint to Africa in the past seriously because the young 50 years was that there was a generation is in the majority. lot of discrimination, our The average age of an African colonial past stunted growth president is in the high 60s, and a big part of Africa so we are being taken more clamoured for liberation. The seriously and innovation is second point is that now that being taken more seriously. we have the liberation, now But having said that, there is that we have stable still a long way to go and the governments in place, we path to follow is education. have the rule of law that has We should focus more on somewhat been established in engineering, science and most part of Africa, we need technology to ensure that we to create jobs, we need to can be globally competitive to create employment embrace the opportunities in opportunities. Most Africans the world and have the right are tired of the aid; we don’t policies that make it easy for want to be seen as accepting

•Siyabulela Xusa aid, and we want to be seen as standing competitively and with veracity when it comes to trade.

Talking about trade and not aid, it is very clear that we need an economic revolution.

Transforming the levels of inequality across the continent has to be through economic revolution. We have to innovate. We have to come up with new ways of doing things. We need to be able to take resources and come up with things that have never been done before. Africa is growing because we have abundant mineral resources.

But it is important we take the abundant resources and create high value added goods.

Innovation is important and young people must be at the forefront.

Leadership is obviously very critical to this process.

You just talked about the huge gap between the leaders (average age of 60) and the governed (average age of 25), which is obviously a challenge. What other challenges do you see affecting the economic as well as innovation revolution?

I think the generational gap is already a challenge. But I think the bigger challenge is between the generations.

There is nothing wrong with age. Age brings maturity, it brings experience but there has to be that clear line of communication. Leaders of today must be in touch with the reality of young people and young people of today must be conscious of the challenges been faced by the leaders. It is about the increase in communication.

Access to education and opportunities are even bigger challenges. A story like mine could happen in Enugu, Kano or anywhere in Africa if young people have that access to opportunity. How do they bring more access to opportunity? It is through investing: investing in healthcare, investing in an environment that enables people to thrive.

However, every challenge is an opportunity and what we have seen from African and Nigerian entrepreneurs are

people being rewarded for rising from those challenges.

I will answer your question by saying that I don’t see it as a challenge. I see the generational gap as an opportunity for young people to take the lead. As you are aware, institutions don’t create leaders; circumstances in the situations create leaders. Mandela became a great leader because of the situation that South Africa was in. Challenges and opportunities will be the situation that will create the next level of entrepreneurial African leaders.

Looking at the geo-political balance, Africa is still trying to leverage technology to drive growth and development, unlike the West where the thought is newer ways through strategy. How can we achieve a fine balance between deploying technology and achieving business objectives?

Technology is simply part and parcel of an overall business. We cannot say that technology would solve all the problems because sometimes the problem is not necessarily technology, it could be human factors. It is important for us to shift that narrative to say that technology is not the magic bullet to solve all the problems but it should be part of the solutions. We must first solve the basics like road infrastructure, rail networks (which is where industrialists come in), power lines, power plants, etcetera.

We can’t just think that they have technology that works in the West; we must make it work in Africa. Technology is a tool; it’s not the overlying philosophy. But we must embrace it and apply it where it is relevant.

What about the fixation with business objectives and how businesses grow? How do we achieve sustainable growth?

The aim of being in business is to make profit, both today and in the future. The rapid rate at which the world is changing requires everyone to be aware of innovation and to embrace it because industries are going to change faster in the next 20 years than they have in the past 100-200 years. We have seen the confluence of multiple things; we have seen what information technology has brought, what renewable energy will do, we have seen the increase in access and ease of travel, people have been more connected, we have seen what social media has changed. All these trends happening in the world have caused the world to change at a rate that it never has. We have what we call the network economy, where Uber, AB&B, Facebook don’t have physical structures. I am not saying companies should invest all their money in innovation but they have to be aware of it, otherwise, they will be caught off guard. Too often, you see big companies become complacent.

Vanguard, MONDAY, NOVEMBER 30, 2015 — 31

Insurance

Wake up to your responsibility, Adeosun charges NAICOM T

he Minister of Finance, Mrs Kemi Adeosun, on Friday advised the National Insurance Commission (NAICOM) to rise up to its responsibilities and explore untapped potential. Adeosun made the call at a retreat marking the five years of NAICOM’s existence in Abuja.

The minister, who was represented by the Director, Home Finance in the Ministry, Alhaji Kari Zakji, said: “The insurance industry needs to be positioned to contribute positively to the Gross Domestic Product (GDP) and creation of employment.”

“NAICOM can help achieve this by cleansing itself of the bad eggs within itself and by improving its services to its consumers. NAICOM as an organisation will be expected to make efficient use of the financial and non-financial resources available to it.

