Financial Vanguard

MAY 26, 2014

MEETING: Co-ordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala flanked on the right by the Managing Director/Chief Executive Officer, Fidelity Bank Plc, Nnamdi Okonkwo, Managing Director, UBA Capital, Mrs. Toyin Sani and President, South-East/South-South Professionals of Nigeria, Emeka Ugwu-Oju at the ongoing African Development Bank (AfDB) meeting in Kigali, Rwanda.

AMCON: Stakeholders bicker over lifespan, performance

unmet debt obligations of AMCON that need refinancing will threaten government’s fiscal operations. At inception, AMCON’s debt is the equivalent of 56.53 per cent of national debt of N10.04 trillion as at December 2013. In reality, gross national debt should include AMCON’s outstanding, and that is huge risk and a threat to sustainable growth.”

On AMCON’s lifespan which was increased by another 10 years by the National Assembly recently, he noted that, “An AMCON continuing in operation in perpetuity is great inefficiency and a waste of taxpayers’ funds, as it will continue to incur high carrying cost from high operational costs as well as from the erosion in the value of assets not disposed and restructured over time. The other worry here is the ‘moral hazard’ whereby continuing existence of AMCON would send a wrong signal to the banks to book loans that can always be sold to AMCON if the loans become deficient.”

He further noted that, “A poorly designed and implemented exit strategy for AMCON can be injurious to the economy. AMCON’s outstanding credit estimated at N3.9 trillion is about 4.86 per cent of Nigeria’s rebased GDP at N80.22 Continues on page 18

zAMCON’s debt is liability to government, says Adedipe zNo, AMCON’s guarantees not public debt, byChike-Obi

BY JONAH NWOKPOKU

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takeholders in the financial sector have raised questions over the effectiveness and success recorded by the Asset Management Corporation of Nigeria, AMCON in its debt recovery efforts since it was set up in 2009. They also argued among other things, against the Act increasing the lifespan of the corporation and AMCON’s increasing role of assuming non-performing loans.

Dr. Biodun Adedipe, a financial expert, said since AMCON was established to stabilize the financial C M Y K

system by restoring confidence in the financial services sector following the financial crisis, it has become imperative to appraise its impact on the nation’s economy.

Delivering a paper entitled: The impact of AMCON on the Nigerian economy, at a symposium organised recently by Bank Directors Association of Nigeria, BDAN in Lagos, he said that AMCON’s debt is a contingent liability to the government, since AMCON’s bonds are backed by the Federal Government of Nigeria (FGN), which implies that in the event of a default, the government will have to settle AMCON’s creditors. In that case, the

Federal Government would issue bonds to refinance AMCON’s debt, making AMCON’s debt a “contingent” liability to the government.

He explained that, “Given the country ’s increasing debt stock, a default by AMCON on its debt obligations will exert more pressure on Federal Government finances. If the government defaults, this will adversely affect investor confidence on Nigeria’s bond market.

“Nigeria’s fiscal framework is characterized by deficit budgets, high infrastructure deficit, high dependence on crude oil, low level of non-oil exports and low non-oil revenue,

-10.15

184.0

+8.00

2,915.00

17.87

-0.33

109.79

+0.70

102.08 +0.58 CURRENCY BUYING US DOLLAR POUNDS EURO FRANC YEN CFA WAUA YUAN RIYAL

154.73 260.0702 211.8873 173.4836 1.525 0.3032 237.8816 24.8206 41.2558

CENTRAL SELLING 155.23 260.9106 212.572 174.0442 1.53 0.3132 238.6503 24.901 41.3891

155.73 261.751 213.2567 174.6048 1.5349 0.3232 239.419 24.982 41.5225

KRONA

28.382

28.4737

28.5654

SDR

239.0579

239.8304

240.6029

CBN Exchange rate as at 23/05/2014

18 — Vanguard, MONDAY, MAY 26, 2014

Cover Story

Developing Entrepreneurial Spirit in Nigeria - Part 1

MoU SIGNING: MD/CEO, CMB Building Maintenance and Investment Company Limited, Mr. Kelechukwu Mbagwu exchanging pleasantries with the President, Fidelity Multi-Purpose Cooperative Society, Mr Chima Igboenyesi, during the signing of CMB Development Memorandum of Understanding with the Fidelity Bank Cooperative Society in Lagos on Wednesday.

AMCON: Stakeholders bicker over lifespan, performance Continued from page 17

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trillion, and this could be a source of macroeconomic instability and influence adversely, Nigeria’s subsequent sovereign ratings. A downgrade of the country will not augur well for the newly acquired status of ‘frontier economy.'

He further added that, “The proposal for the AMCON Amendment Act 2013 to make the banks bear the cost of intervention is an aberration that, when properly interpreted, means simply that AMCON bought over NPLs at a discount (banks took the loss on that) and negotiated restructuring terms that possibly included interest (and perhaps principal) forgiveness with the ‘bad debtors’, and will now make the banks contribute to the Sinking Fund that will pay the cost of AMCON’s intervention. The summary is that the borrowers in question ended up getting away with whatever discount AMCON obtained from the banks and the discount they subsequently obtained from AMCON! There is no successful ‘bad bank’ model that worked with this arrangement!”

He recommended that if AMCON is to successfully deliver its mandate, it must have a well defined lifespan.

“AMCON was conceived to operate for 10 years, but the enabling Act gave it life in perpetual succession. This is a departure from global best practices and should be a key issue in the ongoing effort at amendment of its Act. The

Continuing contribution of banks to this fund is an aberration that brings back almost the entire cost of intervention back on the banks

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only distress resolution asset management company that has continuing life is NAMA of Ireland whose mandate is completely wider in scope than that of AMCON,” he said.

He said AMCON should pursue a clear mandate and that since its mandate on the types of assets to be acquired and resolution methods are clear to some extent, it should not engage in running a business taken over, except perhaps such business is placed on receivership.

He said: “AMCON doesn’t seem to have its mandate defined in terms of clear, time-bound metrics that indicate the percentage resolutions over specific time periods. Such targets should aim at volumes in absolute and relative terms for disposal of the acquired assets. As well, there should be an end-

term target cost of resolution that is either linked to the value invested in NPL acquisition by AMCON or as percentage of GDP. This should apply also to return on investments made by AMCON. That is the only way to measure the efficiency and effectiveness of the ‘bad bank’ crisis resolution model.

On the Sinking Fund, he said, “Continuing contribution of banks to this fund is an aberration that brings back almost the entire cost of intervention back on the banks. He added that, “The AMCON Act needs amendment that the National Assembly should expedite action on in order to achieve quicker resolution and higher recoveries. More bite given to AMCON will enable the corporation prosecute recalcitrant borrowers who have the attitude that bank loans are shares of the national cake.”

He said, “As structured today and as it operates, AMCON cannot deliver its mandate effectively and efficiently, and that will vitiate the impact it is expected to have on the banking industry on the one hand, and the national economy on the other.”

However, in a swift reaction, AMCON’s chief Executive Officer, Mr. Mustafa Chike-Obi who was also present at the event, said operations of the corporation have not drained public funds and

Continues on page 19

scale ventures, did little to curb unemployment. The failure or even inadequate success of these measures is attributed primarily to disregard or ignorance of ground realities, and lack of a coherent, consistent, macrolevel vision.

Nigeria’s unique set of problems calls for broadbased policy intervention from the bottom up, and any individual law or policy that is not part of a unified effort is unlikely to make much difference. The ‘bottom up’ analogy is pertinent, as one of the first things Nigeria ought to be doing is

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recent collection of essays on entrepreneurial innovation in developing economies, titled Lessons from the Poor, mentions an aspect of Nigerian clothing design.

Examining the traditional adire dye industry, author Thompson Ayodele informs that the bottom 19 per cent of entrepreneurs polled for the study earned more than state and federal civil servants. For the purpose of this essay, the story is significant in more ways than one. First, it is a classic instance of entrepreneurial spirit, describing the transformation of an established Yoruba craft into a venture for wealth creation and employment generation.

Second, and perhaps only in between lines, it reflects a measure of the serious imbalances that plague Nigeria’s economy.

Africa’s second largest economy is a bundle of extreme contradictions; with billions of dollars in annual oil revenue on one end and pervasive poverty for most of its 148 million people on the other.

Relative political stability since 1999 has delivered some reform and regulatory initiatives to correct huge and longstanding macroeconomic disparities, yet the country remains overwhelmed by persistently dismal indicators and human development indices. Nigeria’s current per capita GDP of $1,501.72 ranks it below much smaller African economies like Sudan, Congo and Swaziland. The latest UNDP poverty survey of 108 developing nationsthplaced the country at the 80 position, below Rwanda and Malawi.

Achieving the UN Millennium Development Goals and its own more ambitious 2020 target require a paradigm shift in mindset and priorities. It also requires the successful engendering of a broad, panNigerian entrepreneurial spirit!

A slew of relevant policy redirections have already been initiated in this regard: The government has deregulated oil prices, disinvested public sector undertakings, created special economic zones and passed assorted legislation to encourage enterprise development. While some of these measures are starting to show positive results, many have been largely ineffective while yet others have completely collapsed. For instance, a massive privatisation drive launched after 1999 managed to rake up private sector investment.

However, Abuja’s simultaneous inclination for microenterprises, instead of small-

Nigeria’s unique set of problems calls for broad-based policy intervention from the bottom up, and any individual law or policy that is not part of a unified effort is unlikely to make much difference

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improving the condition of its roads.

The business environment in the whole of Africa is crippled with massive infrastructure shortfalls that result in the continent’s high enterprise mortality rate.

Significantly, the rate of failure affects older and new entrants alike. A leading cause is almost always infrastructure deficits that critically hamper genuine economic growth and productivity.

Since 2008 the government has began to show the political will to implement the market-oriented reforms urged by the IMF such as modernizing the banking system, curbing inflation by blocking excessive wage demands, and resolving regional dispute over the distribution of earnings from the oil industry. GOP rose strongly in 2007-10 because of increased in oil exports and high global crude oil prices.

Nigeria likewise suffers from endemic infrastructural woes with regards to roads, communication and especially power (small and large businesses alike across the country rely heavily, and at times exclusively, on

Vanguard, MONDAY, MAY 26, 2014 — 19

Cover Story

CBN against the government and many Nigerians doubted the credibility of data coming out of the CBN. This lack of trust between the apex bank and the Federal Government has to be bridged through an open and transparent dealing

Tough task ahead for Emefiele at CBN between the bank and government.

Godwin Emefiele is a very reserved and conservative person.

His style must be open and transparent. He should steer the bank away from the past controversies which were mainly political in nature. The new CBN governor must draw a distinction between the core mandate of the CBN and what is political. He should take his cue from Joseph Sanusi, whose reform of the banking system was profound but was not conducted through press conferences but through a fair and firm decision-making process. CBN had in the past maintained a professional posture which allowed it to act professionally without dabbling into politics. What Emefiele should do is ensure that the CBN top and middle management are highly professionalized. He must forge a close tie with the Deputy Governors, and policy coming from each must be properly scrutinized. He should carry along the management staff of the bank in decision-making and avoid the temptation of doing it alone.

One area that may prove difficult for the new governor is staff audit. The CBN was in the past manned by competent and qualified economists and accountants who could face up to professionals in the banking industry. The Research and Banking Supervision unit of the apex bank was very thorough in recruitment and

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rd hen on the 3 of June, 2014 Mr. Godwin Emefiele formally assumes office as the CBN Governor, he will be confronted with several nagging issues which he needs to resolve fast if he is to succeed as CBN governor. Many of the issues are like landmines which require both native intelligence and God’s guidance to handle.

He must, as a matter of urgency, attempt to restore both local and foreign confidence in the bank. Many Nigerians lost confidence in the bank as a result of the controversial banking reforms in which the CBN told investors it was out to protect depositors and investors can go to hell. Local and foreign investors got worried, especially when some unguarded utterances led to the erosion of capital in the nation’s stock market. Many investors have not forgotten so soon.

In recent times, the lack of proper co-ordination of facts and figures coming out of the apex bank simply ridiculed the institution. It is now evident that some figures quoted by the former CBN governor were never compiled by the CBN; they were more political than real. The CBN has never faced such turbulence in recent times. For whatever it will take, Emefiele must ensure that every of his utterances is to assure both local and foreign investors just as well as depositors. The Governor must ensure that accurate data are fed to the public. All departments of the apex bank must cross-check data before they are issued out.

Investors in Nigeria were not surprised when former central bank governor was suspended in February.

Before the suspension, he had succeeded in polarizing the bank. He distanced the bank from government by alleging that $49.8 billion was unremitted and later changed it to $10 before making it up to $20 billion. This pitched the

One area that may prove difficult for the new governor is staff audit. The CBN was in the past manned by competent and qualified economists and accountants who could face up to professionals in the banking industry

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staffing. This is not the case today. In the last five years, the morale of many professionals in the bank had been dampened by appointments of persons from outside the bank that were neither qualified nor competent to head units. Such individuals, political appointees most of whom are either sons or daughters of political heavy weights or surrogates of former governors, are now in top positions in the bank.

These appointments were made without complying with CBN's due process and most unfortunately, those appointed were made to head units they are not qualified to superintend over. This brought a lot of discontent and disaffection in the apex bank.

The new governor is certainly inheriting a baggage of discontented staff whose loyalty and performance will depend on how he will quickly address this anomaly. It will be a tough way to go but for him to succeed, he must act fast and timely to raise the morale of the CBN staff.

Mr. Emefiele’s task also will be to convince investors and bankers that he is his own man, not just another political appointee. That Mr. Emefiele is a respected figure in Nigerian banking will help.

He became Zenith’s chief executive in 2010, having been deputy head from 2001.

Under him, the bank has performed strongly. Its 2013 pre-tax profit of $680m was the biggest ever made by a Nigerian bank and amounted to a high return on equity of 23 per cent.

Zenith from where Emefiele is coming has a reputation for investing heavily in technology and good customer service compared with rivals.

The expectation is that Mr. Emefiele will carry this culture of investing heavily in technology and good customer service to CBN. He should complement this with staff training and re-training.

He must see his role as a manager of the economy and not a crusader. He should ensure that monetary and fiscal policies are in harmony to ensure proper management of the economy. He should

develop strategies that would tap into the idle cash in the informal sector by deliberately encouraging the formalization of the informal sector. The CBN under Emefiele should not be one that pursues low inflation at the expense of job creation. It is when there is availability of credit that investors can borrow to create wealth and job opportunities.

He should make CBN policies to be focused on development banking that will encourage small and medium enterprises to grow the economy.

Emefiele must not see the independence of the CBN as that of a sovereign within a sovereign state. He should learn to make the CBN a banker to the government and from time to time as it was the practice of the apex bank, offer professional advice to the President. The CBN must be insulated from political influence.

To put paid to the ever recurring dispute on flows into the federation account, Emefiele should bring together all revenue-generating agencies to reconcile the federation account. This should be published on a monthly basis.

Mr. Emefiele must know from the very beginning that the world will scrutinise his early actions to get a sense of whether the central bank’s policies will change under his leadership. This will be especially important in the run up to presidential elections in 2015, with the likelihood of extra government spending putting the naira under pressure.

Mr. Emefiele should ensure that the central bank coordinates its policies closely with fiscal authorities.

Notwithstanding CBN’s independence, it must walk in line with government policy.

Monetary and fiscal policies must walk hand in hand for the growth of the economy.

AMCON: Stakeholders bicker over lifespan, performance Continued from page 18 that it intends to pay whatever money it had borrowed.

According to him, “It is not correct that there has been N3.17 trillion of tax payers’ money injected into the banking system. So far, tax payers’ money that has been paid into the banking system is N10bn. The rest of the money is funds that we have borrowed and we intend to pay back. So it is premature to say that N3.17 trillion has been

injected into the banks.”

On how long AMCON should exist, he said, “The impression that asset management corporations all over the world ended their operations within a certain period of time is misleading. I need to point out that the scope of the Nigerian banking crisis was bigger in terms of GDP than any of the countries that had combated financial crisis through an asset management company.

Nigeria is the biggest case where you have the biggest airline in trouble, eight of the 10 largest manufacturers in trouble, many of the petroleum companies in trouble, many of the banks in trouble and the scope of the problem would not be addressed in the same way you would address a localised real estate problem.”

On the corporation’s debt, Chike-Obi said, "AMCON has guarantees which cannot be considered as debt by any

standard. He mentioned that AMCON’s debt is equivalent of 56 per cent of national GDP. At this point, let me say that we have had discussions with several agencies in the world.

America for example has $1.3 trillion of public debt and about $18 trillion of guarantees.

