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Despite
pumping N620 billion into the banking sector, businessmen still do not
have access to credit to finance their projects. Bismarck Rewane, the
Managing Director, Financial Derivatives Company, said the paradox of
the industry remains that credit intermediation is declining sharply in
the face of money supply saturation.

“The
credit crunch is unlikely to ease anytime soon. The decisions of the
last committee meeting did not address the credit crisis,” he said. He,
however, commended the committee for acknowledging that there is a
credit crisis rather than toeing the path of national self-deception.

The
Central Bank of Nigeria, confirming that the credit crunch is
worsening, said, a decline in annualised credit to the private sector
by -16.20 per cent, signals a stalling of economic recovery.

Risk aversion

An
extreme level of risk aversion hinders banks from giving out credit
facilities, even though they have enough to lend out. A bank official
at First Bank said banks would rather take their funds to the Central
Bank on the two per cent interest rate overnight, than lend them out,
owing to a lack of confidence in the safety of their funds. “Banks are
not lending, neither are they creating assets for now. They would
rather keep the money with the Central Bank and collect it the next
day,” he said.

But
the last Monetary Policy Meeting reduced the rate to one per cent, to
discourage banks from keeping cash idle, and encourage them do more
lending.

Exorcising the ghosts

However,
Mr. Rewane in the March edition of his monthly Economic Review said the
ghost of banks’ risk repugnance will not “be exorcised with this
measure”, adding that liquidity would be freed up when nonperforming
assets are bought over the Asset Management Corporation, when it
becomes effective.

While
keeping the standing lending rate flat at eight per cent, the CBN
reduced the standing deposit facility to one per cent, down from two
per cent. This is the second time the industry regulator is reducing
the rate, which was previously at four per cent before it was brought
down to two, a step it adjudged to be necessary to encourage banks to
unlock the credit market.

Asset Management Corporation, a must

Finance
experts say the passage of the AMC bill by Nigeria’s House of
Representatives has already started to drive the markets. A report by
Kato Mukuru, Esili Eigbe and Odalo Addeh, a team of finance experts at
Renaissance Capital, published on Friday revealed that, “The passage of
the Asset Management Corporation (AMC) bill has been the key driver of
Nigerian equities this week (March 8-12), putting paid to speculations
about its passage on a lack of support by the current administration.
Over this week, equities have rallied 5.3 per cent, bringing the return
on the index to its high of 15.9 per cent. In addition, the average
value of stocks traded has advanced 19 per cent to $22.6 million daily,
from $19 million last week.”

They
also expect increased trading activities next week in the shares of
some of the strong banks, as the industry complies with the common
year-end reports as directed by the CBN, which should have been
published before the end of March.

“If
the results are better than the market expects, we think this week’s
rally could be sustained, potentially supported by further positive
news on the passage of the AMC bill. We note that the Senate has now
referred the AMC bill for a public hearing (its third reading), before
being presented again for a final reading,” the report said.

The
sharp deterioration in banks’ assets on account of non-performing loan
portfolios, estimated to have increased to around 22 per cent at
December 2009, up from eight per cent a year earlier, has made banks
lending-shy.

Finance
experts believe that a turnaround in credit metrics is unlikely to be
achieved simply on the back of interest rate decisions, especially
given the weakness of the monetary policy transmission mechanism.

They
argue that any turnaround will require more structural steps, such as
the establishment of an asset management company to clean the system
and speed up the recapitalisation of the finance industry and the
emergence of a corporate bond market..

Last week’s write-up, titled – “Youth Empowerment through
Sports”, was a distraction. We were expected to progress to the second part of
the series on the “Diamond Structure”.

The first part which was neither extensive nor conclusive
introduced the benefits children who are actively involved in sports enjoy. So,
we shall continue to mention other benefits in subsequent write-ups.

The second part, which should have been written last week, and
which should have dealt with the roles of parents/coaches, therefore comes up
today. We apologise and are very sorry for the un-avoidable distraction.

Yes, I agree that there are positive and negative distractions,
but this type of distraction, caused by the state of sports in Nigeria, provides
no form of entertainment or amusement, meant to take the mind off work or
worries, in order to produce a state of relaxation.

The distraction produced by most Nigerian sports administrators,
managers, coaches, ex-internationals, etc., in most cases, diverts attention
and interferes negatively with the level of concentration and attention
required for a normal day-to-day existence.

Some comments made by our sports custodians, get me so
emotionally upset at times, that I have personally come up with an antidote
called laughter as a counter, and relief mechanism. For instance, is it not a
laughable matter, to hear Lars Laggerback say that “age does not matter in
football”?

Well, in order not to be engaged in another distraction today, I
want to believe that Laggerback did not really mean to say it that way. All he
wanted to tell us is that players like Kanu and his age-mates, will still
feature in the starting line-up during the FIFA 2010 World Cup finals in South
Africa, come June/July.

