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It is left to
conjecture whether last week’s stalemate among members of the
Federation Accounts Allocation Committee (FAAC) could be blamed on
fiscal recklessness on the part of the nation’s economic managers, or
attributable to legislative incompetence on the part of the National
Assembly, or both.

The late President
Umaru Yar’adua, had last November proposed a N4.079 trillion “fiscal
stimulus budget” for year 2010, computed on assumptions pegged on oil
benchmark of $57 per barrel and production capacity of 2.088 million
barrels per day (mbpd).

However, in the
wisdom of the National Assembly, the final appropriation for 2010 had
to be reviewed upwards to about N4.9 trillion, with the assumptions on
benchmark oil price adjusted to $67 per barrel, while average daily oil
production capacity was raised to 2.35 mbpd. But, not a few Nigerians,
who understand the unpredictable behaviour of oil prices, faulted their
optimism and the wisdom to tamper with the initial proposal.

Unrealistic estimate

Oladiran Fawibe,
executive chairman, International Energy Services Limited (IES), said
then that the new benchmark price was high and unrealistic, considering
the volatility in prices at the international oil market, arguing that
it could have been safer if it was pegged at between $50 and $55 per
barrel.

With oil price
hovering at about $80 per barrel at the time the budget was passed,
perhaps, their estimation was that an average of about $20 accrual in
the nation’s Excess Crude Account (ECA) from the export of every barrel
of oil daily indicated in the budget would be enough to justify the
increase.

Going by recent
revelation that each member of the House of Representatives is asking
for an increase in his quarterly financial allocation from N27million
to N42million, while their Senate counterparts are demanding for about
N100million, analysts say the decision to adjust the assumptions in the
budget may have been influenced more by political considerations than
anything else.

Besides, the
continuous dependence on the ECA by the three tiers of government has
also affected the drive for alternative sources of revenue to handle
developmental activities. In recent times, the ECA has become the last
resort for governments for augmentation in budget in times of economic
difficulties. As at July 2009, the foreign component of the account,
which had a balance of over $20.01billion at the beginning of the year,
had gone down to about $11.2 billion.

Augmentation and more augmentation

By October, the
figure came down to about $9.2 billion after about $2 billion was
withdrawn as stimulus package for the economy in the wake of the
Central Bank of Nigeria (CBN) reform agenda in the banking system. Remi
Babalola, the minister of state for finance, told journalists last
January that about $5.5 billion was withdrawn from the account to
augment the shortfalls in the budgeted revenue during the year.

Between July and
December, the domestic ECA, which had a balance of about N322 billion,
was run down to about N1.47billion, attracting an alarm by the Revenue
Mobilisation Allocation and Fiscal Commission (RMAFC) against attempts
by the three tiers of government to deplete the account.

In spite of this,
another N51.85 billion was withdrawn as budget augmentation for January
this year; another $2 billion the following month, and $1.5 billion
last March for the same purpose. At the FAAC meeting last week, Ibrahim
Dankwambo, the accountant general of the federation, had said that the
balance in the account, prior to the disbursement of about N339.627
billion to augment the arrears of allocation to the three tiers of
government for January to April stood at about $5.193billion. A
breakdown of the figures indicates that about $4.6billion is in the
foreign excess crude account, while N89billion is in the domestic
excess crude account.

The rejection of
the FAAC technical committee recommendation that members shared the
allocation of N498.3billion for April alone and allow the arrears of
N736.985billion for January to March to be paid subsequently over the
course of the year, because of insufficiency of balance in the ECA to
support any augmentation merely threw up a controversy about the
fallacy of the assumptions in the budget.

Did the nation’s
economic managers not anticipate that the country would get to the
stage where the ECA would not be able to support the profligacy of the
government at all levels?

But, indications
are that the nation ran into the crisis because the law makers took for
granted that oil price would nosedive from the levels above the $80 per
barrel threshold attained early this year to where it is today.

