Nigeria Content Online

Experts have said
the agricultural policies of the states and federal government are not
having the expected impact on the productivity of farmers in the
country.

Ojobe Atuluku, a
consultant for Oxfam, a non-governmental organisation working with
other partners to find lasting solution to poverty, said smaller
farmers are being marginalised in the various policies that should have
impacted positively on their enterprises.

Ms. Atuluku, who
was engaged by Oxfam to assess the impact of the NGO’s farming
programme in the past one year, said the government will make progress
in its quest to achieve food security if small scale farmers were given
more consideration.

While presenting
her report at the annual monitoring and evaluation meeting of Oxfam and
partners in Abuja yesterday, Ms Atuluku said, “I have been in the field
looking at Oxfam’s work in the past year, and by field I mean the
states of Oyo, Ekiti, Nassarawa, Plateau, Benue, Katsina and FCT. And
the focus has been interacting with small scale farmers that Oxfam has
been working with as well as the partner organisations in those
states… it is so clear that small scale farmers find agricultural
policies very unfriendly.

“They complain that
they are invisible within agricultural policy, that it is not possible
for them to benefit from those policies. The story across the country
surrounds issues of input, fertilisers, pesticides, herbicides,
tractors, credit. They do not have access to all these and so the
challenge becomes: why is this the case even as the federal and state
government are placing a lot of emphasis on agricultural issues?”
Difficulty accessing funds

Ms. Atuluku said small scale farmers also have difficulty accessing funds provided by the government.

“I will give an
example. The federal government came up with the scheme that provides
N200 billion for farmers. N40 bilion of this has been set aside for
small scale farmers, but the conditions are that you need to provide
collateral and it cannot be the poor farmers’ land in the bush, but a
piece of land that worth something. And you have to access the
collateral through a commercial bank. All these are conditions that the
small scale farmers have no clue or access to,” she said. She therefore
called on decision makers, the legislature, the executive and others to
address the problems in the policy implementation and to find out why
policies targeting smaller-scale farmers are not reaching the target
group.

She said Oxfam has
supported the farmers with capacity building in terms of farming
techniques in order to increase yield. But in some states, fertilizer
is unavailable and the farmers do not have enough money to hire
tractors.

“They are still
using crude implement. That is what we saw in the fields and it seems
as if the high level attention being paid to agriculture in the country
it is still yet to go down to small scale farmers. If we are serious
about food security in this country the government needs to change the
way it actually implements the policies it has put in place,” she said.

Validating the report

Ajayeoba Ayodeji,
the Campaign Manager of Oxfam said the meeting was an avenue to
validate the report of the consultant and plan ahead for effective
delivery of their mandate. He said the efforts are geared towards
improving the productivity of small scale farmers and engaging the
government for improved agricultural governance while providing
opportunities for women that will help reduce inequality and poverty
and support Nigeria attain food sufficiency.

One of the farmers, Amina Bala Jibrin from Bauchi State, said Oxfam programmes have impacted them a great deal.

“Oxfam constituted the voices for food security and they want the
small scale farmers to be heard. It is a very good idea because farmers
in the rural areas are not given proper attention. What is due to them
is not given to them. They do not benefit from inputs because it has to
go through other channels before it comes to the small scale farmer it
is gone. We are the voiceless,” she said.

The current bullish
trend witnessed at the Nigerian Stock Exchange (NSE) has been
attributed to voluminous trading by some institutional investors.

Tunde
Oladapo-Dixon, an analyst and chief executive officer of StockPicks
Consulting, a stock broking firm, said the sixth consecutive trading
days of rebound seen is the result of some fund managers who now find
safe haven in stock market.

Mr. Oladapo-Dixon
said, “What we are seeing now in the market is the work of fund
managers because they couldn’t make a clue in the money market, which
is very stable. That is why they decided to patronise the stock
market.” “If you look at the rate in the money market now, it has been
slashed drastically as a result of some of the decision taken in the
last Monetary Policy Committee meeting that held early this month. The
rate has now been forced down to about eight per cent for individual
and corporate investors,” he said.

He said the rally
in the market may not be sustainable because the institutional
investors will soon leave the market. “I think by mid of this week, we
may start seeing shedding in price of some equities because as sensible
investors, when you make up to 10 to 15 per cent gain, you leave the
market,” he added.

