Nigeria Content Online

Over the last two years the National Assembly made attempts to
enact laws that would bring about needed changes in the oil and gas sector and
in the overall socio-economic environment. Somehow, both the Senate and the
House of Representatives slipped into deep sleep over the salient issues.

The first bill that comes to mind is the highly talked about
Petroleum Industries Bill (PIB). Oil and gas companies operating in Nigeria
have generally been happy to continue business as usual, riding on the tracks
set by various military dictators who held sway over the powers of state in the
past. The PIB, with all its imperfections, attempts to bring some level of
sanity into the sector and allows for some form of integration as well as
enabling the nation to derive more financial and socio-economic benefits from
the sector.

Expectedly, the oil companies have fought the bill. They have
openly said that they would not accept any law that is not favourable to them
and have often twisted statistics to suggest that Nigeria is attempting to
drive them into bankruptcy if the bill is passed into law without being watered
down.

Similarly, the government seems to be bending back and doing the
donkey work to ensure that the oil companies are happy. Having been in bed
together for so long, the necessary social distance needed for serious
negotiations between the government and the companies is difficult to create
and so they continue with their pillow talk away from public view.

While the oil companies kick and scream over who gets to pocket
how much money, the issues that really concern the local communities living in
the oil fields were largely overlooked by the PIB. For example, there are no
concerns about the impacts of the sector’s activities on the environment.
Neither did the first draft make any allowance for community consultations and
participation.

This writer fully appreciates the difficulties that governments
have when it comes to communities. I often recall a conversation I had with a
Mines and Energy minister of another country over serious agitations from
communities who feared that mining activities in their communities would
destroy their livelihood. They demanded a consultation with the government and
the government would not agree to hold one because, according to the minister,
the national constitution did not say anything about popular consultations and
as such the government could not say what it meant, how it should be held, and
who would pay for it.

Even when the community folks were ready to hold the
consultation at no cost to government and insisted that this was a right under
the International Labour Organisation’s covenant, the government would not
budge. The only promise our meeting left with was that the government would not
proceed with the mining projects until a suitable agreement was reached with
the affected people.

Consequently, violent conflicts deepened in the area and it does
seem that this is the sort of dialogue that some governments would prefer to
have. Conflicts in Nigeria have similar roots.

The PIB has the possibility of making environmental and
community concerns central in the sector. The environment has been trashed for
long enough and there is need for a cease-fire now. And if we like, we can
extend an amnesty to the oil companies too.

Sleepy chambers

The Gas Flares Prohibition Bill of 2008 is another critical bill
that has been sleeping in the chambers of the House of Representatives. The
Senate passed the bill and going by it, gas flaring would have been outlawed
again by the end of 2010. Gas flaring has been illegal in Nigeria since 1984
and a High Court sitting in Benin City affirmed in November 2005 that the
activity is indeed illegal and a flagrant abuse of human rights.

Shell informed the world about the origins of gas flaring in
Nigeria in a May 2010 document on their website. “When The Shell Development
Company of Nigeria Limited (SPDC) built many of its first production facilities
in the 1950s, there was little demand or market for gas in many parts of the
world, including Nigeria. So, Associated Gas (AG) was usually burned off safely
– a process called flaring. This remained accepted industry practice as SPDC
established a major oil operation across the Niger Delta.”

As you can see, this dastardly act goes back five decades! Gas
flaring may have been a practice accepted by Shell and their co-travelers in
the pursuit of ecocide, we can loudly say that the practice was never
celebrated by the suffering people of the oil region. Neither will communities
elsewhere in Nigeria accept it if oil is found in their territories.

The gas flare prohibition law for the first time proposes
sanctions that should deter the companies from engaging in the destructive
activity. Apart from prison terms proposed, offenders would pay fines
equivalent to market value of the flared gas. The bill also proposes that no
company should be given any lease for oil and gas exploitation without an
accepted gas utilisation plan.

Now the slumber of the House of Representatives over this matter
has allowed the 2010 deadline proposed by the bill to slip by. Added to dinner
party deadlines set and ignored by past governments, this one has been swept
under the carpet and no future deadline is even hoisted to keep hope alive.

Gas flaring is an abuse that cannot be tolerated for any reason.
We have allowed it for long enough. We do not need new deadlines. And the farce
of presenting projects with regard to existing gas flares for carbon credit
under the United Nations Framework Convention must be halted.

