APRIL 11, 2016

CMYK

Continues on page 18

Trouble is brewing between theFinancial Reporting Council(FRC) and notable shareholder

groups in the country over a draft ruleby FRC spelling out the qualificationindividuals aspiring to the position ofaudit committee chairmen of quotedcompanies must possess.

FRC in the draft rule directed thatsuch persons must be members ofcertified professional accountingbody in the country. The Council basedits argument on the premise that

FRC, shareholders poised for war overaudit committee chair… Audit committee chair must be professional accountant — FRC… It’s not necessary, shareholders declare, demand reversal

By NKIRUKA NNOROM professional accountants are morereliable, saying that their educationand training allow for their judgmentto be relied upon.

However, leaders of renownedshareholder groups have frowned atthe guideline, which they describe asunnecessary and called for immediatereversal. According to them, the FRCrules is in contravention of section359(3) and (6) of Companies andAllied Matters Act, Cap. C20.

Controversial rule/guidelineThe draft rule contained in a circular

titled “Transitional ConcessionsAgreed between the Nigerian StockExchange (NSE) and the FinancialReporting Council of Nigeria (FRC)regarding Rules 1& 2 of the FRC’sRules” published by the NSE on March29, 2016, with reference no:NSE/LARD/LRD/CIR5/16/03/29, statesthus: “Chairman of audit committee,to annual report, financial statements,accounts, financial report, returns andother documents of a financial nature,shall be a professional member of anaccounting body established by Act ofthe National Assembly in Nigeria.”

It, however, states that currentchairman of the audit committee shallbe permitted to attest to accounts offinancial nature regardless of whetherhe is a professional member of anaccounting body or not for the currentfinancial year only.

The FRC added in the circular that"The foregoing concessionaryarrangement shall apply only to entitieswhich in the case of a holding companyshall include its subsidiaries): (i)Which are not currently in court withthe FRC and/or having any of itsdirector(s) currently holding FRCNnumbers that have been suspended bythe FRC. Every subsequent annualreport, financial statements,accounts, financial report, returnsand other documents of a financialnature of the audit committee shall beattested to by a chairman who is aprofessional member of an accountingbody established by Act of NationalAssembly in Nigeria in compliancewith FRC Rule 2.”

Again, the FRC in its ACT No. 6 2011expressly reaffirmed the above positionon qualification of audit committeechairman, warning that certificationsthat do not comply with the Council’spronouncement shall be deemed asnon-compliance with its rule andcapable of rendering the financialstatements misleading. “Appropriatepenalties as provided for in the FRCAct, 2011 and the FRC Guidelines/Regulations for Inspection andMonitoring of Reporting Entities 2014shall apply,” it warned.

Provisions of CAMARelevant sections of Companies and

Allied Matters Act - Section 359 (3 &4), that relate to qualification andexperience of audit committee

VISIT - From Left: Mr Tony Agenmonmen, 1st Vice President &Vice Chairman National Institute of Marketing ofNigeria (NIMN), Mr Yaw Nsarkoh, Managing Director, Unilever Nigeria plc, Mr Ganiyu Koledoye, President &Chairman of Governing Council, NIMN and; Mrs Nsima Ogedi-Alakwe, Brand Building Director, Foods UnileverNigeria Plc,during a courtesy visit by executive members of NIMN to Unilever Head Office in Lagos.PHOTO: Kehinde Gbadamosi

18 —18 —18 —18 —18 — Vanguard, MONDAY, APRIL 11, 2016

Cover

Continued from page 17

members, including thechairman provide that: Thechairman of the auditcommittee should be a non-executive director, to benominated by the members ofthe audit committee.

Basically, members of thecommittee should be able toread and understand basicfinancial statements, andshould be capable of makingvaluable contributions to thecommittee. Moreso, membersof the committee shouldpossess a thoroughunderstanding of thecompany ’s business, itsproducts and services, areasonable knowledge of therisks facing the company andthe essential controls thecompany has in place,inquisitiveness anddependable judgment andability to offer new or differentperspectives and constructivesuggestions.

Like any non-executivedirector, audit committeemembers should (at least as agroup) possess a wide rangeof knowledge, skills andpersonal attributes: soundjudgment; integrity and highethical standards; stronginterpersonal skills; and theability and willingness tochallenge and probe.Specifically, audit committeemembers must be able tounderstand the rules and,more importantly, theprinciples that underpin thepreparation of financialstatements.

Shareholders agitateIn his reaction, Mr. Boniface

FRC, shareholders poised for war overaudit committee chair

COLLOQUIUM - From left: Principal Partner, Technique Loss Adjusters Limited, Mr. RalphOpara; Deputy President, Nigerian British Chamber of Commerce (NBCC), Mr. Akin Olawore;Chairman, Nigerian Insurers Association and Managing Director, Linkage Assurance Plc, Mr.Gus Wiggle; Director –General NBCC, Mrs. Joyce Akpata and Director–General CharteredInsurance Institute of Nigeria, Mr. Rola Ahmed at the NBCC’s Nigerian Insurance industryColloquium in Lagos.

Okezie, Chairman,Progressive ShareholdersAssociation of Nigeria (PSAN)insisted that a shareholderneed not possess anyaccounting qualification asadduced by FRC to sit aschairman of audit committee,arguing that no requirementlike being an ICAN memberwas attached as pre-conditionsto buy shares.

He said: “FRC has no legalbacking to say thatshareholders should not beaudit committee except theyare ICAN qualified. Thatmeans you must be charteredaccountant before you canserve in audit committee. Wesay no because that law is alienas far we are concerned.Nobody told shareholders thatbefore you buy can shares, youmust possess a degree; youmust be an accountant or anengineer before you buy into

a company.“The law says that

shareholders should nominatetwo or three members to contestin audit committee in anyquoted company, while thedirectors should nominatetheir own members. And all thedirectors nominated in thecommittee must not bechartered accountants. Theycan be from any profession.

The requirement is that auditcommittee members should beable to read and write. Theaudit committee is not auditingaccount; they are looking atwhat the auditors, who areaccountants, have done. Theyare reviewing what theauditors have done; they arelooking at reports written bymanagement.

It is the audit committee thatensures that therecommendations made by theauditors to the managementteam are enforced; that isbasically what they do. Interms of looking at figures, theycan liaise with the auditors whoare paid to audit the figures.”

Continuing, he said: “So,what kind of law is FinancialReporting Council making. Werely on CAMA and FRCcannot make any law for us.Any law today governingshareholders activity is madeby CAMA. The law of CAMAstipulates that if you can readand write and interpret figure,you can be audit committeemembers. That’s all!

So, this law that is beingproposed by the FRC shouldbe discarded; we will fight itat the court of law. It has no

Continues on page 19

Having a greatbusiness ideais only the first step

in the journey to raising yourbusiness empire. Turning yourbusiness idea into a money-making venture requires raisingthe capital necessary to get yourblessing running and thatrepresents the next step ofthousands of other steps. Instarting your own business, themost challenging task you haveto face as an entrepreneur israising money as capital.

The ability to raise money tostart a business is one of thetests you must undergo as anentrepreneur. As daunting as itmay seem, the challenge ofraising money is not as toughas you think. It is no secret thatin your quest to raise money tostart your business you arebound to face a lot of obstacles.It would be very unfair of me topromise you otherwise.However, the good news is thatit can be done as there are somepeople, some institutions andsome organisations willing tolook at investing in start – upbusinesses.

There are many tried andtested ways of raising money tostart your business which havebeen used by many famousentrepreneurs whosebusinesses have becomehousehold names, includingBill Gates (Microsoft), MichaelDell (Dell computers) andRichard Branson (Virgin), toname a few. For maximumsuccess, you would do well touse a combination of differenttactics to employ when youwant to raise capital for yourgreat business idea.

Using feasibility businessIdeas

The first and basic key toraising money is to have abusiness idea that is feasible,that is practicable, and that isworkable. You wonder why? Thefirst question any investor youapproach will ask is this: Howprofitable is your business idea?That is because no investor willwant to put his money in abusiness that is impossible andnot viable. They will also wantto know the expected return ontheir investment and the timeframe within which to recouptheir initial investment. Beforeyou embark on a quest to raisemoney, carry out a feasibilitystudy to determine theprofitability of your business

Turning great Ideas intogreat money

idea.Using a business planAnother prerequisite in the

process of raising money foryour business idea is a goodbusiness plan. One of your firstmoves when you want tosource for funds to start yourbusiness should be to put acomprehensive business plan.Your business plan will includedetails of your background,education, training experienceand any other personalqualities you possess. Yourpersonal qualities andexperience are often regardedas assets to your business.Your business plan should alsoexplain in detail themodalities of how you aregoing to use the money youneed.

It should also explain indetail your proposed businessidea, associated expenditure,the market researchundertaken, and your financialprojection and so on. Aboveall, your business plan shoulddescribe in detail what makesyour business differs from thatof your competitors. What willinterest your investors the mostabout your business planshould state precisely whatany investor should expect asreturns on their investmentsand also, when and how youare going to pay it.

Personality, Appearanceand presentation style

Next thing to consider isyour personality, yourappearance and yourpresentation style. Whenapproaching an investor,remember you have only achance to create an impressionin his or hermind.Therefore,you must beconscious of your appearance,don’t appear rough andunkempt and, please, try tolook professional. In the gameof raising money for yourbusiness, appearance mattersa lot.

Now to your presentationstyle: your manner ofpresentation will determinethe success or failure of yourquest to raise money for yourbusiness idea to your investorswith a high level ofconfidence, because the betteryou are at communicating yourstrengths to them, the betteryour chances of raising money.If you lack communicationskills, read up books on thetopic.

Like any non-executivedirector, auditcommitteemembersshould (at leastas a group)possess a widerange ofknowledge,skills andpersonalattributes

Vanguard, MONDAY, APRIL 11, 2016 — 19

Cover Story

Continued from page 18

FRC, shareholders poised for war over audit committee chair

power.” He, therefore, calledon the presidency toreconstitute the Board of FRC,saying that it cannot continueto be run as a one-man-show.

Corroborating his views, SirSunny Nwosu, NationalCoordinator, Independentshareholders Association ofNigeria (ISAN) said that therule is uncalled for andthreatened to sue the Councilat the expiration of two weeksultimatum already handed outto it.

“There is difference betweenrules and laws and where thereis clash, the law overrides the

rule,” he said, adding thatprovisions of the Companiesand Allied Matters Act(CAMA) supersede FRCregulation and as such theCouncil should reverse theregulation which he said runscontrary to CAMArequirements.

“Audit committee is a law byCAMA; therefore, they shouldallow the audit committee toappoint its own chairman. Wewill take action. Already, wehave written them and wehave given them 14 days torescind that. If they don’t, weshall be in court,” he declared.

He added: “If accountants inNigeria have become jobless

and need job, they shouldlook elsewhere and not auditcommittee job.”

Contributing, DR. FaroukUmar, President, Associationfor the Advancement of theRights of NigerianShareholders, regretted thatFRC recently rejected theappointment of veryknowledgeable shareholder(who can dissect financialaccounts) from serving aschairman of an audit committeeon account of the new rule.

Expressing disappointmentwith the rule, Umar said: “youdon’t need to be an accountantto read and understand afinancial statement. We reject

the rule in its entirety and willhead to court if the rule is not

US importing Nigeriacrude oil again?

One news item in the international wire service last week caught my attention.It is the fact that the United States of America has turned again to Nigeria

for crude oil. The new twist in the US quest for Nigerian oil is coming on the heelsof the slow down in shale oil fracking in the US. The US oil production has fallen byabout 600,000 barrels a day since peaking in 2015, and imports have filled the gap.

The news looks cheering going by the fact that several tons of Nigerian crudehave been on the high sea looking for buyers. According to the report, refineries

along the US coasts arechoosing to buy imports insteadof local crude. “One of thebiggest winners is Nigeria,which is regaining lost marketshare. Imports from Nigeriasurged to 559,000 barrels a dayin mid-March, compared withan average of 52,000 for all of2015.

The opening up of the USmarket is giving Nigeria a newbeginning with the US in oiltrade. However, it is because theprice of crude has dropped solow that it is no longer profitablefor the US shale producers tocontinue in business. Thecurrent price of crude has madeoil recovery from shale far moreexpensive than imported oil.

The question is: will this bringrelief to Nigeria's dwindlingrevenue? Perhaps, in the lastfew years, Angolan crude hasbeen finding it easier to attractbuying interest than the lightsweet and better qualityNigerian crude, which, until afew years ago, was the preferredchoice for most refiners. But itis not only due to higher pricesand economics that Nigeriancrudes are struggling; a lot hasto do with the customer base ofboth countries. “Angolan crudesrely on countries that aregrowing at a rate of 5 per centto 8 per cent while crudes outof Nigeria rely heavily onEurope, where economies aregenerally on a decline.”

It must have been givingNigeria's oil authority anightmare that the country’sexport crude cargoes everymonth are grappling to attractend-users and refinerydemand, and are instead beingstored on ships and on storageterminals, idling away. It is saidthat bulk of the oversupply in

the Atlantic Basin crude marketis comprised more of Nigeriancrudes. What is furtherworrisome is the fact that a lotof Nigerian crude had beenfloating on the seas and instorage tanks with no home andno destination. But with the USnow buying an average of559,000 barrel per day, Nigeriacan now have a respite.

