The Nation Newspaper

Category: Business

  • ‘Trade sectors still down, 52 years after Independence’

    The Nigerian Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) has criticised the poor state of infrastructure, quality of the financial systems, capacity utilisation and the macro-economic condition of the country.

    NACCIMA President, Dr. Herb Ademola, during a briefing to commemorate the nation’s 52nd Independence anniversary, said the resultant effect was that for over 13 years of Nigeria’s democracy, the trade and investment sector has not reached its desired potential. About 50 per cent of the population still languish in poverty as they live below the poverty line of $1.25 a day.

    “Available information to us reveals that while the nation witnessed various government initiatives, programmes and reforms at the three levels of governance to drive their agenda, a lot of energy was dissipated on self-inflicted crisis management while at the same time we continue to struggle with the ‘bubble-burst’ pattern characteristic of past oil price cycles,” he said.

    He said the on-going efforts of our various governments with regards to infrastructure, especially power supply, though significant is yet to meet the expectations of Nigerians and the business community.

    “The Nigerian business sector admits that this challenge is already being battled by the administration of President Goodluck Jonathan with its Transformation Agenda.

    “And with the development in the trade and investment sector picking up faster than ever, Nigerians cannot afford to be hopeless or despondent,” he said.

    He said a critical analysis of Nigeria’s trade and investment sector since 1999 despite the achievements or improvements recorded on the performance of the economy, it must be admitted that the country like other developing economies has its own peculiar challenges.

    Ajayi said the prospects of positive improvements were also quite bright and NACCIMA has no doubt that the trade and investment sector environment, which is the pivot of economic growth, would continue to improve.

    “We would like to draw attention to great advantages in reorganising our civil service, especially the human resources and expertise locked in within civil servants through training and re-training programmes because they are the most important managers of the nation’s policies and progress that would ensure the success of the transformation agenda,” he said.

    He tasked the government consider putting in place entrepreneurial training by the OPS for Youth Corp members to help them discover themselves as employers of labour instead of applicants.

  • Firm launches scratch card lottery

    Firm launches scratch card lottery

    ISIS Gaming Limited has launched the first-ever scratch card lottery that offers players a variety of gaming options in Lagos.

    “Unlike other conventional lotteries, what you see under the silver panel on the scratch card is what you win, thus eliminating the stress of forecasting and waiting for results to be announced,” the firm said.

    ISIS is entering the lottery market on three exciting platforms namely – C money + which sells for N50 and players stand a chance to win from N50 to N50, 000, Money-Rain which goes for N100 and winners have the chance to win from N100 to N200, 000 and the Big-Boy selling for N500 where winners could win from N500 to N500, 000.

    In his address at the event, the Chief Executive Officer, Lagos State Lottery Board, Mr. Lanre Gbajabiamila, commended the initiative, saying “it is the first of its kind in the country.”

    He further stated that the members of the public who patronise the product are spending their money on a good cause as against the “general gambling” belief people hold against lottery, explaining that revenue generated from the lottery will be channeled to infrastructural development in Lagos State.

    The company’s Marketing Executive Officer, Okharedia Otibho, in a chat with journalists, said the company is committed to promoting good cause and enrich lives by developing new games with the high winning chances and payout ratios, adding that the lottery’s winning will also include scholarships awards.

     

  • IMF hinges Nigeria’s 7% growth on oil output

    IMF hinges Nigeria’s 7% growth on oil output

    • Forecasts 5% for Sub-Saharan Africa

    THE International Monetary Fund (IMF) yesterday hinged Nigeria’s ability to achieve an overall Gross Domestic Product (GDP) growth rate of seven per cent in 2012, on a rebound in its oil output.

    “In Nigeria, non-oil GDP growth will moderate with the softer external environment and tighter macroeconomic policies. But a slight rebound in oil output will keep overall GDP growth at 7 per cent, “ the Fund stated in its October 2012 World Economic Outlook released yesterday in Tokyo, Japan, venue of the on-going World Bank/IMF Annual Meetings.

    The latest forecast by the IMF, is in line with the Central Bank of Nigeria’s (CBN’s) projection that Nigeria’s Gross Domestic Product (GDP) is expected to grow by around seven per cent this year. The CBN Governor, Sanusi Lamido Sanusi had said Nigeria now has the right policy makers pushing forward reforms, which would ensure Nigeria achieved a significant rise in growth in the coming years.

