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With the Central Banks recent stand on a Cashless (Nigerian) Society, what problems are our traders likely to face?

PAPER REVIEW

MINIMUM WAGE: AT LAST, FG CONCEDES TO LABOUR

After several weeks of negotiation between the Federal Government and organised labour following the disagreement on the mode of implementation of the National Minimum Wage Act, the former Tuesday agreed to demands of the latter that all cadres of civil servants should benefit from the new wage regime. Consequently, workers on grade levels 1 to 17 in the federal civil service are to have some money added to their current salary, as an increment arising from the new National Minimum Wage Act. Both parties also agreed, after a two-hour closed door meeting, that the implementation of the new pay structure would commence this month. In a communiqué read by the Minister of Labour and Productivity, Chief Chukwuemeka Wogu, the Federal Government gave the assurance that the new wage would be implemented and the issue of relativity would be taken care of. “The detailed negotiation on relativity adjustment with respect to the implementation of the minimum wage has been sorted out and agreed upon. Modalities will be worked out and these modalities that will be worked out will be worked out by the joint committee and will be tabled before the national executive councils of NLC and TUC,” he read. Briefing newsmen after the meeting, President of the Nigeria Labour Congress (NLC) Abdulwahed Omar said the discussion on relativity would have been concluded by July 31, but unfortunately, it was segmented because of one or two areas of non-agreement. “Majorly in the area of adjustment across the board, as a result of compliance with the new Minimum Wage Act, this adjustment now cuts across board in order to maintain some reasonable relativity,” he said. He said all labour centres would make formal presentations to their respective organs in a meeting by today and would communicate to the government whatever agreements were reached. President-General of the Trade Union Congress (TUC) Peter Esele also confirmed that the issue of relativity would be discussed at the National Executive Council (NEC). ThisDay

FRSC BEGINS NEW NUMBER PLATES THIS MONTH

The Federal Road Safety Corps is to commence the issuance of new vehicle number plates this month in its renewed determination to harmonise all existing modes of licensing of vehicles nationwide. The FRSC, which said Nigeria was currently losing over N15bn annually to vendors of fake vehicle licences, also planned to introduce a new driving licence, with new security features, to make it difficult for fraudsters to continue to forge the document. A statement by the corps on Monday said that the new plates would be attached to vehicle owners with an identification tag bearing the number affixed to the windscreen for ease of security checks. It quoted the FRSC Corps Marshal and Chief Executive, Mr. Osita Chidoka, as saying the new vehicle number plates formed part of corps’ strategies towards restoring order and sanity in the nation’s motor vehicle administration scheme. On the features of the number plate, the Corps Marshal said that beside the improved security features, the number plates would come with bolder embossed character and the 50th Nigerian anniversary commemorative logo. Chidoka also said that the FRSC had completed an upgrade of its Lagos production plant, especially in information and communications technology to ensure a hitch-free unveiling of the number plate. Other measures for the smooth production of the new number plates, according to him, are the establishment of two new plants in Gwagwalada, Federal Capital Territory, and Awka in Anambra State; cleaning up and updating of central database on motor vehicles in Nigeria.  To pave the way for the new arrangement, Chidoka said that the corps had initiated a quality management system and total overhaul of the national vehicle identification scheme, which would require vehicle owners to exchange their present number plates for the new ones. The statement was, however, silent on when the FRSC would commence the new driving licence.  The corps marshal had earlier said that the new regime would take effect from April this year. He said that the organisation was disturbed by the growing number of syndicates engaged in the illegal production of driving licences and other vehicle documents. The FRSC chief executive added that drivers below 25 years would be required to renew their provisional driving licences until they clocked 25. Similarly, those above 65 years would undergo strict verification every year at states’ vehicle inspection offices before being issued with the licence. He, however, warned that any driver under 25 years would not be allowed to drive at night.

