Financial vanguard 02032015

CMYK

MARCH 2, 2015

Nigerian operators in the e-commerce ecosystem haveattributed the apathy of local

investors to the lucrative and boominge-commerce sector to high failure ratesof tech start-ups as well as fear anddoubts about the viability andinvestment value of the sector.

According to e-Marketer’s 2014forecasts, worldwide business-to-consumer e-commerce sales willincrease by 20.1 per cent to reach$1.500 trillion. Growth will comeprimarily from therapidly expandingonline and mobile userbases in emergingmarkets, increases inm-commerce sales,advancing shippingand payment options,and the push into newinternational marketsby major brands.

Last year, for the firsttime, consumers inAsia-Pacific spent moreon e-commercepurchases than those inNorth America, makingit the largest regional e-commercemarket in the world. This year alone,B2C e-commerce sales are expectedto reach $525.2 billion in the region,compared with $482.6 billion in NorthAmerica.

China will take in more than six ofevery 10 dollars spent on e-commercein Asia-Pacific this year and nearlythree-quarters of regional spending by2017. The country’s ecommerce market

•Nigeria loses 40% of stake to foreign investors, say operators

By JONAH NWOKPOKU is second only to the US, but this isnot expected to last much longer.Beginning in 2016, China will overtakethe US in spending. Massive gains inChina, as well as in India andIndonesia, will push Asia-Pacific’sgrowth ahead. These countries, alongwith Argentina, Mexico, Brazil, Russia,Italy and Canada, will drive e-commerce sales growth worldwide. E-commerce markets in other countriesincluded in eMarketer’s forecast arenearing maturity. The strength of salesin emerging markets is largely due totheir large populations coming onlineand buying there for the first time.

Asia-Pacific will claimmore than 46% of digitalbuyers worldwide in2014, though these userswill only account for 16.9per cent of the region’spopulation. Penetrationwill also be low in Centraland Eastern Europe,Latin America, and theMiddle East and Africa.For now, North Americaand Western Europe arethe only regions where amajority of residents willmake purchases viadigital channels.

In Nigeria although, the market isgradually picking up, local investorshave about 20 percent investment inthe internet business against the 60 percent which should be the ideal hadthey decided to invest earlier in thesector to grow the e-commerceplatform.

Operators, who spoke to FinancialVanguard, said that at the moment,

Continues on page 22

According to e-Marketer’s2014 forecasts,worldwidebusiness-to-consumer e-commerce saleswill increase by20.1 per cent toreach $1.500trillion

— REPORT

Why local investors shune-commerce sector

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22 — Vanguard, MONDAY, MARCH 2, 2015

Cover Story

Continues from page 21


Technical education is aplanned programme of

courses and learningexperiences that begins withexploration of career options,supports basic academic and lifeskills, and enables achievementof high academic standards,leadership, preparation forindustry-defined work, andadvanced and continuingeducation. Vocational educationand training prepares learnersfor careers that are based inmanual or practical activities,traditionally non-academic andtotally related to a specific trade,occupation or vocation. In otherwords, it is an “educationdesigned to developoccupational skills.” Vocationaland technical education givesindividuals the skills to “live,learn and work as a productivecitizen in a global society.”

Technical and vocationaleducation has been an integralpart of national developmentstrategies in many societiesbecause of its impact onproductivity and economicdevelopment. Despite itscontributions the leaders ofNigeria have not given thisaspect of education the attentionit deserves, and this is one ofthe reasons for the nation’sunderdevelopment. This articlefocuses on the dearth of skilledtechnical and vocationalmanpower in Nigeria andargues that technical andvocational education holds thekey to national development.

Every facet of the economyhas been affected by lack ofskilled technicians. Thefinancial sector lackstechnicians to regulate thebanks and to develop financialsoftware to properly tackle therising fraudulent activities inthe banking sector. Without

Vocation & technical education – A keyto improving Nigeria’s development

s e c u r i t y ,development isimpossible in asociety; no nationcan sustain itsdemocracy if thecitizens lackconfidence in thepolice. The policeviolate thecitizens’ humanand civil rightsand lack forensiclaboratory andf i n g e r p r i n ttechnicians toconduct criminalinvestigations.And due to poor

training, military officers areknown to beat up the citizenswho challenge their powers andgo scot free for their inhumaneactions. The danger posed byenvironmental pollution andfake drugs is alarming. The lesseducated in the society lack theskill to manage AIDS, cancerand diabetes among otherserious health problems. Onewonders what the nation’shealth minister and the 36 statehealth commissioners are doingto tackle these issues. Everygood citizen is aware that theneglect of technical andvocational education is sociallyand economically injurious,because it is robbing the nationof the contributions thegraduates would make onnational development. For thatNigeria is today wearing thetoga of a poor state.

Although technical andvocational education seemdeficient in ‘citizenship orleadership training’ (Friedman1982). It provides students with“life skills to become productiveentrepreneurs as it engenderscreative and innovative ideas,enlarge the economic pie, andincrease personal freedom.Most of the so-called“expatriate engineers” who arebeing paid millions of dollarsto build Nigeria’s roads andbridges are graduates oftechnical and vocationalcolleges. Yet the leaders do nottake technical institutionsseriously. Nigeria’s currentpreoccupation with universityeducation reduces economicopportunities of those who aremore oriented toward work thanacademic. Not everyone needsa university education.Awarding licenses to greedyorganizations and individualsto establish private universities

that are not even asequipped as someof the technical andvocational schoolsin the United Statesand other advancednations cannotdevelop the society.Because of the sorrystate of the nation’stertiary institutionsmany of thegraduates lack“employability ”skills, which wouldeasily be acquiredfrom technical andvocational colleges.

there is still lack ofunderstanding and sheerpessimism among Nigerianinvestors about the localinternet business. They arguethat although the sectorrequires relatively highinvestment capital, the growthof the e-commerce platformcould be quicker andtremendous compared toother areas like property andoil and gas.

“It is a daunting tasksecuring investment fromNigerian investors. Wesecured seed funding fromfriends and family whobelieved in the idea. I wouldsay Nigerian investors do notunderstand internet businessand the economics of it. Thismakes it difficult to secureinvestments from them. It willtake a wave of investmentsfrom foreign investors to opentheir eyes tot h e o p p o r t u n i t i e s t h a tabound in the Nigeriantechnology space,” said FemiTaiwo who is the Co-Founderand Chief Executive Officer ofNigeria’s property website,www.private property.com.ng.

He told Financial Vanguardthat he was able to eventuallysecure $100,000 investments

VISIT - From left: Mr Rotimi Fadipe, Executive Director, Supply Chain, Honeywell FlourMills Plc; Mr Folaranmi Odunayo, Chairman, Manufacturers Association of Nigeria, Apapabranch; Dr. Frank Jacobs, President, Manufacturers Association of Nigeria; Mr OlanrewajuJaiyeola, Managing Director, Honeywell Flour Mills Plc and Mrs. Eyanuba Dafinone, ChiefExecutive Officer, Afriq Products during MAN courtesy visit to Honeywell Flour Mills Plc inApapa, Lagos.

Why local investors shune-commerce sector — REPORT

from a South African investor,Justin Clarke who is nowChairman of One AfricaMedia.

“From 2011 when theinvestment was finalised,” hesaid, “we have been growingby triple digits Year on Yearsince then.”

Taiwo noted that “thefears of Nigerian

investors are more aroundreturn on investments sincethese companies have highfailure rates and it usuallytakes a while for many of themto turn a profit.” He howevernoted that in spite of this,Nigerian investors shouldunderstand that everybusiness involves some levelsof risks, and that it has becomeimperative for Nigerians toinvest in the tech space“because Nigeria isleapfrogging thedevelopment learning curvesmost developedcountries went through dueto worldwide rapidtechnological advancements.”

“There are still numerousissues and problems faced byNigerians in various sectors ofthe economy that can be easilysolved by technology,” headded

Over the last three years,the e-commerce sector hasrecorded unprecedentedgrowth. Pioneered by theRocket Internet backedretailer, jumia.com, the sectorhas driven online shopping inNigeria to about 35 percentvalued at over N100 billion,according to recent statistics.

Despite this, localinvestment has remainedrelatively low. According toFinancial Vanguardinvestigation, there are over120 e-commerce sites in thecountry, majority of them havenot even the least capitalinvestment of between $5, 000to $20, 000 (N1 million to 3million) which experts say iswhat is needed to breaksuccessfully into the e-commerce business. As aresult, most of them will notsurvive their first year andthose who do, will manage formuch longer period beforebreaking even.

Investigation has alsorevealed that most of the bignames in e-commerce inNigeria today are completelyforeign owned or have someforeign equity stakes. Forinstance, online ventures like,Kaymu.com, a marketplace,Jumia.com, retail, Lamudi,real estate, Easy Taxi,Transport,Carmudi, automarketplace, Jovago, hotelbooking and hellofood.comare all under the stable ofGerman owned RocketInternet’s Africa InternetGroup.

On the other hand, otherventures like Konga.comwhich is being hailed asNigeria’s indigenous internetsuccess story has at least 50percent of its stake owned by

Manygraduates lack'employability'skills, whichwould easilybe acquiredfrom technicaland vocationalcolleges

Vanguard, MONDAY, MARCH 2, 2015 — 23

CoverContinues from page 22

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into. Around the world today,public-private partnership isbeing used to build first classinfrastructure thatgovernments have noresources to finance. For along while now, theinternational community hascome to realise that theworld’s huge infrastructuredemand cannot be met by thepublic sector alone; privateinvestors and operators areneeded, but they worry aboutpolitical and regulatory risk.Today, political and regulatoryrisk takes many form, fromcommunity protests totightened regulations andcorruption, and is relevant inboth developing andindustrialised countries”.

Last week, the WorldEconomic Forum spelt out 25international best practicesfrom different infrastructuresectors that could help Nigeriaand other developingcountries attract private sectorinvestment in infrastructuredevelopment. The reportwhich was launched in NewYork last Wednesday by theforum was prepared incollaboration with The BostonConsulting Group. It presentsa risk-mitigation frameworkconsisting of actionablemeasures to be taken by thevarious parties to a public-private partnership; some ofthe actions highlighted in thereport could be taken by theprivate sector, some by thepublic sector and some by the

World Economic Forum recipefor infrastructure developmentwill help Nigeria

Nigeria has made several futile attempts to use Public Private Partnershipto build infrastructure that it so badly needs. But each of the attempts

has failed to achieve the desired goal. The Lagos-Ibadan Expressway, the LocalWing of the Murtala Mohammed Airport and Lagos-Epe Expressway are a fewof such attempts.

These projects failed to deliver on their mandate because parties to thepartnership did not understand the full implication of what they were going

two sectors jointly. Forinstance, investors andoperators could seek politicalrisk insurance and companiescould deter governmentintervention by carefullycrafting ownership andcommercial structures. On thepublic sector side, the nationalgovernment such as Nigeriangovernment could provideinvestors with protection byoffering constitutionalguarantees by ensuring fairand fast dispute-resolutionmechanisms, and by enforcingrobust anti-corruptionpolicies.

