The Nation Newspaper

Category: Business

  • Smaller banks beat big ones in credit facility

    Small banks, otherwise known as Tier-2 banks, have outpaced the big ones (Tier-1 banks) in advancing loans, a report from Renaissance Capital (RenCap), an investment and finance firm has shown.

    Loan growth index reviewed by the firm showed that United Bank for Africa (UBA) and Access Bank grew their loan portfolio by three per cent year-to-date. Diamond Bank, it said, grew its loans portfolio by 38 per cent, year-to-date.

    RenCap said for 2013, in the absence of significant progress in power sector reforms or upstream oil and gas projects, the Tier-1 banks are likely to repeat similar levels of loan growth to those they achieved this year.

    However, the non-performing loan (NPL) ratios at as at September, 2012, did not cause any stir. “In our opinion, most of the banks under our coverage cannot sustain NPL ratios of around five per cent without impairment expenses of around two per cent. Nevertheless, given the magnitude of the Asset Management Corporation of Nigeria (AMCON) clean-up in 2011, we would expect the banks to continue reporting below-average charges into fiscal year 2013, with normalisation likely to start coming through in fiscal year 2014,” it said.

    It said since the beginning of the year, most of the banks have been expecting lower tax rates on the back of their high holdings in fixed-income securities and, for some, tax credits from losses over the past few years.

    “We also highlight that, following the inclusion of tax exemptions on fixed-income securities in the federal government’s official gazette in December 2011, these multi-year exemptions effectively kicked in this year. All things being equal, we would expect the larger, more liquid banks with proportionately higher holdings of fixed-income securities to report relatively lower tax rates at year-end,” RenCap said.

    On share-price performance, the banks have been strong performers’ year to date, with all except First City Monument Bank in positive territory. However, on a two-year view, the price performances of most of the banks’ stocks are still negative, with only Guaranty Trust Bank, Zenith Bank and FirstBank in positive territory.

    RenCap has also revised its ratings and target prices for bank stocks to reflect these forecast changes. We have downgraded First Bank, Diamond Bank and Fidelity to hold ratings from buy, as it finds lower relative potential upside in these names following their strong share-price performance.

    RenCap recommended United Bank for Africa and Zenith Bank for buy among tier-1 banks and Skye Bank as buy among tier-2 banks.

  • SAHCOL to establish training school

    Skyway Aviation Handling Company Limited (SAHCOL) said it would establish a training school for cargo and passengers’handlers.

    SAHCOL’s Managing Director, Mr Olu Owolabi, spoke during the presentation of International Air Transport Association (IATA), Safety Audit for Crew Operations (ISAGO) certificate by Miss Adefunke Adeyemi, the Southwest African Area Manager of IATA in Lagos.

    He explained that SAHCOL was working with IATA for the take-off of the school.

    “ There, we will be training our staff, staff members from other airlines on ground handling and passengers’handling and become more relevant within the industry,” he said.

    He expressed appreciation to the Nigerian Civl Aviation Athority (NCAA) for giving SAHCOL the approval to establish the proposed school.

    He added that a lot of money is being spent on the project and would be among the best on completion.

    Owolabi also said the management also approved SAHCOL’s proposed corporate headquarters’design.

  • Govt pegs rice import at $673 per tonne

    The Federal Government has set $673 per tonne as the benchmark price for imported rice in the fourth quarter of the year.

    Sources said the Minister of Finance, Dr. Ngozi Okonjo-Iweala, gave this directive to the Nigeria Customs Service.

    Sources said the benchmark can be broken down as $613 for Free on Board (FoB) and freight charge of $60.

    Ministry of Finance sources said the price is based on the advice of an Inter-Ministerial Committee.

    The committee, the source said, comprised the Presidential Committee on Trade Malpractices (PCTM), Federal Ministry of Agriculture and Customs.

    Others are the Federal Ministry of Trade and Investment, Budget Office of the Federation and Rice Millers, Importers and Distributors Association of Nigeria (RIMIDAN).

    The Federal Government reviews quarterly the benchmark price of imported rice.

    The duty is calculated based on this price and the actual FoB price.

    The per metric tonne benchmark price was fixed at $699 for the second and third quarters but dropped to $673 since October.

  • ‘How directors, insiders run down Resort Savings’

    Former directors of Resort Savings & Loans Plc and other insiders have nearly N4 billion in outstanding non-performing loans, more than three-quarter of the bank’s total balance sheet size, a document on the quoted company’s insider loans has shown.

    The former directors, who resigned in 2011, their family members and related companies, took various loans through different instruments, such as mortgage, overdraft, term loan, lease and staff loan and turned away from servicing the loans.

