Financial vanguard 02022015

CMYK

FEBRUARY 2, 2015

By ROSEMARY ONUOHA

Insurance operators and tradersare split over the lack ofinsurance cover to mitigate

losses suffered by traders during fireincidents.

Market fire disasters have becomea recurring menace in Nigeria and itis estimated that the country losesover N50 billion from these fires everyyear. Recently some traders in theBalogun market, Lagos Island,suffered losses running into billion of

Insurers, tradersdiffer on cover for fireincidents

naira when a fire incident engulfedthe market on January 11th.

Mr. Ogbonna, was one of the tradersaffected by the fire incident. He saidthe fire destroyed N35 million worthof shoes, which was delivered theprevious day. Wailing uncontrollably,he screamed that part of the moneywas borrowed.

Another woman, Mrs. Gbadamosi,an attendant in one of the shops, saidthat her employer had goods worthN27 billion in his containers to beoffloaded on Monday, by the time

they got to the market, nothing wasremaining. Some of the affectedtraders only just returned from theirrespective home towns, where theyspent the Christmas and New Yearbreak, only to be faced with thedisaster.

The impact of the fire incidents isbeing aggravated by lack of insurancecover for the goods. This, accordingto traders was because insurancecompanies in the country wereunwilling to provide insurance coverfor traders.

The traders, for instance, accusedinsurers of inserting frivolous clausesinto insurance contracts which havemade it entirely impossible for themto insure their businesses, whereas,insurers on their part insisted that thetraders have consistently refused toembrace insurance as a reliable risktransfer mechanism.

According to the Coalition ofMarkets and Traders Association inLagos (CMTAL), the unwillingness ofinsurance firms to remove such clausesthat prevent them from insuring is amajor factor why losses incurred fromfire disasters are always massive.

Chairman of the Association of Igboin Commerce (AIC), a part of CMTAL,Mr. Nnamdi Nwigwe said that themajor reason why it appears as iftraders refuse insurance as a risktransfer mechanism is due to the factthat such clauses have not beenfavourable to traders.

Nwigwe said, “Some things whichinsurance companies demand that weput in place are beyond us, ratherthese are things which thegovernment should provide for thepeople. For instance, some insurancecompanies require a fire servicestation to be located in the marketbefore they can insure our businesses,but such things are things that onlythe government can provide. The factthat traders are not insuring is partlythe fault of insurers and thegovernment because some facilitiesthat should have been provided bygovernment so that insurance cancome in, cannot come because thesefacilities are not there. So where suchfacilities are lacking, insurers haveabandoned us to our fate rather thandesigning products that will suit ourpeculiar needs.”

Reacting to the position of thetraders, Managing Director ofLinkage Assurance Plc and Chairmanof Nigerian Insurers Association, NIA,Mr. Godwin Wiggle, said that markettraders jettisoned insurance byrefusing to pay premium because theysee the premium as too expensive.

Wiggle said, “The market tradershave refused to pay premium becausethey say that the premium is tooexpensive. But if you compare whatthey lost to the Balogun inferno, it isno way near what they would have

*ROUNDTABLE - From left: Bob Collymore, Chief Executive Officer, Safaricom, Kenya; Uto Ukpanah, CompanySecretary, MTN; Segun Ogunsanya, CEO & Managing Director, Airtel Nigeria; Elias Masilela , Executive Chairman,DNA Economics, South Africa and Foluso Phillips, Chairman, Nigerian Economic Summit Group at the AfricaSustainable CEO Business Roundtable held at Intercontinental Hotel, Victoria Island, Lagos.

Continues on page 22

CMYK

22 — Vanguard, MONDAY, FEBRUARY 2, 2015

Cover Story

Continues from page 21

PARLEY - From left: Mr Rasheed Mohammed, Executive Director, Mikado Nigeria Ltd;Bryon Kennedy, Global Trainer, USN, Mr Mike Ojeme, MD/CEO, Mikado Nigeria Ltd andDonovan Dunn, African Development Manager, USN during the media parley and introduc-tion of Ultimate Sports Nutrition (USN) Brands to Nigeria by Mikado Nigeria Ltd held inLagos on Thursday. Photo Lamidi Bamidele.

outbreaks already recorded inthe state.

Between January 1 andnow, no fewer than 20 fireincidents have occurred inthe state with lossesestimated at billions of nairaincluding several lives.Among the affected areas arethe Balogun Market on LagosIsland, Oko Baba Sawmill inEbute Meta, another inIgando area where fourhouses were razed recently,another at Ijaniki area wherea building comprising sixapartments was completelyrazed and an eight-month-old baby roasted to death.

The way forwardOn the way forward,

Managing Director ofRiskguard Africa Ltd, Mr.Yemi Soladoye said that thestarting point is for insuranceoperators to begin todevelop products along

trade lines against theconventional insurance thatis readily available.

Soladoye said that if suchproducts are developed, theonus will then be oninsurance practitioners tomarket such products to tradeassociations. He said that inthe history of stategovernments in Nigeria, it isonly Lagos State Governor,Babatunde Fashola, who hasshown support for insurancebecause he has alwayscharged market traders toalways insure theirbusinesses whenever there isa market fire.

“The onus is now oninsurance practitioners togenerate appropriateproducts and distributionchannels that will cater formarket traders. It could bedifficult for these traders todeal with insurers, so the bestthing is to link them withconsultants on free of chargebasis that will sit down withthem and advise them on theright products for theirbusinesses. The consultantswill look for landmines in theinsurance contracts andadvise the traders to insist onhaving a policy that ispeculiar to their needs. Also,through these dealings, thetraders can decipher if theycan carry on with normalinsurance covers or go forcovers with extra premium.

“Enlightenment andeducation is a major thingwhen dealing with markettraders. After that, the rightproduct will be packaged forthem under the terms peculiarto them. Also the InsuranceConsumers Association ofNigeria can help them toprotect their interest,”Soladoye stated.

Insurers, traders differ on cover for fireincidents

The onus isnow oninsurancepractitionersto generateappropriateproducts anddistributionchannels thatwill cater formarkettraders

The focus is on the roles of technology and vocationaleducation in enhancing entrepreneurial skills that will

equip students for entrepreneurship education in Informationand Communication Technology (ICT.) driven technologicalenvironment. The world has become globalized and the futureprosperity depends on comparative advantage. Thiscomparative advantage hinges on people and their technicalor technological sophistication. Towards this, some crucialentrepreneurial and technical skills needed by the students incolleges of education (technical), polytechnics and universitiesto meet the trends in a global economy is analyzed.

Technology education is to be considered as the key agent oftechnology development, either as a way of developing humancapacity, increasing the shield work force for modernization,industrialization, environmental development or as a matterof personnel freedom, developing capability andempowerment. Technology education is increasinglyrecognized to be central to both the origins of technologicaldevelopment and challenges and to the prospects forsuccessfully dealing with them (Alam, 2009). Decision makersat all levels, need timely, reliable access to knowledgegenerated by technology and technical education to introducerational policies that reflect a better global understanding ofcomplex technical, economic, social, cultural and article issuesconcerning the society, and our environment. Technical decisionmaking and priority setting is an integral part of overalldevelopment planning and formation of technologydevelopment strategies. Above all, technology education is ahuman right and, as such, should receive priority in theallocation of national resources. It has become very necessarynot to only keep technology education bound to the role ofmanufacturing skilled manpower but also to economicdevelopment and global economy. In Nigeria, technologyeducation was previously not seen as fundamental for nationaldevelopment, or for the economic development, but for theschool dropouts, and other social and political developmentwithin the nation and for individuals. Hallak (1990) arguesthat technology education is also linked to human resourcesdevelopment and that this has an impact on more than justeconomic growth, but also an impact on the wider developmentof individuals and societies. According to him, it contributesto:

(a). Individual creativity, improved participation in theeconomic, social and cultural roles in society.

(b). Improved understanding of an individual and heir respectfor others, thus promoting social cohesion and materialunderstanding

(c) Improvement in health and nutrition.(d). Improved chances of economic development.(e). Improved technological development.(f). Socio-cultural change.(g). Democracy and equality(h). Ecological development/quality of life (increasing

people’s awareness of their environments).From our analysis so far, it is clear that modernization and

economic development, depends on investment andappreciation of modern trends in technology education.According to Woodhall (1997) investment in technologicaleducation and training produces benefits for the individualand for society as whole.

The roles of technical and vocational education in enhancingentrepreneurial skills using information and communicationtechnology is very important in training for self-employment,self-reliance and skills acquisition now that government cannotemploy every graduate. This could be achieved through thedevelopment of entrepreneurial skills in technology andvocational education through information and communicationtechnology.

Technology and vocational education programme of ourtertiary institutions should be directed to focus on enhancingthe training for entrepreneurship in ICT so as to be functionalin today’s world of work and the global economy.

Vocation and Technical Education –Key to improving Nigeria’sdevelopment (4)

paid as premium if they hadinsured their businesses.The traders should knowthat what they lost as a resultof the inferno is also a hugeloss to the economy. So itwill be better for them toembrace insurance goingforward.”

Reacting to allegationsthat insurers refuse to insuremarket traders, Wiggle said,“The industry has beentrying to create awarenessfor these traders on theimportance of insurance onregular basis. Moreover, doyou wait for the doctor tocome to you when you needone? You are the one thatwill go to the doctor. So theeconomy is the ultimateloser for the consistentrefusal of our market tradersto insure their businesses.”

Market fire outbreaksin the country

Statistics from the LagosState Fire and Safety Servicesshow that in 2013, a total of1,774 fire outbreaksoccurred. The fire serviceacknowledged there weremassive losses to fire in theyear, claiming the losseswere difficult to quantify.

In 2014, the value of goodslost to fire in the state wasput at N14.99 billion in about1,499 fire cases recordedbetween January andNovember.

Except accurate measuresare put in place, there areindications that more lossesare likely to occur in 2015going by the number of fire

Vanguard, MONDAY, FEBRUARY 2, 2015 — 23

Business & Economy

management team haverefused to let price of dieselcome down. These men ofyesteryears who keeprecycling themselves in thecorridors of power are denyingNigerians the benefit ofderegulation of this oneessential economic product.

Following PresidentYar ’Adua’s approval, theNNPC increased the ex-depotprice of AGO from N60 perlitre to N69, while the price ofLPFO was raised from N22 perlitre to N44, representing a 100per cent hike. But in no time,under the disguise of rising oilprices, the price of diesel wentup to N162 per litre. Butprices of crude have longcrashed and diesel price hasnot come down in line withglobal market practice in afree market environment.

Following the crash of crudeoil prices, the maximumindicative benchmark of openmarket price of diesel is aboutN99.11 per litre as of today,going by the PetroleumProducts Pricing andRegulatory Agency.Surprisingly, the price of theproduct in filling stationsacross the country rangesbetween N155 and N165 perlitre with PPPRA not lifting afinger about the price orraising eyebrows about theunwholesome trend.

The price of crude oil, whichconstitutes a major componentin the pricing template, had

Diesel cabal at it again,ripping off Nigerians

When late President Umaru Musa Yar’Adua decided that diesel pricebe deregulated, it was in line with his administration’s pledge todismantle the alleged fuel mafia. But several years after the

deregulation, the expected market behaviour of a deregulated product is farfrom being realised in Nigeria. The price of diesel has remained high in Nigeriadespite the crash of oil prices in the international market to below $50 perbarrel. The mafias who have found their seat in President Jonathan’s economic

plunged by about 60 per centsince June 2014 when itpeaked at $115 per barrel.

If Nigeria were a countrywhere leaders walk the talk,diesel has been deregulatedand ordinarily, if we were tohave an organisedgovernment, since the priceof crude oil has fallen by morethan 50 per cent, the price ofdiesel is supposed to havefallen a long time ago.

Unfortunately, Nigeriansare not getting the benefit ofthe so-called deregulation,and it also shows that thegovernment agencies are notintervening in matters thattouch the welfare of thepopulace except what benefitsthe ruling class. If agovernment allows for certainmeasures to take place in itseconomy, it is also the duty ofthe government to make surethat it is not being abused.PPPRA, DPR, NNPC and theMinistry of PetroleumResources are turning theireyes the other way becausepowerful Nigerians areinvolved, milking the peopleand donating to parties for

political gains. Ordinarily, ifthere were laws governing thederegulation of diesel, evenbefore the price of petrol wasreduced; Nigerians hadexpected that dieselmarketers should have beenthe first to reduce theirprices.”

