Impending Flood: Insurance gets zero consideration

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JUNE 18 , 2012

Continues on page 18

Despite warnings of severe rainfall being anticipatedthis year from the Nigeria

Meteorological Agency, NIMET,residents of flood prone areas haverefused to embrace insurance as aform of risk prevention mechanismin readiness for the expectedflooding, Vanguard investigationhas revealed.

Even when some stategovernments like Lagos, Ogun andRivers have employed series ofmeasures to help curtail the impactof the anticipated flood, insuranceoperators are worried that there isno concrete plan to involve theinsurance sector in the scheme ofthings by these state governments.

This is in sharp contrast to what isobtainable in other countries whereflooding has caused severedevastation. In Australia for

•Would-be victims perfect plans to abandon homes when disaster strikes

•Property worth billions estimated to be destroyedinstance, the government has drafteda proposal to make flood covermandatory in all homes and contentspolicies aside from the huge capitalthat it has committed intoenvironmental safety.

In Nigeria, the scenario isworrisome. In Port-Harcourt, Mr.Austin Okereke, an electronicsdealer in Mgboba in Choba townsaid that after the flood that ravagedthe city, almost all the goods in hisshop were destroyed and mostpeople dwelling and doing businessaround that vicinity packed out. Onwhether he has any insurance plan,Okereke said that he is not lookingat insurance for now. He said thathe is trying to prevent more damageby clearing the drainage and raisingthe platform in front of his shop.

Also, Ayo Daniel, a wine dealer inPort-Harcourt said that most of hisgoods were damaged after the flood.Although Rivers State Governmentstarted work on the dredging of

channels and canals, Daniel saidthat the government stoppedhalfway without completing thework. He said that with theunfinished work, the floods willdefinitely be back. Daniel however,said that he does not believe ininsurance because he fears thatinsurance may not readily pay hisclaims when the need arises. Thepreventive method against theimpending flood for him is to addmore blocks to the pavement in frontof his shop. Another option,according to him, is for the stategovernment to create properdrainage system.

In Ibadan, after last year's floods,a relief camp was opened for thevictims, located at Oke Ayo. Atpresent, the camp is deserted afterdistribution of relief materials wasstopped. Governor Abiola Ajimobi-led administration said it isconcentrating on opening drainagesand dredging of rivers and streams

across Ibadan metropolis and otherparts of the states.

Mr. Ekene Akorisa, who resides inAjeromi /Ifelodun Local GovernmentArea of Lagos State, is a victim oflast year's flooding in Lagos thatdestroyed lives and property worthbillions of naira. Akorisa, whoclaimed that all his property wasdestroyed, including his motorcycle,is still trying to find his feet one yearafter the flood disaster. Although theLagos State government is makingefforts to curtail such massivedisaster this year, Akorisa said sincehe got no compensation for the lossof last year, gathering his life backhas not been an easy task. Asked ifhe has any plans for insurance,Akorisa said that he has no plansbut wants the government to protectthe lives and property of its citizens.

For Daniel Oyebanjo who lives atWilmer in Olodi- Apapa area of

By ROSEMARY ONUOHA

Insurance gets zero consideration

CURRENCY BUYING CENTRAL SELLING

CBN Exchange rate as at 15/06/2012

97.30 +0.13

83.65 -0.26

152.05 +1.00

2,244.00 -19.00

20.60 +0.63

CFA 0.2753 0.2853 0.2953

KRONER 26.1377 26.2221 26.3065

EURO 194.3375 194.9648 195.5921

POUNDS 240.6372 241.414 242.1907

RIYAL 41.3012 41.4345 41.5678

SDR 234.0229 234.7783 235.5337

FRANC 161.7586 162.2807 162.8028

DOLLAR 154.9 155.4 155.9

WAUA 233.1885 233.9412 234.6939

YEN 1.9501 1.9564 1.9627

YUAN 24.3185 24.3975 24.4764The President and Chairman of Council of the Nigerian Institute of Management on Thursday paid a Visit to the Group Headquartersof odu'a Investment Company Ibadan.from left Chief Makole Asugbeme, Nat. Treasurer NIM, Mr Adebayo Jimoh GMD Oodu'aInvestment Company, Dr Olawale Cole President and Dr Uno Uwaja Deputy President during the visit of NIM mangement to theHeritage Mall under consruction by Oodua Investment recently. Pix by Dare Fasube

I M P E N D I N G F L O O D :

18 — Vanguard, MONDAY, JUNE 18, 2012

Cover Story

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YOUTH RESTIVENESS AND UNEMPLOYMENTIN NIGERIA: THE WAY OUT- PART 4

WHAT GOVERNMENT CAN DO TO ACHIEVE THIS

Turning the dead assets most Nigerian home owners aresitting on into immediate capital which can quickly trickledown to create thousands of skilled and unskilled jobs like,carpenters, painters, plumbers, roofers, bricklayers, carpetinstallers etc. create or revamp their mortgage industry andcreate a secondary market to trade mortgage securities. Thismeans the homes are assets that can be converted to cash orcapital. If the government can help most Nigerian homeowners to access the capital locked in their homes, theNigeria government can create several trillion Naira incapital instantly. This new capital can filter through theeconomy and be recycled several times while creatingbetween 500,000 to over 1 million jobs.

According to a report in 234next.com, Ismail Ridwan, asenior economist with the World Bank, said, “The amount

of credit needed to takeNigeria into the top 20economies by the year 2020would have to be generatedinternally.”

JOB CREATIONSTRATEGIES

• The U.S.needs 25 million barrels ofoil daily, and pumps about 8million of those barrelsdomestically. The U.S. oiland gas industry providesemployment directly orindirectly to 9.6 millionAmericans. By proportion, since Nigeria pumps 2.8 millionbarrels of oil daily, we should have 2.8 million Nigeriansemployed in our oil and gas industry. The question is howmany Nigerians are employed in our oil and gas industry,and how can we increase the number?

• Sometime ago, President Jonathan spokeabout the deforestation of Nigeria’s forests. Our solution tothis problem can help develop our gas industry and createthousands of jobs in the process. Nigeria currently exportsmost of the gas we generate, and the rest that are not exportedis burned off. Nigeria burns $2 billion worth of gas yearly.That is enough to build 2,000 mega watts of power that canlight up two million homes. Multiply that by ten or twentyyears, and we have lost an opportunity to build 40,000

It is the duty andresponsibility of thegovernment anddifferent policymakers to providesuch anenvironment andconditions whichare conducive forthe youthentrepreneurialactivities. Differentpolicy initiativesencourage andmotivate youngpeople to come upwith new ideas andstart their ownyouth enterprises

Lagos State, the flooddestroyed most of hisproperty and getting back onhis feet has not been easy aswell.

Mrs. Mulika Owolabi whostays in Lekki area said thatthe rain was terrible as itkilled so many people andrendered some homeless.She said that at that time,she had to take her fourchildren to her husband’sbrother's flat in VictoriaIsland because her housewas flooded and most of herproperty destroyed.

Many of the flood victimsare still very aggrieved.Since most of them had noinsurance cover, gettingback on their feet has notbeen easy. And as it is now,not even the victims or thegovernment has consideredinsurance as a means ofmilitating against suchnatural disasters in future.

Accordingly, i t isestimated that propertyworth over N100 billionmay may be destroyed whenthe floods eventually come.Managing Director ofLinkage Assurance Plc, Mr.Gus Wiggle said that thewarning from NIMETnotwithstanding, the publicis waiting on government tocarry all risk that willemanate from theanticipated flooding whilenot making any effort of theirown to safeguard theirproperty against peril.

He said: “You know ourattitude towards insurancein Nigeria, we are notproactive enough inwarding off disastersbecause we don’t have theinsurance culture.”

Operators’ reactionWorried by this trend of

events, operators in theNigerian insurance sectorhave called on residents offlood-prone areas toembrace insurance in orderto guard against areoccurrence of the massiveloss of property asexperienced in 2011.

Most victims of last year'sflood disasters which wasmassive in Ibadan and

Lagos are yet to recover fromthe loss as majority of themhad no insurance to cushionthe effect. It will be recalledthat the Lagos Stategovernment last month saidresidents of the state shouldprepare for at least 236 daysof heavy rainfall in 2012,being the total period of rainpredicted by experts. Thestate government added thatthe intensity of the rainfallwould be like that of 2011,recording 1,279mm of waterswith marginal error of 50mm.

Lagos State Commissionerfor Environment, TunjiBello, said the predictionwas arrived at using theSeasonal RainfallPredictions instrument,which was coordinated byNIMET.

Bello said: “The naturalphenomena that controlled2011 rainfall are still in forceand as such, it has beenpredicted that rainfall willcommence from Thursday,March 22, with a margin oferror of four days. It has alsobeen predicted that the endof the season for 2012 isNovember 12 with a marginof error of two days; withbetween November 10 and14 as probable days. Thetotal length of rainy seasonfor the year is approximatelyput at 236 days out of the 365days in 2012 with a marginof error of two days. Like lastyear, Lagos will experienceheavy rainfall with seriousintensity.”

According to Bello, thegovernment had designedprogrammes to manage theexpected rain water andminimise flooding. He saidthe massive clearing ofdrainages, dredging ofprimary and secondarychannels, lining of manyearth channels and theintroduction of residentdrainage maintenanceofficers in local councils inthe state, were part of effortsby the government to copewith the rains. His words:“But little can be achievedwithout the collaboration ofLagosians. No nation canpromise a flood-free state,only reduce it to barest

minimum. We appeal thatLagosians should desistfrom indiscriminatedumping of refuse, drainsaround homes must beevacuated and building ofstructures on drainagealignments must stop.”Since it appears that thegovernment is onlyapplying one antidote to acause that requires an arrayof medications, theChartered InsuranceInstitute of Nigeria, hassaid that there should bethe inclusion of insurance asone of the needs for fightingflood hazards in the country.

President of the CIIN, Mr.Wole Adetimehin, whilecommending the Lagos StateGovernment for thepreparations being made tofight the menace of flood inthe state, said that theseenvironmental hazards areof great concern to insurersas they constitute threats tothe insured and potentialinsureds.

Investigations byVanguard to find out whypeople are refusing to takeup insurance as a riskbearing mechanism againstflood revealed that mostpeople are still skepticalabout insurance payingclaims when the need arises.Although poverty is anothermajor contributor to whymany people are shyingaway from insurance, thefew that can afford insuranceare not convinced thatoperators now pay claims.

Defying this argument,Chairman of NigerianInsurers Association, NIA,Mr. Olusola Ladipo-Ajayi,said that such perceptiondoes not hold water anymorebecause insurers now payclaims.

Ladipo-Ajayi said that theservice which the insuranceindustry renders to theeconomy and Nigerians inrecent times is not just aboutmaking money for insurersbut also preventing losses inthe economy and the countryat large.

Continues from page 17

IMPENDING FLOOD: Insurance gets zero consideration

MTN Goodwill Automania Car Prize Presentation to the Winners Pix L- R Mr InnocentOboh - MTN Chief Bola Akingbade Chief Marketing Officer MTN , Mr. Peter Igho DirectorGeneral , National Lottery Regulation Commission , Mrs Steph Nora Okere, Nollywood Star,and Mr Kola Oyeyemi GM. Consumer Marketing- MTN Photo By Diran Oshe

Vanguard, MONDAY, JUNE 18, 2012 — 19

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BRIEF

On March 12, 2012, this column warned on harder times ahead. The Minis-ter of Finance and Coordinating Minister of the economy, Dr Ngozi Okonjo-Iweala, has come out to say that the road ahead will be rough for the nationgoing by happenings in the international market place. Below is what thiscolumn said after the 2012 budget was passed.

REVISED 2012-2014 REVENUE/EXPENDITURE FRAMEWORK:

Tough and harder times ahead

The Federal Govern

ment’s revised mediumterm revenue and ex-

penditure strategy before theNational Assembly does notappear to have any hope forthe ordinary Nigerian. Ratherit is a routine of the usual. Em-phasis in the document is stillvery much on high recurrentexpenditure. Little is left forinvestment in projects that cangrow the economy and createjobs. A nation that is being rav-aged by poverty needs a crea-tive budgeting that will en-courage massive investmentby both the public and privatesectors of the economy.

This is the known way out ofpoverty trap.

The medium term financialstrategy envisaged that totalexpenditure for 2012 will beN4.648 trillion out of whichcapital expenditure will takeN1.284 trillion while non debtrecurrent will take N2.432 tril-lion. Total recurrent remainedhigh at N3.716 trillion. This isthe amount the Federal Gov-ernment will spend on itself,employees and pay interest onloans it took from banks andother lenders.Personnel cost alone stands atN1.658 trillion with overheadcost taking as much asN242.85 billion. Funnyenough, with all the uproarthat greeted the cost of gov-ernance early in the year, gov-ernment has only been able tocut overhead cost provisionsby about N46 billion from theN288.05 of 2011. Going by theprovisions of the revised me-dium term financial strategydocument before the NationalAssembly, in 2013, the govern-ment’s total expenditure out-lay stands at N4.828 trillion;recurrent as usual takes thelarger chunk of N3.879 trillionwith N2.494 trillion as nondebt recurrent spending.

Of this, N1.680trillion goesinto personnel cost for pay-ment of salaries, wages andallowances of federal civilservants while N242.85 billionis provided for overhead cost.Capital budget in 2013 isN1.384 trillion.

This is the amount that willbe spent on long term projectssuch as road construction, re-habilitation etc. It is this com-ponent of the budget that cangrow the economy. It is smallcompared to the amount ear-marked for recurrent. As it isin the past, not all of this cap-ital provisions will be utilized.Experience has shown overthe years at best 60 per centwill be implemented. This willmean that there is little scopein the 2012-2014 provisionsfor growth not to talk of devel-opment. In 2014, a year beforethe next general election in thecountry, N4.925 trillion is pro-vided for as the total budgetexpenditure. Recurrent willtake N4.06 trillion, non debtN2.521 trillion, Capital spend-ing N1.546 trillion.

Looking at these provisions,it is going to be tough for the

ordinary Nigerian. Many whoare at the moment above thepoverty line are likely to dropinto poverty between 2012 and2014. As at last count, over 112million Nigerians out of a pop-ulation of 160 million are saidto be under the poverty line,living on about N200 a day.The import of these statisticsis to bring to the fore the factthat a significant portion ofNigeria’s populace is poor andgovernment spending patternis not being directed to ad-dress poverty.

The question then is, whatdo we do with this data? Howdo we achieve the Millenni-um Development Goals of2015 given this statistical re-ality and expenditure pattern?It shows that there is a lot of

work for the government to doto uplift a huge portion of thepopulace out of poverty. Butwith this kind of budgeting,the government is not settingthe pace for job creation andhuman empowerment. If gov-ernment continues to spend70 per cent of the nation’searning on less than 1 percent of the population, it hasless than nothing left for de-velopment that would lift thecountry out of poverty trap.

Given the burgeoningnumber of people classified as“poor”, as revealed by the sta-tistics from NBS, one hadthought that the relevant gov-ernment agencies responsiblefor planning for economic de-velopment will roll up theirsleeves and treat economicempowerment with a higher

sense of urgency and tact.What is the President doingwith a cloud of ministers, po-litical appointees, and otherhangers on in the corridor ofpower that continues to drainthe nation’s purse? What aboutthe National Assembly, whynot trim their budget furtherto release funds for develop-ment?

The major area of concern forall patriots is that the Nigeri-an government is spendingtoo much on overhead insteadof on capital. This policy,which encourages borrowingto finance overhead, will leadto inflation and a heavy debtburden in the next ten totwenty years. Nigeria hasmoved from a deficit of N54.49billion in 2008 to a deficit ofN80.36 billion in 2009 andN1.79 trillion 2010. TheOverhead of the National As-sembly was 21 per cent in2008; 26 per cent in 2009 and25 per cent in 2010. Asoverhead increases, theexecutive spending puts pres-sure on inflation. As a coun-try, Nigerian cannot keepspending and spending onoverhead and recurrent. It isnot good for Nigeria; morecapital spending is needed.

To make matters worse forNigerians, the entire budgetprocess is based on the wishthat oil prices remain high to

generate the projected in-come streams. But all of usknow that if wishes werehorses, beggars would ride. Ijust wonder how manyNigerians this kind ofbudgeting will turn intobeggars by 2015.

Ngozi Okonjo Iweala

IMF raisesEthiopia2012/2013growthforecast

Ethiopia’s economy isexpected to maintain a

growth rate of 7 percent in2012/2013, the InternationalMonetary Fund said, raisingits earlier forecast of 5.5percent owing to slowinginflation. The Washington-based body’s growthprojection is below officialestimates of 11.4 percent. Avisiting IMF team said tightmonetary and fiscal policieshave contributed to declininginflation, through thetermination of central bankfinancing of the budget andsignificant sales of foreignexchange. The Horn of Africacountry’s annual inflation ratefell for the third straight monthin May to 25.5 percent from29.8 percent in the previousmonth, according to officialdata. “For 2011/12, themission projects real GDPgrowth at 7 percent and end-year inflation at about 22percent,” said a statementsent to Reuters. A similargrowth rate and single digitsinflation are achievable in2012/13 if implementation oftight monetary and fiscalpolicies is maintained.” Thebody warned Ethiopia lastyear that excessive monetarygrowth was the principalcause of its rising inflation,while private bank lendingrestrictions and a trickierbusiness environment wouldslow economic growth. Backthen, the IMF addedEthiopia’s budget saw adomestic financial surplus, butthat there was a significantrecourse to central bankfinancing as the Treasury billmarket collapsed, reflectinghigh negative interest rates.

The major area of concern for allpatriots is that the Nigerian govern-ment is spending too much onoverhead instead of on capital. Thispolicy, which encourages borrowingto finance overhead, will lead toinflation and a heavy debt burdenin the next ten to twenty years.


