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Buhari announces tour of southern states

Buhari announces tour of southern states

The Congress for Progressive Change (CPC) says it has established strong political base in the three geo-political zones in the South just as it has done in the north ahead of the 2011 general elections.

The party also said that its leader, Muhammadu Buhari will soon begin a tour of the states in the south to commission its secretariat and meet its supporters. CPC spokesperson, Dennis Aghanya, who stated this in a statement on Tuesday, said that not only have some clergymen in the south begun to campaign for Buhari, elites and community leaders in that part of the country have also accepted the party’s programmes and manifesto. He added that it was as a result of this general acceptance in the south that the party is consolidating its alliances with all the political parties it has entered into talks with.

The CPC,which was founded early this year by Mr Buhari after he left the All Nigerian People’s Party (ANPP), has reportedly gained wide acceptance in the northern part of the country. Mr Buhari, who is also the chairman of the party’s Board of Trustees, will soon embark on tour of the southern part of the country to commission its secretariats as well as meet its supporters in the zones. “As steps towards consolidating our presence in the south, our leader and chairman of Board of Trustees, Gen. Buhari, will soon embark on tour of the south to commission our party secretariats and also meet with the teeming supporters of the party in the zones of the south,” the CPC spokesman, said.

“The Congress for Progressive Change, CPC, has a very strong political spread in the South just as it does in the North. Very recently, fire brand clerics from the Southern part of the country are the ones now canvassing support for our party and our leader Gen Muhammadu Buhari because of the truth and the commitment which is evident in our party’s programs and manifesto,” Mr Aghanya said.

“We as a political party are committed to the cause of impacting positively on the life of Nigerians. The deceit by other political parties, especially the PDP, is something that requires urgent attention if actually we meant well for our society. This is why the elites, clergies, community leaders and an average Southerner have whole heartedly accepted ‘the gospel according to the CPC’.

To conquer the South

“Our party is moving very swiftly into the Southern part of the country to consolidate our presence just the way we have done in the North. That is why we are consolidating our alliances with all the political parties that are discussing with us, especially those with strong political base in the South.” Mr Aghanya also said that in the South East geo-political zone, more prominent politicians have joined the CPC, but added that their identities would not be revealed now for fear of being hunted by the governments in power in the zone.

According to him, in Enugu State, apart from the governorship and state house of assembly aspirants, the party also has over five senatorial aspirants while nine others planning to go to the House of Representatives.

In Anambra State, the CPC spokesman said over 50 candidates have picked expression of interest forms to contest the councillorship election in the forthcoming local government elections while 19 others have indicated their intention to contest the chairmanship election. Mr Aghanya also said that the party has not only established offices in the South West and South-South geo-political zones,it has candidates for all the elective positions in most of the states in the zones.

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ENVIRONMENT FOCUS: Searching for Africa in Nigeria

ENVIRONMENT FOCUS: Searching for Africa in Nigeria

I magine a British citizen arriving in Nigeria on Friday night for the first time. He is perhaps welcomed by an immigration officer whose name is Charles, then has his baggage inspected by a customs official, William and later checked into Newcastle Hotel, but has been told there are other good hotels in the country – Liverpool, Chelsea, Bolton, Bristol and Hawthorne. Coming from Manchester, he feels somewhat left out.After a beer by the poolside next morning, our visitor is alarmed by loud noises from cursing and fighting nearby. Frightened, he quickly requests the hotel management to check him out.

The manager calms him down, “Oh it’s these hooligans, these football fans, Manchester United supporters fighting with Arsenal fans! We see that every Saturday.” The visitor is shocked beyond belief, cannot comprehend what he has just heard – Arsenal and United fans fighting in a place called Nigeria! And maybe none of these guys had ever been to England before, never visited Old Trafford or the Emirates! What kind of people are these Nigerians! Later, Henry, the steward brings in his tea, but cheekily hangs around for a minute, watching the football match on the TV in his room, then leaps in the air, overjoyed, as Sunderland score against Chelsea.”So, who are you supporting?” the Englishman inquires. “Sir, I’m a Man U fan!” The visitor is totally lost for words, but still makes a call to his family back in the UK to tell them what is going on.

