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A triumvirate of
reformers – Central Bank governor, Lamido Sanusi, AMCON chief
executive, Mustapha Chike-Obi, and SEC director, Arunma Oteh – has
turned Nigeria’s financial markets inside out over the past 18 months.

A $4 billion
commercial bank bailout in 2009 and the sacking of eight bank chiefs
for reckless lending, engineered by Mr. Sanusi, was thefirst strike,
shocking a corporate elite that was unused to close oversight.

Ms. Oteh, who took
office in January 2010, pursued stockbrokers with equal vigour, taking
260 individuals and entities to a special tribunal over alleged price
fixing and insider trading. AMCON, established last year to soak up
non-performing loans in exchange for government bonds, is hoping to
rebuild commercial banks’ balance sheets after the bailout and deepen
the fledgling debt market as it does so. The reform drive has pleased
foreign investors.

But by demonstrating the importance of a few individuals to
financial reforms, the triumvirate’s success indicates the reforms’
vulnerability. Next month’s national elections could cut the political
support that the reformers enjoy, particularly if a new cabinet is less
willing to give them free rein.

To cut leakages in
the system and ensure efficiency in the utilisation of capital
expenditure, the federal government will soon sign up to be a member
nation of the Construction Sector Transparency Initiative (CoST).

This is a
multi-stakeholder initiative to increase transparency and
accountability in the construction sector. Finance minister, Olusegun
Aganga, who disclosed this, said the way public construction projects
are handled in Nigeria is inefficient and allows for corruption to
thrive.

Speaking at the
sidelines of the one-day interactive session with the organised private
sector in Lagos on Tuesday, he said the initiative would allow local
communities to monitor projects in the area and help to plug wastage in
the system.

“One other way to
make it transparent is to join the CoST. Only a few countries, United
Kingdom taking the lead, have actually established that process and I
want us to join. That way, we bring public and private sector involved
in how we monitor our project. It introduces accountability and
transparency,” Mr. Aganga said.

He said the
process, when fully established, would allow independent committee to
monitor ongoing government projects across the country.

Constituency monitor

“The projects will
be on the internet so if there is a road construction in Nnewi to
Umuahia, you will know the roads that are being constructed in an area
and the constituents will know when the project is supposed to start
and end, and they will be able to report back at that local level,” he
further said.

He said the
independent committee would investigate and challenge projects which do
not meet the time lines. The minister said this is part of ways of
ensuring fiscal discipline. Observers are however wondering when this
would come into operation when government contracts are shrouded in
mystery.

CoST is already in
operation in seven countries: Ethiopia, Malawi, the Philippines,
Tanzania, United Kingdom, Vietnam, and Zambia.

Explaining the depletion in the foreign reserves, he said government is making effort to reduce the trend in the 2011 budget.

“In overhead, the
proposal which we sent to the National Assembly was reduced by 30 per
cent. The whole of last year we were shouting about borrowing, but we
really should have shouted when the budget was being put together.
Really, when you have an unnecessarily expansionary budget, that
deficit has to be funded and the only way is from your savings or from
borrowing,” the minister said.

Sovereign fund

Mr. Aganga said
there was need to reduce the level of expenditure and the level of
borrowing and the government is ready and prepared to introduce
discipline in how public finances are managed. Part of this, he said,
is the push to establish the Sovereign Wealth Fund to be managed by an
agency of competent professionals, some of whose services would be out
sourced.

“The Sovereign
Wealth Fund will have three boxes. One will be inter-generation fund
for future generation, and that will be invested in fixed income
securities and equities. The second box will be stabilisation box which
will be made available when there is a fall in revenue,” Mr. Aganga
said.

The third component of the fund, he said, is the infrastructure fund
which will invest in local infrastructure such as rail, roads, power,
and ports.

Last week, Goodluck
Jonathan signed what has been described as binding memoranda of
understanding (MoUs) with petrochemical companies from Saudi Arabia and
India as well as with Chevron, AGIP, and Oando. According to the
president, this step signalled the start of a Gas Revolution in Nigeria.

Coming a week
before general elections, we cannot fail to note the political
undertones in the timing of the launch. Past governments have made
pronouncements on their determination to halt the heinous acts of gas
flaring over the past decades. These have amounted to nothing but hot
air.

Administrative
measures to curb the menace started in 1969. Ten years after the
initial moves, the 1979 Gas Reinjection decree set 1984 as the
essential date when gas flaring became outlawed in Nigeria. However,
the penalty for flouting the law was a slap on the wrist to the oil
companies so that they continued flaring, poisoning the environment and
maiming the people.

