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PERSONAL FINANCE: Don’t miss out on opportunities in the stock market

PERSONAL FINANCE: Don’t miss out on opportunities in the stock market

Far too many people
are still sitting on the sidelines and are hesitant about investing in
the stock market. Because of their strong aversion to risk and the fear
of loss, they are watching opportunities pass them by. The stock market
can seem intimidating for the new investor and for those who have had a
bad experience in the past; but it needn’t be. Here are a few tips as
you consider investing.

Set yourself clear goals

Before you put any
money down at all, set yourself clear goals. These may include funding
your children’s education, making a down payment on your new home or
saving for your retirement. Investing is a journey towards achieving
your goals. Where you have concrete goals that you are working towards,
you will not be easily swayed by market hype and volatility. Your own
unique circumstances should ultimately determine how much, how and when
you should invest.

Build your knowledge

One of the best
investments you can make in yourself is to take the time and trouble to
improve your knowledge of investing. There is a plethora of information
and research by professional analysts and experts, which will be a good
guide. Investment seminars are also available that can develop you and
point you in the right direction. Resolve to take some time to educate
yourself. You will be surprised to see how much you can learn in a year.

How much risk can you take?

How much risk can
you endure? It is important to be aware of your attitude to risk and
that stock market investing comes with risk. Stock market investments
are not guaranteed. This means that although you are likely to make
money over the long term, you can lose your investment.

If you can’t bear
to take much risk and would be devastated by any loss, it is best for
you to put only a small portion of your investable funds in the stock
market and the balance in money market investments. Bear in mind
however, that when it comes to money, sometimes playing it too safe
isn’t necessarily the winning formula. If you invest all your money in
guaranteed investments, they are not going to keep pace with inflation;
earning 3-4% on your savings will make it challenging to achieve even
the most modest financial goals.

Invest for the long term

How much money can
you really afford to put away for say 5 years and beyond? When you
think of investing in the stock market, adopt a long-term strategy
rather than looking to make a quick profit. Avoid investing more than
you can comfortably afford to be without during your time horizon.
Historically, stocks have generally outperformed other investment
classes over the long term. However, in the short term, the market can
be unpredictable and carry a greater risk of loss.

It is impossible to
predict accurately what the stock market will do tomorrow. Sometimes
the stock market makes sense and at other times no one can really
explain why it is acting in a certain way. Many factors come to bear as
to what the market will do, such as market trends and economic
forecasts, the political situation, investor perception, emotions,
greed and fear.

Diversify

“Don’t put all your
eggs in one basket!” Don’t put all your money in one stock and don’t
invest in stocks alone. When it comes to buying shares, diversification
is essential. Instead of investing all your money in just one or two
companies, its best to diversify by buying shares in different
companies and sectors.

It is also
important to diversify your investments across different asset classes
including real estate, money market accounts or bonds. That way, if one
asset class under-performs, you will have some exposure to other assets
that might do well. It is unlikely that all segments will perform in
exactly the same way and decline together.

Get Professional Help

Most of us do not
have the time or expertise to make sound investment choices without the
help of a professional. A professional advisor will work with you to
create an investment strategy that suits your unique situation and your
risk profile to ensure that the appropriate investments are in place
for your changing circumstances. Once you become more experienced, you
can become more involved.

Invest regularly

Allocate a part of
your investments in a systematic investment plan. Instead of trying to
time the market, invest on a regular basis say monthly, or quarterly in
an appropriate vehicle, and even when your finances are stretched. It
is a particularly useful tool in a volatile market as you can reduce
the average cost of your shares by purchasing more shares when prices
are low, and fewer shares when they are high. A consistent disciplined
approach takes away the speculative element of investing and reduces
stress and fear.

Invest in Mutual Funds

If you are new to
investing or don’t have that much money to invest, a mutual fund may be
the most convenient way to invest. A mutual fund pools investors’ funds
and manages them in stocks, bonds, money market instruments, etc. The
benefits of mutual fund ownership include the wide variety of
investment types to choose from, having a diversified portfolio of
stocks, bonds and cash, and having access to professional management,
usually the prerogative of substantial investors.

