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Continues on page 18

*President of the Lagos Chamber of Commerce and Industry, Mr. Goodie Ibru (right), past president and HonouraryLife Vice-President, Asiwaju Solomon Onafowokan (left) and the Director-General, Mr. Muda Yusuf at the Councilmeeting of the Chamber on Wednesday.

25,000 jobs lost in Vegetable Oil industryas sector faces extinction

BY VICTOR AHIUMA-YOUNG

Vegetable oil and relatedproducts industry in Nigeriais nearer total collapse as no

fewer than 25, 000 out of the 30,000direct jobs in the sector have been lostdue to the influx of substandardprocessed oil dumped into theeconomy. This near collapse is as aresult of government unfavourablepolicies and policy reversals. This iscoming on the heels of governmentpropaganda on job creation in themidst of continued risingunemployment in the country.

It will be recalled that FinancialVanguard had on July 15, raisedalarm over the looming collapse of the

sector due to government's importwaivers granted to few privilegedNigerian politicians and portfoliobusinessmen to importrefined vegetable oil, Soya bean mealand related products.

One of the few survivingmanufacturers of vegetable oil in thecountry, Sunola Oil Nigeria Limited,owned by Kewalram Chanrai Group,weekend confirmed that the sector isin real danger of imminent collapseand called on Government not to allowthe sector go the way of the Textileindustry in the country. The companyexpressed sadness that “out of topeight Oil Mills in Nigeria, only threeare working at the moment belowinstalled capacity. If drastic measuresare not taken immediately, Oil Mill

Industry will go into extinction like thetextile industry.”

Group Deputy Managing Director,of Kewalran, Mr. Victor Eburajolo, ata briefing in Lagos, lamented that theindustry had lost the capacity togenerate employment as “not lessthan 25,000 direct jobs have been lostin the last few years because ofunfavourable operating environment.At its peak, the industry created over30,000 direct jobs. But today, the sectorcannot boast of 5,000 jobs. As aNigerian, I am very worried becauseof the increasing growth of idle handsthat ordinarily should contribute to thedevelopment of the country, but arenow being wasted and the unfortunateones become willing hands and toolsfor mischief and crimes.”

According to him, the industry isseriously distressed because ofunfavourable policies and policysummersaults and called for total banon importation of finished productslike vegetable oil, drive to improveinfrastructure like power, fuel,railway, roads etc to support capacityincrease in processing as well asfarming inputs. He called for supportof private sector by funding at minimalcost storage of soya beans and buyingup excess produce at good price fromlocal markets during harvest seasonto enable farmers benefit.

He lamented that one of the majorproblems confronting the sector is“import duty waivers on products likeoil and cake to compete with thealready well developed palm industryin the Far East which has resulted ininability of local manufacturers tocompete against such imported oilsresulting in huge finished inventorystock of oil and DOC (oil for makingcake) running into several billions of

Cover Story

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18 — Vanguard, MONDAY, AUGUST 12, 2013

Continued from page 17

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The basic guide to startingThe basic guide to startingThe basic guide to startingThe basic guide to startingThe basic guide to startingyour business —Part 6your business —Part 6your business —Part 6your business —Part 6your business —Part 6

ARE YOU READY FOR YOUR BUSINESS?

At this point I believe that you have a huge idea of what abusiness is. You also understand the pros and cons of owning

your business, as well as whom an entrepreneur is. Let’s just sayeverything I have mentioned and explained are what I call thefoundations of the remaining two chapters of this book.

Now having read all this, the question is, “how prepared areyou to start your business?” Do you have what it takes to ensurethe take off and successful landing of your business? Or are youunsure of your abilities to carry you through the journey of beingyour own boss? Whatever is the case by the time we are throughwith this chapter, making up your mind and measuring yourreadiness level will no longer be an issue.

The journey of a thousand miles, they say begins with a simplestep, and God was kind enough to bless every man with a senseof purpose, but the problem is, a lot of people have not discoveredthe purpose for which they were created. When I see peoplewithout a sense of vision and purpose, I ask myself how can youchange a world, when you do not have the slightest idea of whyyou where put in the world in the first place?

You’ve got to have a sense of purpose, because it is the essenceof living; the poor man is not the man who does not have a dime,

,Get up, don’t sit here;get up if you wantto get there

*Governor Ibrahim Dankwambo (r), exchanging greetings with the Group ManagingDirector, NNPC, Engr. Andrew Yakubu while the Transport Minister, Senator Idris Umar (l)watched during an investment drive at Beijing, China...recently. Photo by AbayomiAdeshida

25,000 jobs lost in Vegetable Oil industryas sector faces extinction

naira. He stated that the costof funds is also a majorburden considering the hugestock held, saying that seedprice has now crashed as aresult of serious uncertaintyin the industry and theinability of localmanufacturers to competewith imported oil price. Thishe said will eventually resultin farmers gettingdiscouraged contrary to thedrive of the presentgovernment transformationagenda.”

Lamenting on duty waiver,import permit of bannededible oil, Eburajolodisplayed a copy of suchwaivers granted to a company(name withheld) withreference number BO/R.10260/107 to import 250,000metric tons of refinedvegetable oil to supposedlycushion the effect of climatechange and floods. Heequally displayed anotherwaiver of Soya DOCimportation, which reads “Inorder to cushion the presenteffect of the scarcity and highprices of essential rawmaterials for feed productionin the country. HisExcellency, Mr. President hasgranted approval for aconcessionary rate of 0 percent duty and 0 per cent VATon importation of Soya Beanmeal for poultry consumptionby poultry farmers with effectfrom 1st March to 31st

December 2013.”Another problem, Mr.

Eburajolo said, is inadequatepower supply. He said; “Weare compelled to generate 70per cent of the electricity weuse for production, and powercost using diesel generators

(as currently practiced) isabout 20 times higher thanpower purchased from thenational grid. Diesel as fuelis multi dimensional as itaffects cost of generatingpower as well as cost of allactivities that require diesel;like very high logistics forevacuating finished productsto customers spread all overthe country. He disclosed thatthe un-availability and highcost of low pour fuel oil LPFO,makes it difficult to run some

category of steam generatingboilers, hence making theoperations significantly morecostly.

He said coal that wouldhave been a possible optionfor generating power tooperate boiler is practicallyunavailable though known toexist as untapped reserve.”

According to him, “whilecompetition on level playingground under same rules andregulations is no doubt goodfor growth of both industryand economy, we wish tosubmit that relating to poorinfrastructure resulting in

very high conversion cost ofSoya to products, any importsoutside absolute need isliterally destroying theindustry. He said a continuedprocess of de-industrialisingthe country will results indirect loss of jobs for theremaining thousandsemployed in the sector. Healso said that there will beindirect loss of jobs for manymore thousands in terms ofloss of cultivation by soyabeans farmers engaged in thedominant cash crops in thecountry. He said that there isthe consequence of direct lossof income for all three tiers ofgovernment and indirect lossof income for machine partssuppliers and technicalservices providers associatedwith the industry.

Nigeria, he said, is sadlyproviding market for oilprocessors from Far Eastthereby opening morecapacity for production forthem and generating moreemployment for their ownpeople at the expense ofNigeria ever teemingpopulation.”

He said that SunseedNigeria Limited and AfcottNigeria Limited havecombined annual installedproduction capacity of 80,000tons of Soya Beans, 64,000tons of DOC production and13,600 tons of refined edibleoil. This capacity he saidsupports local farmers withthe cultivation of about 84,000hectres of land for Soya beansproduction. Local producersalso provide support for over42,000 local farmers with arealistic and sustainablesource of income thusgenerating indirectemployment in the agricsector of the economy.

Diesel as fuel ismulti dimensionalas it affects cost ofgenerating poweras well as cost ofall activities thatrequire diesel; likevery high logisticsfor evacuatingfinished productsto customersspread all over thecountry

in his bank account, but the man who does not have ideas in hismind. When your life lacks purpose, it loses colour. You cannotafford to sit still and do nothing, you have to get up and put yourpurpose to good use. There’s a particular line I love in one of thesongs written by Mary Mary (a gospel group made up of twosisters), and it says “get up don’t sit here; get up if you want toget there”.

What do you see, what pictures are you painting with yourmind, you have to start from the mind, your vision, I

remember the story of Abraham and his nephew Lot in the Bible.When God wanted to separate them, God told Abraham, that Hewould give him as far as his eyes could see! So you see thecreator Himself expects everyone to have a vision that is fired upby the desire to live a purpose driven life. My dear you have allit takes inside of you, to be what you want to be. A popular preacheronce said “suffering is a choice; so you choose.” Stop waitingfor the government, now is the time to seize your destiny andtake control, if you work hard on it, you will definitely succeed.

Andrew Young, the renowned American diplomat, said in oneof his lectures: “For 18 years I eyed the United Nations seat asthe United States representative, I didn’t let it get off me until Isaw it happen”. Your vision is the map of your intentions. It is awritten picture of your journey to greatness; it may take yourtime, and some reworking, but certainly it is the secret ofchampions. If you are waiting for the government, you will endup a wretched fellow, with no story or history.

I made up my mind a long time ago, to live my dreams, very faraway from the clutches of poverty. Looking back today, I cansmile and say “I haven’t done badly after all!” Well, if I had Iwouldn’t be writing this book to inspire and encourage you. Stopdelaying, now is the time to start, don’t dwell on weighing thepossibilities of succeeding or not. “A man who takes a risk andfails is by far better than the man who takes no risk at all.” Youhave to be decisive and launch out, taking every available chance,life itself is a risk. Like I said earlier you have to be bold andfearless and unforeseen forces will come to your aid. Now is thetime to act, wake up and live, stop asking questions, follow yourheart and act as though it is impossible to fail.

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Vanguard, MONDAY, AUGUST 12, 2013 — 19

Business & Economy

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IN recent times, some incoherent and discordant tunes have been coming out from government quarters for Nigerians to dance to. One of such many

tunes is the oil theft and oil production figure. While the Minister of Financeand Coordinating Minister of the Economy wants us to believe that oil productionis down, so much as to affect the 2013 budget to the point that government maynot be able to function properly, her counterpart in the Ministry of PetroleumResources is saying thoughthere is crude oil theft going on,production has not fallen farbelow the budget target of 2.52million barrel per day though itcould be better. The NationalBureau of Statistics and theCentral Bank have bothconfirmed the position of theMinister of PetroleumResources.

The Minister of Finance hadsaid that crude oil productiondrops to around a disturbing 1.3million barrels per day. Inaddition she said the economyhas suffered great loss due tothe activities of oil thieves andpipeline vandals, and all thesehave led oil production to fallto between 2.1 and 2.2mbpd asagainst the 2013 budgetprojection of 2.5mbpd.

She had told ministers thatthe Nigerian NationalPetroleum Corporation,NNPC, had on April 18reported a drop in crude oilproduction in the first quarterof 2013, January to March,which cost Nigeria a loss ofcrude oil revenue to the tune of$1.23 billion (N190 billion). Thatloss is now set to continue andthe country might not be ableto meet its obligation to itscustomers.

But available data from theCBN and National Bureau ofStatistics contradict the gloomypicture painted by the Ministerof Finance. National Bureau ofStatistics NBS, 2013 first quarterreports said; “The oil sectorrecorded an average dailyproduction of 2.29 millionbarrels per day in the firstquarter of 2013 based on dataobtained from the Nigerian

National Petroleum Corporation(NNPC) as against 2.35 millionbarrels per day in thecorresponding quarter in 2012.These figures, with theirassociated gas components,resulted in a growth rate, in realterm of -0.54 per cent in oil GDPin the first quarter of 2013compared with the –2.32 percent for the correspondingperiod in 2012. However, thesector also benefited immenselyfrom the relative stability ininternational crude oil marketprice and the exchange rate ofnaira against the dollar.

The CBN in its report on oilproduction in the first quarterof 2013 said that in January,2.39 mbp was produced while1.94 mbp was exported at anaverage price of $115.24 perbarrel. It said that in February,2.23mbd was produced, 1.78mpd exported at $118 perbarrel. In the month of March,while 2.2mbp was produced,1.79mpd was exported at theaverage price of $112.79 perbarrel.

NNPC in its own report saidthat data on non-fiscalisedproduction from severalcompanies was not available.Consequently, the total figureof 48.15 million barrels of non-fiscalised production is short ofactual. It said that fiscalisedproduction total for the monthof January was 75.51 millionbarrels representing 2.36million barrels per day, and10.44 per cent higher than the

December 2012 production of68.37 million barrels or 2.21million barrels per day. Totalcrude oil and condensateslifting for both domestic andexport was about 73.89 millionbarrels. Oil companies liftedabout 36.02 million barrels(49%), while NNPC lifted 37.86million barrels (51%). Lifting byfiscal regime shows 42.08,25.83, and 5.99 million barrelsfor JVC, PSC/SC, and othersrespectively. Out of NNPC’sliftings, 27.59 million barrelswere for Federation Account,

lifting for both domestic andexport was about 57.42 millionbarrels. Oil companies liftedabout 35.86 million barrels(62%), while NNPC lifted 21.56million barrels (38%). Lifting byfiscal regime shows 26.48,24.24, and 6.70 million barrelsfor JVC, PSC/SC, and othersrespectively. Out of NNPC’sliftings, 16.19 million barrelswere for Federation Account,while 5.37 million barrels werefor domestic use.

The truth that the governmentis not telling the Nigerian

economical with the truth. Thegovernment is funding the jointventure cash calls and contractsharing project withmultinational with crude. Thecrude that should have beensold is given out tomultinationals. This outlet iswhat gives room for both topgovernment officials, NNPC,multinational companies to stealNigeria’s crude. If this is not thecase, how can a ship load ofcrude oil leave Nigerian waterswithout the law enforcementagencies knowing? Vessels thatcarry crude are not submarineor are they the usual ghosts thattake salaries in ministries,agencies and departments ofgovernment. They are largevessels that even the blind willsee. Very soon, governmentofficials will come out with theusual joke, ghost ships andvessels are stealing Nigeria’scrude oil.

It was instructive when NNPCsaid recently that on completionof the Nebe pipeline, dailyaverage crude oil production isexpected to increase to 2.50 m/bpd which will exceed thenational daily target of 2.48 m/bpd. Our expectation is toincrease production from the2.48 to 2.55 m/bpd (both crudeand condensate) for the rest ofthe year. We have the capacityand potential to maintainproduction above 2.55 m/bpd inthe country.

Mr. President, let’s get seriouswith our economy and sourceof revenue. Crude oil fallingmarginally below budget targetis no excuse for non-performance.

public is that it has no controlover oil production and export.Yes, oil production is less thanthe budgeted target of 2.52million barrels per day ingovernment’s calculation, butproduction has not fallen belowthe two million mark. The dropin production is rather marginalnot to the point of scaring all ofus.

The Federal Government is

while 10.27 million barrels werefor domestic use.

In the month of February,fiscalised production total forthe month was 62.53 millionbarrels representing 2.23million barrels per day,and10.52% lower than theJanuary 2012 production of69.11 million barrels or 2.23million barrels per day. Totalcrude oil and condensates

Pooling wools over Nigerians’ eyes

Let’s get serious with oureconomy and source ofrevenue; crude oil fallingmarginally below budgettarget is no excuse for non-performance

MICROFINANCE is aneffective development

intervention that enhancesaccess to financial services bylow-income earners to easefinancial hardships, create jobopportunities and improve theirstandards of living.

Banks often provide loans tobig businesses or profit-makingorganisations and exclude lowincome earners for fear ofincurring losses.

