Offshore Professionals Queue for Jobs in South Africa

Recruitment agencies have reported a dramatic increase in the number of international professionals and South Africans living abroad who are seeking employment in South Africa after the waves of retrenchments that have hit the US and Europe.

Penny Chaskelson, the managing director of The Personnel Concept, said the agency had seen an increase of between 20 percent and 25 percent in international professionals inquiring about employment opportunities in South Africa.

“There has been a dramatic increase in responses from all over the world, and that is first and foremost a result of the global financial crunch,” she said. “However, this has also been exacerbated by the fact that some professionals were already happy to move to any location for the right job.”

Georgina Barrick, the managing director of Renwick Talent, said the group had seen a jump in inquiries about employment opportunities in South Africa since September.

Some were from South Africans who had been working in financial services outside the country, mostly in the investment and banking sectors.

“We are receiving about five applications a week and about two-thirds of these are South Africans,” she said. Approaches had come from London and other European capitals, but there had been sudden interest from Egypt, with four inquiries from that country last week.

Martin Westcott, the chief executive of Production Engineers Corporate Services, said the trend of international professionals seeking jobs in the country was logical because the South African economy was still showing some growth.

He said the trend had come at a time when South Africa needed to recruit more skilled professionals to reduce inefficiencies across the spectrum.

“This is as a result of skills shortages. Some companies were even failing to realise their employment equity targets, due to a lack of appropriately skilled personnel.

“The arrival of these personnel in the country could provide us with the opportunity of skills transfer,” he said.

In apparent validation of this trend, the Umsobomvu Youth Fund said that it had taken advantage of the situation by recruiting 20 skilled professionals who would be partnered with 40 young South Africans to develop their skills.

Malose Kekana, the fund’s chief executive, said 15 skilled professionals had been identified. They would be partnered with local youths “with the purpose of grooming them for us. We have put the effects of the financial crisis to good use.”

Kekana said the professionals would not have great cost implications for the fund, as Umsobomvu would pay only for their flights, accommodation and meals.

FIVE BANKING SECTOR PREDICTIONS FOR 2009

Beginning of the year is a time when everybody reviews the past year, draws some conclusions and makes the prediction for the new year. The article below was taken from the blog of the Financial Services Club the analysts of which have provided their own prediction for 2009.

For most, 2009 is fairly obviously a year of rationalisation and implementation.

1) More major European and American banks disappear

We’ve seen plenty of this in 2008 already with JPMorgan gaining Bear Stearns and Washington Mutual, Wells Fargo soaking up Wachovia, and Lloyds TSB taking over HBOS. Expect more.

Already the major banks are closing parts of their businesses in order to try to save costs. Citi is selling off large parts of the group and withdrawing from many overseas markets, and Royal Bank of Scotland is doing the same as they get rid of their insurance divisions.

Expect a lot more of that.

Meanwhile, even with all of that frenetic activity of rationalisation of businesses, expect a few more major bank failures in the US and Europe.

Most likely contenders? Some banks share prices are so low today that the Governments of those banks in those nations will either nationalise them or force them to merge with a stronger player, as the UK Government did with Lloyds TSB and HBOS.

2) There will be some spectacular failures in the BRIC economies. The BRIC economies are interconnected with this debacle, and are also extremely vulnerable to it.

China has seen its growth thanks to European and American consumption of their goods. Those consumers have now disappeared, and China will see some spectacular industry failures this year, along with the banks that back those industry players.

Equally, Brazil and Russia’s growth was fuelled by the need for raw materials for those Chinese manufacturers. As those manufacturers fail, so will some of these suppliers.

Therefore, the BRIC economies won’t come riding to the rescue of the West, but expect to see those markets suffer some of the turbulence Europe and America suffered in 2008.

3) A Global Financial Regulatory Body is formed.

The G20 have started this process already and meet again in April in London.

By that time Barack Obama will be in attendance, and he will want to see urgent action to ensure that this situation never happens again, as do Gordon Brown, Angela Merkel, Nikolas Sarkozy, Hu Jintao and the other nation’s leaders.

Therefore, they will all be as one in agreeing that the Financial Stability Forum needs to go much further, and become the Financial Regulatory Forum, comprised of the leaders of the Fed, FSA, Bafin, AMF and other nation’s regulators.

