Nigeria Content Online

The Chartered
Institute of Personnel Management of Nigeria has launched an electronic
voting application developed by Naira.com, a subsidiary of one of
Nigeria’s leading Information and Communication Technology (ICT) firm,
Chams Plc.

Registrar of the
Institute, Musa Rabiu said, “The decision to adopt an e-Voting
application is in line with the institute’s vision to be the foremost
people management institute in Africa, respected across the world. He
said he was very convinced that application of information technology
could simplify a lot of processes currently done manually.

“I am a convert of
electronic voting and wish that it is deployed in other elections in
the country. It has really made things easier and transparent for all
to see.”

Also speaking, the
General Manager of Naira.com, Juliet Ehimuan, said “it was gladdening
that a professional body as CIPM had taken the lead in terms of use of
e-Voting to handle its election.” She said that the application, which
has many rich features, is the effort of her firm’s in-house software
developers.

Head of Operations,
Naira.com, Lape Mobolaji-Lawal, said “The application is just one part
of the solution being delivered by Naira.com to CIPM, noting that the
firm was helping to develop an online portal that would enable members
to interact with the organisation more easily, get up to date
information, and make secure payments online for fees, dues, and other
items.”

Access Bank Plc has
decided to refurbish block of class rooms to the pupils and staff of
Herbert Macaulay Girls Senior High School, Yaba.

The initiative is
designed to create an encouraging learning environment for students in
the school and an expression of the Bank’s resolve to facilitating
socio-economic and educational development of its immediate area of
operation.

Speaking at the
event Segun Ogbonnewo, Group Head, Central Processing Group of Access
Bank Plc, said the gesture is consistent with the bank’s Corporate
Social Responsibility strategy and is in line with the “School Adoption
Campaign” of the Access Bank Central Processing Group motivated by the
Bank’s Employee Volunteering Initiative.

According to
Mr.Ogbonnewo, “We have undertaken to improve the standard of education
at Herbert Macaulay Girls Senior High School through this extensive
infrastructural upgrade.”

He added that our
contribution to the intellectual development of students not be limited
to physical infrastructure but will be extended to personal development
through mentoring programmes, educational seminars and talk shows for
the students of the school.”

The bank says this
initiative is the first phase of the intervention programme which will
involve the adoption, refurbishment and presentation of more blocks of
classrooms by the Bank within the shortest possible period.

“This intervention at the Herbert Macaulay Girls Senior High School
is aimed at promoting girl-child education and address the issue of
gender inequality in our society.”

Kenya’s flower industry said on Friday
it wants a stimulus package to be included in the government’s
2010/2011 budget, to help it recover from last year’s losses and regain
a growth momentum.

Exports of
horticultural products are the biggest foreign exchange earner for east
Africa’s largest economy, with 71.6 billion shillings worth of flower,
fruit and vegetable exports last year, down from 73.7 billion
previously.

The Fresh Producers
Exporters Association of Kenya, an umbrella body for growers of
flowers, vegetables and fruits, said early this week growers were
losing $3 million in wasted produce that was not shipped because of the
closure of Europe’s airspace.

South African gold miner Randgold said on Saturday its Tongon mine in the north of Ivory Coast will start production in October.

“We expect to
produce 75,000 ounces of gold in 2010,” Rangold Executive Director Mark
Bristow said during a visit to the project.

He said the mine
will ramp up to about 280,000 ounces of annual gold output from 2011
through 2013, and said total output from the mine during its projected
11-year life-span would be 2.84 million ounces.

Ivory Coast is the world’s largest producer of cocoa but is seeking to boost revenues from gold mining to diversify its economy.

Gold output from the civil war-scarred West African state tripled in 2009 to about 6.94 tonnes.

Finance
experts argue that the 2010 fiscal budget is becoming countercyclical
in that it is aimed at stimulating the economy from its current state
of contraction, a fall-out from the global financial crisis.

Financial
Derivatives Company, a finance and research firm, says that although
some macroeconomic variables paint a relatively healthy post-crisis
economy, the underlying structure that propels sustainable growth is
still tenuous and requires fundamental shifts that could alter the
growth paradigm.

How will the markets react?