    A document on the outstanding insider credits based on the latest audit of the firm showed that the former directors and their cronies were indebtedness to the tune of N3.99 billion. The company’s total assets and shareholders’ funds were N5.24 billion and N2.87 billion respectively.

    Out of the 25 insider credits worth N3.99 billion, only one loan of N15.44 million, less than 0.4 per cent of total insider credits, was performing.

    The report indicated that the former directors appeared to have taken undue advantage of their membership of various strategic committees, including credit and finance committees.

    In the largest instances of the insider loans, the former directors awarded several loans to another quoted company where they served as directors. The report indicated that about N2.81 billion non-performing loans were related to that company as at the last audit.

    The hugely indebted quoted company engages in fund management, capital market operations, financial advisory and portfolio management. It is listed under other financial companies on the Nigerian Stock Exchange (NSE).

    The immediate past chairman of Resort Savings & Loans was reported to have taken several loans with about N42 million outstanding as non-performing on three facilities.

    A family member of the former chairman has more than N39 million outstanding as non-performing loans on two facilities, which he had abandoned.

    According to the document, a mortgage and overdraft were granted to the relation of the former chairman but he has since abandoned the facilities. The company indicated it has already instituted action to recover the facilities.

    Another director has more than N111 million outstanding from mortgage loan and staff loans that were granted in 2008. The last audit was dated December 31, 2011.

    The company stated that another director, who had obtained an overdraft in 2008 and turned away from servicing the loan, has about N47.15 million outstanding. The director, the company stated, has been “making paltry payment” sequel to demand made on him.

    A market source said the bad loans might not be unconnected with the huge funds poured into the stock market bubble between 2007 and 2008 and were trapped in unrealizable assets as recession kicked in mid 2008.

    In latest review of the company’s operations, management of Resort blamed the “high volume of insider related non-performing credits” for the losses suffered by the company in the past two years.

    The management report indicated that provisions for the non-performing loans adversely impacted the profit and loss and balance sheet positions of the company.

    The report stated that the company has referred uncooperative insider-debtors to the regulatory and enforcement agencies while efforts were ongoing to recover other outstanding loans.

     

  • Why Delta gas project’s site was changed, by Minister

    Why Delta gas project’s site was changed, by Minister

    THE Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has explained why the Federal Government relocated the proposed site for its multi-billion dollar gas-based industrial park in Delta State from its original location in Koko to Ogidigben. She said the need to create a competitive gas-based industrial park that could attract global players in the gas market informed the shift.

    Mrs. Alison-Madueke, who spoke at the Nigerian Gas Association (NGA) conference in Abuja, said the move became unavoidable due to the need to optimise the potential in the project which were factored  in its gas revolution agenda that President Goodluck Jonathan launched last year.

    The Minister, who was represented by the Group Executive Director (GED), Gas and Power of the Nigerian National Petroleum Corporation (NNPC), Dr. David Ige, said the new  projects at the new site will start in the second quarter of 2013 and completed between 2016 and 2017.

    She said: “Basically, what we are trying to do is to ensure that we are creating a gas-based industrial agenda that is going to be competitive globally. A lot of factors came into play. We have considered various locations. Koko was the desired location; originally, it is land-based, accessible and has a port of its own but as the agenda started to grow, it was evident that for the size of fertilizer that we are now beginning to look at and the size of petrochemical that is beginning to materialise, the kind of vessels that you will require to evacuate those products becomes a lot bigger than what we even started with.

    “We started with a smaller capacity fertiliser and petrochemical plant but the investors are stepping up the game and when you do that and look at 50,000tonnes dead-weight vessels, then the Koko channel becomes a problem because it requires a significant amount of dredging over a long distance to the coast and that informs an optimisation of location,”

  • Mobile payment review ’ll be completed soon, says NeFF

    THE ongoing review of mobile payment frameworks will be completed soon, it was learnt.

    Anlaysts say the review would help to remove some bottlenecks which impede the growth of mobile payments, make it more productive, and boost the subsector.

    The Chairman of Nigerian Electronic Fraud Forum (NeFF), Mr Emmanuel Obaigbona, said the mobile payment guidelines have been released.

    He said: “From 2003, many guidelines have been released by the Central Bank of Nigeria (CBN) to bring about the necessary growth in the industry. These include Electronic banking guidelines, Point of Sales (PoS) guidelines, Switches guidelines, Automated Teller Machine guidelines, the mobile payment guidelines among others. But what we are doing is the reviewing of mobile payment guidelines. We hope to conclude it soon. We have gone far on it. It is about to be ready. When it is ready, it would be presented to the CBN and the Bankers’ Committee.”

    According to him, more attention is being given to the development of the nation’s electronic payment system to strengthen the economy.

    He said the NeFF has recorded some successes in educating people on the various electronic frauds in the country, adding that fraudsters use electronic payment channels to commit crimes.