It is also likely that he may appeal to Jay-Jay Okocha and the
likes of Taribo West (the anointed Rock),

Rasheed Yekini (the gangling goal getter), “Mathematical” Segun
Odegbami, Dan “De Bull” Amokachi – the list is endless – to please get out of
retirement and get back to active football playing, in order to represent
Nigeria at the World Cup fiesta. After all, “age does not matter”.

But if Laggerback is serious and means what he said, then, I
call on Ken Anugweje, the President of Nigerian Universities Games Association
(NUGA), who is also a PhD holder in sports medicine, to quickly react to this
comment made by Laggerback. Oh blimey, have I been distracted? May God rescue
us and Nigerian Sports from negative distractions, amen. Now back to our
topic…

The spirit of sportsmanship

Back on track with the Diamond Structure (DS), we concluded last
week, that paramount in the philosophy of the DS, is the need for
parents/coaches to instil the importance of good sportsmanship in Nigerian
children, teenagers and the youth. Cheating; losing one’s temper; negative
criticisms of team mates; coaches; referees and opposing players; trash-talks;
arguing referees’ calls and other negative conducts must not be encouraged to
be exhibited by Nigerian youngsters.

We wish to repeat for the sake of emphasis, that parents should
please understand that coaching children is an honour and a directive from God
Himself. Otherwise, why should God direct that children should be taught
(coached) when they are still very young? It is also a great privilege that
carries with it, very massive responsibilities, that should contribute to the
holistic development of our children, teenagers and youth.

What, then, are parents required to do? Permit me to quickly
state – before we continue – that I am no expert on this subject.

I am in fact still an apprentice – a student. Nonetheless, I
wish to share some of what I experienced with some American parents, who were
part of a training programme organised by Paulo De Souza (Junior) of the
Brazilian Soccer Journey.

The training programme took us to the Pele Soccer Schools, the
Santos Football Club and the Litoral Football Club. The parents involved in the
training programme also doubled as coaches/trainers of their children, who were
also part of the programme. What you are about to be fed with, are therefore a
combination of my experiences in Brazil, England, Germany, South Africa and
most importantly, my interactions with parents in Lagos, Nigeria, while we were
running the Brazilian Soccer Schools programmes at the National Stadium in
Surulere.

Tips for parents

i. You (parent) must be your own child’s role model.

This is very important for the actualisation of the diamond
structure philosophy. Your child is watching you very closely and will imitate
you at the slightest opportunity. So please watch it. For instance, when you
are watching a football match or any sporting activity on TV, with your family
or with your child, watch your tongue. Do not criticise or demean officials,
the coaches or any of the athletes or footballers. If the athletes or
footballers are still young, it is best for you to utter words of encouragement
and appreciation.

ii. Do not force your child into any sport.

Allow the child to be free to choose. In case your child does
not show any interest in sporting activities, encourage him or her, but please
do not compel or threaten that child. Some children are slow starters. Remember
that you should be a role model, so, if you are actively involved, your child
will naturally emulate you.

iii. Take your child with you to your work-out sessions.

Allow your child see you enjoy the sporting activities you are
involved in and seize that opportunity to model the philosophy or doctrine you
have been talking to that child about.

iv. Set the standard.

You owe your child the responsibility to teach him/her the
values of good sportsmanship or fairplay. One of the best and easiest ways of
doing this is by watching your child at play. Observe his or her behaviour and
attitude while playing or competing with others. Watch his/her attitude towards
teammates, the opposing team, and officials of the game. Never correct him/her
while at play.

You are there as an observer and spectator. Discuss his/her
negative and positive behaviours with him/her, after the game, very wisely.
Make it a chit-chat he/she will enjoy. Do not rebuke. If the coach ignores or
encourages poor sportsmanship, as “coachitos” and “coachilas” in this part of
the world are wont to do, make your objections known to the coach privately.
Not in the presence of your child. Try to be friendly with the coach anyway, if
you are aggressive, well, God help your child when you are not around.

v. Discuss child protection policy issues with the coach.

For instance, the security of your child within the sports facility
is very crucial. The environment must be conducive. Sport is fun, even though
competitive, hence children should not receive knocks on their heads or be
caned if or when they make mistakes. Please protect your child.

More suggestions

vi. Please do not commercialise or encourage your child to
commercialise his/her potential at this early stage of his/her life.

Your child’s involvement in sports must be devoid of your own
desire to use that child’s accomplishment for commercial purposes. This has been
largely responsible for the spate of young school drop outs in this country. A
few years ago, I was forced to abort a playing tour of Europe by students of
the Brazilian Soccer Schools, when it became apparent that most of their
parents had made plans for their children to abscond on getting to Europe. As
far as those parents were concerned, completion of the secondary school
education was no priority. Those children should go start making money in
Europe.

vii. Invest in these children.

