financial vanguard 24 february 2014

CMYK

FEBRUARY 24, 2014

Continues on page 18

Sanusi-led CBN lackscorporate governance — FRC

•No board approvals for financial transactions•Investment in Islamic liquidity management had no board approval•Governor as chairman of board, error of law

THE Central Bank of Nigeriaunder the leadership ofLamido Sanusi was accused of

lack of corporate governance by the

By OMOH GABRIEL,Business Editor

SALES CONFERENCE: From left: Mr Ben Ofungwu, MD, ISN Products Nig Ltd; Mr Paul Uduk, MD, Vision Talents;Dr Don Anyanwu, Executive Director, Marketing, ISN and Mr Tosin Lawrence, Application Specialist, Roche System atthe ISN 2014 Sales conference held in Lagos on Friday. Photo by Lamidi Bamidele.

Financial Reporting Council in itsreport to the President on the CBN.The report signed by Jim OsayandeObazee, FRC's Executive Secretary,said that there was very weakcorporate governance in the CBN astransactions that needed boardapproval were carried out in the apex

bank without such approvals.Recall that the Lamido Sanusi-led

CBN had removed some bankexecutives on the basis of lack ofcorporate governance.

The FRC report on CBN stated: “Anumber of transactions and even of afinancial nature were carried out

without board approvals as no boardapprovals were provided asrequested. This shows a very weakcorporate governance of the CBN andclear evidence that statutorilyallowing the CBN Governor to be boththe chief executive officer of the bankas wnepotismell as chairman of theboard is the greatest error made in the

CURRENCY BUYING CENTRAL SELLING

CBN Exchange rate as at 21/02/2014

109.66 -0.64

102.09 -0.66

168.05 -0.75

2,934.00 -16.00

16.63 0.3

DOLLAR 154.75 155.25 155.75POUNDS 258.123 258.957 259.791EURO 212.1777 21 2.8633 213.5488FRANC 173.8764 174.4382 175YEN 1.5102 1.5151 1.52CFA 0.3053 0.3153 0.3253WAUA 238.3459 239.116 239.8861RENMINBI 25.4025 25.485 25.5676RIYA 41.2601 41.3934 41.5267KRONA 28.4279 28.5197 28.6116SDR 238.7638 239.5352 240.30

Cover Story

CMYK

18 — Vanguard, MONDAY, FEBRUARY 24, 2014

Continued from page 17

Continues on page 19

conception of the CBN act2007.

According to the FinancialCouncil Report, the boardapproval for the equityinvestment in the shares ofInternational IslamicLiquidity ManagementCorporation of Malaysia tothe tune of N0.743 billion isalso not provided. The sharecertificate is also to beprovided as it seems thatsection 34 of the CBN Act hasbeen violated.

It said that the date of theboard approval of the

apex bank's financialstatements was not disclosed.It further disclosed that in theCBN response, "YourExcellency is thereininformed that themanagement letter on thefinancial statement is yet to bediscussed by the Board Auditand Risk ManagementCommittee. This is contrary tosection 3 (b) of the CBN Act2007. This is supposed to takeplace, considered by theBoard and decision taken."Accounting issues identifiedusually lead to adjustmentsin the financial statementsbefore the approval of theboard is secured on theaccounts. It said that anumber of issues on the draftmanagement letter can testifyto this.

According to the Council,what this means is that thefinancial statement submittedby the CBN Governor to thePresident was not approved

LAUNCH: From left, ProfessorOladipupo Olujimi Akinkugbe,Chairman of the occasion; DrErinosho A. Eniola, Head of Research and Statistics, Lagos State Ministry of Health; Prof.Folasade Ogunsola, Provost, College of Medicine, University of Lagos, with Dr Ojji Dike Be-vis, Senior Lecturer, Faculty of Health Sciences, University of Abuja and Tarek Rabah, AreaVice-President, Middle East & Africa, Astrazeneca at the launch of Astrazeneca Nigeria Re-search Grant in Lagos. PHOTO BY AKEEM SALAU.

Sanusi-led CBN lacks corporategovernance — FRC

,

,,

,

by the governing board of theapex bank.

The Financial ReportingCouncil report on CBN 2012account further observed thatthe Financial statement washighly abridged with poordisclosures of transactionsand events that are offinancial nature. Thebreakdown provided to some

items seems to be allocationof figures to arrive atpredetermined numbers.

Giving clear instances, itsaid the breakdown of loanprovisioning amounting toN586.703 billion has figuresthat seem more like figures toensure that the total is arrivedat. Therein is staff loan ofN34,789,071; bankers’payment of N900; NationalBiotechnology DevelopmentAgency of N1051. It alsocontains CBN contributorypension fund ofN122,562,355. This should nothave been accounted for

under this classification. Italso contains figure for WemaBank - N50,061,710,108 andAMCON - N500 billionwithout the unsubstantiatedbalance of N236,521,506.05.

A breakdown for the Centerfor Excellence containsseveral invoices with amountsthat are identified simply as‘others.’

The report said thatAMCON made a loss of overN2.4 trillion and also had anegative total equity of overN2.3 trillion at the end of2011.

AMCON’s 2011 accountswere signed by the

board on 8 October 2012. Thisis to the full knowledge of theCBN since it owns 50 per centof AMCON share capital andhas directors on the board ofAMCON. It said that theCBN rightly explained thatAMCON’s bonds are gilt-edge securities of the FederalGovernment of Nigeria (FGN){in their response, 7 (d )} butdid not disclose to Mr.President that a large portionof this sovereign instrumentis to mature by December 31

st

2013 and the inability of FGNto fulfill the guarantee mayaffect credit risk rating ofNigeria negatively.

The fact that it was notbudgeted for in 2013 by theFGN coupled with the factthat the CBN was evenexpecting N713 billiontherefrom, were enoughreasons for the leadership ofthe CBN to have drawn the

Technical education is aplanned programme of

courses and learningexperiences that begins withexploration of career options,supports basic academic andlife skills, and enablesachievement of highacademic standards,leadership, preparation forindustry-defined work, andadvanced and continuingeducation. Vocationaleducation and trainingprepares learners for careersthat are based in manual orpractical activities,traditionally non-academicand totally related to a specifictrade, occupation or vocation.In other words, it is an“education designed todevelop occupational skills.”

Vocation & technical education– a key to improving nigeria’sdevelopment. PART 1

Vocational and technicaleducation gives individualsthe skills to “live, learn andwork as a productive citizenin a global society.”

Technical and vocationaleducation has been anintegral part of nationaldevelopment strategies inmany societies because of itsimpact on productivity andeconomic development.Despite its contributions theleaders of Nigeria have notgiven this aspect of educationthe attention it deserves, andthis is one of the reasons forthe nation’sunderdevelopment. Thisarticle focuses on the dearthof skilled technical andvocational manpower inNigeria and argues thattechnical and vocationaleducation holds the key tonational development.

Every facet of the economyhas been affected by lack ofskilled technicians. Thefinancial sector lacks

technicians to regulate thebanks and to developfinancial software to properlytackle the rising fraudulentactivities in the bankingsector. Without security,development is impossible ina society; no nation cansustain its democracy if thecitizens lack confidence in thepolice. The police violate thecitizens’ human and civilrights and lack forensiclaboratory and fingerprinttechnicians to conductcriminal investigations. Anddue to poor training, militaryofficers are known to beat upthe citizens who challengetheir powers and go scot freefor their inhumane actions.

The danger posed byenvironmental pollution andfake drugs is alarming. Theless educated in the societylack the skill to manage AIDS,cancer and diabetes amongother serious health problems.One wonders what thenation’s health minister andthe 36 state healthcommissioners are doing totackle these issues. Everygood citizen is aware that theneglect of technical andvocational education issocially and economicallyinjurious, because it isrobbing the nation of thecontributions the graduateswould make on nationaldevelopment. For thatNigeria is today wearing thetoga of a poor state.

Although technical andvocational education seemdeficient in ‘citizenship orleadership training’(Friedman 1982).

It provides

students with “life skills tobecome productiveentrepreneurs as it engenderscreative and innovative ideas,enlarge the economic pie,and increase personalfreedom. Most of the so-called“expatriate engineers” whoare being paid millions ofdollars to build Nigeria’sroads and bridges aregraduates of technical andvocational colleges. Yet theleaders do not take technicalinstitutions seriously.

Nigeria’s currentpreoccupation with universityeducation reduces economicopportunities of those who aremore oriented toward workthan academic. Not everyoneneeds a university education.

Thebreakdownprovided tosome itemsseems to beallocation of

figures to arriveat

predeterminednumbers

A breakdownfor the Centrefor Excellence

containsseveral

invoices withamounts thatare identified

simply as‘others’

CMYK

Vanguard, MONDAY, FEBRUARY 24, 2014 — 19

Continued from page 18

,

,Cover

Nigeria stands the risk

of severalm i l l i o n s

marching out one of thesedays saying they need jobs tokeep body and soul together.Nigeria’s unemploymentfigure is alarming andgrowing by the day. It is veryeasy to conceal this fact infigures by saying thatunemployment is 23.9 percent. The question to ask theauthorities is 23.9 per cent ofwhat, of the total populationor of the work force? Eitherway, the figures are alarmingand need urgent action on thepart of the government.

In 2011, Nigeria's populationstood at 164.38 million. Of this,the labour force stood at 67.256million out of which 51.181million are said to beemployed and 16.074 millionare unemployed. Going byofficial data, theunemployment figure whichstood at 12.44 million in 2009rose to 13.9 in 2010 andfurther to 16.74 million in2011.

But this particulargovernment seems not to be inany position to quickly resolve

Unemployment: Aticking time bomb

to 9 per cent in 2011 which gives the Obamaadministration sleepless nights. That of Spainhas risen from 8.6 per cent to 21.52 per centas a result of the debt crisis in Europe; UK,from 5.3 to 8.1 per cent. Unemployment in

Ireland currently stands at14.3 per cent from 4.8 per cent,Latvia from 5.4 per cent to 16.5per cent, Greece with all itsdebt trouble from 8.07 per centto 18.4 per cent and Italy from6.7 per cent to 8.3 per cent.

The average unemploymentrate for the Euro zone is 10.7per cent. Within the Africancontinent, unemployment hasrisen with South Africa,Africa’s largest economyhaving a higher rate thanNigeria at 25 per cent, Angolaat 25 per cent, Botswana at17.5 per cent, Egypt at 11.8 percent, and Kenya at 11.7 percent. The population of eachof these countries is far lowerthan Nigeria’s.

The Nigerian situation ispeculiar in that if the availableresources are better managedand utilised, the country willnot face this level of youthunemployment. Anunemployment ratio of 23.9per cent of total population willmean that over 38 million

available data did not capturethe number of Nigerians ofworking age that dropped outat secondary school level forvarious reasons and enteredthe job market in the rural andurban areas.

A recent survey by theNational Bureau of Statistics'reveals that women aregetting married later than theyused to in the past, resultingin a sizeable number of thesewomen that would have gottenmarried and stayed out of thelabour market by beinghousewives, entering thelabour market pending when

they get married. This impliesthat housewives are notincluded in the official figureof unemployment in thecountry.

Women globally havebecome very active in thelabour market. So in Nigeria,any woman who is lucky tohook a man drops out of thelabour market. But the truth isthat almost every marriedwoman that I know is lookingfor one job or the other. ManyNigerians who are lucky tokeep their jobs in managementpositions are confronted dailywith CVs of applicants, mostof them women. Due to

improvement in femaleeducation, women are not onlygetting married later but also,are increasingly becomingmore insistent on financialindependence andconsequently entering thelabour market and demandingmore jobs than previously.

Besides, families withpreviously just one workingmember are being forced tosend other members of thefamily, particularlyhousewives, into the labourmarket to look for work tosupplement householdincome.

The banking sub-sector, dueto the on going reforms andconsolidation has sent severalhundreds of workers into thelabour market. The sector,instead of generatingemployment, is shrinking.

The manufacturing sector isworse off. The number ofpersons in paid employmentat the end of 2010 in thecement manufacturing sub-sector stood at 3,318,compared to 4,142 in 2009, adecline of 19.9 per cent. At theend of 2009, the number ofworkers engaged in thecement industry stood at 4,289but this dropped to 3,658 bythe end of 2010, meaning 631persons either lost their jobsor switched jobs away from thecement manufacturingindustry.

