Financial Vanguard by Vanguard Media Limited

AUGUST 12,

2013

25,000 jobs lost in Vegetable Oil industry as sector faces extinction BY VICTOR AHIUMA-YOUNG

egetable oil and related products industry in Nigeria is nearer total collapse as no fewer than 25, 000 out of the 30,000 direct jobs in the sector have been lost due to the influx of substandard processed oil dumped into the economy. This near collapse is as a result of government unfavourable policies and policy reversals. This is coming on the heels of government propaganda on job creation in the midst of continued rising unemployment in the country. It will be recalled that Financial Vanguard had on July 15, raised alarm over the looming collapse of the

sector due to government's import waivers granted to few privileged Nigerian politicians and portfolio businessmen to import refined vegetable oil, Soya bean meal and related products. One of the few surviving manufacturers of vegetable oil in the country, Sunola Oil Nigeria Limited, owned by Kewalram Chanrai Group, weekend confirmed that the sector is in real danger of imminent collapse and called on Government not to allow the sector go the way of the Textile industry in the country. The company expressed sadness that “out of top eight Oil Mills in Nigeria, only three are working at the moment below installed capacity. If drastic measures are not taken immediately, Oil Mill

Industry will go into extinction like the textile industry.” Group Deputy Managing Director, of Kewalran, Mr. Victor Eburajolo, at a briefing in Lagos, lamented that the industry had lost the capacity to generate employment as “not less than 25,000 direct jobs have been lost in the last few years because of unfavourable operating environment. At its peak, the industry created over 30,000 direct jobs. But today, the sector cannot boast of 5,000 jobs. As a Nigerian, I am very worried because of the increasing growth of idle hands that ordinarily should contribute to the development of the country, but are now being wasted and the unfortunate ones become willing hands and tools for mischief and crimes.”

According to him, the industry is seriously distressed because of unfavourable policies and policy summersaults and called for total ban on importation of finished products like vegetable oil, drive to improve infrastructure like power, fuel, railway, roads etc to support capacity increase in processing as well as farming inputs. He called for support of private sector by funding at minimal cost storage of soya beans and buying up excess produce at good price from local markets during harvest season to enable farmers benefit. He lamented that one of the major problems confronting the sector is “import duty waivers on products like oil and cake to compete with the already well developed palm industry in the Far East which has resulted in inability of local manufacturers to compete against such imported oils resulting in huge finished inventory stock of oil and DOC (oil for making cake) running into several billions of

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*President of the Lagos Chamber of Commerce and Industry, Mr. Goodie Ibru (right), past president and Honourary Life Vice-President, Asiwaju Solomon Onafowokan (left) and the Director-General, Mr. Muda Yusuf at the Council meeting of the Chamber on Wednesday. C M Y K

18 — Vanguard, MONDAY, AUGUST 12, 2013

Cover Story

The basic guide to starting your business —Part 6 ARE YOU READY FOR YOUR BUSINESS?

25,000 jobs lost in Vegetable Oil industry as sector faces extinction naira. He stated that the cost of funds is also a major burden considering the huge stock held, saying that seed price has now crashed as a result of serious uncertainty in the industry and the inability of local manufacturers to compete with imported oil price. This he said will eventually result in farmers getting discouraged contrary to the drive of the present government transformation agenda.” Lamenting on duty waiver, import permit of banned edible oil, Eburajolo displayed a copy of such waivers granted to a company (name withheld) with reference number BO/ R.10260/107 to import 250,000 metric tons of refined vegetable oil to supposedly cushion the effect of climate change and floods. He equally displayed another waiver of Soya DOC importation, which reads “In order to cushion the present effect of the scarcity and high prices of essential raw materials for feed production in the country. His Excellency, Mr. President has granted approval for a concessionary rate of 0 per cent duty and 0 per cent VAT on importation of Soya Bean meal for poultry consumption by poultry farmers with effect from 1 st March to 31 st December 2013.” Another problem, Mr. Eburajolo said, is inadequate power supply. He said; “We are compelled to generate 70 per cent of the electricity we use for production, and power cost using diesel generators C M Y K

(as currently practiced) is about 20 times higher than power purchased from the national grid. Diesel as fuel is multi dimensional as it affects cost of generating power as well as cost of all activities that require diesel; like very high logistics for evacuating finished products to customers spread all over the country. He disclosed that the un-availability and high cost of low pour fuel oil LPFO, makes it difficult to run some

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Diesel as fuel is multi dimensional as it affects cost of generating power as well as cost of all activities that require diesel; like very high logistics for evacuating finished products to customers spread all over the country

category of steam generating boilers, hence making the operations significantly more costly. He said coal that would have been a possible option for generating power to operate boiler is practically unavailable though known to exist as untapped reserve.” According to him, “ while competition on level playing ground under same rules and regulations is no doubt good for growth of both industry and economy, we wish to submit that relating to poor infrastructure resulting in

very high conversion cost of Soya to products, any imports outside absolute need is literally destroying the industry. He said a continued process of de-industrialising the country will results in direct loss of jobs for the remaining thousands employed in the sector. He also said that there will be indirect loss of jobs for many more thousands in terms of loss of cultivation by soya beans farmers engaged in the dominant cash crops in the country. He said that there is the consequence of direct loss of income for all three tiers of government and indirect loss of income for machine parts suppliers and technical services providers associated with the industry. Nigeria, he said, is sadly providing market for oil processors from Far East thereby opening more capacity for production for them and generating more employment for their own people at the expense of Nigeria ever teeming population.” He said that Sunseed Nigeria Limited and Afcott Nigeria Limited have combined annual installed production capacity of 80,000 tons of Soya Beans, 64,000 tons of DOC production and 13,600 tons of refined edible oil. This capacity he said supports local farmers with the cultivation of about 84,000 hectres of land for Soya beans production. Local producers also provide support for over 42,000 local farmers with a realistic and sustainable source of income thus generating indirect employment in the agric sector of the economy.

*Governor Ibrahim Dankwambo (r), exchanging greetings with the Group Managing Director, NNPC, Engr. Andrew Yakubu while the Transport Minister, Senator Idris Umar (l) watched during an investment drive at Beijing, China...recently. Photo by Abayomi Adeshida

t this point I believe that you have a huge idea of what a business is. You also understand the pros and cons of owning your business, as well as whom an entrepreneur is. Let’s just say everything I have mentioned and explained are what I call the foundations of the remaining two chapters of this book. Now having read all this, the question is, “how prepared are you to start your business?” Do you have what it takes to ensure the take off and successful landing of your business? Or are you unsure of your abilities to carry you through the journey of being your own boss? Whatever is the case by the time we are through with this chapter, making up your mind and measuring your readiness level will no longer be an issue. The journey of a thousand miles, they say begins with a simple step, and God was kind enough to bless every man with a sense of purpose, but the problem is, a lot of people have not discovered the purpose for which they were created. When I see people without a sense of vision and purpose, I ask myself how can you change a world, when you do not have the slightest idea of why you where put in the world in the first place? You’ve got to have a sense of purpose, because it is the essence of living; the poor man is not the man who does not have a dime

Get up, don’t sit here; get up if you want to get there

in his bank account, but the man who does not have ideas in his mind. When your life lacks purpose, it loses colour. You cannot afford to sit still and do nothing, you have to get up and put your purpose to good use. There’s a particular line I love in one of the songs written by Mary Mary (a gospel group made up of two sisters), and it says “get up don’t sit here; get up if you want to get there”.

hat do you see, what pictures are you painting with your mind, you have to start from the mind, your vision, I remember the story of Abraham and his nephew Lot in the Bible. When God wanted to separate them, God told Abraham, that He would give him as far as his eyes could see! So you see the creator Himself expects everyone to have a vision that is fired up by the desire to live a purpose driven life. My dear you have all it takes inside of you, to be what you want to be. A popular preacher once said “suffering is a choice; so you choose.” Stop waiting for the government, now is the time to seize your destiny and take control, if you work hard on it, you will definitely succeed. Andrew Young, the renowned American diplomat, said in one of his lectures: “For 18 years I eyed the United Nations seat as the United States representative, I didn’t let it get off me until I saw it happen”. Your vision is the map of your intentions. It is a written picture of your journey to greatness; it may take your time, and some reworking, but certainly it is the secret of champions. If you are waiting for the government, you will end up a wretched fellow, with no story or history. I made up my mind a long time ago, to live my dreams, very far away from the clutches of poverty. Looking back today, I can smile and say “I haven’t done badly after all!” Well, if I had I wouldn’t be writing this book to inspire and encourage you. Stop delaying, now is the time to start, don’t dwell on weighing the possibilities of succeeding or not. “A man who takes a risk and fails is by far better than the man who takes no risk at all.” You have to be decisive and launch out, taking every available chance, life itself is a risk. Like I said earlier you have to be bold and fearless and unforeseen forces will come to your aid. Now is the time to act, wake up and live, stop asking questions, follow your heart and act as though it is impossible to fail.

Vanguard, MONDAY, AUGUST 12, 2013 — 19

N recent times, some incoherent and discordant tunes have been coming out from government quarters for Nigerians to dance to. One of such many tunes is the oil theft and oil production figure. While the Minister of Finance and Coordinating Minister of the Economy wants us to believe that oil production is down, so much as to affect the 2013 budget to the point that government may not be able to function properly, her counterpart in the Ministry of Petroleum Resources is saying though there is crude oil theft going on, production has not fallen far below the budget target of 2.52 million barrel per day though it could be better. The National National Petroleum Corporation December 2012 production of Bureau of Statistics and the (NNPC) as against 2.35 million 68.37 million barrels or 2.21 Central Bank have both barrels per day in the million barrels per day. Total confirmed the position of the corresponding quarter in 2012. crude oil and condensates Minister of Petroleum These figures, with their lifting for both domestic and associated gas components, export was about 73.89 million Resources. The Minister of Finance had resulted in a growth rate, in real barrels. Oil companies lifted said that crude oil production term of -0.54 per cent in oil GDP about 36.02 million barrels drops to around a disturbing 1.3 in the first quarter of 2013 (49%), while NNPC lifted 37.86 million barrels per day. In compared with the –2.32 per million barrels (51%). Lifting by addition she said the economy cent for the corresponding fiscal regime shows 42.08, has suffered great loss due to period in 2012. However, the 25.83, and 5.99 million barrels the activities of oil thieves and sector also benefited immensely for JVC, PSC/SC, and others pipeline vandals, and all these from the relative stability in respectively. Out of NNPC’s have led oil production to fall international crude oil market liftings, 27.59 million barrels to between 2.1 and 2.2mbpd as price and the exchange rate of were for Federation Account, against the 2013 budget naira against the dollar. The CBN in its report on oil projection of 2.5mbpd. She had told ministers that production in the first quarter the Nigerian National of 2013 said that in January, Petroleum Corporation, 2.39 mbp was produced while NNPC, had on April 18 1.94 mbp was exported at an reported a drop in crude oil average price of $115.24 per production in the first quarter barrel. It said that in February, of 2013, January to March, 2.23mbd was produced, 1.78 which cost Nigeria a loss of mpd exported at $118 per crude oil revenue to the tune of barrel. In the month of March, $1.23 billion (N190 billion). That while 2.2mbp was produced, loss is now set to continue and 1.79mpd was exported at the the country might not be able average price of $112.79 per to meet its obligation to its barrel. NNPC in its own report said customers. But available data from the that data on non-fiscalised while 10.27 million barrels were CBN and National Bureau of production from several for domestic use. In the month of February, Statistics contradict the gloomy companies was not available. fiscalised production total for Consequently, the total figure picture painted by the Minister of Finance. National Bureau of of 48.15 million barrels of non- the month was 62.53 million Statistics NBS, 2013 first quarter fiscalised production is short of barrels representing 2.23 reports said; “The oil sector actual. It said that fiscalised million barrels per day, recorded an average daily production total for the month and10.52% lower than the production of 2.29 million of January was 75.51 million January 2012 production of barrels per day in the first barrels representing 2.36 69.11 million barrels or 2.23 quarter of 2013 based on data million barrels per day, and million barrels per day. Total obtained from the Nigerian 10.44 per cent higher than the crude oil and condensates

Pooling wools over Nigerians’ eyes lifting for both domestic and export was about 57.42 million barrels. Oil companies lifted about 35.86 million barrels (62%), while NNPC lifted 21.56 million barrels (38%). Lifting by fiscal regime shows 26.48, 24.24, and 6.70 million barrels for JVC, PSC/SC, and others respectively. Out of NNPC’s liftings, 16.19 million barrels were for Federation Account, while 5.37 million barrels were for domestic use. The truth that the government is not telling the Nigerian

Let’s get serious with our economy and source of revenue; crude oil falling marginally below budget target is no excuse for nonperformance

public is that it has no control over oil production and export. Yes, oil production is less than the budgeted target of 2.52 million barrels per day in government’s calculation, but production has not fallen below the two million mark. The drop in production is rather marginal not to the point of scaring all of us. The Federal Government is

economical with the truth. The government is funding the joint venture cash calls and contract sharing project with multinational with crude. The crude that should have been sold is given out to multinationals. This outlet is what gives room for both top government officials, NNPC, multinational companies to steal Nigeria’s crude. If this is not the case, how can a ship load of crude oil leave Nigerian waters without the law enforcement agencies knowing? Vessels that carry crude are not submarine or are they the usual ghosts that take salaries in ministries, agencies and departments of government. They are large vessels that even the blind will see. Very soon, government officials will come out with the usual joke, ghost ships and vessels are stealing Nigeria’s crude oil. It was instructive when NNPC said recently that on completion of the Nebe pipeline, daily average crude oil production is expected to increase to 2.50 m/ bpd which will exceed the national daily target of 2.48 m/ bpd. Our expectation is to increase production from the 2.48 to 2.55 m/bpd (both crude and condensate) for the rest of the year. We have the capacity and potential to maintain production above 2.55 m/bpd in the country. Mr. President, let’s get serious with our economy and source of revenue. Crude oil falling marginally below budget target is no excuse for nonperformance.

