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The National Bureau of Statistics (NBS) reported last week that
inflation edged up marginally to 12.1 per cent year on year (y/y) in January,
from 11.8 per cent y/y in December, although it was still below the 12.8 per
cent and 13.4 per cent recorded in November and October.

The persistent rise in food prices, globally and locally
notwithstanding, the Bureau’s report states that food inflation dropped to 10.3
per cent y/y (a record low since February 2008), from 12.7 per cent, and 14.4
per cent in December and November. The ‘All items less farm produce” inflation
also increased to about 12.1 per cent from 10.9 per cent in December and 11.7
per cent in November.

Samir Gadio, Emerging Markets Strategist, Standard Bank,
however, noted that it is rather unusual to have a negative food inflation rate
at this month of the year.

“This implies that month-on-month (m/m) food inflation declined
to -0.9 per cent in January, from 0.9 per cent in December and 0.3 per cent in
November; interestingly, a negative m/m food inflation rate is somewhat unusual
in Nigeria this month of the year,” he said, adding that this happened in
January 2007 for the last time.

“In this regard, the negative imported food sub-inflation rate
appears to highlight that Nigeria has until now been somewhat immune to
exogenous pressures associated with rising oil and global food prices, but the
magnitude of the downturn in this category, to -5.6 per cent in January, from
13.7 per cent in December and 15.1 per cent in November, is somewhat intriguing
and will probably require further official clarification,” Mr. Gadio said.

According to him, most of the pressure still continue to
originate from the “Housing, water, electricity, gas and other fuel”
sub-component (16.7 per cent of the CPI basket) which registered a 13.2 per
cent increase, from 13.0 per cent in December and 12.6 per cent in November.

“As such, there was no sign of a tangible structural shift in
core inflation that would be fuelled by the demand side of the economy on the
back of the loose fiscal policy stance, which we think has been offset by a
weak money multiplier and sluggish private sector credit metrics over the past
couple of years,” he further said.

Unpredictable outlook

Mr. Gadio is, however, hopeful that inflation could drop in
February.

“According to our calculations, year on year inflation would drop
in February if month on month consumer prices are below 1.9 per cent. This
looks possible at this stage since such a m/m rate has been recorded only once
in the second month of the year since 2006 (in 2010) and the average of monthly
inflation rates in February between 2006 and 2011 is 1.06.

Mr. Gadio says if this scenario materialises, it would
positively support bond prices, especially as the liquidity ratio is also
increased from 25 per cent to 30 per cent on 1 March by the Central Bank.

“Nevertheless, the slight pickup in consumer prices in January
could still push the Central Bank to moderately hike the Monetary Policy Rate
during its March MPC meeting, as the policy focus has shifted from a recovery
in credit and growth to inflation in recent months,” he said.

Bismarck Rewane, the managing director, Financial Derivative
Company, is of the opinion that the nation’s inflationary threats are distinct
and prominent.

“World banks are shifting their focus away from the main
objective of controlling inflation. Until now, there were split between those
that adopted the explicit inflation targeting framework or implicit,” Mr.
Rewane said.

According to him, the average inflation for 2010 was 13.8 per
cent and the Central Bank’s single digit target was not achieved, though
inflation declined for the 6th consecutive month to 11.8 per cent (y/y) in
December.

“Robust liquidity growth, combined with recovery in bank lending
is expected to cause strong growth in money supply. Inflationary threats remain
real and pronounced,” he said, adding that the increase in minimum wage,
tighter fiscal policy and election spend, sale of the rescued banks, imported
food inflation, among others, are factors that fuel the pressure on the
nation’s inflation echelon.

The Nigeria Labour Congress (NLC) has advised Union Bank to
fulfil its part of the terms of agreement which both parties reached on Friday,
after days of picketing the bank.

Denja Yakub, the Assistant Secretary General of the Nigeria
Labour Congress said at the weekend that the union has decided to suspend the
strike but that it will not hesitate to unsheathe its sword if the bank fails
to keep its part of the agreement. “Yes, we have suspended the strike. We had a
meeting with the bank and the Minister of Labour and Productivity and we were
able to reach an agreement.

