Archive for nigeriang

Equities value depreciate further at the Exchange

Equities value depreciate further at the Exchange

The value of equities at the Nigerian Stock Exchange (NSE)
depreciated further on Wednesday after closing negatively on Tuesday.

The NSE market capitalisation closed yesterday at N7.913
trillion from Tuesday’s figures of N7.920 trillion, reflecting N7 billion
losses or 0.08 per cent decrease. The market had lost N92 billion or 1.14 per cent
on Tuesday.

The All-Share Index also lost 0.08 per cent or 21.32 units on
Wednesday, down from 24,804.22 basis points to close at 24,782.90. The NSE
sectoral indexes recorded negative performance on Wednesday as the NSE-30
Index, which measures activities of blue chips in the market, dropped by 0.21
per cent.

The NSE Banking shed the highest points by 0.26 per cent; the
Food/Beverages plunged by 0.12 per cent, followed by the NSE Oil & Gas
which declined by 0.18 per cent, while the Insurance, the only gainer, went up
by 0.30 per cent.

Equity Analysts at Resource Cap, an investment advisory firm,
attributed “profit taking activities by investors” to the downturn, adding that
“sell pressures may continue across the sectors on the bourse.”

Low volume

At the close of Wednesday’s trading, a total of 253.22 million
shares valued at N1.930 billion were traded in 6,200 deals as against the
277.00 million shares worth N2.658 billion exchanged in 5,711 deals on Tuesday.
The banking subsector maintained its lead on the most active subsector chart
yesterday with 140.05 million units valued at N1.14 billion.

The volume recorded in the sector was driven by transaction in
the shares of Zenith Bank, United Bank and Access Bank. The Insurance subsector
followed, trading 26.047 million shares valued at N21.843 million. Transactions
in the subsector were largely driven by the shares of Aiico Insurance, NEM
Insurance and Lasaco Assurance.

The Mortgage companies subsector came third with investors
trading 26.032 million shares valued at N14.669 million. Investors in Resort
Savings & Loans, Union Homes Savings & Loans and Aso Savings &
Loans enhanced activities in the subsectors in terms of volume.

More gainers

The prices of 29 equities appreciated in value on Wednesday
while 20 depreciated. Okomu Oil led the price gainers, appreciating by 70 kobo
to close at N14.95 per share. Oando gained 70 kobo to close at N64.00 per share
while University Press grew by 29 kobo to close at N6.28 per share. African
Petroleum topped the price losers’ chart, depreciating by N1.31 to close at
N24.94 per share.

Ashaka Cement shed 91 kobo to close at N22.66 per share while
Ecobank Transnational Corporation lost 74 kobo to close at N15.26 per share.
Meanwhile, a total of 12 companies released their financial results at the NSE
floor on Wednesday.

Fidelity Bank, in its third quarter report, recorded a profit
after tax growth of 85.97 per cent. Nigerian Bottling Company third quarter
result shows a turnover growth of 14.06 per cent and profit after tax growth of
30.21 per cent.

Click to Read more Financial Stories

Profit returns as banks cut cost

Profit returns as banks cut cost

In the midst of dwindling earnings, banks are cutting down on
their cost of doing business in order to remain profitable. As a result,
despite recording significant drop in their earnings, many banks still managed
to post significant rise in profit as seen in recent results.

For most banks, while gross earnings dropped, profit before tax
rose due to what analysts at Afrinvest, a financial research firm, refers to in
Zenith Bank’s case as “improvement across the bank’s key efficiency and
operating ratios.” Despite a 13.6 per cent drop in gross earnings, the
institution posted a profit before tax of 196.3 per cent.

In its update for the
bank’s third quarter result released on October 27, Afrinvest noted that
“continuous improvement across the bank’s key efficiency and operating ratios
has fuelled this performance even as top-line growth continues to come under
intense pressure.” A similar scenario played out in First City Monument Bank
(FCMB) as gross earnings dropped by 19.02 per cent from N55.02 billion to
N44.55 billion. Interest expense however when down from N21.8 billion to N16.7
billion while profit before tax rose by nearly 2000 per cent from N298.13
million to over N6.1 billion.

