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Zambia’s annual
inflation slowed to 7.1 percent in November, due to easing food prices,
putting it on course to end 2010 well below the central bank’s year-end
target of 8 percent, data showed on Thursday.

Inflation slowed from 7.3 percent in October.

“The decline is
attributed to reductions in the cost of some food items,” the Central
Statistical Office (CSO) said in a statement.

Food inflation accounts for more than 50 percent of the CPI basket, and has eased partly due to a bumper maize harvest.

Central bank
governor, Caleb Fundanga, said this month that inflation was likely to
be below the year-end target of 8 percent in 2010, due to the higher
maize crop and expectations the exchange rate for Zambia’s kwacha
currency would be stable.

The kwacha has
gained about 10 percent against the dollar from a low in the second
quarter of the year, and was last trading at 4,730 to the dollar on
Thursday.

The CSO also said
Zambia’s trade account swung to a deficit in October for the first time
this year, recording a shortfall 451.5 billion kwacha versus a surplus
of 692 billion kwacha in September.

“The deficit was
largely due to imports of petroleum products and the appreciation of
the kwacha, which reduced our export earnings,” CSO acting director,
John Kalumbi, said.

Finance minister,
Situmbeko Musokotwane, said this month that Zambia was closely watching
its strengthening currency. The kwacha’s appreciation from early 2007
to mid-2008 hit export earnings.

REUTERS

The
Federal Government yesterday said the unbundling of the Power Holding
Company of Nigeria (PHCN) and the privatisation of the power sector was
not yet finalised because it does not want the company’s critical
assets to go into the wrong hands.

Nuhu
Wya, the minister of state for power, said at the 2010 ministerial
briefing in Abuja that despite the criticisms by the National Union of
Electricity Employees (NUEE) and the Nigeria Labour Congress (NLC), the
power sector privatization programme would proceed as planned.

Mr.
Way said that though the wounding down of the PHCN has continued to
elicit protests from the company workers and affiliates of the
organised labour, government is determined to go ahead with the plan
and complete the process by next year’s second quarter.

“Government
is determined to see the eventual privatization of the electricity
sector as planned. But the public must be assured of the federal
government’s commitment, to ensure that the sector’s resources do not
fall into the hands of asset strippers,” Mr. Wya said.

“The
power sector reform programme, which started in 2005, is well on the
way to completion. The Power Holding Company of Nigeria (PHCN) is
expected to be wound down by the second quarter of 2011, but government
would insist that the exercise is not in favour of those in government
that looted the $16 billion spent on the sector during the Obasanjo
regime. Selling the company to these people would only impoverish
Nigerians,” he declared.

Increased electricity supply

According
to the minister, despite challenges militating against the completion
of the privatisation process, the present administration has recorded
significant improvements in the level of electricity supply to
consumers since the beginning of the year.

Government,
he said, was searching for people who are not only financially vibrant,
but possess the ability to add value to what they are buying, adding
that with several other infrastructural challenges that the government
was facing, the search for foreign investors was unavoidable.

“The
consequence of not taking these decisions would be very colossal. As
long as the PHCN remains in the hands of the government, the country
will continue to be penny wise, pound foolish. If we will not fulfill
our responsibilities, we will continue to live in darkness. So, this
government is saying: enough is enough; let’s go the full length of the
reforms,” he said.

Hussein
Labo, PHCN chief executive officer, said the power sector reform was
inevitable, pointing out that individuals or groups that are against
the ongoing privatization process were either unproductive staff or
‘freeloaders’, who are not really interested in the progress of the
sector.

“There
are two groups of people who are against reforms in the power sector.
The first group is the unproductive members of staff who think when
that utility is reformed they will be out of work; while the second
group is people who enjoy certain benefits when the utility is under
private hands, and they believe they would not continue to enjoy such
benefits if the reform succeeds,” Mr. Labo declared.

The International
Monetary Fund (IMF) wants full transparency and accountability in the
operations of the Asset Management Corporation of Nigeria (AMCON). In
its latest assessment of Nigeria, released on Wednesday, the IMF gave a
tacit approval to interventions in the banking industry, but expects
AMCON to establish clear criteria for eligible assets.