Business & Economy

BRIEFS

BY PROVIDENCE OBUH

Many of thep r o p o s e dimprovements for

the power sector will nothappen except we are able toimprove the financial viabilityof the sector, says Dr. SamAmadi Chairman of theNigerian ElectricityRegulatory Commission(NERC).

Speaking at the NigerianEconomic Summit Group’(NESG) Policy Dialogue withthe private sector, with theme:’Appropriate Pricing and theFuture of Nigeria’s ElectricitySupply Industry,” Amadipointed out that until thesector is financially viable, itwill not attract the kind ofcapital required to improveand sustain the sector, statingthat a good tariff structureshould optimize revenue toensure financial viability.

According to him, “one ofthe acute challenges of reformof electricity in Nigeria isfinancial viability of thesector.”

Speaking on tariff, he saidthat NERC has designed thetariff that every electricitydistribution company willcharge its customers in amanner that maximizesrevenue and social equity.

He recalled that theNational Electric Power Policy2001 clearly identifies rightpricing as key to reform of theelectricity sector, noting thatit provides that the tariffs inthe industry should reflect theactual cost of producing,transmitting and distributingelectricity.

FG hinges power sector reformon financial viability

He added that the ESPR Act2005 requires NERC to set atariff that allows an efficientoperator to recover prudentcosts. “Setting a cost-reflective tariff regime is notdiscretional. Unlike in manyjurisdictions where regulatorsare not bound to make tariffcost-reflective, in Nigeria aneffective regulator mustensure that the tariff structure

allows recovery of cost ofproducing, transmitting anddistributing electricity.”

His words, “A lifeline tariffhas been provided for poorconsumers who consume notmore than 50mwh per month,they will pay a flat anduniversal N4/mwh. They willnot pay fixed charges.

“This class of consumers arebenefiting from a subsidy of

N50 billion provided by thegovernment. Residentialconsumers who use a singleor three-phase meter alsoreceive a bit of subsidy toavoid huge rate shock.

“Medium and smallenterprises under commercial1 are also subsidized bygovernment and cross-subsidized by the biggercommercial and industrialconsumers. The big caveat isthat both the subsidy andcross-subsidy do not distortthe market and do notundermine the revenuerequirement of the industry.”

In addition, he noted thatthe Multi-Year Tariff Order(MYTO-2) succeeds inproviding strong incentive forprivate sector investment inthe value-chains of electricityincluding the off-streamsectors of the industry withoutundermining the affordabilityof electricity by the urban andrural poor.

“It has properly priced thecritical components ofefficient services in theindustry, including fuel costs,losses, O & M costs andmetering to ensuresustainable improvements.

“What is required is aregulatory compact betweenthe regulator and the utilitiesthat clearly outlines servicedelivery benchmarks and therequisite capacity to enforcesuch compact. I believe NERChas such capacity and willenforce the serviceimplications of MYTO-2,” heopined.

BY KUNLE KALEJAYE

ARCO PetrochemicalE n g i n e e r i n gCompany Plc profit

after tax increased by 41.96per cent from N279.67million in 2010 to N397.007million in 2011.

Chairman of the company,Mr. John Akpieyi, made thedisclosure at the 29thAnnual General Meeting ofthe company held in Lagos.

According to him the pre-tax profit grew by 23.74 percent from N378.79 in 2010to N468.74 million in 2011,noting that the stellarperformance was due tosignificant reduction ininterest and bank charges aswell as sustained costreduction program ofmanagement.

The company’s assets basestood at N6.6 bill ion,

ARCO Petrochemical profit rises by 41.96%…deploys two fast crew boats

Akpieyi said, adding that ithas maintained a dividendpolicy that balance the dualobjectives of appropriatelyrewarding shareholdersthrough dividends andreinvesting profit to supportfuture growth of thecompany.

The board presented toshareholders for approval adividend pay out of 8 koboper share out of the profitmade by the company as at31 st March 2011, whichrepresents a dividendgrowth of 300 per cent overthat of 2010.

Akpieyi also informedshareholders that ARCOMarine and Oilfield ServicesLimited, a member of ARCOGroup, recently deliveredtwo fast crew boats with speedover 30-knots under the N5.7billion contracts awarded to

the company by TotalExploration and ProductionNigeria.

“The boats have sincestarted full operation and athird one is on its way tobeing deployed to Totaloperation,” adding thatpreliminary assessment fromoperators of the boats indeep water oil and gas sectorwas satisfactory. Another 70passenger fast crew boatwould be delivered withinthe next three weeks whileadditional two boats wouldarrive in the second quarterof 2013,” Akpieyi said.

He assured theshareholders of ARCO’sdetermination to invest in thefuture growth of theorganization to enable it tocatch up with the hugeopportunities brought aboutby the Nigerian ContentLaw.

L-R: Jumoke Bamisaye; Olutoyin Adepate, ICAN R/CE; Folake Olawuyi; Doyin Owolabi, ICANPresident & Celebrant; Soji Odukoya ICAN DR. Admin; Funmi Otitoju; Dayo Ajigbotosho, ADCorporate Affairs; Dolapo Odukoya; & Niyi Adesola during the cutting of Doyin’s birthdaycake in Lagos.

5m farmers tobenefit fromgrowthenhancementsupportscheme, saysAgric Minister

Five million farmers are tobenefit from the Federal

Government’s GrowthEnhancement SupportScheme (GES) in 2012,Minister of Agriculture andRural Development, DrAkinwunmi Adesina has said.The minister said this inAbuja while briefingnewsmen on the roll out offertilisers and seeds to smallscale farmers. Adesina saidthe Federal Government wasable to raise N30 billion frombanks to fund the supply ofseeds and fertilisers tofarmers with support from theFederal Ministry of Financeand the Central Bank ofNigeria (CBN). He said thatthe joint effort reduced theinterest rates charged foraccessing bank loans from 15per cent to 7 per cent. Theminister said suchdevelopment was anindication of the bankingsector’s support for the theFederal Government’sAgricultural TransformationAgenda.

Constructionworkers hailFG’s plan forCementTechnologyInstitute

Workers in theconstruction and

engineering sector havepraised the FederalGovernment for plans to raiseabout N20 billion for the takeoff of the Cement TechnologyInstitute. The workers, underthe umbrella of the NationalUnion of Civil Engineering,Construction, Furniture andWood Workers, said the stepwould open job opportunitiesfor construction workers.Chairman of the Lagoschapter of the union, MrAdeoye Shabi, told newsmenthat the institute would leadto the establishment of morecement factories. According tohim, this will in turn createjobs for the teemingunemployed Nigerians. Hesaid that the establishment ofthe institute would also boostthe country’s income as thecountry would start exportingcement to other Africancountries.

CMYK


CMYK

BRIEFS

Business & Economy

BY PROVIDENCE OBUH

The Netherlands highcommissioner toNigeria, Mr Bert

Ronhaar has called for asustainable food productionfacility in relation to theincreased need for good foodproduction worldwide.

Ronhaar who made thisassertion in an interview withVanguard, during theBusiness Day Agribusinessfood security summit 2012,called on the FederalGovernment to cooperate withthe private sector and otherbodies to achieve great resultin agriculture.

He said “the Netherlandshas ranked number one interms of export in horticultureand number two in agricultureand food productionworldwide. He by workingtogether as government, asprivate sector and as researchinstitutes, made our nationgreat in agriculture,horticulture and flourproduction.”

Continuing, he said, “that isfor a small country likeNetherlands, Nigeria is a bigcountry, big nation, there arelot of potentials and the needworldwide is very great forimproved food production andI think Nigeria need more ofgood quality food, sustainablefood production facility,because we can not exploit ourindustry.

“That is why we have tomake sure we maintain thequality of the soil because inNigeria we see a lot of

Nigeria needs sustainable food productionfacility —Netherlands envoy

fertilizer users, but if you donot have the proper soilmanagement programme inplace as a farmer, then youmight have for five yearsincreased production and thesoil will be depleted and it willbe very difficult to make itgood again. So that meansthere is need for conservativeeffort from everyone toincrease production.”

He pointed out that in theNetherlands, the governmentprovides the enablingenvironment for the privatesector and for the farmers

while the industry do theinvestment.

Speaking on Nigeria-Netherlands ties, he said thatthe two countries have acommon relationship oninvestment in agriculture andfood production throughPublic Private Partnership.

“Our government is workingwith Nigeria government onthe improvement of cocoaproduction because in thepast, Nigeria was a majorcocoa producer. I think as aresult of the oil industry andthe interest of the people for

money, the cocoa industrycollapsed and there wassickness in the cocoa tree.”

However, he assured thatthere is room for Nigeria tobecome a major producer ofcocoa, adding that it has putcassava programmes in place.

“The overall trade balancebetween Nigeria and theNetherlands is around 67billion euro and forNetherlands, Nigeria is thelargest trading partner in sub-Saharan Africa but twice asbig as South Africa and forNigeria, the Netherlands isthe major exporting country,”he said.

L-R: Legal Adviser and representative of the Rector, Institute of Management Technology (IMT), Enugu,Barr. Valentine Adukwu; student and raffle draw winner, Mr. Okechukwu Agboh, and Manager, YouthSegment, Etisalat Nigeria, Mr. Idiare Atimomo during the presentation of a brand new Hyundai i10 car atthe Etisalat Cliqfest campus tour at IMT, Enugu on Wednesday June 13

Julius Berger Nigeria Plchas concluded

arrangement to purchase amajority stake of Julius BergerInternational GmbH (JBI) inWiesbaden, Germany.

Announcing thisdevelopment in a statement inAbuja, Mr. Clement Iloba, thePublic Affiars Manager ofJBN, said, "this week anagreement between thevendor Bilfinger Berger SEand JBN was signed, toacquire 90 per cent of theshareholding of JBI. Theacquisition is split into twotranches, 60 per cent end ofJune 2012 and 30 per cent endof December 2012."

He said, “JBI bringstogether the engineering andservices activities of BilfingerBerger Nigeria GmbH. Bypurchasing a majority share ofJBI, JBN is assured key-support in planning,procurement and capacity

Julius Berger Nigeria acquires German subsidiarybuilding.

“The Board of Directors andthe Executive Management ofJBN reiterate their confidencethat these strategic businessdirections would achieve asustainable increase in JBN’sefficiency and responsiveness,as well as set the basis for afuture of long lasting success.

Julius Berger Synopsis“Julius Berger Nigeria Plc isa Nigerian constructioncompany headquartered inAbuja FCT An employer of nofewer than 18,000 people ofclose to 40 nationalities, it is amulti-service, solutions-driven company is unique inits long standing delivery ofquality, capacity, reliabilityand excellent performance, allat internationally recognizedstandards.

“Since its 46 years ofoperation in Nigeria,integrity, transparency, safetyand sustainability continue to

be the pillars of JB’sstructures and behaviors, bothinternally and externally.Julius Berger is the leader inits field, a pioneer in

technology and a committedpartner in the developmentand progress of Nigeria.”

FCTA to establish MFBs In area

councils

The Federal Capital Territory Administration (FCTA) willestablish microfinance banks in the six Area Councils of

the territory to provide easy access to financial services forthe administration’s business operators, the Minister of Statefor FCT, Oloye Olajumoke Akinjide, has disclosed. Theminister, who stated this at the commissioning of HATLABPlace in Abuja, explained that the establishment of themicrofinance banks would substantially address the fundinglimitation of micro, small and medium enterprises (MSMEs).“Needless to remind that inadequate funding of micro, smalland medium enterprises (MSMEs) affects positive economicgrowth. I once more use this opportunity to reaffirm ourcommitment towards the establishment of FCT MicrofinanceBanks in all the Area Councils of the FCT. We are alsopositioned to encourage value addition and linkages andensure the establishment of business clusters, trade zones andbusiness incubators in the FCT through the Abuja EnterpriseAgency (AEA),” she said.

Instituterecommendsprojectmanagementplatforms forengineering

The Institute ofAppraisers and Cost

Engineers has recommendedthe inclusion of projectmanagement p la t formsin major engineering projectsin the country. The institute,a division of the NigeriaSociety of Engineers (NSE),said such platforms shouldalso include a sensibleapplication of costengineering and principles ofengineering economy.It made the recommendationin a communiqué issued inAbuja at the end ofits National TechnicalConference and signed bythe Secretary, Mr IkeIwenofu.

The communiqué said thatprofessional valuation, costengineering and engineeringeconomy principle should beproperly applied to Nigeria’ssocial and economicactivities. It added that thiswould enhance economicgrowth and promotesustainable development.

The communiqué observedthat the failure of majorengineering projects inNigeria was due to non-application of costengineering.

CBN workerspersuadedSanusi to cometo work inregalia –spokesman

Central Bank of Nigeria(CBN) Governor SansuiLamido Sanusi appeared inoffice wearing a chieftaincygarb because workerspersuaded him to do so, thebank’s spokesman said.Sanusi was turbaned the DanMaje Kano by the Emir ofKano, Alhaji Ade Bayero.Some national newspaperspublished a photograph ofSanusi wearing his chieftaincyregalia with some bankofficials at the bank’s corporateheadquarters in Abuja CBNspokesman Ugo Okoroaforsaid the apex bank’s governorwas “not on duty” the day heappeared in office in theregalia. He said, “For theavoidance of doubt we wantto use this medium to statethat the CBN Governor wason a short break, and was noton duty on the said day.


CMYK

Banking & Finance

In line with itscommitment to offerbest-in-class e-products

and payment services, UnitedBank for Africa (UBA) Plc,Africa ’s global bank, hasintroduced MasterCard Vervedebit cards for the bankingconvenience of its esteemedcustomers.

The UBA MasterCard Verveis a naira-linked Debit cardthat works well on all ATMs,PoS and Internet paymentplatforms even as it providescardholders the benefit ofspending up to $40,000 orequivalent of their localcurrencies per year anywherein the world.

The Divisional Head, e-Banking, UBA, Dr. YinkaAdedeji, said UBA, with theintroduction of UBAMasterCard Verve, hascontinued to innovate andimprove on service deliveryfor the convenience to itscustomers. “With UBAMasterCard Verve customersdo not need to change theirlocal currency to any foreigncurrency on the streets anylonger whenever they plan totravel either for business orWhenever you travel outsideNigeria to any location inAfrica, Europe, Americas,Asia or anywhere around theworld. The MasterCard Verveallows you to spend up to$40,000 or equivalent peryear,” he said.

According to him, UBAMasterCard Verve is linked toa Naira Account only andcould be used for purchaseson local and internationalwebsites such as Apple,Amazon, among others.Besides, the Card is acceptedat over 30 million merchantlocations worldwide whileother value added servicesinclude Bill Payments (DSTV,PHCN) and Mobile RechargeTop-up.

He maintained that theintroduction of theMasterCard Verve by UBAwould boost the cash-liteinitiative of the Central bankof Nigeria by strengtheningthe protection againstfraudulent activities.“Applicable limits have beenput in place for customers’transactions within 24 hoursin order to protect them fromcard-related fraud. However,any customer who desires tochange any of these advisedlimits to suit a peculiar profilecan visit the nearest UBAbranch to fill a Debit CardLimit Increase form,” Adedejiadded.

CBN shouldn't be subjected tolegislative or executive control— Gowon

Former Head of State,Genral Yakubu Gowonhas risen in defense of

the autonomy of the CentralBank of Nigeria (CBN)saying the apex bank shouldnot be subjected to legislativeor executive control.

Speaking at the 4th

Memorial Lecture of theClement Isong Foundation for2012, Gowon said, ”I firmlybelieve that theindependence of the CBNshould be preserved and thatthe CBN should not besubjected to control by eitherthe legislature or executive soas to grow the economy.”

He reinforced his view withan experience with the lateDr. Clement Isong, who wasGovernor of the apex bankfrom 1967 to 1975.

He said, “Clement Isongwas one of the few officials ofgovernment cleared to speakwith me on the ‘hotline’, a redphone with a secure line thatis only to be used in realemergency situations.

"He called me on a busy dayto request audience with mebut declined to discuss thetopic on phone. He almostfrightened me with his insis-tence on coming to see me;

"I, therefore, promptly can-celled my pending engage-ments in case there was needto call in other advisers, for Iwondered if something hadterribly gone wrong with theCBN.

"Before his arrival, I had be-gun to worry about how wewould be able to meet ourinternational obligations, paypublic servants or implementother programmes in theevent that the CBN crashed.When he stepped into my of-fice, he wore a very broadsmile.

"Governor, what’s the prob-lem?’ I asked. Then he toldme: “Your Excellency, I’ve gotso much money, I don’t knowwhat to do with it.” You canimagine my shock. Then Isaid to him, ‘’if you have somuch money, why don’t youpave the streets of Lagos withit?

“Let us not miss the importof my exchange with my Cen-tral Bank Governor. At thetime, we had put in place the3rd National DevelopmentPlan, 1975 - 1980, whichwould have ensured the rap-id transformation of Nigeriato a politically and socio-economically strong nation."There was so much to do, butthe abandonment of theDevelopment Plan bysuccessive administrationsturned it to a missedopportunity for development.What was regarded as ‘somuch money’ then is merepittance today. For a fact,Clement Isong would neverhave allowed this money to befrittered, just as I would neverhave permitted thesquandering of the commonwealth.

BRIEF

First Bank of NigeriaPLC has unveiled aframework for single

digit interest rate funding forsmall and medium industriesin the country.

Under the framework, whichis in partnership with theNational Association of Smalland Medium Industries(NASI), First Bank willprovide loans to SMIs who aremembers of the Association atnine per cent interest rate.

