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The Central Bank of Nigeria (CBN) said yesterday that banks’
overhead costs would go down by about 30 percent in the next three years if
their managements build independent sources of power supply for their
operations.

Lamido Sanusi, the bank governor, said at the 4th annual banking
and finance conference in Abuja that Central Bank will provide support and
encouragement to facilitate this initiative.

Mr. Sanusi, who spoke on the topic ‘Evolving financial
landscape: Strategies for economic resilience”, said:

“Given the criticality of efficiency to cost of funds, the CBN
has recently started a shared services project, in collaboration with banks,
aimed at centralising back offices and the industrialisation of common
processes.

“In the next three years, we will reduce overhead costs in the
banking industry by 30 percent. We are also working towards establishing an IPP
for independent power supply for all banks operating in Lagos as a pilot
cluster.”

The governor added that the recent decision to review the
universal banking model adopted in 2001, was to enable banks re-examine their
existing business models to identify their strengths and see what opportunities
they could apply to enhance maximum returns.

He told the participants, including vice president, Namadi
Sambo; president of the Chartered Institute of Bankers of Nigeria, Laoye
Jaiyeola; Accountant General of the Federation (AGF), Ibrahim Dankwaabo, and
managing directors of banks, as well as their counterparts in the financial
services sector, that the financial system is experiencing stability, pointing
out that Nigeria is the only country that witnessed a banking sector crisis
during the global economic crisis without a depositor losing money.

More efficient industry

Mr. Sambo noted the pivotal role of the Central Bank in the
implementation of the power sector reforms, pointing out that the Federal
Government will continue to support its efforts to ensure market discipline in
the financial sector.

“The Federal Government identifies with the CBN reforms at
repositioning the banking sector, and it is our hope that a more efficient
banking industry will emerge from the whole exercise,” Mr. Sambo said,
underscoring the need for all to continue to rally round the Central Bank to
support the sector by ensuring market-driven competition, as well as bringing
greater efficiency of the banking industry and the economy at large.

Mr. Sambo assured that government would give all the support
needed to encourage the real sector achieve single digit rate, adding, “We need
to address power to ensure that power is stable. We have expended N10 billion
on thermal plants for distribution to sub stations.”

He challenged participants to take the opportunity of the
conference to take a critical look at the country’s financial system and come
up with ideas to support its safety and soundness, pointing out that this would
not only help the system withstand both internal and external shocks, but would
enhance the confidence of both the depositors and investors.

Agencies of government said curbing the menace of counterfeit
products in Nigeria is difficult, but they are thinking ahead of government’s
strategies to control the situation.

Speaking at an ‘Anti-counterfeit Media Roundtable’, organised by
Nokia in Lagos last Tuesday, Adewunmi Richard, group head,
electrical/electronics, Standards Organisation of Nigeria, said that
counterfeit problem is difficult for agencies to tackle because by the time
government sets up a way to control the problem, some Nigerians are looking for
another way to outsmart government.

“Counterfeiting is an imitation that is made usually with intent
or deceptively represents its content or origin. When you look at all its
features, it looks the same as an original,” Mr. Richard said at the event.

“The SON tried to devise other means to control counterfeit products
from coming into the country via its SONCAP certificate, but I am sorry to tell
you that as at today, we discovered two weeks ago some people opened an office
in Abuja to forge SONCAP certificate.That is their business, and they know how
to formulate all the security features for the dealers,” added Mr. Richard.

Technology is worst hit

Mr. Richard explained that counterfeit issues are very
predominant in the technology and electronic sector in the country.

“There are some mobile phones, if you make a call for five
minutes, the phone is placed far away from your ears because it is very hot.
The auto speaker in your handset is made of coil; if the quality of the coil is
not good, what it means is that the more you talk the more it heats up the
coil. The heat transmitted to the body from the handset could be harmful to the
user,” he said.

Ify Umenyi, the director general of Consumer Protection Council
(CPC), said, “The ill of counterfeiting is sometimes perceived by society as a
victimless crime, with ‘fakes’ simply constituting a cheap alternative
purchase. At times, consumers are constrained by ignorance, inability to detect
counterfeit products, and poverty.

