Nationalised banks AMCON namesAjekigbe, Onwuka, Bello as heads •CBNmay peg naira at N155 per dollar

Tuesday, 01 November 2011
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IN exercise of part of its responsibilities, the
Asset Management Corporation of Nigeria
(AMCON) has appointed non-executive
directors for the three banks that were
nationalised recently.
However, these appointments are subject to
final regulatory approval from the Central
Bank of Nigeria (CBN).
According to a statement from the
corporation on Monday, these nominees
emerged from an exhaustive process,
which involved wide consultation and
review, stressing that it is confident that the
prospective directors are well qualified to
add significant value to their institutions.
For Keystone Bank, the chairman is Moyo
Ajekigbe. The non-executive directors are
Prince Niyi Akenzua; Adolphus Ekpe; Charles
Chidebe Umolu; Yakubu Shehu; Mustapha
Ibrahim; Brigadier-General Aminu-Kano;
Maria Olateju Phillips; Yusufu Pam and
Jacob Olusegun Olusanya.
The Mainstreet Bank is headed by Falalu
Bello. The non-executive directors are
Yabawa Wabi; Mohammed Gulani Shuaibu;
Professor Osita Ogbu; Joshua Ogunlowo;
Abdullahi Sarki Mahmoud; Shuaib Idris;
Shehu Saad; Chris Osiomha Itede and Mr Ayo
Ajayi
On the other hand, the Enterprise Bank has
Emeka Onwuka as the chairman. The non-
executive directors are Sanusi Monguno;
Ebenezer Foby; Asmau Sani Maikudi; Lamis
Dikko; John Aderibigbe; Garba Imam; Ogala
Osaka; Ismaila Shuaibu and Ezekiel Gomos.
The statement noted that with these
appointments, the boards of these banks
were now fully constituted, urging them to
set a standard for good governance and
efficiency.
Meanwhile, the Nigeria Deposit Insurance
Corporation (NDIC) disclosed in Abuja on
Monday that it had so far recovered over
N22.158 billion debt from liquidated banks.
Senate heard from NDIC that as of August
this year, the cumulated debt recovery from
liquidated banks stood at N22.158 billion.
The Managing Director of NDIC, Umaru
Ibrahim, who appeared before the Senate
Committee on Banking, Insurance and other
Financial Institutions, added that the
depositors’ fund in the 24 operating banks
in Nigeria was N12.15 trillion.
He briefed the committee chaired by
Senator Ayoade Adeseun that the sum of
N8.33 million had been recovered to date, in
respect of closed micro finance banks
whose number is now 882.
According to him, “the total assets of the 24
deposit money banks in operation as at
September 2011 stood at about N18.40
trillion, while total deposits amounted to
N12.15 trillion.
“For the 24 operating banks, as at
September 2011, the total insured deposits
stood at N1.65 trillion, while the deposit
insurance fund was N347 billion.”
On the micro finance banks he said “their
assets as at June 2011 stood at N154.34
billion, while their total deposits amounted
to N68.60 billion. The insured deposits for
the reporting MFBS as at June 2011 stood at
N51.45 billion, indicating that about 75 per
cent of funds in the MFBs are fully covered.”
Ibrahim revealed that the cumulative
liquidation divi-dend paid to the depositors
and other claimants of the affected banks
was N6.161 billion out of N16.85 billion,
representing about 37 per cent, saying that
“so far, the corporation has paid a total sum
of N1.28 million as liquidation dividends to
shareholders of three banks in-liquidation.”
He informed that NDIC had established the
exi-stence of 560,882 claims by members
of the public against 440 illegal banks
known as wonder banks and which
amounted to N106.94 billion, saying that
“the situation had implica-tion for financial
stability.”
From the figures pre-sented before the
committee, total assets of existing banks
were put at N18.40 trillion; total depositors,
44.218 million and total number of insured
depositors fully covered was put at
42,884,446.
NDIC put the figure of non-performing loans
at N688 trillion; total insider credits,
N559.58 billion; non-performing, N21.19
billion and gave the figure of female
borrowers and amount owed at 130,885
and N22.62 billion.
The total number of male borrowers and
the amount owed was put at 118,373 and
N25.53 billion respectively, shareholders’
funds put at N38.05 billion, while the total
loans figure was put at N48.15 billion.
In another development, as part of
measures to check volatility in the foreign
exchange market, the Central Bank of
Nigeria (CBN) Governor has concluded plans
to review its target band for the naira in the
next few days.
In an interview with a foreign news media
organisation in Abuja, on Monday, CBN
Governor, Lamido Sanusi, said the review
would depend on where the exchange rate
settled, as it might be moved to midpoint of
N155/N156 to the dollar, compared to its
current N150.
According to Sanusi, the apex bank’s policy
is currently to maintain the naira within
around three per cent either side of the
N150 level.

Making Nigeria ’s stable outlookmeaningful to citizens

Last week, Nigeria ’s sovereign ratings
outlook was revised to stable, from
negative, by Fitch Ratings, citing fiscal
consolidation and reforms in the various
sectors of the economy as responsible for
the new disposition.
“The revision of the Outlook on Nigeria ‘s
ratings to Stable, from Negative, reflects an
improved outlook for reforms, following
elections in April and the appointment of a
strong economic team. In addition, tighter
monetary policy and slightly better fiscal
discipline have arrested the rapid pace of
reserves decline seen in the first three
quarters of 2010, which had prompted the
Negative Outlook in October last year,” says
Veronica Kalema, a Director in Fitch’s
Sovereign group.
The Stable Outlook anticipates continued
reforms progress, a tighter budget for
2012, including progress towards scrapping
the petroleum subsidy and making Nigeria
Sovereign Investment Authority, the
sovereign wealth fund, operational.”
Nigeria ‘s key credit indicators - strong
growth, low public debt and a strong
external balance sheet - continue to provide
strong support to the rating. Fitch expects
Nigeria to sustain its high growth rates of
7%-8%, which are far higher than the ‘BB’
five-year median of 4.4%, as a result of the
planned reforms, continued recovery of oil
production and strong domestic demand.
Since then government and analysts have
been celebrating, saying it is a sign of
confidence in the ongoing reforms and also
that it is capable of increasing foreign fund
managers’ interests in her financial
instruments.
Rated entities in a number of sectors,
including financial and non-financial
corporations, sovereigns and insurance
companies, are generally assigned Issuer
Default Ratings (IDRs) on the entity’s relative
vulnerability to default on financial
obligations. The “threshold” default risk
addressed by the IDR is generally that of the
financial obligations whose non-payment
would best reflect the uncured failure of
that entity.
Fitch Ratings had lowered Nigeria ’s
sovereign credit outlook to Negative last
October from Stable, citing the depletion of
its windfall oil savings and heightened
political uncertainty, ahead of elections at
the time.
But, even as government and some analysts
are celebrating, others are asking of the
relevance of the upgrade to the citizens, in
terms of disposable income, cost of doing
business, exchange rate and interest rate
among others.
“The upgrsde is okay, but how has this
translated into improved living standard,
how has government’s large spending
positively affected my life of how have the
banking sector reforms improved access to
credit by the private sector or citizens, apart
from big corporations and high networth
individuals?”, querries Mustapha Sulaiman, a
chartered stock broker. Wale Abe, Executive
Secretary, Financial Market Dealers
Association of Nigeria commended the
upgrade but worried whether those
indicators used by Fitch would finally
translate into a better Nigerian economy.
Abe was optimistic that the finance minister,
based on her past records, would likely pull
through the implementation of those
economic reforms, but noted government’s
plans to cut down recurrent expenditure by
just 4 percent within four years, as not “just
exciting.” Ngozi Okonj-Iweala, the
Coordinating Minister for the Economy/
Minister of Finance, attributed the upgrade
to government’s determination to embark
on some strategic structural reforms,
particularly fiscal consolidation.
Okonjo-Iweala, described the upgrading
as“Great news for the country and a strong
foundation for the country to keep building
the ongoing economic reforms”.
“Fitch did this because of the medium term
budget of fiscal consolidation proposed by
the Ministry of Finance, in line with the
transformation agenda,” the economic
coordinating minister commented.
“We have to keep working hard to realise
the key priorities of the transformation
agenda – job creation and building key
infrastructure. But this positive
development gives us a strong foundation
to build on,” she added. But, some
stakeholders are of the opinion that a lot
needs to be done to make Nigerians benefit
from the positive outlook. They posited that
Nigeria should leverage on her natural
endowments to improve productivity in
other sectors and competitiveness,adding
that the current cost of doing business in
the country is still prohibitive and therefore
does not in any way make the positive
outlook to Nigerians.
Apart from the positive outlook, the agency
also affirmed Nigeria ’s long-term foreign
currency Issuer Default Rating (IDR) at ‘BB-’
and Long-term local currency IDR at ‘BB’. The
agency also affirmed the Short-term rating
at ‘B’ and Country Ceiling at ‘BB’. Fitch
Ratings had lowered Nigeria ’s sovereign
credit outlook to Negative last October from
Stable, citing the depletion of its windfall oil
savings and heightened political uncertainty
ahead of elections at the time.
The ratings agency had also indicated that it
would further lower its assessment of
Nigeria ’s economic prospects if the country
did not follow through with post-election
reforms to put the economy on a
sustainable path.
Johnson Chukwu, managing director/chief
executive officer, Cowry Asset management
limited said the rating is a good
development saying that by the time fuel
subsidy is removed and power sector
reforms take shape, Nigeria’s rating will
improve and that there are signs to agree
with the report that the outlook is stable.
Oby Ezekwesili, vice president, World Bank,
said although it progress of some sort, it
does not call for celebration when other
countries are getting triple As.
Ezekwesili, a former minister of education
and solid minerals, was of the opinion that a
lot needs to be done to make Nigrians feel
part of the upgrade.
She said, for instance, that private sector
cannot come into an economy where there
is negative rating; it cannot come into a
country where there is infrastructure
deficiency and where the cost of
transaction is too high. They will not come
into a country that has a key bottleneck and
in an environment with many hurdles in
doing business.
And so government has to focus on things
that will improve the business climate. Some
of those things include the bulk
bureaucratic reforms that have been going
on, but the most important is having a
macro economic stability that will ensure
that your fiscal activities are well ordered,
prudential and your monetary policy is such
that checks inflation, guaranty stability and
prohibits exchange rate volatility, so that
such stability will make investors take you
serious when making investment decision.
So, in order to address the infrastructure
deficit, the role of government and private
sector will become complementary.
“In terms of additional financing in an
annual basis that is needed, at least more
than $25 billion is needed to address
infrastructure; you can find private sector
and government sharing the risk that is
involved in it.”
Commenting on the fiscal problem facing
the country, Ezekwesili, said: “Well, it has to
do with fiscal consolidation of the budget.
By fiscal consolidation, we mean taking
hard fiscal responsibility in our budget. The
entire budget has to be looked at, not just
the size alone but the quality and structure
of the budget.
“There is urgent need to reduce the portion
of the recurrent expenditure of the
government, it is really urgent for
government to do so because no economy
can develop its infrastructure with the kind
of budget we have. It does not create the
basis of economic growth. The bride of
economic growth is the investment in
infrastructure and human capital for an
overall economic growth.
The part of fiscal consolidation really must
be considered. The government must live
within its means and it should not crowd
out the private sector by borrowing from
the domestic market where resources are
available for the development of the real
sector that has potentials for employment.
Commenting on the banking sector reforms
which the agency said was one of the
reasons for the upgrade, she said, “these
are early days we have to focus on both
monetary and fiscal policies. The monetary
authority has to keep focus on improving
the performance of the banking sector. The
most important thing is to ensure that credit
is revitalized in the system to reactivate the
real sector, because that is where the job
creation has to come from.
Some of the measures that are being taken
are on course but the high cost of doing
business by the Small Medium Scale
Enterprises (SMEs) is not just from the
lending aspect but from other transaction
costs, such as transport, energy, etc. So by
the time you reduce all the transaction costs
then there will be a balance when you
consider the cost of borrowing.”
MONDAY, 31 OCTOBER 2011 00:00