In this regard, my ministry will be looking to see a strategic, efficient and effective allocation and use of public resources.” Adeosun urged NAICOM to use the retreat to come up with a strategic

Z

PARTNERSHIP - From left: Mr Simeon Eyisi, Chairman, SIMS Nigeria Ltd; Mr Shinichi Wakita, Managing Director, Marketing, Middle East and Africa, Panasonic and Mr Hisao Yamane, Divisional Managing Director, Appliances company, india during during the partnership announcement between Panasonic and SIMS at the Oriental Hotel in Lagos. master plan to strengthen and restructure the insurance industry. The NAICOM’s Chief Executive Officer, Alhaji Mohammed Kari, said the retreat was an avenue for the commission to review what it had achieved in the last five

years. We have reasons to believe we can do more to ensure that insurance continues to be robust in the country.

“We plan to critically review our achievements and decide the strategies to push forward

and those to drop. Also, we recognise the need for further deepening of the insurance market so we will brainstorm on strengthening the players and encouraging consumers to utilise the services being provided,” he said.

...as NAICOM moves to improve service delivery

By FAVOUR NNABUGWU

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n a bid to give its employee a voice in the regulatory body and a sense of belonging, the National Insurance Commission (NAICOM) assembled all cadres of its staff to chat ways of improving efficiency, increase revenues and reduce expenses in the coming year.

The Commission last weekend gathered its entire rank and file staff from across the nation to Abuja for a twoday retreat in order to put the ideas from the cadres of staff into use ahead of 2016 operation.

Commissioner for Insurance, Alhaji Mohammed Kari while welcoming the staff to Abuja, encouraged them to speak out on how best the Commission can function better in the coming years.

Kari who expressed confidence that NAICOM will benefit the most from the retreat said, “We believe that sitting together everybody will have the confidence to speak openly because ideas should come from the bottom to the top, in most cases if you want to have a fair opinion of an organisation.

“This is an opportunity to

Zurich group to stop general business in Middle East

really hear from everybody first hand. Previously we have had retreats where we have directorates retreat; each directorate will sit on their own and then come back and collect directorate resolution.”

The CFI was optimistic that the Commission will not only review its past operations but will, most importantly, chat new courses for the supervisory body to boost its efficiency and service in the year ahead.

“We will take the opportunity to review the last five years, what we have done, see how much we have achieved and what we need to do more.

Whatever we feel is to be carried forward, will be carried forward. Some of the issues we are looking at has to do with

We believe we are making progress and this will give us an opportunity to have a forensic look at what we have done so far

developing the market, strengthening the players, encouraging the stakeholders, that is, the consumers to principally benefit from the services we have been providing.”

He also informed that the Commission is tinkling with the idea of organising a directorate retreat where directorates can learn from one another in the best interest of the government institution.

“We are hoping to have director’s breakout, an open forum and a common plenary

section where all issues will be discussed together thereby members of one directorate can contribute to the issues of another directorate.”

“We believe we are making progress and this will give us an opportunity to have a forensic look at what we have done so far.”

Minister of Finance, Mrs. Kemi Adeosun who declared the 2015 NAICOM Staff retreat opened, said government expectation of the Commission is to make efficient use of its financial and non-financial

Premium Pension makes changes in executive management cadre

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remium Pension Limited has made some changes in the executive management cadre of the company.

In a statement, the company said that the Executive Director, Operations and Services, Mr. Kayode Akande has moved to the Business Development and Investment Directorate to replace Mr. Adamu Musa Mele who in turn takes over from him at the Operations and Services Directorate.

Adamu Musa Mele, now the Executive Director, Operations and Services is a pioneer staff of

the company who played a major role in shaping and stabilising its investment department before 2013 when he was elevated to the position of Executive Director in charge of the Business Development and Investment Directorate which comprises the Investment, Business Development, Contribution Collection and Customer Care Departments. He is a seasoned investment banker with over two decades cognate industry experience. He holds an LLB (Hons) BL, and MBA amongst several other local and international qualifications.

urich Insurance Group Plc said it will stop writing general insurance business in the Middle East at the end of the month because of the “limited potential” for profitable growth.

The decision to exit general insurance in the region follows a company-wide strategic review. Zurich remains “committed” to its life insurance unit in the Middle East, which won’t be affected by the decision, the company said in a statement. Zurich said it’s unclear how many jobs will be cut.

The strategic change reflects “the challenges of building a strong and profitable franchise across multiple markets in the region,” said Brian Reilly, chief executive officer of Zurich’s general insurance business in the Middle East.

Switzerland’s largest insurer earlier this month announced plans to cut jobs and exit some businesses in a reorganisation of its global general insurance unit after the non-life business reported a third-quarter loss.

Zurich also intends to eliminate more than 400 jobs in the U.K. The company will stop writing new general insurance policies for retail and small business customers in the Middle East by the end of the month and plans to completely exit by the end of 2016, the statement showed.

Golden chance rewards hardwork

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olden Chance Lotto, a lottery company in the country, has rewarded at least 30 of its sub-agents who worked extremely hard in the last three months. The lucky winners were given awards in three categories of which the highest category was awarded with ten tricycles and cash sum of N30,000 each.

