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Shareholders are
split over plans by the Central Bank (CBN) to sell some banks that were
bailed out last year. The banks are Intercontinental, Oceanic, Finbank,
Union Bank, Afribank, Bank PHB, and Spring.

After several
months of negotiation, Lamido Sanusi, the Central Bank governor, said
on CNBC Africa last week, that bids have been received for the affected
banks from two foreign institutions and some local banks.

Shareholders agree that the Central Bank has no right to sell the banks, but for different reasons.

Timothy Adesiyan,
president of the National Shareholders Solidarity Association, a
shareholder group, said the Central Bank is not selling the banks
because it has no right to do so. “It is recapitalisation, not sale,”
Mr. Adesiyan said.

“It is only when
the shareholders are not able to recapitalise that the CBN can
liquidate. All the Central Bank wants to do is give out some percentage
to core investors, who will come in subject to the approval of
shareholders.”

He said the CBN was
doing the right thing to ensure that the banks do not go under. When
told that the entrance of core investors would change the ownership
structure of the banks, he said it did not amount to outright sale.

“When Actis went
into UAC as core investor, of course the ownership structure changed
but the company was better for it. What we want to change is the
recklessness with which the former directors were managing the banks,”
he said.

Riding roughshod

Boniface Okezie,
president of the Progressive Shareholders Association, another
shareholder group, said the Central Bank’s insistence on handing the
banks over to a new group of owners was in the manner of riding
roughshod over other interests.

“We have not struck
any balance. The CBN governor’s original statement was that the press
was misquoting him; that he never said he would sell the banks. What we
are saying is that the management appointed by CBN cannot midwife the
handover of the banks. Up till now, the Central Bank has not told us
how much is required to recapitalise each bank,” he said.

Mr. Okezie said
there is already a caveat obtained from courts in Lagos, Abuja, and
Ibadan warning investors to beware of taking interest in any of the
banks. “Even the local banks that are showing interest, how many of
them are sound? How much dividend are they paying their shareholders
now for them to muster enough resources to take over the banks?”

He said the Asset
Management Corporation of Nigeria (AMCON) Bill was unfairly lopsided in
favour of the Central Bank to take over troubled banks.

Timely intervention

Godwin Anono,
chairman of Nigeria Professional Shareholders Association said the CBN
action was timely and was intended to save the banking industry from
imminent collapse. Mr. Anono claimed that many of the shareholders that
are fighting against the sale of the banks were merely fighting for
their own selfish interest.

“Go to the register
of members, how many shares do they actually own in these banks? They
are the ones who were conniving with the sacked management who were
mismanaging the banks. Let these banks be taken over,” he said.

“Shareholders fund, depositors funds are wiped out once CBN calls back its funds.”

Mohammed Abdullahi,
CBN head of corporate affairs, said even though new investors will
alter the ownership structure of the banks, the move was in the overall
interest of the institutions. “The CBN is not selling. We are merely
inviting new investors. If a bank issues IPO, (initial public offering)
does that mean it is selling the bank?”

Mr. Abdullahi said shareholders who were not satisfied with the CBN decision were free to seek legal redress.

Ghana is on track
to pump its first barrel of crude oil in December from total reserves
put at 1.6 billion barrels, vice president, John Dramani Mahama, said
on Tuesday.

The comments
reaffirmed its push to join the league of oil producers this year, and
the reserve estimate breaks from previous, more cautious forecasts, to
concur with a top-end figure given by operator, Tullow Oil Plc.

“In December this
year, Ghana will join the league of petroleum-producing nations as
commercial production begins in the Jubilee field,” Mahama told a
conference in Accra.

“Conservative
appraisal of the wells and available statistics based on credible
scientific findings indicate that the country holds potentially about
1.6 billion barrels of crude oil,” he added, updating previous official
forecasts of merely 800 million barrels – widely considered as overly
conservative.

Field operator,
Tullow, puts the upside potential of the core Jubilee Unit Area at one
billion barrels of crude, with the southeast section under appraisal at
a further 500 million.

Mahama said Ghana
could expect oil revenues on average to contribute seven percentage
points to annual gross domestic product, but warned it would not in
itself transform the fortunes of the country, a third of whose people
live in poverty.

