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  • Can we bank on Nigerian bond market?

    Can we bank on Nigerian bond market?

    The Nigerian bond market hitherto an exclusive preserve of blue-chip companies have since become a fad among the different tiers of government who see it as a veritable source of income to drive development projects. In this report, Bukola Afolabi takes a look at the fortunes of the nation’s bond market vis-à-vis challenges of sustaining capital

    Time was when the bond market was strictly an exclusive market. But not anymore. Today, it has become the beautiful bride sought after by everybody who is anybody, especially the different tiers of government. And the reason for this is not far to seek: the realization that the bond market is perhaps one of the easiest means of raising funds out there with little or no encumbrances at all.

    The game changer

    Following the reforms in the bonds market, the Federal Government in October 2003 issued three-year, five-year, seven year and 10- year bonds. While the three year bonds were 87.5 per cent oversubscribed and allotted, investors showed apathy towards the longer tenured bonds.

    The low turnout for the other bonds resulted in subscription and allotment of less than 50 per cent of the issue. No bonds were issued in 2004. Following investors’ aversion for the long tenured bonds, the government offered only two and three-year bonds on seven separate dates in 2005, raising a modest N178 billion from investors at yields between 8.25 per cent and 17 per cent.

    In 2006, the Federal Government was able to raise N282 billion from the three-year, five-year, seven year bonds. The amount raised was 58 per cent above amount raised in the prior year, while subscription was N613 million. From then onwards, the bond market has grown rapidly, with the Federal Government beginning a tradition of monthly issuance of bonds.

    In 2006, for the first time since the re-opening of the market, special purpose bonds were issued to selected banks for the settlement of N75 billion pension arrears in 2006

    According to Ms. Arunma Oteh, Director-General of Nigeria’s Securities & Exchange Commission (SEC), “interest in (Nigeria’s) bond market is not limited to local issuers as the reformed environment is attracting interest from multilateral financial institutions such as the IFC (International Finance Corporation) and the ADB (African Development Bank).”

    Addressing participants on “recent reforms in the Nigerian bond market,” at a seminar organised by the Capital Market Correspondents Association of Nigeria (CAMCAN) in Badagry, Lagos, Oteh said: “the ADB has also filed for an MTN (Medium Term Note) programme of about $1.5 billion to be denominated in the local currency.”

    She recalled “that the IFC issued its maiden ‘Naija Bond’ in February last year and has already approached us for a medium term note (MTN) programme to be naira-denominated worth about $1 billion.”Both programmes will be free from the eliminated limitation on the lifespan of a shelf programme,” she assured.

    “You may also recall that we approved two new trading platforms, both over-the-counter (OTC), i.e. the National Securities Dealers Association (NASD) platform and the Financial Markets Dealers Association platform, the FMDQ. The former, which was launched recently has already started operations and is expected to revolutionise the entire bond market by boosting liquidity and simplifying bond trading.

    “The Nigerian bond market is certainly on the verge of a revolution buoyed by an improved, competitive and conducive environment that attracts issuers and investors alike. The yield curve of the FGN bonds which has been extended to 20 years provides a good benchmark for issuers of all stripes to leverage the bond market to attract capital, both foreign and local. The market will continue to attract significant amounts of capital internationally since the FGN bond attracted inclusion into the emerging markets indices of Barclays and JP Morgan,” Oteh stressed.

    Continuing, she said the result of these initiatives have been encouraging, as can be seen from the upswing in the domestic bond market, resulting in current total capitalisation of about N5.65 trillion.

    What is more noteworthy, she continued, “is the increasing interest in the bond market by corporates and State Governments.”

    State government bond

    In its annual National Debt Sustainability Analysis (DSA) released by the DMO last year, the total domestic debt of the 36 states and the Federal Capital Territory (FCT) reached N1.471 trillion last year. This is an increase of 19.34 per cent compared with the N1.233 trillion domestic debt figures the previous year.

    The figure indicates an abuse of the opportunity that the bond market provides reported recently that only sixteen states of the federation have raised bonds totalling N520 billion in the last six years without clear outlines on how the funds were used.

    This is against the backdrop of massive unemployment and infrastructural deficit across the country, which the debts could have addressed.

    Specifically, the 16 state governments were found to have raised the bonds without their citizens’ understanding of what the funds are meant for.

    Filings by the state governments at the NSE showed that Kogi state’s N5 billion bond is the smallest so far while Lagos emerged the biggest debtor with a total of N187 billion issued so far.

    Analysis of numbers obtained showed that Osun state with internal generated revenue and federal allocation of less than N2 billion has so far raised N30 billion including the just concluded N11.4 billion sukuk.

    Others include: Kwara N17 billion, Niger N15 billion, Kaduna N8.5 billion, Gombe N20 billion and Edo N25 billion.

    Benue, Ebonyi state Ondo state, Ekiti state, Bayelsa state, Imo state and Delta state have also raised N13 billion, N16.5 billion, N27 billion, N25 billion N50 billion, N18.5 billion and N50 billion respectively.

    Investigation by The Nation also revealed that Oyo, Ekiti, Zamfara, Rivers and Adamawa states respectively have concluded arrangements to head to the stock market to have a taste of the binge findings also revealed that the states activities at the bond market have crowded out corporates, particularly the manufacturing sector thus inhibiting their ability to create value and employment.

    Although safety of the funds is paramount, experts believe that pension funds administrators (PFAs) should do more than rely mainly on state and federal government bonds to invest pension contributions.

