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To make the Calabar
seaport viable and busy all year round, the federal government should
implement a deliberate policy of diverting smaller vessels from Lagos
and other ports prone to congestion to Calabar.

General manager of
Eco-Marine Plc, Kingsley Iheanacho, said the lack of some basic
facilities has made the Calabar Port unattractive to importers.
Eco-Marine is one of the concessionaires of the port.

Speaking yesterday
at a one-day stakeholder workshop organised by the Nigerian Shippers’
Council, South-South zone, Mr. Iheanacho listed a six-point agenda for
the federal government to consider in order to make the Calabar port
viable.

Top on his proposal
is completion of the dredging of the Calabar river channel within a
defined time frame to the 9.4m, as contained in the agreement;
immediate removal of shipwrecks from the quays, in view of the
environmental and security risk they pose to the terminal; completion
of the rehabilitation of the public power supply to the port;
restoration of the 30 per cent rebate on ship dues hitherto granted to
container vessels; and federal government fulfilling its promise on
road construction.

Mr. Iheanacho said
port reforms can only work where the enabling environment is created,
noting that “Cross River State government has been assisting in
reaching out to the federal government on the need to make Calabar port
work.” He regretted that the port is yet to attain its full potential
as a hub for importers.

“The terminal
operators have regularly demonstrated their commitment to the success
of the port concession exercise, as can be seen in their commitment
towards repositioning the terminal for efficient service delivery,” Mr.
Iheanacho said.

He said when his
company took over the port from the federal government in August 2007,
the terminal was in dismal state where container vessel turnaround time
was measured in days and weeks as a result of the appalling state of
the facilities.

“All the equipment
taken over were bad and mostly beyond repair and nothing reasonable
could be done on those equipment other than to junk them and procure
new ones, if the objectives of the privatization were to be met,” he
further said.

Zonal coordinator,
South-South zone, Nigerian Shippers Council, Maurice Effanga, in his
speech, said the council would continue to protect the interest of
Nigerian shippers and the national cargo interest in matters relating
to the shipment of goods to and from Nigeria, and to offer advice to
the federal government.

“We receive
complaints from our members against lack of vessels to bring their
cargoes to Calabar or to evacuate their exports to foreign importers.
The dredging of the access channel and rehabilitation of roads linking
the port to neighbouring towns, amongst others, are challenges facing
the shippers with respect to access to shipping services,” Mr. Effanga
said.

According to him, the poor condition of the port has made
import/export trade difficult “as members have to ship their
consignments through other ports and later truck them to Calabar, at a
high freight cost.”

How would you explain Islamic finance to an ordinary Nigerian?

To explain to a layman, you have to look at what the background of the premise is and the premise is really one of fundamental economic principle.

Money, as we have come to know it today, is only a means of exchange. What has value is something real; a real asset or a real service and the only way we can make sustainable money and build a sustainable economy is to take something real and convert it into a productive asset.

I can use money, but I can’t eat it. But I can buy rice at a cost and trade it at a premium and make my profit. Or I can build a house, and I can rent or lease it out. The fact that I have N7,000 for a bag of rice, I should not earn money just for having it in cash, as you do in the bank which is what interest is. You get a rate on money and that is what is forbidden in Islam.

However, nobody says you are not allowed to make money and that is another fallacy about Islamic finance. A lot of people feel Islamic finance is free finance. It is not. It is just finance around reality; real trade, real service, real added value.

Difference between profit and interest

It is about the value. There are three ways in which people make money in Islamic finance. The first one is trade. You buy something at a cost, you put your mark up, and sell it at a profit, just like every trader does. And you can even do that in a way that looks like a banking transaction.

A manufacturer comes and says I need to buy a machine for my factory. Normally, if it is N1 million, a bank would give him N1 million. But an Islamic financial institution will buy the machine and sell it to you for N1.1 million and you can pay over one year. Every month you pay in installment.

The difference is that while a bank will give you the N1 million and charge 10 per cent, in this case I bought something, I owned it for a few days, and I sold it and I am allowing you to pay me over time. So, I took the risk of ownership and I am selling you something that I owned. I am not lending you money. Lending money is not a business in Islamic finance.

The second area is leasing, which is not very different from the conventional system except that the financial institution must buy the asset and then lease it to you. You want to buy a car for N1 million, we can’t just give you the money. We will buy the car and then lease it to you. So we own the car. That’s the difference.

The third area is partnership. A person comes with a business idea and says come to partner with me. Bring your money, I bring my money, let’s do this business together. If we make profit, we share it together and if we make a loss, we share it together.

So those are the three core areas of how Islamic finance works and everything else is built around these three models essentially.

How viable is Islamic finance, since exclusion from some sectors curtails your investment outlets?

I want to say that this principle of business not based on reality has been the cause of financial crisis. When you look at what was the reality of the transactions that created these bubble, it is because they were allowed to trade on things that didn’t exist, margin lending, and all that.

