Nigeria Content Online

Technology
startups and big companies work together all the time – refining ideas,
seeking mutual advantage and accelerating the pace of development of
new products and services. But these odd-couple relationships can be
fraught with peril.

Steve A. Stone, a
veteran product manager at Microsoft, had an idea for an innovative way
to identify and track digital objects across the Web. So he set up shop
for a new company in his garage in suburban Seattle, and convinced a
few Microsoft colleagues to join him. They began building their
software, working late many nights, fuelled by homemade spaghetti and
takeout Subway and Quiznos sandwiches.

The startup,
Infoflows, began working with Corbis, the big photo library and
licensing company owned by Bill Gates, Microsoft’s chairman, and in
June 2006, the two signed a multimillion-dollar development agreement.

But four months
later, things fell apart, culminating in a Washington state jury
verdict against Corbis for misappropriation of trade secrets, fraud and
breach of contract. The court awarded damages of more than $20 million.

In a statement
last week, Corbis said it was “disappointed by the outcome in the trial
and believes that the trial court made substantial legal errors.” It
plans to appeal and said it was “confident that it will ultimately
prevail.”

The
Infoflows-Corbis story, it seems, is a striking case of a partnership
between a startup and a big company gone bad, and a catalog of pitfalls
to avoid – courtroom battles, millions in legal costs and a business in
limbo for years.

“What you want is
the business equivalent of no-fault divorce,” said Josh Lerner, a
professor at the Harvard Business School. “You want the ability to
experiment, fail and disengage, and move on, to keep the innovation
process moving forward.”

There was no amicable split between Infoflows and Corbis.

In court filings
and testimony, Corbis asserted that Infoflows was a poorly performing
contractor that Corbis had patiently tried to work with, but finally
gave up on. Except for a small sliver of technology belonging to
Infoflows, Corbis said, all the work produced and the intellectual
property was owned by Corbis.

Infoflows saw
things differently. “They took our ideas and tried to claim them as
their own,” Stone said. “And they tried to crush a little company.”

Settlement talks a
few months ago failed. Stone and his Infoflows colleagues were willing
to be interviewed now because, they say, they want their account of
events made public as they try to restart their business. They also say
they hope the court ruling in their favour may deter other big
companies tempted to bully a startup, as they say Corbis did.

It is also the
case that as a result of the ruling Gates – who owns Corbis, but is not
a party to the suit – had to personally put up a bond of more than $20
million for damages assessed. Infoflows will not get a penny of that
money until the appeal process concludes, if Infoflows prevails, or a
settlement is reached. A newspaper article on the suit and the ruling
could be a prod to settle the case, or harden positions on both sides.

In addition to its
statement, a lawyer representing Corbis offered an overview of the
company’s position, answered specific questions and supplied court
documents and testimony, on the condition that he would not be quoted.

Infoflows may hold
the upper hand now, but the protracted legal battle has taken a toll on
the founders, they say. Retirement accounts and personal savings, they
say, have been drained to pay legal fees. Still, unlike many startups,
the Infoflows founders did have resources to battle the big company.
And they say they had little choice.

In October 2006,
Corbis told Infoflows that it was terminating the contract it signed
four months earlier. Stone said he was stunned but just wanted to move
on. When Infoflows put up its public website in January 2007, Corbis
filed suit, claiming any Infoflows digital content-tracking product
would be illegally using Corbis’ proprietary technology. Infoflows
countersued the same day.

Infoflows, its
founders say, talked to potential customers and venture capital
backers. But the litigation with Corbis scared them away. “No one
wanted to come near us,” recalled Carlo Martin, a former engineer at
Microsoft. “It shut us down.”

Infoflows, which
had leased offices in Redmond, Wash., retreated to Stone’s garage. For
Stone, overseeing the legal battle with Corbis, which is based in
nearby Seattle, was a full-time job, but the other five founders sought
outside work, mainly as consultants and contractors.

For Infoflows, the
Corbis deal was a big bet on one customer. And the startup went into
the partnership without patenting any of its software or system for
tracking digital rights, a further risk.

