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Mr Humphrey Okorie – CEO Institute of Internal Auditors

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Mr Humphrey Okorie, The CEO at Institute of Internal Auditors, Nigeria shares with The CFO, challenges, relationship between internal audit and corporate performance and many more. Excerpts…

What are challenges of internal auditing in organizations in Nigeria?

Internal auditing in Nigeria face many challenges, however I will talk about some. For instance, weak control environment is a major challenge to internal auditing. When you look at the COSO internal control framework, the control environment is the foundation. Using the analogy of a building, when the foundation is faulty, it becomes difficult to achieve sustainable and stable house that would enable you have peace of mind, irrespective of the aesthetics, painting, and decoration of the building. In this case, control environment could be viewed from two angles

Internal control environment- this is the control environment inside the organisation. These include organizational culture, tone at the top, organizational ethics, managerial courage etc.

External control environment-the state of control external to the business and covers controls around the locality upon which the organisation operates. These include Nigeria as a nation, states, local government areas, other institutions, and stakeholders that the organisation do business with.

Inadequate Internal audit independence and management support. Some organizational allow internal audit to exist just to ‘fulfil all righteousness’ and do not provide the necessary support or ensure their independence.

Internal audit independence is achieved through two ways, the reporting line of the internal audit function and the existence of the internal audit charter duly approved by the appropriate level of authority.

  1. Inability of internal auditors to provide expected value to their organisations. Another internal auditing challenge lies in the auditors’ inability to provide measurable values to their organisations. Without value, stakeholders will not take the function seriously. Incidentally, there is no better time to offer value than now, when the margins are getting slimmer by the day, disruptive initiatives are challenging status quo, and traditional approach to business operations are fading away.
  2. Low level of internal audit professionalism. The awareness, understanding and adoption of the international internal auditing standards of the Global institute of internal auditors is still below expectation. When you compare internal auditing practices in many organisations operating in Nigeria, with the requirements of the international professional practices framework (IPPF) for the professional practice of internal auditing you will realise that many organisations are not doing well. Some are not even aware of the basic standards and methodologies for international internal audit practice. Businesses are now global and span across continents and countries, it is essential that for internal auditors to be relevant they must work in line with the global standards.

Could you evaluate the relationship between internal audit and corporate performance?

Internal auditing evaluates the effectiveness of governance, control, and risk management processes within an organisation. How effective the governance, control and risk processes are in an organisation to a large extent determines how well such an organisation will perform. When one examines corporate failures in the past and recent times, one would discover that the root causes of such failures are mainly due to nonexistence or ineffectiveness of governance, control or risk management practices in those organisations.

As the CEO at the Institute Of Internal Auditors, what are you and other members doing to ensure that organizations are well enlightened on what internal auditing is all about?

We undertake various initiatives such as advocacy visits to stakeholders in different organisations, including the government, work with the big 4 and other local consulting firms to organise free breakfast seminars and workshops, organise national conferences through the support of industry stakeholders, provide coaching and mentoring to internal audit practitioners and intending internal auditors, provide learning resources and training to internal audit professionals, collaborate with other similar educational professional bodies in various industries, provide awareness on IIA international professional certifications. We also reach out to professionals and share knowledge through our website and various social media platforms such as LinkedIn and twitters and so on.

What other bodies exist in enforcing right values on internal auditing?

Institute of Internal Auditors (IIA) is the globally recognized body for internal auditing. They develop the international professional standards and code of ethics for the professional practice of internal auditing.

What prompted your interests in this line of career?

Internal auditing is not an aspect of finance. Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Unfortunately and understandably, many people in Nigeria associate internal auditing with finance and accounting. Modern internal auditing does not just cover finance and accounting, rather it goes beyond that to cover every area the business. Internal auditing is a professional career path and individuals from different disciplines are trained to practice as internal auditors.

