Nigeria Content Online

On the eve of
Nigeria’s 50th independence anniversary, the Index Committee of the
Nigerian Stock Exchange (NSE) has removed Oceanic Bank International,
Total Nigeria, and Mobil Oil Nigeria from the NSE-30 Index, which
represents the 30 most capitalised equities.

The Exchange, in a
statement on Thursday, said the Index Committee, which was set up to
monitor activities of the most capitalised stocks, agreed after due
deliberations, to remove the affected companies because they could not
rank among the current most capitalised equities.

“The Index
Committee held its quarterly meeting to review and rebalance the NSE-30
Index,” the statement said, adding that “new entrants and exiting
equities have been agreed on during the deliberations.” The committee
replaced the affected stocks with Ecobank, Ashaka Cement, and Cadbury
Nigeria. Ecobank, during the second quarter, was removed before it
bounced back.

The NSE-30 Index is
a price guide that measures the returns on investment from the change
in market value of stocks, in terms of their liquidity, capital
appreciation, and depreciation.

Market watchers say
this development will encourage all quoted companies to improve their
performances in order to rank in the most capitalised category.

However, a stockbroker, who would not like to be mentioned, said he sees more blue chip stocks “falling” from the NSE-30 Index.

“All is still not
well with the petroleum sector. Even the banking sector, in spite of
the recent reform, is still struggling to survive. So, I see more blue
chip companies falling from the list,” he said.

Index appreciates

Meanwhile, at the
close of trading this week, the NSE-30 Index appreciated by 23.11
points or 2.43 percent, to close at 976.80 basis points. Also, the NSE
All-Share Index, a market measuring parameter, appreciated by 361.50
points or 1.61 percent, to close on Thursday at 23,050.59 basis points,
while the market capitalisation of the 199 First -Tier equities
increased to N5.65 trillion.

A turnover of 1.1
billion shares, worth N10.5 billion in 21,572 deals, was recorded this
week, in contrast to a total of 971 million shares, valued at N8.36
billion, exchanged last week in 28,629 deals.

The banking
subsector was the most active during the week, in terms of turnover
volume, with 673.5 million shares worth N5.5 billion, exchanged by
investors in 12,225 deals. Volume in the banking subsector was largely
driven by activity in the shares of Stanbic IBTC Bank, Guaranty Trust
Bank, Zenith Bank, and First Bank of Nigeria.

Trading in the
shares of the four banks accounted for 388.25 million shares,
representing 57.65 percent of the subsector’s turnover.

The insurance
subsector, boosted by activity in the shares of Guaranty Trust
Assurance Plc and Intercontinental WAPIC Insurance Plc, followed on the
week’s activity chart with a turnover of 100.3 million shares, valued
at N94.1 million in 923 deals.

A total of 29
stocks appreciated in price during the week, lower than the 33 of the
preceding week. Nigerian Breweries led on the gainers’ table with a
gain of N5.38, to close at N74.58 per share, while Oando followed with
N2.95, to close at N59.95 per share.

On the flip side, a
total of 48 stocks depreciated in price during the week, higher than
the 47 of the preceding week. Total Nigeria led on the price losers’
table, dropping by N11.87, to close at N225.63 per share, while 7-Up
Bottling Company followed with a loss of N3.89, to close at N36.95 per
share.

Twenty-four hours
after the First Lady, Patience Jonathan, distributed bags of rice in
Abuja, security operatives are having a hard time keeping out a huge
mob from the venue.

The News Agency of
Nigeria (NAN) reports that the security operatives, comprising the
Police, the FRSC, and the Nigeria Security and Civil Defence Corps,
were seen battling to keep people in the queue.

NAN reports also
that the mob was seen dashing across the road unmindful of oncoming
vehicles, while some just stood on the road and this caused a minor
traffic snarl around the area.

Kande Bulus, a
woman in the queue, told NAN, “We have been here since morning. They
told us yesterday that there was rice distribution here and we decided
to come and see if it is true.”

A man, Tega
Oghenekaro, who had a good command of the English Language, said he was
a graduate with no job and that was why he came to see if he could get
some rice.

“I came to see if I
could lay my hands on a bag or some portion of rice. I am a graduate of
Psychology from the University of Ado-Ekiti, but I’m currently
unemployed.”

The Federal
Government on Thursday reiterated its commitment to work towards the
country becoming self sufficient in cement production by 2013.

The Minister of
Commerce and Industry, Jubril Martin-Kuye, made the pledge at his 2010
ministerial news conference tagged, ‘2010 Ministerial Score Card’.

He said the country had no business still importing cement with its abundant natural human resources for cement production.

