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Some finance
analysts have said that the recent change in leadership of the Nigerian
Stock Exchange (NSE) would bring stability to the market soon, despite
the current unsteady performances at the Exchange.

The NSE measuring
parameters, which recorded gains in three of the five trading days last
week, depreciated at the close of Monday’s trading by 0.51 percent.

Laoye Jaiyeola,
president of the Chartered Institute of Bankers of Nigeria, said the
recent action taken by the Securities and Exchange Commission (SEC) to
regulate the Exchange is similar to that which the Central Bank took
over the banking industry.

“I believe what the
SEC is trying to do is to ensure a strong, stable, and safe capital
market for all investors,” Mr. Jaiyeola said.

He said the regulatory measures the Exchange Commission has taken will soon boost investors’ confidence in the market.

David Adonri, chief
executive officer of Lambert Trust and Securities Company Limited, a
stock broking company, is also optimistic that the market “may firm
stronger as we approach the end of the third quarter.

“The past weeks
have been very turbulent in the market but there is calmness now,” he
said, adding that investors’ confidence is gradually picking up.

Market performance

Meanwhile, at the
close of trading on Monday, the NSE market capitalisation recorded
about N32 billion losses on Friday’s figure of N6.140 trillion, to
close at N6.108 trillion; while the All-Share Index lost 130.21 units
down from 25,106.86 basis points to close at 24,976.65.

A total of 27
stocks appreciated, yesterday, in price while 38 stocks depreciated.
Evans Medicals, Spring Bank, and Northern Nigerian Flourmills topped
the gainers chart for the day with five percent price appreciations.
However, Union Homes topped the losers chart for the day with five
percent depreciation.

The banking sector
led the market transaction volume today with 133.895 million units
valued at N1.001 billion exchanged in 3,000 deals.

Transactions in the
shares of Zenith Bank, UBN, FCMB, and Fidelity Bank boosted the volume
traded in the sector. The total volume of 78.92 million units valued at
N534.637 million traded in the shares of the four banks accounted for
58.40 percent of the entire sector volume and their value represented
53.39 percent of the sector’s value.

The downward trend dominated trading activities in the banking
sector on Monday as the sector records four gainers to 13 losers.At the
Exchange’s floor yesterday, Goldlink Insurance, in its second quarter
financial result of 2010, recorded 10 percent growth in gross earnings
and a 22.11 percent decline in profit after tax.

If you are one of
those always-wanting-to-spend-the-money types who work in the IT
department of a multinational that has billions to spend on IT, you can
stop reading now. This article is not targeted at you.

But if, on the
other hand, you belong to one of the small or medium enterprises that
constantly need to justify cost, the question must have arisen before:
where can I get XYZ program that will not cost an arm and a leg? Truth
is that, in Nigeria, some just plunk down to Otigba and buy the
software for N300.

But that is piracy, deemed to be a crime, and a serious business cannot afford to take that route any more.

But before you pay
another kobo to Microsoft or another software publisher, consider
whether you can use a free or open-source application instead. Just
about every commercial application you use on a daily basis has an open
source alternative.

The most well known
open source software is the Operating System which serves as an
alternative to the almost ubiquitous Microsoft Windows operating system, Linux. However,
because of the fact that just about every computer you buy from a
vendor already has Windows pre-installed, there is no need to switch
from that. You have already paid for it when buying the computer, and I
am not quite sure that PC Outlet or any of the other major computer
vendors in Nigeria would refund the N12k plus that a Windows license
costs nowadays. In any event, there are a lot of other applications
that need to be installed, and paid for.

Whether you are
looking out for your small business or personal computing needs, the
open source community delivers excellent applications that are
completely free of charge. In most cases all you need is a working
Internet connection to download the software and you are home free.
Using these applications can save you loads of money. The poster child
for free and open software in the Windows world for the past few years
has been Mozilla’s popular browser, Firefox. Ahh, those young ones who
spend a lot of time on Facebook must be nodding their heads in
agreement right now. No other open-source software has taken the world
of software by as much storm as the little browser, and none has been
as successful in winning converts. But in an office environment, a
browser is not the most important thing so let us start from the basics.

Anti virus

In my experience,
this is the single most important piece of software that you need to
have on your computer, and quite often, the most overlooked. A lot of
people on popping their new computer out of the packaging take a look
at the Norton or McAfee that ship with the computers, and believe that
they have protection.

Rain check here,
these factory installed anti-viruses while having their own merit have
one fatal flaw; they are time-bound. In almost no time at all, you’ll
find that your copy of Norton has expired, and to continue to receive
protection from software you have to subscribe, for a fee. To get
around this,I advice
uninstalling those software and getting either AVG or Avast
anti-viruses. They are very good programs (AVG has been ranked highest
at Cnet.com forever now). AVG has an integrated spyware suite. Another
program that is fit for purpose is Google’s anti-spyware offering.