The other categories are those that won double door deep freezers and television sets, they were also given cash sums of N20,000 and N12,000 respectively.

Speaking at the award ceremony, Managing Director of Golden Chance Lotto, Mr. Charles Arthur said that the award that was given to the winners is as a result of their hard work .

He said that without the subagents, the rewards wouldn’t have been possible because there is no time you don’t see them working. Even when it’s raining, they are there working hard and encouraging people to come and play the game.

32 — Vanguard, MONDAY, NOVEMBER 30, 2015

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“

t is unthinkable that wisdom should ever be popular”, Johann Goethe, 17491832, (VANGUARD BOOK OF QUOTATIONS, VBQ, p 275.)

“The Chairman Fiscal Responsibility Commission, Chief Victor Murako, has warned of a possible shutdown by some states of the federation in the next six months unless they find creative ways of handling their dwindling allocations from the federation account.” PUNCH, November 24, 2015.

You bet they can; and at least two are technically bankrupt now. Those offering them credit do so at considerable risk. One of the saddest things for an economist deeply loyal to his country is to observe as calamities foretold to his countrymen unfold. Chief Murako’s wake up call comes in the nick of time as the Nigerian Labour Congress is once again getting ready for a show-down with governments. Unfortunately, Murako’s warning will fall on the usually deaf ears of officials.

Below, I reproduce excerpts from two warnings issued in 2011 and 2014 respectively to public officials and those aspiring to public office. The most pathetic are those who recently got elected – they have, individually and collectively landed in political hell. Read on.

MW: WHY GOVERNMENTS CAN’T AND SHOULDN’T PAY “We have no problem with labour; everything is clear, but we cannot go against the law.

The only way we can raise money is through budgeting.

Another budget season is around the corner, so that we can commence the implementation of the law from 2011”.

Anyim Pius Anyim, Secretary to the Government of the Federation on Minimum Wage.

Preamble If anyone had told me I would be defending President Jonathan and all the 36 Governors as well as the Local Government Chairpersons a few weeks ago, it would have appeared to me as total lunacy.

Yet, here we are, at a national cross road on the controversial issue of Minimum Wage

Can Nigerian states go bankrupt? (1) implementation and each of us is called upon to take a patriotic stand. Let me start by stating that President Jonathan and the National Assembly, NASS, should not have signed the bill under duress as they did in March of this year. The Nigeria Labour Congress had threatened “No Minimum Wage; No Elections”. And government had caved in without conducting due diligence on the financial implications of the bill. That was weak leadership; especially, when the 2011 Appropriation Bill itself had not been sorted out by the two branches of government at the time of signing.

If the President had taken time out of his busy campaign schedule to take a look at the budget before the NASS, he would have noticed that the estimates for wages and entitlements were based on the wages existing in 2010 with a minimum of N7,500. No provisions have been made for the 150% increase which N18,000 represented. The same is true of the state and local

governments. And, let me again exonerate the President and Governors for not “proactively” including the increase through a “Contingency provision” in their budgets.

Nobody provides for 75% increase in expenditure during the coming year. So, they are totally blameless in that respect.

The question can fairly be raised: Is the government not morally obligated to pay once the President had signed the bill? This, it must be confessed

Jonathan was blackmailed!

And he did what any sensible leader would do under the same set of circumstances

presents an ethical dilemma.

This writer had carpeted the President several times for not upholding agreements. So, why is it difficult to ask him to redeem this one? For me, the dilemma is resolved by pointing to the threat by labour to disrupt an election on which the government had invested over N100 billion. Jonathan was blackmailed! And he did what any sensible leader would do under the same set of circumstances. He signed a contentious bill. Now the controversy confronts us. And, for once, we should stand by the President.

Back to basics “Nor should we listen to those who say, ‘The voice of the people is the voice of God’, for the turbulence of the mob is always close to insanity’. — Alcuin, 735-804.

We have tried everything else, in our discussions on the Minimum Wage Act of 2011, we might as well try the truth.

Senator Anyim finally admitted what, to highly discernible individuals, was known to be the truth but which sentiments

and the noise of the ignorant minority, the only beneficiaries of the Minimum wage Act will not allow to be said or heard.

The Secretary to the Federal Government has not only told all of us why government can’t pay. But, he had also, perhaps deliberately and diplomatically, confirmed some of the reasons why they should not pay. And this applies to governments at all levels – Federal, States and Local Governments. The Nigerian Labour Congress, NLC, and their supporters, including most of my colleagues in the media, would be well advised to look forward to the wage increase starting 2012.

Right now, there is no money to pay as the SGF has rightly said.

Permit me to briefly explain, even at the known risk that this is not going to be a popular view. That is fine by me. Not all decisions can be made by simple majority – especially when the majority is largely ignorant about the subject. It is fact that few Nigerians have studied economics, public finance and budgeting. Yet these are the crucial issues at stake.

That was in 2011. This was followed in 2014 by another article pointing to the dangers ahead – the dangers which now stare all the state governors in the face. I know at least two which are now on the brink.