In light of this, the 9thMicrofinance Training ofTrainers (MFTOT 9) Course,jointly sponsored by the AsianDevelopment Bank Institute(ADBI), World Bank, TokyoDevelopment Learning Centre(TDLC) and joined by a newpartner of China DevelopmentBank (CDB) since MFTOT8 tosupport participants in Africancountries, is ongoing, till

Microfinance can help low-income earnersNovember this year.

This is an interactivemicrofinance distance learningcourse (MFDL) developed bythe United Nations CapitalDevelopment Fund (UNCDF),the UN’s capital investmentagency for the world’s 48 leastdeveloped countries. Thecourse has received high ratingfrom participants and becomepopular in many countries.

“Microfinance is one of thegreat success stories in thedeveloping world and is widelyrecognised as a sustainablesolution to eradicate poverty. Itsservices include microcredit toenhance financial inclusion.”

TaGLA organisesvideoconferences with otherDLCs across the world for it hasmodern facilities for online orvideoconference services. So itis possible to access

international microfinanceexperts’ lectures throughvideoconference sessions atselected Global DevelopmentLearning Network (GDLN)centres like TaGLA. The

videoconference sessions willfeature presentations anddiscussions on current issuesand best practices inmicrofinance.

The videoconferences will also

be webcast live. Local coursesin selected countries will beavailable during the same timeperiod. In Tanzania, low incomeearners may access financialservices such as loans, savings,insurance and training frommicrofinance institutions ororganisations.

FG Seeks Collaboration with NCS In Agricultural sector

BY GABREIL EWEPU

THE Federal Ministryof Agriculture andRural Development, is

seeking for closercollaboration with the NigeriaComputer Science, NCS, totransform the sector.

The call was made by thePermanent Secretary in theMinistry, Mrs. IbukunOdusote while delivering apaper titled, ‘Opportunities for

Investment in Nigeria’sAgriculture’, at the breakfastmeeting of the College ofFellows of the NigeriaComputer Science (NCS) inIloko-Ijesha, Osun State.

Odusote said the support ofNCS would further boost theachievement and successrecorded in agricultural sectorunder the presentadministration, especially indigital management of thenew silos built by the federal

government across thecountry.

She stated that such supportfrom NCS will add more valueto the performance andproductivity of the silos’management and staff inmeasuring content, quantityand output of grains containedin each silo, and enabling theministry to efficiently manageand deploy the contents to thepeople for consumption.

20 — Vanguard, MONDAY, AUGUST 12, 2013

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Business & Economy

THE Executive Secretary ofthe Nigerian Content

Development and MonitoringBoard (NCDMB), EngineerErnest Nwapa has said that theannual spending on locallysourced goods and services byGeneral Electrics, (GE)Nigeria, is expected to rise to$60million (N9.6)billion from$4 million. Nwapa who wasrepresented by Mr. UduakObot, NCDMB ZonalCoordinator, Akwa-Ibom at asuppliers fair in Calabar,commended GE for its foresightin investing in the state.

According to him, “This effortis a clear indication that GE iscommitted to the growth of theNigerian economy and weassure the company of oursupport to see the project tocompletion.” Continuing hesaid; “This manufacturing andassembly factory aims tosignificantly increase the localcontent of GE’s operations inNigeria by increasing localownership of equipment, in-country project executionexpertise and use of local legal,financial and engineeringservices.”

In a related development, GEthrough its President/CEO, Dr. Lazarus Angbazo re-affirmed the company’scommitment to being a long-term strategic partner toNigeria’s economicdevelopment andtransformation. This he also

AfDB commendsNigerian portsreform policy

The African DevelopmentBank (AfDB) says

Nigerian Ports Reform Policyand its economic partnershipwith ECOWAS and EuropeanUnion, have enhanced itsexport drive. The bank said ina book, the African EconomicOutlook, in Abuja, thatNigeria’s export to Africancountries currently stood at 11per cent of its total exports. Thisnotwithstanding, the bank saidNigeria had yet to tap into thehuge potentialities in theregion for growth, economicdiversification and integration.

It said that the West Africanmarket provided a tremendousopportunity for Nigeria’sfinancial sector. The bank alsoobserved that inflation rate,escalating budget deficits insome countries, rising wagebills, increasing domesticinterest payments, amongothers, had hindered fullmonetary integration of theECOWAS member states. Itcommended Nigeria’s effort toencourage localmanufacturing, insisting thatthe major challenge tomanufacturing was poor tradenetwork and infrastructurewithin the region.

BRIEFS

said was in line with the $1billion investmentannouncement made earlier inthe year by the company’sGlobal CEO, Jeff Immelt

He noted that the plannedmanufacturing and assemblyplant is expected to create2,300 jobs, 300 of which will bedirect GE hires and theremaining 2,000 indirect jobscreated through GE suppliersthat will support its expandedoperations. He also said thecompany plans to set up atraining institute on site to buildemployee capacity andcapability. He re-affirmed thecompany’s commitment to

being a long-term strategicpartner to Nigeria’s economicdevelopment andtransformation. He said: “Weare committed to strengtheningour local presence in Nigeriathrough this investment inCalabar. The facility willsignificantly increase the localcontent of our operations inNigeria by supporting theburgeoning power sector andproviding manufacturingcapabilities for the oil and gasindustry.”

Also speaking, the GlobalSupply Chain Leader, Mr. PhilGriffith said; “GE firmlybelieves in the capability and

capacity of our Nigeriansupplier partners inengineering and other sectorsto work with us to deliver onthis investment commitment. Itis for this reason that today wedecided to invite indigenouscompanies to witness first-hand the opportunities that thisproject will avail to them. Mostimportantly we also want to seewhat capabilities are availablelocally and how we can assistin developing suppliercapabilities where they arelacking.”

encourage e-commerce.“Not only will employment be generated with

the increase of activities in the sector, trafficwill reduce, time will be saved and tax revenuesgenerated,” he said.

Olukoya said that the courier association inNigeria would take necessary steps to elevatethe industry to international standards bypartnering with the government on policies andtraining of its members. “The recent initiativeof a National Addressing Policy should bepromptly implemented because the policy willmake it easier to locate individuals.

“It will also improve transportation,” he said.Olukoya also said that the association wouldpartner with foreign organisations to train itsmembers on recent innovations in the industryto keep them abreast of developments. He saidthat proper government intervention wouldenhance the welfare of stakeholders in thesector. “The recent restriction of the motorbikesto some roads in Lagos State is a challenge tosome of our members.

GE to invest N9.6bn on locallysourced goods, services

THE Chairman, Fast Express Courier Nig.Ltd., Mr Olusegun Olukoya, has called for

additional support for the courier industry toenhance standards.

Olukoya told the News Agency of Nigeria(NAN) in Lagos that the Federal Governmentshould come up with policies that would advancethe industry.

“Developed countries are reaping the bountyof a working courier industry, while the sector isgrossly under-used in Nigeria due to lack ofadequate logistics and infrastructure,” he said.Olukoya said that there was the need for anincreased usage of the Internet for purchase ofgoods and services to guarantee improvementin the sector. “Increased Internet usage can onlybe encouraged through proper governmentinitiatives and policies.

“This increased usage will bolster e-commerce,which will advance courier service,” he said.Olukoya urged the government to establishpolicies that would encourage Internet browsingat home. He said that such a development would

Operator urges support for courier industry

By PRINCEWILLEKWUJURU

Fannie Maeprofit doubles,will pay U.S.$10.2 billion

Fannie Mae the largestU.S. mortgage finance

company, said on Thursday itssecond-quarter profit nearlydoubled to $10.1 billion, mainlydriven by a housing recoverythat has reduced mortgagedelinquencies and lifted homeprices.

The government rescuedFannie Mae and its sibling,Freddie Mac in 2008, coveringlosses on soured loans. Sincethen, taxpayers have bailed outthe pair to the tune of nearly$188 billion.

Fannie Mae said it will makea $10.2 billion dividendpayment to the U.S. Treasuryfor its rescue aid. After makingthe $10.2 billion dividendpayment in September, thecompany will have repaidabout $105 billion in dividendsto the Treasury of the $117.1billion in taxpayer assistance.

Under the terms of the bailoutagreement, both mortgagecompanies are only allowed tohold $3 billion in net worth andall other profits go back totaxpayers.

*From left: Dr. Shehu Muhammad, Executive Director, Corporate and Investment Banking, Keystone Bank Limited; Mrs.Adeola Azeez, Deputy Country Head, Deutsche Bank; Mr. Philip Ikeazor, Managing Director/CEO, Keystone Bank; Mrs. YvonneIsichei, Executive Director, Lagos and West Directorate and Mr. Charles Weller, Country Head, Deutsche Bank, during arecent visit of Deutsche Bank Country Head to Keystone Bank.

CMYK

Vanguard, MONDAY, AUGUST 12, 2013 — 21

Business & Economy

BRIEFS

The World Bank has saidthat it will cost Nigeria

and other African countriesabout N6.75 trillion in the nextten years to address reformsand investments in communallands that are individuallyowned as well as addressingweak governance andcorruption in land ownership.

The Bank recent report madeavailable to Vanguard notedthat more than 90 per cent ofAfrica’s rural land isundocumented, making ithighly vulnerable to landgrabbing and expropriationwith poor compensation.

According to the World Bankreport, African countries andtheir communities couldeffectively end land grabs andgrow more food across theregion, and transform theirdevelopment prospects if theycan modernise the complexgovernance procedures onland ownership andmanagement over the nextdecade.

Titled ‘How Africa CanTransform Land Tenure,Revolutionise Agriculture, andEnd Poverty’, World Bank’sVice President for Africa,

Jobless claimsedge up; stillpoint to healingjob market

The number of Americansfiling new claims for

jobless benefits rose slightlylast week but was still near itslowest level since before the2007-09 recession, a hopefulsign for the U.S. economy.Initial claims for stateunemployment benefits roseby 5,000 last week to 333,000,the Labor Department said.

The four-week average ofnew claims, which often givesa clearer read of the labourmarket’s underlying health,fell to its lowest sinceNovember 2007, just before theUnited States fell into acalamitous recession. Now itappears that a long cycle ofaggressive layoffs - which hadfueled a surge inunemployment and helpedshape two presidentialelections - is over.

“The overall economy andthe labour market areimproving at a moderate pace,”said Lindsey Piegza, chiefeconomist at Sterne Agee &Leach in Chicago. The pull-back in layoffs has helpedbring about a substantial fall inthe jobless rate, and the trendin jobless claims could makethe U.S. Federal Reserve morecomfortable in unwinding thenation’s last giant economicstimulus program.

Many economists expect theFed will begin reducing itsmassive bond-buying stimulusprogram as soon as nextmonth. The Fed currently buys$85 billion a month in bondsto push borrowing costs lower.While layoffs are roughly halftheir level in early 2009, therecovery in job creation hasbeen more lackluster.Employers added just 162,000workers to their payrolls inJuly.

Wall Street analysts polled byReuters had expected first-time applications to rise to336,000 last week, andinvestors did not appear totake any cues from the claimsdata.

U.S. stock index futurespointed to a higher open,while yields on U.S.government debt were littlechanged. New jobless claimswere volatile in July due toregular summer auto plantshutdowns, which make it hardfor the government to adjustthe data for seasonal swings.But that volatility is now past,and Labor Department analystssaid there was nothingunusual in the data and thatno states had providedestimates.

Makhtar Diop, in the report,said “Despite the abundantland and mineral wealth, Africaremains poor and improvingland governance is vital forachieving rapid economicgrowth”.

Diop noted that addressingland governance wouldsignificantly reduce povertyand provide more opportunityfor Africans, including womenwho make up 70 per cent ofAfrica’s farmers who are

currently locked out of landownership due to customarylaws.

“The status quo isunacceptable and must changeso that all Africans can benefitfrom their land. Africa couldfinally realise the vastdevelopment promise of itsland over the course of the nextdecade by championingreforms and investments todocument all communal landsand prime lands that are

individually owned.“Regularising tenure rights of

squatters on public land inurban slums that are home to60 per cent of urban dwellersin Africa, and tackling the weakgovernance and corruptionendemic to the landgovernance system in manyAfrican countries, often favourthe status quo and harm theinterests of poor people.

Diop added: “Generating thepolitical will of Africangovernments to mobilisebehind these land reforms andattract the political andfinancial buy-in of theinternational developmentcommunity is the way forward.

Nigeria, others to spend N6.75 trillionto tackle corruption, weak governance

Surprisingly, firmrebounds in China’s

exports and imports in Julyoffered some hope that theworld’s second-largesteconomy might be stabilisingafter more than two years ofslowing growth, although animminent rebound still looksunlikely. Imports of crude oiland iron ore rebounded frommulti-month lows to recordhighs last month as more rawmaterials were shipped in torebuild depleted stocks, andsoy bean purchases hit a recordfor the second straight month.

A steadying of the economywould be a relief to China’sleaders, who have scrambled toshore up growth since mid-yearamid concerns a sharpslowdown could derail theirattempts to reform the economyso it was driven more byconsumption than debt-fundedinvestment and manufacturing.Data from the CustomsAdministration showed exportsrose 5.1 percent in July from ayear ago, a smart turnaroundfrom their first fall in 17 monthsin June. Analysts had expecteda 3 percent rise. Imports fared

even better with a 10.9 per centjump from a year earlier, morethan five times what analystshad forecast. The surprisingstrength in imports left Chinawith a smaller-than-expectedtrade surplus of $17.8 billion.

“July seems to reflect a returnto a ‘normal’, relativelyuninspiring trend,” analystsfrom Moody’s said in a note.In other words, while the worstseems to be over, the upturnwill be relatively flat.” Indeed,exports in the three monthsended July 31 posted theslowest annual increase sinceOctober 2009. Still, Asian stocksrebounded on the data and theAustralian dollar leapt a thirdof a cent on hopes that Chinesedemand may have found afloor.

China’s trade performancehas whipsawed this year afterdata was first inflated bycompanies reporting fakesdeals to disguise illicit cashtransfers, and thensubsequently deflated by thegovernment as it quashed thefictitious transactions. Analystssaid the July data probably hadminimal distortions, but some

cautioned against concludingthe upbeat performance wasdriven by an actualimprovement in final demand.

There was an overwhelmingimprovement in commodityimports last month, with ironore purchases jumping 17percent from June to a recordhigh of 62.3 million tons.

Some commodity analystssaid July shipments may havebeen inflated by unprocesseddeals from June. “I would thinkit has something to do with thefact that the June number waslow and there was some catch-up tonnage coming through,”said Graeme Train, analyst withMacquarie in Shanghai. Butthe overall trends remainstrong, Train added.

“It has been a volatile seriesof data but I anticipate the trendfor strong (iron ore) imports tocontinue.”

Soy imports also hit a recordhigh for the second straightmonth, though again analystssaid that was partly due todelayed shipments finallyarriving from congestedBrazilian ports. Crude oilimports, on the other hand,

were likely lifted by refinersreplenishing stocks after athree-month lull and as somenew refineries started business.

“The monthly data is veryvolatile. I wouldn’t read toomuch into it and say thatdomestic demand is strong,”said Zhang Zhiwei, aneconomist at Nomura in HongKong.

Exports to the United Statesrose an annual 5.3 percent andthose to Europe were up 2.8percent, as China’s two biggestmarkets posted their strongestgains since February.Shipments to southeast Asiawere also up on the year.

With the U.S. economyshowing signs of a gradualrecovery, Ting Lu, aneconomist at Bank of America-Merrill Lynch, said Chineseexporters could benefit furtherin coming months.

The trade figures were seenas a positive sign for industrialoutput data, with economistsexpecting production to showan annual rise of 9 percent inJuly.

