Nigeria's Online Blog

Abuja — The World Bank weekend met with President Goodluck Jonathan and presented the report of a recent research on the state of the Nigerian economy and gave the country a clean bill of health over its credit status.

A highly elated Jonathan has assured the bank and other key players in the financial sector that the board of Asset Management Corporation of Nigeria (AMCON) will be constituted today, as provided for in the Act setting it up which he assented to recently.

In the report, which was presented at presidential meeting with stakeholders, the global apex financial institution certified Nigeria as a non-credit crunch economy.

Mr Isma'il Rodwan of the World Bank Nigeria Country Mission, told Jonathan that the research the bank conducted on the Nigerian financial sector revealed that contrary to perception in certain quarters, there is no evidence of credit crunch in the Nigerian economy.

The World Bank declared that the research has shown that Nigerian banks before the intervention of the Central Bank of Nigeria (CBN) were not lending significantly to the economy, but instead lending was concentrated on margin loans to the capital market and oil and gas.

According to the World Bank, there is gradual credit growth in the economy but for understandable reasons, margin lending has declined after the crisis in the banking sector which led to the intervention of the CBN.

The bank, in the presentation, applauded the reforms of the banking sector by the CBN, saying that the reforms were necessary and timely.

The public finance expert identified the growing fiscal deficit as the major risk facing the Nigerian economy at this time and not credit crunch.

This he attributed to increasing government expenditure, while oil income inflows have been decreasing and increasing level of borrowing by the Federal Government both internally and externally.

He observed that the development, if not checkmated, has the potentials to crowd out the private sector from obtaining credit from banks.

In his comments, Jonathan said, even though some of the outcomes of the reforms are painful, "we have a better opportunity to put the economy, real sector, financial and capital markets on a structurally sounder footing through a well coordinated" reforms and commended the actions of the CBN as timely.

The president said the board of AMCON will be constituted on Monday (today) and explained that the Ministry of Finance and the CBN have performed their role in the process of constituting the Board of AMCON.

The initial delay, according to Jonathan, was caused by the need for due diligence on some of the nominees in view of the importance of AMCON in the resolution of the challenges facing the financial sector.

Also present at the meeting were the minister of finance, Dr. Olusegun Aganga, minister of national planning, Dr. Shamsudeen Usman, minister of petroleum resources, Mrs Deziani Allison-Maduekwe and governor of the CBN, Malam Sanusi Lamido Sanusi represented by deputy governor, financial system stability, Dr. Kingsley Moghalu.

Others are the director general of the Securities and Exchange Commission (SEC) and representatives of other players in the financial sector as well as selected members of the Organised Private Sector (OPS) and captains of industries.

In his contribution, the managing director of First Bank of Nigeria, Mr. Bisi Onasanya commended the CBN reforms and confirmed that the reforms were necessary and have the effect of repositioning the banking system.

The repositioning, according to him, has serve as an effective intermediary to the real sector, adding that the banks had learnt their lessons.

He added that "agric business must be made profitable in order for banks to lend to them and that the businesses need to be de-risked".

The CBN intervention funds for the Nigerian Small and Medium Enterprises (SMEs), Power/Aviation; Agric etc were commended by the World Bank and other participants at the dialogue.

However, the World Bank believes that the 80 per cent risk guarantee given by the CBN for the funding of SMEs was "too generous" and recommended a 50-50 split of risk sharing between the CBN and commercial banks.

The president of the National Association of Small and Medium Scale Enterprises (NASME) Dr. Godwin Abugu in his presentation to President Jonathan commended the CBN credit guarantee scheme to the SMEs.

The NASME boss confirmed that he endorsed the 80 per cent risk sharing taken by the CBN, but noted that 95 per cent of members of the Association have no access to credit with banks.

Proximity is the key to success for investors looking to tap into Africa's up-and-coming economies, according to one expert on West Africa's emerging markets.

"Briefcase investing" cannot be applied in the continent said Ngozi Edozien, head of West Africa for private equity firm, Actis, speaking to CNN's Marketplace Africa.

"You cannot invest in Africa and sit far way," she said. "You actually have to be close to your investment. You have to be close to what is going on so that you can make adjustments to your business and investment strategy as required."