Thus new report in the WorldEconomic Forum’sInfrastructure KnowledgeSeries outlines actionable risk-mitigation measures to betaken by the public and privatesectors. According to the report“Political and regulatory riskis one of the major constraintson infrastructure investmentdecisions. It takes differentforms over an infrastructureproject’s life cycle, fromdelayed construction permitsand community protests tobreach of contract, tightened

regulations and the non-renewal of licences. Inaddition, some broader risksapply throughout the lifecycle, changes to taxationlaws, for instance, andendemic corruption.

The framework developed forrisk mitigation puts inevidence the main levers thatcan be adjusted while elicitingthe white spaces wheremultilateral developmentbanks, commercial banks andinsurers can create much-needed risk-mitigationinstruments.

The report summarises theimpact that the differentpolitical and regulatory riskfactors have on projects, andcites a wide range of examplesthat help explain andunderpin the need for risk-mitigation tools. Importantly,the report confirms that thesetypes of risks are encounteredacross a wide range ofgeographies; this is not adeveloped versus emergingeconomies issue.”

In order for investors toconfidently increase theirinvestments in infrastructure,they need to see transparentand comparable data andprocesses, as well aspredictable legal andregulatory frameworks thatcan withstand political risk,”said Douglas L. Peterson,President and Chief ExecutiveOfficer of McGraw HillFinancial, and Co-Chair of theStrategic InfrastructureInitiative.

Reducing these risks canhelp unlock the private capitalneeded to bridge theinfrastructure financing gap

The report emphasised thatthe world has more to lose thanever before from massivefailure of criticalinfrastructure. To improveefficiency and lower cost,various systems have beenallowed to becomehyperdependent on oneanother. The failure of oneweak link, whether fromnatural disaster, human erroror terrorism ; can create rippleeffects across multiple systemsand over wide geographicalareas.

The challenge is financial,and incentives are misaligned.In the United States, over 80per cent of infrastructure isowned or managed by privatesector firms, which are notresponsible for the negativeexternalities that failure oftheir part of the infrastructurecould have elsewhere.

To increase investment ininfrastructure, a coordinated,g l o b a l , l o n g - t e r m a n dmultistakeholder approach isrequired. There is no doubting the fact that upgradinginfrastructure is essential inrecognition that resilientinfrastructure has become thebackbone of a competitiveeconomy”.

Nigeria policymakers havea lot to learn from the lessonsexposed in the report. Nigeriacertainly need privateinvestors' capital to financethe huge infrastructuraldeficit in the country.

South African Venture Capitalfirm, Naspers. And withadditional $60 million and $40million new venture fund raisedin January and October, 2014respectively, it remains to beseen how much indigenousstake the online retailer stillretains.

Investigation has alsorevealed that Naspers alsosupports a whole range of otherprofitable online ventures in thecountry including the onlineclassified, OLX, pricecomparison site, Pricecheck, anews portal, News24, and therecently launched online jobmarketplace, Careers24. Evenother ventures like the carmarketplace, Chekki, andonline job market, Jobbermanare also being backed by OneAfrica Media from South Africa.

“Nigeria has already lost outon the internet money makingbusiness. We seem to have thishabit of putting money in a

Why local investors shune-commerce sector — REPORTbusiness where we are sure theentrepreneur doesn’t need themoney or have started makingmoney. And even if they do puttheir money in it as it couldhappen sometimes, the dealsyou get in that regard are veryunfavourable. They want tomake little investment in it andthen want to take at least 50 to60 percent. So what is thepoint?” lamented LanreAknilagun who starteddrinks.ng last three years with$50, 000 investments fromSPARK.

Akinlagun told FinancialVanguard that, “the problem isthat Nigerians have lots ofmoney but they have littleappetite for risks. They onlyallow themselves to be awareof what they know isguaranteed. That is why

stealing and corruption is aguaranteed source of revenue.They wouldn’t put money intosomething until someone elsehas done it.”

“Most Nigerian investors lookfor a safe landing wheninvesting. Most of them do notlook at the bigger picture. Theymostly look at the short-termgains. When Raphael Afaedorand Tunde Kehinde foundedKasuwa.com and Sabunta.com,how many Nigerian investorswere willing to take the plunge?Investment can come not onlyin the form of financialinvestment. Intellectualinvestment from investors andmentoring are also forms ofinvestment,” said ChiebukaNworah, Founder/CEO ofEtyresNigeria.com, an onlineautomobile tyre retailer.

He told Financial Vanguardthat he and his friends: GodricEchefu, Olaseni Odukoya andEze Peters Dike pulled theirsavings up to the tune of N1million in July, 2014 to start thebusiness. He said althoughchallenges remain, theinvestment has beenworthwhile as growth has beenexponential. “Sales revenue,”he maintained, “is over 200percent from our projections,“as total units of tyres sold havegrown by more than 300 percentsince we took off.”

According to Nworah, “It isvery, very difficult to secureinvestment from Nigerianinvestors because most of themare skeptical about investing inthe Nigerian Tech Space. Takea look at Facebook for example.I always argue that if Facebook

was the brain-child of aNigerian, that vision wouldhave died. It took Facebook over5 years to become profitable.How many Nigerian investorsare willing to wait that long?”

He maintained that it isimportant that Nigerianinvestors begin to consider thetech space, “becauseInformation Technology is thefuture.”

“We are living at a periodwhere everything would becharacterized by software, theInternet and InformationTechnology. Four of the mostvaluable companies in the worldare IT companies. The businessmodel of InformationTechnology is emerging as amainstay in the worldeconomy,” he added.

More so, he said, “The e-commerce sector in Nigeria isstill untapped. We have barelyscratched the surface. There arestill lots of niches and services


To increaseinvestment ininfrastructure, acoordinated,global, long-termandmultistakeholderapproach isrequired


CMYK

Business & Economy

PRESENTATION - From left, DCP Johnson Kokumo, DC Operations, Lagos State, Mr. RaymondOnomerike, Divisional Head, Corporate Services, Keystone Bank look on as Mr. Innocent Ike,Executive Director, Lagos and West Directorate, Keystone Bank presents keys of patrol vansdonated by the bank to the Lagos State Police Command to CP Kayode Aderanti, Lagos StatePolice Commissioner, last week.

The officials of theNational Automotive

Council (NAC) andWesBank of South Africahave met in Abuja on theproposed roll-out of made-in-Nigeria vehicle financescheme later in the year. Astatement by the NAC saidits Director-General, MrAminu Jalal, led theDirector, Policy andPlanning, Mr LuqmanMamudu and Director,Industrial Infrastructure, MrWaheed Odetoro to discussthe scheme.

NAC, WesBank meetover national vehiclefinance scheme

The WesBank delegationcomprised of Mr EugeneOchse, Head, AfricaOperations and Mr SimonIngersent, CEO-designatefor Nigeria Operations. Itsaid the WesBank officials

also interacted with potentialpartners, including selectedvehicle dealers to obtain firsthand information and getacquainted with dealershippractices peculiar to Nigeria.The statement said that NAC

Scheme was designedaround a network of vehicledealers and distributors forthe pilot project.

NAC signed amemorandum ofUnderstanding (MoU) withFirstRand Bank inJohannesburg, South Africain October 2014. The MoUmandates WesBank tomanage consumer vehiclefinancing for Nigerianassembled vehicles. It alsoquoted Jalal as saying thatthe Nigerian governmentapproved the NigerianAutomotive IndustryDevelopment Plan (NAIDP)to attract investments fromglobal vehiclemanufacturers and to growthe supply of locally-manufactured vehicles.

According to thestatement, the MoU willallow WesBank to workclosely with NAC to developvehicle financing solutions.The aim, it said, is forvehicles built in Nigeria tobe readily affordable for theaverage Nigerian. It recalledthat Jalal had said that theVehicle Financing Schemewould make Nigerian-assembled vehiclesaffordable on convenientpayment terms spread overa period of about four yearsat affordable interest rate.

The statement said thescheme was also intended toassist vehicle assemblyplants in Nigeria to gain highvolume within a short timeso as to facilitate localcomponents development.

The Electricity Meter ManufacturersAssociation of Nigeria (EMMAN)

has commended the Nigerian ElectricityRegulatory Commission (NERC) forenacting a law that would encouragelocal players in the power sector. Thecommendation is contained in astatement in Lagos by the ExecutiveSecretary of the association, MrMuyideen Ibrahim.

The statement said the local contentlaw would not only protect theindigenous players in the evolvingNigerian power sector but also impactpositively on the economy by raising theGross Domestic Product (GDP). It saidthat it would also provide employmentand business opportunities forNigerians.

It added that the local metermanufacturers had the productioncapacity to bridge the wide electricitymetering gap in the sector. They canalso supply world class meters toneighbouring West African countriesand Africa at large, it said.

“On behalf of the Electricity MetersManufacturers Association of Nigeria(EMMAN), I will like to commend the

Indigenous metre manufacturers laud NERCover power sector local content law

Dr Sam Amadi-led Nigerian ElectricityRegulatory Commission (NERC) for thebold step in the right direction,” it noted.The statement also said that Ibrahim usedthe medium to pledge the association’sunalloyed support and commitment tothe Nigerian power sector reform. It saidthat the reform would encourage foreigncompanies who import electricity meterinto Nigeria to come and set upmanufacturing plants which would boostthe economy and improve capacity ofNigerians.

“We are particularly proud of Amadifor having the political will to make thecommitment which will go down in thehistory of this country. “It will re-positionthe power sector which is very critical tothe country’s economy,” it said. Thestatement urged electricity distributioncompanies (Discos) to embrace the localcontent law in the power sector bypatronising the local metermanufacturers. It assured Nigerians thatmember companies were capable ofdelivering world class meteringsolutions and allied products that couldcompete favourably with any product inthe world.

LeapFrog invests$25m in afbLeapFrog Investments

and AFB MauritiusLimited (“afb”) haveannounced that LeapFrog hasinvested $25m in afb. afb is afast-growing financialtechnology (“fintech”) platformthat offers life-changingfinancial services to financially-excluded consumers and smallbusinesses. Partnering withmajor mobile operators andover 400 retailers includingWoolworths and Naivas, afbhas extended its reach to overa million people in sub-Saharan Africa. afb currentlyhas operations in fourcountries, including Kenya,Zambia and Ghana with rapidexpansion into adjacentgeographies planned. afb alsooffers branded store cards forthe English Premier Leaguegiants Manchester United andChelsea.

Across Sub-Saharan Africa,consumer finance from formalbanking channels is almostnon-existent: Insurance ismassively underpenetrated,and can be as low as 1% of theadult population in manyAfrican markets. Savingsproducts also remainchronically underdeveloped,and only 5% of adults sourceloans from formal institutions.

Resort Savings aims athousing for youngpeopleNigerians within the ages

of 25 and 40 years whoso desire to have a roof overtheir head can now afford to doso even if they don’t have allthe funds to prosecute suchambition.