Stock dealers at
Afrinvest West Africa, a portfolio management firm, in an analysis
report, said, “The bullish run in the banking sector continued on
Monday despite some top and mid tier banks losing marginal points, as
majority booked gains in excess of 4.0 per cent.”

“Institutional
purchases mopped up offers of Zenith Bank resulting in a 4.9 per cent
price appreciation. Also on the upbeat were Fidelity Bank, Skye Bank
and Access Bank realising gains in excess of 4.0 per cent. Ecobank
rallied with a 5.0 per cent mark-up after light profit taking early in
the session,” they explained.

The analysts added
that the shares of Dangote Flour, Flour Mills and Cadbury, in the food
and beverages sector, were also investors’ favourites yesterday.

Meanwhile, an
analyst has dissociated any direct link of Aliko Dangote’s removal as
the president of the NSE to the present market upturn.

Egbo Amaechi, a
finance analyst and a member of the Shareholders Association of
Nigeria, said “Market will not react to the removal of Mr. Dangote from
the NSE’s council and president because he (Mr. Dangote) is not an
executive director of the Exchange.”

The bulls hold

The NSE market
capitalisation, on Monday, recorded over N58 billion gains on Friday’s
figure of N5.813 trillion to close at N5.871 trillion, representing
about 0.99 per cent increase.

The NSE All-Share
Index also appreciated by 0.99 per cent or 238.37 units to close at
24,380.09 basis points from the 24,141.72 recorded on the last trading
day.

At the close of
Monday’s proceedings, a total of 53 stocks appreciated in price while
28 stocks depreciated. The Exchange recorded trading in 422.164 million
volumes of shares worth N3.551 billion in 6,927 deals.

Banking stocks lead

Three stocks in the
banking sector led as the most traded equities for the day. Zenith Bank
was top on the list with 37.664 million shares valued at N664.666
million, while Access Bank and Fidelity Bank followed, respectively,
with 30.214 million shares worth N296.220 million and 29.174 million
shares valued at N92.080 million.

As on the last
trading day, the banking subsector yesterday maintained its lead as the
most active with 259.295 million quantities of shares, worth over
N2.471 billion.

The subsector’s volume was driven by shares of the three banks that topped the most traded chart.

Trading activities
in the insurance subsector was second with 64.706 million shares valued
at N55.750 million. Volume in the subsector was boosted by deals in
shares of Regency Alliance Insurance, Aiico Insurance, and
International Energy Insurance.

The food/beverages
subsector followed with 21.490 million shares worth N331.852 million
exchanged by investors. Dangote Flour Mills, Dangote Sugar Refinery,
and Cadbury Nigeria boosted the subsector’s volume.

Across the globe

On the
international scene on Monday, stock markets experienced mixed
performances. In Europe, the France CAC 40 Index was down by 0.83 per
cent; the Swiss Market Index gained 0.13 per cent, while the Euronext
100 Index and the Germany DAX declined by 0.89 and 0.60 per cent
respectively.

The United States
S&P 500 and Canada S&P SX 60 Indices were also down by 0.59 and
0.84 per cent respectively. In Asia, the China Shanghai Composite Index
depreciated by 1.21 per cent, while the Japanese Nikkei 225 appreciated
marginally by 0.01 per cent. Meanwhile, the bears hold sway in the
Australian ASX Index and the Taiwan TSEC 50 Index, were down by 0.66
and 1.46 per cent respectively.

Some finance
experts in the education sector have warned that corruption and lack of good
corporate governance in business organisations are a threat to national
development.

Soji Apampa, an
Executive Director at Integrity Organisation, a consultancy firm, said that
corruption in business damages the ability of a company to “effectively and
efficiently utilize the resources available.”

Speaking at a
one-day meeting of accountants in education, organised by the Institute of
Chartered Accountants of Nigeria (ICAN), Mr. Apampa said that “corruption has a
negative impact on national development because it makes the people on the
advantage side (close to government) gets richer while those on the disadvantage
side gets poorer.”

