Nigeria Content Online

Transportation costs in West Africa are among the highest in the
world only East Africa is higher, according to a study of one of the primary
trade corridors in West Africa.

The route connecting Tema Port in Ghana to Ouagadougou, Burkina
Faso was used for the study. The study, centred on the reason for the high cost
of transportation and what can be done to reduce it, the organisation concluded
that reducing transportation cost will result in the increase of export and job
creation.

For instance, a study of the cost of transportation along the
Tema- Ouagadougou corridor shows that it cost $4,800 (about N710, 400) to
transport a container and it takes 13 to 22 days to transport container across
the route while in comparison, it cost $650 (about N96, 200)to move a container
the same distance within the United States and it takes only five days.

Joe Lamport, Communications and Outreach Coordinator of West
Africa Trade Hub, a USAID funded project that promotes trade across West Africa
carried out the study alluded to a Food and Agricultural Organisation (FAO)
report that said that West Africans spend almost 80 per cent of their income on
food and much of it is spent on imported products: powdered and concentrated
milk, rice, tomato paste among others and so if trucking costs were half what
they are now for imports, consumer prices will likely be lower.

Reasons for high costs

While stating that the bottleneck and the cumbersome documentation
process in the ports are veritable reasons for this high cost of
transportation, the organisation also highlighted retrogressive regulation as
another factor responsible for the hike in the cost of transportation.

West African Trade Hub identified the “one-third two-third rule”
between Burkina Faso and Ghana as one of such regulatory hindrances.

“The rule stipulates that two-thirds of the cargo should be
carried by Burkinabe trucks while one-third can be transported by Ghanaian
trucks”, said Mr. Lamport.

Experts have warned that regulations like these kill
competitions and competition to clear goods at the port is a factor in the
reduction of cost.

The report also pointed at the stripping of containers as
another hiccup militating against the prompt clearance of goods at the ports.
The delay trucker experience on the way to delivering their consignment often
means that they sometimes might miss the ship meant to carry the goods and sure
delays automatically means added cost due to damaged goods and additional port
charges.

Cutting the cost

Lowering West Africa’s transport costs – among the highest in
the world – is critical to poverty alleviation and food security.

“High transport costs ultimately mean consumers pay more for
goods at market,” said Trade Hub Director Vanessa Adams. “High transport costs
make it hard for exporting companies to compete in world markets. When they
cannot compete, they do not create the jobs that West Africans need.” The
statement further suggested that implementation of the ECOWAS integrated
regional market, the elimination of truck queuing rules as well as the
elimination of excessive documentation for importing and exporting and the
streamlining of procedures to reduce delays will reduce the transportation cost
to the level that will spur economic activities leading to the reduction of
poverty.

The decline in the value of equities at the Nigerian Stock
Exchange, yesterday, cuts across all sectors of the market.

The resilient nature noted in sectors like the conglomerates,
breweries, food and beverages in the past week, against the downward trend in
the market, could not be sustained after Thursday’s trading.

The All-Share Index yesterday declined by 0.72 per cent to close
at 27,227.26 basis points compared with the marginal decline of 0.05 per cent
recorded the previous day to close at 27,424.47. Market capitalisation also
followed with N44.611 billion losses to close at N6.622 trillion against the
N3.107 billion losses recorded yesterday to close at N6.667 trillion.

The number of gainers, at the close of trading session, dropped
to 23 from 33 gainers of yesterday .The numbers of losers on the other hand
closed at 58 compared with 59 of the previous trading day.

‘Sell pressures’

Analysing yesterday’s performance, equity research analysts at
Proshare Nigeria Limited, an investment advisory firm, in a statement, said the
decline recorded cut across all the sectors in the market.

“This was evident in the bearish outlook recorded in all the NSE
sectoral indices with the highest decline recorded in the Oil and Gas sector.
Massive sell pressures were also more pronounced in the Insurance and
Food/Beverages sectors,” they said.