This global regulatory body will review and refresh Basel II, as well as many other requirements for solvency and reporting.

It may even mean that some key underpinnings of regulatory change already under way such as Europe’s Capital Requirements Directive (CRD) and Markets in Financial Instruments Directive (MiFID) are changed, refreshed and reformed by new rulings focused upon Global Regulatory harmony.

All that starts up again, just as you thought you had finished your regulatory change programmes.

4) The US will drop IFRS Accounting Rules. Mark-to-market accounting will be reworked, and the IFRS will lose the impetus it had in the USA. All of this just after we had gotten to the stage of understanding what the hell these things meant.

The American movement away from GAAP to IFRS will falter as a result of mark-to-market rules, which are even more stringent in IFRS structures. This will see US firms being allowed to either re-interpret IFRS rulings or stick to GAAP.

Either way, it will be significant climb-down from the Bush administrations’ championing of the IFRS accounting approach, which was meant to become the standard for US firms. Barack Obama’s administration will not care a jot for that history though, and will want to make the accounting requirements for banks as simple and supportive as possible.

Therefore, the US Government will drop any promotion of IFRS accounting in the near-term, and will reinterpret GAAP to allow a ‘breathing space’.

5) Solvent banks gain major market share. Related to point (1) is that the biggest difference between 2009 and 2008 will be signs of the real winners starting to shine through. Some are already showing signs such as JPMorgan, Wells Fargo, Santander, HSBC and Standard Chartered.

Expect to see a few more.

These banks are winning on two fronts:

(a) they can acquire and cherry-pick the best of the weak competition, and buy them for a song as Wells Fargo did in grabbing Wachovia off Citi; and

(b) they can acquire and cherry-pick the best of the prime customer markets, as demonstrated by HSBC’s recent campaign to say: “we’ve got money to lend”.

By the end of this year therefore, expect to see a new World Order in the banking markets.

By way of example, Stifel Nicolaus announced their American bank stock tips for 2009 last Friday , which included BancorpSouth, City Holding, Danvers Bancorp, First Horizon, People’s United Financial and TCF Financial. In their report on the sector, the firm states:

“Though not unscathed by the credit cycle, these institutions maintain adequate capital levels, in our view, and, in many cases, will capitalize on weakened competitors … The list represents our best ideas in a sector that we believe will remain troubled from an earnings perspective for the next several quarters.”

Not much confidence in the industry there then.

However, other observers, such as Grant Thornton, say: “Banks, as a sector, may be thoroughly depressed, but we know by the Government’s own actions that they will not be allowed to fail. That makes it almost a one-way bet.”

With this one-way bet, focus upon the winners and the ones with capital.

These are my five market sector predictions for 2009:

1) More major European and American banks disappear

2) There will be some spectacular failures in the BRIC economies

3) A Global Financial Regulatory Body is formed

4) The US will drop IFRS

5) Solvent banks gain major market share.

My only other prediction would be that I expect the major market indices to rise by over 20% by end of year. After all, most of them were halved last year. It will only get better.

Source: Financial Services Club blog

NIGERIAN COMPANIES AND THE HERD MENTALITY

Philip Kotler, in his book, Marketing Management, posited that “all companies must look beyond their present situation and develop a long-term strategy to meet changing conditions in their industry. They must develop a game plan for achieving their long-run objectives.” He further opined that there is no one strategy that is optimal for all companies. Each company must determine what makes the most sense in the light of its position in the industry and its objectives, opportunities, and resources”.

This principle was applied by some notable companies in the United States and Japan in varying degrees to strengthen their operations as well as markets and hence improved revenue base. Companies like Goodyear Tire and Rubber Co., Uniroyal and Armstrong Rubber Co. in the US and Toyota in Japan applied this strategy to perfect their operations and products.

In the tire industry where all the major players adopted it, it was so used efficiently that each of the company got something and was, in a way, content retaining its distinct character and having to run to the other for assistance at any given time.

Here in our dear country, Nigeria, any thing and every thing runs on the herd mentality, This is why any strategy employed by company A to shore up its operations is automatically copied by company B irrespective of the differences in objective, resources and opportunities available to the two companies and to some extent, experience in their respective fields?

