Nigerians are likely to see more money trickle into their pockets if government faithfully implements its proposed spending plans for next year. The 2010 budget, sent yesterday by the President, Umaru Yar’Adua, to the National Assembly for approval, shows a clear indication and realization that private sector demand has virtually collapsed in the economy and that government is determined to spend its way to realize reasonable growth next year. Government is increasing its spending next year by as much as N1 trillion in its bid to get the wheels of the economy working and analysts say this should have a trickle down effect of seeing Nigerians benefit from the overall boost in economic activities. Government hopes to stimulate the economy through the construction of roads, developing the Niger Delta, rehabilitation of the ailing power sector and reducing domestic debt. It is expected that the spending on critical sectors as enumerated in the budget proposal will create more jobs, both skilled and unskilled. President Umaru Yar’Adua had in the budget said that it expects oil production of 2.088 million barrels per day at benchmark price of $57 per barrel; Joint Venture cash calls of $5 billion; average exchange rate of N150 to the US dollar; target GDP growth rate of 6.1 percent and target inflation rate of 11.2 percent. This is against this year’s projection of 2.292mbpd in oil production, benchmark oil price of $45/barrel, Joint Venture cash calls of $5 billion, GDP growth rate of 8.9 percent and inflation rate of 8.2 percent. “The purpose of the 2010 budget is to accelerate economic recovery through targeted fiscal interventions intended to further stimulate the economy and support private sector growth,” Yar’Adua said in a budget statement presented to parliament by one of his aides. The statement said N1.37 trillion was budgeted for capital expenditure and N2.011 trillion for recurrent, non-debt expenditure. Yar’Adua said the deficit will be funded partly through a planned $500 million international bond, the proceeds of a planned oil licensing round, domestic borrowing, privatisation proceeds and windfall oil savings. The president said that next year’s budget will be based on medium-term priority, focused on fully implementing the Seven-Point Agenda. “We will enhance our power infrastructure to deliver 10,000 mega watts by the end of 2011”, he said. In fact, he said that budget provides about 90 percent of Ministries Departments and Agencies (MDAs’) capital expenditure to five key priority sectors, including critical infrastructure; human capital development; land reform and food security; physical security, law and order; and the Niger Delta. But some industrialists and analysts have bemoaned the poor execution of the budget to which government acknowledged. Ahmad Rabiu, president Kano Chamber of Commerce and Industry says when the government spends more the economy becomes rosier. But the problem is that utilisation of the budgeted amount is the not adhered to. He said the business community he represents is sad about the development. He disputed government’s claim of achieving 50 percent capital utilisation government as at October this year, saying only about 30 percent was actually achieved. This, to him, leaves much to be desired. “There is no use preparing a budget that the government has no intention of implementing fully. But if the government, for once, will fully implement the budget as presented, the economy will without doubt do better and Nigerians would be better for it”, Rabiu stated. Muda Yusuf, director general of the Lagos Chamber of Commerce and Industry, said it is not enough to have the proposed budget figures. “Let the government come out with a well defined policy direction on which the economy should go.” He said the increase in budget spending signals the fact that government is ready to resume serious spending as stimulus for economic growth. “Although the deficit will likely exceed targets established under fiscal responsibility guidelines ... this is no surprise given that priority areas are infrastructure and the Niger Delta,” London-based Knight Libertas analyst, Richard Segal, told Reuters. “The accountability of spending in these two areas will be crucial to sustain the confidence of local investors,” he said. Michael Hugman, emerging markets strategist at Standard Bank in London, said the expansionary budget would have some positive effects in the immediate term but noted there was an inflationary risk, particularly if the government goes ahead with plans to abolish fuel subsidies. “In the short-term, (the expansionary element) will be positive for growth, equities and also, somewhat perversely, bonds, which we believe are being driven by a combination of flight to quality by banks and pension funds together with repeated liquidity injections into the market,” he said. “However, when combined with inflationary risks from fuel price deregulation and possibly poor food production over the next few months, there is danger inflation can head back towards 15 percent year-on-year by mid-2010.”

