Nigeria Content Online

The
Nigerian Electricity Regulatory Commission (NERC) has said that it does
not plan to introduce higher electricity tariffs in the country.

Sam
Amadi, the Commission’s chairman, said in Abuja yesterday that the
reported impending hike in electricity tariffs under the multi-year
tariff order (MYTO) is untrue.

Mr. Amadi further assured consumers that no such action was being contemplated by the commission.

“No
decision has been taken yet by the government on new electricity tariff
in the country, contrary to speculative reports making the rounds in
some media in recent times. If there is any such plans, NERC, which is
the only agency mandated through the provisions of the Electric Power
Sector Reform (EPSR) Act 2005 to regulate the Nigeria Electricity
Supply Industry (NESI) and take decisions on tariffs, should know,” Mr.
Amadi said.

He
added that the EPSR Act 2005 mandates the Commission to, among other
responsibilities, set end-user electricity tariffs, utilising the
methodology of the Multi-Year Tariff Order (MYTO) to arrive at
cost-reflective tariffs for different categories of consumers.

The
MYTO scheme, which came into effect in 2008, was adopted to allow
fixing of electricity prices for up to five years in place of single
year tariff order previously in operation, which limited tariffs to be
set only for the in-coming year.

Under
the plan, provisions are made for limited tariff adjustments each year,
according to prevailing inflationary trend and changes in fuel costs,
with major reviews conducted at five year intervals to allow the
evolution of appropriate tariff template within a projected time frame
of 15-years.

At
present, government-approved electricity pricing per kilowatt hour
(KWH) averages between N4 and N6 for single-phase customers as well as
N6 and N8 for industrial users, while maximum demand users pay between
N8 and N12 per KWH.

Subsidy provisions

To
reduce the impact of regular tariff adjustments envisaged under MYTO on
consumers within the low income bracket, government resolved to make
annual provisions for subsidy to take care of the difference in the
tariff template.

In
the 2009 budget, about N40.31billion was appropriated for the scheme,
as against a provision of N65.78 billion last year, and an allocation
of N67 billion in the 2011 budget.

Though
the major review of tariffs under the MYTO scheme designed to help
reduce some of the risks associated with high electricity price for
consumers and investors in the industry was to have fallen due in 2013,
NERC recently brought the deadline forward from 2013 to 2011 in order
to incorporate other sources of electricity generation, considering
recent major policy decision in the section.

The
MYTO review involves a number of stages, including the ongoing data
collection from relevant agencies, valuation of existing industry
assets liabilities, and consultations.

“These critical regulatory processes are ongoing. NERC expects that
these processes will culminate in the publication of a new MYTO by the
beginning of second quarter of 2011. It is, therefore, presumptuous at
this time to suggest what the tariff will be,” Mr. Amadi said.

Recent trading
activities at the Nigerian Stock Exchange (NSE) revealed that some
investors are currently showing more interest in Zenith Bank’s shares
as over 1.050 billion units of the stock have been traded in the last
one week.

Zenith Bank,
according to the NSE, was the most active stock in 2010 with 6.302
billion shares traded while it also ranked as the third most
capitalised stock with N471.3 billion after Dangote Cement and Nigerian
Breweries.

While some market
watchers say the motivation behind investors’ interest in the bank’s
stock may be connected to government’s intervention in the banking
industry, others say some investors may have information about the bank
that is not known to the public.

Dimeji Akintayo,
analyst at Resource Cap, a business advisory company, said it was
obvious that investors are positioning themselves in banks’ shares
generally because the Asset Management Corporation of Nigeria (AMCON)
is already buying toxic assets in the banking sector.

Mr. Akintayo,
however, said, “The funds been invested in Zenith Bank are actually
coming from portfolio managers who are the main profit takers in the
market.”

Emmanuel Ikazoboh,
interim administrator of the NSE, during a media briefing on Monday,
also said that investors’ pessimism that was widespread after two
consecutive years of losses has “gradually given way to cautious
optimism.”

