Nigeria Content Online

Diezani Alison-Madueke, Minister of Petroleum Resources, at the
weekend defended the Nigerian Content Policy of the Federal Government. She
said the policy was not designed to nationalise the assets of multinational oil
and gas companies operating in the country.

The minister, who spoke at the first anniversary of the
commencement of the implementation of the Nigerian Oil and Gas Industry Content
Development Act 2010 in Abuja, said the policy is aimed at promoting increased
participation of Nigerians in the operations of the industry, as is the
practice in industries around the world.

“Nigerian Content Act is not designed to nationalise foreign
assets or to completely indigenise the investment interests of foreigners, as
is erroneously perceived in some quarters. The important thing is that the
implementation of law would be guided by a framework that has been put in place
to help balance the interest of the investors and the country’s national
interest in the oil and gas industry,” Mrs. Alison-Madueke said.

According to her, since the approval of the Act early last year,
it has become clear that the industry needed to work towards building capacity
in critical areas to ensure that requirements of the law do not impede the
growth of the industry, pointing out that the collaboration with all
stakeholders must be sustained to erase the suspicion in some quarters that
there is resistance by multinationals in the implementation of the law.

Targets to be achieved

Some of the targets set by the government for the Nigerian
Content Development Monitoring Board (NCDMB) include retention of $10 billion
out of $20 billion average annual industry expenditure; creation of over 30,000
direct employment and training opportunities; and establishment of three to
four new pipe mills to service the demands of the industry and coating, valves,
fittings and components.

Other targets include the development of one or more dockyards
for maintaining marine vessels operating in Nigeria; transformation of ownership
profile of marine assets supporting industry activities and integration of
indigenes and businesses, as well as capturing 50 to 70 per cent of banking
services, insurance placements, and legal services in the country.

Group managing director, Nigerian National Petroleum Corporation
(NNPC), Austen Oniwon, disclosed that with the recent launching of the ‘gas
revolution’ by President Goodluck Jonathan, about $53 billion is expected to be
spent in the next three to four years on the establishment of strategic
industry infrastructure in the country, including Greenfield refineries, world
class petrochemical plants, fertilizer complexes, methanol plants, gas
processing facilities, and other gas related infrastructures in the country.

The challenge for stakeholders, he explained, hinges on ensuring
that significant percentage of the amount to be spent is in-country, by
supporting the capacity building initiative for local operators through the
Nigerian Content Development programme, to enable them compete with
multinationals, who set up facilities in Nigeria in order to make them take
full advantage of the existing opportunities.

Executive Secretary, NCDMB, Ernest Nwapa, said the take off of
the Act was threatened by the confusion about the necessity to either pass it
separately or be joined with the Petroleum Industry Bill, as it was
increasingly becoming apparent that government was no longer interested in
pursuing the policy of achieving 70 per cent local content in the industry.

Since the take off of the NCDB, Mr. Nwapa said a number of
achievements have been recorded, particularly building its executive and
operational capacity, underscoring the importance of continuous engagement with
stakeholders to reassure them that the Nigerian Content Act is not a punitive
law, but a confirmation of what is done in other jurisdictions they are
operating in.

Standard Bank, South Africa’s largest bank by assets and
earnings, has said ongoing elections in Nigeria will not affect its willingness
to do business with the country. The bank’s director and head, Agricultural Banking,
will be moving to Nigeria to oversee its operations in the sector from next
month.

“Nigeria is currently our biggest investment at the Standard
Bank Group, outside of South Africa. We keep a close eye on elections as with
any African country, but the reality in Africa is business goes on, with or
without elections. I am actually relocating office in Nigeria in May due of
course to the size of the opportunity from an agricultural point of view,”
Jacques Taylor told NEXT at the weekend.

Speaking at a media forum on agricultural banking organised by
the bank in Johannesburg, South Africa, he said the bank expects agriculture to
contribute up to 40% of its asset growth in Africa in 2011.