Guarantees are not considered anywhere in the world as part of public debt except where there is no clear path for repayment. So, in the case of AMCON where we have

shown the regulatory agencies the clear path to repayment, it is not considered as public debt. We have had discussions and all written agencies including IMF have agreed that AMCON’s liabilities should not be part of the GDP.” He further explained that, “the plan for AMCON is 10 years for now. In 2023, we expect AMCON to be a very

Continues on Page 21 C M Y K

20 — Vanguard, MONDAY, MAY 26, 2014

Business & Economy

Fowler cites over N20b monthly IGR as legacy

BY FRANKLIN ALLI

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r. Babatunde Fowler, executive chairman of Lagos State Board of Internal Revenue has pointed to the state’s monthly internally generated revenue now peaking at N20.5 billion as his administration’s legacy.

Lagos Internal Revenue Service (LIRS) is the major revenue generating agency of the state government saddled with the responsibility of collecting taxes.

Over the years, LIRS has increased the state’s Internally Generated Revenue (IGR) from a monthly average of N600 million in 1999 to N3.6 billion in 2006 and N20.5 billion in 2013, thereby making the state less dependent on proceeds from the Federation Account.

Fowler who hinted to newsmen that he might soon retire from the service, said: “I can’t be here forever; people should know that a time would come and I have to quit. Very soon, I will be knocking the 10- year period and I think at that point in time, it is time to step aside and let somebody else come in."

SMEs need to leverage technology for growth —LEAP

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he Small and Medium Scale Enterprises, SMEs in Nigeria have been tasked to embrace modern technology in order to achieve meaningful growth that will provide employment and contribute to the economic development of the nation.

The Board Chairperson of Leadership, Effectiveness, Accountability and Professionalism, (LEAP) Africa and Managing Director, Shell Nigeria C l o s e d - P e n s i o n Administrator Fund, Mrs. Yemisi Ayeni, who gave the advice to business owners, stressed the need to embrace technology especially given the increasing internet penetration and social media activity in Nigeria.

According to her: “Any business owner wanting their business to transit to the next generation has no choice but to use technology effectively.

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ECOWAS set to implement strategy on maritime security

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COWAS is set to i m p l e m e n t the provisions of its maritime security strategy along with other regional economic communities in the continent, an official said on Thursday.

Mr. Mohammed Tukur, the Maritime Safety and Security Officer in ECOWAS Regional Security Division, disclosed this in an interview in Abuja. Tukur, who spoke on the sideline of an international conference on African Approaches to Maritime Security, said the conference would enable stakeholders formulate legal documents on maritime security.

“The Yaoundé summit on maritime security came up with the Yaoundé Declaration. The AU also has the 2050 Africa’s Integrated Maritime Strategy. ECOWAS too has adopted the ECOWAS Integrated Maritime Strategy (EIMS).

We have these strategic frameworks in line with the UN Security Council (UNSC) Resolutions 2018 and 2039 on acts of piracy and armed robbery at sea off the coast of the states of the Gulf of Guinea.

“Operationalising these strategies will be done step by step and the AU will rely on the regional economic

OGUN INVESTMENT SUMMIT: From left: Mr. Olawale Oshinowo, D-G Lands, Ogun State, Rasak Aboyeji, Regional Business Executive, South-West 2, Sterling Bank Plc and Mrs Kemi Adeosun, Finance Commissioner, Ogun State at the state's Investment Forum in Abeokuta. communities for implementation.”

He said the EIMS adopted in March would ensure a holistic maritime policy framework for action and cooperation within West Africa.

Tukur said it would also strengthen collaboration with other African regional bodies.

He said the development of an Integrated Maritime Strategy between ECOWAS

and the Gulf of Guinea Commission was ongoing.

The official added that the outcomes of the Yaoundé Summit were steps towards inter-regional cooperation to tackle challenges to maritime security. He said the community ’s membercountries had begun the implementation of ECOWAS Pilot Model Zone E within the framework of the EIMS.

FG targets $558.1bn GDP in 5 years —Aganga

BY FAVOUR NNABUGWU

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he Federal Government has said that the implementation of the National Quality Infrastructure Policy, NQIP, which would serve as support to the Nigerian Industry Revolution Plan will help to grow the country’s Gross Domestic Product to $558.45bnwithin the next five years.

The Minister of Industry, Trade and Investment, Mr. Olusegun Aganga made this known while speaking at the second meeting of the National Steering Committee for the Nigerian National Quality Policy in Abuja on Tuesday. Aganga who said the country’s GDP would rise from N510bn to N558.5bn in five years' time

explained that the purpose of the meeting was to discuss in plenary, the progress so far made by the different subcommittees which were constituted during the inaugural meeting of January 27, 2013 and this year.

“With National Quality Infrastructure in place, a skyrocketed increase is anticipated from our GDP from $510bn in 2013 to $558.45bn, a 10 per cent growth within the first fiveyear implementation period.

The Minister was optimistic that with an increase in the contribution of the services sector from the previous 26 per cent to 51 per cent, all energy of the government would be channelled to fast track the early take off of the NQIP. Dr. Aganga said this quality policy which would enhance

Nigeria’s reputation as a provider of quality products and services in the global market will also give credence to the commitment of the World Trade Organisation, WTO, by the signing of the agreement on Trade Facilitation which was signed th at the 9 Ministerial Conference in Bali, Indonesia in December, 2013.

The minister who was represented at the event by the National President, National Association of Small and Medium Enterprises, Alh Ibrahim Garba, said the national policy would seek to stop the conflicts that might arise as a result of duplication of mandates.

“We must join hands and see this assignment as a step towards creating an enabling environment for the public and private sectors to achieve global excellence in the quality of goods and services

Tukur recalled that Nigeria and Benin signed a bilateral agreement for combined patrols to combat piracy in 2011. “This has served as a model for the implementation of the Pilot Model Zone E project,” he said.

The ECOWAS official said countries within the project include Nigeria, Benin, Togo and Niger, and that other projects would be launched to accommodate all memberstates.

“Ghana, Cote d’Ivoire, Liberia, Sierra Leone will comprise Zone F, and the final zone, Zone G, will include Gambia, Cape Verde, Senegal and Guinea Bissau.”

Though the official did not say how much funding would be required, he however said it would be a collective effort of the commission and memberstates.

“It is an expensive, herculean task which involves maritime domain awareness and having surveillance equipment to ensure we have an effective response mechanism. And by the time the regional maritime strategy between ECOWAS and Economic Community of Central African States, (ECCAS) is established, we will have a perfect structure, while the countries would have acquired the necessary experience.”

Also speaking, Mr Felix Henkel, Abuja Regional Office Co-ordinator, Friedrich Ebert Stiftung Foundation, said there was the need for enhanced civil society awareness on ways to tackle threats to maritime security.

Vanguard, MONDAY, MAY 26, 2014 — 21

Business & Economy

BY BABAJIDE KOMOLAFE

Cultural entrepreneurship economy will guarantee development —Duke

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he Central Bank of Nigeria (CBN) has liberalised the conditions for accessing the N200 billion Commercial Agricultural Credit Scheme (CACS).

In a circular released weekend, the CBN announced extension of the tenure of the scheme to 2025, and revised guidelines for its operations.

Previously, loans obtained under the scheme must be repaid within seven years. The CBN under the revised guidelines removed this limit, saying loan repayment period would be determined by the gestation period of the agricultural project being financed.

“Loans shall have a maximum tenure based on the gestation period of the enterprise plus three years cash flow allowance and /or working capital facility of one year with provision for roll over. The scheme allows for moratorium in the loan repayment schedule taking into consideration, the gestation period of the enterprise,” the guidelines stated.

Also to allow more agricultural firms to obtain loan through the scheme, the CBN reduced the minimum asset base criteria for corporate borrowers. Previously, only agric firms with asset base of N350 million and above with the prospect to grow the net asset to N500 million in the next three years, can obtain loan through the scheme.

These criteria were, however, relaxed under the new guidelines to N100 million and above with prospect to grow the net asset to N250 million in the next three years.

BY CALEB AYANSINA INISTER of Tourism, M Culture and National Orientation, High

AWARD: From left, Permanent Secretary, Ministry of Community Development and Co-operatives, Ogun State, Mrs. Yemi Olanrewaju; Area Sales Manager, Consolidated Breweries Plc, Mr. Ayoola Sodipo; and Commissioner, Ministry of Community Development and Co-operatives, Ogun State, Chief Samuel Duro Aiyedogbon, during the presentation of the Most Community Friendly Co-operative Organisation of the Year Award to Consolidated Breweries, in Abeokuta, Ogun State.

CBN liberalises access to N200bn agric credit scheme zExtends tenure to 2025 The CBN, however, limited the loan that banks can grant to a single project to N2 billion per bank. “The single obligor for any project from a participating bank under the scheme shall be N2.0 billion while for state governments shall be N1.0 billion.”

The Commercial Agricultural Credit Scheme (CACS) was introduced in 2009 in response to yearnings for long-term credit to farmers at low interest rate. According to the CBN, the scheme was established: to fast track development of the agricultural sector of the

Nigerian economy by providing credit facilities to commercial agricultural enterprises at a single digit interest rate; to enhance national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting low food inflation.

"To reduce the cost of credit in agricultural production to enable farmers exploit the potentials of the sector; To increase output, generate employment, diversify the revenue base, increase foreign

exchange earnings and provide input for the industrial sector on a sustainable basis."

The CBN in its 2013 half year report said that, “As at endJune 2013, N199.37 had been disbursed to 273 projects. In the review period, the sum of N16.3 billion was released to eight (8) DMBs for on-lending to nineteen (19) projects under the CACS. An analysis of the number of projects financed showed that processing accounted for 52.6 per cent, while production and marketing accounted for 36.9 and 10.5 per cent, respectively.

Chief Edem Duke has emphasized that it is only cultural entrepreneurship economy that could guarantee development in Nigeria. Duke said this in Abuja during the celebration of the 2014 World Culture Day and the launching of UNESCO Club for global Education.

He noted that the role of culture in the development of a society cannot be overemphasized, and that, if well exploited, it will bring about growth and development.

According to him, this year ’s theme which is Cultural Entrepreneurship development in Nigeria, will draw attention to cultural diversity, cultural pluralism as well as other principles and values.

He said: “The fundamental essence of the day is rooted in the three pillars of cultural diversity, dialogue and development. These three pillars are seen as sine qua non for global peace, cooperation and understanding, which are essential ingredients for political and social stability in the world. The world is diverse with peoples from every nation and culture inter-mingling and engaging in political, technological, economic and social activities."

Cover Story

AMCON: Stakeholders bicker over lifespan, performance Continued from page 19 small entity. The reason why we said 10 years and not five years is because for example, we hold about N300 billion of public stocks and the average trading volume is five billion a day. So if you must sell it at the average of 2.5 billion a day, it will take many years to sell all the shares. So we take longer time frame so that we can dispose of these shares.

“The same thing goes with aircraft, airlines, manufacturing companies, tank farms. I think we are in possession of 80 per cent of tank farm capacity and any attempt to dispose of them in any rash manner, will lead to the exact crisis you are trying to solve. So we do not plan for perpetuity, we plan for 10

years and we hope that by then AMCON will remain a very small entity that may be domiciled at NDIC or somewhere else so that it will be better for future crises.”

On whether AMCON’s debts and lifespan constitute a moral hazard, he argued that, “for a bank to sell any loan to AMCON means the bank has to take the provision, it has to take the huge loss, and the average purchase price is about 40 per cent of the cost of loan. I don’t know of any banker, who has made the loan and says because AMCON is there, I am going to make the loan where I am going to make 60 per cent. The issue of moral hazards does not arise because AMCON prices very diligently.

Additionally, the issue of how long AMCON would remain is not a moral hazard; the issue is how efficiently it will dispose of what it has.”

He said that “the banks' bearing of the cost of the loan is the nicest thing Nigeria has done and I think that the world has been emulating them. The beneficiaries of AMCON are the banks. The banks, even before the tight monetary policies and the CBN Cash Reserve Ratio and other regulations, were making profits. I will challenge any bank that was doing better before AMCON and is now being penalised by paying 50 basis points to come up and show me the numbers.

I think it is a responsible thing for the beneficiaries of the

intervention to pay for it. This is also to make the banks realise that in case of any future occurrence, it would be borne by them.”

On his part, the president of BDAN, Olorogun (Dr.) Sonny Kuku said it was imperative that AMCON’s performance is being appraised since the aim of setting it up in the first place was to stabilise the economy which was on the brink of total collapse.

He said: “If you look at the Nigerian economy, it has been centered on financial institutions, and the financial institutions drive the economy. The intervention of the CBN was crucial and a major instrument that the CBN used to stabilise the economy was AMCON. So it

is imperative that after five years, the effect of AMCON on the economy should be reviewed. It is a very delicate subject because if after today we had found out that AMCON failed, it means that a lot of thinking that went to it was faulty. But as we have seen today, it is an entirely different story and this is to say that at least, one aspect of government has done very well. You see, as bank directors, we were directly affected and if those loans were not taken off our books, we will still be struggling today to try and fulfill our obligations."

On AMCON’s 0.5 per cent interest rates that shareholders are conteding, Continues on Page 32

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22 — Vanguard, MONDAY, MAY 26, 2014

Banking & Finance

BY BABAJIDE KOMOLAFE

A

rrangements have been concluded for business owners in the category of small and medium scale enterprises to improve their capacity for business development and growth with a capacity building programme known as SME Financial Forum. The second edition of the Forum is scheduled to hold in Lagos on Tuesday June 3rd.

The forum is organized by SME Business Platform which hosts Small and Medium Enterprises (SME) Live radio programme in association with the telecom giant, MTN Nigeria, on Inspiration 92.3FM in the past two years.

The organizers of the event in a statement said the Forum would bring together all the key stakeholders in the Small and Medium Enterprise subsector of the economy to brainstorm and network to get the best option for financing businesses in the SME categories.

EMP sponsors African Banker Awards

E

merging Markets Payments (EMP), an electronic payments processing company in the Middle East and Africa (MEA), recently participated as a sponsor at the African Banker Awards.

EMP has been sponsoring the regional awards ceremony for several years, with this time being the first as the Platinum sponsor. During the event, EMP Chairman Paul Edwards had the honour of presenting the award for African Bank of the Year to Guaranty Trust Bank Plc. In addition, EMP showcased its cutting edge innovations and vision for advancing the payment card industry at the annual event which took place in Kigali, Rwanda.

“Supporting the development of the payments industry is one of EMP’s key objectives and we work closely with our partners in order to do so,” said Paul Edwards, Chairman of EMP. “Sponsoring an event such as the African Banker Awards provides us with a great opportunity to continue to support the industry through a platform that recognizes the talent, determination and innovation that is moving the industry forward.”

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he Central Bank of Nigeria (CBN) has simplified ownership of bank accounts by creating three types of accounts through the Tiered Know Your Customer (KYC). The aim is to make financial services easily accessible to more Nigerians.

The Lower Level Account and Middle Level Account are both savings and can be opened on behalf of the owner by a bank agent from outside the bank. While the Middle Level Account requires documentation and verification of the customer’s identity, the Lower Lever Account does not require documentation or verification of customer’s identity. The objective is to make it easy for people to own a bank account. But to balance the objective of financial inclusion and the need to ensure the accounts are not used for money laundering, the CBN imposed transaction limits on these accounts.

However there have been concerns about the challenges of operating these accounts vis-a-vis the transaction limits, verification of documents, and impact on banks’ operations.

Transaction limits (Threshold) Without any doubt there would be occasions when the customer may exceed the transaction limit. It could either be deliberate or not. For example, in the case of the Lower Level Account (LLA), the customer can make a single deposit that exceed the N20,000 limit for single deposit, or he may make a deposit that makes his cumulative balance to exceed the N200,000 limit.

Furthermore, a third party can transfer money into his account, say, N50, 000, which exceeds the N20, 000 limits for single transaction. Also, he may have a cumulative balance of N185, 000, and a third party transfers N20, 000 into the account, thus increasing the balance to N205, 000, which exceeds the regulatory limit. In these circumstances what should the bank do?

Should the bank close the account, upgrade the customer to the next level account, which requires documentation and verification?

According to the CBN, customers that exceed the

MoU SIGNING: From left: Lee Zak, Director, United States Trade and Development Agency (USTDA); Dr Teddy Ngu, Head, Corporate Development and Investment, Honeywell Group; during the MoU signing ceremony of the Sagamu Independent Power Project in Lagos.

