Financial vanguard 11052015

MAY 11, 2015

By YINKA KOLAWOLE

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he inability of prospective homeowners to readily come up with the required equity contribution on mortgages has been identified as one of the factors slowing down the process of mortgage origination in Nigeria, Financial Vanguard investigation has revealed.

It also partly explains the nation's huge housing deficit of more than 17 million homes.

Equity contribution is the initial amount of money to be paid by a potential home owner towards the purchase of a property.

Under the National Housing Fund (NHF) scheme, managed by the Federal Mortgage Bank of Nigeria (FMBN), a borrower is entitled to a maximum loan of N15,000,000, or as determined by the bank. Borrowers are expected to make equity contribution based on the loan amounts as follows: N15 million — 30 percent (N4.5 million); N10 million — 20 percent (N2 million); and N5 million — 10 percent (N500,000). No individual can be given a loan in excess of 90 percent of the cost or value of the property to be mortgaged under the scheme.

Financial Vanguard's findings show that majority of applicants for the Lagos State Home Ownership Mortgage Scheme (Lagos HOMS) did not succeed in owning homes under the scheme mainly due to their inability to come up with the required 30 percent equity contribution of the value of their desired properties.

Under the scheme, applicants are required to make 30 percent down payment (equity contribution). This amounts to a down payment of N1.5 million for a N5 million house, which is beyond the ability of an average salary earner.

According to the Chief Executive Officer of Lagos Mortgage Board, Mr Akinola Kojo Sagoe, as at March 2015, a total of 1,716 people have applied for the scheme, out of which 1,348 (78.6 percent) have been prequalified and over 600 applicants have emerged as beneficiaries. This shows that less than 45 percent of those pre-qualified for the scheme or about 35 percent of total number of applicants, actually emerged as

Why Nigerians shun mortgage schemes Prospective home owners can't pay required contribution NMRC, PenCom to the rescue Pension fund can now be used as equity payment

CONFERENCE - From left Chairman, Centre of Excellence, University of Lagos, Prof. Ralph Akinfeleye (left) Deputy Chancellor, Management and Services, University of Lagos. Prof. Duro Oni and President, Nigerian Institute of Public Relations, (NIPR) Lagos Chapter, Barrister Joseph Okonmah at the 2nd NIPR Lagos Stakeholders' Conference held at Julius Berger Hall, University of Lagos, Akoka, last Thursday in Lagos. homeowners.

This development has prompted the state government to initiate the Rentto-Own housing policy which will waive the 30 percent equity contributions largely for artisans, traders and non-salary earners in the state. Governor Babatunde Fashola said the rent-to-own scheme would allow artisans and traders to access Lagos HOMS without having to pay

the 30 percent down payment before they move into their apartments.

“We are working on the new housing policy. It simply means that once they are qualified for the scheme, they will be allowed to move in under the rent-to-own scheme. The beneficiaries will be paying rent which will eventually lead to mortgage. But in an instance where a beneficiary loses his job and cannot continue with

the scheme after some years, such a person will get back all he has paid.

Already, another person will be waiting to buy the apartment,” he stated.

Similarly, Dr Ngozi Okonjo-Iweala, Minister of Finance and Coordinating Minister of the Economy, while giving a progress report on the 10,000 Continues on page 22 C M Y K

22 — Vanguard, MONDAY, MAY 11, 2015

Economy Airlines record more flight delays, cancellations in April

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AWARD: Maurice Newa, Chief Commercial Officer, Airtel Nigeria (right) receiving the CEO’s Brand Personality of the Year Award on behalf of the Airtel CEO, Segun Ogunsanya, from former President, Association of Advertising Agencies of Nigeria (AAAN), Mrs. Bunmi Oke during the prestigious Marketing Edge Awards, held at the Civic Centre, Victoria Island, Lagos.

Why Nigerians shun mortgage schemes Continued from page 21 mortgages scheme launched last year by the federal government under the Nigeria Housing Finance Programme, noted the challenge people face in getting bulk money to pay off the mortgage equity. Under the scheme, an initial payment of 20 percent of total cost of house is mandatory. She said that only 33 of the over 66,000 applicants have been granted mortgages after being successfully pre-qualified.

“66,000 people applied for the scheme. As at date, 23,000 have been prequalified and 9,700 have been cleared as being eligible to get it. And 33 people have actually had money being disbursed to them to own a home,” she said. The minister also noted that the federal government is considering the Rent-to-Own mechanism to help people own their own houses. “We are trying to work out down the line, so that if you cannot put a down payment, you can after years of renting, be able to own your own home,” she added.

NMRC reach-out Prof. Charles Inyangete, CEO, Nigeria Mortgage Refinance Company (NMRC), also agreed that the slow take-off of affordable mortgages scheme under the National Housing Programme is partly due to the equity deposit requirement. He however C M Y K

A lot of the people actually found out that the properties they want are much more expensive than they expected and so the deposit is a bit of a challenge

noted that concerted efforts have been made over the past year to address the problem. “A lot of the people actually found out that the properties they want are much more expensive than they expected and so the deposit is a bit of a challenge.

However, with this new arrangement coming in, we would see that becoming easier. We are also reaching out to the insurance industry to bring in a new product that allows you to pay through insurance for your deposit.

“We are reaching out to developers as well, not only for the purposes of affordability but for quality also, and to ensure that they don’t just build, but they build something that Nigerians want. Something that looks good and still affordable. We have drafted and completed a model

mortgage and foreclosure law which we are going to put as a pilot through the 21 states that signed up, so that process is also starting. That will bring to bear more standardized and more streamlined mortgage process. We do not have to go through the NASS. We drafted it as a state law. So, each state will have to adopt it by itself, that way it will be faster to pass into law,” he stated.

Pension fund Meanwhile, the coast is now clear for pension fund to be used as equity contribution on mortgages.

In a chat with Vanguard, Prof. Charles Inyangete, CEO, Nigeria Mortgage Refinance Company (NMRC), said the nation’s pension fund regulator, Pension Commission (PenCom), has amended its guidelines to accommodate this. “If you do not have a 20 percent down payment, you would not qualify to be refinanced. Remember we are not primary lenders, we refinance. But the primary lenders have to meet our underwriting standards. So there is a 20 percent requirement, and so in order to make sure that it does not become a burden, we have reached out to other industries. Now the pension industry will allow you to use your pension as part of paying your deposit for your home. That is Continues on page 23

he country ’s Aviation Industry recorded more flight cancellations and delays in the month of April 2015, the airlines' performance report has indicated. According to the report, from the Aviation Passengers Service Portal in Abuja, a total of eight airlines were involved in operations during the month. The airlines are First Nation, Dana Air, Arik Air, Air Peace, Overland Airways, Aero Contractors, Medview and Azman.

The report said a total of 7,364 flight operations were carried out in April, of which 1,235 flights were on-time, 3,699 delayed and 2,430 cancelled.

A breakdown showed that First Nation Airways had 229 flights of which 80 flights were on-time flights, 123 delayed and 26 cancelled during the period. It also showed that Dana Air had 505

flights of which 146 were ontime, 313 delayed and 46 cancelled, while Arik Air had 2,506 flights with 464 on-time, 1,336 delayed and 706 cancelled flights.

Air Peace, according to the report, had 782 flights with 122 on-time, 288 delayed and 372 cancelled flights while Overland had 490 flights with 55 on-time, 213 delayed and 222 cancelled. Aero had 1,844 flights with 287 on-time, 1,036 delayed and 521 cancelled, while Medview had 465 flights with 58 ontime, 286 delayed and 121 cancelled flights during the period. A further breakdown showed that Azman Air had a total of 543 flights of which 23 were on-time, 104 delayed and 416 cancelled. The report also indicated that the average airlines performance for the month was 17.68 per cent.

Stakeholders blame Apapa gridlock on tank farms

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ctivities in the Maritime sector closed for the week with stakeholders blaming the week-long traffic gridlock in Apapa and its environs on the concentration of tank farms in the area. The gridlock which arose from the blockade of the highways leading to the Apapa depots, literally brought vehicular movement to a standstill in Lagos.

The traffic situation was actually the point of focus for the week as the situation worsened by the day since the beginning of the week. Mr Bolaji Akinola, the Spokesman for the Seaport Terminal Operators Association of Nigeria (STOAN), said that the tank farms must be de-centralised as a major solution to the problem of traffic jams in Apapa. He noted that the association had always suggested that petroleum products could be piped closer to different geopolitical zones, moved through rail wagons and barges to avoid the extended pressure on the road.

Mr Lucky Amiwero, President of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), said the concentration of tank farms in Apapa was not in the interest of the maritime industry. He said the nation

should first consider critical actions like building of refineries, rather than remaining importdependent for petroleum products.

Amiwero urged the ministries of transport, finance, works and petroleum resources to convene a critical meeting where the issues should be addressed in the interest of the nation’s economy. He blamed the Nigerian Ports Authority (NPA) for not working with the provisions of the NPA Law, Section 32A, which prescribes that the Authority should regulate traffic within particular radius of the port. He stressed that if the NPA had acted accordingly, the ports would not have been subjected to what it was exposed to for the whole of the week.

In the same vein, Mr Nasir Mohammed, the Port Manager, Lagos Port Complex, Apapa, said the traffic situation degenerated because petrol tankers came for loading simultaneously from across the country. He said that the NPA has continued to work with the security and traffic agencies, to resolve the imbroglio to enable trucks to have free access to the ports. The port manager, however, expressed fears that activities in the port may be greatly affected if the situation persisted.

Vanguard, MONDAY, MAY 11, 2015 — 23

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ast week, Presidentelect, Major-General Muhammadu Buhari (retd) surprised Nigerians when he said that he is currently at a loss on how best to tell Nigerians that his promise of turning the economy around quickly upon assumption of office on May 29 may not be feasible. One would have expected the renowned general to know better. He was swept into office by the propaganda of change. Nigerians bought the slogan line, hook and sinker and voted him to power.

Change, it is said, is the only constant thing and does not come by wishes. It is no news that whenever there is downturn in oil prices, the economy experiences financial stress. The economic circumstance that brought about a military coup that made Buhari head of state in 1983 has not changed. It was the fall in oil prices that made the Shagari-led Federal Government to introduce the very first austerity measure in the country. Buhari knew what followed during his 18 months in the saddle. It should not be news to him that the economy is down, almost on its knees because there is no money to share at the federal level.

APC and Buhari must note that it is by dint of hard work that change comes about. If there was surplus money in the treasury, I am sure Nigerians would not have voted for Buhari. They voted for him to lead a team that will change the political, as well as the economic situation in the country. Whatever it will take, Nigerians expect Buhari and his APC co-political travellers to find a winning formula to restore the economy and not give lame excuses.

Buhari is already looking for excuses to explain possible failure on his part and those of his governors and party in the future.

Buhari premised his fear on the perception that the

economy has been battered by the out-going government of the People’s Democratic Party, PDP. This was even as governors elected on the platform of the All Progressives Congress, APC,

APC and Buhari, no excuse for failure, change must be change economy. They failed in their respective states to build a viable economy, depending totally on proceeds from the federation account shared on monthly basis. How many of the 36 federating states were able to attract direct foreign investment in their domain in the last four years? How many new factories and industries were established in the states during this period? How have the governors built the economy of the various states?

Those who went to Buhari did

Buhari

Buhari is already looking for excuses to explain possible failure on his part and those of his governors and party in the future

said empty treasuries may be awaiting them in their respective states. The governors cried out that most state governments had gone bankrupt and, therefore, cannot pay workers’ salaries.

According to them, it was obvious that they were going to inherit huge debts which may delay speedy progress in their respective states.

The state governors that went to Buhari were shedding crocodile tears. Governors are the major problem of the

not tell him that APC states like Lagos, Edo and Osun, are currently the most indebted in the country.

They did not tell the President-elect that Lagos which was run by APC all this while, had an economy where its internally generated revenue has been on the increase. In 2010, Lagos State’s internally generated revenue was N149.966 billion.

It rose to N202.761 billion in 2011. It further went up to 219.202 in 2012 and again rose

to N384.259 billion in 2013.

Figures for 2014 are yet to be made public. If the economy of Lagos was damaged, how come its internally generated revenue had been on the rise?

In the same vein, Kano State governed by APC had internally generated revenue of N6.618 billion in 2010; it was the same for 2011 but rose to N11.051 billion in 2012 and further to N17.142 billion in 2013. Rivers State that was initially PDP but later APC had an internally generated revenue of N49.632 billion in 2011, N52.711 billion in 2011, N66.275 in 2012 and N87.914 in 2013. In Edo State, the internally generated revenue stood at N10.651billion in 2010, N14.764 billion in 2011, N18.88 billion in 2012 and N18.89 billion in 2013.

In all the states sampled, the internally generated revenue was rising rather than falling.

It thus suggests that states which took steps to boost their revenue sources had increased revenue profile.

Curiously, the external debt profile of states has shown that Lagos State has the highest with a profile of $1.087 billion, followed by Kaduna State with a total of $234 million. Cross River State followed closely with an external debt profile of $131.469 million. Other states with relatively large external debt are Edo - $123 million, Ogun - $109 million, Bauchi $87million, Enugu - $62 million, Katsina - $78 million, Osun - $67 million and Oyo State - $72 million.

Cover Wh tgage sc hemes Whyy Nigerians shun mor mortgage schemes Continued from page 22 starting as we speak. The Nigeria Pension Commission (PenCom) has changed its rules and guidelines to allow that to happen,” he stated. The pension fund has so far pooled under the contributory pension scheme is over N4.5 trillion.

Relevance of insurance Speaking to Vanguard on the relevance of the insurance industry to the mortgage sector, Mr. Olorundare

Thomas, Director General of the Nigerian Insurers Association (NIA), said: “The insurance industry is quite central to sustainablity of policy initiatives within the housing sector. Much more so, when you talk about mortgage. It’s a case of, right from the beginning to the end; insurance becomes quite relevant because the lender is interested in recovering his facilities. So whatever happens to the borrower, the lender is quite interested.

And the insurance sector is

there to provide the security and assurance that will reestablish the fact that what is being given out is not going to be lost in the process.

“For example, mortgage life insurance will guarantee recovery in the event of death.

Of course, there are riders, should in case there is an accident or something happens to the borrower and he loses his job and cannot continue, the insurance can also package a product that will take care of that. When even the building is in the

course of construction, if anything happens to it, insurance can also take responsibility, a product is also available to take care of that. When the building is standing, and something happens like flood, fire and all of that, insurance takes responsibility. So in the totality, insurance is there to re-assure the lender that the initiative is not misplaced, is sustainable and that they are there when the need arises.”

