Financial Vanguard August 26 2013

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AUGUST 26, 2013

Continues on page 22

FG orders shutdown of ports facilitieswith security challenges...As US Coast Guards arrive Nigeria

BY GODWIN ORITSE

THE Federal Government hasordered that any port andterminal facility across the

country having security deficienciesbe shut down following the arrival ofofficials of the United States CoastGuards in Nigeria to carry outsecurity audit exercise on Nigerianports Vanguard learnt. Disclosing thisfact to Vanguard the Senior SpecialAssistant to the President onMaritime Mr. Leke Oyewole said thatany terminal or port facility that isfound to have security deficiencieswill be short before the arrival of theUS Coast Guard officials who willbegin their inspection exercise onTuesday.The officials of the US Coast Guards will arrive Nigeriatoday to carry out an audit exerciseof the security deficiencies observedin some ports and terminal facilitiesto determine their compliance levelwith International Ship and PortFacility Security (ISPS) Code,

Operators of such facilities wereseen over the week end putting lastminutes measures in place to avoidsanction. The U. S Coast Guard hadobserved on their first visit thatNigeria port facilities fall short ofcompliance with the InternationalShip and Port Facility Security (ISPS)Code hence a second verificationexercise to test compliance level.Already, the Nigerian MaritimeAdministration and Safety Agency(NIMASA), which was appointed asthe Designated Authority to midwifethe implementation of the ISPSCode, has been collaborating withvarious stakeholders in the Nigerianmaritime industry to ensure that thereare no deficiencies in their facilities.

It will be recalled that the UnitedStates Government, about threemonths ago threatened to withdrawshipping services to Nigeria, if someof the security deficiencies observed

in some facilities are not correctedwithin ninety days. The United Stateshad said it will stop vessels that callat ports and terminals with

deficiencies in Nigeria from enteringAmerica territorial waters adding thatit will encourage its allied countriesto do same. Besides the moves by

NIMASA to ensure compliance,industry operators have alsoexpressed concern over Nigeria’spreparedness to meet the ninety daysultimatum saying that theconsequences of failing to comply willbe very grave.

Speaking at the end of its monthlymeeting, some members of the PortFacility Security Officers (PFSO)Forum had said that vessels will nowsail to neighbouring ports and Nigeriaimporters will be forced to takedelivery of their cargoes from theseports. The officers who spoke onconditions of anonymity also said thatnon compliance with the Code will notonly lead to loss of revenue togovernment, it will also lead to theloss of jobs at the various portfacilities in the country.

Addressing the media last week, theDirector General of the NigerianMaritime Administration and SafetyAgency (NIMASA) Mr. ZiakedeAkpobolokemi said that the agencyencountered some challenges when

MOVEMENT IN NIGERIA’S FOREIGN

RESERVES

CURRENCY BUYING CENTRAL SELLING

CBN Exchange rate as at 23/08/2013

109.92 -0.23

104.65 -0.46

2,426.00 +6.00

16.44 +0.16

DOLLAR 154.76 155.26 155.76

STERLING 240.7447 241.5225 242.3003

EURO 206.682 207.3497 208.0175

FRANC 167.2358 167.7761 169.4148

YEN 1.5876 1.5927 168.3164

CFA 0.2953 0.3053 0.3153

WAUA 234.2687 235.0256 235.7825

RENMINBI 25.2784 25.3605 25.4427

RIYAL 41.2649 41.3983 41.5316

KRONA 27.7104 27.8 27.8895

SDR 235.9007 236.0573 236.8175

-0.20113.00

Cover Story

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22 — Vanguard, MONDAY, AUGUST 26, 2013

Continued from page 21

,

,

Continues on page 23

The Basic Guide to Startingyour Business -Part 2

a) What is not business?One might wonder the importance of knowing what is not

business, but this is necessary because you need to know thekind of business you should not go into, and businesses thatare prohibited by law. Not every business is a genuine oneand I will be taking you through a list of businesses you mustnot be found doing.

b) The mentality of a businessman:There’s a saying in the good book which reads thus “by their

fruits you shall know them”. The same applies to businessmen;they possess certain qualities and mindsets that make themstand out. Consequently, before you start a business, you needto be adequately sure that you possess the die-hard mentalityof an entrepreneur to withstand the challenges that will arise.

c) Who is an entrepreneur?Over time various definitions have been given to the term,

but I will be teaching you the difference between anentrepreneur and a businessman, the boundless and countlessopportunities open to an entrepreneur, the traits andcharacteristics of a successful entrepreneur. In short, everythingyou need to know if you want to be not just a businessman butalso an entrepreneur.d) Your readiness to be your

own boss:A lot of people embark on a

journey without fully preparingfor it, and as such, they areknocked off balance by theslightest wind that blows. Nowarrior goes to war without hisarms and it’s only a stupid farmerthat goes to farm without hishoe. At the end of this topic, youwould know if you are ready tostart a business andperadventure you are not, youwould be taught steps that willhelp you to be both mentally andfinancially ready.

e) The basic steps:In this chapter, I will be taking

you through the steps that youcannot overlook, if you want tohave a successful business.

These include: conceiving an idea, planning, funding,structuring, location, training and so much more.

I am of the sincere opinion that this would be more than just abook for you and your loved ones; it will be a compass that willguide you on your journey into the world of entrepreneurs. Thereis no better time to start your own business than now. Thesesame steps have worked for me and I dare say are still workingfor me, and I am confident they will work for you and everyonethat reads this book.

WHAT IS BUSINESS?Before you start a business, it is very important to understand

what a business is in order to avoid making mistakes that canbe very detrimental. The term business is very broad and can bevague; for some it is any activity or trade with the sole aim ofmaking profits. On the one hand, it can be said to be theoccupation, work or trade in which a person is engaged in. Onthe other hand, a business can be defined as “an organisationthat provides goods and services to people who want or needthem”. When many people think of business careers, they oftenthink of jobs in large wealthy corporations, but for theentrepreneur, a business is any activity aimed at creating andkeeping customers. There are basically two ways to carry out abusiness:

1. Sell goods (physical things like books, toys, cars, houses, etc).2. Sell services (intangible things like nursery education, legal

services, health care, insurance, etc).Many business-related careers though, exist in small

businesses, non-profit organisations, government agencies, andeducational settings. Conversely, your business may consist ofselling both goods and services; for example if you are acomputer dealer, you may sell goods (hardware and software)and services (maintenance, troubleshooting, or consulting).While it is very important to get a degree or some level ofacademic qualification, you can still go into business if you donot have one. Starting and growing your business is very muchlike having a baby and bringing up the child.

,,

Anorganisationthat providesgoods andservices topeople whowant or needthem

it took over theimplementation of the Codesome of which include theexpiration of all Statement ofCompliance for Port Facility(a document that verifies howprepared a facility is toabsolve security threat orchallenges).

According toAkpobolokemi, the agencyhas taken up the challengeof Designated Authority witha view to ensuring that thecountry does not suffer theembarrassment of suchsanctions as contained in thereport. The NIMASA bosshowever disclosed that in abid to correct the deficienciesobserved in some facilities, anaction plan was developedand immediately activated toaggressively close thereported gaps. He explainedthat some of the effortsemployed to close the gaps

includes the dispatch ofcompetent “RecognisedSecurity Organisation” toconduct security surveys andassessment aimed atidentifying and correctingthese deficiencies and anyother observedvulnerabilities.

The action plan accordingto Akpobolokemi has also

been commended by officialsof the United States CoastGuard adding that it alsopledged to support the effortof NIMASA

His words “The action planhas been given a nod by theUSCG and it has pledged tosupport the efforts of the DAin ensuring the issues raisedare remedied.

“The DA has outlined itsimplementation frame work inthe form of a handbook toenable the public understandits agenda with respect to thenew implementation regime.The Management ofNIMASA has since approvedan ISPS Codeimplementation Committee tohelp oversee theimplementation mandate”.Aside from key NIMASApersonnel who form part of theCommittee, membership ofthe Committee are also drawnfrom other governmentagencies such as the NigerianPorts Authority (NPA), the

Nigerian National PetroleumCorporation (NNPC), theNigerian Police, StateSecurity Service (SSS), theCustoms and Immigration.

On the funding of the ISPSCode project, Akpobolokemisaid that the agency will notrequire any subvention fromgovernment as maritime

regulating body can take careof the financial needs ofimplementing the Code inNigeria. It was also said thatin order to establish thenumber, location and natureof operations of all portfacilities in the country,NIMASA has alsocommissioned a stocktakingof the nation’s coastalmaritime assets. This auditAkpobolokemi said will helpthe agency capture andcatalogue all port andberthing facilities as well asverify their ISPS compliancestatus. All port facilitiesincluding those mentioned inthe U S diplomatic note toNigeria are also currentlyundergoing securityassessments as a steptowards preparing plans thatare ISPS compliant.

The agency, Vanguardgathered only recentlyconcluded VerificationInspection Exercise (VIE) onall shore based port facilitiesin Nigeria. In order toaddress the issue ofrelevance and applicationdue to the lack ofunderstanding of the ISPSCode exhibited by securitypersonnel that man theseport facilities, NIMASA hasalso put measures in placeto ensure more training andcapacity building forsecurity personnel andoperators in the maritimeindustry. NIMASA’s Director-General, further disclosedthat security companiesproviding guard forcepersonnel to companiesoperating in the maritime arenow required to provide ISPStraining for their personneladding that everybody has arole to play in the ISPStheatre.

The agency also stated that

FG orders shutdown of ports facilitieswith security challenges

This audit Akpobolokemi said willhelp the agency capture andcatalogue all port and berthingfacilities as well as verify their ISPScompliance status. All port facilitiesincluding those mentioned in the U Sdiplomatic note to Nigeria are alsocurrently undergoing securityassessments as a step towardspreparing plans that are ISPScompliant

From Left; Comrade Ayodele Akele, Mordinator / Chairman Gani Fawehinmi MemorialOrganisation, Dr Sam Amadi, Chairman / Chief Executive Officer Nigerian Electricity Regula-tory Commission, [NERC], and Comrade Adewale Adeoye, Coordinator South West Humanright Community/ Director Journalists for Democratic Right [JODER], During the InteractiveSession Between Nigerian Electricity Regulatory Commission, [NERC], Human Right Group inNigeria, Theme' Public Forum on Transparency Growth and the Energy Sector, Held on Friday23-8-2013, At Femi Falana Chambers, Fajuyi Way, Ikeja G.R.A, Lagos. PHOTO; Kehinde Gb-adamosi

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Vanguard, MONDAY, AUGUST 26, 2013 — 23

Cover

Continued from page 22

used for African First Ladies'conference? These vehicleswere only used for three days- from hotel to InternationalConference Centre. GEJ’sinefficiency is killing Nigerianeconomy. Ngozi is tellingNigerians lies. We cannotcontinue like this. EVIL ISEVIL.”

Bukola Ajisola on her partsaid; “This is the height ofcriminal absurdity. Before westart drinking our oil as SimonKolawole recentlyprognosticated, every wellmeaning Nigerian must voiceout and question the proprietyof Okonjo Iweala’ssupervision of arbitrariness,giving rise to monumentaleconomic loss to the nation.She should resign and leavethe position for another PDP“thieftain” to complete thecycle of kleptomaniacappropriation of the Nigeriancommonwealth in the guise offamily affair. Nigerians arewiser now, the 2015 voters arenot going to the polls withgullible and ethnic parochialmindset, which has left themimpoverished."

Chioma Bukola Ajisolasaid; “So, it is NOI that is yourproblem now? Why can’t webe just objective in ouranalysis of issues andsituations?”

Umutakere Chioma said;“In your own objectiveassessment, do you think NOIis doing a great job as she didduring Obj's era? She is doingexactly the opposite of what

This week, we give readers opportunity to express their views on issues raisedin this column. Here are a few of such views.

Stan wrote in and said; “We cannot wait for 2015 to come after which theGEJ government will be extensively x-rayed. How can GEJ’s governmentgive a waiver to Coscharis Motors to import over 180 BMW cars to be

she stood for earlier. Shepreached against arbitrarywaivers of duty and she isdoing same now plus someother things.”

Bashwaziri wrote and said;“Who is fooling who? A verygood question for foolishdiehard Nigerians."

On the issue of “Lookinward for solution topoverty in Nigeria”

Ed James said; “YourExcellency, please with all duerespect to you Mr. President,is it not better to say the truththat is in the heart than theone in your mouth? Those whospeak from their hearts saynothing but the truth,therefore, “how can poverty beeradicated or tackled whenALL the wealth of the nationare in banks overseas? Theman who keeps the CASHalways appears healthier thanthe one who gave him the fundto save. How long will it takefor African leaders to realisethat they are not leadinguninformed people. Therefore,it is better for them to stop allthe hypocrisy now. You knewtoo well that the leaders inAfrican nations are strongerthan the judiciary, (laws), theymake laws that subdue thepeople under their powers andpretend it is for the bettermentof the people.

Remember you may be wiser

than the people but you cannotbe wiser than their God, whowill judge every secret andopen deed.

On the same issue, AzeezRahamon, a youth corpsmember said; “A very goodthought. Unless we try andsolve our problems locally anddesist from photocopyingforeign policies, that is whenNigeria can feel the impact ofany economic transformation

aimed at developing thecountry and not for the sakeof stealing public funds.”

Mr. President, whereis Nigeria's Industrialpolicy?

Rohlit’s comment said; “Itis no where and we see it.”

Ashuke Njideka said; “I loveyour write-up. You are a true

Nigerian. May God continueto bless you.”

Heaven shall judge said;“Wise write-up. God bless you.It's time Nigerians understoodindustrial policy and stopdepending on imported items.Those in Aso Villa need tochange and implementpolicies that will helpNigerians grow and jobs willbe created for the poor ones.”

Ken said; “WOW! I amhighly impressed by the wirte-up; this is actually thechallenge Nigeria as acountry is facing. Ministry ofNational Planning should takenote as policies that have todo with Nigeria'sdevelopment should not bepersonalised by a few butrather a platform with clearaims and objectives. God Bless

Nigeria”

On the “TheStructure of Nigeria”

Osagix said; “Vanguard,your illustration picture isdiscriminating. Why wasAnthony Enahoro notincluded in the picture?”

Sarginho said; “The mostshortchanged region in theold federal arrangement is theMid-West Region, which nowhas only two states (Delta andEdo). Second mostshortchanged is the WesternRegion which now has sixstates (Lagos, Ogun, Oyo,Osun, Ondo and Ekiti). Theold Eastern Region now hasnine states (Anambra, Abia,Ebonyi, Enugu, Imo, AkwaIbom, Bayelsa, Cross Riverand Rivers). The old NorthernRegion has gained the mostfrom arbitrary state creation bythe military, grossing 19 statesand the FCT of Abuja. Whenwe bring in the number oflocal governments created, theinjustice becomes even moreglaring (compare the 44 localgovernments in Kano Statewith the nine recognised inLagos State which has morepopulation than Kano State).The best way to remedy thiscrass injustice is to return totrue federalism and have allterritories be in full control oftheir resources, paying anagreed percentage of theirrevenues to the centre for useby the Federal Government onagreed federal functions."

On Okonjo-Iweala or Jonathan,who is fooling Nigerians?

,

,

The best way to remedy thiscrass injustice is to return to truefederalism and have allterritories be in full control oftheir resources, paying anagreed percentage of theirrevenues to the centre

it was its responsibility to setor change security levels forport facilities just as it decidedto work closely with the officeof the National SecurityAdviser and other securityagencies in determiningoperating security levelsbased on the evaluation ofrisks and trends.Akpobolokemi stated thatincentives will be given to portfacilities that maintain andsustain their compliance overa period of time just assanctioned will be meted outto facilities that fall short ofexpectation.

Speaking to Vanguard onboth the expectation of theDesignated Authority(NIMASA) and the U.S Coast

Guard, a security expert Dr.Ona Ekhomu said thatNIMASA has adequate time tohave prepared itself inensuring that the observeddeficiencies are correctedbefore the arrival of theirguests. He however opinedthat he will be surprised ifNigeria as a country and thedeficient port facilities fail topass the audit adding that itwas very important that the U.S Coast Guard gives Nigeriaa clean report.

Ekhomu explained thatbeyond passing the audit test,sustainability of the entiresecurity system in the port iswhat NIMASA should beconsidering at this moment.He advised that the only wayto sustain the system, is for thefacilities to regularly carry out

a self audit of themselveswhile NIMASA ensureregular verification andmonitoring exercise of thesefacilities.