    The PFAs held bonds totalling N1.9 trillion at the end of March, equivalent to 45 per cent of their assets under management and 42 per cent of the outstanding stock of debt instruments.

    The project of the state government

    The number of listed state governments bonds currently being auctioned at the Nigerian Stock Exchange (NSE) has risen to 35, with a total market value of N565 billion. The above amount was raised between 1978 and 2013 from the capital market to finance various developmental projects.

    The Nigerian bond market has provided N565 billion to 18 states to finance various infrastructure projects in the last 35 years, 75 per cent of the funds were raised in the last five years. In the last two years, four state governments had raised funds through the bond market to finance various developmental projects.

    Leading the pack in terms of volume and value is Lagos State, which got approval to raise N167.80 billion from the capital market but has so far raised N80 billion in 2012 to finance construction of Adiyan Waterworks (Phase II), infrastructure developments, health facilities and redevelopment of Eric Moore Schools.

    On December 31, 2013, Ekiti State Government concluded its N25 billion bond issuance programme with the successful raising of the balance of N5 billion from the exchange. Ekiti State had in 2012 embarked on the bond issuance programme raising N20 billion as the first tranche with a coupon of 14.5 per cent to fast-track its infrastructural development and economic transformation.

    Having begun the execution of the various projects, Ekiti State returned to the market to raise the remaining N5 billion with a coupon of 14.5 per cent to complete the projects. Earlier in 2012, Ondo State Government under the 50 Billion Debt Issuance Programme issued N27 billion bond to finance developmental projects.

    It was followed by Gombe State in the same year which raised the sum of N20 billion to finance the building of township and regional roads, schools, purchase of earth moving equipment, mega park, School of Nursing and refinancing of existing loan while Osun State got approval to raise N60 billion from the capital market.

    But has so far raised N30 billion in 2012 and N17.4 billion in 2013 under its Tranche 1 and 11 to finance road infrastructures, commercial infrastructure, urban renewal, Ede waterworks and refinancing of loan while the second Tranche will be used to finance education.

    Recently, Director General of Securities and Exchange Commission (SEC), Ms Arunma Otteh said while the state governments have benefitted significantly from the market, the federal government had also been an active participant in both the domestic and international bond markets.

    More disciplined funding

    Also, Director-General of the Debt Management Office (DMO), Dr. Abraham Nwankwo noted that his agency is busier now and has helped by its enabling law ensured Federal Government is now more accountable for its spending. In the days before the advent of the office, he explained further, government funded its deficit budgetary expenses through ways and means, in which case more currency is printed to fund the shortfall in the annual budget. This was particularly the case, he recalled, during the military era and in the years immediately preceding the DMO’s birth.

    Speaking on “the transformation of the Nigerian bond market,” Nwankwo , who was represented by Joseph Ugwuala, head, Policy, Strategy and Risk Management at the office, said between 2003 and this year, Abuja has funded N4.612 trillion or 57.74 per cent of total deficit of N7.986 trillion arising from fiscal operations through bonds issuance at the domestic market.

    Giving a breakdown of the figure, showing that in 2003, fiscal deficit stood at N202.72 billion, representing 2.04 per cent of the nation’s Gross Domestic Products; dropping in 2004 to N172.6 billion or 1.51 per cent of GDP. By 2005, national deficit level fell again to N161.86 billion or 1.11 per cent of GDP; before beginning soaring to N341.86 billion or 2.35 per cent of GDP, and representing a 111.79 per cent jump. The deficit level jumped again to N580.19 billion or 3.64 per cent; and then N537.95 billion or 0.84 per cent in 2008. In 2009, deficit was N836.6 billion, 3.02 per cent of GDP. The figure more than doubled once more as government’s revenue obviously stagnated as needs mounted, Federal Government’s fiscal operations resulted in a 2010 deficit of N1.993 trillion or 6.11 per cent of GDP, the highest within the 10-year period. It dropped to N1.136 trillion or 2.96 per cent in the following year; and N1.135 trillion or 2.85 per cent in 2012. Last year’s deficit is forecast to reduce below the trillion Naira mark at N887.06 billion or 1.85 per cent of GDP.

    He noted that in 2003 at the onset of the bond market, N72.75 billion of the deficit or 36 per cent was funded by domestic borrowing, dropping to N27 billion or 16 per cent the following year; and N25 billion or 15 per cent by 2005, In 2006, the figure rose to N1087.2 billion or 31 per cent; rising further to N200 billion or 34 per cent in 2007; a dropping to N155.47 billion or 29 per cent in 2008. In 2009, the quantum of the deficit funded through the domestic bond market ballooned to N542.11 billion or 63 per cent, a level from which it has never dropped. In 2010, domestic funding of deficit catapulted further to N1.36 trillion or 68 per cent; falling to N852 billion or 75 per cent the following year; last year, N744.44 billion or 65 per cent of the federal deficit was funding domestically; while N544.06 billion or 61.33 per cent of this year’s deficit is to be sourced from the domestic bond market.

    According to Nwankwo, “the current practice of financing part of the country’s fiscal deficits by borrowing from the market has not only led to the development of the domestic debt market, it has brought other salutary benefits for monetary policy operations and the economy.”

    These, he continued, include “removal of conflict of interest – clear separation of debt management functions from monetary policy operations – thereby allowing each agency, especially the CBN, to concentrate on its core mandate; subjecting government’s borrowing to market discipline; use of long-term as against short-term funds to finance long-term projects – a clear case of optimal asset-matching; significant reduction in refinancing risks through tenor elongation.”

    One other benefit, he added, was the “establishment of a Sovereign Yield Curve and benchmark for private sector borrowing.”

