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The World Bank group yesterday assured
Nigeria of its continued support to realise its quest for validation as
Extractive Industries Transparency Initiative (EITI) Compliant Country
come January 15.

The bank’s EITI programme manager,
Anwar Ravat, told NEXT at the end of the World Bank team’s working
visit to the Nigerian Extractive Industries Transparency Initiative
(NEITI) in Abuja that he is satisfied with the level of progress so
far, to meet the deadline set by the EITI Board for Nigeria last
October.

He said he was in Nigeria to work with
the NEITI chairman, Assisi Asobie, and the secretariat, to ensure that
all outstanding issues that needed to be resolved are sorted out, as
part of the partnership between NEITI and the World Bank over the last
several years.

“From my interaction, the NEITI process
so far is on track, and I assure you the world will continue to support
the process, which is ongoing. The support is not about the $3 or
$4million funding we have given over the last several years. The
important thing is the partnership. So, I am in Nigeria to work with
the National Stakeholders Working Group and the NEITI Secretariat, as
part of the process, as is the case in the last several years,” Mr.
Ravat said.

Prior to the meeting, the NEITI
executive secretary, Zainab Ahmed, highlighted the tremendous progress
made so far, pointing out that the report of the ongoing 2006-2008 oil
and gas audit is expected to be ready by January 2011, while the
process to procure auditors for the 2009 oil and gas audits as well as
the first solid minerals audit covering 2007-2009 has already begun.

“NEITI is concerned that implementation
has been slow because an Inter-Ministerial Task Team made up of the
relevant government agencies set up to monitor the remediation and
implementation of recommendations on remedial issues in the 2005 Audit
Report has not been quite active,” Mrs. Ahmed said, adding that the
immediate priority is to reconvene the Task Team before the end of this
month.

On reconvening, the inter-ministerial
task force, which is a standing committee comprising representatives of
all major government agencies, including the Nigerian National
Petroleum Corporation (NNPC), Department of Petroleum Resources (DPR),
Central Bank of Nigeria (CBN), Office of the Accountant General of the
Federation (OAGF), and Federal Inland Revenue Service (FIRS), would
look at those issues, including discrepancies on signature bonuses and
the inadequate data from the metering system.

Metering infrastructure

On the metering
infrastructure, she said a report on the study received from the
consultants is being reviewed, while the recommendations are to be
forwarded to the Inter Ministerial Task Team for consideration when it
reconvenes.

She said the FIRS
has already designed a template for Petroleum Profit Tax (PPT) returns
and estimates, which have already been reviewed by the Oil Producers
Trade Section (OPTS) of the Lagos Chamber of Commerce and agreement
arrived at on the cost component for implementation.

On processes to
ensure revenue flow interface among government agencies, the NEITI
scribe said the CBN has deployed new IT applications to enhance their
operational efficiency, while the NNPC now provides advance information
on financial flows to all affected agencies prior to Federation
Accounts Allocation Committee (FAAC) meetings.

Similarly, OAGF
receives from CBN credit advices in respect of all the oil revenue
receipts, in addition to all revenue bank statements, while CBN reports
on revenue receipts from crude sales, PPT, royalty, gas flaring penalty
and others.

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Investors at the
Nigerian Stock Exchange (NSE) recorded additional losses at the close
of trading session on Monday, in spite of the extension of trading
hours aimed at improving market performance.

The Exchange market
capitalisation of the 201 First-Tier equities closed yesterday at
N7.918 trillion, after opening the day at N7.925 trillion, reflecting
0.08 percent decline or over N7 billion losses. Meanwhile, the market
recorded N43 billion losses last Friday after gaining about N28 billion
the previous day.

The NSE All-Share
Index also shed 0.08 percent or a loss of 21.48 units on Friday’s
figures of 24,807.04 basis points, to close on Monday at 24,785.56. Law
Union and Rock Insurance, Guaranty Trust Bank, and First City Monument
Bank were the most traded stocks yesterday, followed by First Bank and
Skye Bank.

