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To strengthen its existing rules, the council of the Nigerian Stock Exchange (NSE) has approved “certain penalties” for dealing with members who violate market rules governing their operations.

The NSE, in a circular to all member firms said, “At its meeting held on 16th March, 2011, the Council of the Exchange approved certain penalties for breach of the Rules and Regulations Governing Dealing Members (Rules).”

The Exchange said it has presented “an exposure draft of the recommended penalties” to market dealers for comments and contributions from last Friday to the 25th of March, adding that “implementation of the recommended penalties will take effect after a review of all comments and contributions.”

Some of the recommended penalties in the draft include issues on unauthorised sale securities, verification of shares in connivance with another, misappropriation of funds, third party transactions, and maintenance of clients’ accounts.

Others include issues on appointment of a compliance officer, rendition of financial statements, and extension of time for submission of annual financial statements.

Sale of fake securities

On the issue of unauthorised sale securities, the NSE said:

“In no circumstances shall a dealing member that sells securities without the authorisation of the owner be permitted to keep any benefits accruing from such sales, including but not limited to bonuses, rights, cash dividends, capital appreciation, and any profit whatsoever.”

It added that a dealing member that sells securities without the authorisation of the owner shall “be required to buy back the securities; and where the sale transaction is N5 million and below in value, be liable to pay a fine of N100,000 and N5,000 for every day from the day of the unauthorised sale until the day the dealing member completes buying back the shares for the owner.

“Or where the sale transaction is above N5 million in value or the dealing member had engaged in such unauthorised sale of securities on a previous occasion, shall have its dealing licence withdrawn by the Council of the Exchange and shall in addition pay a fine of N100,000 and N5,000 for every day from the day of the unauthorised sale until the day the dealing member completes buying back the shares for the owner.”

However, it said that “no dealing member shall have its licence withdrawn unless the Disciplinary Committee of Council has made a finding that the dealing member engaged in the unauthorised sale of securities and has made a recommendation to Council that the licence should be so withdrawn, provided always that during the pendency of any investigative or disciplinary proceedings, the Dealing Member shall be suspended from trading.”

Analysts have warned against financial indiscipline in the corridors of power. Speaking against the backdrop of the increase of the benchmark for oil price in the budget last week, they cautioned against fiscal indiscipline.

According to Yvonne Mhango, an analyst at Renaissance Capital, an investment bank, “Strong oil price may lead to fiscal indiscipline. The Senate passed a N4.972 trillion 2011 budget on 16 March 2011, which is almost 20 per cent bigger than that proposed in December 2010. Strengthening fiscal revenue, owing to a high oil price, and the fear that when new governors enter office they will spend aggressively, have raised concerns about loose fiscal policy post-elections, which would be inflationary.”

“This conjecture all depends on how fiscally responsible the president-elect turns out to be. Nevertheless, as fiscal management tends to be less disciplined when revenue flows are buoyant, the risk to inflation is real, which suggests monetary policy should be tightened,” Ms. Mhango added.

The Senate passed the 2011 budget with a total projected spending of N4.97 trillion ($31.87 billion) on March 16, which is almost 20 per cent bigger than the proposed budget in December 2010.

This increase comes on the back of the stronger oil price, which led the Senate to pass the budget at a higher benchmark price of $75 per barrel (bbl), compared with $65/bbl initially.

Fall in windfall oil savings

Apart from the expected rise in inordinate spending, the increase in the benchmark oil price will also reduce the amount of funds that would otherwise have been saved from the strong oil price the nation is presently enjoying. Excesses of the oil windfall are supposed to have been channelled to the nation’s excess crude oil account and help boost the nation’s reserves.

Afrinvest, an investment and finance analysis firm, said the increase in oil price benchmark to $75.0 compared to the proposed figure of $65.0 while maintaining a production level of 2.3mbpd, implies that the rise in total spending is predicated on the bullish outlook for oil.

“This also suggests that windfall oil savings may be lower than proposed, with impact on the potential sources of funds for the Sovereign Wealth Fund,” the firm stated in a report titled ‘Nigeria’s 2011 Budget Figures’.