Business & Economy

Microfinance can help low-income earners M

ICROFINANCE is an effective development intervention that enhances access to financial services by low-income earners to ease financial hardships, create job opportunities and improve their standards of living. Banks often provide loans to big businesses or profit-making organisations and exclude low income earners for fear of incurring losses. In light of this, the 9th Microfinance Training of Trainers (MFTOT 9) Course, jointly sponsored by the Asian Development Bank Institute (ADBI), World Bank, Tokyo Development Learning Centre (TDLC) and joined by a new partner of China Development Bank (CDB) since MFTOT8 to support participants in African countries, is ongoing, till

November this year. This is an interactive microfinance distance learning course (MFDL) developed by the United Nations Capital Development Fund (UNCDF), the UN’s capital investment agency for the world’s 48 least developed countries. The course has received high rating from participants and become popular in many countries. “Microfinance is one of the great success stories in the developing world and is widely recognised as a sustainable solution to eradicate poverty. Its services include microcredit to enhance financial inclusion.” TaGLA organises videoconferences with other DLCs across the world for it has modern facilities for online or videoconference services. So it is possible to access

international microfinance experts’ lectures through videoconference sessions at selected Global Development Learning Network (GDLN) centres like TaGLA. The

videoconference sessions will feature presentations and discussions on current issues and best practices in microfinance. The videoconferences will also

be webcast live. Local courses in selected countries will be available during the same time period. In Tanzania, low income earners may access financial services such as loans, savings, insurance and training from microfinance institutions or organisations.

FG Seeks Collaboration with NCS In Agricultural sector BY GABREIL EWEPU

HE Federal Ministry of Agriculture and Rural Development, is seeking for closer collaboration with the Nigeria Computer Science, NCS, to transform the sector. The call was made by the Permanent Secretary in the Ministry, Mrs. Ibukun Odusote while delivering a paper titled, ‘Opportunities for

Investment in Nigeria’s Agriculture’, at the breakfast meeting of the College of Fellows of the Nigeria Computer Science (NCS) in Iloko-Ijesha, Osun State. Odusote said the support of NCS would further boost the achievement and success recorded in agricultural sector under the present administration, especially in digital management of the new silos built by the federal

government across the country. She stated that such support from NCS will add more value to the performance and productivity of the silos’ management and staff in measuring content, quantity and output of grains contained in each silo, and enabling the ministry to efficiently manage and deploy the contents to the people for consumption.

C M Y K

20 — Vanguard, MONDAY, AUGUST 12, 2013

Business & Economy BRIEFS AfDB commends Nigerian ports reform policy

he African Development Bank (AfDB) says Nigerian Ports Reform Policy and its economic partnership with ECOWAS and European Union, have enhanced its export drive. The bank said in a book, the African Economic Outlook, in Abuja, that Nigeria’s export to African countries currently stood at 11 per cent of its total exports. This notwithstanding, the bank said Nigeria had yet to tap into the huge potentialities in the region for growth, economic diversification and integration. It said that the West African market provided a tremendous opportunity for Nigeria’s financial sector. The bank also observed that inflation rate, escalating budget deficits in some countries, rising wage bills, increasing domestic interest payments, among others, had hindered full monetary integration of the ECOWAS member states. It commended Nigeria’s effort to encourage local manufacturing, insisting that the major challenge to manufacturing was poor trade network and infrastructure within the region.

Fannie Mae profit doubles, will pay U.S. $10.2 billion

annie Mae the largest U.S. mortgage finance company, said on Thursday its second-quarter profit nearly doubled to $10.1 billion, mainly driven by a housing recovery that has reduced mortgage delinquencies and lifted home prices. The government rescued Fannie Mae and its sibling, Freddie Mac in 2008, covering losses on soured loans. Since then, taxpayers have bailed out the pair to the tune of nearly $188 billion. Fannie Mae said it will make a $10.2 billion dividend payment to the U.S. Treasury for its rescue aid. After making the $10.2 billion dividend payment in September, the company will have repaid about $105 billion in dividends to the Treasury of the $117.1 billion in taxpayer assistance. Under the terms of the bailout agreement, both mortgage companies are only allowed to hold $3 billion in net worth and all other profits go back to taxpayers. C M Y K

*From left: Dr. Shehu Muhammad, Executive Director, Corporate and Investment Banking, Keystone Bank Limited; Mrs. Adeola Azeez, Deputy Country Head, Deutsche Bank; Mr. Philip Ikeazor, Managing Director/CEO, Keystone Bank; Mrs. Yvonne Isichei, Executive Director, Lagos and West Directorate and Mr. Charles Weller, Country Head, Deutsche Bank, during a recent visit of Deutsche Bank Country Head to Keystone Bank.

GE to invest N9.6bn on locally sourced goods, services By PRINCEWILL EKWUJURU

HE Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engineer Ernest Nwapa has said that the annual spending on locally sourced goods and services by General Electrics, (GE) Nigeria, is expected to rise to $60million (N9.6)billion from $4 million. Nwapa who was represented by Mr. Uduak Obot, NCDMB Zonal Coordinator, Akwa-Ibom at a suppliers fair in Calabar, commended GE for its foresight in investing in the state. According to him, “This effort is a clear indication that GE is committed to the growth of the Nigerian economy and we assure the company of our support to see the project to completion.” Continuing he said; “This manufacturing and assembly factory aims to significantly increase the local content of GE’s operations in Nigeria by increasing local ownership of equipment, incountry project execution expertise and use of local legal, financial and engineering services.” In a related development, GE through its President/CEO, Dr. Lazarus Angbazo reaffirmed the company’s commitment to being a longterm strategic partner to Nigeria’s economic development and transformation. This he also

said was in line with the $1 billion investment announcement made earlier in the year by the company’s Global CEO, Jeff Immelt He noted that the planned manufacturing and assembly plant is expected to create 2,300 jobs, 300 of which will be direct GE hires and the remaining 2,000 indirect jobs created through GE suppliers that will support its expanded operations. He also said the company plans to set up a training institute on site to build employee capacity and capability. He re-affirmed the company’s commitment to

being a long-term strategic partner to Nigeria’s economic development and transformation. He said: “We are committed to strengthening our local presence in Nigeria through this investment in Calabar. The facility will significantly increase the local content of our operations in Nigeria by supporting the burgeoning power sector and providing manufacturing capabilities for the oil and gas industry.” Also speaking, the Global Supply Chain Leader, Mr. Phil Griffith said; “GE firmly believes in the capability and

capacity of our Nigerian supplier partners in engineering and other sectors to work with us to deliver on this investment commitment. It is for this reason that today we decided to invite indigenous companies to witness firsthand the opportunities that this project will avail to them. Most importantly we also want to see what capabilities are available locally and how we can assist in developing supplier capabilities where they are lacking.”

Operator urges support for courier industry T

HE Chairman, Fast Express Courier Nig. Ltd., Mr Olusegun Olukoya, has called for additional support for the courier industry to enhance standards. Olukoya told the News Agency of Nigeria (NAN) in Lagos that the Federal Government should come up with policies that would advance the industry. “Developed countries are reaping the bounty of a working courier industry, while the sector is grossly under-used in Nigeria due to lack of adequate logistics and infrastructure,” he said. Olukoya said that there was the need for an increased usage of the Internet for purchase of goods and services to guarantee improvement in the sector. “Increased Internet usage can only be encouraged through proper government initiatives and policies. “This increased usage will bolster e-commerce, which will advance courier service,” he said. Olukoya urged the government to establish policies that would encourage Internet browsing at home. He said that such a development would

encourage e-commerce. “Not only will employment be generated with the increase of activities in the sector, traffic will reduce, time will be saved and tax revenues generated,” he said. Olukoya said that the courier association in Nigeria would take necessary steps to elevate the industry to international standards by partnering with the government on policies and training of its members. “The recent initiative of a National Addressing Policy should be promptly implemented because the policy will make it easier to locate individuals. “It will also improve transportation,” he said. Olukoya also said that the association would partner with foreign organisations to train its members on recent innovations in the industry to keep them abreast of developments. He said that proper government intervention would enhance the welfare of stakeholders in the sector. “The recent restriction of the motorbikes to some roads in Lagos State is a challenge to some of our members.

Vanguard, MONDAY, AUGUST 12, 2013 — 21

Business & Economy

Nigeria, others to spend N6.75 trillion to tackle corruption, weak governance By DOTUN IBIWOYE

he World Bank has said that it will cost Nigeria and other African countries about N6.75 trillion in the next ten years to address reforms and investments in communal lands that are individually owned as well as addressing weak governance and corruption in land ownership. The Bank recent report made available to Vanguard noted that more than 90 per cent of Africa’s rural land is undocumented, making it highly vulnerable to land grabbing and expropriation with poor compensation. According to the World Bank report, African countries and their communities could effectively end land grabs and grow more food across the region, and transform their development prospects if they can modernise the complex governance procedures on land ownership and management over the next decade. Titled ‘How Africa Can Transform Land Tenure, Revolutionise Agriculture, and End Poverty’, World Bank’s Vice President for Africa,

Makhtar Diop, in the report, said “Despite the abundant land and mineral wealth, Africa remains poor and improving land governance is vital for achieving rapid economic growth”. Diop noted that addressing land governance would significantly reduce poverty and provide more opportunity for Africans, including women who make up 70 per cent of Africa’s farmers who are

currently locked out of land ownership due to customary laws. “The status quo is unacceptable and must change so that all Africans can benefit from their land. Africa could finally realise the vast development promise of its land over the course of the next decade by championing reforms and investments to document all communal lands and prime lands that are

*From left; Group Head, Strategy & Communication, Sterling Bank PLC, Shina Atilola, His Royal Highness, Abdul-Ganiu Dosumu, the Lemo of Ogijo and the Business Development Manager, Sterling Bank PLC, Fatai Adegbuyi, at the opening of the bank’s new ultra modern branch in Ogijo Town, Ogun State.

Unexpected strength in China trade data eases some gloom S

urprisingly, firm rebounds in China’s exports and imports in July offered some hope that the world’s second-largest economy might be stabilising after more than two years of slowing growth, although an imminent rebound still looks unlikely. Imports of crude oil and iron ore rebounded from multi-month lows to record highs last month as more raw materials were shipped in to rebuild depleted stocks, and soy bean purchases hit a record for the second straight month. A steadying of the economy would be a relief to China’s leaders, who have scrambled to shore up growth since mid-year amid concerns a sharp slowdown could derail their attempts to reform the economy so it was driven more by consumption than debt-funded investment and manufacturing. Data from the Customs Administration showed exports rose 5.1 percent in July from a year ago, a smart turnaround from their first fall in 17 months in June. Analysts had expected a 3 percent rise. Imports fared C M Y K

individually owned. “Regularising tenure rights of squatters on public land in urban slums that are home to 60 per cent of urban dwellers in Africa, and tackling the weak governance and corruption endemic to the land governance system in many African countries, often favour the status quo and harm the interests of poor people. Diop added: “Generating the political will of African governments to mobilise behind these land reforms and attract the political and financial buy-in of the international development community is the way forward.

even better with a 10.9 per cent jump from a year earlier, more than five times what analysts had forecast. The surprising strength in imports left China with a smaller-than-expected trade surplus of $17.8 billion. “July seems to reflect a return to a ‘normal’, relatively uninspiring trend,” analysts from Moody’s said in a note. In other words, while the worst seems to be over, the upturn will be relatively flat.” Indeed, exports in the three months ended July 31 posted the slowest annual increase since October 2009. Still, Asian stocks rebounded on the data and the Australian dollar leapt a third of a cent on hopes that Chinese demand may have found a floor. China’s trade performance has whipsawed this year after data was first inflated by companies reporting fakes deals to disguise illicit cash transfers, and then subsequently deflated by the government as it quashed the fictitious transactions. Analysts said the July data probably had minimal distortions, but some

cautioned against concluding the upbeat performance was driven by an actual improvement in final demand. There was an overwhelming improvement in commodity imports last month, with iron ore purchases jumping 17 percent from June to a record high of 62.3 million tons. Some commodity analysts said July shipments may have been inflated by unprocessed deals from June. “I would think it has something to do with the fact that the June number was low and there was some catchup tonnage coming through,” said Graeme Train, analyst with Macquarie in Shanghai. But the overall trends remain strong, Train added. “It has been a volatile series of data but I anticipate the trend for strong (iron ore) imports to continue.” Soy imports also hit a record high for the second straight month, though again analysts said that was partly due to delayed shipments finally arriving from congested Brazilian ports. Crude oil imports, on the other hand,

were likely lifted by refiners replenishing stocks after a three-month lull and as some new refineries started business. “The monthly data is very volatile. I wouldn’t read too much into it and say that domestic demand is strong,” said Zhang Zhiwei, an economist at Nomura in Hong Kong. Exports to the United States rose an annual 5.3 percent and those to Europe were up 2.8 percent, as China’s two biggest markets posted their strongest gains since February. Shipments to southeast Asia were also up on the year. With the U.S. economy showing signs of a gradual recovery, Ting Lu, an economist at Bank of AmericaMerrill Lynch, said Chinese exporters could benefit further in coming months. The trade figures were seen as a positive sign for industrial output data, with economists expecting production to show an annual rise of 9 percent in July. Fixed asset investment is forecast to have risen 20 percent in the first seven months of the year, in line with growth in the first six months, while inflation is forecast to have quickened to a five-month high of 2.8 percent.

