The Nation Newspaper

Tag: regulation

  • CIS pushes for broader market regulation

    The Chartered Institute of Stockbrokers (CIS) would work with other stakeholders in the capital market, the National Assembly and the Presidency to ensure the passage of a new bill that seeks to broaden the scope of certification of the CIS through the creation of the Chartered Institute of Securities and Investment (CISI).

    The CISI bill, which is being sponsored by former Chairman of the Senate Committee on Capital Market, Senator Ganiyu Solomon, intends to replace the law that set up CIS and bring other capital market operators under the supervision of CISI.

    Mr. Albert Okumagba, the new president of the CIS who was formally inaugurated on Monday, has made the CISI as a cardinal point of his administration.

    Okumagba said the CIS would engage the National Assembly and the Presidency to ensure that the CISI bill is passed before the end of this year.

    In a memorandum to the Senate Committee on Capital Markets on the CISI Bill, the Nigerian Stock Exchange (NSE) had stated that the CISI Bill would foster greater collaborative and proactive engagement with regulators, trade bodies, financial services firms, academic institutions and expert advisers and truly reflect the emerging nature of the Nigerian capital market beyond the restrictive definitions of buying and selling of stocks.

    According to the NSE, the CISI Bill is in line with the practice in other leading markets including United Kingdom (UK), South Africa and United States of America (USA).

    The NSE outlined that the objective of its memorandum was to enable the legislators to make an informed decision that would positively affect capital market stakeholders at a critical time in the recovery of the capital markets.

    The NSE noted that the CISI Bill would upgrade Nigeria’s CIS to similar bodies like the Chartered Institute for Securities and Investment (CISI) in the UK, the South African Institute of Security (SAIS) in South Africa and the Financial Industry Regulatory Authority (FINRA) in the USA, broadening the scope of participation and knowledge in the Nigerian capital market.

    The CISI Bill 2013 is based on the model of the CISI UK, the largest and most widely respected professional body for professionals in the securities and investment industry in the UK and in a growing number of financial centers globally. The SAIS was established in Johannesburg in 1978 and it is responsible for drawing up the original training standards for the securities industry. SAIS aims at promoting individual professional competence and to support the maintenance and enhancement of this competence by securities professionals. This model is also similar to the proposals in the CISI Bill. The FINRA, a successor to the National Association of Securities Dealers Inc. (NASD), is a private corporation that acts as a self-regulatory organization (SRO) FINRA is a non-governmental organization that performs financial regulation of member brokerage firms and exchange markets. FINRA also regulates the activities of professionals in the securities markets as well as administers the certification for participating in the US financial markets.

    According to the NSE, the proposed CISI Bill modernizes and broadens the scope of operations of the CIS to include securities and investments and its objectives include ensuring adequate knowledge and discipline in the market.

    “The CISI Bill seeks to adhere to international standards as illustrated in capital market activities in other jurisdictions. It will ensure that the Nigerian capital market meets up to the set benchmark and remains one of the leading financial centres in the African region in line with the transformation of the Nigerian capital market and wider economy,” the NSE stated.

    The Exchange noted that the passage of the CISI Bill will ensure a higher degree of professionalism in the financial services industry and encourage members to maintain and develop their knowledge and skills to promote higher standards of ethics and integrity in the securities and investment industry.

    According to the NSE, there is need for a broader version of the institute of stockbrokers as this will allow for broader participation of other players in the capital market as the Nigerian capital market has evolved beyond buying and selling of stocks and it now includes fixed income trading, Exchange Traded Funds and other securities.

    It pointed out that as part of the effort to deepen and develop the Nigerian capital market other financial instruments will be introduced to the market imminently which will require participation from other financial services professionals such as treasury bond dealers in the over-the-counter (OTC) market amongst other securities.

    “The current CIS structure has become redundant as it is restricted to only stockbrokers and does not accommodate other financial market professionals. The CISI Bill incorporates these professionals so they can also participate and contribute their quota to the development of the Nigerian capital market,” the NSE stated.

    The Exchange however called for broader consultation with all other major capital market stakeholders that will fall under the jurisdiction of the bill as well as a guarantee of the NSE position on the governing council of CISI as contained under the CIS 2004 Act.

    It also noted the need for the scope of the CISI bill to be adequately defined and articulated such that the regulatory functions and powers of the new institute would be clearly defined.

  • Insurers fear increase in regulation cost

    Operators are apprehensive over plans by the Federal Government to stop allocation to the National Insurance Commission (NAICOM) from next year.

    They fear the regulatory body may increase levies and tighten sanctions and penalties to boost its Internally Generated Revenue (IGR).

    The major source of fund for the commission flows from the Insurance Special Supervisory Fund (ISSF) Decree 20 of 1989, which mandates insurance companies to contribute one per cent of their gross earnings to the fund.

