The Nation Newspaper

Tag: Operators

  • SEC gives operators October 31 deadline to join trade groups

    SEC gives operators October 31 deadline to join trade groups

    Securities and Exchange Commission (SEC) has directed capital market operators to register with their trade groups or associations by October 31 as it moves to strengthen the implementation of its new complaints management framework.

    In a circular to the operators, SEC said it would sanction those that fail to comply with the deadline.

    According to the commission, the directive was sequel to the decisions at the just-concluded Capital Market Committee (CMC) meeting held in Lagos earlier this month.

    SEC noted that as part of efforts to restore investor confidence in the capital market, it had developed rules on complaints management in February, last year.

    The rules outline a new and more responsive complaint management framework that requires the SEC,Self-Regulatory Organisations (SROs) and capital market Trade Groups/Associations to establish fair, impartial and objective complaints management policies for the handling of investor complaints. This new framework is expected to significantly improve dispute resolution within the market and ultimately reduce infraction rates as it streamlines the complaints management process.

    “Historically, the SEC had been receiving the overwhelming majority of complaints from investors even when such complaints could be addressed more swiftly at trade group level. In attending to such huge volumes of complaints, the SEC has had to allocate significant resources that could be better utilised in more effective market development and regulation.This informed the need to overhaul the complaints management mechanism in the capital market as encapsulated in the SEC Rules and Regulations which are available on the website,” SEC noted.

    According to the commission, to effectively delegate key complaints management functions to market operators, the SEC recognises the need to strengthen SROs and Industry Trade Groups/Associations to enable them play more prominent roles in the management and resolution of investor complaints.

    It noted that empowering SROs and trade groups to handle and resolve investor complaints is in line with best practice from both emerging and developed markets.

    However, the Commission pointed out that since the new complaints management framework was released by the SEC in February 2015, its implementation has been rather slow due to the inability of a few trade groups to develop their respective complaints management policies.

    The apex capital market regulator stated that a review of the framework’s implementation at the last CMC meeting revealed that a key constraint facing the trade groups is the non-compliance of some market operators who are yet to be registered with their relevant trade association.

  • CBN may license new money transfer operators

    CBN may license new money transfer operators

    The Central Bank of Nigeria (CBN) is considering licensing new International Money Transfers Operators (IMTOs) to join three certified operators – Western Union, MoneyGram and Ria, it was learnt yesterday.

    Industry sources said the apex bank is receiving new applications from prospective IMTOs jostling for the Nigeria market, and targeting huge dollar inflows from Nigerians in Diaspora, who remit over $21 billion annually to national coffers. The annual Diaspora remittance is expected to hit $35 billion this year following the devaluation of the naira, which remains an incentive for Nigerians in Diaspora to send more dollars home.

    The need to licence new operators, followed the exit of hundreds of international money transfer firms, after the CBN rolled out new guidelines stopping operations.

    “The CBN wishes to advise Nigerians at home and in the Diaspora to beware of the unwholesome activities of some unlicensed International Money Transfer Operators (IMTOs) in Nigeria. This warning has become necessary because of the activities of some unregistered IMTOs, whose modes of operation are detrimental to the Nigerian economy,” CBN Acting Director, Corporate Communications, Isaac Okorafor said.

    The CBN spokesman said all financial service providers in Nigeria, just as in other jurisdictions, are required to be duly licensed in order to protect both customers and the financial system as well as to ensure the credibility of financial transactions.

    ”For the avoidance of doubt, all licensed IMTOs, in line with the CBN Circular on the sale of foreign currency proceeds of July 22, 2016, are required to remit foreign currency to their respective agent banks in Nigeria for disbursement in Naira to the beneficiaries while the foreign currency proceeds are to be sold to Bureaux De Change operators, for onward retail to end users. The CBN will therefore not condone any attempt aimed at undermining the country’s foreign exchange regime,” Okorafor warned.

    WorldRemit, one of the international money transfer operators affected by the policy, said it sends more than 40,000 money transfers to Nigeria every month and receives more than $20 billion in remittances annually from migrants around the world.

  • Adeosun blames operators for poor publicity

    Adeosun blames operators for poor publicity

    Finance Minister, Mrs Kemi Adeosun has blamed insurance operators for failing to create awareness through advertisement in the print media, radio and television.

    She made this known to reporters in Abuja.

    She attributed the operators’failure to advertise as one of the major reason for the underdevelopment in the industry.  She said there was need for them to embrace advertisement to grow their business. She stressed that of 57 operators, less than half advertise in the print media, less than 20 on radio and less than 10 on TV.

    She said: “There are several factors that contribute to the underdevelopment of the insurance industry. It majorly includes low awareness. Out of 57 operators, less than half advertise in the print media, less than 20 on radio and less than 10 on TV.

    “There is also the issue of poor distribution channels. Operators of the industry have only focused on one channel which is brokers. This has led to a huge gap in market penetration especially in the retail market which is our greatest opportunity for growth.”

    She further said the challenge of under penetration and non-compliance with the laws relating to compulsory insurance of vehicles, property among others is a much debated issue, combination of poor government enforcement and poor industry practice.

    She pointed out that the discounting industry has some causes of premiums as a competitive strategy, a strategy which would be expected at a much more mature phase of the development lifecycle of the industry.

