NIGERIA: Seplat Named WEF Global Growth Company

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Read Time:2 Minute, 43 Second
The World Economic Forum (WEF)  has named SEPLAT Petroleum Company Development Company Plc,  a Global Growth Company.
 
With this recognition, SEPLAT joins a vibrant community of the world’s most dynamic, influential and high-growth companies.
 
Commenting on the rationale behind SEPLAT’s recognition as a Global Growth Company, David Aikman, Managing Director and Head of the New Champions at the World Economic Forum said “When choosing entrants to our Community of Global Growth Companies, we assess companies on their business model, annual revenues and growth rates, executive leadership and market position.
 
SEPLAT is a dynamic group with clear potential to shape the future in its relevant business sectors and so is a perfect fit to our GGC community.
 
The recognition is coming a few weeks after the company’s very successful and over-subscribed IPO, which raised over $500m on both the Nigerian and London Stock Exchanges.
 
The company has also just announced the signing of a fifteen-year gas supply contract with an Independent Power Plant underpinning  the expansion of Seplat’s domestic gas business and  the company’s organic growth.
 
This contract will leverage SEPLAT's additional $300m investment in gas to boost power supply.
 
SEPLAT has, in the space of 4 years, steadily emerged as a global brand and player owing to its phenomenal growth trajectory, experienced management and strict adherence to Corporate Governance Best Practices which the company underlines as the bed rock of its existence and pivotal to the sustainability of its growth aspirations.
 
Chairman of SEPLAT, Dr ABC Orjiako, who is a participant at the World Economic Forum, Africa taking place in Abuja,  said “the award is both recognition and validation of the significant strides we have made at SEPLAT, which has led to our clear emergence as a highly focused oil and gas company heralding a new era in the Nigerian oil and gas industry. We are humbled by the recognition which we believe will spur us on to greater achievements.”
 
SEPLAT Petroleum Development Company Plc, the operator of the NPDC/ SEPLAT Joint Venture (OMLs 4, 38 and 41) , is a publicly quoted Nigerian Exploration and Production independent company.
 
The company listed simultaneously in Nigerian and London Stock Exchanges in April 2014.
 
With an average gross gas production of 99 million standard cubic feet per day in 2013,  and Oil & Condensate production of 60kbpd, Seplat projects to triple its gas production by end 2016 through massive investments in processing and delivery infrastructure.
 
SEPLAT is also targeting gross operated oil production of 85 Mbopd from its existing assets by the end of 2016.
 
The Community of Global Growth Companies (GGC) is composed of rapidly growing emerging multinationals  and  founded in late 2007 and currently has more than 360 members globally from all sectors.
 
Members of the GGC Community convene every year at the Chinese-hosted Annual Meeting of the New Champions and at the World Economic Forum’s regional meetings, and collaborate through the private area of the World Economic Forum's website, an exclusive online networking platform for business and government leaders.

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Anthony Claret

Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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NIGERIA: NIRA Moves to Address Hiccups in Domain Name Registration

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Read Time:3 Minute, 30 Second
The Nigeria Internet Registration Association (NIRA) has identified possible causes of  the slow adoption of the country's code top level domain name (ccTLD) otherwise known as the dot ng domain name  and is  taking measures to tackle the challenges.
 
President of NIRA, Mrs. Mary Uduma, who spoke with THISDAY in Lagos   shortly after NIRA's Annual General Meeting (AGM) said: "Issues have been raised at the AGM concerning the challenges that most Nigerians are facing in the adoption of dot ng domain name. We have identified some of the challenges and we are going to address them without delay."
 
According to her, some of the identified challenges include: arbitrary pricing of the domain name by registrars; fear of insecurity surrounding the hosting and usage of the domain name; and the class status syndrome of most Nigerians that shy away from using the domain name.
 
Although the dot ng domain name registration grew more than 50 per cent from 10, 000 to over 16, 000 last year, Uduma said the registration figure was not enough compared with the country's population size of over 160 million as well as with the large population of Nigerians that are registered with foreign domain names like .com, .co.uk., .za, .ca, among others.
 
The Nigerian domain name is the country's identity in the cyberspace, through which people communicate on the internet. Each country is identified with its unique domain name and the hub is built and hosted in the country of origin.
But Nigeria, before now, had no domain name, the reason why several Nigerians have foreign domain names. But NIRA, the body in charge of domain name administration for Nigeria, is making efforts to encourage Nigerians to register with the country's domain name.
 
Addressing some of the identified challenges, Uduma said the security issues raised, was a thing of perception, insisting there is enough security built around Nigeria's domain name.
 
“The .ng is as secured as the .com and most of the infrastructure used in running .com is also used in running .ng. So I do not see any reason  Nigerians still prefer foreign domain names to our own domain name, that is supposed to identify Nigerians and their mails on the internet,” Uduma said.
 
NITRA's vice president, Mr. Sunday Afolayan, who also allayed security fears surrounding Nigeria's domain name, said: "Security is a game of protection and we are making efforts in ensuring that our domain name is as secured as foreign domain names."
 
He, however, explained that no technology is without flaw, noting that  the efforts put in place to monitor cyber-attacks and correct them almost immediately, is what really matters.
 
He therefore, called on Nigerians to have confidence in the Nigerian domain name, assuring them that NITRA is making efforts to address every issue concerning the registration and use of .ng domain name.
 
With regards to arbitrary pricing, Uduma assured Nigerians that NIRA would work closely with all registrars to address the issue.
 
Commending Nigerians that have already registered with .ng domain name, Uduma said the total number of those registered is improving by the day, but not yet encouraging.
 
“The figure is not  much but it is an improvement  and that is the reason why we are coming up with some interventions that will encourage more Nigerians to register. We want every category of Nigerian both the low and high class, to register with the country's domain name,”Uduma said.
 
She added, "We need more awareness campaign. Last year we had the Switch to .ng Campaign where we targeted government officials and that campaign compelled government to issue a directive that all government staff must register with the dot ng domain name. That alone helped in boosting the registration exercise but we are not there yet and we need more Nigerians to register with .ng domain name. We have accredited several registrars and they are out there registering people."

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Anthony Claret

Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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Osotimehin: WEF Provides Opportunities for Different Sectors of Nigeria’s Economy

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Read Time:8 Minute, 38 Second
The Executive Director of the United Nations Fund for Population Activity (UNFPA) Prof. Babatunde Osotimehin speaks with Damilola Oyedele on the potential of hosting the World Economic Forum (WEF) and other issues
 
Is Nigeria’s population of 171 million, according to UNFPA figures, an asset or an albatross?
Given what government’s position is on the matter of population and what investments the country has started to make for the issues of young people; their education and health, then it is an asset. But that is space to watch because more needs to be done to make sure that the asset potential is realised. The UNFPA is working with the Nigerian government on a programme called demographic dividend to make sure Nigeria can continue to make that investment. Nigeria today subsists on its natural resources, its extractive industries are what sustain its economy but the people are the greatest asset the country has. Young people would be Nigeria’s greatest and most sustainable asset going forward, so government is making efforts to ensure that young people between the ages of 10-24 years have what they need to become productive agents of change within their communities. We are putting together a programme with the World Economic Forum (WEF) to demonstrate Nigeria’s potentials and how they can be harnessed.
 
What is the demographic dividend programme all about?
 
It is a situation where when you look at the structure of a population, and the number of people who are dependent on the adults is so much larger than those who are producing, then there can be no prosperity. It means what you are doing is bearing the children, having to send them to school, feed them, clothe them and they are not productive. But when you are able to basically ensure that you have between say 20-24 entering the work place, they go to 30, 35 and are productive. Then they stimulate the economy, they are agents of change, they are economic units in their own rights, then the economy grows. That is where the demographic dividends come from. So the individual becomes that agent of change, and so the dividend is dependent on that individual.
 