It is for the same reason that our telecom providers are all in the race to promote one event or the other usually in the entertainment sector that in a way alter and pollute our culture. No thought is given to the education sector by way of empowering the youths through scholarships as the oil companies do nor assisting with social projects that benefit the majority across economic strata.

During the re-capitalization efforts by banks, the stock market became the centre of attraction to all the banks. And they are yet to leave that market till date, not even the crisis in that pot of confusion is discouraging them, no. When it was the turn of the insurance sector to shore up their capital base; they too turned to the capital market for succor. The irony in this as it concerns the insurance companies is that the sector that is supposed to invest more in the capital market and in such other critical areas of our economy because of its potential to raise more money than other financial institutions, is the one begging for money. A direct opposite of what obtains in other climes is what our insurance sector represents here in Nigeria. Too bad.

By some slips arising from misconceptions or miss-application of strategy, our banks are increasingly finding it difficult to match reality with expectations. Rather than attempt a review of business plans and carry out some radical changes, marketing plans are being updated and probably are now made to replace business plans the result of which are the various panic measures being put in place to hunt for deposits even from school children as if that is what will give value and stability to their business.

While all these comedies are playing out, some of the banks are declaring mind boggling figures and mouth watering figures as profits, some as high as 98% over the previous year. And if we are to believe these fantastic performances it then becomes very difficult to reconcile the crazy hunt for deposits that now bothers on desperation. Worst still is the fact that daily, our highly performing banks are being accused of cheating their customers maybe to make up for the big profits declared.

Understandably, and in line with the bandwagon behavior, the new craze has shifted to the micro finance sector with virtually all the major banks falling over themselves to take vantage (?) position in that area. The obvious fact that that sector is also banking at the low level makes no meaning to the extent ‘deposit money’ will be sourced there.

While commending our banks for their innovation and ingenuity in what is gradually becoming a phenomenon in the way we do business in this country, it is better some good thought is given to carry out a review of operations based on reality. It will be a better strategy for each bank to look inward and turn its distinctive competence into its competitive advantage as IBTC used to be. Cutting an edge for your business will be a better strategy to this uniformity approach. Harassing people on the streets for deposits sends a signal that all is not well with our banks.

Can we be more creative in doing these things? Enough of these pretensions.

FINANCIALBRIDGE: HOW TO DO BUSINESS WITH THE AMERICAN INVESTMENT COMPANY THAT FACILITATES OFFSHORE FUNDING FOR NIGERIAN BUSINESSES

When Patrick Fournie, Senior Advisor with FinancialBridge, Inc. made his presentation on the “Private Ownership of Modular Refineries in Nigeria: The New Trend in Building Petroleum Refining Capacity: The Financialbridge Experience” at a seminar organized by the Energy Industry Development Initiative at the Federal Palace Hotel, Victoria Island, Lagos State, this past Tuesday, 11 November, 2008, seminar participants listened with rapt attention.

Fournie presentation, was for the Nigerian and other foreign participants at the seminar, a revelation of a new vista in financing strategies on the pivot of offshore financing, he informed the seminar of how FinancialBridge is facilitating funding for a Pharmaceutical Project in Abuja, at a cost of $12.2 million and an aluminum roofing sheet & allied project at Onna in Akwa Ibom State at a cost of $6.6million. FinancialBridge, he said, is also involved in funding for an amusement park project at Isheri, Ogun State, at a projected cost of $22.3 Million, a pit quarry mining project at Oyebiyi, Oyo State at a projected cost of $7.5 million and a 5-Star luxury hotel in Abuja at a projected cost of $55.8 million.

Other projects FinancialBridge had been engaged to facilitate funding for by Nigerian entrepreneurs are the phase one of the 12,000Barrels per day modular refinery project at Eket in Akwa Ibom State at a cost of $43.7 million and the 12,000Barrels Per Day modular refinery project at Kolo Creek in Yenagoa, Bayelsa State at a projected cost of $121.3 million. A $197.5 million 18,000Barrels Per Day modular refinery project in Edo State is also one of the projects FinancialBridge is facilitating offshore funding for.

