Private Coys Listing Bill may crash capital market, expert warns

 As the bill to compel top companies operating in the country to list on the  Nigerian Stock Exchange (NSE) is about to go into public hearing, expert has warned that the bill may crash the capital market if eventually passed into law.

Oyedele

According to Mr Taiwo Oyedele, a partner with PricewaterhouseCoopers (PwC) on Tax and Regulatory Services, if all the companies operating in Nigeria with shareholders' funds in excess of N40billion or with annual turnover of over N80billion are forced to list on the Nigerian stock market, the market would crash because it does not have the capacity to absorb their share capital.

The sponsor of the bill, Hon. Chris Azubogu, had said last week that, if the bill passed into law, it would build strong institutions and ensure that the nation has stronger companies that are well supported and run. The bill also makes provision for tax waivers as a sort of incentive for the companies to list, adding that “if government decides to privatize all the businesses and they are not complying with the laws of the land, how can government even confirm that they are collecting the right tax? The tax collection to GDP ratio is weak because we don't have strong institutions. This bill “will give us room to have what is called complete financial inclusion; to move away from the informal sector to formalized economy, to account for the strength of economic activities going on in the country.”

But picking holes in the bill, Oyedele said there is no connection between tax avoidance and forcing the the companies to list. “MTN, for instance, is unquoted company, but it paid N180 billion in taxes in 2013.This is far bigger than the taxes of all Nigerian banks put together. I disagreed with the approach”.

Giving reason why the  stock market could not absolve the share capital of the entities, he blamed it on the low capitalization of the market which he put at $80 billion, a fraction of the market capitalization of some of the targeted companies.

He stated: “When Dangote Cement came to the market, because of the market capitalization, it could only list 5 per cent of its shares.The $80billion market capitalization of  the Nigerian Stock Exchange is just a fraction of the market capitalization of a company like Apple with $500billion.If all the telecom companies, the International Oil companies in the country are forced to list, the market will crash.This is because investors will want to sell their shares in other companies to buy MTN stock; they want to get Glo stock, Chevron stock and so on.So if everybody is selling and nobody is buying, prices will tumble and this will crash the market.

 

Private Coys Listing Bill to build strong institutions  -Rep

Azubogu

The sponsor of the 'Private Companies Conversion and Listing Bill 2013 and Deputy Chairman, Capital Market Committee of the House of Representatives, Hon. Chris Azubogu, has urged Nigerians to ensure that the bill is passed into law as it will build strong institutions for the nation.

According to Azubogu, , who stated this during a media parley in Lagos, his decision to sponsor the bill, which seeks to compel top companies to list on the  Stock Exchange, is to ensure that the country has stronger companies that are well supported and run.

He explained that by listing on the NSE, top companies would have increased access to funds leaving the banks and provide liquidity to the real sector.

The Bill is seeking enactment  of “An Act to provide for the private companies whose shareholders' funds exceed N40billion or its annual turnover exceeds N80billion or its total assets exceed N80billion to convert to a public liability company and get its shares listed on the stock market, thereby promoting growth for both the company and the Nigerian capital market and related matters."

Azubogu disclosed that the bill has already passed the second reading at the House of Represetatives, adding that the Act, when enacted, will not only be in the best interest of Nigerians, the capital market and the country at large, but that it is also in line with the provisions of the Constitution.

He said that a public hearing on the bill is expected within the next 45 days, expressing optimism that, with the support of Nigerians, the Bill, whch also provided for tax and listing waivers for companies, would be passed into law.

His words: "It will give us room to have what is called complete financial inclusion; to move away from the informal sector to formalise our economy, to account for the strength of economic activities going on in the country.

"For instance, with the rebased GDP of $500billion, the market capitalisation of the Nigerian Stock Exchange is less than $100billion. So, if our GDP ratio to the market capitalisation is less than 20 per cent, It means that over 80 per cent of our economy is in the informal sector. it would be difficult therefore to account for productivity and for government to put basic things in place.

"Also, if government decides to privatise all the businesses and they are not complying with the laws of the land, how can government even confirm that they are collecting the right tax? The tax collection to GDP ratio is weak because we don't have strong institutions."

He explained that his action was specifically influenced by the provisions of Section 16 of the Constitution, which provides, among other things that a body shall be set up by the National Assembly, which shall have powers to review from time to time the ownership and control of business enterprises operating in Nigeria and make recommendation to the president on same; administer any law for the regulation of the ownership and control of such enterprises.

Azubogu also said the goal was to help the country build strong institutions.

He stated, "One of the reasons why we have not fared very well is that we are a large country and if we don't have strong institutions that will regulate what we are doing to make us comfort and comply with rules, it becomes difficult for us to grow well.  If there are loopholes in our laws, we must correct them if not, anyone can come into the country and exploit those laws and abuse our system.

"Over time government has tried to divest from the key areas of the economy, but services provided by companies in those sectors are so entrenched that if government does not regulate them very well, it does not help the economy. Laws are dynamic and they are changing every day and every loophole that people find, they will abuse it and who pays the ultimate price? Nigerians."

 

Govt’s patronage of Nigerian coys ’ll boost profit – Okafor, MD, May & Baker

Okafor

 

“When you start manufacturing in Nigeria, you are already 40 per cent disadvantaged”. According to Mr. Nnamdi Okafor, the Managing Director of May & Baker (M&B) Nigeria Plc, apart from contending with bad roads to move your goods and epileptic power supply, which makes his company to shell out an average of N20million every month to power its plants, you still have to wrestle with the global brands that swoop down on Nigeria for contracts. And, not bound by any government policies, these foreign companies are desperate to elbow out whoever stands on their way.