Priority countries

South Africa’s Standard Bank Group acquired a majority stake in
Nigeria’s IBTC Chartered through a tender offer in August 2007 to become
Stanbic IBTC Bank Limited.

Nigeria is one of six priority countries that Standard Bank sees
as having the biggest opportunities in the agricultural sector in the short
term. The others are Ghana, Kenya, Namibia, Uganda, and Zambia.

“When we identify a country and try to access the market, the
three key things are natural resources, quality of infrastructure, and a stable
macroeconomic and political environment, because that will result in a stable
exchange rate,” Mr. Taylor added.

The group gave Nigeria a political risk rating of 2.2 on a scale
of 5, second only to Kenya, which has a risk rating of 2.1

“We are serious about that business, with a lot of support
coming from the Central Bank of Nigeria,” Mr. Taylor said.

Last year, Stanbic IBTC Chartered grew at the rate of two
branches per week in Nigeria.

“We have about 60 branches; we could be aiming for close to 300.
Nigeria is a big business for us,” Mr. Taylor concluded.

The market capitalisation of equities at the Nigerian Stock
Exchange (NSE) depreciated further by 0.08 percent at the close of trading
session last week, as against a decline of 0.45 percent recorded in the
preceding week.

The NSE market capitalisation of the 194 First-Tier equities
closed last Friday at N7.902tr after opening the week at N7.908tr, reflecting
N6bn losses. Meanwhile, about N36bn was lost in the previous week.

The NSE All-Share Index in the week under review also shed 0.08
percent to close at 24,733.38 basis points as against a decline of 0.45 percent
recorded in the preceding week to close at 24,752.05.

Analysts at Proshare Nigeria Limited, an investment advisory
firm, said equity market turned unstable with “increased volatility due to high
speculative tendency experienced.” They said, “series of indecision positions
witnessed in most sectors, gave support to the unstable market breadth in the
week, indicating the intense battle between the bargain and sell positions
while the outlook further suggests overwhelming sell position as the week
eventually closed negative.” In the mean time, market watchers have advised
investors to maintain value-investing approach in the coming weeks.

Gainers and Losers

The number of gainers in the week closed at 41 stocks compared
with the 26 stocks recorded in the previous week.

Transcorp Plc topped the gainers chart for the week with 19.83
percent appreciations. One the losers’ side, a total of 33 stocks recorded
price decline in the week compared with the 50 stocks that declined in the
previous week. Guaranty Trust Bank topped the losers chart for the week with
24.57 percent depreciation.

The total volume traded in the week closed at 3.92 billion units
valued at N15.25bn compared with 3.98 billion units valued at N16.65bn recorded
in the previous week. The volume transaction in the week when compared with the
previous week data declined by 1.43 percent as against an increase of 242.68
percent recorded the preceding week. Weekly value also went down by 8.42
percent as against positive growth of 68.36 percent recorded in the preceding
week.

The conglomerates sector emerged the most traded sector during
the week in terms of volume with 2.56 billion units of shares valued at
N4.09bn. The volume traded in the sector accounted for 65.30 percent of the
entire market. Transcorp Plc led the market volume for the week to maintain
previous position as top traded stock. The Banking sector was second most
traded sector with 994.67 million units valued at N7.75bn.

Last week, some companies were marked down for dividends and bonuses. Zenith
Bank was marked down for 85k dividend; Guaranty Trust Bank was marked down for
75k dividend and a one for four bonus; while Stanbic IBTC was marked down for
39k dividend.

The consequences of
the process that has made Nigerians poorer as the years have gone by
have been as diverse as they have been disruptive. I try today to buy
stuff off Amazon, and besides books, the standard reply is that Amazon
does not ship the designated items to the destination indicated –
Lagos, Nigeria. The response to attempted purchase of digital stuff is
clearer: copyright worries make it impossible to send the items.
Conversely, of five books bought online, depending on how recent the
titles are, three get through.