As a result of the boom inshale oil that the USexperienced in the last fewyears and the crash in crude oilprices, the US Senate lifted itsembargo on oil export. In thethree months since the U.S.lifted its 40-year ban on crudeoil exports, rather than floodingglobal markets, U.S. crudeshipments to foreign buyershave stalled. At the same time,imports into the U.S. jumped toa three-year high in what looksto be a reversal of a year-longdecline in the amount of foreigncrude brought into the Americanmarket.

According to Bloombergreport, “As of March 25, thefour-week average of importswas running at 7.9 millionbarrels a day, 9.8 per centhigher than the year before.“That’s not a one-week blip,”says Tim Evans, an energyanalyst at Citi Futures. “We’reseeing a consistent pattern.”

As it tuned out, the USproducers, who reaped thebenefits of the shale revolution,

no longer enjoy a steep priceadvantage over foreign rivals inselling to domestic refiners.Production has fallen by about600,000 barrels a day from itspeak of 9.6 million in 2015.Curiously, almost the 600,000barrels shortfall from US localproduction is now beingimported from Nigeria. At themoment, refineries are buyingforeign oil to replace the lostU.S. output—and, along withtraders, are storing much of theless-expensive imported oil tosell when prices rise.

According to Bloomberg,“During the early years of theU.S. shale boom, millions ofbarrels of light, sweet crude hadone big problem: no affordable

access to refiners on the coastsof Texas and Louisiana. To tapinto the cheaper oil pooling inOklahoma, pipelines that usedto bring imported oil up fromthe Gulf were reversed to takeshale oil down to the coast.Refiners in Philadelphia andNew Jersey also began buyingNorth Dakota crude instead offoreign oil, moving it by trainacross the country. By October2014, U.S. imports had fallen byabout 40 per cent from a highin 2006.

“Analysts say that West TexasIntermediate crude has to be $3to $5 cheaper than imported oilto pay for those pipeline andtransportation costs. From 2011to 2014, U.S. oil was on average$12.61 cheaper than equivalentforeign oil. The discount slowlynarrowed as pipeline projectswere completed and U.S. crudebegan to flow more freely fromthe middle of the country downto the Gulf Coast.

“A week before the US Senateapproved lifting the export banon December 18, WTI tradedaround $3 below Brent. Overthe next month, the discountdisappeared, and, for the firsttime in six years, WTI traded ata premium to Brent for a fewdays in January. WTI is nowless than a dollar cheaper thanforeign barrels available on theGulf Coast.

The irony of the shale boom,and all the light crude itunlocked, is that it came just as

U.S. refiners were spendingbillions to process heavy oil. “Intheory, there was always goingto be a linkage between freeingup U.S. barrels and replacingthem with foreign crude thatU.S. refiners are better suitedto run,” says Kevin Book,managing director at ClearViewEnergy Partners.

“For some of the weakest U.S.producers with the highestcosts, lifting the ban didn’tmatter because they can’tcompete on the global market,says Abudi Zein, co-founder ofClipperData, which usescustoms data and ship-trackinginformation to estimate globaloil flows. For U.S. producerswith the highest costs, “they’llnever be able to export becauseall of a sudden, they ’recompeting with Saudi Arabiaand Iraq.”

The U.S. is hoarding a lot ofthe imported oil. As of March 25, U.S. commercial crudeinventories hit 534 millionbarrels. That’s near the all-timehigh in 1929, when U.S.commercial storage hit 545 million barrels, as huge oil findscoincided with the beginning ofthe Great Depression. Today,with oil so cheap, producers andtraders are opting to wait forprices to rise instead of selling,especially with the futuresmarket signaling that oil priceswill rise. Traders can lock inthose prices by taking out acontract for delivery a fewmonths down the road”.

How this will help Nigeriashore up its dwindling revenueis not yet clear. But one thing iscertain, return of the US tobuying Nigerian crude willensure that there is a readymarket for Nigeria. The NNPChad better take this chanceseriously.

changed.”

UNVEILING - From left: Mr Segun Macaulay, Vice-Presi-dent, Sales and Distribution; Nitin Anard, Vice-President,Data and Digital Services and Adefemi Adeniran, Head, PublicRelations, at the unveiling of Airtel Smart Speedo in Lagos.

Return of theUS to buyingNigerian crudewill ensurethat there is aready marketfor Nigeria;the NNPC hadbetter takethis chanceseriously

20 — Vanguard, MONDAY, APRIL 11, 2016

CMYK

Business & Economy

UNVEILING - From left: Dr Olatunde Aworanti, Registrar/CEO, NABTEB; Dr Doyin Salami,Guest Speaker; Mr Kunle Akinniran, Managing Director, Vatebra; Mr Mike Aigbe, DeputyMaaging Director and Dr Iyi Uwadia, Registrar, West African Examination Council, WAECduring the unveiling of new name for Fleet Technologies Company as Vatebra in Lagos. PhotoLamidi Bamidele.

The Institute of CharteredAccountants of Nigeria

(ICAN) has certified about 30members with the InternationalFinancial Reporting Standards (IFRS)Certification

More so, 15 members were certifiedfor the Forensic Accountant of Nigeriaand Financial and InformationTechnology Consultant respectively.

Speaking at the occasion of theFaculties Joint Induction Ceremoniesfor the 2015 Forensic Accounting;IFRS and Consultancy andInformation Technology Certificationtraining programmes, ICANPresident, Otunba Olufemi Deru,said that the Faculties were createdby the Council in 2001 as part ofstrategies to address the post-qualification specialisation needs ofmembers in response to marketdemand.

According to him, “Over the years,the institute has been producingchartered accountants who havediverse competencies in the practiceof audit, taxation, insolvency,

IFRS: ICAN certifies more members

The Federal Governmenthas stated that the

myriad of problems currentlyfacing the country is creatingan image problem for thecountry.

Permanent Secretary,Ministry of Information andCulture, Mrs. AyotundeAdesugba, who stated this atthe monthly meeting of theNigeria Institute of PublicRelations, NIPR and launchof the Institutes monthlynewsletter, lamented that thefuel crisis and other economicchallenges are denting theimage of the country.

Adetugba, who wasrepresented by the Director,Information andCommunication Technology(ICT), Mrs. VeronicaAdeyemo, called onprofessionals, such as theNIPR to always remember thecountry in their deliberationsand engagement so as helplift the country from theseproblems.

She tasked the NIPR, as wellas other professionalassociations, to proffersolutions to salvaging thecountry ’s image and insolving the problemsconfronting the country.

In his response, Mr. TayoHaastrup, Chairman NIPR,Capital City Chapter, Abuja,promised to support thegovernment in projecting apositive image for Nigeria.

According to him, the NIPRwould introduce programmesand policies that wouldsupport the efforts ofPresident MuhammaduBuhari to present a positiveimage of the country bothlocally and internationally.

He said, “We need anational conference onnational integration, and whatthe present government isdoing would be a very gooddirection for anybody tosupport. Image launderingand policies are veryimportant.

“Let me also tell you that theBuhari is already helping usin the aspect of imagelaundering. He is a man ofintegrity; he is a man thatdeveloped countries believein, and you can see himtravelling here and there;there are receiving him verywell. This is the number onecitizen that is already helpingus to launch and launder ourimage all over the world.

Nigeria facingimage problemsover fuel crisis,others — FG

By MICHAEL EBOH

BY FRANKLIN ALLI

The Central Bank ofNigeria, CBN, hasaverted the closure of

over 200 companies in themanufacturing sector of theeconomy through its recentallocation of foreign exchangeto the affected industries tobring in their raw materials.

Recall that the apex bankhad in a bid to stabilise theexchange rate, in protectionof foreign reserves, followingoil price decline, excluded 41products from access to theforeign exchange market(interbank foreign exchangemarket and Bureau deChange).

This led to inability of some

CBN averts closure of 200 manufacturingfirms through forex access

manufactures to sustainproduction due to lack ofForex to import raw materials

C o n s e q u e n t l y ,Manufacturers Association ofNigeria cried out threemonths ago that if the dollarscarcity persists, an estimated200 of its members out of the1,600 surviving companieswould close down theiroperations by the end of thefirst quarter of 2016.

With the first quarter over,Dr. Frank Jacobs, MANPresident, said: “The goodnews is that CBN has startedallocating forex tomanufacturers. Thought, it isnot exactly what we want butit is better than none. Someweeks ago, we had challengein getting some forex, so I

had a meeting with the CBNGovernor, Godwin Emefiele.

“At the meeting, hepromised that he was goingto make sure thatmanufacturers' requirementsare met although he said hecannot guarantee theirrequirements will be met 100per cent. After the meetingwith the CBN Governor, I metwith MAN members andconveyed the message thattheir requests are beingattended to and they arehappy that although that isnot exactly what they want butthat they are happy thatsomething is happening. Iam very happy about wherewe are today and we hope theCBN will sustain that effort,”he said.

According to him, it was theoutcome of their public outcrythat led the CBN Governor tohave a meeting with “’Me.When he saw the reports, wediscussed at length and hepromised that he wouldensure that manufacturers’requirements are met.”

Fielding question on theway forward, he noted: “Yes,the way forward is we arehappy at present ourrequirements are being met,and our prayer is that itshould be sustained so thatwe can together grow theeconomy.

He stressed that although,the current allocation of forexto manufacturers is not ableto satisfy their demand 100per cent, but at least it is betterthan nothing.

“We are happy that at leastCBN is sensitive to our needsnow even though they are notable to give us 100 per centaccess pending the time whenthe forex improves, and whenthe price of oil goes up andforeign reserve improves.

Like Oliver Twist, in orderto satisfy our raw materialsrequirement, actually, wewant hundred per cent of therequirements because whenyou apply for $100,000 but youwere given $50,000 dollars, itmeans that your production isgoing to be cut into half andcutting your production intohalf would mean that youwon’t be able to work thenumbers of hours you aresupposed to work in a day.That is why we are hopingthat with time they should beable to give us everything wewant. So we are happy thatsomething is coming thatwhen nothing was coming atall. He disclosed that in orderto cut down on dependenceon imported raw materials forproduction, MAN is indiscussion with the RawMaterials Research andDevelopment Council, RMRDC.

BY PROVIDENCE OBUH corporate finance, financial advisoryservices, secretariat services, publicfinance, information technologyamongst others.

“However, developments in themarket place now point to the needfor specialists in these various areasof accountancy. The advent ofglobalisation and the revolution ininformation technology havesignificantly altered the traditionalmode of accounting processes and byextension, the pace, mode and theservice delivery by charteredaccountants.

“The challenges imposed on playersin the economy by these complexchanges have invariably increasedthe premium placed on the skills andcompetences of chartered accountantsresulting in the expansion of theirresponsibilities beyond the traditionalattestation functions.

“It was in response to thesedynamics, the resulting marketpreference for specialists and theneed for post-qualification bymembers that about seven facultieswere created by the Council,” he said.

Deru charged the inductees tocontinue to fly the profession’s flag

of honesty, integrity and excellencewith distinction in their respectivespheres of influence, no matter theodds.

“This noble Institute, in my view, haspioneered various initiatives and maderemarkable progress in various fieldsboth locally and internationally byleveraging on the expertise andingenuity of its members.

“Therefore, except you continue todemonstrate these great ideals andthrive on the virtues of your professionthrough exemplary conduct, we cannotlegitimately claim to be the conscienceof the nation,” he said.

In his remark, Chairman, Board ofAudit, Investigation and ForensicAccounting Faculty, Mr. FrancisMedessou, said that there is a needfor more accountants due to the rise ineconomic and financial crimes in thenation.

“There is a need for more charteredaccountants especially those trained asforensic accountants with skills toinvestigate financial crime andproduce reliable and credible reportswith which they will report theevidence that will facilitate judicialdecisions on matters of fraud andfinancial and economic crimes.”

Vanguard, MONDAY, APRIL 11, 2016 — 21

CMYK

22 — Vanguard, MONDAY, APRIL 11, 2016

CMYK

Banking & Finance

COMPETITION - From left, Group Head, Proposition & Products, Sterling Bank Plc, AdewaleAkinrinde; Principal Consultant, Wiseplanner Consulting, Sam Omole; Group Head, Digital &Transaction Banking, Sterling Bank Plc, Olugbenga Adams; Chief Consultant, HT Limited,Feyikemi Odunuga, and Group Head, Strategy & Communications, Shina Atilola, at thepresentation of the finalists/contestants in the “Meet The Executive” Business Plan competitionorganized by the Bank in Lagos.

STORIES BY BABAJIDEKOMOLAFE

Investors demanded forN2 trillion worth ofgovernment securities in

March, reflecting the level ofidle funds (excess liquidity)in the banking system.

Analysis of trading ingovernment securities, alsoknown as treasury bills, for themonth of March revealed thatthe amount offered by theCentral Bank rose by 31 percent to N762 billion fromN584 billion in February.

Investors demand for N2trnInvestors demand for N2trnInvestors demand for N2trnInvestors demand for N2trnInvestors demand for N2trngovernment securities in Marchgovernment securities in Marchgovernment securities in Marchgovernment securities in Marchgovernment securities in March

Demand by investors, orpublic subscription, rose by 35per cent to N2.09 trillion,while the amount sold rosemarginally by 0.8 per cent toN902 billion from N894billion. However, the amountof treasury bills (TBs) repaidby the CBN dropped by 21 percent to N512 billion fromN644 billion

Further analysis revealedthat investors showed thatwhile demand for freshlyissued TBs, also known asPrimary Market Auction(PMA) rose during the

month, demand for existingTBs also know as OpenMarket Operation (OMO)declined.

