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Exit of Nigerian manufacturing firms necessitates policy review T ODINAKA ANUDU

he number of manufacturing companies silently shutting down or exiting Nigeria is rising by the day, underlining the need for a comprehensive review of some of the policies guiding this sector.

Recently, Grif, maker of aluminium drums, exited Nigeria because the company could not get annealed

cold-rolled steel which was its key raw material.

The cold-rolled steel is one of the items on the Central Bank of Nigeria’s list of 41 items banned from accessing foreign exchange since 2016. Yet, as of today, nobody manufactures annealed cold-rolled steel, meaning that the company lost its rhythm as it could neither import nor source the essential input locally.

Also, Federated Steel from China,

maker of iron rods, has exited Nigeria and sold its assets to MNIL Limited.

Another iron rod maker, Universal Steel, has shut down. Sources close to the company attributed its closure to smuggling and unbridled import of iron rods, which come 20 to 30 percent.

“When you import plain aluContinues on page 34

Market I&E FX Window CBN Official Rate Currency Futures

($/N)

fgn bonds

Treasury bills

Spot ($/N)

3M

361.20 307.00

-0.24 11.68

NGUS jul 24 2019 361.06

6M

5Y 0.00

0.10 13.47

14.47

NGUS oct 30 2019 361.51

@

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10 Y 20 Y -0.01 -0.04 14.55

14.57

NGUS apr 29 2020 362.41

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Nigeria loses big on continued outsourcing of passport booklets

…as scarcity of document persists …NIS denies scarcity IFEOMA OKEKE & MICHAEL ANI

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igeria could be losing big as Africa’s most populous country has continued to outsource the printing and production of international passport booklets for its citizens.

This is despite a directive by President Muhammadu Buhari that production of passports should be domesticated.

Continues on page 34

Inside L-R: Ademola Adebise, managing director, Wema Bank; Tina Vukor-Quarshie, non-executive director; Abubakar Lawal, non-executive director; Moruf Oseni, deputy managing director, and Adebode Adefioye, non-executive director, at the bank’s annual general meeting in Lagos, yesterday.

House sits on N873.5bn Lagos 2019 budget one week after passage P. 2

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news Tribunal sets dates for hearing Atiku, 3 others’ petitions against Buhari’s victory Felix Omohomhion, Abuja

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he Presidential Election Petition Tribunal on Wednesday set date for the hearing in the petitions filed by candidate of the People’s Democratic Party (PDP) in the 2019 presidential election, Atiku Abubakar, his party the PDP, and three other political parties and their presidential candidates against the victory of President Muhammadu Buhari and his party, the All Progressives Congress (APC), in the February 23 presidential election.

The tribunal adjourned petitions of Atiku and PDP against Independent National Electoral Commission (INEC), Buhari and APC to May 15.

The tribunal appealed to the litigants to shun actions that may put the panel in a negative light.

Atiku and three other presidential candidates are challenging the outcome of the February 23 presidential election in which President Buhari was declared winner by INEC. Justice Zainab Bulkachuwa, chairman of the fivemember panel, who made the appeal at the special sitting of the panel, specifically warned counsel and parties in the various petitions to avoid discussing daily proceedings of the tribunal in the media and other public space.

Bulkachuwa also warned

Apapa Trailer Park: Still empty and uncompleted days after government assured that trucks would be made to use it as transit park for trucks that have business to do at the Tin-Can Island Port. The trailer park is today one of Nigeria’s oldest Lily Pond Terminal: Opened by the Nigerian Ports Authority last Friday for trailers and tankers. construction sites.

Pictures by Pius Okeosisi

Hope dims on housing roadmap FG loses case of illegal oil export as Buhari’s 1st tenure nears end Continues on page 34

claims against Eni, Petrobras

…to appeal before end of Thursday

DIPO OLADEHINDE

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Federal High Court sitting in Lagos on Wednesday dismissed allegations of illegal exportation of crude oil to the United States made

by Nigeria’s Attorney-General (AGF), Abubakar Malami, against the local units of two international oil firms, Eni SpA and Petroleo Brasileiro SA. President Muhammadu Buhari’s administration, in a lawsuit filed in 2016, sued the companies as well as the local arms of Chevron Corp., Royal Dutch Shell plc and Total SA, claiming they failed to declare or under-declared 57 million barrels of oil shipped to US ports between 2011 and 2014, according to court documents.

But Justice Mojisola Olatoregun said Wednesday in Lagos that the Nigerian government could not provide evidence to back its lawsuit against Agip, a subsidiary of Eni, and Petrobras’ Brasoil, according to Reuters.

“The court did not agree with our position,” Reuters quoted Ituah Imhanze, a lawyer who represented Nigeria’s government in court, to have said.

Imhanze added the government would file an appeal by the end of Thursday.

Representatives of Eni and Petrobras did not immediately respond to an email requesting comment.

The cases against Chevron, Shell and Total are ongoing, although they have denied any wrongdoing.

The government had accused the oil companies of short-changing it by allegedly shipping several barrels of

crude oil out of Nigeria without making due remittance to the government. As such, the government is now seeking the help of the court to recover almost $12 billion in what it termed missing crude oil revenue.

In February this year, Africa’s biggest oil producing country ordered International Oil Companies (IOCs) to pay nearly $20 billion in taxes owed to local states.

The accusation came after the Federal Government and states government settled a dispute over the distribution of revenue from hydrocarbon production. The sides agreed last year that Abuja would pay the states several billion dollars, three company and government sources said.

These new directives by the Nigerian government have been widely observed by industry experts and members of the foreign community as a shakedown by the government.

Nigeria, a member of the Organisation Petroleum Exporting Countries (OPEC), produces an average of 2 million barrels of crude per day but could pump much more under the right regulations and international investment.

With a GDP of over $376 billion, oil remains the country’s chief source of income, accounting for approximately 56 percent of state revenue and 95 percent of its foreign exchange earnings.

Oil is the heart of Nigeria’s economy, but that heart is not entirely healthy. Nigeria’s state-dominated oil industry is declining, afflicted by systemic corruption, starved for international investment, and hit hard by weak oil prices. www.businessday.ng

CHUKA UROKO

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very robust roadmap on housing was one of the early policies and programmes of the Muhammadu Buhari administration that Nigerians, especially those in the lowincome class and still in the housing market, welcomed with high expectations. But as the clock ticks for the end of Buhari’s first tenure, these expectations are waning.

The roadmap, which focuses on home seekers who are in the majority and those who are most vulnerable,

places much premium on planning which, the government reasoned, was key to successful execution, requiring a clear understanding of those for whom houses are to be provided.

Nigeria’s housing market is populated by an army of low-income earners which explains the wide housing demand-supply gap estimated at 20 million units. Again, the clan of people considered to be vulnerable – people that are generally incapacitated one way or another – is large in the country.

This was why the roadmap raised much hope, but with a few weeks to the end of Bu-

hari’s first term in office and little or nothing done to cater to this class of people, hope on the roadmap is dimming with each passing day.

“The roadmap was well conceived and conveyed by the minister of power, works and housing, Babatunde Fashola, but like anything in Nigeria, it is always easier said than done,” said Yemi Madamidola, a real estate manager. “Here, government finds it hard to walk its talk and this is why we don’t get anything done.”

Madamidola noted, however, that since Buhari was coming back for a second term in office, there was need to fol-

low through the roadmap in order to deliver housing to those in that class who would never be able to afford what was on offer in the open market.

Though Johnson Chukwuma, a structural engineer, applauded the roadmap, saying government’s intervention in the housing sector was long overdue, Adetokunbo Ajayi, MD/CEO, Propertygate Development & Investment Company plc, warned that government should trade cautiously with the roadmap.

“Government should avoid the temptation of getting into

Continues on page 34

House sits on N873.5bn Lagos 2019 budget one week after passage ...keeps Ambode waiting 3 weeks to exit date JOSHUA BASSEY

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ore than one week after the Lagos State House of Assembly (LAHA) passed the state’s 2019 budget of N873.532 billion on April 29, the lawmakers have yet to transmit the appropriation bill back to the executive arm of government for the governor’s assent.

A member of the state executive council (exco) confirmed to BusinessDay on the phone that the budget was yet to be transmitted to Governor Akinwunmi Ambode, whose tenure comes to an end on May 29.

Until the appropriation bill is signed into effect by the governor, it cannot be implemented as it will amount to a breach of the constitution to draw from the budget, BusinessDay gathered from conversations with legal experts.

Although the 2018 budget subsists till end of May this year, the delay that has so far characterised the 2019 appropriation

law in Lagos, with Nigeria just emerging from an election, is indeed taking a toll on the state as some projects provided for in the budget remain stalled.

There is also a general lull in governance in Nigeria’s biggest state economy. Checks in the various ministries, departments and agencies (MDAs) show little is happening, even as some programmes peculiar to certain ministries and planned for the first quarter of the year have either been cancelled or postponed indefinitely for lack of funding.

No official reasons have been offered by the state legislature on why the budget hasn’t been transmitted to the executive. Calls and text messages to the GSM phones of Mudaishiru Obasa, speaker of the House, and Funmilayo Tejuosho, chairman, House Committee on Information and Strategy, at about 12:49pm and 12:46pm, respectively, on Wednesday seeking explanations were yet to receive responses at the

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time of this report.

A source, however, told BusinessDay that the Lagos State House of Assembly has a standing instruction from the powers that be in the state not to transmit the budget to Ambode. The source further alleged that the House was even scolded for having passed the budget in the first place.

The legislature passed the 2019 budget of N873.532 billion on April 29, after raising it from N852.317 billion originally presented to the House by Ambode inFebruary.Thebudgetconsists of N479.691 billion capital expenditure and N393.841 billion recurrent expenditure.

“The governor cannot sign what hasn’t been sent to him.

When the budget is transmitted to the executive, the governor will study it and sign,” said the state exco member.

He added, however, that the delay in the budget was not to the interest of the economy as public spending has positive multiplier effect on private businesses and em@Businessdayng

ployment generation.

When contacted on the issue, however, Olusegun Banjo, Lagos State commissioner for Economic Planning and Budget, said, “We will get back to you on the budget.”

Adetokunbo Mumuni, legal practitionerandexecutivedirector, Socio-Economic Rights and Accountability Project (SERAP), in an interview with BusinessDay, said it remains unconstitutional and illegal to draw from the budget unless signed.

Mumuni added, however, that if for any reason the governor does not sign the budget before exiting office on May 29, the incoming governor would have to sign it to be able to spend it legally.

Beforepassingthebudgeton April 29, the lawmakers had devoted time to interrogate some of Ambode’s ‘legacy projects’, including the Oshodi Transport Interchange(OTI)andpurchase of 820 new buses under the Bus Reform Initiative (BRI).

•Continues online at www.businessday.ng

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NEWS Mass retirement looms in Edo public service ‌ as state cancels 60 years mandatory retirement age IDRIS UMAR MOMOH & CHURCHILL OKORO, BENIN

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ass retirement of staff loom in the Edo State public serviceasthestategovernment has reversed the 60 years mandatory retirement age policy.

The 60 years mandatory retirement age policy was initiated and implemented by the Adams Oshiomhole-led government on October 3, 2014.

The policy made it optional for staff in the state employment that had spent 35 years in service, but had not attainedthemandatoryageof60years

to remain in service until they attain the 60 years mark.

A recent circular dated May 6, 2019, and signed by the Edo State Head of Service, Isaac Ehiozuwa, noted that the strict implementation of the 2014 retirement age policy resulted to challenges, which were in direct contravention of some laid down establishment regulations.

Ehiozuwa said the state governor, Godwin Obaseki, had approved a reversal of the 60 years retirement age to 35 years.

He,however,directedtheaffected officerswithinonemonthofthenotice

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to proceed on retirement with effect from May 6, 2019, the date the circular was issued.

Accordingtothecircular,Godwin Obaseki has approved a reversal of the circular letter No Hos 35/T3/44 of October 3, 2014, which relaxed the mandatory retirement of officers on the attainment of 35 years in service. “By the content of the circular letter, it became optional for officers who had spent 35 years in the service, but had not attained the mandatory age of 60 years to continue to remain in service until they attained the age of 60 years.

Anxiety heightens for 1.8m candidates as JAMB lingers to release UTME result KELECHI EWUZIE

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ecision by Joint Admissions and Matriculation Board (JAMB) to delay the release of the 2019 Unified Tertiary Matriculation Examination (UTME) has heightened the anxiety of over 1.8 million candidates that sat for the examination.

The unusual delay has, aside frustrating the preparation and academic plans of most candidates, provided a leeway for dubious mercenaries operating Computer

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Based Test (CBT) centres to deceive and dupe unsuspecting candidates seeking solution.

BusinessDay investigations reveal that carrying capacity in tertiary education institutions in Nigeria has not significantly improved in relationship to the exponential growth in the number of candidates seeking tertiary education in Nigeria.

Tertiary education institutions in Nigeria include, but not limited to, the universities, colleges of education and polytechnics. In the 2019 UTME, over 1.8 million candidates

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sat for the examinations, with the spaces available not more than 500,000.

Fabian Benjamin, public relations person for JAMB, says the board will carry out all the necessary steps before releasing the result, saying JAMB will not release the result instantly because JAMB Registrar had discovered that public outcry over little delay in the release of result made it a little bit difficult to do things that would guarantee the credibility of the result.

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NEWS

NIMASA in talks with Customs, Finance Ministry on special tariff for vessel acquisition FRANK UZUEGBUNAM, Houston, Texas

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he Nigerian Maritime Administration and Safety Agency (NIMASA) has disclosed plans by the Nigeria Customs Service (NCS) and the Ministry of Finance to create a special tariff for vessel acquisition. Dakuku Peterside, directorgeneral of NIMASA, stated this on the sidelines of the ongoing Oil Technology Conference (OTC) in Houston, Texas, USA. “The high cost of vessel acquisition is gradually edging out a lot of indigenous players in the maritime sector,” Peterside said, adding that NIMASA was going all out to reverse the trend.

He explained that the agency

was already in talk with the NCS and the Finance Ministry to ensure that a special tariff window was created for vessel acquisition, as part of efforts to build capacity and create jobs for Nigerians in the maritime sector.

He decried the situation whereby foreign vessels pay a paltry 1 percent for temporal import permit to bring vessels into the country to do their business and go away, and their indigenous counterparts who were not operating the vessel on temporal basis pay 13 percent was a disincentive to local operators. ‘‘The maritime sector is a capital intensive one and the cost of accessing fund is equally high.

So, to encourage our indigenous players to compete favourably

with their foreign counterparts, we must ensure that we crash the cost of doing business. And that is why we are engaging the Customs and the Finance Ministry on a special tariff for vessel acquisition.’’

He disclosed that talks are at an advanced stage by NIMASA and the Central Bank of Nigeria (CBN) to arrange a single digit interest rate for vessel acquisition.

The acquisition of the vessel at single digit interest rate, according to Peterside would go a long way in increasing the number of vessels owned and operated by indigenous operators.

On Cabotage Vessel Financing Fund (CVFF), the NIMASA DG said that the agency is currently reviewing the guidelines for ac-

cessing the CVFF. The CVFF is a two-per cent deduction backed by law, for every carriage contract, from shipping operators. ‘‘We are also supporting our local players in other areas. Ultimately, we want to grow the Nigerian tonnage and encourage more Nigerians to own vessels and be active in the industry. We want more persons to be skilled and employable in the industry. ‘‘ I think the bigger picture is to secure the funds so that more Nigerians can be able to access the fund which has swelled to over $150 million. This money should be able to help us crash the cost of accessing funds in acquisition of assets and building infrastructure for the maritime industry.’’

L-R: Ifueko Omoigui Okauru, chairman, board of trustees, Lagos State Employment Trust Fund (LSETF), and C.D. Glin, president/ CEO, US African Development Foundation (USADF), at the signing ceremony of a $10m partnership aimed at providing skills training, internship and entrepreneurship opportunities for youths in Lagos.

March global passenger demand growth slows on later Easter holiday IFEOMA OKEKE

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nternational Air Transport Association (IATA) has announced global passenger traffic results for March 2019, showing that demand (measured in revenue passenger kilometres, or RPKs) rose 3.1percent, compared with the same month a year ago, which was the slowest pace for any month in nine years.

This was largely due to the timing of the Easter holiday, which fell nearly a month later than in 2018. On a seasonally adjusted basis, the underlying growth rate has been relatively steady since October 2018 at a 4.1 percent annualised pace.

Capacity (available seat kilometres or ASKs) for the month of March grew 4.2 percent and load factor dropped 0.9 percentage point to 81.7 percent.

“While traffic growth slowed considerably in March, we do not see the month as a bellwether for the rest of 2019. Nevertheless, the economic backdrop has become somewhat less favourable, with the IMF having recently revised its GDP outlook downward for a fourth time in the past year,” Alexandre de Juniac, IATA’s director-general/ CEO, said.

March international passenger demand rose just 2.5 percent compared with March 2018, which was down from 4.5 percent year-on-year growth recorded in February and al-

most 5 percentage points below its five-year average pace. All regions showed growth, with the exception of the Middle East. Total capacity climbed 4.0 percent, and load factor fell 1.2 percentage points to 80.8 percent.

African airlines’ demand increased 2.1 percent compared to March 2018, down from a 2.5 percent rise in February.

Capacity climbed 1.1 percent, and load factor strengthened 0.7 percentage point to 71.4 percent. The upward traffic trend has softened since mid2018 in line with falling business confidence in some of the region’s key economies.

European carriers saw March demand increase 4.7 percent over March 2018, down from 7.5 percent annual growth in February. The result partly reflects falling business confidence in the Eurozone and on-going uncertainty about Brexit. March capacity rose 5.4 percent and load factor slid 0.6 percentage point to 84.2 percent, which still was the highest among regions.

Middle East carriers’ passenger demand fell 3.0 percent in March, marking a second consecutive month of declining traffic. This reflects the broader structural changes in the industry, which have been taking place in the region. Capacity increased 2.3 percent, and load factor plunged 4.0 percentage points to 73.8 percent.

Africa Fintech Foundry positions Nigeria as fulcrum for innovation Ö provides $10,000 Fintech start-up funding Jumoke Akiyode-Lawanson

LSETF, USADF in $10m partnership to support 15,000 youths in Lagos ODINAKA ANUDU

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n line with its mandate to provide employment and entrepreneurship opportunities for Lagos residents, the Lagos State Employment Trust Fund (LSETF) on Tuesday signed a memorandum of understanding (MoU) with the United States African Development Fund (USADF) to support 15,000 youths in the state.

Through this MoU, both parties will provide an equal sum of $2 million every year for five years ($10m in total) to provide skills development and internship opportunities to 3,000 youths between the ages of 18 and 35 yearly. Women will constitute at least 50 percent of the beneficiaries.

The signing ceremony, which took place in Washington DC, United States of America, had top executivesofbothagencies,members of the US Congress, partners and international media present.

Speaking during the signing ceremony, Ifueko Omoigui Okauru, chairman, LSETF’s board of trustees, expressed optimism on the impact of the partnership.

“This USADF-LSETF collaboration will enable the expansion of world-class vocational training centres available in the state and the development of 15,000

skilled youths for employment into targeted sectors. It will also provide internship in cost subsidies to employers and track realtime placement of unemployed youths into jobs,” she said.

In her remarks, Teju Abisoye, acting executive secretary, LSETF, said, “With the recent Labour Force Report by the National Bureau of Statistics (NBS) showing a 6.7 percent drop in unemployment rate as well as Lagos state providing the largest number of 740,146 jobs in the third quarter of 2018, it is obvious that deliberate employment intervention policies of the Lagos State Government are finally impacting on job creation. I am pleased to have USADF join us to create more jobs for our youths, while sustainably decreasing our alarming unemployment rate.”

C. D Glin, president/CEO of the United States African Development Foundation, stated, “We are proud to be in partnership with the LSETF, whose programmes have been independently verified to be making impact on the lives of young Nigerians. This USADF-LSETF partnership further expands our existing commitment to investing in high impact initiatives hinged on generating income, providing financial solutions and causing a change in the African economy.” www.businessday.ng

Edo 2020: Igbinedion throws weight behind Obaseki

... joins campaign to dislodge politics of greed in Edo

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overnor Godwin Obaseki’s sterling performance in the last two and the half years has warmed him into the hearts of opposition party leaders in Edo State, as a chieftain of the People’s Democratic Party (PDP), Gabriel Osawaru Igbinedion has thrown his weight behind the governor’s development strides, urging him to remain focused.

Igbinedion endors ed Obaseki’s performance when he paid a courtesy visit to the governor at the Government House, in Benin City, the Edo State capital, to invite him to the 20th anniversary celebration of Igbinedion University, Okada.

The endorsement comes as political gladiators jostle for candidates for different political parties in the gubernatorial election coming up next year in the state.

According to Igbinedion, Obaseki is doing well in developing the state, and urged him not to listen to sides talks, promising to join hands with him to defeat politics of stomach infrastructure in the state.

“Don’t listen to sides talks; we will join hands with you to defeat politics of stomach infrastructure in the state. We see

your performance. Remain focused and be silent. Just work, as the people will fight for you when the time comes,” Igbinedion said, expressly pledging support for the governor in the coming elections in Edo State.

He officially invited the governor to the 20th anniversary celebration of Igbinedion University, noting, “I am here to inform you that my University is 20 years old and I am inviting you to celebrate with us on Friday as we are the first private University in Nigeria.

63 persons collected the form to establish a private University but just nine of us filled and submitted the form. It took me nine years to fight and establish the University.”

The governor commended Igbinedion on his contribution to the development of the state, especially in the area of education, media, agriculture, among others.

“You set up the most successful secondary school in the country. I am not surprised at the success made so far by your University. You are a man of ideas, and ideas rule the world.

We are proud of you; hate or love you, you are an enigma and an inspiration to our generation,” he said.

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n a bid to unlock potentials in the financial technology ecosystem and position Nigeria as the meltingpointforinnovationandadvancementintheAfricancontinent, the Africa Fintech Foundry (AFF), an Access Bank initiative, has committedtoproviding$10,000funding for the most innovative start-up at its upcoming “Disrupt 2019; Digital Gold Rush” conference.

Speaking to journalists at the AFF head office in Lagos, Olusegun Adeniyi, head, Africa Fintech Foundry, said that the initiative whichisfocusedoncreatingopportunities for innovators in eduTech, healthTech, FinTech, AgriTech, RegTech and others, by providing incubation support to start-ups, will give a $10,000 prize to the best innovator at its AFF startup challenge during the conference on May 16, 2019.

Adeniyi said that 20 start-ups hadattendedtheAFFStart-upChallenge that was held on May 3, 2019 whilefivestart-upswereshortlisted.

He said the five start-ups representingfieldsintheareasofArtificial Intelligence (AI), Big Data, Robotics and Blockchain technology, were shortlisted for a demo that will take place during the ‘’Disrupt 2019 Conference.” ‘’AFF leverages on its extensive partnernetworksandrelationships to offer start-up cohorts access to markets, customers, funding, educational and mentorship opportunities. ‘’Successful start-ups are ex@Businessdayng

posed to a plethora of networking opportunitiestomeetventurecapitalfirms,angelinvestors,corporates and other qualified investors,” he said. ‘’Start-up cohorts from the AFF continue to receive on-going support post Demo-Day, as well networking opportunities with the extensive AFF partner network.” ‘’Start-ups also receive formal and informal referrals, voluntary quarterly check-ins and invitations to mentor current cohorts in the accelerator programme, and most importantly, continued access to funding,’ Adeniyi said.

Stakeholders have lauded the initiative saying that the AFF provides a test bed to showcase best practices for African-led Fintech solutions, as the growth of technology start-ups in Africa is very instrumental to the survival of the continent on a larger scale.

Adeolu Bajomo, executive director, Information Technology (IT) and operations, Access Bank, said that through the ‘’Disrupt 2019 Conference’’, the bank wants to position Nigeria as a melting point for innovation in Africa.

Bajomosaidtheconferencewas tobuildawarenessaroundAFFand position Access Bank as the most innovative African bank.

He said the programme would provideaplatformforstrategicpartnershipandcollaborationbetween Access Bank and investors, experts, regulators, innovators and technology companies to create a new era of technological disruption in the banking industry.

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comment Toward Japan’s Economic End-Game Dan Steinbock

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ver since Shinzo Abe started his second stint as Prime Minister, Japan has focused on positive economic signals, which has sparked futile hopes, including a bad sales tax proposition.

Japanese officials vow to stick to the planned tax hike in October (it has been delayed twice), barring a big economic shock. With the 2019 budget, Abe hopes to offset adverse impact of the sales tax by returning much of the extra revenue to consumers via $18 billion of offsetting measures, instead of faster debt-reduction.

But recently, the Cabinet downgraded its headline economic assessment for the first time in three years. Manufacturing, housing and retail indicators reflect signs of weakness, while first-quarter figures, expected in May, could show a contraction – especially as the impact of Trump’s tariff wars is spreading in Asia,.

Half a decade of Abenomics In December 2012, when the Liberal Democratic Party returned to leadership, Abe campaigned on renewed fiscal stimulus, aggressive monetary easing and structural reforms. The devaluation of the yen, critical to Japanese exporters, was the tacit denominator

of the proposed changes.

In addition to a huge liquidity risk, Tokyo took another risk in timing, as I argued then. It sought to implement the fiscal stimulus in 2013, while consolidation would follow. Obviously, unease increased in 2014. As Abe went ahead with the sales tax hike that spring, it triggered a sharp slump.

Instead of strong expansion, consumers were hit hard and Japan began its third lost decade.

Yet, recently, international observers have been remarkably optimistic. Last November, the International Monetar y Fund (IMF) reported Japan has had an “extended period of strong economic growth.”

As the growth rate, supported by huge monetary injections and rapidly-rising debt, increased to 1.9 percent in the fourth quarter of 2018, upgraded from preliminary data, and inflation seemed to be strengthening in early fall, the Abe administration began to flirt with another tax hike, again. “The sales tax hike to 10 percent is needed the most to secure stable financial resources to pay for social security for all generations,” says Finance Minister Taro Aso. That is a pipe-dream. Huge monetary injections and rapidlyrising debt will undermine Japan’s economic future.

E xcessive monetar y injections More than half a decade ago, t h e n e w g ove r n o r o f Ba n k o f Japan (BoJ), Haruhiko Kuroda, pledged to do “whatever it takes” to achieve the 2 percent inflation target. Under his reign, the BoJ boosted quantitative and qualitative easing with negative interest rate policy.

In 2018, BoJ’s bond and stock holdings topped 100 percent of

GDP. Now the BoJ is adjusting the pace of bond purchases so that its holdings would not surpass 50 percent of the GDP, which is seen to herald the eclipse of monetary accommodation.

In 2018, foreigners held an alltime high of 12 percent share of outstanding debt, yet most debt is in Japanese hands and in yens. In turn, falling rates in the U.S. and elsewhere have made Japanese bonds attractive, as long as their yields are not expected to fall much because of BoJ policy.

But times may be changing. At year-end 2018, the BoJ reduced slightly its holdings to 43 percent of all issued Japanese government bonds. It was the first quarterly fall in almost seven years. In the past five years, Japan’s government debt has climbed to 255% to GDP. As long as interest rates remain ultra-low, servicing it is affordable. But nothing lasts forever.

Moreover, the original target - sustained 2 percent inflation - has proved elusive and some argue that the BoJ’s purchases of exchange-traded funds (ETFs) are distorting the stock market.

Toward the defining moment Japan faces more urgently the same dilemma that today burdens most advanced economies: How to support high living standard with low or no growth?

In t h e p a st t h re e d e ca d e s, Japa n e s e l i v i ng st a n da rd ha s increased from over $30,000 to nearly $45,000. Yet, Japan’s trend growth has plunged from 5 percent to less than 0.5 percent - over 90 percent .

Nevertheless, the Organization for Economic Cooperation and Development (OECD), the advanced economies’ think-tank, is urging Japan to triple its tax to 26 percent to achieve a large primary

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Japan needs a national drive to reduce its gender income gap (it ranks110th in the 2018 Gender Gap Index) and another to attract far more immigrants

surplus, by spending cuts, tax increases and curbing healthcare services. In reality, such austerity could derail remaining support structures for growth, inflation and average prosperity in Japan.

Japan is the first advanced economy in secular stagnation, but others remain in the same path. Penalizing the remaining middle-classes and working people, while sustaining the kind of privatization, liberalization and deregulation, which led to the income gap in the first place, is foolish.

To re s o l ve st r u c tu ra l cha l lenges, a more realistic program is required to ensure fiscal sustainability, while raising productivity and reducing all unnecessary barriers to employment. But that’s only a start.

Japan needs a national drive to reduce its gender income gap (it ranks110th in the 2018 Gender Gap Index) and another to attract far more immigrants (with faster naturalization). In both cases, a change of magnitude is needed; policy nibbling will go nowhere.

And instead of rearmament, militarization and conflicts, Japan needs accelerated job-creation, economic development and regional cooperation.

As the world’s third-largest economy and the second-largest debt market, Tokyo’s future choices will have repercussions across the world - in good and bad.

• The original version was released

by South China Morning Post on May 1, 2019.

Dr. Dan Steinbock is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and the EU Center (Singapore). For more, see http://www.differencegroup.net/

Umaru Musa Yar’Adua: Remembering a great statesman Chima Christian

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ine years ago, Nigeria lost a great president. Umaru Musa Yar’Adua.

Compassionate. Genteel. Unassuming. He was loved.

Yar’Adua brought himself to transcend the barriers of ethnicity and religion. He was everything a complex Nigeria needed in a leader.

By acknowledging that the election that brought him to power was flawed, and making genuine efforts to improve Nigeria’s electoral process, Yar’Adua truly reflected the virtue of integrity.

Paradoxically, one of the greatest tributes paid to late Yar’Adua came from Gov. Adams Oshiomole. Said he in 2010; “In confronting the key challenges of the nation, he demon-

strated great statesmanship, which helped to re-focus the nation. Among this was the imperative of electoral reform, over which he took significant practical measures...”

Yar’Adua, as I remember him, had his shortcomings. Discrimination was not one of them. He would not use his exalted office to promote ethnic or sectarian agenda.

His commitment to a better, united and prosperous Nigeria was never in doubt.

Nepotism and incompetence, now elevated to statecraft, was far from him. He had people he could trust from all parts of the country. He didn’t claim it, but he belonged to everybody.

As cloudy as they were, the issues surrounding Yar’Adua’s last days on earth did not diminish him one bit. If anything, it is the people who saw an opportunity to exploit that got diminished. I remember Yar’Adua’s queenly wife Turai and the famed “cabals.”

Of a truth, power is transient.

Yar’Adua was loved. He still is. To this day, Umaru Musa Yar’Adua occupies a prominent place in the minds and hearts of many Nigeri-

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ans. Arguably though, no Nigerian President, dead or alive, has enjoyed that amount of goodwill.

Critics say his frail health and his passing away contributed in part to this status. They contend that he would have been unraveled or vilified had fate not come to his rescue.

Though not to be waved off entirely, such arguments casually overlook the fact that Yar’Adua was not the first number one citizen to pass on while in office. While the nation mourned him, it couldn’t bring itself to do same for the other. It is also instructive to note that the same people that prayed for Yar’Adua’s recovery are today offering dissimilar prayers for another.

Yar’Adua was a good man. He was a great statesman. History will be kind to him. It is already.

Though Yar’Adua is of a different persuasion, this hymn written by Dr. Horatius Bonar, of Edinburgh, and sang by Ira D. Sankey as a solo in London, at the funeral of the great preacher, C. H. Spurgeon, is befitting; 1. Fading away like the stars of the morn-

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ing, Losing their light in the glorious sun Thus would we pass from the earth and its toiling, Only remembered by what we have done.

Refrain Only remembered, only remembered, Only remembered by what we have done; Thus would we pass from the earth and its toiling, Only remembered by what we have done.

2. Shall we be missed though by others succeeded, Reaping the fields we in springtime have sown?

No, for the sowers may pass from their labors, Only remembered by what they have done.

3. Only the truth that in life we have spoken, Only the seed that on earth we have sown; These shall pass onward when we are forgotten, Fruits of the harvest and what we have done.

Sleep on dearly beloved Umaru Musa Yar’Adua.

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Thursday 09 May 2019

BUSINESS DAY

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comment Dear Nigerian businesses: Who is your market?

Send 800word comments to comment@businessday.ng

David Hundeyin

B

ack in 2015 when I still worked in Marketing on the agency side, I was part of a meeting involving a brand manager from a prominent brewery company. Said company was in the process of launching a new alcoholic beverage that was apparently going to blow the competition out of the water and smash sales records. The meeting was one of those ones where everyone was trying to sound intelligent in front of the client, so you would hear lots of something… something…“Organic Talkability…” something…something… “Estimated Reach…” something…something…“Target Audience Profile…” something…something…

“TOMA.” I must have sat through hundreds of such meetings at that point and in my typical style, I wanted to cut through the buzzwords and get to the point. So I asked a pointed question, “Who are we selling this drink to?” I wanted a clear understanding of who this target audience was, so that we could get down to figuring out how to achieve maximum market impact with our new product. The answer from the brand manager is why I am writing this article today.

Bear in mind that during my time in the UK, I had seen this very drink marketed as the drink of tough, working class bricklayers, satellite TV installers and window washers. In Nigeria however, it was to be presented as a “premium” drink – a sort ofcross between an award-winning San Francisco craft beer and the finest French Sauvignon Blanc, lovingly brewed to the sound of soft Alté music on a starlit Lagos

beach by a shirtless Richard Mofe Damijo.

“Pretentious” does not quite describe it.

Targeting nonexistent customers: A Nigerian obsession According to the brand manager, this drink – known around the world as a generic blue collar working person’s drink – was targeted at a professional Nigerian man or woman, aged 24 – 35, with a disposable income of at least N150,000 a month, who liked to “be part of a group and assert their individuality at the same time.” Putting aside the rather sad idea of buying a pretentiously branded drink in lieu of having an actual personality, what struck me was that this profile was based on absolutely nothing.

Where are all the 24 – 35 year olds in Nigeria with an annual disposable income of N1.8 million? A simple look around shows the very stark and obvious reality that the overwhelming majority of young Nigerians in that age bracket are unemployed or underemployed. Statistically, a Nigerian making N150,000 a month at the age of 40 is a very lucky person indeed. Even I, who just about fit the supposed customer demographic profile at that time, would certainly never have been found in a bar after work cradling a bottle of the overpriced liquor in question, desperately hoping it would give me some personality.

I would either drink something cheaper and less pretentious because of my tight budget, or I would go all out and spend a quarter of the month’s salary on something genuinely premium in a moment of early-20s bravado. In other words, the personality and demographic profile that the brand manager built the entire campaign on was nonexistent. We were trying to sell a product to a customer that did not exist. Unsurprisingly, the launch campaign flopped, and after a few months of underwhelming sales, said brand manager was quietly culled.

This is a common story across pretty much every major Nigerian consumer space. Today it might be a Nigerian car maker proudly announcing that its auto financing program enables people pay 25 percent of the list price of its N7 million

vehicles, and then pay the remainder over 48 months. No matter that anyone with N1.75 million in this economy is never going to spend it on a down payment for a tiny entry level sedan assembled in Nnewi –obviously, they would rather buy a used imported vehicle for the same money.

This is clear to everybody except the carmaker, which continues to advertise its “amazing” finance offer that nobody ever takes up.

Or it might be the rent financing startup that markets itself as the long-awaited solution to the problem of annual rental payments in Lagos, only to restrict its financing options to salary earners banking N200,000 a month and above. This base of N200,000/month jobs simply does not exist in any reasonable concentration anywhere in Nigeria, so this startup and hundreds of others end up competing for a tiny and shrinking slice of the total market, which means they can never really achieve any appreciable scale. But, premium. Because, you know,premium.