“The various
confidence building measures initiated by the regulatory authorities
such as the introduction of AMCON, zero tolerance for market
infractions, and compliance with post listing requirements, have begin
to yield results,” Mr. Ikazoboh said.

Market rebounds

Meanwhile, at the
close of Wednesday’s trading, the NSE’s market capitalisation, which
recorded N44 billion gains on Tuesday, further gained over N121 billion
or 1.45 per cent increase to close at N8.471 trillion from N8.350
trillion.

The number of
gainers at the end of trading session on Wednesday closed higher at 47
stocks as against the 41 gainers recorded the previous session, while
losers also closed higher at 21 stocks when compared with the 18 losers
recorded on Tuesday.

The Banking
subsector maintained its lead as the most active with 492.883 million
units valued at N4.706 billion as against the 483.696 million units
valued at N4.981 billion recorded the previous trading day.

The volume recorded
in the subsector was driven by transaction in the shares of Zenith
Bank, Wema Bank, Diamond Bank, First Bank, and Intercontinental Bank.
The total volume of 308.34 million units valued at N3.62 billion traded
in the shares of the five stocks accounted for 52.58 per cent of the
entire market volume. Trading in Zenith Bank’s shares, yesterday, was
168.319 million units, worth N2.684 billion, and it accounted for 34.15
per cent of the banking subsector’s volume.

Investors are
likely to pour more funds into Egypt in 2011 as a strengthening economy
and attractive yields outweigh a fragile social backdrop and
uncertainty ahead of a presidential election.

Egypt’s main stock
index rose 20 percent in the past six months even as soaring food
prices hit the poor, sectarian tension grew and the country held
parliamentary elections marred by accusations of fraud and bullying. A
church bombing in the northern city of Alexandria killed 23 people at
New Year and sparked angry protests by Egyptian Christians demanding
more protection from Islamist extremists. Egypt’s benchmark index
wavered in the days after the attack before rallying to an eight-month
high on January 5.

A strengthened economy

Explaining that
strength, analysts point to accelerating economic growth and a broader
shift to emerging market risk prompted by quantitative easing in the
United States and lingering uncertainty over economic recovery in
developed nations. That also seems to override uncertainty over whether
President Hosni Mubarak, 82, will run for a sixth term in office in
September. He has no deputy or obvious successor. “We do not believe
that either the run-up to the presidential elections or any overhang
from the parliamentary elections will impact economic policy – focusing
on supporting growth,” said EFG-Hermes in a research report. The
investment bank gave Egypt an “overweight” rating, saying domestic
demand should continue to strengthen this year due to faster credit
growth and rising investment.

Election rules and
the opposition’s weakness make it virtually impossible for anyone but
the ruling National Democratic Party’s (NDP) candidate to win in
September. Mubarak has not said if he will run for another term that
would take him to 89, but ruling party officials say he is their
natural candidate. Mubarak has no clear successor and has denied talk
that his son Gamal is being groomed for power. His three decades in
office have fostered a stable business environment but the strength in
a system that revolves around one man is viewed by some as a weakness
as post-colonial Egypt has no precedent of a voluntary handover of
power. “Uncertainty over the succession is a source of real concern for
overseas investors,” said HSBC Economist Simon Williams. “But while
this will wensure they stay cautious, I think Egypt’s economic
fundamentals are too good, and the yield on offer is too high, to push
them away from the trade.”

Inflation concerns

Egypt’s government
estimates the economy grew 6-6.2 percent in the final quarter of 2010
after gaining gradually from 4.7 percent in the year to June 2009. It
is aiming for 7 percent in the 2011-2012 fiscal year. The central bank
has held its main interest rate steady since September 2009 as the
government seeks to push growth high enough to create enough jobs for a
fast-growing population. That means prices, not politics, could pose
the biggest risk to the inward flow of portfolio funds, say some
economists, who forecast inflation could accelerate in the first half
of 2011. “It’s mainly about inflation – politics will be secondary as
long as there are no major political shocks related to the presidential
election,” said Brahim Razgallah, Middle and North Africa Chief
Economist at J.P. Morgan.

