IMF warns against stripping CBN of its autonomy
The International Monetary Fund (IMF) on Thursday
added to views of many experts in advocating the complete autonomy of the
Central Bank of Nigeria (CBN) without which the apex bank would lose effective
control over the management of monetary policy.
The institution cautioned
that the planned move by the National Assembly to strip the apex bank of its
current independence would particularly mean inefficiency in discharging its
responsibility of maintaining price stability and therefore not in the best
interest of the Nigerian economy.
The lawmakers have commenced
the amendment of some portions of the CBN Act 2007, which confers operational
autonomy on the apex bank with the bill to this respect already scaling through
the second reading at the House of Representatives.
But many experts have
strongly opposed this move, arguing that removing the autonomy of the apex bank
portends danger for the economy and falls short of global practices.
W. Scott Rogers, IMF Country
Chief/Senior Resident Representative for Nigeria, cautioned on Thursday that
Nigeria has been able to enjoy robust monetary policy due to the independence
of the apex bank that allows it to respond quickly to managerial policy.
Rogers spoke at an
interactive session with the media on the recently published IMF’s regional economic outlook
for sub-Sahara Africa which noted that the region has so far maintained strong
growth in the face of a hesitant world recovery, albeit with differences in
performances among country groups.
His words, “The IMF has always argued
for strong independence of the central bank. It provides them with the autonomy
to depoliticise monetary policy actions. Without a strong central bank you will
not have an independent monetary policy. Everything then depends upon the
budget alone and as you can see now, without the central bank’s ability to do what it is
doing, the results you are seeing won’t be there. It is primarily because of the central bank’s ability to tighten
monetary policy which is the right thing to do.
“It is important for the
central bank to have the autonomy to hire the people they need and to undertake
modernisation that they need in order to manage payment system effectively.
They should be able to do that without the fear of being penalised because they
took an unpleasant decision on interest rate policy or because they decided
they needed to close a bank. Those are decisions they need to take constantly”.
On economic performance of
sub-Sahara Africa region, he observed that the regional output rose by 5
percent in 2011 with an anticipated slight growth in 2012.
It noted that the rise in
global food and fuel prices contributed to inflationary pressure in many
countries, but added that food prices across the region were significantly
affected by local supply conditions.
For Nigeria, IMF Country
Representative advocated a combination of fiscal tightening and structural
reforms to achieve the desired economic growth.
“With fiscal tightening and
structural reforms, Nigeria can simultaneously achieve low inflation, low
nominal interest rate; rosy international reserves and fiscal exchange
stability”, he stressed.
FRC blasts Forte Oil over N24.7bn phantom shares, asks ICAN to
postpone AGM
The Financial Reporting Council of Nigeria, the
nation’s accounting and financial
reporting standards custodian, yesterday refused to spare the rod against the
Institute of Chartered Accountants of Nigeria (ICAN), Forte Oil plc, Alliance &
General Insurance Limited and General Life Assurance Limited, for contravention
of corporate governance rules.
Jim Obazee, executive
secretary of the FRC who spoke with a select group of journalists in Lagos said
ICAN was directed to postpone its annual general meeting (AGM) scheduled for
May 25, 2012 “because of issues from its
corporate governance and financial reporting”.
Obazee stated that the
council of ICAN did not approve the institute’s financial statement when it met on January 18,
2012 and that the report of the honourary treasurer also noted that the
financial statement which is subject to ratification of the council was not
done.
In addition to ordering the
postponement of the AGM, the FRC directed that ICAN hold the event not earlier
than 21 days after the ratification of the 2011 financial statement by its
council, in accordance with section 217 (1) and 217 (2b) of the Companies and
Allied Matters Act CAP C20 LFN, 2004.
He also noted that the
actions of ICAN confronted legal requirements of the CAMA and Financial
Reporting Council of Nigeria Act No.6, 2011.
The FRC, he said, had
directed ICAN to explain why the management allowed their external auditors to
report on the 2011 financial statements that were not ratified by the council.
Obazee said Forte Oil plc
was also being indicted for allotting 102 million shares valued at N24.7
billion to certain shareholders during the company’s hybrid offer (public and
rights issues) in 2008.