“Sustainability will be anissue because passing thisaudit exercise is not enough,the tempo should be sustainedfor as long as possible suchthat with or without thepresence of the U. S CoastGuard our security situationmust not fall below certainstandard.

“The best way to sustain thetempo is to periodically carryout a self audit or a penetrationtest on your facility”. Heexplained that should Nigeriafail the test, then doingbusiness in the nation’sports will be more difficult and

expensive.A former official of the

defunct PresidentialCommittee on theImplementation of MaritimeSecurity and SAFETY)PICOMSS) Capt AbelMemuduaghan observed thatthe issue of access control tosome of these port facilities isa major problem adding thatmore measures are needed tobe taken to control both humanand vehicular movement inand out of these facilities.

The ex- PICOMSS officialnoted that NIMASA does nothave the capacity toimplement the ISPS Codeadding the U. S Coast Guardknows what they are lookingfor. He said that sincePICOMSS was wound up,

FG orders shutdown of ports facilities with security challenges

there has been an increase inthe issue of oil theft noting thatwhen PICOMSS was incharge of the ISPS Codeimplementation the rate of oiltheft was manageable.Speaking in similar vein,Chief Chris Orode noted thatafter the first visit of the U SCoast Guard officials, therewas a down turn in cargotraffic, adding that it will bedisastrous both to the maritimeindustry and the economyshould Nigeria fail to pass theverification test. He advisedagainst a fire brigadeapproach to theimplementation of the ISPSCode saying that “suchapproach cannot stand the testof time.


CMYK

Business & Economy

BRIEFS

The Chief Operating

Officer, Fortis MicroFinance Bank (MFB), MrJero Omare-Ogah, saysmultiple borrowing bycustomers remains a majorchallenge to the survival of theMFBs in the country. Omare-Ogah in an interview in Abujasaid that the development wasworrisome in spite of theCentral Bank of Nigeria’sefforts at checking the trendby setting up Credit Bureau.

Credit Bureau was set up bythe CBN to check the financialstatus of potential borrowers.“The issue of multipleborrowing is a major problem

in the industry. Customers gofrom one MFB to the other toaccess loans and it becomes aproblem when it is time forpayment.

“The high number of bad debtsrecorded by MFBs have to dowith the attitude of not repayingloans by borrowers.” Omare-Ogah called on the CBN to putin place a re-financinginstitution that could re-financethe bad debts of MFBs, pendingwhen a legal system in thatregard was instituted. Heexplained that the duty of arefinancing institution wouldbe to refinance bad loans andthe borrower would repay the

money over a period of timewith interest to sustain theinstitution.

According to him, anotherway to minimise the occurrenceof multiple borrowing is byasking customers to providebank statements from otherbanks they do business with.“This way, if a customer hasalready taken a loansomewhere, it will be reflectedin the bank statement and wewill know.”

He urged MFBs operators tocollaborate to eliminate theproblem of multiple borrowingin the sector.

The target of monetaryauthorities to attractthe unbanked into the

banking system and other cashless initiative introducedby the Central Bank of Nigeria,CBN, in the banking sector isyet to gain momentum.

Latest weekly poll resultsreleased by NOI Polls Limitedrevealed that about six in 10 (59percent) Nigerians are notaware of mobile money servicesand only 13 percent of the 41percent that areknowledgeable of it, haveadopted it, showing a very lowadoption rate.

Findings have also revealedthat, teenagers, young andmiddle aged adults are morewilling to adopt the servicesthan senior citizens.

Furthermore, all respondents(100 percent) that use mobilemoney services operate a bankaccount and 93 percent operatetheir mobile money account inconnection with their bankaccounts. This shows thatMobile Money services havenot had any impact on thefinancial inclusion of theunbanked Nigerians so far. Thegeneral perception of users ofthe mobile money service asindicated by majority is that itis easy to use, it is secure,service providers are easilyaccessible, it saves cost andtime. These are the keyfindings from the MobileMoney Services Snap Pollconducted in the week of 5thAugust 2013.

In recent times, the CBNintroduced mobile moneyservices to provide basic

financial services and createpayment access especially tounbanked Nigerians, and alsohelp drive financial inclusionin the country. Mobile moneyenables monetary transactionsto be done on mobile phonesthrough text messaging.Operations that can be carriedout include money deposit,bills payments, funds transferand withdrawal, payment forpurchased goods and servicesand it serves as an alternativeway of storing money for boththe banked as well as theunbanked. More than a yearinto its introduction, thescheme has suffered slow-adoption by Nigerians as thelicensed operators of the mobilemoney services have not madegreat headway in thedeployment of the servicesacross the country. Some

challenges the scheme hasfaced is the low awareness andadoption, lack of finance andbasic infrastructure; few agents,and the exclusion of mobileoperators from taking part inthe execution of the service.

NOI Polls conducted its latestpoll on Mobile Money ServicesSnap Poll to explore the levelof awareness of Nigerians onthe services, determine thepresent adoption rate bybanked and unbankedNigerians, as well as thepotential for its adoption in thefuture.

The findings from the pollrevealed that 41 percent of therespondents are aware ofmobile money services and outof these, only 13 percent haveadopted it. Major sources ofawareness of mobile moneyservices that emerged from thepoll include “Banks” indicatedby 36 percent , “Media (TV,Radio, Newspaper etc.)”indicated by 29 percent of therespondents, and “Family andfriends”, indicated by 27percent . Majority of the users(86 percen) indicated “Banks”as their provider; this may bedue to the fact that licencedbanks have been majorly giventhe responsibility to establishthe services in Nigeria.Relatively, 12 percent indicated“mobile money agents” as theirprovider and one percentindicated other sources.

The perceptions of Nigerianson the general use of mobilemoney showed that regardingthe ease of its use, 55 percentaffirmed that the service is easy,38 percent say the service is noteasy to use and seven percentwere indifferent about the easeof its use. In reference to theaccessibility of serviceproviders, 55 percent of therespondents are of the opinionthat service providers areeasily accessible, while 39percent are in disagreement tothe statement, six percent areneutral. In terms of the securityinvolved in using the services,56 percent affirmed that it issecure to use, 26 percentconsider it unsecure, and 18percent are indifferent. Interms of the processesinvolved, 60 percent affirmedthat it saves time. 36 percentdo not agree that its use savestime and four percentremained indifferent.Concerning cost savings, 63percent are of the opinion thatit saves cost, 36 percent do notagree that there is cost savingassociated with the use ofmobile money services.

The poll also revealed that themobile money services hasgreat future adoptionpotentials as 71 percent of therespondents who have not yetadopted it are willing to give ita try in the future.

Financial inclusion: Low awareness characterisesmobile money services — NOI Poll

*Teenagers, young people show higher interest

Multiple borrowing, a challenge inmicro financing, says operator

By PETER EGWUATU

Confab on Nigeriaas strong Africanfinancial centreholds Sept

An international magazine,

Euromoney, said itwould organise a conferenceon Nigeria’s attractiveness asa strong financial centre inLagos. Mr Hakeem Jimo,spokesman of the magazine,said in a statement in Lagos that the conference woulddiscuss global marketconditions and its effects onNigeria. He said the conference would also discuss how Nigeria couldprepare for the global stage.

“The conference will discusshow corporate organisationswill expand their businessesinto neighbouring countriesand other countries of theworld. Many Nigerians haveentrepreneurial flair, whichsupports the prediction thatNigeria will be Africa’s largesteconomy within five years.Nigeria, with her abundantnatural and human resources,has the strongest potentialgrowth story across thecontinent,” he said.

FG committedto boosting non-oil exports

— Jonathan

President Goodluck

Jonathan hasreaffirmed his administration’sdetermination to do all withinits powers to facilitate andencourage the rapiddiversification of Nigeria’seconomy.

The president stated this inAbuja at the send-forthceremony of the outgoingAmbassador of the CzechRepublic to Nigeria, Mr.Jaroslav Siro. Jonathandeclared that his administrationwas fully committed to movingthe Nigerian economy awayfrom dependence on crude oilexports by promoting thedevelopment of the country’snon-oil sectors.

He said that in keeping withthe commitment, the FederalGovernment was activelyexploring all avenues ofboosting trade and economicrelations with other countries inareas not related to the oil andgas sector.

“With current developmentsin the world, we are moreinterested in diversifying oureconomy, not in over-emphasising oil and gasexports. Our intention is tomove our country away frombeing a mono-producteconomy."

From left: Managing Director, American Porters Water group, Mr Richard Wukish; ManagingDirector, Osun State Investment Company, Mr Bola Oyebamiji; Managing Director, SafariHolding Solution, USA, Mr Carole Obam, and Managing Director, Unicapital Consulting,Mr Bode Adikoye at the Osun International Trade and Investment conference in Osogbo.

CMYK


FP

STANBIC


CMYK

Banking & Finance

BRIEF

From Left: Professor Wole Adewunmi, FCIB, Past President, CIBN; Mr. M. A. Kazeem, FCIB,Past Chairman, CIBN, Lagos State Branch; Mr. Bisi Onasanya, FCIB, Managing Director/Chief Executive Officer, First Bank of Nigeria Limited; Mr. Bismarck Rewane, Chief ExecutiveOfficer, Financial Derivatives Company Limited; Mr. Bolade Agbola, FCIB, Chairman, CIBN,Lagos State Branch and Mr. Segun Aina, OFR, FCIB, President/Chairman of Council, CIBN;at the just concluded 2013 Lagos Bankers’ Nite event held at the Federal Palace Hotel, VictoriaIsland, Lagos

* Dismisses allegation of excessive profits*Former House of Rep member calls for 100% sterilisation

FirstBank CEO cautions on sterilisationof public sector deposit

BY BABAJIDEKOMOLAFE

Ma n a g i n gD i r e c t o r /C h i e f

Executive, FirstBank ofNigeria Limited, Mr. BisiOnasanya has called forcaution in theimplementation of the 50per cent sterlisation ofpublic sector deposit.

He also dismissedallegations that banks aremaking excessive profits,saying that any attempt toreduce the profitability ofbanks would weaken thenation’s capital market,and reduce theattractiveness of Nigeria toforeign investors.

Last month the CentralBank of Nigeria (CBN)effectively sterilised aboutN1 trillion public sectordeposits, when it raisedthe cash reserverequirement (CRR) onpublic sector deposits to 50per cent from 12 per cent.Public sector deposits referto deposits of ministries,departments and agenciesof federal, state and localgovernments with banks.The aim of the policy wasto tighten money supply,so as to reduce idle fundsin the banking industryand curb inflation. Ithowever occasioned sharpincrease in interest rates byabout 200 basis points.

Onasanya warned thatthe policy should beimplemented with cautionas it might lead to declinein loans to small andmedium enterprises.

In a keynote addressdelivered at the LagosBankers' Night organisedby the Chartered Instituteof Bankers of Nigeria(CIBN), Lagos StateChapter, he said, “Whilstthere are still debatesaround the recent movesof the central bank and thegovernment to sterilisepublic sector funds due tointerventions from theregulatory authorities aspart of their macro-p r u d e n t i a lresponsibilities), I believethere must be a clearframework forinterpretation that adoptspractical and pragmaticmeans of identifyingqualifying accounts forsterilisation as themisapplication ofcompliance may havecertain drawback effects onthe availment of creditespecially for the real sectorof the economy, and in the

SME space. (We must becareful to ensure that thesterilisation does not extendto accounts and funds thatare not in class of publicsector deposits. What thisdoes is that we may findourselves in a situationwhere the much neededliquidity in the bankingsystem is strained to suchextent that it becomesdifficult for banks to grantcredit and loans which aremuch needed for thedevelopment of theeconomy”.

But a former Chairman,House Committee onFinance, Honorary LeonardDilkon, called for 100 percent sterilisation of publicsector deposits, saying thepolicy will make banks toinvest in wealth and jobyielding ventures that wouldstimulate growth. “Speakingto News Agency of Nigeria,Dilkon, who is the ExecutiveChairman, Hamtul Press Ltd,a Jos-based large scaleprinting outfit, argued thatthe banks had not helped theeconomy much as they"merely collect monies fromlocal, state and federalgovernments”.

“The banks collect moniesfrom all tiers of governmentand give them out as loansto the same governments.Such monies are deducted atsource with heavy interests.

The banks do not supportany business initiative; when

you are building yourbusiness, the banks will notbe there to support, but onceyou have established, theycome for deposits. Bankshardly support small scaleindustrialists and may noteven care if they everexisted. The commercialbanks hardly seek out waysto help the society,” heclaimed.

He suggested thewithdrawal of, “up to 100 ofgovernment deposit from thecommercial banks”, addingthat the commercialbanks were “exploitingdepositors by collectingCommission On Turnover(COT),” even when they hadno input on such turnover. He stated the banks could domore in addressing theproblem of violence in mostparts of Nigeria, bystimulating the economy.

Defending the hugeprofitability of banks,Onasanya said, “Let mespeak to the perception thatNigerian banks are makingexcessive profits. Let me saythat the Nigerian capitalmarket today, reliesextensively on theperformance of the financialservices sector including thebanking industry. I am awarethat a lot of families dependto a great extent on thedividend they received fromthe capital market to pay theirchildren school fees.

“Let me state therefore that

attempt to ensure that banksreduce their profits or becomeless attractive in terms ofprofitability may weaken thecapital market as it is today.There is no economy that candevelop to the maximum of itscapabilities withoutstrengthening its capitalmarket.

“We therefore must becautious in making commentsabout the perceived excessiveprofitability of Nigerianbanks. We do have aresponsibility to develop theeconomy but however, againstthis, we also have to grow theportion generated for profit toensure that we shore up ourshareholders’ funds whichalso enable us to have largersingle obligor limit to do largeticket transaction.

“Let me take it from anotherperspective. How manyNigerian banks have returnon equity invested in excessof 15 per cent? I dare say youcannot count five. And sowhen you measure theprofitability of banks, youneed to relate it in relativeterms, to the return on equityinvested, which is a measureof the returns expected bythose who invested in thoseorganisations. I therefore saythat the present attractivenessfor foreign investors to investin Nigeria is through theattractiveness they havefound in the few Nigerianbanks that are declaring goodreturns in relative terms.

NDIC's reporton bank fraudworrisome —ASSBIFI

The Association ofSenior Staff of Banks,

Insurance and FinancialInstitutions (ASSBIFI) hasdescribed as worrisome thelevel of bank fraud asrecently reported by theNigerian Deposit InsuranceCorporation's (NDIC). TheNational President ofASSBIFI, Mr OlusojiSalako, told News Agencyof Nigeria (NAN) in Lagosthat the report indicatedthat the level of fraud inbanks was high.

The NDIC's annual reportand statement of accountsreleased on Tuesday saidthat bankers committedfraud amounting to N17.97billion in 2012. "Thisdevelopment calls forconcern from everystakeholder. We have thereport, and we areconsidering the steps totake to prevent areoccurrence in the future.In most cases, thesebankers are mobilised byoutsiders to commit fraud inthe system. We are notgoing to sleep with thisreport; we will work on ourmembers," Salako said.

He said that the unionwould intensify educationof its members on thedangers of allowingoutsiders to use them forfraudulent purposes,noting that fraud in thebanking industry escalateddue to reckless depositmobilisation, casualisationand outsourcing of workers."Casualisation andoutsourcing are two keyfactors. If you employ aperson on a casual basis,and the person has tohandle a lot of cash, yet, heor she is being paidpeanuts, there will be thetemptation to steal. Also, inthe last decade, aggressivemarketing came in andpeople with questionablecharacters were employedin the industry to source fordeposits. Our flanks havebeen opened by thispractice, all safety measuresthrown overboard, and allthat the bank executives areconcerned about is theamount of deposits broughtin," he said.

Salako said that thebanking sector mightcontinue to record leakagesand fraud until the CentralBank of Nigeria (CBN) andmanagement of banks takesteps to curtail it. He urgedCBN and management ofbanks to de-emphasisedeposit mobilisation andengagement of contract staffand casual workers.

sank


FP

ETISALAT


Banking & Finance

BRIEFS

The 19th edition of theNigeria Economic

summit (NES 19) will openup the agricultural sectorfor increased foreign anddomestic investment.

Minister for NationalP l a n n i n g / D e p u t yChairman, NationalPlanning Commission(NPC), Dr. ShamsuddeenUsman stated this at apress conference toannounce the summit.