LAPO to issue N4bn loan in Q12012

Lift Above Poverty Organisation (LAPO)
Microfinance bank limited has disclosed that
by March next year, it would disburse about
N4 billion to its customers.
The bank in September 2011 disbursed a
total of N3.2 billion. Godwin Ehigiamusoe,
managing director of the bank who
disclosed this in an interview with
BusinessDay also said by the end of October
this year, the bank would disburse about
N3.3 billion to low income people it is
serving.
He said there are lots of poverty alleviation
initiatives in the pipeline which the bank
wishes to implement in no distant time.
Ehigiamusoe who is an acknowledged
microfinance practitioner and founder of
LAPO has concluded plans to officially lunch
a book titled, “Issues in Microfinance:
Enhancing Financial Inclusion” in Lagos.
The book which contains 15 chapters would
be presented to the public on Thursday at
the Nigerian Institute of Management at 10
am.
The event will feature Hayford Alile …… as
the chairman of the occasion, Fola Adiola,
founder of …..as the presenter and Segun
Ogidan, microfinance consultant as the
reviewer.
In the book, Godwin provides an insight
into the essential elements of microfinance.
The book examines microfinance schemes
and initiatives in Nigeria, such as the
indigenous savings and credit group, non-
profit credit scheme, so-operative financing,
government and private sector
interventions. It also explores the key
provisions of microfinance policy and
regulatory framework.
He relied on his several years of
engagement in the sector to address central
operational issues such as product
development, risk and delinquency
management, client relationship and
performance indicators management.
The author was careful to address key
issues of interest to a range of stakeholders
in the sector. These issues include the
nature and emerging features identifiable
with microfinance practice across the world,
history of microfinance initiatives in Nigeria
and common operational issues.
TUESDAY, 01 NOVEMBER 2011 00:00 HOPE
MOSES-ASHIKE

Senate summons, Okonjo-Iweala,Madueke, Sanusi, others

ABUJA— THE Senate has summoned the
Ministers of Finance and Petroleum, Dr.
Ngozi Okonjo-Iweala and Mrs. Diezani
Alison-Madueke respectively, to appear
before it and explain the alleged
overshooting of oil subsidy funds from
N240 billion appropriated in the 2011
budget by National Assembly to N1.5
trillion.
Governor of Central Bank, Mallam Lamido
Sanusi Lamido and the Comptroller
General of Nigerian Customs Service, NSC,
Alhaji Dikko Abdullahi were also
summoned by the Senate Joint
Committee probing the utilisation of
subsidy funds.
Chairman of the Joint Committee
comprised of Senate Committees on
Finance, Appropriation and Petroleum
Downstream, Senator Magnus Abe, who
briefed journalists in Abuja said the
government officials will appear on
Thursday to explain the alleged
mismanagement of the subsidy funds.
He said: “We will meet with the
government agencies involved in the oil
subsidy to get a clear brief from them as
to the origin, nature, history and
everything official about the operation
of the oil subsidy in this country.
“The invitation by the joint committee to
the government officials involved in the
management of the fuel subsidy scheme
states clearly that the committee has
resolved to request their reactions in a
written brief.
“We also said that the written brief
should explain the entire procedure for
administering the subsidy, sources of
the fund and why they have been
unprecedented rise in the quantum of
subsidy in the later part of this year
than we had at the beginning.
“Those invited include Minister of
Finance, Mrs Okonjo-Iweala; Minister of
Petroleum, Diezani Madueke, the GMD of
NNPC, Governor of Central Bank of
Nigeria, Executive Secretary of the
PPPRA, CG of Nigerian Custom Service,
the Managing Director of Nigerian Ports
Authority as well as Chief of Naval Staff.”
Abe assured that the probe would be
transparent and open for all Nigerians to
make their contributions, adding that it
was not a witch-hunting exercise
targeted at an institution or an
individual.
He said: “The meeting with these heads
of institutions and government agencies
would be opened to Nigerians. We
would meet them in an open fora and
whatever they have to say to us, people
would be privileged to hear whatever
they say.
“We want to assure Nigerians that this
process will be open, transparent and
whatever is the collective wisdom of the
members of committee, at the end of the
exercise, would be made available to the
Senate for them to take a decision and
also for Nigerians to see what we have
done.”

Analysts differ over marketoutlook as buy opportunitiesexist in most stocks

Amid intensified regulatory efforts to
restore investor confidence at the stock
market, as investor apathy continues to mar
equities’ performance, stock market
analysts vary in their views over the
direction of equities trading this week at
the Nigerian Stock Exchange (NSE).
At the nation’s bourse, companies earnings
and investors optimism continue to move in
different directions. Companies increased
revenues with sustainable strategic options
have not impacted positively on share price
performance. This development continues
to trigger questions at various quarters,
even as most analysts believe that there is
little justification for a fall in market cap or
anemic performance of share prices as
indicated in the All Share Index.
While some analysts say the market outlook
remains bearish, with a ray respite likely
from attractive third-quarter (Q3) earnings
release by blue-chip companies, some
others appear bullish, saying that
impressive Q3 results posted by quoted
companies may sustain investors’ optimism
and further boost market activities.
This varied views come amid the optimism
that buy opportunities still exist in most
stocks with strong fundamentals.
According to Cowry Asset Management
analysts, as interest rates mount up to the
20 percent mark on the back of recent hike
in the monetary policy rate (MPR) by 275
basis points, coupled with the lingering
investors apathy, “the Nigerian equities
market remains disadvantaged as investors
switch to higher yield instruments.
“This week, we expect to see more bearish
siege on the back of likely increases in
money market rates, providing a more
attractive alternative.” In line with most
analysts’ prediction, the equities market was
upbeat last week, having witnessed bargain
hunting activities amid a number of
positive company releases. As a result,
trading at the NSE has closed on a positive
note after about two weeks of bearish
mood.
The NSE All-Share Index appreciated by
387.62 points or 1.9 percent to close at
20,257.47 points, while the market
capitalisation of the 188 First -Tier equities
increased to N6.412 trillion. The NSE-30
Index appreciated by 19.69 points or 2.2
percent to close at 900.36.
All four sectorial indices appreciated a
reversal of the preceding week when all the
indices depreciated. The NSE Food/Beverage
Index appreciated by 0.88 points or 0.1
percent to close at 632.65. The NSE Banking
Index appreciated by 6.87 points or 2.5
percent to close at 287.92. The NSE
Insurance Index appreciated by 5.69 points
or 3.9 percent to close at 149.57. The NSE
Oil/Gas Index appreciated by 10.94 points
or 4.6 percent to close at 245.47.
Stock market report last week showed that
a turnover of 1.4 billion shares worth N9.9
billion in 16,934 deals was recorded in
contrast to 1.3 billion shares valued at
N11.48 billion, exchanged the preceding
week in 18,940 deals. Sterling Capital
analysts said this week they expect
increased liquidity to moderate short-term
interest rates in view of the anticipated
release of Statutory Allocations for the
month of September by the Federal
Government.
“This would most likely impact positively on
the stock market, while the impressive Q3
earnings should continue to give impetus to
investors to take position in view of current
low prices of stocks. Buy opportunities
continued to exist in stocks with good
fundamentals for long term,” they added in
their recent market outlook.
Analysts at Access Bank said the fact that
companies, especially banks exceeding their
profit expectations during the quarter, gave
support to equities last week.
They said: “Stocks also became the primary
beneficiary of the uncertainty in the bond
market. This was due to the significant dip
in bond prices after the Monetary Policy
Committee (MPC) decision to increase MPR to
12 percent from 9.25 percent. The bond
market is in a post-MPC price discovery
phase and trading has been muted in recent
days.
“We are dialling back our outlook, stated last
week, for the market (stock market) from
‘possible sustained decline’ to ‘temporary
rebound in buying momentum.’ Our view is
premised on the impressive Q3 results
posted by quoted companies. We believe
these numbers may sustain investors’
optimism and further boost market
activities.”