BRIEFS Jobless claims edge up; still point to healing job market

he number of Americans filing new claims for jobless benefits rose slightly last week but was still near its lowest level since before the 2007-09 recession, a hopeful sign for the U.S. economy. Initial claims for state unemployment benefits rose by 5,000 last week to 333,000, the Labor Department said. The four-week average of new claims, which often gives a clearer read of the labour market’s underlying health, fell to its lowest since November 2007, just before the United States fell into a calamitous recession. Now it appears that a long cycle of aggressive layoffs - which had fueled a surge in unemployment and helped shape two presidential elections - is over. “The overall economy and the labour market are improving at a moderate pace,” said Lindsey Piegza, chief economist at Sterne Agee & Leach in Chicago. The pullback in layoffs has helped bring about a substantial fall in the jobless rate, and the trend in jobless claims could make the U.S. Federal Reserve more comfortable in unwinding the nation’s last giant economic stimulus program. Many economists expect the Fed will begin reducing its massive bond-buying stimulus program as soon as next month. The Fed currently buys $85 billion a month in bonds to push borrowing costs lower. While layoffs are roughly half their level in early 2009, the recovery in job creation has been more lackluster. Employers added just 162,000 workers to their payrolls in July. Wall Street analysts polled by Reuters had expected firsttime applications to rise to 336,000 last week, and investors did not appear to take any cues from the claims data. U.S. stock index futures pointed to a higher open, while yields on U.S. government debt were little changed. New jobless claims were volatile in July due to regular summer auto plant shutdowns, which make it hard for the government to adjust the data for seasonal swings. But that volatility is now past, and Labor Department analysts said there was nothing unusual in the data and that no states had provided estimates.

22 — Vanguard, MONDAY, AUGUST 12, 2013

Banking & Finance BRIEFS ETI Board reaffirms confidence in chairman

oard of Directors of Ecobank Transnational Incorporated (ETI) has reaffirmed confidence in its chairman, Mr. kolapo Lawson. The Board in a statement said it has “reviewed issues relating to two financial transactions involving ETI Chairman, Mr. Kolapo Lawson. These comprise a personal agreement between him and AMCON and an agreement with Ecobank Nigeria on the part of a company of which he is Chairman. The Board concluded that there had been no financial impropriety and that Mr. Lawson had acted in good faith throughout. As a result, the Board unanimously reaffirmed its confidence in Mr Lawson. Speaking on behalf of the Board, Vice-Chairman, Mr André Siaka said, “Kolapo Lawson has been a loyal servant of Ecobank for many years and has been a major contributor to its on-going success.

Life Track Business Forum empowers six with N1.1m BY BOSE ADELAJA

ix young entrepreneurs in Lagos, have benefited from a financial empowerment scheme to the tune of N1.1m. The scheme coming from the stable of Life Track Business Forum a mentoring organisation, was meant to grow their businesses and groom them for various challenges facing young entrepreneurs in Nigeria. The beneficiaries Adekoya Samuel, Oluwole Roseline, Iheanchor Frank, Uwakwe Lazarus, Umesuruike Helen and Chinenyen Amah have attended series of mentorship training from the organisation before they were considered fit for the empowerment which took place in Lagos. Four of the beneficiaries received cheques of N200,000 each while the rest were given cheques worth N150,000 each for the empowerment. Also, some of them are owners of private schools in Lagos while others are into other small scale businesses in the State. The empowerment was a soft loan with little or no interest to be revolved for a period of three months before a monthly remittance to the NGO. C M Y K

STORIES BY BABAJIDE KOMOLAFE

OVERNMENTS’ deposits and b o r r o w i n g undermine competiveness of banks and corrupt the public sector in Nigeria. Deputy Governor, Corporate Services Directorate, Central Bank of Nigeria (CBN), Alhaji Suleiman Barau made this observation in his personal statement at the last Monetary Policy Committee (MPC). Meanwhile, interbank interest rates shot up by 74 per cent in response to the withdrawal of N1.2 trillion from the system by the Central Bank of Nigeria (CBN) for cash reserve requirement (CRR) debit for July At the end of the its meeting held last month the MPC increased cash reserve requirement (CRR) on public sector deposits to 50 per cent from 12 per cent. The decision effectively reduced idle cash (excess liquidity) in the banking system by N1.2 trillion. In his argument for the decision, Barau said, “In recent times, one of the causes of malfunctions in the Nigerian financial system is the paradox of substantial government deposits in Deposit Money Banks (DMBs) and high government borrowing from the deposit money banks (DMBs). As at June 13, 2013, the three tiers of government had N2.384 trillion in the DMBs out of which about 90 per cent are in zero interest bearing Current Accounts. To mop up the liquidity at 14 per cent will cost N301.33 billion which is

Govt deposits fuel corruption in public sector — CBN •Interbank rates rise by 74% more than the annual budgets of most states. “Clearly, governments are over-borrowing, are wasteful in the management of public resources and are undermining the competitiveness of the DMBs. This corporate welfare, transfers or subsidy is clearly wasteful and costly. In addition, it undermines and corrupts the public sector and makes public resources to generate inefficient outputs and ineffective outcomes. Improving the market and the state demands the correction of the causes of distortions.

An increase in CRR on government deposits will also “incentivise” the DMBs to seek for deposits from the private sector and, to lend to the private sector. After all, the DMBs and other organised private sector players canvass for a market driven economy. A dependence on Government Deposits breeds complacency among DMBs. This policy is thus compatible with a market driven economic model. The policy therefore, helps DMBs to rethink their business models which have lulled them into complacent rent seeking behaviours.

“Complacency is dangerous in a highly volatile world and complacent financial institutions are the least able to survive in a volatile and highly competitive world. Our recent history and, the costs of cleaning up the consequences of complacent mismanagement of the recent past makes it necessary to support DMBs to develop more sustainable business models. A rate of 50 per cent is strong enough but not debilitating. The future direction is sufficiently strong signal for DMBs to quickly change their business model and adapt to new realities”.

*From Left:Mr. Manoj Nambiar, General Manager, Sunola Foods Limited; Mr. Kingsley Awudu, Store Incharge; Mr. Felix Shola Ojo, Production Manager and Mr. Victor Eburajolo, Group Deputy Managing Director, KEWALRAM Chanrai Group at a Press briefing on developments in the Vegetable Oil Industry that are threatening local manufacturing, at KEWALRAM Chanrai Group Head Office. Pix by Oscar Ochiogu.

Review of tax laws critical for enhanced IGR A

REVIEW and amendment of existing tax laws are critical to efforts of states and local government to improve internally generated revenue (IGR). “There may not be much improvement on IGR if provisions of the existing tax laws which are obsolete are not reviewed and amended,” said, Mr. M.L Abubakar, Secretary to the Joint Tax Board (JTB). In an article published in the Nigerian Leadership Initiative (NLI), Volume 2, Abubakar noted that, “Over the years, revenue sharing by the Federal Ministry of Fiannce’s Federation Account Allocation Committee (FAAC) to the State formed the major source of funding for the State’s annual budgets. This trend has ceaselessly continued due to so many factors some of which are neglect of internal sources

of revenue, inadequate application of tax laws and legislation and lack of political will on the part of government. “Generally speaking, availability of oil revenue to the country has blindfolded government authorities at all levels so much that sectors like agro-allied and mining industries which hitherto provided the needed revenue are now near moribound. There is no gainsaying that revenue from agricultural activities, solid minerals gradually dwindled over the years since the discovery of crude oil in Nigeria. This phenomenon continued unchecked to the extent that items, which contributed substantially to the gross domestic products (GDP) in the past are today being imported to support the growing population.”

In the article, titled, Internally Generated Revenue: Diversification of revenue base without multiple taxation, he observed that as at 2008, the contribution of IGR to total revenue in 28 states was less than 10 per cent, while Kwara state and Lagos state had 41 per cent and 131 per cent IGR contribution to total revenue. Highlighting strategies that can be adopted by states to improve IGR contributions, Abubakar said, “In order to adequately harness revenue collectible internally, it is important that the tax authority is able to identify its tax payers by their locations, nature of business and tax type payable. This can be achieved by an effective means of registration of tax payers through direct enumeration, street combing, tax payer registration exercise at designated centers and

liaising with stakeholders like banks, government and private organisations by having access to list of employees and companies that are registered for award of contracts. In addition to the above means, the recent efforts of tax authorities to register taxpayers electronically using biometrics would in no small measure improve taxpayer data base in the Nigerian tax system. The taxpayer Identification Number (TIN) project embarked upon by the 36 tax Boards of Internal Revenue (BIRs) and the Federal Inland Revenue Services (FIRS) aimed at providing a common platform of registering taxpayers online will greatly provide taxpayer database and form a good foundation for achieving realtime tax collection which is a global focus of all modern tax systems”.

Vanguard, MONDAY, AUGUST 12, 2013 — 23

Banking & Finance

ONSOLIDATED Discount House limited has listed four factors that could make or mar the effectiveness of the proposed Mortgage Refinance Company. In a research report titled, “Are the odds against the proposed Mortgage Refinance Company’, the company identify the Land Use Act, Regulation of banks and primary mortgage banks (PMBs) as potential barriers to the MRC. Other factors identified are: lack of blueprint on the three agencies established to coordinate mortgage activities in the

Consolidated Discount lists barriers to Mortgage Refinancing Company country; and hawkish and predatory tendencies on the part of Nigerian entrepreneurs. The company said that how these factors are addressed will determine the ability of the company to impact positively on the mortgage sector in the country. The company said, “The MRC is being set up to support mortgage originators such as Primary Mortgage Banks

(PMBs) and Deposit Money Banks (DMBs) to increase mortgage lending by refinancing their mortgage loan portfolios. We think the impact of the existing land use act may constrict potential gains that would accrue from the establishment of the mortgage refinancing mechanism. The Nigerian Land Use Decree of 1978 nationalised all land in

the country and notionally handed over its administration to committees constituted at state and local government level and these constitute a huge constraint to business. This limitation would have to be removed if the level of investments desired in the housing sector is to be attained “Furthermore, there will be a need for institutional and regulatory checks on the operations of the DMBs and PMBs and their relationships with the Nigerian MRC. The MRC is being positioned to serve as an off-taker of the loans disbursed by the mortgage lenders. There is a tendency for DMBs and PMBs to create low quality mortgage risk assets and expect same to be offset by the MRC which may lead to the USstyled mortgage bust that resulted in what has been described as the worst economic crash since the 1930s depression. “Also, there has been no comprehensive plans on what would happen to the entities traditionally entrusted to c o o r d i n a t e mortgage activities in Nigeria. These are the Federal Housing Authority (FHA), National Housing Fund (NHF) and Federal Mortgage Bank of Nigeria (FMBN). We think a clear blue-print has to be established on the operations of the three entities. “Lastly, the operation of the MRC is set to increase activities in the Nigerian capital markets. We anticipate an increase in the number of Real Estate Investment Trusts (REIT) traded on the Nigerian bourse from the three names which are Union Homes, Skye Shelter Fund and UPDC Plc.

BRIEFS Firm launches ‘SkillMix’ A Lagos-based IT firm has unveiled an outsourcing and crowd-sourcing portal for skill. Christened SkillMix, the social outsourcing site SkillMix is open to all freelance web designers, web developers, marketers and writers who seek avenue to express their prowess. At an interactive forum in Lagos, where SkillMix was uncovered to journalists, Mr. Samuel Adesoga, Managing Director/CEO of Thought Studios, said that the outsourcing and crowdsourcing site was designed specifically for project owners seeking how to effectively execute their projects, which could be a web design or similar projects on time and on budget. “The project owners can outsource the projects to freelancers in order to save costs”, as SkillMix portal would source the right freelance designers, developers, writer etc across the nation on behalf of the project owners. Freelancers who are mindful of earning additional incomes would register on the site. According to him, registration on the SkillMix site is free of charge. Some of the categories of jobs listed on the site include logo design, graphic design, basic web design, e-commerce, blogs, content management systems, mobile apps, social networks, database, search engine optimisation, web apps and software, writing and marketing. While describing how SkillMix works, Samuel explained that project owners are required to post their projects including any supporting documents or project specification on the website. This enables registered freelancers and skilled workers to locate these projects and join the project’s discussion online. SkillMix’s objective is to deepen the growing information communications technology (ICT) industry in the country. According to him, skillsmix.com is designed such that each project has its own discussion forum where freelancers would raise questions concerning the project under scrutiny. The freelancers would convince the project owner their skills and experiences as well as qualifications they have to execute the projects.

24 — Vanguard, MONDAY, AUGUST 12, 2013

Corporate Finance BRIEFS Orange introduces mobile payment services

range has announced a new set of mobile payment services in conjunction with Visa for Orange Money subscribers. Botswana will be the first country to benefit from the new program and will allow easy access to funds 24 hours a day, bringing new point-ofsale, online and ATM transaction options to consumers. Currently, Orange Money allows customers to use their mobile phones to transfer funds to any mobile phone subscriber in or outside the country, buy airtime, and pay bills. From August this year, registered Orange Money subscribers in Botswana will be able to use their Orange Money account to make Visa enabled payments and pay invoices at stores, international online merchants and at over 300 Visa ATMs across the country.