Technology
startups that work with big companies, said Kevin Rivette, a Silicon
Valley consultant, should take care to protect their most valuable
ideas, even as they collaborate. “Innovation without protection is
philanthropy,” said Rivette, a former vice president of intellectual
property strategy for IBM.

Stone said he felt
no rush to patent because he wanted the joint work with Corbis to move
closer to a finished system. Infoflows, he said, would develop the
underlying system for identifying and tracking digital objects across
the Web, and Corbis would own the application for its photo-licensing
business.

In December 2006,
after Corbis terminated its agreement with Infoflows, Stone met with
Corbis managers to discuss details of the breakup. Corbis said the
intellectual property it claimed as its own was covered in the
non-public patent Corbis had filed back in January of that year. It was
the first time Stone had heard of Corbis patenting the work, he said.
“I was shocked,” he recalled.

The Corbis patent,
Infoflows said, was a move on its ideas. Stone said he had an oral
agreement with Corbis, supported by an e-mail exchange, that neither
side would file for patents until their work was well along. Corbis
denied there was any such agreement.

In court, a Corbis
lawyer and a software designer, neither of whom still works at Corbis,
testified that they had put the patent application together fairly
quickly over a weekend. The Infoflows lawyer called this the
“immaculate invention,” and submitted Infoflows documents intended to
show that Corbis had pilfered the startup’s trade secrets. Corbis
countered that most of what Infoflows claimed as its inventions was
already in the public domain.

The case, tried
over three weeks, included 26,000 pages of documents and 21
depositions. Much of the trial revolved around technical matters of
software and business methods. Each point was sharply disputed, as in
an interminable he said-she said argument.

For example,
Corbis asked Infoflows in 2006 to help it gather evidence on a digital
pirate, who was taking Corbis-licensed photos and illegally reselling
them. Infoflows did, and a Corbis manager sent an e-mail message of
thanks. “First of all, let me just say how friggin’ awesome you guys
are. Seriously, this is HUGE, and you guys ROCK!”

In court,
Infoflows presented the episode and the e-mail message as evidence that
its technology did indeed work. Corbis countered that Infoflows did a
good job, but mainly by putting in long hours and using software tools
made by other companies.

Despite the
mountains of documents in the case, some crucial ones – technical
drawings and certain contract details, for example – remain sealed,
though they were shown to the jury.

Legal experts say
accusations of misappropriation of trade secrets are often very
difficult to prove – more so than patent infringement – because such
business secrets can be hard to clearly identify and to show as being
under legal protection. “The court must have felt there was a real
injustice here,” observed Rivette, a former lawyer and litigator.

That is an issue for the appeals court.

© 2010 New York Times News Service

It is now mandatory
for all international oil and gas companies operating in the country to
submit their Nigerian content development plans to the federal
government on a quarterly basis to facilitate adequate planning and
budgeting.

Ernest Nwapa,
Executive Secretary of the Nigerian Content Development and Monitoring
Board (NCDMB), said none of the operating joint venture partners with
the Nigerian National Petroleum Corporation (NNPC) has complied, so
government will soon wield the big stick against them.

Mr. Nwapa, spoke at
a workshop for journalists on the provisions of the recently unveiled
Nigerian Content Act as part of activities to commemorate 100 days of
the introduction of the monitoring board to the petroleum industry.

“We have resolved
to ensure regular monitoring review of the local content values of the
international oil companies,” Nwapa said.

Though he said the
monitoring board would not depend solely on data provided from the oil
majors to know their content values, Mr. Nwapa said the board would
regularly collaborate with other government agencies to develop
community-based manufacturing capacity, and for the training and
certification of seafarers and development of shipyards.

“We have templates
now. We do not depend on the oil companies figures for Nigerian Content
values. We have independent people that work on this, although the IOCs
are still given forms to fill based on their various content values,”
he explained.

