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Cocoa prices
slipped back further from the prior session’s one-year peak on Tuesday
as the market waited to see whether a call to ban exports from top
producer Cote d’Ivoire would attract further support.

A meeting of local
heads of international cocoa exporters in Abidjan, late Monday proved
inconclusive as major buyers of Ivorian beans were still mulling
whether to join U.S.-based agribusiness Cargill and halt cocoa
purchases.

Presidential
claimant Alassane Ouattara called over the weekend for a month-long ban
on cocoa exports to stop revenues reaching his rival, incumbent Laurent
Gbagbo.

The Nigeria Labour
Congress (NLC) and Union Bank management will meet later in the week
over the imbroglio in the bank. The bank last week sacked 13 staff for
participating in labour activities though the management said it was
“for violating bank rules.”

“A meeting has been
called for Friday this week in Abuja by the minister of labour,” Denja
Yakub, the assistant secretary, NLC, said yesterday, in response to an
enquiry on the matter.

Last week, the
labour union asked the bank’s management to reverse its decision not to
recognise the union within seven days and also reverse the layoff of
the 13 members of staff. The union added that without this, it would
shut down the bank offices nationwide.

Francis Barde, the bank spokesperson, said banking operations are going smoothly and unhindered.

“Our banking operations are smooth as we are in dialogue with the staff on their issues,” Mr. Barde said yesterday.

He said that it was the bank management that requested for the meeting with the minister of labour.

Union Tussle

Meanwhile, the
Trade Union Congress of Nigeria has spoken on the Association of Senior
Staff of Banks, Insurance and Financial Institutions (ASSBIFI) and
Union Bank controversy, after its silence since last year when workers
of the bank had open confrontations with their management.

In a statement
yesterday, titled ‘TUC position on the proscription of Union Bank
ASSBIFI’, the union said that it sees this as one of the numerous
attempts by the new management to reform and reposition the bank.

“The Trade Union
Congress of Nigeria (TUC), having watched and followed recent
developments as well as comments and reactions from interested parties
with regard to the decision by the management of Union Bank of Nigeria
(UBN) to formally withdraw its recognition of the bank’s unit of the
(ASSIBIFI), views this u-turn as a welcome development, even though
belated.

“The truth is that
the workers of Union Bank of Nigeria are bonafide members of the
ASSIBIFI whose national secretariat is located at Alausa, Ikeja, and
affiliated to TUC by the relevant laws. Unfortunately, some over
ambitious officers with the active connivance of a dominant external
interest hijacked the workers’ body in defiance of all known trade
union ethos and the extant laws of the federation, cornered its
check-off dues, and diverted its purse under the guise of voluntarism,
albeit ignorantly,” the statement read.

Last week, The
Association of Senior Staff of Banks, Insurance and Financial
Institutions (ASSBIFI), Ikeja division, said that it was helpless in
the travails of the staff of Union Bank as they are not members of the
association.

The market
capitalisation of equities at the Nigerian Stock Exchange (NSE), on
Tuesday, hit N8.884 trillion as transactions closed on a positive note.

Subsequently, it
rose by 0.10 per cent or N9 billion at the close of yesterday’s trading
from Monday’s figures of N8.875 trillion. The market had gained N27
billion at the close of trading session on Monday. The last time the
Exchange recorded market capitalisation in N8.88 trillion regions was
over two years ago.

The NSE sectoral
indices closed with mixed sentiments as NSE-30, which measures the
performance of blue chips in the market, dropped by 0.11 per cent; the
NSE oil & gas gained the highest points by 0.89 per cent; food
& beverages inched up by 0.72 per cent; insurance moved up by 0.66
per cent, while the NSE banking maintained negative trend to decline by
0.99 per cent.

Analysts at
Proshare Nigeria, an investment advisory firm, said market activities
on Tuesday closed with “growing posture”, as more gainers came on board
while “bulls maintained dominance across sectors, as the NSE sectoral
indices closed with impressive figures.”

