Nigeria Content Online

The Dangote Group
says it will invest 3.9 billion dollars (N585 billion) in the expansion
of its cement plants in some Africa countries.

Aliko Dangote,
chairman of the company, disclosed this on Tuesday in Lagos while
signing an agreement between his company and a Chinese firm, Sinoma
International Engineering Co. Ltd.

He said that the
expansion project, expected to be completed in 2013, would produce
additional 16.5 million tonnes of cement to achieve a target of 50
million tonnes in the next two years.

Dangote, represented by Devakumar Edwin, the company’s group
executive director (Business Development), said that the projects
included installation of equipment, mining, quarry, power facilities,
among others.

The Independent
Petroleum Marketers Association of Nigeria (IPMAN) has urged the
Federal Government to hasten the development of the rail system to
enhance effective petroleum products distribution across the country.

Olumide Ogunmade,
the chairman of south-west chapter of the association, told the News
Agency of Nigeria (NAN) in Lagos on Monday that rail system was one of
the best and cheapest means of haulage in the world. He said that a
trip by rail could take what 30 to 50 trucks would carry.

Mr. Ogunmade said
that high-speed trains have become important mode of transportation,
and advised the federal government to partner with private sector
operators to achieve the objective.

The government of India has said it is looking into addressing the lopsided economic relationship between it and Nigeria.

Figures of trade
released by the country show that bilateral relations between both
countries for the year ended March 31, 2010 is $8.7 billion. Nigerian
export to the Asia country is around $7.3 billion, while that of India
to Nigeria is around $1.2 billion. The trade between the two countries
is greatly in Nigeria’s favour, thus making it enjoy the trade surplus
of $6 billion.

Vishnu Prakash,
India’s joint secretary and spokesperson of the ministry of external
affairs, told journalists on Monday that both countries have adequate
potentials to attract investment that will boost their economic
relations.

Important trade partners

“For India, energy
security is a very important consideration and we import almost 80 per
cent of our energy from the global market. In Africa, Nigeria and Sudan
are two key countries from which we import significant amount of
petroleum products.

“It is natural that
when we are importing hydrocarbons from Nigeria that the trade will be
in their favour. I can tell you categorically that we want more trade
with Nigeria,” Mr. Prakash said.

He also that there are a number of areas that India and Nigeria can work together to have more trade.

“Pharmaceuticals
are one of them because we are global leaders in production drugs which
are high quality and of cheap price, and I know that Indian drugs are
in high demand in Nigeria.

“Some other areas
are in the service sector like the information and communication
technologies, the automobile centres, equipment and machinery, and
textiles. Increasingly, I find Nigeria is figuring prominently amongst
other countries on the business ladder of the Indian companies in terms
of investments and trade. I am quite sure of the opportunities that we
have,” he added.

Already, there are
about 30,000 Indians in Nigeria, less than 1.5 per cent of the total
Nigeria population. On the continental scene, the external affairs
spokesperson said India had $45 billion of trade with the African
continent last year and there are similar number of investments, which
are more than $45 billion.

Growing partnership with Africa

$2.3 billion out of
the 5.4 billion credit earmarked for Africa in a five-year period has
been made available, according to Mr. Prakash. The credit is meant to
address the challenges of infrastructure, capacity building, and human
resources issues. The upcoming India-Africa Summit in Addis Ababa is
part of this collaboration.

The Indian
authorities said Africa now has a growing partnership with the country,
though it started long back, but acquired considerable substance and
momentum only recently.

“With the involvement of Indian business giants such as Tatas,
Mahindras, Kirloskars, Ranbaxy, RITES, IRCON, NSIC, TCS, OVL and
others, our bilateral ties have impoved a lot, making us the second
largest trading partner with them. The India Africa Conclaves and the
upcoming Summit in Addis Ababa in May are some of the additional
feathers in the cap,” Mr. Prakash said.

A recent report has
shown that many Nigerians still do not know that their debit (Automated
Teller Machine, ATM) cards can be used for more than just withdrawing
cash from bank ATMs.

Over 74 per cent of
the respondents surveyed by ThinQThanQ, a research and database unit of
financial technology, a financial services technology publication that
circulates in 16 countries, said they have used their ATM cards for
only cash withdrawals.