Profit taking

Market watchers
said the Exchange witnessed a decline on account of weakness observed
in bargain activities due to profit taking tendency recorded across the
sectors. The NSE Exchange sectoral indexes closed negative as NSE 30,
which basically measures the performance of blue chips in the market,
dropped by 0.12 percent.

The NSE Oil &
Gas shed the highest point by 1.21 percent; Food & Beverages
declined by 0.76 percent; NSE Insurance declined by 0.29 percent while
Banking, the only gainer, reversed the previous negative outlook to
gain by 0.60 percent.

The number of
gainers at the close of trading session on Monday closed higher at 24
positions, as against the 22 gainers recorded previous session, while
losers closed lower at 36 stocks compared with the 37 losers recorded
on Friday.

Most active

The Banking sector
led the market transaction volume today with 161.80 million units
valued at N1.34billion exchanged in 3,527 deals, as against 93.66
million units valued at N651.29million exchanged in 2,763 deals
recorded on Friday. The volume recorded in the sector was driven by
transaction in the shares of Guaranty Trust Bank, FCMB, First Bank,
Skye Bank, and Oceanic Bank.

The total volume of
94.49 million units valued at N980.70 million traded in the shares of
the five stocks accounted for 30.56 percent of the entire market volume
and their value represented 40.76 percent of the market’s
value.Transaction volume on the Exchange grew by 57.31 percent to close
at 309.20 million units exchanged in 6,212 deals, as against a decline
of 11.02 percent recorded at previous trading to close at 196.55
million units exchanged in 5,126 deals.

Meanwhile, the
management of NSE lifted off technical suspension on Crusader Nigeria,
Intercontinental Wapic Insurance, Staco Insurance, The Tourist Company
of Nigeria, and Arbico Plc.

The extension

The Capital Market
Committee had last Monday approved the extension of the trading hours
from 9.30 am to 2.30 pm, as against the former 9.30 to 12.30 pm. The
Interim Administrator of the NSE, Emmanuel Ikazoboh, the extension “was
a right step in the right direction,” adding that “it was one of the
strategic moves by the leadership of The Exchange to reposition the
market for enhanced competitiveness.”

Mr. Ikazoboh said the extension would give foreign investors,
especially those in the United States of America, an opportunity to
participate in the Nigerian market.

Unseasonal rain
mixed with lengthy spells of sunshine last week in most of Ivory
Coast’s cocoa growing regions augured well for healthy development of
the 2010/11 main crop, farmers and analysts said on Monday.

Ivory Coast is in
the dry season when rains are normally scarce. Farmers welcomed the
latest precipitation, saying it will strengthen the development of
flowers and small pods to pave the way to an abundant crop compared
with last year.

Ivory Coast’s cocoa
regulator projected 800,000 tonnes of output during the main crop, down
100,000 tonnes from last season due to black pod disease, but analysts
think the forecast is low and see good weather pushing volumes above a
year ago.

“Weather conditions
are favourable to growing lots of cocoa this year. There has been
abundant rainfall in December, and it is rare to see that,” said Lazare
Ake, a farmer in the western region of Soubre, which accounts for about
a third of Ivory Coast’s cocoa output.

“There are many
more pods than last year. This means that we’ll have more cocoa this
year,” said Labbe Zoungrana, who farms near San Pedro.

About 43 mm of rain
fell in the town of Soubre, and 13 mm fell in Sassandra, the southern
part of the Soubre region, analysts said.

In the southern region of Aboisso, analysts reported about 36.3 mm of rain last week mixed with sunshine.

“We have a mix of
sun and enough rain for the dry season. The volumes of large beans will
be higher this year compared to last,” said one analyst.

In the centre-west
region of Daloa, which accounts for 358,000 tonnes of Ivory Coast’s
roughly 1.2 million tonnes of yearly output, farmers were happy with
one abundant rain during the last week.