 
If we do not push our population in that direction, we would end up with building schools, hospitals for people who are dependent, and we would have a small number of adults who would work their bones to sustain them. That is not sustainable; even if you have all the natural resources in the world, there is still the need to have a critical mass of people who would manage those resources. That is why the demographic dividend is important for the growth and prosperity of any country.
 
What opportunities are available for Nigeria to leverage on from the WEF?
 
There are many, Nigeria is full of potential. Nigeria must understand that the WEF coming here is giving different opportunities to different sectors of the economy, be it capital markets, in the extractive industry, and even in the human development resource. Today, we are in the most digital phase of development: Nigeria is so digital, has millions of cell phones, and the internet is one of the biggest development Nigeria has seen in the last few years. We can develop on this, and take the country to a different level if we take advantage of the various partnerships that can result from this encounter with the WEF.
 
Given the high rate of unemployment among the youth who are regarded as the nation’s greatest asset, what panacea would you recommend for the country to harness this asset?
 
What I see and what I have learnt, and what the Nigerian government told me at a meeting with the Coordinating Minister of the Economy/Minister of Finance, Dr. Ngozi Okonjo-Iweala, on this is that Nigeria proposes to take this and create a social protection floor to enable all people to take advantage. That means they would have quality education, skills development, entrepreneurship training, ability to access credit and access to health services. If you want to change the profile of a population, people must have access to information about how to control their fertility because if the population continues to grow at the rate at which it is growing, you would not be able to maintain it or have that demographic transition that you are looking at.
 
The recent rebasing of Nigeria’s economy as the largest in Africa has been described as hollow by several critics.  How can we build on our comparative advantages to ensure an inclusive economy?
 
It’s about ensuring the rights of everybody to access what they need to be who they are and attain their full potentials. Nigeria is not alone in that, there are many economies in the world, including those which are emerging economies which basically can be classified as high middle income, where the gap between the rich and the poor is really wide. In fact in the last 10, 15 and 20 years, only the top five per cent of the world has gained from the growth of the economies of the world. So the issue of inequality is global, but Nigeria needs to address that within its own framework, particularly for young people, because if you have 60 per cent of your population below the age of 35, you need to do something creative in terms of engaging them. Let us be honest, the public sector would never be able to employ everybody, the private sector would also not be able to take the excess that the public sector cannot accommodate, so we have to encourage creativity and innovation and we allow them access to credit. We should also make sure that even in failure, they are congratulated, some of them would succeed, and some would fail: that is what happened in South East Asia; making sure that the innovation which young people bring to the table is celebrated. In that sense, the economy can be grown.
 
 
For example, Nigeria has no business today importing food; we have enough land, enough technology and enough entrepreneurship among young people to do this. They need to be empowered, and be assured of the markets. We have no business importing several of the things that we use; some of the things we import can come from the petrochemicals. We need to encourage small scale and middle scale industries to ensure that the large population base would actually turn out to be our major asset. Then consumption can be encouraged.
 
Nigeria has not achieved any of the eight MDGs. Do you think there is still a chance for this, especially as regards maternal health?
 
There is always a chance. I have always been impressed by Nigeria’s commitment when it wants to do something, and I have no doubt in my mind that the government is committed to do this. We have been part of this; there was Save One Million lives project at some point. Nigeria, as a country, has invested so much in saving the lives of women and children. We at UNFPA, working with our partners are also committed to ensuring that we do this acceleration of the last 600 days of the MDGs to make sure that we reach as many communities as possible. That in itself requires us to work with communities. One of the assets we have (I want to say this with modesty), because I have worked in Nigeria, because I know Nigeria and have been to all the 774 LGAs in this country, we know what works and how it works. We are poised to engage with local Governments, community leaders and religious leaders to make sure these issues are taken on board. There is no community in the world that would like to see children die. There is no community that likes to see women die at childbirth and we can make that happen. Let me give an example of what is going on with our partners in USAID. They are working today in Sokoto and Kebbi and trying to provide very cheap simple methods with life-saving commodities. They give it to the mothers at birth, and these commodities ensure that they do not bleed after giving birth. Bleeding causes about 30-40 per cent of maternal deaths. If we can do these things, we can actually save lives. Another thing that is heartwarming for me is that with what we are doing with the USAID, we are catalysing that process. Today, six state governments are buying those life-saving commodities to distribute to their own people. So we can do it; we just need to be focused, and be out there working to ensure that they understand.
 
To what extent is the work of the UNFPA being affected by the insecurity in some parts of Nigeria?
To the extent that it is affecting everybody else. If you cannot be sure that your staff members can go to places and feel safe, that is an issue. Also to the extent that you need the people, if the people are not there, it becomes a problem. But the UNFPA also has a responsibility in these kinds of situations. We work around the world trying to make sure that women and girls in conflict areas are protected. When there is conflict and disaster, people tend to look after their houses, water supply, food security, but they do not look after security of girls and women. In those kinds of circumstances, rape and sexual violence go on. UNFPA is the agency that goes out to ensure that these do not happen. Secondly women have special needs which nobody thinks about. A pregnant woman cannot stop her pregnancy, she would have to deliver when she is due, and we at UNFPA ensure that we provide the services to look after that pregnant woman and her baby when she delivers. We also look after women because they have needs on a monthly basis. These are things nobody thinks about because there are no pharmacies and shops to buy the sanitary things that they require. We provide those things and ensure that women have dignity.

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Anthony Claret

Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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NIGERIA: Globacom Promises Improved Services as Network Overhaul Progesses

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Read Time:2 Minute, 48 Second
Globacom has assured Nigerians and its growing subscribers of improved telecoms service on its network. This promised is based on the    massive network expansion, swapping of old base stations with new ones and modernisation of existing infrastructure that are now in their final stages.
Group Chief Operating Officer of Globacom, Mr. Mohammed Jameel made this promise at an interactive session with journalists in Lagos recently.
Jameel, who spoke to journalists  in company with other top executives of the company, including its Head of Operations, Mr. Bisi Koleosho, said by the time the project is completed,  Globacom would have completely swapped old components on the network across the nation with state-of-the-art network software and hardware.
 
The Globacom network, according to him, would have 90 per cent 3G coverage, the first in the industry, making it possible for Glo data subscribers across the country to experience significant service enhancement. He added that the project should be completed by the second quarter of the year.
“We embarked upon the network upgrade as part of our 10th anniversary celebration in August last year. The expansion project is to accommodate the mass movement of subscribers into the network. The sharp increase in subscriber figures  led to the need for expansion in order to free up congestion on the network,” Jameel said.
 
He said having played a prominent role in the first telecom revolution in the country, Globacom is now ready to lead Nigeria into the second revolution, which will be an explosive ICT broadband growth across Nigeria in the next three decades.
“Globacom will be the biggest player in the second telecommunications revolution in Nigeria. We are converting every cell site in Nigeria into broadband.  We regret any inconvenience our subscribers might have experienced in the process of the unprecedented network upgrade and expansion. After rain comes sunshine. Nigerians will enjoy the massive transformation on the Glo network after the expansion and modernisation exercise," he added.
 
Speaking further on  the expansion and modernisation project, Koleosho said already  the swapping of cell sites had been completed in Abuja, Oyo state, Osun State, Ogun State, AKwa Ibom State, Port Harcourt and several parts of Lagos including Lekki, Ikorodu, Agbara and Otta. 
 
“The exercise is almost completed in Surulere and Ikeja and  efforts have been intensified to cover the remaining parts of the country,” he said.
He disclosed that the project would cover swapping, upgrade, and overhaul of network infrastructure, as well as building of new switches and construction of additional 4,000 km of optic fibre cable to complement the company’s existing fibre optic facility, which is among the most extensive private fibre networks in Africa.
 
The company’s existing 10,000km optic fibre network is also being expanded with IP MPLS and Dense Wavelength Division Multiplexing (DWDM) network to provide capacity and route protection. It will also ensure constant (24/7) connectivity.
 
