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Beyond some crucial
first steps, the necessity for the regulator to define its message as
narrowly as possible, and keep to the message through the execution
phase, remains a major requirement for the success of the Central Bank
of Nigeria’s (CBN) reform of the financial services sector.

A sense that the
central bank knows what it is about is necessary if the aim is to
restore the markets’ confidence in the financial services sector to
pre-crisis level, at least. And the appropriate market responses are
vital if – the necessary lapses permitting – the bank’s intervention in
the economy is to have the desired result. This requirement is as
important for the task of linking deposit taking institutions’ retail
rates to the policy rate, as it is for reforming the domestic financial
system and returning the banking system to good health.

However, the
extensive deterioration in domestic financial conditions has provided a
poor background against which to judge the CBN’s work. This is of
course not about the central bank’s culpability for the poor state of
the country’s financial services sector. You do not need too much
hindsight to recall that the sector was already in freefall, long
before the CBN discovered its present reforming zeal.

Nonetheless, the
implosion of the market for bank credit has hindered the regulator’s
ability to maintain domestic financial stability. We have seen it worry
about the humongous liquidity in the financial system, only to see its
intervention in support of continued interbank transactions create more
of such liquidity. With any luck, another such panacea, the Asset
Management Corporation (AMCON), in addition to its beneficial effects
on the economy, will exacerbate the financial sector’s current battle
with low-earning funds.

The “credit crunch”
has had other less than helpful effects too: on urban unemployment;
final domestic demand; and national output growth. Until recently, all
of these have had the tendency to divert the CBN from its core task. It
was a relief therefore, when some months back, the rate-setting
committee of the bank made a clear distinction between domestic
responsibility for credit supply (the remit of monetary policy), and
the responsibility for ensuring that the domestic demand for credit
keeps ticking (fiscal policy, and government’s continuing pursuit of
reforms to the economy).

After all is said,
and not much is done, how does all of these sit with the central bank’s
recent claim that it has commenced an 18-month plan to address the
contraction of the credit supply pipeline in the nation’s financial
institutions? According to Kingsley Moghalu, the CBN’s Deputy Governor
in charge of Financial System Stability, the newly discovered process
will help allay investors’ concern over the banks’ credit allocation
process. If it knew of this nostrum all this while, why did the central
bank wait until the credit-creation infrastructure collapsed, before it
bestirred itself? And why wait 18 months before this process yields
results?

There is a certain
noxious, albeit familiar, odour to this new claim by the central bank!
Strange isn’t it, that after having described the process of
stimulating credit demand in the country as the sole preserve of
government, including issues with the domestic cost of doing business,
the CBN should want to turn that logic on its head, by accepting that
it has a magic wand that will allow us witness “significant growth in
credit in the banks” only because the reforms embarked on by it were
“in consultation with the stakeholders and players in the banking
sector”.

We do not need the
Power Holding Company of Nigeria to work again. We do not need
government to resume reforms to the domestic economy, including passing
on some of the service functions that it currently discharges most
inefficiently to the private sector. No! All that matters is that the
CBN has its reform architecture right, and in 18 months time, the
credit taps will open once again. “To who?” would have been such a nice
question to ask Mr Kingsley. And it is a wonder that his audience at
the Financial Institutions Training Centre function where he made these
assertions did not enquire thus.

One other query, how much of the central bank’s newly discovered
competence is a pandering to suggestions from the executive arm of
government, keen to deflect attention away from its competence deficits
in an election year? The 18 months implementation horizon appears very
significant within this context.

The value of
equities at the Nigerian Stock Exchange (NSE) which plunged on Monday,
the first day in office of the newly appointed interim administrator of
the NSE, Emmanuel Ikhazobo, further depreciated at the close of
Tuesday’s trading.

The Exchange market
capitalisation closed yesterday at N6.199 trillion after opening the
day at N6.262 trillion, reflecting a one per cent decline or over N63
billion loss. The market also lost over N32 billion on Monday while
about N5 billion was gained last Friday on the announcement of Mr.
Ikhazobo as the new head.

The All-Share
Index, on Tuesday, shed one per cent whic was a loss of 255.11 units
from Monday’s figures of 25,606.09 basis points, to close at 25,350.98.