Corporate governance

Citing an
example of a corrupt system, he said, “So much is budgeted for education at the
national level but just a faction of it is felt at the local level where it is
supposed to have impact, and that is destroying the quality of education that
is possible.”

Speaking on the
topic “Corporate Governance and Disclosure: The Impact of Corruption and
Accountability on National Development,” he said, “Corporate governance is a
system by which companies are directed and controlled. It is supposedly carried
out by board of directors for the benefit of the company’s operators to provide
direction, authority and oversight management.”

He added that
corporate governance “ensures that the board of directors is accountable for
the pursuit of public objective, and that the corporation itself conforms to
laws and regulations,” he said.

Explaining from
the economic perspective, Mr. Apampa said corporate governance is a tool in
investigating the efficient management of corporations in the use of mechanism
such as contract, organisation design, and legislation. “It also improves
financial performance. It addresses the issue of divorce between ownership and
control of organisations,” he said.

According to
him, the basic tasks of any board are to have foresight, set up strategies,
delegate responsibilities, and providing general oversight for the company.

Mr. Apampa also
said, “a good corporate governance is impossible without appropriate levels of
disclosure that involves dividing to each company’s operator the type of
information to which they have a right.”

He, however,
added that “appropriate disclosure assumes that there will be appropriate
governance of scrutiny” which should enforce accountability.

Speaking on a
similar topic, Ishola Akintoye, Head of the Accounting Department of Olabisi
Onabanjo University, Ogun State, said, “A company where good corporate
governance is expected must have a well-functioning board, accountability, clarity
of purpose, transparency and openness.”

He said the
qualities of good corporate governance are trust, credibility, legitimacy, the
ability to weather crises, a climate and relationships that ensure financial
stability.

Mr. Akintoye
also maintained that “if a company’s process of bringing people to the top is
defective, there will be problem. You cannot create legality out of
illegality.”

Also, Adekunle
Owojori of the Department of Accounting, University of Ado-Ekiti, Ekiti State,
said that corporate governance and business ethics that examine immoral
practices.

Mr. Owojori
said for corporate governance to be effective practice, “all audit committee
members must be financially literate.”

Fighting corruption

On how to
combat corruption, he said that a professional and well-motivated civil
service, budget reform, and a strong judiciary system are required. He added
that civil societies and the media also have roles to play.

Meanwhile,
Elizabeth Adegite, the president of ICAN, said that the issue of corporate
governance “is that of change of attitude and reorientation of all Nigerians,
whether professionals or not.”

She said,
“Corporate governance is important to the institution because charter
accountants are in the middle of all these issues. Internal and external
auditors, consultants, chief executive officers, board of directors are charter
accountants. So we must take responsibility as professionals and chart a course
on how to engage in good practice.”

However, she
said that ICAN has a code of conduct for charter accountants.

“If anybody gets wanted
after our investigation, disciplinary actions will be taken appropriately. And
this is why we say the certificate you hold as a charter accountant is the
property of the institute, it can be revoke if indicted.”

Consumer prices in
China rose 2.7 per cent in February over the year-earlier period,
according to data released on Thursday, partly attributable to the
Lunar New Year holiday but also to the rising inflationary pressures in
China’s economy.

Other data, on
Thursday, reflected China’s continued strong recovery from the global
economic crisis. For the combined January to February period, which
factors out distortions from the Lunar New Year holidays, industrial
output expanded by 20.7 percent and retail sales rose 18 per cent
compared to a year ago.

Those figures followed data on Wednesday that showed robust growth in both China’s exports and imports in February.

No shift in economic policy

Overall, economists
said the picture suggests no shift in economic policy is in store,
although interest rates on loans are likely to rise as China strives to
hold down inflation.

While inflationary
pressures are clearly building, “current inflation is still modest,”
said Ken Peng, an economist with Citigroup Global Markets in Beijing.
“Right now, we are still okay. This is not going to cause any panic
among policy makers.”

Jinny Yan, an
economist with Standard Chartered Bank in Shanghai, said the data
released this week does not suggest China’s economy is overheating,
despite pockets of speculation, especially in the red-hot property
market.

“We see the recovery continuing to keep its momentum,” she said. “The policy makers will continue to hold their stance.”