Fixed asset investment isforecast to have risen 20percent in the first sevenmonths of the year, in line withgrowth in the first six months,while inflation is forecast tohave quickened to a five-monthhigh of 2.8 percent.

Unexpected strength in China trade dataeases some gloom

By DOTUN IBIWOYE

*From left; Group Head, Strategy & Communication, Sterling Bank PLC, Shina Atilola, His RoyalHighness, Abdul-Ganiu Dosumu, the Lemo of Ogijo and the Business Development Manager, SterlingBank PLC, Fatai Adegbuyi, at the opening of the bank’s new ultra modern branch in Ogijo Town, OgunState.

22 — Vanguard, MONDAY, AUGUST 12, 2013

CMYK

Banking & Finance

BRIEFS

GOVERNMENTS’deposits andb o r r o w i n g

undermine competiveness ofbanks and corrupt the publicsector in Nigeria.

Deputy Governor, CorporateServices Directorate, CentralBank of Nigeria (CBN), AlhajiSuleiman Barau made thisobservation in his personalstatement at the last MonetaryPolicy Committee (MPC).

Meanwhile, interbankinterest rates shot up by 74 percent in response to thewithdrawal of N1.2 trillionfrom the system by the CentralBank of Nigeria (CBN) forcash reserve requirement(CRR) debit for July

At the end of the its meetingheld last month the MPCincreased cash reserverequirement (CRR) on publicsector deposits to 50 per centfrom 12 per cent. The decisioneffectively reduced idle cash(excess liquidity) in thebanking system by N1.2trillion.

In his argument for thedecision, Barau said, “Inrecent times, one of the causesof malfunctions in theNigerian financial system is theparadox of substantialgovernment deposits inDeposit Money Banks(DMBs) and high governmentborrowing from the depositmoney banks (DMBs). As atJune 13, 2013, the three tiersof government had N2.384trillion in the DMBs out ofwhich about 90 per cent arein zero interest bearingCurrent Accounts. To mop upthe liquidity at 14 per cent willcost N301.33 billion which is

more than the annual budgetsof most states.

“Clearly, governments areover-borrowing, are wasteful inthe management of publicresources and areundermining thecompetitiveness of the DMBs.This corporate welfare,transfers or subsidy is clearlywasteful and costly. Inaddition, it undermines andcorrupts the public sector andmakes public resources togenerate inefficient outputsand ineffective outcomes.Improving the market and thestate demands the correction ofthe causes of distortions.

An increase in CRR ongovernment deposits will also“incentivise” the DMBs to seekfor deposits from the privatesector and, to lend to theprivate sector. After all, theDMBs and other organisedprivate sector players canvassfor a market driven economy.A dependence on GovernmentDeposits breeds complacencyamong DMBs. This policy isthus compatible with a marketdriven economic model. Thepolicy therefore, helps DMBsto rethink their businessmodels which have lulledthem into complacent rentseeking behaviours.

“Complacency is dangerousin a highly volatile world andcomplacent financialinstitutions are the least able tosurvive in a volatile and highlycompetitive world. Our recenthistory and, the costs ofcleaning up the consequencesof complacent mismanagementof the recent past makes itnecessary to support DMBs todevelop more sustainablebusiness models. A rate of 50per cent is strong enough butnot debilitating. The futuredirection is sufficiently strongsignal for DMBs to quicklychange their business modeland adapt to new realities”.

liaising with stakeholders likebanks, government and privateorganisations by having accessto list of employees andcompanies that are registeredfor award of contracts.

In addition to the abovemeans, the recent efforts of taxauthorities to register taxpayerselectronically using biometricswould in no small measureimprove taxpayer data base inthe Nigerian tax system. Thetaxpayer Identification Number(TIN) project embarked uponby the 36 tax Boards of InternalRevenue (BIRs) and theFederal Inland RevenueServices (FIRS) aimed atproviding a common platformof registering taxpayers onlinewill greatly provide taxpayerdatabase and form a goodfoundation for achieving real-time tax collection which is aglobal focus of all modern taxsystems”.

ETI Boardreaffirmsconfidence inchairman

Board of Directors ofEcobank Transnational

Incorporated (ETI) hasreaffirmed confidence in itschairman, Mr. kolapo Lawson.The Board in a statement saidit has “reviewed issues relatingto two financial transactionsinvolving ETI Chairman, Mr.Kolapo Lawson. Thesecomprise a personal agreementbetween him and AMCON andan agreement with EcobankNigeria on the part of acompany of which he isChairman.

The Board concluded thatthere had been no financialimpropriety and that Mr.Lawson had acted in good faiththroughout. As a result, theBoard unanimously reaffirmedits confidence in Mr Lawson.Speaking on behalf of theBoard, Vice-Chairman, MrAndré Siaka said, “KolapoLawson has been a loyalservant of Ecobank for manyyears and has been a majorcontributor to its on-goingsuccess.

In the article, titled,Internally Generated Revenue:Diversification of revenue basewithout multiple taxation, heobserved that as at 2008, thecontribution of IGR to totalrevenue in 28 states was lessthan 10 per cent, while Kwarastate and Lagos state had 41per cent and 131 per cent IGRcontribution to total revenue.

Highlighting strategies thatcan be adopted by states toimprove IGR contributions,Abubakar said, “In order toadequately harness revenuecollectible internally, it isimportant that the tax authorityis able to identify its tax payersby their locations, nature ofbusiness and tax type payable.This can be achieved by aneffective means of registrationof tax payers through directenumeration, street combing,tax payer registration exerciseat designated centers and

of revenue, inadequateapplication of tax laws andlegislation and lack of politicalwill on the part of government.

“Generally speaking,availability of oil revenue tothe country has blindfoldedgovernment authorities at alllevels so much that sectors likeagro-allied and miningindustries which hithertoprovided the needed revenueare now near moribound.There is no gainsaying thatrevenue from agriculturalactivities, solid mineralsgradually dwindled over theyears since the discovery ofcrude oil in Nigeria. Thisphenomenon continuedunchecked to the extent thatitems, which contributedsubstantially to the grossdomestic products (GDP) in thepast are today being importedto support the growingpopulation.”

A REVIEW andamendment of existing

tax laws are critical to effortsof states and local governmentto improve internallygenerated revenue (IGR).

“There may not be muchimprovement on IGR ifprovisions of the existing taxlaws which are obsolete are notreviewed and amended,” said,Mr. M.L Abubakar, Secretaryto the Joint Tax Board (JTB).

In an article published in theNigerian Leadership Initiative(NLI), Volume 2, Abubakarnoted that, “Over the years,revenue sharing by theFederal Ministry of Fiannce’sFederation Account AllocationCommittee (FAAC) to the Stateformed the major source offunding for the State’s annualbudgets. This trend hasceaselessly continued due toso many factors some of whichare neglect of internal sources

Life TrackBusiness Forumempowers sixwith N1.1m

BY BOSE ADELAJA

Six young entrepreneurs inLagos, have benefited

from a financial empowermentscheme to the tune of N1.1m.

The scheme coming from thestable of Life Track BusinessForum a mentoringorganisation, was meant togrow their businesses andgroom them for variouschallenges facing youngentrepreneurs in Nigeria.

The beneficiaries AdekoyaSamuel, Oluwole Roseline,Iheanchor Frank, UwakweLazarus, Umesuruike Helenand Chinenyen Amah haveattended series of mentorshiptraining from the organisationbefore they were considered fitfor the empowerment whichtook place in Lagos.

Four of the beneficiariesreceived cheques of N200,000each while the rest were givencheques worth N150,000 eachfor the empowerment. Also,some of them are owners ofprivate schools in Lagos whileothers are into other small scalebusinesses in the State.

The empowerment was a softloan with little or no interest tobe revolved for a period of threemonths before a monthlyremittance to the NGO.

Govt deposits fuel corruption inpublic sector — CBN•Interbank rates rise by 74%

STORIES BYBABAJIDE KOMOLAFE

Review of tax laws critical for enhanced IGR

*From Left:Mr. Manoj Nambiar, General Manager, Sunola Foods Limited; Mr. Kingsley Awudu,Store Incharge; Mr. Felix Shola Ojo, Production Manager and Mr. Victor Eburajolo, GroupDeputy Managing Director, KEWALRAM Chanrai Group at a Press briefing on developmentsin the Vegetable Oil Industry that are threatening local manufacturing, at KEWALRAM ChanraiGroup Head Office. Pix by Oscar Ochiogu.

Vanguard, MONDAY, AUGUST 12, 2013 — 23

Banking & Finance

CONSOLIDATEDDiscount Houselimited has listed

four factors that could make ormar the effectiveness of theproposed Mortgage RefinanceCompany.

In a research report titled,“Are the odds against theproposed Mortgage RefinanceCompany’, the companyidentify the Land Use Act,Regulation of banks andprimary mortgage banks(PMBs) as potential barriers tothe MRC. Other factorsidentified are: lack of blue-print on the three agenciesestablished to coordinatemortgage activities in the

Firm launches‘SkillMix’

A Lagos-based IT firm hasunveiled an outsourcing andcrowd-sourcing portal forskill. Christened SkillMix,the social outsourcing siteSkillMix is open to allfreelance web designers, webdevelopers, marketers andwriters who seek avenue toexpress their prowess.

At an interactive forum inLagos, where SkillMix wasuncovered to journalists, Mr.Samuel Adesoga, ManagingDirector/CEO of ThoughtStudios, said that theoutsourcing and crowd-sourcing site was designedspecifically for project ownersseeking how to effectivelyexecute their projects, whichcould be a web design orsimilar projects on time andon budget. “The projectowners can outsource theprojects to freelancers in orderto save costs”, as SkillMixportal would source the rightfreelance designers,developers, writer etc acrossthe nation on behalf of theproject owners.

Freelancers who aremindful of earning additionalincomes would register on thesite. According to him,registration on the SkillMixsite is free of charge. Some ofthe categories of jobs listed onthe site include logo design,graphic design, basic webdesign, e-commerce, blogs,content management systems,mobile apps, social networks,database, search engineoptimisation, web apps andsoftware, writing andmarketing.

While describing howSkillMix works, Samuelexplained that project ownersare required to post theirprojects including anysupporting documents orproject specification on thewebsite.

This enables registeredfreelancers and skilledworkers to locate theseprojects and join the project’sdiscussion online. SkillMix’sobjective is to deepen thegrowing informationcommunications technology(ICT) industry in the country.

According to him,skillsmix.com is designedsuch that each project has itsown discussion forum wherefreelancers would raisequestions concerning theproject under scrutiny. Thefreelancers would convincethe project owner their skillsand experiences as well asqualifications they have toexecute the projects.

BRIEFSConsolidated Discount lists barriersto Mortgage Refinancing Companycountry; and hawkish andpredatory tendencies on thepart of Nigerian entrepreneurs.The company said that howthese factors are addressed willdetermine the ability of thecompany to impact positivelyon the mortgage sector in thecountry.

The company said, “TheMRC is being set up to supportmortgage originators such asPrimary Mortgage Banks

(PMBs) and Deposit MoneyBanks (DMBs) to increasemortgage lending byrefinancing their mortgageloan portfolios.

We think the impact of theexisting land use act mayconstrict potential gains thatwould accrue from theestablishment of the mortgagerefinancing mechanism. TheNigerian Land Use Decree of1978 nationalised all land in

the country and notionallyhanded over its administrationto committees constituted atstate and local governmentlevel and these constitute ahuge constraint to business.This limitation would have tobe removed if the level ofinvestments desired in thehousing sector is to be attained

“Furthermore, there will be aneed for institutional andregulatory checks on the

operations of theDMBs and PMBsand theirrelationships withthe Nigerian MRC.The MRC is beingpositioned to serveas an off-taker of theloans disbursed bythe mortgagelenders. There is atendency for DMBsand PMBs to createlow qualitymortgage risk assetsand expect same tobe offset by theMRC which maylead to the US-styled mortgagebust that resulted inwhat has beendescribed as

the worsteconomic crashsince the 1930sdepression.

“Also, there hasbeen nocomprehens iveplans on what wouldhappen to theentities traditionallyentrusted toc o o r d i n a t emortgage activitiesin Nigeria.

These are theFederal HousingAuthority (FHA),National HousingFund (NHF) andFederal MortgageBank of Nigeria(FMBN). We thinka clear blue-printhas to be establishedon the operations ofthe three entities.

“Lastly, theoperation of theMRC is set toincrease activities inthe Nigerian capitalmarkets. Weanticipate anincrease in thenumber of RealEstate InvestmentTrusts (REIT) tradedon the Nigerianbourse from thethree names whichare Union Homes,Skye Shelter Fundand UPDC Plc.

24 — Vanguard, MONDAY, AUGUST 12, 2013

CMYK

Corporate Finance

BRIEFS

*From left; Chairman, Liquified Petroleum Gas (LPG) Association of Nigeria, Mr. DayoAdesina, facilitator, Nigerian Economic Summit Group (NESG) Environmental SustainabilityPolicy Commission, Mrs. Dupe Akindele, Co-Chairman, Private Sector Environmental PolicyCommission of NESG, Professor. Collins Gardner, and the Associate Director/Head of Research,NESG, Dr.Sope Williams-Elegbe, at the Stakeholders Dialogue with NESG EnvironmentalSustainability Policy Commission Low Carbon Emissions: Mainstreaming LPG Utilisation inNigeria, held in Lagos.

Renaissance CreditNigeria has said that it

remains resolute in itscommitment to providingbetter life to the middle classand low income earners of theLagos population who fallbetween the age group of 22– 55 years.

Barely two months afterobtaining its state licence,Renaissance Credit Nigeriahas rolled out its second outletat the Pentagon Plaza inOpebi area of Lagos, in linewith its quest to providesimple money solutions toindividuals living andworking in Lagos State.

Mr. Oluwole Emeya, Vice-President, Sales atRenaissance Credit Nigeriastated; “Our plan is to plantoutlets within major suburbsof the state such that ourconsumers have easy accessto our range of simple moneysolutions.”

In addition, he said that thecompany offers savingsproducts like Fixed Depositsand Savings Plans, whichcome with attractive interestrates and also partners withretail outlets across the stateto offer Point of Sale financefor the purpose of purchasinghousehold electronics,appliances and mobilephones.

According to Emeya,

Orangeintroducesmobile paymentservices

Orange has announced anew set of mobile

payment services inconjunction with Visa forOrange Money subscribers.Botswana will be the firstcountry to benefit from thenew program and will alloweasy access to funds 24 hoursa day, bringing new point-of-sale, online and ATMtransaction options toconsumers.

Currently, Orange Moneyallows customers to use theirmobile phones to transferfunds to any mobile phonesubscriber in or outside thecountry, buy airtime, and paybills.

From August this year,registered Orange Moneysubscribers in Botswana willbe able to use their OrangeMoney account to make Visaenabled payments and payinvoices at stores,international onlinemerchants and at over 300Visa ATMs across thecountry.

IHS Nigeria setto double assetsafter raising$1bn

IHS Nigeria Plc (IHS),which operates

t e l e c o m m u n i c a t i o n sinfrastructure in three Africancountries, is set to more thandouble its assets after raising$1 billion for investment,Chief Executive Officer IssamDarwish said.

IHS wants to increase thenumber oftelecommunications towersunder its management to20,000 by 2016 from the 8,500towers it currently runs inNigeria, Cameroon and IvoryCoast, Darwish said last weekfrom Beirut, Lebanon’scapital. “We have fundingavailable for variousopportunities that we arecurrently analyzing,” he said.