“The farmers are
happy with this rain. It will help the trees ahead of the harmattan
(seasonal wind),” said farmer Attoungbre Kouame, adding fewer trees
were likely to die during the dry season.

In the region of Abengourou, which produces about 75,000 tonnes a
year, an analyst working for an industrial plantation reported about
8mm of rainfall.

Now and again, newspaper headlines just go over the top.

Thursday last week,
on the strength of the captions alone, you’d have thought that a fresh
banking crisis was in the offing. Apparently, a new report by the
Central Bank of Nigeria (CBN) indicated that of the nation’s 24 banks,
only one has a rating above “C”, on a five-point scale from “A” to “E”,
with “A” the highest rating. A couple of paragraphs down, it is then
obvious that the report should read, “only one had a rating above ‘C’,
on a five-point…”, because the report in question is the apex bank’s
annual report and statement of accounts for 2009. Many will recall that
in August of that year, the CBN released the result of its special
audit of banks in the country. To say that this result was shocking is
to put it mildly: huge portfolios of bad loans; insider-related abuses;
and governance failures. Again, these governance questions are pushed
to the fore by the time it has taken the apex bank to publish its
report for 2009. Nonetheless, since discovering the Augean stable in
most banks’ back offices, the CBN has done its best to stem the
industry’s haemorrhage.

Why then did the
newspaper report alarm so? Partly because financial services are so
essential to the design and implementation of any economic reform
programme. Across the economy, infrastructure is noticeable because of
its absence: the transport sector is in a mess; and the power sector
shambolic. Public finances are lousy too. Now, the latter is something
of a surprise. We have earned more in recent times from increased
production of our major export item, and higher prices for it on the
international markets, than at any time in the last twenty years. Yet,
the budget deficit this year is twice what it was on the average for
the eight years to end-2007. Recent public debates suggest that a
higher burden of governance might be complicit in the difficulty
experienced by managers of the public purse. But then, neither the
nature, nor the structure of government has changed since 1999.

Whatever the
provenance of the problems on the fiscal side of government’s business,
it is obvious that government alone cannot bear the burden of
development. Private investment must bear a part of this load, if we
are to meet any of the development goals we have assigned ourselves in
anything like the times we have also committed to. In addition, even
the World Bank admits that “deepening the financial markets is a key
component of job creation”. I suppose, therefore, that this is where
the concern with the banks comes into play. It is inconceivable that
the private sector will play the roles designed for it, without access
to bank lending.

This lending has
been problematic of late. From the post-bank consolidation era, when
lending to the private sector grew at close to 100% annually, we have
seen lending reduce to a trickle. According to the most recent document
from the CBN, while credit to the private sector, grew marginally by
3.22% in the 10 months to October 2010 (or 3.86% cent on an annualised
basis), bank lending to government “grew substantially by 53.35% over
end-December 2009 (or 64.02% on annualised basis). Concerned about the
crowding-out effects of rising government expenditure and borrowings on
the private sector, the CBN has called for “fiscal consolidation and
the continuation of comprehensive economic and structural reforms to
remove supply-side bottlenecks” in the domestic economy.

How true, though, is this orthodoxy? In an August 2010 report,
“Nigeria’s Credit Squeeze and Beyond”, the World Bank argues against
the notion that there is a credit squeeze in the country. Apparently,
the phenomenal growth in bank lending to the private sector between
2006 and 2008 was not just “unsustainable”, but the bulk of this growth
did not go the way of real sector operators. It went instead to
speculative and outrightly criminal activities: margin lending; oil
importation; and insider lending. The World Bank’s picture gets uglier
at a more granular level. It appears that internal funds/retained
earnings are the biggest source (70%) of short-term finance for the
organised private sector in the country. Why, then, have we invested so
much in the bank rescue programme if “less than 1% of Nigerian
businesses ever had access to bank finance?”.