    The real risk in Nigeria is that of policy, adding that we have achieved an average of seven per cent growth for the last decade, and this is without steady electricity supply or adequate infrastructure,” Sanusi said early this year.

    “GDP can easily move into double-digits If we implement all the things planned. There will be a major step change in growth rates in the next two to three years,” he added.

    Driven by non-oil sector growth, Nigeria’s economy grew 6.28 per cent in the second quarter of this year, up slightly from 6.17 per cent in the first quarter. Historically, from 2005 until 2012, Nigeria’s GDP growth rate averaged 6.8 per cent, reaching an all time high of 8.6 per cent in December of 2010 and a record low of 4.5 percent in March of 2009.

    The GDP growth rate provides an aggregated measure of changes in value of the goods and services produced by an economy.

    Average daily crude oil output from the country also rose marginally to 2.38 million barrels per day (bpd) in the second quarter from 2.35 million bpd in the first quarter.

    Christened, “Coping with high debt and sluggish growth,” the IMF said growth in the oil-exporting economies is projected to remain high, near six per cent in 2012, adding that increased oil production in Angola will expand its GDP by close to 6¾ per cent this year.

    “In the baseline scenario, under which strains in the euro area remain contained and the global economy expands by 3¼ to 3½ per cent this year and next, growth in Sub-Sahara Africa, will continue above five per cent during 2012–13,” the Fund said.

    Noting that external shocks remain elevated, the IMF advised policy makers in the region to use the window provided by strong growth to rebuild budgetary space and normalize monetary conditions to be better prepared for downside risks.

    “Economic activity in sub-Saharan Africa (SSA) has expanded by more than 5 per cent in each of the past three years -continuing a decade-long run of strong performance that was only briefly interrupted by the global downturn in 2009.

    Most SSA economies are participating in this solid expansion, with the notable exception of South Africa, which has been hampered by its strong linkages with Europe, as well as some countries in western Africa affected by drought and civil conflict.

    “ More recently, some food importers in the region have also been hit by the sharp increase in global food prices for a few major crops -leading to higher headline inflation and widening trade imbalances – although so far with less severe effects than during the 2007 -08 food price shocks. The region’s recent growth has occurred against abackdrop of difficult external conditions, including the escalation of the euro area crisis.

    “But apart from South Africa, financial spillovers from Europe to the region have been modest. Export diversification has reduced exposure to weak demand from advanced economies, and high commodity prices have supported the region’s commodity exporters and boosted investment in resource extraction.

  • ‘Insurance contributes only 0.7% to GDP’

    ‘Insurance contributes only 0.7% to GDP’

    The insurace sector contributes 0.7 per cent to the Gross Domestic Product (GDP), a Consultant to the World Bank, Vyasa Krishna Burugupalli, has said.

    Burugupalli, who spoke at a forum organised by nchor Insurance Company Limited,in Lagos, said the Nigerian insurance market is largely untapped, adding that with over 150 million people, Nigeria has an insurance density of just about five to 10 per cent.

    He said in some other developing countries, insurance density is 40 -50 per cent; in the developed economies, it is as high as 90 – 98 per cent.

    Insurance, he said, can contribute significantly to the economic development of Nigeria as it is being witnessed in the developed world, if practitioners will lay emphasis on customer service delivery.

    Burugupalli, who is Country Director, Micro Ensure, India, and Consultant to Price Waterhouse Coopers in Sri Lanka for a World Bank/IFC project, was presented by Kunle Aduloju, a Senior Lecturer, Department of Actuarial Science and Insurance, University of Lagos.

    He said in the lecture, entitled: “Agriculture and micro insurance: A new vista for deepening insurance penetration in Sub-Saharan Africa,’’ despite the effort of the National Insurance Commission (NAICOM), insurance penetration in Nigeria remains one of the lowest in the world.

    He said exploring micro agric insurance remains about the best option if Nigeria is to record any appreciable level of insurance penetration soon, adding that agriculture, as the mainstay of the economy, contributes about 45 per cent of GDP.

    He stated that the agric sector employs about two-thirds of the country’s total labour force and provides a livelihood for about 90 per cent of the rural population.

    He said 75 per cent of Nigerians live in rural and semi-urban area, a ready-made market for micro insurance to thrive, so with 150 million people, the largest in Africa, and a fast-growing economy, taking insurance to them is the right way to go, he said.

