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A
spokesperson of the Nigeria Communication Commission (NCC) has said
that the commission is not involved in granting tax waivers to
telecommunication companies.

The
House of Representatives had accused the commission of helping to
arrange dubious tax waivers for telecommunication companies following a
review of the Auditor General’s reports between 2003 and 2005 asking
the Economic and Financial Crimes Commission (EFCC) to investigate the
waivers.

Reuben
Muoka, NCC’s spokesperson, said in a telephone interview, that, “Those
associating the commission with tax holiday to the telecom companies
are totally misinformed. The commission does not grant tax waivers for
telecom companies.

“Those
responsible for recommendation of tax exemptions are the Nigeria
Investment Promotion Commission (NIPC), Federal Ministry of Finance,
Federal Ministry of Commerce, National Planning, and other government
agencies.”

Mr. Muoka further explained that tax waivers are not only in the telecom sector, but in all other sectors of the economy.

“The
essence of the tax holiday to pioneers was to explore the sector and
the tax waivers given to the telecom companies were fully justified
because they met the criteria for such holiday,” he said.

Meanwhile,
Femi Babafemi, EFCC spokesperson, said that investigations were ongoing
on the matter. “I am aware that we been investigating the NCC over the
tax waivers and in relation to that we invited the former executive
vice-chairman, Ernest Ndukwe, for questioning in 2009 and the
investigation is still on.”

Encouraging first timers

Also
speaking, Kenneth Ugbechie, the secretary of Africa Telecoms
Development Initiative, a non-governmental organisation, said, “When
the telecom companies were given licences in 2001, they were given tax
waiver, which is the same principle all over the world for people that
are investing into business venture, which is called tax wavier or tax
holiday.

“It
is to encourage first timers and that was what the federal government
did in the case of the telecoms companies. But what people are saying
now is that the telecom companies ought not to have been given waiver
since those companies were declaring profit from day one.”

Mr.
Ugbechie explained that the reason why the telecom companies have been
making profit in their business is because they have done well.

“I
think that is illogical to say that they should not have been given tax
waiver. They started making profit because they did their job well.
They deserve to be given tax wavier because as at the time they came
into the country, the sector was poor and nobody was willing to invest
in the sector,” added Mr. Ugbechie.

Mr.
Muoka said, “The dividends of that tax holiday are very visible in all
sectors of the economy from the banking sector, labour, and several
business activities that have been generated from telecom sector.”

“The
Gross Domestic Product (GDP) has improved as a result of the telecom
sector and the image of the country within the global community has
gained a lot of mileage as a result of telecom revolution,” Mr. Muoka.

“When something is done well and done rightly, we should not
quarrel with it. The House of Representatives have to be told the truth
and stop chasing shadows,” concluded Mr. Ugbechie.

“The issue is not about decision to pay or not. The issue is that the corporation is still bleeding as a result of challenges, including subsidies on petroleum products supplies that are not being replenished, making it very difficult for it to meet certain obligations. The truth, as we know in the federal ministry of finance as at today, is that NNPC’s cash flow warrants that we work with them till it is able to stand on its own as a business entity.

“One needs to understand the operations of the NNPC. One cannot be producing a product that costs N60 and be selling at N40, and would not bleed. It does not make sense. I know for a fact that the way NNPC is as at today, they do not have the cash flow to pay the debt.

“That was the immediate past minister of state for finance, Remi Babalola, responding to reporters inquiries last June at the height of the raging controversy about the Nigerian National Petroleum Corporation (NNPC)’s insolvency and its inability to pay the over N450 billion debt to the federation accounts.

Mr. Babalola was not talking as an ordinary folk in the street. Apart from occupying the second highest office in the ministry that superintends over all matter relating to the finances of the Federal Government, he was the chairman of the Federation Accounts Allocation Committee (FAAC).

Membership of the committee is composed of not only the representatives of all revenue agencies in the 36 states of the federation and the Federal Capital Territory (FCT), Abuja, but also their affiliates at the federal level, including the federal ministry of finance, Central Bank of Nigeria (CBN), Federal Inland Revenue Service (FIRS), Office of the Accountant General of the Federation (OAGF), Budget Office of the Federation (BOF), and the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC).