    Aside from the allocations, NAICOM gets its income from the one per cent statutory levy imposed on insurance operators. This is imposed on the gross premium income of insurance and reinsurance companies, gross commission made by insurance brokers and gross fees earned by loss adjusters.

    It also generates income from investments and loans from sources approved by the board, fees and penalties paid by insurance institutions, local and foreign grants.

    Deputy Chairman, Nigeria Insurers Association (NIA), Mr. Godwin Wiggle, who spoke with The Nation, believes the aim of the Federal Government to stop allocations to NAICOM is to partly grant it the autonomy it asked craved for.

    Wiggle however, hopes the commission will not seek to generate more income by reviewing the one per cent commission it charges operators in the industry.

    He said: “My fear is that the commission may want to look at increasing the one per cent commission paid by operators as this can affect insurance business. As a supervisory arm of government, it is entitled to foreign grant hence I believe there are other ways it can generate income.

    “In the event the commission increases it, the Insurance Act has to be amended. But I want to look at the development positively. I feel that government in its wisdom wants to grant the commission part of the autonomy it has been craving for, which will give it the opportunity to widen its supervisory role.”

    Former President of the Chartered Insurance Institute of Nigeria (CIIN), Mr Wole Adfetimehin, said that going by his research, government is used to taking decisions based on trial and error.

    He said he does not support the decision by the government to stop budgetary allocation to NAICOM as it will be an added cost on operators.

    “What this simply means is a review of the commission percentage that we pay to NAICOM and this will affect overheads of companies. “This is a sector that we have been trying to grow and I wonder why they are comparing us with the banking sector.

    “How many of the government parastatals have paid their premium this year. It is only the Nigerian National Petroleum Corporation (NNPC) that has fully paid and this is because it has the capacity to do so on its own,”he said.

    President, Nigerian Council of registered insurance Brokers (NCRIB), Olaide Osijo, said members of the Council have been calling her to express their fears but she has told them not to be apprehensive or speculate about how NAICOM will generate its income.

    But in case their fears come to light, she said that insurance in Nigeria has gotten to a stage that NAICOM does not do anything without consulting the sector.

    She noted that the various stakeholders in the sector, including, the Nigeria Association of Insurers (NIA), CIIN and NCRIB, had come together to form the Insurance Industry Consultative Committee (IICC) to fight their cause.

    Two weeks ago, the Federal Government said it would halt allocations to NAICOM from 2014, admonishing the newly inaugurated board and management to evolve innovative ways of boosting its IGR.

    Minister of State for Finance, YerimaNgama, said the commission has come of age.

    “From time to time, the government supports the commission as its internally-generated revenue grows. But today, the industry has grown and is healthy; we believe that as from next year, NAICOM, just like the Central Bank of Nigeria and the Nigerian Deposit Insurance Corporation (NDIC), should be able to generate enough internal revenue to embark on their activities without any budgetary support from the federation account,” he said.

  • Improved banking regulation creates quality loans for SMEs

    Improved banking regulation creates quality loans for SMEs

    Enhanced banking regulation by the Central Bank of Nigeria (CBN) has sharpened banks’ loan assessment skills, making the lenders to create better loan options for Small and Medium Scale Enterprises (SMEs).

    The SMEs sub-sector currently faces constraints which tend to limit its ability to realise its full growth potentials. These constraints have been identified to include competition, infrastructure, taxes, accounting, management, marketing, economic planning and poor funding. Poor economic conditions, which also implie poor finance and inadequate infrastructure, have been identified as the most crucial factors.

    This position was corroborated by other studies which identified financial support as one of the main factors responsible for small business failures in Nigeria.

    Speaking during a Small and Medium Scale (SMEs) seminar organised by Skye Bank in Lagos, it’s General Manager, Retail Banking, Mrs. Arinola Kola-Daisi, said reforms in the banking sector have also put higher risk management systems in place, ensuring that SMEs get loans and repay them as at when due.

    She said the banking sector is well regulated now than before, making loan approval process strict, as banks no longer experiment with depositors’ funds, adding that banks now look at ways of improving customer services and helping emerging businesses to grow.

    Mrs. Kola-Daisi, said SMEs constitute an important vehicle for national development as they have the capacity to integrate a large segment of the populace in productive economic activities. Specifically, she said the economies of the Asian Tigers or Asian Dragons of the highly free and developed Hong Kong, Singapore, South Korea, and Taiwan, owe their rise to economic pre-eminence to an extent, to the existence of well-organised and efficiently run SMEs.

    She noted that the Tiger Club Economies of Indonesia, Malaysia, the Philippines, and Thailand, follow the same export-driven model of economic development pursued by the four dominant Asian Tigers where SMEs constitute a sizeable vehicle of bringing about development and have remained so till this day.

