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Bank lending should rise significantly in the second quarter of the financial year once the April 2011 elections, which have prompted a slowdown, are over, according to Bisi Onasanya, group managing director and chief executive officer of First Bank Nigeria.

Mr Onasanya told Oxford Business Group (OBG), a consultancy firm, that financial risk exercises undertaken last year by the Central Bank of Nigeria (CBN) and the April elections had both contributed to a dip in loan growth.

Figures show that lending growth turned a corner to reach 5 percent by the end of last year after plummeting in the wake of the 2008 global financial crisis, which was exacerbated in Nigeria by troubles in the domestic banking sector.

“Lending growth was suppressed last year, partly due to a conservative response from banks following the stress test which the CBN conducted in 2010,” he said. “The elections are slowing loan growth for the first half of 2011, but there will be a major increase after elections in April. I expect loan growth of 10 percent in 2011, which is double the 5 percent figure for 2010.”

Businesses face challenges

Mr Onasanya acknowledged that businesses in Nigeria still faced an uphill struggle to obtain credit from banks, despite CBN Governor Lamido Sanusi’s high-profile campaign to encourage growth by stimulating Small and Medium Enterprise financing. He believes banks are unlikely to increase lending to smaller businesses, which are viewed as a higher risk than big corporations, unless lending rules are relaxed.

“Although SMEs have access to some credit, the risk tolerance limit is too high,” he said. “The banks can’t be blamed since they have to meet provisions when the CBN tests their portfolios. The government and the Central Bank should consider implementing risk sharing to increase the flow of credit to higher risk areas.” With bidding for Nigeria’s unhealthy banks drawing nearer, Mr Onasanya highlighted the importance of ensuring that the selling process was clearly laid out in a framework if legal wrangles and lengthy court cases were to be avoided.

Ten of Nigeria’s banks are up for sale after they failed to meet standards set out in an audit undertaken by the CBN in the wake of the 2008 crisis. The move is set to bring consolidation to the sector, with observers expecting the process to reduce the number of players to 15.

“Due process must be followed involving the boards of directors and shareholders,” he said. “Otherwise, if the distressed banks are sold by the CBN rather than by the actual owners, each acquisition will go into irreconcilable litigation.”

By most accounts, agriculture is the mainstay of most African
economies, as experts insist that Africa has what it takes to produce food for
its population of about one billion people and even export food to other
regions of the world. The continent, which is blessed with good weather and
geographical conditions, has the capacity to produce food to feed its
inhabitants, all things being equal.

Agricultural experts, however, note that some regions of the
world, including Africa, have been experiencing a food crisis, as global food
prices spiralled upwards, partly because of rising fuel prices, among other
factors.

The rising food prices have elicited a lot of concern from
observers and agencies such as the World Bank, whose Food Price Index is
currently around its 2008 peak.

Since June 2010, an additional 44 million people fell below the
1.25-US-dollar poverty line as a result of higher food prices, says the latest
edition of World Bank’s Food Price Watch.

The situation may even get worse, as simulations show that a
further 10-percent increase in the food price index could lead to 10 million
people falling into poverty, while a 30-percent increase could increase poverty
by 34 million people.

African economies

However, the situation varies from country to country. The World
Bank publication indicates that low-income and lower-income countries are
experiencing an average 5 percent points’ higher food price inflation, when
compared to better-off countries. A special focus on the Middle East and the
North African region in the publication reveals a double-digit food price
inflation in Iran,

Egypt and Syria, with more moderate levels in other parts of the
region. In spite of the gloomy picture, experts, nonetheless, insist that
Africa has the wherewithal to produce abundant food, attain food security and
even export food to other continents. Calestous Juma, a professor of the
Practice of International Development, Harvard Kennedy School in the US,
belongs to this school of thought.

He stressed that agriculture remained the strength of most
African economies, adding that if agriculture was given priority attention in
Africa, the region had the capacity to withstand the vagaries of rising global
food prices.

Mr Juma, who said this at the recent IMF/World Bank Spring
Meeting at Washington DC in the US, stressed that African leaders should focus
their attention and energy on how to use agriculture to foster the region’s
development.