The project, according to Koleosho, also includes installation of new base stations and densification of existing ones, setting up of three new call centers across the country to take care of vast increase in subscriber figures and upgrade of the radio access network which will ensure that data customers enjoy unparalleled speed and reliability.

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Anthony Claret

Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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Minister Commends MTN over Women Empowerment

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Read Time:2 Minute, 10 Second
The Federal Minister in-charge of Women Affairs and Social Development, Hajia Zainab Maina, has commended MTN Foundation, the Corporate Social Responsibility initiative of MTN Nigeria, for empowerment of Nigerians, especially the widows.
The minister gave the commendation  in Abuja at the presentation of tools of trade to beneficiary widows, under the foundation's new initiative for empowering widows tagged: “MTNF Widows Empowerment Scheme.”
 
According to NaijaAgroNet, the Widows Empowerment Scheme by MTN Foundation, is being managed by Growing Businesses Foundation and aimed at empowering widows who have existing businesses, across the six geo-political zones of the country.
 
The minister urged that such positive intervention be emulated by other organisations, especially in telecommunications sector. She pointed out that widows comprised  a significant proportion of women, ranging from seven to 16 per cent of all adult women.
 
She noted that it is regrettable that this significant section of the population is neglected in the society, especially due to their state of widowhood and the various traditional laws and customs which work against them, thus preventing them from gaining access to resources that will better their lots.
 
"Nigeria should abide by the United Nations' declaration during the 2013 International Widows Day which states that all widows should be protected by the rights established in the convention on the elimination of all forms of discrimination against women and other international human rights treaties. Equal opportunity bill and violence against persons bill presently receiving attention at the National Assembly would greatly benefit widows, when passed into law," she said.
 
Director of MTN Foundation, Mr. Dennis Okoro, said the scheme was the result of a stakeholder's workshop held in October 2011, in collaboration with the Federal Ministry of Women Affairs and Social Development.
 
Okoro  said  the workshop highlighted areas of need for widows in communities and discussed ways of empowering them to meet those needs, and that an Expression of Interest (EoI) was declared and five states, including Imo, Taraba, Lagos, Rivers and Sokoto, in addition to the Federal Capital Territory, representing the six geo-political zones of the country, were selected.
 
"After an analysis of the needs assessment forms, 226 widows were selected to benefit from the scheme," he asserted.
 
Okoro further disclosed that in adopting a micro-finance model, the successful beneficiaries were trained on business management skills and to be mentored by two microfinance institutions, namely the Lift Above Poverty (LAPO) and Development Exchange Centre (DEC) to ensure sustainability of the project.
 

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Anthony Claret

Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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NIGERIA: Operators Give Recipe for Viable Local Airline Service

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Read Time:8 Minute, 38 Second
Nigerian operators have accused government of creating a hostile environment for air transportation in the country, arguing that the inability of Nigerian flag carriers to operate large fleet and compete with world’s mega airlines is because government is yet to realise airline operation is a vehicle to the nation’s economic growth, writes Chinedu Eze
 
With passenger movement of over 15 million per annum, over 24 active airports and most active population in Africa, Nigerian airlines are at the lowest rung of the ladder when compared with major carriers on the continent.
For years, Nigerian travellers have been contributing in the sustenance of such major carriers such as British Airways, Lufthansa, Air France, KLM, Ethiopian Airlines, Emirates, Turkish Airlines, Qatar Airways, South Africa Airways, Egypt Air, Kenya Airways and many others. But Nigeria does not have strong airlines of strength and stature like the aforementioned airlines. The only airline that is hoisting Nigeria’s flag beyond its shores is Arik Air, which operates three international routes and is expanding its international destinations. 
In the last 10 years, airlines like Capital Airlines, Chanchangi, Afrijet, Associated Airlines, Bellview, ADC, Sosoliso and others have gone under and the reason is attributed to cash squeeze, bad management and technical problems.
Besides the self-inflicted problems of the airlines, operators say that competition in a viable atmosphere would have made the airlines to improve their operations if government agreed to provide the necessary incentives and legislations which other countries provide for their airlines.
 
Sustaining Operation of Airlines
One of the major problems with domestic airlines is that they do not have special lending rate from the Nigerian banks as it is done in most countries that know that airline business provides the platform for the growth of the economy. Nigerian airlines have over the years clamoured for single digit, long term loans and wooed government to legislate this request, which would provide the key that will keep the airlines in business. But so far, this has not been done, so airline seek for loans along with traders on the same double digit interest rate. Airlines’ profit is always on low margins so it will be difficult for a Nigerian airline to sustain and service such loans with high interest rate.
Amos Akpan of Capital Airlines noted that after so many tightening measures on lending and policy adjustments on airline funding; all scheduled domestic operators cannot close their end of year account report with a positive balance sheet. 
“They do publish audited accounts that show positive balance sheet. However, at the time the account was closed, how much was outstanding to: aviation fuel companies, aircraft lessors, the Federal Airports Authority of Nigeria (FAAN) bills, the Nigerian Civil Aviation Authority (NCAA) bills, navigational bills, spare part suppliers, interest on loans. Very ironic that a company declares profit yet owes unpaid debts from same operations sometimes inclusive of staff allowances and salaries.”
Akpan, who is the CEO of Capital Airlines which had stopped schedule services, noted that if one produces a tin of milk at the cost of 10 naira, one cannot sell it at eight naira and claim to be in business. “This is the simplest illustration to summarise the economic operations of Nigerian airlines.”
He explained that the ticket price of an hour’s flight is 25,000 naira. After paying taxes and surcharges the airlines go home with 10,000 naira from which they pay loan with interests, salaries, maintenance, aircraft lease, training etc.
“How profitable is their operations? They carry 90 per cent of the capacity they provide from Lagos to Abuja Monday to Wednesday mornings. They return from Abuja to Lagos same mornings of Monday to Wednesday with 40 per cent of same capacity. Same trend happens between Thursday and Friday evenings from Abuja to Lagos. Same aircraft needs to be utilised beyond that route to meet the minimum required hours of usage. Movement of passengers follow the same pattern on the Kano – Abuja, Port Harcourt – Abuja. The developed routes replicate this pattern in Nigeria. Every airline operating today except (overland) based their feasibility and routes schedule on this pattern.” 
Akpan remarked that the consequence of this pattern is that the airlines provide excess capacity on particular routes in specific times. Five airlines provide 680 seats on the Lagos to Abuja route on Monday morning between 7am to 9am to carry 350 passengers amongst themselves. 
“This is the number one reason people cite for current operators to merge,” he said.
The CEO analysed the domestic passenger market and noted that there is minimal growth because the market recycles passengers as follows: Ministry and parastatal workers on official trips to supervise, monitor or attend duties across cities in Nigeria; company officials chasing contract sales or marketing across cities; businessmen chasing deals; students at res umption or close of school periods and festivity movements once a year (Easter, idil fitir, Christmas).
 
Market Growth 
Akpan said from 11commercial scheduled airlines with AOC in 1999 “we have constricted to five airlines in 2013 and there is no chaotic overflow of passengers at the domestic terminal in Lagos, MM2 or the General Aviation Terminal in Lagos (GAT) Ikeja; Aminu Kano International Airport, Kano or Nnamdi Azikiwe International Airport in Abuja? Aircraft still depart with less than 60 per cent capacity. 
“We probably are not noticing the increase in comfortable bus services on these same routes. A large number of patronage is going to these bus services. They are not safer. They are available, affordable, giving improved services to passengers. They make profits as operators. They repay bank loans. Investors have return on investments.”   Akpan said these buses fill the vacuum for local air cargo movements because they have trucks and warehouses that move goods to all cities in Nigeria and West Africa, whether perishable or time definite, adding that Nigerian aviation cargo movement is simply described as a one – way traffic, which is haul in cargo from abroad and ferry the cargo aircraft back empty, for example, taking CBN cargo and dropping it in a domestic airport and returning empty.
“Take cargo charter to drop in any west or central African city and return empty. The mango or pineapple in Yola is yet to break the Asian and Indian monopoly in Europe or Gulf States. Some Indians in Dubai offered to take our natural pineapples at 50 per cent less than the price of their chemicalised pineapples. Worse still, I should deliver and return to collect money after sales. We can’t get our investors to buy bulk; get adequate storage and break their monopoly. Instead they buy estates in Dubai where they only enter with tourist visa even as home owners. Check how foreign operators like Cargolux and DHL are exploiting our air cargo markets.”
 