Be realistic about
your expectations of the stock market. If you set reasonable long-term
profit expectations for your investments, you will be more accepting of
the inevitable periods of volatility. If you stay the course, and
continue to build upon the foundations of a sound investment strategy,
you can come closer to your financial goals. Depending upon your
particular circumstance, your age and time frame and your overall
financial plan, do consider putting at least some portion of your money
in the capital market; it still offers the best prospect of real long
term growth.

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‘Nigeria has contributed largely towards our mission’

‘Nigeria has contributed largely towards our mission’

At the recent
annual Google conference in Lagos, Nigeria, Joe Mucheru spoke to
Funmilayo Ajala about Google’s plan for the African market.

Can you expatiate on Google coming to Nigeria, and what do you hope to achieve in the long and short term?

Google’s mission is
to organise the world’s information makes it universally available and
Africa today represents a significant part of the world’s population,
15 percent of the world population but only two percent of the Internet
population.

The current
strategy we have is to see that number increase from two percent to a
larger number. So we have initiatives, access and as I mentioned,
relevance and sustainability to reduce or remove the barriers that
exists that are currently stopping people from going online.

Those are the
activities that we are working on and in the long run, we hope that
there is going to be revenues generated out of Africa, out of Nigeria.
But for now, the primary focus is to see increase in users and usage of
the Internet so that is what we are currently working on.

You
mentioned that it’s all about the data and not the money. It is a
common knowledge that Google is the largest advertising company in the
whole world and not a search company. Can you explain how the search
and advertising are interwoven and which one takes priority for Google?

Focus on the user
and all others will follow. What we are as a company is a search
company and so we organise the world’s information so that it becomes
easier for people to find what they are looking for. And I think for
Africa that is one of the biggest need, either been found or finding
what someone is looking for. So we do very well in terms of search,
then when it comes to advertising, we provide relevance.

For instance, when
someone searches for furniture, the individual will be able to find
advertisement that are relevant to furniture and it is only when the
person click on the ad to show that they are interested in it that it
becomes a transaction. So in this case for us, they are much
intertwined, but it’s more about relevance. We don’t give you
information that you are not looking for. So when you are searching for
specific products like a holiday, the only ads you will see are travel
ads and holiday ads that are actually relevant.

You
mentioned that your main priority is Internet accessibility in Nigeria,
which companies are you partnering with right now to achieve this?

The key thing is
about partnership. We are partnering with the different players in the
Internet space to make sure that there is more usage of the Internet.
So as more investors become aware of this opportunity then they
actually invest more. There are more investments going into the cables
and you’ve seen their operators now competing with each other by
rolling out 3G services. In terms of the last mile, you’ve seen a lot
of cables being built across the different states but mostly between
Abuja and Lagos. So that infrastructure is being put in place and so we
partner with different operators in terms of working together at the
exchange point by providing information on best use cases.

We provide Internet
engineering support and as you’ve seen in this event, working with
developers also, creating the value added application that can be used
on this infrastructure that is being built. There are many prom
approaches that are actually being developed right now that is bringing
in more usage and more infrastructure.

This
conference is leading to a number of startups, following the tech news
lately; Google has been acquiring quite a number of startups, what is
Google’s plan in aiding tech entrepreneurs in Nigeria?

I mentioned Umbuno
which is one of the projects that Google is working on. Umbuno is a
platform you can turn your tech idea and vision into a business.

It is really about
trying to get tech hubs built which is bring all the players together,
Angel investors, Venture Capitalists. The key issue has been more
awareness, people have not been aware of what the opportunities are. I
think as more awareness comes into play then people will start
investing in that space.

When we look at
Google in terms of its investments and how we acquire, I think that’s
something that’s ongoing throughout and it goes on across the world. So
there is a team of people who just hunt around for business
opportunities for investment and I can’t say that we are or we are not
doing anything in Nigeria in that space. But I know that there are
businesses that are doing successfully well here in Nigeria. Nollywood
Love has actually done quite well. But I don’t believe that exit in two
years is primarily the end game, I think this market is just beginning
and I think it’s going at a certain exponential growth, anyone that
exit in two years would have left a lot of money on the table.

Does Google
have any plan of setting up tech hubs where tech entrepreneurs who
don’t really have money to build up capitals can come in and work,
meet, network because of the challenges they do face?