Demand for OMO billsdropped by 14 percent toN543 billion from N631billion in February. Theamount offered and sold bythe apex bank also droppedby 25 percent and 43 percentrespectively to N150 billionand N290 billion from N200billion and N510 billion in theprevious month. Similarly theamount of matured OMObills repaid during the month

dropped by 74 percent to N67billion from N260 billion.

Demand for PMA billshowever rose sharply by 59percent to N1.54 trillion fromN914 billion in February. Theamount offered and sold bythe CBN also rose by 69percent and 59 percent toNN612 billion from N384billion. Also the amount ofmatured PMA bills repaidduring the month rose by 16percent to N445 billion fromN384 billion in February.

Recalled that the MonetaryPolicy Committee (MPC) at itsmeeting held on March 22nd,2016 had complained aboutthe amount of excess liquidityin the banking system, sayingit is driving demand forforeign exchange, and hasthe tendency to worsen therising inflation rate.

The Committee said, “Fromthe monetary data, theCommittee noted that theexcess liquidity in thebanking system wascontributing to the currentpressure in the foreignexchange market with astrong pass-through toconsumer prices.

Money market interest ratesreflected the liquidity situationin the banking system.Average inter-bank call andOBB rates, which stood at 0.5and 2.77 per cent on 25January 2016, closed at 4.00and 5.00 per cent,respectively, on March 9,2016. Between January 25thand end-February 2015,interbank call and OBB ratesaveraged 1.43 and 2.68 percent, respectively. This wastraced to liquidity surfeit inthe banking system. Thedeposit money banks were,however, reluctant to grantnew credit because of risingnon-performing loans (NPLs),mainly in the oil sector,amongst other reasons.”

The Bankers Committeehas said that thescarcity of foreign

exchange in the countryrequires adjustment on thepart of every Nigerian.

Addressing journalists at theend of the Committee’smeeting in Lagos onThursday, Managing Director/Chief Executive, GTBank Plc,Mr. Segun Agbaje said thatthe Committee is of theopinion that foreign exchangesituation calls for adjustmenton the part of everybody.

He spoke in company ofDirector, Banking SupervisionDepartment, Central Bank ofNigeria (CBN), Mrs TokunboMartins, Managing Director/Chief Executive, FidelityBank Plc, Mr. Nnamdi

Forex: Bankers Committee calls for adjustments*CBN appoints 2 super agents for financial inclusion

Nwankwo, ManagingDirector/ Chief Executive,Unity Bank Plc, Mrs TolaSomefun and the ActingDirector, CorporateCommunication Department,CBN, Mr. Isaac Okoroafor.

Agbaje said, “The reality onthe ground is that we arecoming from $115 per barreloil price to somewhere aroundN37 per barrel. We all haveto make adjustment. Ourhabits have to change a bitbecause we have less moneyto spend. As corporates, youhave to invest in importsubstitution and developthings locally. We all have togrind now, and make sure weallocate the scarce foreignexchange we have now, tomake the best out of it.

“What we have in Nigeriatoday is a supply problem.And the way you deal with asupply problem is first wehave to cut back on demand,we have to develop importsubstitution so that at somepoint you are able to meet thetype of demand that you have.I am not sure there is anymagic we can perform as acountry other than get yoursupply to meet the type ofdemand that you have.”

Mr. Okoroafor however saidthat there has been noticeableimprovement in allocation offoreign exchange tomanufacturers.”

Meanwhile the CBN hasappointed two firms as superagents to drive financialinclusion in the country.

Director, BankingSupervision Department,Central Bank of Nigeria(CBN), Mrs Tokunbo Martinsdisclosed this at the end of theBankers Committee meeting,the name of the super agentsare Interswitch FinancialInclusion Services andInnovatives Limited.

She said, “You will recall thatsometimes past the CBNstarted agency banking. Nowthere are two new agents,called super agents that aresupposed to recruit otheragents that are supposed todistribute financial services atcheaper prices. Hopefully thiswould carry banking servicesto the nooks and crannies ofNigeria at affordable prices.”

The Managing Director,Ecobank Nigeria, Charles

Kie, has disclosed that thebank will adopt top of therange banking technology topush its market penetrationstrategy to become one of thetop three Nigerian banks inthe next three years. Mr. Kiewho assumed leadership ofEcobank Nigeria in Januarysaid rather than build newbranches the bank wouldcontinue to deploy its state ofthe art technology includingsocial media, analytics, andcloud, among others to reachevery segment of theNigerian population.Kie, who was speaking tonewsmen in Lagos,maintained that the bestmeans to achieve penetrationof financial services is not bybranch network but robusttechnology throughalternative channels.According to the EcobankManaging Director, the bankhas no plans to embark onbranch expansion or mergerand acquisition to achievefinancial inclusion inNigeria.

Ecobank todrive efficiency,financialinclusion withtechnology

VISA eGift payment cardhas been launched by

ChamsMobile, a licensedMobile Money Operator inNigeria, in partnership withSkye Bank Plc.It is an online VISA card,which ChamsMobile Kegowsubscribers can send by mobilephone. The eGift card followsthe successful introduction ofKegow’s virtual VISA card inAugust 2015, the first of itskind in the Nigerian market.The eGift card works exactlythe same way, but is mainlyfor sending monetised gifts tofamily, friends, businessassociates etc., in order toeliminate the stress and worryof what to buy for them onspecial occasions. It is anentirely digital payment cardfor online and mobile use,locally and internationally andis unique in that recipients geta full picture of the VirtualeGift Card on their mobilescreen, PC, or tablet.

Chamsmobile,Skye Bankpartner on e-gift payment

Vanguard, MONDAY, APRIL 11, 2016 — 23

Corporate Finance

To help bridge the gap for qualitative educationfor Nigerian students, Stanbic IBTC Bank, a

member of Stanbic IBTC Holdings Plc., has donateda state-of-the-art information and communicationstechnology (ICT) laboratory to GovernmentSecondary School, Apo, Abuja.

The donation is in line with the group’s corporatesocial investment and forms part of initiatives toprovide an ideal learning environment for thestudents that will help bolster their learning abilities,Stanbic IBTC said.

The ICT lab comes fully equipped with 14 units ofhigh-grade desktop personal computers, two HPDeskjet 2135 printers, 120GB Smile Internet modemsubscription, a digital projector with screen, fourChannel CCTV system and two 2-horse power air-conditioners. The laboratory also boasts of anultramodern server and a 15 KVA generator and a6KVA inverter system as back-up power source.

At the lab commissioning, Chief Executive, StanbicIBTC Bank, Mr. Yinka Sanni, represented by theHead, Public Sector Group, Stanbic IBTC Bank, Mr.Yusufu Modibbo, said education remains thebedrock of society and that the Stanbic IBTC Groupcontinues to seek opportunities, through itscorporate social investment arm, for intervention tohelp build a vibrant educational sector in Nigeria.

Stanbic IBTC Bank donatesICT lab to school

STORIES BYNKIRUKA NNOROM

The CharteredInstitute of

Stockbrokers (CIS), hasstruck out the name ofone of its members, MrAdewale Adegboyega,from the members’register for falserepresentation, forgeryand fraudulent practices.

In the same vein,Barrister Alex Ogbebor,CEO, ForthrightSecurities andInvestment Limited, hasbeen suspended from allstock market activities fora period of six monthhaving been found guiltyof three chargespreferred against him.

Adegboyega was de-registered after servingthree month jail termfollowing his convictionby the Chief MagistrateCourt of Lagos State,

Fraudulent practices: CISde-registers erring member,suspends another

sitting at Igbosere,Lagos Island, Lagos onMay 7, 2013 .

Ogbebor, in his ownpart, was found guiltyof writing to run downa competitor, PanAfrican Capital Plc,through deliberatemisinformation.

CIS said in a statementthat Ogbebor failed toobserve high standardsof commercial honour inits business with PanAfrican Capital anddeliberately misled theinstitute throughfalsified facts to gainpersonal advantage overit.

It stated that the twostockbrokers wereuncovered followinginvestigation by CISdisciplinary tribunalwhich investigates andjudges cases ofunethical behavioursamong the members.

Giving details, CIS

said that having beenfound guilty of threecharges preferredagainst him under theCriminal Code Cap C 17Vol. 2 Laws of LagosState of Nigeria 2003,and on completion hisjail term, Adegboyega’scase was referred to theCIS Investigating Panel.

“The InvestigatingPanel reported that theoffences areincompatible with thestatus of a member of theInstitute as they arecapable of bringingdiscredit to the member,his employers and theinstitute, therebybecoming liable forunprofessional conduct.

In his judgement,Chairman, CIS’Disciplinary Tribunal,Mr Oluwaseyi Abe,said the Tribunal upheldthe view thatAdegboyega’s conductwas of such a magnitudewhich warrants strikingoff his name from theregister of members”.

PRESS BRIEFING - From left: The Managing Director, Guaranty Trust BankPlc, Mr. Segun Agbaje; Acting Director, Corporate CommunicationsDepartment, CBN, Mr. Isaac Okorafor; Director, Banking SupervisionDepartment, CBN, Mrs. Tokunbo Martins; Managing Director, Unity BankPlc, Mrs. Tomi Somefun and the Managing Director, Fidelity Bank Plc, Mr.Nnamdi Okonkwo during the press briefing on Bankers’ Committee decisions.

UBA shareholders task newMD on value addition...endorse 60k dividend

ground.He expressed his

appreciation to thebank’s board andmanagement forgrowing profit andincreasing dividendpayment at a time whenmany other banksrecorded lower profitand had to cutdividends, saying: “thisdividend paymentreinforces the resilienceof the bank amidstchallenging operatingenvironment and alsoshows the quality of thebank’s management.”

In his address, thechairman of the bank,Mr. Tony Elumelu,charged the incomingGMD to put his best footforward, saying: “To

whom much is given,much is expected. Wesuppose shareholdersdividend will increasein your tenure.”

Speaking on thebank’s performanceduring the year,Elumelu said: “2015was a challenging year,yet it was productive.We grew post taxprofits, we madeconsiderable gains inefficiency, we have beenprudent in riskmanagement. Thecollaborative effort ofour supportiveshareholders andhardworking anddedicated staff havecontinued to ensure thatwe profitable results.”

“We recorded N314billion in grossearnings, representing10 per cent year-on-year growth.

Shareholders ofUnited Bank for

Africa (UBA) Plc havecalled on the incomingGroup ManagingDirector/CEO, Mr.Kennedy Uzoka, tocreate unequalled valuefor all stakeholdersduring his tenure.

Uzoka will take overfrom the incumbent, Mr.Philip Oduzua, whoretires on July 31, 2016after successfullycompleting a two termtenure as the helmsman.The shareholders alsoratified the payment ofN0.60 dividends for theyear ended December31, 2015.

Making the call at thebank’s 54th AnnualGeneral Meeting(AGM) in Lagos, theysaid that the bank underOduzua was investors’friendly and urgedUzoka to strive and beatthe record set by hispredecessor.

Speaking on behalf ofother shareholders, SirSunny Nwosu, NationalC o o r d i n a t o r ,I n d e p e n d e n tS h a r e h o l d e r sAssociation of Nigeria(ISAN) appreciatedOduzua for hisstewardship, sayingthat he wonshareholders over to hisside and commandedtheir respect throughouthis tenure.

Commending theoutgoing GMD, he said:“You are wonderful; wedo not even expect thedividends being paidtoday. We wish you wellanywhere you are goingto,” while urging theincoming GMD toensure that he addsvalue to what he met on

Corporate Finance

First City MonumentBank (FCMB) has

continued to empowerfarmers with a view toreducing the level of povertyamong them as part of itsfinancial intermediation rolefor national economicgrowth. This can bebuttressed by the fact thatthe bank’s intervention hasresulted in better access tofinancial resources bydeserving individuals,organisations andcompanies. It has also led toimproved processes, betteroutput and profitability.Much more, it has enhancedconfidence in the ability ofthe financial services sectorto drive economic growth.

First City MonumentBank’s intervention in theagribusiness sector ismaking far-reaching impacton the economy, as attestedto by the Chairman of TractorOwners and HiringFacilities Association ofNigeria (TOHFAN), AlhajiDanladi Garba, when hecommended FCMB for itssupport to the agric sectorand farmers, at anengagement with the mediain Lagos. FCMB had hadprovided funding worthN300 million to TOHFAN forthe acquisition of tractorsthat were distributed tofarmers in Kaduna state.

The Bank also collaboratedwith Doreo Partners tolaunch a support programmefor farmers, known asBabbanGona (or ‘ ’greatfarm”). This is anagricultural franchise

FCMB supports agric sector forsustainable economic growthBy PETER EGWUATU

NASDD OTC Plc,promoter of a trading

network that eases secondarymarket trading of all securitiesof unquoted public companiesin Nigeria, has outlined actionplans in 2016 that will positionit as a more efficient market inAfrica.

As part of the plans, theExchange said it has alignedits system with consensusreached at the 2015 AfricanSecurities ExchangeAssociation (ASEA) conferencewhich includes positioning tobenefit from active investorsacross the globe that arelooking for potential in Africanmarkets to invest.