It’s of little use
protesting to the post office. Not all online purchases come with
“tracking numbers”. Tell that to the attendant at the post office and
the shrug of shoulders, and the question, “So, how can we look for it?”
settles the matter.

Yet it was not
always this way. I still recall that some of my father’s dress shirts
came off orders from glossy catalogues, and all the way from the UK. In
the 70s, these orders were delivered by the old post office system to
the house. This, incidentally, was not a Lagos thing, for the house was
in Ilorin. Moreover, all deliveries came through on time.

So we were not
always this dodgy. Although we have been poor for a while now, I was
recently impressed by this latter fact, when I tried to prepare my
kids’ favourite cereal with warm milk. Growing up, milk used to be of
the evaporated or fresh variety – either way, it poured out of some
container. And I felt nostalgic enough to try something different, only
to be told by my kids that the milk didn’t quite make the grade. “It
tasted funny”! Admittedly, it tasted somewhat different from the milk
powder they’d been brought up on. But more important was the
realisation that the use of evaporated/fresh milk made sense only if
electricity from the mains is regular, and steady. Otherwise, food
poisoning becomes a real and present danger. Reduced “quality of life”
issues and poverty, handmaidens both.

However, the more
interesting outcome of the gradual impoverishment of the Nigerian has
been the response of product/service providers in the economy. As
disposable incomes have fallen, shoppers have bought in increasingly
smaller quantities. In the fast moving consumer goods sector, the
changing face of shelf-spaces describes this trajectory: large cans of
food long since gave way to the medium- and then to the small-sized
tins. The now predominant sachets came only later. This value
transition has also happened in the faster growing sectors of the
economy. Today, with recharge card values as low as N50, not many
remember that the GSM-licensed telecom companies started business
almost a decade ago, with recharge card values as high as N7,500. The
card makers’ numbers tell a fascinating story. Given that the margin on
each card is the same, irrespective of the recharge value it carries,
small, frequent, discrete purchases return higher net margins than the
lumpier variety.

Unfortunately,
besides the contraction in domestic final demand, domestic businesses
face a plethora of structural impediments to profitable operations. One
of these – access to formal sector credit – so concerns the Central
Bank of Nigeria (CBN) that it has been forced to cross several
firewalls in its bid to give traction to the market for private sector
credit. It would seem, in spite of the CBN’s quasi-fiscal operations,
that the problem with formal credit growth in this economy is the
failure of the banking sector to mirror the trajectory of the economy.

Talk to bankers
about their concerns over the CBN’s efforts to get a grip on monetary
management by tightening policy, and the central worry is the adverse
effects of the CBN’s policy on the main transmission agents, the banks.
Apparently, whereas banks have come under intense cost pressures as
depositors have insisted on matching the yields on their deposits with
the return on the CBN’s standing deposit facility, the banks have not
been able to pass these new costs on to their borrowers. So the
expectation is of shrinking margins over the next nine months.

But isn’t this
because the banks are at the beginning of the curve, and are still
focussed on the big corporate customers? Would they not be better
served by bulk-breaking their loans and re-packaging them in sachets?

Funke Opeke is the chief executive officer of Main One Cable Company,
the first broadband cable to launch in Nigeria and Ghana. A graduate of
the then University of Ife, and Columbia University, New York, Ms.
Opeke, in this interview, speaks on the company’s operations, and the
challenges of running a business in Nigeria.

Is this what you have always wanted to do?

I think building
network is something I acquired a passion for in graduate school
because data communication was just taking off and the Internet came
later.

Setting up Main One
is one of the aspirations I am happy to accomplish. Having seen the
innovation of technology that drives creativity, I wanted to do that
and see the benefits enjoyed in my country.

Building Main One
happened as a natural progression from what I was doing. I studied
Engineering because I like Mathematics and Physics more than I like
Biology, and as a growing young woman interested in scientific
professions, it was Engineering and not medical school that was my
passion. There was also the place of curiosity.