    It creates a vicious cycle that will ultimately lead to reduced cover in real terms and reduced profitability and capacity for the industry and it must be stopped, she said.

    She noted that in Nigeria, only one in eight cars are insured, only few corporates and the federal civil have group life insurance.

    “Even high risk entities – buildings in multiple occupancy, such as hotels and hostels – have a low rate of compliance.  The regulator alone cannot drive the enforcement, this must be a collaborative effort of the operators, the various arms of government both state and Federal and the National Insurance Commission (NAICOM).

    “To support this, given our vast population and wide geographical spread, the deployment of modern technology is an essential pre-requisite to success. Out of 57 operators, less than a quarter advertise in the print media, less than 20 on radio and less than 10 on TV,” she added.

  • Recapitalisation: Our stand, by operators

    Recapitalisation: Our stand, by operators

    Following last week’s criticism by the Federal Government of the insurance industry’s low penetration and contribution to the country’s Gross Domestic Product (GDP) and its readiness to support it, the operators have said they are ready to take steps to drive growth, reports Omobola Tolu-Kusimo.

    Can insurance operators  take a pill of their own medicine as risk managers and recapitalise and are they willing to take a lead on Nigeria’s financial sub-sector as it is in other developing and developed countries?

    Do they also have the capacity to adequately de-risk the economy, and are they willing to be creative, innovative and harness the opportunities that exist in an economy that has the largest market in Africa? Do they have what it takes to respond to the Federal Government’s call for action?

    These and more questions were raised by the government, experts and other stakeholders at the just- concluded three-day conference of the Insurance Industry Consultative Council (IICC) National Insurance Conference with the theme: ‘’Expanding national resources and infrastructure in challenging times”  in Abuja.

    For the first time in the history of insurance, the second edition was graced by top government officials. The Minister of Finance, Mrs. Kemi Adeosun and her Power, Works and Housing counterpart, Babatunde Raji Fashola, were among the dignitaries.

    The operators, including its regulatory body, the National Insurance Commission (NAICOM), called for action by the government against insurance low performance and contribution to the country’s Gross Domestic product (GDP).

     Govt.’s call for action

    Speaking  on ‘Repositioning the Nigeria insurance industry for growth; Government to enable development’, Mrs Adeosun said it would not be news that Nigeria’s economy is facing some of the toughest challenges in living memory.

    However, she said  the administration firmly believes that the economy has only one direction to move in and that is upwards as true change means doing things differently with the full expectation of different outcomes.

    She said the government’s commitment to rebuilding the country’s physical infrastructure must be matched by rebuilding our soft infrastructure and the enabling environment for business to thrive.

    She said a key element of the enabling environment is the de-risking provided by the insurance industry.

    According to NIA sources, Nigeria with a penetration of 0.3 per cent recorded total industry Gross Written Premium (GWP) of N350 billion in 2015. If we collectively set a seven-year target of achieving Africa’s average penetration of 3.5%, we can transform our industry into one with GWP of N4.5 trillion by 2023.

    She said: “To achieve this, the industry will have to grow at a Compound Annual Growth Rate (CAGR) of 44 per cent from 2017 to 2023. This is in no way an impossible target and in fact represents the type of ambitious objectives we need to set for ourselves as several sectors in Nigeria, including telecoms, banking and pensions’ management have been able to record such impressive growth through the collective support of all stakeholders. It is also consistent with the Change  m andate of President Muhammadu Buhari and insurance have no reason to be different.

    “During this summit, it is important that we dimension the industry in its different facets as this is a gathering of some of our most capable minds and tested hands. We also need to act urgently, as the development of the insurance industry will come with other attendant benefits that are critical for us to achieve the type of growth and change we want for our economy and for the large number of Nigerians who have been deprived of the financial stability, protection and business growth that developed insurance markets have provided for their citizens for centuries. All successful economies are characterised by a strong investment culture of which insurance plays a key role.

    “A developed and active insurance market will bring about increase in GDP, accumulation of long-term funds for infrastructural financing, job creation, improvement in standard of living. It will also share the cost of adverse events with the government and attract foreign investment into our country.We are currently underperforming and there is a need to immediately address the decline in the industry as it is lagging behind global and African peers.”

    She expressed concern that despite being the largest economy in Africa, insurance penetration rate, which is a measure of sector contribution to GDP is 0.3 per cent, one of the lowest in Africa.

    She pointed out that the African and global average insurance penetration rates are 3.5 per cent and 6.2 per cent.

    “Insurance density, a per capita measure is $10 in Nigeria compared to the Africa average of $61 and global average of $662. South Africa has insurance density of $925. Our low performance is a call to action, to which we must develop a robust response.

    “According to the outcome of the 2014 insurance summit,the underperformance of this industry is denying the economy of potential incremental annual GDP growth of as much as 1.5 per cent and access to as many as 70,000 new jobs. The sector should ideally be a strong driver of GDP growth by generating significant value-add. According to a study done by McKinsey for the 2014 Insurance summit, it is estimated that a marginal 3.3 per cent increase in insurance penetration can lead to an incremental 0.5 per cent growth in GDP.”

    The minister highlighted several other factors that also contribute to the underdevelopment of the industry as low awareness, poor distribution channels, and unhealthy competition.