For Sterling Bank, while gross earnings declined by 13 per cent
from N26.6 billion in September 2009 to N23.1 billion in the corresponding
period in 2010, profit after tax rose to N5.3 billion from a loss of N6.2
billion last year.

The bank attributes this significant increase in profit to
efficiency and cutting down on its cost of doing business. Thus, funding costs
declined 38 per cent to N8.1 billion from N13.0 billion. “Sterling Bank
emphasis on efficiency and profitability has been the cornerstone of its
performance in the third quarter. Discretionary costs have been kept in tight
check and new processes brought on stream at the beginning of the year continue
to show expected results”, said the bank’s executive director, Lanre Adesanya.

Common experience across
board

Access Bank’s third quarter results showed that gross earnings
declined by 15.2 per cent from N91.93 billion to N77.95 billion. From a loss
position of N10.64 billion in the third quarter of last year to a profit before
tax of N14.06 billion this year.

Aigboje Aig-Imoukhuede, Access bank group managing director,
said the bank has achieved significant growth in its deposit base with a 24 per
cent increase in customer deposits quarter on quarter as it continues to
benefit from the continuing success and effectiveness of its value chain
strategy. “With our focus on maintaining a high quality service-centered
business model supported by a robust enterprise risk management framework, the
bank is well positioned to deliver a strong full year performance in line with
the positive results achieved year to date,” Mr Aig-Imoukhuded said.

First Bank also posted a gross earnings of N177.1billion, an 11
per cent drop over the N197.9 billion posted last year.

However, profit before tax rose to N40.7 billion from a loss of N6.6 billion
posted last year. Guaranty Trust Bank similarly showed an 11.9 per cent drop in
third quarter earnings from N136.1 billion to N119.8 billion, while pretax
profit rose significantly by 82.1 per cent from N21.4 billion to N39 billion.

Click to Read more Financial Stories

Fitch Ratings and the national welfare

Fitch Ratings and the national welfare

When Fitch Ratings,
one of the world’s better-known Credit Rating Agencies (CRAs), was
reported in the papers last week as having downgraded its outlook on
the Nigerian economy, my initial reaction was “So what?” A negative
credit warning should increase the price of the country’s sovereign
risk. But how to measure this in the absence of a sovereign debt
instrument?

Besides, the credit
rating function is the most damaged franchise to have come out of the
recent global crisis. Indeed, after Greece nearly succumbed to the
market’s panic over the sustainability of its near-term fiscal outlook,
and the deluge of sovereign rating downgrades that followed the
European sovereign debt crisis, the big question has been over the
accuracy of the CRAs’ credit risk assessments.

One of the most
important recent contributions to the debate over the continued
relevance of credit ratings, the IMF’s Global Financial Stability
Report (GFSR) for October 2010, finds the key strength of the CRAs in
their ability to “provide information, monitoring, and certification
services.”

This way, the CRAs
even out the information asymmetries between debt issuers and
investors, provide (through their rating downgrades) continuous
assessments of these securities, and because most countries insist on
credit ratings as part of most financial contracts, they also provide
an assurance function.

Consequently,
countries cannot readily and cheaply “access global capital markets and
attract foreign investment”, if they have not been rated first. Few
investors will touch fixed-income securities that do not have credit
ratings.

And it would seem
that the originate-to-distribute model of bank lending (which replaced
the traditional originate-and-hold variety, and which has been
described as complicit in the underestimation of risk that aggravated
the current financial crisis) could not have happened if the CRAs did
not start lending their imprimaturs to structured products.

Did these functions
also destabilise financial markets? How much of the impact of the
sovereign debt crisis in Europe was because holders of some countries
debt instruments felt pressured by adverse credit rating news in other
countries to demand stricter repayment covenants?

The IMF concludes
that “CRAs do have an impact on the funding costs of issuers and
consequently their actions can be a financial stability issue.”
Accordingly, the GFSR October 2010 recommends, amongst others, for
policy-makers to redouble efforts at reducing “their own reliance on
credit ratings, and wherever possible (removing) or (replacing)
references to ratings in laws and regulations, and in central bank
collateral policies.”

The Fund also
counselled regulators to strengthen their supervision of CRAs if they
had to use the latter’s ratings for their regulations.