Speaking at the MoUsigning ceremony last week,Group Managing Director/Chief Executive, First BankPLC, Mr Bisi Onasanya saidthat , “This scheme and MoUsigning is not aboutprofitability. The nominalinterest rate that we wouldcharge, which is at singledigit interest rate, is just tomake sure that we cover basic

BY BABAJIDE KOMOLAFEAND ELIZABETHAMIHOR

Pix From Left; Mr Olusegun Oloketuyi, Non Executive Director, Mallam Abubakar Jimoh,Managing Director, Chief Executive Officer, Associated Discount House Limited, Mr AigbojeAig-Imoukuede, Chairman Associated Discount House Limited, and Mr John Akujieze, Com-pany Secretary, During the 18th Annual General Meeting of Associated Discount HouseLimited, Held on Friday 15-6-2012, lagos. PHOTO; Kehinde Gbadamosi

“I have recalled this anec-dote to reinforce my funda-mental belief in the indepen-dence of the Central Bank ofNigeria, whose current Gov-ernor, Sanusi Lamido Sanu-si, by some happy coinci-dence, is the Guest Speakerat this event.

Sanusi Lamido Sanusi, al-ways a newsmaker and ever

full of surprises, reallystunned everyone with hisrobes of Dan Majen Kano,which he wore to office onWednesday. Perhaps, he isgiving us a dress rehearsal forlife outside of CBN.

“The CBN, under such emi-nent Governors as Aliu MaiBornu, Clement Isong, Mr.Ola Vincent as well as new

generation Governors likeProf. Charles Soludo and Sa-nusi Lamido Sanusi, have atvarious times creditably dis-charged the onerous respon-sibilities of their office. I alsocommend the courage of thecurrent Governor for speakingout in defence of the indepen-dence of the CBN.”

First Bank unveils single digit interestrate funding for SMIs

BY BABAJIDEKOMOLAFE

cost of funds that are beingdeployed.

This MOU is in furtheranceof the Bank’s support forSmall and Medium ScaleEnterprises and it is meant topromote the growth anddevelopment of SMEindustries and industrialistsin Nigeria.

This MOU also supports theBank’s strategic focus onfinancial inclusion as it wouldmitigate the challenges ofcredit delivery to theunbanked market segmentthrough mobilized fundswhich will avail creditfacilities to registered NASSImembers at concessionaryrate.

In addition to warehousingand disbursing mobilizeddeposits, FirstBank is alsocommitted to support NASSIthrough business advisoryservices, capacity buildingand development of relevantIT infrastructure as well as theissuance of our bio-metric

identity card to all NASSImembers.

You can rest assured that theBank has immeasurablecapacity to deliver on thisbusiness partnership, givenour 118-year heritage andbusiness practices which havesustained FirstBank as thenumber one bank in Nigeriain various financial metricssuch as total gross earnings,total assets, total loans andtotal deposits.

“The greatest impediment tothe development of small andmedium enterprises inNigeria is access to finance.Unfortunately banks havefound themselves in aposition where they all rushto lend to those firms that donot need to be so supported.We all rush to give money tomultinational companies, whoif we are not careful will takethose loans from us and plowthem back into money marketinstruments.

UBA

launches

MasterCard

Verve debit

cards




26 —Vanguard, MONDAY, JUNE 18, 2012

CMYK


CMYK


CMYK

CMYK




32 —Vanguard, MONDAY, JUNE 18, 2012

Interview

There are many ways thatpublic institution could beowned by government, but yetthey are not nationalisation. Beit bridging or recapitalisation,both of which are legal undertheir respective laws

,

,

At the height of the financial crisis that rocked the global economy in 2008, Central Bank of Nigeriapressed for the realisation of the Asset Management

Corporation of Nigeria which had been in the pipeline foryears. The company was set up to buy non performing loansfrom banks. It has performed the function to some extent, butthere are still issues in the financial services sector to be re-solved. Managing Director of the company, Mr. MustaphaChike-Obi spoke to Financial Vanguard on some of the issues

ly worried about it.You once said that you are

looking for advisers to ad-vise you on the sale of thenationalized banks. How farhave you gone with thatproject?

First of all, the banks werenot nationalized. So, I rejectthat claim of nationalisation.The fact that the banks areowned by public institutiondoes not mean that they werenationalized.

What was done to them?They were bridged, which

is a lawful exercise in theNDIC’s Act and recapitalisedby AMCON, which is also alawful exercise in the AM-CON’s Act. None of those actsis nationalisation. I havemade it very clear; nationali-sation is a process that leadsto public ownership, but thefact that a company is ownedby a public institution doesnot mean that it is national-ised. The example I give is,if the CBN building is ownedby CBN, which is a public in-stitution, does that mean thatthe CBN building was nation-alised? There are many waysthat public institution couldbe owned by government, but

yet they are not nationaliza-tion. Be it bridging or recapi-talisation, both of which arelegal under their respectivelaws.

So, on my initial question,on the proposed sale of thosebanks, how far have yougone?

We have kicked it off. Wehave advertised for advisers.Well, we are not advertisingfor advisers for a sale. We arelooking for advisers to tell uswhat to do with the banks toget maximum value. Every-body assumes that means tosell. It might mean going pub-lic with those banks; takingthem to the stock exchange asin public offering so that Ni-gerians can own the banksagain. So, we are looking foradvisers to tell us the bestthing to do. It may well bethat a sale is the right thingto do. In that case, we willconsider a sale, but right now,we are just looking for advis-ers to re-evaluate the banksand then tell us the best wayof exit without affecting the fi-nancial market, and yet getthe best value from it.

There are some people thatbelieve that those banks arenot yet matured for sale.How healthy are they to at-tract new core investors

That’s why we need advis-ers. When the advisers lookat them, they will tell us if theyare ready or not. They willtell us whether to keep them;whether to merge them,whether to sell them, wheth-er to go public; all of these.They will tell us what to dowith the banks, and whenthey tell us, we will consider

the experts’ opinion. There isno point me and you guess-ing whether they are readyfor sale or not. We will getvery competent advisers andthey will tell us what weshould do. They will tell uswhat steps to take to get thebest value.

Up till now, nobody hassaid anything concerning theshareholders of thosebanks; the people that lostmoney in those banks. Whatis going to happen to them?

You need to be very carefulwhen you talk about share-holders. There were share-holders in Bank PHB; therewere no shareholders in Key-stone bank. We did not buyBank PHB. We recapitalizedKeystone bank. Keystonebank is a completely differ-ent entity from Bank PHB. So,the people that were share-holders of Bank PHB who hadissues with what happened,their issue is with the NDIC.It was the NDIC that bridgedtheir bank, and when theybridged their bank, they cre-

Excerpts

Let me start by asking youwhat your thought is on themove by the National Assem-bly to strip the Central Bankof its autonomy

Am not sure there is a moveto strip the CBN of its auton-omy. I think the National As-sembly is only reviewing theCBN’s Act. There are someideas that have been put for-ward, but it is completely un-advisable to tamper with theautonomy of the CBN. It isnot the best practice. Thewhole world has gone to thelevel of an autonomous, inde-pendent Central Bank essen-tially for economic growth.The National Assembly is stillgathering information. So, Ithink that when they finishgathering the information,and they hold public hearing,am hopeful, they will arriveat the correct decision. Theway to deal with the CBN isnot by tearing the economyapart. I am certain they willcome to the right decision.

And if by chance there is areview of the Act that finallytampers with the autonomy,how do you think that will af-fect the economy

In a simple way, it will bedisastrous. The National As-sembly cannot do a worsething than tamper with theCBN’s autonomy. So, I amvery confident that they willnot do that. I don’t want us tospeculate about any problem;they are doing their job, theyare gathering information,and they are listening to peo-ple. When they are throughwith gathering information, Iam very confident that theywill do what is right for theeconomy. So, I am not real-

ated a new bank called Keystonebank. AMCON’s interaction with Key-stone bank has nothing to do withBank PHB. As a matter of fact, AM-CON was the largest shareholder inBank PHB before it was bridged; larg-er than Habib bank which was thesecond largest shareholder. So, welost more as an institution than anyother shareholder, and so sharehold-ers that have a problem should ad-dress that with the NDIC. Let me saythis, I think the NDIC did the rightthing. These banks had failed as in-stitutions. The depositors’ funds werein danger; and the only thing NDICcould do was to act in the best inter-est of the depositors as the law com-pels them to do. They must protect thedepositors, which is what the law tellsthem to do. A bank like Bank PHB hadnegative capital of over two hundredbillion (N200 billion), so what exactlydid shareholders own. It was worthnegative two hundred billion or more.So, there was nothing they lost; theylost their shareholding two years ago,not when it was bridged. When it wasbridged, the bank was in danger anddepositors needed to be saved.

But some shareholders still believe

Mr. Mustapha Chike-Obi ...right now, we are just looking for advthen tell us the best way of exit without affecting the financial

CMYK

NKIRUKA NNOROM

We boughtperforming loansfrom banks to savethem fromcollapsing — AMCON


Interview

,

,

,

,If you have a deposit in the

bank, and the deadline isSeptember 30, will you wait tillthat day to take your moneyout? No! All the governmentagencies will have taken theirmoney out

If investors lost money, it isunfortunate, but that is whatinvestment is. I have investedin businesses that wentbankrupt and nobody askedthe government to come andbail them out

that they should have been asked torecapitalise their banks instead ofbridging them

But that’s what they say. You see,you reporters have a duty to reportthe truth. The banks were intervenedon in 2009. CBN gave them two yearsto recapitalise the banks, they didn’trecapitalise for two years. It was ex-tended to 30th September, 2011. Theystill hadn’t made any progress to re-capitalise them. When are they go-ing to recapitalise, forever? They weregiven over two years to do this andthey didn’t. That’s the fact and then,in addition to that fact, Union Bankjust had a rights issue as part of itsrecapitalisation exercise where theyasked the original shareholders tobring a small fraction of the moneyrequired and they didn’t. The rightsoffering had to be cancelled, onlyAMCON subscribed to the right of-fering. The shareholders didn’t. So,when people tell me that they shouldhave given them chance to recapital-ise, they are not being honest withthe fact.

However, if anybody wants to re-capitalise any of the bridged bankson the same basis that AMCON did,they are welcome. We will sell to them

as many shares as they wanton the same basis that we re-capitalised the banks. So, an-ybody that tells you that theywant to recapitalise thebanks, there is an open invi-tation. We will show them theterm that we used to recapi-talise the banks and they arewelcome to join me on thatbasis.

If you are saying that any-body that wants to recapital-ise any of the banks is freeto do so, does it mean thatthe bridge option can be re-versed?

No! The shares are nowowned by AMCON. We paidfor those shares. If anybodywants to buy those sharesfrom me, any ex-shareholderof any of those banks thatwants to buy the shares on thesame term that we boughtthem, he is welcome. Any! So,if they want to help me recap-italise those banks on thesame term I did, I give theman open invitation to comeand do so. But I assure youthat they won’t come.

But sincerely, don’t youthink that CBN and NDICshould have allowed the Sep-tember 30th deadline toelapse before bridging thosebanks

First of all, let explain some-thing to you. To recapitalisea bank is not something yougo to the market and do in oneday. To recapitalise a banktakes a number of steps. Letme tell you what it takes. Ittakes issuing a Memorandumof Understanding; that has tobe approved by the board ofdirectors. Then from there,you go to what is calledTransaction ImplementationAgreement; that also has to beapproved by the board. Then,you take that to the Securitiesand Exchange Commissionand you go to the court; thenyou have court-ordered sanc-tion, approval of the Transac-tion Implementation Agree-ment. When the court ap-proves, you go to SEC, thenSEC must approve. So, thewhole process takes some-where in the best case, a min-imum of three months- fromthe MoU to the conclusion.So, when you get to the mid-dle of August or middle of Julyand there has been no MoUsigned, you know that therewill be no transaction by Sep-tember 30th. It is impossible.So, when they say Septemberdeadline for recapitalisation,that doesn’t mean Septemberdeadline for MoU. It meansMoU should have beensigned in March to meet Sep-

tember 30th recapitalisationdeadline.

It is like somebody walks innow; your husband walks innow and says ‘I want to eatand you say what do you wantto eat and he says rice andyou say okay.’ Then he says‘where is the rice’. If he isasking for rice now, he knowsthat it will take may be anhour before it will be ready.So, if you want to hit the dead-line, you should not wait forSeptember 30. By July 15th,you know there will be notransaction that can happenby September ending. Here isthe danger, if you wait tillSeptember 30th, other peopleknow it; by September 15th,there will be a run on thebanks that you will never be-lieve. If you have a depositin the bank, and the deadlineis September 30, will you waittill that day to take your mon-ey out? No! All the govern-ment agencies will have tak-en their money out; institu-tions will have taken theirmoney out.

There will be a run on thebank and that is exactly whatwe cannot afford. So, once wegot to July 15th, everybodyknew that the September 30th

deadline has been breached.Every single bank that wasnot bridged had signed MoUby July 15th. So, there is aproblem, if you wait till Sep-

tember 30th, the banks will beliquidated. That is what peo-ple don’t understand. Theyhadn’t even done the firststep to capitalisation, and yousay we should wait for Sep-tember 30th? That wouldhave being irresponsible, andthey knew it. And what youdon’t know which they don’ttell you is that Afribank’sboard of directors wrote toCBN and told CBN, ‘pleaseask AMCON to recapitaliseus’. There is a letter to thateffect. The MD of Springbank came here and askedAMCON to recapitalise thebank because it was making

huge loses. What do you wantus to do? I will give you an-other fact. AMCON owned 80per cent of Spring Bank sharesby the time it was bridged.The largest shareholder ofSpring Bank was AMCON.So, in terms of who lost themost money by the bridging,it was AMCON.

Now, on the issue of Un-ion Bank’s recapitalisation, ifyou had listened to SEC’spresentation at the House ofReps hearing, SEC commis-sioners alleged that AMCONcoerced them to clear UnionBank for recapitalisation.What do you have to say tothat?

Let me ask you a question.How can AMCON coerceSEC? SEC is a regulator,AMCON is not. In what pos-sible way can AMCON coerce…

(cuts in) it was an allegationI understand. I am asking

you; if I allege tomorrow thatyou jumped out of this build-ing, people will laugh at me.Some allegations don’t makesense. AMCON doesn’t haveany coercive power over anyregulator. We don’t have anyregulatory power. How canwe coerce SEC into anything? Moreover, the SEC DG is onmy board of directors, she isone of my directors! How canI coerce her into anything? Soit makes no sense. Now, theUnion Bank transaction, whatpart of it was coerced? I don’tunderstand. What part didthey say that we coerced themto agree to?

Okay, there was an allega-tion that the proceeds of theirlast public offering beforethe bank's crisis was unac-counted for and because ofthat, they refused to accentto recapitalisation of the

bankLet me say something. First

of all, before AMCON cameinto being, there was publicoffer by Union Bank and therewas an allegation that theydid not use the proceeds of theoffer for the purpose of the of-fer. That’s the allegation. Wehave letters to save us fromUnion Bank in the market.AMCON’s only job is to fillthe loss; to recapitalise thesebanks to zero in order to facil-itate the M & A (Mergers andAcquisitions) transactions. Soin the end, the bottom-linewas that the proceeds wereused by Union Bank alleged-

ly as working capital. What-ever it was used for, there wasa negative equity in UnionBank. AMCON’s only job wasto fill the negative equity.There was negative equityfrom people who did foolishthings. It is not our job to pryon that. The bottom-line is thatwe wrote a letter to SEC, forwhatever purpose that wasused; we are going to fill thenegative equity to facilitate themerger transaction. That’s ourjob. That was what we did.Now, it is entirely impossible;there is a long history. (I wishthe lawyer was here, I wouldhave shown you the file, backand forth, of the whole issue),but in the end, it was irrele-vant. What does it matter thatUnion Bank misused N5 bil-lion of the proceeds of the pub-lic offer it did five years ago.Is it because you are going tomake…, Union Bank is a bigbank, and because the lastMD used the proceeds badly,you are going to hold up therecapitalisation? How manypeople does Union Bank em-ploy? Ten thousand people;had a minimum of 1.2 millioncustomers, and a deposit ofN500 billion. You are going toput all of that in jeopardy be-cause there was some bad be-haviour for which the man...,I think they are in court. Look,everything that I know and Ithink that was the fact wasdone for the interest of Niger-ia’s financial system, the de-positors and the employees. Those were the three majorpeople that were considered.If investors lost money, it isunfortunate, but that is whatinvestment is. I have investedin businesses that went bank-rupt and nobody asked thegovernment to come and bailthem out. Why stop at banks,why are they so emotionalabout banks? How about if youhave a Hotel and it goes bank-rupt, should government bail-out the business? How aboutif you have an airline? Are wegoing to bailout Dana Airline? Dana Airline is probably go-ing to be in financial difficul-ty. We have airlines- Bellviewfor instance, they lost all theirmoney. Should we bail themout out? So when investorskeep making this petition,there is no government any-where in the world that willever agree that it is its job tobailout an investor who haslost his money. No where! Butgovernment tells people, ‘goand put your money in thebank so that when you go toget the money, it will be safe.’And so, if we didn’t do that,the banking system will col-lapse. You will have your in-law who will tell you one dayto give him money to start tai-lor business and it may notwork. Should the governmentgive you the money back? Ihave never understood thisinvestors’ issue about how in-vestors feel that it is govern-ment’s job to give them backthe money that they lost.

visers to re-evaluate the banks andmarket

CMYK


CMYK

Banking & Finance

Round-tripping offoreign exchangefrom the official

market to the parallel marketas well as activities ofspeculators are some of thefactors behind the recentdepreciation of the naira saysFinancial DerivativesCompany

Meanwhile, cost of fundsrose sharply in the interbankmoney market due scarcity offunds which intensified duringthe week.