The slippery terrain of the oil sector has dulled the outgoing
NASS into sleep and given room for continued abuse and pillage. If
electioneering will allow governance to proceed, it is not too late in the day
for the legislators to rouse from slumber and do the right thing.

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

The president of the association, Sunday Salako, said yesterday
that the it cannot do anything in respect of the general protest by the bank
staff and the recent layoff reported this week.

“Union Bank members of staff are not under us. They left our
camp since 2004 and have since been on their own. When they were here, they
used to have the highest number of staff members here then so there was this
thinking that they must produce the president of the association during any
elections and then there was a fall out. They say they are with NLC, and we are
not. So that is what happened” he said.

NLC to the rescue

However, the Nigeria Labour Congress (NLC) to which the Union
Bank ASSBIFI chapter is affiliated to has stated that it will not allow the
situation in the bank to degenerate. The labour union had on Monday directed
the bank’s management to reverse its decision not to recognise the union within
seven days.

Denja Yakub, the assistant secretary of the NLC said yesterday
that the union’s decision on the matter still stands. “Yes, that still stands,
and we are also aware of the 13 people that were laid off on Monday. We have
added that also to part of our demand. All these must be done with the given
time otherwise we are going to shut down the bank nationwide when the time
given elapses” he said.

“Workers have to be unionised, that is what the International
Labour Organisation (ILO) says” Mr Salako said. “If you read through ILO
papers, you will see that all workers have the right to be in Unions. Nigeria
is a signatory. The members of staff of some banks have been saying that they
want to join the union but the management did not allow them. Is there any
staff who will not want to join the union given what they are facing in the
industry now? Access Bank, GTB, Diamond, Stanbic, all these banks are not
unionised and the staff want to.”

“When we call for meetings and dialogues, the management would
be speaking on behalf of the staff; they won’t let them speak for themselves.
We are coming up with our own strategy now” he said.

On Monday, the management of Union Bank again laid off 13 of its
members of staff. Francis Barde, the spokesperson of the bank, in a text message
response, said the bank had 13 staff dismissed on Monday due to violations of
bank rules.

On December 15, Union Bank workers shut down operations
nationwide. Among the reasons adduced by the workers as listed on the handbills
they distributed were that the management was undermining workers’ solidarity
and constantly deducting workers’ salary for no specific reason, deducting tax
from salaries without no evidence that they are being remitted to the tax
office, putting wages of workers under assault, as well as moving deposit to
competitors, among others.

The Central Bank
Governor, Lamido Sanusi, has said that the bank will not hesitate to
use corrective measures on its regulated institutions who default its
guidelines.

“If we say we will
do something, we will do it, you all saw what we did with the banks,
the microfinance banks and we will do it to all regulated institutions”
Mr Sanusi said adding that institutions that are not compliant with
laid down guidelines would not be certified, or have their
certifications withdrawn.

Mr Sanusi said this
at the official commissioning of Superflux International Limited’s
factory in Lagos yesterday. He said the Central Bank was making moves
to help the real sector of the economy despite criticisms that it is
not its duty to be directly involved in addressing challenges of the
real sector.

He said the
Superflux project was funded from the Central Bank and Bank of Industry
packages, though the banks helped set the project rolling in the first
place. “This is one company, I am confident that in due course we would
see more others make use of our (CBN and BOI) initiatives. It is our
collective responsibility to provide support for our industry”.

Evelyn Oputu, the
Managing Director, Bank of Industry said the bank’s mission is about
value addition. Mrs Oputu urged banks to also look out for individuals
and companies with integrity, potentials and value that they can loan
money to.

Tokunbo Talabi, the
president and CEO of Superflux International Limited, stated that
though it has taken a while for the company to get to its present
position, he is optimistic that things will get better.

“There are still
challenges. We have inadequate infrastructure, which we all know, and
having to face the fact that some people believe nothing good can come
out of a local structure. Funding is also another issue” Mr Talabi said.

He said it took him 35 minutes to convince his former boss at Guarantee Trust Bank on why he needed funds from the bank.

“Bank Of Industry’s
initiative is a needed catalyst for economic growth” he said, adding
that “Superflux was birthed to constantly stir up stereotypes,
dormancy, and status quo with the sole aim of finding new and improved
ways of handling situations. We have an overwhelming obligation to be
accountable to our customers and to meet their expectations.”

The Nigerian Stock
Exchange recorded a total gain of N5 billion on equities at the close
of trading activities in December, after recording N74 billion losses
in the preceding month.

The market value of
the 217 listed equities, which opened the month at N7.908 trillion,
closed on the last trading day in December at N7.913 trillion,
reflecting a N5 billion marginal gains or a 0.06 per cent increase.