Speaking at an interactive

NASD OTC positions for greater efficiency, unveils action plans

By NKIRUKA NNOROMforum with Chief ExecutiveOfficers of participatingstockbroking houses in Lagos,the NASD Managing Director,Mr. Bola Ajomale, said theexchange will launch linknotes, market makingprogrammes and PrivateEquity fund in the secondquarter of the year to takeadvantage of funds that areseeking investmentdestination.

The NASD boss said that theExchange would tighten pricestructure within the year andis targeting two to three pricebands for an effective pricediscovery.

“Regarding funds andinvestments wanting to comeinto Africa, we think that theway it is going to come in is inprivate equity and the funds

that want to come in arelooking past the macro. Theyare looking for multiple returns,not percentage returns.

“So, as a result, ahead of theASEA conference whichhappened few months ago, wehave started work on privateequity side; we havecommittees, they are active andworking. We have engagedSEC in the process and we thatin few months time we aregoing to be launching theprivate equity fund,” he said.

According to him, theexchange has identified about100 companies that will beprospected for listing on itsplatform. He added that NASDOTC is in the process of joiningthe ASEA and hopes tocomplete the process andbecome a full member in the

second quarter.On the performance of the

exchange for the first quarterof the year, Ajomale said that16.3 billion shares certificateshave been dematrialised, while144 million units valued atN959 million were traded.

He noted that the marketslowed down after ‘a big jumpin June 2015’, attributing thedecline in activities to theSecurities ExchangeCommission (SEC)’spronouncement that onlycompanies quoted on theNigerian Stock Exchange(NSE) are under its purview.“We hope that this number willjump significantly in the nextquarter, because we are hopingthat SEC will correct thestatement that only stocks onNSE are under its purview.”

Fidson Healthcarerecords N838mPAT

Fidson Healthcare Plchas recorded 18 percent growth in Profit

After Tax , PAT for its audited2015 financial results fromN631million in 2014 toN744million in 2015.

This performance is inspite of a 16 per cent declinein turnover to N8.21billion,which was a result of thechallenges to sales anddistribution faced during thefirst half of 2015 largely dueto the general elections. Theupturn in sales witnessed inthe second half of the yearwas curtailed by the paucityof foreign exchange for theimportation of products andessential raw materials,which severely affectedproduct availability.

The financial results alsoshowed an increase of 6 percent in operating profit fromN1.45billion last year toN1.52billion.

According tomanagement, the increase islargely as a result of thecompany’s cost optimizationstrategy and a reduction inselling and distributionexpenses. The company’scost improvement trend,which it embarked on acouple of years ago, is in linewith its strategy to driveefficiency in the face of achallenging businessenvironment.

There was a 29 per centincrease in finance cost,mainly due to the N2billionfixed-rate Bond issued inNovember 2014, fromN554million to N715 million.This impacted on Fidson’sprofit before tax, whichmarginally dipped fromN870 million last year toN838million – a decline of 4per cent.

The company continues itsfocus on extensive brandbuilding as part of its long-term strategy and will beintroducing a number of newproducts into the Nigerianmarket. This is a directresult of the move to thecompany ’s new WorldHealth Organisation GoodManufacturing Practice(WHO-GMP), where localproduction is being rampedup.

Acccording to a statementfrom the company “A newproduct line – Intravenousfluids – to be added to fiveexisting product lines at thenew factory will enableFidson consolidate itsmanufacturing base in thenear future.”

M M M M R M R

Mr. Ladi Balogun, MD/CEO, FCMBM M M M Mmodel, where farmers aretrained and offeredspecially packaged loans tocarry out their farmingactivities.

The Bank recentlydesigned a series of trainingfor this population of small-holder farmers for all-inclusive agro-financeempowerment with aprimary objective ofeliminating poverty,encouraging agriculture asan alternative source ofeconomic recovery forNigeria.

Mr. Ladi Balogun, GroupManaging Director/ChiefExecutive, First CityMonument Bank Limited,had viewed IFC’sinvestment as a stamp of

Head, Agricultural BusinessFinance, First CityMonument Bank (FCMB),while elaborating the bank’sinterest in Agric financing,asserted that agriculture wasthe first occupation for manfrom creation and will remainthe most vital until the endof days. He stated “at the factthat Agriculture has thepotential to stimulateeconomic growth is no longernews. It is logical to expectthat that agriculturalfinancing will become animportant instrument of economicpolicy for Nigeria, in her effort tostimulate development in alldirections.

“Mr. Gumunyu revealed thatFCMB intends to continue topartner with players in the agricspace with a view to takingadvantage of the manyopportunities it presents andultimately contribute positivelytowards economic growth,employment creation, importsubstitution and economicsustainability”.With regards to the fears by farm-ers that the turn-around time andconditions attached to some creditfacilities could be prohibitive, heallayed the fears, saying it is a pos-itive experience with the FCMBfacility. In his words: “Farmers have a point in complain-ing about slow approval processesas their businesses are season-bound and need timely access tofinance. Most complaints stem fromsome financial institutions not un-derstanding the farmer’s business-es. Fortunately they will not expe-rience this at FCMB as we have ateam of experienced and qualifiedAgric Bankers who do not onlyhave a holistic knowledge aboutagriculture, but its associated busi-nesses, especially the fact that theyare time and season-bound. We arecommitted to providing feedbackto clients on the status of their re-quests within competitive timelinesprovided we are in possession ofall the requisite information whichcan enable us make a decision.

24 — Vanguard, MONDAY, APRIL 11, 2016

CMYK

approval on the Bank’sstrategy and commitment togood corporate governanceand risk management. Hesaid, “This partnership withIFC would help First CityMonument Bank achieve ourstrategic growth objectives”.It is indeed comforting thatthe bank’s helmsman, Mr.Balogun reiterated that itsagriculture intervention isreal, and that it is building asolid agric business that is atthe centre of transforming theeconomy. He advised, ‘’if wetruly want to continue em-ploying the growing popula-tion, we need to not onlyfeed Nigeria, but also set oursights on feeding the world.”

In the same vein, Mr.Kudzai Gumunyu, Divisional

Vanguard, MONDAY, APRIL 11, 2016 — 25

CMYK

Homes & Housing Finance

By YINKA KOLAWOLE

The Nigeria MortgageRefinance Company

(NMRC) was established tobridge the funding cost ofresidential mortgages andpromote the availability aswell as the affordability ofgood housing to Nigerians. Itwill achieve this by providingincreased liquidity in themortgage market throughmortgage and commercialbanks.

The company is driven bysubstantial private sectorparticipation consisting ofcommercial banks, primarymortgage banks, insurancecompanies, private equityinvestors and internationalfinancial institutions throughthe Ministry of Finance. Theaim is to help develop primaryand secondary mortgagemarkets, raising long-termfunds from both domesticcapital market and foreignmarkets to provide accessibleand affordable housing toNigerians. Recall that NMRClast year announced therefinancing of 577 mortgageswith the sale of N10 billionbonds. The 15-year bonds,listed on the Financial MarketDealers Association tradingplatform, is meant to refinanceexisting mortgages that meetspecified underwritingrequirements, according toProf. Charles Inyangete,

US mortgagerates sink to14-month low

Mortgage rates in theUS fell to the lowest

in more than a year, reducingborrowing costs during thepeak season for home buying.

The average rate for a 30-year fixed mortgage was 3.59percent, down from from 3.71percent last week andmatching the level in earlyFebruary 2015, Freddie Macsaid in a statement Thursday.The average 15-year rateslipped to 2.88 percent from2.98 percent, the mortgage-finance company said.

Mortgage rates tracked asharp drop in yields last weekfor the benchmark 10-yearTreasuries, which have fallenon concerns of a slowingglobal economy. As the keyU.S. spring buying seasongets going, low borrowingcosts will help fuel demandfor the short of homes on themarket, according KeithGumbinger, vice president ofmortgage-data companyHSH.com.

“To the extent theyincentivize more wannabehomebuyers into themarketplace, that only putsmore upward pressure onprices,” he said in aninterview Wednesday.

Purchases of existinghomes decreased in all fourmajor regions of the countryin February, led by a 17percent monthly plunge inthe Northeast, as a lack ofinventory limitedtransactions, according to theNational Association ofRealtors.

The average 30-year ratehas been below 4 percentsince the start of the year andis approaching the lowestlevel since 2013. It reached arecord of 3.31 percent inNovember 2012.

Federal Reserve ChairJanet Yellen said last weekthat caution in raising U.S.interest rates is “especiallywarranted” as the globaleconomy presentsheightened risks.

Matthew Pointon, U.S.economist for CapitalEconomics Ltd., said heexpects two Fed rateincreases this year as theAmerican economy showsstrength, leading to a slightrise in borrowing costs. “Theimproving economy andinflationary pressure willforce the Fed to act,” Pointonsaid in a phone interviewThursday. But rates “ willremain low for a long time. Idon’t think mortgageaffordability will be a hugeissue.”

You can learn a lot about a home beforeinspection, thanks to the Internet and yourrealtor’s digital tools. However, sometimes,it is best to ask the agent some questionswhen you’re touring a property beforetaking a decision to buy.

Why is the owner selling?It’s crucial to know who owns the

property, the relationship to the propertyand the motivations. Is it the originalpurchaser or the recipient of a bequest froma will? Though, the agent isn’t obligatedto tell you, he or she might. The answercould reveal issues not included in thelisting description.

Is there a new road planned nearby? Isthe seller experiencing financial difficulty,are there litigation issues, any familydisputes or criminal activity? If the agentdoes reveal, for instance, that the owner isdesperate to close quickly, you might beable to use that to your advantage whennegotiating price.

Type of titleSome homeowners are finicky about

disclosing their title deed on a propertydirectly to buyers for a number of reasons.However, a professional agent would haveseen the document and can attest to itsoriginality before showing the property. Inthat case, ask what type of title it is andwhether or not you will be given theoriginal copies at the point of sale.

Sellers’ timelineDoes the property owner need to relocate

What to ask when buying a houseWhat to ask when buying a houseWhat to ask when buying a houseWhat to ask when buying a houseWhat to ask when buying a houseimmediately for work/green card lottery/business venture? Or are they waiting for thekids to finish the current school year? It’simportant that your timeline for moving into thehome and the owner’s timeline for moving outmatch up.

What, exactly, is for sale?Find out precisely what is included in the

selling price. Are the furniture and fittings partof the deal? What about the adjoining land/compound? Learn whether the appliances andfixtures, such as ceiling fans, are included inthe sale price.

Are there issues with the property?Though, sellers are supposed to reveal most

problems; the norm is that any problems willusually be hidden but a chatty sales agent,neighbour or landlord might reveal more thanis included in the listing. It certainly can’t hurtto ask. Does the house or street flood duringthe rainy season? Is there security and regularpower supply?

The neighboursAsking about the people that live nearby and

their profile is a significant piece of informationin your property search. Is there an ex-Governordown the street, or perhaps a current statecommissioner, diplomat, public servant, businessmogul or first class royalty who lives next door?The standing and status of these personalitiesin the society can significantly affect theattractiveness of a particular neighbourhood.

*Culled from Lamudi Nigeria

How NMRC’s mortgage refinancing works

Managing Director/CEO ofNMRC. But how exactly doesthe refinancing cycle work?

Refinancing cycleNMRC serves as a financial

intermediary between thecapital market and financialinstitutions that provide

mortgage loans to averageworking Nigerians. It willaccess the capital market byissuing long-term bonds, andutilise the proceeds of thebonds issued to provideliquidity to mortgage lendinginstitutions by providing

refinancing facilities securedby the mortgage pool createdaccording to an agreedunderwriting standard.

Initial step is for a borrowerto take out a mortgage loanfrom a participating mortgagelender based on the uniformunderwriting criteria set byNMRC. In return the borrowerwill provide regularrepayments of the loanprincipal plus interest. Theborrower will also providecollateral in the form of amortgage over the property tobe purchased.

Second step is for theparticipating mortgagelenders to refinance the loanswith NMRC. The participatingmortgage lender in turn,provides security over itsmortgage portfolio in favour ofNMRC. It acts as a simpleintermediary betweenmortgage lenders and thecapital markets. By using itssize and credit worthiness,NMRC is able to raise fundsat a cheaper rate.

The third step is for NMRCto raise its own funding byaccessing the capital marketsand issuing bonds. NMRCrefinances the mortgage loansof banks with recourse to thefinancial institutions. It willissue corporate bonds whichdo not involve any passthrough of the credit riskattached to the mortgages.NMRC acts as a simpleintermediary betweenmortgage lenders and thecapital markets. By using itssize and credit worthiness,NMRC is able to raise fundsat a cheaper rate. This isattributable to the stron\gshareholders, strong capitalbase, excellent quality ofassets in its books and the factthat NMRC is regulated byCBN and SEC.

NMRC acts as a simpleintermediary betweenmortgage lenders and thecapital markets

Typical housing estate that requires mortgage financing

26 — Vanguard, MONDAY, APRIL 11, 2016

Insurance

Insurers should check theircapital levels as premiums

on policies will probablycontinue to soften this year, asenior Bank of England officialsaid.

Chris Moulder, the BoE’sDirector of general insurance,said the “very tough marketconditions” are likely tocontinue in much the same veinin 2016.

“We see premium rates inseveral lines continue to falland, at the same time,extended terms and conditionsare being accepted,” Mouldersaid in a speech.

