Nigeria Content Online

The budget office
of the federation and the Fiscal Responsibility Commission (FRC) are
working toward ensuring strong and sustainable economy by 2020.

Bright Okogu,
director general, budget office of the federation, said on Wednesday in
Abuja that recommendations had been made to FRC on what should be done
with Medium Term Expenditure Framework to ensure the attainment of the
goal.

He said the budget office was responsible for the preparation of the annual budget in relation to Vision 20:2020.

“We are to ensure
that all the projects highlighted in the budget are consistent with
what we have in Vision 20:2020 so that available resources are
optimally utilised. This is what we do; and we try to get the National
Planning Commission involved at the stage where the capital projects
are engaged, even at the Medium Term Strategy Sector,’’ Mr. Okogu added.

Despite
an installed generating capacity of 5,896 megawatts, Nigeria can barely
evacuate 4,000 megawatts to end users. However, the country currently
subsists on actual generating capacity of about 3,829 megawatts.

Emmanuel
Ezekwere, head, engineering standards and safety division of the
Nigerian Electricity Regulatory Commission (NERC), who gave this
insight, said even when Nigeria is able to increase its generation
capacity, much of it would still not get to the end consumers due to
deficient transmission capacity.

He said that is why the sector needs the participation of private investors in order to improve the situation in the sector.

“We
now embark on regular periodic review of policies and regulations in
order to meet expectations of operators in the sector,” Mr. Ezekwere
said.

Mr.
Ezekwere, who represented Imamudeen Talban, NERC administrator, at the
Roundtable on Right to Access Stable Electricity, organised by Social
and Economic Rights Action Center (SERAC) yesterday in Lagos, said
Nigeria can achieve steady power supply, but only with proper planning.

According
to him, licences have been granted to 54 firms for independent power
projects across the country for generation of about 8,997 megawatts.

“Reforms
in the power sector will bring investment opportunities in training,
power generation and expansion, investment in transmission, investment
in supply, and manufacture of ancillary materials required in the power
sector. Most of the things we use in the power sector today are
imported. These are opportunities that are coming up,” Mr. Ezekwere
said.

He
further said companies licenced to build power plants across the
country are expected to provide periodic report to the commission on
its operations, while government has put in place some guarantees that
would safeguard their investment.

“We
have gone round the country and found some firms that have not started
building. They are not in the majority. Those companies we are going to
delist them. The process is on. As I talk to you, we are about to
publish some of those that have not been able to comply with the
reporting update,” he said.

Felix
Morka, executive director of SERAC, said electricity is a human rights
issue which is hinged on the universal right to decent living.

He
said Nigerians need to begin to hold government accountable for the
absence of steady power supply, as this can be linked to the poverty
level and poor living standard of the people.

“Government
in Nigeria has, historically and up till the present, failed miserably
to meet expectations on electricity supply. More than this is the
failure of Nigerians to protestthe failure of electricity. Is it enough
to grumble when it goes off and celebrate when it comes on, as if we
are done a favour?” Mr. Morka asked.

According
to him, while it may be desireable to privatise the sector, it was
equally important for Nigerians to demand accountability for the huge
sums that have been expended in the sector since 1999.

He
said there is no one direction that is the proper perspective to the
issue, as all that Nigerians demand is steady power supply.

“When government proclaims privatization, that in itself is dubious,
because implicit in that is a deliberate effort to avoid some of the
fundamental questions which must be asked and answered in order for
that proposition to become viable and reasonable,” he said.

Five thousand
unemployed people in Zamfara State will benefit from an
entrepreneurship development, short-term vocational training, and
micro-credit linkage for business start-up and expansion programme.

Ferdinand
Nyantakyi-Dapaah, of the Opportunity Industrialisation Centre
International (OICI), said this in Gusau on Tuesday, during a meeting
with operators for the programme.

The programme was
organised by the Central Bank of Nigeria (CBN), in collaboration with
OICI, under the Entrepreneurship Development Centre (EDC), targeted at
reducing unemployment in Nigeria.

Mr. Ferdinand said
that 3,000 jobs would be created under the programme; EDC would also
provide career guidance and counselling services to 6,000 clients every
year.