In
its economic bulletin issued on Friday the firm says Money and Stock
markets would have their own fair share of economic reactions, arising
from the signed budget.

“Interest
rates are now well below inflation rate which could induce capital
flight and a switch to other asset class,” he said. “The $5.98bn to be
raised by the government through domestic borrowing could help
stabilize rates which are currently at record low. However, this could
have the unintended consequence of crowding-out the private sector.”

The
record low interest rates are already threatening to lead to capital
flight and portfolio rotation by institutional investors, it added.

The
bulletin also highlighted that the equity market has been oblivious to
the signing of the budget, recording a fall of 0.1 per cent and 0.31
per cent in the two days the budget has been in existence. It however
revealed that the indifference of the market comes as no surprise as
there is no direct link between a non-implemented budget and the
market.

The
finance firm says some indicators that back up the requirement for a
fundamental shift include the nation’s external reserves (now
$40.56bn), which have declined sharply by 33 per cent from $60.2bn in
2008, compared to other emerging economies like Brazil and Mexico that
have built their reserves by 34 per cent and 21.5 per cent in the same
period.

Also,
the Excess Crude Account (ECA) has been depleted from $20bn in the
pre-crisis era to less than $4bn while average oil price YTD of
$78.89pb is still about 47 per cent below its all-time peak of $149pb
in 2008.

Oil
production (according to OPEC estimate was 1.986mbpd in March) has
improved, but it is still below productivity of three million barrels
per day.

Money and stock markets remain ambivalent in spite of record low interest rates.

Inflationary pressures

Inflation
has however declined modestly Year on Year to 11.8 per cent in March
from 12.3 per cent in February which is far above short term interest
rates. The inflation gap, which measures the difference between money
supply (M2) growth and GDP growth rate, was 10 per cent as at 2009
compared to 51.82 per cent in 2008.

Inflation
pressure will increase as a result of the budget spending – 45 per cent
of total spending is billed for recurrent expenditure. Other sources of
inflation risk include budget leakages and the proposed deregulation of
the downstream oil and gas sector, the statement highlighted.

According
to the bulletin, the Nigerian economy possesses the absorptive capacity
to convert this budget into a catalyst for growth, but this will depend
largely on monetary policy stability and the success of reform policies
like the Asset Management Company and the Petroleum Industry Bill.

Economic distortion, excess liquidity, no credit

The
economic bulletin also argues that the presence of excess liquidity and
absence of credit is countercyclical, adding that with a massive fiscal
deficit now estimated at six per cent of GDP, maintaining monetary
stability at this time will be a major challenge.

“The
Central Bank has resisted the temptation of tightening when price
inflation is in double digits of 11.8 per cent and interest rates very
low- 2-3 per cent per annum,” it says. “With the budget now signed and
spending kicking in, the Central Bank will have to steer a mid-course
between neutral and tightening.”

The
$31billion spending bill was signed into law by the acting president,
setting the stage for Nigeria’s most ambitious and possibly profligate
spending program in two decades. Capital expenditure is projected to
increase by 82 per cent to $12.3billion while recurrent expenditure is
to shoot up to $13.8billion, a 27 per cent increase from the 2009
budget.

The
weekly report from Afrinvest, also a finance and research analysis
firm, states that the Nigerian Stock Exchange All-Share Index lost 31
bps as at Friday, closing at 27, 400.21 from 27, 486.62 the previous
day. Market capitalisation also moved in the same direction, closing at
N6.6 trillion as a total of 598.4million shares valued at N5.8billion
were traded on Friday.

In late 2007, as
the mortgage crisis gained momentum and many banks were suffering
losses, Goldman Sachs executives traded e-mail messages saying that
they would make “some serious money” betting against the housing
markets.

The messages,
released Saturday by the Senate Permanent Subcommittee on
Investigations, appear to contradict statements by Goldman that left
the impression that the firm lost money on mortgage-related
investments.

In the messages,
Lloyd C. Blankfein, the bank’s chief executive acknowledged in November
2007 that the firm had lost money initially. But it later recovered by
making negative bets, known as short positions, to profit as housing
prices plummeted.

“Of course we didn’t dodge the mortgage mess,” he wrote. “We lost money, then made more than we lost because of shorts.”