Companies have beencushioned by the continuedabsence of significant naturalcatastrophe losses, and prioryear reserve releases, Mouldersaid.

Many business plans atinsurers still, however, containsome element of growth for2016.

“I want to be quite clear thatwe don’t consider this, in itself,to be problematic. It is,however, important that firmsthat are looking to expand incurrent market conditions do soin a responsible andsustainable manner and aretransparent with Boards abouthow they intend to attractbusiness.”

Premiums onpolicy to continuesoftening — BoE

“Insurers lackstandardisation incyber policy”

Cyber insurance hasevolved considerably

since 1999 but commercialinsurers lack standardisation incyber policies and there is nota lot of data available forunderwriters, said AliceUnderwood, Executive VicePresident of Willis Re Inc.

“The data is not all thatrobust at this point in time. Theavailable data depends on loton what people are required toreport. If they don’t have toreport something, they arekind of inclined not to reportit.” Insurers, by contrast, “canmake a decent model of lifeinsurance for individuals basedon how old are you and do yousmoke,” Underwood notedduring a conference session atthe International Cyber RiskManagement Conference.

“The question as an actuaryyou want to know if you wantto quantify something is, firstof all, what the heck is it thatyou’re quantifying?”Underwood said. “In terms ofcyber coverage, what kinds ofthings are covered by thispolicy?

LAUNCH - From left: Executive Director, Public Sector, Union Bank, Ibrahim Kwargana,Director Transformation Union Bank Plc- Mr. Joe Mbulu, Abia State Commissioner for WomenAffairs-lady Mrs. Chinedu Brown , Head of Retail Union Bank, Mr, Carlos Wanderly at theUnionkorrect Product Launch and Branch Unveil of Union Bank, held at 10 Library Road,Umuahia, Abia State.

The challenges ofinfrastructure are a major

impediment to thediversification of the economy.The infrastructural deficienciesof the country areacknowledged and well-documented and the negativeimpact on productivity glaring.Our mineral resources wouldnot have a competitive price tagif the cost of productionremains prohibitive because oflack of basic infrastructure andnecessary incentives. The samegoes for agriculture whichproduce rots away owing toinadequate storage facilities.We should see infrastructurebeyond buildings, roads,electricity, running water, etc.It should also include thenecessary policy framework todrive growth.

The Contributory PensionScheme (CPS) has thepotential to provide thenecessary financial cushion inour drive to build a solideconomy beginning withaddressing our infrastructuraldeficiencies. From a deficit ofmore than N2 trillion in the olddefined benefit scheme before2004, the CPS is closing in onN6 trillion in the amassment ofpension funds even when agreater percentage of this isilliquid as pension funds don’tlie idle in bank accounts. Thisis even with far less than 10%market penetration in thepension industry. In otherwords, less than 10% ofNigerian workers in the formaland informal sectors of theeconomy have enrolled in theCPS. This explains the greatpotential and immensepossibilities of the industry.While savouring theexcitement generated by theremarkable success of the CPS,it is important to note themarked difference between itand the old defined benefitscheme. This is because theword pension in Nigeria hasacquired a pejorativeconnotation as a result of therunaway corruption thatcharacterized the old schemeand still persists.

The various tiers ofgovernment have been eyeingthe pension funds as a possiblesource of funding forinfrastructure and otherdevelopment projects.Interestingly, this includessome states that have yet tocomply with the PensionReform Act 2014, by putting thenecessary structures in placeand enlisting in the CPS. The

Liquidity squeeze andtraction of pension funds

By PADDY EZEALA Federal Government has yet towield the big stick to bringevery state and every workerinto the scheme.

There is no gainsaying thefact that there must be anairtight policy framework forinvestment to ensure that risksare reduced to the barestminimum. Pension funds areheld sacrosanct in view of thefiduciary relationship thatexists between the RetirementSavings Account (RSA)holders and the Pension FundAdministrators (PFAs).

It should be reiterated thatpension funds are well-positioned to play a critical rolein economic development inNigeria. However, excitementmust give way to reason toensure proper application ofthe funds. It is gratifying thatthe investment portfolio in thepension industry has since2010 been diversified to allow

investments in infrastructurefunds and bonds as well asother asset classes such assupranational bonds andprivate equity funds. Beforethen, The National PensionCommission (PenCom)regulation on the investment ofpension assets only allowedinvestment in ordinary shares,money market, corporate bondsand open -and close-end funds.

All these are core asset classes.PenCom has done a marvelousjob in regulating the industryso far.

The question now remainshow funds in this subsector canbe mobilized without thenecessary prudentialsafeguards watered down oreven compromised. TheMinister of Power, Works andHousing, Mr. BabatundeFashola recently at theNigerian Pension IndustryStrategy ImplementationRoadmap Retreat organised byPenCom advocated the use ofpension funds to address theinfrastructural deficiencies ofthe country. In fact, the ministerstated that Nigeria should takethe lead in Africa in usingpeople’s funds to driveinclusive growth. Said he, “Isee a future for Africa led byNigeria, using the resources ofthe people to build a future thatinclude the people.”

Dangote Cement Plc is investing $200million in Cote D’ivoire cement

industry. Dangote Group Executive Director,Strategy, Projects and Portfolio Management,Mr. Devakumar Edwin , who disclosed thisweekend in Lagos, said work has alreadystarted on the new 3 million metric ton perannum capacity cement grinding plant inCote d Ivoire.

He stated that said the Cote Diviore projectwould cost the company $200 million andwould be completed in 18 months.

“The project which has aroused a lot ofinterest from both the government and peopleof Cote d Ivoire, is sitting on over 60 hectaresof land, next to the New Industrial Park in

Dangote investing $200m in Cote d’Ivoire cement industryBy FRANKLIN ALLI Yongbon, a city just outside of Abidjan, the

nation’s capital. “The grinding plants, madeup of two lines of 1.5 million metric tonnescapacity each, when completed, will morethan double the total capacity of local cementproduction in the francophone West Africannation, as the plant would raise total localcement production capacity of the country byover 100 per cent.

“The plant when completed will utilizepower off the grid and provide direct andindirect jobs for over 3,000 people from withinCote d Ivoire and other west Africancountries,” he said.

Mr. Edwin disclosed further that uponcompletion, Nigerian experts would bedeployed to carryout initial training of localmanpower and skill transfer.

The CPS has thepotential toprovide thenecessaryfinancial cushionin our drive tobuild a solideconomybeginning withaddressing ourinfrastructuraldeficiencies

the All Progressive Congress,APC, promised change, theleast people expected werepositive changes with respectto power, fuel, jobs andsecurity. Excuses would not do;certainly not almost a year aftertaking over.

With the uncertaintiesassociated with power and fuelnot abating it is difficult toimagine any sort of rapideconomic progress being made.It is easily demonstrable thatevery economy runs on powerand fuel supply. The twentylargest economies are alsoamong the largest producersand consumers of power andfuel. Additionally, the powerand fuel supply remainuninterrupted 24/7 in everyleading country. This is not thecase in Nigeria as recent eventshave demonstrated.

On March 31, 2016, eight ofNigeria’s power plants wereshut. The nation recorded zeropower generation for hours –driving consumers to eitherstop work or resort to the useof generators. That would havebeen disastrous enough inanother country. But, the totalpower outage occurred at thesame time that Nigerians werestill serving the “economicdeath sentence” pronouncedby the Minister of State forPetroleum who had announcedthat fuel scarcity will linger untilMay. But, even the two monthsdeadline was not categorically

Economic summit: elephant goesinto labour delivers a mouse – 2

We will deliver 10,000MW target, Fashola says.”PUNCH, April 2, 2016, p 8. Thatstatement, already made stale by previous administrations, was uttered on April 1,

2016. Nigerians hope that in three years it would not turn out to be an April fool’s joke. Forthree weeks before the Minister of Power restated that pledge, power supply had averagedless than 2500MW and Nigerians had been treated to the same litany of familiar, and stale,excuses – vandalisation of pipelines, no gas supply, breakdown of systems etc. With alldue respects to Fashola, one might ask where he had lived these past sixteen years. When

stated. Dr Kachikwu had toldus quite clearly that, “I don’twant to put a time frame”. So,even regular fuel supply is notguaranteed by May.

Under those circumstanceswhat could the Summit, whichhad more low points, bediscussing? The nation willhave neither power nor fuel tocarry out its programmesanyway. However, since theFederal government hadorganized an economic retreatand the results of theirdeliberations had beenreleased, there is a need toexamine some of them.

Whoever said that “the morethings change, the more theyremain the same” must havehad the retreat in mind. Fromwhat was released, it was clearthat nobody in attendance atthat retreat had even a modestrecollection of Nigeria’seconomic history. The Summitwould have benefited from theadvice of somebody whoremembers yesterday.

The National AgriculturalLand Development Agency,NALDA, was an initiative of theBabangida administrationwhich failed woefully. The

reasons NALDA failed in the1990s are too numerous torecount here. But, one of my firstcommentaries in theVANGUARD, during IBB’sregime was in relation toNALDA. Then, as now, thepraise-singers and spokesmenof the government had hailed itas a great initiative whichwould solve the problem of foodsecurity once for all. I thoughtdifferently. In fact, the point wasmade then, and is beingrepeated now, that NALDA was,

and is, based on faultyfoundations and that it wouldonly result in massive fertilizerfraud. By the time IBB’sNALDA was laid to rest,virtually no state of Nigeria hadestablished the machinery tomake it work.

NALDA failed then for onecardinal reason. Theprogramme clashed with theentrenched Land Use Decreeof 1978 – which Obasanjo asmilitary Head of State used toforcefully acquire peoples’ landat Sango Ota for ObasanjoFarms – which was calledTemperance Farms at the time.The states still own the land,and for NALDA to take off, eachstate would have to grant therequired parcels of land in eachLocal Government to theFederal Government. Anybodyin Abuja who thinks that stategovernments are prepared togive up 50,000 hectares of landin each LG must be living in afool’s paradise. The LGs whenIBB established NALDA wereabout 583 in number; now theyare 774. Even before the break-up of some of the LGs, it wasvirtually impossible to obtain10,000, 20,000 or 50,000hectares anywhere to be used

for NALDA’s projects. Furthermore, some states are

more urbanized than others. Inthe 1990s, a question wasasked, and the question isrepeated now. Where in LagosIsland, Lagos Mainland, Ikeja,Mushin, or Apapa can anybodyfind 100 hectares of land forNALDA? The same questioncan be asked of Ibadan,Abeokuta, Akure, Ado-Ekiti,Benin, Onitsha, Enugu,Portharcourt, Aba, Calabar,Uyo, Kaduna, Jos, Kano etc.Any funds to be allocated to thescheme will ab initio amount tocheating for the most urbanizedstates which can never providethe land mass needed toprosecute their ownprogrammes. Bluntly put,NALDA is a basically ruralNorthern programme fromwhich no Southern state canbenefit. Where is 50,000hectares in Abak for God’ssake?

Another programmeborrowed from the IBB era isthe wheat project. Those of uswho were close to thefraudulent wheat project onwhich IBB’s government threwaway hundreds of millions ofnaira can only hope that therewas a typo-graphical error theresomewhere. Only God knowswho persuaded Babangida thatwheat, which is a temperatezone crop, could be cultivated,with comparative advantage, inthe tropical sun.

“

Microfinance

Vanguard, MONDAY, APRIL 11, 2016 — 27

CMYK

STORIES BYPROVIDENCE OBUH

NECA’s Network ofEnt repreneur ia l

Women (NNEW) hasdescribed the NNEWWomen’s Microfinance BankLimited as a big achievementin 2015 even as it urgedgovernment to ensureconducive environment forwomen owned businesses toflourish.

Meanwhile, President,NNEW, Mrs. LolaOkanlawon, bows out after afive year tenure expired April2016.

Speaking at the NNEWAnnual General Meeting inLagos, Okanlawon, said thatthe year 2015 waschallenging with persistentdifficulties in the businessenvironment.

In addition, she said thatwomen entrepreneurs alsobore the brunt, “nearly everyNigerian, having to grapplewith lowering income, highcost of doing business,multiple taxes and levies,competing financial

NNEW women MfB a big achievement in 2015 — Women Entrepreneurs

...As Okanlawon bows out as Presidentdemands, poor SME-supportsystem, among others.

She pointed out that SMEswith female ownership inNigeria represent about 30 to37 percent which is abouteight to 10 million. To thisend, she said, “Thegovernments, at all levels,need to ensure a conduciveenvironment for business toflourish and the economy togrow.

“But in spite of the seeminggloom, NNEW achieved greatstrides as a business network.Significantly, in March 2015,the Central Bank of Nigeria(CBN) formally handed overthe certificate grantingNNEW Women’sMicrofinance Bank Ltd a unitlicense. This Bank is the firstof its kind in Nigeria as wellas in the whole of West Africa.

“In 2015 also, NNEWparticipated actively in theUnited Nations IndustrialDevelopment Organization(UNIDO) National QualityInfrastructure Project (NQIP)for Nigeria to support theeconomic competitiveness ofthe trade and investment

sectors in Nigeria,” she said.Also, DG, Nigeria

Employers ConsultativeAssociation (NECA), Mr.Segun Osinowo, commendedthe network, pledgingcontinuous support.

