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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.

The Central Bank of
Nigeria (CBN) says it has expanded the number of departments under its
establishment to 25, up from previous 17 departments, due to the
ongoing banking reforms industry.

The new organisational structure becomes effective on March 1.

It is uncertain
what factors necessitated the expansion rather than cutting down on the
number of its departments, and workforce, which many believe are
already over-bloated and responsible for the lax supervision and
monitoring of financial operations leading to the crisis in the
industry.

The spokesman for
the CBN, Mohammed Abdullahi, could not give explanations to these, as
he refused to pick his calls when NEXT contacted him.

But the Central
Bank said in the statement that the move is the product of an exercise
it carried out in July last year, with the view to promoting efficient
and effective operations and in conformity with global best practise,
among others.

Announcing the cuts
in a statement issued online yesterday, the banking industry regulator
explained, “As part of the ongoing efforts aimed at improving
accountability, communication and efficiency as well as effectiveness
in actualising CBN’s strategic objectives (ACE), the Board of CBN has
approved a new organisation structure for the Bank, effective March
1st, 2010.”

The CBN statement
listed the objectives of the new structure to include “The development
of a more functional organisation structure, alignment of the structure
in line with the Bank’s mandate and strategy, promotion of efficient
and effective operations, building synergy with both internal and
external stakeholders of the Bank, facilitation of information flow and
integrated data management, and facilitation of the achievement of key
deliverables of management in conformity with global best practice.”

The new structure

According to the
Central Bank, the new structure will be run under the leadership of
five directorates which include the Governors, Corporate Services,
Economic Policy, Financial System Stability and Operations, which, in
turn will be divided into 25 departments under their respective
leadership, adding that there will now be 91 divisions and 198 offices.

The Central Bank of Nigeria embarked on an industry wide reforms
last year, under the leadership of Sanusi Lamido Sanusi in June 2009.
The reforms have so far seen some bank chiefs exit their positions and
about $4 billion invested to bailout ailing banks on grounds of
excessively high level of non-performing loans in the five banks which
was attributable to poor corporate governance practices, lax credit
administration processes and the absence or non-adherence to the bank’s
credit risk management practices.

Unilever Nigeria
Plc has earmarked N25.2 million for the provision of boreholes and
toilets as part of its contribution to the promotion of the Water,
Sanitation and Hygiene (WASH) Campaign.

Thomas Boedinger,
the company’s Managing Director, made the announcement on Wednesday at
Okpoga, Benue State, during a WASH campaign organised in conjunction
with WaterAid Nigeria.

The campaign was organised for primary schools in Okpokwu, Ogbadibo and Ado Local Government Areas of the state.

Mr. Boedinger, represented by Yemi Adeboye, said the campaign was a
testimony of Unilever’s concern for the welfare of its customers.

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
Nigerian National Petroleum Corporation (NNPC), major oil marketers and
depot owners have set out to replenish the national strategic fuel
stock that was depleted during the last nationwide scarcity that lasted
more than two months.

The
NNPC ‘War Room’ ad-hoc group created by the management of the company
to tackle the scarcity says it is coordinating the provision of volumes
of premium motor spirits (Petrol) to filling stations throughout the
country while it is filling the strategic stock.

“The
strategy is to provide extra volume of products so that the balance
could be channelled towards building the national strategic stock which
was depleted at the height of the fuel supply/ distribution challenge,”
said Farouk Ahmed, a member of the group who doubles as the Executive
Director, Commercial of the Pipelines and Products Marketing Company
(PPMC), a subsidiary of the NNPC.

“Now
we are moving beyond just eliminating the fuel queues to a point where
we can build up inventory to act as quick intervention in case of line
breaks or unexpected shortfalls. The idea is to use some of our depots
like Ilorin, Kaduna, Suleja and Port Harcourt to build up stocks.”

In
line with this new strategy, a record quantity of 10,142 trucks, the
equivalent of about 334.6 million litres of fuel, has been distributed
nationwide within the last one week according to the NNPC. This figure
translates to a daily average distribution of about 1,448 trucks or
47.7million litres of PMS, he explained.

