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Still smarting from the credit crisis of last year, many banks
are now tightening their credit disbursement processes. This follows the
directive by the Central Bank for banks to engage the services of at least two
licensed credit bureaux in determining the credit behaviour of their customers.

Credit bureau operators confirm that there has been higher
patronage by the banks since the CBN circular issued in April. They, however,
complain about the quality of data which they say still falls short of what is
required to make informed business decisions. According to the CBN circular,
all banks and financial institutions need to comply with the provisions of the
guidelines on the licensing, operations and regulations of credit bureaux by
having a data exchange agreement with a minimum of two credit bureaux licensed
by the central bank.

This also covers all previous loans granted to enable the
determination of the borrower’s current exposure to the financial system. The
banks are also expected to report periodically on the performance of the loans
in their portfolio to any of the two credit bureaux with whom they have a data
exchange agreement and to obtain quarterly credit report from at least two
credit bureaux for all previous loans granted to determine borrowers’ composite
exposure to the financial system.

Increased compliance

Ubong Awah, chief accountability officer of XDS Credit Bureau
said the level of compliance has increased. Mr. Awah said with the CBN
regulation, there has been more interaction between the banks and the bureaus,
adding however, that there is room for improvement.

“The figures are not up to expectations,” he said. “You know we
are in a depressed economy. Most of the credit has been to government while
credit to private sector has not really grown.” According to Awah, banks are
currently engaged in remedial work of trying to reassess previous loans and are
being careful in taking up additional bad credit in their books. He projected a
higher figure in the third quarter when the economy would have recovered and
the various credit easing policies of the CBN.

Ahmed Popoola, managing director of Credit Reference Company
said the compliance level by banks was encouraging. According to him, out of
the 22 banks that have signed on with his company, 15 are using and submitting
data as required. “Only seven are yet to comply and each of them has been given
four months period to comply depending on when they signed on,” said Mr.
Popoola.

Data quality

Operators are however worried about the quality of data that are
currently available from the banks. Customer data, whether individual or
corporate must cover up 70 per cent of the identity of the individual before it
can qualify as sufficient, explained Popoola. He said what is important is how
far the banks are ready to comply.

“There are administrative, legal and IT issues involved,” he said, adding
that some of the information cannot be obtained without the consent of the
customers. Mr. Awah said the quality of data will depend on changing the credit
culture of Nigerians to see the importance of credit bureau to the economy.
Popoola believes that the credit bureaux are pivotal to the growth of the
economy. “It is in the interest of the banks and it is in the interest of their
customers. There is no economy in the world where banks give credit to the real
sector and individuals without a functional credit bureau system. So it is in
the interest of the economy for credit bureaus to work in Nigeria.”

India’s Bharti
Airtel will offer affordable rates in Africa to boost usage, but has no
plan for a price war, a top company executive said on Wednesday, a day
after the firm completed a deal to buy the African assets of Kuwait’s
Zain.

The Indian telecom
market leader has taken over mobile operations in 15 African countries
in the $9 billion deal that makes it the world’s fifth-biggest cell
phone company with 180 million customers in 18 countries.

“Affordability
definitely we are committed to. That broadly I can say,” Manoj Kohli,
chief executive of the firm’s international business, told Reuters in
an interview.

Mr. Kohli will be moving on Friday to Nairobi to manage the African business.

Gold mining will
contribute a record high of 166 billion CFA francs to Mali’s budget
this year, the West African country’s president said on Wednesday, up
from 130 billion francs in 2009.

Mali, the
continent’s third biggest gold producer after South Africa and Ghana,
is trying to develop its mining industry to take advantage of high
metals prices on world markets. Mali’s annual government income is
estimated around $1.5 billion.

A public offering
of shares in Egyptian dairy and juice maker, Juhayna Food Industries,
has been fully covered, the firm’s financial adviser EFG-Hermes said on
Wednesday.

The public
subscription, which involved about 41 million shares offered at 4.66
Egyptian pounds each, was the first IPO in Egypt since 2008. The public
offering was part of a plan to raise about 1 billion pounds and also
included a private placement, which closed earlier and was 1.75 percent
oversubscribed.

“The public offering has been fully covered, 100 percent,” Mina Iskander of investment bank EFG-Hermes told Reuters.

The global
financial crisis put a stop to IPOs in Egypt after oil services company
Maridive and real estate company Palm Hills Developments sold shares in
mid-2008.

Nigeria’s Ashaka
Cement said on Wednesday that its pre-tax profit fell just over 30
percent to N2.36 billion last year, according to a filing with the
Nigerian Stock Exchange.

