FOR Executive Vice Chairman of Capital Assets Limited Ayo Asekun, the fundamentals of the quoted companies, especially the blue chips, remain sound. He said the earnings of the companies encourage people to invest in them, even as he noted that the environmental factors could affect the market.
He said: “You’ll observe that the market went up immediately after the election as a show of confidence in the new leader but the lack of economic policy discouraged investors.
“The foreign exchange situation has also not helped matters as foreign investors have been waiting to see the direction of the market. This investors’ apathy is also affecting the primary market. People may not want to buy shares when the market is down.
“But I think it is better for investors to manage their expectations. I’ll not advise anybody to expect a fantastic rally before the end of the year, even as I believe that the market will stabilise once the government unfolds its economic policy direction. There is room to make some gain, because if the market is 15 per cent negative now and it stabilises and closes the year at one per cent or flat, there is some gain.
But, the Head, Research & Investment Advisory, Meristem, Mr. Basheer Bashir predicted a blur in the outlook of the companies for the remaining part of the year.
He hinged his position on a few macro economic factors including weak global growth and tumbling oil prices at the global market.
“Worse still for the country”, he said, “the glut in the oil market will persist as we expect Iran to push more volume into the market before the end of the year as the sanctions regime will soon end on the Asian country. Against this backdrop, government’s fiscal revenues and foreign exchange earnings are expected to remain under pressure, transferable to the Nigerian equities.
“But, there is a weak probability that the market may close positive as there may be some reliefs in the monetary space as we expect the Central Bank of Nigeria (CBN) to relax some of its policies in favour of improved liquidity in the foreign exchange market, owning to JP Morgan’s deadline and its impact on Nigerian capital market, especially the bond market.
“We also expect the CBN to relax and do a downward review of the CRR rate currently at 31 per cent on the implementation of Treasury Single Account (TSA) policy on public sector fund. All these may bring some reliefs for the financial market. However, we are less enthusiastic about the marked recovery in the market for the last quarter of the year.”
He urged the government to create an enabling environment for the sustained development by paying specific attention to capital market through conscious policy guidelines and pronouncements.
“There should also be reduction in transaction charges in order to engender transactional efficient market in addition to greater regulations and enforcement by regulators in order to boost investors’ confidence, especially the institutional investors”, he said.
Oluleye Ademola, the Head, Research &Investment of Bancorp Plc., described the outlook for the stock market as upbeat, given the fundamentals of the economy and the listed companies.
He said: “The Nigerian economy is not where it supposed to be; despite the declining crude oil prices, devaluation of naira and the rising inflation, our situation is not the worse. We have seen the half year results of most of the listed companies, while some are good, some are not. All things being equal, we have a fair understanding of how the year will end for companies.
“If the Federal Government will get it policies right and put the economy on the right track by appointing quality ministers, I expect a positive turnaround for the stock market positively,
“Going by the aforesaid, we are positive that the NSE ASI can still close the year on a positive note. You will recall that the NSE ASI year-to-date return on February 13 was -20.41 per cent but it reversed and peaked at +3.09 per cent on April 2. The same thing can happen if we get it right as a country before the end of the year.
“For discerning and long term investors, this is the time to buy. Investors should buy based on fundamentals and not sentiments or hearsays. Many of the listed stocks are trading around their year low with good fundamentals. Investors should seek advice from professionals.
“We are no more in the era of people are buying or a particular stock is moving up, then I must buy. Investors should ask to know why a stock is behaving in a particular way. This is long-term market; that is why it is called capital market.To support long-term development of the market, there should be more financial education and sensitisation. The people must understand the instrument and security into which they are investing their money. The listed companies should also strengthen their investor-relations unit so as to communicate well to the shareholders.
The Head, Investment Advisory & Research of SCM Capital, Mr. Sewa Wusu, traced the decline in the market to the lull in investors’ confidence due to uncertainty in policy direction and weak macro-economic dynamics of the country.
Other reasons according to him, include; declining oil prices at the international markets, weak currency following CBN‘s administrative control measures in the foreign exchange market and increased volatility.
Wusu said: “The anticipated interest hike by the United States (U.S.) Federal Reserve also induced capital flow reversals which affected the Nigerian market as Foreign Portfolio Investors (FPIs) were risk-averse on Nigerian Naira-denominated instruments.
“The ministerial announcements due this month may induce some intermittent spiral in the market. Although, the outlook still remain weak due to global headwinds. Should the companies also declare a weak third quarter results, this may also dampen market momentum. There is the likelihood that the banking sector performance may deteriorate slightly as operating environment continues to remain volatile on tight monetary policy.
“Already Fitch Ratings has warned that Nigerian banks are operating under tight monetary environment and that could affect their asset quality, balance sheet size. The non performing loan ratio is expected to rise above the five per cent, but below 10 per cent.
In her own remarks, Aderayo Bankole, who heads the Communications Unit of Investment One Financial Services Limited, said the outlook for the market remained neutral given the macro-economic and sector-specific challenges, including the low crude oil price which has resulted in low foreign exchange reserves, the foreign exchange management that has also kept foreign players out of the market and the political transition period between the previous government and the formation of the Federal Executive Council (FEC) by the new administration.
She said: “But, we believe the market can still close on the positive. The market is definitely very attractive now; prices are very low and some stocks have reached an all-year-low. We advise the investing public to stick to stock that have good fundamentals; they should stagger their purchases and look for value when investing.
“In order to create a stable base for the market, investment education and early inculcation of investment culture that could stimulate domestic participation should be given priority by the regulators and the central government.”
GTI Securities’ John Kanayo expressed optimism that there will be moderate revival of the market in the last quarter of the year, despite the tough economic environment witnessed in the first eight months.
He hinged his prediction on government’s commitment to systematically address the challenges and making good its promised economic and policy pronouncements this month. “These, we think, could boost confidence level of investors, especially, the foreign portfolio investors, thereby boosting the capital market returns”, he said.
Operators of the Nigerian oil and gas industry are counting their losses arising from the non-passage of the Petroleum Industry Bill (PIB), which has been before the National Assembly for over a decade.
The non-passage and its consequences, according to them, include uncertainties over investment in exploration and production, which boosts oil output and reserves as well as funding of operations.
The bill has been undergoing changes from one legislative assembly to another as a result of disagreements between stakeholders over fiscal and structural provisions in the bill. The development led to abandonment of decisions in taking risks to make new discoveries, developing existing acreages and injecting new technologies, therefore, activities have been very low in the industry over the years.
The lingering bill has created uncertainty that has continued to hang on the business environment, compelling foreign and local investors to cancel or delay business decisions that would have kept activities in the industry alive and growing.
The Managing Director of Seplat Petroleum Development Company, Mr. Austin Avuru said: “There are too many contending issues that are lumped into one piece of legislation including issues that were never in dispute; including issues that we didn’t need to revisit. And in the process they have thrown the industry into an impasse; you can’t move forward because everybody, especially the multinationals operating in the deep offshore and who have to make multibillion dollar investments, are in an uncertain business climate. Clearly they have pulled back their pen and they are not taking final investment decision (FID).
