Nigeria Content Online

One can only hope
that the news reports are wrong. A misreading of a new policy; in which
case, some public officer may have “mis-spoken”. The consequences of
the Central Bank’s recent decision to tighten procedures for accessing
foreign exchange (forex), by requiring banks to scrutinise the history
of both domestic importers and their overseas suppliers before making
forex available to the importers, are worrying.

Though this
decision reflects the apex bank’s support of the Federal Government’s
resolve to limit the importation of unwanted goods, especially arms,
into the country, this policy is wrong-headed for several reasons.

Ideally, the
punishment for illegal importation of any kind should include
forfeiture of the consignment; and either a fine and/or imprisonment of
the offenders; including every known accessory to the crime. Now, this
requires that two institutions of the state work properly: the customs
department, which must be able to interdict the shipment; and the
criminal justice system, responsible thereafter for the successful
prosecution of the case against the importers.

Since the customs
department is wont to let the occasional ball slip, the police
prosecute the case fecklessly, and/or the court processes be too drawn
out to result in justice being meted out correctly, the punishment
might not sufficiently reward the crime. Or, put differently, because
existing domestic incentives in one sector of our national life might
reward deviant conduct in another, is it possible that the CBN may have
designed policy to help government do the job of both the customs
department and the criminal justice system?

The fear is not
that the apex bank is about to become the cure-all to the nation’s
myriad complaints (although it recently found initiatives for
re-financing just about every sector of the economy). Instead, the
bigger worry is that the CBN’s new initiative, by requiring each bank
to validate underlying transactions and supporting documents before
selling forex to importers, adds a fresh administrative burden to an
industry already labouring and heavy-laden. Ought not the apex bank to
know better, especially in view of its previous commitment to removing
all administrative burdens from the foreign exchange market in search
of eventual naira convertibility?

Could the CBN then
had intended other consequences for its action? One obvious consequence
of increasing the administrative burden of participating in any market
is the resultant behaviour of prices. If the burden is on the demand
side, and supply remains constant, prices should fall. If the burden
constrains supply while leaving demand unchanged, then prices should
rise. Now, we all know that the CBN had problems funding the supply
side of the forex market in the latter half of last year. So bad was
the problem that despite rising oil prices, better domestic crude oil
production stats, and improved autonomous inflow into the market, the
naira still depreciated marginally, and the gross external reserves
even more so.

Given this dynamic,
concerns began to be raised towards the end of the year over the
prospects for the naira’s exchange rate. If the CBN was rapidly running
out of ammo with which to support its sense of the naira’s exchange
value, how long before speculators piled in, and started “shorting” the
naira?

The apex bank’s
main bulwark against this possibility is the fact that it runs a pretty
rigged market for foreign currency sales. Add to this the absence of a
futures market for the naira, and it is well nigh impossible to borrow
a futures contract on it, sell this on, in the understanding that it
could be bought at a lower price in future and returned to the original
lender.

Thus, by increasing
the administrative burden on market participants, the CBN may have
resolved to further ring-fence the naira against anticipated demand
pressures in the new year. But there are unintended consequences to
this.

If demand continues
to build for foreign currencies, as election-related spending increases
the naira’s supply, the CBN’s action may have the effect of trying to
squeeze hard on a balloon: divert pressure to the unofficial markets,
leading to a widening of the arbitrage window between the parallel and
official markets.

Inevitably, a
vicious cycle, a downward spiral in the market for forex would build
up, as marginal arbitrage opportunities further drive up demand for
forex.

The
Edo State Government has secured approval of the Securities and
Exchange Commission (SEC) to raise N25 billion from the capital market
for infrastructure development. The bond which is at N1, 000 par value
with a fixed rate of 14 per cent will be due in the year 2017. With
this approval, the state will have access to long term capital for
developmental purposes.

This is the second
time the state is raising funds from the capital market, having raised
N1 billion in the First Edo State Floating Rate Revenue Bond 2002/2006
for the Iyekogba Housing Estate project.