Mr. Ikhazobo, a
former managing partner of Akintola Williams Deloitte, who rang the
Exchange’s trading bell on Monday, said he’s in the market to foster
restoration of investors’ confidence.

However, Femi
Awoyemi, the chief executive officer of Proshare Nigeria Limited, an
investment advisory firm, said the need for the recent intervention by
the Securities and Exchange Commission should not be confused with the
means by which it was achieved.

“There are a few
missing links which I understand those responsible for the market are
seriously looking at and I understand that those affected have also had
time to reflect on developments and recognise that things needed to
change,” Mr. Awoyemi said.

Gainers and losers

At the close of
Tuesday’s trading, a total of 22 stocks appreciated in value, lower
than the 30 recorded on Monday; while 48 stocks depreciated in value,
higher than the preceding day’s 37.

Julius Berger and
Northern Nigeria Flour Mills topped the price gainers’ table with an
increase of N2.61 and N1.76 on their initial prices of N52.28 and
N35.25 per share. Ashaka Cement and UAC Nigeria followed in the chart
with an increase of 60 kobo each, to close at N20.00 and N44.00 per
share.

On the flip side,
Nigerian Breweries and Benue Cement Company led the price losers’ chart
with a loss of N1.50 and N1.00, from their opening prices of N74.00 and
N65.00 per share. Despite leading among top traded stocks on Tuesday,
Guaranty Trust Bank and Zenith Bank followed in the losers’ chart with
80 kobo and 53 kobo losses, to close at N16 and N13.77 per share.

Financial accounts

At the Exchange’s floor yesterday, Skye Bank and Oando presented their financial accounts to market operators.

Skye Bank Plc’s
unaudited financial result for the second quarter ended 30 June shows a
1.21 per cent increase in gross earning, from N51.334 billion to
N51.953 billion. However, the bank’s profit after tax fell by 32.44 per
cent from N7.531 billion to N5.088 billion and its total net asset for
the period in review appreciated by 8.09 per cent, from N88.086 billion
to N95.210 billion.

In its second
quarter result ended June 30, Oando Plc recorded a turnover of N172.859
billion from N165.036 billion; representing a 4.74 per cent increase.
The profit after tax, however, dipped by 2.43 per cent from N6.737
billion to N6.573 billion, just as net asset for the period went up by
46.24 per cent from N53.520 billion to N78.268 billion.

The
Central Bank of Nigeria (CBN) has said its intervention in some sectors
of the economy is not going to cost the federal government money since
the funds are fully provided for. This clarification comes amidst
concerns about the legality of the CBN disbursing such huge funds
without legislative approval.

Lamido
Sanusi, the CBN governor said recently that the funds which would be
disbursed through commercial banks would be recovered at the end of the
day. “We are lending to BOI (Bank of Industry) and BOI is lending to
banks and the lending is secured by government security,” said Mr.
Sanusi.

“So
for a power project to benefit from this, the bank has to be convinced
that it is commercially viable and that it can repay the loan. If it is
a bad loan the bank makes the provision. All we do is sell the
government bond and recover our money.”

The
Central Bank is releasing N500 billion to companies in power, aviation,
and manufacturing sectors in its bid to encourage economic growth and
infrastructure development to refinance their loans. On Monday, it also
announced plans to intervene in the agricultural sector with the
signing of agreement with the Alliance for a Green Revolution in Africa
(AGRA) to develop a mechanism for unlocking billions of naira of
financing to serve the needs of all farmers, especially smallholder
farmers, agro-processors, agribusinesses and input suppliers in the
agricultural value chain.

CBN needs to do more

Razia
Khan, Regional Head of Research, Africa at Standard Chartered Bank said
the Central Bank would need to do more in order to encourage banks to
lend their money to the real sector of the economy. Ms. Khan said there
is little prospect of a meaningful rise in credit until the non
performing loans constraining new credit growth have been removed from
banks’ balance sheets. “Given the imminent establishment of an Asset
Management Company to do precisely this, Nigeria may not have to wait
too much longer to see this excess liquidity transformed into
private-sector credit,” she said.

A
treasury manager in one of the banks who spoke on condition of
anonymity said the CBN intervention though laudable, was tantamount to
rewarding companies that have not been prudent in managing their
resources.

“What
you are saying is that those whose assets are performing are being
punished since those who have not managed their funds well now have
access to cheap funds,” he added.