FINANCIAL INCLUSION: Challenges of bank ownership simplification transaction limit should not be allowed to withdraw from the account, irrespective of the reason for exceeding the limit. Such customers should be moved to the next level account, and he/she must

,

MTN, Microsoft, Ecobank drive SME Financial Forum

Customers that exceed the transaction limit should not be allowed to withdraw from the account, irrespective of the reason for exceeding the limit

satisfy the documentation requirements of the next level account. But if the customer is unable to provide the required documentation, he/ she should be advised to operate the account within the limit, and should not be allowed to withdraw from the account beyond the cumulative balance. This implies that if the cumulative balance rises to N205, 000, the customer would not be allowed to withdraw more than the N200, 000, which is the limit.

T

on daily transaction or on cumulative balance. The customer can still operate the account, by making deposits.

But he or she cannot withdraw from the account.

The ideal thing for the

he CBN also made it clear that banks are not to reject deposits or transfer in excess of the limit on single deposit, either by the account holder or third parties. Also banks cannot close the account because it exceeded the limit

,

customer especially those on LLA, is that, immediately they open the bank account, they should begin the process of obtaining documentation to move to the next level (MLA), such that whenever they exceed the daily transaction limit or the cumulative balance, they can easily upgrade to the next level, and hence be able to withdraw their money. According to the CBN, the customer can operate more than one of these three types of accounts.

In other words, you can upgrade to the next level while still enjoying the lower level account, but within its transaction limits.

Verification of documentation The Medium Level Accounts

(MLA) and High Level Accounts (HLA) require documentation which must be verified by the banks. The acceptable documentation to ascertain the identity of the individual is National Identity card (issued by Nigeria Identity Management Commission), Drivers License (by Federal Road Safety Corp) and Voters card (by Independent National Electoral Commission. Should these documents be verified online through the website of the agency or through written letter (which may take a while)? Should banks verify information supplied by customers from all these agencies or just one of them?

These concerns are germane because it determines how quickly banks can open the account for the customer, and allow him to operate such. The apex bank advised that banks should do the verification online, and where the website of the agency is not available or functioning, or does not have capacity for such verification, banks should write to the agencies to verify the customer’s documentation.

The apex bank however stated that, “It is envisaged that, with time, all these institutions will improve on their database infrastructure to a level that will facilitate their active partnership in this project.

Vanguard, MONDAY, MAY 26, 2014 — 23

Banking & Finance

PRE-AGM: From left, Mrs Abimbola Izu, Company Secretary /Legal Adviser Skye Bank Plc, Mr Timothy Oguntayo, Group Managing Director/ Chief Executive Officer Designate, Mrs Amaka Onuwughalu, Deputy Managing Director Designate, and Mr Dotun Adeniyi Executive Director, Enterprise Wide Risk Management, Skye Bank Plc at the Pre Annual General Meeting press briefing of the bank held in Lagos.

Skye Bank deepens market penetration with $150m fresh capital

BY BABAJIDE KOMOLAFE & PETER EGWUATU

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kye Bank Plc said that it has raised $150 million Tier 2 capital that would be deployed to deepen its market penetration and finance big ticket projects.

Managing Director/Chief Executive Officer, Skye Bank, Mr. Timothy Oguntayo disclosed this during the bank’s pre annual general meeting press briefing held in Lagos. He said, “We are sourcing Tier 2 capital from development finance institutions based in Europe and as at today we have completed about $150 million

of that. One third of that should come in before June, while the balance should come in before the end of July. So our Tier 2 capital raising is going as planned and it should be available for use by the second half of this year. This will enable us deepen our penetration in existing markets, while also providing the avenue for exploring uncharted segments and other opportunities.”

He stated that the bank is committed to reducing its cost-to-income ratio, saying “ In a year beset with various regulatory headwinds on the backdrop of monetary policy tightening with attendant

impact on liquidity, cost, fees, and overall earnings, our results for the first quarter declined.

“Our operating expense increased during the review period by 17 percent, from N14.9 billion the previous year to N17.4 billion as a result of increased statutory payments and other operating costs."

He expressed optimism that the growth pattern would be improved upon in the remaining period of the financial year.

Oguntayo declared that the bank is committed to growing its deposit base especially savings deposit, stressing that its leadership is in e-

channels. “We have efficient Automated Teller Machines, ATMs deployed in our branches and we also have efficient internet banking service. We are also strong in Real Estate as well as Oil and Gas sectors.

Also, in the Small and Medium Scale Enterprises, SMEs sector, we have been playing active role in partnering with entrepreneurs to grow their businesses, nurture them up to the point of taking them to be quoted on the stock exchange, which is our target.”

The Bank boss noted that the bank recorded a growth in its net interest income for the first quarter ended March 31, 2014.

The bank’s net interest income stood at N13.6 billion during the period as against the N12.1 billion it reported during the corresponding period in 2013. This represents a growth of 13.4 per cent.

Similarly, the bank’s operating income grew to N20.9 billion during the review period from N19.5 billion the previous year, an increase of 7 per cent.

However, the bank said its profit before tax declined from N4.6 billion during the first quarter in 2013 to N3.4 billion during the corresponding period in 2014. Profit after tax also decreased to N2.8 billion as against N3.7 billion the previous year.

FBN shareholders slam CBN, AMCON over charges, okay N35.8bn dividend

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HAREHOLDERS of FBN Holdings Plc have lambasted the Central Bank of Nigeria, CBN, and Asset Management Corporation of Nigeria, AMCON over charges levied on the bank.

They also unanimously approved the N1.10 proposed by the company as dividend per share for the year ended December 31, 2013. The proposed dividend represents an increase of 10 per cent above the N1.00 paid the previous year.

The National Coordinator, Independent Shareholders Association of Nigeria (ISAN) Sunny Nwosu said the shareholders were appreciative of the efforts

which the staff and management put in place to deliver increased returns on investment. We are really against the CBN and AMCON over the exorbitant fees they levied on our bank, reaping from where they did not sow. It is really painful and indeed unacceptable.”

Mr Goodluck Akpoborie, a shareholder said “The AMCON charges are just too high on our bank. If I knew that this was how it would be, I would not have given support for its establishment.

AMCON is just riping the banks unnecessarily and the new CBN Governor should look into it."

In the same vein, Chief

Timothy Adesiyan, President Nigeria Shareholders Solidarity Association, NSSA said, “The AMCON charges are unwarranted. It is just unjustifiable, increasing it from 0.3 per cent to 0.5 per cent. The banks are already battling with other operating expenses. With all these kinds of levies and sanctions, the CBN and AMCON are not helping the banks to position very well to increase profitability and enhance shareholders returns.”

On his part, Mr Boniface Okezie, Chairman, Progressive Shareholders Association of Nigeria, PSAN decried the huge sum of money being deducted by

AMCON from the group saying, “It is affecting shareholders’ investments and must be challenged. The CBN and AMCON are not friendly with shareholders and it is time they stop these charges because it is affecting our returns on investment. “ Speaking at the Annual General Meeting in Lagos, the Chairman, FBN Holdings, Dr. Oba Otudeko, said, “I am happy to confirm that the key actions we took in 2013 financial year were fruitful.

According to him, the diversification and strong natural synergies, in turn, reduced risk and improved the quality of the company’s earnings.

GT Bank named 2014 African Bank of the Year

G

uaranty Trust Bank Plc (GTBank) has been adjudged the “2014 African Bank of the Year” for the 2nd consecutive time by African Banker Magazine.

The African Banker Awards is one of the biggest annual events that recognizes and celebrates the achievements of the financial services industry in Africa. It recognizes individuals and financial institutions contributing to the development and growth of Africa’s banking industry and changing perceptions of the continent’s domestic and international markets.

Outlining the rationale for selecting GTBank as the overall winner of the coveted ‘African Bank of the Year’ award, the panel of judges commented that the award recognises financial institutions that are industry leaders, consistently report strong financial performance and significantly contribute to the quality of service offered by the financial services industry within their country and across the African continent.

AfDB grants $200m financing facility to Ecobank

A

frican Development Bank (AfDB) and Ecobank Transnational Incorporated has signed a $ 200 million Trade Finance Facility agreement.

The facility was signed at an official ceremony held during the AfDB Annual General Meeting in Kigali by Mr. Albert Essien, Ecobank’s Group Chief Executive, and Mr. Alex Rugamba, Director, AfDB. The facility comprises a $100 million unfunded risk-sharing facility to bolster Ecobank’s capacity as an international confirming bank for trade transactions originated by issuing banks in Africa and another $100 million trade facilitation loan which will be used by Ecobank to provide trade finance support to local corporates and SMEs in Africa. Over a period of 3.5 years, the facility will support approximately $1.8 billion of trade transactions in Africa.

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24 — Vanguard, MONDAY, MAY 26, 2014

Corporate Finance

U.S. commerce Secretary, Elumelu seek more US-Nigeria investments

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he U.S. Secretary of Commerce, Penny Pritzker and the Chairman of Heirs Holdings Mr. Tony Elumelu, have called for increased investments between the US and Nigeria.

Both leaders spoke at a gathering of business leaders in Lagos.

Pritzker, who is leading 20 American companies on an Energy Business Development trade mission to Ghana and Nigeria, said American companies would invest in countries that observe the rule of law, follow ethical standards and have good work environments.

“Nigeria needs to take the tough steps that allow businesses to truly thrive. Our companies want to do business in countries that follow the rule of law, maintain ethical standards, abide by workplace safety, encourage workforce training and protect intellectual property,” she stated.

She also maintained that Businesses must operate freely and devoid of unnecessary regulation, government interference and corruption.

Group launches data bank on performance

By CALEB AYANSINA

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UE to inability of govern ment to develop a standard archive to check performance of each state, a group known as Legal Phobia has launched a data bank, where citizens can cross check achievements claimed by political office holders.

The Governance Impact Assessment Report, a compilation of all people-based projects, programmes and policies of the 36 states and the Federal Capital Territory (FCT), is geared towards holding political office holders accountable in the areas of infrastructural development and the well-being of the people.

Launching the report in Abuja, the Chief Operating Officer of Legal Phobia, Ibrahim Yeku believed that pragmatic governance must follow due diligence and be accountable to the electorate.

He said, "This is part of our objectives of rejuvenating the Nigerian project and reclaiming a political leadership that is accountable to the people.

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From left: Head, Retail Banking Products, Standard Chartered Bank, Mr. Sheahan Arasaratnam; Mrs. Teniade Macaulay, (N1 million award winner); and Head, Brand and Marketing, West Africa, Standard Chartered Bank, Mr. Chima Nwuke, during the One Million Naira cheque presentation to Macaulay at Standard Chartered Bank, Head Office, Lagos.

FMDQ plans collaboration with NSE to increase market depth

By NKIRUKA NNOROM

F

MDQ OTC Plc is s e e k i n g collaboration with the Nigerian Stock Exchange, NSE, to introduce more tradable instruments in the financial FMDQ is a market.

Securities and Exchange Commission (SEC)'s licenced window for trading fixed income securities in the Nigerian capital market.

It is also a self-regulatory organisation (SRO).

Speaking at the maiden licensing ceremony of FMDQ OTC dealing members in Lagos, where a total of 26 dealing members, comprising of 23 banks and three discount houses, were licensed, the Chairman, Mr. Aigboje Aig-Imoukhuede, said that such collaboration will help to increase the depth of the market.

Aig-Imoukhuede, who doubles as the Chairman, FMDA Board of Trustees, also emphasised the importance of regulation and compliance to extant rules by the dealers, saying that without compliance, there will be no effective market.

He noted that the event was a demonstration of the importance the OTC market attached to regulation, while assuring that FMDQ will continue to champion change in the Nigerian economy by promoting the

growth of financial markets within the nation.

“The importance of regulation and transparency in this market cannot be over-emphasised as FMDQ is a market for all stakeholders of the OTC market,” he said.

“Furthermore on regulation, compliance is paramount.

Without

compliance, we do not have an effective market. It is essential that the dealing members of FMDQ comply with the rules and regulations of FMDQ and those set by our regulators – the SEC, CBN and DMO. Cooperation with FMDQ in shaping good conduct of the participants is of utmost importance and should be

seen as our collective responsibility,” he added.

He explained that FMDQ is designed to be the link between investors, issuers and other stakeholders in the financial markets, saying that as a self regulatory organisation, FMDQ has positioned the Nigerian OTC market to become a highly trusted and respected financial hub of activity where expansion is encouraged, businesses are enhanced, performance is driven and stakeholders’ value created.

“To achieve this, FMDQ works closely with the market regulators and agencies from which it derives its authority towards adoption and enforcement of pre-existing rules and regulations of the respective regulatory agencies, formulation of new market rules, regulations and guidelines to strengthen the operations of the markets in consultation with the regulators and issuance of reports on market conditions and activity,” he stated.

The Acting governor of CBN, Sarah Alade, said that the emergence of FMDQ will enhance the liquidity, transparency and safety of transactions in the inter-bank market, adding that it will go a long way in strengthening long-term sustainability of the financial system.

She charged the management to among other things, strive for investors’ protection and education and ensure the observance of rules and regulations by its members, introduce best practices amongst its members

Standard Chartered Bank, others conclude $750m Edo power deal

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tandard Chartered Bank and Azura Power Holdings Ltd have announced the completion of signing key industry contracts and confirmation on the debt financing of the flagship 450MW Azura-Edo Independent Power Project (“Azura-Edo IPP”) in Edo State, Nigeria.

The $750 million transaction is the first of a new wave of projectfinanced greenfield IPPs currently being developed in Nigeria.

The financing of the Azura-Edo IPP involves $220 million of equity and $530 million of debt from a consortium of local and international financiers. The announcement was made at a formal signing ceremony to mark the conclusion of the key project and financing agreements that form part of the wider

transaction.

The event also showcased the $300 million investment being made by Seplat Petroleum Development Company Plc (“Seplat”) in new gas processing facilities at its Oben Gas Plant, which, as part of Seplat’s joint venture with the Nigerian Petroleum Development Company, will supply the Azura-Edo IPP with the project’s fuel gas requirements.

In total, the investments by Azura and Seplat constitute over a $1 billion of local and international financing into the Nigerian gas and power sector.

Speaking on behalf of the Global Mandated Lead Arranger, Mrs. Bola Adesola, CEO of Standard Chartered Bank Nigeria, said, “We are proud to have played a leading role in structuring the financing for this ground breaking transaction, which

creates a template for other similar transactions. Our advisory, structuring and financial contribution to this transaction forms part of the bank’s USD2billion pledge to President Obama’s ‘Power Africa’ campaign launched last year, which aims to bring electricity to more than 20 million Africans within five years. We are on course to exceed our $2 billion target well ahead of time, which is more than 20 percent of the total private sector commitment.”

Also speaking at the event the Coordinating Minister for the Economy and Honourable Minister of Finance, Dr. Ngozi Okonjo-Iweala, said: “The completion of this transaction marks a major step forward in the power sector reform process with the creation of a strong and robust model for project financed power sector transactions.

Vanguard, MONDAY, MAY 26, 2014 — 25

Corporate Finance

CSCS cleared transactions worth N1trn in 2013 … Grows profit by 56%

By NKIRUKA NNOROM

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he Central Securities Clearing System, CSCS, has announced that the total value of transactions it cleared in the year ended December 2013 is worth more than $1 trillion.

This represents a 59.0 percent increase in the value

of equities cleared and settled over the preceding year.

The company also reported profit before tax of 4.82 billion, a 56 percent growth over N3.09 billion reported in the previous year.

The company ’s total revenue grew by 33.16 percent from N5.17 billion in

2012 to N6.8 billion in 2013 just as its expenditure decreased by 0.71 percent from N2.078 billion to N2.063 billion.

Addressing shareholders at the 20 th Annual General Meeting, AGM, in Lagos, the Managing Director, Mr. Kyari Bukar, said the value of transactions settled within the year exceeded that of the previous year by 4.0 percent with net value of transactions amounting to N658.22

billion.

The record, according to him, makes a strong argument in favour of the fair price of Nigerian equities despite the reduction in the number of listed securities (equities, Bonds and ETFs) from 256 in 2012 to 254 in the year under review.

He noted that CSCS recorded downturn in activities relating to clearing and settlement of fixed income securities, owing to

the Central Bank of Nigeria (CBN) action in December 2013 of withdrawing the clearing and settlement function of Federal Government of Nigeria (FGN) securities (FGN Bonds and Nigerian Treasury Bills) for Deposit Money Banks and Discount houses from CSCS. “Currently, the CBN performs the function of clearing and settlement of these securities through its newly established Central Securities Depository.