Read on.

Business & Economy

Courteville grooms next generation leadership S eventeen young managers have completed the gruelling Middle Management Training (MMT) Level 1 program organized by Courteville Business Solutions Plc. The 9-month long intensive program, the first in a tiered series, was conceived to identify and nurture budding in-house talent to fill leadership positions at the fast-growing e-business solutions and business process outsourcing company. At a convocation ceremony held recently, Adebola Akindele, Courteville’s Group Managing Director, expressed his satisfaction with the progress made by the graduates.

In his commencement address, Akindele harped on the need for companies to develop a deep management bench by identifying and investing in future leaders early. He cited Sir Richard Branson of the Virgin Group’s employee retention mantra as the company ’s guiding principle. To train people well enough so they can leave, and treat them well enough so they do not want to.

He told guests at the event that Courteville’s ambition is to become one of the two best places to work in West Africa.

In line with this aspiration, a Trust Index (TI) survey recently carried out by Great Place to Work Nigeria attested to Courteville’s prime ranking among global and local IT solutions companies.

Courteville, which turns 11 in January, is facing increasing demands for premium grade personnel as it embarks on an international expansion program and introduction of new suites in its diversified services portfolio. The company ’s AutoReg motor vehicle and administration (MVAD) platform handles the

TRAINING - Courteville’s executive management with best graduates of its recently concluded Middle Management Training program. From left, Femi Niyi, Executive Director Projects & Strategy, Oye Ogundele, Executive Director, Africa Expansion, Rotimi Olaoye, Deputy Managing Director, Finance and Admin, Mariam Adebimpe, MMT graduate, Adebola Akindele, group managing director, Joanna Ogini, MMT graduate, Adewale Sonaike, Deputy Managing Director, AutoReg Franchise, Olutosin Kalejaiye, MMT graduate, and Olayiwola Adedayo, head, Risk Management.

registration of eight out of every ten vehicles on Nigerian roads.

Early this year, an independent HR audit commissioned by the company, commended Courteville for putting in place innovative staff engagement activities, mentoring practices and a transparent employee evaluation policy. The audit also revealed a dumbbell in the staffing structure. The discovery of a thin middle management cadre and the board’s desire for a robust succession plan served as the inspiration for the MMT. The basic idea behind Courteville’s MMT is to offer a fast-track leadership development training internally to promising young employees that would enable them transition to roles of greater responsibility at an accelerated rate. The decision to run the program in-house, a path less taken by most companies, was taken to maintain Courteville’s cultural DNA, save costs, and strengthen a sense of stakeownership among promising young employees.

In total, the curriculum

consisted 14 rigorous courses.

It covered areas as diverse as Emotional Intelligence, Presentation Skills, Performance Management, Financial Investment, Operations Management, Team Building, and, of course, Human Capital Management.

In addition to the courses, the program incorporated a number of unique elements. GMD-fora-Day exposed the course participants to the work of the group managing director. A participant would be selected to fill in the role of the GMD for a day, sit at his desk, answer his calls, respond to his emails, attend his meetings, and deal with issues that arise on that day. It was a pressure-filled eye opener on the demands of leadership for all 17 participants.

An Entrepreneurship Series invited distinguished business leaders to share their experiences with the participants. Some notable speakers include Chidi Anyaegbu, founder of Chisco Group of Companies, Akinsowon Dawodu, chief executive officer of Citibank Nigeria, and Yetunde Allen, chief executive officer of Clean Business Practice Initiative.

Vanguard, MONDAY, NOVEMBER 30, 2015 — 33

E-Commerce

Taxation: Why digital economy remains elusive — OYEDELE Stories by JONAH NWOKPOKU

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a r t n e r , Pricewaterhouse Coopers, PwC West Africa Tax Leader, Mr. Taiwo Oyedele has identified taxation of electronic related businesses as one of the greatest challenges confronting the global economy.

Oyedele stated this during a press briefing at the sideline of a forum organised by PwC for tax administrators and other

stakeholders on the ease of paying tax in Nigeria.

He said: “It is difficult to deal with the digital economy. Lets’ take Amazon for instance. If you want to order anything, you can just open your laptop or mobile phone, connect to the internet and you can order.

Assuming you have ordered a mobile phone, the mobile phone in Nigeria is liable to Value Added Tax, VAT but Amazon is not a Nigerian company. They are supposed to charge VAT but do not even know that there is VAT in

Nigeria and they are not even interested. So the phone is $50 for instance and they ask you to pay just $50. They cannot put VAT on it. So even if you look at origination and destination principles of tax compliance, which means the VAT, should be collected at destination which is Nigeria but who should collect it? The Nigerian tax authorities said Amazon should have charged it and they say go and collect from Amazon. But if you are lucky to even go to where Amazon is, you will be lucky if

you come back. This is because; you have crossed your jurisdiction. What power do the Nigerian tax authorities have over an American company in America? No one can ever enforce that law.