    She said the government and operator’s immediate and collective next steps is to stimulate extra-ordinary growth and unleash the potential of the industry by carefully taking certain planned steps which is to recognise our true stage of development and strengthen the capital base of insurance companies.

    She recalled that in 1981, the minimum capital requirement for banks was N1 million while that of composite insurance companies was N0.8 million.

    By 2014, banks had grown theirs to N25 billion and composite insurance companies to five billion naira showing that banks had grown capital requirements eight times faster. The industry needs to recapitalise. Capital levels were last raised in 2007. To take true advantage of the opportunity for the industry we must recapitalise and reposition. The top three banks have capital in excess of N300 billion each! The top three insurers have capital of between N14 billion to N25 billion, she stated.

    On what the sector needs to do, she said the stakeholders need to raise minimum capital requirements in a manner that is comparative to what happened in banking in the last  three decades. Increased capital will provide funding for publicity and product development, she said.

    Mrs Adeosun said this would raise the clout of insurance companies in policy formulation and will enhance their capacity to hire the best people and deploy the technology and marketing, product awareness and investment needed to support the industry.

    On the role of NAICOM in the new path to growth, she said there must be enforcement of insurance regulation and solvency standards.

    She emphasised on the need to enforce the laws relating to compulsory insurance of vehicles, property among others.

    She said NAICOM must also strengthening industry and regulatory capacity

    By encouraging actuarial services, marketing and distribution in order to position the regulator as growth drivers and update the legal environment and removal of obstacles to the attraction of talent.

    Fashola  said the government is building infrastructure and will need a strong and capable insurance sector to insure them.

    He queried why the sector is not impacting on the lives of the majority of vulnerable people.

    ‘’Why is our sector not impacting in quantity in the lives of the majority of vulnerable people in the country.

    ‘’Every market man and woman in the country is selling recharge cards. These are areas that insurers need to design products that meets the need of the people,’’ he said.

  • New ways filling station operators rip off innocent motorists

    New ways filling station operators rip off innocent motorists

    AN unsavoury dimension to the prevailing crisis in the nation’s oil sector is the fact that many filling stations appear to have perfected different ways by which they cheat their customers. Unknown to many, the unsolicited gestures and friendly jokes dispensed by many filling station attendants are meant to divert the customer’s attention from the fuel dispensing metre with the sole aim of dispensing less fuel than the unsuspecting customer would pay for. This, in addition to outright adjustment of the metre to dispense less fuel than is displayed on it, is a practice that has been going on for long, according to investigation conducted by our correspondent.

    According to a report, during the last fuel scarcity, in just three months, Nigerians lost about N200 billion to fuel underdispensing.

    According to the report, on every one litre of fuel bought at filling stations, Nigerians lose at least N5.82k on Premium Motor Spirit (PMS) otherwise called petrol.

    Statistics obtained from the Petroleum Product Pricing Regulatory Agency (PPPRA) put daily consumption of petrol at 38.298 million litres.

    When computed, a total of 3,446,820,000 litres of petrol are consumed in three months (90 days). Statistics from the Weight and Measures department of Trade and Investment Ministry revealed that most fuel-pumps have been adjusted to dispense between 18.8 and 19.2 litres of petrol in place of 20 litres to short- change unsuspecting consumers. On the average, 18.8 litres are dispensed as 20 litres.

    By implication, 0.94 litre of petrol is dispensed as 1 litre and this means Nigerians are paying N97 per litre of petrol for every N91.18k worth of petrol purchased.

    Further investigations revealed that petrol attendants are not alone in this shady business. They commit the heinous crime in connivance with their station managers and owners. This, according to investigation, explains why many attendants who have been caught engaging in such sharp practices express no remorse and still manage to retain their jobs at such filling stations. The situation leaves a victim helpless because their superiors would rather plead with a customer than fire an errant attendant.

    “How would the manager of a filling station punish an errant attendant who knows that even the owner of the filling station has tampered with the reading of the dispensing machines?” asked Tiamiyu Salami, manager of a filling station in Lagos.

     

    Different strokes

    The deeds of errant filling station attendants have left bitter tastes in the mouths of many motorists and other users of petroleum products. While a few muster the necessary courage to challenge such attendants, others simply grumble and carry on without challenging them. But it is believed that the trend has caused unnecessary friction between many private car owners and their drivers, as the former often think that their drivers are the ones trying to play smart.

    Narrating his experience, 30 -year-old Samuel Ajenifuja, an unemployed graduate who had to turn to driving for survival, said the “stupid act” of such unscrupulous filling station attendants nearly strained the relationship between him and his former boss.

    He said: “Oga gave me N7,000 to buy fuel for him because the fuel in his car was inching towards ‘reserve’. I did as he instructed only for him to call me a few hours later to tell me that I was a fraud.

    “My brother, I was mad. Out of annoyance, I went to the place to challenge the attendant. But while I was raging, a friend who was also an attendant in the said station, confided in me that it was usual to dispense less fuel than the metre indicates.

    “The first question he asked me was whether the attendant had sold fuel into an okada (motorcycle) before attending to me, and I said yes. It was then he told me that the attendant most likely did not rub off the quantity he had sold to the okada rider before selling into my vehicle.