The overall implication ofthis is that the economy is notgrowing fast enough to absorbexisting job seekers not to talkof the several millions that jointhe labour market annually. Ifthis government is seriouswith its transformation agenda,it must target and implementmore job-creating projects.

Nigerians areunemployed;of the workforce meansthat 16 milliona r eunemployed.

T h e s efigures aremore than thenumber ofpersons livingin Lagos,Kano andabout thepopulation ofG h a n a(24,223,431);B e n i nR e p u b l i c(9 ,325,032)and someother Africanc o u n t r i e s .According tothe NationalBureau ofS t a t i s t i c s ,

the unemploymentsituation in thecountry. Everyq u a r t e r ,government reelsout figures of thegrowth in thee c o n o m y .Economic growthp r e s u p p o s e se c o n o m i cexpansion ofproduction thatrequires additionalhands.

This is not thecase. It is a knownfact thatunemploymenthas become amajor problem formost countriesacross the world.In the USA fori n s t a n c e ,unemploymenthas increased from5 per cent in 2007

Sanusi-led CBN lacks corporate governance —FRC

attention of Mr. President tothe matter in accordance withsection 2 (e) of the CBN Act2007.

The Council in its reportsaid: “Your Excellency isinvited to note that theexplanation provided by theleadership of the CBN isunsatisfactory.

Accordingly, yourExcellency may wish to takethe necessary steps to brief theSenate on the matter and onthe financial implication in theimmediate future as

AMCON’s bond falls due andthe sovereign guarantee calledthereto; exercise the powersconferred on Mr. President bysection 11 2 (f) of the CentralBank of Nigeria Act 2007 orinvoke section 11 2 (c) of thesaid act and cause the CBNgovernor and the deputygovernors to cease fromholding office in the CBN.

The Financial ReportingCouncil further

recommended that thePresident should direct thecouncil to carry out fullinvestigation of the activitiesof the CBN, in accordancewith section 62 (3) of theFinancial Reporting Councilof Nigeria Act no 6, 2011within a period of 90 days orin accordance with section 11

4 of the CBN act 2007. It alsoasked the President to decidethat those found to be culpablebe prosecuted accordingly.

The Council further said: “Itis important that quick anddecisive action is taken so thatthe opposition to the FederalGovernment does not takeadvantage of the informationand use it against thegovernment that your

Excellency was aware of thelax in CBN and allowed it tostay for political reasons. It isalso important that the CBNgovernor and or the deputygovernors do not decideearlier than your Excellencyas they may resign theirappointment to foreclose theaction of the FederalGovernment and whateveraction taken thereafter shall beregarded as politicallymotivated.

M a n yNigerianswho arelucky tokeep theirjobs inmanagementp o s i t i o n sa r econfronteddaily withCVs ofapplicants,most oft h e mwomen


CMYK

Can you give us a backgroundof yourself, where you arecoming from and where you

are now. I am not talking aboutGuinness but you as a person...

I am fairly well known to most peoplearound Nigeria. For those who may notknow me, I am Seni Adetu, the ChiefExecutive of Guinness Nigeria. I haveresumed now for about 18 months andin that period, we’ve made big stridesfor Guinness Nigeria Plc. My visionfor the company clearly, is to build acompany that is seen and respectedas best performing; most trusted andrespected company in Nigeria, whichis my ultimate goal. At this point intime, what we are doing is to set thefoundation, the platform to enable thathappen. And I have always said topeople that holistic delivery of twosorts of three pillars enables you claimyou are the best in the country.

Guinness has been around for awhile. Are you saying you are layinga new foundation or you arereengineering for a differentpurpose?

Just like I said, it is more like buildinga platform for the future. Guinness hasbeen in this country for over 50 yearsand has been incredibly successful inthat period and so what we are doingnow is to build the platform toaccelerate the trajectory of success ofGuinness Nigeria. The marketenvironment is changing, thecompetitive environment is changing;our focus now is to strengthen thefundamentals of Guinness Nigeria ina way that we are able to leverage theopportunities that are showing up inthe market and address some of thechallenges that we are beginning tosee in the market.

What are these strategies?Our strategies are very clear, first is

that we have to strengthen our corebrands like Guinness and Harp. Wewant to make sure that we create andsustain an advantaged growthconsumer, in other words, in terms ofdistribution within just being able tocreate an intensity of distribution thatenables what we call an arm's reachavailability. Every time a consumergoes out to look for any of our brands,we don’t want him having to stresshimself to reach our brands. We wantto leverage our expertise in relation tobuilding scale, so we’ve introducednew brands in the market and that willreally excite the consumers. We’ve gotthe strategy around creating sort of abigger, stronger efficiency in our corestructure, to be able to invest in thebusiness is exactly one of the thingsthat we are doing. And finally, at theend of the day, the most importantthing I say to people is that whateverstrategy you come up with, you’ve gotto have the talent to support it, soguaranteeing our strategies and ourplans with the right talent is very bigfor me. In a nutshell, it is really aboutbrands, innovation, consumers, costefficiency and talent.

From what you have said, you arerefocusing and reengineering; is thatwhat informed the result you’ve justreleased?

The result that we’ve just released isa function of several things, first, is thatwe’ve got a very rich portfolio of brands

Last Thursday, the Managing Director of GuinnessNigeria PLC had a chat with Financial Vanguardin his office. He spoke about the half year result of

the company, strategies being put in place to repositionGuinness for better performance and others. Excerpts:

By OMOH GABRIEL,Business Editor

My focus is to stren gthfundamentals of Gui nneMy focus is to stren gthfundamentals of Gui nne

that are adored by consumers in thedifferent categories. When you thinkabout brands like Guinness, Harp andMalta Guinness, they are the brandsthat are really adored by the Nigerianconsumers.

However, what we’ve seen in thelast six months of the result that

we are announcing, is a softness indemand, primarily, partly on accountof the dip in the discretionary incomeof consumers but also as a result of thefact that perhaps we have beenaggressive or bullish with our pricing,that’s just one part of it. Secondly isthe fact that we are seeing a downtrading in the market by way ofconsumers going for more affordable,cheaper brands in the market today.Our brand as Guinness Nigeriatypically plays in the premium andmainstream and so over the years, wehaven’t built scale in the valuesegment which is the low end whereso many others are and therefore weare seeing an opportunity there. So ourinability to play strongly in thatsegment obviously affected ourperformance. The last thing that reallyimpacted performance in the result thatwe’ve just announced has been thechallenges that we still have with ourdistribution because where our brandsexist, where they get to, people loveus; people drink our brands. Like I saidbefore, our brand is the most adored.

You only drink a brand that you seeeasily and therefore, if you flip overthose challenges that I have just talkedabout, then you get the reasons whywe are confident that the business willturn around because the aggression

around pricing and the fact that wewere price disadvantaged versus ourcompetitors in the market place, havebeen addressed. We did a pricerollback in October; we went up inOctober and we rolled back the priceof Harp and Malta Guinness inJanuary.

The price disadvantage that we hadagainst competition has beenaddressed. The other point is reallyaround the value brands that I talkedabout before. Now, we have a brandcalled Dubic which is intended toexplore the opportunity within thatsegment where people are buyingtheir beer for N150.00, so our Dubicshould really serve that purpose for us.There is real intense work going on tohelp us address small distributionchallenges, especially when it comesto things like outlet coverage; how wecover the outlets, the off trade account,where typically you see them in theopen markets, that is an area wehaven’t played effectively as we wouldhave liked to, things like ruraldistribution and so on. That is why webelieve that if we address all thoseopportunities, the head room forgrowth for Guinness Nigeria is verysolid and that is what keeps usmotivated.

Hope I am not mistaking you forNigeria Breweries; you have anoutsourcing distribution networkbefore, is it?

The outsourcing in the sense that weused third party before, and that iswhat we are still using.

You are having problems with it?No! I am not suggesting that.

What are these third partydistribution challenges?

The challenges are in terms of thereach and the strength so you couldargue that though we have third partyoperators who we call distributors, weneed more distributors especially forrural areas. So if you are going intothe hinterlands, the level of availabilityof our brands is sort of lower than whatyou get in urban areas like Lagos,Abuja and Port Harcourt, and that isthe area we are working on. It is notall; I say this with emphasis, not tosuggest that we are not happy with thedistributors that we have, we are justsaying that perhaps, there is anopportunity for us to move further intorural areas as some of our competitorsdo. Remember that some of our

competitors actually acquired somebusinesses which were in the ruralareas whereas we have taken theconsolidation model approach wherewe have big breweries that we investin, there is no right or wrong; they bothhave their pros and cons but theimportant thing is that whether it isone brewery or 10 breweries, you wantto make sure that when a consumercalls at an outlet to ask for your brand,the brand is indeed available. That isthe project that we are working on, sothis is an opportunity, I should say andnot a challenge in the way that yousee it.

,

,

Interview

A dip of aquarter or halfwill not make

people who havesigned up along-term

partnership withus to be worried

about theirshares


CMYK

gthen thenness Nigeriagthen thenness Nigeria

Does this challenge in distributionhave anything to do with the securitysituation in the North-East?

Certainly, if you look at the North,there are parts where you can go freelyrequesting for an alcohol drinkscompany, and there are parts thattoday, for security or other reasons,you have to probably limit yourmovement and your penetration. Ourjob as businessmen is to find ways towork around these challenges andcreate opportunities for ourselves inthe sense that if you don’t shape yourdestiny, circumstances are going toshape it for you. This is really aboutus shaping our destiny and the future

of Guinness Nigeria.

What is the acceptance level of yourDubic and Alvaro in the market?

One our strengths and the biggestbasis of joy for us is in the quality ofour innovation. Some of the newbrands that we have put in the marketin the last 18 to 24 months have donevery well, brands like Sinapp, Dubic,and Alvaro. Alvaro to a lesser extent,because it is brand new in the market,but Dubic is doing very well, it is thebrand that will enable us to really playwell in the value segment that Imentioned before, the N150 pricepoint. What we are doing now is reallywrapping up distribution for the brandwith a view to ensuring that we arecompetitive. For Alvaro, it is our firstentry into soft drinks; keep malt in aseparate category. We have goodreasons to believe that, that brand isgoing to be a big winner in Nigeria.

Let’s go back to the performanceissue, what are you expecting asreaction of shareholders as well asdirectors of the company?

The good news is that the board ofdirectors of the company understandsthat we are really building a platformfor long-term success of the company.We have the absolute confidence of theboard of directors and the shareholdersin what we are trying to create for thecompany. We believe that a year fromnow, the success story will beabsolutely amazing on account of thebig changes that we are making nowand structurally, the things aroundpricing strategy and portfolio strategyand root consumer strategy. We arevery clear of what we want to do, welay on top of that our innovationstrategy which is broken, and then youbegin to see the reasons why we haveconfidence. The board is very familiarwith this, they are confident and arereally backing the management andlocal team.

What impact does this have on yourshares? Nigerians are interested invalue, once prices are going up,everybody is happy and when it isbeginning to show downturn, peopleget scared; are you not afraid thatinvestors will begin to dump yourshares?

Not at all! The business that we runis not a one day or one month business.Secondly, it is a business that has a richheritage of strong performances over theyears. Our brands are still the mostadored. When you talk about whatmarketers call brand equity, our brandsare still the strongest in terms of brandequity. These are the reasons to believethat for the long-term, it has to be verysuccessful. A dip of a quarter or halfwill not make people who have signedup a long-term partnership with us to

be worried about theirshares. If yourinvestment is long-term, we are sayingthat we haveconfidence in theshareholders; they arein the game for thelong run and they areabsolutely staying thecourse.

Looking at theresult, it seems

to suggest that youare losing marketshare to yourc o m p e t i t o r s ,especially like yousaid the lower endpriced products...

It is so difficult to saywho is gaining shareor who losing share.

(Cuts in) Why?The sources of data

that we have are notcompletely foolproofand what you seecompanies reporting,certainly, is in the netsales revenue and you

cannot deduce from net sales revenuewho is gaining or losing share. Whatwe know is that we have perhaps themost balanced portfolio in the marketand it is the richness of our portfoliothat will enable us to win in the long-term. In a nutshell, I as a leader of theteam, I am confident that we are clearon the issues that we face in the quarter,that is the period that we reported. Weare very clear on the strategies that willenable us turn that around so that wesee improvements going forward andwe are confident in the team that wehave. They have got the capability tohelp us in winning this market. So allthat we are doing now is reengineeringsome parts of our business to enable usto win in the future and that is the gamethat we are playing.