“The other option is charging the person who ordered the phone to collect the VAT. Imagine the millions of Nigerians who make purchases from Amazon. The cost of attempting to collect VAT from

them alone will be more than the tax you want to collect. This is because, one tax officer must be aware of the phone, where the buyer lives, how much it cost - maybe trying to get information from MasterCard, which is another challenge because they will argue that they have a confidential agreement with their customers and cannot release their information.

Skye Bank launches online shop, YesMall

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kye Bank Plc has unveiled an online store which is specifically dedicated to the sale of made in Nigeria products and services.

Speaking during the unveiling of the online mall in Lagos, the Group Managing Director/Chief Executive Officer of Skye Bank Plc, Mr. Timothy Oguntayo, said the bank came up with the platform after noticing that some SME operators find it difficult to

C M Y K

sell their goods as most of the finished goods end up as inventory in the warehouses.

He said: “Available statistics show that the e-commerce sector in Nigeria currently boasts of about 300, 000 online orders daily. Our desire at Skye Bank is to substantially grow these figures and make e-commerce the new trade highway in Nigeria. The introduction of YesMall is therefore a deliberate strategy to live the spirit of our mission

statement which is using technology to drive innovation and enable consumer lifestyle.”

He described the YesMall as an e-commerce platform which offers Nigerians costeffective opportunities to buy and sell online from the comfort of their homes. The Mall will also provide opportunities for many Indigenous Entrepreneurs to showcase their products to a borderless market

PRESS CONFERENCE - From left: Global Head of Cybersecurity, KPMG, Uk, Mr Malcolm Marshall; Partner & Head, Risk consulting KPMG Nigeria, Olumide Olayinka and Partner, Information protection & Business Resilience (II),KPMG UK, George Quigley at the Cybersecurity press conference by KPMG Nigeria in Lagos.

34 — Vanguard, MONDAY, NOVEMBER 30, 2015

Economy

Rise in tax revenue missmatches expenditure growth

By EMEKA ANAETO, Economy Editor

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here is indication that tax revenue may not significantly cushion Federal Government’s impending huge deficit projected for 2016 budget as expected tax revenue in 2016 fiscal year is about N4.5 trillion.

According to the projections of the Federal Inland Revenue Services, FIRS, tax revenue growth is around 10 per cent as against expected expenditure growth of over 100 per cent in 2016 fiscal year.

FIRS Executive Chairman, Babatunde William Fowler, during his screening for confirmation as the substantive tax master gave a hint to this.

Federal Government has planned to spend about N8.1 trillion in next year ’s budget, almost double the N4.3 trillion slated for 2015 which was about 10 per lower than N3.9 trillion in 2014.

When the news of the impending huge expenditure profile of the new government at the centre filtered out through the Vice President, Professor Yemi Osinbajo, many analysts expected an equally huge tax measures and inflow.

But not only did Fowler indicate marginal increase in tax revenue he also indicated that the proposed 100 per cent increase in Value Added Tax, VAT, will not take effect immediately, adding that he would not employ tax driving agents to shore up revenue as he did in Lagos State from where he recently moved to FIRS. FIRS had missed its

•Babatunde Fowler revenue target in the third quarter of the year when actual collection was N980 billion against N1.143 trillion target.

Tax revenue had taken a bashing recently when the Petroleum Profits Tax, a major component of FIRS inflow, underperformed by massively missing its target of N1.48 trillion to settle at N1.1 trillion.

Fowler had said that over 200 oil and gas companies operating in the country have not filed their tax returns for the year.

Also he said that due to the significant drop in oil prices, he said that a huge gap existed between the revenue generated by the FIRS and the total revenue by other government agencies like the Nigerian National Petroleum Corporation, Department of Petroleum Resources and the Nigeria Customs Service between July and September this year.

He pointed out that the

Tax revenue had taken a bashing recently when the Petroleum Profits Tax, a major component of FIRS inflow, underperformed by massively missing its target of N1.48 trillion to settle at N1.1 trillion

decline in oil revenue had made it necessary for the Federal Government to focus on non-oil taxes.

As a result, he explained that compliance was expected by all organisations and that the agency was prepared to remove bottlenecks associated with tax collection, adding that one such way was joint tax audits of companies by the FIRS and the states’ Boards of Internal Revenue.

Other interventions, according to him, are “ nationwide tax registration drive, with focus on VAT, which commenced on October 12, 2015, to bring in all unregistered taxpayers into the tax net”.

The concern of many fiscal policy analysts is that the widened gap between tax revenue and the federal expenditure plan at a time oil revenue was on the downside would me extensive borrowings which will drive up the country’s debt-to-GDP ratio.

The ratio of a country’s national debt to its GDP compares what a country owes to what it produces, indicating the country’s ability to pay.

Nigeria’s Debt-to-GDP ratio averaged 34.26 per cent from 2000 until 2014, reaching an all time high of 88 per cent in 2001 and a record low of 10.50 per cent in 2014.

