Ogun State Land Scare! Government Blackmails Estate Developers, Land Owners

Volume II, Issue 20

Volume II, Issue 20

Last Monday, 8 June, 2009, the Ogun State Bureau of Lands and Survey, under the insignia of the State Government, had caused the publication of what it described as a “Final Warning” ostensibly directing the attention of individuals and corporate bodies to activities of estate developers and promoters in about 14 locations in the state where real estate development seems to be intense. The Bureau of Lands and Survey described the activities of the estate developers as illegal.

The second of such publication in two weeks, the last of the same half page public notice, did get the attention of the target population it was intended for; a hail of panic seized the community of estate developers and subscribers to the former virgin lands belonging to Ogun State but which have found new attraction in value because of their proximity to Lagos State. As affected estate developers became restless, so were subscribers, they became distressed. (Read More)

BGL still upset with underwriting AIT, Honeywell public offers

It is just as well that the Securities and Exchange Commission has decided to adopt the recommendation of the Oladotun Sulaiman’s Nigeria Capital Market Reform Committee on the reversal of compulsory underwriting of public offerings.

BGL Securities Limited, one of Nigeria’s lead issuing houses and brokerage firms, is said to still be smarting from the downside effect of underwriting two public offerings last year. BGL Securities was part of the underwriters of the public offering of Daar Communications and Honeywell.

Others –

Losses, Debts Force Sale of Zain

Transcorp To Lose Hilton Hotel, Abuja

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Volume II, Issue 18

Magazine cover 18This week on the June 08, 2009 edition of Fortune&Class Weekly:

  • FIRS bars ETB, Spring Bank, Wema Bank – The Federal Inland Revenue Service (FIRS) has barred three banks from collecting taxes and other revenue due to the federal government on its behalf.

The banks, Equitorial Trust Bank (ETB), Spring Bank and Wema Bank were given the marching order because they refused to accede to the request by the FIRS to sign the mandatory collection agreement, a source in FIRS has confided in Fortune&Class.

According to the high level source in the revenue collection agency, the FIRS have had to introduce the mandatory collection agreement as a legal contract between it and financial institutions that desire to serve as collection agencies for it (FIRS). (read more)

Who Is In Charge Of The Stock Market? Daisy Ekine, SEC DG, Moves To Tame NSE DG, Okereke-Onyiuke

daisy ekineThe demutualisation of the Nigerian Stock Exchange has become the standard issue to determine the agency that wields ultimate authority and control on the Nigerian stock market. Simply put, demutualisation means that the Nigerian Stock Exchange transforms into the equivalence of a quoted company with its share available to the investing public for subscription and trading.

The imagination of the investing public had been excited since since October last year when  the Director-General of the NSE, Prof. (Mrs.) Ndi Okereke-Onyiuke announced that there would be a demutualisation of the Exchange, announcing in the same breathe that she and seven senior officials of the NSE are to retire voluntarily.

According to the DG of the NSE, at a February 2009 press conference, the Council of the NSE had appointed Accenture, the global management consulting, technology services and outsourcing company to help with the demutualization and transformation of the Exchange to become profit making, she explained at the press conference that “ we have to re-orientate and transform the management and staff (of the Exchange) to look at the Exchange as a profit making company like First Bank, Unilever, Japaul and even our own Central Securities Clearing System.” …

Bank Managers Divert Customers To Black Market Lenders

Chukwuma Soludo, CBN GovernorChukwuma Soludo, fmr CBN Governor

Some branch managers of commercial banks in Nigeria have become lending authorities by themselves, a Fortune&Class investigation has revealed. The activities of these managers, according to the investigation, has led to the emergence and thriving of a black market for lending which, however, has become a source of worries and consternation for customers who are protesting how they are being exploited by the black market lenders.

For each bank branch, there is the unofficial lender, operated by the branch manager with the connivance of some other bank branch officials. When a customer approaches the branch with a request to raise fund for a business, the customer is as usual, confronted with a long list of requirements to be considered before loan application is approved. …

Agagu is Arrow-Head of SW 8, Wema Bank New Core Investor

Segun Oloketuyi, Olusegun AgaguSegun Oloketuyi, Olusegun Agagu

It has been reported that barring any unforeseen circumstance, Mr. Segun Oloketuyi, an executive director with Skye Bank, may soon be named as the new group managing director of Wema Bank Plc following the successful acquisition of 27 per cent controlling shares by new core investors, SW8 Consortium, in the bank.

