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On May 17, 2007, at its annual shareholders’ meeting, a private
shareholder asked David Clementi, chairman of Prudential, the UK insurance giant,
if the company had ‘the strategy, strength and scale to stave off a breakup or
a merger?’ In his response, Mr Clementi, a former deputy governor of the Bank
of England, assured the shareholder that Pru had the ‘strategy, scale and we
have the strength.’ But he did sound a note of caution. ‘Looking ahead, we will
return to these structural issues. Life changes and businesses change. We will
return and we will do so against the one main yardstick [we use to] operate the
group, namely shareholder value.’

Exactly, three years later, on 17 May, the group launched an
audacious $21 billion rights issue, the second biggest ever in sterling, to
fund its planned $35.5 billion takeover of AIA, the Asian business operations
of AIG. Piloting the deal was Prudential’s chief executive, Tidjane Thiam,
ex-McKinsey partner and one-time Ivorien government minister, who was named CEO
in October 2009. Mr Thiam had promised shareholders that AIA will be worth $60
billion in two years, that is, nearly double its purchase price.

Since news of the deal first leaked in February, Prudential had
been under a lot of pressure from its shareholders to either abandon it or
renegotiate its terms. Last week, RiskMetrics, the proxy g6adviser, wrote that
‘a full price, integration risks and ambitious targets that barely meet the
cost of capital do not make a compelling combination.’ It recommended that they
reject the proposal.

In May, Robin Geffen, managing director of Neptune Investment
Management, which owns 0.2 per cent of Prudential shares, began actively
organising shareholders to oppose the acquisition. On
www.prudentialactiongroup.com, a special purpose website, he created to
mobilize dissident shareholders, the manager claimed to have won the backing of
about 20 per cent of Pru’s shareholders.

Another shareholder, David Cummings, head of Investments at
Standard Life Investments, which controls about 2 per cent of Pru’s outstanding
shares, said, ‘We and other shareholders believe the price is too high and the
financial case for the deal hasn’t been particularly well articulated. When
you’re raising £14 billion one needs a lot of strategic and financial
precision. We are sceptical on price and we are not clear in terms of the
strategy.’ It gets worse.

Peter Lees, Head of UK Equities at F&C Asset Management
which owns just under 0.7 per cent of the company pointed out that while it
‘had no issue with the Prudential’s strategy of expansion or acquisition per se
and is broadly supportive of the rationale for developing its presence in Asia,’
it was uncomfortable with ‘the economics of the deal which leave no margin for
error in the delivery of revenues and cost synergies.’

On Wednesday, Prudential announced that it was walking away from
AIA. The insurer obliquely implied that the refusal of the board of AIG, owners
of AIA, to accept a lower price was its reason for exit. How much of that is
damage control spiel and how much of it is delusion should be clear to all.
Prudential’s shareholders, not the AIG board, defeated the deal.

From the start, there were serious questions when the
shareholders who voiced strong reservations about the transaction were not the
typical ravaging ‘locusts’, that is, short-termist hedge fund managers. On the
contrary, they were long-term shareowners who until now had supported the
board.

Vote of no confidence

Shareholders may bear an imperial CEO who has an impeccable
track record a la Jack Welch of delivering value; an imperious Caligula does
not stand a chance. Since the termination announcement, powerful shareholders
have called for Thiam’s departure. In my honest view, their rejection of the
deal was really a vote of no confidence on Thiam’s leadership.

Complexity, integration, pricing, timing, valuation and all of
that are red herring. Investors were not ready to give the Pru CEO a blank
cheque. Despite his illustrious antecedents in management consulting he is
still a ‘suspect quantity’ in the capital markets. The ability to deliver
shareholder value is not just an objective extrapolation from strategy, scale
and strength. It is a direct function of a CEO’s tested and tried reputation
for stirring those three ingredients into a sweet sauce.

Back in March, when he briefly considered accepting an
invitation to the board of Société Générale, the French bank, Jane Coffey, head
of UK equities at Royal London Asset Management, which manages Pru shares,
advised Thiam that he really ought to concentrate on ‘his day job.’
Shareholders were not convinced then that he had the bandwidth to moonlight
just yet. Even with the excruciating pain of $652.5 million in breakup fees,
they have repeated it again loud and clear, ‘show us you can crawl before
running.’ So while Prudential has the S-Factor, its CEO still needs more time
to make his bones. I mean, X-factor.