If we had stuck with reality, the bubble cannot grow much. You have to have something real to back it up. The question of being curtailed in investment outlet is not entirely true. We don’t invest in banking sector, we don’t invest in breweries, we don’t invest in gambling and people say to us, what else is there to invest in.

But what is the percentage contribution of banking, breweries and gambling to our GDP (gross domestic product) and what else do we do in Nigeria? There are other sectors that we could invest in like oil marketing, agriculture, telecoms, manufacturing, food, beverages, pharmaceuticals, transportation, building materials, real estate, and infrastructure. Islamic finance is very well suited for these kind of financing.

What do you have to say about the new CBN guideline on non-interest banking?

As pioneers in this area, I think we are the only institution today that has the entire requirements that the CBN requires. We are compliant with the guidelines as we have it today.

So you can float a bank?

Well, floating a bank is a business decision that we are not really considering at this time. But in terms of the structure of our organisation and system procedures and committee that we have in place, we are compliant with CBN guidelines. We have a lot of experience under our belt and we have everything that it takes.

The guidelines require institutions to set up a shariah advisory council. What will be their role?

It is so that companies do not misrepresent themselves. When you are doing Islamic finance, part of what you come across is that for many people, it is an emotional decision. Many people are excluded from the banks by personal choice. They don’t go to the conventional banks because they feel it is wrong for them to engage in interest, either receiving it or giving it.

So for them, if a bank comes to them and says we are now a non interest bank and in actual fact they are not, then we have a case of public being deceived and that would be very unfortunate. So what the shariah advisory board does is an extra layer of oversight. They ensure and verify that indeed, you are not engaged in any activity or structures that are not compliant with them. In addition, as you are rolling out new products, they review and certify that these new products are actually compliant and are Islamic finance structures that can pass before you roll out.

They are not in your organisation as spiritual leaders in terms of personal counseling. They have to be well versed in shariah of commerce, called Fiqh al-Muamalat; they have to know commerce, accounting, economics, finance and even Law, because this is all about drafting contract at the end of the day.

They have to be up to date with the latest financial instrument, even in the conventional industry. We have a shariah board and it has been fruitful.

Why do you not invest in banks?

The obvious reason is that one of the tenets of Islamic finance is that we don’t invest in interest and banks make their money from giving and receiving interest.

So does that mean that you monitor the companies you invest in to ensure they do not violate your investment principles?

That’s right. We can’t invest in just any company.

But how far can you monitor to ensure that these companies comply with these principles?

There is an internationally accepted framework where you have limits and you make sure that things are not within certain limits of materiality. So you satisfy yourself to the extent of materiality. You can never be 100 per cent sure. In fact, there is no such thing as 100 per cent purity.

So there are internationally accepted standard of the percentage of purity that would be acceptable for an investment for the simple reason that if you want to be absolutely strict, you would not do anything.

Secondly, there is what we call degrees of separation. If you came to invest with me for example, I have my own responsibilities. I have to make sure that you are asking me to invest in something that is ethical. So you can’t come to me and ask me to invest your capital in a brewery. We would not do that.

I have to ensure that your investment is not in cash. It has to go through the banking system, I have your KYC (know-your-customer), I have your address, I know where you come from, and all other relevant information. There is a level of separation that you have to keep yourself to making sure you have met your own responsibility in terms of Islamic finance and in terms of the expectation from a financial institution. There is only so much that you can know about a person.

Limit yourself so that the interaction between you and the person is correct and anything else the person is doing with his life cannot be too much of your concern.

Do you worry about capacity in this field?

In this field, that is a global problem and the only concern I had with the CBN guideline was the insistence that the shariah council advisers can only work for one institution. I felt that should be reconsidered because if there is less capacity as operators, there is even less capacity of the advisers with the qualities that I mentioned.

Globally, it is a problem and the way they have addressed it is you find many of the same people serve on different banks’ shariah advisory council. They are like consultants and only act when they require it and when they need to come and audit an organisation. It is like asking an accounting firm to work for one company at a time. This is even more specialised than accountants.

I think the capacity crunch is even more crucial, even at that shariah advisory board level. At the operator level, training can take care of it. It will take time, so I don’t think any institution should rush into this business. The guidelines have come out, which is great.

You studied Islamic financing several years ago at a time when it was not popular in Nigeria. Did you see this coming?

I was at a training recently and the gentle man was talking about business planning and he said if you want to succeed in business, ask yourself what problems are people grappling with that they need solutions to. Are there things that people need that nobody is supplying today?

For me, that was why I went into Islamic finance. It started out as a personal need. I didn’t want to buy a house on an interest based mortgage but I aspired to own a house. And I felt strongly about it so I said if I feel like this, there must be others that may feel like this; there could be a market for this. We did our survey, did questionnaires, sampled the country and found there were other people that desired this service. That’s why we went into it five years ago now.