Nigerian-born Edozien was appointed head of Actis' West Africa operations in June 2009. Before that she was the founding chief executive of the Equity Vehicle for Health in Africa, which was co-funded by the IFC, the AFDB, the DEG and the Gates Foundation.

Edozien spoke to CNN's Marketplace Africa about how to invest in Africa with confidence.

CNN: Political upheaval and coalition governments can make Africa a particularly risky investment. How do we get beyond that and what effect does it have on real investment?

Ngozi Edozien: One of the key things about investing anywhere in the world is to have a very good sense of either the industry, or the environment which you're investing in.

While in Africa there is still uncertainty in the political and regulatory environment, what I actually see is a trend to greater stability. There are disruptions, but the governments continue to function and the economies continue to grow.

A terrific example of that is Nigeria in 2009, a year that we had political challenges. Our President was ill, so there was some uncertainty in terms of how were we going to come out of that. The vice-president [became] the acting president and things continued to function. You may not have had that occur 10 years ago.

But, I think it's a real advancement and an example of the stability -- or rather the entrenchment -- of a new democratic process or new way of looking at government.

CNN: Some investors, particularly some of the smaller-scale ones, often have a negative impression of Africa. It seems that this is still a fair stereotype in many markets in Africa.

NE: When it comes to investing in Africa, we often talk about "briefcase investors." In my opinion, you cannot invest in Africa and sit far way. You actually have to be close to your investment, you have to be close to what is going on so that you can make adjustments to your business and investment strategy as required.

Africa is not an environment in which you can just sort of place your money and walk away. It's not for the faint-hearted. You need knowledge, you need presence and you also need the confidence that the market will have underlying fundamentals and growth opportunities that are solid.

CNN: Some of the strongest performers in the last 10 years such as Angola and Nigeria have also been listed as some of the most corrupt countries. What's your responsibility as an investor working in an environment where corruption is often rife?

NE: It comes down to your own analysis of the investment that you're about to make -- the company, the people that you're dealing with and the assessment of that private sector company. How open it is to government influences or other influences that may not allow you to stay within your own compliance regulations, within your own comfort zone.

So, I'm not one of these people who believes that you cannot do business cleanly in Africa. I think you most certainly can. It's about choice, it's about management and it's about understanding who you're actually dealing with and how you choose to play.

CNN: Asia was often seen as an emerging market giant. In your industry, is there a sense that Africa is the new frontier? Or is Africa still the poor cousin of Asia?

NE: That's a very good question. I would say that sophisticated investors are beginning to realize that it is a new frontier. I think if that wasn't the case, you wouldn't have seen the number of new private equity funds that have arisen in Africa over the past five years. So it's an asset class that is beginning to have real traction.

Lagos — The Lagos State Government has unveiled its plan to provide low-cost houses for different categories of residents in the state with a view to addressing problems arising from the paucity of affordable houses.

Governor Babatunde Fashola, who disclosed this yesterday when he signed a bill establishing the state Mortgage Board in Ikeja House, described the step as momentous in the history of his administration.

Speaking at the ceremony, Fashola explained the significance of the mortgage law as a major step to effectively address the menace of corrupt practice among different cadres of public servants across the state.

He said: "The law addresses diverse problems facing people who cannot build houses on their own. But those who have jobs can now approach the mortgage companies to buy houses of their choices.

"If there is no institutional and regulatory framework, there cannot be uniform practice in the mortgage sector. The law allows not only the state to build, but also encourage private firms to participate in building affordable and accessible houses.

"This is one of the ways to stem the cases of corrupt practices in the circle of public servants. We can only address corruption by providing affordable and accessible houses for the working class."

The state government had registered a mortgage registry, which he said would primarily perform the functions of monitoring mortgage business, projects and transactions in the state.

The governor added that the state government had created a mortgage division in the state judiciary to ensure that issues and controversies relating to mortgage in the state are not tied up in litigation.

He also announced the state mortgage scheme under which the beneficiaries would be required to pay 30 per cent of the value of the house they plan to acquire before taking possession.

Giving insight into the law, his Special Adviser on Power and Legislative Bureau, Hon. Abdul-Lateef Abdul-Hakeem, said the law had 69 sections and proposed a six-man board expected to generate an enabling environment for affordable and accessible houses.

