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Nigeria’s United
Bank of Africa (UBA) has started operating in Zambia with a capital
investment of $15 million as it seeks to expand its influence on the
African continent, Chief Executive Officer Abba Bello said on Thursday.

Mr. Bello told
Reuters one UBA branch was already operational in Lusaka and the bank
planned to open two more in the country’s mining towns on the
Copperbelt and another in Solwezi, which hosts two key mines in
Africa’s largest copper producer.

“Our focus is on
wholesale and retail and we play in all sectors of any economy that we
are in, so when you say mining, yes we will be in mining but we will be
in all sectors of wholesale space in Zambia and we will support that
with retail play,” Mr. Bello said.

Mr. Bello said UBA hoped its growing influence in Africa would help boost trade and spur the continent’s economic growth.

“UBA is here as a
vehicle to ensure that Africans have their own bank that can assist in
empowering indigenous Africans in growing intra-African trade and trade
between Africa and the rest of the world,” he said.

Mr. Bello said with the start of operations in Zambia, UBA was now present in 17 countries in Africa.

In October, UBA
launched its Kenyan operation to compete with pan-African group Ecobank
Transnational Inc which began working in Kenya in 2008.

Bello said the competition, brought about by the opening of more
banks in Zambia, which now has 18 banks, and favourable economic
indicators in recent months would help bring down interest rates.

The European
Central Bank and the Bank of England left their benchmark interest
rates unchanged at historic lows Thursday, as both worried about the
strength of the economic recovery.

The European
Central Bank, which sets monetary policy for the 16 countries in the
euro zone, left its benchmark interest rate at 1 per cent, where it has
been since May. The bank believes that the euro-zone economy remains
too weak to create an imminent danger of inflation.

In Britain, which
just barely emerged from recession last quarter, the Bank of England
left its benchmark rate unchanged for a 12th month, at 0.5 percent.

Fear of recession

Bank of England’s
committee members, meanwhile, are watching closely for any signs that
Britain’s fragile economy could relapse into a recession. Gross
domestic product rose 0.3 percent in the fourth quarter from the third
quarter, the office for national statistics said last month, revising
an earlier estimate upwards.

“It’s pretty
unlikely they’ll do anything for the next six months,” said James
Knightley, an economist at ING in London. “The environment is still
very uncertain. If the data continues to show a gradual improvement,
they will just keep everything as it is.”

The fear of rising
unemployment and concerns about the sustainability of house prices,
which remained relatively high, is prompting consumers to curb
spending. Unemployment unexpectedly rose in January to the highest
since 1997.

Tight housing
supply and low interest rates are expected to keep property prices from
falling this year, the Royal Institute of Chartered Surveyors said
Tuesday, easing some pressure on homeowners. Still, the availability of
credit remained under pressure as some banks are concerned to meet any
future regulatory requirements. Mortgage approvals dropped to the
lowest level in eight months in January.

Uncertainty about
the outcome of the general election, which is expected to be held
within the next three months, and whether the new government would push
ahead with large-scale spending and job cuts in the public sector meant
consumers were increasingly holding off big purchases. Yet, unsecured
debt rose as Britain’s already indebted consumers borrowed more through
credit cards and personal loans in January.

The pound fell to
the lowest in 10 months against the dollar on Monday before it started
to recover on Wednesday amid concerns Britain might soon face a similar
sovereign debt crisis to Greece. The Bank of England voted last month
to halt its program to purchase government bonds and other debt to
strengthen the economy but said it would not rule out continuing the
program should the economy deteriorate again. The bank is expected to
review its decision in May.

Implication of too much available cash

In the euro area,
the European Central Bank president, Jean-Claude Trichet, and the
bank’s governing council are cautiously draining the cash they began
providing in October 2008 after the collapse of Lehman Brothers brought
interbank lending practically to a standstill.

The bank is
concerned that too much available cash will fuel inflation or asset
bubbles of the type that preceded the 2008 crisis.

The central bank
may be ready to return to competitive bidding to set the interest rate
on three-month loans, which would raise costs for banks. But amid
nervousness about Greek debt and signs that some institutions are still
dependent on central bank funds, the bank is expected to continue
providing unlimited financing on a shorter-term basis.

The European
Central Bank has already stopped making any more 12-month loans to the
roughly 2,200 banks in the euro zone that are eligible. The bank said
in December it will make the last round of six-month loans at the end
of this month.