Haphazard approach

He
added that the manner the Central Bank was going about it suggests a
haphazard approach to tackling economic issues. “Initially it was power
alone, then aviation, then manufacturing. It does not suggest that it
is part of a coherent economic policy at the macro level. So the
criticism is that it is adhoc instead of situating it as part of a
broader policy,” he said.

He
however explained that the move was in line with the CBN mandate as
lender of last resort and does not require the consent of the National
Assembly to appropriate such funds.

This
tally with the view of Bamidele Aturu, a lawyer, who said the Central
Bank intervention was akin to rewarding government cronies. “If the
government is serious about stimulating the economy all it has to do is
to create jobs, fix the infrastructure, mechanise and support farming
and farmers and of course fight corruption. No country can develop by
giving free money to a lazy and dissolute class,” Mr. Aturu said.

But analysts at Afrinvest West Africa Limited, an investment banking
firm said the banking industry would benefit from the intervention.
“With specific reference to the CBN/BOI N500 billion infrastructure
fund, our understanding is that the CBN seeks to stimulate credit to
real sectors of the economy while immunizing its balance sheet from
credit risks.”

Global miner Rio
Tinto’s Zimbabwe unit expects to resume diamond exports in a few days
after a government ban on sales in May, the company’s managing director
said on Wednesday.

Zimbabwe banned all diamond exports until stones
from the government’s controversial Marange fields, where it operates
two joint venture mines, were certified by industry regulators. “We
have been in communication with the government and we expect to resume
(exports) in a few days,” Neils Kristensen told Reuters.

The Nigeria Deposit Insurance Corporation (NDIC) has said it is
reviving its task force on financial crimes in order to strengthen its
prosecution of bank related fraud cases.

Umar Ibrahim, the acting managing director and chief executive
of NDIC, said bank directors who have abused their positions deserve to face
the consequences of their crimes.

Speaking in Lagos while receiving a team from the Financial
Malpractice Investigation Unit (FMIU) of the Nigeria Police Force, Mr Ibrahim
said the police and judiciary would need to do more to tackle financial crimes
in the country.

He said the task force will also tackle new cases that emerge in
the course of sanitising the financial sector. “This is without prejudice to
cases EFCC has been handling.”

Smooth operation

He added that the corporation will work to remove obstacles that
would hinder the smooth operation of the unit. “It is unacceptable and immoral
for people to go scot-free when it is found out that they have contributed to
failures in banks. Government is doing everything to rebuild confidence in the
financial system. More will be achieved when offenders are brought to justice,”
he said. He said the task force which was active during the military era would
be reconstituted in order to accelerate its activities.

“The law was repealed in 1999 and since then, the NDIC has been
left with a lot of cases that need to be prosecuted,” Mr Ibrahim explained.

The then military government promulgated the Failed Banks and
Financial Malpractices in Banks Decree in 1994 to accelerate the prosecution of
persons involved in banks and other financial crimes within 21 working days.
Until it was repealed in 1999 at the advent of democratic rule, a total of
2,464 cases were pending before the Tribunal comprising 2,332 civil and 132
criminal cases. A total of 716 cases were disposed off comprising 672 civil and
44 criminal cases.

The sum of N4.3 billion was recovered through the machinery of
the Failed Banks Tribunal, out of which the sum of N3.55 billion was paid in
respect of banks in liquidation. The NDIC as at the time the tribunals were
scrapped had refunded the sum of N5.8 billion to depositors of 35 banks which
were closed.

Legal obstacles

Assistant commissioner of police, Funsho Saheeb of the special
fraud unit said legal obstacles were always thrown in their path, in their
quest to investigate suspected offenders. “When we send out invitation to
culprits, the next thing we see is petition from their lawyers, copying the
Inspector General of Police questioning our right to invite their clients,” Ms
Saheeb said. She said lawyers use frivolous legal means to shield their clients
from investigation.

The stock market took a swift turn away from the bearish trend
it started the week with following the development at the Nigerian Stock
Exchange which led to change in the leadership of the Nigerian Stock Exchange.

