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Abuja residents struggle with water scarcity

Abuja residents struggle with water scarcity

The taps have run dry in the Federal Capital Territory (FCT) and many residents are not amused.

The FCT water board, on March 7,
2010, announced that water supply within the territory will be rationed
and that only some selected districts will have full capacity treated
water supplied them.

The situation has made life
difficult for residents in the affected areas. Gab Omozwa, a resident,
told NEXT that the water board did not provide adequate publicity
regarding the rationing.

“I turned my tap for water and
nothing came out. I thought my recharge card had finished. I was
disappointed to learn that it was the rationing thing after all,” he
said.

Jibrin Ibrahim, the Director of
the FCT Water Board, said the rationing will continue until work is
completed at the phase 3 and 4 of the treatment plants in Abuja. He
said an increase in population in the city has stretched water supply
beyond estimated limits.

“You see, Abuja is a new city and
is developing,” he said. “There is space between the pace of
development and provision of water infrastructure. That is why we are
now rationing. What happened is that when the forefathers envisaged the
building of Abuja, it was not to be a business capital but an
administrative centre and the population is not to be very large. But
you can see things are changing in the country. Due to insecurity in
some parts of the country, people have now seen Abuja as a haven.
Population has grown. The infrastructure we have now is not meeting the
demand. We cannot give water to everybody 24-7. So we said, we are all
Nigerians, everybody needs water, we can ration so we can move water
from our system to every portion. Our water goes as far as Gwagwalada,
Bwari, Karu and Nyanya.”

He also explained that there are technical issues that have impeded the supply of adequate water.

“We have the problem of raw water
and that of capacity to treat the water. The raw water issue is being
addressed with the Gurara inter-basin transfer. We now have water to
augment the lower Usman dam where we have our own raw water,” he said.

“Government has also gone far with
the development of treatment plant, but there is just a little bit of
gap in the design. There were things not envisaged that cropped: there
is gap between the pipeline coming from Gurara because first of all we
take water straight to the dam and the extract water from there so that
is what has happened but we have seen that the dam has its own capacity
and the maximum you can extract from it but this population is so
high.”

Mr Ibrahim noted that the board
has a long term plan of providing adequate water that will last for
over 20 years without refilling and that the water board was designing
a system that will make it meet expected demand up to 2035.

“What we have now is 10km/hour but
we are going to have 30km/hour when we finish the construction and
commissioned the water treatment plant, which is more than 90 per cent
completed.”

High ground

Mr. Ibrahim, however, said the
rationing will continue up till end of 2011 when the project is
expected to be completed. The director also hinted that other districts
in the FCT will have water supply restored, as plans to lay pipelines
in some satellite towns have advanced.

The areas to be affected by the
rationing, according to a time table which was released by the board,
include some parts of Asokoro, Maitama, Karu/Nyanya, Garki area 11,
Gwagwalada and Bwari.

The affected areas, according to board, are on higher topography of Abuja and requires much pressure to get water to them.

But some residents of the city
were not particularly bothered with the announced rationing. People in
Nyanya and Karu said they were already used to water scarcity and have
since devised means of addressing the gap. They said water rationing is
a non- issue in the area.

“Water supply from the taps has
not been constant here. We have been buying from water vendors and have
also been fetching from the well, so water rationing is not a problem
here,” said Nwayieze Okeke, a resident of NIA senior staff quarters in
Karu.

In Gwagwalada, the story is not
different. Matthew Ikoh, a civil servant, said “right from time, we
have not been having stable water supply; but this rationing has made
things very critical for us in Gwagwalada. We don’t have the water at
all, so we rely on mai ruwa (water vendors).

Mr Ikoh said the most important
thing is for the people to get water, without necessarily being
bothered with how safe it is. Water is sold at the rate of N20 for 20
litres.

“It is not a palatable situation,”
he said. “It is like Gwagwalada problem is very peculiar. In the Abuja
city, there is constant water supply even before the rationing; but in
Gwagwalada; they give us for like four hours. Now that there is a
problem, we do not get water up to one hour and that is once in two
weeks. People buy sachet water more now, as you can see people carrying
it in bags on the street. However, it is also good business for water
vendors and the sachet water sellers. They drink and use the mai ruwa
water for other domestic activities,” he said.