The central bank
had extended the time periods for loans beyond the customary three
months to encourage institutions to continue lending to the private
sector. The bank also allowed banks to borrow as much as they wanted at
the benchmark interest rate, provided they could supply collateral. And
it expanded the definition of the kinds of bonds and other securities
it accepted as collateral.

Analysts say they
expect the European Central Bank to continue providing unlimited funds
for one-week periods, to avoid a crunch as the longer-term loans expire.

When Mr. Trichet
holds a news conference this afternoon, analysts will be watching for
any revision of bank staff estimates of euro-zone economic growth.
Currently the bank projects growth in the euro zone of 0.8 percent this
year and 1.2 percent in 2011.

The Central Bank has stated that the sale of the rescued banks will be made open to all willing investors, local and foreign, even if they are old owners of the banks.

The Central Bank’s spokesperson, Mohammed Abdullahi, said it is a free and fair competition for willing individuals.

“As far as we are concerned, anybody that is bringing the money in for recapitalisation is free to compete, subject to the conditions that we have drafted and that they are aware of. However, it should be clear that we are not returning the banks to the former owners.

If they have the money to recapitalise the banks, and can also afford to return the money the Central Bank used to bail the banks out, they are welcome. It is open to everybody. There is no restriction there,” he said.
Old shareholders show interest

Speculations are rife that old shareholders of the rescued banks are interested in buying back the banks.
A source at Oceanic Bank said that major old shareholders are interested in buying back the bank. “I do not think this should be a controversial issue.

There should be a fair ground for intending investors, irrespective of whether they used to be shareholders here or not. The recapitalisation is in progress and former shareholders are already indicating that they want to reinvest in the bank,” he said, declining to reveal the identities of the interested parties.

“Everything is possible within the environment we find ourselves,” a source at FinBank said. “Even the Central Bank brought up the idea that they may grant the bank shareholders an opportunity to recapitalise if they are capable, so it’s been in the public discourse. However, narrowing it down to FinBank, it is not to my knowledge that there are moves by old shareholders to buy back and you know that there is no formal way to know until it is communicated to us officially,” he said.

The story was the same at Intercontinental Bank, where an official said that there is no official notification by the old owners of the bank indicating a buy back. “I have made enquiries. Presently, there is nothing like that happening now,” he said.

Last month, the Central Bank announced that it held an interactive meeting with the shareholders of the 10 affected banks comprising their directors and principal shareholders. According to Mr. Abdullahi, the objective of the meeting was to inform the stakeholders on plans for the implementation of the second phase of the banking sector reforms.

The banks comprised of Afribank Plc, Bank PHB, Equitorial Trust Bank Ltd., FinBank Plc, Intercontinental Bank Plc, Oceanic Bank International Plc, Spring Bank Plc, Unity Bank Plc, Union Bank of Nigeria Plc, and Wema Bank Plc, who were represented by their respective board members, management and independent shareholders.
Equatorial Bank’s case

Although old shareholders may feel free to compete with other investors to own shares of the rescued banks when the banks are fully up for recapitalisation (which is already in progress), any bank whose shareholders desire to outright buy back will go through stated terms and conditions relating to the specific objections raised by the regulatory body, Mr. Abdullahi explained.

Among the 10 banks, only Equitorial Trust Bank’s shareholders have officially indicated to be allowed to rectify its shortcomings. In a statement issued by the Central Bank the shareholders executed a deed of covenant, with specific terms and conditions.

In granting the bank’s requests, the CBN noted that “the Special Examination had not raised issues of serious supervisory concern or criminal activity by any member of the Board of ETB,” adding that it will closely monitor the implementation of the terms of the covenant to ensure that the lapses are fully rectified and in the overall interest of the banking system.

The nation’s equity market posted a positive outlook on Thursday after it recorded a decline on Wednesday.

The
market capitalisation of the Nigerian Stock Exchange (NSE), yesterday,
gained about N22 billion to close at N5.567 trillion from the previous
day’s figure of N5.545 trillion. The market capitalisation had on
Wednesday lost over N10 billion.

Also, the Stock Exchange All-Share Index closed higher at 23,115.25 basis points from the 23,023.10 recorded on Wednesday.

