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Post-recession: Savouring gains of diversification



With the recent economic recession over, the Federal Government has shifted focus to non-oil sector with emphasis on agriculture and solid minerals where lies huge economic potential. reports Abudlwahab Isa


Many are of the opinion that the last economic recession was self-inflicted, induced by over dependence on crude oil and absence of elaborate plan for diversification.
With the economy out of the woods due to rapid deployment of various policy instruments and miraculous rebound in crude oil price, there is a renewed push to escalate the huge potential in the non-oil sector of the economy with agriculture and solid minerals taking the lead.
Interestingly, the Federal Government, having seen the danger of relying predominantly on crude oil with all its unpredictable vagaries, initiated reforms in these alternative sectors for economic value addition.
Besides the steps taken to boost the agric sector and the gains derived therein so far, a major policy thrust put in place to enhance the sector’s potential is the Agriculture Promotion Policy 2016-2020 document otherwise known as “The Green Alternative,” which is the outcome of an intensive consultative process starting in November 2015 through April 2016 and involving multiple stakeholders.
From farmer groups to investors to processors to lenders to civil servants to academics, many stakeholders provided detailed input, commentary, and support.
While commenting on the initiative, the Ministry of Agriculture and Rural Development expressed gratitude for the resources, energy and intellect put at the disposal of the ministry by parties too numerous to mention for their continued dedication and resolve to build a next generation agribusiness economy in Nigeria.
“Building on the successes and lessons, the vision of the Buhari administration for agriculture is to work with key stakeholders to build an agribusiness economy capable of delivering sustained prosperity by meeting domestic food security goals, generating exports, and supporting sustainable income and job growth.
“Therefore in 2016 to 2020, Nigeria’s policy now needs to be readjusted to solve the aforementioned challenges. The go forward federal priorities (in partnership with state governments) will be the following four: food security; import substitution; job creation; and economic diversification,” FMARD noted.

Solid minerals
On the other hand, is the sold minerals sector with large deposits of about 44 minerals located in different parts of the country.
These include glass sand, limestone, salt, shale, ball clay, galena, granite, marble, laterite, bentonite, phosphate, kaolin, pyrite, feldspar, lignite, gypsum, sphalerite, clay to mention just a few.
Sadly, these minerals were long abandoned in preference for crude oil until recently when concerted efforts are being made to give them priority attention.
Going by the current economic blueprint, the Economic Recovery and Growth Plan, the Federal Government envisages to grow the solid mineral sector’s Gross Domestic Products (GDP) to N141 billion at an average annual growth of 8.54 per cent between (2017- 2020) from the N103 billion in 2015.

Streaming revenue profile
The revenue stream from solid mineral sector is still low compared to earnings from crude oil. However, it is steadily improving on the strength of reforms and overhaul of the sector. Unlike previous dispensations when solid minerals paid no dime to the federation account, it is a different ball game today.
For instance, the sector remitted about N14. 6 billion in to the federation account in the last eight years.
A breakdown of the remittances to showed that in 2009, solid minerals revenue paid to the federation account was N931.7 million, N1.2 billion in 2010; it increased to N 1.3 billion in 2011 and N1.8 billion in 2012.
Similarly, the sector’s remittance stood at N 2.037 billion in 2013, N2.3 billion in 2014, N2.085 billion in 2015 and N2.8 billion in 2016.
As recent as last December 2017, revenue performance report of the Ministry of Mines and Steel Development (MMSD) showed that the sum of N413 million was collected and paid to the federation account, an amount higher than November figure of N397.4 million.
The December figure was higher than the ministry’s monthly target of N262.22 billion by N150.77 billion indicating an increase of 57.50 per cent. Outstanding balance in the revenue account as of December 2017 stood at N8.5 billion.
Commenting on the huge potential of solid mineral sector at a recent interview with New Telegraph, Acting Chairman, RMAFC, Alhaji Shettima Umar Abba Gana, said the commission’s effort to achieve resource diversification was paying off.
Abba Gana confirmed that as applicable to oil producing states, 13 per cent derivation was currently being paid to states whose solid minerals revenue is paid into federation account.
“The result has been very positive. The reason we took that line was simply because depending on only one source, oil, for revenue has opened Nigeria to vicissitude of oil price fluctuations. If we are going to diversify, the revenue commission has identified two veritable sources of income. The solid minerals and agriculture.
“Apart from their high potential in Nigeria, the two sectors are conveniently available in every state and every local government in equal proportion. That means unlike oil, which is located in five or about six states, there is presence of solid minerals everywhere. Every local government and state will benefit from derivation fund. The commission for the first time about two years ago worked out the 13 per cent derivation of solid minerals.
“About N15 billion was collected as taxes and royalties from solid minerals and included in the sharing formula as applicable to the 13 per cent of oil revenue. We wanted the states to see the benefits of allowing solid minerals to be developed because they will also earn 13 per cent of whatever revenue that comes out of solid minerals so developed. That was the main reason why we pursued the diversification of revenue across states and local governments.”