“Ghana cannot see
the oil industry as a miracle wand to solve all problems. Rather, the
country can prudently use this resource to achieve significant economic
turn around,” he said, noting plans to base a nascent petrochemicals
sector on gas from the field.

Mahama stressed the
importance of ensuring local employment in the oil business, which has
typically been more capital than labour-intensive, and said oil revenue
management legislation aimed at ensuring transparency was before
parliament.

The field is due to
take four to six months to reach planned output of 120,000 barrels per
day – a level it will maintain for three years, Ghana’s energy minister
told Reuters in an interview last month.

Kosmos’ stake

Oil firm, Kosmos
Energy, said it had $350 million of extra credit to develop its assets
in Ghana’s Jubilee field and was committed to staying in Ghana, a week
after it said it cancelled an accord to sell its stake to ExxonMobil.

“The funds will
support Kosmos’ share of Jubilee Field phase one development, appraisal
of additional discoveries, and ongoing exploration activities on the
West Cape Three Points Block and adjacent Deepwater Tano Block offshore
Ghana,” it said in a statement issued in Dallas.

Ghana’s state
petroleum company, GNPC, a fierce opponent of the sale of the Kosmos
stake to ExxonMobil for what sources close to the deal put at $4
billion, last week reiterated its interest in the Kosmos assets.

But the Kosmos
statement noted the new funding was part of its plan to build on the
value of its assets and repeated that “the company will remain in
Ghana.”

Kosmos is backed by
private equity firms, Warburg Pincus and Blackstone Group LP. It is the
operator of the West Cape Three Points Block in which it holds a 30.875
percent interest and holds an 18 percent interest in the Deepwater Tano
block.

Trading
performances at the Nigerian Stock Exchange (NSE) got poorer after
Tuesday’s proceedings as investors record more losses, making it a
total loss of over N1 trillion since trading began this year.

The NSE market
capitalisation, which opened the year at N4.989 trillion, had
appreciated to N6.796 trillion during the second quarter of the year,
before it began depreciating at the start of the third quarter.

At the close of
Tuesday’s trading, the Exchange market capitalisation further plunged
to N5.992 trillion, after opening the day at N6.108 trillion,
reflecting 1.90 percent decline or over N116 billion losses. Meanwhile,
about N32 billion losses was recorded on Monday. The NSE All-Share
Index also shed 1.90 percent or a loss of 473.04 units on the previous
day’s figures of 24,976.65 basis points, to close at 24,503.61.

Some analysts said
that the negative market sentiments persist as a result of the gradual
fall of investors’ appetite for equities, which resulted to cut down in
investment activities for safety.

A chief executive
officer of a stockbroker firm, who pleaded anonymity, said, “We (stock
broking firms) are trading and treading cautiously because we are not
sure of what’s going to happen next in the market.”

He said until
Emmanuel Ikazoboh, the interim administrator of the NSE, achieves his
primary assignment of giving the Exchange a new head, “investor
confidence may not improve.”

Also, finance
analysts at Proshare Nigeria Limited said the present negative
performance serves as indications of continued reactions from the
investing public to the crisis, which has compounded the spate of
uncertainty in the market.

“It should be
apparent to all and sundry at this time that the present crisis, though
may be necessary for the paradigm shift needed for the kind of market
we deserve, the manner and how it is being handled may leave bitter
experiences for investors, at least in the short run,” they said.

Market performance

Meanwhile, the
number of gainers at the close of yesterday’s trading closed at 16,
compared with the 27 gainers recorded on Monday, while losers closed
higher at 57, compared with the 38 losers recorded the previous trading
day.

Nigerian Bottling
Company topped the gainers chart for the day with five percent price
appreciation, while Sterling Bank and Bagco topped the losers chart for
the day with five percent depreciations.

The banking
subsector led the market transaction volume on Tuesday with 158.783
million units valued at N1.275 billion, exchanged in 3,837 deals.
Transactions in the shares of Zenith Bank, Fidelity Bank, First Bank,
and UBA boosted the volume traded in the sector. The total volume of
82.807 million units valued at N774.595 million traded in the shares of
the four banks accounted for 52.15 percent of the entire sector volume.