The report also
shows that only 14 per cent of the respondents use their cards to make
purchases on the web or topped up airtime on the web, or at point of
sale (PoS) terminals or ATMs.

The publication
said data for the customer usage pattern for the ATM in 2010 were
collected from surveys conducted through random questionnaires applied
to 600 debit card holders across Nigeria. These were administered to
the survey population in Lagos, Abuja, and Port Harcourt, three leading
commercial cities in the country.

Lack of understanding

Temilayo Ojo, a finance consultant, said she was not aware that her card could perform various transactions.

“I just thought
that the options I had for the card were the ones at the ATM machines,
checking balances, topping up my airtime, and all that,” she said.

Key findings from
the survey are that the migration of the payment cards from the
magnetic stripe to chip and PIN EMV platform has been smooth and hugely
successful in Nigeria. Also, efforts of the CBN, banks, card schemes,
and other stakeholders have yielded positive results.

Sola Fanawopo,
editor-in-chief, Financial Technology Africa, said the drive towards a
cashless payment system in the country has yielded very poor results,
as very few bank customers use their ATM cards for end to end payment
transactions. Majority of the card holders said they only use their
cards to withdraw cash.

“No wonder most respondents referred to debit cards as “ATM cards”.

“Most card holders
in the country are unaware that they can use their ATM cards for
payment transactions on other channels from ATM withdrawals. Some of
the card schemes are also culpable as their cards are not acceptable on
some of the channels,” he said.

Seven per cent also
use their cards for funds transfer from one bank account to another.
However, only four per cent of the survey’s respondents used their
cards to make bill payment on touch points.

Network challenges

ATM downtime and
fear of fraudulent activities have been cited as major factors
inhibiting the frequent use of debit cards for payment transactions by
bank customers.

More than 52 per
cent of bank customers surveyed said ATM downtime was the major reason
that prevented them from using their cards more frequently for payment
transactions. Similarly, about 43 per cent of the respondents affirmed
that concerns about fraud posed another hindrance for using their cards
more regularly.

Only 52 per cent of
bank customers surveyed have actually used their debit cards for any
form of payment transactions, while 48 per cent have refused to do so.

To deepen the
culture of card usage, banks and card schemes need to focus on
marketing strategies that will encourage card holders to activate and
use their cards as frequently as the need arises for all relevant
transactions.

73 per cent of the
respondents actually feel more secure using the new chip and PIN EMV
cards. Incidence of payment card fraud was on the increase before the
change over to the PIN EMV platform. 19 per cent of the people surveyed
have actually experienced fraudulent activities with the use of their
debit cards for financial transactions.

Mr. Fanawopo said
awareness of the availability of loyalty and rewards schemes from usage
of payment cards is low. He, however, said that the assurance that Chip
and PIN EMV payment cards are not fraud-prone like the magnetic stripe
cards is gradually restoring the cardholders’ confidence over fraud
concerns.

A banker at Zenith
Bank, however, said a good number of customers are actually enlightened
about the various uses of their cards.

“Many of them
utilise their cards to an encouraging capacity, especially during
public holidays. In fact, we receive calls for directives as regards
internet banking and online transactions from customers. I can say out
of about 100 customers, about 20 or 30 of them actually know about the
other functions their cards can perform, like the payment of their
utility bills, DSTV, and all of that and more,” she said.

The Central Bank
has on several occasions stated its efforts to address card fraud. At a
recent event in Lagos, Emmanuel Obaigbona, who represented the
director, banking and payments, said apart from a migration directive
of card types, the apex bank has also mandated all banks to set up
effective help desks for handling card-related complaints.

He also said that
the regulatory body also ordered the issuance of relevant rules and
regulations in order to provide a level playing ground for all
concerned parties in the retail payment industry, which include the
electronic banking guidelines, guidelines on transactions switching,
stored value card and prepaid card operations, and others for the
operations of credit bureau.

“These guidelines are aimed at fostering consensus and cooperation
amongst a broad spectrum of payments service providers and increase
public confidence in the system, among others,” Mr. Obaigbona said.