I was reading an analysis done byFBN Capital, and it was trying tosuggest that the unit volume of stoutwhich is your flagship, has declined,the unit volume of harp has alsodeclined, how and what is yourreaction to this?

I have no idea what they have seen,because we typically do not report onunit basis.

(Cuts in) From what they wrote, theysaid it was a conference call discussion.

We have an investors' call and I am

,,

saying to you that I lead an investors'call and we never talk of unit volumes.Now, it is not impossible for somebodyto look at the net sales and call it a unitvolume or assume that the net sales aredown marginally. What we do know isthat these are brands that have been inthe market for over 50 years. Theperformance of a quarter or a half in sixmonths, does not change the fact thatthese brands are the most loved brandsin Nigeria. We are very clear that theaggressive pricing that we applied onthe brands in October, slowed down theperformance and that is why we areconfident that having got the pricesright, we are better placed to grow thebrands. We all know that in an economyof our type, pricing strategy becomescritical and if your price is high orunreasonably high, especiallycompared to competition, it is no rocketscience that there will be impact onvolume and that is why I am saying withemphasis that we have reviewed ourpricing strategy, we have got it rightand we expect to see changes in ourbrands.

As a Nigerian managing an outfitlike Guinness when you meet yourcolleagues, how do you feel and whatdo you tell them?

First, I feel privileged to lead acompany that is this big and not justthat it is big but one of the biggest inNigeria and one of the biggestglobally. But I will like to suggest thatit is a job that I have been longprepared for. This is my fourthmanaging director role, in that regard,I have not gotten to the seat byaccident, it is something I have beenprepared for. Sometime in 2012, I wasactually voted for by Forbes as the CEOof the year in East Africa and the lastjob that I did in East Africa was actuallyas big as Guinness Nigeria. I feelwe’ve got the right leadership and Ihave got the right team without adoubt. We have really positioned thisbusiness to win the mark up term, Ijust want you to watch the space.

Interview

•Seni Adetu

•Seni Adetu

In an economy of ourtype, pricing strategy

becomes critical and ifyour price is high orunreasonably high,

especially compared tocompetition, it is norocket science thatthere will be impact

on volume


CMYK

Banking & Finance

Central banks playcritical roles in thesociety. They

control money supply andmanage the economy toensure stable prices,macroeconomic growth andstability of the nation’scurrency.

Rationality is one of thecritical features of economicagents. Economic players,be it individuals,organisations, whether inthe local grass root markets,or in the sophisticatedfinancial markets, seek tobehave rational, in responseto reality. In the markets,there is little or no room forsentiments; be it religious,political or ethnic. This isbecause basic human needsthemselves don’t haveregard for such sentiments.When you are hungry, youlook for food. It does notmatter to you if the personselling the food belongs toyour ethnic group or yourpolitical party or come fromyour village. When you goto the market, you buywhatever you need, fromwhoever offers the bestquality at the best price.

This is the domain ofcentral banks all over theworld. The economy whichthey are mandated tomanage has little or noregard for sentiments. Theyare to ensure stability ofprices, which always obeythe law of demand andsupply (ceteris paribus). Beit interest rates, prices ofgoods and services,exchange rates, they alwaysobey the law of demand and

IKOYI CLUB & HERITAGE BANK: From left, Executive Director, Heritage Bank, Mrs MaryAkpobome; past chairman, Tennis Section, Ikoyi Club 1938, Mr. Wale Opejin and Past Treas-urer, Ikoyi Club 1938, Olusola Adeosun, during Heritage Bank Grand Slam Team Champion-ship held at Ikoyi Club 1938 in Lagos.

CBN: A transition in

trial and error

By BABAJIDEKOMOLAFE

supply. That is why centralbanks must do their jobs,take their decisions basedon rationality and reality,bearing in mind that in theeconomy and in thefinancial markets, you cancontrol the input, youcannot control the output.You can decide on anyaction, but you cannotdecide the result orconsequences.

The import is that, centralbanks should not makedecisions on the basis oftrial and error. It must bebased on time tested andproven principles andprocedures of economicmanagement.

It is for this reason that somuch power is reposed inthe enabling law of centralbanks around the world. Itis also for this reason thatemployment of staff and topmanagement of centralbanks are based oncompetence, merit, maturityand balance. In developedcountries, suchappointments are made with

,,

little consideration forsentiments of any kind. Thatis why a Canadian can beappointed as the Governorof the Bank of England, anda woman as Chairman of theFederal Reserve.Furthermore, suchappointment is made withsignificant consideration forthe need for continuity andstability of central bank,knowing full well, that theeconomy and financialmarkets generally hateinstability.

While some countries havemastered these importantfacts, and hence, ensuredthat the sanctity of theircentral bank is not sacrificedfor anything or sentiment, inNigeria we are stilllearning. We are stillexperimenting and theSanusi saga is part of theexperiment. From June 4,2009, when he wasappointed, to thedevelopments of last week,we have been witnessingthe result of the lastexperimentation in theappointment of a CBNGovernor.

But the outcome is notsurprising. For those

who knew Mallam LamidoSanusi very well before hebecame CBN Governor, allthe actions and utteranceshe had made during histenure would not besurprising to them. In 2008,when he was still anExecutive Director with FirstBank, he was invited topresent a paper on riskmanagement to the annualworkshop organised by theCBN for financecorrespondents in Calabar.He not only presented a

brilliant paper, he alsocriticised the CBN, his host,for its response to thebanking crisis. Further,during his confirmationhearing, Sanusi dismissedthe ten point agenda of thePresident who nominatedhim.

The truth is that Sanusihad always been anoutspoken and a radicalpersonality. He is neverafraid to speak openlyagainst anybody. He is notafraid to take radicaldecisions. As CBNGovernor, these qualitieshave helped and hurt thenation. In his quest to fightinflation and stabilise thenaira, he took decisionsnever taken by any CBNGovernor. But he alsomade utterances that nocentral bank governor woulddare to make.

We cannot however blamehim. We, especially thePresidency and the Senatewere the ones that choose toappoint an outspoken and aradical personality to beCBN Governor. But is not amistake, rather it was anexperimentation. And weare experiencing the resultof that experiment.

And we would continue toexperiment until those atthe helm of affairs come toterms with the facts statedabove, that central bank isnot an institution thatshould be subjected tosentiments, whims andcaprices of any individual orgroup.

Now the most dangerousoutcome of the Sansui saga,which is even worse for theeconomy is to go to theextreme of appointing apersonality with absoluteopposite personality ofSanusi, or a situation wherethe staff and management ofthe CBN become too quietand fearful such that theyare reluctant to take bolddecisions in response toeconomic reality. Whilethese may be good for theinterest of some people andgroups, the long term effectcan be calamitous. We mustremember the economy doesnot have regard forsentiments and politicalconsiderations.

While the President hasdone his bit by nominatinganother bank chief executiveas the next CBN Governor,the onus now lies on thesenators, the electedrepresentatives of thepeople to do their job, andensure that the appointmentis not an extension of ourtrial and error approach todetermining who shouldmanage an economy thathas no regard for sentimentsand hurtingexperimentation.

We cannot,however, blame

him, we,especially thePresidency andthe Senate, werethe ones thatchose to appointan outspoken anda radicalpersonality to beCBN Governor

UK public financesshow £4.7bnsurplus

Government finances forJanuary showed a

surplus of £4.7 billion, theOffice for National Statisticshas said.

That was less than the £6billion surplus recorded a yearago. For the financial year-to-date, government borrowingwas £90.7 billion, which was £4billion lower than at the samepoint a year earlier.

January usually records asurplus due to high taxreceipts, but in most othermonths the governmentborrows more money than itreceives. The total pile ofgovernment debt now stands at£1.24 trillion, equivalent to 74.6percent of the UK’s totaleconomic output.

The ONS figures are initialestimates and are subject torevision. They exclude theeffect of bank bailouts. The £1.3billion fall in January’s surpluswhen comparing with a yearearlier was down to highergovernment spending. Taxreceipts from VAT and stampduty were up slightly, but thiswas offset by a fall in receiptsfrom income and corporationtax.

According to the Office forBudget Responsibility (OBR),the difference “mainly reflectsthe fact that central governmentexpenditure was £0.7 billionhigher... Receipts were littlechanged from last year”.

Dollar firms,Swedish datapushes crown totwo-month low

The dollar rose against abasket of currencies on

Friday, on track for its firstweekly gain in three weeks,boosted by higher U.S. yieldsand data that underpinnedhopes for sustained economicstrengthening.

But an unexpected drop inSwedish consumer confidenceknocked the crown to a two-month low against the euroand a six-week trough againstthe dollar. The data kept aliveexpectations the Riksbank maycut rates to support theeconomy and ward off fallingprice pressures.

The focus of the currencymarket, though, was thedollar’s recovery, which in partdrove the Chinese yuan to itslowest in four months in theoffshore market. The number ofAmericans filing new claims forunemployment benefits fell lastweek, suggesting the labormarket continues to pick upsteadily despite recent severecold weather.

CMYK


F/PADVERT


CMYK

Corporate Finance

COMMISSIONING: From left, Divisional Head, General Services, Wema Bank Plc,Mr. Fola Ajanlekoko; Head of Commercials, Leadway Assurance Company, Mr. TunjiAmokode; Senior Special Adviser to Lagos State Governor on Justice, Mr. Lanre Akinsola;Group Managing Director, Cryslad Group, Mr. Banjo Onanubi and General Manager,Cryslad Group, Mr.Kunle Olayemi during the commissioning of trucks, warehouse, andlaunching of Kasstul water in Lagos.

UBA Capital Plc hasr e i t e r a t e d

commitment to leverageits four principal lines ofbusiness to gainleadership of the financialservices industry.

The new Group CEO,Oluwatoyin Sanni, whostated this while ringingthe trade closing bell atthe Nigerian StockExchange, NSE, tointroduce the newmanagement, listed thefour lines of business toinclude investmentbanking, trusteeship,asset management andstock broking.

She stated that the newmanagement has adoptedsome key initiatives thatwould drive its operationsgoing forward as well ashelp the company to attainthe set goal.

The key initiatives,according to her, includeinternal processes, legalexpert across all spheresof operations, new ITsystem deployed amongother schemes.

Her word, “UBA Capitalis leveraging on aformidable team ofexperts, and we are well-positioned to continuedelivering world-classfinancial and investmentservices to ourstakeholders. As apublicly-listed companyon the NSE, ourshareholders can be

UBA Capital eyes dominance offinancial services sectorBy NKIRUKANNOROM & WILLIAMJIMOH

assured of high standards ofdisclosure and transparency,in addition to our superiorperformance in investmentbanking, trusteeship, assetmanagement andsecurities.”

“In the coming week, wewill unveil a series of leadingand industry shapinginitiatives which willredefine the financial

services landscape, deliversignificant value to ourstakeholders and clearly setUBA Capital apart from ourcompetitors.

“In addition, we arerepositioning ourselves insuch a way that we candeliver the best of servicesto our clients as oneintegrated financial servicesgroup and that means that it

gives greater ease of doingbusiness from one part of thebusiness to another.

“The same documentationand information will be madeuse of for a client to be able todo business with us in all lineof our business; this impliesthat you will be managed as aclient from single point interms of customer services,reporting, account opening,documentation and externalrelation.

“Now, we are able to do thisthrough the group sharedservices we are deploring,which are underpinned by thestate of art system that wehave developed, which islargely in-house based.”

Continuing, she said, “Ourinitiatives includerepositioning as well asexpanding our activities evenbeyond Nigeria into WestAfrica and gradually to theentire continent. But for thisyear, our focus will still besignificantly on this marketbecause we think it gives aroom to create value.”

In January, UBA Capitalannounced the appointment offrontline capital marketoperator, Oluwatoyin Sanni asthe new Group CEO, andveteran banker Chika Mordias Chairman. Comprisinginvestment banking,trusteeship, assetmanagement and securitiesarms, UBA Capital hasemerged in recent years as aclear market leader in each ofthese areas. In her statementto the floor, Sanni unveiled thegroup’s plans for acceleratedgrowth and sector leadershipthis year.