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The night they killed Bitrus Jack

The night they killed Bitrus Jack

Ilya Bitrus Jack, a retired
soldier, reputed marksman and head of the Ilya family, had been on the
trail of some alleged Fulani marauders. In Kai, Kura Falls, Barkin Ladi
local government area of Plateau State where Mr. Jack lived, he
discovered that his manhunt was a dangerous game, that the people he
was hunting were also hunting him. So he deployed twists, he used
decoys, and he went through convoluted routes to get to his home. In
the end, none of these saved him.

That Sunday evening, Mr. Jack was
at a colonial recreation centre known as Nesco Welfare Club, Kura
falls, watching football. Unknown to him, an alleged accomplice in the
plot against him, Yau Husseini, was also in the premises monitoring
him, and reporting his movement via mobile telephone to other
conspirators who were already lurking around Mr. Jack’s home in
anticipation of his return.

Mr. Jack took the usual
precaution when he left for his house at about 8:30pm. Sensing that he
was being trailed, he took some roundabout route. On getting to Kai
village where he resided, he entered the house of a pastor friend of
his, where he reportedly took some drugs as medication for an
undisclosed ailment. Mr. Husseini, meanwhile, reportedly used this
period to tell his accomplices to get ready; they masked themselves,
mobilised and hid in the dark near the residence of Mr. Jack.
Immediately Mr. Jack entered his parlour, five masked men, among them
the unrelenting Mr. Husseini, rushed him with knives and sticks, while
another group of 10 men provided cover and back up for the attack.

A major skirmish ensued as Mr.
Jack attempted to rebuff them while his wife screamed at the murderers
to let him be. The attackers hacked down Mr. Jack, and proceed to
administer the same fate on his wife and daughter, Keziah Ilya, who had
rushed to the scene. But Mr. Husseini, a Fulani commercial motorcyclist
in Kura Falls, told the only surviving daughter of the Jacks, Bridget,
in Challa (the language of a minority tribe in Bokkos local government
area of Plateau State) to run out of the house to safety.

Gruesome murder

She did. She ended up climbing a
tree around the compound from where she watched the details of the orgy
being orchestrated. Miss Bridget who is a JSS 3 student at a day
secondary school in Kakuruk, said apart from Mr. Husseini and another
Fulani civilian, three of the five men who attacked and murdered her
father, mother and sibling, were soldiers who had earlier served on the
military task force in the area.

Bridget narrated that Mr. Jack
put up manly resistance as they stabbed him from different angles,
before the assailants eventually shot him dead; and proceeded to kill
her mother and sister in the same brutal manner.

A younger brother of Mr. Jack who
also died in the attack, Philip Ilya, was actually killed in the
attempt to defend and avenge the spirit of his brother. Reports say Mr.
Ilya, having been attracted by the disquiet generated by the brawl, and
convinced that they had killed his brother’s family, went on a counter
assault. But his locally made gun with one bullet merely sparked off
more tragedy rather than inflicting any injury on the assailants. They
quelled his defensive outburst with superior fire power. Mr. Ilya was
eventually killed and after this the assailants left. In the ecstasy of
the moment, convinced that they were home free, they removed their
masks but in that moment, a well-known person in the village Yohanna
Mashash who was passing by, saw their faces. They begged him not to
reveal that he met them at that time so near the scene of crime.

An unending nightmare

Mr. Mashash agreed and assured
them that his mouth was sealed and they all departed. Again, it was
reportedly Mr. Husseini with his diabolical instincts who told the
group that Mr Mashash could not be trusted to keep their secret. They
quickly called the unsuspecting Mr. Mashash back, and trusting in the
agreement he had with the group, returned only to be shot dead.

The murderers then reportedly
returned to the house of one Sukku Ruah after accomplishing their
mission, where they had met to hatch the orgy of savagery and
bloodletting.

In the aftermath of the attack,
the security agencies have swung into action. As at press time, reports
said Sukku Ruah and Husseini Yau are already with the state CID, while
Bridget Ilya, who saw it all happen, has been a coveted witness that
the police hope to use to prove their case. At Kura Falls, the mood of
the people is solemn and every body looks so vulnerable. There is
tension too as the incident shows that the enemies are within.

