DECEMBER 14, 2015
CBN halts branch operations by bureaux de change Orders closure of branches within 90 days Bans relationship with street currency hawkers To saction BDCs operating outside registered office BY JONAH NWOKPOKU
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HE Central Bank of Nigeria, CBN has ordered bureaux de change (BDCs) to close all branches within 90 days, saying branch operations is no longer allowed in the subsector. This directive was contained in the revised guidelines for BDCs released on Friday by the apex bank. According to the guidelines, issued via a circular titled: ‘Revised Operational Guidelines for Bureaux De Change in Nigeria’,
"Bureau De Change is Licenced as a unit institution. No Bureau De Change shall have a branch office outside its registered office. All Bureaux De Change that under the 2002 Guidelines have branches are required to close such branches within 90 days of the 2015 guidelines." The CBN also banned BDCs from business relationship with street traders in foreign currencuies. It stated: "Similarly, it shall be a ground for the revocation of Licence should any street trader in foreign currencies
be found to have any business relationship with a Licenced BDC.
Application for licence
According to the circular, “A formal application to the CBN Governor to grant the promoters an Approval in Principle to carry on the business of a Bureau De Change in Nigeria (shall be made). The application should be addressed to the Director, Financial Policy and Regulation Department (FPRD), Central Bank of Nigeria. Applicants/promoters shall attach to
their application the following documents: A non-refundable application fee of N100, 000 or such other amount as may be determined by the Bank from time to time in bank draft payable to the Central Bank of Nigeria; Evidence of payment of the prescribed minimum capital of N35 million or any other amount as may be determined by the CBN from time to time, into the designated CBN account. The Bank shall refund this amount with interest after the proposed institution has obtained its final licence; A copy of the draft Memorandum and Articles of Association; A letter of intent to subscribe to the shares of the proposed Bureau De Change signed by each subscriber; A copy of the list of the proposed shareholders in tabular form showing their business, and residential addresses and the names and addresses of their respective bankers, as well as the details of their Bank Verification Number (BVN).” It further stated that, “Promoters shall reserve the proposed company’s name at the Corporate Affairs Commission (CAC) as no proposed Bureau De Change shall incorporate/ register its name with the Corporate Affairs Commission until an approvalin-principle has been obtained from the CBN, a copy of which shall be presented to the Corporate Affairs Commission.”
Requirements for final licence
CONFERENCE: From left, Aigboje Aig-Imoukhuede, President, Nigerian Stock Exchange (NSE); Gbenga Oyebode, former chairman, Access Bank Plc; Akinwunmi Ambode, Governor, Lagos State, and Herbert Wigwe, GMD/CEO, Access Bank Plc, during the Access Leadership Conference 2015 with the theme “Leading in a Transformational World: The Imperative of Innovation” in Lagos. PHOTO: AKEEM SALAU C M Y K
The circular further noted, “Not later than six months after the grant of AIP, the promoters of a proposed BDC shall submit application for the grant of a final licence to the Governor, Central Bank of Nigeria, Abuja, with the following documents: Evidence of payment of anon-refundable licencing fee of N1 million only or any other amount as may be determined by the CBN from time to time; the names, designations and signed Curricula Vitae (CV) of the proposed members of the top management; Evidence of
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Cover
Breaking the Nigerian Poverty Cycle through Entrepreneurial Revolution (2)
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INVESTITURE - From left, Mrs. Azeeza Munzali, Prof. Munzali Jibril, new President and Chairman of Council, and Dr. Nelson Uwaga, immediate Past President, Nigeria Institute of Management during the investiture of the new President in Lagos.
CBN halts branch operations by bureaux de change Continued from page 21 incorporation of the company with CAC; evidence of payment of N35 million mandatory caution deposit, or any other amount as may be determined by the CBN from time to time, into a designated CBN account; evidence of having suitable office accommodation for the operation of the proposed BDC.”
Financial requirements
According to the circular, the financial requirements, which may vary at the discretion of the CBN, are as follows: “Minimum paid-up share capital-N35million; Nonrefundable application feeN100, 000; Non-refundable licensing fee-N1 million; Mandatory caution DepositN35 million; Non-refundable annual licensing renewal fee [payable not later than30 days after the end of each calendar year]-N250,000; Nonrefundable change of name fee-N100, 000”
Operations of bureaux de change
On the operations of BDCs in Nigeria, the circular said: “Every BDC in Nigeria shall deal in bank notes and coins, plastic cards and such other businesses as the CBN may approve from time to time; The foreign currencies dealt in by a BDC shall be derived from private sources and such other sources which may include the CBN window as determined by the CBN from time to time for the purpose of funding Business Travel Allowance [BTA] and Personal Travel Allowance [PTA]; Any C M Y K
person/individual wishing to sell foreign currency above $10,000 or its equivalent to a BDC shall be required to disclose the source; Transactions shall be on spot basis (immediate settlement), adding “For the avoidance of doubt, forward transactions by BDCs are not allowed; The maximum amount per transaction for a BDC shall be determined from time to time by the CBN with respect to business and personal travel allowances. The maximum amount currently for PTA and BTA per quarter is $4000 and $5000, respectively; All sales or purchases of foreign exchange shall be properly documented and recorded as may be required by the CBN. Such documents should be arranged sequentially and be made available to CBN and other regulatory authorities on demand, etc.”
Ground for licence revocation
The guidelines further stated: “Every BDC shall transact business at its
Every BDC shall be required to open both domiciliary and Naira accounts with Authorized dealers in Nigeria and inform the CBN accordingly
registered office approved by the CBN as any BDC that operates outside its registered office shall be sanctioned. Similarly, it shall be a ground for the revocation of Licence should any street trader in foreign currencies be found to have any business relationship with a Licenced BDC. Every BDC shall fix its hours of business which shall be clearly displayed in its office. Every BDC shall be required to open both domiciliary and Naira accounts with Authorized dealers in Nigeria and inform the CBN accordingly. The accounts shall be used solely for day to day operations.”
Non-permissible activities
According to the circular, non-permissible activities for BDCs include: “Engaging in off-shore business or maintaining foreign correspondence relationship; Engaging in any trade related import activities; Maintaining a foreign account in whatever form; Round-tripping of foreign exchange [currency] acquired through the CBN window; Street trading of foreign exchange; Carrying on capital market activities; Any other activity as may from time to time be termed “nonpermissible” by the CBN.” It also warned that “Bureau De Change is licenced as a unit institution” And as such, “no Bureau De Change shall have a branch office outside its registered office. All Bureaux De Change that under the 2002 Guidelines have branches are required to close such branches within 90 days of the 2015 guidelines.”
hatcher’s radical policies, successfully adapted across the US, Europe and large parts of Asia, sparked off a new world order and confirmed the evolution of global economic powerhouses. For a uniquely placed country like Nigeria, blessed with resources but hexed with endemic problems, these events hold tremendous relevance and opportunity. They are also crucial to Nigeria making progress towards the United Nation’s Millennium Development Goals of eradicating hunger and poverty and improving environmental sustainability, among others. The first lesson for Nigeria of course is the need for fundamental changes in outlook and practices with regards to promoting entrepreneurship as a means to permanently overcoming poverty and achieving grassroots development. Of equivalent importance is upgrading infrastructure and improving access to social services, especially health and education. The World Bank outlines a three-pronged strategy for Nigeria to meet this challenge, which includes:
Establishing a viable macroeconomic configuration that optimises incentives to the widest citizen base. Prioritising accountability as a means of encouraging entrepreneurship and the subsequent delivery of quality services to the population. Adapting policy and public expenditure conventions suitable to promoting efficient growth and enhanced productivity in a way that brings tangible benefits to the poor.
Some of these suggestions have already been adopted. In 2003, the Nigerian government set up the National Economic Empowerment Development Strategy, in line with IMF poverty reduction policies, to achieve better fiscal management. The same year, fuel prices were deregulated and Abuja announced the privatisation of four national refineries. The current global economic downturn is certain to wreak further havoc on Nigeria’s fledgling and often floundering economy. What will determine the final outcome of its nascent entrepreneurial revolution, to borrow a statement from Apple honcho Steve Jobs, is the amount of perseverance is backs it up with. A viable economic agenda for Nigeria that allows rapid entrepreneurial progress has to focus on fundamental adjustments:
Creating a pro-active socio-economic environment that encourages creative and viable entrepreneurship from the grassroots level to onwards. Identifying and correcting infrastructure deficits and systemic imbalance inimical to small business.
