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Hussain: Corruption cause of banks’ bad debts

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Hussain: Corruption cause of banks’ bad debts

Principal Partner, Yomi, Hussain & Co, Mr. Yomi Hussain, has over 27 years experience In Financial Services. He Is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) as well as the Chartered Institute Of Taxation Of Nigeria (CITN.) In this Interview with Tony Chukwunyem and Joseph Agumagu, he speaks on topical financial issues. Excerpts:

 

The NDIC recently disclosed that the former management of Skye Bank is under investigation over financial irregularities that led to the collapse of the lender. It was alleged that one of the allegations against the previous management is that they kept two separate set of books. Why didn’t their auditors discover this until the CBN’s intervention?
The most unfortunate thing about the job of an auditor is that your work is based on information you have no complete input into. And if you are not the author of a piece of information, you can only base your judgment or whatever conclusion, on the information you are given. If the bank has the habit of keeping their own set of records, it is not out of place. A lot of companies do it, either for tax purpose, for management or for this and that. So, the auditor comes around, looks at his books and he is able to conclude that what he sees there, based on the information given to him, is okay. So, to a large extent, you cannot blame the auditor. That does not mean that some additional professional input will not discover a trigger that will enable you to probe further and see what is fundamentally wrong with the information. That is where professionalism comes to play. I cannot excuse the auditors for that. It has happened a lot of times. Another thing is that it is not impossible to see a situation where auditors will collude with the company. It has happened before. But one thing we can just conclude on is that until one gets the facts of what transpired, one cannot hold the auditors responsible.

What is your position on the recurring issue of bad loans that frequently threatens the banking industry?
My stand on it is very simple. There is this serious problem that has eaten deep into the fabric of our society and that is corruption. And until and unless all of us decide that we don’t want to go that way, that is when we are going to get the solution to all these problems. Legislation can be there, law enforcement and all that, but we cannot do it until all of us decide, like in all civilized societies, that this thing (corruption) is not right. Let us all stop! What do you want to do when somebody walks in and says, “I need a loan to do x,y,z”, and then, because of the way we are, we give him the loan and expect him to give you kickback? From that point, the loan is already compromised because he won’t follow the procedure, he will take unnecessary risks and he eventually put the bank into trouble. If you go to the Asset Management Corporation of Nigeria (AMCON), too many stories about loans being given, about loans not being properly backed up with collaterals, and it runs into trillions. You cannot believe it. AMCON ‘s list shows that 13,000 entities owe about N6 trillion. How did this happen? The last time I went through the list, the most shocking thing is that, you will not even see any meaningful company there. You won’t see Globacom, you won’t see Leventis and all other big companies on the list; just funny companies on the list. So, it presupposes that there is more to it than giving the loan to improve the business. If trillions can just pass through the banks without getting the big companies involved, or maybe they are involved but they are reasonable enough to be able to settle the loan as at when due, maybe that is why their names are not appearing on the list. I am not sure that is the correct picture. To have a situation where the bulk of the loans are from very unfamiliar companies, then that has to do with this thing we have been fighting for long; that is corruption.

How do you react to Nigerians’ increasing concern over the nation’s rising debt profile?
Borrowing is not a sin. It depends on what you borrow to do. If your business is expanding, definitely your initial capital injection will not be able to carry you far. You need to borrow. When you borrow, it expands the opportunities of your business and you will make more money for yourself. The same thing applies for the government. When government borrows and inject it into the economy, it will have multiple effects on the economy. Once the economy grows, the money will be paid back in no time because taxes will be collected. But the problem of this country is that the bulk of the money is frittered away on contracts being awarded to friends and through direct stealing. So, by the time the money remaining cannot do what it supposed to do, it will be attracting interest you can’t pay back. What happens in business applies to government. You are talking about rising debt profile, is government really engaging seasoned professionals? And there is this culture we have- sentiments. When you have an idea, you will not sit down and analyze it before running to town, to the press, to social media and play it up. Let’s assume that four or five years ago our debt profile is $4billion. As at that time, the exchange rate was about N157/$ but now it is N360. If that $4 billion does not grow, by the virtue of the change in the exchange rate, that $4 billion would have been $12 billion. So, in practical terms, the debt is not really growing astronomically to attract panic. What I have to watch out for is this: “it was in dollars then, how much is it in dollars now?”. It was $4 billion then and it is $12 billion now. That gap is a long time and a lot of things must have happened in-between the years. So, there is nothing to panic about. We should apply a lot of probity. We should apply it in such a way that it will benefit our economy.

But some financial experts have advised that we should stop borrowing?
First, we cannot stop borrowing but we can reduce it. Secondly, whether it is internally generated revenue or borrowing, once it is properly directed to the right cause, the multiplier effects will be such that we won’t be using 50 percent of our revenue to pay. If the loan is properly directed and then it will have multiplier effect to the economy the percentage we use in servicing debts will drop overtime. When I look at this country, I see limitless opportunities. I see a greater country, even greater than

the America we are talking about. I go to all these countries, what is so spectacular about them? What do they have? But one thing about them is that they manage what they have. They make sure they encourage the right people to do the right thing. Take Bill Gates, for instance. He is just one person in America but look at the money he is making for America. If he was not encouraged, they would have lost all that money. It is not about government sitting down and sharing oil money; that is not what we are talking about. What we are talking about is trying to bring out the creative innovation in people; not only will they be able to create wealth for the country but they will send the wealth all over the world. That is what Bill Gates is doing all over the world. But you see, the problem we have in this country is that we don’t believe in value for value. Let me explain what I mean. Bill Gates has given the world Windows and all that, and the world has compensated him with billions of dollars and he is one of the richest men on earth today. That is the perspective Nigeria should follow. ‘Not that I have some friends in government, let me just look for contracts’. Or ‘let me go somewhere I can easily manipulate and make money’. No! But let us encourage people to create. Let us compensate those who have been able to do it; that is the only way the economy can grow. That is what is happening in China, Singapore and all that. They encourage their people to create. Once you create, you push the value into the society. And you can even push it beyond your boundary. Then you will be rich and your country will be rich and you will pay your taxes and all that. That is it!