Blocking revenue leakages
To ensure maximum revenue is raked in by the Federal Government from the sector, government is leaving no stone unturned in blocking leakages.
It has therefore engaged the services of about 100 revenue consultants to work on areas of leakages in revenue accruing from the mining sector, with a view to shoring up earnings.
The consultants to be deployed to the six geo-political zones of the country in the coming week are to examine financial and production records of companies involved in mining activities in the last six years in order to determine whether appropriate royalties were remitted to government.
Minister of Mines and Steel Development, Dr Kayode Fayemi, disclosed the new step recently during the opening of a three-day induction and training for the revenue consultants in Abuja.
He said the main target of the ministry was to ensure that the Federation Account gets its fair due in royalties and taxes.
“Our expectation of this project is that the ministry would emerge as a lead revenue agency for the Federal Government of Nigeria in line with the growth projections of the Economic Recovery and Growth Plan (ERGP), which recognises the mining sector as one of Nigeria’s most promising growth sectors and acknowledges that its contribution to GDP doubled from N52 billion in 2010 to N103 billion in 2015.
“The ERGP further projects that revenue from the mining sector would grow from N103 billion (2015) to N141 billion (2020) at an average annual growth rate of 8.54 per cent (2017-2020)”
Dr Fayemi said he was optimistic that the ministry would surpass these targets, as all stakeholders work collaboratively to ensure the success of the R.O.V. Project, resulting in improved levels of voluntary compliance of operators.
The minister admitted that leakages in government revenue was a big challenge in the mining sector, a development, which, he said, the ministry was determined to redress with the ROV Project, following its approval by the National Economic Council (NEC).

The biggest headache troubling the mining sector, however, remains the activities of illegal miners. While their activities pre-date the current administration, the minister in conjunction with other stakeholders have mapped out plans to get rid of them. Quite a number of culprits, who were nabbed, are currently facing prosecution.

Last line
There is a refreshing confidence that given the level of reforms in both agric and solid minerals sectors to ensure their economic viability and make it attractive to genuine investors, both have the potential of becoming Nigeria’s next cash cow and capable of replacing crude oil.

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Financials: 33 firms get N461m fines for non–disclosure



The Nigerian Stock Exchange (NSE) has fined 33 quoted companies N460.7 million for failure to file their audited financial statements after the regulatory due date. Checks by New Telegraph showed that some of the firms were sanctioned for their inability to meet the regulatory requirements ranging between full year ended December 31, 2014 and 2017.


The companies include Great Nigeria Insurance Plc, Daar Communication Plc, Guinea Insurance Plc, Newrest ASL Plc, Niger Insurance Plc, Nigerian Enamelware Plc and Phama-Deko Plc.



Also included are Premier Paints Plc, Presco Plc, Royal Exchange Plc, Fortis Microfinance Bank Plc, Sovereign Trust Assurance Plc, Staco Plc, Standard Alliance Insurance Plc, Thomas Wyatt Plc and Union Diagnostic & Clinical Services Plc. Others are Unity Bank Plc, Equity Assurance Plc, A.G. Leventis Nig Plc, African Alliance Plc, Afromedia Plc, Austin Laz & Co. Plc, Capital Hotel Plc and Capital Oil Plc, among others.


Further checks showed that African Alliance Plc, Great Nigeria Insurance Plc, Thomas Wyatt Plc, Fortis Microfinance Bank Plc, Daar Communication Plc, Ekocorp Plc, Niger Insurance Plc, Academy Press Plc, Guinea Insurance Plc and Universal Insurance Plc shared about N362.5 million of the fines, which represents 78.76 per cent of the total figure.


The Exchange, in its X-Compliance report, explained that the initiative was designed to maintain market integrity and protect investors by providing compliance-related information on all listed companies.