Resort Savings and Loans Plc,a primary mortgage bank witha 21-year history in mortgagelending and administration ispoised to help people in suchage bracket with facilities thatwill enable them achieve suchdream. The banks new product,tagged Early Home Owner isthe product that has been sodesigned by the bank to attainsuch dream. Talking about theproduct, the ManagingDirector of thebank, Mr. Abimbola Olayinka statedthat the product is provided tomembers of staff of thebank adding that “the result ofthe test gave birth to theproduct” He explainedthat, Early Home Ownerrequires every customer tomake a minimum equitycontribution equivalent totwenty percent(20%) of thevalue of the property to bepurchased, subjectto a maximum mortgage loanamounts of N6 million.

Nigeriangovernmentapproved theNAIDP to attractinvestmentsfrom globalvehiclemanufacturersand to grow thesupply oflocally-manufacturedvehicles


Banking & Finance

SIGNING - From left: Mr. Suleiman Shuaibu, Acting D-G of the Directorate of TechnicalCooperation in Africa (DTCA); Mr. Ousmane Dore, Resident Representative, AfricanDevelopment Bank Group, Nigeria country office; and Mr. Roberts Orya, MD/CEO NigerianExport-Import at the signing of Nigerian Technical Cooperation Fund (NTCF) financial grantto NEXIM Bank for the Sealink project at the AfDB offices in Abuja

The efforts of theNigerian Export-Import Bank

(NEXIM) to facilitate theestablishment of a regionalmaritime company, TheSealink Project, has receiveda fresh boost with the signingof a financial grant with theAfrican Development Bank(AfDB) for $302,000 underthe aegis of the NigerianTechnical Cooperation Fund(NTCF).

Speaking at the event, theResident Representative forAfDB Group in Nigeria, Mr.Ousmane Dore, reiteratedAfDB’s commitment topromoting infrastructuredevelopment in Africa asbeing in line with the bank’soverarching objective to spursustainable economicdevelopment, social progressand poverty reduction in theregional member countries(RMCs). He indicated that aninnovative maritime initiativesuch as the Sealink Projectwould greatly assist inbridging the artificialboundaries that have hithertoprevented trade, economicintegration and seamlesslogistic services within theregion. He was particularlyimpressed that NEXIMdeemed it strategic enough toenlarge the scope of theproject to include theEconomic Community ofCentral African States (ECCAS) region (for whichfeasibility study part of the

AfDB backs Nexim Bank’s Sealink projectwith $.3m grant

grant shall be applied), andexpressed the hope thateventually, the projectwould cover the entireregion and enhance trade,free movement of persons,goods and services.

In his remarks, Mr.Roberts Orya, theManaging Director/ChiefExecutive of NEXIM Bankthanked the Directorate ofTechnical Cooperation inAfrica (DTCA) AfDB for theNigerian TechnicalCooperation Fund (NTCF)grant to NEXIM.

STORIES BY BABAJIDEKOMOLAFE

He said: “The release of thisfinancial grant ofUS$302,000 to NEXIM Bankunder the Nigerian TechnicalCooperation Fund (which is)managed by AfricanDevelopment Bank is anattestation of the confidencethe Federal Government ofNigeria as well as other keystakeholders in ourcommitment,have in us,especially through theSEALINK Project, tofacilitate the free movementof persons, goods andservices within the West andCentral African sub-regions.…”

The $302, 000 grant wouldbe used to conduct further

feasibility studies on theproject to extend it to theEconomic Community ofCentral African States (ECCAS), as well as enhancethe Sealink promotionalactivities and assist in thedevelopment of human capitaland corporate governancestructure of the the SealinkPromotional CompanyLimited (SPV) which wasincorporated to facilitate theproject implementation. TheSPV is being promoted by theFederation of West AfricanChambers of Commerce andIndustry (FEWACCI),Nigerian Export-Import Bank(NEXIM) and Transimex, S.A, Cameroun.

FCMB funds acquisition of 100 tractors to boost agricultureFCMB funds acquisition of 100 tractors to boost agricultureFCMB funds acquisition of 100 tractors to boost agricultureFCMB funds acquisition of 100 tractors to boost agricultureFCMB funds acquisition of 100 tractors to boost agriculture

First City MonumentBank Limited is set toprovide funding to the

Tractor Owners & HiringFacilities Association ofNigeria (TOHFAN) for theacquisition of 100 tractors toboost agricultural productionthis year.

This is part of the bank’sefforts to increase loans to theagricultural sector from sixpercent to 10 percent of its totalloan portfolio

Managing Director/ChiefExecutive, FCMB Limited,Mr. Ladi Balogun disclosedthis at a press conferenceorganised by the Banktagged, “FCMB AgricBusiness: Diversifying theNigerian Economy.”

Balogun said that the Bankwill intensify its support to theagricultural sector and itsvalue chain in order to fast-track the growth of the

Nigerian economy.Speaking at the press

conference, Chairman ofTOHFAN, Alhaji DanladiGarba, commended FCMBfor its support to the agricsector and farmers.

He said, FCMB in 2014supported the group withN120 million for theacquisition of tractors whichhave been distributed tofarmers in Kaduna state.

He said for the 2015farming season, TOHFANhave applied to FCMB forcredit facility to acquire 100tractors. “And by the timethese tractors are released,52,510 farmers will haveaccess to tractor services andthe expected net revenue tobe generated to thesebeneficiaries is N188million,” he said.

Speaking further, Balogunreiterated FCMB’s

commitment to supportingthe agricultural sector. Hesaid: “The bank is focused onbeing a strategic partner tothe government and otherstakeholders in the agricsector to ensure foodsufficiency, employment andrevenue generation, in linewith its value as a helpfulfinancial institution. We havebeen providing various linesof credit to the sector and itsvalue chain, including smalland medium scalebusinesses. This funding hasbeen on the rise and we aredetermined to grow it to 21percent within the next threeyears as against nine percentin 2014”.

Highlighting FCMB’scontributions to agriculture,he disclosed that in 2014 thebank provided lines of creditvalued at almost N30billionto the sector, adding that six

per cent of FCMB’s total loanbook or 200,000 loans per yeargo to the agriculture sector,compared to an average of 3percent in the bankingindustry. "We realise thatthere are millions of farmersacross the country that needcredit at affordable rates,considering the level ofattraction the agric sector hasgarnered. That is why we areincreasing our level ofsupport.”

He said in addition to thesupport to NOHFAN, FCMBhas also collaborated withDoreo Partners to launch asupport programme forfarmers, known as BabanGona (or ‘’great farm”). Thisis an agricultural franchisemodel, where farmers aretrained and offered loans tocarry out their farmingactivities.

Ecobank CEOcounselsinvestors onmanaging risks

Ecobank Group ChiefExecutive Officer(CEO), Albert Essien

has advised internationalinvestors on strategies formanaging risks in Africa.

He gave this advice in akeynote address delivered inMunich on Thursday at the4th Conference on ManagingRisk in Africa. Mr Essienoffered strategies formanaging risk in Africa’sgrowth markets. Against thebackdrop of what he outlinedas a generally positiveoutlook for Africa, he advisedinvestors against viewingAfrica as one, but rather 54countries with differentgrowth prospects, differentinfrastructure, tradeagreements, tax regulations,culture and levels oftechnological development.

Mr Essien urged investorsto be prepared to engage withAfrican countries on a long-term basis and avoid abruptchanges in investment focusbecause of perceivedinstability in certain markets.He encouraged managingrisks associated with doingbusiness in Africa, includingfiscal and monetary policyissues such as foreignexchange restrictions,transparency andcompliance, politicalinstability and corruption andresource and infrastructurechallenges.

The Ecobank Group CEOoffered executives overseeingmarket entry strategy inAfrica six key considerationsthat they would have tocontend with. These, he said,were: understanding the localbusiness culture; assessingwhich markets represent thebest balance of risk andreward; finding and vettingappropriate local partners;understanding local marketregulations; localenvironmental factors; andlevels of technologicaldevelopment.

Mr Essien highlightedseveral market entry risks,which he enumerated as:political risk, reputationalrisk, operational risk andphysical risk to staff andassets. He encouragedscenario planning as a goodway to anticipate what futuretrends might emerge andwhat their impact andprobability might be.“Whatever risks areidentified, they are bestviewed holistically ratherthan in isolation.


Stories byPETER EGWUATU

GeneralPartners,GPs cannotbe heldliable forperformance,yetinvestorshave no say

Pension funds hit N4.5trn with 6million contributors

C rusader PensionLimited, a pensionfund administrator

has lamented the low numberof people in the pensionscheme in the country, aspension funds hit N4.5trillion.

The Managing Director,Crusader Pension Limited,Mr. Adeniyi Falade, whodisclosed this at the NASDOTC Private EquityConference held in Lagossaid “ N4.5 trillion of PensionFund is available at themoment and this moneyneeds to be invested.Imagine, it is only six millionworkers that are in thepension funds scheme at themoment and we have N4.5trillion just in eight years thatthe new contributory pensionscheme took off. What willhappen when we have all theworkers in Nigeria in thepension scheme? It will bemuch more money. It is verypainful that we have only sixmillion workers contributingto the fund in a country withover N160 millionpopulation”

To this extent, he called onPrivate Equity operators to beactive in terms of having wellstructured products that willrequire funds. “In fact, veryfew people understand thepension scheme. It is highlyregulated. So for this kind offunds to be invested in anyfirm, the firm must haveproper documentation andgood management in place,and well structured toguarantee returns. As youknow, everybody that isemployed ought to becontributors to the pensionfunds, but this is not the casewith Nigeria. Thecontribution of pension fundsto the Gross DomesticProduct, GDP is seven percent. It is still very low. Howis the fund going to bedeployed? So the PrivateEquity, PE stands very

favourable to get this fundonce they are well structured”he emphasized.

Falade, further noted thekey concerns in PrivateEquity investments, sayinglack of investor rights is aproblem. According to him“General Partners, GPscannot be held liable forperformance, yet investorshave no say. Also, there isnon alignment of goalsbetween managers andinvestors. Other problem isthat Private Equity chargeexcessive management feesperceived as locust and catsand there are substantial

restrictions on sale or transferof interest. There is nosecondary private equitymarket in Nigeria to transferlimited partnership interest.All these are what NASD OTCshould consider and see howto tackle these issues.”

In his presentation at theconference, Mr. Bisi Sanya, aSenior Partner, Ernst & Young,said “Over the last severalyears, say one to two decades,emerging market have evolvedinto major Private EquityInvestments. Key findings forAfrica show that PE in 2013 ,which stood at US 3.2 billionwas invested in 98 Private

Equity investments. Also,$3.3bilion was raisedthrough PE funds closed,while US $13.18 billioninvested by PE from 2009to 2015.

In this regard, he statedthat private equity wasentrenched in Africa andencouraged operators towork hard to invest incompanies.

