The Nation Newspaper

Category: Business

  • Nigeria’s revenue may fall over US oil

    The United States (US) increasing oil stock-piles, deepening global uncertainties and weak global demand are likely to suppress oil prices and slash Nigeria’s revenues, Managing Director, Financial Derivatives Company (FDC) Limited, Bismarck Rewane, has said.

    In an FDC Economic report, Rewane said since Nigeria obtains over 80 per cent of its fiscal receipts from oil, a reduction in fiscal revenue especially if production drops will deplete earnings for the country.

    “ Any oil price and or production disruption could easily deplete the government coffers to as low as $20 billion, a depreciation of the exchange rate, loss of market confidence and a possible rating downgrade,” he said.

    The FDC boss said pointers are in favour of an end to the CBN’s tight monetary policy stance and the need to boost growth and lending to the real sector.

    He said the contractionary policy stance has been in play since October 2011 when the Monetary Policy Rate (MPR) was raised by 275 basis points.

    He insisted that the sustainability of a contractionary stance and its stifling impact on growth and the economy justifies the need for a change in policy direction.

    “Our view is that the overdependence on interest rates as a tool for adjustment is precarious. In 2013, the CBN will have to moderate its stance to allow the interest rate decline and exchange rate depreciate,” he said.

    According to him, the Monetary Policy Committee (MPC), as anticipated, left its benchmark interest rate unchanged at 12 per cent per annum during its last meeting for this year.

    He said the decision was based on inflationary risks and uncertainties surrounding the weak global economy and that other policy instruments such as the Cash Reserve Ratio and Net Open Position were left unchanged at 12 per cent and one per cent.

    Likewise, Nigeria’s annual inflation rate increased by 0.4 per cent to 11.7 per cent in October, primarily as a result of exceptional factors such as the flooding which resulted in an increase in food inflation to 11.1 per cent.

    He said the impact of the flooding in 12 states of the country was immediate but was not as severe as expected. Core inflation declined for the fourth consecutive month to 12.4 per cent, which, according to the MPC has created some uncertainty as to the appropriate policy stance to apply.

    Rewane said for the leading economic indicators to have remained positive for two months and the Gross Domestic Product (GDP) growth figure for third quarter to come in lower than the previous year at 6.48 per cent, sends mixed signals on the direction of the Nigerian economy.

    He admitted that government is resolute in its pursuit for fiscal prudence as reiterated by the Federal Minister of Finance. He said that with rising debt service cost of N560 billion that is estimated to increase by 5.67 per cent to N591.76 billion in 2013, the Nigerian debt market may experience respite soon as federal government instruments become more attractive to investors.

  • Insecurity: Firms face shrinking markets

    The spate of violence, kidnappings and civil unrests is hampering corporate growth and precluding companies from exploring nationwide market opportunities.

    Managing Director, Promasidor Nigeria Limited, Chief Keith Richards, said the disruptions caused by the gale of insecurity across several states were impacting negatively on companies’ turnovers.

    According to him, companies cannot distribute extensively to nooks and crannies of the country due to the violence in the North and kidnappings in the East.

    Expressing the private sector’s concerns at the 18th Nigerian Economic Summit, Richards identified insecurity, corruption and ease of doing business as three key issues adversely affecting businesses in Nigeria besides the low level of infrastructure.

    Reports by quoted companies and confidential operational reports by corporate sources indicated that there has been significant build-up in inventories in several companies while many have had to scale down their operations to counterbalance the shortfall from the Northern market.

    Corporate sources said spate of violence and escalated sense of insecurity that lingered throughout the past business year undermined their forecasts given that the Northern market represented a major segment for nationwide companies.

    An executive at a quoted healthcare company had told The Nation that the company’s low performance in the 2011 business year was due partly to the insecurity in many Northern states.

    According to the executive, the Northern market, which represented about one-third of the company’s sales target, substantially fell below targets while the company’s margin was also reduced due to additional costs related to security.

    The executive said the sales representatives in major states like Kano, Kaduna, Sokoto and Maiduguri have been forced to relocate to the Federal Capital Territory (FCT), Abuja.

    Particularly hard-hit were companies dealing in perishable and breakable products, which have had to contend with longer transportation schedule and sometimes, seizure and obstruction of delivery trucks.

    Corporate sources also said the insecurity in the Northern market has adversely affected the pool of human capital in that segment as existing and prospective employees now turn down placements in the North.

