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Mauritius will cut petrol pump prices to tame inflation, its finance minister said on Tuesday, a day after the Indian Ocean island’s Central Bank raised its benchmark repo rate for the same reason.

Pravind Jugnauth told parliament diesel costs would come down 5.3 per cent while unleaded fuel costs would be 3.9 per cent lower once the cut came into effect at 2000 GMT on Tuesday.

Mauritius, which imports all of its oil-based fuel requirements, was selling petrol at a government-controlled 51.3 rupees on Tuesday while diesel traded at 43.5 shillings.

“This will help curb inflationary pressures and maintain good conditions for a reasonable growth rate,” Mr. Jugnauth said.

Mauritius has been surprised by a faster-than-expected rise in consumer prices during the last six months, due partly to a shock 1 per cent repo rate cut in September amid what the Central Bank then called a benign rate of inflation.

The newly launched code of corporate governance for quoted companies at the Nigerian Stock Exchange has been welcomed by investors.

While some market watchers say the various regulations by the Securities and Exchange Commission (SEC) to restore confidence in the market have not yielded the intended results, some investors who spoke to NEXT yesterday said the new code initiative, if well enforced, will further boost investors’ confidence that has been eroded in the system.

Albert Edun, an executive member of the Nigerian Shareholders Solidarity Association, said that with the reviewed code of corporate governance, “I believe that companies will now be run in a transparent manner.”

“We, the investors, can then get accurate and reliable information that will allow us make informed decision on investment,” Mr. Edun said.

David Amaechi, an investment analyst and a member of the Shareholders Association of Nigeria, said the new code will boost investors’ confidence in quoted companies, “because the code now mandates companies to state in their annual financial results a corporate governance report detailing how they are complying with the corporate governance.”

“SEC and the review committee should be acknowledged because of this initiative,” Mr. Amaechi said, adding that enforcement of the code should be priority for the Exchange Commission to further boost confidence in the market.

A review committee, established September 2008, headed by Balarabe Mahmoud, was set up to review and update the 2003 code of corporate governance for public companies in Nigeria.

International best practice

At the official launch of the new code on Monday, Udoma Udo Udoma, chairman of SEC, said the corporate governance code was reviewed in the international best practice.

“In Nigeria, it became particularity important because of some of the unethical practice that was revealed in the administration of some companies,” Mr. Udoma said.

“The new code is formulated to guide corporate companies in the conduct of their affairs. While the application of the new code is limited to public companies, other companies are encouraged to use the principles set out in the code to guide their own activities. While the code sets out best practices, it allows companies to determine which one best suits them.

“Take for instance the issue of committees; while the code prescribes and describes the sort of committee each company should have, it leaves to the board of such company the power to determine which one and how many they need for their particular business; because it is clear that one type does not suit all,” Mr. Udoma said.

Christopher Kolade, a former ambassador to the United Kingdom, said at the occasion that every company must bring up to its board a kind of competence that is required to run a successful business.

Mr. Kolade said companies’ boards must also communicate with various operators in their organisations.

“Communication is key to the success of the organisation. Communication, not just in giving accurate information in good times, but also in giving accurate information in times that are not so good because that is the way to be transparent,” Mr. Kolade said.

Morocco’s Central Bank held its benchmark interest rate at 3.25 per cent on Tuesday, citing a lack of monetary pressures on generally stable prices and resilience in an economy reliant on agriculture and tourism.

“In this context where … inflation forecast is consistent with the price stability objective and the balance of risks is slightly tilted to the upside, the (Central Bank’s) board has decided to keep the key rate unchanged at 3.25 per cent,” Bank al-Maghrib said in a statement.

The statement was issued on the bank’s website after a quarterly meeting of its policy making board that examined economic, monetary, and financial developments and inflation forecasts prepared by the bank up to the second quarter of 2012.

South African
construction firm, Group Five, may construct a 5 billion rand solar
plant to supply power utility, Eskom, with first power seen in two
years, a company official said on Tuesday.

“We hope to be
producing power in 2013, when it starts to come on line,” Greg Heale,
director of engineering and construction, told Reuters on the sidelines
of an African refinery conference.

He later said the
project would supply energy to power utility, Eskom, and not mining
firms, and would go ahead only if it was selected as part of South
Africa’s renewable energy procurement process.