According to KakawaDiscount House weeklyinterbank newsletter, themarket ended with deficit ofN78.21 billion, down fromN32.94 billion the previousweek. The scarcity of fundswas aggravated by N94.475billion withdrawal to fundforeign exchange purchase atthe bi-weekly official foreignexchange auction. The impactof this further drop in marketliquidity is reflected in thedata from Financial MarketDealers Association of Nigeria(FMDA), which showed that

*Interbank interest rate rises as scarcity intensifies

Round-tripping, speculationsbehind naira depreciation — FDC

BY BABAJIDEKOMOLAFE

interest rate on Call lending,7-Days and 30-Days lendingrose by 83 basis points. Inter-est rate on Call lending closedat 15.79 per cent, up from14.88 per cent on Monday,while 7-Days and 30-Dayslending closed at 16.04 and16.25 per cent from 15.21 and15.58 per cent respectively.

In the foreign exchangemarket, the naira furtherweakened at both theinterbank and officialsegment of the market. At theofficial market, the nairadepreciated by six kobo as theofficial exchange rate rose toN155.9 from N155.84 perdollar. The naira depreciatedby 26.25 kobo as the interbankrate rose to N163.21 fromN162.95 per dollar.

Since May 26th the nairadepreciated persistently at

the bi-weekly auction as theexchange rate rose steadilyfrom N155.69 per dollar toN155.9 per dollar on Monday.Similarly, the naira depreci-ated by 386 kobo as the inter-bank rate rose to N163.21 perdollar last week from N159.35per dollar on May 23rd.

The Financial DerivativesCompany explained the fac-tors driving the depreciationof the naira in its monthly eco-nomic publication for June. Itsaid, “ We believe that theweakening of the Naira in-cludes a combination of sev-eral factors: Multinationalswho have declared dividendshave increased their demandfor forex for the purpose of re-patriating earnings;

Speculators besieging themarket to take positions, dueto their expectation of a weak-

er currency as a result of thedeclining trend in oil prices;i.e. lower oil prices will resultin a slowdown in external re-serves accretion and the abil-ity of the CBN to continue itssupport of the Naira;

The divestment of interna-tional investors’ funds fromhigh yield government secu-rities is increasing the de-mand for forex; Round-trip-ping between the official andparallel market. The spreadbetween parallel and officialrates has widened to levelslast seen in December 2009and early January 2010. Thegap between the official spotrate and the parallel cash rateis currently N9.1, from a lowof N2.94 in March.

The recent Monetary PolicyReport (MPR) clearly evi-dences the fact that the CBN

is seriously concerned aboutthe risk of a potential depre-ciation in the Naira, as a re-sult of the recent develop-ments in the internationalcommodity and financial mar-kets. This concern is under-standable as the Nigerianeconomy is heavily de-pen-dent on oil, the possibility ofa softening in crude oil pric-es with potential fiscal reve-nue losses could lead to re-newed pres-sure on the ex-change rate.

If the weakening in theNaira persists, which we ex-pect, then the nation’s forexreserves could deplete evenfaster than the CBN antici-pates. The market would like-ly see such depletion as asign of weakness which couldlead to a further increase incurrency speculation.”


Corporate Finance

With the illiquidity in theequities sector of the

Nigerian capital market,investors have been advisedto review and diversify theirinvestment portfolio toenhance returns on theirinvestments.

Speaking at its wealth andleisure event organized for itspriority customers by StandardChartered Bank, Nigeria, inLagos, the Head ConsumerBanking, West Africa, CarolOyedeji noted that the eventwas designed to enhance thebank’s customers’ valueproposition especially in theareas of investments andleisure.

According to her, the eventprovided the bank theopportunity to deepen itsrelationships with customersand enhance the bank’scustomers’ value proposition.

“The priority andinternational banking team ofStandard Chartered Nigeria,in partnership with PorscheNigeria, decided to host its

US Airwaysseeks support ofshareholders forAMR deal

The top executive ofUS Airways GroupInc (LCC.N) sought

to bolster shareholdersupport on Thursday for aproposed merger withbankrupt AmericanAirlines, saying thefinancial communityalready likes the idea andthat the two airlines wouldmake a strong combination.

Speaking at the No. 5 U.S.airline’s annual shareholdermeeting in New York,Chairman and CEO DougParker said a tie-up withAmerican would create “anairline that can competewith anyone, that can bethe best airline in the world.”The meeting was broadcastover the Internet.

US Airways disclosed itsinterest in merging withAmerican in January.American’s parent, AMRCorp (AAMRQ.PK), filed forbankruptcy protection inNovember of last year.

Cognizantenters $330mdeal with ING

Information technologyservices providerCognizant Technology

Solutions Corp said it enteredinto a $330 million deal withthe U.S. unit of Dutch insurerING Groep NV to expand thebusiness processmanagement contractbetween the two companies.

Under the deal, Cognizantwill purchase ING’s facility inNorth Dakota and sub-leasesome of the insurer ’s officesin Iowa. More than 1,000 INGU.S. employees will betransferred to Cognizantunder the seven-year deal.

The new center will be anintegral part of Cognizant’sglobal delivery network andwill allow the company toprovide an expanded rangeof business process servicesin the insurance and financialservices industries, the ITservices firm said.

Cognizant will provide “acomprehensive array ofinsurance business processservices” to ING U.S., aprovider of retirement,investment management andinsurance services.

Shares of the Teaneck, NewJersey-based Cognizant wereup about 1 percent at $59.18on Thursday on the Nasdaq.

From left: Benson Uwheru, Senior Consultant, Risk and Capital Management, Deloitte West& Central Africa; Demola Adeniran, Director, Risk and Capital Management, Deloitte ,West&Central Africa; Richard Kirkland, Risk Consulting Partner, Deloitte, New Zealand and KlaasStijnen, Consulting Senior Manager, Deloitte, New Zealand, during the Deloitte Risk Academy,Risk Intelligent Platform in Lagos.

The inability of theNigerian stock marketto bounce back to

reckoning has been attributedto lack of capacity of themarket makers to provide themuch needed liquidity.

A leading and prominentstockbroker, who spoke toVanguard on condition ofanonymity, faulted theregulatory authorities for theselection of the marketmakers.

According to him, “How canthe regulators select firms thatare highly indebted to act asmarket makers? Where willthey get the funds from topump into the market? Themarket has been affected byilliquidity. How could peoplewho are chronic debtors beappointed as market makerswhen there are someoperators that are financiallyclean that were notconsidered to play the role ofmarket making?

Continuing, he said, “Theappointment of the marketmakers was highly politicizedand not done in a transparentmanner. It is reallynonsensical for regulators toappoint people that have nofinancial muscle to providethe needed liquidity thatwould revive the market.There are just about threefirms that are capable to playthe role of market making, therest are not competent.

When asked the firms thatare competent for the role hesaid, “I think it is only FBNCapital, Stanbic IBTC, andRenaissance Capital. If wemust grow the market thenissues like appointment ofmarket makers must be basedon facts rather thansentiment.”

It will be recalled that theNigerian Stock Exchange(NSE) released the names of10 market makers that areexpected to boost liquidity inthe capital market.

Speaking during theunveiling of the companies,the Chief Executive Officer,NSE, Mr. Oscar Onyema,said that this was anothermilestone in the history of theNigerian capital market.

He said that the move wasimportant as it was gearedtowards bringing backliquidity and depth into themarket, which had beenidentified as the secondlargest market in sub-Saharan Africa.

A market maker is a dealingfirm, which maintains firmbids and offers prices in a

Stock market: Why marketmakers can’t survive — Stockbroker

STORIES BY PETEREGWUATU

given security by standingready to buy or sell thatsecurity.

According to the NSE, the10 stockbroking firms wereselected from a list of 20 thathad applied last year.

The market makers asannounced by the NSE areStanbic IBTC; RenaissanceCapital; Future ViewSecurities; Vetiva Capital;ESS/DunnLoren Merrifield;WSTC; Capital Bancorp; FBNS e c u r i t i e s ;GreenwichSecurities andCSL Stockbrokers.

Onyema said, “This is agreat milestone and a majorstep in the direction ofturning the market round tobring liquidity and depthback into the market. We willcontinue to move forward onthis. The companies selectedwent through a very rigorousprocess and met theminimum net capitalrequirement of N570 million,we also examined theircompliance history andlooked into their operationalcapabilities including theirtechnology and processes.”

He added further that theselected firms were takenthrough trainings, debated theappropriate market structure tobe used and the Exchangefurther went through theapproval of the Securities andExchange Commission in theselection process.

A major highlight of theunveiling was the selection ofa basket of quoted companiesin which the financialintermediaries would providethe desired level of liquidityvia a blind draw.

The Exchange added thatthe primary obligation of theMarket Maker was to alwaysmake a two-way price in eachof the stocks in which theymake markets.

Standard Chartered tasks investors onportfolio diversification

customers to a lifestyle eventtagged ‘Wealth and Leisure’to further help them bridgethe gap between work andleisure ,” Oyedeji said.

“We are in the businessbecause of our customers. Webelieve they deserve thebetter banking experiencesand relationship that fostersustainable developmentsand success in theirrespective businesses. AtStandard Charteredcustomers are a priority andwe continually strive towardsensuring higher qualityservice that surpasses theirexpectations. This is one waywe reinstate that we are herefor their progress and indeedhere for good,” she added.

On his part, the formerGovernor of Cross RiverState, Mr. Donald Dukewhile speaking on the topic,“Living Great”, enjoined theparticipants to seekopportunities to relax ratherthan allowing others reap thefruits of their return on

investments.To him, seeking pleasure in

doing what we love most andfinding opportunities to relaxand doing it would enhancepeople’s lifestyles and thusincrease productivity.

The event which held at thenew showroom of PorscheNigeria is the first of severalevents planned for customersfor the rest of the year, inwhich customers were treatedto sessions on lifestyleimprovement and givenopportunities to test drivesome of the latest vehiclesfrom the Porsche Franchise.

Standard Chartered remainsone of the top rated financialinstitutions to be reckonedwith both in Nigeria andinternationally. The Porschebrand symbolizes affluence,wealth, luxury, elitism andstatus. These are attributesassociated with prioritycustomers and as a result, wefeel that the bank’s customersas well as the bank wouldgreatly benefit from thispartnership noted JulianHaedy, General Manager,Porsche Centre, Lagos.

BRIEFS

CMYK


That was the advice ofthousands of parents totheir sons at the

beginning of the foundingfathers of the “expatriates”who conquered the vastcountry which we now knowas the United States ofAmerica. Then, as now, therewere restraining hands,urging people not to go andexploit the opportunitieswhich the new frontierspresented. Many of those whoventured forth became richbeyond their wildest dreams.The early Pilgrims had landedand settled on the East Coastof America, without realizingthat the vast agricultural andmineral deposits that werelater to make America greatwere west of their ownterritory. Today, states likeCalifornia, Texas, Ohio andMichigan provide thebackbone of industrial outputwhile the “Midwest” statesaccount for the agriculturaloutput. The sooner “RealDeltans” move to acquirelanded properties in Asabaand its environs, the better forthem. Years from now theirkids will blame them for“missing the flight” – whichis what the investmentopportunities in Asaba willbecome in the future.

Today, in Nigeria’s DeltaState, anyone seeking forinvestment opportunities

FDI: Asaba Airport ascase study – 4

"Go West my son..."

should ‘Go to Asaba”. If thereis one airport in Nigeriawhich can produce the nextbatch of multi-millionaires, ormore, it is that airport. It isalready a winner even beforebeing commissioned. Andwhy is it? It is the ideal airgateway between Lagos andthe Southeast and Southsouth– the zone accounting forclose to 75% of Nigeria’sdomestic trade. No otherairport in the region or zonecomes close.

Already, domestic andforeign enterprises haveindicated interest. One multi-national company hasacquired land; after payingexorbitant price for what was,until recently, “bush”. Theother, a five star Nigerianhotel, wanting to become achain, is also racing to obtaina strong foothold. Thepotential winners are on themove; the ultimate losers arestill quibbling aboutirrelevant matters. But, in

order to assist all possiblestakeholders to decide what todo about this airport, permitme to finish my fact findingreport. Again, I challengeanyone who has contraryevidence to provide them forour readers to decide forthemselves.

It was already confirmedthat, contrary to widespreadrummour, the total cost isestimated at under $30 billionfor an international airport;when only a runway, at Abuja,was awarded for $69 billion.

More Facts About TheAsaba InternationalAirport

With the conversion from adomestic airport capable ofaccommodating, at best, onlyBoeing 737 size crafts, to onewhich can handle any size ofaircraft, the runway had to belengthened. Today Asaba International Airport, with 3.4kilometres of runway is thesecond longest in Nigeria; theMurtala Mohammed Airportwith 4.2 kilometres being thelongest.

To make the extension, notonly in length but in widthpossible more land had to becleared to allow for the widerwing span of bigger crafts as

well. That required two oper-ations First, called for theremoval of 3.7 to 4 millioncubic metres of earth, plantsand rocks from one part of theairport to provide acceptableinternational visibility tolanding aircrafts. The secondcalled for using the samequantity of debris to fill a gullywhich would have createdgreat erosion which wouldhave threatened the airportand surroundingcommunities for milesaround. A visit to the site willreveal hills as tall as six storeybuildings which must beremoved for safety of aircraftand passengers.Unfortunately, photographsare not allowed at airports –for safety reasons. Otherwise,the point being made herewould have been better madewith one or two shots. So,there no ant-hills as somehave claimed; only millions ofcubic metres of earth to bemoved around the sameairport. For the sake of thosewho might not grasp theenormity of the task, 4 millioncubic metres of earth spreadone metre thick, will coverover 20 kilometres of road.Three contractors, each with50 dump trucks have beenworking on it for over fourmonths; virtually 24 hours aday. And, they have not fin-ished removing the enormousamount of stuff.

,

,A visit to the site will

reveal hills as tall as sixstorey buildings whichmust be removed forsafety of aircraft andpassengers

CMYK


BRIEF

Estate surveyors andvaluers have faulted the

position of the federalgovernment on the concept ofsocial housing, even as theyappeal to the National Assemblyto accelerate the passage of theSocial Housing bill.

Minister of Land, Housing &Urban Development Ms AmaPepple, said recently in Lagos,at the induction of 97 registeredsurveyors by the EstateSurveyors Registration Board ofNigeria (ESVARBON), thatcontrary to the opinion held bysome people, social housing isnot the delivery of free housingto the public.

Pepple who was representedby the Federal Controller ofLands, Housing & UrbanDevelopment in Lagos, MrOnaeko Olayinka, argued thatthe place of government is to

Surveyors fault FG’s positionon social housing*Urge NASS to pass social housing bill

provide an enablingenvironment for the privatesector to excel. According to theminister, government issupporting social housing byensuring that houses areproduced in large numbers,cheaply and at the highestquality for the benefit of lowincome group. She saidgovernment hopes to achievethis by exploring optionsavailable in alternativematerials that will de-emphasise the use of cement.“We are testing stabilised bricksfrom South Africa in our pilotscheme in Kuje, Abuja.Ourbuilding material testinglaboratory in Yaba, Lagos is alsocoming up with options tocement based materials. Thiswill not only lead to the crashof cement price but alsodrastically bring the price ofhouses down,” she stated.

President, NigerianInstitution of Estate Surveyorsand Valuers, Mr. Emeka Eleh,

however disagreed with thegovernment position. Accordingto him, government owes it aduty to accommodate allcitizens by providing for thepoor and creating the rightenvironment for those whocould do so to build on theirown, noting that the Britishgovernment provides councilflats for low income earners.

He recalled that the FederalHousing Authority (FHA) wasset up to provide social housing,lamenting that it has sincedeviated by going commercial,making the houses they buildunaffordable to the commonman. He called on thegovernment to come up with anagency that can deliver socialhousing in the true sense of itto take people from the street.“We believe that if you aretalking about housing for all inthis country, there is no way itwill not have social housingcomponent. FHA wasestablished to provide social

housing, it should be seen tobe performing that function.You cannot achieve anequitable society withoutproviding for those who don’thave; those who lack the basicthings they should have,” hesaid.

Eleh asserted that though thehousing sector is better drivenby the private sector,government has to facilitateequitable distribution ofhousing to ensure thateverybody is properly housed,adding that an element ofsocial housing has to beprovided by government.“What we should be talkingabout here is that every year,each local government shouldput 100 housing units into themarket. If they had been doingthis in the past 10 years, eachwould have put in 1,000 units.These local governments areclose to the people andtherefore should know theirneeds more than the state orthe Federal Government. Theyare better placed to allocatethese houses to those whoneed them on a special basis.We therefore encourage thedevelopment of social housingbecause it will ultimately leadto a more equitable society, onein which everybody has ahome and nobody lives underthe bridge,” he stated.

Also, Principal Partner, AkinOlawore & Co, Mr. AkinOlawore, noted that theconcept of social housingworldwide is aboutgovernment providinghousing free to thedisadvantaged members of thepopulace such as singlemothers, orphans, eldercitizens and the unemployed.He said another waygovernment can deliver socialhousing is by giving land freeto developers and pegging theprice it can be sold or rentedto the public when completed.

Town PlannersRegistration Council of

Nigeria (TPRCN) has calledfor enforcement of thebuilding code to curb buildingcollapse in the country.

National President, TPRCN,Mr KabirYari, said thebuilding code was supposedto ensure that structures wereconstructed according tosafety standards. He said thatthe existing building codewas not being enforced andthat there was no adequatesensitisation on the code. “Abuilding code should not beleft to government officials

Town planners seek enforcement of building codealone, it must be a code foreverybody in the city,particularly potential homeowners, who should know itwill protect their safety,” hesaid. Yari said that promotingthe law without educating theordinary man, who builds,would not make much impact,noting that the code containedminimum standards which thecommon man needed toobserve. “We expect that aninstitution should be set up forthe building code. Thisinstitution should sensitise thepublic so that in each statepeople will understand that

there is a minimum standardthat must be adhered to,” hesaid.