He explained that the share
holders did not only refuse to pay for the shares but also received dividends
to the tune of N259 million as shareholders on the shares, which they later
dumped.
The FRC boss said, quoting
from the 2010 annual report of the oil firm: “We draw attention to Note 9 to the consolidated
financial statements on the hybrid offer (public offer and rights issue) in
2008 for which the majority of proceeds were received in 2009. The proceeds for
102 million ordinary shares allotted to certain shareholders of the group
amounting to N24.7 billion have not been received by the company as at date of
this report. Full provision for this amount has not been charged directly to
shareholders’ funds in these consolidated
financial statements.”
He also noted dividends
amounting to N530 million were released for payment to the registrar in respect
of the unpaid shares, as part of the dividends declared for the year ended 31
December 2008, and approved by the shareholders on 22 July 2009. Of this
amount, only N271 million unpresented cheques have been recovered from this
amount, he added.
Obazee said the FRC had
requested Forte to provide it with all the details of the hybrid offer,
including but not limited to circumstances under which the company allotted
shares to group directors and shareholders without payment for the shares; the
accounting policies the board approved to address such allotment of shares that
were not cash-backed and ‘on dividends not recovered’.
Due to this development, the
company’s issued share capital is
less than 25 per cent of the authorised capital prescribed by section 99 of the
Companies and Allied Matters Act, Cap C20 LFN 2004.
The FRC also want to know
the circumstances in which share capital account was credited with un-received
payment for the said allotted shares; the accounting policy the board adopted
to address dividends paid on capital that was not raised; the reason the said ‘dividends not recovered ‘ was treated as memorandum
as against contingency.
“ Council also directed that
as an interim measure, Forte Oil plc should write-off the yet to be recovered
portion of the dividend paid on the said allotted shares, but furnish the FRC
with the details of the beneficiaries of the dividends, and report the said
beneficiaries to the Securities and Exchange Commission (SEC). A copy of the
report should be forwarded to FRC”, he said.
Alliance and General
Insurance Limited and Alliance and General Life Assurance Limited are indicted
for preparing two financial statements for the same year end.
“The FRC, in collaboration
with NAICOM, is currently investigating the 2010 audited financial statements
of the two companies referenced above, wherein the companies prepared two sets
of financial statements for the same year end . In the course of NAICOM’s review of the 2010 audited
accounts submitted to the commission by the above named companies, some errors
/lapses were observed and communicated accordingly. Rather than deal with the
issues raised in the accounts, the companies provided entirely different sets
of accounts , incorporating items that were not originally included in the
accounts under review. Curiously, the different sets of accounts were signed by
the same auditor – AAE Professionals”, he said.
Obazee noted that NAICOM
must review and approve the financial statements of these entities before it
gets to the FRC.
The FRC has of recent come
under fire for not taking serious action against corporate governance
infractions, with the Federal Government threatening to withdraw its support
for the council.
Nigeria’s non-store shopping up 25% to N62bn in 2011
The continuous growth of the formal retail sector
in Nigeria, along with increasing internet penetration in the country, have
given rise to a budding retail trend done outside the physical stores, the
non-store retailing.
This retail trend, according
to a recent report by Euromonitor International, a global market research
organisation, recorded a 25percent growth in 2011 valued at N62.4billion, which
is an additional N12.5billion to the N49.9billion recorded in 2010.
Pushing this retail segment
most is internet retailing, which recorded 25percent growth during the period
under review, while other non-store methods like direct selling and vending
trailed behind. “Non-store retailing’s growth of 25percent is
boosted particularly by the fast growth, over the last five years, of internet
retailing, which also saw 25percent value growth in 2011. Computer and internet
use is growing fast in Nigeria from a very low base.
In particular, trust, which
has been a challenge for internet retailing, is improving among the populace,
who have been introduced to electronic payment methods in shopping through
their banks, and so have started to believe they would not lose their money if
they shop electronically,” the report stated.
Despite this growth, the
report noted that non-store retailing has not yet become popular in the
country, compared to the size and spread of store-based retail outlets, adding “non-store outlets account
for just over one percent of total retailing in value terms.”