The completion
board meeting held at the Edo State government house on Friday was
presided over by the deputy governor Pius Egberanmwen Odubu who
represented the state governor, Adams Oshiomhole. Parties to the issue
– the Edo State Executive Council, Afrinvest West Africa Limited as the
issuing house, FBN Capital, Skye Financial Services Limited, Stanbic
IBTC Bank Plc, FCMB Capital and UBA Capital – agreed that all the
requirements have been met by the state government to secure the Bond.

This offer for
subscription of fixed rate infrastructural development bond is
restricted to qualified institutional investors and high networth
individuals as defined by rule 78(c)(2) of SEC.

The State
Attorney-General and Commissioner for Justice, Osagie Obayuwana, said
the state was assessed by the relevant institutions and given a clean
bill of health to go ahead.

“The issuing
houses, joint brokers, solicitors, Banks and advisers collaborated in
assessing the suit that are against the state and the extent to which
the state was indebted to right now and at the end they found the state
worthy enough to issue this bond,” he said.

The Commissioner
for Finance, John Inegbedion disclosed that the best way to finance
long term projects is through bond and that the state government
complied with the requirements of all the necessary institutions
amongst other factors to get approval.

“It was initially intended to raise N30 billion but the Securities and Exchange Commission only approved N25 billion,” he said.

The stage is set for the revitalisation
of the Nigerian economy with the issuance of bond certificates by the
Asset Management Corporation of Nigeria (AMCON) to 21 banks.

This took place in Lagos last Friday
and signaled the transfer of non performing loans (NPLs) to the asset
company and the issuance of zero coupon bond worth N1.036 trillion to
the banks.

Aliyu Belgore, AMCON chairman, said the
bond has the guarantee of the federal government and the full support
of the executive and legislature.

“We are making history today where many
have failed or not even dared to try. AMCON will help in shoring
confidence in our banking system, reinvigorate the capital market, and
guarantee the soundness of the financial system and Nigeria’s sovereign
credit rating,” Mr. Belgore said.

The bond, which is coming with a yield
of 10.125 percent, is due in 2013. The bond was issued to the eligible
financial institutions for AMCON to acquire the eligible banks assets
comprising almost all the NPLs in the nine intervened banks as well as
margin related NPLs from the non intervened banks.

Swap with tradable bonds

Mofoluke Dosumu, executive director,
finance and operations, said the initial consideration bonds were the
first instruments rolled out to absorb the non performing loans in the
banking system.

“Within the first quarter of 2011, we
will be swapping these with another set of tradable bonds. We will be
issuing more bonds as we buy up more non performing loans, which is up
to N3 trillion in total,” Mrs. Dosunmu said in a telephone interview.

At a parley with bank executives on
December 16, she said that the essence of the intervention is to buy
the non performing loans and to cater for their capital adequacy. She
added that the liquidity of the bonds will be enhanced as it will not
only be held by banks but also fund managers, pension fund
administrators, insurance companies, trustees, and custodians.

On the valuation method, she said the
non performing loans secured without underlying collateral will be
bought at five percent of the principal sum.

“For the listed shares, it will be
valued on a 60 days average on the NSE trading platform counting back
from November 15 with a 60 percent premium on the price,” Mrs. Dosunmu
further said.

She said unlisted assets will not be taken in the first tranche of bonds to be issued.

Giant stride

Director general of the Securities and
Exchange Commission, Arunma Oteh, said the transfer of the NPLs from
the books of the banks will have positive impact on the Nigerian
capital market.

“I look forward to when the bonds will
be tradable. It is a giant stride in addressing the challenges we have
faced over the last two years. The capital market is truly an enabler
of our economy. If we have relied on oil all these years, it is time to
leverage on capital market to build businesses and boost
entrepreneurship skills of Nigerians,” Mrs. Oteh said.