Dangote Sugar to increase production capacity to 2m metric tons … pays 60kobo dividends

By NKIRUKA NNOROM & WILLIAM JIMOH

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angote Sugar Refinery, DSR, said it has begun implementation of sugar development plan that will result in production capacity increase from 1.5 million to 2.0 million metric tones per annum over the next five to 10 years.

Addressing shareholders at the company’s 8th Annual General Meeting, AGM, in Lagos, the Chairman, Alhaji Aliko Dangote, said the development will further consolidate the company’s position as the largest sugar producer in West African region.

“This plan is pursuant to the introduction of the Federal Government’s National Sugar Master Plan in Nigeria and is targeted at the production by your company of 1.5million to 2.0 million metric tones of sugar per annum from locally grown sugar cane within the next five to 10 years,” he said.

H e explained that the company has taken great care in the preparation of the sugar development plan with their operations being structured to include an increased focus on the company ’s backward integration project.

Looking ahead, Dangote said DSR has a robust growth agenda driven by the backward integration development plans.

“As we commence this journey, our priority remains to consolidate our clear leadership of the sugar industry in Nigeria. We will work to ensure ongoing operational efficiency to drive continued growth across our markets,” Dangote assured.

Meanwhile, shareholders at the meeting unanimously approved payment of N7.2 billion dividend, which translated to 60 kobo per share, earlier recommended by the Board of Directors.

Some of the shareholders, who spoke at the event, commended the board and management for the positive performance recorded in the 2013 and the dividend of N7.2 billion recommended for year.

Speaking on behalf of other shareholders, Nona Awoh, Chief Sola Abodurin of Ibadan Zone Shareholders Association, and Mrs. Bisi Bakare of Pragmatic Shareholders Association of Nigeria, said various strategies put in place by the board and management made the company to overcome the challenging operating environment and deliver improved bottom-line. .In his report, the Group Managing Director of DSR, Mr. Graham Clark said the company’s master plan is being developed against the Nigerian Sugar Master Plan, which is a corner stone of the Federal Government policy.

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C M Y K Company Oil and Gas and Products Petroleum Prod ucts Capital Oil Plc 1st fTier Securities AGRICULTURE Crop Production FTN Cocoa Processors Plc Okomu Oil Palm Plc Presco Plc Livestock/Animal Specialities Livestock Feeds Plc CONGLOMERATES Diversified Industries A.G. Levents Nigeria Plc Chellarams Plc John Holt Plc SCOA Nigeria Plc Transnational Corporation UACN Plc

Opening Price (N) 0.50

Daily Stock Market Report Closing Price (N) 0.50

Opening Price N

Quantity Traded 100

Year High 0.50

Year Low 0.50

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

0.09

0.50 32.30 35.30

3,000 492,527 414,505

0.50 24.58 8.30

0.50 14.53 6.40

0.10 7.33 2.75

50.00 2.77 4.37

3.03

3.00

2,789,945

0.66

0.48

0.11

15.00

1.52 3.95 1.21 5.06 3.73 57.00

1.45 3.95 1.27 5.06 3.89 58.00

60,000 10 1,500 1,000 18,172,516 212,587

2.54 7.60 8.82 8.28 1.82 42.50

1.45 6.43 5.89 5.52 0.50 28.70

0.16 0.31 0.00 0.35 0.24 6.89

5.18 20.74 0.00 15.77 3.64 4.14

5.30 1.25

5.30 1.25

31,443 366,200

4 2,720,390.38

20

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

72.00 8.46

72.00 8.46

147,861 6,166

62.26 8.28

32.96 3.01

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

P.E. Ratio

0.50 34.00 35.10

CONSTRUCTION/REAL ESTATE Building Construction/Structure ARBICO Plc Constain (WA) Plc

Real Estate Development UACN Property Development

E.P.S.

Sim Capital Alliance Plc Stanbic IBTC Bank Plc UBA Capital Plc

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

10.11 2.26

17.80

17.80

239,562

20.15

11.59

1.69

7.33

95.00 47.59

95.00 47.59

4 70

100.00 -

97.00 -

11.75 -

8.51 -

98.33 22.41 2.42

1.91 0.50 3.72 2.70 2.60 67.00 1.60 1.07 7.36 1.57

Quantity Traded

Year High

Year Low 103.50 10.64 0.03

10.56 0.87 0.21

9.71 18.03 6.71

2.23

785

10.54

9.52

0.00

0.00

0.50

60,250

0.50

0.50

0.00

0.00

3.72 2.70 2.56 67.00 1.67 1.02 7.36 1.57

162 505,030 3,046,313 21,551 194,950 481,265 2,150 571

5.31 1.45 3.20 23.11 5.61 1.96 12.91 200

5.31 0.70 0.83 2.58 3.61 0.95 0.95 4.28

0.19 0.44 2.62 0.20 0.09 0.00 0.00

0.57

1,319,400

0.52

0.50

0.10

10.00

0.50

0.50

1,100

0.50

0.50

0.00

12.50

15.99 1.97

16.83 1.97

5,098 15,000

9.31 3.59

3.25 3.25

0.00 0.01

1.43 0.00

0.50

0.50

3,602,000

50,000

0.50

0.50

4,000

1.47

0.50

0.00

0.00

19.85 10.00 37.51 9.89 222.98 0.50 1.06 110.01 4.86 1.50 10.00

19.90 10.00 37.51 9.70 223.62 0.50 1.06 112.50 4.10 1.50 11.00

4,623,468 318,331 18,445 854,196 2,803,848 2,000 13,098 2,219,400 20 200 123,564

30.00 12.57 43.98 15.49 132.51 0.75 3.51 48.05 5.28 3.36 13.40

12.00 8.10 15.16 4.16 95.00 0.50 1.02 36.58 5.11 0.51 10.93

2.14 1.09 2.28 1.47 7.56 0.00 0.00 4.10 0.44 0.23 0.00

7.86 4.97 8.88 2.31 13.17 0.00 0.00 42.86 14.19 2.89 0.00

1.61 2.70

1,883 2,717,101

6.91 3.60

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

0.50

14,000

0.50

0.50

0.00

0.00

20 72,525 167,840 2,013,799 10,000

4.63 255.00 7.10 100.00 1.01

2.23 186.00 5.23 72.50 0.93

0.00 9.95 0.41 5.08 0.00

0.00 19.98 16.29 22.22 0.00

Beverages-Non-Alcoholic 7-UP Bottling Company Plc

85.80

85.80

90,019

51.49

,39.00

2.69

13.92

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

Tools and Machinery Nigerian Ropes Plc

7.46

7.46

10

8.69

8.26

8.00 9.51 70.00 4.00 12.75 0.50

8.00 9.85 70.50 3.85 12.75 0.53

170,490 1,922,503 638,233 1,443,557 1,707,523 85,088

19.90 16.20 95.00 6.60 6.70 0.88

4.31 4.02 57.00 2.31 3.80 0.50

0.00 0.91 4.09 0.39 1.01 1.13

16.91 14.38 16.89 16.92 5.75 8.83

NATURAL RESOURCES Chemicals BOC Gases Plc

5,413

9.20

6.80

Food Products-- Diversified Cadbury Nigeria Plc Nestle Nigeria Plc

73.84 1,080.00

73.84 1,080.00

143,245 26,821

37.27 840.10

8.33 400.00

Household Durables Nigerian Enamelware Plc Vitafoam Nig. Plc Vono Products Plc

32.27 4.11 1.66

32.27 4.11 1.58

60 1,131,280 10

36.19 5.54 2.88

33.96 2.91 2.88

13.89 0.61 0.00

2.44 7.07 0.00

Personal/Household Products PZ Cussons Nigeria Plc Unilever Nigeria Plc

34.83 49.53

34.83 49.53

188,383 276,200

41.02 47.39

21.02 27.60

0.82 1.44

4.39 32.91

FINANCIAL SERVICES Banking Access Bank Plc Diamond Bank Nigeria Plc Ecobank Transnational Incorporated Fidelity Bank Plc First City Monument Bank Plc Guaranty Trust Bank Plc Skye Bank Plc Sterling Bank Plc UBA Plc Union Bank Nig. Plc Unity Bank Plc Wema Bank Plc Zenith Bank Plc Insurance Carriers, Brokers and Sector African Alliance Insurance AIICO Insurance Plc Continental Reinsurance Plc Cornerstone Insurance Company Consolidated Hallmark Insurance Custodian and Allied Insurance Plc Equity Assurance Plc Goldlink Insurance Plc Great (Nig) Insurance Plc Guinea Insurance Plc International Energy Insurance Plc Investment and Allied Assurance LASACO Assurance Plc Law Union & Rock Insurance Plc Linkage Assurance Plc Mansard Insurance Plc Mutual Benefits Assurance Plc NEM Insurance Co. (Nig) Ltd Niger Insurance Co. Plc OASIS Insurance Plc. Prestige Assurance Co. Plc Regency Alliance Insurance Sovereign Trust Insurance Staco Insurance Plc Standard Alliance Insurance UNIC Insurance Plc Unity Kapital Plc Universal Insurance Plc Wapic Insurance Plc Microfinance Banks Fortis Micro-Finance Bank Plc NPF Micro-Finance Bank Plc Mortgage Carrier, Broker and Sector Abbey Building SOC Aso Savings and Loans Plc Resort Savings & Loans Plc Union Homes Savings Plc Other Financial Institutions Africa Prudential Plc Crusader (Nigeria) Plc Deap Capital Management & Trust Plc FBN Holdings Plc Nigeria Energy Sector Fund Royal Exchange Assurance

9.10 6.39 15.34 2.05 4.75 28.15 3.26 2.25 7.19 10.20 0.50 0.94 23.25

9.30 6.50 15.13 2.08 4.75 27.68 3.33 2.27 7.20 10.20 0.50 0.99 23.41

5,886,912 5,845,262 666,718 8,161,644 865,336 8,989,369 3,860,852 3,539,698 13,836,068 601,798 202,100 6,162,268 7,196,977

12.39 7.51 14.04 3.47 5.70 26.09 6.50 3.05 7.69 10.60 1.22 1.75 21.49

4.70 1.92 9.90 1.13 2.90 13.02 2.65 0.80 1.64 2.34 0.50 0.52 11.96

1.42 0.90 2.81 0.43 0.00 2.10 0.71 0.54 0.67 0.00 0.00 1.34 2.09

8.73 8.34 5.00 7.93 0.00 12.39 9.15 5.43 11.19 0.00 0.00 0.43 10.24

0.50 0.83 1.02 0.50 0.50 2.00 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 2.41 0.50 0.80 0.50 0.51 0.57 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.81

0.50 0.81 1.07 0.50 0.50 2.06 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 2.41 0.50 0.81 0.50 0.51 0.55 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.81

1,000 218,633 515,040 157,414 50 9,054,578 100 93,000 330,000 2,200 19,777 1,670,890 15,000 3,200 151,500 83,513 200 3,421,230 255,200 300,000 500,000 200 12,100 1,000 20,000 45,000 10,100 1,000,000 159,276

0.50 1.11 1.03 0.54 0.50 2.44 0.50 0.68 0.50 0.50 0.50 0.50 0.50 0.60 0.50 2.59 0.54 0.81 0.61 0.50 1.01 0.50 0.56 0.50 0.50 0.50 0.50 0.50 1.08

0.50 0.50 0.58 0.50 0.50 1.08 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 1.06 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50

0.00 0.50 0.14 0.02 0.50 0.28 0.01 0.00 0.03 0.01 0.00 0.02 0.00 0.00 0.03 0.16 0.00 0.37 0.02 0.03 0.06 0.04 0.09 0.00 0.00 0.00 0.02 0.00 0.07

0.00 22.20 6.79 27.30 10.00 7.43 50.00 0.00 16.67 50.00 0.00 25.00 0.00 0.00 16.67 16.19 0.00 2.19 26.00 16.67 15.50 12.50 5.65 0.00 0.00 0.00 25.00 0.00 15.43

6.27 1.03

6.27 1.12

1,000 4,280,192

6.00 1.18

0.00 0.92

0.04 0.92

150.00 10.56

1.35 0.50 0.50 0.50

1.35 0.50 0.50 0.50

80 101,100 202,200 3,125

1.57 0.50 0.50 0.50

1.37 0.50 0.50 0.50

0.19 0.02 0.00 0.00

47.6 7 25.00 0.00 0.00

3.25 0.50 0.99 13.65 552.20 0.55

3.11 0.50 0.99 13.90 552.20 0.55

3,269,739 22,000 500 11,015,210 20,545

0.75 0.50 2.02 20.00 250 0.78

0.00 0.50 2.02 8.57 552.20 0.50

0.19 0.00 0.00 2.03 12.68 0.13

9.16 0.00 0.00 9.85 43.55 6.00

9.05 14.13 0.00 0.00

0.63

13.79 178.50 25.75 176.13 0.77

27.61 32.84

88.50 0.00 3.07

Computers and Peripherals Omatek Ventures Plc

0.50

1.35 25.43

P.E Ratio

103.50 15.69 1.41

13.79 178.50 25.50 173.50 0.77

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

E.P.S

15,358 419,471 8,893,276

ICT Computer Based Systems Courteville Investment Plc

IT Services NCR (Nig) Plc Tripple Gee and Company Plc Processing Systems Chams Plc 4.11 4.73

Closing Price N

103.50 22.41 2.42

as at Friday, May 23, 2014

Packaging/Containers Avon Crowncaps & Container Nigerian Bags Manufacturing Company

1.61 2.74

5.94 1.47

0.5 0.25 0.00

0.78

39.60 9.16 0.00

6.47

6.47

Metals Aluminium Extrusion Ind Plc

7.37

10.50

10.50

50

12.39

10.70

0.13

85.77

Non-Metalic Mineral Mining Multiverse Plc

0.50

0.50

2,100

0.50

0.50

0.01

0.00

Paper/Forest Products Thomas Wyatt Nig. Plc

0.79

0.79

1,000

1.38

1.38

0.00

0.00

Electronic and Electrical Products Cutix Plc Nigerian Wire & Cable Plc

1.90 0.50

1.90 0.50

723,831 10,000

2.50 2.58

1.62 2.58

0.11 0.00

13.15 0.00

Mortgage Carriers, Brokers and Se Abbey Building Society Plc INDUSTRIAL GOODS Packaging/Containers Abplast Products Plc Beta Glass Co. Plc Nampak Nigeria Plc Poly Products (Nig) Plc Studio Press (Nig) Plc W.A. Glass Ind. Plc

1.44

1.44

2,000

1.51

1.33

0.03

28.80

3.98 17.07

3.98 16.22

6,888 80,736

3.98 15.58

3.98 12.71

0.00 3.90

0.00 3.26

4.30 1.05 2.92 0.63

4.30 1.05 2.78 0.66

29,198 200 84,311 2,749,340

4.30 1.86 2.92 0.63

3.60 1.05 2.92 0.63

1.22 0.30 0.07 0.00

3.52 6.18 41.71 0.00

OIL AND GAS Energy Equipment and Services Japaul Oil & Maritime Service

0.50

0.50

1,723,530

0.97

0.87

0.19

6.06

Intergrated Oil and Gas Services Oando Plc

18.28

20.00

17,573,308

78.97

27.99

1.73

4.17

20.50 0.50 46.74 169.20 124.90 51.49 156.00

20.50 0.50 46.74 186.54 130.00 51.49 156.00

82,191 609 35,492 318,012 84,468 4,015 33,617

37.10 0.70 5.59

0.50 0.50 3.89

4.93 0.00 0.61

7.40 0.00 6.99

163.50 2,100 240.00

141.00 63.86 195.50

6.11 2.98 14.63

11.11 19.23 17.07

0.50

0.50

200

200

0.50

Petroleum and Petroleum Products African Petroleum Plc Beco Petroleum Plc Conoil Forte Oil Nig Plc Mobil Oil Nigeria Plc MRS Oil Nigeria Plc Total Nigeria Plc Hospitality Tantalisers Plc SERVICES Afromedia Plc Automobile/Auto Part Retailers RT Briscoe Plc Courier/Freight/Delivery Red Star Express Plc Trans-National Employment Solutions C & I LEASING PLC Hotels/Lodging Capital Hotel Ikeja Hotel Plc

0.01

0.50

30

0.72

1.04

1.09

556,567

3.65

1.30

0.21

8.19

4.50

4.50 2.20

27,400 2.31

3.67 1,000

2.65 0.25

0.60 11.12

4.91

0.50

202,000

1.64

4.55 0.90

10 3,466,527

400 2.07

0.50 4.55 0.86

0.51

0.90 3.00 1.33

0.00

0.04 0.34 0.92

12.75

11.25 34.09 2.12

Media/Entertainment Daar Communications Plc

0.50

0.50

15,000

0.50

0.48

0.00

0.00

Printing & Publishing.