In 2008, after
three years of solid work, over 400 scientists, 30 governments from
developed and developing countries, as well as 30 civil society
organisations, concluded an epochal work under the International
Assessment of Agricultural Science and Technology for Development
(IAASTD). About 60 countries endorsed the report at a meeting in
Johannesburg in April of that year.

The assessment
process was initiated by the World Bank in partnership with others like
the FAO, UNDP, UNEP, WHO, UNESCO, and national governments. The IAASTD
examined the potential of agricultural knowledge, science and
technology for reducing hunger and poverty, improving rural
livelihoods, and working towards environmentally, socially, and
economically sustainable development.

The report
concluded that modern biotechnology would have very limited
contribution to the feeding of the world in the foreseeable future. The
conclusion was that a viable food future lies in the creative support
of ecological agriculture in which small-scale farmers will continue to
play a major role. Initially participating biotech industry sector
pulled out of the IAASTD when they couldn’t impose their agenda on the
study team.

Other studies have
shown that the claim that genetically engineered (GE) crops have a
higher yield than natural varieties is virtually a myth, and also the
claim that GE crops lead to reduction in the use of pesticides and
other agro chemicals.

Neither is it true that the way to overcome nutritional deficiencies must be through techno fixes.

The Cartagena
Protocol (adopted in 2000) of the Convention on Biological Diversity
requires that, at a minimum, every nation should exercise a
precautionary principle when it comes to the introduction of GE crops
or organisms into the environment. This protocol deals with Living
Modified Organisms (LMOs) that may have adverse effects on the
conservation and sustainable use of biological diversity. It takes
“into account risks to human health and specifically focusing on
transboundary movements.” The term ‘living modified organisms’ is what
is usually termed Genetically Modified Organisms (GMOs).

Besides these, the
biotech industry and their backers have over the years vigorously
resisted the labelling of GE products and would rather have them
sneaked into people’s plates without their knowing. But the biotech
industry does not want to go about it this way any longer.

Their argument is
that GE crops and products are substantially equivalent to natural
varieties. The question they always refuse to answer is, why do they
insist on patent on GE varieties if they were similar to natural
varieties?

The issue of the
patenting of life, including modified life forms, is a matter for
another discussion. But suffice to mention here that major players in
the biotech industry, such as Monsanto, maintain a battery of lawyers
who snoop around and sue farmers for infringing their patent rights,
even when they (Monsanto) should actually be held liable for having
their seeds contaminate the farms of farmers who choose not to
cultivate GE crops.

The food aid agenda

Talking about this
biotech industry giant brings to mind the specious philanthropic thrust
that is seeking to open the African environment to GE crops and
products. The Alliance for a Green Revolution for Africa (AGRA),
sponsored by the Rockefeller Foundation and the Bill and Melinda Gates
Foundation, has vigorously denied on various occasions that they intend
to use modern biotech tools in their tackling of hunger in Africa.

Their denials have
met scepticism and the recent revelation that the Bill Gates Foundation
was making investments in Monsanto should send clear signals to
perceptive Africans and African governments that this Alliance is based
on the platform of philanthropic capitalism.

The other route has
been through food aid as well as uncontrolled commercial imports. The
food aid route became public in 2002 when Zambia exercised her right to
choose what type of foods to allow into her territory and rejected
genetically engineered maize as food aid. Zambia was vilified and
pressured, but refused to buckle. Questions were asked as to why hungry
people should choose to stay hungry rather than eat GE products. We
note here that Zambia rejected GE food aid, weathered the storm, and
produced a bumper harvest the following year.

The US Food and
Drug Administration (FDA) is currently considering whether to approve a
genetically engineered (GE) salmon, which contains a modified growth
hormone gene, for sale to US consumers. Opposition to this fish has
come from a wide range of groups including a group of 40
Representatives and Senators from the US Congress, who have called on
the FDA not to approve the fish for human consumption. They are
questioning the approval process and the lack of adequate public
consultation.

Ignorant Nigerian Representative

While the world is
advancing towards stricter control of GMOs, it is a different ball game
in Nigeria where the chairman of the House committee on agriculture,
Mr. Gbenga Makanjuola, has become a loose canon in his wholesale
endorsement and push for the introduction of GE crops and products into
Nigeria.