Favourable Government Policies
The airline operators demand that government should ensure efficient supply of aviation fuel at relatively lower prices than what it obtains, introduce a policy that would ensure that airlines are made to pay single taxes and radically reduce charges like landing and parking. They also gave kudos to government for eliminating Customs duty on importation of aircraft and parts.
The Deputy Managing Director and Head of Flight Operations of Arik Air, Captain Ado Sanusi, applauded the policy on waiver of Customs duties for aircraft and parts, but said there are some other things government can do to alleviate the suffering of the airlines in the country.
“Part of those things besides the waiver is to look at the Value Added Tax (VAT) issue. Air transport is the only transport sector that is still paying VAT. Why do we talk about VAT? Because you will return the money to the government but it makes your fares go up, and it will make the passengers not to fly; and if passengers don’t fly, you don’t make money.”
Sanusi said all Bilateral Air Service Agreements (BASA) must be done in conjunction with the airlines, so that the airlines can enter into commercial agreement with the foreign airlines. This he said would help the domestic airlines to enter into code share agreements with these foreign airlines.
“But the moment you have the BASA being skewed against the domestic airlines (in terms of multi designation of foreign carriers); when you talk to the foreign airlines or when you are looking for code sharing, the international airlines will not talk to you because they have got all they want from your government.
“If I am supposed to fly into two points in your country and I am flying into four points; then I don’t need to code share with the local airline to transport my passengers to the airport of the outbound flight. These are the things that need to be looked at; deliberate policies should be made to protect local carriers,” Sanusi said.
The airlines and industry observers went further to insist that the Federal Government should make deliberate efforts to grow domestic airlines by introducing the Fly Nigeria Act with code share principle which would make it compulsory for anybody travelling on government expense to patronise Nigerian airlines.
The codeshare clause would encourage foreign airlines to partner with Nigerian airlines so that the foreign carriers can take the Nigerian passengers beyond the destinations the domestic carriers travel to. For example, if Medview is on codeshare with Alitalia, the Nigerian carrier could sell Alitalia ticket to a passenger travelling to Milan but the passenger will travel with Alitalia flight.   There are so many benefits on that which may include training, supporting equipment, employment and revenue sharing.
Travel expert, Ikechi Uko, said that government should give the airlines grant to help them boost their operations or it should introduce the Fly Nigeria Act with code share clause to empower them to grow and compete with foreign airlines. 
It is obvious that government holds the key for the growth of the airlines, from ensuring strict operation through strict regulation to supporting them through policies and funding, government must draw out a master plan for the airline as it did for the infrastructural renewal of the airports.

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Anthony Claret

Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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NIGERIA: Achieving Reliable National Electronic Identity System

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Read Time:7 Minute, 14 Second
Recently, the National Identity Management Commission was issued an international security certification. Kunle Aderinokun writes that by the certification, it has scaled a major hurdle in its implementation of a globally-acceptable national electronic identity card
 
 
The British Standard Institute (BSI) recently awarded the Nigeria Identity Management Commission (NIMC) ISO/IEC27001. ISO/IEC27001 is one amongst a family of standards that have to do with the security and protection of information. 
International Standards Organisation (ISO) and International Electrotechnical Commission (IEC) are foremost global rules agency. ISO has thousands of guidelines that touch on almost all aspects of human life while IEC is the conformity assessment body for all fields of electro-technology. 
The international security certification has given fillip to the implementation of the national identity management project
 
An elated NIMC Director-General, Mr. Chris Onyemenam, stated at the award ceremony in Abuja penultimate Wednesday that with the certification, the commission had crossed one more hurdle in the process of issuing the national identity smart card in the country.
He expressed the hope that the milestone achievement would help Nigerians overcome cynicism which they ‘justifiably’ harboured against the past national identity management schemes.
Onyemenam, who noted that “if you want to be in the global arena, how well your systems and processes conform to international best practices matters,” was optimistic that “over time you pass on this culture and you can bring back confidence.”
 
BSI, which performed the audit and accreditation around ISO/IEC27001 for NIMC has over 100 years of experience on global best practice during which time has helped over 72,000 organisations ranging from top global brands to small ambitious businesses in 150 countries.
In fact, as the organisation which between it and the United Kingdom’s Department of Trade and Industry (DTI) originated the ISO/IEC 27001, which the group first published in 1995, BSI is one of the few organisations in the world that understand standards from start to finish.
Shahm Barhom of BSI, who oversaw the information security process for NIMC said during the ceremony that he was in Nigeria to provide the assurance to Nigerians that the commission had the competences required to safeguard critical national information asset for the country. 
According to him, people see BSI as the police department that oversees standards in the world and NIMC was one of the first national institutions in Nigeria to get the ISO/IEC certification. 
Experts at the epoch-making event posited that attaining the highly-rated ISO/IEC 27001:2005 was a triumph for the commission in particular and Nigeria as a whole. They noted that the national identity management authority had by the certification demonstrated the capability to secure critical national assets.
 
The experts included Adedoyin Adunfa of Digital Jewels, the main consulting firm for the certification process; as well as Anthony Okocha of Forbs Consulting Limited; Tunde Coker of Emerging Markets Payments; and Ubong Awah of International Finance Corporation, the private sector arm of the World Bank.
They also enthused that the emerging identity management sector, which NIMC is creating in the country and associated processes and technologies on which the National Identity Management Systems (NIMS) are based in the country, were at the same standards and in some cases even higher than elsewhere in the world. 
 
Accreditation and certification, which BSI performed, have several stages. The first and preliminary step which is informal involves checking the existence and completeness of key documentation such as the organisation’s information security policy.
At this stage, international auditors familiarise with the organisation and its audit process. During the formal and more detailed second stage, auditing is about compliance and tests against the requirements ISO/IEC 27001. The auditors seek evidence to confirm that the management system has been properly designed and implemented. 
The third stage involves follow-up reviews or audits to confirm that the organisation remains in compliance with the standard. 
 
While sharing the news of the certification with the media ahead of the ceremony, Onyemenam, explained: “This certification is based on the audit of what we have put in place to ensure secure management of personal information and privacy of individuals. So, it means we have kept faith with our promise to meet global best practice in the roll out of NIMS infrastructure. Our services and infrastructure can be relied upon by the world, simple.”
According to him, “We are talking about unique identification of Nigerians and legal residents which must be relied upon by all.” 
 
The NIMC boss noted that the certification, which the agency received amongst other international rules and guidelines backing the operation of NIMC, would help to sanitise the image of the country around the world.
He stated that the best way to go about improving the image of the country and ensure that the world takes Nigeria serious is through technology, because technological measures are concrete and verifiable. 
 
“We have put in place an infrastructure that is technology-driven and based on a verifiable global best practice and this has been so acknowledged by an international standards institute,” he pointed out, adding: “We are serious about the image of Nigeria and playing by global rules of engagement for such acceptance about issues around the ‘dignity of the Nigerian International status’.” 
According to him, the new national e-ID would attract positive recognition and respect for Nigeria and Nigerians especially at international gateways and land borders. He noted also that his agency was putting in place the conditions for a global recognition for the NIMS. 
In this way, Nigerians have taken their fate in their own hands more than ever before as the effort is entirely driven by Nigerians. In other words, NIMC has arrived as a nation with a genie and verifiable identity token that can be relied upon by the world.
 