You are most likely to get the best value from internal auditors who audit or consult in areas of their background or have a good understanding of the business operations. IT professionals who become internal auditors will make better IT auditors, Chartered accountants who become internal auditors will make better finance auditors, those trained in aviation will make better aviation internal auditors, similarly in the oil and gas, automobile and so on.

There are various universities across the globe which offers degrees (B.sc, M.Sc. and PhDs) in internal auditing. People from different backgrounds become trained to work as internal auditors and along the line take various certifications to become certified/qualified internal auditors and can practice globally.

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Dependence On Govt Killing States’ Chambers Of Commerce- RUWASE

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Mr Babatunde Ruwase is the President of Lagos Chamber of Commerce and Industry (LCCI), a Fellow of the Institute of Chartered Accountants of Nigeria, also an astute boardroom guru. In this interview with Akin Naphtal, he speaks on the various advocacies of the chamber and the need to revamp the economy for growth, among others. Excerpt:


The chamber has been leading in the era advocating for best business policy and practice. Can you share with us, your challenges and achievements over the Years sir?
The business started as the Lagos Chamber of Commerce 130 years ago, in 1888, which actually pre-dated the land space which God has given us today, which we call Nigeria. One can say the Lagos Chamber of Commerce had been an institution in this space even before 1914, when Nigeria was put together and most of the corporates that were there then are members. The one that can readily come to mind is UAC. First Bank that also celebrated 125 years are members. Our member also happens to be the first to finance the first port of UAC, we called it harbor then. Bringing of electricity to Lagos was also financed by our members in the 18th century. We were on ground when Nigeria came into being, with Lagos being the center of commerce and governance.
We’ve been doing a lot of advocacy – although when the petrol dollar came in, government became very rich. In those good old days, government would wait for commerce to be able to do their budgets because it was seen that the prosperity of business dictates how far you would go and what was government for then? It was to protect the environment and people – they were not doing business, but then, over time, money came in and government was in charge of petrol dollar. They looked beyond waiting for taxes and duties, they now had a source of wealth on their own.
How healthy an economy is depends on the political environment because when you do your projections, the government is not going at the same pace with you, you could be working at cross-purpose. That also gives us a big challenge at our own time when we now have to see how we will navigate through this difficult terrain. I would also say that in recent times, we have a government that recognizes business – at least we can talk to them, they listen to us, they see it as positive criticism. They don’t see it as them and us.
We talked to the government about ease of doing business and they listened to us. It is now being chaired by the VP. We have access to them and we tell them the problem that we have they also have a sub-unit in that office that deals with different session of business and we are doing well. The only thing is that at the early stage we were not able to reach out; people don’t really know much about what we are doing; and people don’t know that those things are there but we are getting there and hope it will continue to get better.
You know we have various chambers in Nigeria but the LCCI has been the leading factor. What are the unique things that make LCCI unique among all chambers?
The secret is that most of the chambers we have in Nigeria are promoted by government. State governments, for instance, and they have this government involvement in putting together such chambers. So, when you have government putting a chamber together, it is very difficult to be independent which is not so in our own case. It is difficult to start a chamber taking into consideration the mentality of our people.
Can you shed more light on the national body that was put together and what was the motive behind it?