“That is why we are asking the government to give us some level of preference. We cannot develop capacity when we are not protected. The Indians, the Chinese, at some point in their development had to protect their local manufacturers so that they can build capacity”, he said.

In a media parley in Lagos recently, the M&B boss bared his mind on why Nigerian manufacturers want domestic preference jacked up from its current level of 15 per cent; the efforts being made by his company to help contain the spread of Ebola and other sundry issues.

Excerpts:

Global competitiveness

This is a situation I believe that we all should be conversant with because if you start the process of manufacturing, some of those things, the expenses you are incuring, the environment where you manufacture are the factors that will affect your cost structure.

So when you manufacture in Nigeria, you are already 40 per cent disadvantaged because- unlike when somebody is manufacturing in Asia or in  Europe where you don’t have to bother about power, you don’t have to bother about water, about road to move your goods and all of that- here you come up with all sorts of cost. Of course, they have economy of scale which has to do with large scale manufacturing, they are the ones that are getting all the major stakeholders from donor agencies. S o they have built up the economy of scale which also break down the cost per unit for their products. Of course, you are also aware that about 80-99 per cent of inputs into pharmaceuticals from overseas are coming into Nigeria. So where you have to manufacture with ingredients or outputs from Europe, and you have to compete with the same company who is giving you their outputs, definitely it is going to be difficult. What we are doing, in terms of quality, we are competitive. And that is why we build the PharmaCentre.That is why we want the facility to be the best you can get in any part of the world. So as far as quality is concerned, I think we are there.

The other factor is also part of cost. And that is why we talk about patronage because if you build capacity, you must have market where you are going to sell your products. As we increase the level of our capacity, the cost will start coming down. And then, we are hoping that the good job that is being done by the current administration especially as regards power is sustained, the cost of power will come down, We spend on the average over N20million every month to provide power. We don’t use the public grid to provide power to our plants. So these are the costs that we can do without.

70 years of M&B

Today, May & Baker Nigeria Plc is 70 years as a business in Nigeria. And we are celebrating the past and a new beginning for the company. The company was founded on September 4, 1944 as Nigeria’s first pharmaceutical company and began local manufacture of medicines in 1976.  In 2002, the company became 100 per cent owned by Nigerians following the divestment of our foreign partners. The company began an expansion and diversification programme in 2005 which gave rise to the creation of new businesses and subsidiaries. In 2005, Biovaccines, a local vaccine production subsidiary, was set up in partnership with the Federal Government. In 2006, we constructed a multi-billion naira food processing factory, while in 2008, we commenced construction of a World Health Organization Standard Pharmaceutical production facility which was completed and commissioned on June 27, 2011.We saw the need for global best practice and competitiveness. We therefore commenced the process of international certification of our manufacturing plant for Good Manufacturing Practice (GMP) of the World Health Organization(WHO) and the United States Food and Drugs Administration (USFDA).  We are in line to obtaining the WHO GMP certification for this facility and pre-qualification for our products and hopefully with these, the gate into global pharmaceutical market will open for us.

Following these huge capital investments on capacity acquisition and expansion, our company has, in the past four years, been undergoing some restructuring and re-positioning to effectively contain the expected short term negative impact of these investments on the business, while waiting to begin to derive expected big returns on the investments. Consequently, the management has begun the process of consolidating all Pharma manufacturing operations by transferring substantial product lines from Ikeja to the new pharmaceutical plant in Ota, the M&B Pharmacentre, which has the capacity to produce 4.5 billion tablets and 37.5 million bottles of 60 ml liquid preparations annually. That way, we hope to derive the advantage of economy of scale and minimize costs.

We are pleased that, in recent years, the Federal Government through the Federal Ministry of Health and the National Agency for Food and Drug Administration and Control (NAFDAC) has made some efforts towards supporting local pharmaceutical manufacturers. However, much more still need to be done in the areas of patronage, protection through restriction of unbridled massive importation of basic essential medicines and promoting private sector capacity building and technology development in critical areas like vaccines production.

Anniversary

We are marking our 70th anniversary for three main reasons:Seventy is a landmark age and deserves to be celebrated. The second reason is that this company has, during these long years, saved the lives of millions of Nigerians through its quality efficacious medicines and the third is that this is the time May & Baker has come full circle -  growing from a foreign tutelage and ownership to a wholly indigenous player and is now heading back to global focus. It is a significant new beginning for us.

In commemoration of our 70th anniversary we have decided to give back to society through some projects in key areas of need. We are donating sickbays to public schools across the country. The project kicked off with three pilot schools in Lagos State when we donated sickbays to three public primary schools in the state. The beneficiary schools are Central Primary School, Ikeja, United African Methodist Primary School, Eleja, Oyingbo and St. Agnes Primary School, Sabo, Yaba.

Each sick bay is fully air conditioned and equipped to the standard of a clinic with beds, medical instruments, drugs, recovery motifs and television sets to enable the children feel less of their pains while receiving attention. That way we hope to touch the lives of some less privileged ones. Our intention is to make the charity visitation an annual affair. So in September every year, we plan to mark the birthday of the company by visiting charity homes across the country with gifts that can alleviate their conditions.

Job creation

Well, we have a factory in Ikeja here. We have two factories in Ota; we have locations in Aba, Kano.We also plan to set up some beverage plants in Abuja, where we have acquired some expanse of land, and then Onitsha, to add to job creation in other parts of Nigeria. But the fact is that we want to ensure that we are getting results from the ones (investments) that we have made. So, our first priority is to ensure that the factories we have are working optimally before we start going to other investments. As you are aware, we borrowed money from banks to make those investments and we can’t go to the banks again to borrow money to make other ones. That is why we want to ensure that the investments we have made, we are leveraging very well on them before we go ahead to make further investment.