According to him“Capacity for Nigerians tomanage Private Equityfund is an issue as PE hasbecome a major force incapital formation andparticipation of investmentactivity.”

Standard Chartered Bank makes board changes

As part of an orderlysuccession plan

balancing stability with freshperspective, the Board ofStandard Chartered Plc hasannounced a comprehensivepackage of changes to itsBoard. Current Group ChiefExecutive Peter Sands is tostand down from the Board,giving way to WilliamThomas Winters (“Bill”) asthe new Group ChiefExecutive with hisappointment to the Boardtaking effect in June 2015.

The comprehensivechanges to the board alsoextends to the topmost levelsas current Chairman, SirJohn Peace has indicated anintention to step down fromthe Board during the courseof 2016, allowing time for Bill

Winters to transition into hisnew role and to ensure Boardlevel continuity. Speakingabout the ongoingtransitions, Sir John Peacestated that “Bill Winters is aglobally respected banker andhas the right experience andskills to drive the Group’snew phase of growth. Hebrings substantial financialexperience from leading asuccessful global businessand has an exceptionalunderstanding of the globalregulatory and conductenvironment. He’s also aproven leader with a strongtrack record in nurturing anddeveloping talent.”

He continued in praisingthe efforts of the CurrentGroup Chief Executivestressing that “Peter Sands

has made an immensecontribution to the successof the Group and has had atransformative impactduring his 13 year tenureas both Group ChiefExecutive and previouslyas Group Finance Director.Since becoming GroupChief Executive in 2006, theGroup has more thandoubled in size, has beenconsistently profitable andhas returned over USD12billion of dividends toshareholders. Hisleadership and insight,over a period of hugechange and challenge forthe entire industry, ensureshe leaves the Group wellplaced to achieve its fullpotential.

M a s t e r C a r d ,Grooming Centre toextend electronicpayments to SMEs

MasterCard andGrooming Centre

have signed a Memorandumof Understanding (MoU) thatwill see electronic paymentsolutions extended to 500,000Small and MediumEnterprises (SMEs) insuburbs and rural parts ofNigeria.

Grooming Centre is aNigerian micro-financeorganisation that seeks toaddress the gaps in financialservices by providingaffordable loans to women-owned MSMEs. Up untilnow, Grooming Centredisbursed these payments bycash or cheques, which areless efficient than electronicmeans.

Under the MoU, theGrooming Centre will pre-loadthe funds onto MasterCardprepaid cards. Businessowners can use their cards towithdraw funds at millions ofATMs or pay for goods andservices at merchants thataccept MasterCard paymentsin Nigeria and in over 210countries globally.

“There are a huge numberof MSMEs that do not haveaccess to any form of formalfinancial tools or services.Through the provision ofelectronic payments, thesebusiness owners will enjoymore convenient access tocapital, be able to bettermanage and track theirspending, save for futureneeds and protect themselvesagainst unforeseen risks,”says Godwin Nwabunke,Chief Executive Officer ofGrooming Centre.

MasterCard and GroomingCentre will also work withvarious financial institutionsto rollout payment devicesincluding Mobile Point of Saleterminals, enabling theseMSMEs to accept debit,prepaid and credit cards forthe first time.

“Through this partnership,we will enable financialinclusion in communitieswhere consumers have largelybeen unable to use formalpayment products and havehad to rely on cash,” saysOmokehinde Ojomuyide, VicePresident and Area BusinessHead for West Africa,MasterCard.”These paymentsolutions will help theseMSMEs reduce the amount ofcash they currently handle,increase sales, and improvecashflow while making iteasier and safer for theircustomers to pay.”

SIGNING - Ezediashi Ofili, VP, Prepaid Product Management MasterCard, (centre, left)and Godwin Nwabunke, CEO, Grooming Centre (centre, right) shake hands following thesigning of an MoU to extend electronic payments to MSMEs in Nigeria. Looking on areAdesoji Tayo, Executive Director, Grooming Centre (left) and Uwagbae Uzebu, Director,Acceptance Development, Non-Traditional Channels MasterCard (right).

Corporate Finance


CMYK

By NKIRUKA NNOROM

Data from the Nigerian Stock Exchange,NSE, showed a significant drop inforeign investors’ participation as at

December 2014, while a significant increase wasrecorded on domestic side. During the periodended December 31, 2014, foreign investors’participation on the NSE dropped to 48.24 percent,as against 80.92 participation rate achieved inNovember 2014.

On the other hand, domestic investors’participation within the same period in December2014 stood at 51.76 percent, as against 19.08 percentrate of participation recorded in November 2014.

However, on a year-to-year basis, foreigninvestors’ participation rose to 57.52 percent in2014, as against 50.80 percent participationrecorded in 2013, while domestic investors‘participation stood at 42.48 percent betweenJanuary to December 2014, compared to 49.20percent recorded in the same period in 2013.

Also, in 2013, total foreign inflows into theExchange exceeded outflows by about four percent,while in 2014, foreign outflows exceeded inflowsby 22 percent. However, in December 2014, therewere more foreign inflows than outflows.

Also the outflows in December were significantlysmaller than the outflows in the previous months.

In its 2014 review and outlook for 2015, the firmsaid: “The local bourse performed negatively inthe review period, the worst in three years. Thiswas as a result of strong investors’ apathy towardsthe equities market, particularly from localinvestors.

“This was further exacerbated by sell offs byforeign portfolio investors in the face of localexchange rate risks and improvements in theirrespective economies.”

It, however stated that the negative marketmomentum currently being experienced wouldtaper off towards mid 2015, adding that this wouldbe made possible by sound policy framework fromfiscal and monetary authorities.

“Given the current attractive valuation of equities,we expect a flurry of activities in the second half of2015. An upbeat in the international crude pricesand by extension, an improvement in the Nigeria’seconomic environment will provide a strongsupport for the equities market,” analysts at CowryAsset said.

“After two years of consecutive growth–35.45percent and 47.19 percent in the year endedDecember 31, 2012 and 2013 respectively, the NSEAll Share Index (NSE ASI) shed 16.79 percent ofits former value on a year-to-date basis,” the reportadded.

Nestle shareholders suffer 27%dividend decline

By NKIRUKA NNOROM

Shareholders of Nestle Nigeria Plc will havetheir final dividend for the year ended

December 31, 2014 slashed by 27 percent, if theamount being proposed by the Board of Directorsis approved at the next Annual General Meeting,AGM, in three months' time.

The Board of Directors of the company isproposing N13.87 billion as dividend for theperiod, which is 27 percent decrease over N19.023billion paid in the corresponding period in 2013.

However, the final dividend dividend along withthe interim dividend of N7.926 billion paid earlierin the year amounted to a total dividend of N21.798billion.

This represented eight percent increase overN20.212 billion paid in the previous year.

According to a filing with the Nigerian StockExchange, NSE, only shareholders whose namesappear on the register of members as at close ofbusiness on Friday, 24 April 2015, will benefit fromthe dividend payment.

Corporate Finance

FFFFForeign inoreign inoreign inoreign inoreign invvvvvestestestestestorororororsssssparparparparparticipation drticipation drticipation drticipation drticipation drops on NSEops on NSEops on NSEops on NSEops on NSE


CMYK


CMYK

Homes & Housing

Stories by YINKAKOLAWOLE

The FederalG o v e r n m e n tapproved the

restructuring andcommercialisation of theFederal Housing Authority(FHA) due to theunderwhelming performanceof the agency over the past40 years.

Minister of Lands, Housingand Urban Development,Mrs. Akon Eyakenyi,disclosed this at a one-daymanagement retreat on‘Strategizing for EffectiveRestructuring andCommercialisation of theFHA’ in Abuja. She noted thatgovernment was worried bythe consistent under-performance of FHA over theyears and the organization’sinability to meet thelegitimate aspirations ofNigerians for decenthousing. “FHA isgovernment’s foremostagency for housing delivery.Housing is one of the basicneeds of man. You will allunderstand then why thegovernment is genuinelyworried by the consistentunder-performance of theFHA over the years. Theorganization has not beenable to meet the legitimateaspirations of the people ofNigeria,” she said.

The minister said thefederal government hastaken steps aimed at creatinga conducive environment forprivate sector operators toimprove their participation inhousing delivery, butlamented that government’sefforts are being hindered bythe under-performing FHA.

“Thegovernmentis genuinelyworried bytheconsistentunder-performanceof FHA overthe years”

In the quest to bridge the nation’s huge housingdeficit, the Federal Government has signed a

Memorandum of Understanding with an internationalfirm for the construction of 15,000 affordable housesacross the country within 12 months, at a cost of $1.5billion (about N300 billion).

Minister of Lands, Housing and Urban Development,Mrs. Akon Eyakenyi, who signed the MoU, said thedecision was taken in fulfillment of President GoodluckJonathan’s promise to transform the country in all aspectsof life, especially through mass production of affordablehouses.

She said the move underscores government’s resolveto partner with different operators in the housing sector,particularly between real estate developers, buildingmaterials producers, investors in real estate business andthe different tiers of government, to maximize housingdelivery. “I wish to emphasize that the Federal Ministryof Lands, Housing and Urban Development will continueto collaborate with key actors and operators in the housingsector to reposition the sector for improved and efficienthousing delivery to the majority of Nigerians, especiallythe low income earners,” she stated.

The minister urged other investors and developersacross the country to partner with the government inproviding adequate shelter to the citizenry. “We havealso stepped up our efforts in partnering with the privatesector, investors and other stakeholders in the housingand urban development sector in order to ensure that weall work together to achieve the desired goal,” she said.

… Partners firm onN300bn affordablehousing

FMBN to liftembargo onestate loan

Federal Mortgage Bankof Nigeria (FMBN) has

disclosed readiness to liftembargo on EstateDevelopment Loan (EDL)subject to commitment ontimeliness by developers.

Managing Director/ChiefExecutive, FMBN, Mr.Gimba Ya’u Kumo, stated thiswhen the new executivemembers of Real EstateDevelopment Association ofNigeria (REDAN) paid acourtesy visit to the bank inAbuja. He said this was partof the bank’s efforts tofacilitate delivery of qualityhouses to Nigerians and thusreduce the housing deficit.

Kumo explained that thebank would review the estatedevelopment loan window toremove observed lacuna. Headded that the NationalHousing Scheme would bereviewed to ensure bettercollection of contributionsfrom the primary mortgagebanks (PMBs), noting thatFMBN was reforming itsoperations to enforcediscipline and transparency.

FBNMortgagesappoints newboardFBN Mortgages Limited,

a subsidiary of FirstBank of Nigeria Limited, hasannounced the constitution ofa new Board of Directors.

The mortgage company wasestablished to provideintegrated mortgagesolutions to individuals andproperty investors, fund thedevelopment of qualityresidential and commercialaccommodation choices aswell as facilitate acquisitionvia a wide range of financialproducts.

The new board is led by itsChairman, Mr. TundeOdunayo with Mr. AdenreleOni as MD/CEO. Othermembers are AbdullahiIbrahim, Otunba BosedeOsibogun, OlatubosunAshiru, Titilayo Ahmadu andDr. Umaru Kwairangfa.