In my previous column, I described the phenomenon of real estate developers attempting to gentrify entire districts of urban Nigeria without any of the upward wage pressure or high paying jobs that should ordinarily support such price movement. In a country suffering dangerously low economic growth, with at least half of its population numbering among the very poorest people in the world, luxury real estate is clearly not an industry with good growth prospects. But who will tell the developers?

Everyone is furiously committed to building, manufacturing and selling products to a class of aspirational, welltravelled, cash-flush youthful, well-paid Nigerian consumers whose existence has never been proven. Where, pray tell, are they? Where are the dozens of millions of young bourgeois Nigerians making up this mythical “premium” market? I have never seen them. Have you?

Unlike Nigerians, facts do not lie On some level, perhaps one can feel some sympathy for Nigerian businesses that fall into the “premium trap.” Nige-

‘

If you are in charge of the market strategy of a Nigerian company, it would help to take a stroll outside of your airconditioned office space every once in a while, and experience the country the way most Nigerian consumers do

rians after all, are world champions at presenting themselves in a way that suggests they are better off than they actually are. Without reliable market insights, it can be easy to fall for the “there is money in Nigeria” illusion, leading one into an unending rabbit hole of hopes, dreams and unfulfilled promise. So what do the numbers actually say?

Well first of all, the most important number of all – Nigeria’s population – is basically unknown. Depending on who you ask, we are anything from 130 million people to 210 million people. Nigeria has never had a census – a real census that is, and not the exercise that mysteriously finds more people in Kano than Lagos, and reports greater population density in arid areas than around water, in defiance of all human settlement patterns in recorded history. Since no one knows how many people are in Nigeria, “x hundred million people” are not the “market,” except for the purpose of selling oneself a dream.

Nigerian businesses need to define their market realistically. As previously established, this country has an addressable “premium” market of just about 5 million people. Playing outside of this tiny market entails realistic pricing, packaging and branding. Dettol for example, has just launched in cheap sachet form. One of Coca Cola’s most successful distribution channels is roadside hawking. MTN famously built its unrivalled user base using a buy-one-get-one-free promotion. These are businesses that understand the reality of the market they operate in, instead of basing their business models on nonexistent 25 year-old millionaires.

If you are in charge of the market strategy of a Nigerian company, it would help to take a stroll outside of your airconditioned office space every once in a while, and experience the country the way most Nigerian consumers do. In so doing, you might just avoid coming up with more fantastic solutions to problems that do not exist.

David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance.

He tweets @DavidHundeyin.

Some thoughts on improving Nigeria’s elections

Saratu Abiola

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his past election strengthened the argument for electoral reform. As we prepare for a new National Assembly to take charge, we must begin early to call for improvements in our electoral process.There were many issues that came up from the elections that demand urgent attention, but this piece covers just a few that address transparency.

For one thing, we have to standardize the use of the card readers. The new amendment passed by the NASS to Section 49 of the Electoral Act seeks to enshrine use of card readers in upcoming elections, but I believe that more work needs to be done before we do that. In the last election, the card readers were used in some places and not in others. Card readers are a great tool to check election malpractice because they help ensure that only accredited voters can cast votes, reducing the opportunity for any discrepancies in the vote count. However, when we leave it to the discretion of INEC officials on whether to use it or not,

we remove the element of fairness and replace it with suspicion and a sense of disenfranchisement, which is the opposite of what our elections should engender. Card readers are a tool, and we have to use them properly for them to serve us all.

We should either use them uniformly or not at all.

While we are on the subject of card readers, we also need to ensure that we create the structures that help us use the technology before we write it into our laws.The amendment that the President declined in August 2018 has a new section 25A that allows for electronic archiving of election results. There is also a new provision to keep a national registry of voters at the headquarters of the Independent National Electoral Commission (INEC) and an amendment to Section 18 on loss of a voter’s card states that a card can be replaced up to 30 days before an election, an improvement on the current 60 days. These are all good ideas, but they call to question what our current data management system looks like, specifically what Nigeria is doing to protect voter information from getting in the wrong hands. There is currently no law, for example, governing what any government agency does with Nigerians’ personal data. Government is also not officially mandated to share what happens with our information if any of their vast databases are corrupted or if there has been any breach. This is also true for Bank Verification Numbers (BVN) and data collected from Nigerians by telecommunications companies during registration.For this reason, any entity can sell user data to anyone who wants to buy it, be it for a bulk

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SMS marketing campaign or otherwise.

The dangers posed by shoddy data management are real. In October 2018, Arik’s database was hacked and over 600,000 customers’ email addresses, last and first four digits of ATM cards, business names, country of origin of purchase was leaked. A big part of how people come in contact with scammers is because our information is leaked in ways we often do not know. Improving visibility on these issues will be key to improve Nigerian government service delivery where the elections are concerned. As we think of how we can deploy card readers better, we must ensure that Nigerians’ data is protected.

Any amendment of the Electoral Act must also seek to address the sharp increase in cancelled votes and work towards reducing that number.

In 2019, we recorded 1,084,358 cancelled votes across 1175 polling units in 18 States, compared to 844,519 votes rejected out of the 29,432,083 votes cast in 2015.The cancelations were sometimes the result of sharp practices that saw the number of votes cast higher than the number of accredited voters, but it was often the result of violence meted out against ordinary Nigerians that claimed many lives across the country. A lot of the people directly in harm’s way are youth service corps members, many of whom were not adequately taken care of during the unplanned-for period where the elections were postponed. The welfare and safety of ordinary Nigerians must be ensured during the electoral process, and there is a need to develop and document policies on this that take into account all scenarios so that INEC can act proactively.

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The current Act allows parties to hold direct or indirect primaries, and the proposed Amendment tries to add some transparency while attempting to control the arbitrary cost of nomination fees and place caps on campaign financing. However, Nigeria has long since had regulations on campaign finance that have never been followed.

Moreover, there is simply no political will to do this in a way that will not be politically motivated.

Realistically speaking, INEC should direct its energies to helping ensure that political parties actually hold primaries and should be willing to nullify a candidacy if direct primaries are not held. It is arguably easier to control whether primaries are held or not, than whether or not a political party bigwig spent an obscene amount to get elected.

INEC can and should do more to use its powers and enforce these measures to help improve transparency in our political parties, because parties will not do it themselves and prospective candidates can only really put up with whatever their party throws their way.

The preparation for 2023 national elections must begin now, with all public sector and civil society stakeholders holding INEC, the National Assembly and the Presidency to account. This past election was not an improvement on the previous ones, but the best time to prepare for the next elections is years, not months, before you have one.

Saratu Abiola is a writer based in Abuja. Her interests include governance, media, literature and socio-political issues.

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Thursday 09 May 2019

BUSINESS DAY

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Nigerian attitudes to power Remi Adekoya

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he trouble with Nigeria is simply and squarely a failure of leadership”, wrote Chinua Achebe in his 1983 book“The Trouble with Nigeria.”Much of the country nodded in agreement then.

In the thirty-six years since, much has been said about Nigeria’s leadership problems. Yet little has changed on this front. So, what gives here? Considering the systemic causes of Nigeria’s leadership conundrum have been repeatedly analysed, perhaps we can shed some light from another angle by discussing leadership’s twin –power– in the Nigerian context.

All leadership involves the exercise of power. To understand why leadership is practised a particular way in a particular society, it is thus worth examining its prevalent attitudes to power. Power can be understood as the capacity to shape the behaviour of others by providing or withdrawing resources and administering punishments. We should not, however, associate power solely with governments or billionaires, but recognize it is a phenomenon shaped by millions of everyday interactions in society.

Most human relationships contain a power dynamic, be it parent and child, employer and employee, client and corporation, teacher and student, husband and wife, and so forth. Power is relational and contextual. Its resources, be they economic, military or other,

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must be relevant to the motivations of a power-recipient for the power-wielder to maintain a relationship advantage.

If you put a president and a suicide bomber in one room, who do you think has the power to shape whose behaviour? Or imagine a rich male CEO in a relationship with an averagely-paid female nurse. Surely, the man has all the power, right? Now imagine he is madly in love with her while she is not really that into him. Does that not change the power dynamics between them?

Power’s relational dynamics differ across societies. There is a concept in cultural studies known as “power distance.”This measures the extent to which power inequalities are accepted as unavoidable, legitimate and functional in a society. This matters because it reveals to what degree the less powerful members of a society, always the majority, expect and accept unequal distributions of power. This in turn shapes views on how individuals with differing levels of powers should interact.

Based on responses, Nigerians score high (80) on what is known as the Hofstede Power Distance Index. This signals a strong propensity in Nigerian society to accept a hierarchical order with significant power inequalities that require no justification. Of course, there are significant numbers of Nigerians whose views on power deviate strongly from the norm and who question hierarchies. But it is majority attitudes that shape society-scale power dynamics, not minority views.

So, what do societies like Nigeria which score high on the Power Distance Index tend to expect from their leaders and how do they envisage their relationship with them? First of all, they believe authority figures should be shown significant respect and deference in contrast to low power distance cultures who treat leaders much less reverently.

They believe power hierarchies reflect inherent human inequalities and view powerful individuals as possessing

superior qualities. If not, how did they manage to get where everyone else wants to be, goes the logic. Those with less power tend to accept their place in the hierarchy, defer judgments to leaders and instinctively obey authority. Social progress in gender equality or human rights is hampered in such societies as the tendency is to conform to traditional social roles, maintaining the status quo. Organizations will tend to be centralized, with participative decision-making and consultative leadership rare.

In such societies, those higher up often shout on those lower down. These public displays of anger, while sometimes spontaneous, are also deliberately used to reinforce the power hierarchy, reminding everyone who the superior is in the relationship. Followers closely observe the behavioural nuances of leaders as they consider them people to learn from and mimic. Hence, the average Nigerian employee can read Oga’s mood from the briefest of glances at his facial expression. “Ah, Oga is in a bad mood today o! Better don’t annoy him. Did you see his face this morning?”

Leaders are expected to be paternalistic in such societies. According to the Hofstede model, high power distance societies consider the benevolent autocrat the ideal leader. Unsurprisingly, there tend to be fewer checks and balances on power in such countries.

Three important points. First of all, there are societies similar or even higher than Nigeria in the power distance spectrum that are successful. These include countries like China, India, Indonesia, Malaysia, Saudi Arabia, Singapore and United Arab Emirates. Hence, being a high power distance society does not prevent the creation of an efficient ruling class. Importantly, some of these societies are vibrant democracies, like India and Indonesia, though the most successful ones tend to be governed autocratically.

Second, ideas and values are not

‘

...there are societies similar or even higher than Nigeria in the power distance spectrum that are successful

constant in any society; they respond to circumstantial changes. An overlydeterministic view of Nigerian society presuming the attitudes to power of today will be the attitudes of tomorrow would be a mistake. New generations decide what to keep of the cultural repertoires they inherit from the past.

Changes in Nigerian attitudes to power are already visible.

Social media has enabled young folk publicly question power practises ranging from patriarchy to the exploitation of religion in a manner impossible when I was growing up in 1990s Nigeria. Back then, public debate was largely limited to platforms controlled by those who ran the country. No longer. The time is coming when not just powerful Nigerians, but the norms of power in Nigeria, will be challenged by those fed up of living in a society whose powerful seem incapable of delivering a functional state.

That said, I think it might also be time for some deep soul-searching on why Nigerian society throws up the kind of leaders it does at present.

Leaders are the products of the beliefs of their followers. Nigeria’s leaders are rarely people who have inherited power or taken it (primarily) via violence; rather, they have often risen up society’s ranks, often from humble beginnings and they often enjoy significant popular support. As mentioned earlier, the systemic foundations of the emergence of Nigeria’s current ruling class have been well-documented.

But aside that, they are clearly fulfilling certain, perhaps often subconscious, societal expectations of power. Either those expectations change rapidly and widely, or we figure out how to produce an efficient governing class realistically factoring in current dominant attitudes to power. I don’t see a third option here.

Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs,Washington Post and Politico among others.

For leaders only: Gut or intuition Positive Growth with Babs

Babs OlugbemI

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want to thank one of the readers of this column, Mrs Titilayo Sulaimon from London who gave me a detailed expository on poor parenting as the foundation for the lousy behaviour of some leaders in the workplace and in our society. I will write on leadership at home in one of the future editions.

Another response was on my position that leaders should always reward gut. I love people who show gut. Leaders who trained more leaders start by identifying people with the gut for doing the right thing devoid of self-seeking. Bashir Mohammed, want to know the difference between gut and intuition. My answer is from leadership perspective. I see everything with the eyes of leadership; that is why I coach and train people to think, act, be and behave like leaders in their lives and engagement with business organisations.

Gut is courage and fortitude. I have defined conformity as the opposite of courage. Real leaders see people who exude gut as a diamond among many because most people will instead behave in a way that conforms to expectations.

I would mentor a person with gut than go for

millions of people that conform to the norms for fear of criticism or losing out of favour or seen as rebels. The journey to leadership requires thinking out of the box and with the gut to make the difference.

Intuition is direct perception or quick insight independent of the reasoning process. It sees things in new ways given unavailable information or unexpected scenario which make the existing reasoning process inaccurate.

In world-class organisations and learning environment, leaders exhibit intuition while subordinates show gut. It is expected that sustainable institutions have processes and procedures which are expected to be followed. Gut is the courage to push or do things within the limit of the established framework without the authority to change the laid down process or procedure.

Intuition, on the other hand, is the ability of decision makers to use the power and the position of office to do things to correct the flaws within an established process or procedure. In summary, gut is shown by people with no status or power to invoke change while intuition, on the other hand, is for people with the authority to make changes.

Gut is more commonly than intuition. Let me fortify my explanation with the story of Adetayo, one of the most cerebral personalities I know.

Daniel Adetayo was an assistant manager in one of the banks. He is knowledgeable with relevant professional qualifications but restless and unsatisfied with his career progression. He took the lane less travelled by opting to join a federal university teaching hospital as the chief accountant. He changed his employment for an offer with a 60% reduction in his annual salary. His

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thinking was to be in a leadership position with influence and power to guide people better than the opportunity at the bank and rise to the position of director of finance in the teaching hospital.

Four months after his resumption at the teaching hospital, Daniel is out looking for a return to the banking industry. Aside the financial loss, he couldn’t cope with the environment where things are done with less regard to the ethics of his profession. He was made the chief accountant as promised but not the number one person in the department. The previous chief accountant who was indicted and suspended for fraudulent dealings lobbied and was recalled back as the head of the department. Daniel was left wondering how to make the changes he planned with a leader who has the penchant for fraud.

He attended interviews with two banks. At one of the banks, the head of the audit, Adanma told him he would be considered if he can take the level of a banking officer considering his current salary at the federal hospital. She was following a norm that you cannot employ someone to a grade with a massive difference in salary. So, Adetayo was offered the post of a banking officer which was two levels lower than the level of an assistant manager he was four months earlier.

Adanma used the current salary as the only basis to qualify Tayo’s quest to return to the banking industry. She was a leader with no intuition in the given case. Intuition would have been to consider Daniel’s last salary in his previous bank and make a judgement based on his level of experience and what he can offer as a new hire. Daniel rejected her offer on the spot.

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At the second interview, the bank had a long process for employing people. Adetayo met five officers of the bank during the interview including two executive directors. He was recommended for the level of an assistant manager, the same level he was four months ago and scheduled to meet the managing director of the bank.

At the brief chat, the bank’s chief executive officer found him intelligent and approved the grade of a deputy manager for him. His reason was that he quit the industry just for four months to take a political appointment and possesses the relevant requirement to be a deputy manager in any bank.

What the brilliant CEO did was the use of intuition to correct the flaws of the established norm that people should be employed at a lower grade when they are making a return based on their current salary without given consideration to their level of experience or perceived competence at the interview session. On the assumption that was using pay alone as the basis is the industry standard, the officers in the second bank, exude gut by recommending Tayo for the grade of an assistant manager in the first place and got the ratification of the CEO. When the fact says otherwise, intuition is the tool of the game-changing leaders to make impact on the system and the people.

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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Thursday 09 May 2019

BUSINESS DAY

Editorial Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua ASSIST. SUBSCRIPTIONS MANAGER Florence Kadiri GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

The innovation route out of poverty

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igeria features admirably in a critical new Harvard study on the prosperity potential and destination of market-creating innovation in bleak conditions. Nollywood and its creation are one of three case studies of how innovation creates entirely new markets and brings several benefits including infrastructure, new laws and regulations and new markets. More than ever before, Nigeria needs innovators to jumpstart activities in several areas and excite the markets.

A Harvard University team led by the renowned Prof Clayton M. Christensen and featuring Nigerian Efosa Ojomo and Karen Dillon unveiled the highlights of their study in “Cracking Frontier Markets” in the Januar y-Februar y 2019 issue of Harvard Business Review. The emergence of Nollywood features as one of three such innovations that helped create entirely new (frontier) markets. The others are Richard Laffey’s MicroEnsure that enables access to insurance for the poor based on his experience in Zambia and how Liang Zhaoxian created a

demand for microwave ovens in China and made Galanz one of the leading appliance firms in the world.

The authors note that Kenneth Nnebue released Living in Bondage straight to video.

The norm before then was to release films to cinemas first. There were no longer cinemas in Nigeria in 1992, the economy was down but the entrepreneur needed to use his stock of cassette tapes. He invited professionals, and they wrote an exciting story, Living in Bondage, that played to the theme of the pursuit of wealth through rituals common in urban folklore. The $12000 budget film earned massively and sold hundreds of thousands of copies across Africa and the Black Diaspora.

That brave move by the entrepreneur fostered the crystallisation of a new market and industry, that of straightto-video films using available technology and lowering costs of production as well as access to consumers. It established a standard and model for the film industry in resource-poor African countries who looked up to and adopted the Nigerian model.

Was Nollywood via Living in Bondage “a lucky anomaly”?

No, the authors say. The Harvard researchers assert

that Nollywood is among scores of entities that have realised enormous growth by creating entirely new markets where they might be least expected. They call it the power of market-creating innovation. Nollywood comes under the analytic lens of marketing experts for its contribution to knowledge in the area of routes to market, product development and market entry.

More sig nificantly for today, “Cracking Frontier Markets” submits that what happened with Nollywood is replicable and scalable.

The power of market-creating innovation generates new growth for companies and catalyses industries that buoy frontier economies. Innovation provides a strong economic foundation as it offers many people access to a product or service that was previously unaffordable or otherwise unattainable if it existed at all. They also leverage business models and value chains that focus on profitability before growth.

They do this borrowing technology and inserting it into a different business model.

Nnebue did this by using VHS tapes to launch a video-based film industry.

Market-creating innovations are generated by and for

a local market—or at the very least; they are designed with a local market in mind. Innovators must do the arduous work of understanding the ins and outs of that market and making a product simple and affordable enough for it. Market-creating innovations generate local jobs, which fuel the local economy.

These jobs arise specifically to serve the local market ; you cannot easily outsource them to other countries. They might include, for example, positions in design, advertising, marketing, sales, and distribution. Nollywood now generates at least one million jobs annually.

Market-creating innovations can be scaled up. Because they make a product affordable and straightforward, bringing it within many people’s reach, scaling up is a fundamental part of the process. As Nollywood spread across the continent and to Africans in the diaspora, it created more jobs, supported infrastructure development, and helped Nigeria develop its fledgeling institutions. The impact is beneficial for countries and companies.

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HEAD, HUMAN RESOURCES Adeola Obisesan

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Thursday 09 May 2019

Innovation

BUSINESS DAY

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

13

TECHTALK

Broadband Infrastructure

Bank IT Security

As WhatsApp Payment looms, Nigerian banks may need marriage with local fintech startups FRANK ELEANYA

A

fter the announcement by Mark Zuckerberg that Facebook-owned WhatsApp payment feature will soon be launched in “a number of countries later this year”, banks in Nigeria may need to recalibrate their strategies in confronting a bigger threat and give startups room to breathe.

The payment feature which remains at the trial phase has already found a 1 million market in India, since February 2018 when it was released in the country. The trial in India is Facebook’s first attempt at offering peer-to-peer payments through WhatsApp. The company is however familiar with the payment space having offered similar services on Messenger in the United States.

During his keynote address at the F8 Developer Conference, Zuckerberg said he was excited about the “vision” of payments, an area he is convinced Facebook has an opportunity to make things a lot easier for its users.

“I believe that it should be as easy to send money to someone as it is to send

a photo,” says Zuckerberg.

“It’s being used a lot and the feedback is great. And you can take a look at what the basic experience is and you know overall payments and private commerce is one of the areas that I’m really excited about and we’re going to have a lot more news to talk about here over the coming year.”

WhatsApp is the world’s largest instant messaging service and it has a large customer base in Nigeria. The chat app recorded more than half a billion daily active users worldwide in the first quarter of 2019, up from 450 million global daily active users (DAU) in the second quarter of 2018,

according to data from Statista.

Overall, there are about 1.5 billion WhatsApp users in over 180 countries. An average user checks WhatsApp more than 23 times per day.

In Nigeria, WhatsApp and Facebook jointly account for 41 per cent of internet users.

The digital banking - now the new battle field of players in the financial services sector in Nigeria - rest on the population of people on the internet.

Thus, when an organisation that provides a platform where 41 per cent of the people in the market go to on a daily basis, decides to add a payment feature on the platform, other payment providers will need a

miracle to compete. Nigerian banks which for many years have put the threat-neutralising gun on fintech startups now have to change tactics, because the real threat has moved address.

One social media commentator, tweeting from the handle @xynomen captures it this way: “The threat is, every service provider is creating a payment gateway for their communities, this will eventually ostracise the banking industry. Apple Pay is coming with a credit offer. You don’t even need money as long as you are shopping for their products.”

The banks however are

not likely to lose sleep so soon given that WhatsApp still have the very unappealing hurdle of securing a Central Bank of Nigeria (CBN) license if it intends to operate as a Payment Service Provider (PSP) in the country.

Following that, the messaging app is likely to need partnerships with traditional financial institutions to succeed. While that plays into the hands of a few banks that will agree to partner, WhatsApp could potentially benefit from the network of collaboration it has built with Nigeria’s small businesses and tech ecosystem over the years through Facebook initiatives. One of such initiatives is the Express WiFi which gives access to affordable internet anywhere people are – at home, in a café or on the go. The company has empowered small and medium enterprises to grow their businesses at various occasions. Facebook has also facilitated special software trainings, accelerator programs for startups as well provided financial rewards and equity investments in a few.

The threat WhatsApp represents to banks not willing to collaborate with startups there-

fore, cannot be underplayed.

The relationship between banks and fintech startups has not always been mutually beneficial. On every occasion, banks have sought to preserve their dominance for obvious reasons. Startups mostly make do with the hand-outs while battling survival in a very difficult business environment.

This is why many of these startups would eagerly turn to companies like Facebook.

Going forward, any chance of surviving the oncoming onslaught may depend more on how the relationship between banks and startups evolve. A few banks have attempted to collaborate with startups to explore new ways of deepening their market share; but it has only been efforts initiated to benefit the banks.

In order to embrace the innovation of fintechs banks may need to take the laboratory approach – a long term view.

It could be risky but in their best interest.

A situation where big tech organisations like Facebook, Google and Microsoft practically own most of the innovations from local startups puts the traditional banks at disadvantage.

‘We are ready to deploy AI to help governments, NGOs improve lives in Africa’ Last month, Google opened its first Artificial Intelligence centre in Africa, situated in Ghana. Moustapha Cisse, head of Google’s AI Research Lab in Accra in an interactive session with journalists including BusinessDay’s Caleb Ojewale, gave insights into how it will impact Africa. Excerpts: What is the objective for setting up this centre in Africa? ur primary goal is to advance the science of artificial intelligence in Africa. The results of our research will hopefully be used in applied problems to enable and accelerate finding new solutions to them. Most of what we do in our research centre in Google, not just in Accra, we publish it, and is available to the larger public.

We also open source code so that everybody can just go out there, take the code we publish and use it to build all sort of things. In fact, we have seen many times, surprising ways of using code that we open source. For instance, a team of researchers from the University of Pennsylvania and IITA-Tanzania, used TensorFlow, a tool we have open sourced, to build new artificial intelligence models that are deployed on phone to monitor crop disease.

We did not do this, but people who just used the tools

O

we built. When we do science, the results of our research, usually and hopefully because it is of good quality, goes way further than what we expect.

We are hoping to see the same things happen in Accra and across Africa in general.

One of the biggest challenges foreseen is building trust in this technology because data is involved, how will this be addressed?

One of the areas of research I am personally interested in is what I call axiological machine intelligence. I believe that AI and any other technology that we build should be aligned with the best value of the society to which we identify ourselves. Only this way will we be able to build trust between the people, us who are building the technology, and the technology itself that we are deploying.

This means that from the beginning, when in the ideation phase, we design the technology while keeping in mind important and critical issues such as algorithm fairness. How do we design

and build technologies in ways they do not discriminate against certain categories of people. Or how do we design new algorithms that from the beginning incorporate notions of privacy that do not breach the privacy of people. Or how do we design the technology in a way that the predictions and decisions that are taken by the algorithms that learn from the data are transparent and how to make these algorithms reliable. All these are important questions being investigated here by our researchers.

Why Ghana?

I am from Senegal, and I can tell you we did not pick this place because Ghana has better Jollof, because the best Jollof is in Senegal (laughs).

That being said, I think there are many countries in Africa that are good candidates for a research lab like this one. I think Ghana is just one good candidate among all these candidates. Lagos could have been a very good candidate and in fact, Google’s launch pad accelerator is in Lagos.

So, there are different pro-

Moustapha Cisse

grammes in different countries and Ghana is just one good candidate among others.

Many multinationals have been sort of accused of bringing western solutions to Africa and they do not work. What are you doing differently?

First of all, I am not a westerner (laughs). So, I cannot answer from a westerner perspective. From an African perspective, I think it is important that we design solutions that fit our problems, that we give ourselves the tools and capability to build our own solutions. That is exactly what we plan to do here because there are many Africans in this team as well.

Do you accept proposals from external bodies, for instance if the police comes to ask for assistance to use AI in deterring crimes?

We have our AI principles at Google and we only work on projects that comply with our AI principles, so we are extremely careful about any project that may be conflicting with our AI principle. That be-

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng

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ing said, for the greater good, if we can help NGOs or governments improve certain aspects of people’s lives, we are very happy to contribute our expertise in order to advance to those areas. Like in any application that may put at risk the privacy or lives of inidivduals, we are very careful and chiefly want to be in compliance with our AI principles.

Apart from health, in what other sectors are you working on solutions?

We primarily try to advance the foundational aspects of artificial intelligence, and use those advances in different fields. Apart from health, there are people here interested in using AI to improve various aspects in agriculture. There are people interested in using AI to analyse satellite imagery to support census and inform the decisions that will be made by policy makers. There are many different things that we can do with AI today and we are looking at all the exciting and challenging problems that we can put our hands on.

14

Thursday 09 May 2019

BUSINESS DAY

BUSINESS TRAVEL Ease of travel within Africa is key to socialeconomic development - Emeruwa Lola Emeruwa is the Founder of WISH Africa, a social enterprise set up to promote a more positive image of Africa and Africans around the world, in particular to generate both intra-African and intercontinental trade and commerce. In this interview with IFEOMA OKEKE, she speaks on how to how to promote Nigeria through travel and other means.

What is objective of WISH Africa? ur goal is to promote travel and tour into and around Africa.

As a platform, we attend to architectural symposium, tech conferences and art fares. We realised that what was missing is that there was a conversation that needed to be had amongst everybody. This way, everybody knows what is happening in the tech sector and those in the tech sector know what is happening in the Arts sector. That is how we have designed the expos, moving from one sector to another sector, and it is a fluid, symbiotic experience.

Why have you chosen to do this in London?

London is one of the top most places when you talk about travel and tours. A lot of the people who are helping to push this are actually based in London.

There are attractions that people see in tour countries

O

to want to visit them. How are you looking at putting Nigeria on the global map of top countries in Africa promoting travel and tour?

Our job is to shed light on people who are really doing fantastic job, so we have the likes of the Lagos Fashion Week, Arise Fashion amongst others and we do see influx of foreign visitors coming around this time. We encourage people to come for these events and tell them to come and experience these amazing things. During the expo itself, we have two travel sections.

The first one is ‘Traveling in Africa as an African.’ We have seen that it is easier travelling around with European or American passport. However, it is a lot more difficult using a Kenyan or Nigerian passport to travel around. So during the event, travel experts are going to share their experiences, good or bad. We will also have ambassadors from Nigeria, Kenya and some others to discuss about the challenges and what

Lola Emeruwa

the respective governments are doing to make it easier for people to travel around.

What plans do you have to ensure these issues you speak about in the expos are being implemented after the event?

We are doing proper research in this regard to know

what the demand is. If there is a huge demand for people who want to travel around Africa, then by developing relationships with the ambassadors, federal governments and various countries, we can get back to them and tell them what the feedbacks are. Some

South African Airways to launch direct service to Guangzhou, China

S

outh African Airways (SAA), one of the leading carriers on the African continent, will launch direct flights between Johannesburg and Guangzhou, China, on 18 September 2019, giving customers access to the heart of China’s export led manufacturing industries.

This is yet another strategy implementation initiative aimed at enhancing SAA’s route network.

“The decision to launch this direct service between Johannesburg and Guangzhou means we remain on track in executing our strategy to transform SAA into a fit for the future airline that will operate both efficiently and competitively,” Vuyani Jarana SAA CEO said.

The Guangzhou route will cater to a spectrum of travellers between Johannesburg and China including business and corporate travellers and will be of special interest to traders. Cargo operations will complement the viability of this route considering that high value cargo is sourced from Guangzhou.

According to statement issued by the airline, SAA will be the only carrier operating a direct service between Johan-

nesburg and Guangzhou, with flight time of approximately 13 hours and 40 minutes, providing the shortest travel time on a nonstop basis between the two points.

“There will be three new flights per week to Guangzhou, in South China, and these will complement SAA’s current operations to Hong Kong. This means, SAA will fly four times a week to Hong Kong. Airbus A340-300 aircraft will operate both the Guangzhou and Hong Kong routes.

“Guangzhou is the largest city in the Guangdong province in South China and the third largest Chinese city after Beijing and Shanghai. It is an important transportation hub and trading port, located on the Pearl River about 120km Northwest of Hong Kong.”

“Adding a direct service to

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mainland China, combined with our current popular flights to Hong Kong provides SAA with immense growth opportunities to and from mainland China. It also gives our traders access to the centre of Chinese manufacturing,” Jarana said.

The province of Guangdong is the centre of China’s export led manufacturing industries and described as “the world’s manufacturing hub”.

Formal and informal traders source the majority of goods purchased in Sub-Saharan Africa from the province, due to Africa’s poor manufacturing capacity.

For more travel options for SAA customers flying to and from Guangzhou, the airline has interline agreements with China Southern Airlines, China Eastern, Air China and

Hainan Airlines. To complement this initiative Guangzhou city has an extensive fast train network connecting the hub with important cities in China within one to three hours of SAA’s arrival and departure time. The newly opened 45 minutes’ fast train line between Guangzhou and Hong Kong provides alternatives to our customers to use both SAA’s Hong Kong and Guangzhou services.

SAA is also negotiating a code share agreement with Hong Kong Airlines, anticipated to be in place this financial year, for further travel options for customers travelling beyond Hong Kong. Hong Kong airlines will codeshare on SAA’s Hong Kong-Johannesburg sector and provide feeder traffic from Japan, Korea, Philippines and China.

The planned schedule, which will be published on Monday, 06 May, aims to offer morning arrivals in Johannesburg, seamless connection with SAA’s regional network with less than three hours lay-over in Johannesburg.

The afternoon arrival flight in Guangzhou will connect to more than twenty cities in China.

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of these feedbacks will include where the opportunities are, the destinations people will like to visit in the countries, the current state of the tourist attractions, developing proper tour guides for people to visit their preferred attractions and where they can stay when they come, amongst others issues.

What is the role of the government in helping promote tourist attractions in Nigeria?

The government’s responsibility is paramount and they are the real people that have the power to increase ease of doing business and increase ease of travel. Without the support of any respective government, there may not be so much social-economic development in any sector.

As an investor who is looking at investing in Nigeria.

What do you think are investment opportunities here in Nigeria that could be tapped into?

You definitely want to go to the respective chambers of commerce in Nigeria. These

chambers will help give investors the right directions.

Since you started Wish Africa, what challenges have you faced?

Typically, people are used to focusing on one sector at a time but we have mission to showcase several sectors at every given time. It has been important for us to say it can’t just be about arts, fashion, technology or travel. How do these things intersect and affect our daily lives? How do these things intersect to bring about social development? That is what we hope to achieve.

In trying to promote travel in Africa are you looking at partnering airlines and travel agencies in Nigeria?

We are working with Travel Start. We are a marketer of Travel Start. Beyond that, our travel partnerships really involve the speakers that are coming for the Expo. These include the federal government, the ambassadors, and representatives from immigrations.

Med-View Airlines support grassroots soccer in Lagos …sponsors 4th consecutive U-16 boys, girls tournament

M

ed-View Airlines has again for the Fourth consecutive year shown its support for grassroots soccer development in Nigeria by sponsoring the just concluded under 16 Boys and Girls soccer tournament in Lagos.

The tournament tagged: “Med-View Airline Eko Youth Cup 2019”, in conjunction with the Lagos State Grassroot Soccer Association, came to an end as the finals took place at the Campos Mini-Stadium, Ajele on the Lagos Island.

The tournament, having recorded success in the last four years, Muneer Bankole, the managing director of Med-View Airline, after the finals of the competition said he is looking beyond Lagos in order to make other parts of the country to have a feel of the grassroots soccer tourney.

When he was asked on the effort to take the tournament beyond Lagos during @Businessdayng

a chat with journalists after the event, he said: “We will look at the regional level. We will start with the South West Region of the country, then, we will move to the center which is the Federal Capital Territory, Abuja and then move to the South East. It is good for the whole nation to have the opportunity.

On the educational development of the players given their age range, Medview CEO advised the parents of the players, that the education of these children is so important that playing soccer by the children should not be a hindrance.

Harping on the social benefits derived from the organization of the game, Bankole said: “This tournament has reduced negative vices by the children because they are busy channelling their energy to a productive course. Instead of thinking of how to negatively influence the society, they are doing something good with their time and energy.”

Thursday 09 May 2019

BUSINESS DAY

COMPANIES & MARKETS

15

Sub-Saharan African construction activity set to pick up despite risks Pg. 17

COMPANY NEWS ANALYSIS INSIGHT

MARKETS

Nigerian investors worse-off as equity market moves inversely against peers … value worth $2.5mn wipes off year to date DAVID IBIDAPO & ISRAEL ODUBOLA

W

h i l e other emergi n g markets have returned positively to respective investors of their exchanges, investors in the Nigerian equity market have seen their value erode aggregately by 7 percent since the start of 2019.

The Nigerian bourse seems to be only notable exchange in emerging market space with negative year-to-date return, even as it underperformed average EM & FM markets with 9.32 percent and 6.98 percent respectively.

Analysis revealed that while the Nigerian equity market seem to lack adequate boost in terms of clear policy direction, despite impressive results by companies during current earnings season, spread with other emerging markets have widened consistently making the

market the worst performer amongst others.

Emerging markets like China, Kenya, Egypt and South Africa have returned 17.34 percent, 12.36 percent, 10.39 percent and 10.06 percent respectively to investors, all outperforming the emerging and frontier markets averages.

For the Nigerian investors, value worth a whooping N785 billion ($2.56 million) have been eroded during the period under review as market value of all shares on the exchange closed at N10.935 trillion on Tuesday against N11.720 trillion as at 31 December 2018.