The meeting lasted up till 2.30am on Friday. We hope that Funke
Osibodu, the MD of the bank will implement the agreement because if she
doesn’t, we will roll back our terms,” he said. Mr. Yakub said the bank has
decided to meet all the demands of the Union. “They met all our demands. The
union is now being recognised by the bank and they have agreed to call back
those that were sacked, we will give her sometime and watch her implement these
terms” he said.

Business activities have been disrupted at the headquarters of
Union Bank in Marina, Lagos and at branches across the country for days. The
NLC, led by its president, Abdulwaheed Omar, picketed the organisation over its
decision to sack workers and ban union activities. Even the intervention of
Yakubu Alkali, the commissioner of Lagos State Police Command, could not broker
peace between both parties, leading to the decision to go on strike, from an
ongoing picketing.

Back to work

Francis Barde, the spokesperson of the bank confirmed that the
NLC has called off the picketing of the bank and directed its members
nationwide to vacate the premises of the Bank nationwide for smooth operations.

“The order followed the agreement reached last night under the
intervention of the Minister of Labour and Productivity, Emeka Wogu with the
Union Bank and NLC which suspended the industrial action against the bank and
sought to cooperate with each other in ensuring permanent industrial peace” he
said.

Mr. Barde also said in a statement signed and issued on Friday
that the move was the outcome of constructive and fruitful deliberations.
“Following constructive and fruitful deliberations, we are pleased to announce
that all issues in dispute that led to the current action between the Nigeria
Labour Congress (NLC) and the management of Union Bank of Nigeria PLC have been
addressed to the mutual satisfaction of all parties”, he added.

The workers have accused the bank’s management of mismanagement,
undermining workers solidarity, and indiscriminate staff layoff. The dispute
reached its climax last month when the management sacked 13 staff and withdrew
the recognition of the chapter of the Association of Senior Staff of Banks,
Insurance and Financial Institutions (ASSBIFI).

Normal banking activities are expected to resume today.

The Central Bank of
Nigeria’s (CBN) insistence, last year, on banks’ compliance with
section 5.3.10 of its ‘Code of Corporate Governance for Banks in
Nigeria Post-Consolidation’ raised more questions than it answered.

The CBN’s action
provided one answer: by requiring that “non-executive directors should
not remain on the board of a bank continuously for more than 3 terms of
4 years each, i.e. 12 years,” it attempted to address the task of
ensuring both continuity and the injection of fresh ideas into banks’
boards of directors.

The remaining
questions are a lot more, however, and more pressing. Arguably, the
most obvious problem is why it took the apex bank four years between
the effective date for the implementation of its corporate governance
code, and its insistence on the implementation of a key provision of
that code.

Is it the case that
the apex bank had dropped balls on its watch? Troubling though this
likelihood is, it speaks to the huge burden of combining the management
of monetary policy and banking supervision under one roof – a dilemma
that the directors of the IMF recently referred to as the “potentially
conflicting objectives of monetary policy”.

The world over, the
parameters of the arguments for and against this practice have been
altered by the recent global financial and economic crisis. However, a
decision either way in our case must consider two important facts.

First is that
monetary policy management is an inchoate practice here, a fact further
complicated by appalling levels of fiscal illiteracy at the executive
level. The second consideration derives from the venal nature of life
here. Because our default moral setting is a penchant for the easy way,
a regulator’s assignment was always going to be difficult.

However, this
difficulty is the more so when the regulator appears ignorant of its
own rules. This was always an outside explanation for the apex bank,
having dropped the ball on industry compliance with its own corporate
governance code. It, however, became a real possibility recently, when
the newspapers reported the deputy governor, financial system stability
of the CBN, as having hinted at a conference in Lagos, last Wednesday,
that appointments of sufficiently senior bank officials would now be
subject to the apex bank’s authorisation.

The apex bank may
indeed be reforming its operations in order that it can better take on
the task of strengthening the banking industry’s risk management
framework, but I know that banks in the country have regularly reported
promotions to senior levels to the CBN as a matter of course. And that
the CBN has had cause to object to the appointments by some banks into
certain offices of persons whose fitness and propriety for the new
responsibilities it had doubts over.

Is the CBN dropping
the ball because of a failure to read from its own scripts? Something
about how the CBN has proceeded with the authentication of banks’
customer account details nationwide is highly suggestive of a need to
hold the apex bank’s feet closer to the fire.