Until recently, officials of the bank and regulatory agencies involved in the ownership structuring of banks in the country have decidedly kept sealed lips on the individuals and interests involved in the SW8 Consortium.

To sate the going curiosity of investors that desire to take position in the bank, Fortune&Class reveal that Dr. Olusegun Agagu, former governor of Ondo State is the arrow head of other mainly political personalities behind the SW8 Consortium.

Agagu served as Minister of Power in ex-president Olusegun Obasanjo’s cabinet between 1999 and 2003 and was elected Governor of Ondo State in 2003. Agagu re-election for a second term was, however, challenged this year by Dr. Olusegun Mimiko who eventually secured the rulings of both the election petition tribunal and the appeal court panel that asserted that Mimiko was the rightfully elected Governor of the State.

2009 Forbes Profile of Billionaires: Femi Otedola joins Dangote on World’d Richest List

Femi Otedola(l), Aliko Dangote(r)

Femi Otedola(l), Aliko Dangote(r)

Nigeria may have the honour of having two of its citizens listed in the 2009 edition of the annual Forbes list of the world richest. Fortune&Class Weekly can report that Mr. Femi Otedola, Chairman of African Petroleum Plc and Zenon Oil and Gas would join Alhaji Aliko Dangote, the first Nigerian on the list […] Continue reading here.

2009 Outlook: Key Questions for the Director-General of the Nigeria Stock Exchange

If you had an opportunity to ask the Director General of the Nigerian Stock Exchange a question, what would you like to know from her?

Some investors, fund managers and equity analysts have sent in their concerns/questions; some of which were addressed by the DG, NSE at the Annual Review held at the Nigerian Stock Exchange on Monday, January 12, 2009.

However, the following questions, submitted by our board of analysts remain unanswered:

1) Bail-Out: Why has the Federal Government refused to provide a concrete bail out plan for the capital market, not just lip service? Do we think this will change with a change in the Federal Ministry of Finance given that other forward looking economies recognised the need to re-build confidence in its capital markets by taking actions that would bring about the much desired liquidity needed, albeit; with much more emphasis on regulatory control and accountability?

2) Alternative Market Strategies: The NSE (an SRO) along with other regulators has been talking about the introduction of simple options to the capital markets for over two years now. Why has this not been implemented?

At the moment, there are only two strategies investors can use in trading the NSE (that is, buy or sell) and in a free fall or in a downtrend as we have currently, there are usually no buyers for willing sellers.

Even with the introduction of market makers and ‘funding providers’, the makers will not be willing to buy shares that they know are fundamentally weak (given that the incidence of corporate governance and believability of financial reporting in the country is subject to risk discounting risk here relates to poor observance of standards and reporting requirements). If options are available or other strategies, investors can play the market even in a downtrend. The limited options/alternatives for traders at the NSE is keeping sophisticated ‘international’ investors from the NCM. The market appears too one directional.

3) Margin Accounts: With banks not providing margin loans to investors, it appears difficult for the Nigerian Stock Market to maintain any upward momentum or traction.

Has the Director General looked into other alternative source of financing for investors and brokerage firms?

Can the Federal Government provide brokerage firms guaranteed loans which can be loaned to investors based on strict guidelines as an alternative to an outright bail-out?

4) Demutualisation of the NSE: How does the NSE intend to conclude this key 2009 internal goals during a market cycle where most investors are not able to fully participate? The conversion of the NSE into a listed company appears desirable and precedents in Eqypt, J’borg and New York support the viability of such a proposition but to do so in a year where strategic management changes and movements have taken place, and will take place, as well as the governance and process capacity issues/challenges taking place will require a broad range of investor support.

We are interested in knowing more about the conversion of the not-for-profit organisation to a value and profit driven one in such a way as to allow each willing and able investor to participate.

5) New Products: The NSE recently launched five new indexes (including the NSE 30) working with reputable firms that have a history of creating such. We believe it is a welcome development that forward looking firms may create products around.

