The Nation Newspaper

Category: Business

  • Naira falls as forex trading ends

    Naira falls as forex trading ends

    The naira yesterday, fell for a third day, reaching its lowest in a month, as seasonal dollar demand increased and the Central Bank of Nigeria (CBN) ended its foreign- currency auctions for the year.

    The currency weakened 0.1 per cent to N158.05 per dollar, a close at this price would be its weakest since November 16. The naira has gained 2.7 per cent this year, the second-best performing currency in Africa, according to data compiled by Bloomberg.

    There is high dollar demand due to seasonal, year-end imports and traveling, Jide Nwaogwugwu, a research analyst at Lagos-based Dunn Loren Merrifield Ltd., said. “There will be demand pressure while the CBN is not selling,” it said.

    The CBN said last week it will end dollar sales to lenders at twice-weekly auctions and resume on January 7. The Abuja-based regulator sold $300 million today, the most since an August 8 sale, according to data compiled by Bloomberg.

    Nigeria’s inflation rate rose for the second consecutive month in November to 12.3 per cent from 11.7 percent, the National Bureau of Statistics said December 17. The CBN left its benchmark interest rate unchanged at 12 per cent this year to control inflation and stabilise the naira.

    Yields on 10-year naira debt were unchanged at 11.88 per cent, according to yesterday’s prices compiled on the Financial Markets Dealers Association website. Borrowing costs on the nation’s $500 million of Eurobonds due January 2021 fell one basis point to 4.13 per cent yesterday.

  • NERC to commence power consumer fund

    NERC to commence power consumer fund

    The Nigeria Electricity Regulatory Commission  (NERC) yesterday announced that Power Consumer Fund would flag off next year.

    This is coming on the heels of the final phase of the Nigerian Electricity Supply Industry’s (NESI) deregulation, as enshrined in the 2005 Electric Power Sector Reform Act (EPSRA) .

    Speaking yesterday at a capacity building workshop in Abuja, a Senior Manager in the Market Competition and Rates department, Mrs. Kalen  Gwom, said a framework for the administration of the fund is being worked.

    She said the fund will be warehoused at the Commission and used to subsidise electricity for the less privileged.

    She added that the money for the fund is to be generated from special customers and government subsidies.

    Gwom said the market rules and grid code approved in 2008 will come “into effect in the transitional stage of the market which the Commission anticipates will happen by the first quarter of 2013.”

  • Power sector requires $16b investment, says UNDP

    Power sector requires $16b investment, says UNDP

    About $16 billion investment is required in the power sector to bridge the energy gap, United Nations Development Programme (UNDP), has said.

    At a forum on renewable energy organised by the BoI and the United Nations Development Programme (UNDP), in Abuja, the UN body advocated an investment of not less than $16billion to be able to achieve the desired level of electricity for the country.

    UNDP Project Manager, SegunAdaju, who spoke at the Renewable Energy Investment Forum, said the introduction of renewable energy will complement regular electricity supply.

    He said: “The country will require not less than $16billion annually to fix energy problem. This project is in furtherance of UNDP’s support to private sector development for Micro, Small and Medium Scale enterprises. The renewable energy is to provide power through solar, water and biomass.

    “Nigerians spend about $11 billion annually on energy generation through the usage of generators, which involve the usage of fuel. and all what we need for the sustainable energy supply in the country is $16 billion. That is why we are calling on Nigerians to harness these resources for the full operation of renewable energy, “adding that renewable energy industry is rapidly growing beyond all projections by industry experts.”

    He disclosed that a ‘Renewable Energy Global Status Report, 2012,’ released recently predicted that by the end of 2011, total renewable power capacity worldwide exceeded 1,360 Giga Watt (GW), up by eight per cent over what it was in 2010.

    The report added that renewable energy supply constituted more than 25 per cent of total global power-generating capacity which is estimated at 5,360 GW in 2011, adding that it also supplied an estimated 20.3 per cent of global electricity.

    Also speaking, the  Managing Director, BOI, Ms. Evelyn Oputu,  said renewable energy market has grown rapidly in the recent years globally. She called on Nigerians to join the bandwagon to the new development initiative in the energy sector.

    She said: “Renewable energy markets and policy frameworks have also evolved rapidly in recent years across the globe. Its development has grown to an estimated 16.7 per cent of global final energy consumption.”

    Ms Oputu said in the power sector, renewable energy accounted for almost half of the estimated 208 GW of electric capacity, adding that globally in 2011, wind and solar photovoltaic accounted for almost 40 per cent and 30 per cent respectively of the new renewable energy capacity, followed by hydropower with nearly 25 per cent.