Why would it treat
work-in-progress the same way we treat voters’ registration here? I
was, therefore, minded to look again at the corporate governance code,
in search of provisions that the industry may currently be in breach
of, despite the fact that “compliance with the provisions of (the) code
is mandatory”.

What about
independent directors? In “civilised” jurisdictions, the position of
the independent director was conceived of in response to the “conflict
of interest” challenge. Increasingly, companies required persons on
their boards who – unburdened by interests in or previous or past
affiliations with the company or its subsidiaries – can discharge their
duties as directors for the exclusive benefit of these companies.

Responding to this need, the apex bank insists in its corporate
governance code that “at least two (2) non-executive board members” of
banks should be independent directors. Now, in the absence of reports
to the effect that the apex bank has sanctioned banks for breaching
this provision, we may safely assume that there are 48 independent
directors on the board of Nigerian banks.This is one of the many stats
on this economy that challenges one’s belief. Why not solve the problem
by requiring banks to list in their annual reports the number of
independent directors; and the nature of their independence?

Finance ministers of the world’s major economies reached a
fudged accord on Saturday on how to measure imbalances in the global economy
after China prevented the use of exchange rates and currency reserves as
indicators.

French Finance Minister, Christine Lagarde, who chaired the
Group of 20 talks, said the deal nevertheless represented a significant step
towards better coordination of economic policies worldwide to help prevent
another financial crisis.

“It wasn’t simple. There were obviously divergent interests but
we were able to reach a compromise on a text that seems to us to be both balanced
and demanding in its implementation,” she told a news conference.

Ministers and central bank governors agreed on a list of
indicators including public debt and fiscal deficits, private savings and
borrowing, the trade balance and other components of balance of payments such
as net investment flows.

But at Chinese insistence, there was no mention of the real
effective exchange rate or of foreign currency reserves.

“Reserves have been dropped,” Mr Lagarde acknowledged, adding
that the deal included a mechanism to take account of exchange rates when
assessing the overall balance of payments.

The United States and other western countries accuse Beijing of
keeping the yuan artificially undervalued to boost its exports, hence
accumulating massive foreign currency reserves that they say distort the world
economy.

U.S. Treasury Secretary, Timothy Geithner repeated after the
talks that China’s currency “remains substantially undervalued” and its real
exchange rate had not moved much despite a slow appreciation since a reform
last June.

“There is broad consensus that the major economies, not just
Europe, Japan and the United States but also the large emerging economies, need
to allow their exchange rates to adjust in response to market forces,” he said.

The world’s number two economy, which overtook Japan this week,
has resisted Western pressure to substantially revalue its currency to help
rebalance global growth.

China’s trade surplus has shrunk of late, perhaps explaining why
it prefers that measure.

Western and Japanese officials said the indicators would in
practice cover balance of payments and foreign reserves, even if those terms
had been omitted to assuage Beijing. Chinese Finance Minister Xie Xuren left
without speaking to reporters.

“We needed to be inventive about wording in the communique in
consideration for a country that did not want to use the term ‘current account
balance’. The statement lists components of the current account balance,”
Japanese Finance Minister Yoshihiko Noda told reporters.

No specific goals

Mr Lagarde said the indicators were not binding targets but
would lead to the drafting of guidelines for coordinated economic policies to
reduce distortions, and then to a mutual assessment process.

Germany, Europe’s biggest exporter, which has resisted U.S.
effort to set numerical targets for current account surpluses, said no specific
goals would be set for certain indicators.

The G20 ministers acknowledged that economic recovery was
diverging between developed and developing economies, but they differed in
their assessment of global inflation risks.

The communique noted that while growth was subdued in most
developed economies, with unemployment high, major emerging markets were
roaring ahead, “some with signs of overheating.”

European Central Bank President, Jean-Claude Trichet said
inflationary pressures coming from energy and commodities prices must be taken
seriously, and the ECB was determined to avoid second-round effects on wages.

But Mr Geithner said inflation risks in the United States were
moderate.

French President, Nicolas Sarkozy, who holds the G20 presidency
this year, urged ministers on Friday not to get bogged down by the indicators
dispute and welcomed the fact that China had agreed to host a seminar on
reforming the international monetary system in Shenzhen in late March.

France has also ran into opposition with its two other G20
priorities — greater transparency and regulation of commodities prices and
reform of the international monetary system.