There are accounts that say the
late Mr Jack himself was a victim of a system he has been sustaining
and patronising, because he had allegedly been putting his military
experience at the service of gangs of killers, and even repairing their
weapons. Another report says the attacks were sponsored by others as Mr
Husseini was caught with N21,000 on him at the time of his arrest.

But in the larger social circle that is Nigeria, the sobering question is “when will this madness end?”.

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‘We will use satellites to monitor development projects’

‘We will use satellites to monitor development projects’

In the last few
years, Nigeria has successfully launched two satellites: a
geo-stationary earth orbit and a communication satellite. Another earth
observation satellite, Nigeriasat-2 is due for launch in May.

Authorities are
also building small units of satellites, called Pico satellites. The
satellites, will also be used in supplying real time information on
ecological problems and emergency situations.

In this interview,
the chief executive of the Centre for Satellite Technology Development
(CSTD) Abuja, Spencer Onu, speaks on Nigeria’s progress in satellite
technology. Excerpts:

The Pico satellites

The project has
progressed. We are working very hard and as I speak to you, somebody is
already in the United States getting the components for the satellite
for us. We are going to be ready in June. By then, we must have
achieved significant milestones. We have passed beyond the design
stage, done critical review, and are now procuring major component and
subsystems. The next step is to get it space qualified by going through
a number of tests involving sending signals and receiving responses on
ground and, after that, we think of the launch. By December, we will be
ready for launch, although we missed a step in the process in terms of
frequency allocation. But we discussed with the Nigeria Communications
Commission and they advised us to use microwave, which does not require
ITU approval.

N5 billion annually from pico satellite

Normally it will
cost about $30 million to build pico satellites for such size, but we
are looking at spending $80million considering other logistics
associated with it. The economic impact is enormous, because you are
looking at satellite that can generate information worth more than a
billion naira in a year when fully operational. This will be generated
from sales of satellite imageries. We are to produce images needed for
African economies. Images such as those required for emergency
management and monitoring of projects like the Millennium Development
Goals. We are still talking with the MDGs office, to let them see what
we can offer them and what we can do together. How we are going to do
it is that the MDGs office can tell us, look we have this number of
projects in Kwara State. These are the latitudes and longitudes, these
are photographs from contractors, can you give us images of the
projects? I think what they are experiencing now is that projects
people claim to be there are not there. So, with our satellite
imageries, they can compare with images submitted by the contractors.
The satellite will be programmed in such a way that it passes through
Nigeria four times a day. When you look at our projection for the MGDs
office alone, they will need images worth about N3 billion alone in a
year. That is just a sector in Nigeria. There is the National Emergency
Management Agency and others that use Geographic Information System. We
are looking at generating about N5billion annually from Nigeria alone.
Other African countries are market for us as well.

Inadequate human capital

Our vision is
continental leadership for satellite technology development, but South
Africa seems to be ahead of us. South Africa satellite agency spends
$0.08 billion annually on their satellite programme, while Nigeria
spends $0.06 billion. They are using pico satellites in South Africa
and they have launched about two, one of them late last year. Also a
number of universities in the United States do this in conjunction with
the private sector. In the United Kingdom, the European Space Agency
runs a programme for the universities and builds about nine every other
year. Some countries have 12 or 13 of this satellites in order to get
as much information as possible.

If we want to be
leaders, then we should be steps ahead. Our sister agency in South
Africa has more than 300 PhD holders, with both support staff scientist
and engineers. As a research centre, I am the only PhD, while 5 others
are undergoing training. By our roadmap, I would have trained 50 PhD
holders. We do not have adequate human capital for the project in
Nigeria; but we are working in collaboration with international
organizations whom we have discussed with and they are willing to be
involved in the launch. We are also working on micro satellite but,
because of its size, I don’t see the work completed in the next one
year. That has 15 staff on it. It is a replica of Nigeria-sat 1.

