The Petroleum Equalisation Fund (PEF) has said it is partnering the Federal Road Safety Corps (FRSC) to improve on the integrity of its online real-time petroleum products distribution monitoring programme, Project Aquila. PEF stated that Project Aquila, which is going into its next phase of implementation, with additional security features, has now caught the attention of the FRSC, which deploys similar framework in its statutory registration and monitoring of vehicular movements across the country. The Executive Secretary of PEF, Mrs. Sharon Kasali stated in a recent chat with journalists in Abuja that the agency’s seamless partnership with the FRSC will help advance its responsibilities of administering bridging claims in petrol distribution within Nigeria’s downstream petroleum sector. According to Kasali, the partnership will also help PEF close down on the possibilities of financial sleaze in its administration of bridging claims to petrol marketers within the government’s petroleum equalisation scheme. Speaking on the agency’s initial challenges with its management of the project Aquila monitoring scheme, Kasali said: “We found a gang that don’t even have tags but have licence plates and can fabricate the plates. So for one truck they could use it to collect four to five different tags. So those became challenges, but quietly we were working on solutions. And towards the end of last year we found a system that will tag the truck, mark it with a dot metric marker and then we keyed in with the FRSC. This is because the FRSC has a fantastic system that in a lot of ways mirrors what we are doing in PEF.” She continued: “When we started to come up with this idea we decided to get a different tag. Although the pressure was so much by the end of last year, we refused to give them out. So our new policy now is that we will only give that new tag to a truck that is registered with FRSC. For in the FRSC system, once you put that information in, it is registered. FRSC has now given us access to their portal, so from our office we can put your licence plate number and if you have not registered with FRSC you cannot get tag with us. Aside that, we are now going out to integrate our two systems. The challenge has now strengthened our processes well,” she added in her explanation of the new features in the monitoring process.” Kasali further explained that the partnership with FRSC will expose all fraudulent marketers, adding, “once you have that tag you cannot get it again from PEF for you cannot register twice with the FRSC. So we’ve blocked that loophole.” She explained all markers have been instructed to either mark in 2D code or on actual metal and there is a machine that will read that code and link it directly to our system. “So it is not going to be a matter of our staff saying that he saw it; we don’t want our staff to see it, we want the machine to confirm. We also found out that there are areas where loopholes exist in our registration, but right now the registration process is being fully automated.”
Daily Archives: January 21, 2014
BRIC to MINT: Fund Managers Criticise Grouping of Countries
Some fund managers have argued that returns on investments in emerging markets are not guaranteed by the grouping of countries under any form of acronym. According to the fund managers, acronym investment, putting money into small groupings of markets which often have little in common beyond a broad economic concept, is giving way to acronym anxiety. Former Goldman Sachs economist, Jim O’Neill had in 2001 created the BRIC family made up of Brazil, Russia, India and China. But Reuters noted many of the above mentioned countries and others lumped together under separate acronyms have until recently, enjoyed turbo-charged economic growth. The news agency however noted that underperforming local stock markets had led fund managers to flee what had been fashionable groupings. Assets under management in BRIC funds fell to €9 billion at the end of last year from €21 billion at the end of 2010, according to Lipper data, while assets under management in broader emerging equity funds have grown in that time. Undaunted, O’Neill recently coined a new acronym called the MINT group – Mexico, Indonesia, Nigeria, Turkey – as the next giants after the BRICs. O’Neill stressed that MINT – like BRIC before – is an economic, not an investment, concept and he explored each country’s problems as well as its potential. In another sign of acronym anxiety, HSBC had identified CIVETS – Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa, as another group of emerging markets it was tracking. Nevertheless, fund managers stressed that the appeal of acronym investment was fading, saying that such groupings do not take