He also identified impropertown planning as anothermajor challenge in thenation’s building industry as66 per cent of the country’spopulation lived in unplannedplaces. He decried theabsence of a master plan inmajor cities, urginggovernment to hasten andrevive such policies, notingthat “the plans you see aroundare expired plans, which aresupposed to be revised everyfive or 10 years.”

•New buildings housing engineering and hospitality depts at Abia State Polytechnic

Notable personalitieswho havecontributed to the

development of housingsector in Nigeria will behonoured at the 6thAbujaHousing Show/Awardscheduled to hold betweenthe 27thand 28thJune 2012 inthe nation’s capital.The programme is an annual

platform for players in the

real estate industry to show-

case their housing projects,

products and services and in-

teract on major issues that

can attract government atten-

tion to housing development.

The theme of this year’s edi-

tion is “Transforming Nigeria

through the development of

the Housing Sector”.

The housing award is also

used to honour, recognise

and encourage those who

have contributed immensely

to the development of hous-

ing sector in Nigeria. Nota-

ble among those to be ho-

noured during the event are:

Alhaji (Dr.) Ibrahim Gaidam,

Yobe State Governor as the

Housing Governor of the

year; Ogbeni Rauf Aregbeso-

la, Osun State Governor as the

Urban Renewal Governor of

the year; Mr. Terver Gemade,

Housing Man of the year;

Chief Bamidele Awosika,

Chairman of Housing Corpo-

ration of the year; Hon. Ado

Moses Okino, CEO of Hous-

ing Corporation of the year

and; Mr. Bode Adediji, former

NIESV President as President

of Professional body of the

year.

Others include Copen Ser-

vices Limited and Sparklight

Property Dev. Coy Ltd as Es-

tate Developers of the year;

Alhaji (Bldr) Bala Kaoje, -

PDP National Treasurer, Life

Time Achievement in Hous-

ing; Copa Cabano Homes,

Award of Excellence in Estate

Development, among others.

The focus of this year’s con-

ference, according Festus

Adebayo, the Programme Co-

ordinator, will be on Chal-

lenges of Building collapse;

New achievement of FMBN;

State Government Perfor-

mance in Housing; FG Trans-

formation Agenda and Hous-

ing Issues and; Social Hous-

ing.

Abujahousingshow tohonourstakeholders

Homes & Housing Finance

By YINKA KOLAWOLE

Stories by YINKAKOLAWOLE

CMYK


Homes & Housing Finance

Abia State governmentis set to sign aMemorandum of

Understanding (MoU) withASO InvestmentDevelopment Company Ltd(AIDC) to develop 400housing units that would formthe second phase of thegovernment’s housing estatein Umuahia new layout.

AIDC is a fully integratedproperty development thatspecializes in theprocurement anddevelopment of propertyassets in Nigeria andmanagement company and; a

Abia partners property firm to develop 400houses

By YINKA KOLAWOLE

subsidiary of ASO Savingsand Loans Plc.

Mr. Nwabueze Onwuneme,Special Adviser on Housingto Governor Theodore Orji,said that as soon as the twoparties sign the MoU, thecompany is expected to moveto site immediately thereafter.“We should start clearing thesite in another week and it isexpected that in nine monthswe will be seeing the first setof buildings,” he declared.

Onwuneme said that theland area for the development

is 50 hectares and that amodern community would bebuilt on it. “We have 400 semiand fully detached two andthree bedrooms houses thatwill be eco-friendly, firestation, mall, hospital,playground, recreationfacility and parks. The roadswill be wide and paved withinterlocking stones. We arenot developing slums,” headded.

The gubernatorial aide alsodeclared that the Abia Stategovernment is prosecuting agrand urban renewal strategyto ease chaos in Aba as well

as in all major towns and inlocal government areas in thestate. “The Aba-OwerriRoad, the mid-rib of Aba city,no longer has its naggingtraffic problems because ofthe relocation of the notoriousOsisioma Motor Park to a newfacility the Abia StateGovernment built recently.Areas where there were nearimmobile traffic now have freeflow of traffic because of therelocation of the former motorpark, which has been turnedto a leisure park withbeautiful flowers and well-landscaped lawn.

“Also, road medians havebeen erected to traffic controland a foot bridge has beenconstructed with a partdropping off at the compoundof the Abia Polytechnic to easestudents’ crossing of the mainroad. The foot bridge dropsclose to a new high-profile‘Book House’ building, ahuge three storey complexthat the government built tohouse some departments inthe school. Two other newbuildings dot the school, anew engineering complexand a HospitalityDepartment,” he stated.

CMYK


Insurance

Following the avalenchof claims that has beset

the insurance sector in recenttime, Managing Director ofCrystalife Assurance Plc, Mrs.Oluseyi Ifaturoti is of theopinion that any organisationthat wants to remain in busi-ness must do what is profes-sionally ethical by chargingappropriate rate for risks.

Highlights of first halfof 2012

The first half of the yearstarted a bit slow because ofthe way the economy started.And you know that a lot ofthings in Nigeria aredependent on the budgetbeing signed and it was notsigned until after the firstquarter of the year. So theentire year started on a veryslow motion. But in the privatesector activities were goingon, everybody tried to renewtheir policies. But you knowin all intent and purposes, thegovernment contributes about50 per cent of our business,so if the government is notspending, we feel it and if thegovernment has not renewedtheir businesses, we feel it.For us in Crystalife, a lot ofthe government businessesdid not get renewedeffectively and so it didn’t looktoo good. Hopefully before thehalf year is concluded, webelieve that most of them willrenew their policy. With all theclaims occurring now, forinstance the Dana air crash, alot of victims belong to onegovernment sector or theother. For some of them theirpolicies have been renewed,for some their policies have notbeen renewed but lives havebeen lost. Ideally peopleshould just ensure that theirinsurance policies are up andrunning because nobodyknows when disaster willcome or may happen.

Also, we had a lot of friendlyinteraction with our ownregulator, the NationalInsurance Commission,NAICOM, on the issue of theInternational FinancialReporting Standard, IFRS,about the things that we needto do to ensure that we arecomplying inline with bestpractices. 2012 marks thebeginning of accountingunder IFRS. In 2011, we weresupposed to give year endbalances and convert to IFRSso every operator has beentrying to work along that line.We are doing so many things,we are trying to put togetherthe ERM platform which is arequirement even without itbeing the requirement, everybody is trying to work in linewith best practices, because itsometime that we are all tryingto ensure that we put onground. A lot of otherinstitutions are undergoingchanges as there has beensome consolidation, buy-oversin the industry, majorityshareholding in somecompanies and some that arebank related have had new

‘Insurers must chargeappropriate rates toremain in business’

By ROSEMARY ONUOHA

shareholders coming on. It’sbeen okay all in all, everybody has been up and doing.One thing about our industryis that we are always up anddoing because you can notafford not to comply, mobilizebusiness or not to ensure thatyour premiums are collectedbecause you need to have thepremium to enable you payyour claims. And of course alot of organisations are tidingup their year end, some havedone their AGMs, some arein the process of doing it. Sobasically that has been it andby the end of the month weshould be having theNigerian InsurersAssociation, NIA, AGMwhere it is expected that wewill usher in a new chairmanfor NIA.

But yes, there have beenheavy claims for us in thefirst half of the year. Theclaims have been huge andeverybody has beencomplaining. That brings usback to what we need to doas operators because howmuch you charge is also afunction of your experience.

When the 9/11 happened,insurers in so many parts ofthe world edged up their ratesbecause when there is a hugedisaster, the effect of that isthat rates would berationalized again andreviewed and it would go upfor the insurance industry tobe in a position to continue topay claims. One thing that wehave experienced in theNigerian insurance sector ishuge claims because a lot ofus cover the police and theyhave been in the forefront ofthe Boko Haram attacks. Someeven die and there was anaccidental crash of ahelicopter. Dana is anotherhuge claim on this industry,there is property damage, lossof human lives and of coursewe have nothing less than 20lives of those that are insuredby virtue of them being partof one governmentorganisation or the other. Wedon’t want to call it a gloomypicture but it has not been afantastic first half of the yearfor us but we have been livingup to the settlement of claimswhich is our core priority.

In the first half also, we tryto put up the retail end whichis one that has been foot-dragging and we have beendoing a lot of research and wehave been trying to enhancethe visibility of ourorganisation to concisely putthe idea of insurance in theminds of the people on theimport of taking one form ofinsurance policy or the other.How do you explain it, a mansitting in his own house, didnot go to the airport, did notgo to Abuja, did not plan toenter an aircraft but hesuffered loss as a result of anair crash. So it just goes toshow that you cannot sit downand totally imagine where adisaster can happen from. Webelieve that we are a prayingnation, and we will continueto pray, however, we shouldalso make sure that we havethe adequate insurance atleast to take care of thefinancial stress even if youcannot handle the emotionalaspect. And when thefinancial stress is taken careof it also reduces theemotional stress.

Conversion to IFRSConversion to the

International FinancialReporting Standard, IFRS,may be expensive but it isgood because it is tendingtowards best practice,towards good exposure,towards a lot of integrity andtransparency. And it willgrant comfort and confidentto foreign investors oranybody. Any nation will behappy to have direct foreigninvestment here but one of thethings that will stand in theway is interpretation offinancial results when theyare not sure. Because whatIFRS does is to put everyfinancial result on the samepage anywhere you go in thisworld. This is a standard, iffor any reason you are sayingthis is this, you will explainand give the reason why it isthat. So it leaves nothing toimagination. And for us, yesit may be a bitter pill toswallow but it is good. Thepublic will be confident, yourshareholders, policyholdersare comfortable because theycan read and know that it isthe truth and the issue ofcreative accounting is gonefor good with that. Everythingis brought to book and youhave to give explanations forthe whole load of things andthose standards are there toensure transparency and fulldisclosure of the issue as theyare. So Nigeria has done wellto fall in into the list. For usat CrystaLife, we havefinished our conversion; wehave started sending ourreport to NIACOM. Our firstquarter report was sent in linewith IFRS. So we are at home.A regulator will not just comeout with anything, they haveseen that it is the best for themarket and those of you thatembrace it will enjoy. All ofthe things that we areenjoying in Crystalife todayare because we have donethings well. When they saidraise capital, we raised real

capital and we are happy forit. When the capital marketcame and swallowed peopleup we still had things to fallback on and by the specialgrace of God, we are stillrunning our business. Wehave written off somediminution because of the lossin the market but we are stillover and above the minimumcapital and we are better andstronger. Everything we saywe are is what we are. We arecomfortable and confident.When a foundation is faultyissues will be there, when theclaims come, there will beissues. But here when theclaims come we pay. The onlything we need to do now, fromexperience is to review therates that we are charging onsome of the policies becausethe claims have beenimmense. If we do not reviewand charge according to therisk in Nigeria becauseeverywhere has suddenlygone riskier, the life hassuddenly gone riskier,property everything hassuddenly become riskier sothe rates we charge have gotto be reviewed according toour experience on all of therisk that we are writing.

Appropriate pricing ofrisk

With the incidence ofclaims that we areexperiencing, anyorganisation now that wantsto remain in business must dowhat is professionally ethical.You must chargeappropriately. We areunderwriters, we are notmeant to charge premium andgo to be praying that claimswill not happen. We shouldcharge according to the riskthat we are carrying. Afterassessing the risk, we shoulddetermine the appropriatepremium commensurate withthe risk that we are carrying.Claims are real; you need todo something about it so thatyour bottom-line will remainactive because the percentageof claims to what you write isa percentage of underwriting.Your underwriting result atthe end of the day is a functionof how well you underwrite.What is the job of a prudentunderwriter? It is to evaluatea risk and to determinewhether to take it or not. Andif you will take it, at what pricewill you charge? And thatprice depends on the severi-ty of that risk when it occursand the possibility as well asthe frequency in which it willoccur, those are the thingsthat the underwriter shouldtake into consideration.

In Crystalife, we are re-viewing and that is it. A lot ofrisks come and we look at itand if the person is insistingthat this is not it, we let it be.Some of them have comeback to say, ok you can haveit at your rate, some havegone but we are still here. Wewouldn’t take things that willwipe us off the economiclandscape of Nigeria or wipeus off the corporate landscapeof Nigeria.

In Crystalife, we are reviewingand that is it. A lot of riskscome and we look at it and ifthe person is insisting that thisis not it, we let it be

,

,

Mrs. Oluseyi Ifaturoti

CMYK

Appointments & [email protected]

Food, Beverage and Tobacco Senior Staff Association of Nigeria, FOBTOB, President, ComradeTunde Abdulrahman with Managing Director Promasidor, Keith Richardsand Promasidorbranch executive at the conferment of the Senior Comrade Award in Asaba, Delta State.

Aina emerges Presidentas CIBN elects newleaders

A SEASONED and wellgrounded professionalBanker and a member

of the Taskforce on GlobalBanking Education StandardsBoard, GBESB,Mr. SegunAina, has been elected the17thPresident/Chairman ofCouncil of the CharteredInstitute of Bankers ofNigeria, CIBN.

Elected alongside Mr. Ainato lead the institute for thenext two years are are Mrs.‘Debola Osibogun, stVicePresident; Dr. Segun Ajibola,nVice President and Mr. UcheOlowu, National Treasurer.

Mr. Aina who succeeds im-mediate Past President, Mr.’Laoye Jaiyeola.

Similarly, Mr. AdebiyiOladele Alabi, ACIB,Executive Director, EcobankNigeria Plc; Mr. BayoOlugbemi, ManagingDirector, First Registrar Ltd,Mr. Kenneth OnyewuchiOpara, FCIB, Deputy GeneralManager, Fidelity Bank Plcand Barr. Deji Olanrewaju,FCIB, Head of Department,International Law, BabcockUniversity, were also electedinto the Governing Council ofthe Institute.

Aina, until his election asthe President/Chairman ofCouncil, has served theInstitute in various capacitiesincluding, 1stVice President2010 – 2012; 2ndVicePresident 2004 -2006;Chairman, Board of Fellows,2010 – 2012; Chairman, Boardof Practice Licence; Chairman,Corporate and Public Affairs

Committee, 2004 -2008;Chairman, Strategic PlanningCommittee. On the globalscene, he is a member of theTaskforce on Global BankingEducation Standards Board(GBESB), 2011 – 2012, formedin Malaysia.

A product of Universities ofLagos and Ibadan, he holdsa number of academic andprofessional qualificationsamong which are, Masters ofScience in Banking andFinance; Bachelor of Sciencedegree in Accounting.

He qualified as Associate ofthe Chartered Institute ofBankers of London, ACIB, in1979 and also a Fellow of theChartered Institute ofBankers, (FCIB), London andNigeria; Fellow, NigeriaInstitute of Management(FNIM), Fellow, Institute ofDirectors (FIOD); Member,

Canadian Council on Africaetc.

The President is also analumnus of Lagos BusinessSchool; INSEAD, France andIMD, Switzerland.

A seasoned and wellgrounded professionalBanker, Aina has contributedsignificantly to the growthand development of thebanking industry.

He started his professionalbanking career at the UnitedBank for Africa Plc in 1974,moved to Ecobank Nigeria Plcas Assistant GeneralManager in 1989 and rose tothe position of ExecutiveDirector of the bank inFebruary, 1994. Aina left theservices of Ecobank Plc in1999 and joined FountainTrust Bank Plc (now memberof Spring Bank Plc) as the

Managing Director/Chief Ex-ecutive until his voluntaryretirement from the bank in2004.

In addition, he has servedas Director of many otherinstitutions within thefinancial services industrysuch as: Nigeria InterbankSettlement Scheme PLC(NIBBS), First SecuritiesDiscount House Ltd, (FSDH)and FITC

In addition to playing activeroles in the banking industry,Mr. Aina also serves asDirector, First Atlantic BankLtd, Ghana; Director,ACCION Microfinance Bank;Chairman, AdvancementBoard, Federal University ofTechnology, FUTA, Akure;Member, AdvancementBoard, Obafemi AwolowoUniversity O.A.U Ile-Ife andMember, Advisory Board,Osun State University,UNIOSUN.

He was the President, WestAfrican Bankers Association(Nigerian Chapter), 1999 –2001 and Chairman, BankingIndustry PublicEnlightenment Committee (aSub-Committee of BankersCommittee), 2005 – 2008.

Aina was conferred with anational honours award ofOfficer of the Order of theFederal Republic, O,by theFederal Government ofNigeria in recognition of hiscontributions to bankingindustry and economy.

Osibogun, 1st Vice President

OSIBOGUN was alsounanimously elected as

1stVice President of the Institute. Prior to her election, she was the

2ndVice President from 2010 to 2012and her exceptional organizationalskills made her uniquely qualified forher new role.

She commenced her banking careerin 1979 and held variousmanagement positions in severalinstitutions culminating on herappointment as Managing Director/Chief Executive, Sky Trustees, aposition held till 2009.

An accomplished Amazon of theNigerian banking industry and aseasoned technocrat, Otunba

Osibogun, qualified asAssociate of the CharteredInstitute of Bankers of Nigeria(ACIB) in 1994 and wassubsequently conferred withthe Fellowship status of theInstitute in 2005.

She is also an Associate ofChartered Institute ofTaxation of Nigeria and hadserved the Country in variousways as Member, PresidentialCommittee on Housing andUrban Development;Member, PresidentialCommittee on MortgageFinance; and Member, RealEstate DevelopersAssociation.Osibogun

Ajibola, 2nd

Vice President

AJIBOLA, elected as2ndVice President is an

accomplished and astutebankers and had served asNational Treasurer of theInstitute, 2008 - 2010.