Ebola

As far as the Ebola disease is concerned, our response as a country would have been much different and better if Nigeria had technology for local production of vaccines. But we are working on products that we hope should be in the market very soon that will help to control the spread of Ebola virus. Of course, as you are aware, we have this joint venture company with the Federal Government of Nigeria for vaccine production. What that company was meant to do was to acquire technology for local capacity production of vaccines to contain diseases like this viral Ebola Viral Disease (EVD). You know, if we have technology,  that will go a long way to help produce vaccine to ensure that this dreadful disease does not show up in future again.

As for that joint venture company, Biovaccine, you know, anything that has to do with the government takes its course. So that company started operations and stopped for some reasons. We are trying to resolve some issues which are very contentious. And I just want to say to you that we have gone very far in resolving almost all the issues. And hopefully, very soon, this company will come back to life.

Raising funds

We had planned to be in the market some months ago. But, for some reasons, we tried to put it off because we are also trying to ensure that we get all the major stakeholders and the board to be ready. We have to make sure they are ready to take up their shares otherwise we will not do better. That is what we are looking for. And as you are aware, we have gotten the approval of our shareholders at the last AGM and we are looking up to the board to give the go-ahead. We also have stand-by investors that would be ready to put in money. But, as I said earlier, we want to make sure that our Nigerian major shareholders take up their rights. That is very important to us.

CSR

As far as Corporate Social Responsibility (CSR) is concerned, we have started this project of donating sick bays to schools. As you know, Ebola virus spread very fast, particularly where we have children who can not imbibe the basic rules (to prevent it).We also want to make sure that they have the capacity to handle the sick when they arrive. So we are going to be donating these centres across Nigeria and we also want to ensure that they have drugs and also equipment for checking Ebola. In most of the centres, a mention was made about sustainability, that they have to get light to operate the things that we donate to them. So we accepted to provide generators for them. And we also gave commitment that we are going to continue to refill their (stock and meet their) need for drugs. In fact, we are not alone, for the fact that the local government chairmen (of these areas) gave commitment to provide doctors and nurses to ensure that they sustain what we have started.

As far as the host community is concerned, we started from our base in Ikeja here.The first sick bays we donated was in Ikeja. That is the one that is closest to us. In Ota, we donated transformer and installed that transformer to ensure that the host community has power. Before we got there, there was no light in that environment. We also ensure that we attend the meetings of the community. And we made donations to them to ensure that we sustain whatever plan they have, especially, regarding security of the area.

Domestic preference

One, looking at it from the true sense of local content policy, it is not very applicable to our industry. What we are asking government to do is to give us what we call domestic preference for those of us who are manufacturing locally because we know that we have to get our materials from outside Nigeria. And it is going to be difficult for us to compete with the same people who gave us their outputs. And because we know that we cannot develop capacity if we are not protected because there is no country in the world that just woke up  and built capacity. The Indians , the Chinese, at some point in their development., they had to protect their local manufacturers so that they can build capacity. We are asking the Federal Government to give us some level of preference which was approved. And on paper, there is 15 per cent domestic preference when you are bidding for contracts and when you want to compete with pharmaceutical companies from overseas. So that is what we have and we are happy We want that 15 per cent to be increased because we feel it was not sufficient to cover cost at that stage for the fact that, at onset, you are 40 per cent disadvantaged and we found out that you don’t make profit really. Some of the people you are struggling with for these contracts are ready to even sell at discount, but they want to get you out. Yet, like Oliver Twist, we said yes, the 15 per cent is good, but it should be increased because that is not even good enough. And government must ensure that it applies to all the corporate tenders because  if the law says  that if it is not put it in publication or advert in newspaper, you can not apply , then we are saying it must apply to all the tenders. It is noted that when the foreign companies bring their money ,they are not bound to the policies of government.

Counterfeiters

We are working to repackage our products in better packs. We also collaborate with our customers to ensure that they work with us and give us feedback. What is happening in our brands? Yes, in the last couple of years, we have not got any incidence. We collaborate with regulatory agencies to stamp out the fakers. The last incident we had was that of a company that was trying to copy our designs because they felt that our brands were doing well in the market. So they wanted to ride on the back of the brands to push their products to the market. However, some of the fakers retraced their steps when the regulatory agencies stepped in. But it still remains one that we are talking to now.

Okafor

Accessing foreign market

As a company, we realize that we shouldn’t do what a 10-year old or 16-year old are doing. That, in the first instance informed the decision to build the Pharmacentre. As of now in our company, we have world class facility that no company has in Nigeria. The whole idea is to develop some high-tech products. We are going to do that through collaboration. We are talking with some foreign companies to see if they have capacity to enable us acquire technology from these companies manufacturing drugs which Nigeria depends on their importation today. Of course, you aware that to develop technology is not an easy thing. We, on our own, are doing our best and I am proud to say that the products that we want certified is our own technology. We didn’t borrow the technology from anybody. And they are doing very well. Of course, there are products that are in very sensitive areas, like the vaccines. We need to get technology on those products. We believe that by the time we develop these products, we should be able to move them outside Nigeria because you cannot move paracetamol or basic generic products from this country. But by the time we are able to have some specialized products that are of global standards, we will be able to access those markets. That is exactly what we want to do going forward.

And as far as the GMP certification is concerned, I think we have advanced very well. The reason we have not announced was that we have to be very careful. The first time the WHO inspectors came, we had not started production. So they couldn’t inspect us. And you have to go through certain inspections before they could pass you. So we have gone through all those inspections and we are just waiting for them. All I want to say is that we are very much advanced and we are hopeful that soon, the results will be announced.

