Nigeria Content Online

Egypt’s government
is reviewing a proposal to increase the size of a fund set up to help
small investors who bought shares on margin or credit before political
turmoil led to the bourse closing, a market official said.

The stock exchange
has been shut since January 27 amid a popular uprising that forced
President Hosni Mubarak out of power after 30 years. The exchange said
it would reopen before the end of the week but has not specified the
date.

Analysts say the
government has been reluctant to reopen the bourse out of concerns
about the economic repercussions of shares tumbling and capital flight
abroad. Rules have already been put in place limiting how much a share
can fall each session and many particularly small investors have
petitioned officials for support.

A fund worth 250
million Egyptian pounds has already been set up to offer loans to small
investors who were involved in margin trading or who used credit. “We
are now in the process of discussing with the Ministry of Finance
options to increase this amount but until now, we have not succeeded,”
said Mohamed Abdel Salam, chairman of the stock exchange’s Clearing
Settlement and Central Depositary.

Prime Minister
Essam Sharaf on Sunday approved changing rules to the country’s Capital
Markets Law to ease margin calls by brokerages, to limit volatility
when the bourse opens. When the client’s debt reaches 70 percent of the
shares’ value at the end of trading each day, brokerages will require
investors to pay margins or present more collateral, the Egyptian
Financial Supervisory Authority (EFSA) said on its website.

Brokers had
previously been required to make margin calls at 60 percent. Brokers
can also now sell a client’s shares when debt reaches 80 percent of
their value, instead of 70 percent. “If we open it a little bit to 80
percent, this will relieve the brokers and make them think not to sell
before they reach the 80 percent,” Abdel Salam said.

Under exchange
rules, market investors could borrow money on margin through brokers by
using shares they held as collateral. The loans were limited to 50
percent of the market value of the shares on the day the loans were
signed and could be used only to buy the 30 stocks in the benchmark
index.

The heads of EFSA
and the bourse met Finance Minister Samir Radwan on Monday to call for
him to expand the fund, Abdel Salam said, adding he expected a big fall
when the market opened. “Nothing will be enough to prohibit the numbers
of selling orders at the beginning of the market. It is my opinion –
that of course the market will lose in the first two days,” he said.

For shares in the
benchmark index, the bourse has said it will suspend trade for
half-an-hour if it declines by 3 percent and for the remainder of the
session if it falls by 6 percent.

Egypt’s economy
nearly ground to a halt during weeks of protests. Some of its main
sources of foreign exchange, including tourism and foreign investment,
have collapsed. Many factories continue to operate below capacity. MSCI
said in February Egypt would risk being excluded from its emerging
markets index if the market did not reopen before MSCI reviewed its
status in four weeks.

The Senate will
this morning commence the third reading of the Petroleum Industry Bill
(PIB) after it deferred deliberations last week.

The postponement
last week was due to the failure of senators to form a quorum,
apparently as a result of the ongoing political campaigns. Last
Tuesday, only 23 of 109 senators, 10 short of the required minimum to
form a quorum, attended the sitting, which was presided over by the
deputy Senate president, Ike Ekwerenmadu.

Senate
spokesperson, Ayogu Eze, stated last week that the Senate would pass
the Bill today provided there is a quorum of members. Of the 23
senators in attendance, only three were running for re-election.
Truancy in the Senate has caused delays in the passage of bills.

Recently, the
Anti-Money Laundry Bill suffered a setback twice due to the absence of
Ibrahim Ida (PDP, Katsina State), who headed the committee that handled
the review of the Bill. Also, the Tobacco Control Bill, which suffered
a similar fate recently, is still pending before the Senate due to the
absence of Iyabo Obasanjo, whose committee authored the Bill.

Delaying the Bill

Since the PIB was
introduced into the two chambers of the National Assembly in December
2008, it has suffered series of delays due to disagreements on the
provisions of the Bill by various stakeholders. The memorandum
submitted by the Federal Government to both chambers of the National
Assembly identified 14 critical gaps in the draft bill and sought to
close those gaps with about 165 amendments.