He added: “It’s not over, so who knows how it will turn out ultimately.”

Hurting our economy

Actions taken by
Wall Street firms during the housing collapse have become a major
factor in the contentious debate over financial reform. In his weekly
radio address on Saturday, President Obama said Wall Street had “hurt
just about every sector of our economy” and again pressed the case for
tighter regulation.

On Monday, Senate
Democrats will try to prevent a Republican filibuster in the first
major test of the administration’s effort to push through legislation.

Goldman on Saturday
denied it made a significant profit on mortgage-related products in
2007 and 2008. It said the subcommittee had “cherry-picked” e-mail
messages from the nearly 20 million pages of documents it provided.
This sets up a showdown between the Senate subcommittee and Goldman,
which has aggressively defended itself since the Securities and
Exchange Commission filed a security fraud complaint against it nine
days ago.

On Tuesday, seven
current and former Goldman employees, including Mr. Blankfein, are
expected to testify at a Congressional hearing. Carl Levin, Democrat of
Michigan and head of the Permanent Subcommittee on Investigations, said
that the e-mail messages contrasted with Goldman’s public statements
about its trading results.

“The 2009 Goldman
Sachs annual report stated that the firm ‘did not generate enormous net
revenues by betting against residential related products,’” Senator
Levin said in a statement Saturday. “These e-mails show that, in fact,
Goldman made a lot of money by betting against the mortgage market.”

Big profits

At first, Goldman
openly discussed its prescience in calling the housing downfall. In the
third quarter of 2007, the investment bank reported publicly that it
had made big profits on its negative bet on mortgages. But by the end
of 2007, the firm curtailed disclosures about its mortgage trading
results. Its chief financial officer told analysts that they should not
expect Goldman to reveal whether it was long or short on the housing
market.

By late 2008,
Goldman was emphasising its losses, rather than its profits, pointing
regularly to write-downs of $1.7 billion on mortgage assets in 2008 and
not disclosing the amount it made on its negative bets.

Goldman has said it
added shorts to balance its mortgage book, not to make a directional
bet on a market collapse. But the messages released by the subcommittee
Saturday appear to show that in 2007, at least, Goldman’s short bets
were eclipsing the losses on its long positions.

In May 2007, for
instance, Goldman workers e-mailed one another about losses on a bundle
of mortgages issued by Long Beach Mortgage Securities. Though the firm
lost money on those, a worker wrote, there was “good news”: “we own 10
mm in protection.”

That meant Goldman had enough of a bet against the bond that, over all, it profited by $5 million.

On October 11,
2007, one Goldman manager in the trading unit wrote to another, “Sounds
like we will make some serious money,” and received the response, “Yes
we are well positioned.”

Documents released
by the Senate subcommittee appear to indicate that in July 2007,
Goldman’s accounting showed losses of $322 million on positive mortgage
positions, but its negative bet – what Mr. Viniar called “the big
short” – brought in $373 million.

‘We did not know’

As recently as a
week ago, a Goldman spokesman emphasised that the firm had tried only
to hedge its mortgage holdings in 2007. The firm said in its annual
report this month that it did not know back then where housing was
headed, a sentiment expressed by Mr. Blankfein the last time he
appeared before Congress.

“We did not know at
any minute what would happen next, even though there was a lot of
writing,” he told the Financial Crisis Inquiry Commission in January.

In its response
Saturday, Goldman Sachs released an assortment of internal e-mail
messages. They showed workers disagreeing at some junctures over the
direction of the mortgage market. In 2008, Goldman was stung by some
losses on higher-quality mortgage bonds it held, when the crisis
expanded from losses on risky bonds with subprime loans to losses in
mortgages that were given to people with better credit histories.

Still, in late
2006, there are messages that show Goldman executives discussing ways
to get rid of the firm’s positive mortgage positions by selling them to
clients. In one message, Goldman’s chief financial officer, Mr. Viniar,
wrote, “Let’s be aggressive distributing things.”

Several traders from that group will testify on Tuesday.

The further
integration of Arabic language capabilities in internet and other
technological architecture will grant millions access to the digital
world, Microsoft and Google executives said.