Mr. Heale said
Group Five, South Africa’s fourth-largest construction firm, is
expected to conclude all contractual arrangements, including off-take
agreements, within the next nine months.

The project, to be
located in the sun-drenched Northern Cape province, is hopefully the
first of a number of phases that could be constructed on the site,
eventually producing up to 450 MW, Mr. Heale said.

Africa’s largest
economy is rapidly moving away from a reliance on coal, which supplies
more than 90 per cent of the country’s energy needs, to energy sources
such as solar, wind, and nuclear.

South Africa could
produce its first solar power from a proposed $21 billion dollar solar
park by 2012, eventually supplying 5,000 MW of power.

The country wants
to accelerate its renewable energy programme to meet a target of 10,000
gigawatt hours by 2013. Shares in Group Five traded 0.65 per cent
higher at 26.47 rand by 1059 GMT, slightly outpacing a 0.5 per cent
firmer JSE all-Share index.

Last month, Group
Five said diluted headline EPS for the six months to end-December fell
21 percent to 198 cents, compared with 249 cents in the same period a
year earlier. The group said its total secured construction order book
stood at 9.3 billion rand, little changed from the end of June.

The South African
construction industry, which avoided the worst of the global economic
crisis due to big projects ahead of the 2010 World Cup, is now having
difficulty finding new projects as both the government and the private
sector hold back on spending.

The industry is also the target of a sweeping bid-rigging probe by competition authorities.

Reuters

The Nigerian Communications Commission (NCC) is to begin sim card registration in Lagos next week, Demola Aladekomo, MD/CEO, Chams, a global technology company and the authorised firm assigned to carry out the sim card registration by the NCC, said at the ennovators breakfast series event organised by Financial Technology magazine, a financial technology news portal in Lagos yesterday.

Mr. Aladekomo said for the past two weeks, the firm had carried out a pilot exercise, registering a few people to test run its efficiency.

The sim registration is coming amid criticism by many that the commission had no business doing that since the communication companies had earlier registered their customers.

He, however, said, “Sim card registration is not a strange process. It is happening in some other countries in the world too. It is not such a strange activity to be carried out,” adding that some countries such as Kenya, South Africa, and Botswana are among the series of other countries carrying out the activity.

The conflict of interest

Some Nigerians have condemned the exercise, following the supposed disconnect between the operators and the regulator on who to carry out the Sim registration exercise.

Mr. Aladekomo said there was a clear directive initially so that there would be no conflict in data gathering between the regulator and the operators of the telecoms industry.

“It was pretty clear initially. The NCC was to register all old sim cards because they were to use it to create a data base for the nation so that the nation can benefit, including serving as a database for the national identity, while the operators were to register new sim cards so that no one is excluded.

“Unfortunately, because of competition, the operators decided to register the old and the new sim cards and that created a lot of confusion in the industry,” he said.

According to him, from the way the operators were going about it, it was almost like the operators did not actually want the regulators to know all the number of sim cards they operated.

Some finance experts say the 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.

The Central Bank too, has in the last few years, been seeking ways to help banks properly identify their customers’ at the most affordable means, to reduce cases of fraud in the industry.

Abayomi Atoloye, director, banking and payment system department, Central Bank of Nigeria, who gave the keynote address at the event, expressed optimism that the event will provide an opportunity for participants to discuss the “burning issue on multiplicity of SIM Card Registration” and the know your customer ‘KYC’ for efficient financial services delivery, as well as touch on developments in e-payments, and electronic banking in the past one year.

“I will, therefore, attempt to summarise the efforts of Central Bank of Nigeria in the development of Payments System in the last one year and the Regulatory Outlook for the Nigerian Payments System – especially, payments through the electronic cards,” he said.

According to him, the Central Bank of Nigeria had been making efforts under the Payments System Vision 2020, to promote and entrench electronic payments as the major channel for payment and settlement, by all economic agents, away from the current dominance of cash-based transactions.

“In this regard, mobile phone was identified as a channel for effecting electronic payment between person-to-person. Recently, the Central Bank gave approval-in-principle to 16 mobile payments scheme operators to enhance the person-to-person payments services in Nigeria,” he said.

