Nigeria Content Online

Nigeria National
Fitters Association, an affiliate of the Nigeria Labour Congress, at
the weekend threatened to disrupt the operations of Marubeni Nigeria
Limited, the contracting firm handling the National Independent Power
Project in Ogorode, Sapele local government council of Delta State. The
body accused the firm of not adhering to the local content policy in
not engaging its members in the ongoing project work.

The contracting
company was said to have hired about 40 foreign fabricators and thus
contravened the Nigerian Oil and Gas Industry Local Content Development
Act which strives to keep the upstream sector in the hands of Nigerians
as much as possible.

In a protest letter
addressed to the National Assembly, a copy of which was made available
to newsmen in Warri, they said it is unreasonable for a Nigerian firm
to engage over 40 foreigners in a job that could be handled
professionally by certified Nigerian fitters who have proven their
competence in the country and neighbouring African countries.

No disappointment

The protest letter
was signed by the zonal chairman of the association, Morrister Idibra
and his secretary, Clement Ukpebitere. The letter noted that Nigerian
fitters (fabricators) have not disappointed any firm and their major
challenge has been the influx of foreigners who are not better.

According to them,
all attempts to hold meetings with the company have been unsuccessful.
They warned that they will no longer tolerate a situation where jobs
meant for their youth, to reduce restiveness and insecurity, are given
to foreigners.

According to the
letter, “The Project Manager of the NIPP, a staff of Power Holding
Company of Nigerian (PHCN) has refused every attempt to hold meeting
with us instead he maintained that the project is a Federal Government
project and that there is an instruction that Nigerian fitters should
not be employed because they are not qualified.

“This we find
difficult to assimilate because Nigerian Fitters has been involved in
the building of power plant projects like Egbin Power Plant, Ughelli
Power Project and even the Ogorode Power Project”, the letter noted.

Reducing militancy

They also asked why
the federal government which seeks to reduce militancy in the Niger
Delta region and generate over 30,000 jobs within five years through
the implementation of the local content policy, should deny its
citizens opportunity to work.

“We cannot believe
the order came from a government that just passed a law on Nigeria
Local Content Development because it’s most unthinkable and
unreasonable that a job is been executed in our backyard yet we cannot
be employed”.

Some stockbrokers at the Nigerian Stock
Exchange (NSE) have called on Aliko Dangote, the embattled NSE
President, and Ndi Okereke-Onyiuke, the director general of the
Exchange, to settle the feud between them so that the market can return
to profitability.

Since the crisis started last week, the
NSE has plunged by over N119 billion. At the close of Tuesday’s
trading, the Exchange’s market capitalisation lost N53 billion, or 0.84
per cent, to close at N6.216 trillion from Monday’s figure of N6.216
trillion. The All-Share Index was down by 0.84 per cent to close at
25,418.84 basis points, from 25,634.39; reflecting a decrease of 215.55
units. The chief executive officer of a stock broking firm at the
Exchange building, who asked not to be named, said stockbrokers are
trying to work out a solution to the current crisis between Mr Dangote
and Mrs Okereke-Onyiuke. “We are talking to those concerned and we
believe we will find a solution at the end of the day. What is
uppermost in our mind presently is the interest of the market,” he
said. “The market needs peace. While we’re trying to cushion the effect
of the global financial crisis, people should not use the market as a
battle field. But like every crisis, it has to be resolved.”

He said the technical issue involved in
the matter is the question of the legal issue and the status of who can
do what. “This issue is a personal thing. What is happening in the
market is the story of two directors of a company having problems with
themselves and because they both have access to information; they are
now using the information in a way that is arousing investors’ fear,”
the broker said. However, he said investors should separate the market
from the Exchange’ accounting problem. “The trading platform which the
NSE provided for stockbrokers is still operational. We can still trade.”

Insolvency claim

On the insolvency
claim by Mr Dangote against the NSE, the Securities and Exchange
Commission (SEC), the regulator of the NSE, is yet to make public the
Exchange true financial state, though the NSE has refuted the claim.
Calls placed to the mobile phone of Lanre Oloyi, SEC’s Media Head, went
unanswered, and a text message sent to him was not replied. Meanwhile,
another stockbroker, who also spoke under anonymity and offered further
insight, said that Mr Dangote actually gave the true financial state of
the market. “We all expect the NSE management to come out clean since
the current global financial crisis affected many companies,” he said.

He added that in terms of the personality of the warring parties, “I
don’t think any broker has grudge against them,” he said. “What we are
not happy about is what is happening between the two of them and the
effect of it on the market. In the final analysis it is the brokers and
investors that will suffer the consequences of the dispute.” Bola Oke,
an executive member of the Shareholders Association of Nigeria, said
investors would love Mr Dangote and Mrs Okereke-Onyiuke to find
solution to whatever the problem is between them. “This worrying
development should not come at this time that the market has done so
much to put pressure on the government to come up with the Asset
Management Corporation which we believe will uplift the market on the
long run,” Ms Oke said.