 

Only attitudinal change can make Nigeria great again-Chidi Ajaegbu, ICAN President

Ajaegbu

Mr. Chidi Ajaegbu, the 50th President of thr Institute of Chartered Accountants of Nigeria (ICAN),like every other Nigerian, is bothered about the shackles tying down the nation’s progress: corruption. To tackle this malaise, he believes that all stakeholders should have a change of heart and embrace the culture of excellence. To him, if the nation can achieve this feat, all other things shall be added unto it.

Hear him: “The major challenge in this country is corruption.  We can keep talking about what to do from now till tomorrow, but we should have attitudinal change from every stakeholder in the nation.I think that is first thing to do. We must have an attitudinal mind shift.  If we have mind shift towards the Nigeria project, if we can achieve that, I think every other thing will be achievable. Let's start to think about what we can do to take this country out of the woods. We have great potentials; we have massive potentials; everybody knows that we have natural resources; we have manpower resources.  So having resource is not the same thing as developing a country.  We need to have mindset to harness those qualities. We need to move away from the mindset of what generates waste in this country. We need to move towards the culture of excellence.”

In this interview, he bares his mind on some burning issues in the land.

Excerpts:

Backgound

The kind of person that I am, my professional direction was formed when I joined the accounting firm of Binder Balogun and Co in 1984 when I left Government College, Lagos. The accounting firm was where I trained and qualified as a chartered accountant before I became a fellow in 1993.

Early in those days, there was this craze that it was faster to go through the professional offices if you wanted to become an accountant. My father who was a banker felt it was a faster way to actualising my professional dream by joining a practicing firm because it would provide me a better grasp of the profession.

So that is where it started. I joined the firm, got articulated and later qualified in the late ’80s. Did a couple of other professional exams and I am also a chartered stockbroker. I later went to University of Lagos to do my Masters in Banking and Finance.

I have been involved in a lot of start-ups and early in my professional life, I liked run independently. I liked to do my own things my own way. I must tell you that it paid off.

Plans for ICAN

I am barely two, three weeks in office. The way the institute is structured, you come into the presidency as second deputy vice president; from there you get elected into the post of first deputy vice president and then move to vice president and then become the president, if all other things are equal. So what I am trying to say therefore is that in the last two, three years, I have been prepared to take over the leadership of the institute.

As to where one wants the institute to be in the next 12 months, we want to increase the level of our advocacy, we want to also try and enhance the brand and reinforce our certification processes and enhance them and do everything we need to do to upscale our trainers.

We are challenged by the quality of graduates we get to write our examinations; that is a major problem because it is purely an environmental issue and we can’t really do much but what we can do is try and put the necessary structures in place on our own to ensure that candidates that have chosen the noble profession (Accountancy) would get the necessary resources to be able to train, get qualified and be able to hold their own in any professional environment.

The last administration, of course, did start the upgrading of learning resources by signing an agreement with Emile Woolf, London, which is a known name in term of provision of learning resources. In the last administration, we signed a contract with them to help develop our study packs, benchmarking it with global standards. This is ongoing as we speak. We hope to see that through between now and November 2014. We are into making sure that we train our institution house trainers. We need to also shed a lot of pressure in terms of provision of infrastructure base for the institute by building lecture halls across the spectrum of the geopolitical zones.The council has approved the building of lecture halls in University of Lagos, Obafemi Awolowo University, University of Benin, University of Nigeria, Nsukka, Ahmadu Bello University and Kebbi State University. We are going to start all that based on approval that we have. We must make sure that we deliver on them before the expiration the next 11 to 12 months. We want to make the learning environment more friendly as much as possible; give them sense of belonging. We are actually trying to get everybody on board. I think doing that will create team relationship. It is worthy to mention here that the lecture halls would also have libraries both electronic ones and physical ones. We also at some point down the line intend to create professional endowment chairs. But as you know, these are expensive projects so it is not something you can take on simultaneously without creating the infrastructure base to drive the profession.On the issue of motivating the lecturers, it is outside our control because we don’t run the universities but we would do everything possible to reinforce the profession everywhere we go.In addition, we want to motivate our workforce to do the right thing by making the working environment friendlier and as much as possible give the workforce a sense of belonging by recognising them as significant stakeholders in the institute.We are doing all we need to do to get everybody on board and I think doing that will create a team spirit. We intend to create positive synergy among all stakeholders of the institute in the next 12 months and through this, we cannot but achieve most of the things we set out to achieve in the first place.To create awareness about ICAN in those locations, to support the schools is sort of also part of extending the resources we have to these areas. So this is not a one-year plan. We have a revolving, rolling plan; do your bit, the next person does his bit. At the end of the day, we take a look at various reports and see whether you have done well and to take remedial actions where you think the desired outcome has not been achieved to the extent you anticipated when you started the plan initially.

We also have what we call special student project.  And the concept is to ensure that we extend accountancy to all nooks and crannies of this great nation.  And we do recognize that the concentration of accountancy in the country is in the West, followed by Abuja.  The council, in the last five years planned to see how to bring those who are lacking in the production of accountants into process of producing more accountants and they created what we call the Special Student project. We have to partner with the state governments to create them in some states. The one in Yenagoa, Bayelsa State, for example, is the one approved by the current Commander-in-Chief when he was the governor.We have one in Kano.We also have to partner the state government to create one in Calabar. Truly the results we are getting are amazing.  By and large, it is a very successful scheme.

Rebased GDP

Let me just quickly say that the rebasing of the GDP does not translate to immediate economic gains. The human capital index, which is a major measurement of our standard of living, would not exponentially grow because somebody has said we have recounted our net worth.

