Nigeria Content Online

In what amounts to a vote of no confidence, stockbrokers refused
to authorize council members of the Nigerian Stock Exchange (NSE) to fix the
remuneration of auditors, Akintola Willaims Deloitte.

At the 49th annual general meeting held in Lagos yesterday,
member stockbrokers rejected the report after the accounting firm was unable to
provide satisfactory answers to some of the observation raised.

Trouble started when Okechukwu Unegbu, the Chief Executive
Officer of Maxifund Securities Limited, observed the financial report was not
signed. “My concern is the issue of illegality,” he said. “Mr Chairman, this
account is not signed. It is a legal issue and I want you to consider it
because we may need to get another account.” He added that endorsement by the
firm does not substitute for an individual signature.

Akintunde Odunsi, the Managing Director of Interstate Securities
Limited, said with the investigations into the accounts of the NSE, the
submitted financial report may be altered after the final outcome of the
forensic investigation into the books of the stock exchange. “If the auditors
say investigation is not yet finalised and they are not sure the likely effect
it is going to have on the account, my question is why are we hurrying to have
AGM and not get to the bottom of it so that at the end of the day we know where
we are going,” he said.

Unwilling members

When it was time to receive and adopt the report of council,
financial statement, and report of the auditors, no member was willing to move
the motion. Balama Manu, interim president of the NSE council, while admitting
the unsatisfactory response, however called on members to adopt the motion. “I
will like to say that we seem to have addressed most of the questions not
necessarily to the satisfaction of those who raised them, but I will like to
move ahead by moving formally that the accounts for the year ended December 31,
2009 and report of council, be received and adopted,” he said.

Ebilate Mac-Yoroki, CEO of City Code Trust and Investment Limited, said the
conduct of the auditors was not encouraging. “Most of the answers we have had
are not satisfactory,” he said. “The auditors that have been auditing this
account for a very long time cannot give us the basis for which it is
qualifying just last year’s account. The auditor has no new basis on which it
is qualifying this account.”

It took the intervention of senior stockbrokers to resolve the stalemate
after the interim president compelled a council member, Emmanuel Ocholi, to
second the motion. “In the interest of moving this exchange forward, let’s not
introduce complications. I do not think this is in the interest of the exchange
and by implication, all our stakeholders,” Mr Manu said.

Subsequently, Aigboje Higo, of Capital Bancorp, appealed to his colleagues
to work in harmony in order not to reverse the gains that has been achieved in
the last few months. “The market is sick and tired of us not putting our house
in order,” he said. “I think it will be wicked and callous for investors who
put their money for us to come out again and give stories.” Eventually, the
accounts were adopted.

An economist, Lizzy
Okereke, has urged the Federal Government to establish Micro, Small,
Medium Entrepreneurs (MSMEs) banks in all the 774 local governments
areas in the country.

Mrs. Okereke made
the call on Tuesday at the 37th Annual General Meeting and Conference
of the Enugu Chamber of Commerce, Industry, Mines, and Agriculture
(ECCIMA) in Enugu.

“For Nigeria to
take its proper place as an emerging economic power come the year 2020,
we must not only provide access to credit and in the right places, but
in a sustainable manner,” she said, adding that this was the only way
to speed up the economic development of the nation.

ActionAid Nigeria,
an anti-poverty NGO, on Wednesday, in Abuja, urged the government to
provide more support to smallholder farmers, to avoid food scarcity in
the country.

Tunde Aremu, the
organisation’s policy, advocacy, and campaigns coordinator, made the
call while speaking with the News Agency of Nigeria (NAN).

“Announcement of a
surge in global food prices has huge implications for the world’s
poorest who are already struggling to get enough to eat. ActionAid is
calling on governments to take urgent measures to boost harvests and
protect the most vulnerable against the looming possibility of another
global food crisis,” Mr. Aremu said.

The Federal
Government plans to establish a non-interest (Islamic) bank in the
country, to assist low income earners in the delivery of financial
services at affordable costs.

Umaru Ibrahim,
acting managing director, Nigeria Deposit Insurance Corporation (NDIC),
made the announcement on Wednesday, in Abuja, at a one-day
sensitisation seminar on Non- Interest (Islamic) Deposit Insurance
Scheme.

“It is on record
that one of the ways of alleviating extreme poverty in developing
countries such as Nigeria is the provision of banking services and
adequate credit facilities to vulnerable groups,” he said, adding that
the decision to establish the bank was in consonance with the principle
of financial inclusion.

Kenya’s I&M
Bank said on Wednesday it has received a 2 billion shillings loan from
the Netherlands Development Finance Company (FMO) for onward lending,
especially to small and medium sized companies.

“The lending by FMO
provides a positive signal which will help I&M Bank to bridge the
gap arising out of maturity and foreign currency mismatches, whilst
simultaneously presenting a stable and long term source of foreign
currency funding to meet the growing needs of the market,” the bank
said in a statement.