    Companies have been responding to the Northern market challenge by scaling down Northern operations and optimizing opportunities in other markets.

    Corporate reports by companies which factories and main markets are based in the North appear to mirror the slow down escalated by the spate of violence in the region among other reasons.

    Although companies have largely shied away from publicly highlighting the growing negative impact of incessant violence in the Northern states on their operations for fear of reprisals, executives, who spoke in confidence, stressed the need for quick control of the crisis and restoration of peace in the region to forestall complete shut down of operations.

  • Nigerian shareholdaers kick against GSK’s 80% bid

    Nigerian shareholders have kicked against the bid by GlaxoSmithKline (GSK) UK Plc to buy shares held by Nigerian shareholders to increase the foreign core investor’s holding in GlaxoSmithKline Consumer Nigeria (GSK Nigeria) Plc to 80 per cent.

    Shareholders who spoke to The Nation said they would mobilise against such further acquisition, expressing fears the 80 per cent shareholding may be detrimental to the interests of Nigerian shareholders and the capital market.

    Chairman, Ibadan Zone Shareholders’ Association (IBZA), Chief Sola Abodunrin, said Nigerian shareholders did not agree with the directors of the company and the foreign core investor.

    He said he would urge Nigerian minority shareholders not to sell their shares so that the shareholding structure would be retained.

    The Ibadan Zone Shareholders’ Association consists of shareholders from six investment-savvy states of Ekiti, Kwara, Ogun, Ondo, Osun and Oyo states.

    Another shareholders’ leader and activist, Alhaji Gbadebo Olatokunbo, said Nigerian shareholders should not be cajoled into selling their shares noting that if GSK UK is willing to buy at premium, then there must be greater underlying values in the company for Nigerian shareholders.

    He said GSK has not discussed the reasons for the 80 per cent bid with the generality of shareholders, the acquisition appeared against the interests of Nigerian shareholders.

    President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar, said the new share acquisition might not be unconnected with the foreign core investor’s bid for full control of the company.

    He said GSK might be making pre-emptive move to forestall a situation where other shareholders’ groups could frustrate strategic decisions by the foreign core investor.

    “I think the reason is to make the core investor have controlling shares. It could also be a way of stopping organisations like pension funds administrators from having 25 per cent equity stake, which can give them enough votes to stop the core investor from winning a poll at the general meeting,” Umar said.

    He cited the recent case of a quoted company, which board and management could not muster enough votes to secure some resolutions, which they had proposed to shareholders.

    National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, said Nigerian shareholders would also want to benefit from any future value creation that might have motivated GSK to bid for Nigerian shareholders’ equities at premium.

    “Why do they think Nigerian shareholders will sell? Whatever they saw that’s behind their bid, then Nigerian shareholders want that too. In any case, I’m not selling my own shares,” Nwosu said.

    He urged Nigerian securities regulators to protect the interests of Nigerian shareholders noting that domestic investors are the stable base for the growth of the market.

    He called on the Nigerian Stock Exchange (NSE) to review the proposed 80 per cent bid vis-à-vis the floating and liquidity requirements at the stock market.

    GSK UK currently holds majority equity stake of 46.4 per cent in GSK Consumer Nigeria through two wholly- owned subsidiaries. With total outstanding shares of 956.70 million ordinary shares of 50 kobo each, GSK UK holds 443.91 million shares while Nigerian institutional and individual investors hold the balance of 512.79 million shares. Now, GSK UK wants to buy 321.45 million shares out of the shareholdings by Nigerians to increase the foreign core investor’s controlling stake to 80 per cent. In the bid for the 33.6 per cent additional equity stake, GSK UK is offering N48 per share.

    The offer price represents a premium of 28 per cent to the closing price of a GSK Nigeria on November 23, 2012 and a premium of 34 per cent to the volume weighted average closing price of GSK Nigeria for the three months prior to November 23, 2012.

    Under the terms of the proposal, GSK UK would acquire additional shares of GSK Nigeria on a pro rata basis from existing shareholders through a Scheme of Arrangement.

    The board of GSK Nigeria has called on shareholders to support the bid urging that increased GSK ownership underlines GSK’s long term support of GSK Nigeria’s strategy.

    The board said it unanimously believed that the proposal is in the best interest of the continued growth of the GSK Nigeria, the shareholders, employees, customers, the community and Nigeria.

