Nigeria Content Online

A South African
business lobby may buy 15 per cent of one of the country’s listed
banks, the head of the group said on Monday, in a deal that could be
worth billions of rand.

The National
African Federated Chamber of Commerce and Industry (Nafcoc) aims to
eventually take about a quarter of a listed bank, and will get help
from that lender to raise money for the deal, said Gilbert Mosena, the
group’s secretary general.

Selling a stake to
Nafcoc, which represents small companies often owned by blacks, could
help a lender raise its black ownership. Companies in South Africa are
required to meet government targets for black ownership.

Austen Oniwon, the
group managing director of the Nigerian National Petroleum Corporation,
has reassured the international oil companies operating in Nigeria that
the Petroleum Industry Bill, PIB, currently before the National
Assembly, was not designed to victimise them, but to simplify and
streamline the process of doing business in the Nigerian oil and gas
sector in such a way that all investors would operate on a level
playing field.

Mr. Oniwon made
this clarification during a meeting with the French ambassador to
Nigeria, Jean-Michel Dumond, who paid a courtesy call on him at the
NNPC Towers, Abuja.

He disclosed that
some of the concerns raised by the companies about doing business in
the country have been reflected in the bill, and urged France and other
western countries to invest in the downstream, midstream, and upstream
sub-sectors of the petroleum industry in Nigeria.

He called on the
ambassador to invite Total, the oil giant, to invest in the downstream
sector of the value chain by building refineries in Nigeria. He also
reiterated the federal government’s commitment to the deregulation of
the downstream sector in order to allow market forces to control the
prices of petroleum products.

Responding, Jean-Michel Dumond commended Nigeria for its quest to
promote transparency and accountability through the PIB, and expressed
the readiness of France to sustain its strategic business partnership
with Nigeria, disclosing that France is the second largest investor in
the petroleum sector in Nigeria.

An investment fund
plans to raise $100 million to buy assets in Zimbabwe ahead of a
hoped-for bounce back from the country’s status as an economic basket
case.

Masawara Plc has already secured a $25 million commitment from
one of Britain’s biggest investors, Invesco Perpetual’s Neil Woodford,
and its managers hope to achieve a total capitalisation of around $155
million. The new vehicle will invest in sectors where the
breadbasket-turned-pariah has a perceived comparative advantage, such
as mining and agriculture, its manager, Shingai Mutasa, told Reuters on
Monday.

Under a cooperation
agreement with the Bank of China, Ecobank Ghana has become the first
affiliate of the Ecobank Group to have a dedicated desk manned by staff
seconded by the Bank of China. The cooperation agreement between
Ecobank, a leading pan-African banking institution, and the Bank of
China, the country’s leading international bank, is a reciprocal pact
focusing mainly on international trade, projects and investments.
“Today sees the beginning of an exciting partnership between Ecobank
and the Bank of China,” Ecobank Group CEO, Arnold Ekpe, said. “We shall
open dedicated desks at selected Ecobank branches across Africa. In
return, the Bank of China will be our primary conduit in our business
dealings in China.”

Speaking at the
signing ceremony in Accra, Ecobank Group Executive Director, Corporate
Banking, Albert Essien, said: “The pact will allow the Bank of China to
cater more pointedly to their clients in Africa using the Ecobank
platform, while it also enables Ecobank to grow its China business.”
Ecobank and the Bank of China stand to benefit from the growing trade
and investment links between Africa and China. African exports to China
have increased significantly in the past few years reaching $30.14
billion in 2008. China exported goods worth $23 billion to Africa over
the same period.

Bharti Airtel, a
telecom services provider, has announced the appointment of Andre
Beyers as the chief marketing officer for its African operations.

The company
recently acquired the mobile services operations of Zain in 15
countries across Africa and is working towards introducing its brand
‘Airtel’ in these markets shortly. Mr. Andre will report to Manoj
Kohli, CEO (International) and joint managing director.

Commenting on the
appointment, Mr. Kohli said, “We are delighted to have Andre on board
and believe that his experience will be immensely valuable and
contribute to our vision of making Airtel the most loved brand in the
daily lives of African people.

“It will be our
endeavour to achieve leadership position in all our markets by
delivering a superior brand experience backed by world-class service,
strong distribution network, and innovative products that delight
customers. I wish Andre the very best for his new assignment.”