Significantly, the
Fund also found that the informational value of sovereign ratings
occurs not through “actual rating changes,” but because of “outlooks”,
“reviews” and “watches”, which show the possible future trajectory “and
timing of future rating actions.”

On this count, the
response of the Nigerian authorities to Fitch’s review was risible.
Splitting hairs over whether this was a rating or an outlook downgrade
doesn’t quite make the grade. The point is that according to the IMF,
“CRAs use a negative ‘outlook’ notification to indicate the potential
for a downgrade within the next two years (one year in the case of
speculative-grade credits)”. And that between June 26, 1989 and March
31, 2010, the 212 negative outlooks published by one of the leading
CRAs were followed by 118 downgrades within an average of six months.

So, the possibility
of a rating downgrade is high, if over the near-term, government fails
to address the public expenditure management framework in a way that
significantly assuages public concerns.

For, it is not only
the rating agencies that are concerned at the rapid decline of the
country’s foreign reserves, even as demand pressure continues to mount
in the foreign exchange markets; or the country’s rising external debt,
in the face of constricting domestic capacity use. Government may be
persuaded of the usefulness of its planned reforms: proposed
establishment of a Sovereign Wealth Fund (SWF); and its intent to
address the infrastructure deficit in the power sector.

The truth, though,
is a wee bit different: in the absence of sustained and identifiable
welfare gains from government’s sundry activities, the electorate does
not care (nor can it subsist) on the ideas (for reform) that reside in
their leaders’ heads.

Click to Read more Financial Stories

PDP warns Enugu governor, lawmakers over party crisis

PDP warns Enugu governor, lawmakers over party crisis

The National
Working Committee (NWC) of the Peoples Democratic Party (PDP), at its
meeting on Wednesday, resolved to write the Enugu State Governor,
Sullivan Chime and members of the State House of Assembly to stop the
ongoing rancour over the dissolution of the executive committee of the
party in the state.

The committee also decided to revisit the conduct of congresses in Imo and Anambra states.

The executive
committee of the party in Enugu State was dissolved two weeks ago
following complaints that trailed the conduct of the congress in the
state and the refusal of the Independent National Electoral Commission
(INEC) to recognize it.

Some party
officials in the state, who believed the chairman of the party,
Okwesilieze Nwodo, acted unilaterally, have challenged the dissolution
in court.

The situation
prompted President Goodluck Jonathan to intervene in the crisis by
meeting with three members of the NWC while Mr Nwodo was away on
vacation abroad.

A source in the
meeting presided over by Mr Nwodo on Wednesday said the decision to
dispatch the letter to Enugu followed the chairman’s protest that
members of the NWC took sides while he was away in the United States.

Following the
chairman’s protest, the members took turns to explain their roles in
the Enugu issue. The committee resolved to write Mr Chime and others.

The meeting also reportedly resolved to revisit the congresses held
in Imo and Anambra state with a view to taking care of the contending
forces. It was gathered that though the congresses had been held, the
NWC agreed that there was a need to revisit them and explore the option
of harmonisation among the aggrieved groups in the party.

Click to Read More Latest News from Nigeria

World Forum blames Nigeria’s problems on corruption

World Forum blames Nigeria’s problems on corruption

The World Economic
Forum (WEF) yesterday said the troubles with Nigeria’s economy were
worsened by high corruption, poor socio-economic infrastructure and
other vices in the political system.

The Chief Economist
of WEF, Jennifer Blanke, who spoke yesterday at the opening of a
workshop on National Competitiveness in Abuja, said Nigeria should take
the issues of decay in its education system, poor infrastructure and
corruption very seriously if it is to move from its present 127th
position in the performance indicators of 139 countries recently
captured by the forum.

According to Mrs
Blanke, the country’s economic decline commenced since last year in the
areas of finance management and handling of corporate governance issues
in the financial system as well as the capital market, though she
admitted that the country has the opportunity to grow up in the
ranking, given the sophistication of businesses and the large market
that companies can benefit from.

She identified
specific areas Nigeria can focus on in order to further improve her
competitiveness, including improvement in governance issues,
development of strong currency institutions as well as improvement in
the quality of education and infrastructure.