Developing a credit regime – through relevant financial and industrial policy changes – that is sympathetic to small business realities. Promotion of lending through equity, and not debt, is of critical importance.
Removing administrative and trade barriers while simultaneously enhancing technical support and capacity building assistance for both existing and emerging entrepreneurs.
Mobilising the country’s significant human resources pool by revamping the education sector to provide vocational, administrative and skill development training to rural and urban youths.
Creating efficient and effective mechanisms for regulation and oversight of enterprise-development initiatives in general, and microfinance institutions in particular.
Maintaining political stability and authority of democratic institutions; fighting corruption and building social consensus on important issues to ensure broad-based success of macroeconomic policies.
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here is usually the belief that investors avoid Nigeria due to lack of infrastructure. This has led government and many well meaning Nigerians to always focus their thoughts on building infrastructure. While it is true that infrastructure facilitate investment, it also aids economic development. The greatest challenge facing the country in terms of foreign direct investment is the obsolete nature of Nigerian laws that do not conform to 21 st Century economy. Investors have long complained of the lack of sanctity of contract and respect for property right in Nigeria. Nigeria instead of attempting an overhaul of the legal and judicial system to make Nigeria investmentfriendly, they rather focus on what they have been made to believe is the problem. When the Nigerian telecommunication space was opened to private sector investors, many were deceived by the report the World Bank gave to them. But MTN, Econet as Airtel was called then, took the risk. Despite the gloomy picture of lack of infrastructure, telecom companies are making profit from their investment. It is the same story with the oil companies and many others that have invested in Nigeria. The Senate President, Dr. Bukola Saraki seems to have understood the economic bottleneck the nation is facing and last week, promised the business community that the Eighth Senate of the Federal Republic of Nigeria will tackle the problem. Delivering a speech titled: 'Macroeconomic outlook for 2016 and legislative perspective' at Lagos Business School Breakfast Club end of the year dinner, Dr. Saraki told the august gathering of key business operators in Nigeria that the 8th Senate is at an advanced stage of carrying out one of the most far-reaching legislative reviews ever embarked upon by the legislature in Nigeria with the Doing Business Development
Can Saraki really push for a modern economy for Nigeria?
•Saraki project which is aimed at eliminating obsolete business regulatory laws that have outlived their usefulness and in their place, provide adequate legal, institutional and regulatory mechanisms to drive a new modern economy. He said: “Prior to this, we have strategically utilised formal and informal meetings with key stakeholders including the NBA, the SEC, RMFAC, the ICPC, FIRS and many other relevant agencies of government and
critical industry leaders, with a view to using gathered information as a critical tool to fashioning out what will make Nigeria a favourable investment destination. For th the 8 Senate, we can no longer accept the placement of Nigeria at 169 of 189 countries on the global ranking of business competitiveness. Therefore, the task of modernising the Nigerian economy and providing the regulatory environment for ease of doing business is for us a task that must be done
in order to set the stage for meaningful economic growth. As operators, we need your partnership on this important assignment to ensure that your concerns and views are adequately captured.” The question to ask Dr. Saraki is: Will the review be comprehensive enough to include property right, land use act and sanctity of contract? Will the National Assembly pass laws that will fasttrack the judicial process of seeking redress on commercial and trade disputes? Globally, investors are interested in places where return on their investments is high. Nigeria certainly qualifies as investors have found out that they reap higher benefit if they invest in Nigeria. The few that have done so have found this to be true. Yet, Nigeria is not a haven to foreign investors. There must be reasons why they shy away from Nigeria. Many investors out there who speak privately to Nigerians at investment fora are quick to point out that in Nigeria, there is no sanctity of contract and property rights are not clearly defined. Most foreign investors see this as the most inhibiting factor that scares away wouldbe investors. They are not worried about the lack of infrastructure as is always claimed by those who explain away the Nigerian situation. Shell, Mobil, Chevron,
MTN, UACN and others know too well the infrastructural deficiency in the country, yet they invested and are reaping the benefits. The truth is that both local and foreign investors are wary of investing in Nigeria because the state and its agents have no respect for property rights and sanctity of contracts. They are worried that if they invest in Nigeria, their investment can be taken over by the state. The termination of Lekki Concession agreement by Lagos State Government, the taking over of private banks by the Sanusi-led CBN, the revocation of the concession granted to Bi-courtney are examples of such impunity that scare investors away from Nigeria. Property rights, according to Professor Pat Utomi, constitutes a major part of the constitutional arrangement that makes an economy advance. Now, until this entity called Nigeria has a philosophical understanding of what property rights means, Nigeria is not going to make any major economic progress. To say the least, investors are scared and skeptical about Nigeria because there is impunity and property rights are not guaranteed. Will the Saraki-led Senate give Nigeria legislations that will resolve all of these? Nigeria will be a better place to do business if the laws to be reviewed are carried out quickly and include the review of the land use act and a well defined property rights is enshrined in the country.
Business & Economy Financial scandal rocks Head of Service Staff Co-operative BY FAVOUR NNABUGWU
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fficials of the Cooperative Society of the office of the Head of Civil Service of the Federation have accused its President of mismanagement and misappropriation of fund. Financial Vanguard investigations revealed that over 1,600 members of the Head of Service Cooperative Society are calling for the intervention of anti-graft authorities to investigate the refusal of the President to relinquish his position 22 months after he
retired from the Service. In a letter addressed to the President, Joint Union Negotiating Council in the office of the Head of Service dated January 5, 2015, the members appealed for intervention in the crisis that has rocked the cooperative since the president, Mr Stephen Esezebor got on aboard. The letter which was duly signed by the 39 members of the cooperative reads, “Permit us to kindly draw the attention of your office to the lingering crisis that has been rocking the operations and general administration of the Cooperative Thrift and
Credit Society (CTCS) of the Office of the Head of Civil Service of the Federation. This crisis has assumed an unresolved dimension hence the need for this SOS (Save Our Soul) letter. “Mr. Stephen Esezebor, now a retired civil servant has held sway as the President of the Cooperative for many years while in active service and was expected to have relinquished power to a successor just before his retirement but blatantly failed to do so, held onto power unduly thereby aggravating the avoidable crisis that has rocked the boat
of the Cooperative hitherto. “Mr. Stephen Esezebor, not willing to handover the affairs of the Cooperative, and also not willing to end the crisis, resorted to legal means as he headed for litigation in the Court of law which we have viewed as just a strategy to undo so many things to his personal interest. Worst still, is the apprehension that our hard-earned savings in the Cooperative accounts would have been grossly tampered with. This is obvious as members who applied for loans no longer get them, those who retired from the service can not access their
life- savings. "The Cooperative society accounts with Ecobank, United Bank for Africa, Diamond Bank and GTBank are still being operated by Mr Stephen Esezebor who retired from the Service in February 2014. “We undersigned stakeholders and concerned members, on behalf of the entire members of the cooperative therefore considere it imperative for your good office to wade into this crisis that has done nobody any good.” The Audit Committee of the cooperative had in 2012 written to the Head of Civil Service of the Federation on alleged mismanagement and misappropriation of funds. C M Y K
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Business & Economy
Airlines profits to hit record levels in 2016 — IATA
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ow oil prices and healthy demand for travel will boost airline profits again in 2016, the International Air Transport Association has said. IATA, which represents almost 260 airlines accounting for 83 percent of global air traffic, said net profits would reach record levels of 36.3 billion dollars in 2016 after 33 billion dollars in 2015. It said over half of the profits would come from North American carriers. The Geneva-based association had previously forecast airline profits of 29.3 billion dollars in 2015. “It is a good news story,” IATA Director General, Tony Tyler, told journalists in Geneva. Tyler, however, said that the industry profits were still best described as fragile rather than sustainable. Demand for travel has been booming in 2015, thanks to improving economies and lower fuel helping to boost spending, especially on leisure trips. “We should enjoy the benign trading conditions while they last, but it would be a mistake to start to get used to them,” Tyler said.
Land border rice import: Customs rakes in N1.178bn in 2 months
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igeria Customs Service, NCS, has recorded a total revenue of N1,178,720,376 on rice Imported through the land borders in October and November 2015. During the same period, the total quantity of rice imported through the land borders stood at 17.596 Metric Tonnes. A press statement signed by Customs Public Relations Officers, Wale Adeniyi, noted that the figures were disclosed at a strategy session convened by the Comptroller-General of Customs, Col. Hameed Ali (Rtd) to review revenue performance for the year. Adeniyi stressed that it is important to note the revenue collected was during the period the Comptroller-General of the Service had approved the removal of the restriction placed on importation of rice through the land borders.