“Incidentally, consumers opt for substandard or counterfeit
mobile handsets, often referred to as ‘China phones’, because they are
seemingly cheap and look exactly like the originals,” added Ms. Umenyi.

Also commenting on the issue, Timi Bomodi, the spokesperson for
the Nigeria Customs Service (NCS), said that counterfeiting is a major concern
to governments and institutions worldwide because of its implications.

The gathering agreed that government agencies and consumers must
come together to fight the menace.

“Where there is co-operation between the public and the private
sector, it becomes difficult for counterfeiters and the dealers in counterfeit
goods to thrive. We should, therefore, join forces to make Nigeria counterfeit
proof,” said Mr. Bomodi.

The Nigerian Export Promotion Council (NEPC) will host Nigeria’s
first non-oil exports conference, exhibition, and awards.

It is designed to provide a forum for private-public sectors
dialogue on trade policies, export incentives, and challenges aimed at
facilitating the country’s drive to become one of the top 20 economies by the
year 2020.

The expo, which is expected to come in the mould of the now
popular annual Nigeria Oil and Gas (NOG) conference/exhibitions, would showcase
the opportunities in the non-oil sector of the country’s economy, with a view
to providing incentives to local investors, as well as attracting
export-oriented international firms to the country.

“As a country that has set for itself the target of becoming one
of the world’s top 20 developed economies by 2020, Nigeria’s ranking in the
global economic development index is not going to be oil and gas-based, rather
on the quantum of its participation in world trade activities,” Femi Boyede,
the chief executive, Koinonia Ventures Limited, the collaborating export
consultancy firm for the conference, said yesterday in Abuja.

With the theme: ‘Non-Oil Exports: the Road to Nigeria’s Vision
20-2020′, it will focus on training and human development, export management
services, export incentives processing, export development, impact assessment
of government policies, as well as government policy strategies and
implementation for the non-oil export sector.

The time is now

Mr. Aboyede said the time is ripe for a platform for local and
foreign investors on an annual basis to focus global attention on the country’s
non-oil export sector, describing it as the main driver of Nigeria’s economy
and the main road towards the achievement of economic vision in the next ten
years.

“This is the only way to show that Nigeria is actually charting
a course for the realisation of the Vision 20-2020 objectives. Every year,
Nigerians spend huge foreign exchange to attend such events as INDABA, the
minerals sector development event in South Africa, and the Offshore Technology
Conference (OTC) in Houston, for the oil and gas technology.

“It is time for Nigeria to also have an annual programme that
would attract the global community to gather and talk about its vast non-oil
sector potentials and opportunities,” he declared.

The exhibition, he said, will showcase not only existing export
products, but also potential export products and services that go out of
Nigeria to the world, including an array of Nigeria’s agricultural commodities,
ethnic crafts, herbal products, foods, as well as diverse range of goods
available for exports.

“The exhibition is not for the companies to beat their chest
that they have arrived, but also a capacity building exercise, where up and
coming exporters are able to see what the more advanced and technologically
equipped ones are doing, as well as to learn from the international
participants how to move the non-oil sector forward, particularly on how to
adapt their products to suit the international market place and enhance
competitiveness,” he explained.

He stressed the need for Nigerians to begin to accord
recognition and encouragement to those companies that defy all the challenges
of infrastructural inefficiency and deficiency as well as high cost of doing
business in Nigeria, to promote the country’s name in the global export map,
saying the awards to 20 indigenous firms during the event would be to recognise
them as performers in the export industry.

Emotional appeal in advertising is known as Emotional Selling
Proposition (ESP). A brand thrives when it forges powerful emotional bond with
consumers. Emotional appeal makes consumers have intimate relationship with
brands. Since a brand comprises emotional and physical attributes that appeal
to the consumers’ minds and hearts, the use of emotional appeal inspires and
moves them into action.

Recently, brands tend to utilise emotional appeal more to
resonate with consumers. Though one does not have any empirical data to support
this claim, the way such communication campaigns inspire the audience cannot be
underestimated.