As devices and
applications become more ubiquitous in less developed countries, their
content will grow and an embryonic e-economy should flourish, they said.

“(Microsoft CEO)
Steve Ballmer and I a few years ago talked and believed Arabic would be
an increasingly important language,” said Craig Mundie, Microsoft’s
chief research and strategy officer. “And yet, because of the way the
internet was evolving, it wasn’t a language that was getting a lot of
use.”

Of Arabic content

But while Arab
world internet use since 2000 has grown faster than anywhere else and
access costs have shrunk, content still punches below its weight and ad
spending remains tiny.

Arabic content is less than 1 percent of world totals though speakers constituting 5 percent of the global population.

The Arabic portal
of online encyclopedia Wikipedia carries less words than its Catalan
site, Google’s regional marketing manager Wael Ghonim said.

“There is a lot of
Arabic content but it is not well structured,” he said. “We want more
structured content. We want more of the professional, niche sites, more
businesses. One of our biggest missions is to enable Arabic users to
find the right tools to enrich Arabic content. It would be great to see
more e-commerce in the region, more publishers, more news sites. We are
committed to help them.”

Asked how Google
could aid such regional growth, Mr. Ghonim said: “We have a very
ambitious plan in the next few months, we are working on many
initiatives.” He did not elaborate.

Regional spending
on online advertising was around $90 million in 2009, up from $66.5
million in 2008 and $38 million in 2007 but still miniscule compared to
Britain’s $5.3 billion.

Mr. Ghonim said
Arabic speakers have historically engaged in poorly organised and
difficult to archive forums, citing a message board used by 400,000
teachers in Saudi Arabia.

Both Google and Microsoft place Arabic in their top ten languages in need of prioritised attention.

Microsoft’s Mundie
was visiting the Cairo Microsoft Innovation Centre, a regional hub
launched in 2006 that released Windows extension Maren, which converts
Arabic written in Roman characters into Arabic script. It is
Microsoft’s second most popular service by page views after Internet
Explorer 8.

Web addresses and mobile access

Egypt and Saudi
Arabia registered the first domain names written in the right-to-left
Arabic script late last year, after global internet regulator ICANN
voted to allow non-Latin script to be used in web addresses in November.

In Egypt, internet access is becoming cheaper and the use of internet on mobile devices is blossoming.

Egypt plans a $1 billion upgrade to its broadband capacity over four years to quadruple penetration to 20 percent.

“The next few million Egyptian internet users will be people who don’t really speak English,” Mr. Ghonim said.

Such users will
likely not foray deeply into the internet’s marketplace initially, but
will no longer be hindering from creating part of the fabric of the web
by language constraints.

“Think of the guy
running a very small one-stop shop in (Nile delta industrial city)
Mahalla,” Ghonim said. “You should facilitate for him a complete
experience in Arabic, from the way he registers his domain to finding a
hosting company to communicating to his customers.”

Microsoft’s Mr. Mundie said the Arab world was well-placed to skip PC-dominated use and go straight to mobile internet.

“The arrival of a
very low cost form of computing coupled to the mobile network creates
an alternative entry point into the world of computing and internet
usage,” he added.

The management of
First Hydrocarbon Nigeria Limited (FHN), an indigenous company in the
Nigerian oil and gas upstream sector, has promised to realise its
vision of expanding local upstream ownership in the country with its
new directors.

Egbert Imomoh, a
director at the company, while welcoming Owoye Andrew Azazi, Udoma Udo
Udoma and Tosin Runsewe on board, at the weekend said, “I am delighted
to have marked this milestone in our development. I look forward to
working with the Board of Directors and management team to realise our
vision of expanding local upstream ownership and significantly adding
to Nigeria’s production base.”

The board confirmed
the appointment of the three new directors after a meeting in Abuja.
They join Oladele Fajemirokun, Jonathon Long, Magaji Muhammad Inuwa and
Afren Plc Founders -Egbert Imomoh, Osman Shahenshah, Ethelbert J.L
Cooper and Constantine Ogunbiyi as directors of the company.

AfricapracticeR&B,
FHN’s marketing firm, in a statement, said the hydrocarbon company was
established in 2009 as a home-grown business to “fulfil the Nigerian
government’s criteria for indigenous operators.”

