The Nation Newspaper

Category: Business

  • Framework on agency banking coming

    A framework that will define the mode of operation for agency banking would be out before year end, The Nation has learnt.

    Speaking at the Enhancing Financial Innovation and Access (EFInA) forum in Lagos, Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi said the CBN Committee of Governors was fine-tuning the draft exposure of the agency banking.

    He said issues relating to some agents, type and nature of agents including considerations for super agents are critical areas being considered in the draft exposure.

    He said the processes for this line of banking to become functional will be finalised by this year-end.

    Sanusi said there have been improvements in the payment system, including the drive for financial inclusion.

    He said lenders have to address the need for special products that consider women and the handicapped to ensure that everyone is carried along.

    Sanusi said agency banking provides financial services to the widely dispersed population at affordable price and has assisted some countries in decongesting existing customers from crowded branches.

    He added that it would serve the same purpose in Nigeria.

    According to him, agency banking provides financial services by a third-party agent to customers on behalf of a licenced, prudentially-regulated financial institution.

  • Market abuses: Investors Protection Fund may not be enough

    The Investors Protection Fund (IPF) may not be able to cover all cases of market abuses and fraudulent practices against investors given the size and frequency of market infractions and the fund.

    President, Chartered Institute of Stockbrokers (CIS), Mr Ariyo Olushekun, said it appeared the IPF might not be enough to protect investors on a sustainable basis because the incidence of market abuses and fraudulent malpractices in the past has overwhelmed the existing fund available.

    According to him, the challenge before the new board of trustees of the IPF is to manage and grow the fund in a way to meet its objectives.

    The IPF was established to compensate investors with genuine claims of pecuniary losses against dealing members of the Nigerian Stock Exchange (NSE) due to insolvency, bankruptcy, negligence of a dealing member firm and abuses committed by directors, officers, employees or representatives in relation to securities, money or any property entrusted to or received by the broker in the course of its business as a capital market operators.

    IPF has about N625 million with a first generation bank. Mr Gamaliel Onosode chairs the nine-man board of IPF, which includes the Managing Director of the Nigerian Stock Exchange (NSE), Oscar Onyema; Misan Kofi-Senaya, managing director of Central Securities Clearing System (CSCS), Mr Kyari Bukar, Chief Sola Abodurin, Fubara Anga, Edosa Kennedy Aigbekaen, Sam Onukwe and Umaru Modibo.

    Olushekun, who spoke at the SEC Journalists’Academy in Abuja, said the best most effective way to protect investors is to institute and enforce proactive measures that enhance market integrity and forestall abuses.

    “The importance of effective regulation in the capital market cannot be overemphasized. Regulations must be designed to address current market realities and by this, they must be up-to-date and relevant. The importance of regulation and enforcement of rules is paramount in investors protection and in gaining investors confidence,” Olushekun said.

    He outlined that certification, continuous training and effective disciplinary measures of the CIS have proved to be major contributors to protection of investors as stockbrokers are usually wary of infringing on codes of ethics and professional guidelines set by CIS.

    According to him, stockbrokers help to protect investors from vagaries of the market and possible abuses by giving quality investment advice that takes into consideration investor’s investment objective, the risk-return profile of investment opportunities and the capacity of the investor to undertake the risk.

    He noted that the CIS plays central roles in ensuring that brokers have adequate knowledge and skills as well as keep to market rules and regulations.

    He pointed out CIS’s code of ethics and standards of professional conduct ensure that stockbrokers at all times give priority to the interest of the investors and the capital market.

    According to him, CIS’s code of ethics and standards of professional conduct ensure fair dealing with existing and potential clients, preservation of client’s confidentiality, fiduciary duties, and general responsibilities to clients and the market.

    “All of these cannot be achieved without discipline. CIS has an effective adjudicating and disciplinary machinery which promptly attends to complaints on any member of the institute and metes out appropriate sanctions as deemed necessary on proven professional misconduct,” Olushekun said.

    He assured that the CIS has created different platforms to ensure that stockbrokers are well equipped to perform their roles effectively while ensuring investors protection in the capital market.

    Olushekun’s statement came just as the NSE cautioned investors not to misconceive the IPF for insurance scheme.