Nigeria’s ambitious oil reforms look set to be delayed further
as lawmakers give more consideration to government and foreign oil company
concerns, a senior government official said on Thursday.

A new president and a cabinet reshuffle, including a change in
oil ministers, looks likely to prompt Nigeria’s parliament to revisit issues,
stalling the final stages of the Petroleum Industry Bill (PIB) after years of
development.” Remember, there has been a recent change in government,” said
Philip Chukwu, executive director of exploration and production for Nigeria’s
petroleum ministry, when asked why the PIB was still in deliberation.”

The National Assembly are looking at areas of concern,
especially the international oil companies … We have our own concerns,” Mr
Chukwu said on the sidelines of a Nigerian investment conference in London.

The PIB aims to make state oil firm NNPC more competitive and
transparent, encourage outside investment, promote local oil company
involvement and increase gas supplies to the dilapidated domestic market. But
international oil companies worry the bill will impose higher taxes and
royalties while failing to address key issues of under-funding, corruption and
security.

More disagreements

“I definitely think it (PIB) will be delayed further because
there are so many contentious issues in it,” said Holly Pattenden, Nigeria
expert at London-based Business Monitor International.” The fact that the
administration has changed means that they’re going to have to look at it very
closely, and I expect there to be more disagreements.”

With elections due to be held in April next year, new oil
minister Diezani Allison-Madueke and Nigeria’s government are running out of
time to pass the oil reform legislation. Nigeria relies on its energy industry
for 90 percent of export revenue, but Africa’s second-largest economy has never
fully realised its production potential due to sabotage of oil facilities,
which has cut out a third of its capacity of three million barrels per day.

A government amnesty last year encouraged thousands of militants
to lay down their weapons and led to months without attacks, which allowed oil
companies to make pipeline repairs and ramp up output. However, several
incidents last month pointed to a resurgence in oil theft and pipeline
sabotage, threatening to set back the post-amnesty progress.

Speaking at Thursday’s conference, which focused on investment in the
restive oil-producing Niger Delta region, Chukwu said militant unrest had been
successfully diffused.” Pipeline vandalism is declining and I can say
production in Nigeria has risen,” he said. Chukwu said crude oil and condensate
production was around 2.5 million barrels per day.

Workers in the oil
and gas sector on Thursday, assured Nigerians that the proposed
increase in petroleum products prices would not be effected without the
approval of labour unions.

Reacting to the
proposal by the National Economic Management Team (NEMT) for the
government to increase the petrol price from N65 to N100 per litre, the
workers said the body was in no position to make such a suggestion.

The oil and gas
workers belong to the Nigeria Union of Petroleum and Natural Gas
Workers (NUPENG) and Petroleum and Natural Gas Senior Staff Association
of Nigeria (PENGASSAN).

Mr Babatunde Ogun,
the PENGASSAN president, told the News Agency of Nigeria (NAN) in Lagos
that the NEMT was usurping the responsibility of another government
agency.

“The team is not in
the proper agency to make such proposal. The Petroleum, Products
Pricing, Regulatory Agency (PPPRA) is the one charged with the
responsibility to do so,” he said.

The union leaders
explained that before the government could increase the price of
petrol, certain fundamentals needed to be considered and certain things
put in place.

According to him,
some notable Nigerians were appointed members of the committee on
deregulation of the oil and gas sector and their input must be
considered before any price increase.

Ogun cautioned that
if the fuel price was increased without the government implementing
certain yearnings of workers, it would not be acceptable to Nigerians.

Another labour
leader, Elijah Okougbo, NUPENG General Secretary, said that the union
would protect consumers from any increase that would have an adverse
effect on them.

“We are keeping our
eyes open, but do not think that the government will increase the price
of fuel from N65 to N100 without the knowledge or contribution of the
unions,” Mr Okougbo said.

He noted that the
NLC was represented on the committee set up by the government to
deliberate on deregulation and price increase of petroleum products,
which had not concluded its assignment.

“The committee is still sitting and even the issue was debated at
the NEC meeting of the NLC in Kaduna. No increase was mentioned,” he
said.