It does not change anything because what you are counting is already existing. It’s just making sure that you get the count right. But moving forward, on a near to medium term basis, because GDP is a very critical measure of your performance economically, it is going to impact positively in term of perception. All these are considerations that the international capital provider weigh when it comes to costing. If you look at it from that perspective, it is a good thing.  But if you are looking at it as to GDP vis-a-vis the standard of Nigerians, then we have a lot of work to do. For example, if Nigeria’s claim that her GDP is higher than that of South Africa, can you compare the standard of living of South Africans with that of Nigerians? So it is even an added burden on the part of government to justify that the figure they have now told us is our GDP does actually translate in terms of standard of living of Nigerians. Yes it is a good thing coming from the perspective of international capital  providers, business men would like to come and invest because of our new GDP to the standard of living  to the average man on the street. To me I wouldn’t want to be the one that would drive that process because it is a very difficult thing to do.

Let me also say categorically that policies, even  in a well structured and efficient economies, take about a year to impact. In our own environment, it is going to take a lot more than that. So the rebasing of the GDP, whatever  the impact is, it is not going to be felt by the average citizens in the next couple of months.

Disciplinary process

This question keeps popping up here and there. I keep saying that we have procedures, we have rules.  In actual fact, our disciplinary process is actually the enactment that  makes us to be.The procedure here is that if you have any complaint against a professionally qualified accountant, a member of our institute, you have to write a petition;  you have to swear an oath to that petition. Then when you send the petition to us, we assigned it to an investigating panel.  Investigating panel would review it.  And if it is found out that the individual or a set of individuals are found wanting, then we will take it to our Disciplinary Tribunal, which is an equivalent of a High Court. It is a serious business. But we can't begin to pick this from newspaper pages to investigate. It is simply not possible.  And there is no process that works that way; you heard that somebody, an XYZ chartered accountant, has stolen or cause some infractions. Then you start investigation. It is simply not possible. If you know of anybody that committed irregularities, as an individual, you swear an affidavit to a petition, then we would take it up.  We have a lot of cases that we tackle every year.  And because we are conservative, we do not unduly make noise about them.  But I can assure you that we have very active investigating panel. It is mandatory, it is statutory that we must have it.  And when it comes up with its report that a case must be answered by any of our member, we take it up to tribunal level.  And if there is need to pass judgement on that individual or set of individuals, we will do which may  be expulsion from the institute and withdrawal of certificate.  That we can expel you from the institute, it is that tough.  So it is a serious business, but there are processes and procedures; we must follow the procedures.  When you write a petition, you swear an affidavit, and send it to the institute. The registrar must refer that case to an investigating panel within five working days.

ICAN Vs CITN

The truth is again that CITN (Chartered Institute of Taxation of Nigeria) is our baby.  I want that to be clear. CITN was formed at our council chambers some time back.  And whatever disagreement, or whatever misunderstanding in terms of interpretation of the enabling laws, it can only be for a while.  We are working on it and I am sure we will find a solution to it very soon.  We are almost there.  I think there is just one more sticking point that we are about to tidy up.  So when we are able to tidy that up, we will let you know. 

We have joint membership; we have chartered accountants who are members of CITN; So we are one family.  It is like a misunderstanding within the family which, we know, will be dealt with appropriately.  If you want to talk of various litigations, I see it as a form of dialogue just as the way I see war as an extension of dialogue. At the end of the day, when you go to war to slug it out, you still come back to the table to negotiate.

Advice to government

It is not healthy for us to spend over 70 per cent of our budget every year on recurrent expenditure.  It just shows that the nation does not take capital investment serious.  And  the reason why you have that kind of scenario, I think, is that we have a very large government.  All stakeholders of government must begin to think seriously about laying foundation for good  projects if they want to succeed.  The National Assembly is large and then the overhead being allocated to that type of government is also high.  The Executive system of government is also very large. You know, there is a lot of overgrowing or overlapping functions; agencies and parastatals of government that  can be merged to minimize wastage.  The major challenge in the country is corruption.

To reduce waste, I think we should start getting value for contracts.  We can keep talking about what to do from now till tomorrow, but we should have attitudinal change from every stakeholder in the nation

I think that is first thing to do.We must have an attitudinal mind shift.  If we have mind shift towards the Nigeria project, if we can achieve that, I think every other thing will be achievable. Let's start to think about what we can do to take this country out of the wood. We have great potentials; we have massive potentials; everybody knows that we have natural resources; we have manpower resources.  So having resource is not the same thing as developing a country.  We need to have mindset to harness those qualities.  If you asked, we are really, really in dire situation right now in the country.  We need to move away from the mindset of what generates waste in this country. We need to move towards the culture of excellence.  You know we have the Nigerian attitude of if I am not there breathing down on you, you won’t do the job.  We must go to a level where, as an individual, without any external prompting we must do the right thing the right way.  It is not about people seeing you doing the right thing; it is about you feeling comfortable internally that I am doing a good job.  I think we need that in this country and once we are able to look into that direction,  things will change.  But I can tell you, we have a lot of challenges as a nation.

Advice to CBN Governor

You don't lack policies as to what to do, they have the skills and knowledge to do all that.  I think he should beware of bureaucracy and environmental factors.  He has to be  focusing more on policy impact measures.  What I mean is that he should be mindful of policy direction, like ‘how do I get to impact  on the economy and the people?’  We lack efficiency to operate in the economy to get our policy impact in the people. We can't be having GDP growth of six to sever per cent in the last four to five years and there is unemployment.  That means it is not an inclusive growth. He has to enact policy that will push liquidity to small and medium scale enterprises (SMES).  Everywhere in the world, every economy, that segment of the economy must get special attention. Coming from a private sector background, I think that is a good thing.His former bank, Zenith Bank) is one of the successful banks in Africa. As to whether is qualified, I think the bank is in a safe hand.