Academy Press Plc Learn Africa Plc Studio Press Nig. Plc University Press

1.71 1.73 2.40 4.16

1.71 1.71 2.40 4.03

1,000 339,000 540 525,861

3.68

0.25

12.19

0.00 6.82

3.17 0.30 0.00 3.60

0.54

27.69

Road Transportation Associated Bus Company Plc

0.83

0.81

1,151,200

0.80

0.50

0.00

0.00

Speciality Interlinked Technologies Plc

4.90

4.90

1,995

5.15

4.90

0.00

0.00

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

2.25 5.00

2.25 4.99

192,050 252,484

2.78 11.75

1.57 6.50

0.60 12.53

4.22 8.75

26 —Vanguard, MONDAY, MAY 26, 2014

Capital Market

Vanguard, MONDAY, MAY 26, 2014 — 27

Commodity index May 16 -May 22, 2014

C M Y K

28 —Vanguard, MONDAY, MAY 26, 2014

Interview

M

r. Ikpong Umoh, is the Chairman, Toiletries and Cosmetics (T&C) group of the Manufacturers Association of Nigeria (MAN). He spoke on the recent appointment of the new Managing Director, Bank of Industry (BOI), the failure of Small and Medium Enterprises Investment Scheme and numerous challenges facing the Small and Medium Enterprises sub-sector of the economy.

Excerpts The Federal Government has just appointed Mr. Rasheed Adejare Olaoluwa, as the new Managing Director and Chief Executive Officer of the Bank of Industry (BoI). What do you think is the task before him?

The task before him is to restructure the programmes of BOI to accommodate new SMEs in order to enhance job creation. For Nigeria to achieve tangible economic growth and development like advanced countries, we need many SMEs to spring up across every part of Nigeria. The bank no doubt plays a role in terms of interest rate, because BOI charges lower interest rates ranging from six to eight per cent. It deals with single digit interest rate and the companies getting loans are allowed to use the money over a year before they begin to pay back, but that is not enough.

So far, how has BOI impacted on the SMEs subsector?

The bank has not impacted positively on many SMEs, especially in the area of startups. For instance, about 130 manufacturing companies, mostly toiletries and cosmetics closed shop in Nigeria in the past few years, yet we have a financial institution like BOI. The bank is only targeted towards existing firms and nothing tangible is done to assist new SMEs that are just coming up in the sector. Also, the bank gives loan only for equipment as well as expansion but nothing for raw materials, forgetting that machinery alone does not make a firm.

Some years back the Small and Medium Enterprises Investment Scheme was established to nurture the growth of SMEs. How useful has this scheme been over the years?

The Scheme was set up through the initiative of the Bankers’ Committee, to reinvigorate SMEs in the C M Y K

SMEs investment scheme, a total failure — MAN "BOI must restructure to nurture new businesses"

granted a bail-out of N200billion to the real sector. How has SMEs benefited from this fund?

I have not seen the money. I do not know of any SME operator in T and C group of MAN, who has benefited from it.

Government should publish the names of the companies that collected the money for everyone to know. This is the only way we could ensure transparency in the system.

Mr. Ikpong Umoh

country. Under this scheme, all commercial banks were to set aside their 10 per cent profit before tax, for investment in the industry, based on equity participation. Meaning that, if an SME operator approaches a bank, such bank ought to assess the total network and organisational structure of the company to determine the amount of investment in that firm in order to invest more in it.

Assuming the total investment capacity of the company is N100million, the bank is expected to bring in another N100million and its director to be on the Board, to monitor the activities of the company for a specific period.

After a while, the firm would repay the bank the money brought in on equity basis for a period of five years.

Once that is done, the bank would remove its director for the firm to stand on its own.

The scheme was a total failure because banks did not understand the workings of SMEs. They wanted a quantum leap in business but SMEs do not work like that.

The banks assumed everything was high in terms of big pay for the bank director, official car and renovation on ground, not knowing that SMEs require slow and steady process not quantum leap in the market. So, when money came in, they used it to pay high salaries while the business suffered. The banks' scope of planning did not fit into the business structure of SMEs.

What measures should government put in place to turn around the SMEs subsector?

Government should jettison toxic economic polices capable of destroying our economy. Such policies include global listing, policy on Foreign Direct Investments (FDIs) and the move by government to ban tokunbo vehicles.

These polices are working against our economy in various ways. For instance, the policy on global listing has paved the way for us to have over 90 per cent foreign made cosmetics products in Nigeria, whereas these products could be produced locally to create more jobs.

Foreign investors do not come to Nigeria and build factories, rather they are foreign importers, who obtain licenses under global listing chain and import foreign products from their parent companies abroad to Nigeria. You could see how they are working against us.

Now, the foreign investors that are asking government to ban tokunbo cars are trying to do the same thing. They want to monopolise the economy while local firms go under.

Some foreign investors would come to Nigeria without money. They come here only for banks to team up and syndicate loans to them to kill our economy. Today, we use foreign cosmetics that are not developed according to our skin and climate and nobody is saying anything. Our government must wake up to Are you saying that its responsibility for our payment of salaries was economy to move forward.

Government should assist wrong?

No, payment of salaries was local manufacturers to thrive not the problem. The issue and create jobs for our people was about the salary and stop looking for foreign structure. For instance, a investors who are only small scale business must interested in their own have operated with a salary economic interest. structure of N500.000, but the Cosmetics and toiletries bank director came in and fixed a salary structure of business is one of the fastest N1.5million. That greatly growing in the world, why is affected the marginal Nigeria lagging behind?

Nigeria is lagging behind increase realised by the company. At the end, the firm because of toxic economic could not optimise reasonable policies and lack of outputs to stay afloat in transparency in the system.

Government lacks the political business. will to take decisive actions on The Central Bank of certain issues. Who would Nigeria (CBN), under salvage this situation and Sanusi Lamido Sanusi, bring a plain level playing

,

By UDEME CLEMENT

Assuming the total investment capacity of the company is N100million, the bank is expected to bring in another N100million and its director to be on the Board, to monitor the activities of the company for a specific period

,

field, so that local cosmetic manufacturers can thrive and rank among the top 20 cosmetics in the world? In the last 20 years, Global Beauty Market has grown on the average by 4.5 per cent a year. In some countries like the US, Germany, China, Japan and Britain, the annual growth rate ranges from around 3 per cent to 5.5 per cent.

In Africa, countries like South Africa and Nigeria experienced strong growth in the last 10 years and should achieve stable and continuous growth in the years to come.

It is estimated that by the year 2017, the Global personal care market would have grown to about $630billion in value. In Nigeria, the major beneficiaries of this growth are the foreign- made cosmetics firms. Foreign products occupy almost all the major shelves in the open markets and supermarkets.

Our policy on global listing for super and hyper markets has become the “new iron curtain”, which ensures that the indigenous cosmetic manufacturers are screened out of the current and future boom.

Looking at the activities of SMEs in 2014, do you think government is doing enough to rejuvenate the sub-sector?

Well, efforts are being made by government to grow the SMEs but the policies and programmes mapped out only operate on paper and nothing on ground to stimulate industrial growth. Even agencies established to nurture the growth of SMEs operate only in Abuja, without offices and field officers in strategic locations within the country.

For example, Nigeria Industrial Revolution programmes was launched recently by government, to kick-start industrial revolution in the country. The current Minister of Industry, Trade and Investment, Olusegun Olutoyin Aganga, went to Brazil and signed a Memoranda of Understanding (MoU) with the Brazilian government to partner with Nigeria in reviving SMEs. A lot have been done on paper but nothing practical to fast track development of the subsector.

The situation we are experiencing in this country is terrible. Up till now we do not have electricity for businesses to thrive despite the privatisation of Power Holding Company of Nigeria (PHCN).

Vanguard, MONDAY, MAY 26, 2014 — 29

30 — Vanguard, MONDAY, MAY 26, 2014

Homes & Housing Finance

UK mortgage lending leaps 36%

U

K mortgage lending in April was 36 percent higher than a year ago, a lenders’ group says, as a major bank moves to cool the housing market in London.

Gross lending was up 8 percent compared with March to an estimated total of £16.6 billion, according to the Council of Mortgage Lenders (CML).

The data includes the first week of implementation of new mortgage rules. The regulations, introduced by the City watchdog - the Financial Conduct Authority (FCA), came into force fully on 26 April but some lenders were already applying the new rules. They ensure that lenders conduct a full affordability check on mortgage applicants.

The extra time required for lending assessments was expected to slow down the mortgage market, and there have been falls in the number of mortgage approvals in recent months.

Although total lending rebounded April, to the highest level for any April since 2008, the CML said it was too early to be accurate about the effect the new rules would have.

Lagos land transactions revenue drops 18.3%

T

he revenue generated form land transactions by the Lagos State government dropped by 18.3 percent to N8.4 billion in 2013 from N10.28 billion recorded in 2012.

Permanent Secretary, Lagos State Lands Bureau, Mr. Hakeem Muri-Okunola, who gave out the figure, said “the resultant shortfall arose as a result of a reduction of about 40 per cent in the revenue expected to be generated from transactions on state land and capital contribution.” He however said government hopes to generate more revenue in 2014 through property re-certification and transactions on some state land.

Muri-Okunola also said a total of N1.6 billion was paid as compensation to residents whose properties were acquired for infrastructure development in 2013.

According to him, the compensation was paid for the execution of six major projects among which are the Itire/Okota Link Bridge and the Agbowa Housing Scheme in Epe. He said the money was paid to facilitate easy resettlement of owners of such acquired properties.

C M Y K

SON to partner stakeholders in tackling building collapse

By YINKA KOLAWOLE

S

t a n d a r d Organisation of Nigeria (SON) is ready to work with manufacturers of building materials, professionals, regulatory bodies and other stakeholders in the housing sector to tackle the recurring incidence of building collapse in the country.

Director-General, SON, Dr. Joseph Odumodu, who was represented by an official of the organisation, Mr. Adeoye Onipede, at an event in Lagos, said collaborative efforts of all relevant stakeholders are required to curb the menace. He also said there is a need for massive education and enlightenment campaigns on the dangers of building collapse and the need to adhere strictly to good ethical and professional practices.

“It is a well-known fact that the strength of reinforced concrete depends on the proportion of cement, sand, stone and iron rod in it. Here, the professional bodies also have critical roles to play.

The Standards Organisation of Nigeria will continue to work with experts and relevant stakeholders to ensure that

Prefab houses: Easy and fast to construct the benefits of standardisation are actualised and ensure a structurally safe environment to all Nigerians,” he stated.

The SON boss said his organisation has stepped up enforcement actions, noting that most of its state offices have been equipped with mobile block testing machines to monitor the quality of sancrete blocks across the country. “Modern pieces of

equipment are being installed in our laboratories as effective and efficient testing facilities,” he said.

Odumodu said standardisation and quality assurance play very important roles in putting up an enduring building that will not collapse. According to him, building collapse usually occur due to factors or combination of factors

‘Access to affordable housing can curb corruption’ C

orrupt practices and inefficiencies in handling government transactions can be greatly reduced by facilitating easy access to affordable housing by workers in the public service.

Executive Secretary, Federal Government Staff Housing Loans Board, Dr Hannatu Fika, made the observation during a courtesy visit to the Managing Director of Nigeria Mortgage Refinance Company (NMRC), Mr Sonnie Ayere, in Abuja.

NMRC was launched in January this year by President Goodluck Jonathan to boost mortgage financing in Nigeria for housing

delivery and home ownership schemes as well as reduce all impediments to a sustainable and dynamic housing market.

Fika also noted that without proper motivation of public servants to drive the policies and programmes of government, private sector organisations will also be incapacitated. She said her board is committed to delivering 1,000 housing units out of the government’s targeted 10,000 units this year for public servants if given the opportunity.

She said the template of the board is risk free and the repayment option is made easy for the off takers and the mortgagers. “The new mortgage refinance will serve as a vehicle to actualise the dream of transformation

agenda as it affects the housing sector especially for public servants,” she stressed.

In his response, Ayere described the visit by the Federal Government Staff Housing Loans Board was timely, especially with the renewed vigour for effective housing delivery by government. He however expressed reservation on the current three percent interest rate charged by the board, saying it is not market driven.

Ayere counseled that with the high demand for housing loans by public servants from the board, it will be better to look at an option that is market driven, achievable and sustainable. He called for the board to partner with the Federal Mortgage Bank of

including the use of low quality building materials; employment of incompetent contractors; non- enforcement of existing laws; poor work ethics of Nigerians; and lack of adequate enforcement of relevant regulations by town planning authorities. Others are cost-cutting tactics by building owners; unethical practices perpetuated by the professionals involved in the construction process; and poor supervision at the construction stage.

He said the alarming rate of building collapse in recent times in various parts of the country is worrisome to the public at large as well as to professionals in the building and construction industry government, and particularly put a burden on SON for checks and balances. “Over the years, SON has set the pace towards facilitating industrial development through standardisation by focusing on improving product quality and promoting enforcement of quality regulations, and enhancing competitiveness against imports at the domestic market. SON is prepared to sustain this fight with the support of all professionals and other government agencies that have been collaborating with us until the objective is achieved. These, of course, include the fight against substandard building materials,” he stated.

Vanguard, MONDAY, MAY 26, 2014 — 31

Insurance

BY PROVIDENCE OBUH

A

recent survey carried out by Accenture has revealed that the insurance industry could tap into huge revenue potential only through a deliberate transformation and positioning of the sector.

The survey tagged: Consumer Innovation Survey on Insurance, demonstrated convincingly that insurance customers want relevant, convenient and cost-efficient products that address their buyer values and needs.

The survey showed that the predominant insurance product uptake by 1.5 per cent of the population that is insured is motor value insurance.

Another survey across several geographies indicateed that 67 per cent of customers would consider buying insurance from organisations other than traditional insurance companies, while indicating that insurers must take the offensive, make some bets and take some calculated risks to attract and acquire new customers and to retain the customers they already have.

According to the survey, “The revenue potential that is at play for the insurance industry is significant but will only be realised through deliberate transformation and positioning that enhances all channels and experiences.

“Companies that transform their technologies as well as underlying business models will be equipped to deliver the experiences that customers will increasingly expect and demand. Only true digital transformation at a strategic level will let customers define their own experiences rather than simply provide products for them to buy.” Accenture recalled that the EFInA, Access to Financial Services in Nigeria 2012 survey confirmed that: while 28.6 million adult Nigerians are currently banked, representing a banked population of 32.5 percent of the adult population, only 1.3 million adults, 1.5 percent of the population have personal insurance; As a result of the deliberate collaborative strategy and individual actions by banks to focus on specific unbanked and under-banked groups, the banking sector is well on track to dent the financial exclusion trap and to increase banking inclusion to 80 percent by 2020. The insurance industry in Nigeria is over-concentrated on C M Y K

Premium pension takes retirement forum to South East

By ROSEMARY ONUOHA

P

FORUM: Managing Director, CFG Advisory , Tilewa Adebajo; Managing Director Standard Chattered Bank Plc, Bola Adesola ; Managing Director/Chief Executive Officer Guinness Nigeria Plc, Seni Adetu and Corporate Relations Director, Guinness Nigeria Plc, Sesan Sobowale at the Ogun State Investment Forum held in Abeokuta

How insurance industry can actualize revenue potentials, by Accenture intensively competitive, oversold and narrow-margin corporate underwriting, dominated by brokers while under-serving and under developing personal risk underwriting.

The same report indicated that the areas where risks are experienced which in turn imply a high need for insurance have extremely low insurance uptake.

Accenture said, “There is an opportunity for the insurance industry to translate the areas of acknowledged need to effective demand for risk cover.”

Some of its key finding showed that insurance must be ‘sold’ and the driver for growth in insurance is effective selling predicated on clear customer segmentation and customer centric strategies; also that optimal sales performance insurance is achieved by knowledge-based customer insight, enabled by the combination of distinctive sales methods and supporting sales tools.

On youths and insurance, Accenture said, “With the demography of the Nigeria population, clearly a successful digital positioning

will be necessary for insurers to realize the opportunities offered by the younger generation.”

Accenture is an outsourcing company, with approximately 289,000 people serving clients in more than 120 countries.

Combining unparalleled e x p e r i e n c e , comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become highperformance businesses and governments.

Street presence: Guinea Insurance partners CIIN

By ROSEMARY ONUOHA

G

uinea Insurance Plc has entered into a strategic partnership with the Chartered Insurance Institute of Nigeria (CIIN) to ensure that the recently held “street presence” exercise in Lagos, was seamless and successful.