“Foreign investors who are the major movers of the market aren’t certain of the policy direction of the current administration, hence current earnings season isn’t sufficient enough to boost the market,” Paul Uzum, Lagos based stock broker on the NSE told BusinessDay. “Judging from the

reaction of the market during and after the election, it is clear that only a market moving policy can boost the performance of the market, if not we may see market struggle even to the third quarter of the year,” he added.

A review of the behaviour in emerging markets performances revealed that the spread between the Nigeria market and peers began widening mid-

February as investors anticipated the 2019 general elections. Afterwards, the spread kept widening as investors sentiments soured.

Th i s i s h ow e v e r against analysts’ expectation of a post-election market rally, especially the Economic Intelligence Unit (EIU) who predicted a rally on the back of a victory by PDP. “One could easily say the economic situation of the country have deterred investors

from Nigeria, but if we look at South Africa, our realities are not far apart however, their exchange is doing better,” Yinka Ademuwagun, research analyst at United Capital.

Ademuwagun submitted that foreign investors are pricing the current silence of Buhari on his muteness regarding the next Central Bank of Governor, which to him creates some level of uncertainty for investment.

Though the Lagos market has not returned positve gains to investors unlike peers, its stocks are one of the cheapest in the EM space, trading at multiple of 7.14 times thier earnings, compared with South Africa (17.75x), Egypt (15.29x), China (14.15x) and Kenya (10.30x).

“Equity is attractive at the moment. All it is needs is a positive trigger”, Ademuwagun maintained.

HOSPITALITY

Capital hotel records modest top-line growth amid tough operating conditions ...declares dividend in second straight year HARRISON EDEH

C

apital Hotel Plc, owners of Abuja-based Sheraton Hotel, grew its top-line by some 4 percent to N5.98 billion in full year 2018, despite witnessing harsh business operating conditions in the period.

Anthony Idigbe, Chairman, Board of Capital Hotels disclosed this at the 28th Annual General Meeting (AGM) held in Abuja where shareholders applauded the remarkable achievements recorded in the year ended 31st December, 2018.

Despite on-going upgrade of a portion of the Hotel from internally generated revenue, the Board declared 5 kobo dividend per share to all eligible shareholders whose names appear in the register of members at the date of the close of register.

According to financial statement of the company, the net assets of the Hotel increased by 4 percent to N6.42 billion in 2018 above the N6.18 billion recorded in 2017, despite the daunting economic challenges facing the hospitality industry and the country at large.

During the year under

review, the Board of the Hotel carried out renovation of the facilities, and recorded total sum of N379.946 as profit after tax, which was transferred to retained earnings.

At the AGM, thre e members of the Audit Committee were elected, namely: C. F. Nwokocha, Patrick Ajudo and Olubodun Banji.

In the same vein, the shareholders unanimously approved the re-election of three Board members who retired during the year.

In his stewardship report, Idigbe disclosed that the Hotel through its Cor-

porate Social Responsibility (CSR) scheme donated items worth N355,000 including: mattresses, bags of rice, indomie noddles and other edible items to the Abuja School for the Deaf children and those living with speech impairment.

In 2017, the Hotel donated the sum of N694, 000 including used beddings worth N5.4 million.

The chairman stressed that the company operates under “very challenging business environment”, and reiterated the resolve of his team towards taking giant stride in the new financial year.

He adde d that the Board is committed to meeting the yearnings of the shareholders by retaining the premier role, just as he underscored the need for investors’ support towards investment.

The shareholders who spoke during the AGM, applauded the appointed manager and operators of the hotel, Marriott International, owner of Starwood Eame License and Services Company (BVBA) They also acknowledged the employment of two physically challenged persons as at December 2018, to enable them develop their skills, knowledge and

leadership quality.

While appreciating the successes recorded by the Board and management of the Hotel, the shareholders who converged from various states across the country harped on the need for more devotion into the business, adding that there is dire need for the Hotel to sustaining its leading role as a premier hotel in the hospitality industry.

They also applauded the Idigbe-led team for effective utilization of the internally generated revenue for the upgrading of the facilities for business growth and expansion.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

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Thursday 09 May 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

CONSTRUCTION

Sub-Saharan African construction activity set to pick up despite risks MIKE OCHONMA

T

here are very strong indications that construction activities in subSaharan Africa will grow over the next two years, despite various risk factors that threaten to limit economic growth according to Mace International Consultancy and Construction Company.

Mace says that the overall outlook for construction activity in subSaharan Africa is reasonably strong, with an average 6 percent a year growth forecast over the next two years, but warns that there is notable variation across the region.

This variation, driven in part by complex political and economic chal-

lenges in each nation, creates an element of uncertainty that could potentially destabilise markets and restrict growth.

This is particularly possible in countries with high levels of foreign denominated debt.

Nonetheless, ambitious and large-scale social infrastructure programmes are expected to support further growth, with housing and energy sectors set to attract significant funding across the entire region.

Ethiopia is leading in this regard, with construction activity forecast to achieve doubledigit growth through to 2020.

The cautiously optimistic outlook for construction demand across

s u b -S a h a ra n A f r i c a comes at a time when the costs of construction materials are rising and contractor capacity is already stretched.

“Together, these factors suggest that upward pressure on construction costs in the region will continue over the medium term, which will create a challenging procurement environment,” says Kenya-based MaceYMR MD Simon Herd.

The firm expects that better economic prospects will hopefully drive a recovery in the construction sector in the second half of the year, following the electioninduced hiatus in public sector investment in a number of African countries.

L-R: Olaoluwa Babalola, brand manager, Heineken; Funso Ayeni, national trade marketing manager NB Plc; Sarah Agha, portfolio manager, national premium brands, NB Plc, and Bayo Akinola, zonal business manager, west, NB Plc, at the unveiling Of Heineken’s New Crown Cork in Lagos.

L-R: Jonathan Uzomba, head, marketing and communications, Slot Systems Limited, Godfrey Aziegbemi, grand prize winner in the SLOT-Phone-a-Car raffle, and Kolawole Ogunwumi, assistant marketing manager, at the presentation of the Grand Prize to the winner in Lagos.

FINANCIAL SERVICES

Paga hosts security workshop on mobile money payments JOSEPHINE OKOJIE

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aga, leading mobile money company has recently hosted its first annual workshop on security in the mobile money payment ecosystem across Nigeria.

The workshop with the theme ‘Security Organisations: What you need to know about mobile money and payment in Nigeria’, created an opportunity for security agencies in to be trained on security in the Nigerian mobile money space.

“The security forum put together by Pagatech is a major step in the right direction. Paga as a responsible company has taken the lead in sensitizing security operatives and other stakeholders on how the payment systems work in Nigeria,” Victor Olojo, president, AMMAN said in a statement made available to BusinessDay. More encouraging for us as an association, is

that the measures will go a long way in correcting the many instances of harassment, intimidation and detaining of agents across the country over irregular payment issues beyond our control,” Olojo said.

Paga ha s b e e n at the forefront of driving financial inclusion with support from the Central Bank of Nigeria (CBN).

The company has created financial access services points (agent network) across the length and breadth of Nigeria processing payments and making life possible for the financially excluded.

Speaking also, Akinwande Ogundana, assistant superintendent of Police said “this workshop is expository, informative and educative. It makes me understand more about the importance of mobile money operators’ in moving forward the

economy of a nation like ours.”

“The mobile money operators also enhanced the ease of doing business in the country and it made me to realize that there must be a good synergy between the operators and security agencies to enhance the safety of all Nigerians and foreigners in their businesses.

Jay Alabraba, cofounder and director business development, Paga said that Paga as an organization constantly seek opportunities to learn and understand how payments are processed and other extraneous variables that could hinder a successful transaction.

“This security conference which will be held annually is a great opportunity for both Paga and security agencies to rub minds together and have a smooth working relationship,” Alabraba said.

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L-R: Nikunj Vyas, group vice president, Sunflag Nigeria Limited, receiving the ISO 9001:2015 from Oluremi Ayeni, director management systems certificate (MSC), Standards Organisation of Nigeria in Lagos.

L-R: Paul Akinde, acting registrar; Jumoke Aladekomo, administrative manager; Isaac Olorunfemi, chairman, academic board; Folake Adedeji, human resource manager, and John Shoile, faculty member, all of Momas Electricity Metering Manufacturing Company Limited (MEMMCOL) Metering School, at the induction of the first set of student of the School.

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@Businessdayng

Thursday 09 May 2019

COMPANIES&MARKETS

BUSINESS DAY

17

Business Event

TECHNOLOGY

Huawei’s phone sales balloon while Apple and Samsung’s slump JONATHAN ADEROJU

A

ccording to IDC and Strategy Analytics in t h e i r ju s t re l e a s e d smartphone shipment numbers, the clear winner of the last few months has been China’s Huawei, at the expense of incumbent global leaders Samsung and Apple, both of which lost ground.

Huawei has been trifling with the position of world’s second-largest smartphone vendor for a while, having taken over from Apple for the first time in 2017, before switching back and forth in 2018.

The company’s improvement in 2019, however, appears to set it up with a firmer control of the second spot:

Huawei jumped from 39.3 million phones shipped in the first quarter of 2018 to 59.1 million shipments in Q1 2019, as noted by both IDC and SA. Apple’s iPhone shipments shrunk from 52.2 million in the quarter last year to what’s estimated to be between 36 and 43 million (Apple recently stopped reporting iPhone sales in its earnings reports) for the same period this year.

Samsung went from 78.2 million shipments to 71.9 million.

In fact, without Huawei’s bu rg e o n i ng g row t h, t h e smartphone market might aptly be described as experiencing its own form of recession. US carriers AT&T and Verizon last week reported that smartphone upgrades

among their subscribers are at record lows, and other Chinese phone makers like Xiaomi and Oppo are mostly just holding steady with their sales numbers.

Other global brands that used to have significant presence in the phone market are suffering too. Sony’s sales keep dwindling, and the company has said it intends to halve the staff it has working on its mobile business.

LG last week quit making phones in its home country of South Korea, opting to lower costs by shifting production to Vietnam. And HTC is only technically still in the mobile business by virtue of producing that any blockchain phone.

L-R: Mohammed Iyamu, VP trading, Cars45; Katherine Ekekezie, zonal coordinator, Nigeria Customs Service Zone ‘A’; Mandela Oniemola, head, central support services, Cars45, and Tade Adetoye, comptroller administration, Zone ‘A’, during a courtesy visit by Cars45 to the Zone A headquarters, Nigeria Customs Service in Lagos.

INDUSTRIAL GOODS

Lafarge partners FRSC, Rotary Club, others to promote health & safety ISRAEL ODUBOLA

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o commemorate the 2019 Lafarge Global Health and Safety Days and as part of its Sustainability strategy 2030, Lafarge Africa, in partnership with the Federal Road Safety Corps (FRSC),Lagos State Blood Transfusion Services and Rotary Club of Lagos, has delivered a health and safety sensitization programme for motorists and a blood donation drive by employees for societal impact.

Lafarge Africa and FRSC urged motorists in Nigeria to ensure that they are aware of health and safety procedures as this would further reduce road accidents, even as the current data from the Federal Road Safety Corps (FRSC) show a marginal decline in the number of road accidents in the country.

The Head of Safety, Health and Environment for Lafarge

Africa, Mrs. Folake Odegbami alluded to this at the joint health and safety campaign programme held recently for members of the National Union of Road and Transport Workers (NURTW) at Ojota Motor Park in Lagos state. Odegbami stated that Lafarge’s commitment to Health and Safety informed the company’s decision to collaborate with critical organizations focused on improved safety across the country.

According to the January 2019 Road Traffic Crash (RTC) Report by the Federal Road Safety Corps (FRSC), a total of 540 fatalities occurred, while 3,383 were injured following 950 road traffic incidents across Nigeria in January 2019.

It is estimated that 7,827 persons were involved in preventable accidents (although the figures indicated a decrease of 21 percent in fatalities).

Compared to December 2018,

the report showed a 14 percent decrease in crash incidents and 14 percent decrease in the number of people injured in the month under review.

Responding to the reports, Odegbami stated, “Critical at this point is the issue of health and safety among motorists in Nigeria. Although our intervention today is targeted at commercial drivers, our message applies to both commercial and private vehicle drivers”.

She added, “Across the world, LafargeHolcim creates time to implement interventions in the areas of health and safety across different sectors, yielding sustainable positive results. Through our initiatives, we provide support, enhancing safe and healthy practices in order to eliminate hazards in the workplace. Our interventions impact our employees, truck drivers and indeed road users who find the education useful”.

L-R: Christopher Isaiah, sales manager, Kenya Airways; Alice Katiti, consultant, sales strategy, Rwandair; Deji Ajomale-McWord, CEO, African Sports Tourism Week and organiser of Diplomacy Stableford; Funmi PhilipAdewunmi, sales manager, Legend Lagos Airport (a Curio Collection by Hilton), and Remco BÖHRE, director, commercial division, Nigeria & Ghana, AirFrance KLM, at a press conference ahead of the 2019 annual golf

FINANCIAL SERVICES

AFX, Fintec partners MBA Forex to boost FX trading literacy, investment in Nigeria GBEMI FAMINU & DAVID IBIDAPO

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n the quest to boost literacy and improve skills in foreign exchange (Forex) trading amongst Nigerians, MBA Forex limited in partnership with AFX group and Fintec global market seek to open more secure non-banking liquidity platforms for the Nigerian market and African as a whole.

Speaking at a press conference organized by MBA Forex in which representatives from AFX group and Fintec global market were present, the operators of MBA Forex Institute stated they had opened a global window between the Forex market and Africa.

Maxwell Odum, CEO MBA Forex, explained, “we intend to start in Nigeria, so Nigerians can benefit from the trillion dollar market as they herald the first national Forex financial investors summit where a lot on the foreign exchange market

would be X-rayed showing the general public how to trade in the Forex market and how it works.”

The 2019 MBA Forex financial investors summit was birthed by the recent business partnership between MBA Forex and AFX Group who now is the parent body of MBA Forex limited.

This year’s MBA Forex FIS is sub titled, “Step up the gear to financial freedom” a wakeup call to all Nigerians to embrace Forex investment business opportunities, which has been proven over the years by several big players to be the biggest liquidity market in the world; trading over 6 trillion dollars daily.

He explained that unlike some other Forex institutions, MBA Forex is registered under CAC, licenced and under the supervision of the EFCC to ensure safety, check and balance in the operations of the institution.

“We are doing all these to show that we have Nigerians at heart, secure investments and www.businessday.ng

ensure no one get his fingers burnt as a common slogan in forex trading,” Odum asserted.

“Our partnership with AFX is because they have all it takes to accommodate the Nigerian market and provide guarantee and security of funds,” Odum added.

Explaining the synergy between Fintec global market and MBA forex, “every student of the forex institute need a platform to be able to execute trading skills learnt in the institute and that is what we are bringing to the table,” Joel Adoki, Country Manager, Fintec Global Market stated According to him, every successful Forex institution or financial institution needs a financial program that will give them a proper access in the financial market and give them updated knowledge that will enable them trade electronically.

This they intend to make possible by foreign partner AFX group who are supplying the software and programs that is up to date.

L-R: Pulak Sen, MD/CEO, Powergas Nigeria; Ijeoma Ezeasor, Manufacturers Association of Nigeria’s (MAN), Anambra, Enugu and Ebonyi Branch Consultant; Anietom ChuziIgweobi, branch chairman, MAN, Anambra, Enugu and Ebonyi State Branch; Chukwueloka Umeh, executive director, Century Power Generation Limited, and Sumeet Singh, director of sales and strategy, Powergas Nigeria, at the MAN, Anambra, Enugu, and Ebonyi Branch Exclusive Business Forum for Managing Directors and CEOs in Enugu.

L-R: Jubril Salaudeen, chief operating officer; Tobi Osibodu, chief commercial officer, a Citiserve Network Entrepreneur (CNE), and Akinwale Adejuwon, head of retail services, all at Citiserve at the company’s Agent Congress.

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@Businessdayng

18

Thursday 09 May 2019

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions NSE All Share Index

Market capitalisation

NSE Premium Index

N11.721 trillion

Week open 26 – 04–19

31,924.51 29,740.41

N11.1771trillion

2,149.97

Week close (03 – 05–19)

29,212.00

N10.979 trillion

2,100.96

Year Open

2,241.37

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

1,348.90

808.61

119.18

673.00

279.64

2,153.09

1,148.47

1,113.76

806.91

1,332.75 1,313.28

385.87

1,330.62

380.81

120.73

671.05

279.70

2,087.91

1,100.74

1,119.27

-4.16

0.49

1,456.29

Percentage change (WoW)

-1.78

-2.28

-1.36

-0.21

Percentage change (YTD)

-7.06

-4.29

-7.58

1.65

-1.46 -7.33

-1.31 -4.54

1.30 -4.55

-0.29

0.02

-10.39

-7.45

-3.03 -6.54

-11.08

-7.30

Stock market outlook dims on dearth of positive triggers Iheanyi Nwachukwu

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he persisting buy-side lull seen at the Nigerian stock market continues to create doubts on the nearterm direction of equities pricing, despite the recent influx of many corporates first-quarter (Q1) financial scorecards.

The Nigeria’s equity market recently stretched its bearish run following record profit-taking in market bellwethers which weighs on overall performance of the Bourse.

The benchmark index closed lower by 1.8percent in the trading week to May 3.

Though, the month-to-date (MtD) return in the first week in May closed positive (+0.2percent), the year-to-date (YtD) loss expanded to 7.1percent.

Many equity research analysts on Custom Street had expected the much publicised MTN listing to cheer buy sentiment at the Nigerian Stock Exchange (NSE). Meanwhile, Nigerians eager to buy into the much talked about success of the telecommunications giant MTN via an Initial Public Offering (IPO) would have to wait still further as the application now being considered by the Securities and Exchange Commission (SEC) is for the mere introduction of existing MTN shares held by Nigerians.

The most recent IPO that could have come to the bourse as expected by market analyst was the Jumia IPO but that was lost to a more advanced

L-R: Babatunde Fowler, chairman, Federal Inland Revenue Service; Edward Okolo, director, Market Development Department, Securities and Exchange Commission and Oluwatoyin Sanni, chairperson, Financial Literacy Technical Committee of the Capital Market during a Meeting between FLTC and FIRS in Abuja .

New York Stock Exchange (NYSE).

The narrative on the long awaited MTN Nigeria listing has gradually changed.

“We struggle to identify a trigger to boost the Lagos market. The Q1 2019 reporting season was underwhelming with a few exceptions. Nor has the recovery of the crude oil price helped despite the established linkages between the price and the non-oil economy”, FBNQuest analysts said.

Also corroborating this view, equity research analysts at Vetiva Capital in their May 6 note who expected a

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mixed trading pattern on Monday and a positive bias as investors look out for bargains on already beaten down stocks, foresee activity levels remaining average “in the absence of any catalyst to alter the trend.”

The stock market is well into the second quarter (Q2) but it is worth noting that most of the stock markets that analysts monitored appreciated in Q1 2019 except the Nigerian Stock Exchange (NSE) All-Share Index (-1.24percent) and Ghana’s GSE Composite Index (-4.58percent).

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Amid this record disappointing position at the Nigerian Bourse, Afrinvest Research in their May 6 note still said they “expect to see profit taking activities in some bellwether stocks which could potentially drive negative returns in the NSE ASI.” “We maintain a cautiously optimistic outlook as investors’ sentiment show signs of improvement”, the Afrinvest analysts added. “Looking ahead, we expect activities in the local bourse to remain tepid in absence of positive triggers that could spur massive buying

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interest”, Lagos-based analysts at United Capital said in their May 6 note to investors.

They however did not rule out the possibility of intermittent gains in the market “on the backdrop of bargain hunting of stocks with relatively cheap prices”.

The FBNQuest who said that Johannesburg Stock Exchange (JSE) accelerated past both Nairobi and Nigerian Stock Exchanges noted that despite emerging markets seeing a turnaround in foreign portfolio investor (FPI) sentiment, daily turnover on the two frontier exchanges has disappointed, averaging $9.4million in Lagos and $6.2million in Nairobi this year. They believe that sizeable new listings could also energise foreign portfolio investors (FPIs).

“The relief rally on the Lagos exchange after the elections in February and March was negligible, perhaps because the outcome was widely anticipated. “The enthusiasm of two core investor groups remains lukewarm. Domestic equities represented just 6.6percent of the PFAs’ assets under management in January, compared with 9.7percent one year earlier.

“Data from the Lagos exchange tell us that FPIs represented 51percent of turnover in March but that their transactions amounted to a net outflow of N4billion. (An international source estimated the stock of FPI monies in Nigeria in March at US$5bn in equities and $12billion in fixed income),” FBNQuest stated in its May 6 note.

Thursday 09 May 2019

BUSINESS DAY

Investor

19

Helping you to build wealth & make wise decisions

United Capital Investment Views

Investor’s Square

Bears rule the roost Domestic Financial Markets Review and Outlook: ver the week, bears ruled the roost as investors continued to have a hard look at the market. Accordingly, the All Share Index closed the week -1.8percent lower to settle at 29,212 points while market capitalization trimmed N115.4bn to finish at 11.0tn as YTD return weakened to -7.1percent. Activity level for the week remained upbeat as average value and volume of stocks traded both increased by 3percent to N2.3billion and 356.3 million units respectively.

Performance across sectors was bearish as four of the six sectors under our coverage closed in red territory. The Industrial Goods (-4.2percent), Agricultural (-3.5percent), Banking (-1.3percent) and Consumer Goods (-0.3percent) sectors closed downbeat owing to price declines in PRESCO (-7.6percent), CCNN (-6.8percent), DANGCEM (-3.7percent), GUARANTY (-2.2percent), ZENITH (-1.6percent), FLOURMILL (-0.6percent) and DANGSUGAR (-1.4percent).

On the flip side, the Insurance (+1.3percent) and Oil & Gas (+2bps) sectors were the gainers for the week, buoyed by increased buying interest in AIICO (+5.4percent), NEM (10percent), and SEPLAT (+2.1percent).

There was a spree of Q119 earnings that was released during the week; Nestle Nigeria Plc (Revenue up 5.2percent to N70.9billion; PAT up 49.3percent to 12.8billion), Dangote Sugar Refinery Plc (Revenue down 7.3percent to N38.1billion; PAT up 32.7percent to N7billion), Seplat Petroleum Plc (Revenue down 11.4percent to N48.9billion; PAT up 59.4percent to N10billion), FBNHoldings (Revenue up 5.4percent to N147billion; PAT

O

up 6.9percent to N15.8billion), FCMB Plc (Revenue up 4.1percent to N43.9billion; PAT up 39.9percent to N3.6billion), Okomu oil Plc (Revenue down 42.5percent to N4.2billion; PAT down 71percent to N1billion, Dangote Cement Plc (Revenue down 0.8percent to N240.1billion; PAT down 16.5percent to N60.2billion), 11 (Mobil) Nigeria Plc (Revenue up 2.2percent to N46.1billion; PAT down -26percent to N2billion), and OANDO Nigeria Plc (Revenue up 11.6percent to 168billion; PAT up 10.6percent to N4.6billion), amongst others.

Investors sentiment which can be measured by market breadth was underwhelming at 0.8x; 38 stocks advanced against 45 decliners. Looking ahead, we expect activities in the local bourse to remain tepid in absence of positive triggers that could spur massive buying interest. However, we do not rule out the possibility of intermittent gains in the market on the backdrop of bargain hunting of stocks with relatively cheap prices.

Money Market: No OMO auction amid an absence of FAAC inflow Liquidity conditions during the week, though still positive, weakened relative to that of the preceding week, as the only inflow during the period was in form of a marginal OMO maturity and a 2023 Bond Coupon payment. Meanwhile, outflows were in the form of wholesale FX intervention sales which mopped up naira liquidity from the system.

C o n s e q u e n t l y , av e r a g e interbank funding rates (Open Buy Back and Overnight rates) tracked the direction of system liquidity, starting the week on a high of 18.2percent before moderating to 5.6percent at the close of the week. In all, banks with liquidity shortfalls continued to stay active at the CBN’s Standing Lending Facility (SLF) to satisfy their

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funding needs throughout the week in the absence of sizable FAAC injections.

Elsewhere, the Central Bank of Nigeria (CBN) conducted its bi-monthly NTB auction on behalf of the Federal Government (FG), wherein it successfully re-financed total maturing bills worth N109.8billion. The level of demand, though positive, weakened relative to the last auction as average bids worth 2.1x (last auction 3.8x) of the offered amount turned up skewed largely to the 364-day tenor with a bid-cover ratio of 4.1x. Thus, average stop rates at the auction cleared marginally lower when compared to previous levels [91-day (10percent versus 10.15percent at the last auction), 182day (12.49percent versus 12.50percent at the last auction) and 364-day (12.77percent versus 12.74percent at the last auction)].

In the secondary NTB market, average yields inched marginally higher w/w by 2bps to close at 13.1percent, amid a weak level of investable liquidity. This week, a sizable OMO maturity worth N123.0bn is expected to hit the system plus the anticipated Apr-19 FAAC inflow which could possibly result in the CBN announcing an OMO auction during the week. In all, we expect money market sentiments to remain guided by the level of liquidity in the system.

Bond Market : Muted activities at the secondary bond market Activities at the secondary bond market were largely quiet throughout the week, especially as the anticipated FAAC inflow failed to hit the system. However, market bulls managed to edge out the bears in the market as average bond yields trended marginally lower by 3bps w/w to close at 14.3percent. This performance was buoyed by bargain hunting in some of the short-medium term notes as demands were principally order driven.

In the secondary Eurobond market, the FGN Sovereign Eurobonds maintained a relatively flat trend throughout the week with significant gains in prices mildly outweighed by some profit taking in later sessions. Accordingly, average yields trended southwards by 1bp w/w to close the week at c.

6.8percent.

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators?

Let us know and investor will help you investigate and report back.

E-mail: iheanyi.nwachukwu@businessdayonline.com

Union Bank restates commitment to improve profitability …deliver value to shareholders Iheanyi Nwachukwu

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nion Bank of Nigeria Plc said it will continue to focus on embedding disciplined cost management as well as mining synergies across business segments and functions to improve the profitability of the bank’s business. This is even as it restates commitment to deliver value to all its stakeholders – shareholders, customers, b u s i n e s s p a r t n e r s’ a n d employees.

Cyril Odu, Chairman, Union Bank of Nigeria Plc noted this at the bank’s 50th Annual General Meeting (AGM) which held Tuesday in Lagos. At the meeting, shareholders of Union Bank of Nigeria Plc adopted the group’s annual accounts for the year ended December 31, 2018.

While addressing shareholders at the Annual General Meeting, Odu highlighted some major achievements of the Bank in 2018 which included: strengthening retail and transaction banking offerings and the launch of the first Local Letter of Credit to support local trade; the launch of the inaugural N13.5billion Bond

Cyril Odu, Chairman, Union Bank of Nigeria Plc

issue and the adoption of the Robotic Process Automation (RPA) technology – the first Bank to do so in Nigeria.

Major highlights of the group’s financial performance in 2018 showed that profit before tax (PBT) grew by 33 percent to N18.5 billion from N13.9 billion in 2017. Customer deposits also went up by seven percent to N857.6 billion compared to N802.4 billion in 2017, continuing its upward trajectory since 2016; an indication of consumers’ growing confidence in the brand.

As a result of aggressive focus on recoveries, the Bank’s NonPerforming Loan ratio declined to 8.1percent in December

2018 from 20.8percent as at December 2017. In addition, the Return on Tangible Equity (ROTE) improved to 9.6percent from 6.2percent in 2017 demonstrating longter m s hareho ld er value enhancement.

According to Odu, “We have positioned Union Bank to take advantage of the emerging opportunities in the economy and remain optimistic about the future of the Bank. We will execute our 2019-2021 strategic objectives – Sweating our Assets, Digitizing our Bank, and Positioning for the Future - towards being Nigeria’s most reliable and trusted banking partner. We will focus on embedding disciplined cost management as well as mining synergies across business segments and functions to improve the profitability of our business and deliver value to all our stakeholders – shareholders, customers, business partners’ and employees.”

Other businesses conducted during the AGM included the election and re-election of directors and members of the Statutory Audit Committee by the shareholders, and the authorisation of the Directors to fix the remuneration of the Auditor.

Capital Market Studies curriculum ready for infusion – FLTC

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here are indications that the proposed standalone curriculum on Capital Market Studies (CMS) will soon be infused into carrier subjects in Basic and Secondary Schools in Nigeria.

This indication was given by Oluwatoyin Sanni, chairperson of the Financial Literacy Technical Committee (FLTC) of the Capital Market during an advocacy visit to the Chairman of the Federal Inland Revenue Service (FIRS) Babatunde Fowler in Abuja, Tuesday.

According to Sanni, “The Committee has worked tirelessly with the National Economic Research and Development Council, NERDC to develop this curriculum. It is now ready and waiting to be infused into the various carrier subjects in upcoming workshops by the Council. We see this as a great

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step in our financial literacy work.

Sanni also commended the FIRS boss on his initiatives in enlightening students on the benefits of taxation adding that when young people are comfortable with taxation at an early stage, it makes compliance as adults easier.

She restated the commitment of the Committee and the SEC to further educate and enlighten investors in the Nigerian capital market to enhance their ability to make informed investment decisions.

According to her, “This partnership with the Nigerian Educational Research and Development Council (NERDC), to actualize this ground breaking Capital Market literacy programme, is part of the Capital Market Committee’s effort at vigorously pursuing the implementation of one @Businessdayng

of the essential initiatives of the 10-year Nigerian Capital Market Master Plan and we are delighted it is coming into fruition soon”.

“We have been in the vanguard of inculcating financial literacy for quite a long time because stakeholders in the capital market realized that it is very important for students to imbibe the culture and habit of being financial literate and to be familiar with the operations of the capital market. We seek to promote the growth of the capital market which remains an essential pillar in the development of the economy.

She said the Committee promotes financial literacy from school age people to business people adding that when people are more financially literate they will be more economic viable and tax revenues will improve.

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Thursday 09 May 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Nigerian Breweries: Outlook for the brewer remains positive Stories by Iheanyi Nwachukwu

T

hough the newly introduced Excise Duty rate of N30 per litre has been impacting on the operating profits of Nigerian Breweries Plc, the outlook for the largest brewer still remains positive.

Next week Friday May 17, 2019 the shareholders of the brewing giant will converge in Lagos for its 73rd Annual General Meeting (AGM) where the board and management will review the performance of the company in 2018 and if need be brief the shareholder on its outlook for 2019.

The Board will also be laying before the meeting, the report of the directors and the statement of financial position as at December 31, 2018, together with the income statement for the year ended on that date and the reports of the independent auditors and the audit committee thereon.

Though the share price of Nigerian Breweries may have reasonably underperformed the NSEASI, but analysts still believe that the stock is worth holding.

While the NSEASI Year-to-Date (Ytd) return stood negative at 7.43percent as at May 7, the share price of Nigerian Breweries at N66 was down by -22.8percent ytd.

For the full year 2018 in review, Nigerian Breweries Plc recorded turnover of N324billion compared to N345billion in 2017. Operating profit went down from N57billion to N37billion, due in part to higher Excise Duties and other operating costs. Despite the challenging operating environment, Nigerian Breweries Plc was able to end the year with a profit after tax (PAT) of N19billion, although lower than the N33billion recorded in 2017.

As earlier mentioned, a new Excise Duty rate of N30 per litre was introduced in June 2018, and particularly for Nigerian Breweries, it translated to approximately a 43percent increase from the previous average rate of N21 per litre. It was difficult for Nigerian Breweries to pass on this extra cost to consumers in view of weak purchasing power.

Added, to the already challenging operating environment, the company’s results for the year 2018 therefore reflected the challenges it encountered in 2018. Though, with eyes on the economy, the company may pass on this extra cost to consumers anytime.

The Board will be recommending to shareholders for approval at the AGM, a total dividend payment of N19.401billion that is N2.43 per share for the 2018 financial year.

The dividend payment recommendation is in line with the company’s dividend policy of 100percent payout of total earnings, which the Board has adopted in the last few years. Recall that in October 2018, the Board had approved the payment of an interim dividend in the sum of N4.798billion that is 60kobo per share. The final dividend would be N14.603billion that is N1.83 per share.

In their April 30 note, United Capital research analysts favoured a Hold rating for Nigerian Breweries shares at current price.

The analysts noted “NB published its Q119 earnings, showing Gross Revenue grew marginally. However, pressures from the graduated excise duty which most sub-sector players are yet to pass on to final consumers erased the marginal growth in gross revenue. Thus, Net Revenue came in flat at N83.3billion. Meanwhile, PBT and PAT fell sharply by 24.9percent and 21.3percent yearon-year (y/y) to N11.5billion and N8billion respectively. This was on the back of faster appreciation in overall expenditure incurred during the period” “Despite intense competitions, NB was able to wrestle away some market share from its competitors in Q1-19 as it grew Gross

Revenue by 3.3percent y/y to N91.4billion.

According to the parent company – Heineken N.V. – NB grew beer volume by mid-single digit in Q1-19, adding also that the prior year performance was affected by some destocking. However, NB’s efforts to grow volumes were undermined by the spike in Excise Duty Expense (up 48 percent y/y to N8.1billion) which dragged Net Revenue (up 0.4percent to N83.3billion). Additionally, a faster rise in Cost of Sales (up 7.3percent y/y to N48.2billion) as raw material and consumables cost increased (+8.7percent y/y), further pressured Gross Profit (down 7.8percent y/y). Consequently, Gross margin moderated to 42.1percent from 45.8percent”, United Capital Plc research analysts stated in the report tilted “Cost pressures erode marginal revenue gain”.

We see upside potential of 107% in UBA shares – FBNQuest Research …as Q1’19 results review shows compelling valuation relative to peers 8percent increase to our 2019E EPS forecast and price target e maintain our Outperform rating on UBA and increase our price target by 8percent to N13.9 following UBA’s Q1 2019 results which surprised positively relative to our forecasts. The upward revision to our price target is driven by an 8percent increase to our 2019E earning per share (EPS) forecast.

On the back of the upgrades to our forecasts, we now expect the bank to deliver a 2019E return on average equity (ROAE) of 19percent, c.100bps higher than management’s 18percent guidance for the year. We believe that the bank’s current valuation level (2019 P/B multiple of 0.4x or a 41percent discount to the sector’s 0.7x multiple) look compelling when compared with peers and justifies a more positive view on the stock.

The discount is also unjustified when

W

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comparing our forecast ROAE of 17.3percent in 2020E versus the 18.9percent for the sector.

Following the declassification of its 9mobile exposure totaling N22.5billion (from stage 3 to stage 2 loans), UBA’s non-performing loan (NPL) ratio improved by circa 116 basis point (bp) q/q to 5.3percent. Its loan book was flattish q/q.

However, following the conclusion of the general elections in Nigeria in Q1 2019 and the dissipation of associated political risks, management is more positive on the bank’s loan growth prospects for H2 2019.

In addition, the bank’s financial soundness indicators, mainly capital adequacy, loan-todeposits and liquidity ratios which stand at 24percent, 48percent and 50percent respectively as at the end of Q1 2019 are amongst the best in the sector. At current levels, we see an upside potential 107percent in the shares.

Q1 PBT up 14percent y/y, driven by an 8percent y/y growth in pre-provision https://www.facebook.com/businessdayng

profits UBA’s first-quarter (Q1) profit before tax (PBT) grew by 14percent year-on-year (y/y) to N30.2billion. The key earnings driver was an 8percent y/y growth in pre-provision profits underpinned by high single digit y/y growth on both revenue lines. The y/y growth in revenues completely offset an 18percent y/y rise in loan loss provisions and a 5percent y/y increase in operating expense (opex). Below the tax line, PAT grew by 15percent y/y.