The Lagos-based companysaid in July it raised $522million in new capital, $280million in debt and $242million in equity in thepreceding year to fund itsexpansion across Africa.

Nigeria has Africa’s highestnumber of mobile-phoneusers, with 109 millionsubscribers at the end of 2012,according to the regulatorNigerian CommunicationsCommission.

Resort Savings: Don’t expectdividend soon — Olayinka

Renaissance Credit whichboasts of the latest state of theart IT technology and a vastexperience in consumerfinance, having operated in anumber of emerging markets,is set to bring its range ofsimple money solutions to thedoor-steps of Lagosians whofall within the middle and lowincome segment by plantingoutlets across Lagos State.

Mr. Segun Akintemi, CEO,Renaissance Credit Nigeria ,

explained that “our servicesare geared towards meetingthe financial needs of ourcustomers; whetherindividuals or smallbusinesses, with the view ofbuilding the nation’s economyand improving the standardof living of the Nigerianpeople.”

The company whichcommenced operations inOctober 2012 has recorded anumber of milestones and

continues to braze the trail inthe area of consumer financein Nigeria.

From pioneering loandisbursement in 24 hours inNigeria, to simplifying theprocess of accessingconsumer loans, RenaissanceCredit, remains resolute in itscommitment to providingbetter life to the middle classand low income earners inLagos.

Renaissance targets middle, lowincome class for loan disbursement

Shareholders of ResortSavings & Loans Plc

may have to wait a little longerto reap the return on theirinvestments in the bank as theManaging Director/CEO,Abimbola Olayinka, has saidthat the company will likelynot pay dividend in thenearest future.

Olayinka spoke at the bank’sFacts behind Figure’ on theNigerian Stock Exchange,NSE, while reacting tocomplaints by stockbrokersthat the company has not paiddividend since 2009 when itwas listed.

He noted that the decisionnot to pay dividend wasregulatory induced, sayingthat the Central Bank ofNigeria, CBN, would notapprove such payment unless

the bank had enough capitalaccumulation.

In his words, “It isregulatory induced because asa mortgage institution, youcannot pay dividend unlessyou build up adequatereserve. Moreover, theCentral Bank of Nigeria willnot give you the approvalbecause there is no capitalaccumulation.”

“Mortgage business is along-term business, not ashort term business; it takeslong period to build up. Butit is not all loss, becauseeffectively, there will becapital appreciation even ifthere is no dividend,” headded.

While speaking on theN3.39 billion hybrid offercurrently being undertaken bythe bank, the Resort Savingsboss explained that with thecompletion of the offer, the

bank would be positioned tooffer superior services to itscustomers.

He stated that the proceedsfrom the offer were majorly forthe purpose of creatingmortgage based assets andimproving attendant returnsto shareholders.

He said, “To run a mortgagebank, you need to have deeppocket; so, we believe thatwith the completion of theoffer, we will be wellpositioned to grow ourmortgage business andconsequently increasereturns.”

Offering furtherexplanation, the CEO, NSE,Mr. Oscar Onyema, said thatResort Savings & Loans fallsinto the category of growthcompanies, saying that,usually, growth companiesare required to plough backtheir profit into their

businesses, while dividendsare expected in future whensuch companies werestabilised.

He commended the bank forits compliance with corporategovernance structure andurged other companies toemulate the good examples ofResort Savings.

Onyema added that the NSEwas ready to support any listedcompany that aspires togreatness.

Highlights of the company’sfinancials showed an increasein the net profit position from aloss of N1.1 billion in 2011 to aprofit position of N3.5 billion in2012. Earnings before interestand tax, EBIT, grew from a lossof N1.1 billion to a profit ofN3.34 billion.

Shareholders fund also grewfrom N2.9 billion in 2011 toN6.2 billion. The bankcurrently has over N1 billiondisbursement from the FederalMortgage bank of Nigeria,FMBN, and is presentlyprocessing facility in excess ofN5 billion with the FMBN.

BY PETER EGWUATU

By NKIRUKA NNOROM

CMYK

Vanguard, MONDAY, AUGUST 12, 2013 — 25

Corporate Finance

May & Baker Nigeria Plcinterim first half year

report for the period endedJune 30, 2013 showed that itsprofit has surpassed the full-year profit projection for2012, raising prospects forbetter shareholders’ returns inthe current business year.

According to informationobtained from the NigerianStock Exchange (NSE), thecompany’s result showedimprovement in theunderlying profit-makingcapacity with increases in bothoperating profit and profitbefore tax margins.

While higher cost of salesdepressed gross profit marginfrom 42 per cent in first half2012 to about 33 per cent infirst half 2013, increasedinternal efficiency impactedpositively on the operatingprofit margin and pre-taxprofit margin, which rose from10.7 per cent and 1.65 percent in first half 2012 to 11.5per cent and 1.8 per centrespectively in 2013.

Turnover rose by 18 per centfrom N2.43 billion to N2.86billion. Operating profit grewby 27 per cent to N328.3million in first half 2013 asagainst N259.3 million incomparable period of 2012.Profit Before Tax (PBT) roseby 29 per cent from N40.4million to N52.1 million. Profitafter tax stood at N35.42million compared with N27.48million in correspondingperiod of 2012.

With improvement in thebottom-line, basic earningsper share increased by 29 percent from 2.80 kobo in first half2012 to 3.61 kobo in first half2013. Total assets also rose toN8.29 billion, 11.4 per centabove N7.44 billion recordedin comparable period of 2012.

Managing Director, May &Baker Nigeria, Mr. NnamdiOkafor, said the performanceof the company in the firsthalf showed resilience inspite of some current internalcircumstances adverselyimpacting on results.

He noted that whileoperating profit was N232.9million and profit before taxwas N44.5 million for the full-year ended December 31,2012, the first half results in2013 have surpassed the full-year results of 2012.

According to him, while thecompany still facesheadwinds from hugedepreciation due to its ultra-modern factory in Ota, OgunState and high financing

China,South Africaseek cooperationin capital market

Representatives from theChinese and South

African capital markets havemet to discuss ways of buildinglong-term relationship toencourage investment flowsand seek further businessopportunities.

“Today, we are here to furtherstrengthen our relationship. Ihope that this forum will leadto productive collaborationbetween the JSE and the SSE(Shanghai Stock Exchanges),”the Chairman of theJohannesburg Stock Exchange(JSE), Humphrey Borkum saidat the launch of the first SA-China Capital Market Forum.

“The Johannesburg StockExchange is honoured to hostan event that will lead to thefurther strengthening of tiesbetween our institutions andour countries,” Borkum said.

Last year, the JSE and theSSE signed a Memorandum ofUnderstanding, whichemphasised the importance ofthe relationship between thetwo exchanges.

BRIEFS

IN its determined effort to boost activities inthe Nigerian capital market and finance

generally and support the economy forsustainable growth, DHTL CapitalManagement Limited has concludedarrangement to train lawyers on how to packagevarious offerings to raise money for corporateentities.

The Managing Director/CEO, Mr.TundeAdeyemi said “ Since the Nigerian capitalmarket crash of 2009, we have not gottenenough adequate human capital development,especially from legal practitioners to tackleissues and packaging of offerings in raisingmoney from the the capital market. It is basedon this that the company has come up with theplan of having specialised school in financewhere participants will obtain a practical-mini-master certificate in four intensive weeks ofstudy.”

While explaining the need for the intensivetraining, he said, “There is need to improvehuman capital in the Nigerian capital marketand finance generally since the market hasrules and regulations that makes it functioneffectively. But most operators without financialbackground find it difficult to fine-tune deals.

So the summer school will provide suchopportunity and also teach participants on howdo business in Nigeria.

Adeyemi, disclosed that DHTL Capital will bebringing facilitators from outside the country withwide knowledge in finance.

Some of the facilitators include: Iris Mack, Phd,MBA. She earned a Harvard doctorate in AppliedMathematics and a London Business SchoolMAB. She is a former MIT Professor. Dr. Mackis also a Derivative Quant/Trader who has workedin financial institutions in the US., London andAsia.

Ana Lucia Lind is another facilitator; she isPresident/ceo, Swiss Financial Engineering AG.Lucia has more than ten years of experience inthe banking industry in the areas of InvestmentBanking Portfolio and Asset ManagementandPrivate Banking.Prior to founding SwissFinancial Engineering AG, she was partner ofZurich -based Swiss Capital Engineering AG(Scape) and held the role of an Executive Director.

The training has been scheduled to commencefrom August 19th to September 14th 2013. Someof the course outlines include: The Foundatinprerequisites and tools, Investment and SecuritiesManagement, Corporate and Developmentfinance.

costs, Management hasundertaken key initiatives tofurther expand sales andensure improved profitability.

May & Baker Nigeria Plc isconsidering raising additionalcapital to support its businessexpansion and steady thehealthcare company againstcompetition, the board of thecompany has said.

At the recent annual generalmeeting of the company,chairman, May & Baker

Nigeria Plc, Lt. GenTheophilus Danjuma (rtd),had said the company’s hugeinvestments in the factory atOta, the company’s vaccinemanufacturing joint venturewith the Federal Government,new products and otherinitiatives will provide a stablebase for the company’sgrowth in the years ahead.

He said the company hasrolled out a new five-yearstrategic plan that would seek

to harness all opportunities toincrease the group’s earningsand returns to shareholders.

He added that profit is alsoexpected to increase in 2013as the company continues tooptimise production and costefficiencies.

“Our company is well-positioned for the future witha lot of potentials from thestrategic investment we havemade in Ota and otherattractive business prospectsin our sight. As we vigorouslypursue our new five-yearstrategic plan with all theopportunities it presents, wecan only hope for betterperformance and strongerearnings capacity goingforward,” Danjuma said.

*From left; Director, Permanent Secretary Office, Federal Ministry of Health, Dr Ali Magashi;Corporate Communications and Public Affairs Manager, Nestlé Nigeria Plc, Dr Samuel Adenekan;and Permanent Secretary, FMOH, Mr Sani Bala, at the 2013 Breastfeeding Week celebration inAbuja.

May & Baker surpasses half yearforecasts, posts N40.4m PBT

BY PETER EGWUATU

DHTL Capital set to train lawyers oncapital market activities, finance

Guaranty Trust Bank(GTBank ) Plc has

upgraded its social bankingoffering on Facebook toaccommodate Instant GTBankAccount Opening. With thisupgrade, prospectivecustomers of the bank canopen accounts andimmediately get their accountnumbers while on Facebook,without having to visit anyGTBank branch.

Commenting on the newoffering which went liverecently, Managing Director/CEO of Guaranty Trust Bankplc; Mr. Segun Agbaje saidthe upgrade will make it moreconvenient for people tocommence bankingrelationships with the Bank.Mr. Agbaje explained that allpeople have to do while onFacebook is fill the accountopening form, upload theirpassport photograph andsignature mandate andimmediately get their accountnumber.

GTBank Social Banking is aunique offering pioneered bythe Bank earlier in the yearthat allows people openGTBank Accounts, makeAccount Balance Enquiries,perform Money Transfers andpurchase Airtime onFacebook.

GTBankupgradessocial bankingservice

26 —Vanguard, MONDAY, AUGUST 12, 2013

CMYK

ICT Micro-Finance

Findings haveshown that of the500 million micro

entrepreneurs’ world-wide, only two percenthave access to financialservices and only a fewcommunities enjoymicrofinance bankingoperations.

For a true transformationto be achieved,microfinance banking,whose contributionsshould be financial, non-financial and social, ispositioned to play a criticalrole in the transformationand empowerment of ruralcommunities especially ineconomic development ofthe society, ManagingPartner, Alegna GlobalPartnership Ltd. Ms.Angela Adegboye said.

In her paper titled: “TheRole of MicrofinanceBanking in RuralTransformation and

E m p o w e r m e n t , ”Adegboye explained thatmicrofinance banking is asystem of financialintermediation betweenmicro savers and microborrowers, providing aplatform for other financialservices such as moneytransfers and payments.

According to her,“despite the manysuccesses of microfinancebanking models, only anestimated two percent ofthe world’s roughly 500million smallentrepreneurs have accessto financial services andtoo few communities feelthe positive impact ofmicrofinance bankingoperations of thedevelopment of theircommunities.

“Rural dwellers appearsatisfied with meetingtheir immediate needsand many do not havevisions of great enterpriseor wealth. For this reason,they are able to surviveand even thrive on thelittle that they earn or reap

from the micro enterprisesthat they are involved in.

“The quality of life thatmany rural dwellers liveis much higher thanmany in the urban cities,”she said.

On his part, ManagingDirector, Asha Nigeria,Mr. Aminul Bhuiya,added that withmicrofinance, manyfinancially excludedpeople can be reach withsustainable financeserrvices.

Bhuiya attributedindividual client lending,solidarity group lendingand village banking, to bethe three methodologiesadapted and implentedworldwide for microfiancedelivery.

“They all have theiradvantages anddisadvantages. However,what is important is thatservices should bedelivered to clients in anefficient, convenient,affordable andsustainable manner,” hesaid.

BUA Sugarrefinery,

has unveiledplans to ensuree f f e c t i v eimplementationof FederalG o v e r n m e n tpolicy onb a c k w a r dintegration onsugar.

M a n a g i n gDirector, BUASugar RefineryLimited, Mr.Goddie Isiborsaid that it iscommitted to theP r e s i d e n t ’ stransformationagenda and to theM i n i s t e r ’ spassion and

2% of 500m world’s micro entrepreneurshave access to finance – Findings

BUA set to implement government policyon backward integration

allocated only 305,000metric tonnes of raw sugarto the company.

“This leaves a balanceof 85,000 metric tonnes forus to import for the rest ofthe year. Presently, we areoperating at 95 percentcapacity utilisation in thelast two months andproduction rate has beenat an average of 42,000metric tonnes per monthwhich translated to640,000 metric tonnes perannum,” he said,explaining that thismeans that sugarcompanies would

certainly run out of rawsugar and therefore shutdown the factory in the lastquarter of the year.

“When factoriesshutdown or reduceproduction, smuggledproducts take over,workers becomeredundant and evenfunding for backwardintegration is affected. Butwe know that this cannotbe the intention of themaster plan and wehumbly request that thisfirst allocation of sugarshould be 640,000 metrictonnes,” he added.

interest in self sufficiencyin sugar production, asenunciated in the NigeriaSugar Master Plan.

Speaking withJournalists in Lagos,Isibor pointed out that itwas as a result of thiscommitment that it signedthe backward integrationprogramme with theminister.

He revealed that thecompany has importedabout 220,000 metrictonnes of sugar fromJanuary to July this year,saying that the NationalSugar DevelopmentCouncil (NSDC) has

L-R: Minister of Industry, Trade and Investment, OlusegunAganga, Managing Director and Executive Director, BUA Sugar,Mr. Goddie Isibor and Mr. Silva Kuma, during the facility tour of BUA Sugar factory toward implementation of BackwardIntegration policy of Federal Government.

CONVERGENCE SMILES: L-R, Dr Eugene Juwah, Executive Vice Chairman NCCand Mr. Emeka Mba, Director General, NBC after sealing support deal with each otheras NBC visited NCC last week.

THE convergence between twoflagship government parastatals

– the Nigerian CommunicationsCommission, NCC and the NationalBroadcasting Commission NBC mayhappen after all.

This is as the leadership of the NBChas pledged support to the NCC inevery step it would take to hand moderntechnology to the Nigerian people.

Although the Obasanjo-ledgovernment in 2006 set up a committeeto look at the modalities for a convergedNigerian ICT sector with particularfocus to the coming together of the NBCand the NCC, the actualisation hasremained almost a mirage. Industryplayers have often ascribed thedifficulty to clash of interests and fight

to retain certain functions whichneither was ready to abdicate.