Following the
recent acquisition of billions of shares of the Transnational
Corporation of Nigeria (Transcorp) by Heirs Holdings, an investment
company, some investors are now “taking position” in the conglomerate’s
stock.

Transcorp’s shares
were the most traded stock at the Nigerian Stock Exchange (NSE) on
Tuesday with over 54.208 million volume of shares traded, while the
share price rose by 4.61 per cent to close at N1.59 per share.

Olugbenga Emmanuel,
a finance analyst at WealthZone Company, a portfolio management firm,
said, “The stock (Transcorp’s shares) is presently attractive because
of the development in the company. A new board member is expected in
the company to turn around activities,” adding that “retail investors
are currently taking position in the stock for better reward.”

Market rebounds

The market capitalisation of equities at the close of trading session on Tuesday rebounded marginally by 0.03 per cent.

The NSE market
capitalisation of the 194 First-Tier equities closed yesterday at
N7.885 trillion after opening the day at N7.883 trillion, reflecting N2
billion gains. The market had lost over N19 billion after Monday’s
transaction.

The number of
gainers on Tuesday closed higher at 31 stocks compared to the 25 stocks
recorded on Monday, while losers closed at 26 stocks; the same figure
recorded the previous trading day.

May & Baker
Nigeria and Airline Services & Logistics topped the price gainers’
table with an increase of five per cent each, to close at N4.20 and
N1.89 per share, respectively. International Breweries and First
Aluminium followed on the gainers’ table with an increase of 4.86 and
4.84 per cent, to close at N6.47 and 65 kobo per share.

On the losers’
side, UAC Property, Costain West Africa, and National Nigeria Flour
Mill led the price losers’ chart with a loss of five per cent each, to
close at N15.20, N5.32 and N19.97 per share. Glaxo Smithline Consumer
followed with a loss of 4.98 per cent, to close at N27.08 per share.

The Exchange
yesterday marked down the prices of Access Bank and Unilever stocks for
final dividend of 30 kobo and N1.10 per share respectively, as proposed
by the companies’ managements.

At the close of
trading yesterday, the Banking subsector led the most active
subsector’s chart with 199.381 million quantities of shares, valued at
N1.903 billion. Volume in the subsector was largely driven by Zenith
Bank, followed by Stanbic IBTC, Guaranty Trust, Skye, and Access Bank.

The Conglomerates
subsector was second in the most active subsectors’ chart with 55.346
million volumes of shares, valued at over N119.432 million. Transcorp,
the most traded stock for the day, largely boosted volume in the
subsector, followed by UAC Nigeria and Unilever.

Trading activities
in the Insurance subsector was third in the chart. Investors in the
sector exchanged 6.885 million volumes of shares, valued at N6.795
million. Deals in shares of Aiico Insurance, Law Union & Rock
Insurance, and Custodian & Allied Insurance boosted volume in the
subsector.

Meanwhile, the
management of the NSE yesterday reiterated its position on the
execution of “large volume/block divestment transactions” by
stockbroking firms.

The NSE, in a
statement said, “Broker must write to seek approval in writing and
explain the intention behind the transaction” while such application
“must be supported with mandates from both the buyer(s) and the
seller(s).”

This was in response to the controversy generated last week by the purchase of shares of Transcorp by Heirs Holdings.

The consequences of
the process that has made Nigerians poorer as the years have gone by
have been as diverse as they have been disruptive. I try today to buy
stuff off Amazon, and besides books, the standard reply is that Amazon
does not ship the designated items to the destination indicated –
Lagos, Nigeria. The response to attempted purchase of digital stuff is
clearer: copyright worries make it impossible to send the items.
Conversely, of five books bought online, depending on how recent the
titles are, three get through.

It’s of little use
protesting to the post office. Not all online purchases come with
“tracking numbers”. Tell that to the attendant at the post office and
the shrug of shoulders, and the question, “So, how can we look for it?”
settles the matter.

Yet it was not
always this way. I still recall that some of my father’s dress shirts
came off orders from glossy catalogues, and all the way from the UK. In
the 70s, these orders were delivered by the old post office system to
the house. This, incidentally, was not a Lagos thing, for the house was
in Ilorin. Moreover, all deliveries came through on time.