In a statement, the MD/CEO said the new board willcontinue to build on theexcellent records of itspredecessors whilstremaining committed tobuilding and developingFBN Mortgages to make it thepreferred Mortgage Solutionsprovider.

FG restructures FHA due tounder-performance —Minister

“Government has created theNigerian MortgageRefinancing Corporation(NMRC) to simplify theprocess of creating mortgagesfor Nigerians. It has alsoapproved the new NationalHousing and UrbanDevelopment policies. Allthese actions are aimed atremoving all theencumbrances that hinderaccess to decent andaffordable houses for allNigerians. However, aparlous FHA creates adisconnect in the country’sdelicate housing equation.

as a step towardsempowering it to deliver onits mandate. Following thatapproval, I had the privilegeto inaugurate both theInterim Management Teamand the Technical Board ofthe Authority on December 12last year. The two bodies areto be in place for a period of18 months beginning fromNovember when thePresidential approval wasobtained,” she stated.

Eyakenyi urged the newFHA management to give

the authority a new lease oflife, noting that the retreat isan opportunity for staff ofFHA to gain more insight intothe reform document. Sheadded that the document,with specific deliverables andtimelines, is supposed toserve as a compass to guidethe Interim ManagementTeam in implementing therestructuring andcommercialization of FederalHousing Authority.

In his comment, the newlyappointed Managing Directorof FHA, Prof. Mohammed Al-Amin, attributed the under-performance of the authorityto poor operational structure,ill motivated staff and paucityof funds to meet its housingdelivery target.

He said the newmanagement met anorganization filled withpoorly motivated staff thathave stagnated on the samelevel for upwards of 10 years,creating doubts among thestaff about their future andthat of the authority. “Ratherthan work in synergy topromote the interest of theauthority, staff andmanagement were inperennial state of mutualsuspicion which put a daggerat the heart of the authority.In addition, we found thatFHA’s major projectsdesigned to add to thenation’s housing stock and re-inflate the organisation’sdwindling resources had beengrounded by paucity offunds,” Al-Amin stated.

While NMRC is aimed atstrengthening the consumerin his demand for housing,the FHA is expected to firmup the supply side of theequation. That was why thePresident graciouslyapproved the restructuringand commercialization of FHA

•A modern mass housing development


CMYK

CMYK

34 —Vanguard, MONDAY, MARCH 2, 2015

CoverContinues from page 23 Why local investors shun

e-commerce sector — REPORTto be filled and made availableto Nigerians via the e-commerce sector. Thepercentage of investment isvery low but the signs areencouraging. There are stillnumerous opportunities toinvest in only if the investorscould be discerning enoughand look at the bigger pictureinstead of the short-termgains.” He said: “Investorsshould support smallbusinesses in their own littleway. For instance, StriveMasiyiwa supports businessesall over Africa by bloggingabout business principles onhis Facebook page. He isinvesting his intellect andbusiness expertise on smallbusinesses all over Africa.Nigerian investors should alsolearn to do same by investingfinance or their businessexpertise/intellect on startups.It would greatly enhance theNigerian start-up ecosystem.”

On his part, OdebodeAdemola, the Co-Founder ofNerdBervy said: “Tech spacewill always evolve. And thething I love about Technologyis that there are a lot ofproblems we see around us thatsolutions can be created for. At

NerdBevy, for instance, wehave different ideas that wouldmake a lot of changes and affectmany lives positively. Thesesolutions stem from theproblems we see around us. Soreally, investing in Tech spacegives you a pool of viable ideasto choose from. Every Tech ideathat brings about a solution toa particular common problemif well planned out woulddefinitely be a success.”

NerdBevy, an IT firm thatspecialises in supply andmaintenance of IT equipmentsincluding development of webapplications and solutions,launched RepairAm.com, anonline gadget repair service inFebruary, 2014. Unfazed bylack of investment, he and hispartners raised N500, 000 fromtheir friends and families tostart NerdBervy and havewithin one year achieved over60 percent growth.

In this situation operatorsand industry watchers alikebelieve that the role of Venturecapital firms and private equitycannot be underestimated.Some even argue that there

should be legislationsincluding an enlightenmentprocess to encourage them toalso invest in the space.

“What we need is increasedpolitical stability in Nigeria.This is because no one is goingto invest in a country wherethey are not certain of itspolitical future. There alsoneeds to be a platform toeducate high net worthindividual in the country of theimmense opportunities in thesector and its potential forgrowth. There should also besome sort of legislationencouraging indigenousVenture Capital firms to

actually invest in onlineservices,” said SuleimanBalogun who is the Co-Founder of Nigeria’s lettingagency, www.tolet.com.

He said: “What we haverealised is that most VentureCapital firms in this countryinvest mostly in oil and gas.That needs to change. Even inreal estate development, whatwe have found out is that themoney that is being used forthe biggest projects in thecountry is coming fromoverseas. Yet we haveindividuals in this country whohave the capacity and thewherewithal to shoulder allthese costs and makesignificant returns on theirinvestments. It is not exactlyencouraging.”

With such steps takenespecially by authorities, thingswill definitely improve for thissector that has so much to offerbut with little support. At themoment, however, someindigenous Venture Capitalfirms are also stepping in to fillthe vacuum and are alreadybeginning to create completelyindependent and viable

indigenous online companies.For instance, in 2013, iRoko

TV entrepreneurs, JasonNjoku and Bastian Gotter,introduced SPARK, a $1million backed companycreated to support and developaspiring Nigerian tech andinternet entrepreneurs. Basedin Lagos, SPARK is a companythat has set out to buildcompanies and to fill thevacuum that currently exists inthe country’s angel investmentecosystem.

Over the past two years, thecompany has lived up to itsdreams by building andsupporting some of the mostprofitable online businesses inNigeria especially hotels.ng,foto, tolet.com.ng, drinks.ngand a host of others.

At the unveiling of SPARK,Jason had noted that thecreativity, talent, and the spiritof entrepreneurship is inNigeria but Nigeria’s businessecosystem isn’t set up toadequately support start-ups intheir earliest days, adding thatits intention with SPARK is toact as the catalyst to a periodof aggressive and excitinggrowth in Africa’s Internetsector. Perhaps with moreSPARKS, Nigeria may notcompletely lose out on theinternet business.

What we need isincreased politicalstability in Nigeria,because no one isgoing to invest in acountry where theyare not certain ofits political future


CMYK

CMYK

“Injustice anywhere is athreat to justice everywhere”.Rev Martin Luther King, Jr,1929-1968. (VANGUARDBOOK OF QUOTATIONS p104).

Seldom does acommentator findhimself in a position

of the defender of a big andstrong multi-nationalorganisation. Organisations,especially a global bank, in itslegal battle with anindividual, are generallyassumed to be the aggressors.When Justice Oliver WendellHolmes, Snr, 1809-1894, inexasperation, exclaimed that,“An organisation has no pantsto kick and no soul to damn.And, by God, it should haveboth”, he was only echoingthe seeming helplessness ofindividuals when fightingagainst big organisations.However, like most axioms,there are exceptions to theconventional wisdom. Truthis, sometimes, the giantorganisation becomes avictim of the individual –under certain circumstances.Banks, particularly, are proneto becoming victims tocustomers refusing to repaythe loans granted them; andwho still go to court to preventthe bank from obtainingjustice. The courts globallyare inundated with such lawsuits.

Perhaps, one example of alarge global organisationbeing a prey to questionablecourt judgment occurred

Ecobank, victim of injustice… 1recently in the West Africannation of Togo. A court in Togoawarded Mr Thierry Tanoh,the former Group ChiefExecutive Officer, GCEO,$11.6 million on February 3,2015, for alleged wrongfuldismissal, by ECOBANKT R A N S N A T I O N A LINCORPORATED, ETI.Ordinarily, that should nothave attracted any notice,apart from the size of thesettlement – which is probablyfar more than Mr Tanoh would

jurisdiction over Mr Tanoh’semployment contract”. And,indeed, there is a contract,clauses 26 and 28 of whichread as follows:

26. Arbitration.“Any and all disputes,

controversies or claimsarising under or inconnection with thisAgreement, including withoutlimitation, fraud ininducement of thisAgreement, or the generalvalidity or enforceability of

England under theUNCITRAL Rules, and theaward of the arbitrator is tobe final and enforceable inthe courts of England.Irrespective of the outcome ofthe arbitration, it is herebyagreed that parties shall eachbear their own costs.

28. Governing Law andJurisdiction.

“This Agreement shall begoverned by the laws ofEngland, and, subject toclause 26 above, the partieshereby submit to the exclusivejurisdiction of the EnglishCourts”.

Even those not trained inlaw should be able tounderstand those twostatements, whose authorsmust have gone to great painsto render them simple,straight forward and elegantin draft.

The reader might now bewondering what is ourbusiness with the ECOBANKjudgment. The first reason forthis intervention has alreadybeen stated in the statementby Dr Martin Luther King, Jr.The quest for justice isuniversal and it should be all-inclusive. Nobody, individualor corporate citizen, shouldbe discriminated against, onaccount of nationality or size.ECOBANK operates in 36countries, but ECOBANKNIGERIA LIMITED is the

biggest unit. Millions ofNigerians, as well asforeigners in many countries,are also shareholders, and,therefore, stakeholders. It istheir $11.6 million which hadbeen awarded to Mr Tanoh,an Ivorian, in Togo. Globalstakeholders have a stake inseeing to it that justice isdone. And that means toECOBANK as well as to MrTanoh. Given the two clausesquoted above, it is not clearthat judgment had beenobtained in the right place.Jurisdiction remains animportant component of anylitigation anywhere in theworld.

As a corollary to that, itneeds to be pointed out thatseveral “Nigerian” firms –First Bank, UBA, Zenith,ACCESS, DANGOTE etc –have also becometransnational. Any of themcould fall prey to judgmentsobtained from local courtslacking jurisdiction toentertain the cases. Once, theTogo judgment is allowed tostand it could create anavoidable bad precedent foremployees of multi-nationalorganisations in Africa to seeklegal redress in anycomplaisant country – evenwhen the terms of theiragreements have ousted thejurisdiction of domesticcourts. No African nationmust give the impression thatwe have added legalised“jungle justice” to our long listof vices.

have earned as his legitimateremuneration package fromthe bank if he had completedhis tenure twice.