The NES 19 is scheduledto hold next week in Abuja,and the theme is “GrowingAgriculture as a Business toDiversify Nigeria’sEconomy.

“This year ’s Summit isunique, for two reasons.First, this year marks the20th year anniversary of theannual Nigerian EconomicSummit. Secondly, it is thefirst time that the Summit is

From left, Executive Director, Corporate Banking, Skye Bank Plc, Timothy Oguntayo;Chairman/CEO, HDV Nig Ltd, Olufemi Okenla, his wife Dupe Okenla; and Deputy Governor ofLagos State, Adejoke Orelope-Adefulure, at the commissioning of Ibis Hotel, in Ikeja, financedby Skye Bank Plc.

Embracing diversity critical forfinance leaders — ACCA Global

CEO

OMOLAFE

Leaders in the fieldof finance mustembrace diversity in

order to remain competitivein the global economy.

Global Chief ExecutiveOfficer, Association ofChartered and CertifiedAccountants (ACCA), HelenBrown made this call lastweek in Lagos whilespeaking at ‘Women inFinance’ conferenceorganised by ACCA Nigeria.

Brown noted that diversityis becoming an increasingchallenge for the financialworld.

“In a globalised businessenvironment, so the financefunction is increasinglyglobal – new markets, newregulations, and newbusiness demands.Mastering the technicalrequirements of operatingacross many countries is onechallenge, but financeleaders and financefunctions must also bringtogether finance personnel indifferent countries, differentcultures, different workingpractices, differentlanguages to work togetherto provide a consistentservice to the business.

“Dealing with this hugecultural diversity and multigeographic deliveryrepresents a huge challengeto finance leaders trying todrive world class financefunctions. It has a significantbearing on the type of chieffinance officer (CFO)businesses need at a globallevel – they must be able todeal with these differenceseffectively and be able toleverage these differencespositively for the business”,she said.

Brown said that one majoraspect of the diversity

challenge is gender diversityand that is why it is one of thefocus of ACCA. “Ourmembership itself is the mostdiverse of any internationalaccountancy body. We havemore than half a millionmembers and students in 170countries bringing with thema multitude of socio-economic,ethnic and culturalexperiences. Our raison d’êtrewhen we were founded morethan 100 years ago was to giveopportunity to people of talentand application whatever theirbackground – and we reallybelieve in the value that

diversity brings.“Secondly, on the gender

issue, 45 per cent of ourmembers and half our studentintake is female. Given therate at which the proportionof students is changing –many have said that the futureof finance is female. And yet– women account for only 20per cent of the most seniorposts held in finance. Sothere is a great deal of workto enable the thousands ofyoung women entering theaccountancy profession tofulfil their potential and meettheir aspirations.

We believe that diversity isnot simply about gender –diverse organisations need toensure they address equalopportunities in all areas –there is diversity of cultures,diversity of skills andexperiences, diversity ofideas and businessperspectives that help createand drive great financefunctions and deliverenhanced businessperformance. As a bodywhich qualifies financeprofessionals, we arecommitted to playing our partin ensuring the maximisationof the finance function.

NES to open agric sector for more investment—Shamsuddeen

focused on a single sector ofthe economy, Agriculture, notonly for the criticalimportance of the sector, butalso because of its pride ofplace in the Government’sTransformation Agenda andNigeria’s longer-term Vision20:2020,” the Minister said.

Speaking further, he said,“As you are aware, Nigeria’sAgricultural sector isundergoing massivetransformation with the focuson growing agriculture as abusiness. For the first time,an AgriculturalTransformation Agenda(ATA) has been developedand is being vigorouslyimplemented by theGovernment. TheAgricultural sector is also toplay a critical role in therealisation of the objectives ofthe Transformation Agenda.The Summit would present

the opportunity for majordomestic and global leadersto discuss the ongoingreforms in Nigeria’sagricultural sector, with focuson improvement ininfrastructure, agro-processing zones, financingand an enabling policyenvironment which arecentral to the full exploitationof the agricultural valuechain, the attainment of foodsecurity and employmentgeneration and wealthcreation.

“The theme of this year’sSummit is clearly a call toaction by all, if we are tosuccessfully diversifyNigeria’s economy forenhanced growth anddevelopment. It has beenestablished that theagricultural sector has thelargest potential to diversifythe economy, create jobs,

secure food supply, lowerinflation and expand foreignexchange earnings for thecountry. The sectorcontributed an average of 40percent to the GDP between2011 and 2012. The sector,which currently employsabout two third of the entirelabour force, has sustainedits position as the highestcontributor to non-oil GDP,contributing 47.17 per centin 2011 and with an averageGDP growth rate of 7.0 percent in 2011 and 2012 and6.56 per cent in the firstquarter of 2013, theprospects for Nigeria arehuge, remains committed togrowing agriculture as abusiness to diversifyNigeria’s economy, throughthe sustainedimplementation of theagricultural TransformationAgenda (ATA).”

The CoordinatingMinister for the

Economy and Minister ofFinance, Dr. Ngozi Okonjo-Iweala on Friday inaugurateda new board for NigeriaExport-Import Bank, NEXIMin Abuja.

The ministerwho expressed satisfactionwith the performance of thebank so far, commended themanagement of the bank formaking giant strides inencouraging non oil exportsin the country.

She said that the bank hasa critical role in the Nigerianfinancial process andeconomy with hugeexpectations, saying that thebank was set up to supportinternal and external tradewithin the country and theWest African Sub Region.

”We are all aware of theefforts of the presentadministration in partneringwith the private sector toexpand trade. Nigeria’seconomy is 55 per cent of theregional economy andtherefore, what we do in termsof supporting the privatesector is key to economicsuccess not only in Nigeriabut also in the sub region. Weare happy that NEXIM isthere to provide the neededsupport and help to deepentrade in the region”.

Also speaking at theoccasion, Minister of State forFinance, Dr. Yerima LawanNgama said that the bankhad achieved a lot within thepast few years of its operationand commended themanagement on the rightfooting and sustainablepedestal and profitability.

He explained that the bankwas able to pay seconddividend to the FederalGovernment and CentralBank of Nigeria, theshareholders, since theestablishment of the bank,due to efficient management.

He underscored the need tosubject the bank tointernational rating as thatwill assist them to go out andaccess funds outside theshores of the country. He thencharged the new board toensure that it subject itself toexternal audit, as thataccording to him is the onlyway to measure theirperformance as aninternational bank. On theissue of capitalisation of thebank, he said the bank needsto go all out and raise moneyby floating a bond amongothers.

MinisterinauguratesNEXIM board,extolsachievements

BY EMMANUELELEBEKE

STORIES BYBABAJIDE KOMOLAFE

CMYK


Corporate Finance

Global sharesgain, bonds fall assigns point toworld growth

GLOBAL equity marketsgained and bond prices

fell last week after businesssurveys from around the worldreflected a global economy inexpansion, helping cementexpectations the FederalReserve will trim its bond-buying stimulus program inSeptember.

Purchasing managerssurveys showed better-than-expected growth in the eurozone, a rebound in China’s vastmanufacturing sector and U.S.manufacturing activity rising toa five-month high in August.

Data from the U.S. LaborDepartment also showed thenumber of Americans filingnew claims for jobless benefitsheld near a six-year low lastweek, adding to signs the U.S.economy is starting to find afirmer footing.

While weekly initial claimsfor state unemploymentbenefits climbed 13,000 to336,000 - just above the levelexpected by economists in aReuters poll - the four-weekmoving average fell to itslowest level since November2007.

US stocks rise onjobless claims

U.S. stocks rose on datashowing improvement

in global manufacturing andthe American labour marketamid a trading halt on theNasdaq Stock Market after acomputer error.

A gauge of home buildersadded 1.7 percent after a reportshowed house prices rose 7.7percent in June from a yearago. Yahoo Inc. rallied 2.7percent as data showed itattracted more U.S. visitors thanGoogle Inc. in July. Hewlett-Packard Co. slid 12 percentafter the personal computermaker ’s quarterly profitforecast missed some analysts’estimates. Abercrombie & FitchCo. plunged 18 percent assecond-quarter earnings thatfell short of forecasts.

The S&P 500 gained 0.8percent to 1,655.38 in NewYork. The Dow Jones IndustrialAverage rose 65.43 points, or0.4 percent, to 14,962.98.Trading in S&P 500 stocks was21 percent below the 30-dayaverage at this time of day.

Computer errors shookAmerican equity markets againas malfunctioning software thatfeeds data between exchangesprompted Nasdaq to halttrading in stocks and options.

BRIEFS

The Central Bank of Nigeria(CBN) has said that MicroSmall and MediumEnterprises (MSMEs)contributed about 46.54 percent to country's GDP in 2012.Specifically, Nigeria hadabout 17.6 million MSMEsemploying about 32.4 millionpeople in the year underreview. Governor of the CBNMr. Sanusi Lamido madethese statements at theAnnual MSMEs FinanceConference & D-8 workshopon Microfinance for Smalland Medium Enterprises(SMEs)

Sanusi said, "In 2012,Nigeria had about 17.6million MSMEs employingabout 32.4 million people, andcontributing about 46.54 percent of nominal GDP. A recentsurvey by IFC and Mckinsey(2010) suggests that 80 percent of these MSMEs areexcluded from the financialmarkets.

"The state of MSMEs in thecountry underscores theimportance of this conference.Between 2003 and 2012,commercial bank loans tosmall scale enterprisesdropped at an exponentialrate. Analysis of the annualtrend in the share ofcommercial bank credit tosmall-scale industriesindicates a decline from about7.5 per cent in 2003 to lessthan one percent in 2006 anda further decline in 2012 to0.14 per cent.

Some of the reasons for thefinancing gaps are not limitedto the fact that the banksreadily attribute their riskaversion stance for notlending to MSMEs todemand-side constraints,which include the lack ofmanagerial capacity,inadequate collateral, andpoor record keeping, amongstothers, he added, noting thatthere also exist supply-sideissues such as hightransaction costs and lack ofunderstanding by the banksof the nature and operationsof MSMEs.

"Other constraints plaguingthe MSME sub-sector inNigeria include infrastructuredeficit (especially, power andtransport), policyinconsistencies, bureaucracy,multiple taxation and levies,weak intellectual propertyprotection and contractenforcement, and insecurity."The CBN governor said thatthere is a need for theformulation andimplementation of policies tostrengthen the MSME sub-sector.

"The CBN on its own parthas been working assiduouslytowards developing a robustregulatory and supervisory

framework and initiatives forimproved access to finance forthe sub-sector. Some of theseare the Revised MicrofinancePolicy, Regulatory andSupervisory Framework;Certification Programme forMFBs; Designated Non-Financial Businesses andProfessionals (DNFBP);Competency Framework;Payment SystemTransformation; development

of a Moveable CollateralRegistry; and the FinancialOmbudsman Bill currentlybefore the NationalAssembly."

Sanusi. however, noted thatthe N220 billion Micro, Smalland Medium EnterprisesDevelopment Fund(MSMEDF) is designed tofurther enhance access tofinance by MSMEs with thefollowing major objectives:

THE Berger Paints’ 72.5million ordinary

issues of 50k per share atN7.50 to its existingshareholders has openedacross the country followingthe completion boardmeeting held in Lagosrecently.

The rights are being offeredon the basis of one new sharefor every three held bymembers as at May 31, 2013

The net proceeds of theoffer amounting to N543.42million will enable theleading paints and alliedcompany to finance themodernisation of itsmanufacturing operations.

Chairman, Berger PaintsNigeria Plc, Mr. ClementOlowokande, said the netproceeds of the rights issueestimated at N521.71 millionwould be used to finance themodernisation of thecompany ’s factoryoperations.

According to him, themodernisation was the mainthrust of a strategic plan toensure that the companycontinues to operate at the

forefront of paint technologyby replacing its agingm a n u f a c t u r i n ginfrastructure.

He said the modernisationof the company’s factoryoperations would lead toimproved efficiency thatwould positively impact onturnover and profitability.Olowokande said that thecompany also plans to

Berger Paints N543m rights issue opens

MSMEs contribute 47% to GDP in

2012 — CBN

commit substantialinvestments on majorimprovements of itsdistribution channels.

He said the company hastaken several initiatives andentered new partnershipthat would greatly enhanceits products and services inthe Nigerian paint andcoating industry in theperiod ahead.

Forum: From left: Pastor Adetoyi Olabode, Managing Director, Hi-Nutrient Intl. Co. Ltd.;Mrs. M. O. Amore, Director, Veterinary Medicine and Allied Products (VMAP); Dr. Paul Orhii,Director, NAFDAC; Mr. Chinedu Ahamneze, General Manager, Sales & Marketing, LivestockFeeds Plc at the stakeholders forum for manufacturers of animal feeds and premixes, tollmillers and importers of bulk feed supplements, at NAFDAC auditorium, Oshodi, Lagos recently.

By PROVIDENCE OBUH Provide wholesale financingwindows for participatingfinancial institutions (PFIs);Improve the capacity of thePFIs to meet credit needs ofMSMEs; Provide funds atreduced cost to PFIs;Enhance access of womenentrepreneurs to finance byallocating 60 per cent of theFund to them; and Improveaccess of NGOs/MFIs tofinance.

BY PETER EGWUATU

Africa solicits IMF, World Banksupport on infrastructure

Finance officials from 50African countries have

called on the World Bank (WB)and the InternationalMonetary Fund (IMF) to helpAfrican countries in the areasof infrastructure development.They said the bank and thefund should assist them toaddress their debt arrears andgain full access to debt relief.

After two days of meetingsin Khartoum, Sudan, theAfrican Governors of theWorld Bank Group and theInternational Monetary Fundissued a Declaration calling onthe World Bank Group topartner with other donors to

ensure the realisation of thisdream.

The partnership is toestablish a SingleInfrastructure ProjectPreparation Facility for Africato support large-scalet r a n s f o r m a t i o n a linfrastructure projects. Theyurged the IMF to makesustained efforts to encourageremaining countries toexpeditiously submit theirpledges on the gold saleswindfall distribution toenhance the Fund•fsconcessional resources underthe Poverty Reduction andGrowth Trust (PRGT).

30 —Vanguard, MONDAY, AUGUST 26, 2013

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CMYK

THE Managing Director/CEO, Enterprise Bank

Limited, Mallam AhmedKuru, has affirmed that theappointment of Citigroup andVetiva Capital ManagementLimited by the AssetManagement Corporation ofNigeria (AMCON) asfinancial advisers for the saleof the financial institution iscertainly the last lap of thelong journey that willguarantee better days aheadfor all stakeholders of thebank.

Commenting on the

development of appointingfinancial and legal advisers forthe sale by AMCON, Kurustated that “In line with theplan of AMCON, this isobviously the last lap of theentire process that started onAugust 5, 2013 when we cameon board. However, what isimportant for me is that the

bank will at the end of theprocess run like every otherstrong and healthy bank notowned by the government orAMCON and without anyencumbrances whatsoever.For me, it is on this solidfoundation that a financialinstitution needs to soar.”

Speaking further, Kuru, who

said he was happy leavingbehind, a better EnterpriseBank and a happier workforce,also added he was convincedthat customers will have thebest deal at the conclusion ofthe process. Said he:”I amconvinced our customersexpect the best deal at the endof the day. So their

UNION Bankof Nigeria

Plc has enteredinto a collaborativeinitiative withS a m s u n gElectronics WestAfrica, to develop a‘Bank-of -the-Future’ prototypeaimed at providings u p e r i o rexperience infinancial services toboth existing andpotential customersof the bank.

The initiativecalled ‘.UnionBank’ is aprototype e-branchthat wouldcompletely re-design the bankinghall as it is today,transforming it intoa 100 percent self-service, electronicbranch. The ‘Bank-o f - t h e - F u t u r e ’initiative fits intothe bank’s strategyto retain existingcustomers andattract new ones,especially theyoung and

Union Bank unveilsbank-of-the-futureprototype

Financial advisers:

Enterprise Bank assuresstakeholders of smooth sale

By PETER EGWUATU

Corporate Finance

expectation shouldbe high.”

The EnterpriseBank boss also saidhe does not thinkthe last lap of theprocess wouldexperience anyhitch. According tohim, “As I have saidon many occasionsbefore now, theappointment of theadvisers are part ofthe overall plan ofAMCON. We arenot being distractedby it. Rather,everything is being

done to make the process gosmoothly.”