    According to directors of the company, by maintaining a 20 per cent free float, the shareholders will also continue to benefit from the company’s performance.

    With 80 per cent stake, GSK UK will have more than 75 per cent equities required by extant Nigerian laws for companies to effect profound changes in their share capital structure as well as taking some fundamental decisions including mergers, acquisitions and share reconstruction among others.

  • NIBBS daily operation worth N70.02b

    The Nigerian Inter-bank Settlement System (NIBSS) handles about 140, 344 transactions, worth N70.02 billion daily, the Central Bank of Nigeria (CBN) has said.

    The transactions, which were recorded across various electronic payment channels, indicated gradual acceptability of the cashless initiative in the country.

    The statistics also showed that NIBSS processes 6,749 instant payments, 99,602 electronic fund transfers and 33,993 cheque transactions daily.

    “With an aggregate of N70.2 billion daily, the transactions across the three e-channels are worth N5.66 billion, N40 billion and N24.7 billion ,” the statement said.

    CBN Head, Shared Services, Mr Chidi Umeano, said the cash-less initiative hass gained since the beginning of the year. NIBSS has continued to process 4.2 million monthly inter-bank, instant payment and cheque transactions, he stated.

    Industry observers said the N70.02 billion daily transactions amount to N2.2 trillion in a month, adding that the figure would be higher if the trend continues.

    The Chief Executive Officer, Mobile Money Africa, Mr Emmanuel Okowgale, said the cash-less initiative has brighter prospects, if things go according to plans.

    He said the cash-less project would yield more financial values to the industry as time went on, advising Nigerians to continue to appreciate the beauty of using e-payment channels for transactions.

    He said mobile payment system has worked in Kenya, among other countries, arguing that it is taking shape in Nigeria.

    In a related development, the Managing Director and Chief Executive Officer, NIBSS, Mr Adebisi Shonubi, said continued encouragement of the use of PoS terminals is critical to the success of the cash-less initiative.

    “We strongly believe that the enhancement of PoS adoption relies on high PoS availability and connectivity and consequently the expansion of telco facilities beyond the conventional GPRS to CDMAs.”

    Shonubi argued that the Nigerians possessed the acumen required for the success of the cash-less project.

    On his part, the CBN Deputy Governor, Mr Tunde Lemo, said the number of deployed and active PoS terminals had grown from 5,557 as at January 2012 to 104,858 by October 14, 2012.

    Lemo, who was represented at a forum in Lagos by an official of Shared Services Department, CBN, Mr Chimene Eleonu, said another 176,604 PoS terminals were already registered.

    He lamented the huge gap between registered and deployed PoS, arguing that the gap was due to lack of capacity on the part of the payments terminal service providers to meet PoS demand.

  • Debt recovery: NDIC dumps court for alternative dispute resolution

    Debt recovery: NDIC dumps court for alternative dispute resolution

    Weary of what it calls a cumbersome court process, the Nigeria Deposit Insurance Corporation (NDIC) is to explore alternative dispute resolution (ADR) for debt recovery, its Managing Director, Umaru Ibrahim, has said.

    The corporation, he said, discussed with judges at debt recovery conferences in Abuja, Lagos and Port Harcourt on the need to resolve bad loan cases outside the court, adding that debt recovery is a difficult task that has to be tackled with extra efforts and mutual understanding.

    “Debt recovery is a herculean task, but we are making progress. There is need to adopt alternative dispute resolution in solving pending debt issues in the banking industry. We had a conference with Judges on the need to resolve debt issues with bank customers outside the court,” he said.

    Contending that going to court was expensive and in many cases nothing came out of it.

    Ibrahim said the cumulative debt recovery for the closed commercial banks from 1994 to date, stood at N23.33 million as against N22.26 million in December 31, 2011. This is an increase of N1.074 million, representing 4.83 per cent.

    Also, cumulative debt recoveries from closed microfinance banks (MfBs) as at September 2012 stood at N41.97 million, as against N13.57 million recovered as at December 2011. That showed an increase of N28.40 million, representing 209.29 per cent as at September 30, 2012.

    He said N19.6 million had been realised from the sale of physical assets as at September 2012 from closed commercial banks. Also, N154.54 million had been realised from the sale of physical assets of closed MfBs from January to September 2012.

