The Nation Newspaper

Category: Business

  • RenCap: Oil shut down to widen budget deficit

    The three-week shutdown of oil production in October over floods will have negative impact for revenue collections and could expand the 2013 budget deficits, analysts at Renaissance Capital (RenCap), an investment and research firm, have predicted.

    It said in an emailed report that the budget was premised on oil production of 2.48 million barrel per day (mbpd), which means the budget deficit will exceed the targeted 2.85 per cent of Gross Domestic Product (GDP).

    The flooding also led to increase in food index. As anticipated, food inflation rose to 10.2 per cent due to a shortage in supply as the flooding delayed the harvest for some crops like cocoa, beans and pepper. Also, transporting harvested products to the markets has become more difficult and expensive as most of the roads are now impassable.

    It said the impact of the decline in core inflation far outweighed the rise in the food index, the largest contributor to the consumer price index, leading to an overall ease in headline inflation for September.

    President Goodluck Jonathan recently presented the proposed 2013 budget to the National Assembly. The budget is a plan of the intended revenues and expenditures for the country. It is also a tool for macroeconomic management that could help promote fiscal prudency and foster growth in the economy.

    RenCap said the 2013 budget is similar to the Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper sent to the National Assembly for approval. However, while the budget has a span of one year, the MTEF is a strategic document designed for a period of three years.

    The budget highlights showed an aggregate expenditure of N4.92 trillion, representing an increase of 4.7 per cent from the 2012 expenditure of N4.7 trillion, while total revenue is put at N3.89 trillion, an increase of 9.3 per cent from the 2012 revenue of N3.56 trillion.

    However, indicators in the proposed 2013 budget that demonstrate the commitment to fiscal prudence are the reduction in fiscal deficit to 2.17 per cent of GDP from 2.85 per cent (N1.15trn) in 2012, which is within the threshold stipulated by the Fiscal Responsibility Act, 2007.

    There was also reduction in domestic borrowing by 2.3 per cent to N727 billion, from N744 billion in 2012, to ensure that debt stock remains at a sustainable level.

  • ‘Take business interruption insurance serious’

    BusinessES’ failure can be avoided if entrepreneurs and managers take ‘business interruption insurance’ seriously, Raymond Akalonu, General Manager, Group Insurance Dangote Group, has said. He spoke at the Risk Surveryors’ conference in Lagos.

    “Business interruption insurance, Raymond said, “covers the loss of income that a business suffers after a disaster while its facility is being rebuilt.A property insurance policy that most insured businesses take only covers the physical damage to the business, while the additional coverage allotted by the business interruption policy covers the profits that would have been earned. This extra policy provision is applicable to all types of businesses, as it is designed to put a business in the same financial position it would have been in if no loss had occurred,” he explained.

    Speaking on the serious dangers posed to businesses worldwide as a result of natural and/or man- made disasters, such as fire at the work place, flood and others, Raymond said, the best thing to do is take the appropriate steps before the harm occurs.

    Hesaid:“Remember,you wouldn’t want to learn navigation in the middle of the sea during a storm. Successful b usinesses learn from their mistakes and those made by others. Many businesses failed as a result of Hurricane Katrina because they failed to plan for the worst. They did not believe it could happen to them. Consistent focus and consistent action can pay off in the event that an unexpected catastrophic loss event occurs”.

    On how businesses can go about this, he said the best defence against losses is a series of interdependent programmes created by management to identify and control fire, explosion, mechanical and electrical breakdown, and other perils, and to deal with the resulting emergency or contingency.

    To ensure the effectiveness of management programme, he said a standard feedback system must be in place.

    “The effectiveness of these programs must be continuously monitored because the failure of one or more of them significantly increases the potential for loss.

    Raymond said this type of coverage is not sold as a stand-alone policy, but can be added on to the business’property insurance policy or comprehensive package policy. Since business interruption is included as part of the business’ primary policy, it only pays out if the cause of the loss is covered by the overarching policy.

    “With 25 per cent of the population displaced, over N17 billion set aside for resettlement, flood, either man made or as a natural disaster has come to stay as warnings indicate of more perilous times ahead. How prepared are we to take on this challenge?”

    He recalled the fire that gutted the business platform of the Nigerian Bottling Company (NBC), in 2008, which was settled for N8,010,579,302; the one at the Sugar refinery in Kenana, Sudan in 1998, which was settled on arbitration for $108 million, the recent fire in Karachi & Lahore in Pakistan that killed about 315 people and led to a colossal loss of two big clothing facilities and the Dangote Sugar refinery fire incident in July, which underwriters have been advised to make a reserve of over N7 billion.

    He added the Hurricane Sandy in the United States, which he said, destroyed properties worth billions of dollars.