Two more bandwidths from ITU

We are already
talking of a number of communication satellites. Nigeria has not got
any communication satellite in space. We will manufacture and hand over
to any service providers like NIGCOMSAT that will market the
transponders. That was what took us to ITU last month to make sure we
are allocated the two communication satellites. We have been allocated
the bandwidth we require for two communication satellites that will be
launched in the next five years and I can tell you that has been done.
Ministry of communications, NCC, NIGCOMSAT, NASRDA were involved to
secure two additional slots for the next communication satellites. We
are also involved in satellite transport and propulsion. Our staff will
be trained on taking satellite to space.

We have a mission
that in 2018 we will be able to produce a made in Nigeria satellite and
by 2025 we will be able to launch a made in Nigeria satellite. Those
are the things we are working towards, but we need to have the Assembly
Integration and Testing centre in place. If that is not done, our quest
for a made in Nigeria satellite will just be a dream. It is the heart
of satellite technology. The building is ongoing, about 50 per cent
completed but the equipment is yet to be procured. Contract is yet to
be signed with the Chinese because the monetary approval is not in
place.

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Many sticks for D’Banj’s back

Many sticks for D’Banj’s back

Online social
networking got heated again as reactions pour out on President Goodluck
Jonathan’s interview session with ace entertainer, D’Banj. The goofy
interview which was aired on Silverbird Television on the night of
Thursday, March 17, 2011 has been drawing negative reactions, mostly
directed at D’Banj, real name Dapo Daniel Oyebanjo. While comments such
as “at one point D’Banj was almost kneeling to ask the President some
questions, and of course was nodding like an agama lizard even before
the President started giving his answers” are being posted on Facebook.
User @boycottdbanj was created on twitter with 82 followers already.

Many interpreted
the multiple awards winning D’banj’s behaviour during the interview to
“ass kissing” and named him a “sell out” as they criticised him for
taking up the interview in the first place. “D’banj helping the elites
destroy your future. One nod at a time,” twitter user rHuD_bOi tweeted.
And another tweeted “don’t be a Pawn. Don’t be a D’Banj. Be a Rebel.
Secure your future. Don’t let them fool you. D’banj is no Fela, no
Nkrumah, no Mandela.

D’Banj wasn’t available for comment and is yet to update his twitter profile.

President Goodluck
Jonathan, who came into office May 5, 2010 when his predecessor, Umaru
Yar’Adua died, is currently seeking election back into office under the
Peoples Democratic Party. He turned down an invitation to partake in
the National presidential debate hosted by NN24 alongside other
presidential aspirants including Nuhu Ribadu of Action Congress and
Mohammadu Buhari of the Congress for Progressive Change.

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Capital market on the downswing

Capital market on the downswing

Investors at the Nigerian Stock Exchange (NSE) yesterday recorded
more losses on the value of their equities, as market closed trading on
negative note.

The NSE market capitalisation of the 194 First-Tier equities
closed on Thursday at N7.775 trillion after opening the day at N7.969 trillion,
reflecting 2.43 per cent decline or N194 billion losses. The market has lost
over N399 billion since transaction started this week.

Commenting on Thursday’s trading performance, analysts at
Proshare Nigeria Limited, an investment advisory firm, said the continuous
downward trend could be attributed to “the intense sell activities” by
investors, adding that the sell pressures were “very dominant in some blue
chips stocks” in sectors like Banking, Building Materials, Breweries, and
Foreign Listings.

Stockbrokers at GTI Capital, a stockbroking firm, said the
market had “staged a stabilisation trial during the better hours of trade only
to tumble and succumb to sellers’ mood at the concluding session.”

Low gainers

At the close of trading on Thursday, the number of gainers
closed lower at 10 stocks as against the 14 gainers recorded previous session;
while losers also closed lower at 42 stocks when compared with the 45 losers
recorded on Wednesday.

Transnational Corporation and Red Star Express topped the price
gainers’ table with an increase of 4.35 per cent and 4.26 per cent, to close at
72 kobo and N2.94 per share, respectively.

Starcomms and Goldlink Insurance followed on the gainers’ table
with an increase of 3.80 and 3.64 per cent, to close at 82 kobo and 57 kobo per
share.

On the flip side, Dangote Sugar Refinery, Stanbic IBTC Bank, and
Cement Company of Northern Nigeria led the price losers’ chart with a loss of
five per cent each, to close at N12.35, N8.74 and N10.84 per share,
respectively. First City Monument Bank followed with a loss of 4.99 per cent,
to close at N6.48 per share.