The inability of the merger to workout even when the CommunicationsTechnology ministry gave a hintAugust last year that the FederalExecutive Council had approved it,subjected operators particularly in thetelecom sector to getting operationallicense from NCC and also going backto NBC to get spectrum allocations.

Although the NCC regulates thecommunications industry while theNBC superintends the broadcast sectorof the country, the normal practiceacross the world since technologiesbegan to converge is that regulators ofsuch technologies also converge.Today with a single technology device,people can listen to radio programmes,watch television, stream videos and

CONVERGENCE AT LAST:NBC pledge support to NCC onindustry transformation

MTN launches Appdeveloper challengeMTN Nigeria last week flagged off a

competition for mobile applicationdevelopers. The competition, MTN App DeveloperChallenge, is focused on development of localcontent relevant to the Nigerian market.

Speaking at the launch of the initiative in Lagos,the Chief Marketing Officer of MTN Nigeria, LarryAnnetts, said that “the MTN App DeveloperChallenge is a demonstration of our commitment todeliver a bold new digital world to our variousstakeholders. This initiative represents a tangibleplatform to promote the growth and use of locallyrelevant content, which would help develop theNigerian ecosystem via partnerships that arebeneficial to the ecosystem at large.”

He said mobile applications have become anessential feature for most mobile users, adding thata growing number of Nigerians now rely on theirmobile phones as the preferred choice to stay intouch with developments in society. He said thishas made local Nigerian mobile content morerelevant and important than ever before.

According to the marketing chief, MTN, infulfilment of its brand promise and commitment toenriching the lives of Nigerians, had partnered withneXva, a multi-OS app ecosystem solutionsprovider, to launch a branded version of the AppStore called MTN NextApps Store, which housesup to 1330 Apps.

make calls, all at the samespot.

However, with the visitof the newly appointedDirector General of theNBC, Mr Emeka Mba tohis NCC counterpart Dr.Eugene Juwah, last week,a new wave of understandseems to springing up.

Mba and his teamadmitted that the NBC andthe NBC have alwaysbeen sister regulatorswhich roles are becomingmore intertwined becauseof development intechnology.

For him, “these days it’seither you broadcastthrough the internet orthrough the othertraditional channels thatwe were used to, but theimportance of theregulatory responsibilitiesof the two agencies makesit overriding for us toalways look for avenues ofcooperation so thatimportant issues can beresolved before taken tothe FrequencyManagement Council,FMC, which we bothbelong to”.

Stories byPROVIDENCE OBUH

By PRINCE OSUAGWU

Vanguard, MONDAY, AUGUST 12, 2013 — 27

CMYK

28 — Vanguard, MONDAY, AUGUST 12, 2013

Vanguard, MONDAY, AUGUST 12, 2013 — 29

30 — Vanguard, MONDAY, AUGUST 12, 2013

Homes & Housing Finance

BRIEFSUnion Homes’rampaging staffshut offices

OFFICES of Union Homes& Savings Plc in Lagos

were shut down by protestingmembers of staff over what theycalled indiscriminateretrenchment without paymentof benefits.

The rampaging workerscomplained of several cases ofill treatment by the bank’smanagement which include nopayment of entitlements andindiscriminate sack of over 300staff.

A union leader claimed thatthe company has been sackingpeople without paying them,stating that they are re-organising the bankinginstitution. He said the staffstrength which used to be about700, went lean with the sack of300, with another 100 staffadvised to resign.

Vanguard gathered frominside sources that a meetingheld between the managementof the mortgage bank andworkers’ representatives lastweek ended without anagreement but negotiations areto continue this week, after theholidays.

UK homerepossessionsfall in Q2The number of homes

repossessed fromstruggling owners in the UKfell in the second quarter ofthe year. The Council ofMortgage Lenders (CML)said there were 7,700properties repossessed inApril, May and June, a drop ofnearly 4 percent on theprevious quarter.

Homes are repossessed ifhouseholders fall well behindon mortgage payments andlenders see no prospect of thebill being paid. Repossessionfigures in the recent financialcrisis peaked in 2009 whenthere were 48,900 homesseized over the course of theyear. There are 11.3 millionmortgages outstanding in theUK.

The numbers have fallensince 2009 owing to the recordlow level of interest rates. TheBank of England has held thebank rate at 0.5 percent formore than four years, andlenders have been competingfor relatively few buyers byoffering low mortgage rates. Inaddition, lenders have beenunder pressure not to repossessproperties unless it isgenuinely a last resort. Theymust do a considerable amountto convince the courts that theyshould seize a borrower’shome.

Low-cost housing development

MORTGAGE institutionsand other domestic

development financialinstitutions (DFIs) in Nigeriaset up specifically for purposessuch as mortgage/housingfinance, trade finance, etc.,have under-performed.

According to the latest reportby Afrinvest, a firm involved ininvestment banking, securitiestrading, asset management andinvestment research with afocus on West Africa, theinstitutions have fallen short ofexpectations and are far fromfulfilling their mandates.

Due to this, the investmentfirm scored the Central Bankof Nigeria (CBN) a ‘weak pass’on its blue print promise toensure the financial sectorcontributes to the real sector of

the economy. “Rapidfinancialisation in Nigeria hasnot benefitted the real economy,as much as has beenanticipated,” the firm said.

In 2010, while advocatingsolutions that the CBN wasgoing to be pursuing to rightthe then ills of the Nigerianfinancial system, CBNGovernor, Sanusi Lamido, laidout a blueprint for reforming thesector built around four pillars,the reported noted. The pillarsinclude enhancing the qualityof banks, establishing financialstability, enabling healthyfinancial sector evolution andensuring that the financialsector contributes to the

economy. “The outcome of the banking

consolidation was expected todeliver advantages of scaleboosting growth in the realeconomy through the provisionof credit. With theimplementation of thepreceding three pillars, bankswere expected to begin toengage the real economythrough initiatives such asdevelopment finance, foreigndirect investment, venturecapital and public privatepartnerships,” the firm said.

Afrinvest however scored theCentral Bank 3 of 5, equivalentto ‘good performance’, on theimplementation of the first

pillar, enhancing the quality ofbanks.

“The programme wasexpected to consist of industryremedial programmes to fix thekey causes of the crisisincluding the implementationof the risk based supervision,reforms to regulations andregulatory framework,enhanced provisions forconsumer protection andinternal transformation of theCBN,” it stated.

The firm also awarded theCBN 4 of 5, equivalent to ‘verygood performance’ on itsimplementation on the secondpillar, ‘establishing financialstability’. Afrinvest said the keyfeature of the second pillarcentered on strengthening thefinancial stability committeewithin the Central Bank,establishment of a hybridmonetary policy and macro-prudential rules, developmentof directional economic policy,among other relatedresponsibilities.

“The 2009 stress test exposedhuge toxic assets on bank’sbalance sheet. Consequently,the creation of the AssetManagement Corporation ofNigeria (AMCON) was thefirst step towards easing theburden of over N3.0 trillion ofnon-performing loans. Inaddition, the hitherto universalbanking model of banking wasto be restructured intoInternational, national,regional mono-line andspecialised licences,” the firmsaid, and rated the regulatoryinstitution 4 of 5, indicating a‘very good performance’”.

new money to newhomebuyers. Together, theycurrently own or guarantee halfof all US mortgages and backnearly 90 percent of new ones.

Under the plan, thegovernment would only

step in to pay out mortgageguarantees after private capitalhas been exhausted and wouldensure that private capitalwould bear the substantialmajority of any losses. Built intothat system would be aguarantee that 30-yearmortgages would still beavailable. Officials said thatwould involve some type ofgovernment guarantee forlenders, though they did notdetail what that would entail.

The president’s plan to windthem down has bipartisansupport. It is largely in line withother efforts spearheaded byTennessee Republican SenatorBob Corker and Virginia

Obama’s plan calls for thephasing out of the FederalNational Mortgage Association(with the acronym FNMA orpopularly known as FannieMae) and the Federal HomeLoan Mortgage Corporation(known as Freddie Mac), twogovernment-backed housingagencies, which together havebackstopped the entireAmerican housing market forthe better part of the last half-century.

Fannie and Freddie collapsedin 2008 before being bailed outwith almost $200 billion intaxpayer funds. The twoagencies don’t make loansdirectly, but buy mortgagesfrom lenders, package them asbonds, guarantee them againstdefault and sell them toinvestors. Fannie Mae andFreddie Mac take existingmortgages off the balancesheets of banks, allowing thelatter to go out and loan out

U.S. President BarackObama has outlined his

plan to completely overhaul themortgage business by windingdown the government-backedFannie Mae and Freddie Macbodies and replacing them witha system in which the privatesector is responsible formortgage defaults. This iscoming almost five years aftertaxpayers bailed out themortgage giants.

In a speech in Phoenix,Arizona, one of the hardest hithousing markets during therecession, the US presidentsaid taxpayers should neveragain be left “holding the bag”for the mortgage giants’ badbets. “For too long, thesecompanies were allowed tomake big profits buyingmortgages, knowing that if theirbets went bad, taxpayers wouldbe left holding the bag. It washeads we win, tails you lose.And it was wrong,” he said.

Democrat Senator MarkWarner to achieve the samething, which Congress and theUS Senate have alreadyexpressed broad support for.

For the better part of his timein the White House, Obamahas faced calls to shake upFannie Mae and Freddie Mac,but the administration has heldback on taking action while thehousing market was weak. TheUS President’s call to winddown the government’s role inthe US mortgage financemarket won’t have animmediate impact on themortgage market and probablynot even one for years,mortgage experts say. Anyefforts to reform Freddie Macand Fannie Mae, whichcurrently fund two out of threenew housing mortgages in theUS, would likely take years,even if and after there’sconsensus on what to do.

‘Mortgage institutions, other DFIsin Nigeria under-performing’

By YINKA KOLAWOLE

Obama unveils plan to overhaul US mortgage systemObama unveils plan to overhaul US mortgage systemObama unveils plan to overhaul US mortgage systemObama unveils plan to overhaul US mortgage systemObama unveils plan to overhaul US mortgage system

BRIEFS

Vanguard, MONDAY, AUGUST 12, 2013 — 31

Insurance

Insurers across Africa seecoping with regulationsas their greatest risk, a

survey by PwC, has revealed.The survey stated that

series of new laws distractsChief Executive Officers(CEOs) from focusing onstrategic areas of theirbusiness, adding that inSouth Africa some executivesof key insurance companiesspent about 65 per cent oftheir time dealing withcompliance issues.

In its survey, PwC relayed12 responses from insurancepractitioners in South Africaand seven from the rest ofAfrica. The professionalservices company polled morethan 600 insurancepractitioners and industryobservers in 54 countries.

The survey looks at whatinsurers see as the top risksover the next two to threeyears.

Victor Muguto, long-terminsurance leader for PwCAfrica, said the challenge wasthat a wave of new regulationsemerged at the same time. Hesaid companies had indicatedthat the regulations werecostly to adhere to and alsotime-consuming.

Among the sophisticatedregulations that insurers haveto deal with are those aimedat treating customers fairly,scheduled for next year.Another is the solvencyassessment and managementrule requiring long-term andshort-term insurers to aligntheir capital requirementswith the underlying risk sothat they can pay out multipleclaims from policyholders.

The solvency assessment isscheduled for 2016. There isalso the National HealthInsurance initiative which isbeing piloted, the financialsector code, which came into

*From left; Eddie Efekoha, Managing Director/CEO; Obi Ralph Ekezie, Chairman; CompanySecretary representing Foundation Chambers and Tony Aletor, Non-Executive Director, all ofConsolidated Hallmark Insurance Plc during the 18th Annual General Meeting of the companyheld in Lagos.

African insurers see regulationsas greatest risks

Stories byROSEMARY ONUOHA

effect earlier in the year, anda raft of other regulations.

“It’s ironic that theindustry’s greatest risks areseen to come from regulation,which is intended to reducerisk, at a time when operatingand underwriting conditionsare also very hard. It is nosurprise that these pressuresare reflected in risingconcerns about the ability ofmanagement to handlethem,” Muguto said.

Tom Winterboer, thefinancial services leader ofPwC in Southern Africa andAfrica, said in South Africa

some executives of keyinsurance companies spentabout 65 per cent of their timedealing with complianceissues.

“I think the insurancecompanies fully subscribe tothe fact that there must beregulation, however, insurershave to align their systemswith new requirements, andthis usually comes at a cost.

Mr. Mark Claassen, anactuarial leader for PwC inSouthern Africa, said anotherchallenge was duplication inthe regulatory environment,which consumed a lot of

companies’ time. Then therewas regulatory uncertainty.Firms were investing insystems but were unable toknow whether a raft of newregulations would push themto change these systems.

There are also fears thatwith the pace of change andvolume of new rules some ofthe small insurers may beunable to cope with the costs.

Claassen said hundreds ofmillions of rand were beingspent by companies onaligning systems toregulations.

Consolidated Hallmark records impressivegrowth in GPIConsolidated Hallmark

Insurance Plc hasrecorded a Gross PremiumIncome, GPI, of N4.142billion for the financial yearended December 31st 2012.

The figure was in contrastwith N4.098 billion recordedduring the 2011 financialyear.

Chairman of the company,Mr. Obi Ralph Ekezie,presented the figures toshareholders at thecompany’s annual generalmeeting in Lagos, last week.

According to the Chairman,profit before tax grew by 278per cent to N560.5 million asagainst N148.2 millionrecorded in 2011.

Also a profit after tax ofN395.2 million was recordedwhich represented a growthof 158 per cent from the 2011

figure of N153.4 million.The chairman also revealed

that total assets of thecompany in the year underreview rose to N6.677 billionas against N6.077 billion in2011 while shareholders fundwas equally enhanced byseven per cent to N4.186billion in 2012 from N3.911billion in 2011.

Accordingly, shareholdersof the company will get adividend of N180 millionwhich translates to a dividendof three kobo per sharecompared to the two kobo paidout in 2011.

However, while reviewingactivities in the Nigerianinsurance industry during the2012 financial year, theChairman said that insurancepenetration remained quitelow and retail business which

the efforts of the industryregulator, the NationalInsurance Commission,NAICOM, sought to addressthrough the MarketDevelopment andRestructuring Initiative,MDRI, is yet to yield thedesired results.

He said that premium ratesremained low amidst cut-throat competition by industryplayers in their quest to growtheir market share.

“The year under reviewhowever witnessed a resolveon the part of NAICOM toinstill sanity into theoperations of insurersthrough enforcement of theInternational FinancialReporting Standard, IFRS, asapproved by the federalgovernment, and the drive tolower trade receivables

through the monitoring of theexisting credit policy on ‘nopremium no cover ’ of theInsurance Act with effect fromJanuary, 2013,” the Chairmansaid.

He however said that thecompany showed resiliencein spite of the enormouschallenges posed by thebusiness climate and was ableto maintain unbroken recordin profitability.

He said “We remaincommitted to our vision ofevolving into a leadingprovider of insurance andother financial services ofinternational standard.Towards this end, we shallcontinually ensurecompliance with the bestpractices in corporategovernance issues.”

NCRIBcommiserateswith NUJThe Nigerian Council

of Registered InsuranceBrokers has joined othernotable Nigerians andAssociations to commiseratewith the Nigerian Union ofJournalists over the demise ofthree journalists that wereinvolved in a fatal accidentalong Ibadan-Ilesha road lastweek.

