Nigeria Content Online

Despite the
decision by the National Assembly to cut the budget proposals by
government ministries, departments and agencies (MDAs) by 50 per cent,
the Finance Minister, Segun Aganga, insists the country is buoyant
enough to finance government business.

Many of the
ministries and agencies had their 2011 appropriation sliced in a manner
that members of the various committees say was indicative that the
country is broke and can ill-afford funding the budget.

“The 2010 budget,
in my opinion, is a failed budget,” lamented the chairman, Senate
Committee on Environment, Grace Bent, while appraising the 2010 budget
of the Environment ministry last Thursday.

Mrs Bent’s view was
re-echoed by most of her colleagues in other committees and she finds
it worrisome that the Environment ministry, like many others,
implemented only 47 percent of its capital budget for the year, about
six weeks before the expiration of the 2010 fiscal year, as against 100
per cent recorded in the recurrent expenditure and overhead budget.

Indications are
that out of the total allocation of N29.522 billion in the 2010 budget,
the Finance Ministry has only released N10.115 billion to the ministry
till date.

The Environment
minister, John Odeh, blamed the poor performance of the budget on the
Finance ministry’s failure to release the capital budget in full due to
complaints of shortfall in the country’s revenue.

Mr Odeh’s
counterpart in the interior ministry, Emmanuel Iheanacho, also
announced 100 per cent implementation in recurrent expenditure, while
the capital expenditure was about 43 per cent. Mr Iheanacho’s complaint
was that the Finance ministry released only 50 per cent of the
ministry’s 2010 capital budget, because of the shortfall in the
country’s revenue, though the recurrent and overhead budgets were
released and fully expended.

Prudent management

However, Mr Aganga,
explained that the decision to slice the ministries and agencies’
budget is part of the measures being pursued by government to ensure
discipline and prudence in the management of the country’s finances.

“The truth is that
Nigeria is not broke. The question that one needs to ask is: The ones
that they (ministries) got last year, have they used it? Or how well
did they use it? There is no doubt that the country is making more oil
revenue today because commodity prices are going up. But what one
should know is that we are running a deficit budget, which is the
highest ever budget in the history of the country.

“Besides, this is
an expansionary budget because of what government is doing. We must
learn to live within our means. What government is doing is trying to
reduce the huge cost of running business, by emphasising fiscal
discipline and prudence, without necessarily compromising quality in
the implementation of the budget.” Mr Aganga said. During the recent
presentation of the overview of the 2011 budget by President Goodluck
Jonathan, the finance minister pointed out that this year’s budget was
underpinned by the four pillars upon which the country’s economic
growth strategy and government’s reform agenda rests.

Apart from the
determination to make Nigerians feel the tangible benefits of the
country’s economic growth, the minister said government will optimise
necessary capital spending by rationalising recurrent expenditure,
while accelerating the reforms to enhance the quality and efficiency of
public expenditure as well as promote greater prudence in the
management of the nation’s financial resources.

The minister had
argued before the law makers that government was withholding funds from
those ministries that did not show sufficient capacity to utilise past
releases, with some of them accounting for as low as 23.3 percent
implementation of the budget.

“Government has
been very lousy with budget implementation. This is a failed budget of
a failing nation,” observed Bukar Abba Ibrahim, a senator, who claimed
that a cut in the capital budget of the ministries was suggestive that
the nation cannot afford it.

“Why would the
Finance ministry not be able to cash back the capital budget of the
2010 appropriation, despite the claim by the Finance minister that the
country is buoyant enough to fund government’s business and considering
that crude oil price has been stable above the budgeted benchmark?” Mr
Ibrahim noted.

When two people become a couple, they
confront a myriad of financial choices and decisions. Are you engaged?
How much do you know about your fiance’s financial situation? After the
excitement of the wedding ceremonies, it will be time to face your
financial future together. Research shows that money matters have some
part in most divorces yet, most couples go into marriage without ever
broaching this subject. It may not be romantic, but it is important.
Here are some of the money issues that you should discuss with your
fiancé or your spouse.