Active subsector

The Banking subsector led the market transaction volume on
Thursday with 107.122 million units valued at N788.799 million. The volume
recorded in the subsector was driven by transaction in the shares of Diamond
Bank, First Bank, Oceanic Bank, and Skye Bank.

Trading activities in the Insurance subsector was second highest
yesterday, with 36.063 million shares valued at N29.005 million. Volume in the
subsector was boosted by deals in shares of Goldlink Insurance, Aiico
Insurance, and Mutual Benefit Assurance.

The Conglomerates subsector was third with 33.694 million shares
valued at N874.380 million. PZ Cussons Nigeria, Transnational Corporation, and
Unilever Nigeria boosted volume in the subsector yesterday.

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BPE states key requirements for distribution companies’ bidders

BPE states key requirements for distribution companies’ bidders

The Bureau of
Public Enterprises (BPE) has issued the requirement for the next stage
of the privatisation process of distribution companies created out of
the Power Holding Company of Nigeria (PHCN).

The director
general of the Bureau, Bolanle Onagoruwa, said on receipt of
Information Memorandum and Request for Proposal, pre-qualified bidders
will be given access to physical and e-data room; will be able to carry
out physical due diligence; will be issued with draft copies of the
Multi-Year Tariff Order (MYTO); will be encouraged to submit comments
on MYTO; and Bidder comments on MYTO will be subject of conference to
be organised by sector regulator (Nigerian Electricity Regulatory
Commission).

The Nigerian
privatisation agency chief made the remarks on Tuesday as a panel
discussant at POWERINBADA in Johannesburg, South Africa, according to a
press statement on the firm’s website.

A total of 331
applications were received by the Bureau of Public Enterprises (BPE) on
Friday, March 4, 2011 – the deadline for the submission of Expressions
of Interest (EOIs) in the privatisation of the successor companies
created out of the Power Holding Company of Nigeria (PHCN.)

One hundred and
seventy four applications were received from prospective
investors/concessionaires interested in acquiring the four thermal
stations and the two hydro stations. One hundred and fifty seven
applications were harvested from prospective investors interested in
acquiring the eleven distribution companies.

Mrs. Onagoruwa told
her audience that the reform of the Nigerian power sector presents
enormous investment opportunities, adding that the government has put
in place investment-friendly initiatives. This includes the fact that
foreigners can own 100 per cent of investment; that there is guarantee
against expropriation of investments; that repatriation of profits are
guaranteed by law; that there will be generous tax incentives; and that
the nation has one of the highest Returns on Investment (ROI) in the
world.

She pointed out
that the objectives of the electric power sector reform are to increase
electrification; ensure cost reflective tariffs; attract private sector
investments into the sector; create competitive electricity market;
induce investments in new power generation facilities; rehabilitate
existing power generation facilities; improve efficiency by increasing
collections; reduce costs and technical and non-technical losses; and
improve customer service.

Chukwuma Nwokoh,
the spokesperson of the firm, said the firms would have to be
shortlisted first, before the request for proposals would be sent to
the successful ones.

“We would
shortlist, and then when we do, we would send them their Request for
Proposal. It is the next stage after the submission of Expressions of
Interest.”

The core investor
sales to be carried out through international competitive bidding will
cover the eleven electricity distribution companies in the country.
They are Abuja Electricity Distribution Company Plc; Benin Electricity
Distribution Company Plc; Enugu Electricity Distribution Company Plc;
Eko Electricity Distribution Company Plc; Ibadan Electricity
Distribution Company Plc; and Ikeja Electricity Distribution Company
Plc.

Others are Jos
Electricity Distribution Company Plc; Kaduna Electricity Distribution
Company Plc; Kano Electricity Distribution Company Plc; Port Harcourt
Electricity Distribution Company Plc; and Yola Electricity Distribution
Company Plc.

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Nigeria’s crude oil output declines

Nigeria’s crude oil output declines

Nigeria’s crude oil output dropped 3.8 per cent in February at
2.098m barrels per day (bpd), though it remained Africa’s top oil producer,
outperforming Angola (1.704m bpd), Libya (1.347m bpd), and Algeria (1.261m
bpd).

