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Sanusi-watching has become Nigeria’s most popular spectator
sport. Every other week, the Central Bank governor beams his searchlight at a
dark corner of the banking attic to expose a mangled mass of cobweb. Oddly, his
admission at a seminar last week that the regulator does not know the
identities of owners of significant blocs of shares in ‘a very large number of
financial institutions’ has been received with indifference. In typical
fashion, the gallery has latched on to his other announcement at the same event
that the CBN would limit the tenure of non-executive directors of banks to two
years subject to renewal only at CBN’s instance.

The CBN’s authority to impose a ceiling on non-executive
director tenure and the propriety of announcing a major policy decision at a
public forum aside, I think that companies should applaud Sanusi for
championing transparency in shareholder identification. However, my reasons for
urging their interest diverge sharply from the Central Bank governor’s who
asked ‘Who owns the banks? Are they money launders or drug barons?

In fact, it baffles me that there has never been any public
advocacy on the subject of shareholder identification. There may be a good
reason why it has been kept off the agenda. Could it be because quoted company
boards of directors, stock brokers, issuing houses and registrars are complicit
in freezing the trail that leads to some beneficial owners? Or might it be that
they have been so busy covering up their own tracks that they are missing the
significance of the tracks being laid by non-insider investors? Their covert
ambition has been to ensure that control never slips out of their hands. Did
anyone say ‘hostile takeover’? Not in your dreams, not in my time. They and
their proxies are in firm control. Why would they bother about any shareholder
identification when the free float is laughable and they have a maze of
interlocking ownerships that would make any Byzantine emperor proud? With that
kind of moat, they can flick away any interloper’s unsolicited interest like a
dead insect.

Anyone who has followed global markets in the last few years
knows that shareholders can wield influence far in excess of their ownership
stakes. Activist investors with absolutely no interest in taking over the
company have become a fixture of the governance universe. From retail investors
like Eric Jackson who with only 45 shares launched a widely covered shareholder
campaign against the board of Yahoo! using YouTube in 2006 to the Roman
Catholic Sisters of Charity of St. Elizabeth who pushed for the publication of
risk management policies in plain English at Bank of America’s 2010 annual
general meeting and went on to win 39 per cent of votes in support, there is a
trend for proposals to stand on their merit and not on the number of shares
owned by a shareholder.

The bulky ledgers of tiny print with columns of names and
holdings in registrars’ offices contain a wealth of intelligence for every
company’s investor relations (IR) efforts. Companies are fond of mistaking
blasting ego-propping communications of corporate accomplishments to
shareholders as IR. That is mass communications and useful as it may be, it
does not build relationships, which is the operative goal of IR. Boards need to
closely monitor the geographic breakdown, composition, concentration,
investment styles and turnover of their shareholder base to craft effective
investor relations strategies. Anything else is akin to throwing spaghetti on
the wall.

In a paper calling for improved disclosure in shareholder identification,
‘Shareholder ID: The Resounding Silence of Non-disclosure,’ prepared by PR
Newswire’s Disclosure Advisory Board, the writers lamented the ‘thunderous
silence’ on hidden ownership. They argue that it is unfair to demand full
disclosure from companies while permitting investors who may have hidden
agendas from disclosing their interest in a timely fashion. Transparency is a
two-way street.

In banking, there is the policy of Know Your Customer. Companies
must now institute a policy of regular Know Your Shareholder audits. While
board members with vested interests will want to see Mr. Sanusi’s latest
comments as another round of witch-hunting about to begin, he is doing them a
big favour by indirectly fighting for their right to know buyers of their shares.
At least, now the law would ensure that no one comes from behind them to spring
a hostile takeover. However, the whole point of shareholder identification is
not about stealing the company from its owners. It is about giving them an edge
in their capital market relationships.

The writer is the managing
director of a full service investor relations firm based in Lagos.

The decline in the value of equities at the Nigerian Stock
Exchange, yesterday, cuts across all sectors of the market.

The resilient nature noted in sectors like the conglomerates,
breweries, food and beverages in the past week, against the downward trend in
the market, could not be sustained after Thursday’s trading.