The Central Bank of
Nigeria (CBN) insists that despite claims to the contrary, the Nigerian
economy is actually growing in real terms.

Lamido Sanusi, the
CBN Governor, said in Benin, Edo State, last week that official figures
from the National Bureau of Statistics which tally with the Central
Bank data suggests that the Nigerian economy is showing signs of
recovery. Mr Sanusi added that inflation rate which stood at 12.5 per
cent in April dropped to 10.3 per cent in June.

Cheering statistics

“When I became
governor in June last year, the rate of inflation was 15 per cent. End
of last June it was down to 10.3 per cent. When I became governor, the
OBB (open buy back) rate was eight per cent while the overnight rate
was 22 per cent. Now there is a convergence between the OBB and
overnight rate and that has been so for almost a year now,” he said.
The OBB is the rate at which firms trade treasury bills while the
overnight rate is the cost of unsecured funds.

Gross Domestic
Product (GDP), which is the market value of all final goods and
services officially made within the borders of a country in a year and
is a measure of standard of living, is projected to grow by 7.53 per
cent, with the highest growth in the fourth quarter of 2010. The
governor said the current value of the naira was an indication of
economic stability. “When I became governor, the official rate for the
naira was N145 while black market was around N189/N192. We have closed
the differential to less than two per cent and it has been like that
for over a year. The stock market had lost over 70 per cent before I
came in as governor. Between January and June it has regained almost 30
per cent,” he said.

Foreign perception

A financial market
dealer, who spoke on the condition of anonymity, said one indication
that the economy was still in the woods can be deduced from the
perception of foreign investors of the Nigerian economy. “The real
issue is that since the end of 2008, foreign portfolio investors have
lost interest in Nigerian assets in addition to drop in interest rate
on government bonds.” He added that forex demand is seasonal usually
peaking at April and May when multinationals and other expatriate
workers are remitting dividends to their home countries. “Also there
was much speculation around that period due to dropping foreign
reserves, fluctuating oil prices. People bought foreign exchange sooner
rather than later.” He noted that now that the naira was stabilizing,
demand will expectedly drop. Trading from the Wholesale Dutch Auction
System (WDAS) stands at between $21 and $23 billion annualized same as
last year. So, much has not changed.”

He added that the cyclical movement in foreign exchange demand may not necessarily point to an economy that is under pressure.

Uju Ogubunka, registrar and chief executive officer of the Chartered
Institute of Bankers of Nigeria (CIBN) said the banking industry which
is supposed to drive the economy has been floundering prior to the CBN
intervention last year. “Confidence has really taken a flight from the
industry,” he said adding that the effort by the CBN to reposition the
sector would augur well for the economy.

Finance experts
have praised the fact that banks’ books are improving by the quarter,
although they expressed concern with the efficiency ratios especially
the cost-to-income ratio.

Some banks recently
released their half year results, with highlights on loan growth
reflected on decision to preserve capital, retail and corporate banking
loan growth resilience, funding costs significantly lower, improvement
in their profit levels and asset quality, among others.

Sterling Bank’s
profit before tax for the half year rose to N4.2 billion from a loss of
N6.9 billion in June 2009 while UBA’s gross earnings fell to N93.7
billion in the corresponding period from the N109 billion for 2009.

Yemisi Edun, the
chief financial officer, FCMB, said in a statement that the bank hopes
to leverage on its efficiency levels for better profitability.

“The group showed
improvement in its performance quarter -on -quarter. This was largely
driven by recovery in our net interest margins and growing momentum in
non- interest income.” Devendra Puri, an executive director with
Sterling Bank said the second half of the year should reinforce the
trend seen in the first six months.

“Internally, we
will remain focused on efficiency and keeping our cost-income match
within an acceptable range. Our results show that the structural
improvements we introduced in the bank last year are bearing desired
results. Externally, we expect to see growth in net loans and advances
as well as a lifting of the pressure on interest margins driven by
events in the wider economy with a payoff on earnings and shareholder
returns. By and large, we are confident that Sterling Bank will
continue to consolidate on the gains of the first half of the year.”

Solid results

“In summary, we
believe that these were a solid set of results with the bottom-line
coming in ahead of expectations” said Kato Mukuru, Director, Head of
African Research, Renaissance Capital, an investment bank. Mr. Mukuru
added that the passage into law of the Asset Management Company (AMC)
bill should assist in freeing up some capital for banks to grow.

Some analysts say
during the 2010 half year period under review, that the low interest
rate regime had a negative impact on the appeal of the money market and
deposit-taking but that in the same time, a slight improvement in
macroeconomic indices showed evidence of a return of confidence among
businesses and consumers.