  • Fed Govt dissolves Council of Freight Forwarders

    Fed Govt dissolves Council of Freight Forwarders

    The Federal Government has dissolved the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN). The dissolution followed the crisis that rocked the organisation after the government directed it to collect transaction fees at the ports.

    The Nation learnt that in a letter the Minister of Transport, Senator Idris Umar, has notified Chairman of the Council, Hakeem Olanrewaju of the dissolution.

    In the letter, the Council members were directed to quit their positions.

    Sources at the Ministry of Transport said the Council was dissolved because of a petition written to the Minister by the management of the Nigeria Customs Services (NCS). The September 5 letter signed by the Assistant Comptroller–General of Customs, Mr Musa Tahir, for the Controller-General, said the approval granted to CRFFN to collect fees would increase the cost of business at the ports and cause delays in the clearance of goods.

    Also, the Minister, sources said, dissolved the council because of another petition by the Association of Nigeria Licensed Customs Agents (ANLCA), claiming that the tenure of officers of the council had expired.

    In his letter to Olanrewaju the Minister noted that the elected council members have a four-year tenure which expired on August, 14. He said any decision by the council after this date was illegal.

    While dissolving the council, sources said the minister accused its leadership of extending their tenure by one year, in contravention of the council’s Act.

    A member of the board, who craved anonymity, told The Nation that though members of other associations had accepted to cooperate with the council, the Customs and ANLCA did not.

    Trouble, he said, started when the government approved transaction fees for CRFFN at the port.

    Under the fee regime, he said, importers are to pay N1.50 per kilo of every air cargo; N1,000 per 20-foot container, N2,000 per 40-foot container; N500 per car or Sport Utility Vehicles (SUV) and N1,000 per truck or 20-foot equivalent.

    Others, he said, include N2,000 per truck or 40-foot equivalent; N3.50 per every ton of general cargo and N1.00 per ton of every dry bulk cargo.

    The minister, he added, also approved registration fees for freight forwarding practitioners, including Nigerians and non-Nigerians, ranging from N7,500 to N50,000 annually depending on their category of membership and annual subscription of between N10,000 and N60,000 for members of the council.

    But a senior official of the Ministry of Transport, who does not want his name in print, said the issue had gone beyond transaction fees, noting that the government did not want to deal with an illegal body. He said with the expiration of the board’s tenure, its members lacked the authority to perform.

    Efforts by The Nation to get Olanrewaju on phone proved abortive.

     

  • Towards first class airports

    Every successful manager, aspiring manager or student of management holds these words of Peter Drucker sacred: “Management is doing things right; leadership is doing the right things”. Drucker, one of the greatest thinkers on Management, opined that one of the key points of succeeding in an organisation is by the need to manage business by balancing a variety of needs and goals, rather than subordinating an institution to a single value. This is what George Uriesi’s style is all about at the Federal Airports Authority of Nigeria ( FAAN), not subordinating the institution to a single value but to a robust and dynamic framework within the transformation agenda of the Aviation Minister Princess Stella Oduah, and President Goodluck Jonathan

    Uriesi is not new to this terrain; he has put in several aerona miles into aviation business with over 20 years experience. In 2004 , he was appointed General Manager of Cape Town International Airport and he led the massive transformation of the airport in preparation for the 2010 FIFA World Cup tournament, while establishing it as the top international award winning airport in Africa. That job prepared him for his stewardship at FAAN.

    When Princess Oduah assumed office she embarked on a search for an effective hand to run FAAN and she found Uriesi. If she was looking for someone who understood the industry and the urgency for a radical turnaround, Uriesi was the one; he was brimming with passion and raring to go. If experience and technical knowledge were the a criterion he had them in abundance. Most importantly if understanding the mission was an advantage, he had an overriding desire to surpass his success story in South Africa. Armed with the Aviation Master Plan, his first assignment was to key into Princess Oduah’s vision with the reconstruction of 11 airport terminals. From Lagos to Yola, Abuja to Port Harcourt, Owerri to Jos, Kano to Enugu, Calabar to Kaduna, Minna to Sokoto, the aviation industry was taken by storm. The speed and quality of work were unprecedented. The prudence in application of resources was legendary. He ensured that salaries were paid before the end of the month, a far cry from the previous practice where workers were owed. During the inauguration of the Murtala Muhammed Airport, Ikeja Lagos Terminal 1, popularly known as GAT, he took the nation by storm when he announced that the world-class airport terminal being opened by the Secretary to the Government of the Federation, Senator Anyim Pius Anyim was built under 10 months for N648 million!

    With a strong support from the Minister of Aviation, he took on the powerful interests industry who had overtime strangulated the industry. He enforced the sacking of concessionaires who refused to leave even when their contract was terminated by previous Ministers.