National average surpassed

Mr.
Ahmed said the War Room has exceeded its average national weekly target
of 1300 trucks (per day), or 42.9 million litres with an additional
4.8million litres. This new daily average distribution also surpasses
the daily national fuel consumption volume which stands at 33million
litres.

A
breakdown of the War Room’s weekly loading chart for the period
indicates a haul of 131.4 million litres of fuel in 3,982 trucks were
distributed nationwide last weekend.

The NNPC War Room was inaugurated on January 29 by Mohammed Sanusi Barkindo, the NNPC’s Group Managing Director.

The
body was charged with ending the intractable fuel supply and
distribution challenges at the time in 72 hours. Within 48 hours of its
existence appreciable respite returned and the queues at filling
stations began to ease, particularly in the major cities nationwide.

The
group, whose membership is drawn from staff across the NNPC’s fuel
supply chain from marine to retail, is headed Austen Oniwon, Group
Executive Director (GED), Refineries and Petro-Chemicals, and Aminu
Baba-Kusa, GED Commercial and Investment.

Operators
in the industry say they are happy with the current distribution of
petroleum products and are optimistic the scarcity issue will be
corrected.

Tokunbo
Korodo, the Lagos Zone chairperson of the National Union of Petroleum
and Natural Gas Workers (NUPENG) said, “I believe they have the
capacity and capability to do it if they so decide because with the
current status of distribution, it’s quite commendable. So if they can
maintain this tempo, we will not be talking of scarcity again.”

The NUPENG leader implored all parties to cooperate to ensure that the current fuel distribution level is sustained.

“Let the major oil marketers complement the efforts of the NNPC by bring in more fuel into country, Mr. Korodo said.

“They
should not allow only NNPC to the job, if there’s any money to be
settled between the two parties, the earlier the better so that
Nigerians will not suffer.”

Small scale farmers
have complained about being excluded from financial aids provided by
the various agricultural funds floated by the federal government and
other donor agencies.

They say this is part of the reasons for the high consumer inflation prevalent in the country.

Comfort Olaosun,
president of the Cassava Growers and Processors Association, Osun state
chapter, said peasant farmers’ inability to access funds set aside by
government is frustrating government’s effort to enhance agriculture
development in the country.

“Government has
been clamouring about enhancing food cultivation in the country and we
have been reading about various efforts and loan packages on the pages
of newspapers; unfortunately, nobody I know has received money from any
of the funds,” he said. “We just read about it on the pages of the
papers. We are not even sure if anybody has received it. At least to my
best of knowledge no small scale farmer in Osun state has received part
of any of the loan and this is affecting our activities because we only
cultivate what we can afford to maintain,” she said.

Agricultural credits

The federal and
state governments in 2009 rolled out various agricultural funding
schemes, aside from the budgetary allocations for the agricultural
sector, aimed at encouraging more farmers to go into food production
for security and export purposes.

Part of the federal
government effort was the launch of the N200 billion Commercial
Agriculture Credit Scheme, out of which 100 billion was given to First
Bank of Nigeria plc and United Bank of Africa to disburse to farmers.

The governor of the
Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, was quoted as
saying that 656,000 farmers have so far benefited from about N42
billion provided by the agriculture credit guarantee fund since its
establishment in 1978.

Mr. Sanusi said the
N200 billion credit scheme, which is a seven-year single digit loan
aimed at encouraging value chain activities in Nigeria, is now
available to farmers.

However, small scale farmers argue that the manner in which the loan is administered, only favours the commercial farmers.

Organic foods

Also in a related
development, the United Nations Food and Agriculture Organisation
(FAO), earlier in the week said that about 5000 West African farmers
are currently able to take advantage of the growing popularity of
organic foods in industrialised countries.

The increasing
interest is attributed to the $2.4 million German-backed programme that
has helped the farmers meet the necessary certification and other
requirements.