As mentioned
earlier on about the Umbuno project. It is about showing examples of
successful startups, working together here with a community of Angel
investors, Venture capitalists, working with them in the tech hub which
then we allow that community to grow so that you can have the
investment, you can have mentorship going on, you can have actual money
and acquisitions and aggregations actually happening within those tech
hubs. So there have been quite a few that has appeared in Africa
already. Kenya has Afrilabs, iHub, and South Africa has some of the
labs as well. So various have appeared and we’ve seen it as an
interesting model and we are supporting that. We are putting in some
money towards supporting some of these hubs. Not really in building
them but more in terms of partnering with the Angel Investors and
Venture Capitalists to invest in the key businesses.

How has your presence in Nigeria contributed to the Google market worldwide, is there a percentage?

I think for us, we
love people being online, we love people getting on to the Internet.
Three years ago, Nigeria was having about 11 million users and now it
is 44 million users. So that is a huge number that has actually come
online. Nigeria has contributed largely towards our mission of seeing
more users coming online and more users’ usage.

How often do you plan to be doing this kind of event?

For now, it is on a
yearly basis. Like last year we met with about 3, 000 developers, which
is a significant number, and we’ve seen more at this event. Hopefully
we will have more at next year’s. We will continue to give support.

What is
Google’s plan to aid small and medium scale business by passing onto
them the knowledge of what Google tools can do for their business?

There is a whole
initiative in the education sector, which is talking about the Google
ambassadors from the universities. That is the workforce that goes out
to educate people. There is the Google Access University programme
where we provide bandwidth and Google apps services to universities. We
expect that this year the programme would have reached 100,000
students. They are Google ambassadors that go out to talk to different
businesses on how to use the Google products, there is the one we call
‘getting Africa businesses online’ which last year we got about 200
businesses together and we are able to show them how they can build
their online presence, they got domain names, they got their businesses
online, created a website. There is a community that is growing and
developers are also coming in and seeing business opportunities in the
community. This type of event brings them together; there is a whole
lot of conversation and engagement that is ongoing. That is how we are
engaging.

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Dominique Strauss-Kahn faces sex charge

Dominique Strauss-Kahn faces sex charge

International Monetary Fund (IMF) chief, Dominique Strauss-Kahn
was arrested and charged on Sunday with sexually assaulting a New York hotel
maid, in a scandal that appeared to wreck his hopes of running for president of
France.

The charges threatened to create a leadership vacuum at the IMF,
overseer of the global economic system, and threw wide open the French
presidential election next April, for which opinion polls had made Strauss-Kahn
the front-runner.

One of his lawyers, Benjamin Brafman, told Reuters that his
client “will plead not guilty.” The 62-year-old Socialist, a key player in the
response to the 2007-9 global financial meltdown and in Europe’s debt crisis,
was taken off an Air France plane about to leave for Paris from John F Kennedy
International Airport on Saturday.

New York police spokesman Paul Browne said he was charged with a
criminal sexual act, unlawful imprisonment and attempted rape. He is expected
to go before a state court later on Sunday.

The arrest caused shock and disbelief in France, where a
government spokesman called for caution and respect for the presumption of
innocence.

“The news we received from New York last night struck like a
thunderbolt,” said Socialist leader Martine Aubry, appealing for party unity.

Francois Bayrou, a centrist opponent of Strauss-Kahn, said: “All
this is completely astounding, immensely troubling and distressing. If the
facts prove true … it’s something degrading for all women. It’s terrible for
the image of France.”

Far-right leader Marine Le Pen said her rival’s presidential
hopes had been crushed. Strauss-Kahn and Le Pen have led recent opinion polls
ahead of conservative President Nicolas Sarkozy, even though the chief of the
IMF had yet to declare his candidacy.

In a statement on its website, the fund declined to comment on
the case, saying only that it “remains fully functioning and operational.” But
a Greek official told Reuters the arrest could cause some delays to a European
Union/IMF bailout for Athens, in which Strauss-Kahn was closely involved.

Maid’s account

“We must wait until things settle and see if it’s true or a
provocation, one of Strauss-Kahn’s French-based lawyers, Leon Lef Forster,
said. “We must be especially careful not to get into a media circus and we must
wait until things are clear.”

A 32-year-old maid filed a sexual assault complaint after
fleeing the $3,000-a-night hotel suite at the Sofitel in Times Square where the
alleged incident occurred around 1 pm on Saturday, Browne said.

Strauss-Kahn appeared to have fled the hotel after the incident,
the police spokesman said.