ECOBANK, predictably,had given notice of appeal ofthe court ruling. The bankhas announced as follows:“ETI does not accept thelegitimacy of the Togolesecourt’s ruling because thecourt does not have legal

this Agreement shall besubmitted to bindingarbitration before onearbitrator to be selected bymutual agreement of theparties, or failing mutualagreement, to be appointedby the President of theInternational Chamber ofCommerce in Paris, France.The arbitration shall beconducted in London,

Truth is,sometimes, the

giant organisationbecomes a victimof the individual –

under certaincircumstances


Interview

What is the future ofFGN Bonds in view of

JPMorgan’s negative outlook?In actual fact, we have sent a

mail to the JP Morgan, JamesMarshall that only an entityin Nigeria today can tell youthe liquidity of the market. Lastyear, we got the market, all thedealing members reportingtheir activities. So, JP Morgan,and I think another byStandard Chartered researchsaid the liquidity in the markethad gone very low and theywere concerned and that waswhat led to that negativeoutlook. And how did theydetermine the liquidity in themarket. You remember thatcentral bank last year hadtaken off the one percent openposition limit and they felt thatthe speed with which you couldget out of your position isaffected. They felt that liquidityis not so much as funding, buthow quickly you can get of yourposition, so, if you want to buy$100 million dollars, howquickly can you get it out. Lets’be honest, when foreignportfolio investors come in, they

N200bn commercial papers

to hit market in 2015

— FMDQ MDM r. Bola Onadele Koko is the Managing Director/CEO, FMDQ

OTC Plc, a self regulatory institution that organises transactionin fixed income securities in Nigeria. In less than two years

of its operation, FMDQ has recorded a lot of milestones; key amongthem were the achievement of N1 trillion market turnovers in 2014, amore transparent and orderly financial market, which hitherto wasnon-existent before November 2013 when the securities exchangetook off operation.

According to Onadele Koko, in this interview with FinancialVanguard, the FMDQ management was able to achieve thesethrough certain policies which include the publication of dailyquotation list which keeps the entire market abreast of dailytrading at FMDQ among others.

He also argued that the forthcoming general elections willnot have any negative impact on liquidity in the financialmarket.

EXCERPTS:

By NKIRUKA NNOROM

don’t come all at once, butwhen they want to get out, theywant to do that at the sametime. The truth is the marketwas not deep enough to haveeverybody go out at the sametime. So, immediately the crudeoil price started heading south,they wanted to go out at once,the corporate treasurers startedaccelerating their own demandand when you have such asituation, you have a muchhigher level of demand overthe natural supply of themarket. So, JP Morgan quicklyset negative outlook because of

the level ofliquidity. Wethink they willrestore thisbecause, quitefrankly, the levelof liquidity in them a r k e t ,interestingly, hascome back and isactually muchhigher thanwhere it was prior to whencentral bankissued thatcircular. You arealso aware thatthe central bankafter its attemptto reduces p e c u l a t i v etendencies tookthat openposition to zero atfirst, laterbrought it atpoint onepercent and hasnow taken it backto point five, sothe standard

amount that the banks tradedin foreign exchange was$500,000 dollars and that wasback to where it was before thecircular was issued. We haveno doubt that the negativeoutlook will be reversed by JPMorgan. The liquidity in thebonds market remains strong,the liquidity in the foreignexchange market has beenrestored , and you know thatthe crude oil price itself isalready beginning to bounceback gradually, so, I think thereshould be no problem goingfoward.

Do you envisage the return

of foreign investors to themarket?

Definitely, foreign investorsthat had indicated interest totake their money out havesuccessfully taken their moneyout. That is the major strengthand test for the policies of thecentral bank. Now that theexchange rate has gone toN180/190, after the election,with the sort of growth thatNigeria is being positioned toachieve, with the level of theexchange rate, which thecentral bank had said isappropriately priced, and withthe sort of yields in the marketat 14/15 percent, I think thecountry will witness, in actualfact, a higher level of foreigninflows more than it did before.Immediately the elections areover and the transition, whichis expected to be smooth, takesplace, Nigeria will be set foranother bull run in terms ofdevelopment of the economy.

What about FGN bonds

crowding out other bonds inthe market?

I think the way to look at thecapital market, is to look at thesavings side, the investmentside. It is no brainer that thefederal government will likely

borrow this year to shore up itsrevenue against theexpenditure. When it does thatand it demands more money,you will expect the price to goup. So, yields may go up. Thefederal government may alsodecide not to borrow which ithas started doing and issueEurobonds, but the point is ifwe continue to grow oursavings base in the country,there will be less of federalgovernment crowding out themarket. The truth is corporateentities will want to issuebonds. Whether they issuebonds at this level is a differentdiscussion because if TreasuryBills are at 13 percent andbonds are nosing 14/15, thenthe corporate bonds will bemuch higher. Corporatetreasurers usually avoidissuing long term wheninterest rates are high; theyrather stay short term and lookto borrowing long wheninterest rates are low. So, I thinkthis year and probably nextyear, if the interest rate remains

•Mr Bola Onadele Koko

The liquidity inthe bondsmarket remainsstrong, theliquidity in theforeignexchangemarket has beenrestored, and thecrude oil priceitself is alreadybeginning tobounce backgradually


Interview

high, corporate treasurers willgo more to the short term wherenobody is going to crowd themout. The truth is that banks willcontinue their intermediationrole; the federal governmentwill probably borrow more, butdo not forget that the savingsbase is also increasing andeverybody is desirous of findinga way to increase that saving.What we have done is simplypension. Everyone is thinkingthrough how the reforms willcome in the insurance industrysuch that it can grow significantsavings pool. When we growthat savings pool from pensionand insurance sectors, we willtalk less of federal governmentcrowding out the private sector..In actual fact, if the federalgovernment does require anyfunds, we will still it to come tothe market to establish thebenchmark and that is how itworks. So, I think the federalgovernment will borrow more,I don’t think there is anycrowding out, and it will pushup the rate. Even without

borrowing more, we have seenwhere the rates are because iffor any reason inflation trendsup, the central bank will takerates up. So, at times interestrate may go up, not necessarilyfrom federal governmentdemanding to borrow more, butreally from inflation strategy ofthe central bank. The truth is ifthe states come to the market toborrow, they will get the fundas long as the bonds are wellstructured, but they must beprepared to pay more. I thinkwe have seen a corporate thatis already borrowing at 16.45percent. So, if a top corporatein Nigeria is looking atborrowing at 16.5, the statesthemselves are going to beunder pressure to pay more ifthey decide to come to thecapital market. That is what wewill likely see in 2015.

What is the value of

Commercial Papers (CPs)expected at FMDQ this year?

We issued the first one lastyear. A couple of issuing

houses have approached us tomake enquiries on this. We arealso taking a marketdevelopmental approachtowards this to support themarket in ramping up veryquickly. This year alone we havehad visits from investmentbanking firms talking about thesort of commercial papers theywill like to bring to the marketand these are across industries,not only in the banking sector,but in the fast moving consumergoods and also intelecommunications sector. Weexpect about N200 billioncommercial papers to be issuedthis year.

Were there penalties/sanctions for marketparticipants that probablyflouted market rules last year?

We spent last year putting theplatform together, getting themembers on board. We haveput together our penalties andour enhancement as selfregulatory organiSation inplace. We are going through theprocess of educating the marketon those infractions. We spentlast year educating them ontrading practices, now we areletting them know what thesanctions will be when youdon’t keep to the generaltrading practices and rules wehave put in place. This week,we also spent time with someof the dealing members gettingthem familiarised with theinfractions that are in place andthe ones that are beingmonitored. We are set to go livethis month; we have beentracking the infractions andattaching sanctions to them forthem to know. What usuallyhappens is that while you areputting new trading rules inplace, you also want the marketto get accustomed to the factthat once they don’t tradeproperly within those rules andguidelines you have set, thepenalties will take place andthey will be sanctioned. Thatframework is in place andmarket sensitisation is going on

to let people know that theseare the infractions that are beingmonitored. Hopefully, by nextmonth, you will start seeingwhat penalties and sanctions goto the members. So, the way yousee the league table of turnovertoday is the same way we aregoing to give you the leaguetable of infractions. People wantto see on our website, thedifferent institutions and thesort of infractions they have.This year is about increasinginvestors’ confidence, so, weare going to do a lot ofsensitisations and encourageclients/investors to speak toFMDQ in case there are issues.The sanctions we are putting inplace today are on relationshipamong dealing members, whatyou are supposed to do, are youdoing it? We will like clients toreport if there is any unfairtreatment they haveexperienced or a disappointinglevel of service and we willattend to that. But, again, whenyou are developing, you takethings in stages; you don’t bitetoo much at a time. We are alsoworking now on a whistleblowing policy that we expectto be fully robust where you canreport to us when you haveissues in the market placebetween the members, betweenthe clients and members so thatthere is a way to following upon issues that you see comingup in the market place and wewill take that seriously as tohow we resolve those issues tohelp build investors’confidence.

How will the political climate

affect FMDQ business in 2015?We can’t see any negative

impact for now. The fact is themarket is still very active andliquid, nothing has changed,irrespective of whether there iselectioneering ornot and weexpect that tocontinue into theyear. What wewill likely see isthat rate mayincrease, but wedon’t foreseel i q u i d i t yd r o p p i n gbecause thepeple that aretrading in thismarket have a lotof stake investedit . It is part oftheir job to tradeand by the timewe bring in then o n - b a n kdealing membersto also trade inthis same market,we will seei n c r e a s e dliquidity. So, forte politicalclimate, I don’tthink it will havemuch impact interms of liquidity

of the market. And of course,as FMDQ continues to striveto provide more transparency,we believe this will influencethe market more than what thepolitical climate is dictating.We are hoping that theelections will come and go verysmoothly and there will be nowar. If anything is going toaffect the market, it will be aforce-majeure caused by mannot God this time, butotherwise, we will see a veryactive market. The only majorchanges we will see will be inpricing. But that the market willbe illiquid or shut down, wedon’t envisage that.

What is the impact of

volatility in FX on the OTCMarket?

I think we need tounderstand this market a bitand it is a bit different fromequity market. If equity marketis coming down, at times,people run away from themarket, they don’t want toinvest in it, but there is anatural flow of money to thismarket. If banks have liquidity,where will they put them,treasury bills or FederalGovernment Bonds, that isone. Two, the federalgovernment has also put asweetener, all their couponsand income made on thesetreasury bills or FGN bonds aretax exempt. So, when you goto your bank and say ‘am nolonger into equity, I sell myequity and take money to mybank’, this market gets moreliquidity because the bank hasto invest that money. A Bankdoes not keep the money, it iseither it takes it to central bank,buys treasury bills or FGNbonds.

If anything isgoing toaffect themarket, itwill be aforce-majeurecaused byman, notGod thistime. Butotherwise, wewill see avery activemarket


Tax Matters

Often times taxpayershave little or noknowledge of the

basic requirements for filingtheir tax returns as well as theconsequences for late filing onthese returns. Below is abreakdown of the requirementsfor filing your tax returns, theirdue dates and penalties for latefiling as it applies to varioustax types.

1. Requirements for filingCompany‘s Income Tax (CIT)

In line with Section 55 of theCompanies Income Tax Act(CITA) LFN 2004 (asamended), all taxpayersincluding those grantedexemption from tax, arerequired to file their tax returnsto the relevant tax authorityevery year. The tax returnsshall consist of auditedaccounts (financial statement)of the business for thepreceding accounting year andmust be accompanied by:

Income tax computationsCapital allowance

computationsSchedules of fixed assetsTrue and correct statement in

writing containing amount ofprofit from each and everysource

A duly completed self-assessment form signed by adirector or company secretary

Evidence of payment (wholeor part) of the tax due.