The downward trend
also dominated trading activities in the banking sector yesterday as
the sector recorded two gainers to 18 losers, as against the four
gainers to 13 losers recorded the previous day.

At the Exchange’s floor yesterday, Airline Services & Logistics,
in its second quarter financial result of 2010, recorded 8.48 percent
decline in gross earnings and a 95.02 percent decline in profit after
tax.

Some
telecommunications companies in the country are missing out on their
income due to the activities of illegal software pirates. A major hub
of these pirates is the Computer Village at Otigba, Ikeja, in Lagos.
Welcome to the place where young men and some boys sell illegal
Internet connections by bypassing the Internet service providers.

A young man,
Taofik, said that selling illegal Internet connection was to enable
consumers spend less than what service providers charge.

“All I need is for
you to bring your laptop and any of the telecom operators modem. If you
don’t have, we can buy it around here. Then I would add software that
can allow you browse for two months, if you pay well,” said Mr. Taofik.

“I charge N4, 000
to install the connection for you, and it would bypass the service
provider and they would not know or disconnect your Internet
connection. It does not affect the modem; you can always pay to your
service provider anytime after the software I put in for you stops,”
added Mr. Taofik.

Adeola, who
identified himself as Mr. Taofik’s brother and partner in the business,
said that the selling point of their business is the rate and the
duration of their service.

“Let me ask, which
do you prefer? To pay N10, 000 for 30 days or to pay N4, 000 for up to
60 days. Now, you see the difference is clear and when you come back to
re-connect after the two months, you can give us less amount, like N1,
000”, said Mr. Adeola.

Cheapness does not justify illegality

However, Jimson
Olufuye, the president of Information Technology Association of Nigeria
(ITAN), said in a telephone interview that cheap rates or long duration
for illegal service does not justify the illegal business going on at
the Computer Village.

“The fact that a
rate is cheap or that the duration for the service is long does not
justify an illegal business,” Mr. Olufuye said.

“It does not help
the legitimate business owners because they have their business plan
and have invested a lot of money into their business.

“ITAN opposes all
forms of piracy, as that is a breach of intellectual property (IP) of
the business owners and it affects their business growth and the
economy, as it does not create room for other investors to come into
that business,” he said.

In an email on a
separate story, Serge Ntamack, IP manager for Microsoft Nigeria, had
said, “The federal government needs to set a vision to enable a
business-friendly environment, make IP a top policy priority, empower
the agency in charge of IP laws, Nigerian Copyright Commission (NCC),
increase penalties for IP-related offences, enforce IP laws, be vocal
at highest political level against piracy (awareness), commit
government funds to fight all sort of piracy (books, music, film, cable
TV, software), regulate the market, and close down piracy hot spots
across the country.”

A report from
Business Software Alliance/IDC Global Software Piracy Study this year
revealed that Nigeria lost $156 million in 2009 to software piracy.

Mr. Olufuye
explained that it is time for government and the copyright commission
to act fast as piracy is growing very fast in Nigeria.

“This issue needs to be addressed faster than we have done before.
The government and the copyright commission have to work harder,” he
said.

Burundi’s
year-on-year inflation rose to 9.7 percent in June, from 8.4 percent in
May, driven by housing, water and energy costs, the country’s
statistics board said on Tuesday.

Prices of housing,
water and energy jumped to 18.7 percent over the 12 months ending in
June, from 13.4 percent in May, a report by the Institute of Economic
Studies and Statistics said.

The annual
inflation rate in the landlocked country hit a record of 24.5 percent
in 2008, from 8.3 percent in 2007, due to high world fuel and commodity
prices. It dropped to 10.5 percent in 2009, helped by a fall in prices
of essential commodities.

The International
Monetary Fund (IMF) predicts Burundi’s economy will grow by 3.9 percent
this year, up from 3.5 percent in 2009, based on expected strong
production of coffee.

The proposed
Badagry Historical and Monument Resort, located at Gberefun, is to gulp
N577.6 billion. It would be located at “Point of No Return” – a site on
Gberefun Island where slave ships loaded their human cargo for the
shipment to foreign countries.