    She said SMEs remain a tool for employment generation and providing opportunities for entrepreneurial sourcing, training, development and empowerment. Developing nations such as Nigeria characterized as low income earners by the World Bank, value SMEs for several reasons.

    She said SMEs have generally achieved decent levels of productivity, especially of capital and factors taken together while also generating relatively large amount of socio-economic development. The SMEs sector is viewed as being populated by firms most of which have considerable growth potential.

    The Skye Bank SME seminar tagged: ‘It is Possible’ was meant to tackle financing challenges being faced by the subsector headlong. It was attended by young business owners and entrepreneurs who are bogged down by the constraints of finance and other stifling conditions to chart a success path for their growing businesses.

    The seminar was one of the bank’s contributions to support and promote the growth of SMEs as the growth engine of the Nigerian economy. The well attended seminar was not only rich in content but the experience sharing was also pivotal as it helped boost the resolve of those present to continue to work hard for success to beckon.

    It had in attendance many operators in the SMEs sector who came to gain fresh and new insights and trends into the operations, financing and management of SMEs.

    Declaring the seminar open, the bank’s Managing Director, Kehinde Durosinmi-Etti, represented by Executive Director, Corporate and Investment Banking, Timothy Oguntayo explained that the lender organised the seminar as part of its contributions to the development of SMEs in the country.

    He said the SMEs sector was an important sector as it provides more opportunities and employment than the mining, oil and gas sectors. Indeed, the sector can increase economic opportunities for those who have not been able to participate directly in large-scale projects.

    “‘Without doubt, the SMEs sector has the capacity to drive and encourage indigenous business and rural economic development that help people create wealth and contribute to national development’”, he said.

    Durosinmi-Etti said the SMEs sector has the capacity to solve Nigeria’s rising unemployment challenge adding that the lender would continue to play the role of a facilitator and development partner to help young businesses grow and realize their full potentials to the benefit of the nation, the people and the economy.

    Managing Director of the Wedding Store, Mrs. Bolanle Koya, advised start up enterprises to shun ostentatious life style but to work on improving their offerings until their services or products have become successful and embraced in the market.

    The entrepreneur took the audience down memory lane about how she started small, shunned a life of flamboyance at the beginning and how she overcame the initial challenges of access to funding. According to her, small enterprises should grow organically and be mindful of cost.

    Another entrepreneur, Chinedu Nwobi who is the Managing Director of Everrise Wire and Cable Limited, told participants that the business which started as a trading concern some years ago is now into manufacturing of cable and wires. According to him, after leaving school and serving his apprenticeship, he chose to deal in original cable products.

    This, he said, set him apart from the others who were selling sub standard materials. Before long, his fame and acceptance became widespread and opened flood gate of opportunities for him. He urged the participants to build their businesses on honesty, integrity, and trust.

    He said ideas are also key in starting up a successful business. He said entrepreneurs also need to be creative to succeed. He said customer service is a key factor that determines whether a business succeeds or not. “When customers are well treated, they see you as a friend. When you allow customers to know that as your business is growing, they too, will be growing, they will give you their support,” he said.

    Nwobi said small businesses also need to address the issue of succession plan. He regretted that in many small businesses, once the owner dies, the business also dies. He said building an investors’ team that will spell out succession plan, ensures that business continues when the owner dies. He also advised small business owners to run their firms with integrity. He said, doing so pays, not only in the short run, but in the long run.

    Skye Bank officials said the SMEs seminar series would continue and many entrepreneurs would be supported to grow their business from small enterprises to large manufacturing outfits that would in near future attain the status of global brands.

     

    Role of leasing in project financing

     

    Leasing has also been identified as a significant financing alternative for projects and businesses that would create wealth for the economy, Executive Secretary, Equipment Leasing Association of Nigeria (ELAN), Andrew Efurhiewe, has said.

    He explained that globally, leasing has been used to facilitate the sale of vendors’ goods, enhance lessors’ profits and grant lessees the access to productive assets.

    He said the lessor, vendor and lessee, need to collaborate for them to achieve set objectives. “There exists a communication gap between the lessor and vendor which must be adequately bridged to produce a more robust leasing environment.

    He said the potential of leasing is high, considering the low lease penetration in Nigeria in comparison with other countries, stressing that there is need to regulate the activities of vendors in order to check the unscrupulous acts of some that are detrimental to the growth of the industry,” he said.

    Efurhiewe said professionals should facilitate accurate valuation of leased assets and create a strong secondary market for used assets. He said improved synergy between lessors and vendors will create growth and employment for the economy.

    He said ELAN is going to liaise with vendors and other stakeholders to create an efficient leasing industry that will continue to build wealth for the economy. He said the body will continue its proactive initiative by bringing to the membership fold reputable vendors and work towards setting standards for their dealings with lessors.

