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BETWEEN 1998 and 2010, Nigeria and other African countries attracted $554 billion Foreign Direct Investments (FDIs), according to a report just released by KPMG Africa.
The report was released yesterday, at the ongoing World Economic Forum on Africa 2012, which is expected to end today in Addis Ababa, Ethiopia.

According to the report titled: “African Emergence—The Rise of the Phoenix”, revealed new themes around the three mega-trends currently shaping business in Africa, specifically high demand for natural resources, increased consumerism by an emerging African middle class and large-scale investments in infrastructure.

Though the report stated that FDIs in Nigeria, Kenya, South Africa and other African countries increased dramatically over the last decade, from $110 billion at the end of 1998 to $554 billion at the end of 2010, it noted that the overall FDIs were still relatively small compared to other emerging market economies.

According to the report China alone attracted $578.8 billion at the end of 2010, more than all African countries combined, while Brazil had FDI worth $472.6 billion within the same time.
The report said empirical evidence has indicated that in a few years time, South Africa may no longer be the largest economy on the continent, as Nigeria and other countries are likely to close the gap.

Commenting, the Chairman, KPMG Africa Limited, Yunus Suleman said, “FDIs are essential component of Africa’s sustainable, positive future. And it’s good for investors too. There is undoubtedly money to be made in Africa, which is recognised today as one of the world’s most attractive high growth markets.”
Suleman said that improvement in the business, political and macroeconomic environments across the continent have made African economies more attractive for FDIs than ever before.

He explained that the end of the Cold War which ended in more than two decades ago brought new freedom to Africa, adding that people started to demand political representation, beside calling on governments to be more transparent.

In his own remarks, CEO, KPMG, East Africa, Josphat Mwaura said Unlike China, India and Brazil, Africa is a continent of 54 very diverse countries, each with its own natural and cultural endowment as well as regulatory environment to be navigated through. He noted that whilst regional economic integration was creating greater economies of scale and lesser complexity, doing business in Africa required a deep understanding of the landscape and experience in translating the immense opportunities into rewarding returns.

“Without this direction, many international investors have burnt their fingers and somewhat contributed to the earlier skepticism about the prospects of the continent. Those who have been guided through the complexity of Africa have realised premium returns unseen anywhere else in the world and are part of the emerging story of Africa as a priority investment destination”, he stated.

Mwaura explained that Africa still exports mainly minerals and hydrocarbons. He said the top five hydrocarbon exporters namely Algeria, Angola, Egypt, Libya and Nigeria account for 50 per cent of all exports from Africa and have experienced an 89.2 per cent increase between 2001 and 2010, mostly due to an increase of petroleum exports.

According to him, of all oil exports from Africa, Europe and the United States account for about a third, with gradually decreasing amounts during recent years, adding that China and India has most of the market share and have maintained robust economic growth rates despite the global financial crisis.
“Demand for non-oil commodities from Africa, such as gold, platinum, diamonds, iron and copper are equally shifting from Europe and the United States mainly to China. By the end of 2010, 12.9 per cent of Africa’s non-oil exports went to China, almost five times more than 10 years earlier. This dependence on exports of natural resources makes Africa vulnerable to volatility of global commodity prices”, he stated.

Executive Commissioners and Directors of the Securities and Exchange Commission confirmed on Wednesday that there was rot in the commission. They accused the Director-General, SEC, Ms Arunma Oteh, of taking unilateral decisions and said there was an almost total breakdown of communication among the members of staff.

They appeared before the House of Representatives ad-hoc committee investigating the near-collapse of the Nigerian Capital Market on Wednesday.

Oteh, who failed to appear before the panel on Tuesday, was compelled by the panel to do so on Wednesday. She, however, apologised for her action before the hearing began.

“I apologise profusely if an impression was created that I was disrespectful to the committee,” she pleaded, adding that she opted to attend the meeting of the Economic Management presided over by President Goodluck Jonathan.

The SEC management told the panel that though decisions were carried out with the impression that they had the approval of SEC executive management team, Oteh hardly involved them in her policies and decisions.