The analysts added that notwithstanding the current downturn of
the market, “investors are enjoined to look out for the valued stocks whose
prices have declined as the present negative outlook in the market may not
last, most especially considering some of the positive developments in the
market.” All the four sectoral indices declined at the close of trading
session. The Exchange’s Food and Beverages index declined by 1.14 per cent to
close at 860.64; the Oil and Gas index dropped by2.61 per cent to close at 405.71;
the Banking index shed weight by 0.68 per cent; the Insurance also declined by
1.20 per cent to close at 197.73.

The banking sector was the most traded sector yesterday with
139.016 million units valued at N1.333 billion. Transactions in the shares of First
Bank Nigeria, Zenith Bank and Access Bank largely contributed to the volume
traded in the sector.

New listing

The management of the Exchange, on Thursday, listed Sun
International Limited’s 634,585,472 ordinary shares of 50k at N3.79 each on the
official list of the exchange. It also marked down the share price of Berger
Paints Plc for a dividend of 50k per share declared recently by the company’s
board of directors. The share price of Oando Plc was also marked down for 1 for
2 bonus declared.

International Data
Corporation (IDC), a market research organisation, in information
technology and worldwide phone tracking has announced the top five
selling mobile phones in the first quarter of year.

The phones are,
Nokia, Samsung, LG, occupying the top three positions, while RIM
(Research in Motion) makers of Blackberry replaced Motorola to tie with
Sony Ericsson in the fourth position. Motorola and the Apple iphone did
not make the list.

Motorola formerly
held the number two spot and finished fifth last year, but is now out
of the list. The surprise breakthrough by RIM was considered as a
result of growing demand for Smartphone’s in the global market. The
Blackberry features as a high-end Smartphone device and RIM shipped
10.6 million units of mobile phones in the first quarter of the year.

“The entrance of
RIM into the top five underscores the sustained Smartphone growth trend
that is driving the global mobile phone market recovery. This is also
the first time a vendor has dropped out of the top 5 since the second
quarter of 2005, when Sony Ericsson grabbed the number 5 spot from BenQ
Siemens,” said Kevin Restivo, a senior research analyst with IDC’s
Worldwide Mobile Phone Tracker.

Interestingly the
much hyped iPhone from Apple Inc didn’t make the list, even though it
officially stands as the highest selling phone in the U.S with 8.8
million units sold in first quarter of 2010 as opposed to Motorola
which sold 8.5 million units (According to Forbes).

According to IDC
the overall global phone market grew 21.7 per cent in first quarter of
2010, thus showing positive signs in phone market for the rest of the
year in contrast to the market reduction in first quarter of 2009.
Demand for Smartphone’s served as catalyst to the market growth.

Their reports said a total of 294.9 million units of mobile phones
were shipped in first quarter of 2010 compared to 242.4 million units
in first quarter of 2009.

The naira weakened to 152.40 to the U.S dollar on Tuesday,
from 151.75 previously, in the interbank market after heady buying of
dollars by some banks, traders said.

“A couple of banks are buying
up dollars for reasons we don’t know and this has driven the rate
beyond market resistance level,” one dealer said.

“We are completely in the dark on the basis for the prevailing exchange rate at the interbank.”

Dealers said a lack of dollar
inflows from sources other than the central bank and the need by some
businesses to buy dollars to meet their immediate obligations also
helped weaken the naira.

The naira also depreciated at
the official window after the central bank failed to supply all $530
million demanded at its auction on Monday.

The regulator sold $450 million
at N148.85 to the dollar compared to $250 million it sold at
N148.81 per dollar at last Wednesday’s auction.

Traders said the bulk of demand at the auction came from local fuel importers.

“I don’t see the naira falling
further because the rate at the interbank is already 2.0 naira above
the official rate and there will be another auction on Wednesday,”
another dealer said.