The IMF statement,
which was issued by its mission chief for Nigeria, Scott Rogers, states
that, “Recapitalizing the insolvent banks and returning them to private
hands as quickly as possible is critical,” the report stated, while
advocating accountability in AMCON operations and financial results.

AMCON was
established by the Central Bank of Nigeria (CBN) and the ministry of
finance, with the aim of absorbing bad loans in the books of banks.

The IMF assessment
report was released after a meeting with Olusegun Aganga, finance
minister; Lamido Sanusi, Central Bank governor; Shamsudeen Usman,
minister of national planning; as well as other senior government
officials and representatives of the private sector.

Transparency is crucial

Victor Ogiemwonyi,
managing director, Partnership Investment, an investment firm, said the
asset corporation needs to be transparent in order to sustain the
confidence of the market.

“They have to be. They know it is the most crucial thing for them to do,” Mr. Ogiemwonyi said.

In realisation of the import, the corporation has declared its criteria for accepting assets that will be taken over.

Razia Khan,
regional head of research, Africa Global Research, Standard Chartered,
London, said high interbank rates was in anticipation of AMCON.

“Interbank rates
are likely to remain elevated, a much-needed safeguard to ensure that
liquidity growth does not get out of hand once the AMCON’s activities
get underway,” Ms.Khan said.

The IMF team, while
supporting the recent increase in the monetary policy rate, recommended
that the CBN conducts monetary policy with a view to reducing inflation
to a single-digit level. According to the IMF, slower growth in credit
is not unexpected in the aftermath of the unsustainable credit growth
driven by equity-related lending.

“Efforts to boost
lending to small businesses should be promoted through targeted
reforms, such as an effective credit risk bureau, better collateral
execution and bankruptcy procedures, and improved land tenure system,”
it said.

The IMF added that
Nigeria needs to make better use of Open Market Operations (OMO) in
order to make its policy rate more effective. Open market operations
refer to the buying and selling of government securities in the open
market, in order to expand or contract the amount of money in the
banking system.

“Looking forward,
the IMF team emphasised the importance of developing a consistent
macroeconomic policy framework, with the fiscal and monetary
authorities working closely together to help achieve stability and
growth,” it further said.

Prevailing
stagnation of aggregate credit to private sector, according to IMF, is
expected, especially in the aftermath of the unsustainable credit
growth driven by equity-related lending.

“Efforts to boost lending to small businesses should be promoted
through targeted reforms, such as an effective credit risk bureau,
better collateral execution and bankruptcy procedures, and improved
land tenure system.”

Petrofac spends
$100 million on a 15 percent stake in Nigerian oil explorer, Seven
Energy, fulfilling the British oil and gas company’s long-term
ambitions to enter sub-Saharan Africa’s second-biggest economy.

Petrofac also has
an option to invest a further $52 million, should project milestones be
reached, bringing its interest up to 19.2 percent on a diluted basis,
while other investors have agreed to inject an additional $50 million
into Seven Energy.

“We see this as a
mutually beneficial transaction. Seven Energy has a lot of experience
in operating in Nigeria,” Petrofac’s CFO, Keith Roberts, told reporters
in a conference call.

“We’ve been
targeting for years to establish a much stronger (Nigerian) presence,
and we believe that this transaction and the broader alliance, and the
opportunity that gives us to both co-invest and co-develop with Seven
will help us progress our ambitions to develop a significant presence
in the country,” Mr. Roberts said.

Mr. Roberts noted
that the company had “significant fire power”, with a billion dollars
in cash on the balance sheet to fund any future acquisitions, but
declined to say whether the company was looking at any other specific
targets.

“Clearly, we need
to be comfortable with the opportunities, the returns, and the
associated risks. Let’s start with (this) before we think of anything
else,” he said.

Petrofac will
provide experienced personnel to help with the delivery of Seven
Energy’s key existing projects, and will be represented on its board
and management committees.

Shares in Petrofac were up 0.3 percent at 1,455 pence at 1313 GMT.