When will this be introduced in the market and does it not portend a dire signal for firms not included in the index or their sector not considered profitable enough to have a sectoral index?

Is it possible for the criteria or/and weighting of the index be made available for equity analysts?

6) Dealing with Current Challenges: in the last few weeks, there has been a spate of occurrences, not on such a large scale as to pronounce it a major crisis but it is a crisis itself, given that it is occurring in a market with confidence at its lowest ebb. Dud cheques have been issued to investors and fellow fund managers alike. What does the aggrieved receiver of such cheque have to do and what measures are in place to address these challenges given that it goes to the heart of the ‘confidence’ question?

7) Investor Enlightenment: The astounding reality of the market and indeed our larger economy was best summed up by the former president, Olusegun Obasanjo, who in a departure from the less than believable comments of the CBN Governor, declared that the current crisis will visit the poor and rich alike.

If you consider the yearning of the hard working employee, market trader, artisans, aspiring manager, church goer and widower, who in the heat of the capital market boom were plastered all over with offers and media blitz on the viability and security of investments in the NCM, and who now have to worry about the expected income due from the market to meet obligations but cannot access it; you will know that the current meltdown will affect people differently.

Hope is a casualty in this market, so also is the believability of the operators because of their silence. Investors have simply been told to wait and allow ‘nature to take its course’. The caveat emptor that should have been ringing out in the first place now becomes breaking news at this tail end of market downturn.

These are the first death throes. The question is what sort of market will remain?

Yet, one heard not one expression of real remorse or accountability from any of them. They had nothing to offer except the time-worn counsel of confidence men: trust me. Instead of protecting our market or at least preparing the investors and players alike for the possible challenges, we did what we have always done best as a nation…deploy self denial as a shield from the truth.

Maybe not everyone was playing the ostrich game, at least not brazenly. While the CBN Governor embarked on a self effacing trip on being nominated to attend the world deliberations on the crisis, the Ministry of Finance was silent, shooting down everything pushed forward to ameliorate the situation without providing an alternative. The Director General of the NSE, to her credit, continued to show empathy, and spoke consistently about her heavy burden and desire to see that the ordinary citizen/investor is assisted to overcome the current challenge.

The question she has to provide now is: how do we hope to achieve this? What should the investor do from tomorrow?

Source: Proshare Nigeria

Vice President frustrates Transcorp’s plan to sell off NITEL’s Backbone

The nation’s Vice-President, Goodluck Jonathan has, according to sources, stopped moves by the board of directors of Trans National Corporation (Transcorp) to reduce the net worth of Nigeria Telecommunications (NITEL), the national telecommunication carrier in which Transcorp 51 per cent holdings have remained an unending hassle in the Federal Government privatization of former national assets and companies.

The Transnational Corporation of Nigeria secured the purchase of the Nigerian Telecommunications Limited and its mobile arm, Mtel, on Monday, July 03, 2006 for a fee of about $750m.

However, Transcorp paid only $500m of the amount pledged, as it could not come up with the balance of $250m.

The $750m represented the 75 per cent equity holdings that the Federal Government intended to divest from NITEL to the core investor. The remaining 25 per cent was to be sold to Nigerians through a public offer latest in November in 2006. This, however, never happened, as Transcorp could not meet most of the terms of the contracts.

Close to two years after the acquisition of the 51 per cent holding in NITEL, Transcorp was yet to actualize the intentions of the sale of the majority stake in NITEL, the Federal Government under the presidency of Umaru Yar’Adua, successor to the Olusegun Obasanjo’s presidency that superintended the sale of the NITEL shares to Transcorp, in February 2008, reversed the sale of NITEL and its mobile subsidiary, Mobile Telecommunications Limited to Transcorp.

In the immediate aftermath of the announcement of the reversal of sale of NITEL to Transcorp, confusion ensued over the true position of the Federal Government; eventually it was clarified that since Transcorp lacked the requisite technical and financial capacities to manage and successfully rejuvenate NITEL and Mtel, it (Transcorp) and the Federal Government that still holds 49 per cent of the shareholdings would cede 27 per cent and 24 per cent holdings respectively in NITEL to a new core investor.