NMRC is a vehicle set up to bridge the funding cost of

A breakdown of the debt showed that $3.146 billion of the debt owed by states were borrowed from multilateral institutions while $118.9 million were bilateral loans.

Based on the rising debt profiles of state governments, the Federal Government last year directed banks not to grant fresh loans to state governments until they got the relevant approval and clearance from the Federal Ministry of Finance. The Federal Government had defended its decision to dissuade banks from granting unsecured loans to state governments, saying it was to protect the states from excessive accumulation of debts.

States have not done enough to boost their revenue profile. They have relied mostly on federal allocation to survive.

If Buhari wants to make a difference, he should begin by implementing true fiscal federalism. The change that brought him to power should embolden him to change the financial anomaly that implements a unitary fiscal policy in a federation.

Whatever line of action the APC-led Federal Government would want to take that is not based on fiscal federalism, the hues and cries about damaged economy will continue whenever there is no money to share.

So, APC and Buhari, no excuse for failure, change must be change.

residential mortgages and promote the availability and affordability of good housing to working Nigerians by providing mortgage lending banks with increased access to liquidity and longer terms funds in the mortgage market.

Its role is to provide mortgage-lending institutions with access to long-term finance at an affordable interest rate, thereby enabling mortgages to be issued by these institutions to Nigerians, at longer tenors and affordable rates.

C M Y K

24 — Vanguard, MONDAY, MAY 11, 2015

Vanguard, MONDAY, MAY 11, 2015 — 25

Business & Economy

High interest rate‘ll pressurize operating costs in the economy –LCCI

BY NAOMI UZOR

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he Lagos Chamber of Commerce and Industry, LCCI, has said that the implication of the Monetary Policy Committee (MPC) decision to sustain the tight monetary policy regime is that interest rate would continue to remain high and continue to put pressure on operating costs in the economy.

In a parley with pressmen in Lagos, the President of LCCI, Alhaji Remi Bello, said MPC at the end of its last meeting decided to sustain the tight monetary policy regime and retained Monetary Policy Rate (MPR) at 13per cent; CRR on Private Sector deposits at 20 per cent; CRR on Public Sector deposits at 75 per cent; and liquidity ratio at 30 per cent.

“The implication is that interest rate would continue to remain high and continue to put pressure on operating costs in the economy. For now, lending rate of commercial banks including fees and charges range between 22 and 34 per cent depending on the customer profile, tenor and collateral quality. High interest rate is a concern we have expressed at every turn in our advocacy activities engagements” he said.

According to him, with the apparent floating of the naira exchange rate, it has become necessary for the CBN to commence the gradual easing of monetary conditions to stimulate growth in the real economy through cheaper credit. Fiscal operations of government need to be better managed to reduce money supply pressures on macro-economic conditions to create room for a growth oriented monetary policy.

“High interest rate regime is good for the attraction of portfolio investments, but it penalizes the real economy and impedes the capacity to create jobs. We call on the CBN to reduce charges on bank deposits, especially the 0.5 per cent fee to NDIC, and another 0.5 per cent for AMCON.

AWARD - From left: Benson Oraelosi, Regional Manager, Ikeja Region, Diamond Bank Plc; Ashaka Victory Thona, First-Prize Winner - painting category, Vision of the Child 4, Foluke George, Festival Secretary, Lagos Black Heritage Festival and Nike Okundaye, Managing Director/Chief Executive Officer, Nike Centre for Art and Culture at the Award Dinner for Vision of the Child 4 sponsored by Diamond Bank PLC in Lagos.

AUN set to enter Guinness World Record

BY EBELE ORAKPO

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merican University of Nigeria’s Office of Sustainability is set to place the institution in the Guinness Book of World Records (GWR) via its unique waste-to-wealth management programme.

On Friday, April 24, an unprecedented 485 people ended 20 minutes of simultaneous crocheting, using plastic yarn made from waste polythene.

The Most People Crocheting Simultaneously record, was achieved five years ago in New York City at a Stitch ‘N’ Pitch event organised by the National Needlearts Association, at the Citi Field stadium, New York during which 426 people crocheted for 15 minutes using yarn.

The unique thing about this event is the ecological twist where the crocheters’ use plarn, the yarn made from used polythene bags.

Members of Yola EcoSentials (YES), a group of female social entrepreneurs promoted by AUN, took participants through the process before the kick-off of the simultaneous crocheting.

The event served to enlighten the community about the university ’s waste-to-wealth initiative.

The group needlework was sponsored by the Student Government Association of AUN, to sensitize residents of Yola, the Adamawa State capital about the hazards of nonbiodegradable litter. It was

also aimed at surpassing the current Guinness World Record held by Americans.

“We have yet to receive official notice from the Guinness World Record administrators who are based in the USA,” according to Jelena Zivkovic, the Director of the AUN Learning Resource Center and coordinator of the GWR committee.

Ms. Zivkovic read out the rules of the competition and

urged the participants to adhere strictly to rules to avoid the AUN attempt being disqualified. The activity ended at exactly 20 minutes.

There were external observers as witnesses.

“You can make money from it,” says Jennifer Che, Coordinator of Sustainability Outreach Programs and Laboratories.

Chief Information Officer, Mr. Julius Ayuk Tabe, representing the AUN President, Professor Margee

Ensign at the kick-off, said: “In the light of negative news coming from the north-east, whenever the story of tenacity and togetherness is told, your achievement today will be a reference. This is what your sense of togetherness, teamwork, and can-do-it spirit has made possible today.”

The GWR attempt was an illustration of AUN’s sustainability programs and demonstrates commitment to challenging the status quo getting AUN students involved in world events by promoting recycling and sustainability.

In Yola, the lack of a conventional waste collection system and bins/dumpsites is one of the main reasons residents dump their waste (including grocery bags), and then burn it, causing a major health hazard for humans and animals, including respiratory illnesses, gastric problems, and shortened life expectancy.

The University began a program some years ago to address local unemployment and this environmental hazard. As a result, Yola women, under the auspices of YES, have made waste plastic (plarn) into colourful, ecofriendly accessories.

“It is our hope,” says Ms. Che, “that this event will raise awareness on how recycling our products, in this case, plarn, can keep the environment clean and healthy, and as well provide an income for the needy in the community.”

Appeal court sets aside order winding up Afribank

BY INNOCENT ANABA The Court of Appeal sitting in Lagos, has set aside the winding-up of Afribank Nigeria Plc by an order of a Federal High Court, Lagos.

The lower court had following a petition by the Nigeria Deposit Insurance Corporation, NDIC, wind-up the bank.

The appellate court, set aside the winding up of Afribank following the appeal by shareholders of the bank, who had appealed against the judgment of the lower court.

The shareholders Igbrude Oke, Rasak Mumini, Akinsanya Sunday, Suleiman Babatunde, Igba Olatomide, for themselves and other Afribank shareholders, had at the lower court, challenged the petition by NDIC, seeking to wind-up the bank, arguing that there were other pending cases against the take over of the bank that would be

prejudiced if the lower court goes ahead to wind-up the bank.

The shareholders had at the lower court, in challenge to the petition, argued that it was an abuse of court process, as there was a case pending in court, challenging the power of the Central Bank of Nigeria, CBN, in the way they did and without that being resolved, NDIC went ahea to file the petition to wind-up the bank, claiming that since Afribank license had been revoked by the CBN, the bank is dead and should be wind-up.

The lower court on 07/02/ 2012 after being told that there other pending applications in the case, including a preliminary objection, challenging the petition, adjourned the matter for mention. The lower court also on 02/04/2012 further adjourned the case for mention. On 02/07/2012, the lower court, on the day the matter was fixed for mention,

and in the absence of the shareholders counsel, went ahead to hear NDIC counsel argument on the petition and preliminary objection, contrary to decided Supreme Court judgments, that on the day a matter is adjourned for mention, major applications would not be taken unless with the agreement of counsel. The lower court on the same day went ahead to wind -up the bank. The shareholders had asked the appellate court to determine “Whether it is open to the lower court to proceed, on a day date in which the suit was expressly and specifically fixed for mention by the court, to strike out the appellant hearing’s notice of preliminary objection to the competency of the suit and/ or to entertain the petition comprised in this suit without any prior notice to the contrary and in the absence of an order setting aside its earlier ruling to wit: That there are suits that may be prejudiced.”

26 — Vanguard, MONDAY, MAY 11, 2015

Banking & Finance

Citibank announces winner of the 2015 journalistic awards

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itibank Nigeria concluded the 7th edition of its prestigious Citi Journalistic Excellence Awards on May 6th 2015. The program culminated with an awards ceremony to honour this year ’s finalists. The competition was open to business journalists in all forms of media including the internet, print, radio, television and wire services.

Mr. Peter Dele Olowa of BusinessDay has been named winner of the 2015 competition in Nigeria. Mr. Olowa was selected as a winner for his article titled “The òmò-onile phenomenon” which was published in Business Day on December 12th 2014.

Likewise, Mr. Francis Ezem of the National Mirror and Mrs. Omobola Tolu-Kusimo of the Nation emerged as the first and second runner ups of the competition respectively.

This year, Citibank Nigeria received twenty-eight (28) entries from business reporters across various media outlets, including Business Day, Daily Independent, Global Media Mirror, Guardian, Leadership, Nation, New Telegraph, Punch, Thisday, TVC and Vanguard.

In Nigeria, the three finalists were selected by a distinguished panel of judges which included Mrs. Betty Irabor, Chief Executive Officer of Genevieve Magazine, Mr. James Plasman, Economic Officer of the US Consulate General in Lagos and Mr. Richard Ikiebe, Director and Senior Fellow of the Pan-Atlantic University’s School of Media and Communications.

The Citi Journalistic Excellence Awards competition sends winning journalists to an elite seminar at Columbia University in New York. The international journalist’s conference is a special program sponsored by Citi and administered by Columbia’s Graduate School of Journalism. For over thirty years, the program has served to improve the quality of business journalism in the developing world by exposing leading local journalists to the issues and people that drive the global economy.

Study recommends floating exchange rate for Naira STORIES BY BABAJIDE KOMOLAFE

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study on the impact of exchange rate on domestic prices has recommended a floating exchange rate for the naira.

This, according to the study is because the impact of exchange rate on domestic prices is low, incomplete, and it takes about two years. “.

In other words, the fear of floating that the authorities exhibit in Nigeria may be unfounded”, the study asserted.

Published by the Central Bank of Nigeria (CBN) in Economic and Financial Review, the study titled, “Exchange Rate Pass-Through to Domestic Prices in Nigeria: An Empirical Investigation”, was conducted by three economic experts Abdulrasheed Zubair, George Okorie and Aliyu R. Sanusi.

The study stated, “The major finding is that, in line with Aliyu et al., (2009), exchange rate pass-through in Nigeria is incomplete and low. This is in contrast with the findings of Essien (2005) who found that the pass- through is complete in the long run.

Secondly, the total impact is attained after eight quarters, suggesting that it is quiet slow.

“This is consistent with the literature on African countries, for example Ghana as found

in Sanusi (2010). One interpretation of this low and slow exchange rate passthrough is that exporters to Nigeria practice a substantial degree of pricing-to-market strategy. Instead of allowing the naira price of their products to vary whenever there are changes in the exchange rate, these firms

allow their mark-ups to vary as they change their local currency prices in the opposite direction of the change in exchange rate.

“We argue that this is plausible in Nigeria being a large market for fairly all its imported commodities. Firms would therefore strive to keep their competitive advantage

in the domestic market as exchange rate changes. This explains the low passthrough observed.

“One implication of this finding is that the cost of true float may not be as large as it would under complete passthrough. There is therefore a good potential for de facto float, since only a small fraction of the excessive variations in the exchange rate that such a regime would entail will be passed onto inflation. In other words, the fear of floating that the authorities exhibit in Nigeria may be unfounded.”

AWARD - (L) Managing Director and CEO, Citibank Nigeria Limited, Mr. Omar Hafeez and the Deputy Editor Business Day ,Mr. Agomuo Zebulon (R) presenting a plaque to the winner of the 2015 Citi Journalistic Excellence Awards Competition, Mr. Peter Dele Olowa of Business Day at the recently concluded competition in Lagos.

MSME: Heritage Bank building network of entrepreneurial leadership

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eritage Bank Limited is committed to building a network of Entrepreneurial Leaders necessary to drive the growth of Micro Small and Medium Enterprises (MSMEs) in Nigeria Managing Director/Chief Executive of Heritage Bank, Mr. Ifie Sekibo stated this adding that the bank has developed and introduced wide range of services which address the capacity and financing needs of MSME businesses.

“The goal of Heritage Bank’s MSME offerings is to build a network of entrepreneurial leaders that will drive the growth of the sector. This would enhance the ability of the MSME sector to effectively play its role as the engine growth of the economy”, he said.

Heritage Bank’s commitment to leadership building in the MSME sector is reflected in the bank’s SME Clinic. “The Heritage Bank SME Clinic is designed to enhance the entrepreneurial capacity of our SME customers. Through the Clinic, Heritage Bank understands the different aspects of the customer’s business in order to identify areas where it can add value. As a result we are able to develop customised products and services based on the identified needs of each SME customer,” Sekibo added This is complemented with Heritage Governance Model, through which the Bank introduces Corporate Governance

Framework to its MSME customers. The Phase one of the Scheme focuses on issues around statutory and regulatory obligations and incorporates the following four services: Company Secretary Services; Auditing & Assurance; Accounting Services; And Tax Consultancy. These services are rendered to SME customers of the bank at subsidised fees by network of consultants.

To further demonstrate its commitment to the growth of the MSMEs, the Heritage Bank developed the Paris Club Scheme in partnership with RSL Derivatives Limited. This is a credit enhancement scheme specially designed for SME’s to collectively help each other create a platform that will accelerate growth and give SME’s easy access to funding.

The solution provides a platform for SMEs to adopt best practices in managing their businesses and also enable them to access loans from Heritage Bank without any hard core collateral.

In addition to these, Heritage Bank is using the mass media to help MSME businesses across the country. This is done through the Enterprise Stories, a radio programme in partnership with Enterprise Development Centre of Pan African University. The Enterprise Stories is aired on Classic 97.3FM every Sunday at 7pm and on Inspiration 92.3FM at 3:00pm every Tuesday.

Vanguard, MONDAY, MAY 11, 2015 — 27

Banking & Finance

AGM - From left: Oluwole Ajimisinmi, Company Secretary, Wema Bank PLC; Adeyinka Asekun, Chairman and Segun Oloketuyi, Managing Director during the Wema Bank 2014 Annual General Meeting held in Lagos. Photo Lamidi Bamidele.

Fidelity Bank raises N30bn to boost lending to SME

BY BABAJIDE KOMOLAFE

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idelity Bank Plc has commenced measures to raise N30 billion for the purpose of increasing lending to small and medium enterprises (SMEs).