Tax returns under(International FinancialReporting Standards (IFRS)shall be in line with Section 55of CITA and should include:

In respect of first timeadopters;

Statement of financialposition as at the beginning ofthe earliest comparative periodwhen a taxpayer applies anaccounting policyretrospectively or makes aretrospective restatement ofitems in its financial statement

Statement comparing the taxeffect of IFRS adoption withNigerian Generally AcceptedAccounting Principles (GAAP)

Statement of reconciliationsfrom Nigerian GAAP to IFRS

Deferred tax computation

In respect of post-first timeadoption:

Deferred tax computationDue DatesFor old companies, six (6)

months after the end of thecompany‘s accounting year.

For new companies, eighteen(18) months from the date ofincorporation or six (6) monthsafter the end of the company‘sfirst accounting periodwhichever is earlier.

A company may request inwriting for approval to submitaccounts at a later date, in viewof any peculiar circumstances,e.g. fire disaster or need to

Penalties for late filers,ABC of tax returns (1)

obtain prior approval beforesubmission. This must bespecifically approved inwriting by the relevant taxauthority.

Penalty for late filing of CITSection 55 (3) a & b of CITA

LFN 2004 (as amended)provides for penalty ofN25,000.00 in first month offailure and N5,000.00 for eachsubsequent month.

2. Requirements for filingEducation Tax (EDT)

Section 2(a) of theTETFUND (Establishment,Etc.) Act 2011 provides that acompany shall be assessed onEDT when being assessed onincome tax under the CITA/PPTA. EDT should be part ofthe tax computations whenfiling company income tax(CIT) or petroleum profit tax(PPT) returns.

Due DatesFor old companies, six (6)


For new companies,eighteen (18) months from thedate of incorporation or six (6)months after the end of thecompany‘s first accountingperiod whichever is earlier.

Penalty for late filing ofEducation Tax (EDT)

The same penalty applicableto late filing of CIT/PPT alsocovers NITDL.

3. Requirements for filingNational Information andTechnology DevelopmentLevy (NITDL) (for applicablecompanies only)

Section 16 (2) of the NITDAAct, 2007 provides that FIRSwhile assessing a companyfor CIT/PPT in accountingperiod shall also assess suchcompany for NITDL. It shouldbe part of the taxcomputations when filingreturns for CIT/PPT.

Note: Companies withN100,000,000 turnover andare engaged in the followingbusiness lines are assessableto NITDL:

GSM service providers andall telecommunicationcompanies;

Cyber companies andinternet providers;

Pension managers andpension related companies;

Banks and other financialinstitutions

Insurance companiesDue DatesFor old companies, six (6)


For new companies,eighteen (18) months from thedate of incorporation or six (6)months after the end of thecompany‘s first accountingperiod whichever is earlier.

Penalty for late filing ofNational Information andTechnology DevelopmentLevy (NITDL) returns

The same penalty applicableto late filing of CIT/PPT alsocovers NITDL.

4. Requirements for filingestimated Petroleum Profit Tax(PPT) returns

In line with Section 30 of thePetroleum Profit Tax Act(PPTA) Cap P13 LFN 2004,every company which or hasbeen engaged in petroleumoperations shall for eachaccounting period of thecompany, make up accountsof its profits or losses, arisingfrom those operations, of thatperiod and shall prepare thefollowing particulars:

Computation of estimates ofadjusted profit/loss andassessable profits.

A schedule showing;The residence at the end of

that period in respect of itsassets

All qualifying petroleumexpenditure incurred by it inthat period

The values of any of its

assets disposed of in thatperiod

The allowances due to it forthat period

c) A computation of itsestimated chargeable profitsfor that period

d) A statement of othersums, deductible underSection 22 of the PPTA

e) A statement of allamounts repaid, refunded,waived or released to thecompany, as referred to inSection 20 (5) of the PPTA

f) A computation of itsestimated tax for that period.

Due DatesNot later than two (2)

months after thecommencement of theaccounting period of anycompany engaged inpetroleum activities.

If at any time during suchan accounting period, acompany is aware that theestimated tax returns requiresrevision, it shall submit afurther return containing therevised estimated tax for suchperiod.

This is in line with Section33 of PPTA.

Penalty for late filing ofEstimated Petroleum ProfitTax (PPT) returns

Section 51(1) of the PPTAprovides for a penalty ofN10,000.00 and N2,000.00 forevery day the failurecontinues.

5. Requirements for filingfinal PPT returns

In line with Section 30 (2)of the PPTA, the sameparticulars as underEstimated Tax Returns shouldbe filed (not being estimates).Such copy of those accountsand each copy of those

particulars shall contain adeclaration that they are trueand complete and shall besigned by a duly authorizedofficer of the company or byits liquidator, receiver oragent of such liquidator orreceiver.

Due DateWithin five (5) months after

the expiration of theaccounting period of thatcompany. This is in line withSection 30 (2) of PPTA.

Penalty for late filing of FinalPPT returns

Section 51(1) of the PPTAprovides for a penalty ofN10,000.00 and N2,000.00 forevery day the failurecontinues.

6. Requirements for filingPersonal Income Tax (PIT)returns

In line with Section 41 ofPersonal Income Tax Act(PITA) Cap. P8 LFN 2004 (asamended), a taxable personshall, for each year ofassessment, file self-assessment return in theprescribed form (Form A in thecase of filing with FIRS), withthe tax authority of the statein which the taxable personis deemed to be resident. Thisis together with a true andcorrect statement in writingcontaining:

The amount of income fromevery source for thepreceding year, computed inaccordance with theprovisions of PITA

Particulars that may berequired under PITA withrespect to any such income,allowance, relief, deduction orotherwise as may be materialfor that purpose i.e. particularsthat will serve as proof.

WORKSHOP - From left: Mr Bolaga Oshiga, Director Project Management Tax Department,Mr. Achilis Amahwe, Director Internal Affairs Department, Representing Ag.Executive Chairmanof FIRS, Alh. Kabir Mashi, Mr. Peter Olayemi, Director Medium Tax Department, Mr. JohnObaro, MDSystemspecs Nigerian Limited and Mrs. Crystabel Onyejekwe, Executive Director,Buisiness Development NIBSS at One-day Sensitization Workshop for Tax Consultants,Taxpayers and Banks, held at Eko Hotels and suits in Lagos

Often timestaxpayershave little or noknowledge of thebasicrequirements forfiling their taxreturns as well asthe consequencesfor late filing onthese returns


CMYK


CMYK

Business & Economy

Small and MediumE n t e r p r i s e s

Development Agency ofNigeria (SMEDAN) andGlobacom have signed a pactto empower 17 million Smalland Medium Entrepreneurs(SMEs) in the country.

Officials of the twoorganisations signed aMemorandum ofUnderstanding (MOU) onthe partnership at Globacomoffice in Lagos.

The Director-General ofSMEDAN, Mr. Bature UmarMasari explained that thepartnership which will runfor an initial period of fiveyears with the opportunity forattractive call rates as ClosedUser Groups (CUGs) and achannel to advertise theirproducts and services viaCall Back Ring Tone

Masari said, “SMEDAN ishappy to partner with anindigenous company whichhas become a global brand.Ever since Glo demystifiedthe myth that per-secondbilling for calls was notpossible, they have notstopped developing productsand services that arebeneficial to Nigerians,especially the masses”.

He explained that theproject will also give 10percent of the net revenuefrom the partnership to selectMicro Small and MediumEnterprises (MSMEs) whichsubscribed to the package,adding that, “It is alsolaudable that this initiativewas well thought through andhas stakeholders input andbuy-in,”

While explaining thedetails of the agreement,Globacom’s Head, CorporateSales, Kamaldeen Shonibare,said that the company wouldthrough the partnershipempower small and mediumenterprises that are membersof SMEDAN in theirbusinesses by providing themaccess to grants, soft loansand capacity trainingprogrammes.

The training opportunities,he explained, were designedto equip entrepreneurs withcurrent value-adding globalbest practices that will helpthem reposition theirbusinesses.

He said Globacom teamedup with SMEDAN on theinitiative because Micro,Small and MediumEnterprises were the engineroom for the rapid growth ofthe economy because of their

SESSION - From left: Aibee Abidoye, General Manager, Chocolate City; Sasha P, RecordingArtiste; Mr Uzoma Dozie, MD/CEO, Diamond Bank PLC and Mr Gregg Afemikhe, CharteredAccountant, SS Afemikhe Consulting during the session on Financing the Entertainment Sectorat the 2015 Edition of Social Media week held in Lagos on Wednesday. Photo Lamidi Bamidele.

SMEDAN signs 5yr partnership withGlobacom to empower 17m SMEsBy FAVOUR NNABUGWU closeness and importance to

the day-to-day existence ofthe people.

“As a proudly Nigeriancompany, Globacom ispartnering with SMEDAN tocatapult Nigeria to greatnessthrough the empowerment ofSMEDAN’s over 17 millionmembers. We will supportSMEDAN and its affiliateswith funds, sensitisationworkshops and businesstools.

"We will also support theIndustrial DevelopmentCentres being established insome states of the federation.Our dream is to catapultnumerous five thousandnaira businesses to a half amillion naira enterpriseswithin one year,” Shonibaresaid. He added thatGlobacom’s “partnership withSMEDAN is in sync with ourirrevocable commitment to

the promotion of the welfareof Nigerians through ourvarious life-transformingempowerment programmes.

Over the years, we haveinvested heavily in suchprogrammes. Ourempowerment schemes aremulti-faceted and they cutacross variousdemographics.”

Shonibare assuredSMEDAN members that theywould enjoy more telecomsbenefit as Globacom hadconcluded arrangements toempower them withspecialised lines for betterand seamlesscommunication. Hereiterated Globacom’scontinuous support to allprogressive areas of humanendeavors including sportsand entertainment. He alsoencouraged entrepreneurs totake full advantage of thewindow of opportunity thatwill lead to more businessprospects in the future.

Africa’s richest man, Alhaji AlikoDangote has invested N80billion

($400million) to set up a cement plant inKenya through East Africa PortlandCement Company (EAPCC).

Dangote entered Kitui County ’slimestone mines through the Kenya’slocal cement in order to open $400million, representing Sh34.8 billionKenyan currency in Kitui County, Kenya.

Dangote Cement which alsoconstructing major cement plants inEthiopia, Tanzania, and Zambia, alreadyhas a license to prospect for limestone inKitui County while he revised theupcoming factory’s annual productioncapacity to three million tonnes from theprevious 1.5 million tonnes.

According to him, “We are reviewingplans for Kenya with a view to increasing

Dangote invests N80bn in Kenyan cement sectorBy FAVOUR NNABUGWU the scale of our proposed factory from 1.5

million tonnes per annum (MTA) to3MTA”.