But the average Nigerian

businessman is greedy,exploitative and also has theintention to continue to short-change Nigerians.Fortunately for them, it is intheir interest for governmentnot to intervene and so theyare still going ahead short-changing Nigerians. Thequestion is: if diesel is stillbeing sold for up to N160 perlitre in an era of falling oilprices, what are the so-calledregulators doing about it?There is nowhere in the worldwhere there is absence ofregulations. You don’t justleave things to the marketcompletely. If you want to dothat, then liberaliseeverything and you thenprotect the interest of theconsumers.

Currently, the daily averagedemand drive consumption ofthe three main productsstream are as follows:

Premium motor spirit(petrol) 33,500, 000 Liters

Automotive Gas oil(diesel) 15,000,000 Liters

Household kerosene 11,000,000 liters.

Today, more than 90 per

cent of petroleum productsconsumed in the domesticmarket are imported, usuallyat costs which naturallyreflect international crude-oil prices.

Yet, development in theinternational oil market doesnot reflect in domestic dieselpricing. Diesel is a petroleum-based fuel that is used topower many types of vehiclesand boats. It’s made of ablend of crude oilcomponents calledhydrocarbons. Thecomponents for making thisfuel are refined out of crudeoil, usually by fractionaldistillation.

AGO demand is driven byNigeria’s inadequate supplyof power to business places.Households, offices, eateries,banks, hospitals andgovernment parastatals arespending millions and willstill spend millions on dieselconsumption as theelectricity supply situation isnot likely to changesignificantly any soon, hencedependence on generatorsand mini-power plants willsurge. While households,offices, eateries, banks,hospitals and governmentparastatals that depend ondiesel to operate are beingripped off daily by thecurrent sharp practices in thediesel racketeering, it is theordinary Nigerian that bearsthe burden.

Operators in theNigerian capitalmarket have called

on the Federal Government tosource funds from the localmarket to finance capitalexpenditure instead of relyingon the yearly meagerbudgetary allocation budget.

The operators who spoke atthe one day dialogue on“Capital Market & the 2015Federal Budget” organised byChartered Institute ofStockbrokers, CIS, Associationof Stock broking Houses ofNigeria, ASHON, andAssociation of Issuing Housesof Nigeria, AIHN in Lagoscriticized the present 2015budget, saying that the N634billion earmarked for capitalexpenditure was inappropriateas the country requires more

FG urged to finance capitalexpenditure via capital market

infrastructure that would boostproduction and enhance thestandard of living of the people.

The guest speaker at theoccasion, Mr. Tola Mobolurinsaid “The budget of 2015 is abudget of austerity and not atransition budget. The majorassumptions in the 2015 Federalbudget, which include a GDPgrowth rate of 5.5 percent,benchmark oil price of $65 perbarrel, daily oil productionvolume of 2.28 million barrelsand average exchange rate ofN165 per dollar are not realisticbecause revenue projectionsare not in tandem with thereality of the oil market fromwhich the bulk of the revenueis derived. The instability in themarket is such that marketreality changes every week. Itis a tough job.” The Chairman,

ASHON, Mr. EmekaMadubuike, said “The criticalrole that the government mustplay in a country is to ensurethat it provides adequatewelfare for its citizens.Countries all over the worldensure that they harness thecapital market and deploy thelong term funds to the criticalareas that would providebenefits to the people.”

To this extent, he called on thegovernment to fund the criticalareas with long term funds fromthe capital market rather thanthe budget.

Speaking as well, Chairmanof AIHN, Mr. VictorOgiemwonyi said “The budgetis a critical component ofeconomic management andmust be taking very serious.The 2015 budget is not realistic

considering the drop in oilprice. Also, the presentsituation where recurrentexpenditure is reduced by sixpercent is not enough while thecapital expenditure is reduced by30 per cent is not good for aneconomy yearning for majorimprovement in infrastructure.”

Continuing, he said “There isneed to reduce Monetary PolicyRate, MPR , so that interest ratewould get reduced . We thereforeimplore the Federal Governmentthrough the Central Bank ofNigeria , CBN to commence thereduction of interest rate by adownward review of the MPR,especially now that we haveachieved a moderation in inflationto single digit in the last two years..In his own comment, Presidentof CIS, Mr. Albert Okumagba said“All over the world, the capital

market drives the entire economyas it provides a platform forgovernment at all tiers to accessmedium and long term fund toexecute developmental projects.Also, there is need for increasedsavings and investment , hence wecall on the Federal Government topromote the culture of nationalsavings through appropriateincentives.

In his remark at the occasion,Acting Director General, Securitiesand Exchange Commission, SEC,Mr. Mounir Gwarzo sad “TheFederal government has plannedthe 2015 budget in a manner thatensures the most vulnerable areprotected while safely pursuingthe ultimate goal of economicdiversification.

I think beyond this year’sbudget, the capital market mustbegin to assert itself as the mostreliable medium for governmentto source for funds to financecritical infrastructure.

If agovernmentallows forcertainmeasures totake place inits economy,it is also theduty of thegovernmentto make surethat it is notbeing abused


CMYK

Last week Tuesday, the CBN Governor, Mr GodwinEmefiele met with the organised private sector todiscuss developments in the foreign exchange market.

He gave insights into the continued pressure on the Naira,blaming it on speculative activities of operators. He urged theNigerian business community to focus on local production,promising that the CBN will assist local manufacturers ofproducts that are now being imported into the country.

Excerpts:

Nigeria has nobusinessimporting toothpicks — EMEFIELE

No cause forfear, panic

I would like to say, just tounderscore a point,

that people are nervous,people are worried, let meassure you and say that thereis no need to be nervous,there is no need to panic. Nodoubt there is a need forconcern, and we will certainlyfind a solution to the currentcrisis caused by falling oilprices. It is a journey that allof us are already in. I say withcommitment, we will passthrough it. That is why I amtrying to say that there is noneed for anybody to benervous.

Globaleconomic trendThe important thing is that

the global economy has shownin some economies, somerecovery. The recovery is seento be weak, particularly in theUnited States, where we seeunemployment dropping toas low as 5.8 per cent. Wehave seen inflations at somelow levels and we have seenthe growth in the GDP in theUS come up to as high as 3.8per cent in 2014.

Another macro economicdevelopment in the world hadto do with falling commodityprices, I mean we are onlyseeing crude oil prices and Igive you an example. Theprice of gold fell from a peakof about $1,380 per Pound inMarch 2014 to as low as$1,140 per pound inNovember 2014.

Similarly, the price ofcopper fell by nearly

11 per cent in the cause of theyear. So what I am saying hereis that what is happening inthe global economy is not justabout the drop in crude oilprices, we have seen drop inprices of all commodities, wehave also seen in the world,rising geo-political tensionand conflicts, the battle inUkraine and of course the EUand the US taking on Russia,about the annexation of EastUkraine, and we also hadgeo-political tensions in theMiddle Eastern.

Negative trend inglobal economies

Well, the negative is thatunemployment in

some countries is risingparticularly in advanced andemerging markets. For

instance in Spain the rate ofunemployment is about 23.7per cent, Italy 13.4, Greece 25per cent, South Africa 25 percent and in France about 10.4per cent. These are some ofthe things that havehappened in the world in thecourse of the year, we saw thetapering in the US, where ata point, the US was injectingabout $35 billion into the USeconomy on a monthly basisand of course, the world isawaiting the effect of that.

Whatabout Nigeria?

In Nigeria, what we haveseen is that we have

some positives; we have seenthe robust GDP growth rate of6.35 per cent which is amongthe highest in the emergingmarkets in the world. We haveseen inflation stabilising toabout 8 per cent as atDecember 2014 compared toas high as 16 per cent that wesaw as far back as two and halfto three years ago.

This is a strong positive forNigeria in the sense that wehave tried as much as possibleto keep inflation low and it isnot only by using monetarypolicy tools to controlinflation, but also by thediversification of the economyparticularly in the agriculturalsector, helping to keep priceslow. In December 2014, someof you who may havemonitored commodity prices,I mean staple foods like rice,beans and garri, would haveobserved that prices remainedlow, at worst, marginally

higher than they were. Givenwhat has happened, onewould naturally haveexpected that prices will go upand people will begin to feel

the effect, but I think this didnot happen as a result of someof the policies that have beenput in place both by themonetary and fiscal

authorities as well as thepolitical authority to ensurethat the Nigerian economyremains resilient.

Nigeria’s GDP increased byan impressive rate of 6.4 percent last year and it ispertinent to note that thegrowth rate have been drivenlargely by the non-oil sectorof the economy. Deficitbudget also have decreasedand we have considered thatpositive, deficit budgetincreasing to N680 billion asat November 2014 from aboutN4.15trillion in 2013.

So things are not that badand I think we should behappy about that.

Negative effecton Nigeria

Some of the negatives thatwe have seen are that

as a result of the drop in crudeprices, between June 30 andDecember 31, 2014, price ofcrude oil had dropped by 50.7per cent from about $112 perbarrel to $55 per barrel in

We have seenthe robust GDPgrowth rate of6.35 per centwhich isamong thehighest in theemergingmarkets of theworld

Toothpicks: Despite vast expanses of forested landscapenationwide, toothpicks are still imported

Emefiele

Interview


December and right now, weare talking about below $50per barrel. This decline isabout 50 per cent, fromDecember 31 and now.Unfortunately, as a result ofthe drop in prices resulting indropping revenues, we haveseen the foreign reserves drop by about 12.3 per centto about $39 billion in July2014 to $34.26 billion onJanuary 22, 2015.

Impact onexchange rateNaira has depreciated by

about 8 per cent and 13 percent at both official and inter-bank markets respectively in2014 and by 5.6 per cent atthe inter-bank market as atJanuary 23, 2015. As a resultof the drop in crude pricesand the fact that people feelthat the reserves aredropping, we have seen themovements into a bearishmarket in the Nigerian StockExchange, to the extent thattoday, the NSE All-ShareIndex closed at about 43,657,a decline of about 15. 9 percent in 2014 and 29, 687 as atJanuary 22, 2015.

The trends in the oil priceshas shown that during theyear under review, we haveseen oil price drop by nearlyabout 60 per cent from a peakof about $115 per barrel inJanuary 2014, to as low as $50per barrel in January 2015.Another spill over from theslide we have is that inJanuary 2014, reserves was ashigh as $42 billion; by April,it has dropped to below $37billion, and sometime in July,we were able to move it up toabout $39billion and betweenOctober and now, we haveseen the reserves droppingunder pressure.

Exchange ratemovement

In January 2014, theexchange rate at the

official window was about 155,and the inter-bank and thebank 116 in January 2014 andof course, moving up toaround October of 2014 whenwe began to see the reservesdrop and the pressure on theexchange rate; that is whatwe have at this point wherethe official window is about168/170 and of course, theinterbank at slightly higherthan180.

Now what does history teachus? From history, we have thepre-crisis period, crisis periodand we have the post-crisisperiod. In January 2007, boththe official and the interbankrate, the BDC during the pre-crisis period, we could see asort of convergence of thethree markets at about 118and this continued up to 2008and in October 2008, we sawduring the crisis period theBureau de Change price

hitting the roof at almost closeto about 190 and the interbankalso moved up as we see theofficial price moving up toabout 158, moving down toabout 155.

You can see that during thecrisis period, you normallyfind the official market movingtoo high and there will bedivergence between the BDCmarkets as well as the officialand interbank market rateduring the crisis period.

Importation of non-essential goods

So the issue therefore is,what is the extreme

pressure on the exchange ratein Nigeria? We have seendemand pressure on thecurrency arising likely from thelopsided dependence onimports. Today in Nigeria,toothpick is being imported,tomato paste, furniture, rice,fish, sugar, petroleumproducts are being importedinto Nigeria.