The G20 communique said ministers agreed to work on
strengthening the international monetary system to help avoid disruptive
fluctuations in capital flows and disorderly movements in exchange rates.

China and Brazil complain that “hot money” inflows risk
destabilising the economies of emerging countries, pointing the finger at the
U.S. Federal Reserve’s money printing via a $600 billion bond purchase
programme.

With world shares at 30-month highs, investors seem content for
the G20 to take its time, whereas at the height of the crisis two years ago,
markets were baying for policy action.

Whether the voters’
registration exercise has ended or not is not the issue many Nigerians
are talking about these days. The concerns about that exercise are
largely about the huge sums spent on its execution compared to the
number of voters actually registered.

The electoral
commission informed us that about 60 million Nigerians have been
registered to vote in the April 2010 elections. That is not too bad
considering that they had a target of about 70 million. What may sour
the statistics would be if the cases of multiple registrations were
identified, weeded out, and the total number is big enough to reduce
the overall number of voters substantially.

Some analysts claim
that the electoral commission spent N1, 500 per voter if they
registered 60 million. If this number gets whittled down, it would mean
that the cost of registering one voter might actually be higher than
this estimate.

Some preliminary
questions that come to mind are with regard to the actual value of a
voter’s card. Is it worth N1, 500 or more? Can the value be enhanced by
certain factors or is it plain crazy trying to price the card at all?
If voting is a right, can you price your right?

The second layers
of questions are to do with the reasons why some people engaged in
multiple registrations with one person getting caught with as many as
four cards! One can only imagine how many times they had their finger
prints captured and how they must have laughed at the high tech system
that was not networked and thus could be fooled at will. The electoral
commission says they will weed out multiple registrations when all
captured data are downloaded into their central system. We shall see.

What will happen to
those who are still in possession of multiple cards and are far from
getting caught? When will they know that they have been weeded out? It
is possible that some may even get through to the voting period without
being caught at any time. If that happens, what will be the value of
their stock of cards? Will they choose to sell the cards or would they
vote for all candidates and so stand a chance of claiming that they
voted for whosoever won?

It is not likely
that a voter who risked all to obtain multiple cards would want to use
them for fun. It is reasonable to assume that the intention is to make
merchandise of the cards and sell to the highest bidder, who would
probably not pay the owner to carry out the multiple voting but would
simply purchase the cards and find some ways of using them in more
reliable ways that would eliminate the treachery that could occur in
the voting booth away from watchful eyes.

Although vote
buying may be entrenched in Nigeria, it is not a peculiarly Nigerian
phenomenon or invention. When one looks back into history, there are
several cases where vote buying was entrenched and was openly
advertised. Such cases can be found in the history of the United States
of America and in several other places.

In 1812 Britain, a
certain noble man, George Venables-Vernon, left his son-in-law, “one
sum not exceeding £5,000 towards the purchase of a seat in Parliament.”
Office purchases and related practices were eventually halted through a
1883 Corrupt and Illegal Practices Prevention Act.

In the
nineteen-century USA, the price of votes were often quoted, even in
newspapers. One paper, The Elizabethtown Post, reportedly quoted the
price of a vote in Ulster County as being $25.

Whereas vote
selling and buying has transformed into other phenomena in the Western
world, such as campaign donations and lobbying, it is still possible to
see it in many countries in Africa. In fact, in some African countries,
where vote buying does not suffice, an incumbent loser can simply
refuse to vacate office. After much haggling, they may decide to share
offices with presumed winners and carry on as if nothing happened. Or
you may end up with two presidents.

Analysts have seen
that the price of a vote could vary even within the same country and
the office for which the politician is seeking. For example, where the
national legislature is more powerful in terms of determining the
direction of the state and the office of the president is merely
ceremonial, then the vote for a legislator becomes more costly.

The average cost of
a vote for those seeking election to the national assembly in Sao Tome
and Principe in their 2006 election was said to be about $7.10,
although in the capital this was five times more costly. The price of a
vote for the presidency was slightly more than half of that for the
national assembly because the president wields power mainly on issues
of foreign affairs and defence. With oil revenue’s floodgates opening
up, those who have more influence over the economy pay more to garner
the needed votes to sit over the pie.

