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The
Bank of Industry (BoI) and Nigerian Export-Import (NEXIM) Bank have so
far received only six applications from prospective beneficiaries of
the $200 million (about N30 billion) special fund by the federal
government dedicated to the development of the entertainment sector.

Since
the announcement of the Nigerian Creative and Entertainment Industry
Stimulation loans scheme last year, as part of efforts to boost
capacity building in the country’s entertainment industry, it was
gathered that the two banks mandated to manage the fund have been
inundated with enquiries on guidelines for accessing it, as well as
proposals from interested applicants.

The
fund is meant to enhance industry capacity in the areas of film
production, film export market development, and proper distribution
network and system; development of distribution infrastructure and
platforms; development and production platforms and facilities;
acquisition of hi-tech production equipment and ancillary facilities,
as well as refinancing of existing projects to help save jobs and
create new jobs.

Appraisal and processing

Though
the applications are currently undergoing appraisal and processing,
Chinedu Morgan, who represented the BOI managing director, Evelyn
Oputu, told NEXT several proposals have been adjudged below the set
standard and quality. He did not disclose the names of the applicants.

“Since
the announcement of the initiative, six applications have been received
so far. We have commenced the process of appraisal. We are at the
advanced stage of processing the applications. But, there are still
some barriers. Some of the practitioners do not know how to put the
ideas together. We need to address the issue of how to assist them make
their projects viable,” Mr. Morgan said.

To
help prospective beneficiaries come up with bankable proposals, Mr.
Morgan said the BOI and NEXIM are working with the Lagos Business
School (LBS) to develop capacity, particularly by helping to do proper
due diligence and bankable feasibility study, as well as assess the
capability of each applicant to identify areas requiring assistance to
enable them come up with financing models suitable for their respective
enterprise.

Similarly,
last week, the minister of finance, Olusegun Aganga, disclosed that the
LBS is also collaborating with the Small and Medium Enterprises
Development Agency of Nigeria (SMEDAN) and other 22 enterprise
development centres across the country to provide business skills
training to improve the managerial capability of entrepreneurs.

Accessing the loan

On
the criteria for accessing the loan, Mr. Morgan, who said the
application process has been harmonised with NEXIM, advised interested
persons to download the forms from their websites, while they are
expected to forward the completed applications to the BOI offices in
the six geopolitical zones, including Abuja, Kaduna, Bauchi, Lagos,
Akure, Asaba, and Aba.

The
completed applications are to be supported with a copy of the projects
brief, feasibility study, and certified copies of company’s certificate
of incorporation, memorandum and Articles of Association, Corporate
Affairs Commission (CAC) Forms 2 and 7, indicating the names of the
shareholders and directors.

Other
documents to be attached to the applications include audited statement
of accounts or cash flows; budgets or bill of quantities; proforma
invoices; completion bond; proprietary rights; collateral security,
properly patented; trademarked and copyrighted intellectual property
assets or sales agreement and evidence of contracts handled.

Meanwhile,
the minister disclosed that there is an ongoing working arrangement
with various state governments to establish about 20 industrial
clusters in the country to help the growth of Small and Growing
Businesses (SGBs).

“Government
is making good progress in its bid to establish 20 industrial clusters
and job centres in the country. While we have gone far in our
discussion with some states, others are yet to come on board.

“But
we expect them to do so very soon based on discussions we have had so
far for them to provide infrastructures necessary to make them work,”
the minister said.

Yabawa Wabi,
minister of state for finance, has advised the West African Insurance
Companies Association (WAICA) to ensure adequate capitalisation of the
WAICA Reinsurance Corporation.

Mr. Wabi, who was
represented by Fola Daniel, commissioner for insurance, at the National
Insurance Commission (NAICOM), gave the advice at the 2011 WAICA
Educational Conference in Lagos on Monday. The theme of the conference
was ‘Partnership for Growth and Prosperity: the Roadmap for Regional
Integration in West Africa’.

According to her,
the establishment of the WAICA Reinsurance Corporation will bring
immense benefits to the practice of insurance in the sub-region.

“With adequate
initial take-off capitalisation, it is expected that the corporation
will contribute greatly to the insurance companies in the sub region
than the pool. It is critically important that the corporation from
inception be adequately capitalised and directed by an informed board
and management.