Expert emphasizes role of capital in business start-ups

By NKIRUKA NNOROM

The Managing Directorof African Capital

Alliance, ACA, Mr.Okechukwu Enelamah, hassaid that funding is one ofthe key things anentrepreneur requires whensetting up a new business.

He made the remark whilespeaking on “Sources ofCapital for SMEs: theOptions andRequirements”, at theweekly radio programmeorganised by the FidelityBank, saying that start-upcapital could be sourcedfrom ‘family, friends andfoes’.

Much as capital isimportant to starting abusiness, Enelamah said thatpotential investors shouldnot focus solely on how toraise capital, but must spendquality time to plan andthink through the businessbefore starting up so as toincrease their success rate.

“In the industry, people

talk of the three Fs, - family,friends and foes. Peopletypically start off with theirown savings, with family,friends and foes - those whoare prepared to support themany way as an act of trust.What they all have incommon is relationship withthe entrepreneurs whenthey are building theirbusinesses.”

However, “To increaseyour odds of success, one ofthe most important things isproper planning andexecution because planningis where the business comesin. For a lot of people, whenI say planning, here, I meanthe ability to think throughand it may be a fancybusiness plan but it has tobe well conceived.”

The ACA boss explainedthat people naturally go tosources where they haveexisting relationships toaccess funds because theydo not have track recordsthat could help them accessinstitutional capital. “From

there, they can move to thenext stage and with the rightlegislation andencouragement in the arenathey find themselves, they canalways rise and thrive andthen we can also come in toaid them rise to the next level.But they have to make the boldstep of starting up first,” hesaid

He also stressed the need forhuman capacity developmentto enable entrepreneurs attractthe right kind of personnel totheir business, saying, “Inexecution, I would say themost important thing is to havethe kind of people around youthat will increase the odds ofsuccess. An entrepreneur maybring the idea, but he mayneed a general manager thatbrings traditional generalmanagement skills to organisethe team. If he can’t affordthat, then he might needsomebody else thatcomplements him because twoheads are better than one”, hesaid.

US stocks gain,treasuries drop onglobal factory data

U.S. stocks rose as better-than-forecast growth in

an American manufacturinggauge tempered concernabout the global economy anda $19 billion purchase byFacebook Inc. sparked dealsoptimism.

Treasuries fell and the yengained, while shares inemerging Europe dropped.

The Standard & Poor’s 500Index (SPX) rose 0.6 percentto 1,839.47 in New York,climbing back to within 10points of an all-time closinghigh. Yields on 10-yearTreasuries gained two basispoints to 2.76 percent. TheMSCI EM Europe Indexdeclined 0.5 percent. Japan’scurrency strengthenedagainst 10 of its 16 majorcounterparts, climbing 0.2percent versus the euro. TheS&P GSCI gauge of 24commodities slipped 0.1percent as gold lost 0.3percent while natural gasgained for a third day.

A report from the LaborDepartment showed fewerAmericans filed applicationsfor unemployment benefitslast week. The MarkitEconomics preliminary indexof U.S. manufacturingincreased in February.China’s manufacturingdropped to a seven-monthlow and a factory gauge forthe euro region unexpectedlyslipped, according to datacompiled by HSBC HoldingsPlc and Markit.

Europe stockslittle changed asStoxx 600 trimsloss

European stocks closedlittle changed, trimming

losses in the final minutes oftrading, after data showedChinese manufacturingshrank for a second monthand Federal Reserve minutessignaled stimulus cuts willcontinue.

BAE (BA/) Systems Plcplunged the most sinceOctober 2008 after predictingprofit will drop as much as 10percent this year. Randstad(RAND) Holding NVtumbled 11 percent afterreporting quarterly resultsthat missed estimates. TUIAG dropped 5.4 percent afterone of its largest shareholderssold a 15.7 percent stake inthe company. Technip SArallied the most since July2009 after saying its profitmargin will increase nextyear.

CMYK


F/PADVERT

26 —Vanguard, MONDAY, FEBRUARY 24, 2014

CMYK


CMYK

Micro-FinanceCommodity index

The suspendedGovernor of theCentral Bank of

Nigeria, CBN, MallamLamido Sanusi, has saidthat microfinancing in thecountry iscommercialised.

Meanwhile, hedescribed “women” as abig industry, urging banksto take advantage byinitiating programmestargeted at them.

Sanusi said this at alecture. “This economyneeds low interest money,we need it fori n f r a s t r u c t u r e ,m a n u f a c t u r i n g ,agriculture and others. Inthe last five years, thecentral bank has put onthe table, N800 billionsingle digit long-termfunding for these areas.We put up a N220 billionMicro, Small andMedium EnterprisesDevelopment Fund(MSMEDF) called microenterprises.

“Microfinance hasbecome toocommercialised, there isneed aroundmicrofinance that

Microfinance has become

commercialised — CBN

Stories byPROVIDENCE OBUH

somehow, if you don’tgive poor peopleeducation, healthcare,agriculture, if you allow aprivate sectormicrofinance bank to lendthe money at 40 per centinterest rate, they will getout of value chain.

“Microfinance onlyworks within aprogramme developmentenvironment, what wedid was to provide thefunding for MfBs to on-lend at very low rate ofinterest but tied todevelopmental projects,agricultural training,

capital, communitytraining, etc. We go totraining centre, we loanto the graduates of thecentre but 60 per cent willto go to rural women.

“I want banks to comeup with programmes thatare targeted at women,out of all the people whohave borrowed fromNigeria banks today, howmany of the businessesare owned by women, letthem research and findout the nature ofbusinesses that womengo into. Every weekendin Lagos, there is a bigwedding and they buyAso Ebi.

How many women getaccess to credit? Howmany of the banks havethought of how the aso ebimarket is financed. Wecan look into that businessand make it grow."

Feb 14-Feb 20, 2014

VISIT: Vice-President of the Institute of CharteredAccountants of Nigeria (ICAN), Mr. Chidi Ajaegbu(5th left) flanked by Council members of the insti-tute and management team of the Niger-Delta De-velopment Commission (NDDC) during a courtesyvisit by ICAN team to the Commission.

Oxbridge Club electsnew exco

Nigeria’s software developersbest worldwide — Expert

An expert in theoutsourcing sector

has identified Nigeriansoftware developersamong the best in theworld.

The expert, President ofAssociation ofOutsourcing Practitionersof Nigeria (AOPN), Dr.Austin Nweze, buttressedhis point by saying thatthe system is an informalsystem that is functionaland some have travelledto bring knowledge back.“Knowledge is mobile;you can sit any where anddo what you want to do.Our young ones aremaking it on softwarebecause this is the age.

According to Nweze,“Nigerian softwaredevelopers are among thebest in the world, a lot ofprogramming software isshifting to Nigeria, weneed to capitalise on thatand give them supportthat they need, so that wecan focus on these things.If you are manufacturing

car, for instance and youcan manufacture tyre, thewhole economy will beturned around.

Oxford and Cambridge Club of Nigeria haselected new Executive Committee members

to run its activities in the year.The club conducted the election during its annual

general meeting held in Lagos at the weekend,according to a statement by its secretary, Mr.Michael Orimobi.

The statement further said membership of theOxford and Cambridge Club of Nigeria is open toany resident of Nigeria, or Nigerian, whomatriculated at either the University of Oxford orthe University of Cambridge in the United Kingdom.

The Club continues to build a reputation forintellectual thought leadership, attracting leadersfrom the business, diplomatic and academic cadresto its events.

Members of the newly elected ExecutiveCommittee are: Mr. Akinfela Akoni (President); DrTimi Austen-Peters (Vice President); Mr. Uche Okoli(Vice President); Mr. Michael Orimobi (Hon.Secretary); Mr. Ike Chioke (Hon. Treasurer); Ms.Adeola Egbeyemi (Membership Secretary) and Mr.Adekunle Adebiyi (Social Secretary).


CMYK

F/PADVERT


CMYK

Homes & Housing Finance

Lagos commencesissuance of e-C of O

The Lagos Stategovernment has

pioneered the issuance ofelectronic certificate ofoccupancy (e-C of O) inNigeria, with the issuance ofe-certificates to 55 plot ownersunder various governmentland schemes in the state.

Gov. Babatunde Fashola,while presenting thedocuments to the first set ofbeneficiaries, said that themigration from the paper titleto electronic was thegovernment’s response to theproblem of documentcounterfeiting.

He said the illegal printingof the “Yellow Paper” by someunscrupulous people hasaffected the reliability of thepaper C of 0 as a legal title toproperties in the state, notingthat the new electronic titlewas to eliminate fraud in thesystem and ensure efficientland administration in thestate. “This new electronicdocument is more secure as itis designed to eliminatecloning and issuance ofdocuments that are notgenuine,” he said.

Also speaking at thepresentation ceremony, Mr.Hakeem Muri-Okunola,Permanent Secretary, LandsBureau, said the issuance ofthe e-C of O was faster andless cumbersome, adding that

applicants who fulfill allnecessary conditions will beissued the document within45 days.

US fixed mortgagerates inch up

Average US rates on fixedmortgages rose this

week but remained nearhistorically low levels.

Mortgage buyer FreddieMac said the average rate forthe 30-year loan increased to4.33 percent from 4.28percent last week. Theaverage for the 15-yearmortgage edged up to 3.35percent from 3.33 percent.

Mortgage rates have risenabout a full percentage pointsince hitting record lowsroughly a year ago. Theincrease was driven byspeculation that the FederalReserve would reduce its $85billion-a-month bondpurchases. Deeming theeconomy to be gainingstrength, the Fed proceededlast month with plannedreductions of its bondpurchases, which havehelped keep long-terminterest rates low.

The housing market isexpected to deliver anotheryear of solid gains, helped byan improving economy.

FMBN’s e-collection platform boostsNHF by 200% �From N700m to N2.2bn monthly

Stories by YINKAKOLAWOLE

The introduction ofelectronic collectionplatform by the

Federal Mortgage Bank ofNigeria (FMBN) hassignificantly boostedcollections fromcontributors to the NationalHousing Fund (NHF) bymore than 200 percentmonthly, from N700 millionto N2.2 billion.

Managing Director,FMBN, Mr. Gimba Ya’uKumo, stated this whenthe NHF e-card wasformally unveiled byPresident GoodluckJonathan in Abuja. He saidthe introduction of the e-collection platform has notonly improved the Fund’scollections but has alsoassisted to ensuretransparency andaccountability. “The NHFe-Card is a huge stepforward in delivering theadvantages of speed,accuracy, transparency,accountability and superiorcustomer experiences toNHF contributors.

“We have begun toharvest the benefits of theNHF e-Collection Platform,especially in the volume ofNHF collections. Forinstance, the rate of NHFcollections rosesignificantly from aboutN700 million to over N2.2billion per month. Weestimate a further 100 percent increase in monthlycollections to achieve aboutN4 billion per monthbefore the end of 2014.

“The bank (FMBN) inJune 2013 launched theNHF e-Collection Platformto ensure proper record-keeping, transparency andaccountability for NHFcollections. The platformprevents the flagrantviolation of the NHF Actand unlawful practices byemployers who fail to effectstatutory deductions, remitdeductions to the FMBNor provide remittanceschedules by whichcontributors’ monies areeasily misappropriated,”he stated.

The e-card is a form ofidentification card bearingthe contributor ’s name,participation number andphotograph. It also enablesthe holder to access recordsof his/her contributionsusing any of the

information technologychannels such as AutomatedTeller Machine, Point-of-Saleterminals and the Internetand print out a statement ofaccount at a computerworkstation around the world.Also, the NHF card can beused as an e-wallet to stashextra cash for purchases viaPOS terminals or online. Butonly the extra cash, excludingthe NHF funds, can be spent.

Meanwhile, the total NHFcollections now stands atN118.8 billion, with N66.8billion of the amount collected

over the past three years. Asat March 2013, about N100billion had been disbursed to73,676 eligible contributorswith repayment standing atabout N1.7 billion. Of thisfigure, about N40 billion wasdisbursed by FMBN toprimary mortgage banks(PMBs) for the financing ofhousing development for22,246 beneficiaries, whileabout N60 billion was grantedas Estate Development Loanto some private developers,state-owned housingcorporations and the Federal

Housing Authority (FHA) forthe construction of 36,348houses nationwide.