Do you support government increasing taxes?
It depends on what their policy is and what they want to achieve. But what is clear right now is that (tax) coverage is still very low. They should concentrate on that first. Those who are not within the tax net should be brought into the net. It is after that, they can say we have brought everybody in and this thing seems not to take care of our budget, let us tinker with it a little. Until then, it doesn’t make sense. You cannot over flog those who are responsible (complying) and leave those who are not within the tax net alone. It is not fair. That is to the extent that I will not support the idea of increasing taxes because right now, as we speak, until recently, it is almost 10 per cent that is being covered at the federal level. So, you can imagine what effect it will have when they cover more ground and the money, like I said earlier on, is not pilfered neither is it mismanaged. Those two things are important. If you say that the money is not enough and you keep abusing money, it will never be enough. Let us all come together and decide that this thing is enough; we are tired of this stealing. Until then, it is not going to pay us; it is like wasting our time. You will steal and go and build a house with fence that covers your house. You can’t even ride a car of your choice because you are scared. So, why can’t I make my legitimate income and live in peace. This Europe you run to, the London you run to, Dubai you run to, look at what is happening there. They have peace because everybody contributes and they compensate them. You cannot say because you are a citizen of Dubai, for instance, you must be a billionaire. If you put in productivity, creativity and so on and people decide to buy it from you, they will voluntarily give you the millions. Same in America, same in Europe, same all over the world. You can’t say you are a millionaire and they can’t trace where the money is coming from. But here, what we hear is that, “he has made it; he has hit it; he is a friend of the Governor; he is the uncle of the Senator.” This cannot take us anywhere. The same government will be shouting that I have no money to build roads for you, to build hospitals, to pay salaries. You have forgotten that you have shared the money among yourselves. So, that is why corruption is the key problem. Once that is out, we are ready to build our nation. No wonder people keep running away from this country. They go to America and achieve a lot there. Trump, even in his excesses, cannot dare tell Nigerians to leave his country because they are contributing a lot towards the sustenance of that society. Let us do the same thing here.

What is your take on the issue of a new national minimum wage?
It all boils down to the fundamental error of our policies and our approach to issues. It is not the minimum wage that is the problem. It is the purchasing power of the workers. Everything now boils down to the foundation that has been wrecked. The superstructure is now crying for help. About 45 years ago- let us not even go that far- in 1983, our N1 was exchanging for $1.33 cents. The same one dollar is now exchanging for N360. You can see the reverse. The man that was earning N300 then is better than the man that is earning N300,000 now. You see, that is where the problem started. That is why they have to concentrate on what is the purchasing power. I look around this house, I look around the street, and I can’t see what we are importing from America that makes their dollar to exchange at N360 to a naira. Let the monetary economists come and assist us here. What exactly are we buying from them that make their one dollar equivalent to N360? Let our professionals in that area work on it. If we continue like this, we will just be bashing ourselves unnecessarily. We are abusing our currency. Let us give our currency more respect. For as long as I can remember, I have been hearing devaluation, devaluation, devaluation. I have never heard for once that let us even turn it the other way. If we encourage our people to produce, and we produce what we consume and we import minimally, then our purchasing power will improve. But when you now concentrate on exchange rate and the Central Bank of Nigeria (CBN) policy people will sit down and say that our exchange rate is this and that every other month, nobody has been able to tell us what the basis is. I know that exchange rates started from gold standards. What criteria are they using now that makes it so abusive of our own currency? We are blessed with oil. We are blessed with other natural resources. Let us think out of the box for a while. Let our monetary economists tell the international community that the wealth of oil we have underground and other wealth we have and human resources we have, let us discount it with what value it is today and compare it with what other nations have. Let us use that to determine our exchange rate. You will be shocked at what you are going to see. Also, let us shock the world by saying that if you want to buy my goods, buy it in my currency. If you want to lift my oil, pay in naira. And if you don’t have naira, you can come here and source for naira. But you are the ones that determine the price in dollars; you are the ones that will determine the quantity you are going to buy in dollar, too. Where does that lead us? Let our monetary economists and policy makers think out of the box. That is where the Chinese are today. If the Chinese want to rely on Adam Smith economics, they won’t be where they are today. Let us look at what they did? I travel all over the world. The Chinese are all over the world, doing business. What stops Nigerians from doing the same thing instead of going through Sahara desert and Mediterranean Sea, killing themselves?

What is your take on the clamour for economic restructuring?
You see, it is common sense. I am in my office to take care of my staff. I won’t expect any related company, maybe in the UK, to come and do the same. It won’t be effective. All over the world, the local government administration is part of the federal government. They provide light, water and the likes, so that when your light equipment or water equipment is not working, you can stroll down to your local government and ask the chairman or the person in charge. Local governments should be empowered more than any other government. You know why? Every part of this country geographically is a local government. Even the FCT has local governments. Yes, the federal government should empower the local governments so that they will be able to concentrate on the economic restructuring you are talking about. So that workers’ salaries won’t distract them. When the economy improves, the government will have no business in creating jobs. It is not government business to create jobs. Just go around the world and you can assess the number of people working in the supermarkets; they are not less than 2,000 persons in one supermarket- just supermarket alone. They are not working for government. They are working for some serious businessmen. Let the government put infrastructure in place so that people can be engaged economically, so that they can engage others, too. That is how jobs are created. Government cannot be employing people. What will they be doing for government? Their job is administration, pure and simple! Give contracts to very good engineers to construct good roads for you. Let them be responsible for giving you good roads. Same thing with water, same thing light. Concentrate on the policy that will ensure you get value for your money. And whatever is the outcome of all this, will be to the benefit of the common man.

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Business

Gencos threaten shutdown of power generation

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Gencos threaten shutdown of power generation

    .. say they are being owed over a trillion naira

 

Crisis looms in the power sector as the Generation Companies (Gencos) have threatened to shutdown power generation if the federal government failed yo call the Nigerian Bulk Electricity Trading Company (NBET) to order.