This week the bank will offer to the investing public a N30 billion, seven years bond at interest rate of 16.48 percent.

The application for the bond, which would mature in 2022, will open and close on Thursday May 13th 2015.

Speaking at the completion board meeting for the bond offer, Chairman of Fidelity Bank, Chief Christopher Ezeh said that the purpose of the bond is to fund the long term and financial activities of the bank, especially in the Small and Medium (SME) sector of the economy. He added that the bond is fully and firmly underwritten, and it qualifies for investment by pension assets.

The prospectus for the bond show that 80 percent of the net

proceeds of the offer, which amounts to N23 billion would devoted to SME lending, while 15 percent or N4.3 billion would be devoted to retail lending. The balance of five (5) percent which amounts to N1.43 billion would be devoted to enhancing the retail infrastructure.

Eze said that in terms of SME lending, the bank would provide loans to the SMEs in manufacturing, educational institutions, agriculture, health and general commerce.

The N4.3 billion devoted to retail lending would be use to provide loans to retails and individual customers in the form of automobile loans, home loans, cash advance loans and general loans.

He said that the N1.43 billion devoted to retail infrastructure would be used to purchase retail lending infrastructure technology. The retail lending infrastructure technology are processing platforms that will be used for loan application, loan scoring, loan approval, loan monitoring, loan collections, and consumer analytics.

Fidelity Bank Plc recorded 72 percent increase in its profit before tax for the year ending December 31st 2014. The financial statement showed that the bank recorded 21 percent increase in Interest income to N104.3bn from N86.3bn in 2013, while Operating Income increased by 15 percent to N72.6 billion from N63.3 billion in 2013.

Total expenses increased by five percent to N57.1 billion from N54.3 billion, while Profit after Tax increased by 79 percent to N13.8 billion from N7.7 billion in 2013.

During the year, Customer Deposits increased by two percent to N820.0 billion from N806.3 billion while Net Loans and Advances increased by 27 percent to N541.7 billion from N426.1 billion. The Bank’s Total Equity increased by six percent to N173.1 billion from N163.5 billion while Total Assets increased by 10 percent to N1.187 trillion from N1.081 trillion in 2013.

Sterling Bank’s expansion plans on track, says CFO

C

hief Financial Officer ( C F O ) / Executive Director , Sterling Bank, Mr. Abubakar Suleiman said that it the bank’s expansion plans unveiled in 2013 is on course and it would soon proceed with the next phase of its growth strategy.

Suleiman disclosed this at an interactive session with Business Editors in Lagos recently.

According to him, the bank currently has 1.5 million customers and has been able to achieve over three per cent market share from 1 per cent a few years ago. He revealed that from 84 branches in 2006, the lender ’s branch network should hit the 200 mark by the end of the year adding that it would increase the number of its Automated Teller Machines (ATMs) to 1000 by the end of this year.

He also stated

that the bank will soon deploy a new core banking application which would significantly boost the quality of its operations and service delivery.

The Executive Director said that the bank’s goal was to be among the top five lenders in the industry not in terms of balance sheet size but in the areas of quality service delivery and compliance to regulations.

He pointed out that there were banks with much bigger balance sheets which were not meeting customers’ expectations in key areas, stressing that as Sterling Bank expands and becomes a bigger financial institution, it will continue to outperform its peer group.

As he put it, “We have consistently outperformed our peer group and we will

outperform the next group. We want to be there when it comes to service delivery, in terms of compliance to regulations and how we are perceived as good corporate citizens.”

He disclosed that the lender would raise between $100million (N20billion) and $150millon (N30bilion) in Tier 2 capital this year to fund its expansion plans.

The CFO noted that regulatory headwinds, especially the hike in Cash Reserve Requirements (CRR) on public sector deposits had impacted banks’ profitability and restricted their lending capacity to finance economic growth.

He argued that the amount of bank deposits that the CBN had sterilized as a result of the 75 per cent CRR on public sector deposits and 20 percent CRR on private sector deposit was “unprecedented”

and had constrained banks’ capacity to lend.

He pointed out that the deposit with the CBN were non-earning adding that not only does this impact banks’ bottom line but it also prevents lenders from funding businesses.

He however emphasized that despite the tough operating environment Sterling Bank was still committed to meeting its expansion targets.

Abubakar Suleiman dismissed suggestions by analysts in some quarters that the Bank would not be able to achieve its capital raising targets this year due to regulatory headwinds, recalling that such skepticisms were similarly expressed in 2013 when the bank announced that it plans to raise additional capital via equity issues.

FBN Capital wins ‘African Deal of the Year’

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BN Capital Limited has been awarded the Africa Deal of the Year at this year ’s edition of the M&A Atlas Awards for its role in the Acquisition of Oasis Insurance by FBN Insurance.

The awards were organized by the Global M&A Network in London , UK on the 30th of April 2015.

FBN Capital’s Head of Energy and Natural Resources, Ms. Rolake Akinkugbe has also been recognized by Energy & Corporate Africa as the Best African Oil & Gas Analyst of the Year, as well as the Most Valuable Player on the Oil Patch for her commitment to the oil & gas industry through her display of knowledge, the provision of industry insights and analysis which has helped governments and organizations maximize investment opportunities and manage risk. The awards were presented at the eighth edition of the Annual SubSaharan Africa Oil and Gas Conference 2015 which took place in Houston, Texas.

Receiving the M&A Atlas award, the Head of Financial Advisory at FBN Capital, Mr. Afolabi Olorode stated, “This recognition is a reflection of the dedication and hard work the team, the client, and all parties to the transaction put into making this deal a reality.

We are honored to receive it on behalf of the entire team.”

Speaking on her awards, Rolake said, “It is indeed an honor to receive this recognition from a prestigious body such as E&C Africa. It simply serves as an encouragement to build on my current efforts, and I look forward to seeing my passion and contributions continue to add value.” She also made a presentation during the event entitled ‘Sub-Saharan Africa’s Re-shaped Oil and Gas Future’ which took a critical look at the current global dynamics on the Sub-Saharan African oil and gas industry.

Speaking on the awards, the Managing Director of FBN Capital Limited, Mr. Kayode Akinkugbe, expressed his pleasure saying, “We are delighted to have been recognized for our M&A track record among other players across the continent.

28 — Vanguard, MONDAY, MAY 11, 2015

Corporate Finance

Strong corporate governance critical to current low-price environment – FBN capital

BY PRINCEWILL EKWUJURU

F

BN Capital Limited has said that strong corporate governance structures are critical to attracting funding for Oil and Gas development in the prevailing low-price environment.

Rolake Akinkugbe, Head of Energy and Natural Resources at FBN Capital, disclosed this at the eighth edition of the annual subSaharan African Oil and Gas Conference 2015 themed, ‘Optimising innovation and investment opportunities in the upstream, downstream and service sectors’organized

by Energy and Corporate Africa which took place in Houston Texas.

Speaking on the topic ‘SubSaharan Africa’s Re-shaped Oil and Gas Future,’ took a critical look at the current global dynamics on the SubSaharan African oil and gas industry, and said: “In the current low-price environment, it will even be more critical for firms to focus on implementing strong corporate governance structures, and be flexible and willing to explore funding options that may be more dilutive from an equity perspective, than would have been preferred”.

The presentation also highlighted the inherent challenges in the current scenario stating that “Local companies in SSA, could be particularly vulnerable without the right technical and financial capacity to quickly monetise reserves. It is at this juncture, that the search for valuable partnerships with experienced E&P firms and IOCs should quickly yield fruit.” She further noted that though oil prices would eventually recover, it was unlikely that the region would see the triple digit highs recorded prior to June 2014.

“From a macro-perspective, there’s been a structural shift for many of SSA’s crude oil exporting economies, as they cope with the significant fall in export revenues from oil – in some cases revenues have fallen by as much as 40%.

Access Bank shareholders okay N5.7bn dividend, laud cost reduction STORIES

BY PETER EGWUATU

A

ccess Bank Plc shareholders have unanimously approved the N5.7billion dividend proposed by its Board of Directors for the financial year ended December 31, 2014, just as they commended the management of the bank for its prudent management of cost of operations.

The shareholders at the bank’s Annual General Meeting, AGM held in Lagos appreciated the Board of Directors for the proposed dividend which translates to 60 kobo per share, including the 25 kobo interim dividend.

According to the shareholders “It is better that you gave us this dividend knowing the tight business environment you operated upon during the period under review. But we still hope you will pay us higher dividend come next year.”

In his comment, the Chairman of Access Bank Plc, Mr. Gbenga Oyebode said “In

CEREMONY - From left: Executive Director, Business Development, Nigerian Stock Exchange, NSE, Mr. Haruna Jalo-Waziri; Managing Director/CEO, Wema Bank Plc, Mr. Segun Oloketuyi and Executive Director, Market Operations and Technology, NSE, Mr. Ade Bajomo at the Closing Gong Ceremony in commemoration of Wema Bank’s 70th anniversary at the exchange, in Lagos.

2014, there was a significant change in the bank’s operating climate precipitated by changes in key economic variables-the

oil price shock, currency depreciation and an increasingly bearish market.

Our bank remained resilient as it improved its business

Diamond Bank to leverage technology for growth, profitability

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iamond Bank Plc has disclosed its readiness to leverage on technology to boost its services to customers and make higher returns to its shareholders.

Addressing Journalists at a press briefing in Lagos recently, the Group Managing Director of the Bank, Mr. Pascal Dozie, who expressed optimism that the bank would emerge the best retail bank in Nigeria in a near future, said the bank has rolled out new technology solutions that would sustain it in its new market.

According to him “There is optimism that Diamond Bank would emerge the best retail bank in Nigeria in a near future. We have rolled out new technology solutions that would sustain the new market.

He pledged the bank’s commitment to continually offer value-added solutions that conveniently fit into the lifestyle of its customers as an innovative and technologically driven financial institution, adding that the bank has introduced several novel solutions that have transformed the

Nigerian banking space.

Speaking on the Diamond Mobile App solution, Dozie explained that the solution was recently upgraded with a ‘Touch ID’ feature which allows users seamless log on to their accounts by simply identifying their fingerprints as an alternative to entering a User ID and password.

The feature, available on the device, according to him, marked the introduction of the service in Nigeria and also positioned Diamond Bank as an innovative institution that is progressively changing the face of banking in Nigeria with best-in-class customerfocused solutions.

“It is safe, easy to use and specifically developed for the success minded individual who are focused on maximizing all life’s moments whenever or wherever they are.”

Other features of the Diamond Mobile App include funds transfer, bills payment, events ticket purchase, movie tickets purchase, online shopping, wallet top-up as well as searching, booking and making payment for both

local and international flights.

“We have one of the lowest cost of fund in the industry.

We are rated number 37 in terms of credit card issuing in Africa and Middle East. When you create an enabling environment, more people will be financially included into the system and that is what we are doing” he explained .

It is safe, easy to use and specifically developed for the success minded individual who are focused on maximizing all life’s moments whenever or wherever they are

performance whilst managing these macroeconomic challenges.”

In his own remark, Group Managing Director, Access Bank Plc, Mr. Herbert Wigwe commended the shareholders for their loyalty to the bank, saying “In 2015, we remain focus on lifting our customer experience in line with our mantra of speed, service and security. This effort, part of an initiative called Take Tomorrow, represents our commitment to our customers to join hands with them to help build their successful tomorrow.

In looking ahead of the future, Wigwe said “We will continue to ensure that our business ethos is focused on enhanced customer satisfaction across all business lines, maximizing shareholder returns as a result. While, we approach 2015, with great optimism, there are macro economic realities that we cannot ignore. We are aware of the challenges ahead and are determined to face these challenges from a position of strength and stability.”

The financial position for 2014 shows that the bank increased its revenue generation as gross earnings rose to N245 billion, up 18.5 per cent from the previous year 2013. Similarly, Profit Before Tax grew by 21 per cent form N43 billion in 2013 to N52 billion in 2014. The cost to income improved more than 10 percentage points to 62 per cent from 73 per cent in 2013.

Vanguard, MONDAY, MAY 11, 2015 — 29

Corporate Finance

BY PETER EGWUATU

S

tandard Chartered Bank has forecast that Nigeria is likely to raise capital from the international debt market by the second half of the year, 2015 to meet some of its obligations.

It also stated that Nigeria’s weakening fiscal buffers as a result of the sustained low oil price may result to a current account deficit in the country ’s balance of payments this year.

The Managing Director/ Head, Africa Research, Standard Chartered Bank, Razia Khan made the prediction during an interactive session with select journalists in Lagos recently.

The economic analysts stressed that policy makers in the country failed to effectively utilise the opportunity created by the high crude oil prices in the past years, saying that it would be difficult for the country to rebuild fiscal buffers in a low oil price environment.

Khan, however, predicted that crude oil price would average at $76 per barrel by the second half of the year.

“We are going to see oil prices moving higher and there is going to be some overshooting in the second half of the year. We see oil prices averaging $76 per barrel over the course of this year and we think that this means that by the second half of the year, there is a likely hold that oil prices would be $80 to $90 per barrel.

FBN Holdings dismisses plan to raise Tier 1 Capital in 2015

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VISIT - From left : Mrs. TelemaObi, Head of Admin NIWA, CSP Austine Gbaraba, Commander, Niwa PoliceCommand Lagos Area Office, Mr. Richard Nta, Mr Tarzan Balogun, Mr. MuazuSambo (GM NIWA), Engr. Sarat Sulaimon, Head of Marine, NIWA and Mr. Japhet Maisaje – Accountant NIWA during a fact finding visit by the management of Lagos area office of National Inlandwaterways Authorityn NIWA, to Tarzan boats jetty in Badore, Lagos recently.

‘Nigeria'll borrow by mid-year to meet obligations’ — Khan, Standard Chartered's Africa research head “But that would be only short-lived. We shouldn’t discount the fact that these very deliberate strategy on the part of Saudi Arabia in particular, to move away from the price targeting. So, for countries like Nigeria, the important take away is that it has moved away from that world of triple digit oil prices

and what we would see going forward, is more like a double digits oil prices scenario. “We know about the extent to which Nigeria failed to capitalise properly in the boom years in terms of oil production when the oil prices were high. So, it is not going to be that easy necessarily given the demands from the

fiscal side, to rebuild fiscal buffers in a low oil price environment,” she explained.

According to Khan, given the willingness by the federal government not to crowd out the domestic market so much with excessive domestic borrowing, the country might borrow from the international debt market before the end of the year.

NB shareholders to approve N27.7 bn dividend

BY PETER EGWUATU

S

hareholders of Nigerian Breweries, NB Plc are expected to approve N27.7 billion dividend that would be proposed by the Board of Directors of the company at the forth coming 69th Annual General Meeting, AGM of the company.