“I don’t know if
there is any fast-track to achieving this goal. There are also issues
that one definitely needs to focus on that has to deal with government
corruption,” she said

Global watchdogs

The Minister of
State for Finance, Yabawa Lawan Wabi, said that countries all over the
world are increasingly becoming guided by the global competitiveness
ranking of other countries in their development processes, as compiled
and rendered by worldwide risk rating agencies, such as Fitch, Standard
and Poor as well as Goldman Sachs.

“As we all are
aware, several factors ranging from key economic indices, political
stability and democratic ideals, social infrastructure to security are
given significant weight in the determination of a country’s sovereign
risk rating and global competitiveness ranking by these agencies,” she
said.

The minister said the present administration is determined to put in
place, policies and programmes that would propel quick and positive
changes in Nigeria’s economic performance in the relevant areas, such
as domestic production, employment generation, power and energy,
education and health; deepening of our democracy, security and enabling
the right institutional and regulatory framework that will elevate
Nigeria’s National competitiveness.

Click to Read More Latest News from Nigeria

Supreme Court to decide governorship election cases

Supreme Court to decide governorship election cases

The Deputy Speaker
of the House of Representatives, Usman Nafada, yesterday, overcame
opposition by members to the decision of the senate to permit
adjudication for governorship election cases, as the lower chamber
finally approved the harmonized amendments to the 1999 constitution.

In separate
amendments last week, the House altered six sections of the
constitution while the senate approved 10, to pave way for the
extension of dates for next year’s election.

The extra four
sections which the senate introduced, to allow gubernatorial election
cases terminate at the Supreme Court, was harshly questioned on
Thursday by the Representatives who appeared poised for an
unprecedented defeat of a passed bill at the harmonization level.

“I am wondering if
we as a parliament can accept that the issue of governorship election
cases move from election tribunal to the Supreme Court. Where will
justice end for the governors to have time for the issue of
governance,” three-term Delta state member, Halims Agoda, said.

But presiding
officer, Mr. Nafada, turned down overwhelming voice votes against the
bill and convinced the lawmakers to back the amendment after more than
half-an hour of secret consultations.

“We cannot go back
to the senate and say we cannot carry this,” he declared before the
commencement of the closed session. “It will mean the whole exercise
will not make sense. We will adopt it.”

Lawmakers
acknowledged such a defeat would set back the desired extension of
election dates, which is near finalization, but they argued that the
terms of the senate-sponsored clauses will create more challenges for a
polity already burdened by lengthy election process.

By implication, the
provisions will allow gubernatorial election cases move from election
tribunals to the Supreme Court, against the current practice where it
terminates at the Courts of Appeal. For now, only the presidential
election cases are heard at the Supreme Court.

An earlier
unsuccessful attempt by the federal lawmakers to alter the sections,
during the exercise concluded in July, seeks to make the case reach the
highest court only if it begins at the Appeal courts and not the
tribunals.

But members in
support of the extension said it will help lessen the workload of the
Court of Appeal, which has complained of shortage of judges.

With the
experiences of Ekiti, Edo and Ondo states, where true winners of the
2007 governorship elections took office after an average of three years
in court, majority of the members said the intent of the bill is to
grant an unnecessary extension of time for fraudulent polls’
beneficiaries who may be only called to account after they have left
office.

A House committee
named to harmonize last week’s passages from both arms of the National
Assembly accepted the senate’s position at a meeting on Monday.
However, the House disowned the representation yesterday and asked that
the clauses be stepped down.

The bill finally
passed soon after the members emerged from the executive session,
during which those familiar with the proceedings said Mr. Nafada
explained to his colleagues the need to support the governors who in
turn will support the lawmakers.

No backdoor bill

Separately, the
House strongly denied media reports that the rejected clauses of the
Electoral bill, which has to do with the choice of delegates to
primaries, had found its way back to the chamber.

At two news conferences, house officials said presidency sponsored bill was still with the committees to which it was referred.

“We have never said
anywhere that we will accept the contentious areas of that bill, as of
today the committee has yet to submit its reports,” said Sarkin Adah,
chairman of the House committee on Electoral Matters.

Many other members re-echoed their preparedness to defeat the bill
when it is brought back to the house. Reports had said the bill was to
be re-presented to the house on Thursday, this time as a
member-sponsored bill.