Drop in food production

China’s leaders
insist that inflation as firmly in check, below the government’s target
of three percent. The 2.7 per cent increase in February followed a 1.5
percent increase in January. Food prices led the way, a potentially
troublesome sign for the leaders of a country where as much as 40 per
cent of poorer household budgets go to food.

But prices are
typically jacked up during the Chinese New Year holidays, when families
tend to splurge on food and gifts. The National Bureau of Statistics
also blamed the harsh winter, which it said hurt food production.

A spokesman for the
bureau, Sheng Laiyun, predicted prices would come down after the spring
harvests. “We don’t see any signs of economic overheating,” he said.

China’s deputy
central bank governor, Su Ning, told reporters last week: “We believe
we can successfully contain inflationary pressure this year.” He said
the bank was more concerned last year, when prices fell for nine months.

“While we don’t
want to see prices rising too fast, the current situation is necessary
for the development of our economy and cannot be described as
inflation,” he said.

Other data released
on Thursday showed the government’s efforts to rein in loans after last
year’s lending spree, which was designed to spur the economy. Chinese
banks lent only about half as much money in February as they did in
January.

Premier Wen Jiabao
announced that China would lower its lending target for this year to
7.5 trillion renminbi, or $1.1 trillion, about 72 per cent of the 9.6
trillion renminbi in 2009.

The central
government, twice this year, increased the amount of money that banks
are required to deposit with the central bank as a monetary reserve
rather than lend to customers.

Many economists predict one or more interest rate increases in the
coming months, but higher interest rates are unlikely to threaten
China’s economic recovery because growth is governed more by the
availability of loans more than their cost, economists said.

The International
Monetary Fund (IMF) says it anticipates that exchange rate pressures
and volatility will persist for some time in Nigeria and other
Sub-Saharan African countries, according to latest report posted on its
website:

“African economies
can expect exchange rate pressures and volatility to persist for some
time. Shifts in commodity prices as well as in portfolio and other
private capital flows are likely to continue given the highly uncertain
trajectory of the global recovery, the geographic rebalancing of trade
flows, and volatility in the exchange rate of the main currencies,” the
IMF said after an analysis of the evolution of exchange rates of
sub-Saharan African currencies in the context of the global financial
crisis.

The report, which
focused on the differences in the magnitude and volatility of the
exchange rates among countries, was drawn from a sample of seven
countries, four members of the East African Community (EAC) (Kenya,
Rwanda, Tanzania, and Uganda), and three others, which experienced
large exchange rate losses at the outset of the crisis: Ghana, Nigeria,
and Zambia.

External Factors affected exchange rates

The IMF cited
external factors that reflect the transmission of the global crisis
through the trade and financial channels as well as the volatility of
the U.S. dollar, the main international reserve currency.

Abrupt fluctuations
in capital flows also contributed to exchange rate movements. “A
tightening of credit conditions in global financial markets and a
decline of confidence triggered a frantic race to safety by private
investors at the onset of the crisis. As expected, the resulting
depreciation was more pronounced in those countries that had received
large portfolio inflows prior to the crisis (Ghana, Kenya, Nigeria,
Uganda, and Zambia).”

The volatility of
the U.S. dollar as a reserve currency also had a strong effect on
African currencies. The dollar rose sharply against all currencies,
amplifying the depreciations that were triggered by other external
factors.

Challenges and implications

The IMF stated that
exchange rate volatility could hinder progress with financial
integration, skewing capital flows toward short-term options at the
expense of longer-term investment.

Lydia Olushola, an
economist and a consultant at Sky Trend Limited, a finance service
firm, said that real exchange rate is one of the major relative prices
in an economy, which actually defines the rate of exchange between
domestic goods and their foreign counterparts, and as a result, its
volatility has economy-wide implications.

“Exchange rate
volatility has real economic costs on an economy. It affects price
stability, firms’ profitability, and the country’s financial stability,
as a whole. Exchange rate volatility is also influenced by and
correlated to domestic economic uncertainty.”

She added that
countries have reasons to be worried about exchange rates volatility as
it may hinder international investment flows. “Companies may also be
reluctant to establish new firms or purchase existing ones in such
countries as exchange rate uncertainty reduces the expected profits
from such projects.

