House Makes U-Turn on Islamic Banking

Aminu Tambuwal, House Speaker

Perhaps worried by the barrage of criticisms that trailed the seeming endorsement given by the House of Representatives on Islamic banking and cash withdrawal limit last Thursday, the lower chamber has reversed its position on the proposed policies.
The House said Tuesday that its acceptance of the presentation made by the Governor of Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, on the two issues was neither an endorsement nor acceptance of the policies.
Sanusi had appeared before the House to explain the controversial policies, but his explanation had ended in a monologue, as the lawmakers were not allowed to ask questions on the policies. 

The change of position by the lawmakers is coming just as the Anambra State government has faulted a portion of Sanusi’s briefing wherein he alleged that the state was the first to obtain a loan from the Islamic Development Bank.
Leader of the Anambra Parliamentary Caucus in the House, Hon. Uche Ekwunife, said Sanusi misled the House and the entire world when he alleged in the presentation on the Islamic banking policy that Anambra State took a loan from the Islamic Development Bank.

She presented to the chamber a letter from the Anambra State Ministry of Finance and Budget to support the position of the state. The letter signed by the Commissioner for Finance, Mr. Eze Echesi, said the state did not at any time take any loan from the Islamic Development Bank and did not at any time make any contact whatsoever with the said financial institution.

Deputy Speaker Emeka Ihedioha said the letter of protest should be laid formally before the House, but cautioned that the lower chamber should not allow the controversies arising from the policies of the CBN to distract it from its legislative agenda.
Ihedioha directed the Ad hoc Committee on Rules and Business to make copies of the letter available to every member, while the Ad hoc Committee on Media and Public Affairs was asked to address the complaint of another lawmaker that the image of the House had been battered in some media commentaries on the controversial policies.

Chairman, Ad hoc Committee on Media and Publicity, Hon. Bamidele Opeyemi, who briefed newsmen shortly after the plenary, said though the lawmakers applauded Sanusi’s presentation, their action was not an endorsement of the policies.
Opeyemi acknowledged that over a hundred lawmakers raised their hands seeking more clarification on the policies, the decision by the deputy speaker not to allow questions was deliberate to avoid turning the chamber into a battle ground and heating up the polity.
He said such engagement would be better handled at the committee level.

In the same vein, a member of the House, Hon. Bello Kaoje, has warned the CBN against the dangers of forcing the policies on the populace and advised the apex bank to provide sufficient enlightenment on them and allow Nigerians to make their choice.
Kaoje, representing Bagudo/ Suru Federal Constituency of Kebbi State, expressed his views during an interaction with newsmen in Abuja Tuesday.

He said that for the proposed policies to succeed, the CBN must be prepared to carry all strata of the Nigerian public along through sustained enlightenment, campaigns designed to highlight the advantages of the policies to the citizenry.
The lawmaker said that without adequate enlightenment campaign, the policies, laudable as they might appear, might fail to achieve their desired results.
Meanwhile, the General Secretary of the Nigerian Supreme Council for Islamic Affairs (NSCIA), Dr. Abdul-Lateef Adegbite, has disowned Dr. Ibrahim Datti Ahmad over his recent comment that Muslims were ready to go to war if Islamic banking was not allowed to operate in the country.

Adegbite described the statement as his (Ahmad’s) personal view and does not reflect the view or position of the council.
Commenting on the controversy generated by Ahmad’s statement, Adegbite while answering questions from journalists at the two-day National Stakeholders’ Summit on Security and Public Awareness, in Abuja, said the purported statement was a personal opinion which should not be seen as official statement from the council.

He however noted that the concept of Islamic banking was a genuine one, which is practised globally and should not be seen as a tool for Muslim domination of the country.
He said: “About 16 countries in Africa are already practising Islamic banking. The first Islamic bank, Jaiz, that is coming on board has so many non-Muslims on its board. Anybody can go to the bank and buy into it. No discrimination whatsoever. People are just being naïve and ignorant.”

He however emphasised that such controversial statements was the opinion of an individual.
“Don’t bring me into that. Everybody is entitled to his opinion. That does not represent the opinion of the council,” he said.
Ahmad had told journalists in Kaduna last weekend that, “Jaiz bank has come to be and there is nothing they (Christian leaders) can do about it and if we have to go to war on this, we’ll go to war”, adding that, “let those wearing cassocks stop disturbing our peace.

Gentlemen (journalists), being peaceful doesn’t mean we are cowards. We warn them to stop disturbing our peace if they want us to live together in Nigeria. Everybody can go his way; we don’t have to live together. We can’t live under people dictating to us how we should live our lives even within the laws of the country.