PDP ticket tears Bayelsa state apart

The entrance of Mr. Henry Seriake Dickson,
member, House of Representatives,
representing Sagbama/ Ekeremor Federal
Constituency into the governorship race in
Bayelsa State has ignited tension in the
Peoples Democratic Party (PDP) family in
the state. Tempers are not only flying but old
wounds in the process of healing are being
reopened.
According to political observers, the hurried
disbandment of the Bayelsa State Police
security outfit, Operation Famou Tangbei
(OFT) when Sylva was out of the country;
the careful removal of the Commissioner of
Police, Mr. Aliyu Musa; the sudden Appeal by
the Independent National Electoral
Commission(INEC) against the judgment of
the Court of Appeal on the tenures of five
governors including Sylva; the struggle to
ease out the acting chairman of the party in
the state, Chief Darius Obiene, and the
deliberate plot to drag President Goodluck
Jonathan into the politics of the governorship
ticket have heightened tension in the state
chapter of the party eroding the fragile peace
it has witnessed in the last four years, writes
Femi Folarin, from Yenagoa.
Monday, October 31, 2011
In the beginning
Between 1999 and 2005, two dominant
political groups controlled the PDP
machinery in Bayelsa state. These are the
Alamieyeseigha political structure under the
control of his cousin, Chief Abel Ebifemowei,
and the political structure of Mr. Ndutimi
Alaibe. With the successful impeachment of
Alamieyeseigha in 2005, his political
structure, though in disarray, was inherited
by Dr. Goodluck Jonathan. In the 2006
primaries to elect House of Assembly and
National Assembly candidates, the party in
order to avoid a clash between Jonathan and
Alaibe political structures opted for
harmonisation between the two groups and
without any formal primaries the seats in the
state and national legislature were shared in a
60- 40 per cent ratio.
The thinking of the Jonathan political
structure under the control of the Goodluck
Jonathan Committee of Friends/ Green
Movement was that with their man set to be
governor from 2007, he had to consolidate his
power base. However, the nomination of
Jonathan as late President Umar Yar’Adua’s
running mate and the infighting that
followed disrupted the power equation in the
state, rendering Jonathan’s political structure
impotent.
Jonathan was to shock his inner circle when
against the run of things; he picked Chief
Francis Amaebi Doukpola (who came a
distant third in the primaries) to replace him
as the governorship candidate of the party
for the 2007 elections, while the then
Secretary to the State Government, Dr.
Boladei Igali, was nominated as his running
mate. It was an open secret that his choices
not being part of his political family, did not
enjoy acceptability from his core loyalists.
With the conviction that some of them were
also capable of being governor, they refused to
mobilise for the choices he made and created
inroads for a new power bloc to emerge.
Political pundits, who have been following the
politics of Chief Timipre Sylva since the old
Rivers State when he was a lawmaker, say he
is a strategic thinker, who understands
politics in all its ramifications. Sylva’s
nomination to the PDP executive then was
the deputy Chairman Chief Darius Obiene
(who is from Bayelsa East Senatorial district)
but then he had no control over him. In the
governorship primaries conducted by Obiene
(after the chairman, Fred Agbedi was
suspended) and which Sylva took a political
risk to contest, he came a distant second
behind Jonathan.
While Jonathan’s political machinery refused
to back the choices of their man, Sylva moved
in and swiftly took control of the situation.
The House of Assembly passed a resolution
declaring support for the candidature of Sylva
and his erstwhile deputy, Peremobowei Ebebi,
arguing that Doukpola and Igali were not
known to the PDP grassroots in the state.
Sylva eventually emerged the candidate in
2007 and after assuming office began a
systemic decimation of existing political
structures. He was behind the change in the
PDP executive committee in the state with a
controversial congress that sacked the Agbedi
-led executive and replaced it with the Rufus
Abadi -led executive committee. In the House
of Assembly, he took control, leading to the
birth of the Sylva political structure, with the
young turks among them forming the New
Face.
Jonathan’s ascension as vice-president in
2007 rather than rub on his political family
impoverished them. With key loyalists like
Dickson moving to the House of
Representatives, Senator Emmanuel Paulker,
to the Senate and Amatele Jonny Tuner to
Abuja, the Green Movement became
moribund, leaving their foot soldiers to wallow
in political pains.
Regretting the loss of power base at home, the
Jonathan political structure waited for an
ample time. It was not long in coming; the
Court of Appeal nullified the election of Sylva
in 2007 and ordered for a fresh election. The
Jonathan political structure joined by the
rump of the Alaibe structure moved to stop
Sylva from getting the ticket for the re-
election. But it was too late. Sylva, who had
established a relationship with the power base
at the centre, coupled with support from
Jonathan’s loyalists, who do not belong to the
Green Movement, fought back and emerged
the candidate winning the re-election.
Between 2007 and 2010, when he became
acting-president and president, Jonathan’s
relationship with Sylva has been a subject of
discussions. The loyalists of the former
accused the latter of slighting their man by
working against his political interests.
Recently, a tape recording of Sylva’s views on
the personality and politics of Jonathan
allegedly recorded by a former commissioner
who lost out in the power scheme was said to
have been played to the ears of the President.
Now with their man as president, and with
his promise to leave by 2015, his loyalists
believe it is time to take control of power at
home from Sylva and install one of their own
as governor. According to sources, Dickson
has been prevailed upon by the group to lead
the war because of his aggression and
experience in tactical politics.
The war script
The anti- Sylva elements having learnt from
past experience on the political deftness of
Sylva have mapped out a multi-dimensional
approach to neutralize his power base to ease
him out of power. First was the disbandment
of the OFT believed by many to be the attack
dog of the Sylva political machinery to witch
hunt political opponents. The OFT was
disbanded without concrete reasons given by
the Inspector- General Police (IGP) Alhaji
Hafiz Ringim. Next in line in the plot by the
anti- Sylva elements working in cahoots with
a top security chief in the Presidency was the
proposed redeployment of heads of the
security agencies in the state. The argument
was that with the leadership still in place, it
would be difficult to unseat Sylva. While
Ringim has already approved the
redeployment of the Commissioner of Police,
Mr Aliyu Musa,who has been replaced with
Mr. Hilary Opara, the group is still working
on the State Security Service (SSS) and the
Defence headquarters to change the heads of
other agencies in the state.
On the move to change the heads of security
in the state, the State Commissioner for
Information, Orientation and Strategy,
Chief Nathan Egba said Sylva is not
perturbed as the move was a show of
desperation and an indication that his
opponents are scared of his popularity.
His words: “We want the public to know
that Governor Sylva had never predicated his
calculations for political victory on assistance
from any security agency, whether Police, SSS
or JTF.
Infact, when he worked assiduously to deliver
all PDP candidates in the last general
elections in Bayelsa State, including Hon.
Dickson Seriake, who now seeks to stand
election against him, it was through the
enormous goodwill he enjoys from the people
and not any Security agency.
Government wishes to state categorically that
Chief Timipre Sylva as Governor will gladly
work with any Officer that is posted to the
State as head of any Security agency. He has
nothing to hide and therefore has no
preference of personnel in the Services.
After all, even within his first tenure, he has
had to work with about five Police
Commissioners, four SSS Directors and many
JTF Commanders. The good thing however, is
that none of all these people can speak ill of
him. We are therefore, not perturbed by such
actions, as long as the intention is not to
compromise the security of our state and the
people who live in it.”
The anti-Sylva elements have not relented,
the battle to remove Obiene as acting-
chairman has commenced with the acting-
national secretary, Dr Musa Babayo writing
the National Vice-Chairman (South-South)
Chief Mkpubre Okon on the need to appoint a
substantive chairman of the state chapter.
The move has further polarized the party
with Sylva loyalists reading the game at hand
insisting that they should allow Obiene to act
since the congress to elect a new chairman is
three months away.
Sylva fights back
Not known to shy away from a political
battle, Sylva who has been unusually calm
since Dickson launched his governorship
campaign is fighting back. According to
sources, aside reaching all his political
contacts to forestall the PDP from taking a
decision that would be inimical to his political
interest, Sylva has further strengthened his
power base at home to ensure there is no
infiltration. He has secured the endorsement
of members of the National Assembly.
Also the 24 members of the Bayelsa State
House of Assembly, including three
opposition members recently endorsed him for
re-election. In a statement ‘On Sylva We
Stand’ jointly signed by the 24 members, they
noted that as elected representatives of the
people, they want to endorse Sylva because
there is no alternative to him from those who
have indicated interest to contest.
The statement reads in part: “Governor
Sylva’s performance stands him out. Over the
last four years, we have come to know him as
not just an alternative to the coterie of
contenders for the exalted position of Bayelsa
State Governor, but the one we earnestly need
now to lead us in our collective voyage to the
future we all desire. We are happy with what
we have seen.
“We have been impressed with Sylva’s wide
knowledge, foresight, and clear
understanding of the peculiar nature of our
state and its people. These qualities of his
have been apparent in the many development
programmes of his government, which have
put our Glory of All Lands ahead in several
social, economic, and political spheres. The
amnesty programme, which actually had its
roots in our state, is not only a huge success
but is celebrated within the comity of civilised
nations as Nigeria’s contribution to the global
search for peace.
We are proud to be associated with a governor
that has made Yenagoa, our state capital,
one of the best lit at night in Nigeria, giving
Bayelsa State one of the best health
institutions in the country, and giving our
youth one of the most robust human
development programmes in the country”
Is Jonathan involved?
Few days after Dickson announced his
governorship ambition and received several
endorsements, reports were rife that he has
been anointed by Jonathan. It was
unexpected. Dickson aside being a close friend
of the President was also his Attorney-
General and Commissioner for Justice between
2005 and 2007. Not only that those speaking
on his behalf like HRH Amatele Turner,
Tarila Tebepah, Chief Degi, Chief Fyneman
Wilson are the foot soldiers of Jonathan in
the political terrain.
A member of the Presidential Monitoring
team, Furoebi Akene, speaking on behalf of
the Bayelsa Restoration Group would want to
exonerate Jonathan from the current plot to
oust Sylva. According to him, Jonathan had
no hand in the move, but added quickly that
the president would not be averse to any
action meant to salvage a sorry situation of
things in his native state.
A very reliable source in the Presidency
disclosed that the President would not change
this style because people want him to do so. He
pointed out that if Jonathan wants to support
any candidate, he would come out and say so.
Those close to him insist the President’s
decision not to interfere in the politics of the
state by calling his men to order was to allow
them exercise their democratic rights. They
argued that he has also travelled the road
before as governor, and has faced what Sylva
is facing with the opposition against him.
It has also been argued that by not calling his
men to back off from attacking Sylva does
not in any way confirm he has endorsed
Dickson, or that he is against his ambition.
Making reference to his disclosure shortly
after the 2011 PDP primaries that he
deliberately refused to interfere in the politics
of the state because he wanted the party
members to pick the candidates of their
choice, they insist that if former senator
Nimi Amange, a close associate of the
President can lose his bid for re-election, then
Jonathan should be ruled out in endorsing
anybody.
Egba strongly condemned what the Sylva
camp described as name-dropping by the anti-
Sylva elements.
He said: “The tactics of name-dropping by
anti-Sylva elements is retrogressive and
disrespectful. Much as we concede that
everybody has the right under our democracy
to aspire to whatever position they fancy, it is
patently immoral to attempt to confuse and
even dupe the public through name-dropping
and other under hand tactics.”
The governorship primaries is few weeks away
and where the pendulum would swing and
what role President Goodluck Jonathan would
play in the destiny of the Glory of All Lands
remains in the womb of time.