The company said that the move is part of its resolve to support growth and development in the industry.

Accordingly, the company hosted the pre-walk reception of the institute’s members at its new corporate head-office at Jibowu, where the pre-walk

aerobic exercise and health tips were held shortly before the road show commenced to the destination point – National Theatre, Iganmu last week.

In a letter to the company signed by the Director General of CIIN, Mr. Kola Ahmed on behalf of the President/Chairman of the Council, Mr. Fatai Lawal, the Institute thanked the management of Guinea Insurance, noting that, “our bid to bring innovative idea to this year ’s event in partnership with your everprogressive company and

well-known brand had propelled the need for the change in venue this year.”

Meanwhile, Divisional Director, Corporate & Legal Services, Guinea Insurance Plc, Isioma Omoshie, in a speech during the pre-walk exercise, expressed gratitude to participants for attending this year ’s exercise en masse and further reiterated the company’s commitment to continually support the Institute and industry in general. “Our partnership with the Institute is in sync with the repositioning programme of the company.

remium Pension Limited has taken its interaction and collaboration between the retirees whose pension is managed by the company to the South East geopolitical zone of the country recently.

The retirees’ forum organized by the company was held in Owerri, Awka and Enugu.

In a statement, the company said that the retirees in the southeast look strong and healthy and even employable.

Managing Director of the company, Mr. Wilson Ideva said, “There is no better testimony to the success of the contributory pension scheme than the good looks and evident good life of the retirees under the scheme.”

Ideva said that the return on investment by Premium Pension Limited has continued to be above 12 percent, in other words, above inflation for the past three years. “We salute the vision of those who set up the contributory pension scheme in Nigeria. This is one government policy that has been consolidated and begun to yield dividends within a short time,” he said.

He pointed out that with the continued increase in the return on investments, retirees would have to benefit more in the near future.

In his comment, Head of the South East Zonal Office of the National Pension Commission (PenCom), Mr. Eneh Michael Ejiofor described the retirees’ forum as reflective of industry best practice and demonstrative of the high premium placed on retirees

by Premium Pension Limited and the contributory pension scheme.

“As a matter of right, your Pension Fund Administrator (PFA) must continuously be enlightening you on the developments in the management of your RSA and the industry in general.

The pension industry is already huge and would even be greater in the next few years. Funds under management in the contributory pension scheme is one of the most protected in the world,” Ideva said.

C M Y K

32 — Vanguard, MONDAY, MAY 26, 2014

C M Y K

Vanguard, MONDAY, MAY 26, 2014 — 33

Business & Economy

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r David MacRae is the former Ambassador and Head of European Union Delegation to Nigeria and Economic Community of West African States (ECOWAS) between 2010 and 2013.

In this chat with Financial Vanguard, Dr MacRae, whose involvement with Africa as an economist, aid official and diplomat, goes back over many years, speaks on sundry issues including corruption. He advises that resources from the oil sector should be invested wisely in basic infrastructure and human capital development.

Excerpts: Corruption is said to be one of the greatest problems in Nigeria and many are of the opinion that government is not handling it the way it should. How do you advise that the Nigerian government and people tackle this hydra-headed monster?

Corruption is of course not confined to Africa but it is true that Nigeria has acquired an unfortunate reputation as a country where corruption is especially bad.

This perception discourages inward investment, thus reducing development opportunities. It even affects the way Nigerians are viewed by the outside world which is unfortunate when, as those of us who have been living here for some time know, most Nigerians are decent people who deserve to be treated better.

T

he government has in place an anti-corruption programme which includes c o m m u n i t y

Invest oil revenue in infrastructure, human capital devt —DAVID MACRAE zBureaucracy, corruption hamper businesses

,

BY EBELE ORAKPO

The closer policymakers come to adopting an approach to the management of oil wealth the way the Norwegians have done, the better it will be for Nigerians

awareness. Effective implementation of this programme would go a long way in dealing with the problem but this r e q u i r e s improvements in the justice system which is a serious challenge. It is important to take measures to improve the effectiveness of the judicial system and to ensure that corruption cases are dealt with speedily and effectively with no prospect of impunity for offenders.

Based on your experiences of living in Nigeria and other places you have lived in Africa, what is your impression about Nigeria’s business environment?

It is expensive to do business in Nigeria. Security costs are high. Power is deficient. Infrastructure is seriously deficient.

Businesses can be hampered by bureaucracy and corruption at all levels. The legal system is also seriously

,

defective. Despite these obvious deficiencies, it is a tribute to the inventiveness and skills of the Nigerian business community and businessmen that it has been possible in recent years for the economy to register significant growth year on year.

This is due in large measure to the oil sector. It is highly desirable that a major effort is made to direct the resources from the oil sector into much needed investment in human capital and basic infrastructure, and to open up the economy to international

Dr. David MacRae trade and especially to take advantage of the West African market. This is an enormous subject but, in a nutshell, the closer policymakers come to adopting an approach to the management of oil wealth the way the Norwegians have done for instance, the better it will be for Nigerians.

In what way would you encourage investment in Nigeria?

In trying to answer this question, I am not only mindful of the state of the business environment but also the perception of Nigeria to the outside world. These are the challenges.

On the more positive side, I would draw on my experiences as a former ambassador here. Firms from countries of the European Union have been investing in Nigeria over many years making the EU the biggest

Cover Story

investor in Nigeria. To draw attention to this fact, and to encourage further business investment in Nigeria, the EU now organises the EUNigeria Business Fair each year in Lagos. This is expected to become increasingly important in future. One of the themes has been to project Nigeria as a SME-friendly country as SMEs are key in developing supply chains and creating jobs.

A market which is not SMEfriendly cannot deliver on development. EU-connected SMEs possess high levels of business and technological know-how and are constantly looking for investment opportunities around the world. The Fair not only highlights the riches of Nigeria (its resources, people and market) but also the positive concrete trends which make Nigeria a place of choice.

AMCON: Stakeholders bicker over lifespan, performance Continued from page 21 he said, “You cannot eat your cake and have it. This is because if AMCON had not come in, those shareholders wouldn’t have any money today. So what AMCON is doing is to make the banks themselves pay for being rescued. I can tell you that all the banks were rescued but some were rescued more than others. Some were forced to clean their balance sheets; fortunately, they had enough assets to be able to clean their balance sheets so they were not on the rescue list.

“Some did not have enough assets; they had negative balance sheets.

There is hardly any bank that will say it went scot-free. That 0.5 per cent

which is as long as AMCON exists is like paying insurance for a major illness that would have killed you.

So the shareholders should understand that it is a very small price to pay. In any case, 0.5 per cent of assets of banks, is very small and shareholders are paid money based on their equity and it’s like 10 per cent of the total assets of the banks.

“Is it in any way affecting the profits that banks are declaring? Yes of course, what is taken should affect the profits of the banks but you can see that banks are declaring more and more profits despite that and they are able to do that because the enabling environment has been put in place by the CBN and the NDIC

and the AMCON who are making available the stabilizing instruments.“ He noted that even though “the National Assembly has approved that AMCON will go on for another 10 years, we must realise that they are not going to be buying more liabilities. They are going to just spend the time winding down, selling off all these bad loans until they can sell as much as possible. They said their target is 80 per cent but if they achieve 50, 60 per cent, they have done very well compared to other asset management companies all over the world.”

He added that, "AMCON bought the debts at at very low prices. For

instance, if they bought a debt from you that has no collateral, they only bought it for 5 per cent, so even if they don’t sell it, they wouldn’t lose more than 5 per cent but sometimes they can sell it for 100 per cent or 10 per cent or 15 per cent, which is why they are achieving 112 per cent. So they might be able to achieve 80 per cent but what has really happened is that they bought it at very low prices and they are trying to achieve certain levels for high prices.

So in the end really, if it’s well managed, AMCON would have done very well. And whoever brought the idea has done a good job.

C M Y K

34 — Vanguard, MONDAY, MAY 26, 2014

Appointment & Promotions vicahiyoung@yahoo.com 08033348923

Caverton announces Ileoma new CFO

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AVERTON, one of Nigeria’s leading providers of support solutions to local and international oil companies across aviation and marine services, has announced the appointment of Mr. Samuel Ileoma as its Chief Financial Officer, CFO. The appointment took effect May 2, 2014.

Ileoma brings extensive financial and operational leadership experience to Caverton having worked at senior management level at various multinational companies including BJ Services, DiageoGuinness and Baker Hughes.

He is a Fellow of the Institute of Chartered Accountants of Nigeria and also holds a Master’s Degree in Business Administration.

His professional career started with Peat Marwick (now KPMG) in 1987 from where he joined Mobil Producing Nigeria as an accountant.

He served as the pioneer Finance manager for BJ Services between 1991 and 1995 after which he was seconded to the UK office in Aberdeen.

The CFO moved to DiageoGuinness in 2000 as Manager of West Africa Audit and Risk Management and served in that role for six years, when he

undertook several assignments across Africa, Europe and Australia.

Mr Ileoma also worked at Baker Hughes and more recently at Bristow Helicopters as Compliance Manager for the West Africa Strategic Business Unit.

Commenting on the appointment, Mr. Bode Makanjuola Chief Executive Officer, CEO, Caverton said “I am pleased to welcome Mr.

Samuel Ileoma as CFO. He brings on board a wealth of comprehensive financial experience spanning over 2 decades. His track record for success and broad understanding of aviation services will be very valuable to our company as we focus on growing revenues and increasing margins within the oil and gas servicing sector, one of the fastest growing industries in Nigeria”.

Hotel and Catering institute elects Gabriel president

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igerian Hotel and Catering Institute, NHCI, has elected Mr. Gabriel Adebayo Ayodele as its new President.

A fellow of the Institute and Controller, Marketing and Sales of Lagos Airport Hotel, Ikeja, Ayodele is saddled with the responsibility of running the organization for the next one year at an election held during the 13th

AWARDS: From left: Kufre Ekanem, Corporate Affairs Adviser, Nigerian Breweries Plc; Walter Drenth, Marketing Director, Nigerian Breweries Plc; Emmanuel Oriakhi, Marketing Manager, Consumer Market Intelligence, Nigerian Breweries Plc; Charles Chijide, President Outdoor Advertising Association of Nigeria, OAAN; Babu Akinbobola, Chairman, Media Link and Ita Bassey, Senior Brand Manager, Star lager beer, at the 8thExhibition and Poster Awards in Lagos

Annual General meeting NHCI in Lagos.

His predecessor and immediate past president, Mr. Bola Jaiyeola, General manager, Business Development Odua Investment Limited, now represents the Institute at the National Council of Federation of Tourism Association of Nigeria, FTAN. Other fellows of NHCI elected into the new council include Mallam Aminu Kabo, first Vice – President, Mrs. Bola Dada, second Vice – President and Alhaji Gbenga Dau’ud Sunmonu as Third Vice-President.

To further strengthen the foremost hospitality Institute, about six notable professionals representing interests in the hotel and tourism Industry were appointed.

They are Mr. Kazeem Durosomo, a fellow of NHCI and the Institute of Hospitality, United Kingdom, representing the Hotel sector, Mrs. Angella Kachukwu representing Hospitality and welfare sector, Col Beatrice Echenzu (rtd) representing institutional sector.

Others include, Mrs. Ebere Onu of Imo state University, representing the education sector, Mrs. Olabisi Onala, from the office of Chief of Staff, Lagos State Governor’s office, representing the corporate and industrial sector and Mr. Clement Izuogu, representing the oil and Gas sector.

Airtel appoints regional operations directors for Lagos, North I N line with its commit ment to develop local talents as well as create leadership opportunities for exceptional Nigerians, leading telecommunications services provider, Airtel Nigeria, has announced the appointment of Mr. Femi Oshinlaja and Mr. Wole Abu as Regional Operations Director for its Lagos and Northern Regions, respectively.

In their new roles, the duo will be responsible for ensuring market leadership, driving brand engagement and preference as well as providing leadership for the sales force in the Lagos and Northern operations.

Abu comes into his new role with over 23 years of working experience, with skills built across various functions spanning Human Resource and Administration, Networks, Operations, Legal & Regulatory and Sales & Marketing. He joined Econet Wireless Nigeria (now Airtel Nigeria) in 2002 as Facilities Manager in the Human Resources and Administration Department from C M Y K

where he was transferred into the role of Project Manager: Network Implementation in the Networks Department.

As part of his attributes of taking new challenges, he was promoted and transferred into the role of Head of Division, Business Support and Regional Sales Manager in Celtel Nigeria and Zain Nigeria, respectively. Abu has also played the role of Zonal Business Manager in both South and Lagos Regions of Airtel Nigeria. He possesses a Bachelor of Chemical Engineering degree from the University of Benin and an MBA from the Lagos Business School.

Oshinlaja has over 12 years work experience as a Sales, Marketing and Business Operations professional across the Banking, FMCG and Telecoms sectors. Having worked for Multinational firms namely British American Tobacco, Nokia and Diageo, he has also had the opportunity of working in Senegal, Ghana and Nigeria.

Prior to his appointment, he was National Key Accounts Manager

in the Nigeria Bottling Company (Coca-Cola Hellenic). Before then, he was the Channel Development Manager in British American Tobacco Marketing & Distribution Company, where he won the channel game against Philip Morris by implementing a competitive strategy in the ‘HORECA’ space.

As National Sales Manager in Diageo, he was instrumental to the set-up of the new Spirits business in Nigeria and within the first year of trading, he led the sales team in exceeding their annual

operating plan. At Nokia Nigeria he was responsible for the implementation of retail plan for product availability, merchandising and promotion in all outlets, which consistently achieved volume and net Absolute Gross Margin.

He holds a B.Eng. degree in Agricultural Engineering from the Federal University of Technology, Akure and a Masters in Business Administration from the University of Ilorin. He is also an Associate member, National Institute of Marketing, Nigeria.

U.S. states probe eBay cyber attack EBay Inc came under pressure last week over a massive hacking of customer data as three U.S. states began investigating the ecommerce company’s security practices.

Connecticut, Florida and Illinois said they are jointly investigating the matter. New York Attorney General Eric Schneiderman requested eBay provide free credit monitoring for everyone affected.

Details about what happened are still unclear because eBay has provided few details about the attack. It is also unclear what legal authority states have over eBay’s handling of the matter.

Vodacom Business wins 2014 ICT awards

V

odacom Business, Nigeria has won both the Enterprise Solutions Provider of the Year and the Cloud Service Provider of the Year categories at the Beacon of ICT, BoICT, Awards.

The ceremony took place in Lagos.

The BoICT Awards is an annual ceremony which recognises stakeholders, contributions and commitments to the growth of the Nigerian ICT industry.

This year, over 250,307 Nigerians voted in different categories with Vodacom Business Nigeria emerging winner of the Enterprise Solutions Provider of the Year category for the second year running.

Vanguard, MONDAY, MAY 26, 2014 — 35

Tax Matters

By EMBUKA ANNA

T

axation is arguably as old as mankind. In his book, Income Tax Law and Practice in Nigeria, Ola, C. S. said apart from revenue to the government, taxation is important to everyone and taxes collected come back to the taxpayers in the form of social amenities. Almost everything we own and use for personal or investment purposes is a capital asset.

Examples include a home, personal-use items like household furnishings, and stocks or bonds held as investments. Capital gains are the profits realized from the sale of assets at a price that is higher than the purchase price. When a capital asset is sold, the difference between the cost sale and the sales price is a capital gain or a capital loss. You have a capital gain if sales price is higher than cost of sale. The reverse is the case for a capital loss.

Capital Gains Tax (CGT) is a type of tax levied on capital gains accruing to individuals and corporations. The Federal Inland Revenue Service (FIRS) and State Boards of Internal Revenue are responsible for the administration of the CGT in Nigeria. It is a tax applicable to capital gains accruing to any person (company or individual) on the disposal of a chargeable asset. Capital gains taxes are triggered when an asset is realized, not while it is held by an investor.

An investor can own shares that appreciate every year, but the investor does not incur capital gains tax on the shares until they are sold.

Not all disposals are subject to CGT; only chargeable assets are. Chargeable assets are all forms of property, including options, debts and any form of property created or acquired by the person disposing it, or otherwise coming to be owned without being acquired.

Landed properties and buildings are the main income yielding assets in Nigeria.

Most countries’ tax laws provide for some form of capital gains taxes on investors’ and individuals’ capital gains, although CGT laws vary from country to country. In Nigeria, CGT was originally introduced by the Capital Gains Tax Act of 1967 with a rate of 20% but effective from 1998, the CGT rate was revised down wards to 10%.

