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$200,000 digital library for Nekede Fed Poly
Related to country: Nigeria

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

Written by Chidi Nkwopara
Tuesday, 11 November 2008
OWERRI—A digital library, estimated at $200,000, will soon be built in Federal Polytechnic, Nekede, Owerri West local government area of Imo State. Already, the leadership of the Institute of Electrical and Electronics Engineers (IEEE), Nigeria Section, has since opened serious discussions with the management of the Federal Polytechnic, Nekede, for the construction and installation of the digital library in the school.

Addressing journalists after the Institute’s seminar in Owerri, the IEEE Chairman, Nigeria Section, Tubde Y. Salihu, an engineer, explained that the project is its contribution towards providing Information Communication Technology (ICT) facilities in deserving tertiary institutions in the country.

“Our reason for siting the ultra-modern state-of-the-art digital library in the Polytechnic was informed by what the IEEE executives saw on ground in the school. It is expected that this project would cost $200,000.” Salihu said.

Answering a question, Salihu said the most important thing is for the school management to guarantee the organization’s usage, stressing that “the facility in the school has amply proved that the present management of the Polytechnic has actually lived up to expectation”.

While saying that the Polytechnic already has 700 computers hooked to the internet, Salihu also opined that this is a feat other tertiary institutions in the country ought to emulate.

Enumerating the benefits of the proposed digital library, Salihu said it includes access to quality technical research that would enable each researcher to select no fewer than 25 topics per month, pointing out that there are 1.7 million documents in the IEEE/IET Electronic Library.


November 11, 2008 | 1:12 PM Comments  {num} comments

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Old computers pollute Nigeria
Related to country: Nigeria

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

CNN's Christian Purefoy reports on bringing technology to developing nations without causing environmental problems.

visit to it watch live
http://edition.cnn.com/video/?/video/world/2008/11/06/purefoy.nigeria.ewaste.cnn

November 11, 2008 | 1:00 PM Comments  {num} comments

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PHCN to sack 71,000 - 60,000 casual workers included - 12 GMs already sacked
Related to country: Nigeria

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

Bankole Makinde, Abuja - 11.11.2008

AS part of the reform in the public sector being undertaken by the President Umaru Yar’Adua administration, the Power Holding Company of Nigeria (PHCN) is now set to lay off 11,000 out of the reported 30,000 permanent staff in its employ.


Already, 12 general managers of the company, including the Chief Executive Officer (CEO) of Abuja Distribution Zone, Mr. A. Ikwu, who was recently deployed in the Benin Zone, were relieved of their appointments penultimate week.


Nigerian Tribune gathered that 18 more general managers would join the unemployment market before the end of this month just like Mr. K. Osakwe of the Abuja Headquarters, who was sent packing two weeks ago.


The general managers are in charge of the 11 distribution zones in the country, supervising between three and four states. The 11,000 workers to be laid off, it was gathered, are not among the 60,000 casual workers working for PHCN who would also be affected by the rationalisation exercise.


In fact, three weeks ago, all workers of the company were ordered to bring their original educational certificates to determine which of them would be made to join the pensionable scheme of PHCN as, at present, none of them enjoys the pensionable scheme since 2000.


An account audit was also undertaken to determine ghost workers two weeks ago while the first appointment letters of staff and salary and promotion letters were also ordered to be tendered to determine how to implement the rumoured 50 to 100 per cent salary bulk increase for those that would be retained, effective January, 2009.


Nigerian Tribune gathered that the Federal Government was even toying with the idea of returning PHCN to its former name of National Electric Power Authority (NEPA) as PHCN was never privatised, but broken into business and distribution zones.


In a clear departure from what operated in the past when government gave subventions to NEPA, each business and distribution zone is now independent and largely autonomous, generating revenue for its sustenance.


The impending sack of the PHCN workers was said to have been hinged on the fact that most of them, especially meter readers, were no longer needed due to the introduction of the Digital Pre-payment meters (DPPM), which has now left consumers in total control of their consumption of electricity, most especially in Abuja.


Hitherto, the meter readers were supposed to apprehend those who illegally connected directly from PHCN power source, a job which has now been made irrelevant due to the introduction to DPPMs.


When the Nigerian Tribune called the Senior Manager (Public Affairs) of Garki Business Unit of PHCN, Hajia H. Salman, for her reaction, she said she had nothing to say about the development.


She directed the Nigerian Tribune to the chief executive of the Abuja Distribution Zone for clarification, stating that she had been hearing of the impending mass purge too, which she described as a rumour.



November 11, 2008 | 12:53 PM Comments  {num} comments

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Reassessing the Nigerian Financial System
Related to country: Nigeria

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

The governor of the Central Bank, Professor Chukwuma Soludo, and president of the Chartered Institute of Bankers of Nigeria who is also CEO of Intercontinental Bank Plc, Erastus Akingbola, have been talking up the Nigerian banking system. In the process, they have been quick to remind the public that the sector-wide consolidation exercise embarked upon by commercial banks from 2004 to 2005, has strengthened our banking sector and shielded it from the global credit crisis. In comparison, they say banks overseas are undergoing what Nigeria was smart enough to do earlier.
Yet they cannot explain away the forbearance granted the banks not to make the necessary provisions for non-performing margin loans as required under the prudential guidelines of the Central Bank. The last time I recall banks were given any form of forbearance by the CBN was before the consolidation exercise when a significant number of them were ailing. It was after that failed to achieve the desired result, that the Bank forced the banks to increase their capital requirements to N25 billion.
A major indicator that all is not well with our financial system and that the regulators are being economical with the truth, is already manifest in the capital market segment of the financial services industry. At present, several stock broking firms and investment banks that were used as conduits for margin facilities to trade in bank shares are in dire straits. Most of them are defaulting on their obligations to the banks and cannot even meet their monthly wage bills. It is for this reason that the push for a government bail out for the stock market has been loudest from capital market operators that been the worst hit since the market’s downturn.
After considerable pressure was mounted on the CBN to disclose the level of margin lending, it announced that banks’ exposure to the equities market amounted to some 8 per cent of gross banking assets, which in itself was opaque. A few days later, CBN conjured up a figure saying total margin facilities in the banking sector amounted to some N900 billion. If the amount is that insignificant, then the level of core capital and so called profits declared by the banks should give them adequate capacity to absorb the loss provisions. But by allowing the banks to restructure their margin loans, the CBN has given them a blank cheque to keep posting paper profits and declaring dividends on bad loans. It is for this reason I am inclined to believe that figure announced by the CBN is grossly understated.
The only reason I can fathom as to why the CBN is being dishonest with the rot in the system is complicity on the part of the regulator. As a result, it has become necessary for the Federal Government and the National Assembly to wake up from their slumber and start implementing far reaching measures through the enactment of new laws that will strengthen supervision and surveillance in the financial services sector. Some of the measures are as follows:

An Oversight Body for Financial Sector Surveillance and Supervision
The executive arm of government or presidency should send an Executive Bill to the National Assembly that will result in the review, amendment and eventual repeal of all the laws governing the financial services sector and its operations, and the enactment of a new law for the establishment of an independent oversight body responsible for financial sector surveillance and supervision. This new body will comprise the relevant departments/units that will be responsible for overseeing the banking sector, insurance sector, pension funds, clearing houses, and capital market operations. The establishment of this oversight body will achieve a number of objectives that are not necessarily limited to the following: One, it will take away the responsibility of financial services surveillance from the CBN which will enable it concentrate on its core functions of monetary policy implementation and inflation targeting. Two, this will lead to a considerable reduction in the discordant tunes emanating from the regulators whenever a problem arises. Right now there are too many regulators – the Securities and Exchange Commission (SEC), Nigerian Stock Exchange, National Insurance Commission of Nigeria, National Pension Commission of Nigeria and the CBN – that are working individually and at cross purposes. Three, the establishment of a single oversight body will provide the perfect platform for peer review mechanism for what each of the departments under it and their heads are doing at any given point in time. Four, it will engender transparency and improve disclosure.
Five, the law establishing the new oversight body must include a corporate governance code that stipulates the relationship between the regulatory departments/units and the operators in each of the sub-sectors in the financial system; not excluding an arms length approach that eliminates the incestuous camaraderie that currently exists between operators and regulators. The corporate governance code must include provisions barring the heads, management and staff either directly or indirectly through proxies and relatives from buying and owning shares in companies operating in the financial services sector; and taking loans from the institutions. This rule barring the ownership of shares in financial institutions must be extended to include external auditors that audit the books of operators in the financial services sector and/or independent firms that may be appointed from time to time by the oversight body to review the books of operators under its supervision. Five, the new body must have a strong risk control unit that shall be responsible for periodically reviewing prudential risk of operators in the financial services sector. This unit shall be made up of competent hands responsible for credit, market and liquidity risk assessment, and make it mandatory for banks and other operators in the financial system to make full disclosure on the nature of their loans, non-performing loan portfolios and their exposure to various economic segments/sectors, in order to enable the public differentiate risk portfolios particularly in banks.
In establishing the new oversight body, the National Assembly can learn a lot by understudying similar institutions such as the Financial Services Authority (FSA) of the United Kingdom and the Australian Prudential Regulation Authority (APRA). For instance, the FSA in the UK is responsible for the Investment Management and Regulatory Organisation that oversees unit and investment trusts; Lloyd’s; insurance companies; recognised exchanges, which include the London Stock Exchange and commodity markets; professional bodies; banks; clearing houses; wholesale markets; and the Security and Futures Authority. Even though the FSA has been criticised in the past for rarely taking on wider implication cases, its success in curtailing systemic crisis in the British financial system, is today, compelling US authorities to evolve a similar model following the collapse of several venerable Wall Street institutions a few weeks ago.

Merger and Acquisitions
In recent weeks, there has been a growing clamour among financial market analysts for another round of consolidation in the banking sector. While this may instill confidence in the banking and investment public, tackle systemic risks and volatility in the industry, and reduce cut throat competition that is pervasive in the sector today, however the last round of forced consolidation has shown that mergers and acquisitions must be business driven. The problem with Nigerian banks is not necessarily size but the quality of their earnings. This is the only country in the world where banks consistently post growths in profits in the face of difficulties imposed by lack of infrastructure, high level of systemic risk, and general economic and political risk.
Beside, Nigerian banks take far too many risks than their peers in other developing economies ranging from operational to market risks. Even specialised credit risk management in the banking system is almost non-existent. A typical example was the manner a banking syndicate lent Transcorp $600 million for its acquisition of NITEL despite the absence of a balance sheet and no visible income stream. The decision by the banks to put together the facility was borne purely out of cronyism and political considerations. To make matters worse, the banks in this syndicate, from what I gather, have still not started making loan loss provisions on the facility even though it was extended to Transcorp three years ago and the company has been defaulting on its debt service obligations ever since.
Yet, some of these banks are the so called big banks in Nigeria. If these banks have such significant holes in their balance sheets which one of them can be trusted in the event of a merger or acquisition? Over a year ago, Standard Bank (Stanbic) before its merger with IBTC-Chartered had to pull out of talks with one or two other banks after due diligence showed up significant rot in their books. Yes, another round of consolidation may work. But it should not be mandatory. Instead the authorities may consider using a carrot and stick approach which by offering banks a raft of incentives may compel them to merge.

Stock Market Institutional Changes
This may be the most difficult aspect to implement because it requires a change in mindset on the part of investors more than anything else. Traditionally, local investors, especially through the various shareholders associations, have always put considerable pressure on quoted companies to pay dividends and bonuses annually to their shareholders. Companies that fail to do so, or indicate in their prospectus that profits shall be retained, are usually punished by the market leading to negative share prices (the shares of Starcomms have taken a bashing for this reason). But the downside to this is that very high dividend payout ratios and bonus issues support low levels of earnings growth.
Companies go to the market for one primary reason: that is to raise funds to grow their businesses. But when these companies are put under pressure within the first couple of years of their listing and secondary offers to start paying dividends from their profits instead of retaining them, it curtails their ability to expand their businesses. In other words, the mindset of retail and wholesale investors has to shift from what has obtained in the past and begin to view their investments in the stock market as long term investments. By reducing the pressure mounted on banks and other operators in the financial services sector to declare dividends and bonuses, quoted companies will be the better for it, because the retention rate of profits will be higher. That way, financial institutions will be less inclined to falsify their books and declare false profits for the benefit of fickle minded investors.
Lastly, a revision of the pension legislation and PFA guidelines is still necessary given the sheer scale of investible funds pension contributions can constitute in the development of the stock market. According to a market research study published by ARM Investment Managers, a Lagos-based investment banking firm, pension funds provide a natural and stable pool of capital for the stock market and can be harnessed more effectively. A revision of the legislative framework should include the strict enforcement of private sector compliance with existing regulations, particularly with respect to the establishment and funding of retirement savings accounts for employees. Covered employers should be compelled to make the mandated regular contributions, with stiff penalties imposed where defaults occur. This would enhance market liquidity as the PFAs allocate additional funds to the market.
A review of asset allocation guidelines to PFAs to increase the equity exposure limit to more than the current 25% is also necessary. For example, ARM estimates that a 10% upward review would potentially result in an immediate injection of over N100 billion into the stock market. Using PFAs in this manner would also avoid the negative signal from the lobby for a “bailout measure” predicated on the use of public funds (otherwise known as Stabilisation Fund). Added to this, the remittance of public sector contributions currently in custody of PENCOM and/or its successor body to the PFAs would help push up equity prices, as it is estimated that this currently amounts to N100 billion.
But most important of all, and as a superior argument to the establishment of a Stabilisation Fund, is the need to ensure the funding of public sector pension arrears at the federal level. These are estimated at over N1 trillion, and would provide a massive boost to the stock market, if an agreement is reached with the Federal Government to fund this liability in a phased manner.

November 10, 2008 | 9:28 AM Comments  {num} comments

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Senate queries naval chief over assault on lady
Related to country: Nigeria

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

The Senate Committee on Navy has asked the Chief of Naval Staff, Vice-Admiral Isaiah Ibrahim, to explain the reasons why armed naval ratings attached to Rear Admiral Harry Arogundade assaulted a lady, Miss Uzoma Okere, in Lagos on Monday.

Uzoma, who has been identified as a daughter of the Sergeant-At-Arms of the National Assembly, Col. Emmanuel Okere (rtd), was beaten and stripped naked by six naval ratings on Muri Okunola Street, Victoria Island, Lagos, for allegedly failing to quickly give way to Arogundade‘s convoy.

Since THE PUNCH exclusively reported the incident on Tuesday, the newspaper has been inundated with reactions from its readers both at home and in the diaspora who felt that the lady‘s fundamental rights were unjustly violated.

Since the report, however, our correspondents and columnists have been receiving threat telephone calls from unidentified persons.

The bestial act by the naval ratings, which is already on a Cable News Network’s website, http://www.ireport.com/docs/DOC 134234, further strengthened the global perception of Nigeria as a country where human rights are frequently abused, especially by military personnel.
An anonymous witness recorded and sent the brutalisation of the lady to ireport, a user-generated site operated by the international news agency.
A copy of the video, recording secretly surreptitiously recorded by a passer-by was also sent to THE PUNCH on Thursday. The 20-minute brutalisation of the lady apparently rubbishes the naval officers’ claim that they were provoked.

