Nigeria Content Online

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.

Investors
positioning based on the rumor of AMCON commencement of operations,
changed the market mood on the last trading day of the week as the
market run up by 2.42% or 592.56 points on Friday. NSE ASI was up
through the five trading days of the week under review, thus, it
wrapped up trading at 25,077.73 points from the opening figure of
23,772.40 having gained 5.49% or 1,305.33 points through the week. The
market capitalization followed the same trend and closed up at N6.145
trillion. NSE-30 Index closed up at 1,061.79 points. All the four
sectoral indexes end the week above their respective opening points.

Volume performances

The stock market
had a turnover of 1.32 billion shares valued at N11.53 billion in
27,714 transactions. In these the banking stocks was most active with
758 million shares worth N6 billion that were exchanged in 14,608
deals. The said volume was moved by transactions in the shares of
Access Bank Plc, United Bank for Africa and First City Monument Bank
Plc. Unlike previous week when Insurance sector followed, the Airline
services subsector was boosted by volume on the shares exchanged on
Airline Services and Logistics Plc as it top performance with 161.4
million shares worth N403.72 million in 427 transactions. Please not
that the moving volume on this equity emerged on Friday.

62 equities closed
the week above their various opening prices, 23 bows to the bear’s call
and 116 equities end on a flat note. Meanwhile, gainers’ volume stands
at 879.20 million shares and it accounted for 66.43% of total market
volume for the week. The losing stocks moved 339.89 million shares,
same as 26% of market volume and the unchanged stocks traded 104.42
million shares or 7.89% of the market volume. It could be deduced from
the market statistics table that it’s indeed a bullish week.

Technical view

On 10/15/2010, NSE
closed above the upper band by 0.0%. This combined with the steep
uptrend suggests that the upward trend in prices has a good chance of
continuing. However, a short-term pull-back inside the bands is likely.
During the past 10 bars, there have been 8 white candles and 2 black
candles for a net of 6 white candles. During the past 50 bars, there
have been 23 white candles and 27 black candles for a net of 4 black
candles. A long lower shadow occurred; this is typically a bullish
signal. The RSI has just reached its highest value in the last 14
periods this is bullish.

Market outlook

Before the new face
on the last trading day of the week, the market was already dull and
traders are already holding cash to position at bottom of the expected
pull back. If the market fundamentals remains, then the market may
continue on the bullish run from the first trading day of the new week,
nevertheless, traders should expect short pull back due to profit
taking activities. Whichever way it is viewed, cautious positioning
should be every trader’s watchword.

Corporate actions for the week ended

In the week under
review more staled results were reported in the market. Majority of
these results were audited reports. In terms of performance, many of
these reports were poor. We do not expect these reports to have
positive impact on the market indicator in the week ahead. The below
analysis on Arbico Plc and Union Dicon Salt Plc are reflection of how
bad some of these reports are.

Arbico Plc

Arbico Plc is a
building construction company incorporated way back in 1958 and listed
on the Nigerian Stock Exchange in December 1978. The company currently
has a share holding structure of 116.5 million shared in this order of
investors; Nigerians – 60% and Foreign – 40%. The directors yesterday
reported its belated financial year (FY) results for the period ended
December 31, 2007 and 2008. Lead indicators revealed abysmal
performance. Turnover dipped by 12.3% and 5.9% in both 2008 & 2007.
PAT indicator fared worst as it slide deeper in the red from loss after
tax of N2.08 million in 2007 to N36.14 million in 2008. In terms of
ratio performance; Loss per share of 62 kobo was attained against LPS
of 4 kobo in 2007. Loss profit margin stood at 3.01% against 0.15% in
2007. Price earnings multiples (PE ratio) remained dip rooted in the
red meaning the Arbico is not expected to return any positive earnings
in the nearest future.

In terms of book
value, Arbico is unattractive and selling above its intrinsic value at
current market price N26. Book value is 2.6, Price to book value is
9.99 and PSR 2.52. All are above bench mark indicators.