Over the years, some brands have deployed emotional appeal as a
platform to build connection and sustain brand loyalty. Through this, consumers
assume ownership of the brand and they build their lives around it. Such brand
provides desired emotional benefits for the consumers. This goes a long way in
making brands evoke feelings in consumers, which ultimately influence their
purchase decision.

Emotional appeal is a powerful thing and it creates a lasting
bond between the consumers and such brands. When the Skye Bank campaign broke
some years ago, it was one that made a unique connection with consumers. The
campaign was one that not everyone believed it revolved round a financial
institution. It was a total departure from selling service and products
offerings to the consumers. It was one that significantly leveraged emotional
appeal to arouse consumer’s interest.

It is also worthy of note that successful brands thrive because
they offer consumers something that they want and need, something that is
beneficial and relevant to their lives. This should be the thrust of any brand
campaign that is hinged on emotional appeal. This is because many consumers
increasingly use brands as a means of self expression. This was the scenario
when it was discovered that several people downloaded the Hakuna Matata song
used in the Skye Bank advert as ringing tones.

Resonance with audience

The Skye Bank campaign on Hakuna Matata, meaning ‘no worries’,
is one that resonates with the target audience, as it identified with the
yearnings and aspirations of the consumers. Hakuna Matata later became a slogan
for several people, even when they pass through life’s challenges. It is an
emotional appeal that clearly tells the consumers, ‘no matter what happens, do
not worry’. The bank hinged on this appeal to assure customers of its readiness
to make banking a stress-free activity for them. With this strong emotive
platform, the bank was able to capture the minds of the customers.

The bank, basking on the success of the Hakuna Matata campaign,
further reinforced its brand message through the ‘Say Yes’ campaign. This is
one that seeks to tell the audience in clear terms that they should be positive
in life. The bank positions itself as a worthy friend to the customers, sharing
their dreams, and telling them it is only Skye Bank that is a true friend. The
platform is hinged on Emotional Selling Proposition, which evokes feelings of
the consumers to have positive spirit all times. The radio jingle ‘I wish I
have a friend, saying Yes to My Dreams’ became a sing along for everyone.

Succinctly put, the consumer can have possibilities if only he
or she thinks about it. He should just believe everything about his life is
possible when he says YES – which means he should just believe in himself and
his potentials. The campaign, even though now rested, is one that really leveraged
on the impact of emotive appeal that can be forgotten in a hurry. The new
campaign tells the audience ‘How Can We Say Yes To You’. This also positions
the bank as a dependable friend that can shoulder the burden of the cosumers.

Diamond Bank is also joining the fray of leveraging on Emotional
Selling Proposition to reach out to all segments of the society.

Though Emotional Selling Proposition goes the extra mile in
building brand loyalty and creating emotional attachment with consumers, it
should also align with the brand promise. Such campaigns can only translate to
success when consumer experience of the brand brings satisfaction and
fulfilment.

FinBank on Wednesday asked an Abuja High Court to dismiss an N850 million lawsuit accusing it of defaulting on a loan agreement.

The bank is being sued by Osino Holdings LTD, an indigenous company, for fraud and deceit over the non-payment of a loan.

At the resumed
hearing of the case on Tuesday, the presiding judge, Olasunbo Goodluck,
granted the bank an extension of time to file its statement of defence,
and a hearing fixed for September 28.

History of the case

Osino Holdings said
that on January 21, 2008, it applied for a loan of N130 million through
the bank so that it could buy the Goldstar Petroleum Station in Kaduna.
According to the chairman of the company, Emmanuel Osita Okereke, the
bank asked for a N30 million equity contribution and promised to pay
out the loan within a few days.

“I made several
trips to Lagos to hold meetings with the bank’s group head of private
banking, Chinwe Attanbansi,” said Mr. Okereke.

“It was in one of
such meetings that she assured me that as soon as the [my company] can
pay its equity contribution, the loan would be disbursed to it,” he
said.

Mr. Okereke said a
bank draft of N30 million was issued to the bank on May 13, 2008,
though it was not cashed until June 23 – over a month after the draft
was handed over. After the bank’s assurances of the disbursement of the
loan, the company started to invest in the Kaduna filling station.

However, he said
that after payment, the bank insisted on evidence of landed property as
collateral for the loan. The chairman said he complied with the request
for additional collateral, but said that as at December 2009, he had
still not received any money from the loan.