PAPER REVIEW

VICTORY FOR LABOUR AS WAGE TALKS CONTINUE TODAY

The Federal Government and organised Labour appear to have adopted a waiting game in their bid to resolve the crisis generated by the delayed implementation of the minimum wage. At the resumed talks on Sunday which lasted five hours, Minister of Labour and Productivity, Emeka Wogu, who briefed the media on the outcome of the meeting, said the parley would resume for further discussions on the way forward. Wogu said: “Both government and Labour have agreed to meet again on Tuesday (today) for further discussion.” But speaking outside the venue, Acting General Secretary of the Nigeria Labour Congress (NLC), Owei Lakemfa, claimed government has agreed to pay the wage bill across board. Lakemfa hinted that what would be discussed today would be the modalities for the implementation of the minimum wage. He said: “There are no contentious issues now. Government has agreed to pay across board and everybody will benefit from the wage. It is a very simple thing. We are having negotiation. It is not about dictatorship and so we will agree on some facts and we need to further look at what to do. There is nothing strange about that. We are human beings.” Lakemfa dispelled the notion that workers might lose confidence in the NLC leadership for not standing firm on the negotiation so far. He stated: “The people know we are representing them and Nigerian workers know that we will never sellout.” But there were conflicting signals as to what transpired at the meeting since no concrete agreement was reached.

MARKET OPENS WITH 0.37% RISE

The Nigerian Stock Exchange (NSE) All-Share Index rose by 0.37 per cent to close at 23,916.90 just as some companies reported impressive results for the half year ended June 30, 2011. The benchmark gauge, which fell for three days last week, closed at 23,916.90 when trading opened for the week Monday. Similarly, the market capitalisation of equities added N28 billion, rising from N7.622 trillion to close at N7.650 trillion. Market operators attributed the positive move partly to investors’ reactions to some of the results announced by the companies, which showed higher profitability. Meanwhile, investors traded 268.308 million shares valued at N2.143 billion in 5,080 deals led by the banking sub-sector with 180.051 million shares worth N1.639 billion exchanged in 2,901 deals. The Nigerian Stock Exchange (NSE) All-Share Index rose by 0.37 per cent to close at 23,916.90 just as some companies reported impressive results for the half year ended June 30, 2011. The benchmark gauge, which fell for three days last week, closed at 23,916.90 when trading opened for the week Monday. Similarly, the market capitalisation of equities added N28 billion, rising from N7.622 trillion to close at N7.650 trillion

FG MOVES TO ACTUALISE $28BN GREENFIELD REFINERIES

The Federal Government is making moves to begin the construction of three Greenfield refineries worth $28bn, as its representatives will in the next two weeks meet with consultants in the United Kingdom to discuss the projects’ detailed feasibility study, which was completed last month. The Group Managing Director, Nigerian National Petroleum Corporation, Mr. Austen Oniwon, said that after discussing the study, financiers of the projects would be engaged, while the contractors would also have access to the feasibility study. Oniwon, who disclosed this in Abuja on Monday at the opening of the Society of Petroleum Engineers’ Annual Conference and Exhibition, said that there were huge opportunities in the monetisation of the nation’s abundant oil and gas resources through joint ventures with partners. The NNPC had last year signed a Memorandum of Understanding with the China State Construction Engineering Corporation for the construction of three Greenfield refineries and a petrochemical plant in Nigeria. Under the terms of the agreement, 80 per cent of the projects’ cost will be funded with a term loan to be provided by the China Export Credit Insurance Corporation and a consortium of Chinese banks led by the Industrial and Commercial Bank of China, the world’s largest bank. On the rehabilitation of the existing refineries, Oniwon said, “We have given ourselves 24 months to rehabilitate the three refineries.  “We are starting with the Port Harcourt refinery, and we have engaged JGC of Japan, which is partnering Tecnimont of Italy, and they are at present in talks with the hope that by the second or third quarter of next year, they will move into the Port Harcourt refinery and commence rehabilitation.”