into account different stages of development of the countries involved and risk sidelining other promising markets. The groupings have also frequently suffered from disappointing performances of their listed companies, the main target of foreign investors. The Reuters report argued that O’Neill’s timing for creating MINT was not ideal, arguing that Turkey had been rocked by an investigation into alleged corruption following street protests last summer, while Nigerian politics are in turmoil before elections next year. Indonesia, along with other emerging economies which are running large current account deficits, is experiencing a flight of investors. “Mexico, Indonesia, Nigeria and Turkey are all very interesting countries but not much connected beyond the excuse for having an acronym,” the Chief Investment Officer of Emerging Equities at JP Morgan Asset Management, Richard Titherington said. Titherington advocated for groupings by concepts such as markets where companies offer the highest dividend yields. BRIC markets have underperformed the broader MSCI index of emerging stocks in dollar terms in the past three years, with emerging markets in turn lagging developed markets. Both the BRIC and MINT groupings focus on demographics – countries which are going to grow rapidly by the middle of the century, due to their young populations. This is an attraction of frontier economies – those which are at an earlier stage of development than established emerging markets. One such is Nigeria, whose stock market has been an extreme outperformer, doubling in value last year. But relying exclusively on demographics to make investment decisions is risky, the Frontier Fund Manager at HSBC Asset Management, Andrew Brudenell said. Instead, Brudenell urged investors to look at countries with weaker corporate regulation and where relatively low levels of goods and services are available, offering potential for growth. These factors should produce the best returns on company earnings. “Demographics are definitely one of the (investment) criteria, the others are also criteria,” Brudenell said. “We would not necessarily decide MINT are interesting countries to invest in, there are lots of other ones.” To the Chief UK Strategist at UBS Wealth Management, Bill O’Neill: “These countries do not have an independent monetary cycle. In these environments, emerging markets do struggle short term.”
Aganga Seeks Increased Support for SMEs
The Minister for Trade and Investment, Mr. Olusegun Aganga, has called for new strategies to support Small and Medium Enterprises (SME) in the country. This, the minister noted would positively impact on the growth of the Nigerian economy. A statement yesterday said the minister made the call while receiving top executives of Diamond Bank Plc. Speaking at the event, Aganga said: “The SME sector in Nigeria currently employs about 25 million people and accounts for about 40 per cent of the Gross Domestic Product. Despite recent growth in the economy, government realises that economic growth that does not reach the SMEs cannot make any meaningful impact.” He said Diamond Bank had played an important role in their support for SMEs, adding that government was willing to partner such an institution to provide more support for SMEs. While presenting the bank’s blueprint on improving access to finance to Micro, Small and Medium Enterprises (MSME), the Group Managing Director/Chief Executive Officer, Diamond Bank, Dr. Alex Otti recommended that a fund should be set up to take care of identified equity finance gaps. He also called for a risk-sharing guarantee to support the unsecured lending portfolio of banks that have established methodologies for assessing, disbursing, monitoring and collecting such loans. According to him, “Over the past five years, Diamond Bank’s strategic focus on financing MSMEs had led to significant investments in structures and processes dedicated to this market.” These, he said included building a dedicated team of MSME experts, development and acquisition of MSME lending methodology, sustainable provision of non-financial services to MSMEs such as access to market initiatives and promoting MSME focused CSR projects. “Our commitment to the MSME sector has yielded the following results: disbursement of over N100 billion gross loans to over 60, 000 MSMEs since 2009, expertise in MSME lending that is scalable as we enter new markets, recognition as Nigeria’s MSME bank, a diversified loan portfolio and access to financial services by previously excluded MSMEs,” Otti added. On his part, the Executive Director, Retail Banking, Diamond Bank, Mr. Uzoma Dozie called for a lessening of barriers to business financing in order to help MSMEs access long-term working capital.