Core inflation,
which excludes subsidised goods and volatile items, rose in November to
8.58 percent from 7.65 percent in October. High prices hurt the poor in
Egypt, where about a fifth of people live on less than $2 a day
according to the United Nations. Inflation can also dampen demand for
treasury bills, which soak up the biggest chunk of foreign portfolio
investments. Foreigners’ share of Egyptian T-bills went from 14.6
percent in July to around 23 percent in early November, according to
J.P. Morgan. Razgallah said he expected it to remain stable in coming
months as inflation accelerates further but may rise to around 30
percent once inflation stabilises and slows.

Encouraging signs

The yield on
Egyptian 182-day T-bills rose to 10.3 percent this month from around
9.5 percent in late October, an appealing return as developed nations
hold interest rates low in an attempt to kick-start their recession-hit
economies. “I think another 0.5-1.0 percent rise in yields is
possible,” said Monette Doss, senior analyst at Prime Securities in
Cairo. “This will result in stable exchange rates because I highly
believe that if it were not for the high yields the Egyptian pound
would have depreciated more.” Economists see the Egyptian pound – which
has been testing five-year lows above 5.8 against the dollar –
strengthening to around 5.7 in coming months and say that prospect
could bolster inflows into Egyptian bonds and equities. “The FX is
quite important. As long as it remains stable with a bias to
appreciation, that will encourage foreign investments,” said Razgallah
at J.P. Morgan.

Analysts are recommending stocks likely to benefit from a stepped-up
infrastructure drive and growing spending by Egypt’s expanding middle
class after the period of low interest rates spurred consumer lending.
HSBC has “buy” recommendations on Ezz Steel and Orascom Telecom. Among
buys for EFG-Hermes are drugmaker Eipico, Maridive, Credit Agricole
Egypt, National Societe Generale Bank El Sewedy Electric and Palm Hills
Development.

Heineken N.V. has
announced that it has strengthened its platform for growth in Nigeria
via the acquisition of two holding companies from the Sona Group.

The two acquired
businesses have controlling interests in each of the Sona Breweries,
International Beer & Beverages Ind., Benue Brewery, Life Breweries
Co., and Champion Breweries.

The acquisition provides Heineken with an additional technical capacity of 3.7 million hectolitres.

The private sector
may not thrive better than 2010 at the bond market, as the Asset
Management Corporation of Nigeria (AMCON) gets set for bond issuance
this year.

It is estimated
that the Corporation will issue N3 trillion zero coupon in 10-year bond
to enable it buy up non performing loans, as part of moves by the
government to bail out the banks.

For most of 2010,
the nag had been that the Federal Government crowded out the private
sector, raising over N1 trillion. Corporates raised less than 10 per
cent of this amount.

The Nigerian Stock Exchange (NSE), in its outlook for 2011, projects that the private sector may not fare any better.

“The sustained
expansion in public borrowing risks crowding out the private sector,”
said the interim administrator of the NSE, Emmanuel Ikhazobor, in his
presentation at the press briefing on the review of 2010 and the
outlook for 2011, held on Monday in Lagos.

This sentiment is shared by Akin Oladeji, chief executive officer of Futures and Bonds Limited, a financial services firm.

“The market will
not be different from previous years since Federal Government has
devised a crafty way of raising bonds to finance its projects. Market
will continue to be crowded with FG and State Bonds. Although few
corporate bonds may enter the market, the success will depend on timing
and pricing,” Mr. Oladeji said.

“If the usual high
lending rate and low deposit rate should continue, most corporates will
consider bond issuance subject to their existing allowable debt to
equity ratio,” he added.

Dynamics in the bond market

He said AMCON will
alter the dynamics in the bond market, especially as the economy may
not be able to absorb the huge funds that will enter the system.

“Does the market
have capacity to buy all the bonds? Who will be the investors in these
bonds in an economy with so many uncertainties? I do not believe the
market has the capacity or appetite to absolve the volume of bonds
being anticipated,” he added.