“What is stopping the industry from moving forward is the uncertainty created by the possibility of a new legislation that is not clearly understood. And, therefore, you can’t take the risk of making heavy investments because you can’t be certain until that piece of legislation becomes law. And so, as long as there is suspense, there will be a lull. The entire industry is in suspense. Every month, you hear about dwindling revenues in the federation account. Yes, it will continue,” he pointed out.
On the whole, he said: “our survey of oil industry challenges in the wake of the oil price fall exposed crippling challenges that are eroding profitability.”
Avuru also said: “Across the industry, cost has gone up 10 fold from where we were 25 years ago. As a young well-site geologist in the 1980s, and if you recall those terms of the 1985 and 1987 memoranda of understanding (MoUs) nominal technical cost was pegged at $3.50 per barrel. It was expected that average technical cost (operating expenditure and capital expenditure) was $3.50 per barrel. That means you have to be operating below $3.50 to be efficient. If you are doing above $3.50 you are considered expensive.
“Today, that cost has gone up to $30.50 per barrel. So, in the past 30 years, we have allowed a lot of things to creep in. There is the crisis in the Niger Delta; increase in the security apparatus to do the business, there is an increase in everything. All the costs have piled up onto the cost of production.
“And one of the biggest issues, why there appears to be a disagreement between government and operators over the PIB is because government believes that the fiscal regime cannot be predicated on $35 per barrel. And you can understand their frustration. They were there when the cost was $3.50 per barrel.
“But the industry is saying the cost is the cost. If it is $35 per barrel then it is $35 per barrel. People don’t realise that this is where the disagreement resides. The debate is on the cost parameters used to model the fiscal regime. So, the industry has undergone a huge escalation in cost. Unfortunately, nobody has tried to stem that tide because it has escalated beyond control.”
However, beyond the arguments is the fact that the domestic operating environment appears to be losing the necessary conditions required for commercial investments to make appreciable returns and deliver profits to shareholders.
A few issues have cropped up on the nature of incentives local oil companies should enjoy. The Chief Executive Officer, Ascension Consulting Services and Director-General, Ascension Academy Institute Limited, Alatoye Azeez, speaks on these and other issues in this interview with EMMANUEL UDODINMA.
There seems to be confusion on the granting of pioneer status to certain companies. What is your take on this?
The truth is, there should be no cause for confusion on this matter because the laws are pretty clear. The Industrial development (Income Tax) Relief Act of 1971, now Cap 17 Laws of the Federation of Nigeria, 2004 firmly supports the action by government.
In section 1 of that Act, the President is empowered to grant tax holiday to “any industry.” Pioneer status is one of the government’s tax incentives schemes advanced for the development of any industry and to encourage investment in particular sectors of the economy, to grow that sector and raise it to a level where it can satisfy the country’s needs.
So, the government deliberately reduces the tax that accrues to it from a sector, or waives it totally to make funds available for further investment in that sector. Meanwhile, it could also be used to discourage investment where the government increases the taxes and makes the business unprofitable. Example is the tobacco industry.
The cause of this confusion is not its unsuitability for the economy, but whether a particular sector qualifies for this pioneer status and its attendant tax exemptions. If there is no need for growth in that sector and the government grants the incentive, then, it would be a misplaced grant. If the government however identifies a shortfall in a sector of the economy, it can announce a tax incentive to entice more investors and therefore get more products to boost the economy.
The Federal Government plans to make Nigeria a prime investment destination. In what significant ways can taxation be deployed to make that happen, especially in Nigeria’s oil and gas sector?
The Federal government announced in 2005 that it intends to increase its daily oil production quota from 2.5mbpd to 4mbpd by 2010. The target for that is now 2020. Previously, the industry was quite comfortable with 2.5mbpd. However, faced with the challenge of producing an additional 1.5mbpd, additional investment was required and the government wanted the indigenous and marginal filed operators who are Nigerian businesses, to step up to the challenge.
To demonstrate its seriousness, the government approved pioneer status for the industry, which means that whatever amount of taxes they need to pay, they could hold back and add to it to raise more funds from the banks for further exploration and production businesses.
The objective of the government is the increase production of the 1.5million barrels to achieve the four million barrels. Some people are of the view that the government should grant production based incentive. Also, providing Tax Free Zones is another avenue that taxation can be deployed.
In the tax free zones, no tax is supposed to be payable once the operator within the zone is an approved entity and limits its activities to the zone. Nigeria currently boasts about 22 free trade zones. The Onne Oil and Gas Free Trade Zones (OGFTZ) in Port Harcourt, Rivers State is one of such.
How has the government’s Pioneer Status Incentive (PSI) played out in the oil and gas sector?
PSI has made substantial contributions towards the achievement of the government’s objectives for the indigenous and marginal field operators. A good example: when the International Oil Companies (IOCs), particularly Shell, started divesting their onshore assets, if the indigenous and the marginal field operators had not taken them over, the oil production level would have dropped owing to the exit of the IOCs.
Lately, the President promised the indigenous oil and marginal field operators support so that they contribute up to 1.2mbpd from the current 200, 000bpd. If this target will be achieved by year 2020, it is important that security of their assets and investments is guaranteed.
So, while it could be said that the government is yet to achieve the set target that is now reset for the year 2020, we can say that there has been a remarkable achievement that pushed the local producers’ contribution from a total of about 80,000bpd to about 200,000 bpd.
Since the PSI was introduced, has there been any breaches regarding its grant by government to companies?
The government cannot be compelled to grant PSI. In fact, the process for obtaining it is a complex one that involves applications, making business cases, inspections and approval processes by no less than three government agencies. If all these procedures are duly followed, I believe that the question of breaches would not arise.
Some of the issues that people have raised are that oil and gas companies are not under the Companies Income Tax (CIT) and therefore the government should not have given them. There are two questions here. Firstly, is there a business that is not allowed to deduct its business expenses and capital allowances that are wholly exclusively and necessarily incurred for the business? Secondly, if as claimed, those deduction are sufficient, why are the IOCs divesting? Are they tired of making profits or what?
If Nigerian companies are taking up the security challenges of the operating environment, and the government supports them, is the government commendable or condemnable. In my own view, I think the government has taken the right decision and it cannot be said to be an infraction when the grant and the procedures are legally supported. Another issue is whether people who do not have oil blocks were not given pioneer status so that they can claim tax benefits. This is a very naïve proposition. This is not a payment by the Government like Export Expansion Grant (EEG) or fuel subsidy. This is something that you generate and you re-invest in further exploration and development activities for further production. So if you don’t have a block and you are given pioneer, you will simply be a looser because the two per cent processing fees you pay to the government is lost and besides, all your efforts will be a total waste as there is no benefit to such a company.
What industry or companies would you regard as the biggest beneficiaries of the PSI arrangement and why?