    Lessors should know their vendors very well and ensure they understand their products to enable them educate the final users of the assets, he said, stressing that Vendors should support efforts of ELAN, in its pursuit of establishing the leasing law aimed at improving the regulatory framework for the leasing industry that will invariably create more businesses for vendors.

     

    DMO

     

    The Debt Management Office (DMO), said it is looking for an international bank and a local lender to act as co-arrangers for N80 billion depository note to be issued this year.

    The debt office in a notice, said it has appointed a sole depository bank and an arranger for the offering, but did not give any names. Hoever, a source at DMO said Nigeria has mandated Citibank to act as the depository bank. Bids for co-arrangers are due on October 3. Nigeria is increasing the amount it borrows from overseas to around 40 per cent of all debt over the next three to five years, from 12 per cent, seeking lower funding costs.

    The debt office in May said it would issue N80 billion in global depository notes this year, after a $1 billion Eurobond, to deepen its footprint in international debt markets.

    Citibank and Deutsche Bank acted as advisers on the $1 billion Eurobond issued in July, which was four times oversubscribed. Nigeria also plans to issue $100 million in Diaspora bonds this year and is seeking advisers. The DMO said the depository note will be documented under U.S. rules and listed in Europe.

     

    Money market review

     

    Rates across all tenors moved higher by an average 230 basis points (bps) last week. The call rates gained 262 bps, while the 180-days rates gained 216 bps. Week-on-Week however, rates jumped by an average 600bps across all tenors. The call and seven-day rates both climbed the highest week-on-week by 730 bps to 19 per cent, and 19.3 per cent respectively. The Nigeria Interbank Offered Rate (NIBOR) is expected to re-stabilize back in the coming weeks.

    In the Treasury Bills market, liquidity eased following the maturity and repayment of N97.2 billion Open Market Operation (OMO) bills by the CBN. The apex bank subsequently mopped up excess liquidity selling N84 billion in OMO bills.

     

    Forex market review

     

    The CBN last week, offered $600 million at the Wholesale Dutch Auction System (WDAS), while a total of $525.1 million was sold, $266.6 million on Monday and $258.5 million on Wednesday’s auction respectively. The Marginal rate at both auctions remained at N155.76 to a dollar.

    The Naira however lost 50 kobo Week-on-Week at the inter-bank market, to close at N163.60 to a dollar from N163.10 to a dollar previously.

     

  • Censors Board and the Nigeria/Ghana alliance on film regulation

    Censors Board and the Nigeria/Ghana alliance on film regulation

    THE bilateral relationship on film matters between Nigeria and neighbouring country, Ghana, is about to be strengthened. Acting Director General of the National Film and Video Censors Board (NFVCB), Ms Patricia Bala, said the move will not only enable a viable business partnership, but foster possible co-production ties, while also sanitising both countries of indecent movies. Bala, who spoke to The Nation in Lagos, Wednesday, after a forum with film marketers on the New Distribution and Exhibition Framework (NDEF) being championed by her agency, noted that there is need to regulate the influx of semi-nudity and sometimes, hard core pornographic movies from Ghana, a development which she said is equally embarrassing the Ghanaian authorities.

    She stressed that her agency frowns seriously at the incursion by uncensored regular films, let alone pornographic movies, stating that the fight against such is ongoing: “Let me say that we don’t approve pornography, and as such, any pornographic film you see in the market is illegal; it’s an uncensored and unapproved movie. We have a department that monitors the market for such materials and any unapproved film, particularly pornographic films, are usually picked up.”

    The Censors Board boss said although her officers embark on such raids with the policemen, the illegal movies still find their way back in the market because of the clandestine nature of the business. “Because it’s an underground thing, it keeps coming up, and we have been trying to trace the sources enough to understand that most of these movies emanate from pornographic sites on the internet. We have been trying to trace the people who operate such sites on internet. We have been to Nigerian Communications Commission (NCC) and the Nigerian Broadcasting Commission (NBC), and they said they don’t regulate content on the internet. Our next approach is to approach YouTube and other site managers that do such business, so that we can stop them. As a matter of fact, we want those sites to be blocked.”

    However, a ‘next door’ approach lies in the board’s decision to dialogue with relevant authorities in Ghana on the issue of pornographic movies. “We got information that Ghanaians do a lot of pornographic movies which are in the market.” she said. “Very soon, we shall be meeting with the film censors board in Ghana and their Minister of Information to discuss, and find lasting solution to this ugly trend. There is need for us to find a level playing field. They are a sister country and we don’t want to create crises by saying we are rejecting their movies. We want to create mutual relationship through dialogue and tell them that we are worried about some of the contents of their movies coming into our country, so that we can have that bilateral relationship,” Bala added.