Fowler said the proposed N8.1 trillion budget for 2016 is realisable, adding that Osinbajo was not aware of the FIRS projection before disclosing the proposed budget figures.

Vanguard, MONDAY, NOVEMBER 30, 2015 — 35

Media & Advertising

Sponsorship: MTN and manner of giving back Stories by PRINCEWILL EKWUJURU

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ponsorship is the fastest growing form of marketing globally. Therefore the primary reason companies include sponsorship as part of their marketing plans is to increase brand awareness, whether it’s establishing or strengthening the brand, or to change their brand image that subsists.

However, by associating a brand with an event or entity that the target audience views positively is by way of shaping attitudes and helping to generate a positive reaction to the brand. Ultimately, the goal is to improve how a brand is perceived by its target audience. This happens in a variety of ways.

For this reason a brand needs to build relevant memory structures that make it easier to notice, recognise, recall and hence.... of course...buy. This is the brand’s mental availability. several other brands have keyed into this phrase to strengthen and build top- ofthe- mind- brand.

MTN Nigeria recently sponsored 12 of its loyal and committed customers to this year ’s hajj to fulfil their religious obligations afore the

AWARDS - From Left Association of Advertising Agencies of Nigeria, AAAN, Executive Director, Mr. Lekan Fadolapo, Mr. Kayode Oluwasona, Vice president, AAAN, Mr. Enyi Enyi Odigbo, Past President, Mr. Kelechi Nwosu, AAAN President and other at the AAAN –LAIF Awards in Lagos. disheartening occurrence of the stampede in Saudi Arabia.

Like every other years the ICT Company sponsors 12 lucky winners to participate in this yearly pilgrimage, before the unpleasant incident of the stampede in Saudi Arabia. The incident brought the total number of casualty to 700, with the Nigerian pilgrims sharing in the scores of those that died while observing and fulfilling their Islamic rite, which is a commandment in the Holy Quran.

Speaking during the arrival of the winners, the General Manager, Consumer Marketing; Richard Iweanoge condoled with the families of the departed saying it is a great loss not just for their

immediate families but also for the entire country. ‘’ We

sympathize with the families of those who lost their life while fulfilling the Islamic rite of hajj, and also welcome back other pilgrims who made it back into the country with their spiritual experience from the holy land” he said .

He further stated that MTN Nigeria has made it a yearly commitment to connect and reward Muslims customers who have subscribed to various Islamic contents. ‘’ The rationale behind this is to educate and broaden the knowledge of our Muslim customers especially during the season of umrah and hajj”.

The leading ICT operator

organized a seminar for all the 12 winners before their departure to Saudi Arabia for the pilgrimage. The convener of the seminar; Usthaz Suleiman Felani explained in details all that the winners need to know and do when they arrive Saudi Arabia. In his presentation, he advised the pilgrims on what to wear, as there won’t be any need to dress gorgeously but rather focus on the pilgrim to the holy land. This according to him is to explain the simplicity of life.

He preceded his over two hour lecture with visuals for better understanding of the hajj pilgrimage.

SERAs 2015: Lafarge wins three awards

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afarge Africa Plc, a leading Sub-Saharan Africa building materials company has been bestowed with three awards at the 2015 edition of the Social Enterprise Report Awards, SERAs, which aimed at encourage organization to do more in area of impacting positively in the environment where they operate and society at large.

The prestigious event which was held at the Muson Centre, Onikan Lagos, under the theme ‘Building Partnership for a Sustainable Future,’ saw the giant cement building solutions

provider company shined in area of Best Company in Environmental Sustainability, Best Company in Sustainability Reporting, and Overall second runner-up at the 2015 edition of the annual Awards ceremony.

The company opened the flow by winning the first award category as the Best Company in Environmental Sustainability, which had three other nominees including GTBank, FCMB and Nigerian Stock Exchange (NSE). Lafarge subsequently won the Best Company in Sustainability Reporting with nominations into eleven different

award categories.

Speaking on the awards conferred on the company, Group MD/CEO, Lafarge Africa Plc, Peter Hoddinott said adding value to its host communities and the lives of Nigerians remain the core of the company’s CSR interventions, while assuring that “the awards will spur Lafarge Africa Plc to remain committed to sustainable social investments across the country, particularly in the areas of health and safety, environment, youth empowerment and provision of infrastructure”.

Micro-Finance

Skill acquisition: Bettering youths with disabilities via FOTD initiative Stories by PROVIDENCE OBUH

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riends of Special People (FOSP) also known as Friends of the Disabled (FOTD), Vocational Centre, weekend, send forth about 11 youths with disabilities who have made up their minds to survive by accepting and learning skills that includes them into the main stream of the Society.

Some of the graduates acquired various skills from vocations in shoe and leather works, Tailoring, Fish farming and Help services.