Sequentially, PBT was up by 9percent q/q, mainly due to a 20percent quarter-on-quarter (q/q) growth in pre-provision profits. Thanks to a positive result of N11.9bn in other comprehensive income (OCI) vs. –N21.9billion in Q4 2018, PAT grew to N38billion compared with –N3.7billion in Q4 2018. Relative to our estimate, PBT was broadly in line with our N29.2bn forecast. However, PAT beat by 49percent, thanks mainly to the positive surprise in OCI.

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Thursday 09 May 2019

BUSINESS DAY

Corporate Social Impact

21

Onuwa Lucky Joseph (08023314782) Editor.

EcobankPay, Terra Kulture partner for Moremi & African Culture ONUWA LUCKY JOSEPH

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people are about what makes them who and what they are. It is their values.

But it is also their culture: a shared way of doing things that’s peculiar to the group and which makes them standout from others. It is always a cop out for many to say there is no Nigerian culture, we being made up of different cultures and ethnic nationalities. We beg to differ, however.

Over time, a uniquely Nigerian culture has been evolving. It is evident in our music, our films, our food, our fashion, our literature; and even in our football.

Undoubtedly, some ethnic groups have contributed more than their fair share to this growing culture than others. But because it is an evolutionary rather than a legislated process, the general tilt and direction is not coerced, just evident buy-in based on what people find appealing and want to be associated with.

What we do know is that Africa and indeed the world is fascinated by the Nigerian culture. For its eclectic mix of dynamism, aggressiveness, and ready-to-wear assertiveness that has others mystified, especially considering the leadership lacuna that has left us a perpetually tottering structure. A more invested government needs no prodding to make sure that this culture, selling as it is like hot cake everywhere should enjoy the benefit of better packaging and marketing.

One company that has positioned steadfastly as a Nigerian cultural and lifestyle brand over the years is TerraKulture. It has been involved in ground breaking theatre productions and grooming of young Nigerians who go on to make a living in different areas of the culture ecosystem. On May 2nd 2019, the company signed a Memorandum of Understanding (MoU) with Ecobank, the pan African Bank with roots in Nigeria and that is spread over

Left: Joseph Umembom, Producer, Bolanle Austen-Peters (BAP) Productions; Bolanle Austen-Peters, Founder/ Artistic Director, BAP Productions; Patrick Akinwuntan, MD, Ecobank Nigeria and Carol Oyedeji, ED, Commercial Banking , Ecobank Nigeria

32 African countries. That ceremony also featured the exclusive screening of “Queen Moremi: The Musical” which is supported by Ecobank Nigeria.

This kind of collaboration is the norm in other parts of the world where the corporate sector sees itself as selfappointed guardians of the culture and ethos of the people. Philharmonic orchestras, Broadway Shows, Art Events, they are all supported largely by the private sector in Europe, North & South America, and now also in Asia with China and India leading the way. The corporate sector is fully aware that for as long as the culture is coveted by others, their own association with the culture is a big plus for their corporate purses.

That precisely is what Ecobank was doing with its support for Moremi, the Musical. As a kid, I remember the Moremi Ajasoro story; how the stunningly beautiful queen embedded herself with the enemy till she learnt their ways and

later escaped to give the intel to her people of Ile-Ife, helping them defeat the enemy. She also had to fulfill her heart breaking promise of sacrificing her son after her people had gained the victory. These stories are worth telling, and not just in the tales by moonlight setting, but in settings that resonate with today’s audience. Make no mistakes about it, a people are about their legends. When we venerate the legends of others while despising ours, we are in essence despising ourselves and the processes that produced us.

Speaking on the collaboration, Managing Director, Ecobank Nigeria, Patrick Akinwuntan stated that Ecobank, as a pan African Bank, always seeks to promote the African culture and heritage.

This, he said informed the relationship with Terra Kulture, to support the promotion of Nigeria’s cultural heritage on the global stage.

“For us it’s not just about banking

but also about the pride of the African. We know that unless we project ourselves, the world won’t project us.

It is normal for us to look for great institutions like Bolanle Austen-Peters Productions promoting our culture with world class standard. So when we had the opportunity of looking at what is being done here, it came naturally to us that we should work as partners to improve the quality of lifestyles of Nigerians. Our products interact with the lifestyle of Nigerians and we have picked EcobankPay as the flagship product for this collaboration. The platform is safe, secure, and reliable for payment with zero charges. So when people want to pay for shows while abroad, you will simply scan using Masterpass or Mvisa or any QR Code by the international brands to make the payment here. That also attracts foreign exchange for Nigeria. It means that wherever you are, and your family

The man in the arena “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs; who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring

greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

Theodore Roosevelt Some Recent CSR Headlines Christian Aid Donates to 2,100 Households in Kaduna, Launches Contingency Plan Cement Company of Northern Nigeria Donates N6m Drugs to 6 Sokoto Healthcare Centres Agbami Group Donates 2Storey Classroom Block to Abia Schol (For feedback, contact us at csrmomentum@gmail.com/ 08023314782)

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members, friends wish to come and enjoy at Terra Kulture, you can make payment using your mobile phone without stress. It’s about improving lifestyle and retaining the authenticity of our heritage,” Akinwuntan said.

On her part, Chief Executive Officer, Terra Kulture, Bolanle Austin-Peters explained that the partnership is a delight for the cultural brand which has suffered lack of corporate sponsorship since inception. “This is exciting for us”, she said, “because what we do here is to promote Nigerian art and culture.

We’ve done this as private initiative since 2004 and it has been like a lonely existence. In the past, people didn’t believe in what we do. Foreign culture dominated the scene. But things are beginning to shift. People are now appreciating our arts and culture.”

She added that “everywhere in the world, arts are supported by brands.

From our humble initiative, we have hundreds of production houses that have sprung up from here. Most of the under 30s you see in movies and theatres today started from here because we opened our space to them.

This facility receives over ten thousand audience during Christmas and Easter holidays. Ecobank coming to support us is a big deal. It’s huge because the art community in Nigeria is more or less begging corporate Nigeria to support us. Now we have an institution that supports us. We hope that the relationship will be symbiotic. We are willing to ensure that the Ecobank brand is projected positively.”

EcobankPay is an innovative payment solution that enhances transactions between merchants and their customers by eliminating the risk of payment rejection and also delivers immediate value and sales transparency for merchants. Ecobank Pay is built as a core part of Ecobank’s digital financial services ecosystem and will deliver unified and instant self-service across a range of interconnected payment solutions.

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Thursday 09 May 2019

BUSINESS DAY

Corporate Social Impact

The SERA Awards Rev Up for Edition 2019 ONUWA LUCKY JOSEPH

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he SERA CSR awards have been around since 2007.

It’s always with some deal of pleasure that I identify myself as a presenter at that inaugural award. And as with most beginnings, it was a modest outing that night, though evidently classily packaged. But even back then, one could glean that the scope of the ambition was not constricted at all. The wings were well in evidence to fly across an ever expanding and mutating horizon.

What was very different about the SERA Awards is that it was playing on a turf that was far from familiar, Nigeria at that point barely woken up to the idea of corporate social responsibility.

At the inaugural SERAs in 2007, it was more about CSR as a mere construct, an embryonic practice, even though the well-researched speeches delivered suggested otherwise. Today, 13 years after, we might be talking about a sea change. While it cannot as yet be described a choked field, there is now a good number of CSR consultants and practitioners not a few of them learning right on the job as the corporate communications function is further bifurcated to make room for CSR desks.

Of course, more foundations have been founded (and not all of them for the right reasons, it must be said). The increasing number of foundations is however giving impetus to the practice of CSR as line specializations evolve and foundations focus on different interest sectors with their different peculiarities and specialisations.

The SERA Awards have kept the faith these many years, helping to ginger competition among corporates as they strive to impact their immediate and wider communities. Big among the winning corporates have been MTN and Access Bank. Those two, amongst

others, have been endlessly innovative and working hard to retain their position as frontrunners.

To kick-off the 2019 process, Dr Ken Egbas, SERA Awards head honcho and his team organised a workshop on Friday 26th April at the Intercontinental Hotel, Victoria Island, Lagos. Explaining the reason for holding the first ever awards workshop, Mary Ephraim, the executive director of TruCSR and vice chairperson of the local organising committee of the awards said, “Over the years, we have observed some organisations struggle with the submission process. So we came up with this idea of taking everyone through the process at the same time, answer the frequently asked questions, and also the rules guid-

ing participation in the awards this year, and the verification process. Besides the new and easily navigable website, which we are going to launch, we are also going to unveil some new award categories as well as showcase innovations, and new international level partnerships that would help set new highs for The SERAS and participating organisations.”

The workshop provided an opportunity for the SERA team to further elucidate on the ambit of SERA 2019 that has been themed Driving Sustainability through Inclusive Partnerships; Strategic Partnership key to Unlocking Opportunity.

Those familiar with CSR and the NGO/Civil Society community-speak

will quickly recognise in that sentence some stock words that help identify members of their professional tribe.

For the layman mystified about what that is all about, one might wager that it means that partnerships are the catalyst for building synergies. Okay, sorry, I forget I’m a practitioner also. Okay, so, it means two good heads are better than one. That’s more like it. Or put another way: why go it alone when you can go it together?

It is Ken’s conviction, same as that of the CSR/Sustainability community that governments alone can’t get all the work done. In the same vein, corporate organisations can’t go it alone. There has to be some symbiotic partnership but one in which the community/na-

tion becomes better for the joint effort.

And because the community is better, the company and governments invariably can perform better and post better results across the broad spectrum of development indicators.

Since inception in 2007, The SERAS has recorded a growing interest that has seen the participation of 180 top organizations across various sectors, 750 entries, and over 1000 CSR projects have been verified with over 240 award categories won by organisations from Angola, Uganda, Kenya, South Africa, Botswana, Ghana, and Nigeria amongst others.

For the SERA CSR Awards Africa 2019, what the organisers are looking at and for which entries made need to satisfy include: • Poverty Reduction • Employment Generation & Increase in Quality and Quantity of Employment • Agriculture Development/Food Security • Social Inclusion/Social Sector Development • Reduction in Regional Disparities/ Conflict Resolution • Protection of The Environment • Equal Distribution of Income • Gender Equality Lots of organisations are working in these areas but of course only those whose efforts are adjudged exceptional will lift the SERAs at the end of the day.

Even though the SERAs are not the only statues in the awards circuit, they happen to be the most sought after prize, the one that Nigerian companies have their eyes on as they prosecute their CSR/ Sustainability campaigns for the year.

For entry requirements, interested organisations are enjoined to look up the details at the award’s web portal: www. theseras.com.

(with additional reporting from Abiola Ekelojuoti)

Wealth as a mindset: How financial literacy helps EMITAYO ADE-PETERS – TEA

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n the month of March, as part of the 2019 Global Money Week (GMW), working alongside its awesome volunteers, WeForGood, a sustainable development consulting firm, launched a volunteer-led campaign to teach children financial literacy across schools in the Nigeria with a peg on SDG 1 – No Poverty as the learning anchor. GMW, a Child and Youth Finance International initiative, is an annual financial awareness campaign built to inspire children and young people to learn about money matters, livelihoods and entrepreneurship.

According to Investopedia, financial literacy is the confluence of financial, credit and debt management and the knowledge that is necessary to make financially responsible decisions – decisions that are integral to our everyday lives. Financial literacy also involves the proficiency of financial principles and concepts such as financial planning, compound interest, managing debt, profitable savings techniques and the time value of money. The lack of financial literacy may lead to making poor financial choices that can have negative consequences on the financial well-being of an individual.

We are hardly ever taught about money in any formal school setting.

As important as finance is, it is often left to assumption and chance. In fact, according to Robert Kiyosaki’s book, Second Chance, “…our schools blind us financially...” Albeit, having the right financial knowledge, especially from an early age, has the potential to increase the quality of a person’s life by a huge percentage. As such, helping young people to become financially savvy enough to make responsible financial decisions from an informed position is essential for breaking the vicious poverty circle in Africa.

Financial literacy plays the role of a key driver for financial inclusion. As at 2010, the number of financially excludwww.businessday.ng

ed Nigerians was 46.3% and the Central Bank of Nigeria made a commitment in 2011 referred to as the “MAYA DECLARATION”, to reduce the number of financially excluded Nigerians to 20% by the year 2020. According to a report

by Enhancing Financial Innovation and Access (EFInA), the exclusion rate in 2018 was about 36.8%. This is a huge gap and it ties directly to the country’s 46.4% poverty rate for the same period.

Real and sustainable wealth comes from being able to consistently create and attract value that translates to money. It doesn’t however stop there.

You need to be able to effectively manage (save, invest and reinvest across multiple opportunity platforms) the resources that come into your hands, for like the Holy Book declares, “Money has wings.” (Paraphrased - Proverbs 23:5 KJV). Money that isn’t put to productive use has a way of going down the drains. Money that isn’t expended to reproduce itself will also face the same lot. This is where financial literacy comes in.

I once heard someone say that, “Lottery is a mockery of the poor.” I think I believe this. Wealth is a mindset. It has little to do with what is in your pocket at a given time. The rich is rich even if he can’t show you cash and the poor may remain poor even when his pocket

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is full. We therefore shouldn’t envy or honour people who think they need to stack stolen money away for their generations yet unborn; we should rather pity their mindset for we can predict their end.

Again, the ability to recognize and maximize opportunities is key and it takes having the right mindset to do this. Remember Otunba Gadaffi and sh*t business being serious business?

Well he provides a great example of people who spot and develop solid businesses from providing solutions to everyday problems when all others do is complain about them.

True, Nigeria holds the position of the global poverty capital with about 87 million of its citizens living on less than $1.90 a day; that is over 13% of the global poverty spread.

Paradoxically, doing business right in this same country is Aliko Dangote, who has maintained his place as the richest black person in the world with a fortune estimated at $10.9 billion and the overall 136th richest person in the world. His customers are in this country. Selah!

From a historical stand point and based on research, anybody can rise above poverty and anyone can be rich, irrespective of opposing factors.

Nations can overcome their challenges @Businessdayng

and move from 3rd world to prosperity.

Singapore did it and Rwanda is doing it. In the same vein, without proper and deliberate planning, things can also go south for anyone, but like my people say, may that never be our portion.

I will leave you with these words: Wealth is a mindset.

The jackpot mentality breeds mental laziness.

There are actually no short cuts to success.

Anyone can rise beyond all opposing factors.

Wealth comes from value creation.

Opportunities are always looking us in the face.

Don’t let shame stop you; sh*t money doesn’t smell.

If you think you can, you’re right and if you think you can’t, you are right.

Whatever wealth you create is from the common wealth.

There is that scatters and yet increases; and there is that withholds more than necessary, but ends in poverty.

Once more, WEALTH IS A MINDSET and it can be cultivated with the right financial information or literacy.

These are the words we need to keep telling ourselves and the ones coming right behind us. Here’s to an Africa with No Poverty!

Thursday 09 May 2019

BUSINESS DAY

23

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Why investments are falling in downstream sector Olusola Bello

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xcept urgent steps are taken by the g ov e r n m e nt t o create a more e na b l i n g e nv i ronment for businesses in downstream section of the oil and gas industry to thrive, investment into that sector may fizzle out completely.

This would definitely compound the nation’s economic woes as many of the operators have shut down their depots while some have reduced their labour force in order to keep afloat.

One of the factors contributing to this is that their margins have been eroded by the fiat action of the Nigerian National Petroleum Corporation, which changed the ex-depot price from N111 to N117 without the other aspect of the Petroleum Product Pricing Agency template changing.

There is also the issue of the promissory note of N236 billion given to marketers by the government, but which is yet to be converted to money, a situation that has crippled many of the marketers economically at the moment.

Presently it is only NNPC that imports all the petroleum products and then allocates to markers. But this also is not as easy as one thinks because the marketers would have

parted with some money or pay premium before they get allocations.

According to one of the marketers that spoke on condition of anonymity: “Before now despite the fact that there is no deregulation we are still able to make investments and keep the industry going, but now the situation has become worse as the government through NNPC has taken over everything.

Other investors are being frustrated by the inactions of the supervisory agencies Already a silent war is brewing between the oil marketers and their regulating agency, Petroleum Products Pricing Regulatory Agency, PPPRA, over the marketers series of allegations against the agency.

The marketers who said they are losing confidence in the management of PPPRA because of the deteriorating situation in the downstream sector of the petroleum industry want it to live up to its responsibilities.

They claimed they are disgusted over the way the NNPC unilaterally changed the fuel template that had been fixed by PPPRA, a regulating government agency, from N111 ex depot price to N117 per litre of petrol, there by leaving the marketers with N-1.03.

This situation has clearly eroded the margins of the

Ibe Kachikwu

marketers. “When the exdepot price was N111.72 we were making N4 per litre margin but when the NNPC unilaterally increased it to N117, we are left with -1.03”, an industry source told BusinessDay The marketers under the umbrella of Depot and Petroleum Products Marketers Association of Nigeria DAPPMAN and Major Marketers Association of Nigeria have in different letters to the PPPRA expressed disgust at the way the agency is watching things getting worse in the downstream sector of the petroleum industry with noth-

ing being done to stem the obvious slide in the sub sector.

According to the letters, the marketers said they have wanted to communicate in one way or the other with members of the board of PPPRA for quite a while but decided to hold on to see which action the agency would take regarding the travails of marketers which activities the agencies is supposedly regulating.

“It goes without saying from the records of the PPPRA that the number of active petroleum marketers is dwindling everyday and NNPC being the sole import-

er has also contributed to the number further depleting”, the letter stated.

It stated that PPPRA is not bothered about the number of marketers dwindling, nor bothered that the number of marketers submitting import proposal is also reducing by the day. “It is not disturbed that marketer’s payment converted to promissory note since last December 2018 has not materialised in monetary terms”.

The marketers said the PPPRA template has been obsolete for months and that even though the agency updates its data base daily, it seems to lack the courage to present same to the appropriate authority for necessary actions. The board of PPPRA would rather claim the exigencies of the moments and not take it rightful place and advise the FG appropriately.

This means that elements on the templates are changing, PPPRA is aware but is either not advising government.

“The implication of elements here changing means that the prices all must change, but because it is a political hot potatoes nobody touches meanwhile the operators are dying gradually “Despite spiralling costs that make nonsense of the price template NNPC/PPMC took up the duty of PPPRA to caution against selling outside the band weight but

when competition forces marketers to sell below band weight nobody says anything.”

“When was the last time PPPRA called for stakeholders meeting? This April 2019, no board and stakeholders meeting held” the marketers noted.

In the letter, the marketers claimed that for several months they have called for a review of Calabar Port but nothing has happened and yet they bore the financial burden of operations there.

MOMAN says PPPRA has the statutory role to play in the regulation of the downstream sector, including the setting of prices and regulation of margins, but it regrets to observe the ineffectiveness of the agency in performing this role currently.

“We hereby appeal to the board of PPPRA to urgently look into the myriads of problems plaguing the sector to avoid a total collapse of the sector especially as it affects the margins”.

BusinessDay efforts to get the reaction of the PPPRA management were not successful as there were no responses to phone calls and text messages sent to Abdulkadir Saidu, the executive secretary. The general manager, public affairs of the agency, Reuben Apollo, said on the phone that something is being done about the situation.

NECA joins global debate on management of e-waste

Crude Oil Theft: FG urged to declare state of emergency

…as ILO celebrates Centenary Anniversary

he Federal Government has been urged to declare a state of emergency in the oil and gas sector owing to alarming rates of corruption.

Speaking recently on a sensitisation programme designed by the New Nigeria Foundation on the topic “Crude Oil Theft in Nigeria”, the oil and gas commentator said the sector has become a breeding ground for economic gormandizers who prey on the nation’s limited resources.

Meka Olowola, who serves as the Managing Partner of Zenera Consulting, argued that the problem is symptomatic of a larger malaise. ‘’Pipeline vandalism, oil theft, dishonesty, operation of illegal refineries, frustration of due process, and other vices that characterise the sector are not just Niger Delta problems but national issues that demand a holistic approach rather than the kneejerk, quick-fix approach the Federal Government has been

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he Nigeria Employee Consultative Association (NECA) has joined the Global Dialogue Forum on Decent Work in the management of electrical and electronic waste (e-waste), which took place in Geneva recently, as part of International Labour Organization (ILO) Centenary celebrations.

According to NECA, Nigeria’s representative at the forum, the discussion focused on current and emerging issues as well as opportunities relating to the promotion of decent work in the management of e-waste.

Nigeria’s NECA delegate and Chief Human Resources Officer, Ikeja Electric, Ibiene Okeleke, explained that the forum was an eye opener to the environmental impact of e-waste. She said: “While there are clear and present dangers from e-waste, there are also huge opportunities.

Olusola Bello, Team lead,

It therefore requires the right framework, legislation and drive to ensure that proper, sustainable action is carried out as far as e-waste management is concerned.”

The forum also aims to adopt points of consensus, including recommendations for future action by ILO and its Members, over rising concerns of environmental impact of e-waste, in view of global interest in building a more sustainable and circular economy.

Other talking points deliberated on at the forum include opportunities for employment in the e-waste management space, challenges of framework and guiding legislation in the space, with special case study focus on Nigeria, considered a major dumping ground for e-waste, as well as investment opportunities in the sector.

The intensive sessions comprised five employer

Graphics: Joel Samson.

group meetings and five tripartite plenary sessions.

The employers group was made up of eight members from the following countries Portugal, Colombia, Mexico, Romania, Iran, Japan, Belgium and Nigeria. The Workers (Labour) group also had representation from seven countries.

NECA is the umbrella organization of employers in the Organised Private Sector of Nigeria, formed in 1957 to provide the forum for the Government to consult with private sector employers on socio-economic and labour policy issues. NECA provides a platform for private sector employers to interact with the government, labour, communities and other relevant institutions in and outside Nigeria for the purpose of promoting harmonious business environment that will engender productivity and prosperity for the benefit of all.

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exploring,’’ he said.

According to him, the government has set up several committees in the past to check the menace but all efforts have proved abortive, or at best yielded insignificant results, explaining that the solution to the challenges of the sector, demands a collective effort from the leaders as well as the citizens.

Furthermore, he harped on the various levels of oil theft from small- scale pilfering and illegal local refining, to largescale illegal bunkering evident in the operation of full-scale illegal refineries are established deep in the sea. ‘’Theft and the general notoriety in the sector signify a high level of conspiracy among power players and opinion leaders that must be tackled doublequick,’’ he added.

Olowola cited vice president Yemi Osinbajo who put Nigeria’s loss at an estimated 250,000 barrels of crude oil daily, accruing to $ 9 billion annually, adding that the said

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amount would have funded Nigeria’s entire capital expenditure for 2018 which was put at $7.7 billion.

Speaking on the challenges that constantly bedevil the oil sector, Meka noted that persistent conflicts arising from host communities to Oil and Gas activities, coupled with the alarming rate of oil theft, have further aggravated the challenges of the sector leading to a high rate of insecurity, proliferation of arms, dwindling oil revenues, loss of plant and animal life, unemployment, amongst others.

Lamenting over such a level of catastrophe in the sector, he maintained that it has a far-reaching effect on the nation’s revenue, the citizens and the ecology, and went ahead to admonish the government to shelve its lackluster attitude to such serious issues of national significance since oil is the main stay of the Nigerian economy and must be rid of all forms of subversions.

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Thursday 09 May 2019

BUSINESS DAY

ENERGYREPORT

Seplat drives down finance cost by 38% Olusola Bello

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hief executive officer of Seplat Petroleum Development Company plc, Austin Avuru, says the company’s operations have continued to perform in line with expectation with the phasing of its 2019 work programme such that the production uplift will be felt throughout the second half of the year.

He said this would be realised as the company steps up drilling activities which focuses on capturing the numerous high margin and short-cycle cash return opportunities within its current portfolio.

The Seplat boss made this statement while commenting on the recently released interim management statement and consolidated interim financial results for the three months ended 31 March 2019.

The results showed positive impact of the 2018 debt refinancing and subsequent deleveraging, which resulted in a 38 per cent year-on-year reduction in finance costs to $16 million (2018: $26m). Net profit stood at $33 million

after adjusting for a tax credit of $13 million.

He said: “The next phase of growth for our gas business is now gathering pace following FID for the ANOH project, with government’s first tranche of equity investment received. We have continued to deleverage the balance sheet and self-fund investments into the existing portfolio from operational cash flow, while retaining the financial flexibility and

available resources that will enable Seplat to capitalise on what we expect to be an increasingly busy pipeline of inorganic growth opportunities that fit our acquisition criteria.”

A breakdown of how the performance indices showed: • Production uptime in Q1 stood at 85%; Reconciliation losses are yet to be finalised but are expected to remain at levels consistent with prior periods; Full year 2019 pro-

Communities threaten to disrupt 90,000 bpd crude production Francis Sadhere, Warri

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he crisis rocking the Oil Mining Lease (OML) 30 seems to be getting out of hand as host communities in Delta state on Tuesday threatened to disrupt the 90,000 barrels per day production from the Ughelli Pump Station (UPS) located in Eruemukokwarien, Ughelli North council area of Delta state.

Hundreds of angry protesters from Ughelli and its environs stormed the Ughelli Pump Station on Oil Ming Lease OML 30 operated by Heritage Energy Operational Services Limited (HEOSL) and threatened to disrupt operations of the company.

The aggrieved protesters who converged at the entrance of the Ughelli Pump Station in Eruemukohwarien

Community in Ughelli North Local Government Area of Delta State as early as 7am, vowed to continue the protest until Heritage Energy attend to their demands.

The protesters, mostly aged woman and youths, carried placards with various inscriptions like, “Pay Our Yearly FTO Funds,” “Releases Our 2016 GMoU Now!!!,” “Host Communities Demand For Immediate Employment,” “We Demand For Urgent Staff Audit,”.

Among other things, the protesters demanded the immediate release of the agreed development funds for years 2016, 2018 and 2019 to the Community Development Board (CDB), begin the proper employment of graduates and other categories of labour hands from the 112 communities that are hosts to OML 30 facilities, payment

of 2017 and 2018 community was salaries as well as the immediate relocation of the operational headquarters of the company to core operational areas of OML 30.

When contacted the General Manager, Community Relations of Heritage Energy Operational Services Limited (HEOSL), Sylvester Okoh, said he was sure that the issue would be resolved promptly, noting that some of the issues raised had been addressed already.

“First, I will find it difficult to respond just like that because our corporate head is in Lagos and he’s the one that responds to this type of issues.

“About the scholarships, if you ask the beneficiaries, they’ve started receiving alerts since early last week, so currently they have been paid, nobody is owed. Industrial Attachment is on.

duction guidance maintained at 49,000 to 55,000boepd on a working interest basis, comprising 24,000 to 27,000bopd liquids and 146 to 164MMscfd (25,000 to 28,000boepd) gas production.

- Sequencing of the 2019 work programme means the corresponding production uplift will be realised progressively throughout H2; 2019 capex guidance maintained at US$200 million (excluding investment in the ANOH joint

venture).

• Revenue of US$160 million and gross profit of US$81 million represents a 51% gross profit margin (unchanged year-on-year); Revenue reflects the lower oil production and oil price realisation of US$61.7/bbl (2018: US$65.78/bbl). Average realised gas price of US$3.24/ Mscf in the period (2018: US$2.79/Mscf ) - Operating profit of US$33 million (2018: US$84 million) reflects adjustments for a US$16 million overlift position and US$12 million charge in relation to the Company’s oil price hedges, comprising US$5 million cost of hedges and US$7 million fair value loss (reversing the US$9 million fair value gain booked at the end of 2018).

- Net cash generated from operations up 73% year-onyear at US$80 million (2018: US$46 million) versus capex incurred of US$16 million (2018: US$3 million). Further receipt in the period of US$17 million from liftings at OML 55 .

• Repaid US$100 million on the four-year RCF bringing balance drawn to zero while retaining significant headroom in the capital structure to fund growth initiatives.

US$4.5 million RCF fees written off in finance costs.

- Gross debt of US$350 million at 31 March 2019 solely comprised of the Company’s bond issuance due 2023. Cash at bank stood at US$644 million (which includes US$100 million temporarily held on behalf of Nigerian Gas Company (“NGC”) as the government’s initial equity investment into ANOH Gas Processing Company (“AGPC”)); Normalised cash at bank therefore stood at US$544 million with an effective resultant net cash position of US$194 million.

• Final Investment Decision (FID) for the large scale ANOH gas and condensate project was announced in March and initial equity investment of US$100 million from government received; Project to comprise a Phase One 300 MMscfd midstream gas processing development with first gas targeted for Q1 2021.

- Gas revenue from the existing business up 5% yearon-year at US$42 million (2018: US$40 million) Project Updates - Amukpe to Escravos pipeline anticipated to be operational in Q2 2019 with ramp up to initial permitted capacity of 40,000 bopd expected during Q3 2019.

Aiteo, Chevron reiterate commitment to host communities, Nigeria

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iteo has reiterated commitment to continue work with its host communities to achieve an amicable relationship.

The pledge came following a protracted engagement between the company and Nembe community. Following this development, the host community, which protested neglect by the company, had to disband the barricade placed on the company’s yard in Nembe.

Aiteo however alleged that Nembe community provides most of the supply, logistics and security contracts going into its local operations.

“Apart from encouraging community participation in this manner, the company has, in addition, continued to provide considerable amenities and services directly to the community in a most beneficial and

impactful way. Hence, we remain open and are committed to constructive dialogue for the development of both the nation and the community”.

It stated that it is instructive that the barricade of its company is coinciding with the resumption of operations of the NCTL. “These disturbances disrupt our operations and lead to production deferment which affects not just the company but revenues accruing to the government and people of Nigeria”, the company stated Meanwhile Chevron Nigeria Limited (CNL), operator of the joint venture between the Nigerian National Petroleum Corporation (NNPC) and CNL (NNPC/CNL JV), said it is aware of protest by some members of Ugborodo community in its Escravos operations over alleged CNL’s neglect of their community in the provision of social amenities, employment

and contracts.

“CNL wishes to state that the allegations are not true. In fact, CNL has a long-standing relationship with the Ugborodo community which dates back to years before the establishment of its new community-driven participatory partnership model for community development known as the Global Memorandum of Understanding (GMoU” “The needs in many communities, including Ugborodo community, are many and varied requiring the support and intervention of multiple stakeholders to address. We are aware of this and through our GMoU governance model, we have involved other stakeholders, including the Niger Delta Development Commission, the State Government, the Ministry of Niger Delta Affairs, NNPC and some nongovernmental organizations in the developmental efforts.

what is needed to meet longterm climate goals.

It estimates that 300 GW of new capacity is needed each year between 2018 and 2030 to reach the goals of the Paris Agreement, although replacing coal with gas in the power sector also reduces carbon emissions, says the gas industry.

The IEA CEO Fatih Birol

commented: “The world cannot afford to press ‘pause’ on the expansion of renewables and governments need to act quickly to correct this situation and enable a faster flow of new projects.”

China added 44 GW of solar PV in 2018, compared with 53 GW in 2017. Growth was stable in the US, but solar PV additions rose in the

European Union, Mexico, the Middle East and Africa, which together compensated for the slowdown in China.

Renewable capacity expansion accelerated in many emerging economies and developing countries in the Middle East, North Africa and parts of Asia, led by wind and solar PV as a result of rapid cost declines.

Global renewable capacity flatlines in 2018: IEA William Powell

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fter nearly two decades of strong annual growth, renewables around the world added no more capacity in 2018 than they did in 2017, the International Energy Agency said May 6. It was the first year since 2001 that

growth in renewable power capacity failed to increase year on year.

At the same time, energyrelated CO2 emissions rose by 1.7% to a historic high of 33 gigatons, despite a growth of 7% in renewables electricity generation. Emissions from the power sector grew to record levels, it said.

The main reason for cawww.businessday.ng

pacity stalling was a sudden change in China’s solar photo-voltaics incentives.

Other factors were lower wind additions in the European Union (EU) and India.

New net capacity from solar PV, wind, hydro, bioenergy, and other renewable power sources increased by about 180 GW, which the IEA says is only around 60% of

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National Housing Fund (Establishment) Act, 2018: Analysis and Recommendations for Legislative Review

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n a letter dated March 19, 2019, addressed to the leadership of the National Assembly and read at Plenary on the floor of the Senate on Tuesday, April 2, 2019, President Muhammadu Buhari declined assent to eight Bills earlier passed by the federal parliament, one of which was the National Housing Fund (Establishment) Act, 2018 (“the new NHF Act”). Predicating this decision on his powers under Section 58(4) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended), the President specifically attributed his decline to give assent to the new NHF Act to the various levies it imposes on Nigerians and business entities, which as have been argued by relevant industry stakeholders, would have negative impact on Nigerian workers and also be disruptive and punitive to industries and other sectors of the Nigerian economy, if allowed to take effect. The new NHF Act was passed by both Chambers of the National Assembly to repeal and replace the National Housing Fund Act, 1992 (“the 1992 Act”).

This article reviews the controversial provisions of the new NHF Act with respect to the statutory contributions required to be made to the National Housing Fund (“the Fund”) as well as the mandatory investment required to be made in the Fund by banks, insurance companies, pension funds and cement manufacturing companies/importers for the purpose of growing the Fund.

Analysis is also made of the negative socio-economic impacts which the forceful diversion of funds from the affected individuals and corporates, to the Fund, would likely have on the larger economy. From a comparative analysis of the new NHF Act to the 1992 Act and an evaluation of the lackluster performance of the Fund since inception in 1992 to an overview of the moribund mortgage sector in Nigeria, it is submitted that the Fund needs to be grown and the mortgage sector needs to be deepened through an inclusive and incentivizing legal framework.

In order to successfully build Nigeria’s mortgage market without causing harm to the other equally vital sectors of the econ-

new NHF Act also provides that the Federal Government (“FG”) may make any grant of money to the Fund as it may determine or deem necessary. Specifically, the FG is required to make adequate financial contributions to the Fund for the purpose of granting long term loans and advances for housing development in Nigeria.

omy, it is recommended, besides the other suggested policy reform initiatives, that the new NHF Act be returned to the National Assembly for a new round of legislative action geared towards addressing its identified contentious provisions.

Whilst the new NHF Act retains the objectives of the Fund under the 1992 Act, the primary purpose of the re-enactment was to “provide for additional sources of funding for effective financing of housing development in Nigeria”.

THE FUND The statutory sources of contributions to the Fund as well as investments in same by affected entities are as follows: Contributions by Nigerians – both in the public and private sectors: The new NHF Act provides that 2.5% of the monthly income of an employee earning the national minimum wage and above, either in the public or private sector, shall be contributed to the Fund. Same rate of contribution is prescribed for a self-employed person with equivalent monthly income. The contributions to the Fund by the targeted Nigerians shall attract an interest of two percent (2%) per annum or any other interest rate as may be determined by the Federal Mortgage Bank of Nigeria (the “FMB”).

It should be noted that under the 1992 Act, self-employed persons are not covered and that the interest payable on contributions to the Fund by Nigerian employees is four percent (4%).

This is significantly higher than the 2% rate provided in the new NHF Act. Also, the contribution of 2.5% of monthly income under the 1992 Act is applicable only to workers earning an income of Three Thousand Naira (N3,000) and above while the new NHF www.businessday.ng

Act is expected to cover workers earning the minimum wage or its equivalent and above.

Investment in the Fund

by Banks (Commercial & Merchant): Commercial and merchant banks are required, by the new NHF Act, to invest a minimum of ten percent (10%) of their profit-before-tax (“PBT”) in the Fund at an interest rate of one percent (1%) above the interest rate payable on current accounts by banks. The new NHF Act empowers the CBN to apply sanction on any erring bank which may include cancellation of the operating licence of the bank.