Osinowo who was

represented by the Director,Social ,Economic and LabourAffairs, Mr. Timothy Olawale,advised members of thenetwork to contribute tofunding of programmes toenhance financialsustainability.

He said, “The period of fiveyears was a period whenbusinesses were going

through challenges butthrough synergy andcollective activities, yourbusinesses are waxingstronger. This is why forminggroup is very important.People who because ofsubscription fee refuse to jointhe network have a lot tolose.”

Umuchinemere Pro-credit Micro Finance

Bank (UPMFB) hasprojected a totaldisbursement of N1.5 billionin 2016.

Meanwhile, the bankdisbursed a total of N1, 141,937, 000 in 2015, out of whichN712.4 million micro creditfunds were given to 3,814active poor people while therest was given as other loans.

This is contained in anunaudited managementreport made available byHead of Credit, UPMFB,Mr. Ikechukwu Ngene.

Ngene advised the bank’sloan beneficiaries to ensure

Umuchinemere Procredit MfB projects N1.5bnloan disbursement in 2016

prudent use of the facilities onviable ventures and avoidmultiple borrowing, saying,“Credibility is paramount toborrowing. I am happy thatdespite the hash economiccondition, the bank’s creditbeneficiaries are doing well.”

On the FederalGovernment’s Micro, Smalland Medium Enterprises(MSME) SpecialDevelopment Fund, beingdisbursed, in partnership withEnugu State Government,Head of Public/MediaRelations Unit, Mr. AbuchiAnueyiagu, disclosed that thebank disbursed a total ofN180, 740, 000 to 548

beneficiaries in 2015.Anueyiagu said, “The

gender distribution of thefacilities indicates that therewere more male beneficiariesof the bank’s micro creditfunds than females in 2015.Of the total beneficiaries,2,085 were males while theremaining 1,729 others werefemales. “In the previousyear, there were also moremale beneficiaries of suchfacilities than the females, asthe male beneficiaries in 2014,for instance, were a total of2,300, while the females were1,986. In 2014, the bank gaveout a total micro loans ofN659,700,000 but stepped itup by N52.7million in 2015,”he said.

Even before thebreak-up ofsome of theLGs, it wasvirtuallyimpossible toobtain 10,000,20,000 or50,000 hectaresanywhere to beused forNALDA’sprojects

28 — Vanguard, MONDAY, APRIL 11, 2016

e-Commerce

Aviation

Aviation industry contributed $685m toNigeria’s GDP in 2015 — Demuren

By LAWANI MIKAIRU business aviation sector.On the viability of the

business aviation sector, herevealed that there is growinginterest in the use of privatejets and helicopters forIntelligence Surveillance andReconnaissance, ISC,stressing that the NigerianCustoms Service, NCS,recently acquired a CessnaCJ4 jet for border patrol. Somestates have acquired up to fourIntelligence Surveillance andReconnaissance (ISC)helicopters.

He also said Nigeria PoliceForce has a fleet ofsurveillance helicopters inAbuja and Niger Delta. This,he said, would drive demandfor more fixed basedoperations, maintenancefacilities and create jobs.

Demuren gave a statisticaldata of the growth of thebusiness or private jetoperation of the Nigeria civilaviation. He said that in1980s, only 15 business jetswere in operation in thecountry, and in 2006, thenumber grew to 30 and 150 by2015. According to him, thegrowth was further propelledby 305 per cent in dollar

millionaires seen betweenyear 2000-2005. He said “Fiveper cent projected fleetCompound Annual GrowthRate (CAGR).Fifty per cent

business aviation fleet is inNigeria and South Africa.”

On some of the factorsmitigating against the fastgrowth of aviation in Nigeria,

Demuren said doubletaxation and imposition ofduties like the five per centimport duty tax on aircraft isagainst internationalconventions. Nigeria is asignatory to the Cape TownConvention, which does notrequire payment for tax onmoveable assets.

The Rector, NigeriaCollege of Aviation

Technology, Zaria, NCAT,Captain Samuel Caulcrick hascalled for massive investmentin human capital developmentso as to ensure a sustainableair transportation growth. Hesaid the industry must pursue“smart, coordinated, andcooperative manpowerdevelopment strategy “ for thenation’s air transport industry.

Delivering a paperentitled:”The essence of a well-trained manpower to theaviation industry”, at anaviation summit held in Abuja,Capt Caulcrick observed thatthe availability of qualified andcompetent personnel is thepropelling force for thesustainable growth of aviation

NCAT rector calls for improvement inmanpower training

By LAWANI MIKAIRU& DANIEL ETEGHE

in other countries as well asNigeria, adding that it is alsothe path towards excellence insafety and security.

The NCAT boss said, “It is thequality and proficiency of theaviation personnel that cancredibly give birth to a safe airtransport industry, build airtravellers’ confidence, makevaluable contribution to thenation’s Gross DomesticProduct (GDP)”.

According to him the aviationsector in Nigeria contributes0.4percent to Nigerian GDP.He listed the benefits toinclude, ¦ 59 billion directlycontributed through the outputof the aviation sector (airlines,airports and ground services);¦ 34 billion indirectlycontributed through theaviation sector’s supply chain;and ¦ 27 billion contributedthrough the spending by theemployees of the aviation

sector and its supply chain andin addition to ¦ 78 billion incatalytic benefits throughtourism, which raises theoverall contribution to ¦ 198billion or 0.4% of GDP.

In his opening address,organizer of the AirportBusiness Summit and Expo,Mr. Fortune Idu said for theindustry to continue to improvein the delivery of qualitypassengers experience in safeand secured manner, policymakers, aviation professionals,air transport investors and theusers of air transport serviceswill need to meet periodicallyto share information anddeliberate on the future of theindustry and to help directnational policies, planning,programmes and projectstowards improving airportfacilities, air transportationinfrastructures and generaloperations.

In a bid to empower themedium, small and

micro enterprise, MSMEoperators in Nigeria, Nigeria’sonline mall, Konga.com, hasentered into strategicpartnership with the LagosState Ministry of Commerce,Industry and Cooperatives tohost and sponsor the firstMSME Exclusive Fair that willtake place from May 2nd to8th2016 in Lagos.

Speaking at the unveiling ofthe logo for the maiden MSMEExclusive Fair before astakeholders’ forum in theState, the commissioner forCommerce, Industry &

UNVEILING - From left: Director of Commerce, Ministry of Commerce, Industry & Cooperatives,Mr. Hakeem Adeniji; Konga’s Director of Marketing & Customer Experience, Mayowa Adebayo;Commissioner for Commerce, Industry & Cooperatives, Prince Rotimi Ogunleye; Permanent Secretary,Ministry of Commerce, Industry & Cooperatives, Mr. Akodu Olalekan and Industry Manager, Google,Mrs. Jola Aderemi-Makinde at the unveiling of MSME Exclusive Fair in Lagos.

Demand for loan facilitiesand insurance products

through the internet haveincreased significantly by over65 per cent, according to asurvey by online vehiclemarketplace, Carmudi.com.

Carmudi said its severalpartnerships with lendersand insurance providers tomake services available online

Demand for online car loans, insurance hits 65% growthSTORIES BY JONAHNWOKPOKU

especially for online carshoppers have seen over 65per cent subscription for carloans and 35 per centsubscription for autoinsurance.

According to the online cardealer, “Many loan andinsurance providers are nowmaking use of Nigeria’sgrowing internet penetrationand smartphone usage toadvertise their services andconnect with customersdirectly. In 2014, only 2.5

million vehicles had validinsurance meaning thatmore than 85 per cent of the15 million cars plying theNigerian roads were insured.The number was much lowerin 2012 and 2013.

“The last quarter of 2015saw an improvement in thenumber of car insurancepolicies bought by carowners. According to the Nigerian InsurersAssociation (NIA) anestimated 3 million

Nigerians had valid carinsurance at the end of 2015and by the end of the firstsecond quarter of 2016 thenumber of car insuranceholders is estimated to rise by39 per cent.”

Analysts believe that thatthe rise in the number ofinsurance policies could beattributed to the increase ininternet penetration and theuse of mobile and otherdigital marketing andinformation services.

Konga, Lagos partner toempower MSMEs

Cooperatives, Prince RotimiOgunleye said: “The State iscommitted to strengtheningenterprise by bringingtogether and to the foreindigenous brands proudlyfounded, created and ownedby Nigerians and in Nigeria.This is why the Ministry ofCommerce, Industry &Cooperatives is organizing thefirst MSME Exclusive Fair toenhance industrial andcommercial activities in theState as well as promoteeconomic growth anddevelopment.”

In her remarks, the Directorof Marketing & CustomerExperience, Konga.com,Mayowa Adebayo said: “It isthe intention of Konga toempower indigenousentrepreneurs to sell on theKonga Mall. Being the engineof trade and commerce inAfrica, we are determined toprovide market access to atleast 50 per cent of the SMEscurrently available in Nigeria.We will teach them how to sell,how to promote their products,link them with mentors forguidance, support them usingnew media to extend theirreach as we currently deliverto 36 states in Nigeria. Kongawould be equipping them withthe right tools to sell more andshowcase their indigenousproducts to the entire world.

The Nigerian aviationindustry contributed

$685 million to the country’sGross Domestic Product, GDP,in 2015, just as $50 billionwould be needed over the next28 years to grow the sector .These revelations were madeby the Managing Director,EAN Aviation, Mr. OlusegunDemuren, at the NigerianBusiness Aviation Conference2016, held in Lagos.

The conference with theTheme “ Sustaining Nigeria’sPosition on the Africa BusinessAviation Landscape “emphasised the need for Africagovernments to enact enablinglegislations to make aviationcontribute more to theeconomic growth of thecontinent as it has beenwitnessed in other continents.

Demurin said businessaviation, which comprisedchartered and private jetoperators contributed 25 percent out of the total $685 millionthe sector contributed last year. He however added that thereis need for more operators tocome in to the burgeoning

Vanguard, MONDAY, APRIL 11, 2016 — 29

CMYK

Economy

STORIES BY EMEKAANAETO, ECONOMYEDITOR

Amidst growing concernsover alleged monopoly

status enjoyed by one of theoperators in the Nigerian Oiland Gas Logistics and supplyservices, key stakeholdershave called for regulatoryappraisal of the competitionenvironment.

There are also indicationsthat a policy dialogue wouldbe established by the federalministry of transportation forstakeholders in the maritimeindustry to address thelingering issues of monopolyand trade malpractices.

The indication came withrecent acrimony generated byalleged forceful diversion ofbusinesses to a particularoperator underunsubstantiated governmentdirective.

Last week, an official of theministry told Vanguard thatthe authorities in the ministryas well as the NigerianCustoms Service, NCS, maycall a stakeholders’ meeting toresolve the festering crisis.

He also indicated that theFederal Government ofNigeria would be reviewingthe relevant laws and otherdirectives guiding privatesector operators in themaritime logistics serviceswith a view to ensuring evenplaying field.

Also reacting to a similarcomplaint by the chairman ofJagal Group, owners ofNigerdock and Snake IslandIntergrated Free Zone, SIIFZ,Mr. Anwar Jarmallami,

The Comptroller-General ofNCS, Col. Hameed Alli (Retd)said last week that federalgovernment would look intothe industry competitionissues with a view toredressing any anomaly,

Stakeholders challenge monopoly in oil & gas sector… Policy review may be underway… Nigerdock offers 30% cost reduction

adding that the complaintsearlier made by themanagement of the companywould be scrutinized by topmanagement of NCS who areknowledgable enough toknow the right thing to do.

In his words “our people areknowledgable of what the lawsays and what happens here.We will go back and look atyour claims and addressanything that undermines thesuccess of the industry.

“The idea of change isgetting business on the line oflaw, equity and justice and weshall ensure that happens

here”.According to industry

sources the operators arerestive over the dominantmonopoly in the Nigerian Oiland Gas Logistics and SupplyServices which has existed for20 years, sabotaging thenational economy, conspiringand working against anypotential competitors.

Giving the details of thecomplaints Jarmallami hadtold the NCS boss who was onofficial visit to the companylast that the monopoly hasconsistently and aggressivelyused different governmentinstitutions to compromise,

maintain and entrench itsmonopoly position withimpunity.

He stated that attempts havebeen made in times past to alsouse the Customs. According tohim the net effects of themonopoly’s actions includedriving away investmentsfrom Nigeria, while makingthe oil and gas sector inNigeria the most expensive inthe world, adding extra cost ofbetween USD3 and USD5 perbarrel of oil produced inNigeria which translates toover USD1.5 billion perannum.

Meanwhile Jarmallami hasstated that SIIFZ andNigerdock are open forcompetitive business and weare determined to bring downoperational costs of theirclients by at least 30 per cent.

After a massive leap ininflation for the month

of February 2016 economyanalysts are seeing furtherrise to range between 11.76to 12.1 per cent amidst cost-push rises in consumer pricesacross the country in the lastone month.

Inflation rate had risen inFebruary to 11.38 from 9.6 percent in January, a 1.77percentage point surge, thesteepest in recent times withthe National Bureau ofStatistics and independentanalysts attributing the rise tocost pressures arising frompass-through effects offoreign exchange crises in theeconomy, which in turnpushed import components ofthe inflationary measuresvery high.

This time analysts areseeing the effect of theprolonged energy crises inthe country as majorcontributor to the costpressures in March, leadingto a third consecutivemonthly increase in inflationrate this year.