As at last Wednesday, the price of Organisation of Petroleum
Exporting Countries (OPEC) basket of crude crashed to $66.84 per
barrel, the lowest level since January, before rising marginally to
$68.21 the following day and $70.48 on Friday, apparently as a result
of the order by the United States that British Petroleum (BP) should
shut down its operations in the Gulf of Mexico following the spill
accident involving its offshore oil production facility in the area.

Buying a property is likely to be one
of the most significant investments you will ever make; it also comes
with much excitement and emotion. Whether you are a first-time buyer,
or someone who has bought and sold several times, real estate investing
is very involving and requires thorough research, careful planning and
attention to detail. Here are some steps to guide you as you consider
investing in real estate.

Be realistic and stay within your budget

Most people have to borrow to buy
property. Your financial history will be key to your securing a
mortgage so it is important to get your finances in order before you
apply. Be realistic about your financial situation and be clear about
how much of a down payment and monthly mortgage payments you can
actually afford before you start pouring over all the beautiful homes
that you’ve been dreaming of.

An online home mortgage calculator is a
useful tool that will help you to determine your borrowing capacity.
You can input your loan term, interest rate and loan amount to deduce
the monthly repayment amount. Remember that spending more than you can
afford can cause a huge strain on your finances; if you default on your
mortgage, you could face foreclosure. If you can’t really afford to buy
a house just yet, there is nothing wrong with renting.

Try to get a pre-approval

It is useful to approach your lender
and run some numbers in order to obtain a loan pre-approval. Whilst
this is just a first step in the whole process, it will give you an
indication of what credit you can realistically obtain within your
budget; with these numbers in hand, you can start to take a look at
homes within your price range. A pre-approval also provides the added
comfort that when you finally identify the right property, you should
be able to quickly put the financing in place.

Identify a good estate agent

Choose your real estate agent
carefully; a tested, dependable, responsive and experienced
professional who comes recommended, will make the whole process easier.
A good agent can bring their experience and expertise to bear as they
should have sound market knowledge and be a good source of useful
current information and trends in the housing market. Interview some
agents and work with one that you feel comfortable with. Your estate
agent will discuss your requirements, likes and dislikes and preview
several properties in order to narrow down choices based on your
selected criteria.

Location, location, location

We’ve all heard the adage “location,
location, location.” The value of property is largely dependent upon
its location. Neighbourhoods change; market conditions, community
issues, the local economic and political environment, poor enforcement
of regulatory policies; these can all affect an area adversely and
diminish property values considerably and are critical to the success
or failure of such an investment.

Good schools, as well as a proximity to
shops, the business district and other important destinations, will
have a huge impact on the resale value of your property. Repeated
visits to your neighborhood of choice at different times of the day,
will give you a good feel and help you to come to a decision. As far as
possible, try to do some research on the areas current prospects as
well as about plans for it over the coming years; this will help you to
avoid buying a property that may not be in demand in future.

Arrange an inspection

Home inspections are important because
they determine the condition of the property and any repairs needed.
When you have narrowed down your choices, it is worth arranging for a
thorough inspection of the properties to help you avoid any expensive
surprises that may show up soon after the purchase. If the inspection
reveals the need for major repairs it may be possible to have further
price negotiations or for you to insist that the seller completes the
repairs before you close.

Think long term

Never rush into buying a property; if
you are impatient you are more likely to make a bad decision. Real
estate is a relatively illiquid asset and should be viewed as a long-
term investment. It can take a long time to sell a property
particularly if there is a liquidity crunch or if you are holding out
for the “right” price. Like stock market investing, real estate goes
through up and down cycles. Whilst there are boom periods in which one
can re-sell quickly, it is those who invest over the long term that are
most likely to reap the benefits from this investment class.

The real estate and mortgage markets can be somewhat complex. The
more prepared you are, and the more information you have the better. By
working with experienced professionals, and following through with a
sound plan, you are more than likely to find the property that meets
your needs.