After several
interactive sessions with various interest groups, a total of 56
changes were reportedly made by the petroleum industry through the Oil
Producers Trade Section (OPTS), 36 by Federal Inland Revenue Services
(FIRS), 7 by the World Bank/IMF, and 66 by other stakeholders,
including the labour unions.

Host communities,
indigenous oil companies, and federal lawmakers from the oil producing
Niger Delta had during the public hearing on the Bill, insisted that
they will not support the law unless some sections providing for the
interest of the communities were amended to accommodate their interests.

Other relevant
parties of the industry have also raised some serious concerns over the
bill through its period of legislation. It is, however, not clear if
the issues raised by the various interest groups were addressed in the
Bill.

The management of
the Nigerian National Petroleum Corporation (NNPC) at various times had
claimed that government may have been losing about $55.4 million (about
N8.31 billion) monthly as a result of the continued delay in passing
the PIB by the National Assembly.

Chairman of the
Senate panel that reviewed the Bill, Lee Maeba (PDP, Rivers State),
said the benefits of PIB to the Nigerian economy and the petroleum
industry were enormous.

“It will ensure a
strong and virile regulatory framework for overall efficiency of the
petroleum industry, maximisation of the benefits of exploitation of
Nigerian petroleum resources through increase in government take,
overcoming government’s cash call problems, and promotion of
availability of gas for electricity production,” he said.

The Petroleum Industry Bill (PIB) is conceived to repeal the
Petroleum Act of 1969, and consolidate about 16 other petroleum
industry laws into one single, transparent and coherent document. The
objective is to establish a comprehensive legal and regulatory
framework for good governance, transparency and accountability with
regard to operational and fiscal terms for revenues management, and
removal of confidentiality clauses in licences, leases and contracts in
the nation’s petroleum industry.

Bureau of Public Enterprises (BPE) yesterday said it has
formally written to Omen International Limited, the reserve bidder in the
ill-fated bid for the national telecoms carrier, Nigerian Telecommunications
Limited (NITEL) and its mobile subsidiary, MTel, to take over the company.

Spokesman of the Bureau, Chukwuma Nwoko, said the company was
invited to come forward to come forward to re-validate its bid to give the
Federal Government the right to commence negotiations with its management to
take up the offer for the privatisation of the company.

Omen International Consortium had emerged the reserved bidder
during the February 16, 2010 financial bid exercise organised by the BPE and
supervised by the National Council on Privatization (NCP) with an offer price
of $956 million.

Several deadlines

Consequently, the Bureau said it has also written to New
Generation Consortium indicating that its former status as preferred bidder for
the national carrier had lapsed, following its inability to pay up 30 per cent
bid security for its $2.5 billion offer at the expiration of several deadlines.

The bid security, which involved the payment of $750 million
within ten calendar days of receiving NCP’s letter of notification of the
approval for its selection as preferred bidder, expired on December 21, 2010.

But, in the correspondence, the BPE said the invitation of the
reserve bidder was in accordance with the provision of Section 3.4.3 of the
Request for Proposal (RFP) sent to all bidders for the privatisation of the
telecommunications outfit, which give bidders a maximum of six months validity
after submission, except bid proposal is extended.

“Since your bid was submitted February 16th, 2010, it expired
August 15th, 2010. We, therefore, wish to invite you to revalidate your bid
bond of 4th April, 2010, if you are still interested in the transaction,” the
bureau said in the letter to Omen Consortium.

It was gathered that the decision by BPE to invite Omen
Consortium was sequel to the adoption of the proposal of the ad-hoc committee
constituted to review the confusion that trailed the sale, which had
recommended either the invitation of the reserve bidder to come forward and
take up the bid, or for the bid process be made to start afresh.

Not much to cheer about

But according to Lanre Opayemi, an Abuja-based finance analyst,
“there is not much to cheer about the prospects of the invitation succeeding,
as Omen Consortium was also entangled in the controversy surrounding the
involvement of Minerva Group as financial advisers to two companies involved in
the bid, in violation of the bid guidelines.”

Mr. Opayemi said he would be surprised if Omen Consortium would
still be willing to go ahead with the transaction on the same terms and
conditions prior to the cancellation of the bid, as much has happened,
particularly concerning the valuation of the assets.