Office and Productivity Software

The next thing you
will need in your office is your productivity software, and this is
where Microsoft’s Office Suite is king. But the question is can you
afford the licence to buy six copies of Office for your computers? No
worry needed here-OpenOffice.org (OOo) has been around for many years
as a feasible substitution for just about any operating system. It
includes Writer for word processing, Calc for spreadsheets, Impress for
presentations, Draw for illustrating, and Base for databases.

OOo is pretty much
a copy of MS Office 2003, with a few improvements such as support for
Microsoft’s OOXML format that later versions of MS Office default to.

However, unlike MS
Office, OOo does not include an email client (Outlook). For an email
client like Outlook, you can download and use Mozilla Thunderbird. You
may even consider Mozilla’s SeaMonkey, an all-in-one Internet suite
which includes a browser, email and newsgroup client, HTML authoring
program (Dreamweaver), and chat client.

Scribus is an open
source substitute for Microsoft’s Publisher. It does offer page layout
control and provides professional publishing features, such as CMYK
color, separations, ICC color management, and PDF creation. Some people actually use it as a replacement for CorelDraw.

Photo/Video Editing

For an open source
alternative to Adobe Illustrator, there exists Inkscape. It’s a vector
graphics editor similar to Illustrator and CorelDraw. For those who are
Adobe Photoshop users, there is the GIMP.

Kino can substitute
for the video editing application Adobe Premiere, while PiTiVi is an
excellent video editing program for those who just want to do the
simple stuff.

Again for amateur video producers, try Avidemux. It still supports editing AVI, MPEG files, MP4, and ASF using a variety of codecs.

Money Management and Accounting

My personal
favourite in this category is Eqonomize, but I’m not quite sure there
is a Windows version. Grisbi is more for simple personal accounting,
suitable for the family budget, similar to the commercial products MS
Money and Quicken.

GnuCash is a
personal and small-business financial accounting application. It offers
more-advanced features, as in PeachTree and QuickBooks. GnuCash
supports import from both Microsoft Money and Quicken. Also it can
communicate with your bank accounts, though this feature is hardly used
in Nigeria.

With eight months
to the deadline, banks are already gearing up for compliance with the
new uniform accounting system recently introduced by the Central Bank
of Nigeria (CBN).

In a circular
issued to the 24 commercial banks by the banking and payment system
department of the CBN and dated July 14, the banks were given a nine
month compliance period to migrate to the new system, which ends on
April 2011.

To be known as the
Nigerian Uniform Bank Account Number (NUBAN) system, the aim is to
standardise account numbers in banks in order to eliminate delays that
come with filling wrong account numbers for clearance.

Under the new
format, every bank is required to create and maintain a NUBAN code for
every customer account in its customer records database, which should
be the only account number to be used at all interfaces with a bank
customer. The Central Bank said the new format is in line with
international best practice and is expected to enhance the e-payment
system.

“We expect every
bank to maintain their present account numbers and use them for their
internal operations only as from the effective date of NUBAN, but every
such account number would have to be mapped to a NUBAN code as an
alternate account number,” the bank said in the circular. The new
number format will comprise 13 digits which includes the three-digit
bank code and a 10-digit NUBAN code.

Banks’ compliance

Moshood Isamotu,
Afribank spokesperson, said the bank had put in place modalities to
meet the deadline. “We have started implementing, even though we have a
nine month period. Our technology platform is flexible and can
accommodate such change,” he said. He added that Afribank would comply
with the CBN directive and begin to issue compliant account numbers to
its customers as soon as possible.

Frank Barde, head
of corporate affairs of Union Bank of Nigeria Plc, said the bank was
still studying the directive and would ensure that its customers are
carried along. “We have nine months to comply. We will look at the
document and follow up as directed by the CBN,” he Barde said.
Intercontinental Bank on its part said the deadline period gives it
enough time to ensure compliance. “We are understudying and looking at
the implementation within the timeline given by the central bank,” said
a source in the bank who spoke off record.

Migration

The Central Bank
said banks are to submit their comprehensive migration plan to the new
system one month from the release of the circular. Compliance
monitoring will commence six months from the release of the circular.
“Any infractions to the dictates and stringent timelines provided in
this document shall attract severe sanctions as may be determined by
the Central Bank of Nigeria from time to time,” the circular stated.

The bank noted that
the upsurge in automated direct credit was as a result of the January
2009 directive that all ministries, departments, and agencies should
replace all forms of cheque payments with electronic payments, hence
the need to adopt a new cheque number system to make clearing and
settlements of cheques less cumbersome.

“As the Automated
Clearing House volume increased, so have complaints of banks and bank
customers resulting from the incidents of abuse of the clearing
system.”