I studied Islamic finance 10 years in anticipation. Yes, it has taken Nigeria 10 years to have a guideline, but we now have a guideline and that’s progress. Nigeria has a real opportunity to put its stamp on the international financial community by establishing a hub for Islamic finance, given our population, given the size of our economy, given the importance of our country in West Africa and even in Africa.

The European countries, particularly United Kingdom, are scrambling to be known as Islamic finance hub because they know the implication. They finance major infrastructure and major real estate in their economy with Islamic finance and they have attracted foreign direct investment. At the end of the day, it is a financial product and with good returns structured in a way that it does not offend anybody.

How well do your products perform compared to the rest of the market?

It is a challenging question to answer because we don’t have a direct benchmark with which to measure our performance. In the UK and US, they have the FTSE Islamic Index and the Dow Jones Islamic Index, and so Islamic finance fund managers measure themselves against these indices.

We are measured against the industry, even though the structure of our funds is very different. What we found, which is very interesting, is that we have a very low correlation with the general market, which is fund portfolio diversification. For example, during the financial crisis, our funds outperformed the conventional market. During times of market bubble when you had margin lending and things shifting, particularly the banking sector, it becomes a challenge because we don’t invest in the banking sector. For us, it is the learning curve.

We have struggled with a lack of certain instruments that we require to build a balanced portfolio. I mean regulatory instruments from the CBN like non interest bonds, non interest treasury bills, which would allow us to build a more robust portfolio. We are beginning to create them on our own and based on that, we are beginning to do very well.

Our own target now is to work with the Nigerian Stock Exchange. We have an Islamic index that we have created in-house and we want to work with the NSE to publish it so that even if somebody wants to create their own Islamic portfolio, they have the kind of stocks that they can benchmark against.

Following the positive trend recorded by non intervened banks, shares of the seven rescued banks at the Nigerian Stock Exchange have shown significant improvement since the beginning of the year.

However, while the total market capitalisation has grown by 7.59 per cent from N7.91 trillion at the beginning of the year to 8.51 trillion as at the close of trading on Friday, shares of some of the rescued banks doubled during the review period.

From January 4th to February 17th, the share prices of all the seven rescued banks recorded growth within the range of one to 100 per cent; while the healthier banks rose by an average of 10 to 40 per cent.

Spring Bank recorded the highest growth by 100 per cent; Finbank rose by 33 per cent increase; BankPHB grew by 12 per cent; Afribank followed with 14 per cent increase; while Oceanic Bank and Intercontinental Bank recorded increase of 9 per cent and 12 per cent, respectively. However, Union Bank was the least gainer with one per cent growth.

Dimeji Akintayo, an equity analyst at Resource Cap, a portfolio management firm, said the performance of the banking sector generally showed that “both local and foreign investors are beginning to have confidence in the industry following the various reform programmes by the Central Bank.”

“The rescued banks especially are attracting the attention of some foreign investors because they understand that the government has taken steps to stabilise their operations,” Mr. Akintayo said.

Boniface Okezie, the national chairman of the Progressive Shareholders Association of Nigeria, said while other rescued banks’ shares are becoming the toast of investors, “the recent crisis in Union Bank may discourage some investors from investing in the bank’s stock.”

The banking crisis started over a year ago, when the Central Bank sacked the former chief executive officers and top managements of the seven banks for various misdemeanor. The banks’ heads were immediately replaced with new ones. The intervention, and the stringent regulatory control by the Central Bank of Nigeria led to crash in the price of banking stock, a trend that reverberated throughout the market.

Asset Management

Asset and Resource Management Company (ARM), a fund management firm, in its first quarter report, said the creation of the Asset Management Company of Nigeria (AMCON) was key to the recent attraction by some investors in the shares of rescued banks because “AMCON was eagerly anticipated by both investors and the banking system.”

The report said although the recovery in the banking sector from the depression of the last two years was generally slow, it was steady.

“Key indicators of performance and stability are showing signs of improvement across the sector. Of course, this has largely been made possible by the forbearance of the Central Bank. The regulatory body has not only kept all rescued banks alive until now, but has also prevented the situation in the healthy banks, especially the marginal ones, from deteriorating,” the report further said.

However, ARM said while provisioning moderated significantly within the industry aftermath, the crisis “profitability fell short of our expectations. In fact, for a number of banks, write-backs have constituted a significant portion of total profits so far in 2010,” adding that “for the rescued banks, even if the full face value of the AMCON bonds fully impacts balance sheets, most will retain a negative equity position.”

It said significant lending is impossible for the rescued banks without further recapitalisation and attendant dilution of equity.

Getting cash into the hands of a teeming populace can be a Herculean task in a country as vast as ours. In spite of Nigeria’s relatively sophisticated banking sector, the over 6,000 branches that the commercial and microfinance banks have introduced are not nearly sufficient for a potential market of over 140 million people. Because of low bank penetration, a large part of the population is financially excluded from the formal banking system.