Organising your
finances can be a real chore. Every month, you receive several bills,
statements, and other financial documents, which can be quite
overwhelming. Unpaid bills and statements from multiple bank accounts
lying unopened are a sure sign that you are losing control of your
financial life.

Perhaps, you
regularly miss payment deadlines and end up having to pay penalty fees
or punitive interest because you just can’t keep up with all your
financial matters. You could be putting your financial wellbeing at
risk.

Just as you would
attempt to de-clutter your home by throwing out all the things you no
longer need, your finances need an overhaul from time to time. If you
are disorganised, it will be difficult for you to be in control.

Ask yourself these
questions: is your home insured? When is your health insurance policy
due for renewal? What kind of policy do you have? When is your next
rent due? Is the landlord willing to renew at the old rate?

Most of us badly
need to go through this exercise, so this December, let us together go
through all our financial matters and try to create some order ahead of
2011. This might seem like a daunting task; where do you start, with
envelopes, drawers, and cupboards full to the brim and overflowing with
documents that you haven’t looked at for years. If you put your mind to
it and devote some time to this task, you will make huge strides in
sorting things out.

What tools do you need?

To get started, you
need to put a few things in place. Your purchase list could include the
following items: files and folders, A4 envelopes, a letter opener,
stapler, a paper punch, markers, biros and pencils, address labels, a
calculator, a shredder, and even a small safe.

Create a simple filing system

To put your
documents in order, you need to carefully create a system that helps
you to keep track of all the paperwork. A simple filing system is one
way, as there is a lot of important financial information that needs to
be organised and maintained.

The categories
usually include the following documents: bank statements, retirement
account, other investment statements, brokerage and mutual fund
statements, portfolio reports, insurance policies including those for
your home, life, medical and health insurance, title documents for your
home and your car, tax returns, mortgage documents, tax returns,
monthly bills, salary pay slips, warranties, title documents for home,
car, receipts for significant items, and so on.

Sensitive documents

We all have some
particularly important personal documents such as a passport, birth
certificates, title documents, stock certificates, educational
certificates or your marriage certificate; scan or photocopy these
documents for your household files.

Ideally, the
original documents should be stored in a sturdy fireproof filing
cabinet or a small fireproof safe. List all the contents and make
copies to be kept with your lawyer or other reliable family member or
friend. It is important to protect these from the risk of fire, flood,
or other disasters.

You don’t need to
go overboard in trying to create a military fortress at home, but at
the same time you shouldn’t have things lying around in cardboard boxes
at the bottom of your wardrobe for the wrong house keeper to rifle
through whilst you are at work.

Regular Maintenance

Setting up a basic
filing system is one thing, but maintaining it is another. Even if you
are too busy to go over your money matters once a week, do try to
revisit this most important aspect of your life periodically. Whenever
you receive a bank statement, take a moment to check it for errors
before you put away in the correctly labeled folder. That way, your
bills and important documents are easily accessible.

Too many bank accounts?

How many bank
accounts do you have and how many do you actually need and use
regularly? If you have more than two bank accounts, you might consider
closing down the ones you don’t really use unless the accounts play
very specific roles.

Deal with bills promptly

If you receive a
new bill, deal with it promptly. If you subscribe to internet banking,
it will be easy to automate some of your regular utility bill payments.
Otherwise, write a cheque and send it off immediately. Do not
procrastinate; start this task and finish it straightaway so that it
takes only a few minutes of your time.

Shred! Shred! Shred!

Many Nigerians find
themselves victims of fraud and identity theft, in which personal
documents are stolen and the data is used fraudulently. Your financial
information is very personal, and it is essential that you maintain
confidentiality to protect yourself from fraud. When your rubbish is
picked up, you don’t know exactly where it ends up.

Don’t just
carelessly discard old financial statements; all those old bills, bank
statements can become prime targets for thieves. Consider buying a
shredder so that you can immediately shred any sensitive documents that
you no longer need. This way, you can minimise the chances of the wrong
person getting at the information.