NACCIMA was created and founded by the Lagos chamber, we worked with them and act as mentors to those who come around and encourage them and I think some of them are doing very well but then, the factor of not knowing that you must put your money where your mouth is comes to play and the problem of looking out for immediate value in something are things they need to get out of, and I always tell some of them to be independent of government as much as possible. Being tied to the apron string of a ministry of commerce somewhere before they can do anything is not good and should be avoided.
Looking at the current view on Nigeria economy towards economy diversification, what are your views looking at the current situations?
One will say we are making some progress but then they are low side of it. We have this problem of infrastructural decay which is making us to spend money on everything we have to do. In your private life you have to provide your own water, security; you have to think how to get from point A to B. Those are to be in the realms of social service. For a business man, you also have to contend with high cost of funding, if you have to go and borrow to do business, you are talking of two digits and that’s not the fault of anyone it’s just the economy where we have found ourselves but as a people we have not managed our resources very well and the level of inflation too determines the cost of funding.
So if government is doing double digit borrowing by the way of Nigeria Treasury bill, there is no way there will be a single digit. With double digits, borrowing is very difficult for you; you can only do things that are short term and then be profitable, if not you will find things difficult. We have corruption that has even gotten us to where we are. But the good thing about it is that we are at the peak of it, people are talking about it, people are making attempt to solve those problems. We look at what is happening in power, the problem of power is not even the generation because we generate actually what we can’t distribute. There’s lack of capacity to distribute because of the ageing infrastructure. These are the factors that are identified and things are being done; we are talking of mass transportation, agric.
Also we have to be sincere government should have to be at the vanguard of patronising made in Nigeria goods. And as Nigerians we should be patriotic enough to patronise made in Nigeria goods.
We create jobs by producing what we use locally, unfortunately, what we can boast of currently is crude oil. Crude oil does not create more employment as you get from manufacturing, even in Agric. So we need to patronise what we have, interestingly, for instance in Ghana, Nigeria goods are cheaper in Ghana. We don’t realise what God has given us as people, we are always looking beyond this land we don’t have confidence in it. The Asians are doing what we don’t want to do; they are into farming in large scale. Even this manufacturing we are talking of we have them there. So there is something they are doing right that we are not, it also has to do with the way we organise our lives, approach to business. We have a CEO riding expensive vehicles; they don’t even have vehicles for operation. You have factory outside Lagos and you want to live in Lekki but if it is an Asian, he will live there. So we have attitude problem to business. So we don’t realise what God has done for us, we keep on complaining. People are coming in to take over our economy because we have what they need as a country which we don’t see or value.
We should have maximum orientation to take advantage of it. We have a good economy and we need to fight corruption in every sector. The country is potentially great and we need to face some facts. You can’t subsidise consumption and get growth, you can only subsidise production. It is even more vulnerable to exploitation and corruption. When I look at our budget, we have 305 billion naira for fuel subsidy, that’s money that should be directed to some other things like production that can create employment. People buy fuel but the poor are not affected directly because the vehicles that they use, use diesel (AGO) and is deregulated. We need to take hard decision and also spend money on human capital development training in skills, because we go outside the country to bring in vocational skills worker. We need to focus on human capital development. The problem we also have is we do more of politicking, because politics has influence on our business terrain. That’s why we say government has no business in business. They should just set standard and regulate, they shouldn’t be in business. There’s a bureaucracy that take a big chunk of what is meant for business. Running cost takes a big chunk in business. These things affect the economy and also affect us as a people and its pull business down.