Therefore, there was no doubt that he was talking from a position of strength, considering that the statistics and figures of the daily operations of the state-owned oil company was at his disposal.

NNPC’s group managing director, Austen Oniwon, was to later corroborate Mr. Babalola’s position in his response to a FAAC letter giving his management a final ultimatum to come up with a firm repayment schedule.

In the letter, Mr. Oniwon was unmistaken about the facts of the serious financial difficulties the NNPC was facing, which, he claimed, has not only incapacitated its ability to regularly pay for its daily domestic allocations, but affected its capacity to settle its fuel import bills.

“The corporation is insolvent, as its current liabilities exceeded its current assets by N754 billion, as at December 31, 2008”, he declared, insisting it would be able to pay the N450 billion owed the Federation Account only when the Federal Government has reimbursed the N1.156 trillion it reportedly spent on subsidy expenses incurred for petroleum products supplies and distribution since 2003.

Other outstanding claims in favour of the NNPC, he said, included expenditures on repairing/replacement of vandalized oil industry assets and attendant petroleum products losses; demurrage and cost of holding strategic reserves for petroleum products on behalf of the government; and financial difficulties as a result of disequilibrium between operational costs and actual cash-flow streams.

Mr. Oniwon is also supremely in a position to know the difference between the truth and fallacies about the health of the organisation he presides over. All the over 31 subsidiaries and affiliates of the corporation report directly to his desk on a daily basis, therefore, the truth should not be lost on him.

Are Mr. Babalola and Mr. Oniwon in some sort of games to shield the facts about the financial state of the NNPC? Well, it is difficult for discerning followers of the controversy to conjecture a guess from the blurring façade that mirror available facts.

But, the spontaneous reaction by ministers of information and finance, Dora Akunyili and Olusegun Aganga to the contrary, that the “NNPC is not insolvent, … as a going concern” only aggravated the confusion in the debate in search of the truth.

Who is right between Mr. Babalola and Mr. Oniwon on the one hand, and Mrs. Akunyili and Mr. Aganga on the other? Are there facts available to the latter that the former could not be availed with? Could it be that Mr. Babalola, FAAC, and the NNPC were in some kind of political games to deceive Nigerians on the state of health of the organisation that epitomizes the face and strength of the Nigerian economy? Are Mrs. Akunyili and Mr. Aganga playing the ostrich, by burying their heads in the sands and pretending to demonstrate patriotic flavor by shielding the country from the harsh reality of the truth?

If the NNPC is a flourishing going concern, why is it difficult for it to pay up its debts to the Federation Account? And why is the Federal Government keeping quiet in the face of the obvious constitutional travesty? If the NNPC has been exporting Nigeria’s crude, both during high tide and low price regimes at the international market, and the constitution demands that all earnings from such sales and other activities should first be transmitted into the consolidated revenue account, why is the government tolerating the obvious recalcitrance of the NNPC, by allowing it to withhold such funds for such a long spell of time? Is this loud silence and complacency by government part of the pretentious war against corruption?

Or could Mr. Babalola’s redeployment to the special duties ministry be the price for a sacrificial lamb who dared to speak a damning truth? Whatever are the answers to the above puzzles are only in the womb of time.

Trading activities
at the Nigerian Stock Exchange (NSE) were characterised by mixed
performances last week, as market indicators continued their unsteady
movements.

The NSE All-Share
Index, at the close of last week’s trading, appreciated by 122.06 units
or 0.5 per cent to close at 25,106.86 basis points while the market
capitalisation of the 199 First -Tier equities closed higher at N6.14
trillion, after opening the week at 24,984.80 and N6.11 trillion,
respectively. The All-Share Index depreciated by 3 per cent during the
previous week.

All the four
sectorial indices depreciated at the close of trading last week. The
NSE Food/Beverage Index depreciated by 1.45 points or 0.2 per cent to
close at 810.17, the Banking Index depreciated by 1.38 points or 0.35
per cent to close at 372.12, the Insurance Index depreciated by 2.83
points or 1.6 per cent to close at 174.39 and the NSE Oil/Gas Index
depreciated by 5.84 points or 1.56 per cent to close at 370.44.