My vision is for Mainstreet to be in theleague of GTB, Zenith and First Bank

Ms Faith Tuedor-Matthews is the Group
Managing Director/CEO of Mainstreet
Bank, formerly AfriBank. She spoke on
her recent appointment as the GMD of
the bank and her plans to transform the
once vibrant bank, among other issues.
Excerpt:
Introduction and background of
management
My name is Faith Tuedor-Matthews, I am
the Group Managing Director/CEO,
Mainstreet Bank, I have almost 26 years
banking experience, virtually, all I have
done in my life is banking in terms of
work, I came back to the country in 1984
after my Masters Degree in University of
My first job was actually in UBA PLC,
Ibadan, and since then all I have done is
banking. I work for UBA for a number
of years and moved on to work in Devcom
Merchant Bank for a very short time,
then I moved to Ecobank Transnational,
where I worked for many years as GM. I
also moved on to Standard Trust Bank as
an Executive Director.
We merged with UBA and I found myself
back to UBA where I started my career as
an Executive Director as well. I rose to the
position of Deputy Managing Director in
UBA before I resigned from UBA, and
four weeks after, I was appointed to run
the old Afribank which is now Mainstreet
Bank. So, I found myself here to rebuild a
once great institution and to actually
make it greater.
I have talked a little bit about myself, Let
me talk about my team and the mandate
that I have here. On August 4, 2011,
Mainstreet Bank was formed, and I was
appointed as CEO. Mallam Falolu Bello is
the Chairman of the Bank. I am the
GMD/CEO. I have five executive directors
working with me.
What is your assignment in mainstreet
Bank?
Basically, what we are trying to do here is
to build a strong bank. When I say a
strong bank, I mean a bank that is strong
in terms of efficient processes, offers
excellent service delivery and also has very
good people. The mandate I have is to
rebuild the bank, try and stablise the bank
and re focus it in terms of the market,
make it profitable and in the long run
make it attractive for investors. We all
know that monies have been pumped into
this bank. So, there is need for us to make
it attractive and add value to the
institution so that government can realize
the money they have pumped into the
bank, and bring in a good buyer into the
bank if it is possible.
My mandates also include making the
bank to have a very rich legacy. I think it
was formed 50 years ago, and was called
IBWA (International Bank for West
Africa).It is still a very strong bank
because it has a very strong brand. They
have customers that are still very loyal in
spite of all the issues the bank had gone
through all the years. The customers are
still very loyal to the bank and we still
have a lot of workforce that have shown a
good degree of loyalty to the bank.
On assumption of office what immediate
steps did you take?
When we came aboard on August 5th, we
decided there are a number of things we
needed to do to stabilise the bank
immediately. There were issues such as
staff morale, apprehension, anxieties
about what their fate was, and so, there
was need to actually calm them down, and
we started by having town hall meetings
all over the country. I had to meet with the
staff and try and just douse the tension.
All was well, and all of them, their jobs
were secured.
We all needed to work together as a team
to rebuild the institution. This was
another opportunity, because there has
been successive intervention by
government to reposition the bank but
each one had met with different
challenges. So, my job was to first of all,
to really calm the workforce, and I am
glad to say we have been able to do that.
All the staff is back on the payroll of
Mainstream Bank on their existing pay
and on the job they do. It was a long
exercise and it was successful.
After this, we also went further to
identify the gaps in the system. Clearly,
when you look at the bank, it’s a mixture
of old and new generation banks in terms
of attitude and processes. I and my team
met with all the departmental heads and
all the Units to identify what are the
issues, what are the challenges, what can
we do together, and it’s been very
revealing, it has been very good for us.
We understand there are gaps, and we are
looking at feeling these gaps.
How are you filling the gaps?
We know that there are gaps in the
system and processes. For instance, you
all know that technology is the driver of
businesses in modern banking, we have
some challenges in this area and we are
addressing it. We are also bringing new
people to see how we can become more
competitive. My shareholder, the MD of
AMCON, told me to go and run the bank
like any other commercial banks, and not
with the stigma of a state owned or not
state owned. So, what I am doing is to run
Mainstreet the way you will run
FirstBank and Zenith, GTbank,and that
is what we have been doing.
How have you first seventy days in office
been?
I must say, over the last 70 days, if you
look at our record, we have done very well.
Two days ago, we had a profitability
report. It was like a performance session,
and before now the bank did not have a
system where you measure people’s
performance. People just come to office
and work without performance
evaluation. We needed to change that
organizational structure which we did.
We have now structured our business.
What we did is along geography. We
found that there was no ownership, there
was no accountability, and where there is
no ownership and accountability, nobody
is accountable.
What did you do then?
What we did was that if you go to a
branch, for example, you know that a
manager is responsible for the branch.
Before now, we had three different units,
everybody reporting to the Head Office.
So if you have a problem and you go to the
Branch, nobody is responsible. We felt it
was necessary to change that structure to
one whereby the Manager is the Head of
the Branch. There are Units that still
reports to the Head Office, and the
Manager is responsible for the
performance of that Branch.
What we did was to move people around
and put them in the right position. It was
also an extensive exercise and we’ve been
able to do that. We have also been able to
have a performance review session.
I actually ran that session myself as the
CEO for two weeks and we invited all our
regional directors from all over the
country to review our performance and
also to chart the way forward so that there
is clear understanding. For me really, we
need to get the buying in of staff because
the staffs are the ones on ground and
they need to buy into the vision, and this
is what we are going to be doing regularly
until we are able to get the right culture
and attitude to work. I must say it was a
very good meeting.
Are you satisfied with the technology you
have in place now
In the area of technology, we are also
looking at it. We have some technology
but the application is what we need to look
at very critically, so we are talking to two
companies that might help us deploy
application platforms that can be easily
deployed and that can enable us drive our
business faster. We are looking at the
technology that can allow our ATM, and
POS to be very effective and also help us
not to replicate the bricks and mortar
offices.
We have 200 branches presently. With
these 200 branches, if we have the
technology working as it should be coupled
with other channels of providing banking
services, we should be able to reposition the
bank. Most banks are moving all over the
world from bricks and mortar to other
channels of providing banking services. So
that is what we are doing on the
technology side.
What about the staff on ground, are you
comfortable with them?
On the staff’s side, we need to do a lot of
training; we need to retool our people. So
we are going to embark on culture
orientation to ensure that our people are
actually trained to be able to operate
within the competitive environment. We
want to be in the league of banks like the
ones I mentioned earlier. So, that is where
I see. My vision for Mainstreet is to be,
when you call GTB, you call Mainstreet.
I really do not see the institution anything
less, and when you look at the caliber of
management from the Chairman to
Management that are driving the
institution, most of us are from those
types of Banks. I believe if we have been
able to be so successful, and it is
something we can do here and do it
quickly and properly because we have the
experience and the expertise.
Mainstreet has no history?
The former Afribank is a very solid
institution that has had challenges. These
challenges can be handled and we are
fortunate our balance sheet had been
cleaned-up by AMCON, and all our bad
loans, most of them have been taken out
and we are still taking some of them to
AMCON in order to meet the statutory 5
percent Non performing loans NPL ratio
that we are going to achieve. AMCON has
injected about N319 billion into Mainstreet
Bank and so with that we are fully
capitalized. We have strong liquidity and
in fact, in our book, there is no corporate
body that does not have an account in
Mainstreet Bank.
For instance, we have Julius Berger with
us, and they bank with us actively, so
most of the corporate bodies are our
customers. For the Joint Admission and
Matriculation Board JAMB, we have a
very strong collection business. So the
former Afribank is an institution that is
very solid in spite of all it had went
through. We believe that we have
something to work with, we still have the
customers, and what we are doing now is
actually reactivation of these relationships
with our customers.
Once we are able to deploy the right IT,
retool and retrain our people, refocus the
market and get that public trust and
confidence. Banking is a business about
trust and confidence. Your customers
have to trust and have confidence in you,
so what we need to is to rebuild that
confidence and that trust. We have been
there before and what we can do is to
reposition Mainstreet to where it was, and
with the result we are getting it is possible.
It is daunting though.
I have sleepless night, likewise my
colleagues because there are issues that
crops up and we have to tackle them as
they come along. I think so far we are
very much on course, we are focused. I
believe that as a person whatever you want
to do if you have the passion you can
never fail in what you do. That has been
my philosophy and that is what has been
driving me. I believe in this institution
that we are running and by the very grace
of God, we would be able to achieve as the
confidence had been reposed on all of us,
we would deliver on it.
What sectors and market segments are
you actually targeting?
We are commercial bank. When a bank
has more than 200 branches across the
country, you are actually a commercial