At
the close of trading on Thursday, three of the four sectoral indices
appreciated. The Food and Beverages Index appreciated by 0.13 per cent
to close at 607.31, the Banking Index gained 0.94 per cent to close at
385.13, Oil and Gas Index appreciated by 0.25 per cent to close at
294.65, while the Insurance Index declined by 0.23 per cent to close at
209.06. Meanwhile, the NSE-30 rose by 0.44 per cent to close at 923.65.

Market evaluation

Evaluating
the market performance yesterday, Stock Analysts at Proshare Nigeria
Limited said the positive outlook recorded was, notwithstanding the
“noticeable improvement in the banking sector performance with five of
the shares traded in the sector emerging in the class of the day’s top
10 gainers.” They also added that the market recorded gains because the
food and beverages sector’s outlook was positive with indications of
improvement in the building materials and petroleum marketing sectors.

However,
the analysts said that stocks in breweries and conglomerates sector are
still in their passive outlook with most likely to rebound if the
positive trend continues.

Leading subsectors

The
banking subsector maintained its lead as the most active with 130.277
million shares, valued at over N967.874 million. The subsector’s volume
was driven by shares of Ecobank Nigeria, Diamond Bank, First Bank, and
Access Bank.

Trading
activities in the insurance subsector was second with 116.077 million
shares worth N84.445 million. Volume in the subsector was boosted by
deals in shares of Africa Alliance Insurance, Goldlink Insurance, NEM
Insurance Company, and International Energy Insurance.

The
conglomerates subsector followed in the activity chart with 13.737
million shares valued at N71.517 million. Transnational Corporation, PZ
Cussons Nigeria, Unilever, and UAC Nigeria boosted the subsector’s
volume.

Gainers and losers

Lafarge
Wapco and United Bank for Africa topped the price gainers’ table with
an increase of 81 kobo and 60 kobo on their opening prices of N34.18
and N13.00 per share respectively. African Petroleum and Chemical &
Allied Products followed in the chart with an increase of 54 kobo and
51 kobo, to close at N38.60 and N25.78 per share.

Flour
Mills Nigeria and Beta Glass led the price losers’ chart with a loss of
N2.04 and 71 kobo, to close at N46.02 and N13.55 per share, while
Julius Berger Nigeria and Nigerian Aviation Handling Company followed
with a decrease of 50 kobo and 31 kobo on their initial prices of
N28.50 and N8.50 per share respectively.

Mixed performance

Meanwhile, stock markets across the globe, on Thursday, experienced mixed performances.

The
France SBF 80 Index appreciated marginally by 0.09 per cent; the Norway
OSE Industry Index appreciated by 0.07 per cent; the Germany MDAX also
gain 0.05 per cent; the Sweden OMX Index was up by 1.00 per cent,
however, the Europe DJ Stoxx Index and the Netherland AEX Index
declined by 0.02 and 0.24 per cent respectively.

Also,
the Australian Securities Exchange’ ASX100 depreciated by 0.29 per
cent, while the Hong Kong’ Hang Seng went down by 0.54 per cent.

The Central Bank of
Nigeria (CBN) says it has expanded the number of departments under its
establishment to 25, up from previous 17 departments, due to the
ongoing banking reforms industry.

The new organisational structure becomes effective on March 1.

It is uncertain
what factors necessitated the expansion rather than cutting down on the
number of its departments, and workforce, which many believe are
already over-bloated and responsible for the lax supervision and
monitoring of financial operations leading to the crisis in the
industry.

The spokesman for
the CBN, Mohammed Abdullahi, could not give explanations to these, as
he refused to pick his calls when NEXT contacted him.

But the Central
Bank said in the statement that the move is the product of an exercise
it carried out in July last year, with the view to promoting efficient
and effective operations and in conformity with global best practise,
among others.

Announcing the cuts
in a statement issued online yesterday, the banking industry regulator
explained, “As part of the ongoing efforts aimed at improving
accountability, communication and efficiency as well as effectiveness
in actualising CBN’s strategic objectives (ACE), the Board of CBN has
approved a new organisation structure for the Bank, effective March
1st, 2010.”

The CBN statement
listed the objectives of the new structure to include “The development
of a more functional organisation structure, alignment of the structure
in line with the Bank’s mandate and strategy, promotion of efficient
and effective operations, building synergy with both internal and
external stakeholders of the Bank, facilitation of information flow and
integrated data management, and facilitation of the achievement of key
deliverables of management in conformity with global best practice.”