    But the relationship between the two countries on film matters have been a mixture of hot and cold; the former is because Nigerian actors feature prominently in Ghanaian movies and vice versa; and the later, resulting from imposition of levies by one country on the other, as being regarded by many as undue rivalry.

    Critics are of the opinion that collaboration by both countries, which are the leading film producing entities in West Africa, is expected to set an agenda for the exportation of appreciable cultural values that could be regarded as truly African. Reports say the old Gold Coast region is willing and ready to host the delegation from Nigeria in the coming week. The parties are expected to have series of meetings that will be attended by the Information Minister, Ghanaian Cinematic Commission, relevant government agencies, and leadership of professional movie associations.

    The import of Nigeria and Ghana in the areas of film business in West Africa cannot be over emphasized,” said Mallam Tanko Abdullahi, Deputy Director and Head of Corporate Affairs of the NFVCB. “When one coughs, the other sneezes; when one sneezes, the other catches cold…” said Abdullahi.

    Unfortunately, the pockets of frictions recorded in the relationship between both countries are the reason a solid business partnership has not evolved.

    Tension rose when Ghanaian movie industry allegedly issued a directive stating that no Nigerian actor would be allowed to work on any of its movies unless they pay a fee of one thousand dollars each. Retaliating, the Film, Video Producers and Markers Association of Nigeria (FVPMAN) decided to place an embargo on Ghanaian films, halting the distribution of movies by independent producers, and maintaining that if such films must be distributed, its right of ownership should be transferred to the FVPMAN on negotiation. And although various Nollywood and Ghollywood actors have condemned the rivalry, the clash of distribution channel may be put to rest finally when the NDEF takes off fully in Nigeria.

    Ironically, Nigeria had in the past been accused of corrupting the minds of Ghanaian movie viewers, the same way that today Nigeria complains of the Ghanaians’ pornographic recklessness. Between 2003 and 2005, the worry by the Ghanaian film industry was that Nigerians were importing the culture of voodoo into its territory through Nollywood films. Indeed, the proliferation of stories with witchcraft themes went viral in Africa, such that innocent Nigerians who went abroad came back with reports of how they were being associated with magical powers. But perhaps all that had long been regarded as a Nigeria’s version of the Harry Porter series.

    Beyond the fury, practitioners in both countries seem to understand that they are better united than being divided. Members of the Film Distributors Association of Ghana had recently paid Nigerian movie marketers a visit at their Surulere, Lagos office, to express their dissatisfaction over the alleged ban of their movies from the Nigerian market.

    The Ghanaian delegates led by the Chief Executive Officer of A.A Productions Limited, Ghana, Mr. Mustapha Adams, noted that their mission was to foster a better relationship for the distribution of works from Nollywood and Ghollywood. The Film, Video Producers and Marketers Association of Nigeria (FVPMAN), led by Mr. Norbert Ajaegbu, had told the visitors that the decision to ban Ghanaian movies was without prejudice. He said there was need to streamline the distribution of movies in Nigeria, especially when it was discovered that Nigeria was becoming a dumping ground for second-rate movies with nudity content.

    The meeting ended mutually with both parties agreeing that Nigeria will no longer accept Ghanaian films that are not approved by the NFVCB, and that any foreign film being released in the country must follow proper channels, compete under the market forces and in total regard of all existing municipal laws. It was also resolved that possible areas of collaboration should be worked out for further talks between the two sides.

    It is in the light of the above that the move by Censors Board has become a right step in the right direction. Obviously, the regulatory agency will be taking the matter a step further, knowing the status of both countries within the ECOWAS.

    Judging from the relationship of other countries, thoughts have been shared on the fact that the movie industry is one of the highest revenue earners for the United States of America, and from which neighbouring country of Canada has continued to exploit the advantages of their proximity rather than ban American films on its soil. It has been said that Canada earns a lot of revenue and provides its citizens with numerous employments by encouraging American film companies to come and shoot their movies in Canada. The same story is being told of Mexico. It is hoped that the same will be said of Nigeria and Ghana in the nearest future.

  • ‘Level of banks’ regulation has risen’

    ‘Level of banks’ regulation has risen’

    Part of the mandate the bank’s shareholder (AMCON) gave was to run the bank as a sound financial institution and make it competitive. How were you able to achieve these?

    I would say we have laid a good foundation. I make bold to say this because the first thing we did was to initiate a very strong corporate governance structure and we insisted that there must be strong policies in this regard. I am sure you know that thea level of regulation in the system has also gone up. This is the reason as small as we are, we have a 16-member Board of Directors. We have five Executive Directors in addition to the Managing Director and 10 Non-Executive Directors. The least among the non-executive directors was a former Executive Director in a bank. So, we brought credible people and put them on the Board so that the corporate governance structure will be strong to avoid any abuse of process and that is our strength. What that means is that everybody on the Board is an independent character. They are professional people. The Chairman of the Board, Mr. Emeka Onwuka, is the former Managing Director of Diamond Bank. He is a professional and disciplined banker. So, by this action the CBN has ensured that what happened in the past will not happen again.  I always say that it is usually the abuse of process that allows banks to engage in unethical practices. In Enterprise bank now, proper and due process is followed in whatever we do. On that note, I can assure you that we have achieved our mandate to engender a strong and sound bank.  However, we have not reached our destination yet. It is still work-in-progress. Have we made it competitive? Yes. Our 2012 result will attest to that. The bank is now in a position to attract very good staff from the industry, which was not the situation before we came on board.