The Managing Director/ CEO, Nigerian Breweries Plc, Mr. Nicolaas Vervelde at a pre AGM Press briefing in Lagos disclosed that the Board of Directors of the company would propose N27 billion dividend ( (translating to N3.50 per share ) to the shareholder at the company’s 69th AGM that would hold next week Wednesday in Lagos.

According to him “ Having earlier paid an interim dividend of approximately N9.5 billion that is N1.25 per share which was declared in

October 2014, the total dividend will now be N37.2 billion, representing N4.75 per share.”

Speaking, Vervelde explained that the operating environment witnessed in 2014 was very challenging as the country witnessed insurgency in the North East, lower revenue arising from drop in oil revenue and devaluation of naira. All these factors and more affected the activities of our customers as the purchasing power of the people dropped

which affected our operations.

However, our cost leadership agenda enabled us to become more efficient in all area of our operations Also, our 2015 innovation agenda has kicked off with Ace Roots .

While explaining the company’s merged position with Consolidated Breweries Plc, he said “During the year under review, we commenced and concluded the merger process resulting in our enlarged company. At the end of 2014 and arising from the business combination, we had

We are confident about the future and we will be able to return good results even in the face of the expected challenging operating environment in 2015

eleven brewery locations as well as nineteen products in our portfolio of brands. We are also the second most capitalised company on the Nigerian Stock Exchange, NSE. Our enlarged company executed the biggest innovation agenda ever in one year.”

On the financial position of the company, he said “ Revenue declined by 0.8 per cent for the 2014 financial year from N266.8 billion in 2013 to N266.4 billion.; Revenue resulting from operating activities declined by 3.3 per cent to N66.861 billion from N69.2 billion, while net profit dropped by 1.3 per cent to N42.5 billion from N43.1 billion in 2013.

Looking at the future, he said “We are confident about the future and we will be able to return good results even in the face of the expected challenging operating environment in 2015.”

BN Holdings Plc has explained that it has no plan to raise Tier I capital this year, 2015 due to some unfavourable market conditions.

The Chief Executive Officer, FBN Holdings, Mallam Bello Maccido told capital market community during the company’s 2015 facts behind the figures presentation on the Lagos floor of the Nigerian Stock Exchange, NSE that “ FBN Holdings has no immediate plans to raise Tier1 capital within the next 12 months given the low market liquidity, depressed valuation levels, and significant dilution risk for existing shareholders.”

He explained that the company’s capital position is being enhanced through increased profit retention, interim capitalisation of profits, more efficient balance sheet management and more conservative loan growth.

On its efficiency drive, he said “We are rationalizing unprofitable branches and minimal branch expansion. We are also restructuring the procurement processes and streamlining operations as well as cutting back on cost.

We are centralizing processes across the Group to reduce transaction const and processing cycles. The company is leveraging transaction banking to increase the share of wallet thereby optimizing revenue.”

On its financial position, Maccido said “FBN Holdings remains resilient across key financial metrics despite the ongoing challenges faced. Our balance sheet remains strong as we are still the largest bank in Nigeria in terms of assets and deposits. We recorded 21.3 per cent year on year growth in gross earnings to N480.6billion in 2014 as against N396.2 billion in 2013.

This was largely attributable to growth in interest income from loans and advances to customers which grew by 14.2 per cent and for banks 10.3 per cent, with a strong Non Interest Revenue, NIR growth of 66.1 per cent. Also our operating income grew by 19.8 per cent year on year to N355.1 billion in 2014. It was driven by an increase in non interest revenue growth of 66.1 per cent.

C M Y K

30 — Vanguard, MONDAY, MAY 11, 2015

Homes & Housing

NMRC set to refinance N10bn mortgages Goldman Sachs to face $120m mortgage suit

N

ew York Court of Appeals has revived a bond insurer’s $120 million lawsuit claiming Goldman Sachs Group Inc lied about a pool of securities backed by subprime mortgages during the period leading up the financial crisis.

The court in a 5-2 decision said the suit by ACA Financial Guaranty Corp should move forward because the insurer had raised issues about the role of billionaire John Paulson’s hedge fund in a collateralized debt obligation called Abacus. ACA Financial said Goldman had deceived it into believing hedge fund Paulson & Co was a long investor in Abacus when it knew Paulson was betting the underlying mortgages would fail. ACA said it lost approximately $900 million on the deal when the subprime mortgage market collapsed.

Under state law, a fraud case may only proceed if the plaintiff can show it “justifiably relied” on representations made by the defendant.

Lagos builds 10,000 houses

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he Lagos State Government said it had built over 10,000 housing units as parts of efforts to tackle housing deficit in the state.

Commissioner for Housing, Mr. Bosun Jeje, who disclosed this, said the number represented the houses that the state government had constructed since the inception of the Governor Babatunde Fashola-led administration in 2007. He said the administration had been determined to reduce housing deficit in the state, adding that the houses are being handed over to the residents of the state through several strategies. “One of the strategies is the Lagos Home Ownership Mortgage Scheme, popularly called Lagos HOMS. By this month, we will start the Rent-To-Own home ownership scheme,” he said.

Jeje explained that the Lagos HOMS draw by the government had produced over 603 winners.

C M Y K

Stories by YINKA KOLAWOLE

I

n line with its mandate of bringing liquidity into the mortgage market, the Nigeria Mortgage Refinance Company (NMRC) has concluded plans to refinance N10 billion mortgages in the market this month.

Prof. Charles Inyangete, CEO, NMRC, disclosed this at a Public Awareness and Capacity Building Workshop organised by the company in Lagos. Participants at the workshop included representatives of International Development Finance agencies, primary mortgage banks (PMBs), local and international capital market operators, industry regulators, and policy experts. According to him, a critical objective of the workshop was to prepare, educate, and position mortgage operators and stakeholders for the constructive boom in mortgage refinances, and investment vista from the much anticipated successful issuance of the NMRC Bond in the Capital Market.

Inyangete remarked that the first refinancing of existing mortgages in the market, also known as legacy loans, by NMRC involves about 600 loans that are already in the market, adding that 8 mortgage firms are participating in the transaction. “We are starting this month with the first refinancing of existing mortgages in the market, which we call the legacy loans. That is N10 billion transaction and we are about to conclude that. And it involves close to 600 loans that are already in the market, and that’s the first of the kickoff of our refinancing. There are 8 mortgage firms that are part of this first transaction, but we have 20 primary mortgage lenders as part of the NMRC market as we speak, and there are many more waiting to join the market,” he stated.

The NMRC boss asserted that the company has made significant impact in the last one year. “NMRC has brought in uniform underwriting standards into the market.

And so for the first time in Nigeria, we now have underwriting standards that really determine how loans are originated and evaluated for the purpose of being given a facility. So that levels the playing field for everybody,” he declared. Inyangete noted that NMRC is a private

company with a public mission which has the mandate to facilitate the availability of affordable housing, through the provision of long term mortgage refinance to primary mortgage lenders. “The successful delivery by NMRC on its mandate will unlock quantum opportunities in deepening and expanding Nigeria’s mortgage industry, the capital market, and pivoting Nigeria’s GDP to new heights,” he stated.

NMRC’s mode of operation (refinancing cycle) involves an initial step by a borrower to take out a mortgage loan from a participating mortgage lender based on the uniform underwriting criteria set by

We now have underwriting standards that really determine how loans are originated and evaluated for the purpose of being given a facility NMRC; in return the borrower will provide regular repayments of the loan principal plus interest. The borrower will also provide collateral in the form of a mortgage over the property to be purchased. Secondly, the participating mortgage lenders will refinance the loans with NMRC, which will

refinance the mortgage loans of banks with recourse to the financial institutions. The participating mortgage lender will in turn, provide security over its mortgage portfolio in favour of NMRC. The third step is for NMRC to raise its own funding by accessing the capital markets and issuing bonds.

Typical mass housing estate

Owning a house under Lagos mortgage scheme

A

ll over the world, the ability to own a home without financial assistance is beyond the ability of most people.

Mortgage schemes have evolved with the purpose of providing financial support to prospective home owners, providing a loan facility to secure a property and pay the outstanding amount (the principal) back over time, typically with interest on the loan.

In Nigeria, mortgage schemes are still very much at an infancy stage in their adoption.

Prospective homeowners around the country typically save up to purchase property in cash or buy land with the intention of building a home in phases according to the availability of funds. Typical mortgages by deposit money banks are

available for up to 20 years at 20 percent to 25 percent interest.

The Lagos Home Ownership Mortgage Scheme (Lagos HOMS) is unique in being one of the few existing mortgage schemes able to provide interest rates below double digits. The state government has delivered housing units across the state specifically for this purpose.

Lagos HOMS was established to provide first time property buyers in Lagos with the opportunity to become homeowners. Specifically, the government is providing subsidized mortgages for ordinary citizens of Lagos, and a pool of houses in which winners can set up their new residence. Winners of the subsidized mortgages are drawn out of a lottery on a monthly basis. In order to be

eligible you must fulfill the following criteria: an applicant must reside in Lagos State; must be able to provide proof of a job and regular income.

He/she must be over 21 years old; must have a clean credit history; and must have been working for your current employer for a minimum of 6 months.

In order for the application to be processed, the following must be provided by the applicant: Two passport-sized photographs with applicant’s name and signature on the back; Evidence of tax payment covering the last 5 years; Personal Bank Statement for the previous 6 months; Pay slips covering the previous 6 months; and Letter of reference from your current employer, which should contain affirmation of your job title, annual salary, obligations and status within the company.

Vanguard, MONDAY, MAY 11, 2015 — 31

Insurance

Kenya regulator opens takaful market to conventional insurers

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enya’s regulator h a s

DRAW - From left: Odili Ogwu, Customer Experience Executive, Diamond Bank PLC; David Otukpe, Product Manager, DiamondXtra; Ikechukwu Monye, Winner, FiftyThousand Naira prize reward; Echezona Okelue, Brand Executive, Diamond Bank PLC during the DiamondXtra Month-end Draw held at the Ladipo Spare Parts Market in Lagos

Royal Exchange Prudential Life targets market leadership Stories by ROSEMARY ONUOHA

R

oyal

Exchange Prudential L i f e Assurance (REPLA) has been urged to focus on customer service excellence, among other major initiatives, to drive its quest for market leadership and enhance the company ’s status as a dominant player in the life insurance industry in the next three years.

Speaking at a national retreat for management staff of the company, Group Managing Director of Royal Exchange Plc, Mr. Chike Mokwunye, encouraged staff of Royal Exchange Prudential Life, especially those in customer-facing departments, to make service excellence their guiding principle and watchword in their interactions and dealings with clients of the company.

Mokwunye said, “The customer is at the heart and soul of every organisation’s growth and success and it is very important to keep them satisfied if one wants to remain in operation. If the customer is treated well, he/ she stays with you, but if they receive shabby and unsatisfactory treatment, they (customers) will take their business elsewhere.

“The future of insurance in Nigeria is the life business, which has not been fully tapped into, and for Royal Exchange Prudential to seek market leadership, an effective and efficient policy of customer service, loyalty

and retention must be in place in the organisation”, Mokwunye added.

In his remarks, Mr. Wale Banmore, Managing Director of the company said in addition to service excellence, his company’s focus is also on the deployment of a robust retail marketing strategy to take insurance to the grassroots, as well as training/ upgrading of its marketing personnel, in line with current realities.

“The attainment of these goals, amongst others in the

current financial year, will impact positively on the fortunes of the company, (profitability), improve service delivery to our clientele and boost our premium income”, Banmore added.

He further added, “Management believes strongly in the Royal Exchange brand and its people, it’s most important resource, are more than capable of delivering outstanding service to existing and potential clients, nationwide”.

Banmore further commended all staff of Royal Exchange Prudential, for their drive and resourcefulness, which has resulted in ‘ winning ways’ for the company.

He further challenged them to “ work even harder in the years ahead, in order to achieve our objective of becoming a world class company by 2016”.

Royal Exchange Prudential Life Assurance Company is a wholly owned subsidiary of Royal Exchange Plc, licensed by the National Insurance Commission to offer the full range of life and endowment insurance products. With years of experience in the Nigerian insurance market, Royal Exchange Prudential Life Assurance has an enviable reputation for reliability, integrity, professionalism, technical competence and financial strength.

NEM, Stanbic IBTC, others emerge winners in online award

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EM Insurance Plc has emerged the 2014 Businesstoday Online insurance company of the year.

NEM was named winner at the second edition of Businesstoday Online Insurance and Pension Industry award 2014.

The award which is in nine categories had 20 nominees of which nine emerged winners.

This year ’s award also recognised the Governor of Lagos State, Mr. Babatunde Raji Fashola, (SAN), being the first governor in Nigeria to enforce the Contributory Pension Scheme (CPS).

Other winners are Stanbic IBTC Pension Managers Limited, pension company of the year; Group Managing Director of Mutual Benefits Insurance Plc, Mr Akin Ogunbiyi won insurance man of the year; Managing Director Premium Pension Limited, Mr.

Wilson Ideva was named pension man of the year; Prestige Insurance Brokers, broker of the year and Mutual Benefits Insurance Plc, micro insurance company of the year.

Guinea Insurance Plc emerged CSR insurance company of the year and Goldlink Insurance Plc won the most innovative insurance company of the year.

With over N56billion in its joint pension contribution fund the Lagos State Pension Commission (LASPEC) clinched the most pension compliant state of the year award.

The event also featured the unveiling of Businesstoday Online weekly programme titled: “Insurance & Pension Today” which is expected to commence on one of the television stations in the country soon.

The programme will focus on educating Nigerians on the need for insurance and plan for their retirement.

introduced new takaful (Islamic insurance) rules which will allow the entry of conventional players into the sector, part of efforts to boost capital markets in East Africa’s biggest economy.

Takaful is seen as a bellwether of consumer appetite for Islamic finance products. It is based on the concept of mutuality; the takaful company oversees a pool of funds contributed by all policy holders.

Islamic finance, which follows religious principles such as bans on interest payments, accounts for roughly 2 percent of total banking business in Kenya, where Muslims make up about 15 percent of the population of 40 million.

The rules will come into effect in June with firms required to adhere to the requirements by December, according to a document from Kenya’s Insurance Regulatory Authority. This would see Kenya join the countries such as Pakistan and Indonesia in allowing takaful windows, which enable firms to offer sharia-compliant and conventional products side by side.

The rules require separate financial reporting requirements for takaful windows from their parent firm, and their operating model must be approved by a board of religious scholars.

Operators must also maintain separate takaful funds for their general and life businesses.

Kenya’s first full-fledged takaful firm was launched in 2011, Takaful Insurance of Africa. Islamic lender First Community Bank also operates a takaful scheme while Kenya Reinsurance Corp has developed a shariacompliant reinsurance product of its own.

