The Lemonade Relief

 The lack of chairs for students to sit on in our primary and secondary schools is not an excuse for lack of vision or poor performance. It is true that, what we see in schools these days are: uncompleted buildings, rooms without asbestos, no sufficient tables, students sitting on windows and the floor, students many times walk about aimlessly around due to an overcrowded classroom. Teachers that are not motivated because they feel they are not well paid. Things just seem not to be in place. Then I thought of the ‘Lemonade Relief’.

Once upon a time, I felt like drinking an Orange juice but all I had around me was lemon not even an Orange. I felt terrible because of my great thirst for an orange juice. Blessed are the great thinkers. If you can think, you will conquer your world. I started playing around the lemon till I got to the critical point where I realized I can make lemonade from those lemons. What a relief!

This I will say of most of the challenging situation in which we find ourselves, there is always a way out only if we can think and implement. I asked my students why they have a dirty environment. There response was that nothing is beautiful about their classrooms. These students can tap into the lemonade relief by ensuring their old and unattractive classrooms are clean at all times, creating a conducive environment for themselves, which is actually a thing of the mind. If government cannot provide a whiteboard, they should make the most of the chalkboard they have by darkening the board, to help not only their teachers in writing smoothly but to see clearly without straining their eyes.

The MDGs goal two, ‘Universal Basic Education’, where are we? The aim is that by 2015, every child on the street should be in school and that every individual that exist should at least have a minimum of a primary school leaving certificate. In my own view, we are getting there. There is a great probability that Nigeria can achieve the goal of universal basic education. The awareness is massive, there are schools everywhere, even if the quality is not what is expected, we should always remember the ‘Lemonade Relief’. There are Non Governmental Organizations (NGOs) and churches that offer education aid especially at the primary school level. Youths of different qualification and expertise have come together to assist teachers in teachers in teaching and improving the quality of education given at the primary school level. I know of the covenant education aid here in Lagos whereby education experts are gathered with the sole aim of teaching the pupils in the primary school how to read and write effectively which is key. The foundation on reading matters and this will go a long way with their academics even in the tertiary institution.

Though we still have a low percentage of ignorant parents, who deny their children to enjoy the free education or subsidized education. As the awareness continues, their percentage reduces. There is that understanding that poverty can deprive a child of attaining education, while education is a means of eliminating or alleviating poverty. The will should be there on the part of the parents to encourage their children to school and stand by them through school. People complain they do not get quality education from the government. The lemonade Relief will enable us change the mentality and make do with what we have.

Universal basic education will go a long way to help I achieving other goals of the MDGs aimed at solving the economics problems especially in the third world countries. Education will help alleviate poverty. Education brings about confidence and good thinking ability resulting in creative ideas. Good ideas rule the world. Education will make any system work. Knowledgeable leaders in government, community, home, etc. will encourage the education of the younger generation because they know the value. Also, education brings about gender equality. It brings out the best in women and confidence to say no to suppression. Good education enables the men folk to understand the essence and know the worth of a woman.

More so, education makes the health system function well.  Education leads to having well experienced doctors and other health workers who can adequately give medical advice. Thereby reducing infant mortality and cases of mismanagement in the labour ward will be at its minimum. In fact, when there are qualified hands , people will have the confidence to go to hospitals and health centers without fear of having the wrong prescription or an expired injection. Education brings about improved maternal health. Pregnant women will know the need for ante-natal and post-natal care.

Education is simply invaluable. Sex education in school has reduced the rate of teenage pregnancy. Teenage girls are more focused and their male counterparts can now see the big picture and work towards having an excellent future. HIV, AIDS, Malaria,etc. campaign is vibrant. People are no more ignorant. Superstitions are disappearing and people are gradually coming to the reality that malaria kills infants and adults, the superstition of ‘still born’ or ‘Abiku’ is dying. ‘Going and coming of the Abiku’ is no more the slogan but ‘Use treated mosquito net to combat malaria’, ‘Zip up’, ‘Sex is worth waiting for’,etc. The need for immunization to fight against the killer diseases is emphasized; genotype and blood group awareness is vibrant. Education is doing wonders in making this world a better place.

In conclusion, education is the best legacy that can be passed on to generations born and unborn. Quality education will solve the world problems. The lemonade relief will make education work, no matter how insufficient the resources may appear. We can always make the best of every challenging situation. Quality education can only be achieved when all hands are on deck. While the government is doing her part, the students are not left out in maximizing every opportunity that they have. The parents/guardian must contribute their own quota to make it work. Only if we can go the extra mile, if teachers can work like it is their calling, teaching with all the passion, only if students will count education as a great privilege, if everyone will see the fulfillment/success which is the end product of chastisement or challenges, if only people know that there is no shame in tears, if everyone can see the satisfaction that comes with hard-earned money, if everyone will admit there mistake and consider constructive criticism, then education will work for us as a nation. We will cease to have educated fellows that display barbaric style of life. The lemonade relief will make education work more than we can imagine.