Founder of the vocational centre, Mrs. Aku Christy Orduh, said that the attitude and discrimination linked to disability make it much more difficult for them to go to school, to find work or participate in social activities, stressing that in many communities, both rural and urban, the environment is challenging

with physical and communication barriers that make it hard for them to participate in social life.

Orduh who is a retired teacher said, “here in FOSP, our environment is disability friendly and offers opportunity for talent development and we are looking forward to replicate this beyond states and regions.

There have been awareness campaigns and enlightenment programmes on their special needs that is necessary for their inclusion in the community. ninety five percent of those in disability projects are into awareness and enlightenment campaigns leaving the implementation to a few. Our Awareness and enlightenment is enshrined in our implementation programs which has resulted in the graduation.”

On how the centre receives sponsors she said, “we don’t have sponsorship, the Federal Government sometimes help or buy equipment for some but for the day to day training and

maintenance of the instructors no body helps us, we do it alone with a few others who care to show support.

Example is Society of Petroleum Engineers (SPE) who helped in sponsoring three graduands; present and past Partners include: MTN Foundation, Fed Ministry of Women Affairs, National Directorate of Employment (NDE), Universal Basic

GRADUATION - From left: Mrs. Aku Orduh, Executive Director, graduating members, Mrs. Akah, Board of Trustee member and Mrs. Sussy Ationu, Advisory Board Member of FOTD Vocational Centre.

Education Commission (UBEC), NYSC Lagos State, SNEPCO, St

Vincent D Paul ldumagbo and a host of others.

N5,000 unemployed allowance: Do we have accurate statistics? — ICA

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he Institute of credit administration, ICA, has said that there are no accurate statistics to pay Federal Government’s N5,000 monthly allowance to unemployed youths in the country.

Registrar/CEO, ICA, Prof.

Chris Onalo, made the position in a chart at the Credit Management Honours Award in Lagos, where he said that politicians would want to stand

by their promises so that they can win future elections.

To this end he said, “but this has a very far reaching implication on the economy of the country. You don’t just wake up and say I want to pay jobless people N5, 000 on a monthly basis, how is that sustainable in an economy that is not in its full swing and the industrial sector is still in comatose. “The economy is import driven, we

have not diversified the economy, the strength of the economy is shrinking, which is the oil, sustainability now becomes the big question and how many are the jobless people.

“Do we have accurate statistics, what guarantee have been put in place to avoid infiltration, if you multiply the number of jobless people by N5000.

44

36— Vanguard, MONDAY, NOVEMBER 30, 2015

(0805 220 1997)

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uhamadu Buhari’s ouster from power in 1985 clearly attracted jubilations in several quarters, particularly from those who decried the iron fisted enforcement of social discipline; but three decades later, he was, inexplicably, swept back to power, in an infectious carnival-mode campaign, as the arrow head of the change, Nigeria urgently requires to rechart its trajectory and restore hope for a better life for its citizens.

Despite his advanced age, there is clearly no doubt about his passion and commitment to the unfinished business of building a country that we can all proudly call our own.

President Mohamadu Buhari is, expectedly, constitutionally empowered to manage our economy for the greater good of more Nigerians by adopting best practice fiscal and monetary strategies to achieve this purpose.

Instructively, best practice management of fiscal and monetary instruments will transform a ‘ resourceless’ landscape like SINGAPORE and JAPAN into stupendously prosperous communities, while misalignment of the same strategic instruments could degrade the owners of a naturally well endowed, resource rich country like Nigeria, into impoverished and disadvantaged specie of human kind. Curiously, there appears to be a discomforting inverse correlation of deepening poverty, existing simultaneously with reserves which are consistently in excess of $30bn in an economy that remains eternally awash with embarrassingly surplus spending values.

So, what would Buhari do to radically reinvent his administration’s fiscal and monetary strategies, so as to turn around and boost the efficacy and yield of positive economic and social dividends. Recently, Vice President Osinbajo

counterproductive in a money market which is perennially burdened by excess liquidity, which has to be constantly mopped up by CBN by borrowing and farcically keeping idle the proceeds of such loans, despite the attendant high interest rates which are not consonant with sovereign risk free borrowings.

Additionally, appropriate management of Naira supply vis-a-vis other foreign currencies, would also inevitably guarantee a stronger Naira market value; which will make the local currency, to remain attractive as a store of value, rather than suffer rejection like a street urchin.

Instructively, our recent history of unrestrained Naira liquidity has continued to pummel the Naira exchange rate, paradoxically, even when CBN’s reserves steadily climbed as high as $60bn.

Thus, Buhari must feel helpless, like earlier Presidents before him, that the enshrined autonomy of the CBN and its Monetary Policy Committee for ensuring price stability, clearly restricts him from breaching CBN’s territory on monetary policy management.

In recognition of the enormous powers and pervasive influence of a Central Bank in every economy, one of the illustrious Pioneers of the template for modern banking, a certain Mayer Rothschild, insightfully observed as follows in 1790: “Give me control of a nation’s money supply, and I care not who makes it’s laws.”