A total turnover of
1.2 billion shares worth N11.61 billion in 36,855 deals was recorded
last week, in contrast to a total of 1.23 billion shares valued at
N11.3 billion exchanged during the previous week in 33,065 deals.

Most active

The Banking
subsector was the most active during the week, measuring by turnover
volume, with 692.9 million shares worth N5.8 billion exchanged by
investors in 16,423 deals. Volume in the Banking subsector was largely
driven by activity in the shares of First Bank of Nigeria, Zenith Bank,

Fidelity Bank and
Access Bank. Trading in the shares of the four Banks accounted for
319.36 million shares, representing 46.1 per cent and 27.2 per cent of
the subsector’s turnover and total volume traded during the week,
respectively.

The Insurance
subsector, boosted by activity in the shares of AIICO Insurance and
Guaranty Trust Insurance, followed on the week’s activity chart with a
turnover of 96.1million shares valued at N108.3 million in 1,459 deals.
Last week, the Banking subsector led on the activity chart and was
followed by the Construction subsector.

Gainers increase

A total of 38
stocks appreciated in price during the week, higher than the 28 of the
preceding week. Also, as in the preceding week, Northern Nigeria Flour
Mills led on the gainers’ table with a gain of N5.83 to close at N42.84
per share while Nigerian Breweries followed with N4.59 to close at
N72.60 per share.

On the losers’
table, a total of 49 stocks depreciated in price during the week, lower
than the 64 of the preceding week. African Petroleum led on the price
losers’ table, shedding N5.79 to close at N21.20 per share while Flour
Mills of Nigeria followed with a loss of N3.01 to close at N71.00 per
share.

Two equity prices
were adjusted for interim dividend as recommended by the companies’
Board of Directors. Guaranty Trust Bank was adjusted for an interim
dividend of N0.25 per share while Nigerian Aviation Handling Company
was also adjusted for an interim dividend of N0.25 per share.

Bond trading

A turnover of
239.15 million units worth N243.862 billion in 2,890 deals was recorded
last week, in contrast to a total of 166.74 million units valued at
N170.761 billion exchanged in 1,762 deals during the previous week.

The most active
bond, in terms of turnover volume, was the 10.00 per cent FGN July 2030
with a traded volume of 50.45 million units valued at N49.384 billion
in 943 deals. This was followed by 4.00 per cent FGN April 2015 with a
traded volume of 34.5 million units valued at N28.818 billion in 336
deals. Only 18 of the available 37 FGN Bonds were traded during the
week, compared with the 20 in the preceding week.

However, there were
no transactions in the Federal Government Development Stocks, State
Government Bonds and Industrial Loans/Preference Stocks sectors.

Which is the more
remarkable? The fact that in its statistical news for July 2010, the
National Bureau of Statistics (NBS) describes the revision of the basis
for computing the consumer price index (CPI) or the fact that on the
strength of this restatement, previous estimates of domestic price
movement may have been slightly understated (as has long been suspected
by most commentators on these data)?

At issue with the
former fact is why the NBS chose July 2010 to revalue the consumption
expenditure data from the May 2003-and September 1985-based indices,
and why it opted for November 2009 as the new basis for the index? Are
there triggers for such adjustments, and what pray tell, might these
be? Or is this a periodic thing, a key part of the statistical bureau’s
calendar? In which case, when might we expect the next revaluation?

No less important a
line of enquiry is why the NBS did not think as part of this
revaluation of the basis for computing the domestic inflation rate, to
re-weight the makeup of the basket of goods on which its computation is
based.

A good number of
commentators have argued that a basket heavily weighted (65%+) in
favour of food items (including non-alcoholic beverages, and food of
the imported variety) does not sufficiently reflect the spending
patterns of the most economically active segments of the Nigerian
economy. Thus, if the quantum of spending is what matters to the
movement of prices in the economy, we shouldn’t be looking to the
all-in costs of the average Nigerian to explain such movements.
Instead, we should look to an index based on a basket that reflects the
spending patterns of the financially significant sections of this
economy.