On area of gender equality, how is the chamber faring?

Yes, we are very mindful of that, my past president is a lady and my deputy is also a lady. We are very gender sensitive. Of course, we operate in international space and that is something that comes up when you are doing peer review. They want to know what position you have for women. In the real sense we are in business and business does not talk about gender. We have a very strong women group, which is one of the focused groups and they are doing fantastic well. And then we also mentor young ones too.


What are you doing to revive the moribund textile sector?
What is affecting textile basically is not an isolated thing from what is affecting our industry. The textile companies went moribund because of the harsh economic environment. Let’s take power for instance, they don’t have power. They could not replace their engine equipment due to funding challenge that we talked about earlier. There was a time when those who are cultivating cotton realised it was no longer profitable; they moved to other areas. Some were rearing bees at a particular time and I am sure now they will be doing rice.
It is imperative for Government to go back and do backward development, and let us rejuvenates these textiles factories and let us see how we can produce what we need, and of course Government also needs to patronize the textile industry. We all need to be sincere about this because we all know the reason why they went moribund, it was because they never had good patronage and they could not compete with imported items. Even though it is not possible to solve all the problems of textile industry in isolation, if we solve the problem of manufacturers we have solved half.
And how do you balance your personal and professional life?
I always believe that what is worth doing at all is worth doing well, i am not different from anybody of my own generation. My own type of growing up, we were not pampered; some of the indulgence that people kept now, can only be done if you are a rascal. I came from a very disciplined background, the type of training had as an audit training also folded me, and it prepares you for life.
I solidly believe in hard work, and i also try to be quiet, i do not impress people rather i always want to be myself, balancing the two has been easy i mean coping with this modern days is not very tasky, you could feel bored if you do not have things to do, you know a lot of activities that you are subject to.
If you were to make three wishes, what would they be?
I wish for Nigeria to be a better place for us, and also for Nigeria to attain its potentials. But you know we cannot achieve this unless we take money out of politics.
I wish we can get it right as a people. Nigeria is my problem, and also our problem because I know we can do better than where we are today, God has blessed Nigeria, He just need to help Nigeria.

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Nigeria’s capacity to attract investment enormous: Hamda Ambah

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Nigeria is a massive country with a projected population of over 180 million people and diverse natural resources. The human capital is highly mobile and very enterprising, resilient and ready to take up challenges if given the slightest opportunity and the necessary infrastructure. However, the country is overwhelmed with infrastructure deficit which has slowed the developmental process over the years. Nowadays, these challenges are becoming good investment windows for ingenious and astute investors both from within and outside the country. Currently, a new set of corporate organizations are springing up to change the narrative and drive the much needed impetus to take the country and indeed the African continent to the high point of economic development. Some of these companies were recently recognized by the London Stock Exchange Group, and tagged; “Companies to inspire Africa 2019’’.

FSDH Merchant Bank Limited, a leading merchant bank in the country and one of the companies recognized by the LSEG, led by Mrs Hamda Ambah, is one of the companies making Nigeria proud and inspiring others to stand out. Commenting on the LSEG recognition the FSDH boss said it’s a vote of confidence in the bank’s operational model.

“I think what is important for us in FSDH is – because there are many banks, many financial institutions and ultimately we are all trying to deliver financial services to our clients – that there is need to differentiate ourselves. What sets us apart is the focus that we put on integrity and for us, integrity is not just about ‘not stealing’ (obviously integrity precludes us from stealing), it is also about being truthful to the client and putting the client first. What do I mean by that? If the clients ask for our advice on transactions which we consider not to be in their interest to do, even though there’s an opportunity to do something that can make us a lot of money at that time, we will tell them not to do the transactions. We may be a small firm, but we value relationships. Our customer outlook is fostering a relationship that will be retained for years, so we don’t have to try and collect every kobo today. If the relationship lasts, the value of a long term relationship will always be much more than a
transactional relationship. So for me it’s important for our client to trust us. In our environment, trust doesn’t come naturally, because people and situations will test you”, she said.

Over the years, the FSDH Group has become a financial services supermarket that delivers expert financial services in the Nigerian market to its select clientele, thereby assisting them to create long term sustainable wealth.

On innovations the bank has brought to fore, Mrs Ambah revealed that her firm structured its balance sheet differently in a manner that gives room for liquidity. This, she said, makes it easy for asset conversion to raise liquidity. She pointed out that “securitizing assets is very important because it makes the balance sheet liquid and enhances our ability to do more transactions. Then our assets and liability management has to be second to none. We are constantly watching the numbers, so we are not running undue risks. But ultimately success comes from satisfying our customers. We have a belief that it is the customers that guarantee our continued existence and ultimately, our view is that it’s not about getting deposits, it is finding out what your customers’ needs are, finding out what proposition or products you have to satisfy that need. Once you have the customer with you, the deposits will come”, she said reassuringly.

To her, Nigerians are very enterprising people blessed with ability to work and be diligent, stressing that this strong signal tells the world that Nigeria as a country is open for business.