Commendable directive

Lola Amao, chief
executive, Lonadek Consultants, a Lagos-based oil and gas industry
consultancy firm, said on phone on Wednesday that the directive on
submission of plans, quarterly, was commendable, particularly as it
will be beneficial to both the Board and the indigenous firms in their
planning.

“The arrangement
will help the Board incorporate the submitted plans of the companies
into its overall budget, particularly in relation to how much the
companies intend to spend on specific activities and programmes to
develop the policy,” Mrs. Amao said.

“Besides, it will
show the indigenous contractor where investment opportunities that are
available for the provision of their services, to help them take
advantage of. It will help strategic planning and development of
capacity to provide quality industry services.” On the importance of
the Nigerian Content Act, Mr. Nwapa said the signing into law by Mr.
President shortly after its passage by the National Assembly was in
response to the yearnings of discerning Nigerians as well as a
demonstration of the commitment of the present administration to
squarely address the longstanding issues of lack of local capacity and
the near absence of meaningful indigenous participation in the oil and
gas industry.

The issue of Nigerian Content, the monitoring board boss said, is no
longer new considering that the board has sufficient domain knowledge
to guide its successful implementation of the provisions of the
enabling law, which, according to him, was developed with high level of
industry participation in the legislative process.

Investors at the
Nigerian Stock Exchange (NSE) recorded additional losses at the close
of trading on Thursday, as the market measuring parameters plunged by
0.18 per cent, making it the fourth day that it had followed a downward
trend.

The Exchange market
capitalisation closed yesterday at N6.111 trillion after opening the
day at N6.121 trillion, reflecting 0.18 per cent decline or over N10
billion in losses. Meanwhile, about N183 billion has been lost since
trading started this week.

The NSE All-Share
Index also shed 0.18 per cent or a loss of 44.06 units on the previous
day’s figures of 25,032.09 basis points, to close at 24,988.03.

Union Homes Savings
& Loans, RT Briscoe, and Fidelity Bank were the most traded stocks
yesterday, followed by First City Monument Bank and Guaranty Trust Bank.

A finance analyst
said the changes in the Exchange’s management “might be a contributory
factor” for the recent downward trend in the market, but not the only
reason. Femi Awoyemi, the chief executive officer of Proshare, said,
“The market has really not had a significant up trend for over three
weeks. Although we reversed the original downtrend after the passage of
Asset Management Corporation Bill, it appears that market participants
are beginning to realise that the passage of (the) bill will not
improve liquidity issues confronting the NSE.” Mr. Awoyemi also said
that “it seems that there is not a lot of appetite for huge risks”
again in the market.

Gainers and losers

At the close of
Thursday’s trading, a total of 25 stocks appreciated, higher than the
23 stocks recorded on Wednesday; while 29 stocks depreciated in value,
lower than the preceding day’s 45.

Unilever and Okomu
Oil topped the price gainers’ table with an increase of N1.17 and 60
kobo on their initial prices of N23.50 and N12.20. Cadbury followed in
the chart with an increase of 50 kobo to close at N29.00 per share.

On the losers’
table, Nigerian Breweries and Access Bank led the chart with a loss of
N1.55 and 25 kobo, from their opening prices of N70.65 and N8.45 per
share. Despite leading as the second most traded stock after Union
Homes Savings yesterday, RT Briscoe followed in the losers’ chart with
19 kobo loss to close at N2.65 per share.

In spite of
investors’ low patronage in the market, the banking subsector still led
the most active subsectors’ chart with 79.484 million volumes of
shares, valued at over N520.752 million.

Financial accounts

At the Exchange’s
floor on Thursday, Flour Mills of Nigeria and United Nigeria Textile
presented their financial accounts to market operators.

Flour Mills’
unaudited financial result for the first quarter ended 30 June shows
11.94 per cent increase in turnover, from N38.882 billion to N43.524
billion. The company’s profit after tax also grew by 47.26 per cent
from N2.222 billion to N3.272 billion while total net asset appreciated
by 9.26 per cent, from N35.384 billion to N38.659 billion.