Observation; Arbico
current faced stiff competition in its industry militating against
revenue. Its cost of operation is high. Its intrinsic values are weak
compare to benchmarks. All these put together makes the stock
unattractive for short-medium-long term investment goal.

Union Dicon Salt Plc

Union Dicon Salt
Plc is a food, beverage & tobacco quoted company. The company was
listed on the exchange in September 1993 and currently has a paid-up
capital of 360 million. It currently has a six man board of director
chaired by Rtd Gen T.Y. Danjuma. In the recent reports of the company,
all the belated results for period ended December 31, 2004 through 2008
were made public. Hindsight revealed that the company’s operation is
being inhibited by continuous negative returns which have led to
massive erosion of shareholders’ fund after the FY 2003 figure (N219.2
million). Shareholder’s equity as at FY 2008 is in net liability of
N844.2 million.

In terms of
operational performance, for FY 2007 & 2008, no figure was reported
at turnover level meaning the company probably did not engaged in
productive activities. Others P & L indicators (P/LBT & P/LAT)
revealed negative figures from 2004 through 2008 FYs. As such loss per
share of (-1.04, -1.34, -0.40, -0.52 and -0.56) were posted from 2004
through 2008. For details on the revealed period performance, see the
below table.

Report on the OTC Market for FGN bonds

A total volume of
266.9 million units of bonds worth N246.36 billion in 1,978 deals was
recorded last week, in contrast to a total of 248.9 million units
valued at N243.41 billion exchanged in 1,940 deals during the week
ended Thursday, October 7, 2010. The most active bond (measured by
turnover volume) was the 10.00% FGN July 2030 series with a traded
volume of 100.8 million units valued at N84.20 billion in 714 deals.
This was followed by 4.00% FGN April 2015 series with a traded volume
of 35.25 million units valued at N28.53 billion in 331 deals.

Sixteen (16) of the available thirty-six (36) FGN Bonds were traded
during the week under review, compared with seventeen (17) recorded in
the fort-night week ago.

Central Bank’s recent intervention in the regulation of microfinance banks

Well, there is no debate about that; it is no secret that the industry needs to be shaken up. An industry requires adequate supervision. It is important to enhance the reputation and sustainability of the sector; more importantly, for the sector to be able to reach the unbanked and to increase financial inclusion in the market.

I think this happening now is certainly welcomed, for the regulators to do a bit of shake up in the industry. The sector itself needs to have its image improved. Also, microfinance banks need to be run in a sustainable manner, good corporate governance, and have a broad impact when conducting microfinance within that segment of the population.

Central Bank’s policies on small and medium enterprises funding

It would be good to be clear on what those funds were actually meant for. Those particular funds were set aside for banks that had already lent to certain SMEs to be able to refinance or sell, if you like, those loans to the fund manager or the bank of industry, in this case.

Many SMEs are not yet in a position where they can actually service loans. Some are actually in their start off phase, some are still in a growing phase where they are trying to get to break even, and to begin to cash flows. If you are not generating cash flows, how do you really access a loan?

In addition to SME loans, which are good, we need to see more grants, more channel funds for SMEs. Our fund is focused on the micro side of things, in particular, the micro finance banks, that is our focus.

Challenges in achieving the objectives

We are looking at microfinance institutions that can operate sustainably. However, we are working against the backdrop of regulatory uncertainty. The uncertainty within the regulatory environment does pose a challenge to some of the institutions. We are looking at them to decide how they want to move forward with their operations.

Secondly, within this market, there is a scarcity of funds available for microfinance institutions to lend, so wholesale funding is limited within this environment; we are an equity fund and we are looking to place money into microfinance banks to primarily transform their operations.

Client attributes before investment

We would like to see good management, experience management track record, good governance, the potential to have impact both in terms of client base, in terms of impacting the lives of clients, empowering them to participate in the broader economy, the opportunity to run an efficient microfinance institution.