There are actually two classes of beneficiaries: direct beneficiaries and indirect beneficiaries. The direct beneficiaries are the government and the local oil companies. The indirect beneficiaries are the employed individuals and communities with improved corporate social responsibilities. Most of those criticising the PSI may be doing so because they are insufficiently informed about the scheme.
The government benefited by way of increased oil production which would not have happened had the divested assets not been put back to work by the LOCs. This means more income to the government in royalties that is based on production. It means more revenue to the government in transaction taxes, including withholding taxes and value added taxes.
Secondly, the oil companies will benefit to the extent that there is a base fund they could use to raise more funds from the banks for more exploration activities. If such base funds are not available, the only option left to them is to operate at the level they are, or at their own pace and not at the government’s pace. Apart from the government and the companies, the Nigerian masses are indirect beneficiaries of the PSI schemes in terms of employment and corporate social responsibilities to the communities. This has a catalytic effect on the quality of life and can arrest potential insecurity by mopping able men from the street.
In terms of management and implementation of the PSI policy, what concerns could government genuinely have?
One of the genuine concerns that the government could have is whether the tax relief was utilised as applied for. Since this is measurable in number terms, it is fairly simple. Two key tools that the government could use to ensure compliance is monitoring and enforcement of the terms of grant. Another aspect of concern is whether the local companies are employing or have employed as they promised during the process of the grant. Finally, the government should be able to control the approvals where necessary. Again, this is also measurable. As to monitoring, the Nigerian Investment Promotion Commission is empowered to monitor compliance with the terms of the grant and Section 7 of the IDITRA is very clear. The Government can cancel or restrict any grant and this is why I say that the whole scheme is wholly within the control of the government.
How can the benefit(s) of PSI be maximised?
There must be clear definition of what it is meant to achieve. The second issue is where the objectives have not been met, what does it do? It simply has to move on with the scheme at the appropriate time to ensure that not only it meets its objectives but that it exceeds it. The local oil companies would do themselves a lot of good if they invest wholly the fund in further productions and even beyond the years of the pioneer period, keep on growing their capital base so that they can have the strength of the IOCs.
Why is the average Nigerian largely ignorant of the PSI policy?
Firstly, it is a challenge of the overall literacy level in the country. Apart from the professionals especially the lawyers, accountants and tax practitioners, hardly would you see anyone that understands how this scheme works. What many people think is that it is a payment to the oil companies just like the EEG or the fuel subsidy. They would even say that the government declared bonaza! Some people are not ignorant but are either selfish or simply mischievous. For instance, it is a good selfishness if a tax collector who is retiring in the next three years raises strong objection to PSI. It is understood because it would reduce its own current collection but increases its successors collections. This objection is understood and acceptable. A better way to manage this is to exclude the scheme from yardstick of current performance and consider the investment of previous administration in subsequent collections. All these are intellectual works that needs to be well coordinated at the government level. There are other people whose industry is not their turn to benefit. Of course, it cannot be said that those categories do not understand but the issue is that they are not benefiting and therefore, to them the scheme is not fine by them. It is for the government to stand its feet and achieve its set targets for the scheme. Government is a continuum and this type of scheme would benefit the nation. Therefore, it should not be seen from personal perspective but in the overall benefit of the country.
What steps do you think government should take to improve the PSI at this time?
The first thing is for the government to carry people along through enlightenment programme. This would give people opportunity to contribute to the grant. Secondly, there is need for reform in all aspects of our legal system. The law should be reviewed such that where amendments are needed, it could be easily made. Thirdly, the grant should be subjected to rigorous intellectual processes such that no one will come and say that a government scheme is deficient. Fourthly, there must be monitoring of the scheme to ensure that the government objectives are met and finally, there must be enforcement of the terms of grant. The government should have the courage to caution deviation from the terms of grant and either cancel or restrict it as the law provides.
Government should adopt a scientific approach on the issues of PSI, enlighten the people on a continuous basis, strengthen its monitoring and enforcement procedures to enable the country continue to enjoy the benefits of the PSI scheme.
The deregulation of the downstream segment of the oil sector is key to the growth of the petroleum industry. In this report, experts proffer ways of achieving this goal, writes AKINOLA AJIBADE.
The oil and gas industry requires a level playing field driven by economic and market forces and removed from the government’s control, operators have said.
The industry, operators added, should also operate a system that is devoid of monopoly to promote a well-deregulated market that will ensure economic growth.
The operators, who spoke at the this year’s National Association of Energy Correspondents (NAEC) Conference in Victoria Island, Lagos, advocated a business model where there no inhibitions and where some operators are favoured above others.
The operators include the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr Emmanuel Ibe Kachikwu, Managing Director, Mobil Oil Nigeria Plc, Mr. Tunji Oyebanji, Managing Director, Frontier Oil Limited, Mr. Thomas Dada, Group Managing Director, Aiteo Power, Dr Ransome Owan and Dr Frank Edozie, Senior Power Consultant, Nigerian Infrastructure Advisory Facility (NAIF), Chief Executive officer, Egbin Power Plc, Dallas Peavey Jr., and Dr Oladele Amoda, Chief Executive officer, Eko Electricity Distribution Company.
Speaking on the topic “Deregulation: Key to sustainable development in the oil and gas, they identified the issues affecting deregulation, the methods, and benefits vis-à-vis what operators and the industry stand to gain when they operate in a fully deregulated environment.
Kachikwu said there would be a fair deal because of the abundant petroleum resources, fair product prices for consumers, full cost recovery and reasonable profit margins for operators whenever the Federal Government implements the deregulation policy. He said implementation of the policy would entrench efficiency in product usage, product availability and effective competition among operators. The development, according to him, would put an end to product shortage.
He urged the government to fast-track the implementation of the policy to grow the downstream sector of the oil and gas industry. This, Kachikwu said, would go a long way in encouraging the inflow of local and international investment, and further foster the industry’s growth.
Oyebanji said there must be a level playing ground for operators, before full deregulation could be achieved. He said the deregulation meant the removal of government hands from fixing prices. Therefore, the government’s participation through fixing prices of products or services would cease when deregulation takes off.
He said deregulation presupposes market forces as the determinant of prices, and not fixing of prices by administrative fiat with its attendant bias in favour of certain interest groups. He explained that the low rate of investment in the industry, was a result of the government fixing the prices of petroleum products for operators.
According him, when this happens, investors would not increase their profit margins and stop products adulteration.
He said: “One of the problems faced by downstream operators, especially owners of fuel retail outlets, is a fixed price regime. Government fixes the prices of fuel, a development which makes it difficult for operators to determine their own prices, and further achieve a reasonable level of profitability. To make up for the shortfall in profit realised at the end of each financial year, some operators were allegedly adulterating the petroleum products. Cases abound where people mix petrol with kerosene to make money. These situations would not arise when prices were fixed by market forces, as against government’s price fixing.”
According to him, regulated prices cause problems, such as distortion in the market, prolonged product outages, absence of innovation, indiscriminate construction of stations and terminals and unhealthy competition.