    About 698 MfBs and Primary Mortgage Institutions (PMIs), he said, paid N980.79 million as premium to the corporation as at September 30, 2012 as against N1,06 million collected from 765 of them same period of 2011, a decline of 8.02 per cent.

    As at September 30, 2012, 130 MfBs and 20 PMIs could not be assessed for premium collection as they failed to submit their certified deposit statements as well as call reports since December 31, 2011. He said the corporation is still prevailing on the banks to ensure that it obtains their certified deposit liabilities statements or call reports.

    He said the regulators were to issue new licences to microfinance banks that wanted to enter the market.

    According to Ibrahim, NDIC paid N6.68 billion insured deposit to 527,950 depositors of liquidated commercial banks as at September 30, 2012 as against N6.63 billion paid to 527,942 depositors as at December 31, 2011, an increase of 0.70 per cent.

    The NDIC boss said the corporation conducted a joint risk assessment examination of commercial banks with the Central Bank of Nigeria (CBN) during which the later led 11 banks while it led seven banks.

    The exercise, he said, was meant to find out the asset quality of the banks to determine provisions required, a precondition for approving their accounts for publication.

    The CBN also conducted an examination of the three banks acquired by the Asset Management Corporation of Nigeria (AMCON) namely: Mainstreet Bank Ltd, Enterprise Bank Ltd. The Keystone Bank examination was led by NDIC.

    Ibrahim said the assessment was meant to determine the regulatory compliance and financial condition of the banks in the first five months of their existence. Also, out of the 291 MfBs and PMIs assigned for examination by the NDIC, a total of 207 had been examined. The examination of the remaining 84 banks slated for this quarter is still ongoing even as the report of the 186 out of the 291 MfBs scheduled for examination in the year had been concluded and forwarded to the boards of the respective banks and NDIC management for appropriate supervisory action.

    On statutory returns, he said N61.303 billion was collected as premium for commercial banks as assessment for 2011, the Deposit Insurance Fund (DIF) stood at N415.393 billion as at September 30, 2012. This, he said, is an improvement from N354.09 billion recorded as at December 2011, an increase of N61.303 billion or 17.31 per cent.

    The NDIC boss also said a total of N2.64 billion out of the N4.67 billion insured deposits belonging to 73,000 depositors of microfinance banks in liquidation had been settled.

    He said to date, the corporation had, in addition to payout, deployed purchase and assumption and bridge bank option in resolving failures of banks in the country.

  • BoI, FMBN, NEXIM, others assets hit N380b

    THE assets of Bank of Industry (BOI), Federal Mortgage Bank of Nigeria (FMBN), Nigerian Export Import Bank (NEXIM), Bank of Agriculture (BoA), and Infrastructure Bank (IB) rose by 5.8 per cent to N380.3 billion at the end of the second quarter of this year, the Central Bank of Nigeria (CBN) has said.

    The apex bank said paid-up share capital, deposits and loans/advances increased by 3.1, 28.7 and 25.0 per cent to N70.5 billion, N94.2 billion and N162.2 billion.

    Total shareholders’funds, however, declined by 8.1 per cent to N23.7 billion, while a profile of the asset base of the institutions indicated that BoI, FMBN, NEXIM, BoA and IB accounted for 56.6, 18.2, 12.4, 10.0, and 2.8 per cent of the total.

    With the exception of the BoI, the other DFIs were faced with dire operational challenges as evidenced in the increase in their aggregate losses from N42.6 billion at end of December 2011 to N47.1 billion at end of June 2012.

    The Federal Government has also called for the recapitalisation of the DFIs. The government had directed the CBN Governor Lamido Sanusi, and Minister of Finance Ngozi Okonjo-Iweala, to meet with Minister of Trade and Investment Olusegun Aganga, to come up with modalities, which would enable it to increase the capital base of the DFIs.

    It said the move to recapitalise the bank was not to only to improve its capacity to fund the country’s industrial sector, but to also align its operational practices with international best practices.

  • Global experts meet on Islamic financial planning, wealth management

    Financial regulators, experts, jurists, academics and stakeholders across the world would meet in mid-February 2013 at Sheraton Hotels and Tours, Langkawi Island, in Malaysia to brainstorm on how to promote growth and realign the practices of Islamic finance and economics to open new frontiers for the growth of the industry.