The new structure

According to the
Central Bank, the new structure will be run under the leadership of
five directorates which include the Governors, Corporate Services,
Economic Policy, Financial System Stability and Operations, which, in
turn will be divided into 25 departments under their respective
leadership, adding that there will now be 91 divisions and 198 offices.

The Central Bank of Nigeria embarked on an industry wide reforms
last year, under the leadership of Sanusi Lamido Sanusi in June 2009.
The reforms have so far seen some bank chiefs exit their positions and
about $4 billion invested to bailout ailing banks on grounds of
excessively high level of non-performing loans in the five banks which
was attributable to poor corporate governance practices, lax credit
administration processes and the absence or non-adherence to the bank’s
credit risk management practices.

The newspaper headlines, as usual, differed from the content of
the news stories they pointed to. However, the gist of it all was that at a
recent conference in Lagos, the Minister of State for Finance, and the Governor
of the Central Bank of Nigeria (CBN), did not quite see eye-to-eye on the apex
bank’s current reform initiatives.

I seriously doubt, to begin with, that as the media reported,
the honourable minister questioned the necessity for the CBN’s operational and
statutory independence. Despite the sundry dislocations occasioned by the
global financial crisis, a central bank’s independence is not one of the values
that have been called to question. Even in economies such as ours, where
governments have made a good fist of their work, this concept has played a key
role in achieving low inflation.

Still, we could differ on the chances that we would always get
competent hands to run the central bank to ensure that its medium-term take on
price directions in the domestic economy are robust enough to act as a foil to
the politicians’ narrow focus on the short-term imperatives of the four-year
electoral cycle.

Nevertheless, we ought no longer to tolerate a situation where
fiscal and monetary policies are decided in the same room, by the same people
(especially, when this latter lot are beholden to political interests). Of
course, one lesson from the current crisis comes out of the fact that fiscal
policy did take up the slack once monetary policy reached its limits. I would
thus be in the vanguard of any call to strengthen collaboration between
monetary, regulatory, and fiscal policies going forward.

On the question of the central bank’s competence, it is hard to
conclude otherwise than that the incumbent governor has done this economy a
world of good. It is so illogical that we should clamour to trade in a final
cure (because of a near-term allergic reaction) for a major ailment. Of course
we now know that it is proper policy to maintain a firewall between regulators
and the industry they regulate. It is obvious too, that banks occupy a hallowed
place in the economy; although we’d always suspected this from the relationship
that existed between demand deposits, which sit on the liabilities side of
banks’ balance sheets, and the credits they create which sit on the asset side.
Once impaired, especially by the markets’ beginning to question the soundness
and stability of the system, the resulting runs on deposits, affects the
industry’s ability to create loans. Unfortunately, banks’ ability to create
loans on a sustainable basis does matter for any economy’s growth.

The central bank governor

What about the person of the central bank governor? Sanusi
Lamido Sanusi has been described as too showy; a caudillo. In mitigation, we’ve
heard arguments in favour of “stronger institutions”; and inscrutability as a
preferred attribute. Now, I cannot recall many strong institutions that have
been built on the back of invertebrate leadership. Conversely, the gnomic Alan
Greenspan is often indicated as the ultimate model of a central bank governor.
How useful is this? If any financial market took its cue from the coordinates
of its central bank governor’s eyebrow, this was undoubtedly because the market
works well, and that this semaphore had been integrated in its signalling
mechanisms.

But the point of the CBN’s current work is the fact that the
domestic industry had become a burlesque of bank practices. Markets were skewed
so badly that the price mechanism worked selectively, and interested party
transactions held sway over many business decisions.

Financial accounting was a joke. The flipside of this is that as
we make our way tentatively out of the current crisis, we can no longer argue
that financial regulation should remain outside the macroeconomic framework.

When the CBN governor says the reforms are a process, not a
destination, it is my understanding that the apex bank is moving from financial
regulation as a tool for addressing the failings it has since discovered in the
industry, towards using its capacity to design prudential rules for the
industry, to address broader macroeconomic questions, including using it to
moderate the boom-bust cycle.

How do we get the
banks to resume lending to key sectors of the economy? And how do we
reverse market sentiments (capital and funding markets to be precise)
in favour of the financial services industry? These questions have
furtively moved to the top of the list of the average Nigerian’s
worries over how to move this economy away from its addiction to oil,
and into rehab. Apparently, in respect of financial sector worries, not
much will be achieved before something is done about the banks’ loan
books.