The Council in a letter ofcommiseration signed by itsPresident, Barrister LaideOsijo and routed through theNigerian Association ofInsurance Correspondentslamented that the death of thejournalists had created agreat vacuum in news andinformation dissemination inNigeria.

According to Osijo, theunfortunate accident isanother call to the authoritiesto accelerate infrastructuraldevelopment in the country,especially in the area of roadsand safety management.

She said, “A time like thisalso underscores the need forindividuals and associationsto appreciate the endemicrisks that surrounds humanexistence and the need to putin place risk managementdevices, of which insuranceis cardinal, to mitigate lossesto lives or materials whenthey occur.”

Sovereign Trust InsurancePlc has thrown its weight

behind the preservation of theworks of the Late DanielOlorunfemi Fagunwapopularly referred to in theliterary world as D.O.Fagunwa.

In a statement, the companysaid that literary scholars bothhome and abroad will beconverging in Akure of OndoState from August 8-10, 2013,to celebrate the literary icon,50 years after his demise.

According to the statement,the 1986 Nobel laureatewinner for literature,Professor Wole Soyinka willbe on ground to give thekeynote address at the 3-dayconference.

Sovereign Trust InsurancePlc, as one of the sponsors ofthe conference in partnershipwith the Fagunwa studygroup, will be underwritingthe publication of theproceedings of the conferencein form of a book. The majorobjective of the conferenceamongst others is toregenerate the literary culturethat seems to be on the declinein recent times especiallywith the new generation.

STI throwsweight behindpreservation ofFagunwa’sworks

32 — Vanguard, MONDAY, AUGUST 12, 2013

Vanguard, MONDAY, AUGUST 12, 2013 — 33

People in Business

Mr. Akin SamuelMichael is theM a n a g i n g

Director/Chief ExecutiveOfficer of Abuja-based MyPCTechnologies, an IT solutionsfirm. A graduate ofComputer Science from theUniversity of Ibadan withcertifications in informationtechnology and otherMicrosoft certifications, AkinSamuel said he developedinterest in computer in hisfirst year at the universitybecause he enjoys solvingproblems and the computerhas different commands thatcan give one the same resultsand that was actually whatdrew him to the computer. Inthis chat with FinancialVanguard in Abuja, Samuelspeaks on the business andchallenges. Excerpts:

Motivation:"My father once asked me to

do something and I could notget it done. He asked me tolook for another way of doingit. I went back to look for asolution and failed again. Forthe third time, he asked meto go back and still look foranother way of doing it ifothers failed. Eventually, I gotit done the third time. Thatexperience made me fall inlove with the computerbecause it makes your jobeasier."

Establishing my company:After his youth service at the

Nigerian Security and CivilDefence Corps (NSDC)where he worked as a systemengineer and networkadministrator (in theirCommunications unit), hedecided to establish his ownoutfit to provide specialised/professional solutions tosocio-economic problems.

"There are a lot of problemsI will like to solve or be a partof the team that will solvethem. So I took upentrepreneurship ininformation technology anddecided to focus on my areaof specialisation which is website designing and softwaredevelopment.

"I discovered that a lot ofpeople are at the mercy of website designers. We do not havea lot of firms that specialisein web site designing inNigeria. All we have are ITfirms. They do a lot of thingsincluding web site designingbut they are not specialists soI decided to specialize in that.Most of the jobs I do are forpeople that have already builttheir web sites and they still

come to me. They may justwant to edit something on aweb page and they call theperson that designed it andhe is not responding becausethere is no money attached orprobably he is busy or out oftown. So I decided to solvethat problem by establishingMyPC Technologies to takecare of that," he said.

The company which wasregistered in 2011 has about20 professional programmersand designers that can handleclients’ jobs. They build websites for governments, NGOs,private businesses,musicians, events likeweddings, hotel managementsoftware, customer caresoftware, marketing software,office management softwareetc.

"We have a customer careunit and a front desk thathandles all complaints," hesaid.

Thereafter, Samuel cameup with a project to assist thegovernment to solveproblems. He said; "One of thevisions of my company is tosolve socio-economicproblems using the power ofinformation and I know thepower of information isstronger online so it is in linewith what I do – web sitedesigning and softwaredevelopment. I then came upwith some projects likeCorpertion.com, Face ofCorpertion, CorpertionAwards Nite, Corpertion JobFair and Corpertionmaqgazine.

"Corpertion.com is a web sitefor past and present corpsmembers. The purpose is tofurther help the NYSCachieve its objectives. Thetruth is that the only thing thatunites us in this country is noteven football but the NYSCscheme because regardless ofwhether you have HND orBSc., no matter your tribe,religion or course of study,you can go for NYSC. Alsoyou are posted to any part ofthe country and that hashelped to unite us and sothere is need for corpers tokeep in touch after the serviceyear. Since inception inJanuary 2013, we have hadover 1.6 million visitors to theweb site. We have about 1,500registered members."

Samuel said the Face ofCorpertion is a beautypageant which brings thewinners of Miss NYSC andMacho Man at the camp fromall the 36 camps nationwideto a grand finale. CorpertionAwards Nite was instituted toreward corpers and NYSCofficials who have excelled

during the service year. Inoticed that nobody givesawards to corpers. Awardsmajorly given in Nigeriatoday are being bought. Letus give awards to peoplebased on the services theyhave rendered and sacrificesthey have made. I heard of acorper that raised millions ofnaira to facilitate a hospital inher place of primaryassignment. Another oneraised millions of naira for a

skilled workers. If forinstance you need aplumber, you may not haveany plumber’s contact so youask friends. There is nodatabase for skilled workersin Nigeria who constituteover 60% of the labour forceand most are illiterate. Wewant to create a database forall skilled workers liketailors, plumbers, ironbenders; mechanics etc. Ouragents will go round and

him then I can contact him.So even if I am in London, Ican help my grandma to gether plumbing job done. Wealso plan to further trainthese artisans, introducecomputers to them and helpthem advertise their skillsand products. We want tomake skilled work look moreprofessional and appealingto graduates. This will createmore entrepreneurs andreduce unemployment. Itwill give room for people tolearn skilled work and notsee them as jobs forilliterates. If I readmechanical engineering,there is nothing wrong if Iwork as a mechanic but mostmechanics we have aredrop-outs yet, we have a lotof mechanical engineersbeing graduated every year.We want to let them knowthat skilled work is notmeant for illiterates only."

Challenges:On the challenges, Samuel

mentioned access to funds,right people to work with,balancing work and life, lackof mentors and support fromgovernment and people.

"What we have in Nigeria isnot unemployment butunemployable people. Youemploy people to work withyou knowing that you are justa starter, and all they thinkabout is the month end. Theydon’t think about the servicethey render. They are notcreative, not innovative, notready to add value. And whenthey work in an environmentwhere they are given a roleto play that their impact hasto be felt, they tend to chickenout. They love civil service jobwhere they will have free timeto watch movies on theirlaptops.

"As an entrepreneur, youhave a lot of overhead andneed to raise money, get thejob done well, satisfy yourclients, manage the staff andrun the office efficiently. Atthe same time you have afamily and other socialresponsibilities so there isneed for balance.

"I did not get mentors ontime so I made a lot offinancial managementmistakes. I got mymentorship from books andmy pastor. I advise people toread books," he said. Heregretted that smallbusinesses do not usuallyget support from governmentor individuals until theyhave made it big.

My dream:"I believe that by 2020, I

should be able to consult forthe federal and stategovernments, internationalbodies and companies onproviding socio-economicsolutions."

Our problem is not unemployment butunemployable people – Akin Samuel

By EBELE ORAKPO

water project in a localgovernment area. So weneed to recognise thesecorpers. "We will also beorganising job fairs for them.It should not be a doctor in alawyer’s chamber which iswhat we have today. Thenthere is Oga-worker.comwhich is meant to bridge thegap between illiteracy andthe thirst for professional

register them, fill their forms,put them on the web site sothe general public can accessall the information. If I amin Abuja for instance andneed a plumber, all, I needto do is go to the web site,click on Abuja, then onCentral Area and plumber. Iwill click on a plumber to seehis contact, experience andpeople’s comments about

,

,Normally, every entrepreneur willtalk about funds and right people

to work with. What we have inNigeria is not unemployment but

unemployable people

•Mr. Akin Samuel Michael... People don’t support you untilyou make it.

34 — Vanguard, MONDAY, AUGUST 12, 2013

,

,

“Insanity has beendescribed as doing the samething over again andexpecting a different result.”

Nigerians have beentreated to a theatre of theabsurd in which those closeto the oil scene and thosewho should be the primesuspects for the incessanttheft of crude are the samepeople complaining about itand passing the buck amongthemselves. Jonathan’sgovernment is obviouslypowerless to stop the grandlarceny or is unwilling to doso. Meanwhile, we face realfiscal catastrophe this yearand next year if the theft isnot checked. Who are theculprits? Take your choicefrom the list below.

“Oil workers………“Security agents……“NNPC officials…..“Top govt officials….“Militants…….

As Nigeria lurchesdangerously towardsanother debt trap;

and as it will becomeincreasingly difficult for theFederal and Stategovernments to meet theirfinancial obligations to a widerange of stakeholders, themost important item on the

national agenda is to find outwho are those stealingNigerian crude oil. Next tothat is to also find out who arethe buyers of the stolen crude.But, let me pose a question toall Nigerians.

Supposing the members ofa household engage securitypeople to guard theirresidence and pay themextremely well. Yet, thievesbreak into the householdevery night and steal theirmost precious properties,what would the owners of thehousehold do? Retain thesecurity staff or sack them? Ifthe answer that comes to yourmind is “sack them”, then whydo we continue to retain thesecurity people, the oilworkers, the NNPC and topgovernment officials, as wellas the militants who havecollected fantastic salaries andhuge contracts to protect ouroil installations and are notdoing it?

Ask anyone who had evergone far into Nigeria’sterritorial waters and you willbe amazed how extremelydifficult, if not impossible forany maritime vessel to enter

our coastal waters to do anybusiness. Last week, I talkedto a former owner of a trawlerabout my experience aboardanother trawler whose ownerhad asked me to go out to seawith his crew to find out fromfirst hand experience what thesecurity forces, pirates andmilitants do to fishing boats.I went and to my uttersurprise, the former owner,now in his late 70s told me hisown experience when hewent out in his boat with themen. There was no way of

escaping from the Navy, theMarine Police, the militantsand the pirates who board theboats and shake down the

staff or get killed. To the bestof my knowledge, no singletrawler escapes the vigilantmafia consisting of officialsand criminals on Nigerianwaters.

The question is: if peopleengaging in lawful businesscannot sail into Nigerianwaters undetected, how is itpossible on a daily basis forcriminals to so without beingapprehended? The answer isobvious, our security people,like the guards in the fictitioushouse above are the thieves.

The story had been told aboutthe man in rural Russia whocould predict when a goatwould be stolen – until people

discovered that he was thethief. The Ministers ofPetroleum and Finance, aswell as the President havetold us that 400,000 barrelsper day is being stolen withthe calm assurance thatanother 400,000 barrels willdisappear tomorrow and nextweek. They stay in Abujamostly, but they have staff inthe oil producing areas. Thequestions that arise are: howdo they know it is 400,000 aday? Whose oil is stolen andfrom which location and yetthe owners have not been ableto put a security blanket overthe areas involved? Again, letus return to the analogy of thehousehold. Is it possible thatthe home owner will continueto suffer the breaking andentry into his premises everynight without taking measuresto put a stop to it and to findout who is behind therelentless attack on hisproperty? That is what theFederal Government will wantus to believe.

A top official of theDirectorate of PetroleumResources, DPR, last weekannounced withoutembarrassment that “there isnothing” that can be doneabout it.

Who Steals Nigerian Crude Oil?

A government whichconcedes one third to onequarter of its revenue tothieves might as well handthem the keys to thetreasury

BRIEFS

Vanguard, MONDAY, AUGUST 12, 2013 — 35

Agric

The FAO Food Price Indexaveraged 205.9 points in July

2013, 4 points (nearly 2 percent) belowits revised value for June and 7 points(or 3.3 percent) lower than in July 2012.The decline in July, which marked thethird consecutive monthly drop, waslargely driven by lower internationalprices for grains, soy and palm oil whilesugar, meat and dairy quotations werealso down from the previous month.

The FAO Cereal Price Index averaged227.7 points in July, down 8.8 points(3.7 percent) from June and as much as33 points (or nearly 13 percent) belowJuly last year. The sharp decline mostlyreflected falling maize prices asfavourable weather boosted hopes of asignificant production increase inseveral leading maize producingcountries. Wheat prices also fell but thestrong pace of exports limited thedecline. Rice price changes variedaccording to origins, with a decrease inThai prices contrasting with higherVietnamese quotations.

FIIRO's new board chairman, Dr. Alex Obi displaying cassava bread to affirm its commitment to the development of the productand cassava value chain.

AU Commission to boost agriculturalproductivity through research

BY SALIMAT GARBA

The African UnionCommission (AUC)says it will ensure

increase in agriculturalproductivity in the continentthrough strong supportfor research anddevelopment.

Mrs Rhoda Tumusiime, theCommissioner for RuralEconomy and Agriculture atthe commission, stated this atthe just concluded 6th AfricaAgricultural Science Week(AASW) in Accra.

According to her, one of themeasures the commission istaking to enhanceproductivity in the area ofresearch is to renew itsMemorandum ofUnderstanding with theForum for AgriculturalResearch in Africa (FARA).

She explained that FARA isan umbrella that bringstogether major stakeholdersin agricultural research anddevelopment in the continent.

The commissioner disclosedthat AUC was also part of theComprehensive AfricaAgriculture DevelopmentProgramme (CAADP).

“The CAADP is an African-led initiative that was adoptedby Africa in 2003 to increasefood security, reduce poverty,promote economic growthand create wealth througha g r i c u l t u r a l - l e ddevelopment.

“ By 2015, the CAADP

project aims to achievedynamic agricultural marketswithin regions in Africa andestablish a good market forfarmers in both local andinternational market.

“It will also create a moreequitable distribution ofwealth for rural populationsand see Africa as a strategicplayer in agricultural science

and technology,” she said. Tumusiime noted that the

AUC was working with theAfrican AgriculturalTechnology Foundation, topromote the CAADP agendaand public-privatepartnership.

She stressed that scienceand technology are tools toincrease agricultural

productivity in the continent,adding that science inagriculture demanded a lot ofattention.

She observed that Africa haduntapped potentials thatcould enable it to be foodsufficient, but that there wereso many challenges facing theagricultural sector.

The NuclearAgriculture Research

Centre (NARC), Accra, saidit had developed organicmanure from recycling ofhuman excreta, waste fromslaughtering houses andmarket waste in order toreduce fertiliser importationinto the country.

Dr Godwin Amenope, theManager of the centre,made this known during thevisit of some of theparticipants of the ongoing6th Africa AgricultureScience Week (AASW) to thecentre .

According to him,products from the projectwhich started about threeyears ago has reached 2000farmers.

Amenope noted that theproject was establishedwith the aim of reducingf e r t i l i s e r i m p o r t a t i o nand improving farm yieldthrough locally producedfertiliser.

“This manure is verycheap and accessible to ruralfarmers compared to theones being imported; it willalso boost the economy ofGhana because it willgenerate a lot of incomeonce it is mass produced. ‘’

NARC has the mandate todevelop organic fertilisersfrom both solid and liquidorganic waste and toconduct microbiological andanalytical tests on soil andorganic waste samples.

“We also develop humanresources capacity in organicwaste recycling andmanagement as well asassess the effect of organicfertiliser on crop yield,quality, soil characterisationand carbon sequestration.