Click to Read More Latest News from Nigeria

Government to audit ministries, agencies’ accounts

Government to audit ministries, agencies’ accounts

The Federal
Government has hired the services of some accounting firms to audit the
revenue accounting processes of all ministries, departments, and
agencies in the country.

Segun Aganga, the
Finance minister, said this at a two-day national workshop on
independent revenue generation, collection, and remittance, which
opened yesterday in Abuja. Mr. Aganga added that the exercise is
expected to help improve government revenue performance.

The theme of the
workshop is ‘Enhanced Revenue Base As a Veritable Tool for
Implementation of Government Policies and Programmes.’ The minister,
who described as “very poor”, revenue performances of ministries and
agencies, said out of a total N194.5billion of estimated internally
generated revenue (IGR) from January to August this year, actual
revenue collection was about N72.196billion, indicating a variance of
over N12.3billion.

While emphasising
the need for Nigerians to find a sound and uninterrupted source of
funding government budget, Mr. Aganga said the country would be able to
realise its aspiration of becoming one of the leading 20 economies in
the world by 2020, if its revenue generation base is expanded.

“Our nation can
only attain greatness if, uncompromisingly, we all manifest the
greatness in us by our thoughtfulness, good attitude, and noble needs
by affirming that, individually and collectively, we can realise the
vision by renewing our mind,” he declared.

Noting that
corruption and other financial crimes have, over the years, made the
attainment of accountability, probity, and transparency in governance
difficult, he urged participants in the workshop, made up of revenue
administrators to ensure that the training to be received redefined
their focus in their responsibility towards improved revenue
generation, collection and remittances to government.

Lapses and deficiencies

Ibrahim Dankwambo,
the Accountant General of the Federation (AGF), said the workshop
organised by the Revenue and Investment Department of his office was to
focus on lapses and deficiencies identified during routine revenue
monitoring exercises in the ministries and agencies.

Mr. Dankwambo said
over the years, the ministries and agencies were not maintaining proper
books of accounts, particularly the prescribed treasury cash books.
They were also habitually not issuing treasury receipts for remittances
due to lack of Tax Identification Number (TIN), poor follow-ups by
paying agencies, and wrong postings of withholding tax and Value Added
Tax (VAT), as well as other forms of tax collections in cash books.

He said his office
will ensure greater accountability and transparency in the country’s
fiscal operations, thereby facilitating adequate monitoring of the
activities of revenue generation and administration agencies; new
revenue offices are to be opened nationwide.

As a pilot scheme,
he said plans have been concluded to establish revenue monitoring
offices in Port Harcourt, Lagos, Kano, and Maiduguri, while a team of
revenue officers would be set up to monitor on a daily basis the
revenue performances of MDAs in the various regions.

Click to Read More Latest News from Nigeria

Minimum wage report suffers setback

Minimum wage report suffers setback

The implementation of the report submitted by a joint
government-labour committee on national minimum wage yesterday received
a setback after the National Economic Council rejected it on grounds of
technical irregularities.

The governor of Edo State, Adams Oshiomole told
reporters at the end of the NEC meeting yesterday in Abuja that though
the council received the report and was sympathetic, it noticed some
technical and practical issues which still to be addressed.

Following this, a sub-committee was set up to look
into those technicalities and report back to the council in two weeks.
The sub-committee consist of the governors of Edo st, Lagos, Enugu
Benue, ans Jigawa states, with vice president Namadi Sambo chairing it.

A joint government-labour committee on national
minimum wage had, in July, submitted a report proposing N18, 000 as the
new national minimum wage. But this is still awaiting implementation by
the federal government.

Last week, the Nigeria Labour Congress declared that
it will embark on a three-day nationwide warning strike from November
10 to highlight the workers’ demand for a new national minimum wage.

When asked what those technical issues were, Mr. Oshiomole said they could not be discussed with the press.

“When I was at the NLC, I always argued the case that
it is disrespectful to inform your principals through the media. Those
technical issues will be raised with the NLC and not through third
party like the media,” he said.

The governor of Katsina State, Ibrahim Shema, who
also briefed pressmen alongside the governors of Jigawa, Sule Lamido;
Adamawa State, Murtala Nyako and Benue State, Gabriel Suswam said
governors have set up a committee to streamline the workings of the
proposed Nigerian Sovereign Wealth Fund (NSWF) and approval of the
initial take off fund of N1 billion to be raised from the excess crude
account.