However, they said
that profit booking was noticed yesterday in the Banking, Other
Financial Institution, Mortgage and Foreign Listings sectors.

Stockbrokers at GTI
Capital, a stock broking company, said, “It is very likely that most
short positions (investors) will start running off with their profits
which in turn will create room for new entry opportunities,” adding
that “traders should position accordingly.”

Most active

The banking
subsector was the most active on Tuesday with 528.51 million units
valued at N5.69 billion as against the 614.00 million units valued at
N5.76billion recorded in the previous session. The volume recorded in
the sector was driven by transaction in the shares of First Bank, Unity
Bank, FinBank, Guaranty Trust Bank, and UBA.

The total volume of
363.88 million units valued at N4.69 billion traded in the shares of
the five stocks accounted for 46.61 per cent of the entire market
volume and their value represented 62.96 per cent of the market’s value.

The food and
beverages sector followed on the chart with 33.748 million shares
boosted by trading on the shares of Dangote Sugar, while volume in the
insurance sector was third with 26.245 million shares worth N39.906
million.

The number of
gainers at the close of trading session closed higher yesterday at 57
stocks, as against the 47 gainers recorded the previous session,while
losers closed at 18; same position with Monday’s record.

Northern Nigeria
Flour Mills topped the price percentage gainers with 4.99 per cent as
it closed at N43.96 from N41.87. The share price of Julius Berger
Paints attracted 4.96 per cent on its opening price to close at N9.74.

Meanwhile, the NSE,
on Tuesday, added the names of additional four stockbroking firms to
the list of suspended stockbrokerages that have not met the minimum
capital base of N70 million stipulated by the Securities and Exchange
Commission to dealing members of the Exchange.

The four firms are Capital Bancorp, Profund Securities, Santrust
Securities, and Vetiva Securities. The NSE, however, noted that 10 of
the suspended stockbrokerages have met the requirement.

Algeria expects oil
production to remain steady in 2011, while Liquefied Natural Gas (LNG)
supply contracts will be met despite reduced capacity, the head of
state-owned energy giant, Sonatrach, said on Tuesday.

“We will stick to
oil production which will be practically the same as in 2009 and 2010,”
Sonatrach chief executive, Nourredine Cherouati, told a news conference.

The North African
OPEC member supplies about 20 per cent of Europe’s natural gas and is
the world’s eighth-biggest exporter of crude oil, pumping 1.25-1.27
million barrels per day in November and December, according to a
Reuters poll.

Despite an
“incident” at one LNG plant which cut capacity in late 2010, Algeria
still produced 31 billion cubic metres of super-cooled gas last year,
Sonatrach said, and has enough capacity to meet all its supply
contracts.

“We have the capacity to meet the demand on the market,” Mr. Cherouati told reporters when asked about the incident last year.

“We have sufficient
capacity in relation to our contractual obligations so we have taken
the decision to stop the first liquefaction plant that we have,” he
added.

Camel close down

The plant in the
port of Arzew, officially called GL4Z but commonly known as Camel, is
the oldest LNG export facility in the world and is too inefficient to
be profitable in the current market, he said. Sontrach has three LNG
plants at Arzew and one at Skikda.

Mr. Cherouati said he expected the much-delayed Medgaz gas pipeline to Spain to be operational by mid-February.

Algeria has been
sending a lot of its LNG to Europe over the last few years after buyers
in the United States lost interest in imported gas because of booming
North American shale gas production.

Although rising
demand in China, the Middle East and South America have helped support
LNG sales, gas prices in most markets, particularly the United States,
are still well below levels seen before the global financial crisis
slashed industrial energy demand in early 2008.

Increased capacity
in Qatar, the world’s largest LNG exporter, and plentiful alternative
gas production in North America, have put further pressure on gas
prices.

But prices are widely expected to rise over the next decade as higher demand, especially in Asia, slowly absorbs the glut.

Mr. Cherouati said
Sonatrach had not decided whether to buy assets in Algeria, which
Britain’s BP has put up for sale to help pay for the Gulf of Mexico oil
spill in early 2010.