Further elaborating on therole of staff of Enterprise Bankat this important period in thehistory of the financialinstitution, Kuru again said,“As members of staff of thebank on the other hand, wehave had the responsibility ofexplaining to all our esteemedcustomers that the process isin the best interest ofeverybody. I say this becauseif there is any singularbeneficiary of this process, itis the staff whose jobs havebeen secured becausewhoever is buying the bank isdefinitely going to beinterested in the quality ofstaff that we have developedin the bank. What we havedone as a management is toensure job sustenance as wellas welfare of all staff. So it isalso important that the staff arenot distracted by this process.Our attention rather has beento concentrate on running thebusiness.”

Asked whether the comingof financial and legal advisersat this period has interferedwith the day to day runningof the bank, the MD/CEOreplied, “No it has not.

technologically savvy.The ‘Bank-of-the-Future’

prototype is being test-run atthe bank’s Silverbird Galleriabranch, Victoria Island, Lagos.

At the unveiling of theinitiative, Mr. Emeka Emuwa,Group Managing Director ofUnion Bank, re-affirmed thatthe focus of the bank was toserve its teeming customerswell, and added that UnionBank would seek to leverageon the Samsung technologyplatforms to deliver consistentand reliable service to itscustomers.

Mr. Adekunle Adeosun,Executive Director(Commercial/Retail andConsumer Banking – South),Union Bank, noted that theinitiative was part of efforts tomake Union Bank a leadingprovider of innovative financialservices in Nigeria and beyond,adding that the ‘.Union Bank’branch was just one of the newways in which the bank wasusing technology to enhance itsservice delivery and experiencefor customers.

The event was attended bycustomers of the bank,executive management andmembers of staff.

10X4

EMIRATE


Interview

borrowed countries in the worldin terms of statistics; however,government has continued toemphasise from the public debtmanagement point of view thatyes, our debt is sustainable.

All of us should appreciate thereis the need for us to diversify oureconomy because we are over-dependent on oil revenue fordriving our economy as a sourceof foreign exchange and revenuefor government and there is needto diversify that. So, the focus ison diversifying the sources ofrevenue for government. If wedo this, we will observe thatbeyond the statistics, our debt willeven be more sustainable insteadof depending on oil and gas forabout 80 per cent of our revenue.

For instance, we can depend onoil and gas for about 30 per cent,while we also depend on revenuefrom agriculture. Yes, agricultureis the biggest sector in theeconomy; but it's high time weoperate it in such a way that manyof our farmers will be soproductive and competitive andare exporting their products;including the processed ones inparticular and as they exportthem, government earns incomein terms of duties; while thefarmer also earns more income.In that way, our economy will bediversified both for the privatesector and as a source of revenuefor government and our debt willtherefore be more sustainable.Our debt GDP ratio is still below21 per cent currently.

Now, in terms of participationof foreign investors in the wakeof the global financial meltdown,and because of Ben Bernanke,Chairman of the Federal Reserve,Central Bank of the United States'statement that quantitative

easing is going to taperbecause there is a belief thatthe US economy is gettingbetter; following thisstatement, investors all overthe world started recallingtheir investments whereverthey were in anticipation forhigher yields so they couldalso diversify theirinvestments into the USeconomy to take advantageof it.

So you could expect thatthe level we achieved in 2012has come down to anythingaround five and seven percent; but certainly, we are notin a position to stabilise yet.All over the world, if youlisten to the financial marketnews from the CNBC orBloomberg, you willappreciate that recently, theadditional reports comingfrom the UK shows that theireconomy is getting better tothe extent that there was ahuge drop in the

unemployment figure which ispositive for the US economy.

For the fact that it’s positivefor the US economy means thatfor investors, there is a higherprospect that they can earnmore by investing their moneyin the US economy, therefore,it’s a time for them to wait a littlelonger, hold their money andtake advantage of the positivedevelopment in that economy.

The global economy in respectof that stimulus from the USeconomy in terms of possibilityof the quantitative easingbeing drastically reduced, that

intermediate period is still onand I guess it will take us upto the next two or three monthsto be able to settle at the newlevel.

What did you do to sellthe $1.0 Eurobond to

the international community?The job was done by

Nigerians. Investors looked atthe fact that the transformationagenda of President GoodluckEbele Jonathan is on course,they looked at the variouscomponents of the varioussectors and saw what the

government is doing inagriculture and the factthat the distribution offertiliser, seedlings andother inputs had been

rationalised and madevery efficient and they are

reaching the real farmers.Also, the fact that the Power sector

has been successfully privatised andwe are at the threshold of privatesector power-led initiative that willensure adequate and stable supplyof electricity. A look at theinfrastructure transformation goingon; especially roads, the fact that therailway lines have been revitalisedand some lines have started operatingand more are underway to bereactivated. Also, look at the dramaticchanges that have taken place in theaviation sector and with our airports.

They looked at the fact that in termsof institution building, a lot hashappened. For example, in publicdebt management in Nigeria, effortshave been made over a couple ofyears to ensure that not only theFederal Government; but every stateof the federation has a functional debtmanagement department.

When they look at all these as partand parcel of the transformationagenda of President GoodluckJonathan, they came to the conclusionthat the Nigerian economy is doingwell and that it is on the right pathand if we continue the way we aregoing, there is no doubt that in thenext five to seven years, Nigeriawould have arrived at a stage where

The Director-General, Debt Management Office (DMO), Dr. Abraham Nwankwo,in an exclusive interview with selected newsmen in Lagos spoke on issues affectingthe economy and the public debt management of the country. He challenged theprivate sector to raise long-term fund to finance the real sector. Other issues discussedinclude: privatisation, infrastructure financing and raising of long-term fundsamongst others.

Excerpts:

As at December 2012, you said that foreign investors' holding of FGN securitiesamounted to $5.1 billion, can we have a more updated figure?

We are used to emphasising statistics that our public debt is so much, and thatis why in today’s event, we focus on talking about what the benefits are to theNigerian economy particularly through the private sector that derive thisbeautiful statistics we talk about.

So is it good enough to tell Nigerians our debt is so much? We have spenttoday explaining to financial journalists those statistics, what are theopportunities embedded in them in real term that will translate to goodstandard of living for our people and that’s why our emphasis is on pointingout the opportunities we have created for the private sector so that they willissue their own debt instrument in the markets.

We have developed the market so that they can raise long-term money toinvest in the real sector of the economy and infrastructure. By so doing,they will create jobs for our teeming population and it will lead to moreincome in the society; because for every Nigerian who earns incomeby being gainfully employed, you know that there are many otherdependents relying on that person, so there will be spread inwelfare and reduction in poverty.

What is the most current figure of totalgovernment debt?

Our focus now is not talking aboutfigures, yes, let me say in summary thatour debts as usual, remain sustainable,and the statistics are there; but it’s notan issue of statistics. Over the pastseven years, we are one of the least

By PETER EGWUATU

,

,

The IMF didn’t raiseNigeria’s borrowingthreshold, maybeindirectly; countries areclassified in variousgroups

•Dr. Abraham Nwankwo


Interview

it would be so obvious to everybodythat we have left the group ofunderdeveloped countries and moreimportantly, they are looking at thevarious measures government is

taking to ensure that the growthprocess is inclusive, that in the

process of growth eventhough we have been

registering verycredible growth ratesin the world over

the past five or more years, the

current effortsbeing made by

governmentto ensurethat theg r o w t hprocess isinclusivelike I saidearlier, isgeneratingmaximumemploymentand povertyreduction.These are

the thingsthat private

investors allover the world

are taking intoaccount. Of course

when we went to sellthe bond under the

leadership of Dr. NgoziOkonjo-Iweala, the

Coordinating Minister of theEconomy and Honourable

Minister of Finance, we told theNigerian story forcefully, being asfactual as we could; all aspects of theNigerian economy; including, politics,agriculture, banking, infrastructure,human resources and media. We toldall the stories about Nigeria effectivelywith facts and figures and it wasobvious to the international investorsthat Nigeria is on the right path;essentially we are crossing thethreshold and that Nigeria given itspotentials, has eventually come toterms and we have taken advantageof those potentials transforming themso that it will lead to welfare for thegenerality of the Nigerian people.

Looking at your efforts to createa flexible market and

considering the variety of debtinstruments you have in line with themedium-term strategy, when do weexpect to see some of these products?

Some of the products are alreadycoming in the near term; some will bein the medium term. For example, theGlobal Depository Note we talkedabout which is a way of encouragingspecial classes of internationalinvestors who would not invest directlyin the domestic bond market exceptthrough a depository arrangement, thisis likely to come on stream before theyear ends as approved by the NationalAssembly.

We are working on the inflation-linked bond and we believe in the nearterm, it will come to fruition. The otherflexibility arrangements we talkedabout including the securities, lendingcertainly will come on stream beforethe end of the first half of 2014. So,many of these measures, the concrete

new products as well as theflexibility instruments arecoming in the near to mediumterm.

Recently, the IMF raisedNigeria’s borrowing

threshold, what does thatimply for the economy?

The IMF didn’t raiseNigeria’s borrowing threshold,may be indirectly. Countries areclassified in various groups, soNigeria belongs to a particularcategory and because of thechanges in Nigeria’s per capitaincome, it has changedcategories and the one in whichit belongs is allowed technicallyto borrow up to 56 per cent ofour debt GDP ratio withoutraising eyebrows in terms ofcredit worthiness just as it’smuch higher in developedcountries.

So, it’s an appreciation fromthe point of view of those globalfinancial institutions thatNigerian economy is moving tothe next level and in doing so,it has been reclassified in termsof its capacity to borrow.However, Nigeria’s President,the Coordinating Minister ofthe Economy and the DebtManagement Office havemade it clear that in spite of thattechnical space created,Nigeria will continue to be

developed domestically, theprivate sector is now beingchallenged to take advantageand be the borrowers to investin agriculture, solid mineral,infrastructure and so on.

On diversification of

instruments andinvestors base, what are youdoing to tap into the globalalternative market like theSukuk and others?

Government is alreadyworking on alternativefinancing sources andgenerally the non-interestfinancing products includingthe Sukuk. Just recently, therewas a workshop in Abujaorganised by the AfricaDevelopment Bank (ADB)which involved other Africancountries and we deliberated onhow to go forward, so Nigeriais seriously working onestablishing the necessaryframeworks for tapping intoalternative sources of funding;including Sukuk like Imentioned earlier.

Nigeria is going to takeadvantage of all available andappropriate sources. At theAbuja forum, I did say that itshould not be taken thatdevelopment of alternativefinancing should be restrictedto government just as in the

seeking funding through thisalternative.

There are arrangements inplace if some foreign investorspossibly in collaboration withNigerian partners, want toinvest in the country and theyneed some form of politicalguarantee that can be assessedfrom the MultilateralInvestment Guarantee Agency(MIGA), a member of the WorldBank Group, this is available.

Let me also mention thatsomething related to that is thefact that the Minister of Financehas made known on a numberof occasions that before theyear ends, government wouldhave established the mortgageliquidity facility which is to helpthe private sector to fundmortgages. These are some ofthe credit enhancementschemes in various forms.

The collaterised mortgageobligation (CMO) has made itclear in many occasions thatgovernment has obtained $300million from the World Bank asa mortgage liquidity facilityand that is being finalisedbefore the end of the year, sothere is a lot that thegovernment is doing to makesure that they provide thenecessary support for theprivate sector to overcomesome of the structuralconstraints that they have.

What are the differentthings government is

doing to encourage privateorganisations in the realsector to approach the bondmarket?

It is not the responsibility of

discipline of the capitalmarket, borrowing from thecapital market. Thegovernment didn’t simply go toborrow from the capital market,it made sure that it’s structuredin such a way that it borrowedfrom the capital market, itdeveloped the market for along-term fund for the privatesector; so that’s the best thegovernment can do in thatparticular respect and it hasdone so.

Government knows that italso needs to establish abenchmark for the privatesector and it has done thatsuccessfully making sure thatit succeeded in raising fundsat attractive coupons which willensure that when Nigeriancompanies go to raise theirown fund it will serve as abenchmark. Go and look atother countries that haveissued bonds since we issuedours, and what their owncoupons are, compared to ours.

So government has done thebest it can do as far as debtmarket is concerned, it'spermanently working with theprivate sector like I said earlier,to make sure their variousconcerns are addressedwhether in terms of tariffs,duties or infrastructure, theprivate sector does makeproposal to the government onwhat to do so as to make surethere are appropriateinfrastructure. However, theprivate sector is encouragednot to abdicate its own dutybecause in every economy, wehave three agents; we have thehousehold, firms (privatesector) and the governmentthat can work on its own whileinteracting with others.

Go and monitor all thecountries the world over, in thepast 10 years, there are fewcountries that have achievedthe type of macro economicstability that Nigeria hasachieved and that’s one of themajor things our private sectorrequires, a stable macroeconomic environment and I’m sure if you conduct aresearch of countries in theworld that have achieved highlevel of macro economicstability, Nigeria is amongstthe first 20.

Also, amongst the emergingmarket economies, Nigeria ison the top five lists. Theseachievements were as a resultof government's deliberatepolicies in terms of monetary,fiscal, public debtmanagement, exchange rateand banking policies. Theseare some of the things thatgovernment has done to makesure that the economy isrelatively stable, but ifgovernment has not beenperforming optimally as it hasdone in the last two or threeyears, we will not have beendoing as well as we are doingnow.

conservative in its borrowing asif nothing has really happenedin terms of more space for it, soNigeria will continue to beprudent and continueborrowing as if it's using the oldlimits, because the emphasis isnot for government to do moreborrowing, but to create spacefor the private sector to do theborrowing and that is why thetheme of our interaction was onthe opportunities created forthe private sector from debtmanagement achievements sothey are now being encouragedbased on the benchmarkcreated in the internationalcapital market, based on thebenchmark and market we have

private sector to play the leadrole, it's not for government tostart issuing sovereign Sukuks.At the appropriate time, theywill do that, the private sectorshould understand this newfinancing alternative so theycould take advantage of this.

Is there a possibility ofproviding enhancement

for Nigerian corporates?There are various credit

enhancement that are alreadyin place. For instance, thepartial risk guaranty offered bythe World Bank Group and thisusually comes through theMinistry of Finance, I’m awarethere are a couple of projects

government to force privatesector, the private sector isalways in a search for profit.Now, what government hasdone is to provide that biggerframework; especially theinfrastructure. Governmenthas done the best thing it cando for the private sector as faras the bond market isconcerned. Government usedthe opportunity of the fact justlike any other government, itwould need to borrow moneyfrom the market to fund itsfiscal deficit which is whatevery government does anddid in the past.

The government issubjecting itself to the

conventional debtinstruments wherebywe are encouragingthe private sector totake advantage. We arealso for the non-interest financingincluding Sukuk,while encouraging the

,

,

Government is alreadyworking on alternativefinancing sources andgenerally, on the non-interest financingproducts including theSukuk

•Dr. Abraham Nwankwo


Homes & Housing Finance

BRIEFS

FEDERAL MortgageBank of Nigeria

(FMBN) has so far disbursedN39 billion out of about N90billion that has beenapproved, representing justover 43 percent; while out ofthe N110 billion approves asestate development loan(EDL), only N62 billionrepresenting about 53 percenthave been disbursed.

the need to build a modernmega shopping mall in the cityis a part of my administration’sdrive to transform thelandscape of Abia through ourUrban Regeneration Policy,thereby providing a decent lifefor the people of the State,” hestated. The governor said oncompletion, the mall would be

LSDPC, Heirs

Holdings to

redevelop Falomo

Shopping Complex

LAGOS State Developmentand Property Corporation

(LSDPC) has sealed a partnershipdeal with Heirs Holdings, a pan-African proprietary investmentcompany, to redevelop FalomoShopping Complex located inIkoyi, Lagos State.

A statement obtained byVanguard disclosed that thecomplex would be redeveloped toaccommodate shops, officecomplex and world classresidential apartments to serve theneeds of the Lagos populace.

Managing Director, LSDPC,Mr. Biodun Oki, speaking duringa tour of the site stated, “theFalomo Shopping Complex’sredevelopment is long overdue.Our partnership with HeirsHoldings is in line with the stategovernment’s urbanredevelopment project and itbodes well for the state, the countryand for the citizens. Once thisproject is completed, we can alllook forward to a new andimproved landscape that willstimulate business activity in thisarea and beyond. Involving theprivate sector in ourredevelopment agenda is themodel for all future projects.”