So we were not
always this dodgy. Although we have been poor for a while now, I was
recently impressed by this latter fact, when I tried to prepare my
kids’ favourite cereal with warm milk. Growing up, milk used to be of
the evaporated or fresh variety – either way, it poured out of some
container. And I felt nostalgic enough to try something different, only
to be told by my kids that the milk didn’t quite make the grade. “It
tasted funny”! Admittedly, it tasted somewhat different from the milk
powder they’d been brought up on. But more important was the
realisation that the use of evaporated/fresh milk made sense only if
electricity from the mains is regular, and steady. Otherwise, food
poisoning becomes a real and present danger. Reduced “quality of life”
issues and poverty, handmaidens both.

However, the more
interesting outcome of the gradual impoverishment of the Nigerian has
been the response of product/service providers in the economy. As
disposable incomes have fallen, shoppers have bought in increasingly
smaller quantities. In the fast moving consumer goods sector, the
changing face of shelf-spaces describes this trajectory: large cans of
food long since gave way to the medium- and then to the small-sized
tins. The now predominant sachets came only later. This value
transition has also happened in the faster growing sectors of the
economy. Today, with recharge card values as low as N50, not many
remember that the GSM-licensed telecom companies started business
almost a decade ago, with recharge card values as high as N7,500. The
card makers’ numbers tell a fascinating story. Given that the margin on
each card is the same, irrespective of the recharge value it carries,
small, frequent, discrete purchases return higher net margins than the
lumpier variety.

Unfortunately,
besides the contraction in domestic final demand, domestic businesses
face a plethora of structural impediments to profitable operations. One
of these – access to formal sector credit – so concerns the Central
Bank of Nigeria (CBN) that it has been forced to cross several
firewalls in its bid to give traction to the market for private sector
credit. It would seem, in spite of the CBN’s quasi-fiscal operations,
that the problem with formal credit growth in this economy is the
failure of the banking sector to mirror the trajectory of the economy.

Talk to bankers
about their concerns over the CBN’s efforts to get a grip on monetary
management by tightening policy, and the central worry is the adverse
effects of the CBN’s policy on the main transmission agents, the banks.
Apparently, whereas banks have come under intense cost pressures as
depositors have insisted on matching the yields on their deposits with
the return on the CBN’s standing deposit facility, the banks have not
been able to pass these new costs on to their borrowers. So the
expectation is of shrinking margins over the next nine months.

But isn’t this
because the banks are at the beginning of the curve, and are still
focussed on the big corporate customers? Would they not be better
served by bulk-breaking their loans and re-packaging them in sachets?

The market capitalisation of equities at the Nigerian Stock
Exchange (NSE) depreciated further by 0.08 percent at the close of trading
session last week, as against a decline of 0.45 percent recorded in the
preceding week.

The NSE market capitalisation of the 194 First-Tier equities
closed last Friday at N7.902tr after opening the week at N7.908tr, reflecting
N6bn losses. Meanwhile, about N36bn was lost in the previous week.

The NSE All-Share Index in the week under review also shed 0.08
percent to close at 24,733.38 basis points as against a decline of 0.45 percent
recorded in the preceding week to close at 24,752.05.

Analysts at Proshare Nigeria Limited, an investment advisory
firm, said equity market turned unstable with “increased volatility due to high
speculative tendency experienced.” They said, “series of indecision positions
witnessed in most sectors, gave support to the unstable market breadth in the
week, indicating the intense battle between the bargain and sell positions
while the outlook further suggests overwhelming sell position as the week
eventually closed negative.” In the mean time, market watchers have advised
investors to maintain value-investing approach in the coming weeks.

Gainers and Losers

The number of gainers in the week closed at 41 stocks compared
with the 26 stocks recorded in the previous week.

Transcorp Plc topped the gainers chart for the week with 19.83
percent appreciations. One the losers’ side, a total of 33 stocks recorded
price decline in the week compared with the 50 stocks that declined in the
previous week. Guaranty Trust Bank topped the losers chart for the week with
24.57 percent depreciation.