Browne told Reuters: “She told detectives he came out of the
bathroom naked, ran down a hallway to the foyer where she was, pulled her into
a bedroom and began to sexually assault her, according to her account.

“She pulled away from him and he dragged her down a hallway into
the bathroom where he engaged in a criminal sexual act, according to her
account to detectives. He tried to lock her into the hotel room.” Strauss-Kahn
does not have diplomatic immunity, Browne said.

According to New York state law, a criminal sexual act carries a
potential sentence of 15-20 years, the same as attempted rape. Unlawful
imprisonment carries a potential sentence of three to five years.

The allegation is a major embarrassment to the IMF, which has
authorized billions of dollars of lending to troubled countries and played a
major role in the euro zone debt crisis.

France in shock

Popularly known by his initials DSK, the IMF managing director
had been expected to declare by late June if he would run for president of
France. The latest opinion polls ranked him as a clear winner over conservative
incumbent Sarkozy.

“The case and the charges … mark the end of his campaign and
pre-campaign for the presidency and will most likely prompt the IMF to ask him
to leave his post,” National Front leader Le Pen told i-Tele television.

Conservative Trade Minister Pierre Lellouche said: “I think we
have to grant DSK the presumption of innocence. If all this were true it would
be damning.” Even Strauss-Kahn’s political allies were pessimistic.

“The most likely outcome is that this case will stick and even
if he pleads not guilty, which he may be, he won’t be able to be candidate for
the Socialist primary for the presidency and he won’t be able to stay at the
IMF,” said prominent Socialist Jacques Attali.

Strauss-Kahn took over the IMF in November 2007 for a five-year
term scheduled to end next year. Before that, he was a French finance minister,
member of the French National Assembly and a professor of economics.

REUTERS

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Cote d’Ivoire debt relief scheme to start from scratch

Cote d’Ivoire debt relief scheme to start from scratch

Cote d’Ivoire ‘s debt relief programme with the International
Monetary Fund (IMF), which was nearly completed before the country plunged into
war, will have to be scrapped and started all over again – and the earliest it
could resume would be mid-2012, two sources familiar with the matter said on
Friday.

Last year, the West African state was on the verge of completing
a programme for $3 billion of debt relief from the IMF and the World Bank,
under the Heavily Indebted Poor Countries (HIPC) scheme.

The progress had been closely monitored by foreign investors,
especially in the country’s $2.3 billion Eurobond, Africa’s biggest, which was
expected to rally on completion of the debt relief programme, which had been
scheduled for around July this year.

But a November election meant to reunite the country, instead
reignited its armed conflict, when former President Laurent Gbagbo refused to
step down until eventually captured by troops loyal to his rival Alassane
Ouattara.

Ouattara, a former IMF deputy director who was sworn in as
president in last week, must now fix an economy wrecked by months of stalemate,
economic sanctions and urban warfare.

His government must also renegotiate debt relief with donors
from scratch, two sources familiar with the matter said.

“The debt relief programme is cancelled. We’re starting from
scratch,” one of the sources, who is close to the negotiations but could not be
identified, told Reuters.

“Everything they did in previous years was based on targets that
no longer apply. … How much tax revenue will they make next month? Normally
that would be an easy question, not now.” The source said it was possible they
could reach completion by mid-2012 but that meeting conditions by then would be
tight.

“Scrapped completely”

At the time of the last IMF review of Cote d’Ivoire’s programme,
the Finance Ministry forecasted four percent growth for 2011. It now expects
the economy to shrink by between one and three percent, a forecast that most
analysts think is far too optimistic.

Officials at the ministry were not available for comment.

The IMF, in a document it published in April, projected the
Ivorian economy to shrink by 7.6 percent in 2011.

IMF documents from last year show that previous negotiations
depended heavily on meeting tight economic and fiscal targets and weighting
spending towards a detailed poverty reduction strategy, all of which now needs
to be reviewed.

Some officials think output may have halved in the past three
months, as cocoa exports dried up and banks shut.

A fresh start is implied in a Thursday IMF press release.

The release said an IMF mission would visit Cote d’Ivoire from
May 18 to June 1 to “assess the economic situation and discuss with the
authorities policies that could be supported by a loan under the fund’s Rapid
Credit Facility,” which would help it meet “urgent needs, including to restore
public services.” Use of this facility implies an emergency situation that is
not conducive to the stringent requirements of HIPC.