However, despite the expected increase in fiscal deficit, experts believe the major concern still lies in the economy’s vulnerability to oil price shocks as government revenue continues to be hinged on petro-dollar inflows.

The budget

The approved budget shows a 17.9 per cent increase compared to the proposed budget, but a 5.3 per cent reduction compared to the total approved spending of N5.25 trillion ($33.67 billionn, including supplementary appropriation) for the 2010 fiscal year.

The budget allocates 31.4 per cent of total spending to capital expenditure, lower than 37.9 per cent for 2010, while the share of recurrent expenditure was higher than 62.1 per cent in the 2010.

Compared to the initial proposed figures, the approved budget shows a 55.4 per cent increase in capital expenditure and marginal reduction of 0.6 per cent in recurrent spending. However, there was a marked decrease of 21.6 per cent in capital spending, compared to 2010.

In terms of expenditure mix, the approved budget allocates 31.4 per cent of total spending to capital expenditure, higher than the initial proposed 23.8 per cent but lower than 37.9 per cent for 2010, while the share of recurrent expenditure was moved downwards from the proposed 76.2 per cent to 68.6 per cent, but higher than 62.1 per cent in the 2010.

The Nigerian
National Petroleum Corporation (NNPC) has assured Nigerians of steady
fuel supply following a pledge by the Nigerian Association of Road
Transport Owners (NARTO) to return to work.

The assurance was
contained in a statement signed by Levi Ajuonuma, the Group General
Manager, Public Affairs Division of the corporation at the weekend in
Abuja.

The statement was
issued following a strike by NARTO on Thursday to press the Petroleum
Products Pricing Regulatory Agency to raise its freight rate. The
strike resulted in panic buying and scarcity of petroleum products.

Prices of building materials have gone up by about 20 per cent in parts of Delta, the News Agency of Nigeria (NAN) reports.

A survey by the
state’s ministry of economic planning indicated that a bag of Elephant
and Dangote cement, which sold at N1,600 in Asaba, Ughelli, Warri, and
Sapele in December 2010, now cost N1,900.

The survey also
showed that a single bar of iron rod now sells for N1,850, up from
N1,600 it was sold in the cities in December 2010.

Some building
materials dealers who spoke to NAN attributed the increase in the
prices of the items to high cost of diesel as well as low exchange rate
of the naira against the dollar.

The
federal government at the weekend expressed disgust over the attitude
of some financial operators to consumers, which include failure to
provide useful information on their new products.

Ify
Umenyi, director general, Consumer Protection Council (CPC), gave the
charge during a financial services stakeholders’ meeting marking the
2011 World Consumers’ Day in Abuja.

The
DG, described the recent Central Bank of Nigeria (CBN) directive to
micro-finance banks to acquire information technology infrastructure
before the end of the year as a move which would further protect the
interest of consumers at the market place.

Speaking
further on consumer education, Mrs. Umenyi lamented that “this outright
neglect of corporate responsibility has caused untold harm to
consumers, who often fall prey to some unscrupulous fraudsters that
exploit their ignorance to defraud them.”

She
said that the council is not comfortable with the zero level of
consumer education on these new services, stressing that this obvious
lack information placed a lot of statutory burden on sector regulators.

The
meeting, which was attended by sectoral players and various agencies of
government in the financial sector, has as its theme, ‘Consumers for
Fair Financial Service’.

“Much
as we appreciate many innovations brought into the industry by
operators to make financial service attractive to consumers, we are of
the firm belief that it is the responsibility of the operators to fully
educate the consumers properly on the new services and how to maximise
the services.

“This
development underlines the need to adequate financial service literacy
and therefore, places a statutory burden on sector regulators such as
Central Bank of Nigeria (CBN), Securities and Exchange Commission
(SEC), National Insurance Commission (NAICOM), Nigerian Deposit
Insurance Corporation (NDIC), and others to raise tighter policies and
ensure adequate enforcement to guarantee a safe and satisfactory
financial service,” Mrs. Umenyi said.