“Volatile exchange
rates also create uncertainty about income expected to be earned on
international transactions. It is one of the reasons some firms add
some allowance to all they sell to be on the safe side. These costs are
then passed on to consumers in form of higher prices, and then you know
what happens. Even traders would also be reluctant in their businesses
too as the volatility in the exchange rates adds additional risks to
their expected gains,” she said.

IMF’s remedy

The IMF however,
outlined ways of escape, both for the short and long term, to the
countries that are still experiencing exchange rates volatility, adding
that the deepening domestic financial markets is key to enhancing their
capacity to handle external financial volatility over the long term:

“Broader bond
markets will allow diversification into longer-term investment
instruments—important for long-term investors. Developing forward
hedging instruments would also generate some stability in the foreign
exchange market by reducing forward settlement risks.”

Nigeria’s Naira stable

Bismarck Rewane,
Managing Director, Financial Derivatives Company, a finance and
research analysis firm and Member, National Economic Steering
Committee, is however, confident that the Nigerian Naira would remain
stable.

“The Naira is
expected to remain stable because higher oil prices will boost the
accumulation of external reserves, and this will also be supported by
increased sale of Forex by oil majors. The Naira remained unchanged at
N148.6to the dollar in the official market in February. In the parallel
market, it appreciated marginally by 0.32 per cent to N152 to the
dollar from N152.5 to the dollar the previous month. The FOREX demand
however, surged 7% to approximately $1.2 billion in February.

“The gain in
parallel market has been attributed to the increase in forex supply
from the Central Bank. The Year on Year spread between the official and
parallel rates narrowed by 87. 41% to 3.29 from 26.15 in 2009,
indicating a relatively more stable forex macroeconomic compared to
what obtained the previous year,” he explained.

Nigeria’s foreign
exchange market has remained relatively stable since the 2010 year
began. Sanusi Lamido Sanusi, the governor of the Central Bank of
Nigeria, in November 2009, said the Naira will trade between the N150
to $1 band till it finally regains full stability.

The on-going
financial sector reforms and revelation of the true state of health of
Nigeria’s banking industry, makes a strong case for investments, Atedo
Peterside, chairman of the Stanbic IBTC Bank, said during the ‘Stanbic
IBTC 2010 Investor’s Conference’ in Lagos on Monday.

The three-day
conference is focused exclusively on the Nigerian economy with emphasis
on the capital market. The last two years have been turbulent for
financial markets around the world, including Nigeria. The Nigeria
Stock Exchange’s (NSE) all share index has recorded double digit
negative returns in the last two years, crashing from an all-time high
of 66, 731.20 in March 2008.

With a current all share index of 22,985.00, investors seeking for long-term returns can venture into the capital.

“Accordingly, in
tune with the theme of this conference: ‘Connect. Inform. Optimise,’ we
urge all participants to connect with each other and network as much as
possible; obtain information about your investment targets, and please
remember that Stanbic IBTC has an excellent research team with award
winning analysts and robust reports available to assist you to decide
on your investment priorities.”

Major crossroad

But Mr. Peterside
could not resist the urge to comment on the present political reality
in the country and the uncertainty that it has generated both locally,
and on the foreign scene.

“When the idea of
this conference was first discussed some months ago, I never imagined
that the range of questions from the overseas participants would
include several with a political slant,” he said. “As we all know,
these questions were prompted by recent political developments.
Unfortunately, I am unable to provide answers to some of the most
pertinent political questions. I can however, assure you that many of
us are asking these same ‘hard’ questions to key members of the
Executive and Legislative arms of our government and we promise to give
you meaningful feedback as soon as we have credible answers…

“My personal belief
is that Nigeria is currently at a ‘major crossroad.’ The crossroad I
speak of is in the political arena and in some ways it is about a
struggle between Good and Evil, a struggle between the Truth and Lies.”

But he assured investors that “the truth will soon prevail.”

“The foundations
upon which Stanbic IBTC Stockbrokers Limited built its business model
from day one was a desire to attempt to tell investors the truth at all
times regarding the things that we do know and to be humble enough to
admit what we do not know… we are in the business of attempting to
guide investors and interacting with them continuously. We are however,
not in the business of deliberately deceiving or misinforming them.”