In a sense, one
cavils a bit here. For, evidently, the NBS’ adjustment is driven by its
sense of a change in the mix of goods and services purchased by the
“typical Nigerian consumer”. To gauge the trajectory of this change,
one need only look at the composition of the basket over its many
incarnations, and the weights attached to the respective components.
For the September 1985-based index, the food component alone accounted
for 69% of the basket. This index also included a category “drinks,
tobacco, and kola”, which accounted for a little under 5% of the
basket. With the May 2003-based index, “food” alone had a weight of
63.76%. Add “non-alcoholic beverages”, and this weight rises to 64.41%.

With the new base
(November 2009), however, the bureau has introduced a new category
(“imported food” with a weight of 13.25%), on account of which the old
“food” category now has a much reduced weight of 50.70%.

The question is
what changes do these new categories tell of? Do they reflect a change
in the composition of domestic shopping baskets? Do they reflect the
entrance of new goods and services into the shopping basket, the way a
properly reflective index ought to have in the earlier parts of this
decade when telecoms spend entered household balance sheets to an
unusual extent? Or do they just show how granular the bureau can be
now, in the light of new skills and/or software?

The balance of
evidence favours more granular number crunching competences. The makeup
of the measured basket remains basically unaltered. But should we then
replace the one measure of price inflation (that of the man in the
street, plenty of numbers both, no spending weight) with the other
measure (where the size of the purses, and the items on which spending
goes are statistically significant)?

Not necessarily!
For each measure tells a different story about both the character of
the economy and its likely direction. This latter observation leads on
to another question: why do we have just one measure of inflation in
the country, when in some countries they make do with up to five?

Would, for
instance, monetary policy be better designed if we had some measure
that excluded more changeable items in the current basket? What would
we exclude from our own version of the “personal consumption
expenditures price index” to compensate for those short-term price
changes that could interfere with proper estimates of future long-term
inflation trends in the economy?

Point is that the NBS’ recent adjustments raise a few more questions than they do address.

HSBC Holdings Plc
has emerged the frontrunner to buy a controlling stake in Nedbank,
South Africa’s fourth-largest bank, in a deal that could be announced
as early as Monday, the Financial Times quoted people familiar with the
talks as saying.

HSBC, Europe’s
biggest lender, was set to pip its emerging markets rival, Standard
Chartered, to the post in the race for what could be the last big South
African bank that regulators allow a foreigner to buy, the Financial
Times reported on Saturday.

Nedbank is
controlled by Anglo-South African insurer, Old Mutual, which is
undergoing a strategic overhaul to slim down its complicated structure.

Singapore mining
company, Nava Bharat Pte, will spend $108 million on modernising
Zambia’s Maamba coal mine, which it acquired in December last year, the
head of the Zambian operation said on Saturday.

Kalunga Mumba,
chief executive of Maamba Collieries Ltd., said the money would be
invested in a new coal processing plant and mining equipment over the
next 18 months. The mine is expected to produce 360,000 tonnes of coal
for the first year.

The thermal power
plant is important for the mine’s operations. Maamba, which used to be
a key supplier of coal to the country’s copper mines, lost that
business after the mines switched to using electricity, said, Mr. Mumba.

Nava Bharat in
December acquired a 65 percent stake in Maamba, while 35 percent of the
shares were retained by state-run ZCCM-IH.

Egypt’s Alexandria
Cotton Exporters’ Association (Alcotexa) committed to sell 148 tonnes
of cotton in the week that ended on August 21, an Alcotexa official
told Reuters on Sunday.

The sales comprised 33 tonnes of Giza 88 and 115 tonnes of Giza 86, the official said.

The deal brings
Alcotexa’s export commitments for the 2009/10 season, which began in
September, to 81,550 tonnes of cotton worth $197.68 million, the
official said.

Egypt expects to export 80,000 tonnes of cotton this season, the agriculture minister said in February.

By this time last year, Alcotexa had sold 24,875 tonnes of cotton worth $62.69 million.

Nigerian interbank
lending rates eased to 1.1 percent on average this week from 1.66
percent last week, after the release of large budgetary allocations to
government agencies raised liquidity in the system, traders said on
Friday.

The secured Open
Buy Back (OBB) dropped 45 basis points to 1.05 percent from 1.50
percent last week, 5 basis points above the Standing Deposit Facility
(SDF) rate and 4.95 percentage points below the 6 percent central bank
benchmark rate.