Russian oil
company, TNK-BP, has said it is interested in BP’s Algerian assets,
which include stakes in two major gas-producing fields, but Sonatrach
has the right of first refusal.

Sonatrach, which
some analysts say has under-invested in new oil and gas projects, has
set a target of doubling the number of exploration wells, Mr.Cherouati
said. He did not say how the increase would be achieved or give a
timetable.

Asked if there were
any plans to speed up exploration by making the terms on offer for
foreign investors more attractive, he said: “That is a question that
you have to ask the state… The state is my employer.”

Reuters

The
Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) yesterday
raised its policy rate by 25 basis points from 6.25 per cent to 6.5per
cent with immediate effect.

It
also said that inflation risk as a major concern cannot be ignored in
the short-to-medium-term, particularly against prospects of increased
liquidity as a result of the likely increase in government spending in
the run up to the April elections, as well as purchase by the Asset
Management Company of Nigeria (AMCON). The MPC described as
unsustainable the existing subsidy regime on petroleum products in view
of government’s current poor finance.

Sanusi
Lamido Sanusi, the CBN governor, in a communiqué at the end of a
two-day meeting in Abuja, said the decision by the 12-member committee
received a majority vote of 11 to one, as a demonstration of its
commitment to maintain price stability by pursuing a tight monetary
policy in the face of perceived inflation risks in the near future.

At
its previous meeting held November last year, the committee resolved to
retain the rate at 6.25 per cent fixed during its earlier meeting,
underscoring the need to retain flexibility and allow the effect of the
previous rate increase from 6 per cent to work through the system.

Similarly,
the committee resolved to raise the Cash Reserve Requirement (CRR)
ratio by 100 basis points from one per cent to two per cent with effect
from February 1, while the Liquidity Ratio (LR) would be raised by 500
basis points from 25 per cent to 30 per cent with effect from March 1.

Though
the CBN governor noted the economy growth and the continual recovery of
the capital market, and the progress towards restoring stability in the
banking sector, he reiterated the need for government to further
strengthen and deepen economic and structural reforms to redress the
challenge of continued high inflation.

‘Restrain’ is the word

Mr.
Sanusi regrets that despite improved supply of petroleum products and
lower growth in monetary aggregates, the downward trend towards a
single digit benchmark inflation level was not achieved in 2010,
pointing out that this underscores the need to address both
supply/demand side factors that determine the country’s inflation
dynamics.

“One
of the ways to keep aggregate demand in check is to restrain
debt-financed government spending in the medium-term. This calls for a
review of subsidies and other recurrent expenditure categories that
constitute a drain on the national budget as well as improving the
revenue base,” he said.

Though
the committee commended the government for its emphasis on capital
expenditure and infrastructure development in this year’s budget, it
observed that allowing recurrent expenditure at over 70 per cent of the
total budget remained high, pointing out that the risk posed to price
stability by fiscal operations must be constantly monitored to bring
inflation down to single digit levels in the short to medium term.

Rather
than continue to spend huge foreign exchange on petroleum subsidies as
well as importation of food items such as rice, the committee
emphasised the need for government to implement policies that will lead
to food security and total self sufficiency.

“Implementation of these reforms along with the improved outlook for
oil price and output should go a long way in reversing the negative
trend in our foreign reserves, which stood at $32.32 billion as at
end-December 2010, before rising to $33.26 billion as at 20January 20,”
the committee further said.

New vehicle imports
into Nigeria declined 18 percent in 2010, reflecting weak credit growth
in sub-Saharan Africa’s second-biggest economy in the wake of a $4
billion bank bailout the previous year. Vehicle sales in Africa’s
most-populous nation are a proxy measure for private purchasing power,
a leading economic indicator which is not formally available in
Nigeria. Port figures showed new vehicle imports fell to 36,606 units
in the 12 months to December, compared to 44,757 units in 2009,
according to Mohan Sethi, general manager at Dana Motors, which imports
Kia vehicles to Nigeria.