“Agriculture and economy are one and the same, in the sense that
the African economy is driven by agriculture,” he said, adding:

“Therefore, the countries’ ministers of agriculture ought to be
the presidents to enable them to effectively coordinate agricultural activities.”
Mr Juma reiterated that the rising food prices in Africa could be effectively
curtailed if there was a pragmatic focus on agriculture.

Develop agriculture

Sharing similar sentiments, Ngozi Okonjo-Iweala, the managing
director of the World Bank, urged African leaders to focus more attention on
developing their countries’ agricultural sectors, while making pragmatic
efforts to boost food production.

“I think African countries really have to sustain their efforts
to use agriculture funds to ensure food security,” she said.

Mrs Okonjo-Iweala stressed that the global food crisis had been
haunting the world, adding, however, that virtually all the African leaders had
come to realise the pivotal roles of agriculture in efforts to boost the
economy.

Agnes Edmond, an agriculturist, supported Mrs Okonjo-Iweala’s
sentiments but insisted that greater efforts should be directed at expanding
the people’s access to credit facilities for agricultural ventures.

She noted that most African farmers were hamstrung by their lack
of access to agricultural funding, adding that issues regarding the land tenure
system should also be examined.

“Africa has a lot of contentious issues. Corruption should be
checked, the land tenure system should be properly managed, while farmers
should have little difficulties in accessing credit for farming activities,” Ms
Edmond said.

European shares hit
a two-month high in holiday-thinned trade on Monday on optimism the
earnings season will stay strong in the near-term and in a knee-jerk
reaction to news that al Qaeda leader Osama bin Laden was killed.

Mr Bin Laden’s
death in a shoot-out with U.S. forces in Pakistan on Sunday ended a
nearly 10-year worldwide hunt for the mastermind of the September 11
attacks and prompted equity investors to believe global risk threats
might reduce.

Although analysts
said that the positive impact of the news might be short-lived and
focus will soon shift back to economic fundamentals and company
earnings.

At 0735 GMT, the
FTSEurofirst 300 index of top European shares was up 0.3 percent at
1,160.03 points after touching 1,162.05, the highest since early March.
The Euro STOXX 50 — an index of the euro zone’s top blue chips — was
up 0.3 percent at 3,021.50 points.

The UK stock market was closed for a holiday.

“It’s a
psychological and knee-jerk reaction and we have to see how long it
lasts,” said Koen De Leus, strategist at KBC Securities, referring to
the news of Mr bin Laden’s death.

“The market is also
getting support from earnings, which are good. We have some important
economic figures this week that might set the near-term direction.”
Investors awaited the release of the U.S. Institute for Supply
Management’s manufacturing index at 1400 GMT, U.S. jobless claims
figures on Thursday and non-farm payrolls numbers on Friday.

Across Europe,
France’s CAC 40 gained 0.5 percent, while Germany’s DAX rose 0.9
percent to its highest level in more than three years.

“Last week and this
week taken together, more than two thirds of the DAX companies will
report. In these two weeks, the chances for a test of the equity
market’s leeway on the upside will be better than in the weeks to
come,” said Tammo Greetfeld, equity strategist at UniCredit in Munich.

“Going forward, the
newsflow is unlikely to live to high expectations given a number of
burdening factors that have accumulated,” he said, referring to factors
such as a rise in oil prices, more and more central banks raising
interest rates, cyclical indicators which are past their peak, the
catastrophe in Japan and the euro zone debt crisis.

Among individual
movers, Demag Cranes surged 22 percent after U.S. crane maker Terex
said it would launch a takeover offer for its German rival in an 884
million euro bid.

Danish food
ingredients and enzymes maker Danisco gained 4.3 percent after its
board of directors unanimously recommended that Danisco shareholders
accept DuPont’s improved offer for Danisco.

On the downside,
Actelion fell 5 percent after the company said it may appeal against a
jury’s decision in a Californian court to award Asahi Kasei Pharma
Corporation up to $547 million in a dispute with Actelion unit CoTherix.

TNT was down 3.8
percent after reporting a worse than expected performance in its mail
unit, adding to woes in its global express division.