    Executive director, market operation and technology, Nigerian Stock Exchange, Mr. Adeolu Bajomo,said IPF was not an insurance policy which an investor can make claim on but a protection scheme for investors who genuinely made transaction with stockbrokers but such deal was not executed or was somehow defrauded by the stockbrokers.

  • Early budget execution good for insurance

    Early implementation of the budget would enable operators meet their projections, President Nigerian Council of Registered Insurance Brokers (NCRIB), Mrs Laide Osijo, has said.

    She told The Nation that proper implementation of the budget would impact the industry positively, adding that operators performance would improve tremendously if premiums are paid as at when due.

    She called on the government to put adequate compensation for the insurances of its properties, which have been made compulsory, adding that delay in implementation of the budget is affecting the insurance industry negatively.

    She said: “When proper premium is paid on group life scheme, there would be an increase in the income of insurance industry. We have been advocating early implementation of the budget. We have so many premiums that are outstanding due to late implementation of the budget. “Premiums cannot be paid if the budget is not released. Therefore, if the budget is released on time, definitely, insurance companies would have their premium at the right time and all the risks would be covered adequately. No Premium No Cover policy is ignored, because of delay in the implementation of the budget. The delay in implementation of the budget is affecting the insurance industry negatively, if the government could implement the budget early and make all necessary payments, insurance companies would benefit a lot.”

  • Oteh lists benefits of N22.6b forbearance package

    The N22.6 billion forbearance package announced by the Federal Government for indebtedness due to margin loans by stockbrokers would help to improve the balance sheet of operators and enhance the liquidity of the market, Director-General, Securities and Exchange Commission (SEC), Ms. Arunma Oteh has said.

    Speaking at the weekend in Abuja, she said while the forbearance would improve the balance sheet of stockbroking firms and make them participate actively in trading activities, the tax incentives recently announced would also attract more investors and new listings to market.

    It would be recalled that the forbearance package, along with the tax incentives, was announced by the Coordinating Minister for the Economy and Minister of Finance Dr. Ngozi Okonjo-Iweala early this month based on the recommendation of the committee set up on the issue.

    Oteh said the capital market community was grateful to President Goodluck Jonathan for the support to brokers so that some of them could return to the market.

    “The tax waivers we recently got are a major boost the market needs,” Oteh said.

    Stockbrokers have hailed the government over the package. The chief executive officers of stockbroking firms under the aegis of Association of Stockbroking Houses of Nigeria (ASHON) unanimously agreed to embrace the N22.6 billion forbearance package as part of efforts to revitalise the capital market.

    Chairman of ASHON, Mr Emeka Madubuike, said the association has over the last three years solicited for the forbearance on the margin accounts of some of its members with banks now taken over by AMCON.

    According to him, the margin accounts came about from the fact that banks failed to exercise the margin calls as required by the arrangements in the face of falling share prices.

    Madubuike commended President Jonathan, Okonjo-Iweala and all those who made the package a reality.

    “This singular act by the Federal Government gives us in the capital market a lot of hope that the market will begin to play its pivotal role as the engine room for the transformation of our nation’s economy. We trust the government will continue to look for other ways to resuscitate the capital Market to enable it compliment the various reform programmes of government and to become an integral component for the growth and development of the economy,” Madubuike said.

    He said that going forward, ASHON will work along with other stakeholders in the capital market, and continue to initiate and pursue processes, procedures and policies in the areas of risk management , investors protection, corporate governance and professional conduct, to ensure there will be no reoccurrence of the situation that led us to this position.

  • Stockbrokers catalyst for economic growth

    Stockbrokers catalyst for economic growth

    The role of the capital market as the catalyst for an economy is undisputable. But stockbrokers, who are the backbones of the capital market, have for long been in the shadow.

    The Chartered Institute of Stockbroker (CIS), which certifies and regulates the conduct and practices of the stockbroking profession, had played behind-the-scene role in recommending economic policies to government. But the behind-the-scene approach has ensured little or no recognition for the virile contributions of stockbrokers.