A major player

Stanbic IBTC
Stockbrokers is owned by the Stanbic IBTC Bank, a member of the South
African-owned Standard Bank Group, and is said to account for over 20
percent stock market in 2009.

The bank, through
its wholly owned stock broking and asset management subsidiary, IBTC
Asset Management Limited, has several excellent mutual funds including
the IBTC Nigerian Equity Fund, which is Nigeria’s largest mutual fund
with a net asset value in excess of N25 billion (as at December 2007).
It is the only bank that has a direct subsidiary that is a pension fund
administrator, through the market leading IBTC Pension Managers Limited
(IPML).

As at 30th
September, 2009, indicated profitability declined to N3.7 billion, a 65
percent decrease from the same period for 2008. For capital adequacy,
the Stanbic IBTC Plc has a 33 percentage ratio, compared to the 10
percent statutory requirement by the CBN.

Nigeria’s United
Bank of Africa (UBA) has started operating in Zambia with a capital
investment of $15 million as it seeks to expand its influence on the
African continent, Chief Executive Officer Abba Bello said on Thursday.

Mr. Bello told
Reuters one UBA branch was already operational in Lusaka and the bank
planned to open two more in the country’s mining towns on the
Copperbelt and another in Solwezi, which hosts two key mines in
Africa’s largest copper producer.

“Our focus is on
wholesale and retail and we play in all sectors of any economy that we
are in, so when you say mining, yes we will be in mining but we will be
in all sectors of wholesale space in Zambia and we will support that
with retail play,” Mr. Bello said.

Mr. Bello said UBA hoped its growing influence in Africa would help boost trade and spur the continent’s economic growth.

“UBA is here as a
vehicle to ensure that Africans have their own bank that can assist in
empowering indigenous Africans in growing intra-African trade and trade
between Africa and the rest of the world,” he said.

Mr. Bello said with the start of operations in Zambia, UBA was now present in 17 countries in Africa.

In October, UBA
launched its Kenyan operation to compete with pan-African group Ecobank
Transnational Inc which began working in Kenya in 2008.

Bello said the competition, brought about by the opening of more
banks in Zambia, which now has 18 banks, and favourable economic
indicators in recent months would help bring down interest rates.

The European
Central Bank and the Bank of England left their benchmark interest
rates unchanged at historic lows Thursday, as both worried about the
strength of the economic recovery.

The European
Central Bank, which sets monetary policy for the 16 countries in the
euro zone, left its benchmark interest rate at 1 per cent, where it has
been since May. The bank believes that the euro-zone economy remains
too weak to create an imminent danger of inflation.

In Britain, which
just barely emerged from recession last quarter, the Bank of England
left its benchmark rate unchanged for a 12th month, at 0.5 percent.

Fear of recession

Bank of England’s
committee members, meanwhile, are watching closely for any signs that
Britain’s fragile economy could relapse into a recession. Gross
domestic product rose 0.3 percent in the fourth quarter from the third
quarter, the office for national statistics said last month, revising
an earlier estimate upwards.

“It’s pretty
unlikely they’ll do anything for the next six months,” said James
Knightley, an economist at ING in London. “The environment is still
very uncertain. If the data continues to show a gradual improvement,
they will just keep everything as it is.”

The fear of rising
unemployment and concerns about the sustainability of house prices,
which remained relatively high, is prompting consumers to curb
spending. Unemployment unexpectedly rose in January to the highest
since 1997.

Tight housing
supply and low interest rates are expected to keep property prices from
falling this year, the Royal Institute of Chartered Surveyors said
Tuesday, easing some pressure on homeowners. Still, the availability of
credit remained under pressure as some banks are concerned to meet any
future regulatory requirements. Mortgage approvals dropped to the
lowest level in eight months in January.

Uncertainty about
the outcome of the general election, which is expected to be held
within the next three months, and whether the new government would push
ahead with large-scale spending and job cuts in the public sector meant
consumers were increasingly holding off big purchases. Yet, unsecured
debt rose as Britain’s already indebted consumers borrowed more through
credit cards and personal loans in January.

