Why Nigeria remains poor

CMYK

JUNE 29, 2015

Continues on page 22

Economists, geologists andsurveyors have long agreedthat under the Nigerian soil

are wealth and riches untold. Butmajority of Nigerians are wallowingin poverty. The Nigerian ExtractiveIndustries and TransparencyInitiative, NEITI report suggests thatthere are about 40 different kinds ofsolid minerals and precious metalsburied in Nigerian soil waiting to beexploited. The commercial value ofNigeria’s solid minerals has beenestimated to run into hundreds oftrillions of dollars, with 70 per cent ofthese buried in the bowels of NorthernNigeria.

President of Miners’ EmpowermentAssociation of Nigeria, Mr. SunnyEkosin, reveals that Nigeria loses awhopping N8trillion annually inunexploited gold alone. He also saysthat Ajaokuta remains the key toNigeria’s industrialisation and thatgetting it back to work is a matter ofpatriotism for President Buhari and histeam.

Ekosin in an interview withVanguard said: “If Nigerians weretaking data seriously, we would havebuilt a database, where we haveauthentic information. In 2012, thePermanent Secretary of the Ministryof Mines and Steel, came before thenation and said, that from our preciousmetals alone, specifically from goldexploitation alone, Nigeria is losingN8 trillion ($50 billion) annually."

The failure of Nigeria, sinceindependence in 1960, to put in placea structure that will make the benefitsof the exploitation of solid mineralsavailable to all Nigerians has been thebane of the nation. At the momentmining of minerals in Nigeria accountsfor only 0.3 per cent of its GDP, due tothe influence of oil resources. Thedomestic mining industry isunderdeveloped, leading to Nigeria

NEGLECT OF SOLID MINERALS:

having to import commodities it couldproduce domestically, such as salt oriron sheets and billets.

According to NEITI’s audit findings,solid mineral deposits are scatteredall over Nigeria, with more depositsin certain areas than others. Over 40million tonnes of talc deposits havebeen identified in Niger, Osun, Kogi,Ogun and Kaduna states. There arehuge deposits of coal ranging frombituminous to lignite in the AnambraBasin of South-Eastern Nigeria. Thereare lead-zinc ores within the AsabaArea of Niger Delta, while tin,

Kwara states; wolframite in Kano,Kaduna, Bauchi and Niger states;silver is found only in Kano, withkyanite in Kaduna and Niger states;manganese only in the Northernstates of Kebbi, Katsina and Zamfarawith diatomite found only in YobeState, while ilmenite-rutile is only inBauchi, Plateau and Kaduna states;fluorite only in Taraba State with goldin Niger, Kebbi, Kaduna, Kogi, Kwaraand Zamfara and a little in Osun.

Nasarawa State in the North hasbeen appropriately tagged asNigeria’s home of Solid Minerals. Thestate is one of the most naturallyendowed states in Nigeria in terms ofthe availability of economically andcommercially viable naturalresources. These include clay,columbite, ilmenite, mica, barytes,pyrite, galena, limestone, sodiumchloride, ephalerite, silica sand,granites, tantalite, mica, sphalerite,talc, gemstone (tourmaline,aquamarine and sapphire),halcopyrite, topaz, cassiterite,columbite, tantalite, emerald,heliodor, amethyst, quartz, cokingcoal, marble, and iron ore. Bauchi isanother richly endowed state in theNorth with metal ores, non-metallicores and gemstones. Other untappedmineral resources in Bauchi includekaolin,talc,tin,quartz,iron ore,gypsum, zircon, calcite, tantalite,chalcoprite, mica, copper ore,limestone, tourmaline, beryl, garnet,columbite, muscovite, aquamarine,topaz, marble, bismuth, wolfromiteand others.

Yet with these potential moneyspinning resources, states in thecountry are starved of funds and arecurrently facing a cash crunch. Nigeriaas a nation is passing througheconomic hardship as a result of fallin oil prices. The low activity in thesolid mineral sector is not yielding thedesired financial benefit as there areno records of payment of taxes and

By OMOH GABRIEL,Business Editor

niobium, and lead, are to be foundaround Oyo and Igbeti, with as muchas over a billion tonnes of gypsumspread around Sokoto, Niger, Ondoand Ekiti states.

Nigeria’s potentially most beneficialsolid minerals are spread around thenation but most of them are in theNorth. Limestone deposits occur inCross River, Ogun, Benue, Gombe,Ebonyi, Sokoto, Edo and Kogi states;magnesite in Adamawa and Kebbistates; coal in Enugu, Imo, Kogi,Delta, Plateau, Anambra, Abia, Benue,Edo, Ondo, Bauchi, Adamawa and

Why Nigeria remains poor

CMYK

22 — Vanguard, MONDAY, JUNE 29, 2015

Cover

Continued from page 21royalty to the government.Nigeria is losing lots ofresources from untappedmineral deposit as well asfrom the little that is beingmined mostly by illegalminers who smuggle theproducts out of the country.

According to NEITI auditreport on solid mineraloperation in Nigeria, thereare six buying center, ninedredging companies, elevenexporters of solid minerals,fourteen medium scalemining companies, thirty-fivecommercial quarry, fifty-fourconstruction quarry, eightquarry for manufacturinggiving a total of one hundredand thirty-seven activities inthe solid mineral sector of theNigerian economy.

Report on the Physical andProcess Flows in NigeriaSolid Minerals Industry 2011prepared by Haruna Yahaya& CO (CharteredAccountants) indicated thatthere are no adequate recordsof operations in the sector.The report said “A review ofCentral Bank of Nigeria andNigeria Customs Servicerecords on exported mineralsshowed that there werediscrepancies in the value ofexported minerals as well asthe associated company.

From available records ofCentral Bank of Nigeria, 15companies exported 9,068.70metric tonnes of mineralsvalued at N577, 768,456 whileNigeria Customs Servicerecords showed that 30companies exported7,107,099.80 metric tonnes ofminerals valued atN11,496,070,691.

“Despite the fact that Goldand Barites were being minedacross the nation, there is norecord to show that theseminerals are among themined or exported minerals.Further finding shows thatbarites are mined in Benueand Nasarawa states, they arealso purchased bymultinational oil companiesas drill fluids, despite highactivities of miners there areno record of royaltypayments.

“From the available recordsof the Ministry of Mines andSteel Development, therewere no evidence of royaltypayment on these exportedminerals. The NigeriaMinerals and Mining Act2007 requires that anyexporter of solid mineralsmust request for permit toexport minerals. But indefiance to the Act, there wasno available evidence ofrequest for permit or approval

to export minerals by thecompanies,” the report stated.

The report further said “Theinformal players are mostlyartisan miners, medium scaleoperators and illegal minerswho hardly keep any record.Some of the minerals minedin Nigeria are exported out ofthe country by both formal andinformal players. There are noofficial records from ministryof Mines and SteelDevelopment on the actualvolume of minerals exportedout of Nigeria within theperiod under review.However, the few recordsavailable relates totransactions that were doneby the formal players as theypassed through the CentralBank of Nigeria, NigeriaCustoms Service and NigeriaExport Promotion Council”.

NEITI 2012 reportconducted by Moore

Stephens of LLP 150Aldersgate Street Londonsigned by Tim Woodward on31 December 2014 on Nigeriasolid mineral said “Artisanaland Small-Scale MiningDepartment failed to reportrevenues collected frommining cooperatives and fromthe Minerals buying Centre.These revenues were selectedby the NSWG in the EITIscope through unilateraldisclosure of the GovernmentAgency.

“This situation led to asignificant amount of thediscrepancies. Total revenuefrom the Solid Minerals Sectoramounted to N31.449 billionin 2012. The revenue streamfrom the Solid Minerals Sectoris composed of 84.18 per centof taxes received by FIRS.Mining taxes received byMID and MCO represent3.48 per cent and 2.24 percent respectively.

“According to the datacollected from extractivecompanies and GovernmentEntities, after reconciliationwork, revenues generatedfrom the Solid Minerals Sectoramounted to N31.449 billion.These revenues include, inexcess of the reconciledrevenue amounting toN28.736 billion, unilateraldisclosures of companiesamounting to NGN 2,003million and unilateraldisclosures of GovernmentEntities amounting to NGN710 million:

Government Revenues fromContinues on page 23

Neglect of solid minerals: WhyNigeria remains poor

Nigeria faces a number ofchallenges that can

only be met if it has innovative,well-educated, andentrepreneurial citizens who,whatever their walk of life, havethe spirit and inquisitivenessto think in new ways, and thecourage to meet and adapt tothe challenges facing them.Moreover, a dynamic economy,which is innovative and ableto create the jobs that areneeded, will require a greaternumber of young people whoare willing and able to becomeentrepreneurs, young peoplewho will launch andsuccessfully develop their owncommercial or social ventures,or who will become innovatorsin the wider organisations inwhich they work. Becauseeducation is the key to shapingyoung people’s attitudes, skillsand culture, it isvital thatentrepreneurshipeducation isaddressed from anearly age.Entrepreneurshipeducation isessential not onlyto shape themindsets of youngpeople but also toprovide the skillsand knowledgethat are central todeveloping anentrepreneurialculture.

It is important weembrace this‘global age’paradigm in our educationsystem as it has been done inChina, India, Australia,Europe, U.S.A and of lately theAsian tigers (Malaysia,Singapore, Taiwan and theKoreas).The most advancedform of this new model is whatis referred to as‘TEACHERPRENEUR’,

Which Bill Gates wasreferring to in 2010 when hesaid ‘five years from now onthe web, you will be able to findthe best lectures in the worldand it will be better than anysingle university’.

This involves embeddingentrepreneurial education intoeducation and training rightfrom the primary school tosecondary school and tertiaryinstitution. The essence of thisis because education is key toshaping young people’s

Entrepreneurial Education Revolution:An Imperative for SustainableDevelopment in Nigeria: Part 2

attitudes, skills and culture, itis vital that entrepreneurialeducation is addressed froman early age, besides, age isno barrier to entrepreneurshipas Tony Hsieh of Zapposstarted selling worms from rawmud when he was 9 years old,Steve Job, Richard Bransonand Mark Zuckerberg of theFacebook fame all started off asyoung entrepreneurs.

The time is ripe for us as acountry to stop celebratingmere certificates anddormancy, while primacy andrecognition should be given tocreativity, skills andenterprising spirit. The presenttimes have shown over timethat the global arena is blindto your credentials but is awealth creating slave to yourskills and abilities. Anyway, itis not your credentials that

g u a r a n t e e ssuccess in theg l o b a l /information agebut rather yourproblem solvingabilities, criticalthinking abilitythat can discern‘fact from fiction’,your ability toadapt (un-learn &re-learn), yourcreative andi n n o v a t i v eabilities and yourlife-long love oflearning. If your‘piece of paper’failed to deliverthese then whilst

it may have successfullyprepared you for theindustrialized 20th centuryeconomy but it has certainlyfailed you in the globalized21st. As Alvin Toffler puts it,‘The illiterates of the 21st

century will not be those whocannot read and write, butthose who cannot learnunlearn and re-learn’. It is theacceptance of this open secretthat should make policy makersand the general populace toshift attention from theconventional way of thinkingthat you must be a graduatebefore achieving success. Someof the inventors such as BillGates, and Mark Zuckerbergdropped out of school to makeit in life because of theirinnovative, creative andenterprising spirit and not

Despite the factthat Gold andBarites werebeing minedacross thenation, there isno record toshow that theseminerals areamong themined orexportedminerals

The time is ripefor us as acountry to stopcelebratingmerecertificates anddormancy, andgiverecognition tocreativity,skills andenterprisingspirit

Vanguard, MONDAY, JUNE 29, 2015 — 23

Cover

CMYK

the Solid Minerals Sectorincreased from NGN 26,925million in 2011 to N31.449billion in 2012. Large sectormining was higher in 2012due to an increase of graniteand limestone productionrespectively to 12 million tonsand 18 million tons comparedto 8 million tons and 15million tons in 2011. This wasa result of the increase of theconsumption of granite andproduction of cement inNigeria during 2012.

“The Solid Minerals Sectoraccounted for an average of0.02 per cent of total exportearnings for the year 2012.Zinc and Lead ores accountfor more than 48 per cent ofthe Solid Minerals Sectorexports. All companiesoperating under a mining orquarrying license and which

make payments to MID inexcess of NGN 2 million ($$12,500) were required toreport their payments inaccordance with EITIRequirements. As a result,cash flows reconciled for SolidMinerals Sector represent89.43 per cent of royaltiesreceived by MID from theSolid Minerals Sector. MIDalso collected over 3.41 percent of the entire Nigerianflows from the Solid MineralsSector. The selection resultedin 65 extractive companieslisted with the Nigerianauthorities. For extractivecompanies operating in theSolid Minerals Sector andwhich have made royaltypayments below the N2 millionthreshold, cash flows areincluded in this report throughunilateral disclosure byGovernment Entities.

The report said “At the

beginning of the reconciliation,the total amount reported by theGovernment Entities of Nigeriafrom the Solid Minerals Sectoramounted to N49.759 billion.We note, however, that the totalnet difference between theamounts declared by reportingcompanies’ and those of the

the 2007 Mineral Act whichhas vested the ownership ofsolid mineral on the federalgovernment.

Organized mining began in1903 when the Mineral Surveyof the Northern Protectorateswas created by the Britishcolonial government. A yearlater, the Mineral Survey of theSouthern Protectorates wasfounded. By the 1940s,Nigeria was a major producerof tin, columbite, and coal. Thediscovery of oil in 1956 hurtthe mineral extractionindustries, as government andindustry both began to focuson this new resource. TheNigerian Civil War in the late1960s led many expatriatemining experts to leave thecountry.

The exploitation andexploration of solid

minerals are governed by TheNigerian Minerals and

Neglect of solid minerals: Why Nigeria remains poor

Re-Governors: No bailoutcoming from anywhere

Continued from page 22

How can agovernor bemoving about inprivate jet,someone who maynever haveafforded a localflight beforebecoming agovernor?

Continued on page 24

There were severalresponse from

Nigerians on the abovesubject matter discussed inthis column last week . Hereare some.

Kabir Bello Dandago

The rich also cry. Its time forNigerians to see the change aspromised. Blames and counterblames can not help matters.As said, a change only startswith a change of heart. APC,Nigerians are watching closely

Maduka Osoka

All we are saying andexpecting is change from ourpresent situations, not stories.

Umoh Atanang

This is a shame if the federal,states and local governmentscannot be trusted with publicfunds. No wonder those whoaspire to hold public officesalways make it a do or dieaffair. How can they bestealing our monies and showoff as if they are gods? All Iam waiting to see is the so-called change that APCgovernment intends to bringbut if not, it will then be a moralburden on them as so manyAPC members and thosedecamping from PDP andother parties to APC in orderto protect their ill gottenwealth.