    “Microinsurance simply put is a low premium approach to insurance for those at the bottom of the pyramid, that is the poor. The innovative part of microinsurance is that it reaches an area of the population that is still deemed ‘unbankable’ or physically unreachable to the normal banking or conventional insurance activities.

    “Micro-insurance is the ‘protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved.

    The guest lecturer said development institutions, such as the World Bank and the United Nations, see in it a potential to secure poverty reduction. He listed risks covered by micro-insurance to include: crop micro insurance, livestock micro insurance, life micro insurance and health micro insurance. Others are disability micro insurance, property micro insurance and health micro insurance.

    Comparing the traditional with the micro insurance, Burugupalli, said: “In equivalence with regular insurance, the central underlying principle is the pooling of risks, which implies that financial contributions are collected from the members of an insurance scheme, and the loss of one individual is spread among all members in case of risk occurrence.”

    The main difference between micro insurance and regular insurance, he explained, was that the former isw targeted at low-income people, who have limited financial resources and often irregular income flow.

    He said the Food and Agriculture Organisation (FAO) has indicated that five billion people live in developing countries, out of which 57 per cent live in rural areas, adding that 49 per cent of these rural dwellers are employed in agriculture.

    He said the number of micro-insured people was estimated at 78 million, which is not a particularly high number, given that China and India are both among the 77 countries. The lecturer explained that due to the high population numbers in these two countries, the Asian region accounts for 86 per cent of the global outreach of micro-insurance. He said only 2.7 per cent of the poor population in Asia was covered by micro-insurance, while the coverage of the poor in Africa and Latin America was 0.3 per cent and 7.8 per cent.

    This low coverage is reflected in the level of penetration (premiums in per cent of GDP) and density (premiums per capita).

    He said in a world survey of insurance density, out of 78 countries analysed, South Africa ranked 32, Namibia ranked 44, Angola ranked 74, Kenya ranked 82, while Nigeria ranked 86.

  • LCCI worries about influx of short-term investors

    The increasing number of short-term investors bringing in “hot money” is a risk for exchange rate volatility, the Lagos Chamber of Commerce and Industry (LCCI) has said.

    In a statement, LCCI President Goodie Ibru said the risk of sudden reversal or pull-out of such funds would adversely affect price and financial market stability. “Hot money” refers to funds that are controlled by investors who actively seek short-term returns.

    Ibru said there has been a steady decline in aggregate credit to the economy and the private sector, adding that the aggregate net credit by banks to the domestic economy fell by 2.7 per cent and 0.1 per cent in the first and second quarters of the year.

    This, he said, was largely due to the sustained monetary tightening, significant rise in government domestic borrowing, attractive yield of government bonds and treasury bills.

    “The tight monetary policy stance continues to keep funds out of the reach of the private sector. With the planned issue of Treasury Bills to absorb all maturing securities in the fourth quarter, liquidity is expected to remain tighter with the private sector at the receiving end,” he said, adding that in the last nine months, industrialists have seen a steady decline in discretionary spending by households and firms, weaker uptake from suppliers and distributors and softer operating performance, among consumer goods companies.

  • Revenue chief advocates harmonisation of tax laws

    Revenue chief advocates harmonisation of tax laws

    Director at the Federal Inland Revenue Service (FIRS), Samuel Ogungbesan, has called for the harmonisation and coordination of all tax legislations and their codification into one supreme document.

    Doing so, he said, means putting all tax issues on the same page. “Without this, there will always be uncertainty in the law and the implementation thereof. When a country has clear laws, it makes it easier for companies to want to come and invest because they know that there is certainty, fairness and trust between themselves and the law,’ Ogungbesan said at the Ernst & Young tax conference, held in South Africa.

    He said large multinational companies contribute 80 per cent to the country’s revenue and occupy only three per cent of the existing business space. This, he said, emphasises the need to strengthen the Transfer Pricing (TP) laws, as tax administrations are aware that effective transfer pricing rules are key to ensuring that multinationals report and pay tax on the correct proportion of profits they make.

    He disclosed that Nigeria has released the TP regulations and would soon be signed off by the Federal Minister of Finance and the Attorney-General for it to become law.

    The FIRS Director, also called for reforms in the Nigerian tax system to enhance stability of the sector.

    He said the FIRS is re-engineering Nigeria’s tax systems to ensure there is transparency, understanding and certainty on legislation and practice when doing business in the country.