What is your attitude toward money?

You do not just develop good or bad
money habits by chance; attitudes to money are formed very early on in
life and usually develop over many years. You may not even realise the
full effect of your childhood experiences, circumstances, and your
parent’s attitude towards money. Indeed, many people simply assume the
savings and money management habits of their parents. Were they very
frugal, disciplined savers, or were they spendthrifts? Your attitude
toward money can have a significant impact on the financial decisions
you make.

What are your financial goals?

What are your short, medium, and
long-term goals? Where do you see yourselves five, 10, 20 years from
now? Financially, this can mean owning your own home, educating your
children and planning for your retirement.

In relationships, there may be
different goals and priorities. One may be averse to debt whilst for
the other debt is a way of life. He might want a flash car, whilst she
feels more secure with money in the bank. She might spend all the
housekeeping money on jewellery, shoes and bags whilst his priority is
to give the children a sound education. He may view the new home cinema
as their greatest new asset, whilst her priority is to make a down
payment on their own home. If the differences are fundamental, this
will be a source of conflict. At the same time, be conscious of the
fact that it shouldn’t be all about scrimping and saving towards the
future; treat yourselves as well.

Who will manage the family finances?

Women often enter marriage assuming
that their spouse will handle all money issues and thus delegate almost
total responsibility and sit on the sidelines without being involved.
Determine who is best able to manage the routine everyday financial
matters. Teamwork is essential and shared duties work well for some
families, but even if one party is more involved, both should have a
general overview of the total picture. Periodic meetings are important
so you know where you stand financially and can see whether you are
actually moving closer towards your family goals.

How do you feel about budgeting?

It is surprising how many married
couples get by without a budget. Through budgeting, you have a better
idea of what is coming in and how much can be spent. You should both
know how much you pay for your rent or mortgage, utility bills,
insurance, and so on. Budgeting responsibilities should be shared such
that neither partner should feel that they have to shoulder the entire
responsibility. Periodic meetings, say at least once a month are useful
to review bank balances, any outstanding debt, routine expenses as well
as any major expenses that need to be carefully planned for.

How much debt are you bringing to the marriage?

Many people do not discover the full
extent of their spouse’s financial obligations until they are married.
Debt brought into marriage can be a major source of strife if not well
handled. Each partner should know the debt load the other one carries,
as once you are married, that debt load is shared. Whilst you are not
legally responsible for the loans opened in your spouse’s name, it
could certainly affect your eligibility for joint loans such as a
mortgage. It should be a priority to try to deal with it together and
bring it under control.

Who pays for what?

Something as basic as the handling of
everyday household expenses is a source of friction in many families.
How will you handle routine household expenses? You both earn, but how
much should each person contribute? Are you both doing your “share”?
Should it be equal amounts no matter what each person earns, or a
certain percentage? If you earn significantly more or less than your
spouse, it seems only fair to contribute amounts in proportion to your
respective incomes to reflect this imbalance.

Some couples assign expenses – you pay
the rent and school fees, whilst I’ll pay for groceries, utility bills,
and so on. Other couples use one partner’s income for all expenses and
apply the other income to build up savings and investments.

Will you have separate or joint accounts or a combination of the two?

Will you open a joint account and pool
both incomes or have separate accounts? Having a joint account combined
with individual accounts for personal expenses is a good compromise as
each partner takes some responsibility for the household budget, yet is
still able to retain some autonomy. Partners contribute a certain
amount of their monthly salary into the joint account to cover routine
household expenses such as food, utility bills and so on. Some couples
decide to pay their salaries into the joint account and then pay
themselves a monthly allowance.

Remember that parties to a joint
account have a right to withdraw all the money in the account. It is
for this reason that the use of joint accounts is usually limited to
people who have built a solid level of trust. Look critically at the
options and try to come to a compromise that will suit your
relationship.

Will you set spending limits?