    “Investment in renewable energy across the globe continues to increase significantly from a mere $33 billion in 2004 to $257 billion by the end of year 2011. As at today, it is approaching $300 billion mark.”

    She lamented that in Nigeria, investments in renewable energy systems are not well captured into the global reports due to the piecemeal and un-coordinated manner in which renewable energy projects are embarked upon.

    She stated that most of renewable energy projects in Nigeria in the past were mainly pilots, or were embarked upon for political and social reasons by government agencies at Federal, States or Local Government levels, saying, this is why BoI in conjunction with the UNDP and other relevant stakeholders, are making efforts to feature Nigeria in global renewable energy

  • FAMAD’s financial crisis deepens

    FAMAD’s financial crisis deepens

    •Director alleges fraud

    The crisis rocking the board of the embattled Footwear and Accessories Manufacturing and Distribution (FAMAD) Plc, formerly BATA, appeared to have escalated as the Vice -Chairman of the company, Mr Chima Emenyonu, has disassociated himself from the audited accounts of the company for the 2002 to 2006 financial years.

    The results are billed to be presented at the company’s Annual General Meeting (AGM) billed for today in Lagos. This is the first time the company will be holding its AGM after it was suspended by the Nigerian Stock Exchange (NSE) in 2008 for failing to submit its audited reports.

    Kelechi alleged that certain information were not reflected in the accounts and he had cause to raise an audit alarm to the auditors over vital information, which were hidden from the board.

    He said petitions against the entire managemeant for fraudulent activities have been sent to the Economic and Financial Crime Commission (EFCC).

    He alleged that many accounts opened in the name of the company are being used for transactions that have no direct relationship with the company.

    The vice chairman alleged that the chairman of the company took up 40 per cent of the holdings of the tottering footwear maker relinquished by the technical partners of BATA Overseas Limited, which she now uses as leverage over minority shareholders.

    Before now, Emenyonu said he had called on the chairman to hold the company’s AGM to clear allegations of fraud levelled against her and the management by some staff members, including the external auditors.

    In a presentation made available to The Nation, Emenyonu alleged that in order to conceal most of the atrocities, the board’s minute book was stolen away and was doctored and returned by the company secretary who refused to give any explanation for the changes.

    “My struggle for justice for all shareholders is animated mainly by the plight of numerous retires and sustained by the support of several shareholders who stand to lose all if the situation is not challenged. Shareholders must insist on full disclosure, and continuation of our current auditors who have been coerced to withdraw, till they have concluded the years 2007-2012 annual account of their era,” Emenyonu said.

    He alleged that the grand plan was to bring in a fresh auditor who will not be able to get any useful information for the balance of six years of the current auditors’ tenure.

  • Adesina mulls agric bond, equities to finance agro revolution

    Adesina mulls agric bond, equities to finance agro revolution

    The time has come for Nigeria to consider raising long term bonds to finance the agricultural sector, the Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina has said.

    Speaking at a capital markets’ workshop, jointly hosted by the Securities and Exchange Commission (SEC) and Federal Ministry of Agriculture and Rural Development, Adesina said for Nigeria to secure the much-needed cheap long-term funds to finance its agricultural transformation, all stakeholders must think outside the box and proffer amenable and innovative financing means.

    He said while the rising domestic debt is certainly of concern, this should not be used to argue against agriculture bonds, noting that many countries including China and India are using the so called green bonds to power their agriculture.

    According to him,with AMCON having more than N3 trillion and pension funds having billions of Naira looking for sound investments, AMCON and pension funds can buy agricultural bonds to further diversify their portfolios and provide access to lower interest and long term financing for the sector.

    He added that development finance institutions can also finance long term bonds for agriculture.

    “To secure access to cheaper long term financing, we must think outside the box. The experience of the US offers some lessons. In 1916, the US government raised long term bonds, backed by government guarantees, to finance its agricultural sector. As a result, practically no farmer in the US takes credit from commercial banks, but rather through a system of specialised private sector agricultural lending institutions. US farmers therefore secure over $200billion in financing at 4.3 per cent interest rate, a critical factor that has made US agriculture productive and competitive,” Adesina said.

    He outlined that equity markets can also enable agricultural companies to source the much needed capital pointing out that though agriculture has not been a big player in the Nigerian equity markets, it has the potential to be a big player.

    According to him, emerging companies, such as Presco and Okomu, are charting the way for others to follow just as the ongoing plans of the Nigerian Stock Exchange to establish a secondary bourse that will allow for the listing of smaller capitalised companies should create greater access for smaller agricultural companies to the capital markets.