    The first-ever national workshop of the CIS pivoted stockbrokers to the forefront of national discourse and policy recommendations. With the theme: Working the Transformation Agenda- the real issues, the event held at the prestigious Transcorp Hilton Hotel, Abuja brought together major policy makers in the financial markets and the economy and lived up to its billing as a platform for private-public sectors’ engagements on national growth and development.

    The event attracted regulators of the capital market and relevant government agencies and parastatals like the Bureau of Public Enterprises (BPE), Debt Management Office (DMO), the Federal Ministry of Power and a key player in the telecommunication sector like MTN Nigeria. The workshop put in the front burner two major issues- power and telecoms.

    Although the telecoms sector is seen to have taken off the ground in Nigeria, stockbrokers believed that it has not yet fulfilled the much desired purpose of being a catalyst for democratising wealth creation for the people of Nigeria, especially investors in the capital market. None of the four telecom giants-MTN Nigeria, Airtel, Glo and Etisalat, operating in Nigeria has deemed it fit to list their shares on the Nigerian Stock Exchange (NSE).

    Director-General, Securities and Exchange Commission (SEC), Ms Arunma Oteh, in her opening remark at the workshop, said the capital market was critical to the growth of the Nigerian economy.

    According to her, the easiest way for outsiders to see Nigeria is through the capital market. The market is very useful to support government in sourcing cheap funds for economic growth as annual budgetary allocations especially as it concerns capital projects would never be enough to deliver dividend of democracy to the people.

    She noted that the recent forbearance gesture for the capital market by government was a step in the right direction as it was necessary to refuel the economy.

    She pointed out that relentless efforts are being made to further deepen the market by getting highly capitalised companies in both the power and telecom industries to list their shares on the NSE as well as create additional flow of wealth through other sources like the Sovereign Wealth Fund (SWF), Collective Investment Scheme among other sources.

    “The consultative approach we have taken to call large companies to the capital market will soon begin to yield fruit,” Oteh said.

    She predicted that 2013 will be a better year for the capital market urging all operators to play constructive roles in the development of the market.

    Chairman, CIS Annual National Workshop Committee and Group Managing Director of BGL Plc, Mr Albert Okumagba, said the workshop was only the beginning of serious engagements on national issues noting that CIS has more to offer the economy through its national workshop in the years ahead.

    According to President, Chartered Institute of Stockbrokers (CIS), Mr Ariyo Olushekun, said the workshop woule be organised annually and it would initiate and advance national discourse on economic issues while also serving as a platform for monitoring economic policies and implementations.

    Chairman, Technical Committee of the National Council on Privatisation (NCP), Mr. Atedo Peterside,who chaired a session, painstakingly addressed concerns on the current power reforms. Peterside, a revered investment banker who doubles as chairman of Cadbury Nigeria Plc and Stanbic IBTC Hioldings Plc , said the successful implementation of the power agenda will result in a dramatic boom for the economy.

    According to him, milestones that have been achieved since 2005 included the passage of the Electric Power Sector Reform Act by the National Assembly in March 2005, which outlined the framework of the reform which among others include unbundling the state owned power entity National Electric Power Authority (NEPA) into generation, transmission and distribution segments; provision for the transfer of assets, liabilities and staff of NEPA to Power Holding Company of Nigeria (PHCN) and then to successor generation, transmission, and distribution companies.

    He also noted the incorporation of 18 new successor companies comprising of six generation companies (gencos), one transmission company (TCN) and 11 distribution companies (discos) in November 2005 as well as the transfer of the assets, liabilities and staff of PHCN to successor companies, thereby granting the latter greater operational autonomy on July 1, 2006.

    He said that the approved five preferred bidders for Genco and 10 preferred bidders for Disco are expected to yield about $2.5 billion for government.

    He added that eligible prequalified bidders have been invited to express an interest in Afam genco and Kaduna disco on or before January 31 2013.

    Though Peterside acknowledged that the process of privatisation of the power sector has not been without its challenges, he assured the workshop that the process has reached an advanced stage given the selection of preferred bidders , a transaction which is likely to be closed by mid 2013.

    He urged all the stakeholders, including the stockbrokers, to support the power reform agenda to ensure that all its objectives were realised within the timelines.