They however say
financial institutions were mostly cautious on credit expansion with a
deliberate containment of exposure to the capital markets, energy
products trading and real estate sectors as well as lower and mid-tier
business borrowers.

“We are however
optimistic that Second half, 2010 will give rise to better performance
as we expect recoveries in the economy to positively impact the banking
sector” an analysts at Afrinvest, a finance advisory firm said.

Business confidence in South Africa slipped in July on signs the
economy is still struggling to gain momentum after last year’s
recession, a survey showed on Thursday. The South African Chamber of
Commerce and Industry said its business confidence index edged down to
84.3 points in July from 84.8 in June as euphoria from the soccer World
Cup hosted by the country faded.

Some operators in
our nation’s capital market yesterday commended the courage of the
Securities and Exchange Commission (SEC) to wield the big stick against
the former Director General of the Nigerian Stock Exchange (NSE), Ndi
Okereke-Onyuike, and the former council president, Aliko Dangote.

Emeka Nwosu,
President, Independent, Shareholders Association of Nigeria (ISAN),
said the removal will restore investors’ confidence in the capital
market. Tope Fasua, managing director of an Abuja-based capital market
management firm, Global Analytic Consulting, described the removal of
the two as a positive development and a breath of fresh air for
investors.

“Ndi
Okereke-Onyuike’s exit, in particular, would mark a new beginning for
the nation’s capital market,” Mr Fasua said. “In situations like we
have in the market, where investors lost investments valued at several
billions of naira as a result of clear instances of manipulation of the
market by managers, it is good to clear the table and start afresh,” he
said on telephone from Dubai.

On steps to restore
confidence, Mr Fasua urged Nigerians not to expect the recovery of the
market in the short term, rather he advised investors to begin to think
in the long term, to allow enough time for the rehabilitation of the
market. “This will afford major investors – major oil companies,
telecoms operators – enough time for re-education on how the market is
going to work to attract more liquidity to the market,” he explained.

Esan Ogunleye, a
former registrar of the Nigerian Institute of Bankers (NIB), also said
the decision will boost the country’s risk and credit ratings as well
as the status and stature of the capital market.

Describing the
decision as long overdue, Mr Ogunleye said, over the last one year,
investor confidence has been on a downward trend, though it stabilised
briefly in the first quarter of this year. “After that, despite a loss
of two to three per cent in the capital market, it rose gradually and
flattened towards the end of that quarter, after recovering between 20
to 30 per cent capacity. Ever since, it has been spikes and falling.
With the sack, one can imagine what the investor confidence would be,”
he noted.

Namdeb will invest $1 billion in the next 10 years to extend the life
of its diamond mining operations near Oranjemund in Namibia, the 50-50
joint venture between De Beers and the Namibian government said on
Thursday. Namdeb hopes the investment, partly self-financed and partly
via funds from banks, will extend its diamond operations in the coastal
area to 2050. The company also said it expected to produce 500,000
carats of diamonds this and next year from its onshore operations.

The vice-chairman of Egypt’s main state wheat buyer said on Thursday he
hoped Russia would honour existing wheat contracts after Moscow said it
was temporarily banning grain exports. Egypt is the world’s largest
wheat importer, and General Authority for Supply Commodities has signed
contracts for the purchase of 540,000 tonnes of wheat from Russia for
delivery between August 1 and September 10. Russian Prime Minister
Vladimir Putin, who announced the ban earlier on Thursday, is seeking
to keep inflation in check after the worst heatwave on record ravaged
crops. “If a decision is issued and it is an official decision the
Russian government has to … allow (buyers) to implement the contracts
that have been completed, then ban any other contracts after August
15,” said Nomani Nomani, chairman of Egypt’s GASC.

The management of Oando Plc said, on Thursday, it had secured loan facilities worth N60 billion from 13 banks to fund growth.

Oando, which is listed in Lagos and Johannesburg, said First Bank,
Guaranty Trust Bank and Stanbic IBTC Bank were the lead arrangers for
the financing, which takes the form of a 5-year medium-term note.

The Zamfara State
government is collaborating with the federal government in the
execution of a N16 billion project to facilitate the transfer of water
from Bakalori Dam to Gusau water works, to find a lasting solution to
the perennial water scarcity in the state capital.

Kabiru Marafa, the
Commissioner for Water Resources, said the project would be jointly
funded by the federal and state governments.

Mr Marafa said that
apart from providing sufficient water supply to Gusau, the state
capital, and environs, six other local government areas, Maradun,
Talata Mafara, Maru, Bakura, Anka and Tsafe would also benefit from the
project.

He said the project was conceived by the state government in 2007, but suffered some delays owing to bureaucracy.