    The domestic bond market, according to the DMO boss, has not been just for financing government’s fiscal deficits, as it served as a platform for issuance of the Asset Management Corporation of Nigeria (AMCON) bonds to buy toxic debts off the balance sheets of Nigeria banks. Proceeds of the domestic bond issuance, he noted, were also used to fund special government stimulus spending initiatives like the N200 billion commercial agriculture programme, whereby the funds raised by the DMO were made available to the CBN for lending to agriculture enterprises through the commercial banks between 2008 and 2010. Also, proceeds from the issue was used to fund the cotton, textile and garments revitalisation programme, part funding to the tune of N100 billion with FGN bond proceeds. Others include “the purchase of locomotives for the revitalisation of rail transportation; and, the provision of seed money for the development of infrastructure in new districts in the Federal Capital Territory.”

  • Global stocks, bond yields fall as anxiety rises

    Global stocks, bond yields fall as anxiety rises

    Stock markets around the world fell on Thursday after Ukraine said Russia moved more troops into the country, escalating the risk of the region’s crisis spreading, as nervous investors shifted money into gold and United States and German government bonds.

    The euro hit a 21-month low against the Swiss franc and fell against the yen as worries about intensified fighting between the Ukrainian military and pro-Russian separatists drove investors to seek safe-haven currencies.

    Ukrainian President Petro Poroshenko said Russian forces had entered Ukraine, and he convened his security and defense council to decide how to respond.

    “Geopolitics is driving the market again, and this latest escalation in Ukraine comes as European stocks were ripe for a pull-back,” said Alexandre Baradez, chief market analyst at IG France.

    The tensions put riskier assets firmly under pressure with the Standard & Poor’s 500 index .SPX falling below the 2,000 threshold following a record close on Wednesday.

    In midday US trading, The Dow Jones industrial average .DJI fell 52.24 points, or 0.31 percent, to 17,069.77, the S&P 500 .SPX shed 3.99 points, or 0.2 percent, to 1,996.13 and the Nasdaq Composite .IXIC declined 10.15 points, or 0.22 percent, to 4,559.47.

    Reuters reported that the pan-European FTSEurofirst 300 index .FTEU3 snapped its three-day winning streak, falling 0.7 percent at 1,369.15 points. Tokyo’s Nikkei closed down 0.5 percent at 15,459.86.

    The MSCI world equity index .MIWD00000PUS, which tracks shares in 45 nations, fell 1.81 points or 0.42 percent, to 430.44.

    Meanwhile, ten-year German Bund yields DE10YT=RR hit a record low of 0.868 percent, and 30-year U.S. bond yields US30YT=RR touched 3.059 percent, the lowest in 14 months.

    Bond yields worldwide have fallen in recent days as traders bet on new stimulus from the European Central Bank as soon as next week in a bid to avert deflation in the euro zone.

    German inflation came in at a steady 0.8 percent ahead of Friday’s euro zone number. Corresponding Spanish figures saw a slightly smaller-than-forecast drop as revised second quarter GDP held steady.

    These weak inflation readings overshadowed an upwardly revised U.S. second-quarter economic growth reading.

    In the currency market, the dollar and euro softened against safehaven yen, though the greenback retraced much of its earlier decline on the surprise upward GDP revision.

    The dollar was down 0.05 percent to 103.79 yen JPY but flat against the Swiss franc at 0.9148 franc CHF.

    The euro fell 0.3 percent to 136.62 yen EURJPY and declined 0.1 percent versus the Swiss franc to 1.2055 francs EURCHF, close to a 21-month low.

    Safe-haven demand pushed spot gold prices higher for a third day, rising 0.5 percent at 1,289.50 an ounce.

    London oil prices held above their recent 14-month lows on short-term supply concerns. Brent crude LCOc1 for October delivery was last up 19 cents or 0.18 percent at $102.91 a barrel, while U.S. crude futures CLc1 were up 72 cents or 0.77 percent, at $94.60 per barrel.

  • TUNJI OYEBANJI: My word is my bond

    TUNJI OYEBANJI: My word is my bond

    Tunji Oyebanji, Chairman/Chief Executive, Mobil Oil Nigeria Plc, has come a long way. He started off as a mere petrol attendant in Mobil, and now leads one of the most successful multinational companies operating in Nigeria. In this interview with IBRAHIM APEKHADE YUSUF he shares his philosophy of management, among other views. Excerpts:  

    Tarting off at Mobil

    I started working with Mobil Producing close to 34 years ago. Interestingly, I worked as a petrol station attendant on Awolowo Road, Ikoyi. I started my training there for six months, selling petrol among other things that I did. So, I actually started by selling petrol at the pump. That was the basic training that I received and of course, from then I have done many other things.

    The first assignment after the training was to sell kerosene. You may have seen kerosene sold in small trucks of say 8, 000 litre trucks. I used to have a driver and myself and we will drive into the hinterland and sell kerosene to people in 200 litre drums. And basically, that was the job I did for about two years.

    One of the lessons, of course, we learnt is the fact you should never despise days of small beginnings.

    Everybody starts small somewhere and if you have a vision of where you want to go, the sky is just the beginning, as I always like to say. So, I progressed from selling kerosene to become what I will call a proper marketing rep.

    At that point, I graduated to having my own Peugeot 504 car. I had a sales territory. We started on like that and I moved to various other assignments.

    At some point, I decided to take time off work to take a masters degree in the UK. So, I did that for a year and half and I came back to the same job.