His journey into thefinancial sector commenced in1989 when joined the servicesof Nigerian-AmericanMerchant Bank Limited androse to the position of a SeniorManager/Head in 1996.Same year Ajibola movedover to First City MerchantBank Limited (now First CityMonument Bank Plc) as anAssistant General Managerwhere he held the post of anAssistant Vice President &Head of Credit until 1999.

Ajibola occupied othersenior positions in thebanking industry whichincluded Deputy GeneralManager, First Bank ofNigeria Plc, 2002 – 2004;General Manager andDivisional Head,Intercontinental Bank Plc(now Access Bank Plc), 2004– 2005; Executive Directorand Regional ChiefExecutive, 2005 – 2009;Managing DirectorDesignate, IntercontinentalBank Plc East AfricanFranchise, 2009.

A first class graduate ofEconomic from ObafemiAwolowo University, Ajibolais an erudite scholar,intellectual and seasonedprofessional banker,economist and legal luminary,who qualified as Associate ofthe Chartered Institute ofBankers of Nigeria ACIB, inOctober 1997 and wassubsequently conferred withthe Fellowship status of theInstitute in 2006.

He is also a Fellow of theInstitute of CreditAdministration of Nigeria,2008.

At present Deacon Ajibola isa Management Advisor(/Risk) Inland RevenueService,2012 to date and priorto his appointment he was theDirector of Operations, LotteryTrust Fund, The Presidency,Abuja, – 2012.

Mr. Segun Aina

Ajibola


CMYK

Agric Business

As the country awaitsthe introduction ofhigher duty on the

importation of wheat floursand grain from next month ofJuly as one of the measuresto encourage the use ofcassava flour in the country,there are indication thatmillers are fighting tomaintain the status quo.

From next month , Wheatflour will attract a levy of 65per cent to bring the effectiveduty to 100 per cent, whilewheat grain will attract a 15per cent levy to bring theeffective duty to 20 per cent.

Recently, the rejection of thebill on cassava inclusion inbread by the NationalAssembly was traced to thefight back by the millers.

In fact the Minister ofAgriculture, Dr. AkinwumiAdesina, while refuting theclaims that a bill on 40 percent cassava inclusion inbread production was sent tothe National Assembly, saidthat the flour mills and theirsurrogates are doing all theycan to misinform Nigerians soas to protect the super normalprofits they siphon out ofNigeria.

The information thatcassava consumption wasbad for patients sufferingfrom diabetes is one of themisguided information beingpassed around by the milersso as to truncate thegovernment policy ofincluding cassava in wheatflour.

The Minister said thestatement is scientificallybaseless and maintained that“cassava flour has lowglycemic indices of 59.34percent compared to wheatflour having 70.10 per cent.”

He continued: “Thestatement credited to somepeople that cassavaconsumption is not good forthose with diabetes iswholesomely untrue,scientifically baseless and isa deliberate attempt tomisinform Nigerians.

“In the Glycemic indices ofselected Nigerian flour mealproducts in male type 2diabetic subjects published inDiabetologia Croastica 36: 2,2007, the authors comparedcassava flour with yam,maize, and wheat flouramong diabetic patients. TheGlycemic indices show thatyam flour is 49.81, cassavaflour: 59.34, Maize flour54.83 and wheat flour:70.10.”

Quoting the President ofthe Nutrition Society ofNigeria, Prof. IgnatiusOnimawo, he said: “cassavaflour will not increase theglycemic index of bread. Itwill not aggravate diabetes.In fact, it may lower it. Theglycemic index of flour ishigher than that of cassava.It is only whole wheat bread(i.e wheat flour with branintact) that has lowerglycemic index.”

40% cassava inclusion in flour:Are the millers fighting back?

BY JIMOHBABATUNDE with agency reports

Some flour millers are saidto be giving ridiculousexcuse that the wheat flourbeing imported into thecountry had low proteincontent, and that mixing itwith local cassava flour wouldrob the finished product ofadequate protein content.Some flour millers evenstockpiled cassava flour todeceive StandardOrganisation of Nigeria,SON and Nigerians that theywere complying withgovernment directive whilethey are not.

The minister said the nationhad depended so much onwheat importation which,according to him, “costs thecountry N635 billion annuallyat the detriment of Nigerianfarmers.”

He added “The issue of useof cassava bread is also aneconomic decision. Nigeriaspends N635 billionimporting wheat and keepingfarmers of wheat exportingcountries employed,exporting jobs, whiledisplacing jobs at home.”

In 2011, estimates show thatAfrica spent more than $50billion on food imports. Therising prices of food does notmake the situation better inthe years ahead, according to

Dr. Akin Adesina, Nigeria’sAgriculture Minister who isalso an economist.

This probably informed whyas the President of Nigeriabetween 1999 and 2007,Obasanjo promoted a 10percent cassava inclusionpolicy in wheat bread in aneffort to promote agriculturalgrowth and diversify theeconomy through theCassava Initiative project.

It was envisioned thatNigeria, being the largestproducer of cassava in theworld, could engage in amore effective utilisation ofthe crop through valueaddition with a view topromoting the agro-alliedindustrial sector.

Sometimes in 2005,Obasanjo’s government madeit mandatory for bakers toinclude 10 per cent of cassavaflour in the production ofbread and all other flour-based products.Unfortunately, his effort wasfrustrated by the millers whosaid it was not possible toinclude cassava in wheatflour.

Even out of office, PresidentObasanjo, now InternationalInstitute of TropicalAgriculture’s Ambassador,still believes in the policy as

he said recently that Africaneeds to rethink its foodimport burden and consider‘local content’ options, suchas the inclusion of cassavaflour in wheat to reduce therising import bills.

“If we want to develop, wemust change ourconsumption habits. We mustconsume what is our own,what is around us in Africa.In this way, we will be able tomake progress,” Obasanjoadded.

The policy, backed byimproved agriculturalpractices from IITA andnational partners, increasedcassava production in Nigeriaby 10 million tons within 6years, making Nigeria theworld’s top producer ofcassava.

Building on that success,researchers from IITA,working in a pilot bakery,have raised cassava contentin bread to 40 percent withoutcompromising quality.

Upon tasting the 40 percentcassava bread, Obasanjoexclaimed, “The taste isgood!”

“We need to promote it tomake people adopt andconsume it,” he said. Besidesrelieving the burden on foodimports, the adoption ofcassava flour offers severalbenefits to Africa. It promisesto make cassava competitiveby creating markets for theroot crop and offering fairprices to farmers.

With climate change takinga negative toll on most grains,cassava production is fastbecoming an option. Thecrop’s tolerance of extremeweather such as drought andits ability to thrive on poorsoils are increasing its

appeal.In Nigeria, for instance, the

government estimates that the40 percent inclusion ofcassava flour in wheat breadcould help the country saveabout N254 billion ($1.7billion) annually.

“But more than savings, thiswill also provide jobs for ouryouths,” said Adesina.

The success of the cassavapolicy in Nigeria aims toradiate benefits to largeraspects of the economyincluding helping instabilizing the exchange rateof the naira to the dollar andmore importantly, making thefarmers proud and richer.

So, one major challenge,which advocates of cassavaflour said they are facing ishow to convince flour millersthat Nigeria’s cassava flour isof good quality. Many ofthem expressed the fear thatnot many processingcompanies abound, and thatthe cassava flour may not beadequately processed to meetthe desired quality.

But, Dr. Akinwumi said theprivate sector has expressedreadiness to substitutecassava flour for wheat flour,citing UTC Plc and FoodConcepts as few of the breadand confectionariescompanies.

This was confirmed by themanagement of the UnitedTrading Company (UTC)which said that it has set outplans to cooperate with flourmanufacturers and leadingcorporate bakers to achievethe Federal Governmentsdrive for the inclusion of 40percent High QualityCassava Flour (HQCF) in theproduction of bread.

Folusho Olaniyan,managing director of UTCsaid “We can confidentlyreveal that, we have thecapabilities to partner with theFederal Government,particularly meeting the 40%inclusion.”

She noted that UTC ispositioned to be part of theinitiative is based on thecompany ’s firstdemonstration -test run ofcassava-based bread, whichdates back to 2007, saying thatthe company has actuallygone ahead to match thequality of the bread producedfrom the High QualityCassava Flour (HQCF) withthat of 100% wheat flour.

She said they are going tostart an enlightenment cam-paign as there are “ marketinterest group that are inter-ested in the cassava projectand we are going to enlight-en people, we are going tohold meetings and discus-sions.

“What we are doing now iseducating most of our custom-ers of the benefit of the prod-ucts and that of the project tothe nation. And any patrioticNigerian should buy into thisproject. Because ultimately, itis wealth, job creation for thecountry, as well as food secu-rity and it will give a boost tothe profile of the nation. “

,

,

The issue of use of cassavabread is also an economicdecision. Nigeria spends N635billion importing wheat andkeeping farmers of wheatexporting countries employed,exporting jobs, while displacingjobs at home

Former President Olusegun Obasanjo tasting the cassava bread


CMYK

Aviation

BRIEF

DANA Crash: NAAPEimplores Nigeria's travellingpublic not to panic

Stories By LAWANIMIKAIRU & DANIELETEGHE

President of the NationalAssociation of Aircraft

Pilots and Engineers(NAAPE), Comrade DavidIsaac Balami has imploredNigerian travelling publicnot to panic and stop to flysaying that the countrywould soon get over theDANA crash.

Speaking during a pressconference at the Secretariatof the National Union of AirTransport Employees(NUATE), Comrade Balamistressed that Nigeriansshould feel free to fly addingthat although it appreciatethe fears and anxiety of thepublic at the moment, theindustry would soon pick upagain.

According to him, “I wantNigerians to feel free to fly,it is not easy, it is not goingto be easy but we are goingto get over it, the governmentis interested, NCAA, theyhave been trying but they aregoing to do more, we will allsit up, it is not good tocriticize us because, I can tellyou that whether we like itor not, not because of theplane crash, we aviators,most of us have failedNigerian”

“Most of us as airlineoperators have failedNigerian, even in the way wetreat passengers, somebodycome to buy a ticket it is as ifthe airline is doing thepassenger a favour, flight isbeen delayed, there is nocommunication, there are somany ways that the aviationsector has hurt Nigeriancitizens but we want to assurethem that because of ourrelationship withmanagement of each airline

and the government, I amtalking about NAAPE as abody, we are going to doeverything possible to makesure that Nigerians haveconfidence in the aviationsector once again and we aregoing to get there” hestressed.

Speaking on the purposewhy the conference wasorganized, Comrade Balamisaid the purpose of the pressconference was first of all to

commiserate with Nigerians,the families of those that losttheir loved ones, and theentire nation and also to letthe press know that for thevery first time NAAPEmembership went on strike inAir Nigeria for up to a weekto make the aviation sectorbetter.

Comrade Balami furthersaid Air Nigeria airline wasnot grounded due to safetyreasons, but due to welfare

package which ‘’ we believethat if we did not interveneor come into the whole issue,it could lead to incident oraccident and we all know whythere was a delay because themanagement of Air Nigeriadid not agree with theassociation on the issues thatwere on ground and becauseof that, it took us a lot of timebefore the Chairman of AirNigeria, Mr. Jimoh Ibrahim,addressed our members so thestrike has been called off”

Kenya Airways will cutcosts this year to protect

its bottom line, its chiefexecutive, Titus Naikuni,said after a sharp rise in itsfuel bill hit annual profits.

The airline, which is owned26.73 percent by Air France-KLM and 29.8 percent by theKenyan governmentfollowing this month’s rightsissue, is ranked among thelargest carriers in sub-Saharan Africa, alongsideSouth African Airways andEthiopian Airlines.

Mr Naikuni said the cost-cutting measures would befar-reaching and will affectprocurement, staffproductivity and fuel costsbut would be preceded by athorough review of theairline’s cost structures.Naikuni also said the firmwould also drive revenuegrowth through increasing itsfleet to 40 planes this yearfrom 34, while opening newroutes to Beirut and Abuja.The airline, whose strategyhinges on connecting Africato the rest of the worldthrough its Nairobi hub, will

Kenya Air to cut cost after profit dropsalso increase its fleet offreighters to three from one.

“You can’t let costs run awaywith you,” he told an investorbriefing after the companyreported a 57 percent drop inpre-tax profits in the year toend-March to KES2.15 billionKenyan shillings (USD$25.2million), after oil pricesjumped during the period,sending its direct costs up by44 percent to KES77 billionshillings (USD$902

million).Revenue increasedby a quarter to KES107 billionshillings, buoyed by higherpassenger and cargo traffic.

Kenya Airways’ said a moveto bring together carriersunder the African AirlinesAssociation to buy fuel jointlyin bulk, would save it USD$2million this year, adding theywould also carry on with fuelhedges in order to managethe costs.

Analysts said focusing on

costs was the right step,adding that next year ’sdelivery of the first of nine 787Dreamliner planes orderedfrom Boeing, would also cutcosts as the planes are morefuel efficient.

‘ “This is a very volatilebusiness because fuel costsare something that airlinescannot really control,” saidGregory Waweru, who coversKenya Airways at KestrelCapital.

Air crashreports:Kayodeshouldsubstantiatedoctoringclaim

— Capt Akinkuotu

Following the claim byFormer Minister of

Aviation, Chief Femi Fani-Kayode that the FederalGovernment wasresponsible for doctoringreports of past plane crashesin the country “in an attemptto manipulate the reports”,Rector of Ilorin College ofAviation, Kwara state,Captain. Fola Akinkuotu hassaid that Chief Kayodeshould substantiate hisclaim.

Captain Akinkuotu whiledisclosing this developmentto newsmen said, “I am notaware and I do not know andthen I can’t say whether anydocument has beendoctored and I do not expectthat they should bedoctored. I like to believethat people in the AccidentInvestigation Bureau (AIB)are good people and areprofessionals. However, if aformer minister says so,what I will say is that thestatement should not bemade only, but should besubstantiated”

Asked if there was anytime the report of an accidentwas doctored, CaptainAkinkuotu said that he wasnot sure but affirmed thatany statement that could notbe substantiated by theclaimant was only beensubjective adding that in amatter of this magnitudeeveryone concern should beobjective.

“I wouldn’t know and likeI said I don’t expect it. Idon’t want to passjudgement over what I donot know. Anything thatcan’t be substantiatedbecomes subjective and Ithink we should be veryobjective in this matter” henoted.

There are reports that theFederal Government, failsto make public the reportsbecause, in some instances,the local versionscontradicted the versionsprepared by the NationalTransportation and SafetyBoard (NTSB) of the US,renowned for air crashinvestigations across theworld. The situation thusputs the government in aquandary.

The Chairman of AirNigeria, Barrister Jimoh

Ibrahim has advocatedcompulsory membership ofInternational Air TransportAssociation(IATA) fordomestic airlines in thecountry and their audit bythe organization’s oversightsafety audit(IOSA).This, he noted wouldpromote safety and restorepassengers confidence inNigeria registered schedule

Safety: Ibrahim advocates compulsoryIATA,IOSA membership for domestic airlines

passenger airlines.In addition, he called on theFederal Government to banfrom the country’s airspace,geriatric aircraft which hehumorously nicknamed-’’Grand Papa’’ planes.He noted that the average ageof aircraft in the fleet of hisairline was between three andnine years and they aremaintained as at when due toensure safety,’’We are not inthe group of airlines

operating Grand Papa fleet ofaircraft’’.He said with the membershipof IATA/IOSA in conjunctionwith NCAA, the safeoperations of airlines in thecountry would be bettermonitored including theirfinances by ensuring that theydo not default in theirfinancial obligations to otheragencies and constantmaintenance of the aircraft intheir fleet.

From left Miss Benyl Ehondor, Customer /PR Manager, Tehila Integrated Services Ltd; Mr.Timothy Ogboruche, Chief Executive Officer and Mr. Pagag Mycoyett, Chief Engineer duringa press conference in Lagos to announce the forthcoming Tehila/Master Audio Sound Summit2012. Photo by Lamidi Bamidele.


Tax Platform

State Governors wouldbe expected to ensureco-operation among

State Boards of InternalRevenue, the Federal InlandRevenue Service, the NigeriaCustoms Service and otherrevenue agencies for thedevelopment of the Nigeriantax system in areas such asinformation sharing,improved structure andefficiency in taxadministration, elimination ofmultiple taxation andadoption of a nationwideUnique TaxpayerIdentification Numbering (U-TIN) system.

Federal Executive Councilin general and the FederalMinistries of Finance,Education and Information inParticular The FederalExecutive Council (FEC) isthe highest Federal leveldecision making body inNigeria and is responsible fordecisions, which impact alllevels of Government inNigeria. In addition, theMinister of Finance whoexercises oversight functionson tax and fiscal issues is amember of the FEC. In thisregard, the FEC shall beresponsible for approving allmatters, which will ensureeffective oversight of taxpolicy and administration.The FEC would be expectedto give necessary direction toother levels and tiers ofGovernment in this respect asmay be relevant. Tax andfiscal matters shall be treatedwith priority, given theimportant role they play in theeconomic and nationaldevelopment of the country.

The executive arm ofGovernment is responsible forencouraging voluntarycompliance by taxpayers. Aneffective mechanism forachieving high compliance isby leading by example as wellas by making the mostefficient use of the tax revenuecollected by the Government.Accordingly, all members ofthe FEC shall on an annualbasis ensure that they fullydisclose all sources of incomeand ensure the right taxes arecomputed culminating in thepublication of their taxclearance certificate by the30th of June annually. TheFEC shall in addition ensurein all of its decisions andactions that tax revenue isjudiciously allocated andutilised for the benefit of theentire citizenry. The FECshall also ensure that on amonthly basis taxpayers areinformed of the use to whichtax monies are being applied.In this wise, the FEC shallensure that matters of taxationand revenue generation ingeneral form an intrinsic partof the deliberations anddecisions around the annualappropriation budget as wellas in discussions at theFederal Executive Councilmeetings on at least aquarterly basis.