The Senate committee‘s reaction was sequel to the petition by the victim‘s father, urging it to look into the matter with the view to bringing his daughter‘s attackers to justice.

In a petition presented to both the Senate Committees on Navy and Defence on Wednesday, Okere described the attack as unlawful and condemnable.

He said Uzoma, who is still receiving treatment in a Lagos hospital, would want the Senate to intervene.
The Chairman of the Senate Committee on Navy, Senator Bode Olajumoke, confirmed on Thursday in a telephone interview that the committee had received the petition from the Sergeant-At-Arms.

He said the Chief of Naval Staff had been officially asked to respond to the allegations.
Olajumoke said, ”We have already swung into action on the matter. We have written the CNS to respond to the petition on the brutality of the daughter of the Sergeant-At-Arms.
“We need to hear from the other side, the CNS will have to explain the reason for the action before we know what to do.”

THE PUNCH also gathered on Thursday that the Nigerian Navy had ordered an investigation into the incident.
The Director of Information of the Navy, Commodore David Naibada, and the Director of Policy, Captain Henry Babalola, confirmed the development to one of our correspondents in Abuja.
They assured Nigerians that anyone found to be directly or remotely connected with the incident would be sanctioned if found guilty.
They said they were sensitive to how the public perceived the Navy and that they could not be seen to be building bridges of understanding with civilians and at the same time, be condoning acts that went against this belief.

It will be recalled that Naibada had, in his earlier reaction to the incident, attributed the assault to ‘provocation’ from the victim.

Meanwhile, Nobel laureate, Prof. Wole Soyinka and some notable non-governmental organisations have called for the sanctioning of Arogundade and the naval ratings for the brutalisation of Uzoma.

Among the groups that have expressed interest in the case are the Project Alert, Women Arise, Real Woman Foundation and the Committee for the Defence of Human Rights.

Soyinka, at a news conference in Lagos said, “I want to add my voice to the uproar that has been generated by that admiral in the brutalisation of this woman. If that admiral is not prosecuted, civil organisations will institute actions against him.

“This abominable kind of conduct has got to stop. This animal conduct on the part of our uniformed services must end.”

“The civil society group said that the assault and humiliation of the lady was one act of aggression that must not be allowed to go unchallenged.
This, they added, was not only in seeking redress for the victim but in ensuring that other women do not suffer similar fate in the hands of ”overzealous men who play up their weakness as a sign of strength.”

Pastor Nike Adeyemi of RWF and Dr. Joe Okei-Odumakin of WA would address a joint press conference on the issue at the weekend.

The CDHR, in a statement by its President, Olasupo Ojomo, described the assault as unjust, inhuman and degrading.

It said the attack was also a ”direct violation of the fundamental rights of the victim to life (which was threatened); dignity of her person (she was brutalised and tortured); fair hearing (punishment without trial or conviction by a court established by law); freedom of movement (her free movement on the road was disrupted) which are all rights guaranteed her in chapter IV of the Constitution of the Federal Republic of Nigeria, 1999, the African Charter on Human and Peoples Rights, the United Nations Declaration on Human Rights and all other continental and international treaties to which Nigeria is a signatory.”
The group said because such injustice must not be allowed to go unaddressed, it was prepared to use all lawful means including litigation to secure appropriate redress and remedy for the victim unless some demands were met.

The demands include, ”That the Federal Government take full responsibility for the treatment and restoration of the good health of Uzoma.
”That the Federal Government pays such amount of compensation as may be expressed by Uzoma as redress for the violations of her human rights by Arogundade and his men who are officers and men of the Nigerian Navy.
“That Arogundade and his men, who are ratings in naval uniform, be relieved of their posts via dismissal from service for engaging in conduct that show that they are not fit and proper persons to be retained as officers and men of the Nigerian Navy.
”Prosecution of Arogundade and the ratings for engaging in conducts capable of breaching public peace and for assault occasioning grievous bodily harm to Uzoma.”

The CDHR advised that since Nigeria was not in a state of war, all military and quasi-military personnel should be restrained from using siren on the roads henceforth.


November 7, 2008 | 7:18 AM Comments  {num} comments

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Yar’Adua Approves 30% Reduction in Ports’ Charges
Related to country: Nigeria

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic


President Umaru Musa Yar’Adua has approved across board slashing by 30 per cent of all charges, fees and fines by all regulatory agencies on cargo and goods being cleared at the ports.
He has also sanctioned the abrogation levies on rice, textile and sugar as well as terminal charges by the Nigeria Ports Authority (NPA) and plant hire charges, amongst others.
Yar’Adua however, retained port development levy, which will be used “strictly” for ports development, especially provision of infrastructure.

These approvals followed the 19 findings and 84 recommendations of an Inter-ministerial Committee on 48-hour clearance of goods from the ports across the country chaired by the Finance Minister, Dr. Shamsuddeen Usman and co-chaired by the Minister of Transportation, Mrs. Deziani Alison-Madueke, which was inaugurated on February 12, 2008.
The recommendations, which were submitted to Yar’Adua three weeks ago by the committee, have been approved.

Some of the recommendations that could be implemented immediately will be effected and those that require legislation before implementation will have to be referred to the National Assembly for legal backing.
Briefing newsmen yesterday in Abuja , Usman said the charges by the regulatory agencies were slashed because they are not revenue generating agencies. Usman explained that the need to facilitate trade at the ports and make them more competitive necessitated the setting up of the inter-ministerial committee on 48-hour clearance of goods.

The establishment of the committee, he said, had been preceded by a stakeholders retreat held on October 2, 2007, which had identified certain impediments to early clearance of cargo at the ports.
He listed such impediments to include “technological-inadequate infrastructure and automation; capacity-competence, skill gaps; administration-over-regaulation,over centralisation and multiplicity of government agencies at the ports; public policy,fiscal policy, tariff structure, ports charges and multiplicity of fees; and communication/lack of awareness.”
The administration at its inception in 2007, Usman lamented, had been confronted with “the rating of the Nigerian Ports by the international community as among those with the longest clearing cycle.”

He pointed out that, “the factors responsible for this rating were the issues of corruption, inefficiency and bureaucracy.”Usman noted that, as part of its findings on fiscal and other charges, the committee had discovered multiplicity of charges and fees for importers as impediments to early clearance of their goods. He added that, it also discovered high number of items under import prohibition.The Finance minister disclosed that the committee found out that, the nation’s ports were at disadvantaged positions because of inadequate infrastructure, especially parking spaces, rail services, electricity supply, non-dredging of inland waterways and ports, amongst others. The ports he said, were also disadvantaged owing to their inadequate IT infrastructure for most of the stakeholders, thus making it having little or no interconnectivity.The committee, Usman disclosed, realised the high level centralisation and multiplicity of agencies at the ports and as a result, only the Nigeria Customs Service (NCS), Nigeria Immigration Service (NIS), National Food, Drug Administration and Control (NAFDAC), Standard Organisation of Nigeria (SON) and National Quarantine Service (NAQS) will be at the ports, henceforth. According to him, “other agencies are to be invited as the need arises.”To kick-start the quick win process, which it is adopting, Usman said the Federal Government has commenced electronic payment on experimental basis as well as reviewed and revised the tariff book.He added that the NCS has been given the greater push to be able to do faster release of cargo, while the government has “succeeded in reducing the average time for clearance of cargo from 28 to 12 days.”Usman, who said efforts were been geared towards the implementation of the other recommendations of the committee, revealed that, a monitoring committee was being constituted to monitor and ensure the implementation of the recommendations.However, speaking on waivers and concessions, Usman said since he assumed the leadership position, Yar’Adua has not issued any waivers and concessions to any company or organisation.