Rather than see the
Biosafety Bill that the National Assembly has been considering as a
legislation to ensure the regulation of genetically modified organisms
in Nigeria, Mr. Makajuola and his team see the bill as the key that
will throw caution into the winds and allow the pushers of GE crops and
products to have a field day in Nigeria.

His recent and past
public pronouncements have been shockingly based on discredited or at
least unproven biotech industry claims. We have reasons to believe that
the Biosafety Bill Nigerians will receive from the National Assembly
would have been drafted solely to satisfy the interests of those who
wish to push yet another nail into the coffin of the already prostrate
Nigerian environment.

This is a matter about what we eat. It is a matter of life or death. We cannot afford to play politics or speculate on this.

The National
Economic Council has taken a decision that Nigeria will no longer play
big brother to countries in trouble without getting anything in return,
insisting the nation’s foreign interventions and assistance will be
guided by national interest.

Briefing
journalists on Tuesday after the council meeting chaired by vice
president, Namadi Sambo, at the Presidential Villa, Abuja, Governor
Babangida Aliyu of Niger State said while Nigeria remains a responsible
member of the community of nations, she will insist on getting
development benefits in return for her foreign policy commitments.

“The Council
reiterated the foreign policy objective of the country as a new
partnership for the development of Nigeria. In other words, we are
going to shed that belief that we are big brother where we go to help
other people and we never get something in return.

“So, wherever we go
or whoever we relate with, must be because it will help us develop,
rather than, as we normally say, that we have gone to help these or
that people without getting anything in return,” said Mr. Aliyu.

The council also
discussed Nigeria’s BB-rating by international economy assessment
organisation, Fitch, saying that though it was a downward result, there
is hope that the country is moving on the path of addressing the
concerns that led to such assessment in the first place.

“Fitch rating too harsh”

Segun Aganga, the
finance minister, noted that though the rating was “harsh”, it
acknowledged Nigeria’s decision to set up a Sovereign Wealth Fund, and
a good fiscal policy which will increase the country’s rating during
the next assessment.

“We discussed the
rationale for the revision of the outlook (from stable to negligible)
and did not fully agree with their rationale; we believe that it was
harsh.

“But we welcome the
fact that they affirmed the credit rating that nothing has changed and
the main reason for that re-affirmation or confirmation of that credit
rating was that Fitch felt that the idea that set up the sovereign
wealth fund was in the best interest of the country.

“It is a good
fiscal policy and they have indicated that they will issue a positive
statement once the sovereign wealth fund bill was passed,” he said.

The minister
further stated that government welcomed Fitch’s affirmation that the
country has a very strong balance sheet, has a less debt ratio compared
to her peers anywhere in the world, and has net petrol balance.

He disclosed that
the final draft of the Sovereign Wealth Fund bill will be adopted at
the next economic council meeting on November 4, before it is submitted
to the National Assembly.

Governor Raji
Fashola of Lagos State also said they discussed the concerns regarding
the legality of the Federal Road Safety Commission (FRSC) in printing
licence plates for vehicles.

The market
capitalisation of equities at the Nigerian Stock Exchange (NSE), on
Tuesday, hit N7.960 trillion following the listing by introduction of
15.494 billion ordinary shares of Dangote Cement.

As a result, the
capitalisation recorded an increase of 29.6 per cent yesterday, from
Monday’s figures of N6.141 trillion. However, the NSE All-Share Index,
on Tuesday, plunged marginally by 0.003 per cent.

History is made

Emmanuel Ikazoboh,
the interim administrator of the NSE, said the President of Dangote
Group, Aliko Dangote, who was at the listing, made history in the
country. “We have for the first time a N2.1 trillion ordinary share
listing on the floor of our Exchange,” he said. “I want to use this
opportunity to thank Mr Dangote for making Nigeria proud and for
showing the world that we as Nigerians can develop our own country and
our capital market.” He also announced that the new quoted company
topped as the most traded stock on Tuesday with 196.169 million volumes
of shares.

Dipo Williams, the
spokesperson for market dealers and Chief Executive Officer of Support
Services Limited, a stock brokerage firm, said Mr Dangote’s effort to
make history as the largest stock to be listed on the Stock Exchange is
commendable. Mr Williams, who is also the immediate past president of
the Chartered Institute of Stockbrokers, said, “I am sure that the
introduction of Dangote Cement will bring life into the market.”