The Central Bank
said the change would enable Nigeria to fully comply with the 10-digit
Account Number structure required by the West Africa Monetary Institute
(WAMI) towards the economic integration of ECOWAS countries.

Trading activities
at the Nigerian Stock Exchange (NSE) were characterised by mixed
performances last week, as market indicators continued their unsteady
movements.

The NSE All-Share
Index, at the close of last week’s trading, appreciated by 122.06 units
or 0.5 per cent to close at 25,106.86 basis points while the market
capitalisation of the 199 First -Tier equities closed higher at N6.14
trillion, after opening the week at 24,984.80 and N6.11 trillion,
respectively. The All-Share Index depreciated by 3 per cent during the
previous week.

All the four
sectorial indices depreciated at the close of trading last week. The
NSE Food/Beverage Index depreciated by 1.45 points or 0.2 per cent to
close at 810.17, the Banking Index depreciated by 1.38 points or 0.35
per cent to close at 372.12, the Insurance Index depreciated by 2.83
points or 1.6 per cent to close at 174.39 and the NSE Oil/Gas Index
depreciated by 5.84 points or 1.56 per cent to close at 370.44.

A total turnover of
1.2 billion shares worth N11.61 billion in 36,855 deals was recorded
last week, in contrast to a total of 1.23 billion shares valued at
N11.3 billion exchanged during the previous week in 33,065 deals.

Most active

The Banking
subsector was the most active during the week, measuring by turnover
volume, with 692.9 million shares worth N5.8 billion exchanged by
investors in 16,423 deals. Volume in the Banking subsector was largely
driven by activity in the shares of First Bank of Nigeria, Zenith Bank,

Fidelity Bank and
Access Bank. Trading in the shares of the four Banks accounted for
319.36 million shares, representing 46.1 per cent and 27.2 per cent of
the subsector’s turnover and total volume traded during the week,
respectively.

The Insurance
subsector, boosted by activity in the shares of AIICO Insurance and
Guaranty Trust Insurance, followed on the week’s activity chart with a
turnover of 96.1million shares valued at N108.3 million in 1,459 deals.
Last week, the Banking subsector led on the activity chart and was
followed by the Construction subsector.

Gainers increase

A total of 38
stocks appreciated in price during the week, higher than the 28 of the
preceding week. Also, as in the preceding week, Northern Nigeria Flour
Mills led on the gainers’ table with a gain of N5.83 to close at N42.84
per share while Nigerian Breweries followed with N4.59 to close at
N72.60 per share.

On the losers’
table, a total of 49 stocks depreciated in price during the week, lower
than the 64 of the preceding week. African Petroleum led on the price
losers’ table, shedding N5.79 to close at N21.20 per share while Flour
Mills of Nigeria followed with a loss of N3.01 to close at N71.00 per
share.

Two equity prices
were adjusted for interim dividend as recommended by the companies’
Board of Directors. Guaranty Trust Bank was adjusted for an interim
dividend of N0.25 per share while Nigerian Aviation Handling Company
was also adjusted for an interim dividend of N0.25 per share.

Bond trading

A turnover of
239.15 million units worth N243.862 billion in 2,890 deals was recorded
last week, in contrast to a total of 166.74 million units valued at
N170.761 billion exchanged in 1,762 deals during the previous week.

The most active
bond, in terms of turnover volume, was the 10.00 per cent FGN July 2030
with a traded volume of 50.45 million units valued at N49.384 billion
in 943 deals. This was followed by 4.00 per cent FGN April 2015 with a
traded volume of 34.5 million units valued at N28.818 billion in 336
deals. Only 18 of the available 37 FGN Bonds were traded during the
week, compared with the 20 in the preceding week.

However, there were
no transactions in the Federal Government Development Stocks, State
Government Bonds and Industrial Loans/Preference Stocks sectors.

“The issue is not about decision to pay or not. The issue is that the corporation is still bleeding as a result of challenges, including subsidies on petroleum products supplies that are not being replenished, making it very difficult for it to meet certain obligations. The truth, as we know in the federal ministry of finance as at today, is that NNPC’s cash flow warrants that we work with them till it is able to stand on its own as a business entity.

“One needs to understand the operations of the NNPC. One cannot be producing a product that costs N60 and be selling at N40, and would not bleed. It does not make sense. I know for a fact that the way NNPC is as at today, they do not have the cash flow to pay the debt.

“That was the immediate past minister of state for finance, Remi Babalola, responding to reporters inquiries last June at the height of the raging controversy about the Nigerian National Petroleum Corporation (NNPC)’s insolvency and its inability to pay the over N450 billion debt to the federation accounts.

Mr. Babalola was not talking as an ordinary folk in the street. Apart from occupying the second highest office in the ministry that superintends over all matter relating to the finances of the Federal Government, he was the chairman of the Federation Accounts Allocation Committee (FAAC).