    “He said I should always make sure that the attendant rubbed off the sum displayed on the metre before selling fuel to me.”

    If Ajenifuja was lucky to have somebody tell him about the antics of filling station attendants, it was not so with Peter Uzor, a senior manager in a publishing company. According to him, the fuel in his car, a Honda CRV, had entered the ‘reserve’ and the red light had appeared on the dash board, meaning that he had to refuel as quickly as possible.

    He was, however, surprised that the fuel gauge of his car remained on the same spot even when he had moved a considerable distance from the filling station, and the light indicating that the fuel tank was near empty was still on. He said his initial thought was that his gauge was faulty. On a second thought, he decided to visit another filling station to buy the same quantity of fuel he bought initially. Immediately he started the engine, the fuel metre began to move upwards and the red light went off.

    “I narrated my earlier experience to the attendant and he burst into a prolonged laughter. He said the first attendant might have merely pumped air into my tank which was why the reserve light remained after I had bought fuel.”

    Another respondent, who identified himself simply as Steve, recalled that he had a bitter experience with a filling station where he had gone with a 25-litre jerry can he uses in buying fuel for his generator.

    He said: “I had to go to the station because there was no fuel at the one where I usually bought fuel. To my surprise, the fuel that was sold to me was nowhere near the level the same quantity used to get at the usual filling station.

    “From that day, I swore never to buy fuel from that filling station again. I later discovered that the petrol station was doing it to everybody that bought fuel from there.

    “I was not surprised that the filling station lost patronage after some time. In fact, the first day I went there, a brother of mine saw me and asked what I was doing at the filling station, saying that station was fraudulent.”

     

    ‘Shaddy’ to the rescue

    A filling station attendant, who asked not to be named, said in order to make more profit, many filling stations resorted to a practice he called “shaddy.” By this, he said, many stations resort to “undercutting”. That way, he said, it is difficult for officials of the Department of Petroleum Resources (DPR) and other filling stations regulatory agencies to accuse the petrol station of any crime since they are seen to be selling at the official price as indicated on their metres.

    “In order to break even, they have resorted to passing on the cost to their customers by engaging in what we refer to as ‘shaddy’,” he said.

    While he would not confirm or deny the issue of pumping air into vehicles, he said most times when such happens, it is not the fault of the attendants. Rather, he said, the owners of petrol stations should be held responsible because, in most cases, it is a sign that the pump is old or faulty.

    “When a pump or machine is faulty, what is the fault of an attendant in that? Your own is to work and collect your pay. How a businessman runs his business is none of your business,” he said.

    While customers complain of being short-changed, it is more money for the attendants when a pump is faulty. Unfortunately for most modern cars, pumping air into their tanks could spell big trouble.

    In his anger, Olumide Balogun, a car dealer, described many petrol station attendants and dealers as a band of cheats, saying: “Nigerian businessmen generally are cheats and they are greedy. They are always looking for extra profit at the expense of their clients. A good example is our filling stations which is one avenue through which a lot of customers are ripped off without they knowing.

    “To begin with, one litre of petrol, diesel or kerosene is never up to the standard litre approved by the Directorate of Petroleum Resources (DPR). The best you can get from most filling stations is between 0.5 to 0.85 litres. Also, most filling stations, especially independent marketers, tend to manipulate their dispensing pumps in order to discharge both air and petrol together. This is done by the in-house engineer to distort the regular workings of the pump so that they can make extra money.

    “The principle behind this is simple: adjust the pump and slack the spring or lever inside the pump, and educate the attendants how to handle the pump so that the public will not suspect any foul play. That is the reason behind some stations dedicating some pumps to vehicles and others to jerry cans because it is easier to detect the anomaly when you buy in a keg.”

     

    Our story, by filling station attendants

    However, a petrol attendant in one of the leading petrol station in Akute, a suburb Lagos, dismissed the notion that attendants cheat their customers.

    He said: “I think the people who hold this opinion are ignorant. I used to suspect every petrol attendant until I took up this job. It is impossible to cheat a customer because the machines we use have been programmed.

  • Association seeks good environment for boat operators

    The Association of Tourist Boat Operators and Water Transport of Nigeria (ATBOWTON) on Monday called on the Lagos State Government to provide an enabling environment for boat operators to thrive in the country.

    The ATBOWTON National President, Mr Ganiyu Balogun, told the News Agency of Nigeria (NAN) in Lagos that government’s policies had not helped the growth of the industry.

    Balogun said some association members had, sometime in the past, wanted to develop the sector by providing capacity building and infrastructure but they were hindered by government’s policies.

    He urged the state to also be flexible in its policies’ implementation to encourage positive development in water transportation.

    Balogun urged the state government to earmark portions of land in every local government area as dumpsites to minimise dumping of refuse into the waterways by the public.

    He said throwing faeces into the waterways could also be curbed, if public toilets were provided at strategic locations all over the state and the country also.

    “Dumping of refuse and faeces in the waterways pollutes the waterways and causes it to smell; and this has always deterred the average tourist from plying the waterways.

    “Apart from this, when refuse and feaces get into the boats’ engines, it destroys them. We need to have a neat and organised society,’’ Balogun said.

    He, however, lauded the Lagos State Government for deploying marine police officers to functional jetties that in the state.

