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Appointments since assuming office

What really
happened was that we had a deployment of a staff for administration.
Our staff just swapped places. The manager for admin took over from the
other department while the guy in that department moved over to admin.
So there was no appointment as such of a new admin manager. They just
swapped places and that was all.

I read in the
press that a new manager was appointed or has been recruited. There was
nothing like that. No recruitment or appointment has been done since I
took over.

Information dissemination

To ensure that the
public stop rumour mongering, we are working out a communication plan
which is one of the short term objectives of this administration. We
are going to have a communication plan to let the market know what is
going on so that people can take informed decision as and when it’s
necessary. So I can assure you that there will be consistency and
information flow.

Plan for the market

My agendas of
uplifting what I met on ground to a higher level are three for now.
One, I’m going to ensure I put in place a credible communication plan.
I’ll also ensure that I follow up to make sure that the executive
selection is properly carried out and that we have a credible process
that is auditable so that whoever emerges as the new director general
of the NSE is the right person for the position. Finally, I’ll work
with the forensic auditors to ensure that we come out with the true
position of things so that there are no longer speculations as to the
financial situation of the Exchange. Those are the three things I am
concentrating on for now.

Purchase of a new trading platform

We are forging
ahead with the process of purchasing a new trading platform that will
be comparable in all material aspects to those used in other exchanges
such as the New York Stock Exchange and the London Stock Exchange.

The Exchange’s
current trading platform is very effective and efficient. What we are
only trying to do is to upgrade it to a higher level because, as we all
know, technology is moving and we cannot lag behind. Even the London
Stock Exchange is upgrading. You can have the best technology today and
by tomorrow it’s no more current. You must make sure you play within
the international market because that is the only way you can attract
international investors.

A trading platform
is built over a number of months; in most cases it doesn’t take less
than 18 months, from the commissioning to the final completion. This is
why we have to start the process now.

The cost of the new trading platform is not known yet. We are still in the process.

Presentations are
being made by the owners of the London Stock Exchange and the New York
Stock Exchange to the NSE council and management. I guess it is after
all these have been done and the selection of the new Exchange’s head
has been concluded that the cost element will be looked into. And as we
progress, this information will be disclosed.

On the current unstable market trend

The trend is a
hallmark of a dynamic stock market which cannot remain static. I wish
to re-affirm that our market fundamentals are strong and the current
trend is a phase that would pass away.

Markets across the
globe are also experiencing a downswing as institutional investors
express concerns on the stability of the world economy. This global
trend confirms the thinking that the stock market is a barometer for
the economy. We need to appreciate this in our analysis of transactions
on the market because the quoted companies cannot operate in isolation
from the economy.

Lessons for investors

One of the lessons
that investors through the Exchange need to learn from the global
meltdown is the essence of portfolio diversification. Many investors
had hitherto concentrated on equity at the gross neglect of other asset
classes, especially fixed income securities. Today, awareness is
gradually rising regarding investments in bond as many state
governments and corporate entities have applied to raise funds on the
market via bonds. It must be noted that investment in bonds guarantees
a fixed income. Until the late eighties, the bulk of investment through
the Exchange was in debt securities, before equity investments took the
centre stage.

As part of the
Exchange’s commitment toward encouraging more investments in government
bonds, in January, 2010, the council reduced transactional charges for
bonds.

We expect more
companies to take advantage of this gesture by considering the bond
option in their capital raising planning. Investors should also take
advantage of the fee reductions to include fixed income securities in
their portfolios. It is heartwarming to say that the Exchange’s trading
platform is effectively configured for trading bonds. Listing bonds on
the market would not only increase its depth but enhance the rating by
the international agencies that prefer quoted securities in rating
stock exchanges.

Our goal is to
build investors’ confidence through regular and professional provision
of accurate information and dissemination of such information, given
the sensitive nature of the capital markets.

The
Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) says the
Sovereign Wealth Fund being proposed by the Federal Government is
illegal, as its foundations are not rooted in the provisions of the
country’s constitution.

The Fund is for the
accumulation of excess revenue from trade and crude oil exports for
investments and development of critical infrastructure that would
benefit both the country’s economy and the citizenry in general.

Olusegun Aganga,
the Minister of Finance, said the decision to establish the Fund is to
enable it serve as a catalyst for the nation’s economy development.