In its March Monthly Oil Market Report released this week, the
Organisation of the Petroleum Exporting Countries (OPEC) estimated the nation’s
crude oil output at 2.098m barrels per day (bpd) in February, from 2.181m bpd
in January, and 2.192m bpd in December.

Samir Gadio, Emerging Market strategist, Standard Bank, says
these statistics seem to suggest that a sizeable increase in production in the
short-to-medium term looks somewhat unlikely, until new oil fields come on
stream and the existing infrastructure operates at a higher capacity.

“Although last month’s output was still up 7.4 per cent year on
year, the annual growth rate in the data flattened further, in line with our
expectations, given the sharp rebound and subsequent stabilisation in output
since November 2009, as the security situation in the Niger Delta region
broadly improved. Additionally, the average crude oil production (2.139m bpd)
has edged up 8.5 per cent year on year said,” Mr. Gadio said.

“Overall, the turnaround in output since late 2009 as well as
the rally in the Bonny Light oil price in 2011 should theoretically translate
into a significantly positive trade balance and robust current account
surplus,” he added.

Foreign reserves
accretion

Experts believe that the surge in the oil price (and a somewhat
stable output) is translating into an increase in foreign exchange reserves,
which reached $35.9 billion on 10 March 11, up from $3.6 billion.

“Although it is difficult to estimate the breakdown in the
accumulation of foreign exchange reserves between Central Bank’s monetised
proceeds and the Excess Crude Account (ECA), it is worth stressing that the
finance minister, Olusegun Aganga, indicated in February that oil-related
savings had resumed this year.

“In this case, we should see a rapid rebound in the ECA balance,
given the substantial differential between the current oil price and the
proposed oil price benchmark in the draft of the 2011 budget ($65 per barrel),”
Mr. Gadio further said.

World economic growth remains robust and continuing improvements
have led to improved growth expectations for 2011, which have been adjusted 0.1
per cent higher to 4.0 per cent, according to the OPEC report, though inflation
is beginning to pose a challenge for policy makers in both the OECD and the
developing countries.

Afrinvest, a finance research and analysis firm, said the
government has offered to increase its crude oil production, on OPEC’s request,
to cool soaring oil prices.

“Oil prices last week rose to their highest point in more than
two years, as the social unrest in Libya reduced global supply by as much as
1.0 million barrels per day. Nigeria’s Bonny Light is similar to the type of
oil produced by Libya and would be a good replacement for refiners, who are
currently lacking adequate supplies because of the North African crisis.

“Nigeria has a combined crude oil and condensate output of
around 2.4m bpd, with a production capacity of around 3.0m bpd,” the firm said.

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Shoneyin on Orange Prize longlist

Shoneyin on Orange Prize longlist

Writer Lola
Shoneyin has been longlisted for the Orange Prize For Fiction for her
novel, ‘The Secret Lives of Baba Segi’s Wives.

The book, published
in the UK by Serpent’s Tail and in Nigeria by Cassava Republic Press,
depicts a raucous polygamous household presided over by Baba Segi,
husband to four wives and father to many children. It is the first
novel by Shoneyin, author of three poetry collections and one
children’s book.

She is one of nine
debut novelist on the longlist of 20 international writers. Shoneyin is
only the second Nigerian writer to make the Orange longlist. Chimamanda
Ngozi Adichie won the prize in 2007 for ‘Half of a Yellow Sun’, her
novel about the Biafran war.

Established in
Britain in 1996, the Orange Prize is awarded annually for writing by
women. It comes with a cash prize of £30,000 and the presentation of a
miniature sculpture known as the ‘Bessie’.

Also on this year’s longlist is British/Sierra-Leonean author
Aminatta Forna whose book, ‘The Memory of Love’, has already won this
year’s Commonwealth Writers’ Prize for the Africa Region. The Orange
shortlist will be unveiled on April 12 and the winner announced in
London on June 8.

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Pressure on naira tests Nigerian central bank

Pressure on naira tests Nigerian central bank

The Nigerian central bank looks set to win a showdown with the foreign
exchange market as it resists pressure for major depreciation of the naira
ahead of national elections.