Mr. Andre brings
with him over 20 years of rich experience in marketing and brand
management, particularly in the telecom sector. He contributed towards
Vodacom’s marketing and brand efforts for 11 years. Andre spent 4 years
supporting Vodacom’s incubation hub (the fast tracking of advertising
and communications relating to new ideas) and managing Vodacom’s brand,
whilst working for FCB (South Africa’s largest advertising group) and
then led Vodacom’s marketing function for 7 years (2001 to 2008) during
which both customer base and revenue grew manifold.

Depositors
and shareholders of Savannah Bank Plc and Societe Generale Bank Nigeria
Limited may have to wait longer before accessing their funds since the
Central Bank of Nigeria (CBN) has outlined conditions under which both
institutions can open their doors for business.

Lamido
Sanusi, CBN governor, said even though their licenses have been
returned, both banks must show proof of strong financial capacity, a
new business model and foreign or local partners to show that they are
ready for business before it can extend any assistance to the promoters
of the banks.

“Of
course, with non performing loans, if they have collateral, we can buy
the non performing loans. If they want support similar to the ones we
have extended to other banks, CBN will give them all the support that
is reasonable.” According to him, it is left for the banks’ owners to
decide whether they wanted to remain in banking business or not.

A tale of two banks

Societe
Generale, owned substantially by second republic senate leader, Olusola
Saraki, was sent out of the clearing house in 2003 following its
inability to meet its financial obligations. During this period, the
bank was unable to fund its CBN Account, which was overdrawn by several
billions of naira. It also couldn’t meet the N25 billion minimum
capital during the banking consolidation of 2005, which led to the
withdrawal of its banking license.

The
bank then began legal proceedings, insisting that the revocation of its
banking licence was in bad taste, and that it was not given enough time
to recapitalise. In April 2008, a Federal High Court sitting in Abuja
granted its request and ordered the CBN to restore the bank’s license.

For
Savannah Bank, a Federal Court of Appeal in Abuja on February 20 2009
declared that the CBN and Nigeria Deposit Insurance Corporation (NDIC)
wrongly revoked the bank’s license and that it should be allowed to
return to business. The court then granted the bank an 18 month
recapitalisation deadline which expires next month. Savannah Bank is
also owned by a former governor and senator, Jim Nwobodo.

This
was supposed to be a breather for the bank’s 85,000 shareholders, and
over 750,000 depositors who had their fund trapped for the seven years
that the bank was closed.

However,
since both banks won their case against the regulators, there had been
no visible effort to reopen for business. “It is not for the central
bank to be working towards bringing SGBN or Savannah back but for the
directors and shareholders to work towards opening for business,” Mr.
Sanusi said.

Open shop, not partnership

Obi
Adindu, media consultant to Savannah Bank said then that the bank was
planning a multiphase opening strategy that would see the bank opening
its branches gradually and not all at once. “What we are doing right
now is harmonisation of assets to ensure that what we have in our books
tally with what are in the books of the liquidators. This is a normal
process. It is after this that we will take full control of our
premises nationwide.”

Boniface
Okezie, the leader of one of the shareholders’ group said the central
bank should not force the partnership option on the bank but should
rather support the bank to open its shop to customers first. “It is
obvious that the current investors do not have the financial muscle to
run the banks. The CBN should allow them to open shop first, reactivate
accounts of customers and from there they can begin to talk about other
things. They need to get new hands who will install corporate
governance in place so that the bank can be run professionally.”

Shareholders
say a major concern is the ability of the bank to return to an industry
that has undergone fundamental changes since its doors were shut about
eight years ago. Apart from meeting obligations to depositors, the bank
would need to deploy funds in total overhaul of its operation
machineries.

Banking
is highly IT driven and most of the facilities and infrastructure which
the bank relied on seven years ago have become obsolete. The hardware
and software would require total replacement while the requisite
manpower would have to be deployed to ensure the competitiveness of its
operation.

A
source who preferred to be anonymous said the greater challenge would
be for the bank to stand alone at a time when many operators are
anticipating further mergers and acquisition in the industry. “Efforts
at reopening the banks must be communicated to the public so that all
stakeholders would appreciate the genuine effort to reposition the bank
and open for business. This will help to build confidence of depositors
and shareholders,” he said.