President GoodluckJonathan, while launchingthe card, reiterated the thecritical importance of housingto the economy of a nation.He called for a strongcollaboration between thenewly established NigerianMortgage RefinancingCompany (NMRC) and theFMBN will stimulateaffordable mortgage financingto reduce the cost of housingin Nigeria.

An expert in theproperty market hasadvised budding

entrepreneurs to takeadvantage of opportunities inthe real estate sector to growtheir income, describing thesector as investors’ haven.

Chairman/CEO, GenesisGroup of Companies, IchieNnaeto Orazulike, made thecall while speaking at FidelityBank’s SME Forum, inLagos.

Speaking on “Growing aDiversified Group ofBusinesses” at the forum,Orazulike said that theproperty business is one areawhere investors can expect torecoup their investmentwithin a short period of timebecause of the high return oninvestment (ROI). He advisedSmall and Medium ScaleEntrepreneurs (SMEs)desirous of growing theirbusinesses to make consciousefforts to tap into the hugeproperty market in the countryeven as they plough back theexcess funds into theirbusiness.

“Naturally, as you grow your

‘Why entrepreneurs should invest in realestate’

By NKIRUKA NNOROM business and develop it, thebest thing to do with theexcess which the businessdidn’t absorb is to invest it inreal estate,” he said.

Orazulike, who is also adirector in Fidelity Bank Plc.,said he veered into businessimmediately after hisNational Youth ServiceProgramme (NYSC)

essentially because hewanted to do somethingdifferent. He said that realestate is an investment hewould advise everyentrepreneur to take on,noting, “real estate, as far asI am concerned, is the best forvalue. It will grow over time;outlast you and generationsto come.”

Ogun moves to standardiseproperty documentation

Ogun State government is poised to assist propertyowners with no valid land documents to regularise

their property/land documents with the introduction ofthe “Homeowners Charter Program”.

The State Ministry of Urban and Physical Planning saidthe move will help rebuild the state by providing adequatedata for medium-term planning – provision of hospitals,roads, schools and other public infrastructures to theresidents of the state. To this end, the state governmentpromised to waive all accrued penalties while fees willbe discounted.

It said the scheme became expedient because a GISSatellite mapping of the state forecasts that the state isreplete with sizeable numbers of undocumentedproperties and houses with no building plan approvals,C of O’s and other relevant documents.

The ministry however makes it clear that some propertiesare not eligible for participation in the scheme.

•Housing development under Lagos Home Ownership Mortgage Scheme


CMYK

F/PADVERT


CMYK

Insurance

Pension assets to hit N4.2trn byyear end — PenOp

Staco gross premium hitsN6.8bn, begins new headoffice complex

Stories byROSEMARY ONUOHA

Chairman of thePension FundOperators of

Nigeria, PenOp, Mr.Misbahu Yola, said thatthe pension industryexpects subscribers tothe Contributory PensionScheme, CPS, to climbto over 6.2 million in the2014 financial year.

Yola who made theassertion at a mediabriefing in Lagos saidthat the industry alsoexpects pension assetsto grow to over N4.2trillion by year end.

Yola stated that theCPS currently has about5.9 million contributors,as against 5.7 million asat December 2013, while

pension assets stand atN3.9 trillion.

According to Yola, thepension annual growthprojection stands at 20per cent and due to exitof some workers fromtheir employments, theprojected income for2014 should be aboutN500 billion.

He said, “We expectthat by the end of 2014,the pension assetsshould be around N4.2trillion to N4.3 trillion.The number ofcontributors will beabove six million.”

Yola disclosed thatPenOp is working withthe National PensionCommission (PenCom)to introduce the pensionscheme into the informalsector.

He however stated

that the currentamendment to thePension Reform Act willtake care of thischallenge, such that theinformal sector can beincorporated into thecontributory pensionscheme.

“It is not easy becauseso many things are notin place. Even theidentity issue is a thingthat would hinder the

smooth take off of theinitiative in the informalsector. ”

While stating that thenumber of subscriberswill keep on increasingas long as moreemployers andemployees areembracing the scheme,Yola noted that thepension sector expectsmore compliance fromthe private sector.

Yola however regrettedthat the transfer windowcannot commencebecause there is still alot to be done on thebiometrics database,stressing that, as soon asthe industry gets thebiometrics right, thetransfer window will beopen.

The PenOp Chairmannoted that most stategovernments are yet tofully embrace the CPSpromising that pensionoperators, in alliancewith PenCom, willcontinue to persuadestate governments to

key into the scheme, asit is better for retireesand the economy as awhole.

“The major challengewe have is that somestate governments areyet to key into thescheme.

The Pension Act of 2004does not make itmandatory on stategovernments to choosethe contributory pensionscheme. They have theliberty to create pensionschemes of their own.What we can do is moralsuasion, which theoperators are currentlydoing,” he stressed.

By FAVOURNNABUGWU

The Board of StacoInsurance Plc said

it has acquired twoproperties adjoining itspresent head officelocation for theconstruction of Ultra-Modern head officecomplex even as thecompany grossed N6.8billion.

The Chairman of thecompany, Dere Otubudisclosed this at the18

th Annual General

Meeting (AGM) that thecompany needs toadequately capitalize inorder to competefavourable in theNigerian InsuranceIndustry.

Focused onstrengthening itsoperations and takingadvantage of emergingopportunities in thebusiness environment,Staco Insurance plc hasploughed back overN300 million profitsgenerated in 2012financial year. Thisaccording to thecompany would enableits boost growth forenhanced shareholdervalue.

Staco Insurance in the2012 financial yearrecorded a written grosspremium of N6.8 billion

as against N6.48 billionin 2011, despite thechallenging operatingenvironment.

The company’s netpremium written alsoincreased from N5.99billion in 2011 to N6.28billion in 2012, whilethe underwriting resultwas N3.12 billion in2012 as against N3.06billion achieved in2011.

STACO’s profit beforetax and exceptional itemrose to N310.76 millionin 2012 from a loss ofN462.97 million in 2011.

The adoption ofInternational FinancialReporting Standards(IFRS) in thepreparation of financialstatements equallyn e c e s s i t a t e dadjustments thatimpacted on the capitalbase of the insurancecompany during the outgone year.

Dere Otubu, chairmanof the Company whodisclosed this at its18

th Annual General

Meeting held in Lagossaid the Company hasploughed back theprofits recorded in 2012to promote growth andposition the companystrategically for the everincreasing competitionin the financial servicessector.

10 X 4ADVERT


CMYK

“Every hero[ine] becomes abore at last”, Ralph WaldoEmerson, 1808-1882.(VANGUARD BOOK OFQUOTATIONS p 90).

Dr Ngozi Okonjo-Iweala,like most of us who

studied in America, andundertook elective courses,

BRISTOL HOTEL REVIVAL: Lagos CBD gets a boost

Everything that is done inthis world is done in hope”,Martin Luther, 1483-1546,German Reformer.(VANGUARD BOOK OFQUOTATIONS).

The regular readers of thispage must forgive me for

postponing, once again, thecontinuation of the series onthe INHERITORS – thesecond generations ofNigerians who allowed greatenterprises bequeathed tothem to crumble. The nextwould have been theLAWSON Group ofCompanies, among whichwas the ECOBANK, onceheaded by Mr KolapoLawson. The slide down thegreasy slope of misfortune forthe group started severalyears ago. But, this is not thetime for that.

This is the time forcelebration, once again, byold Lagos boys who rememberwhen Bristol Hotel was the

place to go for unparalleledenjoyment. At the height of itsfame, it was easily the besthotel in the Central BusinessDistrict, CBD, of Lagos andsimply delightful.

But the years have not beentoo kind to Bristol and it hadbecome a victim of oneatrocious management, afteranother, until it became abeehive of illegal activities,con men, and dope peddlers.With the demise of BristolHotel, Lagos lost its last

prestigious hotel in the CBD.And, that unfortunatetransformation renderedLagos CBD the only onewithout a decent hotel in thewhole world. Theimplications are toonumerous to describe. But, letme point out a few. The quicklunch, at a familiar but decenthotel, which saved millions ofbusy executives from suddendebt on account of stress, wasno longer possible — once thehigh class hotel closed its

doors to top class clientele andbecame a haven for robbersand money-changers. Tohave a decent lunch thesedays, the top executives ofUBA, First Bank, Union Bank,CBN, FCMB, WEMA, etchave to get in their cars andhead for V.I – a timeconsuming endeavour.Similarly, those working lateand who must have a quickbite to eat were alsohandicapped in this way.

Staff of the banks and other

businesses, coming fromoutstation, have also beenforced to lodge elsewhere –other than Lagos Island. Thatmeant having to commute tothe Island everyday, sufferingfrom the imminent traffichold-up, while in Lagos.Those days will soon come toan end. Once Bristol re-opens for business, they canlodge in Lagos Island andstroll to their assignments…..

MORE ON THAT LATER.

OKONJO-IWEALA: Killing us softly with debtmust have read aboutEmerson. When she came in2003, ostensibly to teach us alesson that Nigeria as anation should avoid the debttrap, we believed she wassincere. Even when sheoverpaid our Westerncreditors, who we later learnt,foisted her on us, we still

asked Horace, 65-8 B.C.Today, we have on our handsa Minister of Finance who hasbeen part of the conspiracy toreturn us to the debt trap.Sometimes, one wonders ifthe measure she introducedin 2003 was really her own orwas either handed to her fromthe World Bank, or, Godforbid, plagiarized fromanother economic guru. Thefact is; the Dr Okonjo-Iwealaof 2014 bears no resemblanceto the 2003 version; they onlybear the same name. Onemight even find oneselfindulging in the satanicthought that there might havebeen some sort of identitytheft. Has somebody

kidnapped the “real” Okonjo-Iweala and are we nowdealing with an impostor?

Just in case you think thisis all crazy stuff, please take alook at these graphs andfigures representing themounting domestic debtsituation and the frighteningdebt servicing burden thiscountry now experiences.

Later, I will reveal theexternal debt situation. Andthe situation is getting worse.Is this any way to run aMinistry of Finance?

Since, as the Chinese say,“a picture is worth more thana thousand words”, there willbe no comment from me.Judge for yourself.

gave hercredit forhelping usto escapethe debttrap.

But,“what doescorruptingtime notdiminish?”

Business & Economy

Every year, Campari,an alcoholic drink

marketed by BrianMunro Limited inNigeria, andmanufactured by GruppoCampari comes withiconic calendar. The 2014edition of the Calendarlooks at globalcelebration of culturalheritage as its mainfocus. This year, thetheme for the calendar is:“ W o r l d w i d e

Campari projects cultural heritage in 2014

Celebrations”, eachpage(month) of thecalendar focuses on aunique festival from anumber of differentcultures around theworld. Through thisintriguing features,Campari intends tohighlight how culturesaround the world havebecome more global thanever before, andreinterprets eachcelebration through its

spirit made of passion,style and charisma.

The Campari Calendaris one of the world’siconic artistic calendars.Distributed ininternational Limitededition of only 9,999copies, it is a small,collectible luxury for thefew that receive it, and isa tribute to the worldclass talents andphotographers that makeit come to life every year.

¼ADVERT


CMYK

Business & Economy

NIGERIA is set toreplicate thesuccess story of

One Local Government OneProduct (OLOP)opportunities it borrowedfrom Japan to boost jobs andrural economy in all states ofthe federation over the nextthree years.

Bature Umar Masari,Director-General of Smalland Medium EnterprisesDevelopment Agency ofNigeria (SMEDAN), whodisclosed this during aninteractive session withIndustry correspondents inLagos, said: “OLOP is basedon a borrowed idea fromJapan which has seen themdeveloping economically andotherwise.

“The pilot projects havebeen conducted in Kano andNiger states, using rice,groundnut oil, leatherproducts , yam and sheanut, and based on the lessonslearnt from the pilot projects,SMEDAN is nowimplementing theprogramme in all states of thefederation and localgovernment areas within thenext three years, under theNational EnterpriseDevelopment Programmme,NEDEP. It is beingimplemented by SMEDAN,Industrial Training Fund,ITF, and the Bank ofIndustry.

He explained that OLOPfocuses on identifyingproducts with competitiveand comparative advantagesin each of the localgovernment area in thecountry.