But he added that, the only organization, that has benefited from waivers and concessions, were the United Nations agencies, the World Bank because there is a provision for them to enjoy such by law.“Since president Umar came in, we have not granted any new waiver to any company or any organisation other than those provided by law. You know there is an arrangement that the UN agencies, the World Bank and so on, their transactions are extremely outside taxation. Certain humanitarian organizations are exempted from taxation. These are the only ones that we have given and they always have diplomatic backings. We have not given any waivers to any company,” he said.




November 5, 2008 | 8:52 AM Comments  {num} comments

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General Assembly Plans Own Conference
Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic


PLAN by US President, George W. Bush to host an international Economic Summit on global financial crisis later this month does not take Nigeria and even the African Union and the NEPAD into the picture.
However, a list of the invitees from the White House shows that South Africa is the only country invited from Africa while top European countries and the EU are also getting seats at the summit.

The plan is also brewing controversy at the United Nations because of what diplomats and experts see as the selective nature of the invitation to participate in the summit.
Consequently, the current president of the UN General Assembly, Nicaragua's Miguel D'Escoto Brockmann, a Reverend Father, is leading a fierce opposition against the attempt by the US and other developed countries to monopolise the international response to the global crisis.
At the UN talks on Thursday, American Economics Nobel Prize winner, Prof. Joseph E Stiglitz, who has agreed to work with the UN General Assembly, also spoke of the need to hold a more representative international summit at the UN in reaction to the global financial crisis.

The international summit, which the Bush administration is now effectively controlling, is coming on the heels of the global financial crisis, which sharpened with the crash of the Wall Street in the US.
But the summit was initially expected to hold at the United Nations headquarters, which was seen as the credible organisation to host such a meeting since the subject is one of international importance affecting not only developed countries but also developing countries.
However an offer of some world leaders including the President of France, Nicolas Sarkozy and the United Nations Secretary-General, Ban Ki-moon that the UN should host the meeting was turned down by the Bush White House, which has gone ahead to fix the meeting for Washington, DC on November 15 at the White House.

According to UN sources, the Bush administration even initially left out inviting the UN Secretary-General, who had publicly asked, in line with few other world leaders, to have the summit held at the UN offices in New York.
After the White House released a list of its invitees on October 22, the name of the Secretary-General was initially missing before it was added hurriedly apparently after some behind the closed door protests from the UN.
The invitees essentially included leaders of 20 countries, in line with previous G-8 plans to expand the group to G-20.
The G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union.
Nigeria, with the largest population in Africa and one of the leading economies in the region and an emerging economy in the world is also left out of the invitation.
In a chat, Nigeria's Ambassador and Permanent Representative to the United Nations, Prof. Joy Ogwu, waived off the White House summit, saying the US reserves the right to organise whatever summits it chooses.

But she added that "Nigeria is playing a prominent role" in international response to the crisis, pointing specifically to the Doha Trade talks in which she said Nigeria remains very active. She said in Doha talks, "everybody is involved."
On the plans of the UN General Assembly president to organise a UN summit, Ogwu said Nigeria would support any steps taken by the UN to restore global financial crisis.
"We share the aspiration to get the crisis resolved, and Nigeria's position is not different from other UN member states."

In order to assert a more international response to the global crisis in direct antagonism to President Bush's plan to host a more limited international summit in White House, UN diplomats, with the leadership of the UN General Assembly, is also planning a summit on the global crisis.
As part of the plans at the UN, a group of experts met at the UN headquarters in New York to review the technical issues involved.
At that meeting on Thursday, the General Assembly president, D'Escoto Brockmann said bluntly that, "it is time to stop viewing the global economy as the private dominion of some exclusive clubs."
"The G-8, G-15, G-20 are no longer sufficient in their scope to solve these problems. I believe that long term solutions must include the G-192," in obvious reference to the 192 members of the United Nations.
Brockmann added that, "only full participation within a truly representative framework will restore the confidence of citizens in our governments and financial institutions. "
In an apparent reference to the G-8, G-20 summit being planned by President Bush, Prof. Stiglitz said: "While discussions among informal groupings of countries will necessarily play an important role in developing a global consensus on key and complex issues, decision making must reside within international institutions with broad political legitimacy, and with adequate representation of both middle income countries and the least developed countries."
The Nobel winning economist declared that "the only institution that currently has that broad legitimacy today is the UN."

But a White House statement last month said "the leaders of 20 nations have been invited to attend an economic summit in Washington to discuss the current financial crisis, its causes and efforts to resolve it through more effective regulation and reform."
Curiously, the White House statement expected its selected 20 countries to also "discuss the effects of the crisis on emerging economies and developing nations," who have not been invited by the White House.
The implication is that the US government wants to discuss the fate of the emerging economies and developing countries like Nigeria in their absence, reminding many of the 1885 Berlin Conference of European nations on Africa.

Dana Perino, the White House Press Secretary, added that President Bush was inviting the members of the Group of 20 to a "Summit on Financial Markets and the World Economy," which is expected to be the first of a series of summits to bring together world leaders who participate in the G-20 finance process to discuss current economic issues.


http://www.guardian newsngr.com/ news/article01/ /indexn2_ html?pdate= 021108&ptitle=U.S.Ignores% 20Nigeria, AU

November 3, 2008 | 1:48 PM Comments  {num} comments

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FG plans N1.19tr sovereign fund
Related to country: Nigeria

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

FG plans N1.19tr sovereign fund

Recruits experts to manage investment

Sovereign Wealth Fund (SWF), the plan is expected to cushion the effects of future falling commodity prices, and put an end to the nation’s reliance on crude oil sales for revenue.

The fund is the brain child of President Yar’Adua’s Economic Management Team (EMT) which rose from a meeting at the weekend in Abuja According to a source close to the team, the initiative is being proposed for take-off during the 2009 fiscal year, with $10 billion as its initial grant. The idea, an intervention for future economic emergencies, was first mooted in some Middle East countries like the United Arab Emirates (UAE) which invested in very profitable ventures for future generations. “This was where the excess crude oil savings actually originated from in the latter part of President Olusegun Obasanjo’s first term in office, but the manner of its operation has not allowed the idea to really work the way it was planned”, the source said.

The EMT’ s meeting had in attendance officials from the International Monetary Fund (IMF) to work out modalities on how the fund would operate and to make it legal. It was learnt that the Federal Government has moved a step further by setting up a committee to determine legal imperatives of such a fund as well as understudy their operations in other countries, with a view to adopting international best practices in the Nigerian version. Said the Presidency source: “The Sovereign Wealth Fund is an intervention fund meant to ensure sustainable development in Nigeria, particularly in recession period like what is happening now globally. If we have such a fund, we could approach it for intervention in the market or a bail out for any weak bank. “It is going to be open to the three tiers of government to invest in the Fund, including the private sector and a competent Fund Manager is going to be appointed for the investment.

“The plan is to check against the rainy days like the current Excess Crude Account. But unlike the Excess Crude Account, the Sovereign Wealth Fund is going to be opened to even the private sector. It will pool resources which will be invested in key infrastructure areas with high returns on investment.” “A committee has already been set up to work out the legal framework for the Fund and to understudy similar operations in other countries.” Members of the IMF, who began a budget reform programme for the Federal Government officials, ahead of the 2009 Federal Budget presentation to the National Assembly, were on Friday night treated to a dinner at the Transcorp Hilton Hotel, Abuja dilapidated power sector. The National Assembly last week approved a N683 billion supplementary budget for 2008. This is in addition to a revised N2.6 trillion 2008 budget passed by the National Assembly earlier this month and sent to the President for final approval.


http://www.compassnews.net/news/index.php?option=com_content&view=article&catid=43%3A
news&id=1885%3Afg-plans-n119tr-sovereign-fund&Itemid=63

November 3, 2008 | 1:40 PM Comments  {num} comments

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WORDS FROM THE US PRESIDENT ON ECONOMIC MARKETS
Related to country: United States

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

Despite the ups and downs that our markets have experienced in recent months, the American people have reason for optimism in our Nation's economic future. Throughout our history, we have seen that when Americans are given the freedom to apply their talents and imagination, prosperity and success follow closely behind. For over two centuries, that principle has allowed our economy to overcome every obstacle it has faced. And we can all be confident that it will do so again.
—George W. Bush, October 25, 2008


October 30, 2008 | 8:26 AM Comments  {num} comments

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UN Security Council: ‘African Countries Oppose Nigeria’s Quest’
Related to country: Nigeria

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

Former Nigeria’s Permanent Representative to the United Nations (UN) and ambassadorial nominee, Ambassador Aminu Wali, said yesterday that the nation’s quest for UN's Security Council seat was not helped by opposition to it by some African countries who benefitted from Nigeria’s goodwill in the past.