The event was attended by chief
executives officers of 10 banks namely Oceanic Bank, GT Bank, Afribank,
Intercontinental, Spring, Zenith, First Bank, UBA, Union Bank, and
Ecobank. All the other banks were represented apart from Citi, Standard
Chartered, and Stanbic IBTC.

The board members of each bank has
individual and collective responsibilities for the accuracy of the
information provided, especially as regards the valuation of the assets
handed over to AMCON. AMCON will manage these assets and sell off at a
later date to recoup its investment.

In the AMCON law, which is yet to be
made public, the asset company can take over assets of bank debtors
which are not charged as collateral while banks or customers found to
have made false representation on valuation can attract a jail term of
three years or fine of N5 million.

Equity
performance rebounded at the Nigerian Stock Exchange (NSE) on Wednesday
as market measuring parametre, the market capitalisation, appreciated
by a 0.26 percent.

At the close of
proceedings yesterday, the market capitalisation recorded over N21
billion gains on last trading figures of N7.887 trillion, to close at
N7.908 trillion.

All the NSE
sectoral indexes maintained previous outlook to close positive as the
NSE-30, which measures the performance of blue chips in the market,
gained by 0.41 percent; the NSE Banking gained the highest point by
0.50 percent; Oil & Gas moved up by 0.13 percent; the Food &
Beverages appreciated by 0.08 percent; while the NSE Insurance closed
flat.

Commenting on
Wednesday’s market performance, analysts at Proshare Nigeria, an
investment advisory firm, said the nation’s capital market witnessed
“low participation and lackluster performance in the early trades, but
later geared up in the noon session with key benchmark indices
recording thin turnover.”

They said banking
stocks and food/beverages stocks with few insurance stocks remained the
“toast of investors” during the session, while majority of the rescued
banks saw profit booking.

Low gainers

At the close of
trading on Wednesday, the number of gainers closed lower at 27 stocks,
as against the 30 gainers recorded the previous session, while losers
closed at 24 stocks; same position with the previous trading day’s
figures.

The NSE’s
transaction volume moved down by 62.62 percent to close at 211.60
million units exchanged in 3,939 deals, as against a growth of 80.57
percent recorded the previous trading to close at 566.04 million units
exchanged in 3,300 deals.

Also, market value
dropped yesterday by 2.97 percent to close at N1.67 billion, as against
a decline by 39.73 percent recorded last Friday to close at N1.73
billion.

Active subsector

The Banking
subsector led the market transaction volume on Wednesday with 138.29
million units valued at N1.22 billion exchanged in 2,547 deals, as
against the 104.93 million units valued at N827.70 million exchanged in
1,939 deals recorded on Friday.

The volume recorded
in the subsector was driven by transaction in the shares of Zenith
Bank, Guaranty Trust Bank, First Bank, Fidelity Bank, and Oceanic Bank.

The total volume of
69.30 million units valued at N823.93 billion traded in the shares of
the five stocks accounted for 32.75 percent of the entire market volume
and their value represented 49.07 percent of the market’s value.

The banking
subsector closed on Wednesday with 9 gainers to 8 losers, compared with
10 gainers to nine losers that was recorded the previous trading day.

Disturbed
by the seeming increase of substandard cigarettes in the country’s
markets despite several raids by it and other relevant regulatory
agencies, the Consumer Protection Council (CPC) says it will soon bare
its fangs.

The Council read
the riot act to cigarettes merchants, threatening that those caught
would henceforth face the full weight of the law.

Abiodun Obimuyiwa,
head of public communications in the Council, said in a statement that
more stringent punishments would be meted out to those behind the
circulation of these “deadly products”.

The statement came
on the heels of its surveillance activities, which revealed the
existence and circulation of spotted Super King Cigarette in the north
west zone of the country.

“Markets within
Kano Metropolis had been raided and we will close in on the major
outlets of the distribution of the product nationwide,” Mr. Obimuyiwa
said.

