The Nation Newspaper

Category: Business

  • Insurers advise govt on disaster management

    Insurers have asked the government to mitigate losses arising from human and natural disasters in the country.

    Managing Director, Royal Exchange Prudential Life, Mr Wale Banmore, said one way to do this is for the government to ensure that Nigerians embrace appropriate insurance.

    Banmore said it was wrong for the government to raise money to compensate victims of disasters while insurance companies, whose responsibilities are to indemnify people would have done that without taking a kobo from the government.

    He said the government should ensure that everyone are insured.

    He said the government should help its citizens to ensure that insurance firms pay appropriate claims to the citizens when disasters occur and not compensate those who suffer losses.

    Banmore said despite the damages that the Hurricane Sandy brought upon Americans, the government did not use public funds to compensate victims because the insurance companies are there to do that. He said if government stopped this practice all parties would benefit.

    Also, Chief Executive Officer, Custodian and Allied Insurance Plc, Mr Wole Oshin, said to mitigate losses arising from disasters, the government should put in place insurance schemes and other processes that would protect the citizens against such disasters.

    He argued that nobody expected crisis human and natural witnessed in the country in recent times.

    He said such crises have started happening, and that the government should put in place structures and processes to mitigate the risks.

    He explained that the government should not continue to fund the disasters caused by climate change or man.

    He said: “Some years ago, we never thought some of the disasters we are seeing in Nigeria could happen. We do not know when it would happen next and when it happens,” adding:’ “Will we go through this process again of raising funds, donating materials and so on? “

     

     

     

     

     

     

  • Teachers lament non-payment of Dec. salary in Enugu

    Primary school teachers in Enugu State have appealed to the state government to pay their December 2012 salaries to enable them settle their children’s school fees.

    The teachers accused the government of not giving priority to their welfare to enable them to contribute their quota to the educational advancement of the state.

    One of the teachers, who did not want his name in print, expressed dismay with the government, saying that their families had dry Christmas and New Year celebrations.

    “We celebrated this season almost without food on our table. I could not provide my family with the needed things because I so much relied on my December salary, but to my surprise, we were not paid.

    “I could not even borrow because it was already late and I so much expected this salary to come. It was horrible for my family during the celebrations,” he said.

    Another teacher ,who also preferred anonymity, called on the government to pay the salaries and entitlements to enable them to settle their children’s school fees.

    According to him, schools will resume soon and their children need to resume along with their mates.

    “It is very unfair that one will work and not get paid, especially in this season.

    “We celebrated Christmas and New Year from hand to mouth and now that the celebration is over, the government should endeavour to pay us our money so that we can pay our children’s school fees,” the teacher said.

    A volunteer teacher in a rural community said the government had yet to pay him and his colleagues since their recruitment in 2011.

    When contacted, the Chairman of the Nigerian Union of Teachers in the state, Mr Chumaife Nze, confirmed the non-payment of salaries and entitlements to the members.

    “I contacted the permanent secretary of the Enugu State Universal Basic Education Board before Christmas, but he said the salaries and leave allowances have been released but till date, no teacher has received a bank alert on the payment.

    “I do not understand what is happening. Even volunteer teachers have not received any salary since they were recruited in 2011,” Nze said.

     

     

     

  • ‘75% of identity documents are fake’

    ‘75% of identity documents are fake’

    THE National Identity Man agement Commission (NIMC) has said 75 per cent of the 167 million population has no authentic identities because they are self-issued.

    The body said it would endeavour to deliver a reliable and secured national identity to the country.

    NIMC Director-General, Chris Onyemenam, identified key issues that have led to the insecurity in the country, saying an average Nigerian parades multiple and unreliable identities.

    As a result, over 75 per cent fake and counterfeits identities are in use, stating that the problem has been further compounded by excessive focus on ID card issuance without proper authentication and verification.

    Onyemenam also said over 100 million Nigerians have no official identities. He said: “Seventy per cent of identity documents are fake and self issued, and there is no timely means of authenticating the documents. Less than 20 per cent of the population have access to financial services and that actual total bank cards were less than 10 per cent of the population.’’

    In a paper entitled: National Identity Management System (NIMS): How the system will work and how it will benefit you and the government, Onyemenam said the solution to these is a shift from ID card issuance to identity management system that is the statutory duty of the NIMC.

    He explained that the NIMS project is in five components. He listed them to include: the establishment of reliable, secured and accurate national database, assigning of National Identification Number (NIN), issuance of General Multi-Purpose Cards (GMPC), provision of infrastructure that will be used for verification and confirmation of identity, and harmonisation of government agencies’ databases in the country.

  • NLC seeks end to youth unemployment

    The Nigeria Labour Congress (NLC) is seeking ways out of the growing rate of unemployment, which it put at 60 per cent of employable youths.

    Its President, Abdul Waheed Omar, who spoke with The Nation, said unemployment is Nigeria’s greatest problem.

    He said: “In particular, the crisis of unemployment continues to be the greatest of these. Official statistics puts the unemployment rate at above 24 per cent. As alarming as this would seem, it actually disguises the enormity of the unemployment problem given the huge pool of disguised unemployment and underemployment.