PAPER REVIEW

BANKING & FINANCE

REPS OKAY ISLAMIC BANKING, CASH LIMIT

The House of Representatives has endorsed the Islamic banking and N150, 000 cash withdrawal limit introduced by the Central Bank of Nigeria (CBN). The endorsement came after an intensive briefing provided by the CBN Governor, Sanusi Lamido Sanusi on the two initiatives on the floor of the House yesterday. The briefing, which was applauded severally by members, brought out the benefits of the non-interest banking and the N150, 000 cash withdrawal limit. Lawmakers occasionally burst into thunderous applause as the CBN boss explained the motives behind the initiatives, especially when he challenged opinion and political leaders to lead by example and appreciate initiatives that would take the country from the doldrums. Sanusi told the House that the first memo for approval of licenses for Islamic banking was received and approved by the CBN during the tenure of his predecessor, Prof. Charles Soludo. The apex bank boss insisted that if Nigeria must meet up with other countries in terms of development, her citizens must learn to put things right in line with international standards. Sanusi declared that profit sharing without interest banking was not restricted to Islam and Muslims alone. According to him, the first memo for approval for licences for Islamic banking was received and approved by the CBN during the tenure of Soludo in 2008.His words: “The fact is that some people approached the CBN and said based on the Banking and Other Financial Institutions and Allied Matters (BOFIA) Act, which made provision for non-interest banking, they wanted a licence to operate Islamic banking. And we issued guidelines. Soludo played more roles in formulating guidelines for the establishment of Islamic banking. I am only completing the job.” He said the guidelines issued by the CBN for the operation of Islamic banking stipulated that no form of discrimination would be allowed in terms of employment, structure and transaction. The briefing which was characterised by occasional applause for the CBN boss, also revealed that Islamic banking, like every other non-interest banking, entailed ethical and socially responsible investment, unambiguous terms, non-faith-based products and services and the prohibition of unlawful businesses. On the N150,000 cash withdrawal limit, Sanusi said it was meant to generate funds to offset cash management, adding that by 2012, direct cost of cash in the Nigerian banking industry is estimated at N192 billion. According to him, the circular never prevented any individual from withdrawing cash above N150,000 but whatever amount one withdraws in excess of N150,0000, there will be a charge. Guardian

AMCON, ACCESS BANK TO INJECT FRESH N600BN INTO INTERCONTINENTAL BANK

As the September 30 deadline given by the Central Bank of Nigeria to the rescued banks to fully recapitalise approaches, the Group Managing Director, Intercontinental Bank Plc, Mr. Mahmoud Alabi, has said that the bank will receive fresh N600bn in the next few weeks. The amount, according to him, will be provided by the Asset Management Corporation of Nigeria and Access Bank Plc. Alabi disclosed this on Thursday during the bank’s “I save I win” promo and customer forum in Abuja. He said that already, a memorandum of understanding between the bank and the fund providers had been signed. The fresh funds, he noted, became imperative because the huge loss of N677bn recorded by the bank in the peak of the banking sector crisis of 2009 had made it to have a negative net asset in its balance sheet. The crisis led to the sacking of the former Group Managing Director of the bank, Mr. Erastus Akingbola.  Alabi said that the bank had a non-performing loan portfolio of N158bn two years ago, but that the figure dropped by 25 per cent to N119bn last year owing to the intervention of AMCON. He said the huge NPLs impacted negatively on the bank’s financial performance as it recorded the highest loss in the history of banking operations in the country. He, however, added that with hard work and determination of the management, Intercontinental Bank returned to profitability in 2010 as it posted a profit of N65bn. Punch

