The Nation Newspaper

Category: Business

  • Biometric ID database for launch

    Dragnet Solutions, computer-based testing and talent management firm, in partnership with the United Kingdom-based biometric solutions company, Warwick Warp (UK) Limited, is to launch a Centralised Biometric Identity Database for West African Countries.

    Managing Director, Dragnet Solutions, Mr Robert Ikhazoboh, said the project was borne out of the need to provide a modern and efficient identification system that is private-sector driven.

    “At Dragnet Solutions, we are noted for our bouquet of innovative products and services that are carefully designed to address seemingly intractable challenges. This project also follows this same business philosophy of Dragnet. The challenge of identification verification is one that has been with us for years and it appears that various efforts to address it have been unsuccessful,” Ikhazoboh said.

     

  • MainOne to build data centre

    Indigenous submarine cable company, Main One Cable Company, is to build a 600-rack data centre this year to expand its hosting capacity.

    Its Chief Executive Officer Funke Opeke said the new data centre, expected to be operational by next year, will host data from telecoms operators and Internet Service Providers (ISPs), bringing more data hosting into Nigeria.

    Many local ISPs use hosting services abroad. Hosting data in the country is expected to help boost the local economy and reduce costs.

  • Why Savannah, SGBN are yet to get CBN’s loan

    Why Savannah, SGBN are yet to get CBN’s loan

    Inability of the embattled Societe Generale Bank of Nigeria (SGBN) and Savannah Bank of Nigeria to meet the credit terms of the Central Bank of Nigeria (CBN) has delayed the reopening of the two lenders for business, The Nation has learnt.

    Already, SGBN now known as Heritage Bank, has recruited and poached some of the best hands in the industry. It has also appointed one of the former managing directors as its chairman.

    CBN spokesman Ugochukwu Okoroafor told The Nation that the duo would only be granted credits ‘if they meet the stipulated terms of the loans’.

    He said they have shown greater capacity to come back and expressed the regulator’s willingness to work with them and facilitate their return to business.

    “We will encourage the banks to return to business even if it entails granting them credit lines provided they meet specified terms,” he said.

    He said corporate governance in the banking system is improving, adding that the lenders will fit into the system.

    The CBN Director of Banking Supervision, Mrs Tokunbo Martins, was also reported to have confirmed that the ailing institutions could get about N20 billion each in credit from the apex bank to enable them to meet the statutory requirements.

    The CBN had restored the operating licences of the two banks after they won their protracted legal battles against the apex bank.

    While the operational licence of Savannah Bank was withdrawn in 2002 and later restored in 2009, SGBN’s was withdrawn in 2005 and returned in 2008. Both lenders were shut over poor liquidity challenges.

    The last time they opened their doors for business, there were 89 banks in the country, the figure has since dropped to 23 following the 2005 consolidation and subsequent mergers and acquisitions in the sector.

    The banks are expected to furnish the apex bank with the names of their managing directors for screening, before the final approval is given for their take-off.

    But Managing Director, Nigeria Deposit Insurance Corporation (NDIC),Umaru Ibrahim, said for Savannah Bank to resume operation, finding a new investor is important. According to him, the delay in its returning had to do with lack of capital.

    Ibrahim said it would take some time for the two banks to put their houses in order, noting that when they were shut, some of their branches were vandalised and their staff have also left.

    “For the banks to come back is not easy task, it will take quite some time for them to put themselves together as all their employees have left, they do not have access to some of their branches , they cannot access their records in those branches,” he saidat a forum last year.

    Their return is also subject to the CBN banking guidelines released in 2010 that categorised banks into regional, national and international banks with varying capital bases. The guideline stipulates that the minimum paid-up capital for a regional banking licence is N10 billion, while a national bank must have N25 billion and international N100 billion. The licences of SGBN and Savannah Bank were were restored in 2010 through court judgments.