Nigerian banks are not allowed
to trade the dollars they purchase at the central bank’s bi-weekly
auction among themselves. Lenders in sub-Saharan Africa’s
second-biggest economy can only trade dollars they purchase from oil
majors and other importers.

‘Climate change is
an issue which raises fundamental questions about the relationship
between companies and society as a whole, and between one generation
and the next.’

Can you guess who
said that? A campaigner for Friends of the Earth? Wrong. That was Lord
John Brown speaking in 2001. At the time, he was the group chief
executive officer of BP, the world’s third largest energy company.
Under his watch, BP was the first oil major to admit a direct link
between global warming and greenhouse gases, which is still a taboo
subject among the Seven Sisters.

A year earlier, the
company had rolled out the most audacious campaign ever conceived by an
energy company. Developed by Ogilvy & Mather Worldwide, the global
advertising and PR agency, the $200 million paradigm bending campaign
would either change the mindset or set it up for a fall.

With two words,
‘beyond petroleum,’ BP effectively told the world, “We are a different
type of energy company and we care about the environment. Really.”

‘Good’ company

According to the
company, “Beyond petroleum’ sums up our brand in the most succinct and
focused way possible. It’s both what we stand for and a practical
description of what we do.’ What the campaign had done was to define BP
as a ‘good’ energy company in a very value-loaded type of way. The
others were ‘bad’ energy companies. In the public mind, that quality of
goodness covered more than BP’s investment in alternative energy
sources.

It extended to its
Safety & Health standards as well as progress with less
environmentally costly Exploration & Production techniques. For
better, for worse, henceforth, the company would be judged by those
standards.

When mishaps like
the March 2006 explosion at the company’s Texas City refinery happened
and later, the August 2006 oil spill in Prudhoe Bay, Alaska occurred,
public anger was directed as much at the jarring dichotomy between what
BP claimed to be in its campaigns and what it really was in its
operations as much as at the physical damage proper.

Last month’s
accident on its Deepwater Horizon rig in the Gulf of Mexico, which has
caused severe destruction of sea life, may well be the straw that
breaks the camel’s back. Can BP still claim to be ‘beyond petroleum’? I
strongly doubt it.

Whatever BP says
about the errors of engineering or placing the blame on its
contractors, one thing is clear: BP’s ‘beyond petroleum’ tag has become
BP’s ‘big problem’ albatross. This time, it will take more than Ogilvy
& Mather to put Humpty Dumpty back together again.

The limits of spin

Spin is a poor
adhesive for fixing cognitive dissonance cracks. John Kenney, an
ex-Ogilvy executive who played a key role in developing the campaign,
has openly questioned BP’s commitment to the ethos of ‘beyond
petroleum.’

He has called on the company to leave the hype and hypocrisy aside and go ‘beyond propaganda.’ Ouch!

I have used BP’s
‘beyond petroleum’ as a type for companies that choose to build their
brands around sympathetic signals. It can have a massive upside, but it
can also be a two edged-sword.

Companies need to
do an honest assessment about whether they can deliver on these
promises before trumpeting them. The challenge for BP is not about
rebuilding confidence in its brand. The crisis on the company’s hands
is about admitting that BP as BP will never be beyond petroleum. Energy
companies will be energy companies in the way boys will be boys.
Resigning itself to this humdrum fate will be the hardest part.
Greencleaning will not wipe the oily slick away.

Maybe this is why
many companies prefer to play it safe with impersonal taglines like
‘Nigeria’s biggest network’ and ‘Africa’s mightiest bank.’

Except for those
who find boasting attractive, these ego-thumping chest-drumming claims
mean little to most people. But change those to the personalised
‘Helping loved ones stay in touch’ or ‘The listening bank that cares’
and the dynamics change greatly. When the same network goes down on
Valentine’s Day or the bank deducts indiscriminate charges, customers
will take a very different view than if they had just stuck with the
prior descriptions.