“Whatever they call themselves, whether archbishops, priests or whatever they are, let them stop disturbing our lives. We have had enough; let the government warn them because these abuses are enough. We have been patient but there is a limit to what we can take. On this Jaiz bank, there is no going back. Everything has been done according to the law.”

CBN Raises Interest Rate to 8.75%

Sanusi Lamido, CBN Governor

The Central Bank of Nigeria (CBN)  Tuesday raised further the Monetary Policy Rate (MPR)  to 8.75 per cent from 8 per cent, representing an increase of 75 basis points.
The MPR, the benchmark interest rate at which the commercial banks borrow from the apex bank, was raised to 8 per cent from 7.5 per cent in May. It had also been increased by 100 basis points from 6.5 per cent to 7.5 percent in March.  

The implication of the increase is that borrowers including manufacturers, corporate bodies and individuals will have to pay more for funds since the commercial  banks will  get such funds at higher rates from the apex bank.

The CBN  said the MPR was raised due to  uncertainty over the “dark clouds” on the international landscape and the rising spectra of structural fiscal deficit including likely increase in liquidity occasioned by the implementation of N18,000 new minimum wage for workers; the injection of funds by the Asset Management Corporation of Nigeria (AMCON) and  Federal Allocation.
It also emerged Tuesday that the country’s gross external reserves stood at $33.73 billion as at July 21, 2011. That was an increase of $1.84 billion or 5.77 per cent over its June 30, 2011 level.

Addressing journalists on the outcome of a two-day meeting of the Monetary Policy Committee (MPC), CBN Governor, Mallam Sanusi Lamido Sanusi explained that the decision to further tighten monetary policy was informed by the need to take precautionary measures in the event of adverse development in the international economy.
Sanusi disclosed that the resolve to raise the MPR by 75 basis points was supported by a majority vote of eight members of the committee while one member favoured an adjustment by 50 basis points. Three other members voted for retaining the MPR at 8 per cent.

Essentially, he stated that the decision to tighten monetary policy was approved by a majority of 10 to 2.Sanusi noted that MPC agreed to maintain the corridor at +/-200 basis points around the MPR. The governor who read the Communiqué No.77 of the MPC said the committee noted that inflationary pressures that were traceable to the high expenditure levels associated with the April 2011 general elections as well as the effects of rising international energy, commodity and food prices had moderated by June 2011. He tied the development partly to the tight monetary policy of the bank since September 2010.

He added that the committee however, observed that the inflation outlook remained uncertain as a result of the expected implementation of the new minimum wage policy and the imminent deregulation of petroleum prices.
“The federal government itself is not going to increase the salary bill because no civil servant in the federal civil service earns less than N18, 000. But you are going to find that across the board, as the states increase that, assuming they are able to pay, that exerts pressure on prices especially if it feeds into other sources of liquidity injection especially AMCON and FAAC,” he said.

Besides, Sanusi pointed out that significant injection of liquidity from FAAC in the third quarter coupled with the impact of AMCON recapitalising the intervened banks to the tune of N1.6 trillion will both add to inflationary pressure.
He said the committee okayed the favourable growth projections but cautioned that the current security challenges, infrastructural bottlenecks and uncertainty in the global economy as well as fiscal developments could undermine investors’ confidence and output growth in the short-term.

Sanusi also said  the committee expressed worry over sluggish growth of credit to the private sector in the first quarter due to the heightened credit risk in the real economy as a result of persistent structural problems caused by inadequate power supply and critical infrastructure deficit.

He added: “The Committee noted the modest accretion to external reserves in recent months but remained concerned about the sustained low level of accretion in the face of higher oil output, higher oil exports and higher oil prices... given that the current oil price level may not be sustained in the event of a slowdown in global economic recovery, the Committee reiterated the need for pursuing policies to foster macro-economic stability, economic diversification as well as encouraging foreign capital inflows.”
It however, commended  the CBN for the limit placed on the foreign exchange sales to the BDCs

Amnesty Chides JTF over Maiduguri Killings

Hafiz Ringim, Police IG

Amnesty International has accused Nigeria’s military of killing 23 people, while shooting at random, after the bomb blast in the city of Maiduguri on July 23.

The group acknowledged a report that the bomb, which was allegedly set off by Boko Haram injured three soldiers but accused the Joint Military Task Force (JTF) of responding by shooting and killing a number of people, apparently at random, before burning down a market.

“President Goodluck Jonathan must get a grip on the Nigerian armed forces and immediately prevent them from carrying out further human rights violations and unlawful killings,” said the group’s Deputy Director for Africa, Tawanda Hondora.