Do you have to account for everything
you spend to your spouse? If you show up with an expensive new TV or a
car, could this be a cause of tension? Everyone needs some personal
spending money that doesn’t have to be accounted for. The amount will
vary depending on the couples’ resources and lifestyle. Some couples
set spending limits on how much either can spend without consulting
each other.

Even though there may be the occasional
conflict about money, it is really about how best these conflicts can
be resolved. With careful planning, clear communication and compromise,
you can avoid many frustrating conversations. There is no one size fits
all when it comes to finances in relationships; even the best system
may not always be appropriate so be prepared to modify your system as
your relationship and financial situation evolve. Try to find the right
balance that works for your situation; if one option doesn’t work, try
another. The financial decisions that you make now can have a lasting
impact on your financial future as you go through life together.

Happy Valentine Day!

The Ondo State
government is to carry out soil treatment on 500 hectares of land for
the planting of the Ghana high-yield cocoa at Oda Plantation in Akure.

The state
commissioner for agriculture, Julius Akinnigbagbe, told the News Agency
of Nigeria (NAN) on Tuesday in Akure that the government would also
train farmers on the production of the cocoa type. He said the
treatment would allow the government to establish the suitability of
the soil for the cocoa specie.

“We have already carried out some experimental plantation at Oda
farm but we still want to establish the suitability of our environment
and land for mass production of the cocoa here,” Mr. Akinnigbagbe said.

The 36 state
governments on Monday restated their demand for more transparency and
accountability from the Nigerian National Petroleum Corporation (NNPC)
and other revenue collection agencies in the country to enhance the
profile of federally generated revenue.

Akwa Ibom State
governor, Godswill Akpabio, who made the states’ position known at the
retreat for Revenue Mobilisation Allocation and Fiscal Commission
(RMAFC) commissioners and management in Uyo, Akwa Ibom State, restated
their resolve not to relent in their agitations for a greater share
from the federation account as the commission is working on a new
allocation formula for the country.

“The call from the
states for more revenue allocation would persist given the need to
promote development from the grassroots to the centre, instead of the
present situation of the federal government taking on too much funds
for very little work done,” the governor said.

Transparency report

The Nigerian
Extractive Industries Transparency Initiative (NEITI) in its latest
report indicted the NNPC for lack of transparency in the measurement of
revenue flows from exploration of oil and gas. The NEITI report, which
covered activities in the oil and gas sector between 2006 and 2008,
also revealed impropriety in the sale of tax and royalty oil by the
corporation.

“Improved
accounting procedures are required to improve the transparency of
NNPC’s handling of these components of the proceeds of crude sales,”
the report added, noting that the volumes reported by NNPC for crude
oil lifting differed from those reported by companies operating the
terminals.

Mr. Akpabio argued
that instead of the Federal Government deploying a larger proportion of
funds from the Federation Account to consultancy services and other
sundry expenses that do not impact positively on the people, such
monies should have been given to the states that have more
developmental challenges to attend to.

Urging the RMAFC to
urgently come up with a new revenue allocation formula that would
ensure equity, justice, and fairness to all stakeholders, the governor
pointed out that the Federal Government must agree that development can
only move from the states to the center and not the other way round.

According to him,
the commission must also closely consider addressing the issues of
compensation for states currently suffering from the adverse effects of
oil production activities and security beyond 200 metres isobaths,
adding that a critique of existing processes for reviewing indices of
sharing the 13 per cent derivation fund must be carried out to avoid
the recurrent problem of over payment and under payment for some states.

Diversifying revenue base

The governor said
there was need for RMAFC to seriously tackle the diversification of the
country’s revenue base, adding that a close examination of all past
reports on lack of transparency and accountability on the part of
stakeholders in the collection and management of revenue accruing into
the federation account would be helpful.

Vice president,
Namadi Sambo, who declared the retreat open, pledged federal
government’s readiness to support RMAFC in producing a new Revenue
Allocation Formula, adding that government was aware of the enormous
responsibilities of the commission and would not renege in its pledge
to provide the necessary environment for it to deliver on its mandate.