Gold E. Boyd

Some people are not beingreasonable. The question is,was it GEJ administration thatmismanaged their state funds,and make them to be bankrupt?Initially, they claimed that GEJadministration didn’t share theexcess crude account moniesbut the former Finance ministerrefuted them. The Governorsare the major problem ofNigerians because it is thesame governors crying wolfnow that starved the LGAs oftheir funds. They foughtagainst financial autonomy ofLGAs. They should go backhome and straighten up theirrecords.

NetanyahuBuhari MUST ignore them

and concentrate on making thefederal government work. Theway and manner they convertstate funds to personal useinsults all sensibilities. Howcan a governor be moving aboutin private jet, someone whomay never have afforded a localflight before becoming agovernor? They move in aconvoy of over 30 SUV’s inaddition to cars, buses, pick uptrucks, dispatch riders etc. Notone saved a kobo for a periodlike this. Buhari should leavethem alone. I wish ourdemocratic system allows formidterm elections, all of themwould have gone in one fellswoop. I am enjoying their cryof frustration to find money to

continue to live their wastefullifestyles. The governor of Imostate built an ‘Internationalconference centre’. You askyourself which internationalconference is holding in Owerri?

OromillaWatch out, the bailout thing is

just a scheme by Buhari and hisAPC co-travelers to refund someof the campaign funds used fortheir presidential election. Howdo you imagine a state using upto N30 billion or N50 billion ona federal project when that samestate has it’s own projectsabandoned? This is the samereason Umaru Musa

Yar ’Ardua’s governmentbanned this same governorsnever to execute federalproject’s in their domain butshould request or draw FG’sattention to it.

In actual fact, the FG shouldnot bail out any state. Let themthink out of the box to rescuethemselves or face their people.I tell you, they will either wakeup or their government or willbe swept away by riot. And thenthe FG should enact a law thatwill make early election possibleif there is a major protest againsta governor or local governmentchairman in their domain.

Osanebi OsakuniWhere are the people that

supported these politicians toshout for change? They must beashamed of themselves. Theyqueued behind them to chaseout someone else. Now theperson has been chased out andthe story have become different.Yes, federal government owessome states. How do we believethe financial figures beingsubmitted by the samegovernors? This is actuallywhere the so called Buhari’sprobe should start from. Howmuch does FGN owe states likeOsun and Benue? We arewaiting for this ‘hange’

AbiamoneA situation where half of the

states are insolvent calls forurgent review. Either thenumber of states is too many orstate creation is detrimental to

Government Entitiesamounted to NGN6,535,199,305 (13%), At theend of the reconciliation, a totalamount of N27.560 billion wasreported to have been receivedby the Government of Nigeriabetween 1st of January and31st of December 2012. A netdifference of N (2.004 billion)

(7.3%) remainedunreconciled. According to thedata collected from SolidMinerals Companies, we havecalculated the royalties thatshould be paid to the MIDbased on quantum reportedduring the reconciliation work.The difference betweenamounts really paid and thosecalculated amounting to N(12,089,562) and represents(1.4%) of the total royalties asdeclared by MID”.

The inability of states toexploit the resources in theirdomain is partly traceable to

long-term economicdevelopment. In which case,reversion to regional autonomymay be preferable. If we had,as in per-indendence days,Eastern Region, WesternRegion and Northern Region,this will reduce the cost ofgovernance and add to theviability of the regions.

MichaelIt is not their fault since every

month they get their freeHallelujah Niger Delta moneyand spend all the money asthey wished forgetting theymust pay their workers.

Prince TFG will fail if it does not help

the states. However, Buhari canlearn from Obama by applyingstringent rules to the bail outfunds. The fund will be specificto certain projects and paidperiodically on completion ofeach stage of the projects.

Rio ItseneHow can irresponsible and

reckless spending by states beconsidered “financial crisis”?One-sided crisis?

“Every state must publish itsaccount as well as every localgovernment. This is the kind ofchange the APC governmentand legislature should bringabout in the country”.

Solid MineralsSectoraccounted foran average of0.02 per centof total exportearnings in2012


CMYK

Cover



fluorspar. Bentonite and barite– both of which are constituentsin the mud used when drillingoil wells – are also inabundance, with 7.5 milliontonnes of barite in Taraba andBauchi states and 700 milliontonnes of bentonite across thecountry.

Reserves of bitumenrepresent another underutilised resource, withestimated reserves of 42 billiontonnes or twice the country’sexisting reserves of crude oil.Paradoxically, most bitumenused in road construction inNigeria is currently imported.

Coal and tin were among thenatural resources mined on amassive scale, with the formerbeing used to generateelectricity, power the railwaynetwork and meet the demandsof regional and internationalmarkets. Lead and zinc were asignificant source of exportrevenue, and Nigeria was theworld’s largest exporter ofcolumbite. Stagnation in the

CONFERENCE - From left: Syed Khurrum Zaeem, Head, Transaction Banking; Remi Oni,Executive Director, Corporate & Institutional Clients; David Adepoju; Head, Global Markets,all of Standard Chartered Bank Nigeria and Bassam Issa, Treasury Manager, Nigerdock NigeriaPLC-FZE at the 5th EuroFinance Conference on Treasury, Risk & Cash Management in WestAfrica held in Lagos, Nigeria.

Mining Act 2007 (“the Act”)which was passed into law onMarch 16, 2007 to repeal theMinerals and Mining Act, No.34 of 1999. The Act vestscontrol of all properties andminerals in Nigeria in thestates and prohibitsunauthorised exploration orexploitation of minerals.

According to the Act, alllands in which minerals havebeen found in commercialquantities shall from thecommencement of the Act beacquired by the FederalGovernment in accordancewith the Land Use Act.Property in mineral resourcesshall pass from thegovernment to the person bywhom the mineral resourcesare lawfully won upon theirrecovery in accordance withprovisions of the Act. TheMinister, amongst otherthings, is charged with theresponsibility of ensuring theorderly and sustainabledevelopment of Nigeria’smineral resources, creating anenabling environment forprivate investors, both foreignand domestic, by providingadequate infrastructure formining activities and alsoidentifying areas wheregovernment intervention isdesirable in achieving policygoals in mineral resourcesdevelopment.

The Act also provides for theestablishment of the MiningCadastre Office, MCO, whichshall be responsible for theadministration of mineraltitles and the maintenance ofthe cadastral registers, andempowers the Minister, byregulation, to determine areaseligible for the grant of anexploration or mining leasebased on a competitivebidding process. The MCOshall collect a fee forprocessing of applications formineral titles and an annualservice fee established at afixed rate per square cadastralunit for administrative andmanagement services. In otherwords, the FG owns, controls,monitors the exploitation andexploration of natural solidmineral resources.

In economic developmentmineral resources are thefoundation upon which anindustrialised economy isbuilt, and industrialisation isessential if Nigeria is toreduce over-dependence onthe oil industry – an industrywhich, despite the revenue itgenerates, providesemployment for just 6 per centof the Nigerian labour force.

The schist belt that coversthe western half of Nigeria hasproven reserves of gold.Although gold production inthis region dates from 1913,colonial mining companiesabandoned their activitiesfollowing the onset of the

Second World War. The goldmines have since remaineddormant, aside from anabortive attempt at extractionby the Nigerian MiningCorporation in the 1980s,which floundered due to alack of funds. Artisan minersnow account for most goldextraction, but primarydeposits that could supportmechanised mining havebeen identified in the northwest and south west parts ofNigeria. These deposits are ofa relatively high grade, andit is estimated that extractioncosts could be as low as $50per ounce, due to the shallowdepth at which they are found.An estimated 10 milliontonnes of lead and zinc veinsstraddle eight of Nigeria’sstates, with the 700,000tonnes in Abakiliki in EbyoniState representing the mostfavourable prospect. In thenon-metallic mineralscategory, riches also abound:the building industry issupplied by crushed rock,gravel and sand; glass-making grade sand has beenestablished in many parts ofthe country; and Niger, Osun,Kogi, Ogun and Kadunastates collectively boast up to100 million tonnes of talc, amere fraction of which is usedin several medium-sized talcprocessing plants.

Gemstone mining is onearea that has seen

something of a boom, thoughagain the level of exploitationis running well belowpotential. Gemstones presentinclude sapphire, ruby,aquamarine, emerald,tourmaline, topaz, garnet,amethyst, zircon, and

solid minerals sector cannotsimply be attributed to themeteoric rise of oil: poormanagement by state-ownedenterprises – compounded bycorruption and an incoherentexploitation of resources – hasalso played its part.

Precious metals are alsopresent in quantities that makethem commercially viable. Butfor all this mineral wealth,Nigeria’s mining industryremains in the shadow of theoil industry. Arc. MusaMohammed Sada formerHonourable Minister of Minesand Steel Development said inan interview while in office thatthe World Bank projectinstitutional frameworks suchas Nigeria’s Minerals andMining Act of 2007 was put inplace to bring miningindustries in the country to bein line with global bestpractices. He said Nigeria’sSteel industry has to beresuscitated for Nigeria torealise its vision of becomingone of the first top 20industrialised nations in theworld by year 2020

The solid minerals sector inNigeria has long been treatedas the poor relation of the oiland gas sector. Compared tothe level of investment anddevelopment in oil and gasextraction – which has grownexponentially since Nigeriajoined the Organisation ofPetroleum ExportingCompanies (OPEC) in 1971 –mining activity has sufferedstagnation, and even decline.

While petrol dollars dominatethe economy, the NationalBureau of Statistics lists solidminerals as contributing lessthan 1 per cent of GDP, despitesignificant coal and iron ore

reserves, and known depositsof gold, uranium, tin andtantalum. But the vast potentialof Nigeria’s mineral wealthhas not always been soignored. Before the oil boom ofthe 1970s, the economy waslargely sustained by theexploitation of solid minerals.International blue-chip miningcompanies have long sincegiven the sector a wide berthdue to its reputation forinefficiency. PresidentMohammadu Buhari hasacknowledged its potential asan alternative to the petroleumindustry for foreign exchangeearnings, and said he wouldrevitalise its fortunes. Therationale for Nigeria’s renewedinterest in exploiting its naturalresources is simple.

The government recognisesthat over dependance on oilalso leaves the economyvulnerable to international oilpolitics and fluctuations in oilprices.

A simplification of theprocedures for attainingmining licenses is key to futuredevelopment of the solidmineral sector. In the past,efforts to generate growth inthe industry have beenthwarted by bureaucracy andthe absence of a focused federalpolicy. The emphasis is onproviding transparentprocedures that will helpdevelop an industry led by theprivate sector. Tax concessions,deferred royalty payments and100 per cent foreign ownershipof mining enterprises areamong the incentives it ishoped will encourageinvestment.

In September 2009 thenational president of theMiners Association of Nigeria,Mr Sunday Ekosin,announced that illegal mininghad declined by 30 per centcom-pared to previous years,thanks to a renewedcommitment by the associationand the Ministry of Mines andSteel Development to integrateillegal miners into themainstream.

If the government’s plan torevitalise the solid mineralssector is to succeed, it must firstboost confidence in miningtitles among potential privateinvestors.

In September 2009, MinesMinister Diezani Alison-Madueke told a conference atthe London Stock Exchangethat Nigeria will soon startaddressing a backlog of newmining licenses and willcomplete a review of existinglicenses aimed at weeding outspeculators by the end ofOctober 2009. The review aimsto open up new areas forqualified mining companies,which will build on newlegislation that makes thesector more accessible toinvestors. But so far this has not


If thegovernment’splan to revitalisethe solidminerals sectoris to succeed, itmust first boostconfidence inmining titlesamong potentialprivate investors


Business & Economy

been realized.Though the potential rewards

for both investors and Nigeriaare high, so too is the cost ofregenerating the solidminerals sector. If thesubstantial known reserves ofindustrial minerals are to beexploited, significant financeand expertise must first beploughed into the sector. It isestimated that the industrywould require an investment of$10 billion a year if Nigeria isto achieve its aim of becomingone of the top 20 world



GTBank PLC is insistingthat InnosonGroup of companies

owes the bank. Contrary to alaw suit filed by the companyclaiming N30 billion indamages, findings traced theorigin of the case andconfirmed that GTBankgranted various credit facilitiestotaling N2,400,000,000.00(two billion, four hundredmillion Naira only) to Innoson,to finance the importation ofmotorcycles and spare parts.

The customer the bank saidhad the obligation of utilisingthe said funds for the agreedpurpose and ensuring loanrepayments as and when dueas contained in the contract.

The facilities granted toInnoson, it was gathered, weresecured by lien over shippingdocuments covering theimported goods financed byGTBank; Legal Mortgage overproperties located in Calabar,Enugu and Nnewi and PersonalGuarantee of Chairman/Managing Director of Innoson,Chief Innocent Chukwuma.

According to confirmedsources from GTBank, Innosonand Chief Innocent Chukwumahowever failed to meetrepayment obligations dueunder the facilities. The bankalleged that it discovered thatInnoson and Chief InnocentChukwuma had cleared severalconsignments of goodsfinanced by the bank withoutendorsed shipping documents,the originals of which are stillin the bank’s custody. It saidupon discovery some of thegoods have been cleared, thebank filed a Petition before theEconomic and FinancialCrimes Commission (“EFCC”)on May 27, 2013, toinvestigate the matter.

Based on the petition, ChiefInnocent Chukwuma wasinvited by operatives of theEFCC, following which heagreed to make monthlypayments into Innoson’saccount until the fullliquidation the indebtedness tothe bank. GTBank claimed thatInnoson defaulted in makingthe agreed payments. Thebank further alleged that inorder to frustrate the recoveryof the debt bid by the bankagainst him (Chief Chukwuma)and his company institutedsuits at the Federal High Court,Abuja, as well as the FederalHigh Court, Awka in January2014 against the InspectorGeneral of Police, the NigeriaPolice Force and InvestigatingOfficer(s), seeking declaratoryand injunctive reliefs,including orders restrainingthe Police from commencing

economies by 2020. Thegovernment must also takemeasures to ensure that theexploitation of Nigeria’smineral wealth benefits agreater proportion of thepopulation than the oil sectorhas. Further challenges includean inadequate infrastructureand the environmental impactof large-scale mineralextraction.

However, offsetting thesechallenges are the immenserewards a successfulrevitalisation of the industrywould bring: a huge boost to thenational coffers; a means ofhalting the drift of labour from

Innoson’s outstanding debt at GTBankreconfirmed GTbank action injured our credibility

SEMINAR: From left: Paul Uduk, MD/ CEO Vision and Talent; Olubukola Amoo, Training Execu-tive, Vision and Talent; Tosin Benson, Customer Service Officer, Dangote Sugar Refinery PLC;Felix Ofungwu, ED ISN Medicals and Chinasa Oriaku, Legal Officer Vibrant Ventures Limitedduring the service excellence seminar organised by Vision and Talents Nigeria ltd in Lagos.

proceedings against Innosonand Chief InnocentChukwuma. Furthermore, in abid to stall the Bank’s recoverysteps, Chief InnocentChukwuma and his companyInnoson, have continued toinstitute various suits beforevarious courts, claiming hugesums against the Bank.