Responding to an enquiry, Onyemenam said the national e-ID card was in the horizon.
“We have again proven that something good can come out of the ‘House of David’, he said. 
“The world is about to receive a unique card from Nigeria. For the first time the national e-ID will have a payment solution, something that is unprecedented in the world and that’s why so many critics believed it can never happen. 
 
“We will launch the card as soon as the authorities approve a date. We then start issuing it immediately. We have arranged for the ‘post issuance’ of the other stakeholder agencies’ applets. We have delivered on the third component of the NIMS. The card is the one everyone wants to see. We will give it to you but it should be noted that it’s not even the most important aspect of the NIMS,” he added. 
 
Onyemenam continued: “The fourth component is being implemented and would be launched ASAP (as soon as possible). And the fifth, which is the harmonisation and integration will receive a boost as soon as government policy on this is revised and announced. As the president said we should all consolidate our identity data capture needs and verification services and the NIMC has a basic infrastructure everyone can key into. The era of data capture proliferation is coming to an end. 
“Very few public sector institutions have this kind of certification. We opted for this as part of credibility-built measures as we know so many people have lost faith in the ability of the public sector to create a basic and support infrastructure to get this identity management issue behind us. Given the strong citizen apathy and cynicism we inherited from the outcome of past efforts, especially the SAGEM ID Card project, we needed to do more than the ordinary to convince Nigerians that we are up to the task. 
 
“Like Albert Einstein once said: ‘You cannot solve your problems with the same thinking that created them.’ Dimensioning our problems to include bench marking our methodology to international best practice and ensuring this independently by a world class institution is an important strategy for us to win back the confidence of even our enemies and detractors. 
“We now need to achieve the GVCP (GigE Vision Stream Protocol) to silence them forever and face the more daunting task of sustainability. For me the single mindedness of purpose bears fruit when things like this come true.”

About Post Author

Anthony Claret

Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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Nigeria’s Top Banks: How They Rank

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Read Time:15 Minute, 44 Second
Zenith Bank leads in profitability,  shareholders’ fund; First Bank in assets
 
With the 2013 full year results of most of the quoted banks in the public domain as at the weekend, a clearer picture of the banking industry leaders has emerged, reports Festus Akanbi
 
Last year was characterised by intense competition in the banking industry amidst a harvest of regulatory headwinds which eventually took toll on industry performance by the time the results started to make their ways to the public domain.
In spite of the regime of tough regulatory measures put in place by the Central Bank of Nigeria essentially to reduce cost of banking and the attendance reduction in banks’ income streams, THISDAY checks from the 2013 full year results of quoted financial institutions released so far showed that a number of banks were, to the admiration of their stakeholders, still able to put up sterling performances to retain their pre-eminent positions in the industry’s ranking.
 
Using indices like total assets, profit before tax,  gross earnings, customers deposits and  shareholders’ funds, front runners in the Nigerian banking industry (Tier-1 banks) remain Zenith Bank, First Bank GTBank, UBA Plc  and Access Bank. 
However, among the Tier 2 banks, the contention were banks that showed promises in their delivery and the names include Skye Bank, Fidelity and Diamond Bank respectively.
 
Profitability
In the area of profitability, Zenith Bank emerged the industry leader, declaring N110.59billion as profit before tax (PBT). In the second position is GTB which recorded a PBT of N107.09billion while First Bank came third with a PBT of N91.346 billion.
In the fourth position was UBA with N56 billion in profits after tax, followed by Access Bank in the fifth position with a PBT of N44.9 billion and Diamond Bank with N32.1 billion as profit after tax in the sixth position. Stanbic IBTC  recorded N24.6 as PBT to come seventh. FCMB came eighth with PBT of N18.2 billion, Skye Bank followed  with N17.13 billion and Ecobank Nigeria which declared a profit before tax of N10.53 billion came tenth. Next was Sterling Bank with N9.31 billion, and it was followed by Fidelity Bank, Union Bank and Wema Bank with profits after tax N9.08 billion, N4.2 billion and N1.9 billion as profit after tax respectively.
 
Shareholders’ Fund
Using banks’ shareholders’ fund to measure performance, Zenith Bank emerged the leader with N509.3 billion and it was followed by First Bank with a shareholders fund of N471.8 billion. GTBank came third with N332.35 billion and in the fourth position is Sterling Bank with N321.74 billion.
UBA came in the fifth position with N227.7 billion, while Union Bank came sixth with N188 billion. Access Bank was in the seventh position, posting a shareholders’ fund of N172.5 billion, Fidelity Bank with N167 billion to come eighth. In the ninth position was FCMB which recorded a shareholders fund of N144 billion, Diamond Bank with N138.85billion was in the 10th position. Skye Bank which recorded a N94 billion shareholders fund came 11th position and Wema Bank with N41 billion while Ecobank occupied the bottom of the table with N41 billion.
 
Total Assets
Using the 2013 results, First Bank ranked first in terms of total assets, where it recorded N3.9 trillion followed closely by Zenith Bank in the second position with total assets of N3.14 trillion. United Bank for Africa Plc, which recorded N2.6 trillion, came third, while GTBank was in the fourth position with total assets of N2.1 trillion.
Access Bank, which shot into Tier 1 category last year, was able to maintain its fifth position with N1.8 trillion in total assets. In the sixth position was Ecobank Nigeria Plc with N1.146 trillion. Diamond Bank, Skye Bank and Fidelity Bank Plc came in the seventh, eighth and ninth category with N1.5 trillion, N1.11 trillion and N1.08 trillion in total assets respectively.
In the number ten positions was FCMB which declared a total assets of N1.008 trillion. Sterling Bank which recorded N909.4 billion total assets came 11th, Union Bank with N882 billion was 12th while Stanbic IBTC and Wema Bank took the 13th and 14th positions respectively.
 
Gross Earnings
First Bank also emerged as a clear leader using gross earnings as an index to rank the banks. It posted N396 billion to push Zenith to the second position with a gross earnings of N351.4 billion in 2013. UBA was in the third position. Its gross earnings totaled N264 billion. GTB came in the fourth position with its gross earnings put at N242 billion. Access Bank recorded N207 billion to occupy the fifth position. Diamond Bank came sixth with N181 billion while FCMB which declared N131 billion came seventh. In the eighth position was Ecobank with a gross earnings of N177 billion,
Skye Bank and Fidelity shared the nineth position with N127 billion gross earnings while Union Bank was in the 11th position with N121 billion. Stanbic IBTC came 12th with gross earnings of N111.2 billion, Sterling which posted N92 billion in gross earnings came 13th while Wema Bank came 14th.
 
Customers Deposits
In terms of the chunk of customers’ deposits in their kitty, First Bank also came top with N2.9 trillion in customers’ deposits for the year under review. It was followed by Zenith Bank with N2.27 trillion. UBA grossed N2.22 trillion to take the third position while GTB was pushed to the fourth position with N1.44 trillion. Access Bank was in the fifth position with N1.33 trillion deposits for the year while Ecobank Nigeria came sixth with N1.118 trillion in deposits.
Leading the pack of the Tier 2 banks was Skye Bank which had N996 billion in deposits and it came in the seventh position, followed by Fidelity Bank in the eighth position with customers’ deposit of N806 billion. FCMB was ranked ninth with a deposit of N715 billion, followed by Sterling Bank, which came up in the 10th position with a deposit of N570.51 billion. Union Bank was in the 11th position with a deposit of N480 billion, followed by Stanbic IBTC –N416.3 billion in the 12th position; Diamond Bank with N1.206 billion is in the 13th position and Wema was at the bottom of the table with a deposit of N217.7 billion.
 