Yewande Adigun, a pepper seller at Ipodo market in Ikeja, Lagos,
said the prices of food items are increasing by the day, without tangible
explanations, apart from the rainy season.

“It is true that things are usually expensive this season, rainy
season, but this time around, it is very serious and customers especially do
not understand,” Mrs Adigun said.

“The prices of baskets of the tomatoes I sell have increased. A
basket of tomatoes today cost N9000. I bought it N2800 last week. Do you
understand, and that is what people have been talking about since morning. The
price increase cuts across almost all the things that are sold in the market”
she explained.

Harsh faces of food sellers adorn the markets with threats to
take their goods home than sell at give away prices.

Reflection of global
trend

Lydia Olushola, an economist and consultant at Skytrend Nig. Ltd
said to a large extent, rising food prices usually reflect global trends.

“Food-price inflation is sometimes globally prone, with the
prices of different food types such as grains, cooking oils, vegetables, meat
and other stuff all rising by varying degrees reflecting, in part, more intense
competition for the same resources in the production of different food
products. Sometimes however, local factors are also responsible for pushing up
prices of certain items in individual countries”.

Ms Olushola added that food price inflation affects general
price inflation since it contributes directly to general consumer-price
inflation as food is a major component of the Consumer Price Index.

She also said that if not addressed accordingly, it may lead to
non-food inflation as higher food-price inflation may consequently prompt
higher earning demands to compensate for rising food costs, consequently
bringing about some cost-push inflation. Besides that, it may generate higher
inflation expectations.

“People tend to work on the anticipation that things are usually
expensive in one period or the other of the year, create higher inflation
expectations for that period, and set prices accordingly, which would now
generate some form of second-round effects on prices”.

She however says an economy with a credible monetary-policy
framework will help to keep inflation expectations under control in the event
of unexpected price surge.

Rising price index

The Composite Consumer Price Index (CPI) rose 12.5 per cent
year-on-year in April, according to the latest report issued in May by the
Nigerian Bureau of Statistics (NBS). This is higher than 11.8 percent recorded
in the previous month. The monthly change of the CPI was 1.2 per cent increase
in April when compared with March.

The year-on-year average consumer price level as at April for
urban and rural dwellers rose by 7.9 and 14.8 per cent respectively.

Average monthly food prices rose by 1.4 percent in April when
compared with March of same year. The level of the Composite Food Index was
higher than the corresponding level a year ago by 14.3 percent. The average
annual rate of rise of the index was 13.6 percent for the 12-month period
ending April.

The rise in the index was caused mainly by increase in the
prices of some food items like yam, potato, meat, sea food, fruits, tomatoes, fresh
vegetables and non-alcoholic beverages.

Global food prices rose notably in 2007 and in early 2008, with
the prices of several agricultural commodities such as wheat, maize and, more
recently, rice, surging ahead. As well as heightening social concerns, higher
food-price inflation has also triggered concerns over broader price stability
and led to some delicate weighing of risks by monetary policy-makers, at a time
of unusually high uncertainty over global growth.

On
Sunday, 30 May, the last Aero Contractors flight to Abuja was delayed
for over an hour because of an altercation on board. After check in
formalities have been concluded, it turned out that five passengers did
not have seats; the aircraft had more passengers than it could carry
legitimately.

The
five refused to disembark, insisting that they had to get Abuja, having
paid fully for their tickets and after being checked in formally. The
argument went on until a man volunteered to get down, saying he could
make his journey the next day. Gradually, four others disembarked, and
the five protesters were airlifted to Abuja.

Though
Aero rebooked the passengers for the next flight, the first on Monday
morning and also gave free one way tickets to them, usable within a
year, and also paid the taxi fare back home for the first passenger who
volunteered to get down, the incident again highlighted the problems
besetting the airline.

Increasingly,
travellers are getting piqued with the manner in which Aero Contractors
attends to customers who booked their tickets online, just as the
experience raises the possibility of a faulty computer system for its
online booking.

Embarrassing acts

Describing
the act as “inhumane”, some of them disclosed that passengers who book
online are treated poorly, compared to those who purchase their tickets
at the ticketing and reservation stands of the airline.