 

The Executive Secretary, Association of Power Generation Companies, Dr. Joy Ogaji, who handed down the threat on Sunday, said the GenCos are being owed over a trillion naira and it had become difficult to pay the gas suppliers

 

Ogaji decried the frustration the GenCos are facing  from the management of the NBET, stating that the Bulk Electricity Trading Company has constituted itself to a regulator and no more a debtor to the GenCos

 

The Executive Secretary said that they have written relevant authorities on the demand by NBET that the GenCos would pay 0.75% administrative charges before they can access the N600 billion released to them by the Federal Government.

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Aviation

Last remains of Ethiopian plane crash victims buried, families say little notice given

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Last remains of Ethiopian plane crash victims buried, families say little notice given

The last remains of 157 people killed aboard an Ethiopian Airlines plane in March were interred at the crash site, farmers and families told Reuters, but some relatives were upset they had been unable to take part in the ceremony.

Nadia Milleron, whose daughter Samya Stumo was killed, said an email was sent to some families — but not all — notifying them of the burial just two days before it happened.

“By the time the burial took place I was just wiped out; I was just glad they were doing it. I was tired of it not being done,” said Milleron. “But a lot of people didn’t feel like that. They hadn’t been aware of what was happening.”

Ethiopian Airlines did not return calls seeking comment about why some families were not told in advance.

Families have been begging the airline to fill in the crater left by the March 10 crash, which still contained remains too small to be recovered.

Milleron said on Saturday that locals had been burying remains exposed by rains in small mounds of earth. She herself found a bone at the site when she visited Ethiopia to collect her daughter’s remains in October, which she told the airline about in an email.

The force of the impact meant no complete bodies were recovered; partial remains were tested for DNA and finally returned to families last month.

As the burial took place on Thursday, a U.S. embassy representative present kept Milleron updated by text: “Now they’re laying the coffins down, now they’re putting earth on them …”

“I became a blubbering mess,” she said.

Milleron said the lack of notice of the burial ceremony had raised tensions between the families and Ethiopian Airlines.

“We are looking into taking legal action against EA – not of course to exhume and re-organise the burial, that’s done – but to make sure we secure a leading role in planning for a future memorial,” said Adrian Toole, a British father whose daughter Joanna was aboard the plane.

“EA are clearly on a corporate strategy to ‘tidy up’ the remaining issues so as to get the whole episode out of the public eye.”

Representatives of the airline and of Boeing and some embassy employees were there. The Boeing representatives were on a prearranged trip to discuss community projects, Milleron said.

Boeing manufactured the 737 MAX 8 plane, which nosedived shortly after take-off. A preliminary investigation pointed to a malfunctioning anti-stall system known as MCAS, which was also implicated in the crash of a Lion Air plane in Indonesia five months earlier. All 189 people onboard that flight were killed.

Tesfaye Mulatu, a farmer near the crash site, said he had seen a helicopter arrive and cars bring caskets on Thursday. The crater left by the impact has been filled in, he said.

“Now, the area looks a football field,” he told Reuters by telephone.

Some bereaved families have formed associations and hope to use funds from Boeing to build a memorial. The manufacturer will make $100 million available, with half going to families and half to projects in local communities.

“We continue to offer our deepest sympathies to the families and loved ones of the victims of Ethiopian Airlines Flight 302 and Lion Air Flight 610 and we are committed to helping those affected by these tragedies,” Boeing spokesman Chaz Bickers said.

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Duty waiver on building materials can reduce cost of housing in Nigeria –Chukwuemelie

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Duty waiver on building materials can reduce cost of housing in Nigeria –Chukwuemelie

Determined to bridge the housing deficit in the state and satisfy the needs of all residents, the Enugu State Housing Development Corporation (ESHDC) embarked on multiple housing projects for low and high income earners. The General Manager of the Corporation, Mr. Agu Chukwuemelie, in this interview with KENNETH OFOMA, highlights the strategy and challenges towards achieving these objectives. Excerpts:-

 

How has it been with your Corporation and the task of achieving your mandate?

 

 

I want to give God the glory and then thank the Executive Governor of Enugu State, Rt. Hon. Ifeanyi Ugwuanyi who has given me the opportunity in the first place to serve the state in the capacity of the General Manager of Enugu State Housing Development Corporation because without this opportunity I don’t know whether we can be discussing this. And secondly I thank him for the enabling environment he has created in the state, for the security which is actually the selling point of most of our parcels and our houses. We noticed that because of the peace in the state and because of the security in the state many people are relocating from outside the state, from the Diaspora as well and they are relocating back to Enugu which used to be the capital of Eastern region. I thank my management which has worked with me because I would not have achieved this without them.

 

 

Coming to what we have done as a team; when I took over, I told them (staff and management) that jointly we are going to break all records kept by all the other MDs and CEOs. And that has been our target. Our target is to reduce housing deficit in Enugu State. When you look at the population of the state and the number of decent houses that we have, you notice a very big gap, I might not have the details of the gap but there is a gap between the number of people we have and the number of houses that are available to accommodate them because actually the first need of life should be I think after food is shelter. So you can’t live under the mango trees, you must have a roof over your head; even birds have nest talk less of humans, we need shelter.

 

 

Since my assumption of office, we have done seven estates. Those estates are WTC, Citadel, Heritage, Transparency, Rangers, and Valley estates. In Rangers we have Phases 1 and 2; in IMT that’s Citadel, we have Phases 1 and 2 as well. I can say that we have done well on the high end. High end is not parcels for low income earners; they are parcels for medium class and upper class. We have also been trying to expand our network to the outskirts because we noticed we are having congestion in the city and we want to face that squarely to see how we can help the Governor and the government to decongest the state. So because of that, we are moving towards the outskirts. We have started moving towards the outskirts.