Ogun to reviveabandonedhousing sites

OGUN State governmenthas said it has taken

measures to utilise sitesabandoned by the immediate pastadministration to construct lowcost housing estates for the people.

Commissioner for Housing, Mr.Daniel Adejobi, during aninspection tour of existing andproposed government estates inAbeokuta, said that thegovernment plans to use the sitesfor the construction of low costhousing estates. He pointed outthat the Ibara Housing Estate inthe state capital, inherited fromthe past administration, had beencompleted, and urged civilservants to expect the secondphase of the Workers Estate,Laderin for which developmentplans had been concluded.

Adejobi noted that affordablehousing for all cannot be achievedby government alone due to thehuge capital outlay required. Hetherefore called on genuineproperty developers to partnerwith the government, adding thatgovernment had signed aMemorandum of Understandingwith some registered privatecompanies in order to deliver onit housing mandate to the people.He said the existing low cost estateat Ibara would be inaugurated inSeptember.

capable of “generatingemployment opportunities, asthe new businesses and themall facility management willrequire considerablemanpower in excess of 20,000direct jobs and over 100,000indirect jobs.”

In speech at the signingceremony, CEO, Greenfield

Managing Director, FMBN,Mr. Gimba Ya’u Kumo, whodisclosed this in Abuja,lamented the low capital baseof the bank which is currentlyN5 billion, out of which only50 percent or N2.5 billionbeing the FederalGovernment’s share has beenpaid up. He noted that theother shareholders, namelythe Central Bank of Nigeria(CBN) and the NationalSocial Insurance Trust Fund (NSITF) have not paid up their30 percent and 20 percent

share respectively.Ya’u Kumo noted that the

National Housing Fund(NHF) presently only has3,772,031 contributors, addingthat it would require 50contributors to contributeN500 monthly for 10 yearsbefore the bank can be able toprovide a loan of N15 millionfor one individual. He calledon the Federal Government toincrease the bank’s sharecapital from its present N5billion to N200 billion, toenable it address the housing

deficit in the country. Heasserted that the over 17million housing deficit in thecountry would requireaggressive injection of fundsby the government.

According to him, the totalnumber of houses deliveredthrough NHF scheme is just56,000 units, conceding thatthe number “is just a drop inthe ocean when compared tothe housing deficit we areconfronted with in thecountry.” He however claimedthat 46 to 52 per cent of thehouses delivered so far weredone by the currentmanagement of FMBN withinthe last two years, while afurther N1.6 billionrepresenting 1.58 per cent oftotal collections was refundedto retirees.

The FMBN boss also notedthat the bank in partnershipwith some trade unions hasbeen able to bring down thehousing deficit for registeredworkers in the country to 4million, while efforts arebeing made to clear the deficitwithin the next eight years.He commended stategovernments that are alreadypart of the scheme, but urgedthem to provide infrastructureto help reduce the cost ofhousing delivery. “We alsoappeal to those states that arenot yet in the scheme, abouteight of them, to do so toenable Nigerians in thoseplaces to begin to derive thebenefits of NHF and own theirhomes” he said.

ABIA State government

has entered adevelopment leaseagreement with a real estateinvestment and infrastructurecompany, Greenfield AssetsLimited, in consortium withits development partners fromCanada, US and UK, to builda modern shopping complexin the state capital, known asAba Mega Mall.

The project which is to becompleted within 12 monthswill be erected on 23 hectaresof land. The mall wouldconsist of 5,830 ultra modernshops, in four sizes of 12sqmeters, 16sq meters, 24sqmeters and 48sq meters.

The facility will also haveprovisions for banks, securitypost, petrol station, 25,000 sqmeters of climate-controlledwarehouse space, restaurantsand a massive parking spacefor over 5,000 cars.

Governor Theodore Orji, saidthe Aba Mega Mall project ispart of efforts by hisadministration aimed atencouraging development ofmodern shopping centres asdecent alternatives to whatobtains at the present. “Theconception and realisation of

Assets, Paul Obanua, said todevelop the mega mall, thecompany would be workingwith its development partners,one of which is JK StructuresUK Ltd to introduce cuttingedge concrete buildingtechnology.

“Tried and tested in variousparts of the world, thetechnology for example, wasused in developing the EuroDisney, Paris, the largestamusement park in Europe.This system entails the use ofthree dimensional galvanisedsteel mesh reinforced withgalvanised wire beam andalleviated concrete. The JKStructures system can delivertop quality mass housing andother civil works in a fractionof the time it takes usingconventional buildingmethods,” he stated.

Obanua assured the governorof the commitment of his firmto deliver a world-class mall.“We wish to assure you thatGreenfield Assets Ltd and herdevelopment partners willdeliver a world class facility tobecome a testimonial and aninspiration to present andfuture citizens of God’s OwnState,” he asserted.

FMBN disburses 43%of approved NHF loans

Stories by YINKA

KOLAWOLE

Abia, Greenfield partner on Aba shopping mall

•Development of mass housing

Paul Obanua, CEO Greenfield Assets Limited shaking handswith Abia State Governor,Chief Theodore Orji, at the signingceremony of Development Lease Agreement between Abia StateGovernment and Greenfield Assets Limited for the developmentof Aba Mega Mall at Osisioma-Ngwa, Aba, Abia State.


FP

SAMSUNG

GALAXY

36— Vanguard, MONDAY, AUGUST 26, 2013

Insurance

Clients must be placed atthe core of everything

from underwriting to claimsexperience, according to areport on the future for thecommercial insuranceindustry.

The customer is now kingthanks to the availability ofinformation in the digital age,Suncorp’s latest InsuranceInsights paper says.

“There is a real threat to theviability of insurance player, ifthey do not view theirbusinesses from theircustomers’ perspective,”according to report author andCEO Commercial InsuranceAnthony Day.

He says multiple distributionchannels are needed to caterfor changing and diverserequirements.

“The commercial insurerneeds to have the broadestdistribution strategy it cansustain. At the same time, thestrategy needs to be flexible inadopting technology, which isin itself evolving rapidly.”

Shifts in customer buyingpreferences are a crucialconcern for intermediariessuch as brokers andauthorised representatives,the report says.

From left: Bimbo Oyetunde, journalist who had an accident receiving a medical billcompensation cheque from Bode Opadokun, General Manager, Technical and Nike Nihinlola,Senior Manager, Technical both of Consolidated Hallmark Insurance plc on an insurancecover by the company for members of the National Association of Insurance Correspondents(NAICO) at the Surgical Emergency Ward of the Lagos State Teaching Hospital, Ikeja, Lagos.

Commissioner forInsurance, Mr.Fola Daniel has

charged the newlyinaugurated InsuranceIndustry ConsultativeCommittee, IICC, to fashionways of returning theinsurance industry to itsrightful place as a catalystfor national economicgrowth and development.

Daniel, who gave thecharge at the inaugurationof the Committee in Lagos,said the industry and thepublic expect to seeremarkable changes in theway insurance businessoperates.

Daniel said, “The IICC isa body whose time hascome. In line with theobjective behind itsestablishment, thecommittee has beenentrusted with the followingmandate: To serve as aunifying voice for theindustry; to represent theindustry on national issuessuch as budget formulation;make input to nationaleconomic matters and anyother issues affecting theindustry; act as a body forresolution of intra and intersector conflicts and take upand assume any other rolesthat will serve the bestinterest of the industry.”

He urged the committeeto take necessary stepstowards uplifting the profileof the industry, improvepublic confidence in theprofession and enhance thefortune of the industry.

Daniel noted that the taskbefore the committee isenormous, but is optimisticthat they would engenderrobust and qualitativeoutcomes.

“Suffice to say that theunification of purpose andthe cooperation of allplayers in the industry atthis point in the history ofthe industry is not anoption, but an imperative.From the composition of thecommittee, it is satisfyingthat every arm of theindustry is adequatelyrepresented. This isexpected to aid theachievement of the muchneeded unity so that theindustry would be seen toalways speak with onevoice.

“Let me remind membersof the committee that theindustry expects so muchfrom you. They expect to seeremarkable changes in theway we do our business andthe way we are perceived bynot just members of thepublic, but by governmentat all levels.

“They expect to see greatimprovement in thecontribution of the industryto national discuss and itsdue recognition as asignificant segment of thenation’s economy. I couldgo on and on, but the fact isthe time has come for the

BRIEFS Stories byROSEMARY ONUOHA

NAICOM tasks consultative c’mtte onindustry transformationindustry to assume its rightfulplace as a catalyst for nationaleconomic growth anddevelopment,” he said.

He noted that theinauguration of the committeewill mark the beginning of anew era in the industry. Heurged members of thecommittee to remainsteadfast, committed anddedicated to their mandate forthe overall benefit of theindustry.

President of the CharteredInsurance Institute of Nigeria,CIIN, Mr. Fatai Lawal, saidthe IICC would give theindustry a voice, guarantees acollective medium fordialogue, provides a clearinghouse for vital industrypolicies, engenders a firmanchorage for industry ’sgrowth agendas, constitutes apowerful group for governmentrelations and platform forresolution of conflicts.

He maintained that thesuccess of the committee lieson the honest, open andsincere hearts of all arms ofthe industry to shed theirindividual toga for the benefitof the sector.

Past President of the CIIN,Mr. Wole Adetimehin, said formany years, if the industryhas had this kind of bonding,it would have madetremendous progress.

Consolidated Hallmark pays compensation toinsurance correspondent

Mrs. Bimbo Oyetunde ofRadio Nigeria who

was recently involved in aghastly motor accidentalongside other members ofthe Nigerian Union ofJournalist (NUJ) on theirreturn from Abuja after anofficial assignment wherethree people died hasreceived a medical billcompensation fromConsolidated HallmarkInsurance (CHI) plc.

Oyetunde, an insurancereporter got the monetarycompensation having beenpart of a Group PersonalAccident insurance Scheme ofthe members of the NationalAssociation of InsuranceCorrespondence (NAICO),provided by ConsolidatedHallmark Insurance plc aspart of its Corporate SocialResponsibility.

According to details of thepolicy covering all insurancecorrespondents in Nigeriaand renewed annually, CHIwill pay a death benefit ofN1million; permanent ortemporary disability of N1million or N200,000

maximum for medical bills.Mr. Bode Opadokun,

General Manager, Technical,of the company who led themanagement of the Companyfor the cheque presentation toOyetunde at the SurgicalEmergency Ward of the LagosState University TeachingHospital, Ikeja thanked Godfor the survivors and prayedGod to grant families ofdeceased ones the fortitude tobear the loss.

Opadokun stated the needfor all and sundry to embracethe culture of insurancebecause of its ability toprovide succor in the event ofthe unexpected, stating thatjournalists particularly needto have adequate insurancebecause of the risky nature oftheir job.

He called on media houses,the NUJ and otherstakeholders to takeinsurance policy forjournalists more seriouslybecause of the high risknature of their jobs. “Thejournalism profession bothwithin and outside thecountry is exposed to different

kinds of risks and such callsfor the need for insurance tomitigate the risks in the eventof this nature.”

He stated that insurance isnot a luxury but a necessity,adding “That is why as partof our CSR we decided toprovide Group PersonalAccident insurance forjournalists covering theinsurance beat so that theycan do their jobs with rest ofmind.”

He said that CHI has overthe last 18 years been in thebusiness of providinginsurance services to peopleacross the country and takesits claims payment veryseriously.

Mr. Modestus Anaesoronye,one of the insurancejournalists covered in thepolicy while expressingappreciation to the companyon behalf of other insurancejournalists stated thatNAICO’s joy knew no boundsin October last year when thepolicy was presented to it,adding that no one knew thepolicy was going to mature soquickly.

Insurers consider

avenues to cover

fundamental risks

By ANGELA OKPE

Mr. Wole Adetimehin,immediate past

President of the charteredInsurance Institute ofNigeria, CIIN, said that theinsurance industry is lookingat ways of providinginsurance covers forterrorism, war, and politicalrisks because Nigerians arestarting to request for them.

Adetimehin who stated thisto Vanguard said thatinsurers have not beencovering them because of theircatastrophic nature.

Adetimehin said, “In ourmarkets, people are askingthat we provide cover forkidnapping, terrorism,political risks which areknown as fundamental risks.By the day people arebeginning to look at ways andmeans of providing cover forsuch risks which areinsurable.”

According to Adetimehin, inthe early times of insurance,they were not insurable but inmodern times, they areinsurable but because of theircatastrophic nature andmagnitude it has beendifficult for insurance housesor markets to build therequired capacity that canprovide for such losses.

Respond tochangingcustomer needs,says Suncorp


“Those who do not rememberthe past are condemned torepeat it”, George Santayana,1863-1952. (VANGUARDBOOK OF QUOTATIONS p93).

“When an old man dies, youlose a library,” according to anold adage. Having survived allodds to reach the age of 69, ina country where life expectancyis still under 52 years, it mightnot be too presumptuous to callmyself “an old man.” Not justan old man, but one whoactively attempts to documenthistorical landmarks in themanagement of our nationaleconomy. The reason is obviousand simple, I am an economistand one of the founding fathersof Economics, Alfred Marshall,1842-1924, has enjoined us that“The economist, like anyoneelse, must concern himself withthe ultimate aims of man.” I amprimarily concerned with theultimate aims of Nigerianswithin the context of economicdevelopment and aggregatesocial welfare. I believe we canorganise our economy betterthan we do at the moment andwe have done for almost 30years; and the worst area of ourmacro-economic policies hadalways been the banking sector– the sector that really shouldbe creating wealth for most ofthe people but it is not. Instead,banks are once again on theverge of deepening our woes.

Nigerians with deposits inbanks and their bankers are

again poised to experience oneof the worst traumas to whichthe financial sector wassubjected about 24 years ago.That was when the CentralBank of Nigeria first embarkedon a massive withdrawal ofpublic funds from banks. Theimpact was devastating; in theend, over 20 banks went underin the first major banking crisisin Nigeria since the early 1960s– when banks likeAGBONMAGBE Bankcollapsed in the first everbanking disaster.

In the late 1980s to the early1990s, when the second set ofbanks went down, the build upto catastrophe had been thesame. Banks had left over 70per cent of the money incirculation outside the bankingsector and had allowedthemselves to be seduced intochasing, securing andoperating on public funds –when the public sector hadmore money than sense.Federal and state governmentofficials deposit money at nointerest in banks and borrowtheir own funds back at highinterest rates. It was scandalouswhen “money was no problem”for governments, that is, whenrevenue outstripped budget bya wide margin. It becamepolicy insanity when revenuefell short of budget. Even agood primary school pupil can

understand that when youdeposit your cash withoutinterest and borrow from thesame bank at 14 per cent, youhave, in effect, given away 14per cent of your deposit. Whythis simple fact became difficultfor Finance Ministers,including Dr Ngozi Okonjo-Iweala, to understand remainsone of the most baffling puzzlesof the century in Nigeria. Whyshe did not put a stop to itsooner boggles the mind thatwants to contemplate it.

As usual, a time comes whenthe interest rates payable tobanks are gobbling up anincreasing percentage of thefunds on deposit. Then,government officials start to “dowhat they have left undone”because the truth was sent on

time, carries with it direconsequences for the banks, forthe economy and for Nigerians.Like somebody who had neverhad to lift a finger or rise frombed to get fed, asking him tosuddenly go to the farm toharvest raw food, return homeand cook it, can result in heartfailure. Yet, this is what theFederal and state governmentsdo to our banks every ten yearsor so. We feed them freegovernment money; then, weforce them to compete whenthey are least prepared and thecasualties follow predictably.The graveyards of banks arewaiting for the corpses of 2013-14 – as they swallowedOCEANIC etc.

The withdrawal of public

withstand the pressure betterthan others. A few will resortto the tried-and-failedapproach of issuing falsifiedAnnual Reports and Accountsor Interim Reports in order tomislead depositors and somewill even approach the capitalmarket to raise additionalcapital. The ones to avoid noware those attempting to raid themarket for funds. The bankingsector is once again likely toexperience a downturn ratherthan an upward surge in theshort and medium terms.People should ask for advicebefore investing – becauseinvestors stand a good chanceof losing their funds.

Perhaps, the most importantquestion on the minds ofdepositors remains: “Is mybank safe”? Before attemptingto answer that question let meagain remind us of the lessonsof our banking history. Somepeople might be able to answertheir own questions.