Oil prices fell more than 3 percent on Monday after U.S. forces
killed al-Qaeda leader Osama bin Laden after a decade of military operations
across central Asia and the Middle East.

ICE Brent crude futures for June fell $4.22 to a low of $121.67
a barrel before recovering some ground to trade around $122.85 by 0942 GMT.
Last month Brent hit a 32-month high above $127.

U.S. crude slid $2.40 to $111.53. Early futures market volume
was depressed by a public holiday in Britain and several other countries, which
may have added to price volatility, oil brokers said.

The oil market focused on whether the news would help unwind the
risk premium attached to prices because of war in Libya and unrest in the
Middle East and North Africa.

“There’s probably a knee-jerk reaction to the extent that part
of the geopolitical risk has been supported by al-Qaeda, so there will be an
initial sell-off,” said Jeremy Friesen, commodity strategist at Societe
Generale.

Economists including David Cohen from Action Economics warned
that in the near term, Mr bin Laden’s killing might trigger a violent response
by al-Qaeda, but analysts said it was unlikely the network would succeed in
disrupting oil supplies.

The closest al-Qaeda has been to hitting the oil industry was on
February 24, 2006, when Saudi forces repelled a suicide attack on the Abqaiq
oil-processing centre, the world’s largest.

The U.S. Department of Homeland Security (DHS) and the FBI have
not issued any warning of a credible or imminent threat, but President Barak
Obama warned Americans to remain vigilant.

“Temporary”

Thorbjørn Bak Jensen of Global Risk Management suggested the
initial sell-off was unlikely to last.

“We regard the reactions as temporary as nothing fundamentally
new is really on the table. If anything it might be a good idea to secure oil
costs,” he said.

Oil was already down before the bin Laden news, after NATO air
strikes over the weekend killed one of Libyan leader Muammar Gaddafi’s sons and
industry sources said Saudi Arabia raised output in April.

Mr Gaddafi’s youngest son and three grandchildren were killed in
a NATO air strike, the Libyan government said on Sunday. Britain said that
while it was not targeting the leader, it was homing in on the regime’s
military machine.

“What’s happening in Libya is probably an event that will see
Gaddafi moved out of his position, so the risk premium which relates to Middle
East concerns will start to erode,” said Jonathan Barratt, head of Commodity
Broking Services.

Saudi Arabia’s crude oil output edged back up in April to around
8.5 million barrels per day (bpd) from roughly 8.3 million bpd in March as
demand picked up, Saudi-based industry sources said on Sunday.

The dollar strengthened by around 0.2 percent on Monday
following last week’s slide, deterring investors from piling into commodities
this week and triggering a 10 percent plunge in spot silver prices.

Money managers increased their bets on higher U.S. crude oil
prices to a combined record level in New York and London in the week to April
26, data from the CFTC showed on Friday, as U.S. prices rose to their highest
level since September 2008.

Volatility and uncertainty due to the pan-Arab protests and
Libya’s conflict have tempered oil trading. The U.S. 30-day average volume was
down by nearly 130,000 lots compared with the 250-day average at the end of
last week, Reuters data showed.

Oil prices fell more than 3 percent on Monday after U.S. forces
killed al-Qaeda leader Osama bin Laden after a decade of military operations
across central Asia and the Middle East.

ICE Brent crude futures for June fell $4.22 to a low of $121.67
a barrel before recovering some ground to trade around $122.85 by 0942 GMT.
Last month Brent hit a 32-month high above $127.

U.S. crude slid $2.40 to $111.53. Early futures market volume
was depressed by a public holiday in Britain and several other countries, which
may have added to price volatility, oil brokers said.

The oil market focused on whether the news would help unwind the
risk premium attached to prices because of war in Libya and unrest in the
Middle East and North Africa.

“There’s probably a knee-jerk reaction to the extent that part
of the geopolitical risk has been supported by al-Qaeda, so there will be an
initial sell-off,” said Jeremy Friesen, commodity strategist at Societe
Generale.