IHS Nigeria set to double assets after raising $1bn

HS Nigeria Plc (IHS), which operates telecommunications infrastructure in three African countries, is set to more than double its assets after raising $1 billion for investment, Chief Executive Officer Issam Darwish said. IHS wants to increase the number of telecommunications towers under its management to 20,000 by 2016 from the 8,500 towers it currently runs in Nigeria, Cameroon and Ivory Coast, Darwish said last week from Beirut, Lebanon’s capital. “We have funding available for various opportunities that we are currently analyzing,” he said. The Lagos-based company said in July it raised $522 million in new capital, $280 million in debt and $242 million in equity in the preceding year to fund its expansion across Africa. Nigeria has Africa’s highest number of mobile-phone users, with 109 million subscribers at the end of 2012, according to the regulator Nigerian Communications Commission. C M Y K

Renaissance targets middle, low income class for loan disbursement BY PETER EGWUATU

enaissance Credit Nigeria has said that it remains resolute in its commitment to providing better life to the middle class and low income earners of the Lagos population who fall between the age group of 22 – 55 years. Barely two months after obtaining its state licence, Renaissance Credit Nigeria has rolled out its second outlet at the Pentagon Plaza in Opebi area of Lagos, in line with its quest to provide simple money solutions to individuals living and working in Lagos State. Mr. Oluwole Emeya, VicePresident, Sales at Renaissance Credit Nigeria stated; “Our plan is to plant outlets within major suburbs of the state such that our consumers have easy access to our range of simple money solutions.” In addition, he said that the company offers savings products like Fixed Deposits and Savings Plans, which come with attractive interest rates and also partners with retail outlets across the state to offer Point of Sale finance for the purpose of purchasing household electronics, appliances and mobile phones. According to Emeya,

Renaissance Credit which boasts of the latest state of the art IT technology and a vast experience in consumer finance, having operated in a number of emerging markets, is set to bring its range of simple money solutions to the door-steps of Lagosians who fall within the middle and low income segment by planting outlets across Lagos State. Mr. Segun Akintemi, CEO, Renaissance Credit Nigeria ,

explained that “our services are geared towards meeting the financial needs of our customers; whether individuals or small businesses, with the view of building the nation’s economy and improving the standard of living of the Nigerian people.” The company which commenced operations in October 2012 has recorded a number of milestones and

*From left; Chairman, Liquified Petroleum Gas (LPG) Association of Nigeria, Mr. Dayo Adesina, facilitator, Nigerian Economic Summit Group (NESG) Environmental Sustainability Policy Commission, Mrs. Dupe Akindele, Co-Chairman, Private Sector Environmental Policy Commission of NESG, Professor. Collins Gardner, and the Associate Director/Head of Research, NESG, Dr.Sope Williams-Elegbe, at the Stakeholders Dialogue with NESG Environmental Sustainability Policy Commission Low Carbon Emissions: Mainstreaming LPG Utilisation in Nigeria, held in Lagos.

Resort Savings: Don’t expect dividend soon — Olayinka By NKIRUKA NNOROM

hareholders of Resort Savings & Loans Plc may have to wait a little longer to reap the return on their investments in the bank as the Managing Director/CEO, Abimbola Olayinka, has said that the company will likely not pay dividend in the nearest future. Olayinka spoke at the bank’s Facts behind Figure’ on the Nigerian Stock Exchange, NSE, while reacting to complaints by stockbrokers that the company has not paid dividend since 2009 when it was listed. He noted that the decision not to pay dividend was regulatory induced, saying that the Central Bank of Nigeria, CBN, would not approve such payment unless

continues to braze the trail in the area of consumer finance in Nigeria. From pioneering loan disbursement in 24 hours in Nigeria, to simplifying the process of accessing consumer loans, Renaissance Credit, remains resolute in its commitment to providing better life to the middle class and low income earners in Lagos.

the bank had enough capital accumulation. In his words, “It is regulatory induced because as a mortgage institution, you cannot pay dividend unless you build up adequate reserve. Moreover, the Central Bank of Nigeria will not give you the approval because there is no capital accumulation.” “Mortgage business is a long-term business, not a short term business; it takes long period to build up. But it is not all loss, because effectively, there will be capital appreciation even if there is no dividend,” he added. While speaking on the N3.39 billion hybrid offer currently being undertaken by the bank, the Resort Savings boss explained that with the completion of the offer, the

bank would be positioned to offer superior services to its customers. He stated that the proceeds from the offer were majorly for the purpose of creating mortgage based assets and improving attendant returns to shareholders. He said, “To run a mortgage bank, you need to have deep pocket; so, we believe that with the completion of the offer, we will be well positioned to grow our mortgage business and consequently increase returns.” Offering further explanation, the CEO, NSE, Mr. Oscar Onyema, said that Resort Savings & Loans falls into the category of growth companies, saying that, usually, growth companies are required to plough back their profit into their

businesses, while dividends are expected in future when such companies were stabilised. He commended the bank for its compliance with corporate governance structure and urged other companies to emulate the good examples of Resort Savings. Onyema added that the NSE was ready to support any listed company that aspires to greatness. Highlights of the company’s financials showed an increase in the net profit position from a loss of N1.1 billion in 2011 to a profit position of N3.5 billion in 2012. Earnings before interest and tax, EBIT, grew from a loss of N1.1 billion to a profit of N3.34 billion. Shareholders fund also grew from N2.9 billion in 2011 to N6.2 billion. The bank currently has over N1 billion disbursement from the Federal Mortgage bank of Nigeria, FMBN, and is presently processing facility in excess of N5 billion with the FMBN.

Vanguard, MONDAY, AUGUST 12, 2013 — 25

Corporate Finance

May & Baker surpasses half year forecasts, posts N40.4m PBT BY PETER EGWUATU

ay & Baker Nigeria Plc interim first half year report for the period ended June 30, 2013 showed that its profit has surpassed the fullyear profit projection for 2012, raising prospects for better shareholders’ returns in the current business year. According to information obtained from the Nigerian Stock Exchange (NSE), the company’s result showed improvement in the underlying profit-making capacity with increases in both operating profit and profit before tax margins. While higher cost of sales depressed gross profit margin from 42 per cent in first half 2012 to about 33 per cent in first half 2013, increased internal efficiency impacted positively on the operating profit margin and pre-tax profit margin, which rose from 10.7 per cent and 1.65 per cent in first half 2012 to 11.5 per cent and 1.8 per cent respectively in 2013. Turnover rose by 18 per cent from N2.43 billion to N2.86 billion. Operating profit grew by 27 per cent to N328.3 million in first half 2013 as against N259.3 million in comparable period of 2012. Profit Before Tax (PBT) rose by 29 per cent from N40.4 million to N52.1 million. Profit after tax stood at N35.42 million compared with N27.48 million in corresponding period of 2012. With improvement in the bottom-line, basic earnings per share increased by 29 per cent from 2.80 kobo in first half 2012 to 3.61 kobo in first half 2013. Total assets also rose to N8.29 billion, 11.4 per cent above N7.44 billion recorded in comparable period of 2012. Managing Director, May & Baker Nigeria, Mr. Nnamdi Okafor, said the performance of the company in the first half showed resilience in spite of some current internal circumstances adversely impacting on results. He noted that while operating profit was N232.9 million and profit before tax was N44.5 million for the fullyear ended December 31, 2012, the first half results in 2013 have surpassed the fullyear results of 2012. According to him, while the company still faces headwinds from huge depreciation due to its ultramodern factory in Ota, Ogun State and high financing

costs, Management has undertaken key initiatives to further expand sales and ensure improved profitability. May & Baker Nigeria Plc is considering raising additional capital to support its business expansion and steady the healthcare company against competition, the board of the company has said. At the recent annual general meeting of the company, chairman, May & Baker

Nigeria Plc, Lt. Gen Theophilus Danjuma (rtd), had said the company’s huge investments in the factory at Ota, the company’s vaccine manufacturing joint venture with the Federal Government, new products and other initiatives will provide a stable base for the company’s growth in the years ahead. He said the company has rolled out a new five-year strategic plan that would seek

to harness all opportunities to increase the group’s earnings and returns to shareholders. He added that profit is also expected to increase in 2013 as the company continues to optimise production and cost efficiencies. “Our company is wellpositioned for the future with a lot of potentials from the strategic investment we have made in Ota and other attractive business prospects in our sight. As we vigorously pursue our new five-year strategic plan with all the opportunities it presents, we can only hope for better performance and stronger earnings capacity going forward,” Danjuma said.

*From left; Director, Permanent Secretary Office, Federal Ministry of Health, Dr Ali Magashi; Corporate Communications and Public Affairs Manager, Nestlé Nigeria Plc, Dr Samuel Adenekan; and Permanent Secretary, FMOH, Mr Sani Bala, at the 2013 Breastfeeding Week celebration in Abuja.

DHTL Capital set to train lawyers on capital market activities, finance I

N its determined effort to boost activities in the Nigerian capital market and finance generally and support the economy for sustainable growth, DHTL Capital Management Limited has concluded arrangement to train lawyers on how to package various offerings to raise money for corporate entities. The Managing Director/CEO, Mr.Tunde Adeyemi said “ Since the Nigerian capital market crash of 2009, we have not gotten enough adequate human capital development, especially from legal practitioners to tackle issues and packaging of offerings in raising money from the the capital market. It is based on this that the company has come up with the plan of having specialised school in finance where participants will obtain a practical-minimaster certificate in four intensive weeks of study.” While explaining the need for the intensive training, he said, “There is need to improve human capital in the Nigerian capital market and finance generally since the market has rules and regulations that makes it function effectively. But most operators without financial background find it difficult to fine-tune deals.

So the summer school will provide such opportunity and also teach participants on how do business in Nigeria. Adeyemi, disclosed that DHTL Capital will be bringing facilitators from outside the country with wide knowledge in finance. Some of the facilitators include: Iris Mack, Phd, MBA. She earned a Harvard doctorate in Applied Mathematics and a London Business School MAB. She is a former MIT Professor. Dr. Mack is also a Derivative Quant/Trader who has worked in financial institutions in the US., London and Asia. Ana Lucia Lind is another facilitator; she is President/ceo, Swiss Financial Engineering AG. Lucia has more than ten years of experience in the banking industry in the areas of Investment Banking Portfolio and Asset Management andPrivate Banking.Prior to founding Swiss Financial Engineering AG, she was partner of Zurich -based Swiss Capital Engineering AG (Scape) and held the role of an Executive Director. The training has been scheduled to commence th th from August 19 to September 14 2013. Some of the course outlines include: The Foundatin prerequisites and tools, Investment and Securities Management, Corporate and Development finance.

BRIEFS GTBank upgrades social banking service

uaranty Trust Bank (GTBank ) Plc has upgraded its social banking offering on Facebook to accommodate Instant GTBank Account Opening. With this upgrade, prospective customers of the bank can open accounts and immediately get their account numbers while on Facebook, without having to visit any GTBank branch. Commenting on the new offering which went live recently, Managing Director/ CEO of Guaranty Trust Bank plc; Mr. Segun Agbaje said the upgrade will make it more convenient for people to commence banking relationships with the Bank. Mr. Agbaje explained that all people have to do while on Facebook is fill the account opening form, upload their passport photograph and signature mandate and immediately get their account number. GTBank Social Banking is a unique offering pioneered by the Bank earlier in the year that allows people open GTBank Accounts, make Account Balance Enquiries, perform Money Transfers and purchase Airtime on Facebook.

China, South Africa seek cooperation in capital market

epresentatives from the Chinese and South African capital markets have met to discuss ways of building long-term relationship to encourage investment flows and seek further business opportunities. “Today, we are here to further strengthen our relationship. I hope that this forum will lead to productive collaboration between the JSE and the SSE (Shanghai Stock Exchanges),” the Chairman of the Johannesburg Stock Exchange (JSE), Humphrey Borkum said at the launch of the first SAChina Capital Market Forum. “The Johannesburg Stock Exchange is honoured to host an event that will lead to the further strengthening of ties between our institutions and our countries,” Borkum said. Last year, the JSE and the SSE signed a Memorandum of Understanding, which emphasised the importance of the relationship between the two exchanges.

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26 —Vanguard, MONDAY, AUGUST 12, 2013

ICT

Micro-Finance

2% of 500m world’s micro entrepreneurs have access to finance – Findings Stories by PROVIDENCE OBUH

CONVERGENCE SMILES: L-R, Dr Eugene Juwah, Executive Vice Chairman NCC and Mr. Emeka Mba, Director General, NBC after sealing support deal with each other as NBC visited NCC last week.

CONVERGENCE AT LAST:

NBC pledge support to NCC on industry transformation By PRINCE OSUAGWU

to retain certain functions which neither was ready to abdicate. The inability of the merger to work HE convergence between two out even when the Communications flagship government parastatals – the Nigerian Communications Technology ministry gave a hint Commission, NCC and the National August last year that the Federal Broadcasting Commission NBC may Executive Council had approved it, subjected operators particularly in the happen after all. This is as the leadership of the NBC telecom sector to getting operational has pledged support to the NCC in license from NCC and also going back every step it would take to hand modern to NBC to get spectrum allocations. Although the NCC regulates the technology to the Nigerian people. Although the Obasanjo-led communications industry while the government in 2006 set up a committee NBC superintends the broadcast sector to look at the modalities for a converged of the country, the normal practice Nigerian ICT sector with particular across the world since technologies focus to the coming together of the NBC began to converge is that regulators of and the NCC, the actualisation has such technologies also converge. remained almost a mirage. Industry Today with a single technology device, players have often ascribed the people can listen to radio programmes, difficulty to clash of interests and fight watch television, stream videos and make calls, all at the same spot. However, with the visit of the newly appointed Director General of the NBC, Mr Emeka Mba to his NCC counterpart Dr. TN Nigeria last week flagged off a Eugene Juwah, last week, competition for mobile application a new wave of understand developers. The competition, MTN App Developer seems to springing up. Mba and his team Challenge, is focused on development of local admitted that the NBC and content relevant to the Nigerian market. the NBC have always Speaking at the launch of the initiative in Lagos, the Chief Marketing Officer of MTN Nigeria, Larry been sister regulators Annetts, said that “the MTN App Developer which roles are becoming Challenge is a demonstration of our commitment to more intertwined because deliver a bold new digital world to our various of development in stakeholders. This initiative represents a tangible technology. For him, “these days it’s platform to promote the growth and use of locally either you broadcast relevant content, which would help develop the Nigerian ecosystem via partnerships that are through the internet or through the other beneficial to the ecosystem at large.” He said mobile applications have become an traditional channels that essential feature for most mobile users, adding that we were used to, but the of the a growing number of Nigerians now rely on their importance mobile phones as the preferred choice to stay in regulatory responsibilities touch with developments in society. He said this of the two agencies makes has made local Nigerian mobile content more it overriding for us to always look for avenues of relevant and important than ever before. According to the marketing chief, MTN, in cooperation so that fulfilment of its brand promise and commitment to important issues can be enriching the lives of Nigerians, had partnered with resolved before taken to neXva, a multi-OS app ecosystem solutions the Frequency provider, to launch a branded version of the App Management Council, Store called MTN NextApps Store, which houses FMC, which we both up to 1330 Apps. belong to”.

