Nigeria Content Online

European regulators
will gain unprecedented powers to control commodity markets through
trade caps and heightened intervention if a draft EU document becomes
binding, specialist lawyers said on Friday.

Commodities are
being integrated into sweeping reforms to the European Union’s markets
in financial instruments directive (MiFID), which is due to be released
next week.

A draft version
seen by Reuters increases surveillance of market activities and
allocates new powers to set U.S.-style position limits to restrict
speculative trade.

“I think there are
some risks in this, and the framework of this paper seems to suggest a
fairly significant increase in regulatory intervention. Some is
foreshadowed at the G20 level and some of it isn’t,” said Chris Bates,
a partner at Clifford Chance with a focus on financial services
regulation.

France, Europe’s
largest grain producer and exporter in the EU, has been pushing for
more controls for commodity markets as the head of the Group of 20
economic powers.

Spikes in wheat and
cocoa prices this summer have given fresh impetus to the debate. Bates
said that the new Mifid in some ways is more stringent and likely to be
more controversial than proposed U.S. regulation under the Dodd-Frank
act.

“The real concern
about the whole European framework is that it’s quite rigid once it’s
set … and that is one of the big differences from the United States.
There are concerns that there are many regulators that don’t have a
close feel for these markets, so it is giving them powers to take
actions they are not well-equipped to deal with.

“In contrast, the
CFTC (U.S. Commodity Futures Trading Commission) is steeped in
commodity markets and commodity markets regulation, so while its powers
may be extensive, at least they are manageable or predictable in some
way,” Mr.Bates argued.

Debate has been
heated on the topic of position limits. Under the revised Mifid,
traders could be required to reduce their positions in the interests of
the market.

“They (regulators)
will have powers to impose position limits for whatever category of
participant, and that’s something the UK has never called for,” said
Jonathan Herbst, a partner at law firm Norton Rose.

Mr. Bates, at
Clifford Chance, said the draft law would give regulators greater
powers to selectively manage a party’s position after it has been taken.

“I think that this
sort of intervention power is quite a dramatic change. If you imagine
that in securities markets that regulators were given powers to ask why
you are holding a security and to make you sell it at their whim,
that’s quite a big intervention in markets,” Mr. Bates said.

He added that the
natural consequence of stricter European regulation was a loss of
liquidity in the EU, as investors shift to the growing commodity
trading hubs in Singapore and Switzerland.

“There’s very
little discretion to adjust the rules later. So what you would expect
is a certain amount of this business to move somewhere else. Some of it
can’t, like electricity, but oil probably doesn’t need to stay here,”
he said.

REUTERS

Nigeria’s private sector credit is gradually improving, according to the latest data released by the Central Bank.

Data from the
regulatory body says private sector credit growth rebounded marginally
in October, reaching 6.9 percent year-on-year, from 5.3 percent in
September and 4.5 percent in August.

In nominal terms,
credit to the private sector reached N10.5 trillion in October, from
N10.3 trillion in September, N10.1 trillion in August, and N10.2
trillion at the end of 2009.

Finance experts say
while it appears that private sector credit has only moved up 3.2
percent year to date, its month-on-month growth rate has been in
positive terrain for three consecutive months (for the first time since
December 2009), at 1.9 percent in October, from 2.2 percent in
September and 2 percent in August.

Samir Gadio,
emerging markets strategist, Standard Bank, said one of the reasons
behind the substantial decline in annual growth rates is the high base
effect in the data.

“Private sector
growth expanded 84.8 percent year-on-year in 2008, predominantly due to
margin lending-related activities. The combination of a high base
effect and the continued deleveraging in the financial system since
2009, as well as a sharp deceleration in lending associated with the
structural issues in the banking system and increased risk aversion,
could only result in a sustained fall in annual credit growth figures,
until the end of the first half of the year,” Mr. Gadio said.

Experts say some technical reforms will be needed to boost retail lending, despite the significant improvement.