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Airports, UNFCCC enter deal on climate neutrality By GODWIN ORITSE
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partnership to cut emissions from airports and take the industry towards climate neutrality has been launched. The partnership was signed at COP21 in Paris by the United Nations Framework Convention on Climate Change (UNFCCC) and Airports Council International (ACI), which developed the Airport Carbon Accreditation programme. Emissions reductions will be achieved through use of energy-efficient lighting, cooling and heating systems, solar energy, climate-friendly ground transportation and a wide range of other measures aimed at climate neutrality. ACI will support the UNFCCC’s initiative, while the UNFCCC secretariat will support airport carbon accreditation, whereby airports measure, report and reduce their emissions. The two organizations will develop a common work programme and communications plan promoting carbon neutrality. UNFCCC will join the advisory board of the Airport Carbon Accreditation programme, which aims to increase the number of airports graduating to carbon neutral status. In the past 12 months, 137 airports worldwide, representing 31 percent of global passenger traffic have earned ACI’s “airport carbon accredited”
status. There are currently 20 carbon neutral airports. The partnership announcement follows the commitment by the European airport industry last week at COP21 to increase the number of carbon neutral airports to 50 by 2030. “It is immensely encouraging to see an industry as visible and strategically relevant as the airport industry being so proactive on climate action,” said John Kilani, Director, Sustainable Development Mechanisms programme, UNFCCC secretariat. “What ACI has achieved through airport carbon accreditation over the past six years is inspiring – to mobilize 137
airports in the journey towards carbon neutrality is an example that many other industries could learn from.” Angela Gittens, Director General ACI WORLD and Olivier Jankovec, Director General ACI EUROPE in a joint statement said “Today is a very big day for ACI and Airport Carbon Accreditation. To gain the support of an organization as authoritative as the UNFCCC is something we consider a major achievement and a genuine recognition of the contribution of the airport industry to the climate action through Airport Carbon Accreditation. We are delighted to be partnering with UNFCCC and look
forward to their input in the Advisory Board of the programme.” Launched at Climate Week in New York in September 2015, Climate Neutral Now encourages countries, industries, organizations and even individuals to measure their emissions, reduce what they can and offset the rest with quality projects in developing countries. The Intergovernmental Panel on Climate Change has estimated that aviation accounts for about 2 percent of global CO2 emissions. Of that figure, airport operations account for up to 5 percent. For more information about the Airport Carbon Accreditation programme, including key results,
AWARD - From left: Director, MTN Foundation, Mr. Dennis Okoro; MTNF Science &Tech Beneficiaries, Ms. Seun Akinfolarin and Onyeonoro Praise; and MTNF Executive Secretary, Ms. Nonny Ugboma at the Award Ceremony of the MTNF Scholarship Scheme 2015 in Lagos.
LIRS shuts four firms over N6.86 million tax debt
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he Lagos Internal R e v e n u e Service (LIRS) said it had shut four companies over non-remittance on N6.86 million workers’ personal income taxes. Mrs Ajibike Oshodi-Sholola, the Head, Distrain Unit of the LIRS, disclosed this to the News Agency of Nigeria (NAN) in Lagos. According to her, the firms were closed during a statewide tax law enforcement exercise on Thursday, last week. Oshodi-Sholola said that the four companies’ total tax liabilities were only for 2012 audited results. She said that the affected
companies included hotels, electronic shop, shipping company and fashion firm. The head of the distrain unit said that some of the affected companies had started paying the 2015 taxes, but had not paid for 2012, 2010 and 2011. She said that some firms would pay for the current year without paying for the previous years. According to her, the companies were doing this by thinking government will forget, overlook or wave tax payment of past years. “It is wrong to bypass tax payment of any year because government will not forget its money. Certainly, the
government will come for the taxes one day. And pilling up the taxes may make the amount to accumulated so high that it may be difficult for the company to pay,” she said. She said that some companies were out of business because their tax liabilities had accumulated such that they were unable to pay the debts. Oshodi-Sholola urged firms operating in the state to ensure that they regularly remit their workers’ taxes to the service to avoid the embarrassment and disruption of their operation. “Ensure your company is upto-date with its tax payments and always make available all
necessary documents in respect to the companies’ tax issues in case LIRS visits. Tax-payment is a civic responsibility of everyone because it is a major source of government’s revenue. “It also the only way government can provide the basic amenities for the citizens to improve their living standards,” she said. Some of the affected companies, however, complained that LIRS was not giving them fair hearing. They said that they did not receive letters from the LIRS in respect of its plan to seal their companies.
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Banking & Finance
Access Bank leads innovation advocacy to transform Nigeria’s leadership By Jonah Nwokpoku
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ccess bank Plc has led the call for Nigeria to adopt innovative approaches in its bid to transform its leadership for a better, prosperous society. The Chief Executive Officer/ Group Managing Director, Access Bank, Herbert Wigwe made the call while speaking at the 2nd Access leadership conference held in Lagos. According to Wigwe, the question around leadership and innovation is perhaps more pertinent in Nigeria today that just had a successful transition into a new leadership. He said: “If we can change the world with very simple question, what if? What if our literacy rate in Nigeria is 100 percent? What if everyone in Nigeria had access to education? What if the fight against malaria and HIV was won? What if our infrastructure enabled economic success and opportunities for all Nigerians? And the banking industry could contribute to all these lofty goals by providing the best quality products and services at the cheapest prices for all Nigerians. This conference will enable each and every one of us to ask the question, what if? The question around leadership and innovation is perhaps more pertinent in Nigeria today that just had a successful transition into a new leadership.” While noting that the conference brought together global business leaders, innovators, entrepreneurs, politicians, civil society leaders to discuss important topics that affect all sectors, he added, “Despite the fact that there are global differences and economic challenges all over the world, there are also significant opportunities which we must all grasp both for home grown talents and for international investors. Whereas such an environment may bring its own challenges to the business world, we also know that such environment will create tenacious leaders, courageous politicians and innovative chief executives. C M Y K
PROMO - From left, Ebere Nwaolikpe, Assistant Marketing Manager, Western Union (ECOWAS); Mrs Olukorede Demola-Adeniyi, Head, Personal Banking, Ecobank Nigeria; Prince Adewale Oladiti (one of the lucky winners of ‘Ecobank-Western Union Double your money promo), and Daniel Onyemenam, Deputy Manager, Regulatory and Monitoring, National Lottery Regulatory Commission, during the draw, in Lagos.
Financial crimes threaten global economy system —DPPF BY ONOZURE DANIA
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he Director of Public Prosecutions of the Federation (DPPF), Federal Ministry of Justice, Mr. Mohammed Saidu Diri has said that organised crimes and financial crimes are the major threats to the global economic system. He said that organised crimes and financial crimes, which have taken the centre stage in the global world, entails intricate layers of criminal conspiracy and responsibility, with cross border implications as different components of “predicate crimes.” Diri disclosed this during the 2015 Capacity Building Workshop for Law and Enforcement Agencies organised by the Nigeria Deposit Insurance Corporation (NDIC), in L a g o s . The two-day workshop had in attendance, the Law Enforcement Agencies which includes the Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices and Other Related Offences Commission (ICPC), the Nigeria Police, Federal Ministry of Justice etc. was held at Golden Tulip Hotels, Festac, Lagos. The public prosecutor, who was represented by Mr. Ernest Ezebilo stated that the investigation of financial crimes in this high-tech globalised world required men and women of sound technological know-how and that such level of skills can only be possible through capacity building
programmes such as the one organised by the NDIC. “Financial crimes and Terrorism are criminal acts that are inextricably intertwined and in this era of terrorist attacks on Nigeria and her citizens, terrorist financing is the most deadly act of terror as without the financial capability, the terrorists cannot carry out any attacks. “Money laundering as a form of financial crime has become
a phenomenal criminal activity as almost all proceeds of financial crimes are laundered to safety, until our law enforcement agencies are equipped to trace, find and recover all proceeds of crime, the criminals will always be ahead of the public security institutions”, Ezebilo said. Diri further encouraged the agencies not to relent in the fight against corruption, adding that they should be
steadfast and never give up on their mandate, as corruption is the bane of the country ’s national development and that Nigerians are counting on t h e m . “Corruption, I cannot in all honesty address you without mentioning this issue, most importantly because it is the bane of our national development but most practicably because it falls within your mandate. The current administration of President Muhammadu Buhari has decided in words and in deeds to purge our dear country of this cankerworm that has hindered us from attaining national development commensurate to our economic fortunes. The president and indeed Nigerians are counting on all of us”, Diri stated. Earlier in his keynote address, the Managing Director/Chief Executive Officer of NDIC, Alhaji Umaru Ibrahim lamented incessant fraud in the banking system, in Nigeria, stating that this has continued to be a great concern to the Corporation going by the magnitude of losses recorded over the years. Ibrahim, who was represented by Alhaji B.D Umar noted that the experience with those banks that were closed between 1994 and till date clearly illustrated the trend and the damaging impact of fraud on the affected banks. “Many of the banks under liquidation as well as many in operation have suffered a great deal from the impact of fraud.