    “Each of the jetties is now being manned by two marine policemen, and this has drastically reduced the crime rate.

    “We love this development but we want more friendly laws that will enable us take water transportation to the next level,’’ Balogun added.

  • Operators blame idle pension cash on past govts

    Operators blame idle pension cash on past govts

    PENSION Fund Operators Association of Nigeria (PenOp) has blamed the failure to invest money borrowed from pension funds on past governments.
    The group said the funds stand at over N5.3 trillion.
    Its Chairman, Longe Eguarekhide, who spoke at the PenOp2016 Media Retreat for Pension correspondents, in Lagos, said said instead of channelling these borrowings into infrastructure, it had been using it to fund its recurrent expenditure.
    PenOp is the umbrella body of Pension Funds Administrators (PFAs) and Pension Fund Custodians (PFCs).
    Eguarekhide, who is also the Managing Director, AIICO Pension, said people who say pension fund does not have any impact on the economy are wrong, adding that the government has been borrowing about 70 per cent of the funds as allowed by the Pension Reform Act (PRA) 2004 as repealed by the PRA 2014
    He said: “It is a mistake for people to say they don’t see investment that are made from pension fund impacting on the economy. This cannot be blamed on the pension industry but on government. If you look back at how the pension money has been invested, you will find out that over 70 per cent of the money are in government bonds. In other countries, some government invested the money in infrastructure to impact on their local economy. Lagos State is a good case in point.
    “As pension managers, we are not responsible for what government does with money that it borrows. Ideally, monies borrowed for reasonably long term should be used for long term assets and not used to fund recurrent expenditure. It ought to have been used to develop infrastructure because that would have had significant impact on the economy.”
    Eguarekhide said the critical question that Nigerians needed to ask is: What has the government done with all the money it has made from all the borrowings from institutional investors?
    “For instance, if they borrow $2 billion and they take it and utilise it as bail out money, how do you think the creditors will feel? All these questions are very important for people to ask and not look at pension managers as not wanting the fund to be used to impact the economy,” he added.

  • Fuel importation: ‘Banks don’t lend to most operators’

    Over 70 per cent of oil marketers eligible to import fuel are not doing so because banks are not lending money to them, the Chairman, Integrated Oil and Gas Limited, Captain Emmanuel Ihenacho, has said.

    He said banks were not lending to operators in the downstream because of paucity of funds and the inability of operators to repay with interest as agreed upon.

    He said the banks’decision to impose restrictions on lending has compounded the woes of indigenous oil and gas operators further as they have to operate at below the capacity level.

    He said: “More than 70 per cent of the operators in the nation’s oil sector want to import fuel in the wake of lopsided performance of the refineries, but unable to do so because banks have shut the window to advance credit to them for reasons best known to them. In view of this, the operators rely on fuel allocations or supplies from the Federal Government.“

    Ihenacho said the country needed to adopt and implement a policy that is geared towards making the refineries refine more crude oil in order to proffer solution to the perennial fuel crisis and its attendant problems in Nigeria.

    “There is a need for a paradigm shift from importing to refining in-country. This shift can only be made possible when more refineries are allowed to operate. Why can’t we encourage companies to establish more refineries to meet fuel needs of operators in the downstream sector and the consumers,” he asked.

    Ihenacho said lack of a workable operation plan is killing initiatives by the Federal Government to move the downstream sub-sector of the oil and gas forward, adding that to improve the downstream sub-sector, government needs to restructure it.

    He said deregulation of the downstream segment of the industry cannot be possible unless private entities invest in refineries.

    Ihenacho said subsidy is a drain on the government’s purse, stressing that trillions of naira have been paid as subsidies to fuel importers in the last few years.

    He urged the government to remove subsidies, and also provide environment that is conducive for private refineries to operate, adding that the idea would help in reducing the fiscal challenges, which the country is facing.

  • Capital Market operators woo investors with digital trading

    Capital Market operators woo investors with digital trading

    Regulators and operators of the Nigerian capital market are taking the market to the high-tech platform – mobile phones, laptops and other internet-enabled electronic devices. The emergence of these online mobile portals has potential to deepen domestic participation in trading, reports, Capital Market Editor TAOFIK SALAKO.

    The facts are startling! Less than three per cent of Nigerians are participating in the stock market and less than 0.2 per cent of the population has never invested in collective investment schemes (otherwise known as mutual funds). In fact, foreign investors dominate transactions on the stock market. Yet, more than half of the population is classified as educated and urbane.

    Going by the capital market penetration and participation data of both the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE), as well as other stakeholders’ groups, there is a consensus that there low participation of Nigerians in the capital market.

    On the contrary, Nigerians are atop the list of mobile phone and internet users globally. A report by the Nigerian Communications Commission (NCC) showed that in December 2015, there were 151.02 million active phone lines in the country. These include: 148.68 million mobile GSM lines, 2.15 million mobile CDMA lines and 187,155 fixed wired/wireless lines.

    The report put Nigeria’s teledensity at 107.87 per cent, showing a marked increase against total active lines of 139.14 million and teledensity of 99.39 per cent recorded in 2014.

    Wikipedia has ranked Nigeria seventh on the global list of countries going by the number of mobile phone users with a connection rate of 94.5 per cent.