We live in a very
materialistic world and, sadly, Nigerian society is one that
increasingly seems to favour instant gratification over hard work. With
a growing number of people living well above their means and images of
beautiful people living extravagant lifestyles, decked in expensive
designer clothing, and driving state-of -the-art cars, it is no wonder
that these images are affecting a young and vulnerable generation.

For young
Nigerians, from the minute they graduate from college or university,
the pressure is on. This segment of the population are sometimes
obsessed with the need to have an attractive car, designer clothes, a
job with a prestigious firm, and if they don’t have the money to live
“the” lifestyle, they are increasingly prepared to lease, borrow, and
in some cases will even consider doing unscrupulous things to maintain
a certain standard of living.

Without having
worked a day, some of our youth feel that they are nothing and will not
be accepted unless their appearance fits the bill; they are tying outer
image to personal value and self worth.

Where does the pressure come from?

There are a variety
of factors that drive this mindset. Parents are a major influence on a
young person’s attitude to money as they are natural role models for
their children. As money management is not routinely taught in school,
if their parents are poor money managers or exhibit an extravagant
lifestyle of over-indulgence, their children are likely to imitate
them.

The media and
advertising naturally have a huge influence on spending patterns.
Prolific advertising and product placements are so sophisticated that
you are convinced that you must acquire the product.

Many young people
interviewed however, say the greatest influence on their excessive
spending was their friends who put pressure on them to keep spending,
even when they have run out of money.

It is true that our
friends do have some influence on all of us in what we do, but it is of
grave concern if young people are being persuaded by their peers to
spend money they simply don’t have.

The trappings of
success are becoming more demanding and expensive each day.
“Necessities” now include designer handbags and shoes, trainers, the
most expensive Brazilian hair, the latest smart phone or BlackBerry, or
the largest flat screen television; and now the iPad 2 has come unto
the necessity list.

Who is paying for the shopping sprees?

This “must-have”
culture is putting pressure on parents. Who is paying for the $1,000
handbags and the first or business class tickets for a young
21-year-old youth corps member? As they strive to impress their peers
with expensive clothing, jewellery, and cars, parents are footing the
bill to help their children keep up with the “popularity contest”.
Whilst the children are still living at home, the problem can be
papered over and ignored, but when they move out into the “real world”,
they often feel a sense of entitlement and try to keep up a lifestyle
that took their parents decades to build.

Sadly, many parents
may unknowingly be jeopardising their children’s ability to succeed, by
over-funding them through young adulthood, and making it difficult for
them to fend for themselves in later life.

Overspending by
this generation has damaging implications both for consumer debt and
future savings habits and threatens their long-term financial health.
As they build up debt from overspending when they are young, it could
be a challenge for them to build wealth for their future.

At such a young
age, when they are just beginning to earn a salary and manage finances,
it is vital to start to establish a good savings habit and enjoy the
advantage that time brings to investing.

Who are the Jones?

But who are the
Joneses and why do so many people live their lives in fear of what they
think and do? No one really knows who they are, but they always seem to
set the pace for so many of us. The expression “keeping up with the
Jones’” is used widely today and dates back to 1913.

The name “Jones”
was chosen by the artist, Arthur Momand, as it was a common surname
that highlighted the common nature of social rivalry and image
consciousness. It makes reference to the desire to keep up appearances
of affluence and wealth as others around us.

The problem of
excessive spending is not limited to the younger generation; indeed
they learnt it from us. We often equate the worth of a person with what
they have acquired by way of money and material possessions, such as a
house, a car, jewellery, how often they take vacations, where their
children go to school, and so on.

If we are not able
to keep up, we then feel inferior on a socioeconomic level. It has
become a sorry way of life as it puts us in a precarious position. We
fail to recognise that there is so much about the Joneses that we
cannot see; we are thus influenced by perceptions or what we “think”
that they might have.

Keeping up with the
Joneses can creep into your life and you may have fallen prey to
spending patterns that have increased your debt. Whilst debt can be an
excellent tool when applied to acquire certain assets that are likely
to appreciate in value, funding luxuries with debt limits your choices
because you are constantly caught up paying for yesterday’s shopping
instead of securing tomorrow.