“We have huge capacity; we are a country with huge potential also with our variety of cultures and natural resources. The one thing that is going for us is we have the population; depending on how we treat it, it should be strength but if we are not careful it could become a weakness” she pointed out.

Referencing MTN’s investment in Nigeria as evidence of the business opportunity offered by Nigeria, Mrs Ambah said, “I am very proud to recall that when they came to Nigeria, FSDH as a discount house then, was a member of the first syndicate that funded their start-up operations. When we reviewed the projections, they were amazing and let us give credit to MTN because when those licenses were auctioned at $285 million, it took a lot of guts to invest that kind of money. Other foreign companies dropped out because they had a negative perception of the country. Guess what?, in the first six months of operating in Nigeria, we asked them if they were having any problems; they said the problems they were having were not the ones we were anticipating. Their problem was that if they put a base station on ground today by 10am, by 2pm it is congested! So the equipment they thought would last them one year was overstretched within three months. The demand was far in excess of the most optimistic projections. That is th
e type of problem any business person would love to have. They have succeeded in making money but had to be bold to make that investment in the first place”, she said

FSDH Merchant Bank’s journey to becoming a merchant bank started when the Central Bank of Nigeria revoked all universal banking licenses in 2009 and created a new banking structure in the country. Under the new structure, banks were categorised as commercial or merchant banks. Prior to the creation of the new structure by the CBN, FSDH had – through its subsidiaries – developed the structures required to offer the full range of merchant banking services (to the extent permitted by regulation).

At FSDH, this change was recognised as an opportunity to expand the scope of operations while retaining a focus on the core activities in order to serve customers better. As a result, the company applied for a Merchant Banking license from the CBN which was granted in November, 2012. FSDH Merchant Bank Limited was one of the first merchant banks to be awarded a license in Nigeria in this new era.

“I think I’m very fortunate to have a very capable and professional team here. This refers to the staff and the board of directors. The tone that is set by the board of the directors is such that everyone is in support of the direction that has been determined and we are all working collectively to achieve the lofty aspirations of the bank.

Source: Vanguard

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Elsewedy Industrial Development’s total land bank reaches around 25m sqm in 2019

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Elsewedy Industrial Development’s land bank in Egypt increased by 15.4 m sqm in 2019, reaching around 25 m sqm as a total,  which is the largest land portfolio owned by an industrial development company in Egypt, the CEO of Elsewedy Industrial Development, Mohamed Al Kammah, explained in an interview.

He added that more than 70% of the firm`s lands are sold.

How many factories have you established in your industrial zones?

Currently, Elsewedy Industrial Development’s industrial zones have more than 150 contracted factories.

The company has several industrial zones; could you please tell us more about their spaces and the number of factories in each one?

The firm’s-owned industrial development portfolio includes: 10th of Ramadan (PI Parks) which is on an area of 4 m sqm. The second one is Al Oula Park in Sixth of October on an area-of 1 m sqm. The third one is located in the Sadat City on an area of 1.4 m sqm. Then there is Al Alamein on an area of 2.6 m sqm. As for the Suez Canal Industrial Zone, it is established on an area of 10 m sqm (acquired on a usufruct basis).

Concerning the number of factories, I could say that the number of the contracted manufacturers to set up factories in our industrial zones, either with their factories already established or still under construction, amounted to 41 in the Sixth of October industrial zone (Al Oula).

While the contracted manufacturers in 10th of Ramadan recorded 98 manufacturers in PI Parks East, while in the PI Parks West we have 33 manufacturers.

Did the utilities enter all your industrial zones?

No, only 7 m  sqm of our industrial zones’ land have witnessed the entrance of the utilities, while the majority of the rest of the lands are not utilised as we still did not receive them.

Are there any promises from the IDA about the date to receive the rest of the lands?

There are promises to receive in April an area of 5.4 m sqm of which, we will receive 4 m sqm in the 10th of Ramadan, in addition to 1.4 m sqm in Sadat City.

Has the firm withdrawn land from non-serious investors?