At the height of
the last economic bubble, banks were lending as if the funds they were
holding would burn a hole in their vaults otherwise. With the massive
increase in access to retail credit, consumer spending jumped as a
proportion of domestic output. Domestic output growth in turn drove
increases in banks’ deposits, allowing the banks to lend more over the
next cycle, and so on. When the floor came off the home mortgage market
in the United States, this virtuous cycle turned vicious very quickly.
The bottom fell off the local stock market, and with stock prices
plummeting, most bets on the trajectory of the equities market came
unstuck. Since a goodly number of retail investors had piled into the
market with nothing but the prospects of the virtuous cycle supporting
their punts, the nation’s nest egg ended up trapped in the equities
market.

Loans default

With borrowers
unable to meet their obligations, the downturn has meant that banks
have a portfolio of loans on which they haven’t earned anything in a
long while. Even when most banks in the country have taken losses on
the unprecedented levels of provisioning they have had to make to clean
their balance sheets, they cannot create new assets until they have
sorted this mess out. And the markets, investors largely, will not take
this group of businesses seriously, as long as their balance sheets
still contain so much dross.

Enter the Central
Bank of Nigeria. If the central bank governor is to be believed, the
bank’s intervention in the market thus far is anchored on four pillars:
enhancing the quality of banking in the country; ensuring financial
stability; ensuring healthy financial sector evolution; and making sure
that the financial sector contributes to the development of the
economy. Its proposal to clean up the banks’ balance sheets with the
Asset Management Company (AMC) must thus be interrogated within this
context. The plan is for banks with large non-performing loan burdens,
to move these assets off their balance sheets and onto the books of the
Asset Management Company. The company then bears all the risks of the
assets transferred, and arranges to deconsolidate the bad loans through
sale to external investors. Meanwhile, the banks obtain a fresh lease
on life from the ability to use their newly clean balance sheets to
restore their profit and loss accounts.

Commentaries on the asset company

Most commentators
on this proposal have focused on the cost of this process. For
instance, given the trillion naira estimates of the size of the
non-performing section of the banking sub-sector’s loan book, how
adequate would the N10 billion proposed as initial capital for the
asset company be? There are other costs: legal, tax, regulatory, and
accounting. How much forbearance would government and the regulatory
authorities have to offer banks to ease the proposed asset transfers?
Then, there are governance matters. Would the process be better served
by establishing an independent valuation process/agency? What other
incentives would the banks have to sell these assets, after providing
fully for them? The eventual look of the banks will depend on how the
final structure of the company combines these variables.

Important, though
all these are, one point is sorely missed: Transparency. It is the lack
of transparency on the books of the severely burdened banks arising
from their bad loans portfolios that interferes with the capital and
funding markets’ interest in these institutions. The value of the
banks’ loan books, the risk transfer process, and the rationale for the
forbearances that the regulators offer to sweeten the transfer process
must be as plain as a pikestaff if the process is to result in a
re-opening of the banks’ access to new funding sources. This
requirement is even more crucial in the context of the CBN’s barely
concealed desire to have new capital come into the industry.

The Central Bank of Nigeria (CBN) said the new phase of reforms
will positively impact on the provisions and requirement of Islamic banking,
and hasten the progress of that arm of banking.

Mohammed Abdullahi, spokesperson for the CBN, said that Islamic
banking is not a Sanusi Lamido Sanusi programme, but started by his
predecessor, Chukwuma Charles Soludo.

“This policy has been on for about three years and has been
approved in principle for some time now. I can recall that Jaiz International
Bank Plc has been given approval in principle to operate as an Islamic Bank.
All that the Central Bank is waiting for them to do is to mobilise their
capital base of ₦25 billion required for operations in the Nigerian banking
system.”

He also noted that under the current reforms, banks have been
falling in line with the CBN requirement, adding that the recent announcement
on the categorisation of Nigerian banks for bank specific solutions will boost
Islamic banking operations.

“I believe that Islamic banking or Zero interest banking would
fare very well under that arrangement and it is possible that they may not be
required to raise exactly ₦25 billion before they can start operating. Islamic
banking and the Central Bank are trying to introduce a supervisory framework
for easy supervision,” he said.