It doesn’t mean that they necessarily have all these ingredients, but if they have some of these we can use them to develop sustainable businesses. We look at what the company is doing, we don’t want our money to go in and distort what is already there.

We are looking at a million euros investment; it should have existing infrastructure and asset base balance sheet. It has to be commensurate with that. We are not here to take over any institution; we are here to partner with the institution.

Nigeria’s microfinance industry in the next five years

Well, you have to look at other countries and see how they fare. If you look at some of the ancient models, you will see that some of the microfinance banks have indeed increased financial inclusion. You don’t need to have about a thousand microfinance banks; there will be a smaller number, but they would be more effective in what they do, in their outreach, and in terms of their sustainability.

I see the the industry with a cleaner image, a better corporate governance, and broader outreach.

Are you one of those people that keep your share certificates in a cupboard at home or have them framed and hung on the wall, feeling a comforting sense of wealth as you admire them?

The Nigerian Stock Exchange (NSE) has been steadily phasing out the issuance of share certificates and for a few years investors, in the Nigerian capital market have been urged to comply with its directive to “dematerialise” their share certificates. Even though the original deadline was extended, reluctant shareholders will eventually have to transfer their existing share certificates to an electronic share settlement system, which will ultimately render paper certificates virtually obsolete.

Paper certificates have hung on, particularly amongst smaller private shareholders and those who maintain inactive portfolios. There continues to be a preference for the traditional “proof” of ownership of a paper share certificate, especially among older shareholders. When they finally come round to the idea of dematerializing stacks of certificates, there is often confusion from out-of-date or invalid share certificates purchased nearly 40 years ago, following corporate takeovers and stock splits.

Central Securities Clearing System (CSCS)

One of the greatest developments in the Nigerian capital market was the establishment of the Central Securities Clearing System (CSCS), which commenced operations in 1997. When an investor opens a CSCS account, the shareholder’s data is captured or transferred into an electronic register and an equivalent number of securities are credited in electronic form to the CSCS depository. The paper share certificates are replaced by electronic statements reflecting the investors’ shareholding and its’ current value. Dematerialization facilitates paperless trading whereby transactions are executed electronically.

Have your shares lodged securely

By having your shares securely lodged in a CSCS account you can safeguard your investments, as the burden of storage and handling of your share certificates is taken off you. Apart from keeping accurate records of your shareholding and updating the records as new transactions are effected, it eliminates the risk of the loss of documents due to theft, fraudulent transactions, or extreme risks such as fire or flooding, which are very real hazards when certificates are stored at home in material form.

A periodic statement helps you keep track of your CSCS account and should you feel that you need additional protection, a CSCS Special account will provide this. A trade alert system is also in place, which will alert you by text should any transaction be made on your account.

No more delays

Registrars have a huge client base to serve; this makes the printing, sorting, and dispatching of certificates a challenge. In spite of the fact that registrars supposedly use their best effort to post certificates to the addresses on their records, shareholder complaints regularly flood registrars’ offices as they attempt to sort literally hundreds of thousands of certificates. As no transaction can be carried out until a shareholder receives his or her share certificates, this naturally causes much anxiety for shareholders.

Having a CSCS account makes subscription for new shares through a public offer or a rights issue much easier; you simply indicate your CSCS account number and the number of shares you applied for on the form, and the number allotted to you will be credited directly to your CSCS account. This means that the issuance of physical certificates and the attendant delays in receiving them is avoided, as the issue of certificates being lost in transit will have become a thing of the past.

Selling your shares

If you still hold paper certificates and wish to trade your shares, you could be subjected to delays in the verification process, which can sometimes be long and tedious. You could thus lose out should share prices move against you, as you will not be able to sell the shares until they have been dematerialized.

A CSCS account gives you greater flexibility, as the verification process has already been concluded. The registrar would already have certified that you own the shares by verifying your signature before it gets into your personal account. You are thus able to sell quickly and efficiently where there is the market for the shares and take advantage of any market movements. This is a critical issue, particularly in a volatile market.