Membership of the committee is composed of not only the representatives of all revenue agencies in the 36 states of the federation and the Federal Capital Territory (FCT), Abuja, but also their affiliates at the federal level, including the federal ministry of finance, Central Bank of Nigeria (CBN), Federal Inland Revenue Service (FIRS), Office of the Accountant General of the Federation (OAGF), Budget Office of the Federation (BOF), and the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC).

Therefore, there was no doubt that he was talking from a position of strength, considering that the statistics and figures of the daily operations of the state-owned oil company was at his disposal.

NNPC’s group managing director, Austen Oniwon, was to later corroborate Mr. Babalola’s position in his response to a FAAC letter giving his management a final ultimatum to come up with a firm repayment schedule.

In the letter, Mr. Oniwon was unmistaken about the facts of the serious financial difficulties the NNPC was facing, which, he claimed, has not only incapacitated its ability to regularly pay for its daily domestic allocations, but affected its capacity to settle its fuel import bills.

“The corporation is insolvent, as its current liabilities exceeded its current assets by N754 billion, as at December 31, 2008”, he declared, insisting it would be able to pay the N450 billion owed the Federation Account only when the Federal Government has reimbursed the N1.156 trillion it reportedly spent on subsidy expenses incurred for petroleum products supplies and distribution since 2003.

Other outstanding claims in favour of the NNPC, he said, included expenditures on repairing/replacement of vandalized oil industry assets and attendant petroleum products losses; demurrage and cost of holding strategic reserves for petroleum products on behalf of the government; and financial difficulties as a result of disequilibrium between operational costs and actual cash-flow streams.

Mr. Oniwon is also supremely in a position to know the difference between the truth and fallacies about the health of the organisation he presides over. All the over 31 subsidiaries and affiliates of the corporation report directly to his desk on a daily basis, therefore, the truth should not be lost on him.

Are Mr. Babalola and Mr. Oniwon in some sort of games to shield the facts about the financial state of the NNPC? Well, it is difficult for discerning followers of the controversy to conjecture a guess from the blurring façade that mirror available facts.

But, the spontaneous reaction by ministers of information and finance, Dora Akunyili and Olusegun Aganga to the contrary, that the “NNPC is not insolvent, … as a going concern” only aggravated the confusion in the debate in search of the truth.

Who is right between Mr. Babalola and Mr. Oniwon on the one hand, and Mrs. Akunyili and Mr. Aganga on the other? Are there facts available to the latter that the former could not be availed with? Could it be that Mr. Babalola, FAAC, and the NNPC were in some kind of political games to deceive Nigerians on the state of health of the organisation that epitomizes the face and strength of the Nigerian economy? Are Mrs. Akunyili and Mr. Aganga playing the ostrich, by burying their heads in the sands and pretending to demonstrate patriotic flavor by shielding the country from the harsh reality of the truth?

If the NNPC is a flourishing going concern, why is it difficult for it to pay up its debts to the Federation Account? And why is the Federal Government keeping quiet in the face of the obvious constitutional travesty? If the NNPC has been exporting Nigeria’s crude, both during high tide and low price regimes at the international market, and the constitution demands that all earnings from such sales and other activities should first be transmitted into the consolidated revenue account, why is the government tolerating the obvious recalcitrance of the NNPC, by allowing it to withhold such funds for such a long spell of time? Is this loud silence and complacency by government part of the pretentious war against corruption?

Or could Mr. Babalola’s redeployment to the special duties ministry be the price for a sacrificial lamb who dared to speak a damning truth? Whatever are the answers to the above puzzles are only in the womb of time.

With
a population of over 150 million people, Nigeria is a marketers’ dream.
Both local and international companies must look for ways to increase
their market share by employing innovative marketing strategies. For
years, celebrities have thrown their fame and image to support brands
and consumer products and there has been a steady increase of celebrity
endorsement in Nigeria; this is good.

There must be a
mutually beneficial relationship for an endorsement and it should offer
huge possibilities for both entertainers and the companies with whom
they partner. The artist must be able to give the endorsing company the
right exposure to its target segment and in return the artist has an
opportunity to earn money and even greater visibility.

Name and image

The most valuable
asset a celebrity has is his or her name and image. Often artists are
totally consumed by their creativity and ignore the financial value of
their image. By building a strong and exclusive personal brand,
entertainers will be able attract the attention of companies who wish
to have them identify with a product. Such talent can increase
recognition and acceptance of a brand by tapping into the consumers’
passion for the persona and image of our celebrities, which could
translate to a boost in sales.

Once a celebrity’s
fame is firmly entrenched, companies may be willing to invest millions
of Naira to associate that image with their brand. Artists should take
deliberate steps to develop and effectively position a strong and
timeless personal brand to maximise their earnings whilst they are
still in the public consciousness; their image can be used to
supplement and diversify revenue streams. Indeed it is common for a
good part of a star’s wealth to be attributed to sponsorships and
endorsements outside their professional calling.