The Exchange’s
Strategy and Business Development Department said the marginal increase
in market capitalisation during the month could be attributed to the
“commencement of operations by the Asset Management Company of Nigeria
which boosted investors’ confidence, as reflected in positive equity
price movements.”

The Exchange said
the 217 listed equities accounted for 79.85 per cent of total market
capitalisation of the 264 listed securities which closed December at
N9.92 trillion; down by 0.94 per cent from N10.015 trillion in November.

Market turnover

The market recorded
a turnover of 6.63 billion shares valued at N56.7 billion in 111,114
deals during December, in contrast to a total of 7.43 billion shares
valued at N60.34 billion exchanged during November in 121,531 deals.
Trading days in December were 21, compared with 20 in November.

Aggregate stock
market turnover between January and December 2010 were 93.335 billion
shares valued at N797.551 billion, exchanged in 1,918,479 deals. In the
comparable period during 2009, the market recorded turnover of 95.3
billion shares valued at N638.11 billion in 1,619,385 deals.

Measuring by
turnover volume, the Banking subsector was the most active in December
with traded volume of 3.83 billion shares valued at N35 billion, while
the Insurance subsector was second with traded volume of 1.01 billion
shares valued at N658.55 million. The Information Communication
Technology subsector was third with transaction volume of 398.1 million
valued at N276.62 million.

A total of 173
equities out of the 217 listed were traded during the month compared
with 176 in November. Zenith Bank was the most active stock with
transaction volume of 981.1 million shares, followed by Guaranty Trust
Bank with 367.1 million shares, while First Bank placed third with 350
million shares.

Analysts at Renaissance Capital, an investment bank, said equity market outlook is compelling in 2011.

“Nigeria is just
beginning to fully recover from the financial crisis that started in
2008. Equities remain an attractive asset class to be in during the
recovery phase of the business cycle, and as such our outlook for
equity market performance in 2011 is robust,” they said.
Over-The-Counter (OTC) bond market, a turnover of 465.9 million units
worth N430.03 billion, was recorded in December 2010, in contrast to a
total of 730.82 million shares valued at N750.91 billion, exchanged
during the preceding month.

The most active
bond, in terms of volume, was the 5.50 per cent Federal Government of
Nigeria (FGN) Bond Feb 2013 with traded volume 81.2 million units
valued at N73.21 billion.

It was followed by
10 per cent FGN July 2030 with a traded volume of 73.85 million units
valued at N56.1 billion. Only 24 of the available 33 FGN Bonds were
traded during the month, compared with the 26 in the preceding month.

Standard &
Poor’s Ratings Services has assigned its ‘B+’ long-term senior
unsecured debt rating to the proposed $500 million 10-year bond to be
issued by Nigeria in the next few weeks.

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.

In an issued
statement yesterday, the global ratings agency said: “We rate bonds
with a ‘4’ recovery rating at the same level as the issuer credit
rating. The rating on Nigeria’s upcoming bond is, therefore, equalised
with the ‘B+’ long-term foreign currency sovereign credit rating.”

The agency stated that it applied a hypothetical event of default as a starting point.

“If the government
were to default, we believe it would likely follow a prolonged period
of adverse terms of trade that deepened the country’s regional
tensions.”

The agency noted
that Nigeria’s debt profile would look very different under such a
scenario, and a period of uncertain governability could ensue.

“In this scenario,
we assume that Nigeria’s multilateral creditors would maintain their
preferred creditor status and bilateral creditors would resist a debt
reduction,” since, according to the agency, Nigeria has already
benefited from a 60 per cent reduction of $30 billion of Paris Club
debt in 2000 and 2005.

While downplaying
the possibility of such a scenario, as indicated by the ‘B+’ rating,
S&P noted that its sovereign credit ratings on Nigeria are
constrained by its view of the country’s political risk, as manifested
in its underdeveloped political institutions and apparently weak
governance.

“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.

The ratings on Nigeria are supported by the sovereign’s strong
external and fiscal balance sheet, owing to debt write-offs in 2005 and
2006 and fiscal reserves built up during years of high oil prices.

The naira has shed
114 kobo, or 0.76 per cent at the official market as the Central Bank
of Nigeria (CBN) struggles to meet increasing foreign exchange demand.
The naira opened the New Year at N149.17 to the dollar and closed
Monday at N150.31 at the official market. At the interbank, the dollar
traded for around N155 and N57 at the parallel market.