  • NAICOM takes over ailing firms

    NAICOM takes over ailing firms

    • Shareholders hail action

    Shareholders have praised the National Insurance Commission (NAICOM), for taking over some ailing firms.

    So far, the commission has taken over Goldlink Insurance Plc and Alliance and General Insurance.

    The President, Nigerian Shareholders’ Renaissance Association (NSRA), Olufemi Timothy, said with this step, underwriters would now sit up.

    He said: “With the measure taken by NAICOM, underwriters would see the Commission as a dog that can bark and bite. It is a good development that some people are made scapegoats. We have been complaining of uncomplimentary things going on among the underwriters.

    “Now that NAICOM has risen to punish them, they would realise that most of the things they have been doing that they cannot escape with them.

    “The step taken by NAICOM is a good development and it portends a good future for the industry”.

    On why shareholders have been silent over the rot that is being uncovered by NAICOM, he said: “When you talk of shareholders in the insurance industry, you are likely to have 200,000 of us. Where you have 200,000 shareholders, opinions would vary. Some of us who are active have been talking of the misdeeds in these companies, but nobody listened to us. We had been calling on the regulators to look into the accounts of these firms, but nobody cared to listen, but now that we have got somebody who was ready to listen and take action, we are happy that our voices would be adhered to and our complains would be acted upon,” he said

    Secretary, Nigerian Shareholders Solidarity Association (NSSA), Gbadebo Olatokunbo, said the taking over of the companies was good, adding that it would raise the confidence of stakeholders.

    He noted the measure would deter other operators who are carefree in carrying out their responsibilities.

    NAICOM, in a statement, said it has constituted a seven-man interim board of directors to oversee the affairs of Goldlink with effect from November 1.

    It noted that the constitution of the interim board is sequel to the resignation of members of the board of directors of the company following anomalies discovered in the audited financial statements of the company for the year ended December 31, 2011.

    The board is, among other things, charged with investigating the financial reports and corporate governance failures observed in the company’s financial statement for the year ending December 31, 2011.

    The board, which has a six-month tenure, has Mr James O. Ayo, as Chairman; Gbolahan Olutayo, as Managing Director and Mr Adeyinka Olutungase, as Chief Finance Officer.

    Other directors are Ambassador Umar Damagun, Alhaji Sashe Dabana, Prof. Chioma Kanu Agomo and Mallam Abubakar Sadiq Mijinyawa.

    The statement said the development would not affect the firm’s service delivery.

  • ‘Workers save less than 5% for retirement’

    GLOBAL research, consulting and professional development group, LIMRA, has said two-third of middle-incomeAmerican workers save less than five per cent of their yearly income for retirement, .

    In a report, Matthew Drinkwater, associate managing director, LIMRA’s retirement research. said: “These results, while not surprising, are very troubling.”

    “Less than 30 per cent of American workers have a traditional defined benefit retirement plan that could help them pay for their expenses in retirement, so the responsibility for providing the financial resources for retirement lies squarely on the individual. Many Americans will live at least 20 years in retirement, and will need significant savings to ensure their financial security.”

    Overall, four in five American workers are saving less than 10 per cent of their income for retirement. Most disturbing, the largest age group that reported not saving for retirement was those ages 55 and over (26 per cent) – often considered within 10-15 years of retirement. One in four workers ages 18-34 reported not saving at all for retirement.

    While more workers age 35-54 report saving some percentage of their income for retirement, almost one in five are not saving for retirement at all.

    “Optimally, all people should be saving systematically throughout their careers to ensure they can amass the funds necessary to live the lifestyle they wish in retirement,” noted Drinkwater.

    “Many Americans’ plans include delaying retirement or not to retire at all, but our research has found that more than half of current retirees retired before they planned – often involuntarily. It is important that Americans take the steps to prepare for every contingency while they are drawing an income.”

    Most Americans understand that they need to set aside more for retirement. Eighty percent of those surveyed said they needed to save more to be on track for retirement, with a quarter of Americans saying they need to save an additional 15 per cent or more of their income annually. Older workers (age 55+) and women, who represented the highest level of non-savers, were most likely to think they need to save at least 15 per cent more.

    “While economic conditions are clearly challenging Americans’ ability to save for retirement, savings habits have not changed significantly over the past two decades,” said Drinkwater.

    “Over this period, employer-sponsored retirement plans have continued to transition from defined benefit plans managed by employers to defined contribution plans where workers are fully responsible for their retirement funds.

    Our research indicates that workers still need more education and guidance to help them make the right decisions to ensure they have sufficient savings for retirement.”

  • Ex-bankers protest non-payment of entitlements

    Workers who lost their jobs to the 2005 banking consolidation have protested against the non-payment of their entitlements, seven years after. They are allegedly being owed N8billion as entitlements.