The chairman of
Badagry local government in Lagos State, Mr Moses Husitode, disclosed
this in Badagry, on Tuesday, at a lecture to mark the International Day
of Slave Trade and its Abolition.

The News Agency of
Nigeria (NAN) reports that the United Nations Educational, Scientific
and Cultural Organisation (UNESCO), set aside August 23 of every year
to mark the International Day of Slave Trade and its Abolition.

The week long
event, which started on Sunday with an inter-denominational service,
will end on Friday at the Old Slave Trade Port, located at the Badagry
Marina. Husitode said the project would be executed by the friends of
the late pop star, Michael Jackson – Motherland Group in the U.S.

“It gladdens my
heart to tell you that 11 years ago, Badagry LGA staged the
International Day of Slave Trade and its Abolition …this has come
with huge rewards. For instance, the Motherland Group is set to commit
N577.6 billion to the Historical and Monument Resort Project in
Badagry,” he said.

Eugene Juwah, the
Executive Vice Chairman, Nigerian Communications Commission (NCC), has
said that the agency will ensure compliance with regulations that will
favour tariff reduction in telephone calls. Mr Juwah spoke in Abuja on
Tuesday, when the leadership of the Association of Licensed Telecom
Operators of Nigeria visited him.

The News Agency of
Nigeria reports that Zain had on Monday announced a reduction in tariff
on calls within and outside its network. Mr Juwah said that the
commission had set up a task force to work out short, medium and long
term measures aimed at tariff reduction. “In the course of their work,
we will be interacting with the service providers at various levels,”
he said. “I want to use this opportunity to seek your cooperation in
bringing a lasting solution to the issue of quality service in the
various networks.”

The NCC executive vice chairman said that the commission would
continue to foster competition by encouraging new entrants into the
market at all times. “We also expect the operators to be responsive to
their subscribers, without the subscribers, no operator will exist and
sustain it services,” he said. Earlier, Gbenga Adebayo, the chairman of
the association, said that prices and cost of services were not
determined by regulatory and policy intervention, but by market forces.
“If you charge higher than the market can accommodate you will be out
of business,” he said. “Price reduction and prices are strictly
commercial and they are driven by market forces.”

Growth in South
Africa’s economy slowed more than expected in the second quarter of
2010, as mining contracted while expansion in manufacturing was lower
than before, backing the case for another interest rate cut.

Statistics South
Africa said the economy grew by 3.2 percent in Q2 on a seasonally
adjusted and annualised basis, compared to 4.6 percent rise in Q1 and
below the median forecast of 3.6 percent, from a Reuters poll of 16
economists last week.

The economy
expanded by 3.0 percent year-on-year unadjusted, compared to 1.6
percent in the first quarter of 2010, against predictions of a 3.1
percent rise.

Both the central
bank and the National Treasury had predicted a moderation in Q2 growth
and finance minister, Pravin Gordhan, said last week risks for global
growth had risen sharply and that this, coupled with increased
turbulence in financial markets, would see growth of at least 3 percent
in Q2.

“I think (the
quarter-on-quarter number) is a bit disappointing. It does suggest that
there has been some loss of momentum in the economy,” said Nedbank
chief economist, Dennis Dykes.

He said this could
prompt the Reserve Bank to cut rates further, adding to 550 basis
points of reductions between December 2008 and March this year.

A
spokesperson of the Nigeria Communication Commission (NCC) has said
that the commission is not involved in granting tax waivers to
telecommunication companies.

The
House of Representatives had accused the commission of helping to
arrange dubious tax waivers for telecommunication companies following a
review of the Auditor General’s reports between 2003 and 2005 asking
the Economic and Financial Crimes Commission (EFCC) to investigate the
waivers.

Reuben
Muoka, NCC’s spokesperson, said in a telephone interview, that, “Those
associating the commission with tax holiday to the telecom companies
are totally misinformed. The commission does not grant tax waivers for
telecom companies.

“Those
responsible for recommendation of tax exemptions are the Nigeria
Investment Promotion Commission (NIPC), Federal Ministry of Finance,
Federal Ministry of Commerce, National Planning, and other government
agencies.”