“It’s a bit surprising,” said Samir Gadio, emerging market
strategist at Standard Bank. “The assumption was that there would be a disruption
in the programme but that at the end of the day it would be a delay, not
scrapped completely.” The setback, however, is unlikely to have an impact on
Cote d’Ivoire‘s ability to meet its Eurobond coupon payments.

It will get interim debt relief on better terms and the IMF is
likely to agree an emergency credit facility of $100 million.

Cote d’Ivoire owes $58 million in coupons in June, including one
it defaulted on in January, but analysts say it can pay it.

“Paying them is not going to have a significant impact on
finances, but not paying them is going to have an impact on Ouattara’s
relations with creditors,” Gadio said.

REUTERS

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Egypt eyes Ethiopia trade boost as Nile row eases

Egypt eyes Ethiopia trade boost as Nile row eases

Egypt’s interim Prime Minister, Essam Sharaf offered to increase
trade with Ethiopia on Friday and said a new atmosphere now existed with
regional neighbours over the vexed question of sharing Nile river waters.

Cairo has been at odds with upriver nations over their efforts
to overturn colonial era-treaties granting it a lion’s share of the river’s
flow.

Nile basin countries including Ethiopia and Uganda signed a deal
last year effectively stripping Egypt of its veto over hydro-power projects.

However, Addis Ababa said this month it was delaying
ratification until a new government was installed in Egypt to replace authoritarian
ruler Hosni Mubarak. Ethiopia had accused Mubarak of supporting rebels trying
to destabilise the country.

“We were in Uganda yesterday and today we had discussions in
Ethiopia, and the environment is completely different from the previous
period,” Mr Sharaf told journalists following talks with members of Ethiopia’s
business community and a meeting with Ethiopian Prime Minister Meles Zenawi.

“With the concept that all should be winners – because we have
huge resources, based on that there will be discussions and exchange of ideas,”
he said.

‘Unfair’ trade

Mr Sharaf also offered to increase trade between the two
countries.

“When you look at trade between Ethiopia and Egypt, it’s a tiny
fraction of total trade. We have to take care of that, to develop means and
tools to increase trade,” he said.

Egypt, threatened by rising temperatures and a growing
population, is almost entirely dependent on the Nile for its water and has been
nervously watching hydropower dam projects take shape in upriver nations.

Ethiopia is building a multi-billion dollar mega dam on its
share of the river, which accounts to eighty-five percent of the Nile’s water.

Ethiopian officials dismiss fears the dam would reduce the
river’s flow, and Sharaf said his country was willing to discuss its effects by
joining a committee of Ethiopian, Egyptian and Sudanese experts.

“There will be committees and meetings, the scope is wider: to
involve all development plans, including energy development, electricity,
agriculture and industrial services,” he said.

While Egypt and Ethiopia signed a cooperation agreement in 1993,
relations have been at a low ebb since 1995 following an assassination attempt
on Mubarak by Islamist gunmen during a visit to Addis Ababa.

Under a 1929 pact, Egypt is entitled to 55.5 billion cubic
metres a year of the Nile’s flow of around 84 billion cubic metres.

Since Mubarak’s fall, the military-backed interim government has
not openly criticised the new treaty, instead focusing on diplomatic ties in
the search for a compromise.

Egyptians are expected to vote for a new leader in December.

REUTERS

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FINANCIAL MATTERS: The Central Bank’s limit on cash withdrawals

FINANCIAL MATTERS: The Central Bank’s limit on cash withdrawals

Once again, the
Central Bank of Nigeria (CBN) has set its now famous cat amongst the
banking sub-sector’s star-crossed pigeons. Initially much welcome, when
the financial services sector was the favourite bugbear of all who had
issues with the more adverse consequences of the global financial and
economic crisis, much heavy weather has been made recently of the
central bank’s continuing intervention in the sector.

From concerns over
what now appears to be the apex bank’s penchant for trying to
micro-manage the sub-sector, the popular gravamen against the CBN has
moved through new charges of its interfering with the evolution of
market-driven solutions, to the accusation that (as with such
regulatory measures in the near past) the apex bank can no longer see
the monetary policy formulation trees for the banking supervision woods.