•Members lack legislative capacity Nigeria is in dire need of

As the supremacy row between the two arms of the National Assembly that scuttled the presentation of the 2010 budget before a joint sitting continues to attract criticisms, integrity and accountability, ingredients essential to good governance, are said to be in short supply among federal lawmakers. And rather than partner with the executive branch in the delivery of the dividends of democracy, the National Assembly has been unnecessarily proving difficult to convince on the need to legislate for the provision of funds to improve the lot of Nigerians, especially those in rural areas, through the MDG projects. The scathing criticisms came from Amina Az-Zubair, senior special adviser to the president (SSAP) on the Millennium Development Goals (MDGs). Az-Zubair said the present National Assembly is very far from the envisioned position it ought to be in terms of legislative capacity that countries in dire need for transformation like Nigeria. She made the observation at the opening ceremony of a one-day consultative forum on promoting MDGs into political parties’ agenda in Nigeria, organised by the Civil Society Legislative Advocacy Centre (CISLAC) in conjunction with the United Nations Millennium Campaign (UNMC) on Tuesday in Abuja. She added that federal lawmakers seem to be only interested in mounting pressure on the executive to approve funds for the execution of their constituency projects which are already being provided for in the national budget. According to her, “members of the National Assembly have become the most difficult tribe to convince when it comes to ameliorating the plight of the poor masses which they ought to be representing. They insist that funds amounting to billion of naira should be given to each member for constituency projects.” She kind words for some lawmakers “who are very upright and committed to the plight of the poor”, lamenting that they are in the minority and “mostly from opposition parties.” They are the crop of parliamentarians that have fully equipped themselves with the wherewithal to ask crucial questions and engage the executive constructively, she said. She further harped on the need for stakeholders, including civil society organisations and the media to continue to engage the National Assembly in order to achieve the desired change that would guarantee the future of generations yet unborn. Apart from the integrity and accountability challenges among federal lawmakers, the presidential aide said the three tiers of government need to be constantly reminded of their responsibilities because the bulk of the MDGs work is located in the sub-national levels. “We have to continue to leverage on the resources of the country, harness the expertise of Nigerians working with international agencies in order to effectively manage and utilise the nation’s common wealth for the general wellbeing of the people and development of the country”, she added. She advised those charged with the responsibility of executing annual budgets to stop seeing fiscal prudence legislations like the Procurement Act, Fiscal Responsibility Act and others as barriers to their selfish interests for the sake of national interest.

The former managing director of Oceanic Bank, Cecilia Ibru, on Tuesday filed a suit at the Federal High Court in Lagos challenging her removal as the managing director
of the bank.
The Central Bank of Nigeria (CBN) had on August 14 removed Ibru as managing director of Oceanic Bank alleging mismanagement of depositors’ funds and abuse of office. She was sacked along with chief executives of three other banks on that day. Ibru, in the suit filed by her counsel, Taiwo Osipitan, contended that the CBN acted hastily and in bad faith by removing her as the chief executive of the bank. She said that she was never given any opportunity to defend herself before the sack. She alleged that her sack was part of an elaborate design by the CBN to sell Oceanic Bank to its friends under the guise of “core investors.” “The appointment of John Aboh to replace me was part of CBN design to sell the bank to whoever he nominates,” she said. Ibru wants the court to determine whether the CBN was not bound to observe the rules of natural justice and fair hearing by hearing her side of the story before sacking her. She also wants an order setting aside her removal and an order restraining Aboh from occupying or parading himself as the chief executive officer of Oceanic Bank.