If portraying an
image of luxury is more important to you than acquiring long term
financial freedom and security, there will eventually be consequences.

Stop comparing
yourself to others. There will always be people that simply have much,
more than you do. If you constantly try to outdo them, you put yourself
under overwhelming pressure and undermine your own future financial
security.

Particularly for
young people who, with focus and discipline, have the potential to
create lasting wealth over a long time frame, it is such a waste to be
distracted by the trappings of success; they are only trappings.

Stay focused on your goals and objectives

We live in a
society where so many people appear to be competing instead of focusing
on their own goals and objectives. The good news is that, thankfully,
there are many young hard working, successful men and women who are
aggressively seeking a healthy and prosperous future through discipline
and hard work. Acquiring and maintaining long-term wealth is a process
that usually comes without short cuts.

Look critically at
your own particular situation, set your own priorities, and try to
improve yourself through self-development and education. Focus on what
is really important to you and stop worrying about the distraction of
what the Joneses are doing.

It takes courage
and a lot of self-confidence to cope with peer pressure. Too many
people learn this lesson the hard way by ending up in debt and with no
savings.

If it gives you any comfort, the Joneses are broke. If you are busy
trying to keep up with them, please stop. The Joneses are probably
trying to keep up with you!

I was pleasantly
surprised, in a conversation last week, to learn that of the many
concerns over the Central Bank of Nigeria’s (CBN) repairs to and
reforms of the banking sector, the nationality of the would-be buyers
of the banks rescued by the apex bank is the more troubling.
Transparency of the accounting treatments of the intervention funds did
not make the grade. According to the IMF, the original financial
intervention in 2009, by the CBN (N620 billion) in support of the 10
banks and its subsequent quasi-fiscal interventions in designated
sectors in support of a recovery in the market for credit, “pose on and
off-balance sheet risks…that should be undertaken, if at all, within
the context of the federal government budget”.

Related
reservations have been entertained over government’s attempts to pass
on some of its responsibilities for developing domestic infrastructure
on to the Nigerian Sovereign Investment Authority. Worries abound too
about how much of the Asset Management Company of Nigeria’s (AMCON)
purchase of the industry’s dodgy loan portfolios will feed into
monetary aggregates, and thence into domestic prices.

However, none of
these mattered to my interlocutors. Unease centred on protecting the
“national interest” from the beady gaze of “greedy” foreign investors.
According to the lead argument, top on the list of interests to be
protected are shareholders. And it mattered nought that a majority of
these shareholders had been complicit in the significant value erosion
that had taken place in the banks before the CBN’s August 2009 special
audit of the industry. Indeed, it is a long walk to health, from the
negative equity, and huge non-performing loan books that most troubled
banks’ balance sheets carried then, to the current valuations of their
shares on the stock market. Moreover, because of the CBN’s efforts,
these shareholders may yet come off better than they had reason to
expect a year ago, if external investor interest in their banks pushed
valuations up the more.

Shareholders gain
two things in addition. Unlike previously, no bank failed in the
current round of distress. Secondly, we all have learnt a lesson or two
about the importance of a strong governance suite for the management of
the companies in which we have financial interests. Admittedly, the
corporate governance sphere includes legitimate fears over minority
shareholder interests. As the banks’ recent experience indicates, this
has nothing to do with the complexion of the major shareholding
interests. In the absence of a strong regulator, there will always be
benefits from gaming the system, and a disposition to do so.

Incidentally, the
regulator in question in this instance is not the CBN. For as long as
these banks remain quoted companies, the operative environment that
either helps or impedes the progress of good governance will largely
remain the SEC and NSE’s call. So for shareholders, there are real
welfare gains to be had from investor interest in the banks. Foreign
investors have the added advantage of bringing in new money, new
management competences, and the latest technology.