Thus, inspite of Buhari’s undenied passion for positive economic and social change, not even his best efforts and commitments nor the additional capacity of an eminent cabinet will unseal the failure of this administration, if the CBN and MPC continue to fumble with the management of money supply.

•SAVE THE NAIRA! SAVE NIGERIANS

Is CBN’S MPC stronger than Buhari? suggested, at a retreat for ministers-designate in Abuja that allocation for capital expenditure will be increased to about N2Tn in the proposed N7-8Trillion 2016 budget.

Clearly, even if the projected $10bn capital vote is judiciously applied, the impact will still be insignificant, when compared with the speculated immediate infrastructural deficit of well over $100bn!

Furthermore, Vice President Osinbajo has also suggested that with depleting oil revenue, the over 70% projected increase in the 2016 budget, would be funded with additional borrowing while the National debt will require increased debt service charges of almost N1Tn ($5bn) or 12.5% of total budget.

It is nonetheless, inexplicable, and worrisome that Nigeria’s total debt is currently in excess of $60bn, in place of the earlier widely condemned $30bn that elicited so much public consternation when $18bn was controversially fleeced from our pockets by overseas creditors, ten years ago.

Consequently, this experience, advises that we should be wary of external loans denominated in foreign exchange, especially, when the Nigerian money market still remains interminably awash with hundreds of billions of ironically idle funds that can be marshalled for investment in agriculture, infrastructure and human capacity building to drive inclusive growth.

It is also becoming increasingly clear that the present Administration’s selective sectoral support may not be too different from the standard process of offloading hundreds of billions of intervention funds into a money

market that is perennially suffocated by a burden of surplus cash. It is instructive, for example, that despite several special provisions to the Textiles and Aviation sub-sectors and the special allocations for the enhancement of Agricultural value chain by previous administrations, remarkable success has so far remained elusive.

In the event of these serial failures of fiscal management, Buhari may have to rely primarily on the efficacy of monetary strategies to successfully turn around the economy. Curiously, however, the responsibility for designing and implementing sensible and appropriate monetary policies, constitutionally resides with the Central Bank of Nigeria and its Monetary Policy Committee rather than the President. Thus, ‘If the CBN and the MPC successfully manage Money supply effectively, inflation rate will fall to best practice levels below 2%; with such outcome, purchasing power of all income values will become preserved to sustain healthy consumer

In the event of these serial failures of fiscal management, Buhari may have to rely primarily on the efficacy of monetary strategies to successfully turn around the economy

demand which will inturn stimulate further investment and increase job opportunities.

Conversely, consistently faulty management of money supply will trigger unrestrained inflation which will distort governments’ budget projections, impoverish our people, particularly pensioners, and make the realisation of forward plans a major challenge.

Additionally, best practice management of money supply will similarly facilitate single digit interest rates that would be less oppressive and less restraining to investments in all sectors of the economy; indeed, critical sectors, such as agriculture, food processing and education could attract 02% interest rates, as applicable, for example, in Japan, to encourage active private sector participation.

Incidentally, the CBN’s MPC decided at its 104th meeting in Abuja last week to reduce its Benchmark interest rate (which sets the pace for domestic bank lending rates) from 13 to 11%.

Regrettably, if the erstwhile 13% policy rate induced commercial lending rates between 23-27%, then the new 11% benchmark may only marginally bring down market rates to about 20%, instead of the more appropriate and supportive single digit rates required to truly encourage new investments, economic diversification and job creation.

Furthermore, in its attempt to inject liquidity into the banking system, CBN’s MPC lately also decided to reduce the cash reserve commercial banks must hold to 20% from 25%.

Evidently, even though this decision may appear progressive, it is clearly misguided and

Business & Economy IPMAN partners PAN, Access Bank on car acquisition

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he Independent Petroleum Marketers Association of Nigeria (IPMAN) yesterday partnered Peugeot Automobile Nigeria (PAN) and Access Banl in the Peugeot Car acquisition scheme for its members nationwide Speaking at the event in Abuja, the National President of IPMAN, Elder Chinedu Okoronkwo said the scheme is to help members acquire brand new cars in order to ease their mobility and improve their welfare.

He said, the scheme will in no doubt, create a level ground

for the promotion and actualisation of made in Nigeria product thereby creating jobs for the youths.

“These patronages for made in Nigeria product will create more jobs for the youths in Nigeria which will help reduce unemployment in the country,” he said.

Also speaking, the Managing Director Peugeot Automobile Nigeria, PAN, Alhaji Ibrahim Boyi said, Pan has been leading automobile plant in Nigeria for the past 45years.

According to him, most of the auto technicians and mechanics we have, are

either product of PAN or made by PAN, adding that PAN is very conscious of that provision in market.

“We are very proud of our products in terms of quality, performance, real efficiency and the operation cost of running. Our products are lower and the ownership cost is exceptional,” he said.

He further added that with more patronage, PAN is going to create more jobs opportunities for employment, investment which he said will help develop the Nigeria economy.

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