•Mergers and acquisitions in top gear Middle level banks, including Fidelity, GT Bank, Diamond, Skye Bank, Access and FCMB are likely to be favoured in the new banking structure that will emerge at the end of the banking sector reforms, BusinessDay investigations have revealed.
This assumption is underlined by the existing robust shareholders fund (SHF) and their capital adequacy ratio (CAR). Specifically, these middle level banks have their SHF among the highest in the industry and their CAR is far above the industry's 10 percent requirement and they are now believed to be making subtle moves to acquire the recently bailed out banks. CAR measures banks' capital, expressed as a percentage of their risk weighted credit exposures. It is usually used to protect depositors and promote the stability and efficiency of the financial system. Investigations revealed that GT Bank has its CAR at 27.5 percent and SHF-$3 billion-global. Diamond Bank has its CAR at 19.4 percent and SHF-N109.6 billion. Skye Bank's CAR stands at 21.7 percent while its SHF is N94.98 billion. Access Bank on its own has its CAR measured at 25.3 percent and SHF valued at $1 billion. In the same vein, FCMB CAR is measured at 33 percent while its SHF is valued at N130 billion and Fidelity bank has an SHF valued at N136 billion and its CAR measured at 46 percent. Analysts said yesterday that the implication is that banks will soon be moving away from a business model that justified a high cost structure based on higher income from commission on turnover (COT) which had hitherto denied the economy of credit facilities for development. Another implication is that the resources at the disposal of the banks would be efficiently deployed for enhancement of Information Technology infrastructure that will improve customer service delivery and, consequently, return on investment for shareholders. Renaissance Capital (Rencap) in its recent report alluded strongly to this emerging development. It said that rather than follow the big four, they believe tier-two banks such as Access Bank, Fidelity Bank, Diamond Bank, First City Monument Bank (FCMB), Stanbic IBTC and Skye Bank will take advantage of the current market environment to buy scale and position their businesses for leadership status. Meanwhile, some of the banks have reached advanced stages in their discussions on acquisition or merger with some of their weaker counterparts. Confirming the development, one of the managing directors of the banks said that discussions are currently going on with regards to acquiring some of the troubled banks, a development, he said, may bring them into reckoning very soon. His argument was that some of them are very strong financially, but are not known to the investing public, adding "at the end of the current exercise configuration of banking structure and leadership in this country will definitely change". CBN has said that it is not opposed to discussions on mergers and acquisition going on in the industry, but that the institution will not be involved in the preliminary discussions. "CBN will not be involved in the discussions but we would only be involved when discussions are fruitful and then we will look at the whole exercise," Mohammed Abdullahi, CBN's spokesman, said.