Mr. Gadio says the
tightening in monetary conditions by the Central Bank, following the
Monetary Policy Committee held on September 21 has not helped the
private sector credit outlook, adding that Sanusi Lamido Sanusi, the
Central Bank governor, recently indicated that he did not expect an
improvement in lending in 2010, at least until the banks are
restructured.

Yes, more loans are available

Bashir Borodo,
president of the Manufacturers Association of Nigeria (MAN), confirmed
that access to loan in the sector has improved.

“Yes, I must say
that access to loans has improved. This is because there is more
liquidity in the system, partly because of the direct intervention of
the Central Bank in terms of its guaranteed loans. Right now, we are
very optimistic that this change would continue this year and in 2011,”
Mr. Borodo said.

A source at
Intercontinental Bank said the improvement could be traced to the
special funds deployed by the Central Bank to the private sector.

“We should remember
that the Central Bank gave money for loans for those sectors, and they
are guaranteed. The banks have no option than to put these funds up for
loans. Also, this is the year’s end, many companies have to produce
more to meet year end demands and this means they would have to make
more demands for loans and fortunately, there are more guaranteed funds
from the regulatory body,” he added.

“Risks are better
evaluated now. Because of what banks have faced, they have strengthened
their risk management departments with better and more hands. Also, the
cost of money is reducing. There are now more willing deposits, current
and savings account, and this encourages the banks to lend now,” the
source said.

Nigeria expects its
budget deficit to widen to 6.1 percent of GDP this year, more than
double the level set under a fiscal responsibility act three years ago,
as government spending rises ahead of elections next April.

Revenue shortfalls
from the oil and gas sector, unexpected wage increases, and election
costs will contribute to the widening deficit, Finance Minister,
Olusegun Aganga, said in an annual briefing on sub-Saharan Africa’s
second biggest economy.

Government revenue
is projected at 3.18 trillion naira, with expenditure expected to be
5.16 trillion, Mr. Aganga said in the review, released on Monday.

Analysts have
expressed concern about the state of public finances in Africa’s most
populous nation, as presidential, parliamentary, and state governorship
elections approach.

Recurring
expenditure accounts for more than half of the country’s overall
spending, meaning it is paying more to keep government running than it
is investing in badly-needed infrastructure and other capital projects.

Government
borrowing has risen sharply, increasing by more than 50 percent since
the start of the year, compared to private sector credit growth of just
three percent over the same period.

The government has
said it will also issue bonds to pay workers at former state telecoms
company, Nitel, and to fund part of the electoral commission’s budget,
further increasing domestic debt.

Still, the head of
the debt management office has pointed to a debt-to-GDP ratio of 16
percent that is expected to remain stable next year, depending on the
rate of economic growth, suggesting Nigeria could easily raise more
debt if needed.

But authorities
have also spent billions of dollars of oil savings since the start of
the year alone, and seen foreign exchange reserves fall 20 percent
year-on-year by mid-November to $34 billion.

Ratings agency,
Fitch, last month, cited those factors when it cut its sovereign credit
outlook for Nigeria to negative from stable.

Oil savings dwindle

The Excess Crude
Account (ECA), into which Nigeria saves revenues above a benchmark oil
price, has dwindled from $20 billion at the start of late President
Umaru Yar’Adua’s term in 2007, to around $4.4 billion when President
Goodluck Jonathan took over in May, and less than $1 billion now.

The government says
the ECA has served its purpose as an account to be used to protect
Nigeria against a fall in commodities prices or a global downturn.

But analysts say
the reduction is alarmingly sharp during a period of relatively high
oil prices – Thursday’s price of $85 a barrel is a 40 percent premium
on the $60 assumption in the 2010 budget – and a recovery in Nigerian
oil production.

Mr. Aganga said
last week Nigeria’s foreign reserves were well below where they ought
to be, and that a plan was in place to restore them.

He has also said
spending for next year will be capped at 4.56 trillion naira, as the
government seeks to rein in expenditure over the next three years.

Parliament approved spending of more than 4.8 trillion naira for 2010, up more than 50 percent on the previous year.