I entered college
in the mid 1970s, but technology was just developing around that time.
Things like cassettes, video recorders, betamax were just developing
really. Electrical/Electronic Engineering was very fascinating. The
world was changing rapidly and by pursuing a career along that line, I
had the opportunity of being part of it.

I was the only
female in my graduating class at the University of Ife that time, but
there were other females in other classes next to mine, though it was
always just one or two.

How did it feel being the only woman?

To be honest, I did
not feel anything different. It has made me somewhat less sensitive to
the male/female thing in the work place. It also helped in America
where I’ve worked most of my career, as you don’t only have to deal
with such but also that of race. It helped me to focus on those things
that really matter. A lot of time you’re the exception but you get on
with what you have to do.

Most singular influence in your career

Gosh! The most
singular influence in my career? I’m not sure that there is one
influence I can pick. But I think I have learned from mentors and have
had really good mentors because of what I do. No single thing really,
it is an aggregation of many factors.

If there is one
thing I have learnt from them, it is that you should do what you are
doing really well. They have encouraged me to work hard to achieve my
results from a career point. Do what you’re doing now well and the
opportunities will come.

Don’t worry about
what’s coming next, just keep getting good at what you’re doing. You’ll
find the opportunities, not the company or the job you’re doing, and
that has helped me build up myself and my capacity.

In terms of Main One and being able to run it in Nigeria, Mr. Fola Adeola has been a very strong mentor.

Growing up

I grew up in Ibadan
and I went to Queen School, a boarding school. One of the differences
between when I was growing up and now was that we felt that the sky was
our limit, even in Ife. We did not feel that what Steve Jobs was
achieving in the United States for example, was totally out of reach
for us being educated in Nigeria, if we built up ourselves and take all
opportunities available to us.

We truly expected
Nigeria to participate on the world scale, and if you look at our
economic rankings compared with other countries, it was much higher
that time. I worry today that young people graduating from Nigerian
universities do not aspire to create a Google, or an Intel, to create
the kind of tremendous economic value that can transform our society
and the world.

I think that’s a
big difference; we had access to the same information. Today, anybody
going to school in Nigeria is at a marked disadvantage. Even if you go
to the best schools in Nigeria, you don’t have access to the
information that someone in Harvard, for instance, does; even in South
Africa.

We played on the
streets and lived in mixed economic neighbourhood. We had people of
mixed faith living together, Christians and Muslims, and it was about
hard work, going to school, and doing well. The values were different.

People who were
wealthy or respected in the society then, we knew what they were doing
to gain that respect. We knew what they were doing to achieve that and
there was no popularity contest, so you also wanted to earn your place
in the society.

Coming back to Nigeria

At some point in
the late 1990s, when I had been away for about 15, almost 20 years
working in a company in the US, I wanted to go back to sunshine, and
that’s when I started thinking of coming back to Africa.

It seemed more
meaningful that I could give more back to Africa and it was no longer
about self but giving back, and I thought I could give more in Africa.
If I built another fast feed link in New York, it would allow people
watch movies faster, but it would not even be that but maybe give a
choice of selecting from 1000 movies, as opposed to being able to
select from 100.

If I give Internet
to someone in Nigeria, it could make the difference between life and
death, it could ease how they get information to someone in rural
communities, on how they can get information about a certain ailment
that needs urgent treatment, someone’s life being saved, someone is
able to share information without taking a five-hour road trip from the
hinterland to Lagos, escaping the risk of the hazards of the road.

It could mean
thousands, hopefully millions of young people having access to the kind
of information where they are able to acquire knowledge and improve and
educate themselves, since today’s education is about e-learning.

A lot of time, I
still think I’m crazy being here. Whenever I get out of my home, before
I travel five minutes, I see a lot of people, hundreds, young, middle
aged people, who if employed at all, are marginally employed, they are
not skilled.