    Having made the bank this attractive and given its bridged status, do you now have investors for the bank? Are they foreign or local? Who are they and when is the transaction (sale of the bank) expected to be completed?

    Ordinarily, I would have referred you to AMCON because our mandate did not include the sale of the bank. However, last weekend, on May 18, 2013 to be precise, the Corporation in a press statement said that there is a plan to commence the process leading to the sale of Enterprise Bank and the two other bridge banks. However, it is necessary to state that what is important to us is to continue to run the institution at full throttle. The announcement will not in any way affect the operations of the bank. The sale transaction is different from the business of running the bank, which is our responsibility.

    What is your plan to move the bank forward?

    What is important to us is to run the bank commercially, profitably and put all the structures on ground to ensure that business continues according to the mandate given to us by AMCON. We have a five-year plan, which we are implementing. This is because whoever steps in to buy Enterprise Bank at the end of the day is not coming to buy just our beautiful head office or structures. The investor is coming to buy the value that we have added along the line, which includes the quality of the customers that the bank has, the balance sheet, quality of staff and infrastructure among others. Our recent declaration of a profit of N11.3 billion after our first Annual General Meeting (AGM) is a further attestation to the value addition. Those are the positive things that any buyer or investor will want to see. We have returned the bank to profitability and are concentrating our attention on sustaining and even surpassing that achievement. So our plan for the bank going forward is to have a traditional institution where only five per cent of our customers will come to the bank. We want to be a traditional institution that is leveraging innovation and technology to deliver an efficient service to all customers and stakeholders and I believe we are on track to achieving that giving the right investments we have made since we came on board.

    How far has the bank gone in terms of implementing the cashlite policy? What measure of success in terms of market share can you say the bank has achieved?

    At Enterprise Bank, we are in the forefront of the cash-lite policy implementation. Ahead of the introduction of the cash limit policy meant to enhance the Nigerian payment system, reduce the use of cash in payments for goods and services and improve the use of Electronic Payment Systems, we were already doing everything possible to reduce the risk our customers go through in handling bulk cash. We had begun strengthening our Automated Teller Machines (ATM) platforms, Point of Service (POS) terminals, mobile and internet banking channels for use across the various outlets in and outside of Lagos State. Our internet banking channel, for instance, is to ensure our customers enjoy banking transactions from the comfort of their offices and homes anywhere they may be in the world. Like I said earlier, our desire is to cut down physical visits to our banking halls down to about five per cent. However, for the customers without access to Personal Computers (PCs), we also made it possible that their mobile phones will suffice as the Enterprise e-Mobile will enable them carry on the same banking transactions. Customers on this service can check their account balance, view the last five transactions, conduct intra and interbank transfers, purchase recharge cards for self and third parties and pay for DSTV, PHCN and mobile phone post-paid bills among other transactions.

    Often times, it has been said that small and medium scale businesses are at the core of meaningful economic growth in economies as ours. However, the low impact of this segment on our economy has been blamed on a number of factors, such as the lack of funding from the banks. How has your bank fared in the area of credits to this sector?

    I have continually reiterated our commitment towards the support of the Small and Medium Enterprises (SMEs) in the country, because we know as a bank that it is ‘critical’ to the development of Nigeria. Since we came on board, we realised the strategic importance of SMEs in fast-tracking the growth of the Nigerian economy and have since thrown our support to SMEs. We are a SMEs bank. Our name is Enterprise. More than 60 per cent of our book is towards SME and commercial. We have resolved strategically as a bank to be wholly a retail bank. We may opportunistically played in other areas. But we are a retail bank. We are putting more effort and emphasis in building capacity and understanding the workings of SMEs both from the providers and users of funds. It is the major challenge facing the SME space. Associations providing SMEs need to partner with banks such as Enterprise Bank.

    How is your bank taking advantage of the positive policy thrust in agriculture in the last few years?