Though
Nigeria ranks high as one of the nation that deploys troops for the
United Nations (UN) peacekeeping mission, it has failed to benefit from
the agency’s procurement system.

Sean Purcell, the UN Chief, Peace Keeping Section, said this at a
workshop in Lagos to sensitise Nigerians on the need to register as
vendors for the organisation. The Ministry of Foreign Affairs and the
Centre for Trade Practitioners organised the workshop.

Mr
Purcell disclosed that the UN Procurement Department (UNPD)’s
expenditure has doubled to close to $4billion in the last four years,
but the participation of Nigerians company has drastically reduced.

“In 2009, the UNDP spent $3.6billion on purchases and just $500,000 was what came from Nigeria businesses,” he said.

The
UNPD is saddled with the responsibility of purchasing materials
utilised by UN missions across the world on either peacekeeping or
political mission. The materials range from food, fuel, pharmaceutical
supplies, freight services, air transportation, construction and
engineering services amongst many other services and skills.
Individuals and corporate organisations of member countries of the UN
are allowed to bid for the supply of the materials.

Mr
Purcell revealed that 10 companies are registered with the UNDP from
Nigeria, and noted that the workshop was organised to get Nigerian
companies to register with agency “so that the UN can know what you do
and what you have to offer” adding that “to win a contract with the UN,
you must be a registered vendor.”

He
noted that the UN has 78 different agencies and the UNDP deals with at
least “25 per cent of the entire UN procurement system.”

How to register

Florence
Marie Owonibi, a Nigerian with the UN Procurement Section, New York,
took the participants through the 14-stage process of how to register
as a vendor on the UNDP’s portal, noting that the registration is
“absolutely free.”

Mrs
Owonibi said that transactions vary for vendors from level 1 which
involves expenditure of less than $200,000 to Level 5 of above
$5million, noting that “the registration process has been revised to
let business owners choose businesses that suits their capacity.”

Other
benefits of being a registered vendor, is “the regular supply of
adverts from agencies within the United Nations Global Market Place
(UNGMP)” she added.

Martin
Uhomoibhi, the permanent secretary for the foreign affairs ministry,
noted that despite the price Nigeria has paid in all its services to
the UN “both in human and material resources, Nigeria has not
benefitted significantly in the UN activities” and that other countries
have taken full advantage of the full UN Procurement process.

Mr
Uhomoibhi enjoined all regulatory agencies in the country to ensure
that made in Nigeria goods meet the UN standard because “it is only on
that level that Nigerian goods would be considered” he said.

An
industrialist at the workshop asked if the UN will give certain
considerations to Nigerian companies due to peculiar challenges faced
in the country when competing with other nations citing power failure
which occurred six times during the event. But Mr Purcell responded
that “all the 192 member nations of the UN are evaluated on the same
level.”

For registration, please visit http/www.ungm.org/info/Publications.aspx

Nigerian interbank lending rates
eased to 1.16 percent on average this week from 7.33 percent last week after
about 390 billion naira in monthly budgetary allocations to states and local
governments was injected into the system, traders said on Friday.

The secured Open Buy Back (OBB)
eased to 1.05 percent from 6.5 percent, after initially dropping to 1.10
percent on Wednesday when part of the funds hit the system.

Overnight placement fell to 1.20
percent from 7.50 percent, while call slipped to 1.25 percent from 8.0 percent.

The finance ministry announced
the disbursal of 750 billion naira from the federation account to the three
tiers of government — federal, state and local — on Monday, but part of the
funds meant for states and local governments came into the system between
Wednesday and Thursday, helping to ease the tight liquidity in the market.

“The system closed with a
surplus balance of about 310 billion naira, this is more than sufficient to
keep the system liquid for the coming week,” one dealer said.

Banks in sub-Saharan Africa’s
second biggest economy depend largely on monthly cash inflows from budgetary
disbursals to its agencies to fund their operations.