I wonder what they
are going to do in retirement when they are too old. I really wonder
what quality of life they have or their children. I’m indeed privileged
to be in the position I am here in Nigeria or the States.

This is what I know
how to do; telecommunication is what I know how to do in my life. Maybe
I can create something for 10, 000 or 20, 000 people, then I’ve done my
best. It’s hard coming back to Nigeria. We still talk about light going
out, inverter, water, security guards, and what have you, things that
are taken for granted in other societies. It’s hard to live here still.

Working with MTN

MTN actually
brought me back. They were doing something on a scale and wanted me to
be part of it. A rather gutsy move, if I have to say so myself, because
outside my youth service, I had not worked in Nigeria. I think my
family was a little bit concerned that I was going back.

Then I got called
upon to work with Transcorp to privatise NITEL and it was not just
about the company but about Nigeria, a national phone company that
NITEL is. If you look at the advanced economies in the world today,
even with privatisation, British Telecom is still the largest in
Britain, Deutsche Telecom in Germany. The incumbent national phone
company always has a critical role to play in the development of
infrastructure in the country.

I thought I could
impact Nigeria through that platform. Unfortunately, it was not to be
and the NITEL matter is unresolved till today. I came out of that and
asked how do I add value to Nigeria? I then looked at the region and
asked myself what I can do that will be meaningful and consistent with
my ability, and that’s how Main Street, which gave birth to Main One,
came about.

Solving the NITEL conundrum

If I was asked what
to do to save NITEL, I would give it away to the most competent party
that will manage it, clean it up, and turn it around. I will not
collect any money since it has fallen apart. I will not allow them to
sell any of the company’s assets, but look for the best way to add the
most value to it.

Second, they have
to think of how it can be funded. They may be required to go and raise
money based on the merit of the business plan, but the government may
be required to give them some seed money. If they did that and succeed,
then they will have to pay back the government, since it is a
commercial investment and the people who have done the work get a
further payback beyond their salaries in form of some ownership of the
company.

More importantly,
Nigeria would have created an indigenously managed company, though
there might be some form of foreign partnership of NITEL. With this,
part of our unemployment problem would have been solved, and this would
add value to the Nigerian economy. So, you create job and strategic
infrastructure that will help grow the economy.

Internet service pricing in Nigeria

The prices have
crashed at the wholesale level and at the retail level too, depending
on who your provider is. At the wholesale level, prices have been
reviewed by maybe 70 per cent across the market, but on the retail
side, for instance blackberry, we’ve seen a 40 per cent reduction
across the market, on retail bundles, to go on your laptop probably
about 20 per cent.

For subscription
services, it’s been more of improvement in service than reduction in
price, but I think that is coming. It has to come because the market is
changing, but also one of the challenges is that the last mile
distribution and the infrastructure is largely fragmented proprietary
and costly.

The last mile to
get that modem in your house is owned by one party and for another
person to be able to deliver that they have to build infrastructure
running to millions of dollars.

In retail data, we
still do not have that kind of mass market competition that GSM
afforded on the voice side, but we expect that over the next 12 to 18
months, given the amount of bandwidth that is landing on our shore and
the evolution of technology, hopefully with some policy support from
the government, which is always crucial, we will get there.

Main One business operations

We’re making money,
but people seem to forget that we invested $240 million to build Main
One and capital is expensive in Africa. Operations are expensive in
Africa and I wish we make enough money so that I just pay off this loan
so I don’t have to worry at night about generating enough revenue to
cover our operations, pay our obligations, and also give something back
to those who took a risk by investing in the business when I just had a
plan on paper.

We are earning
revenue, but we are not rolling in money. As an entrepreneur, the
greatest challenge is the difficulty and cost of capital in Africa. We
don’t have matured processes and support for incubating and launching
new businesses. The other one, now that we are in operations, is the
fragmentation in the market, access, and getting to individual end
users. Our price to wholesale operators today for data service is lower
than 60 per cent of what they were paying to others before we came to
the market because of the retail distribution. The networks they use
are so fragmented, so there is no large economy of scale.