    While some stakeholders argued that the banks would nots meet the pace of the banking climate, others expressed optimism that if the right steps are taken, the banks may look attractive once more.

    While the management of SGBN opted for the regional banking category, Savannah Bank is yet to decide. The CBN had restored the operating licences of the duo after they separately won their legal battles against the apex bank on reclaiming their licences.

    The NDIC has conducted due diligence on the banks and have handed them over to their promoters.

    For the SGBN, International Energy Insurance Plc (IEI), which won the bid for the acquisition of the bank,that floated a private placement has raised bulk of the funds needed for its return.

     

  • CBN monitors banks’ payment channels

    CBN monitors banks’ payment channels

    The Central Bank of Nigeria (CBN) is monitoring banks that have not complied with the directive on Payment Card Industry-Data Security Standard (PCI-DSS) to secure payment channels in the country.

    PCI-DSS is a set of standards and security due diligence practice issued by the United States-based Payment Card Industry Standard Security Council (PCI-SSC). This is a global Information and Technology (IT) regulatory body which sets the pace for security standards to ensure that the safe handling of payment card data.

    The scheme is intended to optimise the security of credit, debit, and cash card transactions, and protect card holders against misuse of their personal information.

    CBN last year directed banks to comply with the standards to improve electronic payment transactions and operate in line with global practices.

    Speaking to The Nation, the Head, Shared Office Department, CBN, Mr Chidi Umeano, said some banks have complied prior to the December 2011 deadline given to them, while others are yet to.

    He refused to mention the names, saying that divulging such information is not healthy for the industry.

    He said: “A lot of banks have complied with the directive on PCI-DSS. There has been appreciable progress on this issue. However, some banks have not complied, prompting CBN to be monitoring them. We are watching the activities of such banks to ensure they comply.Though they have expressed commitment to enhancing the security of their payment channels. They have not fully complied. The banks are at various stages of compliance.”

    He said it has become imperative for financial institutions to comply with the PCI-DSS as Nigeria deepens its cash-less initiative.

    Mr Umeano said when banks are PCI-DSS certified, they will secure the data of their customers well.

    He said this is the only way operators in the nation’s financial chains would help in curbing electronic payment fraud, restore customers’ confidence and operate in line with the globally acceptable standards set for cashless programmes.

    According to him, efforts are being intensified to promote cash-less initiatives and further strengthen the economy. He said issues relating to the growth of the cashless economy policy are being given attention by the regulators.

    On the Fraud Forum Committee, Umeano said the committee has been able to reduce electronic payment fraud. He said the committee comprising chief executive officers of banks, Visa Card, MasterCard, among other stakeholders in the financial sector, have been meeting to share ideas on how to reduce fraud in the industry.

    “To some extent, the committee has achieved some laudable goals in the country. The committee has a mandate that is not time-bound. We will continue to work together to curb card payment fraud and related activities.

    “We organised our annual meeting last December where we delivered a report on the activities of the committee. At the meeting we review our activities. Some strategies were mapped for 2013 for the committee. We resolved to continue to do what we are doing in the New Year, by ensuring that all fraudulent cases were reported and checked,” he added.

  • CBN to increase N300b power fund

    CBN to increase N300b power fund

    The Central Bank of Nigeria (CBN) plans to extend the N300 billion Power and Airline Fund (PAIF) to increase funds for power sector projects and further create amenable structures directly suitable to the peculiarities of the power sector.

    The extension is one of the major planks of the apex’s bank and banking sector’s economic development programme for this year. It will include the size, tenors, structures, projects, collaterals and other terms in a holistic approach to further align the financial system to the critical funding requirements of the power sector.

    The power sector transformation is a major thrust of Federal Government’s Transformation Agenda with a major target of generating 40,000MW by 2020.

    However, it has been estimated that the power generation segment would require investments of at least $ 3.5 billion yearly over the next 10 years to meet the target.