The All-Share Index yesterday declined by 0.72 per cent to close
at 27,227.26 basis points compared with the marginal decline of 0.05 per cent
recorded the previous day to close at 27,424.47. Market capitalisation also
followed with N44.611 billion losses to close at N6.622 trillion against the
N3.107 billion losses recorded yesterday to close at N6.667 trillion.

The number of gainers, at the close of trading session, dropped
to 23 from 33 gainers of yesterday .The numbers of losers on the other hand
closed at 58 compared with 59 of the previous trading day.

‘Sell pressures’

Analysing yesterday’s performance, equity research analysts at
Proshare Nigeria Limited, an investment advisory firm, in a statement, said the
decline recorded cut across all the sectors in the market.

“This was evident in the bearish outlook recorded in all the NSE
sectoral indices with the highest decline recorded in the Oil and Gas sector.
Massive sell pressures were also more pronounced in the Insurance and
Food/Beverages sectors,” they said.

The analysts added that notwithstanding the current downturn of
the market, “investors are enjoined to look out for the valued stocks whose
prices have declined as the present negative outlook in the market may not
last, most especially considering some of the positive developments in the
market.” All the four sectoral indices declined at the close of trading
session. The Exchange’s Food and Beverages index declined by 1.14 per cent to
close at 860.64; the Oil and Gas index dropped by2.61 per cent to close at 405.71;
the Banking index shed weight by 0.68 per cent; the Insurance also declined by
1.20 per cent to close at 197.73.

The banking sector was the most traded sector yesterday with
139.016 million units valued at N1.333 billion. Transactions in the shares of First
Bank Nigeria, Zenith Bank and Access Bank largely contributed to the volume
traded in the sector.

New listing

The management of the Exchange, on Thursday, listed Sun
International Limited’s 634,585,472 ordinary shares of 50k at N3.79 each on the
official list of the exchange. It also marked down the share price of Berger
Paints Plc for a dividend of 50k per share declared recently by the company’s
board of directors. The share price of Oando Plc was also marked down for 1 for
2 bonus declared.

Transportation costs in West Africa are among the highest in the
world only East Africa is higher, according to a study of one of the primary
trade corridors in West Africa.

The route connecting Tema Port in Ghana to Ouagadougou, Burkina
Faso was used for the study. The study, centred on the reason for the high cost
of transportation and what can be done to reduce it, the organisation concluded
that reducing transportation cost will result in the increase of export and job
creation.

For instance, a study of the cost of transportation along the
Tema- Ouagadougou corridor shows that it cost $4,800 (about N710, 400) to
transport a container and it takes 13 to 22 days to transport container across
the route while in comparison, it cost $650 (about N96, 200)to move a container
the same distance within the United States and it takes only five days.

Joe Lamport, Communications and Outreach Coordinator of West
Africa Trade Hub, a USAID funded project that promotes trade across West Africa
carried out the study alluded to a Food and Agricultural Organisation (FAO)
report that said that West Africans spend almost 80 per cent of their income on
food and much of it is spent on imported products: powdered and concentrated
milk, rice, tomato paste among others and so if trucking costs were half what
they are now for imports, consumer prices will likely be lower.

Reasons for high costs

While stating that the bottleneck and the cumbersome documentation
process in the ports are veritable reasons for this high cost of
transportation, the organisation also highlighted retrogressive regulation as
another factor responsible for the hike in the cost of transportation.

West African Trade Hub identified the “one-third two-third rule”
between Burkina Faso and Ghana as one of such regulatory hindrances.

“The rule stipulates that two-thirds of the cargo should be
carried by Burkinabe trucks while one-third can be transported by Ghanaian
trucks”, said Mr. Lamport.

Experts have warned that regulations like these kill
competitions and competition to clear goods at the port is a factor in the
reduction of cost.

The report also pointed at the stripping of containers as
another hiccup militating against the prompt clearance of goods at the ports.
The delay trucker experience on the way to delivering their consignment often
means that they sometimes might miss the ship meant to carry the goods and sure
delays automatically means added cost due to damaged goods and additional port
charges.

Cutting the cost

Lowering West Africa’s transport costs – among the highest in
the world – is critical to poverty alleviation and food security.