These are just
suggestions; it is important to devise a system that works for you,
otherwise you will not follow it through. Using technology to organise
your finances will make things even quicker and easier.

Often, we don’t appreciate the importance of keeping our finances
organised until we are faced with a major financial decision such as
buying a home, applying for a car loan, or trying to claim on our
insurance policy.

A major factor that
would determine the performance of the Nigerian economy next year is
the elections. Economic and financial analysts all acknowledge this
concern. Apart from the huge spending that has pushed deficit to above
six percent of gross domestic product, there is also the concern that
in the event of a change in government, there may be radical reversals
of many of the policies already in place.

Expenditure is
estimated at N5.16 trillion, revenue is put at N3.18 trillion, while
budget is estimated at N 4.67 trillion. The shortfall will be sourced
from massive domestic and foreign borrowing, with the attendant effect
on the economy. The exchange rate is tottering; interest rate is pegged
at 6.25 percent, while inflation at above 13 percent has not shown any
signs of slowing down.

In its October
rating of the country, Fitch Ratings, a global rating agency, noted
that elections in the first half of next year have increased short-term
political uncertainty in the country. According to its ratings note,
the end of zoning in the ruling party could give rise to instability in
the Niger Delta or in the northern states, depending on who is chosen
as candidate.

“A flare-up in the
Niger Delta would be the worst outcome for the economy as a whole, as
it would likely bring a renewed decline in oil output, budget revenues,
and international reserves,” the report said.

The report added
that the major constraints on the ratings, low per capita income, weak
transparency and governance, and the infrastructure deficit, especially
the power shortage, remain in place.

Uncertainty persists

Bismarck Rewane,
managing director, Financial Derivatives Company Limited, a Lagos-based
financial advisory services firm, also believes that the current
development in the political scene creates uncertainty in the country.

In his presentation
at the Lagos Business School November monthly executive breakfast
meeting, Mr. Rewane said recent development has made the incumbent
president more vulnerable, adding “the political structure is fragile
and the imponderables have multiplied. Stakes are high and situation
fluid.”

Thankfully, the
country’s oil production is back to its best levels since 2006, but
elections pose a risk. Without doubt, the election period comes with
some level of frenzied spending by government that is usually not
captured in the appropriation.

“Revised budgetary
projections and two supplementary budgets (including one to cover the
costs of Nigeria’s new voter registration system) suggest that spending
will rise around 50 percent in 2010, with some spillover into 2011,”
said Razia Khan, regional head of research, Africa, at Standard
Chartered Bank, London.

Ms. Khan said
Nigeria’s election will be one of Africa’s most watched political
events in 2011. She added that the extra budgetary spending is not
without its repercussion.

“Elections are not
without their risks, however, and the concern is that while much reform
is promised in the future, there is little to show for the reform
agenda so far. Almost the entire focus has been on elections and what
emerges thereafter, with comparatively little emphasis on structural
reforms that would benefit the economy now,” Ms. Khan said.

This is in addition
to the coming on board of the Asset Management Corporation of Nigeria
to buy up bad debts from the books of the banks. This will be financed
by bonds to be floated in the next few weeks. According to Fitch,
institutional and structural factors are weaknesses for the public
finances.

“Costs arising from AMCON and other contingent liabilities would
still leave debt ratios comfortably below rated peers,” it said.

The Central Bank of
Nigeria (CBN) has stated that it is still in the process of verifying
the raised capital of Wema Bank, a month after the deadline set for the
bank to recapitalise. The CBN had set October 30 for the bank to
recapitalise after it failed to meet an earlier deadline of September
30.

Mohammed Abdullahi,
the spokesperson of the Central Bank, said the regulatory body is still
at the process of capital raising verification.