  • ‘Review audit committee tenure’

    ‘Review audit committee tenure’

    The tenure for audit committee should be increased from one to three years of two terms to promote continuity, National Coordinator, Independent Shareholders of Nigeria (ISAN), Sir Sunny Nwosu, has said.

    He spoke at the Annual Audit Committee Roundtable in Lagos. According to him, audit committee members should report to the shareholders, adding that some firms discourage people who can interpret account statements from joining the committee where there are sinister motives.

    He also said the Companies and Allied Matters Act (CAMA) needs to be amended to address pressing issues that hinder auditors from carrying out their responsibilities effectively

    Chairman, Audit Committee Institute of Nigeria,Christian Ekeigwe, also said CAMA has to be reviewed to check management excesses and protect the interest of shareholders and other stakeholders.

    He advised investors to be careful in choosing companies to invest in, saying they should choose those companies that have developed the right governance environment. “Good governance is a control against fraudulent financial reporting. Firms with good governance would have enterprise risk management framework that helps deter and detect fraudulent financial reporting,” he said.

    He said the Audit Committee Institute is spearheading initiatives to improve the committee effectiveness with the establishment of its Centre for Audit Quality, which will focus on helping organisations and their internal n external auditors to improve the quality of audit judgments as a means of improving the quality of financial reporting process.

    Ekeigwe said audit committee is a key pillar of corporate governance, explaining that in advanced capital markets, regulators have imposed heavy gate-keeping responsibilities on audit committees. He said the Financial Reporting Council Act 2011 recognises the importance of Audit Committees in cooperate governance and there is need to explore the dimensions of audit committee responsibilities to ensure they fulfill their duties diligently.

    He added that shareholders have a right to expect that Audit Committees are working for their interests because when that happens, shareholder value is protected.

    He said when shareholders’interests are protected, it becomes easier to attract investments that create jobs and wealth for the economy. He called for reforms in many aspects of corporate governance and audit committees regime, financial reporting value chain as well as audit firm governance.

    Soon, professional bodies and audit firms will be invited to affiliate with the CAQ, in the quest for reassuring audit quality and preventing audit failure.

    Nwosu said there is need to ensure that those elected into the audit committee report to the shareholders.

    He said the CAMA should be reviewed and brought up to date for companies to make progress.

  • Law Union & Rock Insurance pays N1.2b claims

    Law Union & Rock Insurance pays N1.2b claims

    Law Union & Rock Insurance Plc has paid over N1.2billion in claims to its policy holders within the first three quarters of 2012, according to the firm.

    The claims payment cuts across portfolios in the underwriter’s product offerings in general business.

    A breakdown of the payment shows that Fire accounted for 41.95 percent with N535.9million; Motor vehicle claims was N355.2million (27.8 per cent); marine and aviation N160.9million (12.60per cent); general accident N105.8million (8.28 percent); engineering N82.8million (6.48 per cent) and oil and gas N35.5 million (2.78 per cent).

    The company said the total claims paid on bonds amounted to N1.2million, representing 0.10 percent.

    Following Skye Bank Plc’s divestment from the company, Law Union & Rock Insurance Plc was acquired by a consortium of investors comprising Alternative Capital Partners (ACAP) and Swede Control Intertek.

    The company has effected some strategic initiatives that would enable it provide first class insurance services to the public.

  • We’re not closing any insurance firms, says NAICOM

    The National Insurance Commission (NAICOM) has no plan to close any insurance firm as reported by Business Monitor International (BMI) Limited in its Nigeria Insurance Report, the Commissioner for Insurance Fola Daniel, has said.

    He told The Nation that NAICOM has no reason to close any underwriting firm, adding that the commission is committed to strengthening the firms for the protection of policyholders.

    In its report BMI said there are some insurance companies that the regulator would shut. It noted that NAICOM is also keen to improve capitalisation and standards among the 15,000 insurance agents and 350 brokers.

    It said: “Over the years that BMI has been monitoring the Nigerian insurance sector, the story has remained the same even as premiums appear to have grown.

    “An industry that is largely ignored by foreign multinationals with South Africa’s Metropolitan being an exception, consists of a large number of extremely small, predominantly listed indigenous insurers.