The FEC shall co-operatewith the Legislature ininitiating legislation on taxmatters and shall provide thenecessary approvals required

National Tax policyguidelines andrules (7)

to speedily implementlegislation, which is passedby the Legislature. The FECshall also ensure a cordialrelationship with theJudiciary and that theindependence and integrityof the Judiciary is maintainedat all times. There shall be co-operation amongst all themembers of the FEC inrelation to tax and fiscalmatters especially with regardto information sharing. AllFederal Ministries,Departments and Agenciesare required to provide andshare all information thatwould assist in the accurateassessment and collection ofthe relevant taxes. This wouldinclude amongst others:Having a revenue generation(as distinct from anexpenditure) mindset. Strictimplementation of tax lawsincluding overt and explicitsupport through referrals ofmajor cases to tax authorities(Federal and State) on acontinuous basis andintegration of tax “psyche” inthe day to day business ofgovernment: Ensuring properassessment, collection andprompt remittance of taxes todesignated governmentaccounts; Ensuring fiscalcompliance of every personthat they deal with;

* Ensuring that everydatabase maintained ingovernment has a compulsoryfield for the inclusion of theunique taxpayeridentification number forevery company, enterprise,individual and otherregistered organisation

*Use of e-payment systemsin all transactions inclusive ofdirect remittance to theaccounts of the taxauthorities;Use of technologyand related systems in theway business is done - e.g.electronic cash registers,automated land registries, etcand linkage of databases andsuch systems maintained ingovernment to that Federaland State tax authoritydatabases

* Ensuring tax is a majorconsideration in theevaluation process ofindividuals and organisationssuch that the lack of paymentof taxes is seen as an affronton government and a crime.

*Ensuring that all TaxClearance Certificates andother tax documents used ingovernment transactions arereferred back to the relevantrevenue authority forauthentication.

*Have primaryresponsibility for tax policymatters, including initiatingproposals for amendments totax laws by the NationalAssembly.

*The FMF shall coordinateall requests from other

Federal Ministries andAgencies relating to fiscalissues as would ensureharmonisation of the fiscalpolicy issues of government.In this regard, no otherFederal Ministry orGovernment agency shallhave the right to commitgovernment through thesigning of agreements,writing of letters, or othercommunication regardingfiscal policy issues without theauthority or consent of theFederal Ministry of Finance.

* The FMF and the relevantGovernment agency, whichwill administer the tax, shallseek recommendations fromthe relevant stakeholders toensure that enactments areregularly reviewed andsubstantially meet theprinciples of good taxationand the objectives of Nigeria’stax system as stated in thisdocument.

* The FMF shall partnerwith the State Ministries ofFinance and other State andLocal Government agencies toensure the development ofNigeria’s tax system and a taxculture amongst Nigeriancitizens.

* The FMF shall in this role,work closely with the Federalinland Revenue Service, theJoint Tax Board and theNigeria Customs Service (inthe case of import and exciseduties) who have secondaryresponsibilities to support theFMF on all tax policy issuesaffecting the country.

* The FMF shall support theFederal Inland RevenueService and the NigeriaCustoms Service (in the caseof duties) on all taxadministration matters aswould complement the effortsof those agencies. Suchsupport shall cover amongstothers:

*Ensuring that taxpayersmonies collected areeffectively accounted for andjudiciously utilised

*Communicating to the taxpayer the use to which taxpayer monies are being put

*Demonstrating in action

and words that the taxpayeris a priority of governmentand is well appreciated

The Federal Ministry ofEducation (FME)

Shall provide support to theFederal Ministry of Financeand the relevant tax andrevenue authorities indeveloping a tax cultureamongst Nigerians. TheMinistry through its relevantorgans shall be responsiblefor ensuring the inclusion oftaxation in the curricula ofNigerian educationalinstitutions from primary totertiary institutions based ona cradle to grave concept.

The Federal Ministry ofInformation (FMI)

Shall provide support to theFederal Ministry of Financeand the relevant tax andrevenue authorities incarrying out publicenlightenment campaigns ontax and revenue mattersaffecting the country. It shallsupport the process ofproviding accurate and timelyinformation flow to Nigerianson all tax and revenuematters decided at theFederal Executive level. Inthis regard, it shall co-operatewith the Federal Ministry ofFinance and the relevant taxal)d revenue authorities toobtain the requiredinformation for disseminationto the public.

The SEC shall co-operatewith the State Houses ofAssembly in initiatinglegislation on tax andrevenue matters, which arewithin the jurisdiction of theState Houses of Assembly andalso provide the necessaryapprovals required toimplement legislation, whichis passed by the House ofAssembly.

The SEC shall ensure acordial relationship with theJudiciary and that theindependence and integrityof the Judiciary is maintainedat all times. There shall be co-operation amongst all themembers of the SEC inrelation to revenue matters.

State Executive Council ingeneral and the Ministries ofFinance, Education and In-formation in particular

The State Executive Coun-cil (SEC) shall playa role sim-ilar to that of the Federal Ex-ecutive Council as the high-est decision making body atState level. In this regard, itshall be responsible for ap-proving all matters pertainingto policy development as wellas the implementation andenforcement of taxes at Stateand Local Government level.It is also expected to give thenecessary leadership and di-rection to Local Governmentsin respect of revenue gener-ation matters. Tax and reve-nue matters shall be treatedwith priority, given the im-portant role they play in theeconomic development of theStates.

,

,There shall be cooperation

amongst all the members ofthe FEC in relation to taxand fiscal matters especiallywith regard to informationsharing


Kabir M. Mashi, Ag. Chairman, FIRS

CMYK

People in Business

Miss Mayen Ekpo is the Managing Director/ChiefExecutive Officer of Black & Gold Events, an eventsand catering outfit based in Lagos. The graduate

of Food Science and Technology from the University ofNigeria Nsukka (UNN), said her going into events businesswas a case of turning her hobby into a profession. In thischat with Financial Vanguard in Lagos recently, the ex-Carnival Calabar Queen says the youths of today are not asbusiness-conscious as they are money-conscious. They wantto have a lot of money but they don’t want to work for it.

Excerpts.

After her secondary school education at Queens College,Yaba, Lagos, Miss Mayen Ekpo gained admission intothe University of Nigeria Nsukka where she read Food

Science and Technology.“I graduated in 2008 and in 2009, I became the Carnival

Calabar Queen. I was in Calabar, Cross River State for a year.Afterwards, I decided to launch my own business because Iworked in an event planning company for a while and Irealised I was talented in that area. I began as a professionalcompere and it was exciting and nice to moderate at events. Iactually started while in school. Some people would come tome and say ‘please cook for this event and compere too’ or ‘doyou have anybody that cooks?’ And I could cook very well. Icould cook for a large crowd so I will cook for the event andeventually end up being the compere. It was a wonderful thingand I realised I was going to do it professionally. I had finishedschool while I was queen so there really wasn’t anything todo apart from my duties as queen.”

For her to excel in her new profession, Mayen decided toacquire more knowledge in order to hone her skills and shedid not have to go far to do that.

She said: “I decided I was going to train myself and startedtaking online wedding planning courses while I was queen

You have to be an excellentadministrator to manage abusiness —Miss Mayen Ekpo

in Calabar. As soon as myqueenship was over, Ilaunched my business calledBlack & Gold Events.”

Asked how she came aboutthe name, she said: “When Iwanted to start eventsplanning, I realised if I wasgoing to be in Lagos, there area thousand and one eventsplanners in Lagos and Ineeded to create a niche formyself. So I decided I wasgoing to do something that isreally going to appeal to theelite, people that want thefinest things in life, theclassiest events, luxuriousevents, and I realised whatbetter name than Black &Gold! Black connotes mystery,intrigue, sophistication. Andwhen you see gold, you seewealth, affluence, so I realisedBlack & Gold was a perfectname. Under Black & Gold, Ihave a luxury division whichis targeted at supplyingluxury and classy goods. Wedo luxury hampers, just nameit. Anything from the classiestbrands in fragrances, timepieces, jewellery, we do all ofthat. Recently, I got into a veryunique brand of coffee calledorganogold. It’s not justcoffee alone, tea, hot chocolateetc. It is gourmet, meaningthat the classiest people of theworld can have a taste of it aswell as those that have healthissues. So I infused that intomy business and so far, it hasbeen doing very well.”

Speaking on her initialcapital, Mayen Ekpo saidevents planning business iscapital-intensive, “in fact, tilltoday, I have not stoppedspending money on Black &Gold because it is somethingI started from scratch and I

needed a lot of money. Askanybody anywhere and theywill tell you that eventsmanagement business iscapital-intensive. I do rentals,so getting the things to rentout to people costs money. Ido everything, fromdecoration, catering, drinks,ushers and models, lighting,to sound and technical stuff.In fact, we plan, package andexecute events. Of course youknow that all these things costhuge amounts of money so I

still keep putting moneyinto the business everysingle day."

As with everything inl i fe, there are ups anddowns and so it has not allbeen smooth for Black andGold Events. Said Ekpo:"The number one challengea new events planner facesis getting clients becauseas the saying goes, ‘thedevil you know is betterthan the angel you do notknow.’ Nobody wants to

take the risk of starting witha new person. That is onething I have learnt. Even ifthe person they know hasnot been doing them well,they prefer to stay with theone they know. They won’twant to try out a new eventsplanner. You will hear themsay something like: ‘Allthese new people sef.’

“Another one isadvertising. Advertisingyour business in Nigeria isa lot of money, talk about

newspapers, magazines,f l iers , posters , radio,te levis ion, even theinternet, you spend money.Getting committed staff thatknow what they are doing;good concept designers,good event hall designers,decorators, etc, is anotherchallenge. I found out thatbefore you can manage abusiness, you have to be anexcellent administrator.First of all, you have to beyour own secretary,personal assistant ,marketing and publicrelations personnel. Soemptying yoursel f intoother people that will nowrun with your vision isextremely difficult. And theyouths of today are not asbusiness-conscious as theyare money-conscious. Theywant to have a lot of moneybut they don’t want to workfor it. All they want is comeout of school, do their youthservice in a big oil companyso that they can be retainedor when they are done withthe youth service, they getinto an oil company. And Iask them, who is going toteach? Who is going to takecare of the children? Who isgoing to be the civi lservant? "These arequestions we should askourselves.

"One important thing thatwe, as Nigerians must knowis that this country is in thehands of the youths and theearlier we become service-oriented, the better for usbecause if everybody keepsgrabbing, a piece of thisand grabbing a piece ofthat, the country will justfall down flat so we need tobe service-oriented. Weneed to learn how to serve."

In the next five to tenyears, Mayen Ekpo saysher desire is for Black &Gold to have its own state-of-the-art event centre inLagos and by the grace ofGod, spread to other places.

Oneimportantthing thatwe, as’

’

Nigerians mustknow is that thiscountry is in thehands of theyouths and theearlier webecome service-oriented, thebetter for us

•Mayen Ekpo.... we need to be service-oriented; we need tolearn how to serve.

BY EBELE ORAKPO

•All set for an event


CMYK

ICT


STORIES BYPRINCE OSUAGWU

Chief ExecutiveOfficer, Main Onecable company, Ms

Funke Opeke, at theweekend threw a daringchallenge at the federalgovernment to open up thebroadband market and seewhat an explosion thecountry ’s ICT landscapewould suddenly experience.

Opeke was speaking whilereviewing the activities of hercompany in the last two yearsto ICT Journalist in Lagos.Her challenge apparentlycame off her worry that thecountry was still not havingthe expected access afterhuge investments insubmarine broadband cableprojects. This samecircumstance seems to havepushed her into changingMain One’s original businessdecision of being solely abroadband whole salecompany to now venturinginto the retail market.

Although she painted aflowering picture of growthand penetration that hercompany has made in the lasttwo years, the feeling thatmany others were just behind,seemed to dim her joybecause for her, getting thecountry to the top spot ofglobal broadband market wasfar more a desire thanindividual business growthand profits.

She believed that for aMain one that has close to 200corporate customers, investedwell over $255 million andstill investing, great joywould finally come when the

MainOne @2 challenges govt onopen broadband market

market is open, to createopportunity for all players toget together and put thecountry firmly on the map.

“We are not interested inbuilding a monopolisticempire. We want others tocome on board to help us in

taking access to where it issupposed to be in thecountry” she said.

According to her, “theproblem with broadbandpenetration in Nigeria is notabout infrastructure. There isinfrastructure but it is inproprietary, meaning that it iscontrolled by large telecomoperators. That is exactly whyit is still costly to go into theinlands. That is why a hugecapacity is still in the shoresand major cities. That is whythe wholesale retail pricedifferences are stillprohibitive and relativelyhigh.

“However, there is a way out— Broadband policy. We areseriously advocating for itbecause it would makeinfrastructure available for allto play, without thinking somuch about competition,business and profit” sheadded.

Taking the media throughher company’s two years ofoperations, Opeke claimedthat Main One has provenitself as a serious businessoutfit and a clear leader in thewholesale broadband genre ofNigerian ICT business.

“We have proven ourselvesin wholesale broadbandservices in Nigeria, Ghanaand other African countries.

At the moment, our cable

provides services betweenNigeria and Ghana. We arelooking forward to linkingfrom Togo to Benin Republic.We are carrying a lot ofNollywood content on ournetwork. So far, most of thecompanies uploadingNollywood contents on the netare doing so via our services.We are also working onlanding in Portharcourtshores to push capacity intothat region. However, we aretaking our time to ensure thatthe leap would have businessvalue”.

Meanwhile, Opeke alsonoted that MainOne waslooking forward to delvinginto the retail market. “Wehave partnership with secondtier operators (ISPs) to be ableto do that” she said.She also believes thatcompetition is one of the veryrealities of business buthowever added that in hercase, MainOne’s competitorsare just delving into theservice areas that thecompany ventured into evenas a green company ,succeeded and moved farahead. “I think that we are farahead and should beconfident that competition isfar behind.

Ms Funke Opeke

If there are two menwho have showngreat confidence in

Central Bank Governor,Lamido Sanusi’sattempt at entrenchinga cashless policy intoNigeria, they mayprobably be thePresident of ElectronicPayment ProvidersAssociation of Nigeria,E-PPAN, Mr MacAtasie and hiscounterpart atInterswitch limited, MrMitchell Elegbe.

The duo through theiroutfits have rolled outdifferent initiatives tosupport the cashlesspolicy project. WhileAtasie’s E-PPAN rolledout a summit tagged E-payment forGovernment Summit inAbuja, to help

Elegbe, Atasie confident inSanusi’s cashless policy*Interswitch backs CBN, E-PPAN’s Abuja summit

CBN has decided to use e-payment as a driver of a newgeneration of e-services inpublic sector in a bid toentrench the cashless societyand has set January 2013

target for Nigeria to embracethe cashless economy.However, the MDAs arecurrently facing a lot ofuncertainties and challenges

in implementing the FederalGovernment policy onelectronic payment. Thesummit would serve to releaserelevant government officialsof the pressure which the new

policy seems to be putting onthem. So, it is expected thatthe two day intensive forumwould strategise on the bestimplementation methods ofthe cashless policy by theMinistries, Directorates andAgencies, MDAs ofgovernment to implement thenew government cashlesssociety.

The summit which holds inShehu Musa Yar’Adua centreAbuja, July 10-11 2012, plansto feature series of workshopswhich would be facilitated bythe Central Bank Officers,Commercial Bank Officersand the top relevantorganizations in electronicpayment. The summit wouldalso provide avenue for allpublic officers to ask relevantquestions which feedback, atthe end of the day, will beused to shape the new policyfurther.

The workshops would forayinto wide areas of importancein the implementation of thegovernment’s cashlessscheme, including What rolewill e-payments play indriving down the cost to servecitizens? How can e-payments complement thecountry ’s vision 20:20:20initiatives? How can seniorofficials build business casesfor new e-paymentsprogrammes that best meetthe needs of their MDAs’?

government implementers ofthe policy out of theintricacies, Elegbe’sInterswith has thrown itsweight behind the event.

The card company said itsinvolvement in the epic eventwas due to its knowledge thatthe summit would bring aturn around in theimplementation strategies ofthe CBN newly introducedcashless economy in Nigeria.

It could be recalled that thegovernment through the

,

Elegbe AtasieSanusi

CMYK

Trade & Investment

Chris Ndibe, Executive Secretary of Africa Free ZonesAssociation (AFZA), an international non-profitorganization established in Cape Town, South Africa

in October, 2004 with the secretariat of the Association inNigeria in this interview with Favour Nnabugwu said thecountry can indeed attain a successful free trade zone far andabove other countries in the continent that have success storiesto tell about the free trade zones. He however said that it willbe possible only if Nigeria government can revisit the freetrade zone law and put other infrastructures in place to attractthe much needed boom in that area and many more.

ExcerptsWhat do we have to learn from the Asian tigers and other

successful economies that have made the best of the concept? When we talk about learning from Asia, I will first tell you

Nigeria FreeTrade Zones' lawis backward,delays businessboom – AFZA boss

that an economic environmentis very complicated;therefore, there is nouniversal model to a problem.So it is with Free Zonescheme. There are no uniquerules for the management ofFree Trade Zones, and so Isuggest that the regulationsand basic law have to berevised according to theeconomic environment. Notwo zones are the same butyou have to manage accordingit to its development,economic and socialenvironment. Going back toyour question, we can observethe basic things that arecommon to the success ofzones which is working forthe Asians. The concept mustbe considered as part of thenational economic strategy,otherwise we may not achievestrong linkages with localindustry. This is becausezones initiative determinestheir destiny from the startwith the policy framework;incentive packages and otherprovisions. That is why I saidearlier that our basic lawshave to be revisited to makeincentive competitive andreduce the control on zone’slaw. Nigeria ExportProcessing Zones Authority,the Free Zones Authority inthe country is beingunderfunded and thereforepoorly managed as to take usto the Promise Land wherethe Asian tigers are. I doubtif the Authorities can on theirown bring in a consultant fromanywhere to work with themfor a period and pay theconsulting firm or consultantwhich points to a weakadministrative body ofgovernment.