MTN launches App developer challenge

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indings have shown that of the 500 million micro entrepreneurs’ worldwide, only two percent have access to financial services and only a few communities enjoy microfinance banking operations. For a true transformation to be achieved, microfinance banking, whose contributions should be financial, nonfinancial and social, is positioned to play a critical role in the transformation and empowerment of rural communities especially in economic development of the society, Managing Partner, Alegna Global Partnership Ltd. Ms. Angela Adegboye said. In her paper titled: “The Role of Microfinance Banking in Rural Transformation and

Empowerment,” Adegboye explained that microfinance banking is a system of financial intermediation between micro savers and micro borrowers, providing a platform for other financial services such as money transfers and payments. According to her, “despite the many successes of microfinance banking models, only an estimated two percent of the world’s roughly 500 million small entrepreneurs have access to financial services and too few communities feel the positive impact of microfinance banking operations of the development of their communities. “Rural dwellers appear satisfied with meeting their immediate needs and many do not have visions of great enterprise or wealth. For this reason, they are able to survive and even thrive on the little that they earn or reap

from the micro enterprises that they are involved in. “The quality of life that many rural dwellers live is much higher than many in the urban cities,” she said. On his part, Managing Director, Asha Nigeria, Mr. Aminul Bhuiya, added that with microfinance, many financially excluded people can be reach with sustainable finance serrvices. Bhuiya attributed individual client lending, solidarity group lending and village banking, to be the three methodologies adapted and implented worldwide for microfiance delivery. “They all have their advantages and disadvantages. However, what is important is that services should be delivered to clients in an efficient, convenient, affordable and sustainable manner,” he said.

BUA set to implement government policy on backward integration

UA Sugar refinery, has unveiled plans to ensure e f f e c t i v e implementation of Federal Government policy on b a c k w a r d integration on sugar. Managing Director, BUA Sugar Refinery Limited, Mr. Goddie Isibor said that it is committed to the President’s transformation agenda and to the

Minister ’s passion and

L-R: Minister of Industry, Trade and Investment, Olusegun Aganga, Managing Director and Executive Director, BUA Sugar, Mr. Goddie Isibor and Mr. Silva Kuma, during the facility tour of BUA Sugar factory toward implementation of Backward Integration policy of Federal Government.

interest in self sufficiency in sugar production, as enunciated in the Nigeria Sugar Master Plan. Speaking with Journalists in Lagos, Isibor pointed out that it was as a result of this commitment that it signed the backward integration programme with the minister. He revealed that the company has imported about 220,000 metric tonnes of sugar from January to July this year, saying that the National Sugar Development Council (NSDC) has

allocated only 305,000 metric tonnes of raw sugar to the company. “This leaves a balance of 85,000 metric tonnes for us to import for the rest of the year. Presently, we are operating at 95 percent capacity utilisation in the last two months and production rate has been at an average of 42,000 metric tonnes per month which translated to 640,000 metric tonnes per annum,” he said, explaining that this means that sugar companies would

certainly run out of raw sugar and therefore shut down the factory in the last quarter of the year. “When factories shutdown or reduce production, smuggled products take over, workers become redundant and even funding for backward integration is affected. But we know that this cannot be the intention of the master plan and we humbly request that this first allocation of sugar should be 640,000 metric tonnes,” he added.

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C M Y K

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Homes & Housing Finance BRIEFS Union Homes’ rampaging staff shut offices

FFICES of Union Homes & Savings Plc in Lagos were shut down by protesting members of staff over what they called indiscriminate retrenchment without payment of benefits. The rampaging workers complained of several cases of ill treatment by the bank’s management which include no payment of entitlements and indiscriminate sack of over 300 staff. A union leader claimed that the company has been sacking people without paying them, stating that they are reorganising the banking institution. He said the staff strength which used to be about 700, went lean with the sack of 300, with another 100 staff advised to resign. Vanguard gathered from inside sources that a meeting held between the management of the mortgage bank and workers’ representatives last week ended without an agreement but negotiations are to continue this week, after the holidays.

‘Mortgage institutions, other DFIs in Nigeria under-performing’

By YINKA KOLAWOLE

ORTGAGE institutions and other domestic development financial institutions (DFIs) in Nigeria set up specifically for purposes such as mortgage/housing finance, trade finance, etc., have under-performed. According to the latest report by Afrinvest, a firm involved in investment banking, securities trading, asset management and investment research with a focus on West Africa, the institutions have fallen short of expectations and are far from fulfilling their mandates. Due to this, the investment firm scored the Central Bank of Nigeria (CBN) a ‘weak pass’ on its blue print promise to ensure the financial sector contributes to the real sector of

the economy. “Rapid financialisation in Nigeria has not benefitted the real economy, as much as has been anticipated,” the firm said. In 2010, while advocating solutions that the CBN was going to be pursuing to right the then ills of the Nigerian financial system, CBN Governor, Sanusi Lamido, laid out a blueprint for reforming the sector built around four pillars, the reported noted. The pillars include enhancing the quality of banks, establishing financial stability, enabling healthy financial sector evolution and ensuring that the financial sector contributes to the

economy. “The outcome of the banking consolidation was expected to deliver advantages of scale boosting growth in the real economy through the provision of credit. With the implementation of the preceding three pillars, banks were expected to begin to engage the real economy through initiatives such as development finance, foreign direct investment, venture capital and public private partnerships,” the firm said. Afrinvest however scored the Central Bank 3 of 5, equivalent to ‘good performance’, on the implementation of the first

UK home repossessions fall in Q2

he number of homes repossessed from struggling owners in the UK fell in the second quarter of the year. The Council of Mortgage Lenders (CML) said there were 7,700 properties repossessed in April, May and June, a drop of nearly 4 percent on the previous quarter. Homes are repossessed if householders fall well behind on mortgage payments and lenders see no prospect of the bill being paid. Repossession figures in the recent financial crisis peaked in 2009 when there were 48,900 homes seized over the course of the year. There are 11.3 million mortgages outstanding in the UK. The numbers have fallen since 2009 owing to the record low level of interest rates. The Bank of England has held the bank rate at 0.5 percent for more than four years, and lenders have been competing for relatively few buyers by offering low mortgage rates. In addition, lenders have been under pressure not to repossess properties unless it is genuinely a last resort. They must do a considerable amount to convince the courts that they should seize a borrower’s home.

Low-cost housing development

pillar, enhancing the quality of banks. “The programme was expected to consist of industry remedial programmes to fix the key causes of the crisis including the implementation of the risk based supervision, reforms to regulations and regulatory framework, enhanced provisions for consumer protection and internal transformation of the CBN,” it stated. The firm also awarded the CBN 4 of 5, equivalent to ‘very good performance’ on its implementation on the second pillar, ‘establishing financial stability’. Afrinvest said the key feature of the second pillar centered on strengthening the financial stability committee within the Central Bank, establishment of a hybrid monetary policy and macroprudential rules, development of directional economic policy, among other related responsibilities. “The 2009 stress test exposed huge toxic assets on bank’s balance sheet. Consequently, the creation of the Asset Management Corporation of Nigeria (AMCON) was the first step towards easing the burden of over N3.0 trillion of non-performing loans. In addition, the hitherto universal banking model of banking was to be restructured into International, national, regional mono-line and specialised licences,” the firm said, and rated the regulatory institution 4 of 5, indicating a ‘very good performance’”.

Obama unveils plan to overhaul US mortgage system

.S. President Barack Obama has outlined his plan to completely overhaul the mortgage business by winding down the government-backed Fannie Mae and Freddie Mac bodies and replacing them with a system in which the private sector is responsible for mortgage defaults. This is coming almost five years after taxpayers bailed out the mortgage giants. In a speech in Phoenix, Arizona, one of the hardest hit housing markets during the recession, the US president said taxpayers should never again be left “holding the bag” for the mortgage giants’ bad bets. “For too long, these companies were allowed to make big profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag. It was heads we win, tails you lose. And it was wrong,” he said.

Obama’s plan calls for the phasing out of the Federal National Mortgage Association (with the acronym FNMA or popularly known as Fannie Mae) and the Federal Home Loan Mortgage Corporation (known as Freddie Mac), two government-backed housing agencies, which together have backstopped the entire American housing market for the better part of the last halfcentury. Fannie and Freddie collapsed in 2008 before being bailed out with almost $200 billion in taxpayer funds. The two agencies don’t make loans directly, but buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. Fannie Mae and Freddie Mac take existing mortgages off the balance sheets of banks, allowing the latter to go out and loan out

new money to new homebuyers. Together, they currently own or guarantee half of all US mortgages and back nearly 90 percent of new ones.

nder the plan, the government would only step in to pay out mortgage guarantees after private capital has been exhausted and would ensure that private capital would bear the substantial majority of any losses. Built into that system would be a guarantee that 30-year mortgages would still be available. Officials said that would involve some type of government guarantee for lenders, though they did not detail what that would entail. The president’s plan to wind them down has bipartisan support. It is largely in line with other efforts spearheaded by Tennessee Republican Senator Bob Corker and Virginia

Democrat Senator Mark Warner to achieve the same thing, which Congress and the US Senate have already expressed broad support for. For the better part of his time in the White House, Obama has faced calls to shake up Fannie Mae and Freddie Mac, but the administration has held back on taking action while the housing market was weak. The US President’s call to wind down the government’s role in the US mortgage finance market won’t have an immediate impact on the mortgage market and probably not even one for years, mortgage experts say. Any efforts to reform Freddie Mac and Fannie Mae, which currently fund two out of three new housing mortgages in the US, would likely take years, even if and after there’s consensus on what to do.

Vanguard, MONDAY, AUGUST 12, 2013 — 31

Insurance BRIEFS

Stories by ROSEMARY ONUOHA

nsurers across Africa see coping with regulations as their greatest risk, a survey by PwC, has revealed. The survey stated that series of new laws distracts Chief Executive Officers (CEOs) from focusing on strategic areas of their business, adding that in South Africa some executives of key insurance companies spent about 65 per cent of their time dealing with compliance issues. In its survey, PwC relayed 12 responses from insurance practitioners in South Africa and seven from the rest of Africa. The professional services company polled more than 600 insurance practitioners and industry observers in 54 countries. The survey looks at what insurers see as the top risks over the next two to three years. Victor Muguto, long-term insurance leader for PwC Africa, said the challenge was that a wave of new regulations emerged at the same time. He said companies had indicated that the regulations were costly to adhere to and also time-consuming. Among the sophisticated regulations that insurers have to deal with are those aimed at treating customers fairly, scheduled for next year. Another is the solvency assessment and management rule requiring long-term and short-term insurers to align their capital requirements with the underlying risk so that they can pay out multiple claims from policyholders. The solvency assessment is scheduled for 2016. There is also the National Health Insurance initiative which is being piloted, the financial sector code, which came into

NCRIB commiserates with NUJ

*From left; Eddie Efekoha, Managing Director/CEO; Obi Ralph Ekezie, Chairman; Company Secretary representing Foundation Chambers and Tony Aletor, Non-Executive Director, all of Consolidated Hallmark Insurance Plc during the 18th Annual General Meeting of the company held in Lagos.

African insurers see regulations as greatest risks effect earlier in the year, and a raft of other regulations. “It’s ironic that the industry’s greatest risks are seen to come from regulation, which is intended to reduce risk, at a time when operating and underwriting conditions are also very hard. It is no surprise that these pressures are reflected in rising concerns about the ability of management to handle them,” Muguto said. Tom Winterboer, the financial services leader of PwC in Southern Africa and Africa, said in South Africa

some executives of key insurance companies spent about 65 per cent of their time dealing with compliance issues. “I think the insurance companies fully subscribe to the fact that there must be regulation, however, insurers have to align their systems with new requirements, and this usually comes at a cost. Mr. Mark Claassen, an actuarial leader for PwC in Southern Africa, said another challenge was duplication in the regulatory environment, which consumed a lot of

companies’ time. Then there was regulatory uncertainty. Firms were investing in systems but were unable to know whether a raft of new regulations would push them to change these systems. There are also fears that with the pace of change and volume of new rules some of the small insurers may be unable to cope with the costs. Claassen said hundreds of millions of rand were being spent by companies on aligning systems to regulations.

onsolidated Hallmark Insurance Plc has recorded a Gross Premium Income, GPI, of N4.142 billion for the financial year ended December 31st 2012. The figure was in contrast with N4.098 billion recorded during the 2011 financial year. Chairman of the company, Mr. Obi Ralph Ekezie, presented the figures to shareholders at the company ’s annual general meeting in Lagos, last week. According to the Chairman, profit before tax grew by 278 per cent to N560.5 million as against N148.2 million recorded in 2011. Also a profit after tax of N395.2 million was recorded which represented a growth of 158 per cent from the 2011

figure of N153.4 million. The chairman also revealed that total assets of the company in the year under review rose to N6.677 billion as against N6.077 billion in 2011 while shareholders fund was equally enhanced by seven per cent to N4.186 billion in 2012 from N3.911 billion in 2011. Accordingly, shareholders of the company will get a dividend of N180 million which translates to a dividend of three kobo per share compared to the two kobo paid out in 2011. However, while reviewing activities in the Nigerian insurance industry during the 2012 financial year, the Chairman said that insurance penetration remained quite low and retail business which

the efforts of the industry regulator, the National Insurance Commission, NAICOM, sought to address through the Market Development and Restructuring Initiative, MDRI, is yet to yield the desired results. He said that premium rates remained low amidst cutthroat competition by industry players in their quest to grow their market share. “The year under review however witnessed a resolve on the part of NAICOM to instill sanity into the operations of insurers through enforcement of the International Financial Reporting Standard, IFRS, as approved by the federal government, and the drive to lower trade receivables

STI throws weight behind preservation of Fagunwa’s works

Consolidated Hallmark records impressive growth in GPI C

he Nigerian Council of Registered Insurance Brokers has joined other notable Nigerians and Associations to commiserate with the Nigerian Union of Journalists over the demise of three journalists that were involved in a fatal accident along Ibadan-Ilesha road last week. The Council in a letter of commiseration signed by its President, Barrister Laide Osijo and routed through the Nigerian Association of Insurance Correspondents lamented that the death of the journalists had created a great vacuum in news and information dissemination in Nigeria. According to Osijo, the unfortunate accident is another call to the authorities to accelerate infrastructural development in the country, especially in the area of roads and safety management. She said, “A time like this also underscores the need for individuals and associations to appreciate the endemic risks that surrounds human existence and the need to put in place risk management devices, of which insurance is cardinal, to mitigate losses to lives or materials when they occur.”

through the monitoring of the existing credit policy on ‘no premium no cover ’ of the Insurance Act with effect from January, 2013,” the Chairman said. He however said that the company showed resilience in spite of the enormous challenges posed by the business climate and was able to maintain unbroken record in profitability. He said “We remain committed to our vision of evolving into a leading provider of insurance and other financial services of international standard. Towards this end, we shall continually ensure compliance with the best practices in corporate governance issues.”

overeign Trust Insurance Plc has thrown its weight behind the preservation of the works of the Late Daniel Olorunfemi Fagunwa popularly referred to in the literary world as D.O. Fagunwa. In a statement, the company said that literary scholars both home and abroad will be converging in Akure of Ondo State from August 8-10, 2013, to celebrate the literary icon, 50 years after his demise. According to the statement, the 1986 Nobel laureate winner for literature, Professor Wole Soyinka will be on ground to give the keynote address at the 3-day conference. Sovereign Trust Insurance Plc, as one of the sponsors of the conference in partnership with the Fagunwa study group, will be underwriting the publication of the proceedings of the conference in form of a book. The major objective of the conference amongst others is to regenerate the literary culture that seems to be on the decline in recent times especially with the new generation.