Genesis Analytics Strengthens Risk Management Operations
Genesis Analytics The Genesis Analytics, a consulting firm that advises governments and companies in emerging markets on competition, strategy, regulation and development has announced the strengthening and expansion of its services in financial risk management. To this end, the South Africa-based firm said it recently appointed Mr. James Bernstein, a top risk professional, as Head of its new Risk Management Unit. A statement explained that the unit was established in response to the growing challenges presented by new regulatory requirements and the need for financial institutions to improve their risk management capabilities. “Increasingly active balance sheet management is the cornerstone of competitive strategy in today’s financial institutions,” Bernstein said. He noted that being able to respond to changing risks and regulations was fundamental to both sustainability and success. “The new risk management unit at Genesis Analytics will therefore be working with clients across the entire risk spectrum, leveraging off the firm’s full complement of products and analytical expertise,” the statement explained. Commenting on the expanded services offering, the Head of the Financial Institutions Practice at Genesis Analytics, Richard Ketley said Bernstein brings with him unique skills and experience. “With the appointment of James Bernstein we have added an expert on risk management to our team, right at a time when banks need to improve their ability to manage capital and liquidity in rapidly evolving markets. “Throughout Africa, regulators are calling on banks to comply with global best practice, and many do not have the internal skills or systems necessary in order to comply. This is the gap we intend to fill,” he added.
NSE Index Sheds 0.67% on Losses by Dangote Cement, Nestle
Price declines by tow heavy weight stocks, Nestle Nigeria Plc and Dangote Cement Plc yesterday made trading on the Nigerian bourse to close on bearish note. Although the number of price gainers outstripped losers, losses by Nestle Nigeria Plc and Dangote Cement made the Nigerian Stock Exchange All-Share Index (ASI) to close 0.67 per cent lower at 41, 471.28 compared to its closing level of 41,751.55 last Friday. Dangote Cement and Nestle are the first and third highest capitalised stocks respectively. At the close of trading yesterday, Dangote Cement shed N4.98 which wiped off about N85 billion from the market capitalisation of the NSE. Similarly, Nestle Nigeria Plc went down by N9.95, resulting in a decline of about N7.9 billion in capitalisation. Guinness Nigeria Plc also shed N2.30, while UAC of Nigeria Plc lost N1.00. In all, 29 stocks recorded price losses, while 35 added value. The price gainers were led by Oando Plc with N1.10 to close at N26.70, trailed by Nigerian Breweries Plc and International Breweries Plc with N1.00 apiece. UBA Capital Plc, which made some leadership changes last week continued to attract high demand by investors who are responding to the new appointments in the investment banking firm. The stock closed at N2.42 after gaining 10 kobo. Mr. Chika Mordi was last week named the chairman of UBA Capital, while a frontline capital market operator, Mrs. Oluwatoyin Sanni is the new group chief executive officer (CEO) of the company. Speaking about her plans for the company, Sanni said, “I am eager to lead a team of skilled, driven professionals into the next phase of UBA Capital’s development. We have had a solid performance across all our subsidiaries and our trustees business is clearly a dominant player in the market. With the others making solid progress towards market leadership, UBA Capital is ready to establish itself as a leading African financial services and investment banking group.”