Oyebanji also said fuel stations were springing up indiscriminately across the country because the government fixes the prices. “If you go to some areas in Port Harcourt, Rivers State capital, you would see new terminals coming up. In some places, you would see more filing stations than houses, a development which has created unhealthy competition in the oil and gas sector,” he added.
Edozie said there was nothing like monopoly when there is full deregulation, urging the government to provide anti-monopoly laws to prevent or forestall monopoly oil and gas sector. He said the government assumed greater powers which resulted in the fixing of prices for products, when the market is partially deregulated.
He said deregulation must be handled with caution to prevent a situation whereby operators would come together in a locality and dictate the prices for others.
“Deregulation of the energy sector requires that market forces (forces of demand and supply) determine the prices of products as against a situation in which some operators would gang up, for example, in a place like Lagos and dictate the price for others. To forestall this, there must be anti-monopoly legislation, which would ensure that the market is open to every player,” he added.
Edozie, formerly of Federal Ministry of Power, said various business models exist when it comes to deregulation, arguing that a country or industry is allowed to choose the one that suits its purpose.
He said in deregulating the nation’s oil and gas industry, operators would be allowed to choose between a business model in which prices are controlled to some extent and the one in which prices were not controlled at all.
He said the former model requires that a maximum ceiling is placed on prices to prevent operators from going beyond the ceiling, while the latter model suggests there is no barrier to price fixing.
He said operators in oil and gas industry would fare well, when the market is deregulated in such a way that the government removes the ceiling placed on prices of petroleum products.
Similarly, Dada, the Chief Executive officer, Frontier Oil Limited, said a fully deregulated petroleum industry presupposes free entry and free exit for players. He said there would be inflow of investments when operators are allowed to come into the sector freely and leave in the same manner.
He said gas price is fixed and regulated by the Federal Government, arguing that the idea is at variance with the aims and aspirations of a deregulated industry. According to him, operators in the gas value chain are yet to get a fair value for the product, in spite of the decision of the government to review the prices of gas upward in 2014.
‘’If the government is fixing the price of gas at $3 per 1000 standard cubic feet and I cannot sell above that price due to one reason or the other, then the market forces which is one of the features of a deregulated industry is yet to be operational,” Dada said.
He said full deregulation of the oil and gas industry would bring in more operators, urging the government to incentivise the private sector operators to increase their gas production.
Similarly, Peavey said full deregulation is the way out for operators in the power sector. His representative Mr. Kingsley Okotie, said there was need to remove the caps or ceiling placed on some fees charged by power firms, stressing that Power Distribution Companies(DISCOs) were yet to fix some prices.
The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said partial deregulation would not help the oil and gas industry and the economy. He said when the government removed its hand from the sector by allowing market mechanism to determine prices of petroleum products, the better for operators and the industry.
Indigenous independents and marginal field operators have faulted reports, which described the five-year tax holiday for pioneer status, granted them by the Federal Government as fraudulent.
The local oil firms said the tax holiday was a policy aimed at empowering them to boost production and curtail security issues through increased employment and investment in their corporate social responsibility projects.
Operators of these firms condemned reports that oil and gas firms got $4.5 million tax holidays, which they were not entitled to. The reports alleged that the tax holiday given during the administration of former President Goodluck Jonathan to 20 local oil companies was bonanza to the firms for buying marginal fields from some International Oil Companies (IOCs).
“The Economic and Financial Crime Commission (EFCC) is investigating the Federal Ministry of Industry, Trade and Investment as well as the Nigerian Investment Promotion Commission (NIPC) for tax holidays to about 20 oil companies,” the report added.
But the indigenous operators said the pioneer status is in the national tax policy and it entitles companies and firms to tax holidays as an incentive not only to oil and gas companies but to qualified firms in other industries anywhere in Nigeria.
“The grant of Pioneer Status to a company in Nigeria is aimed at enabling such company operating within the pioneer industry make significant capital expenditure and a reasonable level of return of profit within its formative years without having to pay company tax,” said Azeez Alatoye, a tax and regulatory expert.
The enabling legislation on the Pioneer Status in Nigeria is in the Industrial Development (Income Tax Relief) Act 2004. The Act provides that where the government says any sector or industry is not being undertaken on a scale suitable to the economic advancement of Nigeria or that it is in the public interest to encourage the further development or establishment or advancement of trade in such sector or industry, the President is authorised to publish in a gazette, a list of such industries who qualify for pioneer status.
“Whoever is insinuating that the tax holiday is fraudulent is either being mischievous or not well-informed, and do not understand the policy,” Alatoye added.
He said the Petroleum Profit Tax of these firms meant to pay for the first five years will not be taken out of the book and shared as dividends among the shareholders of the company but invested to meet the aspirations of the government who have targeted to boost oil output from the region of about 2.5 million barrels per day (mbpd) to 4mbpd in the nearest future.
“The money is in the book for the five year-period and not taken out. It is like government’s investment, which when matured in near future will mean that government will collect 85 percent of 4mbpd instead of 2.5mbpd as PPT. The government is not losing any money. There is absolutely nothing like that. The money is used as investment to boost production output,” he said adding that most of the oil companies went through due process to procure their pioneer status. The processes of obtaining tax holiday cuts across different agencies of the government like the NIPC, Federal Ministry of Trade and Investment, Federal Inland Revenue Service, among others.
Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) may delist and reclassify no fewer than 100 capital market operators in the first week of October.
The action would follow the conclusion of the capital market regulators exit procedures for insufficiently capitalised operators.
The Nation learnt that the market regulators would undertake a final review of the compliance status of all capital market operators on September 30 and effect deregistration and reclassification of the operators on October 2.
The capital market will wake up on October 5 with the list of compliant operators and renewed status of each operator, according to the sources.
SEC, the capital market regulator, will trigger the deregistration and reclassification, prompting the NSE to automatically deregister or reclassify operators in line with SEC’s master list.
Existing rules at the NSE make it mandatory for it to replicate SEC’s regulatory enforcement actions including suspension, revocation and reclassification.
As lobby intensifies by operators, SEC has insisted that it will not grant further extension of the September 30 deadline for compliance with new minimum capital requirements for capital market operators.
ItsDirector-General, Mounir Gwarzo, said any further extension would damage the integrity of the market.
SEC last week extended the deadline for the notification of any possible changes in the status of any operator as a result of the new minimum capital requirement to August 31.
Operators are expected to write the Commission on possible reclassification of function, reduction of functions or merger and acquisition while the Commission has also provided template for orderly reclassification of functions.
Already, the NSE has launched its final expulsion process for stockbroking firms deemed to be inactive. The National Council of the NSE, late last month held inquiry for the first batch of stockbroking firms deemed to be inactive and in line for expulsion, unless they present substantial evidence to show otherwise.
The first batch of stockbroking firms included 15 firms, which failed to activate their dealing licences.