Before the “sudden bankfailure” during the Abachaadministration, it was standardoperating practice for banks toannounce eye-popping profitsover the last year. Among theleading banks was AlphaMerchant Bank whoseManaging Director, Jimi Lawal,was the toast of the NigerianStock Exchange, NSE.

Is your bank in trouble? Act before it goes down

funds from banks bythe Central Bank in 2013 willinevitably produce the sameresult. Naturally, it will affectbanks differently; some will

,

,Banks which had declared

unbelievable profits turned out to haveonce again falsified their reports. Bythe end of 2008, another banking partywas over; Nigerians were staggeringaround with the hang-over from thatbanking misadventure.

Micro-Finance

Stories byPROVIDENCE OBUH

MTN Nigeria hasintroduced cloud

services for small and medium-sized enterprises (SMEs).

Chief Enterprise SolutionsOfficer, MTN Nigeria, Mr.Babatunde Osho said that theservices would offer SMEsenterprise applications for

THE South West Zone of the

National Association ofMicrofinance Banks (NAMB)has expressed delight overMicro, Small and MediumEnterprises Development Fund(MSMEDF), launchedpenultimate week by the CentralBank of Nigeria (CBN), sayingit will bring liquidity into thesystem.

Chairman of the zone, Mr.Olufemi Babajide, in atelephone conversation said,“The fund will bring confidenceinto the system and the interestrate will serve as a sustainingvehicle of the fund. Penetrationwould be massive and peoplewill reach us properly.”

Meanwhile, Women in theMicro, Small and MediumEnterprises (MSMEs) sub-sector would be enjoying about60 percent of the fund,representing N132 billion of theapproved N220 billion.

NAMB applauds CBN over MSMEDF

MTN introduces cloud software for Nigerian SMEs

holiday all along.Unfortunately, encouragingbanks to avoid the difficult taskof funds mobilization, for a long

Chapter one of the“Guidelines for the Operationof Micro, Small and MediumEnterprises DevelopmentFund for Nigeria,” shows thata large number of un-servedand under-served clients existin the Nigerian MSME sub-sector.

In order to address thefunding requirements of thiscritical segment of theeconomy, Section 6.10 of therevised Microfinance Policy,Regulatory and SupervisoryFramework for Nigeria

stipulates that; “a MicrofinanceDevelopment Fund shall be setup, primarily to provide for thewholesale fundingrequirements of MFBs/MFIs.”

The Policy also stipulates80:20 prescription for on-lending to micro enterprisesand SMEs respectively, hencethe decision of the CBN torename it “Micro, Small andMedium EnterprisesDevelopment Fund’(MSMEDF).

According to the guideline,“Considering the peculiar

challenges faced by women inaccessing financial services inNigeria, the RevisedMicrofinance Policy,Regulatory and SupervisoryFramework in Section 4.2 (iv),provides that women’s accessto financial services shouldincrease by 15 per centannually in order to eliminategender disparity.

“In order to achieve this, 60percent (N132.00 Billion) ofthe Fund has been earmarkedfor providing financial servicesto women.” The key objectives

of the guideline shows that 10per cent has been earmarkedfor social and developmentalcategories and the balance of90 per cent of the fund,amounting to N198 billion,will be utilized for theprovision of direct on-lendingfacilities to ParticipatingFinancial Institutions (PFIs).

For monitoring andevaluation, “the financedprojects shall be subject to on-site verification andmonitoring by the CBN, theManaging Agent and PFIduring the loan period.

There would be off-site ICTbased reporting system toprovide up-to-dateinformation on the fund’sactivities.

human resource managementand customer relationshipmanagement.

” Osho said, “It is a range ofprepaid cloud-based servicesdesigned to offer HumanResource Management,Customer RelationshipManagement and other

enterprise software over asecure internet connection.And this without any of theassociated IT infrastructurecosts.”

He added that the operatoris using the service to supportSMEs in Nigeria by removingthe attending costs of the

applications, explaining thatthe SMEs will enjoy moreflexible offerings on a pay-as-you-go basis. “We will continueto explore opportunities tohelp in stimulating the economic

growth and development of thisgreat country,” he said.


Appointment and [email protected] 08033348923

MasterCard appoints Ofili Vice-President sub-Saharan Africa

MasterCard hasa p p o i n t e dEzediashi Ofili

Vice President and BusinessLeader to drive the growth ofits Prepaid Business in sub-

Access Bank PLC where hewas the Head of BusinessEngagement for NorthernNigeria.

With more than twentyyears’ experience in thebanking, energy, InformationTechnology and credit ratingsectors in both Africa andEurope, Ofili has played akey role in several majorprojects most recently thelaunch of the Nigeria NationalIdentity Card project.

MasterCard is seeking toexpand its prepaid productoffering in the region and haspartnered with severalfinancial institutions to drivethis strategy.

Speaking on theappointment, DanielMonehin, MasterCard’sDivision President sub-Saharan Africa, said growingthe prepaid business in Africawould bring more people intothe formal financial systemthereby increasing levels offinancial inclusion in thecontinent.

He said “We are happy towelcome Mr. Ofili to theMasterCard team. As we worktowards realising our vision ofa world beyond cash weacknowledge that Africa’sposition as an emerging

Ofili

EY appoints four new partners

EY (also known asErnst & Young),has announced the

appointment of four newpartners to the firm. The newpartners are Yhiza Pena, YemiSaka, Colin Daley andAkinbiyi Abudu.

The appointment comesunder the Africa investmentplan to help the firm buildsstrong capacity in theadvisory, assurance and taxservices across the region forthe long-term success of itsbusiness and clients.

Yhiza Pena:Yhiza, who has since

relocated to EY Nigeria, is aPartner in Assurance serviceline with focus on financialservices industry in WestAfrica. She joined EYIndonesia in 1989 and rosethrough the ranks to becomePartner in 2000. A ofBusiness Administration,University of the East,Manila, Yhiza, has extensiveexperience in bankingindustry with over 27 years ofaudit and advisory workexperience in Nigeria, theCIS (Russia, Georgia,Azerbaijan, Uzbekistan,Belarus), Indonesia, Taiwanand the Philippines.

Yemi SakaAs a new Partner in

Advisory, Yemi will be leadingIT Advisory for West Africa.

As part of the EMEIAInformation Security Centreof Excellence (CoE) with theobjective of driving Security

across the Europe, MiddleEast, India and Africa, Yemibrings to EY’s clients over 15years of world-classexperience in consultingacross industries (FinancialServices, Telco, High-Tech,Public Service, Resources,Retail). Through direct clientexperience, Yemi hasincreasingly deliveredcomplex work programs andbusiness-driven IT strategiesto a diverse set of clients.

Colin DaleyColin is a new partner

focused on the financialservices sector.

He comes with vastprofessional servicesexperience in Change andBusiness Improvement andhas held roles within thefinancial services andautomotive industries. Colinhas worked in the UK,Norway, Poland and countriesin Middle and South Americawith a primary focus onhelping global banks toprofitably organisethemselves to improve

banking for their valuedcustomers. He has had greatsuccess in the Africancontinent working withleading financialorganisations to improvecustomer engagement,regulatory compliance andprofitability. Colin led thelaunch of our GlobalConsumer Banking /Insurance surveys in SouthAfrica, Zimbabwe andNigeria, which survey over55,000 Customers in 35countries across the Globe.

Akinbiyi AbuduAkinbiyi Abudu is a new

Partner in tax service line.Prior to joining EY Nigeria in2011, he worked in the UnitedStates for one of the other Big4 firms. Akinbiyi has over 12years experience in theconsulting industry, primarilyin global tax structuring andplanning. He has provenexcellence in achievingresults and generatingrevenue.

He currently leads the EYNigerian tax advisory team as

well as the human capitalteam for global clients. Inaddition to client service,Akinbiyi has been active inpeople activities, particularlyas it pertains to recruiting.Akinbiyi holds a BBA inAccounting and MTx inTaxation from Georgia StateUniversity in the US and is aCertified Public Accountant(CPA).

Pena Saka

Daley

Abudu

Kola Balogun gets 2 awards

Chairman of MomasElectricity Meters

Manufacturing Limited,MEMMCOL, the onlyindigenous manufacturers ofdigital prepaid electricitymeters, Kola Balogun, hasbeen honoured with twoawards.

The awards are the“Distinguished Gold ServiceAward” by the Centre forDemocratic Governance inAfrica, CDGA, and “Award ofExcellence” by the NationalAssociation of NigerianStudents, NANS, inrecognition of his contributionto the economic growth anddevelopment of the nation.

The Awards were presentedto him when leaders of thetwo bodies paid him acourtesy call at the company’sfactory located at Lagos –Ibadan Expressway, OgunState.

The CDGA team was led bythe Director General, Dr. DafeAkpocha, while the NANSdelegation was led by itsnational Vice President, JubrilAhmed.

Explaining the rationale forthe award, Dr. Akpocha saidCDGA was particularlyimpressed by hisachievements and immensecontributions to nationbuilding through theestablishment of the companywhich serves as a criticalintervention in the Nigerianpower sector.

According to him, CDGArecognized the immensecontributions and resilience ofEngineer Balogun to puttingNigeria in the globaltechnology map and creatingemployment opportunities forteeming Nigerian youths.

He called on the federalgovernment, concernedministry, parastatals andagencies to give all necessarysupport for the company tocontinue to add value.

From Left: The Director General , Centre for Democratic Governance,Dr. Dafe Akpocha, Chairman Momas Electricity MetersManufacturing Company Limited, MEMMCOL, Engr. Kola Balogun,Member of Board, Centre for Democratic Governance, Esther Ebiere Gboukumar and the National Vice President, National Associationof Nigerian Students, NANS, Jubril Ahmed, during the presentationof the Distinguished Gold Service Award and Award of Excellenceby the two bodies to the Chairman of MEMMCOL.

Saharan Africa.He will also oversee

MasterCard’s GlobalProducts and Solutions teamin the region.

Ofili joins MasterCard from

market provides increasingopportunities for the growthof prepaid card payments,especially as the marketbegins to witness a shift fromcash to cashlesstransactions.”

“We believe that investing

in the kind of talent that willmake our vision a reality iscentral to our success, and weare glad to bring on boardsomeone with the experienceand passion required to driveour growth in this region.”

Mr. Ofili is a qualifiedPetroleum Engineer from theUniversity of Ibadan, and isalso a Microsoft CertifiedEngineer and ProjectManagement Professionalwith PRINCE2® certification.

In addition, he holds aMaster’s degree in BusinessAdministration – StrategicManagement of Technology –from Cass Business School inLondon.

On his appointment, Ofilisaid, “The potential for Africato become as technologicallyadvanced as its counterpartsin the developed world in thearea of payments isenormous, and I look forwardto contributing to this growth.With the African marketpoised to grow significantlyin the coming years as themiddle class expands anduse of electronic paymentsgains traction, now is the timeto ingrain prepaid card usagein our consumers’ dailytransactions.”

Also speaking, Ahmedcommended Balogun for hisforesights and believe in theNigerian dream by investingin what he tagged, the future.


Mr Amed Demirhan isthe Director ofLibrary Services at

the American University ofNigeria (AUN) in Yola. In2006, he started the first digitallibrary in the University ofKurdistan, Iraq. In November2011, he moved to AUN asDirector of Library Serviceswhere he has transformed thelibrary from a traditionallibrary to a digital library andnow, AUN is about to unveilits new smart library, all in abid to go green and makeeducation cheaper. In this chatwith Vanguard, Demirhanspeaks on how the institution,strongly supported by itsPresident, Dr. Margee Ensign,is leading the movementtoward digital librariesaround the world. He says ifAUN could achieve this tobecome Africa’s only globallibrary, other institutions inNigeria can achieve that too.

Excerpts:

According to Demirhan,

AUN is doingsomething unique in the areaof library services not just inNigeria, but internationally.Recently, the AUN e-libraryproject received the AmericanLibrary Association’s (ALA)Presidential Citation forInnovative InternationalLibrary Projects. One of thereasons given by ALA forchoosing AUN was that AUNhas created a digital librarymodel for other libraries that isaffordable, sustainable andincreases availability ofresources for users.

“We are applying informationtechnology both toorganisational structure, spaceand collection. Those are thethings that created the magic.So that was why this year(2013), the AUN was selectedas one of the best innovativeinternational projects in libraryand I think every Nigerianshould be proud of that. Also,

a publication by The Guardianof UK singled out AUN, alongwith Oxford, New York,Manchester, and six otheruniversities around the world,for its extraordinaryachievements. It was the onlyAfrican library to make the list.

“This is really bringing usclose to the founder’s dream ofcreating efficient, functional,competitive institution thatcould be replicated all overNigeria and Africa. We are notsaying we are doing thisbecause we are better thaneverybody else, we are sayingwe are doing this and we canprove everybody else could doit. We want every university,every school in Nigeria to knowthey can do what we are doingregardless of their resourcesbecause this did not cost a tonof money. We createsustainable, affordablelibraries. In the last two years,we have moved from traditionalto digital and now to smartlibrary. We are constantlyimproving. Only very few

saves money, moree n v i r o n m e n t - f r i e n d l y,consumes less electricity andtakes up less space. We have abusiness and entrepreneurshipcentre, radio and televisionstudio, communicationdepartment, all located in thelibrary. That is why it is called

archiving them. With thatmoney, we can buy tons of e-books and thousands of e-journals. So e-learning ismoney saving, it is effective andthat is why I am saying this isan equalizer for developingcountries. It is not magic. WhenI talk with others fromuniversities in Nigeria, theytell me 'you have all theseresources because you have allthe money. The issue is reallynationally critical fordevelopment," he said.

“An organisation visited AUNand observed that the wholeplace was so organised andclean and I tell them ‘look, thepeople who do the job areNigerians, they are not from themoon so Nigerians work foryou and work for us too. So ifthey can do this for us, they cando it for you too. It is so simple.But the difference is not beingNigerian or American orJapanese or whatever; thedifference is organisation,functionality and efficiency.That is the key and everyonecan do it," said Demirhan

Community service:“The use of the latest

technology has dramaticallyincreased both the library’s e-collections, and user access (24/7), regardless of location.

"The community benefits fromour Open Access resources. Weoffer them training on how touse resources and evaluatethem. Open access is the bestinvestment for expansion ofglobal education anddevelopment. Through that,we are able to help otherNigerian universities andindependent researchers. In2012, we trained 147 facultyand administrative staff fromthe Federal College ofEducation, Yola and 20 facultymembers from ModibboAdama University ofTechnology, Yola. As at today,the library has subscribed tomore than 210,000 e-books.This is more than mostuniversity libraries' e-bookcollections in America.

"People in the communitywho want to start their ownbusiness can come to ourentrepreneurship centre inthe library and get free adviceand may be applicationforms."

We want every university, everyschool in Nigeria to know they cando what we are doing regardless oftheir resources because this did notcost a ton of money

E-learning is cost-effective— Amed DemirhanBy EBELE ORAKPO

universities in the world havedone it.”

Advantages:“A smart library is basically

like a smart phone – multi-functional, efficient, has moreservices and because you dealwith e-resources, you don’tneed too much space, so wehave more space to add moreservices. We use more mobileapplications. For instance, thescanner, desktop computer,laptop, photocopy machine,and telephone have beenreplaced by smart phones,tablets and netbooks, thusproviding a new level ofefficiency and effectiveness. It

smart library. That is efficientuse of space and we did notspend so much money to getto where we are. We spentmuch less than what thePetroleum Trust Fund gives toa university library in Nigeria.Every library gets about N30million from the fund. Almostevery university is erecting newbuildings; but if they can putthat money into tablets or otherdevices, every university withthe cost of one building, canbecome an AUN as far as e-library goes.

“We used to pay about $11,360 for 76 newspapers andmagazines plus the cost ofhandling, displaying and

,

,

•Amed Demirhan

Third setwinners ends“33” promo

Three consumers of

C o n s o l i d a t e dBreweries Plc's “33” Exportlarger have won N3 million inthe national consumerpromotion tagged; Crackingthe code.

The trio; Mr. Tunji Odusanya,Sunday Edobor and HenryEmama emerged the third setof winners in the recentlyconcluded “33” Export lagerpromo.

The consumers wonN1million each aftersuccessfully cracking the codeof friendship by combiningtheir crown corks to form thephrase - Code Of Friendship.