Wali, who spoke at the screening of 11 ambassadorial nominees by the Senate Committee on Foreign Affairs, said the jostle for the seat was not an easy task.He said, “it is not an easy task. We can only achieve our goal if we can consolidate our position of influence in our region. But the major problem, a major opposition is coming from Africa.

“It is coming from our own brothers and sisters in some parts of Africa. What we need is to ensure that we reach out to members of our region who will give us support, because even to reform” the Security Council, you have to have Africa as a group to go together at the General Assembly to be able to allow for the reform.”

“Now so far, there have been spoilers in Africa. There have been people that are coming to divide us either from outside or from inside for some basic or selfish interests”, he said.
He added that “but basically or fundamentally, Nigeria ought to be, because what we have in the Ohio Panel report you mentioned was that Africa should have two permanent seats in the Security Council. “Now, we have a problem. Nigeria certainly qualifies because of its own antecedents in terms of peace-keeping operations and contribution to peace and security in the continent.
We sacrifice more to Africa than any other country. We certainly deserve to have that seat,” he said.
He maintained that “unfortunately, we have opposition even within our region. So, this is certainly an issue in which all of us, including the legislature, will have a lot of work to do, because they can help to talk to them to come to the understanding that we need to be supported because we have contributed more and carried more weight than any other African country.”
Wali, who insisted that Nigeria remained a very strong contender, told the Committee that “unfortunately, we have opposition; one from Egypt, which is our main opponent from my own experience.”

I know I told the G-4 which are Germany, Brazil, India and Japan because they came together and formed their own G4 to promote their own permanent seats in the Security Council.“I called them in my office and I told them that I heard you are making overtures to Egypt; but, it will not fly, because Africa will not go for that. We are talking about Africans not Africans who happen to be here geographically.” He said India, Germany, Japan and Brazil which were equally interested in becoming a member of the Security Council representing their continents were supporting Egypt.




October 30, 2008 | 6:59 AM Comments  {num} comments

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Yar’Adua drops 20 ministers....
Related to country: Nigeria

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

The much-awaited cabinet reshuffle by President Umaru Yar’Adua took place on Wednesday with the removal of eight full ministers and 12 ministers of state.
Top on the list of the dropped ministers are those of Education, Dr. Igwe Aja-Nwachuckwu; the Federal Capital Territory, Dr. Aliyu Modibbo Umar, and Sports/Chairman, National Sports Commission, Alhaji Abdulrahman Gimba.
The other full ministers are Mr. Charles Ugwuh (Commerce and Industry); Hajiya Halima Alao (Environment/Housing); Alhaja Saudatu Bungudu (Women Affairs); Chief Sarafa Isola (Mines/Steel Development); and Alhaji Mohammed Daggash (National Planning Commission).
The dropped ministers of state are Chief Emmanuel Odusina (Energy; Gas); Hajiya Fatima Ibrahim (Energy; Power); Alhaji Haruna Hassan (Interior); Alhaji Adamu Waziri (Agriculture/Water Resources); Ahmed Bichi (Commerce and Industry); Mr. Jerry Agada (Education); and Senator John James Akpanudoedehe (FCT).
The rest are Alhaji Tijani Kaura (Foreign Affairs); Alhaji Ibrahim Nakande (Interior); and Alhaji Haruna Hassan (Interior).
Alhaji Ahmed Gusau (Mines and Steel); Mr. Felix Hyat (Aviation); Mr. John Emeka (Transportation); and Alhaji Ahmed Gusau (Mines and Steel Development).
A statement by the Special Adviser to the President on Media and Publicity, Mr. Olusegun Adeniyi, which contained the names of the dropped ministers, added that some of the retained ministers had been mandated to oversee some ministries affected by the exercise.
The statement reads in part, “The President also directed that until new ministers are confirmed by the Senate and sworn into office, Mr. Remi Babalola (Minister of State, Finance), will serve as supervising minister of the FCT.
“Similarly, Mr. Demola Seriki (Minister of State, Agriculture and Water Resources) will serve as supervising minister, Ministry of Mines and Steel Development, while Dr. Aliyu Idi Hong (Minister of State, Culture and Tourism) will serve as the supervising minister, Federal Ministry of Commerce and Industry.
“Alhaji Alhassan Zaku (Minister of State, Science and Technology) is to act as the supervising minister, National Sports Commission; Elder Godsday Orubebe (Minister, Special Duties) will act as the supervising minister/Vice-Chairman, National Planning Commission; and Mrs. Grace Ekpiwhre (Minister, Science and Technology), will oversee the Ministry of Women Affairs.”
Adeniyi said the President thanked the former ministers for their services to the nation and wished them well in their future endeavours.
Before the FEC meeting on Wednesday, the ministers arrived at the Council Chambers of the State House, Abuja, before 9am in high spirits. But hours after the meeting ended, some of them wore sombre look as they departed in trickles.
Yar’Adua had relieved most of them of their posts, thus signifying the end of the much-awaited cabinet reschuffle and their less than 15 months as FEC members.
Yar’Adua, according to a source close to the meeting, took a valedictory photograph with them.
Our correspondent in Abuja gathered that the President’s announcement that he would at last implement the promised cabinet shake-up took the ministers by surprise.
Although Yar’Adua had, during a presidential media chat five months ago, disclosed that he would make some changes in his cabinet, most of the ministers had grown complacent as time rolled by without any action from the President.
A source said before the meeting started at 11.40am instead of the normal 10am, most of the ministers greeted their colleagues amidst backslaps and laughter.
But an indication of what might come was delayed by the President, who first considered the items on the day’s agenda before announcing his plan to reshuffle the cabinet.
According to the source, “The President informed them that he was going to reshuffle his cabinet; he thanked them and said that it had been nice working with them.
“He also told them that both himself and Vice-President Goodluck Jonathan were happy with their efforts.”
The source added that those that were dropped were presented with letters of appreciation to avoid the unsavory situation whereby they would hear of their removal through the media.
“All those people who were dropped were given letters so that they will not just hear it from the media,” the source said.
He added that Yar’Adua, thereafter, invited them for a valedictory group photograph.
According to him, some of the dropped ministers thanked the President for the opportunity to serve.
Before his statement, Adeniyi had said the names of the new ministers would be forwarded to the Senate for confirmation.
He added that some of the retained ministers would be assigned new portfolios in the new-look FEC.
It is expected that technocrats would be brought into the cabinet to fast-track the work of the government.
Before dropping the affected ministers, Yar’Adua had established a monitoring mechanism to assess their efforts.
The ministers were severally summoned to the President’s official residence on Saturday to defend the programmes being handled by their ministries.
Most times, they came with permanent secretaries and directors.
It was gathered that the monitoring mechanism played a big role in the President’s decision on the ministers that were dropped and those retained.
Earlier, the two ministers of Health – Prof. Adenike Grange and Gabriel Aduku – had resigned following their alleged involvement in the N300m unspent vote of the ministry.
The former Defence Minister, Alhaji Yayale Ahmed was appointed as SFG in August by Yar’Adua.
Meanwhile, the FEC on Wednesday approved eight contracts worth N8.6bn.
The Minister of Information and Communications, Mr. John Odey, who briefed State House correspondents after the meeting, said that the contracts were in the power, education, environment and health sectors, as well as the FCT.