With no other alternative andto ensure the recovery ofdepositors' funds held byInnoson, the bank said itinstituted a recovery actionagainst Innoson at the FederalHigh Court, Lagos. This is inaddition to a winding up actioninstituted against Innoson bythe bank, which is still pendingin court. Pursuant to the suitinstituted by the bank at theFederal High Court, Lagos, itsecured mareva orders againstInnoson freezing its bankaccounts in all banks in Nigeria

in September 2014. The new N30 billion action

filed by Innoson at the FederalHigh Court, Awka wasinstituted on the basis ofpurported damages which itsuffered as a result of the

mareva orders granted by theFederal High Court, Lagos infavour of the bank. Accordingto some legal experts, this newsuit is in continuation ofInnoson’s attempts to distractthe Bank from focusing on thecriminal matter pending withthe EFCC and the Police.

The legal experts alsointerpreted these Innoson’smoves as legal delay tacticsantics, to avoid or delay paying its indebtedness anddischarging its obligations tothe Bank, which stands inexcess of N2.4billion, whileinterest continues to accrue.

According to a source in thebank, the recovery of theborrowed funds is todiscourage deliberate loandefault, uphold integrity andserve the long term interest ofdepositors and the society atlarge.

ICC lauds CBNdirective on foreignexchangeThe International

Chamber of Commerce(ICC), Nigeria, said on Fridaythat compliance with the CentralBank of Nigeria (CBN) foreignexchange directive for importerswould impact positively on thenation’s business climate.

ICC’s President, MrBabatunde Savage said in Lagosthat the directive would drive thegrowth of local industries andcreate employmentopportunities. Savage said thatcompliance with the apex bank’sdirective would also ensurecompetitiveness for Nigerianproducts. The CBN had on June24, directed that importers ofcertain products will no longeraccess foreign exchange fromCBN, Banks and Bureau dechange for such importation. TheCBN Governor, Mr GodwinEmefiele, said that the measurewould prevent further depletionof the country’s foreign reserveon importation of goods thatcould be locally produced.

Dangote donateswork tools to blockmoulders

D angote Cement hasempowered block mak-

ers in Lagos and Ogun stateswith work tools as part of itsefforts aimed at strengtheningblock makers across the coun-try, to become more produc-tive.

The items which ranged fromwheel barrows, shovels,rainboots to hand gloves, werehanded to the block mouldersin Badagry and Ibeju in LagosState and Agbara in OgunState,

The Regional Manager,Marketing Services of DangoteCement, Johnson Olaniyi,said, at the weekend, whilepresenting the items to theblock makers, that the gesturewas one of the many incentiveslined up by the foremost indig-enous cement giant to helpthem boost their businesses.

According to him, the do-nated items are to enable theblock makers attain the neces-sary standards which he saidis necessary to ensure safetyof buildings as well as curb themenace of sub-standard blockswhich contribute to buildingcollapse. He said contrary towhat some quacks are saying,cement block contribute to thesafety and strengthen of abuilding hence the need to takegreat care in terms of thecomponents used in mouldingthem.

By NAOMI UZOR

The recovery ofthe borrowedfunds is todiscouragedeliberate loandefault, upholdintegrity andserve long terminterest ofdepositors

poor rural areas to more affluenturban concentrations; and, mostsignificantly, a viable alternativeto the oil and gas revenue thathas dominated the Nigerianeconomy for three decades. Ifforeign investors are willing tobear the start-up costs of large-scale mining operations – andif the federal government cancement a favourable policyframework to make foreigninvestment both attractive andtenable – Nigeria’s solidminerals sector could finallyshake off the status of oil’s ‘poorrelation’ and provide a lucrative,sustainable drive that will setthe economy on the road toindustrialisation.


Banking & Finance

In spite of economicrealities, the Central

Bank of Nigeria (CBN), forobvious reasons, is tryinghard to avoid anotherdevaluation of the naira.

Consequently, it imposedfurther restrictions on theforeign exchange market byexcluding 41 products andservices from purchase ofdollars from the nation’sforeign exchange market.

“For the avoidance of doubt,please note that theimportation of these items arenot banned, thus importersdesirous of importing theseitems shall do so using theirown funds without recourseto the Nigerian foreignexchange markets”, the apexbank said in a circular issuedon Tuesday.

Though the CBN said thatthe purpose of the restrictionis to conserve the nation’sforeign reserves, which hasfallen by $10.59 billion from$39.62 billion in September to$29.03 billion last week, andpromote local production ofthe products, analysts at theFinancial DerivativeCompany argue that themain reason might bebecause another devaluationwill impose further hardshipon Nigerians

“The previous devaluationcoupled with fuel scarcity haseroded disposable income.Further devaluation of thecurrency will increase theburden on the Nigerianpublic, “they stated in the Bi-monthly Economic Bulletinissued last week.

Devaluation afterrestrictions

The CBN has devalued thenaira twice betweenNovember and February. OnTuesday November 25th lastyear, the CBN announced an8.4 percent devaluation of theNaira, moving the officialexchange rate band fromN155 to N168.

This was followed by anindirect devaluation onFebruary 17th, when the apexbank announced the abolitionof the official foreignexchange market, directingall foreign exchange demandto the interbank foreignexchange market. But each ofthese devaluations has beenpreceded by a set ofrestrictions imposed on theforeign exchange market, ina bid to avoid devaluation.

For example, prior to theNovember 2014 devaluation,the CBN imposed a two dayrestriction on utilisation of its

Naira: Between restriction and devaluationBy BABAJIDEKOMOLAFE

intervention dollars. It alsolimited the margin on sale ofsuch dollars to 10 kobo, andbanned banks from sellingthem to bureau de changeoperators. This was followedby the exclusion of importationof generators and some items,including invisible transactionsfrom purchase of dollars fromthe official foreign exchangemarket. The implication is thatimportation of these itemswould not be funded withforeign exchange purchasedfrom the bi-weekly Retail DutchAuction System (RDAS)sessions conducted by the CBNbut from foreign exchangepurchased from banks.

Furthermore, prior to theFebruary devaluation, the CBNon December 17 reducedbanks’ foreign exchangetrading position to zero fromone percent of shareholders’funds. This was followed by a48 hour limit imposed onutilisation of foreign exchangepurchased in the interbankmarket by banks’ customers.These restrictions werehowever ineffective in savingthe naira from the Februarydevaluation, rather theyincreased uncertainty andundermined confidence in thefuture value of the naira as wellas encouraged sharp practices

in the foreign exchangemarket.

Impact of newrestrictions

The restriction announcedTuesday last week is expectedto have similar effect.According to a retired topmanagement staff of CBN, theexclusion of the importation ofthe 42 items from the nation’sforeign exchange market willonly heighten uncertainty andflight of foreign investors fromNigeria. “Mark my word, thenaira will crash. The policy willincrease sharp practices.People will claim to purchaseforeign exchange for items notexcluded, but will use it toimport the excluded items.Remember our ports are veryporous, with prevalence ofsharp practices. The CBNcannot monitor what peopleimport or use the dollars topurchase. As a result, sharppractices will abound,” theretired staff told Vanguard oncondition of anonymity.

A senior bank foreignexchange dealer also said thatwhile the restriction mightreduce demand for dollars inthe interbank market, it wouldcertainly increase demand fordollars in the black market,hence the black marketexchange rate is expected torise, and the gap between itand the interbank rate widenfurther.

The policy, according toAlhaji Aminu Gwadabe, ChiefExecutive Officer, Sabil BDC,has further created room forspeculation and hoarding. Henoted that already parallelmarket exchange rate hasrisen to N226 per dollar onFriday from N220 on Monday,thus increasing the gapbetween the parallel marketand the interbank market toN28.59 from N21.35 within fivedays.

On their part, analysts atAfrinvest Plc said that therestrictions lack the ability to

stimulate domestic productionof the products excluded, andwill lead to furtherdevaluation of the naira.

“We note that the capabilityof these restrictions tostimulate domestic productionof the excluded items, assuggested by the CBNdepends to a large extent ontoo many variables outside theCBN’s purview”, they statedin the Afrinvest WeeklyUpdate issued on Friday.

“Structural weaknesses andinfrastructural constraintswhich strains competitive localproduction and the rigorousdiscipline and tight bordercontrol needed to implementimport substitute strategiesare vulnerabilities yet to beaddressed. In our view, thesefactors will continue todissuade the long-termbenefits of this restriction untilconscious structural reforms byfiscal authorities andsupportive monetary policiesare directed towardsaddressing the weaknesses.

“Pressure at the interbankforeign exchange market isexpected to ease while thetransferred effect will becomevisible at the BDC and Streetsegments as importers re-direct demand. Hence, weperceive this as yet anotherdodgy devaluation of theNaira as we expect the spreadbetween FX rate at theinterbank and BDC/Streetmarket to widen markedly.This may further pressureinflation rate and Banks’trading income due to furtherreduction of interbankliquidity. In addition, revenuefrom custom duties may belimited even as higher spreadbetween interbank and BDC/Street market may furtherincentivize sharp practices.”

These predictions imply thatthe latest restrictions aimed atsaving the naira may end updoing more harm to theeconomy than good. While therestrictions may help toconserve the nation’s foreignreserves, as posited by theCBN, it would definitelypromote sharp practice in theforeign exchange market.Further, in the short term,rather than stimulate localeconomy, it would lead toincrease in the prices of theexcluded items, and henceaggravate the deterioratinginflationary situation.

Consequently, therestrictions, for now, representthe most convenient policychoice from a regulatoryperspective, but like previousrestrictions, it might turn outto be another attempt to avoidthe inevitable.

Sterling Bank to publishnames of debtorsSterling Bank has

concluded plans to publishthe names of individuals andinstitutions with non-performingloans on national newspapers,including social media if they failto repay loans obtained from theBank.

This is in line with a directivefrom the Central Bank of Nigeria(CBN) mandating banks topublish said names in at leastthree national daily newspapers.

With non-performing loans inthe industry totaling N390 billionin May 2015, the Apex Bank hasgiven a deadline of July 31, 2015for delinquent debtors to changethe status of their accounts fromnon-performing to performing,failing which their names (including directors in the caseof companies) will be madepublic.

Sterling Bank admitted thatsome of its delinquent debtorshad approached it after receivingformal notice for amicablesettlement to avoidembarrassment.

Part of the statement from theBank read thus: “Somedelinquent debtors are makingfrantic efforts to repay their loansand avoid their names beingpublished, while others arehopeful that the CBN willextend the deadline and areasking for more time to pay.

FirstBank sponsors LBSAfrica BusinessConference 2015First Bank of Nigeria

Limited, Nigeria's mostvaluable bank brand has againdemonstrated its support forsustainable growth of businessenterprises by sponsoring theAfrica Business Conference 2015organised by MBA Students ofthe Lagos Business School(LBS), Pan-Atlantic University,Lagos.

The conference with the theme“Innovative Strategies forSustainable Growth in anEvolving Market” promises toproffer solutions to issuespeculiar to doing business inAfrica and Nigeria in particular.

The LBS Africa BusinessConference 2015, the third in theseries of annual gathering ofprominent business leaders,policy makers and owners ofSMEs will provide a rareopportunity for participants togain key insights from panelistswho are actively involved inshaping various economies inAfrica.

Slated for 10:00am on Friday,June 26, 2015, the conferencewill hold at the Lagos BusinessSchool, KM 22, Lekki -EpeExpressway, Ajah, Lagos.

People willclaim topurchaseforeignexchange foritems notexcluded, butwill use it toimport theexcludeditems


By JONAH NWOKPOKU

International Business News

The economic slowdown is over, sayconsumersConsumer sentiment

climbed to a five-month high in June, a sign thatshoppers may be ready to rampup spending, according todata released Friday.

A gauge of consumersentiment rose to a final Junereading of 96.1, reboundingfrom a drop in May, theUniversity of Michiganreported. Economists polled byMarketWatch had expected thefinal June figure to match apreliminary result of 94.6. Theconsumer-sentiment gaugeaveraged 86.9 over the yearleading up to the recession.

“Consumers voiced in thefirst half of 2015 the largest andmost sustained increase ineconomic optimism since2004,” according to the report,which noted an improvementfor households throughout theincome distribution. “Theeconomic slowdown has endedaccording to consumers.”

Economists follow readingson confidence to look for cluesabout consumer spending, thebackbone of the economy.Earlier this week thegovernment reported thatMay’s consumer spendingposted the largest growth sinceAugust 2009. A strengtheninglabor market, along with a pickup for wages, is supportingspending.

“After a soft start to the year,we expect the economy to find

Few events will be as significant forthe world in the next 15 years

as China opening its capital borders, ashift that economists and regulatorsacross the world are now starting tograpple with. With China’s leadershipaiming to scale back the role ofinvestment in the domestic economy, thenation’s surfeit of savings — depositscurrently stand at $21 trillion — willincreasingly need to be deployedoverseas. That’s also becoming easier,as Premier Li Keqiang relaxes capital-flow regulations.

The consequences ultimately couldrival the transformation wrought by theCommunist nation’s fusion with theglobal trading system, capped by its2001 World Trade Organisation entry.That stage saw goods made cheaperacross the world, boosting thepurchasing power of low-incomefamilies at the cost of hollowed-outindustries.

Some changes are easy to envision:watch out for Mao Zedong’s visage onbanknotes as the yuan makes its wayinto more corners of the globe. China’sgiant banks will increasingly dot NewYork, London and Tokyo skylines,joining U.S., European and Japanesenames. Property prices from Californiato Sydney to Southeast Asia already

its footing in the comingmonths with strongerconsumer spending seen to bea key driver of accelerating[economic] growth,” saidGregory Daco, head of U.S.macroeconomics at OxfordEconomics.

Also, rising home priceshave helped Americans gainequity in their properties,shoring up their personalfinances. Families withproperties that have increasedin value have been able torefinance or sell their homeswithout taking a loss. A gaugeof consumers’ views on currentconditions rose to 108.9 inJune from 100.8 in May, whilea barometer of their

expectations increased to 87.8from 84.2.

However, U.S. consumersalso face headwinds. After

plunging in 2014, gasolineprices have been on the risesince January.