ASSET MANAGEMENT COMPANY OF NIGERIA (AMCON): THE GENESIS AND PROSPECTS

Abstract

The President of the Federal Republic of Nigeria signed to law the incorporation of the Asset Management Corporation of Nigeria (AMCON) on the 19^th of July 2010, with the hope that it will bring about the revival of the banking sector, increase employment, promote higher output and enhance a rapid economic recovery. This paper studies the genesis of this new development, the expectations, the funding model and the prospects.

The Genesis

The idea of having a state owned Asset Management Company in Nigeria was first raised by the immediate past CBN governor, Professor Charles Soludo in 2004 as part of his 13-point reform agenda of the banking sector during his tenure as the CBN governor. It was an idea that was not brought too reality.

The global economic recession that came to the forefront of business and media world in September, 2008 has its impact on the Nigerian economy. This recession led to a collapse in the prices of commodities and securities, as the price of crude oil, which is the major source of government revenue dropped from $147 per barrel to $35 per barrel within 120days. There was a decline in the prices of equities, and an exposure of the mismanagement in the banking sector. There was the unraveling of the weak risk management structure and a weak corporate governance in the banking industry at the period. As a result of growth in equities before the decline, banks gave out margin loans and other loans collaterized with shares and some loans issued without collateral based on personal interest without anticipating the steep decline that occurred. The illiquidity of this shares constrained borrowers from meeting up with their obligation.

Sanusi Lamido Sanusi,a risk management and control expert was appointed the CBN governor by the late President Umaru Musa Yar’adua in June 2009, which was in the middle of the crunch. Sanusi had a strict bank examination, came up with the banking sector reforms in August 2009, which led to the further exposure of the weak corporate governance and inadequate risk management measures in the banking industry. Eight banks were affected while six bank managing directors parted with their jobs and N620 billion was injected into the system to recapitalize these banks and avoid a close down. The CBN governor adopted the following measures as part of his bail out reform to ensure a better and trust banking system in Nigeria:

·         A common financial year end

·         Prudential guidelines

·         Fixed tenure of CEOs and Directors

·         Setting up the Asset Management Corporation of Nigeria(AMCON)

·         And good rules on governance, transparency and accountability.

A proposal for the AMCON was made and at the last MPC meeting held on the 5^th of July, 2010, the governor of CBN hoped that the harmonized AMCON would be passed to law and kick off sometimes in September as a tool to the perfection of the reforms that was embarked upon to promote stability in the industry and enhance a rapid economic recovery. The president signed the bill to law earlier than anticipated, meaning that the door to the final phase of the banking sector reforms has been opened. The banking sector awaits a credible monetary regime with this positive step.

The Expectations

The signing to law of AMCON is a reflection of the Federal government’s commitment in safeguarding the interest of depositors, creditors and other operators in the financial system. The sole aim of AMCON is to ensure stability in the financial sector and enhance economic recovery.

 The route to the attainment of this objective is in the expectation placed on AMCON to boost the liquidity in the troubled banks by buying their non-performing loans, help in the recapitalization of the affected banks that CBN has embarked upon and increase access to of restructuring opportunities to borrowers.

AMCON is expected to ease the liquidity crunch in the financial sector, clean up the banks’ balance sheet, bring confidence to the banking industry and the capital market, prevent loss of jobs in the banking industry, increase Nigeria’s credit and risk rating, higher economic output, increase in demand for shares and appreciation of market indices, encourage lending to grow the real sector of the economy and enhance job creation.

The Funding Model

The reality of AMCON is a joint effort of the ministry of finance, CBN, SEC, NDIC, NSE and the Ministry of Justice. The CBN and the ministry of finance are to raise the authorized capital of N10billion for the start up on a 50:50 or an equal ratio. The next step as proclaimed by the minister of finance is to appoint the management team.

Also, the banks are to contribute 0.3% of their balance sheet worth into the sinking fund to support course of AMCON, starting from 31^st December, 2010. This was agreed at the just concluded bankers’ committee meeting held on the 21^st of July, 2010 and it is to run for the next 10years. The fund will be invested in a zero coupon and serve as a standby pool to make up for any funding shortfall from the model CBN has put in place for the corporation. The step taken by the banks will reduce the fiscal burden the corporation may impose on the government.