In Nigeria, the
votes can easily be arranged in a hierarchy of prices starting from the
vote for a local government councillor to that for the president. What
may be a bit tricky to rank would be the price differential between the
vote for a senator and that for a governor. The confusion comes from
the fact that many former governors forget that they had governed whole
states and often angle to represent a third of their states as senators.

However, in terms
of which office is more lucrative (via corruption), that of the
governor takes the cake, no matter how much salaries and perks the
senators legislate for themselves. If people got elected to provide
selfless service, vote buying, ballot box snatching (a form of
wholesale purchase of votes), and electoral violence would not be the
norm.

What is the price of your vote?

SODIC, Egypt’s
third-biggest listed developer, said it is assuming zero sales for 2011
after three weeks of political unrest had unnerved investors.

The high-end real
estate firm, which does not fully recognise revenue until it delivers
units, has a strong cash position, limited outstanding debt and land
debt, as well as strong cash flows, its chief executive said.

“To be totally
conservative in working out cash flows, is our objective – to make sure
our cash flows are more than sufficient to tide us through – we are
assuming zero sales for 2011,” Maher Maksoud told Reuters, adding that
he remained optimistic about the long-term outlook.

The
Nigerian Stock Exchange (NSE) has encouraged more stockbrokers to
engage remote trading system to further ease their operations.

Wole Tokede, the
NSE’s spokesperson, in a statement on Wednesday, said the use of remote
trading by stockbrokers “has continued to grow in acceptance as there
are 235 remote trading connections in Lagos, besides those deployed in
branches across the country.”

Remote trading,
which is one of the attached benefits of the Automated Trading System
being used for transaction, was introduced to the market in 2005. The
system enables stockbrokers to trade from their offices without having
to come to the Exchange in person.

Ogbonnanya Osita,
NSE deputy general manager and acting head, Market Operations and IT
Directorate, said, “Stockbroking firms are connected based on request,
and the number of dealing member firms that are using the system is
growing rapidly.”

He said that
stockbrokers who still come physically to the Exchange’s floor to trade
“are doing so because most of them want to keep relationships with
their colleagues since they have the capacity to do remote trading from
their offices.” He also said that the situation is the same in advanced
markets.

Some stockbrokers have described the impact of the remote trading on their operations.

The chief executive
officer of Stanbic IBTC Stockbrokers Limited, Akeem Oyewole, said the
remote trading has helped the growth of the market and improved the
performance of his company.

“We have ten
stockbrokers in our company and it is only one of them who goes to the
Exchange’s trading floor to trade physically. The remaining nine trade
remotely from our office. It is working fine, it has been a blessing to
our operations,” Mr. Oyewole said.

Kasimu Kurfi, the
managing director and CEO of APT Securities and Funds Limited, the
first company to start remote trading on the Exchange, said “We have
been using it since inception and since then we have never encountered
any serious problem.”

Meanwhile, Victor
Ogiemwonyi, CEO of Partnership Investment Company, said there are
challenges with the remote trading system that may be beyond the
control of the Exchange.

“Sometimes, the link is bad and that is the problem of Internet Service Providers,” Mr. Ogiemwonyi said.

However, Mr. Osita
said that there are two service providers engaged by the NSE for the
purpose and these are 21 Century and MTN.

He said the network
coverage of the service providers is not everywhere and this reality
has been a drawback to the operations of remote trading.

In the mean time,
investors at the NSE, on Wednesday, recorded more losses on the value
of their equities, as market closed trading on negative note after
Tuesday’s break.

The NSE market
capitalisation of the 201 First-Tier equities closed yesterday at
N8.459 trillion after opening the day at N8.501 trillion, reflecting
0.49 per cent decline or N42 billion losses. The market had lost over
N27 billion on Monday.

Economic Community
of West African States (ECOWAS) yesterday indicated that it is working
towards the harmonisation of the capital market rules and regulations
to make for cross border listing of companies on stock exchanges across
the sub-region.

At the 27th meeting
of the convergence council of the West African Monetary Zone (WAMZ)
last week in Abuja, Nigeria’s president and chairman of the community,
Goodluck Jonathan, emphasised the need to remove all barriers to the
achievement of economic integration and monetary union, to create an
enabling environment for regional trade among WAMZ member countries.