Last month, Flour
Mills in its audited year result ended March 31, 2010, proposed, to its
shareholders, a dividend of N2 per share and a bonus of one for every
10 units of share own.

The audited result
year ended December 31, 2009 for United Nigeria Textile shows a
turnover of N9.223 billion from 2009’s figure of N12.218 billion;
representing a 24.51 per cent decline.

The
continued delay in the takeoff of the Asset Management Corporation of
Nigeria (AMCON) is already taking a toll on the financial markets.
Since the signing of the AMCON Bill into law by President Goodluck
Jonathan on 19 July, the regulators concerned have been working to set
it running.

AMCON
was expected to stimulate the recovery of Nigeria’s financial system
from its recent crisis by boosting the liquidity of troubled banks
through buying their non-performing loans, helping their
recapitalisation, and increasing access to restructuring or refinancing
opportunities for borrowers. The Central Bank proposed its formation in
December 2009 as part of moves to revive the banking industry and
strengthen the financial market.

Analysts’ anxiety

However,
the uncertainty over its form and structure has continued to generate
anxiety among operators. Analysts at Afrinvest, a firm of investment
bankers, said the effect was evident in the bond market.

“PDMMs
(Primary Dealers and Market Makers) who usually take long term position
at the beginning of the month, have instead been selling off
securities. This may be related to the slow start in AMCON operations.”
According to the report, average yields for the three year, five year,
seven year, 10 year and 20 year bonds had dropped to 6.7 per cent, 6.9
per cent, 5.8 per cent, 7.5 per cent and 9.3 per cent respectively at
the end of a fortnight by 6 August.

Apart
from AMCON’s absence, other operators said recent developments in the
capital market have created uncertainties about the market’s direction.
Only last week, the Securities and Exchange Commission (SEC) intervened
in the stock market by sacking the director general of the Nigerian
Stock Exchange (NSE), Ndi Okereke-Onyiuke, and the council president,
Aliko Dangote. Since then, the market has been on a downward slide
though SEC immediately appointed Emmanuel Ikhazobor as the interim
administrator of the stock exchange.

Volume drivers

Joshua
Omo-Kehinde, managing director of Marimpex Finance, a stockbroking
firm, said the major problem with the stock market was beyond the issue
of who heads the stock exchange. Mr Omo-Kehinde said there was need to
stimulate demand and supply of equities by having institutions that
would be capable of driving volume in the market.

“It
does not matter whether they are appointed or unofficial, what this
market needs at this time are market makers that would be able to buy
huge volume of shares when available and sell huge volumes when there
is demand.” Another stockbroker, Davis Adonri, the managing director of
Lambeth Investment and Securities Limited, said it was difficult to say
precisely what was responsible for the market slowing down.

Mr. Adonri said that despite the good results declared by Guaranty
Trust bank and National Salt Company, shares of both companies were not
generating the kind of patronage that is expected. He said some
extraneous factors were responsible for the market lull, adding that
the liquidity position was a factor to consider. “It has almost become
a trend now that at the beginning of the month, the market slows down
and picks up once the FAAC allocation (Federation Accounts Allocation
Committee) starts to come in.”

In any brand
communication campaign, knowing the pulse of consumers, gauging their
perceptions, and understanding their feelings are crucial to the
success of the communication process. Such insights thus become
imperative in building an enduring relationship between brand and
audience. An effective way to build relationship is by gaining insights
into consumer behaviour.

In this age, brands
need to connect directly with the consumers. Brands that warm their way
into the hearts of consumers are the ones that impact lives, because
they identify with the aspirations and yearnings of the consumers.

Some of the key
things to do is to focus on who is buying the product or service, what
their needs or goals are, key characteristics of the consumers, how
communication or brand messages should be tailored to fit consumer
preferences and how best to use that to capture their interest.

An incisive and
thorough knowledge of consumers may provide brands the complete
understanding of consumers about their reactions and responses to brand
messages.

