Nigeria Content Online

While stock market operators may not directly be affected with
the proposed three-day warning strike by government workers, some finance
analysts said the performance of trading activities at the capital market may
further suffer decline during the industrial action.

Investors at the Nigerian Stock Exchange (NSE) already recorded
loses of over N116 billion in the past one week due to profit taking
activities.

However, Detola Olukorede, head, equity research team at
Investment Option, a fund management firm, said the value of equities at the
NSE “may further depreciate this week due to the high selling pressure the
market will witness.” Mr. Olukorede said, “When workers are embarking on a
nationwide strike of this magnitude, it is expected that investors, especially
retail investors will start ordering for the sales of some of their stocks to
enable them have cash at hand during the strike.”

Johnson Chukwu, chief executive officer of Cowry Asset
Management, a stock broking firm, said institutional investors may also want to
see the outcome of the industrial action before taking position in the market.

Analysts said all these “cautious reactions” by investors are indicative
of a market that will further plunge in worth due to the warning strike.

The Nigeria Labour Congress and the Trade Union Congress are to
embark on a three-day warning strike from Wednesday over the proposed N18, 000
minimum wage.

Market indices down

Meanwhile, the decline witnessed at the NSE last Friday
continued at the close of trading session on Monday. The Exchange’s market
capitalisation lost N23 billion on Friday’s figure of N7.919 trillion, to close
at N7.896 trillion, a 0.29 per cent decrease.

The All-Share Index was also down by 0.29 per cent, shedding
72.39 units from the 24,800.47 basis points recorded on Friday, to close
yesterday at 24,728.08 basis points.

A total of 20 stocks appreciated in price on Monday while 36
stocks depreciated. Oando and United Bank for Africa topped the price gainers’
table with an increase of N1.95 and 35 kobo on their initial prices of N64.05
and N8.60 per share, respectively.

On the flip side, Cadbury Nigeria and PZ Cussons led the price
losers’ chart with a loss of 67 kobo and 50 kobo respectively, from their
opening prices of N29.56 and N33.00 per share.

Most active

Five banks -FinBank, Oceanic, Bank PHB, Zenith, and United Bank
for Africa -were the most traded stocks yesterday.

The Banking subsector led the most active subsectors’ chart with
352.013 million volumes of shares, valued at over N1.684 billion. Volume in the
subsector was driven by banks that led the most traded stocks’ chart.

Trading activities in the Insurance subsector followed, with
24.230 million shares valued at N16.640 million. Deals in shares of Lasaco
Assurance largely boosted volume in this subsector, followed by Aiico Insurance
and NEM Insurance.

The Food/Beverages subsector was third in the chart. Investors
in this sector exchanged 11.231 million shares, worth N191.795 million. Volume
in the subsector was driven by deals in the shares of Dangote Flour Mills and
Dangote Sugar.

The Board of the Asset Management Corporation of Nigeria (AMCON)
yesterday swung into business, swiftly rolling out three major policy
decisions.

In its first formal meeting concluded late last night in Abuja,
the board announced that AMCON will value non-performing loans (NPLs) backed by
shares of listed companies at an implied premium of approximately 60 percent on
the 60-day average of recent prices ending November 15th 2010, while those
backed by other perfected collateral would be accepted at the most current
estimate of the loan value supplied by the institution, but for this category,
AMCON put a caveat, “there must be a post-transaction adjustment agreement that
allows AMCON to independently value the loan as of the transaction date of
November 15th 2010.”

According to the corporation, all unsecured loans or loans with
ineligible collateral will be valued at 5 percent of the principal value.

Explaining the underlying assumptions for the valuation, which
it said is solely for the purpose of buying the NPLs and not for
recapitalisation of the banks, the Board said that it could be that “a fair
value ascribed for the purposes of buying the NPLs would be two times book value
and this premium approximates that value.”

Besides, it said the estimate for the valuation must be based on
current market analysis of the collateral and a written guarantee of good faith
by the institution. The valuation methodology, the Board said, has been
consented to by the Minister of Finance, Segun Aganga, the Central Bank of
Nigeria (CBN) governor, Sanusi Lamido Sanusi, and the affected banks.

Reiterating its mission to acquire non-performing loans across
the banking industry, recapitalise the rescued banks, and manage the acquired
assets, the board also announced its approval of the purchase of all the margin
loans in the banking sector and all the non-performing loans of the rescued
banks, totaling in excess of N2.2trillion.

In addition, the board approved a funding model for AMCON, based
on conservative estimates of recovery rates and return on managed assets,
pointing out that with the agreement already reached with the banks to
contribute to a sinking fund, AMCON board is satisfied that the Federal
Government guarantee will not need to be invoked at the end of its expected ten
year life span.

While expressing optimism that AMCON would reach agreements with
the selling institutions regarding pricing of the NPLs by November 15th, 2010,
the Board said AMCON aims to settle these transactions on or before December
30th, 2010, to allow the institutions to obtain the necessary Board and
Shareholders approval, whilst also giving AMCON the time to establish the
necessary operational structures to settle these purchases.