    First breakthrough on the job

    The first breakthrough I had in my career, I think came from networking. I recalled we had a group of visitors who came from the United States. And basically, like I said, I came back to my old job after my masters degree and I felt I needed to move from the department where I was working. So, these visitors came and as is our usual practice, we took them on tour of our retail outlets and luckily, I was in charge of the particular sales territory they visited.

    Normally, small people like me were not called to attend the dinner at the end of such visits. But in this particular occasion, I was very lucky my boss asked me to join the crew. And I told myself, well, this is a unique opportunity.

    So, naturally, what I spent the evening to do was to disturb the men who came from the United States. I was just moving around and saying, well, in your own country, if you go and take a masters degree, will you still be working in this same department, shouldn’t you be moved into another department and all that? I pestered them a bit.

    Anyway, they left and about a week later, I got a call by the Corporate Planning Manager of Mobil, an American. Before you know what was happening, I had been moved to Corporate Planning.

    I progressed through that subsequently. I went to the United States for a couple of years, where I worked at the company’s global headquarters. When I came back to Nigeria, I was posted to the north as the Regional Manager for about three years. I came back to Lagos, took on some additional assignment.

    Eventually, I was called to the board in 2002. After that I had some assignments. For instance, I went to head the operations in Cameroon. I also went to head the operations in Ethiopia and later became African and Middle East Manager for industrial and whole belts. In 2007, I was called back to Nigeria and in 2008, I took on my current role as Chairman/Chief Executive.

    Experience managing a multinational company

    For many years I have to stand in front of the shareholders and give account of my stewardship. I know that if I don’t make a profit consistently over some years, the people will begin to throw chairs at me… (laughs). But the organisation can still continue to run even if it doesn’t make profits.

    But if it doesn’t have any cash and it cannot meet its obligations anymore that is the end. Then, it would have to close its doors because it cannot meet up to its creditors. Therefore, how you manage the cash is very key. No matter what the size of your organisation is, whether it’s a big or small organisation, multibillion naira company and what have you, if you don’t manage your cash well, between what is coming in and what is going out, you’re in trouble. And the key element of managing that cash is how you manage credit.

    I have had to speak with small business owners, especially people who are into buying and selling and the complaints they always give is that people often defaults when it comes to making payment and as a result they run into serious problems and they are not able to withstand the shock simply because they have given all their products out on credit.

    The question I usually ask is, what is your policy on credit and they say if we don’t give credit, we won’t be able to sell. Well, to me, it’s a yes and a no. No because you can still sell without giving credit. The difference is yes, you may not be able to sell as much as possible.

    But the fundamental rule in marketing is that if you have not collected money, the sale is not complete.

    In downstream sector, our retail margin today which is fixed by the government is N4.60 kobo. If you sell a truck of PMS, which is about 40, 000 litres, the cost of that is close to N4million. So, the profit you ought to make per litre is N4.60kobo. Assuming you sell that truck close to N4million to somebody and the person doesn’t pay and goes away with that money, how many litres do you have to sell at N4.60kobo to make up for that one truck?

    If you do the maths, it’s about 21 other trucks to make up for what you have lost, if you don’t manage your credit process very well.

    One of the reasons for the demise of many institutions, especially government institutions in the past such as Nigeria Motels, Nigeria Airways, Nigeria National Shipping Lines and many more had one weakness: all these institutions, to a large extent, collapsed because of the fact that they had offered credit to various other institutions without collecting their money back. So, to succeed in any management endeavour, always know when to apply the breaks.

    Management style

    Well, l think if l was to talk about my management style, l’ll say l have an open management style. I believe in taking feedback, getting people involved because l believe everybody has some value they can add to the system. You get better ideas from the people who are actually doing the work; they give you better ideas sometimes than what you have.

    I know that as a person because l started from the grassroots. I know a lot of the fundamentals that drive the business. So, l’m able to know those areas l should focus on.

    Another thing is that as the boss; make sure your word is your bond. So, if you promise something whether internally within your organisation or externally, make sure you meet up to it. That way you build a reputation over time as a performer.

    On micromanaging

    No l don’t. What l do is set boundaries for people within which they should operate. So, within those boundaries you’re at liberty to achieve the goals and objectives in whichever way you deem fit.

    So as long as you operate within those boundaries l set for you, you’re free. For instance, if you have a particular budget, you have to be able to operate within that budget.

    But how you go about it is entirely left to you.

    On staff motivation and punishment

    I think l motivate people by challenging them, expecting more from them than they think they can deliver. Sometimes until they’re pushed and challenged, they don’t know they actually have the ability to do much more than what they do. But when you show them that this thing is possible and challenge them to go and do it, you find that many people rise up to the occasion and perform.

    Well, for punishment, it’s always the last resort. I don’t like talking about punishment per se. But at the end of the day, what l try to do is to make sure that l put people in a situation where they themselves will know that they have not performed or delivered on their given targets. So it makes it easy.

    The fact that they have found out that they have even disappointed themselves is sometimes enough punishment for them.

    Worst or toughest decision as CEO

    Well for me, there is no perfect or worst decision. I think what is important is that you always strive for the best. Not doing anything at all is always worst.

    For me, you can’t always get every decision right. It’s not possible that 100 per cent of your decisions would be right. Some would be good and some would be bad.

    But you’ve got to take action rather than sit on the fence because if you have problems you face them squarely rather than wish and hope they will disappear and go away. So what l have found out is that you must try to take decisions whether they work out or not

    And l’ll be honest to say, sorry this or that didn’t work, so we need to try a different approach.