“SMEDAN borrowed theOLOP concept from Japan in

Nigeria goes for Japan's OLOPmodel to boost jobs, rural economy

BY FRANKLIN ALLI

April 2009 to revitailse therural economy, improveemployment opportunitiesand alleviate poverty in ruralareas. This was based on theOne Village, One Product(OVOP) movementimplemented in the OitaPrefecture in Japan. Thegovernments of both Nigeriaand Japan agreed toimplement a technicalcooperation programmebeginning in February 2010 toverify implementation

methods and institutionalarrangements for thepromotion of OLOP,” he said.

He disclosed that the firstbatch of cooperative bodies setup under the NEDEP will getapproved funding before theend of February.

“The approval for award offunds was obtained after thecooperatives’ business planssuccessfully passed therequisite assessment andevaluation of the Bank ofIndustry (BoI).

“And so far, we havebeen able to cover 22states within a period ofthree months and wehave also formed as atthe end of December2013, 20, 111 cooperativebodies all over thecountry who are nowvery busy being guidedby SMEDAN to come upwith bankable businessplans. We have receivedand handed over thosebusiness plans that areready to BOI which is acollaborating partner ofthe NEDEP programmewith a view to providingfinancing for theenterprise of their choicealong an identifiedproduct’s value chain.And I believe that beforethe end of this month,these ones that havequalified will startgetting financing fromBoI,” he said.

According to him,some of the successfulcooperatives withbankable business planshave already receivedletters of award from BoI.

He explained that alldeveloped businessplans must come throughSMEDAN before it goesto BoI who also in turngives SMEDAN a copyof their assessment andevaluation of thecooperative, stressingthat all these are done inorder to minimise the

BY CALEB AYANSINA

FEDERAL Government has said that itsproposed summit in the tourism sector was

to create awareness and agree on implementablepolicy framework that would enable the countryharness the potentials abound in the sector.

The Minister of Tourism, Culture and NationalOrientation, Chief Edem Duke, who gave thereason, yesterday, during a press conference onthe forthcoming National Discourse on Tourismin June, in Abuja, also expressed the possibilityof establishing Tourism Police Force to ensuremaximum security of tourists.

The Minister explained that various issuesranging from multiple taxations, securitychallenges as well as the establishment of touristsite account to gather information that would beused in the economic planning would form thebasis of the discussion.

According to him, “There are a lot ofchallenges and we have looked at the prospectsof an urgent review of laws and regulatoryframeworks.

“We have looked on how we can work withUnited Nations Tourism Organisation and World

Why we want to hold tourism summit – FG

Travel Organisation Council to implementthe critical element of National TourismMaster Plan, as well as re-engineering theNigeria Tourism Development Corporation.

We will be looking at the strategy ofupgrading our institute of hospitability tobecome the one stop regulatory body inthis sector.

We have started with the idea ofestablishing tourist site account to bepowered by the private sector; it is theplatform that will help us in collating datawhich will help in economic planning policydevelopment, and appraising thecontribution of tourism to the nationaleconomy.

A number of our stakeholders havecomplained about multiple taxations in thesector, and this is something that I am surewe will be looking at in the course ofdeveloping the investment environment oftourism. A number of people have spokenabout security challenges of tourism, andit’s our hope that we will be able to look atsome of the suggestions of possible tourismpolice force.

…possibility of tourism police force coming

12 rice vesselsto berth atLagos ports

Twelve ships carrying

rice are expectedto arrive in the Lagos portsbetween Feb. 21 andFeb.24. The Nigeria PortsAuthority (NPA) in its dailybulletin, Shipping Position,said on Thursday in Lagosthat the ships would berthat ENL, ABTL and GONLall in Apapa quays. TheNPA said the shipscarrying bags of riceinclude Hector, StarCapella, Haci Ali Sari,Wariya Naree and AquaRunner.

It said that other shipsare also expected to sail inwith containers of sugar,wheat, crude palm oil andgeneral cargoes. Thebulletin said there wereno cargoes awaitingCustoms clearance, whileseven ships carryingpetroleum products werewaiting to berth at variousterminals at the ports. It said that the ships carryingpetrol and gas wouldarrive at new oil jetty —Single Buoy Mooring,Fishery Wharf and AtlasCove Jetty.

$20bn missingfunds: NPDConly receivedfunds forcapital,operationalexpenditure

The Nigerian

P e t r o l e u mDevelopment Company(NPDC) on Thursday inAbuja said it only receivedfunds to cover its capitaland operationalexpenditure from theNigerian NationalPetroleum Corporation(NNPC).

Mr Victor Briggs, theManaging Director ofNPDC, disclosed this atthe Senate Committee onFinance hearing on thealleged missing $20billion oil revenue.

Briggs was reacting toallegations by the CentralBank of Nigeria (CBN)that $6 billion out of themissing funds was paid tothe company. He,however, did not disclosethe amount that the NPDCreceived from the NNPCfor capital and operationalexpenditure.

TALENT HUNT: From left, Otunba Fatai Olukoga, Special Adviser to the Lagos StateGovernor on Education; Mrs Sewanu Amosu, Director, Private Education, Lagos State andMr Eric Birhiray, Bobo Food and Beverages at the Bobo Kids with Voices grand finale heldin Lagos.


CMYK

Tax Matters

IAS 11 - CONSTRUCTION CON-TRACTS

The current practice for determining contract revenue by FIRSshall be sustained. Only costs

attributable to certified work done shallbe allowed for tax purposes in line withprovisions of CITA. Other incomes inthe nature of incentive paymentswould be taxed accordingly.

The expected loss recognized as anexpense shall be disallowed until theloss is actually incurred.

Interest received on advanced pay-ment placed in an interest yieldingaccount shall be treated as other incomeand be subjected to tax at the time it isearned.

Retention income shall be subjectedto tax at the time it is earned.

Future cost shall not be allowable asexpense for tax purposes

IAS 12 – INCOME TAXESTaxpayers shall furnish FIRS with all

deferred tax disclosures as containedin the standard.

IAS 16 – PROPERTY, PLANT ANDEQUIPMENT (PPE)

Land is not a qualifying capital ex-penditure under Schedule 2 of CITA,thus capital allowance is not claimableon land. Capital allowance claimed onland in error in prior years shall be ad-justed for tax accordingly.

The entities should provide sched-ule of how they apportioned the costbetween land and building.

Separation of historical cost of the landand building shall be at the proportionof the current market value of the landto building except where the historicalcost can be easily ascertained.

Deferred Payment for PPE:Capitalised cost of PPE shall be based

on the cost indicated on the invoice. Anyimputed interest element charged asfinance cost in the income statementshall be disallowed.

The company should provide thedetails of the imputed interest includ-ed in the cost of asset for necessaryadjustments. Cost of employee benefitsdirectly attributable to the constructionor acquisition of the PPE shall beallowed for inclusion in the cost of thePPE. The schedule of such attributablestaff costs should be provided.The costof dismantling and removing the itemof PPE and site restoration:

Provision/estimate of cost of abandonment, dismantling, removing

the item of PPE and site restoration shallnot be allowed for capitalization withPPE. The cost shall only be allowablefor tax purposes when it has beenincurred, or if it is set aside in a fundedsinking fund, provided that:

i. Any company that has claimeddeduction on any amount set aside forabandonment, dismantling, removalof items of PPE and site restorationshall not claim further deduction uponincurring the relevant expenditureexcept on amounts set aside for thatpurpose;

ii. Any amount claimed in excess ofthat expended for the abandonment,removal of items of PPE and site

International Financial Reporting Standards(IFRS) tax implication - Part 2

restoration shall be treated as taxableincome.

Exchange of Assets:a. Where there is exchange of

dissimilar assets, the old asset shallbe treated as a disposal with the salesproceed being the market value (priceat arm’s length) of the asset. Balancingcharge/allowance, Value Added Tax andCapital Gains Tax shall be computedaccordingly.

b. The cost of the new asset for capitalallowance purposes shall be the marketvalue of the old asset plus any cashconsideration included in the exchange.

Revaluation Surplus/Deficit:a. Cost and Tax Written Down Value

(TWDV) is the basis of capitalallowance computation. FIRS shallcontinue to disregard all revaluation ofPPE. Any revaluation surplus shall notbe taxable while deficit shall not be anallowable deduction.

b. Professional fees and valuationexpenses relating to revaluation of PPEshall not be allowed for income taxpurposes. These expenses should beseparately disclosed. Where suchexpense is incurred prior to the sale, itshall be deductible from chargeablegains under Capital Gains Tax.

Componentization:Schedule/breakdown of componen-

tized PPE inclusive of the basis fordetermining the value of each compo-nent shall be filed with the FIRS as itshall form the basis of capital allowanceclaims and applicable rates.

FIRS shall rely on Schedule 2 of theCITA in granting capital allowance oncomponentized PPE. For a componentto be significant, it must be 20% andabove of the total cost of the asset.

Taxpayers shall provide reconciliationbetween the total cost of PPE underGAAP and componentized cost of samePPE under IFRS for first time adopters.

Historical cost of components shall beprovided by the entities.

Depreciation of land used as quarriesand landfill: The Second Schedule ofCITA does not recognise any form ofland as qualifying capital expendituretherefore capital allowances will not begranted until the relevant tax laws areamended.

Spare Parts and Servicing Equip-ment:

Stock of spare parts and servicingequipment should continue to becarried as inventory and expensedwhen consumed e.g. returnablecontainers. Where replacement resultsin improvement, the cost shall be addedto the TWDV of the PPE while the car-rying cost of the replaced part that wasexpensed in line with IFRS shall beadded back in arriving at the assess-able profit. Replacement cost shall betreated as allowable deduction if it doesnot result into improvement.

For assets reclassified to operatinglease, paragraph 18(1) of Schedule Twoof CITA which relates to rights to claimcapital allowances on operating leaseshall apply.

Also, FIRS Information Circular No.2010/01 dated 12th April, 2012 (Guide-lines On Tax Implications of Leasing)which relates to VAT and WHT shallapply. The lease/rental payments to be

recognised for tax purposes each yearshall be the amount incurred/realised.

Where land is on lease, the rental shallbe allowed for tax purposes in line withSection 24 of CITA.

Lease of building: Where the building is on operating lease or finance

lease, our existing tax treatment (FIRSInformation Circular No. 2010/01 dat-ed 12th April, 2012: Guidelines on TaxImplications of Leasing) shall beapplied.

Sale and Leaseback Transaction thatResults in a Finance Lease:

The sales and leaseback transactionsshall be treated separately for tax pur-poses and relevant tax provisions shallapply. This position is based on theprovisions of FIRS Information Circu-lar on Lease of 12th April, 2010 (Guide-lines on Tax Implications of Leasing).

The disposal shall be treated in linewith the provision of Schedule 2 of CITAon capital allowance, balancingallowance and balancing charge.

Gain or loss on disposal shall besubjected to the provision of CapitalGains Tax Act. The finance lease shallbe treated separately in line withthe above guideline on finance lease.

Yearly amortisation of profit on dispos-al into profit or loss shall be treated asnon-taxable income.

Sale and Leaseback Transaction thatResults in an Operating Lease:

The existing tax treatment on dispos-al, operating lease, VAT and CapitalGains Tax shall be applied on thetransaction. For tax purposes, thehigher of sales price and market priceshall be taken as the disposal value.

The actual lease rentals paid shall beadopted for tax purposes.

IAS18 – REVENUEIn the case of deferred consideration

where imputed interest is embedded insales revenue, the entire value on theinvoice will be subjected to tax.However: Where the interest elementis clearly shown and separated on theinvoice, VAT should not apply to theinterest portion.

Where the interest element is clearlyshown and separated on the invoice,the interest element shall suffer WHTat the rate of 10 percent.

For income tax purposes, both thesales and financial/interest incomeconstitute taxable income. The taxpayermust always disclose clearly thecomponents of deferred consideration.

The turnover to be subjected to taxtreatment under loyalty program shallbe the payments made for both theconsumed and deferred portion of theservices. Revenue shall be recognizedfor tax purposes at the point of realiza-tion. VAT will be charged on totalinvoice value, whether consumed ordeferred. Where there is exchange ofdissimilar goods, the revenue shall beseparately treated for tax purposes.Where there is exchange of similargoods or services, the exchange will notbe regarded as a transaction whichgenerates income for tax purposes. Thetransaction will not be viewed as a caseof supply of goods or services.