Further, some jobless workerscontinue to face a particularlyharsh labor market — almostthree-in-10 unemployedpeople have been looking fora new spot for at least half ayear. Also, workers withoutpermanent jobs have seentheir share of the total laborforce grow in recent years, atrend that cuts families’financial stability. And therebounding housing markethasn’t helped everyone —there are still pools of deeplydistressed borrowers who arestruggling to pay their monthlybills.

With $21trn, China’s savers are set to change the worldhave seen the influence of Chinesebuying.

Other shifts are tougher to gauge.International investors includingpension funds, which have had limitedentry to China to date, will pour in,clouding how big a net money exporterChina will be. Deutsche Bank AG isamong those foreseeing mass netoutflows, which could go to fund large-scale infrastructure, or stoke asset pricesby depressing long-term borrowingcosts.

“This era will be marked by Chinashifting from a large net importer ofcapital to one of the world’s largestexporters of capital,” Charles Li, chiefexecutive officer of Hong KongExchanges & Clearing Ltd., the city’sstock market, wrote in a blog this month.Eventually, there will be “fund outflowsof historic proportions, driven byChina’s needs to deploy and diversifyits national wealth to the globalmarkets,” he wrote.

The continuing opening of China’scapital account will also promote thetrading of commodities in yuan, andboost China’s ability to influence theirprices, according to an analysis byBloomberg Intelligence.

As was the case with China’s WTOentry, where many of the hurdles had

been cleared in the years leading up to2001, policy makers in Beijing havebeen easing restrictions on the currency,the flow of money and interest rates foryears. What’s making 2015 notable isthe International Monetary Fund’sonce-in-five-year review of its basket ofreserve currencies. China wants in, andis accelerating reforms to get there.Recent steps to promote its currencyhave included setting up five offshoreyuan centers, a new link between theShanghai and Hong Kong stockexchanges and letting the tightlycontrolled yuan trade against the dollarin a wider band. It has promised toremove a cap on interest paid to savers.

“The integration of China –- theworld’s second-largest economy withthe highest saving rate but still a lowper capita income -– into the globalcapital markets is an unprecedentedevent,” China International CapitalCorp. economists led by Beijing-basedLiang Hong wrote in a note this month.

There are already signs of thatpotential. Chinese buyers toppedCanadians to rank as the biggestforeign purchasers of U.S. homes bysales and dollar volume in the yearthrough March, accounting for morethan a quarter of all internationalspending.

Consumersvoiced in the firsthalf of 2015 thelargest and mostsustainedincrease ineconomicoptimism since2004

Tunde Kehinde and ErcinEksin, both former co-

founders and co-ManagingDirectors of Nigeria’s premieronline retailer, Jumia.comhave launched onlinelogistics company, AfricanCourier Express, ACE todrive innovations in theNigerian logistics industry.In an exclusive interview withthe Vanguard, the duo saidACE leverages technology todrive direct to consumerdelivery, helping retailers,banks, insurance companiesand other businesses delivergoods directly to consumersall over Nigeria.The service also allows usersto track packages real time aswell as make provisions forpayment collection at point ofdelivery.They said the service wasinspired by their experiencebuilding Nigeria’s first onlinestore, Jumia.com.“With Jumia, we saw end toend what the customerchallenges are betweenbuilding operations andcustomer service. We saw thatwhere the big pain was, waslogistics. And that was whywe said we could solve theproblem we saw while wewere at Jumia and most likelysolve the same problems otherretailers and businesses arehaving. It goes beyonddelivering just an ecommerceitem. For us, what we want isfor that business that wants toget products across thecountry to be able to do thatusing this platform. That waswhat the Jumia experiencehas helped us to do,” saidKehinde.He added: “We saw a bigopportunity in logistics, so wescaled Jumia to the level itwas at the time we left andthen decided to build aplatform that can power ahundred more Jumias. Andwhen you think in that scale,it is an opportunity youcannot pass up. "This is because, what is veryclear all over the world is thate-commerce in developedmarkets can be as high as 6per cent of GDP. This is meansthat in our country, e-commerce can be a $10 billionplus market. But right now, itis constarined by lack ofstructured logistics platform."

Ex-Jumiabosses’ ACEdrivesinnovations inNigerianlogistics industry


BY PETER EGWUATU

Shareholders, underthe aegis of

Proactive ShareholdersAssociation of Nigeria,PROSAN have berated themanner in which theCorporate AffairsCommission, CAC grantsapprovals to companies tohost Annual GeneralMeetings, AGMs withoutdue process.

They further urged theregulatory bodies in thecountry to collaborate withone another for virile andsensitive capital marketissues in order for thecountry to get globalattractions. The shareholdergroup in a letter sent to theRegistrar General of CACand obtained by Vanguardexpressed their displeasureover the manner in whichthe commission grantedapproval to InternationaEnergy Insurance Plcwithout following dueprocess.

In the letter signed by theNational Coordinator, andGeneral Secretary ofPROSAN, Mr. OderindeTaiwo and Mrs . OluyemisiFawunmi , it sated , Ihereby write on behalf of theabove named associationsand the entire minorityshareholders ofInternational EnergyInsurance Plc for your

AGM: Shareholder: Shareholder: Shareholder: Shareholder: Shareholders caution Cs caution Cs caution Cs caution Cs caution CAAAAAC oC oC oC oC ovvvvverererererunnecessarunnecessarunnecessarunnecessarunnecessary appry appry appry appry approoooovvvvvalsalsalsalsals

insensitivity and for puttingour investment at risk bygranting approval to one ofthe shareholders of thecompany by name PearlchrisProperties Limited t holdExtra- ordinary GeneralMeeting, EGM last month atLe Meridian Hotel, Uyo, AkwaIbom State.”

Prosan warned the CAC notto allow such unnecessaryapproval to person other thanthe company to host AGM.“We do not want you to repeatthis type of mistake wheneverany other shareholder (s) ofany quoted company

approach you in the nearestfuture for the same purpose”it added.

The shareholders cautionedCAC on the need to get intouch with the directregulatory body overseeingsuch a company. “Forexample, CBN regulatesbanks and Securities andExchange Commission, SECregulates quoted companies.So, for approvals of AGMs tocompanies being regulated bythese bodies there is need forCAC to always collaborate withthem to clarify issues” thegroup advised.

PROSAN further revealedthat Pearlchris Properties with10 per cent holding wasowned by two former directorsof International EnergyInsurance who just bought theshares of the company fewmonths from the floor of theNigerian Stock Exchange,NSE for hostile takeover ofthe company without respectfor other ninety per centshareholders of the company.

According to the group “Ifyou look critically at the agendaof the EGM, the first agendais to convert the proposedEGM to an AGM which is byour understanding is a hostiletakeover of our company if notfor the timely intervention ofNational InsuranceCommission (NAICOM) bydissolving the Board for properinvestigation.”

AGM: From left: Managing Director/CEO Capital Bancorp Plc, Mr Aigboje Higo; Chairman,Mr Olutola Mobolurin and Company Secretary, Mr Olayinka Jafojo during the AnnualGeneral MEeeting, AGM of Capital Bancorp Plc in Lagos.

StanChartStanChartStanChartStanChartStanChartleveragesleveragesleveragesleveragesleveragesinternationalinternationalinternationalinternationalinternationalreach to boostreach to boostreach to boostreach to boostreach to boostcustomers’ needscustomers’ needscustomers’ needscustomers’ needscustomers’ needs

Standard Chartered Bankhas said that it is

leveraging its internationalreach to meeting the needs ofits customers in Nigeria.

Speaking at the StandardChartered Bank recently co-sponsored 5th EuroFinanceConference On Treasury, Risk& Cash Management in WestAfrica in Lagos, Remi Oni,Executive Director, Corporate &Institutional Clients, StandardChartered Bank Nigeriaexpressed optimism that withthe quality of topics andconversations at theEuroFinance conference,companies in the region wouldbe better equipped to the facethe challenging operatingenvironment.

According to the ExecutiveDirector “Beyond theconference, Standard CharteredBank is leveraging itsinternational reach and robustlocal presence to help its clientsnot only survive the currentunpredictability of the markets,but thrive in the midst of it”.

Delivering a presentationtitled “Creating a successfulstrategy for RMB”, Jing Liu,Director RMB Solutions,Standard Chartered Bank,London highlighted thatChinese investment isbecoming more highly soughtin West Africa, which haveimportant implications fortreasurers in the region.

According to Liu, the RMB’srole in global trade has beenexpanded by China increasingits import and export trade flowsin offshore RMB. In addition,over the past year the CBN hasmoved some FX reserves intoRMB from US dollars.Treasurers, thus, need tounderstand the RMB, and howits increasing global profileaffects their operations.

In the session titled “Liquiditymanagement essentials in WestAfrica”, Ibude Guobadia(Corporate Sales Head -Transaction Banking, StandardChartered Bank Nigeria) andAbisola Adefarati (Head Tax &Treasury, British AmericanTobacco, Nigeria) highlightedthe critical role of cashmanagement as a cornerstoneof treasury management.

They further shared bestpractices for corporate liquiditymanagement, to helpcompanies improve intra-dayliquidity, in spite of restrictionsplaced on different currencies indifferent countries and the dropin oil prices.

Infractions:Infractions:Infractions:Infractions:Infractions:SEC orSEC orSEC orSEC orSEC orderderderderders BGL ts BGL ts BGL ts BGL ts BGL to appear befo appear befo appear befo appear befo appear before APC Aore APC Aore APC Aore APC Aore APC August 4ugust 4ugust 4ugust 4ugust 4

Following thesuspension placed on

BGL subsidiaries as a resultof alleged infractions in theNigerian capital market,the Securities andExchange Commission,SEC has ordered themanagement to appearbefore its AdministrativeProceedings Committee,APC to explain theallegations of infractionsagainst them.

The commission hasdisclosed that themanagement has beeninvited to appear before itsAPC on 4th and 5th Augustfor hearing on the allegedinfractions.

The SEC has explainedthat it received over 40letters of investorcomplaints against BGL

Group Plc, allegingindebtedness to the tune ofabout N5.8 billion.

Investigations wereconducted and all-partiesmeetings were arranged by

SEC during whichrepayment agreements werestruck between BGL andsome of the affectedinvestors.

Unfortunately, BGLcontinued reneging onpromises to restituteinvestors.

Backed by a court orderfrom the Investments andSecurities Tribunal (IST),SEC said, it set up a 7-manInterim Management Team(IMT) for BGL Group.

According to SEC “Thiswas a necessary, well-considered action with thesole objective of protectinginvestors while a moredetailed forensic audit wasconducted to determine thefinancial health of thecompanies within the BGLGroup and the nature/extentof infractions committed bythe BGL management.”

From the preliminary

report of the forensicauditors, it was revealed,among other facts, thatindeed BGL Group was in acritical financial state inwhich: The Group’smanagement hadprogressively eroded itsshareholders’ funds throughlosses sustained over a 5-year period totaling aboutN48 billion as at December31, 2014; Billions of naira ininvestors’ funds were put atextreme risk throughquestionable investments bythe BGL management insome ill iquid, unlistedcompanies’ securities; one ofwhich has been declaredbankrupt ; The Group hassignificant liquiditychallenges making it unableto meet its responsibilitiestowards clients andinvestors as evidenced byover N11 billion in unpaidmatured funds to investors.

The Group’smanagement hadprogressivelyeroded itsshareholders’funds throughlosses sustainedover a 5-yearperiod totalingabout N48 billion

BY PETER EGWUATUp

Corporate Finance


CMYK

Economy

The All ProgressiveCongress (APC) led

federal government ofNigeria may have put thenumber of Nigerians living inadversity as a result ofcorruption at 110 million.

It was not clear how theycame about this figure but thiswas given last week by theVice President, Prof. YemiOsinbajo while speaking atthe third annual ChristopherKolade lecture on businessintegrity in Lagos.

He said that such largenumber of Nigerian citizenslive in deplorable economicconditions because a fewcabals have undermined thesystem and cornered theresources to the detriment ofthe greater population addingthat when public institutionsare weakened by corruptionthe society is in danger ofcollapse.

According to him thecurrent administration ofMuhammadu Buhari isbuilding a fair and inclusivesociety with a network ofsocial services and anti-corruption policy based onethical values.

Speaking on the theme ofthe lecture, ‘’BeyondCompliance: Imbibing aCulture of BusinessIntegrity ’’ Osinbajo notedthat the level of integrity orotherwise in the society maynot necessarily be a result ofthe copious legal orregulatory provisions as muchas it is a function of theculture of the people evolvedover time.

He explained that thefunctionality of the legal andregulatory provisions wouldimply the resolution of theethical dilema Nigerianshave found themselves whereone either saves hisrelationships with corruptfamily members in publicoffices and destroy the larger

society or sacrifice suchrelationships and save thenation.

He said the decision toaccommodate corruptionbecause the person involved

is a friend, family relation,ethnic relation or religiousmember shows lack ofintegrity and makes whoeverthat is accommodating suchvices guilty of corruption.

Osinbajo stated that thecommitment of MuhammaduBuhari administration is tocreate an environment forresolution of such ethicaldilemma without fear ofvictimisation or loss.

However he added thatwhile government should takethe lead and ultimateresponsibility in the fightagainst corruption the civilsociety as well as corporateorganisations should also beinvolved in taking positiveactions against corruptionand promote integrity as aculture in the various spheresof influence.

He also wants businesses tobegin a paradigm shift inthere Corporate SocialResponsibility (CSR) to focuson sustainability andstrategic scalability.

Speakers at the lectureurged government to adopt apreventive strategy inaddressing issues of integrityin governance. They alsoasked the current

administration to useincentives to drive whistleblowing and cultural re-orientation.

Furthermore they remindedthe vice president that thecurrent government has thechance to succeed more thanany other adding that if thischance to fight corruption ismissed it is going to bedifficult and long time torecover adding that this iswhy the APC governmentwas elected in the first place.

In his remarks the centralfigure in the annual lecture,Dr Christopher Kolade,stated that in Nigeria theword ‘corruption’ is used farmore frequently than‘integrity’ and that is why ithas become so dominant inour national mindset. Headmonished that Nigerianshave to reverse this in allpublic communications.

Reacting to insinuations thatcorruption is more attractivethan integrity because corruptpeople are seen as moresuccessful Kolade said thatOsinbajo is a proof that it ispossible for a man of integrityto pass through publicservice and get to the top inNigeria.

110 million Nigerians impoverishedby corruption – Osinbajo

It appears that the recentefforts of the Central

Bank of Nigeria (CBN) tostem Naira depreciationmay not turn positive to theeconomy eventually.

Speaking at the thirdChristopher KoladeAnnual Lecture last weekin Lagos, chief executive ofThe Chair Centre Group,a leading furnituremanufacturer in Nigeria,Mrs Ibukun Awosika, saidthe new policy whichexcluded some itemsrelating to manufacturinginputs from accessing theCBN foreign exchangewindow would definitelysky-rocket cost ofproduction, adding that

some local manufacturers mayeven shut down.