The last set dates
for ending gas flaring were given by the late Yar’Adua in December
2008. Towards that deadline, Odein Ajumogobia, at that time the
minister of state for petroleum, announced that a new flare out formula
was being worked out to end gas flaring without hurting government
revenue.

When an earlier
target date of December 2007 was getting close, the same minister
announced that zero gas flare was a moving target.

The gas revolution
announced by Mr. Jonathan is replete with figures on how much money
would be spent on the various projects, but as far as news reports go,
we have seen very little of the volumes of associated gas currently
being flared that the projects would take up.

The drums are very
loud that foreign direct investments will bring in $10 billion and an
aggregate investment of $25 billion over the next three years, with
activities in fertilizer production, petrochemicals, and methanol
manufacturing.

All these will add
up to create about half a million jobs directly and indirectly. But
statistics can be colourful, especially when they are of the Nigerian
variety.

Except for Chevron,
which says it would start by delivering 175 million cubic feet of gas a
day “once the pipelines and infrastructure are in place”, we don’t see
concrete gas utilisation figures associated with this revolution.

Undoubtedly,
efforts have been made in the past by some oil companies to reduce the
amount of gas flared. For example, the Nigerian National Petroleum
Corporation (NNPC) and Mobil’s East Area Natural Gas-to-Liquid (NGL II)
project initiated in 2006 was completed ahead of schedule in 2008 and
was designed to utilise 950 million standard cubic feet of gas daily.

Chevron also
announced that the West African Gas Pipeline project (WAGP) would
significantly dent the amount of gas being flared in the oil fields.

It turned out that
this was not the case because, according to some estimates, less than
20 per cent of the gas on this pipeline is associated with crude oil
production. The bulk of the gas comes from gas fields, rather than oil
fields.

As for the oil
company AGIP, their notoriety in the area of gas flaring is marked by
their seeking to claim carbon credits for utilising some of the gas
they have been flaring at Kwale in the face of the fact that the
activity has not ceased to be illegal in Nigeria.

The same can be
said of Chevron and their claims of the WAGP as well as of other
companies such as Pan Ocean, which is making strides towards obtaining
carbon credits through this route dotted with ethical and moral
questions.

Nigeria’s huge gas
reserves, easily accessible in new gas fields, have made the stoppage
of gas flaring unattractive to an industry that has admittedly taken
the act as a routine matter since the 1950s, despite public outcry.
Nigeria is said to have proven gas reserves of about 187 trillion cubic
feet.

The 2005 estimates
by the World Bank indicated that Nigeria flares about 812 billion cubic
feet of gas daily. We can argue all we want on whether this figure has
increased or reduced with the passage of time.

Oil companies
sometimes make curious claims about how much reduction they have
achieved in their flaring binge. Some have claimed up to 30 per cent
reduction, but the reality on the ground has not backed up such claims.

The gas revolution
also has an anchor on the stomach, as marked by the proposed fertiliser
plants. Obviously, the existing fertiliser plant in Nigeria has not
made a significant dent on supply of the product in the country and
this has left the field open for above and below board games.

While launching the
gas revolution project, the president declared, “We can only be
successful if our actions impact on the common man in Nigeria. The
agricultural revolution arising from the fertilizer and blending plants
will create affordable food for Nigerians and a lot more for export.
The LPG agenda will touch the lives of many households, as cheaper and
cleaner LPG displaces kerosene. The disposable income that arises from
the savings will result in the purchase of more goods and services,
boosting GDP.”

Good lecture, Mr.
President. However, when it comes to wholesome food provision for the
present and in the future, it has been shown that this will come
through farmers who cultivate using agro-ecological methods, and will
not be dependent on the use of artificial fertilisers that are climate
changers and ultimately harm soils and water bodies.

Let the Gas
Revolution roll, but let it begin by the release of the figures of
associated gas to be used in the project, as well as the schedule for
the environmental and other impact assessments for the project.

And, of course, the
question remains, Mr. President: when will gas flares be quenched? Do
we take that the revolution will begin to snuff some flares out in
three years and continue over indeterminate years into the future?

The
management of the Nigerian Stock Exchange (NSE) yesterday suspended
Binos Yaroe, general manager, Listing and Quotation Department.

He
was placed on indefinite suspension over what was described as
“indiscipline act”. However, no further explanation was given as to the
nature of the indiscipline.

Mr. Yaroe, who was suspended on Tuesday, has been asked to stay off work from the following day (yesterday) till further notice.

Wole
Tokede, the NSE’s spokesperson, confirmed the suspension and said the
sanction was “an internal discipline of the Exchange” measured against
the offender.