The pound fell to
the lowest in 10 months against the dollar on Monday before it started
to recover on Wednesday amid concerns Britain might soon face a similar
sovereign debt crisis to Greece. The Bank of England voted last month
to halt its program to purchase government bonds and other debt to
strengthen the economy but said it would not rule out continuing the
program should the economy deteriorate again. The bank is expected to
review its decision in May.

Implication of too much available cash

In the euro area,
the European Central Bank president, Jean-Claude Trichet, and the
bank’s governing council are cautiously draining the cash they began
providing in October 2008 after the collapse of Lehman Brothers brought
interbank lending practically to a standstill.

The bank is
concerned that too much available cash will fuel inflation or asset
bubbles of the type that preceded the 2008 crisis.

The central bank
may be ready to return to competitive bidding to set the interest rate
on three-month loans, which would raise costs for banks. But amid
nervousness about Greek debt and signs that some institutions are still
dependent on central bank funds, the bank is expected to continue
providing unlimited financing on a shorter-term basis.

The European
Central Bank has already stopped making any more 12-month loans to the
roughly 2,200 banks in the euro zone that are eligible. The bank said
in December it will make the last round of six-month loans at the end
of this month.

The central bank
had extended the time periods for loans beyond the customary three
months to encourage institutions to continue lending to the private
sector. The bank also allowed banks to borrow as much as they wanted at
the benchmark interest rate, provided they could supply collateral. And
it expanded the definition of the kinds of bonds and other securities
it accepted as collateral.

Analysts say they
expect the European Central Bank to continue providing unlimited funds
for one-week periods, to avoid a crunch as the longer-term loans expire.

When Mr. Trichet
holds a news conference this afternoon, analysts will be watching for
any revision of bank staff estimates of euro-zone economic growth.
Currently the bank projects growth in the euro zone of 0.8 percent this
year and 1.2 percent in 2011.

The Central Bank has stated that the sale of the rescued banks will be made open to all willing investors, local and foreign, even if they are old owners of the banks.

The Central Bank’s spokesperson, Mohammed Abdullahi, said it is a free and fair competition for willing individuals.

“As far as we are concerned, anybody that is bringing the money in for recapitalisation is free to compete, subject to the conditions that we have drafted and that they are aware of. However, it should be clear that we are not returning the banks to the former owners.

If they have the money to recapitalise the banks, and can also afford to return the money the Central Bank used to bail the banks out, they are welcome. It is open to everybody. There is no restriction there,” he said.
Old shareholders show interest

Speculations are rife that old shareholders of the rescued banks are interested in buying back the banks.
A source at Oceanic Bank said that major old shareholders are interested in buying back the bank. “I do not think this should be a controversial issue.

There should be a fair ground for intending investors, irrespective of whether they used to be shareholders here or not. The recapitalisation is in progress and former shareholders are already indicating that they want to reinvest in the bank,” he said, declining to reveal the identities of the interested parties.

“Everything is possible within the environment we find ourselves,” a source at FinBank said. “Even the Central Bank brought up the idea that they may grant the bank shareholders an opportunity to recapitalise if they are capable, so it’s been in the public discourse. However, narrowing it down to FinBank, it is not to my knowledge that there are moves by old shareholders to buy back and you know that there is no formal way to know until it is communicated to us officially,” he said.

The story was the same at Intercontinental Bank, where an official said that there is no official notification by the old owners of the bank indicating a buy back. “I have made enquiries. Presently, there is nothing like that happening now,” he said.

Last month, the Central Bank announced that it held an interactive meeting with the shareholders of the 10 affected banks comprising their directors and principal shareholders. According to Mr. Abdullahi, the objective of the meeting was to inform the stakeholders on plans for the implementation of the second phase of the banking sector reforms.

The banks comprised of Afribank Plc, Bank PHB, Equitorial Trust Bank Ltd., FinBank Plc, Intercontinental Bank Plc, Oceanic Bank International Plc, Spring Bank Plc, Unity Bank Plc, Union Bank of Nigeria Plc, and Wema Bank Plc, who were represented by their respective board members, management and independent shareholders.
Equatorial Bank’s case

Although old shareholders may feel free to compete with other investors to own shares of the rescued banks when the banks are fully up for recapitalisation (which is already in progress), any bank whose shareholders desire to outright buy back will go through stated terms and conditions relating to the specific objections raised by the regulatory body, Mr. Abdullahi explained.

