Nigeria Content Online

Everyone knows that
traffic in Lagos is becoming more and more of a serious problem. I
learnt that it is also a problem in Abuja as well. This brings to
question the point of having to go to the office each day, especially
on days when you do not have any meetings scheduled.

In Western
societies, a whole lot of people opt to work from home. Working from
home on days when your presence at the office is not essential is very
easy using a variety of remote access software, one of which is LogMeIn.

LogMeIn uses their
website as a bridge between two computers, which may be on opposite
sides of the planet. Simply go to their website (www.logmein.com) and
create an account, then download the client software onto the computer
that you want to connect to. It is very easy to install on either
Windows or Mac platforms, and it is light on system resources. (In my
Windows XP virtual machine, it uses just 8MB of memory).

Once you have the
client software installed, using the computer from another location is
a breeze. Simply go to the website, log into your account, and you will
see the names of all the computers on which you have installed the
client software. Simply click on the name of the computer you want to
connect to, and you will be taken to that computer’s desktop. Change to
full screen mode, and it would be like you are right in front of that
computer.

Because LogMeIn
connects to your remote computer over the Internet, there’s no need to
change the firewall settings on any of your computers.

LogMeIn works with
Internet Explorer, Firefox, Chrome, or Safari. It has Windows and Mac
OS clients available for download, and there is a free version which
allows you do everything you need to do while working away from the
office, except to print. It is also very secure.

If your boss is one
of those who insists on productivity over eye-service, and you have a
reliable Internet connection at home (or in a cafe near you), then
forget about killing four to six hours a day in Lagos traffic. Just
LogMeIn.

Investments
in projects to boost deepwater oil production in West Africa have grown
by more than 10 fold in the last decade, from about $1.5 billion in
2000 to the current level of about $15.6 billion (N2.34 trillion).

Oil
industry operators noted yesterday at the opening of the 3rd Regional
Deepwater Offshore Conference and exhibition organised by the Nigerian
Association of Petroleum Explorationists (NAPE) in Abuja that the
significant growth exceeds the combined investments for onshore and
continental shelf areas.

Mark
Ward, chairman/managing director, Mobil Producing Nigeria, said the
level is expected to climb even further, with ongoing new deepwater
projects being developed in Nigeria, Angola, and Ghana.

Mr.
Ward, however, bemoan the high cost of executing deepwater projects,
pointing out that the declining oil prices significantly contrasts with
the limited local construction capability, which, he said, has been
identified as a major feature of the high cost profile of deepwater
projects in West Africa.

With
over 25 billion of oil equivalent barrels discovered in deepwater West
Africa since the early 1990s, Nigeria and Angola, the ExxonMobil boss
said, have achieved the biggest exploration success, with discoveries
in fields like Erha, Bonga, Bosi, and Agbami in Nigeria, and Girassol,
Dalia, Kissange, and Kizomba in Angola.

In
spite of increasing discoveries and basin maturity, he said discovery
size and reserve per well has decreased, with average discovery for all
of West Africa reducing significantly between 2000 and 2004 when
compared with the level before 2000.

“Since
2005, the average discovery size trend for West Africa has increased,
while average Nigeria discovery size has continued to decrease,” he
said, adding that the trend goes with increase in operational cost,
with unit capital cost for projects put at about 50 percent higher than
unit capital cost of existing fields.

Operating cost is essential

He
underlined the need for fiscal terms to take into consideration the
unique attributes of fields and the high cost of operating them. Mr.
Ward said this was the only way to avoid deepwater oil discoveries from
being stranded.

He
listed other facilitators to include technology, stable fiscal terms,
as well as balancing Nigerian Content Development initiative with
efficient project development processes, arguing that “while Nigerian
Content Development is important, it needs to be paced, realistic, and
collaborative,” as imposition could stifle both the total in-country
projects and pace of project development.

Diezani
Alison-Madueke, petroleum resources minister, acknowledged deepwater as
a critical frontier for the West African region and Nigeria in
particular, when the country’s aspiration is to increase its oil
production capacity and national reserves, saying this has informed
government’s focus on the development of the country’s deepwater assets.

“Despite
the recent exploration decline, Nigeria has done an aggressive work to
ensure that going torwards the fiscal terms for Nigeria’s deepwater
assets are attractive enough to enable progressive growth in the next
couple of years.

“The
Petroleum Industry Bill (PIB), which encompasses the fiscal regimes for
deep offshore production sharing contracts (PSCs), is currently being
debated in the National Assembly, to ensure that by the time it is
promulgated into law, the interest of all would have been
accommodated,” Mrs. Alison-Madueke said.

The theme of the conference, co-hosted by the American Association
of Petroleum Geologists (AAPG), was: ‘West Africa Deepwater: Successes,
Challenges and Future Prospects.’

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.

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.

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.