The market had began the week on a bearish note but later
recovered on the third day of trading, gaining significantly by 1.07%. The
positive streak was sustained throughout the last three days of trading of the
week. At the close of trade on Friday NSE All Share Index gained 0.09% to close
at 25,738.79 while the market capitalization also appreciated by N5.72 billion
to close at N6.295 trillion.

A review of the week’s activity showed a turnover of 1.1 billion
shares worth N9.11 billion in 27,401 deals was recorded last week, in contrast
to a total of 2.11 billion shares valued at N17.7 billion exchanged last week
in 33,067 deals.

The NSE All-Share Index depreciated by 105.39 points or 0.4% to
close on Friday at 25,738.79 while the market capitalization of the 199 First
-Tier equities closed lower at N6.3 trillion. However, the NSE-30 Index appreciated
by 0.22 points or 0.04% to close at 1,076.12. Last week, ASI and NSE-30 Index
appreciated by2.3% and 2.7%, respectively.

Three of the four Sectoral Indices depreciated during the week.
The NSE Food/Beverage Index depreciated by 5.47 points or 0.62% to close at
834.95, the NSE Banking Index depreciated by 2.53 points or 0.62% to close at
388.06 and the NSE Insurance Index depreciated by 8.19 points or 4.41% to close
at 179.40. However, the NSE Oil/Gas Index appreciated by 0.79 points or 0.22% to
close at 375.41.

Overall, the market depreciated by 0.41% both in market
capitalization and index. While the market has recorded 26.16% (YTD) yield in
market capitalisation.

Forty Five (45) stocks appreciated in price during the week,
lower than the forty-four (44) of the preceding week. PZ led on the gainers’
table with a gain of 5.00% to close at N35.70 per share while

Livestock followed with 5.00% to close at N0.63 per share. Other
price gainers’ in the Top 5 category include; Ikeja Hotel 5.00%, NASCON 4.98%,
and WAPIC 4.92%, closing at N1.47, N7.38, and N0.64 respectively.

Forty three (43) stocks depreciated in price during the week,
lower than the forty-nine (48) of the preceding week.

Honey flour led on the price losers’ table, dropping by 4.99% to
close at N6.09 per share while AG Leventis followed with a loss of 4.99% to
close at N3.43 per share. Other price losers in the Top 5 category include; HIS
4.98%, FCMB 4.94%, and 4.93% closing at N3.82, N7.50, and N34.10 respectively.

Most active sectors

The Banking subsector was the most active during the week
(measured by turnover volume), with 479.5 million shares worth N4.1 billion
exchanged by investors in 14,606 deals. Volume in the Banking subsector was
largely driven by activity in the shares of Zenith Bank Plc,

First Bank of Nigeria Plc, UBA Plc and Guaranty Trust Bank Plc.
Trading in the shares of the four Banks accounted for 215.2 million shares,
representing 44.9% and 19.8% of the subsector’s turnover and total volume
traded during the week, respectively. The Insurance subsector, boosted by
activity in the shares of Unity Kapital Assurance Plc and Continental
Reinsurance Plc, followed on the week’s activity chart with a turnover of 289
million shares valued at N227.6 million in 1,004 deals.

Corporate results for the
week

During the week, the following Companies released their results
to the floor of the NSE: International Breweries Plc released its unaudited
second quarter (Q2 June) 2010 results; Premier Paints Plc also released its
audited year ended December 2009 results while NCR (Nigeria) Plc announced its
audited year ended December 2009 results.

Here are details of the financial results submitted by the
companies:

World Stock Markets Summary US stocks posted modest gains during
the first week of August, led by the S&P 500 index with a gain of 1.82%.

Within the S&P, health care and energy companies rose the
most.

Pork belly future contracts jumped 18% for the week, while the
US dollar fell to a 15-year low against the Japanese yen.

The Dow ended up 187.62 or 1.79% for the week, logging
3-consecutive weeks of gains The S&P 500 ended up 24.04 or 1.82% for the
week, its first weekly increase since 7/23 when it rose 3.55% The S&P has
posted weekly percent gains of 1.5% or more approximately 31% of the time this
year, including the current week 366 (~73%) of the S&P 500 components
advanced for the week, and 4 companies were flat The NASDAQ Composite ended up
33.77 or 1.5% for the week, its first weekly increase since 7/23 when it rose
4.15% The NASDAQ has posted weekly percent gains of 1.5% or more approximately
37% of the time this year, including the current week 78 of the NASDAQ 100
components increased for the week, only 1 company finished flat.