Rödl& Partner integrates with WFO Professional Services R
ödl& Partner, a global professional services firm providing audit, legal, tax consulting, BPO, management and IT consulting, has further strengthened its presence in Africa with the admittance of WFO, a fast growing group of firms providing audit, tax and advisory services in Nigeria and Ghana. Rödl & Partner offers a unique approach to the opportunities of the African markets: a multi-disciplinary, one-stop shop firm of lawyers, accountants, tax specialists and management consultants – entirely focused on the needs of foreign direct investment and truly integrated services for private investors, international financial institutions and governmental agencies in Africa. Rödl & Partner supports German and other multinational businesses, wherever in the world they might be.
WFO is the brand through which WFO Professional Services LP (Chartered Accountants), WFO Advisors Limited (providing tax and advisory services) and Lekki Corporate Services Limited (providing company secretarial services and, immigration and
employment advisory services) provide a boutique of services to clients. WFO, with over 40 partners, directors, managers, consultants and associates, is headquartered in Lagos and has representative offices in Port Harcourt, Ibadan, Abuja and Accra, Ghana.
Why We Donated Students’ Centre to Pan-Atlantic University – FCMB
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irst City Monument Bank (FCMB) has said that its decision to decision to donate a multi-purpose Students’ Centre to PanAtlantic University (PAU), is part of its strategies to invest in the future especially that of the youth. Speaking at the commissioning and handover ceremony of the Centre, Group Managing Director/ Chief Executive of FCMB Limited, Mr. Ladi Balogun,
added that the gesture is also in line with the commitment of the Bank to effectively support initiatives that would enhance the standard of education in the country as well as the well-being of the society. The FCMB Students’ Centre, located within the main campus of PAU at Ibeju-Lekki, along the LekkiEpe expressway in Lagos, is a facility devoted to students’ recreation and socialisation.
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Corporate Finance
Stanbic IBTC offers competitive rates for vehicle and asset financing — OGBOR I
feanyi Ogbor is the Head, Vehicle and Asset Finance, Stanbic IBTC Bank. He is experienced in asset finance and general investments and currently leads the team that is responsible for originating, structuring, executing and administering asset finance facilities within Stanbic IBTC Bank. In this interview with Vanguard, Ogbor explains how the bank is using asset finance to make vehicle ownership less cumbersome for Nigerians. Excerpt: You just signed a deal with Peugeot Automobile Nigeria to finance car purchase for your customers. Coming on the back of a similar deal you recently signed with Coscharis Motors, what would you say is the overarching strategy behind these deals? We plan to grow our Vehicle and Asset Finance franchise in the market, providing services to various customers. These include individuals, small and medium enterprises (SMEs), commercial and corporate clients. With our position as a market leader in vehicle and asset financing in Nigeria, we have continually provided various solutions to our customers who require various equipment from time to time. Aside the successful sales campaigns with selected vehicle and equipment dealers, we are in relationship with key vendors and vehicle dealers financing their products for a wide range of users. Taking this further, we are bringing vehicle and equipment financing to the dealer’s showroom. By so doing, customers can walk into our vendor outlets and they can access financing from the dealer flow. This we have started and we intend to replicate amongst several dealerships. Simply put, the customer will eventually walk into a dealer showroom, process and secure financing for any choice of vehicle and eventually take delivery without necessarily going to any of the bank branches. Does this deal represent the re-emergence of Peugeot in Nigeria and that the small fleet transporter, who provide the majority of transportation via road, can now access facilities at Stanbic IBTC to replace their buses? The programme supports the drive to produce and sell locally assembled vehicles in Nigeria. This is one way in which the bank supports local 4008, 3008, 308, 301 and the manufacturing by providing a Panel Van. Peugeot is back special finance scheme that again and working with a will enhance the sale of bank like ours, it is most likely locally assembled vehicles. going to end up with at least Years ago, it seemed like there “One Peugeot brand in most was at least one Peugeot homes.” brand in most homes in The offering is channelled Nigeria. Our parents drove towards existing and new the 504GL, 504SR, 404, 305 customers of the bank. and later, the 505. We also However, the fleet buyers are remember the 505 evolution. likely to take more advantage With this deal, the bank will of the programme and we are be providing financing for willing to support them in this customers who are interested regard. in buying any of the Peugeot What are the specific brands based on favourable requirements for individuals terms and conditions. The who wish to benefit from this new brands include a wide deal? range of vehicles from the In the personal space, first Sedan to the Crossover and price for us will be to deal with SUVs. These are the 508,
What is constant is the fact that our offerings are a combination of very attractive rates, quality assets, special insurance offerings and a convenient repayment plan.
•Ogbor employees of corporate organisations whose salary accounts are domiciled with the bank. Where we deal with customers without salary domiciliation, an irrevocable standing order must be in place. The above is, however, subject to affordability, considering the cost of the vehicle and salary. Are the requirements and paperwork arduous? What exactly is the process? Aside the execution of the application form, we will require other documents showing proof of employment, evidence of monthly take home and proforma invoice stating the price of the vehicle. Customers can walk into any of the outlets of Peugeot Automobile approved vendors or any branch of Stanbic IBTC Bank nationwide and there are sales team members who are at all times available to provide the necessary support. After a preliminary assessment, the customer will receive immediate feedback on eligibility and will be guided on the documentation process for the application. Upon approval, the customer will be issued an offer letter. Based on acceptance of the offer (other conditions met) the customer will take delivery of the vehicle. It appears the scheme is skewed in favour of employees who work in blue chip organisations, unavailable to a huge percentage of Nigerians who are in the informal sector but are desirous of owning a car. How can a self-employed Nigerian in the SME sector benefit from this deal? As a group, we offer financial services to customers in various segments. These are Personal Banking, Business Banking, Corporate & Investment Banking and
Wealth. In the Business Banking space, we offer banking services to both SMEs and commercial customers and our vehicle and asset finance offering is one of the numerous products on offer. Self-employed clients and other small businesses fall under our SME segment and they are open to this scheme. For the SMEs, it is a business application with separate requirements, which differ from those of the individuals. When the Coscharis deal was signed, the perception was that Stanbic IBTC Bank was only interested in the top end of the market as only luxury car brands, essentially high-net-worth individuals, were covered by the deal. Can we then say that the Peugeot deal is an indication of the bank’s intention to increase presence in the retail end of the market? Under the Coscharis Vehicle Finance Scheme, financing is availed to customers who intend to purchase any of the Coscharis brands of vehicles. These include Ford, M&G, BMW, Jaguar, Mini, Land Rover and Rolls Royce. Even though the vendor sells luxury brands, Ford and M&G have models that compete with other brands that are considered to be less expensive. Aside the special programmes we run with selected vendors, we deal with most of the major vehicle and equipment dealers providing financing for a wide range of products. We cater for the various segments in the market. Many observers of deals such as this often wonder why there is fanfare around such deals when the market for new cars in Nigeria is only 10 per cent of the total car market, with used vehicles making up the balance 90 per cent. Don’t you think that real value lies in going after the 90 per cent, which these deals do not cover? For new vehicle purchases, we are aware that a higher number of these vehicles are sold on outright purchase. With the kind of offerings we have, we are able to increase the number of financed vehicles in the market. For a number of customers who would ordinarily buy used vehicles, affordability is created and we see them move up to play in the new vehicle segment. Lifestyle and standards of living are enhanced. Aside that, we also provide financing for preowned vehicles under our general vehicle financing terms and conditions. Therefore, we can rightly say that we cover the pre-owned car segment as well.