“The defendants’
refusal or neglect to disburse the loan as assured, has led to the
plaintiff’s heavy loss on investment in the said Goldstar Filling
Station in Kaduna,” read court documents.

Mr. Okereke accused
the bank of collecting the draft from his company for almost two years
to boost its profile. Osino Holdings LTD is now asking the court to ask
the bank to reimburse its N30 million equity contribution at the
current lending rate. The company is also asking the bank to pay it
N850 million as general damages for the loss it suffered during the
transaction.

I recently learnt a lesson in basic capitalism from two hawkers on the streets of Antigua, Guatemala.

The first hawker
approached me, selling wooden flutes that I had no particular interest
in. He urged me to part with US$25 for one. For a moment, I thought of
my youngest son who has a passion for playing the flute and the
trumpet.

The hawker’s basic
commercial English would tickle your ears. But then, my Spanish is not
enough to get anywhere beyond basic greetings. I offered to pay US$5,
and the guy lowered his price to 15. Eventually, I dished out $10 to
this guy who took the cash and promptly moved to search for another
‘tourist.’

The flute under my
armpit, I swaggered with friends for dinner in a beautiful restaurant.
Not too long after, another hawker caught up with me. Guess what? He
had flutes to sell and without any bargaining, he announced they went
for $1 apiece. That was the end of lesson one: never rush the
celebration of a bargain.

Some evenings
later, my friends and I decided to sample the culinary delights of
Antigua again. A young girl soon made an approach with a collection of
pendants and scarves for sale. I was not ready to be sucked in a second
time.

When she pushed her
pendants at me I showed her one I had bought earlier in the day
dangling from my neck. Next, she brought a scarf. Too bad, I already
had one around my neck to ward off the cold. She looked at me for a
while and asked in impeccable English, “Why don’t you want to spend
money?” Taken aback, my response was laughter. Then she fired a second
salvo: “open the other wallet!”

She taught me a
sound lesson in basic capitalism. First, you must spend money. Is that
not the logic about how to stimulate recovery from the financial crisis
the world has been plunged into? More money into the hands of private
sector operators is expected to bring efficiency over profligacy
caskets.

Open the other
wallet? It was later on it dawned on me that some tourists probably
always carried two wallets: one with the local currency and another
with dollars or some similar currencies, but I had only one wallet.

With the
reflections from Antigua hawkers, it was time for us to visit San Juan
Sacatepéquez, a municipality in Guatemala whose local people engage
mainly in agriculture and production of flowers. The visit to a region
of 12 communities with a population of 75,000 revealed an iconic
struggle between local peoples on the one side, and combined teams of
governments and industry on the other.

After listening to
the people at a community meeting and then to the minister of energy
and mines of the country, I saw similarities with community struggles
in Nigeria. A major source of conflict has often been the peoples
demand for dialogue.

Shattered peace

The people recalled
that peace was shattered in 2006 when Cementos Progreso moved in to
commence exploratory activities for mineral exploitation for cement
production. Cementos Progresso is embarking on this project in
partnership with Holcin, the world’s second largest multinational
cement company, which is raising environmental dusts in other
countries, including South Africa.

The people insisted
they were not consulted and that an Environmental Impact Assessment
(EIA) prepared for the project was not participatory. Also, when they
asked for consultative meetings with the company and the government,
they were rebuffed. At a point, a state of emergency was declared in
the area and initial works on the project took off under that cover.

Community people
insist that this denial of consultation violates their rights, as
established under International Labour Organisation’s convention 169,
which requires that affected communities be consulted on projects that
will affect their territories. Guatemalan constitutional court ruled in
December 2009 that licences issued by the ministry of energy and mines
for the recognition, exploration, and mining and hydropower licences
without consultation, is unlawful and arbitrary and violates the
constitutional right of consultation.

With official
rejection of dialogue, the people went ahead and voted against the
project. The official response was repression, heavy-handed attacks,
deaths, and also imprisonment of three local people.

The people believe
their territory has over 34 different solid minerals and that the
cement company’s move is a ploy to open the area to mining of these
other minerals. They fear that the dust from cement operations would
damage their flower production and cripple the local economy.