“A deliberate
selection criteria, particularly for its management team, based on
maturity, experience, qualification, and goodwill, will be helpful in
addition to a sizeable capitalisation beyond the statutory minimum
capital,” Mrs. Daniel said.

She further said
that it was obvious that WAICA Reinsurance Corporation would come into
intense competitive environment based on her knowledge of the insurance
industry in the sub region.

According to her,
the emerging risks in the oil and aviation sectors required high-level
of technical support both for the corporation and the insurance
industry.

Mrs. Wabi said it
was necessary for WAICA Reinsurance to seek for competent technical
partners to help it in the development of technical competences.

She also said there
was the need to collate quality information relating to insurance and
re-insurance matters in the sub region and make them available to
members of WAICA and the government. This would help to make informed
decisions and opinions on insurance matters, she said.

William Agbenyega,
president of WAICA, said that the association had made history with the
establishment of WAICA Reinsurance Corporation. According to him, the
corporation will strengthen bilateral business relationships among
members, as they would continue to cede businesses to it. He said that
WAICA Reinsurance would have its headquarters in Freetown, Sierra
Leone, and country offices in member countries.

NAN

Afam Obiago, the
Economic Adviser to governor. Emmanuel Uduaghan of Delta , says the
state government is re-positioning to take advantage of the provisions
of the Local Content Act.

Mr. Obiago told the
News Agency of Nigeria (NAN) in Asaba that the act would help to
promote production of inputs and improve manpower in the oil and gas
sector locally. He said the state was ‘‘beginning to recover from its
staggering position in oil and gas production’’ which was hampered by
militants’ activities in the recent past. “What the act seeks to do is
to promote what you can find both in terms of products, technology and
manpower locally” he said, adding that about 40 per cent of gas
production in the country comes from Delta state.

No fewer than
82,689 farmers benefitted from agricultural input loans under the
Zamfara Comprehensive Agricultural Revolution Programme (ZACARP)
between 2008 and 2010.

Yunusa Abdullahi
Kuturu, the special adviser to the governor, Mahmud Shinkafi, told the
News Agency of Nigeria (NAN) in Gusau on Monday that the state
government provided agricultural inputs worth N5 billion to the farmers.

Mr. Kuturu, who
spoke through the coordinator of the programme, Dahiru Kaura, said that
the inputs distributed included fertiliser, improved seeds, pesticides,
and agricultural chemicals.

He said that under
the programme, farmers initially paid 25 per cent of the total bill of
their inputs requirement to balance 75 per cent after harvest.

Mr. Kuturu said that between 2008 and 2010, about 254,224 hectares of land were cultivated under the programme.

The price of
Tanzania’s top-grade AA coffee beans rose to a high of $350 per 50kg at
last week’s auction, surpassing a previous record of $339.80 hit in
January, traders said on Monday.

Traders said the
new high in Africa’s fourth-largest coffee grower was on the back of
strong demand at a time of dwindling supplies, given the current
season’s crop ends in April.

“These are
unbelievable prices. Top-grade coffee is selling for an astonishing $7
a kilo,” said Geoffrey Mwangulumbi, executive director of the
Association of Kilimanjaro Specialty Coffee Growers.

“These prices
reflect the trend at the world market, where there is a huge shortage
of coffee. The prices will likely continue to rise at coming auctions,”
he said.

A union
representing workers at Kenya’s sole power supplier started a strike on
Monday to protest against their employment terms, its secretary general
said.

Kenya Power has
been involved in a protracted dispute with the Kenya Electrical Trade
and Allied Workers Union (KETAWU), which claims that more than a third
of the workers are on casual terms, in violation of the country’s
labour law.

Ernest Nadome,
secretary general of the union, told Reuters by phone that 6,000
workers had downed tools after Kenya Power failed to honour this year’s
collective bargaining agreement.

“We are demanding our rights. We will not be cowed by threats,” he said.

South Africa’s gold production fell 6.4 percent in 2010 to 191,833.7 kilograms, the Chamber of Mines said on Monday.

South Africa was
the world’s largest gold producer for most of the last century up until
2006, but output has been hit by dwindling grades and stoppages of
mines and shafts for safety-related reasons as companies mine ever
deeper.