We note that the proposed statutory contribution by banks is a clear departure from what is currently applicable. Under the 1992 Act, banks are only required to invest in the Fund 10% of their loans and advances at an interest rate of 1% above the interest rate payable on current accounts by banks. Also worthy of note is the fact that no sanction is contained in the 1992 Act in respect of failure of a bank to comply with the provisions on contribution to the Fund.

Investment in the Fund

by Insurance Companies registered under the Insurance Act: Similar to the prescribed investment by banks, every registered insurance company is required by the new NHF Act to invest a minimum of 10% of its PBT in the Fund, at an interest rate not exceeding 1% above the interest rate payable on current accounts by banks. NAICOM is empowered to apply sanction on any erring insurance company which may include cancellation of the operating licence of the insurance company.

Worthy of note is the fact that under the 1992 Act, insurance

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companies are only required to invest a minimum of 20% of their non-life funds and 40% of their life funds in real property development (of which not less than 50% shall be paid into the Fund through the FMB) at an interest rate not exceeding 4%.

Also, we note that, save for application of sanction on erring insurance companies, NAICOM plays no role under the 1992 Act with respect to the collection and onward transmission to FMB the contribution by insurance companies for investment in the Fund. In other words, under the extant regime, the FMB determines the contribution by insurance companies for the purposes of investment in the Fund and issue a Demand Notice to this effect, after a careful examination of the audited annual accounts of each insurance company.

Investment in the Fund by Pension Fund Administrators: Every registered Pension Fund Administrator (“PFA”) is mandated by the new NHF Act to invest a minimum of 10% of its PBT in the Fund, at an interest rate not exceeding 1% above the interest rate payable on current accounts by banks. The new NHF Act empowers PenCom to apply sanction on any erring PFA, which may include cancellation of the operating licence of the affected PFA. Notably, pension funds were not included in the “Resources of the Fund” under the 1992 Act. The National Insurance Trust Fund, the old pension administrator in Nigeria and precursor to the PFAs, was not under any mandate to invest the assets under management in the Fund.

Financial contributions by the Federal Government for long-term housing loans: As contained in the 1992 Act, the @Businessdayng

Sustainable Development Levy on locally produced or imported cement: The new NHF Act imposes a fresh tax called Sustainable Development Levy (the “Levy”) on the production and importation of cement in Nigeria. The Levy is to be paid and credited into the Fund and is calculated at the rate of 2.5% ex-factory price before transportation cost for each bag of 50kg or its equivalent in bulk.

After proper assessment of the Levy due to be paid by a manufacturing company or importer in a year, the FIRS is to issue a “Notice of the Assessment” to the affected manufacturer/ importer. Any cement manufacturing company or importer that fails to pay the Levy imposed within the specified periods commits an offence and liable on conviction to a fine not less than One Hundred Million Naira. In addition to this, a CEO, director or officer purporting to act in the capacity of the company/ importer shall be liable, upon prosecution and conviction, to a fine of Ten Million Naira or imprisonment for a term of three years or both; unless it is proven that the act or omission constituting the offence took place without the knowledge, consent or connivance of the CEO, director or officer.

This is a new development, as no tax was imposed on cement manufacturing companies and importers under the 1992 Act. The Levy is thus part of the additional sources of funding created by the new NHF Act to boost effective financing of housing development in Nigeria.

COMMENTS Generally, the thrust of the new NHF Act is well understood, given the fact that the housing sector requires adequate funding to support a robust mortgage system for the proviContinues on page 27

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Banks as collecting agents for FIRS – a conundrum IFEATU MEDIDEM

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he Federal Inland Revenue Service has intensified its drive to recover outstanding tax liabilities from tax payers in default of tax obligations.

To this end, FIRS has been writing to tax payers’ bankers, appointing the banks agent of the banks’ customer, to collect outstanding tax liabilities from the tax payers’ bank account balance. This is referred to as tax substitution.

FIRS bases its appointment of the banks as collecting agents on the provisions of Section 49 of the Companies Income Tax Act 2004, and Section 31 of the Federal Inland Revenue Service (Establishment) Act 2007.

Section 31 of the Federal Inland Revenue Service (Establishment) Act 2007 provides: 1. “The Service may by notice in writing appoint any person to be the agent of a taxable person if the circumstances provided in subsection (2) of this section makes it expedient to do so.

2. The agent appointed under sub-section (1) of this section may be required to pay any tax payable by the taxable person from any money which may be held by the agent of the taxable person 3. Where the agent referred to in subsection (2) of this sectiondefaults, the tax shall be recoverable from him.

4. For the purposes of this section, the Service may require any person to give information as to any money, fund or other assets which may be held by him for, or of any money due from him to, any person.

5. The provisions of this Act with respect to objections and appeals shall apply to any notice

given under this section as if such notice werean assessment.”

Section 49 of the Companies and Income Tax Act, 2007 also empowers the FIRS to collect tax due from companies and appoint agents to collect tax due from companies, thus: “The Board may by notice in writing appoint any person to be the agent of any company and the person so declared the agent shall be the agent of such company for the purposes of this Act, and may be required to pay any tax which is or will be payable by the company from any monies which may be held by him for or due by or to become due by him to the company whose agent he has been declared to be, and in default of such payment, the tax shall be recovered from him”.

Typically, FIRS instructs the bank to set aside an amount equivalent to the tax payer’s outstanding tax liability, and remit same to FIRS. FIRS also directs that the bank place a restriction on the tax payer’s accounts and inform FIRS of any transaction on

the tax payer’s account prior to execution on the accounts. The bank is also expected to release the tax payer’s bank statements and other financial records to FIRS. The banks, probably concerned about compliance and cooperation with government agencies are quite swift to comply with the directives. Some valued customers are lucky to receivesome notification, prior to the bank’s execution of FIRS’ directives; others, not so much.

Understandably, given how difficult it often is to recover outstanding debts from recalcitrant debtors, it may not be so surprising that FIRS devised this strategy. But the appointment of banks as collecting agents has stoked several fundamental issues in relation to the propriety or otherwise of the action. Chief of which, is the constitutionality of FIRS’ appointment of banks as collecting agents to collect and remit outstanding tax liabilities of tax payers, without court orders. This is besides the conversation around the hardship that may be occasioned the

tax payer who has had its bank account restricted, particularly where it turns out that the restriction is unjustifiable.

However, a salient issue that seems to have eluded discussion is the query, “Is a bank legally enabled to act as collecting agent to collect outstanding tax liabilities from its customers’ bank account(s)on behalf of the FIRS?” FIRS’ APPOINTMENT OF A BANK AS A COLLECTING AGENT IMPOSES A MANDATORY RESPONSIBILITY On a cursory reading of the provisions of Section 31(3) FIRS Establishment Act and Section 49 of theCompanies Income Tax Act, it may appear that the provisions create an ordinary principal/agent relationship between FIRS and the appointed collecting agent. By principles of law an agency relationship presumes a payment obligation between the principal and the agent. This is not the case with tax substitution, because the appointed/declared agent is the agent of the tax payer, and not FIRS. The provisions of Section 31(3) of the Federal Inland Revenue Service (Establishment) Act 2007 and Section 49 of the Companies and Income Tax Act, 2007 impose a mandatory responsibility on the Bank appointed as collecting agent, rather than a commission earning activity. By these provisions, where the FIRS appointed Bank fails to remit the outstanding tax liability from the tax payers’ funds in its custody, such bank would be personally liable to FIRS for the tax payer’s outstanding liability. This certainly places the banks between the devil and the deep blue sea.

BANKS OWE A DUTY OF CONFIDENTIALITY/ SECRECY TO THEIR CUSTOMERS WITH SOME EX-

CEPTIONS A pressing issue for concern, as to the propriety of the banks’ appointment as collecting agents for FIRS, is the unavoidable breach of a bank’s fiduciary duty to its customer. This issue has raised a lot of hue and cry, over FIRS’ appointment of banks as collecting agents over their customers’ outstanding tax liabilities.

A bank and its staff are obliged to keep secret, information regarding the business and account(s) of its customers. In Tournier v National Provincial and Union Bank of England, (1924) 1KB 461, BankesLJ of the Court of Appeal of England held that confidentiality was an implied term in the customer’s contract and that any breach could give rise to liability in damages if loss results.

As with every general rule, there are exceptions to the duty of the bank to keep secret, every information regarding the customer’s account(s). These exceptions are: a. Where the bank has duty to the public to do so. b. Where the bank’s own interest requires disclosure: - This occurs for example, where legal proceedings are required to enforce the repayment of an overdraft or where a surety has to be told the extent to which his guarantee is being relied upon. c. Where the bank has the express or implied consent of its customer to do so: - where he supplies a reference to its customer or where it replies to a status inquiry from another bank. d. Where disclosure is required by law.

FIRS’ appointment of banks as collecting agents in respect of the bank’s customer’s outstanding tax liability, ostensibly falls under the exception (d) above; given the provisions of Section 31(3) FIRS Establishment Act and Section 49 of theCompanies Income Tax Act.

GLOBALREPORT

Big four to separate professional services from audit work L

egal practices set up by the ‘Big Four’ accountants: Deloitte, EY, KPMG and PwC, would be split from the firms’ auditing business along with other professional services under long awaited shake-up proposals published by the competition watchdog on Tuesday.

The Competition and Markets Authority’s (CMA) recommendations echo those of a committee of MPs earlier this month.

In a market study to ad-

dress what it calls ‘serious competition problems’ in the UK audit industry, the CMA recommends an ‘opwww.businessday.ng

erational split’ at the Big Four. This would require the firms to hive off their auditing business under a separate

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management, accounts and remuneration and to end profit-sharing between audit and consultancy.

However the report shies away from recommending ‘an immediate global structural split’ between the firms’ audit and other service functions.

It states that legislation is needed to address ‘the vulnerability of the industry to the loss of one of the Big Four, and the current inadequate choice and competition’.

Each of the Big Four has expanded their legal ser@Businessdayng

vices clout in recent months.

Earlier this year Deloitte announced that it had hired Michael Castle, a former magic circle partner, to head its UK legal arm. In a speech at the end of last year lord chancellor David Gauke said he welcomed the arrival of the Big Four to the legal services market.

The CMA’s proposal follows recommendations by the House of Commons Business, Energy and Industrial Strategy Committee, which earlier this

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The NLNG train 7 project

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he Nigeria LNG Limited (NLNG) and the Nigeria Content Development Monitoring Board (NCDMB) have, on Friday 22nd March 2019, signed the Niger ia Content Plan for NLNG Train 7 project. The NLNG Train 7 Nigerian Content plan will form the operating guide for the execution and monitoring of the Train 7 project. The NNPC is of the view that the signing of the Nigerian Content Plan for the Train 7 works will strengthen the NLNG’s commitment to further contribute to the advancement of growth in the Nigerian economy. It would also aid the maximisation of Nigerian content deliverables in the project, as envisioned in the Nigerian Oil and Gas Industry Content Development Act, 2010.

The sign off ceremony was witnessed by major stakeholders in the energy sector, who are also partners in the project - NNPC

Nigeria is one of the top 10 countries in the world, with huge natural gas reserves. Despite these huge deposits, Nigeria is not regarded as a major international gas hub due to its low gas export, compared to its huge oil exports. It is anticipated that the Train 7 project will catapult Nigeria from being mainly an oilbased country to both an oil and gas-based economy to be reckoned with globally.

(with 49 % stake) on behalf of the Federal Government, Shell Petroleum Development Company (25.6% stake), Total (15% stake) and ENI (10.4 % stake).

According to the NNPC, the NLNG Train 7 project is aimed at increasing the NLNG’s production capacity by the expansion of the existing Trains 1 - 6 and associated

infrastructure at an estimated cost of $4.3bn. The Managing Director of NLNG, Mr. Tony Attah at the ceremony stated that the Train 7 project is the biggest project that will unluck Nigeria Gas potentials.

The Train 7 project is expected to ramp up NLNG’s production capacity from 22 million tons per annum to 30 million tons per annum.

BENEFITS Some of the many benefits of the Train 7 NLNG project from local content perspective include: • giving first consideration to indigenous goods, services and human resources; • local procurement of low and high voltage cables; civil engineering works on roads, piling and jetties; • fabrication of the condensate stabilisation unit, pipe-racks, flare system, etc;

• provision of logistics services, equipment leasing, insurance, hotels, office supplies and consumables; • aviation services, haulage services.

Key Contacts Jackson, Etti & Edu is a fullservice law firm with a sector focus, rendering legal services to Nigerian, Pan-African and International clients in diverse jurisdictions. We have earned a reputation for delivering commercial advice across all the key sectors: energy & natural resources, fast moving consumer goods (FMCGs), financial services, health & pharmaceuticals, real estate & infrastructure, and technology, media & entertainment.

Further information about the firm is available at www.jacksonettiandedu.com. This is a publication of Jackson, Etti & Edu and is for general information only. It should not be construed as legal advice under any circumstances.

National Housing Fund (Establishment) Act, 2018....

Continued from page 25

sion of affordable homes for Nigerians. According to data released by the Nigerian Bureau of Statistics, Nigeria’s housing deficit stood at 17 million units as at 2012. Today, the housing gap continues to widen rapidly with Nigeria’s burgeoning population (currently estimated at 200 million people) coupled with low access to housing finance, particularly among low and middle income earners and operators in the informal sector of the economy. Recent reports underpin the country’s low rate of access to affordable homes. Nigeria reportedly has only 25% rate of home ownership compared to 84% in Indonesia, 73% in Kenya and 56% in South Africa. If the current rate of population growth is sustained, it is estimated that about US$363 billion would be needed to curb Nigeria’s current housing deficit of about 20 million units. Therefore, the urgent need for policies and regulations geared at deepening the mortgage market is quite understood. Mortgage finance in Nigeria currently stands at 0.58% of Gross Domestic Product (GDP). This is abysmally low compared to 80% in the United Kingdom, 77% in the United States of America and 31% in South Africa.

In spite of the above and the good intention reflected in the main objective of the new NHF Act, the legislation as passed by the National Assembly contains provisions which would make

its implementation difficult and which, apparently, have potentially counterproductive effects on the housing sector, financial market and the Nigerian economy at large.

Firstly, the 2.5% contribution mandated for qualified individuals amounts to a regressive tax on the people’s income. For instance, a worker placed on the soon to be implemented monthly minimum wage of N30,000 is required to contribute the sum of N750 monthly to the Fund while a middle class worker earning N300,000 monthly is required to contribute a sum of N7,500. Economists and tax analysts have argued that this is not progressive, as it imposes more tax on low income earners than the average and high income earners; when the contributions are expressed as a percentage of the income tax (PAYE) of the respective workers.

Secondly, the imposition on commercial and merchant banks, insurance companies and PFAs to invest 10% of their PBT in the Fund, will further reduce the amount of credit available from banks to other sectors of the economy; such as loans to Micro, Small and Medium Enterprises (MSMEs) as well as cut the returns on investment to shareholders of banks, insurwww.businessday.ng

ance companies and PFAs. By forcefully diverting investible funds from more profitable ventures, such as capital market instruments; trade finance; project finance and consumer lending etc. at a meager interest rate of 1% above the interest rate payable on current accounts by banks, the new NHF Act, if operational, will shrink projected revenues and profit margin of banks, insurance companies and PFAs as well as trigger further liquidity crisis in the financial market. This is not desirable at this time when banks are struggling to return to stability and profitability and insurance companies barely struggling to stay afloat amidst economic recession and stagnancy. Also, given Nigeria’s past bitter experiences with provident funds and the sensitivity and fragility of pension fund assets vis-à-vis the poor performance of the Fund since its establishment in 1992; caution is advised in the way and manner the growing pension funds in the country is invested.

Thirdly, there are no provisions as to the duration of the investment which banks, insurance companies and PFAs are to make in the Fund. The new NHF Act is silent on whether the capital invested by the affected financial institutions can

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be withdrawn after a particular period and the mode of such withdrawal. It is therefore not clear if a bank, insurance company or PFA facing imminent liquidity challenge could resort to making withdrawal out of its stake in the Fund.

Fourthly, the Levy of 2.5% ex-factory price before transportation cost for each bag of 50kg or its equivalent in bulk, will eventually be passed on to consumers by way of increase in price of a bag of cement. A clear unintended consequence of this is that the cost of building a house will further go up, thereby defeating the original purpose of making affordable housing available to Nigerians through the Fund. It therefore appears that the Levy, as proposed in the new NHF Act, will be counterproductive on implementation.

Fifthly, the penalty regime in the new NHF Act is not commensurate with the offences created therein. The amount of fines prescribed and the terms of imprisonment stipulated for persons (individuals and corporates) found guilty of contravening any of the provisions in the new NHF Act are too heavy and stringent and could cripple the affected sectors. Rather than boosting the housing sector and the economy, the excessive and disproportionate penalties would act as disincentive to investment and further stifle the ease of doing business in Nigeria.

In conclusion, whilst we support the need to deepen the mortgage market in Nigeria, the @Businessdayng

Fund should not be grown at the expense of the other vital sectors of the economy as analyzed.

In our opinion, the first step to take in boosting the Fund should be a review of its operation since inception to determine its strength, weakness, opportunity and threat (SWOT analysis) with a view to charting the right path and policy direction for the growth and efficient application of the Fund. To avoid the likely negative multiplier effects on the economy, it is strongly recommended that the new NHF Act be subjected to legislative overhaul through wide consultations with relevant stakeholders including the Bankers Committee, Nigerian Insurers Association (NIA), Pension Fund Operators Association of Nigeria (PenOp), Manufacturers Association of Nigeria (MAN), Nigeria Employers’ Consultative Association (NECA), Nigerian Economic Summit Group (NESG), labour unions, civil society groups and the Organized Private Sector. The recommended review should be done and the concerns raised addressed after which the President’s assent can again be sought to the new NHF Act.

The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm or serve as legal advice.

Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

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The Meter Asset Provider Regulation: A Game Changer?

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narguably the largest economy in sub-Saharan Africa, Nigeria is constrained in its growth by inadequate power generation, distribution and consumption. This is notwithstanding its endowment with large oil, gas, hydro and solar resources. With an installed capacity of 13,496Mw, the absence of costreflective tariffs, a huge metering gap and a host of other challenges have continued to plague the sector. According to the Sector Regulator, the Nigerian Electricity Regulatory Commission (NERC), about 4.7 million (approximately 57 per cent) of its registered electricity customers have not been metered. This has led to about $29.3 billion in annual loss(es) due to low supply of electricity resulting from load shedding or in most cases, dilapidated infrastructure.

To reduce this monumental commercial loss, the NERC recently issued the Meter Asset Provider Regulations 2018 (‘The MAP Regulation’). The key regulatory objectives of the MAP Regulation are to encourage the development of independent and competitive metering services in the Nigerian Electricity Supply Industry (‘NESI’) and to attract private investment into the sub-sector. Suffice to add that the MAP Regulation effectively unbundles Nigeria’s electricity distribution sector, and re-allocates the responsibility for providing metering services, thereby creating a new class of market participants; – Meter Asset Providers (‘MAPs’).

An ingenious innovation of the

Tolulope Aderemi

MAP structure is that the Regulation has now effectively shifted the burden of liquidity (or the absence thereof) as it relates to the provision of metering services from the Distribution Companies to the MAPS; entities perceived to have the wherewithal to manufacture, supply and install electricity meters.

The NERC has commenced issuing MAP permits to successful MAPs and has directed full implementation of the meter roll-out by May 1, 2019. Essentially, customers may now directly approach a MAP or its designated bank for the purchase of single and three-phased meters.

According to the Regulation, once

payment is made, the MAP must have the meters installed within a maximum period of 10 (ten) days.

Payment for the meters could either be upfront or through a credit financing arrangement with individual MAPS and Banks.

As this is a new regulation with potentially far reaching implications, a careful understanding of its salient parts is crucial; particularly the rights of customers under the MAP arrangement as well as the MAPs’ obligations.

Meter Acquisition under MAP:

(a) Upfront Payment: The Regulation allows customers to either make up-front payment of the sum of N36,000+ for a singlephased meter or about N67,000+ for a three-phased meter. In other words, a customer may simply apply to a MAP, pay the total cost of the meter and have the same delivered and installed in the premises within a period of 10 (ten) working days. (b) Payment by Installment: Customers may also purchase meters and make payment over a period of time. In other words, where a customer is not able to make an upfront meter cost payment, the Regulation also provides for these customers to pay over a period of time. This is through what is known as the Meter Service Charge (MSC).

The subtle challenge to this arrangement may be the security of this credit. Partner Banks have however reiterated their commitment to a more transparent and less cumbersome structure, such that a customer may not have to provide any security to access this loan.

Repair/Replacement of Damaged Meters: (a) Where a meter is damaged and upon notification to the MAP, the MAP must within a period of 2 (two) working days repair or replace the damaged meter. Where a MAP fails to repair or replace a damaged meter within two (2) working days of a report by the customer or Distribution Licensee, the customer shall not be liable for the payment of metering service charge for the billing period unless such delays were as a result of inaccessibility to the customer’s

premises. It must be noted however that it is the MAP’s responsibility to establish the nature of the damage; whether damage resulting from a manufacturer’s defect or damage as a result of customer use. (b) Where a customer is dissatisfied with the decision of a MAP regarding the cause of meter damage; i.e. due to manufacturer’s defect or otherwise, such customer has the right to fair resolution in line with the Metering Code and other applicable Regulations and the MAP shall provide a meter pending the resolution of the dispute. (b) Where the MAP is unable to provide a replacement meter within a billing period, an average of the last three (3) months’ billing shall be applied for the purpose of determining the customer’s energy consumption.

Relocation/Maintenance of Meters: (a) Pursuant to the Regulation, a tenant/customer is unable to relocate his/her meter on account of a change of address. This is because meters are associated with feeders and distribution transformers. Where a customer relocates within a franchise area, the customer shall apply to the Distribution Company/Distribution Licensee (DISCO) for the transfer of services; including applicable credits for energy. However, the Regulation is silent on what happens if the customer relocates outside the franchise area. It is therefore advisable that only property owners should apply for the installation of meters.

• To be continued next week

NSE pledges support for 13th Annual Business Law Conference T he Nigerian Stock Exchange (NSE) has pledged support for the 13th Annual Business Law Conference organised by the Nigerian Bar Association Section on Business Law (NBA-SBL), scheduled to hold in Lagos from June 26-28, 2019; with the theme, ‘Growth, Investment and Employment: Beyond Rhetoric’.

Speaking at a meeting with the Council of the NBA-SBL, the Chief Executive Officer (CEO) of the Nigerian Stock Exchange (NSE), Oscar Onyema commended the support received so far from the association, and the section on business law, with specific reference to the NSE’s X-Academy - a specialised learning centre which offers bespoke capital market business courses to help individuals who lead businesses transform and grow their businesses.

He said, “The Exchange has had an interest in the affairs of the Nigerian Bar association for a long time and thus have shared an affinity towards to development of our economy.

“We appreciate the support you have given to us at the X-Academy, with the training capital market lawyers and we are glad to return the support, towards the achievement of our shared goals and objectives,” Onyema said.

Oscar Onyema, CEO, Nigerian Stock Exchange (L) and Seni Adio, SAN

The NSE Chief further expressed hope that the relationship between both institutions would grow deeper and yield greater achievements for Nigeria’s growing economy. He thus urged the NBA-SBL Council to lend its voice to the signing of the CAM (Company and allied Matters) Bill, since the section as a group had made significant contributions to the bill itself.

Responding to the CEO’s calls, the Chairman of the NBA-SBL, Seni Adio, SAN, assured the management www.businessday.ng

of the NSE of the Section’s continued support in the realisation of all its objectives.

“As you rightly said, we have had a long and profitable relationship with the stock exchange and assure you that we would continue to work with you to ensure that quality legal service is being provided for the market.

“We are an integral part of the business market in Nigeria. One of the key things that we do is to build capacity within business environment. We have not only come to

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show our support for the work you do, but to explore more collaborative ways to develop the capital market and enhance commercial law practice in Nigeria.”

The NBA-SBL Chairman further sort the support of the NSE for the upcoming annual business law conference, which according to him would require the collaboration of institutions like the NSE to drive the message of growth.

Affirming this, NBA-SBL Secretary and Chair of the 2019 Conference Planning Committee, Dr Adeoye Adefulu, explained that a significant part of the visit to the NSE was also to create awareness for the 13th annual business law Conference amongst the NSE legal team and others.

He said, “The conference will open on the 26th through to the 28th of June at the Eko Hotel in Lagos and we would like the team at the Exchange to be a significant part of the engagement at the conference.”

After the meeting, the NBA-SBL delegation was invited to the trading floor by the CEO of the NSE for the closing gong ceremony. T The Chairman of the NBA-SBL, Seni Adio, SAN, accompanied by the Secretary of Council/Conference Planning Committee Chair, Adeoye Adefulu; Chairman, Confer@Businessdayng

ence Programme Sub-committee, Ozofu Ogiemudia; Fundraising Committee Chair, Babasola Alokolaro; Council Member/Company Secretary, Sterling Bank, Justina Lewa; Council Member/Company Secretary, Cadbury, Fola Akande; Chair, Media & Communications, Theodora Kio-Lawson; and the Section’s Administrative Officer, Endurance Uhumuavbi, rang the closing bell for the day - signifying the end of trading.

The Nigerian Bar Association Section on Business Law (NBA-SBL) has 20 committees bordering on various sectors of the economy, one of which is the capital market committee, hence the continued collaboration with institutions like the NSE, SEC and others to enhance and build capacity of commercial lawyers.

The section currently has a programme at the Nigerian law School called the Knowledge Impact Series (KIS) where members of the Capital Market Committee go to the law school to teach Young Nigerian lawyers about capital market practice.

It is part of the mandate and objectives, the NB-SBL to build capacity for young and mid-level lawyers across the country. It engenders the development of commercial law and specialised commercial law practice in Nigeria.

Thursday 09 May 2019

BUSINESS DAY

29

MADE in aba

Cash crunch hits Aba entrepreneurs as rates remain high ODINAKA ANUDU

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imgba Isiguzo is a small-scale shoemaker in the sprawling city of Aba, Abia State’s industrial capital. He has been seeking N12 million loan from two of Nigeria’s tier-two banks for the past 16 months. The banks are willing to give him half of this money on the condition that he must return it in 12 months and pay back 24 percent interest rate comfortably.

Isiguzo complains that banks can’t give him the money he needs and are asking him to pay an exorbitantly high interest rate.

Aba has more than 80,000 shoe makers who produce shoes, belts and trunk boxes for the entire West Africa, but these key economic players cannot access loans from banks who consider them high risk.

“Requests come to us every day, but we cannot meet up because we don’t have money to buy good machines,” said Ken Anyanwu, secretary of the Association of Leather and Allied Industrialists of Nigeria (ALAN), who produced shoes for the Nigerian Armed Forces in 2016.

“The Bank of Industry has done its best by giving few people N300,000 each, but it takes 100 or 200 times that

money to set up a standard shoe factory,” he said.

“Again, commercial banks are not interested,” he said.

In 2018, average interest rate charged Nigerian manufacturers was above 22 percent, according to the Manufacturers Association of Nigeria (MAN).

Governments and the private sector are competing for funds in the banks, with federal and state governments crowding out the private sector, especially small businesses.

While credit to the private sector in the third quarter of 2018 was N15.59 trillion, federal and state government claims were N13.4 trillion.

Thirty-seven million small and medium businesses (SMEs) are the worst hit, with many of them seeking offshore funds and equity to pump cash into their business.

Banks, however, say many businesses lack of proper documentation, structure, plan, and financial history, N i g e r i a’s m o n e t a r y policy rate (MPR), which is a benchmark interest rate in the country, remained 14 percent for almost two years until recently when it was reduced to 13.5 percent. Deposit money banks lend as high as 25 to 35 percent, according to BusinessDay checks.

The monetar y polic y committee (MPC) of the South

Africa’s Reserve Bank met in March last year and cut interest rates by 25 basis points.

The current repo rate (central bank lending rate to commercial banks) in South Africa is now 6.5 percent while the prime lending rate (lending rate to customers) is 10 percent.

Similarly, Kenya Central Bank’s monetar y polic y committee cut the determining bank rate in late July to 9 per cent from 9.5 per cent.

BusinessDay gathered that Kenyans now borrow at an interest of 13 per cent (as against from 13.5 percent earlier) in line with the interest rate capping rule that limits lending rates

to 4 percentage points above the CBR. Zambia is one of the emerging countries in SSA and its central bank cut benchmark lending rate by 50 basis points to 9.75 percent in February this year, citing lower consumer inflation and weaker economic growth, according to Reuters.

In October 2017, the central of Ethiopia raised its benchmark interest rate to 7 percent from 5 percent.

At least the benchmark interest rate of most SSA countries have remained single digit, barring few, meaning that it is cheaper for businesses

to access funds there than in Nigeria.

Inflation rate in was 11.25 percent in March.

Bismark Rewane, CEO of Financial Derivatives Company, has been consistent on asking the CBN to cut rates to aid economic recovery for a country that just exited recession.

“No economy will grow when businesses get interest rate at a very high rate. What we need is a single-digit interest rate as manufacturers. We believe that this is what can stimulate growth,” Frank Jacobs, former president of MAN, told

BusinessDay recently.

“It is important to fast-track the recapitalisation of the Bank of Industry (BoI) to enable it to meet up with huge credit demands of the industrial sector,” Jacobs said.

He said government now needs to open up access to various development funds created by the Central Bank of Nigeria (CBN) such as the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) and the N300 billion Real Sector Support Facility (RSSF) by relaxing stringent conditions denying manufacturers and businesses access to these funding windows.

Babatunde Paul Ruwase, president of the Lagos Chamber of Commerce and Industry (LCCI), said the current state of the economy shows the government must prioritise stimulation of investment and growth.

“The proposition is that low interest rate will stimulate investment, impact positively on growth, create more jobs, increase income, and boost output. This would ultimately have a moderating effect on inflation,” Ruwase said recently.

Tony Elumelu, founder of Tony Elumelu Foundation, recently said that every $1 spent on SMEs generates $5.

Firm trains Aba shoemakers, others GODFREY OFURUM, Aba

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or ward Africa, a capacity building and development organisation, with support from Ford Foundation West Africa, has completed the 2nd series of training for zonal leaders of the Leather Products Manufacturers Association of Abia State (LEPMAAS), an association of shoe, bag, belt and trunk box makers in Aba. The three-day workshop held at Oluaka Training Institute, Owerri, Imo State capital, is geared towards improving the quality of finished leather products made in Aba, as well as enable the artisans to advocate for programmes and practices that support small business projects in the Aba finished leather cluster (FLC).

C h i b u z o L O r i u w a, executive director, Forward Africa, also explained that the workshop would enable leaders of LEPMAAS to provide adequate direction and support to the over 200,000 artisans in the Aba FLC.

She observed that building the capacities of young people in the cluster would improve their products, adding that she would advocate for programmes and practices that support small businesses.

In h e r w o rd s, “ Th e advocacy and leadership training was designed to empower the participants with skills that would enable them advocate for programmes and practices

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that support their small businesses, as well as train their members to become finished leather products (FLP) advocates.

“It will also build the skills of the leaders, using the executive enterprise education modules (EEEM), and provide participants with necessary information that would enable them and their members advocate for support to small businesses”.

Sam Hart, lawyer and senior special assistant to

Abia State Governor on public communications, who represented Governor Okezie Ikpeazu in the opening ceremony, explained that the state g o v e r n m e n t ’s e f f o r t s at marketing Aba made goods, especially leather and garment products, is to attract fresh investments into the sector and improve quality of goods made in the commercial city.

He urged finished leather manufacturers

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@Businessdayng

in Aba to adopt online marketing (e-marketing), invest in branding and improve on their integrity, to compete favorably in the international market.

He informed LEPMAAS leaders that foreign companies are showing interest in investing in the sector and advised them to take advantage of the opportunity to adapt to new technology and improve on the quality of their products.

According to him, “if you must compete in the international market, you need to learn to do new things over time, no matter how long you have been in business”.

“You must learn to move from where you are to a new level and this entails completing the chain of production”, he advised.

He urged LEPMAAS leaders to always ask for ideas, innovations, skills, and not cash, stressing that money would come when they excel.

Hart decried the rancor within the association and urged them to close ranks @Businessdayng

for the good of the industry.

In his words, “There is need also for LEPMAAS to resolve their internal crisis and work as a team.

There is a need for more collaboration with partners to break the monopoly existing in the industry.

Some of the training resource persons include Ug o c hu kw u A n oz i e o f Community and Youth Development Initiative (CYDI), Owerri; Chimezie C. Iwuala of the School of Health Technology Federal University of Technology O w e r r i I m o State ; Iya Ikongbe of the Development Finance Office of CBN Owerri; Kenneth Amogu, programme coordinator, Forward Africa, and Kola Ogungbile, manager, Oluaka Institute of Technology Owerri.

There were also goodwill messages from the board of governors of Forward Africa, represented by Chinweuba Amachi, Bank of Industry (BOI), represented, by O layemi Yomi- Tokosi and Oluaka Institute of Technology represented,

by Kola Ogungbile.

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Thursday 09 May 2019

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

SPENDING TRENDS

Jumia Food stirs competition in Nigeria’s pizza market, partners Pizza Hut OLUFIKAYO OWOEYE

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ver the years, people, especially the young population has developed a craving for Pizza, a food item that holds a combination of varied parts: crust, vegetables, cheese, sauce, meat or other proteins The growth in Pizza market was largely buoyed by rising urbanization, increase in the disposable income of the population and various technological and infrastructure advancements.

According to Market research, the market is expected to grow at a significant rate in the future due to the introduction of organic ingredients, rising usage of social media and preferences of consumers for online ordering. Home delivery is the segment which is expected to dominate the market with increasing frequency to order online and rising brand preferences by the consumers.

The global pizza mar-

ket is highly fragmented with Domino’s Pizza, Yumowners of Pizza Hut and Debonairs Pizza been the key players.

The Pizza market in Nigeria is a two horse race between Domino’s Pizza and Debonairs Pizza both jostling for market leadership and profitability. Interestingly, the narrative in that market segment is about to change Recently, Jumia Food announced a partnership with Lagos-based Pizza Hut and will soon launch an on-demand pizza delivery with the firm. Pizza Hut Nigeria is operated locally by Marathon Restaurants Africa, a franchisee of Yum Restaurants International.

Managing Director Jumia Food, Guy Futi, noted that the partnership is expected to boost operational performance and last mile delivery in Nigeria.

“Currently, our average delivery time is less than 45 minutes which is the quickest in Nigeria. We are reinforcing our operations to further cut our average delivery time to

guarantee that both food and pizza are delivered at best times to our customers while not compromising quality,” he said.

Speaking on the expansion plans of Pizza Hut, Tony Ozanne, Chief Executive Officer, Marathon Restaurant Africa, revealed that Pizza Hut will expand its footprint to

Abuja, Port Harcourt, Ibadan and of course open more outlets in Lagos.

Rising competition in the Pizza Market With a youth-adult population that is witnessing an increasing urban lifestyle, Nigeria is positioned to offer growth to businesses despite numerous challenges. It is

therefore not surprising that competition is mounting daily in the Quick Service Restaurants.

Pizza Hut, a division of Yum, recently entered the pizza market and as new entrants, it offers a different Pizza taste that still retains a strong quality.

Debonairs, on the other

hand, has had to play second fiddle for some time relying on opening smaller satellite outlets to increase its spread across Lagos. Though it has often experienced a slight dip in taste, it has managed to retain the quality of its pizzas.

For fans of Domino’s Pizza its business model has brought about growth and higher market share. However, fast food businesses hardly maintain a competitive moat for too long. Before Domino’s were the likes of Mr. Biggs, Tantalizers, and even Sweet Sensation. They have since been replaced by newer and more nibble quick service restaurants such as The Place, and Mega Chicken.