Clearly, the leadership of the two unions in the electricity
industry think that being ideologues with regard to the privatisation of the
successor companies unbundled out of the Power Holding Company of Nigeria
(PHCN) would hold them in good stead with their followership. They are mistaken
as they are threatening the unique opportunities that will be available to the
workers in a liberalized environment in the industry.

This piece seeks to address most of the technical issues raised
so far by the unions. On behalf of the two unions in the industry, Joe Ajaero,
the General Secretary of National Union of Electricity Employees (NUEE), had
contended at a media session that “we see privatisation as jinxed. Besides
that, government has not informed us about the plan to privatise PHCN. Any time
they do, we can give them our position.” Mr. Ajaero added, “If we had been
invited to discuss privatisation or road map, we could have invited them to
take a cue from Nigeria Airways, Delta Steel, Daily Times, NITEL…We are
equally aware of what happened in the communication sector when MTN, Globacom,
Airtel came in, they never bought over NITEL.”

Fine sophistry? But the BPE will not allow the likes of Ajaero
to write its history. At the BPE, we do not claim to be perfect and we do not
pretend to have all the answers. Since 1999, over 120 transactions have been
consummated and only the four mentioned are the sore points. Can Ajaero inform
Nigerians about the successes of Eleme Petrochemical, Oando, Conoil, BCC (now
part of Dangote Cement), National Truck Manufacturing Co; Transcorp Hilton and
others?

On the matter that the unions have not been informed of
government’s intention to privatise PHCN (formerly NEPA), recall that
participation in the privatisation programme which is instituted in law through
the Public Enterprises (Privatization and Commercialization) Act No. 28 of 1999
was given tangible expression by the integration of the Nigeria Labour Congress
(NLC) into the membership of the National Council on Privatisation (NCP) which
is the highest policy and decision making body on privatisation and economic
reform in Nigeria. In the same vein, 22 labour leaders of some industrial
unions were made members of all the 11 technical and sector reforms
implementation committees of the NCP; thus, ensuring the attainment of the
desirable goals of vertical and horizontal integration of labor in the
privatisation process.

In fact, the electricity unions were members of the Electric
Power Implementation Committee of the NCP which produced the Electric Power
Policy and the Electric Power Sector Reform Bill. And Section 28 of the
Privatisation Act of 1999 lists NEPA as a candidate for privatisation. Furthermore,
the Electric Power Sector Reform Act 2005 provides for the privatisation of the
electricity utility. Let us say for the umpteenth time that BPE is implementing
the provisions of the EPSR Act.

In addition, when then Acting President Goodluck Jonathan met
with the leadership of two unions in the electricity sector last May, were they
not told about government’s desire to re-start the stalled power sector reform
programme?

Moreover, is it not disingenuous for the labour unions in the
electricity sector to, on the one hand accuse the BPE of not engaging them in
dialogue and when the opportunity is available for negotiation, they refuse to
meet with the privatisation agency? An example was on Tuesday, November 2, 2010
when the unions refused to engage with the Bureau at a meeting to discuss
labour matters under the chairmanship of the Minister of Labour.

NUEE had argued that “if the government is really serious about
the sector, it should allow the 25 licensed companies to operate alongside
PHCN, like the Nigeria Electricity Supply Company (NESCO.) NESCO has been
operating in Nigeria since 1929, generating its own electricity without taking
over PHCN.” The fact is that due to the structure of the electricity industry,
it is not possible for private operators to build their distribution facilities
to compete with the extant distribution network of Power Holding Company of
Nigeria (PHCN.)

Transmission versus
generation

It is important to note that the technology in power generation
allows for many participants unlike the technology for transmission and
distribution networks. One can set up separate generating plants using any fuel
source (hydro, gas, coal, etc) that is economically viable. At any point, you
can have many players. Transmission network is such that it is a natural
monopoly given that you cannot ask every operator to build its own transmission
network. It is uneconomic, not sensible and, in the end, counterproductive and
this is what Ajaero and NUEE is recommending to Nigeria.