A brand targeted at
children should make conscious efforts to touch base with the mothers.
This has become evident in the advertising of the various noodles
brands as they focus on the mothers and their children. Mothers play
influential role in purchase decisions and home keeping. A brand like
noodles for instance should stimulate the interest of mothers and
capture them to influence the eating habit of their children. Such
brand should also take cognizance of shopping pattern, spending habits
and lifestyle of the mothers.

Through consumer
insights, brands can build loyal and active consumer base as consumers
identify a true value from the brand. When consumer insights drive the
communications process, consumers are put in the driver’s seat and as a
result, valuable insights are gained that will ultimately translate to
success for the brand in the market place.

From research to insight

It has become
pertinent to move from the realm of market research to consumer
insights. Though market research is an indispensable tool but a brand
can maximize its understanding of the consumers to fully exploit growth
and build equity for the brand.

A dipstick research
recently conducted in some fast food outlets in Lagos show that some
brands have eroded consumer confidence. A large percentage of them have
not factored in the feelings, and purchasing habits of their consumers
into their service delivery. It is vital for brands to engage in
building and refining their consumer insights to secure a vantage
positions in the consumers’ mind.

The integration of
insights into key decisions such as marketing, product development and
service delivery to a large extent project the brand attributes and
this lead to success.

There should be
several touch points for the brand to interact with consumers. Every
interaction should impact on how customers think and feel about a
company and its brands. A brand is no longer identified by its name and
logo alone but it should be a total experience for the consumer. The
need to create actionable insights, go a long way in differentiating a
brand offering from its competitors.

Insights provide value to the brand as they are the objective voice of the consumer.

Consumer insights
allow brands to improve their service delivery, review consumers
perception and open new perspectives on attitudes, behaviours and
consumer expectations. Insights are also utilised to guide the creation
and evaluation of product concepts.

For any brand
communication to achieve the desired objective, it must through
consumer insights identify and know the most appealing message to
consumers, evaluation of key brand messages, perception of quality and
its effects on pricing and intent to purchase. “Now you are talking”,
the payoff of Etisalat, is one that has resonated well with the target
audience. With the latest TV commercial, it captures the whole essence
of bonding with consumers. That campaign is one that depicts the desire
of an average Nigerian to have access to affordable call rates.

Where do we go from
here? It is for brand custodians to focus on consumer insights and
ensure it is given a premium place to build brand equity. Consumer
insights and perception must align with the brand values and
attributes. Consumers can maintain both emotional and physical
attachment to brands through consumer insights.

AYODEJI AYOPO, a Communication Strategist and Public Relations Specialist, is the CEO of Shortlist Ltd.

Youth unemployment
across the world has climbed to a new high and is likely to climb
further this year, a United Nations agency said Thursday, while warning
of a lost generation as more young people give up the search for work.

The agency, the
International Labour Organisation, said in a report that of some 620
million young people ages 15 to 24 in the work force, about 81 million
were unemployed at the end of 2009 the highest level in two decades of
record-keeping by the organisation, which is based in Geneva,
Switzerland.

The youth unemployment rate increased to 13 per cent in 2009 from 11.9 per cent in the last assessment in 2007.

There’s never been
an increase of this magnitude both in terms of the rate and the level
since we’ve been tracking the data, said Steven Kapsos, an economist
with the organisation. The agency forecast that the global youth
unemployment rate would continue to increase through 2010, to 13.1 per
cent, as the effects of the economic downturn continue. It should then
decline to 12.7 percent in 2011.

The agency’s 2010
report found that unemployment had hit young people harder than adults
during the financial crisis, from which most economies are only just
emerging, and that recovery of the job market for young men and women
would lag behind that of adults. The impact of the crisis also has been
felt in shorter hours and reduced wages for those who maintain salaried
employment.

In some especially
strained European countries, including Spain and Britain, many young
people have become discouraged and given up the job hunt, it said.

The trend will have
significant consequences for young people, as more and more join the
ranks of the already unemployed, it said. That has the potential to
create a lost generation comprised of young people who have dropped out
of the labor market, having lost all hope of being able to work for a
decent living.