Industry reacts

For Tope Fasua, a Dubai, UAE-based investment management
specialist, taking over bank assets that were secured with equities at 60
percent of original value will, in reality, be more than what those shares are
currently worth, considering that the value of most of the distressed loans
secured with shares declined by over 90 percent.

“Valuing such loans at 60 percent is, therefore, quite
magnanimous. The capital market is likely to receive that news most favourably,
because such shares would generally be growing to the value placed on them by
AMCON. People would naturally buy bank shares, insurance shares, since the
AMCON has put its money on those shares at much above their current values,” he
said.

On loans secured against landed property, Mr. Fasua said the
problem usually associated with it is that because of the nature of valuations
in Nigeria, they are often ‘fictitious’, adding that the value people usually
put on a property is at best mere conjecture.

According to him, a property is only worth N1billion when one is
able to sell such a property and realise the money, notwithstanding what the
estate valuers, rating agencies, bank managers, or even AMCON, says, predicting
that the new policy will create a new market for those who are ‘experts’ at
valuing properties.

“Some will dispute the values already placed on such properties,
while some will reach a ‘compromise’ at the end of the day. AMCON can only find
out if their ‘evaluation’ of a property is wrong and ‘adjust afterwards’, if
and only if, it sells such properties and compares the value received with the
value on paper,” he said, noting that in Nigeria, those scenarios are rackets.

Six companies including Swiss logistics firm Panalpina (PWTN.S) and Royal Dutch Shell (RDSa.L) have agreed to settle foreign bribery investigations and will pay some $236 million in criminal and civil penalties, the Obama administration said on Thursday.

A Panalpina unit has agreed to plead guilty, admitting to paying at least $27 million in bribes to officials in at least seven countries including Nigeria, Brazil and Russia between 2002 and 2007 on behalf of its oil and gas industry clients.

“They did so in order to circumvent local rules and regulations relating to the import of goods and materials into numerous foreign jurisdictions,” the Justice Department said.

Those customers, which included Shell’s Nigeria unit, a unit of Transocean Ltd (RIG.N), Tidewater Inc (TDW.N), Pride International (PDE.N) and Noble Corp (NE.N), admitted to approving or condoning bribes on their behalf, the Justice Department said.

Pride’s French unit is also pleading guilty in the case while the others reached deferred prosecution agreements with the Justice Department. The companies also settled related bribery charges by the Securities and Exchange Commission.

Collectively they will pay $236 million in criminal and civil penalties and disgorgement, with Panalpina paying the largest amount, almost $82 million. Shell will pay almost $48.2 million, according to the Justice Department and SEC.

Shell’s Nigerian unit agreed to settle charges and pay $30 million in criminal penalties, the Justice Department said.

The settlement is the latest in a series by the Obama administration as authorities try to crack down on corporations paying bribes to foreign officials in violation of the U.S. Foreign Corrupt Practices Act (FCPA).

Nigerian women
should take up active roles in business, move to relevant positions,
and be the change they want to be, Jesse Jackson, former United States
special envoy for Africa said in Lagos on Thursday.

“Men cannot leave
women at home. We need full partnership. There is nothing women cannot
do. Women are now heading major corporations. What we need now is
business education. If an African American can become the president of
America, then a woman can become the president of Nigeria,” Mr Jackson
added.

He spoke at the 9th Annual conference of the Women in Management and Business (WIMBIZ) with the theme ‘Impact your world’.

WIMBIZ, a
non-profit organisation started in 2001 with a mission to be the
catalyst that elevates the profile of women in management and business.
The organisation just completed the maiden phase of her mentoring
programme as promised, where 72 young women were attached to mentors
for a period of four months in two batches. Its annual conference is a
gathering of women in commerce and corporate Nigeria, attracting
international delegates from different parts of the world.

Nigeria’s structure is problematic

Ben Murray-Bruce,
the chairman, Silverbird Group, and keynote speaker at the event, said
the major problem facing Nigeria is the nation’s political structure.

“The political
structure of the country does not allow talent in any administration,
because of issues such as zoning, ethnic balancing and so on. For
instance, if we have five smart people from Edo state, politically, I
can’t appoint all five of them, so I have one smart guy from Edo state
and four dumb guys from other places. As long as the right talents are
not in government, this is not going to work,” Murray-Bruce said.

Murray Bruce also
said that if you put someone in an environment where there is free
money, “there can’t be creativity, because there is no need to be
creative to earn that money, it is already there. And then the money
needs to be spent, but then, we cannot think and be creative to invest
in technology that is futuristic, because that requires thinking.
Instead, we spend it on a technology that is obsolete.”

People have impacted in my life, and that is why I can also make an
impact in people’s lives. “We may be free, but we have a slave
mentality. In Nigeria today, we may not have to fight for the right to
vote, but we must fight for the right to live. Why can’t we do anything
without bringing someone in from abroad? If our people don’t know how
to do it, why can’t we teach them? You can be somebody if you choose to
be somebody” he said.