Assist with training equipment like spike shoes, air-tight
canvasses – not the hard soled type that will damage their ankles – boots, shin
guards, training shorts and shirts. Please get the right size for your
children.

For instance, it is not wise to let 10 year old children play
football with size 5 balls. There are sizes 1, 2, 3, and 4 balls for all the
age-grades.

viii. Parents must also watch what the children eat and drink.

It may be instructive to let parents know Arsene Wenger does not
allow his young players to drink tea with sugar. They are encouraged to consume
less sugar. Some dairy stuffs are also banned. Producers of “fast foods” and
some particular types of beverages are also not allowed to sponsor sporting
activities in Europe . Please protect your child from obesity.

Encourage them to eat less of cakes, dodo, and such fried stuff.
Expose them to fruits now and please encourage them to drink a lot of water.

ix. Please do not gag your child.

Children love discussing sports – especially football. Make that
child comfortable each time he/she approaches you for discussions. Allow
him/her ask questions and please, be a very good listener. Allow that child to
do the talking, while you listen. You’ll be surprised how much your child knows
about the sports he/she is involved in.

x. Please discuss sports at the next P.T.A. meeting you attend.

Encourage other parents to join you in forming the Sports and
Education Association of Nigeria, while we continue working on the modus
operandi of the Association.

xi. Your reactions are needed.

No one knows it all. Please contribute your own ideas. Your
suggestion may be that which will weave all the threads above together. Two, it
is said, is better than one.

Last Friday, my day
went sour on reading Ikeddy Isiguzo’s column in the Vanguard about the
plight of Willy Bazuaye, a former international and assistant coach of
the U-23 team that won gold medal at the 1996 Olympic Games in Atlanta.
He needs five million naira to address health challenges occasioned by
the stroke he had in 2003.

The campaign
against corruption has met with little or no success because we have
failed to take care of our citizens in their old age. People now opt to
take care of themselves; as governments have been derelict in
addressing pension/terminal benefit issues and instituting a social
safety net.

After Ikeddy’s
piece, I had to Google similar stories and read the article in PM News
that prompted his column. The earlier piece can only prompt one
response: Weep for Nigeria.

Bazuaye’s experience

According to
Bazuaye, “when I discovered that I could not meet up with the medical
expenses I incurred daily on my treatment, I took the courage to inform
the Nigeria Football Federation (NFF) in Abuja. But I didn’t believe my
ears when the officials in Abuja told me they won’t do anything about
my situation. They said there is nothing they could do to help me
because by the time I suffered stroke, I was only a contract staff with
the NFF. That was how I have been struggling with life since then.

“At a stage, my son
personally went to complain to Taiwo Ogunjobi, who was then the
Secretary General of the NFF. But the NFF official said his hands were
tied because I was on contract with them.

“I also went to
Patrick Ekeji (Director General of the National Sports Commission) who
was one of my players when I was assistant coach to Father Tiko in the
Green Eagles.

Oh! I was stunned
that Ekeji snubbed me. He said I was too old to be in the NFF in 2003.
So, I came back home to face my predicament alone.” Pray, what has age
got to do with compassion? Is it when he had stroke that the
authorities knew that he was too old? Prior to the ailment, was he not
competent and effective?

Contempt for contemporaries

The issue of
contempt for our contemporaries informs the snobbery meted to Bazuaye.
When they want to avoid responsibility, the coaches are on contract.
When they want to cheat the coaches, then they are public servants.

To hear the NFF
hands-off Bazuaye’s case on the excuse of being on contract, one would
think NFF was looting banks in order to pay him then. They should tell
us how much they were paying him that immunizes them to aid a former
employee. How much were they paying Bonfere Jo who was brought in to
take charge of the U-23 team after Bazuaye had qualified the team for
Atlanta? Even as an ex-international, will it be asking too much of NFF
and NSC to assist Bazuaye?

The 71-year-old
former soccer tactician is disappointed that everyone has abandoned
him. “I’m surprised that my country people, Nigerians, are not thinking
about what has happened to me for the past seven years,” he said.

The campaign for Bazuaye

Nonetheless, our
appeal goes to players that were coached by Bazuaye to come to his aid,
especially those playing outside our shores. Nwankwo Kanu, who was
captain of the 1996 Olympic team, has a humanitarian heart and we
implore him to lead the campaign to come to Bazuaye’s rescue. Ekeji
should not make us despair.

What Bazuaye needs
is less than $35, 000. If the internationals contribute $1, 000 each,
we will arrive at the amount needed to restore his health.

In addition to the
Bazuaye’s appeal to the Lagos State governor, Babatunde Fashola, to
come to his assistance, his state governor, Adams Oshiomhole, should
also come to the aid of the distinguished servant of Nigeria and Edo
State.