Reading about Nigeria before falling asleep, he makes a stunning discovery that keeps him awake – the country has been a sovereign state, independent from British colonial rule for 50 years! When foreigners come here, they are actually disappointed and disgusted at the painful attempts by Nigerians to measure themselves blindly by the culture and norms of the former colonial master without any sense of decency and self-respect.Festivals of art and culture in Nigeria were started by the British during colonial times, in appreciation of the people’s rich heritage which dates back over 2000 years. The partial result is that some of Africa’s most famous writers, sculptors and painters come from Nigeria. Ignorant post-colonial administrations have turned the country into a caricature of Europe or anything else but Africa.

We are yet to see the dividends of the 1977 FESTAC.In the early 1990s, Wole Soyinka commented that Abuja was disappointing in not reflecting Nigerian culture. The Nobel Laureate may be interested to know that Bala Mohammed, Minister for the Federal Capital Territory is presently preparing the award of a contract for the construction of the Abuja Town Centre to a US firm in Dallas.

Is this minister telling us there are no artists and architects in Nigeria to design and execute anything purposeful and culturally unique?

Know thyself

Bala Mohammed and our other leaders must also understand that for security reasons, it is not prudent to have the detailed architectural designs of built-up environments in a country – airports, air force bases, naval yards, highways, power stations, factories, central banks, mints and security printing, radio and telecommunications stations, ministries, presidential lodges, and prisons in the safe-keeping of foreigners.Most of such documents on Nigeria are already in the vaults of Julius Berger at their head office in Wiesbaden, Germany.

If the objective of development in this country is to emulate the industrialized world, Nigerians would prefer our governments to provide healthcare, water, electricity, food, jobs and schools, just like in Europe and America, instead of constructing massive concrete and glass houses in anci

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Opposition parties reject proposed amendment

Opposition parties reject proposed amendment

More opposition parties have condemned the proposed
amendment of the Electoral Act 2010 to include members of the National
Assembly in the National Executive Committee (NEC) of their respective
parties.

Two separate bills are currently before the Senate
and the House of Representatives seeking the amendment of Section 87 of
the Act to make the 469 federal lawmakers part of the NECs of their
parties. The NEC is the highest decision-making organ of the 63
recognised parties.

While sending goodwill message to the Muslims in the
country on the occasion of the Eid-el-Kabir celebration, the Citizens
Popular Party (CPP) said the proposed law is an attempt to undermine
the democratic process.

A statement by the CPP’s national chairman, Maxi
Okwu, said the bill, which has scaled through second reading in both
chambers, is not only provocative, but an affront on the collective
will of the people. It asked Nigerians to resist the bill because it is
self-serving.

“CPP condemns the National Assembly attempt to
undermine our democratic process by pushing for a Bill that will make
them automatic members of the National Executive Committee of their
respective political parties,” the statement said.

The party also called on all eligible Nigerians to
participate in the January 2011voter registration, stating that a
credible voter register is the foundation of a transparent and
acceptable election. It added that the 2011 polls will provide
Nigerians another opportunity to vote for credible, purposeful, and
responsible candidates who will govern the country with the fear of God.

Also in a statement yesterday by its national
chairman, Ngozi Emioma, the Nigerian People Congress (NPC), condemned
the proposed bill, describing its introduction as legislative
rascality. It noted that while Nigerians are yet to recover from the
huge pay rise the lawmakers got, they are planning to impose themselves
on their parties as members of the NECs.

“It is outrageous and should be condemned and stopped
before our legislators turn themselves to tyrants and oppressors of the
people they were elected to serve,” Mr. Emioma said.

The NPC national chairman asked the lawmakers to withdraw the bill
immediately, just as he reminded them that leadership is a serious
responsibility and the distraction must stop. The party, which
congratulated Muslims on the celebration of Eid-El-Kabir, urged
“Nigerians to use this occasion, which coincides with the country’s
Golden Jubilee and the forthcoming general elections, for sober
reflection and prayers for a united and prosperous democratic nation.”

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Uneasy life of private security guards

Uneasy life of private security guards

Approaching
eateries and banks in Lagos and other parts of the country, security
operatives in uniforms, popularly known as corporate guards, have
resorted to making ends meet by asking customers for tips.