,

,

COMMISSIONING: From left, Mrs Adrianne Nwagwy,Head,Sustainability& Resposibility Guinness Nigeria Plc; Engr. Adegboye Benedict Ifedayo, As-sistant General Manager, Production, South; Hon. Sheriff Anipole ExecutiveChairman, Ikorodu Local Government with Mr Sesan Sobowale, Director, Cor-porate Relations, Guinness Nigeria Plc and Ramakrishna Varma, BusinessDevelopment Manager, WaterHealth Nigeria Limited at the Commissioningof the Guinness Nigeria funded Safe Water for Africa [SWA] Project,SaboIkorodu Lagos. PHOTO BY AKEEM SALAU.

The turnover tobe subjected to taxtreatment underloyalty programshall be thepayments madefor both theconsumed anddeferred portion ofthe services


CMYK

E-Commerce

Stories by JONAHNWOKPOKU

Nigeria’s online

r e t a i l e r ,Konga.com,

has said that the marketplacewhich it plans to unveil inMarch will drive economicdevelopment in Nigeria.

Konga said that the platformwill revolutionise the waybuyers and sellers interact,with a model that is moreconvenient for the seller andmore attractive to the buyer.It will create unlimitedopportunity for the Nigerianentrepreneur, small businessowner or even large businessowner; and will serve as thegreat equaliser/nationbuilder, boostingemployment, trade andpowering economic growthand development in Nigeria.

The retailer noted that it hasalready changed the rules ofparticipating in e-commercein Nigeria through severalnovel offerings to customers,major investments ininfrastructure and widespreadeducation on the merits andconvenience of online retail. It explained that, “Kongais building a marketplace thatwill exponentially drive theadoption of e-commerce in thecountry through unrestrictedyet structured participation,as well as novel platformsecurity measures andguarantees that ensurebuyers and sellers areprotected and rewarded forparticipating.

“This new offering whichwill be launching in thecoming weeks will cater to the

Konga coming with new marketmodel to spur development

needs of not only bigwholesalers/ retailers, buteven the road side/ markettraders in Surulere, Alaba,Aba, Onitsha, Kaduna, as wellas enterprising individuals

across the country withamazing products but nohope of expansion orscaling.”

Konga’s Chief ExecutiveOfficer, Sim Shagaya,

explained that the newplatform was inspired bythe imperative forcontinuous innovationand the need to offersocially valuable services.

He said, “About a yearago, we realised that forour services to be reallyvaluable to society, we hadto build a platform foranyone, not just Konga, tosell and prosper. Welaunched this platform toa limited number of sellersand in that time, we havelearned how to build atruly revolutionaryNigerian onlinemarketplace. Today we arepleased to invite allNigerian businesses -great or small, designer orfarmer, producer or trader,sole proprietorship orlimited liability, - to signup to this new platform -Konga Marketplace.”

He added that theinternet is changing retailaround the world, and thewinners will be those thatembrace the internetrevolution. Konga.com,he said, will provide thetools, awareness andsecurity for entrepreneursand businesses acrossNigeria who wants tobenefit from the immensebenefits of expandingtheir businesses online.

CapitalSquare has

unveiled ap l a t f o r m

targeted at fledglingentrepreneurs to showcasetheir products and introducetheir services to targetmarkets.

CapitalSquare is amembership-based co-working space in Lekki,Lagos, with a goal to make iteasier for small businesses todo business by providingaffordable office space,business resources, andlearning and networkingopportunities, therebyhelping them grow in theprocess.

Tagged the ‘Demo Day,’CapitalSquare said, theplatform will provideopportunities for individualswho have created newproducts or services toshowcase their products inorder to raise awareness andgrow customer base.

Speaking about theplatform, Founder and ChiefExecutive Officer of

CapitalSquare unveils platform toboost entrepreneurship

Capitalsquare, ModupeMacaulay said that theinaugural edition of theprogramme which will becoming up by March willinvolve three entrepreneurspresenting their projects infront of the media, investors,thought leaders in the startupecosystem, and otherentrepreneurs, in order toraise awareness, grow theircustomer base, increaseinvestors’ interests andreceive feedback on theirproducts.

“Demo Day is something wecame up with because wewanted to give somethingback to the startup and SMEcommunity here in Lagos.There are so many businessesthat would go much further ifonly more people knew aboutwhat they were doing, sowe’re trying to make thathappen,” she said.

“We’re still working on theagenda, but basically, we’llhave three people come up togive a short presentation anddemo of their products,

followed by a question andanswer session from theaudience. There will alsobe time for networking,and hopefully people willleave having learntsomething new, andhaving made somevaluable contacts,” sheadded.

She explained that theevent aims to, “Bringtogether, creators, whocould be buildinganything from a mobileapp to a broadwaymusical, to talk about theircraft and showcase theircreations. She said,“Entrepreneurs areencouraged to send inapplications to presenttheir projects. Threepresenters will be selectedat each edition of DemoDay, which will come upevery other month, and aselection of the otherapplicants will also beshowcased on theCapitalSquare blog andthrough media partners.”

UNVEILING: From left, Mr Tajudeen Fatai, Store Manager, Swatch; Mr Segun Ogunleye,Marketing Communication Manager, Smart Mark and Mr Usime Martin, Brand Manager,Swatch at the unveiling of 2014 Swatch Valentine collection held at Ikeja Shopping Mall,Alausa, Ikeja, Lagos on Saturday. Photo by Lamidi Bamidele

MTN Nigeria,Ericsson inmanagedservices deal

ERICSSON has signed afive-year managed serv-

ices agreement with MTN, aleading telecommunicationscompany with presence in 21countries in Africa and theMiddle East, for its Nigeria op-erations. MTN Nigeria is thelargest mobile operator in Ni-geria and West Africa with over45 million subscribers. Thisagreement not only extendsEricsson’s managed servicesleadership across Africa, butmakes Ericsson MTN’s largestmanaged services partner onthe continent.

Under the contract, Ericssonwill assume full responsibilityof the management, optimiza-tion and field maintenance ofMTN’s network infrastructurein Lagos, Abuja, Enugu, PortHarcourt and Asaba, whichrepresents 75 percent of thenetwork. With Ericsson takingover the day-to-day operationsof the network, MTN is able tofocus even more on its corebusiness; providing a superiorcustomer experience across allits network offerings.

Mr. Michael Ikpoki, ChiefExecutive Officer, MTN Niger-ia, says: “This engagementwith Ericsson is a logical stepforward in our strategy execu-tion and is consistent with ourcommitment to deliver a boldnew digital world to our cus-tomers across Nigeria. Leavingthe management and mainte-nance of our infrastructure toEricsson will allow us to focuseven more on adding value tothe customer experience on ournetwork. We consider this part-nership a joint investment inthe growth of the telecommu-nications industry in Nigeriaand a great opportunity tostrengthen ICT knowledge andspecialization locally. Ericssonis the global leader in the man-aged services space and theright partner for us.”

MTN will retain ownershipand full control of its networkassets and continue to haveresponsibility for strategic de-sign and planning, as well asequipment purchasing deci-sions.

Jean-Claude Geha, Head ofManaged Services at Ericsson,says: “This agreement withMTN, Nigeria’s largest tele-com operator, marks a mile-stone for Ericsson in Nigeriaand in the region. In ManagedServices, we bring our globalexpertise and experience tobenefit our customers and ulti-mately their subscribers’ expe-rience of the network.”


CMYK

Facebook to buyWhatsApp for$19bn

Facebook Inc will buyfast-growing mobile-

messaging startupWhatsApp for $19 billion incash and stock in a landmarkdeal that places the world’slargest social network closerto the heart of mobilecommunications and maybring younger users into thefold.

The transaction involves $4billion in cash, $12 billion instock and $3 billion inrestricted stock that vestsover several years. TheWhatsApp deal is worth morethan Facebook raised in itsown IPO and underscores thesocial network’sdetermination to win themarket for messaging.

Founded by a Ukrainianimmigrant who dropped outof college, Jan Koum, and aStanford alumnus, BrianActon, WhatsApp is a SiliconValley startup fairy tale,rocketing to 450 million usersin five years and addinganother million daily.

“No one in the history of theworld has ever donesomething like this,”Facebook Chief ExecutiveMark Zuckerberg said on aconference call onWednesday.

Samsung’s newGalaxy to featurebigger, sharperdisplay

Samsung ElectronicsCo. will release a new

device with a larger 5.2-inchscreen and sharper displaythan the current Galaxy S4.

The new phone, with animproved battery and camera,will be released about thesame time as an upgradedGalaxy Gear smartwatch.Samsung may start sellingthe new phone for less thanprevious models in the Sseries after encouragementby at least one wirelesscarrier.

Samsung is addingfeatures to the latest versionof its most-popular device asit tries to fight stalling growthfor premium smartphones,new models from Apple Inc.and a plethora of Chinesecompetitors selling devicesfor as little as $100. Theworld’s biggest smartphonemaker is releasing its newphone, which may be calledthe S5, after sales of thepredecessor S4 unveiled lastyear fell short of analystestimates.

F/PADVERT


CMYK

F/PADVERT


Advertising, Media& Marketing

CMYK

So you want to excel in service? Perhaps, you evenwant to build or manage an organisation that’s

known for its excellence in service – an organisationin the mould of Marriott Hotels, Nordstrom, SouthwestAirlines, Mayo Clinic and the rest. Well, I have someword for you. Over the next few weeks, we will look atsome principles – I call them laws – you need toremember and apply to your advantage. You may,however, wish to ignore or break the laws – at yourown peril (needless to say).

Let me state that what I intend to share with you islargely drawn from my book, 20 Universal Laws ofService Excellence. I believe there are more than 20principles that should guide our quest for excellencein service; but I also know that any organisation thathas fully internalised these 20 is already on its way! Idon’t know of any organisation that won’t find the lawsrelevant.

The customer is the Boss

In customer-focused companies, the products(services) and processes are tailored to suit the

needs of the customer. Whatever the organisation doesis geared to pleasing her. This, no doubt, is the firstlaw in business. Business exists only when there is acustomer for the organisation’s products and services.So the customer is the ultimate boss.

Your frontline is the company

In service, as in many other things in life, the partrepresents the whole. Whoever the customer meets

does not only represent the company, but is thecompany. To the customer, if you’ve seen one, you’ve(probably) seen them all. The pitfall, however, is thatan otherwise excellent service organisation may haveits reputation sullied by the indiscretion of just oneemployee.

Service is driven by organisationalculture

In organisations built on service excellence, thereis a deliberate effort to create a culture that is

conducive to service. For instance, it is going to bevery difficult to deliver exceptional service if theorganisational culture dis-empowers employees suchthat for every single decision they must seek approvalfrom superior officers. It is also going to be difficult toserve customers well if people see marketing andcustomer service as departments rather than roles forevery employee of the organisation.

External service mirrors internalservice

Until employees have a taste of good servicewithin the organisation, it is a tall order to expect

them to deliver it to customers. If you care for them,they most likely will care for your customers. If yourorganisation is a great place to work, employees aremore likely to make your customers feel great too. Truthis that you cannot get excellent service from a bunchof poorly paid, overworked, maltreated, untrained andunmotivated employees. There is usually a correlationbetween the way employees feel about their place ofwork and the kind of service they render to customers.

Customer experience matters morethan company communication

Prospects may sometimes rely on corporatecommunications and physical evidence to form

impressions about the organisation, but actualcustomers rely more on their previous experience. Tocustomers, experience with the company counts muchmore than the carefully (some say, seductively) craftedcommunications from the company. Their perceptionof service quality and the value delivered by thecompany carry more weight than anything the companyhas to say.

Laws of Service

Excellence – Part One

As the marketplacegets competitive forconsumers,’ loyalty

gets fiercer, lifestyle positioningbecomes an increasinglypopular approach amongbrand managers, especially incategories where functionaldifferences are hard tomaintain. By connecting withconsumers on a more personallevel, contemporary brandmanagers hope to break freefrom aggressive competition,thereby carving a niche fortheir brands through lineextension that speaks tospecific lifestyles.

Other brands like 5 Alive,Fumman that toe the TVC lineto reach their target audiencehave been able to carveexpected niche for themselvesthrough the deployment ofbroadcast commercial.Fumman projecting itself asthe natural fruit juice tells muchabout the closeness ofconsumers to nature.