Let’s try to do our best now that Bazuaye can appreciate our help.
Let us not wait until when the Lord calls him; to start shedding
crocodile tears and talking about how ‘his shoes will be too big to
fill’. May we ask: how can NFF convince the present internationals that
if per chance they fall on hard times in future, they would not be
treated like Bazuaye? So, when we demand commitment from our players,
we should also expect responsibility and compassion from our sport
leaders.

The Economic
Community of West African States (ECOWAS) is urging the European Union
(EU) to show real monetary commitment to a proposed development fund
for the subregion.

The call, announced
in a press release, follows an ECOWAS Ministerial Monitoring Committee
held over the weekend in Cotonou, Benin. Negotiations are expected to
commence on Wednesday to lay the foundation for a new trade regime,
which aims to create a free trade area of the two regions.

Pending issues

Some issues that
remain to be resolved related to the Economic Partnership Agreement
Development Programme (EPADP) fund are: what each partner will give to
the fund, and how it could be accessed.

The experts-level
MMC meeting showed how the Partnership Agreement could be integral to
West Africa’s integration process. The fund could also boost
competitiveness, leading to an economic partnership pact that would
help the 16-member ECOWAS take advantage of potentially greater access
to European markets.

West Africa wants
EU negotiators to make clear the “dedicated source and accessibility”
of the fund, according to the press statement.

Monetary support

Heads of state from
across the ECOWAS region say they would like notable EU monetary
support for the proposed fund before it is approved by the West African
bloc.

For their part, the
ECOWAS states are expected to finish listing the priorities in their
operational plans and projects, in keeping with a framework adopted two
weeks ago, which was to be submitted to the ECOWAS Commission latest
end of this month.

Also, the ECOWAS Commission was expected to carry on with planned fiscal reforms, among other activities.

ECOWAS asked its
negotiators to get fast replies from EU representatives regarding
financing of the proposed fund, as well as guidance on how it could be
tapped by the ECOWAS member states.

Some other
unresolved aspects of the negotiations are a seven-year old 0.5 per
cent Community Levy charged by West Africa for imports from outside the
region. ECOWAS uses the funds to pay various activities, but the
Europeans consider it a trade barrier and want it lifted.

Still, movement has been perceptible in certain core areas, such as
issues related to market access and a comprehensive sectoral economic
analysis.

Experts have said
the agricultural policies of the states and federal government are not
having the expected impact on the productivity of farmers in the
country.

Ojobe Atuluku, a
consultant for Oxfam, a non-governmental organisation working with
other partners to find lasting solution to poverty, said smaller
farmers are being marginalised in the various policies that should have
impacted positively on their enterprises.

Ms. Atuluku, who
was engaged by Oxfam to assess the impact of the NGO’s farming
programme in the past one year, said the government will make progress
in its quest to achieve food security if small scale farmers were given
more consideration.

While presenting
her report at the annual monitoring and evaluation meeting of Oxfam and
partners in Abuja yesterday, Ms Atuluku said, “I have been in the field
looking at Oxfam’s work in the past year, and by field I mean the
states of Oyo, Ekiti, Nassarawa, Plateau, Benue, Katsina and FCT. And
the focus has been interacting with small scale farmers that Oxfam has
been working with as well as the partner organisations in those
states… it is so clear that small scale farmers find agricultural
policies very unfriendly.

“They complain that
they are invisible within agricultural policy, that it is not possible
for them to benefit from those policies. The story across the country
surrounds issues of input, fertilisers, pesticides, herbicides,
tractors, credit. They do not have access to all these and so the
challenge becomes: why is this the case even as the federal and state
government are placing a lot of emphasis on agricultural issues?”
Difficulty accessing funds

Ms. Atuluku said small scale farmers also have difficulty accessing funds provided by the government.

“I will give an
example. The federal government came up with the scheme that provides
N200 billion for farmers. N40 bilion of this has been set aside for
small scale farmers, but the conditions are that you need to provide
collateral and it cannot be the poor farmers’ land in the bush, but a
piece of land that worth something. And you have to access the
collateral through a commercial bank. All these are conditions that the
small scale farmers have no clue or access to,” she said. She therefore
called on decision makers, the legislature, the executive and others to
address the problems in the policy implementation and to find out why
policies targeting smaller-scale farmers are not reaching the target
group.

She said Oxfam has
supported the farmers with capacity building in terms of farming
techniques in order to increase yield. But in some states, fertilizer
is unavailable and the farmers do not have enough money to hire
tractors.

“They are still
using crude implement. That is what we saw in the fields and it seems
as if the high level attention being paid to agriculture in the country
it is still yet to go down to small scale farmers. If we are serious
about food security in this country the government needs to change the
way it actually implements the policies it has put in place,” she said.