“That is what we
are still doing. Our update on the verification of the bank’s raised
capital and confirmation on the loans it is said to have recovered is
still valid,” he said.

In first week of
November, the Central Bank stated that it would embark on a
verification process on the N7.5 billion claimed to have been raised by
the bank and the loan of N4 billion it also claimed to have recovered.

The regulatory body
had in October stated that it had granted a 30-day extension to Wema
Bank Plc to enable it conclude its recapitalisation, which ended
October 30.

“At the expiration
of the deadline, the CBN is pleased to note that Wema Bank Plc was able
to raise the sum of N7.5 billion from the Special Placement Offer,
approved by the Securities and Exchange Commission (SEC), and was
formally authorised during the bank’s completion meeting, held on
Tuesday, October 28, 2010,” according to a CBN statement.

The regulator
stated that the total subscriptions of N7.5 billion had been received
in the offer proceeds account domiciled with the Receiving Bank to the
Offer, Skye Bank Plc. In addition, Wema Bank made recoveries of N4
billion on its outstanding loans within the same period.

“Consequently, the
CBN will embark on the verification of the capital raising exercise and
confirmation of the loan recoveries made by the bank,” the statement
said.

The Central Bank
spokesperson said the full recapitalisation of Wema Bank is expected to
be concluded with the sale of some of the bank’s non-performing loans
to the Asset Management Corporation of Nigeria (AMCON), when the latter
becomes operational.

“Meanwhile, Wema
Bank’s application for a regional commercial banking licence is also
receiving the attention of the Central Bank of Nigeria. All
stakeholders are to be guided accordingly,” the statement added.

Shareholders support

Wole Ajimisinmi,
the bank’s company secretary, said the bank has been carrying its
shareholders along in its recapitalisation process.

“The last time we
had our Annual General Meeting in June, we got approval by the
shareholders to issue new shares and embark on a special placing offer,
after given the go ahead by board of directors. Shareholders also
endorsed the decision of the Board to obtain a Regional Banking licence
when the proposed new licencing regime came up,” Mr. Ajimisinmi said.

The bank’s
management said its recapitalisation process includes recovery of
delinquent loans through internal efforts, and resolution of some of
the nation’s delinquent risk assets using the AMCON window, raising
additional equity through special placing, and application for a
Regional Banking Licence.

In the banks
unaudited balance sheet for the first half of the year released in
August, gross earnings of the bank stood at N14.6 billion, and profit
after tax stood at N1.07 billion. The bank still carries a long term
facility from the CBN of N87 billion, which the bank expects to clear
using the AMCON window.

The
Revenue Mobilisation, Allocation, and Fiscal Commission (RMAFC)
yesterday said no approval was given for the payment of enhanced
remuneration package for members of the National Assembly (NASS) to
warrant their accessing 25 percent of the country’s total Federal
annual expenditure profile.

Central
Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi, stirred the
hornet’s nest at the weekend when he blamed the country’s economic woes
on “wasteful politicians”, particularly the National Assembly, whose
members, he said, earn a quarter of the nation’s annual budget in
salaries and allowances.

As
the Federal Government banker, the apex bank, which is constitutionally
responsible for disbursing funds to agencies of government, as approved
by the federal ministry of finance and released by the Office of the
Accountant-General of the Federation (AGF), also keeps records of all
such disbursements for accounting purposes.

Huge disbursement

But
the Revenue Commission told reporters yesterday in Abuja that it was
wondering from where the quantum of disbursement to the NASS would have
come from, as alleged by the CBN governor, as the approved pay for the
lawmakers would hardly be sufficient to take care of such huge
disbursements.

Section
32(d) of Part One of the Third Schedule of the 1999 Constitution
empowers the Commission to “determine the remuneration appropriate for
political office holders, including the president, vice president,
governors, deputy governors, ministers, commissioners, special
advisers, legislators, and the holders of the office mentioned in
sections 84 and 124.