bank. And when you are a commercial
bank, you focus really is retail business.
The whole idea of commercial bank is
taking its services to the nook and cranny
of the country. So, we focus on the retail,
we focus on the consumer business. We
also have a corporate and investment
banking directorate and we have an
Executive Director driving that area. So,
we do the whole gamut of banking- we do
retail, commercial banking, we also bank
government agencies and states
government. So our focus is typically what
every commercial bank does.
Would you say that trust is back to this
bank, and are all stakeholders buying into
the idea?
Trust is not something that you earn one
day. It takes time to build trust. And
when we talk of our stakeholders, they
include our customers, our staff, our
shareholders and the general public. We
say general public like people like you the
press, maybe you do not bank with us ,
and after this meeting you say I trust this
lady, let me bank with them. So trust is
built over time. We cannot say we are
there but we are trying.
What am I saying? I have been in the
banking industry for a number of years. I
have friends, I have family, and I have
customers that I have banked, so those
people they trust me, the same with my
colleagues, and because of the trust they
have in us, they will translate that trust
into where we are now. So if they trust us,
they will trust the institution, and we on
our part also ensure we understand what
their needs are and deliver our services in
such a way that the customer is
comfortable. So trust is something that
we have to earn, and it takes time.
If you come to our banking halls, they
way you were served, and if you use our
ATM; the way we relate with you at every
touch points is what will build trust. I
think we are on a journey, and I think we
are getting there. For most of us, we have
been in the industry, the banking
industry is a service industry, and for me,
when I look at the industry, the
differentiating factor is service, because
all banks are the same, we offer similar
products but calls them different names.
For me, the differentiating factor is the
customer experience: how does the
customer feel anytime they come in, if
you are my friend and I am not there
while you came to the banking hall, what
was your experience? For me building
customer experience and intimacy are
things that are very important.
So these are the things that we want to
build in Mainstreet Bank and I believe if
we are able to do this, you will see integrity
inn us. You will see professionalism in us;
you will see people that really care in us. I
think with that we will be able to build our
trust. I can’t say we have achieved this but
we are on that part and with every
stakeholders support we will get there while
doing our part.
The transition from Afribank to
Mainstreet, was the name change
technically imperative?
I think it was imperative to change the
name because if you follow the history of
the all the banks that were nationalised,
and the issues in the industry in the last
few years, it’s imperative to change the
name. The Executive management and
the Board were always at logger heads even
with investors that showed interest so it
became difficult for the regulator to move
forward with the transaction because of
all kinds of litigation and all kinds of
issues that came up. So, the only thing to
do and the right thing to have done were
to change the name of the bank, not just
the name but also ownership.
Faith Tuedor-Matthews
I think the bank was liquidated. If a bank
was liquidated it exist as a company in
CAC but as a bank the license was
canceled, it was withdrawn and that bank
does not exist. Of course, if a bank does
not exist there has to be a new name. So,
it’s not just that Afribank was changed
to Mainstreet bank that is not what
happened.
The bank was liquidated and the asset and
liability was assumed by the NDIC and a
new bank was licensed and took over its
asset and liability. So it’s not just that
Afribank was changed. There was a
process that was followed. It wasn’t just a
name change. It went through a deeper
process. It was liquidated and its asset and
liability was moved, and a new bank was
created. That was what happened and
the records are there to show that is what
happened.
What risks do you perceive now and in the
coming years?
I think the whole banking business is all
about risks. There are all kinds of risks,
risk in the credit we give, market risk in
the environment we operate, we have
operational risks, and there is also societal
risks out there. I think for us, the
greatest risk is the credit risk. We have
money and we need money that we will use
to trade, we have bad loans taken from us,
and the other risks are the ones from the
everyday business- the risk that somebody
will defraud you, and those ones we have
systems and structure and processes that
we are putting in place to mitigate those
risks.
What were the challenges you met on
ground when you assumed office?
There were a number of litigations all over
the place. And we have challenges on IT,
but these are things that we can address,
and as you see the head office building, I
would like it to look nicer and I want our
reception to look a little bit nicer. We
have too many staff. I think it is a big
issue, and we are looking at how we can
make them more productive. It is not a
problem to have too many staff as long as
they are productive. The total staff
strength here is over 4,000.
So, we have a large workforce with a large
concentration of staff at the Head
Office and we are looking at how to make
them more productive. We also have the
challenge of acceptance by the public. It
is a big challenge because we are going
through a change. We need to do a lot of
confidence building because some people
say why I should bank with you again; I
don’t know what’s going to happen
tomorrow.
So we need to build that confidence. That
is also a challenge. We are also working
on a public relations campaign to
reintroduce the brand to tell people who we
are and what we stand for and what we
have set out to achieve. As I said before,
we have a very strong and dynamic
management team, the market is there;
we have capital that we can give to people,
we have good products. There is no reason
why we can’t compete with any other
bank. But we need to address people’s
minds and their fears that they can trust
us. You can put your money with us and
go to sleep.
Why should the public trust you?
You can trust us because I have over 26
years banking experience, and I have the
competences and I have colleagues, and if
you put all of us together, it’s over a 100
years’ experience that we all have. And
we’ve all worked up to the senior level to the
Board level of banks, and we have a
shareholder, 100 per cent by sovereign list,
and we have the capital. So people should
trust us and have that confidence in our
bank.
There seemed to be no panic withdrawals
on nationalisation
Let me start with run on banks and
whether we have deposit. I think, clearly,
following the announcements it is
expected that people would withdraw
money out of panic but we didn’t
witnessed significant drop in deposits even
within the first two weeks. We actually
witnessed deposits withdrawal but it wasn’t
significant. What happened was that
the regulator and government actually
took steps to reduce that from happening
among the banks and even among
government agencies.
Monies were not allowed to move out for no
reason at that time, especially for
government funds. On the individual
customers, some of them expressed
apprehension initially. What happened
was that our people were on top of their
game. So throughout that week, we were
out engaging the customers. We found
out that even the little money that went
out actually came back in. So the panic
wasn’t as much.
Shareholders reaction
AMCON is my shareholder. We run as a
commercial bank and not as government
banks. My shareholder does not interfere
in the way I run my business. What I am
to do is to run the bank, stabilize the
bank, make it profitable, return
dividends, and make it attractive for sale.
The chairman of AMCON told me that
you guys must return dividends, because
it’s a business to my shareholder. So, I am
competing in a space like any other
banks. So that is the way we are running
the business as a commercial and not as a
government bank.
The question of gaps, Skill -gaps.
When I talk about gaps, you can have
many workforces and there are areas
where you do not have the required skills.
We need skills to drive this management.
You can really be overstaffed and yet
don’t have the required skills to drive the
business. And in banking this day, you
have to retool your people or bring in people
with the right skills to drive the business.
In the areas that we have people that are
excess, we will move them round and
retrain them.
We have already started that process. We
have offered everybody their jobs back.
Some wants to leave and I have begged
them not to leave. As soon as we came in,
some staff wanted to leave, and I said, no,
you can’t leave. This was because we have
some good people and we have to keep
them. Some have institutional memory
have been here for years. With a lot of
these people, you need to have the history
of the organisation. So we need most of
them in the system because some of their
skills are still relevant to the institution.
AMCON injected N319 billion into the
bank. We have a shareholders fund of
N45 billion, our margin loan was N20
million and above, we took them to
AMCON and we were giving consideration
bond for those loans and they gave us
value for those loans, they are not
collateral. So if we have loans that are
troubling us we take them back to
AMCON to give us consideration so that
our book is clean, and so that we are not
saddled with things that happened in the
past that we’re not able to recover.
My vision for this bank as I said earlier is
to reposition it to be in the league of
banks. An institution can be small and
be in the leagues of the top banks, and it
can be massive. It depends on the
objectives and how you see the institution.
My strategic thrust is in three areas. Once
I am able to achieve those three areas, I
think I would have reposition Mainstreet
Bank.
They are customer intimacy, operational
efficiency, and products leadership. I
believe if we can focus and excel in three
areas, I would be able to reposition
Mainstreet Bank to be like First Bank,
Zenith and GTBank.
The level of investors’ interest.
Investors have not been coming to me.
They may have been going to my
shareholders, AMCON. I am extremely
busy, and even if an investor should come
to me now, I would direct them to
AMCON. My mandate is to turnaround
the business. Investors are for AMCON.