Economists including David Cohen from Action Economics warned
that in the near term, Mr bin Laden’s killing might trigger a violent response
by al-Qaeda, but analysts said it was unlikely the network would succeed in
disrupting oil supplies.

The closest al-Qaeda has been to hitting the oil industry was on
February 24, 2006, when Saudi forces repelled a suicide attack on the Abqaiq
oil-processing centre, the world’s largest.

The U.S. Department of Homeland Security (DHS) and the FBI have
not issued any warning of a credible or imminent threat, but President Barak
Obama warned Americans to remain vigilant.

“Temporary”

Thorbjørn Bak Jensen of Global Risk Management suggested the
initial sell-off was unlikely to last.

“We regard the reactions as temporary as nothing fundamentally
new is really on the table. If anything it might be a good idea to secure oil
costs,” he said.

Oil was already down before the bin Laden news, after NATO air
strikes over the weekend killed one of Libyan leader Muammar Gaddafi’s sons and
industry sources said Saudi Arabia raised output in April.

Mr Gaddafi’s youngest son and three grandchildren were killed in
a NATO air strike, the Libyan government said on Sunday. Britain said that
while it was not targeting the leader, it was homing in on the regime’s
military machine.

“What’s happening in Libya is probably an event that will see
Gaddafi moved out of his position, so the risk premium which relates to Middle
East concerns will start to erode,” said Jonathan Barratt, head of Commodity
Broking Services.

Saudi Arabia’s crude oil output edged back up in April to around
8.5 million barrels per day (bpd) from roughly 8.3 million bpd in March as
demand picked up, Saudi-based industry sources said on Sunday.

The dollar strengthened by around 0.2 percent on Monday
following last week’s slide, deterring investors from piling into commodities
this week and triggering a 10 percent plunge in spot silver prices.

Money managers increased their bets on higher U.S. crude oil
prices to a combined record level in New York and London in the week to April
26, data from the CFTC showed on Friday, as U.S. prices rose to their highest
level since September 2008.

Volatility and uncertainty due to the pan-Arab protests and
Libya’s conflict have tempered oil trading. The U.S. 30-day average volume was
down by nearly 130,000 lots compared with the 250-day average at the end of
last week, Reuters data showed.

An Abeokuta-based
legal practitioner and former member of the Ogun State House of
Assembly, Benjamin Ogunmodede raised alarm that some foreign investors
in the state are in the habit of dislodging rural dwellers under the
guise of bringing development projects to the communities.

“Our rural
inhabitants are being cheated and dislodged from their inheritance and
God-given gifts by Chinese and other foreign investors and their
Nigerian collaborators,” Mr Ogunmodede said.

He made the
revelation while delivering a lecture on the topic, ‘Environmental
Degradation in Some Rural Communities and Adverse Effect on The Rural
Inhabitants’ as part of the second session of the 12th Synod of Egba
Anglican Diocese, held at the Bishop’s Court, Abeokuta on Sunday.

Mr Ogunmodede
revealed that the foreign investors engaged in the act in collaboration
with some Nigerians serving as partners, commission agents,
facilitators or land speculators. He said the communities which were
affected included Osiele-Odere, Ilawo in Odeda local government area,
Oko-onigari, Obale, Kajola and Oloparun in the Obafemi Owode local
government area, all in Ogun State.

“They enter rural
dwellers land containing rocks, paying them a pittance or at times
intimidating them that government is the owner of the land and they can
only be paid little or nothing for their crops on the land and not
minerals on it, whereas the position of the law is that whatever
attaches to the land belongs to the owner,” Mr Ogunmodede stated.

He added that the
so-called projects had been causing serious damage to farmland, crops,
and led to the collapse of houses in different villages due to soil
earth vibration and splinster of rocks that fall on houses in the
villages where rocks and quarry sites are located by the crushing
companies.

“I am aware and can
confirm to you that some villages have been completely sacked or
rendered desolate and abandoned due to quarrying activities, whereas
there should be corporate social responsibility by the investing
companies to provide alternative,” Mr Ogunmodede said, adding that the
situation persisted because the affected communities do not have
knowledgeable people like relevant professionals to negotiate on their
behalf, thus the result is “serious and monumental cheating of our
rural inhabitants”.