The report stated: “Companies that are listed on the Exchange are required to adhere to high disclosure standards, which are prescribed in Appendix 111 of the Listing Rules.


“Financial information, which is periodic disclosure and on-going material events disclosure, should be released to The Exchange in a timely manner to enable it efficiently perform its function of maintaining an orderly market.”


The NSE, in an effort to achieve a world class capital market, had reiterated its commitment to maintaining zero tolerance posture on dealing member firms and quoted companies on violations of rules and regulations.


This is on the back of the exchange’s determination to shift gears to drive innovations cantered on increasing global visibility for the Nigerian capital market in the current year. Chief Executive Officer, NSE, Mr. Oscar Onyema, said recently that the Exchange will sustain a zero-tolerance stance on dealing member firms and listed companies’ violations to help boost confidence in the market.



Managing Director, Crane Securities, Mr. Mike Eze, reacting to the development, said the action of the NSE will boost investors’ confidence in the market because it is sending a signal that the NSE’s management understands the need for investors to get companies’ financial reports as and when due.


Eze said sanctioning erring companies is a way the Exchange is using to tell the investing public that they really want to revive confidence in the market. He added that investors need to take informed decisions before choosing which stock to buy, which, he said, could only be achieved if there is adherence of good corporate governance by the quoted companies.


A founding member of Nigeria Shareholders Solidarity Association (NSSA) and one of the leading shareholders’ activists, Alhaji Gbadebo Olatokunbo, said penalizing erring companies is a signal that it is no longer business as usual.


“The action is great and it shows that the NSE management is becoming alive to its responsibilities.



Besides, it is a signal to the companies in particular and the capital market in general that it is no longer business as usual. We must always abide by the rules,” he said.


Olatokunbo noted that the sanction would make other companies sit up and post their results as and when due, thereby providing investors, analyst and stockbrokers the platform to predict the real value of the companies.

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BOFIA: Proposed amendments to boost financial system stability



With proposals such as tougher sanctions for defaulters and more powers for the Central Bank of Nigeria (CBN), the House of Representatives bill to amend the Banking and Other Financial Institutions Act (BOFIA) seems to boost prospects of a safer banking system for the country. TONY CHUKWUNYEM writes


With the BOFIA regulating banking and other financial institutions as well as related matters in the country, there were often calls for it to be amended to accommodate the dynamics and challenges in regulation in the industry.


So given that the Seventh House of Representatives had made efforts but failed to amend the Act, it perhaps did not really come as a surprise to industry watchers that the current members of Nigeria’s lower House will decide to continue from where their predecessors.


Indeed, if the statement made by the Chairman of the House Committee on Banking and Currency, Mr. Jones Onyereri, while unveiling plans to pass a bill which: “seeks to amend the Banks and Other Financial Institutions Act, 2004 and to re-enact the Banks and Other Financial Institutions Act, 2017, and for matters connected therewith,” in March last year, is anything to go by, the country could have a new, tougher BOFIA before elections next year.


He had said at the time : “I’m worried to the extent that if you look at the BOFI Act amendment bill, you will agree with me that most banks create unnecessary infractions. How will you ask a bank to pay N100,000 for an infraction, that is why the bank can afford to give themselves billions of credit facility at the expense of the depositors.


“With respect to the regulator’s, there’s nothing weighty about the consequences of not doing your job as it were because why would you have the banking supervision department and you know that the law provides that no shareholder or bank director will give credit to himself or anybody whosoever related to him or her in excess of N50,000 but you are giving billions of naira.


“Central Bank of Nigeria (CBN), you know that no bank has the authority to give any loan whatsoever without the express approval of the CBN and you allow that to happen. So the time has come to take critical look at the BOFI Act and trust me, in the next two to three months, we will come out with the amendment, enough is enough,” he said.


Proposed amendments


Also, giving details of the proposed BOFIA amendments while briefing the House during a plenary session in last December, Onyereri said: “Section 44 makes provision for disqualification and exclusion of certain individuals from management of banks. It further provides that the Chief Executive Officer (CEO) of a bank appointed by the Board of Directors under such terms and conditions approved at the Annual General Meeting (AGM) shall not serve as a CEO for a cumulative period of more than 10 years.


“Section 44 (6) imposes a fine not less than N50 million on any bank that contravenes the provisions of this section and a fine of not less than N50 million or imprisonment for a term not less than three years or both on any director, manager or any other officer of the bank who contravenes the provisions of this section.”