Yet, the story
could be told differently. The CBN’s latest directive to banks
indicating that effective June 1 next year, it shall be imposing a
“daily cumulative limit of N150,000 and N1,000,000 on free cash
withdrawals and lodgements (from banks) by individual and corporate
customers respectively” does have its benefits. To the extent that this
reduces the use of cash payments for all but the most basic of
transactions, it should reduce the wear on the existing stock of fiat
money; and to the same degree, it should help trim the CBN’s spend on
minting cash.

In addition, it
should likewise moderate the cost to the financial services industry of
managing cash, and help nudge bank customers towards alternative
payment channels. The jury will be out for a while yet on the effect
that this policy would have on crime and related anti-social behaviour;
but it is a safe bet to believe that the fewer cash-based transactions
we have, the lesser the tally of crimes based on the supposition that
the victims have money on their persons.

Unfortunately, the
close relationship between practice and policy, promises to overturn
this narrative. In effect, the connection between objective conditions
and the subjective state invites further interrogation of the likely
effects of the CBN’s latest initiative. Fail to acknowledge the former,
and, as a policy maker, you run the risk of turning turtle. Alas, the
CBN has run this gauntlet several times too many.

It failed, for
instance, in 2004 to understand that a bank is as big as the needs of
the economy it serves; and ignoring clear local constraints, aimed to
have banks in Nigeria equivalent in size to their South African
counterparts. Of course, the rest is history.

Not all of it
though. The inability to persuade the local economy to use cheques is a
real and present problem; and it bears strongly on the CBN’s renewed
drive for reduced cash transactions. You could dismiss this failure as
the result of a local affinity for cash. Or you could go one step
better; and see instead at the bottom of the problem, a huge trust
deficit. This latter problem, on the other hand, is one of the many
upshots of our failure to enforce rules across every department of the
economy. Because few persons have been penalised for issuing dud
non-cash payment instruments, most people feel safer paying with cash.

Besides the absence
of trust, and the difficulty with enforcing contracts, or seeking
redress for the non-enforcement of contracts, there are objective
constraints to the use of non-cash payment methods, which the current
CBN circular appears blissfully ignorant of.

The CBN recently
forced banks to shut down their off-site ATMs, without arrangements to
replace these. And even where ATMs exist, cash-outs, and network
problems ensure that a precautionary hoard of cash, appropriately
concealed on one’s person is a wise decision in this economy. For small
enterprises (the market women, largely) operating in this economy, the
challenge is of a different order. It still takes forever to open an
account; and the yields on these accounts are a swindle that the apex
bank is privy to.

On the CBN’s side, an argument could be made that this precautionary hoard of cash cannot be anything close to N150,000.

In essence, the point is that as crafted, this directive would not
hurt daily transactions. However, this is to ignore, again, the
incentives to, and the role of the shadow economy in keeping a sizeable
amount of the money in circulation outside the banks’ vaults.

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Nigeria distributes N456b to tiers of government

Nigeria distributes N456b to tiers of government

Nigeria
distributed N455.6 billion to the three tiers of government for April,
up 7.3 percent from March, the acting accountant general of the
federation Aderemi Ogunsanya said on Thursday.

“The total revenue
distributable for the month (including VAT) is N455.596 billion and
this shows an increase of 7.3 percent compared to the amount
distributed in March.”

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States demand equity, fairness in revenue sharing formula

States demand equity, fairness in revenue sharing formula

The thirty-six
states of the federation yesterday, renewed their demand for a complete
review of the formula in the sharing of revenue between the three tiers
of government on the basis of equity and fairness.

Chairman of Finance
Commissioners Forum, Rebo Usman, told reporters at the end of the
Federation Accounts Allocation Committee (FAAC) meeting in Abuja that
it is unfair for the federal government to continue taking the lion’s
share; 52.68 percent from all revenues accruing in the federation
account, leaving the states and local governments with 26.72 percent
and 20.6 percent allocation respectively.

Usman, who spoke on
behalf of the finance commissioners from all the states of the
federation, described the existing allocation formula as not only
unfair and archaic, but a creation of the military that should be done
away with.

“Our position has
always been very clear. We have made a submission to the federal
government through our governors that there is the need for us to
change this archaic revenue sharing formula. What we are using now is a
creation of the military regime, with little modifications. It is very
unfair to the states and local governments that up to date, we are
still making use of this formula, which is a creation of the military,”
he said.