Perhaps it is important for allof us to know that if we importone set of toothpick, it impactson the reserves, so why shouldwe be seen to be importingitems that we can producelocally? Why should we beimporting tooth picks? I willgive credit to the cementindustry. The lesson in historyis that if we are committed to acause and we stand by thatcommitment to that cause,there is no how we will notimprove our economy. Someyears ago, Nigeria wasimporting cement and of thelist of items imported intoNigeria then, cement used to

rank one of thehighest, up to threeyears ago we wereimporting cement intoNigeria, but today weare not onlyproducing cement forour local consumption,we have started toexport cement.

Alhaji Dangote is atthe forefront of someNigerians who havesaid let’s take this upand let’s begin torevive the situationand improve oureconomy, it is notrocket science to getdetermined and tellyourself that Nigeriahas limestone, if wehave limestone whatis stopping us frombeing able to blast ourlimestone and convertit into cement, use itnot only for domesticconsumption but alsofor export?

Need for local production

Why is it that wea r e

unable to dothis in Nigeria?Simple wool weimport, tomatoes, weimport, in fact, weimport rice, we importfish, sugar. You canimagine what will

efforts?I am saying if we are doing

it in cement, why shouldNigerians ever think that it isdifficult to do it in fish? Whatdoes it take to grow rice? I amhappy that efforts are beingmade, I am sure that in thecourse of time, we are notgoing to ban importation ofrice, we are going to say thatwe will no longer provideforeign exchange if you wantto import rice into this country.Rather than import rice, I willadvise you go into theproduction of rice, if you wantto use your dollars that youkept somewhere to import riceno problem, but we will notallocate foreign exchange foryou to import rice.

The same way we willgraduate into other products.I keep saying that before I wasborn, we have been importingmilk, what does it take toproduce milk, are we sayingthat if it has been done inother countries, it cannot bedone in Nigeria? I do notbelieve so; it only involvescommitment; that is what weare saying.

The only thing that can helpus to reduce the demandpressure on our domesticcurrency is that we need to seeourselves producing mostthings that we are importing,that will help.

Aside from rice, petroleumproducts are being imported,and a lot of speculativedemands going on in thedifferent sectors in thisbusiness.

Take a cue from Dangote

Aliko Dangote hasinvested about $9

billion in the petrochemicalbusiness, and he hascommitted to Nigerians thatby the end of 2017, he willbegin to produce 500,000barrels of petroleum productsin this country. What thatmeans is that by thatcommitment, we will stop

happen, how employment willbe created, if you takesomething as simple as fish,what does it take to developan aqua-culture and in theprocess of developing theaquaculture industry, you willalso be developing the feedmill industry, because you willneed the feeds that will feedthe fish in the aquaculturebusiness. As you produce thefeeds, you will also be growingthe maize that you need forthat industry, can you imaginethe entire value chain; thekind of employment andimprovement in GDP that willbe created as result of these Continues on page 26

We have triedas much aspossible tokeep inflationlow and it isnot only byusing monetarypolicy tools tocontrolinflation, butalso by thediversificationof the economy

It isimportant forall of us toknow that ifwe import oneset oftoothpicks , itimpacts on thereserves

To reducedemandpressure onour domesticcurrency weneed to seeourselvesproducingmost thingsthat we areimporting

Emefiele

Interview


Interview

importing petroleum productsin Nigeria come end of 2017.

You do not have to build a$25 billion worth of refinery,you can do a modular refineryand that is why I am sayingthat if I find somebody whosays he wants to invest $9billion in petrochemicalbusiness and I find someonewho wants to invest money inthe oil and gas businesswhere we are going to beproducing polypropylene, notonly for domesticconsumption but also forexports, if we have peoplewho are saying yes, we cancommit some billions ofdollars or over $1 billion forthe production of rice or wehave people who want tocommit money into thebusiness of aqua culture, orin sugar, if somebody invests$9 billion and he raisesequity, somebody brings hismoney and says I want toinvest $7 billion in fertilizerbusiness and out of that hebrings $3.5 billion of hismoney as equity and he putsit in that business, and hetells foreign banks, give me$1.7 billion loan and he tellslocal banks give me $1.75billion as loan and he comesto central bank and say hewants N50billion, we willassist him as the Central Bankof Nigeria in support of hiseffort in helping the countryproduce what it would haveimported.

What are we saying? Evenif we have been accused ofbeing involved inquestionable physicalactivities, what we are sayingis that what seed can you sowto help people who areshowing commitment to helpour economy? What can youdo to help and encouragepeople who are showingcommitment to our economy?That is the bottom line today.

CBN'llsupport importsubstitutioninvestment

Why would CBN or thegovernment help this

people, because they are ableto reduce the demandpressure on our localcurrencies. What we find isthat if they can do this, we canconserve our external reserveand do something good withit and like I said earlier, whenexternal reserve goes up,there is a direct relationshipbetween external reserve andexchange rate.

We have seen speculatingdemand, we have seen rentseekers taking advantage andI will warn that those of youwho are speculating, will loseyour money, and I have tolda few people that there is no

‘Nigeria has no businessimporting tooth picks’

need to speculate, we haveabout $34 billion in reserve,don’t forget that I said in2007, our reserve was lessthan $10 billion, we survivedwith that.

I know economic activitieshave improved but I amsaying that $34 billion cansupport this economy, there isno need for you to panic, ifwhat you need is to import justone microphone, do, there isno need for you to be nervous,there is no need for you topanic, you want onemicrophone, you import five.

If you are supposed toimport one bottle of water, please continue, there is noneed for you to think thatbecause of drop in prices, thatthe exchange rate will go up,you are contributing intoputting more pressure on thenaira and speculatingdemand and that will pushexchange rate high. If whatyou say is that you want tocontinue to do your business,that is importing, do it in anorderly manner, there is noneed for you to be nervous, I

am appealing to all of us whoare speculating with thecurrency to stop and in thecause of that, you will find out,because I heard a few peoplesaying they are doing forwardtransaction at 190 and above190, you will lose money, Iassure you, there is no needfor you to panic.

Capital flight

As a result of the drop inprices, we have seen

increased foreign exchangeout-flow, no problem, youbrought in your money, whatwe say is free entry, free exitbut do it in an orderly fashionand that is why we introducedsome measures because wehave seen that people werebeginning to behave in anorderly fashion. If yourdemand is legitimate, we willmeet all legitimate demand,we would not be concernedabout illegitimate demand,what did we do as a result ofwhat we saw in the market (asa result of the pressures), wehad to re-classify some eligiblegoods and services from their

SAHCOL gets worldCustoms organizationaward of meritThe Skyway Aviation

Handling CompanyLimited, SAHCOL, last weekwon the World CustomsOrganization (WCO) Awardof merit, for showing“exceptional support\collaboration for customstowards the realization of itsmandate.”

The award certificate,signed by the Secretary-General, World CustomsOrganization, Kunio Mikuriyawas presented to theManaging Director \CEO,SAHCOL, Oluropo Owolabi,by the Comptroller-General ofthe Nigerian CustomsServices, Dikko indeAbdullahi, on the occasion ofInternational Customs DayCelebration, at the NigerianCustoms ServiceHeadquarters, Wuse, Zone 3,Abuja.

While presenting the awardcertificate of merit toSAHCOL, the Comptroller-General of Customs noted,that in line with WorldCustoms Organization“practice of rewardingexcellence, Skyway AviationHandling Company Limited(SAHCOL) has been selectedas an Outstanding TerminalOperator to receive this year’sWorld Customs Organization(WCO) Award, for renderingexceptional services to theinternational customscommunity.”

Interim report oncrashed MH370 to bepublished March 7Malaysian authorities

will publish apreliminary report on thedisappearance of MalaysiaAirlines flight MH370 March 7,a day before the first anniversaryof the incident, an official reportsaid last Wednesday. Accordingto Deputy Transport MinisterAziz Kaprawi, the crashed reportwill be posted on the website ofthe department of civil aviation.

He said “We have notconcluded on the status of theplane, as the search is still on-going,” the New Straits Timesquoted him as saying.”I cannotreveal the details of the interimreport but it will be on theinvestigation that has beencarried out so far in search of themissing plane,” he Aziz said.

The plane disappeared March8, 2014, with 239 passengers andcrew on board after“deliberately” changing itscourse, according to experts, just40 minutes after take-off fromKuala Lumpur en route toBeijing.

R class window to theinterbank window, conductspecial interventionbudgeting market in order to stabilise the rate. We will domore - prequalification ofcustomers’ applications toforestall portfolios’ demandand there is need for us toalso stop that.

Hope forall in 2015

2015 is not bad, it will begood but we need to

take certain actions. Webelieve that in the cause of theyear, there will be reversal inthe crude oil prices, if thathappens, it will help us in thisnation. We are determined toensure our GDP growth rateis protected at about 5.5 percent, we will try to see whatwe can do to keep inflationrate within the bound that wehave set for ourselves, butwhat is most important for ushere is that we need to beginto diversify our economy. Weneed to begin to look at thestructure of our economy andtell ourselves that as westopped importation ofcement and today we areexporting cement, we can dothe same and encourage thosewho are ready to produce tosupport the economy and helpconserve our reserves andultimately keep our exchangerate strong. Inflation isexpected to be under controlin 2015. The CBN as themonetary authority stands tosupport the economy, defend

Continues from page 25

CBN as the monetaryauthority stands to

support the economy,defend the reserves andthe country’s exchange

CBN Governor, Emefiele, and Mrs Sarah Alade, Deputy Governor at an outing


Banking & Finance

UNVEILING - From Left: Mr Eyo Bassey, Managing Director/CEO, Payporte GlobalSystem Ltd.; Ms Toke Makinwa, Payporte Brand Ambassador and Media Personality andMr Benjamin Amu, Head Social Media Business Strategy, Payporte during the mediaunveiling of the Payporte Brand Ambassadors, held last week in Lagos PHOTO: KehindeGbadamosi

Electronic payments hitN35 trillion in 2014

BY BABAJIDEKOMOLAFE

The value of electronicpayment rose by 150

percent in two years to N35trillion in 2014, reflecting theimpact of the cashless policy.

Deputy Governor,Economic Policy, CentralBank of Nigeria (CBN) Dr.Mrs Sarah Alade disclosedthis in Lagos at theinauguration of the PaymentSystem Strategy Board,Payment Scheme Boards andInitiatives Working Groups.

“Ever since theimplantation of the PSV2020initiatives in collaborationwith the banking communityand other stakeholder,Nigeria has witnessed animpressive growth inelectronic payments and asteady shift from thedominance of cashpayment”, Alade said.

From N13.687 trillion in

2012, value of electronicpayments, excluding ATMtransactions, rose to N35trillion in 2014.

While transactions throughthe NIBSS Electronic FundTransfer rose 7.5 percent toN14.6 trillion from N13.6trillion in 2012, Point of Sale(PoS) transactions rose 550

percent to N312 billion fromN48 billion. Similarly theNIBSS Instant Payment(NIP) transactions rose by 423percent to N19.9 trillion fromN3.8 trillion in 2012, whileinternet and Mobile paymenttransactions rose by 108percent and 8,400 percentrespectively. While internet

transactions rose to N31.5billion from N65.6 billion,Mobile payment transactionsrose from N3.5 billion toN296.9 billion.

CBN Governor, Mr. GodwinEmefiele however describedthe huge growth in electronicpayment as a stepping stone,noting that, “There are still agreat deal to be done”.

He said the inauguration ofthe Payment System StrategyBoard, Payment SchemeBoards and InitiativesWorking Groups, is to furtherdeepen the adoption ofelectronic payments in thecountry.

He said that the PaymentSystems StrategyBoard(PSSB) is being put inplace to provide strategicdirection for the NationalPayments System. “ This bodywill replace the NationalPayment Systems Council(NPSC), and will be thepinnacle organisation for thegovernance, managementand operation of the NigerianPayment Systems.

Its terms of reference (inaddition to those outlined inthe draft Payment SystemsManagement Bill) aremajorly: To provide strategicdirection and drive the overallNational Payments SystemStrategy; To provide cross-scheme priorities andresource allocation; Toarbitrate in cross-schemedecisions.