    From then on he was marked “enemy No 1”. Unperturbed, he has taken on perennial debtors of his organisation. Driven by the mission that development of airport infrastructure is not just an economic necessity but central to strategic objectives, Uriesi remains focused in his vision for FAAN to be among the best airport groups in the world. The verdict of the Federal High Court in Lagos, freeing him of the contempt charges brought against him by a firm Maevis, which got contract for toll collection at the airport, brought relief to FAAN. Few men will stand to be counted when faced with the threat of prison conviction. He stood. This victory is symbolic. It’s a refreshing departure from the past. The judgment has come and gone but the impact is reverberating across the aviation community.

    •Yakubu Dati , General Manager (Corporate Communications, FAAN)

  • Bytesize seals Konga’s deal

    Bytesize Digital Marketing Agency has secured the deal to manage the account of Konga.com, one of Nigeria’s foremost e-commerce sites.

    In a keenly contested pitch, Bytesize brushed aside challenges from several other digital agencies to secure Konga’s deal.

    The deal has been formalised with the signing of the contract by both parties and Bytesize is expected to commence work immediately.

    Henceforth, all digital communications and activities of Konga.com will be managed by the agency.

    “The digital community and Nigerians in general would witness a new strategic creative direction and footprint for konga.com shortly.

    This is in line with the objective of Konga.com to establish itself as Nigeria’s foremost e-commerce site delivering first class customer experience to its customers at all times, ” Bytesize said in a statement on Monday.

    Bytesize is a full service digital communications agency currently managing a number of digital accounts like The First Group, P&G Always, Hennessy and Mansard Insurance.

    The agency combines consumer research, creativity and data driven insights to deliver business objectives.

     

  • Budget 2013: Reps condemn envelope system

    Budget 2013: Reps condemn envelope system

    • Query NEPAD over N60m security vote

    Members of the House of Representatives have condemned the adoption of the ‘Envelope Template’ for budget planning for Ministries, Departmements and Agencies (MDA) without considering individual peculiarities of the MDAs.

    Various House Committees that are engaging MDAs on the 2012 budget defencee and 2013 budget presentation, have condemned the envelope system, stating that it is detrimental to the economy.

    The lawmakers expressed their determination to address the issue with the 2013 budget. The envelope system requires that the MDAs adopt the estimates given in sealed envelops to the Ministry of Finance, with a designated officer assuming responsibility for collecting all allocations due each agency. Such designated official is also expected to account for all expenditures in respect of both capital and recurrent appropriations.

    Chairman, House Committee on Human Rights, Beni Lar during the budget defence of the National Human Rights Commission (NHRC), yesterday regretted that MDAs were not involved in budget preparation by the MDAs.

    Also, Chairman, Committee on Integration in Africa, Abubakar Momoh, also questioned the essence of the N60million security vote for 2013 for the New Partnership for Africa’s Development (NEPAD) as shown on the agency’s budget.

    Lar said: “This envelope system is not doing this nation any good; it is setting us back. It is our opinion that we have to find new ways of helping this country.

    “One can imagine that in a country that is short on infrastructural development, the Ministry of Finance and the Budget Office would not find it expedient to have the input of the MDAs that actually know what they needed before being given whatever they feel.

    “It is disheartening to hear from one agency to the other that they have no input in the final budget proposal sent to the National Assembly by Mr President.

    “The Ministry of Finance should not just give a blanket amount to MDAs telling them to spend it anyhow they can. If they spend the money given to them anyhow, they can. Won’t they be violating the Appropriation Act if they really want to meet their needs with the inconsiderate envelope thrown at them by the Presidency?” he asked.

    On his part, Chairman of the Committee, Abubakar Momoh, who had earlier accused NEPAD and the Institute for Conflict Resolution (ICPR) of conspiracy for failing to submit their budget presentations earlier, noted that the envelope system was a deservice to the development of the country.

    On scrutinising the NEPAD budget, the Chairman of the Committee asked the Special Assistant to the President on NEPAD, Dr Tunji Olagunju the necessity for the security vote .

    “We are aware that NEPAD has no security issue to address on its own, and one wonders what use the teaching aids and laboratories would be for the agency.

    “This is an organisation that clearly needs funds in some critical areas knowing that its mandate transcends the shores of this country. The impact of its mandate on the growth of this country cannot be overemphasized.

    “It is the opinion of this Committee that the envelope system is retrogressive and it showed that they were not carried along in the preparation of the budget.

    “The MDAs should be involved in the planning of the budget and that is the only way through which they can be effective”.

    While the budget presentation of the Human Rights Commission was approved, NEPAD was asked to go back and prepare a comprehensive document for presentation on another day, as the one presented was trashed for being incomprehensible.