We need insurance more now that theeconomy is down– Uranta

The Nigerian insurance industry is
grappling with a lot of challenges,
chief among which is lack of
awareness among the populace. This,
coupled with the downturn in the
economy has suffocated the industry
leading to low profitability among
other things. But Managing Director
and Chief Executive Officer of Niger
Insurance Plc, Dr. Justus Uranta who
is the Chief Executive Officer for this
week believes that the economy is not
doing particularly well adding that the
industry can do a lot better than it is
doing now.
“If activities in the economy hit a low
side, every company must be affected. If it is
on the up side, we take advantage of it. So
right now that the global economy is
suffering, every economy, every practicing
going concern must be affected, depending
on your activity anyway,” Uranta said.
Excerpts:
Insurance industry in the Nigerian economy
The economy as we know today, I am sure you
can lecture me, is not doing particularly well.
We can do a lot better than we are doing now.
Therefore, every player in this economy must
be affected. If the activities of the economy
hit a low side, every company must be
affected. If it is in the up side, we take
advantage of it. So right now that the global
economy is suffering, every economy, every
practicing going concern must be affected
depending on your activity anyway. Some
done less affected than others.
That is the way I put it. In my company here,
there was a time when our price was between
N9 to N10 per share. It was not the 50 kobo
you are seeing today. The same thing applies
to all other aspects of the economy. If it is
good, you go with it, if it is bad you go with it.
However, when you come to insurance, the
company on its own may not be doing well,
but the low level of activities in any country
brings out the necessity of insurance. I say so
because I always like to use very costly
examples.
So at this time of downturn in the economy,
that is when insurance is very necessary
because a lost of asset is double jeopardy for
the owner. You lost it; you have difficulty in
replacing it with your own funds. But if you
have insurance, the premium you pay will take
care of it and then bring you back to the
same position you were before the loss and
under the present economic crunch you will be
better of it.
Plan to beat competition and be on top
Competition is not bad itself. In fact, if
anything is a big booster, users will be
affected. That is practitioners and better
still, the end users because when there is
competition among productive sectors, they
tend to come out with excellent products, they
tend to come out with competitive prices, so
that they can sell. So at the end of the day,
the end users are better off for it. However,
under the circumstances we find ourselves, the
issue of competition, challenges us to think of
better ways of serving the public, you have
known. You need to have an edge over your
competitors to be able to remain in business.
So we look at our service delivery, we look at
how we can improve on it; and in the last two
years, in response to environmental change,
we have introduced a special agenda in this
company called the “NEST” agenda. It is an
acronym for, Niger Enterprise Strategy
Transformation.
This agenda is created to answer this
question, because as competiton gets stiffer,
you must survive and how do you survive? You
must strategize, you must introduce new
tactics, new strategy to beat your competitors.
So we look at how best we can serve the public
in terms of turnaround time. We look at our
manpower; we try to train people so that they
can be a lot more efficient and improve on
their skills and experience. We also look at
the facility we have, we are trying to improve
on them so that collectively they can help to
improve that service delivery.
And then, in terms of our claim
administration, we always controllably review
it so that we reduce the time it takes to settle a
particular claim because when your client is
aggrieved, sad by way of an occurrence of an
accident, the only language he wants to hear
is to make him happy. And how do you make
him happy, it is through claim settlement. So
all these put together is what we controllably
drive under the NEST Agenda to make sure
that they remain afloat. And our target of
course as any other serious minded company
is to be the number one. And the number one
position is very tasking. In fact it is as
difficult to get there as it is to remain there.
Relationship of Niger Insurance with
government
Those who think Niger Insurance belongs to
government should not be blamed. Even the
name itself is synonymous to Nigeria
(Niger), a river flowing from all the way,
north down to the south. Seriously speaking,
anybody that thinks that Niger Insurance is
government owned is not entirely wrong
because at a point back in the sixties, during
the introduction of indigenization decrees,
the company itself was taken over by the FG
from the real owners in England and they
ran it for a while and passed it on to their
baby company, NICON Insurance. That one
also was commercialized. There after it
became privatized; trading today on the floor
of the Nigerian Stock Exchange (NSE)
trading on shares. So we are fully privatized
now as supposed to what it used to be in the
past when government has some interests.
Whether kidnapping, bombing, flooding are
insurable
Insurance is about the unexpected. It is about
fortuity, something you did not expect to
happen but happens. It is not something you
expect. If I know that this filling station will
go on fire, and the owner wants insurance,
why should I give him, considering that the
money he will pay is always very
disproportionate as supposed to the liability,
which I am admitting? I mean that the entire
value of the filling station might be N200
million and ask him to pay .2% of that. So
you know the proportion of 2%.
You will be paying 2% of N200 million, 1% of
it will be N2 million, .2% of it may be N400,
000 in exchange for N100 million. No sane
person can do that and expect that in the
next 3 hours he will be overburdened by
financial outlay of close to N100 million. So,
not every risk is insurable. However, as far as
its fortuitousness is concerned, there are risks
which ordinarily you can see on the face of it,
it looks as uninsurable but can also be insured.
In fact the bottom line there is that it must be
unexpected. The damage or result of the peril
must be unexpected. If you come now and tell
me that you are going to Onitsha and will hit
your car when you get to Asaba then I know
that you are prepared for that therefore that
is not fortuitous.
That means that I cannot insure it. Perhaps
I decide, and ask you what is the value of your
car and you said N10 million and I said okay
drop N10.2 million then I can insure it. In
that sense, every risk is insurable provided you
are able to pay. But, however, narrowing it
down to what I think you have in mind,
terrorism and all that; terrorism, before it is
identified, you want to insure it, you will find
out everything about it, frequency of
terrorism in that area, the magnitude and all
that, and then we can give you a charge.
If you can pay, it becomes an insurable thing.
Just like flooding as well. Flood is not
exclusion in its entirety; just that it must
happen accidentally just like that. So if I
know that this area is a flood prone area, that
the next rainy season or the next rain that
comes, it must be flooded and there will be
damages again, it is not fortuitous. But when
you don’t expect it and flood comes’ here and
sweep the whole place, the flood there is
accidental and you can afford to insure that.
Enforcing compulsory insurance
Yes, we have other compulsory insurances in
place right from way back before 1930. There
are the motor insurances. So now that the
government is, through the National
Insurance Commission (NAICOM) is
considering other areas; from experience
anyway because I want to sincerely talk about
building in the course of erection that you
and I know the frequency of its collapse here
and there in the country. I think that
occasioned the necessity for government to
insist that, such buildings in course of
erection, buildings over two floors and so on
that are for public use must be insured. It is
for the benefit of the users more than for the
owners actually. So it is enforceable.
So what government through NAICOM is
doing now is to sensitize the public about the
need to have some of these aspects of our lives
compulsorily covered by way of insurance.
Thereafter I think they will need a lot of
other factors like legislation, to give it a
backing and then further sensitization so
that through legislation there will be statutory
penalties. The law enforcement agencies will
be involved to go round where they cannot
find any insurance on such property that is
so designated, then the owner will be penalized
or compelled to carry that insurance.
Improving on the price of insurance stocks on
the NSE
You are narrowing down to insurance but as
you can see, crash in the price affected every
sphere of the economy locally and globally.
This is a peculiar situation we found ourselves
in now. In the past if particular quoted
company finds its shares dropping, a little
research can reveal a number of reasons why
that is happening and then they will be in the
position to stabilize it and find a way to make
it move up again by certain activities. You
have first of all to tell the investing public
what program you have as far as the
company is concerned to encourage them that
this going concern is on the verge of doing
even better. So by so doing, the shareholders
will be encouraged to transact on your shares.
What we have today is a global meltdown.
You can see that out of over twenty- ever
companies, insurance companies that were
quoted, not more than three have their prices
above N1, the rest of us are cashed to the
minimum of 50 kobo.
For example now Niger is going into right
issues. We are going to raise huge money to
plough back and improve on our shareholders
money and other provisioning. If the
investing public hears that, it is positive
information that will confirm to them that
we are doing something that will further
sustain the license of this company. So such
efforts you expect baring every other short
comings like investor fatigue because as we
speak now people have little or no confidence
in the stock market. So no matter the amount
of noise you make, they will not believe you
until perhaps they see things happening.
NAICOM regulation
That question is extremely subjective.
Regulation itself is a very difficult challenge.
Let me digress a bit. You can see what is going
on between the CBN and the banks. If you
are in Sanusi’s shoes, you don’t know what
you would have done in this dispensation. I
don’t know how you feel? But having said
that, I will want to also join forces in
commending NAICOM. The past
commissioner before the current one had a lot
of knocks from the market. This market is