Overhaul

He said the
personnel cost of all the states and local governments far outweigh
that of the federal government, pointing out that in the interest of
equity, it is fair for the revenue formula to be completely overhauled
in favour of the states and local governments to enable them deliver
their responsibilities to the people at grassroots where the bulk of
Nigerians reside.

“The revenue formula needs to be completely overhauled, not just amendments here and there,” he maintained.

On the
controversial N450 billion debt by the Nigerian National Petroleum
Corporation (NNPC) to the federation account, Mr Usman said that for
the first time, the corporation has accepted its obligation, and is
making efforts to repay, saying that high-level meetings were going on
to finally lay the issue to rest.

“One good thing
that happened today was that at least, for the first time, NNPC was
remorseful about the whole issue and categorically stated that they
were aware of the indebtedness to the Federation, and that already
high-level meetings were going on to try to resolve the issue. This was
captured in the minutes. So, with that statement we were comforted that
by the next meeting, the corporation will fulfil its promise to pay
up,” he noted.

Meanwhile, Minister
of State for Finance, Hajiya Yabawa Wabi, said a total of N455.596
billion shared among the three tiers of government. “Total amount
distributed was N455.596 billion, made up of statutory of N309.944
billion; VAT N42.564 billion, and augmentation figure of N103.018
billion,” she said.

Details of the
distribution, the minister said showed the federal government getting
N147.681 billion, or 52.68 percent, states shared N74.806 billion, or
26.72 percent and local governments N57.749 billion, or 20.6 percent,
while derivation payment to oil producing states was N29.608 billion.

Reduced revenue

Acting Accountant
General of the Federation (AGF), Aderemi Ogunsanya, said gross revenue
for the month of April declined by N32 billion, or 5.2 percent, from
N615.06 billion generated in March to N582.97 billion, owing to reduced
oil production. The reduction was attributed to the complete shutdown
of the Bonga oil terminals for maintenance work as well as the on-going
repairs at the Qua-Iboe, Akpo and Amenam terminals. To this end, the
AGF said the committee decided to withdraw N103.09 billion from the
excess crude account to augment the shortfall in distributable revenue.

Though the
distributable revenue increased by N31.01 billion, or 7.31 percent
compared to the figure in March, there was additional N1.35 billion in
exchange gain from the differential between the prevailing exchange
rate of N152.18 per dollar and the budgeted rate of N150 per dollar set
as benchmark. The exchange rate difference has been escrowed pending
the approval of the budget.

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Investors record more gains at the exchange

Investors record more gains at the exchange

Investors at the
Nigerian Stock Exchange recorded additional gains at the close of
trading session on Thursday, as market-measuring parameters appreciated
by 1.01 per cent; making it the third day of consecutive upward trend.

The exchange market
capitalisation of the 194 first-tier equities closed yesterday at
N8.223 trillion after opening the day at N8.140 trillion, reflecting
N83 billion gains. About N152 billion has been gained in the last three
trading days.

Market watchers
attributed the market upward trend to the positive performance of some
blue chip stocks that continued to drive market activities up.

Analysts at
Proshare Nigeria, an investment advisory company, said they are
optimistic that market outlook in the coming weeks will be more
“profitable as the previous prolonged downtrend in the market has
provided ample of attractive opportunities across the sectors,” adding
that “transparent merger and recapitalisation in the banking sector
will also garner supporting momentum towards investing in capital
market.”

Low gainers

The number of
gainers at the end of trading session on Thursday closed lower at 28
compared with the 36 recorded on Wednesday, while losers closed higher
at 30 against the 22 recorded the previous trading day.

Dangote Cement and
Dangote Sugar topped the price gainers’ table with an increase of five
per cent and 4.98 per cent, to close at N127.32 and N14.33 per share,
respectively. International Breweries and CAP Plc followed on the
gainers’ table with an increase of 4.97 and 4.95 percent, to close at
N6.34 and N22.03 per share.

On the flip side,
Oceanic Bank and First Aluminium led the price losers’ chart with a
loss of five percent each, to close at N1.90 and 50 kobo per share.
Champion Breweries and Prestige Assurance followed on the losers’ chart
with a loss of 4.97 and 4.91 per cent, to close at N4.40 and N2.13 per
share.