The company said
turnover fell to 17.19 billion naira from 21.38 billion the previous
year. It proposed a bonus of one share for every eight held.

Nigerian
conglomerate UAC said on Wednesday it expected its pre-tax profit to
drop to 5.3 billion naira in the 9 months to September from 6.6 billion
naira in same period a year earlier.

The company, whose interests range from real estate to food
products, said in a filing to the Nigerian Stock Exchange that it
expected turnover to be 38.45 billion naira, compared to 41.98 billion
naira reported a year earlier.

Financial experts say there is increase demand for foreign exchange, while external reserves dwindle.

The experts
revealed that Nigeria’s foreign exchange demand is gradually
increasing, with a noted surge in May, while the nation’s external
reserves is declining steadily, an implication of which could
exacerbate currency pressure and spur further depletion of external
reserves as the Central Bank intervenes in the market.

Bismarck Rewane,
managing director, Financial Derivatives Company, a finance and
research analysis firm said “Forex demand surged in May, increasing by
55 per cent and 54 per cent compared to demand in April and March.
External reserves are approximately $38.8 billion, a significant
decline of 3.7 percent from $40.3 billion as at April 28.”

Mr. Rewane added
that part of the increase may be due to the usual increase in forex
demand during the summer season. Another explanation could be the
increase in business activities, using the number of ships awaiting
berth in Apapa and Tincan as a proxy. Latest figures show that the
number of ships increased to 110 from 87 in April.

“One area of
concern is the low nominal and negative real interest rates which could
induce more capital flight as a result of interest rate arbitrage,” he
said. “The implication of this is an increase in forex demand that
could exacerbate currency pressure and spur further depletion of
external reserves as the CBN intervenes in the market.”The money market
was highly volatile in the last three weeks as rates across all
maturities and instruments losing almost all they gained in second and
fourth week of May.

Increase in credit disbursement

The spike in rates
began during the second week and lasted till the fourth. Analysts
attributed this sudden spike to increase in credit disbursement to
selected companies and major outflows from the market, including N104bn
Wholesale Dutch Auction System (WDAS), funding NNPC’s forex sale of
N22billion and TB auctions of about N65billion.

Gali Suleiman
Kabiru, the spokesperson of a section of Hausa currency changers in
Marina, Lagos, was however optimistic that if the present stability in
the market was maintained, it would gradually work the currency back to
its previous value. The naira recorded a depreciation of -0.13 percent
loss in May, due to increased pressure on margins particularly for
multinationals. Bonds and dollars were May’s two big winners. 10 year
treasury yield touched its lowest level in a year. Dollar gained 8.51
against the euro. Emerging markets stand the risk of seeing new
investment flows squeezed.

Finance experts say Nigeria in
particular is vulnerable to this deterioration in world markets since
it intends to raise $500 million through a Euro bond issue. However
Nigeria’s foreign exchange reserves slipped further to $38.79 billion
by last Friday from $40.28 billion in May, the Central Bank said last
week. Increased dollar demand at the central bank’s bi-weekly forex
auctions in the last two months had put pressure on the reserves, with
the regulator raising its weekly sales from an average of $500 million
in March to $900 million by April.</

The
improved performance at the Nigerian Stock Exchange (NSE), witnessed
since the beginning of the year, could not be sustained in May as
market capitalisation plunged by N123 billion.

NSE
management attributed the drop in equity prices during the month as the
reason why the market capitalisation depreciated. “The rise in equity
prices recorded during the first week of the month could also not be
sustained,” they stated.

The
market value of the 262 listed securities closed at N8.425 trillion,
down by 0.4 per cent from N8.45 trillion recorded in April. The 214
listed equities accounted for N6.37 trillion or 75.6 per cent of total
market capitalisation. The NSE All-Share Index, which opened at
26,453.20 closed the month at 26,183.21. The year-to-date rise in the
index stood at 5,356.04 points or 23.53 per cent. In May 2009, the
All-Share Index rose by 8,209.13 points or 32.94 per cent.

Low returns

Ahmed
Razaq, head of research at Meristem Securities Limited, a stock broking
firm, said low return on investment declared by some companies
contributed to the poor performance of the market. Mr. Razaq, however,
added that the economic challenges facing most of the companies made
them declared low returns.

“Some
industrial companies have device a mode of separating production from
consumption. They can afford to produce elsewhere where production cost
is minimal and then exploit their opportunities in the Nigerian
market,” he said.

He
said companies like Unilever now produce in Ghana due to the steady
power supply there, while they bring their products to Nigeria for
consumption because that is where the major market is. Mr. Razaq said
improved investment horizon will be seen soon in the nation’s market as
a result of the recent passage of the Asset Management Bill and a
clearer political environment.