As competitors circle in on the growing Pizza market, innovation geared towards better quality service and standards will eventually win the Pizza war. For known brands, such as Domino’s and Debonairs if its service is not reviewed, Pizza consumers might be forced to crown another pizza venture king in the short or long term.

SPENDING TRENDS

Increased priority on basic needs dampens patronage for electronic items BUNMI BAILEY

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he weakened purchasing power of Nigerians has necessitated them to attach more importance to basic needs over luxury items such as electronics, and this translated to lower sales revenue for electronics.

With consumers’ wallet yet to receive a tangible boost, a large number of households are allocating more of their income to basic items such as food, clothing, shelter & transportation, they can’t do without, while placing less focus on electronic products like air conditioners, dishwashers, refrigerators, washing machines and dryers, microwave ovens, etc.

Johnson Chukwu, Cowry Asset Management Limited said that the lack of improvement in consumer’s income has made them focus on food and food-related items or basic items while shifting interest away from secondary or disposable items like electronics.

“Aggregate demand and consumption have weakened because overtime consumers’ income has been eroded by inflation and devaluation of the exchange rate which has made it difficult for them to afford the volume of goods and services that use to afford before,” Chukwu said.

The country’s per capita income has been on a decline since 2014. According to the International Monetary Fund (IMF), per capita income data in Nigeria declined to $1,994 in 2017 from www.businessday.ng

$3,268 in 2014.

Also, from the National Bureau of Statistics (NBS), the electrical and electronic sector contracted some 3 percent points from 6.47 percent in 2014 to 3.75 percent in 2018 on low customers’ patronage among

others.

“The sustained weakness in consumer purchasing power has limited the demand for electronics. To put this in perspective, average inflation rate between January and June 2018 was 13.2 percent while NBS

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reported that disposable income within that period grew by about 10 percent which ultimately implies prices grew faster than income,” Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers said.

BusinessDay visit to popular electronic stores like LG Electronics, Samsung, Panasonic and Sony showed revealed that there was very few patronages as some people were basically window shopping and not to buy anything.

Through a discussion with the sales representatives of these stores, findings showed that even though they had adjusted their prices lower after the dollar scarcity in 2016 which made them double their price due to the fact that most of their products are @Businessdayng

imported, consumers are still not able to afford them Tola Adesanlu, a sales representative said that although the prices are a bit lower than what it was before, people still cannot afford it and that what they do is just make deposits and pay later.

The electronic retailers are saying that things will be better for them unless the dollar goes back to what it was in 2015, but analysts are saying that it is not possible as the dollar cannot be controlled internally but suggest other methods to get the sector or market back on track.

Akinloye suggested that the implementation of the signed minimum wage bill would increase the income levels of the country making people to be able to afford electronics.

Thursday 09 May 2019

BUSINESS DAY

Retail &

31

consumer business

COMPANY

Huawei unseats Apple to become the second the biggest smartphone maker this year. Samsung went from 78.2 million shipments to 71.9 million.

Last week, South Korea’s Samsung Electronics, bets on a better second-half after first-quarter profit slumped. Samsung said its mobile business posted a 40 percent drop in operating profit to $2.3 trillion in the first quarter while Apple Inc rival and supplier is hoping to revive flagging growth in its mobile business with its latest handset, featuring a big, bending screen. But in a blow to its renewed focus on innovation, Samsung delayed global sales of the foldable phone after reviewers discovered problems with the display. Samsung, which supplies screens for its own folding phones, forecast weak second-quarter earnings in the display business as demand for flexible screens was expected to remain weak.

But it said demand for flexible display panels would likely pick up and sales for its smartphones were also expected to rise in the second half, led by new models in all segments including the low-end Galaxy A series.

OLUFIKAYO OWOEYE

U

ndeterred by challenges in some markets, smartphone maker, Huawei unseats Apple to claim the number 2 in the smartphone market during the first quarter.

Figures from the International Data Corporation (IDC), a global provider of market intelligence for the information technology, telecommunications, and consumer technology markets revealed China’s Huawei recorded the highest number of phone shipment with incumbent leaders, Apple and Samsung losing their hold on the market share.

According to IDC, Huawei jumped from 39.3 million phones shipped in the first quarter of 2018 to 59.1 million shipments in Q1 2019. While Apple’s iPhone shipments shrunk from 52.2 million in the quarter last year to what’s estimated to be between between 36 and 43 million for the same period

Source: IDC

CONSUMER SPENDING

Mojito, Long Island Iced Tea, others top choice of cocktails at events BUNMI BAILEY

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igerian’s love for leisure and entertainment are drawing in Mojito, Long Island Iced Tea, Strawberry Daiquiri, Kiwi delight and Irish Empire as top choices for cocktails at wedding ceremonies, birthday parties and business events.

A cocktail is an alcoholic drink, mixed either with one type of alcohol with juices, as soft drink and other fruits or as multiple alcoholic drinks with juices or ice tea. The cocktail business is under the industry of event management and hospitality. And usually you see bartenders who help to mix cocktails.

According to cocktail vendors and bartenders, the preference for these is due to its sweet and unique taste.

Ayoade Adesanya, a partner and chief executive officer, Aplusdrinks, said “They are in high demand due to the unique and nice taste it gives.”

Akintunde Shenbanjo, chief executive officer, Chill Park Cocktail & Drinks said that whenever he has an event, his customers would check for his menu list for these drinks and most of the time they would prefer Mojito and Long Island Iced Tea and if the drinks are not on the menu, they request for it.

Bartenders say the prices of these drinks usually range from N1, 000-N4, 000.

Cocktail is also any beverage that contains two or more ingredients if at least one of those ingredients contains alcohol. It is said that cocktail was derived from the French

word “coquetier”, referring to an eggcup-type measure.

Mojito consists of five ingredients that include sugar or sugarcane juice, lime juice,

soda water, mint and white rum. It is best served and consumed in Collins glassware garnished with a sprig of mint and lemon slice. Although there may not be a very clear

history of origin but it is believed that it is one of the first cocktails to have been invented.

Long Island Iced Tea is a stylish cocktail typically made with vodka, triple sec, tequila, light rum, gin and cola that gives a nice and soothing amber hue. It is generally served in a long highball glass. The cocktail has a much higher concentration of liquor than most of the other popular cocktails.

Strawberry Daiquiri usually served frozen is a classic and popular fruity cocktail that is made with fresh or frozen sweet strawberries, rum, lime juice and some ice.

Drinking is fast becoming fashionable and trendy in today’s world. And many more cocktail businesses are flooding the shores of Lagos and other places in Nigeria.

When you log into Instagram, a social media tool and search for cocktails in Nigeria, you will see the number of displayed colourful and refreshing cocktail drinks its vendors on their pages.

“I think there is a big improvement in the demand for cocktails than in the past as are more young people are going into the business and finding new ways and ingredients to make cocktails available making it both competitive and lucrative,” Shenbanjo said.

“But it is still a young market. We have not scratch the surface that is what the essence or what it takes to be in the cocktail business. I recently came back from South Africa, where I went to learn and upgrade my skills in cocktail learning and it actually helped me to discover a whole lot. South Africa has one of the best schools in cocktail making and bartending,” Shenbanjo further said.

Analyst: Bunmi Bailey Graphics: Fifen Eyemisanre Famous www.businessday.ng

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32

Thursday 09 May 2019

BUSINESS DAY

Live @ The Exchanges Investors lose additional N49bn as sell pressure persists on Nigerian Bourse Stories by Iheanyi Nwachukwu

S

ell pressure witnessed at the Nigerian Stock Exchange (NSE) continued on Wednesday May 8, 2019 leading to equities eroding approximately N49billion in value.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased further by 0.45percent on the review trading day, while the Yearto-Date (ytd) return stood further low at 7.84percent.

The stock market recorded 21 gainers as against 21 losers.

The All Share Index fell below 29,000 points and

closed at 28,966.41 points as against the preceding day close of 29,096.41 points.

The value of listed equities –Market Capitalisation closed at N10.887 trillion as against preceding day close of N10.936 trillion.

Dangote Cement Plc led the laggards table after its share price decreased from N181 to N179, losing N2 or 1.10percent.

Mobil Oil Nigeria Plc followed from N175 to N173, losing N2 or 1.14percent; while GTBank Plc declined from N33 to N32.3, down 7kobo or 2.12percent. Beta Glass Plc stock price advanced most from N62.7 to N68.95, adding N6.25 or 9.97percent.

Dangote Flour Mills Plc also gained, from N16 to N16.8, adding 80kobo or 5percent; while Cadbury Nigeria Plc moved up from N10.7 to N11, gaining 30kobo or 2.80percent.

The volume of stocks traded decreased by 24.5percent, from 430.26million to 324.81million, while the total value of stocks traded increased by 14.37percent, from N2.83billion to N3.24billion in 3,631 deals.

The Financial Services sector led Wednesday activity chart with 247.5million shares exchanged for N2.12billion; followed by Consumer Goods with 27.09million shares traded for N993million.

L-R: Chinua Azubike, chief executive officer, Infracredit; Mallam Ibrahim Aliyu, chairman, North-South Power Company Limited; Olumide Bolumole, divisional head, Listings Business, The Nigerian Stock Exchange; Olubunmi Peters; executive vice chairman, North South Power Company Limited; Oladapo Peters, director, North South Power Company Limited during the Closing Gong Ceremony to commemorate the listing of its first N8.5billion 15 year 15.60percent Series 1 Guaranteed Fixed Rate Senior Green Infrastructure at the Exchange.

Dividend payment: Shareholders applaud Wema Bank

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he shareholders of Wema Bank Plc on Wednesday May 8, 2019 applauded the board and management of the bank for their efforts in returning the bank to profitability which led to the payment of dividend.

The Board of Directors of the bank, pursuant to the powers vested in it by the provisions of section 379 of the Companies and Allied Matters Act (CAMA) of Nigeria, proposed and got approval of the shareholders to pay a dividend of 3kobo per share from the retained earnings account as at December 31, 2018.

The shareholders at the meeting received the bank’s audited financial statement for the year ended December 31, 2018 together with the reports of the directors, auditors, and audit committee thereon.

“Consistently, our aim as a bank is to scale up and improve market share through various initiatives and it is

particularly pleasing to note that in 2018, the bank made significant strides in this direction,” Babatunde Kasali, chairman, Wema Bank Plc told the shareholders.

“As we go into 2019, we will deepen our focus on the commercial and corporate business while we introduce a renewed focus on our retail business. The above will help to continue to reinforce our commitment towards balance sheet optimisation, efficient processes and operations as well as value creation for our esteemed customers and shareholders,” he said.

Wema Bank group financial scorecard shows it recorded improved performances, as gross earnings in 2018 grew by 9.6percent from N65.27billion in 2017 to N71.53billion. The group profit before tax (PBT) and profit after tax (PAT) increased by 59.47percent and 47.35 percent respectively to N4.80billion and N3.33billion

against N3.01billion and N2.26billion in 2017.

Total assets as at December 2018 stood at N488billion representing a 26percent increase over the N387billion recorded in the corresponding year of 2017 as loans to customers rose by 16.65percent to close the 2018 year at N252billion from N216billion recorded in 2017.

Impressively, the bank during the year maintained its non-performing loans (NPLs) at 4.98percent, below the regulatory limit of 5percent, despite the challenging macro-economic environment.

Furthermore, Wema Bank continues to record growth in its retail deposit drive, as the bank gains continued acceptance.

Savings deposit grew by 26.2percent from N49.83billion to N62.89billion while current account deposit grew by 46.80percent from N12.47billion to N18.30billion.

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Thursday 09 May 2019

BUSINESS DAY

33

OPINION

Wasteful foreign jaunts by PMB and PDP governors The Public Sphere

CHIDO NWAKANMA

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oes the Secretariat of the PDP Governors Forum know of the existence of these facilities in Nigeria? The Obudu Mountain Resort, Le Meridien Ibom Hotel and Golf Resort, Yankari National Park, Whispering Palms Beach Resort and the Tinapa Resort. Do they know of the Nike Lake Resort, Ikogosi Warm Spring Resort and La Campagne Tropicana Beach Resort?

Or do they remember the Transcorp Hilton Hotel and the Eko Hotel, Lagos, with the most extensive facilities for conferencing and meetings in West Africa?

Citizens received with considerable consternation news of the planned jaunt of governors elected on the PDP platform to Dubai ostensibly for a retreat. It came a few days after the return on Sunday, May 5, of President Muhammadu Buhari from a 10-day “private visit” to the United Kingdom. Neither trip fits into any pattern of seriousness, accountability and promotion of national interest. They raise troubling signals for the next four years.

Officials of the Presidency made strenuous efforts to rationalise the failure of Mr President to formally hand over power to his vice president in the course of his trip.

They could not explain to the nation the essence of his trip; they left it to analysts and citizens alike to speculate that it was about his health. More significantly, presidential spokesman Garba Shehu claimed the charge of non-observance of constitutional stipulations on the transfer of authority would only apply if Mr President stays more than 21 days outside the country. Shehu claimed that the President could govern from anywhere in the world.

There is no information in the public space about the cost of this presidential “private visit” to a foreign land for medical or other reasons. What is known is that the State House Clinic has continued to receive budgetary allocations amounting to N5b in the last four years. Candidate Buhari famously carpeted past administrations for neglect of the health sector and frowned against medical tourism by Nigerian officials. Under him, the State House Clinic degenerated and then became reserved only for a few.

The 15 governors elected on the platform of the People’s Democratic Party will attend “An induction and investment retreat” as part of “Getting ready for the task” from May 16-22, 2019. They will “invest” considerable amount of resources from Nigeria first at The Retreat Palm Dubai, in the Palm Jumeirah, Dubai.

The governors would follow in the footsteps of the PDP presidential candidate in the last election, former Vice President Atiku Abubakar, who similarly took 400 party offi-

cials to Dubai supposedly to devise strategies for managing and leading Nigeria.

The incoming PDP governors should take another look at significance and implications and reconsider their trip. Each of them can go to Dubai on their own steam but to do so as a collective representing 15 states and the opposition party deserves deeper thinking. The country is currently in dire straits financially with the absence of jobs and opportunities. A choice of any of the locations in Nigeria for their retreat will significantly boost direct and indirect job creation and the economy of the town. It will also be good optics for them and speak to understanding by the PDP of the mood and need of the nation.

Business tourism is one of the fastest growing sectors of the global economy.

Nigeria ranks in the 20s rather than the Top Ten in Africa. Actions such as those by the governors-elect contribute to the low numbers for Nigeria. The sector now goes by the acronym MICE, which means Meetings, Incentives, Conferences and Exhibitions.

This correspondent often attends “Meetings Africa” in Johannesburg wherein South Africa Tourism invites participants from across the globe, hosts them, showcases their facilities and works to ensure that planners of meetings come to South Africa.

The World Travel and Tourism Council (WTTC) estimates that the travel and tourism industry globally is worth US$7 trillion.

“This includes domestic and international travel, for leisure and business, the investment in the sector, spending by tourists and tourist businesses, and so on. It is a meas-

‘

The PDP Governors Forum may want to survey Nigerians, particularly the business class, to gauge views about the appropriateness of their foreign excursion

urement of the whole industry, which is the most diverse of all.

Of that US$7 trillion, experts estimate that the global MICE industry is worth around US$650 billion to US$700 billion, a sizeable figure. They say that Africa accounts for no more than around two per cent of that figure, or around US$13 billion. That’s just a quarter of what South Africa spent in the run-up to the 2010 FIFA World Cup!”, the report states.

According to the WTTC (2019) “Travel and tourism supports one in 10 jobs (319million) worldwide and generates 10.4% of world GDP. In 2018, the Travel and Tourism industry experience 3.9% growth, compared to the global economy (3.2%). This industry created one in five new jobs over the last five years.”

The PDP Governors Forum may want to survey Nigerians, particularly the business class, to gauge views about the appropriateness of their foreign excursion. They may also note the fact that Nigerians expect them to signal a change in thinking from the health tourism of the Buhari years to a focus on growing Nigeria. You do not grow Nigeria by exporting significant business and revenues outside. Expectations are justly high from persons to whom citizens have invested hope through the ballot. The PDP Governors Forum should show seriousness, emotional and social intelligence!

Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@ gmail.com.

Flashback2: Buhari’s believers and the challenge of talent portability

ik MUO

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ast week, I recalled my views in 2015 when PMB appointed his saint-ministers. Today, I also represent another 2015 article in which I argued that even the best of these saint-ministers would not perform much due to the surrounding circumstances and the challenges of talent portability.

Kindly read on Whether you call them saints (PMB) believers (Soludo), or even apostles, it boils down to the same thing: one cannot be a saint without being a believer and an apostle. My brief comments on these apostles of PMBs change gospel are as follows. As in the days gone by, the north is in-charge of internal affairs, water resources, FCT and the entire security architecture. Amaechi and Fashola, probably as major political investors, will oversee almost all the contracts in this change era, starting with the $25bn infrastructure fund. I also note the strange situation in education where a Professor and former VC plays a second fiddle to an accountant turned journalist. It is indeed a tragic blunder!

I also wonder whether the young lady at the ministry of finance can cope with the intricacies, political dynamics and global challenges of that ministry, in our challenged economy. The entire annual turnover of Ogun State is less than the petty cash account of one of the parastatals under her ministry. But let’s agree that she will start somewhere and that she must start from building contacts, confidence and trust. Things

are more worrisome as these ministers are starting with new ministerial configurations, new permsecs and the wild expectations, birthed by equally wild campaign promises!

Furthermore, these fellows are not masters of body-language, of which PMB is the only certified custodian. That is why their first outings were disastrous. When I recommended a special reorientation programme for Lai because he had become an MFR (Minister of the Federal Republic) and no longer an APC highwire propagandist, nobody listened. But the gutter and intemperate language he deployed to decimate those who raised issues on the TSA fraud has reinforced my position, (Incidentally the TSA matter was stirred by the obscenely affluent neo rights activist and change master, Dino Melaye). He unleashed verbal terrorism on them, calling them dishonest, frivolous, scandal-mongers, and ignorant, while advising them to go back to primary school. He had also cautioned social-media operatives to self-regulate so as not to self-destruct, to maintain credibility and avoid charlatanism. Yet, a few months ago, he had gleefully misused these faceless charlatans to good effect.

Yes; we have had Fani Kayode and Doyin Okupe but these were of PDP and were ordinary advisers whereas Lai is a minister in this change republic! The minister of interior had threatened his staff (or his houseboys?) that he would show them ‘the other side’ while Ibe Kachikwu had ordered DPR operatives to sell hoarded petroleum products free to the public.

Apart from being a draconian, military type directive, I am still wondering how to ‘sell petroleum products free’!

However, business appears to be taking off, at least for Fashola, the superminister, who recently unveiled the agenda for his gargantuan ministry.

People expect wonders from him because of his pedigree and that is where the problem starts. Fashola was employed and given the largest portfolio in Africa because of his attributes and perceived performance in Lagos. The same applies www.businessday.ng

‘

We should thus moderate our expectations from these super ministries... because this is a widely different environment, with different rules of engagement

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to Ibe Kachikwu (first-class experience at Mobil) Audu Ogbe (agriculture) and Mrs. Adeosun (assuming she shined in Ogun state). But it is not always the case that the stars shine wherever they are because the circumstances that favoured the shining at point A, may be irrelevant or absent, at point B. People do not always perform as they had performed previously because the environment and dynamics are quite different. We all recall the experience of Dora Akunyili in NAFDAC and Ministry of Information. But it is not just a matter of Dora’s experience; it is a global affair.

Garry Duncan had examined why a salesperson successful in one organization is unsuccessful in another, even within the same industry. He averred that the key causative factor is poor management- poor direction, coaching, communication and motivation. (Garry Duncan: Has your new sales star failed to shine?). David Bukus(2012) empirically examined whether star performance can be maintained when performers move to new firms and concludes that performance is largely dependent upon organizational context and, as such, does not transfer to new firms as is hoped.( “When migrating stars fail to shine. HRM International Digest, 20: 4). Chang et al find that firmswith different characteristics need managers with specific attributes that fit these characteristics. This is similar to the finding of Groysberg et al(Are leaders portable, Harvard Business Review, May2006) who noted a wide variation in performance of former GM executives in different settings, because they were not good “fits” with the firms they went on to manage.

We should thus moderate our expectations from these super ministries. This is not because the situation is beyond redemption but because this is a widely different environment, with different rules of engagement. If Kachikwu were still in Mobil, he could not have given the sell-for-free order neither would he have spoken that type of grammar! For BRF, his word was the law as he decided the if, what, why, how and when of every@Businessdayng

thing while he was oga at the top in Lagos.

Now, he has to watch the body language of PMB who may be busy globetrotting (about 30% of his tenure so far spent in the Presidential jet and foreign lands) to give any clarification and even if he were around, the numerous roadblocks would make access herculean. He may also be unlucky to have some subordinates who are more powerful than him because they have more access to the rock or are better able to decode the body language.

In effect, Fashola of Alausa is not Fashola of Abuja! All the same, I wish them luck; indeed, Goodluck; they (and the nation at large) need a large those of it.

How should PMB optimize the performance of his believer-ministers? To ensure that these stars do not dim he needs to create the environment- political, policy, interpersonal, motivational- that is favourable to performance.

Furthermore, since we now have super and ordinary ministers, indicating that some are more valued and competent than others, he should avoid the setup-to-fail-syndrome. This is a situation in which someone underperforms because he has been viewed as an underperformer, and indeed, expected to underperform. This is the opposite of Pygmalion effect in which a person who is expected to perform well actually performs well. These are some of the strategies for optimizing the performance of his believer-ministers Meanwhile, I note that PMB has borrowed a trick from his friend, Ayo Fayose.

In the belated budget documents, he has devoted N500bn for stomach infrastructure though he calls it social welfare scheme! It is well with Nigeria! The fact that you have just read this article is an indication that the umpire(editor) did not declare it inconclusive! God-win!

Continues online at www.businessday.ng

Ik Muo, PhD. Department of Business Administration, OOU, Ago-Iwoye, Ogun State muoigbo@yahoo.com ;muo.ik@ oouagoiwoye.edu.ng ; 08033026625

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Thursday 09 May 2019

BUSINESS DAY

news Exit of Nigerian manufacturing...

Continued from page 1

minium, you pay 5 percent

duty. But when you wish to import your input like galvanised sheets,forinstance,youpay35to 45 percent duty,” a chief executive of a steel company, who did not want his name in print, said.

“So, it is more expensive to import finished goods than inputs because people who do not have the capacity to produce the industry needs told government that they do,” said the chief executive.

BusinessDay gathered from industry sources in the steel sector that Industrial And Farm Equipment Company, a maker of wheelbarrow, has exited.

Nigeria had 21 enamel makers in the 1980s but only about five companies barely exist currently. Like Grif, Wa-

hum is about to shut down as it can’t produce because it is unable to get cold-rolled steel.

First Aluminium is also in dire straits as the company continues to be hobbled by cheap aluminium products.

Qualitec Industries, a major maker of roofing sheets, is nearing shutdown, having downsized workforce by over 50 percent in the last four years. When BusinessDay visited its factory at Ota, Ogun State, only few workers were in its rolling mills and caster section.

“We are really struggling. In the metals industry, the majority of the companies are dead,” Oluyinka Kufile, chief executive of Qualitec Industries and chairman of Manufacturers’ Association of Nigeria (MAN)

Basic Metals and Steel Group, told BusinessDay. “Except government re-classifies all the HS Codes in metals and steel and puts them in proper classification, some may continue to manipulate the duties and people will keep bringing in substandard products that kill the industry,” he said.

Nigeria exited recession in 2017, which claimed at least 50 manufacturers, mainly SMEs, according to MAN. Much of the problem was caused by poor access to dollars to import inputs.

The business environment is tough, as Nigeria ranks 146 out of 190 countries in the 2019 World Bank Doing Business Index. The country is full of opportunities, with demography of 201 million people, half of who are under 18 years.

But issues like multiple taxation, hurdles by government agencies and poor infrastructure hurt investors.

In July 2018, the dominant player in the diaper industry, Procter&Gamble, shut down its $300 million Agbara plant.

P&G shutdown arose from issues relating to inability to meet expected targets due to multiple taxation and harsh treatment in the hands of Nigeria Customs Service, which regularly acts as a revenue earner rather than a business facilitator.

The Lagos-based Kimberly Clark, which produces Huggies, a brand of diapers, is exiting Nigeria.

“There are many substandard diapers flooding the Nigerian market. They pack them in white bails, sell them to Nigerian merchants at ridiculously low prices and

bring them into this market.

What we need is to stop this kind of products from coming into this market because they cause rashes and infections and they are not of good quality,” Paul Odunaiya, managing director, Wemy Industries, told BusinessDay in an interview.

Pharmaceutical companies are also in the shutdown party. Evans Medicals has shut down. Pharmaceuticals are struggling with importation of excepients and other inputs as Nigeria does not have a strong petrochemical industry that should produce them.

Energy constitutes 40 percent of manufacturers’ expenditure. Gas is dollarised, say manufacturers.

“We need a new energy policy. We need to review our energy policy,” Muda Yusuf, director-general, Lagos

Chamber of Commerce and Industry (LCCI), said in a recent interview.

In a recent CEO Confidence Index (MCCI) for Q1 2019 conducted by MAN, 92 percent of the CEOs said multiple taxes were the biggest issues, as 63 percent voted that banks were reluctant to lend to them.

However, analysts say apart from challenges in the economy, poor business practices also contribute to closure of firms.

“I know of a company which shut down because of financial recklessness,” Ike Ibeabuchi, an economy analyst, said.

“I also know of another which was a result of inability to cope with competition. So, in a developing, uncertain environment like ours, tread with caution,” he said.

Nigeria loses big on continued...

Continued from page 1

The Nigeria Immigra-

tion Service (NIS) on behalf of the Federal Government pays about N24 billion ($66.8 million) annually to Malaysia, Netherlands and South Africa for the production of the Nigerian international passport booklets, BusinessDay calculations show.

The Nigerian passport is in high demand as many citizens seek greener pastures overseas owing to persisting economic hardship.

A senior officer at NIS said the Ikoyi, Lagos office of ImmigrationServiceissuesanaverage of 800 passports daily but has demand of over 1,000, while FestacandIkejaissuecombined issue 1,000 passports daily with demand of over 1,400.

Abuja issues an average of 500 passports daily with demand of over 800, according to the senior officer who craved anonymity because he is not authorised to speak on the matter.

Kano, Asaba, Ogun and Ibadan, which also rank top in the mobility of passports, issue 500 passports altogether, with demand of almost 1,000,

while other states in Nigeria combined issue an average of 2,000 passports daily with demand of over 3,000. This implies that on a daily basis, passport offices across Nigeria issue at least 4,800 passports.

BusinessDay’s calculations, based on the above figures, show that passport offices across Nigeria issue about 1,248,000 passports a year, going by five working days in week.

The government spends about N19,500 for the production of one passport. This implies that the government spends N19,500 x 1,248,000 to produce Nigerian passports every year, which amounts to N24.34 billion.

This huge amount could have gone a long way in providing jobs for the over 20.9 million working-age Nigerians who are currently unemployed, according to data from the National Bureau of Statistics (NBS), and lift the over 87 million citizens The Brookings Institution said are currently living below $1.9 a day.

Africa’s biggest oil producer could also see a boost in Gross Domestic Product (GDP) and

Hope dims on housing roadmap as...

Continued from page 2

housing construction in its zeal to accelerate housing delivery. That will lead to regression and breed corruption,” Ajayi advised. “Government should rather focus on helping to build strong housing and mortgage systems with

the private sector serving as the engine of execution.”

But Fashola insisted that government must lead the change that was needed in the housing sector, recalling that over the years, Nigeria had embarked on a series of housing initiatives but not one of them had been pursued with

Tribunal sets dates for hearing Atiku...

Continued from page 2

that the tribunal would not hesitate to wield the big stick against anyone found culpable in that regard, adding that the task of the tribunal was a serious national assignment and must be seen as such by all.

The chairman stressed that no matter how an election was conducted there were bound to be complaints, hence the establishment of the tribunal

to give speedy hearing on such complaints.

She disclosed that there are currently 786 petitions against the outcome of the 2019 general election, with Imo State having the highest number of 76 and six tribunals.

The presiding judge assured that the panel would be fair to all and would give equal time to all litigants in its efforts at ensuring that justice is done www.businessday.ng

Mohammed Balarabe (l), deputy managing director, Fidelity Bank plc, and Ebrima Faal, senior director, African Development Bank (AfDB), exchange a signed MoU during the formal signing ceremony of $50m line credit between Fidelity Bank plc and AfDB in Abuja.

a huge increase in actual revenue which has been below target for over five years since the collapse in the global oil price and a restiveness in the Niger Delta region pushed the country into its first recession in a quarter of a century.

BusinessDay checks show that the passport booklets are currently being produced by Iris Smart Technology Nigeria (ISTL) through its parent company, Iris Corporation, based in Malaysia.

A company in the Neth-

erlands is responsible for the biometrics and security details inserted into the passports, while South Africa provides the ink used for the printings done in the passports, our findings show.

This is even as many Ni-

gerians complain of difficulty in obtaining the international passport as immigration officers repeatedly complain of scarcity of the booklets.

consistency or any measurable sustainability.

“We are convinced that this change must be led by government and subsequently driven by the private sector,” Fashola said.

He cited the public housing initiative of the United Kingdom which was started by government in 1918 and, as of 2014, had recorded 64.8

percent of the people who were home-owners.

Fashola also cited Singaporean initiative in housing which, he added, was started by government in 1960 and has provided housing for 80 percent of its people.

He pointed out that what was common to both models was that there was a uniformity of design, a com-

mon target to house working class people and not the elite, standardisation of fittings like doors, windows, space, electrical and mechanical, and also a common concept of neighbourhood.

Re-emphasising the focus of the plan on the low-income earners and the most vulnerable, the minister also recognised that there were people

who wanted just land to build for themselves, and also those who wanted town houses and duplexes, whether detached or semi-detached.

“But this class of people is not in the majority and so, they are not part of the target of the plan. The people who we must focus on are those in the majority and those who are most vulnerable,” he stressed.

and done expeditiously in all the cases before it.

Responding, counsels in the matters promised to play by the rules and give maximum cooperation to the panel.

While Levi Ozoukwu, senior advocate of Nigeria, is leading the legal team of Atiku and the PDP, Wole Olanipekun (SAN) and Lateef Fagbemi (SAN) are leading that of Buhari and APC, respectively.

Other members of the presidential panel include Justices Abdul Aboki, Samuel

Osiji, Joseph Ikyegh and Peter Olabisi-Igeh.

The tribunal in stating that proceedings would be on a daily basis called the first case, the petition of the Hope Democratic Party (HDP) and its presidential candidate, Albert Owuru.

At the end of the identification and regularisation of processes filed in the HDP petition, Justice Bulkachuwa fixed May 14 for pre-hearing of the petition.

The tribunal fixed May 15

to hear the petitions of Atiiku and PDP. However, the tribunal declined to give definite date for hearing in the petition of Coalition for Change (C4C) and People’s Democratic Movement (PDM), following the inability of the two petitioners to serve processes on Buhari and other respondents.

Meanwhile, the tribunal declined to hear an ex parte application filed by the C4C, praying for substituted service on President Buhari and Vice

President Yemi Osinbajo, following flaws in the motion.

Among others, the tribunal found that the ex parte application filed by Obed Agu was not competent in law because it was not signed, and the seal of the counsel was not fixed as required by law, adding that there was no affidavit in support of the motion.

Faced with the rejection, the counsel withdrew the application and told the tribunal that a fresh one would be filed in its place.

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Thursday 09 May 2019

BUSINESS DAY

35

news ‘Nigeria requires strong institutions ECOWAS Parliament to strengthen regional security, enhance economic growth to achieve thriving economy’ Temitayo Ayetoto

T

o achieve an economy that thrives and rise above its current level of poverty, unemployment, insecurity and other socio-economic problems, Nigeria requires strong institutions anchored by visionary leaders, Asuwrinme Ighodalo, chairman, Sterling Bank plc, says.

Tthere are linkages between strong institutions and flourishing economies, as institutions function efficiently to promote desirable and progressive attitude for growth, Ighodalo said while speaking at the 2019 Annual May Day Lecture of the Silver Knights in Ibadan, Oyo State.

Institutions in Nigeria lack a central nervous system and a cohesive national agenda to protect it, according to Ighodalo’s analysis.

“While there are significant differences in how the states I would refer to as ‘Turnaround Nations’ – China, Singapore and UAE – built and utilised institutions to support economic growth, what they all have in common is a compelling desire

to catalyse and speed up change in their societies rather than to gradually evolve,” he said.

“They set out a clear national agenda for achieving specific goals and found ways to short circuit ‘institutional attributes’ and fashion for themselves a way of delivering radical change for which there was a dire need.”

Noting that Nigeria has neither the luxury of a fresh start nor the time for evolutionary development, he said the country primarily needed a few good men and women - passionate, progressive and possessed by genuine love for the country.

They must identify a vision, around which consensus can be built, and evolve into custodians of that vision.

They must develop a national plan to execute the vision and strategically embed themselves into the political structure. They also must evolve a strong sanction structure that keeps the custodians in check, prevents selfish derailment, and ensures fidelity with the agenda. The custodians must understand their privilege and embrace with clarity the knowledge that the whole is greater than the sum of its parts.

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He said: “A visionless nation is bound for destruction, at the worst, or drift, at best. Without vision, Lee Kuan Yew would have taken two steps forward and three steps back. If he prepared the population only for the low wage jobs they initially started with, and did not invest in consistently elevating the labour force, they would have been stifled by China when it eventually got its act together.”

Earlier in his remarks, Jide Owoeye, a professor, who is the club chief, observed that the major concern was about facing the great challenge of how to make Nigeria work.

According to Owoeye, a state characterised by fragility of its institutional structures may not fulfil its own side of the social contract.

“The problem of Nigeria, which we must reverse in the next four years, is that those with vision never become leaders and those who become leaders do not have a national vision. Strong institutions support a thriving economy but visionary leaders with a clear agenda design and create a thriving economy and a developed country,” he said.

Innocent Odoh, Abuja

T

he Parliament of the Economic Community of West Afr ican States (ECOWAS Parliament) has pledged to work with partners to strengthen security in the sub region and enhance the macroeconomic growth variables of member countries.

Speaker of the Parliament, Moustapha Cisse Lo, gave this assurance while giving his welcome address at the opening session of the 2019 First Ordinary Session of the regional legislature on Wednesday in Abuja, and disclosed that the institution had made giant strides in curtailing insecurity and strengthening political stability in the ECOWAS region.

Cisse Lo, while congratulating President Muhammadu Buhari on his support and selfless commitment towards the progress of

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the ECOWAS Community, noted that ECOWAS was improving on free movements of goods in the region for the benefit of its economy and member states.

He also applauded the synergy between the Parliament and the United Nations High Commission for Refugees (UNHCR) towards the fight against impediments that could threaten progress in the region.

President of the ECOWAS Commission, JeanClaude Kassi Brou, in his remarks, highlighted the concerns of the region at the mounting security threats with grave incidents recorded in some countries.

“Several countries have suffered deadly attacks against their peaceful citizens. We offer our condolences to the bereaved families, government and people of these sister countries. The Community will, in this regard, continue working with its partners to stabilize and protect the

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region from terrorism, piracy, cross-border crimes, inter-ethnic clashes among others,” he said.

He noted that it had become incumbent on the region to tackle the menace of youth unemployment, migration, and epidemiology diseases, among others.

Kasi Brou pointed out that the region’s economic prospects are promising given the good performance of major macroeconomic indicators. “ The region will continue effort to consolidate the regional economy with several achievements which will be presented in the next few days,” he said.