The
Commission yesterday provided its approved emolument, as enshrined in
the existing Certain Political, Public and Judicial Office Holders
(Salaries and Allowances, Etc) [Amendment Act, 2008, pointing out that
the lawmakers had, in January 2009, turned down an Executive Bill that
sought to cut-down all political officers’ emolument in the wake of the
global economic and financial crises between 2007 and 2009. The Bill
was perfected by the immediate past chairman of the Commission, Hamman
Tukur, who earlier raised alarm last year on the growing figure of N1.3
trillion total annual emolument, out of which allowances gulped the
lion share, with basic salaries accounting for only N90 billion.

Former
President Umaru Musa Yar’adua and members of the Federal Executive
Council (FEC) had volunteered to take a 20 percent cut in their basic
salaries before the enactment of the pay cut law, before it was aborted.

No pay cut

Under
the proposed pay cut, the president’s total annual emolument would have
dropped from N14.058 million to N11.598 million; his deputy, from
N12.126 million to N10.004 million; ministers, Secretary to the
Government of the Federation (SGF)/ Head of Service/ chairmen of
federal establishments, from N7.801 million to N5.471 million.

The
package was in addition to other benefits, including official vehicles
and fueling, personal assistants entertainment, utilities, and domestic
staff.

Similarly,
the Senate president’s current annual emolument of N8.694 million would
have come down to N5.589 million; the deputy Senate president from
N8.082 million to N5.195 million, while those of the senators would
have moved from N12.766 million to N8.206 million; Senate committee
cxhair/ vice, from N12.867 million to N8.308 million respectively.

The
Speaker of the House of Representatives, would have had his annual
emolument also sliced from the current N4.954 million to N4.334
million; his deputy would have had his packaged trimmed from N4.574
million to N4.002 million, while members would have had their current
N9.529 million slashed to N6.352 million and House Committee/ Vice from
N9.628 million to N6.541 million respectively.

The emoluments of the principal officers of the Legislature exclude other pecks of office that are not spelt out in the law.

The global
financial meltdown took its toll on investment banking business
worldwide, with a drop in the volume of transactions recorded during
the 2008 – 2010 period.

Managing director of Alexander Forbes, Femi Oyetunji, described it as “nothing short of catastrophic.”

He was speaking at
the press briefing held in Lagos yesterday to herald the ninth Nigerian
Investment Banking League (NIBL) upcoming awards ceremony, which is
scheduled to hold on 9th December, 2010, in Lagos.

Alexander Forbes is
acting as independent auditor of the results to ensure transparency and
credibility. The independent auditors are to thoroughly scrutinise the
process of scoring as well as the scoring criteria.

Managing director
and chief executive officer of SBA Research, Segun Akande, said the
last two years have been difficult for the financial markets.

“The global
recession has had a fairly devastating effect on the Nigerian capital
market,” he said. He, however, admitted that despite the strenuous
financial terrain, some companies have still managed to excel.
“Therefore, it would be a gross injustice not to reward those companies
with the credit and awards they deserve.”

Mr. Akande said
that NIBL has set up a scoring committee composed of senior
stakeholders in the investment banking sector, who themselves are
competing for the various award categories. He said that this would
help reduce any incidence of corruption in the scoring process.

He also said that
the Securities and Exchange Commission (SEC) is actively involved in
the whole process, as every transaction uploaded by the investment
banks would be verified by SEC before further scoring would proceed.

NIBL aims at
achieving complete transparency and total credibility by tallying up
the scores and sending the results to the independent auditor for
verification and confirmation. Mr. Akande explained that due to
financial constraints and a low volume of transactions in the last
year, the categories for this year’s award would be reduced to four, as
against eight categories in recent years.

The awards
categories are Best Equity House, Best Mergers & Acquisition, Best
Debt House, and Best Investment Bank 2009. Another category of Best
Equity Private Equity Deal would be personally given to the awardees
after the ceremony, due to financial constraints.