The 15 firms included Al-Pina Investment & Trust Co. Limited, BBL Asset Management Limited, Integrated & Allied Securities Limited, Standard Chartered Securities Limited, Translux Services Limited, Afro-Arab Investment Limited, Barakat Investment Limited, Bosson Capital Assets Limited, Dealers Assets Management Limited and Enabell Capital & Investment Limited.
Others are First Express Limited, KFF Worldwide Solutions Limited, Kingdom Securities Limited, Silver & Gold Securities Limited and Williamson Capital Management Limited.
A reliable NSE source had said the hearing was part of the expulsion process to ensure that the it complies with extant rules that provide for fair hearing to dealing members. The 15 firms are the first batch of what may be a long-running expulsion process.
The inquiry was sequel to a new rule on the revocation of dealing licences and expulsion of inactive stockbroking firms, which came into effect on June 29 this year.
The new rule and amendments on revocation of dealing licences was earlier approved by SEC last February, but the NSE had delayed the implementation.
The Nation had then reported exclusively that the NSE might commence the process of revocation of dealing licences and expulsion of not less than 88 stockbroking firms, about one-third of the total number of registered stockbroking firms on Nigeria’s only stock exchange.
This re-examination process of dealership might be the largest-ever cleansing of the Augean stable at the stock market. The total number of previously revoked licences stood at 13.
The Nation’s check indicated that the NSE had already determined 88 out of the 308 stockbroking firms on its dealing members’ list as inactive. A status report on dealing members indicated that out of 308 existing stockbroking licences, 220 were active while 88 were inactive.
A breakdown of the inactive licences included 50 operationally inactive firms, 20 inactive dealing firms deregistered by SEC and 18 licences that had been dormant and were not activated since issuance. All these fall within the purview of revocation and expulsion due to inactivity.
SEC had late 2013 announced major increases in minimum capital requirements for capital market functions under a new minimum capital structure that was initially scheduled to take off by January 1, 2015. It however extended the deadline to September 30, 2015.
Minimum capital base for broker and dealer was increased by 329 per cent from the existing N70 million to N300 million. Broker, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for dealer increased by 233 per cent from N30 million to N100 million.
Also, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million as against the current capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million. Trustees, rating agencies and portfolio and fund managers had their minimum capital base increased by 650 per cent each from N40 million, N20 million and N20 million to N300 million, N150 million and N150 million respectively. A Registrar will now have a minimum capital base of N150 million as against the current requirement of N50 million. While the minimum capital base for corporate investment adviser remained unchanged at N5 million, individual investment advisers will have to increase their capital base by 300 per cent from N500,000 to N2 million.
Operators have lauded the appointment of Commissioner for Insurance, Mohammed Kari by President Muhammadu Buhari.
The operator’s expectation are high. They are hopeful that the new commissioner will provide regulations that will further drive the growth of the insurance industry.
Buhari appointed Kari on July 31, this year on the same day former Commissioner, Fola Daniel’s tenure in office ended.
Daniel held the position for eight years. Director-General, Chartered Insurance Institute of Nigeria (CIIN), Kola Ahmed, thanked the president for his quick response in appointing someone as the commissioner.
For him, it shows that President Buhari’s administration has focused on the industry. He describe Kari’s appointment as the right speg in the round hole and in the right direction.
He said: “I also see his appointment as a vote of confidence by the government on NAICOM programs. This is why they chose somebody from the Commission.
“He does not have to reinvent the wheel because he has been part of the existing policies. It is good for the industry too because we don’t have to start understanding the commission all over again. We will cooperate and support him.”
The CIIN DG further noted that Kari is a strict person and that is the kind of person the industry need. He said that while the former commissioner on his part enforced the Insurance Act 2003 on operators, he believes the new commissioner will continue with a lot of force.
“He is somebody that will not bend the rules for anybody. He knows the pranks that any underwriter, broker, loss adjuster, agent and any other stakeholder in the industry may want to play. Everybody will just have to do the right thing”, he said.
Chairman, Nigeria Insurers Association (NIA), Godwin Wiggle said the association was willing to work with the new commissioner to make the industry better.
He said they expect more regulatory reforms to place the industry at par with global best practice. He said the commissioner is a critic and focus person whom they believe will make an impact.
Managing Director, AIICO Insurance Plc, Edwin Igbiti, said the commissioner’s appointment is a welcome development.
“Kari is a practitioner who knows the pains of the operators. The fact that the president appointed him shows succession plan in the industry.
“One thing we have to give to the former commissioner is that he has set the stage on a high level and Kari cannot afford to let down the level at this moment. I believe he will help us obscure the level in terms of the control the industry needs presently,” he added.
Worried by the seemingly intractable security situation in the country, the Nigerian Communications Commission (NCC) has handed down a seven-day ultimatum to Global System for Mobile Communication (GSM) and other network providers to deactivate all pre-registered Subscribers Identification Module (SIM) cards or face sanctions.
This was the fallout of a meeting between Office of the National Security Adviser (NSA), Department of State Service (DSS), the network operators and the NCC. The meeting which took place at the NCC boardroom in Abuja, took into cognizance crimes committed against members of the public either by kidnappers, terrorists, robbers and threats to lives, through the use of such unregistered SIM cards across all the networks.
Operators were however told to notify such subscribers before deactivation of their SIM cards.
At the meeting were the representatives of the NSA, Group Captain, Ibikunle Daramola, DSS, Mr. Godwin Ometu, the immediate past NCC Executive Vice Chairman (EVC), Dr Eugene Juwah, Executive Commissioner, Technical Services, Engr. Ubale Maska and representatives of MTN, Globacom, Etisalat, Visafone , Airtel and others.
A statement by NCC Director, Public Affairs, Mr. Tony Ojobo who was also at the meeting said specifically that: seven days’ notice is hereby given for deactivation of all invalid/improperly registered SIM cards; these include all SIM cards without or improperly captured facial pictures and or finger – prints; and affected subscribers to be notified to regularize their registrations.
The meeting resolved that henceforth, all registrations must conform to the Data Dictionary, Technical Specifications on finger prints and facial images and the business rule agreed by all stakeholders; all registration records must be validated before sending to the Commission; thus eliminating all invalid records that does not conform new registrations and indicate same in the monthly reports sent to Commission; it was also resolved that operators will be held liable for cases for cases of pre-registered SIMs; earlier grace of 21 days given by the Commission has lapsed.
SIR: As President Muhammadu Buhari settles down to the serious business of governance, one key area that should quickly engage his attention is the petroleum industry. The reason for this is not farfetched. As a major player in the global oil market by the virtue of our natural crude endowment, it is ironical that the country is not only an importer of petroleum products, but also, experiences acute shortage on a constant basis.
Due to the heavy dependence on the importation of petroleum products to augment local production, marketers have exploited the situation to perpetrate massive fraud as the subsidy fraud imbroglio showed. At will, they also hold the nation to ransom by withholding products from the market.
To address the ugly situation, it has been suggested over the years that local refining of the crude oil is the most sustainable option. However, the combined capacity of the four refineries owned by the Federal Government is far below the daily oil requirements.