Nigerian money market
update

Nigerian interbank rates were flat at 1.08 percent on average
this week, with excess liquidity of more than 300 billion naira ($2.3 billion)
in the banking system keeping a lid on the cost of borrowing. Borrowing costs
between banks could stay flat next week as well, with liquidity likely to
remain flush due to additional inflows from monthly budgetary allocations.

The secured Open Buy Back (OBB) was unchanged at 1.05 percent, 5
basis points above the Standing Deposit Facility (SDF) rate and 4.95 percentage
points below the central bank’s benchmark rate. Overnight and call were also
flat at 1.10 percent each.

Liquidity had been boosted by the central bank’s injection of
130 billion naira in intervention funds for the refinancing of debt in the
manufacturing sector last week, despite withdrawals by state energy firm NNPC
on Friday.

Market outlook

In the aftermath of the leadership crisis at the Nigerian Stock
Exchange, the week ahead will see investors increasing its activities in the
stock market as confidence gradually return into the system. We expect the
market to further rally in the weeks ahead.

The Nokia N900 is a touch screen and slider phone that has a
QWERTY keypad. It is also Nokia’s fist phone that runs Maemo5, a Debian Linux-based
operating system that can run on computers and phones and it may end up being
the only Nokia phone with Maemo5. This leads to the question is the N900 worth
the purchase?

One thing I like about the N900 is the fact that it has a
keypad. I really hate touch screens (eat your hearts out iPhone folks), so the
fact that Nokia was smart enough to provide the slide out keyboard is an
excellent choice on their part. However, one must point out that the N900’s
touchscreen is very responsive. The colour quality is also very good, and the
screen resolution (800×480) is an excellent choice. This brings this phone well
into computer range (most netbooks use that resolution natively).

The sound quality of this phone is unbelievable. The speakers
which are located on opposite sides of the phone are something, and this
quality makes it a great phone for listening to music or quickly watching that
downloaded video. Unfortunately, Zain’s connection did not allow me to see what
a streaming video would look like.

Like any good Operating System should be, it is easy to
customise Maemo5. This made it easy for me to put different applications in
particular orders on different homescreens. The N900 has 4 by default which
also means that you can have multiple programs open and switch between them
easily. Think of it as the equivalent of Alt+Tab on your PC.

Web browser

One of the killer apps for me is the in-built web browser. Based
on Mozilla, it is called MicroB, and unlike certain other platforms (iPhone and
Android I mean you), it has support for Adobe’s Flash. If you are a news
junkie, you will find the inbuilt RSS reader to be a very useful tool. Just
export your XML file from your computer and import here, or better still
subscribe directly to your favourite news sites and everything comes to you
with ease. Unlike in most other smartphones, the web browser recognises the
phone as a desktop computer. This means that when you are going to Facebook for
example, you get the full site instead of the striped down mobile version. But
the downside to that in the Nigerian environment is that I had to keep paying
more money to Zain for Internet connection. It might make more sense with MTN’s
mobile Internet package.

The phone’s application manager is easy to use. However, I think
that Android’s Marketplace is some steps ahead. Again it did not seem to have
as many applications as the Android, which definitely means that the iPhone has
more applications than it does. Unlike my Android, however, I did not have to
start scrounging for FM software as the phone’s music player has an inbuilt FM
transmitter which allows you to listen to stored music in your car on the move.

Impressive storage

Speaking of storage, the inbuilt storage on the N900 is
impressive. It comes with 32GB split into three partitions. 2GB is mounted as
home, 768MB is reserved for swap space, and the remainder, a princely 27GB
(remember this is a phone) is reserved for storage. Now, that is something.

One great advantage that the Blackberry has over this phone is
that setting up email accounts on this phone for push mail is not at all
intuitive. I gave up after some attempts, but to be honest since I was just
testing the phone, maybe I did not try hard enough. Another thing I did not
really dig is the size and weight of the phone. If I was the owner of the
handset, I’d be tempted to stone a Lagos bus conductor with my device. He would
certainly know that he had been hit by something.

Back to the earlier question, is the N900 worth the purchase?