    He explained that tax matters need to be made easy to administer, given the important role they play in the economic and national development of the country. “We need to increase our tax base and have an extensively high measure of predictability in order to attract investments,’ he said, in a statement.

    He said Nigeria, with its 37 state tax authorities, still has a lot to learn on taxation. However, he explained that Nigerian tax system has undergone significant changes in recent times, with the laws being reviewed for simplicity.

    He said a new National Tax policy has been drafted, awaiting government’s approval. “The policy, which will be enforced by the Federal Ministry of Finance, calls for standardisation between tax law and practice across all tiers of government. It also provides for exchange of information and statistics across all spheres in order to keep tabs on taxpayers, “he said.

    The policy, he stated, will facilitate coordination between all agencies of government and harmonise the laws and practices across State Internal Revenue Boards.

    On the rationale for the conference, Abass Adeniji, Partner, Tax, Ernst & Young, said the annual event was designed to showcase the firm’s strength and expertise as well as integration to its existing and potential clients, globally.

    According to him, Africa Tax Conference provides an opportunity to demonstrate how connected Ernst & Young is as a single firm through- out the sub area.

  • CIBN, regulators collaborate

    CIBN, regulators collaborate

    The Chartered Institute of Bankers of Nigeria (CIBN) is partnering with key stakeholders and institutions to ensure that the banking sector attains the highest level of professionalism.

    A statement from the Institute said it would continue to partner with the Central Bank of Nigeria (CBN), and Economic and Financial Crimes Commission (EFCC) to ensure that bankers do their work diligently.

    The Institute also said it was partnering with Unity Bank Plc and other government and private bodies within and outside the country to take the Institute and the banking profession to greater heights.

    The President/Chairman of Council of the Institute, Mr Segun Aina, stressed the need to partner with relevant stakeholders on capacity building and training of staff in the banking industry as well as other sectors of the economy in order to enable the country realise her millennium goals aspiration. Aina spoke during the Institute’s dialogue with key stakeholders in Abuja.

    He urged EFCC, CBN and Unity Bank to engage the services of the CIBN Practice Licence holders and other well experienced professional bankers for their consultancy services, debt recovery, forensic audit, training and other services.

    Aina asked EFCC to support the establishment of commercial courts to fast-track cases involving banks and their customers as well as enforce the Dud Cheque Offences Act to checkmate dud cheque crimes.

  • ‘Credit bureaux ’ll reduce loan default’

    ‘Credit bureaux ’ll reduce loan default’

    The services of credit bureaux are central to reducing the rate of non-performing loans, the Bank Director Associat-on of Nigeria (BDAN) has said.

    BDAN’s President, Sonny Kuku, said the bureaux would complement the on-going banking reforms of the Central Bank of Nigeria (CBN), adding that the increased use of services of credit bureaux will enable banks to create cleaner balance sheets.

    He said: “We have devoted the 2012 edition of the annual BDAN Stakeholders Forum to examine the linkage between credit bureaux and the banking industry, thus we have chosen the theme of the 2012 edition to be, ‘How Banks can leverage on Credit Bureax Services to accelerate growth.’

    Kuku said experiences of other countries showed that credit bureaux offer services, which if properly harnessed, can reduce banking sector crisis and facilitate industry growth.

    Banks, he said, should also tap into the opportunities offered by credit bureaux by ensuring that top decision makers are acquainted with them opportunities, thereby promoting the use of credit bureaux services.

    The association’s scribe, Yemi Idowu, said banks’ primary focus is growth, having overcome the challenges of the global financial crises, that led to the liquidation of some of their counterparts across the world. He said the group’s focus is not only how to achieve growth, but sustainable growth, assisted by services of credit bureaux.

    Idowu said the prevalence of non-performing loans constitute a major setback for banks, which could be addressed by the use of credit bureaux. “There is the need for industry mechanism to address this problem. With credit bureaus, the problem of non-performing loans will be minimised and nipped in the bud,” he said, adding that while the role of the Asset Management Company of Nigeria (AMCON) is critical in taking over non-performing loans of banks, the services of credit bureaux will however, ensure that the level of loan default is reduced.

    He explained that while AMCON is curative, the credit bureaux sub-sector is preventative, stating that BDAN wants banks to focus more on the services of credit bureaux, so as to achieve an improved credit culture in the country.

    The Forum, which is scheduled to hold in November, will feature a keynote address by the CBN Governor, Sanusi Lamido Sanusi.