The panel had sought their views on how to address the “dysfunction and absence of coordination in SEC.”

They also told the Ibrahim El-Sudi-led panel that there were mutual suspicion, distrust and low staff morale in the apex regulatory agency of the capital market. They accused Oteh of hiring and placing contract staff above some key directors.

No meetings

The Executive Commissioner, Operations, Mrs. Daisy Ekineh, who had spent 30 years in SEC, told the panel that members of the management team rarely met to take decisions or discuss issues since Oteh came in in 2010. She said meetings in SEC were either conducted through text messages or electronic mails.

She said this was done to avoid face-to-face meetings due to the distrust and lack of cohesion in the agency.

Ekineh stated, “In the past, when (Musa)Al-Faki and other DGs were there, we met regularly to deliberate on issues.

“Unfortunately, this has been lacking lately. As a way forward, we need to do more in terms of communicating with each other.

“The way we go about it now is not working; we need to do more face-to-face communication, instead of using text messages and e-mails.

“Also, there should be respect for all. The head should be respected and those under the head deserve their own respect as well.”

Contract staff

The Executive Commissioner, Legal, Mr. Charles Udora, said the low staff morale at SEC was caused by the DG who sidelined regular staff, and hired “contract staff” to handle sensitive assignments.

“The contract issue is affecting morale; the system is creating disaffection.

“People are brought in through wrong processes and occupy positions they know nothing about,” he added.

He stated, “The moment we recognise our staff, SEC will fly again.”

The Director of Legal Services and Secretary to the commission, Mr. Edosa Eigbekaen, lamented the absence of any “structured agenda for meetings” at the commission.

The commissioners and directors testified in the presence of Oteh, who also made submissions to the panel.

They all denied knowledge and involvement in three major management decisions Oteh took, which she claimed that they jointly approved. One was the seconding of two Access Bank employees to SEC to serve as advisers to Oteh.

A member of the panel, Mr. Bimbo Daramola, had sought to know whether the appointments would not compromise SEC role as a regulator since the bank was a key market player.

He also asked whether there was an approval by the management of SEC.

The DG told the committee that she discussed the matter at several management meetings with the directors where they agreed that SEC could use outside assistance in areas the existing staff lacked the competence.

“Yes, I discussed it with them as part of the broad-based areas that we might need assistance,” she said.

The commissioners and directors however, said the DG never discussed the issue with them.

Expressing shock over the revelation, El-Sudi said, “Your reform to achieve a world-class capital market regulation will have problems if schedule officers feel that they have been sidelined or slighted,” he noted.

Project 50

Oteh and the commissioners also disagreed on the controversial “Project 50″ event held in 2011 to commemorate 50 years of capital market regulation in Nigeria.

While Oteh told the committee that the management team discussed and approved the project, the commissioners again denied knowledge of how it was planned and executed.

A panel member, Mr. Buba Jibril, asked Oteh to name the sponsors of the project and how much was realised.

She replied that there were no donations in respect of the project, but that “project partners” handled specific aspects of the project.

Oteh said SEC, being one of the partners, used its tender’s board to execute its own part at the cost of N42.5m.

She also admitted being the “current chairman” of the project committee, having taken over from Mr. Sylvester Akele who had retired from service.

“There were no donations to SEC but there were partners that funded various aspects of the celebration. SEC funded its own part,” she stated.

Under pressure, Oteh listed the Central Bank of Nigeria, the Federal Ministry of Finance, the Ministry of Trade and Investments, Association of Issuing Houses and “several other private sector players” as the partners for the project.

She declined to speak on what the partners funded.

The panel directed her to furnish it with the names of all the partners and the details of the projects they funded.

Daramola had read a memo from the CBN indicating that it would only make donations to SEC’ account and not a third party account.

Oteh clarified that the memo originated from an officer, who probably thought that there would be donations toward the project.

Incidentally, the Bureau for Public Procurement queried whether SEC paid for a venue for Project 50 at the Transcorp Hilton Hotel, Abuja.