The involvement of the private investors in establishing refineries becomes imperative. The Department of Petroleum Resources (DPR) has issued a number of licences to various companies who showed interest over the last 10 years. Despite this, no privately-owned refinery is operational in Nigeria as of today.
A lot of factors are responsible. Many of the licence holders have accused DPR of shifting the goal post in the middle of the game concerning sourcing of crude, the major raw material. The initial arrangement was that there would be a sovereign guarantee of steady supply of crude by DPR to Nigeria-based refineries. A situation where no priority is accorded and operators would have to rely on off-shore crude sourcing is a major worry. Instead of selling crude to foreigners as a matter of priority, operators are demanding that national interest and investors concern should take precedence in arriving at a decision.
The current oil subsidy regime by the Federal Government also constitutes a big headache for intending refinery owners. Except for diesel, all other petroleum products are currently being sold at a highly subsidised rate. With the possibility of private refinery operators production cost being higher than the current subsidized rates, there are fears that they might run into a huge loss if they invest in the refinery business. The operators are waiting to see how the new government addresses this disincentive.
Two options are open for considerations: One, government assures operators of buying their products at the production cost so they could break even. Two, the sector is deregulated and allow market forces to determine pricing.
Another huge concern is that of infrastructural challenge. Setting up a refinery comes with its peculiar challenges. In most cases, refineries are sited in locations that are far from city centres, where there are deficit in terms of infrastructural provision. Good access roads, constant electricity supply, hospitals, schools, among others are some of the facilities that the operators would expect the government to provide in order to support the social and economic needs of the refineries and their host communities. Leaving the investors to provide all these facilities aside the huge capital requirement of setting up the refineries would be highly discouraging.
A critical area that government could help the operators is that of financing. The current high interest rate of domestic borrowing will surely have a negative effect on product pricing. The ordinary citizens will bear the brunt of high product price. Like the government did in some critical sectors like entertainment and aviation, operators have suggested an intervention fund would help a great deal.
Government can also provide encouragement by granting generous waivers for the importation of needed materials and equipment for the projects.
For the country to jump start the country’s oil industry and guarantee the availability of petroleum products for the citizens at all times, the establishment of local refineries is crucial. Government needs to support the licensed operators through the provision of conducive environment for them to thrive, bring succour to Nigerians and contribute substantially to the country’s economy by way of job creation, among other benefits.
Assistant Editor SEUN AKIOYE and SAMUEL MALIK in this joint investigation, report on the activities of some self-acclaimed prívate universities whose legality has been questioned by the National Universities Commission (NUC).
In the prosecution dock at the Federal High Court, Akure, Ondo State, stood Dr. Martins Olurankise. Standing opposite him was Ayobami Blessing, witness-in-chief in a case Justice I.M. Sani heard on February 10, 2014. Olurankise and Blessing were fairly familiar with each other; the former as a vice-chancellor and the latter as a student. Now they found themselves at opposite ends of the law.
Eight years earlier, Olurankise was living in dreamland as the Vice-Chancellor of the Akure Campus of Open International University, Sri Lanka. The institution had more than 2,000 students registered for various courses.
Open International University Colombo Sri-Lanka, Akure Campus, was not any other university. Its admission process was not cumbersome. You did not need the Joint Admissions and Matriculation Board Examination (JAMB) to secure admission into it. All you needed was to pass the special entrance examination of the school, pay the required fees and you would become a student. What is more, you would be given a degree certificate from a foreign university. The prospects were simply too enticing to resist.
Blessing thought she had been blessed after passing the school’s entrance examination and meeting other entry requirements. She was admitted to study for a degree programme in Nursing and Midwifery.
Blessing told the court: “I met the requirements and admission was given. The admission letter showed the name of the school, the course offered and the signature of the Vice Chancellor, which helped to convince me that the school was authentic.”
Her conviction, she said, moved her to pay the various fees required to tie down a place at the institution. “I paid the sum of N5,000 for acceptance fee and a receipt was issued. I then paid the sum of N2,000 and N12, 500 as part of the tuition fees. I also paid the sum of N17, 500 for which a receipt was not issued. I later paid N5,000, making it a total sum of N22,000, for which a receipt was given,” Blessing told the court.
The fees, she explained to the court, were classified as tuition and miscellaneous fees for the 2006/2007 academic session.
The school opened and classes resumed, with students studying courses like Medicine, Pharmacy and Nursing.
The next session, Blessing paid N5,000 as part of the tuition fee and got a receipt. She paid another N15,000 which was also receipted.
In 2008, however, Blessing’s dream of continuing her studies in the school crashed. The institution was invaded by operatives of the Independent Corrupt Practices and other related offences Commission (ICPC), accompanied by officials of the National Universities Commission (NUC).
The agencies were acting on a petition addressed to the NUC by the Ondo State Ministry of Health, to which the institution had written that it was running academic programmes in Pharmacy, Medicine and Midwifery.
Olurankise had written to the Ondo State Ministry of Health, introducing his school and the courses it offered, including B.Sc in Medicine, Pharmacy, Nursing and others. It was in a bid to request that the ministry should offer students of his university opportunities for practical training in health facilities in local government areas in the state. Olurankise successfully placed some of his students at medical facilities operated by Akoko South West Local Government Area.
But that was as good as it got. He was arrested by operatives of EFCC and the institution was shut down. One year later, Olurankise appeared before the Federal High Court to face allegations related to fraudulently obtaining money from unsuspecting students.
A disturbing trend
A joint investigation by The Nation and ICIR would later show that there are many others in the country, running illegal tertiary institutions and fleecing hapless students. A major problem bedevilling admission into tertiary institutions in the country is acute shortage of places for qualified candidates.
In addition to this, many candidates are denied admission because they lack basic requirements, notable among which are earning a certain number of credit passes in the West African Examinations Council (WAEC) examination required for university admission and scoring the required marks in the highly competitive Joint Admissions and Matriculation Board (JAMB) examination.
But a disturbing, albeit recurring decimal, has been the number of students who are qualified for admission but are unable to get places because of shortfall in admission slots. Recent figures from the NUC indicate that the country has 142 universities. Of these, 41 are Federal Government-owned, 40 are owned by state governments, while 61 are privately-owned.
The total number of universities, many experts believe, is grossly inadequate for the number of eligible admission seekers, which has been rising yearly. For instance in 2009, a total of 911,653 candidates applied to sit for the JAMB examination. This number increased to 1,092,324 in 2010. In 2011, it was 1,493,604 and in 2013, it reached an all-time high of 1,735,729. Also between 2013 and 2014, there were roughly 1.67 million candidates who sat the JAMB examination.
Admission places are simply not available in the same proportion. For instance in 2013, the number of spaces in the universities was 520,000 (29.96 per cent) of the students seeking admission.
Most of the universities dealt with this issue by exceeding their permissible admission quotas. According to the NUC report of 2011/2012, University of Lagos’ (UNILAG) admission quota was 6,500, but it admitted 7,527; Ahmadu Bello University (ABU), Zaria, had 6,688 places but ended up with 7,397. University of Nigeria, Nsukka (UNN) had 5,970 places, but admitted 8,267.