The year in review,
according to the report, recorded little innovations in non-store retailing in
terms of channel and product offering. In the aspect of channel, vending
(dispensing of merchandise by machine to buyers on insertion of money) was the
fastest growing, recording about 28 percent growth, while packaged foods was
introduced in product offering.
“There has been little
innovation in non-store retailing, either in terms of channel or product
offering. Packaged foods internet retailing is fairly new as some newer players
such as Ferriesmart have begun to offer food and drinks through internet
retailing, whereas previously, perishables were not being offered through
internet retailing, due to difficulty in transporting them on time,” the report disclosed.
Commenting on the cost of
goods sold through non-store method, the research revealed that they were more
expensive than the ones sold in-store, but noted that the trend may change
soon, as internet retailers are likely to forge partnerships and strategic
alliances with major suppliers in order to become more competitive and offer
lower prices for products online.
To retain its dominance in
the anticipated competitive environment, existing store-based retailers are
expected to also adopt online retailing which will give them a bigger edge over
those doing only online.
Due to the increasing
penetration of internet usage and the general interest in internet retailing,
the report projects a steady Compound Annual Growth Rate (CAGR) of nine percent
in Nigeria’s non-store retailing sector
in the next five years.
However, it noted that this
expected growth is still threatened by the lack of reliable and secure online
payment system in the country, adding that unless this is properly addressed;
internet retailing will remain insignificant compared to store-based retailing.
Meanwhile, the introduction
of the cashless policy by the Central Bank of Nigeria (CBN) is expected to
indirectly boost non-store retailing (online transactions) as the policy
aggressively promotes the use of electronic payments as well as win back
consumers’ confidence.
Another threat to the growth
of the sector, according to the report, is the ignorance of distributors to the
business model of direct selling, which is why they are yet to fully maximise the
potentials in it.
While internet retailing
topped all segments of non-store retailing to account for N55.9billion out of
the total value of N62.4billion recorded in 2011, direct selling accounted for
only N6.1billion, while vending accounted for N500million and home shopping
recorded none.
NestOil, Oilserve win deal to build $400m gas pipeline
NestOil and Oilserve, two indigenous companies have
been awarded the $400 million East-West evacuation gas pipeline project by the
Federal Government.
This project is part of a
network of gas pipelines underway around the country, expected to bring about
the springing up of hundreds of new businesses, reduce the cost of doing
business in the country by as much as 30 percent, and generate many thousands
of jobs, within a few years.
BusinnesDay investigation
reveals that budgetary provision for the project has already been approved. The
project is estimated to cost $700million when completed.
The East –West gas pipeline is about
120km x 48inches and will pass from Ob/Ob-Oben .
The contract is split into
two equal parts for the two companies. This is the first time a project so
large and strategic is being handled by indigenous companies. It is understood
that the contract was awarded in the spirit of local content development. The
construction would last for 24 months and is expected to generate over 1,000
jobs in the two years that it will last.
The NNPC/Total JV pipeline
from Ubefan to Imo River via Obigbo, was recently awarded the 120km x 48inch
Ob/Ob-Oben East West gas pipeline contract.
Other major gas pipeline
projects that are on-going and progressing steadily, are the doubling of
capacity to Two billion Cubic Feet / per day of the Escravos –Lagos Pipeline System( ELPS)
from Oben-Ore-Lagos, through the 320km x 36inch pipeline construction,
NNPC/Total JV pipeline from Ubefan to Imo River via Obigbo.
The idea to construct the
pipeline to provide the much needed gas for the power industry and other
sectors has been on the drawing board for several years. It is estimated that
the country will need about $4 billon to build the pipelines.
A source told BusinessDay
that the things that could encourage investors to put down their money is that
the government must give assurance that the price is right for transmission.
There certainly are a lot of
investment opportunities that would be generated with the pipeline by the time
it comes on stream. This is because the reserves are there, market is there, while
the infrastructure for the delivery of gas is being articulated and is
progressing, a source said.