The BPE, according to Daramola, wrote SEC, asking for the details of the transaction.

But, when the panel sought to know whether SEC had replied the query, Oteh said that she needed to confirm whether the agency had responded.

Shortly after assuming duties, Oteh released a “Road Map to World-Class Document,” a policy on how she planned to transform the market.

When asked whether she attended any meeting where the document was discussed, Ekineh replied, “We never met to consider the road map.

Udora said, “I have not made any input into any road map and there was no discussion on this by the executive management team.

“It is at this hearing that I am being told that I was part of such a meeting.”

The Executive Commissioner, Finance and Admin, Mr. Sani Stores, responded, “I have never been involved in this framework and I have never seen it.”

The secretary to the commission, Aigbekaen, said he was not aware of the document.

On the thorny issue of 37 contract staff, the Director of Human Resources, Mr. Hussaini Dauda, told the panel that though using contract staff was the discretion of a DG, due process must be followed or it would be illegal.

He said Oteh was advised to forward the matter to a meeting of the management for deliberation and to further seek the approval of the board but that the management, headed by Oteh, neither deliberated on the matter nor approved it.

While the appointments of the contract staff were still to be formalised, he said that they were already earning salaries and allowances.

However, Oteh said that she used her discretion to engage the staff to assist her execute her transformation agenda, while taking steps to formalise the process.

N16bn loan

The panel attempted to resolve the allegation that the managing director and the deputy managing director of Access Bank took personal loans totalling N16bn from Intercontinental Bank before Access Bank acquired the latter in 2011, but made no headway.

Mr. Ini Udoka, who raised the question, noted, “It was a case of owing me money, I became bankrupt and you acquired me.”

Oteh simply responded, “I am not aware.”

She also declined further comments on the transaction, promising to look at the books again and get accurate information to the panel.

However, Udora spoke on how the Union Bank was acquired.

He informed the panel that SEC initially opposed it because it was aware that the bank floated shares in the market and got N8bn but did not explain how the money was spent. However, the Asset Management Company of Nigeria later wrote SEC to say that the N8bn would be absorbed as Union Bank’s losses.

“AMCON wrote us to assume responsibility for the loss. I felt that it was absurd for AMCON to assume the loss.

“I personally felt that somebody must account for that money,” he added.

The Nigerian National Petroleum Corporation has been spending N1.35bn annually on 36 of its employees redeployed to the Nigerian Content Development and Monitoring Board.

This much was discovered and made known by the Presidential Committee on Restructuring and Rationalisation of Federal Government Parastatals, Commissions and Agencies in its report.

Apart from the fuel subsidy issue, the NCDMB, which was established on April 22, 2010, came under serious scrutiny from the members of the Stephen Oronsaye Committee.

A breakdown of the figure by the committee showed that each of the 36 NNPC officials deployed in the new board received on the average N37m per annum.

The committee noted that the figure “is very high and cannot be supported when the basic salary per annum in the public sector is N216,000.”

The committee has also listed the Petroleum Products Pricing and Regulatory Agency and the Petroleum Equalisation Funds among agencies that should lose their independent status.

According to the 660-page report exclusively obtained by SATURDAY PUNCH, the committee, led by a former Head of Service (Oronsaye), recommended a merger of the PPPRA with the PEF as an antidote to the fraud in fuel importation and distribution in the country.

Oronsaye and his colleagues in the committee recommended that the PPPRA and PEF be collapsed into a single department under the supervision of the Ministry of Petroleum Resources.

In recommending the merger of some of the core agencies in the nation’s corruption-ridden oil industry, the committee said, “The PPPRA and the PEF be merged into a single department in the Ministry of Petroleum Resources; and there should be full automation of the bridging process of distribution of petroleum products to eliminate abuse.”

The Committee stated that the statutory functions of the PEF could be carried out as a department in the petroleum ministry.

The report stated that the PPPRA and PEF perform functions that have a cause and effect relationship, which makes it necessary for an alignment of functions for a better efficient service delivery.