From informal to formal channels

The primary objective of financial inclusion strategies being implemented across the developing world is to connect the “unbanked” population with the formal banking system.

In the absence of access to the formal banking system for most Nigerians, transactions tend to be cash based, leaving no audit trail for regulators to monitor. Mobile money will introduce more transparency and create greater visibility in transactions and money flows as remittances move from informal to formal channels.

The challenges of financial inclusion include illiteracy and a lack of awareness, a cumbersome documentation process, and difficulty in proving identity or proof of address, long distances and often awkward physical access to bank branches, particularly in rural and isolated locations, low income, and high transaction costs.

For an emerging market country severely constrained by an inadequate infrastructure and where relatively few people have access to bank accounts, the introduction of mobile money into the domestic economy should help to extend basic financial services to the millions of unbanked people who will enjoy the convenience of transferring money without having to open bank accounts which they often do not qualify for.

With over 60 million mobile phone users and less than 25 million bank account holders, the mobile phone penetration far outnumbers the bank account penetration.

What is Mobile Money and how does it work?

Simply put, Mobile Money is a service that enables money to be transferred through a mobile phone. Once the account holder has registered and the account has been set up, subscribers can carry out a number of operations; they can deposit money, pay bills, transfer and withdraw funds, and buy goods and services via text messaging and in a cost effective way.

To open a mobile money account, you will be required to take some form of identification to a mobile money outlet, which will include telecom shops, large and small retailers, for registration. You can then deposit money, which can be transferred to a mobile phone even where the recipient uses a different service provider. The recipient receives a notification on their mobile phone via text message with which they can visit a local agent to receive the money.

A medium of storage

Mobile money provides unbanked mobile phone users with a secure platform, which introduces easy to use menus on their phone to send messages through an audited system; it can authenticate both sender and recipient and record the transaction in a secure way. In addition to its ability to increase transactions, mobile money is an ideal medium of storage of money for both the banked as well as unbanked subscribers.

Inspite of the fact that interest is not earned on balances, money that may have been kept “under the mattress” at home that failed to enter the traditional banking system, may now find its way into the formal system and those without bank accounts can retain their savings on this platform.

More secure than carrying cash

Many Nigerians have to travel far away from home to find work and need to send money back to their dependent extended family in rural areas to meet their daily expenses and assist with their bills. The cost of remitting money can be very high and this forces people to depend on more informal channels such as friends or relatives to remit or physically deliver money.

Mobile technology lowers the cost of remittances as it removes the need for physical points of presence. The ability to pay for goods and services, without having to carry cash, has universal appeal. With mobile money, travelling long distances just to deliver cash, which comes with significant risk of loss or theft, should no longer be an issue and the money will be delivered as fast as it takes a text message to arrive.

Opportunities for small retailers

Retailers will be able to register their outlets as agents offering the service and in return get a commission for registering new subscribers. Naturally, the retailers would also benefit from an increased number of customers visiting their stores, as they are likely to make other purchases from the store.

Throughout Nigeria, with its vibrant entrepreneurial populace, there are retailers that are well placed to register their outlets so that subscribers can easily withdraw their cash.

A veritable tool for economic development

Financial inclusion and in particular, the advent of mobile money, will have a huge impact on the lives of the ordinary Nigerian. As soon as people gain access to financial services, their cash management and personal financial planning will improve and this will lead to a greater ability to save.

Indeed, the extraordinary success of mobile money in Kenya has demonstrated that there is a strong and compelling need for a platform that can empower people to make cashless transactions without having to visit a bank for every transaction.

The youth segment is likely to adopt this payment mode faster than the older members of the population as they imbibe technology as ducks to water and constitute a large segment in Nigerian mobile subscription; yet they remain relatively under-banked or unbanked.

Nigeria is poised to take huge strides in this direction following the release of the mobile payment regulatory framework issued by the Central Bank of Nigeria (CBN). Its objective is to provide an enabling environment for mobile payments services in reducing cash dominance in the Nigerian economy.

The mobile phone has been a driving force for change and with an enhanced ability to move money efficiently from one point to another, economic activity is bound to be enhanced, further endorsing the mobile phone as a veritable tool for economic growth and development.

South Africa’s loss
may just be Nigeria’s gain. Many mine operators in South Africa are
currently faced with the possibility of losing their mining titles, as
the government is planning to nationalise the mines and withdraw
existing operational rights.

This is part of the government’s plan to distribute the country’s wealth more among the majority black population.

Though the South
Africa’s minister of mineral resources, Susan Shabangu, assured
participants at the recent Indaba Mining conference in Cape Town that
the idea of mining nationalisation was “not an option”, as it would
result in huge losses in jobs, president of the Youth League of the
ruling African National Congress (ANC), Julius Malema, is reportedly
insisting on the policy as the “only solution” to the economic problems
faced by ordinary South Africans.

Already, Nigeria is reaching out to mine investors whose South African investment may be under threat.