The impact of
celebrity endorsement on a brand can be significant and many corporate
and product marketers such as Glo, Etisalat, MTN, Guinness, Chivita,
Lux, Onga, GTBank and Lagos State Government have recognised its power.
It is gratifying to see Nigerian movie stars, musicians, comedians, TV,
Radio and sports personalities and other celebrities like Lagbaja,
D’Banj, Tu Face, Asa, Cobhams, Agbani Darego, Oluchi, Joke Silva,
Genevieve, Kate Henshaw-Nuttal, Ali Baba, and Basket Mouth, lending
their images to local and international brands.

The popularity and
success of celebrity endorsement has in other markets prompted stars to
expand their portfolios by launching their own clothing, perfume, and
other brands to keep their names out there and secure their financial
future.

The celebrity’s credibility

Celebrity’s attract
attention, and an artist should be able to convince and connect with
the consumer via credibility. A corporate brand with a core focus will
go out of its way to seek the right celebrity to match the brand as the
core idea of the campaign is as important for the brand as it is for
the celebrity. A good example of a celebrity successfully matched to a
product is former heavyweight champion boxer, George Foreman, a fit and
energetic boxer who is a good spokesman for healthy cooking and eating.
His positive image continues to impact sale of the “George Foreman
Grill” long after he is done with the boxing ring.

Guard your reputation jealously

As a celebrity
bestows special attributes on a brand, in the same way, his image and
public reputation can tarnish the brand’s image. Sometimes through
their behaviour or due to a scandal, celebrities betray the public
trust that has been endorsed by their selection.

It is debatable
whether or not celebrities should be held to a higher standard of
conduct but there are certainly issues to consider: If you are being
paid for your talent and skill as a musician, a sports personality or
an actress, you’re allowing your image, charisma and ability to draw
people to you and by association to the product is thus of huge
importance. If your behaviour causes you to no longer fulfil the
demands of the role, then a company must protect its product and must
consider whether the relationship is still beneficial.

Companies are aware
of the potential hazards of celebrities endorsing their products and
many contracts contain a moral clause that allows a company to exit
without penalty if the celebrity’s behaviour is seen to affect the
company’s reputation. Some of Tiger Woods endorsement deals were
discontinued and advertising appearances cancelled. However due to the
sheer magnitude of his celebrity, and his earning power for the
products that support him, Nike and a few others continued to stand by
him.

Celebrities usually
turn out to be the greater losers financially and in terms of good will
when their image is tainted in some way. Because of the sensitive
position they occupy in the public eye and often as role models to
their fans, it is thus important for Nigerian celebrities to guard
their reputation jealously.

Celebrity
endorsement is earned; it is in itself an endorsement of one who is
perceived to be fit to stand out in the public eye as a role model to
their fans, and to represent a brand. A celebrity who has successfully
built a personal brand is thus more likely to be sought after and can
capitalise on that image and earn significant supplementary income
through endorsements. The reach of endorsements can be tremendous and
goes much farther than the immediate cash benefit; there is the
attendant recognition through television, radio, newspapers, billboards
and other media.

Write to personalfinance@234next.com with your questions and
comments. We would love to hear from you. All letters will be
considered for publication, and if selected, may be edited.

Even
the coolest folks in the financial world sometimes lose their
composure. Arunma Oteh, director general of the Securities and Exchange
Commission (SEC) lost hers two Fridays ago when a reporter called for
her response on her agency’s efforts to cleanse the capital market.

Ms. Oteh, a public servant, was more interested in
how the reporter obtained her phone number than answering questions
about the agency that recently removed the Nigerian Stock Exchange
director general, Ndidi Okereke-Onyuike.

“I am telling you that I do not respond to calls
from people I don’t know and you are asking me when I would respond to
your text. This is invasion of privacy, even for security reason. It is
just not right. We have totally lost our culture in this country. You
just call somebody who does not know you and you expect a response,”
she said.

Ironically, the enquiry was supposed to highlight
the new bite that Ms Oteh has brought into the office especially as SEC
has been docile and nearly visionless for several years. But, six hours
later, perhaps after some reflective moments, her assistant called
apologising for his principal’s action and responded to the enquiries.

On August 5, when SEC removed Mrs. Okereke-Onyiuke
and suspended the president of the council, Aliko Dangote, quite a lot
of market operators and financial analysts applauded the move as one
that was long overdue. It came after initial opposition to the
appointment of Arunma Oteh as SEC director general on December 11,
2009. Some groups had taken the Federal Government to court for
appointing Oteh who they claimed does not have enough experience in
capital market which they considered requisite for the head of the
regulatory institution.