“When you create a 1.6
million crude barrel equivalent a day, clearly there are huge opportunities for
both big and small players. About 2,500 kilometres of pipelines are going to be
laid. The entire value chain around the pipeline is open for business
opportunities. Everything around pipeline infrastructure is huge opportunities,” he said.
The minister of Petroleum
Resources , Diezani Alison –Madueke
said ``Specifically in the last one year, the government has invested close to
$1bn in almost 1,000km of gas pipeline development, adding that the 136km x
36inch permanent gas pipeline from Oben to Geregu has been completed, creating
a major sharp artery to the Geregu Independent Power Plants, and will feed
Dangote’s Obajana cement and other
potential industrial customers. She further said that this line would provide
arterial supply to the North once the Ajaokuta-Kano line is completed.
She added that two other
critical pipelines that will be concluded shortly are the Itoki-Olorunshogo
31km x 24inch gas pipeline and the 104km x 24inch Escravos-Warri gas pipeline
expansion.
According to her, by the
time the two pipelines are completed in the next few months, they will create a
permanent solution to the challenge of gas supply to the PHCN and NIPP power
plants at Olorunshogo, as well as supply to Ewekoro, Abeokuta and environs, for
industrial capacity growth and double the existing transmission capacity to 600
mmcf/d and immediately add about 80mmcf/d additional gas supply to the grid
from Escravos.
Omatek lists benefits of divestment, bemoans challenges against
ICT growth in Nigeria
THE Group Managing Director, Omatek Ventures, Mrs.
Florence Seriki, has attributed the growth of the company in Nigeria in the
last three years to various investments in alternative power solution.
Speaking
at the combined 2010 and 2011 yearly general meetings of the company in Lagos,
Seriki pointed out that Omatek’s
turnover was mainly from the sale of hybrid solution with solar, UPS and
inverters together with its new LED bulbs that last three to five years without
replacement.
According
to her, that had not allowed the company to really source funds from financial
institutions in the country.
She
explained that Omatek had benefited from buying from first class manufacturers,
adding that the importation of the solution was a Semi Knocked Down process as
opposed to the computers that were completely knocked down components and raw
materials.
The
Omatek boss said that these were easier to fund and a clear-cut evidence of the
immense opportunity in Omatek.
“If over a billion were
equally done in this respect, then with funding available, the expected
turnover of the company is expected to sky rocket. The opportunity seen in
this pioneering ICT factory is one that will place the group in the fore front
of Africa’s ICT and a champion in the
innovation of ICT in Africa.”
She
explained that some challenges including power, regulation and funding from
financial institutions were paramount among the list of identified challenges
hindering the growth of ICT firms, especially the indigenous ones in the
country and called on government to intervene.
Meanwhile,
shareholders at the AGM lauded the company for its doggedness and determination
to keep it alive despite the challenges it had faced in the last three years.
According
to them, it was a phenomena performance for Omatek to have sustained itself
after all its working capital and facilities were suddenly truncated in the
wake of the banking reforms in 2008.
The
shareholders, expressed satisfaction with the boldness and determination of the
management to ensure that the company maintained its activities despite all
odds.
Omatek’s shareholders’ funds grew from N6, 012,616
in 2009, to N6, 449,331 in 2010, indicating an increase of seven per cent. The
company’s net assets and group net
assets also appreciated by seven per cent, respectively.
The
Group Chairman, Omatek, Dr. Timothy Farinre, thanked the shareholders for their
patience, support and understanding of the peculiar situation it found itself
in the last three years and apologised for the delay in conducting the two
AGMS.
Farinre
said that Omatek had to fund all its consumer schemes and factory initiatives
on its own without support from any bank in the last three years.
He
stressed that the company’s banker, Afribank Plc (now
Mainstreet Bank Limited), had expressed its inability to offer support due to
its takeover.
“The Omatek Consumer Scheme
with many states was a joint product with Afribank and this was cancelled
suddenly. Their 10-year old mortgage was cancelled and the offshore and local
guarantee facilities could not be sustained as the bank had lost its offshore
guarantee as well.