  • Banks raise daily ATM withdrawal limit

    Banks raise daily ATM withdrawal limit

    Some banks have increased the limit of cash withdrawals from their Automated Teller Machines (ATMs) from N100,000 to N150,000 daily, The Nation has learnt. Their action may not be unconnected with the confidence gained on sucurity of the platform.

    Diamond Bank informed its customers that it has increased the withdrawal limit, but did not give reasons for its action. Findings showed that other banks, including GTBank and United Bank for Africa (UBA) and implement the new benchmark, sometimes on request.

    Many bank customers welcomed the move, saying it would not only save them time from visiting ATMs’ frequently, but also reduce the commission they pay for cash withdrawals, which is tied to the number of transactions. Some said they believed that banks should set even higher withdrawal limits.

    A customer, Michael Obinna, said the increased limit gives him more opportunity not to queue in banking halls trying to withdraw huge cash, adding that banks can actually raise the limits further, as security of the device is improving.

    Another customer, Biodun Aremu, said ATM has reduced the cost of banking operations, urging banks to drop the N100 charge by some banks on other lenders’ cards. He said deducting excessive charges on use of ATMs diminishes the gains of the device.

    Findings showed that the action, became exigent after the introduction of chip and pin payment cards which drastically reduced fraud in electronic payments. The cards, the Central Bank of Nigeria (CBN) said, have led to 99 per cent drop in ATM card related fraud.

    The CBN said it has assisted in the building secured technology that makes it difficult for fraudsters to hack into customers’ transactions, especially with the migration to EMV (Europay, MasterCard and VISA) which are more secured platform needed to prevent frauds.

    Its Deputy Governor, Operations, Tunde Lemo, who spoke on the sideline at a seminar organised by the Committee of E-Banking Industry Heads (CeBIH) in Lagos, said the bank and other relevant institutions have been able to reduce card fraud drastically.

    “The ATM Fraud Prevention Group convened earlier this year, has successfully driven down ATM fraud incidences by 99 per cent. It has enabled the introduction of the more secure chip and pin cards, versus the magnetic stripe cards that were formerly used in the industry. The success of this group, has demonstrated practically what can be achieved as an industry when we work together to address issues, for the good of the system and the public at large,” he said.

    ATM, which was introduced into Nigeria in 1989, has changed the face of electronic payment. The first ATM was installed by the National Cash Registers (NCR) that for the defunct Societe Generale Bank Nigeria (SGBN) in 1989. There is hardly any bank that has not adopted today technology because of its cost effectiveness.

  • NCRIB to partner NAICOM on debt validation

    The Nigerian Council of Registered Insurance Brokers (NCRIB) will partner with the National Insurance Commission (NAICOM) on its planned validation of debts allegedly owed by brokers, NCRIB Prresident Mrs laide Osijo has said.

    Mrs Osijo told The Nation that the council suggested the idea to validate the debts to NAICOM, adding that brokers are striving to be ethical and professional and would never engage in anything that would attract sanction.

    She said: “We suggested the idea to validate acclaimed debts to NAICOM. The underwriters have been accusing brokers of with-holding premium which is not true. The underwriter often claim that the premiums has been paid and that brokers are with-holding them. But the truth is that most of the premiums are receivables that are not yet collected, especially government accounts, adding that because the debit notes are written by brokers, it is assumed that the money is with brokers.

    “The allegation is unfounded. We have asked underwriters that have documentary evidence to bring them out, so that we can do reconciliation. That was the advice we also gave NAICOM.The commission wrote us and we replied by telling them to ask underwriters to show evidences of premiums with-held by brokers. I would not say that brokers do not err, but brokers in the past are different from those practising now. ‘’

    She further stated that brokers of these days are afraid of being sanctioned, hence, they abide by rules. ‘’So we are trying to practice professionally and ethically these days, and I can boldly boast of that. Why would anybody accuse somebody for no just cause? It is unfair. If it is possible underwriters can go to the insured to confirm if the premiums have been paid, instead of accusing brokers unjustly. But that may be going to the extreme for there is no contract between the insured and the underwriter. Since we bring the business, we should be allowed the freedom of contract,” she said.

    She said NCRIB would collaborate with NAICOM to validate the claims of underwriters to stem the allegation that brokers hold back underwriters’ premiums, stressing that there should be proper documentation before laying accusation on the brokers.