Profile

But Ms Oteh has over 16 years of capital market
experience including being the Vice-President (Corporate Management
Services) of the African Development Bank Group (AfDB). The portfolio
includes responsibility for overseeing the Language Services Unit, the
General Services and Procurement Department, the Human Resources
Management Department, and the Information Management and Methods
Department. She was appointed as part of a programme of institutional
reforms that are taking place within the Bank.

Previously, she was the Bank’s Group Treasurer for
five years in addition to working variously as Division Manager
Investments and Trading Room and Senior Investment Officer/Senior
Capital Markets Officer from 1993 to 1997.

Prior to joining the AfDB, she worked in corporate
finance, consulting, teaching and research for several institutions,
including the Harvard Institute for International Development, United
States, and Centre Point Investments Limited, a Lagos based
stockbroking and investment firm.

In the struggle against corruption, Oteh is known
to be an advocate of action not only at institutional and governmental
level, but also on the personal level. “We can only win the fight
against corruption if each and every one of us has zero-tolerance for
it. Each of us is a potential taker or a giver, and we need the courage
to say no,” she was quoted as saying in 2008 about her functions at the
AfDB.

It is this conviction that she has brought into
SEC, as her actions in the last few months have shown. Apart from the
intervention at the NSE, the commission has also concluded moves to
sanction about 260 stockbroking firms alleged to be involved in
unethical practices. An indication of her focus came last May in Abuja
at the International Conference on Good Governance and Regulatory
Leadership. In her keynote address, she observed that government’s
macroeconomic policies will come to naught if financial institutions
are not well governed. “Financial institutions which are poorly
governed pose a risk to themselves and also to others and could pull
down financial markets. Recent experience in the Nigerian financial
market attests to this fact.” She said capital markets and its
operators need to engender good corporate governance through their
disclosure, reporting and transparency requirements.

As part of moves to determine the true state of
affairs, SEC in April engaged a team from the US Securities and
Exchange Commission which compiled a confidential report detailing lax
oversight at the Nigerian Stock Exchange and the financial regulators.
The report detailed cases of bribery inside the Stock Exchange,
dysfunctional enforcement, “complicated and entrenched governance
problems”, “clear instances of insider trading and market manipulation
that resulted in no action”, and “woefully inadequate” surveillance, a
clear indictment of the NSE authorities. This prompted SEC to direct
the council to implement a clear succession plan and for the DG to
handover to a successor by June. But, a source at SEC said, “Remember
we had given the NSE till 30 June to complete this process. They
slipped, and asked for an extension till the end of July.”

Wielding the big stick

It was the failure of the NSE to carry out these
that prompted the SEC move, with Oteh revealing that the exchange has
not submitted its audited financial statement for 2009, a clear
violation of the SEC reporting rules. “The allegations regarding the
leadership and membership of the council of the exchange against the
NSE are very grave and that is why in our opinion, the SEC has decided
to take this step in exercising its powers under the Investment and
Securities and other applicable regulation.” This view was corroborated
by a senior stockbroker who spoke off record saying that the NSE
council which was supposed to call the NSE DG to order was unable to do
it.

Ope Banwo, a lawyer said the fact that two
principal officers of the stock exchange were heads of quoted companies
already showed that there was no transparency. “I think that beyond the
personalities recently removed, the public policy on the management of
the stock exchange should be formally changed to reflect the need for
transparency.”

“SEC is a responsible regulator. We cannot just
fold our hands and watch things go wrong,” said Lanre Oloyi, the
spokesperson for SEC in defence of its action. Mr. Oloyi said the
commission’s action was in line with its mandate to protect investors
and sustain confidence in the market.

To Mr. Banwo, SEC’s move was expected before now.
“The way Ndi conducted the listing and sales of shares in Transcorp
alone is enough for her to be removed if not prosecuted for misleading
the public. Yet, she continued to run the exchange for months after the
transcorp debacle.” He said the suspended president of the NSE council
had disobeyed the order of a competent court. “How do you even begin to
defend a man who was contemptuous of court orders on him before the
sack? It will be interesting if he willow expect the same court whose
previous orders he held in contempt to help him.”

He added that SEC as a responsible regulator must
be seen to have given the two individuals fair hearing.”I think the SEC
complied with the relevant provisions of the law and also afforded them
reasonable fair hearing. If they want to challenge that in court, I
believe that’s their right and we wait to see what the court has to say
on the points raised by Ndi.”

The SEC source explained that the former NSE DG
was given every opportunity to explain all allegations of infractions
levelled against her. “There is a clear provision in the ISA for giving
fair hearing and we did that with the DG and gave her an opportunity to
respond to allegations that have been leveled against her. We took that
response into consideration before the decision by SEC to remove her,”
the source added.

If Oteh continues in her strides, maybe there’s hope for Nigeria’s capital market eventually.