    “The incidence of unemployment among the youth is even more alarming. Though official figures indicate over 40 per cent of them as unemployed, the reality is that about 60 per cent of youths remain unemployed. On average, graduates of the nation’s universities and polytechnics continue to remain unemployed four years after discharge from the mandatory NYSC scheme.

    Other categories of less qualified youths have been roaming the streets in millions without gainful employment. Thus, resigning to a life of perpetual destitution and despondency in a country blessed with so much resources and potential.’’

    Omar traced causes of unemployment to include corruption in the high places. This, according to him, include the fuel subsidy scam through which many influential Nigerians had siphoned much money that could have been used in creating jobs.

    He, therefore, called for the probe and trial of fuel subsidy fraudsters, saying that is the only condition for peace in the industrial sector in the new year.

    It also said the Labour subsidy strike led to the unveiling of many fraudulent subsidy transactions.

    “The government will be unfair to the Nigerians if it fails to expeditiously prosecute those who have stolen so much, and caused so much trauma and death to the people. We hold the view that no one is above the law in any decent society and if our government is committed to the enthronement of good governance and a corrupt-free society, it must get the named beneficiaries of the oil subsidy scam to not only refund all the money they have stolen, but also serve appropriate jail terms. This will be the only acceptable condition for continuous industrial harmony by workers and the Nigerians.”

    The NLC chief said the economy, in 2012, was characterised by many maladies, with dire consequences for workers and other Nigerians.

    It faulted the Gross Domestic Product (GDP) growth that has not led to job creation.

    “This abysmal economic outlook is prevailing in the face of official aggregate of the economy touted to experience respectable growth. The growth rate of GDP is flaunted to average about 6.5 per cent based on data for the first three quarters of the year. While this is lower than the corresponding rate for 2011, it is way above the global growth rates for comparable national economies.

    “However, our concern about this respectable economic growth is that it does not translate into industrial development and better life for the Nigerian people. The economy continues to experience incessant factory closures, and with no visible industrial policy, has led to continuous informalisation of work and de-industrialisation, unemployment has continued unabated, and hyper-inflationary pressure, which has been most severe in the food, energy and transport sub sectors have impoverished majority of Nigerians.”

     

  • Key drivers for insurance growth in 2013

    DESPITE the inability of insurance industry to meet its set target of N1 trillion premium income projections last year, operators are optimistic that the entrenchment of some basic fundamentals last year would prop the industry to lofty heights this year.

    To reposition the industry, stakeholders have identified proper budget implementation, enforcement of insurance laws, adherence to ethical practice, among others, as key drivers that will propel growth in the industry.

    President, Chartered Insurance Institute of Nigeria (CIIN), Wole Adetimehin, said the operators hope that the implementation of the budget would be timely and decisive, adding that the government has raised the hope of the public by ensuring that the budget was passed before the close of last year.

    President, Nigerian Council of Registered Insurance Brokers (NCRIB), Mrs Laide Osijo, noted that the government should ensure that the budgetary provision for insurance should be well used, and that it should not be diverted.

    She said the response of insurers to the budget would also help to drive the industry and the operators’abilities to study the budget to ascertain where to take pragmatic steps to tap into it, would help push the industry up.

    The enforcement of compulsory insurance laws, such as motor third party policy, insurance of buildings and buildings under construction, among others, would help prop the industry.

    Observers believed there should be a collaboration between the industry and government’s security authorities to ensure implementation of the laws.

    Managing Director Riskguard-Africa Nigeria Limited Yemi Soladoye, said the N1 trillion projection tied to the Market Development and Restructuring Initiative (MDRI) programme failed due to delayed implementation.

    He noted that the programme was to start in 2009, but took off in 2011, leaving two years out of the implementation schedule.

    “Most people are reading the strategy document and not relating it to when implementation took off. If there is a projection that in year four, we will get N1 trillion and as we could see from the paper, we were to start in 2009, we had what we were to achieve in 2009, 2010, 2011 and 2012. So, N1 trillion is in year four which is 2012. If implementation started in 2011, it will be a case of shifting the deliverables forward based on the difference on the ground between the strategy crafting and the implementation,” he said.

    The policy on ‘No Premium No Cover’ has been adjudged as one of the best initiatives to sanitise and boost the industry’s premium income.

    Osijo said what the administration in National Insurance Commission (NAICOM) has done to bring sanity into the industry is a right step in the right direction, adding that underwriters accusing brokers of non-remittance of premiums will be a thing of the past with the introduction of the policy.

    NAICOM has said from January 1, this year, any underwriting firm that provides insurance cover without collecting the premium would be liable to a penalty of N500, 000 or lose its licence.

    It noted that insurance covers shall only be provided on ‘no premium no cover’ basis, adding that only cover for which payment has been received, directly by the insurer or indirectly through a duly licensed insurance broker, shall be recognised as income in the books of the insurer.

    NAICOM said any insurer, who grants cover without having premium in advance or notification from the relevant insurance broker shall be liable to a penalty of N500, 000 on each cover so granted, and in addition, may be a ground for suspension of the licence of the insurer.

    On professional practices, the Chartered Insurance Institute of Nigeria (CIIN) has threatened to withdraw its certificates from members who engage in unethical practices.

    Its President, Dr Wole Adetimehin, said the institute reserves the right to withdraw its certificate from any holder, if it discovers any breach, adding that further reason for such withdrawal of certificates may emanate from acts unbecoming of a holder of the institute’s professional qualification.