Businesses and rich Nigerians are going long on dollars to hedge against the
risk of any prolonged political upheaval or security problems due to the April
9 presidential vote, in which President Goodluck Jonathan faces a determined
challenge from his main rival, ex-military ruler Muhammadu Buhari.

A downtrend in Nigeria’s foreign exchange reserves has added to the market’s
jitters. The International Monetary Fund warned last month that the naira could
become subject to “intense speculation” if the reserves continued to
fall, and recommended greater exchange rate flexibility.

But central bank governor Lamido Sanusi, who has won international praise
for his clean-up of Nigeria’s debt-ridden banking system, insists the naira is
flexible enough.

He has repeatedly said a stable exchange rate is key to maintaining investor
confidence, and told Reuters two weeks ago that devaluing the naira would increase
Nigeria’s import bill and fuel inflation.

Some clever maneouvering by the central bank in the market, and a recent
improvement in the foreign exchange reserves, now suggest it will probably
succeed in keeping the naira in a corridor of plus or minus 3 percent around
150 to the dollar, as it has been doing for over a year.

“We remain confident in the sustainability of the 150 level despite the
current naira weakness, notably given the country’s favourable external
fundamentals, the tightening in monetary conditions and, to a lesser
extent…the nearly flat spending outlook implied by this year’s budget,”
said Samir Gadio, emerging markets strategist at Standard Bank.

Weakness

The naira edged down to trade around 156.90 against the dollar on Thursday,
its lowest level in about 18 months, compared to 155.10 at the start of the
week and 153.40 around two weeks ago.

Dollar supplies from the central bank at its
bi-weekly auctions have slowed the decline but have not been large enough to
halt it. Traders say strong dollar demand from companies with unconfirmed
letters of credit, payments on foreign credit cards and large foreign exchange
purchases by bureaux de change are eating up dollar supplies in the interbank
market.

“I see the naira going up to 158 depending on whether the central bank
is willing to defend it,” said a treasury executive at a multinational
consumer goods firm.

The executive said a rate of 160 would affect his company’s operations.
“Anything above 155 naira would be a worry and anything above 160 naira,
we would have to put contingency measures in place like forward
contracts,” he said.

“Any increase in forex charges would be added to our bottom line and
reduce our profits, and it’s got the potential to increase our prices and
affect our operations.”

A senior commercial banker, noting the shallowness of the foreign exchange
market meant a single large deal could shift the rate significantly, said
Nigeria’s reserves were a concern. Their decline over the past year, despite
rising oil prices, has raised questions among some analysts about the quality
of the government’s economic management.

“Reserves of $37 billion would not anchor the currency in the event of
a concerted market drive against the naira,” the banker said.

Fiscal policy is another concern for investors. The Senate on Wednesday
passed a 4.972 trillion naira 2011 budget, increasing spending plans from
Jonathan’s initial proposal three months ago. Over half of the planned spending
is recurrent, meaning Nigeria is spending more on keeping government running
than on badly needed new infrastructure and development projects.

A Nigerian government bond auction on Thursday suggested some investor
disquiet about fiscal policy and the currency. Five-year paper was sold at a
marginal rate of 12 percent, up from 11 percent last month, and three-year
paper at 10.50 percent against 9.25 percent.

Support

Nevertheless, the treasury executive at the
multinational, and many analysts, said they expected the naira to recover to
normal levels after next month’s elections to the presidency, parliament and
state governorships.

Nigeria only emerged from military rule just over a decade ago, and all of
its elections since then have been marred by rigging and intimidation. But this
has not seriously threatened stability at a national level and Jonathan remains
the favourite to win, though the opposition is hoping to force a run-off vote.

Recently there has been good news on the foreign reserves; they rebounded to
$36.4 billion on March 8, up 10 percent from the end of February, though they
remained well down from $42 billion a year ago, according to the central bank.

The government has attributed reserves’ decline in the past year to
counter-cyclical spending during an economic downturn, the defence of the
naira, seed capital for a planned sovereign wealth fund, and financing for
infrastructure projects.

Those explanations do not fully satisfy everyone, but authorities insist
that with oil output and prices rising, reserves will build up once again.