Minister of Mines
and Steel Development, Musa Sada, who also participated in the
conference, said he discussed with several investors on the investment
opportunities available in Nigeria as a viable option should they
desire to look elsewhere. He also said some of the coal miners his team
discussed with included those interested in investing in coal
development as a source fuel for the country’s power sector.

Coal-to-power projects

“We had discussions
with about 13 different groups that are interested in investing in
coal-to-power development projects, apparently because of the interest
of the federal government in the development of the power sector. Some
of them are multinational companies that are currently making
significant contributions to the South African economy,” Mr. Sada said.

He said Nigeria is
prepared to accept such investors into the country. “The groups are
willing to come into the country to invest in the coal development on
agreed partnership terms for the local market, which means they would
be supplying fuel for other investors interested in running the power
plants,” he said.

Other groups the
minister said he and representatives of the departments of steel and
metallurgy geological survey held discussions with included investors
interested in understanding issues on community development agreements,
to avoid the experience in the oil producing communities of the Niger
Delta.

Attracting investors

Though he said
discussions are to continue when they visit the country, Mr. Sada
assured them that government is already taking steps to create a stable
operational environment that would attract investors to the country.

“Government is
determined to grow the mining sector as another source of revenue for
the country and to provide job opportunities for the teeming youth as
well as ensure that the sector regains the role it once played prior to
the country’s independence,” he said.

Identifying the
ongoing reforms in the sector as one of the steps government is taking,
the minister said the adoption of a national policy would give a clear
direction for the sustainable growth of the industry, while the
establishment of the Mining Cadastre office as an independent legal
business entity responsible for the administration of mineral titles
would be a confidence booster, as it would operate without any
political interference and ensure security of titles tenure.

“Government is
working towards establishing the solid minerals development fund with
the support of some international agencies, while it is putting in
place the regulatory framework to assure investors of the security of
their investment. Government is also interested in creating a solid
mineral sector that would contribute effectively to the development of
the country’s economy,” he said.

The National Bureau of Statistics (NBS) reported last week that
inflation edged up marginally to 12.1 per cent year on year (y/y) in January,
from 11.8 per cent y/y in December, although it was still below the 12.8 per
cent and 13.4 per cent recorded in November and October.

The persistent rise in food prices, globally and locally
notwithstanding, the Bureau’s report states that food inflation dropped to 10.3
per cent y/y (a record low since February 2008), from 12.7 per cent, and 14.4
per cent in December and November. The ‘All items less farm produce” inflation
also increased to about 12.1 per cent from 10.9 per cent in December and 11.7
per cent in November.

Samir Gadio, Emerging Markets Strategist, Standard Bank,
however, noted that it is rather unusual to have a negative food inflation rate
at this month of the year.

“This implies that month-on-month (m/m) food inflation declined
to -0.9 per cent in January, from 0.9 per cent in December and 0.3 per cent in
November; interestingly, a negative m/m food inflation rate is somewhat unusual
in Nigeria this month of the year,” he said, adding that this happened in
January 2007 for the last time.

“In this regard, the negative imported food sub-inflation rate
appears to highlight that Nigeria has until now been somewhat immune to
exogenous pressures associated with rising oil and global food prices, but the
magnitude of the downturn in this category, to -5.6 per cent in January, from
13.7 per cent in December and 15.1 per cent in November, is somewhat intriguing
and will probably require further official clarification,” Mr. Gadio said.

According to him, most of the pressure still continue to
originate from the “Housing, water, electricity, gas and other fuel”
sub-component (16.7 per cent of the CPI basket) which registered a 13.2 per
cent increase, from 13.0 per cent in December and 12.6 per cent in November.

“As such, there was no sign of a tangible structural shift in
core inflation that would be fuelled by the demand side of the economy on the
back of the loose fiscal policy stance, which we think has been offset by a
weak money multiplier and sluggish private sector credit metrics over the past
couple of years,” he further said.

Unpredictable outlook

Mr. Gadio is, however, hopeful that inflation could drop in
February.

“According to our calculations, year on year inflation would drop
in February if month on month consumer prices are below 1.9 per cent. This
looks possible at this stage since such a m/m rate has been recorded only once
in the second month of the year since 2006 (in 2010) and the average of monthly
inflation rates in February between 2006 and 2011 is 1.06.

Mr. Gadio says if this scenario materialises, it would
positively support bond prices, especially as the liquidity ratio is also
increased from 25 per cent to 30 per cent on 1 March by the Central Bank.

“Nevertheless, the slight pickup in consumer prices in January
could still push the Central Bank to moderately hike the Monetary Policy Rate
during its March MPC meeting, as the policy focus has shifted from a recovery
in credit and growth to inflation in recent months,” he said.

Bismarck Rewane, the managing director, Financial Derivative
Company, is of the opinion that the nation’s inflationary threats are distinct
and prominent.