According to him, section 47 of the bill also proposed a fine of not less than N50 million on any bank that contravenes any provisions of the Act, which an offence or penalty is not expressly provided for.


Specifically, he stated: “Section 2(2) of the bill imposes a penalty of not less than N50 million and imprisonment for a term of not less than 10 years or both against any person that transacts a banking business without a banking license.
“Section 5(4) provides for a fine of not less than N20 million against any director, manager or officer of the bank that fails to take reasonable steps to ensure compliance with any of the conditions of the licence.


“Section 16(2) imposes a fine of N20 million against any manager or officer of a bank who fails to disclose any personal interest in any advance loan or credit.


“Section 16(11) imposes a fine of N50 million against any director that fails to disclose any property whether directly or indirectly owned that conflicts with his duties or interests as a director of a bank. Section 18(8) provides for a fine of N50 million and five years imprisonment or both fine and imprisonment upon conviction on any bank officer that grants facilities exceeding 20% of the banks paid up capital to persons/organizations without authority of the board.


“Section 22(2) provides for a fine of N10 million against any director, manager, or officer of a bank who fails to take reasonable steps to ensure that the bank keeps proper books of account with respect to all transactions of the bank and imposes a fine of N20 million on any director, manager or officer of a bank that willfully caused a default by the bank in respect of the provisions if this section.


“Section 25(6) imposes fine of N2 million for every day a bank fails to publish on two daily newspapers its detailed financial statements.


“Section 27 also provides for the appointment, power and report of auditors. It further imposes a fine of N50 million against any auditor approved under this section that contravenes the provisions of this section and a term of imprisonment not exceeding five years in the partners if the auditor is a firm.




“Section 28(5) imposes a fine of not less than N20 million on a bank that fails to provide the required books, documents or information required by a CBN appointed examiner and an additional fine of N2 million for everyday the offence continues,” Onyereri said.


Significantly, the bill received widespread support from members leading to Speaker Yakubu Dogara who presided over the plenary, to direct Onyereri’ s Committee to continue with further legislative action on it.


Public Hearing


Thus, last week, the Committee held a two-day public hearing on the proposed amendments to the Act, which ended in Abuja last Wednesday.




Attended by key stakeholders such as the CBN, the Nigeria Deposit Insurance Corporation (NDIC) and several Deposit Money Banks (DMBs), the hearing saw the lawmakers and the regulators brainstorming on the way forward for the country’s banking industry.


Interestingly, while the CBN Governor, Mr. Godwin Emefiele, and the Managing Director/Chief Executive, NDIC, Alhaji Umaru Ibrahim, both welcomed the proposed amendments to BOFIA, especially as regards to incremental sanctions  directed mainly at individuals rather than the institutions, they, however, disagreed on the amount defaulters should pay.


For instance, Emefiele who was represented by CBN Director, Legal Services, Mr. Johnson Akinkunmi, said while increases in fines may not necessarily deter banks from breaching regulatory guidelines, he was optimistic that the significant increment in money penalties in the proposed amendment would help to address the problem.


However, the NDIC boss, who was represented by the Corporation’s Director of Legal/board secretary, , Mr. Belema Taribo, opposed the proposed fines saying they were too high.


“The NDIC, as a deposit insurer supports the passage of the bill into law as the current fine of N1000 does not meet contemporary realities. However, it is our submission that the proposed penalty of N200,000 is above 100 per cent increment from the current penalty. In view of the above, we propose a fine of N5000.”



Also, while the CBN Governor asked that the Apex Bank be granted reserved powers to revoke licences of non-compliant financial institutions where necessary, the NDIC proposed that the CBN should seek its consent before granting any application for banking licence.


“This is to enable the corporation have a prior evaluation of the applicants with regard to insurance of deposits,” the NDIC stated, adding that the power of banks to reverse revoked licences should be removed from the Act as the case is in other jurisdictions.


It said banks could, however, challenge the revocation if done in bad faith- where only damages could be sought.


The CBN had argued that the reserve power would enable it to revoke licences of non-compliant financial institutions where necessary, while any challenge of such powers by affected banks in a law court will be penalised.


Citing the case of Savannah Bank, the CBN said such legal  tussles were not in the best interest of bank customers and investors, noting that though Savannah Bank’s licence had been restored as directed by the Courts, depositors were yet to get their deposits as the lender has not been able to resume operations.