AfDB Approves $187.3m for Power Sector Investment
The African Development Bank Group (AfDB) has approved a number of financial packages to help advance Nigeria’s reform of her electricity industry. The board of the pan-African bank recently approved an African Development Fund (ADF) Partial Risk Guarantee (PRG) programme worth $184.2 million as well as an ADF loan of $3.1 million to help grow capacity in the sector. The financial assistance is geared to support the country’s power sector privatisation programme. A statement, which was obtained from the AfDB in Abuja noted that the PRG programme was aimed at increasing Nigeria’s electricity generation by catalysing private sector investment and commercial financing in the power sector through the provision of PRGs. As expected, the PRGs will mitigate the risk of the Nigeria Bulk Electricity Trading Plc (NBET) as it fulfills its contractual obligations under its power purchase agreements with eligible independent power producers (IPPs). NBET is an entity of the federal government established to purchase electricity from IPPs under contractual terms contained in signed power purchase agreements. Its responsibilities are amongst others, to increase the comfort level of private sector financiers and commercial lenders investing in the Nigerian power sector privatisation programme. The statement added that the Director of the AfDB’s Energy, Environment and Climate Change Department, Alex Rugamba had explained the potential impact of the programme following the board’s decision. “An effective and steady power supply is critical to the sustainability of Nigeria’s development path. The board’s decision today will allow the AfDB to support the Nigerian government’s efforts to reform the power sector and position the country for sustainable and inclusive growth,” Rugamba said. The AFDB also explained that over the long term, the Nigerian PRG programme is expected to lead to increased productivity, economic activity and growth, and reduced poverty, adding that in the short to medium term, the project will yield an increase in the maximum electricity supply and consumption per capita. AfDB further stated that government statistics indicate that power outages cost Nigeria about three per cent of its Gross Domestic Product (GDP) annually, thus it is anticipated that the IPPs eligible for coverage under the programme could generate an additional 1,380 megawatts (MW) of power by 2016 and thereby contributing to increasing the population’s access to more reliable and affordable electricity from its current 41 per cent currently to 50 per cent by 2016. Nigeria, in its development objective to rank amongst the top 20 economies of the world by the year 2020, targets an ambitious 40,000MW of electricity generation which represents more than half of the current installed capacity on the African continent. The ADF PRG is a political risk mitigation instrument that covers private lenders and investors against the risk of the government or government-owned entity failing to meet its contractual obligations to a project. Since 2004, the AfDB has made ADF PRGs available to catalyse private investment in middle-income countries.
Nebo: Government’s Order on Stable Power Supply Remains Irreversible
The Minister of Power, Prof. Chinedu Nebo, has said the six months nationwide power supply stability order issued by President Goodluck Jonathan a fortnight ago to managers of the country’s electricity system will not be changed for whatever reasons. Nebo said in a statement in Abuja that nothing would be left undone in meeting up with the president’s desire to ensure adequate electricity supply to all Nigerians. He added that the government has gone ahead to compliment its efforts in improving on-grid power generation with the initiation of off-grid power supply sources within the “operation light up rural Nigeria” programme of the ministry. While admitting that a lot more still needed be done to meet up with this expectation, the minister assured Nigerians of continued improved electricity supply until government’s aspirations for constant power eventually come to reality. He said government’s immediate goal was for those already getting 12 hours of electricity supply to move up to 14 hours, others with 14 to enjoy between 16 and 18, while major cities like Lagos and Abuja will get between 22 and 23 hours supply daily. The minister informed that the target would be achieved within a few months time, adding that the ultimate goal was for Nigerians to get 24 hours of daily power supply. He noted that though the plan would still take some time, it would be realised, with the foundation already laid by government for increased generation and enhanced transmission and distribution of generated power across the country. While condemning activities of saboteurs, who he said had upped their ante in a bid to suppress the progress made in the industry so far, Nebo said: “For instance, it was unthinkable for any Nigerian, for whatever reason to go underground into the deep sea and blow up gas pipelines to stop gas flow to electricity generating plants, such as recently happened in the Escravos-Warri axis, where more than 20 holes blasted with dynamites were discovered in such pipelines buried under the sea.” According to him, the level of expertise employed by the perpetrators, suggested the amount of work and the high-profile nature of their operation and wondered why Nigerians would decide to punish themselves and their families in that manner. While justifying its initiation of the ambitious project of “operation light-up rural Nigeria” that is currently being commissioned across the country at intervals, the minister stated that the vision of President Jonathan has not stopped at giving electricity to city dwellers, but to ensure that it got to all the nooks and crannies of the country where residents never dreamt of seeing electricity in decades. “Mr. President gave us a marching order. He said he wants electricity to even be taken to places not connected to the national grid. Of course, before this administration nobody was talking about that. You had to just wait until there was national grid before you had electricity. Now, the game has changed,” Nebo said.