While drawing the
attention of the marketers of the sub-standard product to the danger of
smoking spotted cigarette, the Council warned the marketers to “halt
the distribution of the spotted product and withdraw all packs that are
in the market place or face prosecution.”

Mr. Obimuyiwa
added, “Efforts to mop up those found in the markets are in top gear,
just as it seized the opportunity to alert Nigerian consumers of the
existence of the spotted cigarette, which has been found to be
deadlier.”

Experts said
consumption of substandard cigarette has grave health implications as
it contains high levels of a cancer-causing toxic metal picked up from
the soil the tobacco is grown in.

“Counterfeit
cigarettes that contain more than three times the usual levels of
arsenic and can cause vomiting and abnormal heart rhythms. There is
hardly a better way of delivering some carcinogens to the lungs than
smoking tobacco grown in contaminated environments. Counterfeit
cigarettes are substantially contaminated with toxic elements such as
arsenic and lead compared with genuine brands,” the statement said.

Fake cigarettes can
cause nausea and vomiting, abnormal heart rhythms, damage to blood
vessels and increase the risk of bladder, liver and prostate cancer,
among others.

Abubakar Mohammed,
a lecturer at the University of Abuja, said the impact is in two folds:
irreversible and reversible mental effects.

“These include
hallucination, delusion, illusion, complete madness, decay of teeth,
shortage of oxygen due to narrowing of lungs, and cancer of the bones.

Mr. Mohammed noted
that many Nigerians consume fake cigarettes ignorantly. There is
therefore, the need for proper consumer education to save consumers
from careless death.

Investors
at the Nigerian Stock Exchange (NSE) on Thursday recorded additional
gains on their equities’ value, as market closed trading on a positive
note.

The Exchange market
capitalisation closed yesterday at N 7.912 trillion after opening the
day at N 7.908 trillion, reflecting 0.05 percent upturn or over N4
billion gains. The market had gained about N21 billion at the close of
trading session on Wednesday.

The NSE sectoral
indexes maintained previous positive outlook as NSE-30, which measures
the performance of blue chips in the market, gained by 0.28 percent;
the NSE Food & Beverages gained the highest point by 0.52 percent;
the Banking moved up by 0.39 percent; and the Oil & Gas appreciated
by 0.19 percent, while the NSE Insurance, the only loser, closed with
2.07 percent loss.

Commenting on
Thursday’s market performance, analysts at Proshare Nigeria, an
investment advisory firm, said the early session witnessed stocks of
Building Materials, Food & Beverages, Industrial & Domestic
Products and Agriculture sectors dictating the pace in price
appreciation.

“The moderate
buying activities in Food & Beverages, Maritime, Construction, and
Agriculture sectors with slight bargain towards blue chips despite much
selling across the sectors, took the market higher with modest gain,
closing year-to-date All-Share Index performance higher at 18.94
percent,” they said.

High losers

At the end of
trading, the number of gainers closed at 27 stocks; same position with
the 27 gainers recorded previous session while losers closed higher at
31 stocks when compared with the 24 losers recorded on Wednesday.

Presco Nigeria and
Costain West Africa topped the price gainers’ table with an increase of
4.98 percent each on their opening prices of N6.22 and N6.43 per share
respectively. IHS and Vitafoam followed in the chart with an increase
of 4.84 percent and 4.79 percent, to close at N2.60 and N6.35 per share.

On the losers’
side, Wema Bank and C & I Leasing led the price losers’ chart with
a decline of 5 percent and 4.97 percent, to close at N1.33 and N1.53
per share. Evans Medical and John Holt followed with a decline of 4.96
percent each on their initial prices of N1.21 and N9.28 per share.

Active subsector

The Banking
subsector led the market transaction volume on Thursday with 111.04
million units valued at N1.04 billion, as against the 138.29 million
units valued at N1.22 billion recorded on Wednesday.