Our prices will go
down further if we were doing more volume and the benefit on the retail
scale will also be higher. But because of our infrastructure
constraint, we don’t have that. I know that the NCC has been looking
into it, but in some advanced economies what they do is unbundle, to
separate the physical infrastructure from the service, and so ensure
that it is priced on a competitive basis.

I engage with a lot
of government officials but the ability to drive change through
policies is a challenge here, especially in economic growth and
infrastructure. Most of the developed economies output is driven by
government policies and is implemented by the private sector, but we
are yet to see that here.

The mixed fortunes that trailed trading at the Nigerian capital market during the first quarter of the year are expected to continue this quarter, according to some finance experts.

This is coming despite the resumption of the new chief executive officer of the Nigerian Stock Exchange (NSE), Oscar Onyema, whose assumption of office was expected to restore confidence in the market. Some analysts say the Exchange may still witness low investors’ patronage this second quarter, especially from fund managers. They hinged their argument on the fact that attention is currently been shifted to the money market following the recent increase in interest rates.

The NSE, which recorded a total loss of N260 billion on equities in February, further lost over N449 billion at the close of trading activities in March, after recording significant gains of N662 billion in January.

The NSE’s Strategy and Business Development Department attributed the downturn in market, which started in late-January and continued during the first quarter, to “low liquidity arising from low incomes and reduced savings, mixed performance by quoted companies and profit taking/loss cutting by investors.”

But Femi Oladehin, vice president and managing director of BGL Limited, an investment bank, said political risks in the country and the crisis in the Middle East and North Africa region contributed to the woes as a result of the withdrawal of funds by some foreign investors from the market.

Mr. Oladehin said uncertainty would remain in the market this quarter because “significant contributors of trading in the Nigerian market are foreign investors as against local investors.”

External factors

Also, analysts at Renaissance Capital, an investment bank, said, “The performance of the market in the first quarter was largely muted as a result of a sell-off on the back of a perception of higher sovereign risk, uncertainty related to the April elections and the late release of banks’ financial year results.” They added that external factors like the sell-off in frontier markets and heightened uncertainty ahead of the April elections will continue to weigh on the market, adding that “high oil prices, the potential appreciation of the naira, completion of elections, and conclusion of privatisation transactions in the power sector, are “catalysts to watch” this quarter.

Market watchers also said that if the elections are peaceful, the Exchange will start recording stable rebound in early May. Other market drivers identified to bring stability include the creation of a Sovereign Wealth Fund, the completion of Asset Management Company of Nigeria loan purchases, the completion of banks’ mergers and acquisitions, and the extension of trading hours.

Analysts at Vetiva Capital Management Limited, a financial service company, said the market is expected to perform better in the coming months on the back of quoted companies posting “positive earnings growth induced by higher profitability and stronger balance sheets.”

They added that other expectations in the market include investor optimism; barring any negative surprises on the political front, a post-election rally in the equities market, and increased portfolio flows from developed markets as investors search for higher returns.

Market agenda

In the mean time, although Mr. Onyema said he will soon unveil his agenda for the market to further boost the current high foreign participation at the bourse and also woo more local investors, some market operators have advised him not to rush in handling the various projects he met on ground.

Virginus Agada, a stockbroker at Eurocomm Securities Limited, a stockbroking firm, said, “We expect him to be calm in handling issues. We also don’t expect him to start witch-hunting so that operators do not lose confidence in his leadership.”

For David Amaechi, an executive member of the Shareholders Association of Nigeria, Mr. Onyema should make demutualisation of the NSE one of his priorities “to enable the market community own the Exchange so that few hands don’t hijack the whole market.”

Demutualisation is transforming the Stock Exchange from being a self-regulatory organisation to a public organisation.