Available statistics also show that only about 20 per cent of post-secondary school students seeking admission into higher institutions get admitted. The shortage of admission places in the federal and state universities makes the privately-owned institutions the only alternative.
However, it is not an alternative open to everyone, as the huge fees charged by the schools constitute an impediment. This, naturally, compels many applicants to keep hoping for places in government-owned universities and creates opportunities for proprietors of unapproved universities to mine applicants’ eagerness for degrees.
They simply establish universities and advertise them as being affiliated to foreign tertiary institutions. Most times, the overseas affiliates are in Asia, a continent where verification is difficult.
“The problem is with the system. Apart from the fact that we do not have enough universities, there is also this craze for a university degree. In Nigeria, you almost cannot make any headway if you do not have a university degree, and we have relegated technical certificates to the background. That is the gap fraudulent individuals seek to fill by establishing schools that would feed the desire of students that are left out,” said Oladele Olaleye, an educationist said.
Another educationist, Mrs. Funso Apoeso, believes that the lure of easy admission requirements is the main attraction to these universities.
“In such institutions, you discover that the admission requirements are always lower than the ones in approved universities. And if someone has tried to gain admission but was constrained due to these, such a person will easily fall prey to such scams,” she said.
In 2006, the NUC went after these ‘gap-filling’ institutions by establishing the Committee on Closure of Illegal Universities (CIU). The committee, which has since shut a number of illegal universities, publicly listed 64 universities as illegal and unapproved institutions in 2013. The NUC said the schools flouted the Educational Act, CAP E3, Laws of the Federation of Nigeria 2004.
Operating in the shadows
Adebola (surname protected), a staff of the Federal University of Technology, Akure (FUTA), remembers exactly where and when he met Olurankinse. “We heard the advertisement on the radio where he was calling for students and lecturers. There were posters all over Akure. I got in touch and he asked me to come for an interview,” Adebola said.
The ‘interview’ held at the Ondo State Library at St. Peters Junction, Oyemekun Road, Akure. It had a three-man panel that included Olurankise. In the end, Adebola was given the school’s posters and flyers and then a shocker: his employment would be based on how many students he brought into the new school.
“My marketing skills aren’t good so I did not bring any student and thus no employment for me,” Adebola said with a smile.
Blessing got Olurankise’s phone number from one of the posters and was admitted to the school after paying the N5,000 acceptance fee. About 2,000 other students also paid about N10,000 each into the coffers of Open International University, Sri Lanka, aside the tuition and other fees.
In the course of a two-month investigation into the operations of these illegal universities, most of the schools on the NUC list and visited had two things in common: they operated on the outskirts of town, possibly to avoid the attention of relevant authorities, and had no structures of their own. They operated from rented apartments or already existing schools.
For instance, Apa University, which reportedly folded up years ago, existed in Utonkon in Ado Local Government Area of Benue State. Getting to Utonkon and back from Otukpo, a major town, on a motorcycle cost about N1, 000, and the location makes it very difficult for relevant authorities, like the NUC, to regulate it.
Apa University had no structures of its own and operated from Government College, Utonkon, a school with decrepit facilities.
Akor Okpe, a victim of Apa University, told our reporter: “The hostel was not good and had small rooms. Students fixed the doors themselves. The sanitary condition was so terrible that students defecated in the bush, and there was no good library to suggest we were in a school, a private school. Even lectures were not regular.”
Also, it takes about two hours from Makurdi, the state capital, to get to Adoka, where Samuel Adokpela University allegedly existed. On arrival in Adoka, the only school seen with the name Adokpela was a secondary school, with residents saying there was never a university there. The university had simply ‘vanished’.
Another ploy of the operators of unaccredited universities is to claim an affiliation with little known universities abroad. This way, they deceive students into believing that they are studying for internationally recognised degrees. It makes sense, therefore, that instead of the students spending millions to travel abroad and undergoing the stress of obtaining visa, the same international degree could be obtained here in Nigeria spending a fraction of the money.
In Ekiti, St. Clement University, Iyin Ekiti, seemed to have folded up and the operators disappeared into thin air. However, one Atinuke, who claimed to have been a victim of the school’s admission racket, said her dreams were shattered after they saw the name of the school among the ones listed by the NUC as illegal and confronted the management.
“The next day, no lecturer came to the lecture rooms. We saw only a few of the administrative officials and within the week, the campus was only filled with students that would mill around discussing their fate. Some would cry and we were unable to console one another. It was like that until one after the other, we dispersed from the institution, seeing that there was no one to hold by the collar,” she said.
In the eastern part of Nigeria, investigations also revealed that many of the universities on the NUC list have gone underground. In Mbaise, Imo State, nobody could recollect seeing Fifom University and the United Christian University, which are on the list of the NUC as illegal. In Abia State, nobody seemed to have heard about the Volta University, Aba. In Oyo State, Acada University in Akinlalu, near Ife, was also nowhere to be found. A resident of the village said he had heard of the school, but it had closed down.
•The site of the Borough College London, Igboho, Oyo State.
There is also the celebrated case of Borough College London, Igboho Study Centre, which has been attracting attention since The Nation did an exhaustive report on the activities of the school. Currently, the school is still shut while the NUC said the operators must return to follow the accreditation process before it could be re-opened.
According to Folu Olamiti, the resident consultant on Media for the ICPC, the operators of the school have two options: “They can either redress any defaults and thereafter resume operations or seek legal protection of their rights if they believe that they are executing their activities with the approval of applicable state and federal legislation. As a last resort, they can forcibly reopen the institution and face criminal charges.”
However, the NUC has an explanation for some of the above scenarios, according to the Chairman of its Committee on Closure of Universities, Prof. Adebisi Balogun. He explained that the universities may have folded up due to the clampdown from his committee.
“The list of universities you found there are compilations over a period of time. Because of our activities, some of those schools have packed up and gone underground. You may not find them where they were listed. At the time we captured those lists, they were actually in operation,” Balogun said.
Impatience
According to investigators at the ICPC, some operators of these schools fell foul of the law for lack of patience. Once they applied to the NUC for permission, they did not wait for approval before beginning to run the schools.
Sunday Adokpela University, our investigation revealed, falls into this category. Having applied to the NUC for permission to operate a university, it went ahead and sold forms without waiting for NUC’s approval.
The school sold forms for pre-degree programmes and gave admissions to students, but then realised that the university was going to take time to start. So, it decided to convert the admissions to polytechnic programmes under the incorporated name of Sunday Adokpela Polytechnic. But since the polytechnic itself was not yet operational, the school approached Fide Polytechnic in the state for permission to administer its programmes to the students and after their graduation, they would be given certificates in the name of Fide Polytechnic.
Students were not happy and some of them decided not to continue because what they wanted was university education.