Mr. Oladeji further said investors in the bond market may not enjoy the level of returns as expected.

“Rates will be
guided by demand and supply. But with intuition, it is clear that the
rate may drop if this kind of volume is taken to the market, coupled
with the facts that other type of bonds may come into the market with
attendant uncertainty.”

However, the
managing director of AMCON, Mustafa Chike-Obi, has said that the
issuance of the bonds will not overwhelm the market.

“Look at it as an
asset swap. We are taking a non productive illiquid asset and replacing
it with a somewhat liquid asset,” he said.

Briefing bank chief
executives recently in Lagos, Mr. Chike-Obi said the market will be
liquid such that banks will not be under pressure to flood the market
to sell off.

“My feeling is that banks are going to hold on to the bonds until they can make loans,” he said.

Union Bank has announced the ban of its senior staff
association. This is the aftermath of the December 15, 2010 industrial action
which crippled operations nationwide for about three days.

The bank made this known in a terse press statement release
yesterday in Lagos captioned, ‘Withdrawal of recognition of Union Bank
Association of Senior Staff (UBASS), Association of Senior Staff of Banks,
Insurance and Financial Institutions (NLC Affiliate) (ASSBIFI).’

“Following the unlawful operations of UBASS and ASSBIFI, Union
Bank of Nigeria Plc has withdrawn its recognition of the above named trade
union bodies with immediate effect. All concerned have been duly advised. The
general public should please take note,” the statement read.

The other union, National Union of Banks, Insurance and
Financial Institutions Employees (NUBIFIE), was, however, not affected by the
proscription.

Collective agreement

The 94-year old financial institution, with a workforce of over
8,000, said it will take disciplinary action against any staff that has been
found to breach the terms of their employment.

“Some staff were found to be exposing false and confidential
customer information to the public, including shareholders. In the collective
agreement, it is stated there, the dos and don’ts of members. When there is no
rule, everybody becomes lawless. We will do the proper thing. We will not
victimise anybody,” Mrs. Osibodu said, adding that 315 staff were promoted in
December, 300 staff are facing disciplinary action for various infractions,
while some have received commendation.

However, ASSBIFI, in its response, said the bank has no
constitutional basis for withdrawing recognition of the union. Its response
letter, signed by the national president, Princewill Ojeh, and secretary
general, Obukese Orere, stated that the issue of withdrawal of recognition is
null and void.

“Recognition of Trade Unions by various managements is
compulsory and automatic and not a choice or wish. Trade Unions Act No 22
chapter 437, third schedule part B (7) of 1978 as amended refers.”

According to ASSBIFI, membership of unions is guaranteed by
Section 40, 1999 Constitution on freedom of association.

“No organisation has a unilateral power to withdraw recognition
from a trade union registered under the Trade Union Act,” and urged the bank to
withdraw the proscription letter.

Union Bank gets N239b
AMCON funds

Union Bank said it has received N239 billion from the Asset
Management Corporation of Nigeria (AMCON) for the purchase of its non
performing loans in the first phase of bailout.

This is in addition to N120 billion capital injection received
from the Central Bank of Nigeria (CBN) when it intervened in 2009 following the
sack of the former managing director.

Group managing director, Funke Osibodu, at a briefing in Lagos
yesterday, said the funds may not be the final intervention as the bank would
conclude reconciliation of its accounts in the next one week. She said the bank
had a negative capital of N254 billion and would still need about N154 billion
to move up to ground zero, after which a core investor can come in.

“This N154 billion will be covered by they (AMCON) taking equity
in the bank to that level. We place this at the table, on the terms of the
equity with AMCON, they provide the money they become the shareholder
technically and then we are now at ground zero,” Mrs. Osibodu said.

She said at this point, a new core investor can come in. “The
minimum capital that may be required is N100 billion for an institution of our
size.”

She further said the bank was already talking to new core
investors. “We have a preferred core investor and we have a standby core
investor. Out of all that have indicated interest, we have narrowed down to
two. We still have to negotiate the broad terms of engagement.”