    Legacy

    Well, l want to build a stronger company than l met. You know we have existed for over  100 years. So, l want to build a company that can have the basis of existing for another 100 years. We’re looking constantly into the future, making sure that we bring new, fresh blood into our organisation, making sure that we train people, so that if we put adequate investment in place the company can continue to remain strong into the future.

  • Lagos pays N50b first tranche of N275b bond

    Lagos pays N50b first tranche of N275b bond

    Lagos State has commenced settlement of the N275billion Bond series issued with the payment of N50billion first tranche.

    The Commissioner for Finance, Ayo Gbeleyi, who made this known yesterday while briefing newsmen in Alausa, Ikeja, said the five-year bond that started in 2009 for infrastructural financing, was fully redeemed in February this year, adding that the government has commenced payment in order to boost the confidence of investors.

    Gbeleyi said the N275 billion bond was oversubscribed  due to the growing confidence of investors in the state’s economy.

    “The bond series began in 2009 with the issuance of N50 billion in tranche One (which has matured and fully redeemed) and N57.5 billion in 2010 in tranche 2 of the same series expected to mature in 2017,” he said.

    He explained that under Series Two of the bond issuance, “the state in 2012, raised N80 billion in tranche One, which is maturing in 2019, and eventually sealed the deal in 2013 when it raised N87.5 billion last tranche of the series Two. With N50 billion offset, the outstanding in the state’s bond programme is now N225 billion.”

    He said in an effort to ensure the continuing repayment of the bond debts, the government has created a Consolidated Debt Service Account (CDSA) managed by independent trustees to which 15 per cent of the state’s monthly Internally Generated Revenue (IGR) is transferred.

    He said the state currently generates about N20 billion from IGR monthly, while as at March 2014, the CDSA had accumulated N47.8 billion.

    Gboleyi explained that all indices guiding purposeful borrowing are benchmarked against international best practices, and the size of the state’s economy, allows Lagos to borrow, stating that all monies raised through the bond programme, are channeled into capital projects which could bring more money to build in the future.

    The Commissioner also explained  that the state’s  GDP the US dollar stands at $100 billion as of 2013, which  accounts for 20 per cent of Nigeria’s GDP, and is equivalent to that of some 15 states combined, and larger than that of most African countries, including Ghana, Ivory Coast, Senegal and Kenya.

    He said  the state will continue to post impressive (investment grade) risk ratings.

    He said in the risk rating of the state economy by Fitch, it moved from AA- stable in 2012 to AA -positive in 2013, and from A in 2012 by Global Credit Rating (GCR) to A+ in 2013.

  • Detroit proposes deeper pension, bond cuts in debt plan

    Detroit proposes deeper pension, bond cuts in debt plan

    Detroit, the biggest city in the United States is seeking bankruptcy protection, proposed deeper cuts for police and firefighter pensions, as well as for some bondholders, as it pursues approval of a plan to reduce its $18 billion in debt.

    The city yesterday filed a description of its debt-adjustment plan that differs in some details from what it submitted in February in US Bankruptcy Court in Detroit.

    The disclosure statement, if approved by US Bankruptcy Judge Steven Rhodes, will be consulted by creditors in deciding whether to back the plan.

    Detroit filed for bankruptcy in July, saying it couldn’t meet its financial obligations and still provide necessary services. The city has since been in negotiations over cuts with unions, retired workers and bond insurers.

    General obligation bondholders, who had been set to receive 20 cents on the dollar under February’s plan, are now projected to get 15 cents.

    Pensions for police and firefighters would be cut about six percent if they vote for the plan, 14 percent if they don’t. In February, those proposed cuts were four percent and 10 percent respectively.

    The office of Kevyn Orr, the city’s emergency financial manager, said in a statement yesterday that the new numbers were included to offer “greater clarification for retirees on how much pension benefit reductions would be.” The statement didn’t say why the numbers had changed.

    Previous Proposals

    The new disclosure statement also incorporates proposals the city previously announced, including a plan to spend $1.5 billion to improve services and a proposal for foundations and the state to put more than $800 million into pension funds in exchange for a promise that art owned by the city wouldn’t be sold.

    Absent a deal with creditors, the city may have to battle unions, retired municipal workers, bondholders and bond insurers to win approval of the plan in court. The unions have asked an appellate court to dismiss the bankruptcy, while insurers have sued over proposed cuts to general-obligation bonds and retirees have said the pension cuts may push many of them into poverty.

    Detroit, meanwhile, has sued to void $1.44 billion in pension-related debt. Also, Orr is attempting to lease the city’s water and sewer department to a new regional public authority, a plan suburban leaders have resisted.

    A hearing on the disclosure statement is set for April 14. A trial on plan approval has been scheduled for July.

  • Online shopping owners, tech people bond

    An online platform owned by Red Media, Y!/YNaija.com, in collaboration with one of the leading online destinations for premium African business, entertainment and travel content has hosted 100 of the most innovative people in the tech world.

    Tagged ‘#YTech100, the event was attended by Nigeria’s Konga’s Sim Shagaya, iROKO’s Bastian Gotter, Google’s Juliet Ehimuan, Gbenga Sesan of Paradigm Initiative Nigeria, among others.

    Speaking at the forum, which focused on technopreneurship among young Africans, Jadesola Osiberu of Ndani TV said with start up businesses in mobile and online payments, e-commerce as well as online content distribution, the tech industry has received over $100 million in investment from local and foreign investors and is shaping up to be a key contributor to Nigeria’s gross domestic product (GDP) over the next 10 years.