    The CBN launched the power sector fund in August 2010 with the objectives of addressing the critical finance needs and peculiarities and stimulate lending to the power sector. Managed by the Bank of Industry (BOI) under the technical assistance of the Africa Finance Corporation (AFC), the power fund prioritises key power projects and provides funds at an interest rate of 7.0 per cent payable on a quarterly basis. The fund covers refinancing of loans and leases as well as working capital for the sector.

    Sources said the extension is targeted mainly at increasing funding to the power sector but would also consider inputs from banks and other stakeholders on other structures and terms that would further improve the catalytic impact of the fund.

    The sources noted that the extension of the power fund was in line with the responsibilities of the apex bank under the founding charter of the power fund.

    Under the charter of the power fund, the CBN is saddled with articulation of clear guidelines for the implementation of the fund, provision and determining of the limits of funds, specification of the lending rate and review of review of the fund guidelines as may be necessary from time to time.

    This initiative could help to quickly unlock the potential benefits of the power sector reform. The power fund’s objectives include accelerated development of electric power projects, especially in identified industrial clusters, serving as credit enhancement instrument to improve the financial position of banks, leveraging additional private sector investments in the power sector and down the line, improved power supply, employment, and enhanced living standard for Nigerians through consistent power supply.

    Eligible projects and companies for the power funds cover any corporate entity, duly registered in Nigeria, involved in electricity power supply value chain that includes power generation, transmission, distribution, gas-to-power projects and associated services.

    Also, eligible projects can be promoted by private or public sector sponsors or a combination of both but must be structured either as profit-oriented business or a public service, provided that contracted cash-flows or financing support exist to ensure repayment of principal and interest, as well as long term viability.

    Also, the projects could be already existing and in operations, in design and development, under construction, or existing but operationally inactive.

    Facilities that could be taken under the power fund provided for the whole gamut of needs of operators and include long term loans for new power projects, refinancing loans for restructuring of existing loans and leases and working capital loans.

    The power fund could provide as much as 70 per cent of the total cost of the project while the loans shall have a maximum tenor of 15 years as determined by the project’s cash flow profile not exceeding July 31, 2025.

    The fund provides for moratorium of up to six and a half years on the amortised repayment schedule of the loans. No upfront fee or charge is deductible on any facility under the fund.

    In recognition of the importance of the financial system as a catalyst for national economic development; the CBN had in 2009 started a regulator-led collaborative process to enable the financial system participate more effectively in the Nigerian real sector.

    The apex bank uses the Bankers’ Committee to enable banks to articulate and strategise on ways to boost lending to most critical sectors of the economy for sustainable growth.

    The Banker’s Committee had during its fourth Annual Retreat held in Calabar in December last year reaffirmed its commitment to providing finances to the three key sectors of power, agriculture and transportation.

    It noted that it decided to focus on the three key sectors because of the foundational importance of the sectors for driving growth and development of the economy.

     

  • ‘Nigeria ranks 120 in Index of economic freedom’

    ‘Nigeria ranks 120 in Index of economic freedom’

    NIGERIA has been ranked 120 out of 177 countries in the 2013 Index of Economic Freedom. The index is published yearly by The Wall Street Journal and the Heritage Foundation.

    According to the Index, after a slight improvement in previous ranking, Nigeria slipped -1.2 and ranks as mostly unfree in the economic freedom ranking.

    The Sub-Saharan Africa’s overall level of economic freedom “remains weaker than that of any other,” the Index editors write. A majority of countries in this region either fall into the Index’s “mostly unfree” or “repressed” categories. Indeed, 15 of the world’s 33 “repressed” economies are in Sub-Saharan Africa, and 22 are in the next lowest, “mostly unfree” category, the report added.

    It noted that Sub-Saharan Africa continues to lag far behind the five other regions of the world in overall economic freedom.