    “As is explicitly noted in the discussion by NAICOM, the regulator, of the objectives for its Market Development & Restructuring Initiative (MDRI), there are a number of bogus insurance companies that the regulator is keen to close.

    “The BMI report further added that till now, there has been no sign that the MDRI has had a substantial and positive effect on insurance penetration or popularity in a country where 94 per cent of people are completely uninsured.”

    It noted that in relation to the MDRI, it believes that total premiums this year would be about one third of the N1 trillion that was envisaged by NAICOM.

  • MDAs to implement new accounting rules in 2013

    Ministries, Departments and Agencies (MDAs) will start implementing the International Public Sectors Accounting Standards (ISPAS) from January next year, the Accountant-General of the Federation Mr Jonah Otunla has said.

    Speaking during the Ninth Financial Reporting Council (FRC) Summit in Lagos, Otunla said the aim is to reduce abuse of public funds and encourage the good corporate governance.

    He said with the new accounting standards, the government will be able to know and record income when it is received, adding that It will also help in recording expenses when cash is paid out for certain developmental projects.

    ISPAS is a set of high quality independently developed accounting standards aimed at meeting the financial reporting needs of the public sector.

    The idea, he said, would serve as an alternative to the International Financial Reporting Standards (IFRS) conceived for privately quoted entities globally.

    He said the International Public Sectors Accounting Standards Board (ISPASB), United States developed the standards, adding that it has been adopted by governments in the developed economies to ensure uniform, strong and effective management of public funds.

    Also, a partner with Deloitte, an accounting firm, Mr Uwadiae Oduware, said the government is committed to the implementation of the international public sectors accounting standards to encourage good fiscal management and subsequently block loopholes through which funds are stolen from the public purse.

    He said the government through the Office of the Accountant-General of the Federation (AGF) has communicated the issue to agencies of the Federal Government.

    He said the adoption of the standards was long overdue because other countries, including Benin Republic, Ghana, and Kenya had long adopted ISPAS to foster growth.

    He said at the end of the implementation of the standards, the government hopes to deliver to the nation, a Standardised Uniform Chart of Accounts, Budget and General Purpose Financial Statements that will meet international best practices as required by ISPAS.

    Oduware said users of government’s financial statements would see more transparency, accountability and integrity in the statements when the standards would have been adopted next year.

    He said the ISPAS cash basis will be implemented with effect from the 2013 financial year, while the ISPAS accrual basis will come into operations in 2015.

    ISPAS accrual basis is the accounting method that in which each item is entered as it is earned or incurred regardless of when actual payments are received.

    He said the standards would build confidence of donor agencies, improve service delivery, enhance public-private partnership, and boost peer review mechanism of financial reports of the three-tiers of governments and governments of other countries.

    Other benefits of the adoption are better access to financing through either bond releases or international financing from organisations, such as the International Monetary Fund (IMF) and the World Bank.

  • ASO Savings donates to Ogoniland

    ASO Savings & Loans Plc, has donated N15 million to the Hydrocarbon Pollution Restoration Project (HYPREP) to support the proposed clean-up exercise of oil spills in the Ogoniland, Rivers State.

    The cheque, which was presented by the Managing Director of ASO Savings & Loans Plc, Mr Hassan Musa Usman, was received by the Permanent Secretary, Federal Ministry of Petroleum Resources, Ambassador Abdulkadir A.Musa at his office in Abuja.

    Usman said the donation is for the erection of a Call Center and procurement of Overhead Tanks specifically in the affected areas in Ogoni land. “This is to help support the ongoing plans for the cleanup of oil spills in Ogoni, Rivers State. I pledged my organisation’s commitment to supporting HYPREP in their noble initiative of ridding the region of the degradation and pollution caused by oil spills in the State,” the mortgage finance expert explained.

    Expressing gratitude at the gesture, Ambassador Abdulkadir A.Musa commended ASO for their support and called on other Corporate Organisations to support the government’s initiative by joining the cleanup campaign.

    Explaining how the funds will be expended, the National Coordinator for the project, Mrs Joy Nunieh-Okunnu, said out of the N15 million donated by the bank, N10 million would be spent on overhead tanks while the balance would be used to construct an emergency call centre for HYPREP.