“World banks are shifting their focus away from the main
objective of controlling inflation. Until now, there were split between those
that adopted the explicit inflation targeting framework or implicit,” Mr.
Rewane said.

According to him, the average inflation for 2010 was 13.8 per
cent and the Central Bank’s single digit target was not achieved, though
inflation declined for the 6th consecutive month to 11.8 per cent (y/y) in
December.

“Robust liquidity growth, combined with recovery in bank lending
is expected to cause strong growth in money supply. Inflationary threats remain
real and pronounced,” he said, adding that the increase in minimum wage,
tighter fiscal policy and election spend, sale of the rescued banks, imported
food inflation, among others, are factors that fuel the pressure on the
nation’s inflation echelon.

The Nigeria Labour Congress (NLC) has advised Union Bank to
fulfil its part of the terms of agreement which both parties reached on Friday,
after days of picketing the bank.

Denja Yakub, the Assistant Secretary General of the Nigeria
Labour Congress said at the weekend that the union has decided to suspend the
strike but that it will not hesitate to unsheathe its sword if the bank fails
to keep its part of the agreement. “Yes, we have suspended the strike. We had a
meeting with the bank and the Minister of Labour and Productivity and we were
able to reach an agreement.

The meeting lasted up till 2.30am on Friday. We hope that Funke
Osibodu, the MD of the bank will implement the agreement because if she
doesn’t, we will roll back our terms,” he said. Mr. Yakub said the bank has
decided to meet all the demands of the Union. “They met all our demands. The
union is now being recognised by the bank and they have agreed to call back
those that were sacked, we will give her sometime and watch her implement these
terms” he said.

Business activities have been disrupted at the headquarters of
Union Bank in Marina, Lagos and at branches across the country for days. The
NLC, led by its president, Abdulwaheed Omar, picketed the organisation over its
decision to sack workers and ban union activities. Even the intervention of
Yakubu Alkali, the commissioner of Lagos State Police Command, could not broker
peace between both parties, leading to the decision to go on strike, from an
ongoing picketing.

Back to work

Francis Barde, the spokesperson of the bank confirmed that the
NLC has called off the picketing of the bank and directed its members
nationwide to vacate the premises of the Bank nationwide for smooth operations.

“The order followed the agreement reached last night under the
intervention of the Minister of Labour and Productivity, Emeka Wogu with the
Union Bank and NLC which suspended the industrial action against the bank and
sought to cooperate with each other in ensuring permanent industrial peace” he
said.

Mr. Barde also said in a statement signed and issued on Friday
that the move was the outcome of constructive and fruitful deliberations.
“Following constructive and fruitful deliberations, we are pleased to announce
that all issues in dispute that led to the current action between the Nigeria
Labour Congress (NLC) and the management of Union Bank of Nigeria PLC have been
addressed to the mutual satisfaction of all parties”, he added.

The workers have accused the bank’s management of mismanagement,
undermining workers solidarity, and indiscriminate staff layoff. The dispute
reached its climax last month when the management sacked 13 staff and withdrew
the recognition of the chapter of the Association of Senior Staff of Banks,
Insurance and Financial Institutions (ASSBIFI).

Normal banking activities are expected to resume today.

The Central Bank of
Nigeria’s (CBN) insistence, last year, on banks’ compliance with
section 5.3.10 of its ‘Code of Corporate Governance for Banks in
Nigeria Post-Consolidation’ raised more questions than it answered.

The CBN’s action
provided one answer: by requiring that “non-executive directors should
not remain on the board of a bank continuously for more than 3 terms of
4 years each, i.e. 12 years,” it attempted to address the task of
ensuring both continuity and the injection of fresh ideas into banks’
boards of directors.

The remaining
questions are a lot more, however, and more pressing. Arguably, the
most obvious problem is why it took the apex bank four years between
the effective date for the implementation of its corporate governance
code, and its insistence on the implementation of a key provision of
that code.

Is it the case that
the apex bank had dropped balls on its watch? Troubling though this
likelihood is, it speaks to the huge burden of combining the management
of monetary policy and banking supervision under one roof – a dilemma
that the directors of the IMF recently referred to as the “potentially
conflicting objectives of monetary policy”.

The world over, the
parameters of the arguments for and against this practice have been
altered by the recent global financial and economic crisis. However, a
decision either way in our case must consider two important facts.

First is that
monetary policy management is an inchoate practice here, a fact further
complicated by appalling levels of fiscal illiteracy at the executive
level. The second consideration derives from the venal nature of life
here. Because our default moral setting is a penchant for the easy way,
a regulator’s assignment was always going to be difficult.

However, this
difficulty is the more so when the regulator appears ignorant of its
own rules. This was always an outside explanation for the apex bank,
having dropped the ball on industry compliance with its own corporate
governance code. It, however, became a real possibility recently, when
the newspapers reported the deputy governor, financial system stability
of the CBN, as having hinted at a conference in Lagos, last Wednesday,
that appointments of sufficiently senior bank officials would now be
subject to the apex bank’s authorisation.