The much awaited
sale of seven rescued banks is gradually unfolding, as the various
parties put finishing touches to the deal. While some prospective
financiers, particularly foreign investors, don’t want to stake their
funds, some local entities are making efforts to tidy up loose ends.

After injecting
N627 billion to resuscitate Intercontinental, Oceanic, Finbank, Union
Bank, Afribank, Bank PHB, and Spring banks last year, the Central
Bank’s plan is to allow new core investors that would entrench a new
culture of corporate governance, which the regulator said was lacking.

After several
months of negotiation, Lamido Sanusi, the Central Bank governor, said
recently that bids have been received for the affected banks from two
foreign institutions and some local banks. However, no foreign
institution has made its intention pubic. FirstRand, the South African
bank, regarded as one of the bidders, has said it is not bidding.

No foreign interest

Sam Moss,
spokesperson for Firstrand, said the institution is not interested in
any of the rescued banks, even though it has already registered its
presence in the country’s financial sector. JP Morgan, another foreign
financial institution, has also said it is not interested in any of the
rescued institutions.

“While we are not
purchasing a local bank, we do have relationship with some of them and
helping to build capacity,” said Tosin Adewuyi, JP Morgan’s senior
country officer in Nigeria.

However, the
International Finance Corporation (IFC), the investment arm of the
World Bank, may be backing the sale of the rescued banks, with the
recent signing of cooperation agreement with First City Monument Bank
(FCMB). The agreement, which comes with a $70 million investment in the
bank, also includes a clause for future partnership. A statement by the
bank says the areas of partnership include “acquisition finance of a
distressed bank.” FCMB is one of the bidders for Finbank.

IFC support

IFC’s country
manager for Nigeria, Solomon Adegbie-Quaynor, said, “IFC is committed
to supporting the full recovery of Nigeria’s banking system, and our
investment in First City Monument Bank reflects this strategy.”

“The CBN cannot
sell any bank because it does not have the power to sell what does not
belong to it. The only instrument is for the CBN to liquidate and
transfer to the Nigeria Deposit Insurance Corporation and these two
options will be too heavy considering the current condition of our
economy,” said Sunny Nwosu, coordinator of one of the numerous
shareholder groups recently.

Boniface Okezie,
another shareholders’ group coordinator, said pending court cases would
stall any attempt by the CBN to sell the banks. He said CBN has not
disclosed how much each of the banks require to recapitalise, which is
why the shareholders are in court to prevent the sale.

Mohammed Abdullahi,
CBN spokesperson, said so far, the banks were making appreciable
progress in reaching agreement with potential core investors.

“Individual banks
can tell you how far they have gone. They are talking with people, and
it has reached advanced stage,” he said.

He, however, said the banks are in a better position to talk on how far they have gone with the various bidders.

While welcoming
delegates to the Conference of the Parties (COP) of the United Nations
Framework Convention on Climate Change (UNFCCC), President Felipe de
Jesus Calderon Hinojosa of Mexico said that climate change has been
driven by changes in human behaviour, and that a shift in another
direction is needed to reverse the trend.

He intoned that the
world must embark on the pursuit of “green development” and “green
economy” as the path to sustainable development. He also stated that
some of the steps to be taken to attain this ideal include progress on
the negotiations on Reduced Emissions from Deforestation and
Degradation in Developing Countries (REDD), as well as development of
technologies to reduce fuel emission.

These were nice
words. These were also very contentious ideas. There are several red
flags and concerns about REDD by indigenous groups and forest dependent
peoples, as well as mass social movements across the world. The idea of
canvassing the extension of financial assistance to the poorest and the
most vulnerable countries is also seen by critics as a possible way of
dividing them and making them pliable to suggestions and decisions that
may actually be contrary to their best interests.

Even before the
Cancun conference opened, there were concerns that efforts may already
be afoot to rig the outcome, as was the case in Copenhagen in 2009. One
concern is about a text for negotiation that is emanating from the
chair of one of the working group through an opaque process.