He also called on all member countries to consolidate on the gains of democracy in the region even as he welcomed the “successful conduct of presidential elections this year in two of our member states, namely the Federal Republic of Nigeria and the Republic of Senegal.”

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Thursday 09 May 2019

BUSINESS DAY

RESEARCH&INSIGHT

In association with briu@businessday.ng

A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

08098710024

Simplifying the Purchasing Managers Index (PMI) AMAMCHUKWU OKAFOR

Chart 1: Manufacturing PMI

T

he Purchasing Manager Index (PMI) is an economic indicator that surveys purchasing managers at work. It is an index of the prevailing direction of economic trends in the manufacturing and services sectors. The PMI is framed around a diffusion index that summarizes whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting.

The diffusion index is computed as the percentage of responses with positive change plus half of the percentage of those reporting no change. The purpose of the PMI is to provide information about current and future business conditions to companies, decision makers, analysts, and investors.

The PMI reads from 1 to 100 with 100 representing an improvement by a 100 percent of the responders, and 0 representing deterioration if 100 percent of the responders report a deteriorat-

Source: CBN ing and non-manufacturing activities.

In Nigeria, the Central Bank of Nigeria (CBN) reports the PMI based on a survey of purchasing and supply executives in manufacturing and nonmanufacturing industries across the 36 states in Nigeria. The headline PMI for the manufacturing sector is computed as the weighted average of five

Chart 2: Non-manufacturing PMI

others especially new orders and production level led the expansive change. Drilling down, twelve of the 14 subsectors surveyed reported growth in the review month in the following order: electrical equipment; plastics & rubber products; cement; petroleum & coal products; transportation equipment; food, beverage & tobacco products; nonmetallic mineral products; chemical & pharmaceutical products; furniture & related products; textile, apparel, leather & footwear; printing & related support activities and fabricated metal products. The paper products and primary metal subsectors recorded decline in the review period.

level seemed to have been offset by a positive 1.5 percent change in Employment level in the review months. All the 17 subsectors surveyed recorded growth in the following order: management of companies; real estate rental and leasing; construction; wholesale/retail trade; agriculture; health care and social assistance; finance and insurance; professional, scientific, and technical services; educational services; water supply, sewage and waste management; information and communication; accommodation and food services; repair, maintenance/washing of motor vehicles; arts, entertainment and recreation; electricity, gas, steam and air conditioning supply; transportation and warehousing and utilities.

From PMI to Real sector The PMI, in its simplicity speaks to the real sector activities of the economy. It tracks the activities in the manufacturing and services sector. The trend in chart 3 shows the direction of the PMI over a one-year period. With a peak in December 2018, due mostly to increasing manufacturing activities towards the yuletide, the headline PMI for both manufacturing and non-manufacturing activities dipped through the first quarter of 2019.

There has been some moderation, however, since

Chart 3: 1-year trend of the PMI

Source: CBN diffusion indices, namely: production level, level of new orders, suppliers’ delivery time, employment level and raw materials inventory/work in progress, with assigned weights of 25%, 30%, 15%, 10% and 20%, respectively. Whereas the headline PMI for the non-manufacturing sector is computed from four diffusion indices, namely: business activity, level of new orders, employment level and raw materials inventory, with equal weight assignment of 25% each.

The Manufacturing PMI (MPMI) The manufacturing PMI for April 2019 stood at 57.7 index points, indicating expansion in the manufacturing sector for the twenty-fifth consecutive month – soaring 7 points above the benchmark level of 50. The index changed slightly by 0.52 percent compared to that of the previous month at 57.4. Of the 5 sub-indices that make up the headline MPMI, only supplier’s deliveries recorded a negative change of 0.51 percent, whereas

The headline PMI for the non-manufacturing sector stood at 58.7 points in April 2019, a 0.51 percent change from the previous month, indicating a slight expansion in the non-manufacturing PMI for the twenty-fourth consecutive month. The four major sub-indices that make up the headline NPMI all show positive change from the previous month to the review month except for the level of inventory. The change in the inventory level declined in the month of April from 59.5 in March to 58.5. The -1.6 percent change in the inventory

February 2019.

Notice also how the growth rate in manufacturing GDP in 2018 (as trended by the 2 period moving averages) corresponds with the changes in the PMI, especially the MPMI. Accordingly, we expect the growth rate of manufacturing GDP as well as national GDP to moderate in Q1 2019. This would be attributable to perceived stagnation in the economy since after the election and overall political pessimism. Rebound may be likely, however, towards the end of Q2 2019.

12734BDN

ing condition. A PMI of 50 means that the variable is unchanged: a number over 50.0 indicates an improvement, while a number below 50.0 suggests a decline. The degree of confidence experienced by respondents reporting an improvement and the degree of concern experienced by respondents reporting deterioration are not factored into the index.

The Institute for Supply Management (ISM) began computing the PMI for the US since 1948.

Other principal producers of the PMIs include the Singapore Institute of Purchasing and Materials Management (SIPMM), which produces the Singapore PMI and the Markit Group, which produces metrics based on ISM’s work for over 30 countries worldwide. Like the ISM, the Deutsche Börse reports the Chicago-PMI which also covers the manufacturing and non-manufacturing activities in the Chicago region – the region is representative for the US in terms of manufactur-

WIDE OPEN MINDED RMB Nigeria. Solutionist Thinking.

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BUSINESS DAY

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ECONOMIC MONITOR A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

briu@businessday.ng

08098710024

The giant strides in the aviation sector …a leap into 2019 ADEMOLA ASUNLOYE

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he Nigeria aviation industry witnessed some noticeable improvements in 2018. The sector promises better performance in 2019 as we are likely to see landmark achievements. For a consecutive period of three years, the industry witnessed laudable operations without any major accident that involved loss of lives—zero-crash.

This is largely attributed to the regulatory agencies on their significant measures to deepen safety as well as the Accident Investigation Bureau with their issuance of safety recommendations.

“Civil aviation is a critical element in Nigeria’s transportation system and indeed its economy. Nigeria has twenty (20) airports and many regulated airstrips and heliports; 23 active domestic airlines; 554 licensed pilots; 913 licensed engineers and 1700 cabin personnel”, Nigerian Civil Aviation Authority (NCAA) said on its website.

The industry has been criticized for its inability to earn fairly large returns, albeit, investigations revealed that the aviation industry in 2017 and 2018 lost more than $2 billion investment from international financiers who wanted a stake in Nigeria’s air transport sector due to the economic downturn.

Source: NCAA, BRIU

flew 4,079,078 passengers during the period under review.

Of the 74 complaints reported against the international airlines, quite a fair resolution of about 49 per cent of these was successfully provided. Domestic airlines on the other hand were able to resolve 72 per cent of the complaints reported.

A total 7,027,768 inbound passengers and 7,143,954 out-bound passengers were

operations. These 10 top-ranked airlines contributed 82.5 per cent of the total flight operations from January to December in 2018 whereas the remaining 33 airlines contributed a combined 17.5 per cent.

Air Peace topped the list among the 9 airlines with regards to the number of delayed flights in 2018. The airline recorded 14,067 delayed flights representing over 63 per cent of total scheduled flights of 22,055 and 67 outright cancellations. In similar trailing pattern, Arik Air ranked second with 15,205 scheduled flights, 8,073 delayed flights, whereas 152 flights were outrightly cancelled.

Next is Dana Air which scheduled 5,944 flights with 3,915 delayed flights and 67 cancelled flights; Azman Air with 4,944 scheduled flights, 3,242 delayed flights representing 65.9 per cent of total flights, and 49

the top rated international airline based on flights operated—generally ranked 9th with 1,655 flights operated while Asky, 2nd rated international airline, ranked the 1oth with 1,226 flights operated from January to December 2018.

Airline patronages increased by 26.28 per cent in 2018 as more travellers opted for air transport between January and December 2018. The figures released by the Consumer Protection Directorate of the Nigerian Civil Aviation Authority revealed that 14,171,722 air travellers went through Nigeria airports in 2018 as against 11,221,608 recorded in 2017.

No fewer than 734 cases of cancelled flights were recorded from both the international and domestic airlines operating in Nigeria, according to the data released by the Consumer Protection Department of Nigerian Civil Aviation Authority (NCCA).

Arik Air tops with 152 cancelled flights, next is Air Peace, 137; Aero contractors, 70, and Danar Air with 67 cancelled flights. Other cancelled flights of the listed airlines in the chart are above 21 which represent the average number of cancelled flights.

Ethiopian Air and Max Air demonstrated a significant level of credibility as they both have minimal cancellation of flights representing 0.27 per cent and 0.23 per cent of total scheduled flights respectively.

In January 2019, it was revealed that 134 flights were cancelled by local and international airlines operating in Nigeria and a total number of 1,290,857 passengers were airlifted within and outside the country by local and international airlines respectively across the 30 airports in the country.

Within the same period,12 airlines consisting 5 international airlines and 7 domestic

Source: NCAA, BRIU

Data from the National Bureau of Statistics (NBS) revealed that air transport contributed 0.11 percent to GDP at 2010 constant basic price in 2018. This amounted to 20.7 per cent increase from 2017 to 2018.

In 2018, the industry reported a total number of 75,463 operated flights plying international and domestic routes. These flights were operational on a total 43 airlines—international and domestic.

There are about 9 airlines operating within Nigeria, all of whom operated a total of 59,818 flights and airlifted 10,092,648 passengers across the country in 2018.

These airlines are: Aero Contractors, Arik Air, Air Peace, Azman Air, Dana Air, First Nation, Med-View, Overland and Max Air. The remaining 34 airlines on the international routes operated 15,645 flights and

recorded collectively in the industry with 61.5 per cent resolution provided to the total complaints. The international airlines recorded a combined 1,994,099 in-bound passengers; 2,084,980 out-bound passengers; 5,395 delays and 41,334 baggage(of the 44,885 baggage delayed/missing) were found. On the other hand, domestic airlines garnered 5,033,669 in-bound passengers; 5,058,974 out-bound passengers; experienced 36,350 delays, and found 164 baggages from a total 173 either delayed or missing.

The combined activities of airlines and their operations in full year 2018 are shown in chart provided in this analysis.

In the period under review, eight domestic airlines and two international airlines ranked top as the airlines with highest flight

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Source: NCAA, BRIU

cancelled flights. Aero Contractors operated 4,361 flights with 2,459 delayed and 70 cancellations; Overland, 601 flights with 1,960 delayed and 29 cancellations. Max Air and Medview recorded flights between 2,000 and 3,000 within the same period.

The 9th and 10th airlines from the rank are international airlines. African World—

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airlines recorded 132 flights cancellation comprising 13 international airlines and 121 domestic airline operators.

Still in January 2019, total passengers airlifted amounted to 1,290,857 passengers consisting 392,364 on international airlines and 898,493 on domestic airlines. The industry, however, aims to leverage on its progress to develop the country into a hub in the West

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Thursday 09 May 2019

BUSINESS DAY

NEWS Push for insurance penetration gains traction as NAICOM grants licence to Casava microinsurance -…firm to focus on life, general business in Lagos only …company owned by the Lagos Pedro family Modestus Anaesoronye

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he Nigerian insurance industry’s efforts to deepen insurance penetration by capturing the low-income population with affordable products have received a boost with the approval to Casava MicroinsurancetooperateasstatemicroinsurancecompanyonlyinLagos.

Casava, according to BusinessDay investigations, is owned by the Pedro family of Lagos which parades politicians, oil moguls and financial services sector experts.

This licensing brings to two the number of standalone microinsurance companies licensed by the National Insurance Commission (NAICOM), Goxi Microinsurance Company having been licensed in February 2019.

Both Goxi and Casava Microinsurance are to operate as state composite microinsurance companies, transacting life and general micro-

insurance business in Lagos only.

NAICOM had disclosed at the beginning of 2019 that it plans to increase to five or six the number of microinsurance firms by the end of the year.

Insurance penetration in Nigeria is one of the least in Africa, falling behind South Africa, Kenya, and Egypt, and currently stands at less than 0.1 percent, while the industry’s contribution to the gross domestic product is put at 0.4 percent.

Sunday Thomas, deputy commissioner for insurance, technical, told BusinessDay over the phone that NAICOM was eager to see the microinsurance companies take off to drive grassroots insurance.

“Certainly, we must lift something off the ground, and we are working towards it seriously,” Thomas assured.

Thomas said that this approval was in a bid to increase insurance penetration and acceptance in the

country, saying that it would also complementthecommission’sefforts on insurance penetration.

Ayodele Iyun, an insurance practitioner in a presentation titled ‘Micro-Insurance:Nigeria’sUntapped Insurance Market,’ said low insurance awareness and inaccessibility to insurance services especially by the low-incomeearnersandthepoorhad over the time been identified as the major factors responsible for Nigeria’s low insurance rate.

He said there was a general perception amongst most low- income persons in Nigeria that insurance is onlymeantforthewealthythatcanaffordit,andthisbelief,henoted,hadleft majority of the people in this class that accounted for the larger percentage of country’s population ‘’ uninsured” and vulnerable to numerous perils.

Insurance products designed for this group of people are going to be cheaper,affordable(lowerpremiums) withlotsofflexibility,toattractthemto taking up insurance covers.

RenCap ready to hold 10th annual pan-Africa 1:1 investor confab in Lagos

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enaissance Capital, an emerging and frontier markets investment bank, will hold its 10th Annual PanAfrica 1:1 Investor Conference on May 15-16, 2019, at the Continental Hotel in Lagos, Nigeria.

The firm will mark this anniversary event with special insights and extensive coverage.

The conference serves as a platform for closed-door 1:1 meetings between top global and local investors from across the globe and corporate representatives to discuss investment opportunities in Nigeria and other fast-growing economies on the continent.

More than 200 scheduled 1:1 meetings will bring together local corporates and international and Africa-based investors with total AUM of ca. $150 billion.

The opening ceremony will include a keynote address by Yewande Sadiku, executive secretary/CEO, Nigerian Investment Promotion Commission

(NIPC). Charles Robertson, global chief economist, Renaissance Capital, will give a talk on Nigeria’s structural reform and diversification from oil dependency as key to industrialisation.

Temitope Popoola, CEO, Nigeria, Renaissance Capital, said, “We are delighted to welcome all participating corporates and investors to the 10th edition of our annual conference, particularly those who have travelled from countries outside of Nigeria to be a part of the event.

“We expect discussions at this year’s event to be driven by expectations for the new political environment considering the recently concluded elections. Renaissance Capital remains committed to Africa, which is evidenced by our growing share of market and deal pipeline in each of our core regions in the continent, particularly Nigeria.

“We successfully priced a debut $450 million 9.50%

five-year Reg S/144A bond offering for Ecobank Transnational Incorporated, a leading pan-African bank, and we are currently involved in several landmark transactions with key clients.”

Robertson said: “We do believe that further improvement in the business climate and a strong welcome to foreign investors are necessary for Nigeria to lift the investment rate.

With some rapid reforms, a better value currency, accelerating growth – Nigeria could become an overweight again.”

RenCap’s Annual Pan-Africa 1:1 Investor Conference in Lagos, Nigeria, will be combined with bespoke investor trips to the most exciting investment destinations in West Africa and dedicated site trips on the back of the event. It will be preceded by two-day trips to Accra, Ghana and Abuja, Nigeria and followed by a focused investor site visit in Nigeria.

FG commences utilisation of N10bn North East development fund ... inaugurates NEDC Governing Board

Tony Ailemen, Abuja

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ederal Government plan to reconstruct the Boko Haram ravaged North East got a boost Wednesday with the inauguration of the Governing Board of the North East Development Commission (NEDC).

This is as President Muhammadu Buhari said the Fderal Government had allocated N10 billion in the 2019 budget for the development of the war-ravaged region The establishment of the Commission is in fulfilment of the pledge of the Buhari administration to the people of the North East and as part of strategies for regenerating the socio-economic potentials of the geo-political zone after the devastation of the Boko Haram insurgency.

President Buhari also noted that the plan was in appreciation of the massive electoral support receivedfromthezonein2015and 2019 general elections.

The North East Development Commission was established by theNorthEastDevelopmentCommission (NEDC) (Establishment) Act, 2017, which the President assented to on October 25, 2017.

The Commission is charged with the responsibility of among otherthings,receivingandmanaging funds allocated by the Federal GovernmentofNigeriaanddonors fortheresettlement,rehabilitation, integration and construction of roads, houses and business premises of victims of insurgency as well astakingcareofthemenaceofpoverty, illiteracy, ecological problems and other related environmental and developmental challenges in the North East states.

The President noted that the 11-memberGoverningBoardhad been carefully constituted based ontheproventrackrecordsofhard work and integrity of members.

“It is therefore the expectation of government and people of the zone that you will rapidly and sys-

tematically set to work to address all areas of your mandates in a fair and equitable manner.

“To demonstrate the commitment of this Government to your effective takeoff, a provision of N10 billion has been made in the 2019 budget. It is my expectation that you will judiciously apply these resources,” he said.

He charged them to immediately commence the conduct of comprehensive survey of all states in the zone to determine the reconstruction and rehabilitation needs of all the socio-economic sectors of the zone and develop an interventionmasterplanbasedon the outcome of the assessments.

The Commission is also to develop policies and implementation guidelines for immediate intervention in the development of the zone, and institute a strong mechanism for effective and efficientcoordinationofallthestakeholder (local and International) activities, starting by taking over of all Federally-funded activities, projects and programmes as well asthestructuresandlogisticsassets that the organisations utilize.

“In order to avoid duplication of efforts and waste of scarce resources, you shall be the focal organization to assess, coordinate, harmonise and report on all the intervention programmes and initiatives that the Federal Government or any of its Ministries and agencies are involved in the region.

“Youmust,therefore,constantly liaisewiththerelevantFederalMinistries, Departments and Agencies (MDAs),StatesandotherDevelopmental Partners for the implementationofallprogramsandinitiatives and proper utilisation of funds released for intervention in the zone.”

He also directed the Commission to commence the process of Resettlement and Rehabilitation of Internally Displaced Persons (lDPs) to their original homes or newcommunitiesinordertobring social cohesion in the zone. www.businessday.ng

L-R: Ifeanyi Agwu, managing director, BKG Exhibition Limited; Abiona Babarinde, general manager, marketing and corporate communications, Coscharis Group, and Adetunji Oyebanji, MD/CEO, 11 plc, during the launch of Ford Everest and Figo, at the 14th Lagos Motor fair in Lagos, yesterday. Pic by Olawale Amoo

Edo-HIP: Edo, UBTH mull partnership on specialised healthcare

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d o S t a t e g o v e r n o r, Godwin Obaseki, says his administration will collaborate with the management of the Univ e r s i t y o f B e n i n Te a c h i n g H o s p i t a l ( U BT H ) t o strengthen the Edo Health Improvement Programme (Edo-HIP) and offer more specialised health services to residents.

The governor said this at a courtesy visit by the UBTH management led by the Chief Medical Director, Darlington Obaseki, at the Government House, Benin City, Edo State.

Governor Obaseki said the partnership would help

in curbing medical tourism in the state, as plans had reached advanced stage for the re-establishment of the state’s School of Nursing and Midwifery and upgrade it to world-class standard to ensure adequate training of health personnel.

The governor described UBTH as a critical partner in the state’s healthcare sector, adding that the state government would enter an agreement with the management of the hospital to formalise the partnership as soon as possible.

He commended UBTH for its achievements since inception over 46 years ago,

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noting that the hospital had contributed to the health, social and economic sectors of the state.

Earlier, the UBTH’s Chief Medical Director said the t e a m v i s i t e d t h e g o v e rnor to inform him of the maiden edition of the hospital’s Founder’s Day cele b rat i o n t o b e at t e n d e d by former Head of State, General Yakubu Gowon and his wife, alongside other dignitaries.

He said the hospital had recorded successes in carrying out specialised medical services and was ready to assist the state government-owned hospitals on @Businessdayng

similar ser vices, noting, “The state’s hospitals need manpower in performing surgeries and we can assist in this area.”

The CMD commended the governor for his intervention programme in the health sector, especially t h e s t a t e g o v e r n m e n t ’s re sp o n s e t o L a ssa Fe ve r a n d Ye l l o w F e v e r o u t breaks.

According to the CMD, the renovation of Primary He a l t h c a re C e n t re s a n d relative industrial harmony in the health sector are also part of the successes recorded by the Obaseki-led administration.

Thursday 09 May 2019

BUSINESS DAY

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news FirstBank hits N1trn in transactions processed through Firstmonie network

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irst Bank of Nigeria Limited has announced that its Firstmonie network has processed a cumulative transaction value of N1 trillion from its re-launch in January 2018.

The network also achieved nationwide coverage in record time, enabling access to financial services for many locations that never had a way for its residents to access financial services. This is in line with the Central Bank of Nigeria’s (CBN) objective of bringing banking services close to allNigerians,irrespectiveofwhere they live.

FirstBank’s Firstmonie service provides financial/banking solutions to rural and semi-urban locations across the country, such as account opening, cash deposit, cash withdrawals, airtime purchase, bill payments and much more. Through this channel, the Bank is committed to providing convenient services that endears trustandprovideseaseofaccessto

banking products, thereby saving time and travel costs for users of our network.

According to Adesola Adeduntan,CEO,FirstBankofNigeria Limited,“TheFirstmoniescheme is supporting the Federal Government’s empowerment and job creationagendaasover22,000Nigerians,throughthisscheme,contribute to the increased economic activitiesoftheirneighbourhoods.

“Our partner network is growing and we are particularly delighted about the progress we are making in actively driving nationwide Financial Inclusion, exposing communitiesto opportunities for growth, jobs, empowerment, and improved live conditions.

Yet again, we are delighted to score another first in promoting financial inclusion in the country.

“We appreciate our partner network and remain committed to working together to achieve even greater impact on the lives of Nigerians.”

TEF to host 5th annual entrepreneurship forum in July

Godwin Obaseki, governor, Edo State (m); his deputy, Philip Shaibu (2nd r); David Osifo, commissioner for health (r); Darlington Obaseki, chief medical director, University of Benin Teaching Hospital (UBTH) (2nd l), and Casimir Omuemu, chairman, medical advisory council, UBTH (l), during a courtesy visit by management of UBTH to the governor in Benin City.

Nigeria generates over $180bn revenue from deepwater operations

…Rwandan, Senegalese presidents … as deepwater production to double in 10 years expected as venue shifts to Abuja Baru, who was represented by diving.

TEMITAYO AYETOTO

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he Tony Elumelu Foundation (TEF) will host its 5th annual forum on July 26-27, 2019. Adjudged the largest annual gathering of African entrepreneurs, the two-day event will take place at Transcorp Hilton Hotel, Abuja.

The forum is the culmination of the annual Tony Elumelu Foundation Entrepreneurship Programme,whichthisyearmentored, trained and seeded over 3,000 young Africans selected from over 216,000 applicants.

The event provides a unique opportunity for young women andmenfromall54Africancountries to meet, learn and network with the broader African and global entrepreneurship ecosystem. It is also a critical opportunity for political leaders and policymakers to meet, face to face, a new generation of African business leaders who are transforming Africa’s economic trajectory.

Keynote speakers at the highly anticipated forum include President Paul Kagame of Rwanda and President Macky Sall of Senegal, who will join Tony O. Elumelu, TEF founder and chairman, Heirs Holdings and United Bank for Africa (UBA), in an intimate open house discussion.

The Presidential Convening is a highlight of the forum, allowing the African entrepreneurs in attendance to closely engage with political leaders, to give first-hand testimony of the important role government can play in catalysing growth and encouraging business ambition.

The forum agenda includes masterclasses and panel discussions with leading speakers and sector experts, from Africa and globally, who will engage attendees in specialised training sessions to share insights, deepen their knowledge and refine their skills.

The forum will also feature a pitching event, where select

entrepreneurs will deliver exciting presentations on the goods and services they provide to a distinguished judging panel.

For first time the forum will be hosted in Abuja, Nigeria’s federal capital, and will bring together leading policymakers, business leaders, development agencies and the entire entrepreneurship ecosystem, including alumni of the Foundation’s Entrepreneurship Programme.

Last year, a significant highlight was the launch of TEFConnect, the digital networking platform for African entrepreneurs, which provides a unique digital hub for the African entrepreneurship, facilitating networking, mentorship and, most importantly, business beyond borders.

Previous forums have been headlined by African leaders, including Ghana’s President Nana Akufo-Addo, Kenyan President Uhuru Kenyatta, former Nigerian President Olusegun Obasanjo, Nigeria’s Vice President Yemi Osinbajo, and former Benin Prime Minister Lionel Zinsou, who is also TEF Advisory Board Member.

The Tony Elumelu Foundation’s determination to bring change in scale across Africa and its relentless focus on entrepreneurship is rooted in the inclusive philosophy of Africapitalism, created by its founder, which recognises economically empowering Africa’s youth, the continent’s future wealth creators, and thereby creatingsustainable economic and social wealth, as one of the most pressing issues of the 21st Century.

In 2015, the Foundation committed $100 million to empower 10,000 entrepreneurs from across the continent over a period of 10 years. Now in its 5th year, the Foundation has funded, mentored and provided business management training to over 7,500 start-ups and small businesses from all 54 countries in Africa. www.businessday.ng

Olusola Bello & Harrison Edeh, Abuja

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ontrary to the general notion that Nigeria is making little or nothing in terms of revenue from deepwater operations, the Nigerian National Petroleum Corporation (NNPC) says the country has generated revenue in excess of $180 billion.

Industry players’ capital investment in the sector is in excess of $65 billion with the potentials for growth amid untapped abundant opportunities in the sector.

Maikanti Baru, group managing director of the NNPC, made this disclosure while delivering a paper entitled: “Deepwater Operations in Nigeria: The journey so far” at the panel session of the Petroleum Technology Association of Nigeria (PETAN) in the ongoing golden anniversary of the Offshore Technology Conference (OTC) in Houston, Texas.

Bello Rabiu, chief operating officer, Upstream of the NNPC, stated that Nigeria held approximately 13 billion barrels of oil, out of which about 2 billion had been produced with a huge volume yet untapped.

The NNPC boss said Nigeria remained an active player relative to other regions in terms of deepwater development, stressing that the industry started with the deployment of latest technology, a stride it had continued to maintain.

“Out of the 15 Floating Production Storage and Offloading (FPSO) in Nigeria, seven have been deployed for deepwater operations. Nigeria ranks only behind Angola within the African deepwater operations in terms of FPSO deployment,” Baru said.

According to Baru, the country has utilised each deepwater project as an avenue to upscale its unique human capital skills in different areas not limited to engineering design, project management, welding and

He added that the local content contribution or services share in deepwater had continued to grow and improve from the sub 1% level to an aggregate contribution of over 25%, from engineering man-hours of less than 20,000 to over 1.1 million in recent Egina project.

“With the Nigerian content, tonnage has grown by 600% from the first deepwater project till date,” Baru said.

TheNNPChelmsmanstatedthat deepwater projects had benefited the wider Nigerian economy by boosting demand for a range of goods and services, including offshore vessels and platforms, materials, floating hotels, helicopters and manpower, creating jobs and providing wide range of training and maintenance services to the industry locally.

He added that services in areas such as manpower supply, logistics, and vessel supply, chemical supplies had more or less been domesticated in the deepwater value chain.

He averred that the recent fur-

ther demonstration of this was the in-country topside integration on the Egina FPSO project, saying this had achieved the dual goal of both industrialisation and manpower development through job creation and skill acquisitions.

“The gains enumerated in terms of production and reserve growth, revenue and value creation, manpower and technology development need to be sustained. I must reiterate that sustaining these gains means all hands must be on deck. We must leverage the expected growth in deepwater for national development. We expect within the next 10 years that production from Nigeria deepwater would double,” he said.

He said the development implied increase in steel demand, as steel represented 20% to 35% of the overall cost for a new-build structure, dry docking, pipe coating, welding and sundry ancillary services, adding that that Nigeria needed the right calibre of technical and engineering skills and manpower.

NSITF: Labour pickets Ngige, cries out against brutality by minister Innocent Odoh, Abuja

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igeria Labour Congress (NLC) has carried out its threat to picket and protest against the Minister of Labour and Employment, Chris Ngige, over his alleged delay to inaugurate the board of the Nigerian Social Insurance Trust Fund (NSITF), which the labour leaders claim is chaired by Frank Kokori.

The protesters were however, met with stiff resistance from a group suspected to be thugs allegedly hired by the minister, who attacked the protesting workers with sticks and stones, and chased them away from the private residence of the minster.

The NLC had told a news conference on Tuesday that it will embark on picketing the minister today (Wednesday) and as early as 7 am the labour movement led by NLC President Ayuba Wabba, blocked the entrance to

the Asokoro private residence of the minister in Abuja with two fuel tanks.

NLC had given the minister an ultimatum to inaugurate the board with Kokori as the chairman, and that ultimatum expired on May 1, which led to Wednesday’s protest.

The NLC president, while briefing reporters on Wednesday during the protest, described the attack on workers as “barbaric” adding that maximum force has been use upon workers and live bullets used on them.

“Whereas workers went with bare hands, the thugs were carrying weapons and arms. And as I talk to you, we have four people in the hospital apart from those that were injured by bullets.”

Wabba vowed that NLC was going to invite more workers to continue the protest, saying, ‘’we are going to invite our largest organ by tomorrow.”

He threatened that unless President Muhamadu Buhari

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intervened, the workers would continue the protest, stressing that they would call on the central working committee of the labour movement for further action. ``It has never been so bad where a minister of Labour will bring thugs to attack workers.

That has never been heard. It is on record and everybody has seen it,” Wabba said. ``That is our position and now we are here to demonstrate in his office also to show that we are not happy,” he explained. ``Therefore Mr President must act on this immediately.

Workers voted and supported him. Ngige cannot in any circumstance assume the power the president. That cannot be the case.”

Also speaking, William Apkoreha, President of National Union of Petroleum and Natural Gas (NUPENG) claimed that two of his members were missing following the attacks by thugs at the minister’s resident. @Businessdayng

``We are embarking on peaceful protest as two of my members are missing and I cannot fold my arms. We will maintain sanity until 12 midnight,” he said. ``If we did not hear a word from them, then every oil and gas worker in the country will enter the street to look for their members,” he said.

The labour movement has been at loggerheads with the Minister over the delay in the inauguration of the board of NSITF, claiming that the minister wants to run the fund as a sole administrator, which is against the law.

It would be recalled that the inauguration of the board was postponed two weeks ago with labour unions protesting what they described as the removal of Frank Kokori as the Chairman of the board and his replacement with Austin Enejamo-Isere. The Minister has however, stated that his decision was in consonance with the NSITF Act.

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Friday 10 May 2019

BUSINESS DAY

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@Businessdayng

Thursday 09 May 2019

FT

BUSINESS DAY

FINANCIAL TIMES

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World Business Newspaper

Donald Trump turns the screw in US-China trade dispute Threat to raise tariffs fuelled by fury at Beijing’s tactics and confidence in economy JAMES POLITI AND TOM MITCHELL

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a s t S u n d ay s t a r t e d out quietly by Donald Trump’s standards. His first tweet was about the appointment of a new head for the US immigration and customs enforcement agency. His second lamented the outcome of the Kentucky Derby horse race, after the original winner was controversially disqualified.

Then came the bombshell: in two more posts, the US president turned the screws on Xi Jinping, his Chinese counterpart, in their high-stakes negotiations to end a year-long trade dispute between the countries. If Beijing did not stop trying to “renegotiate” previously agreed provisions of the draft agreement, the president wrote, US tariffs would rise on Chinese goods worth hundreds of billions of dollars by Friday. After months of suggesting that the trade talks were going well, the president’s suggestion that a deal was in peril rattled global markets and unner ved policymakers worldwide.

According to senior administration officials and people briefed about the negotiations, Mr Trump’s irate messages did not come out of nowhere.

They were driven by anger at perceived backtracking by China on some commitments it had made earlier in the talks, mounting confidence that the US economy and markets could withstand more confrontation if necessary, and politics — the president needed to prove to the growing ranks of China hawks in Washington that he would not settle for a weak agreement. “ W h e n a l l t h e d u s t s e ttles . . . we have to show that this was a worthwhile negotiation,” said Chuck Grassley, the veteran Iowa Republican senator.

“The president is the one who has to step up and sell this deal, putting his reputation — and possibly the 2020 election — on the line,” said Derek Scissors, a resident scholar at the American Enterprise Institute, a Washington-based think-tank. “He’s not going to take that risk if he feels he’s being jerked around.”

In recent days, US negotiators have squarely blamed China for the eleventh-hour impasse.

“Over the course of the last week or so we have seen an erosion in commitments by China,” Robert Lighthizer, the US trade representative, told reporters on Monday.

Mr Lighthizer did not say in which areas Beijing had pulled back on its promises but people

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should make their concerns heard.”

A spokesman would not say what percentage of Deutsche’s shareholders it advises, but ISS is widely regarded as one of the most influential proxy advisers in the world.

In its advisory, ISS dismissed Deutsche’s claims of improving “know your customer” and antimoney laundering (AML) controls, and management’s frequent claim that the bank’s poor performance is the product of an unfavourable environment.

“We believe it is time for shareholders to hold the boards accountable for the many years of substantial monetary and reputational costs to the bank borne by shareholders as a result of the failing execution of AML (amongst other) policies and strategies.”

Earlier in the week, fellow proxy advisory Glass Lewis urged shareholders to vote against ratifying Deutsche’s board, though in less damning terms than ISS. “This report does not reflect the current situation of our bank and its control environment,” a spokesman for Deutsche said, adding that several issues raised by ISS predated 2016.

“While we acknowledge that there is still work ahead of us, we have significantly improved our risk and control systems in the last three years and we will continue to do so,” he added, stressing that “the management board brought the bank back to profitability for the first time since 2014”. www.businessday.ng

like we were going substantially backwards”. That prompted the two cabinet secretaries to “update” Mr Trump, precipitating his tweets.

Since then, both sides have kept a small window open for negotiations. Mr Trump declined to break off the talks and Beijing decided to plough ahead with plans to send Liu He, Mr Xi’s lead negotiator, to Washington later this week, albeit delayed by a day and with a smaller delegation.

“China got greedy and wanted to renegotiate entire parts of the deal,” said one person familiar with the talks. “The question is

whether Liu comes to Washington with a mea culpa, saying he is prepared to negotiate on all outstanding issues, or will he come to say that if the US escalates, China will escalate right along with it.”

Others dispute such assertions, citing related Chinese amendments to a host of existing regulations — including those governing trademarks and fair competition — and a new foreign investment law. “Liu He is a straight-shooter,” said James Zimmerman, a Beijingbased partner at Perkins Coie, the law firm. “I can’t imagine he reneged on terms that are clear and actionable.”

President Hassan Rouhani announces Tehran to take action after US withdrawal from pact

Group urges shareholders to vote against boards and ‘make their concerns heard’

eutsche Bank’s shareholders should use their upcoming annual meeting to hold its boards “accountable for many years of substantial monetary and representational costs”, influential proxy advisory ISS said on Tuesday, joining fellow proxy advisory Glass Lewis in calls for investors to vote against the bank’s management and supervisory boards.

Deutsche’s top management will host their annual meeting on May 23, just weeks after the collapse of merger talks with Commerzbank, which offered the promise of salvation for an institution that has lurched from scandal to scandal in recent years and lost more than half its market value since 2018.

Under the German corporate code, a vote to “discharge” the board of a company is deemed a vote of confidence in its management and policies. But a vote against discharge is the strongest way in which shareholders can express displeasure at an AGM. “For many years, ISS has highlighted the discharge of the management and supervisory boards for shareholders’ attention, always underlining the innumerable issues facing the bank, but never going so far as to recommend against the discharge (of the boards),” ISS said in a circular to investors. “However at a certain point, shareholders

familiar with the negotiations say they included two issues at the heart of the dispute: codifying in law protections for US intellectual property and preventing the forced transfer of technology.