This latest set of winners hasincreased the number of grandprize winners so far to ninesince the promo commenced onJune 7.

Presenting cheques to thewinners, the Brand Manager,Consolidated Breweries Plc.,Mr. Dare Olateju expressedappreciation to consumers ofthe beer for making the promoa huge success.

SBC’s 3rd HBSwinner emerges

SEVEN-Up BottlingCompany, SBC, Plc was

the recipient of this year’s 7UpHarvard Business School MBAScholarship.

The scholarship wasinstituted in 2010 as part of the50th anniversary celebration ofthe company to provide youngNigerians the opportunity toacquire skills that will equipthem to become global leaders.Miss Mayowa Kuyoro, a youngMechanical Engineer, wasunveiled in Lagos as therecipient of the 7Up HBSScholarship for this year. Shejoined two previous winners:Ms. Misan Rewane and Mr.Olujimi Williams.

Speaking at the event, theExecutive Director, HumanResources, Seven-Up BottlingCompany Plc, Mr. FemiMokikan, said that the countrywould benefit from young,energetic Nigerians who arecapable of transformationalleadership by virtue of theireducation and exposure.

He listed some of the criteriafor the scholarship selection toinclude: a valid admission letterfrom Harvard Business School,residency in Nigeria, relevantpost-graduation self-application proposal tocontribute to nationaldevelopment and the criticalneeds criterion – financialneed to fund the scholarship.

•AUN Library houses a business and entrepreneurship centre, radio and television studio, communication department etc.

BRIEFS

People in Business


Aviation

NIGERIAN Airspace

M a n a g e m e n tAgency , NAMA, is to train96 members of its staff inBasic AeronauticalInformation Course at theNigerian College of

BRIEFS

Aviation Technology , NCAT,Zaria.

According to SupoAtobatele, General Manager,Public Affairs, NAMA, thistraining is part of on goingefforts by the agency to beefup capacity and manpowerrequirement preparatory tothe imminent take-off of

Aeronautical InformationService (AIS) automation inNovember.

The Managing Director,NAMA, Engr. Mazi NnamdiUdoh , said “ the affected staffare to be trained in BasicAeronautical InformationCourse at the NigerianCollege of Aviation

Technology, NCAT, Zaria . Foreffective deployment oflogistics, the group shall runthe course concurrently in fourbatches.“

Addressing participants atNAMA headquarters inLagos, Engr Udohcongratulated them for theprivilege just as he enjoinedthem to justify the agency’shuge investment in theirtraining by taking theirstudies seriously.

Atobatele further said; “TheInternational Civil AviationOrganisation (ICAO) has setNovember 15, 2013 asdeadline for theimplementation of AISautomation worldwide andthe project in Nigeria hasreached advanced stage ofcompletion.”

AIS automation when inoperation, would enhance airsafety with pilots sendingtheir aeronautical messagesonline and this would reduceexcessive telephoneconversation between pilotsand air traffic controllers.

NAMA said the airports tobenefit from the projectinclude Lagos Kano, Abuja,Port Harcourt, Ilorin, Jos,Sokoto, Maiduguri, Owerriand Yola. Others are Zaria,Calabar, Osubi, Minna,Kadunna, Enugu, Katsina,Ibadan, Benin, Akure, Bebi,Bonny, Eket, and Eskravos.

that Mr. Uriesi inherited oneof the worst Governmentagencies in Nigeria which hehad undoubtedly transformedthrough his “passion todeliver.”

The Minister told FAANstaff who were present at theevent that they did not haveany choice but to transform

NAMA to train 96 AIS staff at NCAT

By LAWANI MIKAIRU

THE Minister of Aviation,

Princess StellaOduah, has said that theManaging Director of theFederal Airports Authority ofNigeria, Mr. George Uriesi,deserved the NationalProductivity Order of Merit,NPOM, award bestowed onhim and 19 otherdistinguished Nigerians byPresident Goodluck Jonathanrecently in Abuja.

According to Yakubu Dati,General Manager, CorporateCommunication, FAAN,Princess Oduah made thisremark when she made anunscheduled appearance at areception held in honour ofMr. Uriesi by some staff ofFAAN in Abuja, soon after theaward ceremony. “ She saidthat it was remarkable thatMr. Uriesi had turned thefortunes of FAAN, from that ofa parastatal reeling under theweight of heavy indebtednessto the tune of about N8 billion,to one that is becomingincreasingly financially self-sustaining in less than twoyears of his appointment asthe authority’s chief executiveofficer.”

Dati said Oduah describedMr. Uriesi as “a trueprofessional who understandshis tasks and is bent onachieving them.” She added

the authority into an efficientagency that would contributesignificantly to the socio-economic development of thecountry, promising thatgovernment was willing toencourage them to make thatgoal feasible.

“Apart from being a pastGeneral Manger of the

award-winning Cape TownInternational Airport, in SouthAfrica, Mr. George Uriesi,continues to play active partin the Airports CouncilInternational (ACI), both atthe regional and internationallevels, in airport safety andtechnical matters. He is alsoa United States-certifiedBusiness Coach.”

FAAN MD deserves merit award — Aviation Minister

NCAT launchesbook on airnavigationmaintenancetomorrow

THE Nigerian College ofAviation Technology,

(NCAT)Zaria in conjunctionwith the Chief AeronauticalTe l e c o m m u n i c a t i o nEngineering Instructor of theCollege, Engr. EmmanuelOnwuka, is to launch a book toenhance the training ofaviation personnel tomorrow inLagos.

Speaking in Lagos on theproposed book titledIntroduction to Air NavigationSystem Maintenance inNigeria, Onwuka noted thataviation training colleges in thecountry lacked training bookswhich has made it difficult forstudents to get the requiredknowledge.

He disclosed that the dearthof books in the training ofaviation personnel is a sourceof worry to the college andother aviation colleges as it wasbecoming increasingly difficultto get materials for aviationtraining and research. Heexplained that it was based onthis that after about 20 years asan instructor with NCAT, thathe decided to write the 200-page book which provides aninsight into navigationtelecommunication.

environment for airlines to operate and succeedadding that the way to go is to stand to acceptcompliance to the law at all times. Whileexpressing his wish for airlines to succeed andmake profit, the D-G prayed for accident/incident-free period throughout his tenure.

Earlier, the Chairman of Caverton and leaderof the team, Mr. Aderemi Makinjuola told theD-G that his team has come to pledge theirsupport to him, promising to continue to executetheir work and responsibilities with duediligence and recourse to the existing industrylaws, adding that they are always willing tomake corrections whenever there is a mistake inthe course of their operations.

He said that they have also come to know thepolicy thrust of the D-G even though accordingto him, it has always been safety, safety andsafety, so that they will know areas he wouldwant them to contribute in line with his policythrust and also towards the growth of theindustry.

THE Director-General, Nigerian Civil

Aviation Authority, Capt FolaAkinkuotu has advised airlines operating inNigeria to comply with extant aviation lawsto avoid sanctions by the regulatory agency.Capt. Akinkuotu made the remark whilereceiving the chairman and managementteam of Caverton Airlines who paid him acourtesy visit.

According to Fan Ndubuoke, GeneralManager, Public Affairs, NCAA, the D-G saidthat "one good thing about the aviationindustry is that the laws are there andcompliance is very essential. As a regulator,we will always assess airlines from the pointof view of adherence to the industry laws.”

Capt. Akinkuotu further said that theauthority will provide the enabling

Ghana’s AfricaWorld Airline tobegin flights toNigeria

Africa World Airlines, a

Ghanaian carrier hasbeen granted rights to beginflight operations to Nigeria bythe Nigerian Civil AviationAuthority, NCAA. Ch-aviationreports that while speaking toGhana’s Citi Business News,Africa World Airlines (AW)Chief Operating Officer, MrApiigy Afene, revealed thatthe airline would tentativelybegin plying its Nigerianroutes, named as Abuja andLagos originally, fromOctober this year, though thisis still not fixed.

“We are fortunate that fivemonths after putting inapplication, we have beensuccessful. Tentatively, we arelooking at October 2nd to startflying into Nigeria but it maychange but we will work hardto ensure we start flying inOctober,” he said. FellowGhanaian carriers, Antrak Air(O4, Accra) and Fly540Ghana (5G, Accra), have alsoclaimed that they have beententatively granted trafficrights to Nigeria followingthe intervention of theGhanaian Ministry ofTransport and Civil AviationAuthority (GCAA). AfricaWorld currently operates tworoutes, both domestic, toKumasi and Tamale.

NCAA advises airlines to complywith industry laws

By LAWANI MIKAIRU

& DANIEL ETEGHE

From left: Sullivan Akala, Executive Director, Business Development, E-Tranzact Internation-al plc; Kemi Okusanya, Business Development Anglophone, West Africa, MoneyGram, andKunle Olumuyiwa, Operation manager Anglophone, West Africa, MoneyGram at the partner-ship agreement signing between MoneyGram and E-Tranzact to flag-off MoneyGram GoesMobile platform in Lagos Photo by Lamidi Bamidele


Agric

The Federal Governmenthas targeted the

production of 500,000 metrictonnes of Cocoa annually,from 2015. Mr. AkinwumiAdesina, Minister ofAgriculture, disclosed this ina paper entitled: “Agriculture:The Value Chain Roadmap”on Friday at the 9th AllNigerian Editors Conferencewith the theme “NigeriaBeyond Oil: Role of theEditor” in Asaba, Delta.

The News Agency of Nigeria(NAN) reports that the four-day conference which startedon Wednesday was organisedby the Nigerian Guild ofEditors in collaboration withthe Delta State Government.

According to him,government’s target is todouble the production of cocoafrom the current 250,000metric tonne per annum toover 500,000 metric tonne perannum by 2015.

“We are taking advantage ofthe recently released highyielding hybrids of cocoa bythe Cocoa Research Instituteof Nigeria.

“These varieties give yieldsfive times the yields currentlyobtained by farmers and in

Investment in agriculturalresearch has gone down—Akinbamijo

D r Yemi Akinbamijo

has an agriculturebackground with

specialization in animalproduction. As anagricultural expert who hasserved in variouscapacities over the last 28years, he is solidly plugged-in on agriculturaldevelopment issues in Africa.

Dr Akinbamijo was recentlyappointed Executive Directorof the Forum forAgricultural research inAfrica (FARA), he hadserved the African UnionCommission as head of theAgriculture and FoodSecurity Division until June2013 at the Headquarters inAddis Ababa, Ethiopia.

Dr Yemi Akinbamijo holdsa PhD of the WageningenAgricultural University, TheNetherlands.

In this interview withjournalists after a visit to theoffice of Minister ofAgriculture, Dr. AkinwumiAdesina , he shares histhoughts on Agriculture inAfrica.

Here is an excerpt.

On his visit the Minister ofAgriculture

Where are here in Abujabecause I received aninvitation, from the FederalMinistry of Agriculture andRural Development, to meetwith the Minister ofAgriculture, Dr. AKinwunmiAdesina.

Let me put it in perspective,this is the very first missionthat I will be undertaking afterassuming office, and it is veryinteresting for me in particular

because, I am a Nigerian andI thought it right that I shouldcommence my engagementwith the internationalcommunity from my homecountry.

I also came as the head of adelegation called FARA deForum. Now let me make abrief description between thesecretariat of FARA and FARAde Forum. The secretariatservices the interest of theForum, and de forum is theagglomeration of all thestakeholders in agriculturalresearch for the continent. Soit was a delegation that wascomposed of a cross-section ofstakeholders.

In the delegation, I havethree of the senior colleaguesfrom FARA, and we have fromNigeria the head ofAgricultural ResearchCouncil, Professor Abubarkarand we also have tworepresentatives of the DirectorGeneral of the InternationalInstitute for TropicalAgriculture (IITA) based inIbadan, and we also have theDirector General of the

International livestockResearch Institute, DR. JimmySmith.

Basically as I said, it was myfirst mission out of office andI wanted to keep the ministerabreast of my desire to haveNigeria continue to play animportant role in the domainfor agricultural researchdevelopment in the continent.

However, from what I ambeginning to see over the lastcouple of years and this is notpeculiar to Nigeria,investment in agriculturalresearch has been down.

Across the continent today,the key supporter of Africanresearch and developmenthave been European andAmerican countries, but wefelt that Nigeria should nowcome to the fore and supportthe effort of FARA de Forumand the secretariat in its driveto have a food secured Africa.

It should be noted that latePresident Bingu waMutharika in his tenure as thechair of the AU made a pledgewhich we still try to upholdwhen he said that he wanted

an Africa where no child willgo to bed hungry. And we feltthat apart from me being aNigerian that my first port ofcall is solving Nigeria’s

Food challenge is actuallysolving 25 per cent ofAfrican’s challenge, becausethe demographic informationavailable to us today says thatNigeria’s population is aquarter of the continent.

So whatever, we can do tosupport the ministerespecially in the context of theAgricultural TransformationAgenda (ATA)is equally adeliverable for us in FARA. So it is a win-win scenariofor both FARA and thegovernment of Nigeria toactually now step-up ourcollaborative engagement inthe

quest of providing researchtools for our stakeholders.

On Value chain approachAs mentioned earlier on, am

an animal scientist and I havemade my mark when it comesto livestock research andlivestock integrated systems.I am particularly delightedthat the minister has chosento pursue the value chainapproach and that is the wayto go, if we look at countriesthat have broken the foodinsecurity barrier of late (last30 years), we have countrieslike Brazil and China; thesetwo countries paid the heavyprice of investing inagricultural value chain.

Brazil is a model toemulate and if you go toChina, it is another scenariowhere you have demandapproach to research fromfarm to fork which means that

you disaggregate everysegment of the chain from thefarm until it reaches the table.

In other words, if we adoptwhat I referred to earlier onas demand driven research asopposed to the supply drivenresearch, we look at the tableand see what the demand onthe dining table of Nigeriansis and what will be thedemand facing Nigeria 50years from now.

Now the question facing usis will we be able to meet thisdemand? And if yes, there area few things we still have todo. Well it is on record thatabout 45% of the foods weproduce do not get to the tablebecause of post-harvest loss.

One of the key issues in thereduction of post-harvest lossis definitely the issue of valueaddition, processing andtransformation of productsand when we look at the valuechain, there is the issue ofdealing with inputs, agro-dealership, fertilizers, seeds,access to credits andenhancing the capacity of thefarmers not to do business asusual because just like AlbertEinstein said that if you do thethings you always did, youwill get the results you alwaysgot. And we know it that theresult we always got is not theresult that will sustain drive.

At the moment the foodimport bill on this continentis in excess of 40 billion USdollars and we in thiscontinent have the capacity toreduce this bill by the way, thisis the money we do not haveso it is incumbent upon us thatwe do anything we can toreduce this bill and we can.

,

,FG targets 500,000 metrictonnes of Cocoa from 2015

half the time.”The minister also said that

irrespective of the nature ofproducts be it crops, livestockor fisheries, marketing hasremained a dauntingchallenge to farmersadding that government wasalready addressing that.

He said that the challengeof marketing was basicallydue to the absence of marketinformation system, poorstorage facilities, poor ruralroad networks among others.

“Post harvest loses can be ashigh as 45 per cent for someagriculture commodities,especially perishable such asonions, tomatoes, fruits andhorticulture products.

“We are addressing thischallenge. We have completeda total of 10 new silos forstrategic food reserves withinone year.

“We now have a total of 30silos of different capacities invarious locations in the sixgeopolitical zones of thecountry,” he said.

He said that governmentwas also supporting the siloswith warehouses to ensurethat the post harvest loseswere reduced.

Across the continent today, thekey supporter of Africanresearch and developmenthave been European andAmerican countries, but we feltthat Nigeria should now cometo the fore and support theeffort of FARA de Forum

Yemi Akinbamijo


Commodity Index

half pgWarning


Customers asElephants - 1

Do you still remember a particularly awful

service experience you had in the hands ofa certain organisation some 10 or 15 years ago? Ifyou do, your memory can favourably compare withthat of an elephant. I understand that elephantshardly forget anything. In fact, as they grow older(especially the female) their memory gets better andbecomes more useful for adaptation to theenvironment. Well, some customers are like that.

I don’t know of any systematic study that hasattempted to unravel the average time it takescustomers to forget a poor – or even great – customerexperience. (If you have come across such a study,please do bring it to my attention). Anecdotalevidence, however, suggests that some customerssimply find it difficult to forget certain experiences– especially the egregiously poor ones.