The market for
organic and fair-trade products in developed countries is expected to
grow by about five to 10 percent annually over the next three years,
offering new opportunities for smallholder farmers in poor countries.
However, these poor farmers struggle to comply with high-level food
standards in the developed countries and the need to meet certification
requirements.

Furthermore, to
enter organic markets, the farmers first have to go through a
conversion period from conventional to organic agriculture during which
they tend to incur higher costs as a result of applying new organic
techniques without obtaining the higher prices usually associated with
the organic label.

Agro-industry development

Meanwhile, African
Heads of State participating at the on-going High Level Conference on
the Development of Agri-business and Agro-Industries in Africa (3ADI)
in Abuja have articulated a seven point declaration to accelerate the
development of agriculture in the continent.

The declaration,
according to them, iss to articulate the important role of agriculture
in national development for adequate resource allocation.

To ensure the sustainability of this policy thrust, they also
expressed commitment to the establishment of “requisite legal,
regulatory and institutional framework to support agri-business and
agro-industry development.”

Motorola cell phone lovers have expressed concern over the shutdown of all Motorola mobile phone shops in the country.

Obiosa Odigie, a
consumer said, “I went to a Motorola shop at The Palms to buy a
Motorola RAZR phone for my sister last year, only to find out that the
shop has been shut down and was occupied by another business and I was
advised to go to their shop at the City Mall. But I discovered that
they had shut it down also.”

Motorola could not
be reached for official comments, but a source at the former City Mall
sales shop, who asked to remain anonymous, hinted that Motorola had
experienced a downturn as a result of the global economic recession.

“In a letter from
Motorola, we were informed that our services were no longer needed due
to the ongoing reorganisation in the company and in the light of the
recent global recession,” said the source.

Liquidation

Fred Adewale, a
mobile phone dealer at the Computer Village, Ikeja said, “Motorola
phones are liquidated in the market, people no longer come to buy
Motorola phones here. Last year, the sale of Motorola phones in my shop
was very poor, that was why I stopped selling. People only ask for the
major phones in the market, like Nokia, Samsung, and Sony Ericsson,
amongst others. But if you really want a Motorola phone, you can get a
second-hand one on the street,” said Mr. Adewale.

i-Cell Integrated
Service, one of Motorola’s partners in Nigeria, explained that its
relationship with Motorola is based on after-sales service agreement,
and not on sales or promotion.

“We have nothing to
do with the sales and promotions of our partner’s brand, as far as
sales issue are concerned. We deal only with the after-service issue
for consumers, as they bring in complaints about their mobile phones,”
Jari Ollila, the Service Director of i-Cell said.

“I do not have much knowledge about their market, as that would be for Motorola to talk about,” he added.

Shared information

In an email,
Mahmoud Sayedahmed; Head of Marketing, Middle East and Africa Motorola
Mobile Devices, said, “Let me try and address your questions in line
with the information that the corporation shares publicly with the
market, noting that Motorola does not comment on any specific market
information or financial figures. Being a publicly traded company, our
corporate results can be found on our Motorola website.

“With regards to
the Nigerian market, Motorola mobile devices have launched two devices
(WX160 and WX180) that are part of a range of six devices that were
introduced in several emerging markets around the globe in late 2009.”

Mr. Sayedahmed explained that the firm only sells its mobile devices through distribution channels in Nigeria.

“The WX series were
introduced in the market through a Motorola distribution partner that
provides national coverage for phone distribution and a 12-month
warranty service for Motorola devices. Nigeria is a key market in
Africa and we continue to have Motorola devices sold in this market
through our distribution partner across all the major cities in
Nigeria,” said Mr. Sayedahmed.

Regulator has no explanations

The Nigerian
Communications Commission (NCC) could not offer any explanation on the
exit of Motorola from the country, saying that its responsibility is
limited to ensuring that the company sold standard phones to users.

“NCC only gives out
type approval to mobile phones providers as all mobile phones must meet
the international standard of phones. All mobile phones must be type
approve, which is basic and some of the providers can have dealers who
sell their products within the country, said Reuben Muoka, the
spokesperson of the Commission.