such that we try most of the times to tell the
truth especially about our operations.
This young man is very straight forward. He
was part of us and by virtue of his age, at the
expiration of his tenure, he will come back to
the industry. So he appreciates that position
and is using that to his advantage in the
sense that he does not see us as the leg. He
sees some kind of collaboration before the
regulated and the regulator and that is a
better approach, shortly after the opening of
the NAICOM Headquarters in Abuja, the
Commissioner had the course to call all the
trainees to a meeting and there and then he
was bold enough to tell us that, this time, it
will be more different from what it used to be
in the past.
We have to collaborate more, we have to work
towards solving problems, because it is
common sense that if you are a regulator and
you are too strict to the letter and you end up
killing all the companies you are to regulate,
haven’t you killed yourself. There is nothing
like that. In that extent, we appreciate the
style of the current commissioner and his
team. We only but wish them better luck and
also assure them of our cooperation.
Areas needing attention
Well thank you. What I want to say is like
repenting myself. It is what they are already
doing. They are a listening set of supervisors
and over the years and up till now that we are
speaking, they always try to provide a forum
for interaction between themselves and the
regulated. We have regular meetings, given
which times people bare their minds and they
listen. So in terms of what they are doing, I
can say that the industry is quite happy with
them. This is because the bottom line is that
you have to understand whom you are
regulating. The moment you understand
whom you are regulating, you understand
their problems, their predicament, their
challenges, then you will be able to be proactive
in terms of regulating them and by way of
appeasing their problems and probably
providing solution to make sure they remain
in business..
Relationship between NAICOM and NIA,
NCRIB, ILAN
In this sense we cannot be talking about
superior regulator here. We shall be talking
about practitioners that are in senior activities
that are doing the same thing. Underwriters
have complete different functions. They are
the actual risk bearers. By underwriters I
mean direct insurance companies; then the
brokers (NCRIB) who have all brokers under
them. They are the intermediaries. They
don’t bear risks; they introduce clients and
businesses to underwriter. So their roles are
very clear than the adjusters. It is not until a
claim occurs or until you want to insure some
huge assets that you bring them in to look at
what is happening. We also have assessors.
Their role is also different. All these are
distinct roles that do not make room for any
clash. Perhaps the only one that you may
look at that may suggest some aspects of
clash but there is actually none, I can assure
you, is NIA and CIIN. But I can quickly tell
you they have different roles. Nigerian
Insurance Association is the umbrella body for
all insurance practitioners; and Chattered
Insurance Institute of Nigeria are particularly
made for academic development, training
and academic development so you can see
there is no clash. That is why out there in the
market, you can’t hear us clashing. The worst
disagreement we have is may be to percentage
commission which is also statutory. It is there,
laid down. So if you are doing motor, the
percentage is there for your commission and
so on and so forth. Even in the loss adjusting
aspects too, it is tariff based so you have a
value, you have this, you apply the tariff and
you get your figure.
Encouragement of rate cutting
We cannot encourage rate cutting. The issue
of rate cutting I want to believe is for new
companies, for new entrants who have not
been able to build any base for themselves;
asset base, customer cliental base and stuffs
like that. It is not with a company that is 50
years old. We have been tested over time, tried
and tested like they said and found to be solid
and reliable. So our customers hardly leave us.
In fact most of our customers are our
marketers that recommend us to other
customers to come to us. So we don’t
encourage rate cutting. In fact we are known
in the industry as being ethical. You will not
be able to meet your claims obligation so why
cut rates? When the claim comes, are you
going to tell your customer that he did not
pay adequate premium; that is why you
cannot settle the claim?
We give discount where necessary depending
on how you have been handling your assets.
This is because when you charge very low and
ridiculous rate, you will not be able to
accumulate the funds early enough to be able
to meet a claim obligation on course. So you
have to fail in your ability to pay claims and
that in itself rubs us negatively in our images.
Elimination of brokers
Well, I am happy you said that shareholders
called for the elimination of brokers because
of controversy that arise in the course of
settling cost of business called premium.
Remember that shareholders will not be
pushing us because no professional will
support the elimination of middlemen. I want
to use the middlemen now for us to
understand the role of brokers. You see, there
are middlemen in so many businesses.
Ordinary renting of house, you have
middlemen. Is it possible to eliminate agents?
So, in our own business, brokers have very
crucial role to play.
They are also professionals like us and
qualified as we are and are equally
experienced. What they do is to profess that
they know it all. They can introduce to you a
client that is very reliable that cannot
disappoint you especially at times of meeting
your claims obligation. You cannot dismiss
the fact that in every ten there must be a
Judas. So if one or two brokers are not doing
the right thing that is not enough to call for
their elimination. And one of the private
practices we do is broking business. So any
chief executive of insurance company, top
ranking person by the time he retires, he
resorts to broking, so there is no way you can
eliminate the brokers because they have very
important roles to play.
Motivations for your workers
Job stability. If you look over there, you see our
mission statement. We are working with well
motivated employees. We are using the high
level information technology (IT) platform
to ensure that we provide value for our
shareholders. So as far as Niger Insurance
staffers are concerned, they are enjoying one
very key thing in employment and that is job
stability. I am sure as journalists, you cannot
remember the last time you heard of staff-
management problems in this company.
What does that tell you, that at the least of
average, staff is serving and we continually
strive to see that they get their times’ worth
for being there with us. No!
We don’t joke with staff welfare. Of course
when times are hard, the funds may not be
available, we explain to them. Of course that
was the reason why I had to stay back a little
before coming to join you here. It was the
same staff problem I was addressing. So we
take staff matters very seriously because we
want to work with highly motivated employees
because it is only such caliber of staff that
can give you the best in terms of meeting
efficient customer satisfaction and service
delivery. We provide working tools; those who
are entitled to cars, they get cars, those who
are entitled to every other working tools,
training of course; training and retraining is
one of the fundamental aspects of this
administration.
We insist on human capital development and
expose our staff to as much training as we
can. We send staff to all over the world, to
America, Britain and Africa especially South
Africa to expose them the more and as we
speak now, we have about five staff in West
African Insurance Institute, the one we call
WAII in Gambia, of which my humble self
happens to be the Vice Chairman. And we also
take advantage of that because we are one of
the companies that send the highest number
of staff to that place for their one year
programme in insurance.
South Africa really leading Africa in
insurance
It is not exaggeration at all. I don’t know the
last time you visited South Africa because that
may have accounted for this question. This is
because if you have ever been there, you will
know that no doubt they have facilities well
ahead of us. The reason is very obvious. Let
me be a very bit funny. We were in a hurry to
drive our own colonial masters away, back in
the 1960s. They only got their independence
when Mandela was released in the 1990s. So,
their own Colonial Masters were there 30 years
after we have sent our own packing helping to
prepare ground for them, providing all the
facilities, replicating what we have in the
developed world. And going to there you don’t
need anybody to tell you. The moment you
land in any of their airports you begin to have
a very different feel.
In fact there is no great difference between
London in terms of developments and some
parts of South Africa. The only different is
that probably you see more black people/heads
than whites. Otherwise even as we speak today
the whites are still somehow on the driver’s
seat. The black guys can control the political
aspects of it but the nitty-gritty of the
economy is still in the hands of the whites.
And that is why we go there to borrow what
they are doing.
Why Insurance companies are not paying
dividends
I blame the inability of insurance companies
not paying dividends as expected to both the
individual companies and the stocks on the
exchange not doing well. However, one
precedes the other. There has to be an
encouraging environment first and foremost
for the economy and all its players to strive.
Then you can now come back home, the
management of these companies to take
advantage of this flourishing environment.
If the environment is rough and unfriendly,
there is hardly any serious headway any
individual company can make. They can
make progress but the rate will be very slow.
Africa-Re as 40th in the world, the
implications
First and foremost the fact that Africa-Re is
headquartered in Nigeria is one big advantage
for us. But let me quickly remind you that it
is a sub-regional outfit. It is not a Nigerian
company. They are only headquartered in
Nigeria so their operations go beyond the
shores of Nigeria. They operate globally as a
very solid financially based reinsurance
company. They accept businesses from
Nigeria, the West Coast, Africa and any part
of the world.
And I can go to the best securities in the world
including Africa Re. So it is a good sign at
least they are in this clime and they are doing
well. For me as a practitioner, I am happy
that at least thy can meet my claims
obligation if and when they occur. The same
thing applies to every other CEO both in
Nigeria and abroad. So I like to commend
them to keep up the good works they are doing
and give good services in consonance with
their level of improvement.