In fact, the design of the Nigerian Electricity Supply Industry
(NESI) is such that the Transmission Service Provider (TSP) should give equal
access to generators in accordance with laid down rules. It is in order to
initiate this that the Federal Government has retained ownership of the
transmission network.

Indeed, the Electric Power Sector Reform Act of 2005 recognizes
the monopoly elements in the transmission and distribution chains of the
industry structure. That is why the law gave the Nigerian Electricity
Regulatory Commission (NERC) the power to set tariffs for both services so as
to prevent consumers from being exploited. This is what is done in all
electricity markets that are reforming.

It should be noted that the revenue that drives the entire value
chain (generation, distribution, transmission-market operator and system
operator) comes from consumers through the distribution companies. In this
regard, any reform that does not address the challenge in the distribution
network would collapse as there would not be adequate revenue to fund the rest
of the value chain (that is, generation and transmission.)

Ajaero had stated that “they claim that PHCN is inefficient and
obsolete but today, they are scrambling to take over the obsolete PHCN that
cannot deliver. Today, tariff has started going up and in the next few months,
it would go up to 300 per cent without commensurate improvement in the power
sector. We challenge the protagonists of privatisation to come and sign
agreement with the workers that tariff will remain the same for the number of
years till power generation and transmission situation improves.”

Given such comments, one wonders on whose side Ajaero and his
sympathisers are in the power sector reform programme. Is he on the side of
Nigerian consumers who are compelled to invest in self-generation, thereby
raising their tariff from an average of about eight naira per kilowatt-hour
charged by PHCN to a real cost of N80 per kilo watt hour? It is clear from
Ajaero’s remarks that he is not on the side of the long-suffering Nigerian
electricity workers and consumers but on the side of importers of generators
and diesel. Moreover, the current tariff structure has a subsidy element of
N177 billion over a three-year period (2008-2011.)

More funds needed

It is important to state that government’s annual capital outlay
(for all capital budgets) is about $6 billion whereas power alone requires $10
billion annually. In other words, annual funding requirement has already
outstripped the capacity of public sector funding. The funding requirement will
grow as the economy and population grows. And let us not forget that public
sector does poorly at efficient design, planning, funding and implementation of
any kind of infrastructure project.

The unions think they have a winner if they hinge their
opposition to privatization to tariff increases. On current tariffs, no private
operator will get involved as it is not attractive. It is only when the tariff
regime is made investor-friendly that the investments that will address our inadequacies
come on board. The unions have asserted that none of the 20 private power
companies issued licenses by the Nigerian Electricity Regulatory Commission
(NERC) to generate electricity has added a megawatt of electricity to the
national grid.

It needs to be stated that Shell, Agip and AES are all operating
IPPs and supplying power to the national grid. Shell is generating not less
than 450 MW; Agip generates 450 MW and AES produces 200MW. Shell and Agip are
oil companies who are not unduly concerned about being owed since they have
access to the oil revenue. AES is producing because they have a sovereign
guarantee. As such, if PHCN does not pay AES, the Federal Government does.
Thus, out of currently available power of 3, 500 MW, the three IPPs are generating
1,100 MW.

There is a pertinent question to also ask: who are the private
power generators going to sell to? Is it PHCN that is not financially viable
and would not be able to honour commitments? It is the recognition of this gap
in the industry structure that led the Federal Government to incorporate the
Nigerian Bulk Electricity Trading Plc, also known as the “Bulk Trader.”
Incorporated on July 29, 2010 by the BPE, the functions of the Bulk Trader are
to undertake the business of trading in the wholesale electricity market as
bulk purchaser and the bulk seller of electricity and ancillary services
pursuant to the Electric Power Sector Reform Act 2005; and to take over the
contract management and obligations of the Federal Government of Nigeria under existing
Power Purchase Agreements (PPA).