Do you ever feel like you have lost control of your finances and all you do is spend, spend, spend? N1,000 here, N5,000 there, N25,000, N100,000 and so on. Do you constantly have to borrow money from your parents, siblings, or friends? In a way, you cannot really stop spending; there are so many payments that have to be made; your rent or mortgage, school fees, groceries, petrol, diesel, the list is endless. Whilst you can’t really avoid the essential expenses, the real problem is the money that just gets frittered away without you really knowing what it went on.

Here are a few tips that might help to get your finances under control:

Keep track

Write down everything you buy for at least a month: N7,000 for groceries, N3,000 for petrol for your car, even N200 for your daily newspaper; write it all down. You may not realise that you are spending over half of your income eating out each month. Many of us spend money casually without really thinking about it; after you have used a spending diary for a while and tracked your expenses for say a month, you will have a clearer picture of where you can cut back. A spending plan gives you the power to decide how you will spend your money. You will be less likely to overspend when your expenses are planned for.

Create a budget

The budgeting message may seem like it is over-flogged but it really is one of the most vital steps you can take to curb over-spending. Having a simple budget is one of the tried and tested ways to keep your finances in check. Set aside the money you require for your fixed, necessary expenses; groceries utility bills, loans and so on. Then estimate how much you spend outside the essentials, say on clothes, and entertainment. It is usually these variable expenses that make you overspend. Withdraw that money at the beginning of the week, and plan to make it last through the week. Determine what to allot to each category and stick to the set spending limits.

By fixing a spending limit and sticking to it, you will be much more in control of your spending. The key to the success of this saving method is that once you have spent what you have allocated to each expense category, you must make a conscious effort to just stop. As difficult as it might sound, once the budgeted amount is gone, that’s it. No more withdrawals. After the first few months, you will be able to make adjustments that make your spending pattern more realistic. Remember to involve members of your household. You need their buy in for the initiative to be successful.

Pay with cash

If you feel your debit or credit cards are leading you to spend more than you plan to, then put them away for a while and pay with cash. If you are used to making payments with your cards, using cash may seem ridiculous but it is still the best way to rein in your spending should it get out of control. When you use cards to make payments, you feel less impact of how much you are spending because it doesn’t feel like you are actually parting with your money.

With a credit card, you aren’t spending your own money so the ability to delay payment encourages you to spend more than if it was your money you were parting with right now. It is so easy to slip your ATM card into the machine without feeling the impact.

Save

It might seem absurd to suggest that you save when your finances are out of control but this is exactly what you should do to ensure that you are not tempted to spend what could be going towards saving and investing. Put aside some money at the very beginning of the month, when you receive your salary. Automate the process so that your current account is debited at source and the funds are moved directly into a savings account. Once you have reached an initial goal of having an emergency fund of say six months of expenses safely set aside, you can begin to save for other goals. A direct debit from your current account to an equity fund is a painless and effective way to invest towards your long-term goals.

We all love to shop. It seems to be woven into the very fabric of our society. There is nothing wrong with a little shopping from time to time but when your spending gets out of control, it can destroy finances, relationships, even lives. Financial hardship and debt don’t just happen overnight. It takes time to run up unpaid bills, to default on loan repayments, to constantly buy things that you don’t need. If you are focused and disciplined about getting your finances in order, you will soon be back in charge of your financial future and can enjoy the sense of satisfaction, fulfilment and satisfaction that this brings.

The financial services industry has witnessed a landmark in the penetration of banking services to rural and urban areas with the introduction and migration of its payment cards and terminals from magnetic to the more secure chip and pin EMV platform.

However, despite these achievements, the industry is still faced with the challenge of encouraging about seventy per cent of the presently ‘unbanked’ population to be financially inclusive.

About seventy per cent of adult Nigerians do not have bank accounts, said a report by Enhancing Financial Innovation and Access (EFInA), an independent non-profit organisation, set up to promote access to financial services for the unbanked and financial sector development in Nigeria.