Worsening Wealth Gap, Unemployment Biggest Risk Facing the World in 2014
The widening gap between the incomes of the richest and poorest citizens and unemployment is seen as the biggest risk that is most likely to cause serious damage globally in the coming decade. Other risks of significant concern include extreme weather events, unemployment and fiscal crises. This was contained in the 2014 Global Risks Report released recently by the Global Economic Forum. The report includes special in-depth investigations into youth unemployment, digital disintegration and geopolitical risks. Taking a 10-year outlook, the report assessed 31 risks that are global in nature and have the potential to cause significant negative impact across entire countries and industries if they take place. The risks were grouped under five classifications – economic, environmental, geopolitical, societal and technological – and measured in terms of their likelihood and potential impact. After income disparity, experts see extreme weather events as the global risk next most likely to cause systemic shock on a global scale. This is followed by unemployment and underemployment, climate change and cyberattacks. In particular, the report considered the twin challenges facing those coming of age in the current decade of reduced employment opportunity and the rising cost of education, and also considered the impact on political and social stability as well as economic development. With over 50 percent of young people in some developed markets currently looking for work and rising informal employment in developing regions where 90 percent of the world’s youth live. However, the report offered insight into how technological and other measures can be deployed to mitigate some of this risk. Speaking on the challenges on unemployment, Group Chief Risk Officer of Swiss Re, David Cole, said: “Many young people today face an uphill battle. As a result of the financial crisis and globalisation, the younger generation in the mature markets struggle with ever fewer job opportunities and the need to support an ageing population. While in the emerging markets there are more jobs to be had, the workforce does not yet possess the broad based skill-sets necessary to satisfy demand. It’s vital we sit down with young people now and begin planning solutions aimed at creating fit-for-purpose educational systems, functional job-markets, efficient skills exchanges and the sustainable future we all depend on.” The report also noted that the deepening reliance on the internet to carry out essential tasks and the massive expansion of devices that are connected to it, make the risk of systemic failure – on a scale capable of breaking systems or even societies – greater than ever in 2014. “Recent revelations on government surveillance have reduced the international community’s willingness to work together to build governance models to address this weakness. The effect could be a balkanization of the Internet, or so-called “cybergeddon”, where hackers enjoy overwhelming superiority and massive disruption is commonplace,” it added.
Kukah: Agitation for Northern Presidency Not in the Interest of Masses
He also stressed the need for Nigerians to be wary of selfish politicians who would want to use religion to divide the people for political gains.
Speaking during an interactive session with journalists in Sokoto yesterday, Kukah maintained that the agitation for the presidency between the elite in the North and South was not about moving the country to greater heights but about politicians struggling to reposition themselves ahead of 2015.
He posited that those clamouring for Jonathan to continue in 2015 were not doing it in the interest of the nation but repositioning themselves for political gains and patronage.
"The truth of the matter is that all the grandstanding whether the president should come from the North or the South or whether Jonathan should go or whether he should stay is all about personal interest.
"At the end of the day, a lot of quarrel between politicians is about selfishness and how they allocate their resources. It is quite possible that people that are in APC now will go back to PDP and people in PDP will probably cross over to APC, it depends on where food is easy to get.
"So, the most important thing for Nigerians is to be able to discern who really represents what our aspirations are. And for those of us that are spectators, it is important to learn not to cry more than the bereaved because at the end of the day, the politicians will settle their differences," he said.
He lamented that the ordinary citizens were not getting good value for governance because of corruption.
The cleric emphasised that Nigerians were in dire need of better living conditions, education for their children, security, improved welfare as well as jobs for the youths.
He decried that politicians had continued to use religion and ethnicity to divide Nigerians rather than working hard to improve the living conditions of the people.
Kukah noted that politicians would always appeal to ethnicity, religion and region to gain attention, adding that it was the responsibility of Nigerians to be conscious and be able to see beyond the grandstanding and such divisive tendencies.