Fournie who flew into Nigeria to make further revealed how his company had structured funding and project implementation procedures for the soon to be streamed 12,000 Barrels Per Day Amakpe Refinery Project at Ikot Usekong – Eket in Akwa Ibom State and the Rehoboth Refinery, also a 12,000 Barrels Per Day Refinery Project in Yenagoa, Bayelsa State.

Fournie, who, on behalf of Financialbridge, signed a Memorandum of Understanding (MoU) appointing Energy Industry Development Initiative as its representative in Nigeria, explained that FinancialBridge is an export finance and business credit consulting firm:

“We work with U.S. and international financial institutions to provide innovative funding solutions to private companies and government agencies, including: export trade finance, project finance, public sector financing and export working capital. We are also involved in equity financing and facilitation of bridging loans” Fournie said.

“We cooperate with Project Implementation and Management Companies in ensuring effective utilization of procured funds for successful planning and execution of related projects and trade transactions.”

Highlighting its primary sources of export funding in the United States financial market, Fournie said his company’s sources include: Export-Import Bank of the United States (U.S. Ex-Im), Overseas Private Investment Corporation (OPIC) and the Export Finance Banks and Credit Insurance Companies, among others:

“Ex-Im Bank is the official Export-Credit Agency of the United States that helps create and maintain U.S. jobs by financing the sale of U.S. Exports, primarily to emerging markets throughout the world. Ex-Im Bank provides Loan Guarantees, Export-Credit Insurance and Direct Loans, in fiscal year 2007, Ex-Im Bank authorized $12.6 billion in financing to support an estimated $16 billion of U.S. exports worldwide.” Fournie said.

Perhaps, of importance to Nigerian entrepreneurs, is the revelation by Fournie that the Ex- Im Bank has approved a $1.0 billion facility to guarantee Nigerian Projects (of which $800 million is still available) despite the global financial melt down.

Explaining the process for securing offshore funding for projects in Nigeria, Fournie said:

“Under the Ex-Im Bank Guarantee Program, the Promoter is required to provide Statutory Equity Contribution of 15% of U.S. Cost Content, while the U.S. Lender funds 85% of the U.S. Cost Content utilizing the Comprehensive Credit Guarantee of Ex-Im Bank. The Project Promoter is further required to provide Local Bank Guarantee to support the 85% portion of the U.S. Loan as well as finance local In-Country Costs requirements within the overall Project Cost.The U.S. Ex-Im Guaranteed Loans have Medium Term Tenure of 5 to 7 years at Interest Rates of +/- 2% above Six Months Floating LIBOR (London Interbank Offered Rate).

Some of the projects funding prospects of FinancialBridge include Oil and Gas (Modular Oil Refineries, Gas Gathering & Processing Plants, Downstream Petrochemical Projects, Pipelines, etc.), Energy (Gas Turbines and Diesel Powered Plants), Communications (Wireless VSAT Network VoIP Telephone, Fax, High Speed Broadband Internet Systems, Cable TV, etc.) and Solid Mineral (Quarrying & Processing).

Other funding prospects are: Manufacturing and Assembly (Small and Medium Scale Plants), Construction (Pre-engineered Buildings & Facilities, Stadiums & Arenas, Industrial Parks, etc.) Agro-Business (Farming & Food Processing), Medical (Pharmaceutical Projects, Supplies & Clinics), Tourism (Amusement Parks, Hotels/Resorts, etc) and Aviation (Used & New Passenger & Cargo Aircrafts, Helicopters, Airport Development & Expansion, Avionics & Spare Parts, etc.)

Highlighting the milestones already attained with the 12,000 Barrels Per Day (BPD) Amakpe Refinery as a case study, Fournie said:

“The Amakpe Refinery is being implemented in two phases, with Phase 1 – 6000BPD Refinery Plant originally estimated to cost about $36.5 million and now revised to cost $43.7 million, including Escalation, and revised Field Erection Costs. Construction of 12KM Dual Steel Pipeline connecting Exxon/Mobile QIT and Amakpe Tank Farm is estimated at $10 million of Additional Cost. The Project is expected to start production by October 2009. Out of the current revised Project cost of $43.7 million, $26.2 million has been expended while $17.5 million is outstanding to complete full funding of the Project.