SEC disclaims BGL 50 Index
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ollowing the publication of the BGL 50 Index in a national newspaper, the Securities and Exchange Commission (SEC) Nigeria has insisted that the suspension of BGL Plc, its subsidiaries and sponsored individuals from all capital market activities still subsists. SEC in a notice it posted on its official website, said that the Commission dissociates itself from the “BGL 50 Index” publication. According to the notice, The attention of the Securities and Exchange Commission (“The Commission”) has been drawn to a “Market Index” titled “BGL 50”, currently being sponsored by BGL Plc in Thisday Newspapers. This is to remind the general public that the suspension of BGL Plc, its subsidiaries and sponsored individuals from all capital market activities still subsists. “The Commission hereby dissociates itself from the “BGL 50 Index” publication.
GTBank named Bank of the Year in Nigeria
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uaranty Trust Bank Plc has once again reaffirmed its position as a leading global brand with its recent recognition as the ‘Bank of the Year’ during the 2015 Banker Awards held in London, United Kingdom. The Banker, a publication of the Financial Times, is the world’s leading monthly journal of records for the banking Industry, with over 90 years expertise in publishing development in the banking industry both in Africa and on the global scale. The Banker Awards is regarded as the industry standard for banking excellence, recognizing and celebrating the achievements of individuals and financial institutions within the global banking sector. According to Brian Caplen, Editor of the Banker Magazine: “The banking and financial services industry continues to develop rapidly, with a few financial institutions cementing their positions as market leaders, pushing the boundaries of innovation and excellence. GTBank has over the years maintained a reputation for delivering notable financial success hinged on world class corporate governance standards and excellent service delivery.”
32 — Vanguard, MONDAY, DECEMBER 14, 2015
Homes & Housing Finance
“Govt must provide enabling policies for affordable housing”
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real estate d e v e l o p e r, Mr. Deji Alli, has revealed that without government’s enabling policies to drive the prospect of affordable housing in Nigeria, achieving it will be difficult. Alli is the chairman of Mixta Africa,, parent body of Mixta Nigeria, a real estate development firm operating in several African countries that has now been acquired by ARM Properties. Disclosing this at the formal launching of Mixta Nigeria in Lagos last week, Alli noted that affordable housing is a major segment in the operations of Mixta Africa. He said “In Senegal for instance where we have developed affordable homes, the price is 30,000 Euros per home which is about N6 million. This is exactly what we want to do in Nigeria. “But before we can do this, certain things have to be done. For instance, the governments must be desirous to make homes affordable to the teeming prospective Nigerian home owners by creating policies that will drive the dream of affordable homes in the country. For instance, the
government should ensure that it is possible for people to borrow for a long term at affordable rates to acquire their homes. “This is the difference between what is happening in Nigeria and what we are seeing in other countries where we are operating. So, until we have a situation where the government is providing that enabling environment for affordable homes, achieving affordable housing in Nigeria is always going to be difficult”, he stated. According to him, there is
what is called social housing programme, which is usually a programme of the government where there is an objective to deliver homes to citizens at a price point. He added that to do this, there must be policies in place. He further pointed out that then, there is affordable homes where there is no government’s support. “I think for Nigerians, this is where they have the opportunity to own their homes because there are no policies by the government to facilitate affordable homes
in the country yet. The kind of prices we are talking about which is between N5 and N6 million as we have done in other countries in Africa is not impossible in Nigeria”, the chairman noted. Shedding more light on Mixta Africa, he said “Mixta Africa which is the parent body of Mixta Nigeria is based in Barcelona, Spain. It has subsidiaries in Tunisia, Senegal, Cote’d Voir and now Nigeria. In addition to this, in the past, we had developed projects in Algeria, Egypt and
Mauritania. So, Mixta Africa is an African real estate development company. But the distinguishing feature of this company when you look at its operations across Africa, is that we have specialisation in our area of business.”Our core area is affordable homes. In places like Morocco and Algeria, we have been able to deliver homes successfully to end buyers at a price of N5 million. So, the reason for the acquisition for us, is to bring that management discipline of Mixta Africa to Nigeria which makes a lot of sense to us so that we are able to lower the delivery cost of houses to prospective buyers.
Estate Valuation practitioners seek global certification
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n a quest to be globally competitive in plant and machinery valuation practice, some Estate Surveying and Valuation practitioners in Nigeria have liaised with the American Society of Appraisers (ASA), to obtain international certification. Though, known as valuation in Nigeria, some countries use the term, appraisal to define the act of estimating value for tangible and intangible assets, plant, machinery and equipment. This was the highlight of the visit to Nigeria by the Past President of the American Society of Appraisers (ASA), Leslie H. Miles Jr.
The ASA, last week in Lagos, commenced Stage 1 of the accreditation process aimed at certifying the first set of Nigerians as Members of the organization. The program is being co-ordinated by Mr. Leslie H. Miles Jr. a past president and Certified Instructor of ASA. He is also a Senior Appraiser with Asset Valuation Source, a Texas based institution in the United States of America (USA). The program dwelt essentially on plant, machinery and equipment valuation principles and practice. The program was hosted by Messrs Paul Osaji& Co at their head office in
Lekki Phase 1. Elaborating on this, Mr. Paul Osuji, a renowned estate surveyor and valuer, said valuation is needed in various sectors of the economy such as banking and financing, oil and gas industry, aviation sector, manufacturing, real estate and such sundry businesses. Investors would want to know the values inherent in the business they want to put their money in. According to Osaji, Estate Surveyors and Valuers (Appraisers) are in the best position to put them through on this as they have the competence. Continuing, Osaji argued that
investments have no border, therefore, professionals have to continually seek to obtain certifications with international designations in addition to their National Certifications, in order to meet various expectations of multinational organizations. “An appraiser must invest in academic study and handson, full-time experience; and must prove competency through passing qualifying examinations in valuation theory, ethics, and at least one specialty, plus peerreview approval of appraisal reports”, said Osaji.
Insurance
ITF builds partnership with insurance companies STORIES BY FAVOUR NNABUGWU
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s a human resource development agency, Industrial Training Fund has planned to build on its partnership with insurance companies on skills training to see how the underwriters can provide insurance for its facilitators, among others. The Director-General of ITF, Mrs. Juliet ChukkasOnaeko made this known during a press briefing with Commerce and Industry Correspondents Association of Nigeria (CICAN) Abuja chapter in her office. Chukkas-Onaeko will write to some insurance companies on how the insurers can work with the Fund to insure some of its facilities and facilitators. “We are planning to build on our partnership with insurance companies. We
want insurance companies to come up with a kind of product that will cover our facilitators as trainers train our trainees in our various centres. “ITF is committed to continuous development of human capital to adequately advance human resource practices in Nigeria and accelerate the level of contribution in national development. We have five vocational training centres in different states. We are partnering with other training institutions both inside and outside Nigeria and the aim is to provide internationally acceptable training for Nigerians so that they can use the certificates earned anywhere in the world. It is only when we do this that our people can leave Nigeria and get good jobs outside the country. We want to empower people that
can work locally and internationally” She said the fund had established collaboration and networking with other institutions and agencies such as the German Chamber of Crafts and Commerce to train apprentices in line with
German Dual System., SENAI in Brazil, Institute of Technology Engineering and Education Services (ITEES) in Singapore, Galilee International M a n a g e m e n t Institute(GIMI) in Israel, the SURE-P, Dangote, the Nigerian Employers
Consultative Association (NECA), Manufacturers Association of Nigeria (MAN), Cement Technology Institute and the Ajaokuta Steel Rolling Company. The whole aim of the collaborations, she said, is to see a revitalized economy as evidence from developed and emerging economies show that requisite skills constitute a major platform for attaining sustainable economic development.
Use of US Dollar in Zimbabwe market stabilises CRe operations – MD
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he Managing Director of Continental Reinsurance plc, Mr Femi Oyetunji has said the use of US Dollar in the company’s offshore offices has helped to sooth the reinsurer ’s operations, following the continuous fall of the naira in the organisation’s home country. Oyetunji who said the depreciation of currencies has slowed down business in
Mozambique, Zambia and South Africa, noted that the use of the US dollar in Zimbabwe had stabilised the firm’s operations. “In terms of using the US dollar for us, we convey our premiums and when we aggregate the average, we report in Naira. The issue of currency losing traction affects us in other markets. Premiums paid in US dollar
boost us when translated into the group rate,” he said. He said although the current focus was on consolidating the firm’s position in Botswana, there were concerted efforts to deal with regulatory challenges so as to operate directly from Zimbabwe in the near future. Oyetunji said Zimbabwe was an important market for the company and was the third largest market in Africa in terms of premium income.