Nigerian Deposit Insurance Company (NDIC) will also contribute to the funding from its dividend. NDIC is considering the reduction of the premium every bank pays yearly which is about 1% of the value of its deposit as an insurance premium to the corporation.

The corporation is expecting N500billion from CBN to be paid in tranches for the next 10years, 0.3% of banks’ balance sheet worth which may amount to N1trillion at the end of the 10years AMCON is to run for and a substantial amount from NDIC. This reveals that AMCON is expecting over N1.5trillion to secure a risk free banking system in Nigeria.

The Prospects

The setting up of a state owned asset management corporation is an ideal way to tackle credit crisis in the financial system of any economy. Managing bad asset is a central activity in the financial sector restructuring. CBN, NDIC, SEC which are the regulators believe having an AMCON will solve the problem of Non Performing Loans (NPL) and create a risk free banking system. The government unanimously signed the harmonized bill to law while the banks believe in AMCON to be the messiah; this led to the banks bearing of the major capital share of AMCON.

The government of the East Asian countries adopted the idea of a state owned asset management company during the financial crisis in their region in the late 1990s and it worked out well in attaining economic stability, the AMC bought the banks’ Non Performing Loans and led the economy of these nations  to what we have today as emerging economies. We had in Czech republic, Central Asset Management Company (Konsolidation bank); in France, Consortium de Realisation(CDR); in Indonesia, Indonesian Restructuring Agency; Thailand, Thailand Asset Management Company(TAMC); and Korea Asset Management(KAMCO).

Factors that will Enhance the Success of a State Owned Asset Management Corporation

·         A strong political will

·         An explicit government financial support

·         An effective legal backing: A good legal regime with bankruptcy and foreclosure laws will aid quick attainment of purpose

·         Clear AMC mandate: The objectives and mode of operation must be well stated.

·         A well defined life span: the tenure of an AMC must not be too long

·         Adequate governance: An AMC must have a good internal control system with an external body supervising its actions

·         Good transparency: An AMC must periodically disclose the result of its operations and audit performance.

·         Speedy resolution: An AMC should not hold on to acquired asset for so long. Waiting for an economic turnaround to increase recovery often leads to slower resolution and larger losses.

Conclusion

The setting up of an Asset management corporation of Nigeria is a welcomed development aimed at buying the banks’ Non Performing Loans(NPL) and ensure stability in the financial sector.

If the AMCON will be managed by people that are accountable and committed to the objectives following the acceptable guidelines for setting up and operating a state owned Asset Management Company, then a progress in economic activities will be attained. Analysts are of the view that AMCON will provide a basis for a meaningful mergers and acquisition talks and eventual reconciliation of the banking sector as we proceed into the third quarter of the year.

References

Ben Fung et al (2004), Occasional Paper No3, ‘Public Asset Management Company in East Asia.’

Dominic Salvatore,(2001) ‘The Financial Crisis : Causes, Effects, Policies, Reforms, and Invesment Strategies’

http://www.leadershipnigeria.org/: ‘One Year of Banking Reforms: sanusi’s milestone, Achievements, and Challenges.’

http://www.acceleratorng.com/

http://www.nigeriannewsservice.com/

http://www.nigerialatestnews.com/

Economics

Shoe-Leather Cost of Inflation

The shoe-leather cost of inflation is the time and effort used in counter-acting inflation, especially in the situation of a hyperinflation.

When there is inflation, especially a hyperinflation, there is usually an increase in nominal interest rate, that is, the actual interest rate and the expected rate of inflation. The rise in interest rate leads to holding of less cash. People tend to invest their money. The additional cost of having to go to and from the bank or building societies where they keep their money is the shoe-leather cost .i.e. the wear and tear on their shoe leather, the cost of transport and other inconveniences.

Although the internet has reduced the wear and tear on the shoe, it is more convenient these days. Therefore, the shoe-leather cost of inflation is the opportunity cost of time and energy used in beating inflation.

Economics

Inflation

Inflation is the rise in price of goods and services. The hike in price definitely affects the economy in a subtle manner. Inflation is an erosion of the value of money or anything that has a monetary value. It has its types, causes, effects, and control measures.

Inflation is a common economic phenomenon in every economy. Nigeria has her experience of inflation as it rises and the control measure offered by different administration with their reforms.

Types of Inflation

Wage Inflation: This is also known as Demand Pull inflation. This is a situation that arises when the demand for goods and services exceed the supply. This leads to competition that in turn causes a hike in the price of commodities and services.

Cost Push Inflation: This is the rise in price that is caused by increased cost incurred in the production process of goods and services.