“High transport costs ultimately mean consumers pay more for
goods at market,” said Trade Hub Director Vanessa Adams. “High transport costs
make it hard for exporting companies to compete in world markets. When they
cannot compete, they do not create the jobs that West Africans need.” The
statement further suggested that implementation of the ECOWAS integrated
regional market, the elimination of truck queuing rules as well as the
elimination of excessive documentation for importing and exporting and the
streamlining of procedures to reduce delays will reduce the transportation cost
to the level that will spur economic activities leading to the reduction of
poverty.

South Africa’s economic outlook has improved, although growth
should stay below potential output for “some time”, posing little threat to
domestic inflation, its central bank said on Thursday.

Developments in the euro area – a major trading partner where
sovereign debt worries are growing, sparking global risk aversion – are a risk
to growth and may also hit the rand currency, the Reserve Bank (SARB) added in
its latest Monetary Policy Review.

Africa’s biggest economy pulled out of recession in the third
quarter of last year and the recovery appears to be gathering pace, with data
this week showing annual retail sales rose for the first time in more than a
year, signaling households are starting to spend again.

Consumer spending was the main driver of average 5 percent
annual growth in the five years before the credit crisis, but it has been the
slowest to rebound as banks cut lending and more than one million jobs were
lost, hurting households’ finances.

The central bank said in the review – released twice a year –
that domestic expenditure appeared to be recovering, while manufacturing output
continued to improve.

This, though, did not pose a threat to inflation, as firms
continue to produce below maximum capacity.

“Despite the more favourable growth outlook, the output gap is
expected to remain positive for some time,” it said. The bank has in the past
estimated potential growth at 4.5 percent.

The SARB forecast the economy would grow by 3.7 percent
quarter-on-quarter and annualised in the first three months of this year, and
by 3.2 percent in the second quarter.

It recently raised it prediction for expansion in 2010 to 2.7
percent from 2.6 percent – roughly in line with economists’ expectations.
Statistics South Africa is scheduled to publish first quarter growth data on
Tuesday.

Euro risks

The bank warned the recovery could be damaged by the debt
problems in the euro zone, with austerity measures dampening growth in some
economies and, ultimately, trade.

“The growth performance will also be affected by the performance
of the global economy and the risks posed by developments in the euro area,” it
said.

Another global crisis, and accompanying risk aversion, may hit
the rand, lessening the impact its relative strength has had on containing
inflation.

The central bank said its policy committee had considered the
rand a major contributor to the favourable outlook for inflation, but
recognised it was volatile and subject to external factors, such as risk
appetite.

“The reaction of the rand to the developments in the euro area
demonstrated that the positive impact of the rand on the inflation outlook was
contingent on developments in the euro area and general risk aversion,” the
central bank said in the review.

The rand had held onto last year’s nearly 30 percent gain
against the dollar, supported by strong gold and platinum prices and the lure
of high interest rates. It has weakened sharply this month as fears Greece’s
sovereign debt woes may spread to other European countries prompted investors
to cut back on riskier investments in emerging markets.

The rand fell to 8.0806 versus the dollar on Thursday, a
six-month low and a fall of almost 4 percent, compared with around 7.30 in
early May. At the height of the global financial turmoil in late 2008, it fell
to 11.88 to the dollar.

The SARB reiterated its favourable outlook for inflation, forecasting
targeted CPI to trough at 4.7 percent in the third quarter, and stay inside the
3 to 6 percent band until the end of 2012, when it is seen at 5.3 percent.

International Data
Corporation (IDC), a market research organisation, in information
technology and worldwide phone tracking has announced the top five
selling mobile phones in the first quarter of year.

The phones are,
Nokia, Samsung, LG, occupying the top three positions, while RIM
(Research in Motion) makers of Blackberry replaced Motorola to tie with
Sony Ericsson in the fourth position. Motorola and the Apple iphone did
not make the list.

Motorola formerly
held the number two spot and finished fifth last year, but is now out
of the list. The surprise breakthrough by RIM was considered as a
result of growing demand for Smartphone’s in the global market. The
Blackberry features as a high-end Smartphone device and RIM shipped
10.6 million units of mobile phones in the first quarter of the year.

