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Nigeria has risen its planned spending for this year to around
N4.3 trillion ($30 billion) from an initial N4.079 trillion proposal, outgoing
finance minister Mansur Muhtar said on Thursday.

“The federal government made some additional submissions into
the budget which were priority areas … It’s now a little above N4.3
trillion,” he said, adding that the final figure would come from parliament,
which is still debating the plans.

The government made the budget additions before the cabinet was
dissolved on Wednesday by Acting President Goodluck, Jonathan in a further move
to assert his authority in the absence of the ailing President Umaru Yar’Adua.

A supplementary 2009 budget, which runs to the end of March, has
allowed Nigeria to maintain government spending while the 2010 budget is
debated, but this year’s spending plans must be passed and signed into law by
the end of the month.

The original N4.079 trillion budget for this year, sent to
parliament in November by Yar’Adua, would have pushed sub-Saharan Africa’s
second biggest economy to a deficit of 4.79 percent of gross domestic product.

Mr. Yar’Adua left Nigeria in November for three months of medical care in
Saudi Arabia, and Mr. Jonathan assumed full executive powers just over a month
ago to end paralysis in government.

The emergence of
Automated Teller Machine(ATM)

ATM or Cash points, first introduced in 1961 by City Bank of New
York on a trial basis, allowed financial institutions provide their customers
with a convenient way, round the clock, to carry out varying transactions which
included withdrawal of funds, made deposits, check account balance, and later
on included features to allow customers pay bills, etc. There was no need for a
cashier to be present or for a customer to physically visit the financial
institutions premises to carry out such transactions.

ATM technology allows customers carry out the above-mentioned
transactions using an ATM card, which could be a debit or a credit card. An ATM
machine authenticates the card by reading and verifying the magnetic strip,
card number, expiration date, and an already provided or pre-selected PIN
number.

Like with most technological advances, there is always a flaw
which criminal-minded individuals identify and exploit to perpetuate fraud.

Technology is being constantly evolved so that ATM transactions
can be an enjoyable experience to its customers, especially if one has to pay
for goods or services in cash by 1.00am in the morning and has no money.

Biometrics

What better way than using Biometrics, which has successfully
been applied for identification purposes to validate passport and travel
documents, entry into secured areas, and in authenticating or securing
financial transactions, especially in developed nations.

Biometrics can be applied to uniquely identify an individual,
based on his/her physical or physiological or behavioural traits, features or
attributes, which include facial recognition (visage is such an example), DNA,
fingerprint, voice recognition, etc.

There is still the issue of fingerprint spoofing or cloning
(fake biometrics), but it is certainly easier to clone a card number, as it is
currently practised.

In different countries, biometrics technology (fingerprint
authentication to be precise) has been successfully used to combat ATM fraud by
financial institutions such as the Western Bank in the USA, Banco Falabella in
Chile, Groupo Financiero Banorte in Mexico, to mention a few.

In developing countries such as Nigeria, according to reports,
ATM fraud seem to be committed by mostly individuals linked to bank officers
who are able to provide pin numbers and other relevant information required to
commit such crimes.

With biometrics, such fraudulent incidents can be minimised, as
an added layer of authentication is now introduced that ensures that even with
the correct pin information and in possession of another person’s ATM card, a
fraudster will not be able to withdraw any money since the biometric features
of every individual is unique.

The continuous usage of services such as the ATM will rely quite
heavily on public perception and confidence that it is safe to use it for
everyday transactions that include cash withdrawals, payment of bills, prepaid
phone top up, and a host of other transactions which at the moment can only be
carried out by actually going to one’s local bank.

Investing in Biometrics

As Biometrics technology is becoming cheaper both in its
application and usage, financial institutions need to invest in this technology
as a way of securing transactions, both across the counter and whilst using the
ATM.

It is possible that in securing transactions in this manner,
financial institutions can provide even more services at the ATM which will
generate more revenue and cut down on the amount of services offered across the
counter.

By providing a wide range of services at the ATM, depositors and
customers can conveniently carry out banking transactions round the clock and
reduce the heavy reliance on across-the-counter services, which also is to the
advantage of these financial institutions.

Certainly, a winning business case based on ROI (Return on
investment) can be made for investing in using biometrics to secure ATM
transactions.

In the United Arab Emirates, Barclays Bank in 2007 successfully
implemented biometric technology to secure ATM transactions. In Bolivia and
across the Middle East, Biometrics has been successfully applied as mentioned,
providing confidence and peace of mind to bank depositors and customers in
these countries.