Interests are growing

Mr. Abdullahi said few banks have also indicated interest and
indeed have actually started processing their setup for Islamic banking in Nigeria,
without disclosing their identities. He added that the CBN will rely much on
the success and experience of the Negara of Malaysia. “They have gone far in
the operations of Islamic banking and I believe we have a lot to learn from
them, and we hope to use their experience to develop our own locally. As soon
as that is done, everything would become clearer. Islamic banking has been
provided for in the Banks Act and Approval-in-Principle has already been given
during Soludo’s time,” he said.

Apart from Jaiz International, he also revealed that BankPHB was
also given approval in principle to operate Islamic banking, and has been
operating the system for some time now.

Bank PHB offers the classic Bank PHB interest free account. A
statement on the bank’s website said, “This product is designed for Muslim
faithful desiring banking services without compromising their religious
beliefs.”

The interest-free banking offer the following products: Current
Account, Savings account, Investment account, and Hajj Target Savings account,
with minimum account opening balances ranging from ₦2,000, and attracts no
penalty for account closing.”

The statement also added that with simplified account opening
procedures, the interest-free products are expected to accommodate all Muslim
faithful of bankable age group, irrespective of gender or income level,
including women in Purdah.

No Knowledge, no banking

A non-interest bank, according to the Central Bank of Nigeria,
means a bank which transacts banking business, engages in trading, investments
and commercial activities, as well as the provision of financial products and
services, in accordance with the principles and rules of Islamic commercial
jurisprudence.

Last year, the CBN governor, Sanusi Lamido Sanusi, said
operators needed to have the knowledge of modern banking and of Islamic banking
before they can participate in the system because, “The services would be
available to Muslims and non-Muslims. It is not a religion; it is a product
available to the public. If things are set in place, I would be in support.”

In March 2009, the Central Bank released a framework for
non-interest banking. It also expressed the desire to collaborate with the
Securities and Exchange Commission (SEC), Nigerian Stock Exchange (NSE),
National Insurance Commission (NAICOM), Economic and Financial Crimes
Commission (EFCC) among others, to ensure the successful implementation of
Islamic banking system in the country.

Many of the banks are still weary of delving into this branch of banking
because according to them, the framework states that the funds cannot be mixed
and the institutions should be treated as separate entities, even if they are
owned by the same bank.

The Central Bank of Nigeria (CBN) says the basis of the current
banking reforms is to improve on corporate governance and risks management in
the financial services sector.

Sanusi Lamido Sanusi, the CBN Governor, who was represented by
Kingsley Maghalu, his deputy in charge of Financial System Stability, said that
the reform is projected to enhance the quality of the banks, to ensure
financial stabilisation through the proposed Asset Management Company (AMC), to
encourage sound evolutions of the financial system, and to connect the
financial sector to the real economy.

Speaking on the topic, ‘Financial System Fallout in West
Africa,’ at the third EuroFinance Annual Conference on Treasury, Risk and Cash
Management, in Lagos on Wednesday, Mr. Sanusi noted, “Most of the banks in
Nigeria did not really understand how important corporate governance is to
their business continuity.”

One-man shows

He said many banks took this for granted because “a lot of the
banks were essentially one- man shows,” adding,

“When you do not have a sound corporate governance frame work,
the reliance on the judgement or the views of one person or a small group of
persons becomes a very fundamental risk exposure for the bank’s survival.”

Accordingly, he said, risk management is important in practice.
“It is a matter of life and death. Risk management is not just an exoteric
thing. It is the conscious management of risk, reward, and business processes
to prevent untoward events that could disrupt the business.

“We found a situation where a lot of banks went into business
without proper risk analysis, just because other banks are doing it or because
they felt the need to grow big. Their ambitions led to a misalignment in risk
capacity and tolerance.” Not absolving the regulatory agencies from blame, the
chief industry regulator also admitted, “There was a very weak regulatory and
supervised environment caused mainly by the failure of the Central Bank as a
lead regulator to enforce the rules already in existence,” which he said are
now being addressed.

Reviewing governance code

In agreement with the CBN governor, Fabian Ajogwu, a legal
practitioner and Managing Partner of Kenna & Associate, called for the
review of corporate governance code in the financial and non-financial sectors
of the country.

Mr. Ajogwu, who spoke on ‘Towards all round corporate governance
best practice,’ said that the current corporate governance code has been
“weakened.” The Senior Lecturer at Lagos Business School said that the weakness
of the code is “forcing all regulators to come up with their own codes” which
may not wholly meet international practice.