With the level of interferenceon our zones, administration

by other government agencieswhose responsibilities areallied to the development ofFree zones, a single body isimperative. By this, you haveFree Zone customs,immigration etc under onebody as it is in Dubai. This willmake for good training andretraining of allied agencyofficers, thereby reducing thefrustration of training acustom officer on Free Zonematter and after some monthshe or she is transferred. Suchofficer must be with FreeZone for not less than 10years.

NEPZA can work with Smalland Medium EnterprisesDevelopment Agency ofNigeria, SMEDAN, under aspecial guideline to nurture

incorporate a PPP frameworkfor zone developmentoutlining rights,responsibilities, andobligations of all parties withrespect to all aspects of zonedevelopment, financing,regulation and promotion.

As a matter of fact, if we dowhat we are supposed to doand the right attention given,our Free Zone will take us towhere the Asian Tigers are,thereby contributing to therealization of Vision 20:2020.

How would you describethe Nigeria free trade zonelaw in its present state?

The Nigeria Free TradeZone law in its present statecan be described as archaicand it requires visitation andreview. The Free Zone law isdelaying the businesscommunity who are dynamic

sell 100 per cent and a host ofother trash that need toexpunged and modern tenetsinfused into it. If you check,there is no single policy ofgovernment that can mop upjoblessness from the streets ofthe country like Free Zonepolicy. You will agree withme that we are joking by notgiving attention to FZ law. Afactory I visited in Mombasa,Kenya recently had 2,700employees. Calabar FreeTrade Zone has the capacityof hosting about 100 of suchfactories. You extrapolate andtell me if we will not goimporting workers intoCalabar. We have 26 FZsapproved by the federalgovernment at different levelsof development to date. Whileyou are doing yourextrapolation, rememberwiththe backward linkages forsome factories in place, somefamers can budget because ofthe amount of raw materialsthey supply.

What laws are required topromote the scheme inAfrica?

You are asking of what lawsthat are required to promotethe scheme in Africa. We needlaw of connectivity andaccessibility within thecontinent which should bepioneered by African Union.We need a law empoweringan association or council thatshould be assisting in FreeZone policy framework andthe concept of extra-territoriality. The concept ofextra-territoriality states thatFZ should be treated outsidethe domestic customs territorybut should be eligible fornational certificate of originand participates in trade andmarket access agreement. We also need a law on labourregime which will consist ofILO standards and collective

bargaining. Moreover, thetransparency of foreignworker employment regimewill discourage excessivedependence on foreignworkers at the expense oflocal ones.

Many entrepreneurs inAfrican continent are stillnot aware of Free TradeZones in spite of its seemingsuccess. What are the benefitsto their businesses?

I quite agreed that manyAfrican entrepreneurs arestill not aware of theenormous potentials of FreeTrade Zones for reasonsbothering on our level ofpromoting our zones in thiscontinent. Many Africancountries, including Nigeria,that have established freezones are not giving it thepublicity it required. In thefeasibility report of zonesdevelopment, promotion isalways given priority butbecause of the cost involved,most countries are always notmeeting up. Promotion whichis made up of advertising,Public Relations and personalselling are expensive worldover and normally classifiedunder capital budget if youmust make impact. But mostAfrican countries classifypromotion under over headwhich waters down theconsideration and allocation.At the end of it, money isspent but the effect is notachieved because of the lowlevel of the promotionexecuted in a year. I havebeen assisting some AfricanCountries of recent in theirplan for promotion that willgive the desired effect but theproblem is always fund. Aproject of Internationalcomplexion requires goodfunding to go to CNN andother media.

SMEs into being an exportprocessing zone or factory.Kenya is effectively practicingthis incubation strategy,including other Africancountries. Nigeria shouldencourage private rather thanpublic development of zones.This will shore up our chancesof success. A stategovernment can obtain a FreeZone licence and agree witha private developer todevelop and manage under awell structured agreement.The law review should

beings. We should bedynamic as well in the reviewof the Free Zone laws. Whatwe are using was enacted in1992 and 21 years later, youthink it can still serve andattract the dynamic FDIs? Weare shooting ourselves on thefoot by leaving the law whichstill states that an investor canonly sell 25 per cent in thecountry in the internet world.The individual would haveread and made up his mindwithout us knowing so as totell him that he can actually

•Chris Ndibe

I doubt if the Authorities canon their own bring in aconsultant from anywhere towork with them for a period andpay the consulting firm orconsultant which points to aweak administrative body ofgovernment

’’


CMYK

Media & Advertising

Marketing Kwarathrough investment logo

In businesses globally,every company hasdistinctive visual

communication symbol thatdistinguishes it from others.So, in brand strategy, theoverall corporate identity ofan organisation cannot beover-emphasized as a resultof its strong appeal.

Since the strength,dependability and perceptionof a company rests on thepublic’s acceptance of itscorporate identity, whichreveals its visualcommunication artistry, thenthe more impressive acompany’s corporate identitystrategy is, more respect andbrand visibility theorganisation gets in thebusiness world.

States, like companies havethe responsibility to evolve amore pro-active stand oncorporate imaging which lieson the State Managers tocreating an attractive visualcommunication symbol.

Before now, those chargedwith the responsibility of Statepositioning were notappreciative of the role ofvisual appeals in theircorporate imaging, and arenot also paying good attentionto the look of their state’ssigns, these, Managers of theKwara brand have capitalizedon.

However, the launch of aninvestment logo at the firstanniversary of the state’sincumbent Governor, AlhajiAhmed Abdulfatai, (AKAMaigida), to commemoratethe Democracy DayCelebration at theMetropolitan Square, Ilorin,typifies the investmentpotential of the State, inexplaining the power of logoin the overall brandcommunication artistry of thestate’s investmentopportunities.

Like the Governor said, theexposure of the investmentopportunity of the state wasin line with the covenant hehad with Kwarans, when heassumed office.

Among other things, he hadpromised his administrationwould initiate programmesthat would economicallyempower the people andreposition the state for foreigninvestment.

According to him, the newlogo, which he described as aglobal identity for indigenesof the state, defines whoKwarans are; their plurality,diversity and shared values.

His words, “This campaignand the new logo that comeswith it are designed topromote our state as a topinvestment destination usingour reputation for peace, ourstrengths in agriculture,commerce, solid mineraldevelopment, tourism andstrategic infrastructure.

“We intend to stronglymarket our state as a havenfor lucrative domestic and

STORIES BYPRINCEWILLEKWUJURU

foreign direct investment. Letme state here this is not amere political gimmick.Rather, we are setting thefoundations for the long-termprosperity of our great stateand its people,” the governorsaid.

He added, “As you are allaware, the previousadministration placed thestate on a global stagethrough innovativeprogrammes and policies.Today, we make history bymid-wifing a new Kwara, one

which gives us all a greatersense of pride, ownership andparticipation.

“Today, we celebrate thethings that make us uniqueas a people and strengthenour identity as a people. Onthis day, we commemorate thepeace in our communities, ourharmony in the midst ofdiversity, our growingstrengths in agriculture andour age-long reputation forentrepreneurship,” he added.

Earlier, his Senior SpecialAssistant on Media, Dr.Muideen Akorede, haddisclosed that the logocleverly pointed out thecultural attributes andresources of the state.

According to him; “Thelogo practically explainedwhere we belong and what wehave. The green element andlivestock stand for ourcommitment to agriculture,while there are otherelements that explained ourlinks with the north and thesouth.

Also speaking, the SpecialAdviser on Communicationsand Strategy to the governor,Alhaji AbdulraheemAdedoyin, said that the

governor should becommended for therebranding initiative.

According to him, theexecutive governor did notonly conceive the ideaimmediately he assumedoffice last year, but drove andparticipated actively in therigorous process thatproduced the new logo.

He assured stakeholders ofthe government’sdetermination to live up to theexpectation of the newcampaign. “We are creatingshared prosperity for allstakeholders by leveragingon our resourcefulness in thearea of impacting economicgrowth, human capitaldevelopment and youthempowerment and strategicinfrastructure,” he said.

A youth leader, Mr. AdioGaruba, who volunteered totalk, admitted that theactivation has been on for aweek and that they all had thefeeling that something newwas around the corner.

“Aside what we arewitnessing this morning orwhat we may still witnesslater in the afternoon at thevenue of the democracy dayanniversary ceremony, a lothave been going on in the lastone week, especially onKwara Radio and TV, whichpointed to the fact thatsomething new is in theoffing,” he added.

Governor Ahmed Abdulfatah

Outdoor sanitisation will create newopportunities —- DG OYSAA

Following in the foot step of Lagos State,Oyo State by law established its ownsignage agency to regulate the outdoor

business in the state. Mr. Yinka Adepoju,newly appointed Director General of theagency in a chat with Princewill Ekwujuru,exposed his plans for the State. Read on.

Starting signage agency in Oyo State, whathave been your experiences so far

First, it is the governor’s intention to cleanthe streets. To achieve this, it will be asystematic and gradual process. Thegovernor is not happy with the dirtyenvironment. If it is possible to do it in oneday, he will appreciate it. The kind ofsanitization is not the kind we have in someother places. Oyo State Signage andAdvertising Agency (OYSAA) has beenestablished in Oyo State and backed by law.

Henceforth practicing outdooradvertisement in Oyo Statewithout due registration is anoffence. We are starting withsanitization of the roads butnot a total removal of allbillboards on the roads but thebad, the dilapidated and nonconforming ones. In thecouple of weeks the city willbe transformed.

What has been the responseof the advertisingstakeholders?

When we went to the roadsand started cleaning, somecalled to complain why theirboards are being destroyed.Immediately I corrected the

impression, that we are notdestroying boards, butpulling out bad ones whichconstituted eyesore to thecity. Some of them fell on theground and others werebroken. We have onlycovered only a portion ofIbadan much more the wholestate. So far we have removedover 1000 bad billboardswhich are junks.

Have you already boughtthe equipments for thisoperation

So far, we hire equipment.We are just starting as we

have plans to acquire theequipment. The removal ofthe bad billboards is ongoing.There is need to acquire thoseequipment so that we willcontinue to use them.

Are you likely to regulateand operate?

We are not consultants. Theagency was established bylaw. We are to control theoutdoor business. It is areplica of LASAA, but we aregoing to operate within ourterms. Some of the boardsmay be upgraded but notimmediately.

What is your opinion onestablishment of states’outdoor regulations

It is expected that operatorsshould key into what statesdefine as standards. We areprofessionals. For instance, Iknow the A-Z of advertising.Again, we have seen outdooradverting practiced in otherplaces. I was instrumental toLASAA. In Abuja, the thenMinister of Works, Ogunleweset up a similar body and Irepresented OAAN in thecommittee I was part ofOGSAA. I should be able todo the same in my state. It isa good development for statesto do their own. We want tomake Oyo state a role modelin outdoor business.

Do you have plans to givethe operators Billboardprototypes

That is why we are planninga stakeholder forum. At themeeting, most of the partiesboth small and big operatorsare expected to be present.We want advertisers toadvertise but we will spell thesizes to them in order to haveuniformity in the state.

What is the revenue drivein the exercise

First, the plan is to beautifythe state, create the aestheticsand remove bad billboards.

Mr. Yinka Adepoju


CMYK


CMYK

Omoh Gabriel - Group Business EditorBabajide Komolafe - Acting Finance EditorClara Nwachukwu - Energy EditorPeter Egwuatu - Head, Capital MarketYinka Kolawole - Snr Bus. Correspondent

Favour Nnabugwu - Insurance CorrespondentGodwin Oritse - Maritime CorrespondentGodfrey Bivbere - Maritime CorrespondentYemi Adeoye - Energy CorrespondentOscarline Onwuemenyi - Energy CorrespondentFranklin Alli - Industry ReporterMichael Eboh - Capital Market Reporter

Amaka Abayomi - Money market ReporterEbele Orakpo - Energy ReporterIfeyinwa Obi - Maritime Reporter

CONTRIBUTORSPrincewill Ekwujuru - Media/Marketing

Naomi Uzor - IndustryProvidence Obuh - Capital MarketLAYOUT - Graphics Department

0817 002 3569

The impact of the IMF-inspired StructuralA d j u s t m e n t

Programme during theBabangida regimefundamentally destabilizedour economy, and ultimatelyaltered the mobility of someof our brightest intellects infavour of a migratory urge tomore clement pasturesabroad. From a trickle in theearly 80s, it has become anunstoppable flood that nowincludes even fresh graduatesfrom our ailing universities.Some optimists would claimthat Nigeria’s loss is thediaspora’s gain, but wouldassuage the sense of loss withthe speculated benefits ofalleged millions of dollarsmonthly remittances byNigerians working abroadevery month. It is of noconsequence that the moneyssent back home can only be atiny fraction of the total lossNigeria suffers from theforced absence of theseexpatriate Nigerians fromtheir home country.

It is not unusual for theseour fellow countrymen to misstheir fatherland and some ofthem are even eager to makewhatever contribution thatwill remediate some of ourchallenges. Amongst suchpeople are successfultechnocrats, bankers,engineers, computer gurus,surgeons and professors insome of the world’s bestuniversities. Thegovernment’s creation of anagency for the diaspora wasan attempt to formallyharness the intellects of thiscaliber of Nigerians to theservice of their fatherland.

However, the impact of thisagency is yet to be felt, andthe unsolicited opinions ofsuch endowed Nigerians inthe diaspora are oftendiscountenanced.

In the rest of this piece, wewill relate the experience ofToyin Dawodu, one suchNigerian, who is thesuccessful Managing Partnerof Capital Investment Groupin California. He is also theCEO of Capital EnergyResources, an outfit currentlytesting alternative and cleanenergy generation for

A rebuffed helpinghand fromthe diaspora

Nigeria.Dawodu posits in a paper

titled “Stable Electricity stilla decade away for Nigeria”,that “Given Nigeria’s historyof underperformance andcorruption, and its currentlack of systems, the countrywould benefit from creatingan environment that is moreconducive to theimplementation ofdistributive generation.”

Smart companies, Dawoduobserves, “are embracingtechnologies that deliverpower efficiently at fifty tosixty percent less than the costof imported diesel. Ratherthan rely on dieselgenerators, Nigerians cangenerate electricity at acheaper rate on smaller microturbines that run on clean-burning LPG that is producedin abundance locally.

“Nigeria spends 15% of itannual budget on importingdiesel and Nigerians ownmillions of generators that arefueled every single day usingthe wrong fuel, a fuel thatindirectly exports jobs andsubsidizes other countries.

Distributive generation cansave the country billions ofdollars in wasted foreignexchange, diversify and growthe economy, and createmillions of jobs. The solutionis to embrace technology andutilize locally- produced fuelthat is mobile and cheaper”.

Dawodu is a great advocateof the huge potentials forcooperation between theUnited States, where heresides, and Nigeria,particularly in the area ofpower provision. His 4th ofJuly letter to PresidentObama “Re: Investing inNigerian Power Supply” andPresident Obama’s directreply is available on the web;in addition, he has alsopublished a paper on “WhyAmerica Needs Nigeria”.

The following are excerptsfrom a couple of Dawodu’smails to thiscolumn on thenature of thefeedback orlack offeedback frome m i n e n tNigerians inpublic offices.Please readon.

“I sent aletter to Dr. Iweala onhow Nigeriacan raise N3–4 trillion, andcreate overhalf a millionjobs withoutborrowing asingle kobofrom the localbanks or theIMF. I sentthe lettertwice; onebefore she leftthe US aftershe was firstappointed tomake sure itwas deliveredto her at theWorld Bankbecause Icannot rely onN i g e r i a ’ spostal system.I got noresponse. Isent anotherone, after sheb e c a m eminister, toher office inNigeria. I didnot get ar e s p o n s eeither.

“The newtrade ministerand the pow-

er minister like to parade, the$1.5 billion loan guarantyscheme approved by the U.S.Exim Bank for power gener-ation as part of their handi-work. However, when I satdown with Prof Nnaji in2010 before he became ener-gy minister and told him thatI can get the US governmentto support power projects inNigeria, his response was,“why would the US do that.” (See my efforts to that effect.

h t t p : /amazingtoyin.blogspot.com/).

“Our people are not sincereand most of the time I wonderwhether they are servingNigeria or servingthemselves.

“Yesterday, I saw a post onLinkedIn about businessloans in U.A.E. forbusinesses; the rate is 2.5%.You are right, few businessescan make money on 20%interest and 40% cost ofgenerating electricity. Nige-rians subscribe to the illusion

that unemployment is 18%. Ihave been to Nigerian threetimes in the last six months,and every morning I walkedaround Surulere, and I sawhundreds of able bodied menand women on their balcony,with chewing sticks between8 & 9 am with no where to go.My estimate is that Nigeriahas 30-50% unemploymentand another 20% under em-ployment.

“When Nigerian banksdeclare huge profits, are theprofits from loaning moneyto Nigerian businesses or justmanipulation of foreignexchange?

“I still don’t understandhow a CBN governor canretain his job when theinterest rate on loans fromNigerian banks is about 27%.

“Nigerian banks spend 40%of their revenue on diesel topower their branches. Sanusihas been making noise for 2years about cost of powergeneration for the banks, butwhen I sent him a mail onhow we can help the banksreduce their power cost, I didnot get a response. I am ofthe belief that what they sayand what they do are twodifferent things.

Save the naira

’

’

Thegovernment’screation of anagency for thediaspora was anattempt toformally harnessthe intellects ofthis caliber ofNigerians to theservice of theirfatherland

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Impending Flood: Insurance gets zero consideration

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