Off course with such technology, combined with further educating
depositors and customers, on the best practice – such as to always change one’s
pin number, not to use obvious numbers as one’s pin number like, one’s date of
birth, car registration number, etc This will certainly all go a long way in
reducing the level of ATM fraud currently experienced in developing countries.
Installing all ATMs in a secure, properly lit environment, with CCTV coverage
will also assist in minimising ATM fraud.

Also, in a country like Nigeria, a review of the relevant
procedures within the financial institutions that caters for how pin numbers
are generated, handled and delivered to the customer (at the least to minimise
the number of people who it passes it through) will also contribute in
combating this manner of fraud.

When the relevant technology is combined with best practice and
an effective procedure, the results can be rewarding but they certainly need to
be deployed hand in hand.

There is certainly no silver bullet method or technology
advocated that will guarantee a 100% eradication of ATM fraud completely (there
never is), since as mentioned, the emergence of new technology everywhere in
the world is followed closely by a subverting technique or method but can
certainly go a long way in minimising it.

The writer is an
international IT and Business Process Consultant.

The Nigerian naira appreciated further against the U.S dollar on
the interbank market on Thursday after more energy firms sold the greenback to
banks, dealers said.

The naira was trading at 150.15 a dollar on the interbank on
compared to the 150.28 it closed on Wednesday.

Dealers said the local unit of Italy’s Agip sold $26 million on
Wednesday, a day after Royal Dutch Shell and the Nigerian LNG firm sold an
unspecified amount of dollars, raising liquidity in the system.

The naira was also supported by expected dollar sales by the
local arm of U.S. energy giant Chevron on Thursday and state oil firm NNPC next
week, traders said.

“Apart from the dollar inflows from oil majors, most banks are
squaring up their positions. No one wants to hold dollars for the long-term
because of the uncertainty created by the cabinet dissolution,” one dealer
said.

Acting President Goodluck Jonathan sacked the entire cabinet on
Wednesday in a bid to consolidate his authority a month after assuming
executive powers in Africa’s months populous country.

“The market is treading cautiously and we are watching the
direction of governance,” another dealer said.

The central bank had sold $200 million at N148.40 a dollar at
its auction on Wednesday, short of the $267.81 million demanded and compared to
the $200 million it sold at 148.35 naira per dollar at Monday’s auction.

Traders said the interbank rate could converge with the central
bank’s rate next week because of the expected additional dollar inflows.

In ‘A Future of On-Line Finance: From Brokers to Blogs to
Yahoo,’ Mark Clare, founder of Valuecruncher.com, an interactive website for
stock valuation, presents a scenario matrix of trends in online equity research
and investment advice along the free-to-paid and individual-to-collaborative
axes. Mr Clare explains how the Internet has broken stockbroking firms’
exclusivity over the triple-link investor supply chain of information, stock
analysis and trade execution.

Sites like Google Finance and Yahoo Finance have upended the
first link, while others like SeekingAlpha, StockTwits and Wikinvest have
invalidated the second. In the third hook, sites such as AlphaClone, Covestor
and KaChing are challenging the bread-and-butter income of brokers.

I have given more than casual thought to similar disruptive
sites in Nigeria. In reality, excluding the third link, trading execution, a
few sites like InvestorDelight.com, ProShareNg.com and StockMarketNigeria.com
are challenging the status quo. But how far these sites will go in connecting
the value proposition dots to users is open to conjecture.

Upstarts and the
resources

Anyway, the victors in the battle between these upstarts and the
Resources sections on established dealing firms’ websites will not be
determined based on content alone, for instance, interactive financial
statements, rich stock charts, downloadable analyst research, etc.

In my opinion, the winners will be those that leverage the
metadata generated by communities that coalesce around their sites. In other
words, the real differentiator will be discursives layered over numbers and
mechanical analysis. Call it the ascent of Investment Information 2.0 if you
like, but I doubt that sites which focus on content to the exclusion of
metadata will triumph over those that merge the two.

Like a lot of readers, I receive market information from
different stockbroking firms in my inbox most days of the week. For example,
Meristem Research, under its very able head, Saidi Bashir, sends me daily
prices and the market wrap-up each day. Last week, the firm sent an email to
the effect that ‘in line with its business strategy and emerging realities,’
beginning March 31, it would restrict access to its research portal to clients
and paid subscribers. As a consolation, some material would still be available
free of charge.