According to the
statement, the company intends to acquire and develop substantial oil
and gas assets, including holdings in assets currently under
negotiation and held by the joint ventures between the Nigerian
government and International Oil Companies. It also intends to develop
under producing and shut-in fields to their full potential.

Wealth of experience

Meanwhile, Mr.
Imomoh, who is also the Chairman of Afren Nigeria, an independent oil
company, said the decision of the new directors to accept these
positions is “a significant endorsement of the company’s vision and we
are delighted to welcome such high calibre individuals to our Board of
Directors.”

He said, “Each will
bring a wealth of experience to the company as we embark on our
acquisition and development plans. FHN has in place a strong Board of
Directors combining Afren Nigeria’s operational expertise and the
financial strength and local network of two of the largest financial
institutions in the country.”

Mr. Fajemirokun,
another director, said the company’s vision is compelling, adding that
“the intention to list the company on the Nigerian Stock Exchange in
the near future, offering all Nigerians an opportunity to invest in the
upstream sector is particularly appealing.”

The new directors

Mr. Azazi is a
retired General in the Nigerian Army, and has served as chief of
defence staff, as well as chief of army staff. He is currently involved
with Weiboro Properties Ltd and Total Transformation Associates
(security sector reforms consultancy).

Mr. Udoma was a
two-term member of the Nigerian Senate from 1999-2007. At present, he
is the part time Chairman of the Securities and Exchange Commission.
Mr. Udoma specializes on Nigerian investment laws.

Tosin Runsewe is
the chief client officer/executive director of Guaranty Trust Assurance
Plc. Prior to joining the insurance industry over six years ago, he had
acquired over 12 years experience in the banking sector in Nigeria. He
was the head of the oil and gas group in Guaranty Trust Bank.

Market overview The stock market
had been mixed so far in the week having given up part of the gains
accrued in the past weeks. The market ended last week’s trades with
some declines after witnessing fluctuations in terms of its daily
performance. By the end of the week, the NSE AS index closed at
27,400.21 basis points, down by 2.10 per cent while the market
capitalisation lost N142.34 billion in a week after closing at N6.63
trillion .
The volatile
movement of the market’s indices was as a result of profit taking
transactions on one hand and purchase activities, which were mostly
speculative, on the other. The decline was also occasioned by losses
with stocks in major blue chip companies.
Furthermore, listed
companies continued to announce their annual results for the year 2009.
First Bank, Skye Bank, NAHCO, and BIGTREAT were among the companies who
released their corporate earnings and performance in the just concluded
week. However, the market further retreated due to disappointing
earnings reports from some of these companies.
Meanwhile, the
acting president Goodluck Jonathan during the week signed into law the
2010 appropriation bill of N4.6 Trillion. The budget is aimed to
accelerate economic recovery through targeted fiscal interventions
designed to stimulate the economy and support sustained private sector
growth. This has been based on assumptions reflecting outlook for the
fiscal year, including: oil production of 2.35 mb/d; benchmark oil
price of US$67/barrel, and average exchange rate of N150 to the US
dollar.
Looking ahead, the
market will focus over the coming weeks on more corporate results and
other economic indicators even as speculation and the taking of swift
profits continue to dominate market activities. Currently, attention is
drawn to 2010’s first quarter results in light of NSE’s registered
gains during the first three months of the year. The market will remain
steady in the coming weeks as investors monitor new moving factors on
the strength of future corporate earnings.
During the week,
both the market capitalisation and the NSE AS Index lost 2.10%
respectively. So far, the market has recorded a YTD-high market
capitalisation of N6.78 trillion, representing a YTD yield of 35.88%.
Overall, the market traded a total of 3.36 billion units of shares,
valued at N35.82 billion in 52,134 deals.
Most Active Sector The Banking sub
-sector remain the most active (measured in terms of traded volume) as
it recorded 1.43 billion shares valued at N19.64 billion exchanged in
18,798 deals while the Insurance sub -sector was second with traded
volume of 494.24 million shares valued at N532.78 million in 3,467
deals.
Corporate actions and results In the past week,
First Bank Plc proposed a dividend of 10 kobo and one new share for
every eight shares held in its corporate earnings and benefits
announced.
Guaranty Trust Plc
also released its interim report for the period ended (Q1) March 31,
2010 to the floor of the Nigerian Stock Exchange. The company declared
a Gross Earnings of N44.382 billion and a Profit After Tax of N8.847
billion.
In addition, Skye
Bank Plc released its full year audited financial report. The bank
declared a gross income of N126.665 billion and a profit after tax of
N1.130 billion. The directors also recommended a dividend of 5 kobo per
share.
Market outlook The stock market
will likely be driven again by company earnings reports over the next
two weeks, as investors try to get a sense of how well corporate
profits and benefits will hold up in second quarter of the year.

