The Nation Newspaper

Category: Business

  • Nestle Nigeria leads equities as investors gain N138b

    Nestle Nigeria leads equities as investors gain N138b

    Nestle Nigeria set a new market-wide all-time high of N615 value per share last week as investors pocketed about N138 billion in new capital gains.

    Nestle Nigeria led a compact but impactful pack of fast moving consumer goods companies that provided impetus for further market recovery. Other major gainers during the week included Guinness Nigeria, Cadbury Nigeria, Flour Mills of Nigeria, Nigerian Breweries and GlaxoSmithKline Consumer Nigeria (GSK).

    Nestle Nigeria’s share price improved by N35, representing an increase of 6.03 per cent. Guinness Nigeria followed with a gain of N17.20 to close at N277.20. Cadbury Nigeria added N3.62 to close at N27.56. Flour Mills of Nigeria gained N3.32 to close at N64.99 while Nigerian Breweries and GSK added N2.85 and N2 to close at N139.85 and N38 respectively.

    Gains by 48 stocks added N138 billion to aggregate market capitalisation of quoted equities, which rose from opening value of N8.282 trillion to close at N8.420 trillion. The All Share Index also reflected the gain with closing index of 26,442.67 points as against its opening index of 26,011.64 points.

    Total turnover stood at 4.76 billion shares worth N40.472 billion in 20,364 deals, a marked improvement from a total of 1.70 billion shares valued at N14.54 billion exchanged in 24,202 deals in previous week. The consumer goods sector accounted for 3.261 billion shares valued at N32.447 billion in 3,902 deals.

    The financial services sector followed with 905.262 million shares valued at N6.236 million in 11,327 deals.

    Turnover was largely driven by the transfer of majority equity holdings in Dangote Flour Mills Plc. The flour mills accounted for 3.178 billion shares, representing 66.78 per cent total turnover for the week.

    On the secondary over-the-counter bond market, investors staked N198.96 billion on 185.76 million units through 991. This represented a slowdown from the previous activity level, when investors staked N247.31 billion on 229.84 million units in 984 deals.

  • Power: Experts make case for rural communities

    Power: Experts make case for rural communities

    The on-going privatisation of electricity distribution in the country may remain a mirage if adequate provision is not made to address the apprehension of rural communities in the new power distribution model.

    Immediate past Chairman and Chief Executive Officer of the Nigerian Electricity Regulatory Commission NERC, Dr. Ransome Owan, disclosed this at a business forum in Lagos.

    He noted that the preferred bidders are more likely to be inclined to focus on the urban centers where there is propensity for achieving high returns on investment at the detriment of the rural dwellers.

    He said this is no time for experiment as electricity supply under the new model could be a security issue if left in the hands of inexperienced operators technical comprehensions that do not reflect the reality of the peculiarity of the environment.

    Dr Owan, who commended the Bureau of Public Enterprises (BPE) for a job well done, admonished the privatisation agency to ensure that cynics of the entire privatisation process were encouraged to change the pervading apprehension in the land over the sincerity of the government to pick the most qualified bidder in terms of footprint, stakeholder knowledge and size of previous projects handled.

    Speaking in the same vein, the Managing Director, Bayelsa Electricity Company Ltd, Engr. Olice Kemenanabo noted that current inefficiencies in the power sector have brought about great expectation that the new entrants will address the identified shortcomings and make electricity consumers smile again based on the following criteria: size of utility experience of the bidders and experience in rural and urban areas, the need for the state government’s participation; are the partners familiar with the terrain? Can the shortlisted distribution companies deliver; can they take power to the rural riverine areas?

    According to Kemenanabo, who doubles as Special Adviser to the Bayelsa State Governor on Power sector,.

    “We must ensure that we give it to somebody who has a track record of having done it before with great competence. Loss reduction figures should not be a strait-jacket yard stick for selecting preferred bidders as against technical experience, size of previous operations and adequate knowledge of the local environment.”

  • CBN moves against money laundering

    CBN moves against money laundering

    Account opening forms for all commercial banks have been unified by the Central Bank of Nigeria (CBN).

    In a circular to all banks and Other Financial Institutions (OFIs), the apex bank said it took the step to forestall the use of the accounts for money laundering and financial terrorism by bank customers.

    The circular signed by CBN Director, Financial Policy and Regulation, Obot U.A said the absence of uniformity in account opening procedure and documentation for prospective customers has continued to hinder the effectiveness of Know Your Customer requirement in banks and OFIs.