Mr. Martin-Kuye described cement as a resource-based product, where Nigeria had one of the greatest competitive advantages.

“We have no product that can beat cement when it comes to resources with the abundance of limestone.

Nigeria is
centrally located in the continent, and can export cement to the
western, eastern, and southern African countries. We, therefore, have
no reason to import dust from other countries,” he said.

The minister said
government’s sustained incentive to investors in the sector had
witnessed increased local production of cement, which stood at 8.3
million metric tonnes in 2009.

“It is expected
that when the new cement plants at Ibeshe (Dangote), Lakatabu
(Lafarge), and Ava Cement, Edo State, as well as the rehabilitation and
expansion programmes at the Ewekoro, Gboko, Obajana, are completed, the
local capacity for cement would increase tremendously,” he said.

On sugar production, Martin-Kuye said government also planned to attain 70 percent self sufficiency of local production by 2020.

Some Nigerians have
decried the slow pace of the nation’s infrastructural development,
saying that there had been little development in the sector, 50 years
after independence.

In separate
interviews in Lagos on Thursday, the citizens said the country had
nothing to celebrate in terms of infrastructural development.

Omeresan Adegite, a
former president of the Institute of Chartered Accountants of Nigeria
(ICAN), advised the country to adopt international best practices to
ensure the growth of the various sectors of the economy.

“We need to adopt
the International Public Sector Statement of Auditing Standards
(IPSSAS) as part of its strategies to promote accountability, and
transparency in governance,” Mrs. Adegite said.

Ronke
Marquis-Bamgbala, a retired chief superintendent of police, said that
the crisis the nation was facing today was due to lack of foresight and
greed of leaders.

“I enjoin all eligible voters to use the coming elections to elect credible leaders,” she said.

Kazeem Afolabi, an entrepreneur, said, “The nation’s problem is not lack of ideas, but poor implementation.”

Some customers of micro-finance banks, on Tuesday, in Abuja, expressed concern at the closure of the banks, urging the authorities to urgently refund their deposits.

The Central Bank of Nigeria (CBN) had, on Friday, announced the closure of 224 micro-finance banks across the country. The CBN had revoked the banks’ licences on the grounds that they were found to be technically insolvent and distressed.

The News Agency of Nigeria reports that E- Barclays Micro Finance Bank, one of the affected banks whose licences were revoked, was shut down. But the bank’s premises witnessed a large turn-out of depositors who were, however, unattended to by a handful of the bank staff available.

A customer, Robinson Idoko, told NAN that government should compel the banks to urgently come to the aid of depositors. “I have a savings account with E-Barclays,” he said. “I have N257, 000 in my account, and I didn’t open the account to take a loan from the bank. The purpose of opening this account is to save and pay for my shop, and the rent will expire by next month. I even paid in N35, 000 on Thursday, not knowing that the bank will be closed. Now, I don’t care if the government is closing the bank. What I want is my money.”

Another consumer, Friday Onuwu, said he operated his company’s account with the bank since a commercial bank disappointed him some years past. “I have a company account with the bank which amounts to over N1.187 million and on Thursday I even issued a cheque of N100, 000 and it was cleared,” he said. “You can imagine even their staff came to work today. But my problem is that nobody in the bank’s management has come to address or talk to us. This is really bad and I am really disappointed. We are not armed robbers; we worked for the money. Please, we want our money back.”

A staff of the bank, who did not want to be named, expressed dismay at the situation, arguing that the bank was not what the CBN claimed it to be. “I feel very sad right now,” he said. “Our bank is very strong and reliable. We have the capital base, the managerial skill, the manpower and the capacity. This is a big embarrassment to the bank. It came as a blow because as of Friday we were still paying our consumers. In fact, we paid over 600 costumers. The entire staff here are unhappy with government. This bank has undergone many stages before it got to this level.

Staff of CBN recently came to our bank and asked our staff questions, checked our cash control and even congratulated the bank. We are asking the CBN governor to let our bank be. Other mushroom banks are still operating, so why E-Barclays? We were being appraised monthly. The bank has above N100 million which was required by the Nigeria Deposit Insurance Corporation (NDIC) Act 2006.”

Some finance
experts have stated that Nigeria, contrary to general opinion, is in
fact a highly under borrowed economy, and needs to venture into
constructive borrowing for the right reasons.

“If we had a
purposeful government that actually wants to address infrastructural
displacement, then they must borrow” Ayo Teriba, managing director,
Economic Associate, stated at the firm’s 3rd quarter Economic
Assessment, held in Lagos on Tuesday.

Nigeria’s debt
profile rose in the 80’s to 160 percent of the nation’s real GDP,
before it finally fell to less than 20 percent in 2006.