“The Board which shall bechaired by the Governor of theCentral Bank of Nigeria,would have the followingmembers: The HonourableMinister of the Ministry ofCommunication Technology,the Accountant General of theFederation, the four DeputyGovernors of the CentralBank of Nigeria, theChairmen of the four PaymentScheme Boards, independentDirectors from the end-usercommunity represented bythe Director Generals,NACCIMA and ConsumersProtection Council. Othersare the Director Generals ofthe Securities and ExchangeCommission (SEC) and theNational IdentityManagement Commission(NIMC), the Chairmen of 2subcommittees of theBanker ’s Committee(Payments Infrastructures andFinancial Literacysubcommittees), theExecutive Chairmen of theNigerian CommunicationCommission and FederalInland Revenue Service, thePermanent Secretary of theMinistry of Justice”.

BY EDIRI EJOH & HOPE OFOBIKE

Finance Minister and CoordinatingMinister of the Economy, Dr Ngozi

Okojo- Iweala has said that the country’seconomy has to a greater extent experienceddevelopment in other sectors of the economy.

Addressing members of the businesscommunity in Lagos, she said theadministration of President Jonathan hadforeseen the need to develop other sectors ofthe economy long before the falling oil priceand had invested in some areas over the years.

She said: “We will talk about diversifyingthe economic. This is because the difficultieswe are having on the economy and the oiland gas have been challenged with the natureof instability in the economy; therefore,diversification is the topic on everyone’s lips.

“The President had foreseen that, what weneeded to do in other to improve the country’seconomy is to tap into all the sectors of theeconomy that were different and separatefrom the oil and gas. We would continue totap oil and gas, but we would look at othersectors and develop them. The Minister said

We've diversified economy, says Okonjo-Iwealathat the government and Nigeria Bureau ofStatistics found out that 1.8 million jobs areneeded yearly to meet the needs of Nigerians,adding that currently the government iscreating 1.2 million jobs yearly and needs thesupport of Nigerians to bridge the gapbetween the next three to four years.

“Transformation agenda of the Presidentactually means diversifying agenda. It hasproven to be a very sound set of policies. Wefound that the economy is more diversifiedthan we thought and therefore the policies thatsupport the different sectors are soundpolicies. “We found that the services sector ismuch larger, and agriculture still remainsimportant at 22 percent, services at 51 percent,industries at 26 percent. The creative sectorsthat are up-coming are at 1.4 percent. Thismeans that our country is moving forward andtherefore, the push to support agriculture, andsee it as a main stem of the country’s economy,to grow above and stop importation, was theright one.

“The move to encourage manufacturing,minerals to support the creative industries wasthe right one also, as well as the developmentof the housing sector.

Access Bank,bags Lagos taxcomplianceaward

BY EDIRI EJOH

Access Bank Plc has beenrecognised by the Lagos

State Government for its 100per cent tax compliancerecord.

The Lagos State Governor,Babatunde Fashola, whilepresenting the award onbehalf of the Lagos StateInternal Revenue Service,LIRS, to Access Bank,emphasized the fact that taxpayment is a defined and co-existing social contractbetween the government andthe governed which shouldnever be breached.

According to him, therevenues generated fromtaxation have helped the stateto fulfill its developmentalroles to the people, addingthat the state has built a taxsystem that works and whichhas helped sustain the stateduring the trying timesbrought about by thedeclining oil price.

“The price of oil hasdropped drastically. Thefederal allocations to thestates have dropped. In spiteof these, Lagos State has paidsalaries regularly. We paid 15per cent bonus in Decemberbecause we created a modelof public finance that works,”he said.

AfDB reiteratescommitment toagriculturalgrowth andtransformationThe African Development

Bank (AfDB) hasexpressed its support to theAfrican Union (AU) inimplementing Africa’scommitments for anaccelerated agriculturalgrowth and transformation.

Speaking at a high-levelevent during the 24th AUSummit in Addis Ababa, AfDBVice-President Aly Abou-Sabaa said the AfDB wouldbring, with other partners, aninnovative financial support tothe implementation of the AUStrategy and Roadmap for therealisation of 2014 Malabocommitments on agricultureand food security.

Agriculture, he said, hasbeen and continues to beimportant for the AfDB. Itplays a key role in AfDB’sStrategy 2013-2022 infostering an inclusive growth.

Nigeria has witnessedan impressive growth inelectronic payments anda steady shift from the

dominance of cashpayment


Micro-FinanceCommodity Index

A commercial Truck Driver, Mr. Abiodun Adio,has emerged as grand prize winner of 2015

Range Rover Vogue worth N30 million at AirtelNigeria’s Red Hot Promotion.

The winner emerged weekend, in a raffle drawsupervised by independent audit specialist, TCQAand conducted at the Airtel Corporate Head Officein Lagos.

The Airtel Red Hot Promo, lasted for a period of60 days and was open to all prepaid and ZeroCredit limit post-paid customers.

In her remark, Senior Manager, High ValueSegment, Airtel, Mrs. Omoyeme Effiong, said thatover 500 million records were entered for the promowhere a participant is likely to record about 500points.

Effiong further highlighted that staff and familiesof independent contractor were not allowed toparticipate in the draw.

However, 10 winners where electronicallyselected by the auditors and the customerconfirmed with a valid detailed information withthe Know Your Customer (KYC) emerged the grandprize winner.

Also, Managing Director, TCQA, Associates, Mr.Wale Akingbade, added that its participation inauditing the draw was part of effort to ensuretransparency and accuracy.

To qualify, customers recharged their lines orpurchase any Airtel data, Blackberry, Androidbundle or voice offer bundle offer. Each of theseactivities carry specific number of entries into theraffle draw and the higher the number of entriesearned, the higher the chances of winning.

The accumulated entry points for a customer canbe carried over every day throughout the promoso that the chance of winning increases with everypassing day

Devaluation heralds tough times forbusinesses this year —KAPOOR

Stories BYPROVIDENCEOBUH

We run gasgeneratedpowerwhich ischeap andevencheaperthan NEPA

The ViceC h a i r m a n ,

Vital Products Plc, Mr.Sanjeeve Kapoor,penultimate week, saidthat 2015 is going to betough for businesses asa result of nairadevaluation, as thismay result to marketcontraction of about 35percent.

He stated this in achat with news menimmediately after thecompany's closed doorAnnual GeneralMeeting, for thefinancial year endedDecember 31, 2014, inLagos.

Kapoor noted thatthe cost of doingbusiness in Nigeria hasremained high. “Ibring in tomato fromRussia to Nigeria at$30 per ton and fromLagos to Kano it cost me$30 per ton, cost oftransportation fromLagos to kano costs methe same thing fromRussia to Nigeria," hesaid.

“2014 was not tooalright but 2015 isgoing to be toughbecause of thedevaluation of thenaira. Today naira to adollar is N210 and wehave not been able tomove our prices up andso we will slow downour sales because weare having a lot ofproblem in increasingour prices," he added.

He said: “I don’tthink government canbring down the nairadollar price, unless oilgoes up to $70 or $80.I see the marketcontracting by at least35 percent in 2015, sovolumes will comedown, nobody shouldthink big anymore andwe will go from twoshifts to one shift wehave to lay off a lotpeople,” he said.

He added that itsbusiness is establishedin the northern part ofthe country, “but wehave not been sosuccessful in Lagos. Wehave been improvingour costing expensesand we have beencutting down cost. Werun gas generatedpower which is cheapand even cheaper thanNEPA.” Earlier in astatement, Chairman of

Board, Alhaji, BashariAminu, said that itsoperating environmentremained undoubtedlymarked by variouseconomic, security andpolitical challenges inthe year under review.“The upsurge ofinsurgence in thecountry and theupcoming election hasimpacted negatively onbusiness.

“Going forward we

will continue to build onexisting competencies toenable us set theneeded platform forcontinuous marketexpansion, volumegrowth and delivery of

the desired benefits toall stakeholders.

“We will continue toattract and retain thebest talents in theindustry. Ourcompetitive strengthsand growth potentialswill be fully maximized,with the likes of Sudanand India and we willadopt a model for thebackward integrationproject,” he said

Meanwhile, thecompany ’s revenuestood at N4.213 billionfor the year under focuscompared to N4.452billion in 2013.

Truck driver wins Airtel'sRange Rover worthN30m

•Sanjeeve Kapoor

Jan 23-Jan 29, 2015


CMYK

Homes & Housing

Nigeria DepositI n s u r a n c e

Corporation (NDIC) hasliquidated 21 PrimaryMortgage Banks (PMBs),following the revocation oftheir operating licences bythe Central Bank ofNigeria (CBN).

It would be recalled thatCBN issued the revocationorder of the 21 PrimaryMortgage Banks (PMBs)as well as onemicrofinance bank via itsgazettes dated November14 and 19, 2014, andappointed NDIC theprovisional liquidator towind up affairs of theclosed financialinstitutions.

To this end, the NDIChas issued a public notice

•Construction of houses everywhere, how affordable?

NDIC begins liquidation of21 mortgage banks

By YINKA KOLAWOLEannouncing the closure of thefinancial institutions. Thenotice stated: “This is to informDepositors, Creditors,Shareholders and the GeneralPublic that the operatinglicences of the under listedTwenty-One (21) PrimaryMortgage Banks (PMBs) andOne (1) Microfinance Bankhave been revoked by theCentral Bank of Nigeria(CBN) via gazettes dated 14thand 19th November, 2014respectively and the NigeriaDeposit InsuranceCorporation (NDIC) has beenappointed as the provisionalliquidator to wind up theaffairs of the closedinstitutions. Consequently,the Nigeria Deposit InsuranceCorporation has commenced

the process of orderly windingup of the affairs of the affectedPMBs/MFB and will soon bemaking announcement/publication on the verificationand payment of insureddeposits.” The corporationtherefore called onstakeholders to contact theDirector, Claims ResolutionDepartment or any of theCorporation’s Zonal Officesfor further enquiries andnecessary assistance.

At a workshop on ‘CreditUnderwriting Standards forNDIC Examiners’ in Lagos,recently, NDIC ManagingDirector, Alhaji UmaruIbrahim, confirmed theliquidation. He said availablerecords showed that thePMBs’ Portfolio at Risk

averaged 45.70 percent, whichis more than the prescribed 5percent threshold. “In its bidto clean the system, on5thJanuary, 2015, the CBNrevoked the License of 21PMBs and handed same toNDIC for Liquidation. Ourattention is now being focusedon the PMB sub-sector so asto address the emergingchallenges, especially inCredit UnderwritingStandards. PMBs in Nigeriacan create significant impactif only they adhere torecommended corporategovernance practices, basedon effective and sustainablerisk management practices asinstituted by the RegulatoryAuthorities. In particular,PMBs should be interested inenhanced CreditUnderwriting Standardsbecause their loan portfoliosare on a variable rate andtherefore sensitive toMonetary Policy Rate (MPR)fluctuations,” he said.

The list of affectedinstitutions include: Allianceand General MortgageLimited, Benhouse BuildingSociety, Consolidated EstateBuilding Society, CymonSavings and Loans, Euro-Banc Savings and Loans, FirstAmalgamated BuildingSociety, First Capital Savingsand Loans, Global BuildingSociety as well as HarvardTrust Savings and Loans.

Others are HomeFoundation Savings andLoans, Jubilee BuildingSociety, Lagoon HomesSavings and Loans, LeverageHome Savings and Loans,Midland Mortgages,Mortgage PHB, MultiBlancSavings and Loans, MustardSeed Mortgage, OmegaSavings and Loans, PasswordSavings and Loans, PostService Savings and Loans,TMC Savings and Loans, aswell as Crystal EdgeMicrofinance Bank.

Kano State government hascommissioned the multi-billion naira

Kwankwasiyya city, one of the three megacities being developed by the currentadministration in the state.

The three cities, namely Kwankwasiyya,Amana and Bandirawo, estimated to gulp thesum of nearly N30 billion, were initiated tocounter the challenges of shortage ofhousing, overcrowding, overstretching ofpublic infrastructure and related problems,caused by rapid urban growth of Kanometropolis.

Realizing these problems and theirattendant consequences, the stategovernment, in 2012, conceptualized whatit termed “the Kano Mega City project” whichentailed constructing the new capitalintensive cities among other infrastructure,established the Kano Geographic InformationSystems, KANGIS, and banned thedemarcation and sales of illegal sub-divisions

Kano commissions multibillion naira Kwankwasiyya Cityof plots popularly known as Awon Igiya.