 

 

I personally noticed that if you go outside the country, some people drive up to an hour to their offices. If you go to a place like US, you have estates outside the cities and people still come to work outside those areas. So we want to create value at the outskirts because that’s where you have large expanse of land. We have an estate at Ugwuoba which is ongoing; we have another estate we call Coal City View at Aguabo which is like 10-15 minutes from Enugu city, also we are developing a parcel at Akagbe Ugwu. We have another estate we call Sand View at Akwuke. We are trying to develop these four estates simultaneously based on how far our capacity and our purse can carry us to create value to the outskirts. And in another one year, I think probably we should be done with all these four estates. And it’s something that we have to do to also reduce the deficit that I mentioned earlier.

 

 

So having done much on high end, what are you doing for the low income earners?

 

Currently we are discussing with the Federal Mortgage Bank and Primary Mortgage Bank as well as Family Funds. Family Funds is a Federal Government Agency, they have Funds to support civil servants to see if we can build for the lower income earners. So if these materialize as well, we are going to see a whole lot of low income houses coming on board within the next six months because we noticed that those that are heavily hit are low income earners because of the cost of housing units due to high cost of cement, high cost of iron rods, high cost of building materials and all that.

 

 

So we are paying major attention to low income earners and jointly with Federal Mortgage bank, and some of these other institutions we want to jointly develop like 500 units of low income housing in the state. And that we have started working on and after our presentation at Abuja and after my “Housing Award” at Abuja, they started paying more attention to what we do. These ones are on low income end.

 

 

We are also partnering with some indigenous real estate firms in the country to develop the high end, and these houses will be expensive but also it’s going to create value for the state. It’s expensive because of the type of finishing and their own objectives, their own sense of real estate. So you don’t expect them to do what you do for civil servants; that’s why. So we want to balance the high end and the low end so that we can satisfy all the housing needs.

 

 

Most people look at government housing projects as elitist projects meant to benefit only the rich; because if you look at the house rent in Enugu, it’s still one of the highest in the country; so how do you strike a balance?

 

 

Enugu State Housing Development Cooperation is a commercialised corporation. We don’t receive subventions from the state; we react to the market the way all other private real estate companies do because it’s from what we make as profit that we use to run the corporation. We pay our salaries; we have our overhead etc. I want to correct that impression of elitist minded projects. I normally see situations where they ask me, just like you are asking, why is it that you don’t have low income houses? And we ask them why is it that we don’t have low income cement, why is it that there are no low income iron rods? We are part of the society and we should begin to look at some of these problems from where it all started. Why can’t the Federal Government give waivers to duties on cement and iron rods? I know that they produce cement in Nigeria, why can’t they support that project so that if I get low priced iron rods it will translate into low cost houses. So why will people want a high priced building materials to produce a low priced house? It can never work, it is not possible.

 

 

Besides, we don’t sell only houses, we develop estates. And for you to develop an estate, you are including infrastructure within the estate, such as roads, electricity, water etc. If I tell you how much they sell bitumen, you will be shocked. Even sand, we buy sand to do earthwork, then the drainage is is even more expensive than the road. Land as well, you have to pay for it because we are not getting land free; we discuss with communities, we pay them and we get this land and before we put the infrastructure on it we need to fence the whole area, we need to put electricity, we need to put water and then security before we now build on already high cost. And at the end of the day when you add up this it will turn out to be a high priced house.

 

 

Why do you have to move to the satellite towns for the low income houses considering that workers who live in such places will be paying transport fares which will add to their cost of living?

 

 

To build estates in the city will even worsen the price. To buy a land in the city we all know how much they are selling properties in town, because we can’t build on the air we need to buy these properties and build on top of it and it will turn out the normal way of being expensive. So what we are trying to do to solve these problems is we are talking to the stakeholders. We are discussing with Mortgage Banks so that civil servants; we know how low their salaries are, can you allow these people to pay for 20 years depending on the number of years they have in the service. So it’s working out because they have started listening to us because they feel now that we have the capacity, they now know as well that we have that good image, we will be able to get off-takers.

So we are putting our off-takers together, the cooperatives; already we have over 1000 people who are interested. With this it will be possible, but without this it will never be possible because I don’t like chasing shadows because you cannot make impossibilities to be possible.

Most often we see conflicts or misunderstanding between some institutions or communities, who lay claim to lands acquired by the corporation; some are accusing the government of forceful takeover of either communal land or land that belong to institutions and commercializing such without any benefit to them?

 

 

No, it’s a wrong impression. What we do is that we meet, we normally discuss with some of the communities or most of the communities. I will give you examples. In Coal City View which is Aguabo, we called them; we normally give them some money for what they call traditional rites because we don’t want to get involved in it. Then secondly, we give them percentage of the developed area. For Aguabo I think we gave 20 per cent of the developed area back to the same community; the same thing in Rangers Estate and so many places. But you know out of every 12 there must be a Judas. You will see some people who will say we don’t agree with what you discussed with our community and they are in the minority. They want more or they want what is not possible, that is one aspect. The second aspect is that the state might declare an area problematic if this area is causing problem in the society and they want to solve it and sometimes it comes from the House of Assembly because of reports of criminal activities. And the House of Assembly will now force the State Government to acquire the land because people are passing through hell and all that. And in such a place you don’t do any other thing because in the initial time they were given compensation.

 

 

So it’s not something that is hidden, we normally have our agreements with the communities written and we settle them and we still give them some percentage of the developed areas.