Mr. Sambo,
represented by the minister of finance, Olusegun Aganga, said
government is desirous to reduce the high cost of governance, adding
that it has already taken steps in the 2011 budget to address the
issue, while challenging the RMAFC to come up with a solution to the
problem.

RMAFC chairman, Elias Mbam, said the retreat, which was packaged to
enable the newly appointed members of the commission to carefully
examine and understand the operations and fundamental responsibilities
of its operations, would also provide the opportunity to set its agenda
and chart a new course for the achievements of its targets.

The Nigerian Stock
Exchange recorded a total gain of N662 billion on equities at the close
of trading activities in January, after the marginal gains of N5
billion in the preceding month.

The market value of
the 217 listed equities, which opened the month at N7.913 trillion,
closed on the last trading day in January at N8.575 trillion,
reflecting a N662 billion gains or 8.37 per cent increase.

The 217 listed
equities accounted for 81.13 per cent of total market capitalisation of
the 264 listed securities which closed January at N10.583 trillion; up
by 6.7 per cent from N9.92 trillion in December.

The Exchange’s
strategy and business development department said the stock market
performance during the first three weeks of January “was very
impressive with the Nigerian market ranking among the world’s best,”
adding that “the fourth week was rather bearish.”

The NSE attributed
the downturn recorded during the fourth week “to the upward review in
the monetary policy rate, profit taking by investors, and the impact of
the regulatory action, which prevented some operators believed to be
undercapitalised from participating in the market.”

Market turnover

The market recorded
a turnover of 10.84 billion shares valued at N104.1 billion in 139,950
deals during January, in contrast to a total of 6.63 billion shares
valued at N56.7 billion exchanged during last December in 111,114
deals. Trading days in January were 20, compared with the 21 days in
December.

Measuring by
turnover volume, the Banking subsector was the most active in January
with traded volume of 8.1 billion shares valued at N76.8 billion, while
the Insurance subsector was second with traded volume of 816.01 million
shares valued at N694.22 million. The Food and Beverages subsector was
third with transaction volume of 408.9 million worth N7.3 million.

A total of 174
equities out of the 217 listed were traded during the month compared
with 173 in December. As in the preceding month, Zenith Bank was the
most active stock with transaction volume of 1.72 billion shares,
followed by First Bank with 1.22 billion shares while FinBank placed
third with 697.12 million shares.

Meanwhile, analysts
at Vetiva Capital Management Limited, a financial service company, said
the market is expected to perform better in the coming months on the
back of quoted companies posting “positive earnings growth induced by
higher profitability and stronger balance sheets.”

They said other
expectations in the market include “investor optimism, barring any
negative surprises on the political front; a post-election rally in the
equities market; increased portfolio flows from developed markets as
investors search for higher returns.”

Bond trading

Over-The-Counter
(OTC) bond market, a turnover of 875.62 million units worth N801.134
billion was recorded in January, in contrast to a total of 465.9
million shares valued at N430.03 billion exchanged during the preceding
month.

The most active
bond, in terms of volume, was the 10.00 per cent Federal Government of
Nigeria (FGN) Bond July 2030 with a traded volume of 218.6 million
units valued at N170.2 billion.

It was followed by
5.50 per cent FGN Feb 2013 with traded volume of 206.9 million units
valued at N194.2 billion. Only 24 of the available 33 FGN Bonds were
traded during the month, same as in the preceding month.

Chinese telecoms
hardware and network makers are biting off bigger chunks of African
business and are likely to overthrow hitherto dominant European vendors
in a region with mouthwateringly low penetration rates.

While in the past
they might have brought unreliable technology and a handbook only in
Chinese, the firms are leveraging on a pool of skilled labour and
government loans to dislodge traditional vendors.

“It is not good
news for the traditional vendors,” says Dobek Pater, telecoms analyst
and partner at research firm, Africa Analysis.

China’s main
telecoms gear makers, Huawei Technologies and ZTE, are rapidly taking
business from European vendors such as Ericsson, Nokia, Siemens
Network, and Alcatel-Lucent.