While
commending the CBN on the directive to microfinance bank on IT
infrastructure, the CPC boss noted that the establishment of the Card
Fraud Arbitration Committee by the apex bank to provide a card fraud
arbitration framework for speedy resolution of card fraud complaints,
was a step in the right direction as it would help to look into the
various anomalies relating to the use of Automated Teller Machine (ATM).

Mrs.
Umenyi also commended the efforts of Lamido Sanusi, the CBN governor,
over his policy which stipulates N50, 000 fines on banks and e-payment
companies that breach its guidelines on the operation of ATM.

Tanzania’s
year-on-year inflation rate rose for a fourth consecutive month in
February on the back of higher food and fuel prices, staying in step
with trends at east African neighbours Kenya and Uganda.

Tanzania’s National
Bureau of Statistics said on Saturday that consumer prices rose 2.2
percent in February, helping push the country’s inflation rate to 7.5
percent from 6.4 percent a month earlier.

The International
Monetary Fund said on Friday it expected food and fuel prices to drive
inflation higher this year, and analysts warned on Saturday it could
soon hit double digits.

“All signs show
Tanzania’s inflation rate is going up and up this year,” said Honest
Ngowi, an economics lecturer at Mzumbe University.

“Food production
hasn’t been good in Tanzania. The future is even worse for the
inflation rate, because power is still a major problem, the fuel crisis
is still biting and the Japanese earthquake could impact on global fuel
prices.”

The statistics
office said in a statement that the food and non-alcoholic beverages
component of the consumer price basket rose 3.0 percent in the month,
after rises of 2.9 percent in January and 2.6 percent in December.

Food and
non-alcoholic drinks have a 47.8 percent weighting in the consumer
price basket, so they have a major impact on the overall inflation rate
in the region’s second largest economy.

The monthly food
price rise left the year-on-year rate of inflation for the component at
9.2 percent, behind the inflation rate for housing, water, electricity,
gas and other fuel, which was running at 11.1 percent in February.

Inflation rates in
Kenya, Tanzania and Uganda, the three largest economies in the East
African Community, last slowed in October. Since then, higher food and
fuel prices have helped push year-on-year rates to 6 percent or above.

Tanzania had the
highest inflation rate in February, ahead of Kenya’s at 6.5 percent and
Uganda’s at 6.0 percent, and analysts said chronic power shortages in
Tanzania may also contribute to rising inflation in the coming months.

“The inflation rate
is going to accelerate further. We still haven’t resolved the power
crisis in the country,” said Humphrey Moshi, an economics professor at
the University of Dar es Salaam.

“The disturbances in the Middle East are spreading to more oil-producing countries.

This will obviously lead to higher crude oil prices,” he said.

“If the government
doesn’t take serious measures, we will definitely see a double-digit
inflation rate in the second half of this year,” Moshi said.

Reuters

The following are selected highlights from a report issued by a U.S. Department of Agriculture attache in Morocco:

“Morocco’s grain
area in 2010/11 is estimated at 4.93 million hectares, with 3.04
million HA planted with wheat and 1.89 million HA with barley. The
grain crop is developing nicely under good growing conditions. The GOM
revised total grain production forecast upward to 9 million tonnes, of
which 5.9 million tonnes is for wheat and 3.1 million tonnes for barley.

“Morocco’s wheat imports in 2010
reached 3.062 million tonnes, an increase of 30 per cent over imports
in 2009. Wheat imports from the U.S. totaled 394,784 tonnes and
accounted for 13 per cent share of the market.”

The Bureau of
Public Enterprises (BPE) has issued the requirement for the next stage
of the privatisation process of distribution companies created out of
the Power Holding Company of Nigeria (PHCN).