“These providers
are vendors to telecom operators in the country too. The commission
does not regulate the sales of mobile phones in the country,” he added.

Reliable and
efficient payment systems have been identified as aiding regional
integration, especially with regard to establishing a common platform
for regional trade. Mansur Muhtar, the Minister of Finance, speaking at
the regional policy workshop on Payment Systems and Cash Couriers in
West Africa, in Abuja on Wednesday, said non-cash payment systems can
transform a financial landscape.

Intra-regional trade

Specifically, the
minister said that it is pertinent for West African countries to create
a conducive environment for the promotion of intra-regional trade, to
accelerate the journey towards regional integration.

“Indeed, the
efforts towards regional integration, especially with regard to
establishing a common platform for regional trade, can only yield the
desired results if there are reliable and efficient payment systems in
place”.

He argued that
recent developments in Nigeria provide good examples of how non-cash
payment systems can transform a financial landscape. “The phenomenal
growth experienced by financial institutions in the acquisition and use
of cards and card payments by their customers, is a testimony of
availability, reliability and acceptability of modern systems and
processes, not only in the financial sector, but also as experienced in
the telecom sector.”

Furthermore, he
said that the new tax systems introduced by Nigeria’s Federal Inland
Revenue Service (FIRS), is also a model for efficient tax collection
through modern electronic payment systems.

Financial reforms

Mr. Muhtar,
however, expressed regrets that while individual countries in the
region are making progress in reforming their financial systems, this
is not the case at the intra-regional level.

He noted that
despite the fact that indigenous banks are spearheading financial
system reforms, we are yet to make a significant breakthrough in the
acceptability, efficiency and reliability of non-cash payment systems
in the region.

“The ubiquitous
impact cash-trust people have in cash transactions has become the norm
rather than the exception in modern day commerce. This situation should
not be allowed to continue after over 30 years of ECOWAS existence,” he
said.

The minister added,
“The recent financial and economic crisis has many lessons not only for
us in this region, but the world over. One of the lessons is that the
global economy is far more integrated than we have ever imagined. What
happens in the United States has the capacity to affect our region
through a spiral effect of liquidity freeze.”

He called on
financial institutions operating in the region to demonstrate total
commitment to its development by creating efficient, reliable,
dependable payment systems, saying that money laundering, which is an
international crime, has become more compounded by globalisation and
greed and further fuelled by desperation and marginalisation of the
poor in the country.

Nigeria, he said,
is fully committed to addressing the problem of money laundering and
terrorist financing by cash dominated economies, by deepening the
reforms in the financial sector and the enforcement of relevant laws to
limit cash transactions.

Mr. Muktar said the
bill seeking the amendment of the Money Laundering Prohibition Bill
presented to the National Assembly by Acting President, Goodluck
Jonathan, will bring the country’s anti-money laundering legislation to
full conformity with international standards.

Global economies

Also speaking,
Abdullahi Shehu, the Director-General of the Action Group against Money
Laundering in West Africa (GIABA), pointed out that economies of many
countries of the world have moved away from the dominance of cash as a
medium of exchange to non-cash payment systems.

He said cash
transactions present a unique challenge in the identification, tracing
and recovery of laundered proceeds of crime, particularly in the
absence of legal frameworks limiting cash transactions, or lack of
faithful enforcement of available laws.

The workshop, he
noted, will among other things, provide a forum for concerned parties
to deliberate on the implications of cash transactions and cash
couriering in West Africa and to also consider ways of addressing the
problems, especially of how existing and emerging new payment systems
can be tailored to meet the needs of the region.

The workshop was organised by the Inter-Governmental Action Group
against money laundering in West Africa (GIABA), in collaboration with
the Economic Commission of West African States (ECOWAS).