The manager, however,expressed regret thatfunding was a majorchallenge facing theinstitute.

“We will love to extend ourtentacles and produce morethan what we are producingat the moment but we do nothave access to adequatefunding.

“We have partnered witha number of organisations,one of them is theInternational WaterManagement Institute,which is working on aproject called Developmentof Fort-fert from excreta,market waste and sawdust,”Amenope said.

Institute todevelopfertilizerfrom humanwaste

FAO Food Price Indexfalls for the thirdconsecutive month

36 — Vanguard, MONDAY, AUGUST 12, 2013

Interview

We heard so much aboutwhat you were able to

achieve as the Vice-Chancellorof the University of Nigeria, myalma mater...

Are you a Lion? Wonderful.

So, what has it been like,transforming from an

academic and universityadministrator to a federal cabinetminister? Can you describe theatmosphere in the two worlds?

Of course, initially it appearedto be very daunting, simplybecause they are two differentterrains. The ivory tower has itsown norms and idiosyncrasies.But the world of politics is totallydifferent. The language isdifferent. The aspirations aredifferent, and the people aretotally different. To come in fromthe academia to the cabinet, Iwouldn’t say it is a cup of tea. Thegood thing is that the academiaprepares people for the positionof leadership and that is thecritical role that I have to play inthe Power sector. The leadershiptraining that I got starting fromwhen I was a lecturer, became aprofessor, became a dean,became a deputy vice-chancellorand then vice-chancellor twotimes over. Really, it prepared mefor the role of a federal levelcabinet minister.

It has been okay, even thoughone had to learn how to talk as apolitician, and when you havefacts to give, you have to givethem in a politically correctmanner so that you will not offendpeople you are not supposed tooffend.

So, one can say that the chairhas turned the other way.

As an academic, you were fondof blaming people ingovernment and now you will beblamed?

That is correct. That’s very true.

People have complained thatsince you took over as

Minister of Power, the powersupply situation has worsened.Do you think that is correct?

That is a total misconception.One thing you need to know isthat every year between Marchand May, we have the lowestwater level in our rivers due tothe weather situation and thatreduces power delivery from the

privatise the Power sector,especially with regard togeneration and distribution. Itwas such a bold step that manypeople had thought that wasimpossible and that was not

going to work. So far, by the grace ofGod, it is working and it is quiteconceivable that it will do Nigeria alot of good compared with whengovernment provided, transmitted anddistributed power. The enormous

Nigeria will soon be liberated Nigeria will soon be liberated Nigeria will soon be liberated Nigeria will soon be liberated Nigeria will soon be liberated Since he replaced

Professor Barth Nnajias Minister of Power, Professor Chinedu Nebo has

struggled to reassure Nigerians that the steady march tostable electricity in the country will not be truncated. As ahigh performing university administrator, having risento the top of the ladder in the academia, Professor Neboaffirms he is equal to the task. In this interview, he paintsan inspiring picture of a seamless transfer of the powerbusiness to the private sector within the next one month.Here are the excerpts of the very exciting interview:

By OCHEREOME NNANNA

is not available, they will bequite uncomfortable. But withmore power generation, I amanticipating from the end ofthis year, and from thenupwards, I believe that that willbe taken care of.

Are you saying that byMarch and April next

year, the chances of breakingthe vicious cycle are very high?

The chances will be higherthan what we have seenbefore.

One of the major activitiesof the Ministry in recent

times was the unbundling andsale of companies out of thePower Holding Company ofNigeria (PHCN). How do youdescribe the process and whatshould Nigerians expect at theend of it?

The government took a verybold, courageous step to

hydros. There are a lot ofsystem collapses. At that timewhen the rains come andvegetation follows, there area lot of disruption oftransmission activities, andthat affects the amount ofpower distributed. If there isany slippage, there will beinterruptions in powerinterfaces. There were manychallenges and they arebeing surmounted. You cansee that there already is animprovement in powersupply. It is really picking upnow and many cities in thecountry can testify that powersupply is actually picking up.There are many testimonies.The most recent was in Awka.People have been jubilatingthat for a couple of weeksnow, Awka of all places, hasexperienced uninterruptedpower supply. Kaduna is alsoexperiencing that. Theminimum in Abuja is about18 hours a day. Some placesin Abuja are getting 22 hoursa day. We are passingthrough a cycle that is causedby natural phenomena, andwe are coming close to theend of that cycle. Powersupply improvement isactually happeningnationally.

That cycle you referredto is a vicious one. It

happens every year. March,April and May are about thehottest months of the year.When people need light thatis when it is at the lowest.When are we going to breakthat vicious cycle?

Actually, it will soonhappen. It is something thatis not far-fetched. It is aquestion of planning anddoing the right thing. Ibelieve that very soon, thatwill be a thing of the past.With more power generationcoming on and thestrengthening of ourtransmission interface, therewill be a lot more dependablepower supply to thecitizenry. The reason whypeople are so uptight at suchperiods is because a lot ofpeople need airconditioning. When they goto their offices and theycannot get it because power

•Professor Nebo... I believe that there should be a massive enlightenment campaign, and themedia can help. In one DISCO alone, all the vandals could steal was worth N10,000. Meanwhile,they knocked one million people out of electricity supply, and it took N27 million to rectify what theyvandalised for the sake of a N10,000 component

,

,

I must be very frank with you. Theunion leaders have been quite good,even though they are hard nuts tocrack. They bargain as hard-nosedbusinessmen. They want every “i”

dotted and every “t” crossed. At thispoint, they want to get as much as

possible for the people they represent. Iwould not say I have experienced any

bad situation with them except that theyare asking for too much and it goes

beyond constitutional provisions

Vanguard, MONDAY, AUGUST 12, 2013 — 37

Interview

amounts of capital needed to beinjected into power generation,distribution and transmission is sohuge that the government cannot do italone. And when it is left in the handsof the government, and you add thefactors of the system whereby not allthe money that is voted to solve aproblem goes into solving thatproblem, when you consider all this,you will know that the private sector ismuch better at providing theseservices. Government has no businessdoing business. Government's businessis to create an enabling environmentfor businesses to thrive. It is thesebusinesses that will thrive that willcreate jobs for the people, multiply thenumber of wealthy people, increase themiddle class and make everybody elsehappier. So, the government took theright decision to privatise the Powersector. Right now, it is going very well.Just a couple of days ago, theremaining generating company(GENCO) at Afam and distributingcompany (DISCO) in Kaduna havebeen privatised. All the 10 GENCOSand five DISCOS are now in the handsof private companies. They havealready paid and will soon take over.They are waiting for the completion ofthe engagement with the Labourunions then they will complete theirpayments and assume power.Everything is on course and we believeit is the best thing for Nigeria.

So, what is the situation betweengovernment and workers’

unions with regard to terminationbenefits?

As at yesterday (August 1st 2013),payments started hitting their accounts.Government wants this process to beseamless. We are doing everythingpossible to carry everybody along. It isnot always easy to get 100 per centagreement on everything. We arepaying the GENCOs first. At the endof that, we will begin to pay theDISCOs. Part of the reason is the sheernumber of people and the amountinvolved. Nobody can do that in onefell swoop. If you do that on anyeconomy in Africa, it will createproblems. It is better to do it on agradual basis. They are completing thefinal assignment of auditing the peoplewho were biometrically captured, andall of them have confirmed that theywere credited with the correct amountdue them.

When do we expect the processto end and the new owners of

the privatised companies to take over?I believe that by September, many of

them should be taking over.

Can you describe the most tryingmoment you have experienced

on the Labour issue?I must be very frank with you. The

union leaders have been quite good,even though they are hard nuts tocrack. They bargain as hard-nosedbusinessmen. They want every “i”dotted and every “t” crossed. At this

point, they want to get as muchas possible for the people theyrepresent. I would not say Ihave experienced any badsituation with them except thatthey are asking for too muchand it goes beyondconstitutional provisions. Wedon’t want to create precedentsthat will become a burden onthe system. The unions aredoing very well thoughsometimes we see them writea few things in the newspapersaccusing us of one thing or theother. It is worrisome becauseif you are the leader of a sectorand people are complainingabout one thing or the other,naturally, it will affect you.Sometimes we are at daggers-drawn; sometimes we aresmiling and shaking hands. Ithas generally been okay.

You participated in theMinisterial Platform.

What will you tell Nigerians isthe achievement of PresidentGoodluck Jonathan'sadministration in the Powersector since he took over?

Rural electrification projectswere moribund. Some previousgovernments even wanted toscrap them. It was PresidentJonathan that revived the RuralElectrification Agency in 2012and provided funding so thatrural dwellers that constitutethe larger population of thecountry will get electricity. Thatis one significant achievement.Remember also that all theseNational Independent PowerProjects (NIPP) that all of us areacclaiming, were virtually deadupon the arrival of PresidentJonathan. They were all stalled.Nothing was going on.Unfortunately, the Yar’ Aduagovernment did not want tocontinue with it. Eventually,President Jonathan stepped itup. We are really survivingwith regard to electricity supplybecause he revived the NIPPprojects, a multi-billion dollarproject altogether. This is theactual basis that we have ofguaranteeing steady supply ofpower to Nigerians. Now, takethe hydros aspect, it is the samePresident Jonathan whodecided to go forward with it,and not dreaming and seeingvisions. He proceeded toactualise them. Zungeru hasbeen on the drawing board for30 years. It was PresidentJonathan that said, let’s get onwith it, found funding for it andflagged it off on 28th of May2013. Mambilla has been on thedrawing board for 40 years, itwas President Jonathan whosaid, let’s get it going.Mambilla will give Nigeria3,050 megawatts. Zungeru will

give us 700 megawatts. Thetransmission system wasoutdated and aging. ThePresident injected a substantialamount of money and we arerecovering what we had lost.The same thing goes for thedistribution that is now beingprivatised. A lot of money hasbeen spent to stabilise the grid,and he is doing this all overthe country. Remember thatbefore President Jonathancame on board, powerdistribution in Nigeria was inthe region of 2,000 megawatts.Now, we are hitting over 4,000megawatts, doubling capacityin only a few years. He hasdone so well in the Powersector and we must shake hishands.

People are wondering,with these foreign

investors coming to take overgeneration and distribution,what are the guarantees thepoor and the rural dwellerswill be able to pay for theirservices? How do youguarantee they do not priceelectricity out of their reach?

That is the reason we have theNigerian Electricity RegulatoryCommission (NERC). It issupposed to protect the

You were with thePresident in his recent

economic mission to China.What do we expect fromChina?

Mr President undertook astate visit to China, invited bythe Chinese Government. Someof us ministers accompaniedhim because of our varioussectors involved in the bilateralagreements the two countriesentered into. With regard topower, that visit to China wasvery liberating. Number one,Power China Corporation iscoming into Nigeria to help uswith gas-fired power plants togenerate 20,000 megawatts.That is one quantum leapwhen it happens - and it willhappen. When they start, it islikely to be completed withintwo to three years. It issomething Mr President andall of us are very happy about.All the talk about Vision 20-2020 will be just a mirageunless we have electricity todrive the industrial andmanufacturing sectors andmove the Nigerian economy tothe next level. And one way todo it is to engage in this kindof scheme. Power China is alsoplanning to help raiseresources to build 10,000kilometers of super grid. Wealso entered into agreementwith companies that arecoming, at the President’sinstance, to start the coal-to-power power plant. They wantto build a 1,200 megawatt

plants, they go with theirfinanciers and lawyers becausethe legal framework has to betaken care of, otherwise therewill be no power plants. Thatwill probably be the thing thatwill delay it, but funding isbeing worked out so there willbe no lapses. I will say, in thenext few years, Nigeria will bemuch better off than where it istoday. I don’t want to give youany time frame because “actsof God” do occur, but I don’tsee that happening to set usback too much. But I will assurethat there will be more thandoubling of what we have todaybefore the end of next year.

You complained bitterlyabout the activities of

vandals during the MinisterialPlatform, but is it not the workof government to secure itsown infrastructure?

There is no doubt that it is thework of government. But it isthe collective responsibility ofall of us. Even today, I havebeen accosted by communitieswho are complaining that theydon’t have light. Whathappened to their light? Youthsvandalised the distributionnetwork. They went to thetransformers, disfigured thetransformers and dismemberedthe transformers in order tocollect some components theycould sell as scrap, thusplunging the people intodarkness. This happenedduring the oil subsidydemonstrations. One of thesub-stations in Ogun State wasburnt. Now, they arecomplaining that they have nopower. Gas pipelines are beingvandalised. If you vandalisegas pipeline, there will be nogas for the generation stationsto produce power. The same ifyou vandalise transmissionlines and sub-stations.

I believe that there should bea massive enlightenmentcampaign, and the media canhelp. In one DISCO alone, allthe vandals could steal wasworth about N10,000.Meanwhile, they knocked onemillion people out of electricitysupply, and it took N27 millionto rectify what they vandalisedfor the sake of a N10,000component. Government isdoing what it can, but the wholepopulace should be mobilisedto ensure that miscreantsshould not be going the waythey are going. When there isno electricity, there will be nocompanies, no industries andno jobs. Sometime ago, therewas a power outage aroundOshodi during a football matchand some people went andvandalised a power station. Formonths, they were unable towatch other football matches,let alone enjoy light in theirhomes and offices.

We must sensitise people toknow that vandalisation ofpublic amenities for any reasonis not in the interest ofanybody.

from darkness from darkness from darkness from darkness from darkness

consumer as well as regulatethe entire electricity industry.They are not going to allowexcessive profiteering by thegenerating and distributioncompanies. I believe that it willnot happen. And rememberthat there is R1and R2 for thevery low income people. Whatthey are charged is so little thatit is not up to 30 per cent ofwhat they will spend if they areusing generators. I don’ thinkthat is something to worryabout. Remember that some ofthese foreign companies havetheir Nigerian counterparts.Most of them are actuallyowned by Nigerians with aninjection of foreign directinvestment. It is all well foreverybody.

plant. Then we have the ChinaMachinery EngineeringCompany ready to contributeas much as 20 to 25 per centequity in transmission andprovide funding to help usdevelop our transmission lines.There are many othercompanies that are coming tohelp us in our Power sector. Itwas a very successful outing.

Given the picture you havepainted, when do we

expect all these things tobecome reality?

These things are very capital-intensive. And one of the thingsthat delays starting of powerplants is usually the funding.Whenever you see peopletalking about starting power

,

,

With regard to power, that visit toChina was very liberating. Number

one, Power China Corporation iscoming into Nigeria to help us withgas-fired power plants to generate

20,000 megawatts. That is onequantum leap when it happens -

and it will happen. When they start,it is likely to be completed within two

to three years

— Prof Nebo, Power Minister

38 — Vanguard, MONDAY, AUGUST 12, 2013

Advertising, Media& Marketing

Vanguard, MONDAY, AUGUST 12, 2013 — 39

Stories by PRINCEWILLEKWUJURU

WITH Gross DomesticP r o d u c t ,( G D P )

estimated at $262billion in2012, Nigeria is the largesteconomy in Sub-SaharanAfrica. Yet, economists say it isfar from its potential even withits huge population estimatedat 162.5 million people.Economist had further said thatbarriers to the optimal growthand development of theeconomy is its hugeinfrastructure deficiency whichmakes it a harsh operatingenvironment for businesses.

The harsh operatingenvironment which is withconsequencies on businesses,especially small and mediumscale enterprise, explains theslow pace of its developmentand its high unemploymentrate especially among younggraduates who are supposed tomake positive contributions tothe economy. This, however ,has caused stakeholders tocontinually ponder on ways ofemployment generation fromtime to time.

