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Savannah Bank, whose licence was restored 18 months ago, says it has other issues to address than the recapitalisation deadline given by Central Bank.

The bank, which was ordered to be reopened in February 2009 by the Court of Appeal, was given 18 months to raise N25 billion for its recapitalisation.

“The present state is that the verification exercise of assets and renovation is going on,” said Wemimo Ogunde, the lawyer who argued the bank’s case. “We cannot talk on recapitalisation at this stage. Right now, we are concerned about… the customers who want to get their money back and those who want to remain.”

Mr. Ogunde said that there have been meetings with the Central Bank on the matter, but he would not say what the outcome of the meetings was.

“The bank has just completed its verification exercise, to know the state of the branches, and the assets of the bank,” he added.

The Central Bank did not confirm whether an extension will be granted to the bank, but confirmed that the bank was yet to raise the N25 billion capital required to put the bank back on track.

“With the information we have, they have been doing a lot of things to raise the capital, but there is no information reaching the CBN confirming that such capital has been raised,” said Mohammed Abdullahi, the Central Bank spokesman.

On Monday, a newspaper reported that First Inland Bank has begun moves to sell property belonging to a former governor of Enugu State, Jim Nwobodo, for failing to settle a N258 million loan he took to help in recapitalising Savannah Bank.

Depositors and shareholders of Savannah Bank, who were excited after the ruling and the bank’s licence restoration, may have to wait longer before accessing their funds, since the Central Bank has outlined conditions under which it can reopen for business.

Last August, the Central Bank’s governor, Sanusi Lamido Sanusi, said even though its licence have been returned, the bank must show proof of strong financial capacity, a new business model, and foreign or local partners, to show that they are ready for business before it can extend any assistance to the promoters of the bank.

“Of course, with non performing loans, if they have collateral, we can buy the non performing loans. If they want support similar to the ones we have extended to other banks, CBN will give them all the support that is reasonable,” Mr. Sanusi said.

A
constitutional crisis looms as concession granted Bayelsa State to
receive extra derivation revenue for nine mega offshore fields may
trigger legal agitations from other oil producing states in the
federation.

The
Bayelsa State government, in a letter dated February 16 to the then
acting president, Goodluck Jonathan, had requested approval for the
attribution of nine oil fields to assuage negative impact of the
delimitation of maritime boundaries of littoral states by the National
Boundary Commission (NBC) in the wake of the promulgation of the
Offshore/Onshore Dichotomy Abrogation Act 2004.

Timipre
Sylva, the governor, who signed the letter, listed the oil fields,
which included some of the country’s biggest deep offshore oil
concessions, like the Agbami, operated by Chevron, with proven oil
reserve of over 770 million barrels; Bonga, operated by Shell, with
proven reserves of over 1.5 billion barrels; and Akpo, operated by
Total, with proven oil reserves of over 630 million barrels.

Others
include Chota oil field, with 60 million barrels reserve by
ConocoPhillips; N’Golo oil field, 100 million barrels reserve by Elf
Petroleum Nigeria; Nnwa Doro oil field, by Statoil; and Aparo by
Chevron.

Mr.
Sylva said the delimitation has put Bayelsa State in a disadvantaged
position in the allocation of revenue since 2004. He drew attention to
the impact of ecological damage to the state’s coastline, pointing out
that the exercise did not attribute the oil fields and wells to the
littoral zone of the state, “despite the huge security challenges,
increasing environmental and health concerns, and the state’s massive
contributions to the amnesty programme.”

The
presidential concession would make Bayelsa State the highest derivation
revenue earner among the oil producing states in the country.

However,
following the approval of President Goodluck Jonathan on August 31, the
other littoral states are poised to equally demand their share of
derivation revenue based on the delimitation of their location beyond
the 200-metre isobath of their seaward boundaries.

Available
data for the Revenue Mobilisation Allocation and Fiscal Commission
(RMAFC) on the revised 13 percent derivation indices for July, obtained
at the weekend, based on the concession, put total oil production for
Bayelsa State at 15,995,773 barrels, ahead of Rivers (13,317,840
barrels), Akwa Ibom (12,796,954 barrels), and Delta (11,163,493
barrels).

Prior
to the concession and subsequent revision of the volume of oil
production figures attributable to each state, Akwa Ibom topped, with
13,905,432 barrels, followed by Rivers (12,636,795 barrels), Delta
(11,163,493 barrels), and Bayelsa (10,313,368 barrels).

Legal breach

The
concession to Bayelsa State to enable it earn derivation revenue from
oil wells lying beyond the 200-metre isobath, according to some
lawyers, is in breach of the Offshore/Onshore Dichotomy Abrogation Act
2004 in the application of the 13 percent derivation principle.