Click to Read More Latest News from Nigeria

Bayelsa governorship candidates allege harassment

Bayelsa governorship candidates allege harassment

Governorship
candidates on the platform of the Peoples Democratic Party (PDP) in
Bayelsa State are allegedly being harassed by agents of the state
governor, Timipre Sylva.

One of the
candidates, Fred Agbedi, made the allegation in Abuja yesterday and
said they have petitioned the Inspector General of Police, Hafiz
Ringim, the director general of the State Security Service (SSS),
Ekpeyong Attah, and the National Security Adviser, Owoye Azazi over the
matter.

“Well of course we
have sent our petition papers to the Inspector General of Police (IGP)
Hafiz Ringim, the Director General of State Security Service (SSS) and
to the National Security Adviser (NSA). There have been lots of attacks
on our campaign offices, our supporters are not spared,” Mr Agbedi said.

“There are lots of
aggression coming from the agents of the State Government. We just have
to cry out so that the law enforcement agencies will create peaceful
atmosphere for democracy to thrive in Bayelsa state.”

He, however, did not say if the security chiefs have addressed the issue.

Mr Agbedi, a former
chairman of the PDP in the state, told journalists at the party’s
national secretariat in Abuja after submitting his nomination form,
that the Sylva administration has lost credibility while the party has
lost grip of the state due to the alleged high-handedness of the
governor.

Claiming that he
helped put Mr Sylva in power, the candidate boasted that he will defeat
the incumbent because he represents the change that the people of
Balyesa yearn for.

“I have served as
Chairman of the Peoples Democratic Party in Bayelsa and I felt that the
government I brought into office in Bayelsa has lost credibility. The
party is fast losing grip of the state and Bayelsa needs a change and I
am the change organ. My agenda are development, peace and rule of law”

The media aide to Mr Sylva, Doifie Ola, could not be reached on his
mobile telephone but he has in the past said that his principal’s
opponents are out to frustrate the governance in the state.

Click to Read More Latest News from Nigeria

‘South East lecturers are being used as guinea pigs’

‘South East lecturers are being used as guinea pigs’

Valentine Obienyem,
a senior aide to Anambra State governor, Peter Obi on media and
publicity, yesterday described the strike by the South-east lecturers
under the Academic Staff Union of Universities (ASUU), as a direct
result of an attempt by lecturers from other parts of the country to
experiment with them before making their own demands.

Mr Obienyem, who
addressed newsmen in Awka yesterday, said although other state
universities were not paying what the federal universities were paying,
the situation in the south east had become overblown to give the
impression that only the south east universities were not paying.

“The rest of the
country are only encouraging the south east to continue agitating so
that once they get what they are asking, they will use it as a
bargaining chip,” he said, adding that the lecturers from the south
east were unintelligently allowing themselves to be so used.

“Why is it that
other state universities such as Rivers and LASU that have same problem
are quietly seeking solution without unnecessary media hype?”

Competing needs

He pointed out that
the agreement on salary was between ASUU and the federal government and
not with the state governments, pointing out that even ASUU President,
Akabueze Awuzie acknowledged that in his press conference two days ago
in Awka, wondered why ASUU were insisting that the state governments
must implement it.

The lecturers had
accused Mr Obi, who is chairman of the forum of south-east governors,
of instigating the refusal of his colleagues to accede to their demand
for better payment structure.

But Mr Obienyem,
who restated the commitment of Mr Obi to education, appealed to
lecturers to remember that there were other competing needs to be
tackled by the governors.

On Mr Awuzie’s
comment on the decay and absence of infrastructure in the south east
universities, Mr Obienyem said that everybody knew that ASUU was after
salary increase and had to bring in other needs to make their case look
good.

He advised ASUU to
first purge itself of the activities of some of their members, which
contributes to the decline in education before they looked for a
scapegoat. He said some of those activities included obsession of some
of the lecturers with sale of poorly prepared handouts, molestation of
students in various ways and what he called poor and incestuous
scholarship.

Click to Read More Latest News from Nigeria