As part of its policies to minimise the level of card fraud in the Nigerian Payments System, the regulatory body had directed banks to migrate all their cards from magnetic stripe technology to chip+PIN, otherwise known as EMV, due to the weaknesses of the former.

Also, the development of Guidelines for Credit Bureau Operations in Nigeria gave rise to the approval of three credit bureaus which have significant influence in promoting credit cards operations in the country.

The way forward

Mr. Atoloye said over the next few years, the Central Bank’s focus will be on strengthening the institutional and regulatory frameworks that would encourage financial inclusion of the unbanked and promote more usage of electronic payment, as clearly enunciated in the Payment Systems Vision 2020.

He added that some factors in particular are expected to drive the usage of electronic payments in the near future.

These include the application of mobile technology for financial services, especially in rural areas, which is expected to ensure that a large percentage of the population outside the formal banking system have access to financial services using one of the three scenarios of card-based, account-based, and virtual account. The draft National Payments System Bill, which is undergoing approval process and is expected to address legal barriers to electronic payments such as the admissibility of electronic evidence in the law court.

Also, the adoption of National Identity Number (NIN) as part of the requirements for opening of accounts is expected to address the challenge of unique identifier that affects the widespread of credit cards in Nigeria, while the adoption of electronic payments by organisations for payment of allowances to employee, pensioners, and social beneficiaries is expected to also boost card payment in Nigeria.

The
Central Bank of Nigeria (CBN) has said that so far, it is has not
granted any approval for any bank to sign Memorandum of Understanding
(MoU).

The
regulator, in a statement by its spokesperson, Mohammed Abdullahi,
expressed displeasure over speculations and comments on the proposed
mergers and acquisitions of rescued banks.

The clarification is coming just as Access Bank and Intercontinental Bank announced the signing of an MoU at the weekend.

While
welcoming the trend of ongoing negotiations among various parties and
some rescued banks, the CBN stated that MOUs can only lead to actual
transaction if and when CBN issues no objection and other regulatory
approvals.

“The
CBN and other regulators will ensure that all relevant factors,
including professional advice from the financial advisers, are
adequately considered before any approval is granted,” the statement
added.

Apex bank not involved

The
CBN rebuttal may not be unconnected to insinuations that the regulator
is influencing the whole procedure in favour of some interested parties.

“The
process, which is being driven by the parties involved and not the CBN,
will have to be approved by the board and shareholders of the banks
concerned. Therefore, all speculations and unsavoury comments on the
process are premature and unnecessary,” the Central Bank stated.

Intercontinental
Bank became the third rescued financial institution to make significant
progress in the search of a new core investor, with the signing of a
“business combination” agreement with Access Bank.

A
joint statement by both institutions at the weekend stated that the two
have signed a MOU for the purpose of “business combination that would
create one of Africa’s largest financial institutions.”

The
agreement, which puts to rest several weeks of speculation, follows the
completion of a competitive, rigorous, and transparent selection
process and the approval of the board of directors of both banks.

Milestones will be reached

Sunday
Ekwochi, company secretary of Access Bank, said the details of the
merger, which could take as much as 24 months, was still being worked
out.

“During
this period, milestones will be reached and as we go along, we will
unfold the details. The MoU is an indication that both parties are
prepared to work together,” he said on telephone, when asked about the
amount and the equity stake that is involved in the transaction.

Last
week, Union Bank announced a memorandum of agreement with Africa
Capital Alliance for the injection of over N112 billion ($750 million)
into the rescued 94-year old financial institution. It said the deal,
with its new core investor, would provide a framework for the process by
which the bank will be recapitalised.

“However,
the entire process will be subject to the approval of the bank’s
shareholders, the Central Bank of Nigeria (CBN), the Securities and
Exchange Commission, the Nigerian Stock Exchange, and the Federal High
Court,” it said in a statement.

Afribank,
another rescued bank, a fortnight ago announced the emergence of Vine
Capital as its new preferred core investor with which it is still
negotiating. The other rescued banks, Oceanic Bank, Bank PHB, Spring
Bank, Finbank, and Equitorial Trust Bank are yet to announce appreciable
success.

Aggrieved
shareholders of Bank PHB last week secured a court injunction against
the planned sale of the bank to Habib Bank of Pakistan.