As a result economists atFinancial DerivativesCompany Limited, FDC, runby one of Nigeria’s notable

Economists forecast March inflation at above 12%economists, Bismark Rewane,stated “we are projecting asignificant increase of 0.7 percent in the March inflationnumber to 12.1 per cent”.

They explained “the monthof March was unique as thefuel scarcity intensified andhigher transport costs filteredthrough to commodity pricessuch as beans, tomato andpepper.

“While our initial time seriesanalysis projected an increaseof 0.4 per cent, the severityand longevity of the prevailingfuel scarcity has distortedprice levels.

“Our retail study showedthat prices of many consumergoods have remainedstubbornly high and in somecases increased in spite ofconsumer resistance.

“The factors that arecontributing to the spike ininflation include seasonality,cost push factors, moneysupply and foreign exchangeshortage.

“These factors whiletransient in nature arebecoming more permanent. Asthese factors grow increasinglyembedded, they are makingconsumers panic.

“Anticipated inflation ismore important because of the

pass through effect ofincreased demand andexpectations of higher priceson current prices”.

FDC economists also statedthat the dichotomy betweenurban and rural prices maypersist given the impact ofrising transport costs andexchange rate pressures onurban prices.

A little more conservative inits own analysis and forecast,economists at FSDH MerchantBank Limited stated “weexpect the March 2016inflation rate to increase to11.76 per cent from 11.38 percent recorded in the month ofFebruary 2016.

“We expect the increase inthe inflation rate to come fromincrease in transportation costand food and beverages as aresult of the shortage in fuelsupply.

They however, added thatother factors that would driveinflation rate are include theimplementation of the newelectricity tariff and the impactof the weak foreign exchangerate on imported goods.

The Food Price Index, FPI,that the Food and AgricultureOrganization, FAO, releasedlast week shows that the FPIwas up 1.0 per cent in March.

The increase recorded in theFPI was because of a strongrecovery in sugar prices andincrease in vegetable oilprices.

The increases in both sugarand vegetable oil were morethan enough to offset theplunge in dairy prices.

FSDH economists stated“our analysis indicates that thevalue of the Naira remainedstable at the inter-bank marketwhile it appreciated at theparallel market.

“The appreciation recordedat the parallel market betweenthe two months under reviewmoderated the impact of theimported consumer goodprices in the domestic market”.

They further informed that“the prices of most of the fooditems that FSDH Researchmonitored in March 2016increased.

“The prices of tomatoes, rice,vegetable oil, beans, yam andmeat increased by 15.56%,11.11%, 7.59%, 6.67%, 4.76%,and 1.11% respectively.However, the prices of onions,Irish potatoes, fish and garrifell by 16.19%, 5.56%, 4.71%and 3.61% respectively”.According to their researchprices of sweet potatoes andpalm oil remained unchanged.

•Ibe Kachikwu, Minster ofState for Petroleum Resources

CMYK

30 — Vanguard, MONDAY, APRIL 11, 2016

People in Business

training aspect; programming/system design was not reallymy thing. But the job preparedme for the days ahead. When Ileft the bank,I relocated to theUS and then England. Afterhaving my twins 13 years ago,I came back to Nigeria becauseI was tired of that system.

Relocating to Nigeria:Kuforiji who insists her first

job is being the mother of fourchildren and manufacturer ofplastics is her second job, said:“Before I came back, myyounger sister’s husband saidhe wanted to set up a plasticsfactory from scratch. I had noidea what that entails but I saidif he told me what he wanted, Icould do it because I havealways believed in RichardBranson’s saying that ifsomeone asks you if you cando something, just say yes andthen go and learn. That wasexactly what I did. He hadmassive land and a lot ofmoney to work with. So I tookup the challenge. I saw it as ajob that would be fulfilling bothfinancially and morally.

I relocated and started tobuild. I called all the mentors Ihad in various industries, Iwent on the internet, and gotall the help I could get. One ofthem is Shoga Sonaike who isin charge of a massive plasticsmanufacturing firm in Lagos.He put me under his wingsand taught me a lot.

Cartel:Sonaike told me the secret of

the business. He said it is aman’s world aside from beingan Indians’ world. They hoardthe materials, block access tothose that you can buy mouldsfrom; those that will give youthe parts etc. But I agreed totake up the challenge.

Machines/Moulds/Rawmaterials: I had to go to India

We are supposed tosource rawmaterials fromElemePetrochemicalCompany but theynever haveenough...ImagineNigeria where rawmaterials forplastics are a by-product of our oil ,and we have toimport

If only industries could beprovided with power, a lotof people will enjoy— Mrs Adebisi KuforijiBy EBELE ORAKPO

Mrs Adebisi Kuforiji is the Managing Director/ChiefExecutive Officer of Hindle Plastics Limited, plastics

manufacturing outfit b ased in Lagos. In this chat with Vanguard,the Abeokuta, Ogun State-born computer scientist-turned-manufacturer, speaks on how she ventured into manufacturing,the challenges, and says getting raw materials is very difficultdespite the fact that Nigeria produces oil, their major sourceof raw materials. Excerpts:

Background:Armed with a degree in Computer Science from the University

of Ife (now Obafemi Awolowo University) in 1986, Mrs. Kuforijiworked with Société Générale Bank for nine years before leavingNigeria because she was not really fulfilled. "I thrived on the

and Dubai to get the best ofraw materials and machines.We have different types ofmachines – injection machines,blow-moulding machines forbottles, kegs etc. I bought themachines and two moulds atthat time. The difficult part wasgetting raw materials. We aresupposed to be sourcing ourraw materials from ElemePetrochemical Company butthey never have enough so weimport. Imagine us in Nigeriawhere raw materials for plasticsare a by-product of our oil , yet,we don’t have! And because wehave to get from India, theIndians monopolized themarket and whatever they sayis the cost is what we pay. Wetried to bring in and we hadour fingers burnt. It is a massivecartel; very scary so we buyfrom them unless you don’twant to produce.

A lot of companies userecycled materials which ischeaper but because we makemedical products, we cannotafford to use recycled rawmaterials. We use virginbecause we want them to be asclean as possible. We can userecycled for large jerry cans thatpeople use for fuel.

In less than six months,(November-March), because of

the dollar fluctuations, theprices have doubled. Wecannot pass the cost to ourcustomers for now, so weabsorb it.

Going solo:I had a contract with my

brother in law because youdon’t want businesses to go onfor too long so it doesn’tdestroy relationship. So weagreed that at the end of twoyears, I would have employedthe staff, run the products andensure a proper handover. Isaid: “Look, I love thisbusiness. It’s something Iwould really like to go into.Could we reach an agreement

whereby I can do things thatyou do not do at all?”Incidentally, the plastic firm isjust a small part of hisbusiness group.

He agreed. Nigeria isunbelievable in terms of marketstrength. That was how westarted Hindle Plastics. HindleHouse is where I used to livein England; that was where Ihad my twins so that namegives me good memories.

My first director in the bankbelieved in me and in theproject and encouraged me. Itry to have what we callPersonal NetworkDevelopment; people arealways useful all of your life. Ibrought some other people onboard. Nobody produces sitzbaths in Nigeria except us.When I had my twins inEngland, they gave me sitz bathfor healing rather than thetraditional hot water and cloth.Virtually all teaching hospitalsin Lagos use it and we can'teven meet demand; we don‘thave money.

What happens is that if acustomer orders 10,000 pieces,we source for money to do7,000, deliver, collect themoney and use part of it toproduce the remaining 3,000.

Women:I do not know any other

woman that owns a plastics

manufacturing firm inNigeria. We are very good atselling plastics but I amlooking for women in the fieldand I hope that via thismedium, we will be able tocome together and form afemale plastics manufacturersassociation.

Challenges:Funding is one. A lot of

people want to invest but as abusiness owner, you have tothink of either going for debtfinancing or equity financing.For now, I do equityfinancing. We do not oweany bank. We have acouple of directors thathave invested in thebusiness but I am carefulso that we don’t go pastthe 50% for me and havea case of sharing until youlose control. I have verygood and supportivedirectors. Any time there isa problem, they invest.Each mould, mostlymade of German steel,and weighs minimum oftwo tons, costs N2.5m.

We tried to make onehere but it started to rustafter three months. Theones we get from Chinahave five-year warrantyand it can producebetween 500,000 and onemillion products.

So we just need moneyfrom Bank of Industryand Microfinancecompanies or a companyto give us money and say'ok, use this to run thisparticular project.Return in three or sixmonths.' We don’t havesuch offers.

Selling:Our sitz bath is our number

one product, the others areslow and we have shifted ourfocus to the sitz bath and weproduce the others only onorder.

Power: If only government can

provide power for industries,a lot of families will be fine.We are all suffering. Imaginethe bakery in my area shutdown for two weeks for lackof fuel to power the generator!Let us prioritize ministries, doit step by step, focus on onething first and get it right. Ifsmall businesses can be givenpower at least 12 hours a day,they will manage it. Withouta generator, no factory canfunction in Nigeria. We havea transformer! Why should acompany buy a transformer?But we had to.

Next five years:Our sitz bath weighs 330

grams at N1,500 maximumwhile those in US weigh 170gand go for $10 each. It meansyou are getting what is almosttwice the size, locally madeand of high quality. We shouldlook inwards. My vision is tohave a one-stop shop formedical plastics. Anyone whowants kidney dishes, sitzbaths, test tubes, etc., can goto Hindle Plastics.

•Mrs Adebisi Kuforiji

•The products•Dame Abimbola

Fashola (r) endorsingHindle's sitz bath.

Vanguard, MONDAY, APRIL 11, 2016 — 31

Advertising & Media

As a successful globalbusiness concern,businesses understand

that their actions and visionplay a foundational role inensuring the success of futuregenerations. Theyunderstand that their progressrequire that they invest in theregions and locations wherethey operate, building healthy,resilient communities.

While businesses exist tomake profit, and this isn’tmeant to change as a goal. Thereality is that no organisationoperates in isolation. CSR isabout managing theserelationships to produce anoverall positive impact onsociety.

Since businesses thrive withincommunities they operate.Therefore they should takesome responsibility for thewellbeing of its operatingcommunities and also endeavorto manage the direct andindirect impact of its businessactivities. And this doesn’talways have to be in terms ofmoney, but in terms ofopportunities for advancementand growth.

Based on this premise, FBNHolding has undertakenseveral social responsibilitydrives and more. It’s been nodoubt in the mind of themanagement of the companythat the communities where itspeople live and work have beeninstrumental to its success. Thatmust be why a major aspect ofthe Group’s citizenship is the“Supporting our Communities”platform, which has helped itbuild its various communalimpacts through commitment tothe fundamental areas ofeducation, health, welfare andeconomic empowerment. Today,as one of Africa’s leadingbrands, it appreciates the needfor supporting ideas andenabling the dreams ofindividuals within thecommunities where it operates.

In terms of “EnvironmentalSustainability,” the Group hasendeavored to focus oninitiatives that serve tominimize carbon footprints,

INAUGURATION - From Left: Chairman, Lagos StateChapter of Nigerian Institute of Public Relations (NIPR),Olusegun McMedal; Chief of Staff to the President of theInstitute, Willy Ogbidi; and Chairperson, CaretakerCommittee, Ethel Agbeyegbe handing over to the newChairman at the inauguration of new executives of the Chapterin Lagos.

Sustainability as instrument of change for FBN HoldingStories byPRINCEWILL EKWUJURU

while promoting wildlife andbiodiversity conservation andpreservation towards carbonneutrality in partnership withrelevant bodies.

Presently, it is working onthe more comprehensiveEnvironmental, Social &Governance ManagementSystem (ESGMS) as part of itsstructured approach toembedding sustainability andminimizing adverseenvironmental and socialimpacts.

Riding on its rich traditionof giving back to society and

nurturing intellectualdevelopment, which dates asfar back as 1978, when theGroup started the NationalEssay Competition wherewinners gain automaticemployment among otherprizes, FBN Holdings hascontinued to impact lives,operating through specificstrategic programmes.

In partnership with the LagosEmpowerment and ResourceNetwork (LEARN) and JuniorAchievement Nigeria (JAN),FBN Holdings has beendriving career counselling &

Financial Literacy for youngones through the Future Firstprogramme, designed toempower students ofsecondary schools between theages of 13 and 17years.Through their collaborationwith JAN, the Group has beenproviding students with thetools and knowledge requiredfor long term financialindependence, availing seniorsecondary school students ofpractical business experiencethrough the organization andoperation of an after-schoolbusiness enterprise.

Another Community Supportinitiative of the Group is theFirstBank InfrastructuralDevelopment programme,which has been promotinginfrastructure development inschools and hospitals, inrecognition of its importance inimproving the quality of life.

In recent years, theprogramme has seen it supportprojects like the Faculty of ArtsBuilding at the University ofPort-Harcourt, theEntrepreneur Centre at theUniversity of Abuja, the SportsPavilion for Queens College,the Squash Court for KingsCollege, an AdministrativeBlock for Jesuit MemorialCollege, a Red Cross Clinic inIbadan, the Langbasa PotableWater Projects in Eti Osa LocalGovernment Area of LagosState, a 500-seater lecturetheatre for the FederalUniversity of Technology Akureand a Solar Lightening Projectin Kirikiri Town, Apapa, Lagos.