The apex bank may
indeed be reforming its operations in order that it can better take on
the task of strengthening the banking industry’s risk management
framework, but I know that banks in the country have regularly reported
promotions to senior levels to the CBN as a matter of course. And that
the CBN has had cause to object to the appointments by some banks into
certain offices of persons whose fitness and propriety for the new
responsibilities it had doubts over.

Is the CBN dropping
the ball because of a failure to read from its own scripts? Something
about how the CBN has proceeded with the authentication of banks’
customer account details nationwide is highly suggestive of a need to
hold the apex bank’s feet closer to the fire.

Why would it treat
work-in-progress the same way we treat voters’ registration here? I
was, therefore, minded to look again at the corporate governance code,
in search of provisions that the industry may currently be in breach
of, despite the fact that “compliance with the provisions of (the) code
is mandatory”.

What about
independent directors? In “civilised” jurisdictions, the position of
the independent director was conceived of in response to the “conflict
of interest” challenge. Increasingly, companies required persons on
their boards who – unburdened by interests in or previous or past
affiliations with the company or its subsidiaries – can discharge their
duties as directors for the exclusive benefit of these companies.

Responding to this need, the apex bank insists in its corporate
governance code that “at least two (2) non-executive board members” of
banks should be independent directors. Now, in the absence of reports
to the effect that the apex bank has sanctioned banks for breaching
this provision, we may safely assume that there are 48 independent
directors on the board of Nigerian banks.This is one of the many stats
on this economy that challenges one’s belief. Why not solve the problem
by requiring banks to list in their annual reports the number of
independent directors; and the nature of their independence?

Finance ministers of the world’s major economies reached a
fudged accord on Saturday on how to measure imbalances in the global economy
after China prevented the use of exchange rates and currency reserves as
indicators.

French Finance Minister, Christine Lagarde, who chaired the
Group of 20 talks, said the deal nevertheless represented a significant step
towards better coordination of economic policies worldwide to help prevent
another financial crisis.

“It wasn’t simple. There were obviously divergent interests but
we were able to reach a compromise on a text that seems to us to be both balanced
and demanding in its implementation,” she told a news conference.

Ministers and central bank governors agreed on a list of
indicators including public debt and fiscal deficits, private savings and
borrowing, the trade balance and other components of balance of payments such
as net investment flows.

But at Chinese insistence, there was no mention of the real
effective exchange rate or of foreign currency reserves.

“Reserves have been dropped,” Mr Lagarde acknowledged, adding
that the deal included a mechanism to take account of exchange rates when
assessing the overall balance of payments.

The United States and other western countries accuse Beijing of
keeping the yuan artificially undervalued to boost its exports, hence
accumulating massive foreign currency reserves that they say distort the world
economy.

U.S. Treasury Secretary, Timothy Geithner repeated after the
talks that China’s currency “remains substantially undervalued” and its real
exchange rate had not moved much despite a slow appreciation since a reform
last June.

“There is broad consensus that the major economies, not just
Europe, Japan and the United States but also the large emerging economies, need
to allow their exchange rates to adjust in response to market forces,” he said.

The world’s number two economy, which overtook Japan this week,
has resisted Western pressure to substantially revalue its currency to help
rebalance global growth.

China’s trade surplus has shrunk of late, perhaps explaining why
it prefers that measure.

Western and Japanese officials said the indicators would in
practice cover balance of payments and foreign reserves, even if those terms
had been omitted to assuage Beijing. Chinese Finance Minister Xie Xuren left
without speaking to reporters.

“We needed to be inventive about wording in the communique in
consideration for a country that did not want to use the term ‘current account
balance’. The statement lists components of the current account balance,”
Japanese Finance Minister Yoshihiko Noda told reporters.

No specific goals

Mr Lagarde said the indicators were not binding targets but
would lead to the drafting of guidelines for coordinated economic policies to
reduce distortions, and then to a mutual assessment process.

Germany, Europe’s biggest exporter, which has resisted U.S.
effort to set numerical targets for current account surpluses, said no specific
goals would be set for certain indicators.

The G20 ministers acknowledged that economic recovery was
diverging between developed and developing economies, but they differed in
their assessment of global inflation risks.

The communique noted that while growth was subdued in most
developed economies, with unemployment high, major emerging markets were
roaring ahead, “some with signs of overheating.”

European Central Bank President, Jean-Claude Trichet said
inflationary pressures coming from energy and commodities prices must be taken
seriously, and the ECB was determined to avoid second-round effects on wages.

But Mr Geithner said inflation risks in the United States were
moderate.

French President, Nicolas Sarkozy, who holds the G20 presidency
this year, urged ministers on Friday not to get bogged down by the indicators
dispute and welcomed the fact that China had agreed to host a seminar on
reforming the international monetary system in Shenzhen in late March.