Awosika who is a director ofmany blue chip companiesincluding First Bank ofNigeria Plc, Cadbury NigeriaPlc amongst others alsolamented that the policy wascoming at same time NigerianCustoms Services wasthrowing the furniture marketopen to massive imports byremoval of the import ban.

At the weekend Afrinvest, aleading investment housealso pointed out a number ofdraw backs in the new forexpolicy.

According to the analysts atAfrinvest ‘’the capability ofthis restrictions to stimulatedomestic production of the

excluded items, as suggestedby the CBN depends to alarge extent on too manyvariables outside the CBN’spurview. Structuralweaknesses andinfrastructural constraintswhich strains competitivelocal production and therigorous discipline and tightborder control needed toimplement import substitutestrategies are vulnerabilitiesyet to be addressed’’.

They added ‘’these factorswill continue to dissuade thelong-term benefits of thisrestriction until consciousstructural reforms by fiscalauthorities and supportivemonetary policies are directedtowards addressing the

weaknesses’’.Afrinvest analysts stated

‘’whilst we are somewhatstartled that the CBN’sdecision is coming ahead ofPresident Buhari’s economicblueprint, it howeverunderscores the responsibilityand independence of theCBN - remaining proactive intaking critical monetary policydecisions that will guaranteeexternal economic stabilityamongst other concerns’’.

They opined that this movemay unintentionally limitfiscal revenue expansionsources of the FederalGovernment needed to fundbudget deficit particularlyfrom custom duties.

Pressure at the interbankforeign exchange market isexpected to ease while thetransferred effect will becomevisible at the parallel marketsegments as importers re-direct demand.

Private sector, analysts pickhole in new CBN’s Forex rule

Stories by Emeka Anaeto,Economy Editor

•Prof Osinbajo, Vice President


CMYK

Homes & Housing

*High-end private estate development

Average UKmortgage deposit hitsrecord highThe average house buyer

in Britain is puttingdown a record deposit of morethan £72,000, according to anindex. It is the highest levelsince the Mortgage AdviceBureau (MAB), a broker,began collating the figures inMarch 2009.

The previous peak was£71,474 in June last year. Lastmonth, the figure rose to£72,302.

Rising house prices meanthat not only do buyers needto find bigger deposits, butthe increased equity alsohelps those already on theproperty ladder to put downlarger amounts on their nexthome. The average deposit asa proportion of a loan rosefrom 28 percent to 30 percent.

Figures from Halifaxshowed house prices in theUK had risen by more than£100 a day in April, taking theaverage value across Britainto £196,412. MAB’s index –compiled using data from over600 brokers and 900 estateagents – indicated thataverage mortgage sizes, aswell as deposits, reached newlevels in May with the typicalhomebuyer applying for amortgage of £167,842 lastmonth, 1 percent higher thanApril’s previous post-recession peak of £166,141.

LASG considers ‘rentand own’ housingschemeLagos State government

would consider adoptinga ‘ rent and own’ housingscheme in resolving thehousing deficit in the state.

Governor Akinwumi Ambodewho disclosed this in his office,said it was not easy for a winnerof a three-bedroom flat, underthe state’s housing scheme, tomake an initial payment ofabout N5 million, which is halfthe cost, before spreading thebalance through monthlypayments.

He noted that it wasunnecessary for a bachelor orspinster to own a three-bedroom flat, stressing that itwas better for those in thiscategory to get studioapartments and upgrade tomore spacious accommodationswhen they get married and starthaving children.

He appreciated the solidfoundation already laid by hispredecessors in office in thestate, calling for suggestionsand constructive criticism by allresidents, including the media,so as to build on what was onthe ground.

Mortgage Bank; ResortSavings and Loans; Suntrust Savings and Loans; andTrustbond Mortgage Bank.

Inyangete noted that whilethe NMRC has been able toprovide a uniformunderwriting standard for thecountry’s mortgage market,the absence of a foreclosurelaw is hampering quickerexpansion. “We see a need fora legal structure that is clearand simple for the creation ofmortgages,” he said.

The NMRC boss said thecompany plans to sell sharesto the public before the end ofthe year to dilute itsownership. He said: “Ourideal scenario is to have everybank that is interested inproviding mortgage financingto be part of it. Our bond issuewill allow us to raise fundswith the government guarantee which allows us tocome in at a cheaper ratethan otherwise. If thegovernment is borrowing atdouble-digits, it means that[our] cheaper rate will be atabout the same rate that thegovernment is borrowing.”According to him, Nigeria’sproperty market is currentlyvalued at $41 billion,representing about 8 percentof gross domestic product,asserting that the companyplans to more than triple thisover the next few years as ithelps extend maturities forNigerian home buyers to asmuch as 20 years.

NMRC was set up toencourage and promote homeownership in Nigeria byproviding financial facilities tothe mortgage lenders, therebyincreasing the availability andaffordability of mortgage loansto Nigerians.

Twenty member mortgagelending banks are currentlyenlisted with NMRC. Theseinclude: Sterling Bank Plc,Access Bank Plc, HeritageBank Plc, Stanbic IBTC BankPlc, Infinity Trust MortgageBank Plc, Homebase MortgageLimited, FHA Homes Savings& Loans Limited, Aso Savings& Loans Plc, Trust BondMortgage Bank and, ImperialHomes Mortgage Bank.Others are: Abbey MortgageBank Plc, Resort Savings &Loans Limited, PlatinumMortgage Bank Limited,Jubilee Life Savings & LoansLimited, Haggai Savings &Loans Limited, Refuge HomeSavings & Loans Limited, NewPrudential Building Society,Sun Trust Savings & LoansLimited, Nigeria PoliceMortgage Bank Limited and,Mayfresh Savings & LoansLimited.

NMRC refinances 577 mortgages withN10bn bonds Targets 400,000 mortgages in 5 years

Stories by YINKAKOLAWOLE,with agency report

In the bid to expandaccess to housingfinance, Nigeria

Mortgage RefinanceCompany (NMRC) is set torefinance 577 mortgageswith the sale of N10 billionbonds this week, even as ittargets refinancing 400,000mortgages with N440 billionin the next 5 years.

Managing Director/CEO,NMRC, Prof. CharlesInyangete, said the bonds saleis the first step in a quarterlyprogram to raise N140 billion.He said the 15-year bonds willbe used to refinance existingmortgages that meet specifiedunderwriting requirementsand will be listed on theFinancial Market DealersAssociation tradingplatform. “We

started by looking at thelegacy loans – existingmortgages in the economyand bring them into conformitywith what we now call theUniform UnderwritingStandards. We have done that

and it drives our first processof the mortgage refinance,”he stated. According to him,an investment of N3.5 trillionis needed to cut the nation’s17 million housing deficit bybuilding 780,000 housingunits annually.

The mortgages to berefinanced were originated bynine banks which met theNMRC requirements foruniform underwritingstandards and were includedin the provisional Series 1Mortgage portfolio as at May28. The banks shortlisted forthe mortgage refinancing are:Aso Savings and Loans;Stanbic IBTC; Imperial Homes Mortgage Bank;Access Bank; Abbey

Mortgage Bank;F H A

Our bond issuewill allow usraise funds withgovernment guaranteewhich allows usto come in at acheaper ratethan otherwise

A research carried out by LamudiNigeria, an online real estate

marketplace, has revealed the most popularspots for house-hunters in Lagos.

According to the research, theseneighbourhoods in Lagos dominate propertysearches in the country’s most populous city,attracting 89 percent of all searches. Datashows Lekki as the most popular area forhouse-hunters in Lagos, attracting 38.33percent of all property searches in the city.

Breaking down the data, Lamudi revealsthat house-hunters in Lekki are lookingpredominantly for properties to rent (70percent), with only 29 percent looking to buy.A mere one percent of searches were for landin the area.

The second most popular district, accordingto the report, is Ikeja with 12.32 percent ofhouse-hunters in Lagos searching forproperty in this area.

At the other end of the scale, the researchhighlights 10 areas in the city that generateless than one percent of all Lagos propertysearches combined.

According to the survey, renting dominatesproperty searches in all the top 10neighbourhoods in Lagos. In Yaba - the

Firm reveals real estate hotspots in Lagos

fourth most popular district for propertyseekers in Lagos - 93 percent of searchesare for rental properties, with only fourpercent looking to buy.

In Shomolu, 94 percent of propertysearches are house-hunters who want torent. Data shows the most popular of thetop 10 neighbourhoods for purchasingproperty in Lagos is Ikoyi; 42 percent ofsearches in this area are carried out byhouse-hunters aiming to buy.

Obi Ejimofo, Managing Director ofLamudi Nigeria, said: “Lagos is at theforefront of Nigeria’s dynamic propertymarket, as highlighted by such a highnumber of searches in this area. Webelieve it should be important for bothsellers and investors to understand thebreakdown of demand for properties byneighbourhood in order to betterunderstand where people are looking tosettle down within the city. We have seenthat the Lagos rental market is muchmore active than the sales market. Thistrend is confirmed by our data for thefirst quarter of 2015, where searches forrentals dominate over 75 percent of allsearches in the city.”


CMYK

34 —Vanguard, MONDAY, JUNE 29, 2015

CMYK

Micro-Finance

“The Central Bank ofNigeria, (CBN) has

recently directed all banks inNigeria to periodically publish,in at least three national dailies,names of their delinquentdebtors, whose accounts remainnon-performing.”

DIAMOND BANK PLC,Punch, June 22, 2015, p 39.

Permit me to mention thatVANGUARD is one of fournewspapers which can truly becalled “national papers”. Therest, including three published inLagos, are mere pretenders. So,the banks know where to gowhen they are ready to publishthe names of the national deadbeats. Readers should restassured that a lot of names andreputations of business“moguls” will be tarnished forever. However, before going intothe finer details of this CBNdirective, let me digress bypointing to another CBNdirective whose terminal date isdrawing close.

The Biometric VerificationNumber, BVN, exercise will endthis month. From July 1, 2015,anybody without a BVN will notbe permitted to operate his/heraccount in any bank. Unlike thecustomer number issued to

Recovery of delinquent credit facilities and theeconomic calamity ahead

customers by every bank, theBVN is applicable nationwide.Apart from helping to identifycustomers more easily, the BVNwill serve another function whichmany people, especiallyfraudulent individuals, are notaware of; it will help to uncoverthose operating several accountsunder various identities. Thefinger prints collected will be putthrough computer matchingprocess and very soonthousands on Nigerians andforeigners residing here, whohad escaped the law will findthemselves exposed. Millions ofaccounts will be affectedeventually. Some of yourneighbours might soon bevisiting the nearest EFCC officeto explain how the same personcan be John Doe and Sam Bird.Interesting times await us.

However, the one that willcreate the greatest disaster, atleast temporarily, is the directiveabout delinquent accounts.Thousands of companiesoperated by Nigeria’s bigbusiness people are heading forcrash on account of this. Forinstance, on the same day, inthe same paper, on page 68,there was a Police Bulletinregarding one Stella Dike

Ozoemene, who defraudedGuaranty Trust Bank Plc ofN150 million using Ohzed Oiland Gas Company as theconduit. Yet on the same page,a Lagos State High Courtattached the accounts of an oilmarketing and distributioncompany, Nitrend Limited overN150 million debt. This timeAccess Bank was the victim.These two cases might be thefirst in a series of desperateactions by banks which hadtreated their non-performingdebtors with kid gloves —especially when the debtors arewell-connected.

Perhaps, it is just acoincidence that these cases arecoming out in the open at thistime. But, it is doubtful. Apartfrom the amounts involved beingthe same, the guarantor to theNitrend Limited loan was also afemale former ManagingDirector of defunct City ExpressBank, which went down withmillions of depositors’ funds. Ifindeed, Access Bank andGuaranty Trust have diligentlyapplied the basic principle ofKnow Your Customer, it isdifficult to imagine how thedamages could have occurred. Now they are now chasing

money which should not haveleft the bank in the first instance.Heads will, and must roll, in thebanks for these.

However, the two casesmerely reveal a tip of the noseof the submerged monsterwaiting to send shock wavesthrough the Nigerian economy.Last year, the CBN Governorrevealed that less than onethousand Nigerian firms accountfor over seventy per cent of allbank loans; the remaining onemillion-plus companies make dowith the little that is left. Leftunsaid by the CBN Governor,either deliberately orinadvertently, is the fact thatvirtually all these companiesoperate multiple accounts withmany banks and the mainfunction of their directors offinance is to juggle funds fromone bank to the next; to allowsome accounts to becomedelinquent until pressed by thebanks and to delay payments aslong as possible. A look at thelist of toxic loans, acquired byAsset Management Corporationof Nigeria, AMCON, will revealthat it might as well be publishedas a WHO IS WHO AMONGNIGERIAN BILLIONAIRES.The “professional” dead-beats

are all the people we routinelyapplaud. The list of delinquentaccounts and the names of theirdirectors will include almostall the “usual suspects” – whoare uniformly incorrigibledebtors.

The CBN directive willhowever result in very painful re-adjustments – at least in the shortterm. Most of these companieshave operated on the principleof not allowing the left hand toknow what is happening on theright hand. Each bank hadguarded jealously its transactionswith the biggest customers. Thatis precisely what the dubiousbusiness people want. Until aloan goes terribly bad, and it islarge enough, most banks willnot disclose to other banks theirexperience with the customer.That way, the same customercan dupe several banks at thesame time.

With the new CBN directive,“professional” delinquentcustomers will be revealed forall to know; they will not be ableto access foreign exchange andthe banks will take steps torecover their loans. Severalthousand companies might beliquidated in a short timeexacerbating the nation’sunemployment problem. But, itis task that must be done sooneror later. It might as well be now.


CMYK

The Tony ElumeluFoundat ion (TEF)

has called on government atall levels and politicians tocreate enabling environmentfor entrepreneurs in thecountry to thrive.

Founder, TEF, Mr. TonyEleumelu, said this at a mediabrief heralding the two daysBoot Camp session designed toequip the successful 1,000entrepreneurs with skills neededto build a successful businessfrom July 10 to 12, in Ota, OgunState.

Elumelu said, “In Africa, over90 percent entrepreneurs dieswithin the first year. It is verydifficult for entrepreneurs tosucceed but the only option isthat our government should dosomething by creating theenvironment that would enableentrepreneurs to survive in ourcountry.”

Recall that theentrepreneurship programmelaunched in December 2014 isa $100 million initiative todiscover and support 10,000African entrepreneurs over the

Foundation seeks enabling environment for entrepreneursStories byPROVIDENCE OBUH

next decade with a target ofcreating one million new jobsand $10 billion in additionalannual GDP contribution Africa-wide by end of the programme.The programme received over20,000 individual applicationsfrom 52 African countries withideas ranging from fish farm tofashion, web apps to wellnesscentres, education and energy,among others and in Marchabout 1000 entrepreneurswhose ideas can transformAfrica were selected.