However, as lifestyle brandsget recognition through theexperiences they areassociated with, their broadcastcommercials are usuallydeveloped to draw attention tothe positive emotion that islikely to accrue throughexperiences with the brand.For instance, the new radio andTV commercials of ChivitaActive from the House of ChiLimited resonates on the

TV commercial as instrument ofbrand growth

Stories byPRINCEWILL EKWUJURU

benefits of consuming ChivitaActive by people who desire ahealthy and active lifestyle.

Although the brand canequally be enjoyed by all, it istargeted more at people whoare eager to do more and getmore out of life. This is becausethe brand contains six citricfruits juices and vitamin C. Thecitric fruit juices are Orange,Grapefruit, Lime, Tangerine,Lemon and Mandarine.

The radio commercial says itall: “Some days, you really justwant to stay in bed to do somuch in so little a time, just getactive with Chivita Active.”The commercial went on to saythat Chivita Active helps theconsumer get more out of life.

You work better, play harder anddo so much more and successfollows… so you want to stay active,drink Chivita Active.

The 60-second TVC opens withan executive meeting and moveson to a workout on the basketballcourt before panning on to agrueling photo shoot at a modelingsession and ending the day on thedance floor. The TVC depicts anactivity-packed day that issustained by the perfect choice ofrefreshment for an active life style– Chivita Active.

Undoubtedly, individuals whoenjoy active lifestyles oftenparticipate in energy-sappingactivities that include meetings,recreation sports, outdoor hobbiesand an active social life. Speakingon Chivita Active’s slogan,‘BeActive – Do More”, ManagingDirector of CHI Limited, Mr.Deepanjan Roy, said: “One thingwe have always tried to do isprovide our consumers with acomplete & balanced range of fruitjuice offerings, so that we areready to fulfill their needsirrespective of whatever they maybe, from the product or the lifestylestandpoint.”

LAUNCH: From Left: Retail Customer Marketing Manager,Nokia West & Central Africa, Olajide Adeyemi; Head ofMarketing, Nokia West & Central Africa, Debbie Shepard;Consumer Engagement Manager, Nokia West & Central Africa,Mayor Esiaba at the Nokia/Maggi Food Photography Night heldto celebrate the launch of Nokia Lumia 1520 and Lumia 1320during the Social Media Week at Terra Kulture in Lagos.

The argument bymarketing bookmakers

that 97 percent of brandextensions don’t survive thefirst six months of their launchinto the market cannot befaulted.

Many examples abound asposited by marketingprofessionals. NigerianBreweries, NB Plc, producersof the latest lager beer in themarket: Star Lite, says they areaware of the failures of mostbrand extensions, but that awell laid strategic marketingplan has been mapped out togive the new beer a strongholdin the market, even as thebrand has taken note of the pitfalls of other brand extensionsin the market.

The 4 volume alcoholic beerbrand introduced a new crispy,truly refreshing and less fillingbeer as described by NBMarketing Director, WalterDrenth, during the trade

Star Lager becomes ‘Lite’

launch of the new beer inLagos. Drenth further said thatthe beer is with an innovativetemperature sensitive label,and a special cold protectioncrown cork which locks incoldness inside the bottle.

The age long TelevisionCommercial, TVC, code

named, ‘Doctor’ of Forte oilPlc, formerly AfricanPetroleum, AP, has been re-introduced into the lubricantsegment of the market withprospects to push sale of itsflagship engine oil brands:Super V and Visco 2000.

The new TVC is a shift awayfrom the former whichshowcased a car that went toa doctor, which is a fuelingpump machine to complainedof its medical condition,where eventually thesupposedly doctor diagnosed

Forte Oil rejigs ‘Doctor’ TVC to push products sale

it to have engine fatigue.The doctor prescribed Super V

and Visco 2000 engine lubricantwhich eventually relived it of itsmedical condition, a situation thatprompted other vehicles torejoice with it as it comes back tothe road. Other of the productsinclude Gear Oil 90, Gear Oil140, Diesel Oil, Synth 10000 andHeavy

The animated TVC reveals thepower of the products to bringvehicles and generators back to lifeif used to service them, and theremoval of slug from motor engine(s), a process that helps keepengines new and long lasting.


Email:[email protected], [email protected] page:www.lesleba.com/blog2Website: www.lesleba.com

Tel:0805 220 1997

Business & Economy

CMYK

Omoh Gabriel - Group Business EditorBabajide Komolafe - Finance EditorClara Nwachukwu - Energy EditorPeter Egwuatu - Head, Capital Market

Yinka Kolawole - Snr Bus. CorrespondentFavour Nnabugwu - Insurance CorrespondentGodwin Oritse - Maritime CorrespondentGodfrey Bivbere - Maritime CorrespondentMichael Eboh - Capital Market Reporter

Oscarline Onwuemenyi - Energy ReporterFranklin Alli - Industry/Agric. ReporterEbele Orakpo - Energy ReporterIfeyinwa Obi - Maritime Reporter

Rosemary Ohuoha - Insurance Reporter

CONTRIBUTORSPrincewill Ekwujuru - Media/Marketing

Naomi Uzor - IndustryProvidence Obuh - Micro FinanceLAYOUT - Graphics Department

The increasing length ofqueues lately in petrolstations nationwide

may suggest that the erstwhileliberal availability of petrolmay be threatened. Consequently, many carowners now inevitablypatronise the ‘black market’ inspite of the higher prices onoffer, rather than waitendlessly in frustration atpetrol stations! Invariably,marketers have blamed theirinability to meet demand onshortage of supply; indeed,Major Marketers Associationhad earlier warned that theywere yet to receive importslicences this year. Additionally, the ability of oilmajors to import seems to beadversely affected byextended delays in thepayment of subsidy refundson their fuel imports. Themarketers have argued thatdelayed payment threatensthe sustainability of theirbusiness, as the already thinmargins become criticallywhittled down by heavyinterest payments on bankloans obtained for fuelimports. Indeed, acombination of the precedingfactors has always inducedfuel scarcity over the years.

In the above event, therehave been several calls for theurgent turnaroundmaintenance of the fourexisting federal governmentrefineries and the need foradditional refineries to bebuilt by both the private andthe publicsectors. Nonetheless, inkeeping with thisadministration’s policy topromote higher efficiency andreduce wastage, byprivatizing erstwhilecorruption-laden andinefficient public utilities,government has refrainedfrom contemplating directfunding or involvement in theestablishment of newrefineries, and has instead,

,

,

Will more and efficient refineriesreduce fuel prices?encouraged investors toestablish private plants. Incidentally, by 2008, over 18licences had been issued toinvestors who had expressedinterest in building newrefineries. For example, inApril 2008, a Guardiannewspaper editorial reportedNNPC’s Alhaji AbubakarYar’Adua’s allegation that “16out of 18 companies that werelicensed in 2008… merelyused the licences as a launchpad to seek contract for crudeoil exports; they were notcommitted to buildingrefineries”.

Later in May 2011, thefederal government and

some Chinese investors alsoundertook to build additionalrefineries in Kogi, Lagos andBayelsa States respectively. Regrettably, so far, there is noapparent progress on thisproject. Later still, in July2012, the Minister for Tradeand Investment, SegunAganga, endorsed aMemorandum ofUnderstanding (MOU)between a partnership ofprivate United States andNigeria companies with thefederal government. Underthis MOU, six refineries wereto be constructed in modularforms within 30 months, at acost of $4.5bn; each refinerywould process 30,000 barrelsof crude oil daily, withexpected total output of about30m litres of fuel every day. (See our article “Six NewRefineries, But Not YetUhuru” of 13/7/2012).

Regrettably, once again,almost 24 months after thesaid MOU, there is nothingon the ground to indicate that

the project has actuallycommenced. Observers ofthis development havesuggested that the prevailingregime of subsidized fuelprices was actually the majorimpediment to these privateinvestors’ aspirations, as theusual delayed payments ofsubsidy would inevitablycripple the sustainability ofthe project.

In view of the foregoing,therefore, it came as a surpriseto most Nigerians that inspite of the perceivedimmovable hurdle ofsubsidies, Africa’s richestman, Alhaji Aliko Dangote,announced plans to establisha fertilizer and petrochemicalplant with a complement ofrefineries in Ogun and Ondostates with the princely costof about $9bn.

The ensuing question oneverybody’s lips was why theevidently business-savvyAliko Dangote would stake somuch on a project whereothers have feared to thread,because of the spectre ofsubsidized fuel prices. See

our article “Refineries:Dangote to the Rescue?” ofJune 10, 2013www.lesleba.com.

In an interview withThisDay’s Simon Kolawole inSeptember 2013, Dangotehowever, noted that “With orwithout deregulation, there isnothing stopping anyone frombuilding a refinery; I am nota marketer. All I will do isbuy crude oil at the marketprice, refine and sell tomarketers at the marketprice.

It is marketers that willdeal with subsidy! If

government continues tosubsidize, marketers can buyproducts from us and thencollect the subsidy fromgovernment…. Don’t forgetthat when they go to foreignrefineries to import petrol, theybuy at the market pricesbefore coming home to claimsubsidy payments!” Indeed,in view of the attraction of theobvious potential of thisstrategy, Dangote earlier thismonth, also announcedanother plan to buildadditional refineries withinthe Lekki free trade zone inLagos State.

Ultimately, we wouldcertainly have increasinglymore refineries that wouldmore than cater for localconsumption, with amplesurplus for export to otherAfrican countries andelsewhere worldwide. Thecritical question, however, iswhether or not more andefficient refineries wouldmean lower fuel priceswithout subsidy componentdomestically? The answer isa clarion no! At least, not

with the existing frameworkwhere a depreciating nairarate of exchange wouldautomatically translate intohigher fuel prices.

Thus, ultimately, domesticfuel price levels may only fallby a small margin of about10%, from the imported brandas a result of savings from seafreight cost of imports. Thismay not be welcome news tomost Nigerians, particularlythe trade associations, whocanvass for more governmentrefineries because of theirperception that fuel priceswould be much cheaper withlocal production.

Certainly, a 10 percentreduction on locally producedfuel will not make significantdifference to currentsubsidized prices; besides,with the awareness of thepublic’s sensitivity to anyincrease in fuel pricesgovernment may be reluctantto revive the social tensionscaused by almost 100 percentfuel price hike in January2012. In reality, additionalprivate refineries may notdrastically reduce the currentalleged annual subsidypayments in excess of N2trillion.

However, I haveconsistently argued for manyyears that fuel subsidypayments will only beeliminated with a strongernaira, which can becomepossible, if the CBN’sexchange rate strategy loyallydefends the naira, byreducing the self-inflictedburden of surplus cash on theeconomy, whenever the apexbank increases money supply,when it substitutes fresh nairasupply for monthlydistributable dollar revenue.

A projected eight millionconsumers will be

sampled by Dufil Prima FoodsIndustries this year with varyingflavours of Indomie noodlesnationwide, as part of thecompany’s efforts to continuallyensure objective consumerfeedback and satisfaction.

This projection came about asa result of the company’s desireto surpass last year’s 5,000,000consumers sampled last year.

Speaking on thisdevelopment, the Head of

Dufil to sample 8m consumers in 2014

By PRINCEWILLEKWUJURU

Marketing, Dufil Prima FoodsPlc, Mr. Manpreet Singh,affirmed that the companyintends extending thesampling to the entire geopolitical zone in the countrynamely: North-Central, North-East, North-West, South-East,South-South and South-West.

He further stated that theintent behind the samplingexercise is targeted at creatingexcitement and increasing theemotional connection betweenthe brand and its consumers, asa way of encouraging a storeexperience in the home ofconsumers.

“Sampling is a regular andcontinuous exercise that Dufilembarks on with the purpose ofstrengthening the existing bondbetween consumers and thebrand. This serves as a feedbackmechanism that affordsconsumers the opportunity tofreely savor and experience theunique taste of indomie noodleswhile also expressing theirsincere opinion about thebrand,” said Mr. Singh. “In thelong run, this will furnish uswith valuable informationtowards making consumer-tailored adjustments to ourproducts.”

In reality,a d d i t i o n a lp r i v a t erefineries maynot drasticallyreduce thecurrent allegedannual subsidypayments inexcess of N2trillion

financial vanguard 24 february 2014

Documents

cbn governor

cbn act2007

cbn astransactions

cbn andclear evidence

cbn act hasbeen

chairman of board

weakcorporate governance

board approvalgovernor