In their book, Satisfaction, Chris Denove andJames D. power IV graphically narrate theexperience of one of those customers who simplywon’t forget. In 1977, Frank Burrows bought aGeneral Motors (GM) car – a Pontiac Trans Am.The car came with a 12-month or 12,000-milewarranty. Seven thousand miles and 13 monthslater, Burrows began to hear some strange soundsthat he easily attributed to a manufacturing defect.He took the car back to GM and then discoveredthat many other cars had a similar problem. Sincethe problem was obviously the result of a technicalerror made at the manufacturing stage, Burrows hadhoped that GM would fix the car at its expense.Also considering that his car had done mere 7000miles, he couldn’t see any reason why GM wouldnot be glad to fix the problem without billing him.

Well, the chaps at GM thought differently. Theywould not fix the car free of charge. In frustration,Burrows wrote several letters to GM without gettinga response. The long and short of it was that hecoughed out $500 (a huge sum in those days) forthe repairs. Almost 30 years later, he was still sofurious he hadn’t bought any car from the companyever since. And guess what? Frank Burrows hadbought 11 cars since then and had vowed never togo near a GM car.

If GM had taken a long-term view of its business,absorbed a $500 bill of a complaining customer anddone a few other basic things to keep the customerhappy, it obviously would have sold 12 cars to thesame customer in about 30 years – an average ofone car every 2.5 years – instead of just one car.And who knows how many other people Mr Burrowscould have influenced to buy GM cars! In fact, Isuspect since he was so angry with GM, he musthave discouraged many from buying from thecompany. It may sound good to blame the rigidexecutives at GM. But we’re talking about 1977here! You and I know that thirty years later, manyof us still operate our businesses with the sameinflexible mind-set. Everyday, many of us choosethe same route in our business decisions.

Now, let’s turn to personal experience.As a customer, I don’t forget bad experiences too

easily. It’s not as if I make any special effort toremember. It’s just that the memories of someexperiences refuse to fizzle out. And that’s human,isn’t it? After all, we would never learn anythingwithout a good memory.

I remember vividly that in 1995, I boarded a HarkaAir (light) aircraft that flew from Lagos to Abuja inall of 95 minutes! And the in-flight service wasn’tparticularly great. One of the people I travelledwith said he would never patronize the airline again.I knew I didn’t want to spend more than an hour inthe sky moving from Lagos to Abuja. Today, HarkaAir is moribund. If it were still in operation, I’msure it would have lost at least two customers thatwere on that flight.

TO BE CONTINUED

Comments are welcome.

Advertising, Media& Marketing

RECENTLY, the fruit juice

market has beenwitnessing some string pullingby contending brands for theleadership position in thecarton packed fruit juicemarket, breaking campaignson 100 percent natural juicecontent.

Brands like 5Alive, Fuman,Ribena and few others havebeen riding on the 100 percentjuice content tagline to controlthe market. More obvious is theChivita 100 percent naturaljuice campaign that had takenover media spaces lately.

Conversely, since the fruitjuice market is a market drivenmore by volume sales thanprice differentiation,availability at every point ofpurchase is critical to marketleadership. Distributionnetwork built over time is onlyable to match and even surpassthat of competition in certainlocations. In a monopolisticmarket, leadership in anybusiness category is never abirthright, it is never anaccidental occurrence. Instead,market leadership is a strategicdecision that must be plannedfor and excellently executed. Tobe sure, any brand can desireto be the market leader in itscategory, but unless thedecision is translated intoaction it will simply remain awish.

The re-enforcement ofChivita’s 100 percent fruit juicecontent as part of a carefullydesigned strategy to maintaintop-of-the-mind-awareness,remains a tagline that has wonaccolade for the brand amongfruit juice lovers in Nigeria.

Juice content, market leadership tussle… Chivita deploys content campaign

Furthermore, a careful look atthe campaign shows it is aconscious strategic choice bythe owners of the brand on howit intends to compete in themarket with its flagship brand- Chivita Premium Fruit Juice.

Like Justin Akugo, ManagingDirector, Kizito Stores, puts it,“managing for marketleadership demands courageand boldness to tread whereothers are afraid to venture.Chi Limited was daringenough to chart new coursesand risk operation in adeveloping economy likeNigeria where uncertainty isthe only certainty.”

Continuing, he said,Chivita’s success stands onthree strategic pillars. The firstpillar is the fruit juice itself. Asthousands of customers haveattested to, even in blind tastetests, Chivita Premium FruitJuice is truly 100 percent fruitjuice in content and contains

no added sugar, no added preservativeand no artificial colours and flavours.

Chi Limited was able to deliver theproduct through massive investment inlatest technology that helps to addressthe needs of a growing health-consciousness Nigerian fruit juiceconsumers.

Further, he explained that in its questto enrich the quality of its flagship brandwith premium taste and quality, the newChivita Premium Fruit Juice comes witha newer, more attractive pack designedto give more impact and to focus moreon brand elements. Relying on consumerinsights, the fruit juice is packaged inTetra Pak elongated rectangular andeasy-to-open formats that are a hugedelight to consumers.

The third strategy adopted by ChiLimited was to have a functionalcampaign strategy to communicate thereality of the 100 per cent fruit juicecontent of its flagship brand toconsumers. That way, the brand hasbeen able to sustain its quality imageand is more accessible to the generalityof Nigerian consumers.

Ernst and Young, which

metamorphosed intoEY, said the name change is astrategic movement in line withthe firm’s global vision, whichwill make it more distinctiveprofessional consulting firm.

Recently in Lagos when theAfrica leadership of the firmgathered to discuss the Africanpotentials and growth marketstrategy, Henry Egbiki, theRegional Managing Partner,West Africa told his colleaguesand clients at a reception for theAfrica leadership that theobjective of the firm is to benumber one tax, transactionand advisory services firm inAfrica.

“What the one management,one leadership, one

governance across EMEAdoes for us is that it allows usto make the right investment todrive the right level of qualityin technology to ensure wedeliver seamless and consistent client service at alltimes. The power in this kindof model is the ability to pullresources where ever they existand the focus is to ensure weassemble the right team todeliver quality for clients”,Egbiki said.

According to him, EY isinvesting heavily in theNigerian market because of ourclients and we want to meettheir expectations and exceedthem. He also said thatbeyond the profit motive, thereis higher calling for the firm.

“Everyday, as member of EY, there issomething that drives us and that isabout building a better working world.To build a better working world entailswhat we do, including helping ourclients, making sure investors make theright investment and the right decisions,supporting communities where weoperate and supporting our staff to dothe right thing for the right purpose. Werecruit quality people, train and ensurewe drive the right kind of quality andintegrity.”

Also speaking, Ajen Sita, CEO, EYAfrica, explained that the firm which isinvesting heavily in Africa, encouragingentrepreneurs through awards andsupporting organisaitons in theirdecision taking is due to the firm’sdeep commitment, conviction and beliefin the future and potential of Africa.

EY’s Africa leadership takes strategic step onglobal vision

Stories byPRINCEWILL

EKWUJURU

From Left: Marketing Manager, Diageo Brands Nigeria, Sola Oke; GeneralManager, Diageo Brands Nigeria, Felix Enwemadu, Diageo ReserveBrands Ambassador, Tim Etherington-Judge and Marketing andInnovation Director Guinness Nigeria, Austin Ufomba and Africa ReserveSenior Brand Manager, Hrvoje Smiljanec at the launch of Johnnie WalkerGold Label Reserve recently in Lagos.

Email:[email protected], [email protected] page:www.lesleba.com/blog2Website: www.lesleba.com

Tel:0805 220 1997

44— Vanguard, MONDAY, AUGUST 26, 2013

Omoh Gabriel - Group Business EditorBabajide Komolafe - Finance EditorClara Nwachukwu - Energy EditorPeter Egwuatu - Head, Capital Market

Yinka Kolawole - Snr Bus. CorrespondentFavour Nnabugwu - Insurance CorrespondentGodwin Oritse - Maritime CorrespondentGodfrey Bivbere - Maritime Correspondent

Michael Eboh - Capital Market ReporterFranklin Alli - Industry/Agric. ReporterEbele Orakpo - Energy ReporterIfeyinwa Obi - Maritime Reporter

CONTRIBUTORSPrincewill Ekwujuru - Media/Marketing

Naomi Uzor - IndustryProvidence Obuh - Micro FinanceLAYOUT - Graphics Department

Business & Economy

O U R T E A M

,

,

Nigeria’s revenues plunged by 42per cent in July due to oil theft

and production outages, theaccountant general said on Friday,underscoring how oil theft isdamaging public finances this year.State revenues fell to N498 billion, thelowest monthly earnings this year anddown from 863 billion naira in June.Oil theft has cut government earningsin several months this year, and bymore than last year, and July wasparticularly badly hit.

Military in the restless Niger Deltasay they are renewing efforts to catchoil thieves, while the Oil MinisterDiezani Alison-Madueke says she isreaching out to foreign governmentsto help stop the buying of Nigeria’sstolen oil. “This was due to continuoustheft of crude oil, leakages, pipelinebreaks at various terminals,compressor failure and repair work,”Accountant General Jonah Otunla toldreporters. Shell Nigeria shut its150,000 barrel per day Trans Nigerpipeline on July 11 after a leak was

Nigeria's revenues tumble 42 % in July due to oil outagesdetected; barely a week after thecompany re-opened the pipelinefollowing the repair of some crude theftpoints.

Criminal gangs frequently tap intoexposed pipelines in the windingwaterways and swamps in the NigerDelta, siphoning off tens of thousandsof barrels a day. Nigeria lost out on$10.9 billion in potential oil revenuesdue to production losses caused bytheft and sabotage between 2009 and2011, an audit showed last month. Atotal of 715.8 billion naira wasdistributed to local, state and federalgovernments in July, down slightlyfrom 718.1 billion in June, Otunla said.The excess crude account, whereNigeria saves oil revenues over abenchmark price, holds $5.1 billioncurrently, compared with $9 billion atthe end of last year, data showed onFriday. Nigeria is aiming to cut itsbudget deficit to 1.85 percent of grossdomestic product this year, from 2.85percent in 2012. Oil accounts foraround 80 percent of government

revenues and the crude savingsaccount is often used to fund thebudget deficit if oil revenues fallbelow target.

Meanwhile, Nigeria’s Bonny Light

oil exports areprojected to fallin October.Nigeria willexport 95,000barrels per dayof the BonnyLight crude oilgrade inOctober, ap r o v i s i o n a lshipping listshowed onFriday, downfrom a planned127,000 bpd inSeptember. TheBonny Lightgrade, operatedby Shell , hasbeen under

force majeure since April. A forcemajeure relieves companies of theircontractual obligations. A firm may optto keep it in place if it can onlypartially meet commitments.

Okonjo-Iweala perplexed byhigh interest rates

“The first thing I have to say is thatwe have a central bank that isautonomous and it is the best practiceto make these decisions. We may notbe happy about it and I am bold tosay we are not happy about highinterest rates! As I said before, it istough for our entrepreneurs tofunction. Even before the withdrawalof this liquidity, they were alreadycharging over 20% interest rates andI think that is alarming. …we needto interrogate why. Structurally, whatis the issue? And we are not willingto ask our banks that question. So,as the minister of finance, I have beenvery concerned about that. Even ifthe monetary policy rate (MPR) is 12%,inflation is coming and there is noreason why the spread. It is too high! Why are real interest rates in theNigerian economy so high? Depositrates are extremely low and Nigeriansavers are earning as low as 5% and3%. But they are giving certainsegments high deposit rates.

“…But the fact that we are leavingthe banks as we are running a freemarket system, does not mean that youhave to have this kind of behaviour. Private sector credit has gone down. I plan to have a meeting with thebanking sector operators to reallyunderstand what is going on.

“That is why we are really going toset up the development bank. I amnot trying to bash them (banks), but Iam puzzled as to why. I think thereis a structural problem within thebanks and our banking system andtheir pricing.”

The above is an excerpt of theFinance Minister, Dr. NgoziOkonjo-Iweala’s responses to

ThisDay Editiors, on the seeminglyintractable challenge of thedysfunctional interest rates structure.

It may indeed be best practice for acountry ’s Central Bank to enjoyautonomy in formulating andexecuting strategies and decisions thatwould sustain price stability (i.e. lowcost of funds, minimal inflation andappropriately priced currency). Nonetheless, the monetary policydirections of Central Banks and thefiscal policy objectives of the Executivebranch of government must be in

harmony to avoid conflict in theproduct of their respective actions; for example, the high interest ratescurrently induced by CBN’s policiesdeflates the real sector and challengesgovernment’s expectation forindustrial and agricultural expansionto promote increasing jobopportunities, and by extension,improved social welfare, while itsimultaneously increases our debtburden in spite of minimalinfrastructural impact.

This realisation of the stifled

objectives of government led to Dr.Iweala’s above lamentations! Regrettably, the enabling 2007 CBNAct does not finely define parametersfor judging acceptable level of pricestability; consequently, CBN could stillclaim that it has successfullymaintained stability, even wheninterest and inflation rates remain‘stable’ at such high rates that depresseconomic growth.

Consequently it is necessary tocircumscribe CBN’s jealously guarded

autonomy with clear parameters,which define success and failure; thusbest practice monetary managementmust sustain lower single digitinflation and interest rates as obtainsin successful economies elsewhere;therefore, CBN’s monetary policyrate must never exceed, say, 2% of theinternational bench mark of theLondon Interbank Offer Rate(LIBOR). Failure to engenderinflation rates below 4% should alsolead to the resignation of the Governorand dissolution of CBN’s MonetaryPolicy Committee.

The Finance Minister alsoexpressed her consternation at

the huge gap between high lendingand very low deposit rates. Instructively, however, best practiceinterest rate structure can never beattainable with the ever-presentburden of surplus cash or excessliquidity in the system.

Consequently, any viable strategymust attack the root cause of systemicsurplus cash, which curiously does nottranslate to liberal availability of cheapcredit to the real sector!! In spite ofthe distractive serial arguments to thecontrary, undoubtedly, such surpluscash evolves, whenever CBNsubstitutes naira allocations for dollar-derived revenue. This singular factorpoisons successful management of theeconomy, as it instigates the oddreality of government borrowing backits own funds from banks and alsocrowding out the real sector fromavailable credit. Indeed, excess fundsalso fuel inflation and facilitates ampleopportunities for corruption. Indeed,Dr. Iweala needs no longer search forthe cog in our economic wheel ofprogress.

Furthermore, excess naira supplyinstigates downward pressure on thenaira, especially when we earnincreasing dollar revenue! Worse

still, a weaker naira increases fuelsubsidy and may pose a threat tosubsidy-free tariff in the power sector.

Incidentally, some critics may observethat before the 2007 CBN Act, whichconsolidated CBN’s power, cost offunds were between 17 – 20% (still veryhigh rates) throughout the FinanceMinister’s first term in office, but thereis little evidence that she did anythingabout it, even when there were noconstitutional constraints. Nevertheless, Dr. Okonjo-Iweala’sintended meeting with banking sectoroperators will certainly bemeaningless, if the root cause ofsurplus cash is not addressed.

The option of creating a developmentbank suggested by the Minister mayactually turn out to be a wastefulduplication of the functions of theexisting Bank of Industry (BOI). Furthermore, the creation of selectivelow interest rate by fiat for such a banktogether with CBN’s tight monopolyof 80% of forex supply may also not becompliant with Dr. Iweala’s support fora truly free market system.

Advisedly, the BOI funding shouldbe heavily supplemented to increaseits territorial spread and ensure thatcost of funds and other ancillarycharges do not cumulatively exceed7% in place of oppressive cumulativecharges above 20%, whichmanufacturers recently decried. Furthermore, in line with best practicein successful economies elsewhere,agriculture loans should not exceed2% also cumulatively.

Instructively, Dr. Iweala’s dilemmaon conflicting economic strategies willbe resolved once CBN cuts theumbilical cord that feeds the moneymarket with excess cash by stoppingits usual capture of monthly dollarrevenue and substituting same withbloated naira sums.

SAVE THE NAIRA, SAVE

NIGERIANS.

The option ofcreating adevelopment banksuggested by theMinister mayactually turn out tobe a wastefulduplication of thefunctions of theexisting Bank ofIndustry (BOI)

Financial Vanguard August 26 2013

Documents

Transcript of Financial Vanguard August 26 2013