Validating the report

Ajayeoba Ayodeji,
the Campaign Manager of Oxfam said the meeting was an avenue to
validate the report of the consultant and plan ahead for effective
delivery of their mandate. He said the efforts are geared towards
improving the productivity of small scale farmers and engaging the
government for improved agricultural governance while providing
opportunities for women that will help reduce inequality and poverty
and support Nigeria attain food sufficiency.

One of the farmers, Amina Bala Jibrin from Bauchi State, said Oxfam programmes have impacted them a great deal.

“Oxfam constituted the voices for food security and they want the
small scale farmers to be heard. It is a very good idea because farmers
in the rural areas are not given proper attention. What is due to them
is not given to them. They do not benefit from inputs because it has to
go through other channels before it comes to the small scale farmer it
is gone. We are the voiceless,” she said.

The current bullish
trend witnessed at the Nigerian Stock Exchange (NSE) has been
attributed to voluminous trading by some institutional investors.

Tunde
Oladapo-Dixon, an analyst and chief executive officer of StockPicks
Consulting, a stock broking firm, said the sixth consecutive trading
days of rebound seen is the result of some fund managers who now find
safe haven in stock market.

Mr. Oladapo-Dixon
said, “What we are seeing now in the market is the work of fund
managers because they couldn’t make a clue in the money market, which
is very stable. That is why they decided to patronise the stock
market.” “If you look at the rate in the money market now, it has been
slashed drastically as a result of some of the decision taken in the
last Monetary Policy Committee meeting that held early this month. The
rate has now been forced down to about eight per cent for individual
and corporate investors,” he said.

He said the rally
in the market may not be sustainable because the institutional
investors will soon leave the market. “I think by mid of this week, we
may start seeing shedding in price of some equities because as sensible
investors, when you make up to 10 to 15 per cent gain, you leave the
market,” he added.

Stock dealers at
Afrinvest West Africa, a portfolio management firm, in an analysis
report, said, “The bullish run in the banking sector continued on
Monday despite some top and mid tier banks losing marginal points, as
majority booked gains in excess of 4.0 per cent.”

“Institutional
purchases mopped up offers of Zenith Bank resulting in a 4.9 per cent
price appreciation. Also on the upbeat were Fidelity Bank, Skye Bank
and Access Bank realising gains in excess of 4.0 per cent. Ecobank
rallied with a 5.0 per cent mark-up after light profit taking early in
the session,” they explained.

The analysts added
that the shares of Dangote Flour, Flour Mills and Cadbury, in the food
and beverages sector, were also investors’ favourites yesterday.

Meanwhile, an
analyst has dissociated any direct link of Aliko Dangote’s removal as
the president of the NSE to the present market upturn.

Egbo Amaechi, a
finance analyst and a member of the Shareholders Association of
Nigeria, said “Market will not react to the removal of Mr. Dangote from
the NSE’s council and president because he (Mr. Dangote) is not an
executive director of the Exchange.”

The bulls hold

The NSE market
capitalisation, on Monday, recorded over N58 billion gains on Friday’s
figure of N5.813 trillion to close at N5.871 trillion, representing
about 0.99 per cent increase.

The NSE All-Share
Index also appreciated by 0.99 per cent or 238.37 units to close at
24,380.09 basis points from the 24,141.72 recorded on the last trading
day.

At the close of
Monday’s proceedings, a total of 53 stocks appreciated in price while
28 stocks depreciated. The Exchange recorded trading in 422.164 million
volumes of shares worth N3.551 billion in 6,927 deals.

Banking stocks lead

Three stocks in the
banking sector led as the most traded equities for the day. Zenith Bank
was top on the list with 37.664 million shares valued at N664.666
million, while Access Bank and Fidelity Bank followed, respectively,
with 30.214 million shares worth N296.220 million and 29.174 million
shares valued at N92.080 million.

As on the last
trading day, the banking subsector yesterday maintained its lead as the
most active with 259.295 million quantities of shares, worth over
N2.471 billion.

The subsector’s volume was driven by shares of the three banks that topped the most traded chart.

Trading activities
in the insurance subsector was second with 64.706 million shares valued
at N55.750 million. Volume in the subsector was boosted by deals in
shares of Regency Alliance Insurance, Aiico Insurance, and
International Energy Insurance.

The food/beverages
subsector followed with 21.490 million shares worth N331.852 million
exchanged by investors. Dangote Flour Mills, Dangote Sugar Refinery,
and Cadbury Nigeria boosted the subsector’s volume.

Across the globe

On the
international scene on Monday, stock markets experienced mixed
performances. In Europe, the France CAC 40 Index was down by 0.83 per
cent; the Swiss Market Index gained 0.13 per cent, while the Euronext
100 Index and the Germany DAX declined by 0.89 and 0.60 per cent
respectively.