But are they good
for staff? If they are not nepotistic, and choose to run efficient
shops, the short-term response is a resounding “no”. The choice before
your average executive is simple. Depending on the product and customer
service preferences, it would always pay to automate. Costs are driven
inexorably downward, and the space for human error is minimal. So if
the same value may be obtained from three staff, which was previously
delivered by five, stronger returns will accrue to that organisation
that can ask the two individuals who are surplus to requirement to go.
A major proviso here: the welfare effects depend on the relative costs
of labour and capital. This is good, because with cheap labour, the
incentive will always favour labour-intensive solutions. The only
drawback is that then, you are at the bottom of the production
ecosystem. That is how the private sector should run. Those who
bellyache over the fate of staff who lose their jobs as entrepreneurs
search for more efficient ways of doing business should turn instead to
the public sector. A bigger economy, including through best of breed
fiscal and monetary policies, and an education sector that ensures
constant retraining opportunities are baseline requirements if labour
is to be both mobile and productive.

Royal Dutch Shell is about to complete the sale of its stake in
four onshore oil blocks in Nigeria after it received bids from a number of
foreign and local interests.

A Reuters report yesterday said “some of these assets hold over
300 million barrels of proven oil reserves and bids for the largest block have
exceeded $1 billion, industry sources said. Shell confirmed on Wednesday four
blocks were still on offer but had no further comment.”

Industry watchers hope indigenous companies would bid for the
blocks and that local players, who are likely to be partnered by foreign oil
companies or independent investors, will have the best chance of securing the
blocks.

Precious Okolobo, one of the spokespersons of the oil company,
stated that the company would enlighten the public in due time.

“Shell has commenced the sale of equities in various offshore
fields in the Niger Delta, selling 30 per cent stake in four onshore blocs with
an estimated two billion barrels of reserves. Bidders include both local and
foreign. Interested local buyers include Conoil producing, Oando, Dangote
Group, and Niger Delta Petroleum,” Bismarck Rewane, managing director,
Financial Derivates, said.

According to him, local bidders are favourites due to
developments in the Niger Delta and the local content bill.

“Shell has refocused strategy at investing in offshore
operations spurred by the lucrative nature of offshore Production Sharing
Contracts (PSC’s), and attacks on Shell facilities,” Mr. Rewane said.

Shell has already sold part of offshore assets in January 2010.
Shell and JV partners, Total and Agip, sold equity stakes in OMLs 4, 38, and
41. Although not publicly announced, in this round Shell is looking to divest
its 30 per cent interest in the following Nigerian blocks: OML30, OML34, OML40,
and OML42.

Oil services firm, Petrofac, said this week its Nigerian
partner, Seven Energy, was bidding for one of the blocks, while local players –
Oando, Vertex Energy, Niger Delta Ltd., and Conoil – are all involved in
current bids, sources said.

Some of the companies that are reported to have indicated their
interest in the bid include Conoil, African Petroleum (now Forte Oil), Afren,
Neconde Energy, Essar Oil, Seven Energy, Oando, and Niger Delta Petroleum.

Shell’s sale of assets in Nigeria is part of a wider plan to
divest $5 billion of assets in Africa in 2011. It is believed that the actual
potential will be a lot clearer once the winners are announced and more
detailed technical data are publicly available.

Moving the oil bill
forward

Experts say delay of the PIB could also be cited as a reason for
Shell’s withdrawal from onshore operations.

The Senate this week pushed back a debate on long-delayed
reforms to the oil industry, making it unlikely the ambitious legislation will
pass as promised by government officials.

The Petroleum Industry Bill (PIB), which is expected to amend
the country’s long relationship with its foreign oil partners and vary almost
everything from fiscal terms to the structure of the Nigeria National Petroleum
Commission, NNPC, has become synonymous with missed deadlines.

The PIB, which is a long and in-depth bill, a historic, critical
and extensive bill encompassing the 16 hitherto existing laws with the oil and
gas industry, has been delayed since the draft bill was made available in 2009.

In the latest setback, lawmakers have delayed this week’s clause
by clause debate on the PIB until March 15, as some senators said they were not
given adequate time to look over the latest draft of the bill, knowing too well
that they are due to go on recess on March 16 and won’t return until after the
elections.