CAPITAL MARKET

FG SELLS N70BN SOVEREIGN BONDS

The Federal Government has sold N70bn in three, five and 10-year sovereign bonds at its seventh debt auction of the year.  The Debt Management Office said on Thursday that it sold N30bn of the three-year papers, N15bn of five-year and N25bn of 10-year papers. The debt office also said that the papers were due to mature in 2014, 2015 and 2018 respectively, adding that all the papers were reopening of previous issues.  Reuters reported that yields were lower than at the previous auction in June, with the three-year paper allotted at a marginal rate of 10.24 per cent compared to 11.69 per cent last month, while the five-year instruments were allotted at 10.70 per cent, down from 12.75 per cent.  It added that the 10-year papers were allotted at a marginal rate of 11.49 per cent. The Central Bank of Nigeria, last month, eased restrictions on foreign investors holding of government debt for at least one year, a move meant to attract new offshore inflows into the country. DMO in a statement said, “The original coupon rates of 10.50 per cent, four per cent and 10.70 per cent for the three-year, five-year and 10-year offers respectively will be maintained. Total subscription stood at N157.98bn against N153.15bn last month.” The Federal Government issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit. Meanwhile, the naira is seen extending gains against the dollar in the coming week mainly due to dollar inflows from the energy sector, while greater offshore interest in Kenya’s bond market might support the shilling. According to currency dealers, the naira is expected to gain further next week as currency dealers anticipate increased dollar inflows from energy companies selling their month-end greenbacks to some lenders. Many of the oil firms operating in Nigeria usually sell dollars at the end of the month to obtain local currency for their domestic obligations. The naira traded at N152.15 per dollar at the inter-bank market on Thursday, stronger than N152.20 recorded on Wednesday. Punch

PAPER REVIEW

ZENITH BANK POSTS N35BN PROFIT

Zenith Bank Plc Monday reported impressive financial results for the second quarter (Q2) ended June 30, 2011 with profit after tax (PAT) rising by 44 per cent. The results made available to stockbrokers during trading by the Nigerian Stock Exchange (NSE) showed gross earnings of N122.84 billion, up by 27 per cent from N96.85 billion in corresponding period of 2010. Pre-tax profit rose by 38.2 per cent to N35.05 billion from N25.34 billion in the 2011, while profit after tax grew by 44 per cent from N21.3 billion to N30.67 billion in 2011. Also, margins firmed strongly as pre- and post- tax margins rose from 26.16 per cent and 21.99 per cent 2010 to 28.53 per cent and 24.97 per cent in 2011. The Chairman of Zenith Bank Plc, Mr. Steve Omojafor, had told shareholders at the Annual General Meeting (AGM) of the bank recently that even in the face of very challenging operating environment, the bank had maintained its culture of outstanding performance and industry leadership. According to him, the bank remains committed to delivering superior returns to its shareholders.  Shareholders of the bank received a dividend of N26.6 billion, which translates into 85 kobo per share for the year ended December 31, 2010. ThisDay

FG OFFERS SMES N75BN CREDIT FACILITY

The Federal Government has offered to release N75bn to Small and Medium Scale Enterprises across the country as a credit facility to strengthen their capacity for job creation. The Minister of Trade and Investment, Dr. Olusegun Aganga, disclosed that on Wednesday in Abuja at a Workshop on Attracting Investments into Nigeria. He said that the money would be disbursed to SMEs through the Bank of Industry and the Nigerian Import Export Bank at a single digit interest rate. Aganga said that the Federal Government would give priority attention to the development of SMEs in the next four years by providing the necessary incentives for their businesses to thrive.  He said, “One of the major areas of concern for the Federal Government is the growth and development of the Small and Medium Scale Enterprises. We have identified lack of access to credit as one of the major factors inhibiting the growth of SMEs in Nigeria. Very soon, the government will commence the disbursement of $500m credit facility to SMEs through the Bank of Industry and the Nigerian Import Export Bank at a single digit interest rate.” “The Federal Government is determined to restructure and reform the economy by creating the necessary macro-economic and regulatory environment, as a way of attracting Foreign Direct Investments and encourage ideas that can lead to the realisation of the full potential of our national resources,” he added. The Punch.