32 — Vanguard, MONDAY, AUGUST 12, 2013

Vanguard, MONDAY, AUGUST 12, 2013 — 33

People in Business

Our problem is not unemployment but unemployable people – Akin Samuel

r. Akin Samuel Michael is the M a n a g i n g Director/Chief Executive Officer of Abuja-based MyPC Technologies, an IT solutions firm. A graduate of Computer Science from the University of Ibadan with certifications in information technology and other Microsoft certifications, Akin Samuel said he developed interest in computer in his first year at the university because he enjoys solving problems and the computer has different commands that can give one the same results and that was actually what drew him to the computer. In this chat with Financial Vanguard in Abuja, Samuel speaks on the business and challenges. Excerpts: Motivation: "My father once asked me to do something and I could not get it done. He asked me to look for another way of doing it. I went back to look for a solution and failed again. For the third time, he asked me to go back and still look for another way of doing it if others failed. Eventually, I got it done the third time. That experience made me fall in love with the computer because it makes your job easier." Establishing my company: After his youth service at the Nigerian Security and Civil Defence Corps (NSDC) where he worked as a system engineer and network administrator (in their Communications unit), he decided to establish his own outfit to provide specialised/ professional solutions to socio-economic problems. "There are a lot of problems I will like to solve or be a part of the team that will solve them. So I took up entrepreneurship in information technology and decided to focus on my area of specialisation which is web site designing and software development. "I discovered that a lot of people are at the mercy of web site designers. We do not have a lot of firms that specialise in web site designing in Nigeria. All we have are IT firms. They do a lot of things including web site designing but they are not specialists so I decided to specialize in that. Most of the jobs I do are for people that have already built their web sites and they still

come to me. They may just want to edit something on a web page and they call the person that designed it and he is not responding because there is no money attached or probably he is busy or out of town. So I decided to solve that problem by establishing MyPC Technologies to take care of that," he said. The company which was registered in 2011 has about 20 professional programmers and designers that can handle clients’ jobs. They build web sites for governments, NGOs, private businesses, musicians, events like weddings, hotel management software, customer care software, marketing software, office management software etc. "We have a customer care unit and a front desk that handles all complaints," he said. Thereafter, Samuel came up with a project to assist the government to solve problems. He said; "One of the visions of my company is to solve socio-economic problems using the power of information and I know the power of information is stronger online so it is in line with what I do – web site designing and software development. I then came up with some projects like Corpertion.com, Face of Corpertion, Corpertion Awards Nite, Corpertion Job Fair and Corpertion maqgazine. "Corpertion.com is a web site for past and present corps members. The purpose is to further help the NYSC achieve its objectives. The truth is that the only thing that unites us in this country is not even football but the NYSC scheme because regardless of whether you have HND or BSc., no matter your tribe, religion or course of study, you can go for NYSC. Also you are posted to any part of the country and that has helped to unite us and so there is need for corpers to keep in touch after the service year. Since inception in January 2013, we have had over 1.6 million visitors to the web site. We have about 1,500 registered members." Samuel said the Face of Corpertion is a beauty pageant which brings the winners of Miss NYSC and Macho Man at the camp from all the 36 camps nationwide to a grand finale. Corpertion Awards Nite was instituted to reward corpers and NYSC officials who have excelled

•Mr. Akin Samuel Michael... People don’t support you until you make it. during the service year. I noticed that nobody gives awards to corpers. Awards majorly given in Nigeria today are being bought. Let us give awards to people based on the services they have rendered and sacrifices they have made. I heard of a corper that raised millions of naira to facilitate a hospital in her place of primary assignment. Another one raised millions of naira for a

By EBELE ORAKPO

him then I can contact him. So even if I am in London, I can help my grandma to get her plumbing job done. We also plan to further train these artisans, introduce computers to them and help them advertise their skills and products. We want to make skilled work look more professional and appealing to graduates. This will create more entrepreneurs and reduce unemployment. It will give room for people to learn skilled work and not see them as jobs for illiterates. If I read mechanical engineering, there is nothing wrong if I work as a mechanic but most mechanics we have are drop-outs yet, we have a lot of mechanical engineers being graduated every year. We want to let them know that skilled work is not meant for illiterates only."

skilled workers. If for instance you need a plumber, you may not have any plumber’s contact so you ask friends. There is no database for skilled workers in Nigeria who constitute over 60% of the labour force and most are illiterate. We want to create a database for all skilled workers like tailors, plumbers, iron benders; mechanics etc. Our agents will go round and

Normally, every entrepreneur will talk about funds and right people to work with. What we have in Nigeria is not unemployment but unemployable people

water project in a local government area. So we need to recognise these corpers. "We will also be organising job fairs for them. It should not be a doctor in a lawyer’s chamber which is what we have today. Then there is Oga-worker.com which is meant to bridge the gap between illiteracy and the thirst for professional

register them, fill their forms, put them on the web site so the general public can access all the information. If I am in Abuja for instance and need a plumber, all, I need to do is go to the web site, click on Abuja, then on Central Area and plumber. I will click on a plumber to see his contact, experience and people’s comments about

Challenges: On the challenges, Samuel mentioned access to funds, right people to work with, balancing work and life, lack of mentors and support from government and people. "What we have in Nigeria is not unemployment but unemployable people. You employ people to work with you knowing that you are just a starter, and all they think about is the month end. They don’t think about the service they render. They are not creative, not innovative, not ready to add value. And when they work in an environment where they are given a role to play that their impact has to be felt, they tend to chicken out. They love civil service job where they will have free time to watch movies on their laptops. "As an entrepreneur, you have a lot of overhead and need to raise money, get the job done well, satisfy your clients, manage the staff and run the office efficiently. At the same time you have a family and other social responsibilities so there is need for balance. "I did not get mentors on time so I made a lot of financial management mistakes. I got my mentorship from books and my pastor. I advise people to read books," he said. He regretted that small businesses do not usually get support from government or individuals until they have made it big. My dream: "I believe that by 2020, I should be able to consult for the federal and state governments, international bodies and companies on providing socio-economic solutions."

34 — Vanguard, MONDAY, AUGUST 12, 2013

Who Steals Nigerian Crude Oil? national agenda is to find out who are those stealing Nigerian crude oil. Next to that is to also find out who are the buyers of the stolen crude. But, let me pose a question to all Nigerians. Supposing the members of a household engage security people to guard their residence and pay them extremely well. Yet, thieves break into the household every night and steal their most precious properties, what would the owners of the household do? Retain the security staff or sack them? If the answer that comes to your mind is “sack them”, then why do we continue to retain the security people, the oil workers, the NNPC and top government officials, as well as the militants who have collected fantastic salaries and huge contracts to protect our oil installations and are not doing it? Ask anyone who had ever gone far into Nigeria’s territorial waters and you will be amazed how extremely difficult, if not impossible for any maritime vessel to enter

our coastal waters to do any business. Last week, I talked to a former owner of a trawler about my experience aboard another trawler whose owner had asked me to go out to sea with his crew to find out from first hand experience what the security forces, pirates and militants do to fishing boats. I went and to my utter surprise, the former owner, now in his late 70s told me his own experience when he went out in his boat with the men. There was no way of

“Insanity has been described as doing the same thing over again and expecting a different result.” Nigerians have been treated to a theatre of the absurd in which those close to the oil scene and those who should be the prime suspects for the incessant theft of crude are the same people complaining about it and passing the buck among themselves. Jonathan’s government is obviously powerless to stop the grand larceny or is unwilling to do so. Meanwhile, we face real fiscal catastrophe this year and next year if the theft is not checked. Who are the culprits? Take your choice from the list below. “Oil workers……… “Security agents…… “NNPC officials….. “Top govt officials…. “Militants……. s Nigeria lurches dangerously towards another debt trap; and as it will become increasingly difficult for the Federal and State governments to meet their financial obligations to a wide range of stakeholders, the most important item on the

staff or get killed. To the best of my knowledge, no single trawler escapes the vigilant mafia consisting of officials and criminals on Nigerian waters. The question is: if people engaging in lawful business cannot sail into Nigerian waters undetected, how is it possible on a daily basis for criminals to so without being apprehended? The answer is obvious, our security people, like the guards in the fictitious house above are the thieves.

A government which concedes one third to one quarter of its revenue to thieves might as well hand them the keys to the treasury

escaping from the Navy, the Marine Police, the militants and the pirates who board the boats and shake down the

The story had been told about the man in rural Russia who could predict when a goat would be stolen – until people

discovered that he was the thief. The Ministers of Petroleum and Finance, as well as the President have told us that 400,000 barrels per day is being stolen with the calm assurance that another 400,000 barrels will disappear tomorrow and next week. They stay in Abuja mostly, but they have staff in the oil producing areas. The questions that arise are: how do they know it is 400,000 a day? Whose oil is stolen and from which location and yet the owners have not been able to put a security blanket over the areas involved? Again, let us return to the analogy of the household. Is it possible that the home owner will continue to suffer the breaking and entry into his premises every night without taking measures to put a stop to it and to find out who is behind the relentless attack on his property? That is what the Federal Government will want us to believe. A top official of the Directorate of Petroleum Resources, DPR, last week announced without embarrassment that “there is nothing” that can be done about it.

Vanguard, MONDAY, AUGUST 12, 2013 — 35

Agric BRIEFS Institute to develop fertilizer from human waste

FIIRO's new board chairman, Dr. Alex Obi displaying cassava bread to affirm its commitment to the development of the product and cassava value chain.

AU Commission to boost agricultural productivity through research BY SALIMAT GARBA

he African Union Commission (AUC) says it will ensure increase in agricultural productivity in the continent through strong support for research and development. Mrs Rhoda Tumusiime, the Commissioner for Rural Economy and Agriculture at the commission, stated this at the just concluded 6th Africa Agricultural Science Week (AASW) in Accra. According to her, one of the measures the commission is taking to enhance productivity in the area of research is to renew its Memorandum of Understanding with the Forum for Agricultural Research in Africa (FARA). She explained that FARA is an umbrella that brings together major stakeholders in agricultural research and development in the continent. The commissioner disclosed that AUC was also part of the Comprehensive Africa Agriculture Development Programme (CAADP). “The CAADP is an Africanled initiative that was adopted by Africa in 2003 to increase food security, reduce poverty, promote economic growth and create wealth through agricultural-led development. “ By 2015, the CAADP

project aims to achieve dynamic agricultural markets within regions in Africa and establish a good market for farmers in both local and international market. “It will also create a more equitable distribution of wealth for rural populations and see Africa as a strategic player in agricultural science

and technology,” she said. Tumusiime noted that the AUC was working with the African Agricultural Technology Foundation, to promote the CAADP agenda and public-private partnership. She stressed that science and technology are tools to increase agricultural

productivity in the continent, adding that science in agriculture demanded a lot of attention. She observed that Africa had untapped potentials that could enable it to be food sufficient, but that there were so many challenges facing the agricultural sector.

FAO Food Price Index falls for the third consecutive month

he FAO Food Price Index averaged 205.9 points in July 2013, 4 points (nearly 2 percent) below its revised value for June and 7 points (or 3.3 percent) lower than in July 2012. The decline in July, which marked the third consecutive monthly drop, was largely driven by lower international prices for grains, soy and palm oil while sugar, meat and dairy quotations were also down from the previous month. The FAO Cereal Price Index averaged 227.7 points in July, down 8.8 points (3.7 percent) from June and as much as 33 points (or nearly 13 percent) below July last year. The sharp decline mostly reflected falling maize prices as favourable weather boosted hopes of a significant production increase in several leading maize producing countries. Wheat prices also fell but the strong pace of exports limited the decline. Rice price changes varied according to origins, with a decrease in Thai prices contrasting with higher Vietnamese quotations.

he Nuclear Agriculture Research Centre (NARC), Accra, said it had developed organic manure from recycling of human excreta, waste from slaughtering houses and market waste in order to reduce fertiliser importation into the country. Dr Godwin Amenope, the Manager of the centre, made this known during the visit of some of the participants of the ongoing 6th Africa Agriculture Science Week (AASW) to the centre . According to him, products from the project which started about three years ago has reached 2000 farmers. Amenope noted that the project was established with the aim of reducing fertiliser importation and improving farm yield through locally produced fertiliser. “This manure is very cheap and accessible to rural farmers compared to the ones being imported; it will also boost the economy of Ghana because it will generate a lot of income once it is mass produced. ‘’ NARC has the mandate to develop organic fertilisers from both solid and liquid organic waste and to conduct microbiological and analytical tests on soil and organic waste samples. “We also develop human resources capacity in organic waste recycling and management as well as assess the effect of organic fertiliser on crop yield, quality, soil characterisation and carbon sequestration. The manager, however, expressed regret that funding was a major challenge facing the institute. “We will love to extend our tentacles and produce more than what we are producing at the moment but we do not have access to adequate funding. “We have partnered with a number of organisations, one of them is the International Water Management Institute, which is working on a project called Development of Fort-fert from excreta, market waste and sawdust,” Amenope said.