    “Permit me to reiterate the policy of council regarding certificates issued by the institute as the institute’s property, which could be withdrawn from the holders if the institute has good reasons to do so.

    “Let me state categorically that the institute reserves the right to withdraw its certificate from any holder, if it discovers any breach of the examination process. A further reason for such withdrawal of certificates may emanate from acts unbecoming of a holder of the Institute’s professional qualification, “ he said.

    Curbing the unethical practices between underwriters and brokers, observers say that would enhance the industry’s performance and build a lasting trust that would make the industry grow high premium income.

    Over the years, underwriters and brokers have often engaged in premium war, which, observers believed, has hampered growth.

    Proper implementation of the Nigerian Content Act on insurance would open up the billion dollar oil and gas business to operators, who have been empowered to underwrite 70 per cent risks in the sector.

    Insurers have called on oil and gas operators to lower the hurdles placed on their way. They believed their engagement would give them the opportunity to acquire more knowledge on oil and gas underwriting.

    Insurance brokers are worried by the enormous demands by the Nigerian National Petroleum Corporation (NNPC) in engaging them for its risks.

    They said the NNPC has placed difficult hurdles to restrain brokers from qualifying for risks allotted to local brokers by the Nigerian Content Policy.

    They said 34 brokers were engaged for the NNPC account in 2011, but the number was reduced to 14, last year. Insurers have, therfore, called for a rise in the number this year.

    Operators called for the development of infrastructure to reduce their overheads and enable them to enhance their operations.

    Adetimehin said: “We do hope the government would do a lot more this year to ensure better development of right infrastructure in power supply, energy and job creation. Because, these are basic elements that could propel economic performance.”

    Observers believed the fight against corruption would help insurance attract positive image home and abroad.

    They appealed to the public to join hands with the government in the fight against corruption, stressing that corruption is a problem that cannot be fought by the government alone.

    They noted that though the public look up to the government to set the pace, the citizens should operate on high integrity to ensure that they shun corruption, so that the nation’s image and ranking before the rest of the world could be improved upon.

  • Decentralised agric insurance will boost participation, say experts

    THE decentralisation of agricultural insurance will allow many firms with the wherewithal to offer their products in the area, Managing Director, Sovereign Trust Insurance Plc, Mr Wale Onaolapo, has said.

    During an interview, he said his company would be interested in anything that could contribute to the growth of the industry.

    He said through decentralisation of the insurance scheme, farmers would have better prices to choose from.

    At present, agriculture insurance cover to farmers is provided by the Nigerian Agriculture Insurance Corporation (NAIC).

    Commissioner for Insurance, Mr Fola Daniel said NAIC has enjoyed the support of the Federal Government as it has been subsidising some insurance to encourage farmers to get cover.

    However, to make the insurance more available for farmers, he said agriculture insurance was being deregulated to make more insurance firms to participate in the subsector.

    Director-General, Nigerian Insurers Association (NIA), Mr Sunday Thomas, said though farmers have a lot to gain from insurance, many of them lack awareness and are poorly funded.

    He noted that Nigeria can have a vibrant agriculture industry, adding, however, that the reverse was the case.

    According to him, considering the opportunities available in the sector, it could have been the mainstay of the nation’s economy by providing wealth and creating employment for the people.

    Thomas noted that farmers were faced with numerous challenges that were hindering their ability to produce in large quantities. Some of the challenges include poor funding, inadequate storage facilities, climatic factors as well as infrastructural deficiencies, among others, he said.

    President, Risk Surveyors Association of Nigeria (RISAN), Mr Jacob Adeosun, said if the government is serious about insurance awareness and penetration, Nigerians should be encouraged to embrace insurance as a way to avert disasters.

    He said diverting money meant for other development projects and begging people in the name of seeking donations is not a sustainable way of helping the society. Besides, he said most of the donations end up in wrong hands because of the corruption.

    He said over the years, local farmers had continued to encounter challenges in production, a factor that had been militating against their ability to produce in large quantities and become export oriented.

    According to him, insurance can cover food crops of different categories, adding that crops could be insured against so many disasters, such as flood, drought, pest, disease and others, goods in transit could be insured against losses or damages.

    Managing Director, Continental Reinsurance Plc, Dr Femi Oyetunji said NAIC is the firm that insures agriculture in the country, but noted that since NAICOM was regulating insurance, there was the need to ensure capacity build for more local insurance firms to provide this kind of cover. ”With a population of over 160 million agriculture is very important to us as it is a major focus of the government. So, the ability of the government to achieve its aim in agriculture depends on the ability to provide the right type of insurance to the farmers and even to the suppliers of farm equipment”, he said.

    Meanwhile, NAIC has assured farmers whose farmlands were destroyed by the flood that they would be compensated.

    While sympathising with the victims of the disaster, NAIC’s Acting Managing Director, Dr Tijani Garuba, advised them to take advantage of the corporation’s services to mitigate their losses, adding that the Federal Government established NAIC to provide succour and extension services to farmers who insure with the corporation.