C M Y K

32 — Vanguard, MONDAY, MAY 11, 2015

Interview

Nigerians have not discovered the Senegalese market –Ambassador Jackden

BY FRANKLIN ALLI

M

Jackden,

rs. Katyen

Nigeria’s Ambassador to Senegal and Mauritania, spoke recently with Vanguard at the Embassy in Dakar. In this interview, she disclosed that there are lots of business opportunities Nigerians can tap into in Senegal, especially in agriculture, tourism and housing sector.

Excerpts: Tell us about Nigeria and Senegal relationship since the time you have been here; what business opportunities exist for Nigerian industries?

Thank you very much and let me say good afternoon and welcome to Nigeria House, your House in Dakar, Senegal. By way of introduction, I am Katyen Jackden. I am Nigeria’s C M Y K

Ambassador to Senegal and Mauritania. I cover Mauritania from here. You asked about the relationship

When I was here in the Embassy as an officer, Nigerian textiles and plastic products used to sell here a lot.

When I came back in 2012, I found out that other people have taken that market from us

between Nigeria and Senegal. I want to believe those relationships are very strong. It has been very cordial, very brotherly and it is waxing very stronger. I served here as an officer in the Embassy before I was appointed Ambassador, so the relationship has been waxing very strong.

Our bilateral relationship is very good at political level, and it is also very good at economic level.

What is the percentage of Nigerians living in the 14 million population and the attitudes of Senegalese toward Nigerians?

We are a little bit more than ten thousand Nigerians but we have only five thousand registered in the Embassy. The Senegalese are very hospitable to foreigners. You know in every community, there are bad eggs, but generally, I would say the Senegalese are very hospitable toward Nigerians. There are mixed marriages between Nigerians and Senegalese; so I think the relationship is good.

What is the trade volume between Nigeria and Senegal?

•Amb. Katyen Jackden

Vanguard, MONDAY, MAY 11, 2015 — 33

Interview favour of Senegal because Nigerians come here to buy Senegalese products, especially textile and fashion products. A lot of Nigerians every week come here to buy items and take them home and apart from that, the main thing that we sell to Senegal is oil but now that Senegal has discovered its own oil, I wonder what is going to h a p p e n n e x t .

Therefore, I can say that trade is mostly a t informal level. We are trying to see how the

Katyen Jackden business community can come together and form Nigeria-Senegal Chambers of Commerce to further improve trade ties.

Do you think the discovery of oil by Senegal will affect the relationships?

In fact, the discovery of oil is a welcome development; what we want is for our region to grow. The oil they have discovered will be used to the benefit of their people; it is going to be a healthy competition. Don’t forget that we also import refined crude oil from some of these neigbouring countries. So I don’t think it is going to affect t h e relationship, negatively.

The current government of President Macky Sall has development agenda which Nigerians can key into. There are opportunities for investment in agriculture sector, tourism and housing sector

What are the challenges you face in marketing Nigerian products to the Senegalese?

I believe Nigerians have not discovered the Senegalese market. That was why last year, because of our engagement with Senegal government, Nigeria was designated special honor at the Dakar International Trade fair. The aim of that was to come here and showcase made –in-Nigeria products to the Senegalese market. When I was here in the Embassy as an officer, Nigerian textiles and plastic products used to sell here a lot. When I came back in 2012, I found out that other people have taken that market from us. So, it is for Nigerians to be very aggressive in marketing their C M Y K

We estimate there are about 10,000 Nigerians here.

Generally, Nigerians are very tolerant and are going about their businesses. That is not to say there are no bad eggs among them. Some Nigerians that come here find themselves in detention because they default in immigration laws. The reason is because Nigerians believe ECOWAS is free movement, so people come here to stay; they don’t bother to regularize their stay after three months. It is good to know that right from home, when you come here, you are allowed to stay for three months and after the three months, you are expected to regularize your residence in terms of showing that you have a means of livelihood and not to live on the society. Those are some of the challenges we have, otherwise, Nigerians are generally well-behaved.

What do you think government can do to make your job easier?

Let me say that my work can be made easier if I am assisted to make Nigeria much visible in Senegal. Before, we used to have publications to share with people who come here to enquire about this and that in Nigeria. This day, we don’t have publications to share. We do write to the Ministry of Tourism and Nigeria Export Promotion Council, NEPC, but we don’t get feedback. There is limit to what you can do once you are outside the country. Again, our own media is too critical of our country, and we forget that these things are actually read outside the country. If we paint ourselves as good people, people will see us as good people; if we paint ourselves bad, people will see us as bad people.

What is your take on Dangote’s investment in this country?

products to this market. We are trying to see how we can work with the traders and industries to come and showcase their products to the Senegalese. That is part of the plans we are putting in place, to promote trade and investment forum; we are also going to organize road shows to make sure that Nigerian products come to the Senegal market. Senegal is import economy and there are lots of things Nigerians can bring into Senegal.

What is your take on the attitude of Nigerians here?

In terms of single foreign direct investment, I think Dangote is the biggest African foreign direct investor in Senegal. All the African countries put together, Danagote is the biggest investor from Africa. I think what Dangote is doing in terms of cement is helping to promote regional integration.

Of course, there are a lot of opportunities for Nigerian industries. The current government of President Macky Sall has development agenda which Nigerians can key into.

There are opportunities for investment in agriculture sector, tourism and housing sector.

LAPO boss earns doctorate in Microfinance

BY PROVIDENCE OBUH

M

anaging Director of L A P O Microfinance Bank, Mr. Godwin Ehigiamusoe, has earned a Doctor of Philosophy degree from Ambrose Alli University, Ekpoma.

His thesis with the topic: Policy Instruments and Financial Inclusion: A Comparative Study of the Ethiopian and Nigerian Microfinance Policy and Regulatory Frameworks earned a distinction and is considered as relevant to the improvement of microfinance policy environment in Africa.

Ehigiamusoe is one of the leading lights for microfinance in Africa. In the late 1980s, he founded LAPO (Lift Above Poverty Organization) a successful pro-poor development organization with microfinance operations in Nigeria and Sierra Leone.

He had earlier earned a Bachelor of Science degree in Sociology and Anthropology and Master’s degree in Development Studies from the University of Benin, Benin City. He has attended several capacity enhancing courses at local and international institutions, including Harvard Kennedy School; Lagos Business School; IESE Business School, Barcelona, and INSEAD Business School (Singapore Campus).

Dr Ehigiamusoe won the FATE Foundation’s Model Entrepreneur Award – Nigeria in 2008; the Schwab Foundation’s Outstanding Social Entrepreneur in Africa Award in 2010; and Lagos Business School’s Distinguished Alumni Award in 2014.

He has authored Understanding NGOs (1998); Poverty and Microfinance in Nigeria (2000); Issues in Microfinance: Enhancing Financial Inclusion (2011).

He is currently the Managing Director, LAPO MfB, a regulated national microfinance bank.

34 —Vanguard, MONDAY, MAY 11, 2015

Economy

Key facts about the Pension Reform Act 2014

S

ince it’s all about reducing the risks, it is quintessential we all know the facts pension entails whether as a business person or an individual. These facts can and will serve as a guideline for everyone to understand their place and row. In this analytical insight by OLUBUSOLA MAKINDE, Relationship Manager, Leadway Assurance Company Limited, we present these as facts about the pension reform act 2014.

First, effective July 01, 2014, the Act governs and regulates the administration of the contributory pension scheme for both the public and private sectors in Nigeria.

The Act encourages participation in the contributory pension scheme which applies to two categories of employees. These categories comprise of all employees in the public sector and those in private Organizations with employees numbering 15 and above.

There is a provision for Private Organizations with less than three employees based on guidelines issued by the National Pension Commission (PenCom).

Under the Act, both employer and employee are required to make a minimum of 10% and 8% respectively of the employees monthly emoluments.

There is a review of the definition of

‘monthly emoluments” to mean the total emolument defined in the employees’ contract of employment provided it is not less than the total of the employee’s basic salary, housing and transport allowance.

Pension funds can be invested and this includes specialist investment funds and other financial instruments as approved by the Commission.

There are penalties for offences of misappropriation of funds, reimbursement or payment by a Pension Fund Administrator (PFA) or Pension Fund Custodian (PFC) to a staff, officer or director.

In situations where the PFC fails to hold funds to the exclusive preserve of the PFA and PenCom or where it applies the funds to meet its own financial obligations, the Act will sanction such appropriately.

Jurisdiction resides in the High Courts of the Federal, State ,Federal Capital Territor y and National Industrial courts respectively.

A fund known as the pension protection fund is created to protect the benefit of contributors. Proceeds from this fund are paid to contributors in the form of minimum guaranteed pension. The National Pension Commission (PenCom) determines how compensations will be made where shortfall in payments arise.

Continues on page 35

C M Y K

Vanguard, MONDAY, MAY 11, 2015 — 35

Economy Stories by EMEKA ANAETO, Economy Editor

E

merging economies of Nigeria, Indonesia and Mexico could push the UK and France out of the top ten economies of the world by 2050 provided they are able to build their institutions to global standards, diversify their economies and sustain growth friendly policies.

This is one of the key findings of the global report from PricewaterhouseCoopers’ (PwC) economists titled ‘‘The World in 2050: Will the shift in global economic power continue?’’ This presents longterm projections of potential GDP growth up to 2050 for 32 of the largest economies in the world, covering 84 per cent of total global GDP. According to the report, the current global economic power shift away from the established advanced economies in North America, Western Europe and Japan will continue over the next 35 years, despite a projected slowdown in Chinese growth after around 2020.

The world economy is projected to grow at an average of just over 3 per cent per annum from 2014-50, doubling in size by 2037 and nearly tripling by 2050.

But there’s likely to be a slowdown in global growth after 2020, as the rate of expansion in China and some other major emerging economies moderates to a more sustainable long-term rate, and as working age population growth slows in many large economies.

Nigeria, Vietnam and the Philippines are notable risers in the global GDP rankings in the long term, reflecting relatively high projected average growth rates of around 4.5-5.5 per cent per annum over the period to 2050.

According to Mr Andrew S. Nevin, PwC Nigeria’s Chief Economist and co-author of the report, “Over the past decade, Nigeria has boasted superior economic growth and, with the right reforms and investments, Nigeria could become one of the world’s leading economies by 2030, with further progress by 2050. Nigeria’s potential advantages for future growth

Nigeria, Indonesia, Mexico to displace UK, France out of top 10 largest economies include a large consumer market, a strategic geographic location, and a young and highly entrepreneurial population’’.

He continued, ‘‘however, at the same time, we are all aware of the significant headwinds (adverse trends) created by the rapid drop in the oil price, putting pressure on the fiscal and monetary systems, as well as reducing economic growth in the short term.

To achieve its long-term economic potential, Nigeria will need to manage the oil price decline effectively at all levels of government and create a sustainable platform for diversification

into the sectors that we know will drive the economy in the future – including power, agriculture, manufacturing, telecoms, hospitality and real estate’’.

Nevin concludes, “according to our long term projections, Nigeria could sustain average growth of around 5-6 per cent per annum in the long run, following projected growth of around 6-7 per cent in the rest of t h i s decade, assuming broadly growthfriendly policies are pursued.

W h i l e foreign investment has in absolute terms long been focused

•Okonjo-Iweala

on the oil sector, portfolios are becoming increasingly diversified, moving towards the power, agriculture and mining areas of the economy that have demonstrated a comparative advantage in emerging markets vis-à-vis the West’’.

Recent experience has however underlined that relatively rapid growth is not guaranteed for emerging economies, as indicated by recent problems in Russia and Brazil. It requires sustained and effective investment in infrastructure and improving political, economic, legal and social institutions.

Overdependence on natural resources, according to the analyst, could impede longterm growth in countries such as Nigeria, Russia, and Saudi Arabia unless they can diversify their economies over time.

Nevin further concludes that ‘‘while our analysis confirms that emerging markets have huge potential, they can also be an institutional minefield – both managers and investors need to tread carefully.

Overall, Nigeria continues to be an attractive place to invest

not because it is an oil producer, but because of the immense size of its domestic market and the extraordinary commercial energy of its people, which remains largely untapped.”

Beyond Nigeria, the PwC Report projects that China will be the largest economy by 2030 on any measure. However, it also expects its growth rate to slow markedly after around 2020 as its population ages, its high investment rate runs into diminishing marginal returns and it needs to rely more on innovation than copying to boost productivity. Eventual reversion to the global average has been common for past high growth economies such as Japan and South Korea and we expect China to follow suit.”

The report also contains projections based on GDP at market exchange rates, without this relative price adjustment.

On that basis, China is projected to overtake the US in around 2028, while India would clearly be the third largest economy in the world in 2050, but still some way behind the US. Other highlights from PwC’s projections are: India has the potential to sustain its higher growth rate for longer and become a $10 trillion economy by around 2020 in purchasing power (PPP) terms, or around 2035 at market exchange rates.

But this relies on India making sustained progress on infrastructure investment, institutional reforms and boosting education levels across the whole population.

Key facts about the Pension Reform Act 2014 Continues from page 34 An employee who disengages from employment before the age of 50 and is unable to secure employment within four months of disengagement is allowed to make withdrawals from the account although not exceeding 25% of the total amount credited to the retirement savings account.

To be appointed to the office of the Director General, the possession of relevant and professional qualification in pension matters and at least 15years cognate experience is required.

Any member of board, employee or agent, officer engaged by a PFA or PFC is expected to maintain confidentiality with respect to information obtained in the course of their duties.

Failure to comply will be sanctioned.

No action can be taken against an officer or employee of the National Pension Commission (PenCom) for any act done in execution of the Act or any other law if not commenced within three months of the act or in the case of a continuous act,

within 6 months after the act ceases.

There is tax exemption on any interests, profits, dividends, investments and other income accruable to pension funds or assets.

Any Company that is set up by the Nigeria Social Insurance Trust Fund (NSITF) under the Pension Reform Act No.2 of 2004 shall continue to operate as a PFA. Funds Contributed to PFA’s shall be computed and credited into the respective retirement savings account opened under the Act. Any individual who has retired before the commencement of the Act shall be entitled to make withdrawals from the account although not exceeding 25% of the total amount credited to the retirement savings account.

Any employee aggrieved with his employer or PFA is obligated to approach the Commission for a redress before exploring arbitration or commencing an action at the National Industrial Court.

36 — Vanguard, MONDAY, MAY 11, 2015

“Forensic audit report prepared without Bank Statement, says PwC.” THE NATION, April 29, 2015, p 4.