Gov. Rabiu Kwankwaso explained that thefirst phase of the Kwankwasiyya Housingproject covers 205 hectares with 698,consisting 5 and 4 bedroom duplexes as wellas 3 bedroom bungalows. “Governmentresources were solely used to build thesehouses and we have sold some while othersare being sold to Kano citizens and otherNigerians,” he said.

The governor said a Chinese companyhas acquired 250 houses and 41 hectaresof land at Amana city, at the cost of aboutN5 billion, payable within three months,adding that from all indications, all thehouses at the three new cities would be soldby May, 2015. He, therefore, assured thatthe proceeds generated from the sale of thehouses would be channeled to the provisionof infrastructure in other layouts like KuyanTa’inna, a suburb of Kano city, in the lastfew months of his administration.

NIESV lauds LASGover land transactioncost slashNigerian Institution of

Estate Surveyors andValuers (NIESV), Lagos Statebranch, has commended theLagos State government overthe reduction in the cost ofland transactions in the state.

The commendation wasmade at a press conferenceaddressed by NIESVchairman, Stephen Jagun.“We appreciate the listeningear of the Governor, Mr.Babatunde Raji Fashola, andhis Cabinet for the assiduouswork they have done inyielding to the advice by ournoble institution. He has beenable to reduce the cost oftransaction from 13 per centto three per cent. It is anachievement that thegovernment needs to beapplauded for, although it canbe improved upon. In October2012, a position waspresented by the President ofour institution and severalmeetings were held thereafterwith the Commissioner andother senior governmentofficials. We believe that thisculminated into the results wehave today.

“The government actionwould provide more liquidityin the property marketthereby generating morerevenue for the stategovernment.

US mortgagerates inch upFixed mortgage rates in

the US last week rose forthe first time in 2015, withFreddie Mac’s widely watchedsurvey pegging the 30-yearconventional rate at 3.66percent, up from 3.63 percent.

The average rate for a 15-yearfixed home loan was 2.98percent, up from 2.93 percent.Start rates for adjustable loansrose as well, Freddie Mac said.The average monthly rate for a30-year conventional mortgagehad been 4 percent or higherfor 18 months before droppingbelow that threshold inDecember.

This boon for borrowers wastriggered by powerful globaldemand for safe securitiesdenominated in strong U.S.dollars. That has pushed downthe yields, or effective interestrates, on Treasury andmortgage securities, andmortgage rates have followed.

Freddie Mac asks lenderseach Monday throughWednesday about the termsthey are offering on mortgagesof up to $417,000 that can bebacked by Freddie and FannieMae, its sibling mortgagefinance company.

PMBs inNigeria cancreatesignificantimpact ifonly theyadhere torecommendedcorporategovernancepractices


E-Commerce

Courier firms must reposition tokey into e-commerce — Johnson

The Minister ofCommunica t i ons

Technology, Mrs. OmobolaJohnson has said that couriercompanies in Nigeria mustreposition and re-strategise tomeet the growing demands ofparcel delivery being drivenby the boom in e-commerce inNigeria.

She said there is no need fore-commerce companies tocreate separate logistics for

delivery if the couriercompanies in the country cancreate a value proposition thatappeals to and meets thedemands of these e-commerce firms.

“The courier companiesmust have a value propositionfor these companies becausethe opportunity is there. Letterdelivery is declining but weare seeing an increase inparcel and goods delivery,”she said.

Johnson who was speakingat the Information and

Communications Technology,ICT stakeholders’ forum inLagos also disclosed thatsince 2011, the ministry hasbeen making significantefforts to reform the NigeriaPostal Service, NIPOST toboost the economic value ofthe agency and the Post andCourier Services sector. Shenoted that the revised GrossDomestic Product, GDP figureshowed that the sector ’scontribution at 0.03 percentwas low but that “the sector ishowever growing steadily,

STORIES BY JONAHNWOKPOKU

and is likely to experiencemore rapid growth as e-commerce expands.”

The minister who alsopresented her score card tothe forum said part of theMinistry’s achievement in thelast four years was thecreation of the TechnologyIntervention Fund, aninnovative intervention Fundwhich she said, closed at$16.2 million last year and“further rounds will aim toreach target of $50 Million.

According to her, the Fundwill among other things:“help to grow the still verynascent Venture Capitalindustry in Nigeria and willfill the gap that exists wherehigh risk capital is needed byentrepreneurs; targetdisruptive and innovativetechnology start-ups inNigeria that have thepotential to grow to becomecategory leaders and createopportunities currentlyunavailable to the evergrowing ecosystem of youngNigerian IT entrepreneurs.”

Naira devaluation: ‘No significant impact on e-commerce yet’

world where there arecurrency fluctuations. Thereare lots of ways to deal with itand a lot of merchants aresavvy enough to be able todeal with it.”

On what Kaymu hasaccomplished in the past twoyears, she said they have

been able to attract over tenthousand merchants to theKaymu marketplace even asit has expanded to six othercities in Nigeria and 34 othercountries all over the world.

She said Kaymu willcontinue to expand throughstrategic marketing to achieveits vision which is to bring allNigerian merchants online.

Also speaking, Kaymu’sHead of MarketingCommunications, TomiwaOladele told journalists thatthe online marketplace hascontinued to providepremium exposure formerchants who sell on Kaymuwebsite through promotion ondifferent platforms includingGoogle, Facebook, and offlineincluding customer servicesand logistics support at nocost.

She noted that Kaymu isconcentrating on expandingits merchant base andtherefore offers free servicesto all merchants who enlistand sell on the Kaymuplatform.

Search engine Googlehas agreed to better

inform users about how ithandles their personalinformation after aninvestigation by Britain’sdata protection regulatorfound its privacy policywas too vague.

The InformationCommissioner ’s Officesaid in a statement that itrequired Google to sign a“formal undertaking” that itwould make the changesby June 30 and take furthersteps in the next two years.

The ICO investigationstems from a privacy policyimplemented by Google inMarch 2012 thatconsolidated some 70existing privacy policiesinto one and pooled datacollected on individualusers across its services,including YouTube, Gmailand its social networkGoogle+.

Regulators in Spain andFrance have fined Google900,000 euros ($1.02million) and 150,000 eurosrespectively over theprivacy policy, smallpenalties relative toGoogle’s scale.

Visa reportsprofit boost

Visa Inc, the world’slargest credit and

debit card company,reported a better-than-expected quarterly profiton last week due to a goodholiday season and astrengthening U.S. jobmarket that encouragedpeople to spend.

The company said e-commerce, which mainlyuses cards, was“extraordinarily strongduring the holidayseason.” But ChiefExecutive Charlie Scharfsaid consumer spendingon the whole, while at“reasonable” levels, wasnot accelerating.

Shares of the company,which also announced a 4-for-1 split of its class Acommon stock, rose about4 percent in extendedtrading. Visa, which earnsmoney from both thevolume and value oftransactions using itscards, said total volumeincreased to $1.90 trillionfrom $1.84 trillion.

Google tochangeprivacypolicy

LAUNCH - From left: Minister of Industry, Trade and Investment, Dr. Olusegun Aganga;Managing Director, Coca-Cola Nigeria Limited, Mr. Adeola Adetunji; Group ManagingDirector, Diamond Bank, Uzoma Dozie; and Director, Enterprise Development Centre (EDC)Mr. Peter Bamkole; during the launch of the Enterprise Development Centre's new building atPan Atlantic University, Lagos on Thursday 29th of January, 2015.

Letterdelivery isdeclining butwe areseeing anincrease inparcel andgoodsdelivery

Even if afterthe elections

and theNaira

continues tofall, I still

think that itwill not havesignificantnegative

impact on e-commerce

The Managing Director ofNigeria’s premier

online marketplace,Kaymu.com, Evangline Wilehas said that the currentdepreciation of the Nation’scurrency, the Naira has nothad any significant impact one-commerce.

She stated this whilespeaking to Vanguard on thesideline of a media brunchorganised by the Marketplaceto mark its secondanniversary in Lagos.

She said although an impactmay be expected; it will notbe significant as operators inthe sector especiallymerchants on Kaymumarketplace had anticipatedthe trend and madecontingency plans.

“Certainly there should bean impact but we don’t expectit to be over a long period, forexample over a year. Rightnow, this situation has nothad any impact on ourmerchants because lots of ourmerchants had anticipatedwhat is happening and

planned for it and alsobecause we are just comingfrom the Christmas periodwhen importers over-exportedand there is still a reasonablestock that will last until thesituation stabilises,” she said.

“I think our merchants seeit as short term issue. I thinkour expectation is that after theelections that it will go backup. And even other majorcurrencies will stabilise. Ithink most of our merchantshad anticipated that this willhappen for this short periodof time and so they havemade contingency plans. SoI don’t expect the continuousdecline in the naira’s value tohave any significant impact inthe long term. I think it willbe short term thing andprobably be over in the nextquarter,” she added.

She however noted: “Evenif after the elections and theNaira continues to fall, I stillthink that it will not havesignificant negative impact one-commerce because Nigeriais not the only country in the

Insurance


LAUNCH - From left: Assistant Secretary, Steps to Greatness Foundation,Abimbola Okodabi; Chairman, Mr. Ayodele Ifaturoti and ManagingDirector/CEO of the Foundation, Mrs. Oluseyi Ifaturoti, during the medialaunch of the foundation in Lagos.

The insurance industry in Nigeria isworking hard to take its rightful place

in the economy; as a result, all efforts aregeared towards making the industrycontribute meaningfully to the GrossDomestic Product (GDP) of the country. Nigeria’s gross premium per capita of $8.9is low when compared to $1,072, $29.9 and$49.3 for South Africa, Kenya and Ghana,respectively. Insurance penetration as apercentage of GDP is 0.43 per cent; andonly an estimated 6 per cent of thepopulation has any form of insurance.

Before 1992, the insurance industry wasbeing supervised by the National InsuranceSupervisory Board. Initially, the industrywas being supervised by the InsuranceDepartment in the Federal Ministry ofTrade, headed by the Registrar ofInsurance. And from inception, NAICOMhas been reporting to the Federal Ministryof Finance.

This is quite unlike other regulators inthe country’s finance market including theapex bank, Central Bank of Nigeria andthe 10 years old National PensionCommission (PenCom).

In recognition of this challenge, the fourinsurance Commissioners that the countryhad have worked hard and recorded severalpositives in raising the stakes of the industry.

It is therefore pertinent that the tenuresof all commissioners be reviewed here.

OkworChief Eugene Okwor, who was appointed

as Registrar of Insurance, Federal Ministryof Trade, Lagos in 1974 and later appointed

Insurance commissioners and efforts to revamp the sector

Director of Insurance in 1977, becamethe pioneer Commissioner forInsurance, National InsuranceSupervisory Board, and the body whichmetamorphosed into the NationalInsurance Commission (NAICOM). He served in this capacity from 1993 to1997 when he voluntarily retired.

In this capacity Okwor supervised thecarving out of the InsuranceDepartment at the Federal Ministry ofFinance and subsequently establishingthe National Insurance Commission(NAICOM) as the regulator forinsurance industry.

BaileyThe seven and half years tenure of

Chief Oladipo Bailey was spent mostlytearing down bad structural defects and

BY ROSEMARY ONUOHA

setting up new structures that formed thebedrock of what achievements that theinsurance industry has recorded in the last10 years.

At different times, Bailey confrontedrecalcitrant operators, particularly theinsurance brokers’ fraternity that heldother operators hostage and would notwant any interference from any regulatorwho want the situation changed.

The greatest achievement of Bailey wasthe protection of the insurance industryfrom predation by banks and other hawksin the finance sector. He warned andlobbied government to stop banks, underthe guise of universal banking, from takingover insurance business, warning that itwould cause serious crisis in the economy.

Universal banking policy was introduced

to enable financial institutions toprovide all classes of financial servicesunder one platform, with theinsurance industry as the target. Hisagitation has been rewarded with thereversal of universal banking by theCentral Bank a few years back.

Bailey also supervised the upwardreview of the capital base of insurancecompanies as prescribed by theInsurance Act, 1997; from N20 million,N50 million for life and special risksbusiness to N150 million, N200 millionrespectively. The capital base forcomposite and reinsurance companieswere raised from N90 million to N350million at the same time. Thisinadequacy in this capitalisation ledto its upward review during the tenureof his successor.