The Central Bank of
Nigeria (CBN) recently released two exposure drafts, as part of its
ongoing reform of the financial services sector. Designed to complement
the proposed dismantling of the universal banking model, the “CBN
Scope, Conditions and Minimum Standards for Commercial Banks”, and “CBN
Scope, Conditions and Minimum Standards for Merchant Banks”, lay down
the conditions precedent to the licensing of these categories of
financial services providers, going forward. Industry practitioners
have been invited to review the proposals, and make comments where
necessary. Given the rather unassuming nature of industry operatives
vis-à-vis their regulator, they may well endorse these proposals in
their entirety. But from a much different vantage, all one hears are
sighs over the dangers from “reform creep”.

A slight variation
on a phrase first used in 1993 by journalists working with the
Washington Post to describe the status of the UN Peacekeeping mission
in Somalia, a useful definition of this malady is “the expansion of a
project or mission beyond its original goals, often after initial
successes”. It is also the case that persons who use this term mean no
endearments, because the new phases in the mission are perceived as
undesirable due to the fact that the dangerous path of previous
successes only breed more ambitious attempts, a process that invariably
stops with a catastrophic failure. Largely, this reading of the CBN’s
current reform trajectory is educated by one interpretation of the root
cause of the most recent financial crisis in the country.

Second-round
effects of the Great Recession, there may have been, but the main
finding of the apex bank’s special audit of the banking industry last
year, was the full extent of the failure of governance in the industry.
This failure showed up in the inability and unwillingness of the
managements and boards of some of these institutions to govern and
control them with a “view to increasing shareholder value and meeting
the expectations of the other stakeholders”. However, no less important
was the fact this governance failure was also about the CBN and allied
regulators’ capacity to oversee the industry properly. How much
interest did the apex bank show in the effectiveness of the corporate
governance of the institutions under its regulatory remit? And to what
extent were compliant directors able to rely on the CBN’s continuing
oversight of the risk profile and of the adequacy of the internal
control systems that were in place in their banks?

If these were
central worries then, they are no less so now. The only difference is
that the bulimia with which the apex bank has pursued its reform
initiative raises the question of the extent to which the new licensing
requirements address these concerns. How does a tiered commercial
banking licensing arrangement conduce to improve governance in the
financial services sector? Does it not instead add to the CBN’s
regulatory burden? In which case it helps to know, what effort the apex
bank has made to address its own regulatory lapses. What guarantees are
there that ahead of the next crisis, the CBN’s structure will not act
as it did before the last one, by ignoring wiser counsel from down the
ladder in favour of the ostriches in positions of authority? This test
is failed immediately, if the response to this latter query is that the
ostriches have since been gotten rid of. For the critical concern was
always with how the ostriches got into such positions in the first
place, and the support institutions, which subsequently kept them there.

Now, flightless birds apart. The other problem arising on the back
of the apex bank’s never-ending reforms is that it gives the impression
that we are doing all that is necessary to avoid the next crisis. This
is impossible. At best, we’d be working to ensure that lapses
identified as responsible for the last crisis are fixed. Part of the
crisis of capitalism is its need for regular cleansing – Schumpeter’s
process of creative destruction. So, that there will be another crisis
is without question. The markets are thus best served by a process that
strengthens institutions against observed lapses, while reinforcing the
capacity of most participants to auto-regulate. Micro-management is so
at odds with this requirement, and at variance with the need to ensure
that the market proffers solutions to our most difficult worries.

As the new board
members of the Nigerian Communications Commission resumed for duty on
Monday, some professionals in the telecom industry said the appointees
are competent in exercising their duties. In an email response on what
he thinks of the new members, Olusola Teniola, an engineer and the
chief operating officer of Phase3 Telecoms Ltd said, “According to
public information given about each nominee, it would appear that they
are highly competent to carry out their duties in ensuring the
stability of the political environment within the industry and more
important exercise their oversight mandate.”

The new board
members are Eugene Ikemefuna Juwah as the executive vice
-chairman/chief executive officer, Peter Egbe Igho as chairman,
Okechukwu Itanyi an executive commissioner, Mohammed Bintude as a
non-executive commissioner.

Since April, the
commission has been without a substantive executive vice-chairman after
the tenure of the former executive vice-chairman; Ernest Ndukwe came to
an end and the retirement of the board chairman, Ahmed Joda.