T

he report written by Nduka Chiejina revealed the following. “The forensic audit report on the Nigerian National Petroleum Corporation, NNPC, compiled by PricewaterHouse Coopers (Pwc) was done without bank statements, the report said.

The Central Bank of Nigeria (CBN), according to the report, shunned the auditors’ request for the bank statements.”

PricewaterHouseCoopers should be ashamed of itself that the internationally highly regarded auditing firm ever got itself into this mess – at any price. No local auditing firm in any country in the world would ever conduct what it calls a forensic audit report without obtaining bank statements in respect of the organizations it has been called upon to audit. Even, a freshly minted ICAN Chartered Accountant anywhere in the world knows that most everything in audit ends in the bank accounts.

Certainly, PwC must have assigned this monumental task to some of its most experienced national and international auditors – given the magnitude of the amount in dispute.

PwC, and the auditors assigned to this particular audit have done the company’s reputation a great deal of damage with this self-made confession and its implications. To be sure, PwC

PwC’S audit report or cover up? had accomplices in what can only be regarded as deliberate cover up.

Among them is the Central Bank of Nigeria, CBN, where the whole palaver about missing funds started in the first place.

It was the former Governor of the CBN who raised alarm in late 2013 that $47bn had not been remitted to the Federation Account by NNPC. Later, under interrogation, the amount outstanding to the Federation Account was reduced to $20bn.

Meanwhile, for blowing the whistle, Sanusi Lamido Sanusi was hounded out of office by the Jonathan administration, which under public pressure promised a “forensic audit”.

What PwC eventually produced last month, again under duress, must have been the longest delayed audit on a matter of urgent national importance.

Ordinarily, one would have expected PwC, with its international reputation at stake, and Nigeria’s vital interest involved, to conduct and release a report on which everybody from the Chief Executive Officer, CEO, would be prepared to stake his life for its veracity. Unfortunately, that was not the case. PwC, for whatever reasons

known to its managers and the auditors assigned to this project, has now become part of the problem and not the solution. Let me point out some of the problems the staff assigned have created for the auditing firm – starting from the first.

PwC’s first problem is one of credibility – allied with integrity.

Unfortunately, for the company, integrity is a 100% issue for an auditing firm. Even 95% is not good enough. An auditing firm which issues a “forensic report” without copies of the bank statements has already violated one of the primary professional requirements of an audit.

Hoe, on earth would the auditors know that funds that were supposed to be transferred to bank accounts actually got there? Even student of Business Administration, who only obtained theoretical lessons in auditing know that it was totally unprofessional for PwC to continue with the assignment once it was made clear that bank statements were not forthcoming. So, the report lacks credibility because it was professionally flawed.

The possibility of deliberate collusion to cover up several frauds by PwC’s staff arises from what was written before. If, non-professionals knew that an audit, forensic or routine, is not

complete without bank statements, how could the well experienced auditors of PwC, on this assignment fail to see that they were about to issue a report which, at best, is fit only for the dust bin? Surely, all those involved must be aware that they were issuing a report which fell far short of the highest professional standards; at a time when only the very best was required of them. That they probably knew they were being unprofessional, yet going forward and risking their company’s reputation, as well as their own, naturally leads to the next set of questions.

The first one is: who engaged them?

Was it the Ministry of Petroleum? Or the NNPC? Or the Ministry of Finance? Or the Auditor General’s Office? Or the Secretary to the Federal Government of Nigeria? Or the Presidency? Irrespective of who paid them for this, obviously shoddy job, Nigerians, and, indeed, the entire world wants to know the Terms of Reference, TOR, for the audit. Were they specifically forbidden to request for and obtain bank statements? And, if not, why was there no demand for those documents, through their principal for them? And, why did PwC fail to honourably resign when it was clear that a credible “forensic audit” was not possible under the circumstances?

Finally, if they were told to back off from obtaining bank balances, they need to tell the whole world who did it.

Micro-Finance

Most confident women entrepreneurs are from Sub-Saharan Africa —WEConnect Stories by PROVIDENCE OBUH

W

omen in SubS a h a r a n Africa, has been identified as most confident entrepreneurs in the area of doing businesses by WEConnect International.

WEConnect International is a Non -profit Organisation connecting women-owned businesses with multinational corporate purchasing organisations outside of the United States, while weconnect international in Nigeria identifies, educates, register and certifies women business enterprises that are at least 51 percent owned managed and controlled by one or more women.

In a media chart at the just concluded WEConnect International Exhibition and Matchmaker, held in Nigeria, Executive Director, WEConnect International, Nigeria, Ms. Comfort C M Y K

Sakoma, said that the number of Nigerian women owned businesses that joined the group has grown to over 600 from zero at which it started.

To join, she said its free registration on it website to get sense of the business and a certification process begins with facilities tour to know the strength of the business.

Sakoma highlighted that women entrepreneurs face the of having a mind set that innovation is not a priority and a mind set that they cannot do businesses with multinational operations.

According to her, “One benefit of Wecoonect is that the Nigerian woman entrepreneur gets access to market. Sub-Saharan Africa has the most confident women entrepreneurs, what

that means is that the women entrepreneurs in this part of the world feels most confidence of their ability to be successful as business owners.”

In the same vein, CEO/ CoFounder WEConnect International, Mrs. Elizabeth Vazquez, added that women entrepreneurs must learn to think big and about its role in the society, saying, “men cannot be the only one

creating jobs, we must think how to translate our dreams into a business and identifying the huge opportunity available to buy and sell.”

However, the exhibition was Co-Chaired by Ernest and Young, Accenture and ExxonMobile while the Gold spensors include: Etisalat Nigeria, Dana Air, Nigeria Bottling Company (NBC) among others

ITF challenges trainees on entrepreneurship, skills acquisition D

irector General of Industrial Training Fund, ITF, Dr. Mrs Juliet Chukkas-Onaeko has challenged Trainees to brace up and live up to high academic standards expected of them, in order for them to contribute their quota towards national development.

The ITF said it remains committed towards its objectives of producing middle and high level skilled

manpower that will drive the nation’s economy forward, through the provision of global standards technical and vocational education that will eradicate unemployment, particularly amongst youths.

Highlighting how the fund is initiating proactive measures to achieve its mandate, Chukkas-Onaeko, said students under its training programmes are challenged to impart

knowledge provided by the fund, and take charge of leading the nation and the continent into an era of sustainable economic development.

She said the vision of economic leadership on the continent by the country can only be achieved when adequate attention and commitment is shown by all stakeholders in the quest to imbibe the nation’s youths with continuous training vocational and technical training knowledge that can

create jobs and entrepreneurial opportunities for them and other citizens.

The ITF DG noted while Nigerian students has excelled in various technical and vocational opportunities around the world, that it was important for those getting the benefits of the world class training that the Fund provides in Nigeria to make the most of it, become entrepreneurs and contribute to the development of the economy.

Vanguard, MONDAY, MAY 11, 2015 — 37

E-Commerce

FORUM - From left: Sales Manager, AFP Furniture Production, Mr. Uche Uzoewulu; Sales Officer, Abuja, Hope Amadi; Lagos Project Coordinator, Frank Joos and Media Relation Officer, Julius Berger, Susan Obi at the Architects Forum at Eko Hotel, Victoria Island, Lagos

How payment on delivery threatens e-commerce growth in Nigeria

BY JONAH NWOKPOKU

F

ounder/CEO of Drinks.ng, Lanre Akinlagun has identified payment on delivery, prevalent among online retailers in Nigeria, as one of the greatest impediment to the growth of the sector.

He disclosed this at a news conference to announce the acquisition of a 200Sqr ft warehouse in Lagos, in a strategic move to integrate offline platform into the online drinks seller to drive visibility while boosting distribution.

He said, “Payment on delivery is a bad idea and it is bad for businesses in Nigeria.

In a country where you are introducing new concept, it is very bad to introduce new bad habit at the same time.”

Akinlagun said payment on delivery is a bad idea because consumers are as indecisive as they are choosy thereby raising businesses’ operational cost when they reject delivered items.

“Generally as a people, we are very indecisive, but we are also very choosy. So when a delivery person arrives your house and you don’t like the item, you send it back at the cost of the company that is trying to deliver. So I just think that because of the indecision of the consumers, payment on delivery is not a good idea.

Also there is high cost of logistics. And there is also the issue of inconsistency in fuel delivery, including lack of time keeping by consumers,” he added.

On the integration of the offline platform, Akinlagun told the newsmen that the move was basically to connect with more consumers through

effective offline distribution system He said, “We have integrated offline into our platform for two reasons. The first is to improve our distribution. Nigeria is a very unique country. A lot of things happen differently here. So drinks are one of the things that as much you can get them

anywhere, it still relies much on impulse purchases. For instance, people know they want to drink but they don’t necessarily plan for it. This makes it very difficult for people to purchase drinks online. But there is a trend we noticed with other online ventures which we are building on. We have realised

that a lot of people research online and purchase offline.

So people are able to go to our website, see our stock and the prices we offer, and then book it and tell us to keep it at the store and then come by the store later and pick it up.

“It is that physical element that is prevalent in Nigeria’s business environment that we are trying to key into. People will not impulsive buy and pay for drinks online, they want to see it first and that is why I think the Iroko style where people research online and buy offline is what is most suitable for products like ours” He added: “The reason why we have moved offline is not to become big player in the offline world but to merge our online visibility with our offline distribution. And also to give people more reason to trust with our physical presence. It’s also for an extension of our marketing tool because it is easy for us to get referrals through word of mouth, if we have offline presence. But the main point is to increase our distribution.

There are people who come into our stores and make orders now because with certain products, there has to be a physical element.”

Akinlagun said this business model will also help the business reduce operational cost and improve logistics.

Lamudi releases updated Android App Online real estate marketplace, Lamudi.com has released an updated version of its Android app to make it easier for house-hunters in emerging markets to buy or rent property on the go.

Version 2.0 of the app, Lamudi: Property for Sale & Rent, offers overall better speed and performance, making it easier to browse through Lamudi’s global catalogue of more than 900,000 property listings using an Android device.

The app has been optimized for devices with lower storage space and the overall application size has been reduced, ensuring downloading the app is also much faster.

Push notifications that lead users directly to newly published listings have also been introduced.

Contacting agents via email has been simplified, with users’ existing contact details saved for future use. The app has a new product detail page and a fresh design for saved searches. It also now supports the Android Lollipop operating system. The app is also available on iOS. Lamudi’s Co-founder and Managing Director, Kian

Moin, said: “Anyone who works in the real estate business knows just how important mobile has become.

This is particularly true of the emerging markets in which we operate, where the smartphone penetration rate is soaring and demand for mobile Internet services is ever increasing.

This is why we are focusing our efforts on mobile - to ensure Lamudi is delivering a high-quality app that meets

the changing demands of house-hunters in emerging countries.”

The app has customised search functions, allowing users to easily filter results by country. A key feature is the match alerts, which notify users as soon as a property that suits their needs hits the market. Users can also create a list of favourite properties, which can be accessed at any time and on any device.

eTranzact boosts financial inclusion with NewPocketMoni

N

igeria’s mobile money operator, eTranzact International has given a boost to its financial inclusion drive with the introduction of the NewPocketMoni, an updated version of the PocketMoni app.

The NewPocketMoni app comes with several features including the ability for direct deposit of salary through the app, withdrawal of cash via any ATMs without the use of cards and institution of banklike standing orders. Also, features like money transfer, airtime purchase and bill payments have also been simplified, thereby giving

more financial control to consumers without relying on traditional banking processes.

Speaking at the demo event in Lagos, eTranzact’s Executive Dircetor, Strategy and Corporate Development, Mr. Ike Eze said the new features is part of a strategic move to use mobile money to drive the growth of businesses in Nigeria.

He stated that eTranzact has done a retake of what mobile money can be with a recreated game changing mobile experience, and that the new features will truly lead the next generation of mobile payments platforms in Nigeria.

Amazon unveils drone delivery plans

D

etails about how Amazon’s proposed delivery drones may work have been published by the US Patent Office.

According to the patent, the drones will be able to track the location of the person it is delivering to by pulling data from their smartphone.

The unmanned vehicles will also be able to talk to each other about weather and traffic conditions. Amazon faces many regulatory hurdles before its plans can be turned into reality.

Amazon submitted its drone patent in September 2014, but the details are only now being published by the US Patent and Trademark Office, after it approved the ideas.

For many, Amazon’s idea of delivery via drone was seen as pie-in-the-sky, but the details it provides in its patent application suggest that the firm is taking the idea seriously and working hard to overcome a variety of technical obstacles.

According to the plans, Amazon’s drones will be able to update their routes in realtime. A mock-up delivery screen suggests that people will be able to choose from a variety of delivery options from “bring it to me” to nominating their home, place of work or even “my boat” as places for packages to be dropped.

EU launches cross-border ecommerce investigation

E

uropean Union antitrust regulators opened an investigation into cross-border e-commerce last week in a move aimed at removing borders to online sales as part of a broad strategy to overhaul the bloc’s digital market.

European Competition Commissioner, Margrethe Vestager had announced her intention in March to open the sector inquiry The European Commission said the probe would focus on barriers to online sales in electronics, clothing and shoes, as well as digital content.

While U.S. online retailers such as Amazon and e-Bay dominate the e-commerce industry, traditional companies are boosting their presence as well.

38 — Vanguard, MONDAY, MAY 11, 2015

People in Business

Metal component manufacturing is a unique area of manufacturing — JUDE OKPALA

BY EBELE ORAKPO

Raw materials: He said they source their raw materials both locally and internationally. “The major component of our activities is metal sheets and metal coils.

We do not have rolling mills in Nigeria to produce metal coils, especially steel coils. So we import them. There are other inputs that we get locally. For example, we can source for the metal blocks locally to make moulds. We actually scavenge to use discarded materials to be able to produce our moulds. Other inputs, especially the consumables used in the tools shop such as quenching oil and drill beads, we get locally.”

M

r. Jude Okpala is the Managing Director/Chief Executive Officer of Lagos-based Cliché Limited, a metal component manufacturing company engaged in precision engineering, metal stamping and finishing. He has a first degree in Civil Engineering from West Virginia University, USA and a second degree in Management and Business Administration from the University of Lagos. In this chat with Financial Vanguard, Okpala speaks on his business which he describes as unique, the challenges and hopes the business model has come to stay in Nigeria as it will help develop the economy. Excerpts: According to Okpala, metal component manufacturing is a unique area of manufacturing that is supportive to bigger organisations “in the sense that we produce components out of metals used by other manufacturers as inputs. We are designed to take up any sort of component that comes out of flat sheets, design it, make prototype, send it to the customer and once it is approved, we mass produce.

The business is modelled after what obtains in SouthEast Asia.”