Amnesty called on the government to investigate what it terms as heinous crimes and put on trial those found to be responsible for the killings.

“Allowing troops to go on the rampage will not bring to justice those who carry out these terrible bomb attacks on civilians,” he said.

“While staying within the law, the government must step up efforts to bring to justice members of Boko Haram who wreck untold suffering on people in the middle belt,” it continued.

Amnesty said one human rights defender said: “Soldiers went on the rampage. They shot several people and burned all their shops and properties and burned their cars.”

Jonathan: With FoI Act, No More Hiding Place

 President Goodluck Jonathan

President Goodluck Jonathan Monday warned public servants who had been circumventing public procurement laws to desist from doing so as any infraction would henceforth be visited with the full wrath of the law. 

Ignorance, he said, would never be an excuse, as he warned contractors who he said he had received reports of their collusion with civil servants to aid abandonment of contracts.

Jonathan said there was no more hiding place for them with the passage and assent into law of the Freedom of Information (FoI) Act which requires that government business should no longer be shrouded in secrecy.

Secretary to the Government of the Federation (SGF), Senator Anyim Pius Anyim, represented the president at the fourth National Procurement Forum to mark the 10th anniversary of the public procurement reform in the country.

He warned that civil servants and government appointees needed to study, understand and apply the provisions of the Public Procurement Act as it was the only guide to conducting government businesses.

He noted that all the necessary legislations were now in place to ensure that transparency which would drive transformation were in place in a manner that would make government business to run transparently and where anybody could make inquiries and get answers, “so people have to work transparently in the discharge of their duties”.

 “I strongly advise all public officers whether elected or appointed to study the Public Procurement Act and understand and apply its provisions in the conduct of government business.  There will be no sacred cows for any infractions especially by those responsible for budget implementation at the federal level. And of course ignorance of the law will never be accepted as an excuse,” he warned.

He asked the Bureau for Public Procurement (BPP) to step up sensitisation efforts to cover ministries, government agencies and Nigerian missions abroad to ensure that a uniform system was adopted in the conduct of government business.

“Finally, I am happy to note that with the passage of the Freedom of Information Act, the media and the general public now have a tool to work for good governance. It is no longer possible to hide behind officialdom as everything is now in the open.

“I believe that the fight against corruption has now entered a critical stage and all public servants must take note that the old era has passed away. This is the era of transformation; the era of transparency and accountability not just in words but by action because the tools for public participation are now fully in place,” he pointed out.

Jonathan said the cream of attendees at the forum was a proof of the interest Nigerians have on the issue and urged the drivers of the programme to continually improve with an aim to perfect the system.

“I am fully aware of the many challenges which the BPP is confronted with in efforts to implement procurement reforms. Some of them include the tendency by corrupt officials of MDAs to circumvent BPP’s guidelines and the Public Procurement Act to satisfy selfish interests. Other common challenges which I understand the Bureau is battling with are contract splitting, manipulation of prequalification processes, and disregard for bidding regulations, payment guidelines etc.

“The Federal Government has also received reports of collusion between civil servants and contractors, and cases of contractors abandoning projects after receiving advance payments. There is also the problem of name-dropping in attempts to intimidate officials of BPP.

“My administration will continue to give every support that the BPP requires to sustain and improve on the achievements it has recorded thus far. I urge the Bureau to remain fair, firm and resolute and resist any form of intimidation or inducement in its resolve to enthrone a procurement regime that is open, competitive and cost-efficient and delivers value for money without compromising faster budget implementation,” he said.

He noted that as the system was being perfected, delays were being reduced in securing approvals, while integrity of the process was not being compromised which was the aim of the law.

Also Monday, former President Olusegun Obasanjo called for sanctions, including imprisonment, for culprits of the public procurement system abuse to serve as a deterrent. 

Obasanjo, whose administration passed the Public Procurement Act of 2007, said it was gratifying to see a gradual emergence of a "transparent" procurement system. 

The Director-General, BPP, Mr. Emeka Eze, said certain powers were bent on frustrating the due diligence efforts.

Eze said the bureau, through the help of civil organisations, had waxed from strength to strength notwithstanding the current opposition.

According to him, the bureau had won two out of the 11 cases against it, while five agencies had been recommended for investigation and eventual prosecution if found wanting.

Forex: CBN Intervenes, Raises Dollar Supply

Sanusi Lamido, CBN Governor

Apparently concerned by the rising demand for the United States dollar at the foreign exchange (forex) market, the Central Bank of Nigeria (CBN) Monday increased its supply of the greenback at its regulated Wholesale Dutch Auction System (WDAS) by 60 per cent to a total of $400 million.