Among the 10 banks, only Equitorial Trust Bank’s shareholders have officially indicated to be allowed to rectify its shortcomings. In a statement issued by the Central Bank the shareholders executed a deed of covenant, with specific terms and conditions.

In granting the bank’s requests, the CBN noted that “the Special Examination had not raised issues of serious supervisory concern or criminal activity by any member of the Board of ETB,” adding that it will closely monitor the implementation of the terms of the covenant to ensure that the lapses are fully rectified and in the overall interest of the banking system.

The nation’s equity market posted a positive outlook on Thursday after it recorded a decline on Wednesday.

The
market capitalisation of the Nigerian Stock Exchange (NSE), yesterday,
gained about N22 billion to close at N5.567 trillion from the previous
day’s figure of N5.545 trillion. The market capitalisation had on
Wednesday lost over N10 billion.

Also, the Stock Exchange All-Share Index closed higher at 23,115.25 basis points from the 23,023.10 recorded on Wednesday.

At
the close of trading on Thursday, three of the four sectoral indices
appreciated. The Food and Beverages Index appreciated by 0.13 per cent
to close at 607.31, the Banking Index gained 0.94 per cent to close at
385.13, Oil and Gas Index appreciated by 0.25 per cent to close at
294.65, while the Insurance Index declined by 0.23 per cent to close at
209.06. Meanwhile, the NSE-30 rose by 0.44 per cent to close at 923.65.

Market evaluation

Evaluating
the market performance yesterday, Stock Analysts at Proshare Nigeria
Limited said the positive outlook recorded was, notwithstanding the
“noticeable improvement in the banking sector performance with five of
the shares traded in the sector emerging in the class of the day’s top
10 gainers.” They also added that the market recorded gains because the
food and beverages sector’s outlook was positive with indications of
improvement in the building materials and petroleum marketing sectors.

However,
the analysts said that stocks in breweries and conglomerates sector are
still in their passive outlook with most likely to rebound if the
positive trend continues.

Leading subsectors

The
banking subsector maintained its lead as the most active with 130.277
million shares, valued at over N967.874 million. The subsector’s volume
was driven by shares of Ecobank Nigeria, Diamond Bank, First Bank, and
Access Bank.

Trading
activities in the insurance subsector was second with 116.077 million
shares worth N84.445 million. Volume in the subsector was boosted by
deals in shares of Africa Alliance Insurance, Goldlink Insurance, NEM
Insurance Company, and International Energy Insurance.

The
conglomerates subsector followed in the activity chart with 13.737
million shares valued at N71.517 million. Transnational Corporation, PZ
Cussons Nigeria, Unilever, and UAC Nigeria boosted the subsector’s
volume.

Gainers and losers

Lafarge
Wapco and United Bank for Africa topped the price gainers’ table with
an increase of 81 kobo and 60 kobo on their opening prices of N34.18
and N13.00 per share respectively. African Petroleum and Chemical &
Allied Products followed in the chart with an increase of 54 kobo and
51 kobo, to close at N38.60 and N25.78 per share.

Flour
Mills Nigeria and Beta Glass led the price losers’ chart with a loss of
N2.04 and 71 kobo, to close at N46.02 and N13.55 per share, while
Julius Berger Nigeria and Nigerian Aviation Handling Company followed
with a decrease of 50 kobo and 31 kobo on their initial prices of
N28.50 and N8.50 per share respectively.

Mixed performance

Meanwhile, stock markets across the globe, on Thursday, experienced mixed performances.

The
France SBF 80 Index appreciated marginally by 0.09 per cent; the Norway
OSE Industry Index appreciated by 0.07 per cent; the Germany MDAX also
gain 0.05 per cent; the Sweden OMX Index was up by 1.00 per cent,
however, the Europe DJ Stoxx Index and the Netherland AEX Index
declined by 0.02 and 0.24 per cent respectively.

Also,
the Australian Securities Exchange’ ASX100 depreciated by 0.29 per
cent, while the Hong Kong’ Hang Seng went down by 0.54 per cent.