The United States
S&P 500 and Canada S&P SX 60 Indices were also down by 0.59 and
0.84 per cent respectively. In Asia, the China Shanghai Composite Index
depreciated by 1.21 per cent, while the Japanese Nikkei 225 appreciated
marginally by 0.01 per cent. Meanwhile, the bears hold sway in the
Australian ASX Index and the Taiwan TSEC 50 Index, were down by 0.66
and 1.46 per cent respectively.

Some finance
experts in the education sector have warned that corruption and lack of good
corporate governance in business organisations are a threat to national
development.

Soji Apampa, an
Executive Director at Integrity Organisation, a consultancy firm, said that
corruption in business damages the ability of a company to “effectively and
efficiently utilize the resources available.”

Speaking at a
one-day meeting of accountants in education, organised by the Institute of
Chartered Accountants of Nigeria (ICAN), Mr. Apampa said that “corruption has a
negative impact on national development because it makes the people on the
advantage side (close to government) gets richer while those on the disadvantage
side gets poorer.”

Corporate governance

Citing an
example of a corrupt system, he said, “So much is budgeted for education at the
national level but just a faction of it is felt at the local level where it is
supposed to have impact, and that is destroying the quality of education that
is possible.”

Speaking on the
topic “Corporate Governance and Disclosure: The Impact of Corruption and
Accountability on National Development,” he said, “Corporate governance is a
system by which companies are directed and controlled. It is supposedly carried
out by board of directors for the benefit of the company’s operators to provide
direction, authority and oversight management.”

He added that
corporate governance “ensures that the board of directors is accountable for
the pursuit of public objective, and that the corporation itself conforms to
laws and regulations,” he said.

Explaining from
the economic perspective, Mr. Apampa said corporate governance is a tool in
investigating the efficient management of corporations in the use of mechanism
such as contract, organisation design, and legislation. “It also improves
financial performance. It addresses the issue of divorce between ownership and
control of organisations,” he said.

According to
him, the basic tasks of any board are to have foresight, set up strategies,
delegate responsibilities, and providing general oversight for the company.

Mr. Apampa also
said, “a good corporate governance is impossible without appropriate levels of
disclosure that involves dividing to each company’s operator the type of
information to which they have a right.”

He, however,
added that “appropriate disclosure assumes that there will be appropriate
governance of scrutiny” which should enforce accountability.

Speaking on a
similar topic, Ishola Akintoye, Head of the Accounting Department of Olabisi
Onabanjo University, Ogun State, said, “A company where good corporate
governance is expected must have a well-functioning board, accountability, clarity
of purpose, transparency and openness.”

He said the
qualities of good corporate governance are trust, credibility, legitimacy, the
ability to weather crises, a climate and relationships that ensure financial
stability.

Mr. Akintoye
also maintained that “if a company’s process of bringing people to the top is
defective, there will be problem. You cannot create legality out of
illegality.”

Also, Adekunle
Owojori of the Department of Accounting, University of Ado-Ekiti, Ekiti State,
said that corporate governance and business ethics that examine immoral
practices.

Mr. Owojori
said for corporate governance to be effective practice, “all audit committee
members must be financially literate.”

Fighting corruption

On how to
combat corruption, he said that a professional and well-motivated civil
service, budget reform, and a strong judiciary system are required. He added
that civil societies and the media also have roles to play.

Meanwhile,
Elizabeth Adegite, the president of ICAN, said that the issue of corporate
governance “is that of change of attitude and reorientation of all Nigerians,
whether professionals or not.”

She said,
“Corporate governance is important to the institution because charter
accountants are in the middle of all these issues. Internal and external
auditors, consultants, chief executive officers, board of directors are charter
accountants. So we must take responsibility as professionals and chart a course
on how to engage in good practice.”

However, she
said that ICAN has a code of conduct for charter accountants.

“If anybody gets wanted
after our investigation, disciplinary actions will be taken appropriately. And
this is why we say the certificate you hold as a charter accountant is the
property of the institute, it can be revoke if indicted.”

Consumer prices in
China rose 2.7 per cent in February over the year-earlier period,
according to data released on Thursday, partly attributable to the
Lunar New Year holiday but also to the rising inflationary pressures in
China’s economy.

Other data, on
Thursday, reflected China’s continued strong recovery from the global
economic crisis. For the combined January to February period, which
factors out distortions from the Lunar New Year holidays, industrial
output expanded by 20.7 percent and retail sales rose 18 per cent
compared to a year ago.

Those figures followed data on Wednesday that showed robust growth in both China’s exports and imports in February.

No shift in economic policy

Overall, economists
said the picture suggests no shift in economic policy is in store,
although interest rates on loans are likely to rise as China strives to
hold down inflation.

While inflationary
pressures are clearly building, “current inflation is still modest,”
said Ken Peng, an economist with Citigroup Global Markets in Beijing.
“Right now, we are still okay. This is not going to cause any panic
among policy makers.”