One of the areas that havesomewhat been overlooked inthis regard is the outsourcingprofession and proponents hadinsisted that Nigeria shouldactually become the hub ofoutsourcing in Africa. Toachieve the benefits thatabound in the sector, there isneed for a partnership betweengovernment, private sector andthe outsourcing sector. Chinaand India are examples ofeconomies that have takenoutsourcing seriously and arereaping the benefits.

Still in its infancy though, theoutsourcing sector in Nigeriais showing promises. This wasaffirmed by the quality ofspokespersons and attendeesfrom multinational corporationsthat attended the 2013Outsourcing Expo jointlyorganised by the ResourceIntermediaries Limited (RIL)and the Association ofOutsourcing Practitioners ofNigeria (AOPN) in Lagos.

The expo turned out to be aharvest ground for ideas onhow to grow the industry.Speakers at the event SeniAdetu, Managing Director,

Chief Executive Officer,Guinness Nigeria, and SojiOyawoye, Managing Director,Resource IntermediariesLimited, among othersdiscussed a wide range ofissues that will engendergrowth of a globallycompetitive outsourcing sectorin Nigeria. This was in line withthe objective of the expo to makethe outsourcing sector in thecountry achieve its potentialand perhaps by extensioncontribute to the efforts toreduce the high rate ofunemployment in the countryby a significant level.

However, for the sector togrow, develop and contributeto the GDP of the country likeits counterparts in China andIndia, there is need for a strongcollaborative effort betweengovernment and the industryleaders in the private sector. The role of government in thisinitiative, some participantscontended, is to provide anenabling environment withnecessary incentives that willmotivate both local and foreignentrepreneurs to invest in thesector.

At the expo, Oyawoye, whois one of the

conveners, disclosed thatprofessional outsourcing isnew in Nigeria. According tohim, companies have beencontracting and calling it

outsourcing for over 30 years.He expressed concern overwhat he called ‘contracting’ inthe name of outsourcing andurged those who aremisconstruing the two to havea rethink as the two aremutually exclusive. Hedescribed it as bad signal forthe young industry, whileadding that in developedcountries, the outsourcingprofession drives the economy.

In his keynote address titled‘Outsourcing and the need forthe Outsourcing Professional’,Seni Adetu, ManagingDirector/CEO, GuinnessNigeria, identified the benefitsof outsourcing to business,urging outsourcing serviceproviders to be professionaland develop proper businessstrategy because the industryneeds a systemic approach. Hehowever noted that theincreasingly competitivenature of the businessenvironment has madeoutsourcing an imperative forcompanies like GuinnessNigeria, while also stressingthat outsourcing has come tostay because of the need tokeep pricing down.

Adetu differentiatedoutsourcing from contracting,saying that the core reason foroutsourcing is to build‘organisational efficiencies andto grow shareholders value’.

Outsourcing: Govt, private sectorpartnership & unemployment

* Mr. Yinka Adepoju, Director-General, Oyo State Signageand Advertising Agency (OYSAA) (right), receiving theDistinguished Excellence Award as Best OOH Media Regulatorin Nigeria organised by Phillip Omnicom in collaboration withInternational Brand Association and HSBS Group recently inLagos.

The headline of this write-up is not a mistake.We all know that nurses take care of patients(not usually customers). Well, what’s the

difference? Are patients not customers to hospitals?Before we get back to this, let’s consider a few pointsabout the health sector in general.

The health sector is one of the very few industries(apart from public utilities) where service providersassume they are superior to customers (that is, patientsand their relations/friends). It seems the society hadwillingly accepted this thinking until lately. The reasonis not far-fetched. It is not very easy to become amedical doctor, a pharmacist or even a nurse. It takesa lot of investment of time, money and effort to becomeone of those. And once you are fortunate enough tobecome one, you automatically become something of asuper-human. After all, even the most powerful peopleon earth still need the attention of doctors and nurses.In fact, presidents could be placed under a very strictregimen by their doctors, with the able assistance ofthe ubiquitous nurses in immaculate white attire. So,once you’re a patient, the balance of power is tippedin favour of doctors and nurses. Well, that’s the waysome people in the medical profession think andbehave.

But that kind of thinking is antiquated. Savvy medicalpeople know that “the patient is king” and they doeverything possible to make her happy. In fact, mostdoctors that I have met are very nice and kind people.The challenge they seem to have is that the nursesthat work with them tend to be a little grumpy anduncaring. Maybe, many nurses are so used to deathand suffering that one more corpse or suffering soulreally makes little or no difference. So they cannot bebothered.

Difficult NursesA doctor I spoke to told me that he was always having

difficulties with nurses because of their attitude towardpatients. Apart from a few top-class hospitals, nursesgenerally believe they have a divine licence to talkrudely to patients, shout at them or even mock them.Someone once shared a tale of how a nurse slapped apregnant woman in labour pains in one of the publichospitals. In addition, the cheeky nurse posed arhetoric question at the poor lady: “Did anybody forceyou to be pregnant?” I guess you must have heard ofsimilar situations.

In the Surulere area of Lagos, there is a certainprivate hospital that has earned a nasty reputation forrebuffing relations who wish to see a patient. In fact,a particular customer was visibly fuming in anger whenthe nurses would not allow him to see his wife whohad been in labour all through the night. One of thepeople who were rebuffed put it down to the quality ofnurses. “The doctor is very good,” he said. “It’s justthat he keeps employing unqualified nurses.” Onething I can tell you for sure is that the hospital is notthe favourite of people around the area. To most people,it is a place to visit only as a last resort – in anemergency!

To the public, nurses that don’t live up to theirexpectations are simply unqualified. Although poorcustomer service is more pronounced in publichospitals, the problem is also noticeable in privatehospitals. If the truth be told, a lot of the nurses simplyhave no business working in hospitals. They lacksympathy. They lack a sense of urgency. Sometimes,they are negligent.

Humanitarian BusinessWhy are we devoting so much time and space to what

nurses do? The reason is simple. Hospitals renderhumanitarian service to sick people. They thereforeneed to be humane in their dealings with their patientsand their relations – both of whom constitute theircustomers. But then, hospitals are also businesses andshould be run the way businesses are run.

We must acknowledge that hospitals, by their nature,require that their customers conform to certain rules.The best hospitals give those rules a human face andcommunicate them in such an agreeable manner thatcustomers themselves begin to see the benefits of suchrules.

Nurses and Customers

MR. Andy Watts, Master Distiller ofBane’s Whisky, Africa’s first single

grain whisky has said that part of the brand'ssuccess secrets that won it recent globalrecognition is commitment to qualityproduction and blend of local raw materials.

Watts, whose brand recently occupied theglobal center-stage as the world’s best grainWhisky during the World Whisky Awardsceremony held in London recently, disclosedin a statement that the maturation processadopted by his distillery in brewing thewhisky was a unique process.

He said the whisky is made to undergo a

double maturation process, whereby the spiritis placed in oak barrels and matured for aminimum of three years, after which the drinkis revatted for additional two years before it isbottled for consumption.

According to him, whiskies do not age whilethey are in the bottle. Rather, maturation isachieved years before bottling, stressing that“absolute skill and passion goes into eachbottle of Bain’s Cape Mountain Whisky,utilizing only the finest grain and doublematuration process to produce a lightlyflavoured, refined spirit that can be discoveredin each and every sip”

Quality responsible for Bane’s Whisky recognition—Watts

Email:lesleba@lesleba.com, lesleba@gmail.comBlog page:www.lesleba.com/blog2Website: www.lesleba.comTel:0805 220 1997

40— Vanguard, MONDAY, AUGUST 12, 2013

Omoh Gabriel - Group Business EditorBabajide Komolafe - Finance EditorClara Nwachukwu - Energy EditorPeter Egwuatu - Head, Capital MarketYinka Kolawole - Snr Bus. CorrespondentFavour Nnabugwu - Insurance CorrespondentGodwin Oritse - Maritime CorrespondentGodfrey Bivbere - Maritime CorrespondentMichael Eboh - Capital Market ReporterFranklin Alli - Industry/Agric. ReporterEbele Orakpo - Energy ReporterIfeyinwa Obi - Maritime Reporter

CONTRIBUTORSPrincewill Ekwujuru - Media/MarketingNaomi Uzor - IndustryProvidence Obuh - Micro FinanceLAYOUT - Graphics Department

Business & Economy

O U R T E A MA strong rally in the price

of U.S. crude in Julycoupled with a generalimprovement in the Americaneconomy has encouragedinvestors to return to energyexchange traded products(ETPs) after several months ofoutflows.

Some $142 million wasinvested in energy ETPs inJuly, according to data fromBlackRock, the world’s biggestasset manager. This followsoutflows of $90 million in June,$48 million in May, $89 millionin April and $423 million inMarch. By contrast, some $2.6billion was withdrawn fromgold ETPs in July whileindustrial metals ETPs lost$157 million. ETPs, whosevalue is linked to moves in their

underlying assets, are an easyroute into commodities forinvestors and allow assetmanagers to make swift tacticalswitches.

“Generally investors havebeen cautious on commoditiesdue to the poor performancebut energy has bucked theoverall trend and done quitewell,” said Russ Koesterich,chief investment strategist atBlackRock. He said energy hadheld up better than industrialmetals because these tend to bemore influenced by Chinesedemand, and China’s economyhas been slowing. “But energyis still very driven by the U.S.economy and while it is notgrowing at gangbuster rates,we are seeing a gradualimprovement.”

On the supply side, he citedthe unexpectedly largedrawdowns in U.S. crude oilinventories at delivery hubCushing, Oklahoma in July, withstrong demand from U.S.refineries.

This kickstarted a rally in U.S.crude oil futures that saw pricesrise by almost $9 a barrel in themonth, to end July at more than$105 a barrel. The S&P GSCIEnergy index was also up 7.1percent in July. “There has alsobeen a lot of production comingoffline in the Middle East andAfrica, in Nigeria and Libya, anda significant reduction in Iranianexports, so there has been moreof a bid in the energy complexthan other parts of the commoditysector,” Koesterich said.

Oil price rally lures investors back to energy ETPs in July

In a recent interactive section withthe House of Representatives

Committee on Banking and Currency,the Governor of the Central Bank,Lamido Sanusi, noted that if the planto redesign naira notes last year wassuccessful, “it would have made itimpossible for counterfeiters to cook”. He further noted that best practicecurrency management is that “Withina period of 5 – 8 years, you redesignthe currency, after which counterfeiterstend to catch up with you”.

The question, which we may needto ask, however, is whethercounterfeiting or redesign is the mostserious problem with our currency,particularly when Sanusi, himself,admits that “In terms of what we seeas counterfeit in the processing ofnaira notes, the percentage, is verylow”! Indeed, the claim that it is alsobest practice to redesign currencyevery 5 - 7 years may not be supportedby the longevity of currencies such asthe pound sterling and US dollar.

In reality, the issues of unwieldyportability, the acrimony associatedwith shortage of change for smalltransactions, the inflationary pushassociated with product pricing, therapid deterioration of both paper andpolymer notes because of their highturnover rate and ultimately thereduction in the purchasing value ofthe naira as a result of double-digitannual inflation rate, are all equallysignificant challenges to the nairaprofile.

Consequently, it will be self-delusion to think that a mere redesignof the naira would counter orremediate these weaknesses.

In this event, some analysts havesuggested that redenomination/decimalization would make the nairamore portable, and also provide roomfor primary kobo coins, which wouldfill the gap for change in smalltransactions, and which will also makemore competitive pricing of consumerproducts more practical.

Instructively, redenomination is thesimple process of changing thenominal value of a currency by movingthe decimal point; for example, if thenaira is restructured by two decimalpoints, then, N1000, which is the

highest in our current currencyprofile, will be replaced by a N10denomination. Similarly, existingN100 note will become N1;consequently, the new N1denomination can then be fabricatedas a coin, and still have the samepurchasing value as the old N100note. In the same manner, N50would similarly be a 50Kobo coin,while the current N10 will become10Kobo coin.

In this manner, a newredenominated currency profile,would not only accommodate thedesired quality of portability, it wouldalso increase the purchasing power ofcoin denominations and make themattractive for transactions and forprovision of change.

Furthermore, consumer products canbecome more competitively priced insteps of plus or minus 1Kobo, ratherthan the unusually wide leap of N5 ormore, because of scarcity of primarycoins.

The advantages of redenominationmay however, be short-lived, if theabiding economic instigators ofinflation are not adequately tackled. For example, the Ghanaian currency,the Cedi, was redenominated withfour decimal points, about five yearsago, so that C10,000, became just onenew Ghana cedi and consequently,became equal to almost US$1.2;however, since the root causes ofGhana’s average annual inflation rateof about 15% remained unresolved,inevitably, the cedi has depreciated byover 50% within five years toGhc1.8=US$1.

From the above discussion, it willbe clear that neither redesigning norredenomination of a currencycompletely satisfies the qualities ofportability, store of value andacceptability, as a medium ofexchange.

Conversely, I have consistentlyargued that the issue of value is themajor problem with naira profile; forexample, a much stronger naira value,just like redenomination, would makeprimary kobo coins more valuable. However, if the root causes of double-digit annual inflation rate remainunresolved, the purchasing power ofthe redenominated naira would alsobe rapidly eroded.

Some analysts have argued thatthe naira value cannot be enhanced

government borrowing back its ownfunds at between 13 and 14%,according to CBN Governor, whilecost of funds to the real sector remainsdisenabling at over 20%, with inflationstill largely untamed.

Instructively, the creation orsubstitution of humongous naira sumsas replacement for monthly allocationsof dollar-derived revenue results in aconscious manipulation of the balanceof demand and supply, in favour ofthe dollar.

For this reason, the naira hasparadoxically depreciated, as ourdollar reserves climbed from less than$4bn in 1996 to consistently over $50bnin recent years. Thus, an appropriaterealignment of the naira/dollarexchange rate will be, to issue dollarcertificates for allocations of dollar-derived revenue, rather thanrecklessly create naira replacement. The evolving market supply imbalanceof more dollars chasing naira willprovide a platform for a stronger naira/dollar exchange rate in favour of thenaira.

In reality, there is no sensibleexplanation why the naira shouldexchange for N80=$1 between 1996and 1998 with only four months importsdemand cover, while the nairacurrently exchanges for N160=$1 inspite of over 12 months importsdemand cover. A much strongernaira will ultimately also make primaryKobo coins more valuable andtherefore more desirable fortransactions.

In conclusion, therefore, anappropriate naira/dollar pricemechanism will evolve a currencyprofile that will become a stable storeof value, which is also portable enoughto be readily accepted as a medium ofexchange. Neither currencyredesign nor redenomination canenduringly accommodate these valuesand remain steadfast against inflation.

SAVE THE NAIRA, SAVE

NIGERIANS!!

NairNairNairNairNaira:a:a:a:a: redesign, redenomination redesign, redenomination redesign, redenomination redesign, redenomination redesign, redenominationor revaluation?or revaluation?or revaluation?or revaluation?or revaluation?

,The advantages ofredenominationmay however, beshort-lived, if theabiding economicinstigators ofinflation are notadequatelytackled

or improved unless we diversify oureconomy and produce more to earnadditional export revenue; on theother hand, a diversified economy cannever evolve without liberal access tocheap funds at rates not exceeding 5- 6%, while the exchange rate mustbecome stronger, so that criticalimported industrial raw material costswill also become cheaper.

Regrettably, such benign enablingclimate will never be possible, so longas Nigeria’s economy remainsbesieged by the unyielding threat ofexcess liquidity, which ultimatelypredicates the crazy reality of

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