“The company has commitments
and loyalty to its customers and the states’ consumer schemes were still sustained by Omatek
despite these sudden challenges from Afribank; a tough situation after just
being listed or going public,”
Fanire explained.
Omatek,
through a private placement undertaken by Afribank Capital Limited, eventually
got listed as the first computer company on the Nigerian Stock Exchange in July
2008.
Seriki
raised concern over the Federal Government’s N500bn intervention fund for the manufacturing
sector, stating that the benefits expected from it had not been forthcoming “due to some banks’ refusal to process and
submit duly completed application papers for their customers.”
The Federal Government and Chinese investors have
reached an agreement for the latter to build state-of-the-art terminals at four
major airports in Nigeria, including Lagos, Kano, Abuja and Port Harcourt (in
Rivers State).
The projects, THISDAY learnt, are planned to be
completed before the end of this administration. The terminals would not only
meet international standards but also rival the best in the world, according to
a source, who disclosed this to THISDAY.
Although the terms of agreement reached between the
FG and the investors are not yet made public, but a reliable source said that
it would be on build, operate and transfer (BOT) basis, so “they are going to provide
all the funds needed for the project under private, public partnership (PPP)”.
The deal was said to have been signed by the
Minister of Finance, Dr (Mrs.) Ngozi Okonjo-Iweala on behalf of the Federal
Government, and the project is expected to kick off soon.
The four airports where the terminals are
designated are the busiest in the country and with the growth of passenger
movement in air transport in Nigeria, the existing terminals, industry experts
say, would soon be too small for the teeming passengers especially on
international destinations.
The source said, “Chinese investors have indicated interest to invest
in our airports and they are going to build four terminals at the airports in
Kano, Lagos, Abuja and Port Harcourt. The Minister of Finance has signed the
contract and it will take off soon. That is a good development for our
airports.
“They are providing the money so we will not bother
about funding it and it is state-of-the-art terminals with advanced technology.
We need such terminals in our airports now, at least to move on with the rest
of the world,” the source added.
The
prototype of the terminal has already been obtained and the Federal Government
has agreed to provide free land for the project at the four airports, and
because of the expected expanse of the terminal at the Murtala Muhammed
International Airport, Lagos, it would be built a distance away from the
existing international terminal at the airport, but would share the same
runway.
The Minister of Aviation, Princess Stella Oduah, said in her recent ministerial briefing in Abuja that government would build four new terminals and the projects would kick off soon.
The Minister of Aviation, Princess Stella Oduah, said in her recent ministerial briefing in Abuja that government would build four new terminals and the projects would kick off soon.
In a
recent interview she said that the present administration wants to provide
modern airports that Nigerians would be proud of and that has started with the
remodelling efforts and now, new terminals.
“What we are doing is to ensure that passengers have value for their money and most importantly we want every Nigerian and stakeholders to be proud of our airport environment. It’s a total transformation of the aviation sector,” she added.
“What we are doing is to ensure that passengers have value for their money and most importantly we want every Nigerian and stakeholders to be proud of our airport environment. It’s a total transformation of the aviation sector,” she added.
Dangote cement to produce 60m tonnes by 2015
Aliko Dangote, Chairman of Dangote Cement on
Thursday said that the company's production capacity would be increased to 60
million tonnes by 2015, up from its present capacity of 11 million tonnes.
Dangote, who said this at
the company's annual general meeting in Lagos, said that the company had mapped
out strategies aimed at achieving the 2015 target to satisfy the demands of its
customers.
The industrialist said that
the Ibese cement plant capacity currently at six million tonnes, would be
increased to 12 million tonnes in the next 26 months.
He said that additional
three million tonnes would be added to Obajana cement plant, adding the Calabar
plant capacity would be six million tonnes.
Dangote told the
shareholders that the company would seek fresh funds from the capital market at
the appropriate time for expansion of its projects.
He said that the company was
also constructing 3,000 tonnes per day cement plants in other African countries
such as Zambia, Tanzania, Ethiopia and Congo, among others.
Dangote assured the
shareholders of robust dividend, saying that additional production capacity
would lead to increase in turnover and profitability.