ChukwulozieChukwulozie supervised the last

recapitalisation exercise in theindustry, when in 1997, the FederalGovernment mandated reinsurancecompanies to raise their capital basefrom N350 million to N10 billion,while life and general insurers wereasked to raise theirs from N150 millionto N2 billion and N200 million to N3billion respectively.

At the end of the exercise, the capitalbase of the industry was raised from apaltry N2 billion or thereabout to overN200 billion. The capacity of theindustry to take on high ticket risks,meet claims obligations and train itsworkforce improved significantly at theend of this exercise.


CMYK


CMYK

34 —Vanguard, MONDAY, FEBRUARY 2, 2015

Banking & Finance

BY BABAJIDEKOMOLAFE

The Central Bank ofNigeria (CBN) has said

that the introduction ofelectronic collection ofrevenue (e-Collection) bythe federal government willhelp to curb revenue relatedcorrupt practices in thecountry.

Director, Banking andPayment SystemDepartment, CBN, Mr. DipoFatokun, stated this at asensitisation workshop forbanks of Federal Governmente-Collection on CBNPayment Gateway.

The workshop wasorganised by SystemSpecsLimited, an indigenoussoftware developmentcompany and owners of theRemita electronic paymentplatform, which is used forthe e-Collection of revenue.

Speaking on e-Collection ina Cashless Society, Fatokunsaid, “He said, “The wholeworld is moving into a cash-less mode and Nigeriacannot be an exemption. Thee-Collection will avert alarger proportion of revenuetheft, diversion of collectedrevenue and all sorts ofcorrupt practices associatedwith revenue collection.

“We must not be deterred bythese routine challenges ofinfrastructural deficiencies orfraud (especially electronic/card fraud) that come up,because ultimately thepotential benefits of goingcashless outweigh thechallenges.

“The policy involves aculture change, which will

PRESENTATION - From left: Mr. Abubakar Suleiman, Executive Director, Finance & Strategy,Sterling Bank Plc; Lagos State Commissioner of Police, Kayode Aderainti and Chief SecurityOfficer, Sterling Bank Plc, Mr. Igba Austin Iwar at the presentation of vehicles and othersecurity equipment by Sterling the Bank to the Lagos State Police Command at the weekend

E-collection to curb revenuerelated corrupt practices—CBNnaturally take some time togain acceptance.Nevertheless, with supportof all the stakeholders,Cash-less Policy is beingaccomplished”.

The e-Collection of revenueis part of the Treasury SingleAccount (TSA) initiative,

under which all moniesbelonging to the governmentare domicile in one accountwith the Central Bank ofNigeria, with payments outand collection into the accountis done via an electronicpayment platform.

“E-Collection is the flip side

Ecobank Nigeriadonates to ArmyPR SchoolThe Nigerian Army

School of PublicRelations and Informationhas commended EcobankNigeria donation of N2.5million towards thecompletion of a buildingproject at the Nigerian ArmySchool of Public Relationsand Information.

Captain Musa Yahaya ofNigerian Army School ofPublic Relations andInformation, who extoled thebank’s support, stated thatthe monetary donationwould go a long way,enabling the school achieveits long term desire to expandits infrastructure toaccommodate morestudents. He laudedEcobank’s willingness tosupport communities whereit operates, urging othercorporate organizations toemulate the bank.

In his remarks DeputyManaging Director,Ecobank, Tony Okpanachi,said the bank has a historyof giving back to thecommunities where itoperates.

He stated that thedonations would go a longway to assisting Armyauthority complete its schoolbuilding project.

Enterprise BankbeginsMoneygram“Naija Send”

In the continuous bid toserve her customers

better, Enterprise BankLimited has commenced MoneyGram “NaijaSend” – Outbound moneytransfer services fromNigeria with MoneyGramInternational.

MoneyGram “NaijaSends” enables walk-inand existing customersenjoy the opportunity ofsending money abroad onthe MoneyGramInternational platform. Theproduct is designed foreverybody, and has provento be a convenient means ofmeeting personal financialneeds. Such needs includepayment of school fees,pocket money and othereducational expenses (forparents who have childrenschooling abroad).

Under this service, moneyis sent in naira but receivedin the currency of thereceiving country. Thiseliminates the risk attachedto carrying physical cash intransit while travellingabroad. For additionalsecurity, money sent fromNigeria cannot be receivedin Nigeria.

of e-payment. Outflows fromthe TSA are currently madethrough e-payment, whileinflows are largely manual,”said Mr. Jarad Sosarumso,Deputy Director, Revenueand Investment, Office of theAccountant General of theFederation (OGF).

“E-collection completes thecycle of processinggovernment transactionselectronically”, he said

Sosarumso, whorepresented the AccountantGeneral of the Federation,said that the present systemof manual collection ofrevenue is bedevilled withvarious problems including:Poor tracking of internallygenerated revenue ( IGR)and other collection;Leakages of governmentrevenue and other inflows;Non remittance of revenue bycollecting entities;Misappropriation of revenueand other collections; andInadequate, or sometimes,out-right lack of records”

He said the new e-Collection among otherthings is designed: To plugloopholes in the FGNrevenue collection system;Enthrone a new regime oftransparent and accountableIGR management; and alsoto improve available funds forfunding developmentalprograms”. He noted that inaddition to these, theintroduction of e-Collectionaligns with the on-going CBNe-payment policy; Ease theburden of revenue payers;Make government contractsmore accessible to the people;and create a mutuallyrewarding relationship withcollecting banks”

Central Bank of Congo(BCC) has approved the

acquisition of BanqueInternationale de Credit(BIC) by First Bank of NigeriaLimited.

FirstBank of Nigeria Limitedhad acquired 75 percentequity interest in BIC in 2011,as part of its regionalexpansion efforts.

Announcing the approval ina statement on Friday,FirstBank said that name ofBIC has subsequently beingchanged to FBNBank DRCongo

The Bank said, “Followingthe recent approval by CentralBank of Congo (BCC), theBanque Internationale deCredit has now becomeFBNBank DR Congo, asubsidiary of First Bank ofNigeria Limited. FBNBankDR Congo is strategicallypositioned to foster greatercollaboration and providebetter service for the country’spublic and private sectorclients, and the general publicat large.

“The launch furtherconsolidates FirstBank’sposition as the largestcorporate and retail bankingfinancial institution in sub-Saharan Africa (excludingSouth Africa) with presence inGhana, Guinea, Gambia and

Congo Cenbank okays FirstBank's acquisition of BIC

Senegal as well as presencein the UK and representativesoffices in Johannesburg,Paris, Abu Dhabi and Beijing,China. The expansionrepresents FirstBank’sstrategic objective to maintainsignificant market share,expand its pan-Africanfootprint and diversifyearnings while deliveringvalue to shareholders. Withover 35 branches in DRC,FBNBank DR Congoleverages FBN’s internationalnetwork, business expertise,which is part of the diversifiedsynergies of the FBN Group

to offer innovative,convenient and securebanking services to itscustomers and better seize theemerging opportunities of themarket”

Speaking on thisdevelopment, the GroupManaging Director/ChiefExecutive of FirstBank, BisiOnasanya, said: “The launchof FBNBank DR Congo fulfillsone of the critical stages of ourambition to steadily broadenand build a more diversefootprint across Africa. We arecommitted to developing amulti-local business modelthat broadens our geographicrevenue base while providingenhanced service delivery toour new customers and equityparticipation to localinvestors.”

“Commenting further, theManaging Director, FBNBankDR Congo Cheikh-TidianeN’Diaye said “Having builtvalue for Nigeria over the last120 years, FBNBank DRCongo is poised to do evenmore in the DR Congofinancial markets. FBNBankDR Congo will providecustomers with a bouquet ofbanking solutions that maketheir financial lives lesscumbersome and stressfulwhilst providing a delightfulservice experience.

We arecommitted todeveloping amulti-localbusinessmodel thatbroadens ourgeographicrevenue base


CMYK

CMYK

AVIATION

The Nigerian AirT r a f f i c

C o n t r o l l e r sAssociation, NATCA,has said most aircraftfind it difficult to landat airports across thecountry duringadverse weatherconditions such as dusthaze, rain and fogbecause of inadequate

Why aircraft land with difficulty atNigerian airports — NATCABy LAWANI MIKAIRU

B i - c o u r t n e yA v i a t i o nS e r v i c e s

Limited , operator ofMurtala MuhammedAirport DomesticTerminal 2, MMA2, hasdisclosed that thecompany has spentabout N2billion to upgrade facilities in theterminal building.

Head, CorporateCommunications, Bi-Courtney AviationServices Limited Mr.Remi Ladigbolurevealed that in the lastone year the companyhas focused its attentionon upgrading facilitiesat the airport’s terminaladding that such movewas meant to bringcomfort and maketravelling convenient forthe passengers.

Mr. Ladigbolu notedthat facilities that wereupgraded were done inline with what wasobtainable at variousinternational airportsacross the world. Heenumerated facilitiesthat were upgraded toinclude: the upgradingof the escalators,panoramic lift, theCupps system,automation of the firstMSCP in Lagos,upgrade of generatingplants, instalment of e-gates, BaggageReconciliation System,UPSs, and BaggageScreening Machines, hesaid that suchachievement was whatthe company iscelebrating today.

We spent N2bto upgradefacilities atMMA2— Bi-CourtneyBy LAWANIMIKAIRU &DANIEL ETEGHE

instrument landingsystems .

According to NATCAGeneral Secretary,Mr. Olawode Banji“Nigerian airports donot have somecategories ofinstrument landingsystems (ILSs) thatwould enable aircraftto land at airportsunder severe weathercondition and zero

visibility.”He added that many

of the landing aidssuch as ILS, airfieldlightings (AFLs) andothers are inadequatethereby making i tdifficult for airlines tooperate in adverseweather conditions.

“Some adverseweather conditionsthat are associatedwith harmattan season

include mist, fog anddust haze. All thesereduce visibility andcould limit the usageof an airport or impairair safety. Many of thelanding aids such asILS, airfield lightings(runway, approachand taxiway lights) areinadequate at ourairports therebylimiting operations inadverse weathercondition like dusthaze, rain and fog.Many of the airports

operations arerestr icted underadverse weathercondit ions due toabsence of airf ieldlightings and non-availabil i ty ofdesirable landingaids,” he said.

Banji also said someairports that areequipped withinstrument landingaids had been battlingwith power andtechnical challenges.

“Some airports withILS are always havingproblems of powersupply to theequipment and other

technical problems thatcould make thee q u i p m e n tunserviceable.

The categories of theavailable ILS and non-availability of airfieldlightings do not allowfor aircraft operationswhen the visibi l i tyreduces below someset minima for eachairport . There arecategories of ILS thatare not available atNigerian airports toal low for landingunder severelyreduced visibility evenas low as zerovisibility,” Banji said.



CMYK

Business & Economy

Securities Africa unveilsReal Trade, assures ofadequate security

In its determination to boost the Nigeria capitalmarket, Securities Africa Financial, SAFLimited, a dealing member of the Nigerian

Stock Exchange, NSE, has introduced a newproduct, “Real Trade” and has assured stakeholdersthat their transactions on the platform are adequatelyprotected.

Speaking to newsmen in Lagos, the ManagingDirector, Securities Africa Financial, Mr. AfolabiFolayan, said “Real Trade is our online/electronictrading product designed to offer convenience tothe investing public through our e-Business Suite.This new product is borne out of the need to satisfythe cravings of certain group of investors. They are:The IT Savvy; those that believe that the best wayto get anything done is to do it yourself; those thatwant minimal interactions with human personnelby serving themselves on a trading platform; thosethat want to take and execute their investmentdecisions from the comfort of their desks/homes/mobile devices; the young investors, starters andstudents.”

He further explained that to subscribe to the RealTrade platform, investors need to have access tointernet, either through their phones, laptops,computers or ipads etc.

He stated that Real Trade features include:Convenience. Investors have opportunity to tradedirectly through straight processing to NSE; tradefor yourself/ Self Serving platform (put you in thedriver ’s seat); instant confirmation of successfultrades/feedback; direct access to stockbrokingaccounts, portfolio position; direct access real timemarket information and access to research materials.