Leadership style

I am very informal, very accessible and firm. I believe that power is divine. I like things being done very quickly, I believe in results and not what you tell me. I don’t play politics; I am a very plain talking person. People may not agree with me all the time, but at least they know where I stand on some certain issues.

Work/family balance

I have a very wonderful wife, the truth is that my wife is my pillar and without fear and without her, a whole lot of things would have gone  differently. She is very understanding and you can’t take anything away from her. Whatever I am today, she takes a very large chunk of praise and the work.

I work round the clock. I am not saying that you can’t achieve all that you want to achieve if you work between 8 and 5 o’clock. At a certain level you need to put in more than the 8 to 5 arrangement.

 

New import tariff ‘ll hike up price of books- Segun Oladipo, Learn Africa boss

Oladipo

The nation’s book industry may soon run into chaos! According to Mr.Segun Oladipo, the Managing Director of Learn Africa Plc, formerly Longman Nigeria Plc, the new regime of import duties on books, recently introduced by the Federal Government, may turn out to be an ill wind that blows nobody any good as it will send up prices of books. Not only that, “there will also be scarcity of books,” he warned.But how can the education sector avert this impending doom, Oladipo opined that government must revert to the zero tariff regime.

His words: “A problem is looming, there is going to be scarcity of books. As you are aware, the Federal Government has introduced 50 per cent levy or import duty on books. In the past, it used to enjoy zero per cent. But it is now 50 per cent. And the implications of that are many. One, that means there will be scarcity of books. Two, there will be price increase by minimum of 50 per cent. Not only that, there will be increase in piracy. We want to maintain that government should go back to the zero per cent import duty on books. If not, there will be crisis in the publishing industry.”

In this interview, he bares his mind on the goings on in the publishing industry.

Excerpts:

Longman divestment

Oladi

As you might be aware, Learn Africa Plc is an education solutions business with a history spanning over 50 years. The company was established in 1961 as Longman Nigeria – a book publishing concern wholly owned by Longman Group UK Limited, now Pearson Education. On July 23, 1996, the shares of Longman Nigeria Plc were listed on the Nigerian Stock Exchange. In 2008, the company became a subsidiary of Pearson Plc following the latter’s increase in its shareholding from 29 to 51 per cent . In the first quarter of 2012, the two majority shareholders – Pearson Education Limited and Longman Group (Overseas Holdings) Limited formally divested their combined 51 per cent holdings in Longman Nigeria Plc on the basis of mutually acceptable terms. Consequently, Longman Nigeria Plc organised a rebranding ceremony on February 16, 2012, during which it formally became Learn Africa Plc with a distinctive logo. This company seized the opportunity to announce its determination to place greater emphasis on customer satisfaction, product quality and value addition. We also pledged to ensure a more judicious management of the company’s resources in order to enhance shareholders’ value. Besides, we declared our intention to renew our vision with an uncommon passion to provide products of international standard that will enable the company to sustain the confidence and patronage of our ever-loyal customers. It is worthy of note that the rebranding event was attended by commissioners of education, chairmen of State Universal Basic Education Boards (SUBEBs),representatives of Pearson Education, authors, teachers, students, booksellers and other stakeholders in the Nigerian educational sector.

New titles

Oladipo

We are glad to inform you that we have successfully introduced new titles into the Nigerian market as replacements for some of the Pearson Education titles that were withdrawn from our list. Specifically, we have replaced New General Mathematics with New Concept Mathematics. Junior English Project and Senior English Project were

We 'll sustain capital formation through margin loan –Okumagba, President, Chartered Institute of Stockbrokers

More than six years after many investors and brokers got their fingers burnt in the margin

loans saga, the case still remains a hot-button issue in the nation's capital market today.But this time around, the new leadership of the Chartered Institute of Stockbrokers(CIS) plans to devise ingenuous ways of making the facility crank the engine of wealth creation  again. According to its president,Mr,Albert Okumagba, CIS under him would engage the new leadership of CBN on how to ensure that the process of capital formation, as driven by margin loan, is sustained

and used in a way that is mutually beneficial to stakeholders. At an interface in Lagos, Okumagba also touches on many burning issues around the market. Excerpts:

 

We 'll sustain capital formation through margin loan –Okumagba, President, Chartered Institute of Stockbrokers

More than six years after many investors and brokers got their fingers burnt in the margin

loans saga, the case still remains a hot-button issue in the nation's capital market today.But this time around, the new leadership of the Chartered Institute of Stockbrokers(CIS) plans to devise ingenuous ways of making the facility crank the engine of wealth creation  again. According to its president,Mr,Albert Okumagba,

CIS under him would engage the new leadership of CBN on how to ensure that

the process of capital formation, as driven by margin loan, is sustained

and used in a way that is mutually beneficial to stakeholders. At an interface

in Lagos, Okumagba also touches on many burning issues around the market. Excerpts:

Returns on Investment

It has been very poor this year. But we need to understand that cycles occur, we have boom period and we have bust period. The third quarter of the year started on a negative  note maybe because some of the financials have not been very positive. We are also aware of increased challenges in the country. Some investors are already weighing their options .Honestly, there are challenges because of the security situation and the election coming up next year. We pray this will not create tension. Nigerians should start looking positive about the future. There are issues surrounding politics, how will that impact on investments? These are the kind of issues we should be looking at. As people benefit from politics monetarily, they can move these monies into savings and investments. People who have amassed money, they should release those monies. For those of us in the financial system, we should come-up with most strategic approaches to capturing those that have benefited from politics at all levels. They should move the money to investable assets. They should move the money to collective investment scheme, insurance, pension assets. The next time you are going to have major political activities is another four years.