Vanguard, MONDAY, DECEMBER 14, 2015 — 33
Minimum wage and the inevitable bankruptcy of state governments “Who ever reads history with application will perceive that the same events are often repeated and that we need only change the names of the actors. Frederick the Great, 1712-1786, (VANGUARD BOOK OF QUOTATIONS, VBQ, p 92.)
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nother economic war is about to start in Nigeria. The war will be about Minimum Wage, MW. The states want to renegotiate it, meaning reduce it. Labor also wants to renegotiate it, meaning increase it. Renegotiation seems to be the only point of agreement; it is also the battle ground. On the face of it, one would assume that this is only “a matter of cash”. But, it is more than that. The very existence of states and local governments is threatened by this conflict. The first sounds of the 2016 war involving the governments and Labor have already been heard from most of the state governors –
minus three dissenters, namely Governors Wike, Fayose and Oshiomhole. Wike, as everybody knows, faces another election and cannot be seen to be antilabor. Self-interest is the motive here. Fayose, we know, loves to fish in troubled waters; while Oshiomhole is caught in the trap of his past as a labor leader. The former labor leader cannot be seen to be forsaking the people who brought him into prominence. At any rate he has only seven months to go; he can leave his successor with the problem when he goes. That is the worst form of political cynicism. Irrespective of how the three governors arrived at their current positions, they can be regarded as traitors to the cause of the other governments. They may eventually regret their dissent from the majority. Let me declare, up front, that I strongly believe that the two sides are engaged in a war that would end up in
mutual destruction — they will also destroy the states, economically, as we know them now. Most states are already tottering on the brink of bankruptcy with the current MW pegged at N18,000 per month. Many will grind to a halt by the second quarter of 2016 if they continue to pay the current MW without retrenching staff. Any increase in MW will only hasten the day of doom. The case for the governors had been made explicitly by the Chairman of the Nigeria Governors’ Forum, NGF, and Zamfara State Governor Abdulaziz Yari when he said: “What we said is that the when the National Assembly enacted the law of paying N18,000 minimum wage, oil was about $118 per barrel and today oil is sold for $41 per barrel…So, if it continues, definitely we will find it difficult to continue….The receipts from Federation Account show that some [states] received N400 million, N500 million; some
others received N55 million…Not even the salary [can be paid], their pension is over a billion. So how can we continue borrowing..?” The states and the Federal government ran into trouble very early this year. In a report titled “FG records N1.3tn revenue shortfall in three months” by Ifeanyi Onuba, in PUNCH, May 7, 2015, Nigerians were told that “The persistent drop in oil prices and low receipts from non-oil sources may have led to N1.3tn shortfall in revenue accruable to the federation in the first three months of this year. The report further pointed out that “the National Assembly, while passing the 2015 budget last week approved a benchmark oil price of $53 per barrel.” Meanwhile, the revenue generated for the first three months of 2015 were as follows: January N416.09bn February N401.46bn March N315.05bn According to Dr Ngozi Okonjo-Iweala, Minister of Finance, “in April, we had to borrow to cover up some gap.” The chief reason for borrowing was the depletion of the Excess Crude Oil Account, ECA, by November 2014. From January till now, the price of crude oil had stayed below $53 per barrel and in the last quarter of this year, it had averaged just about $42 per barrel. The consequences of this were made clear in the
September 2015 revenue aggregates which came to N389.94bn, less than the January and February figures and far off from the budgeted N815bn per month. Things can only get worse in 2016 as the price of crude is set to decline even further below $40 per barrel and volume is also likely to drop. States of Nigeria will be collecting about 40% of the average monthly allocations for 2014, which was our second best year in history. Compared to 2013, the states will be fortunate to receive 35% of that glorious year. With many states depending on the revenue allocation from Abuja for close to 95% of their income, it is clear that Governor Yari had spoken the truth. But, sadly, that is not a truth which labor and their mindless sympathizers want to be told. Forgetting that organized labor constitutes less than five per cent of the population of any state, they insist that the states must go bankrupt just to please them. Civil servants are threatening to close down states. That only demonstrates how desperate the situation has become. Shutting down a state will not produce money which the states don’t have. At any rate, where were the civil servants when some of their governors were incurring huge debts to fund “innovative” projects?
E-Commerce Stories by JONAH NWOKPOKU
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n a bid to discourage payment on delivery considered one of the challenges of e-commerce in Nigeria, online marketplace, Kaymu.com.ng has partnered Interswitch to provide electronic payment options for its customers. Kaymu said through the
Kaymu tackles pay-on-delivery, partners Interswitch on e-payment partnership, hundreds of thousands of customers currently conducting business transactions via the Kaymu platform are provided with a reliable alternative pre-payment solution. Speaking on the
partnership, Managing Director of Kaymu Nigeria, Sefik Bagdadioglu said: “Trust is a major issue in ecommerce and we take this very seriously at Kaymu. It is an essential component in every part of the transaction, from honest product
descriptions right through to reliable payment options. This necessitated a partnership with Interswitch to promote a secure and enabling environment for people to make prepayments for products purchased on Kaymu.”
CanalPlus, iROKO launch video service for Francophone countries
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rench premium cable television channel, CanalPlus Group and Nigeria’s mainstream online streaming video on demand, iROKO have entered into a deal to create and launch the first Francophone Subscription Video on Demand, SVOD service aimed at bringing affordable, popular mobile TV content to French-speaking Africa. The partnership which was announced last week as part of a multi-million euro deal will see the two parties build the mobile-first Android App with download functionality to be launched in the coming months. In a statement, iROKO said the service which will be C M Y K
designed to optimize data consumption, will be aimed at building a new mobileonly subscriber base across Francophone Africa. The statement noted that the
partnership with CanalPlus was inspired by the fact that the group now owns and broadcasts the largest catalogue of African content, including Nollywood films
and TV series, African homemade series and shows and South-American TV Novelas, for Frenchspeaking Africa.
SlimTrader launches white label rewards scheme
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-commerce solution provider, Slimtrader, has launched a White Label Rewards scheme, the Mo’Rewardz Club, for its ecommerce platform, MoBiashara. MoBiashara is introducing the add-on loyalty programme to simultaneously reward guests and hotel staff for using the e-commerce platform. In a statement, Slimtrader said: “In stark contrast to
traditional loyalty schemes, where customers are rewarded for their loyalty to either a hotel chain or a third party booking site, Mo’Rewardz is brand & sales channel agnostic, allowing travellers and hotels to accrue points via any first or third party sellers that use the MoBiashara online reservation system. At present, these include Trip Advisor, HotelNowNow, Lagos Oriental Hotel, Protea Hotels and the Maison
Fahrenheit Hotels. Guests are rewarded with points for each reservation, which can be used towards future reservations, to buy mobile airtime, pay bills and can even be cashed out by the guest. Front desk staff receive loyalty points for creating reservations on the MoBiashara for Hotels Admin area and checking in guests with the system when guests arrive on the hotel’s premises.”
According to Bagdadioglu, the primary focus of this collaboration is to bring even greater convenience to the customer. By partnering with Interswitch to create more accessible payment channels, Kaymu is further opening up the e-commerce space to all consumers. “By working with likeminded partners, we are offering the Nigerian consumer easy, secure and most importantly free payment options with the aim to continue to pioneer the Nigerian online ecosystem through innovation,” he said. He added that, “The prepayment gateway promotes business transactions across the country via the Kaymu platform. Now, customers can make secure payments for products they desire from the comfort of their homes or offices irrespective of location and sellers encouraged to ship products outside of their states,” noting that “Kaymu’s partnership with Interswitch highlights its commitment towards developing effective payment solutions geared towards strengthening commerce and developing the country’s economy.”