Encourage others

Responding, Mr
Dangote expressed appreciation to the stockbrokers for their supports.
“I can assure you that you have not advised your clients wrongly,” he
said. “It is the best advice you’ve given to them. We will try as much
as possible to improve our corporate governance.”

He also urged other
companies in the telecom and oil industries to come and list their
companies on the market. “They should not be making money here in
Nigeria and be listing elsewhere,” he said, adding that the listing of
a company is beneficial to everybody because the profits will be shared
with shareholders while the government also gets its benefit through
tax.

Open to media

Meanwhile, Mr
Ikazoboh, yesterday, denied that the NSE has barred journalists from
covering live trading activities in the market. He was responding to
publications in some national dailies, which he said was untrue. “That
information is not correct,” he said. “We are open to the press and we
have nothing to hide. Please ignore that story.”

However, the NSE has deployed Sola Oni, its former spokesperson, to
the Market Operation/IT Directorate Department; while Wole Tokede, the
most senior officer of the Communications Department, now acts as the
new spokesperson.

Fola Daniel,
commissioner, National Insurance Commission (NAICOM), has disclosed
that the Commission plans to grow insurance premium to N1 trillion,
from N200 billion, by 2012.

Mr. Daniel said
this during an interview with the News Agency of Nigeria (NAN)
yesterday in Lagos. According to him, the Commission is working on the
successful implementation of its Market Development and Restructuring
Initiatives (MDRI) to realise the objective.

He said to achieve
this, the Commission started with the roadshow on compulsory insurances
in Lagos, and it was meant to call the attention of the public to
insurance policies.

“The launching of
the enforcement of the compulsory insurances will soon be done in
Lagos. After the launching, NAICOM will partner with the law
enforcement agencies to ensure full compliance,” he said.

He said that with
these in place, the sector had no reason not to achieve the target. He
stressed that the commission had since realised that besides issuing
out regulations and guidelines, it needed to do more to assist the
operators to meet the minimum standard.

He said that the regulatory authority was also committed to grow insurance penetration from 6 percent to 30 percent by 2012.

The Association of
Small-Scale Agro Producers in Nigeria (ASSPIN) has canvassed for 10
percent budgetary allocation to the agricultural sector by governments
at all levels.

Mabinuori Adeleke,
the national vice president of the association in the south-west zone,
made the call on Tuesday, in Ijebu-Ode, in an interview with the News
Agency of Nigeria (NAN).

Mr. Adeleke said
that the current 3.5 percent of budgetary allocation to the sector was
not adequate to engender sustainable development. He said that
increased budgetary allocation to the sector would assist farmers to
boost food production and help reduce unemployment.

“There is nowhere
in the world that you have food sufficiency and poverty eradication
without government playing adequate role in agricultural development.
Agriculture is very important to the survival of any nation because of
its many opportunities.

“If government
could increase its investment in agriculture, there would be an
increase in food production and this will help to reduce unemployment,”
he added.

Former president,
Olusegun Obansanjo, on Tuesday in Abuja, said the NEPAD-Africa Trade
Fair on indigenous products and services was aimed at promoting non-oil
products and services.

Speaking at the
NEPAD Business and Investment Forum, he said the trade fair would
encourage African countries to enrich their export potential for
economic growth and better living standards for the people.

Mr. Obasanjo said
the trade fair was about indigenous products and services, which
offered a major avenue for African governments to create a set of
bridges to partner with entrepreneurs.

Such partnerships,
he added, would promote access to techniques, knowledge, and finance
for economic prosperity of Africa countries.

“I see the business
investment forum as another way of promoting our sense of shared values
as well as a practical demonstration of our commitment to a prosperous
future in Africa,” he said.

In his keynote
address, Nigeria’s vice president, Namadi Sambo, stressed the need for
African countries to provide a conducive business climate to attract
foreign direct investment and promote domestic investment.

Represented by the
minister of commerce and industry, Jubril Martins-Kuye, Mr. Sambo added
that Africa should create appropriate systems, processes and policies,
as well as implementation strategies to facilitate intra-African trade.

Two recent
proposals are being discussed at the Nigerian Stock Exchange (NSE) with
brokers and regulators that would have far reaching implications for
the market. They would also have a revolutionary effect on investor
confidence and trading.