    According to the report, Mauritius remains in the top 10 in annual worldwide rankings-the only one of 48 Sub-Saharan countries to do so. But while it is first for the region, its Index score declined slightly from last year.

    Second-place Botswana, meanwhile, moved from “moderately free” to “mostly free” by adding one full point to its score. At third place, Rwanda halted two consecutive years of progress by shaving eight-tenths of a point off its score, according to the report.

    Burkina Faso slipped to “mostly unfree.” Sào Tomè & Prìncipe and Ethiopia are now considered “repressed.” But several countries showed improvement, with Zimbabwe reporting the best increase by moving up 2.3 points to 28.6. Benin and Seychelles, according to the report, both added almost two full points to their Index scores; Gabon added 1.4. Yet all three remain mired in the “mostly unfree” category, which shows how far the region has to go.

    “It is dead last in seven of 10 measures of economic freedom and collectively scores about 13 points behind average world scores in business freedom and more than 10 points behind in property rights and freedom from corruption.

    “Nigeria continues to ranks low in the Index of Economic Freedom because of the increasing role of government within the economy,” said Thompson Ayodele, director, Initiative for Public Policy Analysis.

    He said: “The government spending has increased. We have continued to spend unearned money. Government borrowing has also crowded out private borrowing in the economy while debts owed-local contractors have ballooned. Ironically, government seems to think that more borrowing is the answer to our economic problem.

    “The private sector, particularly small business, still remains engine of growth in the economy. Since the beginning of this administration Nigeria has resorted to more borrowing while other loans are in the pipeline. We cannot borrow our ways to prosperity. Should we continue in this trend, Nigeria is surely on the road to Greece,” Ayodele said.

    Launched in 1995, the Index evaluates countries in four broad areas of economic freedom: rule of law; regulatory efficiency; limited government; and open markets. Based on its aggregate score, each of 177 countries graded in the 2013 Index was classified as “free” (that is, combined scores of 80 or higher); “mostly free” (70-79.9); “moderately free” (60-69.9); “mostly unfree” (50-59.9); or “repressed” (under 50).

    The world average score of 59.6 was only one-tenth of a point above last year’s average. Since reaching a global peak in 2008, according to the Index, economic freedom has continued to stagnate. The overall trend for last year, however, was positive: Among the 177 countries ranked in the 2013 Index, scores improved for 91 countries and declined for 78.

    In many countries, average government spending scores improved. Unfortunately, this was matched by a decline in regulatory efficiency, as a number of countries hiked minimum wages and tightened control of labour markets.

  • FBN capital offers investment products

    FBN capital offers investment products

    FBN Capital is offering a bouquet of high-yield investment products designed to meet individuals and organisations’ desire for good returns and safety of investments.

    For as low as N5,000, with no upper limit, FBN Capital, according to a statement, is offering investment window for small, medium and large scale investors seeking to secure their funds while benefitting from high returns accruable from expertise of the FBN Capital.

    FBN Capital is the investment banking and asset management business of FBN Holdings PLC, Nigeria’s oldest banking group. FBN Capital’s Asset Management products, FBN Money Market Fund and FBN Fixed Income Fund provide investment-savvy individuals and institutions access to short-term liquid money market instruments and high-grade medium to long-term government bonds and other debt instruments.

    The FBN Money Market Fund is a collective investment scheme that pools funds together for investment in a wide range of very liquid short term funds with tremendous investment benefits to all investors.

    With portfolio allocation, spread and diversification that most often may be above the capacity of an average investor, FBN Money Market Fund leverages on its portfolio size, fund management expertise and group synergies to enhance returns to investors by investing in different risk instruments including treasury bills, bank tenured deposits, commercial papers (CPs) and bankers acceptances (BAs).

    The FBN Fixed Income Fund, on the other hand, offers investors the opportunity to invest in Nigeria’s sovereign bonds and other gilt-edge long-tenor debt securities.