He added that the law substantially catered for the interest of the less privileged and gave the board the power to negotiate on their behalf.

The board has the Commissioner for Finance, Hon. Rotimi Oyekan, as the chairman, his counterpart in Housing, Hon. Dele Onabokun, Special Adviser on Works and Infrastructure, Mr. Ganiyu Johnson and three others as members.

The Shelby County Commission voted 7-2 in committee Wednesday to give 1.5 percent pay raises to the county's 140 firefighters.

The vote won't be final until the full County Commission weighs in today.

Any pay raise for firefighters would come on top of a 2 percent pay raise for all employees approved in the budget for the 2010-2011 year.

It follows the commission's July 26 vote in favor of a 1 percent pay raise for sheriff's deputies.

Annual pay for a firefighter with three or more years of experience would rise from $49,572 to $50,316.

The pay raise would bring the county workers' salaries closer to those of their counterparts at the city of Memphis.

Even after the raise, though, the county firefighters would earn slightly less than the city firefighters -- a difference of $1,405 per year for those with three or more years' experience.

The raise would start Sept. 1 and cost about $170,583 for the remaining 10 months of the fiscal year, said Ted Fox, the county's director of public works.

The fire fees paid by residents in unincorporated areas would cover the raise.

Fire officials including County Fire Chief Clarence Cash Jr. asked for the raise following negotiations with the Shelby County Fire Fighters Association, a labor union.

The labor negotiations focused only on firefighters, Cash said. But at the committee meeting, fire officials sought raises for other workers, including dispatchers and administrators.

Commissioner Deidre Malone suggested that the raise apply only to the firefighters, and her proposal passed.

Voting yes were Wyatt Bunker, Sidney Chism, James Harvey, Edith Ann Moore, Steve Mulroy, Malone and John Pellicciotti.

Voting against were Mike Carpenter and Mike Ritz.

Bunker said county firefighters should be paid about the same as those at the city.

"These guys are putting their life on the line, a lot of time in cooperation with each other in the same areas," he said.

Ritz said the pay increase is inappropriate and that government is spending revenue from fire fees "like drunk sailors." He has lobbied for a large decrease in the fee.

The county's small fire force responds to emergencies in unincorporated Shelby County and Lakeland, and also provides dispatch services for some other municipalities. It's much smaller than the Memphis Fire Department, which has about 1,800 employees.

The firefighter pay issue is just one of the pending proposals that could affect Shelby County's workers.

Pellicciotti proposed the concept of a bonus plan for groups of employees who identify ways to save taxpayer money, but presented few details of how it would work.

Commissioners approved the broad concept 6-4 in committee.

And Carpenter is continuing his efforts to reduce the number of sick days and other leave available to Shelby County employees. County workers can build up a bank of hundreds of sick days, plus vacation days, holidays and "bonus days" for not calling in sick.

Carpenter argues that the large number of free days cuts into productivity and costs too much. But the Republican faces a skeptical Democratic majority and outraged employees.

Last month a vote was delayed because several commissioners were absent.

In a preliminary vote Wednesday, the tally was three in favor, three against, with one abstention.

Lagos — There are strong indications that the Senate has waded into the crisis at The Nigerian Stock Exchange as the chairman, Senate Committee on the Capital Market, Mr. Ganiyu Solomon, visited the exchange yesterday.

Ganiyu, who came at the instance of the National Assembly, said that his visit was for the purpose of mediating in the crisis. In a chat with newsmen, he said that his visit was to ensure that the growth recorded in the years of financial crisis is not eroded again.

"Whatever that has come out of the crisis, I believe we should come in and mediate in the interest of the masses. Every body should do his or her bit to ensure that investor confidence returning to the exchange is not eroded again," Ganiyu stated.

The Senate committee chairman refused to disclose his discussion with the management but said that the message he had brought was to ensure that everybody avoided anything that would impact negatively on the market because the market is information-driven.

Meanwhile, the exchange has offered explanation to the latest downturn in the market. In a release made available to newsmen yesterday, the assistant general manager (Corporate Communications), Mr. Sola Oni, said it is simplistic to attribute the current downswing on the market to alleged misappropriation of funds by the NSE.

He attributed the downturn to profit- taking, saying that investors had learnt from previous trend to realise their profit at a moderate price.