NIDF to pay N25mcoupons to note holders

The NigerianInternationalDebt Fund

(NIDF) , a NigerianStock Exchange, NSE,listed Mutual Fundplans to pay a minimumof N40.00 per noteholder as final couponto investors for the yearending December 31,2014. A total of N25.2million will bedistributed amongstnote holders on theregister of the fund asat the closure date ofFebruary 5, 2015.

According to OlaBelgore, ManagingDirector of AfrinvestAsset ManagementLimited, the FundManager, this is the34th coupon in the lifeof the Fund since itslaunch in 1997, andthe final distribution isin l ine with thestructure of the NIDF,as the Fund isdesigned to paydistributions twice ayear.

In his words, “NIDFpaid an interimcoupon of N60.71 pernote in August 2014and with an estimatedN40.00 per note to bepaid on February 11,2015, the totalpayment for the 2014financial year standsat N100.71.”

“The Fund closedthe year at a price ofN1, 978.31 per noteachieving a N68.51capital gain over theopening price for2014. At the tradingprice of N1987.26 onWednesday, January21, 2015, the couponyield was 5.1 percent”,Belgore added.

The Nigeria

International DebtFund invests in thedomestic andinternational debtinstruments of theFederal Government ofNigeria as well asthose of the 36 States.

NIDF offers investorssafety, capitalpreservation, steadyreturns, diversificationand value, and has aconsistent dividendhistory, making it quiteattractive for bothindividual and

institutional investorssuch as Pension FundAdministrators (PFAs),insurance companies,asset managers andgratuity funds.

Only recently, theNIDF was rated “A-”by Global CreditRating Company(GCR). This rating byone of the leadingglobal rating agenciesis among the best formutual funds in themarket today.

From right: Nigeria Opportunities Industrialisation Centres, ( NOIC ) Na-tional Board Chairman, Archbishop Magnus Adeyemi Atilade, Senior SpecialAssistant on Christianity to the Governor of Lagos State, Rev. Funmi Akitoye-Braimoh, and Former Deputy National Executive Director, NOIC, Evang. BunmiOlusola-Kupoluyi at the just concluded 2nd batch bi-weekly graduation cer-emony of the NOIC/EARN programme sponsored by Walmart's Foundation fromUSA.




CMYK

Tax Matters

(i) The Self- AssessmentRegime requires the

concurrent filing of tax returnsand payment of tax due on orbefore the due date.

(ii) A taxpayer must computehis/her tax liabilities, pay thetax/taxes due and file therelevant returns with evidenceof payment of the tax/taxes onor before the due date.

(iii) The relevant taxauthority, FIRS shall accept alltax returns submitted by thetaxpayer. The Tax

Authority shall carry outnecessary checks to ensure thatall required information havebeen appropriately entered intothe tax return forms.

(iv)Failure by a taxpayer tosubmit the tax returns forms onor before the due date is abreach of these Regulationsand the Taxpayer shall be liableto pay such fines together withinterests as may be prescribedin these Regulations or underthe relevant provisions of theapplicable tax laws.

FORMS FOR FILING TAXRETURNS

For the purpose of filing of taxreturns required under the taxlaws listed above:

(a) In the case of the PersonalIncome Tax Act and other taxeson individuals, the tax returnforms shall be as may beprescribed by the Board ofFIRS;

(b) In the case of taxes oncompanies, the tax return formsshall be as may be prescribedby the Board of FIRS;

(c) In the case of the tax returnforms required under the ValueAdded Tax Act, the forms shallbe as

may be prescribed by theBoard of FIRS;

(d) In the case of all othertaxes not covered byparagraphs (a) – (c) of theseRegulations, the tax returnforms shall be authorized by therelevant tax authoritiesresponsible for the collection ofsuch taxes.

MODE OF FILINGRETURNS

(i) A taxpayer must file taxreturns under the Self-Assessment Regime in personor engage the services ofaccredited Agents to filereturns on his behalf.

(ii) For an Agent to carry outthe services required underthis Regulation, the Agent mustbe fully certified by any one ofthe under listed Bodies:

• The Association of NationalAccountants of Nigeria;

• The Chartered Institute ofTaxation of Nigeria; and

• The Institute of CharteredAccountants of Nigeria.

(iii) For the Agent to renderthe services under thisRegulation, the Agent musthave the accompanying sealsof any of the Bodies listed in(ii) above.

SIGNING OF FORMSWHERE AGENT IS

Filing returns based on selfassessment regimeENGAGED BY THETAXPAYER:

Where an Agent has beenengaged by a taxpayer for thepurpose of filing of tax returns:

(i) In the case of filing returnsfor Personal Income Tax Act, theforms must be signed by thetaxpayer in person;

(ii) In the filing of returnsunder the Companies IncomeTax Act, the forms must besigned by a Director or theCompany Secretary.

(iii) In either (i) or (ii), theAgent shall sign alongside anyof the signatories mentioned in(i) and (ii) above.

LISTING AND DELISTINGOF AGENTS BY RELEVANTTAX AUTHORITY:

The FIRS in the exercise ofits responsibilities under theseRegulations may:

(i) Compile annually a list ofagents upon being satisfiedthat they are knowledgeable inthe provisions of the applicabletax law, rules and regulations;and

(ii) Remove from such list, inconsultation with the relevantprofessional body, any agentwho fails to satisfy thestandards referred to in theseRegulations.

TIME FOR FILINGRETURNS:

1. For Personal Income TaxAct- The due date for the filingof selfassessment returnsunder the Personal Income TaxAct shall be on or before the 31stday of March of every year.

2. For Companies Income TaxAct- The tax due for filing self-assessment returns under theCompanies Income Tax Actshall be six months from theend of the accounting year;

3. For Petroleum Profits TaxAct- Under the Petroleum ProfitTax Act, a company shall file areturn of its estimated tax foran accounting period withintwo months after thecommencement of eachaccounting period whileinstalment payment shallcommence not later than thethird month of the accountingperiod and the final returnshall be filed within five monthsafter the end of the accountingperiod with evidence ofpayment of the finalinstalment.

4. For Value Added Tax Act-Taxable persons and agents ofMinistries, Departments andAgencies of governmentsubject to Value Added Tax(VAT) shall render a return ofactivities of the precedingmonth and remit VAT due onor before the 21st day of themonth after the month of

transaction with evidence ofpayment.

EXTENSION OF TIMEFOR MAKING RETURNS:

(1) For the purpose of filingincome tax returns, a taxpayermay apply in writing to theBoard of the FIRS for anextension of time within whichto file returns provided thetaxpayer:

a. Makes the applicationbefore the due date of filingreturns; and

b. Shows good cause of itsinability to comply.

(2) The Board may in writinggrant the extension of time formaking returns to such time asit may

consider appropriate.CONDITIONS FOR

GRANTING EXTENSION OFTIME FOR MAKINGRETURNS:

(1) In granting anyextension, the Board of theFIRS shall take the followinginto consideration:

a. in the case of an individualtaxpayer, on the death of thetaxpayer within the period offiling of the returns;

b. in the case of a company,on the death of any principalofficer of the company, such asthe Chairman, ManagingDirector or Company Secretary,within the period of filing of thereturns; and

c. Where the companyexperienced a fire or naturaldisaster within the period offiling.

(2) The company mustprovide verifiable evidence ofthe fire or natural disaster or ofthe death of the principal officerof the company.

CONSEQUENCE OF LATEFILING UNDER THEPERIOD OF EXTENSION:

Where an extension isgranted, any late filing outsidethe period of extension whetheraccompanied by payment of taxdue or not shall be penalizedfor late filing under theseRegulations.

APPROVAL TO EXTENDTIME NOT TO ALTER TIMEFOR PAYMENT OF TAXES:

Any approval granted by theBoard of the FIRS under 14 ofthese Regulations shall not beconstrued as to alter the timewithin which payment of taxesshall be made under anyapplicable tax law provision.

The filing of returns for VAT isexcluded from this extension.

INSTALLMENT PAYMENTSOF TAX:

(1) A taxpayer may makeinstalment payments of taxdue by commencing paymentin the relevant year ofassessment in a manner thatthe final instalment paymentshall be made not later thanthe due date provided that:

(a) The taxpayer notifies theFIRS of his intention to makeinstalment payments; and

(b) The taxpayer files returnson or before the due date withevidence of payment of thefinal

Instalment.(c) The FIRS shall not

approve more than threeinstalment payments from thedue date.

(d) The payment of VAT isexcluded from instalmentpayments.

PAYMENT OF TAX DUEWhere a tax falls due and is

not paid under any enactmentby any person from whom it isdue, whether or not thepayment of such tax is securedby a bond, the tax due shall bepaid on demand by the FIRSor by delivering the demandnotice in writing to his place ofabode or business or throughhis agent, registered post orapproved courier service.

A D M I N I S T R A T I V EASSESSMENT FORFAILURE TO FILERETURNS:

(1) For the purpose of thisRegulation the term“Administrative Assessment”means an assessment

raised by the Board of FIRSwhere a taxpayer has failed tofile returns and pay taxes dueon or before the due date orwhere there is anunderstatement of tax in thereturns filed.

A D M I N I S T R A T I V EASSESSMENT NOT TORELIEVE A TAXPAYERFROM OBLIGATION TOFILE RETURNS

A determination of the taxpayable throughAdministrative Assessmentshall not relieve taxpayers fromthe obligation to file tax returnsof their businesses, in the caseof a company or full disclosureof income from all sources inthe case of an individual.

Administrative Assessmentshall include penalties andinterests imposed as part of theliability due, effective from thetime the returns became due.

FAILURE TO FILERETURNS AFTEREXTENSION OF TIME

Where a taxpayer, agent oremployer fails to file the taxreturns for an accountingperiod after the time extendedby the Service, the taxpayer,agent or employer shall beliable to pay prescribedpenalties for late filing ofreturns from the due date offiling.

AdministrativeAssessmentshall includepenalties andinterestsimposed aspart of theliability due,effective fromthe time thereturnsbecame due

Kabir Mashi, Chairman, FIRS


CMYK



CMYK

Advertising

LAUNCH - From Left:Brand Building Director Foods, Mrs Nsima Ogedi-Alakwe,Category Manager Oral care, Oiza Gyang; Musical Artist, David Adeleke (aka) Davido,Brand Building Director, Unilever Nigeria Plc, Mr. David Okeme; Musical Artist, YemiAlade; and Communications Channel Manager, West Africa, Unilever Plc, Mr. AdenugbaDiran, at the media launch of Close up cupids game in Lagos recently.

During the invention oftelevision in the 1940s,

advertising became one of itsmany inceptions. Manyhomes adopted regulartelevision-watching as a habit,programming on televisionalso became more clever.

Advertisements then becamestrategically placed betweentelevision show segments. Insome cases, the televisionshow itself acted as anadvertisement.

Over the years, televisioncommercials became highquality mini-productionsmany viewers sit throughbetween their favorite shows.These traditionaladvertisements which run 15to 30 seconds, eat part of aprogram’s airtime. Accordingto Ad Age, an internationalonline journal, ads havebecome increasingly targetedrather than catering foreveryone.

Apart from pushing for aproduct with its constantairing and re-airing, atraditional televisioncommercial can also beentertaining and sometimestells a story or makes a songpopular.

According to the MotleyFool, a multimedia financial-services company, manycompanies, particularly thoseinvolved with selling aconsumer item, make use ofproduct placement as itsmarketing tool. Automobilecompanies or food companiesemploy this method a lot, asseen in many televisionprograms. Without evenmentioning the item, sceneswhere the characters of theshow are either driving a caror eating out of a cereal boxhave the company’s very-visible logo on the product.The result can create a strong,identifiable image, just likepresent day political ads.

Most commonly applicableto the government or its

TV commercial as politicalweapon

Ambode, Agbaje, others deploy theme songs

Stories by PRINCEWILLEKWUJURU

projects, a politicaladvertisement may also be themethod used by humaninterest groups, the academia,religious groups and evencorporations, as a way toconvince the audience or swaythem into their own ideals,systems and beliefs.

According to a researchpaper by Won Ho Chang andothers, political ads come

about when there areimportant issues to be decidedupon by the general public.