The report said that young people in developing economies were more vulnerable to precarious employment and poverty.

About 152 million
young people, or a quarter of all the young workers in the world, were
employed but remained in extreme poverty in households surviving on
less than $1.25 a person a day in 2008, the report said.

The number of young
people stuck in working poverty grows, and the cycle of working poverty
persists, the agency’s director-general, Juan Somavia, said.

Young women still
have more difficulty than young men in finding work, the report added.
The female youth unemployment rate in 2009 stood at 13.2 percent,
compared with the male rate of 12.9 percent. The gap of 0.3 percentage
point was the same as in 2007.

The report studied
the German, British, Spanish and Estonian labor markets and found that
Germany had been most successful in bringing down long-term youth
unemployment. In Spain and Britain, increases in unemployment were
particularly pronounced for those with lower education levels.

Data from Eurostat,
the European Union’s statistical agency, showed that Spain had a
jobless rate of 40.5 percent in May for people younger than 25.

That was the
highest level among the 27 members of the European Union, far greater
than the 9.4 percent in Germany in May and 19.7 percent in Britain in
March.

New York Times

Nigeria has distributed $4.7 billion in revenues and windfall oil savings to government for July, a massive disbursal which is likely to trigger a drop in bond yields and interbank rates next week, dealers said.

Africa’s biggest oil and gas producer shares its revenues among three tiers of government each month — federal, state and local — and tops the disbursal up with a withdrawal from its windfall oil savings if there is a shortfall.

Accountant General Ibrahim Dankwambo said Nigeria had distributed 404.27 billion naira in revenues and $2 billion from its crude oil savings for last month, making up one of the largest monthly disbursals ever.

Around 80 percent of the liquidity in sub-Saharan Africa’s second-biggest economy comes from public cash flows and the monthly allocations can trigger significant shifts in bond yields and interbank rates.

“We expect (interbank) rates to crash immediately part of monthly budgetary allocations to state and local governments hit the system, latest by Tuesday,” one money market dealer said.

The disbursal comes five months before presidential and parliamentary elections in Africa’s most populous nation. Government spending has traditionally risen in election years, leading analysts to question the quality of the expenditure.

Among the major recipients of the monthly revenue distributions are the country’s 36 states, whose governors form a powerful caucus within the ruling People’s Democratic Party (PDP) and who will be key to the outcome of the polls.

President Goodluck Jonathan, who is from the southern Niger Delta, has not yet announced whether he plans to contest but a bid would be controversial because a “zoning agreement” within the PDP dictates that power should rotate between the Christian south and Muslim north every two terms.

Jonathan inherited the presidency when northern President Umaru Yar’Adua died part way through his first term earlier this year, meaning the next term should go to a northerner.

The PDP said on Friday its national executive council had “unanimously endorsed the retention of the zoning principle” but also said Jonathan had the right to contest because he was on a joint ticket with Yar’Adua, effectively hedging its bets.

“FINANCIAL INDIGESTION”

Government spending is set to rise sharply this year.

Parliament last month approved 445 billion naira in extra spending on top of the main 4.4 trillion naira 2010 budget, likely to push Nigeria’s fiscal deficit beyond 5.4 percent of GDP, above a 3 pct target set three years ago.

“It raises eyebrows,” Bismarck Rewane, head of Lagos-based consultancy Financial Derivatives, said of the latest disbursal.

“Do we have the capacity to absorb this amount of spending in such a short period, what are the inflationary aspects of this? Apart from the propensity of government to waste, there is also the question of financial indigestion,” he said.

Cabinet this week approved the $150 million purchase of three new presidential jets and parliament passed an 88 billion naira budget for the electoral commission to overhaul voter lists, funds to be raised through a government debt issue.

Dankwambo said a further $1 billion had been withdrawn from the excess crude account, a pillar of IMF-backed reforms into which Nigeria saves oil revenues above a benchmark price, to be set aside for the creation of a sovereign wealth fund.