    He noted that there were a number of strong agricultural companies that could seek to raise equity financing through initial public offerings (IPOs) but are unable to do so due to the minimum requirements of the NSE.

    “Public equity capital markets should play stronger roles in financing the agricultural sector. Despite the strong performance of agriculture stocks, the sector still represents less than one per cent of the over $40billion market capitalisation on the Nigerian Stock Exchange. And only five of the 199 listed stocks are from the agricultural sector,” Adesina said.

    He said the government would soon launch a Seed Venture Capital Fund that would be run by private equity managers to invest in existing and new seed companies adding that government is in the closing stage of receiving first-ever investments from KfW, the German Development Bank, for the establishment of a fund for agricultural financing.

    “We must also use private capital markets. Private equity funds are increasingly playing a critical role in channeling financing to Nigeria’s agriculture sector.”

  • Capital market needs medium, long-term strategies to sustain recovery, says NSE

    Capital market needs medium, long-term strategies to sustain recovery, says NSE

    • Options coming in 2014

    Introduction and implementation of medium to long-term strategies must remain priorities if the ongoing recovery at the capital market would be sustained.

    Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr Oscar Onyema, said while recent market performance showed considerable progress and represented a sign of the returning Nigerian capital market vibrdaancy, there is still a relatively long road ahead of the market.

    According to him, to enable the market to sustain and increase the momentum it has recently experienced, the successful implementation of medium and long-term strategic initiatives by NSE must remain a priority.

    He outlined that the NSE is focused on building local liquidity, exploring the potential of acting as a true regional hub, and looking to attract both local and foreign listings.

    “This focus complements a key trend we are seeing by companies in developed economies looking to tap into rising demand from emerging markets. These companies see the value in building brand recognition through an IPO, on the stock exchanges of their target markets which account for the largest and most-rapidly growing share of their revenue; in our case, Nigeria,” Onyema said.

    Speaking at the Annual General Meeting of the Financial Markets Dealers Association (FMDA) in Lagos, Onyema, however, noted that the last few years have shown the need for portfolio diversification from traditional equities focus by retail investors.

    He said the NSE has demonstrated its drive towards deepening the fixed income market with its planned introduction of a retail bond trading platform.

    According to him, the current over-the-counter (OTC) structure only allows institutional participants trade in bonds; a robust retail bond trading platform will enable retail investors partake in the bond market as well. The new platform will be complementary to the OTC market and will increase the credibility of Nigerian bond market while allowing for improved price efficiency and transparency.

    “The Exchange also has a product roll-out plan of five products in five years. Equities, ETFs and Bonds are presently listed and traded on the floor of the Exchange. Options and Futures are scheduled for launch in 2014 and 2016. Initial market feasibility studies are planned for 2013,” Onyema said.

    He added that the Exchange would next year continue with innovations centered on technology and product development, as well as on increasing investor base and continuing efforts to attract new listings.

    “We will operate best-in-class technology-based solutions, offer advanced market data services, and continue advocating changes to policy, with the aim of transforming the Nigerian capital market into “the gateway to African capital markets,” Onyema said.

    He explained that securities lending and short-selling structure are key to ensuring vibrant market making.

    According to him, major asset holders such as the Asset Management Corporation of Nigeria (AMCON), Pension Fund Administrators, insurance companies and other entities will participate and earn additional income through the process while helping to improve liquidity in the market.

    He said FirstBank of Nigeria and Citibank (Nigeria International Bank Limited) are set to join United Bank for Africa and Stanbic IBTC Bank as securities lenders as part of the market making initiative expected to boost liquidity at the stock market.

    He added that the market makers are committed to ensuring that the objectives of introducing this initiative into the market will be achieved.

    He said that the Nigerian capital market would now be in a better position to provide alternative financing methods for businesses to thrive, thus impacting positively on the nation’s economy.

  • SWF will hasten infrastructure devt

    SWF will hasten infrastructure devt

    The creation of the Sovereign Wealth Fund (SWF) presents an opportunity for the government to fund infrastructure, the Managing Director, Stanbic IBTC Holdings Plc, Mrs Sola David-Borha, has said.

    Speaking at the Fourth Christopher Kolade Symposium hosted by the Nigerian Leadership Initiative (NLI) in Lagos, she said infrastructure stimulate growth.

    The Federal Government requires N16 trillion to provide infrastructure in the country, she said.

    According to her, the economy is growing but not as fast as expected because of inadequate infrastructure.