Last week, Diezani Alison-Madueke, the minister of petroleum,
had expressed optimism that the bill would be passed in April, if all things go
as planned.

“We are very expectant. The Senate and the House of
Representatives are passionate and eager to move this bill forward and they
both want it out in the shortest possible time” she said.

“Another draft has been submitted to the National Assembly with
slight modifications. The NNPC MD announced in mid-February the bill will
become law before the president’s tenure expires,” Mr. Rewane said, adding that
circumstances have contradicted this assertion.

One of the major benefits of this bill is that transparency in
the oil and gas industry would be achieved, besides addressing issues such as
funding shortfalls at its joint ventures with foreign firms, insecurity in the
Niger Delta, increasing local involvement in the industry, and production of
more gas for domestic power.

The value of equities at the Nigerian Stock Exchange (NSE)
yesterday rebounded significantly after two weeks of negative performances.

The NSE market capitalisation of the 201 First-Tier equities
closed on Thursday at N8.125 trillion after opening the day at N8.059 trillion,
reflecting 0.82 per cent or N66 billion gains.

The market also gained N16 billion on Wednesday after the first
upturn in two weeks. Meanwhile, a total of N505 billion has been lost in the
last ten trading days.

The number of gainers at the close of trading session yesterday
closed higher at 37 stocks compared to the 24 recorded on Wednesday, while
losers also closed lower at 18 stocks as against the 42 recorded the previous
trading day.

Analysts at GTI Capital, a stock broking firm, said, “There
appears a likelihood of the free fall in the market indicators abating soon.
This is based on the fact that magnitude on percentage change in the market
index significantly waned on Tuesday,” adding that “another strong point in
support of this assertion is the attractiveness of most stocks in the market
which we believe will buoyed investment ecstasy soonest.”

Virginus Agada, a stockbroker at Eurocomm Securities Limited, a
stock broking firm, said the market may not see significant recovery this
quarter because of political risk, but will rebound after elections.

“With the level of progress in the political scene, I believe
the market will pick up after the election. You’ll notice that the market
recovered a little after major political parties picked their candidates.

“Although the political risk is currently hindering participants
from coming into the market, things should change after election. International
communities are also watching as events unfold,” Mr. Agada said.

Company report

In the meantime, GlaxoSmithKline Nigeria has notified the
Exchange that its board of directors has recommended to its shareholders a dividend
of 90 kobo per share and an additional one-off special dividend of 30 kobo per
share in commemoration of the company’s 40th anniversary.

The dividends are to be paid to members whose names appear on
the register of members at the close of business on Thursday, April 28.

The register of members and transfer of books of the company
will be closed from Friday, April 29 to Thursday, May 5; both days inclusive.

In a related development, Afromedia reported its first quarter
unaudited results for the period ended December 31, 2010 to the market.

On quarter-to-quarter analysis, the company’s turnover grew by
46.5 per cent from N661.67 million in similar period of 2009 to N969.41 million
but fell short of management forecast figure of N1.03 billion by 5.7 per cent.

Meanwhile, the company’s profit after tax dropped by 16.4 per
cent from N161.09 million in 2009 to N134.67 million.

It is essential for brands to present attractive offerings that will add value to consumers’ experience.

The present market
realities have made brands adopt strategies aimed at engaging consumers
and also building brand loyalty. The lifestyle of the consumer should
be given utmost priority in service delivery.

Brand offerings
should be able to deliver creativity, excitement, and entertainment, as
it fosters physical and emotional connection with the brand. Today’s
consumers are dynamic and vibrant and they want a brand that can fit
into their lifestyle and give them worthwhile experiences.

In fact, consumers
now want to create the brand and own the brand. They want offerings
that meet their desired taste and the brand they can use as a means of
self expression. This supports the “MSP” i.e. Me Selling Proposition
standpoint, which places a renewed focus on the consumer.

This is perhaps the main rationale for DSTV Mobile’s offering of ultimate mobile TV entertainment for the consumer.

When DSTV Mobile
launched months back in the Nigerian market, it was readily accepted
because it represented entertainment, information, and value added
services to consumers. Hitherto, they watched DSTV in the comfort of
their homes, but with DSTV Mobile, television is in their hands. This
is one visible way to build brand loyalty and followership.