The director
general of the Bureau, Bolanle Onagoruwa, said on receipt of
Information Memorandum and Request for Proposal, pre-qualified bidders
will be given access to physical and e-data room; will be able to carry
out physical due diligence; will be issued with draft copies of the
Multi-Year Tariff Order (MYTO); will be encouraged to submit comments
on MYTO; and Bidder comments on MYTO will be subject of conference to
be organised by sector regulator (Nigerian Electricity Regulatory
Commission).

The Nigerian
privatisation agency chief made the remarks on Tuesday as a panel
discussant at POWERINBADA in Johannesburg, South Africa, according to a
press statement on the firm’s website.

A total of 331
applications were received by the Bureau of Public Enterprises (BPE) on
Friday, March 4, 2011 – the deadline for the submission of Expressions
of Interest (EOIs) in the privatisation of the successor companies
created out of the Power Holding Company of Nigeria (PHCN.)

One hundred and
seventy four applications were received from prospective
investors/concessionaires interested in acquiring the four thermal
stations and the two hydro stations. One hundred and fifty seven
applications were harvested from prospective investors interested in
acquiring the eleven distribution companies.

Mrs. Onagoruwa told
her audience that the reform of the Nigerian power sector presents
enormous investment opportunities, adding that the government has put
in place investment-friendly initiatives. This includes the fact that
foreigners can own 100 per cent of investment; that there is guarantee
against expropriation of investments; that repatriation of profits are
guaranteed by law; that there will be generous tax incentives; and that
the nation has one of the highest Returns on Investment (ROI) in the
world.

She pointed out
that the objectives of the electric power sector reform are to increase
electrification; ensure cost reflective tariffs; attract private sector
investments into the sector; create competitive electricity market;
induce investments in new power generation facilities; rehabilitate
existing power generation facilities; improve efficiency by increasing
collections; reduce costs and technical and non-technical losses; and
improve customer service.

Chukwuma Nwokoh,
the spokesperson of the firm, said the firms would have to be
shortlisted first, before the request for proposals would be sent to
the successful ones.

“We would
shortlist, and then when we do, we would send them their Request for
Proposal. It is the next stage after the submission of Expressions of
Interest.”

The core investor
sales to be carried out through international competitive bidding will
cover the eleven electricity distribution companies in the country.
They are Abuja Electricity Distribution Company Plc; Benin Electricity
Distribution Company Plc; Enugu Electricity Distribution Company Plc;
Eko Electricity Distribution Company Plc; Ibadan Electricity
Distribution Company Plc; and Ikeja Electricity Distribution Company
Plc.

Others are Jos
Electricity Distribution Company Plc; Kaduna Electricity Distribution
Company Plc; Kano Electricity Distribution Company Plc; Port Harcourt
Electricity Distribution Company Plc; and Yola Electricity Distribution
Company Plc.

Investors at the Nigerian Stock Exchange (NSE) yesterday recorded
more losses on the value of their equities, as market closed trading on
negative note.

The NSE market capitalisation of the 194 First-Tier equities
closed on Thursday at N7.775 trillion after opening the day at N7.969 trillion,
reflecting 2.43 per cent decline or N194 billion losses. The market has lost
over N399 billion since transaction started this week.

Commenting on Thursday’s trading performance, analysts at
Proshare Nigeria Limited, an investment advisory firm, said the continuous
downward trend could be attributed to “the intense sell activities” by
investors, adding that the sell pressures were “very dominant in some blue
chips stocks” in sectors like Banking, Building Materials, Breweries, and
Foreign Listings.

Stockbrokers at GTI Capital, a stockbroking firm, said the
market had “staged a stabilisation trial during the better hours of trade only
to tumble and succumb to sellers’ mood at the concluding session.”

Low gainers

At the close of trading on Thursday, the number of gainers
closed lower at 10 stocks as against the 14 gainers recorded previous session;
while losers also closed lower at 42 stocks when compared with the 45 losers
recorded on Wednesday.

Transnational Corporation and Red Star Express topped the price
gainers’ table with an increase of 4.35 per cent and 4.26 per cent, to close at
72 kobo and N2.94 per share, respectively.

Starcomms and Goldlink Insurance followed on the gainers’ table
with an increase of 3.80 and 3.64 per cent, to close at 82 kobo and 57 kobo per
share.