By Emma Anya and Ihuoma Chiedozie, Abuja
Published: Thursday, 30 Oct 2008


October 30, 2008 | 6:53 AM Comments  {num} comments

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Woman handcuffed tots to preserve food
Related to country: United States

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

So, the 29-year-old pregnant Winton Hills mother of six told police she did what she often did to make the food last – she bound her children’s wrists and ankles with plastic handcuffs to keep them from “hoarding food.”

“These kids, mind you, are (ages) 4 and 5,” Assistant Hamilton County Prosecutor Calambas said Thursday. “They are thin.”

That was part of the evidence that could send Ross and her boyfriend, Christopher Gray, 31, to prison for 10 years each.

Ross was convicted Thursday of using plastic flex cuffs to bind the ankles and wrists of two of her children, and for waiting two weeks to take her son for treatment after the 4-year-old burned his hand.

Officials became aware of the restraints when the 4-year-old showed up at the hospital with 2-week-old burns and skin peeling from a hand covered in scabs
Ross and Gray told authorities the child burned his hand by sticking it in an operating washing machine.

“We just don’t know. That’s what (Ross and Gray) say. There’s no way for us to prove he was thrown in there,” Calambas said.

The couple didn’t seek help for the child’s burned hand. Instead, they treated it with ointment. They took him to the hospital two weeks later when his hand began smelling foul and peeling.

At the hospital, the doctor noticed the burn ended at the boy’s wrist. It was noticeable because the boy’s wrist had cuff marks on it. So did his other hand and ankles.

That’s when the boy said his mom cuffed them to stop them from getting food.
Police investigated and went to their Winton Hills home, finding plastic flex cuffs in a garbage can.

In the home at the time with the pregnant Ross were a 5-year-old, twin 4-year-olds and an infant.

Ross told police that because she was on welfare she was concerned about the children eating all of the food before the end of the month.

First, she put a lock on the refrigerator. When that didn’t keep the children out, she said, she resorted to the cuff with at least two of them, often while she slept.

“This is obviously a sad case.. Children do not have to go hungry in this community. We provide food stamps and cash assistance to needy families and there are many social service agencies that will help bridge the gap,” Department of Job & Family Services spokesman Brian Gregg said Thursday.

A single mom with seven kids can receive cash and food stamps of about $1,400 per month from JFS, Gregg said.

“Every parent has the responsibility to seek out that assistance and ensure their children are properly cared for, so that JFS doesn’t have to get involved from a child-welfare standpoint,” Gregg added.

JFS has had previous contact with Ross and her family.

Gregg wouldn’t provide specifics, but said in 2003 and 2004 she was investigated for “neglect-type issues” involving family finances.

Welfare recipients who run out of money can ask JFS to help pay for rent, utilities or food.

Three of Ross’ children are now in foster care.. The other four are with relatives.

Ross, who had no criminal record in Hamilton County, was convicted Thursday of three counts of child endangering. She’ll be sentenced Nov. 14 by Hamilton County Common Pleas Court Judge Fred Nelson, who can send her to prison for 10 years.
Gray’s only crime in Hamilton County was a 1998 theft conviction. He avoided prison by successfully completing five years of probation.

Gray will be before Nelson on Monday to face three counts of child endangering.

http://newscincinnaticom/article/ 20081023/ NEWS0107/ 310230025





October 29, 2008 | 7:38 AM Comments  {num} comments

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Nigerian leaders stole N64 trillion
Related to country: Nigeria

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

A total of N64 trillion was stolen by Nigerian leaders in less than 30 years, the ActionAid an international charity organization has said.
Revealing the grim picture in a chat with The Nation last week, Action Aid Country Director, Dr. Otive Igbuzor said the amount represents the total money stolen by Nigerian leaders between early 1970s and 1999 when the military handed over power to civilian authorities. The Nation met Mr Igbuzor at an interactive media session with editors in Lagos.
The director said the stolen funds in Nigeria when benchmarked against the 2008 proposed national budget of N2.456 trillion by the National Assembly, NA, translates into 26 years of Nigerian annual budget, and about the budget of many African countries for a whole generation.

Igbuzor said by plundering national treasures, the leaders have unquestionably deepened the poverty of the people adding that corruption had become the culture of many developing countries including but not limited to Nigeria.

The Action Aid was established in 1970 by Jackson Cole. In the first decade, the organization worked in India, Rwanda, Kenya, Burundi and Gambia. Action Aid is an organization that works with over 13million worlds poorest people and disadvantaged communities in 42 countries across the world. The group works towards a world without poverty and where every person can exercise the right to a life of dignity.

Speaking on corruption in Nigeria, the Action Aid Director relies on figures sourced from the recent United Nations Office of Drugs and Crime, and the Nigerian Economic and Financial Crimes Commission, EFCC. He said the statistics available to the UN alone indicate that Nigerian leaders have stolen over 400 billion dollars, stashed away in foreign banks by past corrupt leaders before the return to democracy rule in 1999. He however said that $507billion dollars were stolen by Nigerian leaders over the years, meaning that an additional $107billion may have been stolen from public funds by Nigerian rulers since 1999 till date.

"We are aware the EFCC figure of stolen funds in Nigeria is about 64 trillion (about 507 billon dollar) from public offices. Corruption has a lot of negative impact on every sphere of society development, which are social, economic and political.

He lamented that Nigeria, which was one of the richest 50 countries in the early 1970s, has retrogressed to become ¡one of the 25 poorest countries at the threshold of the twenty first century. It is ironic that Nigeria is the sixth largest exporter of oil and at the same time host to the third largest number of poor people after China and India¢.
Igbuzor said statistics show that the incidence of poverty, using the rate of US$1 per day, increased from 28.1 percent in 1980 to 46.3 percent in 1985 and declined to 42.7 percent in 1992 but increased again to 65.6 percent in 197l. ¡If the rate of US $2 per day is used to measure the poverty level, the percentage of those living below poverty line will jump to 90.8 percent.¢ But the National Planning Commission¢s 2004 report indicates that poverty has decreased to 54.4 percent, according to state officials.

He said Nigeria fares very poorly in all development indices. The average from 1990, 2000 was 2.4. Although the growth rate has increased to about 6 percent from the 2004-2006, the poor is yet to feel the impact of the economic growth. All development indices are precarious: Under five mortality rate per 1,000 live births is 153; maternal mortality rate per 100,000 live births is 1,100; and life expectancy is 46 years for males and 48 year for females.

Igbuzor said: "the policies and strategies utilized in fighting corruption are not holistic and comprehensive. In most countries, there are elaborate legislative framework and policies for fighting corruption. Perhaps, what is missing is the freedom of information regime and protection of whistle blowers. But political will and commitment of a critical mass of people both leaders and follower is lacking."


By Adewale Adeoye
26/10/2008




October 29, 2008 | 7:21 AM Comments  {num} comments

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Somali woman executed by stoning
Related to country: Somalia

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

A woman in Somalia has been stoned to death after an Islamic Sharia law court found her guilty of adultery.

The woman was buried up to her neck and then pelted to death with stones in front of a large crowd in Kismayo.

It was the first such execution in the southern port city since Islamist insurgents captured it from government-allied forces in August.

A local Islamist leader said the woman, Aisho Ibrahim Dhuhulow, had pleaded guilty to committing adultery.