“Economic and
monetary integration is not only beneficial to our people, but also an
agenda whose implementation has become over-arching for its relevance
internationally, including the facilitation of trade among member
countries, promotion of investment, and economic growth,” Mr. Jonathan
said.

Socio-economic development

The president said
the establishment of a common central bank and common currency would
facilitate rapid socio-economic development and integration of the zone
through stable prices, sound public finances, and a sustainable balance
of payments for WAMZ member states.

NEXT gathered that
most members of the regional body now appreciate the significance of a
single currency monetary union in West Africa to the growth of their
economies and have taken steps towards its actualisation.

Minister of
finance, the Gambia, Abdou Kolley, said the emergence of cross border
banking activities in the zone and the need to safeguard financial
sector stability as well as the initiative by the central banks of
member states to create synergy towards the attainment and sustenance
of sound financial stability in the region was encouraging motivation
towards economic development in the region.

“One critical
factor in the quest for economic integration and monetary union is the
imperative to create an enabling environment for trade to thrive among
WAMZ countries to enhance the usefulness of the common currency. We
must accelerate the implementation of the free trade proposal of ECOWAS
protocols on Common External Tariff (CET) and ECOWAS Trade
Liberalization Scheme (ETLS),” he said.

To facilitate the
urgent integration of the CET and ETLS with WAMZ, Mr. Kolley stressed
the need for the West African Monetary Institute (WAMI) to collaborate
with ECOWAS, considering that achieving the monetary union would
require changes in the existing laws, constitutional amendments, and
ratification legal statutes in most member states.

Delayed implementation

However, it was
gathered that meeting the January 2015 deadline for the take off of the
common monetary zone in the WAMZ might be delayed, pending when member
countries resolved issues relating to the domestication of the relevant
statutes and legal instruments.

Minister of
finance, Segun Aganga, had emphasised the importance of an actively
integrated real sector and financial market in the region, pointing out
that the new monetary regime would not attain the status and financial
efficacy as envisaged without the full implementation of all existing
ECOWAS protocols on trade liberalisation as well as establishment of
bilateral and multilateral agreements to facilitate free and seamless
movement of people and goods within the sub-region.

The
Nigeria Labour Congress (NLC) continued its picketing of Union Bank
yesterday after a similar action on Monday paralysed activities for a
few hours at some of the bank’s branches across the country.

As at close of
normal banking hours, the doors to the head office in Lagos remained
shut, as petroleum tankers and union buses were used to barricade the
entrance, thereby preventing flow of traffic on the major Marina Road.

NLC national
president, Abdulwaheed Omar, in a statement, said the ongoing dispute
is an industrial relations problem with the Union Bank and not against
the administration of President Goodluck Jonathan.

“We, therefore,
think that the use of armed police and soldiers in this matter is
completely unjustified. The bragging of Mrs. Osibodu (Union Bank CEO)
that the soldiers have orders to shoot those who picket the bank at
sight should be investigated by the government. The mandate of the
Armed Forces does not include dabbling in purely industrial relations
matters,” Mr. Omar said.

He said the workers would resist any move to use force to disperse the protesters.

“The NLC,
therefore, warns that if by any act of commission or omission, a single
drop of a worker’s blood is split in the process of the planned
peaceful and legal picketing of the Union Bank, NLC will call out
workers and the Nigerian masses on an indefinite mass street protests
and general strike. We will also drag government and the management to
the United Nations and the International Criminal Court,” he added.

Mr. Omar said more severe actions will take place if nothing is done and no agreement is reached after February 21.

“The decision of
the Union Bank management and the honourable Minister of Labour, Emeka
Wogu, to pass judgement in an intra union dispute pending at the
industrial Arbitration Panel, (IAP) is illegal,” he further said.

Ade Martins-Odigie,
president, National Union of Banks, Insurance and Financial
Institutions Employees (NUBIFIE) said the picketing would last till
Friday.

“If our demands are
not met by Friday, then we would hold an executive meeting at the NLC
and deliberate on when the NLC, as an umbrella body of labour unions,
would go on strike,” he said.

As at 3pm, the
picketing workers were still situated at the bank’s headquarters. “We
are still at the headquarters. I am sure that not less than 90 per cent
of Union Bank branches are closed and there are no banking activities
going on,” he said.