Do no evil

Google’s ‘Do no
Evil’ and JP Morgan’s ‘At all times doing only first-class business,
and that in a first-class way,’ are two perfect examples of claims
people will scrutinise closely. From him who claims much, much is
expected.

So why should
companies care at all? Here are two reasons why they should. First, the
customer-investor divide has become blurred. The capital markets are
paying more attention to companies’ marketing messages and consumers
are becoming better attuned to what investors feel. The contagion of
distrust in one will contaminate the other.

Second, reputation is an increasingly important factor in investment decision-making.

Those
north-easterly pointing stock price charts are unsustainable if the
brand is living a lie. That should be a no-brainer. To thine own brand
be true.

The writer is the managing director of a full service investor relations firm based in Lagos.

If your way of
dealing with debt problems is to ignore them or wish them away,
remember that inaction will only make things worse

Are you facing money problems? Some of the early warning signs are usually clear and may include the following:

• You are completely broke long before payday

• You are missing debt payments

• You are regularly borrowing from friends and relations just to make ends meet

• You are coming under pressure from lenders

• Your money worries are keeping you awake at night

So how did you get
to this point? Was it your lifestyle? Are you extravagant? Did you make
poor spending decisions? Were you trying to keep up socially? Perhaps
you are just not earning enough to fund your lifestyle and obligations.
There are so many reasons for money problems but the good news is that
it is possible to turn your financial life around. By recognizing and
acknowledging the fact that there is indeed a problem, you can start to
take the necessary steps to address it.

Your attitude to
your debt problems can hinder your financial recovery. If your way of
dealing with it is to wish it away, remember that inaction will only
make things worse. With interest, late payment penalty charges, and the
attendant fees and charges you will find that almost all your money
goes towards debt service. It is important to get your debt under
control and aim to clear or at least reduce it significantly.

Make a list of all your debts

To get a true
picture of what you owe, list all your debt – in no particular order at
this stage. You can list them according to size, due dates, interest
rates, by whom you owe – it doesn’t really matter. It is important to
know how much you owe if you are going to get out of it.

Be sure that you
are current with the minimum payments on all your debt. If you are not,
contact your creditors to discuss your payments. It may be possible to
restructure the debt in a way that enables you repay at amounts you can
afford. Staying away will only make things worse and your loans will be
called in with dire consequences.

Create a Budget

Track your expenses
for a month to determine exactly what comes in and what you are
spending it on. Determine how much you need to spend on food,
transport, clothing, school fees, entertainment, and set strict
spending limits. There is usually some waste lurking in the monthly
budget; be realistic and honest with yourself, as you must find a way
to cut back. If you can find just that little bit of extra money after
budgeting for your essential expenses, then you can use this towards
reducing your debt.

Make every effort
to stop the bleed. Try not to incur any additional debt. It is tempting
to continue to use your card to make more payments but even the
smallest payments add up and increase your debt. Naturally you may have
to live below your comfort level for a time and will certainly have to
do without some luxuries, but it will be well worth it in the end.

Prioritise your debt

Put your debt in
the order in which you want to pay it off. Ideally it should be
organised according to interest rate. It makes sense to pay off high
interest debt first as this will maximise your debt payments and reduce
the amount of overall interest that you pay. Ultimately, the higher the
rate, the more you’re paying beyond your actual principal. Some people
prefer to start by paying off their smallest debt first as this quickly
gives a sense of achievement and can provide a significant boost as you
systematically pay down your debt.

Bear in mind that
the most important debts aren’t necessarily the largest. These are the
ones where serious action can be taken against you if you don’t pay
what you owe, such as rent or mortgage repayments, secured loans and
utility bills. If you don’t sort these out, you could be disconnected
from utilities, have problems with your landlord or even face a
repossession of your home.