"She was asked several times to review her confession but she stressed that she wanted Sharia law and the deserved punishment to apply," said Sheikh Hayakallah.

A group of men performed the execution in one of the city's main squares in front of thousands of people, AFP news agency said



October 28, 2008 | 6:06 AM Comments  {num} comments

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The Global Financial Meltdown: Impact on Nigeria’s Capital Market and Foreign Reserves
Related to country: Nigeria

Translations available in: English (original) | French | Spanish | Italian | German | Portuguese | Swedish | Russian | Dutch | Arabic

Introduction – The US and Global Financial Situation
On Tuesday, October 9, 2007, the Dow Jones Industrial Average (DJIA), a major United States stock market index, attained its highest value ever at 14,164.53. Since opening at 40.94 on May 26, 1896, the DJIA has increased steadily, despite several periods of decline.

However, by Wednesday, October 22, 2008, just over a year after DJIA’s high, it had closed at 8,519.21, representing a 39.85% decline in the index.

In fact, a cyclical bear market is recognized to have commenced on July 2, 2008 when the Dow closed at 11,215.51, more than 20% below its record high, accelerating by mid-September with a series of panics related to financial instability caused in part by the failure and/or sub-prime mortgage lending difficulties of the investment banking industry in the United States, specifically Lehman Brothers, Merrill Lynch, Morgan Stanley and JP Morgan-Chase, as well as government-backed mortgage giants Fannie Mae and Freddie Mac.. For example, the largest daily point loss (777+; closing DJIA 10,365.45 ) was on September 29, 2008; the largest daily point gain (936+; closing DJIA 9,387.61) was on October 13, 200; and the largest intraday point swing (1,018+; closing DJIA 8,451.19) was on October 10, 2008. Furthermore, along the largest percentage gain since 1933 was 11%, achieved on October 13, 2008 (closing DJIA 9,387.61), while the largest percentage loss since 1987 (7.87%) was attained on October 15, 2008 (closing DJIA 8,577.91). The last day that the DJIA closed above the psychological 10,000 level was October 3 (at 10,325.38). [See Table 1 and Figure 1]
This wild financial period was broad and not confined to the United States. According to a TIME magazine essay (October 20, 2008), through October 8, the year-to-date losses of the Standard & Poor 500 of the US was 33%; of the DAX index of Germany was 38%; of Brazil’s BM&F Bovespa was 40%, of Shanghai’s SE Composite was 60% and of Russia’s RTS Index was 67%. In fact, the TIME essay also states that on October 6 and 7, 2008 alone, the global stock market lost a whopping $6.5 trillion as measured by Standard & Poor’s BMI Global, an index of major markets worldwide.

We will review briefly below the response of various governments around the world, but we first ask: what has the financial situation in Nigeria been?

The Nigerian Capital Market Situation

Nigeria’s own stock market index is the Nigerian Stock Exchange’s All-Share Index (NSE-ASI, or simply ASI), and currently provides a composite picture of the financial health of 233 listed equities. Starting with an index value of 100 in 1984, with increased listings and financial activity, it attained a value of 57,990 at the end of year 2007. It started the year 2008 at 58,580 (with a market capitalization of N10.284 trillion), and went on to achieve its highest value ever of 66,371 on March 5, 2008,with a market capitalization of about N12.640 trillion.

However, ever since that high, the ASI has inexorably declined, exhibiting a secular bear posture since July 17 when, at ASI=52,910, the index fell below 20% of its all-time high, and has continued to fall, closing on October 22 at 42,207 (a 36.4% loss from the high within just seven months, and a year-to-date decline of 27.9%), and appears headed to below 40,000 if matters do not improve. In terms of capital decline, the Nigerian capital market has since the March 5 lost to date about N3.38 trillion, or about 26.7%. [See Table 1 and Figures 2 and 7]

Possible Impacts

So what, if any, has been the impact of the global financial crisis on the Nigerian capital market, since from the dates given above, there seems to be an overlap of distress periods? Bearing in mind that there is virtually no cross-ownership of banks (investment or otherwise) between Nigeria and foreign countries, and there is hardly any domestic mortgage market for there to be a sub-prime problem as found particularly in the UK and the USA, it is difficult to pronounce any direct impact. Nevertheless, three factors on which the global situation may direct or indirect impact are as follows:

foreign portfolio investments withdrawals and withholding (in order to service financial problems at home), as well as prospects of reduced foreign direct investment, are bound to affect investor confidence in and the economic health of Nigeria. This is particularly in an era where public-private partnership of big ticket items like power plants, rail and roads are being encouraged.

parallel to the concept of sub-prime mortgage problem abroad is the rife phenomenon of marginal borrowing/lending in Nigeria, whereby investors borrow money from banks to invest in other financial instruments (particular IPOs of banks) with the hope of making profit all around. This may have been Nigeria’s own “sub-prime” problem version.


Nigeria being an oil monoculture, the see-sawing price of crude oil and prospects for economic recession in the developed world with its attendant reduced energy needs, coupled with interests in innovative energy resources, are bound to give a pause to confidence in Nigeria’s economy. For example, during the period of this financial crisis, Nigeria’s Bonny Light Crude Oil Spot Price FOB went from a January 2008 start price of $95.16 per barrel to as high as $146.15 in the first week of July before closing on October 17 at $76.24 per barrel, less than 50% of the high price. [See Table 1.] In fact, on Tuesday, October 21, 2008 the NYMEX West Texas Intermediate Crude Oil for November delivery closed down $3.36 at $70.89 per barrel. [See Figure 3] In this respect, it would look as if Nigeria’s capital market bear cycle actually began with the decline of oil prices in July, and accelerated with its further decline in September and October.


Foreign Reserves

We now turn our attention to our foreign reserves, and inquire what the impact of the global crisis might be, noting that:

at a quantum of about $62 billion as of October 1, 2008, 67% of the foreign reserves is denominated in US dollars, 24% in Euros, 3.7% in British Sterling, 3.6% in Japanese Yen, 0.1% in Swiss Franc, and the rest (1.6%) in a basket of other currencies. It was not too long ago that the US dollar exposure was 90% (at least one hopes that that is the correct information) but with the global crisis, there is hardly any currency or country that is not in distress. In short, there is no where to hide.

On October 3, 2006, some $7 billion (representing some 18.40% of total external reserves at the time) were apportioned to 14 Nigerian banks (out of the 24 consolidated banks as confirmed July 2004) and their 14 global asset management partners. The 14 global asset managers and their local counterparts were Black Rock (UK) and Union Bank of Nigeria Plc; J.P. Morgan Chase (USA) and Zenith Bank Plc; H.S.B.C (UK) and; First Bank of Nigeria Plc; BNP Paribas (France) and Intercontinental Bank Plc; UBS (Switzerland) and United Bank for Africa Plc; Credit Suisse (Switzerland) and IBTC Chartered Bank Plc; Morgan Stanley (USA) and Guaranty Trust Bank Plc; Fortis (Benelux) and Bank PHB Plc; Investec (UK, South Africa) and Fidelity Bank Plc; ABN Amro (Netherlands) and Access Bank Plc; Cominvest (Germany) and Oceanic Bank Plc; ING (Netherlands) and Ecobank Plc; Bank of New York (USA) and Stanbic Bank Plc and; Crown Agents (UK) and Diamond Bank Plc. [See Table 2] It is believed that CBN gave each asset manager, $500m of the external reserves to manage, with the global custodian being JP Morgan. The idea was to ensure that our own local financial institutions benefit both financially and in terms of international knowledge and skills transfer – in CBN’s words “to allow for professional management, diversification of investment and to leverage on the expertise of the foreign banks to transform Nigerian banks into global financial institutions. The CBN has traditionally kept the external reserves as deposits with foreign banks. This is the first time that it is appointing foreign assets managers to manage part of its reserves, in line with global best practice.”