A unique selling
point was a free trial for the subscribers, which is key to creating
value. The strategic intention is to align with the needs of the
upwardly mobile and constantly on the go consumers who desire to have
fun and excitement as they move on in their pursuits.

DSTV Mobile is on
both MTN and Glo networks, making it easier for subscribers to have
first hand information and knowledge about happenings around them. This
is a vantage way to connect and build brand loyalty.

Brands remain
vibrant and relevant when they focus on key consumer segments; it has
become imperative to meet the expectations of today’s consumers with
ideas like DSTV Mobile. The consumer culture is rapidly changing and as
a result, brands should adopt strategies to remain relevant.

Brands should also
identify key gaps in the lives of their consumers and bridge these
through innovation and value service. Nigerian consumers have a passion
for football, including foreign football clubs, and this is one area in
which DSTV offers enormous benefits.

Through the mobile
television in their hands, and as long as they are connected to DSTV
Mobile, they cannot miss any of the exciting matches. DSTV Mobile makes
subscribers optimise the quality of their viewing time and also get
premium content and programming on their phones.

Consumers are
attracted to brands that simplify their lives. This is one thing that
DSTV Mobile has done so well. Subscribers will not only be loyal to
such brands, but will ultimately create a community of brand loyalists
by enlisting others to share the same experience. This makes the brand
stand out as one of the very few that matters in the marketplace.

Any brand that keys in to the lifestyle of consumers ultimately creates an enduring experience for them.

Ghana National
Petroleum Corporation (GNPC) has given up efforts to buy a stake in the
Jubilee oil field held by Kosmos Energy following the U.S firm’s
decision not to sell, its chairman said on Thursday.

While state-owned
GNPC’s move to end its interest in Kosmos was expected, it will be seen
as significant by investors concerned that the bitter wrangling over
the Kosmos stake was a sign of state interference in the ownership of
oil assets.

Kosmos, backed by
private equity firms Blackstone Group and Warburg Pincus , owns a 23.49
percent stake in the offshore oilfield, operated by Britain’s Tullow
Oil and holding at least 1.5 billion barrels of light crude.

Last August the
firm called off what sources close to the deal said was a $4 billion
pact to sell the stake to ExxonMobil after resistance from GNPC, which
later made a $5 billion joint bid with Chinese oil giant CNOOC.

However Kosmos has
subsequently said the asset is not for sale and announced plans to
raise up to $500 million via an initial public offering of its shares
in the United States.

“That chapter of
GNPC wanting to increase its stake is closed … Kosmos wants to do an
IPO and it is within their rights to do so,” GNPC chairman At Ahwoi
told a news conference.

“I don’t think we
can force them to sell to us at all cost if they don’t want to do so.
So as far as we’re concerned that ends the matter,” he said, adding
that Ghana would still be interested should Kosmos ever put its stake
on the market.

He said GNPC and CNOOC had been partnered in their bid by London-listed BP.

Ghana on Wednesday
lifted a first crude entitlement of 995,259 barrels from Jubilee,
estimated to fetch about $110 million dollars for the state treasury.
Pricing was based on a benchmark of around $110 dollars.

Ghana was fourth to
lift its entitlement after Tullow, Kosmos and Anadarko together lifted
about 3.7 million barrels. GNPC chief executive Nana Boakye Asafo-Adjei
said the first shipment was sold to Sun International, a subsidiary of
U.S.-based Sunoco Inc.

He said in addition to the crude entitlements, Ghana will also receive quarterly tax payments from the Jubilee partners.

Asafo-Adjei said
daily production from the Jubilee field will normalise at 120,000
barrels in June-July, from about 70,000 barrels currently.

Volatile interest
rates may attain relative stability while lending activities are
expected to improve, with the Central Bank’s new framework for banks’
Cash Reserve Ratio (CRR).

The Central Bank of
Nigeria has introduced reserve averaging to the money market, to reduce
volatility in overnight market rates and bring them more in line with
the official bank rate.