“Right now, we are
not borrowing to invest; we are borrowing to pay pension allowances, to
get voters register and the likes. It shows the lack of vision on the
part of the nation’s leadership,” Mr. Teriba said, adding that though
United States remain the largest borrowing country in the world, all
its debts are domestic, because the people have confidence in their
government.

Nigeria’s external
debt rose in the mid 80’s because of the devaluation of the exchange
rate. In the process, the non public sector that had borrowed the
government funds lost value of their funds, which in turn led them to
lose confidence in borrowing government funds.

Judicious use of funds

Sunday Salako, a
member of the National Economic Management Team (NEMT), said the issue
is not about if the nation was over or under borrowed, but what the
borrowed funds are actually being used for.

“The question is
how are these funds being utilised? The issue is in the last four
years, how many roads have been constructed? How many roads have been
repaired? You can borrow money if there are issues you have that need
to be addressed with the borrowed funds, but not in a situation where
there is nothing tangible that is ready to be addressed.

“Look at South
Africa. Do you know how much they borrowed during the World Cup period,
but the result is evident, you can see it, not the type that you would
only read in papers and would not see physically. Yes, borrowing is
good if it is used to instigate economic activities, such as building
good roads, transportation, and power. But when these do not exist,
what then are we saying? No major road has been constructed in the last
four years or even more,” Mr. Salako said.

Last month, the
Debt Management Office (DMO) said it had pegged borrowing next year to
$7.1 billion, in a bid to control public borrowing and keep Nigeria’s
debt within sustainable porch.

The office, in a
report, said that the Net Present Value (NPV) of the country’s debt,
currently at 16.2 percent of gross domestic product, would crash to
about 2.2 percent, by 2020 and 0.9 percent by 2029, if effective debt
management practices are put in place.

Abraham Nwankwo,
director general of DMO, said with this forecast, total public debt is
expected to grow from $31.4 billion presently to about $38.5 billion
next year, to be sourced from both domestic and external institutions
in a 60:40 proportion respectively, in line with last year’s analysis.

The marginal gains
in market capitalisation recorded on Tuesday at the Nigerian Stock
Exchange (NSE), continued at the close of Wednesday’s trading as 1.09
per cent recovery was made.

The NSE market
capitalisation closed yesterday at N5.556 trillion from Tuesday’s
figures of N5.495 trillion, reflecting a N60.116 billion gain. The
market had gained N5.291 billion or 0.1 per cent on Tuesday.

The All-Share Index
also gained 1.09 per cent or 245.34 units on Wednesday, up from
22,429.09 basis points to close at 22,674.43.

Analysts at
Resource Cap, a portfolio management firm, said, “The market is
recording gains, even though marginal, after six days of bearish
(downward) performances because some portfolio managers are gradually
returning to invest in some blue chips equities.”

However, they said
the sustainability of the current positive trend remains uncertain as
investors’ confidence in the market, generally, is still on the low ebb.

Most active subsectors

The Banking
subsector, yesterday, led on the most active subsector table with
151.550 million shares valued at N1.405 billion. The volume in the
subsector was driven by shares of Guaranty Trust Bank, First Bank,
Access Bank, Zenith Bank, and Skye Bank. The five banks were also the
most traded stocks on Wednesday.

The Insurance
subsector followed in the activity chart with 30.773 million shares
worth N23.052 million. The volume in this subsector was largely boosted
by shares of Intercontinental Wapic Insurance, Aiico Insurance, and
Continental Reinsurance.

The food/beverages
subsector was third in the chart with investors exchanging 6.598
million shares worth N82.202 million. Dangote Sugar Refinery, Dangote
Flour Mills, and Tantalizers drove the subsector’ volume.

Gainers increase

The number of
stocks that gained at the close of trading session on Wednesday closed
higher at 40, as against 20 stocks recorded previous day while losers
closed lower at 18, compared with the 35 recorded on Tuesday.

Oando Oil and
Cadbury Nigeria topped the price gainers’ chart with an increase of
N2.76 and N1.15 on their opening prices of N55.50 and N23.02 per share
respectively. Unilever Nigeria and Nigerian Breweries followed in the
chart with an increase of N1.10 and N1.03, to close at N24.20 and
N71.03 per share.

On the flip side,
Ashaka Cement and Chellaram topped the chart with a decrease of 66 kobo
and 42 kobo, to close at N21.00 and N8.08 per share. Julius Berger and
First City Monument Bank followed on the list with a decrease of 40
kobo and 28 kobo respectively, on their opening prices of N8.06 and
N5.75 per share.