    He said, the apex bank has prepared a draft copy of the proposed form, and directed banks and OFIs to make inputs to enable it approve the final copy for implementation by the lenders.

    The Director said that the adverse effect of this on the fight against money laundering and combating of financial terrorism cannot be overemphasised.

    Obot explained that the apex bank, in conjunction with the Committee of Chief Compliance Officers of Banks of Nigeria, has said developed draft uniform account opening forms for adoption by banks and OFIs in order to increase the effectiveness of customer due diligence, comply with anti-money laundering /combating the financial terrorism (AML/CFT) standards.

    Such plan, he added, will also facilitate quick investigation of financial crimes by relevant agencies. For review therefore, are all account opening form for individuals, companies, partnership and sole proprietorship, and for designated nonfinancial businesses and profession.

    The banking watchdog said implementation of risk-based supervision to combating money laundering and terrorist financing depends on a sound understanding of the threats and vulnerabilities of the menace to each financial institution in particular and entire financial industry in general.

    The apex bank has commenced full implementation of its anti-money laundering /combating the financial terrorism (AML/CFT) risk-based supervision framework, it issued in 2011.

    The CBN said the measure is further supported by the importance the Financial Action Task Force (FATF) attached to the risk-based approach to AML/CFT supervision in its revised recommendations issued last February.

  • Imo teachers undergo special training

    The Imo State Universal Basic Education Board has embarked on a 10-day train-the-trainer workshop for its teachers.

    The workshop entitled Strengthening Mathematics and Science Education (SMASE), is aimed at training core teachers who would implement the programme in their respective schools.

    The desk officer coordinating the programme, Mrs Vivian Owunna, told The Nation that the focus of the exercise was to change the attitude of the teachers in mathematics and science subjects.

    “We are trying to train the teachers here on ways to teach their students how to relate mathematics and scientific concepts to their daily lives. The teachers trained here by the national trainers will continue this training in their local government areas so that every school will benefit,” Owunna said.

    One of the trainers in chemistry, Mr Joseph Onimisi, said the training was a customised contextual course meant to enhance teaching of mathematics and sciences in schools.

    “This will teach them content mastery; we encourage them to bring out the topics students find hard to grasp and we teach them a more practical approach to make teaching easier,” he said.

    “The trainers have all gone on these customised courses sponsored by the Japan International Cooperation Agency, either in Malaysia or the Philippines, at the Asian regional educational centre.

     

  • Asset Managers, SEC facilitate securities lending

    The Association of Assets Custodians of Nigeria has said that its partnership with the Securities and Exchange Commission (SEC) assisted in the implementation of securities lending in the country.

    Speaking at the first annual general Meeting of the Association held at the weekend, in Lagos, President of the association, Segun Sanni said the group is at the forefront of promoting securities lending because, such will help deepen the market.

    Sanni said the group was able to ratify its constitution, received report of its activities, approved its audited financial year for 2010 and 2011, appointed auditors among other deliberations at the AGM.

    According to him, the group has also partnered with the Central Bank of Nigeria (CBN) on collective investment and automation of the Certificate of Capital Importation (CCI). The CCI enhances confidence of foreign investors when they are investing in the country.

    Sanni explained that foreign investment constitute between about 70 per cent of the total turnover volumes in the capital market.

    He said there is increasing need to automate the CCI as such would enable foreign investors to easily find out the status of their investments in the country, increase transaction efficiency and ensure that investors get adequate returns on their investments.

    Sanni explained that the group also prevailed on the apex bank to relax its rule, mandating foreign investors to keep their investments for at least one year, before disposing them.

    He said such policy affects foreign direct investment (FDI) as there should be free entry and exit by investors. He said the risk of investors not being able to take away their investments at will would not favour the economy, adding that after presenting these views to the CBN, the policy was abolished in 2011.

     

     

     

     

     

  • Benefits of micro-insurance products listed

    Benefits of micro-insurance products listed

    Concerted efforts in the development and introduction of micro-insurance products will go a long way to create insurance awareness among Nigerians, Acting Director – Inspectorate, NAICOM, Mr. Emmanuel Farinu has said.

    He was presenting a paper on how to develop the insurance industry. The forum was organised by the National Insurance Commission (NAICOM).

    Farinu said micro-insurance is accessed by the low income population, provided by a variety of different entities and run in accordance with generally accepted insurance principles.

    The International Association of Insurance Supervisors (IAIS) defines micro-insurance as: “The protection of low income people against specific perils in exchange for regular premium payments appropriate to the likelihood and cost of the risk involved.”