"The issues of religion and regionalism continues to pulls us back from the sense of nationhood. I think nations are united not by constitutions or political declarations but what unite nations are largely infrastructure.
"Thus, the day Nigerians can move from Sokoto to Aba on a descent railway line and road in a less threatening environment, the day Nigerians will take electricity for granted, I can assure you that such divisive tendencies by politicians will stop," he stressed.
He averred that there was no problem between Muslims and Christians in the country but bad individuals are using religion to cause chaos and anarchy in the polity for selfish interest.
"In my 30 years of personal research and reflections on the issues of religion and politics in Nigeria, I keep on saying we don't have any problem between Christians and Muslims.
"There is a difference between Christians and Christianity, the same way there is a difference between Muslims and Islam. There are bad Muslims and bad Christians and that is the result of us as human beings struggling to follow the word of God which is not an easy thing," he added.
He cautioned clerics against making unguarded statements capable of instigating violence in the polity but should endeavour to preach peace at all times.
Kukah commended President Jonathan for signing the anti-gay law, saying same-sex marriage was alien to the culture of Nigerians.
Jonathan Set to Launch N960 billion Workers’ Housing Scheme
President Goodluck Jonathan is set to launch about 600, 000 housing units valued at N960 billion ($6 billion) for Nigerian workers. As part of efforts to build affordable houses for its members, the Nigeria Labour Congress (NLC) entered into partnership with Kriston Lally EPC Nigeria Limited, a private property developer to build affordable housing estates for Nigerian workers in all the 36 states including the FCT. The collaboration of NLC with Kriston Lally EPC Nigeria Limited is to ensure a good number of the labour members have decent roofs over their heads. An agreement which will bring the housing projects into reality was signed on April 6, 2013 by Deputy President of the NLC, Mr. Promise Adewusi, and the Group Managing Director (GMD) of Kriston Lally EPC Nigeria Limited, Mr. Mustapha Madawaki. Already, President Jonathan has expressed interest in the project which will be commissioned by him in the first quarter of the year. Madawaki, who confirmed this to journalist said the NLC is awaiting President Jonathan for the immediate take off of the project, adding that the partners is set to move to site for the full commencement of the construction in Abuja. He said but for the inability of President Jonathan to fix a date for the launch of the scheme, the company would have started the construction as scheduled early this month. He, however, assured that a date will soon be fixed for the foundation laying ceremony and the launch of the project, which will signal the take off of the construction at the three sites in Abuja. “As at last week, all the equipments regarding block making and materials for the take off of the construction of the houses have been imported, but the congress and its partner said they are waiting for President Jonathan, who have accepted to personally launch the stone laying foundation of the workers’ houses. “The leadership of the NLC and Krison Lally had met the President shortly after their arrival from Greece where they tidy up the final agreement late last year, and the President had assured that the foundation laying would be done by him this January,” he said. On the promise made to Nigerian workers who have subscribed and paid their initial money that they would start to see the commencement of the houses early January, Madawaki said: “We want the president to come and do the stone laying ceremony. He had accepted to do this, but no date has been agreed as at last year. But by and large, we are ready. We are just waiting on the President to come and do the stone laying ceremony.” Speaking further, he added: “We looked at both scenarios. We are already making arrangement to move to site for the purpose of clearing and to start some aspect of the main work. Of course we expect to have some things on ground before the President comes for the stone laying foundation. He is not going to come to perform the stone laying on plain field. My thinking was to invite you in a week or two so that you can also go and see what we are doing.” He assured that the delay by the President on the stone laying foundation will not affect the December hand over date to subscribers as earlier promised, adding that the NLC and Kriston Lally will work to ensure that workers who subscribed will get their houses by December 2014. “From our point of view, we have been ready since October last year. All along, we have been waiting for NLC to fulfill its own. Everything has been taken care of. What is left now is the understanding between our bank and their bank which they are sorting out among themselves,” he added.