Meanwhile, the 1000

entrepreneurs are expected toconverge for a two-day maidenboot camp session of the TonyElumelu EntrepreneurshipProgramme (TEEP) whereparticipation will earn them$5000 seed capital funding aswell as continued monitoringand support as they refine andexecute their business plans.

Upon completion of businessplans, select businesses wouldreceive a further $5,000 lowinterest loan and access theprogramme’s Angel Investorsnetwork.

“I am confident that theseentrepreneurs are Africa’s hopefor the future. In empoweringthese emerging entrepreneurs,we are providing the capital, thenetworks, the training and

support for them to driveeconomic and socialtransformation throughoutAfrica, providing solutions to itsproblems as well as securingtheir future and that ofgenerations to come, Elumelusaid.”

A irte l Niger ia , penul t imate week,disclosed that in December alone,

i t s p r imary sa l e s h i t N22 b i l l i on ,rewarding top performing trade partnerswith Sports Utility Vehicles (SUVs) amongother luxury prizes.

Speaking at the Airtel Channel PartnersAwards 2015, tagged: “Hunger to WinCustomers for Life,” Managing Director/CEO, A i r te l N iger ia , Mr. SegunOgunsanya, commended the channelpartners for commitment, loyalty, focusand hard work. He attributed company’sgrowth in the last financial year to supportfrom the par tners, stating: “With your

A shoe manufacturer,Chief Executive Officer,

Kene Rapu Nigeria, Ms. KeneRapu, has said that shoemanufacturing would be ahuge source of revenue to the

'Shoe manufacturing, revenue spinner'

federal government and theeconomy if well utilized.

Also she urged thegovernment and the NigerianExport Promotion Council(NEPC) to create a betterawareness and value additionto locally manufactured leatherto increase revenue for thegovernment and create jobs.

Rapu, made the appeal whilespeaking with news men on thesidelines of the official openingof her showroom and factoryin Lagos.

AShe said that shoemanufacturing could be a hugerevenue-spinner for thegovernment and it wascreating not less than 20,000jobs in its value chain forLagos residents alone, and itwas capable of creating more,if better value was placed onlocally-manufactured leather.

Airtel primary sale hit N22bn in December, rewards trade partners

support, we have over 130 Express Shopstoday. You, our esteemed channel partners,have also contributed immensely to thedevelopment of our business. In December2014 alone, we achieved the highest everprimary sales of N22 billion and a growingcont r ibut ion o f over 65% in GADsperformance coming from our partners.

“We thank all our Channel Partners fordemonstrating exceptional zeal towards theachievement of the business objectives ofour company. As partners in progress, theyhave contributed immensely to our successand fulfilment of promises made by theAirtel Nigeria to its teeming customers.


People in Business

They providedus theopportunity toincubate ourbusinesses andmature so thatby the time weare leavinghere, we wouldhave alreadydeveloped thetentacles tospread out

Mr. IfeanyiUkegbu is theC h a i r m a n /

Chief Executive Officerof Colectic ResourcesNigeria Limited, acompany that is intoagricultural materialproduction, specializingin animal feeds rawmaterials. Afterobtaining a HigherNational Diploma inUrban and RegionalPlanning from theFederal Polytechnic,Owerri, Ukegbu went onto read ProjectManagement at theUniversity of Calabar,Cross River State. Hespoke to FinancialVanguard on why hewent into his line ofbusiness and thechallenges involved.Excerpts:

Why I started Colectic:In the last few years, Idiscovered that the economywas becomingagriculturally–driven. If youlook at the focus of the lastadministration, you will seewhere the policy was going

Boko Haraminsurgencyaffecting ourbusiness— IFEANYI UKEGBU

By EBELE ORAKPO and when I saw the emphasisbeing placed on agriculture,I started researching intowhich area I could go into. Ihave passion for vegetableoil; in fact, that was what gaveme the push to go into thisbusiness. When I found out

that you can produce oil fromsoybean, maize andsunflower and they are veryhealthy for humanconsumption, I settled forsoybean.

Experimenting:You know, education gives

you a wide horizon to dive intoanything you want so that waswhy when I found I had thispassion, I started studyingall I could about soybean,from the planting of the seeds,to harvesting, the drying andthe usage. I startedexperimenting, first, with thesoybean and I saw that theoil was very good. We triedmaize and the oil from maizeis very good too but when weanalysed the three andcompared the soybean,maize and sunflower oils, wediscovered that the maize oilhas a better oil productionbut because of the interestwe have in the soybean cake,we settled for the soybeanseed because of the need offarmers.

What we do:We use soybean seed to

produce soybean cake andoil. The soybean cake is usedpurely by those involved inpoultry and piggery and alsothose that are into feedproduction use it as a sourceof raw material for theproduction of feeds. Theyblend it with otheringredients to form what theywant. For instance, themixture for growers isdifferent from the mixture forlayers. So they use the cakein their production. They alsouse the oil as a mixture. If theoil is refined, it is good forhuman consumption asvegetable oil but in the stateit is here, we still call it rawmaterial because it still needsto undergo refining process.What we only have here is thefiltration process. We filterout the impurities from theoil but in the proper refining,they separate the odor and themoisture because in the stateit is here, it still has moisturebut one good thing is that theoil is cholesterol-free. Youcan use it as it is now but theonly thing is that it foams

because of the moisturecontent.

We imported the machine,finished installation inOctober and commencedproduction in December lastyear.

Challenges:Our major challenge is

the Boko Haraminsurgency. As you know,we get our raw materialsmainly from the northernpart of the country so theBoko Haram issue hasaffected the rate of soybeanseed production andconsequently, the price atwhich we buy the seeds andthe prices of our products.But all in all, by the graceof God, it is a good businessand we are doing well.

Incubation Centre:I want to appreciate the

Federal Government forencouraging smallbusinesses and for theopportunity given to ushere to start. If they had notgiven us this place,definitely, the cost ofproduction would havebeen higher because youhave to look at the cost ofrenting a place. But here atthe Technology IncubationCentre, under the NationalBoard for TechnologyIncubation in the FederalMinistry of Science andTechnology, we areprovided freeaccommodation otherwise,cost of production wouldhave been higher. They haveprovided us the opportunityto incubate our businessesand mature so that by thetime we are leaving here, wewould have alreadydeveloped the tentacles tospread out; this place is likea formative stage for anyserious-minded person thatwants to go into industrialproduction orentrepreneurship so thegovernment actually did agood thing by encouragingus. Apart from giving us thisplace, they also organiseseminars for us to enhanceour businesses free ofcharge, bringing in qualitypeople to talk to us on howto grow our businesses.

Lagos becomesLufthansa sales hubfor Sub-Sahara AfricaLufthansa German

Airlines hasdesignated Lagos as the centreand regional headquarters ofits Sub-Saharan sales, stationand administrationorganization leadingmarketing and sales for theairline across the continent,including East African andSouthern Africa countries.

Managing Director Sub-Sahara Africa, Claus Becker,made this known recently inLagos. He said Nigeria is themost populated country inAfrica, also with the highestGDP and geographicallylocated within 6 hours from allother Lufthansa Sub-Saharamarkets hence it was thenatural choice for a regionalhead office in Africa.

“Nigeria has always playeda key role in Lufthansa’sintercontinental network andnow we are creating a neworganization that will benefitfrom the country’s economicalsize and business prospects asa leading regional businesshub” said Claus Becker,Managing Director Sub-SaharaAfrica, who will head the neworganization. The decision ofchoosing Lagos as theheadquarter of Lufthansa salesorganization will not onlysecure jobs here but also bringmore employmentopportunities for Nigeria.

The country which boaststhree Lufthansa destinations(Lagos, Abuja and PortHarcourt) has been served bythe German carrier since 1962and is a pillar in the burgeoningeconomic relationshipbetween Germany, Nigeria aswell as businesses in bothcountries. Becker was joined byTamur Goudarzi Pour,Lufthansa Vice President Sales& Services for the Middle East,Africa & Southeast Europe todiscuss the aviation group’supcoming plans for the Africancontinent including the newand revamped cabins ofservices to be offered on allflights from Nigeria as well asother key African gateways.

“Sub-Sahara Africa is one ofthe Lufthansa Group strongestmarkets, with around 150weekly flights byLufthansa,Swiss/Edelweiss and BrusselsAirlines serving 30destinations in 26 countriesand we plan to continueexpanding services across thecontact,” noted Goudarzi Pour.Already scheduled for the endof October, Lufthansa willcommence service to Nairobi,Kenya with initial four-timesweekly and Brussels Airlineswill offer customers in Accradirect service to Brussels.

*Soybean cake

*Soybean seeds

*Mr. Ifeanyi Ukegbu


Tax Matters

All goods and services are ‘VATable’,except those that are exempted underschedule 1 of the Act. These are:

Goods Exempted

All medical and pharmaceuticalproducts

Basic food itemsBooks and educational materialsBaby productsFertilizer, locally produced

agricultural and veterinary medicine,farming machinery,

and farming transportationequipment All exports Plant andmachinery imported for use in theExport Processing Zone

Plant, machinery and equipmentpurchased for utilisation of gas indownstream

petroleum operations.Tractors, ploughs,and agricultural

equipment and implements purchasedfor agricultural purposes

Services Exempted

Medical servicesServices rendered by community

banks, People’s Bank and mortgageinstitutions

Plays and performances conductedby educational institutions as part oflearning.

All export services.

Note also:

Exports are zero rated.

VAT is leviable at the time of supplyof goods and services.

VAT paid on inputs are creditableagainst output tax.

Tax returns are to be submitted onmonthly basis.

Administration of VAT

The tax shall be administered andmanaged by the Federal Board ofInland Revenue (in this Act, referredto as “the Board”)

Registration

A taxable person shall within six (6)months of commencement of this Actor within six (6) months ofcommencement of business, whicheveris earlier register with the Board forthe purpose of this Act

Registration by governmentministries, etc as agents of the Board

Every government ministry statutorybody and other agency of governmentshall register as agent of the Board forpurpose of collection of tax under thisAct.

Every contractor transacting businesswith a government ministry, statutorybody and other agency of federal stateor local government shall produceevidence of registration with the Boardas a condition for obtaining a contract.

Registration by non-resident

Value Added Tax (VAT) in Nigeria (ii)

companiesA non-resident company that carries

on business in Nigeria shall registerfor the tax with the Board using theaddress of the person with whom ithas a subsisting contract as its addressfor purposes of correspondencerelating to the tax.

Records and AccountsA registered person under shall keep

such records and books of alltransactions, operations imports andother activities relating to taxablegoods and services as are sufficient todetermine the correct amount of tax

Failure to issue tax invoiceResisting authorised officersIssuing tax invoice by unauthorized

personFailure to registerFailure to keep proper books and

accountsFailure to collect taxFailure to submit returnsAiding and abetting commission of

offenceOffences by body corporate.Explanation of Some Terms in VAT

Taxable Goods and ServicesThe Act says the tax shall be charged

and payable on the supply of all goodsand services (in this Act referred to as“taxable goods and services”) otherthan those goods and services listedin the First schedule to this Act.

Allowable Input TaxThe input tax to be allowed as

deductions from the output tax shallbe limited to the tax on goodspurchased or imported directly forresale and good which form the stock-in trade used for direct production ofany new product on which the outputtax is charged.

This means input tax on:

Any overhead, service and generaladministration cannot be charged asinput tax but expended through theprofit and loss account

On capital item and asset too shouldbe capitalized along with the cost ofthe item and asset.

Distribution of Revenue

15% Federal Government.50% States Government & FCT,

Abuja.35% Local Governments.

Input TaxTax charged on purchases made

Output Tax

Tax charged on sales made

Taxable Person

Means a person who independentlycarries out in any place any economicactivity as a producer, wholesale trader,supplier of goods, supplier of servicesor person exploiting tangible orintangible property for the purpose ofobtaining income therefrom by way oftrade or business and includes aperson and an agency of governmentacting in that capacity.

Zero rated goods

If you sell zero-rated goods orservices, they count as taxablesupplies, but you don’t add any VATto your selling price because the VATrate is 0 per cent. Thus while no VATis charged on providing goods andservices taxable at zero-rate of VAT,you are still able to deduct VAT oncosts and expenses you incur inmaking zero-rated supplies.

Examples are (1) all non-oil exports(2) goods and services purchased bydiplomats (3)

goods and services purchased for usein humanitarian donor funded projects

Exempted Goods/Services

If you sell goods or services that areexempt, you don’t charge any VATand they are not taxable supplies. Thismeans that you won’t normally be ableto reclaim any of the VAT on yourexpenses. Generally, you don’tregister for VAT or reclaim the VAT onyour purchases if you sell only exemptgoods or services. In this case you maynot be able to reclaim the VAT on allyour purchases

due under the Act.Offences by lawFurnishing false documentsEvasion of taxFailure to make attributionFailure to notify change of address

The input tax tobe allowed asdeductions fromthe output tax shallbe limited to thetax on goodspurchased orimported directlyfor resale and goodwhich form thestock-in trade usedfor directproduction of anynew product onwhich the outputtax is charged


Interview

Nigeria loses over N8trnannually in untappedgold — EKOSIN

My argumentis that thesector has thepotentials ofdiversifyingour economy

BY EMMA UJAH, AbujaBureau Chief, MIKE EBOH &GABRIEL EWEPU

Nigerians are sitting on top of billions of dollars inuntapped solid minerals and yet lamenting dwindlingeconomic fortunes owing to over dependence on oil. Inthis interview, the President of Miners’ EmpowermentAssociation of Nigeria, Mr. Sunny Ekosin, reveals thatNigeria loses N8 trillion annually in unexploited goldalone. He also says that Ajaokuta remains the key toNigeria’s industrialisation and that getting it back to workis a matter of patriotism for President Buhari and his team.Excerpts:

How would you rate thecapacity of the Solid

minerals sector in the nation’seconomy?

To talk about the capacity ofthe solid minerals sector in thecountry, how important it is andwhat it can contribute to theeconomy, let’s take our mindsback to the past. There was atime in the economic history ofthis country when the solidminerals sector wascontributing as much as 12 percent to the GDP (GrossDomestic Product). From thelate 1950s before the discoveryof oil, the solid minerals andagriculture were the main stayof the economy. From thatperiod up till 1973 , to beconservative, because 1972 wasthe turning-point between thebenefits we derived from themining and the curse that oilbrought us.

Up until 1972, we werehaving about 12 per centcontribution from solidminerals to the GDP. Butthe Indigenisation Degree ofGen. (Yakubu) Gowon in 1972to transfer the solid mineralsindustries from foreigners toindigenous operators seemedto be our undoing,unfortunately. Like we oftensay that management is theproblem of the African race, itall played out in the solidminerals sector at that time.