     

  • ‘Why banks are running away from SMEs’

    ‘Why banks are running away from SMEs’

    Small and Medium Enterprises (SMEs) are expected to be the soul of the economy. But they have a problem; many of them cannot access loan for their growth. The banks too are shying away from doing business with them. Why? It is because they are not vibrant and are operating in an unconducive environment, says Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi in this interview with reporters on the sidelines of the Bankers’ Committee retreat in Calabar, Cross River State. Group Business Editor AYODELE AMINU was there.

     

    What will be the focus of the Bankers’ Committee in 2013?

    Our focus in 2013 remains the implementation of the financial inclusion strategy, continuation of the agricultural lending programme, moving towards the gas to power plan, privatisation of power, issues around policies and principles. We still have a long way to go, but we are proud of the work we have done in the last four years. I do hope that this industry will produce the generation of central bank and bank chief executive officers that played a catalyst role in the development of the economy. The Bankers’ Committee has said that our focus would be on financial inclusion across the country. But there will be a special focus on Borno State on financial inclusion. The Bankers’ Committee will partner with the government of Borno on financial inclusion in that state. Now, with the conclusion of the power privatisation there are issues. The first is advising the government on funding of power transmission. One thing that is clear to us and what we are going to advocate is that all the proceeds from the sale of power assets should actually be dedicated to improvement in power transmission system. Because there is a huge financial requirement for power transmission development and if $2.3 billion is dedicated to that, it covers a significant part of that cost. Now the announcement of that kind of decision to be taken by the Presidency and the National Assembly and not the Bankers’ Committee, would create the confidence that private investors require to invest in the integrated plant because they know that the big risk in the power value chain now is transmission. A lot of funding is required. So fixing transmission is one, ensuring that we have funding for capital expenditure for generating plants that have just been set up is also key. The committee is working on financing and advising the sector. On the agricultural sector, we will continue with our engagements with the states and continue to address the value chain process. There are outstanding issues and they need to be addressed. We need to improve the engagement with the Federal Ministry of Agriculture and our resolve is to integrate our silos so that all stakeholders can get more value chains to operate. We shall continue with the work which we have started on the modernisation of the payment system, governance, competency, training and financing.

    How does your intervention in the agric sector affect rural farmers?

    The whole idea of the intervention in the agric sector through Nigeria Incentive Based Risk Sharing for Agricultural Lending (NIRSAL) is to address some of those things that have affected the growth of the sector. One of those things that we have tried to do is to work with states and put those farmers into cooperatives so that they are able to raise silos as a cooperative. As a cooperative, they are able to get training, extension services, buy seeds and negotiate for fertilisers. Then, you go to Kagawa, which is 40 kilometres from Kano, you will see how we and the state have put together, tomato farmers to get improved varieties and seeds. Now, we are looking at setting up a processing plant, which will produce tomato and process it on-site. They are producing twice a year now, instead of once with irrigation. We give them seeds, fertilisers and they are able to access financing. But we must remember that agriculture and lending to the real sector is a journey and not a destination. Two years ago, we set a target of getting bank lending to 10 per cent of the loan book of banks by 2017. As at that time, 2011, we were at 1.5 per cent. But today, we are at 3.58 per cent. So, as we continue to implement these reforms, we should get to our target by 2017.

    What is the Bankers’ Committee doing to ensure that lending rate is reduced to support the growth of SMEs and what would be the contribution committee’s to assist flood victims?

    As far as the Committee is concerned, remember that small and medium enterprises (SMEs) only thrive in an environment that is conducive. If you want vibrant SMEs that can borrow from banks, we must fix the power problem, we must fix the agricultural value chain problem. Banks cannot continue to lend to SMEs that are not profitable because they have to continue to run on generators and buy diesel, with bad roads and insecurity. So the environment has to be fixed and that would encourage banks to lend to SMEs. That is why we said there should be focus on power and we should get the reform ongoing. A lot of work has been done on power reform and the funds from banks. Take funding for example, the reform would not have happened if the Central Bank did not provide the funding for the advisory role. So, the Central Bank paid for all the work that was done to privatise power by the Bureau of Public Enterprises (BPE). The objective is to get the power reform completed, and if that is done, then power supply would improve, cost of production would come down, industrial capacity would increase and SMEs would be able to borrow and service their debts. On the rate of interest rate, it is not a Bankers’ Committee issue. Rates of interest are reflective of rates of inflation, therefore there is need to have stability in the system. As we begin to move to a low inflation environment, rates of interest would continue to drop and make it easier for banks to provide financing for the real sector. On the flood, the Bankers’ Committee has agreed that we would support. The CBN would put money into that pool, all the banks would put money into that pool and we would give the funds to the Flood Relief Committee that was set up by the President.

    What is the Bankers’ Committee’s level of commitment to the stability of the financial system?

    We affirm our commitment to a stable financial system that contributes to economic development of the country. We commend President Goodluck Jonathan’s economic reform agenda and associate with the objective of growing the Nigerian economy and creating jobs. The Central Bank has taken proactive actions to ensure that the financial system remains focused and committed to the goals of economic development and sustainability. Effective collaboration and partnership across government, banks, private sector and key stakeholders is critical to achieve economic goals and objectives. We reaffirm our aspirations for the transformation of the power, agriculture and oil and gas sectors of the economy, increasing access to finance for the under-banked and unbanked, and to the principles of sustainable banking. To consolidate our progress and achievements to date and address issues that remain, the Bankers’ Committee will continue deliberate advocacy and partnering with the economic team to implement the economic reform agenda to grow the economy and create jobs. We have defined clear objectives and targets for 2013, agreed on the results and outcomes we expect to achieve and assigned responsibilities for implementation. We will continuously monitor our progress on implementation as well as the impact of our actions on Nigeria’s economic development goals and objectives.