Last week, after
the presidency released the name of the appointees to the Senate for
approval, the National Assembly disbanded the committee on
communication over an alleged fraud activity in the committee’s
screening of the new board members of the commission. The chairman of
the committee on communications, Sylvester Anyanwu was alleged to have
been screening the appointees of the NCC alone without other members of
the committee and at night. Mr. Teniola said that the dismissal of the
committee on communications, last week showed good faith in democracy.

Ensure sustainability

“The intent and
objective of the president to nominate a new executive vice-chairman
and other board members (including the chairman) is to ensure
sustainability of 10 years of good regulatory momentum and to ensure
that the absence of a leader or referee in the industry is not
elongated to send the wrong signals to the industry and the global
community of investors,” added Mr. Teniola.

Nine years after
the introduction of GSM telephones, the telecom industry has shown so
much growth. Industry watchers say there is more work to be done in
order to move the industry forward. Jimson Olufuye, the president of
the Information Technology Association of Nigeria said, “The commission
should work closely with operators in the private sector, the gap
between the commission and operators should be removed. He should
ensure more transparency in the USPF deployment.”

Mr. Teniola added that the new board members should focus on
projects that are yet to be introduced by the commission. “There is
need for the commission to introduce Mobile Number Portability (MNP) to
address quality of service issues and allow consumers to easily migrate
from operator to another without losing their mobile number. This helps
ensure a level playing field and allows consumers greater choice.”

Lending by Kenya’s
commercial banks rose steadily between April and June, almost doubling
the lending growth during the same period last year, but remained below
desirable levels, the central bank’s Monetary Policy Committee (MPC)
said on Monday.

East Africa’s
largest economy is struggling to bring commercial lending rates lower
to stimulate greater credit expansion while facing a key referendum on
a new constitution later this week. Investors see a ‘yes’ vote as
important for stability.

Separate data on
Monday showed Kenya’s inflation rate ticking up slightly to 3.6 per
cent in July from 3.5 per cent a month earlier owing to higher food and
beverage prices, but analysts said it was expected to steady.

Gross bank loans
increased by 30 billion shillings between April and June 2010 to 828
billion shillings, with more than a quarter taken on by the
manufacturing sector. Domestic credit grew by 26.6 per cent in the
first half of 2010.

“The growth of
credit to the private sector, though, was noted to be below what is
desirable for a high growth trajectory,” the MPC said in a written
statement.

Central bank
Governor Njuguna Ndung’u told a news conference that last week’s cut in
the bank’s benchmark lending rate (CBR) by 75 basis point to 6 per cent
was to stimulate credit growth amid benign inflation and worries about
the high level of commercial bank lending rates.

“Despite (the)
reduction in lending rates … there is scope for banks to lower rates.
We are quite concerned about this,” he said.

While the central
bank has made seven cuts totalling 3 per cent to its lending rate since
it began a cycle of easing in December 2008, commercial banks have been
slow to follow.

Latest central bank figures put the average commercial bank lending rate at 14.39 per cent in June.

Market inefficiency

Ndung’u said the
spread between commercial banks’ rates was increasing as deposit rates
fell more sharply than lending rates. “These spreads signal
inefficiency,” he said.

At 1310 GMT,
Kenya’s shilling traded at 80.15/25, up slightly on Friday’s closing
price of 80.30/40 amid growing optimism Wednesday’s referendum on a new
constitution would be peaceful after the final campaign rallies passed
off without trouble this weekend.

Stocks on the Nairobi Stock Exchange’s benchmark 20 share Index climbed 1.27 per cent to 4494.78 points.

A central bank
market survey showed 41 per cent of banks saw credit expansion of more
than 10 per cent by the end of 2010 and more than half of private firms
expected their demands for loans to rise by more than 10 per cent
during the same period, the MPC statement said.

The same study also
showed that Kenya’s private sector is more optimistic the economy will
expand by more than 5 per cent in 2010 against 2.6 per cent last year
thanks to a rebound in agriculture and manufacturing.

The poll in July
showed that 17 per cent of those polled saw gross domestic product
above 5 per cent, nearly double the 9 per cent of those surveyed in
May, the MPC said.

“We are getting out of the trough faster than we thought,” Ndung’u said in reference to economic growth.

Separately on
Monday, month-on-month food and non-alcoholic drinks prices rose 0.5
per cent while alcoholic beverages and tobacco costs were up 1.2 per
cent on June.