Dangote’s upcoming plants in Kenya,Tanzania, and Ethiopia will give it a totalcapacity of 8.5MTA, putting it ahead ofKenya’s Bamburi and Uganda’s Tororothat currently have capacities of 3.1MTAeach.

“We are confident there will be sufficientdemand both in Kenya and neighbouringcountries”. Besides being rich inlimestone, Kitui is also attractive due toits proximity to the Mui basin which haslarge reserves of coal. The coal is tippedto replace the relatively expensive dieselfuel in firing energy-hungry cementfactories.

The group plans to have around 60million tonnes of production, grindingand import capacity in Sub-SaharanAfrica by 2016".

Institute partners USuniversity on youthsand womenempowermentYouths and Women

empowerment efforts inthe Niger Delta region hasreceived a new fillip asDevelopment and LeadershipInstitute (DLI), a non-governmental organisation(NGO), recently sealed amajor partnership agreementwith University of Arkansas atPine Bluff, (UAPB) UnitedStates.

The partnership agreementinvolves collaborative supportto various programmes andinterventions by DLI in theNiger Delta region. Speakingduring the ceremony in PortHarcourt, OlaoshebikanClement Executive Director,DLI, disclosed that thepartnership represents amajor breakthrough for theorganisation that will have aresounding positive impact onits work in the region.

“It will enhance the qualityof our organisation’sprogrammes in the areas ofagriculture, Povertyalleviation, livelihoodprotection and environmentalconservation”. We will receivetechnical assistance, tools andtechnology to multiply theimpact of our ruraldevelopment programs,especially support tovulnerable women andyouths”.

He further disclosed that theUniversity of Arkansas at PineBluff is operating andpioneering research intoenhancing the productivityand performance of the lowerMississippi Delta, whichcompares with the Niger Deltaand offers tremendousopportunity for transfer ofknowledge and technology.”We hope to see impact onvegetable farming, fishfarming, youthentrepreneurship, smallhouseholder farmers, snailfarming and generalbiodiversity in the NigerDelta”, he said.

Clement who also spoke onchoice of the AmericanUniversity to partner with hisorganisation, opined that it isbased on DLI’s track recordand achievements. “We havecollaborated with Universityof Arkansas at Pine Bluff onan ongoing project, whichinvolves the Rivers StateGovernment, Rivers StateUniversity of Science andTechnology, WetlandsInternational Africa andRivers State SustainableDevelopment Agency.

The trainingopportunities, heexplained, weredesigned to equipentrepreneurs withcurrent value-adding global bestpractices that willhelp themreposition theirbusinesses

Business & Economy

Email:[email protected], [email protected] page:www.lesleba.com/blog2Website: www.lesleba.comTel:0805 220 1997


Omoh Gabriel - Group Business EditorBabajide Komolafe - Deputy Business EditorClara Nwachukwu - Energy EditorPeter Egwuatu - Asst. Business EditorYinka Kolawole - Snr Bus. CorrespondentFavour Nnabugwu - Insurance CorrespondentGodwin Oritse - Maritime CorrespondentGodfrey Bivbere - Maritime CorrespondentMichael Eboh - Energy ReporterFranklin Alli - Industry/Agric. ReporterIfeyinwa Obi - Maritime ReporterRosemary Onuoha - Insurance ReporterNkiruka Nnorom - Capital Market Reporter

CONTRIBUTORSPrincewill Ekwujuru - Media/MarketingJonah Nwokpoku - E-CommerceNaomi Uzor - IndustryProvidence Obuh - Micro FinanceLAYOUT - Graphics Department

CMYK

FG directive on foreign airlines' operationalstandards takes off

The Federal Governmentdirectives to the

Nigerian Civil AviationAuthority ,NCAA, to remove and ground allforeign aircraft registered inthe private category that arelisted on the OperationsSpecifications (Ops Specs)Part G of some Air OperatorCertificate holders takeseffect this week.

Speaking during thepresentation of the report by

By FAVOUR NNABUGWUthe Ministerial Committee onForeign Registered, PrivatelyOperated Aircraft Operationsin Nigeria chaired by CaptVictor Iriobe in Abuja, Mr.Osita Chidoka, Minister ofAviation, said, “I have alsoaccepted the March 1 datefor all foreign registeredprivate category of aircraftsthat are listed on the OpsSpecs Part G of some AOCholders, must be removedfrom that status by NCAA” .

He said, “Consequently, theaircrafts operations willremain grounded until NCAA

approves an alternativeoperational status for theaircrafts. So March 1,2015 remains the date forthis.”

Chidoka also directed theNCAA to immediately revokethe Flight OperationsClearance Certificate (FOCC)and Maintenance ClearanceCertificate (MCC) or airlinesoperating commercialcharters, instead of theirNCAA authorisation forprivate and also impose civilpenalties of N17billion, anequivalent of $100,000 on theaircrafts.

Over the years, both theLegislative and theExecutive arms of

government have consistentlydemonstrated their faith in thepopular axiom that “he whofails to plan, plans to fail”;consequently, they have,always ensured that anIncome and Expenditure planis passed into law annually;nonetheless, inspite of theirapparent loyalty to the conceptof planning, publicexpectation for improvedinfrastructure and enhancedsocial welfare has, ironicallyremained unfulfilled, such thatsome cynics may suggest thatour economic and socialwelfare couldn’t be worse evenif we ignored the need for aformal plan of action.In reality, however, empiricalevidence suggests thatplanning is intrinsic to successin every endeavour, includingthe business of government;so, why is our own casedifferent; why do we fail, evenwhen we apparently plan? Wewill hereafter take the 2015budget as a paradigm, andidentify the areas of deviationfrom best practice in successfuleconomies where annualplans positively impact on thewelfare of citizens.It is noteworthy that in moresuccessful economies, budgetimplementation religiouslycommences on the first day ofeach year. Regrettably, incontrast, as at the first week inMarch, Nigerian’s 2015budget still remains inchoate.Nonetheless, this is notunusual, infact since the returnto civil rule; Nigerians may notrecall any budget enactmentbefore March. Clearly, thesalaries and allowances of civilservants are nominallyimmune to any delayedpassage of the budget for upto 6 months; in this event,

there is never any real pressureor anxiety for civil servants andpolitical office holders tocomplete the budgetingprocess promptly. Lately,however, there are suggestionsthat the 6 months latitude forexpenditures on operationalexpenses in the absence of abudget should be reduced to 3months; however, some criticsmay wonder how we can hopeto become a first world country,when we cannot embrace therequired fiscal discipline thatwill ensure that budgetimplementation begins on thefirst day of January each year!Ultimately, the more seriousimpact of delayed budgetpassage is primarily on thecapital budget, which capturesexpenditure on those sectorsand infrastructure that wouldreduce hardship in the lives ofincreasingly more citizens.Unfortunately, delayed budgetenactment, has consistentlyfrustrated the comprehensiveimplementation of the mostessential part of the budget forseveral years; indeedimplementation rates above50% for Capital Expenditure isoften regarded as success,while the unspent funds arehazily accounted for with welltested civil service procedures.In the light of the aboveprocess, the present decrepitstate of public infrastructureshould not come as a surprise;for example, despite over$20bn expended on power inthe last fifteen years, power stillremains epileptic with barely4000MW generated from thenational grid. Ironically, wehave also had to selectivelyprovide additional soft loans tothose buyers to whom we soldour power infrastructure witha loss of over N400bn!Curiously, despite theprivatisation of power,

government’s sustainedexpenditure in the subsectorstill exceeds the consolidatedfunds brought into thesubsector by the new owners ofour power infrastructure.Clearly, with the present 15%paltry allocation (including 5%from SureP) to capitalexpenditure, the 2015 budgetcannot raise any hope of anyserious remediation to ourcritical infrastructural deficit.Indeed, with the legislators’current demand for almost 80%reduction in the projectedSureP allocation, the net capitalbudget may be less that 10% oftotal expenditure, despite theurgent requirement for at least50% to gradually redress thegeneral decay.Sadly, about 90% of all federallybudgeted revenue in 2015 willsimply be consumed in runningthe civil service; surprisingly,inspite of the savings from thealleged thousands of ghost

workers so far weeded out ofgovernment service, therecurrent budget still continuesto increase while the capitalbudget contracts; surely, suchan inverse strategy will nevertransform us into a first worldcountry.However, the other seriousthreats to the success of the2015 budget relate to theadopted benchmark for crudeoil price, the Naira exchangerate and uncaged inflation. Itis not clear if the Minister ofFinance and the Budget officewill stick to the proposedbenchmark of $65/barrel beforethe recent crash below $50/barrel. Nonetheless, if the more cautious benchmark of$52/barrel proposed by theLegislators is ultimatelyadopted, then, the budget as itcurrently stands would becomeworthless, and the Minister ofFinance would need to revisit the drawing board to producefresh income and expenditureestimates for the year 2015’.Expectedly, the protractednature of such review maymake budget enactment achallenge until after theelections in April, unless ofcourse, unfoldingopportunities for selfenrichment induce the hurriedpassage of a clearly inchoatebudget by the Legislators.Either way, the net product, willbe the attendant social miserynationwide.Certainly, the massive over20% devaluation of the Nairawas certainly not factored intothe 2015 budget. Indeed, evenif, inspite of low crude prices,a paltry 10% capital vote belowN500bn is realisable, thesizeable import component ofinfrastructure expenditure,may actually further shrinkbecause of the 20% plusdevaluation and constrain any

hope of infrastructuralimprovement.Incidentally, if low crude pricespersist through 2015, almost50% of budget revenue will bewiped off to create severechallenges for theimplementation of the alreadypaltry recurrent and capitalbudgets. In this event,government would incurfurther debts at atrociousinterest rates in order to fundthe N1 trillion deficit in theFederal budget, which sadly,is predominantly consumptionoriented. It is really a sad day,if inspite of our bountifulresources, we still have toborrow irresponsibly just tofund our appetite forconsumption rather than makea serious commitment to socialand infrastructuralremediation.Nonetheless, just because civilservants and political officeholders still earn the nominalvalues of their incomes andallowances will not totallyshield them from the austeritybudget. This is because Nairadevaluation will push up pricesand fuel inflation beyond 10%,and this will also have seriousconsequences for thepurchasing power of all incomeearners. In other words even ifyour salary or usual incomedoes not change nominally, itwill inevitably begin to buy lessand less. Thus, unless, thereis a commensurate annualincrease in salaries andincomes in the face of inflation,the net result is that consumerdemand will contract as peopleinvoluntarily cut down on theirbasic needs and endurepoverty, with disastrousconsequences formanufacturers and suppliers ofconsumer goods and servicesand ultimately for employmentopportunities.

In more successfuleconomies, budgetimplementationreligiouslycommences on thefirst day of eachyear. Regrettably,in contrast, as atthe first week inMarch, Nigerian’s2015 budget stillremains inchoate

Budget 2015: Planning to fail?

Financial vanguard 02032015

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