Biremo, senior
manager, sales & marketing, SBA Interactive Data, explained that in
order to accommodate the vagaries of the current financial crisis, the
minimum transaction value for scoring has been reduced to N1billion, as
against N5billion in recent years.

Previous winners of the Best Investment Bank include BGL Plc, Stanbic IBTC, and in 2009, Chapel Hill Denham Group.

Established in
2000, the NIBL was set up by SBA Research to create more transparency,
efficiency, and healthy competition in the capital markets. It has
become the parameter used by the Nigerian capital market to measure the
performance of domestic issuing houses in the country.

Small and medium
enterprises in Nigeria are still finding it difficult to access funds
from commercial banks to kick start their businesses, despite attempts
to aid the sector.

These are
enterprises with a maximum asset base of N500 million (excluding land
and working capital), as classified by the Central Bank of Nigeria.
They argue that compared to their foreign counterparts, they don’t get
the required financial support from Nigerian banks.

“Most commercial banks do not want to give loans to start-ups,” said a banker at Intercontinental Bank.

“The proof for a
bank is to know that you are specialised and focused in your business,
and if they give you the money, you know what to use it for. You must
have run the business for a period of time; that is why some banks
would demand to see your cash flow statement, and your certified
audited accounts for two years.

“That is the stand
of commercial banks towards small and medium enterprises. An average
commercial bank will tell you that you are just starting the business.
As such, they are not sure about your business. If the Central Bank can
actually implement their plan to support small and medium enterprises
in terms of finance, then there may be a way out for them,” he added.

Friends and family to the rescue

But some operators of these enterprises are finding ways around the banks hurdles.

“Right now, I source for funds from my friends and family,” said Ade Olatunde, an oil and gas supplier.

“It is even worse
for oil and gas SME’s. Banks are not ready to fund such businesses,
especially downstream. What I’m doing is that I’m running my account
properly, so that my bank can monitor it, pending the time that I would
again request for a loan,” Mr. Olatunde said.

He added that there are so many people with great ideas, but they do not have funds to turn such into budding enterprises.

Kemi Abiodun, a
university graduate who wishes to establish a fashion designing centre,
says she was advised by bank staff to source for her capital from
friends and relations.

Saying she does not
feel bad about the bankers’ comments, “but I think if the government is
really serious about creating jobs, there should be an institute or
set-up that would guarantee the funds that the banks will give us and
monitor our businesses, to ensure that the money is spent as proposed.
I do not think the guranteed Central Bank’s fund covers start-ups, so
it will be difficult for these banks to lend us money. How much am I
looking for?”

Plans and more plans

Meanwhile, the
federal government, last Wednesday, announced the provision of
N75million to the Bank of Industry (BoI) to boost increased access by
small and medium-scale enterprises.

Olusegun Aganga,
the finance minister, disclosed at the launch of the initiative to
ensure the viability of small and medium enterprises in the country,
that the National Economic Management Team has identified the two
groups as the best institutions for job creation and economic growth in
most economies around the world.

The Central Bank
too has not left small and medium enterprises to their fate. It
facilitated the Small and Medium Enterprises Equity Investment, a
voluntary initiative of the Bankers’ Committee approved at its 246th
meeting of December 21, 1999.

The scheme required
all banks in Nigeria to set aside 10 percent of their profit after tax
for equity investment and promotion of small and medium enterprises.
The question is, where does all the money by these banks go, and what
projects do they fund?

The Intercontinental banker offers a clue

“Banks would rather
lend to people who have already made their money, who are already in
business, with the view that they are more credit worthy. Do you know
how many bankers from various banks are sitting at Dangote’s office, or
some other top shot with proposals of loan facilities that he can
acquire?

“We all know what
happened during the audit, how many so called ‘top shots’ owe the
banks. If, for instance, you give someone like Dangote N50 billion, do
you know how many small and medium enterprises that money would have
funded? That is what is happening,” he said.