Out of a total of
$1.67 billion that was demanded in the four auctions held this year,
the CBN sold $1.15 billion, representing 69 per cent of demand. This is
coming as the regulator’s resolve that it would continue to defend the
naira by striving to meet all legitimate demand at the bi-weekly
Wholesale Dutch Auction System (WDAS) foreign exchange market.

The CBN governor,
Lamido Sanusi, confirmed recently that it will maintain its foreign
exchange objective in achieving stability. “We remain committed to
stability in the forex market. We are pleased that we had stability
last year,” Mr Sanusi said in a response to enquiry on how the CBN
intends to pursue its foreign exchange objective in 2011.

Cost of stability

However, this
stability was at the cost of depleting foreign reserves, which went
down from $42.39 billion at the beginning of 2010 to $32.35 billion at
the close of the year, though, the reserves has been trending upwards
in the last few weeks, closing last Friday at $33.53.

A currency dealer
on Broad Street, Lagos, Suleiman Ghali, hinged the depreciation of the
naira on Central Bank’s failure to substantially meet demand. “Dollar
is scarce and even allocating only $50,000 to bureau de change does not
help matters,” Mr Ghali said.

CBN recently added
the Chinese Yuan, to the list of foreign currencies that can be used
for trade settlement in the domestic foreign exchange market. This was
in a bid to reduce the pressure on the dollar since a substantial part
of Nigeria’s international trade settlement is for imports from China.

The directive has,
however, not become operational. “It is not yet implemented. Let us
wait and see how it will affect demand for dollars. You know the system
of government, sometimes, it is not what they say but what they do” Mr
Ghali said.

Increased supply

Analysts at
Afrinvest West Africa, a financial services and advisory firm, said
CBN’s pursuit of maintaining stability may result in more intervention
in the weeks ahead. “Given CBN‘s commitment to managing the exchange
rate at the $1.00 / N150.00 – N151.00 band, we expect increased supply
of the dollar to meet demand at the official market,” according to the
firm’s weekly report.

“Nigeria’s growing
and substantial trade relation with China (especially imports) is
expected to spur demand for the Yuan in the medium to long term. We
expect forex exposure to fluctuations in the US Dollar to be
significantly reduced as banks begin to issue Yuan accounts to their
customers,” the report stated.

Angola’s
much-delayed stock market will not open this year as many of the
country’s companies do not meet the requirements needed to participate
on a bourse, the government said.

The announcement
from state news agency, Angop, monitored by Reuters in Portugal, is the
latest set-back for investors looking to tap into one of Africa’s
fastest-growing but most impenetrable economies.

A Luanda bourse has been in the pipeline for more than eight years.

“It is clear that
the commercial, business and legal situation does not allow us to say
that in 2011 we can have a stock market already,” Angop quoted minister
of state, Carlos Feijo, as saying.

The Consumers Protection Council (CPC) received 2,860 complaints from consumers between January and October 2010.

Statistics made
available on Tuesday showed that the figure represents an increase of
24.35 per cent in the number of complaints received in the previous
year. The council received 2,300 complaints from consumers in 2009.

Ify Umenyi, the
director general of the council, explained that the complaints were the
products of public awareness campaigns organised by the agency.

“Ninety per cent of
the complaints were resolved amicably, while the outstanding 10 per
cent are being sorted out through negotiations, mediation and
conciliation,” Mrs. Umenyi said.

The National Bureau
of Statistics says inflation rate stood at 11.8 per cent in December.
It said in a statement on Tuesday in Abuja that the figure was lower
than the 12.8 per cent recorded in November.

According to the
statement, the Composite Consumer Price Index went up by 1.29 per cent
to 114.2 points, compared with 112.8 observed in November.

The statement
attributed the increase in the index mainly to the increase in the
prices of some food items such as meat, fish, oil and fat, vegetables
and fruits.

Uganda’s 2010 sugar
production rose slightly on a year earlier but fell short of forecasts,
hit by technical problems at the leading producer and poor rains, an
industry association said on Tuesday.

Richard Orr,
chairman of the Uganda Sugar Cane Technologists Association (USCTA),
said East Africa’s third-largest economy produced 292,051 tonnes of raw
sugar last year, 8.2 per cent below the projected 318,000 tonnes
forecast.

“The 4.3 per cent fall in production here was to do with adverse
weather conditions for part of the year and also a technical problem we
had with a new mill drive that was not installed correctly,” Mr. Orr,
who is also KSW’s general manager, said.