Some of the guards told NEXT this was to help them cope with their pay.

“We are still here
because there are no other jobs for us to do”, one of the guards said
last week in Lagos on condition of anonymity.

“I have worked for
over 20 years. My salary was 300 naira when I started. Everything was
good then. They even negotiated with clients to increase guards’
salary. Now, all of that had stopped, especially now that they have
more clients. No medical and retirement benefits. You are not allowed
to go on leave, and nothing is given to you when your appointment is
terminated. It took me over twenty years to be able to earn N20,000 as
monthly pay. For over five years now, some guards have not received
increase in pay. This is modern slavery.”

The complaint of
the guards is almost the same. It is either of poor salary as a result
of their company taking too much percentage from what the clients are
paying, or absence of benefits.

Some of the guards
working with Real Assets, Halogen Security Limited, and Prudential
Guard also complained of late payment of salary and jostlings to be
posted for proximity advantage.

A former corporate
guard, Ejiro Abuwa, mourned what he called “marginalisation of
corporate guards in the country.” Mr. Ejiro, who divided the private
security companies into two: namely, downstream and upstream sectors,
said there is no future for any one working as a corporate guard under
private contract agreement.

‘I worked with two
security outfits for 16 years. I started with Amnesty Security and I
was with them for five years; I later left to join Prudential Guard,
for which I worked within the capacity of security operative to
supervisor until the time I left,’ he said.

‘One of the reasons
I left was poor condition of service. No matter the time you put in,
there is no pension; there is no gratuity. Up-stream simply means: the
owners of the security outfits who handle the administrative
departments where you have the CEOs and the Managers.

“And then you the
down-stream, where you have the guards and their supervisors. Wherever
the guard is posted, the client has no interest in him. If he sustains
injury in the line of duty, he is on his own. Whatever the client does
for him is on a compassionate ground,” Mr. Ejiro said.

One major issue
that is pathetic in Mr. Ejiro’s story is the high level of
confidentiality between the security outfits and their clients in
concealing vital information from the guards in order to deny them due
benefits.

According to him,
some unscrupulous officials of both the security outfits and their
clients connive in disguise of confidentiality in order to rub the
ignorant guards of their entitlement.

Mr. Ejiro calls on
government and the relevant agency in charge, the Nigerian Security and
Civil Defence corps (NSCDC) to, as matter of urgency, implement
policies to help strengthen the sector.

Another former corporate guard, Samuel Yenki, laments what he called “high level of corruption’ in the sector.

“I worked with a
security firm for over ten years. I left when I learnt the client was
paying N18,000 for my head, and the company was paying me N6,000. A
friend of mine suffered a similar fate,” he said.

Better monitoring needed

The managing
director of Coast Land Security Safety and Consultancy Services Nigeria
Limited (CSSSNL), Chris Utulana, admitted that some private security
companies are indeed enslaving their employees in order to enrich
themselves.

He said the NSCDC is currently working to ensure a better working environment for corporate guards in the country.

“I know that they
are working hard to establish the Association of Private Security Guard
of Nigeria (ASPN), that is going to be the umbrella body of all the
security companies in Nigeria. Very soon, the security employment
bench-mark will be out,” he said.

Mr. Otulana, who is
a retired colonel in the army, however, advised guards to bear in mind
that, in case of losses and theft, it is the security company that is
liable, and not the guards.

“A good security
company pay taxes, pay up to N500 to the Civil Defence per corps.
Including other administrative causes the guards are not aware off. In
the case of theft, the company is responsible not the guards,” he said.

The director
general of the International Institute of Professional Security (IIPC),
Tony Ofoyetan, said a professional security company should not pay a
guard less than 65 percent of what the client is offering.

“In terms of the
industry itself, we have the Private Guard Company Acts, 1996. The
essence of that Act is to tell who is qualified to run a private guard
company. The Act also prohibits foreigners from running a private guard
company in Nigeria,” he said.

Reacting to the
‘modern slavery’ allegation by some of the guards, Mr. Ofoyetan said it
was lazy for guards to say they are being enslaved and still remain in
enslavement.

“It is a bad staff
that will go to the extent of running his organisation down. Have you
ever bothered to ask yourself, what is the qualification of the person
that said he is been enslaved?”