Moreover, they
believe a road the company plans to build will only benefit the company
by providing it a link to the inter-America highway and would ignore
the community’s earth road that is in sore need for upgrading and
repairs.

When the issues
were tabled before the minister, the answers were telling. Of course,
they had the best intentions. They needed to fight poverty. Poverty
causes environmental degradation. An EIA was conducted and approved by
the relevant ministry.

A United Nations
agency also reviewed the EIA and cited the potential for heavy dusts as
an impact that needed action. Then he added that there was a
constitutional gap with regard to consultations. There is no clarity
about the meaning of popular consultations and who would be involved
and what the scope of such consultations should be. The ILO Convention
169 does not confer the power of veto to any consultative forum that
may be set up.

At the moment, the
project is stalled and there is an uneasy calm in the communities. The
government said mining works would commence only when a “friendly”
agreement is reached with the community.

This reminded me of
the lesson I got from the hawker about the approach of governments to
mining and other projects: open the other wallet – exploit anything
that can be exploited, whether you need it or not.

Lesson over!

The Institute of
Chartered Secretaries and Administrators of Nigeria (ICSAN) has said it
would prosecute its members who violate corporate governance rules in
the country. ICSAN, which membership comprises lawyers and
administrative managers, is the recognised professional body in Nigeria
dedicated to enhancing the status and practice of corporate governance
and public administration.

Moses Adeisa, the
institute president, said corporate governance was the important
challenge facing public and private businesses in the world today.

“Our members are always expected to adhere to the rules of corporate governance,” Mr. Adeisa said.

“Anyone of them
found wanting will be brought before the disciplinary committee, which
tries them to give them fair hearing. Anyone found wanting will be made
to face sanction of either a fine or other punishment under the law.”

He, however, said
the institute does not have the power of enforcement under the law, but
would rather subject its members to the disciplinary rules of the body.

Collaborating with regulators

He said the
institute was collaborating with regulatory authorities in the training
and retraining of their staff, in order to strengthen the enforcement
of corporate governance in the country.

In his address at
the institute’s 34th annual conference with the theme, ‘Managing Growth
in Challenging Times: The Significance of Corporate Governance’ held in
Lagos yesterday, Adeisa said the current economic recovery, which has
begun by government, must be made to work in order to build the
confidence of investors.

“The shakeup in the
financial sector is not really as a result of failure of corporate
governance, but it emphasises the need to enforce corporate governance
practices,” he said.

He said company
secretaries are expected to advise the board of directors on changes in
laws as it affects the operations of the sector.

“He must keep up
with changes in the laws, business, and finance and understand their
implications for better decision making,” he further said.

Cause of distress

Tunde Lemo, deputy
governor, banking and payment systems department of the Central Bank of
Nigeria (CBN), said poor corporate governance has been one of the
primary causes of all known distress in the Nigerian banking industry,
including the latest incidence which required the direct intervention
of the CBN in some banks last year.

“Banks’ reports to
Central Bank and investors were seldom accurate, thus depriving the
Central Bank of the right information to take timely and effective
regulatory decisions. Investors and other stakeholders were also misled
by this distorted information supplied by the banks,” Mr. Lemo said.

In his keynote address, Mr. Lemo said that a safe and sound system is predicated on good corporate governance practices.

“The achievement of
vision and mission of your respective organisations would remain a
mirage without good corporate governance. The various professional
bodies must promote and enforce ethical behavior that will reinforce
strong corporate governance practices,” he said.

Mr. Lemo added that
instituting corporate governance was important for private sector
companies, as well as public sector firms where it has begun to receive
increased attention. “This is particularly the case when countries are
attempting to curb widespread corruption within the public sector, or
when they are preparing public enterprises for privatisation. In either
scenario, sound corporate governance helps to ensure that the public
gets fair return on their national assets,” he added.

George Oguntade, a
retired Supreme Court justice, who chaired the conference, observed
that poor corporate governance was the foundation for corrupt
practices.

“There is huge unemployment; growth is a mirage in Nigeria due to the problem of corruption,” Mr. Oguntade said.