Kenya’s central bank says commercial lending was up 6 percent in the third quarter to $11 billion.

Senegal plans a
$500 million Eurobond issue for the first half of next year, replacing
the $200 million bond launched last year, the finance ministry said on
Wednesday.

“The borrowing
should be launched in the first half of 2011 and reach the critical
size of $500 million, that will enable it to be listed on the emerging
markets reference indices,” ministry communications adviser, Ousseynou
Gueye, told Reuters in response to inquiries.

The inclusion of an
instrument on the Emerging Markets Bond Index (EMBI) is considered an
advantage, as it improves its liquidity.

The Ugandan
shilling weakened on Wednesday, undermined by dollar demand from
telecoms and energy companies and the euro’s slide against the dollar,
traders said.

At 1037 GMT,
commercial banks quoted the shilling at 2,290/2,295 per dollar, weaker
than 2,285/2,290 at Tuesday’s close. Traders forecast it would trade
within the 2,290-2,297 range in the days ahead.

“I think we will
continue to see a weak shilling. We saw some dollar demand from the
energy and telecom sectors, which depleted what was available in a
market that is short on dollars,” said Faisal Bukenya, head of market
making at Barclays Bank, Uganda.

Nigeria’s Central
Bank left its benchmark interest rate at 6.25 percent on Tuesday, to
allow a previous rate hike to filter through the system, but said it
recognised there was a need for monetary tightening.

The following are some analysts’ reactions:

Samir Gadio –
emerging markets strategist, Standard Bank: “The ability of the Central
Bank to tackle or contain inflationary pressures is constrained by the
weight of the food category in the CPI basket, but also the increasing
disconnect between expansionary fiscal policy and a more conservative
monetary stance.

“Yet, this year’s
substantial fiscal expansion and the monetisation of excess crude
account proceeds since early 2009, have been offset by sluggish private
sector dynamics and a weak money multiplier, notably as excess
liquidity has been mostly reinvested into the Nigerian bond market, and
not the real economy.

“As such, while it
is true that the annual base effect in core inflation has deteriorated
lately and non-food inflation rose 13.2% y/y in October, from 12.8% y/y
in September and 12.4% y/y in August, this trend could still flatten in
Nov-Dec., as a more favourable index comes into effect.

“Interestingly, the MPC reiterated that exchange rate stability remained a policy priority.

In our view, the
CBN is keen to preserve the USD/naira 150 level, since the exchange
rate is its main nominal monetary policy anchor, and inflation
targeting is unlikely to be implemented in the medium-term, given the
predominantly exogenous nature of Nigerian inflation,” Mr. Gadio said.

Kayode Akindele –
Greengate Strategic Partners: “The committee acknowledged the growing
inflationary pressure in the economy, especially in terms of food
prices, and given their “price stability” mandate, a rise in MPR was
expected. The rate was, however, maintained by a narrow one vote
majority which suggests a rise at the next meeting.

“The corridor was
narrowed, which increased the deposit rate instead, which they hope
will encourage banks to deposit more money with the CBN and out of
circulation. This would, however, discourage growth in private sector
credit, which has been very low since the banking crisis and needs to
grow more rapidly.

“The MPC again
emphasised the need for supply side reforms, especially in agriculture
and energy, by the government, to curtail inflationary pressures in the
medium to long term, and also warned about the rapid expansion in
government borrowing, also voiced recently by the World Bank … and
how it is encouraging inflationary spending and crowding out the
private sector from the debt markets,” explained Mr. Akindele.

Alan Cameron –
Sub-saharan Africa analyst, business monitor international: “Although
the CBN has decided to leave the headline policy rate unchanged, its
decision to raise the lower band of the corridor around the MPR by a
further 100bps will effectively tighten liquidity.

“This is consistent
with the language in September’s communiqué, in which concerns over
rising prices appeared to be taking precedence over the bank’s
objective of financial sector stability.

“In addition to the
litany of upside risks already cited by the CBN, as a net food
importer, Nigeria is highly exposed to rising commodity prices
internationally.

“The real question
then is how effective rate hikes will be at combating inflation. Given
the low penetration of banking services and the fact that inflation has
been high, in spite of credit growth being so low, we do not think the
transmission mechanism is particularly strong.

“However, the CBN
does have a mandate for price stability, so it cannot afford to be seen
sitting on the sidelines as inflation continues to run into the double
digits, with risks now manifestly to the upside,” said Mr. Cameron.

Razia Khan – head
of research for Africa, Standard Chartered: “Growth in monetary
aggregates remains below trend, and the Central Bank would have been
wary of a full-blown tightening at this stage of the cycle.

“Nonetheless, given
persistently high inflation and recent pressure on FX reserves, there
would have been a need to signal the ongoing intention to maintain
tight policy, or perhaps even tighten policy further over the course of
next year.

“Hence, the
measures to narrow the band around the MPR, which is consistent with
the overall policy bias of the Central Bank. With fiscal spending
likely to go into overdrive ahead of the elections, it is more a case
of when more tightening measures will follow, rather than if.