Innocent
Ogboru, a Port Harcourt-based legal practitioner, said the decision may
lead to agitations and court actions by other states, like Lagos, which
also has oil wells located beyond the 200-metre isobath in waters
within their boundaries.

“The
new twist in the calculation of oil derivation revenue will reduce the
amount of net revenue available to the Federation Account for
distribution to the three tiers of government, consisting the 36 states
of the federation and the 774 local government councils, as well as the
Federal Capital Territory (FCT), after the deduction of derivation
payable to oil producing states,” Mr. Ogboru said.

The
2003 interpretation of the Supreme Court judgment in the resource
control suit instituted against the Federal Government over the
implementation of the offshore/onshore dichotomy, which ended the
controversy, did not include revenues from oil wells outside the
statutorily allowed 200-metre isobath as part of derivation calculation.

With the decision
of the Central Bank of Nigeria (CBN) to discontinue defending the
value, the naira may be facing imminent devaluation, some financial
analysts have said.

CBN governor,
Lamido Sanusi, told Reuters on Monday that the value of the naira need
not be maintained “at all costs”, though he predicted the currency
would remain stable. This comes after several months of meeting
increasing demands for foreign exchange, which has taken its toll on
the foreign reserves.

Nigeria’s foreign
reserves, which peaked at $62.24 billion in mid-May 2008, has
depreciated by over 43 percent since then, closing last week at $35.24
billion.

Mr. Sanusi further
said “exchange rates have multiple equilibria, and equilibrium exchange
rates will depend on what we see as the long-term sustainability of the
reserve positions.”

A financial
analyst, who spoke off record, said though the foreign reserves are
still at comfortable levels, the trend of withdrawals in the last few
months is a cause for worry.

“The last time the
naira was devalued was when many portfolio managers left Nigeria at the
thick of the global financial crisis. The situation has not changed
pretty much and even many diaspora Nigerians have reduced the amount of
money sent back home. The CBN is now the major source of foreign
exchange.”

He said the lack of
transparency on how the foreign reserves is calculated also puts doubt
on how well the economy is being managed.

“If the budget
benchmark is $45 dollars, and we have had higher prices in the last few
months, how come the excess crude account is not replenished? Crude oil
prices have increased, production has gone up, but reserves are
dropping,” he said.

Naira defence versus reserves

An indication of
the direction of the currency market emerged last week as the naira
sold for N150.01 at the official Wholesale Dutch Auction System (WDAS)
window, for the first time in several months. At the interbank market,
the naira sold for 152.25 to the dollar, with dollar demand
outstripping supply at the Central Bank’s bi-weekly forex auction.

Prior to now, the
naira had fluctuated between N148 and N149.50 at the official window, a
band that it had maintained since 2008. A total of $550 million was
offered at the WDAS last week, while $771.65 million was demanded. The
total sale stood at $707.65 million, representing 91.71 percent of what
was demanded.

Doyin Salami, a
member of the Monetary Policy Committee of the CBN, said at the August
Breakfast meeting of Nigeria South Africa Chamber of Commerce, that the
government has to make a choice whether to defend the value of the
naira, in which case, it could commit huge sums from the reserves to
meet demand; or could decide to devalue the naira in order to reduce
pressure on funds.

“Should I defend
the naira or should I defend the foreign reserves? That is the question
for the Central Bank to answer. Whatever happens is going to have
effect on inflation,” Mr. Salami said.

The last time the
currency was devalued was in December 2008, when the rippling effect of
the global financial crisis took its toll on the naira, which had
remained stable for nearly three years before then.

Of late, Sanusi
Lamido Sanusi, the Governor of the Central Bank of Nigeria, has blown
hot and cold over the bank’s policy on the domestic exchange rate. He
has vacillated between an apparently strong commitment to defend the
“integrity” of the naira, and insouciance over the fortunes of the
embattled currency that in certain quarters could border on the
irresponsible. Still, you cannot but feel sorry for the man. He’s got a
duty to keep domestic monetary conditions on an even keel. No
businessperson wants to be wrong-footed or blind-sided by sudden
movements in the exchange rate, inflation figures, and/or the rates on
debts. They would rather, for their planning purposes, that trends in
these areas are largely predictable. Yet, if the central bank must have
a proper handle on all these, it should itself have reliable real-time
estimates on the different sections of the economy, and a working
understanding of the interactions that define the indices it looks at.

Unfortunately for
the central bank, ours is one of the noisiest economies around: there
are just too many extraneous variables, their emergence into the model
always unpredictable, and their conduct nearly always stochastic. Who,
for instance, could have predicted that waivers on the importation of
rice would be the one way that the campaigning for the next general
election kicks off? Unpredictable though this was, it has had clear and
present implications for foreign exchange demand in the country. To the
same extent, the bulimia with which this government has run down public
finances was just as unexpected. And to the extent that government’s
rapacity may have helped deplete the external reserves, it has burdened
the central bank’s ability to ratchet up supply at the weekly official
foreign exchange auctions.