“Our educational
system is deeply troubled. We worry everyday whether we can survive as
a nation. Put bluntly, this country is in a state of self doubt,” he
added.

He said Nigerians must begin to consider the negative influence of corruption in order to curb the menace.

Some
finance experts say money and treasury bill rates are expected to rise
in the short to medium term due to the tightening in monetary
conditions.

This
is also because the government’s ability to inject substantial amounts
of liquidity will be limited, as the excess crude account has been
depleted, although recurring spending is still likely to remain robust
ahead of the 2011 general elections.

In
a move that took most industry watchers by surprise, the Central Bank
signalled a move towards a tightening of monetary conditions in the
country with its decision to increase the policy rate (MPR) by 25 basis
points from 6.0 percent to 6.25 percent, in contrast with market
expectations.

The
decision comes in the wake of indications last week by the bank
governor that the policy rate may remain neutral. However, the threat
of higher inflation rates as the nation enters into the early stages of
the 2011 general elections cycle may have persuaded the rate-setting
committee to move away from its previously accommodative position.

“Overall,
this means short-dated rates will incrementally catch up with
long-dated bond yields, which have been tilted to the upside given the
DMO’s incremental issuance needed to bridge this year’s rising fiscal
gap (N120 billion in September, from N126 billion in August and a
median of N80 billion in half year 2010)”, said Samir Gadio, emerging
markets strategist, Standard Bank Plc.

Afrinvest,
an investment firm, said while the upward revision to the Standard
Deposit Facility was largely in line with its expectations, it views
the revision to MPR as mildly surprising given the restated commitment
of the Central Bank towards growing credit to the real economy.

“The
magnitude of this change, however, reveals only a slight concern,
notably within the context of recent inflation data, which suggests a
gradual upward trend,” the firm stated.

Lending challenges may remain

The
benchmark rate had been maintained at a record low level of six percent
since July 2009, amid an accommodative monetary framework as the
Central Bank attempted to revive private lending and boost growth, even
as private sector credit expansion decelerated further to 9.8 percent
in July.

As
such, experts say a turnaround in lending to the real economy has not
materialised, despite systemic excess liquidity, which highlights the
weakness of the monetary transmission mechanism, especially given the
structural issues in the banking system.

“Accordingly,
we think AMCON’s role will be critically important to improve risk
perception across the board and progressively boost financial
intermediation and lending over the next few years. It will also
ultimately contribute to allaying fears of investors, which have caused
the recent poor performance of the Nigerian Stock Exchange, with the
banking sector weighting heavily on the index,” Mr. Gadio said.

Addressing Inflation

The
Central Bank also factored in a higher inflation environment, as it
reiterated its earlier position on the threat of inflationary pressure
arising from several other factors.

Mr.
Gadio, however, said that the MPC will probably revise its year-end
forecast given that single-digit consumer prices are highly unlikely in
the framework of the new CPI basket, released by the National Bureau of
Statistics.

“In
our view, this makes sense if one factors in the relatively weak money
multiplier and sluggish credit metrics. Additionally, the volatility in
inflation is still driven by its exogenous component, which would make
tricky the implementation of inflation targeting in the near future,”
Mr. Gadio said.

The
committee noted that the key policy challenges remained the continuing
sub-optimal growth in money supply, coupled with the negative growth in
private sector credit, as well as the subsisting high retail lending
rates in the face of substantially low wholesale inter-bank and retail
deposit rates.

Nigerian consumer
products firm, PZ Cussons, said on Wednesday its pre-tax profit rose
1.5 percent to 863 million naira in the first quarter to the end of
August.

Turnover fell to 12
billion naira in the period from 13.88 billion naira the year before,
the company said in a filing with the Nigerian Stock Exchange.

South Africa’s
retail sales growth quickened by 7.9 percent year-on-year in July at
constant prices, compared with an upwardly revised 7.6 percent increase
in June, Statistics South Africa said on Wednesday.

Stats South Africa
said retail sales grew by 6.5 percent in the three months to July,
compared to the same period a year ago, also at constant prices.

Economists polled by Reuters last week forecast sales growth would brake to 6.9 percent year-on-year in July.