"What is happening currently is that investors are simply realising current capital appreciation. One of the unique features of a month end is realignment of portfolio by many investors. They want to review their assets classes and identify their net profit from each class as a basis for further decision.

"We should not lose the fact that we are approaching summer when some high net-worth investors travel overseas. One of the options available for them to mobilize funds is to sell part of their shares".

He further cited other familial obligations of parents and guardians concerning university admissions and school fees. He argued that even if investors are selling because of an allegation, it meant that another was buying, having negated the allegation.

However, trading activities on the floor of the Nigerian Stock Exchange, yesterday further closed on the bearish note as the market has lost N119 billion since the news of financial misappropriation broke out.

The market capitalisation further depreciated by N53 billion or 0.8 per cent to close at N6.2 trillion while the All-share index equally shed 215.55 index points or 0.8 per cent to close at 25,418. 84 as against 25,634.39 which was opening index.

On the whole, about 19 stocks appreciated in value with Mobil Nigeria leading on the gainers' chart with a gain of N8.00 to close at N173.00, Nigerian Breweries followed with a gain of N2.30 to close at N72.00.

On the downward side, about 46 stocks depreciated in value with Chevron Nigeria leading on the losers' chart with a loss of N4.50 to close at N85.60 while Oando shed N3.48 to follow the losers to close at N66.22.

Investors exchanged a total of 266.2 million shares worth N1.9 billion in 6,804 transactions.

Analysis of transactions showed the banking sub-sector was the most active with 93.5 million shares valued at N793.4 million in 3,568 deals while insurance sub-sector followed with 78.3 million shares worth 85.6 million in 235 transactions.

Today marks a new beginning at Skye Bank Plc, United Bank for Africa (UBA) Plc and Zenith Bank Plc as power effectively changes hands. The Central Bank of Nigeria (CBN) had ruled last January that, as part of the banking reform, any chief executive who had spent 10 years or more should retire by July 31, 2010.

The policy immediately led to the retirement of three CEOs: Mr. Jim Ovia, the founder/chief executive of Zenith; Mr. Tony Elumelu, the Group CEO of UBA; and Mr. Akinsola Akinfemiwa, the CEO of Skye Bank.

In came Godwin Emefiele (Zenith), Phillips Oduoza (UBA) and Kehinde Durosinmi-Etti (Skye). The new CEOs assume duty today at the corporate headquarters of their respective banks in Lagos. They each can now spend a maximum of 10 years as chief executive, in accordance with the CBN policy.

At the three-day seminar organised for business correspondents and editors in Benin, Edo State, last week, CBN Governor, Sanusi Lamido Sanusi, had maintained that bank chiefs or leaders of any institutions do not need more than five years and just one term to effect any change.

He said that if those in management positions are mindful of the fact that they would give an account of their stewardship one day, they would behave well.There are, however, strong indications that the new managing directors of these institutions are not likely to effect any significant change in the business focus of their respective banks because the former CEO had been gradually winding down the control of the banks since six months ago when the CBN announced tenure policy.
This means the new CEOs have been indirectly running these institutions since then.But industry watchers believe that the major challenge for the trio is how to surpass the achievements of their bosses.

Zenith Bank:
Godwin Emefiele
Emefiele, who has been on the bank's management team since its inception, was appointed as deputy managing director of Zenith Bank in 2001. Prior to the appointment, he was the bank's executive director in charge of corporate banking, treasury, financial control and strategic planning. The position enabled him to oversee all the group’s local subsidiaries, treasury and correspondent banking, and multilateral, conglomerate and private banking.

With over 23 years of banking experience, Godwin, who holds B.Sc and an MBA both in Finance from the University of Nigeria Nsukka, had a stint as Lecturer, Finance, Bank Management, and Insurance at the University of Nigeria and University of Port Harcourt respectively, before his sojourn in the banking industry. He is an alumnus of Stanford University, Harvard and Wharton Graduate School of Business.
The board said on his appointment: “Given his pivotal role, the bank has benefited from his in-depth knowledge of finance and banking. Emefiele’s strong leadership skills will no doubt be a significant advantage as he sets in motion the combined vision for the Zenith Bank Group.”