So the CBN must
have felt a thrill run through it last week as oil prices in the global
marketplace ran past the US$80/barrel mark. With production figures
from the Niger Delta on the mend following the relative pacification of
the previously restive region, higher oil prices should boost the
external reserves, leaving the central bank with a lot more ammo in its
guns. Most commentators had feared recourse by the apex bank to
administrative measures to help ease supply constraints in the official
foreign exchange market, but higher oil prices might see the apex bank
better placed to meet demand at its new levels. More than this, it
would seem that oil prices might remain elevated for some time yet, in
spite of earlier apprehension over the consequences to commodity prices
of the last recession, and the slow global growth that we are
experiencing in its wake.

Although global oil
production was up in the first half of this year, led by a 14% increase
in demand in China, the IMF, reporting in its October edition of the
World Economic Outlook, argues that since “oil markets have not yet
reached a state of full cyclical normalisation”, “Oil demand will
continue to rise as the global recovery progresses, with the buoyancy
determined in part by the strength of the expansion in activity”.
Accordingly, the fund estimates that the “average price of oil will be
US$76.20 a barrel in 2010 and US$78.75 a barrel in 2011 and will remain
unchanged in real terms over the medium term”.

To a considerable degree, the central bank’s current dilemma
describes in small print, the problem with the macroeconomic policies
of the current administration. Déjà vu? Yes, we have been down this
route before. Under Professor Charles Soludo, as governor, the central
bank’s response was to supervise a huge devaluation of the naira, as
demand flourished. Additionally, though, the current administration has
spent all that it has earned, and more. Déjà vu? Yes again, for on the
back of healthy oil prices in the world market, it has superintended
over a staggering increase in government’s consumption as a share of
GDP (at the expense of the private sector). It has also grown public
debt without adding to the economy’s installed capacity, or increasing
productivity. In other words, over the last four years, neither
monetary nor fiscal policies have contributed anything new to how this
economy is managed. Truth be told, today because of the current
macroeconomic policy environment, we might be even more vulnerable to
oil price-based shocks to the economy, than we were at any time in the
history of this country.

Since the sack of
Ndi Okereke-Onyuike as the Director General of the Nigerian Stock
Exchange (NSE) by the Securities and Exchange Commission (SEC), the
search of the new head seems been fruitless, even after set deadlines.

After the initial
October 12th deadline for the post, Accenture Nigeria, the firm
conducting SEC’s recruitment exercise, continued to place advert for
the offices of the NSE chief executive officer and three executive
directors. “The NSE is transforming to increase the depth of Nigeria’s
capital market and improve access to liquidity for listed
organisations. To provide leadership for its transformation program,
the NSE is seeking to recruit qualified and experienced executives to
be its future,” a paid advertorial published on October 13th in some
national dailies, said. However, the same advert categorically stated
that “the closing date for applications is 12th October, 2010.
Applications will not be received after 5:00 pm Nigerian time (GMT +1)
on this date.”

Nobody is certain

In the meantime,
while the NSE’s spokesperson, Sola Oni, said he was not aware of any
extension of the recruitment, Accenture could not confirm if the
deadline was extended. The head of Corporate Communication Department
at Accenture, who refused to give his name, said, “It (the advert)
could probably be a mistake. The date remains closed. But I don’t know
the cause of the last advert and I can’t be on record over something I
have no power on.”

Meanwhile, Mr Oni
said, “I don’t know what actually happened whether the last publication
was a mistake on the people handling the recruitment exercise. In fact
I cannot explain what happened since the Exchange is not the one
placing those adverts. Accenture is the firm handling the recruitment.
But if there is anything I can find out I’ll let you know. I still want
to believe it was a mix-up. The deadline remains October 12th. There is
no further extension. People should ignore the last adverts since it’s
likely to be a mistake. Even the published advert still maintained the
correct date of closure for applications to show that it expires on
October 12th at 5:00 pm.”

Wasting money

Lanre Oloyi, the
spokesperson for SEC, said the commission is not in the best position
to talk on the matter. “Talk to the NSE,” he said. “They should tell
you if it was a mistake or there is an extension.” However, the last
time the deadline was extended, SEC gave the approval. A finance
analyst at Resource Cap, a portfolio management firm, who did not wish
to be named, said the last publication should be categorised “wastage
funds since the advert according to the advertiser is not intended to
woo applicants again.” “Definitely, millions of naira would have been
spent on those unnecessary ads. Accenture too must be accountable for
all the expenses carried out during the recruitment. You cannot say
because money has been billed for a project, then it must be spent
unjustifiably,” he said.