Numbers Fell
However, a common denominator among these banks is the fact that various numbers fell within the range of expectations, a development attributed to a regime of regulatory headwinds which have continued to affect the growth potentials of the Nigeria banks in recent times.
The tough regulatory environment where the banks operated in the year under review, according to chief executive officers of some of the banks, included the decision of the Central Bank of Nigeria to raise cash reserve requirements on public sector deposits to 50 per cent from 12 per cent, reduction and removal of a number of fee income lines such as ATM and CoT charges as well as the increase in AMCON levy from 0.3 per cent to 0.5 per cent, amongst others. In spite of these challenges however, a number of banks were still able to raise the hope of their stakeholders by maintaining good ratios although slight reductions were recorded in some aspects.
 
Bankers Explain
One of such banks with promising outlook is Access Bank Plc. Giving an insight into the bank’s 2013 results, its Group Managing Director, Mr. Herbert Wigwe, said: “Access Bank’s 2013 earnings were impacted by several regulatory changes in the Nigerian banking sector. The bank’s balance sheet structure during the period further constrained growth and limited the yield on our earnings asset. However, despite the difficult operating environment, the bank grew its loan book to position it for improved earnings, while driving deposit mobilisation from targeted segments to further reduce cost of funds. We also saw an increase in our non-interest income. As the business continues to grow, risk management remains fundamental to the bank’s philosophy evidenced by the reduction in the NPL ratio.
“I am particularly excited about the next phase of the bank’s evolution. Having articulated our five year strategy plan, we began execution by re-aligning our SBUs to ensure that customer service and delivery are improved at all levels. With our businesses realigned, we are now placing greater emphasis on providing services geared towards women and SMEs in Nigeria, as they underpin the next phase of economic growth. Infrastructure financing is another key focus for us going forward. Throughout the next phase, we will continue to invest in technology to ensure that we build a customer experience that is both innovative and sustainable.”
There is no doubt that an analysis of the results released on the floor of the Nigerian Stock Exchange validated the bank’s capacity for sustainable growth.
The results showed an increase in the bank’s deposit base from N1.201 trillion to N1.33 trillion, an 11 per cent growth over last year’s figure while its loan book rose impressively by 33 per cent, from N609 billion in 2012 to N810 billion in 2013, demonstrating the bank’s resolve to empowering critical sectors of the economy.
The performance for the financial year under review is a strong testament to Access Bank’s positioning as one of Nigeria’s Tier 1 banks, the bank said in a recent statement.
A glance through the numbers also revealed that the bank’s earnings grew to N206.7 billion from N206.4 billion in 2012.
Similarly, the bank recorded an improvement in its cost of funds from 4.5 per cent to 4.6 per cent, while Non-Performing Loans ratio decreased to 2.7 per cent from 5.0 per cent, which is owed to the bank’s enhanced risk management framework.
Also, the bank posted a Profit Before Tax of N44.9 billion, which is a 3.4 per cent decrease compared to the N46 billion recorded for the corresponding period in 2012.
Group Managing Director, Zenith Bank Plc, Mr. Godwin Emefiele, who spoke on the bank’s performance in 2013 said, “Our 2013 results testify to our consistency in delivering superior performance and returns, driven by our innovative processes, cutting edge technology and committed staff. Despite the increase in the cash reserve requirement for public sector funds, Zenith Bank’s total revenue grew to an unprecedented level of N351billion boosted by a 21 per cent increase in interest income. Profit before tax witnessed an impressive growth of 8.3 per cent to N110.59 billion while total assets increased by 21 per cent to N3.1 trillion. Expectedly, profit after tax declined by 5.33 per cent as a result of increase in income tax charged in the current year compared to FY2012, arising from the commencement of tax waivers granted by the Federal Government on income from Bonds and Treasury bills in 2012. Our focus on creation of competitively priced high quality risk assets, is evident in the year on year growth of loans and advances to N1.2 trillion (25.7% growth) with a marginal increase in cost of risk from 0.94% to 0.97%.”
Another bank which has, in spite of the prevailing tough operating conditions, put up an impressive performance is Guaranty Trust Bank Plc.
For its 2013 operations, the bank’s total assets and contingencies hit N2.1 trillion, an improvement over its 2012 figure put at N1.7 trillion. The bank recorded a profit after tax of N90.02 billion for its 2013 financial year as against N87.30 billion posted in the preceding year. It however recorded N47 billion as its fees and commissions, an improvement over N45.4 billion in 2012.
For United Bank for Africa Plc, a reduction in profit after tax was attributed to the headwinds that shook the banking industry in the year under review. It recorded a profit after tax of N47 billion which was less than the 2012 figure put at N55 billion. However, the bank recorded a marginal improvement in its gross earnings which was N265 billion in 2013 whereas N220 billion was the 2012 figure.
UBA’s total assets for the period were N2.6 trillion while the figure for the preceding year was N2.3 trillion. It grossed N50 billion as fees and commissions in 2013 as against N48 billion in 2012.
All our businesses contributed to the strong Gross Earnings growth, said Phillips Oduoza, Group, Managing Director and Chief Executive Officer of the UBA Group.
 
“We achieved a good result despite a tough operating environment, demonstrating the strength and resilience of our people and their dedication to implementing our plans in 2013,” he explained.
Giving an insight into the business behind the bank’s earnings, Oduoza said, “Customer-focused, Corporate Banking and Treasury led business model drove the bank’s success for the year.”
He also identified the bank’s African focus, shared responsibility of empowering African businesses through its African network, as well as capital and commitment to excellent service delivery as other drivers of business growth.
Oduoza assured that the UBA Group had the capacity to continually evolve and come up with new ways to provide high end and value adding products and services to its customers to enable it to thrive in a tough economic environment noting that the bank’s management remain committed to achieving set targets for 2014 by maintaining a disciplined approach to the execution of agreed strategic initiatives.
 
Pressure on Tier 2 Banks
A random scan through the results showed that mostly affected by the dip in profit margin in 2013 was the Tier 2 banks. Analysts were of the opinion that these were the banks limited scope in retail business.
Diamond Bank which had in 2012 posted a profit after tax of N27.4billion recorded an improvement in its 2013 operation as it declared N32 billion.
It also recorded a marginal improvement in its total assets which hit N1.5 trillion in 2013 as against N1.17trillion in 2012. Its fees and commission were put at N30 billion whereas N26.5billion was the figure posted in 2012. For its gross earnings, the bank recorded N181.1 billion up from N139 billion in the preceding year.
Fidelity Bank Plc is another bank that experienced dip in its profit after tax which was put at N9.3 billion in 2013 from N21.4 billion in the preceding year. Meanwhile, it recorded an increase in its total assets, posting N1.1trillion, against N914 billion recorded in 2012. Its gross earnings for the period were N127 billion but the figure for 2012 was N119.14 billion.
In the case of Sterling Bank Plc, its modest gain in the area of profit after tax in 2012 which produced N7 billion was improved upon in 2013 as the bank recorded N8.2 billion. Its total assets for 2013 were put at N909.4 billion as against N708 billion in the preceding year. Gross earnings was N92 billion in 2013, the figure for 2012 was N69 billion.
First City Monument Bank Plc declared a profit after tax of N16 billion in the period under review. In 2012, it posted N15.2 billion. Its gross earnings rose from N117 billion in 2012 to N131 billion in 2013. It recorded N15.2 billion as fees and commissions in 2013, a slight rise from N15 billion in 2012.
The bank’s total assets grew from N909 billion in 2012 to N1 trillion in 2013.
The story is the same for Skye Bank which declared a profit after tax of N16 billion whereas N13 billion was the figure declared in the preceding year. Total assets grew from N1.07 trillion in 2012 to N1.11 trillion in 2013.
Stanbic IBTC was not left out in the regime of suppressed performance as it posted a profit after tax of N21 billion in 2013 whereas N10.2 billion. Its total assets were N763 billion in the period being reviewed while the 2012 figure was N677billion. Their gross earnings was put at N111.2billion in 2013 as against N92billion in 2012.
 