“Averaging means
that a bank’s average end-of-day reserve balance over a given period
must be equal to or above the required level; but that on any
individual day, it can be lower or higher.

“If averaging of
RRs is permitted, this can be a very effective way of supporting
commercial banks’ own short-term liquidity management,” Simon Gray, an
IMF staff said.

Finance experts say
the read-across of this policy is positive and that the implication of
this is that there would be more liquidity in the system and this would
translate to increase in banks lending activities, which have plunged
since the banking crisis of 2008.

They also say that
the volatility in interest rates would be addressed, as banks can now
borrow from their own reserves to meet up with pressing cash demands,
instead of borrowing from other banks, an opportunity they did not have
before.

Under the new
framework, the Central Bank plans to remunerate banks’ surpluses above
the cash reserve requirement (CRR) in their operational accounts in
contrast to the previous practice, according to which the CRR account
did not yield interest, could not be accessed, and did not qualify for
liquidity ratio computations.

The daily average
in banks’ operational accounts with the Central Bank will be monitored
over maintenance periods of four or five rolling weeks, and this would
now serve as the banks’ CRR.

Aiding rates and lending capacity

With this
framework, finance experts say, it is expected that there would be
stability in the money market and that banks liquidity ratio should be
boosted.

“Although we note
that this modification to the operations of the money market has been
in the works for some time, we expect to see decent stability being
infused into money market yields when the framework takes effect on
March 9,” Adesoji Solanke, a banking analyst at Renaissance Group, an
investment bank said.

“Banks’ liquidity
ratio should be boosted, as on 9 March, banks will be credited with the
2 per cent of their deposits currently locked up in the CRR account –
this will immediately bolster liquidity levels, given that this sum
previously did not qualify for the computation of banks’ liquidity
ratio,” Mr. Solanke further said.

According to him,
the impact of liquidity shocks should be largely reduced, ultimately
easing interest rate volatilities, which characterise Nigeria’s money
market yields.

This would be made
possible given that under the new framework, banks’ focus would be to
ensure that they maintain an average daily minimum balance over a four-
or five-week period with the potential of earning interest on the
surplus, as opposed to the previous practice of ensuring that a moving
base sum is domiciled in a non-interest yielding CRR account.

“In other words,
banks will be able to spread the impact of sudden liquidity tightness
over a number of days, thus lessening the impact on overnight yields,”
he added.

Mr. Gray, in a
working paper titled ‘Central Bank Balances and Reserves Requirement’,
said in deciding the precise structure of RR it is important for a
central bank to be clear what the intended goals are.

“Reserve averaging
is a powerful liquidity management tool, but giving primacy to this
goal undermines the prudential aspect since a bank could, if under
pressure, run down reserves for a period and so not have any left when
trouble arrived.

“Similarly, one of
the benefits of reserve averaging is that it reduces the need for
‘excess’, or precautionary reserves, effectively reducing the demand
for central bank balances. Banks’ efforts to dispose of surplus
reserves will tend to lead to an easing of monetary conditions,” Mr.
Gray said.

According to him,
RRs which are unremunerated, or at least remunerated substantially
below prevailing market rates, should impact the spread between
commercial banks’ deposit and lending rates.

“Since the
facilitation of liquidity management should reduce short-term interest
rate volatility-to the extent that volatility is the product of
unanticipated liquidity shocks, it can promote interbank trading and
support capital market development,” he said.

A source at First Bank said this is a positive development.

“Before, the CR was
a fixed sum of 20 per cent and it must not be lower than that. Now, you
can take money from there, you can borrow money from that source now,
instead of going to the interbank markets to borrow. Hence, to an
extent, it would make rates less volatile.

“I, however, do not
think that the nation’s lending problem is basically because banks
don’t have money to lend. The banks have money to lend, but no one is
borrowing,” the source said.

According to him,
banks are wiser now and would request for proper form of
identification, which from the retail end, may not be readily
available. And the corporate too have their challenges. So generally,
“there is a demand problem,” he said.

The Central Bank
has been making efforts to address the nations lending challenges,
which have lingered since the banking crisis in 2008 as banks have been
reluctant to create new assets.