From that particular time tilldate, mining has been indecline. And today, we aretalking generously, based onthe data by the NigerianBureau Statistics, of 0.3 percent to the GDP. Imagine thefall from 12 per cent to the GDPto as low as 0.3 per cent.

The questions everyone isasking are: Does it mean thatskills in the sector have beendeteriorating? Does it meanthat in this age of science andtechnology, when people areacquiring better ways ofexploration and mining, are weon the decline? Or issomething really wrong withus? There is advancement inthe industry as technologyadvances, worldwide. But themajor problems towardsharnessing the sector andhaving the sector and thecomatose situation in the sectoris the fact that certain peopleare profiting from the crisis.

What you are saying is thatsome people are benefitingfrom the lack of developmentof the nation’s solid mineralssector?

Absolutely. The situation issuch that the more the sectoris declining , the more thepurses of some of these set ofcabals within the sector areenlarged.

If by 1972, the sector was

contributing 12 per cent to theGDP, what could have beenmissing, averagely, on anannual basis, by abandoningthe industry?

Assuming Nigerians takedata seriously, assuming webuild a database where wehave authentic information, in2012 the Permanent Secretaryof the Ministry of Mines andSteel, came before the nationand said, that from our preciousmetals alone, specifically fromour gold exploitation alone,Nigeria was losing $ 50 billionon annual bases.

Do you mean $50 million or$50 billion?

I said $50 billion. If youconvert that amount to theNaira, as the exchange rate ofthat time, it would be about N8trillion which is about thebudget of the federalgovernment for two years.

What you are saying is that,if we had pursued thedevelopment of the sector,gold alone could have giventhe nation as much as $50billion annually?

Yes. That is exactly what I

am saying. Only gold. We arenot yet talking about ourpotentials in bitumen; we arenot yet talking about ourpotentials in our traditionalexport.

Niobite (Columbite) and Cassiterite (Tin ore) .Mind you the only two

major minerals prior to 1972that gave us a very highpercentage of contribution to

the GDP were only exploitationof calciterite and niobium. Those were the only twodominant minerals as at thattime.

We cannot talk aboutwhat we are losing

without knowing what wehave left untapped. Whatsolid minerals do we evenhave in Nigeria in terms ofdeposits in commercialquantities?

Based on the data at theFederal Ministry of SolidMinerals, we have 34exploitable and exportableminerals across the country.

Back to the issue ofabandonment, we don’t needto ask why the sector wasabandoned because we allknow it is because of the shiftof attention to oil. Where areother countries with similarendowments on the scale?

There must be interest insolid minerals because withoutsolid minerals, there will neverbe industrialization. Withoutminerals, there will be nomeaningful economicdevelopment. This must beunderscored. So it isimperative for nations withsolid minerals to develop them. It would interest you thatsome nations that don’t evenhave natural endowment like

United States of America yousee them having strategicmineral deposits that evensurpasses those nations that areendowed in terms of their solidminerals.

It is so critical because

without solid mineralsdevelopment in any nationthere is no industrilisation andthere is no meaningfuleconomic development of suchnation. That is why it is soimportant that the solidminerals aspect in particular inNigeria should be developedif we are to realize our vision20:2020.

What is the cause of adeclining productivity in thesolid minerals sector?

I will handle the problemin two ways. Unfortunately,they are not well educated onthe potentials of solid mineralsin the country. One is that thegovernment agency saddledconstitutionally with thepowers to serve the sector, donot have adequate knowledgeon what potentials we have inthe mining industry. Two, wealso have a situation that thegovernment being so satisfiedand benchmarking theirannual budget only on therevenue that comes from oiland gas, do not think ofdiversification of this economy.And the political will is noteven there to look atalternatives.

Number three is thedeliberate efforts of some fewprivileged people within thesector to emasculate this sectorand shield it from some frominitiatives coming from theoutside.

Those who are saddled withthe responsibility of manning



Interview

Nigeria loses over N8trnannually in untappedgold — EKOSIN

Continues from page 40

this sector like the Ministry ofMines and Steel Developmentand some few persons havetaken the sector captive andhave shielded it from outsideinitiatives.

As an organisation what have you done on

your own to deal with thesechallenges?

In 2006, when I assumed theleadership of the MiningAssociation in this country timetill date, about 10 years ago, Iconsistently articulated theproblem within the miningsector, looked at the in and out;and putting my years ofexperience and operation inthe industry for 25 years, I haveconsistently maintained thattwo million jobs from 2006 todate could have been realisedwithin the tenure of any regimeof four years.

And with revenue that willcompete with revenue from oiland gas can be realised fromsolid minerals development inthe country. I have done a loton this by my letters, memos,articles and position papers toboth the National Assemblyand the Ministry, and all aredocumented.

My argument is that thesector has the potentials ofdiversifying our economy andI have consistently maintainedthis for the past 10 years.

The sector over the years hasbeen plagued with issue offunding which has led to theabysmal performance of thesector, what do you think as amining professional should bedone to address thischallenge?

I have come to a conclusionthat funding is not a problemto this sector after my longassessment of the sector withmy 25 years experience. Any public money you put intothe sector right now will be asa vapour in the hands of thesecabals.

Their antecedents are upthere because all theintervening of funding thathave gone into the sector likeAjaokuta, Aluminum SmeltingCompany at Ikot Abasi, Thedefunct Nigeria MiningCorporation, and all othercompanies the governmenthave delved into, what have

they given to usand is nearly zero.

The solidM i n e r a l sD e v e l o p m e n tFund is what Iadvocated when Itook over themantle ofleadership in2006. The clause34 is where youhave that SolidM i n e r a l sD e v e l o p m e n tFund in the Mining andMinerals Act

What the agency under theAct set out to achieve is to givedevelopmental funding to thesector, to enable off-takers inthe sector to reduce geologicalfunding that will generate datafor the sector, and nothingmore than that.

Is the objective of the SolidMineral Development Fundachieved?

Never!

Could it be because there isnot enough data?

Nothing. We got some datafrom them and according tothem they have done airbornegeophysical survey; done 100percent, we have mapping of1-250, 000 on the scale ofgeophysical mapping of thecountry. The question is whereis the development?

What further data do yourequire in the industry?

We can have better geologicaldata that will reduce themapping to a smaller ratio,maybe 1-100, 000. This onecan be done by the investorsthemselves. The one requiredgenerally is already thereaccording to the information bythe Nigeria Geological SurveyAgency under the Ministry ofMines and Steel Development.

Trying to reduce the mappingto a smaller ratio of say, maybe1 to 100,000 or 1 to 10,000, likeit is done in most places. Theseones can be done by theinvestors themselves. The basicone that is required generallyis already there, according tothe information given to us bythe Nigerian Geological SurveyAgency (NGSA), which is anagency under the Ministry OfMines And Steel. If you say theproblem of data is our problem,

before 1972, what was theposition of the data; when thesector was contributing 12 percent to GDP? The truth is thatdata is not the issue. The issueis not funding also.

The government officials inthe Solid Minerals industry,three years down the line, whathave they done for us? If youanalyse the Ministry’s annualbudget, 90 per cent is going forpayments of their own pockets,servicing the people that theyput in there, when the peoplethat they put in there weresupposed to generate funds. They lack the capacity,because their antecedent iszero.

Is it not because they arecivil servants and by

nature of their jobs they aresupposed to create theenabling environment ratherthan generating funds ?

Unfortunately, like I told you,I initiated, essentially part andparcel of that clause, clause 34(of the Mining Act). There wasno way we would have,

knowing the bureaucracy of thecivil service, left that thing(Mining Development Fund)in the hands of the civilservants. We requestedspecifically that thechairmanship of that placeshould be somebody withcapacity, independent of thecivil service. It is supposed tobe an entity that can be suedand have the right to sue. It issupposed to be an autonomousagency. So, it was notsupposed to operate within thecivil service bureaucracy,never. That was not theconcept. But unfortunately, yousee that because of the kind ofstooges that have beenplanted to manage theagencies were of the ministerand of course, everybody issubjected to the ministry andlooking up to the ministry formoney and other things.

The day the agency wasinaugurated, I came before themedia to say that this is goingto be blackmail againstoperators in the mining sector,because it is going to be afailure. What we are seeingtoday has brought to questionthe essence of setting up theagency in the first place; it hasbecome a blackmail.

Anything we now ask of thegovernment, they will say thateverything they have done forus has resulted in a failure.These are deliberate boobytraps set up by these cabals tocontinue in their hegemonies.

If the Fund is given a

leadership of an operator, willwe see any difference?

Absolutely. Any institution,no matter how good the policyestablishing it, without menand women with integrityrunning it, the result will be afailure. For example, priorto (late) Dora Akunyili coming

to the leadership of NAFDAC,it was to many of us, notexisting, even though by lawand structure, it was existing. But it came into limelight andto the knowledge of everybodywhen a person with capacityassumed the leadership of thatinstitution. This is similar toother institutions.

What are the expectations of

the operators from this Fund?The agency is to create fund,

because mining is a longgestation operation. Before youcan begin to get the dividendsfrom mining, you must putmuch into exploration. Onecan be involved in explorationfor one year and at the end ofit, might not get anything thatis of economic value.

Again, one can also find outthat at the end of exploration,certain elements in the orebody may be harmful and maynot be suitable for the market,so you discard it and move on.Those kinds of fund, which Icall developmental fund is toaid the organization, so that atthe end of such things, one donot have heart attack, knowingthat all one’s livelihood havebeen pumped into the activitywithout yielding anythingpositive. It is supposed to befor that kind of cushioningeffect.

How do you help

government to mobilizeprofessionals to make thesector viable?

We are using thisopportunity to appeal to theconscience of the nation, thefourth realm, to sensitise thegovernment. Like I told you,one of the major problems isthat government lack good andcredible information regardingthe mining sector. Thegovernment should besensitized that the country hasan alternative in solid mineralsthat can diversify the country’seconomy from oil and gas.

Once the government canhave that, the governmentshould not just listen to itsagencies alone. For example,in the ministries, one shouldnot expect anything differentfrom the back tapping and egomassaging, because they wantto speak well of themselves.

They told us in 2013 whenthere was the media chat by thethen Minister of Mines andSteel, that 1.25 million jobswere created from the miningsector, those kind of thing, youtake them up on it. Ask themto show the indices.Meanwhile, the economicmanager of the country, theMinister of Finance, told us thatthe whole nation recordedabout one million jobs on anannual basis; what acontradiction? If a ministryalone is saying it created 1.25million jobs, then who isfooling who?

•Mr. Sunny Ekosin

I have come to aconclusion thatfunding is not aproblem to thissector after mylong assessmentof the sectorwith my 25 yearsexperience


CMYK

Advertising & Promotions

Stories by PRINCEWILLEKWUJURU

A well executed TVcommercial has the

power to make consumer (s)experience all kinds of emotion– laughter, sadness or fear, allin a matter of seconds.

One of the most interestingtype of commercial is the touristcommercials of variouscountries. The recentcommercials of India andMalaysia get viewers struck insuch a warm, emotive way andin such a short period of time.

Today, a number of mediumshave joined television aslucrative ways to marketbusinesses. From social mediaplatforms like facebook, Twitterand Instagram. Modern-daycompanies have come to get afirm grasp of all these availablemethods of promoting theirbrand (s).

TV is and always will be thesource of huge spending onadvertising, but how has itchanged over the years andwhat is expected in years tocome? Before now, TVcommercial was virtuallyconventional in nature, nottaking into cognizance thestorytelling analogy recentlydeployed by Gulder beer whichdepicted a real life scenario.

However, viewers are stillwilling to engage with TVcontent and one in ten Nigeriaconsumers search for a productafter seeing an advert on TV.

The new TV commercial ofGulder beer from the stable ofNigeria Breweries Plc

•Screen shot from the latest Gulder TV commercial

Digital age and Gulder storytelling analogy

employed all the story tellingingredients to deliver its brandpromise of making itsconsumers; men.

The ad could be said to be arevolutionary move by thebrand to takes its rightful placein the array of beer brands inthe market, particularly as itrelates to bringing out the manin the consumer.

In the new commercialhowever, Gulder beer presentsthree different scenarios thatexplains the boldness exhibitedin achieving the unimaginable.

The first story is a young mancaught between sitting backand receiving no positiveattraction for his stellarperformance in the office. Heeventually grows up to becomea ‘MAN’ by walking up to hisboss to eventually get his

reward. The second, agentleman was mistaken for anattendant by a lady, while inthe third story, a man who is inlove with a General’s daughteris afraid of going before hissupposedly father- in- law toexpress his feelings for thedaughter, but took a bold stepin confronting the General

father of the girl, a confidencethat can only be exhibited bythe ‘Brand made for Men.’

However, these are unusualstories even for a beercommercial but the signaturethat runs through the thread isthat Guilder signs off thesestories at the very end of thecommercial rather thaninterrupting the stories with thebrand’s value propositions.

On the contrary, the storiessubtly sell these propositions ofstrength, bravery, intelligenceand daring which are thehallmarks of a real man. Thecommercial is the story of theman (and we are faced withsuch challenges everyday)rather than essentially the storyof Gulder.

On the other hand, thetransformation of Gulder fromits old bottle over 40 years agogives it the edge over others,making it manly in presentation.Recalled that the Anambra stateGovernor Obiano who hostedthe Ultimate search team said:‘’the brand’s new look made itoutstanding among otherbottles.’’

Today, the brand stands on thetable of men to reclaim itsrightful place; thereby makingitself a beer for ‘men’ aproposition that hasrepositioned the brand in themarket. Vanguard spoke toDigital Advertising Age, agroup that helps to analyse brand and watch the impactof TV advertising.

According to Maxwell Udoji,Director of Analytics, DigitalAdvertising: “Seven years agothere were no iPhones andtablets, meaning TV audiencesfocused solely on the bigscreen. While the actual amountof television that people watchhas not changed much – in 2006Nigerian viewers watched anaverage of 3.6 hours of TV a day,while in 2013 they watched 3.9hours – today the degree ofviewer distraction haschanged.

The West and Central Africa’sindependent media specialist,

mediaReach OMD has aligned forces withGoogle Global Services Nigeria Limited totake brand marketing in Nigeria to anotherlevel.

The alignment will see both companiesexchanging ideas on survival strategies fordifferent brands now that the players arefaced with stiff competition not only inNigeria but across the world.

The agency, mediaReach OMD, andGoogle traded ideas at an event christened“Google Day”, organised at the mediaReachoffice in Lagos.

Addressing members of staff of bothcompanies, Juliet Chiazor, the CountryManager of Google, said it is imperative forany organisation that will survive to developa strategic marketing campaign that canstand out in the competitive market.