Most of our investors are serious and committed to the timeframes and the periods allowed by the Industrial Development Authority (IDA). Yet, the case was different with only two investors thus we have took back the lands from them and re-offered the lands again due to the huge demand and requests.

Could we estimate the space of the withdrawn lands?

We have withdrawn over 20,000 sqm in the 10th of Ramadan, in addition to 18,000 sqm in the Sixth of October.

Who are the most prominent investors in your industrial zones?

The company has attracted a number of international companies such as L’Oreal Paris for cosmetics, Jotun, KAPCI Coatings, Mintra, Iskraemeco, Nissan, Padico International and many others to set up factories at the company’s industrial zones.

Through the firm’s industrial zones, how many direct and indirect jobs did it provide?

Elsewedy Industrial Development provides about 125,000 direct jobs and 250,000 indirect jobs to the local market through its current industrial areas.

Moreover, I want to mention that the firm is expected to provide around 100,000 additional jobs through the industrial zones that are under construction.

What are your new projects?

The company started to expand horizontally by contributing to the establishment of industrial projects in different regions within Egypt. In the city of 10 of Ramadan, we have an integrated industrial city on an area of 4 m sqm. In addition to that, we plan to establish an industrial zone on an area of 1.4 m sqm in Sadat City. Also in Ain Sokhna (Suez Canal Zone), we plan to establish an integrated industrial city on an area of about 10 square kilometres.

What are the firms’ targeted areas?

The industrial development sector targets the developmental axis in Ain Sokhna as well as the Suez Canal and Ismailia.

In the next phase, it aims to study and target the development axis in Upper Egypt between the new cities, in order to provide them with an integrated industrial and residential backbone.

Furthermore, the company aims to develop the logistical infrastructure in all governorates of Egypt, through studying and establishing the logistics and commercial centres at all Egyptian governorates.

In general the firm took its lands as a usufruct (right to benefit) or through licences?

All the company’s lands are free owned except the new project of Ain Sokhna, which is on area of 10 m sqm.

Concerning the new project in Ain Sokhna, what are your targeted industries in this area?

In general, Ain Sokhna targets the heavy and medium industries. Therefore, through this area, we aim to attract more foreign investments.

Did the decision of the pound flotation increase the prices of the utilities entrance?

Yes, the pound flotation doubled the prices in general, but the company bore part of this increase, and raised the prices of its lands by only about 25% after the pound flotation.

What about the prices increase this year?

This year, I think the price increase rate is normal due to the inflation. We increased the prices of the lands this year by about 10% to 15%, compared to 2018.
I want to highlight that this increase rate is normal given the monetary policy that has modified the situation and limited the dealing in parallel markets. The Egyptian pound also expresses the actual purchasing power and a natural result of the current inflation rates. The state is now adjusting the current situation, through providing expansion projects and ensuring a moderate investment climate, which in turn will improve the economic climate in Egypt.

Finally, how do you see the state of the Egyptian market?

The Egyptian market is a promising market and a catalyst for domestic and foreign investment, especially in light of controlling the exchange rate’s volatility and the direction of the rise of the Egyptian pound against the dollar, and in light of the successful policies followed by the monetary policies of the Central Bank of Egypt.

The rise in Egypt’s credit rating is a guarantee of investment inside Egypt and a safe haven for foreign investors to invest in Egypt.

Also, the availability of energy sources, especially electricity and renewable energy, promotes this, as well as the lower energy consumption tariffs than those of neighbouring countries.

Moreover, I want to highlight that the new Investment Law is aligned with the decision of the pound flotation, with both aiding in attracting foreign investments.

On the other hand, I think that the government could attract more foreign investors if the concerned bodies would announce a clear plan for the offering of the lands, in addition to implementing some modifications regarding some points in the new Investment Law, as investors need some clarifications or have suggestions on some points. Moreover, there should be more coordination between the private and the public sectors.

Source: Daily News Egypt

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