The volume recorded
in the subsector was driven by transaction in the shares of Zenith
Bank, First Bank, Skye Bank, Oceanic Bank, and Diamond Bank. The total
volume of 64.54 million units valued at N715.82 million traded in the
shares of the five stocks accounted for 30.62 percent of the entire
market volume.

This column came
into existence in August and since this will be the last for the year,
I want to do a summary of the topics focused on during the year. All
that you will find are snippets of what this column focused on in the
year.

A brand that must
retain consumers’ attention in the New Year should be one that feels
their pulse. The quantum of consumers insight generated is central to
the overall success of the brand in the New Year. It is important for
brands to touch base with consumers while also ensuring satisfaction
and superior service delivery.

Brands should also
speak the language of consumers as consumers respond more through
persuasive and emotive communication messages. It is also important to
say that any sales/consumer promotion embarked upon in 2011 should be a
reward scheme for consumers and not exploitative in approach. Consumers
want brands they can identify and relate with as their own.

Despite the
economic meltdown, brands should seek to sustain the tempo of their
messages to retain their established image. Since 2011 is an election
year, it is important to have strategy based political campaigns which
will inspire and move the electorate to action.

Brands should
ensure that negative perception is eliminated to the barest minimum as
this can hinder the brand in the market place. To forestall negative
perception, brands should embark on image building tactics that will
position the brand in the minds of the target audience. The issue of
Corporate Social Responsibility thus become important here. Brands
should be good corporate citizens. Some brands and their companies
should embark on projects that will impact lives meaningfully in the
communities where they operate.

The rebranding
Nigeria project should be given utmost priority in the New Year. The
import of this is that our leaders should make concrete efforts in
leading by example. Now that Dora Akunyili is a politician, one hopes
the fire of tenacity will keep burning.

The recurring name
change by Airtel generated so much discourse. It was one topic that had
the highest number of feedback this year. In the New Year, Airtel
should consolidate on the gains of the name change and connect more
with the subscribers on the network.

The media also has
a critical role to play as the purveyor of information. It is highly
expected of the media to focus on professionalism and ethical standards
in the New Year.

Public speaking is
a skill everyone needs to leverage a positive image. It is not an
activity to engage in to pour venoms on other people. It is one that
comes with panache, style, and delivery. This is one skill that a brand
personality needs in the New Year.

The insurance
industry also needs to raise the bar of its visibility in the New Year.
The industry needs to wake up from its slumber and set an agenda for
public discourse on insurance services.

Evaluation

This column debuted
over twenty weeks ago and I will appreciate feedback of readers on the
column, its contents and approach to issues. This I believe will enrich
the column the more.

Till we meet in 2011, may all your days be colourful and bright. Also, believe you can make it in the New Year.

Ayopo, a Communication Strategist and Public Relations practitioner
is The CEO of Shortlist Ltd, email-shortlistedprspecialists@gmail.com

In keeping with its
timeline of absorbing all the non performing loans in banks books by
the end of the year, the Asset Management Corporation of Nigeria
(AMCON) will today sign debt purchase agreements with chief executive
officers of 21 banks in the country. One bank is yet to submit its debt
profile while two foreign owned banks, Citi and Standard Chartered,
withdrew from submitting any bad loan.

With the agreement,
over N2 trillion of nonperforming loans (NPLs) will be taken off the
books of the banks and transferred to the asset company. Today’s
meeting will be attended by finance minister, Olusegun Aganga, Central
Bank of Nigeria (CBN) governor, Lamido Sanusi, and director general of
the Debt Management Office (DMO), Abraham Nwankwo.

AMCON was set up to
take up the bad loans in the books of banks in the wake of the global
financial crisis which took a toll on the Nigerian financial sector.

Thereafter, the CBN
injected N627 billion into Afribank, Bank PHB, Equitorial Trust,
Finbank, Intercontinental, Oceanic, Spring, Wema, and Union, to save
them from imminent collapse.