Since the Lekki Gardencollapse incident

occurred, sentiments havebeen wiped, there’s beenblames and counter blames,yet no one invests to lose itovernight, and expects toremain in business.

Whichever way, the LekkiGarden brand has had its ownimage bashing via the incidentthat occurred in March 2016.

However, its contribution asa Small and Medium

SMEs role and Lekki Garden brand valueEnterprises, SMEs cannot beover-looked with the major rolethey play in economicdevelopment of countries,particularly in developingcountries. For example, formalSMEs contribute up to 45percent of total employmentand up to 33 percent of nationalincome, that Gross DomesticProduct, GDP in emergingeconomies. These numbers aresignificantly higher wheninformal SMEs are included.

According to estimates,600million jobs will be needed inthe next 15 years to absorb thegrowing global workforce,mainly in Asia and Sub-Saharan Africa. In emergingmarkets, like Nigeria, mostformal jobs are with SMEs,which also create 4 out of 5 newpositions. Even though financeis a key constraint to theirgrowth; without it, many SMEslanguish and stagnate.

A World Bank Group studysuggests there are between 365-445 million micro, small andmedium enterprises, MSMEsin emerging markets: 25-30million are formal SMEs; 55-70million are formal microenterprises; and 285-345million are informal enterprises.

Meanwhile, with Nigeriastanding at 17 million housingunits deficit currently, andchances are that thegovernment will not be able tofulfill its campaign pledge toprovide 1 million units forNigerians yearly, the countrycannot afford to run down anyof the big players in the industryparticularly if the company hasno history of collapse or poorquality delivery until now. Thiswas the view of a structuralEngineer, Samuel Ekulumbaand Sons.

Airtel Nigeria, has unveiledSmartSpeedoo, a revolutionary

service that allow customers experience realdata while browsing at affordable tariff andenjoyingfree megabytes.

Airtel Smart Speedoo, which can beactivated using *141#, was unveiled in Lagos,the Chief Commercial Officer, Airtel, AhmadMokhles, said the company is passionateabout creating innovative mobile Internetplatforms, value offerings and opportunitiesthat will help telecoms consumers in Nigeriastay connected and be fully empowered tofulfil their dreams.

“Airtel Nigeria is intensely interested indemocratizing data tariff and we have takena huge step forward in this journey in line

Airtel unveils Smart Speedoo…Offers free surfing

with our major objective of becoming theprovider of first choice for mobile Internetservices,” Mokhles added. Speaking on howAirtel Speedo works, Vice President, Data &Digital Services, Airtel, Nitin Anand, saidcustomers using Smart Speedoo enjoy low ratein addition to free data the more they browse.

“When a customer uses up to 10mb at 1kobo/kb, Airtel gives him 10mb free. And when hisusage gets to 50mb, the browsing rate dropsto 0.5kobo/kb, then he gets 50mb free. Whenthe customer’s usage reaches 100mb, the ratedrops further to 0.2kobo/kb and he is given100mb free,” Anand explained.

Anand further noted that this cycle continuesevery month, thereby giving Airtel customersthe FREE SURF experience.

Pampers winsMoms confidence

Pampers Baby-Dry, fromProcter & Gamble, P&G

Nigeria, has won theconfidence of nursing mothersfor delivering on its promise ofsuperior dryness and comfort.

This was the outcome of aspecial event tagged ‘MomsKnow Best’ held for selectmothers and hosted byPampers brand Advocate, Tiwain Lagos penultimate week.

The event was a learningscene for no fewer than ahundred mothers who sharedmotherhood tips andexperiences with others.

Many of the moms expressedtheir satisfaction on the usageof the improved Pampersdiaper saying that it gives theirchildren the needed comfortand soothes their skins. Oneof such is Mrs. Anike Sholankeone of the moms who attendedthe event from Bauchi statesaid that ever since sheswitched to Pampers Baby Drysome months ago, it providesthe needed comfort for herbaby.

In her words: “To say I lovePampers Baby Dry for my babyis an understatement. After mybabies developed rashes fromusing another diaper, I decidedto switch to Pampers. Sincethen I believe there are nodiapers that compare toPampers baby dry when itcomes to versatility andaffordability, Pampers BabyDry delivers ultimate comfortto my baby.

Giant vitaminwater hits Nigeria

Giant Vitamin Water, abreakthrough product

with a range of variants is nowavailable in the country. Thebrand, which is the first of itskind in the Nigerian beveragemarket has formally beenunveiled in Lagos.

The product, from the stableof Giant Beverages Limited, ismade from demineralizedwater, infused with natural fruitextracts, vitamin and mineralsunlike carbonated drinks madefrom chemical compounds andsugar. It does not containartificial flavours, colours andpreservatives.

According to the MarketingManager of the company, Mrs.Bose Ogunyemi, Giant VitaminWater comes in one bottle sizeof 500ml but 6 delightfulvariants - Blackcurrant-Acai,Lingonberry-Boysenberry,Pineapple-Passion, Orange-Lime, Lemon-Balm, andPrickly Pear-Kiwi.

Each variant, according toher has blend of vitamins andfruit extracts to deliverrefreshing and naturallytasting hydration.

32 — Vanguard, MONDAY, APRIL 11, 2016

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

(0805 220 1997)

Business & Economy

CMYK

The Enugu Stategovernment is set to attract

prospective investors to takeover the operations of identifiedstate owned companies andcorporations, for which theEnugu State Investment Summit(ESIS) scheduled to hold fromApril 12 – 14, 2016 will providea platform.

The summit is an initiative ofthe Enugu State EconomicAdvisory Committee, which wasset up by Governor IfeanyiUgwuanyi in June 2015 to adviseand guide the state on the besteconomic policies that would

Enugu investment summit to repositionstate's economyBy YINKA KOLAWOLE

help to engender sustainableeconomic growth.

A statement Ike Chioke, theSummit’s Director-General,noted that the summit will serveas a catalyst to reposition theeconomy of the state in a mannerthat the living standard of thepeople will be uplifted. He addedthat the summit is a platformthrough which the governmentof Enugu State seeks tocollaborate with the privatesector to promote enterpriseand improve economicproductivity. Minister of Power,Works & Housing, BabatundeRaji Fashola, SAN; Minister ofIndustry, Trade & Investment,Okechukwu Enelamah; and

Minister of Foreign Affairs,Geoffrey Onyeama, have all beenconfirmed as speakers at thesummit.

The three-day summit with thetheme, “Beyond Oil: FosteringInclusive Economic Growth &Sustainable Development”, willbring together local andinternational business leadersand investors, bankers,financiers, the diplomaticcommunity and the academia toexplore Enugu’s rich potential –and the entire South-East – in awide range of industries includingagriculture, solid minerals andmining, power generation anddistribution, infrastructure andreal estate development, tourismand hospitality, education, ICT,media and entertainment.

In a recent discussion withsome media

practitioners, I ‘innocently’asked the innocuous questionof who actually owns thereported foreign reservebalance of about $27.8bn?Expectedly, the response wasa spontaneous chorus of“Nigeria of course”!

But, then I quickly remindedmy audience of an incidencein far away China just aboutthree years ago, when formerPresident Jonathan and Co-ordinating Minister of theEconomy, Ngozi OkonjoIweala, visited Beijing withthe prime objective of seekinga $1.5bn ‘soft’ loan, toIMPROVE our decayedtransport infrastructure.

Incidentally, Lamido Sanusi,the incumbent Governor ofCBN was also in PresidentJonathan’s delegation, albeit,apparently, for a differentpurpose. Indeed, in responseto questions from journalists,Sanusi noted that, he wasseeking to diversify CBN’sforeign currency reservesaway from dollar holdings,and the Chinese Yuan wasconsequently beingconsidered as a possibleoption. In essence, CBNwould exchange part of itsexisting dollar reserves forYuan. Thus, in farcical twist,Chinese Bankers whoexchange their Yuan forSanusi’s dollars, could alsoturn around and offer thesame dollars, plus additionalcost of borrowing toJonathan’s delegation; insuch event, Nigerians wouldhave been sold a dummy,which will, inexplicably, stillbe celebrated, as a testimonyof Nigeria’s credit worthiness!Surely, it would be totallyinappropriate, for Jonathan’sdelegation, to have traversedthe world in search of dollar

Buhari’s compulsive leap into a debt traploans, when our own CBN isequally in possession of idledollar reserves which earnminimal or nil returns.

Ultimately after thepreceeding narrative, I againasked my audience, about theownership of the present$28bn reserves? Notsurprisingly, this time,everyone chorused something to the effect that “the CBN obviously owns thereserves”. However, news ofPresident Buhari’s imminentvisit to China in search of a$5bn foreign loan, despiteCBN’s presents custody ofalmost $30bn, largely idlereserves, clearly evokesmemories of theembarrassment of theJonathan/Okonjo Iweala/Sanusi earlier misadventurein China in 2013.

Surely, it would be moreresponsible management, withless risk to our sovereignty toborrow $5bn directly from ourown CBN, than to expose thenation to increasing debtaccumulation, at a time whenwe already require up to35kobo from every Nairaincome earned to serviceexisting debt annually. Surely,It is clearly irresponsible tocompulsively seek additionalloans (whether domestic orexternal) without firstshedding the ‘excess fat’,mischievously, deliberatelycouched in the 2016 budget.Indeed, President Buhari’spatriotic concern that we donot stumble into anotherignoble debt trap, should haveadvised against furtherborrowing until a thoroughaudit of ongoing capitalprojects have been completed,to determine their viability andpotential for positive socialand economic impact.

Indeed, the President’s menshould have meticulouslysieved the wheat from the

chaff, with these projects andsaved the Nation, the agonyof losing hundreds of billionsof Naira already spent onprojects which are then simplyabandoned for political or selfserving reasons.

Similarly, it is also pertinentto interrogate why thesustenance of an unwieldydeficit and borrowing plan inthe 2016 budget remainssacrosanct, when indeed, theprojected revenue shortfallcould have been funded fromnon debt sources, such as theelimination of the allegedfraudulent components of the

persist.Furthermore, if Buhari’s

government must borrow fromthe domestic market, whyaren’t such loans, obtainedwith minimal or nil cost fromthe trillions of idle Naira deposits, that CBNcontinuously borrows andwarehouses as sterile funds toreduce the burden ofsuffocating Naira spendingvalue in the system, despitethe inordinate cost of suchcounterproductive loanaccumulation.

Similarly, the CBN’srelatively substantial dollarreserves, which currently earnlittle or no yield, could alsohave provided a ready, andless risky source of raising theprojected $4.5bn foreign loanrequired to partly fund the2016 budget. Indeed, theresidual reserves in CBN’scustody after such deduction,is still, i.e much more than thereserve base of most AfricanCountries, with the exceptionof Algeria and South Africa.

Nevertheless, the misguidedpublic perception still persists,that it is more economicallyredeeming for billions ofdollars to remain as idlereserves, with CBN ratherthan to apply same to fundbudget deficits and alsoeliminate the risk of borrowingexternally at shylock rates, thatmay eventually mortgage oursovereignty. Indeed, CBN hassuccessfully promoted thisodious propaganda over time,to engender public perceptionthat reserves in CBN’s custodyare to be primarily dedicatedto defending the Nairaexchange rate in the currencymarket. This tragic faux pas isso distressing, because theprocess through which CBNaccumulates it’s so called“dollar reserves”, is itself adisenabling framework thatdeliberately pressurizes theNaira exchange rate against

the dollar, even when our forexearnings grossly exceed ourexpectations.

Nonetheless, we must ask,the question, which businessCBN operates to consolidateits billions of dollar reserves?Instructively, these reserves,are consolidated wheneverCBN captures the nation’scrude oil dollar revenue andthen proceeds to freshly createand directly substitute Nairaallocations to the three tiers ofgovernment. Consequently,the higher the crude price andoutput, the bigger, also willalso be the related forexearnings and the moreburdensome inadvertently also, will be the volume andvalue of Naira substituted andinjected into the money marketto precipitate a disenablingmarket paradigm with thedefining feature of too muchNaira persistently chasingrations of dollars andrelatively less supply of andgoods and services, toinvariably induce thedisenabling prospect of aweaker Naira exchange rateand spiraling inflation.

Invariably, therefore,fortuitously increasing dollarrevenue, will translates toincreasingly bloated,distortional and disenablingexcess Naira liquidity, but thisprocess ironically expands thecache of dollar reserves fromwhich CBN regularly auctionsdollar rations in a Naira surfeitmarket; ultimately the Nairaexchange rate becomes aproduct of monopolistic pricesetting by the Central Bank,which also invariablyunilaterally determines theNaira exchange rate.

Worse still, in the guise ofdefending the Naira exchangerate, the CBN’s dollarauctions ultimately ironicallyfavors the highest Naira bidsagainst the dollar andtherefore further depreciatesthe Naira.

Save the Naira, SaveNigerians!

budget and the capture of thesignificant revenue accrualsfrom loot so far recovered fromcorrupt public servants.

So who are the ‘smart’ civilservants who sold Buhari, thedummy of the highest everbudget deficit, despite thestark reality of dwindlingrevenue? Furthermore, whatadvised the decision to borrowover a third of the budgetrather than to responsibly, cutour coat according to our cloth,so as not to compound ouralready oppressive debtburden, especially whenadditional borrowing mayagain become imperative tosustain expenditure in 2017,if very low crude oil prices

In essence,CBN wouldexchange partof its existingdollarreserves forYuan u