Online trading

I think it is a welcome development. It expands the space for capital market operations. Most of the firms that have launched this are launching it to  improve their capacity to distribute securities between those who want to buy and those who want to sell.

As for the connection between online trading and Collective Investment Scheme(CIS), I think it is something that we have to study very closely. But one of the ways of distributing products coming out of the Collective Investment Scheme is for those managing it to have retail and wholesale channels.I believe the Securities and Exchange Commission (SEC) and most market operators are looking at all the avenues for making sure they lure many investors back to the space in CIS. I think we are going to be very active in working with the regulators and operators to see how more Nigerians can participate in the capital market, working with the platform created by the institution that have launched the CIS over the past seven or eight years.

We also want to see a lot of this scheme launched going forward. We believe that those who are going to be launching the scheme (CIS) going forward are going to be availed with more channels for distributing this capital market product because it will be a very strategic way for collective investors who don't have access to professional advisers or investment advisers because of the size of what they are investing. I think one of the biggest problems we have in the past was the fact that retail investors did not have the opportunity of using the CIS.It was not well established eight years ago. I think today, CIS is beginning to be more well established. Those who have approved schemes are taking advantage of  the new channel for more enlightened investors. I think it will be strategic for an institution like the Chartered Institute of Stockbrokers to monitor that process of making sure that Nigerians are better informed about the advantage of using CIS for the retail investors rather than investing directly. That is why we are very keen on this our Diploma program, which we had had before now.

As for its regulation, it seems as we are driving the regulator rather than the regulator driving us. We have a lot of international investors trading on our markets because the market has been opened up. If you want to drive the market the way you want to drive it, I think it is better we open it up a little to make it easier for this class of investors. The local stockbroker trade for these people. With the new initiative, they should be able to trade on their own, having worked with the framework of the local stockbrokers there. I do not see any challenge in terms of regulation because when the regulators sit back, they can see how and where to tie the loose  ends and minimize risks in the market. It has been happening in other markets as well. Forex trading online is basically the same. You can follow the trend and the graph. So, if the Forex trading is not an aberration. In the country now, we are talking about cashless, we are talking about 1T infrastructure. There are lots of things you should be able to do online. And if we what to drive the number we want to come  and operate in our capital market and run in tandem with the Nigeria Initiative, I think we should better go online for our trading.

CIS diploma

I think we used to conduct exam for the Diploma program twice every year. But beginning from this year, we are going to do it every month, beginning from September. We have a strategy of reaching out to target students to take the exams. Those who have the minimum qualification of school certificate will be able to take the exam. We want to use the program to support the back office of most capital market operators. All workers in stockbroking firms are eligible for CIS certification either in diploma , associate or graduate cadre. That will be for those who work in stockbroking  firms. Beyond stockbroking firms, we also expect that our certification will also cover those who play in different aspects of the capital market. We have an ambitions target of bringing in 150,000 students before the end of the year. Restricting ourselves to university graduates alone will be wrong, although that is our primary target. The program will also target school leavers who have not entered universities because the minimum qualification is school certificate. If you are in or out of university, jobless or looking for job, you are covered by the Diploma program. If you have a job and not happy with the challenges of the job, you are also covered by the programme. What we have done was to sit back and repackage the diploma. We believe that if you are a holder of our diploma certificate, you should be able to sell financial products across financial industry like pension products , Treasury Bills(TBs). You should also function well in bonds and all financial instruments generally. And so, what we have done was to look at the whole syllabus and repackage everything. This tallies with what the Exchange said we should look at. We will be looking at the backroom office of stockbroking firms and other financial stakeholders. We believe that if you are a backroom person and you are not involved in the activities, there is a basic level of education that you need to have to function effectively and efficiently in those firms. So, that education crusade  is going to harvest about 150,000 students between now and January. From diploma, you can take on professional line, and so on and so forth. When talk about financial products, a stockbroker should be able to talk about pension funds, you can even talk about insurance and other financial products. You don't have to be a straightjacket stockbroker. When you are talking, you are talking generally of financial  products across all the sub-sectors of the financial industry.

Recapitalisation

SEC has raised the issue, released guidelines on recapitalisation. I think stakeholders are engaging SEC on steps to make sure that the market and people should respond to issues surrounding this new recapitalization positions. My advice is that one should give this engagement  process some time. Let us come back to you, maybe, before the end of the third quarter on the recapitalization update. I believe it will be a win-win resolution;a situation that will be good for the regulators and also good for the operators.

Delisting

I believe that is an ongoing process, the Stock Exchange normally reviews the institutions that are registered with it. We would monitor the process to make sure that our members are not affected by the reduction in the number of registered stockbroking firms. We have a very good working relationship with the Nigerian Stock Exchange. The Chief Executive Officer of NSE is on the council of the Institute, a very active member of CIS.We also have some of her top executives in our various committees. So we have a very disciplined process of relating with the Exchange. We would make sure that our members who operate as dealers in that platform have the best operating environment. We are also connected to other trading platforms, like the two OTC platforms - NASD and FMDQ - and the Commodity Exchange platform. So we will be looking at our members operating in the four platforms and making sure that their capacity to make money is enhanced by our very constructive engagement with the governance structure of the four platforms.In realization of this new position, we have visited the NSE about a month ago and last week (then), we visited  the NASD Plc and also addressed the registered operators of that platform.