•Yar’Adua leaves for medical check up in Saudi Arabia

President Umaru Yar’Adua yesterday left the country for the Kingdom of Saudi Arabia for a follow-up medical check up fortuitously providing a soft landing for the two arms of the National Assembly that has been embroiled in a supremacy contest. Before departing Nigeria for Saudi, the president forwarded copies of the proposed 2010 budget to David Mark, president of the Senate and Dimeji Bankole, speaker of the House of Representative, thus putting to rest the feud between the two chambers of the National Assembly over where to present the budget. The row arose over the chamber to be used by the president for the presentation of the 2010 budget estimate at a joint sitting. After failed efforts by the national leadership of the People’s Democratic Party (PDP) and its Elders’ Committee to broker peace, President Yar’Adua yesterday informed the leadership of both chambers he would be sending his National Assembly adviser, Mohammed Aba-Aji to lay the budget today before each house. This is the second time this year that the president would be going to the Kingdom of Saudi Arabia for scheduled medical check-up, the first one been in August when he also performed the lesser hajj. The superiority row between the two chambers may have unwittingly paved the way for the president to comply with section 81 (1) of the constitution which states “The President shall cause to be prepared and laid before each House of the National Assembly at any time in each financial year estimates of the revenues and expenditure of the Federation for the next following financial year” Eseme Eyibo, chairman House of Representatives Committee on Information who disclosed this a telephone interview with newsmen yesterday in Abuja, said he can authoritatively confirm that the National Assembly will receive the draft copy of the Appropriation Bill for the 2010 fiscal year today. According to him, “in substantial compliance with section 81 of the 1999 Constitution, I can confirm to you that the Appropriation Bill for the 2010 fiscal year will be laid before the National Assembly by President Umaru Yar’Adua today.” A statement by Olusegun Adeniyi, special adviser on media and publicity to the president, said the president while in the Kingdom of Saudi Arabia will call on his personal physician for a medical check up. However, the statement did not say how long President Yar’Adua will be away. The presentation was postponed indefinitely on Thursday last week, following a disagreement between the House of Representatives and Senate over the venue for the joint sitting by both houses of the National Assembly. The presentation was shifted to allow the feuding lawmakers sort themselves out as the Presidency diplomatically avoided being dragged into the disagreement which has continued to attract condemnations from a wide spectrum of the society. The latest draft suggests the president will propose aggregate spending of N4.07 trillion ($27 billion), a sharp rise which would push the country’s deficit to 4.87 percent of GDP, one source who was at the meeting said. The source said the rise in spending was due to higher proposed capital expenditure of 1.37 trillion naira, funds meant largely for development projects in the Niger Delta and to rehabilitate the ailing power sector, as well as to help stimulate the broader economy. The benchmark oil price would be set at $57 per barrel, although government sources said they expected the National Assembly to favour lifting that figure to $60. Oil production is assumed at 2.088 million barrels per day while the spending plans are based on an exchange rate of N150 to the dollar, the source said. Economic growth is seen at 6.1 percent and headline inflation at 11.2 percent, according to the draft figures.

Julius Alli Ucha, chairman, Senate committee on works, says his committee has identified over 30 interstate roads in deplorable conditions across the country. Ucha, who stated this during a visit to Lagos State governor, Babatunde Fashola, on Monday, said the roads needed urgent re-construction. According to him, the roads include Sagamu-Ajebamidele, Kabba-Efon Alaaye-Ogbomosho, Ore-Benin road, among others. “These roads are in critical condition and deserve attention of the government. The legislature and executive met and identified such roads. There are seven of them in the South West. We have identified between 25 and 30 of such across the country”, he said. Ucha emphasised that some of the roads had been awarded but none of them had been completed due to lack of equipment by the contractors that are working on the roads. “We have taken note of this. We will brief the Senate of the Federal Republic of Nigeria properly,” he said. He said that the committee’s visit was organised to investigate the executives, adding that it was a formal assignment to motivate the executives.