Pricing Power Inflation: is a type of inflation that is caused by the deliberate act of the industries and entrepreneur to increase their profit margin. It is also known as the Oligopolistic Inflation

Sectoral Inflation: The hike in price is a result of price increase in certain sectors of the economy which will definitely have a ripple effect. For example, a rise in the price of fuel will lead to an increase in transport fair, prices of goods and services, and so on.

Fiscal Inflation:  Excessive government spending is the cause of this type of inflation.

Hyper-Inflation: This is an extreme case of inflation. It is also known as Galloping Inflation or Runaway Inflation. It is an unusual case and it affects the economy adversely. We have a hype-Inflation case during or immediately after a war.

Core Inflation:  This puts into consideration all the items in the basket without food and energy which are highly volatile.

Headline Inflation:  In this case as different from the core inflation, the headline inflation puts into consideration the highly volatile items i.e food and energy.

Measures of Inflation

Inflation is usually measured by estimating the inflation rate using the price index. The inflation rate is the percentage rate of change in indexes over a given period of time. The inflation price indexes are:

• Producers price index
• Commodity Price index
• Core price index
• GDP deflator
• Regional Inflation
• Historical Inflation
• Asset Price Inflation

The Effects of Inflation

This could be positive or negative.

Negative

• Hoarding
• Shoe-Leather Cost
• Menu Cost
• Allocation efficiency
• Hyperinflation
• Sets off Business cycle

Positive

• Labour market Adjustment
• Debt relief
• Tobin Effect

Room to Maneuver

   Government Bonds

   Government bonds are risk free debt instrument backed by the credit and taxing power of a country. It is an instrument for controlling the supply of money in an economy. It is also a form of long term investment for investors. It aids long term economic plans and so on.

Definition of Bond Related Terms

• Broker - Any person engaged in the business of effecting transactions in securities market for the account of his customer for a commission.
• Broker/Dealer - Any entity, other than a bank, engaged in the business of buying or selling Securities on its own behalf or for others.
• Competitive Auction – An auction in which securities are sold to the highest bids. Successful bidders are awarded securities at the prices that they bid.
• Customer - Customers are all Non-Primary Dealer institutions or individuals that purchase or sell Government Securities or engage in Repurchase Agreements in Government Securities with a Primary Dealer.
• Dealer - An entity that stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). Individual or firm acting as a principal in a securities transaction.
• Dutch Auction – An auction in which the lowest price necessary to sell the entire offering becomes the price at which all securities offered are sold.
• Government Securities - Securities whose principal or interest is guaranteed by the government or its agents.
• Government Securities Dealer - A dealer in government securities.
• Inter-dealer brokers - An intermediary between dealers in securities who matches ‘best’ bids with the ‘best’ offers to arrive at the right price.
• Primary Dealers - Dealers appointed under the Primary Dealership system.
• Primary Dealer System - A system whereby some institutions are given exclusive rights to purchase/underwrite all securities issued for resale.
• Primary Markets - The market in which new securities are issued by corporations in order to raise capital.
• Regulatory Authorities - Regulators of different operators in the capital market i.e. Central Bank of Nigeria (CBN) for banks, Securities Exchange Commission (SEC) for capital market operators and Nigerian Stock Exchange (NSE) for members registered to trade on the floor of the exchange.
• Repurchase Agreements - A short-term loan agreement by which one party sells a security to another party but promises to buy back the security on a specified date at a specified price.
• Secondary Markets - The market in which previously issued securities are traded among investors.
• Securities - Instruments that evidence the holder’s claim against a firm or government.
• Securities Exchange - An organized market for purchase and sale of securities such as a Stock
• Exchange.

Skirts in the Boardroom

Skirts in the Boardroom

Gender equality and the empowerment of women in the society has been a goal that has existed for decades considering religious and social standards, a woman is said to be weaker than a man. Other common expressions in use are: “weaklings”, “must be submissive”, “helper ”, “home make/keeper ”,“sex machine“, “baby makers ”, “skirts in the boardroom’.

Also, in the professional world, when some professions are mentioned, the gender that comes to mind is the female gender. Some of these professions are: secretary, hostess, sales representative, caterer, teacher, among others. All these aforementioned can be said to exist at a time. Better said, exist at its minimum in recent times. Even the language of adverts is better these days. Some of us can still remember the UBA jingle. (Wise men bank with UBA…) that was later modified to (wise men bank with UBA, wise women too with UBA…). Gender equality and women empowerment, (MDGs Goal Three) where are we in Nigeria?