Mr. Ofoyetan,
however, admitted that there were some bad eggs among the private guard
companies, whom he said “are not professionals, but called themselves
‘CEO’, and are in the sector to make quick returns of investment.”

In a swift
reaction, the Chief Superintendent Corps (CSC), NSCDC, in charge of
private guard company, Ray Ekwueme, said that some private guard
companies had been closed down as a result of fall in standard of the
NSCDC.

“We are working
towards a better condition for the guards. We encourage them to always
come to us with useful information that can help arrest the situation.
There are rules governing private guarding; medical benefit for guards
is compulsory. The board of a security company must have military
personnel on its board. Licences had been seized in the past as a
result of non compliance in these areas,” he said.

Be glad for the work

On the issue of
percentage to be paid out to guards, Mr. Ekwueme said a decision has
not been reached on that because the clients do not pay the same amount.

“If we should say
65 percent, how do you settle guards whose clients are paying N20,000
per month or less? It will amaze you to know what some of these big
companies pay for guard! We are currently on a structure of N10,000
minimum wage, no matter how low the client is paying. No guard should
earn less than N10,000 per month.”

The managing
director of Halogen Security Limited, Wale Olaoye, dismissed the claim
of non medical benefits by Halogen guards, adding that such guards must
be ‘‘fake Halogen officials.”

“We have Health Management Organisation (HMO) and Retaining Hospitalisation (RH) programmes,” he said.

Though some guards
with a bank complained of been given N10,000 annual medical allowance,
NEXT investigation shows they seem to be working in paradise when
compared to their counterparts serving in sectors such as telecoms,
some embassies and banks, with the exception of Zenith Bank, whose
guards are said to be well taken care off.

The Head of the
Security Unit (HSU) at GTB, Sina Borisade, said the company has a
structure on ground that would be improved on from time to time.

“We take guards from the Nigerian Legion,” he said. “We tell the
Legion what we want and an agreement is reached. I think we have been
able to manage our guards well, and we will consolidate on that,” he
said.

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‘Return to class or quit’

‘Return to class or quit’

Angry that striking
workers of the Abia State University, Uturu have refused to shift
grounds, the state governor, Theodore Orji advised all those
dissatisfied with the conditions of service at the institution to quit.

The governor said
this during a meeting between the state government and major interest
groups in the state seeking to find ways of ending the three-month-old
strike.

Mr Orji said
efforts by his government to ensure that striking staff unions return
to work have been rebuffed by the unions’ leadership, which was why he
decided to invite religious leaders to wade into the matter.

He said federal
institutions are there for lecturers who feel they can no longer stay
in ABSU and called on the lecturers to make concessions towards
resolving the strike in the interest of the students.

The governor said
he had promised to pay 100% of the agreement reached by the unions with
effect from January next year adding that if the unions insist that the
arrears must be paid, he would have to revert to paying only 50%.

He said other
sectors of the state economy must receive attention, adding that the
state has two other tertiary institutions that must also be attended
to. As part of efforts to resolve the impasse, the stakeholders,
including parents, students and the university management arrived at
the conclusion that the striking staff should call off the strike and
accept the state government’s offer.

No wage increase

They equally
agreed that the new wage increase would require an increase in fees
paid by students, but that the increase should not be such that parents
would be forced to withdraw their wards from school as such action
could lead to crime, prostitution and other social vices associated
with frustration and idleness.

The pro chancellor
of ABSU, Joshua Ogbonnaya gave an overview of the steps so far taken by
government to resolve the imbroglio. Bishops and other religious
leaders suggested that a meeting be convened between them and the
striking unions to try to resolve the issues involved.

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Mortgage sector struggles for survival

Mortgage sector struggles for survival

Damilola Adegoke, a
writer, says he was discouraged by the procedure he was told to go
through before he could obtain a mortgage.

“I was asked to
first open accounts and save with the bank. They said after that, I
would be entitled to a mortgage of N5 million. I was told it was a 60
year repayment plan, and that you deduct your present age from the 60
years, within which you must finish the payment, so for instance, if I
am 30 years, I must repay the N5 million within 30 years. The
percentage they told me to pay annually, I think 20 per cent of the
borrowed sum, when I added it up, I saw that it amounted to about N12
million or more.