The
Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) says the
Sovereign Wealth Fund being proposed by the Federal Government is
illegal, as its foundations are not rooted in the provisions of the
country’s constitution.

The Fund is for the
accumulation of excess revenue from trade and crude oil exports for
investments and development of critical infrastructure that would
benefit both the country’s economy and the citizenry in general.

Olusegun Aganga,
the Minister of Finance, said the decision to establish the Fund is to
enable it serve as a catalyst for the nation’s economy development.

Mr. Aganga said the
apparent lack of discipline among managers of the nation’s finances
over the years has necessitated “a very strong structural vehicle,
properly managed by local and international advisers, to meet the
triple objectives as a stabilisation fund to support annual budget
deficits; savings for future generations, as well as funding for the
development of the nation’s basic infrastructural needs.”

Though
consultations are said to be ongoing on its operational structure,
management as well as other governance issues preparatory to its take
off, Ibrahim Dankwambo, the Accountant General of the Federation (AGF),
said last week that the government has already set aside $1billion
(about N150billion) as seed money for the Fund.

But, a RMAFC
Federal Commissioner, who spoke last Thursday on condition of
anonymity, said “government is treading the path of illegality in
pursuing a justifiable agenda”, pointing out that “no matter the good
intentions of government, the structure establishing the SWF would
render it defective, illegal, null and void, if its existence and
operation are not derived from the provisions of the country’s
constitution.”

He said that though
the revenue mobilisation agency is yet to formally write to the
Presidency on its position on the proposal, it, however, made its
concerns known during a meeting convened recently by the Federal
Ministry of Finance to discuss the issue of government treading the
same path of unconstitutionality when it established the Excess Crude
Account (ECA) and the Excess Revenue Account (ERA).

Erosion of Obasanjo’s legacy

The ECA was
established in 2003 by the Olusegun Obasanjo administration to
accumulate revenues earned from crude oil exports above approved
benchmark price indicated in the annual budgets, while the ERA was
opened recently for all monthly revenue accruals in excess of about
N365 billion pegged as ceiling for distributable allocations for
sharing by the Federation Accounts Allocation Committee (FAAC) to the
Federal and the 36 state governments as well as the Federal Capital
Territory (FCT), Abuja.

The ECA was also in
fulfilment of the conditions by Nigeria’s debtors for the external debt
pardon Mr. Obasanjo got the country. But the Act came into force in
July 2007 with the account reaching $20 billion in January 2007.

Sections 162 of the
1999 Constitution stipulates that all federally collected revenues,
namely oil and non-oil revenues earned from crude oil sales, royalties,
petroleum profit tax (PPT), gas revenue, rentals, penalties from gas
flaring and miscellaneous oil earnings as well as company income tax
(CIT), import duties, excise duties, and Customs penalty charges are to
be lodged in the federation account.

The RMAFC is the
only government agency mandated under Section 162 (2) and (3) to
recommend the distribution of the amount standing to the credit of the
Account among the federal, state and local governments in each state on
such terms, and in such manner as prescribed by the National Assembly.

The implication of
this, according to the commissioner, is that any disbursement,
withdrawal or appropriation of government revenue without strict
compliance with these provisions, as has been the case with
government’s management of the ECA and ERA, is unconstitutional.

“The RMAFC has
consistently criticised the practice by the Presidency and the Federal
Executive Council (FEC) to approve withdrawals from the ECA, which has
been depleted from over $22billion in 2008 to about $460million as at
last month. The FEC is made up of a group of politicians, whose
decisions should not set aside the supremacy of the constitution,
particularly on issues that have to do with the nation’s finances.

“Though the
minister has indicated that the ownership of the SWF would be devoid of
the control of either the federal or state governments, and managed
through a Council, whose members would be made up of representation
from all parts of the country, including women groups, student bodies,
civil society organizations, public and private sectors, its existence
still requires a constitutional backing to make it legal. The only way
that can be done is if the constitution is amended,” he said.

Meanwhile, Razia
Khan, a financial analyst and regional head of research, Africa for
Standard Chartered Bank, London said that “the sheer amount of
liquidity that has been pumped into the system, with spending ramped up
dramatically in this year’s budget, and an increased pace of disbursal
from the excess crude account, eroding much of Nigeria’s saved oil
windfall is a concern.”

“While the evidence
suggests that economic growth remains weak – for now, at least –
limiting the likelihood of significant demand-related price pressure,
the amount of liquidity out there still sits uncomfortably with many.”

Canada’s First
Quantum said on Saturday that Kazakh mining group ENRC’s acquisition of
mining rights in Congo violated a tribunal order freezing the sale of a
contested mining project.

ENRC announced on
Friday that it agreed to buy a majority stake in Camrose Resources
Ltd., which through an off-shore company has secured a new permit to
take over the Kolwezi project after First Quantum put $750 million into
developing it.