    Farinu said micro-insurance involves low level of premium. “It is insurance with small benefits, simple, easily understood contracts unlike the complex nature of the conventional insurance,” he said.

    He said quite a number of products are offered under the micro – insurance scheme, some of which are: life and savings, health and disability insurance as well as agriculture and livestock insurance. Others include: index based crop insurance, funeral insurance, property insurance, credit insurance/loan protection and packaged policy.

    Explaining the different types of micro- insurance, Farinu stated that for one who took the life and saving insurance, at death, the deceased’s beneficiary will be paid the amount held in the savings plus benefits.

    The health and disability policy is to enable the poor cover the cost of medicine, hospital stay and treatment as well as protecting against the loss of income due to sickness or injury while the agriculture and livestock insurance is to protect against losses associated with cattle rearing, piggery, poultry, fish farming and other types of farming.

    Farinu explained that Index based crop insurance is for protection against adverse weather conditions while the funeral insurance cover the cost of burials. Property insurance, he explained, replaces assets lost due to theft, damages or destruction. Property damage could result from fire, flood or other natural disasters, he stated. For credit insurance /loan protection, he explained that it is meant to

    “To prevent people from becoming poor due to illness, natural disaster, lack of savings, or loss of assets or livestock, developing Countries must invest in micro-insurance. Micro-insurance focuses on helping people from falling into poverty traps on their way to the middle class”.

    The Commissioner for Insurance, Mr Fola Daniel, said insurance penetration in Nigeria was not more than five per cent compared with 15 per cent and above in some African countries, including South Africa.

    A study conducted by the combined team from GIZ, a Germany agency for sustainable development, and Riskguard-Africa Limited revealed that less than 25 percent of insurance companies operating in the country are known by Nigerians.

    This clearly shows the level of apathy among Nigerians to the insurance sector.

     

     

     

     

  • Joint execution of IFRS, Basel Accords by banks likely

    Joint execution of IFRS, Basel Accords by banks likely

    Risk officers are advocating processes that would allow banks to jointly implement the International Financial Reporting Standard (IFRS), Basel I and Basel II Accords, The Nation has learnt.

    The IFRS are principle-based standards, interpretations and the framework adopted by the International Accounting Standard Board (IASB) that requires disclosure on a range of issues, including risk management measures and changes in accounting policy.

    Risk Expert and Chairman, IFRS Interpretations Committee, at the IASB, Bob Garnett confirmed the possibility of a joint implementation of the IFRS by lenders to The Nation at an IFRS meeting organised by Ernst & Young in Lagos.

    He said how much a bank achieves in terms of data integrity and efficient financial reporting, is hinged on its application of IFRS models and Basel I and II Accords.

    Basel Accord, analysts said, is a set of agreements set by the Basel Committee on Bank Supervision (BCBS), which provides recommendations on banking regulations with regards to capital risk, market risk and operational risk.

    The Basel II, which is to be fully implemented by 2015, focuses on three main areas, including minimum capital requirements, supervisory review and market discipline, known as the three pillars.

    The thinking is that although banks cannot be stopped from taking risks associated with their businesses, but they must put in place structures and processes that will hedge against loss.

    Nr Garbett said banks are in the business of taking risks, for without risk taking, the possibility of making money becomes illusive.

    “So, while one cannot stop financial institutions from taking risks, a failed financial system has serious adverse implications on the economy. That explains why all over the world, banks and financial institutions are the most highly regulated,” he said.

    Garnett said the process whereby banks manage their market risk, reputational risks, environmental risks, and all other risks that face financial institution, in a disparate form, may not produce the best result.

    “We have all risk managers scattered everywhere and when you manage risks with such approach, the institution will fail. The modern approach to risk management is what is referred to as enterprise risk management system. It is an integrated approach to risk management system,” he said.

    The expert urged the adoption of regulatory processes to ensure that banks comply with risk management procedures, adding that harmonising the IFRS and Basel Accords, would give Nigerian banks’ financials, better credibility.

    He said the IFRS, which requires disclosure on a range of issues, including risk management measures and changes in accounting policy, will ensure that their results for this year are compliant with the international guidelines.

    Garnett explained that the global knowledge and expertise reduces the risks of getting things wrong, adding that the adoption of the model will further enhance transparency and facilitate the restoration of investor’ confidence in the on-going efforts to sanitise and rebuild the financial services sector.

  • PenCom seeks tax exemption for pension returns

    PenCom seeks tax exemption for pension returns

    The National Pension Commission (PenCom) is seeking tax exemption and strict enforcement of the Pension Reforms Act 2004 to ensure returns on investment of pension funds.