Return to Profitability
Year 2013 was significant for Wema Bank Plc as it returned to full profitability having recorded a profit before tax of N1.9 billion for the year ended December 31, 2013 as against a loss of N5.9 billion posted in 2012. The return to full profitability is coming on the heels of the successful completion of the bank’s N40 billion Tier 1 capital raising exercise in third quarter(Q3) of 2013.
A breakdown of the results showed that Wema Bank ended the year with a total operating income of N20.9 billion in 2013, up 68 per cent from 12.5 billion in 2012.
Non-interest revenue rose 25 per cent from N5.6 billion to N7.1 billion, while credit impairment charge improved from N4.9 billion N1.3 billion.
Consequently, profit before tax stood at N1.9 billion, while profit after tax was N1.6 billion, compared with a loss of N5 billion in 2012.
A further analysis of the results indicated that the bank ended the year with a total assets of N331 billion, up from N246 billion, customer deposits improved from N174.3 billion to N217.7 billion, while net loans and advances to customers rose 34 per cent from N73.7 billion to N98.6 billion.
Commenting on the bank’s performance, managing director of the institution, Mr. Segun Oloketuyi, said the improved performance followed concerted efforts in implementing the first phase of the bank’s turnaround project, despite the increasingly competitive and highly regulated operating environment.
“Our transformation plan, Project Leap; a short term growth project with a target of rapidly increasing our market share in our niche segment of retail and SME has started to yield positive results and the bank is on the path of sustainable growth,” he said.
According to him, the bank recorded improvements in profitability and an increase in customer deposits on the back our retail and commercial businesses.
“The capital raising exercise we concluded in 2013 has also increased our capacity to do business and ability to withstand economic shocks.
The bank remains committed to improving operational efficiency and focused on containing operating expense growth.

About Post Author

Anthony Claret

Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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NIGERIA: Stock Market Option as Tool for Resolving Income Inequality

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Read Time:6 Minute, 12 Second
Nigeria’s rebased nominal Gross Domestic Product (GDP) may have fallen short of meeting expectations in terms of adding value to the pocket, nevertheless it has among other things raised questions on the need for income redistribution in the economy, using the capital market as a veritable instrument, James Emejo writes
 
Nigeria finally emerged the 26th larger economy in the world and Africa’s biggest market going by the size of its nominal GDP but with income inequality still posing a major challenge.
By implication, the total monetary value of its GDP growth in 2013 was estimated at about N80.2 trillion (about $509.9 billion).
But since the new rebasing figures were announced, Nigerians, particularly the common man, had struggled to ascertain the immediate benefit of the positive economic indicators to their well-being with regards to job creation, poverty alleviation and economic empowerment.
Most observers were particularly bewildered that despite the accolades from the exercise, there were no statement to suggest any immediate improvement in living standards.
 
This was partly the reason why the apex capital market regulator, Securities and Exchange Commission (SEC), recently invited two experts – Statistician General of the Federation and Chief Executive, National Bureau of Statistics (NBS), Mr. Yemi Kale, as well as renowned analyst and Chief Executive, Financial Derivatives Company Limited, Mr. Bismarck Rewane, to the 2014 SEC Nigeria’s Learning Series themed: “The Rebased GDP and its Impact on the Nigerian Capital Market”, in an effort to bring the implications of the rebased outcome home to to the average Nigerian.
 
The gathering was also to explore the relevance of the stock market in the aftermath of the rebasing exercise.
However, in trying to explain the mismatch between the rebased figures and reality, the NBS boss had said it was rather erroneous to link GDP growth with job creation and poverty reduction.
According to him:”The growth in GDP is not synonymous with job creation. It is expected that as the economy grows, people’s income rise and their demand for goods and services increase. As a result, producers increase output and employ more people so that employment increases.
“However, though jobs are being created, the jobs may not be enough to reduce unemployment or poverty. This is the challenge of non-inclusive growth, which occurs when an economy that is greatly endowed with human labour (population) actually employs more capital-intensive production processes rather than labour.”
 
Kale said though developing countries are known to have higher and faster GDP growth rates than developed countries “The fact that a country has a higher nominal GDP than the other does not in itself suggest that one country is ‘more developed’ than the other, since development encompasses a broader set of measures of human progress than GDP, which is strictly a measure of economic output. However, GDP (or output) growth is necessary for development. When output rises, producers’ profits increase, government tax and revenue rise and, if deployed appropriately to building physical or social infrastructure, one can expect to witness tangible development progress.”
 
The NBS boss further argue that the issue of non-inclusiveness of growth is compounded by the new structure of the economy which showed that services sector which constitutes over 50 per cent of nominal GDP but provides the bulk of employment opportunities to foreign countries from which services were merely imported and consumed without a balance of output on the Nigerian side.
 
Moreover, he explained that the economic activities which significantly contributed to the GDP growth were often undertaken by a fewer sectors and companies, implying that contracts are awarded and executed by the same kinds of persons who influence GDP results and sometimes use capital-intensive method for production rather than labour- intensive mechanism.
The resultant impact of this is that only those who benefitted from government contracts get richer and the economy grows even when more Nigerian are out of job because technology and machine are used to production output.
 
Interestingly, it was further revealed that of all the companies that currently contribute significantly to GDP growth rate, none of them is listed on the Nigerian Stock Exchange, a development which hampers income distribution in the economy.
Yet, the rebased GDP estimates showed income inequality remained at an alarming rate in the country, fueling fears it could lead to a revolution as only the rich continue to get richer at the expense of an expanding and jobless population.
Notwithstanding, Director General, SEC, Ms Arunma Oteh, said the capital market has a critical role to play in wealth creation and distribution adding the rebased outcome had exposed the challenge of unequal distribution of income.
 
She said the rebasing has started an important national conversation about the significance of national output and how it affects the ordinary citizen.
Meanwhile, Rewane said it had become necessary to build and sustain investor-confidence adding that it had also become critical to develop a high productive population in order to improve living standards.
 
“It’s not all about population, it’s about productivity,” he said.
He said the higher the income inequality in a country, the higher the crime rate, lamenting that only few people are wealthy in the country.
He said, addressing income inequality is a major issue – income inequality is a product of lack of opportunity stressing that any country with high inequality is prone to anger, instability and backlash.
In proffering a solution to income inequality, Rewane said more should be done by SEC to win the confidence of local investors to list in the market in order to encourage foreign investors.
He said: “If there’s income inequality and the people that are rich have no confidence in that market, they don’t save there and they don’t invest in that market, it becomes counter- productive. So you must win the confidence of local investors. Everybody talk about foreign investors, foreigners would not come into the market if domestic investors are not happy with that market.”
 
For instance, he said: “If we can have the NLG to list, the democratic effect of Nigerians owning and having a revenue source would have a greater multiplier effect on consumption than the government itself losing the revenue because if the revenue comes to the government it goes to the consolidated revenue account.”
 
He added that one of the ways to address the issues of kidnapping and other social vices was to ensure income redistribution and provide appropriate safety nets for the people.
Rewane said there should be proper management in terms of ostentatious display of wealth in a country with high income inequality to reduce the chances of insurrection.
Meanwhile, Kale said: “It is difficult for growth to translate to meaningful development progress, whether in terms of physical infrastructure or progress with social indicators. Rebasing the GDP is an exercise which brings the comparison of current GDP estimates to the closest picture of reality as possible. By measuring better the level of economic activity, GDP rebasing provides a more accurate picture of the economy which is crucial to informing policy makers on the current economic trends. This helps in the formulation of more- informed policies to address poverty, unemployment and human development challenges.”

About Post Author

Anthony Claret

Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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A Business Transaction Gone Awry

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Read Time:8 Minute, 3 Second
What ordinarily would have been a smooth business deal between two firms is now characterised by legal tussle, reports Kunle Aderinokun
 
When on March 1, 2007, Cross Country Limited, operator of City Bus owned by Mr. Bube Okorodudu, approached A.G. Moeller, which has Mr. Kemi Adeloye as its chairman/chief executive officer, for a finance lease facility of N140 million to acquire 40 Volkswagen Transporter buses, it never envisaged any problem.
 