South-East Asia model: “Manufacturing today, is mostly about assembly. You design a product, tear it apart, out-source the production of the components to different companies, then you gather those components and reassemble them. This takes place in every aspect of the production cycle. The trend in the western world is that when you do such designs, you out-source the components to South-East Asian companies. That is why you see manufacturers of vehicles, aircraft, computers and household products, out-sourcing the production of components to smaller organisations in China, Taiwan, Indonesia, Malaysia etc., and when they produce the prototype, they give it to the organisation and when it is approved, they sign a long-term agreement for material supply for final production.

That is why if you open a computer made in the US, you will see that the components are made in different countries. That is the trend in manufacturing now. So Cliché Limited is modelled after such, where we can set up a metal component manufacturing company in Nigeria and get bigger organisations to do the same with us – outsource part of their metalbased production to us and we can design and produce for them and have a longterm supply agreement.

“We are at the early stage where we are developing the business and trying to see how that model can catch up in Nigeria. Our products are quite extensive depending on what the customer brings. It is what he brings that we are going to design and produce,” he stated.

Scope of operation: “We cut across almost all the sectors of the economy – household products, packaging, just name it. It is a matter of discovering what and what we can do in a given industry.

So our marketing strategy is to look for our type of activity in every productive line. For example, we go to Mr. A who manufactures mosquito coil and say ‘ok, there is this metal you use in your production, let us go and do a sample and send to you.’ If he approves it and signs a delivery order

Jude Okpala like buttons, ranks etc., for the armed forces, small containers used for canned foods, accessories used in producing

short-term so we are hoping that someday, that model will completely catch up with Nigeria where we can sign a

Manufacturing today, is mostly about assembly. You design a product, tear it apart, out-source the production of the components to different companies, then you gather those components and reassemble them two, three-year supply arrangement with bigger organisations. Abroad, big organisations outsourcing components manufacturing to smaller organisations in Asia, actually invest in building up the smaller companies in order to ensure that the supply chain is not broken,” he said.

with us, we produce and supply to him and he uses it to finish his product. We do the same with other companies. We can make metal components used to secure currency by the CBN, Nigerian Security Printing and Minting Company and companies that do note sorting. We make seals used to secure ammunition; metal seal used to secure graded produce, uniform accessories

mechanical press, feed metal coils through that mould and then the press will punch out the shapes needed,” he explained.

electrical appliances and so many others. Once we produce the prototype and send to them and they approve it, then we have an agreement with them to start producing and supplying them. Unfortunately, in Nigeria, we have not developed the habit of having a structured inventory management where you can sign a long-term agreement with suppliers. Everything is

Our workflow: “Enquiries come in form of either samples or designs and sometimes concepts.

When we receive enquiries, we first go through the computer and do the electronic design, we then simulate the mould of that design and transfer that design to some other machines that produce the different components of the mould and when those machines produce the different components, we put them together and simulate them and if they suit what we need them for, we do metal treatment where we harden the mould components after which we assemble the parts.

We now have a complete metal contraption called mould. We then put the mould into hydraulic press or

Challenges: On the challenges, Okpala mentioned power as number one, saying: “The size of Cliché is such that any little increase in cost of production tells a lot on our bottom line.

Power is the major channel through which our profit margin is eroded. Second is funding. It is difficult to secure long-term funding for SMEs here so a business like this is hugely funded through savings by the owners. It gets to a point where savings can no longer drive growth so you keep looking for external funding which never comes because it is difficult to get long-term funding.

Acceptability and policy somersault is another challenge. An organisation like ours is expected to have some sort of protection through government policies; that is how it is done in South-East Asia and that is how small businesses grow.

They are given long-term protection in form of policies that ensure they are not exposed to unnecessary external competition. Our economy is more like a dumping ground for foreign producers so it is difficult for us to compete with similar products that come from abroad because of high cost of production. Then also this idea that nothing produced in Nigeria can be better than what comes from abroad. That is what I mean by acceptability. It is taking us time to make our people realise that we can produce better quality products than what comes from abroad if we are given the conducive environment. So when you go to government establishments or individuals or even bigger organizations to offer your services, they will ask if yours will be better and cheaper than what they are getting from China? That is

Vanguard, MONDAY, MAY 11, 2015 — 39

40 — Vanguard, MONDAY, MAY 11, 2015

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Vanguard, MONDAY, MAY 11, 2015 — 41

Aviation Airport passengers groan as FAAN introduces new shuttle bus rules

Airlines operators lack knowledge, experience to operate PBN —Experts

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irport passengers have been groaning as they are left stranded at various bus-stops along the IkejaAirport road due to shortage of airport shuttle buses because of the new rules introduced by Federal Airport Authority of Nigerian, FAAN. FAAN had instructed the drivers to replace their old buses with new ones and the operators have been finding it difficult to purchase new buses.

Vanguard investigation revealed that the shortage of the airport shuttle buses was as a result of the phase out of the old shuttle buses and the replacement of new ones which began on Monday, May 4th 2015.

One of the passengers contacted, Mr. James Onyike said that the new rule by FAAN was the reason why the buses that ply the road were few just as he affirmed that with the development on ground, the drivers have pegged a fix price for transport at N100 irrespective of any bus stop that the passenger will alight.

Another passenger, Mrs. Juliet Oghene said that the situation was becoming unbearable and called on FAAN to ensure that the buses were deployed in due time to alleviate the sufferings of the passengers.

When contacted on phone, General Manager, Public

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INAUGURATION - From left Mr Christophe Pennick, Chief Executive Officer, Bi-Courtney Aviation Services Ltd; Mr Wale Babalakin, Chairman; Chief Osita Chidoka, Minister of Aviation and Mr Kayode Odukoya, MD, First Nation Airways during the Inauguration of Common User Passenger Processing System (CUPPS) at the Murtala Muhammed Airport 2 (MMA2), Ikeja Lagos . Photo Lamidi Bamidele.

FAAN’s Director of Finance appointment not terminated — FG

By LAWANI MIKAIRU

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he Federal Government, through the Federal Airports Authority of Nigeria, FAA N , w e e kend explained the recent controversy surrounding the appointment of the Federal Airports Authority of Nigeria, FAAN, Director of Finance, Mr. Tochuku Bede Uchendu.

It was reported by a section of the media that he was

sacked by the Aviation Minister, Chief Osita Chidoka because he granted an unauthourised waivers worth over N1 billion.

Explaining the Federal Government's position to newsmen, General Manager Corporate Affairs, FAAN, Mr. Yakubu Dati said that Mr. Uchendu was only asked to wait for the conclusion of all formalities regarding his appointment as Director in

Domestic airlines lack service delivery mechanism, says Chidoka

By LAWANI MIKAIRU & DANIEL ETEGHE

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viation Minister, Chief Osita Chidoka has said that most domestic airlines in the country lacked effective passengers service delivery mechanism as most of them treat passengers poorly.

Speaking at the Eight anniversary celebration of BiCourtney Aviation Services, operators of the Murtala Muhammed Domestic Terminal 2 ,MMA2 , and the launch of Common User Passenger Processing System (CUPPS) and upgrade of facilities at the terminal building of Murtala Muhammed Domestic Terminal 2 (MMA2), Lagos, Chidoka noted that in dealing with issues in the aviation industry, the passengers, processes and technology were key factors to make travel seamless for the passengers.

The Minister who also commissioned the Self check-in Kiosk, Screening point and

check in counters at the Terminal pointed out that domestic airlines do not have good passenger services mechanism, citing an incident where Aero Contractors airline had to abandon its passengers at the Nnamdi Azikiwe International Airport, Abuja and Lagos Airport instead of activate their hospitality partnership with the hotels in Abuja and Lagos.

According to Chidoka, with the deployment of facilities that aid easy travel experiences by Bi Courtney Aviation Limited, MM2 terminal was maintaining its status as the best airport terminal in the country.

“MMA2 has offered a template to the Nigerian government to improve our airport. Apart from passengers rating the MMA2 as one of the best airport terminals in Nigeria, ground handlers, pilots and other operators also said that MMA2 is a befitting airport terminal” he said.

While expressing his gratitude, Chairman of Bi Courtney Aviation Limited, Dr. Wale

Babalakin pointed out that the company would continue to improve the terminal with adequate facilities to ensure seamless travel experiences for the passengers.

Babalakin affirmed that he feels impressed that the minister acknowledged the fact that Bi Courtney operated terminal was the best airport terminal in the country. According to him, aviation is global and Nigeria will strive to compete favourably in the international scene adding that the airport terminal was attaining such height and feat because of the strategy the company put in place and facilitated with money to make things work effectively.

“We thanked the minister of aviation for his sincerity for acknowledging that MMA2 was the best airport terminal in Nigeria. Aviation is international, we must seek to comply with international standard and even exceed it” he said.

Meanwhile, Chief Executive Officer (CEO) of Bi Courney, Mr.

FAAN. This misinformation from the Federal Ministry of Aviation may have resulted to the recent redeployment of the former Permanent Secretary of the Ministry, Mr Mohammed Abbas, to the Federal Civil Service Commission and his replacement with Hajia Binta Bello, who is the current Permanent Secretary of the Aviation Ministry.

Dati said “On his appointment, Mr. Uchendu was only asked to wait for the conclusion of all formalities (due process). That process is still on-going”. He also debunked the story in the media alleging that the Minister of Aviation had sacke d M r. Tochuku Uchendu over irregularities in his appointment and the granting of unauthourised waivers worth over one billion naira by him.

According to him “The Authority hereby wishes to state that the story in question was not only false but also malicious as Mr. Uchendu’s appointment was neither irregular nor did he ever grant waiver to any FAAN customer, not to talk of waiver amounting to over one billion naira” “The Director of Finance of the Authority does not have the power to grant waiver to any customer. On his appointment, Mr. Uchendu was only asked to wait for the conclusion of all formalities (due process).

That process is still on-going . We therefore urge members of the public to discountenance the said story” he added.

It would be recalled that

xperts in the aviation sector have decried the inability of most airlines operators to effectively use the Performance Based Navigation (PBN) due to lack of adequate experiences and knowledge on the part of the operators.

They however argued that even though the PBN was a new phase in the aviation industry, that for it to be effective and fully operational in the aviation industry, it was expected that operators should be well grounded in it with a lot of experiences.

Speaking on the topic, Presentation on PBN implementation: Approval Process at the NCAA annex, Murtala Muhammed International Airport, (MMIA) Lagos, General Manager, Flights Operator Inspector, Nigerian Civil Aviation Authority (NCAA), Captain Sunday Arome said that the PBN was adequately analysed in the International Civil Aviation Organisation’s, ICAO document 9613.

Captain Arome pointed out that Nigeria had not fully started using the PBN because of lack of adequate knowledge and experiences stressing that, that was the key factors that should be considered before the PBN could be fully operational in the aviation industry.

According to him, the approval process of the PBN consists of five phases including what the operators need to do, the application been submitted to the regulatory agency, the acceptance of the application by the regulatory agency, demonstration of flight and the approval stage.

He emphasised that PBN required an approval from the regulatory authority before any operator can use it stating that there were three conditions to be satisfied by the airlines operators before they can fully use the PBN. Captain Arome said that the operator must be cleared for airworthiness element, flight operator element and all other necessary process that would help the operators to effectively use the PBN.

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42 — Vanguard, MONDAY, MAY 11, 2015

Tax Matters

LSDP: we’ll use medium term sector strategies to deliver - LASG

BY PROVIDENCE OBUH

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agos State Government has assured to use Medium Term Sector Strategies (MTSS) to deliver on the Lagos State Development Plan (LSDP) in the medium term, while the impact assessment reporting would be used to review the plan on a regular basis of five years intervals as documented.

The LSDP 2012 - 2025 was formally launched and presented to the public by Governor Bababtunde Fashola, on December 2014, to provide overall direction for long term growth and development of the state.

Speaking at a Stakeholders’ Sensitisation on the LSDP 2012 – 2025 in Lagos, Commissioner, Ministry of Economic Planning and budget, Mr. Ben Akabueze, said that the plan will set overarching long term framework for government’s planning and budgeting system, stating: “It is important to note that a plan will however not achieve anything by itself except it is executed.

Therefore the planning teams have developed an implementation programme to identify those actions and responsibilities which will ensure that the plan is implemented and becomes a mechanism for realising the vision for Lagos by the year 2025.”

Akabueze who was represented by Special Adviser to the Governor on Economic Planning and Budget, Mrs. Iyabowale Aluko, said that the preparation of the LSDP began by looking at the main issues and challenges facing the state, drawing upon previous state reports, current statistics, especially those published by the Lagos Bureau of Statistics and other relevant documents/ reports made available by Ministries Departments and Agencies (MDAs), adding “ Our vision for LSDP by 2025 is to become “Africa’s Model Mega-city and Global Economic and Financial Hub that is Safe, Secure, Functional and Productive” by 2025.

According to him, “Lagos as the fastest growing megacity state is geographically well placed to serve all the major markets of the world.

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Administration of withholding Tax (11)

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he organizations making the payments are required to withhold tax from such payments and pay over the withheld amounts to their respective relevant Tax Authorities within 30days of receipt of payment or credit by the person or entity suffering

activities covered under the withholding tax regime shall include company (Corporate or noncorporate), Government Ministries and Department, Parastatals, Statutory bodies, Institutions and other established organization approved for

The relevant tax authorities to receive the WHT tax transactions made by companies is FIRS and for individuals and unincorporated bodies subject to Rules of Residence is SIRS or FIRS the Tax. The relevant tax authorities to receive the WHT tax transactions made by companies is FIRS and for individuals and unincorporated bodies subject to Rules of Residence is SIRS or FIRS. Person liable to deduct withholding Tax The payer of withholding tax in respect of any of the

the operations of Pay As you Earn System.

Who is Taxable *All Persons, Companies etc. who’s Incomes are liable to income tax, are subject to Withholding Tax. *However, exempt entities like Educational Institutions, Government Ministries, Parastatals and other Agencies of Government, are Agents for

the collection of WHT. They are required to deduct WHT on any payment made to a taxable body and remit same to the relevant tax authority.

Withholding Tax implication on foreign transactions Non Resident Companies/ Enterprises The Revenue practice is that non-resident companies are not empowered to deduct any type of WHT. These categories of enterprises are practically outside the regulatory monitoring and control of the FIRS. It will be impracticable for Revenue office to inspect the accounting books of these companies in order to confirm due deduction and remittance of WHT. Double Taxation Agreement (DTA) Transactions that are ordinarily not liable to tax in Nigeria are not liable to WHT in Nigeria. Thus contracts and supplies of goods and services performed entirely outside Nigeria by non-resident individuals are not liable to WHT. Nigeria has treaty agreements with about eight

(8) countries and these countries are granted a reduced rate of WHT deduction, usually at 75% of the generally applicable WHT rate. 7.5%. These countries include UK, Northern Ireland, Canada, France, Belgium, the Netherlands, Pakistan, and Romania.