The SEC had accused
the previous management of the NSE of slowing down the succession plan.
It recently said in a statement that “the commission had previously
asked the NSE to develop and implement a credible and transparent
succession plan and while the NSE had made significant progress, it had
unfortunately not completed the process by the deadline of 31st of July
approved by the commission despite an extension of the deadline.”

Hundreds apply

The commission said
it is certain that the succession process “can be concluded quickly,”
adding that the SEC has contracted Accenture to facilitate the
selection exercise. “Accenture has confirmed that 944 candidates
applied for the four positions, including that of the CEO of the
Exchange. 131 applied for the post of CEO and the rest applied for the
positions of executive director (Listings), executive director (IT and
market Operations), and executive director (Strategy, and Business
Developments),” it stated.

Meanwhile, against requests by some market operators that Mr
Ikazoboh should declare specific date when his tenure would expire, the
substantive CEO said he is not sure of the duration of his tenure. At a
media briefing recently, he said, “How long my tenure will take, I
cannot clearly say right now; but I can only say that the process has
started for the selection of a new DG.”

Zimbabwe’s annual
inflation quickened to 4.2 per cent year-on-year in September from 3.6
per cent the previous month, the Zimbabwe National Statistical Agency
(Zimstats) said on Friday.

Month-on-month
inflation was at 0.1 per cent from -0.1 per cent in August, Zimstats
said in a statement. Zimstats figures showed that rising food,
beverages and utility prices drove inflation higher.

Gold fell on
Friday, snapping a two-day record-setting rally, as the dollar rose and
Fed Chairman Ben Bernanke offered few new details on further economic
stimulus which prompted investors to take profits.

In a day of
volatile trade and a host of mixed market signals, bullion is still on
track to end higher for an 11th straight week, driven by a hardening
view that the Fed will resume buying government debt to stimulate the
economy.

On Friday, Mr
Bernanke delivered his most explicit signal yet that the U.S. central
bank is likely to use easier monetary policy as soon as its next
meeting in November. But he failed to offer the details that some gold
investors are craving to sustain the rally.

“The question is
for how much longer the market is prepared to run just on the
quantitative easing story. I think the market at these levels wants to
see the facts before committing additional capital to the upside,” said
Saxo Bank senior manager Ole Hansen.

As the people of
Bayelsa await President Goodluck Jonathan, who is expected in the state
in a few days’ time, electricity supply in Yenagoa, the state capital,
has improved.

Consequently,
social and economic activities have received a boost with artisans and
other self-employed persons who closed shops due to lack of electricity
supply returning to work.

The News Agency of
Nigeria (NAN) reports that the improved power supply became noticeable
on Wednesday, two days after the governor, Timipre Sylva, announced the
President’s visit.

The governor said Mr Jonathan will be on a two-day working visit to the state from October 22 and 23.

Power supply in the state, especially in the state capital, has been
characterised by constant outages which last for long periods and at
times, results in total blackout for days. But since the President’s
visit was announced, power supply has been stable, lasting for as long
as 18 hours, daily.

The Fiscal
Responsibility Commission Yesterday in Abuja said the menace of
corruption could be curbed if due process was followed in budget
drafting and implementation across the federating states.

Aliyu Yelwa, the Commission’s Chairman, said this in an interview with the News Agency of Nigeria on Sunday in Abuja .

“Although it is
difficult to completely eradicate the menace of corruption, it can be
reduced to the barest minimum if due process is followed with regards
to budget drafting and implementation as stated in the constitution,”
Mr Yelwa said.

According to him,
the constitution demands full consultation with the people before every
budget preparation while priority should be given to their desires. He
added that anything short of that was unconstitutional and capable of
breeding corruption in the country.

“Nigeria ought not to be poor but it is unfortunate that some
Nigerians are richer than state governments not to talk of Local
Government Councils because of lack of due process,” he said.

The federal
government has purchased fertiliser worth N39 billion in preparation
for the next farming season, Fatima Bamidele, the Permanent Secretary,
Federal Ministry of Agriculture, has said.

Speaking at the end
of this year’s annual National Agricultural Fair in Tudun Wada,
Nasarawa State, the permanent secretary said that the federal
government was more committed to improving the agricultural sector of
the nation’s economy.

She noted that
Nigeria was currently the lowest user of fertiliser in the world and
urged farmers to utilise the opportunity presented by the government to
improve on their output at the end of every farming season.

Mrs Bamidele said that the Federal Government was constructing 17
rice processing mills in the rice producing areas, as part of efforts
at ensuring job creation and food security.