36 — Vanguard, MONDAY, AUGUST 12, 2013

Interview

Nigeria will soon be liberated S

By OCHEREOME NNANNA

ince he replaced Professor Barth Nnaji as Minister of Power, Professor Chinedu Nebo has struggled to reassure Nigerians that the steady march to stable electricity in the country will not be truncated. As a high performing university administrator, having risen to the top of the ladder in the academia, Professor Nebo affirms he is equal to the task. In this interview, he paints an inspiring picture of a seamless transfer of the power business to the private sector within the next one month. Here are the excerpts of the very exciting interview: e heard so much about what you were able to achieve as the Vice-Chancellor of the University of Nigeria, my alma mater... Are you a Lion? Wonderful.

o, what has it been like, transforming from an academic and university administrator to a federal cabinet minister? Can you describe the atmosphere in the two worlds? Of course, initially it appeared to be very daunting, simply because they are two different terrains. The ivory tower has its own norms and idiosyncrasies. But the world of politics is totally different. The language is different. The aspirations are different, and the people are totally different. To come in from the academia to the cabinet, I wouldn’t say it is a cup of tea. The good thing is that the academia prepares people for the position of leadership and that is the critical role that I have to play in the Power sector. The leadership training that I got starting from when I was a lecturer, became a professor, became a dean, became a deputy vice-chancellor and then vice-chancellor two times over. Really, it prepared me for the role of a federal level cabinet minister. It has been okay, even though one had to learn how to talk as a politician, and when you have facts to give, you have to give them in a politically correct manner so that you will not offend people you are not supposed to offend.

o, one can say that the chair has turned the other way. As an academic, you were fond of blaming people in government and now you will be blamed? That is correct. That’s very true.

eople have complained that since you took over as Minister of Power, the power supply situation has worsened. Do you think that is correct? That is a total misconception. One thing you need to know is that every year between March and May, we have the lowest water level in our rivers due to the weather situation and that reduces power delivery from the

hydros. There are a lot of system collapses. At that time when the rains come and vegetation follows, there are a lot of disruption of transmission activities, and that affects the amount of power distributed. If there is any slippage, there will be interruptions in power interfaces. There were many challenges and they are being surmounted. You can see that there already is an improvement in power supply. It is really picking up now and many cities in the country can testify that power supply is actually picking up. There are many testimonies. The most recent was in Awka. People have been jubilating that for a couple of weeks now, Awka of all places, has experienced uninterrupted power supply. Kaduna is also experiencing that. The minimum in Abuja is about 18 hours a day. Some places in Abuja are getting 22 hours a day. We are passing through a cycle that is caused by natural phenomena, and we are coming close to the end of that cycle. Power supply improvement is actually happening nationally.

hat cycle you referred to is a vicious one. It happens every year. March, April and May are about the hottest months of the year. When people need light that is when it is at the lowest. When are we going to break that vicious cycle? Actually, it will soon happen. It is something that is not far-fetched. It is a question of planning and doing the right thing. I believe that very soon, that will be a thing of the past. With more power generation coming on and the strengthening of our transmission interface, there will be a lot more dependable power supply to the citizenry. The reason why people are so uptight at such periods is because a lot of people need air conditioning. When they go to their offices and they cannot get it because power

•Professor Nebo... I believe that there should be a massive enlightenment campaign, and the media can help. In one DISCO alone, all the vandals could steal was worth N10,000. Meanwhile, they knocked one million people out of electricity supply, and it took N27 million to rectify what they vandalised for the sake of a N10,000 component is not available, they will be quite uncomfortable. But with more power generation, I am anticipating from the end of this year, and from then upwards, I believe that that will be taken care of.

re you saying that by March and April next year, the chances of breaking the vicious cycle are very high? The chances will be higher than what we have seen before.

ne of the major activities of the Ministry in recent times was the unbundling and sale of companies out of the Power Holding Company of Nigeria (PHCN). How do you describe the process and what should Nigerians expect at the end of it? The government took a very bold, courageous step to

privatise the Power sector, especially with regard to generation and distribution. It was such a bold step that many people had thought that was impossible and that was not

going to work. So far, by the grace of God, it is working and it is quite conceivable that it will do Nigeria a lot of good compared with when government provided, transmitted and distributed power. The enormous

I must be very frank with you. The union leaders have been quite good, even though they are hard nuts to crack. They bargain as hard-nosed businessmen. They want every “i” dotted and every “t” crossed. At this point, they want to get as much as possible for the people they represent. I would not say I have experienced any bad situation with them except that they are asking for too much and it goes beyond constitutional provisions

Vanguard, MONDAY, AUGUST 12, 2013 — 37

Interview

from darkness

— Prof Nebo, Power Minister

o, what is the situation between government and workers’ unions with regard to termination benefits? As at yesterday (August 1st 2013), payments started hitting their accounts. Government wants this process to be seamless. We are doing everything possible to carry everybody along. It is not always easy to get 100 per cent agreement on everything. We are paying the GENCOs first. At the end of that, we will begin to pay the DISCOs. Part of the reason is the sheer number of people and the amount involved. Nobody can do that in one fell swoop. If you do that on any economy in Africa, it will create problems. It is better to do it on a gradual basis. They are completing the final assignment of auditing the people who were biometrically captured, and all of them have confirmed that they were credited with the correct amount due them.

hen do we expect the process to end and the new owners of the privatised companies to take over? I believe that by September, many of them should be taking over.

an you describe the most trying moment you have experienced on the Labour issue? I must be very frank with you. The union leaders have been quite good, even though they are hard nuts to crack. They bargain as hard-nosed businessmen. They want every “i” dotted and every “t” crossed. At this

point, they want to get as much as possible for the people they represent. I would not say I have experienced any bad situation with them except that they are asking for too much and it goes beyond constitutional provisions. We don’t want to create precedents that will become a burden on the system. The unions are doing very well though sometimes we see them write a few things in the newspapers accusing us of one thing or the other. It is worrisome because if you are the leader of a sector and people are complaining about one thing or the other, naturally, it will affect you. Sometimes we are at daggersdrawn; sometimes we are smiling and shaking hands. It has generally been okay.

ou participated in the Ministerial Platform. What will you tell Nigerians is the achievement of President Goodluck Jonathan's administration in the Power sector since he took over? Rural electrification projects were moribund. Some previous governments even wanted to scrap them. It was President Jonathan that revived the Rural Electrification Agency in 2012 and provided funding so that rural dwellers that constitute the larger population of the country will get electricity. That is one significant achievement. Remember also that all these National Independent Power Projects (NIPP) that all of us are acclaiming, were virtually dead upon the arrival of President Jonathan. They were all stalled. Nothing was going on. Unfortunately, the Yar’ Adua government did not want to continue with it. Eventually, President Jonathan stepped it up. We are really surviving with regard to electricity supply because he revived the NIPP projects, a multi-billion dollar project altogether. This is the actual basis that we have of guaranteeing steady supply of power to Nigerians. Now, take the hydros aspect, it is the same President Jonathan who decided to go forward with it, and not dreaming and seeing visions. He proceeded to actualise them. Zungeru has been on the drawing board for 30 years. It was President Jonathan that said, let’s get on with it, found funding for it and flagged it off on 28th of May 2013. Mambilla has been on the drawing board for 40 years, it was President Jonathan who said, let’s get it going. Mambilla will give Nigeria 3,050 megawatts. Zungeru will

give us 700 megawatts. The transmission system was outdated and aging. The President injected a substantial amount of money and we are recovering what we had lost. The same thing goes for the distribution that is now being privatised. A lot of money has been spent to stabilise the grid, and he is doing this all over the country. Remember that before President Jonathan came on board, power distribution in Nigeria was in the region of 2,000 megawatts. Now, we are hitting over 4,000 megawatts, doubling capacity in only a few years. He has done so well in the Power sector and we must shake his hands.

eople are wondering, with these foreign investors coming to take over generation and distribution, what are the guarantees the poor and the rural dwellers will be able to pay for their services? How do you guarantee they do not price electricity out of their reach? That is the reason we have the Nigerian Electricity Regulatory Commission (NERC). It is supposed to protect the

amounts of capital needed to be injected into power generation, distribution and transmission is so huge that the government cannot do it alone. And when it is left in the hands of the government, and you add the factors of the system whereby not all the money that is voted to solve a problem goes into solving that problem, when you consider all this, you will know that the private sector is much better at providing these services. Government has no business doing business. Government's business is to create an enabling environment for businesses to thrive. It is these businesses that will thrive that will create jobs for the people, multiply the number of wealthy people, increase the middle class and make everybody else happier. So, the government took the right decision to privatise the Power sector. Right now, it is going very well. Just a couple of days ago, the remaining generating company (GENCO) at Afam and distributing company (DISCO) in Kaduna have been privatised. All the 10 GENCOS and five DISCOS are now in the hands of private companies. They have already paid and will soon take over. They are waiting for the completion of the engagement with the Labour unions then they will complete their payments and assume power. Everything is on course and we believe it is the best thing for Nigeria.

ou were with the President in his recent economic mission to China. What do we expect from China? Mr President undertook a state visit to China, invited by the Chinese Government. Some of us ministers accompanied him because of our various sectors involved in the bilateral agreements the two countries entered into. With regard to power, that visit to China was very liberating. Number one, Power China Corporation is coming into Nigeria to help us with gas-fired power plants to generate 20,000 megawatts. That is one quantum leap when it happens - and it will happen. When they start, it is likely to be completed within two to three years. It is something Mr President and all of us are very happy about. All the talk about Vision 202020 will be just a mirage unless we have electricity to drive the industrial and manufacturing sectors and move the Nigerian economy to the next level. And one way to do it is to engage in this kind of scheme. Power China is also planning to help raise resources to build 10,000 kilometers of super grid. We also entered into agreement with companies that are coming, at the President’s instance, to start the coal-topower power plant. They want to build a 1,200 megawatt

With regard to power, that visit to China was very liberating. Number one, Power China Corporation is coming into Nigeria to help us with gas-fired power plants to generate 20,000 megawatts. That is one quantum leap when it happens and it will happen. When they start, it is likely to be completed within two to three years

consumer as well as regulate the entire electricity industry. They are not going to allow excessive profiteering by the generating and distribution companies. I believe that it will not happen. And remember that there is R1and R2 for the very low income people. What they are charged is so little that it is not up to 30 per cent of what they will spend if they are using generators. I don’ think that is something to worry about. Remember that some of these foreign companies have their Nigerian counterparts. Most of them are actually owned by Nigerians with an injection of foreign direct investment. It is all well for everybody.

plant. Then we have the China Machinery Engineering Company ready to contribute as much as 20 to 25 per cent equity in transmission and provide funding to help us develop our transmission lines. There are many other companies that are coming to help us in our Power sector. It was a very successful outing.

iven the picture you have painted, when do we expect all these things to become reality? These things are very capitalintensive. And one of the things that delays starting of power plants is usually the funding. Whenever you see people talking about starting power

plants, they go with their financiers and lawyers because the legal framework has to be taken care of, otherwise there will be no power plants. That will probably be the thing that will delay it, but funding is being worked out so there will be no lapses. I will say, in the next few years, Nigeria will be much better off than where it is today. I don’t want to give you any time frame because “acts of God” do occur, but I don’t see that happening to set us back too much. But I will assure that there will be more than doubling of what we have today before the end of next year.

ou complained bitterly about the activities of vandals during the Ministerial Platform, but is it not the work of government to secure its own infrastructure? There is no doubt that it is the work of government. But it is the collective responsibility of all of us. Even today, I have been accosted by communities who are complaining that they don’t have light. What happened to their light? Youths vandalised the distribution network. They went to the transformers, disfigured the transformers and dismembered the transformers in order to collect some components they could sell as scrap, thus plunging the people into darkness. This happened during the oil subsidy demonstrations. One of the sub-stations in Ogun State was burnt. Now, they are complaining that they have no power. Gas pipelines are being vandalised. If you vandalise gas pipeline, there will be no gas for the generation stations to produce power. The same if you vandalise transmission lines and sub-stations. I believe that there should be a massive enlightenment campaign, and the media can help. In one DISCO alone, all the vandals could steal was worth about N10,000. Meanwhile, they knocked one million people out of electricity supply, and it took N27 million to rectify what they vandalised for the sake of a N10,000 component. Government is doing what it can, but the whole populace should be mobilised to ensure that miscreants should not be going the way they are going. When there is no electricity, there will be no companies, no industries and no jobs. Sometime ago, there was a power outage around Oshodi during a football match and some people went and vandalised a power station. For months, they were unable to watch other football matches, let alone enjoy light in their homes and offices. We must sensitise people to know that vandalisation of public amenities for any reason is not in the interest of anybody.