    Osiberu said: “Consequently, Ndani TV and Y!/YNaija.com agreed on the imperative to engage the key players and leaders of this emerging industry and facilitate discuss that will drive growth and synergy.

    “It’s very hard to overstate the impact that digital has on our lives at the moment,” Sim Shagaya, chief executive of Konga and DealDey said on the panel discussing ‘Nigeria’s Tech Space: Ecosystem or Bubble?’

    Speaking on the occasion, founder, Open Africa, Emeka Okoye, said: “There is a real thirst for knowledge in Nigeria and so we need to invest in our mind economy.

    “To be a tech entrepreneur you must be willing to make sacrifices, because the technology industry is presently at its lowest ebb”

    The networking event saw the 100 Tech honourees presented with certificates of recognition, Managing Partner of RED and founder, Y!,YNaija.com, Chude Jideonwo said: “You guys – developers, entrepreneurs, storytellers, funders, designers – you guys are the standard bearers for this new reality.”

  • IFC seeks advisers for Cedi bond plan

    IFC seeks advisers for Cedi bond plan

    The International Finance Corporation (IFC) is seeking advisers for the sale of local-currency bonds in Ghana, expanding an African debt programme that started with an issue in Zambia that attracted demand five times the amount offered.

    The World Bank unit, which received approval from Ghana regulators in August to sell two billion cedis ($880 million) under its pan-Africa Domestic Medium-Term Note Programme, is studying proposals from local and international lenders, the IFC’s manager of Treasury Client Solutions for Africa, Andrew Cross, said.

    “We’re currently looking through a list of banks that are interested in playing a financial advisory role,” he said, without naming the lenders. “We’re in touch with the Securities and Exchange Commission, the Ghana Stock Exchange (GGSECI) and the Bank of Ghana to give us their support once we settle on the advisers.”

    The IFC is in talks with the governments of Botswana, Kenya, Namibia, Rwanda, South Africa, and Uganda about taking part in the program as it seeks to tap economic growth in sub-Saharan Africa that the International Monetary Fund estimates will reach five per cent this year, compared with 2.9 per cent globally. Africa may become the IFC’s biggest portfolio over the next three years, Chief Risk Officer Saadia Khairi said.

    The IFC’s plan to issue cedi debt comes as yields on Ghana’s benchmark 91-day Treasury bills drop to the lowest since June 2012, falling 410 basis points, or 4.1 percentage points, to 19 per cent from this year’s peak reached in February. In June, the IFC said Ghana’s high borrowing costs made it difficult for bond sales to begin. Cross declined to comment on whether yields were now low enough.

  • No final decision on £3,000 visa bond, says UK envoy

    No final decision on £3,000 visa bond, says UK envoy

    Nigeria protested yesterday the planned £3,000 (about N750,000) visa bond for its citizens traveling to the United Kingdom.

    Minister of Foreign Affairs Olugbenga Ashiru told the UK High Commissioner to Nigeria, Mr. Andrew Pocock, that the UK should reconsider the policy or Nigeria might be forced to take appropriate measures to protect the interest of Nigerians

    He said the UK policy would undermine the spirit of the Commonwealth of Nations.

    Besides, he claimed that the policy will hinder Nigeria and the UK plans to double the volume of bilateral trade.

    Ashiru met with the High Commissioner, who said the policy, if eventually implemented, would affect a small number of honest risk visitors in Abuja.

    A statement on what transpired by the spokesperson for the Ministry of Foreign Affairs, Ogbole Amedu Ode, reads: “The Honourable Minister of Foreign Affairs, Ambassador Olugbenga A. Ashiru, MFR, summoned the British High Commissioner to Nigeria, Mr. Andrew Pocock, to his office on Tuesday, 25th June 2013, over the proposal by the UK Government to impose a £3,000 ‘cash bond’ on first-time visa applicants from Nigeria, and other selected countries of the Commonwealth, which are regarded as “High Risk” countries.

    “At the meeting, which was held at the Tafawa Balewa House, the Honourable Minister expressed the strong displeasure of the government and people of Nigeria over the policy, which he described as not only discriminatory but also capable of undermining the spirit of the Commonwealth family.

    “The Honourable Minister recalled with nostalgia, the times when nationals of the Commonwealth travelled freely to the UK and to other member states. This, no doubt, deepened the strong historical bonds between the peoples of the various countries who were all regarded at that time as Commonwealth citizens. He further recalled that this time-honoured practice was unilaterally jettisoned by the UK Government in 1985, thereby weakening the bonds of the Commonwealth family.

    “The Honourable Minister further opined that the proposed policy would definitely negate the joint commitment by Prime Minister David Cameron and President Goodluck Jonathan to double the volume of bilateral trade between the two countries by 2014, just as it would hinder people-to-people contacts, which is one of the cardinal principles of the Commonwealth.

    “Ambassador Ashiru pointed out that the decision of the UK Government is coming at the time the Commonwealth Foreign Ministers have unanimously recommended for adoption at the Commonwealth Heads of Government Meeting (CHOGM) holding in Colombo, Sri Lanka in November 2013, a proposal to remove visa requirements for holders of Official and Diplomatic Passports from member states.

    “The Honourable Minister, therefore, called on the UK Government to reconsider the proposed policy, which is incompatible with the strong and cordial relations built over the years between the UK and Nigeria.

    “He however informed the British High Commissioner that the Federal Government of Nigeria has a responsibility to take appropriate measures to protect the interest of Nigerians who may be affected by the proposed policy, if finally introduced.”