Africa’s biggest energy producer
shares oil revenues between federal, state and local governments each month in
order to pay salaries, fund development projects and keep government running,
providing the bulk of liquidity in the economy.

The federal government’s portion
of the funds is kept with the central bank, while that of the other two tiers
goes in the accounts with retail banks.

Dealers said the cost of
borrowing among banks could remain stable next week despite plans by the
central bank to sell treasury bills at the secondary market in a bid to reduce
the impact of excess liquidity on the economy.

Some operators at
the Nigerian Stock Exchange (NSE) have said that the prosecution of
infraction practices in the market will serve as deterrence and reduce
criminal activities at the exchange.

Bola Oke, a finance
analyst at WealthZone Limited, an investment management company, said
the work of “the law enforcement agencies is extremely important in the
investigation and prosecution of criminal cases” following the naming
of some perpetrators of sharp practices in the market.

Some market
analysts say the successful prosecution of such criminal cases will
undoubtedly, serve as deterrence and reduce criminal practices in the
market.

A recent case was
the suspension of Diamond Securities Limited, a dealing member of the
NSE, on Wednesday, by the Securities and Exchange Commission (SEC)
after it “observed unprofessional conduct by the company.” A suspension
which the SEC said would “remain in force until the company is cleared.”

Egbo Amaechi, an
executive member of the Shareholders Association of Nigeria, said a
country that has an “infraction-free” character would attract more
foreign investors because “its exchange will serve as a barometer to
measure the performance of country’s economy.”

Mr. Amaechi said
the success of the market reforms by regulators will further boost
investors’ confidence, provide integrity, good corporate governance,
and sound regulatory framework.

‘Broker-dealer monitoring’

Meanwhile, SEC
recently said it is currently engaging the NSE management to be more
responsive to ‘broker-dealer monitoring,’ while it has set up a
committee of both institutions to work out the modalities for the
process.

Arunma Oteh, SEC’s
director general, said the success of the process with the NSE, a Self
Regulatory Organisation (SRO), will restore investors’ confidence in
the nation’s capital market. Ms. Oteh said SEC will also place strong
responsibilities on other SROs in monitoring brokers-dealers and
enforcing their rules.

“In this regard,
the capacity of the SROs and trade groups shall be enhanced to
complement the monitoring and enforcement activities of the SEC,” she
said. “The SROs must be alive to their responsibilities in dealing with
complaints affecting broker dealers. In other jurisdiction, such
complaints are primarily handled by them which free the statutory
regulator to deal with other important market issues. As part of the
market reform, the SEC will develop a framework for SROs to deal with
such complaints under its oversight with sanctions for failure to
effectively discharge these responsibilities.”

Ms. Oteh also revealed that the Commission was strengthening relationship with law enforcement institutions.

“We believe that
closer collaboration will improve understanding and capacity of law
enforcement agencies to expeditiously handle capital market matters and
strengthen the Commission’s zero tolerance policy on infractions,” she
said.

Market rebound

Meanwhile, after six days of losses, market indices bounced back to profitability on Thursday.

The indices for
measuring market performance, the market capitalisation and the
All-Share Index, at the close of proceedings yesterday appreciated by a
1.07 per cent each.

The market
capitalisation recorded over N67 billion gains on Wednesday’s figure of
N6.220 trillion, to close at N6.287 trillion; while the All-Share Index
gained 275.76 points up from 25,573.66 basis points to close at
25,849.42.

A total of 48
stocks appreciated in price on Thursday compared with the 30 recorded
the previous day while 27 stocks shed their prices; lower than 51
recorded on Wednesday.

Business activities
resumed on Thursday at the Calabar branch of the Central Bank of
Nigeria which was sealed on Wednesday by the Cross River Board of
Internal Revenue Service over tax default allegedly for five years.