At a meeting with
bank executives on December 16, Foluke Dosunmu, AMCON executive
director of finance, explained that the rescued banks will enjoy two
sets of funds injection. One is to buy their non performing loans and
two, to cater for their capital adequacy. Mrs. Dosunmu said AMCON will
issue the first set of bonds by the end of today.

She said bonds will be issued for a two year period which will be refinanced by issuing another set of bonds next year.

“The bonds will be
zero coupons, fixed or floating, that will be tradable and liquid and
listed on the Nigerian Stock Exchange,” she said.

She added that the
liquidity of the bonds will be enhanced, as it will not only be held by
banks but also fund managers, pension fund administrators, insurance
companies, trustees, and custodians. The bond will be guaranteed by the
federal government.

This development is
expected to trigger price rally at the stock market as investors cash
in to take advantage of the valuation model already released by the
asset company.

AMCON’s managing
director, Mustafa Chike-Obi, listed assets which are to be taken over
from the banks; they will be priced at 60 percent of market value on a
60-day price average on the NSE trading platform, counting back from
November 15.

Mr. Chike-Obi said AMCON will buy all non performing loans by the end of the first quarter of 2011.

The
high copper price will bring further hefty investment into the sector
in Zambia next year, keeping it on track to produce an annual 1 million
tonnes by 2012, the head of the body representing foreign miners said.

Chamber of Mines of
Zambia president, Nathan Chishimba, said the trend seen in 2010, when
Zambia attracted $2 billion in new mining investments, would continue
and would further benefit from stable tax policies in the southern
African country.

“I think the prospects for mining in Zambia… are very, very bright,” Chishimba told Reuters in an interview on Wednesday.

“A high copper
price … permits flexibility by investors to plough back into
improvements in production, improvements in efficiency, and overall
improvement in output.

“We believe these
new projects, once they stabilise, will go a very long way towards
achieving the 1 million tonne mark which we have set for ourselves in
the next two years or so,” he said.

London Metal
Exchange copper rose to a record high of $9,447 a tonne on Wednesday
when trade resumed after the Christmas break, during which U.S. futures
rallied to a top fuelled by a weaker dollar and worries about supply
from Chile.

Metals prices are
expected to follow their own fundamentals during 2011, as emerging
market economies drive ahead and demand recovers in developed nations,
pushing copper above $11,000 a tonne, Goldman Sachs forecast this month.

Chishimba said the
investment of $400 million into a Zambian copper project by Brazil’s
Vale, the world’s top iron ore miner, was a vote of confidence in
Zambia’s mining sector, which is the largest copper producer in Africa.

Finance minister,
Situmbeko Musokotwane, said in November the government had agreed to
maintain the existing mining taxes for 10 years to provide stability to
mining investors.

Chishimba said
“shifting of goal posts and knee-jerk reactions” via policy changes
without exhaustive consultation of industry players could pose a risk
to the sector and he welcomed the stability in policies, which he said
reassured investors.

Chishimba said it
had taken $5 billion in investment over the last decade for Zambia to
get back to annual copper output of more than 720,000 tonnes, and the
country should strive to exceed that by attracting further investment.

Zambia should also
bring down the cost of doing business and invest in energy and
infrastructure projects to support the growing mining industry, he said.

Other mining
companies operating in Zambia include Vedanta Resources Plc, Equinox
Minerals, Glencore International AG, and Metorex.

The Bauchi State
Fertiliser Blending Company said it will produce about 30,000 tonnes of
fertiliser for farmers in the 2011 cropping season.

The commissioner
for commerce and industry, Ahmed Giade, said that the firm produced
only 5,000 tonnes in 2008, but had been equipped with modern machines
to meet the demands of farmers in the state.

He disclosed that
the state government had also acquired compacting equipment and modern
granulated machines, with their installation at 90 percent completion.

Mr. Giade said the
installation of the equipment was expected to be completed in the first
quarter of 2011. and that the company, expected to be the largest in
West Africa, had substantial reserves of kaolin, giving it a
competitive advantage.