 

 

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Business

N300bn presidential Initiatives on Customs Modernisation: The inside story

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N300bn presidential Initiatives on Customs Modernisation: The inside story

…as reps stop project, commence investigation

•Customs does not need AFC $300m investment –Alagbaoso

 

 

In this report, PAUL OGBUOKIRI ex-rays the new Customs modernisation plan, tagged: ‘E Customs Projects,’ already approved by the presidency. He concludes that the move is needless as the Nigeria Customs Service is modernised, adding that the wild goose chase will cost Nigeria over N300 billion savings in the 1 per cent Comprehensive Import Supervision Scheme (CISS) fund

 

Controversy of over 20-year concession of Nigeria Customs Service, tagged ‘E Customs Projects’

 

 

As controversy trails the reported move by forces in the presidency to concession the Nigeria Customs Service to the private sector for 20 years, a document sighted at the weekend by our correspondent  titled, Re: Presidential Initiatives  on Customs  Modernisation: “E-Customs  Project”(Establishment  of  a Digital /Paperless  Customs  Administration) and other Matters,  indicate that the presidency has approved the  engagement  of  a consortium comprising Bionica  Technologies  West  Africa,  Bergan  Security  Consultants & Supplies,  Africa Finance Cooperation (AFC) and Huawei to establish a project special  purpose  vehicle to  enter  into the 20-year  concession arrangement with the Nigeria Customs Service (NCS)  and the  Infrastructure Concession Regulatory Commission (ICRC).

 

 

Sunday Telegraph learnt that  the selection  of  this  consortium  was not  advertised  and  no  tender was  issued  for  the selection  of  the  best  companies.  It was further learnt that the  process  was  not  made  transparent  and  the  current contract  holders in the ongoing transformation and modernisation of NCS  were never given  an  opportunity  to  bid.

 

 

This is even as it was disclosed that the  supposed  partners  within  the  consortium  do  not  have  any  discernible experience  to  warrant  their  inclusion  in  such  a  huge  and  sensitive  endeavour. 

 

 

A search on Huawei,  the  technical  partner, showed that it has  never  implemented,  anywhere  in  the  world,  an  automated system  for  Customs  and  has  no  experience  in  the  Customs  environment.

Chief Jerry Igbokwe, a maritime lawyer, described the plan as a major  risk to the Nigerian economy  as NCS  plays  a  vital  role  in  revenue  collection  for  the  Federal Government of Nigeria.

 

 

Recall that the security  debate around  Huawei is  not  new,  although  it  has  intensified  in  recent  months.  Huawei  is  considered  by many governments to be a surrogate for the Government of the People’s  Republic  of  China.

US security  forces  have  warned that Huawei equipment  could  be  used  to  create  a  “backdoor”  into foreign  mobile  and  data  networks.

 

 

According to Chief Igbokwe, having  such  a  company  monitoring  all  trade  transaction  in Nigeria  could  be  a  major  issue.

 

 

He noted that granting  of  a  20-year  concession  “in  a  non-tendered  and  non-transparent process  seems  precisely  to  be  the  type  of  business  model  that  the  Federal  Republic  of  Nigeria has been trying  to move  away from.”

Modernising of Customs since 2013 led to NICIS 11

 

On October 10, 2019, Hon. Jerry Alagbaoso, Chairman of House of Representatives Committee on Public Petitions, in a motion, raised the alarm over the plan to introduce a fresh modernisation programme for the Nigeria Customs Service even as the agency has been modernising since 2013.

 

 

He urged the Speaker of the House of Representatives, Hon Femi Gbajabiamila, to cause an investigation to commence into the deal.

 

 

He said: “There are some foreign companies who are very eager to sponsor, finance and provide technical services to what they call the modernisation of Customs, without recourse to the National Assembly.

“My motion is the need to investigate the curious concession proposed arrangement between the consortium Bionica Technologies West Africa Limited, who are the sponsors; Bergan Security Consultants and Supplies, who are co sponsors, African Finance Corporation, who are lead financiers and Huawei, Nigeria Customs Service and Infrastructure Concession Regulatory Commission (ICRC) for Customs modernisation project.

 

 

“The House is aware of various Customs modernisation projects in the past. For example in the 90s, the United Nations Conference on Trade and Development (UNCTAD) for the installation of ASYCUDA++ and training of Customs officers for three years.

“The House is also aware that the Federal Government agreed to engage former pre shipment companies for valuation and classification of goods, hence, some service providers namely Webbfontaine, Cotecna, SGS and Globalscan were engaged for that purpose.

“This contract was to last for seven years, from 2005 to 2012 when the service providers handed over to Nigeria Customs Service.

 

 

“By 2011, one could say the positive effects of this included competent and committed workforce for Nigeria Customs Service, personnel understanding of the new process and benefits to stakeholders.

 

 

“It resulted to collection of proper revenue due, elimination of corruption and other benefits. The House notes that with these put in place, there exist a one stop shop which allows all trade transactions to be conducted through a single system domiciled with the Customs

“For example, all other government agencies like NAFDAC, SON and the rest have dissolved into a single platform with the Nigeria Customs Service,” he said.

He noted that in 2011, there was an illegal concession between the Federal Ministry of Finance and a company with inadequate capital base called Single Window System and Technologies, signed in secrecy during the government transition period of which the House of Representatives had a Public Hearing and stopped it to save Nigeria billions of Naira vide the votes of Wednesday, July 13, 2011.

According to him, in 2017 another move for Customs modernisation was made by the Technical Committee on the Comprehensive Import Supervision Scheme, purported to be acting on behalf of the Federal Government called Adani Systems Nigeria Limited, to modernise, maintain, develop the scanning of goods in the country in line with the pre shipment inspection act for a period of 25 years.

“Again the attention of Controller General of Nigeria Customs Service was drawn to this and the concession was stopped.

 

 

“Curious that in September 2019, another concession, which will last for 20 years (that is the subject matter now) is being suggested to Nigeria Customs Service, Infrastructure Concession Regulatory Commission, Federal Ministry of Finance, Federal Ministry of Budget and Planning, Federal Ministry of Justice and this agreement is for pro-rata sharing of one per cent CISS and a needless $300 million investment.

 

 

Meanwhile, Sunday Telegraph learnt that the implementation of Nigerian Integrated Customs Information System (NICIS) II, adopted by the Nigerian Customs Service for trade facilitation and tariff processing has built a robust Customs System for Nigeria. 