The shareholders approved
the company's gross dividend of N34.9 billion, which translated to N1.25 per
share and a bonus of one new share for every 10 shares already held.
Mr Peter Owolabi, a
shareholder asked the management to ensure steady growth by exploring available
opportunities in the industry to increase its market share.
Owolabi said that the
company should ensure maximum returns to all its stakeholders for their
support.
The company posted a
turnover of N235.7 billion for the financial year ended Dec. 31, 2011, as
against N202.6 billion recorded in the corresponding period of 2010.
The company's profit after
tax was N125.5 million in contrast to 105.3 million declared in 2010.
Facebook Inc. (FB) may fall more than 42 percent
below its initial public offering price by the end of the year, according to
bets by structured-product investors.
The most actively traded structured products tied
to Facebook since its IPO have been so-called put warrants, whose buyers profit
if the shares drop below a pre-defined level, in some cases as low as $22, data
compiled by Bloomberg show. UBS AG (UBSN), Commerzbank AG (CBK) and Julius Baer
Group Ltd. (BAER) are among lenders that listed 1,504 warrants and certificates
in Europe linked to shares of the social networking site that were offered at $38.
According to Bloomberg, since raising $16 billion on May 17 in
the biggest technology IPO of all time, Facebook has tumbled, closing at $32
yesterday. The U.S. Securities and Exchange Commission and the brokerage
industry’s watchdog both said they
may review the deal, after a person familiar with the matter said Facebook and
Morgan Stanley, the lead underwriter, increased the offering price to persuade the
company’s backers to sell more of
their stock.
“There has been strong demand on the put side, with
the ratio between puts and calls at around 70/30” with “some people expressing deep downside views,” Heiko Geiger, the head of
public distribution for Germany and Austria at Bank Vontobel AG in Frankfurt,
said in an interview yesterday.
Ashley
Zandy, a spokeswoman for the Menlo Park, California- based company, declined to
comment.
Bank Vontobel’s best-selling Facebook-linked product is a put warrant that will reward investors if the shares are below $22, the so-called strike price, in December, said Geiger. Put warrants give investors a cash payment depending on how far a stock falls below a set level.
Bank Vontobel’s best-selling Facebook-linked product is a put warrant that will reward investors if the shares are below $22, the so-called strike price, in December, said Geiger. Put warrants give investors a cash payment depending on how far a stock falls below a set level.
Julius Baer sold the securities with the largest
trading volumes, two put warrants with strikes of $35 and $30 on the Scoach
exchange in Zurich. Investors traded 402,000 contracts yesterday valued at
$335,780 of the former and 603,000 warrants for $322,620 of the latter, data
compiled by Bloomberg show.
Zurich-based
structured products distributor EFG Financial Products AG added Facebook shares
to a basket of 10 social media companies that are tracked by a certificate that
has traded on Scoach since last month, it said in an e-mailed statement.
Facebook rose in German share trading today, climbing 1.6 percent to $32.50 as of 12:14 p.m. in Frankfurt.
The Massachusetts security division subpoenaed Morgan Stanley (MS) this week over its communications with clients. The firm said it handled the May 17 sale properly.
Facebook rose in German share trading today, climbing 1.6 percent to $32.50 as of 12:14 p.m. in Frankfurt.
The Massachusetts security division subpoenaed Morgan Stanley (MS) this week over its communications with clients. The firm said it handled the May 17 sale properly.
The cost to short-sell Facebook has surged to the
most- expensive level in a 10-point scale developed by Data Explorers Ltd.,
which said bets against the social-media company amount to 4.3 percent of shares
sold in the IPO.
Index Summary
|
|||
BusinessDay
Afrinvest-30 Index
|
|||
24-May-12
|
23-May-12
|
change
|
|
Index
Points
|
1,106.34
|
1,111.24
|
-0.44%
|
P/E
|
12.3x
|
12.3x
|
|
P/BV
|
1.9x
|
1.9x
|
|
Dividend Yield(%)
|
4.3
|
4.4
|
|
BA-30
|
NSE ASI
|
||
YTD change
|
11.71%
|
7.18%
|
|
No comments:
Post a Comment