REUTERS

JP
Morgan, a United States investment banking and securities firm, has
said it is still managing $500 million of Nigeria’s foreign reserves,
in collaboration with Zenith Bank.

Tosin
Adewuyi, the bank’s senior country officer in Nigeria, said the
collaboration, which has been on since 2006, is still ongoing.

“Zenith
Bank Nigeria joint venture is still very much on. Nothing has changed
since then,” Mr. Adewuyi said at the sidelines of a workshop between
the Nigerian Stock Exchange, the London Stock Exchange, Thomson
Reuters, and JP Morgan, held yesterday in Lagos.

“The Central Bank, in October 2006, gave 14 Nigerian banks, with their international asset manager partners, $500 million each, totaling $7 billion, out of the country’s foreign reserves, to manage on behalf of the country

The
14 global asset managers and their local counterparts were Black Rock
and Union Bank; J.P. Morgan Chase and Zenith; HSBC and First Bank; BNP
Paribas and Intercontinental Bank; UBS and UBA; Credit Suisse and IBTC
Chartered Bank; Morgan Stanley and GTB; Fortis and Bank PHB; Investec
and Fidelity; ABN Amro and Access Bank; Cominvest and Oceanic Bank; ING
and Ecobank; Bank of New York and Stanbic Bank; and Crown Agents and
Diamond Bank.

Mr. Adewuyi said despite the drop in Nigeria’s foreign reserves, the arrangement still subsists.

Deepening presence

He added that JP Morgan may consider deepening its presence in the country.

“We view Nigeria as a key market for us in Africa. In Africa, pretty much Nigeria comes into number two,” he said.

He, however, said the bank is not considering buying into any of the rescued banks.

“While
we are not purchasing a local bank, we do have relationship with some
of them and helping to build capacity. We don’t run a retail bank in
Nigeria, at least not now. Not to say, in the next two or three years,
we don’t see that as a viable model. But so far, we support banks,
corporations, and government behind the scene internationally,” Mr.
Adewuyi said.

Ibukun
Adebayo, head of primary markets, Middle East, and Africa of the London
Stock Exchange (LSE), said it was collaborating with the Nigerian Stock
Exchange to enhance its development. He said the Stock Exchange has
performed as expected, considering the fallout of the global financial
crisis.

“The
Nigerian Stock Exchange is doing exactly what the London Stock Exchange
is doing, which is keeping interest in the market. We (LSE) get a lot
more support from our regulators. In the UK, we operate under a more
flexible environment. We don’t have rigid rules,” Mr. Adebayo said.

He said LSE operates under codes which need not be rigidly adhered to, provided there is proven effort to comply.

“That
flexible approach to regulation means that we have actually works very
well and that has attracted a number of investments,” he said.

He
explained that unlike Nigeria, investors in the UK capital market have
a responsibility to the companies in which they invest.

“We
have the investors’ stewardship code, which effectively means that
there is covenant between investors. We don’t want you here today and
gone tomorrow. You have to shadow a certain amount of dedication to a
company over a period of time,” Mr. Adebayo said.

This arrangement, he said, helped to mitigate the repatriation of
funds from the UK market during the global financial crisis in 2008.

It’s that time of year again; it comes around so quickly, doesn’t it? For many, the approach to Christmas has become a time of too many expectations, and too much pressure. As the seasonal blitz with its attendant flashing lights, piped carols, and colourful ads, draws near, you find yourself caught up in the whirlwind of activity.

Whether you look forward with excitement to the shopping and preparations, or with some dread at all the disruption, stress and drain on your resources, be careful not to overspend. Here are a few suggestions on how to get through Christmas without throwing your finances into disarray.

Avoid last minute shopping

Are you one of those found in the shopping mall panic buying at 9.30pm on Christmas Eve? Let’s try to change things this year. Shopping under pressure will lead you to overspend, and you are more likely to buy gifts that are not appreciated by the recipients. Shop early; if you begin now, you can shop around for more meaningful, appropriate gifts than you would find in a last minute shopping spree.