In
all, the CBN said it and other relevant regulators will be guided by
appropriate considerations including due diligence on investors and the
advice provided by financial advisers to the parties before approving
MOUs and other subsequent transactions.

Folorunso Gbadamosi, the Ibadan district manager of the Nigeria Railway Corporation (NRC), has said the Federal Government is committed to putting in place an efficient rail system in the country.

Mr. Gbadamosi said this on Monday in Ibadan while speaking to the News Agency of Nigeria (NAN).

NAN reports that the NRC has commenced passenger train services in the city.

Mr. Gbadamosi said government had released funds to ensure sustainability of the initiative, adding that the private sector would soon be involved.

Last week, the
prevalent apprehension was with inflation rates. How could the rate of
change in domestic prices, as measured by the official number crunching
agency, be southbound, when the world is affrighted by both rising
energy and commodity especially food prices?

The answer to this
question mattered for a variety of reasons, not least of which is its
implication for the relationship between the appropriateness of policy
responses and the relevant signals from the economy. Two questions
allied to this line of inquiry, recommend themselves: “How much of our
domestic policy error is the consequence of poorly generated data?” And
“how much is the result of defective policy frameworks?” Coming just
before the meeting this month of the Central Bank of Nigeria’s (CBN)
rate setting committee (the MPC), the release by the National Bureau of
Statistics (NBS) of its consumer price index (CPI) numbers for February
2011, was topical, if nothing else.

Against the
backdrop provided by the direction in which domestic prices appear
headed, there was always going to be a lot of interest in the
consequent policy direction. The widening arbitrage opportunity between
the official and parallel market exchange rates could mean that the
one-way bets on the national currency that we were warned against
earlier were being taken. The general elections loomed on the horizon,
and it is counter-intuitive to think that election-related spending
would not put pressure on domestic prices. So, what was the MPC to do?
Raise the policy rate? Not if the inflation rate is down.

Oddly, the MPC not
only raised the policy rate at its meeting last week, and by definition
the symmetric corridor around its standing facilities, but also raised
the rate far faster than any commentator had anticipated – by 100 basis
points to 7.5 per cent. Now this decision has its uses, for if rates do
not go up until they are higher than the measured rate of change in
domestic prices, then the negative real returns currently to be had
from the financial services industry will continue to discourage
savings.

The level of
private savings is important in a rather roundabout way. With the
transition in the formal pension system, from defined benefits to
defined contributions, the amount of money that households currently at
work salt away matters a lot over the long-term. Where society does not
have a social security arrangement, then people must save if they are
not to become public charges after their useful work life is done. What
better way to encourage the necessary savings than by ensuring positive
real yields on all financial instruments traded in this economy?

Moreover, in our
environment, where the formal financial services sector, by one
estimate, accounts for only about 1 per cent of short-term finance for
formal sector businesses, then savings by businesses (or their retained
profits) also matter. Without these, investment in the capital stock
necessary to boost domestic productivity growth just would not happen.

But even more
significant is the national savings rate: this is the sum of household,
corporate, and public savings. In the last four years, this has been
depressed by the growing public sector deficit. Government, apparently,
has borrowed to finance its huge appetite only because of its access to
rather cheap funding sources. And cheap money may actually have helped
shift the focus of public spend away from net capital formation towards
recurrent expenditure. Higher rates should thus push up the cost of
public borrowing, and by default encourage the bean counters in the
public sector to take a more serious approach to estimating the
sector’s borrowing requirements.

Cheap
naira-denominated assets may likewise be implicated in the growing
demand pressure currently being experienced in the market for foreign
exchange. If the opportunity cost of converting naira-denominated
assets into dollar-denominated ones remains this low, the CBN would
strive in vain to meet demand in the official foreign exchange market.

Against this
argument for raising interest rates, there is always the possibility
that the average Nigerian politician, concerned to conceal the
provenance of his/her ill-gotten lucre, will stop at nothing to convert
naira-denominated assets into dollar-denominated ones. In which case,
the political class might be indifferent to the cost of borrowing in
naira. Nonetheless, by making such deviant behaviour more expensive, we
would have signalled our intention to stop offering subsidies to
conduct inimical to our welfare.