Borrowing against your shares

If you wish to borrow using your shares as collateral, your banker or other lender will want the certificates lodged and verified into a CSCS account. Without this in place, your transaction could be delayed.

On-line monitoring

Through the online facility at the CSCS website, www.cscsnigerialtd.com, registered investors can monitor their investments at anytime and from anywhere in the world. They can view CSCS stock account statements, obtain their stock positions regularly, and review and evaluate their portfolios. Investors can also monitor stock prices and new stock deposits into the CSCS.

The NSE continues to educate the investing public on the importance of the dematerialization of share certificates. Nigerian shareholders are encouraged to embrace dematerialization, as the initiative will further increase the efficiency and liquidity of the market and should raise investor confidence, leading to a more vibrant and transparent capital market.

The Nigerian Extractive Industrories Transparency Initiative (NEITI), the promoter of transparency and accountability in the nation’s extractive industries, said it has taken steps to reorganise its secretariat to effectively deliver on its mandate.

The agency came into the negative limelight recently following reports of an internal wrangling among some of its top officials, which appeared to have threatened Nigeria’s quest for validation among the 31 countries that are due for re-assessment as EITI Compliant countries by the Extractive Industries Transparency Initiative (EITI) when its validation committee meets later this month.

The roots of the wrangling, which earned the chairman, National Stakeholders Working Group (NSWG), Assisi Asobie, a query from the Secretary to the Government of the Federation (SGF), Mahmud Yayale Ahmed, was traced to reports of corruption charges against the then executive secretary, Haruna Sa’eed, and the former director of services, Stan Rerri.

Both were accused of “abdication of responsibility and ineffectual leadership”, as well as “inaction” in preparations towards the 2009 Civil Society (CS) training programme, involving a controversial disbursement of about N15 million to two hotels in Lagos and Kaduna, before it was initially postponed, and later cancelled.

Mr. Sa’eed, as head of the secretariat, had denied authorising the disbursement of the money, while Mr. Rerri, who reportedly colluded with the former accountant, Sunkanmi Adeoti, and former procurement officer, Tony Onyekweli, to make the payment without the knowledge of the ES (Executive Secretary), ignored all entreaties to recover the money and pay back to the NEITI coffers.

Mr. Asobie, in his response to the SGF’s query, said the trio have been relieved of their positions, after the Leke Alder-led ad hoc investigative committee constituted by the Board had recommended “overhaul of the administration of NEITI Secretariat for efficiency and effectiveness.”

Roots of the crisis

Mr. Asobie also traced the roots of the crisis to the NSWG resolution two years ago to engage the services of human resources consultants to examine the structure of the NEITI Secretariat; evaluate existing staff and their official positions; develop new terms of reference for all roles within the secretariat; design suitable managements system that fits the requirements of NEITI; and construct recruitment guidelines and recruitment plan for NEITI.

Though Mr. Rerri reportedly participated actively in the recruitment of the consultants and supported them till they completed their assignment, he, however, rejected the recommendation that he be relieved of his position as director, Support Services, or show proof of being a chartered accountant if his wish to be a director would come to pass.

Despite the board’s acceptance of the consultants’ recommendations, neither Mr. Sa’eed nor Mr. Rerri took it seriously, with the latter not only continuing to identify himself with the unofficial designation of “Director (Administration/Finance)”, but also going ahead to issue a letter appointing one Garba Saidu Yakawada as ‘Head of Internal Audit.’

Though the board took exceptions to the disregard to its resolution, and ordered immediate reversal, Mr. Rerri, in his petition to President Goodluck Jonathan, alleged massive fraud in NEITI, describing his removal as “an attempt to “silence the whistle blower”.

But, Mr. Asobie, who accused Mr. Rerri of allowing “unprincipled bureaucratic politics to undermine Nigeria’s interest” by mobilising groups to lobby for the non-validation of the country by the global EITI, said he was only “opportunistically blowing the whistle as a protective manoeuvre.” He also said the process to appoint a new executive secretary has commenced.