Permanent Establishment (PE) principle exists under nigeria taxation The rules construe a PE where: *The company has a “fixed base” in Nigeria. *The company operates in Nigeria through a dependent agent authorized to conclude contracts or deliver goods on its behalf, *The company is executing a turnkey project in Nigeria, or *The operation between the company and its Nigeria affiliate does not appear to be at arm’s length. *“Fixed base” implies some degree of permanence and will include: *Facilities, such as a factory, office, branch, mine, oil or gas well *Activities, such as building, construction, assembly or installation.

Vanguard, MONDAY, MAY 11, 2015 — 43

Advertising & Promotions Stories by PRINCEWILL EKWUJURU

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ll around Nigeria, Legend extra stout is going about rewarding loyal consumers in a campaign it dubbed “Legend Taste and Tell’ contest.

The brand which has traversed parts of Lagos, Enugu, Owerri, Ibadan and now Abeokuta, the Ogun State capital, precisely at Halmond Entertainment bar, a popular hangout at the MKO Abiola Stadium, rewarded consumers who engaged in the blind taste game, ‘Taste and Tell.’ Whilst rewarding winners of the game who were able to distinguish the brand from filled cups marked ‘A’ to ‘C’, eventually carted home prizes ranging from generating sets to LED televisions and refrigerators.

The star of the night was Iyanu Ogunrinde, a 26 year old Abeokuta based businessman who emerged winner of a brand new generator in the ‘Taste and Tell’ contest. Ogunrinde revealed that it was the first time he would ever taste Legend Extra Stout that night, yet he was able to correctly identify the drink from the array of stout brands during the blind taste test.

An elated Ogunrinde also added that he attended the event after he reluctantly accepted a friend’s invitation to hang out at the bar. He stated: “I am so happy that I won this generator. Thank God that I agreed to accompany my friend here.

Legend is truly a unique stout brand and that is why I did not find it difficult to pick out the brand from others during the blind taste challenge”.

Other winners of the night were Adekunle Gafar, a student and Jamiu Lawal, a technician, both based in Abeokuta. Gafar, a 25 year-old HND 1 student of Moshood Abiola Polytechnic, Abeokuta, won a refrigerator during the blind taste contest, said he came well prepared to win. In his words: “I am not surprised I won because I came here prepared to win. I have been drinking Legend for the past five years and today I am excited about winning this fridge. To me it shows that Legend is not just looking for avenues to make money from consumers. It is also looking at ways to reward loyalty. I am so happy today and I will keep drinking Legend. To me Legend is the best.”

On his part, Jamiu Lawal, the winner of a brand new 32" flat screen television on the night expressed his joy at winning the feat. He stated:

Analysts hail Chivita 100%, Man U partnership

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CSR - From Left: Onilogbo of Ilogbo, Oba Samuel Ojugbele, Managing Director, Intercontinental Distillers Limited, Engr Patrick Anegbe, and a Chief inside one of the classrooms built by Intercontinental Distillers Limited for Ilogbo Community High School, Ilogbo, Ota, in Ogun State.

Is Legend making reward system a policy?

“I am very happy to have won this TV. I did not expect to win but I am happy I won all the same. My favorite drink is Legend and I feel rewarded, winning this night.”

The event also featured a cultural display by the Ogun State Performing Troupe with

live music by Lagos-based Platinum Blazers.

Speaking, Key Account Executive, Nigerian Breweries Plc., Abeokuta, Mr. Adeyanju Babatunde stated that Legend is the leading stout brand in Abeokuta, that the brand owns its rising profile to its unmatched quality as well as its willingness to reward customers through events

such as the ‘Taste and Tell’ challenge.

The trip to Ibadan for the taste and tell contest was not different from what was witnessed in Abeokuta. In Ibadan, Solution Oguniyi, Adekunle Adeyinka, where all consumers who went home with refrigerator and generating set respectively, but Moshood. S. Abiola, 39year, a native of Oyo State had decided to end a three years self-employed imposed break from drinking Legend Extra Stout, that night he was lucky to go home with 32-inch LED flat screen Television.

According to Abiola, he was a regular consumer of Legend Extra Stout until three years ago when he decided to quit alcohol.

Magic Mirror, new OOH ad medium enters Nigeria

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new vista has been opened in the Nigerian out-of-home, OOH advertising industry with the introduction of Magic Mirror advertising option by Soundz & Meknitz Limited.

The product, world’s latest OOH advertising technologies, is the first in entire Sub-Saharan Africa.

Classed under the emerging media and below the line/indoor advertising category, works by interfacing a specially designed mirror with an in-built LCD video and audio programme that also doubles as a viewing mirror. The television commercial, TVC is seen playing on the mirror, with an inbuilt sensor that squeezes the advert message to a corner on approach of a user to present a full mirror and returns after use.

Speaking on the new innovation, Managing Director of Soundz & Meknitz

Limited, Mr Felix Ugbechie, said already his company has been granted exclusive permit to install the new generation advertising technology in all the rest rooms in all airport lounges in Nigeria, a factor he is sure will give maximum value to Nigerian advertisers.

Ugbechie said the advertising medium is unique because it offers the advertiser the opportunity to have something close to personal conversations with individuals who come in contact with it.

“The mirror, as simple as it is, is a very important tool for managing personal relationships. We must always go to the mirror to appreciate ourselves and determine if we are looking good enough for that all important meeting. It is a personal tool that enables us to have a conversation with ourselves before we go out to

meet other people. What we are doing is take this conversation even further by enabling brands to talk to their targets in their most intimate periods. This is a period when conversations are best appreciated and ensure long lasting retention,” he stated.

Ugbechie explained that the Magic Mirror advertising has the distinguishing capability to pass the message personally and without interruptions and also overcomes the challenges of no tune out, trashing or flipping pages that have been the disadvantages of electronic and print media advertising in recent time.

“The Magic Mirror is like a welcome companion to the often disconcerting privacy of the rest rooms. That is why we say it holds personal conversations because advertisers have the privilege of talking to individuals in this secluded privacy and be able to arrest their attention throughout their stay.

n today’s busy world of brand marketing, utilizing the strength of partnership brand marketing to gain incremental marketing exposure is not only smart, but an essential tool for brands to remain more competitive in today ’s constantly changing marketplace.

Brand partnerships such as the one between Nigeria’s fruit juice flagship brand Chivita 100% and English Premiership side Manchester United FC has continued to generate massive interest within the sporting community and consumers of the brand.

According to Adewale Okoya, a marketing communication consultant and former Editor with Marketing Edge Magazine in Lagos, “seven months after the partnership was signed, the management of Chi Limited seems to be doing an excellent job of projecting the partnership and the benefits to its numerous consumers. The communication tactics deployed to create awareness for the Chivita 100% fruit juice and Manchester United partnership has been so effective that both brands have become synonymous with each other in the consciousness of Nigerian consumers”

APRA set to project Africa to the world

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n a renewed bid to reposition Africa’s image within and outside the continent, African Public Relations Association, APRA is set to hold its annual conference. th The conference’s 27 edition which is billed to hold in Cameroon between May 12 through 14, 2015, aims to analyse and project to the world the true image of Africa.

Addressing the press in Lagos at the Pre-APRA Yaounde 2015, the Secretary General of the Association, Mr. Yomi Badejo-Okusanya said that the programme is pertinent considering the image crisis plaguing Africa continent on frequent occasion.

“For instance, the outbreak of the deadly Ebola Virus Disease and the recent Xenophobic attack on foreigners of African descent in South Africa.

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44 — Vanguard, MONDAY, MAY 11, 2015 Email:lesleba@lesleba.com, lesleba@gmail.com Blog page:www.lesleba.com/blog2 Website: www.lesleba.com Tel:0805 220 1997

The oppressive folly of fuel subsidy The data released on fuel subsidy outlays from responsible Agencies of government have, overtime, regrettably remained divergent, such that, it has become a challenge to obtain definitive estimates.

Nevertheless, the Finance Minister, Dr. Ngozi OkonjoIweala recently explained that the inconsistent figures often quoted were unavoidable because subsidy payments is a continuous, rolling process, therefore, relevant government agencies could only provide specific data relating to approved claims that have passed through each department at any point in time.

The above notwithstanding, what is clear however, is that we are spending a disproportionate amount of our Federal budget to fund subsidy payments, which add up to about N500bn, or an average of about 10% of annual Federal budgets since 2011. Incidentally, despite the obvious severe social deprivations caused by our dismal infrastructural deficit, critical sectors such as Education and Health, were never so favoured.

Well, if you are already concerned at the apparent misplacement of priorities, then you may be alarmed, that actual subsidy values may have exceeded 20% of total Federal budgets in recent years. This is because, in addition to the N500bn or so average actual subsidy payments annually, the value of unsettled bills may approach or indeed exceed another N500bn annually.

Infact, according to the Coordinating Minister, subsidy values, which were never

captured in annual appropriation bills, have nevertheless been settled ultimately by her Ministry without recourse to Legislative approval as constitutionally required.

Why the National Assembly condoned this blatant violation of annual fiscal Acts, despite the unathourised monstrous outflows involved, is not clear.

This tradition of impunity has obviously been stepped up with possibly, over N200bn additional commitment which was recklessly incurred this year without Legislative consent as penalty for bank interest on delayed payments and exchange rate differentials on a ‘core’ subsidy bill of N40bn according to Thomas Olawore, the Executive Secretary of the Major Petroleum Marketers (see report titled: Daily Subsidy on PMS rises to N1.7bn on Pg. 38 on Punch newspaper edition th of 30 of April, 2015).

Clearly, if this bizarre fiscal trajectory continues, cumulative fuel subsidy values may ultimately exceed 50% of annual budgets, particularly if crude oil prices remain above $60/barrel and or the Naira exchange rate depreciates above the current N197=$; eventually, the oppressive folly of government’s subsidy strategy may become so embarrassingly glaring when we become constrained to obtain high priced loans to fund our debilitating subsidy habit.

Conversely, however, if subsidy is abolished under the prevailing crude oil price and Naira exchange rate, fuel price will rapidly shoot up to about N150/litre, and ultimately push the average price index

Business & Economy

for goods and services closer to 10%. Consequently, unless all wages and salaries rise by 10% annually, income earners may lose 50% of the purchasing value of their Naira incomes every five years; thus, more Nigerians will need to cut down on their families’ standard shopping list, as incomes increasingly lose purchasing power and deepen poverty, particularly for those families who depend on the existing minimum wage of N18000/month.

Until price imposition is abolished, investors will continue to stay away from establishing new domestic refineries Furthermore, consumer demand will contract if inflation spirals to create adverse consequences for manufacturers and other employers of labour who will become compelled to scale down on their workforce; clearly, this will further worsen the already socially disturbing rate of unemployment.

Thus, government may seem to be caught between the devil and the blue sea, on this matter of subsidy. Indeed, if government’s response to this persistent dilemma remains pedestrian as usual, the incoming administration would predictably seek a truce with Organised Labour to once again share the burden of

these refineries may characteristically still take forever to complete.

However, even if refineries operate at optimal capacity, the ex-refinery cost of fuel will not be significantly different from the f.o.b. prices invoiced by the overseas suppliers; clearly, the price gain from deduction of freight and local charges may not exceed 10% off the domestic pump price in a fully deregulated market, unless crude oil is allocated to refineries at a heavy discount (another subsidy through the back door)!

Consequently, if crude oil prices rise significantly or Naira exchange rate further depreciates, fuel pump price will faithfully spiral uncomfortably to make the accommodation of subsidy inevitable. Besides, until price imposition is abolished, investors will continue to stay away from establishing new domestic refineries because of the clear challenges related to the payments system of the present subsidy scheme.

However, savvy investors, such as Dangote, who establish new refineries, would hedge their investments by selling their products strictly in dollars ex-refinery gate to marketers who would still need to source the required forex for their purchases. In such event, the forex outlay for fuel will still remain substantial despite the new private refineries established.

Conversely, however, owners of domestic refineries would readily price their fuel in Naira if the Naira reestablishes a reputation as a safe store of value, rather than a currency that is perennially beleaguered and remains on life support.

subsidy, by raising the current fuel price of N87 to about N120/litre instead of a subsidy free actual market price of about N150/litre.

Regrettably, however, this arrangement will collapse as soon as crude oil prices rise above the current $60/barrel and, or the Naira exchange rate rises above N197/$, as such price movements will push deregulated petrol price well beyond N150/litre to create a wider margin of subsidy than the N30/litre earlier projected.

Furthermore, if CBN’s rapidly depleting reserves increase pressure on dollar demand, Naira exchange rate would simultaneously spiral closer to or above the current black market rate of N220=$.

In such event, fuel prices will rise and related subsidy values will again increase to precipitate the usual train of inadequate funding, delayed payments, etc, etc, until a brokered resolution between government and Labour once again sets in motion another cycle of folly with an agreement for partial subsidy in fuel pricing.

Sadly, it is not generally known that almost 50% of our forex earnings are currently repatriated abroad as payment for imports for the 40m litres of fuel consumed daily.

Conversely, a huge reduction in external payments, may be possible, if more refineries are built or if at least existing government’s refineries become fully operational. Nonetheless, the reality is that even at full capacity, existing refineries may provide barely 20% of national requirement; besides, Turn Around Maintenance for

CBN may consider easing naira rules this week

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he central Bank of Nigeria has started talks with banks and currency dealers on how to loosen foreignexchange trading restrictions while still maintaining stability in the naira. The Financial Markets Dealers Association, a Lagos-based industry body, met last week to put a proposal together that may be presented to CBN this week.

The FMDA will recommend ways to increase trading and liquidity in the foreignexchange market, while at the same time avoiding speculative demand that might significantly weaken the naira.

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Recall that the CBN has implemented several measures since December to bolster the naira, which has weakened 19 per cent against the dollar since the end of June, by limiting the buying of dollars in the interbank market. The central bank hasn’t made any decision to change the trading rules currently in place, Ibrahim Mu’azu, CBN spokesman told Reuters by e-mail.

David Adepoju, the Lagosbased president of the FMDA, said by phone that he was on holiday and referred requests for comment to Adebayo Adeyemo, the vice president, who didn’t immediately

respond to an e-mail.

The CBN probably won’t make any changes to the foreign exchange regime until after the new government is sworn in on May 29, two of the people who spoke to Reuters said.

Head of Africa economic research at Standard Chartered Plc, Razia Khan had told reporters in Lagos last week: “The central bank will probably have to let market forces have a greater say over the exchange rate if Nigeria is to preserve its reserves. It makes sense to assume that there will be some adjustment in the regime to allow for greater flexibility.

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