The first is the
proposal to migrate to a modern platform of Straight Through Processing
(STP), designed to eliminate settlement risk and ensure that all trade
settles cash versus securities. In other words, there will be no failed
trade and all trade ideally will settle same day.

This means that all
cash settlement will go straight to investor bank accounts, thus
eliminating the nagging issues of rogue brokers, who sell their
client’s shares without authorisation. This has been a major confidence
issue with some investors before and has contributed to labeling all
brokers as fraudulent, even though the records show that only few
brokers are involved in these condemnable acts.

For example, the
requirement for investor bank accounts, that will be tied to a CSCS
account for every investor, will enhance the ‘Know Your Customer’ rule,
as it will be another check for knowing who the account holder is. It
will eliminate mystery investors who launder money through the stock
market.

This has been a
major omission in the past. No one can open a brokerage account today
in any advanced market, without a corresponding bank account to keep
records of the inflow and outflow of cash. There is also the added
benefit to stock brokers, as it will eliminate customer payment duties
in their back offices, leading to more efficient back office operations
that are a major challenge for small broker offices, which currently
rely on manual processes that is fraught with errors and delays, with
the attendant client dissatisfaction. The resulting back office
efficiency will enhance broker income and allow focus on the more
important aspects of their functioning in the market.

The combined
benefits of implementing the programme and the expected results will
increase trading volumes and investor confidence, which should
translate to liquidity. The New York Stock Exchange, when it adopted
STP in 1995, after a 203 year history, witnessed huge volume increases.
It ushered in a new era with automated trading of this type and
shortened processing time; we expect the same to happen here.

Interestingly,
implementation will have minimum disruption, since all that will be
required will be for clients to submit their bank accounts to their
brokers, who will cross check their validity with the banks.

Improving trading economics

The other proposal
is aimed at improving trading economics by expanding the current
trading band. I see this as another forward looking proposal likely to
move the market forward quickly. Many analysts have questioned the
rationale for limiting the price movement to a daily plus 5 percent up
and minus 5 percent down, and have called for its elimination.

That seems drastic,
and may bring about volatility that we may not be able to manage. The
new suggestion to move gradually by increasing the current position to
plus 10 percent up and 10 percent down has my support. The current low
volume of trade and sluggish upward movement of prices means no
profitable trade can take place.

Even though average
daily volume has increased since the crash of 2008, the price decline
has meant average trading value has remained below 2007 and 2008
levels. This has affected broker/NSE revenues. By widening this trading
band, we will see increased activity, as investors will be more willing
to trade their accounts.

This will also
dramatically improve liquidity and provide a basis for the current
stabilised market prices to appreciate more steadily and give room for
faster correction of bubbles when they appear, as investors and brokers
trade to take profits quicker and correct market imperfections in stock
prices.

Margin guidelines

The margin
guidelines jointly provided by the Central Bank of Nigeria and the
Securities and Exchange Commission seem to be an overreaction that will
produce the bubble in share prices in the future if corrections are not
made before implementation.

First, they want
all bank stocks eliminated from margin lists for margin financing
purposes, a situation that affects 60 percent of market capitalisation.
Second, they want a 50 percent maintenance limit and then 10 percent
market cap on exposure to margin lending within banks portfolios.

While some of these
are best practices, concentrating margin financing to only 40 percent
may lead to the situation where the most liquid of these are the only
stocks banks will agree to finance, leading us back quickly to bubble
prices.

The second half of
the year 2010 has already showed evidence of what is likely to happen;
second half volume is lower than the first half for same period last
year. The advances/decline ratio is also reduced, while cumulative
volume for the year which was looking promising to exceed 2009, is now
weakening and may barely match 2009 levels.

I think the
appropriate thing will be to use percentage guides, for example, no
margin financed portfolio should carry more than 25 percent bank
stocks.

There is also the
need to fast track introduction of the margin list, as this will give
clarity to this aspect of the market and reduce panic selling. The
market needs to be sensitised to the technical details of how margin
accounts work, and how it will operate under the new guidelines. It
should be clear that margin accounts are an important part of the
market. They were not the problem, but their operation.

Victor Ogiemwonyi is the MD/CEO of Partnership Investment Plc, Lagos.