Francis Barde, the
bank’s spokesperson, who confirmed that the bank was closed, said the
management is hopeful that the issue will be resolved before the week
runs out. “You know, it is not an issue that can be resolved overnight.
It is a dialogue issue. We are hoping that an agreement would be
reached before the week runs out,” he said.

Since the crisis
began last year, the Central Bank of Nigeria (CBN), which appointed the
current management of the bank in the wake of the sacking of the former
chief executive officer in 2009, has not made any official statement on
the matter.

Efforts to reach
the CBN spokesperson, Mohammed Abdullahi, on the position of the
regulator on the issue, was not successful as he would neither pick his
calls nor respond to text message.

The workers have
accused the bank’s management of mismanagement, undermining workers
solidarity, and indiscriminate staff layoff. The dispute reached its
climax last month when the management sacked 13 staff and withdrew the
recognition of the chapter of the Association of Senior Staff of Banks,
Insurance and Financial Institutions (ASSBIFI).

As at the time of
going to press, the union officials and the management of the bank were
in a meeting with the minster of labour in Abuja.

The
manufacturing sector is fraught with many problems which has stifled
the sector from contributing to the growth of the economy.

According to the
director general of the Manufacturers Association of Nigeria (MAN),
Jide Mike, an enabling environment needs to be created for the
manufacturing sector to thrive.

Speaking yesterday
in Abuja at the investment forum of technology exposition ( Techno-Expo
2011), he said the dismal performance of the manufacturing sector was
due to the high cost of operating business, among other factors.

He identified the
cost of challenges faced by manufacturers to include high operational
costs in the area of alternative sources of power generation such as
gas, diesel, and LPFO, cost of fund as a result of high interest rate,
lack of long term loans, and inadequate operational fund for the Bank
of Industry.

Other challenges include high cost of infrastructure, such as energy, transportation, mobile telephones, and internet tariffs.

On taxation, Mr.
Mike said, “the case of multiplicity of taxes among the three tiers of
government is a great problem to the manufacturing sector, and indeed
to all other business concerns.”

Multiple taxation

According to him,
recent research carried out by MAN in conjunction with Centre for
International Private Enterprise, Washington, USA, shows that over 100
taxes and levies are currently being charged by the three tiers of
government in Lagos, Oyo, and Ogun States, as against the 38 legally
approved.

He noted that while
many nations operating tax business friendly environment are further
reducing the number and rates of taxes as part of the economic stimulus
package, the reverse is the case in Nigeria.

“Charges by
concessionaries and the high cost of administering the recently
introduced cargo track note by the Nigerian Port Authority and the
aggregate of all the above put the country’s manufacturing costing as
much as 45 per cent higher than world averages. The locally made
textile products are more prone to this phenomenon,” Mr. Mike said.

Other experts at the expo said developing industrial cluster will boost the manufacturing sector in Nigeria.

Olufemi Bamiro,
vice chancellor of the University of Ibadan, in his address, said there
are thousands of clusters around the world including the highly
celebrated Silicon Valley information technology cluster of the United
States of America, and in Nigeria, the Nnewi industrial cluster in
Anambra State and the Otigba ICT cluster in Lagos.

He said several
clusters have been identified in Nigeria, particularly by Raw Materials
Research and Development Council (RMRDC) in the areas of textile,
furniture, leather, agro raw materials processing, metal working,
mineral processing, among others, noting that clustering has become a
powerful weapon to face competition – local or global.

Cluster initiative

According to him, it is increasingly becoming one of the key drivers of economic growth in localities, cities, and regions.

“Consequently, most
nations are engaged in mapping and evolving appropriate cluster
initiatives aimed at transforming them into innovative clusters,” Mr.
Bamiro noted.

He said that in the
developed and some developing economies, the cluster initiative has
become a central feature of industrial planning aimed at improving
growth and competitiveness.

“The main thrust of
cluster initiatives/policy is not to create cluster from scratch but,
most importantly, how to help existing clusters to develop and
transform into innovative clusters. This is particularly important in
the Nigerian setting with several calls for the replication of the
Nnewi phenomenon in other places in the country,” he said.

He said increased
expertise provides sourcing companies with a greater depth to their
supply chain and allows for inter-firm learning and co-operation, which
offer a wide range of benefits to both business and the wider economy.