For an infinitely large phone book where you can store contact details,
working bluetooth, infrared and USB, and a 5 megapixel camera where pictures
can be geo tagged, and a battery life that the manufacturers claim is up to 9
hours of talk time; the only reason not to shell out N66, 000 at the Computer
Village, Otigba, Ikeja, Lagos is that our mobile service providers don’t give
us enough bandwidth to make this phone really fun. If they did, it is worth
having.

The Central Bank of Nigeria (CBN) yesterday said it has
developed a mechanism that would facilitate access to financing for
small-holder farmers, agro-processors, agri-businesses, and input suppliers in
the agricultural value chain.

The mechanism called Nigeria Incentive-based Risk Sharing System
for Agricultural Lending (NIRSAL) will be operated in collaboration with the
Alliance for a Green Revolution in Africa (AGRA), United Nations Industrial
Development Organisation (UNIDO), and other agricultural operators in the
country.

AGRA is an Africa based organisation working in partnership with
governments, agricultural research organisations, farmers, private sector,
civil society, and other rural development operators to improve the
productivity and incomes of resource poor farmers in Africa.

The aim is to provide farmers with affordable financial
products; reduce the risk farmers face in securing loans under other financing
programmes offered by financial institutions; help build capacities of banks to
expand lending to agriculture; deploy risk sharing instruments to lower risks
of lending, and develop a bank rating scheme to rate banks based on their
lending to the agricultural sector.

Home grown instrument

As part of the agreement signed yesterday to mark the formal take
off on the mechanism, the Central Bank governor, Sanusi Lamido Sanusi,
expressed dismay that though agriculture accounts for over 40 percent of
Nigeria gross domestic product (GDP), only one percent of total commercial bank
loans goes into the development of that sector, describing NIRSAL as Nigeria’s
home grown instrument for achieving transformation.

Mr. Sanusi, who described a productive and efficient
agricultural sector as the foundation for the food and economic security of the
country, said, “Unlocking access to bank financing for agriculture and
developing risk-sharing approaches is therefore critical for stimulating
innovations in agricultural lending and increasing food production.” The
Central Bank, he said, has initiated major reforms in the banking sector to
bring it in line with its priorities for sustainable economic growth, pointing
out that financing agricultural development is central to Nigeria’s economic
future.

Namanga Ngongi, the AGRA President, said the Central Bank’s
initiative has paved the way for new opportunities in the agricultural value
chain through leveraging financing from commercial banks, adding that the
NIRSAL example, if successful, is capable of setting the tone for the rest of
Africa.

“Agriculture is not different from any other businesses.
Agriculture is a business, not a way of life,” Mr. Ngongi said, arguing that
the key to its success is through the provision of farmers with access to
improved farming technologies, financial resources and market linkages as well
as financial literacy to help them use financing better.

Patrick Komala, the Country representative of UNIDO, noted the
CBN’s effort to promote agricultural development, adding that UNIDO is proud to
be a partner in the alliance for the development of the NIRSAL project even as
the agency looks forward to future collaborations to champion agricultural
development in Africa.

Finance
experts have noted that the declining earnings of banks are not
reassuring for an industry seeking to regain the confidence of
customers and investors.

They said this over the weekend at the official launch of the 2010 Nigerian Banking sector report in Lagos.

Ike
Chioke, the Managing Director, Afrinvest (West Africa), a finance
investment firm said for the creation of wealth and proffering of
solution to investment challenges, banks have disappointed, especially
in the area of asset creation.

“The
recent industry earning releases are not reassuring. There is a notable
decline in the growth of banks earnings. They did not create new
assets, and lending rates are still high. The signals we are seeing
from earnings are not encouraging. We are urging the banks to re think
and address their strategy as regards the creation of assets” he said.

“What
we are getting now is a write back of provisions made last year,
because hardly any new assets have been created. This is an opportunity
that can probably last for one more year” he said.

The
experts at the forum, comprising of the chief executive officers of
banks like Stanbic IBTC and Spring Bank among others, investors and
advisors from different finance houses, and representatives of the
industry’s regulatory bodies, confirmed that until the real sector of
the economy is revived, the future of the banking industry is not
really clear.

Joe
Alegienu, the representative of the central bank governor, Sanusi
Lamido Sanusi, said the regulatory body is already seeking solutions to
these problems in the real sector.