Officials of the
state Internal Revenue accompanied by security agents on Wednesday
afternoon ordered all staff to close and locked up the office entrance.
But the staff questioned that their Pay As You Earn (PAYE) which is
deducted monthly by the CBN management is not remitted to the state
government’s coffers.

According to
Akumaye Adie, the Revenue Service Director of PAYE, the amount which
was more than Nl00 million was reduced to N56 million following a
waiver on interest and penalty granted to the bank. The CBN was,
however, said to have paid N30 million but “refused” to pay the balance
of N26 million in spite of repeated demands and representations by BIRS
officials.

But, Mr. Adie, told
News Agency of Nigeria (NAN) that the CBN branch was reopened on
Thursday following a commitment by its management that the money would
be paid next week.

Besides, he said
that the unsealing of the bank was also facilitated by consideration
given to the plea of all the banks in Calabar.

He said, “The
management of CBN had a long discussion with our chairman and at the
end they promised to pay the money next week, unfailingly.

“In fact, the way
the agreement was reached, the money will be remitted to us on Monday
or Tuesday,” he said. He, however, said that if the bank failed to pay
the money as promised, “We may have to go back and seal the place
again”. The News Agency of Nigeria reports that normal business has
resumed at the apex bank which is located on Calabar Road, in the state
capital.

Divine Edim, a
director with the revenue service, who led the operation, said they
decided to shut down the CBN branch because “it has not settled its
liabilities with the state government. These among others include PAYE
which is deduction of income of staff to pay as tax to the host state
government”.

Mr. Edim revealed
that the outstanding PAYE to the state government for the period under
review was N26.5million, adding that this amount may be more as it
covers only 2005 to 2008. When that of the last two years is added, the
bank will be indebted more.

“The management of
CBN”, according to him, “said it is processing the relevant documents
in order to pay. This action is a follow up to series of
correspondence, meetings and even telephone calls all of which yielded
no results. We have documents to show”.

Since the federal
government ceded 76 oil wells of the state to Akwa Ibom state, Cross
River has embarked on an aggressive revenue drive to shore up its
revenue base and thus be able to meet its budgetary commitments.

Forget the glamour.
It is a hard knock life for the corporate communications department.
Crisis communications, reputation management, community affairs, brand
direction, internal communications, external affairs, sponsorships,
event planning, PR, executive speech writing, corporate voice and media
relations are a short list of some of the tasks literally piled on the
head of corporate communications. Come to think of it, one would expect
that with its multi-tasking résumé, the corporate communications
department would be part of the magic circle for executive management
breeding and CEO selection. Perish the thought.

In the jaundiced
way that all-A students were supposed to go up to university to study
engineering and medicine, parents expressed their dismay when their
first-class graduating wards applied for jobs in what they deemed
PR-topia. If the department was not exactly the equivalent of corporate
Siberia, it has not been the choice career path for apparatchiks
aspiring to climb to the Soviet Central Working Committee. Should this
be the case? Has corporate communications been getting the short end of
the stick and where does the blame lie?

The past 20 months
should have been a glorious era for the communications department. The
economy was in a tailspin, the oppressive odour of executive scandal
was everywhere, consumer spending was in reverse, the stock market was
in panic, earnings had dropped sharply and employee morale was at its
lowest point. The future looked bleak. It was unthinkable that the
department would not seize this opportunity to establish its
credentials as an integral part of the corporate strategy development
process.

The issues faced by
companies were fed mainly by perceptions. The public was reading ahead
of the script. If the global economy was in freefall, then there was no
way that the local economy would escape. If Company A’s CEO was
involved in a fraud, then such practices must have been widespread
among all CEOs in the sector. If Company X in its sector had downsized,
then it was only a matter of time before Company Y would go under the
knife too. Fears ran riot and took a life of their own. Confidence was
fast evaporating.