Jinny Yan, an
economist with Standard Chartered Bank in Shanghai, said the data
released this week does not suggest China’s economy is overheating,
despite pockets of speculation, especially in the red-hot property
market.

“We see the recovery continuing to keep its momentum,” she said. “The policy makers will continue to hold their stance.”

Drop in food production

China’s leaders
insist that inflation as firmly in check, below the government’s target
of three percent. The 2.7 per cent increase in February followed a 1.5
percent increase in January. Food prices led the way, a potentially
troublesome sign for the leaders of a country where as much as 40 per
cent of poorer household budgets go to food.

But prices are
typically jacked up during the Chinese New Year holidays, when families
tend to splurge on food and gifts. The National Bureau of Statistics
also blamed the harsh winter, which it said hurt food production.

A spokesman for the
bureau, Sheng Laiyun, predicted prices would come down after the spring
harvests. “We don’t see any signs of economic overheating,” he said.

China’s deputy
central bank governor, Su Ning, told reporters last week: “We believe
we can successfully contain inflationary pressure this year.” He said
the bank was more concerned last year, when prices fell for nine months.

“While we don’t
want to see prices rising too fast, the current situation is necessary
for the development of our economy and cannot be described as
inflation,” he said.

Other data released
on Thursday showed the government’s efforts to rein in loans after last
year’s lending spree, which was designed to spur the economy. Chinese
banks lent only about half as much money in February as they did in
January.

Premier Wen Jiabao
announced that China would lower its lending target for this year to
7.5 trillion renminbi, or $1.1 trillion, about 72 per cent of the 9.6
trillion renminbi in 2009.

The central
government, twice this year, increased the amount of money that banks
are required to deposit with the central bank as a monetary reserve
rather than lend to customers.

Many economists predict one or more interest rate increases in the
coming months, but higher interest rates are unlikely to threaten
China’s economic recovery because growth is governed more by the
availability of loans more than their cost, economists said.

The International
Monetary Fund (IMF) says it anticipates that exchange rate pressures
and volatility will persist for some time in Nigeria and other
Sub-Saharan African countries, according to latest report posted on its
website:

“African economies
can expect exchange rate pressures and volatility to persist for some
time. Shifts in commodity prices as well as in portfolio and other
private capital flows are likely to continue given the highly uncertain
trajectory of the global recovery, the geographic rebalancing of trade
flows, and volatility in the exchange rate of the main currencies,” the
IMF said after an analysis of the evolution of exchange rates of
sub-Saharan African currencies in the context of the global financial
crisis.

The report, which
focused on the differences in the magnitude and volatility of the
exchange rates among countries, was drawn from a sample of seven
countries, four members of the East African Community (EAC) (Kenya,
Rwanda, Tanzania, and Uganda), and three others, which experienced
large exchange rate losses at the outset of the crisis: Ghana, Nigeria,
and Zambia.

External Factors affected exchange rates

The IMF cited
external factors that reflect the transmission of the global crisis
through the trade and financial channels as well as the volatility of
the U.S. dollar, the main international reserve currency.

Abrupt fluctuations
in capital flows also contributed to exchange rate movements. “A
tightening of credit conditions in global financial markets and a
decline of confidence triggered a frantic race to safety by private
investors at the onset of the crisis. As expected, the resulting
depreciation was more pronounced in those countries that had received
large portfolio inflows prior to the crisis (Ghana, Kenya, Nigeria,
Uganda, and Zambia).”

The volatility of
the U.S. dollar as a reserve currency also had a strong effect on
African currencies. The dollar rose sharply against all currencies,
amplifying the depreciations that were triggered by other external
factors.

Challenges and implications

The IMF stated that
exchange rate volatility could hinder progress with financial
integration, skewing capital flows toward short-term options at the
expense of longer-term investment.

Lydia Olushola, an
economist and a consultant at Sky Trend Limited, a finance service
firm, said that real exchange rate is one of the major relative prices
in an economy, which actually defines the rate of exchange between
domestic goods and their foreign counterparts, and as a result, its
volatility has economy-wide implications.

“Exchange rate
volatility has real economic costs on an economy. It affects price
stability, firms’ profitability, and the country’s financial stability,
as a whole. Exchange rate volatility is also influenced by and
correlated to domestic economic uncertainty.”

She added that
countries have reasons to be worried about exchange rates volatility as
it may hinder international investment flows. “Companies may also be
reluctant to establish new firms or purchase existing ones in such
countries as exchange rate uncertainty reduces the expected profits
from such projects.

“Volatile exchange
rates also create uncertainty about income expected to be earned on
international transactions. It is one of the reasons some firms add
some allowance to all they sell to be on the safe side. These costs are
then passed on to consumers in form of higher prices, and then you know
what happens. Even traders would also be reluctant in their businesses
too as the volatility in the exchange rates adds additional risks to
their expected gains,” she said.