38 — Vanguard, MONDAY, AUGUST 12, 2013

Vanguard, MONDAY, AUGUST 12, 2013 — 39

Advertising, Media & Marketing

Outsourcing: Govt, private sector partnership & unemployment Stories by PRINCEWILL EKWUJURU

ITH Gross Domestic Product, ( G D P ) estimated at $262billion in 2012, Nigeria is the largest economy in Sub-Saharan Africa. Yet, economists say it is far from its potential even with its huge population estimated at 162.5 million people. Economist had further said that barriers to the optimal growth and development of the economy is its huge infrastructure deficiency which makes it a harsh operating environment for businesses. The harsh operating environment which is with consequencies on businesses, especially small and medium scale enterprise, explains the slow pace of its development and its high unemployment rate especially among young graduates who are supposed to make positive contributions to the economy. This, however , has caused stakeholders to continually ponder on ways of employment generation from time to time. One of the areas that have somewhat been overlooked in this regard is the outsourcing profession and proponents had insisted that Nigeria should actually become the hub of outsourcing in Africa. To achieve the benefits that abound in the sector, there is need for a partnership between government, private sector and the outsourcing sector. China and India are examples of economies that have taken outsourcing seriously and are reaping the benefits. Still in its infancy though, the outsourcing sector in Nigeria is showing promises. This was affirmed by the quality of spokespersons and attendees from multinational corporations that attended the 2013 Outsourcing Expo jointly organised by the Resource Intermediaries Limited (RIL) and the Association of Outsourcing Practitioners of Nigeria (AOPN) in Lagos. The expo turned out to be a harvest ground for ideas on how to grow the industry. Speakers at the event Seni Adetu, Managing Director,

Chief Executive Officer, Guinness Nigeria, and Soji Oyawoye, Managing Director, Resource Intermediaries Limited, among others discussed a wide range of issues that will engender growth of a globally competitive outsourcing sector in Nigeria. This was in line with the objective of the expo to make the outsourcing sector in the country achieve its potential and perhaps by extension contribute to the efforts to reduce the high rate of unemployment in the country by a significant level. However, for the sector to grow, develop and contribute to the GDP of the country like its counterparts in China and India, there is need for a strong collaborative effort between government and the industry leaders in the private sector. The role of government in this initiative, some participants contended, is to provide an enabling environment with necessary incentives that will motivate both local and foreign entrepreneurs to invest in the sector. t the expo, Oyawoye, who is one of the conveners, disclosed that professional outsourcing is new in Nigeria. According to him, companies have been contracting and calling it

outsourcing for over 30 years. He expressed concern over what he called ‘contracting’ in the name of outsourcing and urged those who are misconstruing the two to have a rethink as the two are mutually exclusive. He described it as bad signal for the young industry, while adding that in developed countries, the outsourcing profession drives the economy. In his keynote address titled ‘Outsourcing and the need for the Outsourcing Professional’, Seni Adetu, Managing Director/CEO, Guinness Nigeria, identified the benefits of outsourcing to business, urging outsourcing service providers to be professional and develop proper business strategy because the industry needs a systemic approach. He however noted that the increasingly competitive nature of the business environment has made outsourcing an imperative for companies like Guinness Nigeria, while also stressing that outsourcing has come to stay because of the need to keep pricing down. Adetu differentiated outsourcing from contracting, saying that the core reason for outsourcing is to build ‘organisational efficiencies and to grow shareholders value’.

* Mr. Yinka Adepoju, Director-General, Oyo State Signage and Advertising Agency (OYSAA) (right), receiving the Distinguished Excellence Award as Best OOH Media Regulator in Nigeria organised by Phillip Omnicom in collaboration with International Brand Association and HSBS Group recently in Lagos.

Quality responsible for Bane’s Whisky recognition—Watts

R. Andy Watts, Master Distiller of Bane’s Whisky, Africa’s first single grain whisky has said that part of the brand's success secrets that won it recent global recognition is commitment to quality production and blend of local raw materials. Watts, whose brand recently occupied the global center-stage as the world’s best grain Whisky during the World Whisky Awards ceremony held in London recently, disclosed in a statement that the maturation process adopted by his distillery in brewing the whisky was a unique process. He said the whisky is made to undergo a

double maturation process, whereby the spirit is placed in oak barrels and matured for a minimum of three years, after which the drink is revatted for additional two years before it is bottled for consumption. According to him, whiskies do not age while they are in the bottle. Rather, maturation is achieved years before bottling, stressing that “absolute skill and passion goes into each bottle of Bain’s Cape Mountain Whisky, utilizing only the finest grain and double maturation process to produce a lightly flavoured, refined spirit that can be discovered in each and every sip”

Nurses and Customers

he headline of this write-up is not a mistake. We all know that nurses take care of patients (not usually customers). Well, what’s the difference? Are patients not customers to hospitals? Before we get back to this, let’s consider a few points about the health sector in general. The health sector is one of the very few industries (apart from public utilities) where service providers assume they are superior to customers (that is, patients and their relations/friends). It seems the society had willingly accepted this thinking until lately. The reason is not far-fetched. It is not very easy to become a medical doctor, a pharmacist or even a nurse. It takes a lot of investment of time, money and effort to become one of those. And once you are fortunate enough to become one, you automatically become something of a super-human. After all, even the most powerful people on earth still need the attention of doctors and nurses. In fact, presidents could be placed under a very strict regimen by their doctors, with the able assistance of the ubiquitous nurses in immaculate white attire. So, once you’re a patient, the balance of power is tipped in favour of doctors and nurses. Well, that’s the way some people in the medical profession think and behave. But that kind of thinking is antiquated. Savvy medical people know that “the patient is king” and they do everything possible to make her happy. In fact, most doctors that I have met are very nice and kind people. The challenge they seem to have is that the nurses that work with them tend to be a little grumpy and uncaring. Maybe, many nurses are so used to death and suffering that one more corpse or suffering soul really makes little or no difference. So they cannot be bothered. Difficult Nurses A doctor I spoke to told me that he was always having difficulties with nurses because of their attitude toward patients. Apart from a few top-class hospitals, nurses generally believe they have a divine licence to talk rudely to patients, shout at them or even mock them. Someone once shared a tale of how a nurse slapped a pregnant woman in labour pains in one of the public hospitals. In addition, the cheeky nurse posed a rhetoric question at the poor lady: “Did anybody force you to be pregnant?” I guess you must have heard of similar situations. In the Surulere area of Lagos, there is a certain private hospital that has earned a nasty reputation for rebuffing relations who wish to see a patient. In fact, a particular customer was visibly fuming in anger when the nurses would not allow him to see his wife who had been in labour all through the night. One of the people who were rebuffed put it down to the quality of nurses. “The doctor is very good,” he said. “It’s just that he keeps employing unqualified nurses.” One thing I can tell you for sure is that the hospital is not the favourite of people around the area. To most people, it is a place to visit only as a last resort – in an emergency! To the public, nurses that don’t live up to their expectations are simply unqualified. Although poor customer service is more pronounced in public hospitals, the problem is also noticeable in private hospitals. If the truth be told, a lot of the nurses simply have no business working in hospitals. They lack sympathy. They lack a sense of urgency. Sometimes, they are negligent. Humanitarian Business Why are we devoting so much time and space to what nurses do? The reason is simple. Hospitals render humanitarian service to sick people. They therefore need to be humane in their dealings with their patients and their relations – both of whom constitute their customers. But then, hospitals are also businesses and should be run the way businesses are run. We must acknowledge that hospitals, by their nature, require that their customers conform to certain rules. The best hospitals give those rules a human face and communicate them in such an agreeable manner that customers themselves begin to see the benefits of such rules.

40— Vanguard, MONDAY, AUGUST 12, 2013

Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com Tel:0805 220 1997

n a recent interactive section with the House of Representatives Committee on Banking and Currency, the Governor of the Central Bank, Lamido Sanusi, noted that if the plan to redesign naira notes last year was successful, “it would have made it impossible for counterfeiters to cook”. He further noted that best practice currency management is that “Within a period of 5 – 8 years, you redesign the currency, after which counterfeiters tend to catch up with you”. The question, which we may need to ask, however, is whether counterfeiting or redesign is the most serious problem with our currency, particularly when Sanusi, himself, admits that “In terms of what we see as counterfeit in the processing of naira notes, the percentage, is very low”! Indeed, the claim that it is also best practice to redesign currency every 5 - 7 years may not be supported by the longevity of currencies such as the pound sterling and US dollar. In reality, the issues of unwieldy portability, the acrimony associated with shortage of change for small transactions, the inflationary push associated with product pricing, the rapid deterioration of both paper and polymer notes because of their high turnover rate and ultimately the reduction in the purchasing value of the naira as a result of double-digit annual inflation rate, are all equally significant challenges to the naira profile. Consequently, it will be selfdelusion to think that a mere redesign of the naira would counter or remediate these weaknesses. In this event, some analysts have suggested that redenomination/ decimalization would make the naira more portable, and also provide room for primary kobo coins, which would fill the gap for change in small transactions, and which will also make more competitive pricing of consumer products more practical. Instructively, redenomination is the simple process of changing the nominal value of a currency by moving the decimal point; for example, if the naira is restructured by two decimal points, then, N1000, which is the

Naira: redesign, redenomination or revaluation? highest in our current currency profile, will be replaced by a N10 denomination. Similarly, existing N100 note will become N1; consequently, the new N1 denomination can then be fabricated as a coin, and still have the same purchasing value as the old N100 note. In the same manner, N50 would similarly be a 50Kobo coin, while the current N10 will become 10Kobo coin. In this manner, a new redenominated currency profile, would not only accommodate the desired quality of portability, it would also increase the purchasing power of coin denominations and make them attractive for transactions and for provision of change. Furthermore, consumer products can become more competitively priced in steps of plus or minus 1Kobo, rather than the unusually wide leap of N5 or more, because of scarcity of primary coins. The advantages of redenomination may however, be short-lived, if the abiding economic instigators of inflation are not adequately tackled. For example, the Ghanaian currency, the Cedi, was redenominated with four decimal points, about five years ago, so that C10,000, became just one new Ghana cedi and consequently, became equal to almost US$1.2; however, since the root causes of Ghana’s average annual inflation rate of about 15% remained unresolved, inevitably, the cedi has depreciated by over 50% within five years to Ghc1.8=US$1. From the above discussion, it will be clear that neither redesigning nor redenomination of a currency completely satisfies the qualities of portability, store of value and acceptability, as a medium of exchange.

Conversely, I have consistently argued that the issue of value is the major problem with naira profile; for example, a much stronger naira value, just like redenomination, would make primary kobo coins more valuable. However, if the root causes of doubledigit annual inflation rate remain unresolved, the purchasing power of the redenominated naira would also be rapidly eroded. Some analysts have argued that the naira value cannot be enhanced

The advantages of redenomination may however, be short-lived, if the abiding economic instigators of inflation are not adequately tackled

or improved unless we diversify our economy and produce more to earn additional export revenue; on the other hand, a diversified economy can never evolve without liberal access to cheap funds at rates not exceeding 5 - 6%, while the exchange rate must become stronger, so that critical imported industrial raw material costs will also become cheaper. Regrettably, such benign enabling climate will never be possible, so long as Nigeria’s economy remains besieged by the unyielding threat of excess liquidity, which ultimately predicates the crazy reality of

government borrowing back its own funds at between 13 and 14%, according to CBN Governor, while cost of funds to the real sector remains disenabling at over 20%, with inflation still largely untamed. I n s t ructively, the creation or substitution of humongous naira sums as replacement for monthly allocations of dollar-derived revenue results in a conscious manipulation of the balance of demand and supply, in favour of the dollar. For this reason, the naira has paradoxically depreciated, as our dollar reserves climbed from less than $4bn in 1996 to consistently over $50bn in recent years. Thus, an appropriate realignment of the naira/dollar exchange rate will be, to issue dollar certificates for allocations of dollarderived revenue, rather than recklessly create naira replacement. The evolving market supply imbalance of more dollars chasing naira will provide a platform for a stronger naira/ dollar exchange rate in favour of the naira. In reality, there is no sensible explanation why the naira should exchange for N80=$1 between 1996 and 1998 with only four months imports demand cover, while the naira currently exchanges for N160=$1 in spite of over 12 months imports demand cover. A much stronger naira will ultimately also make primary Kobo coins more valuable and therefore more desirable for transactions. In conclusion, therefore, an appropriate naira/dollar price mechanism will evolve a currency profile that will become a stable store of value, which is also portable enough to be readily accepted as a medium of exchange. Neither currency redesign nor redenomination can enduringly accommodate these values and remain steadfast against inflation.

SAVE THE NAIRA, SAVE NIGERIANS!!

Business & Economy

Oil price rally lures investors back to energy ETPs in July A

strong rally in the price of U.S. crude in July coupled with a general improvement in the American economy has encouraged investors to return to energy exchange traded products (ETPs) after several months of outflows. Some $142 million was invested in energy ETPs in July, according to data from BlackRock, the world’s biggest asset manager. This follows outflows of $90 million in June, $48 million in May, $89 million in April and $423 million in March. By contrast, some $2.6 billion was withdrawn from gold ETPs in July while industrial metals ETPs lost $157 million. ETPs, whose value is linked to moves in their

underlying assets, are an easy route into commodities for investors and allow asset managers to make swift tactical switches. “Generally investors have been cautious on commodities due to the poor performance but energy has bucked the overall trend and done quite well,” said Russ Koesterich, chief investment strategist at BlackRock. He said energy had held up better than industrial metals because these tend to be more influenced by Chinese demand, and China’s economy has been slowing. “But energy is still very driven by the U.S. economy and while it is not growing at gangbuster rates, we are seeing a gradual improvement.”

On the supply side, he cited the unexpectedly large drawdowns in U.S. crude oil inventories at delivery hub Cushing, Oklahoma in July, with strong demand from U.S. refineries. This kickstarted a rally in U.S. crude oil futures that saw prices rise by almost $9 a barrel in the month, to end July at more than $105 a barrel. The S&P GSCI Energy index was also up 7.1 percent in July. “There has also been a lot of production coming offline in the Middle East and Africa, in Nigeria and Libya, and a significant reduction in Iranian exports, so there has been more of a bid in the energy complex than other parts of the commodity sector,” Koesterich said.

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