“The entrance of
RIM into the top five underscores the sustained Smartphone growth trend
that is driving the global mobile phone market recovery. This is also
the first time a vendor has dropped out of the top 5 since the second
quarter of 2005, when Sony Ericsson grabbed the number 5 spot from BenQ
Siemens,” said Kevin Restivo, a senior research analyst with IDC’s
Worldwide Mobile Phone Tracker.

Interestingly the
much hyped iPhone from Apple Inc didn’t make the list, even though it
officially stands as the highest selling phone in the U.S with 8.8
million units sold in first quarter of 2010 as opposed to Motorola
which sold 8.5 million units (According to Forbes).

According to IDC
the overall global phone market grew 21.7 per cent in first quarter of
2010, thus showing positive signs in phone market for the rest of the
year in contrast to the market reduction in first quarter of 2009.
Demand for Smartphone’s served as catalyst to the market growth.

Their reports said a total of 294.9 million units of mobile phones
were shipped in first quarter of 2010 compared to 242.4 million units
in first quarter of 2009.

President Goodluck
Jonathan has directed the Ministries of Transport, Commerce, and
Petroleum Resources and their parastatals to ensure that all goods
imported into the country are discharged at designated terminals of the
Nigeria Ports Authority.

While on inspection
of Oil and Gas Free Zone, Onne and inauguration of port facilities at
Onne Port Complex, Rivers State, Mr. Jonathan warned that government
will no longer condone the flouting of the directive, adding that
imported goods should not be discharged at private jetties.

Mr. Jonathan, who
was on his first working visit since he assumed office as President,
said the new facilities at the port show that Nigeria is growing and
commended Governor Rotimi Amaechi of River State for providing the
enabling opportunities and the partnership in the success story as well
as the concerted effort between government and Public Private
Partnership (PPP).

The President said
such efforts is yielding the desired results and the partners have
shown genuine sense of purpose as government will continue to work with
them, disclosing that the Oil and Gas Free Zone in Onne is the largest
in the world dedicated to gas and oil and it will provide jobs to Niger
Delta youth thereby creating wealth as well as curbing restiveness.

He explained that
such facilities will create drive for foreign investment into Nigeria
to make it one of the leading economies in the world while commending
the joint efforts between the Nigerian Ports Authority and Intel in
creating the new facilities at the port to boost maritime operations.

Enabling environment

Yusuf Suleiman, the
Minister of Transport revealed that the policy behind the joint project
is intended to reduce government’s role by creating an enabling
environment for private sector to grow thereby enabling government to
apply funds in other sectors, saying that the project will be useful in
ports operations as every party had lived to the terms of agreement.

Mr. Suleiman
observed that facilities at the port could compete with those in any
part of the world, adding that government will partner with other
agencies to check unhealthy practices at Nigerian ports while it has
established specialized ports at Onne, Warri and Calabar to handle oil
and gas operation and asked people to transact their business within
any of the terminals.

The minister added that with the new facilities at the port, 4,000
jobs have been created while 140 foreign companies operating there will
empower the people, and generate wealth, saying that facilities at the
Onne port are the largest of its kind in the world that meet the needs
of maritime operations and asked indigenous operators to engage local
ship yards.

Market indices at
the Nigerian Stock Exchange, NSE, bounced back to profitability
yesterday after two days of negative performances.

The two days decline plunged the market by over N116 billion from the N580 billion recovered in the last two weeks.

The indices for
measuring market performance; the market capitalisation and the
All-Share Index, at the close of proceedings on Tuesday, appreciated by
0.19 per cent.

While some analysts
have predicted that the capital market will experience sustainable
rebound in the second quarter of the year, past data showed that since
December 2008, the market has not witnessed more than nine consecutive
positive trading days.

Gregory Otsu,
managing director and chief executive officer of Mact Securities
Limited, said the unstable market recovery “is normal and should not
cause panic for investors. There is a worry about the down trend in the
market during the last few days.”

“But the real
situation is that investors are trying to take profit. Any market in
the world is based on demand and supply. You have a situation where
people need money for various reasons; you’ll expect them to cash-in
opportunities to meet their needs. I believe the current performance is
normal and in few days time we should expect positive and stable
reactions,” he added.