NSE demutualization

We are in advanced discussion with the leadership of the Exchange as regards the ownership interest of stockbroking firms and the process for mutualizing and demutualizing the Stock Exchange. And from the kind of discussion we have had so far, we believe that stockbroking firms will be protected; their equity investment that they made over the years will be captured in whatever processes that would be put in place to demutualize the NSE.

University affiliation

Our aim as regards the diploma program is to mobilize aspiring Nigerians who are interested in becoming professionals in financial market. We are going to mobilize a lot of them across the country. Our strategy is to make sure we reach to as many as possible. One of the strategies is to go into the higher institutions and speak to them. We are

already discussing with a number of higher institutions who are willing to work with us and  ensuring that we collaborate in running the program together. So they are showing a lot of interest to make sure we have a large number of candidates. Our target is 150,000 young people in the next few months before the end of 2014.The CIS is covered by a law passed in 1992 and what we are trying to do with this program is to bring value to young people; give them an opportunity to become a major partner in the financial system. And this opportunity will place them, while they are in the university, to explore avenues to be part of the financial system. Every student of Nigerian universities that has interest to be part  of the  financial system can take the exam. And while they are in the university, they  can participate in the financial system by being affiliated with either capital market operators or working on their own as part of agency network to sell financial products, they will be knowledgeable enough to sell the products across the entire financial industry.The capital market have a better structure to assimilate them and work with them, but we are not going to restrict them. Knowledge  will make it possible, the knowledge impacted will put them in a position to sell products that are connected with Collective Investment Scheme and other products that have to do with the four platforms in the market; whether it is the OTC platform, whether it is NSE platform or Commodity Exchange. We are also working with banks, mortgage institutions to sell financial products. So what we are going to do is to reach out to trade groups that service the entire financial system to let them understand that we are producing diploma holders that will help you drive the sale of your products. We are already in discussion with trade groups for stockbroking firms, issuing houses and registrars. We have had discussion with the trade group for pension- both PFA and PFC. We are also going to engage the trade group for Insurance and we have two banks represented on the Council of CIS. We also made it open to them to use these diploma holders in the agency banking arrangement which the CBN has approved. We are also going to engage with a number of institutions that will guide these students as  they prepare for this diploma exams.  They will also have processes for hand holding these people when they eventually have this certificate, to know whether they will be part of agency arrangement established in any one of the trade groups that I have talked about or whether they will operate as entrepreneurs in their own right with the platforms to sell financial products across the entire spectrum. There is financial inclusion plan that the CBN launched, you need people to make sure that this financial system work. We also expect that when the national savings strategy is put in place by the stakeholders that are currently working on it, this diploma certificate holders will be a major force for making sure that we can drive savings and investment  across the entire financial system. There will be massive enlightenment to ensure those young Nigerians take advantage of this opportunity that we are creating.

Investor Protection Fund

I think the structures that will make the fund work were put in place by the new leadership  of the Exchange. I think we have to give them opportunity to make it work.

CISI

We have a law, and we have an amendment going on now at the National Assembly. That law-Chartered Institute of Securities and Investment(CISI)- is expected to accommodate other stakeholders in the capital market. Because of our projections into the future, that engagement of trade groups commenced before the amendment of the law. We are already reaching out to issuing houses and stockbroking firms to participate more in our activities.

As AIHN ex-leader

So the issue you raised on the impact of my leadership of Association of Issuing Houses of Nigeria (AIHN) on CIS is already manifesting. Bringing issuing houses and stockbrokers  to the platform is going to be very easy for us because, before joining the Council of CIS, I was already a leader of AIHN. We are also very involved with ASHON (Association of Stockbroking Houses of Nigeria). So in a number of meetings that we currently had, there is a greater collaboration in a way  that will benefit the market.

Margin loan

The Institute worked with AMCON, NSE, SEC and the Federal Ministry of Finance to address issues around margin loan. I believe there is progress with the latest development coming from AMCON in the resolution of issues surrounding the margin loan. That engagement will continue with AMCON. AMCON has been very supportive of the institute and its activities. We also plan to engage with the new leadership of the Central Bank of Nigeria (CBN), especially with regard to the new guidelines by SEC working in conjunction with CBN on how margin loan should be handled. I think that structure was not in place 10 years ago. So there is a new structure that is supposed to drive margin loan by banks. I think CIS will review what has been done and since we live in dynamic world, we will engage with the new leadership of CBN to ensure that the process of capital formation as driven by margin loan is sustained and used in a way that is mutually beneficial to those who take this loan , the banking industry and the financial system. I believe constructive engagement will address a lot of grey areas as relate to historical issues around margin loan and also address where we are today and going forward.

Encroachment

The financial system is supposed to be open. The diploma holders selling financial products will not stop those selling insurance, those selling pension or capital market products from doing so in as much as you are aligned with the regulations. I don't expect you to sell capital market products without aligning with capital market regulation or selling insurance products without being aligned with insurance regulation. Those who sell insurance products today are not educated. They just attached themselves to insurance companies as agents. But here, we want to train people to have better appreciation of financial services. I don't think we are encroaching on other people's business. We are just being expansive in our ideas to mobilize savings. We have a target of 150,000 this year, our target for next year is multiple of that. Before the end of next year, we expect a million students to have registered for the program. It is a well thought-out strategy on how we are going to open up the financial space. The diploma programme is for people across the country and for the people outside the country. We are even structuring some of our programs to be bi-lingual - English and French - before the end of the year. This will open to Nigeria and entire West Africa. We also expect those interested in the Nigerian economy and the West African economy but not resident in Africa to also take the program.

CIS is a strategic way of moving those who are currently a shareholders associate to move into CIS. By that they will have story voice at meetings where they can get 3 per cent of shareholding  structure of company rather than less than one per cent.