The withdrawal leaves just $460 million in the excess crude account, compared to around $20 billion in early 2007, the start of the current presidential term.

Finance Minister Olusegun Aganga, a former Goldman Sachs executive appointed in March, has said he wants a sovereign wealth fund to replace the excess crude account, which has no clear constitutional basis.

But the fund has not yet been created and it was unclear where the $1 billion would be held in the interim.

REUTERS

Finance experts say
overall economic activity appears to have lost the momentum of its
rebound during the second quarter of this year, thus bringing concerns
that a second round of financial crisis is beginning to spread across
global economies.

“The current budget
deficits and planned cuts in spending in most developed countries may
pose further challenges to sustainable global economic recovery,” said
a report on the review of the Nigerian economy by Access Bank
yesterday.

“Recent economic
data from developed economies indicate a disturbing situation, with
unemployment rates remaining high, amid further weakening in
manufacturing activities and consumer sentiment. The threat to global
economic recovery appears to be broadly entrenched and real,” the
report added.

It said that
improvement in oil GDP is a key feature that would support the nation’s
overall economic expansion in the face of these uncertainties while
sustained growth in non-oil sector, especially agriculture, wholesale,
retail trade and services, remained the major driver of growth.

“The drop in crude
oil price was a major concern for Nigeria, with President Jonathan
urging a downward review of some key assumptions of the 2010 budget.
Factors to support crude oil price include the weakening of the US
Dollar against major currencies, increased flow of speculative money,
supply bottlenecks resulting from political instability in oil
producing countries, elevated demand from China, as well as
stabilisation in major economies.”

A flicker of hope

Similarly,
Financial Derivatives Company, a finance firm which offers treasury and
financial services, said the economic mood has since soured and double
dip is the phrase on everyone’s lips. The report said that economists
were still optimistic, adding that a poll by the Wall Street Journal
showed that economists are more optimistic than the general public.

“History shows that
whenever economists are more optimistic than the public, the good times
are around the corner. Economists views lead and public views lag
prosperity” the report stated adding that Nigeria has to spend its way
out of the slowdown.

“Aggregate spending
in budget 2010 could exceed N5 trillion. With the states, we expect N10
trillion. Absorptive capacity weakness could lead to fiscal spills and
leakages. The Senate has also approved N445 billion extra spending and
there is an expansionary budget supported by accommodative monetary
policy. All these are expected to catalyse growth,” it added.

Finance experts say the nation’s rising fiscal deficit, increase in
domestic borrowing, shrinking of credit to the private sector,
depleting foreign reserves, and an uncertain foreign exchange market,
cautious approach to the stock market by brokers and unyielding
investors to recapitalise banks are fall outs of the financial crisis.

The
current market performance at the Nigerian Stock Exchange (NSE)
contradicts the projected positive outlook by some finance analysts.

Resource Cap
Limited, a portfolio management firm, in a report in July, forecast
that “performance at the nation’s capital market in the remaining
trading days of the third quarter of 2010 will be positive following
the signing into law of the Asset Management Corporation Bill.” The
company projected that the market All-Share Index, a measuring
parameter, will end the quarter at 30,000 basis points. Some
stockbrokers had also predicted the same trend for the third quarter.
However, since last week intervention by the Securities and Exchange
Commission (SEC), the NSE has recorded over N173 billion losses. At the
close of proceedings on Wednesday, the Exchange market capitalisation
which plunged on Tuesday by N63 billion further depreciated by N78
billion; reflecting a 1.25 per cent decline while it closed at N6.121
trillion from N6.199 trillion.

The All-Share
Index, yesterday, also shed 1.25 per cent or a loss of 318.89 units
from Tuesday’s figures of 25,350.98 basis points, to close at
25,032.09. A total of 23 stocks appreciated in value, higher than the
23 stocks recorded the preceding day; while 45 stocks depreciated in
value, lower than Tuesday’ 48. A stockbroker, who spoke under
anonymity, said the market may experience more downturn because
“investors are now shying away from the market since no one can predict
the outcome of the SEC independent investigators.” “Stockbrokers and
their firms are also cautious because we don’t know who is next to go,”
he said. The SEC, last Thursday, appointed independent investigators,
Aluko & Oyebode, a law firm; and KPMG, an accounting firm, to
investigate the allegations of financial mismanagement at the Exchange.
The jointly independent investigators have since commenced work.