    The Sunday Times reported that from November, a pilot scheme would target visitors from Nigeria, Bangladesh, Sri-Lanka, Ghana, Pakistan and India. Visitors aged 18 and over, according to the new planned policy, which is aimed at cutting immigration and abuses of the system, would be forced to hand over £3,000 from November for a six month visit visa.

    A statement by Dr Pocock after the meeting with Amb. Ashiru said:

    “ The British Government has announced that it intends to undertake a very small scale trial of the use of financial bonds as a way of tackling abuse in the immigration system (which occurs when some people overstay their visa terms).

    “The details of a pilot scheme are still being worked out. No final decision has been made. If the pilot were to go ahead in Nigeria it would affect only a very small number of the highest risk visitors. The vast majority would not be required to pay a bond. Those paying bonds would receive the bond back, if they abided by the terms of their visa.

    “Let me put this in perspective. Over 180,000 Nigerians apply to visit the UK each year. About 70% or around 125,000, of those applicants are successful. Travel between our two countries is a key part of our strong cultural and business relationship. Financial bonds would be focussed on only a tiny minority of potential abusers. It would NOT be a “£3000 visa charge” as some media reporting has alleged.

    “As soon as more details of the policy have been decided, we will inform the Nigerian Government and public fully and officially, in the spirit of our long standing friendship, and our wish to help bona fide Nigerian visitors to work, study or do business in the United Kingdom.”

     

  • Reps kick against UK’s planned £3,000 visa bond for Nigerians

    Reps kick against UK’s planned £3,000 visa bond for Nigerians

    Minister of Foreign Affairs Olugbenga Ashiru said yesterday that the Federal Government will defend the interest of Nigerians on consular related issues with foreign countries.

    Ashiru spoke in Abuja following a proposal by the United Kingdom to introduce a bond of 3,000 pounds (N750, 000) for intending visitors from Nigeria and five other countries.

    Speaking at the 2013 Ministerial Platform, Ashiru reiterated that the UK government was yet to officially notify Nigeria on the proposal scheduled to start in November.

    “Really, we have received no official communication from the UK government.

    “When we receive communication from them, we will study whatever proposal they are trying to do but I can assure all Nigerians that President Jonathan’s government will defend the interest of Nigerians by whatever means it can.’’

    The House of Representatives Foreign Affairs committee kicked against the policy. Chair of the Diaspora Committee Abike Dabiri –Erewa asked Nigeria to adopt the principle of reciprocity if the UK insists on the visa bond from Nigerians traveling to Britain. She suggested a N5million bond for any Briton seeking Nigerian visa as a visitor.

    Chairman, House of Representatives Committee on Foreign Affairs, Ms. Nnenna Elendu-Ukeje described the visa bond as discriminatory and unacceptable. She said the House of Representatives would take a critical look at the policy as it affects Nigerians and come up with a way forward. Dabiri-Erewa said: “Nigeria should adopt the principle of reciprocity. If they ask us to pay £3,000, let their citizens also pay N5million visa bond.

    “This is a discriminatory policy and it is unacceptable. Do not forget that we are a member of the Commonwealth, what are we going to enjoy if they could impose such a discriminatory policy?

    “I am quite sure that France will not impose visa bond on their former colonies. The UK Government should reverse it or else we should pay them back in equal measure.

    “The Federal Government should not allow the situation to lie low; it should reject it and make it reciprocal.

    “When South Africa said we should be paying N100, 000 visa bond and we reciprocated, it quickly stopped the policy.

    “If Nigerian and Indian doctors withdraw their services in the UK, their health sector will collapse.

    Elendu-Ukeje described the new UK visa bond as discriminatory and unacceptable.

    In a statement in Abuja, the lawmaker said such policy was not in the best interest of Nigeria and Nigerians.

    She said: “This is totally discriminatory and unacceptable. It is target to non-white Commonwealth.

    “They should realise that it is not in the best interest of UK. We will as a country, going to look at it vis-a- vis our citizens and come up with a decision.

    “We agree totally with our Foreign Minister that the policy is totally unworkable and impractical’’.

    “It is contrary to the commitment made to our President by Prime Minister David Cameron during their last meeting. We believe it is for political reason ahead of general elections.

    “We seek that our long historical relationship should take precedence over political expediency.”

    The minister admitted that the biggest challenge facing the present administration’s foreign policy thrust was the welfare of Nigerians abroad.

    He said Nigeria missions abroad had been directed to pay utmost attention to the needs of Nigerians abroad, particularly the plight of Nigerians in various prisons abroad.

    He acknowledged that many Nigerians were stranded abroad in prisons and that the affected Nigerians had continued to suffer various forms of discriminations in their host countries.

    According to the minister, over 9000 Nigerians are currently serving prisons terms abroad, with the largest number of 752 in the UK.

    “Most of the remaining prisoners are concentrated in the Asia – Pacific region and a good number of them are on death row.

    “We are concluding Prisoners’ Transfer Agreement (PTA) with all those countries, such as United Kingdom, Thailand, Japan, China, Indonesia, Switzerland, South Africa, Mozambique, Angola and Hong Kong, so that we can bring home these Nigerians to complete their prison terms.

    “I wish to seize this opportunity to appeal to members of different groups; the media, civil societies, religious groups, traditional rulers, etc, to join hands in the education of our youths in an enlightenment campaign against trafficking in drugs, in particular, and other social vices in general. “This assignment should not be left alone to Governments at different levels to handle.’’

    On the much-talked about reopening of Information Centres abroad, the minister appealed to the Federal Ministry of Information to ensure proper funding for the centres.