Wema Bank said it has got N15.2 billion from the Asset
Management Corporation of Nigeria (AMCON) as sales of some non-performing loan
portfolio of the bank.

“We have got 15.2 billion from AMCON, in addition to the N7.5
billion we raised from bonds last year. These we have, in addition to about 30
billion we have recovered from our non-performing loans. We have applied for
and we have obtained our licence to operate as a regional bank. We would be
operating in South South, South West, Lagos and so on,” Tunde Olofintila, the
spokesperson of the bank said in an interview yesterday.

He explained that the bank had operated domestically all along,
so it had no worries about addressing subsidiaries outside the country.

“Going regional will not affect our operations in any way,
neither will it affect our customers. There is nothing major that can be done
with a bank with international licence, national licence that we cannot do,
except clearing at the interbank market, which does not affect our customers.

“Wema bank has about 150 branches. We would close down 17
branches that we have deemed to be non-profitable, maybe due to their location
or other factors. In the areas where we want to operate, our profit margin is
high, our deposits are high, and there is federal allocation to those states
every month, which helps”.

“For our customers who patronise some of the branches that would
be unfortunately affected by our reforms, we have made provision for online
banking. They don’t need to go to the banking halls. All our customers can
reach us online and transact their businesses like nothing has changed, which
would actually be easier for them.

“We are aware that not all of our customers may follow us when
this is done, but after we have done the cost-benefit analysis, it is the best
decision for us, to operate in the region where we make profit,” he said.

He said the amount was received based on the level of
nonperforming loans in its books.

“It depends on the quantum of their delinquent loans. The money
we get from AMCON is based on the value of delinquent loans that we have. We
have recovered about N30 billion of our non-performing loans already, as at
December ending. It is a continuous process and I think we are doing well,” he
said.

At the expiration of the deadline for capital raising last year,
the Central Bank stated that Wema Bank Plc was able to raise the sum of N7.5
billion from the Special Placement Offer, approved by the Securities and
Exchange Commission (SEC), and was formally authorised during the bank’s
completion meeting, held on Tuesday, October 28, 2010, while its full
recapitalisation would depend on its receipts from AMCON.

According to the Central Bank’s guidelines, commercial banks authorised to
conduct business on a regional basis shall “maintain a minimum paid-up share
capital of N10 billion or such other amount as may be prescribed by the CBN
from time to time.”

Investors at the Nigerian Stock Exchange (NSE) on Thursday
recorded additional gains on their equities’ value, as market closed trading on
a positive note.

The Exchange market capitalisation of the 201 First-Tier
equities closed yesterday at N8.630 trillion after opening the day at N8.471
trillion, reflecting 1.87 per cent upturn or over N159 billion gains. The
market had gained N120 billion at the close of trading session on Wednesday.

Meanwhile, market watchers said the current political concerns
should not affect investors’ sentiment in the market.

Analysts at Renaissance Capital, an investment bank, said the
stock market will be resilient during the political period.

“In the past, the NSE’s performance has been resilient to
significant political and security events. Notable political events, including
the hand-over from military to civilian rule in 1999 and the first civilian
elections in 2003, did not mar the performance of the NSE.

“We believe that concerns over the political landscape have been
slightly exaggerated and may present buying opportunities,” they said.

Instead, they further said, there are great opportunities “in
all the major sectors of the NSE, including banking, consumer and building
materials and agriculture.”

High gainers

At the close of trading on Thursday, the number of gainers
closed higher at 52 stocks as against the 47 gainers recorded previous session;
while losers also closed higher at 23 stocks when compared with the 21 losers
recorded on Wednesday.

Nigerian Breweries and Dangote Cement topped the price gainers’
table with an increase of N4.14 and N3.52 respectively to close at N87.08 and
N130.02 per share. Oando Oil and Flour Mill followed in the chart with an
increase of N3.22 and N2.00, to close at N76.26 and N74.00 per share.

On the losers’ side, Total Nigeria and Nigerian Aviation
Handling Company led the price losers’ chart with a decline of N2.00 and 21
kobo, to close at N232.00 and N10.79 per share respectively. Vono Products and
Nampak Nigeria followed with a decline of 17 kobo each to close at the N3.32
and N3.85 per share.