    In our previous interactions with the media, we have always made it clear that Enterprise Bank is playing actively and will continue to explore every opportunity that are available in the agricultural sector of the economy. If you remember, the CBN disposition is to become a catalyst in economic growth through agricultural development among other key sectors of the economy. In that respect, the CBN initiated many interventions in the real sectors of the economy, particularly, in the agricultural and manufacturing sectors. As a matter of fact, the CBN Governor, Mallam Sanusi Lamido Sanusi, is very passionate about this. At Enterprise Bank, we have come to terms with the fact that once we as a nation have the right strategy in the agricultural sector funding, employment could be generated in an unprecedented manner, which means our teeming youth will be gainfully employed among other positive developments that will follow. Having said that,  we do not need to remind anyone that the economies of major industrialised countries of the world such as the United States of America (USA), Asian and European countries are driven by agriculture. That is why Enterprise Bank is supporting agriculture and targeting the retail business. As a country too, we want to believe that we have no option than to give agriculture and other small businesses with easy ‘points-of-entry’ priority attention. The CBN is doing a lot in this regard but banks need to, as a matter of deliberate policy, build capacity in the area of agricultural financing, which is what we are doing. In our bank, everybody is aware today that for us to move our economy forward we have to pay a lot of attention to the agro-allied industries and from what we have seen; all hands are on deck to see that we achieve this mandate. Our retail and credit products have been designed to fund opportunities and sustain the agricultural sector.

    Enterprise Bank posted a stellar performance for the 2012 financial year. Can tell us how and your team achieved this feat?

    In summary, we posted a profit-before-tax (PBT) of N11.3billion in the year ended 2012 as against a loss of N5.2 billion in the five month period ended 2011; customer deposits rose from N62.6 billion in 2011 to N208.4billion in 2012 while total assets grew from N198.5 billion as at the end of 2011 to N261.1billion in 2012. The result came as a reassurance that our efforts since we came on board have not been in vain. We feel very happy with the result although there is always room for improvement. It shows what a great team can do. When we were appointed, if you remember, the Asset Management Corporation of Nigeria (AMCON) gave us a mandate to run the bank commercially and competitively. The 2012 result that you have seen is a direct result of that effort.

    What has been your experience so far, given the fact that this is the first time you are running a bank as the CEO?

    It has been challenging and rewarding at the same time. I count myself lucky because it is a big opportunity to help build a sound financial institution as well as serve the country. When the appointment came, I saw it as a national call in addition to the capping of a long professional banking career.  Building a sound bank, particularly, from the structures of the old Spring Bank meant a lot, in that; a successful bank will impact positively on many areas of our economy. It will mean creating wealth for a happy and satisfied clientele through the provision of excellent financial and advisory services; providing employment as well as grooming first rate professionals. The contribution of a well run financial institution to society in terms of corporate social responsibility is also immense. I am equally humbled by the level of support I am receiving from my employers, Asset Management Corporation of Nigeria (AMCON) and the Board of Directors, which is made up of highly experienced and very successful professionals drawn from the academia, banking and insurance industries. I am very happy to have a dynamic Executive Management team that is dedicated and hardworking. So it is a collective effort, which makes things easy and the staff are charged. I must also acknowledge the continued patient, understanding and loyalty of our customers. Altogether, the experience has been wonderful, making the daily challenges exciting. But then one cannot forget God Almighty, who keeps providing us with life and the good health to carry on with the assignment? I count myself really privileged.

    What kind of management style do you run? Are you democratic or autocratic?

    From our first interaction with all staff when we assumed office nearly two years ago, we made it clear that this administration will run an open-door policy style of leadership. It was not just a rhetorical exercise; we backed it up with action in all our relationships with colleagues in the bank. The idea was to ensure that we run a flat structure that will make hierarchy as seamless as possible to enable people function very well. As a matter of fact, modern day leadership ideals do not encourage ‘them and us’ style of management. People function better in an environment where they see themselves as colleagues irrespective of grade, age, tribe, religion among others. In such an environment, it is easy for people to share informed knowledge that will help the organisation to grow. If you have observed, we address ourselves on first name bases so there is nothing like Oga, Mr. ‘A’ or Mrs. ‘B.’ To answer your question therefore, you will see that autocracy has no base in the bank.

    Finally, what would you want to be remembered for when you leave the bank?

    When we were appointed, AMCON’s directive was clear: to run the institution as a commercial entity. We were given the bank and a mandate to run it commercially and competitively and we think that that is what we have done in the last two years and what we will continue to do until the end of our assignment. We want to be remembered as the team that did not destroy value. We want to be remembered for systematically contributing our quota to the development of the economy by building a very strong and sound bank that creates value. But, most especially, we want to be remembered for positively touching the lives of people that we have met during our stewardship in the bank because without them, the story will not be complete. We want to create an ‘Enabling Bank.’

  • Experts flay new aviation regulation policy

    Aviation experts have criticised the new policy by the Nigeria Civil Aviation Policy ( NCAP), especially the proposed creation of a regulator for the aviation sector.