Mr. Asobie added that work is progressing well on the conduct of the 2006-2008 audit report while the final report is expected between December and January next year, while advertisements are out for expression of interest (EOI) for the fourth oil and gas sector audit and solid minerals sector audit.

Angolan state-owned
oil firm Sonangol and South Africa’s PetroSA Ltd. are considering
setting up a joint-venture to build and manage refineries, Angola’s oil
ministry said in a statement.

The announcement
was made after a South African delegation, led by energy minister,
Dipuo Peters, met with Angola’s oil minister, Jose Botelho de
Vasconcelos, in Luanda earlier this week, Angola’s oil ministry said.

“Both parties are
considering the possibility of creating a joint venture between
Sonangol and PetroSA for the construction and management of refineries
and terminals of petroleum products,” the oil ministry said.

Angola is Africa’s
biggest oil producer, but its sole 37,500 barrels per day plant covers
only 30 percent of domestic needs. A new $8 billion refinery in the
port city of Lobito is expected to be ready by 2014.

The customer
service week was observed throughout the globe in the last one week,
but some key issues were not addressed in order to give the week the
meaning it deserves. Customer service is the life of any business and
when customers are not happy, the life of any business is threatened.

The way a customer
is treated goes a long way in projecting brand image. From my findings
and experience over the years, efficient customer service is a key
issue that is lacking in several organisations. This ultimately affects
the image of the brands and erodes consumers’ confidence in the brands.
The culprits in this area are telecom companies, banks and quick
service restaurants. The telecom companies focus more on online
customer service which increases negative perception of their brands.

The truth is that
online customers are invisible and you create psychological trauma for
them. There is that basic need for human to human interaction that
promotes mutual trust and understanding. In most cases, you waste
valuable time waiting for a response that can never be. It was only
after the advent of the Sanusi Tsunami in the banking sector that some
banks started focusing on good customer service. When you walk into a
banking hall, you will find dejected and hostile faces responding to
you. In some cases, some bank tellers scream at their customers!

The issue is it
creates perception problems for the brand in question because word of
mouth goes a long way in either building or destroying a brand. Good
customer service is all about bringing customers in and about sending
them away happy – happy enough to pass positive feedback about your
business along to others, who may then try the product or service you
offer for themselves and in their turn become repeat customers.

Questions begging for answers

The organisations
who celebrated customer service week in the media, should answer these
salient questions: What have you done to enhance customer satisfaction?
What can you give customers that they cannot get elsewhere? Do you
follow-up and thank customers even if they don’t patronise your
service? What can you give customers that is totally unexpected?

The gospel truth is
that these questions may never get favourable responses because some
organisations have not integrated customer service into the corporate
strategy. There should be a Customer Value Proposition for any service,
product or brand. This focuses on the need to place premium value on
every individual customer as crucial to the continued existence of the
organisation.

I believe the first
step to good customer service is to know the customer. When you know
the customer, you build a relationship and the customer becomes a fan
of the brand. Most companies do not go this extra mile to know the
customers and build a beneficial relationship with them. It is pathetic
that several brands do not have relationship with their customers. It
is not only when you have sales promotion that you remember your
customers. There should be a database that provides useful information
about your customers, wedding anniversaries, and birthdays among
others. When relationships are not built with customers, there is no
way such business will have customer retention. There is a level of
customer satisfaction that should make the consumers have a life time
experience with a specific brand.

It is also very
important to gain feedback from customers in respect of customer
service. This helps the brand to succeed and retain a strong pedigree.
Effective listening helps in knowing and identifying the needs of the
customers. When customers are listened to, it creates an atmosphere of
trust and ultimately, builds loyalty for the brand. This is also
important as customers feel important and appreciated. When customers
have a sense of belonging, they believe they own the brand.

GTB Example

My wife woke up on
her birthday last September, and the text message she first received
was that of GTB. She was surprised, because she has not operated the
account for some time. I could see smiles on her face. GTB is one bank
that I know has consistently focused on going the extra mile in
customer service.