Okorodudu has been in the business of selling cars and his car mart, Car Link Limited, is well known all over the country and doing creditably well. But the zeal to diversify his business, made him venture into commercial transportation and set up Cross Country. Vowed to be dominant in this endeavour, Cross Country sought the assistance of A.G. Moeller, a finance house based in Lagos to finance the procurement of its 40 VW Transporter buses. Knowing full well that commercial transportation business is lucrative and would pay back the loan facility according to schedule, Cross Country signed the agreement for the facility. Shortly after, he was made an offer of the N140 million lease facility.
 
According to the terms of the lease facility as stated in the offer letter dated March 29, 2007, obtained by THISDAY, the N140 million Cross Country secured from A.G.Moeller to purchase the 40 units of Volkswagen Transporter buses at the rate of N3.5 million each, when fully repaid would total N228 million after factoring interest and other charges. The company was expected to repay the loan over 24 months “from operational cash flow, which include but not limited to daily cash takings from commuters.”
 
However, due to unforeseen challenges, Cross Country could not meet the 24-month deadline for the full repayment of the loan with interest and other charges. But it paid N222.916 million out of the N228 million by the 30th month.
That was where the trouble started.
 
Following this payment default, A.G. Moeller, asked Cross Country to pay additional N213.142 million, which it claimed, represented default interest charges. This implies that the company would be paying a total of N436 million for the N140 million loan facility.
 
The letter conveying this development to Cross Country was addressed to Okorodudu and signed by Adeloye. It was titled: ‘Final Demand Notice for the Payment of Your Indebtedness against the Leased 40 units of Volkswagen  Transporter Bus to Your Company’
The letter, dated January 25, 2011, reads in part: “We hereby make a final demand for the payment of the sum of N213,142,447.88 (Two hundred and thirteen million, one hundred and forty two thousand, four hundred and forty seven naira, eighty eight kobo) outstanding against you as at this letter. This amount represents the arrears of unpaid rentals and other charges now due for payment.
“We therefore expect your payment instrument in satisfaction of your liability as above relevant charges will continue to apply until liquidation.”
Cross Country was shocked to read this from A.G. Moeller because having paid N222.916 million out of N228 million, it would have only N19.836 million for it to settle with interest and other charges.
 
It had before then received a letter written by Cross Country (as a response to an earlier letter the former wrote on September 16, 2010) clarifying that N19.836 million was the outstanding to be settled by the company and was committed to liquidating it.
 
“We would like to restate and acknowledge before responding to other pertinent issues raised in the said letter that the sum of N19,836,246.25 (Nineteen million, eight hundred and thirty six thousand, two hundred and forty six naira, twenty five kobo only) is the outstanding on the above lease and we are committed to liquidating it as soon as our requests to you are made available to us. It is noteworthy to state that so far, we have paid a total sum of N222,916,416.66 on this transaction as at 31st August, 2010 for transaction , whose total outlay was N140,000,000 and total repayment of N228,000,000 as agreed at the time of going into the loan/purchase agreement,” it had stated in the letter.
 
However, a petition by Cross Country had alleged that A.G. Moeller, had already, through “text messages from a purported bank manager” to the company’s chairman, threatened legal action and repossession of the 40 VW Transporter buses if Cross Country failed to pay N213.142 million as the outstanding of the loan facility. But Cross Country insisted that “technically, we are the beneficial owners of the vehicles having paid the total sum of N222,916,416.66 and are ready to pay off the balance N19,836,246.25, thus bringing the total payment on this transaction to N242,752,662.91 (Two hundred and forty two million, seven hundred and fifty two thousand, six hundred and sixty two naira, ninety one kobo).”
 
Determined to make Cross Country accede to its demands, Adeloye wrote a petition to the Nigeria Police Zone 2 Command, Onikan, Lagos, alleging that the former had stolen 40 VW Transporter buses belonging to him.
 
With the turn of event and faced with police intervention in the issue, Cross Country also decided to run a background check on A.G. Moeller to ascertain its status. The background check revealed that the company was not licensed by the Central Bank of Nigeria (CBN) to operate as a finance company.
 
A letter from the Other Financial Institutions Supervision Department of CBN dated May 23, 2011, to the Assistant Commissioner of Police, IGP Monitoring Unit, on the status of A.G Moeller stated: “we here state that A.G.Moeller Limited was not licensed by the Central Bank of Nigeria to operate as a financial institution in Nigeria.”
 
Armed with this finding, Cross Country had to cross-petition the Inspector General of Police, who ordered his Special Monitoring Team to take over the case from Zone 2 and investigate the two petitions.
 
Following its investigation of the two petitions, the Special Monitoring Team submitted its report. Part of the report reads: “That investigations revealed that, by the nature of the subject transaction between A.G. Moeller Ltd and Cross Country Ltd, the 40 units of Volkswagen buses in the question were owned by Cross Country and not by A.G. Moeller Ltd, that Cross Country cannot be held to have stolen its own buses.
 
“That investigation also revealed that A.G. Moeller was operating an illegal finance house i.e. it was neither licensed nor registered or accredited to run a finance house, which is an offence under the BOFIA Act.”
 
Based on this report, the Police brought up a criminal charge against A.G. Moeller Ltd and Kemi Adeloye, its chairman/CEO at the Federal High Court, Lagos Division on October 25, 2011 with the charge number FHC/398c/2011.
 
A.G. Moeller and its chairman/CEO were handed to the IGP Special Monitoring Team by the Economic and Financial Crimes Commission(EFCC), who had earlier arrested the AG Moeller boss upon the complaints by CBN based on their findings that the company and its chairman/CEO were illegally operating a finance house.
 
Convinced that it was innocent, A.G. Moeller and its chief executive vehemently contested the charge.
In pursuing this, A.G. Moeller and Kemi Adeloye filed a Fundamental Rights Enforcement Proceedings against the Nigeria Police, EFCC, Cross Country, Car Link and Bube Okorodudu at the Lagos High Court in Suit No. M/1175/2011, claiming N1 billion as damages. They also filed a motion to quash the case pending at the Federal High Court. Interestingly, however, EFCC was dropped from this suit by AG Moeller.
 
But on May 3, 2013, the Federal High Court dismissed the motion to quash the criminal charge against them. And on June 6, 2013, the Lagos High Court ruled that the fundamental human rights of A.G. Moeller and Kemi Adeloye were not infringed upon.
 
While the police had earlier filed criminal charges against Adeloye, EFCC also two years later dragged Okorodudu and his company to court for theft of N82.9million which, it said was the sales proceeds from 17 units of Volkswagen Transporter buses belonging to AG Moeller Ltd.
Chief Ladi Rotimi-Williams’ Chambers, the lawyers to Cross Country, Car Links and Bube Okorodudu, had earlier petitioned the EFCC Chairman, Mr. Ibrahim Lamorde, and copied the Minister of Justice and Attorney-General of the Federation, Mohammed Adoke, SAN on the whole matter. The letter was dated November 28, 2013.
 
Weeks ago, shortly after testifying in the criminal matter against Adeloye at the Federal High Court in Lagos in the suit filed against Adeloye by Police for operating illegal finance house, EFCC operatives accosted Okorodudu in the court premises and attempted to arrest him.
At a court session two months ago, EFCC requested for a bench warrant against Okorodudu, but Okorodudu’s lawyer, Chief Robert Clarke (SAN), objected to the application, insisting that there is a subsisting application by his client challenging the jurisdiction of the court.
 
At a resumed hearing late last month, the Lagos High Court sitting in Ikeja, turned down the request for the warrant of arrest, maintaining that the presence of an accused at the hearing of a preliminary objection is not compulsory.

About Post Author

Anthony Claret

Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.
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