The legislation currently governing taxation of capital gains is the Capital Gains Tax Act CAP C1 LFN 2004.

Capital gains are excluded from taxation under the Companies Income Tax Act

The CGT – An Untapped Revenue Goldmine (CITA) to avoid double taxation since such gains are subject to tax under the CGT Act. Assets situated outside Nigeria are chargeable to CGT on the amount received in or brought into Nigeria. In the case of a non-resident, CGT is charged on any part of the gains received or brought into Nigeria.

Disposal to a Connected Person

W

hen a taxpayer transfers his capital asset to say, his wife, this is seen as a transaction between ‘connected persons’.

In this case, the chargeable gains will be calculated on the basis of the market value of the asset at the date of transfer.

Section 24 of the CGT Act, 2004 provides that a person is ‘connected’ if: That person is the individual’s spouse.

A trustee of a settlement with any individual who in relation of the settlement is a settler.

A person is connected with any person with whom he is in partnership and with any person the spouse or relative of any person with whom he is in partnership.

A company is connected with another company if: The same person has control of both or he and persons connected with him has control of the other.

Where a group of two or more person has control of each company and the group either consists of the same persons or could be regarded as consisting of the same persons by treating a member of either group as replaced by a person with whom he is connected.

A company is connected with another person if that person has control of it or if it and that person connected with it together have control of it.

Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with another and so will any person on the directions of any of them to secure or exercise control of the company.

C

apital gains is the net consideration accruing to a person on the disposal of capital assets after the sum of the total consideration and expenses for acquiring the asset has been deducted. It is arrived at by deducting from the proceeds accruing to any person on disposal the following:

EXAMPLE: Ola sold his property for N150,000 on the 2nd of June, 2005.

He incurred the following expenses in the course of the sale: Adverts (online and print): N 8,000 Legal service charge: N15,000 He bought the property on 13th December, 1981 at N60,000 and incurred the following expenses: Agency: N10, 000 Renovation : N 10, 000 .

Here is a computation of the amount of CGT due from Ola: N N Proceeds from sale: 150,000 Less expense: Adverts: 8,000 Legal service charge: 15,000 Agency: 10,000 Renovation: 10,000 (43,000) Net sales proceeds: 107,000 Less cost of acquisition: (60,000) Gains 47,000 Capital Gains Tax = 10% of N 47,000 The amount or value of the consideration (in money or money ’s worth) given wholly, exclusively and necessarily incurred in providing the asset.

Expenses wholly, exclusively and necessarily incurred on the asset for the purposes of enhancing its value being expenditure reflected in the state or nature of the asset at the time of disposal.

Expenses wholly, exclusively and necessarily incurred on the asset in establishing, preserving or defending the title or right over the asset.

The incidental cost of making the disposal, incidental costs of the acquisition of the asset or of its disposal includes fees, commissions or remuneration paid for professional services of any surveyor or valuer or auctioneer or accountant or agent or legal adviser and cost of transfer or conveyance including cost of advertising.

Expenses Allowable and Computation of CGT

E

xpenses allowable as a deduction in computing the gains or losses of a trade, business, profession or vocation for income tax purposes are not to be deducted in the course of determining the applicable CGT. So also are premiums or other payments made

under a policy of insurance against the risk of any kind of damage or injury to lose or depreciation of any asset.

This does not prevent the deduction of expenses allowable in the computation of capital gains under the CGT if the assets have qualified for capital allowances.

According to Ayua, I. A. in his book, The Nigerian Tax Law, the above position on deductions is to the effect that capital gains are liberally calculated for the purpose of the CGT law. In practice, capital gains are calculated by deducting the total cost of acquisition from net sales proceeds.

Exemptions

T

he CGT Act exempts gains accruing to the following: Ecclesiastical, charitable or educational institutions of public character.

Any statutory or registered friendly society.

Any co-operative society registered under the Trade Union Act, in so far as the gain is not derived from any disposal of any asset acquired in connection with any trade or business carried on by the institution or society and the gain is applied purely for the purpose of the institution or society as the case may be.

Gains accruing from any local government council.

Companies being purchasing authorities

established under any law in Nigeria empowered to acquire any commodity in Nigeria for export.

Superannuation funds (pension provident or other retirement benefits fund, society or scheme approved by the Joint Tax Board under Section 20 (1) (f) of the Personal Income Tax).

Decorations, stocks and shares (the Act provides that where a person disposes a decoration awarded for valour or gallant conduct which he acquires otherwise than for consideration in money or money ’s worth, such is not a chargeable gain. The Act also recognizes disposal of Nigerian government securities, stocks and shares as nonchargeable gains).

Reliefs

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o prevent double tax e l i e f on disposed assets, the Act provides that relief would be given in respect of replacement of business assets, compensation for assets lost and destroyed and in respect of delayed remittances from abroad.

The relief would be in the form of tax deferred. r

Offences and Penalties

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ith regards to the FIRS’ jurisdiction, offences and penalties under CGT is as provided for by Part VI of the FIRS Establishment Act 2007. On failure to deduct or remit taxes, Section 40 of the FIRSEA 2007 provides that “any person who being obliged to deduct any tax under this Act or the laws listed in the First Schedule of this Act but fails to deduct or having deducted fails to pay to the Service within 30 days from the date the amount was deducted or the time the duty to pay arose, commits an offence and shall upon conviction be liable to pay the tax withheld or not remitted in addition to a penalty of 10% of the tax deducted or not remitted per annum and interest at the prevailing Central Bank of Nigeria minimum rediscount rate and imprisonment for a period not more than three years”.

On general penalty, Section 49 (1) stipulates that “any person who contravenes any provisions of this Act for which no specific penalty was provided, commits an offence and shall be liable on conviction to a fine not exceeding N 50,000.00 or imprisonment for a term not exceeding 6 months or to both fine and imprisonment”.

C M Y K

36 — Vanguard, MONDAY, MAY 26, 2014

UNIVERSITY OF LAGOS IN PARTNERSHIP WITH UNIVERSITY OF BEDFORDSHIRE, UNIVERSITY OF CENTRAL LANCASHIRE, UNIVERSITY OF THE WEST OF ENGLAND, UNIVERSITYOFBIRMINGHAM, UKAND SOOCHOWUNIVERSITY, SUZHOU P.R. CHINA ADMISSION INTO FOUNDATION PROGRAMMES 2014/2015

Applications are invited from suitably qualified candidates for the Foundation Programmes offered by the University of Lagos in the 2014/2015 Session. Students who have two A-level passes, HND holders and graduates of recognised Institutions are exempted from the entrance examination and may be considered for admission into the Foundation Programmes.

Highly successful candidates after an examination administered by the Joint Universities Preliminary Examinations Board (JUPEB), are eligible for consideration for direct admission into the 200 Level of the Degree Programmes of the Universities through JAMB (Joint Admissions and Matriculation Board), or admission into either the University of Bedfordshire, University of Central Lancashire, University of the West of England and University of Birmingham, UK and Soochow University, China. This is strictly a non-residential programme.

The University will provide an intensive one-year taught Foundation courses of study in the following Faculties:

(A) ARTS (08037118691) (i) Linguistics, African & Asian Studies (Yoruba, Igbo) (ii) Creative Arts (Theatre Arts, Music, Visual Arts) (iii) English (iv) History and Strategic Studies (v) European Languages (French, Russian) (vi) Philosophy (B) BUSINESS ADMINISTRATION (+234-8078053979) (i) Accounting (v) Industrial Relations & Personnel Management (ii) Actuarial Science (vi) Insurance (iii) Finance (iv) Business Administration (C) EDUCATION (+234-8023810802) (i) Adult Education (xii) Education Mathematics (ii) Educational Administration (xiii) Education Physics (iii) Education Biology (xiv) Education Yoruba (iv) Education Chemistry (xv) Christian Religious Studies (v) Education English (xvi) Islamic Religious Studies (vi) Education French (xvii) Human Kinetics & Health Education (vii) Education Geography (xviii) Business Education (viii) Guidance & Counselling (xix) Education Economics (ix) Education History (xx) Technology Education (x) Education Igbo (xxi) Home Economics (xi) Education Integrated Science (xxii) Early Childhood Education (D) ENGINEERING (+234-8055556945) (i) Chemical Engr. (vi) Mechanical Engr. (ii) Civil & Environmental Engr. (vii) Petroleum & Gas Engr. (iii) Surveying & Geoinformatics (viii) Computer Engr. (iv) Electrical & Electronics Engr. (ix) Systems Engr (v) Metallurgical & Materials Engr.

(E) ENVIRONMENTAL SCIENCES (+234-8023166473) (i) Architecture (iv) Quantity Surveying (ii) Building (v) Urban & Regional Planning (iii Estate Management (F) LAW (+234-8023132114) (G) SCIENCE (+234-8023288606) (i) Biochemistry (viii) Marine Biology (ii) Botany (ix) Mathematics (iii) Microbiology (x) Physics (iv) Zoology (xi) Geophysics (v) Cell Biology & Genetics (xii) Geology (vi) Chemistry (xiii)Fisheries (vii) Computer Sciences (H) SOCIAL SCIENCES (+234-8033304512) (iv) Political Science (i) Economics (ii) Geography (v) Psychology (iii) Mass Communication (vi) Sociology (I) PHARMACY (+234-1-8023004426) (J) COLLEGE OF MEDICINE (+234-8023059033, +234- 8023014284 & +234-08023034954) (i) Dentistry (vi) Medical Laboratory Sciences (ii) Medicine (vii)Nursing Sciences (iii) Physiology (viii) Radiography (iv) Physiotherapy (v) Pharmacology SOOCHOW UNIVERSITY, CHINA, PROGRAMME: Medicine (only) Enquiries 090993621958; 08086757464 UNIVERSITY OF BEDFORDSHIRE (U.K.) PROGRAMMES: (Enquiries – 09093621958; 0806757464) Accounting, Advertising, Biomedical Science, Business Studies, Computer Science, General Media Studies (Mass Communication), Law, Marketing and Psychology.

UNIVERSITY OF CENTRAL LANCASHIRE (U.K.) PROGRAMMES: (Enquiries09093621958; 0806757464) Business Related Programmes: Business Administration, Business Studies, Business Information Systems or Technology, International Business, International Fashion Management, Management and Marketing, Marketing, Marketing and Business Management, Business Operations Management, Retail Management (with options).

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Engineering-Related Programmes: Aerospace Engr., Mechanical Engr., Motorsport Engr., Electrical & Electronic Engr., Computer Science, Construction Management, Civil Engr., Architectural Design.

Environmental Sciences Related Programmes: Construction Management, Civil Engineering, Architectural Design Technology.

UNIVERSITY OF BIRMINGHAM PROGRAMMES (Enquiries–09093621958; 0806757464) Chemical Engr, Civil Engr, Electrical & Electronics Engr, Mechanical Engr, Materials Science and Technology ADMISSION REQUIREMENTS A minimum of FIVE credits (English Language and Mathematics and three relevant subjects) obtained in one sitting at the SSCE/WASC, GCE/O/L, NECO with results obtained before registration. Note that Engineering, Computer Sciences and Mathematics candidates require credit in Further Mathematics. Candidate must be 16 years and above by September 2014.

PROCEDURE FOR COMPLETING FOUNDATION PROGRAMMES EAPPLICATION FORM - Visit the University of Lagos website, click on the Foundations link Go through the subject requirements page to confirm if you are registrable for your proposed course Complete the Pre-application page to obtain a payment reference number (PRN), using the applicant’s names Make payment at any branch of the underlisted banks with the payment reference number (PRN) * Access Bank *Ecobank *First Bank *GTbank *UBA Plc *Union Bank *Wema Bank *Zenith Bank - Return to the University website, click on the Application Form Link, Login with PRN and applicant’s surname in lowercase as password - Complete the application form, print two copies, stamp and sign them at your faculty, submit a copy of the form at the faculty coordinator’s office and come along with a copy for the entrance examination on 8th - 13th September, 2014 Cost of Application Form(including online free practice tests): =N= 25,000.00 (excluding Bank Charges) N.B.: Please read the information and Guildelines for completing the application forms online to determine if you are registrable for your proposed course ¾ The Application opens on Thursday 22nd May, 2014 and Closes on Wednesday 20th August, 2014. ¾ Submission of printed application forms to the Foundation Coordinators at the Faculties: 22nd May -20th August, 2014.

Conduct of Examination: Computer-Based Testing (Please check the Unilag Website a week before the examination to verify your venue and examination date).

Examination Dates: 8th - 13th September, 2014 Venue: .Check the University of Lagos Website by Monday 25th August, 2014.

Mode of Examination: All Questions are Multiple Choice. x(xamination subjects are: Mathematics, English Language (20 questions each) and 3 other relevant subjects of 15 questions each that is, a total of 85 questions to be answered in 1 hour. xStudents to Report at designated venues - 7.00 a.m. for Verification Examinations begin at 9.00 a.m.

Results:- Results will be released on the University website and at the Faculties on Monday 29th September , 2014.

Registration: Starts 6th October, 2014 Period of Programme: 6th October, 2014 - 30th June, 2015 All Enquiries are to be made to Director, Foundation Programmes 09093621958; 08086757464; 08039193089:08123800468; (Please call between 11a.m. - 3 p.m. Monday - Friday) PARTNERING UNIVERSITIES

Dr. (Mrs) Taiwo F. Ipaye, MNIM Registrar & Secretary to Council

C M Y K

SOOCHOW UNIVERSITY, SUZHOU, P.R. CHINA

Vanguard, MONDAY, MAY 26, 2014 — 37

E - Commerce

Africdeals.com pledges commitment to reliable, efficient online shopping Stories by JONAH NWOKPOKU

F

ounder of Africdeals.com, Mr. Deji Adeoni, has said that his e-commerce company, Africdeals.com will provide seamless, efficient and reliable online shopping for variety of items for online shoppers across the African continent.

He said he conceived the idea of an e-commerce site with international standard in 2009 to offer reliable online shopping experience and provide an alternative for Africans who shop overseas.

Speaking with newsmen at the just concluded Offshore Technology Conference, OTC, Adeoni said Africdeals.com, launched May 1, 2014, sells consumer electronics like computers, cameras, toys, accessories, adults and kids clothing, designer handbags and whatever can be found on the website.

"If you don’t find it there, you can place an order. The rea-

UNVEILING: From left, Tawanda Gumbo, Transnational Leader, Deloitte; Folake Ani-Mumuney, Head Marketing, First Bank and Junior Achievement Nigeria, JAN Ambassador; Tayo Oviosu, founder and CEO, PAGA, JAN Ambassador and Kunbi Wuraola, Executive Director, JAN at the unveiling of JAN in Lagos. Photo: Lamidi Bamidele

son is because most merchandise that come into Nigeria and most other African countries lack quality and are mostly being sold for the price of the originals. The quality and standard is way different from what you get in the United States and a few

other countries that have standard quality and control measures in place?,” he said.

Adeoni explained that Africdeals.com was created so that Africans, especially Nigerians can shop and have their items delivered within three weeks of pur-

chase.

“If Nigerians go to Amazon and other foreign e-commerce sites to shop, they won’t ship it to Nigeria because they don’t trust us but as indigenes of Nigeria, I understand the market very well.

“The creation of Africdeal.com is to enable Nigerians go to our website, shop and purchase whatever they want to buy and we ship directly to them in Nigeria.

Our prices are competitive compared to what one can get on

Amazon and BestBuy, for example, and one can be rest assured that one is getting the right quality,” he said. , Adeoni also noted that the quality of its merchandise will help build customer confidence in Nigeria and other parts of Africa.

Konga.com, Infinix offer car reward to online shoppers

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igeria’s online m a r k e t p l a c e , Konga.com in collaboration with device makers, Infinx will reward loyal shoppers in the month of May with an opportunity to win a brand new Hyundai i10 and other gift vouchers.

In a statement, Konga said, “To win the car, customers have to purchase the new Infinix 8s tablet on Konga.com.”

It said the tablet is exclusive to Konga.com and if one buys it, one will get a free Bluetooth headset including a free 100 per cent bonus data for twelve months from MTN. Commenting on the offer, Konga’s Head of Marketing, Gabriel Gab-Umoden said, the offer is part of the marketplace's commitment to driving online shopping and boosting access to tablet in Nigeria.

38 — Vanguard, MONDAY, MAY 26, 2014

Agric Business

BY JIMOH BABATUNDE

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ormer Nigerian President, Olusegun Obasanjo, has emphasised the need to invest in technology to modernise agriculture in Africa and increase access to affordable finance for smallholder farmers.

He said this is required to increase productivity.