“UPS Capital/Ex-Im Bank Loan of $10.3 milion is being disbursed to Ventech, based on P&M Construction Progress Payment while Amakpe Refinery has fully paid required statutory Equity Contribution and continues to pay the Counterpart Funds. Akwa Ibom State Government Investment of $8.5 million has also been applied to the Project

“As at June 27, 2008, Ventech achieved 50% Mechanical Completion of the Refinery Plants and Machinery Fabrication, which was certified by visiting representatives of the Department of Petroleum Resources, including Mr. M.D.B. Ladan-Head Downstream, Mr. O.A. Adeleke- Assistant Director, Dr. D.M.E. Eradiri- Chief Environmental Officer, Mr. Oyedele Sangobowale and Mr. Hussaini Basaka-Site Representatives. Based on this development, Amakpe Refinery has qualified to receive $1.2million Security Deposit earlier paid to DPR as a requirement for revalidation of related Refinery Construction License.

“Sterling Bank has approved additional $9.3 million Loan Facility for the Project. Amakpe Refinery is planning to issue 15,000,000 Shares of Common Stock of the Company for sale to Private Investors. The Private Placement is being packaged by Financialbridge and Sterling Bank for issuance by Sterling Capital Markets (Issuing House).

To start -up the process of obtaining required funding, a Company is required to retain the services of Financialbridge which will develop a Bankable Business Plan that will satisfy U.S. Export Financial Market requirements and procure the Project Loan.

The retainership will further cover service coordination of Project Loan Packaging and Procurement that will involve the Borrower and the U.S. Lender. The U.S. Lender will underwrite the submitted statutory documentation leading to Loan approval, following which the Lender will request the U.S. Ex-Im Bank for issuance of Political Risk and Medium-Term Insurance/ Comprehensive Credit Guarantee before disbursement of related Loan. The process of underwriting the Loan through approval and disbursement could be concluded within 45-90 days after the U.S. Lender receives the complete statutory documentation as outlined.

Financialbridge be responsible in carrying out tasks that will result in the successful procurement of U.S. Loan for the implementation of the project which include: Conduct of Feasibility Study and preparation of Bankable Business Plan that will satisfy U.S. Export Financial Market requirements. The Business Plan will be concluded within 30-45 days from receipt of Engagement Fee, Data from Market Research as well as Borrowers information. The draft of the Business Plan will be forwarded to the Company for approval and possible input before production of final Document.

FinancialBridge also processes Due Diligence, Approval and Disbursement of Project Loan within 45-90 days of the U.S. Financial Institutions receiving and underwriting complete statutory documentation from the Nigerian company.

If required, Financialbridge can also be engaged to Package and Instrument Private Placement of Shares of Common Stock of the company to raise additional funds through Private Equity Investment, utilizing a local Nigerian Bank as Issuing House.

The Funds raised through the Private Placement could be applied to fund Local Project Site Development and In-Country Costs as well as required Equity Contribution, etc.

The Nigerian company shall be responsible for the following within the requirements for successful Loan Procurement, including: Obtaining Nigerian Bank Guarantee for 85% or 75% of the total U.S. Loan amount to fund the Project, depending on the Ex-Im Bank or OPIC requirement.

Securing all required Permits and Licenses from Nigerian Regulatory Authorities, submission of three years audited financial statements of the Nigerian bank as certified by a renowned accounting firm. Provision of Equity Contribution of 15% of total U.S. costs content within the overall Project cost for U.S. Ex-Im Bank Guaranteed Loan to be added to 85% of total U.S. cost content as Loan, or 25% as statutory Equity contribution of total Project

Confirming Energy Industry Development Initiative’s (EIDI) relationship with FinancialBridge, the organisation’s Chief Executive Officer, Mr. Tom Obaseki said FinancialBridge has already shown interest in facilitating funding for some project ideas it had forwarded to FinancialBridge.

“As we speak, we have forwarded project proposals for the establishment of 5-7 MMSCFD Modular Gas Gathering, LPG and Lean Gas Production Plant in Nigeria, the establishment of Integrated 55MW Power Plant, Natural Gas Gathering and LPG Processing Project in Nigeria and for Development of Pre-engineered Medical Clinic & Diagnostic Centers, Pharmaceutical Project and Customized Medical Trailers & Boat Clinics, complete with Outreach Medical Technicians Training Support.” Obaseki explained.