And the central bank has taken some clever administrative steps to reduce
pressure on the naira. It has asked banks buying foreign exchange at its
auctions to submit lists of customers for which the purchases are occurring, to
verify the demand is for commerce rather than for speculation.

It also plans to start selling short-tenored forex forward contracts from
next Wednesday as part of efforts to smooth demand and help businesses hedge
their currency risk. This could reduce the threat of panicky sales of naira.

Razia Khan, economist for Africa at Standard Chartered Bank, said the
current naira corridor might conceivably be shifted, but only carefully and
gradually.

“We all believe that the mid-point is around 150 but there is nothing
to stop the central bank adjusting it up gradually in response to high
demand…and then maybe allowing it to go down again when conditions allow.

“Do we think that they are about to announce a big devaluation in the
naira? No. But do we think the recently announced spending plans are going to
create more pressure on the currency? Yes.”

REUTERS

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Bank budgets $40m to support Nigerian products

Bank budgets $40m to support Nigerian products

The Nigeria Export Import (NEXIM) Bank plans to spend about $40
million (N6 billion) within the next two years to support potential buyers of
Nigerian products in order to boost the country’s export market.

Managing director and chief executive, Roberts Orya, told
reporters in Abuja on Wednesday that the aim is to make Nigerian products more
competitive within the sub region.

“As part of our mandate to facilitate and promote Nigeria’s
trade, NEXIM has engaged consultants in the region to develop a sea-link
project, which is expected to culminate in the establishment of a company to be
owned by investors from all ECOWAS sub-region, to facilitate sea transportation
of goods across the region,” Mr. Orya said.

Potentials and opportunities

According to him, the bank has set an ambitious target on how to
deepen cross border trade and payment system within the Economic Community of
West African States (ECOWAS) sub-region and Africa, to make it the traditional
market for exporters, as is the practice in most EXIM (Export Import) banks
around the world.

“What we have in the ECOWAS or the Central African region is a
non-traditional market, which nobody wants to go and do business, while we
allow other countries’ EXIM banks to take advantage of the huge potentials and
opportunities.

“If trade in the sub-region is deepened, it will help create
jobs and halt capital flight within the region, while every benefit that go
with deepening of trade would come to the region,” he said.

In order to discontinue the current scenario of huge non
performing loans among its clients, he said the institution has resolved to
follow stringent conditions in approving fresh facilities to prospective
beneficiaries.

Out of a total portfolio of over N10 billion recorded in its
books as non-performing loans to various groups since 2009, the bank has been
able to recover less than N1billion.

Tackling non performing
loans

“Loan recovery is usually a challenge in Nigeria. As at August
2009, the total amount of non-performing loans that had 100 per cent provision,
based on the grading of the prudential guidelines, was only N10.03 bilion.
NEXIM was able to recover about N540 million that year; less than N300 million
was recovered between January and December last year,” Mr. Orya said.

A special remedial management department, he said, has been
established charged with the responsibility of following up on customers on a
daily basis to help reduce the high level of non-performing loans, while
stricter conditions are to be adopted in approving future loans facilities.

“We have decided to carry on this transformation, knowing that
going forward, any credit to be created must be of good quality. Apart from the
one per cent general provision that the prudential guidelines require the bank
to make, we do not want to create any bad loans. We have taken time to
establish the pillars necessary to ensure that the bank does not go the same
way in the next two to three years, in terms of bad loans.

“We have learnt from our mistakes. We must ensure that any money
that is given is judiciously used. Any exporter that is not prepared to comply
with our conditions would not be attended to, as there are no political loans
in NEXIM. Any project that the bank must support must be bankable and viable.
Such projects must not only be able to pay back itself, but must also be seen
by all that the capacity is there to do so,” he declared.

He said the bank would henceforth be more concerned with its
ability to generate more foreign exchange for the country as well as facilitate
jobs creation, pointing out that only businesses with healthy balance sheets as
well as those with proven capacity to make sufficient returns to their
shareholders and those in a position to approach the international capital
market to raise money and have good relationships with other EXIM banks around
the world enjoy its patronage.

According to him, Nigeria, with a population of over 150
million, is well-placed to control the political and economic advantages within
the ECOWAS sub-region, pointing out that NEXIM, as Nigeria’s trade policy bank,
is poised to take up the challenge.

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