‘Leadership imbroglio’

Commenting on the
current market performance at the close of Wednesday’s trading,
Analysts at Proshare Nigeria Limited, an investment advisory firm,
said, “The leadership imbroglio ravaging the Nigerian Stock Exchange
continues to have severe consequences on the equity performance. This
would be against expectations from some quarters that the assumption of
the Interim Administrator of the NSE will tame the consequential effect
that would follow; that is yet to be seen.” Meanwhile, they said the
downturn recorded on Wednesday could be attributed mainly to heavier
declines recorded in some blue chip and banking stocks. “We hope to see
the expected positive impact of the reported measures aimed at
restoring investors’ confidence in the market being put in place by the
interim management of the NSE, even as the team solicits for
cooperation of market operators for moving the market to stability,”
they said.

Unaudited results

At the Exchange’s
floor yesterday, Intercontinental Bank Plc presented its financial
accounts to market operators. The bank’s unaudited financial result for
the second quarter ended June 30, 2010 shows a 49.49 per cent decline
in turnover, from N85.065 billion to N42.968 billion. Its profit after
tax also fell by 102.07 per cent from (N109.333 billion) to N2.268
billion. Total net asset for the period in review depreciated by 0.71
per cent, from N380.344 billion to N377.628 billion.

President
Goodluck Jonathan has pledged his support to the ongoing effort by the
Securities and Exchange Commission (SEC) to cleanse the Nigerian
capital market. In his posting on Facebook, the social networking site,
he said he will give political cover to the commission in taking any
necessary measure backed by law to cleanse the stock market.

“I also extend that
same promise to all heads of Federal Government agencies and bodies in
charge of maintaining or… enforcing Law and Order be it in the civil
population, the military/paramilitary, anti corruption bodies or the
core civil service,” he said in his Facebook wall posting on Tuesday.
“I want you all to know that there will not be any negative
consequences to you for doing your job in accordance with the laws of
our land.” The comment attracted 1, 049 remarks while 158,587 people
followed the posting.

Social justice

According to the
president, there must be social justice without which there will be no
level playing field for the citizens to operate. “I personally do not
see the justice in sentencing to prison a man who steals because he is
hungry while the man who causes the hunger by misappropriating funds
meant to ease society’s burden is treated with kids gloves,” the
president stated. SEC last week sacked the director general of the
Nigerian Stock exchange, Ndi Okereke-Onyiuke, and president of its
council, Aliko Dangote on grounds of infighting, lack of corporate
governance and alleged fraud and bankruptcy. The commission
subsequently appointed an interim management led by Emmanuel Ikhazoboh,
the immediate past chairman of Akintola Williams Delloite, a firm of
chartered accountants.

The commission DG,
Arunma Oteh, said it has commenced investigations into the activities
of the stock exchange over allegations of financial irregularities in
the exchange. “The allegations purport that the exchange is insolvent
and may soon face bankruptcy and it will not be able to meet its
financial obligations,” she said.

Unethical practices

Also, on Tuesday,
Ms Oteh told the House of Representatives Committee on capital market
that about 260 persons and organizations are to face charges over the
crisis in Nigeria’s capital market, in continuation of its resolve to
purge the sector of unethical practices. She acknowledged the
widespread allegations of increasing insider dealings, share price
manipulations, of weakness in enforcement of excessive risk taking in
the market environment, which informed the plan to possibly bring
charges against those listed.

She said the intervention was to save the fragile capital market
that has already been hit by allegations of various malpractices,
including insider trading and share prices manipulation. “Like you
know, our call and mandate is to protect public interest and to protect
the investor, particularly what I will consider the voiceless masses of
people,” she said.