Skye Bank: Kehinde
Durosinmi-Etti
A seasoned banker with many years of cognate banking experience, spanning Banking Operations, Treasury Management, Investment Banking, Project Finance and Commercial Banking, Durosinmi-Etti has taken over from Akinfemiwa. He is a 1982 Economics graduate from the University of Ibadan and a fellow of the Chartered Association of Certified Accountants (ACCA), United Kingdom.

After a stint in audit practice, he started his banking career in 1987 when he joined the Nigerian-American Merchant Bank Limited (Affiliate Bank of Boston) where he was in charge as the Head of Accounts/Computer and later, Internal Control. Thereafter, he moved to Midas Merchant Bank as Head of Treasury and Assistant General Manager in charge of Money Market Division, before stepping up to become an Executive Director, and later, the Chief Executive Officer (CEO) in 1994.
Years later, he joined the Lagos Building Investment Company Limited in 2001 as Managing Director, and thereafter moved over to join the train ground-breaking at the EIB International Bank Plc in April 2002, where in July, 2002, he was appointed as the MD/CEO. While at EIB International Bank Plc, he successfully anchored the turnaround of the bank and led it to becoming one of the strong banks in the country. He was DMD in the last five years until now.

UBA:
Phillips Oduoza
Oduoza, now at the helm of UBA, holds a first class degree in Civil Engineering and an MBA (Finance) from the University of Lagos. He is an alumnus of the Advanced Management Programme (AMP) of Harvard Business School and has over 20 years banking experience spanning all facets of the profession.

The new UBA boss started his banking career with International Merchant Bank (IM as a Credit Officer, where he trained in credit analysis. After working for one year he moved to Citibank, the world's largest financial services institution, a period during which he was equipped with an indispensable knowledge of banking operations, relationship management, credit/marketing, efficient implementation of technology, risk management and lean banking methods.

He worked with a small team of young and talented professionals to pioneer Diamond Bank Plc and built it into one of the strongest brands and most successful financial services entity in the country. As Executive Director, Operations & Technology at Diamond Bank in 1999, he transformed IT within the bank to global standards. He became the Executive Director, Commercial/Retail Banking at the same bank until 2004 when joined Reliance Bank Limited as Deputy Managing Director, where he worked briefly before joining the Management and Board of Standard Trust Bank Plc in December 2004.
He has attended numerous banking, management and leadership courses, and has strengths in execution, talent management, technology integration and lean banking.

The Government of Liberia and the Federal Republic of Nigeria have committed themselves to what appears to be rewarding contracts through which their two oil companies, the Liberia Petroleum Refinery Company (LPRC) and the Nigeria National Petroleum Corporation (NNPC) will collaborate effectively and meaningfully.

During the signing ceremonies which took place in the Federal Republic of Nigeria, the Liberian government was represented by Justice Minister, Cllr. Christina Tah and LPRC’s Managing Director T. Nelson Williams.

By the scope of the “purchase and sale contract” signed and entered into by the two nations, the LPRC is being provided the opportunity now to allocate 20,000 barrels per day of Nigeria cruel oil from the NNPC.

The news of the signing of the mouthwatering contract was revealed yesterday at a news conference attended by members of the LPRC Board in persons of Prof. Wilson Tarpeh as chairman, Cllr. David A.B. Jallah, Samuel P. Jackson, William Smith as well as Justice Minister Cllr. Christina Tah.

The contract which is expected to last for a period of twelve calendar months, according to the management of the LPRC, is also renewable for an additional period of twelve calendar months upon negotiations between the LPRC and NNPC.

The contract brings with it huge revenue benefits to the Liberian government which in return will be used for other construction projects.

“This manifestation of assistance will enable the government of Liberia to accrue about US$120,000 per month, an amount that will be used for national reconstruction projects,” a prepared statement read by the Managing Director Williams revealed.

Most importantly, owing to the fact that the LPRC does not have refinery facilities, it has signed what it calls “Management Service Contract (MSC)” on the same day it signed the contract with Nigerian Government with the Sahara Energy Resource, Ltd.

As for the terms of reference agreed between the MSC and the Sahara Energy Resource Ltd, the company will have oversight in the managing the operations, logistics and arrangements for lifting the oil, including programming, loading, transportation and trading of the cruel oil.