    The country’s internet usage is the highest in Africa, almost twice that of Egypt, Nigeria’s closest in Africa. Internetworldstats.com in its latest ranking, indicated that Nigeria has more than a quarter of Africa’s total internet usage with more than 51 per cent of its population having access to the internet.

    According to the global internet monitoring platform, Nigeria has 92.7 million internet users, representing 51.1 per cent penetration and 28 per cent of Africa’s total internet usage. Egypt, the closest to Nigeria, has 14.6 per cent of Africa’s internet usage, while  South Africa controls 8.1 per cent.

    An International Data Corporation (IDC) report has predicted a rise in the expenditures of corporate, government establishments and individual users of internet technology (IT) in Nigeria to more than $5.6 billion in the course of the year as institutions and individuals continue the race toward digital transformation.

    Capital market authorities and operators have launched efforts aimed at leveraging on the active internet usage to leapfrog domestic capital market participation through seamless, online access to capital market data and transactions.

    No fewer than 10 stockbroking firms have launched online stock trading portals that allow investors to create stockbroking accounts, fund the accounts and trade online- real time at the stock market.

    Among the firms are GTI Securities Limited, Investment One Stockbroking International Limited, Meristem Securities, CSL Stockbrokers, Capital Bancorp Plc, Lead Securities Limited, Morgan Capital Limited and Afrinvest Securities among others.

    Real time, online trading

    Though the online portals comes in different names according to the brand essence of the originating firm, they come with similar concept and features.

    The cutting edges have been additional security features and smoothness of the access and procedures.

    As a prototype, Investment One Stockbrokers International’s online portal, known as ‘Easy Trade’, allows investors to buy and sell stocks directly on the floor of the NSE, besides the access to real time market data and back-up research and analyses.

    The sign-on fee is a one-off payment of N1, 000 and investors can open account and trade with any amount. The platform enables clients to manage their stockbroking portfolios on mobile devices, tablets, laptops and desktop computers.

    The 24-hour connectivity to the portfolio is complemented by access to the company’s online customer support through online chat functionality, so that clients can talk directly to the customer service team who will manage their enquiries.

    ‘Easy Trade’ provides investors with two options of direct market access to the trading engine at the NSE, which is best suited for savvy investors and alternatively, to allow clients’ instructions go through the Investment One in-house order management system before reaching the exchange trading engine, which will allow investors’ orders to be previewed and completed by the stock broker.

    The NSE is coordinating the online trading by stock brokers under a new initiative tagged: “Smart Trade”, which is meant to rally the stock market behind the mobile online trading, standardise and unify the platform and further provide regulatory support for the individual stockbroking firm’s efforts.

    According to NSE’s Executive Director, Market Operations & Technology, Ade Bajomo, online and mobile stock broking has potential to tremendously improve the depth of capital market by widening investors’ base.

    From the current retail trading investors’ base of five million, Bajomo said the stock market could leverage on increasing mobile and internet usage to grow retail investors’ base to 25 million, which will create a win-win situation for all stakeholders.

    He said the online platform will enable investors to buy and sell stocks on the exchange with real-time processing functionality, adding that the platform will also enhance financial inclusion, transparency and market integrity as it gives investors greater control over their investment decisions.

    He said that the platform would provide users real-time market data with availability of various technical indicators to analyse the trend and momentum of the market, thus enabling investors to make informed decisions, using the latest data.

    As part of efforts to standardise and ensure security of online users and the general stock market, the NSE, in collaboration with the SEC, has issued guidelines on online stock broking.

    Dealing members that operate online trading portals must adhere to the seven-point guideline on individual investors online trading and all other extant laws, rules and regulations, guiding the operations of the stock market.

    According to the guidelines, dealing members with the intension of setting up online trading portals, shall implement and set up X-Net connectivity and an Order Management System (OMS), certified by the exchange.

    Also, no dealing member shall operate an online trading portal without subjecting the online portal to regular penetration tests, which shall be, at least twice, a year with a reputable firm.

    The dealing members shall submit to the NSE the certified Penetration Testing Reports (PTR) from a credible information security company that the online portal platform is secured for usage. The NSE will also carry out independent routine checks to validate the PTR on an annual basis and the dealers must be able to rectify any identified issues promptly.

    The guideline stipulates that “all trading activities on the portal must be duly monitored and supervised by an authorised clerk employed by the dealing member.

    “Any trading errors or anomalies shall be duly and promptly reported to the Exchange in line with the Exchange’s Error Trade rules.”

    Besides, any dealing member willing to operate an online trading portal can carry out a comprehensive “Know Your Client” (KYC) check  on all clients registered before activating an online trading portal before an online trading account is activated, or any transaction is carried out by investors on the portal.

    The dealing member will also have to keep the records of the (KYC) and transactions for a minimum period of six years, or as may be amended from time to time. Stockbrokers are also expected to disclose on their trading portal and account opening forms the risks associated with portal usage in addition to compliance with the NSE’s rules and regulations, including those on communications, advertisement and publication.

    Besides, applications used by clients to access the OMS system shall be protected with strong passwords, strong authentication in line with industry standards, optimised for performance and regular security testing.

    Head, Transformation of the NSE, Mr. Olumide Lala, said online trading portals will close the gap between the market, investors, operators and regulators as well as increase awareness about the market.