Some South African
gold mines reach depths of around 4 km. The main gold mining firms in
South Africa include the world’s No. 3 and Africa’s top gold producer,
AngloGold Ashanti, fourth-ranked Gold Fields and fifth-placed Harmony
Gold Mining Co.

Some
market operators at the Nigerian Stock Exchange (NSE) have criticised
the recent proposed extension of trading period by another two hours.

Emmanuel
Ikazoboh, interim administrator of the NSE, announced last week that he
will increase trading activities by another two hours within the next
two months. The move will take trading hours to seven. The NSE had last
December extended the trading hours from 9.30 am to 2.30 pm, against
the former 9.30 to 12.30 pm.

Mr.
Ikazoboh said the previous extension was done to give foreign investors
opportunity to participate in the market, adding that another extension
would further attract more foreign participation in the market.

“Within
the next one month or two, I am going to increase the trading hours
from 9:30 am to 4:30pm. This is to increase volumes and allow American
investors to trade in our market,” he said.

However,
Ola Yussuff, chairman of the Association of Stockbroking Houses of
Nigeria, said that the NSE should direct its efforts at building up the
base of local investors by “encouraging local investors to come back
into the market.”

“If
foreign investors are coming to the market, I think that is a welcome
sign. But our own position is that the NSE should encourage local
investors to also come to the market. As things are now, local
investors’ participation in the market is less than ten per cent
whereas in other jurisdictions, like in the United Kingdom and America,
you have 70 to 80 per cent local participation.

“Having
foreign investors is not bad, but it shouldn’t be at the expense of
local investors. If we have our way, we would direct more energy on
getting the local investors,” Mr. Yussuff said.

“Foreign
investors will only come here when there is something to be gained. As
soon as there is any slightest problem in our economy, they are out.
This makes the volatility of the market high.

“Therefore,
it is the local investors of every country that keeps its market alive
so that when foreign investors want to go, it doesn’t affect the market
negatively,” he added.

David
Amaechi, an executive member of the Shareholders Association of
Nigeria, said the planned trading extension may be a setback.

“There
is still fear that investors’ confidence is yet to be guarded jealously
in the market. It is these same foreign investors who pulled out their
funds, leaving our market to crash. More attention should be given to
us who plan to stay longer in the market,” Mr. Amaechi said.

Workers’welfare

Asked
if the NSE is considering the welfare of its staff in the proposed
plan, Wole Tokede, the Exchange’s spokesperson, said, “Since no staff
of the Exchange is complaining about the development, how the
(proposed) trading extension affects the staff should not be anybody’s
concern.”

However, Mr. Tokede said, “The management of the Exchange will not
create any policy that will affect the health of its workers. I also
believe that there is no sacrifice too much for the NSE staff to pay in
order to make the market progress.”

The National
Pension Commission (PENCOM) said the recent review of its investment
guidelines for pension fund assets was done in order to allow for
investible funds to be channeled to critical sectors of the economy.

The revised
guidelines, which were released on December 16 last year, were designed
to enable pension funds to be used to intervene in correcting the
infrastructure deficit in the country.

According to the
review guidelines, the list of assets in which the funds can be
invested include bonds, debentures, redeemable/ convertible preference
shares, and other debt instruments issued by corporate entities,
including asset backed securities and infrastructure bonds.

Section five of the
reviewed guidelines states that pension fund assets can be invested in
infrastructure projects through eligible bonds or debt securities,
subject to the infrastructure project being “awarded to a
concessionaire through an open and transparent bidding process, is not
less than N5 billion in value, and managed by concessionaire with good
track record.”

According to
PENCOM, such projects must be in accordance with and meet due process
requirements of the Public Private Partnership (PPP) Policy, as
certified by the Infrastructure Concession and Regulatory Commission
(ICRC), and approved by the Federal Executive Council (FEC).

Investment in critical sectors

The Central Bank of
Nigeria (CBN) governor, Sanusi Lamido Sanusi, disclosed recently that
it was collaborating with PENCOM on ways to unlockthe huge pension fund
for investment in critical sectors of the economy. He said rather than
expose the Nigerian economy to cheap dollar loans, which could prove
costly in the long run, it was better to access cheap funds locally.

“Part of it has
been working with the Pension Commission to see how we can unlock some
of the N2 trillion we have in pension funds into infrastructure and
power in a manner that works.