34 — Vanguard, MONDAY, DECEMBER 14, 2015
Economy BY EMEKA ANAETO, Economy Editor
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midst sustained high liquidity in the banking system financial experts are expecting developments in Nigeria’s fiscal policy 2016 and the international financial markets to shape investment yields positively in December 2015 and first quarter 2016. A total inflow of about N890billion is expected to hit the money market from the various maturing government securities and Federation Accounts Allocation Committee, FAAC, in the month of December 2015. Expected outflows from the various sources such as government securities and statutory withdrawals are estimated at N577billion within this month, leading to a net inflow of about N312billion. Though, according to finance industry operators, this analysis does not include the CBN’s interventions at the inter-bank segment of the foreign exchange market by the Central Bank of Nigeria, CBN, and the Cash Reserve Requirement (CRR) total liquidity in the system is still expected to exceed N1.0 trillion except if the CBN conducts Open Market Operation, OMO, to mop up the excess cash during the month. With this situation financial analysts expect yields on fix income securities to rise in the month of December. Analysts at FSDH Merchant Bank said during the weekend that higher increase in the longer dated securities is more likely than on the shorter dated securities. According to them ‘’the higher yields would be driven by the need to maintain positive real yield by the investors, the expectation of an increase in the Fed Rate in the United States of America and the impact of Nigeria’s fiscal deficit for 2016'’. But with the
Fiscal policy 2016, other factors shape investment returns in Dec
Godwin Emefiele, CBN Governor implementation of the Treasury Single Account, TSA, yields in the Nigerian Treasury Bills, NTB, may be lower, according to the analysts. Consequently investors are seeking likely opportunities at the longer end of the market while money traders may exit current position for profit-taking. Average yields on the FGN Eurobonds were higher in November 2015. Consequently, the prices of all the bonds closed lower in the month of November, compared with October 2015. According to the analysts at FSDH Merchant Bank, ‘’we expect the yields to rise higher in the month of December because of the macroeconomic risks the Nigerian economy still faces in the short-term. This is in addition to our expectations that Dollar denominated yield may increase because of the possibility of rate hike in the U.S.’’
Meanwhile the banks are taking advantage of the huge liquidity to trade their excess cash instead of lending to the real sector of the economy as envisaged by CBN’s new expansionary monetary
policy stance. CBN’s Monetary Policy Committee, MPC, announced an expansionary monetary policy in November 2015, marking a departure from its tight policy. CBN’s intention is to stimulate lending to the real sector, agriculture, infrastructure and solid minerals sectors. At the end of its November 2015 meeting, the MPC reduced the Monetary Policy Rate (MPR) to 11% from 13%. The MPC also lowered the Cash Reserve Requirement (CRR) to 20% from 25%; and maintained the Liquidity Ratio (LR) at 30%. Reacting to this development, however, FSDH said “ while we support measures aimed at stimulating lending; our conversations with banks reveal that they are cautious about lending at the moment. This is because of the impact of the current economic conditions in Nigeria on the ability of banks’ customers to repay loans extended to them.
“Many of the banks prefer to play safe in the inter-bank market and government securities despite the low rates and yields. We believe that the current low rates in the financial system does not adequately compensate for the risks in the economy to encourage lending. “We believe measures to de-risk the economy would likely stimulate lending. Some of these measures are: adequate security of lives and properties, improvement in infrastructure (roads, rails and power), enforcement of laws and order and diversification of the Nigerian economy from oil. This will reduce the adverse impact of low oil price on the economy. “These measures are long term in nature and are outside the confine of the monetary authority. The proposed expansionary budget for 2016 may remove liquidity from the financial system. Necessary measures are required so that banks will not only have preference for government securities”.
Investment experts harp on economic value of Portfolio Management BY ESTHER ONYEGBULA
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nvestment experts have canvassed investment education amongst not only investment managers but also the investors in both retail and portfolio. This according to them would address the challenges of maintaining quality investments even in crises situations adding that the more informed the investor, the more balanced his investment and the more value he derives from investing. This was the thrust of the
discussion of the maiden Annual national conference of the Portfolio Management Institute of Nigeria (PMIN), led by Dr Isaac Olusola Dada, its president and chairman in council. In his presentation, Dada urged Nigerians and the stock broking community to take advantage of the opportunity offered by the PMIN to boost their interest on portfolio management to return additional value to their clients. According to him, balanced portfolio creates room for attainment of investment objectives, creates more
wealth, and increases expansion of existing businesses while adding to job creation by freeing more funds for investments, thus translating to vibrancy of the capital market as well as the overall economy. Dada said investment education thrives for those that want to secure maximum value on their invested funds, and that without education on portfolio investment, balance in portfolio arrangement would not be achieved and this would not optimize earnings from investment. Mr Wole Adetunji, Chairman of the 2015 annual conference said the portfolio management institute offers both education and training to the qualified investment community that advances portfolio investments to attract the best value from investible funds. This is done through training students in portfolio management leading to examination in various cadres of portfolio investing. It also entails continuous training through seminars and workshops.
Vanguard, MONDAY, DECEMBER 14, 2015 — 35
People in Business
We’ll meet housing challenges if govt is.... — CHRISTOPHER NWADI BY EBELE ORAKPO
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ngr. Christopher Uchenna Nwadi is the Managing Director of Abuja-based NCR & Associates Limited, an outfit that specialises in Properties, Estates and construction. In this chat with Financial Vanguard in Abuja recently, the Property Consultant speaks on why he ventured into the property business, the challenges and says his love for real estate and the desire to provide good and affordable housing for Nigerians made him go into the real estate business. Excerpts: According to Engr. Christopher Nwadi, after his primary Educational background: school education at the Army Children’s School in Yaba, Lagos, he proceeded to CMS Grammar School for his secondary school education. Thereafter, he was admitted into the University of Lagos where he read Mechanical Engineering. Upon graduation, he was posted to Abuja by the National Youth Service Corps scheme for the one year compulsory service to fatherland. On completion of the service year, he started his own business. “Along the line, I was awarded an honorary doctorate degree in Business Administration by the Commonwealth University, London and I am a United Nations Peace Ambassador. I have received so many other awards,” he said.
been a lover of real estate/ property because as far back as 1980; I joined my mother in her real estate business. She is very passionate about the business. You see, my mother is Yoruba, from Lagos royal family so we have so many family lands that we had to sell and being the first child, I always went everywhere with her to the extent that people called meMummy’s husband. So as a young child, my mother took me along while conducting her real estate business so I became a lover of property. “When I came to Abuja for my youth service in the late 90s, I was posted to Abuja Municipal Area Council (AMAC) for my primary assignment. One of the first jobs I did was construction of corner shops in Wuse Zone 3 and I also designed and constructed the overhead tank at Utako Market. I thank God for where we are today. I have partnered with so many people in Real estate such as Pent House, Platinum Bank, Mortgage
Home etc. Going into business: “I started this business after my youth service. I started from scratch and gradually built up, building from one house to small estate. I love buying property. I buy land from speculators. I buy land and keep for like 10 or 15 years and sell. I don’t believe anywhere is a bush. I can make a city out of every bush
I can make a city out of any bush because I have seen it before; I went to Dubai in the 90s when Dubai was nothing and I saw Dubai grow
*Engr. Christopher Nwadi…Government policies have not been consistent because I have seen it before. I went to Dubai in the 90s when Dubai was nothing. I saw Dubai grow because I went to Dubai every year so I saw the city coming up. I was part of the people that went to see Living Faith Church, Ota, Ogun State. That place was a thick forest, today, it is a city so I have seen bush turned to city. I was in Kubwa area of Abuja in 1992-93, I saw it grow to what it is now. I saw Abuja grow into a city so there is nowhere in Abuja that is a bush. You know I grew up in Lagos, I lived on the mainland and I saw Lagos expand to where it is today.”
Challenges: Speaking on the challenges faced in the business, Nwadi said: “One of the problems we Motivation: have in the real estate sector “I just have this love for is government policies. The real estate. When I realised policies have not been that Nigeria is lacking in the consistent. A new minister area of accommodation, will come in and truncate the housing estates to be precise, process that has been on I decided to go into the real ground and bring up his own estate sector. Again, I have team. A land that has been allocated will be reallocated without going through the process of revoking before reallocation; they will just override the previous allocation. Even when we are able to bring in foreign investors, once they come into the country, before you know it, within a few months, may be the minister is changed or there is a transition of government, the whole thing will be truncated. The only way a common man can own property in a *Only through mass housing schemes like this can Nigeria be able to meet the housing challenges. city like Abuja and many places in
Nigeria today is through mass housing schemes. For instance, in the Federal Capital Development Authority (FCDA) allocations, if you want to buy 100 acres of land now, you will pay about N5 billion. Without N5 billion, a common man cannot own a house in that place. The minimum price of a house there is about N30 billion,” he stated. “It is now that they have reallocated some places within the area council that people want to key into it and do mass housing. They will tell us they have given us land for mass housing but it is being sold to us. We buy for N3 billion or N4 billion so there is no way we can meet up with the housing challenges in Nigeria. Nobody should deceive us, we cannot meet up. The only way we can meet up is if government is consistent and is truthful and transparent. That is the only way that gap can be bridged. Only then will we be able to convince foreigners to bring in money. Another challenge is the interest rates on bank loans. They are killing. Interest rate is about 25 per cent from bank to real estate. The Federal Mortgage Bank is trying but they are not doing enough because they do not have the resources.” It will be recalled that in late 2012, about 500 housing units built by Minanuel Investments Ltd (our clients) for low income workers, was pulled down by the FCT administration over claims that they were built without approval. “We were able to go to court and the judgement was in our favour. The land was restored and that increased our client’s confidence in us,” he said.