    What role is the Bankers’ Committee playing in the development of the economy?

    The Bankers’ Committee is committed to a lead role as catalyst for economic development, improving access to finance by the unbanked and under-banked and growth of the real sector.

    The Committee has focused on the Power, Agriculture and Transport Infrastructure sectors for driving growth and identified opportunities for financial system intervention in the transformation of these critical sectors of the economy.

    Through collaboration with the government, the banking community and real sector stakeholders, the Bankers’ Committee programmes and initiatives have contributed to tangible improvements in the enabling environment and private sector funding for the power and agriculture sectors.

    Progress has been made on several fronts. For example, lending to the agriculture sector has increased. The banks’ lending to agriculture has increased from 1.5per cent of total industry portfolio in 2009 to 3.5per cent in 2012.

    We have established the NIRSAL to encourage the growth of formal credit for the agriculture value chain. We have continued effective advocacy that has led to significant progress in the reform of key sectors of the economy including power, agriculture and oil and gas. Also, the financial excluded population has reduced from 46 per cent of adults in 2010 to 38.7 per cent in 2012.

    Significant capacity is also being built within the financial services sector in the areas of project finance and agriculture lending to support long term finance and agricultural lending.

    The 2012 Bankers’ Committee Retreat focused on strategies to consolidate and improve on the gains we have made in real sector development, determine further opportunities for financial system intervention as well as required actions to sustain and improve stability of Nigeria’s Financial System.

     

  • Stocks that made the market

    The Nigerian stock market posted average full-year return of 35.4 per cent, equivalent to capital gains of N2.44 trillion in 2012. Notwithstanding the widespread gains and exceedingly positive overall market situation, only 29 stocks recorded above-average returns. ‘Equities Watch’ had pinpointed 11 of the best-performing stocks. Taofik Salako reviews the initial investment guides and highpoints of the stocks that made the market

    The Nigerian stock market rounded off 2012 atop the global returns’ table.

    With average full-year return of 35.45 per cent, equities outperformed market pundits’ estimates and overwhelmed returns by other securities. The All Share Index (ASI), the common value-based index that tracks changes in prices of all quoted companies, closed 2012 at 28,078.81 points as against its opening index of 20,730.63 points for the year. Aggregate market capitalisation of all quoted equities also rose from its opening value of N6.533 trillion to close the year at N8.974 trillion, indicating capital gains of N2.441 trillion. Besides its primary importance as the benchmark index for the Nigerian Stock Exchange (NSE), the ASI doubles as the country index for Nigeria and rightly indicates the competitiveness of Nigerian equity returns.

    Globally, Nigerian equity return ranked seventh on global return scale as average capital gain on equities in Nigeria significantly exceeded returns in all advanced markets of Europe and America. Full-year percentage changes in global stock indices tracked by the Wall Street Journal (WSJ) indicated that Venezuela posted the highest return of 302.8 per cent. Egypt recorded the highest return of 50.8 per cent in Africa. Nigeria followed Egypt on the returns table, far ahead of South Africa, which posted 22.7 per cent. The significance of Nigerian return is in the context of the global returns, especially in key world financial centres, which look toward emerging markets to bolster portfolio performances in matured markets. The Dow Jones Global Index indicated global average equity return of 13.7 per cent for 2012 while another global index-The Global Dow, posted a return of 10.7 per cent. Average return in United Kingdom stood at 22.5 per cent while France, Germany, Japan, Russia and China posted average return of 15.2 per cent, 29.1 per cent, 22.9 per cent, 10.5 per cent and 10.9 per cent respectively.

    Equities provided the best returns among Nigerian securities. With inflation rate at 12.3 per cent and the Monetary Policy Rate, the benchmark interest rate set by the Central Bank of Nigeria (CBN),at 12 per cent, equities were the only investments with real adjusted return in 2012 considering the cost of fund and time value of capital. Fixed-income rates were substantially below equities’ returns and in most cases, negative in real terms. Three-month tenor deposit rate of banks stood at 8.94 per cent, 91-day Nigerian Treasury Bill (NTB) carried return of 11.7 per cent while average monthly prime lending rate stood at 16.51 per cent.