She noted that customers are faced with aminimum of 2,000 marketing messagesstreamed on different communicationplatforms every day. Chiazor therefore saidfor any player to excel, its communicationmust be appropriate and target the rightaudience.

Meanwhile, she said innovation is at theheart of everything Google does as the

MediaReach OMD, Google partner on brand marketingcompany is aware of dynamism of differentmarket the world over.

As a result, Chiazor said Google hasdifferent solutions that corporationsanywhere in the world could use to achievetheir goals in the target markets. Some ofthose solutions, according to her, are: GoogleVoice Search; Google Maps; Google Now;and Google Photo Sphere.

She declared that television viewership isslowly declining as audiences are shiftingonline. Specifically, she stated that there isan increase of 60 percent of online videostreaming that customers are faced with.“Brand building elements still entailawareness and emotional engagement justas the case with traditional marketingplatforms”, she said. Based on this, sheadvised that video should be seen as anintegral part of brand building and shouldbe used more in brand communication.

Corroborating her view, Tolu Ogunkoya, theChief Executive Officer of mediaReach OMDnoted that there are still many players whoare undecided about the relevance of digitalbrand marketing despite its importance intoday’s marketing communication. Hiswords: “It is high time we decided to takeactive steps in the interest of ourcorporations”.

Valmont waterhits marketPoised to make a debut in

the Nigerian market,Giant Beverages Limited, aLagos based beverage outfithas unveiled Valmont, a waterbrand. The introduction of theproduct is coming on the heelsof the company’s resolve toensure that Nigerian brandsjoin the league ofinternationally renownedbrands.

The company, according to itsGeneral Manager, Mr. AyoAfolabi, is travelling this routebecause of its firm belief that abrand is a mark of quality whichis one of the key characteristicsof the company.

To this end, the new product,Valmont is produced to attaina super-premium brand statusin taste, look and feel. “Ourwater is produced to the bestof international standards. Itgoes through our ultra-purification processes withoutbeing exposed to air until itenters our unique bottles, thuspreserving its freshness andpurity. It is called ‘Valmont’ forits strong, rich, luxurious andsophisticated background.”

He added that Valmont isnatural and produced toaccompany fine food andluxurious lifestyle.

Cussons Baby fulfilsbrand promise, takeswinner to DubaiCussons Baby has

fulfilled its brandpromise by taking the winnerof the Cussons Babycompetition and family toDubai, the United ArabEmirate on a 7days all expensepaid trip.

The Brand Manager CussonsBaby, Oluwaseun Ayeni whodeclared that the brand hasfulfilled its promise and is readyto offer more to Nigerians saidthat the brand has taken Miss.Morireoluwa Davids and herfamily on the account ofwinning the second edition ofCussons Baby Moment 2014competition.

On the competition and itsessence, Ayeni pointed out thatit is about rewarding thecustomers and giving parentsthe opportunity to showcasetheir beautiful babies.

She said “It is all about givingfamilies an opportunity toshowcase their beautifulbundles of joy for a chance togo on an all-expense paid trip.It is also about providing aplatform to communicate one onone with our consumers andthe opportunity to meet newconsumers”. On thepreparation for Season 3, Ayenisaid.

Today, the brandstands on thetable of men toreclaim itsrightful place;thereby makingitself a beer for‘men’


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CMYK

Aviation

From left: Deputy Managing Director Arik Air,Captain Ado Sanusi; Mr. PaulCooper Insurance expert, Mr Hugo Hill Broker Africa/ Middle East GlobalSpecialist Aerospace and Managing Director Arik Air-Mr. Chris Ndulue,during the visit of Arik re-insurers and Brokers to the airline office in Lagos.

The restrictions onpolice personnel

movement at the airport,especially the airside area,may be one of the reasonsNigerian police is unableto effectively curb the casesof stowaways and othercrimes at the airportsacross the country. This isthe view of Arik AirManaging Director, Mr.Chris Ndulue.

Ndulue made his viewknown while receiving thenew Commissioner of

Airport Security: Arik Air faultsrestrictions on police movementBy LAWANI MIKAIRU Police, Airport Command,

CP Taiwo Lakanu at Arik AirCorporate Head office inLagos. He said airports inEurope and America allowthe police to access all partsof the airport including theairside. And this hashelped in minimizing andpreventing crime in anypart of their airports.

He added that the ironyof the security situation atNigerian airports is thattouts at these airports areallowed to access therestricted areas includingthe airside once they have

their On Duty Card , ODC,on. Ndulue also solicitedthe assistance andcooperation of the newcommissioner to make theairport a safe environmentfor aviation business.

Arik Air has sufferedseries of security breachesof his planes at airside atsome of the nation’sairports. The celebrated onebeing the case of a youngboy of Fifteen years thatentered the wheel hole ofone of its planes at Benincity airport and stowawayto Lagos.

Managing Directorof the Federal

Airports Authority ofNigeria ,FAAN, Engr.Saleh Dunoma weekendrevealed that the agencyhas established a specialtask force to enhancerevenue generation at thevarious airports acrossthe country.

Confirming the move,Mr Yakubu Dati , GeneralManager, CorporateAffairs, FAAN, said “In abold move to improve therevenue base of airportsfor greater productivity,the Managing Director ofthe Federal AirportsAuthority of Nigeria(FAAN) Engr. SalehDunoma has establisheda special task force onrevenue enhancement.The task force will beheaded by the ManagingDirector himself”.

Dati added that Engr.Saleh Dunoma made therevealation in Lagos at ameeting with Regionaland Airports Managerswhere he urged them torecover revenue at thepoint of collection as andwhen due, and applyingsanctions wherenecessary.

Dunoma also urged themanagers to step upefforts in recoveringdebts and “initiating non-aeronautical revenuestreams in order to meetup with revenue targetsbased on the authority’s2015 approved budget”.

He also reiterated theauthority’s commitmentto delivering services atinternational qualitystandards in line with itsmission statement as wellas in compliance with theglobal aviation standard.

FAAN sets up taskforce to enhancerevenue generation

By LAWANIMIKAIRU &DANIEL ETEGHE

Business & Economy

Email:[email protected], [email protected] page:www.lesleba.com/blog2Website: www.lesleba.comTel:0805 220 1997


CMYK

Omoh Gabriel - Group Business EditorBabajide Komolafe - Deputy Business EditorClara Nwachukwu - Energy EditorPeter Egwuatu - Asst. Business EditorYinka Kolawole - Snr Bus. CorrespondentFavour Nnabugwu - Insurance CorrespondentGodwin Oritse - Maritime CorrespondentGodfrey Bivbere - Maritime CorrespondentMichael Eboh - Energy ReporterFranklin Alli - Industry/Agric. ReporterIfeyinwa Obi - Maritime ReporterRosemary Onuoha - Insurance ReporterNkiruka Nnorom - Capital Market Reporter

CONTRIBUTORSPrincewill Ekwujuru - Media/MarketingJonah Nwokpoku - E-CommerceNaomi Uzor - IndustryProvidence Obuh - Micro FinanceLAYOUT - Graphics Department

Group Managing Director/CEO of FirstBank of

Nigeria Limited, BisiOnasanya has called on theCentral Bank of Nigeria to easeregulations as they are hurtingprofits and causing someforeign investors to shunNigeria’s economy.

"A rule forcing banks to place31 per cent of deposits with theregulator needs to changed.The requirement should belowered or the central bankshould pay interest on thefunds," he said.

“The existing cash reserveregime is not helpful,”Onasanya said in an interviewduring a Bloomberg conference

Deposit rules hurting profits, says FirstBank bossat the Nigerian Stock Exchangein Lagos.

“First Bank has close to N650billion ($3.3 billion) sterilisedat the central bank at zero percent interest. These are fundswe pay interest on. So you canimagine the impact this has onour revenue-generatingcapabilities and our ability tofund loan obligations.”

The Central Bank of Nigeriahas increased reserverequirements as part ofmeasures to bolster the naira,which fell 18 per cent againstthe dollar in the past year ascrude prices slumped.Ratcheting up the ratio reduces

the amount of naira incirculation, helping to bolsterits value.”If the central bankmust keep that level, which Ifeel is very high, it should becomplemented with somecushioning effects,” Onasanyasaid. “The central bank shouldconsider remunerating, even atthe average cost of funds, forbanks to be able to meet theirfunding costs.”

International investors areshying away from Nigerianstocks partly because of theregulations, Onasanya said.“You can see portfolio investorsnow taking a wait-and-seeattitude,” he said.

According to recent mediareports, almost N5tn was

disbursed as subsidy paymenton fuel consumption between2006-2012? Thus, the annualaverage provision of about N1tnis probably equivalent to aboutone fifth of total annual federalbudget in the same period. Ineffect, subsidy payments clearlyexceeded the consolidatedannual allocations for health,education, transport andagriculture every year.

Worse still, the alleged benefitsof subsidy are not direct ortangible as progressive driversof social welfare. Nevertheless,the more relevant question,however, is probably what wouldbe the result on the economy andpoverty alleviation if fuelsubsidy was summarilyabolished and pump price of fuelrises to about N140/litre, whencrude oil price is about N62/barrel and Naira exchange rateis N200/$.

Experience has taughtNigerians to expect the prices ofmost goods and services to headnorthwards as fuel price rises toinduce higher transport costwhich trigger an upward spiralon the general price level.

Nonetheless, some Nigeriansmay insist that if the higher priceof N140/litre would eliminate the perennial problem of fuelscarcity and the attendant socialstress and economic dislocationand minimise corrupt leakages,then, so be it, “let subsidy beremoved”, they would chorus!After all, they would also arguethat if Nigerians readily paidover N200/litre during the mostrecent fuel scarcity, then N140/litre should be no big deal!

Instructively however,Nigerians may change from thissame melody if a N50/litre risein petrol price pushes the rate ofinflation, beyond 10% within sixmonths or so from the date ofsubsidy removal. Inevitably, theprices of foodstuffs and allearners of static income wouldprobably be hardest hit. The

Mr. President:Beware of the day ofsubsidy removalN18,000 minimum wage earner,for example, would struggle tokeep alive, and pensionerswould also groan under the yokeof inflation; consumer demandwould contract and industrialcapacity utilisation would alsofurther recede, while newinvestments may be put on hold;clearly, such outcomes will notimprove the level ofemployment in the country andwill certainly deepen povertynationwide.

Despite such a desperatesocial scenario, subsidyabolitionists would counter thatat least fuel supply and price willbe stable and Nigerians do nothave to spend the whole daysearching for petrol. Besides, itis assumed that once pricecontrol is eliminated, moreinvestors would establish newrefineries and the resultantcompetition will bring downprices; notwithstanding, thereality, of course, is that theexpectation for lower prices mayregrettably never materialise ifthe experience of diesel pricederegulation is anything to goby; diesel currently sell wellabove petrol despite itsderegulation, and there isnothing to suggest that the priceof petrol would fall if subsidy wasalso abolished from PMS (petrol)pricing.

Besides, it is also uncertainhow long the deregulatedmarket price of N140/litre, wouldhold, particularly if the Nairaexchange rate suffers furtherdepreciation.

This correlation between fuelprice and Naira exchange rate

is clearly demonstrated in therecent past, when a ‘lowly’ crudeprice of about $60/barrel (downfrom over N100/barrel) instigatedactual market petrol price ofabout N140/barrel; theunexpected price rise was clearlythe result of the fall in value ofthe Naira from less than N160/$to almost N200/$. Indeed, evenif crude price further slides below$60/barrel, petrol price will stillrise well above the subsidy freeprice of N140/litre. For example,if in response to market pressure,the Naira further depreciates tosay N300=$1, the deregulatedpump price of fuel may still spiralwell above N200/litre!

The inevitable public resistanceto a higher fuel price willtemporally stall supply frommarketers, scarcity will persistand long queues will surface oncemore, while fuel will sell on theblack market for over N400/litre,and the usual pain from theresulting social and economic

dislocation would prevail onceagain. Ultimately, as in the past,the public will succumb andaccept what is clearly the more‘benign’ price of N200/litre, withthe expectation that adequatesupply will become available toonce again reduce theirsufferings.

Incidentally, the higher fuelprice also comes with thecollateral of spiraling inflation,which will threaten thepurchasing value of the Naira;ironically, if the systemic burdenof surplus Naira in the economyalso subsists, further Nairadevaluation would becomeinevitable. In such event, theNaira could subsequentlyexchange for between N250-N300=$1. Thus, even if crudeprice remains low, domesticpump price will still rise if theNaira exchange rate furtherdepreciates. Sadly, this cycle ofinflation, devaluation, higherfuel price and more devaluationwould become endless withdisastrous social and economicconsequences; clearly, efforts toalleviate poverty or jumpstartagricultural or industrial growthwould fail in such a disenablingenvironment. This phenomenonhas been replicated in severalAfrican countries, notably, Ghanaand Zimbabwe.

Don’t let anyone tell you itcannot happen in Nigeria;indeed no one would havebelieved that the Naira whichonce exchanged for 50 kobo=$1will today exchange on the blackmarket for over N220/$1, yet thepressure on the Naira remainsunabated.

In any event, the current 10%gap between official and parallelmarket exchange rate of theNaira will certainly widen withCBN’s exclusion of importers ofrice and some forty othercommodities from official foreignexchange window. Ultimately,the increasing margin betweenofficial and black market rateswill encourage malfeasance, aswitnessed over the years in theforeign exchange market; inorder, to “save” the Naira, theCBN would respond by raisingthe official exchange rate closerto the rates in the parallelmarket, this reaction wouldinadvertently induce higher fuelprices, and ultimately threatenthe capacity of the CBN toachieve its prime mandate forprice stability.

The outcome of such failurewould be reflected as double digitinflation rates, higher cost offunds to the real sector and aneven weaker Naira exchangerate; the combination of theseindices will contract consumerdemand, stifle investment andpromote a higher level ofunemployment as povertydeepens nationwide.

Instructively, the solution torising fuel price will actually befound in a more sensible processof managing money supply toinduce a stronger Nairaexchange rate. For example, ifthe Naira exchanged forN100=$1, the “subsidy free”price of fuel will fall below N70/litre, so that a minimum sales taxof N17/litre can be imposed oneach of the 40million litres ofpetrol consumed daily in thiscountry, if market price remainsat the current price of N87/litre.

Meanwhile, such a strongerNaira exchange rate wouldgradually evolve if dollardenominated revenue is notsubstituted with fresh creationsof Naira values as monthlyallocations to the tiers ofgovernment.

Save the Naira, SaveNigerians!!

Despite such adesperate socialscenario, subsidyabolitionistswould counterthat at least fuelsupply and pricewill be stable andNigerians do nothave to spend thewhole daysearching forpetrol

Why Nigeria remains poor

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