The point of
differentiation for the bank is building relationship and sustaining
brand loyalty. The bank parades employees who have good customer
disposition. ‘Wouldn’t You Rather Bank with us’?

The bank’s slogan
is a living testimony to the banks customer service culture, I have
been with the bank for some time and through the branches I have
related with, the story has been the same. The bank’s customer’s
service culture is one that has projected the bank positively and
generated favourable perception for it.

A customer centric
approach is important to maintaining a good brand image. The focus here
is to build brand loyalty through customer experience. Customers will
always come back when you deliver a great experience for them. This
translates to enormous results for the brand in the marketplace. The
image of any brand is based on customer’s unique experience and this
whether positive or negative influences his or her decisions. The
resultant effect of this is either death sentence or life for the brand.

Ayopo, a
communication strategist and public relations specialist is the chief
executive officer of Shortlist Ltd, ayopo@shortlistprng.com

OPEC
agreed on Thursday to hold intact a supply policy that has served it
well for nearly two years and set aside the concern that a weak dollar
would drive the oil price too high for a fragile world economy.

Ecuador, which
holds the rotating presidency of the Organization of the Petroleum
Exporting Countries, confirmed the no-change decision and said the
group’s next conference would be in Quito, on December 11.

Earlier, a delegate told Reuters the ministers had been “100 percent” in agreement there was no need to change policy.

Oil prices did not
react to the widely-expected OPEC news, but they held firm at close to
$84 a barrel, drawing support from a weak dollar, which has stoked
buying across the commodities asset class.

The market has
climbed above the $70-$80 price range, which top exporter, Saudi
Arabia, has said is ideal for producers and consumers. But speaking
just before Thursday’s meeting, its oil minister said the kingdom was
still happy with the oil market for now.

“The biggest
challenge we have is to keep the oil market as it is today,” Saudi
Arabian oil minister, Ali al-Naimi, told reporters.

He declined to be
drawn on a price level that might endanger economic recovery, but said
producers were concerned about a possible slide back into recession.

“I hope we don’t have a double dip. Everybody is working very hard to avoid it,” he said.

Oil rises, dollar falls

International
benchmark U.S. crude has this month climbed above Naimi’s favoured
range, as heightened expectation of more stimulus for the United
States, the world’s biggest economy and biggest oil user, has weakened
the U.S. dollar.

The dollar on
Thursday dropped to its lowest this year against a basket of
currencies, making dollar-denominated commodities relatively cheap for
holders of other currencies.

So far, oil’s gains
have been relatively modest – compared with gold which has hit a series
of record highs – as the dollar impact on oil has been countered by
weak market fundamentals of nearly record-high fuel inventories and
sluggish demand.

Some analysts say there is a risk, however, of a strong oil rally.

“Without a specific
commitment to defend a price level, the oil price can move on
fundamentals between $65 and $100. With QE (quantitative easing)
weakening the dollar and stimulating emerging market economies, that
trend is higher,” said Lawrence Eagles of JP Morgan.

Saudi Arabia, which
is keen to preserve long-term demand for its extensive reserves and is
holder of the bulk of OPEC’s spare output capacity, has traditionally
stepped in to add more oil if it considers the market is rising too
fast.

Others in the
group, including Venezuela, Algeria, Iran, and Libya, have tended to
favour a higher price to meet domestic budgetary needs and have argued
a weaker dollar erodes the value of their petrodollars and justifies
more costly oil.

Algerian energy and
mines minister, Youcef Yousfi, said on Thursday he would like to see an
oil price of between $80 and $100 per barrel.

“A price between $80 and $100 would be comfortable as the dollar depreciation is a concern,” he said.

Libya’s most senior
oil official, Shokri Ghanem, said a price of around $75-$85 was
acceptable, but he would welcome more expensive oil.

“As a matter of fact, the terms of trade are going against OPEC because the dollar is getting eroded,” he said.