Everybody I know
remembers where they were and what they were doing when they heard the
news that Lamido Sanusi, the Central Bank of Nigeria governor, had
summarily dismissed the chief executives of five banks for various
infractions. That date is now known by a string of colourful monikers:
Black Friday, Operation Sting, Codename Demystify and Sanusi’s Tsunami.
There may well be other more dramatic titles. Since then, it has become
normal for commentators to speak of a pre- and post- August 14, 2009.
Watersheds precipitate these kinds of mental cut off point.

I vividly recall my
precise coordinates. I was stuck in traffic that afternoon at the
Rumens Road- Kingsway junction, listening in disbelief to the news over
Wazobia FM. In front of me, a hawk-eyed LASTMA official leapt out of
nowhere to order the motorist in front of me to park for using her
phone while driving. Who knows, perhaps, she was calling to confirm the
news. I even remember what I was wearing. A light blue shirt and
burgundy tie.

A million thoughts
raced through my head. Though unsure of the market implications of the
regulator’s drastic actions, I quickly saw that public perception of
the CBN move would depend to a large extent on the competence of the
communications teams serving the governor and newly appointed chief
executives.

Habits and emergencies

What I did next
underlines the truth that habit will trump numbed senses during an
emergency. Daring the vigilance of the traffic officers, I picked up my
phone and called up my assistant. I instructed her to go to the
websites of all the affected banks and take full screenshots of every
page. In that hectic transition period, I wanted to monitor how the
institutions would use the web to communicate with the public, and
importantly, investors. After one week, my verdict was straight Fs.

Regrettably, today,
seven months later, their grades have not improved. These banks have
completely ignored their websites as effective channels for pushing out
key messages. With barely any mention of the CBN’s strategic intent for
the institutions or management’s provisional plans, their websites
might as well have been frozen on August 13, 2009. Excluding summary
biographies of the new management and generic letters to stakeholders
that were uploaded to their sites, one finds no content on a credible
roadmap at each institution, that takes into consideration its unique
challenges and opportunities.

But this is not for
lack of their discussing it elsewhere. For example, I recently watched
a CNBC Africa interview with an executive director at Oceanic Bank,
Oyinkan Adewale, and another frank video chat with the managing
director, John Aboh, on YouTube, the video sharing site. Both videos,
which were shot in December, ought to have been embedded on the bank’s
website. They have not. Sadly, the Press page at the Oceanic Bank
website is blank. The news pages on the other bailed out banks’ sites
fare no better. It is impossible for the stakeholders addressed in
those letters to buy into what they have not been sold on, and
increasingly, a lot of them use the web to search for information.

An integral part

Compare the
situation there with two UK mortgage institutions, Bradford &
Bingley and Northern Rock, which were taken over by the government. Not
long after their takeovers, both companies’ launched new sites with
dedicated sections on their new ownership. Importantly, the sites had
extensive frequently asked questions (FAQs) pages. How hard can it be
to replicate these?

Newspapers will
always be a great medium. A few even form part of the breakfast diet
for many people. But companies do not control it. Editors do. They
determine when and where stories run, the length and tone. Besides
paper, by definition, is disposable. How many people still have copies
of last month’s paper? This is where the corporate site excels. It is
always accessible, malleable to textual and video formats, archives
perfectly and is under the company’s control. What better broadcast
platform can a company wish for? None I can think of.

Gone are the days
when the corporate website was a sandbox for the IT department. Today,
it is an integral part of every institution’s corporate communications
toolbox.

Anyone who uses
tools like Google Analytics and Visistat on their sites for tracking
visitor statistics and search engine queries knows too well the gold
mine of information their dashboards reveal. Do any of these banks
monitor these? If they do, what are they doing about it? How is their
web content evolving to match search parameters?

Thinking about the
full power of a corporate website unleashed reminds me of the lyrical
US Marine recruits’ creed in Stanley Kubrick’s 1987 classic, Full Metal
Jacket: ‘This is my rifle. There are many like it but this one is mine.
My rifle is my best friend.’ No exaggeration here. At critical times,
the fully loaded website can be the choice assault weapon in the
company’s arsenal.

The writer is the managing director of a full service investor relations firm based in Lagos, Nigeria.

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.