    Mrs David-Borha said Nigeria can achieve 30 per cent efficiency by getting the power sector right. “Infrastructure is enabler for growth and the sooner we learn about that the better,” she said.

    She said that corporate governance in the banking system has improved, adding that there is no country with a perfect system.

    The Central Bank of Nigeria (CBN), she said, took bold steps in that direction, adding that more still needs to be done to get better results.

    “Corporate governance practice has improved in the country. Although more work still needs to be done, there has been great improvement,” she said.

  • Experts advise on capacity building

    Environmental experts have canvassed the need to build capacity to respond and mitigate the impact of natural disasters such as flooding in Nigeria.

    The experts who spoke on ‘The economic impact of natural isasters’ at an event organised by Greenspring Group in partnership with the School of Media and Communication (SMC), Pan African University, Lagos, argued that man cannot stop natural disasters, but he can, however, mitigate their impact.

    President, Council of Registered Engineers of Nigeria (COREN), Ibikunle Ogunbayo, pointed out that the 10 River Basin Authorities in Nigeria are meant to manage river flows in their areas of influence, noting that the recent flood disaster in the country which submerged many communities showed that the authorities lacked the capacity to do their work.

    “The River Basin Authorities should be able to know ahead when a River Niger, for instance, is about to overflow its banks; as a country, we should be able to know why the disasters are occurring; we should be able to learn from the experience of other countries,” he advised.

    Director, SMC, Pan African University, Prof Emevwo Biakolo, added that Nigeria should have the scientific capacity to predict the occurrence of natural disasters.

    According to him, “Since we can expect the occurrence of these disasters, there should be mechanisms in place to respond to them; we should create structures for mitigating their impact.”

    Biakolo noted that there could be agencies that should be responsible for all these but asks: “How capable are they when they lack the capacity and managerial ability?”

    He regretted that relevant agencies, such as the National Emergency Management Agency (NEMA) exists for purposes of formality and not for necessity, stressing that it is difficult to assess the agency correctly in the absence of adequate funding and accountability.

    Managing Director of Double Q International Limited John Okodi-Iyah, said the impact of natural disasters, especially flooding, is not only economic, but also social.

  • Experts decry slow pace of mobile money market

    EXPERTS have attributed the slow pace of growth of the mobile money market system to the poor commitment by operators and regulators.

    The experts, drawn from the banking, and telecoms industry, identified lack of commitment as bane of the industry.

    Head of Payments and Mobility, Accenture Nigeria, Mrs. Henrietta Bankole-Olusina, said mobile money operators and their regulators need to show more commitment, to attract investment and drive the industry.

    She said one year after the Central Bank of Nigeria (CBN) licensed the 16 mobile money operators, the sector is yet to appreciate the policy.

    She stated that the success of mobile money services, acceptance of the services by the rural dwellers and investment in mobile payment infrastructure, would only come when people realise the opportunities inherent in that industry.

    “Capital would always go to where there is an opportunity. Mobile money subscribers far outnumber Personal Computer users and the banked in Nigeria; a great opportunity the providers have failed to utilised,” she added.

    She decried the approach of the operators, noting that if they continued to target only the banked, then the unbanked that were the main crux of the initiative would not be captured.

    Also, Pagatech’s Chief Executive Officer, Mr Tayo Oviosu, observed that in view of the poor and unbanked number of Nigerians, the mobile money payment should have a wider coverage than it does now.

    He, however, linked the inability of some mobile money firms to roll out services to poor funding, technology challenges and limited distribution channels, among others.

    The President, Institute of Software Practitioners of Nigeria, Mr Chris Uwaje, also said certain loopholes must be addressed for the mobile money service to be successful.

    “There are lots of things we cannot go to the market and buy, one of those things are good policy and strategy instrument. We need them. We always find ourselves running without equipment, so we need to equip ourselves with what we need to run with,” he said.

  • ICAN harps on credible data

    Accountants have been urged to generate credible financial reports that will present a true state of public and private institutions.

    In a communiqué at the 42nd Annual Accountants’ Conference of the Institute of Chartered Accountants of Nigeria (ICAN) in Abuja, participants also noted that the economy would function properly when participants have trust in the financial statements that drive activities and decisions in the capital market.

    It noted that the problems of the nation‘s uninspiring pace of development, is attributed to the absence of strong institutions and professionals who give high regards to corporate governance.

    The conference recommended that accountants should play a more active role in public governance. It urged the Institute to regularly relevant stakeholders in advocating good governance, principled leadership, institution-building and fiscal discipline.

    It urged the institute to ensure that its members hold to the highest level of professional standards and integrity and apply big stick where members act fail to adhere to rules.