The total volume traded in the week closed at 3.92 billion units
valued at N15.25bn compared with 3.98 billion units valued at N16.65bn recorded
in the previous week. The volume transaction in the week when compared with the
previous week data declined by 1.43 percent as against an increase of 242.68
percent recorded the preceding week. Weekly value also went down by 8.42
percent as against positive growth of 68.36 percent recorded in the preceding
week.

The conglomerates sector emerged the most traded sector during
the week in terms of volume with 2.56 billion units of shares valued at
N4.09bn. The volume traded in the sector accounted for 65.30 percent of the
entire market. Transcorp Plc led the market volume for the week to maintain
previous position as top traded stock. The Banking sector was second most
traded sector with 994.67 million units valued at N7.75bn.

Last week, some companies were marked down for dividends and bonuses. Zenith
Bank was marked down for 85k dividend; Guaranty Trust Bank was marked down for
75k dividend and a one for four bonus; while Stanbic IBTC was marked down for
39k dividend.

Standard Bank, South Africa’s largest bank by assets and
earnings, has said ongoing elections in Nigeria will not affect its willingness
to do business with the country. The bank’s director and head, Agricultural Banking,
will be moving to Nigeria to oversee its operations in the sector from next
month.

“Nigeria is currently our biggest investment at the Standard
Bank Group, outside of South Africa. We keep a close eye on elections as with
any African country, but the reality in Africa is business goes on, with or
without elections. I am actually relocating office in Nigeria in May due of
course to the size of the opportunity from an agricultural point of view,”
Jacques Taylor told NEXT at the weekend.

Speaking at a media forum on agricultural banking organised by
the bank in Johannesburg, South Africa, he said the bank expects agriculture to
contribute up to 40% of its asset growth in Africa in 2011.

Priority countries

South Africa’s Standard Bank Group acquired a majority stake in
Nigeria’s IBTC Chartered through a tender offer in August 2007 to become
Stanbic IBTC Bank Limited.

Nigeria is one of six priority countries that Standard Bank sees
as having the biggest opportunities in the agricultural sector in the short
term. The others are Ghana, Kenya, Namibia, Uganda, and Zambia.

“When we identify a country and try to access the market, the
three key things are natural resources, quality of infrastructure, and a stable
macroeconomic and political environment, because that will result in a stable
exchange rate,” Mr. Taylor added.

The group gave Nigeria a political risk rating of 2.2 on a scale
of 5, second only to Kenya, which has a risk rating of 2.1

“We are serious about that business, with a lot of support
coming from the Central Bank of Nigeria,” Mr. Taylor said.

Last year, Stanbic IBTC Chartered grew at the rate of two
branches per week in Nigeria.

“We have about 60 branches; we could be aiming for close to 300.
Nigeria is a big business for us,” Mr. Taylor concluded.

Diezani Alison-Madueke, Minister of Petroleum Resources, at the
weekend defended the Nigerian Content Policy of the Federal Government. She
said the policy was not designed to nationalise the assets of multinational oil
and gas companies operating in the country.

The minister, who spoke at the first anniversary of the
commencement of the implementation of the Nigerian Oil and Gas Industry Content
Development Act 2010 in Abuja, said the policy is aimed at promoting increased
participation of Nigerians in the operations of the industry, as is the
practice in industries around the world.

“Nigerian Content Act is not designed to nationalise foreign
assets or to completely indigenise the investment interests of foreigners, as
is erroneously perceived in some quarters. The important thing is that the
implementation of law would be guided by a framework that has been put in place
to help balance the interest of the investors and the country’s national
interest in the oil and gas industry,” Mrs. Alison-Madueke said.

According to her, since the approval of the Act early last year,
it has become clear that the industry needed to work towards building capacity
in critical areas to ensure that requirements of the law do not impede the
growth of the industry, pointing out that the collaboration with all
stakeholders must be sustained to erase the suspicion in some quarters that
there is resistance by multinationals in the implementation of the law.

Targets to be achieved

Some of the targets set by the government for the Nigerian
Content Development Monitoring Board (NCDMB) include retention of $10 billion
out of $20 billion average annual industry expenditure; creation of over 30,000
direct employment and training opportunities; and establishment of three to
four new pipe mills to service the demands of the industry and coating, valves,
fittings and components.