The management of Nigerian National Petroleum
Corporation (NNPC) has said there are sufficient petroleum products in the
country.

The Group General Manager, Public Affairs
Division of NNPC Levi Ajuonuma, said in a statement in Abuja on Monday said:
“NNPC has well over 39 days sufficiency of PMS and other Petroleum products in
stock.”

The statement urged petroleum tanker owners to
release their trucks for the loading of products at various depots. “The NNPC
wishes to inform Nigerians that the rumoured hike in the price of PMS by the
federal government is false and a mere figment of the imagination of detractors
of the nation.

“The corporation also urges petroleum tanker
owners and drivers to resume loading of petroleum products in order to avoid
any artificial scarcity of the products,” the statement added.

It advised the public to desist from engaging in
panic buying of products as the corporation worked hard to end the artificial
scarcity created by the rumour. Following the fear created by the rumour, long
queues have re-emerged at filling stations around the country.

The director-general, Nigerian Civil Aviation Authority (NCAA),
Harold Demuren said on Monday that the Billing and Settlement Payment (BSP)
system had created more job opportunities in the country’s aviation sector.
He said that the BSP which was introduced in 2008 had also restored
confidence in local travel firms.
BSP is a system designed to simplify selling, reporting and
remitting procedures of the International Air Transport Association (IATA)
accredited passenger sales agents, as well as improve financial control and
cash flow for BSP airlines.
Before its introduction in Nigeria, major airlines required each
travel management firm to produce bank guarantees and performance bonds for as
much as N30 million, thus forcing many to go out of business.
“BSP has restored confidence and mutual trust between members of
the powerful airline cartel and local travel management firms. There has been
tremendous progress since it was introduced,” Mr Demuren said. “Our travel agencies
were almost dead. The foreign airlines were killing them. We fought that battle
and we won. Today, we have the strongest downstream in the aviation sector, the
travel agency system.”
Mr Demuren, who worked with IATA and the International Civil Aviation
Organisation (ICAO) to introduce the system in Nigeria, said BSP was good for
the country.
“Globally, 400 airlines in 160 countries are in the BSP system,
with sales in 2010 exceeding about 200 billion dollars,” he said.
He said more than 26 airlines operating in Nigeria, including Air
Nigeria and Arik Air were also members of the BSP.
Mr Demuren disclosed that the BSP had also brought integrity into
travel management business by protecting airlines against loss of revenue.
“It has helped to reshape the future and fortune of one of the very
important segments, which is often described as the engine of the downstream
sector of the aviation industry. The BSP operations in Nigeria are a big boost
to the government’s desire to protect the downstream sector of the economy and
encourage the growth of travel agencies,” he said.

The Standards Organisation of Nigeria (SON) has given a
one-month ultimatum to manufacturers and importers to remove substandard
products from circulation. Joseph Odumodu, the director-general of SON, gave
the charge in Lagos while unveiling his five-point agenda which was aimed at
tackling the influx of substandard products into the country.

He said that his agenda was to ensure that agricultural products
and locally made products meet international standards. Mr Odumodu urged local
and foreign manufacturers, importers and vendors to comply with this directive
or face the wrath of the law. According to him, after the expiration of the one
month ultimatum, products entering into the country must have a certificate of
free use from the country of origin, in addition to the Conformity Assessment
Programme (SONCAP) of SON.

“Products not good enough for citizens of the producer countries
must never again be dumped on Nigerians because we do not question what we buy.
We have had enough of the idea that Nigeria importers always request for lower
standards from the producers,” he said.

According to him, through proper monitoring of all ports of
entry, SON will also insist that importers of goods and their agents bring in
goods that conform to standards.

He explained that after the expiration of the one-month notice,
vendors of substandard goods would be made to prove how such goods came into
the country.

He said that SON had worked out plans that would ensure that
such foreign manufacturers were blacklisted from exporting goods to Nigeria.

Mr Odumodu said that SON would send a bill to the National Assembly to
ensure that unscrupulous importers were made to pay compensation for importing
substandard products.