    This, its Director – General, Mohammad Ahmad, said would enhance retirement benefits.

    In a statement, he said though Sections 7 and 10 of the Pension Reform Act (PRA) 2004 provided for tax exemption at the point of accumulation and payment of retirement benefits, it is silent on taxation of income from investment of pension funds.

    “To ensure real returns on investment of pension funds and ultimately enhance the retiree’s retirement benefits, the income earned on investment of pension funds should also be exempted from taxation,” he said.

    “On exemption of Pension Fund from Tax, Ahmed said even though Sections seven and 10 provides for tax exemption at the point of accumulation and payment of retirement benefits, it is silent on taxation of income from investment of pension funds.

    “In order to ensure real returns on investment of pension funds and ultimately enhance the retiree’s retirement benefits, the income earned on investment of pension funds should also be exempted from taxation,” he said.

    The PenCom boss called for the amendment of Section sevens of the Act to include tax exemption on income from investment of pension funds.”

    Chief Executive Officer, IBTC Pension Managers, Dr Demola Sogunle, also said tax exemption should be used by the government to encourage employers to embrace the pension scheme.

    Sogunle said one of the ways the government could assist to ensure the success of the scheme is to engender strict enforcement of the Pension Reform Act 2004.

    He noted that government needs to enforce strict sanctions against defaulting employers, adding that the introduction of the new scheme has induced nation-wide mass saving culture, which allows Pension Fund Administrators (PFAs) accumulate assets that can be invested in financial markets.

     

    Sogunle noted that one of the major challenges against the success of the scheme in the private sector is the fact that many employees are yet to register with a PFA, while some employers fail to remit or are defaulting in remitting contributions into their employees Retirement Savings Accounts (RSAs).

    “The issue of defaulting poses a major challenge to the success of the contributions pension scheme, since it influences the adequacy of the benefit payments to participants. A lot of enlightenment is required to ensure that employers and employees understand the benefits of keying into the contributory pension scheme, especially as it is mandatory by law,” he said.

  • Agency advises motorists on parking lots

    Agency advises motorists on parking lots

    The Federal Airports Authority of Nigeria (FAAN) has urged motorists to use designated parking points at the Murtala Muhammed International Airport and the General Aviation Terminal, Lagos.

    A statement by the General Manager, Corporate Communications Yakubu Dati said, there are laid out signages provided to guide motorists on the routes around the terminals.

    The airport environment, Dati said, is a special place and the need to keep international standards is uppermost, hence the need to create a safe and sane environment for steady flow of traffic.

    He said towing of vehicles at the airport is to help FAAN focus on its main business of running airports and terminals, and to serve as deterrent to errant motorists that will not abide by the rules.

    He said: “The action is to compel motorists to conduct themselves in orderly fashion and to transform the environment into a world class airport as envisioned by the management. We want to discourage the arbitrary parking of vehicles and often cases of abandoning of vehicles for days on end, which results in crisis in traffic management.

    It is against standard practice worldwide for vehicles to park at designated no-parking zones, park haphazardly or be left unattended at airport environments. Such vehicles not only constitute a nuisance to the scenic environment being envisaged, but are a threat to the security and wellbeing of the airport and the general public.”

  • Resource staff disrupt Enterprise Bank’s operations

    Resource staff disrupt Enterprise Bank’s operations

    Staff of First Spring Franchise Services (FSFS), a human resource service provider of Enterprise Bank Limited have failed to honour agreement between the lender and their organisation. This affected banking operations at the bank’s Head Office last Friday.

    According to a statement from the bank, representatives of national officers of Nigeria Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE) and the Nigeria Labour Congress (NLC), the bank and the FSFS had reached agreement on how to resolve the matter, but the workers were alleged to have failed to keep their own side of the agreement. .

    The Management of Enterprise Bank said it was surprised that the FSFS staff will recant and resort to picketing the financial institution, disallowing staff and customers’ access to the offices and banking halls respectively, while carrying placards with denigrating remarks.

    “ Appeals to the picketing staff by the management of the bank for more time to look at the issues have fallen on deaf ears as they have continued with the illegality which began without due notice of the required minimum of seven days,” it said.

    Following the intervention of the Nigeria Deposit Insurance Corporation (NDIC) in the now defunct Spring Bank in August last year, the Asset Management Corporation of Nigeria (AMCON) took over the bank and recapitalised it to start a new bank.

    Enterprise Bank Limited, which has stabilised its operations over the period, and has shown positive indices in all areas of operation.