Mr. Aganga said the
apparent lack of discipline among managers of the nation’s finances
over the years has necessitated “a very strong structural vehicle,
properly managed by local and international advisers, to meet the
triple objectives as a stabilisation fund to support annual budget
deficits; savings for future generations, as well as funding for the
development of the nation’s basic infrastructural needs.”

Though
consultations are said to be ongoing on its operational structure,
management as well as other governance issues preparatory to its take
off, Ibrahim Dankwambo, the Accountant General of the Federation (AGF),
said last week that the government has already set aside $1billion
(about N150billion) as seed money for the Fund.

But, a RMAFC
Federal Commissioner, who spoke last Thursday on condition of
anonymity, said “government is treading the path of illegality in
pursuing a justifiable agenda”, pointing out that “no matter the good
intentions of government, the structure establishing the SWF would
render it defective, illegal, null and void, if its existence and
operation are not derived from the provisions of the country’s
constitution.”

He said that though
the revenue mobilisation agency is yet to formally write to the
Presidency on its position on the proposal, it, however, made its
concerns known during a meeting convened recently by the Federal
Ministry of Finance to discuss the issue of government treading the
same path of unconstitutionality when it established the Excess Crude
Account (ECA) and the Excess Revenue Account (ERA).

Erosion of Obasanjo’s legacy

The ECA was
established in 2003 by the Olusegun Obasanjo administration to
accumulate revenues earned from crude oil exports above approved
benchmark price indicated in the annual budgets, while the ERA was
opened recently for all monthly revenue accruals in excess of about
N365 billion pegged as ceiling for distributable allocations for
sharing by the Federation Accounts Allocation Committee (FAAC) to the
Federal and the 36 state governments as well as the Federal Capital
Territory (FCT), Abuja.

The ECA was also in
fulfilment of the conditions by Nigeria’s debtors for the external debt
pardon Mr. Obasanjo got the country. But the Act came into force in
July 2007 with the account reaching $20 billion in January 2007.

Sections 162 of the
1999 Constitution stipulates that all federally collected revenues,
namely oil and non-oil revenues earned from crude oil sales, royalties,
petroleum profit tax (PPT), gas revenue, rentals, penalties from gas
flaring and miscellaneous oil earnings as well as company income tax
(CIT), import duties, excise duties, and Customs penalty charges are to
be lodged in the federation account.

The RMAFC is the
only government agency mandated under Section 162 (2) and (3) to
recommend the distribution of the amount standing to the credit of the
Account among the federal, state and local governments in each state on
such terms, and in such manner as prescribed by the National Assembly.

The implication of
this, according to the commissioner, is that any disbursement,
withdrawal or appropriation of government revenue without strict
compliance with these provisions, as has been the case with
government’s management of the ECA and ERA, is unconstitutional.

“The RMAFC has
consistently criticised the practice by the Presidency and the Federal
Executive Council (FEC) to approve withdrawals from the ECA, which has
been depleted from over $22billion in 2008 to about $460million as at
last month. The FEC is made up of a group of politicians, whose
decisions should not set aside the supremacy of the constitution,
particularly on issues that have to do with the nation’s finances.

“Though the
minister has indicated that the ownership of the SWF would be devoid of
the control of either the federal or state governments, and managed
through a Council, whose members would be made up of representation
from all parts of the country, including women groups, student bodies,
civil society organizations, public and private sectors, its existence
still requires a constitutional backing to make it legal. The only way
that can be done is if the constitution is amended,” he said.

Meanwhile, Razia
Khan, a financial analyst and regional head of research, Africa for
Standard Chartered Bank, London said that “the sheer amount of
liquidity that has been pumped into the system, with spending ramped up
dramatically in this year’s budget, and an increased pace of disbursal
from the excess crude account, eroding much of Nigeria’s saved oil
windfall is a concern.”

“While the evidence
suggests that economic growth remains weak – for now, at least –
limiting the likelihood of significant demand-related price pressure,
the amount of liquidity out there still sits uncomfortably with many.”

With
a population of over 150 million people, Nigeria is a marketers’ dream.
Both local and international companies must look for ways to increase
their market share by employing innovative marketing strategies. For
years, celebrities have thrown their fame and image to support brands
and consumer products and there has been a steady increase of celebrity
endorsement in Nigeria; this is good.