However, successfulmarketers understand that aproduct is developed into abrand through a professionalprocess that endears theproduct to loyal consumersand enables it to connect withprospects. Not surprisingly,this applies to product as well

as personality brands.With the 2015 general

elections at hand, thepeople are beginning tofind it increasinglydifficult to differentiatebetween the noise in thepolitical space and thetruth, as each politician orpolitical group vies toshout the loudest in a bidto get the most attention.

Diageo, parent companyof Guinness Nigeria

Plc, owners of the Baileys Irishcream said its increasing itsdistributors' marketing profilewith a car and threegenerating sets.

The gift winners whoemerged through a raffledraw had the following tradepartners emerging winnersMr. Ikechukwu Nnamani ofMcVic Ventures Limited, wona KIA Mohave Jeep 2015Emeka Ezeabata and UcheDomeli won 4.5 KVAgenerators respectively in the5th edition of the monthlyreward system.

The company said its doingthis to make the distributorsfeel the impact of the companyon their businesses as a wayof rewarding them for theirpatronage for 2014 Decembersales period.

Udjoh Ufuoma, BaileysBrand Manager, DiageoBrands Nigeria, said that itsbrands, including Baileys, isable to maintain its numberone status in Nigeria due tothe efficient workingpartnership the outfit has withits wholesalers.

Diageo boostsdistributors'marketing profile

By PRINCEWILLEKWUJURU

Why we introduced anew music trackingdevice — CCMA media monitoring

company, Complianceand Content MonitoringLimited (CCM), has identifiedthe need to detect and trackseveral songs played on thenation’s airwaves as the majorreason for the introduction ofmusiktrak, another trackingdevice to its range of trackingdevices.

The device, which is availableon www.musiktrak.com, thecompany explains, detects andprovides complete,comprehensive and verifiablelog of the airplay of songs bylocal and foreign artistes across260 radio and television stationsin Nigeria.

Musiktrak, according to theManaging Director and ChiefExecutive Officer of thecompany, Mr. Tunde Onadele,is the first and only service thattracks song played acrossNigeria with around the clockrecording of free-to-airbroadcast transmission,presented in twocomprehensive reportpackages - the musiktrak reportand the musiktrak chart.

A product isdeveloped intoa brandthrough aprofessionalprocess thatendears theproduct toloyalconsumersand enables itto connectwith prospects

Competition they say is good forbusiness, but when the hand of Esau

is visible in the affairs of Jacob then thereis every tendency for brand owners to beskeptical of the happenings in the market.

Quite recently, after the launch ofKasapreko’s Alomo bitters into the Nigeriamarket its success attracted barrage of otherbitters like Baby-Oku, Orijin, ‘Osomo,’‘Yoyo,’ ‘Koboko,’ ‘Kerewa’ and the latestentrant, Swagga bitters amongst others.All in a combined effort has stiffenedcompetition in the market which ‘Alomo’owners don’t see as a problem.

Obviously privy of the dangers ofadulteration, Kasapreko’s Alomo is makingfrantic efforts to stay on top, thus inducingan education on dangers of consumingadulterated bitters.

This practice of adulteration has not goneunnoticed, as genuine manufacturersdiscovered that their finances haddropped as a result of influx ofadulterated or faked bitters.

To stem the adulteration trend,Kasapreko took time out to educateconsumers on the dangers of consumingadulterated bitter brands with a marketingactivation intended to deepen consumerconsciousness about their wellness andsafety by encouraging them to makehealthier choices in things they eat anddrink amidst the euphoria of the yuletide.

Of bitters and Kasapreko’s quest todeepen consumers knowledge

The company capitalized on the occasionof the Christmas new year celebration to rollout a weeklong marketing initiative to boostconsumer knowledge of the ‘Alomo’ Bittersbrand. To this end, an activation truck anda team of Brand Ambassadors weredeployed to strategic touchpoints in the cityof Lagos to educate consumers on the safetyfeatures of ‘Alomo’ Bitters as distinct fromthe imitated version and other bitter brandsin the market.

For days, the ambassadors moved fromsocial events to street carnivals and jams,market areas and neighbourhoods to drivethe brand’s key message as the “authenticAfrican herbal bitters.”

The ambassadors also distribute flyerswhich contain vital product information.Radio hypes anchored by popular on Air-personalities and a television commercial,are also running on select city stations toensure consumers are equipped withadequate information they require on thebrand need of ‘Alomo’ Bitters, therebysafeguarding them from harmful imitatedproducts in the market.

According to officials of the company, therationale for the initiative is that asNigerians shop and catch fun of yuletide,they could also be assisted in makinghealthy choices while they also get someincentives for their loyalty to the brand overthe years.

Business & Economy

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


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

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

CMYK

Apapa traffic: Tanker drivers streamlineoperations

THE Petroleum TankerDrivers branch of theNational Union of

Petroleum and Natural GasWorkers Union of Nigeria(NUPENG) has begun movesto streamline theiroperations with a view tomanaging the perennialtraffic gridlock at the portend of the Apapa-Oshodiexpressway.

One of the major factors thathas been attributed to the

traffic situation, is the highconcentration of tank farmsin that area.

Speaking to Vanguard, thePublic Relations Officer of thePetroleum Tanker Drivers,Comrade Atanda Adebayosaid that in order to bringsome level of orderliness tothe loading of tankers at thedepots, tank farms now taketurns to load.

Adebayo explained thatbecause of the problemcreated by the number of tankfarms, the Union has resolved

to streamline the operationsof these tank farms byallowing them to take turnsin their operations.

Explaining further,Adebayo said that some ofthese tank farms take turns toload saying that “when someof them are operating, otherswill be shut for about threedays.

“After another three days,the others will open up theiroperations while the onesthat operated before them willshut down”

By Godwin Oritse

The office of Dr. NgoziOkonjo Iweala, the co-ordinating Minister of

the Economy has promptlyresponded to the content of arecently published articletitled “BUHARI Vs JONATHAN– Beyond the election.”

The article which was writtenby the former Governor of theCentral Bank, ChukwumaSoludo, as an attempt to proffersolutions to our severe socialand economic challengessimply echoed the prevailingpopular sentiments regardingthe failure, of PresidentJonathan’s Economic Policies,to improve the lot of ourpeople.

However, although Soludo’scontribution does not containany fresh mind bogglingrevelations on theincompetence of the currentEconomic Management Team,his glowing reference to theeconomic performance duringObasanjo’s era shouldordinarily be sweet,comforting notes to Ngozi whowas the leader of the Economic‘wizards’ who were largelyseconded from theirresponsibilities with the IMFand World Bank to rejig theNigerian economy;nonetheless, Soludo’s latterday condemnation of the“terrible policy choices” madeby the Honourable Minister inher second coming inJonathan’s administration,probably stung madamMinister as a betrayal of espiritdes corps. Consequently, theIron Lady quickly fired back ina Press release; in herresponse, Dr. Iweala notedthat “It is a sad day for Nigeriaand the Economics professionthat someone like Soludo, aformer CBN governor, shouldwrite such an article. If Soludowants to regain respect, heshould return to the path ofprofessionalism. He certainly

SOLUDO VS IWEALA: The pot and the kettleneeds something to improvehis image from that ofsomeone whose sojourn intonational economicmanagement ended in disasterfor the banking sector.”

It is not clear when theHonourable Minister, realisedthat CBN’s management ofmonetary policies was adisaster; the question is, didshe ever bring herreservations about thepotential adverse impact ofSoludo’s mismanagement toPresident Obasanjo, and if not,why did she choose to simplykeep mute despite thepotential magnitude ofdevastation that a predictabletsunami could cause to thebanking sector? Was suchreaction the HonourableMinister’s best expression ofher patriotism?

Curiously, those of us whoexpressed concerns on theshenanigans of Soludo’smanagement of the bankingsubsector were quite simplyignored until the bubble burstin 2008/9, despite theGovernor’s unflinchingassurances to all and sundrythat the Nigerian bankingsector was immune from theeconomic crisis that engulfedeverywhere else worldwide.

Latter events have shownthat Soludo’s acclaimedbanking consolidation andmarket regulations were allfounded on quicksand andOkonjo Iweala is apparentlyclearly now moreappreciative of the fact thatChukwuma’s reckless brand ofbanking regulation andsupervision, ultimately, led to“massive accumulation of baddebts, (which) meant that ourbanks were ill-positioned todeal with the global financialcrises when it hit. In fact, thebanking sector was brought toits knees and required amassive bailout by Nigerian

taxpayers.”It has not been verified if

Soludo was a covertbeneficiary of the rot heknowingly induced in thebanking sector, but accordingto Iweala, it was evident that“there was very littleseparation between theregulators and the regulated.”Thus, Soludo unwittingly orknowingly sustained arelationship that “is clearly aviolation of a key requirementof central banking success.”

Iweala holds that theregulatory lacuna led “toinfractions in corporategovernance as loans and other

credit instruments running tohundreds of billions of Nairawere extended to clientswithout following due process,and several of these loanscould not be paid back.”

So, according to Ngozi“ S o l u d o ’ s

s i n g l e h a n d e dmismanagement of thebanking sector led to anincredible accumulation ofliabilities that will costtaxpayers about N5.67tn(over $36bn) to clean up.”Sadly, future generations willinherit this debt.

The Honourable Ministeralso noted that the amount“constitutes the bulk ofNigeria’s contingent currentliabilities’ which were decriedas profligate in Soludo’s

article.”Conversely, Chukwuma’s

article paints a completelydifferent picture whichportrays the erstwhile CBNGovernor as the brain behindan exemplary and also sociallyand economicallyprogressive EconomicManagement Team.Nonetheless, the public willrecognise such perception asfalse. Indeed, the Economicstrategies of the currentadministration are clearly acontinuation of the strategiesthat typified the Obasanjo era.

All the uncomplimentaryfeatures that Soludo observesin the current regime are infactamplified derivatives ofSoludo/Iweala fiscal andmonetary strategies between1999-2007.

For example, the fiscaltradition of comparativelymodest annual capital votesagainst increasing humongousrecurrent consumption,prevailed in that era; OkonjoIweala has loyally followed thesame trajectory, such thatalmost 90% of total spendingin 2015 will be devoted toplain consumption with apaltry vote of 10% forinfrastructural remediation;regrettably, education budgethas hardly exceeded 15%since 1999, despite UNESCO’sbest practicerecommendation of 26% ofannual budgets.

Furthermore, CBN’s currentmonetary framework adoptsthe same template that Soludoinherited from hispredecessor; for example, theoppressive system of placinggovernment deposits for zeroreturns, while governmentembarks on regularborrowings from commercialbanks with extreme rateswhich distort resourceallocation was a permanentfeature of Soludo’s monetary

strategy, despite the needlesscost and the attendant heavyaccumulation of loans whichare ultimately stored away asidle funds.

Similarly, the presentadministration continues tobattle with the oppressiveburden of surplus cash whichthe former CBN Governor alsosweated unsuccessfullythroughout his tenure to mopup. Curiously, still no oneappears concerned on theunending source of systemicsurplus Naira despite itsabiding adverseconsequences on the level ofinflation and the capacity ofsmall and medium enterprisesto thrive and create more jobs.

Furthermore, CBN’s anti-social strategy of deliberatelycreating dollar scarcity aftersuffocating the market withfreshly created humongousNaira values is actuallyresponsible for increasinglyweaker Naira exchange rateseven when reserves arefortuitously bountiful;curiously, Lamido Sanusi keptfaith with this same strategyand Emefiele has also becomea loyal apostle.

Sadly also, cost of funds tothe real sector has remainedwell above 20%, the sameoppressive rates thatconstrained industrial growthduring the Soludo years as CBNGovernor; inexplicably, also,over N40bn contributed aslevies from banks’ profitsunder Soludo were returnedby the Governor to the samebanks because CBN could notcome up with an acceptablestrategy for disbursement!

Yet, inspite of considerableevidence of impunity andcontroversial deals while CBNGovernor, Soludo hassurprisingly elected himself asour saviour.

Save the Naira, SaveNigerians!!

CBN’s currentmonetaryframeworkadopts the sametemplate thatSoludo inheritedfrom hispredecessor

Documents

Financial vanguard 02022015