Monday Business ReportSovereign Wealth Fund: Why governors arekicking

The controversies swirling around the
much-anticipated Sovereign Wealth
Fund (SWF) do come to most
Nigerians as a huge surprise,
particularly, in the wake of the court
action instituted against the Federal
Government by the 36 governors.
The question on many lips is this: Why
this bitter opposition to the Fund that
will “build a savings base for future
generations, enhance development of
infrastructure and impose fiscal
discipline?”
The Chairman of the Nigeria
Governors’ Forum (NGF), the
arrowhead of the anti-SWF, Governor
Rotimi Amaechi of Rivers State, gives
the reason.
According to him, what the Federal
Government has done is mere hijacking
of our money. His words: “The conduct
of the government of the federation
and her officials is a violation of the principle
of the Rule of Law and breach of the
independence of the judiciary and constitutes
a violation of the principle of the Rule of Law
handed down by the Supreme Court. The Rule
of Law eliminates completely the rule of
man…Governors agree that the Federal
Government should save but the law has to be
respected. What the Federal Government has
done is mere kidnapping of our money.”
Shedding more light on the issue, he said:
“Section 80 of the constitution is talking
about Consolidated Revenue and it also says
that the executive authority of a region shall
extend to the execution and maintenance of
the constitution of the region and to all
matters with respect to which the legislature
of the region has, for the time being, power to
make laws but shall be so exercised as not to
impede or prejudice the exercise of the
executive authority of the federation or to
endanger the continuance of Federal
Government in Nigeria.”
Throwing his weight behind the governors,
Asiwaju Bola Ahmed Tinubu, the immediate
past governor of Lagos State and a chieftain
of Action Congress of Nigeria (ACN),
criticised the creation of SWF by the Federal
Government, saying the Fund was illegal and
an attempt to hoodwink Nigerians.
His words: “I’m in full support of the
governors going to court. The Sovereign
Wealth Fund is an illegal looting committed
under an act. It is giving the Excess Crude
Account (ECA) another name and taking it
to the House for illegal constitutional
amendment.”
“When an act confiscates and contradicts
the constitution, Section 162 of the
constitution says all revenue must be
distributed. You cannot act
unconstitutionally if you are a government of
rule of law. You are confiscating the money
of the state; you are violating the
constitution; it is illegal. It is an amendment
to the constitution if it is not seen clearly by
Nigerians. Otherwise, Section 162 of the
constitution is useless. What are the steps to
be taken before an amendment to the
constitution takes effect. That is clear there.
I ask, if you are a regular saver and your child
is dying of anaemia in a hospital and you say
you are saving for that child to inherit. Will
you say you must save that money and not
pay for the blood if the child needs blood
transfusion? The states say this is our time to
develop, why are you forcing them? You can
save the Federal Government’s portion. It is
unconstitutional. I’m in support of the
governors.”
What is Sovereign Wealth Fund?
A sovereign wealth fund (SWF), according
to Wikipedia.org., is a state-owned
investment fund composed of financial
assets such as stocks, bonds, property,
precious metals or other financial
instruments. Sovereign Wealth Funds invest
globally.
“Some Sovereign Wealth Funds may be held
by a central bank, which accumulates the
funds in the course of its management of a
nation’s banking system; this type of fund is
usually of major economic and fiscal
importance. Other Sovereign Wealth Funds
are simply the state savings, which are
invested by various entities for the purposes of
investment return, and which may not have a
significant role in fiscal management.
The accumulated funds may have their origin
in, or may represent foreign currency
deposits, gold, Special Drawing Rights (SDRs)
and International Monetary Fund (IMF)
reserve positions held by central banks and
monetary authorities, along with other
national assets such as pension investments,
oil funds, or other industrial and financial
holdings. These are assets of the sovereign
nations which are typically held in domestic
and different reserve currencies such as the
dollar, euro and yen. Such investment
management entities may be set up as official
investment companies, state pension funds,
or sovereign oil funds, among others,” it adds.
The first SWF - Kuwait Investment
Authority (KIA) - was set up in 1953. Since
then, over 70 such funds are known to exist
around the world. Of the top 10 largest
funds, China Investment Corporation is the
youngest. It was set up in 2007. The top 20
biggest SWFs have existed for a minimum of
20 years on the average.
Nigerian scenario
The idea of setting up a Sovereign Wealth
Fund for Nigeria has been around since the
Excess Crude Account (ECA) - a quasi SWF
- was set up in 2004 to hold funds, accruing
as oil revenue above the budget benchmark
prices during the administration of former
President Olusegun Obasanjo. This remained
impossible to realise until Mr. Olusegun
Aganga, former Goldman Sachs Managing
Director and erstwhile Minister of Finance,
provided a strong will to push through the
executive bill for the Nigeria fund for
legislative approval and presidential assent.
The Nigeria Sovereign Investment Authority
(NSIA) Act 2011 was subsequently passed into
law last May. It is aimed at building a savings
base for Nigerian citizens. It also seeks
to enhance the development of Nigerian
infrastructure and provide stabilisation
support in times of economic stress .
The Sovereign Investment Authority
(Establish, etc.) Act, 2011 established for the
country a Sovereign Investment Authority.
This Authority is charged to receive, manage
and invest in diversified portfolios the excess
of the medium and long term revenue of the
federal, states, local governments and area
councils. The proceeds of these investments
are statutorily required to create a savings base
for the country, develop infrastructure that
will attract local and foreign direct
investments.
The Nigeria Sovereign Wealth Fund
(NSWF) legislation is necessitated by the
depletion and the non-renewable nature of
the hydrocarbon resources in the country and
the need to develop critical infrastructure that
would attract investment and diversify the
economy.
In fact, the bill for the Act states in its
Preamble that:
“The Nigerian State has over the years relied
heavily on income from hydrocarbon
resources, which form the mainstay and
support for its socio-economic development;
hydrocarbon deposits being depleting natural
resource assets that may not be available in
sufficient quality for future generations of
Nigerians to continue to support the
development of vital infrastructure; the
federal, state, Federal Capital Territory and
local governments of the federation have
agreed to take steps within the constitutional
framework to provide for the needs of current
and future generations by channelling
certain available resources to infrastructure,
areas of investment and stabilisation
measures to safe guard the economy as may
be required; and the federal, state, Federal
Capital Territory and local governments of
the federation, drawing from the experience
of other countries and adopting best
practices, have agreed to establish the Nigeria
Sovereign Investment Authority as an
independent entity to carry out the intention
of the federal, state, Federal Capital Territory
and local governments to, among other
things, build a sustainable savings base for
the benefit of future generations.”
The Act sets out the objectives of the
Authority as follow:
a) to build a savings base for Nigerian people;
b) to enhance the development of Nigerian
infrastructure;
c) to provide stabilisation support in times of
economic stress; and
d) to carry out such other matters as may be
related to the above objects.
It adds that the Authority shall:
a) establish a ring-fenced diversified portfolio
of appropriate growth investments for the
benefit of future generations of Nigerian
citizens (the “Future Generations Fund”) as
further set out in Part IV of this Act and the
investment policies and procedures developed
by the Authority;
b) establish a ring-fenced portfolio of
investments specially related to and with the
object of assisting the development of critical
infrastructure in Nigeria that will attract
and support foreign investment, economic
diversification and growth (the “Nigerian
Infrastructure Fund”) as further set out in
Part V of this Act and the investment
policies and procedures developed by the
Authority; and c) establish a ring-fenced
portfolio of investments to provide
supplemental stabilisation funding based
upon specific criteria and at such time as
other funds available to the Federation for
stabilisation need to be supplemented (the
“Stabilisation Fund”) as further set out in
Part VI of this Act and the investment
policies and procedures developed by the
Authority.
In furtherance of the Funds established
under sub-section (1) of this section and for
the carrying out of its other functions, the
authority shall:
a) receive, manage and invest the initial and
future contributions on behalf of All the
Future Generations Fund, the Nigeria
Infrastructure Fund and the Stabilisation
Fund pursuant to the allocations of
contributions of the Federal Capital Territory
and Local Governments made in accordance
with section 31 of this Act;
b) reinvest the profits and proceeds of its
investments to generate further risk adjusted
returns in service of the Federation except as
provided in this Act; c) develop and foster
skills in asset-management, investments,
operations, risk management and other
related areas in addition to developing
expertise in infrastructure, project
management and auditing capabilities in
qualified Nigerian personnel in a matter
consistent with the overall financial objectives
of the authority;
d) implement best practices with respect to
management independence and
accountability, corporate governance,
transparency and reporting on performance
as provided in this act, including with due
regard as appropriate for the Santiago
Principles;
e) attract co-investment from other
investors, including strategic investors,
sovereign and internationally–recognised
investment funds and private companies, to
enhance the Authority’s capital and
maximise risk-adjusted returns; and
f) obtain the best achievable finance returns
on all capital and assets of the Authority.
With all these laudable objectives, why should
the governors kick against the Fund?
Oserogho $ Associates in its online comments
on the Acts opines that:
“Section 80 (1) of the 1999 Constitution (as
amended) provides that all revenues received
or raised by the Federal Republic of Nigeria
shall be paid into one Consolidated Revenue
Fund for the benefit of the entire Federation
of Nigeria. The exception to this provision is
whereby a Law passed by the National
Assembly, a specific public fund is created for
a specific public purpose, like the Sovereign
Investment Authority to manage Nigeria’s
Sovereign Wealth Fund. Opposition to the
constitutionality or legality of the NSWF
Act will remain misplaced until the 1999
Constitution (as amended) is further
amended to devolve more legislative authority,
responsibilities and revenues on the states and
local governments areas as should be the case
in a federal system of government as opposed
to the current “unitary’’ System of
government in Nigeria.”
Writing on the Nigerian Sovereign Wealth
Fund Concerns, Jide Akintunde, the
Managing Editor of Financial Nigeria
Publications, agrees with the above position.
According to him, there is much more work to
be done in fiscal reform in Nigeria than what
the National Sovereign Investment Authority
(NSIA) represents. “It doesn’t give the sense
of fiscal federalism that these three funds -
Permanent Wyoming Mineral Trust Fund
(PWMTF), Alaska Permanent Fund
(APF) and New Mexico State Investment
Office Trust (NMSIOT) - give the United
States.”
He advised that certain state economic
agents need to be restructured or consolidated.
“Although it is now a public company, will the
Infrastructure Fund have any relationship
with the Urban Development Bank which
holds the government mandate to finance
development of public infrastructure in
Nigeria? How about the confusion of having
a new Stabilisation Fund separate from the
long-standing Stabilisation Fund, which has
been part of the sharing of federal revenue?”
he asked.
On the desirability or otherwise of SWF,
Akintunde said: “As it has been stated until
May when the NSIA Act came into existence
that Nigeria was one of three members of the
Organisation of Petroleum Exporting
Countries (OPEC) having no sovereign
wealth fund. Desirability of Nigeria SWF can
hardly be faulted under the right legal,
institutional and governance frameworks.
The last financial crisis, which saw the price
of crude oil tumble from $147 a barrel to
around $32 a barrel tells how volatile
government revenue can be, if there is no
mechanism to smoothen it through savings of
budgetary surplus. It is a matter of
responsibility that savings should be made for
the future generations, so that they are not
bequeathed with only environmental
catastrophe, arising from crude oil
production, after the wells might have dried
up.
However, these strong reasons should not lead
to the founding of the Nigeria fund that will
not be able to rise to the challenges that it was
set up to address. No question about it, the
NSIA Act requires a review.”
For instance, he observed that the
composition of the Governing Council for the
Fund is the most recent indication of lack of
consensus to build a united country around
development agenda as opposed to harmony
for revenue sharing purposes.
“How will this impact the investment
decisions of the management of the fund?
There are already indications of a strong
affinity between the fund management and
government’s (business as usual) projects.
For instance, Mr. Aganga was quoted as
saying that the infrastructure fund would be
dedicated to investments in the development
of critical “national” infrastructure, with 10
per cent of it going to agriculture and
government sponsored projects. With this
arrangement, the independence of the fund
management is already compromised.
The United Arab Emirates’ SWF - Abu Dhabi
Investment Authority (ADIA) - carries out its
investment programme “independently and
without reference to the Government of Abu
Dhabi or other entities that also invest funds
on the government’s behalf. China
Investment Corporation (CIC) is promoted as
an investment institution established as a
wholly state-owned company under the
Company Law of the People’s Republic of
China. CIC is governed by the country’s
Company Law and the company’s Articles of
Association and operating guidelines. Will
economic consideration and potential good
upside return on investment provide guidance
for investing the Infrastructure Fund?
Linking project approved by the Federal
Executive Council to investment of the fund
would make it heavy weight on political
consideration and lightweight on commercial
considerations.”
Hedge Fund or SWF
In trying to showcase further weakness of the
Nigeran version, Akintunde tries to compare
SWFs with Hedge Fund, saying they share
several similarities contrary to the notion of
clear-cut dissimilarity, between both. “But a
generally acknowledged dissimilarity, which
literatures commonly cite is that SWFs are
not directly leveraged, whereas hedge funds
are. The Nigeria fund, through its
subsidiaries, will issue bonds and other debt
instruments to raise fund for investment.
This provision in the NSIA Act requires close
scrutiny for two reasons.
The bill was debated at a time of national
outcry about the rising level of the country’s
external debt and the mammoth domestic
debt. Consequently, a freeze on external
borrowing was agreed by the Federal
Government while the framework for issuance
of the monthly FGN Bond was to be reviewed.
Should the SWF become a vehicle for creating
national liabilities, it can be counter-
productive, especially because of the suspect
framework for the fund’s governance. What
is more, creating another borrowing vehicle at
a time of sovereign debt concerns is a
manifestation of the usual lack of
coordination in government policies.”
To drive home this point, Akintunde
compares Nigeria with Ghana, saying that
SWF opponents’ argument on its leverage
strips it of one of its myths. “It means SWFs
do contribute to market volatility with regard
to their investment behaviour and pooling of
the funds. Ghana, a nascent oil economy,
recently passed the Petroleum Revenue
Management bill, which, among other
provisions, established the Ghana Heritage
Fund and the Ghana Stabilisation Fund. But
the very idea of using oil revenue as collateral
for loans generated heated debate in
parliament. In Nigeria, however, the SWF
seems to be a borrowing vehicle. While the
controversial provision in the Ghanaian bill
eventually scaled legislative approval, its
application is in the realm of the wider fiscal
management, and not with regard to
funding the wealth funds created.”
Looking at the merits and demerits of the
Fund, the Edo State Governor, Comrade
Adams Oshiomhole, said the 36 governors were
not opposed to the Nigeria Sovereign Wealth
Fund but that they are only challenging the
manner the fund is being executed.
Speaking at the on-going 15th Stockbrokers
Annual Conference, Oshiomhole attributed
the perceived opposition of the governors to
the attitude of some ministers.
According to him, the former Minister of
Finance, Mr. Olusegun Aganga, handled the
issue of the SWF with so much arrogance.
“Let me be very open with you on the
arrogance with which former Minister of
Finance, Olusegun Aganga, handled the
issue of SWF. As the finance minister then,
he had powers over federal finances, not
states’ finances. No one should come out to
say that the Federal Government is more
transparent than state governments in terms
of finances. Savings at Federal level into the
SWF is for all Nigerians. Federal
Government has no state of its own to
manage. A state cannot save what it doesn’t
have. Savings is a function of earnings,” he
said.
He, however, said the Coordinating Minister
of Finance, Dr. Ngozi Okonjo-Iweala, and
the governors were making moves to resolve
the issue. “Okonjo-Iwela is very persuasive and
she is doing a lot of work in the interest of the
nation. The reality is all about discussing the
best way to save the future, not the savings.
Savings should not be based on excess crude
because the so-called excess is based on
forecasts whose bases are sometime doubtful,”
he said.