NICIS  II, our correspondent learnt, links around  a  paperless  platform of various organisations like CBN, FMF, SON, NAFDAC, NIACOM Insurance Certificate,  NAQS,  MLSN,  NSA  and  FIRS,  commercial  banks  and  more  than  3000  private  sector companies (Importers,  Shipping  lines,  Airlines,  Clearing  agents).

 

 

Having exceeded the N1 trillion mark in revenue since 2017, NCS in October alone, collected over N115 billion and in the first nine months of this year has collected over N1.05trillion. Experts in Customs operations say the revenue continues to increase  despite  the  closure  of  the Nation’s land  borders, because  the  electronic  payment of duties and taxes has secured revenue collection and removed opportunities  for  fraud.

 

 

Our correspondent also learnt that clearance  time  is  also  drastically  reducing  for  revenue  collection  and electronic  certificates,  leading  to  better  turnaround  time  and  therefore  many  more  revenue cycles.

House investigates, suspends concession

 

 

Sequel to the Hon. Alagbaoso’s motion, the House passed Resolution No. HR 132/10/2019 mandating its Joint Committee on Finance, Customs and Petitions to investigate the contract.

The resolution further read: Pursuant to Section 88 (1) (a) and (b) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) which confers on the National Assembly power to conduct investigations, the Joint Committee urged the different parties involved to maintain the status-quo-ante pending the outcome of the investigation

 

 

Alagbaoso had in the motion expressed worry that the over N300 billion believed to have accumulated in the CISS fund between 2012 and 2019, will be frittered away.

He said he is further worried that there is no difference in substance, scope and structure between the failed concession attempts of 2011, 2017 and this 2019.

He added that there is already a national single window platform in the Nigeria Customs Service and officers of the service are performing beyond expectations, collecting duties in billions of naira on daily basis.

 

 

The House further resolved to mandate the Committee on finance, Customs , public petitions, committee on agreements to expose the foreign and local collaborators involved in this project either as sponsors, co sponsors, financiers and others.

 

 

Infrastructure Concession Regulatory Commission (ICRC) could not be reached at the time of going to press, to comment on their involvement in the deal as several calls put across to Mr. Chidi Iwuwah, Director General of the agency were not answered.

Last line

 

 

A maritime expert and president of Council of Managing Directors of Licensed Customs Agents, Mr. Lucky Amiwero, said changing  such  a  complex  Customs  system  as NICIS 11 that has cost the country billion and has repositioned the Service, to  an  untested  IT  system  that  has  never  been implemented  in  a  big  country  might  have  an  impact  on  the  revenue  collected  by  NCS  and  could have  a serious impact on the  ability of importing  and  exporting  for  several months. 

 

 

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Port congestion looms

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Port congestion looms

…may worsen Apapa gridlock

 

I

ndications were rife at the weekend that the Apapa Port is set to record another round of cargo congestion, not only because the cargoes are flowing in faster than before, courtesy of the partial border closure, but because the cargoes are not evacuated as fast as they were offloaded from the ships.

 

Sunday Telegraph learnt that the layers of containers in the port terminals which used to be three strata have elongated. This development, our correspondent learnt is not unrelated to the activities of the Federal Ministry of Works on the roads inward the seaport.

At Point Road intersection, the Federal Ministry of Works has blocked the intersection leading to Liverpool, at the Polysonic Mall.

 

First they dug a ditch in front of the Mall, made it very steeply, so that container-laden trucks would not be able to use it. Then, they moved towards the bank, inward Point Road and properly blocked it with rocks and boulders.

 

 

By blocking the Point Road Intersection, the FMW has ensured that every truck, moving towards the Tin Can could not go through, the Point Road unto the Liverpool. In order words, every truck going to Liverpool, must join the queue, as they come from Ijora, drive past the Police Point Road, move through the Airways Bus stop and head towards Eleganza.

 

Trucks going to Tin Can now have to first go through Ijora and enter Apapa Wharf Road before heading to Tin Can because the road leading into Tin Can from Mile 2 or Coconut Bust Stop has become seriously impassable.  Experts say if the Ministry of Works put its mind into it, a palliative measure can be achieved in one week.

 

With the Point Road intersection successfully blocked, a new wave of bedlam is currently in the offing, looming larger every day.

 

A Concerned resident of Apapa told Sunday Telegraph that the FMW first poured laterite in early September, halting traffic on Point Road. But sensing the danger it posed to the smooth traffic along the axis, the source said it was removed by PTT but the FMW came back on October 1, and totally blocked the same route/spot this time with rocks and boulders.

 

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Innoson’s new automated auto plant opens in Nnewi

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Innoson’s new automated auto plant opens in Nnewi

…heads NACCIMA committee on dumping of toxic vehicles

 

I

nnoson Vehicles Manufacturing Company’s third plant and most advanced and automated; has opened in Nnewi, Anambra State.

This came as the Chief Executive Officer of Innoson Vehicle Manufacturing Co Ltd, Chief Innocent Chukwuma has been appointed head of the Automobile Committee of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) against dumping of obsolete and toxic vehicles into the country.

 

The President of NACCIMA, Hajiya Saratu Iya – Aliyu dropped this hint at the official commissioning of INNOSON Vehicle’s ultra-modern automated production line Nnewi, Anambra State.

 

 

She said “the essence is to monitor and inspect vehicles being imported into the country and ensure that the country does not become dumping ground for used and obsolete vehicles.

 

 

“When you look at the vehicles being imported into the country as fairly used you cannot clearly confirm that those vehicles are good enough for our people and you cannot be sure that it would last so Innoson being a manufacturer is in a better position to find out if those vehicles still have life in them,” she said.

 

 

She urged the Federal and State governments as well as the private sector to ensure that there is a conducive environment for business like Innoson to flourish, adding that it holds potentials for job creation and reduction of unemployment as well as contribute to the Gross Domestic Product and fast track industrialisation economy.

 

 

Speaking earlier, Chief Innocent Chukwuma said: “The major attendant benefit of this automated plant is that it will definitely reduce production cost. I am glad to announce that this newly installed plant has successfully reduced the cost of a brand new 15-17 seater Hummer bus from N16 million to N9 million.