Turnover volume

The
market recorded a turnover of 8.25 billion shares valued at N76.14
billion in 180,489 deals last month in contrast to a total of 12.6
billion shares valued at N108.31 billion exchanged during April in
206,182 deals. Consequently, trading volume and value depreciated by 35
per cent and 30 per cent, respectively. Trading days in May was 18
compared to 20 in April. In April, trading volume and value rose by 17
per cent and 19 per cent, respectively.

Aggregate
stock market turnover between January and May 2010 were 47.72 billion
shares valued at N376.24 billion exchanged in 1,001,620 deals. In the
comparable period during 2009, the market recorded turnover of 35.11
billion shares valued at N207.41 billion in 684,855 deals. The banking
subsector was the most active (measured by turnover volume) with traded
volume of 3.9 billion shares valued at N36.31 billion while the
insurance subsector was second with traded volume of 1.6 billion shares
valued at N2.0 billion.

The food beverages and tobacco subsector was third with transaction
volume of 389.9 million valued at N8.34 billion while the Mortgage
Companies subsector was fourth with transaction volume of 317.8 million
shares valued at N176.61 million. During the month, 21 subsectors
suffered reduction in market capitalisation of between 0.13 per cent
and 31.11 per cent; 10 subsectors recorded increased market
capitalisation of between 0.45 per cent and 14.84 per cent while 4
subsectors did not record any change. A total of 174 equities out of
the listed 214 were traded in May compared to 175 in April.

Information
Technology is the enabler to all sectors and functions in society. It
plays a significant role in improving processes within government
departments.

Information
Technology also assists in reporting and monitoring Key Performance
Indicators (KPI’s) to ensure that government departments are working to
their full capacity, highlight any inadequacies, resource shortage, or
budgetary shortfalls.

All government
departments need to utilise simple technology techniques or practice –
as usually done in the private sector – to help them provide an even
better service from the point of first contact with a client.
Technology can be used to capture the initial contact process, down to
providing the actual service, and to any follow up, as may be necessary.

In perspective, in
more developed countries, if you put through a call to a government
ministry or department, using modern technology, such a call, most
times, will be recorded and the voice data archived for future
reference.

This not only to
ensure that a high quality of service is provided to the client, but
protects both parties if there is any misunderstanding as to what
transpired between them.

Any progress or any
action on the initial request or inquiry is also captured
electronically, monitored and dealt with accordingly. Again,
Information Technology is here playing a crucial part in providing an
acceptable level of service to the client, ensures that the civil
servant provides an acceptable level of service, and that such
government agency is accountable and auditable in the service it
provides.

Information
technology can be used to automate every single process or function
within government, from monitoring the progress of all awarded
contracts using modern colour coded dashboard exception reporting, for
example, monitoring runaway projects (in terms of cost and timeline),
up to date and real time reporting on any function, evaluating the
pulse of citizens on new policies the government is contemplating,
disseminating accurate information in real time to citizens, both at
home and abroad through the use of YouTube, web conferencing, video
conferencing, or using other dedicated web portals to reach out to
their citizens, maintain records of expenditure and income, conducting
elections, carrying out census, and promoting our country’s image
abroad, amongst others.

The government can
interact better and more accurately with its citizens, especially with
the Nigerian youth who are very active on the Internet and because it
is simply the way forward, the future. Government agencies also need to
use the Internet to better project their own image and highlight their
achievements.

eGovernment

Broadly speaking,
eGovernment captures all the points discussed above and focuses on
automating government processes, on creating the relevant Information
Technology infrastructure for citizens to interact in real time, and
for government agencies to work with the private sector in utilising
their services.

The government
needs to establish that its services are accessible, where relevant,
via the Internet or in other electronic form. For example, a citizen or
a client needs to be able to download or fill out online, any relevant
forms to access any service from a government agency.

Where possible, the use of email, online chatting tools, bulletin
boards, and newsletters need to also be used to provide real time, up
to date information on any enquiries or requests as relevant.

Farida Waziri,
Chairman of the Economic and Financial Crimes Commission (EFCC), said
on Wednesday in Abuja that the commission had recovered $3.5 billion
since she took over leadership in 2008.

Mrs Waziri made the
statement at a public presentation of an anti-corruption handbook
written by Tabi Joda. According to her, it is not true that the
activity in the commission has waned.

Assuring Nigerians
of continuous commitment, she said, during the period of her being in
office, the commission has secured over 100 convictions and recovered
approximately $3.5 billion.