    The Fourth Langkawi Islamic Finance and Economics (LIFE-4) Global Forum, being organised by the INSANIAH University College in collaboration with Deloitte, Islamic Development Bank, IBFIM-Malaysia and Rayyan Ventures Limited, will provide global platform to discuss key issues around the competitiveness, growth and sustainability of Islamic finance.

    The theme of the forum is: Islamic financial planning and wealth management as the new frontier for global Islamic banking and finance industry.

    Managing Director, Rayyan Ventures Limited, Nigeria’s partner to LIFE-4 Global Forum, Alhaji Idris Usman, said the forum would brainstorm on how to reposition Islamic banking and finance for sustainable growth over the next decades.

    According to him, the global nature and the quality of participation at the forum makes it a viable platform for the immediate strategic efforts to consolidate the asset size, market share, overall growth and competitiveness of services of Islamic banking and finance.

    He noted that LIFE-4 Global Forum would also focus on how to create more wealth in the system through Shari’ah-compliant financial planning and wealth management techniques while providing scholars opportunity to update their knowledge with latest know-how and skills.

    He pointed out that as Nigeria makes efforts to develop its alternative finance industry, the country stands to benefit tremendously from the LIFE-4 in terms of practical knowledge and experience from other operators and regulators around the world.

    It should be noted that the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) introduced frameworks for Islamic banking and asset management. Nigeria is working towards issuing its first Sukuk-Islamic bond. The Nigerian Stock Exchange (NSE) has recently launched an Islamic equity index to provide ethical investors with baseline for tracking, measuring and managing their assets. The first wholly Islamic bank licensed by the CBN- Jaiz Bank Plc, has commenced operations while other Nigerian banks including Stanbic IBTC Bank run Islamic finance windows. There are also many Nigerian mutual funds based partly or fully on Islamic finance and economics rules.

    Alluding to the successes of previous LIFE events, Usman outlined that more than 500 leading stakeholders including central banks, securities commissions, ministries of finance, Islamic banking and finance association, banks, financial firms, educational and research institutions, auditing firms and legal firms are expected at the LIFE-4 in addition to popular attendance by the public.

    He added that experts would also discuss the peculiarities of emerging economies and provide the necessary solutions toward advancing Islamic finance and economics in emerging as well as advanced economies.

    “LIFE-4 would create a global platform where all stakeholders could meet and brainstorm on operational challenges and opportunities in the Islamic finance and economics industry. The forum would provide supports for both operators and regulators in fashioning strategies to move the industry forward,” Usman said.

    He pointed out that as Nigerian partner to LIFE-4, Rayyan Ventures would assist intending participants from Nigeria to facilitate their registration, travelling and other logistics.

  • Sanusi, Rewane query Fed Govt’s N23b margin bailout

    Sanusi, Rewane query Fed Govt’s N23b margin bailout

    Governor of Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi and Bismarck Rewane’s Financial Derivatives Company (FDC) Limited have picked holes in the N22.6 billion debt relief on margin loans extended by the Federal Government to some 84 stockbrokers last week.

    Sanusi queried the existence of any margin loan hanging on any stockbroker arguing that by virtue of its definition, technique and operations, brokers were not liable for any further indebtedness from margin loan agreement other than their deposits for the margin loans.

    He said the liabilities arising from margin loans belong to the banks, which were the custodians of the margin loans agreements and were required to promptly activate the margin loan terms where share prices crash beyond the limit set.

    According to him, under the margin loan arrangement, stockbroker would put up a certain percentage of the funds and the bank would come up with the balance with a provision mandating the bank to sell the shares once the prices fall below certain limits.

    Although he acknowledged the absence of clear-cut margin rules during the 2004-2008 capital market boom period, Sanusi said banks should bear the brunt of not being able to sell the shares, rather than the brokers.

    He noted than when he was in charge of risk management at First Bank of Nigeria (FBN), he made provisions for all the margin loans because they were recognized then as the risks of the bank.

    He however said Nigerian capital market needs to draw the line over the past and move on to new era of stability.

    FDC in its bi-monthly economic and business update said the margin loan bailout raised more questions of moral hazards and relevance than the intended benefit of stimulating the capital market.

    According to the report, the selection of 84 stockbrokers to be anointed as debt-free, throws out the question of selective breeding and more importantly: moral hazard.

    FDC noted that moral hazard played a central role in the events that led to the capital market crisis and all stakeholders need to appreciate this role to adequately design future reforms and to prevent disasters down the line.