Acumulating gifts throughout the year eases the pressure, and you won’t feel the strain of buying several presents all at once. By the time Christmas arrives, hopefully, you will have only a small amount of shopping left to do. After Christmas sales are also a useful way to prepare for next year, as many items are sold at much reduced prices in January.

Stick to a budget

Wouldn’t it be wonderful to be able to buy special gifts for all your loved ones? The reality is that funds are limited. In an ideal world, one should have started to set money aside specifically for Christmas over a period of time, so that when it is time to shop you have the cash in place.

As we get close to Christmas and before the shopping frenzy gets into full gear, put a simple Christmas budget in place. It will help you determine exactly how much you can afford to spend on Christmas and all its trappings: gifts, decorations, Christmas cards, extra food and drink, new clothes, entertainment, phone calls, charitable donations, and travel. Don’t forget to include a little indulgence for yourself.

Add up the total and compare that with what you have available to spend. If it’s more than you can afford, don’t feel pressured to overspend, just look for areas to trim. Remember, most people are in the same boat. If you are wondering whether you should drop a person or family from your list, you can be sure that they are also considering dropping you.

Food is a major Christmas expense

In the run up to Christmas, we tend to buy far too much food, and so much of it will go to waste. Plan your Christmas food requirements now, and make a list of all that you will need. Prices usually go up significantly in early December so bulk-buying some of the non-perishable items, which can be shared with friends and family can take some pressure off your finances, in the week running up to Christmas.

“Making a list, checking it twice”

Once you have a budget, make a list of friends and family for whom you wish to purchase gifts and how much you think you can afford to spend on each person. Remember those who have been particularly helpful through the year, and don’t forget to include a few extra gifts under the tree just in case someone shows up unexpectedly. Sometimes, you receive a gift from someone not on your list and feel obliged to reciprocate.

Avoid borrowing if possible

Don’t borrow money just to pay for a great Christmas. Be realistic and spend what you can comfortably afford today without going into debt. It is usually better to pay with cash to purchase toys and other gifts, rather than to borrow, as the interest cost will make everything more expensive.

It’s the thought that counts not the amount

Most people appreciate a thoughtful gift, something that lifts them and demonstrates love and care, not wealth. Often, gifts of great sentimental value, such as framed photographs, a potted plant, or a special book or CD, aren’t that expensive.

It is also a way of teaching your children by example that thoughtfulness is more important than price. Encourage them to use their talents and present handmade crafts or delicious edible gifts such as homemade biscuits for their grandparents, aunts, and uncles who will treasure these gifts.

Give away “unwanted” gifts

If you look in your cupboards you are bound to find loads of gifts you never found a use for from birthdays and Christmas’ past. There may be sets of cutlery, juicers, engraved glasses that are still in their original boxes that will make ideal gifts this Christmas.

Open any gifts you receive early and rewrap the ones that you will not use and give them to others who will really appreciate them – make sure you keep a list of what came from whom to avoid the embarrassment of giving Uncle Celestine back the same basket of plastic fruit he gave to you!

Christmas Bonus

It’s always nice to have some extra cash over the holiday season. If you are fortunate enough to receive a Christmas bonus or 13th month salary this year, don’t spend it all; put it to good use. It is tempting to plough it all into Christmas festivity, but by spending your entire bonus on short-term expenses, you could be forfeiting a great opportunity for build your savings. After indulging yourself a little, invest the balance in something that will contribute to your long-term financial security.

Gifts that keep giving

The pressure from children to buy the latest high-tech gadget, smart phones, and toys can be overwhelming. Presents that improve personal finances are an ideal gift at Christmas; not only do they outlast expensive toys and gadgets, but they may continue to give, long after the wrappings have been thrown away.

The gift of stock or a lump sum mutual fund investment is a thoughtful financial gift to a young child and could be the start of a rewarding long-term savings plan.

A mutual fund is a professionally managed fund that pools money from many investors and invests in investment securities such as stocks, bonds, and money market instruments. Choose a fund managed by a reputable company with a sound track record. The fund manager will advise you on the most appropriate fund for your purpose. Decide on how much you want to invest, and complete an application form. The company will issue you with a certificate in respect of the investment; this can be presented to the beneficiary.