“For now, however,
given continued uncertainty in the outlook, not least with oil output
under pressure again, and concerns over too rapid a correction in the
bond market, the latest move should be seen as normalisation of policy.

“The return to a symmetric band around the MPR once again signals
that the extraordinary monetary policy accommodation put in place at
the time of Nigeria’s banking sector crisis has probably run its
course. Recovery will require less accommodative monetary policy, and
fiscal policy is forcing that policy change to happen sooner rather
than later,” Ms. Khan said.

Taxpayers have been
asked to come together and form associations and pressure groups to
address common issues, press for their rights, channel their demands to
the government, and obtain better services.

Ifueko Omoigui
Okauru, executive chairman, Federal Inland Revenue Service (FIRS), said
this would encourage a two-way communication between the government and
taxpayers.

Mrs.
Omoigui-Okauru, who said this recently, added that there is strength in
unity, and taxpayers could achieve more by coming together, rather than
by going through the struggle alone.

“I really want to
see a situation where taxpayers form themselves into associations, into
some lobby groups,” a statement from Wahab Gbadamosi, a media
consultant to FIRS, said.

“I think it is a good idea”, Stephanie Olorunshola, a client service consultant in a PR firm in Lagos said.

“When there is a
union, there would be a better platform to address issues of employees
who have their salaries taxed, without anything to show for it, from
the employer, as receipts or from the government, in terms of its
responsibility to the government.

“Employees can make
their stand known, demand for notification whenever their taxes are
paid, and take the necessary actions when they are not,” Ms.
Olorunshola said.

However, Laruba
Owa, a visual artist, said “How realistic is it for us, all tax payers
in Nigeria, to form an association? All these would not have been
necessary if we had responsible hands.”

Voluntary compliance is important

Mrs. Omoigui Okauru
noted that voluntary compliance is the best for taxpayers and the tax
authorities, given the low level of tax education. Though the legal
option and enforcement are available, FIRS employs this as the last
resort.

“Nigeria cannot be
called a tax paying nation, judging from what is obtainable in other
nations. Our compliance level is low. And people are not knowledgeable
about tax.

“In some countries,
people get jailed for not paying their taxes. But in Nigeria, where
people are not very knowledgeable about taxation, jailing such
defaulters cannot be considered as a solution, but this could come as a
last resort,” Mrs. Omoigui Okauru said.

On multiple
taxation and issuance of Tax Clearance Certificates, TCC, she said that
FIRS was working towards correcting some abnormalities in the process:
“We have received complaints from some quarters about the confusion
caused by multiple taxation.”

She, however, said
the constitution is very clear on this, and that the institution is
working to see that the abnormalities are corrected.

Multiple taxes, a
situation where the same income is subjected to more than one tax
treatment, and unauthorised and unclear charges, are fast crippling
businesses in the country.

South Africa’s
Telkom aims to sell its money-losing Nigerian mobile business within
the next six months, as it looks to slim down and focus on its new
mobile operation at home.

Africa’s largest
fixed-line operator, which posted a 5 percent drop in first-half profit
on Monday, has been looking to exit its Multi-Links mobile business,
one of four mobile operators using the CDMA technology platform in a
market overwhelmingly dominated by the rival GSM standard.

Telkom recently
launched a mobile business in the crowded South African market, where
it faces stiff competition from MTN Group and its former unit Vodacom.

Jeffrey Hedberg, Telkom’s acting chief executive, said selling the mobile unit in Nigeria was a top priority.

“There is a clear
need to stop the bleeding in the CDMA business, and on the fixed side
we are in discussions with other partners; again, about increasing
country scale and minimising our exposure,” he said.

Telkom said it had
received a number of expressions of interest for the Nigerian business,
which was bought for $330 million three years ago and incurred a 262
million rand ($37.42 million) operating loss in the six months to
end-September.

Shares of the company jumped 3 percent, although analysts cautioned that a sale of the unit was not yet a done deal.

“At this point in
time, they are talking about it; we need to actually see the cash flow
arrive before we become too excited,” said David Lerche, a telecoms
analyst at Avior Research.

Tough sale

One analyst, who declined to be identified, said the Nigerian mobile unit would be tough to sell.

“If you look at
performance metrics, it’s not a compelling story in a sense that Telkom
will get the price it wants,” said the analyst.

Telkom said
normalised headline earnings per share, which strip out one-time
charges, fell to 265.7 cents in the six months to end-September from
280.6 cents a year earlier, at the low end of its own forecast for a
drop of up to 20 percent.

At home, Telkom is attempting to offset a decline in revenue from traditional telephony by focusing on its new mobile business.

8.TA, Telkom’s mobile phone business, has signed up about 186,033 customers since it was launched on October 15.

At 1015 GMT, Telkom
shares were up 3 percent to 37.0 rand, outperforming Johannesburg’s
All-Share index, JALSH, which was up 0.7 percent.