“There are
pressures both ways so it (inflation rate) could remain within a fairly
narrow range,” said Nairobi-based independent economist Robert Shaw.

Inflation has been
slowing across east Africa most of 2010, largely due to easing food
prices as a result of heavy rains and increased harvests.

The next rains in
Kenya, usually short in duration, are expected around November. “If
they are deficient, it could exert pressure on food prices,” Shaw said.

When you are writing or updating your
will, it is important to carefully consider your choice of an executor.
This role, a largely administrative one, comes with huge responsibility
and can be extensive and time consuming. The work begins at the time of
death, from locating the will, and continues until taxes and debts have
been paid and what is left has been distributed in accordance with the
will. The objective is to ensure that all the deceased person wishes
are properly carried out.

It is important to pick someone whom
you know will be committed and wiling to accept the legal
responsibility and of course, someone you feel able to trust.
Naturally, you also want your executor to be someone who is quite
healthy and likely to survive you; for this reason it makes sense to
consider someone younger than you.

Should you choose a family member?

There are some advantages to choosing
an executor with whom you have a close personal relationship and many
people nominate a close relative to perform this role. One must be
conscious of the fact that a trusted family member is likely to be
emotionally affected by the loss and may find it unduly stressful to
handle executive responsibilities so soon. There will be a need for
absolute objectivity and impartiality without the emotional drain of
being at the centre of any potential family feud.

Where you decide to nominate one of
your adult children, you should be conscious of the fact that the
appointed child will have more power than his or her siblings; you want
to ensure that this doesn’t end up creating conflict instead of
ensuring that your family stays united after your death. An executor
should not have any conflict of interest and ideally a beneficiary to
an estate should not be the sole executor as the position can be used
to gain advantage in the distribution of property.

A common choice for many is a relative
who happens to be a lawyer. Whilst being a lawyer does have advantages
in performing an executor’s role, it is by no means absolutely
necessary. The most important thing is that it is someone that is
intellectually capable, financially responsible, and has the time to
pay attention to what could be the administration of extensive
financial and legal matters and has the respect of family members.

Or should you choose a professional?

An alternative to choosing a relation
or close friend is to engage the services of professionals that have
some expertise in estate planning such as a trust company or a law
practice; they would assign an individual or team to handle your estate
matters. There are stories abound of weaknesses in the role so it is
important to seek out a strong, credible company that comes
recommended, to protect your family from the possibility of an
unscrupulous or incompetent executor mismanaging their inheritance.

It can be expensive to hire the
services of a professional executor; indeed many will only deal with
estates above a certain value; this is appropriate for someone with
complicated intentions or a very large estate but largely out of the
reach of most people. If you choose to engage the services of a
professional, agree their fees in advance. Some will charge an up-front
fee, whilst others may arrange to take their fee from estate
distributions or a percentage of the value of the estate.

One of the benefits of a professional
executor is the existence of a somewhat formal relationship. In our
society where family relationships are so intertwined, whilst it does
help to have a little distance to make for objective decision-making, a
deep personal knowledge of the vagaries of a particular family is often
required. The family would value fairness, flexibility and sympathy
particularly where there are complex arrangements. It is important that
your executors should work closely with you during your planning stage
to develop an in depth understanding of your intentions so that they
are more able to carry out your wishes in accordance with your
instructions.

Naming multiple executors to provide
checks and balances on the decision-making process makes sense, but
remember that the executors must usually agree on all decisions and
sign off on all paperwork, which can become cumbersome.

Have a backup

Revisit your choice of executor once a
year to make sure you still want them to perform this role. Often there
might be reason why you think they may no longer be appropriate. If you
do decide to make a change, don’t forget to have the documents amended
as early as possible to reflect this to be sure that your wishes are
indeed carried out. It is also wise to have a backup in case your first
choice is unable or unwilling to perform the tasks when the time comes.
An advantage of engaging an institution to act as executor for your
estate is that it offers continuity.

Trust, Trust, Trust

Because your executor would be party to
intimate knowledge of your family’s assets, and their actions can have
far reaching consequences on the future of those assets, your primary
consideration should be to choose someone or an institution that you
can trust totally; if they disregard your wishes, they can be sued,
along with your estate, and tie it up in litigation for several years.
In the final analysis, it won’t matter to you what happens since you
will not be there, but you do owe it to your loved ones to try to leave
things as orderly as possible.

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