It’s not very pleasant to have someone dampening your enthusiasm and telling you to be careful and control your spending, but here is a word of caution; many Nigerian families will still be paying for their Christmas indulgencies well into 2011. There is still time to get your finances in some kind of order before the festivities start. Don’t wait until the last minute.

personalfinance@234next.com with your questions and comments. We would love to hear from you. All letters will be considered for publication, and if selected, may be edited.

The Federal
Government is exploring prospects of enlisting the support of the
African Development Bank (ADB) towards the execution of some critical
projects in the country’s power sector.

Olusegun Aganga,
the finance minister, said this on Tuesday, when Donald Kaberuka, the
ADB president, visited him in his office in Abuja.

“We have to take
advantage of the opportunities in the ADB to solve problems facing
African nations. As Africans, we believe that we have to manage our
issues by ourselves through the partnership with ADB,” Mr. Aganga said.

The minister, who
identified the Independent Power Projects (IPPs) as one area that
requires some attention, expressed optimism that the ADB would be able
to join the World Bank in providing the partial risks guarantees to
interest the Independent Power producers.

The finance
ministers and Central Bank governors in five African countries (C-10
Committee) had in its last meeting in Washington to discuss how issues
affecting Africa’s development could be tackled, directed Nigeria,
Egypt, South Africa, and Kenya to get together to explore creative ways
to solve the infrastructural issues affecting the African continent.

The meeting with
the ADB boss, Mr. Aganga explained, was in furtherance of that agenda,
considering the continued supportive disposition of the bank to the
government’s development efforts, particularly with the ongoing reforms
in the country to check the infrastructure deficit in the power sector.

Ineffective institutions

Besides, the
minister said the Primary Mortgage Institutions (PMIs), like Bank of
Industry (BOI), Nigerian Agricultural and Cooperative Banks (NACB),
Nigerian Export-Import (NEXIM) Bank, and National Economic
Reconstruction Fund (NERFUND), which were established to provide
support to government in the execution of it policies, have not been
living up to expectation.

“All these
institutions were set up by government to help execute government
policies in the different sectors of the economy. But, unfortunately,
government is not seeing the benefits of these institutions at the
moment,” he noted, adding that government is working on ways to ensure
that they become more active in providing finance to the real sector of
the economy of the country’s economy.

“We will see a big
difference and change in how government execute works with the PMIs.
The ADB has worked in so many countries to promote this effort by
sharing ideas to empower them to deliver their mandate to the economy.

“Government has
decided to empower all the banks in the country to work closely with
all these institutions towards the empowerment of Small and Medium
Enterprises (SMEs) and the development of the power infrastructure, to
ensure that they are provided with the support they require to execute
government policies the way they should have been done,” he said.

The ADB president
said he was in the country to, among others, explore ways of working
with the Federal Government to handle the assignment handed by the C-10
in Washington, adding that he was of the conviction that Africa will
come out of the global economic crisis stronger, if its resources are
properly managed to the benefit of the people.

“We are here to
interact with the Federal Government on ways to consolidate on the
achievements so far and to accelerate efforts on the development of
infrastructure in the country,” he said.

The Central Bank of
Kenya (CBK) said on Thursday it was looking to buy 5 million euros from
the local market, its second foreign currency purchase this week.

Some traders have
said the central bank’s frequent purchases of foreign currency have
kept the shilling under-priced. The bank says it is not manipulating
the shilling’s value but building foreign currency reserves.

The CBK purchased 5 million euros on Monday.

Dangote Cement Plc
(DCP), a member of the Dangote Group, has announced an interim dividend
of N30.98 billion for the period ended September 30.

The interim
dividend is part of the group’s strategies of enhancing and growing
shareholders’ value through consistent dividend payment. It also
fulfills the promise by the directors of the company to pay an interim
dividend to shareholders.

Dangote Cement
resulted from the merger between Dangote Cement and Benue Cement
Company (BCC). The merger created the biggest company listed on the
Nigerian Stock Exchange (NSE).