Chinese vendors’
initial market entry strategy was hinged on low priced offerings, often
to state-run operators, but the companies have reinvented themselves by
throwing billions of dollars into research and development and are now
often ahead of the curve with new technologies.

Stringent testing
by global operators such as Vodafone has seen the Chinese vendors
become the approved suppliers of almost all core access and
transmission infrastructure in Africa.

Analysts say Chinese vendors are also willing to bend the rules to provide more cost-effective solutions for emerging markets.

“Chinese vendors
have mastered doing business in Africa the African way, if we can put
it that way,” said Tinyiko Mavoni, chief executive at South Africa’s
Mavoni Technologies.

Sweet deals

China’s
export-oriented growth strategy has supported its companies. In March
2009, China Development Bank agreed to provide ZTE with a $15 billion
credit line, according to Simon Schaefer, an analyst at
Johannesburg-based Frontier Advisory.

To avoid rankling
western competitors, China is now lending directly to African
governments or operators, but the money comes with the proviso that it
is spent on Chinese products.

The European Union
this month dropped an inquiry into the subsidy of Chinese firms after
Belgium’s Option withdrew its complaint after reaching a cooperation
agreement with Huawei.

The Chinese
companies deploy skilled personnel to build new networks in numbers
that few western vendors can match, and often offer a financing deal.

Mr. Pater said Huawei ranked itself in the top three on money generated from operators.

“They estimate that by 2014 they would be in the number one position in equipment and building networks,” he said.

Fringe players

The era of
acquisitions and mergers of established European and U.S.-based vendors
in the mid 2000s resulted in a loss of strategic focus as the new
companies tried to settle, says Simon Lee, head of Farwell Consultants.

Up until that point the Chinese were fringe players, and the general perception was that they were cheap and unreliable.

“The Chinese
companies were not going to pack up their bags and go home. They saw
… the general confusion of the established vendors and went full
blast on a new strategy to gain respect and confidence globally,” Mr.
Lee said.

“From 2008 until
last year they were picking up coveted contracts and even swapping out
equipment from operators who had had long-standing relationships with
their incumbent vendor,” he added.

Chinese firms are
also pushing the boundaries with handsets and personal devices but have
some way to go to match the aesthetics and ease of use of established
makers.

Nokia and Samsung
remain the dominant players in Africa, and the Blackberry is
increasingly popular among the upwardly mobile. However, mobile phones
recycled in China or of Chinese origin are making an entry, according
to Fola Odufuwa, an Africa-focused telecoms consultant.

It is in the
broadband USB modem market where Huawei and ZTE head the pack in many
African countries and where analysts see some of the choicest
opportunities.

Africa has a mobile
penetration rate of only 41 per cent, compared with 76 per cent
globally, while the broadband penetration rate on the continent was
negligible, statistics from the U.N. agency International
Telecommunication Union.

As long as the
Chinese vendors continue to provide quality, competitively priced
equipment that is set up in a relatively short period of time, they
will be the suppliers of choice.

The
initial momentum by government to pass the Petroleum Industry Bill
(PIB) may have waned, as the focus of elected officials is now mainly
on the forthcoming elections.

Despite
the promise by government that the Bill will be passed by the current
National Assembly, events in the last few months point to the contrary.

According to Bismarck Rewane, managing director, Financial Derivative Company, the Petroleum Industry Bill remains stuck.

“Oil
and gas reforms are unlikely in the face of elections. The Nigerian
president once again reiterated his wish that the Petroleum Industry
Bill (PIB) will be passed in this session of the National Assembly. The
petroleum minister had pronounced earlier that it would be passed last
September. It is probably inconceivable that the bill in its present
form will be debated and passed at the current session of the National
Assembly,” Mr. Rewane said.

The
Petroleum Industry Bill has been undergoing setbacks since the draft
bill was made available in 2009. The government has repeatedly said the
passage of the Bill is imminent, yet, revisions and debate have
hindered the process since then.