However, the lawmakers expressed concern that granting such extensive powers to the CBN could lead to abuses, a claim, which Emefiele strongly denied, citing instances where the regulator could have taken harsh measures against some banks, but restrained itself in order not to send the wrong signal to bank customers.



Other notable requests by the banking watchdog include its call for the abolition of Shell banks in the country on the grounds that they serve as institutions for money laundering and, “power to inject funds into a falling bank by way of equity participation up to a level that guarantees control by CBN.”


Last line
Although it is still not certain at this stage when and if the bill will be passed and eventually signed into law, the consensus among financial experts is that it is likely to result in a safer, stronger banking system.


As a financial analyst, Mike Ogugua, put it: “An amendment of BOFIA is clearly overdue so I believe the lawmakers have consulted widely with stakeholders. From what I have read, the bill will generally make banks to embrace good corporate governance, which will be make the banking system safer.



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Nigeria exports N97.24bn liquefied gas to Asia



Five vessels laden with 308,000 tons of liquefied natural gas valued at N97.24 billion ($270.1 million) have left Nigeria through Onne Port this month as demand for gas by China, Pakistan and India soars.




It was learnt that global liquefied natural gas shipments have risen 40 per cent since 2015 to almost 40 billion cubic meters (bcm) a month since last January. It was also gathered that the strong economic growth and cold winter across the Asian countries has pushed up the demand to a doubling of LNG prices from mid-2017 till February, this year. Last January, ex-plant LNG prices were quoted at $877 (5,700 yuan) per ton at China.



Among the vessels laden with 308,000 tons of the products are LNG Bonny II with 70,000 tons, LNG Golar Bear, 70,000 tons; LNG Enugu, 68,000 tons; LNG Ogun, 70,000 tons and LNG Nave Bellatrix, 30,000 tons. According to Business Monitor International (BMI) Research, the global LNG tanker market looks increasingly bullish for 2018 and 2019 because of strong demand growth.



Last year, Pakistan had turned to Nigeria for a new trade deal to import more liquefied natural gas. Following the deal, Pakistan’s per annum import of gas, which stood at 4.5 million tons, was increased to nine million tons by the end of 2017.


The National Bureau of Statistics (NBS) had explained a total of N372.44 billion was earned by the Federal Government from LNG exports in the first quarter of 2017. Last year, Nigeria exported 3.40 million metric tons through Onne and Warri Ports between January and December.



T he gas was transported to India, Pakistan, China and other major buyers such as Colombia, Turkey, Egypt, Jamaica, Jordan and Poland. Between last September and October, Nigerian Ports Authority (NPA) shipping data revealed that a total of 443,000 metric tons of the product were carried by seven vessels from Onne Port to various destinations.



Last October, 130,000 tons of the product were ferried out of the country by LNG Sokoto, laden with 65,000 tons and LNG Akwa Ibom, 65,000 tons respectively.


Also in September, LNG Abalamabie left the country with 77,000 tons; LNG Ogun, 68,000 tons; MT Tom Arawa, 25,000 tons; LNG Lokoja, 68,000 tons and LNG Abuja II, 75,000 tons.


Last July and August, 506,000 metric tons of gas was exported out of the country. A total of 388,000 metric tons of the product were ferried out from Onne Port in June, while six vessels exported 389,000 tons of gas from Onne and Warri ports in May, 2017.


March and April shipment recorded a total of 293,000 metric tons from Onne Port, while 274,000 tons was taken away from Warri Port.


At Onne Port, LNG Trinity Arrow ferried 65,000 tons; LNG Kano, 68,000 tons; LNG Cross Rivers, 65,000 tons; LNG Adamawa, 65,000 tons and Silver Joan, 65,000 tons, while, LNG Kano exported 65,000 tons; LNG Enugu, 68,000 tons; LNG Ogun, 68,000 tons and LNG Maran Gas Agamemnon, 70,000 tons from Warri Port.



In February this year, 365,000 tons of gas was exported from Onne Port by LNG Cross Rivers laden with 65,000 tons; LNG Goodside Goode, 70,000 tons; LNG Pskov, 70,000 tons; MT Aegean Wave, 25,000 tons; LNG Maran Gas Mystras, 65,000 tons and LNG Vuekiy Novgorod, 70,000 tons.

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