In the review
period, the enlarged company reported a turnover of N146.56 billion.
According to the unaudited financial results, turnover rose by N55.26
billion or 37.71 percent, when compared to turnover value of N91.30
billion posted in the corresponding period of 2009.

A review of the
financial results indicated that Profit Before Tax (PBT) rose by N30
billion or 39 percent to N76.93, compared to N46.93 billion recorded in
the corresponding period of 2009. Profit After Tax (PAT) was on the
same upward swing, as it rose by N30.16 billion or 40.05 percent to
N75.30 billion, in contrast to N45.14 billion at the preceding year.

With the payment of
N30.98 billion interim dividend, investors in the companies under the
Dangote Group that are listed on the Exchange received a total dividend
of N60.21 billion.

The first stage of the operations of the Asset Management
Company (AMCON) would address most of the troublesome loans in the industry,
Mustafa Chike-Obi, the managing director of AMCON, expressed this optimism in
an interview last week.

The AMCON chief also said shareholders of the rescued banks will
never be forced to sell their shares during the recapitalisation process.

“We think that when we have done the first stage, we would have
addressed 80-90 percent of all the troublesome loans in the country,” he said.

“We are taking non performing loans in stages – Phase 1 we
estimate to be about N2.2 trillion face value and roughly 600 billion in actual
cash. The Act specifies what assets are eligible for purchase by AMCON, so it
is determined absolutely by the Central Bank’s guidelines, and the guidelines
in this case are non performing loans – all non performing margin loans for all
banks and all non performing loans for rescued banks.

“In the first phase, first of all, everything has to be
non-performing loans. It is a category. Another category is all margin loans
across all banks and then all other non-performing loans from the rescued
banks. That is the first stage. We anticipate that there may be other loans
that may be troublesome down the road, which we would address later,” Mr.
Ckike-Obi said.

He also assured shareholders of the troubled banks that they
have the freedom to decide how and when to sell their shares.

“They may sell their shares on the market, if they think the
market is high enough; or they can stay and be partners with AMCON in the new
recapitalised banks, but they will never be forced to sell their shares and
nobody will force them out,” he said.

Freedom to sell

Mr. Chike-Obi said major conflicts between the banks and
shareholders are not really anticipated. According to him, the NDIC is the only
option left for any bank in an irresolvable conflict with its shareholders.

“Our view is pretty clear. What we (AMCON) would do is that we
will buy the non performing loans and we will offer to recapitalise the rescued
banks. Negotiations between the banks and the shareholders, we expect, between
those two,” he said.

“If the existing shareholders don’t agree to a merger, the only
option left for them is to go to the NDIC where they would lose everything, so
we don’t expect much… This is a win- win for everybody. The existing
shareholders get something, the new shareholders get something. Most of these
rescued banks have interested buyers’ interested merger partners, most of them
do. There has been a lot of work done with them and we know who they are, both
local and international,” Mr. Chike-Obi further said.

Afrinvest, an investment and research firm, said the AMCON
intervention should be good for the economy.

“AMCON has offered to purchase an estimated N2.2tn (US$15.0bn)
in bad loans in exchange for 7-year bonds guaranteed by the Federal Government
of Nigeria. This should help plug the negative equity of the rescued banks, as
well as get banks lending again.

“Another crucial point in our view remains the relatively small
window within which banks are expected to deal on these terms. The AMCON has
said that it expects all transactions involving the purchase of NPLs from banks
to settle on or before December 31, 2010. This may prove to be impracticable
for a number of reasons, including the length of time required to carry out
necessary due-diligence on the relevant assets, as well as the impact the
existing market conditions surrounding bond pricing will have on funding for
AMCON,” Afrinvest said.

AMCON was set up as a resolution trust vehicle, following the
Central Bank induced reforms in 2009, which led to the sack of the chief
executives of all eight banks, as well as the injection of N620.0bn (US$4.0bn)
into these institutions. The audits revealed severe impairment to asset quality
across the sector, a display of grave corporate governance abuses amid serious
liquidity squeeze in several banks.