One of the most damning broadsides
directed at the Central Bank in recent times has come from the office
of the National Security Adviser, General Aliyu Mohammed Gusau (rtd).
The Central Bank of Nigeria’s (CBN) recent intervention “seemed to have
damaged economic activities in the banking sector to the detriment of
the larger society,” Mr. Gusau said in his address at a security
awareness seminar organised for newly appointed ministers by his office
in Abuja two weekends ago.

Alarmed by both the
strength of this indictment and the very senior person making it, the
analogy which readily came to mind, was of an anthropomorphic kind.

Confronted by a
brain-dead patient on some fancy life-support system, what is the right
thing to do? This is one helpful way of addressing the dilemma raised
by the general. It is easy (one of the benefits of hindsight) to
attribute the “seven years of plenty” that preceded the current crisis
in the economy to the activities of the banks. And to proceed from this
to the argument that by hobbling the banks, the CBN is directly
responsible for the current fortunes of the economy. The difficulty
with meeting the falsities in this argument lies in being able to avoid
talking down to one’s interlocutors.

So why not have the
General Gusaus respond to two related questions: How much of the
massive growth in credit to the private sector, which happened in the
years of plenty, went the way of productive activity, and how much to
speculative ones? What role did structural policy play in the many
private decisions to allocate resources in that period?

A hard decision well made

As with the patient
on life-support, the decision to pull the plug on non-performing
economic entities is not readily made. But it is justified in terms of
a cost-benefit assessment and useful when closure definitely would have
a cathartic effect. Rarely, if ever, have those whose call it is to
pull such plugs been accused of murder.

Evidently, to
prefer the financial services sector the way it was before the advent
of the current regime at the CBN is to lose sight of one of the more
important lessons from Japan’s recent economic history. In the late
1980s, when Japan allowed the yen to rise in response to American
concern over its huge current account surplus, the asset price bubble
and the “lost decades” that followed were in part the result of a
failure to implement structural policies in aid of the transition from
external sector-led growth to one driven by domestic demand. The most
notable of such failures, if the IMF’s April World Economic Outlook is
to be believed, was the failure to “clean up the banking system.”

As the main
financial intermediator in any economy, the biggest danger from banks
is that lax controls allow them earn more money from trading on their
own account and for favoured clients, rather than from arbitrating the
efficient allocation of financial resources in the economy.

What manner of gains?

The gains from
greed and enlightened self-interest are not the same thing. Neither is
their effect on the economy. The one is the excess that results in
crapulence, indigestion, and obesity, all harmful in equal measure to
all that indulge in it.

The other involves
the pursuit of personal gain, while acknowledging the rights/needs of
others. The emplacement and enforcement of laws and rules in any
society based on competitive capitalism should aim at incentivising the
latter set of behaviour, while clamping down on the former.

Even though the
current management of the CBN appreciates this fact, the bank still
needs to do a lot more to cleanse the banking sub-sector in a way that
makes monetary policy management easier.

Take for example
its latest directive to banks to quote their rates as a function of the
policy rate. Imagine the moral outrage when deposit rates are quoted as
MPR-5, and lending rates as MPR+10. Yet, the problem is not with rates
at the retail end of the market. It is instead about the structure of
the MPR itself.

For so long, it has been out of
alignment with all the rates it is meant to control, only because it
has no relationship to inflation. Would General Gusau support a policy
rate expressed as the sum of the inflation rate plus the trend growth
rate of the economy?