Market dynamics

The market
capitalisation yesterday recorded over N13 billion gains on Monday’s
figure of N6.657 trillion, to close at N6.670 trillion; while the
All-Share Index gained 53.34 points up from 27,383.91 basis points to
close at 27,437.25.

A total of 27
stocks appreciated in price on Tuesday while 53 stocks shed their
prices. Over 602.484 million volume of shares, valued at N5.525
billion, were recorded in 8,784 deals.

Equity analysts at
Proshare Nigeria Limited, an investment advisory firm, said the market
“out-staged the bears and returned to positive outlook owing more to
market dynamics that revealed a significant increase in transaction
volume.”

They added that the
positive outlook recorded at the close of market was a function of
positive performances in the shares of Petroleum Marketing, Banking,
Food/Beverages and some of the blue chip stocks.

“In the midst of
volatility of the entire market, Food/Beverages and Petroleum Marketing
sectors posted above the general market performance in the past five
trading days,” the analysts explained further.

Active sectors

The hotel and
tourism subsector led the most active subsectors’ chart with 204.046
million volume of shares, valued at over N731.786 million. Volume in
the subsector was largely driven by trading in the shares of Capita
Hotel, followed by Ikeja Hotel.

Trading activities
in the banking subsector followed with 150.711 million shares valued at
N1.411 billion. Deals in shares of Guaranty Trust Bank, First Bank of
Nigeria, and Diamond Bank boosted volume in this subsector.

The insurance
subsector was third in the activity chart with 61.736 million shares
worth N57.642 million. Volume in the subsector was driven by trading in
the shares of Universal Insurance Company, NEM Insurance Company, and
Aiico Insurance.

Some finance experts have said that it would require more than the
set of measures prescribed by the Central Bank’s Monetary Policy
Committee meeting to have a turnaround in credit availability for the
private sector.
Renaissance Capital, an international finance firm, said though
liquidity levels may remain adequate, addressing private sector credit
still remains a challenge.

Last week, the Central Bank decided to keep the Monetary Policy
Rate (MPR) unchanged at six percent, and hold the standing deposit
facility and standing lending facility at one percent and eight
percent, respectively.
“This low rate environment, coupled with fiscal expansionary policies,
the depletion of the excess crude account, and the injection of N620
billion into the banking system, has boosted systemic liquidity,
fuelling the rapid drop in interbank lending rates.

As
such, the extension of guarantees on interbank transactions to 30 June
2011 could also help ensure liquidity levels remain adequate,” said
Renaissance.
“Still, the set of measures described above has yet to result in a
turnaround in credit to the private sector. Indeed, lending rates have
remained sticky, as in most Sub-Saharan African countries which went
through a cycle of monetary easing.” Limited influence Similarly,
Afrinvest West Africa, a finance company, has also expressed worry. “In
isolation, the current benchmark rate will have very limited influence
on credit growth to real sector, a situation that is particularly
worsened by the stubbornly high lending rates.

“This view is supported by the 6.8 percent decline in credit to
the private sector by the end of the first quarter of 2010 from the
corresponding period of 2009, amid a 113.6 percent increase in credit
to government. We, however, expect other macroeconomic variables such
as lending rates to trend downwards slightly, exchange rates to
moderate at current levels, and inflation rates to trend upwards
slightly, towards the latter part of quarter two and the early stages
of quarter three in year 2010.”
Lydia Olushola, an economist and consultant at Skytrend Nigeria, said
policy makers need to act fast to create an effective economic
incentive that would spur credit growth and job creation.
“Without an effective credit stimulus of sufficient degree, the economy
is likely to see a decline in growth or even a formal recession,
leading to higher unemployment, declining or stagnant wages, and a host
of other economic problems,” Ms. Olushola said.
She said that there is always a debate over what effective credit
growth measures should look like, as different policies are purported
to stimulate the economy. “It is important to distinguish between those
that will have their effect in the very near-term to offset issues like
rising unemployment and the shrinking of manufacturing capacities and
those policies that have longer-term effects.”
According to her, any useful credit stimulating policy should
strengthen the economic recovery immediately and create more jobs in
the process.