    But notwithstanding the relatively high return indicated by the overall market position, the bullish rally in 2012 was highly concentrated on about one-ninth of quoted stocks. More importantly, the bulls followed Equities Watch’s trails during the year. Most of the stocks picked out for upside potential dominated the top gainers’ list while stocks and sectors marked for doubtful and negative outlook ended on the downside. Cadbury Nigeria Plc, which was first spotted with a year-to-date return of 26.3 per cent and further reinforced in a second piece when it posted 46.8 per cent, rallied through the year to close with a full-year return of 154.4 per cent. Nestle Nigeria was trading at a high of N486.70 when it was cited as a market leader and rallied to close the year at N700, posting a return of 57.1 per cent. Equities Watch had noted when Nestle Nigeria was at a peak of N577.50, that “stability of earnings and returns and sense of corporate security may still take Nestle Nigeria to a new level.” “Besides, in a market still characterized by uncertainties and questions about corporate governance, Nestle Nigeria’s overall image of stability and consistency will continue to be major attraction. The compact nature of the outstanding shares of the company and the preponderance of buy-and-hold retail investors that see the stock as their nest eggs will also continue to mediate the share price fluctuation, making it resistant to downtrend. Most investors holding the free float shares don’t easily sell off. As a consistent dividend-paying stock, Nestle Nigeria provides cushion against the downturn at the secondary market. With recent huge investments in new factory and innovations, the company appears to have operational supports to drive fundamentals and by extension, market consideration,” the September 2012 report had noted.

    Presco was trading with a year-to-date return of 26.6 per cent in March when Equities Watch concluded that dividend expectation for the 2011 business year would provide further impetus for capital appreciation. “Most investment pundits believe Presco, and other well-positioned agricultural stocks, could leverage on government’s focus on agriculture and domestic capacity building to improve returns. Already, incentives aimed at encouraging farmers included low-interest intervention funds and reduced tax and tariffs. These incentives fit into Presco’s long-term growth plan, a synchronization that encourages investors’ optimism about future returns,” another June report stated. Presco rallied to close the year with a gain of 96.1 per cent.

    At the onset of First Bank of Nigeria’s comeback bid in May, when the bank was with a year-to-date return of 18.1 per cent, Equities Watch had noted that improved fundamentals would impact further on the market consideration. By August when First Bank’s year-to-date return was 46.6 per cent, Equities Watch had noted that “with this year’s high just barely above the intrinsic book value, the bank appears still substantially undervalued” and that “from earnings to dividend and historic pricing outlooks, most counts tilt in favour of the bank.” First Bank closed the year with 76.6 per cent capital gain.

    In March through to July, Equities Watch had cited United Bank for Africa (UBA) Plc as a promising stock. “With its restructuring into pan-African financial services holding group, operations in 19 African countries and major global financial centres, qualitative balance sheet and expansive deposit base, UBA is a stock to watch,” the March report had pointed out. By July when interim reports had formed consistent growth pattern, it was noted that “there is strong tendency for the emerging fundamentals to set new ceiling for the share price”. UBA closed within the top-four banks with a full-year return of 76.1 per cent.

    Access Bank came under focus in May when its year-to-date return was 41 per cent. “With strong fundamentals, many analysts expect Access Bank to further unlock many growth opportunities from its recent business combination exercise while sustaining its intrinsic aggressive internal growth strategy. It’s this outlook that is driving the equally aggressive positioning by farsighted investors in the equities of the bank,” it was noted. Access Bank closed with full-year return of 88.5 per cent.

    In September, when Sterling Bank was trading with a year-to-date return of 52.5 per cent, Equities Watch had noted that while Sterling Bank opened then at its highest price so far, the share price still represented significant discounts to the recent historic highs. “With continuous improvements in earnings over the period, the share price appears to be more sentimental than fundamental, and it may be opportunity for discerning investors,” it was pointed out. Sterling Bank closed 2012 with a full-year return of 71.3 per cent.

    Other stocks spotted by Equities Watch including Transnational Corporation of Nigeria, UAC of Nigeria and GlaxoSmithKline Consumer Nigeria closed with substantial gains. DN Meyer had closed with a moderated return of 44.9 per cent, in line with the cautious note on the fundamental supports for the then jumpy market price. With one in every two stocks on the top 20 gainers list on the upside watch list of Equities Watch, the equity intelligence report provided reliable guide for investors in 2012. And that is the promise for this year, and always.

     

     

     

     

  • Seven drivers of effective job search

    This is 2013, well almost. It is natural to talk of a new beginning or new opportunity to take on job-hunting and be successful. No matter, there are certain “immutable principles” of job search. It is relevant to take another look at them, to provide you with “fresh fire” for successful job hunting in 2013.

    It is my fervent desire that you succeed this time. The stats are not on your side- unemployment is high and raging: many people will have to look for job this year. And many here have been on the job queue for some time. Add to these are those who are just entering (or re-entering the labour market). Now to the drivers

     

    Nobody owes you a job

    If you desire a good job, you need to get up your butt and go after the job you desire. Invest your time, energy and money (no matter how little you have, some are still investible in job search-related endeavour- you have a credit consuming GSM handset, don’t you?).

    The principle here is that though you may be unemployed, you still have a job to do: to get yourself a job. And that is the mother of all jobs, if you know what I mean! You will need to put in all you have and be focused. To get a good job takes imagination, initiative and focus.

    It means that you must be committed to implementing the skills you will acquired reading this column (and if you have the time, from our website) attending seminars, reading relevant books. You know what you want, and must be ready to work for it.

     

    Put in the maximum

    effort possible

    Job-hunting success rate is directly proportional to the amount of intelligent job-hunting effort. The more you try, the more likely you will find the job you want, and quickly too. Even if you are a career/job changer, you need to schedule and make time out consistently to pursue your job search. Always ask: am I doing the best? Is there something else I can do?