    Also, the workers have appealed to the Senate President David Mark to invite the Central Bank of Nigeria(CBN) and the Nigerian Deposit Insurance Corporation of Nigeria(NDIC) to resolve the issue.

    The workers, who staged the protests under the aegis of the Ex-Staff of Non-Consolidated Banks of Nigeria (AESNBN), were drawn from All States Bank Plc; Hallmark Bank Plc; Liberty Merchant Bank Plc; Lead Merchant Bank Plc; City Express Bank Plc; Assurance Bank Plc andTrade Bank Plc, among others.

    Speaking during the rally, the association Chairman, Mr Magnus Maduka, said the development has put the affected workers in a dire situation. He said the affected staff were 14,000, adding that some have died when struggling to get their benefits.

    He said the former CBN Governor, Prof Charles Soludo, reneged on his promise to pay the workers of the banks that failed to consolidate their terminal benefits in line with the policies of their employers.

    Maduka, who was the former Deputy General Manager, Head of Operations, Hallmark Bank Plc, said members have made several moves to get their gratuities and severance packages without success.

    He said: “Initially, we had thought the CBN will live up to its billing by honouring its promise within 90days, but later referred us to NDIC. This made us to conclude that something is amiss. On the other hand, NDIC, in order to keep us off its back, classified our entitlements as “Other Creditors,” meaning that they may never pay us in our lifetime. It is quite unfortunate that NDIC which had earlier agreed in our meeting with them and in a letter dated June 20, 2008 to pay us would make a U-turn within a short time of one year.” (565).

    Similarly, a former staff member of All States Bank Plc, Mr Charles Elelegwu, said NDIC and CBN have paid workers of the Lead Merchant Bank and City Express Bank, and must accord the same privileges to them.

    “The NDIC, through its existing legal framework of winding up banks, has set aside a maximum of N200, 000 for depositors of the failed banks irrespective of the balance in their accounts. We are, therefore, asking that the same principle be applied to the settlement of the staff entitlements,” he added.

    Sources close to the management of CBN said the apex bank would look into the matter to ascertain the level of genuiness of the complaints of the aggrieved staff. The sources said the winding up of banks, valuation of their assets, payments of the affected depositors/staff, among other issues, are sensitive, and need to be handled with cautions.

    “We would look into the issue and see what really happened, the sources added.

  • Voter Cards: CBN wants depositors to report defaulting banks

    Voter Cards: CBN wants depositors to report defaulting banks

    Depositors who were denied the opportunity of using their voter cards for identification in banks should forward their complaints to the Central Bank of Nigeria (CBN), its Director of Corporate Communication, Mr Ugochukwu Okoroafor has said.

    CBN had last month directed banks to accept voter cards duly signed and approved by the National Independent Electoral Commission (INEC) for transactions as part of its Know Your Customer (KYC) programme to promote financial inclusion in the country.

    Ugochukwu said though the apex bank has not received any complaints, depositors should report erring banks to the CBN.

    He said the three levels of Know Your Customer initiative was introduced to enable people with different means of identifications access the banking services.

    He said: “Though we are yet to hear that banks do not accept voter cards for identification, if there are depositors facing this problem, they should let the CBN know. Based on CBN’s study, 65 per cent of people are out of the financial system, representing over 90million of the 160 million Nigerian population. We want to ensure that 32.5 per cent of this figure is brought into the financial community before 2020. We would like to see a situation whereby Nigerians that have been excluded from financial activities, mostly women, embrace banking transactions. If identification is the major problem in the industry, we should do something about it to encourage more participation in the industry.”

    According to him, lack of proper means of identification is one of the major problems affecting operations in the industry, adding that the inability of many people to have driving licence, international passports, among other major means of identification, resulted in the introduction of voter cards for banking transactions.

    “What we are trying to do by the three levels of KYC initiative as stated in the policy guidelines, is to ensure that banks know their customers in details. Through this, banks would take lesser risks, guarantee the safety of funds, make more money and help in stabilising the system. It is not everybody that has the same level of identification.

    ‘’So, when there are multiple and varying means of identifications in the banking system, the more people come into the industry, the better for the growth of the industry and the economy in particular,” he added.

    The Association of Chief Compliance Officers of Banks in Nigeria (ACCOBIN) said the acceptability of voter cards for identification in banks is a welcome development. The association said banks would not leave any stone unturned to carry out a through customer due diligence.

    The association at a forum in Lagos said the approval of voter cards for transactions will give as many customers as possible an opportunity to have an interface with the banks.

  • Forex inflows decline to $27.5b

    Foreign exchange inflows to the economy dropped by 2.44 per cent from $28.19 billion in first quarter, to $27.50 billion in second quarter of 2012, data from the Central Bank of Nigeria (CBN) website has shown.