“After
joining their (Aero) Owerri to Lagos flight, I could not travel back to
Owerri with my return ticket on their flight when I got to the airport.
I was told that the aircraft was filled and my seat has been taken over
by another passenger, who I guess, paid cash for his ticket,” said a
woman who gave her name as Nkechi.

Nkechi,
who admitted that she benefitted from the low online fare of the
airline when coming to Lagos from Owerri, however, argued that the
carrier should make necessary provisions for whatever seat they sell to
travellers, “whether online customers or not.”

“It
is inhumane to stop one from travelling when he or she has made
arrangements of leaving that day,” she said. “They should know the
number of passengers who booked online and those who purchased tickets
directly at the airport for any aircraft, so as to stop embarrassing
people by telling them that they cannot fly because the aircraft is
filled.”

Another
traveller, who prefers anonymity, disclosed that on getting to the
airport at the stipulated minutes before the departure of her flight,
she was denied access to the aircraft on the grounds that her seat has
being sold out to another customer, adding that she booked online.

“I
couldn’t fly for they told me that my seat has been sold out,” she
said. “I was also told to pay an extra amount for the regular seat in
order to be able to travel, can you imagine this?” The passenger, who
was on her way to Calabar, the Cross River State capital from Lagos,
maintained that she followed all requisite procedures provided by Aero
on its website directing passengers on how to book and when to arrive
the airport for their flights, yet she was unable to fly.

“I
arrived at the airport 30 minutes before departure, and I did pay for
the ticket with my ATM card as they said online, but I cannot
understand why they had to sell my seat to another person,” she said.

Aero
Contractors has been at the forefront in online sale of promotional low
cost tickets, ranging from N3, 000 to N7, 000 for one-way flights,
which has created a surge in their ticket sales.

However,
series of calls and text messages to Simon Tumba, the media consultant
for the airline, did not yield positive response, as he promised to
react to the complaints of the aggrieved customers but did not do so
for two days.

In an attempt to
unlock the untapped potentials of Nigerian women and increase their
contribution in export trade, the Nigerian Export Promotion Council
recently conducted a training for women in export business.

Speaking at the
training on Tuesday in Abuja, Usman Gwandu, a director in the Ministry
of Commerce and Industry, who represented Jibril Martins-Kuye, the
Minister of Industry, said that if Nigeria is to realise its full
potential, gender issues which are at play in economic, social,
political, and other spheres ought to be addressed.

Mr. Gwandu said
many international and national initiatives have been undertaken to
address gender-related issues in society, but very little has been done
to exploit the opportunities that women contribute to national
development.

“In this context,
NEPC-Women in Export Development programme set a centre stage for the
development of the Nigeria women in the export sector”, an initiative
which, according to him, is worthwhile, relevant and commendable.

“Obviously, the
export sector can play a fundamental role in transforming the country
when targeted interventions are made in shaping the minds and actions
of Nigerian women. Vision 2020 can also be achieved when production
activity and potential of both men and women are recognised, harnessed,
and utilised,” he said.

The NEPC-Women in
Export Development Programme is aimed at mainstreaming gender
perspective, using relevant, targeted support policies and services to
empower Nigerian women’s capacity, competence, and competitiveness in
non-oil export trade.

Encouragement for women

David Adulugba, the
executive director of Nigerian Export Promotion Council, said an
increasing number of women now participate in processing of
agricultural products, and harnessing their potential for export is
necessary.

“The women
population is high in Nigeria and much of the interventions are not
directed at them. They have the capacity, the ability, the patience,
the natural endowment, and they are more in the rural areas. So, we are
focusing on them to exploit their potentials, and help them to develop.
We are encouraging women to look for local resources around them and
produce not only for Nigeria, but for the international market.”

The idea is that
women in rural areas should form cooperatives, which NEPC will link
with exporters who need their products. The products will be packaged
to international standards.

Mr. Adulugba stated
that “NEPC has 15 zonal offices, 36 state offices, and we are sieving
this down to their level, so they can relate with the offices in terms
of guidance on packaging.”

The programme
provides assistance to participating Nigerian women in core critical
export services areas, which include market intelligence, capacity
building, technical assistance, market linkages, access to finance,
export advocacy, and trade facilitation.