“The committee believes that the performance of the functions of the agencies does not need a complicated apparatus in the form of two parastatals and their boards.

“Their collapse into a single department in the Ministry of Petroleum Resources would reduce the widely reported financial and procedural abuse in the oil sector.

“The need will therefore arise to fully automate the bridging process of the distribution of petroleum products to eliminate abuses.”

In arriving at its decision, the committee stated that the 26-member board of the PPPRA is rather unwieldy.

The committee members argued that PPPRA would cease to exist with the phased removal of fuel subsidy in the country and with the expected enactment of the Petroleum Act.

Oronsaye and the members of his committee made serious observations about the administration of the NNPC.

According to the committee, the NNPC has been maintaining a workforce considered inimical to the nation’s economy.

The committee put the workforce of the corporation at 9,765 out of which 1,386, 7,331 and 1,048 are management, senior, and junior staff respectively.

It was also the observation of the committee that “the NNPC structure is unwieldy in terms of the size of its workforce and this constitutes a big drain on government resources.”

The committee observed that the NNPC is violating a constitutional stipulation, which forbids a minister to be chairman of a parastatal under them and recommended that an independent chairman be appointed to head the governing board by the President in accordance with “extant Federal Government Guidelines on the Administration of Federal Government Parastatals.”

The committee recommended a periodic management audit of the corporation.

It was further observed that the NCDMB and the Petroleum Technology Development Trust Fund were performing similar functions of training qualified Nigerians for placement in the oil and gas sector of the economy, which the committee said could have been performed by a single agency.

The report said, “The committee further observed similarities in the functions of the NCDMB and the Petroleum Technology Development Trust Fund.

“While the NCDMB focuses on the initiation, design and implementation of effective indigenous research and development capacity for Nigeria’s oil and gas and solid minerals industry, and while the core functions performed by the two bodies could be performed by one agency, the committee is of the view that the bodies – the PTDF and the NCDMB – should be merged to ensure greater synergy and have a one-stop shop for training and placement of competent Nigerians in the oil and gas sector.”

The committee, therefore, recommended that the PTDF be subsumed in the NCDMB as a way of ensuring an effective coordination in the training and placement of competent Nigerians in the oil sector.

It recommended the amendment of the NCDMB law to enable it to take over the PTDF.

The Oronsaye Committee further recommended the scrapping of 38 agencies, the merger of 52 others in addition to the reversion of the status of 14 agencies to departments in ministries.

t recommended the management audit of 89 agencies and the capturing of the biometric data of members of staff.

It is also part of the recommendations of the committee that the government shou ld stop the funding of certain agencies that are expected to be self-sustaining.

On the issue of the scourge of corruption in the country, the committee gave some insight into its recommendations for the merger of the anti-graft agencies in the country.

The committee recommended the merger of the Economic and Financial Crimes Commission, the Independent Corrupt Practices and Other Related Offences Commission and the Code of Conduct Bureau, because of the similarity of functions performed by the agencies.

The committee recommended the establishment of an independent anti-corruption agency in place of the EFCC, ICPC and CCB.

“The Code of Conduct Bureau should be merged with the ICPC and EFCC into a strengthened parastatal and that the law should accord it independence and autonomy,” the report stated.

It is part of the recommendations that the Code of Conduct Tribunal be renamed the Anti-Corruption Tribunal, entrusted with the sole responsibility of handling cases referred to it by the proposed anti-corruption body.

The committee stated that the recommended Anti-Corruption Tribunal should be “granted the status of a Court of Superior Records.”

lso recommended is the establishment of strong departments in the proposed anti-corruption agency. These include prosecution, investigation, prevention (advocacy) and asset declaration/forfeiture.

It was recommended that the Nigeria Financial Intelligence Unit be made an autonomous body now domiciled in the EFCC.

The committee observed that the recommendations involving the anti-corruption agencies and the special tribunal for corruption would take a strenuous constitutional amendment, which they agreed, was worth the stress.