Active sectors

The banking
sub-sector led the most active sub-sectors’ chart with 219.986 million
volumes of shares, valued at over N1.850 billion. Volume in the
sub-sector was driven by First Bank, Zenith Bank and Unity Bank.

Trading activities
in the insurance sub-sector followed, with 29.992 million shares valued
at N20.269 million. Deals in shares of NEM Insurance, Continental
Reinsurance, and Goldlink Insurance boosted volume in this sub-sector.

The conglomerates
sub-sector was third in the chart with 17.501 million shares, valued at
over N156.905 million. Volume in the sub-sector was driven by
Transnational Corporation, PZ Cussons, and UAC Nigeria.

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BRAND MATTERS: Customer loyalty programmes and its benefits

BRAND MATTERS: Customer loyalty programmes and its benefits

Customer loyalty is
one major thing that brands need to thrive in the market place. When
customers are loyal to a brand, they become ambassadors by mouthing
good stories about the brand. It is a basic truth that when customers
are happy, they go to a large extent to promote a good image for the
brand. Customer loyalty is all about relevance and meaning throughout
every customer touch point. It is all about making the brand experience
more intimate relationship with the customers.

However, one thing
I have observed is that our brands are not really embarking on
initiatives that will build loyalty amongst the customers. Customer
loyalty programme is achieved through free offers, discount prices,
generous commissions, cash awards etc. When concrete efforts are made
to promote customer loyalty, it translates to profitability for the
brand in the long run. This is because a satisfied customer will always
make repeat purchases and also persuade others to patronize the product
or service.

Customer loyalty
programme is one that companies use to build brand loyalty, retain
their valuable customers and increase sales. A comprehensive database
of customers is very key to the overall success of a customer loyalty
programme. The database is not intended to be used to announce sales
promo but one that take cognizance of the customers consistent purchase
habit. Through this, some key loyal customers are identified for a
reward scheme that will sustain their interest in the brand.

Customer
satisfaction surveys are also important to determine the level of
loyalty and commitment of customers to a brand. This is a viable avenue
to gauge customers’ perception and develop strategies to generate
loyalty.

Before customer
loyalty can take its root firmly, companies need to communicate the
whole brand essence to the internal audience. It is important because
getting loyalty from the external customers without focus on the
internal customers is a colossal waste of time. When the employees who
interface with customers do not live up to expectations, there is no
way customer loyalty can take place.

I wonder how many
of our customer care personnel know their customers by name and attempt
to key into their lifestyle to offer quality service. Consistent
excellent customer service has a crucial role to play in building
customer retention and loyalty.

I think Zain (now
Airtel) started this last year when subscribers accumulated points to
collect several branded prizes. The scope and structure of the then
Zain reward scheme was excellent as it was a direct and open scheme.
When I migrated to Zain step-up, I won a Zain phone apart from the
points I used to win other prizes. I became an instant advocate of the
network and quite a lot of my friends believed more in the network as
caring and making the subscribers happy.

Companies can only
build loyalty by maintaining constant touch with customers and making
them feel important to the brands’ existence. Customers need to be
rewarded for choosing a particular brand over competitors. There are
enormous gains to be derived from a good customer loyalty programme. A
loyal customer will always make repeated purchases because he is
already satisfied with the quality of service.

Through the loyalty
programme, there is a greater tendency of increased volume for the
brand. This is because customers may decide to buy greater volumes of a
brand. Customer loyalty programme creates a good relationship and
builds affinity with the customers. Most customers through the
programme maintain steady relationship with the business. When
customers establish strong brand loyalty, it gives the brand immunity
from competitive forces. A loyal customer will use all resources at his
disposal to protect the brand image and defend it because of trust and
reliability that has been developed over time.

The place of word
of mouth marketing should not be underestimated. This is because loyal
customers always bring in new customers. Word of mouth is a very potent
tool of marketing. I remember I once demonstrated this for GTBank when
a fellow customer had a complaint. The way I promoted the bank and its
customer centric nature assuaged the feelings of the man. What
happened? He had a change of mind. I only demonstrated what I had
experienced and all he needed to do was to believe the words of an
ordinary customer like himself.

It is indeed a good strategy to retain customers with less money
than looking for others which cost more on the long run. It is
essential for companies to build strong affinity with customers and
build loyalty programmes that sustain customer loyalty and interest in
their brands. The values attached are enormous and it is a worthwhile
investment to retain customers than to lose them.

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