“If we put up
guarantee worth N400 billion and the pension funds puts down N400
billion 20 year money into power and infrastructure, the maximum risk
it will take on the Central Bank balance sheet is N20 billion bond, and
N400 billion generates 4,000 megawatts,” Mr. Sanusi said.

The reviewed
investment guidelines said such funds can only be invested in
infrastructure bonds, subject to a maximum portfolio limit of 35 per
cent of the pension assets under management, with a maximum of 15 per
cent being in infrastructure bonds.

Such investment
shall have a maturity date that is prior to the expiration of the
concession and have a redemption procedure, in the event of project
suspension or cancellation.

The commission said
the review was done in order to give backing to any institution that
wants to invest in the infrastructure development.

“We do not have the
power to direct the PFAs on areas to invest. What we have only done is
to review the guidelines so that those who want to invest in the sector
can do so.”

A statement from
the commission said the emphasis of the review was to allow PFAs to
invest in bonds which would be floated by the CBN targeted at power and
infrastructure development.

“PENCOM did not sign any understanding directly with the CBN. What
we just told them is if you want to raise money for power sector, issue
bonds, and if it makes sense to the PFAs, they will invest in them.”

Experts have stated
that high oil price, which is expected to shore up the nation’s foreign
reserves, may also have harsh effects on consumers’ pockets and
companies books.

The high oil
prices, which experts foresee would last through March and April and
moderate sometime midyear at the expense of consumers’ disposable
income, would soon begin to have some indirect rippling effects.

Oil prices have
been rising especially since January, due to the unrest in the Middle
East and experts are of the view that high oil prices imply higher
Automotive Gas Oil (AGO) and Low Pour Fuel Oil (LPFO) prices.

“Our oil price
outlook suggests Automotive Gas Oil (AGO) and Low Pour Fuel Oil (LPFO)
prices will remain high. According to our economists, our base case for
the oil price is that it will stay at around $110 per barrel through
March and April 2011, before moderating to $90/bbl in the second half
of 2011,” Akintola Akinbamidele, research analyst, Renaissance Capital,
an investment bank, said.

In 2003, the
Nigerian government had deregulated the downstream segment of the
petroleum industry, with the exception of Premium Motor Spirits PMS,
permitting petroleum marketers to compete favourably and to import and
sell at market rates.

The deregulation of
the sector thereby created competitive scenery that forced down prices,
unlike when the Nigerian National Petroleum Corporation had a monopoly
on importing and selling. However, high oil prices are now implying
higher automotive gas oil and low pour fuel oil prices.

This, Mr. Akinbamidele said, has translated into an average 35 per cent increase in AGO prices in the local Nigerian market.

“The depot price of
AGO from an independent retailer averaged at N90-95/litre in 2010. We
have seen an uptick in prices, with the average price of AGO sold by
independent retailers now at N145-155/litre,” Mr. Akinbamidele said.

The gainers and losers

Many fast moving
consumer goods (FMCG) companies, like other industrial users in the
Nigerian space, depend totally on self-generated power, which can be
fuelled by AGO, LPFO, coal or, more recently, natural gas. Compared
with the cheap cost of power from the national grid, which remains
unreliable, experts say the cost of running a generator averages at
30-45 per cent of an FMCG company’s production costs.

Experts say these
fast, moving consumer goods companies that have invested in the
generation of power through the use of gas turbines are in a better
position to protect themselves from the price shocks expected for AGO
and LPFO and therefore, are in a better position to reduce the net
impact of the increase in AGO prices (assuming any attacks in the Niger
Delta do not interrupt the gas supply).

Mr. Akinbamidele said consumers are also going to feel the pinch.

“We expect higher
energy costs to eat into the disposable income of the average Nigerian,
especially as a sizeable proportion of the population use kerosene
(which is deregulated and is currently priced at about N105/litre, up
from an average of N70-80/litre in 2010) for its cooking needs, rather
than more expensive cooking gas. PMS is a regulated product segment, so
we do not expect any direct impact on its price, which we expect to
remain flat at N65/litre.

“We are of the view
that the ability of FMCG companies to pass on increases in the cost of
raw materials and commodities to their customers, in absolute terms, is
minimal, as any significant price increase would result in consumers
shifting to cheaper alternatives,” he said.

“These are
short-term setbacks, in our view, and we maintain our positive outlook
on the FMCG segment over the medium to long term,” he added.