No other way

Speaking generally on the reforms, Mr. Sanusi noted that
majority of the people had concentrated more on the removal of some banks’
Chief Executive Officers than on the findings of the bank audit, which “revealed
a serious systematic stress threatened by these banks.” In his own
presentation, Roland Ebelt, Managing Director, Nigerian Bottling Company Plc,
who spoke on ‘Financing trade in a tricky economy environment,’ insisted that
that the Nigerian economy has remained tricky for a while now.

Identifying some of the challenges confronting the company, Mr.
Ebelt said that the NBC needs “a lot of cash to finance growth (investments in
capital expenditure and working capital); has to reduce costs and drive bottom
line; wants to continue to simplify its products; needs reliable and audit
robust processes.”

Lately, it seems like every day the headlines talk about thousands of people facing retrenchment. What would you do if your boss called you aside to let you know that due to the recent restructuring, your position no longer exists and they are letting you go? Are you financially prepared for this type of news?

The days of “job security” are a thing of the past. In an era of downsizing, restructuring and retrenchment, no one is assured of long-term employment any longer, so it is important to have a plan of action in case you are suddenly laid off. Many employees see some warning signs that their jobs may be at risk but it is so easy to brush this aside when you don’t feel any immediate threat or are not under undue pressure.

The future is largely uncertain and the threat of sudden unemployment is all too real for many people. Whether you are 25 or 55, chances are that at some point in your life you could find yourself out of work. Even if you feel secure in your job right now, it is best to be financially prepared rather than to be caught off guard. Consider the following tips:

Review your expenses

When you are in a “secure” job you tend not to dwell on what you spend each month and where you can cut back. Do you know how much you spend on your weekly grocery bill or eating out? Are your utility bills exorbitant? Can you reduce your mobile phone bill? Are you paying subscriptions or membership fees for services you don’t even use?

While the job outlook is uncertain, it is important to try to live below your means and avoid unnecessary spending. Try to determine the minimum sum that you may need to cover basic expenses, such as rent or mortgage payments, utility bills, food, transportation and health insurance. Develop a budget that reins in most non essential spending until the job outlook improves. If you had already been on a budget, it would be much easier to cope financially if you have to look for another job.

Start to save

If savings have never been a priority for you, now is the time to start to set some money aside. It is recommended that you have the equivalent of three to six months’ income to tide you over if you lose your job, but given the current state of the job market, it is wise to save more especially if you have a family to support. This for many might seem like an impossible amount to accumulate but by tracking your expenses you can start to work towards this goal rather than to do nothing at all.

Even if you do not have the entire amount saved, whatever you manage to save could go towards your rent, mortgage, food and debt. It will also help to protect your retirement savings. Place such emergency savings in a high yield money market account where it is easily accessible.

Be cautious about debt

Are you in debt? A poor credit profile can negatively impact upon a future job search and limit your financial options. If you sense that redundancy might be in the offing, be cautious about taking on any new debt. Credit card and other high interest debt should become your first priority and should be reduced or paid down immediately. If you were to lose your job while paying thousands of naira in interest and principle, it would be challenging to get yourself out of this difficulty.

Review your health insurance policy

One of the big pitfalls of retrenchment is the loss of health insurance. Review the health benefits at your current job and check what options will be available to you in the event of a lay off. How much would cost you to maintain your insurance cover privately? Remember that you would have to pay both the employer and employee shares of the premiums in order to keep the same coverage.

Improve your skills

You should continually be looking for opportunities for self-development to improve your knowledge, skills and certifications. Do not depend totally on your current employer to put this in place for you; you owe it to yourself to develop yourself. Constantly update your CV to reflect your new skills so that you will always be able to present the most updated version.

It is also worth exploring other income earning opportunities that you can pursue without their having any impact on your present job. This must not become a distraction as if you do not stay totally focused on the job at hand you might actually be accelerating your retrenchment!

Network, network, network

Take networking seriously as some of the contacts you make may well end up being your potential employers in the future. Reactivate your network if you have been a bit lax about keeping in touch with acquaintances and associates; it is much easier to call someone just to say hello than it is to call them to ask for a job, especially when you haven’t spoken to them in several months.

Don’t get unduly stressed by the possibility of being made redundant as this is largely out of your control. As you continue to work with a positive attitude, build a sound business reputation and give your job your very best commitment, you are less likely to face this prospect. But no matter how good your prospects may be, it does no harm to be prepared and to get your finances in order.