Overnight placement fell to 1.10 percent from 1.75 percent, while call eased to 1.15 percent from 1.75 percent previously.

Nigeria, last
Friday, announced the distribution of 704 billion naira from central
accounts to the three tiers of government – federal, state, and local –
for the month of July.

The Institute of
Capital Market Registrars (ICMR) has faulted the Central Bank of
Nigeria (CBN) and Securities and Exchange Commission (SEC) on the
proposed common share registry for all banks in the country.

David Ogogo,
registrar and chief executive officer of ICMR, said in a statement that
ceding all bank equities to a single entity would create a monopoly.

“This would run
contrary to SEC’s role in guarding against anti-competition practices
in the capital market. And that bank equities currently account for
about 66 percent of the market capitalization of the Nigerian Stock
Exchange (NSE).”

He said that
instituting a single registry for banks would mean that many
shareholders records would be moved from one place to the other, which
would lead to chaos.

Mr. Ogogo condemned what he described as the persistent attempt to single out registrars as the problem of the capital market.

He said the institute expects that the new CBN policy on universal
banking would have positive corporate governance implications in the
capital market, especially as banks would no longer control non-banking
subsidiaries.

The
ongoing efforts by the Federal Government to professionalise the
operations of the Nigeria Customs Service (NCS) will not only help
boost the image of the agency, but will also rid it of its poor public
perception, minister of finance, Segun Aganga, said at the weekend in
Abuja.

Mr
Aganga also said government remains committed to attaining the policy
of 48-hour clearance of goods at the ports as well as general ports
congestion, saying this remains the only way to help lift the poor
image of the agency responsible for fiscal policing of the country on
customs and excise duties as well as sundry trade levies.

The
minister, who was speaking at the inauguration of the reconstituted
presidential task force on the reform of the NCS, described as unfair
the low rating of the Customs in the area of trade facilitation,
particularly in respect of it being blamed for the obstruction of free
flow of trades import and export in the country.

“From
my recent facility tour of the nation’s major entry ports, I found a
greater level of professionalism in the agency than the public knows,
though there is still room for improvement. The Customs we need is one
that not only does its duties professionally, but also one that lives
up to its billing as the prime agency at the nation’s ports, by
actively seeking solutions to the challenges that port users face, and
advising government proactively on them,” he said.

Warning
that government cannot afford to keep losing trade and revenue to
neighbouring countries, the minister pointed out that considering that
international trade in both developing and developed countries has
become a key driver in economic growth and development as well as a
factor in raising the living standards of the people, there was need
for the agency to clean up its act to deliver on its mandate.

Though
he acknowledged improvements in the agency’s year-on-year revenue
generation, with its target for last July exceeding budget as a result
of close supervision and attention of its duties, Mr. Aganga said the
dwindling government revenue in the wake of the recent global economic
crisis has thrown up the challenge for the Customs to increase its
effort towards generating more revenue.

Fully automated

The
comptroller general, Abdullahi Inde, last week, disclosed that the
decision of the NCS under his leadership in the last one year to update
the quality of its operations to meet internationally accepted
operational standards, has not only resulted in the reduction of the
usually long delay in Single Good Declaration (SGD) processes for
imported goods to a maximum of 12 hours, but has facilitated its
efforts to generate an average of N15 million every month.

The
operations of the NCS, he said, is now fully automated, blaming long
delays associated with clearance of imported goods at the ports to
shipping companies and concessionaire agents, who still depend on the
manual system of processing documents.

According
to the minister, the former taskforce had to be reconstituted after two
years for failure to deliver on its mandate, saying members of the new
body would be expected to harmonise the reports of the various reform
initiatives in the past and come up with a blueprint for the
implementation of approved recommendations.

The
taskforce, which has three months to complete its assignment, was also
asked to focus its attention on delivering its mandate by showing the
effects of the measures implemented on revenues in the last three
months.

The
eleven-member committee is headed by a retired federal permanent
secretary, Mr. Ochi Achinivu, with representatives from the NCS, State
Security Service (SSS), Manufacturers Association of Nigeria (MAN),
Clearing & Forwarding Agents Association, and Federal Ministry of
Finance, among others.