“That apart, I was
told categorically by the managing director of the bank that there was
no guarantee I would get the loan, I would just submit the form and
hope that it would be granted. I was told everything is based on
probability” Mr. Adegoke said.

Such is the tale of
about 80 per cent of mortgage applicants in Nigeria, a nation with a
weakening mortgage sub-sector which can barely create 10, 000 housing
units per annum. The nation is short of about 15 million housing units
to meet the demands of its citizens and would have to create about 700,
000 housing units in 20 years, if it would address her housing
challenges, according to Kola Ashiru-Balogun, an investment officer at
ARM, an asset and investment firm in Lagos.

Mr. Ashiru-Balogun at a recent conference added that banks have no appetite to lend to the mortgage sector.

However, in
recognition of the importance of the housing sector, and considering
that banks have ready access to cheap sources of funds through retail
deposits as well as the infrastructure to process real estate loans
efficiently and the skills to manage the risks involved, the Central
Bank has encouraged banks to support the development of the housing
sector in Nigeria.

Inadequate Funding

The Central Bank
has through its credit policies, required the erstwhile commercial and
merchant banks to allocate a stipulated minimum proportion of their
credit to the housing and construction sector.

According to the
Central Bank, available information reveals that the supply of credit
by the Federal Mortgage Bank of Nigeria is grossly inadequate to meet
the growing demand.

“With regard to
cooperative societies and state/municipal governments, evidence seems
to suggest some increase in the level of funding although, there
appears to be a lull in recent times owing to inadequate funds.

The lingering
challenges of mortgage financing in Nigeria includes low interest rate
on National Housing Fund, the hitherto high inflation rate negatively
affecting the macroeconomic environment, non-vibrancy of some primary
mortgage institutions, cumbersome legal regulatory framework for land
acquisition, The structure of bank deposit liabilities, among others.

“We need long term bond in this mortgage sector, I strongly believe Lagos State can champion this,” Mr. Ogunniran advocated.

Kelechukwu Mbagwu,
an executive member, Real Estate Developers Association of Nigeria,
(REDAN) said if builders can build with cheaper funds, it would be more
suitable for them to approach lenders.

Borrowers have
issues too Some experts say all the blame should not be put on the door
of the banks or lenders as some borrowers do not meet the requirements
to access such loans.

“The reality of the
matter is that for access to mortgage finance, usually, you would be
required to have a part funding. Most people who want to access
mortgage in this country do not have the capacity to provide the bank
part funding, so that is a major constraint. The second is collateral.
It poses very serious challenge to lenders” Abimbola Olayinka,
President, Primary Mortgage Institutions, (PMI) Association said.

Mr. Olayinka added
that unless the right environment is created to have the level of best
practice as seen across the world, the sector cannot really attract
investors.

“As it is now, the
system that we run is people driven, we have to get to a level where
mortgaging will be process driven. It should get to a stage where it
would no longer be, I know a friend who can help get this done within
the shortest time. All those long procedures must be cut down” he said
adding that there are so many bottlenecks in this present procedure,
“We have to create a smooth, formal transparent system”.

Another issue is
acquisition of land which takes a longer period in Nigeria. Processing
title and getting the required papers, especially certificate of
occupancy is not a simple matter. Hakeem Ogunniran, managing director,
UACN Property Development would be happier if it does not take more
than three days to acquire land and finish the processing of papers.

Striving forward

Some experts say
the financing of national housing programmes should be viewed primarily
as a national responsibility while the private sector should be
encouraged to provide actual investment funds for housing middle income
and upper income groups.

A Central Bank
report says empirical evidence shows that private sector participation
in housing is the most assured way to induce stability in the market.

“The housing fund
contribution should be integrated into the personal income taxation
system such that a defined proportion of taxes paid are allocated to
the housing fund pool, as it is done in Singapore. There is need for
constant re- engineering of the capital and money markets in order to
cope with the renewed challenges of provision of some mortgage
financing. In this regard, the restructuring and strengthening of the
FMBN becomes imperative for it to remain a viable financial institution
with the capacity to enhance efficient housing finance development in
Nigeria” Joseph Sanusi, a former Central Bank governor, said in a
report titled Mortgage Financing in Nigeria, Issues and Challenges of
2003.