36— Vanguard, MONDAY, DECEMBER 14, 2015
(0805 220 1997)
T
he crash in crude oil prices from over $145 in 2008 to below $40/ bar rel presently, has invariably reduced Nigeria’s export earnings by over 50%; consequently, the significant deflation in dollar income is commonly blamed for the persistent intense market pressure on the Naira exchange rate. Interestingly, this perception is, ironically, against, the actual reality that the Naira exchange rate remained static between N152-N160/$1, even when the foreign reserves in CBN’s custody exceeded $60bn. Incidentally, after 2006, the IMF’s ‘Policy Support’ recommendation to liberalise dollar supply and stabilise Naira exchange rate, soon became an article of faith in CBN’s monetary policy management. Ultimately, almost 3,000 BDCs became licensed to sell weekly dollar allocations supplied from CBN’s reserves. Curiously, dollar allocations to BDCs often exceeded the monthly provision for the real sector, despite their indisputable role as engine of economic growth and prime creators of employment opportunities. Curiously, however, personal Naira debit cards were actively promoted by the banks, with CBN collaboration to enable Nigerians cash up to $150,000 from ATMs abroad at the official Naira rate, even when it is clear that possibly less than 1% of Nigerians earn N15m annually. Clearly, such uninhibited dollar supply clearly promotes widespread money laundering and liberal imports of contraband which undermine governments’ declared intentions to support local industrialists and create more jobs. Ironically, while billions of dollars are offered to the BDCs and Nigerian travellers at official rates, some local manufacturers are denied access to CBN dollars and are therefore invariably constrained to fund their dollar needs at over N240/$1, while other equally genuine
allocations at its own unilaterally determined exchange rate before the distribution of bloated Naira sums to the constitutional beneficiaries of the Federation pool. So, while the three tiers of government are fed with increasingly worthless Naira values, the CBN ‘ wisely ’ keeps all the dollars we earn; consequently, any fortuitous increase in dollar revenue for whatever reason, will also increase the burden of systemic Naira surplus which ultimately fires inflation and also induces weaker Naira exchange rates, as the resultant excess Naira supply chase the small rations of dollars that the CBN ironically auctions from time to time TO DEFEND THE NAIRA. In addition, the subsisting Naira surplus unfortunately induces, highly oppressive cost of funds and also discourages investment and job creation as the same CBN which initially instigated the Naira surfeit, impulsively spikes its benchmark interest rate to banks, to discourage consumer borrowing and liberal spending as a strategy against a threatening inflationary spiral. Technically, reserves are normally defined as any excess to immediate requirement; consequently, the real reserves we own are those deposits which are constitutionally consolidated from any revenue earned in excess of annual budget projections, and warehoused in the Excess Crude Account and Sovereign Wealth Fund. Consequently, we may once more ask, who owns the reserves? Surely, it would be unconscionable if the three tiers of government also subsequently lay claim to all the dollars in CBN’s custody after they have readily accepted and consumed the substituted Naira allocations. Surely, you cannot have your cake and eat it. SAVE THE NAIRA! SAVE NIGERIANS.
Is the economy poisoned by CBN $ hoarding? industrialists may also have to remain in bank queues for several weeks before they obtain forex cover for their critical raw material imports. Besides, it is certainly irrational for CBN to gleefully sell ‘our’ dollar reserves at face value to BDCs and tourists , while government is simultaneously busy borrowing same dollars externally with an unnecessarily high cost. Nevertheless, the CBN remains resolute that its forex control measures are absolutely necessary to protect the Naira exchange rate and by extension our economy and the welfare of our people . Evidently, however, the present wide difference between an official (read as subsidized) rate of N197 and the open market price of N240=$1 would expectedly create potentially serious market distortions and threaten economic and general price stability. The above realities notwithstanding, CBN management proudly positions itself as credibly performing its role as the constitutional defender of the Naira Exchange rate with dollar reserves in its custody! Incidentally, however, if the slide in crude revenue persists, Nigerians may begin to question why fuel imports, Corporate dividends and Technical fees, which consume about 80% of our total forex income, are subsidized with cheaper forex allocations when a significant segment of the real sector, is conversely forced to endure higher black market exchange rates to import those critical inputs they require to produce and create jobs locally. Regrettably, If this
imbalance persists, we may ultimately become helpless against the challenge of cheaper imports of finished consumer goods flooding our markets, forcing factory closures and throwing more Nigerians into an already saturated job market. Nonetheless, it is necessary to examine how CBN accumulates its dollars, since the Apex bank clearly does not engage in the production and export of goods or services that could sustainably fund its relatively high reserves base. Firstly, we may need to ask who actually owns the reserves in CBN’s custody? Indeed, if the Nigerian Federation truly owns the dollar reserves in CBN’s custody, it would be unexpected and inexplicable for government to simultaneously resort to funding its programmes with external borrowing with higher interest rates when infact it has $30bn idle deposits, which earn minimal
Nonetheless, it is necessary to examine how CBN accumulates its dollars, since the Apex bank clearly does not engage in the production and export of goods or services that could sustainably fund its relatively high reserves base
or nil yield in CBN vaults and accounting records. Curiously, in 2013, former President Jonathan, paid a business visit to China with a distinguished delegation which included Ngozi Okonjo-Iweala, Finance and Co-ordinating Minister of the Economy, and Lamido Sanusi, former CBN Governor; while President Jonathan went in pursuit of a $3bn loan package for the enhancement of aviation, railway and marine infrastructure from Export-Import Bank of China and China Development Bank, Lamido Sanusi, the CBN Governor conversely reported that his mission was to assess how some of the CBN’s surplus reserves of about $40bn could be held in alternative currencies such as the Chinese Yuan. Clearly, the import of the preceding scenario is that CBN reserves are not actually consolidated to bring respite from those social and infrastructural deprivations Nigerians suffer. Furthermore, what infact stops the Chinese Bank from selling Chinese Yuan or at best borrowing Sanusi’s dollar reserves for below 3% and turning round to lend the same funds to President Jonathan’s delegation with a higher interest rate. The begging question however, is , how can CBN confidently lay sole claim to the dollar cache that is, in the light of the preceding, obviously erroneously called our National reserves. Evidently, the level of CBN’s reserves clearly has nothing to do with any direct economic activity of the Bank. Instructively, therefore, the CBN consolidates its reserves by retaining Nigeria’s export dollar revenue from crude oil and substituting Naira
Business & Economy Africa has potential to solve global food security crisis – Report By Jonah Nwokpoku
F
ood security in Africa is set to become a major investment theme as rapid industrialisation and urbanisation across many emerging economies places a strain on the world’s food resources, according to a new report by PricewaterhouseCoopers PwC. The PwC report released last week outlined how the collapse in oil prices, a US$35bn continent-wide structural food deficit and huge potential to lift output and productivity, have forced
food security and agricultural development to the top of the political and economic agenda. Agricultural adviser to PwC and author of the report, Richard Ferguson said: “The world needs more food. China’s growing protein needs alone will require an area the size of the United Kingdom (UK) to grow the grains to support that consumption. And as more industrialising countries lose the ability to feed themselves, the world is going to look increasingly to Africa to be the solution”.
He said: “For Africa to thrive, economically and socially, African food security efforts need to become more urgent, more active and more focused. With some 400 million hectares of under-utilised land on the Guinea Savannah, Africa represents an extraordinary resource not only capable of supplying domestic needs for multiple African nations but also becoming a major source of world food supplies. Africa has a once in a lifetime opportunity to feed the world.”
Omoh Gabriel Babajide Komolafe Clara Nwachukwu Peter Egwuatu Yinka Kolawole Favour Nnabugwu Godwin Oritse Godfrey Bivbere Michael Eboh Franklin Alli Ifeyinwa Obi Rosemary Onuoha Nkiruka Nnorom CONTRIBUTORS Princewill Ekwujuru Jonah Nwokpoku Naomi Uzor Providence Obuh LAYOUT
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