Frankly, while I doff my hat to the industrious team at
Meristem, the fact is that access to quality information on equities has moved
beyond the barbed wire perimeter of stockbroking firms’ research departments.

In a related development, BroadStreetLagos.com, a pay-to-access
stock market portal, has announced a radical shift in its business model which
allowed two weeks of free access to new users of the site. At expiration, they
either pay for continued access or have their accounts terminated. On Monday,
Obi Ugochukwu, the managing director, sent emails to blocked account owners
that their expired accounts would be reactivated in line with the portal’s
latest two-tier structure: regular, which is free (with unlimited access to
some site features) and premium (with paid access to all site features). Again,
content is only half the battle. The absence of context around the numbers on
the site remains a heavy yoke.

Research focused

Since most trading-signal focused research quickly passes its
sell-by date, research departments have nothing to lose by making them
available on their sites after their own clients have seized the opportunities.
By fostering communities around their sites to discuss trading ideas, company
performance and prospects as well as the wider market, these firms can attract
a substantial client base that will be encouraged to pass their trading
instructions through them.

I have bypassed the conflict of interest debate over research
subsidisation since the purpose described is not to seek investment banking
business from companies.

What of the challenger sites which do not enjoy the preliminary
popularity of established firms with a broad client base? There are two issues
they need to deal with. The first challenge will be to foster a community
around their domains, and the second will be to attract a circle of what Mark
Clare calls ‘rock stars,’ members who have built an enviable track record of
accurate market calls, to their sites’ budding communities as contributors,
moderators or ‘unofficial’ investment advisers.

In this regard, StockMarketNigeria.com is far ahead its peers,
although its forum structure, instead of a multi-user blogging platform, may be
limiting its full potential. ProShareNg.com has built a solid reputation for
engaging analysis but may be hampered by the tight control it maintains over
posts on its site.

Adopting a SeekingAlpha model by open invitations to credible
investment professionals and analysts to write articles will give it further
boost and encourage community growth. A good number of these knowledgeable
folks already moonlight under aliases on StockMarketNigeria.
InvestorDelight.com needs to add community features to its site. It is
counter-productive to provide tools and information to visitors only for them
to go to other sites to discuss them for want of same on the original site.

Whoever the winners are, the losers are already marked. They are
the companies which disdain their suffrage and abdicate their mandate to these
third-party sites by failing to build information rich websites. They are not
worthy of inclusion in the title. I call their category ‘abandoned properties’
or if you prefer, ‘ghost towns’.

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

The
new live broadcast of the Nigerian Stock Exchange (NSE) market data on
Reuters’ system is expected to improve transparency and market
participation, a Thomson Reuters’ head has said.

Speaking
at the Lagos floor of the stock exchange, on Tuesday, to celebrate the
partnership between the NSE and Reuters, Busisa Jiya, the Manager,
Africa Markets Division, of Thomson Reuters, said the live data feed,
which was launched on December 15, 2009, gives an opportunity to
clients in Nigeria and the rest of the world to actively participate in
the Nigerian economy.

Thomson Reuters is an online source of information for businesses and professionals.

“This
broadcast will help us (Reuters) to improve the ability of the world to
see Nigeria and have access to information live; whether in the form of
data, in terms of stocks prices, or on how we can improve our news
coverage on political and economic issues,” Mr. Jiya said.

He
added that Reuters and the NSE are optimistic that the real-time data
feed that is been celebrated will bring about liquidity. According to
him, illiquidity in the market will soon end because “all our global
clients will now be able to participate in trading and stock operations
in Nigeria, and we will be able to provide our clients with answers
relating to risk associated questions.”

“We’ve
had a long relationship with Nigeria and Africa since 1960; then from
1986, with the directorate of the NSE. Today marks the day we reiterate
our commitment that we will be here for ever. We will continue to
improve the partnership we have formed,” the senior company officer
said.

Asked
what the profit sharing formula would be for both organisations in the
live date feed partnership, Musa Elakama, assistant director general of
the stock exchange, said, “There is no profit sharing between us (the
NSE) and Reuters because we are not paying them any money. It is free
of charge. We’ve been together since 1986.”

Subscription fee

Matthew
Dago, a member of the Reuters team, said the live data feed subscriber
will pay a nominal fee of about N250 per month. “The feed can be
accessed on mobile phones and the Internet. The benefit of this is that
it will help subscribers in investment decision making,” he said.

“We
hope to see more products made available in the market due to the
availability of data. Also, a greater degree of transparency is
expected in the market which will also increase market participation,”
Mr. Dago said.