“The
measures should generate growth directly and create jobs directly and
indirectly to offset rising unemployment. It may raise current deficits
but should not affect the long-term budget outlook.”
The Central Bank did not respond to enquiries on this matter as at
press time.

A month after the
exit of both the chairman and chief executive of the Nigerian
Communication Chairman (NCC), there has been no board meeting as only
the chairman is authorised to call board meetings. This has prevented
the commission in discharging its functions.

An official of the
NCC who spoke under anonymity as he is not authorised to comment on the
matter said, “Based on the Nigerian Communications Act of 2003, a
chairman can summon a meeting on his own or if notice is given to him
by at least four members demanding for a meeting.” The official added
that there was no provision for any other person to call for board
meeting.

The tenure of the
last executive chairman, Ernest Ndukwe, ended on April 2 while the
chairman, Ahmed Joda, also retired at the same time; just as another
board member, Patrick Kentebe, left. The federal government has not
appointed anybody to fill the vacant positions. But Stephen Bello, the
executive commissioner for licensing and consumer affairs, has been
acting as the chief executive.

Kenneth Ugbechie,
secretary, Africa Telecoms Development Initiative, a pan-African
non-governmental organisation committed to the development of telecoms
in the continent, said in a telephone interview: “The internal
operation in the NCC as a body has been slowed down because it is
difficult for the acting executive vice chairman to be definitive when
taking decisions. Mr. Bello is acting executive vice chairman without
the full complement of a board, so there are certain decisions he
cannot take now because those direction might be upturned by the
incoming executive vice chairman. So, instead of making a decision that
would be upturned, he may have to shelve that decision and I think that
is not good enough for the telecom sector.

“What the
presidency has done by changing the headship without a substantive vice
chairman is to create a state of anomie. In the state of anomie
anything is possible, there is confusion, and laxity. For the sake of
the sector, I think it is time for President Goodluck Jonathan to do
something,” he said.

Some market
analysts have identified education of investors as a way out of the
wobbly rebound recorded at the Nigerian capital market.

Gbenga Emmanuel, a
finance analyst at WealthZone Company, an investment advisory firm,
said the efforts of relevant capital market authorities towards
investors’ education is still low. “Authorities should devote more time
to investors’ enlightenment in order to boost market performance,” he
said. Gbenga Idowu, managing director of the Centre for Shareholders’
Enlightenment Limited, said investors, being the main drivers of
performance at the Nigerian Stock Exchange, should be well “informed
and involved” on market activities.

More enlightenment

Citing an example,
Mr. Idowu said investors need more enlightenment especially from the
Central Bank and the Ministry of Finance on the much anticipated Asset
Management Company of Nigeria (AMC) targeted at cleaning toxic loans of
banks.

“Even when you put
the AMC in place and you put money there, it will still be run as a
purely profit concern. You do not expect the managing director in
charge of the company to come out and say they have failed because they
have given the money out to Nigerians,” he said, adding that people
only know that the AMC will clean banks’ books.

Tunde
Oladapo-Dixon, chief executive officer, StockPicks Consulting, a stock
broking firm, said real investors are still shying away from the market.

“Real retail
investors are not investing yet in the market. Institutional investors
are the one playing the market and because they will always want to
take their profits, market performance is bound to be unstable,” Mr.
Oladapo-Dixon said.

Commission assures

Meanwhile, the
director general of the Securities and Exchange Commission (SEC),
Arunma Oteh, has promised that her administration will focus more on
investors’ education.

At a seminar last
weekend, Ms. Oteh said the greatest asset of any capital market, and
indeed financial market, is its investors. “It is investors, whether
retail or institutional, who provide the savings which are needed for
productive investment. Therefore, if investors lose confidence in the
capital market, the ability of the market to mobilise and channel long
term funds, which are very vital for economic development, will be
marred,” she said.

The SEC’s boss added that a market would lose its essence without
the confidence of investors. “To build a world class market therefore,
the SEC would focus considerably on investor protection and the
restoration and sustenance of investors’ confidence in the market. No
doubt, investors will feel protected and confident to participate when
a market is perceived as fair, efficient, and transparent with a strong
enforcement regime. The SEC is committed to building a market which
displays such internationally recognised characteristics.”