Mr. Muoka further explained that tax waivers are not only in the telecom sector, but in all other sectors of the economy.

“The
essence of the tax holiday to pioneers was to explore the sector and
the tax waivers given to the telecom companies were fully justified
because they met the criteria for such holiday,” he said.

Meanwhile,
Femi Babafemi, EFCC spokesperson, said that investigations were ongoing
on the matter. “I am aware that we been investigating the NCC over the
tax waivers and in relation to that we invited the former executive
vice-chairman, Ernest Ndukwe, for questioning in 2009 and the
investigation is still on.”

Encouraging first timers

Also
speaking, Kenneth Ugbechie, the secretary of Africa Telecoms
Development Initiative, a non-governmental organisation, said, “When
the telecom companies were given licences in 2001, they were given tax
waiver, which is the same principle all over the world for people that
are investing into business venture, which is called tax wavier or tax
holiday.

“It
is to encourage first timers and that was what the federal government
did in the case of the telecoms companies. But what people are saying
now is that the telecom companies ought not to have been given waiver
since those companies were declaring profit from day one.”

Mr.
Ugbechie explained that the reason why the telecom companies have been
making profit in their business is because they have done well.

“I
think that is illogical to say that they should not have been given tax
waiver. They started making profit because they did their job well.
They deserve to be given tax wavier because as at the time they came
into the country, the sector was poor and nobody was willing to invest
in the sector,” added Mr. Ugbechie.

Mr.
Muoka said, “The dividends of that tax holiday are very visible in all
sectors of the economy from the banking sector, labour, and several
business activities that have been generated from telecom sector.”

“The
Gross Domestic Product (GDP) has improved as a result of the telecom
sector and the image of the country within the global community has
gained a lot of mileage as a result of telecom revolution,” Mr. Muoka.

“When something is done well and done rightly, we should not
quarrel with it. The House of Representatives have to be told the truth
and stop chasing shadows,” concluded Mr. Ugbechie.

More than 600
workers at Exxaro’s mineral sands unit in South Africa went on strike
on Monday, a union said, while 1,700 planned to do the same at a Rio
Tinto-BHP Billiton joint venture.

The National Union
of Mineworkers (NUM) said workers at Exxaro’s KwaZulu Natal sand units
were demanding a 14 percent rise in wages. The company has offered an 8
percent increase.

“Our strike is
indefinite. With us, you either deliver on our demands or you go fry
eggs,” Bhekani Ngcobo, the union’s regional coordinator for the
province, said in a statement.

Trevor Arran, the
head of Exxaro’s mineral sands and base metals businesses, said the
company would ask the union to drop its wage demand as it was higher
than the below 8 percent pay settlements at its other units and core
businesses.

“We certainly think it is unrealistic,” Arran said.

Arran said the
strike would not impact Exxaro’s operations as production at the mines
had been suspended before the strike and the company also had enough
stockpile of slag, used to produce titanium dioxide, at the units with
a 200,000 tonnes annual slag output capacity.

Ngcobo said the
union was demanding that Exxaro phases out a certain grade in which
workers’ monthly net pay was 5,800 rand and place them in a grade of
over 7,000 rand.

“We further demand
that the company should ban the usage of labour brokers and offer a
housing allowance of 2,000 rand a month,” Ngcobo said.

NUM also said it
would on Tuesday give 48 hours’ notice to strike at the BHP-Rio Tinto
Richards Bay Minerals joint venture if Rio Tinto did not agree to its
demands by the end of Monday.

The union is demanding a 10 percent pay rise on a one-year deal. Rio Tinto has offered an 8 percent rise on a three-year deal.

The NUM is also demanding a rise in housing allowance to between 4,000 and 6,000 rand, depending on the employee group.

Rio Tinto said it would comment later on the planned strike.

South Africa, the
continent’s biggest economy, has been hit by a wave of strikes and
strike threats in both the private and public sector, which have led to
above-inflation settlements and stoked fears that the cost of living
will rise.

South Africa’s inflation rate slowed to 4.2 percent in June.

Shares in Exxaro were up 1.48 percent at 114.88 rand by 1349 GMT, compared with a 1.83 percent rise on the JSE’s Top-40 Index.