    However, total outflows increased marginally by 0.32 per cent from $10.09 billion, to $10.11 billion, while a net inflow of $17.38 billion was recorded in second quarter contrary to $18.10 billion in first quarter of this year.

    According to the apex bank, net inflow through the CBN declined by 17.07 per cent from $12.11 billion in the preceding quarter to $10.05 billion. Similarly, outflow through the bank declined marginally, by 1.70 per cent, from $9.76 billion in the first quarter of 2012 to $9.59 billion in second quarter.

    Total foreign exchange transactions through the bank therefore resulted in a substantially lower net inflow of $0.46 billion, which reflected in the marginal accretion to the stock of external reserves. The level of external reserves as at end June 2012 stood at $35.41 billion as against $35.20 and $31.89 billion in the preceding quarter and corresponding quarter of 2011.

    “The current level of reserves could finance 11.1 months of foreign exchange disbursements and 7.3 months of imports compared to 10.8 months of foreign exchange disbursements and 7.8 months of imports recorded in the pre-ceding quarter,” the report said.

    Analysis of foreign exchange utilisation by sectors revealed that $7.74 billion or 63.8 per cent was spent on importation of various items into the country in the second quarter.

  • SON seeks standards enforcement in construction sector

    SON seeks standards enforcement in construction sector

    The Director-General, Standard Organisation of Nigeria (SON), Dr Joseph Odumodu, has called on stakeholders in the building and construction industry to harmonise efforts to ensure that relevant standards are implemented and enforced in the construction sector of the economy.

    Speaking in Lagos at the first graduation of e-building artisan’s project in the country, he commended the artisans who enrolled for the programme to improve on their skills.

    Odumodu, who was represented by an officer of the agency, Mrs Cynthia Ifeagwu, said the diligent implementation of the National Building Code, which came into force since 2006, would help to reduce the incidence of building collapse and the attendant avoidable loss of lives and properties.

    Earlier in his speech, Executive Director of Shelter Watch Initiative, Mr Segun Olutade, said the recent clamp down on Okada riders in Lagos State, would be a blessing to the building/construction industry as good hands that have abandoned the sector would be forced to return.

    He, however, appealed to the Lagos State Government to assist in retraining this group of people to make them useful to the society.

    He regretted that the country loses over N900 billion to foreign governments through foreign artisans rather than ensuring that our ageing artisans are provided with facilities that would aid them in the discharge of their duties.

    He revealed that about 50 retrained artisans were carefully selected for the e-building artisan’s project, saying that they could compete with their foreign counterparts.

    Rector, Lagos State Polytechnic, Dr.  Abdulazeez  Abioye  Lawal, who was represented by Dr A. O. Abayomi, frowned at the over emphasis on certificates and urged  the graduates to be pain-staking in the performance of their duties.

  • Group makes case for female engineers

    Group makes case for female engineers

    Female engineers have expressed concern over the few number of female engineers in the country.

    Speaking at a seminar in Lagos to mark 30 years of the National President of Association of Professional Women Engineers of Nigeria (APWEN), its President, Olayinka Abdul, stressed the need for the training of the girl-child to embrace the engineering profession.

    “We are not satisfied with the number of practising female engineers in the country. We need more entrance of females into engineering,” she said.

    Abdul explained that a lot of females do not know about the engineering career hence the association decided to embark on the visitation to schools.

    The APWEN President urged associations, well-meaning Nigerians and institutions to encourage the girl-child to take up engineering.

    Abdul expressed delight that the future was bright for female engineers, adding that they started with six women and now have over 2,000.

    She declared that their male counterparts were never a threat to them as there was no intimidation on the job and urged girls to embrace science subjects that will make them future engineers.

    Also speaking, the Lagos State Chairman of APWEN, Felicia Agubata, said the education of the girl-child towards becoming engineers cannot be over emphasised.

    According to Agubata, the profession needs more females, especially the aviation industry, noting that the profession has achieved a lot in the last 30 years despite all the challenges facing it.

  • Local food production hits 8.1m mt

    Local food production hits 8.1m mt

    The Minister of Agriculture and Rural Development, Dr. Akinwunmi Adesina yesterday, revealed that Nigeria’s local food supply and production has hit 8.1million metric tonne.

    Adesina informed that with the development of the value-chains, the country will soon graduate into a major food exporter and stop the importation of staple foods.

    The Minister spoke at a seminar on Agricultural Commodity Value Chain Development in Nigeria, organised by the Agricultural and Rural Management Training Institute (ARMTI) in Abuja.

    He said “We should be exporting food to other countries instead of importing it, especially in areas that we have comparative advantage.

    Nigeria must be a food self-sufficient nation. Our food produce has reached 8.1 million metric tons. The era of food importation will soon be over hence machineries have been put in place to take care of this.