This piece will discuss three generation of women, their activities, experiences, passions, and future. For easy reference, the first generation, I call the grand-mothers, the second generation will take the position of the mothers, while the third generation I call the daughters. The first generation is the successor of women of ancient times. They had few opportunities and made good use of what they had. These are the generation that spoke in their time and said a capital “NO” to female suppression. In fact, they laid the foundation for the feminist movement that some women modified as “womanism”. These generations cleared the path for what we have today as the sexist language where women are  put into consideration in daily conversation. Part of the joy of existence is communication; these group of women said no to suppression in a society where the voice of a woman is unheard, where the double standard exist, where women were sex objects, where women were the property of a man, where a woman dare not talk when a man talks, where a woman dare to say no, a world of no recognition for the identity of a woman. To mention but a few of these women were Olufunmilayo Ransome-Kuti and Eniola Soyinka (wild Christian).

These women damned the consequences, refused to be kept mute for life ,liberated the posterity and allowed history to absolve them.

Suppression continued ever after the generation of the grandmothers but they had already set the pace of speaking up, they set the pace of expressing the identity of a woman and the struggle against female oppression was actively championed in their time.

The mothers, that is, the second generation of women saw the great value in education, went for it, in a world where education was considered only for the male gender. They strived to be at their best. These brought out their voices that have been silenced for a long time. I salute their courage.

These women are found in all professions as lawyers, doctors, professors, engineers, linguists, and accountants and are active in their profession. Now, we have ladies in the boardroom, also as head of various units in organizations, vice-chancellors in universities, presidents of professional bodies and even pastors in churches. It is an awesome shift, isn’t it?

These women, because of the knowledge they have acquired could carry–on with the struggle on female suppression. To mention but a few, we have, Professor M.E.M. Kolawole, Prof. Alele-Williams (First Nigerian Female Mathematician and Vice-Chancellor), Prof. Dora Akunyili, Dr. Obi Ezekwesili, Dr. Ngozi Okonji-Iweala, Chimanda Adichie, Prof. Adedoyin (who composed the national pledge), Erelu Olusola Obada, Kofoworola Bucknor, Abike Dabiri-Erewa, amongst others. They are part of the feminist movement. Women can now do what a man can do even much better based on the performance of these women that brought about their recognition as women of substance. They have complemented the beauty of an African woman with the knowledge pursuit. When some women took the feminism movement from the radical point of view, which turned them into anti-male, some other women that have a good sense of the balanced and fulfilled woman came up with the movement called “womanism”. “Womanism” says no to female suppression and believes in gender equality. Womanism is not anti-man, they are not haters of men, but believe that both sexes should work together to have a better world to exist in. Both the man and the woman take care of the home (family relationship), they put heads together to have the best in the work environment, in the various religions, men and women have their roles to play, even in the politics of the nation, we have   female ministers, and female deputy governors, for example,  Erelu Olusola Obada in Ogun State and   Mrs. Sarah Sosan in Lagos State.

More so, the third generation that is, the daughters are the up-coming young feminine minds that see the sky as the starting point. They see themselves as beautiful within and without, their shoulders are tall and heads are high. They can only see the best coming their way. They are carrying on the battle of identity consciousness. Now, we have better expressions describing a woman. For example, “what a woman cannot do, only God can do it”, “a woman of substance”, “epitome of beauty”, “quintessence of excellence”, “rare gem”, and so on.  Also, the rate of teenage pregnancy has steeply reduced , teenage marriage barely exist, we now have NGOs championed by men and women of understanding e.g. Society for Family Health (SFH), Association for Reproductive and Family Health (ARFH), e.t.c. minding the good growth and development of both male and female children and educating adults on how to lead a better life. In fact, from a recent survey of a senior secondary school in Lagos: Aguda Grammar School. The data we have below is that of boys and girls in the school through the three levels of senior secondary education in four years.

2005/2006 Session

	Boys	Girls
S.S.1	214	330
S.S.2	224	227
S.S.3	170	167
Total	608	724

2006/2007 Session

	Boys	Girls
S.S.1	244	355
S.S.2	300	270
S.S.3	190	195
Total	734	820

2008/2009 Session

	Boys	Girls
S.S.1	383	309
S.S.2	339	317
S.S.3	221	196
Total	943	822

2009/2010 Session

	Boys	Girls
S.S.1	340	404
S.S.2	350	354
S.S.3	250	304
Total	940	1162

From the data above, the level of female education is encouraging, it tells us how far, we have come in achieving the MDGs goal three (3), i.e. “promote gender equality and empower women” in Nigeria. This gives us the hope that more would be achieved in the nearest future. Then we can talk not only of the skirts in the boardrooms but also stilettos at the core of business.