THISDAY checks showed that the total amount offered by the apex bank at the auction represented an increase of $150 million, as against the $250 million it had offered at last Wednesday’s auction.

But the demand for the dollar at the bi-weekly auction climbed further by 50 per cent, to a total of $545.5 million Monday, compared with the $362 million recorded at the previous auction. 

The value of the naira slipped slightly due to the strength of the unmet demand at the WDAS. It dipped by 15 kobo to N150.26/$1 compared with the N150.11/$1 it stood at last Wednesday.

However, data by Financial Market Dealers Association (FMDA) showed that the local currency maintained its Friday’s value of N165/$1 at the parallel market. It also stood at N164.50/$1 at the Bureau De Change (BDC) section of the market.

Operators have continued to express concern over the disparity in the value of the dollar between the official and parallel markets. This, they alleged, had resulted into round tripping in the system.

An analyst and Head of Research, BGL Plc, Mr. Olufemi Ademola, argued that because of the volatility in the other market, especially the stock market, investors might be pulling out of equity market for other investment opportunities where returns were higher.

Ademola, who spoke in an interview with THISDAY, insisted that the parallel market of the forex market reflected its real volume of demand and supply.

He explained: “There was rumour in the market sometimes last month that the CBN was planning to devalue the naira and so there may be speculative trading in the market. You can’t speculate in the official market because of the CBN regulations, but you can do that in the parallel market. The parallel market measures the true movement of demand and supply of the market. 

“We have noticed that there are some periods of the year that demand usually go up because Nigeria will always travel. Summer period is one of such periods. Again, around September, you see a lot of pressure, particularly on the pounds. In December when most Nigerians living abroad come back, the naira appreciates because they will come back with dollar to celebrate the yuletide.”

He stressed that with the country’s robust oil revenue, which he argued were enough resources to demand and supply at the market and the new CBN policy, which lifted the restriction on bond holdings, there would soon be inflow of funds into the system. 

Managing Director and Chief Executive Officer, Slamad Bureau De Change Limited, Mr. Amaeze Olisaemeka, urged the apex bank to raise the amount of dollar available to BDC operators.

“The CBN has a very good intention for the market, but we are appealing for an increase in the supply side of the market, either at the WDAS or from banks,” he said.

‘Why Licensees For Independent Power Projects Failed’

Minister of Power, Prof Barth Nnaji

Managing Director of Chevy Chase Limited, Mr. Chukwude Okonjo said majority of the 34 operators licensed by the Federal Government to build Independent Power Plants (IPPs) failed because the authorities did not conduct adequate due diligence to determine their competence.

The Federal Government, through the Nigerian Electricity Regulatory Commission (NERC ) had licensed about 34 IPPs but six years after obtaining the licences, only few of the operators have demonstrated that they have the capacity to execute the projects.
Also a recent verification by NERC showed that some of the licensees could not be traced to the addresses they gave to the regulatory agency.
But Okonjo told THISDAY that both the government and the operators should be blamed for the failure of the licensees to perform according to their operating licenses.

According to him, the government did not provide adequate incentives to encourage private participation in the power sector.
“The problem lies on both sides – I don’t know how much due diligence that was conducted on the operators that were licensed to determine whether they have the capacity. Most of them also have funding problems – they were not able to access funding and this problem is also tied to the fact that the tariff or revenue that will accrue from power generation is too small to encourage people to actually invest. So, some of them were actually waiting to see if the government will revisit the issue of tariff. That is one major problem. The second major problem is the fact that the enabling environment was not just there,” he said.
He however noted that the government has stated putting adequate structures in place to enable the IPPs to thrive, adding that the recent creation of the Bulk Trader in the power industry will boost investment in IPPs.

“In fact, the government is also enhancing the transmission infrastructure to ensure that the power to be generated can be absorbed because even if we are to generate 30,000megawatts, we cannot transmit the power. So, we have to address this transmission problem,” he said.

He advocated for the creation of a buffer fund that will give private operators in the sector a sort of guarantee.
According to him, the buffer fund will assure the operators that that if they generate power and there is problem, there is a guarantee to take care of the problem.

“I think that is what the Bulk Trader is going to do. Again, there is the issue of Power Purchase Agreements (PPAs). If you don’t have proper PPA, which is your off-take agreement from the beginning, how do you expect that the financier will take u very seriously? They will not take you seriously until they know how they will be able to recoup their money if they give you the loan,” he added.