Another concern has
arisen from a decision of the Mexican president to invite selected
heads of states to the conference. The list is not openly available,
but already it is becoming clear that some uninvited presidents intend
to be in Cancun.

Last year in
Copenhagen, the COP began and ended under a cloud of doubts and
perceived undemocratic actions. At that meeting, many delegations from
developing and vulnerable nations believed that drafts of what would be
the final outcome document were being discussed and circulated within
privileged circles, away from the standard practice where such
negotiations took place on the open conference floor.

In Copenhagen,
there was a steady flow of leaked documents allegedly prepared by the
president of the COP. The anxiety in Cancun is being raised by the
texts prepared by the chair of the ad hoc working group on Long-term
Cooperative Action (LCA). The other major working group under the COP
is the one that deals with the Kyoto Protocol and another text is being
expected from the chair of that working group, also without a mandate
from the working groups, according to analysts.

The year between
conferences is spent in technical negotiations and preparations during
which delegations review texts prepared by chairpersons of the working
groups on the basis of the submissions made by the delegations or
members.

Variation in documents

The document
produced by the chair of the LCA appears to be something quite at
variance with what many delegates expected would be the outcome of the
negotiations and work done since Copenhagen. The document that
delegates are to debate is allegedly based on the ‘Copenhagen Accord’,
which some delegates insist was not an agreement at the end of COP15,
but was merely taken note of by that conference.

Questions are being
asked why such a document would now be legitimised and made the
foundation for serious negotiations expected to produce a fair and
ambitious agreement at the end of the conference in Cancun.

After the
Copenhagen conference ended without an agreement, the government of
Bolivia hosted a first ever World Peoples Conference on Climate Change
and the Rights of Mother Earth in Cochabamba in April 2010. The outcome
of that conference was the Peoples Agreement that the government of
Bolivia then articulated into a formal submission to the UNFCCC and the
secretary general of the United Nations.

The essential fault
line between those following the path crafted by the Copenhagen Accord
and those who do not accept it as the way towards fair agreement that
recognises the principle of common and differentiated responsibilities,
are quite serious, and the resolution has deep consequences for the
future of our planet and the species that inhabit it, including
humankind.

The draft text
circulated by the chair of the LCA puts forward the ambition that may
lead to an aggregate global temperature increase of up to 2 degrees
Celsius, as opposed to proposals made by a number of delegations that
the target should be between 1 degree and 1.5 degrees temperature rise
above pre-industrial levels. A 2 degrees Celsius temperature increase
would mean catastrophic alteration to some parts of the world, with
Africa being particularly vulnerable.

The text in
question has also disregarded the demand by vulnerable nations that to
ensure urgent and robust technology transfer for the purpose of
mitigation and adaptation, such transfers should not be governed by
subsisting intellectual property rights regimes.

Another sore point
in the text is that the financial commitment proposed does not step up
to the level of ambition needed to tackle the climate crisis, and is
even less serious than what was suggested by the so-called Copenhagen
Accord.

The immediate past
chair of the COP in her final statement indicated that the conference
must move in a way that would show that Cancun can deliver a good
outcome for tackling climate change.

At the end of the first day, the clear question on many minds was, can Cancun?

The World Bank
Group says it is working towards promoting the application of
international accounting standards in the country in a bid to
institutionalise greater transparency in financial reporting in the
banking and financial sectors of the economy.

The International
Finance Corporation (IFC), the investment arm of the World Bank, is to
collaborate with PricewaterhouseCoopers LLP, a corporate accounting and
finance consulting firm, to educate practitioners on the need to adopt
the accounting standards to enhance greater transparency in financial
reporting in the country, and allow Nigerian companies meet the
disclosure requirements of international investors.

IFC, which is the
largest global development institution focused on the private sector in
developing countries, is involved in efforts to create opportunities
for people to escape poverty and improve their lives by providing
financing to help businesses employ more people and supply essential
services.

Awareness and understanding

Managing partner,
PricewaterhouseCoopers, Ken Igbokwe, said in a statement that more than
80 banking and financial sector practitioners recently participated in
a one-day seminar in Lagos to help improve awareness and understanding
of the issues involved with adopting new International Financial
Reporting Standards (IFRS).