The
development has been generating various comments from some market
operators. A stockbroker, who spoke to NEXT on the condition of
anonymity because of the sensitivity of the issue, said he believed
that Mr. Yaroe’s suspension was not unconnected with plans by the
interim administration of the NSE to “further clear away all the old
members of staff to give Oscar Onyema, the chief executive officer
designate, a fresh start.”

An
official of the NSE, who also pleaded anonymity, said, “His (Mr.
Yaroe’s) suspension was the outcome of the Exchange’s effort to
practice what it preaches on enforcement of good corporate governance.”

However,
Mr. Tokede said, “I know that he (Mr. Yaroe) has been suspended but I
don’t know whether definite or it has a time dimension,” adding that
the suspension was “an internal discipline of the Exchange, as it does
not have anything to do with the insinuation that they (the NSE) are
cleaning the road for the incoming chief executive officer.”

Emmanuel
Ikazoboh, the interim head of the NSE, had sacked 95 staff of the
Exchange few weeks after he assumed office, following the sack of Ndi
Okereke-Onyiuke last August on allegations of financial mismanagement.

Also,
while some of the senior staff with insider knowledge of the system had
to resign because of pressure from some quarters, Mr. Yaroe, one of
those supposedly pencilled down to head the Exchange if Mrs.
Okereke-Onyiuke had retired, remained in the market until his
suspension.

Some
market watchers said that the report on the investigation of the
affairs of the NSE under the leadership of its former director general,
Mrs. Okereke-Onyiuke, may indict some of its general managers,
including Mr. Yaroe.

NEXT
had reported that the yet-to-be officially released forensic report
showed that in 2008, the NSE expended a total of N186 million in
purchases of Rolex watches for long serving employees.

In
the mean time, the Federal High Court, Ikoyi, has adjourned judgment
till April 4, on the suit filed by Mrs. Okereke-Onyiuke, challenging
her sack as the director general of the NSE.

The Federal Inland
Revenue Service (FIRS) yesterday said that the project to computerise
the nation’s tax system is billed to take off with the full
implementation of the Unique Taxpayer Identification Number (UTIN)
system in April.

The computerisation
system, which the service has been championing in conjunction with the
Joint Tax Board (JTB) in the last four years, is expected to become
available for taxpayers’ registration at pilot locations in November,
while nationwide operations are billed for April 2012.

Indications are
that the pilot phase of the system would become operational in eight
locations in the six geopolitical zones of the country, including
Lagos, Rivers, Delta, Adamawa, as well as the Federal Capital Territory
(FCT), Abuja.

Indications towards
the planned take off of the new tax system is coming just as the JTB
has renewed the call on the National Assembly to accelerate the process
towards the passage of Personal Income Tax (PIT) Bill as soon as they
reconvene from recess, to facilitate the realisation of the objectives
of the proposed law.

The PIT Amendment
Bill, which has been pending before the National Assembly for the last
three years, finally sailed through legislative deliberations before
the close of the 6th Legislative Assembly.

The call for the
passage of the law, which was amongst eight-point decisions at the
124th Meeting of the Tax Administrators in Abuja, would give some
relief to taxpayers, as it seeks to reduce the current rate from 20 per
cent to 17.5, even as government is convinced that the amendment would
also improve the tax compliance of taxpayers generally.

On the
administration of the existing PITA provisions, the Board urged all
federal, states and local government Ministries, Departments and
Agencies (MDAs) to ensure that the provisions were strictly adhered to
by deducting adequately all Pay-As-You-Earn (PAYE) taxes of their
employees.

Approved taxes

Ifueko
Omoigui-Okauru, FIRS chairman, in a communiqué after the meeting, said
the members also resolved to sustain their ongoing fight against
multiple taxation by increased public awareness campaigns at all levels
of government, including the publication of the list of approved taxes
and levies on a sustainable basis.

Similarly,
discussions on the proposed Enhanced New Drivers Licence scheme ended
with a resolution that adequate awareness about its take off on April
18 this year, even as the Board commended the initiative of the
Students’ Tax Advisory Initiative (STAI), while urging Nigerian youth
to take active interest in taxation as a fiscal policy option for
building a better Nigeria.

With these
resolutions, some of the member states may have shifted position on
their earlier subtle opposition to the proposed amendment of the Bill
in view of what they believe were its likely negative effects on their
Internally Generated Revenue (IGR) profile.

Some governors,
particularly those with High Internally Generated Revenue (IGR)
profiles, had begun moves to ensure that the proposed amendment to the
PITA was considered simultaneously with the proposed amendment of the
Value Added Tax (VAT) law, which they believed would offset some of the
revenue losses their states might suffer as a result of the amendment
of the former Bill.

The PIT is imposed on the income of all Nigerian employees or residents who derive income in Nigeria and outside Nigeria.