At the NSE floor
yesterday, Chams released its audited report for the year ended
December 2009. The company posted a negative turnover of 58.81 per cent
and negative profit after tax of 1,588.43 per cent.

Ikeja Hotels, in
its first quarter unaudited results for the year, recorded turnover
growth by 5.20 per cent and negative profit after tax of 12.35 per
cent. The company, in its second quarter results, also recorded
turnover growth by 8.04 per cent and positive profit after tax of 44.73
per cent.

The
World Bank said its support to Nigeria in the wake of the global
financial crisis has enabled the country to survive the turbulence of
the period.

In a statement on
the bank’s website, the international financial institution affirms
that its support to Nigeria’s ongoing economic reforms has helped to
reduce the negative effects of the crisis.

The World Bank
claimed the support, under the aegis of International Development
Association (IDA), has helped Nigeria address key financial
transparency issues that would buffer the country from future shock.
The IDA, formed in 1960, is part of the World Bank that helps the
world’s poorest countries.

“By providing the
first budget support to Nigeria in 30 years, the International
Development Association was able to help the government arrest the
slide in market confidence,” the report added.

The IDA operation
provides budgetary support to the Nigerian government to offset the
fiscal impact of the after effects of the global financial crisis. It
also supports the government in maintaining its current economic reform
path in the financial sector, fiscal policy, management, and governance.

Monetary support

“A $500 million
development policy credit from IDA helped provide fiscal space at a
time when government’s budget shortfall and borrowing requirement
increased dramatically, primarily as a result of the global financial
crisis and the concomitant fall in oil prices,” said the IDA statement.

It added that the
IDA credit potentially prevented a broader collapse of the banking
system in Nigeria. The Central Bank of Nigeria (CBN) last year injected
N620 billion into eight banks in the wake of the global financial
crisis to save the financial institutions from imminent collapse.

Ismail Radwan, a
senior economist with the World Bank, said the amount of credit needed
to take Nigeria into the top 20 economies by the year 2020 would have
to be generated internally.

Mr. Radwan based
his optimism on the five pillars of ongoing reforms in the financial
sector. These are improvement in banking supervision; improved credit
information; conventional banks diversifying by introducing new
products; credit guarantee schemes; and business development services
to scale up business training for entrepreneurs.

He said the World
Bank was convinced that the intervention by the Central Bank in the
banking sector last year was necessary in order to save an already bad
situation and to create a platform for banks to be willing to lend to
the real sector.

“Nigeria is a land
of tremendous opportunities. We have all sort of people wanting to come
to Nigeria to make money, and yet Nigerian banks don’t seem to see all
the opportunities in this country,” Mr. Ridwan said.

World Bank on Nigeria

Minister of
finance, Olusegun Aganga, said recently that the World Bank’s
impression about Nigeria’s economic development was commendable. Mr.
Aganga said based on the findings of the Bretton Woods institution,
Nigeria was making good progress compared to other emerging economies.

“The World Bank
gave an independent assessment about where we are, whether we are on
the right track or not, and where the economy is today. We find some
things very interesting in their presentation,” he said.

He added that government was prepared to partner with the private sector in order to drive economic growth.

The IDA said from
its intervention in Nigeria, it was able to identify a set of medium
term actions required to achieve regulatory reform in banking,
pensions, insurance, and capital markets sectors.

These include the
adoption of International Financial Reporting Standards (IFRS),
implementation of risk-based banking supervision, improving collateral
and land registries, and strengthening and enforcing creditor rights.

Many depositors
yesterday thronged branches of some microfinance banks (MFBs) in Abuja
in the wake of last weekend’s decision of the Central Bank of Nigeria
(CBN) to wield the big stick against erring operators.

The Central Bank,
through its deputy governor, Financial Systems Stability (FSS),
Kingsley Moghalu, had announced the immediate revocation of the
operational licences and closure of 224 banks declared either
“terminally distressed” or “technically insolvent.”

Mr. Moghalu, who
said the affected banks failed a recent target examination administered
in conjunction with the Nigeria Deposit Insurance Corporation (NDIC)
for the 820 registered MFBs in the country, to determine their ability
to meet matured obligations to depositors, did not, however, name the
other 596 that were adjudged successful.

About 62 of the
sanctioned MFBs are in Lagos; 17 in Anambra; 15 in Rivers; 13 each in
Delta and Imo; 12 in Ogun; 10 in both Abia and Edo; 5 in Enugu; 7 each
in FCT and Osun; 8 each in Oyo, Kaduna, and Kogi; 4 in Ondo; 3 in Akwa
Ibom and Ekiti; 2 each in Cross River, Benue, Niger, Kebbi, Plateau,
and Bayelsa; one each in Adamawa, Bauchi, Sokoto, Jigawa, Taraba, and
Kwara.