According to the EFInA report, presented in November last year, Nigeria remains largely unbanked with only 25.4 million people, representing 30 per cent of the adult population, having bank accounts.

The report also said that 39.2 million Nigerians, about 46.3 per cent of the adult population, are financially excluded, that is, have no access to financial services.

Some of the challenges that make many unbanked include the long process of opening bank accounts, the time spent during bank transactions, fear of fraud, arbitrary bank charges, among others.

Complex demands

Ganisirey Seck, MD, Ingenico (Nigeria), said she could not open a bank account on her arrival into Nigeria.

“The Know Your Customer (KYC) is all about filling forms. When I went to fill an account opening form in one of the banks, I couldn’t fill it because I was lost. They were requesting for this and that. There are challenges and we have to overcome them. About 68 per cent of Nigerians are without identity cards. We need more than one identity factor. Is there any possibility that we can be enlightened on the KYC form?” Mrs. Seck said.

She said she had to go back because she couldn’t fill the form. “I couldn’t fill anything; I didn’t understand what they were asking me, and why they were asking,” she said.

Funmi Adeoye, a song writer, said despite the fact that “I already had an idea of what could be requested, I still spent over an hour trying to open an account in one of the banks I use. I already had NEPA bills, passport photographs, international passports, and all that, yet, the time I spent trying to open that account can actually be improved on.”

Industry watchers say under normal circumstance, opening bank accounts should not be as tedious as it is obtainable. Some of the information requested by the bank include basic data details that the government should have made available to the banks if there was an existing central database for national identity.

It is probably because of the lack of this that the Central Bank came up with different policies of identifying bank customers, which may indirectly be a burden on the customers.

Just recently, the Central Bank ordered that all bank users should go to their respective banks to update their personal data.

Moving forward

Some finance experts believe the ongoing SIM registration would help address some of the challenges of customer identification in the banking industry, which has to battle with identifying its customers, especially when it comes to e-payment, mobile payment, and all the related banking activities.

“SIM card registration, a mandatory collection and registration of identity information on mobile phone users as a requirement for their owning and using their mobile phone number, can help with bank’s KYC and identity confirmation for payment,” James Agada, MD. ExpertEdge Systems (CWG’s software division), said.

According to him, the SIM card registration can help in tracing transactions related to criminals and criminal activity.

“By registering a SIM, you can know all about an individual, technically,” Mr. Agada said.

Mosh Adetoro, CEO, Qrios Networks, a specialised technology house focused on services on helping clients in the deployment and maintenance of mission-critical environments, said some of those who would have been interested in opening accounts have got no means of identification and are not literate.

“There are too many things that you ask for in KYC that makes it even impossible for them to fill and be included. This has to change,” Mr. Adetoro said.

According to him, mobile payments, using mobile devices as a means of transferring monetary value in Nigeria, may fail if the Central Bank does not step in and make this change, as it is too hectic a process for people to go through, all because of opening an account.

Know Your Customer (KYC) compliance regulation has over the years proven to be one of the biggest operational challenges banks, accountants, lawyers, and similar financial service providers worldwide have had to overcome.

The KYC compliance mandate, its positive outcomes notwithstanding, has burdened companies and organisations with an extensive administrative obligation. Furthermore, it increasingly entails the creation of auditable proof of due diligence activities, in addition to the need for customer identification.

Basically, in order to meet KYC compliance requirements, financial institutions have to verify that customers are not or have not been involved in illegal activities such as fraud, money laundering or organised crime, verify a prospective client’s identity, maintain proof of the steps taken to identify their identity, establish whether a prospective customer is listed on any sanctions lists in connection with suspected terrorist activities, money laundering, fraud, or other crimes.

Because no single form of identification can be fully guaranteed as genuine, or representing correct identity, the Central Bank says the identification process would be cumulative.