Obasanjo, who spoke as a member of the Africa Progress Panel at the ongoing Annual Meetings of the African Development Bank holding in Kigali, noted that though few farmers have access to finance, the cost of it is still excessively high with interest rates ranging between 18 and 20 per cent.

“There is no way farmers can make it at that rate of interest unless they are producing cocaine,” he said, underscoring the need to provide affordable financing to farmers.

Obasanjo added: “Agriculture should not be seen just as a development project – it should be seen as a business. Whether you are talking of small scale or medium size – this is very

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productivity enhancement through support to research; and sector capacity-building and knowledgesharing on appropriate development policies for the sector in Africa, has helped to improve agricultural productivity and competitiveness in the region. Viswanathan Shankar, the Group Executive Director and Chief Executive Officer, Standard Chartered Bank for Europe, Middle East, Africa and Americas, observed that since the majority of Africans depend on agriculture, investing in the sector is critical to reducing inequality and creating jobs. He noted that access to finance can be improved by investing in the entire agriculture value chain.

In her remarks, Claire Akamanzi, the Chief Operating Officer of Rwanda Development Board, said Rwanda has managed to sustain growth in agriculture reduction on average at 8 per cent over “Improving agricultural the last decade due to the productivity is not rocket Government’s heavy science. People know what to investment in the sector, do – the question we must ask including ensuring access to is why people are not doing financing for small farmers. it?” he said, pointing out that Over the past few decades, a several countries, including growing concern about SubCape Verde and Rwanda, are Saharan Africa’s agricultural already demonstrating the sector has been its poor possibilities for agricultural performance in terms of growth. The AfDB, through its productivity and yield of main investments in rural food staples, as well as market infrastructure; agricultural

Obasanjo, others urge African govts to boost agric productivity important. African farmers are living in antiquity by the material that they use, including inadequacy of infrastructure and poor access to markets. This should not be so.”

Speaking at the interactive session, Donald Kaberuka, President of the AfDB, emphasized that increasing productivity in agriculture is critical for sustainable development and .poverty

AFAN to distribute 18,540 tonnes of fertiliser to farmers in Gombe

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he All Farmers Association of Nigeria (AFAN), Gombe State chapter, says it will distribute 18,540 tonnes of fertiliser to farmers in the state.

Alhaji Gambo Sarkin-Noma, the Secretary of the association, told the News Agency of Nigeria (NAN) in Gombe that the commodity, which would be given on loan, would be interest-free.

He said that the association was just awaiting clearance from the state government before it commenced the distribution of the commodity.

Sarkin-Noma said that the fertiliser would be distributed to only bonafide farmers in the 114 wards of the 11 local government area of the state.

The AFAN secretary said that the initiative was the product of collaboration between the state government and JAIZ Bank, aimed at improving both farming activities and the economy of the state.

Vanguard, MONDAY, MAY 26, 2014 — 39

Advertising, Media & Marketing

By PRINCEWILL EKWUJURU

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he differences between former Nigerian Institute of Marketing, NIMARK and Chartered Institute of Marketing of Nigeria, CIMN members have been finally laid to rest, as both factions decided to form a unified force.

Speaking at a press briefing to announce the unification in Lagos, the president of the National Institute of Marketing of Nigeria, NIMN, the umbrella body of marketers in Nigeria, Ganiyu Koledoye, said that he is glad the NIMN factions are laying to rest their differences to form a common front in the interest of the marketing profession and the Nigerian economy at large.

He stated that the crux of economic growth is marketing which he described as creative and optimum utilization of resources Koledoye who said the “Institute is born again” noted that soon there will be a uniform structure in the institute signaling end of three years squabbles between the two factions, a situation he agreed affected the reputation of the institute.

Speaking on the economy, the NIMN president stated that the $68 billion investment commitment by foreign investors at the World Economic Forum in Abuja would help propel Nigerian and other African economies.

He further said that if the investment is channeled to

Things Customers Hate – Part 4 CONTINUED FROM LAST WEEK

H Third left: Head of Marketing, Mr. Norden Thurston; Pepsi Music Ambassador, Tiwa Savage with Nigerian Idol season 4 contestants during the Pepsi Day Out with Contestants in Lagos recently.

Feuding marketing associations bury hatchet, to form unified force agriculture, education, mining and infrastructure, especially electricity generation, the African economy would stand on good pedestal for global competition.

According to him, “I will like to narrow it down to education in particular because we would like to drive Nigeria’s economic development through

education because the economy cannot be developed by people who lack the idea to progress the country positively”, he said.

According to the marketing professional, the WEF for Africa forum was important as it focused on the critical sectors Nigeria and the rest of Africa need attention to become more competitive in the global market.

La Casera empowers distributors with N60m

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he La Casera Company has committed N60 million to enhance the services of its distributors.

The company said the investment is to help the distributors contribute their quota to the growth of the economy by providing more employment for Nigerians through the sale of the La Casera brand.

The company which rewarded its loyal distributors for performing exceptionally well in the 2013 trade year, tagged Distributors Conference 2014 in Lagos, saw the presentation of awards to distributors who distinguished themselves in enhancing sales for the company in the previous year.

The distributors also went home with prizes ranging from Ford Ranger vans that will aid them in the distribution of the products to cash prizes amounting to C M Y K

Not knowing the price of your product ave you met a frontline person who didn’t know the price of their product(s)? I have met quite a number.

And I think it’s rather unprofessional not to know the price of the product you sell. Your price list should be within easy reach at all times since you may not be able to memorise all prices, especially if you have many products or if prices change often. But even then, you are likely to remember the prices of your fastest moving products, if you make the effort.

N60million, according to their performance in the previewing year.

Speaking, the Chief Operating Officer of the company, Mr. Dileeban Ponniah, said: “I am highly honored to be here to celebrate, recognize and reward our esteemed distributors who have

consistently shown great loyalty to our company with their unflinching support to our growth and aspirations.

Ponniah, continued, “Your immense efforts have contributed to the phenomenal growth of the company, and we are indeed proud and thankful to be associated with you”.

Search for Top 50 brands in Nigeria begins

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he attempt to search for the Top 50 brands in Nigeria has begun in earnest. Organisers of the annual search for 50 most popular and top of the mind brands in Nigeria, Top 50 Brands Nigeria, through the Project Coordinator, Taiwo Oluboyede, at the press briefing to herald the second edition of the search serves as a media for recognition and classification of brands performance in the market.

According to him, recognition of the brands include rating and information, the avenue, he said, also serves as a means of celebrating brands that have gained significant brand equity overtime, whilst having good market share.

Not knowing what is happening in the organisation I have met a number of frontline people who didn’t know who was responsible for what in their organisations. I have also met those who didn’t know what products had arrived and what promotions were running, even when such promotions were being advertised in newspapers or on company website.

Indeed, the frontline person is not always to blame. Sometimes people in Marketing run programmes without informing the customer-contact employees. When this happens, you can expect very poor outcomes.

Complaining about the workload Some of us are perpetual complainers. If you have such people serving customers, they will definitely display their complaining behaviour on the frontline. For those who complain about their workload, even to customers, my advice is: go get a less demanding career. Serving customers professionally is hard work. And customers want to be served; they are not interested in anybody’s workload issues.

Chatting away on the phone Gossiping, giggling or chatting away on the phone while a customer is waiting is really not the way to go. Customers perceive those who indulge in such behaviour (and their organisations) as unserious.

Dressing shabbily or indecently We won’t launch into a homily about what constitutes indecent or shabby dressing. You should know what is acceptable within your society or even among the class of customers you serve. I think the dressing of those who serve customers ought to conform to a certain level of dignity. Avoid being offbeat.

“It’s five o’clock. I’m about to leave. Please come tomorrow” Many of those who work in ministries, government departments and agencies still use this kind of expression, in spite of the SERVICOM initiative to make public service a lot more responsive to the needs of the public. They are perpetual time-watchers although they are never “on seat,” as the saying goes. Ironically, the ideals of SERVICOM have found more expression on the posters on notice boards and office doors than in the attitude and behaviour of many public servants!

If a customer comes at 5 pm, when you think your work is done, don’t dismiss them with a wave of the hand. I suggest you go the extra mile. Give them some attention. You know the extra mile actually begins when you have done your bit. If you can serve a customer today, why ask them to come back tomorrow?

“My boss is too busy to attend to you now” Secretaries or Personal Assistants (PAs) to top executives are good at saying this. Those who speak in this manner miss the point. The boss may be too busy to attend to other people, but not his customers. Reason? He is still there because customers spend enough money to keep him on the job!

What are those things you don’t like as a customer? To share them on this page, send an email to: allwellnwankwo@gmail.com. TO BE CONTINUED.

40 — Vanguard, MONDAY, MAY 26, 2014 Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com Tel:0805 220 1997

The narrative, this week, will answer questions on the impact of a stronger naira exchange rate such as N80:$1 on critical economic indices like inflation, interest rate, fuel subsidy, national debt and job creation. The discussion is as follows:

Why do you believe that a stronger naira is better for the economy?

Historical evidence clearly confirms that the trajectory of deepening poverty in Nigeria correlates loyally with depreciation of the naira exchange rate from stronger than 1:1 in the 70s and early 80s to current market rate of about N160:$1. In reality, a much stronger naira should yield more benefits to our economy, and halt deepening poverty; conversely, any naira depreciation will further fuel inflation, deepen poverty, and widen the already huge gap between the rich few and the poor masses.

So, how does naira exchange rate affect inflation?

Inflation is generally defined as excess money chasing too few goods; in other words, inflation will be restrained, when optimal naira values exist in the system. For example, the

Advantages of a stronger Naira substitution of naira allocations for say, $1bn distributable revenue at a rate of N160:$1 will increase the actual naira stock in the banks by N160bn, while commercial banks could leverage almost ten-fold on this amount, to compound the burden of surplus naira in the economy.

Conversely, additions to already bloated money supply from monthly naira allocations would be reduced by at least 50% to just N80bn, if the same $1bn allocation was exchanged at a stronger rate of, say, N80:$1.

Consequently, inflation will fall with a stronger naira rate, as there would be less surplus naira chasing available goods and services; lower inflation rates will increase the purchasing power of all income earners, while also reducing production cost.

Indeed, economic best practice inflation rate is often less than 2% in successful economies. In reality, our current inflation rate of 8% means that static income earners (e.g. pensioners) will lose 40% of their incomes’ purchasing power every five years.

Does a stronger naira positively affect interest rate?

In the earlier article “Should the Naira be Devalued”, we explained that existing high interest rates are the result of CBN’s selfinfliction of surplus naira on the economy.

We also explained that systemic naira surplus increases with lower naira exchange rates; thus, a stronger exchange

rate of, say, N80:$1 will reduce the level of disenabling excess naira by at least 50%.

In such event, CBN will not become compelled, for fear of inflation fueled by surplus naira, to sustain disruptively high Monetary Policy Rates (MPR) that trigger over 20% cost of funds to the real sector. Thus, with reduced or optimal money supply, the apex bank will inevitably reduce its MPR (i.e. rate at which it lends to commercial banks), from the current disturbingly high level of 12%, to benign levels that will encourage banks to, in turn, provide credit to the real sector at rates that support increasing productivity and more job opportunities.

Evidently, lower cost of borrowing will reduce interest rates, so that madein-Nigeria goods would become more competitive against imports, which are supported with cheap concessionary funds. Thus, a stronger naira will not only stimulate productivity, but would also bring about much cheaper made-in-Nigeria goods, and create additional jobs.

Nonetheless, we must recognise that no country successfully grows its economy when government deposits with banks earn zero percent, while government simultaneously pays doubledigit interest rates to the same banks, just to remove perceived surplus naira from the system.

Will a naira exchange rate of N80:$1 have any

other positive economic impact?

An exchange rate of N80:$1 will also enhance the naira’s purchasing power.

Thus, the N18,000 minimum wage, for example, which is currently equal to about

,

IN an article earlier this month, we explained why further naira devaluation would constrain demand and economic growth, and also add millions more to the population of impoverished Nigerians, who are currently unemployed or live on less than $2 per day.

In a subsequent article, we identified the unyielding, suffocating self-inflicted burden of surplus naira as the primary cause of continuously depreciating naira despite bountiful dollar reserves since the return to civil rule in 1999.

Indeed, economic best practice inflation rate is often less than 2% in successful economies, while a 5% inflation rate will generally be regarded as failure in the management of money supply

,

$110, would now be worth $220 per month; thus, the additional product demand created by the higher purchasing power of income earners would encourage local entrepreneurs to produce, if cost of funds also fall below 10%.

What impact would such entrepreneurial impetus have on our economy?

Well, the renewed spirit of enterprise would ultimately lead to the creation of more job opportunities, as new investors enter the market, while established industrialists expand their capacity utilization, or retool their plants for increased production. Ultimately, the wages earned by the increasing army of newly employed workers, will also create additional consumer demand that will further invigorate the industrial climate, and instigate additional industrial expansion, with even more job opportunities.

Will a stronger naira eliminate fuel subsidy?

Yes, it would; for example, if 1litre of petrol sells for $1

ex refinery, this would be equivalent to N160/litre in Nigeria. If however, the naira rate falls from N160:$1 to, say, N200:$1, the same petrol ex-refinery would now also sell for N200/litre.

Furthermore, if however, petrol continues to sell for N97/litre instead of the actual market price of about N200/litre, the attendant subsidy value would increase to N103/litre, instead of the current N53/litre with exchange rate of N160:$1.

Thus, the sum of over $12bn (N2tn) which is currently frittered away as fuel subsidy annually, will become available for rapid infrastructural enhancement in the areas of education, health, transportation, etc.

Evidently, it will cost this and future generations an arm and a leg, if we had to borrow $12bn annually at cutthroat interest rates to enhance our infrastructure.

Will a stronger naira reduce our national debt burden?

As earlier explained above, a stronger naira will reduce the cost and size of government borrowing, as cost of funds will fall for both private and public sector borrowings. Additionally, government need not increase its debt burden, by providing funds to the banks at zero percent, and irrationally borrowing back the same funds at doubledigit interest rates in order to manage surplus naira and contain inflation.

In conclusion, however, the problems associated with excess naira will be correctly resolved if dollar certificates are adopted for the allocation of dollarderived revenue.

SAVE THE NAIRA, SAVE NIGERIANS!

Business & Economy NSE market capitalisation rises by N92bn

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ransactions on the Nigerian Stock Exchange (NSE) on Friday maintained the bullish trend with the market capitalisation appreciating further by N92 billion.

The market capitalisation rose

by N92 billion or 0.70 per cent to close at N13.831 trillion against N13.060 trillion achieved on Thursday.

Similarly, the All-Share Index, which opened at 39,553.00, appreciated by 278.83 points to close at 39,831.83. Forte Oil, for the second consecutive day, led the gainers’ table, appreciating by N17.34 to close at N186.54 per C M Y K

share. Mobil trailed with N5.10 to close at N130, while Nigerian Breweries rose by N2.63 to close at N176.13 per share.

Lafarge Wapco garnered N2.49 to close at N112.50, while Oando gained N1.72 to close at N20 per share.

Conversely, Sim Cap led the laggards’ chart, dropping N5.17 to close at N98.33 per unit.

Okomu Oil lost N1.70 to close at N32.30, while Beta Glass dropped 85k to close at N16.22 per share. Caverton lost 74k to close at N7.02, while GTBank depreciated by 47k to close at N27.68 per share. Transcorp

was the most active stock with a turnover of 18.17 million shares worth N69.79 million. It was followed by Oando with 17.58 million shares valued at N352.59 million, while FCMB traded15.94 million shares worth N61.53 million.

UBA sold 13.84 million shares worth N99.64 million, while FBN Holdings accounted for 11.02 million shares valued at N153.26 million. In all, investors exchanged 198.03 million shares worth N3.09 million achieved in 5,187 deals on Friday against the 267.78 million shares valued at N3.18 billion traded in 3,937 deals on Thursday.

Omoh Gabriel Babajide Komolafe Clara Nwachukwu Peter Egwuatu Yinka Kolawole Favour Nnabugwu Godwin Oritse Godfrey Bivbere Michael Eboh Franklin Alli Ebele Orakpo Ifeyinwa Obi Rosemary Onuoha

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Group Business Editor Deputy Business Editor Energy Editor Asst. Business Editor Snr Bus. Correspondent Insurance Correspondent Maritime Correspondent Maritime Correspondent Energy Reporter Industry/Agric. Reporter Energy Reporter Maritime Reporter Insurance Reporter

CONTRIBUTORS Princewill Ekwujuru Nkiruka Nnorom Jonah Nwokpoku Naomi Uzor Providence Obuh LAYOUT

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