Other targets include the development of one or more dockyards
for maintaining marine vessels operating in Nigeria; transformation of ownership
profile of marine assets supporting industry activities and integration of
indigenes and businesses, as well as capturing 50 to 70 per cent of banking
services, insurance placements, and legal services in the country.

Group managing director, Nigerian National Petroleum Corporation
(NNPC), Austen Oniwon, disclosed that with the recent launching of the ‘gas
revolution’ by President Goodluck Jonathan, about $53 billion is expected to be
spent in the next three to four years on the establishment of strategic
industry infrastructure in the country, including Greenfield refineries, world
class petrochemical plants, fertilizer complexes, methanol plants, gas
processing facilities, and other gas related infrastructures in the country.

The challenge for stakeholders, he explained, hinges on ensuring
that significant percentage of the amount to be spent is in-country, by
supporting the capacity building initiative for local operators through the
Nigerian Content Development programme, to enable them compete with
multinationals, who set up facilities in Nigeria in order to make them take
full advantage of the existing opportunities.

Executive Secretary, NCDMB, Ernest Nwapa, said the take off of
the Act was threatened by the confusion about the necessity to either pass it
separately or be joined with the Petroleum Industry Bill, as it was
increasingly becoming apparent that government was no longer interested in
pursuing the policy of achieving 70 per cent local content in the industry.

Since the take off of the NCDB, Mr. Nwapa said a number of
achievements have been recorded, particularly building its executive and
operational capacity, underscoring the importance of continuous engagement with
stakeholders to reassure them that the Nigerian Content Act is not a punitive
law, but a confirmation of what is done in other jurisdictions they are
operating in.

Trading activities at the Nigerian Stock Exchange (NSE) were characterised by varied performances this week as market indicators continued their unsteady movements.

The market capitalisation appreciated in value at the close of trading on Thursday after it declined the previous day. The market capitalisation of the 194 First-Tier equities closed yesterday at N7.906 trillion after opening the day at N7.862 trillion, reflecting 0.56 per cent or N44 billion gains. The Exchange had recorded gains also on Tuesday before plunging the following day.

Stockbrokers at GTI Capital, a stockbroking firm, said: “Uncertainty pervaded the equity market because the oscillatory trend continued to hold sway in the market amid political uncertainty. The market had failed to attain a steady rally in succession for five days in the past one month. This shows strong weakness in the economic space burden with political uncertainty.”

A total of 32 stocks appreciated in price on Thursday higher than the 28 recorded the previous day, while 21 stocks depreciated in value higher than the 18 of Wednesday. First Aluminium Nigeria and Ecobank Transnational Incorporated topped the price gainers’ table with an increase of five per cent and 4.97 per cent, to close at 63 kobo and N16.27 per share, respectively. On the flip side, Union Bank of Nigeria and Cement Company of Northern Nigeria led on the price losers’ chart with a loss of 4.95 and 4.94 per cent respectively, to close at N3.07 and N10.78 per share.

Financial results

Meanwhile, despite the fact that more quoted companies released good results, market capitalisation remains wobbly. Dangote Cement, on Wednesday, posted significant improvement in its audited financial result for the year ended December 31, 2010. The company, which was listed at the Exchange last October after acquiring Benue Cement Company, posted a profit after tax of N106.605 billion in 2010, from a profit after tax of N47.251 billion in 2009, reflecting a 125.61 per cent increase. Dangote Cement’s turnover in the period in view also increased by 56.06 per cent, from N129.797 billion to N202.565 billion.

The company’s board of directors proposed a dividend of N2.25 per share for its shareholders. The bank’s share will be marked for payment on the 27th of April while the cash will be disbursed on the 25th of May. The stock price of Dangote Cement remained unchanged yesterday at N125.50 per share after the announcement.

Fidelity Bank posted a 2010 pre-tax profit of N8.65 billion, more than four times the N2.05 billion pre-tax profit it made in 2009. Turnover in the period rose to N56 billion from N35 billion a year earlier.