Meanwhile,
Ndi Okereke-Onyiuke, the Exchange’s director general and chief
executive officer, said that the information partnership has “afforded
Thomson Reuters robust opportunity to disseminate real-time market data
from the NSE to the global investment community.”

“The
data for investors and market operators that are being provided include
the bid/ask prices, volumes, latest trades and market depth information
on equities and indices listed on the Exchange,” Mrs. Okereke-Onyiuke
said.

“The development has also enhanced accessibility to the NSE’s data, thereby reinforcing market transparency.”

Strategic improvement

She
said the NSE had in 1986 signed on Reuters to transmit stock market
data through a Electronic Contributor System. The NSE’s boss added that
the current real-time dissemination of the Exchange’s data marks a
“strategic improvement in the information partnership” between the two
organisations.

In
a vote of thanks to the guests, the spokesperson for the stockbrokers,
Babatunde Sobamowo, managing director and chief executive officer of
Global Assets Management, said, “We give thanks to Reuters for dimming
it fit to extent their business formation process to Nigeria at no
cost. We need to let the world know what is happening in Nigeria; that
is why the information partnership is quite timely.”

Finance experts
have affirmed that the embargo on universal banking is not likely to
have adverse effects on Nigeria’s banking climate, if the requirements
for such transitions are met appropriately.

Gamaliel Onosode,
Chairman, Zain, and a leading boardroom player in Nigeria’s corporate
environment, said the policy is a welcome one, as he did not think it
was a good idea introducing universal banking into Nigeria.

“I can only say
that I am delighted. After trying it for the years that they have, the
Central Bank has now come to the same conclusion that I had at that
time, just as when consolidation was introduced. I felt that room
should have been created for banks that still desired to remain
relatively small as quality is not equated with the size of the bank.”

Akinbamidele
Akintola, finance analyst at Renaissance Capital, an investment firm
said, “Right now, you have a situation where banks have insurance
companies, stock broking companies, and all other sorts under them in
the name of ‘universal banking.’ What they are hoping to do is make
sure that banks focus on their core designation, like if a bank is a
commercial bank, all it does is core banking activities.

“I do not think
this should adversely affect the banking industry, but the concern is,
does the Central Bank of Nigeria have the manpower, efficiency, and
capacity to really execute this? That is the concern,” he said, adding
that the CBN did not state if the new policy was to affect existing
banks or interested parties.

Back to the basics

Mr. Onosode argued
that the abolition of universal banking would effectively mean all
smaller banks can now exist to run in a capacity that would be
convenient for what they were specialised in.

“I didn’t see why
all banks should become mega banks the way they were. That was my view
at that time; effectively, we are going back to that, as there are
going to be smaller banks now. The larger the number you have of that
sort, the more difficult it would be to regulate them effectively so as
to achieve the objective that they were set up to achieve.”

Mr. Onosode said
universal banking had the tendency to weaken transparency, if the
quality of the existing supervision and regulation was not improved.

He noted that when
a bank wants to have all kinds of businesses, it becomes very difficult
to prevent it from getting its fingers burnt, from putting depositors’
money in all kinds of high risk ventures, which may not succeed and put
the interest of all other stakeholders in trouble.

Apart from the
transparency issue, Mr. Onosode also said it is easier to generate and
create skills, as these facilitate proper monitoring and management to
be carried out in respect of these banks, as opposed to what is o
btained now.

He further added
that the real sector is not being well supported by the banking sector
as it is supposed to, because the banks – rather than invest in the
real sector – would seek lower risks adventures because of the high
risk involved.

Recycled policies

The Central Bank of
Nigeria (CBN) on Monday, said it will soon discontinue the issuance of
universal banking licenses to operators, in line with ongoing reforms
in the banking sector, to consolidate on the stability recorded so far.

Under the new
policy, operators would be expected to apply for and get separate
licenses for each model of banking operations, including commercial
banking, micro-finance banking, mortgage banking, and investment
banking.

The Central Bank is
expected to spell out the details of the implementation of the policy
in a transitional period that would last between 18 and 24 months to
ensure that normal banking operations are not disrupted.

Under the tenure of
Joseph Sanusi, a one-time CBN governor, some financial observers had
called for the replacement of old models with the introduction of
universal banking to create a level playing field for both commercial
and merchant banks. This was finally introduced in 1999.

They had also
argued that Universal Banking is a global phenomenon and the country
cannot afford to be left out, even though the conditions precedent to a
successful universal banking practice in the country were, and perhaps,
are still not in place.