Chukwuma Nwokoh is Head of
Public Communications at the Bureau of Public Enterprises

Earlier this month,
there were text messages alerting people to leave the Motorway Centre,
Ikeja, Lagos. The message said there was a bomb ready to explode any
moment in the area and this caused a lot of panic among Lagos
residents. In a season of bombs, many took the text seriously and the
Police Anti Bomb Squad actually moved to the premises and combed the
entire area but no bomb was found.

This is one of the
ubiquitous messages that are common with cell phone users in our
country. Funny, foolish and sexually explicit messages now dot the
landscape and subscribers seem helpless in the way they flood their
phones.

Other examples
include, “MTN is celebrating their six years in Zaria, send it to other
six people and get free 750. It is free, be sure it is from MTN to
MTN”. “If you know anyone that has money in Oceanic, Unity and
Intercontinental Bank, tell them to go and withdraw their money within
24 hours because information reaching us is that they may go on
distress soon,” says another.

But some of these
messages have had great consequence as they don’t all end the way the
Motorway Centre message did. “I saw the pictures of people queuing up
to withdraw their funds from the bank when the messages warning
customers to withdraw their funds (went round),” said Bisi Adetunji, a
graphic artists.

“A friend of mine
was able to get shots of people actually queuing up to withdraw their
funds, I actually saw that. I did not know the effect those messages
could have until I saw those pictures. It is the affected banks that
can really tell you the cost of that message.”

Intercontinental,
one of the banks responded with text messages of its own, assuring
customers that their money in its custody is safe. The Central Bank
also followed with adverts asking Nigerians to ignore the text messages.

The Nigeria
Communications Commission said last year that a nationwide SIM cards
registration would be done in a bid to enhance security and related
crimes perpetrated through mobile phones.

This, Mohammed
Yusuf a staff of a private security firm said, will enhance security as
such messages cause inconvenience to many who receive them and some
even get to the stage of being scared to use their phones. “Some are
sent by fraudulent people with dubious motives. Others would send you
messages that they are expecting some goods from the port and just need
some money to pick it up.”

Mr Yusuf suggested
that mobile service providers step up their responsibility for their
customers’ phones security so as to help them from being swindled.

Different perspective

However, some
subscribers have a different perspective saying information sharing can
actually save lives. Emmanuel Tarfa, a financial consultant said he
thinks operators can monitor the source of such messages for security
reasons only and relay the details to the security agencies.

“In a case where a
message is controversial but true, not sharing it could be dangerous to
the public. In addition, the telecom providers do not have the absolute
moral power to determine what is true or false, because Nigeria is made
up of different religions and ethnic groups, whose rights should be
protected. Their interference could mark the beginning of a censorship
campaign that could undermine the integrity of our information system
in Nigeria. Let the system regulate itself – people will eventually
learn to determine what is true or false”.

Similarly, Jito
Ogunye, a lawyer, said receiving such messages is not an infringement
of one’s privacy because the right to privacy guarantee of the
constitution cannot be stressed to cover the receipt of such text
messages.

“We live in a world
of ICT. Telephoning has become wireless so anybody that subscribes to
wireless telephony has put himself in a position to receive such
blanket messages. Now, if anyone feels that he has spent much time and
energy deleting such calls, such a fellow can sue the service provider”

However, phone operators were silent on the issue. MTN and Glo
spokespersons did not respond to enquiries. Same goes for Reuben Morka,
the NCC spokesperson.

Last Friday, Nigeria made a successful debut at the
international bond market with the 10 year $500 million Eurobond massive
subscription. The issue was 2.5 times oversubscribed, translating to about
$1.25 billion. This is coming after initial apprehension about the
attractiveness of the bond on the back of mismanagement of huge income from oil
over the last one year.

In an interview before the deal closed that day, the finance
minister, Olusegun Aganga, said that he had spoken with over 40 investors and
the response to the bond had been overwhelmingly assuring. Mr. Aganga dismissed
reports that some investors had doubts about the viability of the issue. The
report suggested that the alleged mismanagement of Nigeria’s Excess Crude
Account (ECA) had caused potential investors to shun the country’s first bond
issue.