Earlier
in the month, the president said he expects wide-ranging reforms to the
mainstay oil and gas industry to be passed into law before the end of
the current parliament in May, according to a Reuters report.

The
legislation process has been held up for years, going from revision to
revision and committee to committee as the industry’s decision-makers
and government officials negotiate over its terms.

Industry
watchers say billions of dollars of potential investment, especially
from foreign oil companies, in the oil and gas industry are on hold as
a result of the uncertainty over the proposed legislation.

A
Reuters report stated that a joint Senate committee which has been
considering the bill for the past year has concluded its work, since
last year, paving the way for the upper house to begin voting on the
legislation clause by clause.

“The
joint committee on PIB has laid the report (the PIB) on the table in
the Senate. We have concluded work on it. It is now the property of the
Senate,” the report quoted Osita Izunaso, a co-chairman of the joint
committee.

Mr. IZunaso had also reportedly gone ahead to say that in the next few weeks, the Senate will consider it clause by clause.

Crucial decisions already on

Despite
the delay, some major multinational oil companies have already started
selling some of their oil blocks while some are shifting their
operations towards deep offshore and divesting some of the onshore
assets.

Shell,
which is in the process of selling more of its oil blocks, recently
sold some of its Nigeria assets to a consortium led by local companies.
In a statement issued by the company, it agreed to transfer its
interest in three production licences and related equipment in the
Niger Delta to a consortium led by two Nigerian companies.

“This
sale of assets supports the Nigerian government’s goal of expanding
opportunities for local energy companies,” Mutiu Sunmonu, managing
director, SPDC, said.

Experts
say the Petroleum Industry Bill (PIB) will re-write Nigeria’s age old
relationship with its foreign oil partners, altering and varying
everything, right from the fiscal framework for offshore oil projects
to the involvement of indigenous firms in the sector.

Dragan
Trajkov, an oil and gas analyst at Renaissance Capital, a finance
investment bank, said the potential PIB and the passed Local Content
Bill may have influenced their decision.

“We
do believe that the potential PIB and the already passed Local Content
Bill might have had some impact on their decision. Especially the fact
that the early version of the PIB was proposing that the majors may be
required to relinquish some of the undeveloped fields,” Mr. Trajkov
said.

He, however, said while this may not be a major determining factor, it would be a contributing one.

Proponents
of the bill say it will enable the Nigeria National Petroleum Company
(NNPC) to become more transparent, encourage local and foreign
investment, particularly promote local oil company involvement in the
industry, and increase gas supplies to the ramshackle domestic power
sector.

Disruptions to
energy supplies have forced some cocoa processing facilities in Ivory
Coast to shut temporarily and shipping services have halted, inhibiting
cocoa exports and wheat and rice imports, two trade bodies said.

The Federation of
Cocoa Commerce and the European Cocoa Association said in a joint
statement on Tuesday that they had observed not only a massive
displacement of people, but also an increase in cocoa smuggling across
neighbouring borders.

Tanzania’s
year-on-year inflation rate rose for the third successive month in
January, driven higher by fuel and food prices, the country’s
statistics office said on Tuesday.

The inflation rate
hit 6.4 per cent in January, up from 5.6 per cent in December, and a
low of 4.2 per cent in October – the month the National Bureau of
Statistics (NBS) changed the calculation methodology and reduced the
weighting of food.

“The increase of
the inflation rate was mainly caused by a significant rise in food,
fuel, and house rent costs,” Ephraim Kwesigabo, director of population
census and social statistics at NBS, told a news conference.

The proposed deal
between Wal-Mart and South Africa’s Massmart Holdings should support
local procurement and job creation in Africa’s biggest economy, South
African economic development minister, Ebrahim Patel, said on Tuesday.

Mr. Patel said his department is in talks with both the U.S. retailer and South African unions who oppose the deal.

“What we would be
seeking to ensure is that there is strong local procurement, that the
South African supply base is supported, and that our capacity to create
jobs locally is highlighted. This is what the conversation with
Wal-Mart is about,” he told reporters.