    Riding on the back

    of high-tech

    The NSE runs a trading engine with the scalable capability to absorb and adapt more than the current mobile phone and internet users along various product categories, including equities, bonds, derivatives, Treasury Bills, commodities and exchange traded funds (ETFs) among others.

    It (NSE) runs on the most advanced trading technology in Africa. The NSE launched its current trading engine in September 2013. The current trading engine, known as X-Gen, is a version of NASDAQ X-Stream, developed by NASDAQ OMX System, a global financial services powerhouse.

    The trading platform is based on a number of leading technologies, including NASDAQ OMX’s XStream matching engine, and the NSE’s flexible and robust X-GEN Market Database, developed from scratch by the NSE and its technical partners.

    X-Gen has been described as the fastest trading engine in Africa. The NSE has continued to ride on the back of the wide scalability of the X-Gen to include new features aimed at enhancing price discovery and forestalling market abuse and manipulation.

    In 2015, NSE introduced new features to the X-Gen including several windows that allow stockbrokers to track the underlining tempo of the market movement and also make clearer evaluation of the yield status of debt instruments.

    Besides, the changes also allow for greater flow of communication among stockbroking firms during trading. The OMS, which coordinates orders from scores of stockbrokers trading simultaneously from their remote or office locations, and trading floors of the NSE, has also been made more flexible to accommodate various orders.

    In its basic form, the X-GEN is able to process some 100 million orders per day with 5,000 trades per second. With the ongoing efforts to integrate West African stock markets under the West African Capital Markets Integration Committee (WACMIC) initiative, X-GEN has the latitude to use a single platform across West Africa, allowing the NSE to offer co-hosting services to other African Exchanges.

    Apart from its enhanced accessibility which allows real time access to the market and scalable capability that allows trading in several assets, the X-GEN comes with market surveillance to reduce infractions and advance the back-end oversight function of the NSE, order management rules, user activities, market maker rules and much more can now be monitored and reported on in real-time.

    NSE’s Chief Executive Officer (CEO), Mr. Oscar Onyema spoke of the efforts being made to curtailing cyber risks as the stock market opens up.

    His words: “OMS are subject to rigorous checks and tests which culminate in a certification awarded by the Exchange. If a Firm successfully attains the certification, it means that the NSE is satisfied with the integrity of the system’s capability to undertake transactions effectively on XGEN.

    “The OMS provider is then allocated a unique connection key by the Exchange. Only then is the OMS allowed to connect to the Exchange’s live trading engine.

    “The Exchange has also taken steps to ensure that its eco-system maintain a high level of vigilance and best practice in information security management to mitigate against the risk of malicious code, stolen identity and fraudulent practices that could arise from this channel. There are regular frequent checks in place that are designed to identify and mitigate these risks.”

    According to Onyema, X-GEN has opened an unprecedented level of innovative trading capabilities for the capital market, providing direct access for both the buying and selling sides, and mobile access through smartphones to the retail investors.

    With the youth as the main driver of Nigeria’s mobile and internet usage, Onyema said NSE’s investment education programmes have been specifically designed to leverage and engage the participation of youths, noting that both the NSE and its stockbroking firms have carried out regular awareness sessions in tertiary institutions and developing materials that will further enhance youth participation and the wider investing community to mobile trading.

    Onyema said: “We believe that mobile trading is set to rise significantly in our market as it offers an unparalleled level of convenience, transparency and control for all classes of investors to engage actively in the market.

    “The Exchange is also constantly engaging with the younger generation to ensure they are educated and understand the dynamics of the capital market at a secondary school level.

    “We think that it is important to note that 90 per cent of last year’s National Essay Competition on the capital market that was sponsored by the NSE had entries submitted online, via the NSE website, e-mail and face book.

    “Only a few were physically dropped off at three of our 13 regional branches. It is a global trend that young people have more access to information, thanks to the internet, and they are savvy with the emergence of mobile phones.”

    The coming boom

    The Internet Society, a global organisation dedicated to promoting access to internet, predicted that mobile internet penetration will reach 71 per cent by 2019. Usage per device is forecast to more than triple by 2019 and while smartphone sales are the majority of mobile handsets sold worldwide; tablet sales will soon exceed total Personal Computer (PC) sales.

    Already, 192 countries have active 3G mobile networks, which cover almost 50 per cent of the global population.

    Leading e-business advisor, Babafemi Omotesho, said the internet has proven to be a platform with the largest target market audience with high-level of interaction and engagement as websites can deliver all investment education necessary for potential investors to get adequate information.

    He said: “With these analysis and statistics, I would say the prospects of mobile and online stock market trading is quite high because it has proven to be more cost-effective than traditional channels in terms of personnel and financial resources needed and its ability to establish a wider target market. A deeper market penetration is expected if well executed.”

    He noted that several complementary initiatives, implemented by the Central Bank of Nigeria (CBN), such as the simplified risk-based tier framework, agent banking regulatory framework and mobile-payment system and cashless policy have laid the background for the success of the online trading.

    Bajomo said the mobile online trading initiative will ride on the crest of full dematerialisation and  direct cash settlement to create a seamless experience for investors.

    The direct cash settlement initiative will require complete documentation and reconciliation of investors’ information, holdings, contact details and bank account details.