The ICPC is currently prosecuting some individuals and institutions for operating illegal degree programmes and exploiting students. According to the commission, one Prof. David, operator of a university in Abuja allegedly collected over N100 million from students for the award of honorary doctoral degrees under the pretence that the school is based in Belize in the Americas.
Another operator falsely assumed authority to offer admission and in the process obtained more than N8 million from students by deceiving them that the school was affiliated to Ambrose Ali University, Ekpoma, to offer degree courses.
Barrister Moses Awe, deputy director, Legal Department, and secretary of the Committee on the Closure of Universities, said the motivation for the establishment of illegal universities is greed and the act an economic crime.
“It is an act of obtaining money under false pretence from gullible students,” Awe said.
This is the case that is hanging over Olurankinse. He has been charged with fraudulently obtaining money from unsuspecting students by false promise.
Legal encumberances
The ICPC and NUC operatives who shut down Evangel Christian University came unannounced. One Saturday, classes had begun and it seemed things would go on swimmingly.
Grace, a woman who witnessed the raid, said the school management was caught unawares. “Many of them were running everywhere looking for escape routes, with many fleeing through the window and leaving the hapless students to their fate,” she recalled.
According to the NUC, when operatives shut down any institution, they are always on the lookout for the proprietor or the vice-chancellor as the case may be. These men usually run away whenever they sight operatives of the ICPC.
But NUC and ICPC have been able to prosecute and get convictions in some cases. For instance, Francis Ada Agbo was convicted in Keffi and sentenced to three years imprisonment. Also, Mr & Mrs Nwachukwu of Temple University, Abuja, were convicted and sentenced to six months imprisonment.
But there are others who have either escaped justice or have been able to use the law to their advantage. For instance, the lead prosecutor in Olurankinse’s case, T.N Ndifon, had complained about deliberate tactics by the defence counsel to delay the prosecution of the case.
For Lawrence Kayode Dare, counsel to Olurankinse, his team has a solid defence against the allegations against his client. In a telephone interview, Dare said: “Our defence is that my client is just an employee of that institution. It is not his responsibility to register the school and he didn’t collect any money from the students. None of all the payment receipts tendered was signed by my client. He is not the owner of the institution; he was just employed as a regional Vice Chancellor.
“You work with The Nation. Is it your responsibility to ensure The Nation is registered with the appropriate bodies? And if certain adverts are carried and payment made to the cashier, can you be liable?
“We asked the prosecution if they knew that the parent body is in Colombo and they confirmed that the parent body exists. They should have enquired from the parent body if Martins is an employee of the school,” Dare concluded.
But the case may have hit a dead end. At the last adjourned date of April 11, 2015, the court did not sit on the case and there is currently no date for continuation of the trial. With the lull in the case, there are fears that it may die naturally.
Students’ gullibility
Unaccredited institutions offer the easiest route to a university degree for candidates who do not have the minimum entry requirements of five credits, including Mathematics and English Language; those who consider the JAMB examination an irritation or those who have attempted it without success.
The institutions lure candidates with the assurance that they have nothing to worry about, while the students follow without asking the necessary questions. Even if they do ask, the schools usually come up with convincing answers.
“Seven professors came to assure us that we had nothing to worry about and that the school would be accredited because they had been to the NUC and the process was already on,” Daniel Ojile, a victim of an unapproved university in Benue State, said.
Ojile had become desperate for admission, and when news went round that a university was coming to Idoma land, he was excited. He was offered admission into the school’s preliminary studies and after a year, got admission to study Medicine. Two years later, his world came crashing down.
“We waited for the accreditation and after two years, when I was in 200 Level, we learnt that the school could not secure accreditation and that it would be scrapped,” Ojile, now a final year student of Microbiology in the University of Abuja, recalled.
Awe would also blame some of the students for not being diligent enough to seek information about the universities. He also believed the problem is not that of access to universities, with the Federal Government’s recent approval of specialised universities and over 150 schools students can choose from.
“Nobody has a reason to patronise them. But you would see students with two credits getting admission and a Third Class graduate teaching them. I would blame it on the students. We have a website where they can check for all the information they need. You would be shocked to find that some students even want it like that,” he said.
NUC and the law
As much as the NUC wants to fight the running of illegal universities, it is hampered by lack of prosecutorial powers. Even when arrested, there is no law with which the NUC can charge operators of illegal universities. Currently, there is no law that criminalises the running of an illegal school apart from the Educational Act, CAP E3, Laws of the Federation of Nigeria 2004, which stipulates the requirements for the establishment of private universities in the country.
“This is why we have partnered with the ICPC, which has the power to prosecute people who have committed economic fraud,” Awe said.
Implications of attending a degree mill
To many of the victims, the opportunity offered by the unaccredited universities might have been hard to resist, but the implications of attending and graduating from one of such universities are dire.
“The perpetrators of this evil act see themselves as the last hope of the masses. And before the students become aware that they were being fleeced, they would have been in the university for one or two years, with a lot of money already spent,” Ojile, a victim, said.
One easy way of attracting students by these fake universities is to offer them respite from JAMB which, unknown to many students, is the gatekeeper between schools and the National Youth Service Corps (NYSC) programme.
•UTME students about to write exam at a centre… What hope of placement for them?
JAMB is the only body that is responsible for admission into tertiary institutions through the University and Tertiary Matriculation Examination (UTME), which qualifies a candidate for admission into a university, polytechnic or college of education.
According to JAMB, while a school may organise preliminary programmes for those seeking admission, such programmes are not substitutes for UTME.
“Some schools, which have their regulatory bodies’ accreditations, run preliminary programmes, remedial studies or whatever they want to do (and) we do not care,” Fabian Benjamin, JAMB’s head of public relations said.
“What we do (care about) is that when these candidates go through these programmes, they still have to write the JAMB exam. The point here is that whatever you are doing is like a coaching class for them.”
Benjamin said schools cannot impose candidates on the board simply because the candidates perform well in the preliminary programmes, and that if a defaulting school thinks it is smart and offers admission to students without its knowledge, repercussions await such students.
“If you have to participate in the National Youth Service Corps programme, you must have a JAMB admission letter. And for you to have that, you must have sat for and passed the JAMB exam. To have sat for JAMB and gained admission, you must have got the minimum entry requirements,” he said.
The way forward
According to some experts, the NUC should do more than just shutting down illegally operated universities but also address the roots of the problem. Prof. Olusegun Osinowo, chief operating officer of Sophie Academic Services, Abeokuta, said the government must address the issues of serious shortfall in the number and quality of university lecturers.
He said while there are about 150 universities in Nigeria, the high fees being charged by private universities put them beyond the reach of most admission seekers. Osinowo said the NUC must adopt a more liberal attitude towards part-time programmes and the operation of 24-hour campuses (night study).
“Virtually all Nigerian universities currently operate for between eight and 10 hours daily. The facilities remain idle for the rest of the day. The introduction of night study on these campuses has the potential of increasing enrolment by 50 to 100 per cent, with minimal additional investment in solar panels or diesel generators, pending improvement in power supply through the national grid,” he said.