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Odds against doing business in Nigeria

Odds against doing business in Nigeria

A recent World Bank
report on the ease of doing business in Nigeria paints a picture of an
economy that is in dire need of reforms. According to the report, there
are several constraints to local business activities in Nigeria, chief
of which are the limitations for small to medium-size domestic firm to
thrive. The report focused on the aspects of starting a business,
dealing with construction permits, registering property, and enforcing
contracts.

In these areas,
Nigeria is still a long way behind. In enforcement of contract, it
requires 40 procedures and 457 days to achieve, while it takes up about
32 per cent of the income per capita of the population. To set up a
business for instance, would require about N118, 557. The report
however singled out Jigawa, Borno, and Gombe as states where there have
been improvements in the ease of doing business index. Doing business
was most difficult in Imo and Ogun states.

Improving
regulations Empirical research by the World Bank shows that improving
these regulations has positive effect on economic growth. “If Nigeria
adopted nationwide all of its states’ best practices identified in this
report, it would rank 72nd out of 183 economies globally, 53 places
ahead of Nigeria’s position in the global Doing Business 2010 report,”
the reported stated.

According to the
report, “Doing Buisness 2010 Nigeria” our country slipped in the global
ranking from 134th position last year to 137, behind South Africa,
Botswana, Tunisia, Rwanda, Ghana in Africa, on the grounds that it is
increasingly more difficult doing business in the country. The report
is supposed to engender reforms economic competitiveness among
countries. “But for reform-minded governments, how much their
indicators improve matters more than their absolute ranking,” the
report stated.

It challenges
countries to strengthen and add to regulations to protect investor and
property rights and find more efficient ways to implement existing
regulations and cut outdated ones. “One finding of Doing Business:
dynamic and growing economies around the world continually reform and
update their regulations and their way of implementing them, while many
poor economies still work with regulatory systems dating to the late
1800s.” Olusegun Aganga, minister of finance said recently that
government was concerned about the condition of doing business and that
is why it met with key operators to find out what their problems are.
“What we are trying to do is to find out what the issues are and what
government can do. We met with the banks and asked what we need to do
in order for them to start to lend to the real economy. There are a
number of things we need to do. One is legislative that we need to
change the Land Use Act, Evidence Act and Bankruptcy Act. Second thing
is establishment of commercial courts.” Mr. Aganga said two of these
documents are already with the National Assembly for deliberations in
order to help improve the ease of doing business in the country.

Manufacturing
challenges are many David Kliegl, general manager of the Federal Palace
Hotel and Casino, said in a recent interview that Nigeria is a
difficult environment to do business. Mr. Kliegl said, “It’s difficult
to do business in Nigeria. We run our generator 24 hours of the day and
that is very expensive. We have to estimate that in the cost of doing
business since we can’t cry about it.” “If you want to do business
here, you just have to live with these challenges,” he added. He would,
however, love to see a better Nigeria. “We’ll love to see stable power.
We believe that by being good corporate citizens, paying the taxes that
are due to the authorities, those funds will be used for the quick
provision of power and other basis infrastructure which would enhance
business and investments opportunities in the Nigeria.” “We are
investors in Nigeria and we understood what it took to do business
here. We are happy doing business in the country and we also want to be
a part to ensuring that infrastructure continues to get rectified
hereby attracting more investors,” Mr. Kliegl added.

Doyin Salami, a
member of the Monetary Policy Committee (MPC) of the Central Bank of
Nigeria (CBN) said there is need for synergy between the various
sectors of the economy. One way of doing this, according to him, is to
remove the Land Use Act out of the constitution so that it becomes a
policy issue rather than a constitutional matter which is cumbersome to
review. “The Land Use Act must be reorganized such that it makes
verification and transfer of title easy. Currently, farmers cannot
pledge land which is why banks are not willing to finance agriculture.”
Mr. Salami said it is ironic that agriculture, which contributes about
42 per cent of the GDP, does not attract credit from banks due to the
distortion in the Land Use Act which requires the consent of the
governor before deed of title is issued.