However, as the nation awaits the announcement of Transcorp successor core investor in NITEL, Transcorp was reported to have floated a special purpose company; the Nigerian Telecommunication Backbone Company Limited. The company was intended to be used to buy out the telecomm-unication backbone of NITEL by way of stripping the telecommunications company’s assets before the cessation of the majority holdings in the company is concluded.

Communications experts explained that success of this sell-off would have put the main operational sphere of NITEL in the purview of this so called Nigeria telecommunication backbone company.

“The company would have inherited NITEL’s main telecommunication platform which may include the SAT 3, the fibre optic and CDMA platforms,” an industry expert said. “These are the platforms that the whole gamut of the Nigerian telecommunication industry still depend on, so if Transcorp arrangement was successful they would, in fact, be transferring a stripped entity to whoever succeeded in the bid to become the new core investor,” the expert reasoned.

Mr. Jonathan, the Vice-President, who is also the Chairman of the National Council on Privatisation, the office on which the ultimate responsibility for the supervision of the privatization processes rests, was reported to have thwarted the move to sell NITEL’s backbone.

“The promoters of the company had successfully persuaded some Nigerians and foreign investors to be part of the Nigerian Telecommunication Backbone company, but when they brought the issue to the attention of the Vice-President he insisted that the status quo must be maintained. This means that nobody is allowed to dispose off any assets or rights that belong to NITEL or Mtel until a new core investor in the company emerges,” a source close to NITEL, confided.

Heavy Debt Burden: Banks suspend funding for Dangote’s cement project

A heavy debt burden and the anticipation of high profile competition for the share of the Nigerian cement supply side from Femi Otedola may have compelled Alhaji Aliko Dangote to call off investments with intent to expand production lines in his many cement manufacturing plants and to build new ones. Sources in the banking industry indicated that some bank’s exposure to Dangote have become quite high and more discomfiting for the banks in consideration of hurdles they would have to contend with in the effort to get the debt repaid.

Though Forbes Magazine had listed Dangote as the richest man in Nigeria in 2007, financial sector source said his total debt folio drawn from various Nigerian banks may add up to N622billion. According to the source, about N300billion was secured from a bank by Dangote to play in the stock market between February and March 2008 when prices of stocks were at their peak.

“Prices of stocks started falling soon after the investment in the stock market and the fall in prices have become protracted which has resulted in stock prices sliding to historic lows. This, apparently, has affected the repayment traction of Dangote and this had added to the depressing situation of the banks that gave out the fund,” the source explained.

According to the source, Dangote also secured a N75billion loan for Obajana Cement and N240billion for his cement production plant in Ibeshe while also funding his Alheri Engineering, the company that won the 3-G GSM licence and will manage the GSM telephony service provider in the Dangote group.

Dangote’s decision to beat a retreat from cement manufacturing besides Nigerian banks refusing to make their money available for his use, is the wholesale opening up of the supply side of cement through the cement importation scheme of the Federal Government.

Dangote had enjoyed near monopoly status on the supply side of cement in Nigeria, and not a few aspiring builders had protested persistent increase in the price of cement which got to a high of N1,800 mid 2008. The Federal Government under Alhaji Umar Musa Yar’Adua removed the protectionist policy of the Olusegun Obasanjo’s presidency which banned the importation of cement into the country and closed down some other Nigerian cement producing companies ostensibly to protect the manufacturing essence of Dangote Cement production subsidiaries and the other players in the sector.

“This did not help price at all, because just a few producers can come together to determine the price of a bag of cement,” an industry player told FORTUNE&CLASS Weekly.

The Federal Government’s bid to beat down the price of cement by flooding the market with imported brands may have started impacting the market as the price of a bag of cement has come down to about N1,500 even as the imported brands are yet to fully land in the country.

Industry buzz, however, suggests that Dangote may also be worried with the licence granted Femi Otedola by the Federal Government to import two million tonnes of cement into the country as part of the effort to crash cement prices.

“The Federal Government had to consciously look out for a Nigerian business that has enough cash to back up the importation. It would not make sense to allow for importation of cement when you don’t have high profile business people that can mobilize enough funds to flood the market in the shortest possible time. That is why I think the Federal Government gave Otedola the licence to be involved in the importation of cement and I think he has a commitment to the Federal Government to sell at very cheap rate to Nigerians,” a source in the Presidency said.