    The CEO, Infoware Limited, Mr. Uwa Agbonile, said the security of the online trading portals could be guaranteed through the use of many layers of protection to protect investors’ accounts and ensure that hackers do not tamper with the seamless operation of the system.

    Managing director, GTI Securities, Moses Aledare, said his stockbroking firm has put in place adequate arrangements to ensure hitch-free operation on its online trading portal.

     “The platform has a robust security features which is well articulated to ensure that investors trades and accounts are not compromised,” Bajomo said in reference to online portals reviewed by the NSE.

    The capital market has struggled with the volatile fluctuations due to the dominance of foreign investors. Quick to respond to global variables and national fiscal and monetary changes, foreign investors have orchestrated the declines at the stock market over the past two years.

    The Nigerian stock market lost N1.75 trillion in 2014 and additional N1.63 trillion in 2015.

    In the last two months, the stock market has lost about N1.4 trillion.

    Analysts, who are unanimous on the attractiveness of the Nigerian equities, also agreed that the stock market has been under the undue influence of foreign portfolio investors, who have continued to react strongly to foreign exchange management and fiscal uncertainties.

    SEC’s Director-General Mounir Gwarzo has identified that growing the domestic investors’ base, remained the only way to ensure stability in the capital market growth.

    Operators say that linking the vast growing mobile phone and internet usage with the unexplored potential of the capital market may attract Nigerians to their market.

  • How to boost oil, gas reserves, by operators

    President Muhammdu Buhari has been asked to  encourage exploration and production to boost oil and gas reserves.

    Oil chiefs gave the charge at Petroleum Technology Association of Nigeria (PETAN) dinner/awards, night in Lagos.

    They issued robust  and continuous consultations with the government to create an all-inclusive and implementable policies that would keep the sector productive and competitive.

    PETAN Chairman Mr. Emeka Ene, who is also the managing director of  Oildata Energy Group, said the crude oil reserves might not enable the country realise its long-term economic objectives if urgent measures were not taken to boost exploration and increase oil reserves, which were being depleted.

    He noted that robust oil and gas reserves form the basis for increased production, adding that exploration and drilling is best done during periods of low oil prices, which is now.

    He urged the government to follow the steps of other oil producers in the Middle East and North Africa (MENA), where he said that drilling rig counts have sharply risen since the fall in oil prices began resulting also in reduced cost of services.

    Ene, the immediate past Chairman of the Nigerian Council of Society of Petroleum Engineers (SPE), said Nigeria’s long-term economic aspirations were at stake because investments in exploration had fallen resulting in drastic reduction in fields, which gave rise to redundancy and massive staff lay-offs across the industry’s value chain.

    He said PETAN can provide leadership in the service sector by providing a model for value-added local content, which guarantees significant cost reduction, and a stimulus for increased drilling and production activities.

    He urged the government to provide stable medium to long-term economic aspirations by diligently working to actualise the planned oil reserves of 40 billion barrels, daily production of four million barrels per day, monetisation of gas resources, and increase in local content activities for the advancement of indigenous capacity and job creation.

    Managing Director Seplat Petroleum Development Company Plc and former President of Nigerian Association of Petroleum Explorationists (NAPE), Mr. Austin Avuru, said low oil reserves is not good for Nigeria considering the contribution of the oil and gas sector to the economy.

    He said Nigeria is seriously feeling the impact of oil price crash because it failed to build a robust sovereign wealth fund that would have cushioned price fall shock.

    He said the Organisation of Petroleum Exporting Countries (OPEC) countries were driving exploration and production with sovereign wealth funds despite the low oil prices, while Nigeria is cash constrained to carry out such activities.

    Avuru corroborated Ene’s position on the need for medium to long-term economic plans, adding that little or no exploration in the industry means the nation’s lean oil and gas reserves can no longer provide support for economic projections.

    Avuru said oil production from onshore and shallow water environments has fallen from 2.4 million barrels per day to 1.2 million barrels per day (mbpd), adding that production from the deepwater which should have increased the  production has merely ended up only stabilising output at 2.4 mbpd.

    Domestic gas demand, according to him, has jumped from the previous 300 million standard cubic feet per day (mscf/d) to 1.0 billion scf/d. He projected that demand will jump to 3.0 billion scf/d by 2017. “The projected domestic gas demand is about four times more than what the country’s estimated gas reserves can support,” he added.

    Outstanding industry players conferred with awards include the  late Dr Rilwanu Lukman, Dr Emmanuel Egbogah, Gaius Obaseki, Sanni Bello, and Mutiu Sunmonu, Mrs. Callista Azogu, Charles Ngoka and Ugo Ralph Ekezie.

    Others include Shawley Coker, Pedro Egbe, Steven Aribeana, Sam Adegboyega, Dr Diran Fawibe and Emeka Okwuosa.

    Corporate award winners include Shell Petroleum Development Company (SPDC), Neconde Limited and First bank Plc. They recognised for their contributions to the development of the oil industry in 2015.

    The event ended with meetings, conferences and other industry forums with members of PETAN, Nigerian Association of Indigenous Petroleum Companies (NAIPEC), Nigerian Association of Petroleum Explorationists (NAPE) and the Society of Petroleum Engineers (SPE), among others in attendance.