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Foreign reserves pressure continues

Foreign reserves pressure continues

The end to the fall
of Nigeria’s foreign reserves may not be anytime soon as factors such
as strong demand for foreign exchange, year end expenditure, and
elections are predicted to still take a toll on the funds.

“A nation’s
falling foreign reserves has two levels of influence on the economy”
Biodun Adegboye, an economist and lecturer at the University of Lagos
said.

“It affects both
the external and the internal economic situation of a nation. Anytime
we have depletion, a country loses its credit worthiness, both
externally and even internally. Countries that would otherwise have
borrowed such an economy funds would become jittery and reluctant to do
so.” Mr.Adegboye also said such a country loses its confidence in
economic viability.”Look at China; they are seeking ways to grow their
foreign reserves. It’s over $1 trillion already. The advantage and
significance of a strong and solid foreign reserve base is to be able
to contain any external shock that may affect the smooth running of the
system. Let’s assume that there is an external shock and the country
cannot generate funds, how do we then push the budget demands and
balance its forecast?”

“In recent times,
we were told the existing foreign reserves can cover about nine months
of imports but at this rate, we cannot say this is what will happen.
The lower the months that can be covered however, the worse for an
economy.”

No cause for worry

A source at Eco
Bank however says there is no cause to worry or panic at this stage.
“The government have been embarking on some high revenue projects. Take
the power initiative for instance. We cannot say that because we want
to save money, we cannot invest in projects that would better the lives
of Nigerians. We must use our money to achieve these things. The issue
is that they should just be fair and sincere in their approach.

“The oil price is
high and encouraging. The country would always make money. Personally,
am not really worried about this. I believe that if indeed this money
is invested wisely,even if the accounts are down now, in a few months,
we should be able to build it up, to any reasonable level we desire” Mr.

Adegboye further
said that, “internally, what those funds are spent on is very
important. If they are spent on consumer goods, increase of salary, or
any such that increases the purchasing power of the residents of such
economy, it can overheat the economy and then lead to inflation and we
all know the implication of that”.

“On the other hand,
if such funds are spent on critical infrastructure, like creating good
roads, power, transportation, human empowerment, education and the
sort,then it would have a long run positive impact on the economy so
the question is what has the government been spending these funds on?”
he said.

Nigeria’s external
reserves have been falling at a rate at which experts say calls for
caution. In October, the nation’s foreign exchange reserves fell 15 per
cent to $34.57 billion compared to $40.75 billion at the same time a
year earlier.

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Bond market impact of Nigeria "bad bank" seen muted

Bond market impact of Nigeria "bad bank" seen muted

Plans by Nigeria’s
“bad bank” to issue bonds in tranches to absorb bad loans from the
banking system will help limit the impact on the fledgling debt market
but yields and interest rates could still rise.

The newly formed
state Asset Management Company (AMCON) plans to issue zero-coupon bonds
in five tranches to absorb bad loans from nine banks rescued last year
in a $4 billion bailout. The aim is to help recapitalise the rescued
lenders and restore lending in sub-Saharan Africa’s second-biggest
economy. AMCON will issue bonds through the Debt Management Office
(DMO) to buy non-performing loans with a face value of 2.2 trillion
naira ($15 billion), although it has told bankers it expects to pay
around 800 billion naira for the assets.

It will also bring
the lenders’ negative shareholders funds to zero by injecting 1.7
trillion naira, before new investors come in to restore them to minimum
capital adequacy levels.

AMCON plans to
issue a 3-year zero-coupon bond, the first tranche of the series, by
the end of the year and replace it at maturity with a 7-year bond.
AMCON bonds will have the characteristics of sovereign bonds and can be
discounted by the central bank for cash. “The first 25 percent of the
bonds issued to the banks can be discounted with central bank, and the
balance traded for liquidity at the over-the-counter market (OTC),”
Vetiva Capital said in a note to investors following a meeting with
AMCON. Brokers said AMCON had consulted on the impact of issuing such a
large amount of bonds. The decision to issue them in tranches will
stagger the impact on the debt market, which is still largely dominated
by government bonds. “Actual asset purchases will only be in the region
of 0.8 trillion naira, so liquidity impact once the AMCON gets going
(is) more muted,” said Razia Khan, head of Africa research at Standard
Chartered Bank. Nigeria has raised just over 1 trillion naira in
government bond issues over the past 10 months.