    With a minimum investment of N50, 000 the FBN Fixed Income Fund would provide investors with attractive long term returns by investing in a diversified portfolio of government and corporate bonds.

    A total of 17.98 million units of FBN Money Market Fund were last week admitted to the daily official list of the Nigerian Stock Exchange at par value of N100 each. Also, 1.75 million units of FBN Fixed Income Fund were admitted at N1, 000 par value.

    While the money market fund accrues its returns daily and pays it out to investors on quarterly basis, the fixed income fund distributes its returns on half-yearly basis.

    Besides the FBN Money Market Fund and the FBN Fixed Income Fund, FBN capital also offers the FBN Heritage fund which gives investors exposure to the money markets and bond markets as well as the equity and real estate markets too. The fund aims for a higher return by investing in the aforementioned markets meaning it is suitable for investors with a higher risk profile who also desire an even higher yield.

    The FBN Heritage Fund is also open ended, meaning you can subscribe to and/or redeem from the funds on any business day directly from the fund manager. This flexibility offers investors liquidity advantage.

    According to the Director/ Head, Asset Management for FBN Capital, Mr Michael Oyebola, the funds primary objective is to achieve a high level of income obtainable from investments consistent with prudent investment management, the preservation of capital and maintenance of liquidity.

    He noted that high level of professional management drives the achievement of investment results in today’s complicated volatile market. Investors would therefore benefit from FBN Capital’s cutting-edge investment process, in-depth research capabilities, experience and expertise with proven track record of performance.

    According to him, “FBN Capital Investments and management process combines top-down views on the macroeconomic environment with proprietary local bottom-up analysis of credit quality and market factors including supply, demand and liquidity by our credit analysts and markets team.

    “The FBN Capital asset management team has the experience, depth and diversity to actively manage a broad and diversified portfolio of investments. Our tactical asset allocation provides portfolio diversification as well as the offering exposure to different sectors of the economy,” Oyebola noted.

    He pointed out that “diversification across a range of investments reduces risk as often a decline in the value of any specific security may be offset by the stability or increasing value of other securities in the portfolio”.

    According to Mr Oyebola, active valuation of all sectors and individual issuers is also used in an effort to provide potential returns in excess of the overall market.

    “As open-ended funds, investors are able to subscribe to and redeem units on any business day. Investors purchase units in the fund directly from the fund itself rather than from existing unit holders exposing them to the opportunity of achieving good returns from a diversified portfolio of investment,” Oyebola said.

    He added that investors would receive regular information on the performance of the funds on a year-to-date basis and that the current net asset value of the units, which indicates the price at which an investor may purchase or redeem the units, would appear in the fund price listings of selected national newspapers.

  • Omatek hints on dividend payment

    Omatek hints on dividend payment

    OmateK Ventures Plc has expressed optimism that shareholders will start to reap the benefits of its ongoing business growth initiative with the payment of dividend for this business year.

    Its Group Managing Director, Florence Seriki, who outlined efforts being made to improve the performance of the company, said there were hopes that the company could resume dividend payment by the end of this business year.

    According to her, while the company had been challenged by the financial crisis induced by the problem in the banking sector as well as economic meltdown, its long-standing adherence to quality and international standards has sustained its customer base, which it’s now leveraging on to deliver growth.

    She said the company has started constructing a solar panel production bay in its new expansive factory complex so that it would overtime be able to produce solar panel locally. Besides, she said the company has energised its distribution channels to expand its market share.

    She said Omatek has declined to issue new shares to raise funds from the capital market because the market value of the company’s shares does not represent the true worth of the firm.

    She, however, charged capital market regulators to be at the vanguard of advocacy for the development and patronage of small and medium manufacturers to sustain listings and attract new ones to the stock exchange.

    According to her, both the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE), should patronise listed companies’ products. She championed broadening of the local content policy to include all Nigerian manufacturers.

    She added that the governments at all levels need to imbibe consumption of indigeneous goods to promote domestic manufacturing, which she noted, is the only solution to the high rate of unemployment.