Make extra payments

As you start to
tackle your “priority” debt, you will need to determine how much extra
you can afford to pay every month over and above the minimum monthly
repayments. If your first debt has a minimum payment of N100,000 per
month, and you have freed up N20,000 in your budget for an extra
payment, your total payment is N120,000. Continue making minimum
payments on your other debts and then move on to the next debt on the
priority list. The idea is that every time you pay off some debt, you
are in effect “freeing” up some cash to tackle the next one.

Debt has become a
necessary part of life for some. When applied properly, it should
provide greater opportunities and enhance the quality of life. For
others who have borrowed excessively and for the wrong reasons, they
could face distressing consequences. With careful planning, and a more
disciplined and systematic approach to money management, you can take
control of your finances and deal with your debt.

The one thing that
can be said about the meeting, last week, of the central bank’s rate
setting committee is that it was finally brave enough to apportion
responsibility for the management of the different departments of the
economy. Not too long ago, the apex bank had argued the strength of the
domestic economy in the face of rising contagion from the global
financial and economic crisis. And for good reasons too. For beginning
in 2003, the second term of the Olusegun Obasanjo administration
embarked on the path towards fiscal responsibility: due process; excess
crude accounting; the fiscal responsibility act; etc. Because of this,
the economy entered the current crisis by far stronger than it had ever
approached any other downturn in its recent history. But vulnerable it
remained. And when the hot money that had driven the rapid rise in
prices on the stock market began to flee in response to a drop in
investors’ risk appetite for emerging market instruments, it was
inevitable that the system that had provided most of the credit that
drove local purchases of equities was going to suffer.

Almost a year ago,
the central bank commenced its most aggressive intervention in the
banking sub-sector. Its efforts at repairing the financial sector
focused on removing inefficiencies in the market, and addressing
failures in the regulatory and supervisory framework. Banks,
thereafter, had to provide fully for their portfolio of non-performing
assets, the previously stratospheric growth in gross earnings and
profits reversed almost overnight, and the credit taps were turned off.
Now, some recollect this sequence of events a lot differently.
According to the new narrative, the CBN’s intervention precipitated the
credit crisis. The CBN either through its incompetence, or through the
pursuit of a pre-scripted agenda concealed behind the fancy rhetoric of
its new governor, had hurt the economy badly. At the heart of this
latter day narrative is a sense of the apex bank’s over-riding
responsibility for the fortunes of the domestic economy.

The last rate
committee meeting set itself squarely against this reading, by
reminding as many who cared to read its communiqué that the main
mandate of the CBN is to ensure price and financial stability within
the economy. It almost did not matter that members of the rate-setting
committee were chuffed at the relative success achieved in the pursuit
of this goal, as “reflected in relatively stable exchange rates,
interest rates, and moderating inflation”. More important is the fact
that this new reading necessarily casts a number of moot points in a
different light. Thus, rather than being designed to foul up the
economy, the central bank’s recent intervention in the banks was
designed to “improve the supply side (of the credit market) through the
various reform measures to strengthen the DMBs’ balance sheets, remove
toxic assets, and generally repair the financial system to promote the
flow of credit”.

If all this has
happened, it is only proper to ask why private sector credit growth is
dwindling. We all know that credit is material to a recovery in final
domestic demand. Moreover, with the market for long-term fixed-income
securities long exhausted, bank credit might just be as important as
captains of industry regularly make out. Now, the rate committee tells
us that “credit growth is a function of demand and supply factors”.
Apparently, the problem with the economy might be the result not of
CBN-induced impediments to the banks’ ability to create risk assets,
but the consequence of a collapse in demand for credit. What to do
about this then? If the central bank is to be trusted on this question,
recovery in the demand for credit “would necessarily require critical
reforms in the real sector, particularly power, energy, and key
infrastructure to reduce the cost of doing business and improve
investment climate to generate bankable projects”.

From this vantage,
the apex bank and its most important committee could not have put the
crisis facing the economy in better perspective. It clearly does not
matter how much liquidity domestic banks are currently sitting on.
Someone has to need the money in order to close the loop. But even if
you have credit in this economy, what do you do with it?