According to Mr.
Igbokwe, the impact of IFRS goes beyond reporting by accountants, and
covers all standards for measuring business performance, adding that
this makes it important that line managers understand its effect on the
internal and external reporting of the operations and performance of
the business.

IFC country manager
for Nigeria, Solomon Adegbie-Quaynor, said embracing the IFRS was
important to assist the financial market in preparing for the process
of change and to realise the importance and benefits to be derived from
increased transparency in financial reporting.

Removing subjectivity

Identifying the
benefits, Mr. Adegbie-Quaynor said apart from helping to remove some
subjectivity from financial reporting, the IFRS provides a consistent
basis for recognition, measurement, presentation, as well as disclosure
of transactions and events in financial statements, pointing out that
the challenge is in getting not only accountants, but other operators
in the banking and financial sectors, to adopt them in their operations.

“As more African
businesses operate internationally, it is important for investors to be
able to compare companies under similar standards in all countries
where they operate. Greater transparency, which these standards will
bring, is likely to attract increased investment into Nigeria,” he said.

Besides, he said,
local companies seeking dual listing in other countries will find IFRS
easier to comply with reporting requirements of overseas stock
exchanges, while governments will be in a better position to assess the
tax liabilities of multinational companies receiving income from
overseas, as well as for foreign multinationals setting up shop in
their own country.

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.

European regulators
will gain unprecedented powers to control commodity markets through
trade caps and heightened intervention if a draft EU document becomes
binding, specialist lawyers said on Friday.

Commodities are
being integrated into sweeping reforms to the European Union’s markets
in financial instruments directive (MiFID), which is due to be released
next week.

A draft version
seen by Reuters increases surveillance of market activities and
allocates new powers to set U.S.-style position limits to restrict
speculative trade.

“I think there are
some risks in this, and the framework of this paper seems to suggest a
fairly significant increase in regulatory intervention. Some is
foreshadowed at the G20 level and some of it isn’t,” said Chris Bates,
a partner at Clifford Chance with a focus on financial services
regulation.

France, Europe’s
largest grain producer and exporter in the EU, has been pushing for
more controls for commodity markets as the head of the Group of 20
economic powers.

Spikes in wheat and
cocoa prices this summer have given fresh impetus to the debate. Bates
said that the new Mifid in some ways is more stringent and likely to be
more controversial than proposed U.S. regulation under the Dodd-Frank
act.

“The real concern
about the whole European framework is that it’s quite rigid once it’s
set … and that is one of the big differences from the United States.
There are concerns that there are many regulators that don’t have a
close feel for these markets, so it is giving them powers to take
actions they are not well-equipped to deal with.

“In contrast, the
CFTC (U.S. Commodity Futures Trading Commission) is steeped in
commodity markets and commodity markets regulation, so while its powers
may be extensive, at least they are manageable or predictable in some
way,” Mr.Bates argued.

Debate has been
heated on the topic of position limits. Under the revised Mifid,
traders could be required to reduce their positions in the interests of
the market.

“They (regulators)
will have powers to impose position limits for whatever category of
participant, and that’s something the UK has never called for,” said
Jonathan Herbst, a partner at law firm Norton Rose.

Mr. Bates, at
Clifford Chance, said the draft law would give regulators greater
powers to selectively manage a party’s position after it has been taken.

“I think that this
sort of intervention power is quite a dramatic change. If you imagine
that in securities markets that regulators were given powers to ask why
you are holding a security and to make you sell it at their whim,
that’s quite a big intervention in markets,” Mr. Bates said.

He added that the
natural consequence of stricter European regulation was a loss of
liquidity in the EU, as investors shift to the growing commodity
trading hubs in Singapore and Switzerland.

“There’s very
little discretion to adjust the rules later. So what you would expect
is a certain amount of this business to move somewhere else. Some of it
can’t, like electricity, but oil probably doesn’t need to stay here,”
he said.

REUTERS

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.

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.