There must be a
mutually beneficial relationship for an endorsement and it should offer
huge possibilities for both entertainers and the companies with whom
they partner. The artist must be able to give the endorsing company the
right exposure to its target segment and in return the artist has an
opportunity to earn money and even greater visibility.

Name and image

The most valuable
asset a celebrity has is his or her name and image. Often artists are
totally consumed by their creativity and ignore the financial value of
their image. By building a strong and exclusive personal brand,
entertainers will be able attract the attention of companies who wish
to have them identify with a product. Such talent can increase
recognition and acceptance of a brand by tapping into the consumers’
passion for the persona and image of our celebrities, which could
translate to a boost in sales.

Once a celebrity’s
fame is firmly entrenched, companies may be willing to invest millions
of Naira to associate that image with their brand. Artists should take
deliberate steps to develop and effectively position a strong and
timeless personal brand to maximise their earnings whilst they are
still in the public consciousness; their image can be used to
supplement and diversify revenue streams. Indeed it is common for a
good part of a star’s wealth to be attributed to sponsorships and
endorsements outside their professional calling.

The impact of
celebrity endorsement on a brand can be significant and many corporate
and product marketers such as Glo, Etisalat, MTN, Guinness, Chivita,
Lux, Onga, GTBank and Lagos State Government have recognised its power.
It is gratifying to see Nigerian movie stars, musicians, comedians, TV,
Radio and sports personalities and other celebrities like Lagbaja,
D’Banj, Tu Face, Asa, Cobhams, Agbani Darego, Oluchi, Joke Silva,
Genevieve, Kate Henshaw-Nuttal, Ali Baba, and Basket Mouth, lending
their images to local and international brands.

The popularity and
success of celebrity endorsement has in other markets prompted stars to
expand their portfolios by launching their own clothing, perfume, and
other brands to keep their names out there and secure their financial
future.

The celebrity’s credibility

Celebrity’s attract
attention, and an artist should be able to convince and connect with
the consumer via credibility. A corporate brand with a core focus will
go out of its way to seek the right celebrity to match the brand as the
core idea of the campaign is as important for the brand as it is for
the celebrity. A good example of a celebrity successfully matched to a
product is former heavyweight champion boxer, George Foreman, a fit and
energetic boxer who is a good spokesman for healthy cooking and eating.
His positive image continues to impact sale of the “George Foreman
Grill” long after he is done with the boxing ring.

Guard your reputation jealously

As a celebrity
bestows special attributes on a brand, in the same way, his image and
public reputation can tarnish the brand’s image. Sometimes through
their behaviour or due to a scandal, celebrities betray the public
trust that has been endorsed by their selection.

It is debatable
whether or not celebrities should be held to a higher standard of
conduct but there are certainly issues to consider: If you are being
paid for your talent and skill as a musician, a sports personality or
an actress, you’re allowing your image, charisma and ability to draw
people to you and by association to the product is thus of huge
importance. If your behaviour causes you to no longer fulfil the
demands of the role, then a company must protect its product and must
consider whether the relationship is still beneficial.

Companies are aware
of the potential hazards of celebrities endorsing their products and
many contracts contain a moral clause that allows a company to exit
without penalty if the celebrity’s behaviour is seen to affect the
company’s reputation. Some of Tiger Woods endorsement deals were
discontinued and advertising appearances cancelled. However due to the
sheer magnitude of his celebrity, and his earning power for the
products that support him, Nike and a few others continued to stand by
him.

Celebrities usually
turn out to be the greater losers financially and in terms of good will
when their image is tainted in some way. Because of the sensitive
position they occupy in the public eye and often as role models to
their fans, it is thus important for Nigerian celebrities to guard
their reputation jealously.

Celebrity
endorsement is earned; it is in itself an endorsement of one who is
perceived to be fit to stand out in the public eye as a role model to
their fans, and to represent a brand. A celebrity who has successfully
built a personal brand is thus more likely to be sought after and can
capitalise on that image and earn significant supplementary income
through endorsements. The reach of endorsements can be tremendous and
goes much farther than the immediate cash benefit; there is the
attendant recognition through television, radio, newspapers, billboards
and other media.

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