As I drove around Lagos in the last few days, I recalled what I saw and thought about during a recent visit to Kano and Ibadan. I was wondering if anyone really cares where the nation's budget is presented. Indeed, in the constitution, there is no requirement for the president's physical presence during the presentation of the budget. In the last week, I have seen a child making his way to school in a very tattered uniform and slippers, listened to a parent's lament over how he struggled to pay his daughter's hospital bills, and noticed a beggar on the sidewalk suffering from an unimaginable disease. To this set of people and millions more, the time, venue and space where the president presents his budget (which in times past has meant nothing to them, anyway) is of no consequence. So the problem here is that, as we have always known, those in the National Assembly have been locked up as 'prisoners' of the assumption that they are important. For those not yet familiar with the comedy, let me help you with your understanding. The previous budgets have been presented in the chambers of the Lower House because that has more space. However, the Senate felt that some members of the House have been arrogant of late. Suddenly, they remember that in our African tradition, it is a younger person that pays a visit to his older counterpart. So for this year, the Senate insists that the Lower House should come to them. But the Senate has not told us that their chamber is fit to host the joint House of Assembly. And it is actually not, because it only sits 250 people. To many Nigerians, these are very mundane issues, but not for our petty, mean, assuming and egocentric honourables and distinguished persons. However, I want to be very clear. The president should send the budget to the National Assembly the same way he sends all other bills. The Appropriation Bill is no different, and the tradition of the president presenting the budget at the National Assembly is a military one. I will be very glad if this ego trip leads to a scrapping of this tradition. Also, as one would imagine, the members of both houses may not be aware of the damage being done to the status and prospects of the House. I can imagine that if the president of the United States of America (USA) decides to speak to both chambers and the arrangement is to use any of the chambers, the other members will surely respond. Now, it is a shame that both houses could not set their differences aside to listen to the president. Since the People's (not so) Democratic Party (PDP) has waded into the fight of two 'brothers', I can only imagine that it has become a family affair. But it does not answer the question of who is senior. We know the constitution confers equal powers on both the Senate and the House. But those powers are collective powers. The power vested in the Senate is shared by 106 people; while the power vested in the House is shared by 360 people. So in matters of collectivity, they are equals, but they are not equal as individuals. A representative of more people cannot have powers equal to the representative of fewer people. The president is the most powerful because he represents all by virtue of the direct votes. So we can go on and on. The Senate president is recognised as the number three citizen, and the Speaker of the House of Assembly is recognised as the number four citizen. During my school days, coming third and fourth were quite different. One collected a prize while the other did not. It is also the case that the powers to preside over the joint sitting of the House rest with the Senate President, and the Speaker stands in when he is not present. But the overall determination of who is senior can best be resolved by asking the question: Given a choice would the Reps. want to be in the Senate? In any case, the description above does not concern the "Nigerian". He is poor, without education - at least not a good one, he is unemployed, he is either sick or his wife is, and worse still, his children sometimes share a similar fate. He waits hours for public transport and sometimes jumps into any of those passing lorries for a free ride. He is never sure of where his next meal will come from, and poverty has diminished any little dignity left in him. The last time I went through any embassy, a version of him was struggling to leave the country. He thinks anywhere is better than Nigeria (will you blame him?). When he has been denied entry visas to the US, he tries the UK, after which he tries Germany and sometimes is not entirely himself when he begins to try Mauritania, Tunisia, Turkey, and even Sudan. To this Nigerian, he can never understand why it is such a big deal where the president's budget is presented. I manage to ask why he is not bothered. He asked a rhetorical question: what has the budget done for me lately? To the House, you may have done us all a big favour by sparing us 'meaningless' aspirations.

•Banks being prepared for acquisitions
The Central Bank of Nigeria (CBN) has entered the final stage in its preparation to get the seven troubled banks it took over between August and October this year ready for sale to interested parties, BusinessDay has learnt. It is now carrying out due diligence on the banks that it had injected some N600 billion capital and sacked their executive managements in the process. Indeed, the recently appointed nine additional advisers for the banks are presently helping to accelerate the due diligence which would lead to possible acquisition process of the banks, BusinessDay investigations showed at the weekend. Days after the CBN intervened in five banks on August 14, namely Oceanic, Afribank, Union, FinBank, and Intercontinental, KPMG, the chartered accounting and financial services firm, had been working on the books of the banks. KPMG also started work on Bank PHB and Spring Bank after the apex bank intervened in the institutions later on October 4. At the same time, Deustche Bank and Stanbic IBTC have been advising the CBN from the onset of the intervention. Since then, a source said their work has covered audit, forensic audit, and now due diligence is being carried out in all the banks in preparation for some form of mergers and acquisitions. In the last few weeks, some of the due diligence has intensified such that data room information are now being collated in some of the banks. It thus means that a large amount of confidential information and data is being collated for the purpose of making same available to the other banks that may be interested in acquiring the bailed out banks. Under normal mergers and acquisitions transactions, the data room is opened to potential bidders. In this case, it appears the CBN is carrying out the due diligence for it’s and third party banks’ purposes, as well as for stability in the financial system. For the banks, few possibilities remain, the source said. The possibilities have been reduced to mergers and acquisitions, as the CBN sees a 15 bank structure by the end of first quarter of 2010. “It is difficult for foreign banks to come in wholesale, so the attraction for them will be a tie up or taking up a stake in the existing banks,” said one analyst who chose not to be named. It thus leaves Nigerian banks in best position to acquire the banks. A BusinessDay source said that banks such as Access, First Bank, UBA, Fidelity and Skye Bank are all poised for acquisition of any of the CBN capital injected banks. When the banks are acquired, it is expected that they will be “cherry picked”. The “good” assets of the banks will be acquired by the banks, while the CBN will be left with the bad assets, following similar circumstances during the consolidation period in 2005. Thus, the CBN will absorb the toxic assets of the banks while the acquiring banks will take on the acquired banks’ deposits and their other liabilities. Early this month, the CBN mentioned that it will set up the Asset Management Company (AMC) with a N250 billion capital, some of it coming from the treasury. It is expected that the AMC will acquire and warehouse the toxic assets of the CBN capital injected banks to allow for completion of the merger process without the toxic assets blocking the way.