Mr. Aganga, who was in New York as part of the road show to market
the bond, said that the Excess Crude Account barely featured in the questions
the investors were asking. “There is absolutely no correlation between the
Excess Crude Account and what we have set out to achieve with the bond,” he
said. “In reality, 42 per cent of that goes into investment in power such as
the NIPP project which has been allocated N8 billion.”

Excess Crude Account

He said that the Excesss Crude Account was a necessity for
states to invest in major capital projects but refused to comment on
allegations that many states had not remitted the money accordingly.

“The investors were far more interested in economic and other
fiscal factors. They were fairly consistent in their questions which were
mostly about political stability, exchange rates, the budget, levels of
production and the quality of our loan book.”

He said that modern investors were extremely sophisticated and
Nigeria represented a very attractive opportunity for those looking for healthy
diversity in their portfolios.

The finance minister added that a large number showed interest
in the Euro Bond.

“However it is not just anybody with money that will be able to
invest. We need to vet each investor’s suitability as well.”

A highly elated Aganga, after the close of the book, said the
issue was a major milestone for Nigeria. “More remarkable is the exceptional
quality and diversity of investors from 18 countries spanning Europe, the US,
Asia and Africa.

Investors are impressed by Nigeria’s credit story and were very
keen to participate in the offering.”

Mr Aganga said Nigerian corporate can now more easily access
well-priced long term financing from the international capital markets to fund
economic opportunities such as infrastructural development.

“We now have a transparent and internationally observable
benchmark against which international investors can accurately price risk. My
expectation is for an increase in capital inflows and FDI (foreign direct
investment) into the economy.”

The accomplishment of the bond may not necessarily translate to
much unless local corporate are able to latch on to the success recorded.

“We will commence the process of educating Nigerians on the
benefits of this bond. It is a very good thing,” the minister said in a text
message.

William Wallace, the Africa Editor of the Financial Times said
the massive investor interest in Africa has rubbed-off well on Nigeria.

“Some of the world’s fastest growing economies are on the
continent, which looks set to grow in coming years at double or more what the
developed world is. Then there is a lack of supply of African sovereign debt.
Nigeria as the second largest economy is obviously going to attract interest.”

Fiscal prudence

Mr. Wallace said current mismanagement may be due to the
elections and that fiscal prudence will improve after April. “Nigeria’s debt
profile is still far more favourable than it was a few years ago even if both
domestic and external debt has been on the rise again.”

Standard & Poor’s Ratings Services on Tuesday assigned its
‘B+’ long-term senior unsecured debt rating to the bond. At the same time,
S&P assigned a recovery rating of ‘4′ to the proposed bond, indicating its
expectation of average (30 per cent to 50 per cent) recovery in the event of a
payment default.

According to S&P, the ratings are also constrained by a low
level of development and high dependence on the oil sector.

“Furthermore, we see residual risks in Nigeria’s financial
sector, although the Central Bank has addressed solvency and liquidity problems
in the banking sector,” it said.

S&P notes that even with mismanagement, Nigeria’s oil
revenues are such, with the price of oil rising, that over the 10 year period
the country will always be able to pay.

Click here for the full transcript

South Africa
government’s bonds fell sharply on Friday, driving yields to their
highest level in 7 months after Central Bank comments on rising
inflation pressures dented prospects of interest rates cuts.

The bond sell-off,
a day after the Reserve Bank left its repo rate steady at 5.5 percent,
weighed on the rand, pushing the currency to a near 8-week low against
the dollar at one stage.

Stocks ended
higher, snapping two days of declines as firmer commodity prices and
upbeat global equities lifted sentiment, with technicals pointing to
further gains.The yield on the benchmark 2015 bond soared to 7.905
percent, up 22.5 basis points from Thursday’s close and reaching its
highest level since early July 2010.“The Reserve Bank left rates
unchanged and the market feels they are now looking ahead and seeing
higher inflation. It looks like there will not be any more rate
cutting,” a bond dealer in Johannesburg said.