    She called for the provision of adequate funding for manufacturers, pointing out financial requirements of the manufacturing sector are different from other sectors.

    She said the Central Bank of Nigeria (CBN) should redirect its intervention funds to interface with the sectoral operators and groups rather than the situation where companies are required to be recommended by their banks, which might have been implicated in the crisis of the company.

     

  • ‘Firms should seek profitable investments’

    Insurance companies need to seek viable and profitable investments that will protect their premiums and safeguard their balance sheet to make returns for shareholders.

    Head, Research and Investment Advisory Services, Sterling Capital Markets, Mr Sewa Wusu, gave this advice during a chat with The Nation.

    He said reinvestment into more profitable instruments would help the recovery of insurance firms listed on the Nigerian Stock Exchange (NSE).

    Noting that many investors burnt their fingers during the stock market boom, he said insurance firms were not left out and are still leaking their wounds five years after.

    He noted that invested premiums, which usually yield profits for the insurance companies to pay claims to their clients went away with bad investment that never brought back anything to the companies.

    He said that since the market is coming back and recovering gradually, the companies should be wise enough to seek better instruments that will enable them to make much profit.

    The insurance sector is recovery at the exchange. Most of the firms couldn’t pay their claims and as such, the number of operators dropped from over 70 to 50.

    At present, 29 companies are listed on the floor of the NSE; out of this 25 have been active this year while three out of the remaining four non-active companies where last traded in December last year. The other traded in July 2010.

    The stocks in the insurance sector has been struggling to break off from the nominal value (N0.50). As at Friday, 72.41 per cent were selling at N0.50 while 20.69 per cent had their price value between N0.51 and N0.82. The remaining 6.90 per cent were valued between N1.57 and N2.00 per share.

    Specifically, Mansard Insurance is the most priced in the sector with N2 followed by Custodian and Allied insurance at N1.57 per share.

    The insurance market between September 5, 2005 and February 28, 2007, deployed sundry means, including private placements, initial public offering of shares, mergers and acquisitions and formation of strategic alliance to comply with the new capital regime.

    Minimum capital requirement for life insurance capital rose by 1,233 per cent from N150 million to N2 billion; general insurance increased by 1,400 per cent from N200 million to N3 billion; while reinsurance capital rose by 2,757 per cent from N350 million to N10 billion.

    Fourteen companies were liquidated for failing to meet the recapitalisation requirement in 2004. The minimum capital requirement was raised from between N20 million and N90 million to N150 and N350 million for their classes of business.

  • Analyst seeks improved risk-based supervision

    Regulators of the financial market need to improve on their oversight functions, especially in carrying out risk-based supervision in financial services operations, the Head of Markets, Sterling Capital, Sewa Wusu, has said.

    Speaking at a forum in Lagos, he said the challenges facing the insurance sector of the economy were because operators used mostly margin loans to invest in the capital market, adding that some of such funds have been lost.

    He said improved regulatory supervision would have averted the challenges and prevented the implications of such actions on investors.

    The expert said the banking sub-sector is recovering fast, with attractive valuations, adding that the recent regulatory intervention and reforms has led to increased stability and attractive growth prospects going forward.

    The building material subsector has also been tipped to benefit from increased infrastructure spending.

    He, however, stressed the need for the completion of on-going projects by the government and other key industries in 2013. This, he said, is expected to continue to raise demand and support strong growth in the sector.

    For the breweries sub-sector, Wusu said the threat of increased competition has spurred major companies (NB & Guinness) to make defensive acquisitions of smaller regional breweries coupled with aggressive expansion drive to sustain market share.

    ”The demand for beer is expected to continue to grow in line with increased economic activities, expanding population, improvement in product quality, and improving distribution network systems. Key success factors for the industry include; strong brand identity, extensive distribution network and strong advertising campaign,” he said.