On the flip side, Dangote Sugar Refinery, Stanbic IBTC Bank, and
Cement Company of Northern Nigeria led the price losers’ chart with a loss of
five per cent each, to close at N12.35, N8.74 and N10.84 per share,
respectively. First City Monument Bank followed with a loss of 4.99 per cent,
to close at N6.48 per share.

Active subsector

The Banking subsector led the market transaction volume on
Thursday with 107.122 million units valued at N788.799 million. The volume
recorded in the subsector was driven by transaction in the shares of Diamond
Bank, First Bank, Oceanic Bank, and Skye Bank.

Trading activities in the Insurance subsector was second highest
yesterday, with 36.063 million shares valued at N29.005 million. Volume in the
subsector was boosted by deals in shares of Goldlink Insurance, Aiico
Insurance, and Mutual Benefit Assurance.

The Conglomerates subsector was third with 33.694 million shares
valued at N874.380 million. PZ Cussons Nigeria, Transnational Corporation, and
Unilever Nigeria boosted volume in the subsector yesterday.

Nigeria’s crude oil output dropped 3.8 per cent in February at
2.098m barrels per day (bpd), though it remained Africa’s top oil producer,
outperforming Angola (1.704m bpd), Libya (1.347m bpd), and Algeria (1.261m
bpd).

In its March Monthly Oil Market Report released this week, the
Organisation of the Petroleum Exporting Countries (OPEC) estimated the nation’s
crude oil output at 2.098m barrels per day (bpd) in February, from 2.181m bpd
in January, and 2.192m bpd in December.

Samir Gadio, Emerging Market strategist, Standard Bank, says
these statistics seem to suggest that a sizeable increase in production in the
short-to-medium term looks somewhat unlikely, until new oil fields come on
stream and the existing infrastructure operates at a higher capacity.

“Although last month’s output was still up 7.4 per cent year on
year, the annual growth rate in the data flattened further, in line with our
expectations, given the sharp rebound and subsequent stabilisation in output
since November 2009, as the security situation in the Niger Delta region
broadly improved. Additionally, the average crude oil production (2.139m bpd)
has edged up 8.5 per cent year on year said,” Mr. Gadio said.

“Overall, the turnaround in output since late 2009 as well as
the rally in the Bonny Light oil price in 2011 should theoretically translate
into a significantly positive trade balance and robust current account
surplus,” he added.

Foreign reserves
accretion

Experts believe that the surge in the oil price (and a somewhat
stable output) is translating into an increase in foreign exchange reserves,
which reached $35.9 billion on 10 March 11, up from $3.6 billion.

“Although it is difficult to estimate the breakdown in the
accumulation of foreign exchange reserves between Central Bank’s monetised
proceeds and the Excess Crude Account (ECA), it is worth stressing that the
finance minister, Olusegun Aganga, indicated in February that oil-related
savings had resumed this year.

“In this case, we should see a rapid rebound in the ECA balance,
given the substantial differential between the current oil price and the
proposed oil price benchmark in the draft of the 2011 budget ($65 per barrel),”
Mr. Gadio further said.

World economic growth remains robust and continuing improvements
have led to improved growth expectations for 2011, which have been adjusted 0.1
per cent higher to 4.0 per cent, according to the OPEC report, though inflation
is beginning to pose a challenge for policy makers in both the OECD and the
developing countries.

Afrinvest, a finance research and analysis firm, said the
government has offered to increase its crude oil production, on OPEC’s request,
to cool soaring oil prices.

“Oil prices last week rose to their highest point in more than
two years, as the social unrest in Libya reduced global supply by as much as
1.0 million barrels per day. Nigeria’s Bonny Light is similar to the type of
oil produced by Libya and would be a good replacement for refiners, who are
currently lacking adequate supplies because of the North African crisis.

“Nigeria has a combined crude oil and condensate output of
around 2.4m bpd, with a production capacity of around 3.0m bpd,” the firm said.