IMF’s remedy

The IMF however,
outlined ways of escape, both for the short and long term, to the
countries that are still experiencing exchange rates volatility, adding
that the deepening domestic financial markets is key to enhancing their
capacity to handle external financial volatility over the long term:

“Broader bond
markets will allow diversification into longer-term investment
instruments—important for long-term investors. Developing forward
hedging instruments would also generate some stability in the foreign
exchange market by reducing forward settlement risks.”

Nigeria’s Naira stable

Bismarck Rewane,
Managing Director, Financial Derivatives Company, a finance and
research analysis firm and Member, National Economic Steering
Committee, is however, confident that the Nigerian Naira would remain
stable.

“The Naira is
expected to remain stable because higher oil prices will boost the
accumulation of external reserves, and this will also be supported by
increased sale of Forex by oil majors. The Naira remained unchanged at
N148.6to the dollar in the official market in February. In the parallel
market, it appreciated marginally by 0.32 per cent to N152 to the
dollar from N152.5 to the dollar the previous month. The FOREX demand
however, surged 7% to approximately $1.2 billion in February.

“The gain in
parallel market has been attributed to the increase in forex supply
from the Central Bank. The Year on Year spread between the official and
parallel rates narrowed by 87. 41% to 3.29 from 26.15 in 2009,
indicating a relatively more stable forex macroeconomic compared to
what obtained the previous year,” he explained.

Nigeria’s foreign
exchange market has remained relatively stable since the 2010 year
began. Sanusi Lamido Sanusi, the governor of the Central Bank of
Nigeria, in November 2009, said the Naira will trade between the N150
to $1 band till it finally regains full stability.

The on-going
financial sector reforms and revelation of the true state of health of
Nigeria’s banking industry, makes a strong case for investments, Atedo
Peterside, chairman of the Stanbic IBTC Bank, said during the ‘Stanbic
IBTC 2010 Investor’s Conference’ in Lagos on Monday.

The three-day
conference is focused exclusively on the Nigerian economy with emphasis
on the capital market. The last two years have been turbulent for
financial markets around the world, including Nigeria. The Nigeria
Stock Exchange’s (NSE) all share index has recorded double digit
negative returns in the last two years, crashing from an all-time high
of 66, 731.20 in March 2008.

With a current all share index of 22,985.00, investors seeking for long-term returns can venture into the capital.

“Accordingly, in
tune with the theme of this conference: ‘Connect. Inform. Optimise,’ we
urge all participants to connect with each other and network as much as
possible; obtain information about your investment targets, and please
remember that Stanbic IBTC has an excellent research team with award
winning analysts and robust reports available to assist you to decide
on your investment priorities.”

Major crossroad

But Mr. Peterside
could not resist the urge to comment on the present political reality
in the country and the uncertainty that it has generated both locally,
and on the foreign scene.

“When the idea of
this conference was first discussed some months ago, I never imagined
that the range of questions from the overseas participants would
include several with a political slant,” he said. “As we all know,
these questions were prompted by recent political developments.
Unfortunately, I am unable to provide answers to some of the most
pertinent political questions. I can however, assure you that many of
us are asking these same ‘hard’ questions to key members of the
Executive and Legislative arms of our government and we promise to give
you meaningful feedback as soon as we have credible answers…

“My personal belief
is that Nigeria is currently at a ‘major crossroad.’ The crossroad I
speak of is in the political arena and in some ways it is about a
struggle between Good and Evil, a struggle between the Truth and Lies.”

But he assured investors that “the truth will soon prevail.”

“The foundations
upon which Stanbic IBTC Stockbrokers Limited built its business model
from day one was a desire to attempt to tell investors the truth at all
times regarding the things that we do know and to be humble enough to
admit what we do not know… we are in the business of attempting to
guide investors and interacting with them continuously. We are however,
not in the business of deliberately deceiving or misinforming them.”

A major player

Stanbic IBTC
Stockbrokers is owned by the Stanbic IBTC Bank, a member of the South
African-owned Standard Bank Group, and is said to account for over 20
percent stock market in 2009.

The bank, through
its wholly owned stock broking and asset management subsidiary, IBTC
Asset Management Limited, has several excellent mutual funds including
the IBTC Nigerian Equity Fund, which is Nigeria’s largest mutual fund
with a net asset value in excess of N25 billion (as at December 2007).
It is the only bank that has a direct subsidiary that is a pension fund
administrator, through the market leading IBTC Pension Managers Limited
(IPML).

As at 30th
September, 2009, indicated profitability declined to N3.7 billion, a 65
percent decrease from the same period for 2008. For capital adequacy,
the Stanbic IBTC Plc has a 33 percentage ratio, compared to the 10
percent statutory requirement by the CBN.