“The
Central Bank has promised N500 billion to the real sector. N200 billion
is allocated to SME’s and manufacturers and N300 billion to power and
aviation. I can assure you that the disbursement of these funds is
already in progress”.

“Of
the N200 billion allocated to SME’s and manufacturers, N130 billion has
been disbursed to the Bank of Industry. The Bank of Industry has also
disbursed N111 billion has been disbursed to 17 banks for 305 projects
that were applied for. We believe that this would help change the face
of SME’s and manufacturers industry in the country. We have just
concluded the guidelines and we are waiting for bank able projects in
that sector” he said.

“As
regards the N300 billion for the Power sector, we have just concluded
the guidelines that would be used to monitor the disbursement of that
fund and we are also waiting for bankable projects in that sector” he
said.

The fear of lending

Mr.
Chioke said one of the lingering effects of the central bank’s special
audit is that credit to the private sector has practically thinned out
as banks have directed focus on debt recovery. “Meanwhile, they are
defining new approaches to asset creation given now the obvious
requirement to exercise extra caution and due diligence in order to
avoid future losses.”

Afrinvest
West Africa says provisional data from the Central Bank indicates that
year- on – year credit growth slowed to 30 per cent in August 2009
compared to 59 per cent in January 2009 and the highs of over 100 per
cent in 2008.

The
Central Bank has also expressed concern at banks’ reluctance to lend,
especially to the real sector and has noted this at Monetary Policy
Committee (MPC) meetings.

One
of such concerns led to its resolutions of policy committee members
considering modalities for the injection of N500 billion into the real
economy, noting that though economic reforms and human capital
development remain key ingredients for economic growth, the apex bank
would continue to focus on macroeconomic and financial stability
considering its strategic role in achieving sustainable economic growth.

Finance experts are however urging banks to endeavour to create assets
and not rely wholly on writing back provisions made last year. Experts
say the asset management company would help the banks address their non
performing loans and reposition them to create new assets.

The Independent
Shareholders Association of Nigeria at the weekend faulted the decision
by the Securities and Exchange Commission to sack the Nigerian Stock
Exchange council, describing it as a hasty action “calculated to cover
up her inept regulatory inadequacies.”

The association in
a statement by its national coordinator, Sunny Nwosu, at the end of its
emergency General Meeting on Friday in Lagos pointed out that “the
punitive massive sack (of the leadership and Council of the NSE) was
done to provide soft landing for the estranged member of the council in
defiance to the order of a court of competent jurisdiction.”

The association,
along with some aggrieved shareholders of African Petroleum (AP) PLC,
has, since last year, been fighting a legal battle in a Federal High
Court, Lagos, for the annulment of the controversial election of Aliko
Dangote as the president and chairman of the NSE.

The August 6, 2009
election was held in defiance of an injunction for its stoppage after
the shareholders had instituted a legal suit against Mr. Dangote in the
wake of allegations that he connived with the Managing Director of Nova
Finance and Securities Limited, Eugene Anenih and 12 others to
massively manipulate AP shares early last year.

Though the court,
last March, ordered his removal as NSE President as well as the
nullification of the election organised by the exchange and commission,
Mr. Dangote refused to vacate the office, on grounds of an appeal he
filed against the judgment.

The shareholders’
association, which was awaiting a final verdict on the appeal, on
Friday described last Wednesday’s dissolution of the NSE Council by SEC
as proof that “investors’ protection were calibrated and measured,”
adding “SEC’s punitive regulation and actions on the ongoing court
rulings over the Presidency of the NSE has lowered the confidence level
of the nation’s capital market to an abysmal level.”

The commission, he
said, “clearly breached the confidence of investors and the nation’s
avowed rule of law by arriving at a hurried conclusion without
investigating all allegations and the substance of it,” arguing that
the association was not surprised at SEC’s attitude, accusing it of
“behaving like a maximum ruler in the troubled capital market.”

“SEC, like the
other members of the nation’s financial industry, has been cut by the
Sanusi Lamido Sanusi bug. Officials are now relieved of their
appointments without giving them appropriate opportunity to defend
themselves,” the association’s president said.

The association
maintained that the removal of the NSE council members would not stop
its court action, reassuring investors of its commitment to ensure the
total sanitisation of the capital market and protection of their
investments.