 

 

“We intend to duplicate the success of this production line to other production lines. We shall not stop until an average Nigerian can comfortably purchase a brand new vehicle,” he said.

 

 

Recall that second hand and fairly used vehicles dealers across the country recently protested what they described as uncontrolled flow dumping of obsolete vehicles in the country, lamenting that Nigerians are being ripe-off. They added that such vehicles are a threat to the lives of Nigerians.

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South Korea to strengthen relationship with Nigeria

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he Government of South Korean has intensified moves to strengthen business relationship with Nigeria in key area of the economy.

 

This was the thrust of a Sustainable Business for Economic Development forum organised by the Korean Trade Investment Promotion Agency (KOTRA) in Lagos recently.

 

Speaking at the event, the South Korean Ambassador to Nigeria, In-Tae Lee, said the tow countries have proven to the world that more can be done in areas like ship building,  ports development, rail construction, power and renewable energy and gas pipeline and many more.

 

“I would like to point out another chapter of bilateral cooperation – educational, cultural and E- government training exchanges that are crucial to development of relations between our countries”

 

He added that Nigeria is South Korea’s second largest trade partner country in Africa and the biggest construction market on the continent.

 

According to UNCTAD, South Korea recorded a cumulative total of $494 million as at end of 2018 in139 cases in four years

 

Statistics obtained from Kotra in Lagos also indicates that export amount to Nigeria from South Korea increased to $540 million, which is 0.4 per cent from January to August this year.

 

On trade volume, export to Nigeria, import from Nigeria and trade balance, the statistics shows a trade volume of $985,673 in 2016, $2,622,405 in 2017, $1,965,412 in 2018 and $984,871 resulting in -16.2 growth.

On export to Nigeria, it recorded $460,813 in 2016, $2,121,967 in 2017, 917,850 in 2018 and $540,627 as at August 2019.

 

Import from Nigeria to South Korea shows $524,860 in 2016, $500,438 in 2017, $1,047,562 in 2018 and $444,244 as at August this year, representing 30.4 per cent growth.

 

On Trade Balance, 2016 had -64 while 2017 was $1,621,529. For 2018 and January to August 2019, it had -$129,712 and $96,383 respectively.

 

Also speaking at the event,  Adeshina Emmanuel, Director Investment Promotion at Nigeria Investment Promotion  Commission (NIPC),  listed the country’s large population, sophisticated financial markets, improving business climate, strategic location and generous investor protections as part of reasons to invest in the country.

 

In a presentation he made, Emmanuel said the two decades of political stability, Nigeria’s projection to be the 14th largest economy in the world by 2050 and running a private sector led economy makes the country attractive.

 

Yusuf Bashar, Customs Assistant Comptroller General in charge of ICT, talked on the service modernisation and it’s existing partnership with Korean Customs Service. He also gave advise on efficient clearing process.

 

Potential investors from Korea at the event includes Ace Global Company, Furaha,a beauty manufacturing brand,  Paylink which deals in mobile money transactions , Samsung Construction and Shinhan Bank which is a leading financial institution, ranked 67th out of top 500 banking brands.

 

Others includes Creativehill, an IT services company that creates new value in Agri business, blockchain technology and Gyeongsangbuk, a firm that partners Dangote in agriculture.

 

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Weststar announces new arrivals of Mercedes-Benz Sprinter

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he Mercedes-Benz Sprinter has become a bestseller in major markets around the world with over 20 years since its first production at the Düsseldorf plant in Germany (1995).

 

 

In response to the growing and diverse needs of the Nigerian transport industry today, and in an attempt to provide value suited for passengers, drivers and fleet owners, Weststar Associates Limited, Authorized General Distributors of Mercedes-Benz Passenger Cars and Commercial Vehicles in Nigeria is happy to announce the arrival of more units of Mercedes-Benz Sprinters.

 

Already selling fast, the Mercedes-Benz Sprinter 324 KA comes with features like fuel efficient petrol engines, high-performance roof air conditioners, electrical sliding doors, reverse camera and 14 – 19 seats depending on customers’ preference.

 

 

The exterior of the Mercedes-Benz Sprinter 324 KA comes with a radiator grille frame in the vehicle body colour, 16-inch steel wheels with 18-hole design, daytime running lamps which make it possible for other road users to identify the vehicle faster in the daytime and the electric sliding door on the side which enables comfortable boarding and exit for passengers.

 

 

The Mercedes-Benz Sprinter puts great emphasis on comfort in its interior with features like the high-performance roof air conditioner, seating with adjustable backrest, interior LED illumination, wood flooring, interior design with black Tunja fabric, 14 – 19 seats depending on customers’ preference, Audio 15 multimedia system, instrument cluster with pixel-matrix display, 3-point seat belt and a locking glove compartment with considerable stowage space.

 

 

With regards to performance, the Mercedes-Benz Sprinter 324 KA is equipped with a M272 petrol engine with 190 kW (258hp) power output and 5900 rpm torque; the engine is also coupled with automatic transmission. This fits perfectly with the requirements of Nigerian roads.

 

 

Other key features include Crosswind Assist which detects track offset caused by strong crosswinds on-time and helps the driver to remain in their lane.  The adaptive brake lights with their conspicuous flashing which help significantly prevent the threat of rear-end collisions, ABS – the Anti-locking Brake System which ensures that a vehicle remains steerable even in the event of emergency braking, ESP which stabilizes the speed and movement of the vehicle during bends by selectively braking one or more wheels and reducing engine torque if required, and PARKTRONIC which through a series of ultrasonic sensors strategically placed around the vehicle, accurately measures the distance between the vehicle and other objects during parking to prevent collisions.

 

 

 

Speaking on the new units of the Mercedes-Benz Sprinter, Mr. Mirko Plath, CEO, Weststar Associates Limited commented; “The Mercedes-Benz Sprinter’s global appeal is one that is recognized by businesses and transporters in the Nigerian market. It is our utmost goal to ensure that our customers get a product that is able to attend to the challenges they face on Nigerian roads and most importantly add significant value to their businesses.”