•Seeks stakeholders’ support to kill bill
The Newspaper Proprietors Association of Nigeria (NPAN) has examined the Press Council Bill at the National Assembly and says it does not see the logic in the bill.
The bill sponsored by a House of Representatives member, Abike Dabiri-Erewa seeks to abolish the Nigerian Press Council and replace it with a Nigerian Press and Practice of Journalism Council, whose chairman will be appointed and dismissed on the order of the president on the recommendations of the minister for information and communications. The association, which met last week to deliberate on the bill was saddened that in 2009 when Nigerians had hoped that progress had been made in dismantling the obstacles to a free press, there are some people who are thinking of enacting a bill that will take the press back to dark ages and era of government control. In a statement entitled, ‘Back to the Dark Ages’ and jointly signed by the president of NPAN, Ajibola Ogunshola; vice president, Kabir Yusuf, and publicity secretary, Frank Aigbogun, the association which reinforced the mounting criticisms against the bill wondered whether history is lost on its promoters, because the press in Nigeria has always stood against any attempt to emasculate it. “As a democracy, we believe that Nigeria should be making much progress at freeing up the space for public discourse and engagement and ensuring that every effort at instituting public accountability is encouraged”, the statement noted. The association further pointed out that the bill begins on the faulty and diabolic premise that Federal Government should determine what the public should know and seeks to abridge the right of the people to information and to hold their leaders accountable to those who elected them. NPAN recalled that in 1999, it instituted a case at the Federal High Court, Lagos seeking to abrogate the Nigerian Press Council decree because “it is our view that its provisions are inimical to the smooth functioning of a free press”. It pointed out that the suit with number FHC/L/C/1324/99 is still pending before the courts and it would now seem that the promoters of this vexatious bill now seek to make the final outcome of that suit a nullity. To finally bury the bill, NPAN seeks the support of other stakeholders to fight to defeat this evil bill and any other measures that seek to curtail freedom of information. Aware of the need for higher ethical standards in the press, NPAN states that it had already established an Ombudsman process and calls on Nigerians to support the process. The Nigerian Guild of Editors (NGE) had equally condemned in strong terms the bill before the National Assembly that purports to enhance the practice of journalism. The Guild in a statement signed by its president, Gbenga Adefaye, noted that section 10 of the bill requires members of the council to swear to an oath of secrecy, saying this may be a standard ritual in government offices, noting that journalism is about revelation and conflict. “We, therefore, reject any ritual that goes against the grain of transparency and openness in public affairs, which such oath-taking obviously seeks to encourage and perpetuate”, the statement noted.

Mega Party (MP) leaders, including Balarabe Musa, Pat Utomi, among other notable Nigerians, are set to address the nation in Abuja on the issue of electoral reform in the country. In a statement on Sunday by Obafemi Olubori, the media assistant to Olawale Okunniyi, the head of secretariat confirmed that the party leaders had agreed to confer together. It stated that their agenda would include how the party’s members could build mutual understanding in the movement toward the national political summit. “The key leaders of the various sub-committees of the movement are slated to throw light on the movement’s action plan and manifesto of the mega party.”