The corporate
rationalists scratched their heads in confusion. Excel spreadsheets,
corporate finance models, risk management stress tests, and all the
other numerical kitchen sinks thrown at the problem were unsuccessful
at silencing the anxiety. These Cartesian wizards of numbers were
unfamiliar with problem-solving that depends on the right-side of the
brain. In their usual fashion, they broke the problems down to the
smallest components then lined them up. Still there were no answers in
sight.

All else tried,
they decided it was time to invite their colleagues from the
communications department to take a look at the problems. Then a funny
thing happened. The communications shamans pointed out that the way to
solve the problem was by shifting attention from its content to the
frame. The frame is just as important as the picture. If the frame is
right, then the picture becomes easier on the eye. How neat. ‘Why
didn’t we think of that before?’ they said in relief.

But when it came to
designing and fitting the frame, both sides, and they really are on
opposites, ran into their first hitch. They had spoken different
languages for so long that it was almost impossible for the number
crunchers to explain the picture to the idea munchers. This cultural
exchange of convenience was not producing the hoped for assimilation.
In the end, a sign language of sorts was adopted. The results served
but were not ideal.

This leads to the
question: is the onus on these so-called ‘serious’ departments to learn
the language of corporate communications or the other way round? Call
me partial, but I am on the side of the ‘others’: strategy, finance,
operations. The only thing that unites them is their ease with the
numbers. Figures are their native dialect. Without fluency in it,
corporate communications will always play second fiddle, no matter how
brilliant the last campaign was.

The financialization of markets makes it essential for corporate
leadership everywhere to speak the lingua franca of figures. The
numbers folk are not just another tribe in the org chart. They have
become das Herrenvolk (the ruling race) in the corporate species. To
avoid that cruel fate of mockery of mere men by the Übermensch (overman
or superman) that Friedrich Nietzsche describes in Thus Spoke
Zarathustra the corporate communications department must learn to speak
that language. Until then, its place at the head table remains
‘Reserved’.

A planned 20,000
barrel per day oil refinery in Equatorial Guinea will cost just under
300 million euros, and the nation plans to invest another $150 million
in petrochemicals, an official said.

Equatorial Guinea
is one of sub-Saharan Africa’s biggest oil producers, although crude
oil production has slipped off peaks at around 360,000 barrels per day
and is looking to expand its gas industry and boost local processing
capabilities.

A feasibility study for the refinery has been completed and the
government will take bids for the project at Mbini, on the central
African country’s Atlantic coast, over the next two months, Vicente
Abeso Mibuy, managing director of hydrocarbons in the energy ministry,
told an energy conference on Wednesday.

Zimbabwe has banned
all diamond exports, including those from a Rio Tinto unit, until
gemstones from its controversial Marange fields are certified by
industry regulators, the mines minister said on Thursday.

Obert Mpofu accused
Western countries of using the Kimberley Process Certification Scheme,
which regulates the global diamond trade, to ban Zimbabwe from
benefiting from diamonds.

“It is true that the government has, with immediate effect, suspended all diamond exports,” he told Reuters.

He added that the
ban affected Rio Tinto’s Murowa mine, which produced 124,000 carats
last year, and privately owned River Ranch, both of which are certified
by the Kimberley Process.

Zimbabwe has been
waiting for the certification of its Marange diamonds, and on Thursday
the Kimberley Process monitor, Abbey Chikane, said he would recommend
Zimbabwe be allowed to export the precious stones.

Algeria has frozen
a $750 million deal with Egypt’s Ezz Steel, and is in talks with other
investors to replace the Egyptian firm, Algerian Industry and
Investment Minister Hamid Temmar said on Thursday.

“The project has
been affected by financial crisis and problems linked to soccer,”
Temmar told parliament, referring to a dispute between Egypt and
Algeria over qualification for this year’s soccer World Cup. “This has
led to the complete freezing of the project.”

“In order to
replace Ezz, we are currently studying projects from companies
including ArcelorMittal and (Algerian private company) Cevital,” the
minister said.