Camrose is
controlled by Israeli investor, Dan Gertler, who has built up a wide
portfolio of interests in resource firms across Congo over the last 13
years.

First Quantum said
that a tribunal at the International Chamber of Commerce (ICC) in Paris
had issued an order the day before the ENRC announcement to prohibit
Congo “from taking any action to transfer or allow the transfer of the
Kolwezi tailings exploitation permit.”

“These
announcements (by ENRC) appear to indicate a clear contradiction of the
Tribunal’s orders,” said the statement from First Quantum, adding that
the company believes it has exclusive rights and a binding contract for
the project.

“(A)ny purported transfer of the tailings exploitation permit covering the Kolwezi Project is ineffective,” it added.

Officials from the ICC were not immediately available for comment.

First Quantum
sought international arbitration at the ICC in February after its
Kolwezi copper tailings project, KMT, was closed by Congo’s government
late last year following a protracted mining contracts review.

The company said on
Saturday a second order from the ICC prohibits Congo enforcing a local
court judgement that required First Quantum to pay $12 billion in
damages.

ENRC Ceo, Felix Vulis, said on Friday his company was not aware of any legal action regarding the deal.

“We have done a very, very good legal due diligence … We are in really good comfort,” he told Reuters by telephone.

“Everybody’s
putting the emphasis on arbitration, but we also have internal legal
proceedings in Congo, and arbitration does not overrule what the
Congolese court, a sovereign court, does,” Bene M’Poko, Congo’s
spokesman on the deal with ENRC and ambassador to South Africa, told
Reuters by telephone on Friday.

First Quantum said its frontier mining project, the biggest copper
producer in the country, had also been informed in a letter dated
August 5, that its production permit had been withdrawn, but said its
operations at the site were unaffected.

The
ongoing efforts by the Federal Government to professionalise the
operations of the Nigeria Customs Service (NCS) will not only help
boost the image of the agency, but will also rid it of its poor public
perception, minister of finance, Segun Aganga, said at the weekend in
Abuja.

Mr
Aganga also said government remains committed to attaining the policy
of 48-hour clearance of goods at the ports as well as general ports
congestion, saying this remains the only way to help lift the poor
image of the agency responsible for fiscal policing of the country on
customs and excise duties as well as sundry trade levies.

The
minister, who was speaking at the inauguration of the reconstituted
presidential task force on the reform of the NCS, described as unfair
the low rating of the Customs in the area of trade facilitation,
particularly in respect of it being blamed for the obstruction of free
flow of trades import and export in the country.

“From
my recent facility tour of the nation’s major entry ports, I found a
greater level of professionalism in the agency than the public knows,
though there is still room for improvement. The Customs we need is one
that not only does its duties professionally, but also one that lives
up to its billing as the prime agency at the nation’s ports, by
actively seeking solutions to the challenges that port users face, and
advising government proactively on them,” he said.

Warning
that government cannot afford to keep losing trade and revenue to
neighbouring countries, the minister pointed out that considering that
international trade in both developing and developed countries has
become a key driver in economic growth and development as well as a
factor in raising the living standards of the people, there was need
for the agency to clean up its act to deliver on its mandate.

Though
he acknowledged improvements in the agency’s year-on-year revenue
generation, with its target for last July exceeding budget as a result
of close supervision and attention of its duties, Mr. Aganga said the
dwindling government revenue in the wake of the recent global economic
crisis has thrown up the challenge for the Customs to increase its
effort towards generating more revenue.

Fully automated

The
comptroller general, Abdullahi Inde, last week, disclosed that the
decision of the NCS under his leadership in the last one year to update
the quality of its operations to meet internationally accepted
operational standards, has not only resulted in the reduction of the
usually long delay in Single Good Declaration (SGD) processes for
imported goods to a maximum of 12 hours, but has facilitated its
efforts to generate an average of N15 million every month.

The
operations of the NCS, he said, is now fully automated, blaming long
delays associated with clearance of imported goods at the ports to
shipping companies and concessionaire agents, who still depend on the
manual system of processing documents.

According
to the minister, the former taskforce had to be reconstituted after two
years for failure to deliver on its mandate, saying members of the new
body would be expected to harmonise the reports of the various reform
initiatives in the past and come up with a blueprint for the
implementation of approved recommendations.

The
taskforce, which has three months to complete its assignment, was also
asked to focus its attention on delivering its mandate by showing the
effects of the measures implemented on revenues in the last three
months.

The
eleven-member committee is headed by a retired federal permanent
secretary, Mr. Ochi Achinivu, with representatives from the NCS, State
Security Service (SSS), Manufacturers Association of Nigeria (MAN),
Clearing & Forwarding Agents Association, and Federal Ministry of
Finance, among others.