France has also ran into opposition with its two other G20
priorities — greater transparency and regulation of commodities prices and
reform of the international monetary system.

The G20 communique said ministers agreed to work on
strengthening the international monetary system to help avoid disruptive
fluctuations in capital flows and disorderly movements in exchange rates.

China and Brazil complain that “hot money” inflows risk
destabilising the economies of emerging countries, pointing the finger at the
U.S. Federal Reserve’s money printing via a $600 billion bond purchase
programme.

With world shares at 30-month highs, investors seem content for
the G20 to take its time, whereas at the height of the crisis two years ago,
markets were baying for policy action.

Whether the voters’
registration exercise has ended or not is not the issue many Nigerians
are talking about these days. The concerns about that exercise are
largely about the huge sums spent on its execution compared to the
number of voters actually registered.

The electoral
commission informed us that about 60 million Nigerians have been
registered to vote in the April 2010 elections. That is not too bad
considering that they had a target of about 70 million. What may sour
the statistics would be if the cases of multiple registrations were
identified, weeded out, and the total number is big enough to reduce
the overall number of voters substantially.

Some analysts claim
that the electoral commission spent N1, 500 per voter if they
registered 60 million. If this number gets whittled down, it would mean
that the cost of registering one voter might actually be higher than
this estimate.

Some preliminary
questions that come to mind are with regard to the actual value of a
voter’s card. Is it worth N1, 500 or more? Can the value be enhanced by
certain factors or is it plain crazy trying to price the card at all?
If voting is a right, can you price your right?

The second layers
of questions are to do with the reasons why some people engaged in
multiple registrations with one person getting caught with as many as
four cards! One can only imagine how many times they had their finger
prints captured and how they must have laughed at the high tech system
that was not networked and thus could be fooled at will. The electoral
commission says they will weed out multiple registrations when all
captured data are downloaded into their central system. We shall see.

What will happen to
those who are still in possession of multiple cards and are far from
getting caught? When will they know that they have been weeded out? It
is possible that some may even get through to the voting period without
being caught at any time. If that happens, what will be the value of
their stock of cards? Will they choose to sell the cards or would they
vote for all candidates and so stand a chance of claiming that they
voted for whosoever won?

It is not likely
that a voter who risked all to obtain multiple cards would want to use
them for fun. It is reasonable to assume that the intention is to make
merchandise of the cards and sell to the highest bidder, who would
probably not pay the owner to carry out the multiple voting but would
simply purchase the cards and find some ways of using them in more
reliable ways that would eliminate the treachery that could occur in
the voting booth away from watchful eyes.

Although vote
buying may be entrenched in Nigeria, it is not a peculiarly Nigerian
phenomenon or invention. When one looks back into history, there are
several cases where vote buying was entrenched and was openly
advertised. Such cases can be found in the history of the United States
of America and in several other places.

In 1812 Britain, a
certain noble man, George Venables-Vernon, left his son-in-law, “one
sum not exceeding £5,000 towards the purchase of a seat in Parliament.”
Office purchases and related practices were eventually halted through a
1883 Corrupt and Illegal Practices Prevention Act.

In the
nineteen-century USA, the price of votes were often quoted, even in
newspapers. One paper, The Elizabethtown Post, reportedly quoted the
price of a vote in Ulster County as being $25.

Whereas vote
selling and buying has transformed into other phenomena in the Western
world, such as campaign donations and lobbying, it is still possible to
see it in many countries in Africa. In fact, in some African countries,
where vote buying does not suffice, an incumbent loser can simply
refuse to vacate office. After much haggling, they may decide to share
offices with presumed winners and carry on as if nothing happened. Or
you may end up with two presidents.

Analysts have seen
that the price of a vote could vary even within the same country and
the office for which the politician is seeking. For example, where the
national legislature is more powerful in terms of determining the
direction of the state and the office of the president is merely
ceremonial, then the vote for a legislator becomes more costly.

The average cost of
a vote for those seeking election to the national assembly in Sao Tome
and Principe in their 2006 election was said to be about $7.10,
although in the capital this was five times more costly. The price of a
vote for the presidency was slightly more than half of that for the
national assembly because the president wields power mainly on issues
of foreign affairs and defence. With oil revenue’s floodgates opening
up, those who have more influence over the economy pay more to garner
the needed votes to sit over the pie.

In Nigeria, the
votes can easily be arranged in a hierarchy of prices starting from the
vote for a local government councillor to that for the president. What
may be a bit tricky to rank would be the price differential between the
vote for a senator and that for a governor. The confusion comes from
the fact that many former governors forget that they had governed whole
states and often angle to represent a third of their states as senators.

However, in terms
of which office is more lucrative (via corruption), that of the
governor takes the cake, no matter how much salaries and perks the
senators legislate for themselves. If people got elected to provide
selfless service, vote buying, ballot box snatching (a form of
wholesale purchase of votes), and electoral violence would not be the
norm.

What is the price of your vote?