The Central Bank’s
decision not to disclose the MFBs in good standing across the country,
ostensibly created panic among the people, who were anxious to know the
true standing of their various bankers.

‘Don’t want to take chances’

During a visit to
one of the MFBs located in the Garki area of Abuja, some of the
depositors interviewed said they would not want to take chances with
their funds.

It was gathered
that the bulk of those who thronged their various banks were more
anxious to get as much as they could from their accounts to forestall a
repeat of the experience with the distressed commercial banks two years
ago.

“As early as 8 a.m.
today (Monday), we have been inundated with several of our customers
who turned up to demand withdrawals from their accounts, apparently in
panic response to the decision of the CBN to announce the closure of
some of the microfinance banks”, one of the clerks said.

“We have not been
able to do anything else than attend to customers who have come to
withdraw money, despite notices that we are not affected,” she added.

Head,
communications, of the CBN, Mohammed Abdullahi, in a text message
response said yesterday that the bank was not considering the
publication of the names of the successful MFBs, to reassure depositors.

“Any depositor who
has any doubt whether his or her bank is affected should go to where he
or she has the account to confirm. If the names of the banks that have
been sanctioned have been published and people claim they do not see,
what is the guarantee that they would see if the list of the successful
ones are published,” Mr Abdullahi asked.

Meanwhile, the CBN
has indicated that it is not considering outsourcing the regulation of
the microfinance banks, pointing out that though the challenge of
monitoring the operations of almost 900 MFBs in the country may appear
almost beyond its capacity, the function would remain within its
internal structure.

Nigeria needs a minimum of 150,000 megawatts of electricity in
order to maximise productivity of the entire economy.

Toyin Dawod, managing partner, Capital Investment Group, a
California, United States-based diversified investment company, said to achieve
this, the country would need to localise the generation of electricity to make
it more efficient.

Mr. Dawood said the standard in the world is one megawatt per
thousand population. “And Nigeria has 150 million people,” he said in an email
response to enquiries.

He added that the reason Nigeria was not working is because all
power is concentrated in the federal government, instead of giving autonomy to
the states, local authorities, the judiciary, the legislature, and other
institutions.

“Our due diligence also tells us that the past attempts at
resolving the power problems for Nigeria have not worked because we put
emphasis on centralised power generation, instead of embracing distributive
generation,” Mr. Dawood said.

Policy change

He said there was need for a policy change that would transfer
the authority to generate power to each state and locality, because the local
governments can do a better job of providing for their own people under proper
supervision of the federal government.

President Goodluck Jonathan, last month, launched the power
reform agenda, which includes giving the private sector more participation in
the generation and distribution of power. This was followed with the
inauguration of a new board of the National Electricity Regulatory Commission
(NERC) that would oversee the activities of operators in the power sector.

Barth Nnaji, the chairman of the presidential task force on
power, said recently that Nigeria would require about $5 billion annually over
the next 10 years in order to achieve stable power supply.

Mr. Nnaji said the bulk of this amount would have to come from
the private sector. He explained that the country was going to create an
enabling environment for private participation in a sector that has been solely
dominated by the government over the years.

Mr. Dawod is, however, skeptical about the preparedness of
government to attract and retain foreign private investors in the sector.

“The federal government is trying to solve everyone’s problem
when it can’t even solve its own problem. The problem with our government is
that they believe that Nigerians are so dumb. I believe different. I believe
that individual Nigerians are smart enough to solve their own problems, if only
the government will leave them alone,” he said.

He said the strategy of his firm was to build power plants for
Nigerians, create employment for Nigerians, and transfer technology and
management to Nigerians. His company, he said, was already involved in building
power plants in America and other parts of the world.

“I am an entrepreneur. My job is to bring the factors of
production together and create a viable business. Our plan can create a minimum
of 40,000 jobs over the next two years and a multiplier effect of another
400,000 jobs,” Mr. Dawood further said.

Stymied growth

According to him, Nigeria is yet to reach its full potential due
to the shortfall in power supply. “Our country is being stymied by lack of
vision on the part of the so called leaders. The government is happy to
announce to the world that Nigeria recorded a growth of 7.9% so far this year.
Can you imagine what our growth will be if we have 24/7 electricity?”

He said with optimum electricity supply, Nigeria is capable of
achieving 16 percent growth in GDP, which would translate to additional $36
billion in GDP output.

“Shouldn’t we then make power generation a priority, including
declaring a state of emergency to generate power as fast as we can? That is
what our plan calls for,” he said.