Active subsector

The Banking subsector led the market transaction volume on
Thursday with 411.524 million units valued at N3.817 billion, as against the
492.883 million units valued at N4.706 billion recorded on Wednesday. The
volume recorded in the subsector was driven by transaction in the shares of
Zenith Bank, First Bank, Afribank, Finbank, and Oceanic Bank.

The Mortgage Companies subsector followed in the chart with
44.317 million shares worth N23.666 million. Resort Savings & Loans largely
boosted the subsector’s volume, followed by Union Homes Savings & Loans and
Aso Savings & Loans.

Trading activities in the Foreign Listings subsector was third
highest yesterday, with 34.441 million shares valued at N549.619 million.

Volume in the subsector was boosted by deals in shares of
Ecobank Transnational Incorporation, the only traded stock in the subsector
yesterday.

Research and Marketing Services (RMS), a leading marketing
research company not only in Nigeria but also within the West Africa region,
recently released a survey tagged ‘Pulse of the Nation’, which reflected the
opinions and views of Nigerians on socio- economic and political issues.

The survey is an eye opener as it revealed the desires of the
people with specific regards to governance, citizen empowerment, elections, and
leadership. It is one survey that reflects the wishes of the people for a
government to focus on delivering value to the citizenry.

The importance of such perception surveys cannot be
underestimated, especially in an environment such as ours. The survey comes as
a critical reference point in this column due to the recent decision of
government to close schools for over three weeks because of voter registration
exercise.

Even though RMS is a private entity, I think government
parastatals saddled with information and civic orientation should, on a
consistent basis, engage in public perception research to touch base with the
citizens. The recent uproar resulting from the schools’ closure bears testimony
to the fact that we do not have a listening government. A key ingredient of the
re- branding campaign is the desired need to re-tool government machinery to be
more virile and responsive to the needs of the citizens.

I find this a very commendable effort because perception is a
key and Nigerians are living up to their civic responsibilities. Some other
bodies like a group of educators went to meet the education minister while
others utilised media to publish their grievances.

It thus becomes crucial for Nigerians to embrace every channel
of communication to make their opinion and perception count on key government
policies. The media also has a critical role to play in ensuring that the
public perception and views on key issues of national discourse are given
prominent attention. The same was accorded the public outcry that greeted the
legislators pay.

Public perception should not also be taken with levity, as it
constitutes a groundswell of public opinion on issue. Gauging public perception
on a consistent basis helps in moulding and reshaping government policies for
better impact. Public perception helps the government to perform better and
focus on key parameters to provide good governance.

It thus becomes essential for government to embark on public
perception survey to assess people’s response to government policies and
initiatives. This is due to its effectiveness in evaluating the thought pattern
of the people as it enables government to focus on areas that can improve the
lot of the entire citizenry.

It has become expedient for government to attach high importance
to public perception.

This sounds strange in our clime and it should not be so. It is
high time the government do away with unpopular policies.

There should be a sustainable and consistent process to gather
opinions, feelings and views of the people. When the government fails to do
this, it meets with resistance from the people and thus reverses unpopular
decisions.

This is also a clarion call to Nigerians to shed all garments of
docility when it comes to public issues. We should also make our opinion count
and let the government listen when we talk.

Ayopo, a communication
strategist and public relations practitioner, is the chief executive of
Shortlist Limited.

The Abuja Enterprise Agency (AEA) has advised Nigerians to embrace financial literacy as a means of reducing poverty.

Bashir Muse, a
training officer with the agency, on Tuesday, said that people need to
always have good reasons for spending their income.

He said the AEA
will embark on a rally to educate the public on financial literacy, its
benefits, and how to reduce poverty among the populace.

“Being financially literate is one sure way of empowering people and
making them financially independent. Our mission is to provide
excellent support for the Federal Capital Territory residents by
developing relevant programmes and activities for starting and
nurturing business,” he said.