    “By issuing the “go and sin no more” mandate to 84 stockbrokers, the finance ministry has set a precedence that excessive risk will not be punished or in other words, issued the stockbrokers with subsidised risk-taking. This fosters moral hazard where a party feels that if it can take risks that another party has to bear, then it may as well take them. If a party has to bear the consequences of its own risky actions, it will act more responsibly. The finance ministry has now pardoned the excessive risks taken by the stockbrokers and thereby increases the chance of moral hazard coming into the equation,” FDC stated.

    The report noted that another important issue of moral hazard thrown up by the forbearance is that there is no reward for the stockbrokers that have stayed away from excessive leverage or refinanced their debt.

    It pointed out that stockbrokers that paid off the majority of their debt by selling off their assets are now at a disadvantage to the 84 that received the “clean bill of health” noting that not only will these stockbrokers feel disgruntled but they will also feel excessive risk-taking is incentivised by the regulators.

    It noted further that the 84 stockbrokers handed forbearance were not inherent to the economy or the capital market itself.

    “A market gain of over 26 per cent this year further shows that with debt overhang on the 84 stockbrokers the capital market can recover provided steps are taken to boost investors’ confidence.With the forbearance completed for the 84 stockbrokers, other sectors of the economy will question why the bailout has not been extended to them. Indeed, there are moribund companies around the country that might benefit from a bailout and also go a long way to solving the unemployment problem. While the FGN might have the right intentions in handing forbearance to the stockbrokers, the value is lost in the moral hazard it throws up,” FDC stated.

  • CBN’s fresh guidelines on bank fraud coming

    The Central Bank of Nigeria (CBN) is contemplating introducing Public Key Infrastructure (PKI) framework to guide against frandulent transactions in banks.

    PKI is a set of hardware used in creating, managing, distributing, storing and revoking digital certificates used for transactions. The hardware helps in validating the identities of customers during transactions.

    The concept is expected to help improve transactions and prevent the theft of depositors’ funds through scams and forgeries.

    CBN’s Director of Communication Mr Ugochukwu Okoroafor, said: “We are working on Public Key Infrastructure mechanism to track down transactions. This will enable us to know when, where and who conducts transactions in the industry.”

    He said the concept would help in ascertaining the veracity of claims made by customers after transactions.

    “Through the Public Key Infrastructure, the banks would be able to know those who are conducting transactions, authenticate them, as well as proving that they were the ones carrying out the transactions. CBN is working on the framework for the growth of the industry,” he added.

    He said the industry is set for greater heights in view of the measures put in place to protect customers.

    An investment analyst, Mr Tayo Bello, said corruption is the major problem in the industry globally, noting that fraudulent practices was the major cause of the distress in the banking industryin the 80s.

    Bello said CBN was restoring confidence in the industry. He advised that the reforms must continue to improve growth. He said the reforms had helped in engendering confidence, and made customers believe in the system.

    He said once customers are sure of the safety of their funds, they would not hesitate to patronise the products offered by banks.

  • Bayelsa signs economic pact with South Africa

    In its renewed zeal to transform Bayelsa State through its restoration and economic development agenda, the state government has signed an economic pact with the Industrial Development Corporation (IDC) of South Africa.

    The aim of the memorandum of understanding is to improve the state”s economic profile and diversification from the oil and gas sector of the economy.

    Mr. Tam Alazigha, the Economic Adviser to the state governor, who disclosed this after signing the pact with the World rated South African Corporation, said the pact with IDC will make positive impact on the state economically.

    Alazigha, who had led the state economic team at the signing of Memorandum of Understanding held in South Africa ,said the rating of IDC would rob positively on the image of the state explained that the IDC is noted for transparency and accountability and with the position of the present administration on this key issue, foreign and local investors would be willing to invest in the state.

    According to him, if the pact is implemented, the state stands to benefit more in terms of infrastructural development and expressed optimism over the success of the pact.

    Areas of focus for the pact, the economic Adviser disclosed, would include operational and support skill requirement, human resource and capacity building, development and support of institutional policy and procedure and overall guidance in both establishing and operating developmental institutions.

    The memorandum of understanding, he added would also have impact on low income earners, and would assist in financing of specific small and medium size enterprises, particularly as it relates to non oil and gas sectors, agriculture, agric processing, manufacturing and tourism.