Sahara is an international oil trading company conducting business in several countries around the world. Sahara is currently involved in similar arrangements in several West African nations.

According to the LPRC, Sahara shall be responsible to provide a monthly report to the LPRC on allocation from the NNPC.

The process that following awarding Sahara the contract, the LPRC said, met all of the requirements.

MD Williams said four companies bided for the contract out of which Sahara was declared winner based on its rich credentials, as confirmed by authorities of other countries in which the company has assets.
At the same time, while responding to inquiries as to whether the new contract is an extension of the one signed by his predecessor, the LPRC boss said the contract in question, so far, is independent, and has nothing to do with the controversial contract Mr. Harry Greaves, former Managing Director signed two years ago.

Relishing the contract as major breakthrough, the LPRC management said the signing is a goodwill of the government of Nigeria, as Liberia or the LPRC will not pay a dime, whatsoever, for the lifting of the oil.

At the same time, the LPRC management said efforts are underway to embark on it robust rehabilitation work in order to return the entity to its pre-war status.

Lagos — Nigeria is a place where many more deals are announced than are ever completed. But July saw progress towards the construction of one of three new Nigerian refineries expected to reduce imports of refined petroleum products, a costly and ironic feature of the oil-rich nation's economy.

The memorandum, signed in May 2010, proposed the building of three refineries at a total cost of $25 billion dollars. Speaking to IPS in June, American University professor of development Deborah Brautigam said she doubted the deal would ever be completed.

"I think it will be very brave Chinese bank that takes on a 20 something billion dollar project in Nigeria because, yes, Nigeria is much more stable than the Democratic Republic of Congo [where China has also invested heavily], but the DRC projects are much smaller."

Brautigam told IPS that the need for the refineries is clear, but the obstacles to the deal are political. "A few people at the top benefit from having some control over the imported oil products, and they don't want that situation to change. So it's a challenge for this deal to be consummated."

But she also suggested that the wisest course of action would be to come up with a practical funding model and partnership for just one refinery to begin with.

The various players seem to have been thinking along the same lines.

Not surprisingly, it's in the bustling economic engine of the country, Lagos, that concrete details of funding of a public-private partnership to build a refinery have emerged.

The project is be co-funded by a Chinese consortium called the Chinese State Construction Engineering Corporation which will put up 80 percent of the capital, and the Nigerian National Petroleum Corporation stumping up the rest.

The Lagos State government will provide necessary infrastructure including land, new roads and an adequate electricity supply.

The eight billion dollar refinery will be located in the southeastern state's Lekki Free Trade Zone, and NNPC Executive Director in charge of Engineering and Technology, Billy Agha, commended Lagos State Governor Babatunde Fashola for incorporating an oil and gas project into the LFTZ.

"On its part, NNPC will support the LFTZ by assisting with the arrangements for the supply of natural gas feedback to the zone for the manufacture of petrochemicals, fertilizer and other much desired industrial products," Agha said.

He said that the project would create an estimated 2,000 skilled positions and construction work for an additional 5,000 labourers.

Babatunde Ogun, president of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) which represents skilled workers in Nigeria's oil industry, welcomed the joint venture.

"That is what we have been clamouring for; to have refineries run by the private sector. This government is going the right direction by inviting the Chinese consortium to build and run the refineries," Ogun told IPS in Lagos.

He blamed government interference in the running of the existing facilities for the problems that the country was currently facing the supply of refined petroleum products.

Despite ranking in the top ten producers of crude oil, Nigeria imports 85 per cent of the fuel used in the country. According to the NNPC, Nigeria spends $10 billion a year on importing refined products.

Ogun advised the Chinese investors who will manage the refineries to ensure fair wages and good industrial relations with workers when the project takes off.

"We are sending a signal to them that Nigeria is as state that respects labour and so they must ensure fair wages and good industrial relations in the refineries. They must know that we operate under the International Labour Organisation standards."

The deal bears the hallmarks of what Brautigam describes as resource-backed infrastructure loans from China to Africa. The Chinese consortium will find the bulk of the financing for a project that it will then build and operate as a majority partner, thus securing both the construction contract and a reasonably safe revenue stream to recover the loan.

"Deals like this have happened across the continent," says Brautigam. "It's not altruism, it's not foreign aid: it's about business, but looking at Africa in a different way."