     

    Successful job-hunting requires a willingness to change tactics

    If something is not working, move to another strategy. Try something new. Try something unusual- as long as it is reasonable. But do you have a job search strategy? These apply to everybody in the job market.

     

    Never give up. Never

    A major challenge is that most job seekers give up often too soon. They expect the job search to be easy, simple and quick. It hardly works that way.

    Most people don’t have the stamina. You must realise that job hunting is a marathon- a game of strength, stamina and appropriate strategy. In your efforts to get a job, you will probably encounter some barriers and hurdles. Common barriers include:

    • Analysing my skills, interest and qualities

    • Honestly looking at barriers

    • Identifying specific job target

    • Writing effective job applications

    • Preparing for interview

    • Performing at interview

    • Writing effective Resume/C.V

    • Networking skills

    • Selection Test skills

    • Evaluating job offers

     

    Think again, are these real barriers or excuses? It is often easy to blame external factors for failure to get what you want. The real barriers are generally internal doubts and fear, resistance to change and our perception.

    Perceptions, may be stronger than reality- it influences our atitude and actions towards a given object or situation, whether it is right or wrong.

     

    Aquiring job-hunting skills

    Even madness, they say, have methods! Review the points already listed (1-4). Look at the ‘barrier’ list above- most of them are ‘Job Hunting Skills’ gap: Do you know how to find a good job?

    You especially need to acquire skills in the following areas: skill analysis, job search strategies formulation, career and job goal setting, identifying career achievement, writing winning Resume/C.V and application letter, conducting informational interview, job interview and follow up, job aptitude test etc.

    One more thing: Give yourself a big advantage in the job market- get a copy of our recently published book. Visit our website for details.

     

     

     

     

  • Naira weakens despite Diaspora dollar inflow

    The naira on Friday, slipped 0.3 per cent to N156.7 per dollar on the interbank market, and for the week, depreciated 0.4 per cent despite. This ensued despite dollar inflows from the Diaspora.

    The currency’s position was also aggravated by the Central Bank of Nigeria’s (CBN’s) suspension of foreign-exchange auctions, which curbed demand for the dollar.

    The apex bank, which sells dollars to keep the naira within a three per cent band around N155 per dollar, ended twice- weekly auctions on December 19 and resumes today. “The closure of foreign-currency auctions for the second week has reduced dollar supply, relative to demand from companies reopening for business,” Sewa Wusu, currency analyst at Lagos-based Sterling Capital Ltd., said told Bloomberg.

    The previous week, the naira had strengthened, reaching the highest in more than two months, as citizens living abroad returned for the holiday period, increasing the supply of dollars.

    “Many Nigerians in the Diaspora have come home with dollars, which has increased the supply,” Pabina Yinkere, head of research at Vetiva Capital Management told Bloomberg. Remittances to sub-Saharan African countries from citizens abroad are forecast to increase 6.3 per cent to $24 billion, the World Bank said in June. Nigeria, Kenya, Sudan, Senegal and South Africa are the largest recipients of remittances in sub- Saharan Africa, with about 69 per cent of the funds in 2010 from migrants in the United States and Western Europe, according to the bank.

    Central Bank policy makers left their benchmark interest rate unchanged at 12 per cent last year to control inflation and stabilise the naira. The inflation rate rose for the second consecutive month in November to 12.3 per cent from 11.7 per cent, the National Bureau of Statistics (NBS) said.

     

    T-Bills

    Yields are rising on Tanzania’s and Nigeria’s Treasury bills, although demand continues strong, according data posted on the website of the Central Bank of Tanzania and CBN. The average yield-to-maturity for Tanzania was 13.43 per cent on the 364-days bills, 12.86 per cent on the 182-days paper, 11.76 per cent on 91-days and 7.25 per cent on 35 days.

    For Nigeria, it is 12.5 per cent on the 364-days bills, 11.75 per cent on the 182-days paper, 11.6 per cent on 91-days. The main investors in government securities in both markets are Pension Funds and commercial banks who took more than 60 per cent of the market, followed by insurance funds and a few micro-finance institutions. Treasury bills are issued regularly as part of monetary control measures to help lenders manage their liquidity.

     

    Reserves target

    The Federal Government has missed the $50 billion target it set for the foreign reserves by December 31. The reserves closed the year at $44.2 billion based on figure obtained from the CBN website on December 24, $5.8 billion below the estimate.

    However, analysts have predicted that the Nigeria foreign reserve is expected to hit $47 billion by March next year. Managing Director, Financial Derivatives Company Limited, Bismark Rewane, said such accretion would strengthen naira’s stability.

    The reserves were $44.3 billion as at December 20, from a low of $33.09 billion January 4, this year. The global oil prices continue to fluctuate as risks of supply disruptions in the Middle East increase and global economic outlook weakens further. Bonny Light declined to as low as $111.4 per barrel in October and as at December 19 traded at $112.6 per barrel.

     

    Currency unification

    The central banks of West and Central Africa are considering merging their currencies to boost trade within the region, Lucas Abaga Nchama, governor of the Bank of Central African States, has said.

    According to Bloomberg reports, the West African and Central African CFA francs are separate currencies that are both pegged to the euro. Merging them would boost trade and help fight money laundering, Nchama said.

    The franc zone covers 14 African countries, Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Congo Republic, Equatorial Guinea, Gabon, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo.