An interesting tangled case in point is that of Fortis, ABN Amro, and BNP Paribas, three asset managers of Nigeria’s foreign reserve. In October 2007, one year after it became an asset manager, Fortis, along with Banco Santander of Spain and Royal Bank of Scotland, acquired ABN Amro in a deal for more than 70 billion euros. Santander picked up ABN Amro's Italian and Brazilian units, while RBS acquired ABN's wholesale and investment banking businesses. But the deal left Fortis apparently overstretched so much that on September 28, 2008, Fortis, a huge Benelux banking and finance company was partially nationalized, with Belgium, the Netherlands and Luxembourg investing a total of 11.2 billion euros (16.3 billion U.S. dollars) in the bank. Belgium agreed to purchase 49% of Fortis's Belgian division, with the Netherlands doing the same for the Dutch division. Luxembourg agreed to a loan convertible into a 49% share of Fortis's Luxembourg division. However to complicate matters, before the opening of the business day, October 6. BNP Paribas, the French bank, assumed control of the remaining assets of Fortis following Dutch nationalization of the operations of the bank in The Netherlands. Finally, on Monday October 20, France announced a €10.5 billion rescue plan for six of its largest banks, including Crédit Agricole, Société Générale – and BNP!.


Thus we can see that three Nigerian banks – Intercontinental, Bank PHB and Access – are tied up in this Fortis/ABN Amro/BNP Paribas tangle.



From above, it may actually be that the Royal Bank of Scotland is effectively Access Bank’s partner. On Wednesday, October 8, the government of Britain announced that it would make £25 billion available as "Tier 1 capital" to the following financial institutions: Abbey, Barclays, HBOS, HSBC Bank Plc, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland, and Standard Chartered as part of a bank rescue package. An additional £25 billion was scheduled to be made available to other financial institutions, including British subsidiaries of foreign banks. " The plan can be characterized as partial nationalization. On October 13, 2008 the UK government actually started the nationalization process by injecting £37 billion in the nation’s three largest banks, and ended up owning a majority share in the Royal Bank of Scotland (RBS) and over a 40% share in Lloyds and HBOS. In return for the bailout, the banks agreed to cancel dividend payments until the loans are repaid, have board members appointed by the Treasury, and limit executive pay.



To round things out, on Tuesday October 14, the United States announced a plan to take an equity interest of $250 billion in US banks with 25 billion going to each of the four largest banks. The 9 largest banks in the US: Goldman Sachs, Morgan Stanley, J.P. Morgan, Bank of America, Merrill Lynch, Citigroup, Wells Fargo, Bank of New York Mellon and State Street were called in to a meeting; all eventually agreed. Finally, on October 16, a rescue plan was announced for the Swiss banks UBS and Credit Suisse. Recapitalization involved Swiss government funds, private investors, and the sovereign wealth fund of Qatar. A Swiss agency was set up to purchase and workout toxic funds. UBS had suffered substantial withdrawals by domestic Swiss depositors but still reported profits; Credit Suisse has reported losses.



What the above information shows is that the overwhelming majority of our counterpart asset managers themselves have been having significant trouble managing themselves, and one wonders what kind of “toxic exposures” they have inflicted on our foreign reserves, how safe our piled-up monies are in all of these foreign banks. One hopes that they have not been “eaten” up by the proverbial termites where we thought that they were safe, rather than use them strategically in developing our country as many long-suffering Nigerian citizens have called for. This is more so when we note that out of the 14 asset managers listed above, 10 of them have either gone bankrupt, been taken over, or have been partially or fully nationalized by their countries within the past one month, with only Cominvest, Crown Agents, Investec and Black Rock seemingly above the fray.



It is of course only the Central Bank of Nigeria that can answer the question of our foreign reserves’ safety. One therefore first turns to public information that the CBN provides on its website to attempt to ferret the true situation out.



If one looks at its website www.cenbank.org – Foreign Reserve Movement page – starting from January 2, 2008, one sees that our gross foreign reserves steadily increased from $51.2 billion to a high of $63.5 billion on September 10, 2008, before declining to a value of $61.99 billion on October 1, 2008 – the last recorded entry. That is a decline of $1.5 billion within a two-week period, following which, after three weeks (today is October 23, 2008), there are NO MORE ENTRIES in the table.



One wonders why this lack of further entries is so – is this site updated daily, weekly or monthly, for example? One thinks that the CBN owes the nation further precise explanation to assure us that it is not hiding anything, and that our foreign reserves have been lodged safely and insured against losses - for example in foreign-government-backed securities rather than in some highly speculative foreign stocks, bonds or mutual funds.. In this regard, the recent assurances by Central Bank Governor Soludo and his bank colleagues Messrs Odoko and Imala about the foreign reserves’ safety are welcome, but not sufficiently informative of their precise structuring to allay all fears.





How Have Our Banks Fared at the Stock Exchange in 2008?

Of the 24 consolidated customer deposit banks that we have in Nigeria, 21 are listed among a total of 233 securities traded on the Nigerian Stock Exchange. In terms of capitalization ranking, 8 of these banks rate among the Top Ten, 13 among the Top Twenty, 16 among the Top Thirty and all of them are in the Top Forty-One.



Pertinent information in terms of stock movement and Price to Earnings Ratios are shown in Table 3 below. It shows that virtually all of the banks have experienced significant erosion in their stock prices, both within the month of October 2008 and since the beginning of the year, with many experiencing near-50% decline since January 2008. It is likely that the erosion would have even been more without the -1%/+5% daily movement cap recently imposed on stock movements by the NSE on August 27, 2008, rather than the previous -5/+5 caps. For example, on the high stock-price end, Oceanic Bank has seen its price plunge from N39.05 in January 2008 to N17.13 on October 23, 2008 ( a 56% drop), while at the low end, Access Bank [Figure and Unity Bank [See Figure 4-6] have witnessed 56.65% and 55.34% drops respectively in their January 2008 start stock prices of N23 and N8.8 respectively.



It should be noted that these negative movements do not necessarily mean that the banks' PRESENT financial positions are NOT sound – they do not affect that current asset status, which may be more than adequate – but they reflect investor confidence in the banks themselves, as well as their prospects for future growth based on new capital injection. Nevertheless, allegations persist that some banks engage in stock or capitalization "gaming" within the system, and have their working capitals locked down thereby, and stand to lose heavily when all the chips are down. Obviously, as months go by, the men will be separated from the boys in the banking industry.





Conclusion

From all the above, one is led to the conclusion that Nigeria faces an uncertain economic situation both in the near and far future as a result of the ongoing global and domestic financial crisis. Our capital market is in tatters at the moment; our banks are struggling; our monoculture of oil continues to bedevil us, resulting in a reported need to adjust government expenditure and upcoming budget accordingly; and our foreign reserves situation remains an enigma wrapped in a mystery for now.



One hopes that the government in Abuja - both Executive and the National Legislature - the Nigerian Stock Exchange (NSE), the Securities and Exchange Commission (SEC) and the Central Bank (CBN) will all coordinate their activities and rise to the occasion as has been attempted by various governments around the world, lest our nation gets consigned to another long period of economic wilderness. The admonition in the West is even more apt in the developing countries, that in this new order of globalization, high technology and 24/7 operations, the only option is the infusion of innovative ideas (including new technology), new regulations, and in particular highly-competent professionals at the NSE, SEC and CBN conversant with the management of 21st-Century financial markets.



Burying our heads in the sand, holding on to the old order of doing business, and mouthing platitudes of complacency, are no options.


By

Mobolaji E. Aluko, PhD

Burtonsville, MD, 20866, USA