    According to experts, giving the functions of the Nigeria Civil Aviation Authority (NCAA) to another body could bring about some infraction on air safety as experience has shown in other countries, including the United Kingdom.

    The experts are a pilot, Captain Dung Pam, who is Chairman, Nigerian Aviation Safety a initiative (NASI), and Mr Olumide Ohunayo, an aviation analyst, Head of Strategy, Zenith Travels.They spoke in separate interviews in Lagos.

    Capt Pam said withdrawing the functions of NCAA, and giving them to another body could lead a communication gap in the industry.

    “The outcome will dilute the effectiveness of the NCAA in performing its statutory functions with regards to aviation safety, consumer protection and anti-trust matters.

    “The prevalence of issues, such as abuse of market dominance, predatory pricing, unreasonable discrimination between classes of users, allegations of monumental fraud, in FAAN, NAMA, NIMET, are clear indications that the industry in Nigeria is suffering the consequences of loss of economic efficiency” he said.

    Also, Ohunayo said: ”Some aspects of the policy need to be reviewed, an independent search and rescue agency with offices in the six geo-political zones will only over burden the system with attendant cost implication.

    “Why do we want to protect a new group of private investors at the expense of investors using the banner of a national carrier?

    “The government is starting another flag carrier not national, so the carrier should be free to compete rather than seek government protection.

    “ The same protection Virgin Nigeria signed with the government only to repudiate to the consternation of the investors.

    “Also, the Fly Nigeria Act that would have aided our commercial airlines was again bypassed by the policy, a phased implementation starting with charter flights and some regional routes would have been appropriate.”

  • NERC: What manner of regulation?

    NERC: What manner of regulation?

    SIR: Regulatory agencies in Nigeria, apart from a handful have done dismal jobs in regulation and consumer protection. Many are unaware of their responsibilities or are negligent. This leaves the Nigerian consumer in situation where he has no choice and therefore left to the vagaries of the market. The telecommunications revolution was successful due to the efforts of the regulator, in this case, the NCC and its relationship with consumers and telecoms operators. But the electricity reform seems to be taking a direction of its own, one which has little regards for the consumer and sees them as sheep to be sheared. The Nigerian Electricity Regulatory Commission NERC, seems intent on taking an unknown route despite the myriad examples of how not to do things,

    The Policy somersaults of NERC have left a bitter taste in mouths of consumers, the unfulfilled promises and the failures which are fruits of inadequate planning. When the NERC came up with the Multi-Year-Tariff-Order MYTO 2, is was to allow for sustainable generation of electricity and for adequate metering so as to avoid exploitation. Nigerians agreed with them and were expecting to see those promises delivered but the only thing we saw was outrageous bills in the midst of dismal improvement in electricity supply. Most consumers woke up to find out that their electricity charges and risen by about 50% and their consumption rates by the same. This would be no problem if the figures were correct, but has power generation increased by 50% since June 2012 and where is the extra consumption coming from?

    The average American home consumes 940 kilowatts hour (KWH) per month, Canada 950, British 500, France 500, Japan 500 according to World Energy Council, with 24 hours electricity. In our case, our electric bills tell us that we Nigerians are consuming 1000 kwh per month on average, Which would be funny if it were not a cruel joke.

    Looking back at the early days of the telecommunications revolution, we can remember the consumer councils which were organized and where industry players, consumers and regulators parlayed. There problems experienced by consumers were brought to the fore and the regulator and industry operators took note of them. But in this other revolution, such things are absent. There are so many questions to be asked but no one to talk to. The recent somersaults of NERC are even more menacing. We were promised free prepaid meters alongside MYTO but that turned out to be a failure. Now we are being told to pay for meters and get then in 45 days, yet no guidelines on how to pay and collect the meters.

    Every regulator operates with a carrot and stick policy applicable to consumers and industry operators, but the same cannot be said of the NERC. It would seem NERC gives the carrots to the industry operators only and reserves the stick for consumers. The Distribution Companies, DISCOS were required to provide free meters but due to the corrupt benefits they enjoy declined to do so and the regulator while acknowledging this did nothing. Even the 200 kilowatts hour max consumption rate for estimated billing, which would have reduced the incentive for corruption, went no further than the lips of the NERC chairman.

    Another disturbing aspect of the NERC is the absence of regulations covering the rights of consumers as regards safety and damages to life and property caused by voltage fluctuation. Numerous people have lost their lives, loved ones, property due to this menace with no reprieve and the regulator turns a blind eye to it. Or is the fault of the consumer that the distribution companies are inefficient and cannot maintain their equipment? Who is liable for the damage done, for the lives and property lost? Or should consumers start taking laws into their hands to solve their problems as is becoming the order of the day? I hope the NERC would borrow a leaf from the NCC and make the industry one that satisfies consumers, Industry operators and others concerned.

    • Nwachukwu Nnochiri

    Lagos