 

 

Building on its success and global appeal, the Mercedes-Benz Sprinter continues to dominate the vans segment and it is the choice vehicle for the transportation industry in Nigeria.

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Analysts: OMO restriction threatens banks’ profitability

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he decision by the Central Bank of Nigeria (CBN) to bar non-bank locals (individuals and corporates) from participating in its Open Market Operations (OMO) at both the primary and secondary markets, could make it difficult for the banks to comply with the apex bank’s Loan to Deposit Ratio (LDR) requirements, thereby affecting their profitability, analysts at Comercio Partners have said.

 

 

In a report obtained by New Telegraph at the weekend, the analysts noted that the OMO restriction had resulted to a decline in yields at the CBN’s primary market auction as well as a significant drop in lenders’ fixed deposit rates.

 

 

According to the analysts, the latter development will hinder DMBs’ ability to comply with the LDR requirement, thus making them liable to being hit with debits by the regulator.

 

 

As part of what it said were its efforts to compel banks to increase lending to the real sector of the economy,  the CBN had in a letter dated, July 3, 2019, directed all lenders to maintain a minimum LDR of 60 per cent by the end of September 2019.

The LDR is the portion of customers’ deposit that is given out as loans.

 

 

The apex bank also warned that failure to meet the LDR requirement would lead to a levy of additional Cash Reserve Requirement (CRR) equal to 50 per cent of the lending shortfall of the target LDR. This means 50per cent of a bank’s deposit will be immediately sent to the CBN.

 

 

At the expiration of the September 30 deadline, the CBN debited the accounts of 12 banks to the tune of N499.18billion for failing to comply with its directive even as it announced that it was raising the LDR target upwards to 65 per cent and which lenders must achieve by December 31, 2019.

 

 

However, according to the analysts at Comercio Partners, while the OMO restriction is in line with the CBN’s desire to drive more lending to the real sector, the move may impact DMBs’ balance sheet.

 

 

The analysts said: “CBN claims this new policy directive is to drive more lending to the real sector, we see this play out in different ways in banks’ balance sheets. During Q3 results presentation some banks revised their deposit growth forecast downwards by as much as 10 per cent to 20 per cent and revised upward the loan growth assumption, this speaks directly to the loan to deposit threshold of 65 per cent.

 

 

“However, this is unlikely to happen as the new CBN circular has created a wall of money (Due to the paucity of investment outlets) which will sit with the banks making it difficult to meet the LDR requirement- this would easily see further debits in December, crimping the banks’ profitability. The possible upside to this new policy for banks is, will see a possible decline in interest expenses, therefore, increasing interest income.”

 

 

The analysts also pointed out that since the OMO restriction was announced, yields at the CBN’s primary market auction have declined quite significantly even as the market remains thin on volumes.

 

 

They further noted that bond yields had dropped significantly across the curve, saying “with the five-year declining by 158bps to 12.05 per cent, 10-year bond yields have shrunk by 103bps to 13.14 per cent and the yield on the 30-year bonds is down by 81 bps to 13.68 per cent.”

 

 

“We expect yields to decline further on the back of the resolution of the CBN to stay true to their new policy and the anticipated OMO maturities repayment. The question here is how far can these yields fall off to make a plunge into risk assets worth the while of market participants.

 

“We have also seen a significant drop in Fixed deposit rates with tier 3 banks offering single digit fixed deposit rate as opposed to the over 14 per cent they were offering prior to the policy pronouncement. This is clearly reflective of the general paucity of investment outlets as participants scramble to deploy investible funds in limited outlets,” the analysts said.

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Jaguar I-PACE voted ‘Best SUV’ in the mid-size class

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aguar’s all-electric performance SUV has won Germany’s most famous car award, the Golden Steering Wheel. The I-PACE triumphed in the mid-size SUV category, ahead of the Audi Q3 and Seat Tarraco.

 

 

Designed and developed in the UK, the I-PACE was created from a clean sheet of paper with the aim of delivering the world’s best premium electric vehicle – and a true Jaguar driver’s car. Its combination of sports car performance, zero emissions, exceptional refinement, and all-wheel drive SUV usability and practicality make I-PACE the stand-out choice in its segment.

 

 

A 90kWh lithium-ion battery enables a range of up to 470km (WLTP) and is capable of charging from 0-80 per cent in around 72 minutes (60kW DC). The two light, compact and efficient Jaguar-designed motors generate a combined output of 294kW and 696Nm of instant torque, delivering 0-100km/h in just 4.8 seconds.

 

Prof Sir Ralf Speth, Jaguar Land Rover Chief Executive Officer, accepted the Golden Steering Wheel for the Jaguar I-PACE at the award ceremony in Berlin, and said: “As part of our ‘Destination Zero’ vision, Jaguar Land Rover is pursuing an ambitious goal: To establish an environmentally friendly closed-loop economy. The Jaguar I-PACE is the clear and creative representation of our vision – an exciting, emissions-free electric vehicle. As a British manufacturer of premium vehicles we are delighted to win the Golden Steering Wheel in the world’s most demanding and competitive premium car market.

 

 

“This award is one of many prestigious awards the I-PACE has won. We will use this validation to intensify our efforts to offer desirable and highly innovative vehicles to our customers. I thank the readers and the experts for rewarding the courage and forward thinking of our designers and engineers with their vote for the I-PACE.”

 

For the 43rd Golden Steering Wheel Awards, millions of readers of Auto Bild and its sister publications in over 20 European countries, together with readers of the Sunday newspaper Bild am Sonntag chose their favourites. After the votes had been counted, the 21 finalists – three in each of the seven categories – were thoroughly tested at the Lausitz-Ring circuit by the jury of racing drivers, leading motoring journalists and other car experts, with a focus on driving dynamics, connectivity, design, and total cost of ownership.

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