The decision to
keep output unchanged still leaves the group plenty of leeway to adjust
supplies informally. Compliance with the record cut of 4.2 million
barrels per day (bpd) announced in December 2008 – when OPEC last
formally changed its output policy – has slipped to 57 percent,
according to the latest Reuters assessment.

Ministers can discuss the situation again in the near future.

In addition to
their next output policy meeting in Ecuador, on December 11, Saudi
Arabia is hosting a meeting in Riyadh next week, as part of a wave of
celebrations to mark the 50th anniversary of OPEC, which was founded in
September 1960.

Investors at the
Nigerian Stock Exchange (NSE) on Thursday recorded additional gains on
their equities’ value, as market closed trading on a positive note.

The Exchange market
capitalisation of the 199 First-Tier equities closed yesterday at
N5.999 trillion after opening the day at N5.988 trillion, reflecting
0.18 percent upturn or over N11 billion gains. Meanwhile, about N174
billion has been recovered since transaction began this week.

The NSE All-Share
Index on Thursday also appreciated by 0.18 percent or a gain of 45.8
units from Wednesday’s figures of 24,439.37 basis points, to close at
24,485.17.

Four NSE sectoral
indexes reflected the positive outlook yesterday as the NSE-30 Index,
which measures the performance of blue chips in the market, gained by
0.15 percent; the NSE Food/Beverages gained the highest points by 0.99
percent; Insurance gained by 0.58 percent; the NSE banking, the only
loser, declined by 0.17 percent, while the NSE Oil/Gas moved up by 0.50
percent.

Analysts at
Resource Cap, a portfolio management company, said its outlook for the
market remains positive following the “various measures by the NSE’s
management to restore investors’ confidence in the market.”

Banking sector leads

The banking
subsector was the most active on Thursday, leading market transaction
volume with 84.37 million units of shares valued at N635.17 million, as
against the 198.59 million units of shares valued at N1.65 billion
recorded on Wednesday.

The volume recorded
in the sector was driven by transaction in the shares of Zenith Bank,
First Bank, Intercontinental Bank, and Access Bank. The four stocks
accounted for 21.74 percent of the entire market volume.

The Insurance
subsector followed, trading 30.40 million shares valued at N17.98
million. Transactions in the subsector were largely driven by the
shares of Goldlink Insurance, which accounted for about 75 percent of
the subsector’s volume.

The Food/Beverages
subsector came third with investors trading 15.98 million shares valued
at N483.53 million. Investors in Cadbury and Dangote Sugar enhanced
activities in the subsectors in terms of volume.

More gainers

The number of
gainers at the close of trading session yesterday closed higher at 33
as against the 32 gainers recorded previous day; while losers closed
lower at 18, compared with the 24 stocks recorded on Wednesday.

Flour Mills Nigeria
led the price gainers’ chart, appreciating by N1.40 to close at N69.70
per share. Cadbury shares went up by N1.38 to close at N31.70, while
African Petroleum grew by N1.30 to end at N27.83.

Cement Company of
Northern Nigeria led the price losers’ chart, shedding 60 kobo to close
at N13.40. Unilever lost 48 kobo to close at N29.54, while Dangote
Flour Mills depreciated by 35 kobo to end the day at N15.00 per share.

Meanwhile, as
requested by the board of directors of the concerned companies, the
Exchange on Thursday adjusted the prices of Chellarams Plc and
Custodian & Allied Insurance Plc for a dividend of 8 kobo and 6
kobo respectively.

The Chairman, Board
of National Insurance Commission (NAICOM), Maryam Ciroma, on Thursday,
urged insurance directors to imbibe the culture of good corporate
governance.

Mrs Ciroma said
that this was the only way to make the commission’s enlightenment
programme on corporate governance worth the while. “I urge insurance
directors to reciprocate the good gesture of NAICOM by doing all within
their powers to implement the new code of corporate governance,” she
said. “This is a way of contributing their quotas toward building a
strong and viable insurance industry in the country.”

She said that by adhering strictly to the Code of Corporate
Governance for the industry, the directors would help to sustain the
industry’s premium growth.