Pressure on yields

Some analysts see
the impact on the debt market as limited because AMCON will raise bonds
to buy non-performing loans from banks which could then sell the bonds
for cash, meaning that the liquidity remains within the banking system.
“Even though money is being raised from the system, the bulk of that
money would go back to the system,” said Sonnie Ayere, head of
Lagos-based investment bank, Dunn Loren Merrifield.

But other analysts say AMCON’s activities could raise bond yields
and interest rates, with pension funds and banks lacking the levels of
liquidity needed to absorb such a large issuance. “If all the banks
decide to sell AMCON instruments to the market at once, it remains to
be seen whether the absorption capacity would actually exist,” said
Samir Gadio, emerging markets strategist at Standard Bank. If the
supply of bonds increases sharply without a corresponding increase in
liquidity to absorb, yields and interest rates could rise. “In the
absence of the central bank increasing liquidity in the system, an
increase in bonds through AMCON in the market place will increase
interest rates,” said Malcolm Gilroy of investment firm Afrinvest West
Africa.

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Exchange interim administrator clocks 100 days

Exchange interim administrator clocks 100 days

An assessment of
the administration of the interim head of the Nigerian Stock Exchange
(NSE), Emmanuel Ikazoboh, after 100 days in office, produced mixed
results amongst some market operators.

While some analysts
said Mr. Ikazoboh’s administration may not have done much, it has
however, continued to challenge quoted companies on quick submission of
their financial results, which helps investment decision.

Meanwhile, some shareholders said his 100 days in office “has not been merrier” to them.

Olugbenga Emmanuel,
a finance analyst at WealthZone Company, a fund management firm, said,
“One thing you cannot take away from his tenure is the rate and manner
in which (quoted) companies are presenting their quarterly and annual
financial accounts to the investing public. Even those that cannot meet
up have had to write the Exchange for permission.”

Mr. Emmanuel said
in the past, companies abuse such, adding that “portfolio managers
don’t see reports until we cry and shout on these companies. And such
delay in results ends up affecting our investment decisions.”

Market experiment

But a stockbroker,
who pleaded anonymity, said some of the current decisions taken by Mr.
Ikazoboh’s administration “suggest that he is only experimenting with
the market and taking orders from the Securities and Exchange
Commission (SEC).”

Sunny Nwosu, the
national coordinator of the Independent Shareholders Association of
Nigeria (ISAN), said the Stock Exchange has continued to work in
phobia.

“They don’t know
whether they are doing the right thing or the wrong thing. So as a
result of that, they’ve been very jittery, and that is why they
continue to make more mistakes,” Mr. Nwosu said.

He said it is a
mistake on the part of the NSE to plan the introduction of a 10 percent
appreciation or depreciation in equity prices.

“All they are
trying to do is to say during our period we were able to move the
capitalisation of the capital market to the greater height; whereas, on
the same line, it could pull down and erase every gain that the stock
exchange is presently enjoying,” he added.

Shareholders not happy

Mr. Nwosu said the
other negative side of Mr. Ikazoboh’s tenure is the merger of Benue
Cement Company (BCC) with Dangote Cement.

“BCC was consumed
by a company not known on the list of quoted investment in capital
market. In doing that, the shareholders of BCC were all cheated,” he
said.

He said
shareholders were never informed about the merger at the company’s
annual general meeting two months after Dangote Group got a court order
for a merger with BCC.

“The process simply was manipulative and a breach of the normal merger procedure,” he added.

“It was unfortunate
that the Stock Exchange led by Ikazoboh allowed that to happen. He has
compromised every standard trying to achieve a higher capitalisation.
Even the almighty SEC also allowed that to happen. It’s a very bad
example of his tenure. His 100 days has not been merrier to us,” Mr.
Nwosu further said.

Market down

Meanwhile, the
value of equities at the capital market, which plunged last Friday,
further depreciated at the close of Monday’s trading. The Exchange
market capitalisation closed lower at N8.079 trillion, after opening
the day at N8.100 trillion, reflecting 0.25 percent decline or N21
billion losses.

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