    Six other West African nations, namely Nigeria, Ghana, Sierra Leone, Gambia, Guinea and Liberia — plan to enact a common currency, known as the Eco, by January 2015, 12 years behind an initial target, Temitope Oshikoya, chief executive officer, West African Monetary Institute, said.

     

    Finance Houses

    Reform package that would drive the finance houses sub-sector of the economy will be unfolded this month by the CBN. An insider at the Finance Houses Association of Nigeria (FHAN) who spoke in confidence, said the apex bank would also be releasing timeline for compliance to regulatory issues raised in the guideline.

    The source also hinted that the Board of Directors of the CBN is also expected to approve an enhanced capital base for the subsector to strengthen its operational capabilities.

    The Nation findings showed that the apex bank’s board would release a new prudential guidelines for the subsector that also includes raising the capital base from the current N20 million to about N1 billion. This, he said, would bring stability to the troubled sector. The source said other policy issues such as the appointment of Managing Directors form part of the ongoing reforms in the subsector.

     

    SWF

    Governors’ opposition against the Sovereign Wealth Fund (SWF) will affect the amount of money needed for investment but there is high chances of reaching a compromise, FBN Capital, a research firm has said.

    The Nigerian Sovereign Investment Authority is due to start its investment programme in March, but the agency will not have sizeable funds to invest until the state governors drop their opposition to the scheme. The legality of the SWF is still being challenged by different state governments across the country.

    It said higher budget threshold would reduce the transfers to the SWF, adding that given the porous nature of the account and the many obstacles to its expansion, there are legitimate concerns about the defences against an external shock and therefore called for sufficient buffers to be built.

    The $1 billion SWF was set up in May last year to invest savings made from the difference between budgeted oil prices and actual market prices. Nigeria on crude exports account for more than 90 per cent of foreign income and about 80 per cent of government revenue, making it vulnerable to swings in prices.

     

    Bank subsidiaries

    Nigerian banks with subsidiaries may rethink their continued operation in Ghana and Zambia as deadline for their recapitalisation in the counties ended last year. The Nation’s findings showed that not much has been achieved in terms of complying with the recapitalisation order by local banks in these countries.

    Specifically, Ghana and Zambia central banks had raised their minimum capital requirement for banks, saying that the measure would help mobilise additional resources for their economies and enable banks participate effectively in their national economic growth as well as provide more funds for flow of credit.

    In the case of Ghana, whose financial market had been undergoing some restructuring since the discovery of oil in the country, the Bank of Ghana has directed all banks to recapitalise to the tune of GH¢60 million ($31.7 million) by the end of 2012, from the $5.28 million it used to be.

     

    Exchange rate

    The exchange rate was relatively stable in the past one year, with the naira maintaining moderate appreciation and depreciation at intervals.

    The naira-dollar rates stability was largely as a result of increased supply of foreign exchange through autonomous sources to the interbank segment. Also, the CBN intervened in the market to dampen demand pressure and increased the net open position of commercial banks in part to curtail speculative foreign exchange demand. To achieve this, the regulator adjusted the mid-point exchange rate band from N150 plus or minus three per cent to N155 plus or minus three per cent within the year.

    Managing Director, Blue Wall Bureau De Change (BDC) said that despite occasional upsurges in foreign exchange demand due to interventions by the CBN and the increased supplies from autonomous sources, the exchange rate never exceeded a two per cent appreciation or depreciation margin. He said the year has seen some of the CBN policies on forex reflect on the dollar-naira parity at both the local and international market.

     

    CIBN

    The Chartered Institute of Bankers of Nigeria (CIBN) has reiterated the need for certified bankers in the country to work in other African countries. In a statement, the institute said a communique at the end of its Annual General Meeting (AGM) called for an inter-country recognition and acceptance of qualifications and certificates of member countries. This, it said, will encourage and promote mobility of labour as well as skills among banks in the continent.

    It stressed the need for the Alliance of African Institute of Bankers (AAIOB) member institutions to participate actively in the establishment, programmes and activities of the Global Banking Education Standards Board (GBESB), which is expected to be launched at the World Conference of Banking Institutes (WCBI) scheduled to hold in Nairobi, Kenya in June, this year.

     

    Bank to bank report

    Guaranty Trust Bank Plc has re-affirmed its commitment to the safety of stakeholder funds as it prepares for the financial year. In a statement, the bank said it has installed several new technologies and introduced a number of internal procedures that enable it check frauds on customers’ accounts.

    The bank’s Managing Director Segun Agbaje said the lender is committed to ensuring that its customers are protected from the rising incidence of online and other forms of electronic fraud being experienced within the industry.

    Ghana’s economic growth is set to beat the African average for a sixth year in 2013, risks boosting imports and fuelling further weakness in the region’s third-worst performing currency, Standard Bank Group Limited and Ecobank Transnational Incorporated (ETI) have said.

    The cedi, which has declined 14 per cent against the United States currency last year, may slump to 2.15 a dollar over the next 12 months, according to Ecobank’s head of economic research, Angus Downie. Samir Gadio, emerging-markets strategist at Standard Bank, sees the Ghanaian unit at 1.95 a dollar by the end of 2013. It weakened 0.3 per cent to 1.9065 a dollar according to data compiled by Bloomberg.