    “All I will appeal is that when it starts, they must be well funded; I do not want cases where you send information officers abroad and after nine months or six months the funding will be tied.

    “You must ensure proper funding and we in the ministry of foreign affairs are in favour of this move because three or four heads are better than one’.

  • The bond of honour

    The bond of honour

    The evolving story of President Goodluck Jonathan’s one-term pact with governors invokes a critical signpost of the statesman: honour.

    Honour is not only a virtue, it is life. History has plied us with many men and women who have amplified this rare human light. Constitutions swear by, with it Mandela has gained immortality, Washington crafted the United States presidency on it, Jesus died for it. All other virtues – love, courage, loyalty, truth – find validation in the acts of honour.

    Honour dwarfs money, reinforces friendship, disdains consequences, affirms heroism. A love story slacks when it lacks honour. And it is because, against all odds, it is truth between partners that consummates all. In Wole Soyinka’s Death and the King’s Horsemen, the epic theme is the failure of honour at the last moment. Okonkwo, in Achebe’s Things Fall Apart, dies for the honour of his people, even if tragically the novelist propagates surrender.

    When the news of the pact broke, it conjured a recent absurdity: Dame Patience Jonathan’s banquet. She threw the party to celebrate her recovery from a terrible illness, which still remains nameless. The President and his crew of publicists denied that the woman was embroiled in so serious a situation. Just like the stories of the ailing governors who wrapped their medical narratives in a cloud, we knew what was going on and we did not know what was going on until we knew what was going on.

    But in the banquet last week Sunday we saw the extravagances: the extravagances of dances and choreography, the extravagances of flatteries, the extravagances of sartorial vanity and the extravagances of money. But the worst of the extravagances was lies. The same people, including the President, who said all was well or routine with the First Lady came to celebrate with her over the fact that all was not well before it became well. It was a banquet of lies because the basis of it was a lack of honour. Before the party we witnessed another extravagance: of curses. She poured woe on those who said she had died. It is not the sort of civility we expect from the first family.

    So, if the President could not be faithful to Nigerians in smaller matters such as telling the truth to the Nigerian people on his wife’s situation, why should the governors expect him to be faithful about a matter such as fulfilling a promise to abdicate an ambition to be president.

    Governor Babangida Aliyu is an ebullient man, whose dramatic flair in his public utterances is sometimes matched by a stunning candour. When he means it, he would say exactly what he means by saying exactly what he means. And for many in the media, the news blindsided us. How come no one had this scoop and the word was not out there to haunt Jonathan through his campaign and the early year of his Presidency?

    Was it that the governors had such infinite confidence in the man that he would not renege? Or was it naivety, losing the art to find his mind’s construction in his face? Maybe President Jonathan meant it before he did not mean it, especially after he settled to the epic pomp, grandeur and dizzy comfort of the throne? The aphrodisiac has taken root. The President’s spokesman, Ahmed Gulak, griped that Jonathan did not win Niger State. He implied that since the northern governors as “field commanders” did not capture the North for Jonathan, then the President owed no one any obligation, pact or no pact. Gulak has fallen into Jonathan’s moral gulag.

    The governors who sat – 20 in all – were probably lost in amnesia at the time. Two governors who were there confirmed to me that the meeting held, one of them told me how the President was almost moved to tears at the proceedings. But by December 2010, when the deal was allegedly brokered, Jonathan was pooh-poohing another pact of honour: zoning.

    Jonathan denied that such agreement existed. Constitutional maestros blindsided him by telling him that it was in his party constitution. He countered by appealing to his constitutional right. He had the right to run, but not the honour to step down. The same Jonathan swiveled back shamelessly to zoning in doling out positions. Why did the governors sign another pact when they knew all this?

    Jonathan’s men deny it, but when did honour matter in this Presidency? Even if there was no pact between the governors and the President, the President has not earned the right for us to believe him based on what that Presidency has turned itself to with its serial untruths.

    “It is not titles that honour men,” wrote Nicolo Machiavelli who knew a thing or two about opportunistic lying, “but men who honour titles.” The President and his men have not honoured the Presidency because what they said have not settled their differences with what they do. He has said many things about governance, about infrastructure, agriculture, education, but the chasm between reality and promise is a big gulf.

    Was it not the same President who said that he had no hand in the intrigues to oust former Bayelsa State Governor Timipre Sylva when the heat was on and all fingers pointed in his direction? But did he not come out in Yenagoa in his unforgettable stone-throwing speech to say that he was the one behind it because the ex-governor did not perform and singled out an uncompleted hotel as evidence?

    I don’t expect the President to say anything now about the so-called pact. Even if he signed it, he can still invoke, as in the case of zoning, his constitutional right to run. But it is a matter some have challenged in court, and the jury is still out. It is not a matter of law but of honour.

    It is an irony of juridical history that the law came into being to inspire and preserve the honour of men, yet men can hide under it to subvert honour. Hence the American essayist D. H. Thoreau said, “The law never made anyone a whit more just.” That was the frustration of law theorists like the eminent Ronald Dworkin who died recently. The author of Law’s Empire argued that moral principles were superior to all else in interpreting the law.

    The pressure to give up the transient comforts of the now often militates against the pursuit of honour. That is why gallantry among soldiers, the sacrifice of a family member, the desire to be a statesman and not a politician over lofty principles often fail in human societies. That is the challenge of our politics, not only in the PDP, but every party in the land. But Jonathan, as the man on top of it, has not shown examples.

    “I would prefer even to fail than to win by fraud,” wrote playwright Sophocles. When you fail for honour, you win for society. That is the challenge before Jonathan.