Another problem was that Mr Xi’s negotiators had not provided a full Chinese text of a possible agreement, further irritating Washington.

Steven Mnuchin, the US Treasury secretary, said there had been “some signs” of a Chinese shift during negotiations in Beijing last week. But when he and Mr Lighthizer returned home over the weekend “it looked

Iran calls halt to parts of nuclear deal

Proxy adviser ISS slams Deutsche Bank LAURA NOONAN

US negotiators have blamed China for the impasse in trade negotiations in recent days © Reuters

NAJMEH BOZORGMEHR AND ANDREW ENGLAND

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he Iran nuclear deal was at risk of collapse after Tehran said it would cease to implement some of its commitments under the 2015 accord in response to the US’s withdrawal and the failure of other signatories to deliver on economic incentives.

Hassan Rouhani, Iran’s president, said in a televised address on Wednesday that his country would halt key commitments agreed under the deal, in line with a dispute resolution mechanism included in the accord. Mr Rouhani said the deal was “either a win-win agreement for all or a lose-lose agreement for all”.

The move came as America ramped up pressure on the Islamic republic one year after US president Donald Trump unilaterally withdrew from the nuclear agreement.

Mike Pompeo, US secretary of state, abruptly cancelled a visit to Germany on Tuesday and flew to Baghdad, telling reporters that this was in response to reports that Tehran was “escalating their activity”, although he did not provide any specifics about potential threats.

The unscheduled trip followed news that the US was deploying an aircraft carrier strike group to the region.

Mr Rouhani’s statement raises the pressure on the EU, including France, Germany, and the UK —

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the three European signatories to the deal — who were left scrambling to respond.

A German foreign ministry spokesman cautioned Iran against taking any aggressive steps, adding that Berlin remained committed to the deal.

A senior EU official said: “Leaders and others will meet in the coming days and it will be an issue under discussion. We are in an assessment phase and the rest is pure speculation.”

EU foreign ministers are due in Brussels for a regular meeting on Monday. Leaders will also gather at this week’s bloc summit in Romania, although Theresa May, the UK prime minister, is not due to attend.

Under the nuclear deal, which took several years to negotiate, Iran agreed to limit its nuclear activities in return for the economic benefits of many sanctions being lifted.

However, in his statement on Wednesday, Mr Rouhani said Iran would over the next two months stop transferring excess heavy water produced in the uranium enrichment process and no longer swap enriched uranium for mined uranium yellow cake.

He said Iran would resume these commitments if the UK, France, Germany, Russia and China could find a mechanism for Iran to sell oil and handle banking transactions within the next two months. If not, Iran would resort to the next step by which the country would not observe the limitation @Businessdayng

on uranium enrichment at 3.67 per cent. He said all these steps were notified to the five capitals.

Germany, the UK and France have stood by Iran, believing the agreement was an example of successful international diplomacy that had prevented Tehran from pursing a nuclear programme.

France has reluctantly accepted the possibility of new EU sanctions against Iran. “That is one of the things being looked at,” Florence Parly, French defence minister, told BFMTV on Wednesday. “If these commitments are not met, naturally that would raise the question,” she said.

Javad Zarif, Iranian foreign minister, flew to Moscow on Wednesday to deliver a letter from Mr Rouhani to President Vladimir Putin. Sergei Lavrov, Russia’s foreign minister, said after meeting Mr Zarif that the crisis around the deal was the result of “the United States’ irresponsible policy”.

Dmitry Peskov, Mr Putin’s spokesman, told reporters that the Kremlin continued to support the deal and would work with European countries to “prolong the document’s lifespan”.

Tehran has continued complying with the accord in the year since the US withdrew from it. But the socalled E3 have struggled to counter the impact of sanctions that have driven Iran into a deep recession and emboldened regime hardliners who say that the country never received the promised dividend.

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Thursday 09 May 2019

NATIONAL NEWS

Facebook picks London as base for WhatsApp push into payments

Messaging app turns to Europe’s fintech capital for talent MADHUMITA MURGIA

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acebook has chosen London as the centre for a push into payments on its WhatsApp messaging service, boosting the city’s hopes of becoming a global fintech hub and signalling the company’s commitment to monetising the fast-growing platform.

The app, which has 1.5bn users globally, will expand its workforce by a quarter with the hiring of about 100 people. Most of the software engineers will be hired in London with additional operations staff hired in Dublin.

Facebook said it chose the UK, where WhatsApp is far more popular than in the US, because it attracts a multicultural workforce from many of the countries where the app is widely used, such as India. New staff will build a payments function as well as products that focus on safety and spam on the app.

Mark Zuckerberg, Facebook’s chief executive, last week announced that WhatsApp’s mobile payments would launch in several countries this year, saying he was “particularly excited” about the expansion after an initial test in India.

“Payments is one of the areas where we have an opportunity to make it a lot easier. I believe it should be as easy to send money to someone as it is to send a photo,” he said at the F8 developers conference.

Senior engineers from the WhatsApp founding team were sent to London late last year to recruit people, WhatsApp said.

“We’re eager to work with some of the best technical and operational experts in both London and

Dublin to take WhatsApp into its second decade. WhatsApp is a truly global service and these teams will help us provide WhatsApp payments and other great features for our users everywhere,” said Matthew Idema, WhatsApp’s chief operating officer.

Despite being one of the most used apps in the world, the California-based company only has roughly 400 employees. While its most popular markets are India, Brazil, Indonesia and Mexico, it had not established a local office anywhere until late last year, when it hired an India head in time for the country’s elections.

The company, which rolled out end-to-end encryption in 2016, cannot see or trace messages sent using its platform. The encryption, designed to protect privacy, means that the company has struggled with the misuse of its platform, including the sharing of child abuse imagery, and misleading and false information.

“That’s ultimately the challenge of WhatsApp. Since 2016, there has been a focus on political misinformation, but globally there is a huge problem with scientific and health misinformation, such as antivaxxers, as well,” said Claire Wardle, a fellow at Harvard University who studies the spread of fake news on social media globally.

To battle this, WhatsApp has been trying to build a machinelearning team that can identify patterns of abuse in bulk messaging, and also categorise user reports to spot bad content. The European teams will work on these products globally, WhatsApp said.

Google Face Match brings privacy debate into the home Google at-home device TIM BRADSHAW

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oogle has used its annual developer conference to unveil a “smart display” that uses facial recognition to offer users personalised information, from messages and calendar entries to recommendations of music and videos.

But at a time of intense debate on Silicon Valley’s handling of privacy and personal information, the device pushes the boundaries for the acceptance of facial recognition systems in the home.

While face-scanning cameras have become widespread in smartphones, the technology has been criticised for its application in public, particularly in surveillance and security cameras. But Google believes that convenience, alongside a new set of privacy commitments designed for “smart home” devices, will trump such concern.

To allay potential privacy concerns, Google’s “Face Match” camera processes image recognition on each device, rather than sending the data to the cloud, as it does with some Nest security cameras.

It will not be turned on by default; customers will have to opt in to use the system. Once a person is recognised, they will have to tap the device’s touchscreen to show their personalised information.

The smart display is one of the product announcements at this year’s Google I/O, which also marks the start of a rebranding for the

company’s home products, after its Nest subsidiary was absorbed into Google’s hardware division last year.

The “Google Nest” rebranding comes with a prompt for Nest customers to merge their user accounts with their Google profiles. “We want to make sure we are seamlessly integrating these devices,” said Rishi Chandra, vice-president and general manager of Google’s Home and Nest products.

For some customers, merging Nest data could include years of information on a family’s comings and goings, home energy usage and security camera video recordings.

Google says it will not use that information for advertising.

“That data will never be used for ads personalisation,” said Mr Chandra, before being corrected by a member of Google’s public relations team. “We can never say never,” he added hastily, “but the commitment we are making is, it is not being used.”

Google is hoping to recapture some of the trust it lost this year when it emerged that its Nest security hub included a secret microphone.

Mr Chandra conceded that it was a “mistake” not to inform customers when it went on sale.

In another change to how earlier devices, from Google Glass to Nest security cameras, have historically worked, the Home Max device will have an indicator light that always shows when it is capturing video, which users will not be able to switch off. www.businessday.ng

Polling stations opened at 7am across South Africa © AP

ANC faces tough challenge as South Africans go to polls Cyril Ramaphosa’s promised ‘new dawn’ after Zuma era set to be tested in election JOSEPH COTTERILL

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outh Africans headed to the polls on Wednesday in what is expected to be the tightest electoral test yet for the ruling African National Congress of President Cyril Ramaphosa.

Polling stations opened at 7am across Africa’s most industrialised nation to elect a new parliament, which chooses the country’s president, and provincial legislatures, as the ANC fights to defend a national majority it has held since the birth of democracy in 1994.

The party is widely expected to win about 55 to 60 per cent of the vote — below its share in the 2014 national election when it was returned to office with 62 per cent.

Many will see the result as a verdict by voters on Mr Ramaphosa’s promised “new dawn” after a decade of misrule by the ANC under Jacob Zuma, his predecessor. The trade union leader turned tycoon replaced Mr Zuma as president last year.

In Soweto, Johannesburg’s largest township, Dexter Twala said he was voting for the ANC to support Mr Ramaphosa. “He’s a man who was a unionist and a businessman. Overseas people trust him,” the 58-year-old said.

The ruling party was like a house in disorder, he added, but: “I have to correct what’s going on inside the house, not run away.”

Business has mostly hoped for a significant majority for the ANC in the belief that it would help Mr Ramaphosa push through politically difficult reforms to boost a stagnant economy and remove corrupt actors in his party.

In the past year, Mr Ramaphosa has begun clearing out important state institutions that were allegedly warped for private gain under Mr Zuma. But he faces stiff resistance from allies of the former president who still retain senior posts in the ANC. Mr Ramaphosa has vowed that after the elections “the era of impunity is over” for officials involved in graft.

The ANC is primarily pitted

against the main opposition Democratic Alliance, a liberal party that is expected to poll 20 to 25 per cent.

“I voted DA because I want a better life,” Paul Raas, 60, said at a Soweto polling station. “Children who went to varsity are sitting at home and it was time for change,” he added.

But the party also faces a threat from the Economic Freedom Fighters, a far-left ANC breakaway. The party led by Julius Malema, a former leader of the ANC’s youth wing, may double its vote to more than 10 per cent by attracting black voters fed up with ANC corruption and high rates of joblessness.

The ANC also faces a battle to retain Gauteng, the country’s most populous and economically important province, which includes Johannesburg and Pretoria.

The South African independent election commission has said that it could issue the final result on Saturday. Counting of ballots may unofficially reveal the largest party beforehand.

JPMorgan poised to take control of Chinese asset manager Move would be first time a foreign group had taken majority stake in a domestic fund manager HUDSON LOCKETT

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PMorgan’s fund arm is a share purchase away from becoming the first foreign group to take control of an asset manager in China, after its joint venture partner in the country put 2 per cent of their business up for sale.

Shanghai International Trust revealed it would auction the stake in China International Fund Management in a stock exchange statement on Wednesday. Analysts expect JPMorgan Asset Management to snap up the offering.

A sale to JPMorgan would raise the US company’s stake to 51 per cent while reducing its Chinese partner’s holding to 49 per cent.

Reforms last year allowed foreign businesses to take a 51 per cent stake in Chinese fund managers for the first time, stoking speculation that some foreign asset managers with minority stakes in joint ventures could move to

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obtain controlling positions.

JPMorgan on Wednesday declined to comment on the sale but it had previously said it wanted to increase its stake in the joint venture.

Taking control would give it first crack at a huge market — a report this month by Morgan Stanley and consultancy Oliver Wyman forecast that the pool of assets sourced from Chinese clients would increase from $5.3tn to $9.3tn as early as 2023.

Peter Alexander, managing director of Z-Ben Advisors, a consultancy that advises foreign asset managers in China, said he was optimistic JPMorgan could buy the shares and receive regulatory approval for control relatively quickly. But he cautioned that this was not guaranteed.

“While it looks as though it’s a pretty straightforward process, it’s still a public auction and this is China, anything can happen,” he said.

He said that if a sale went through, other foreign asset man@Businessdayng

agers seeking control of their JVs were also likely to get the green light — provided Beijing and Washington agreed on a trade deal.

“The only variable we believe has been holding this process up is the ongoing bilateral dispute between China and the Untied States,” Mr Alexander said.

International fund managers have moved to expand their presence in China this year.

BlackRock’s chief executive last month said the company was “very engaged” with Chinese regulators on gaining majority control of a local asset manager, while Morgan Stanley bought an additional 5.5 per cent of its local fund management business via online marketplace Taobao, taking its stake to almost 43 per cent.

JPMorgan in January won approval from China’s securities regulator to sell two Hong Kong-based funds into the mainland.

Thursday 09 May 2019

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Binance unsure of extent of breach after revealing $40m hack Cryptocurrency exchange‘s chief asks for ‘forgiveness’ as it halts withdrawals ADAM SAMSON AND DANIEL SHANE

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ryptocurrency exchange Binance said it is not sure how extensive its latest security breach is or whether it has cleared intruders from its systems, hours after it revealed a $40m hack and halted withdrawals.

Changpeng Zhao, the group’s outspoken chief executive, asked for customers’ forgiveness in a YouTube video on Wednesday, saying that the number of users affected by the hack is “hard for us to guess”.

“We need to make sure that we eradicate any trace of the hackers in all of our accounts, in all of our data. That is a very tedious process,” Mr Changpeng said.

The group — one of the world’s biggest digital token exchanges — has suspended withdrawals until its investigation is complete, he added in his assessment of a breach that has cast fresh doubt upon this once red-hot and seemingly promising asset class.

The exchange revealed in a blog post on Wednesday morning Asia time that 7,000 digital tokens were siphoned off in a single transaction in a “large-scale security breach”.

The culprits used a variety of advanced hacking methods including phishing and viruses to access the exchange’s “hot wallet”, which holds about 2 per cent of Binance’s total assets.

Asked by the Financial Times whether it was possible more than 7,000 coins had been stolen, a spokesperson said: “There may be additional affected accounts that have not been identified yet, but we are closely reviewing all parts of our systems and have not

identified any further suspicious transactions or accounts.”

Mr Changpeng asked Binance users to “forgive us” for suspending withdrawals for “the next week or so” as it investigates the incident.

“Please bear with us,” the executive said, adding that “it’s not a great day.”

In the blog post, Binance said that the hackers “had the patience to wait, and execute well-orchestrated actions through multiple seemingly independent accounts at the most opportune time.”

The exchange said it would compensate victims through an emergency fund. “We will cover all the funds ourselves,” Mr Changpeng vowed. “All the user funds are OK.” Binance said it would now conduct a large-scale review of its security protocols and did not rule out the possibility of unearthing further breaches.

The incident highlights the security issues still faced by the cryptocurrency industry. Mr Changpeng has repeatedly used Twitter over the past year to argue that funds held at Binance are “SAFU”, a phrase meant to mean safe.

Other major exchanges have also been targeted by cyber thieves in recent years. One of the highestprofile examples was Coincheck, a Japanese exchange that suffered a vast breach but eventually compensated victims some $435m.

Interest in cryptocurrencies has tended to ebb and flow with the price of major coins. Bitcoin, the best-known coin, has rallied almost 60 per cent this year to $5,823. However, it remains well off of the highs of nearly $20,000 hit in late 2017.

Wall Street set for further losses as trade fears persist Telecoms group looks to raise cash to bolster its balance sheet

MICHAEL HUNTER AND SIDDARTH SHRIKANTH

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all Street stocks were set for further declines on Wednesday, as worries about darkening trade relations between the US and China continued to unnerve investors and leave recent record highs for New York equities looking vulnerable.

Investors remained frustrated as they looked for signs of a detente ahead of Chinese vice-premier Liu He’s trip to Washington, while hopes faded that the visit at the end of the week would produce a breakthrough. Mr Liu will arrive in Washington on Thursday for an abbreviated round of trade talks.

Futures trade expected Wall Street’s S&P 500 to lose a further 0.6 per cent after it fell 1.7 per cent over the previous session, when President Donald Trump’s threat to increase tariffs set a fraught tone

to trade.

European bourses fell, but by narrower margins than the losses seen during Asian trade Frankfurt’s Xetra Dax 30 slipped 0.1 per cent and London’s FTSE 100 shed 0.4 per cent. The Europe-wide Stoxx 600 was also down 0.4 per cent.

Mainland China’s CSI 300 lost 1.4 per cent and Hong Kong’s Hang Seng was down 1.2 per cent. Japan’s Topix fell 1.6 per cent, while the S&P/ASX 200 in Australia fell 0.7 per cent.

Brent crude also fell, taking knock from fears about the dangers posed to demand by the impact of the trade dispute on global growth.

The international oil marker fell 0.5 per cent.

Japan’s yen, seen as a haven in times of uncertainty, strengthened 0.2 per cent to ¥110.03 and a fresh five-week high. Gold rose 0.2 per cent to its strongest level in eight sessions. www.businessday.ng

Grains trading group Bunge swings to first-quarter profit US-based company to revamp structure and shake up management EMIKO TERAZONO

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unge, a leading international grains and oilseeds trader, reported a first-quarter profit thanks to higher soyabean crushing margins compared with a loss a year before, as it announced a widespread reorganisation and reshuffle of executives.

The US-based group said firstquarter income swung to a profit of 26 cents a share compared with a loss of 20 cents the year before.

Losses last year reflected a $120m loss on derivative contracts used to lock in margins The group’s agribusiness unit reported earnings before interest and tax of $109m, up from

$42m, while ebit in its edible oils business rose to $48m from $28m.

Greg Heckman, who was officially appointed Bunge’s chief executive last month, announced a change in key executive roles and a new global operating model, which would “improve the speed and quality of decision-making”.

“We expect this new model to provide additional clarity and accountability of roles and responsibilities and enhance strategic flexibility as we continue to evaluate the portfolio,” he said.

Mr Heckman brought in John Neppl, with whom he had worked at Gavilon, as his chief financial officer to succeed Thomas Boehlert,

effective from May 29.

Bunge said Raul Padilla would become president of global operations, managing all physical handling and processing assets.

He will continue to lead sugar and bioenergy.

Christos Dimopoulos will oversee the physical commodity supply chains that support Bunge’s handling and processing assets. He will also be responsible for trade flows, freight and distribution.

For the full year, Bunge said its agribusiness unit was likely to see lower results compared with 2018.

Soyabean processing margins will depend partly on the US-China trade talks, the company said.

Former GAM fund manager Tim Haywood blocked from annual meeting Executive was fired from the asset management group for alleged gross misconduct LAURENCE FLETCHER AND JENNIFER THOMPSON

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im Haywood, the fund manager sacked from GAM for alleged gross misconduct, was blocked from the firm’s annual meeting on Wednesday at which shareholders vented their anger at the crisis that has engulfed the Swiss asset manager.

Mr Haywood, who ran some of the firm’s flagship bond funds and was dismissed earlier this year, said he was told by GAM that the shares he had bought in order to attend the meeting had not been registered in time because of an administrative error.

The shareholder meeting was the first since GAM suspended Mr Haywood in June in a move that centred on illiquid bonds he had purchased. However, the suspension initially came with little explanation, triggering a plunge in the asset manager’s shares price, the exit of chief executive Alexander Friedman and the scrapping of the dividend.

Although GAM’s share price has steadied this year as the asset manager liquidates the funds, the meeting saw investors reject by a slim margin a motion that would have given a waiver to the board of directors and the management board against future legal action.

Two shareholder advisers, Glass

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Lewis and Ethos, had recommended that investors deliver a protest vote against senior executives after Mr Haywood’s suspension unleashed months of turmoil.

“If we are speaking about so many losses and shareholders not even receiving a dividend, we should not even be speaking about variable compensation,” Ivanka Gellings, a private investor based in Switzerland, said of the board’s remuneration in remarks that drew applause.

However, the management board’s fixed compensation for this year and variable compensation for last year were still both approved by just over 90 per cent of votes cast at the meeting.

Hugh Scott-Barrett, chairman, pointed to the 60 per cent fall in variable pay in 2018 from the previous year.

Ms Gellings told the Financial Times after the meeting that she was not satisfied with management’s answers and that the AGM was “a farce”.

GAM’s management board, including the chief executive, were awarded a collective SFr12.62m ($12.39m) in pay and bonuses last year, of which SFr5.03m was variable, around half the amount of the prior year.

Another shareholder told management it had done a “bad job” by not intervening earlier in Mr @Businessdayng

Haywood’s situation. “It cannot be that variable compensation is that high and you don’t intervene,” he said. “I cannot accept that.”

David Jacob, who has been GAM’s interim chief executive since November, defended management’s actions over the absolute return bond funds. “Changing portfolios [intervening in the management of Mr Haywood’s funds] simply because there’s an investigation wouldn’t have been appropriate,” he told the FT after the AGM. “It’s only when you get to some stage in the investigation does that make sense.”

Mr Haywood said his invitation to the AGM had been confirmed in an email at the end of April, in which he was told his invitation would be waiting for him to collect upon arrival.

Rupert Heggs, a private investor and friend of Mr Haywood’s who had bought shares in GAM some months ago using the same nominee company as Mr Haywood, said he was similarly prevented from entering the AGM. “Registering shares is a very straightforward process: a shareholder needs to make sure that their shares are registered by the registration deadline. In this case, the person failed to do that,” said GAM. Mr Haywood is appealing against his dismissal, saying he has been made a scapegoat and treated unfairly.

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FT

ANALYSIS

Uber chief keeps founder in back seat ahead of IPO How Dara Khosrowshahi managed an uneasy truce with Travis Kalanick SHANNON BOND AND TIM BRADSHAW

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n his job interview with Uber’s board in 2017, Dara Khosrowshahi gave a PowerPoint presentation that included the slide: “There can be only one CEO at a time.”

Nearly two years later, turning that statement into reality has been a key test of Mr Khosrowshahi’s leadership.

He took over the top job in the midst of a crisis that pushed Uber to the brink, after investors ousted the ride-hailing company’s founder, Travis Kalanick.

But Mr Kalanick, the 42-yearold avatar of Uber’s aggressive approach to growth, competition and regulation, did not go far after he was ejected: he remains a director and has launched a new business in the food sector, a growing area of interest for Uber.

The dynamic of Mr Khosrowshahi in the spotlight and Mr Kalanick on the sidelines has become a familiar, if not entirely comfortable, routine for the two men as Uber steers towards its initial public offering.

nance standards in its IPO pitch to investors.

Meanwhile, Mr Khosrowshahi rewrote Uber’s cultural values, called time on a competitive bloodbath in south-east Asia and put money into new businesses such as scooter rentals.

‘Friendly’ Uber yet to persuade But not everyone is convinced by the new, friendly, Uber. The company’s drivers, as well as those of rival Lyft, are planning strikes on Wednesday in cities across the US and the UK, including New York, Los Angeles and London, to demand more money and better working conditions.

“There is distrust of Uber that belies any specific feature improvement,” said Alex Rosenblat, who interviewed hundreds of drivers for her book, Uberland: How Algorithms Are Rewriting The Rules Of Work.

Within Uber’s corporate ranks, Mr Khosrowshahi continued efforts that had begun before he arrived, such as changes to its performance management style in which the company

Travis Kalanick, left, and Dara Khosrowshahi, right, have largely settled into a detente

In an implicit criticism of his predecessor, Mr Khosrowshahi has apologised for Uber’s previous bad behaviour, overhauled its management team, settled legal cases and tried to rebuild relationships with regulators.

In an interview with the Financial Times last year, Mr Khosrowshahi acknowledged that it could take years to complete Uber’s road to redemption.

“The internal work on culture remains incomplete — and the fact is that it’s going to take years,” Mr Khosrowshahi said. “I think I’m going to sit here next year and tell you the same thing.”

Yet the two men have largely settled into a detente, in service of the greater goal of reaching the New York Stock Exchange. Uber and Mr Kalanick declined to comment in the quiet period ahead of the IPO. Initial signs were not good Such a truce did not seem likely when Mr Khosrowshahi — a protégé of Barry Diller, veteran dealmaker and former chief executive of online travel company Expedia — arrived at Uber in August 2017.

Just a month into Mr Khosrowshahi’s tenure, Mr Kalanick, who initially said he wanted to stay involved in strategy and decision making, exercised his right to fill two board seats.

While he was not required to consult his fellow directors, the move came as a shock. Mr Khosrowshahi described it in a memo to staff as “disappointing” and “highly unusual”.

The board subsequently agreed to strip extra voting rights from Mr Kalanick, other co-founders and early investors after a vital injection of funding from SoftBank. In recent weeks, Uber has touted those gover-

abandoned the controversial “stack ranking” system in favour of an approach that focused on teamwork and collaboration instead of individual achievements.

Under Mr Kalanick, employees were encouraged to find their “red line” — pushing themselves to their limits, which some said led to burnout or exhaustion.

Now, Uber staffers say that while the hours are still long and work is intense, the emphasis on “hustle” has been replaced with more traditional processes and decision making at the company, which employs more than 22,000 people.

But Mr Kalanick remains a figure of inspiration to many current and former Uber employees, who, while acknowledging the flaws of the culture he fostered, still praise his “passion”, “drive” and the autonomy he gave to young managers.

Mr Khosrowshahi also inherited a divisive effort that was already under way to centralise control at Uber headquarters, which had encountered significant “political resistance” from local fiefdoms, according to former employees. “The cultural shift was already in the works as well,” said one former city manager, “but can you have that catharsis without someone dying for all our sins?”

Kalanick settles into background Post resurrection, Mr Kalanick has by all accounts settled for having no strategic or operational involvement at Uber. Now based in Los Angeles, he and his successor do not talk frequently outside of board meetings, according to two people close to the board. “He doesn’t have any more involvement than any other director,” said one. www.businessday.ng

UK far-right extremism: hate spreads from the fringe The attack on mosques in Christchurch has intensified concern over a tech savvy and global brand of neo-Nazi terror DAVID BOND AND HELEN WARRELL

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he day after a far-right extremist murdered 51 worshippers in two mosques in the New Zealand city of Christchurch, Mohammed Kozbar received a chilling telephone call 12,000 miles away in London. “The caller said ‘your congregation will be next’,” says Mr Kozbar, chairman of Finsbury Park Mosque. “Imagine something like that. Maybe he was serious or maybe he wasn’t, but we couldn’t take any risk.”

For the hundreds of Muslims who regularly attend the north London mosque, which tightened security after the threat, the Christchurch attack in March brought back memories of their own deadly experience of far-right extremism. Almost two years ago, and with the UK on high alert after a series of Islamist-inspired attacks in London and Manchester, Darren Osborne, a 47-year-old who had been radicalised online, drove a van into a crowd of people — killing one man and injuring others. He was jailed for 43 years in February.

The threatening phone call to Mr Kozbar is not the only thing that links the two attacks. The man accused of the Christchurch killings, an Australian neo-Nazi called Brenton Tarrant, cited Osborne and other far-right murderers including Anders Breivik who killed 77 people in Norway in 2011, in a rambling 74page “manifesto” he posted online before the attack.

Taken together these attacks represent an alarming long-term shift in the far-right terror threat which is forcing western security officials to reassess the way they treat white supremacists and neo-Nazi groups that are establishing increasingly global networks. “Rather than being isolated hate incidents or attacks,” says Jacob Davey, from the Institute for Strategic Dialogue, a think-tank, “they are part of a transnational struggle.”

While it may appear contradictory, security officials and analysts say far-right extremists are taking inspiration from Islamist terror groups such as Isis and al-Qaeda, moulding their own ethno-nationalist ideology and using the reach of social media and other online platforms to spread it across borders.

Using gaming chat platforms such as Discord, groups like the proscribed far-right National Action in the UK and Atomwaffen in the US are targeting a younger, more tech savvy audience, who it hopes to mobilise for what it sees as a long-term struggle against radical

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Islam, say counterterror police and security officials.

In the UK, Islamist-inspired terrorism remains the single biggest threat to national security.

According to Home Office statistics released last year, only four out of 18 attacks stopped by the police and security services between March 2017 and December 2018 were designated as far-right plots.

Yet the consensus among British police and security officials is that the threat is growing. “The general feeling is that it is getting worse,” says one senior UK security official. “The world is getting more polarised.”

The 2016 Brexit referendum did not cause the divisions in public attitudes — between metropolitan and rural, blue collar and white collar, internationalism and nationalism — but it exposed the depth of the faultlines.

In the febrile atmosphere leading up to the vote Thomas Mair, a self-radicalised white supremacist, shot and killed the Labour MP Jo Cox, who had campaigned for Remain and lobbied for a more generous refugee policy. As Mr Mair stood over his victim’s body, he shouted: “Britain first. Keep Britain independent. This is for Britain.”

Naz Shah, the opposition Labour MP for Bradford West in northern England, and a former colleague of Cox, argues the political ructions of the past decade are to blame for the rise in extremism of all kinds. “People just do not have confidence in politicians,” she says. “Brexit and the eight or nine years of austerity leading up to it . . . created a vacuum which is filled with anti-establishment and divisive views across the political spectrum.”

Incidents of racially and religiously-motivated hate crime increased by 44 per cent in July 2016, immediately after the EU referendum, compared with the same month the previous year, according to the Home Office.

Separate research by Tell Mama, an organisation which monitors Islamophobia, found that hate crimes targeting mosques more than doubled between 2016 and 2017 to 110. Threats, harassment or other intimidating behaviour more than tripled during the same period, while cases of violent hate crime against individuals doubled.

Facebook has banned a host of far-right UK groups and individuals, including MEP candidate Tommy Robinson, whose real name is Stephen Yaxley-Lennon, for breaching the social media platform’s hate speech rules. @Businessdayng

One UK government official, who spoke on condition of anonymity, suggests that violent incidents are proliferating because rightwing activists feel under-represented and frustrated at having exhausted what they see as official avenues of protest.

The British National party — a fringe group prone to racist violence — did have some electoral success at local council and European level in the past decade. But it failed to win a parliamentary seat and eventually went into decline under the strain of its own infighting.

The BNP’s support has now splintered towards groups such as National Action and the English Defence League, which are not seeking influence through politics, but through protests and violence. Mark Cotterill, a former leading member of the BNP, says the young people he speaks to now are going down what he sees as a fruitless path for lack of any “constructive” alternative.

“They’re annoyed that we are the only country in Europe that doesn’t have a nationalist movement or party. In France, or Belgium or Germany, they could get involved [in a political process],” he says. “There are these street protests, but I’m not sure where they’re actually leading. You go out and protest and then what?

Go back to the pub?”

The most prominent of the newer militant groups is National Action, the first far-right organisation to be banned in the UK since the British Union of Fascists in 1940. It is on this group that UK counterterror police and security services have focused their attention: a series of court cases in 2018 led to the conviction of 13 members of the faction, in a process described by the anti-fascist campaign group Hope Not Hate as the “most significant prosecution of any far-right group on serious terrorist or violent charges” since the early 1960s.

Over the course of the trials a new picture of the far-right threat emerged: more organised, more hateful and displaying a willingness to resort to increasingly violent acts to achieve its aims. One case involved Jack Renshaw, a 23-year-old white supremacist who was accused of being a member of National Action and who admitted plotting to kill the Labour MP for West Lancashire Rosie Cooper and a female police officer.

Although a jury could not reach a verdict in April on whether he was a member, something he denied, Renshaw had earlier admitted planning to stab Ms Cooper. Police and campaign groups worry the case shows that far-right extremists are now egging each other on to commit ever more violent attacks.

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Garden City Business Digest Warring factions in oil-rich Kula kingdom reunite to fast-track economic development • Handshake in oceanic town after 37years Ignatius Chukwu

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he warring factions in the age long chieftaincy tussle of oil-rich Kula Kingdom in Akuku-Toru Local Government Area of Rivers State have decided to put their differences aside to embrace peace in the interest of peaceful co-existence, development and progress of the area.

The traditional rulers, chiefs and community leaders from the Sara Royal House and the Oko Royal House who could not see themselves eye ball to eye ball for many years, sat together and embraced themselves at a Peace and Unity meeting in Kula Community.

The king, Kroma Eleki of the Sara Royal House and the other king, Bourdillon Ekine of the Oko Royal House, officially dissolved and collapsed their councils of chiefs into a new body known as the Kula Supreme Council of Traditional Rulers.

This marks a new dawn in the history of Kula that have been plagued with aged long traditional rulership crisis which threatened to balkanized the once most peaceful kingdom in the Niger Delta.

The king, Kroma Eleki who is the Amanyanabo of Anyame-Kula, in his remarks said history will be kind to an illustrious son of the

L-R: King Kroma Ekine Eleki (Sara 14th) welcomed in warm handshake by King Bourdillon Ekine (Oko 28th) at the Reunification Meeting at Anglican Church Field on Saturday, May 4, 2019.

area, an engineer, Jack-Rich Tein Jr for initiating the peace move.

He urged all Kula sons and daughters to promote love, unity and brotherliness, and eschew hatred, disharmony, disunity and all divisive tendencies capable of causing disaffection amongst them.

The king, Bourdillon Ekine, who is the Amanyanabo of Opu-Kula the Old Shipping also acknowledged the role played by

Jack-Rich Tein Jr, an engineer, in developing the area, creating wealth and uniting the people.

He said the era where different royal houses operated isolated traditional rulerships in Kula were gone for good.

Bourdillon noted that no community can make any meaningful progress in an atmosphere devoid of peace or cohesion among the people particularly the traditional leadership

who are the custodians of the culture of peaceful co-existence.

Some stakeholders of Kula which include Alapuye Elekiye-Okpara and Wapakabuari Ebejiye-Gaga who spoke on the sideline of the occasion described the inauguration of the Kula Supreme Council of Traditional Rulers as historic.

They regretted that Kula has suffered so much setback and avoidable deaths in the past as a result of the age long chieftaincy tussle in the area. The Stakeholders urge the Rivers State government to support the peace move in Kula by recognizing the newly inaugurated Kula Supreme Council of Traditional Rulers as the highest decision making organ and authority of Kula Kingdom.

Some of the mega projects expected in Kula soon include the Belema Atlantic Island, Belema Industrial Base, Belema Atlantic Office, Billionaire Atlantic Island, and Belema Trading Island”. It was gathered that preliminary work and approvals for the kick-off of the construction of the 85km Kula-Port Harcourt Road, which will link up all our satellite communities and settlements of Belema, Robertkiri, Luckyland, and Boro through Idama Kingdom and Degema has commenced. This is said to be a multi-billion-naira project that when completed, guarantee the security of the lives and properties of the areas by avoiding marauders at sea all the time.

Riding the rough waves to Atlantic Kula Port Harcourt

by Boat

IGNATIUS CHUKWU

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ula is an ancient enclave jutting into the Atlantic Ocean in the southern-most part of Rivers State; just like Bonny by its left, Oron farther left in Akwa Ibom as well as Soku, Nembe, and Brass on the right side, all extreme coastal towns that caress the ocean on a daily basis.

To get to Kula and any of the oceanic towns in the Niger Delta, you would sit in a boat for hours.

It’s worse if you are in Port Harcourt and you want to dare Kula. You must first brave the one and half hour road trip to Abonnema town which takes you through Emohua, the most dreaded kidnap stretch in Southern Nigeria at the moment.

Pirates now inhabit the vast water ways from Bonny route to Kula route, always hibernating in the Atlantic waters from where they allegedly spring into the rivers to snatch boats, rob, kidnap and often rape. They are as fast and swift as fish and play in the waters like mermaids.

They are the dread of the waters. Fishermen, boatmen, water travellers, all talk about them with panic and all abandon the vast waters to these marauders.

Now, hints of the impending first-ever handshake by two rival kings in Kula kingdom about to take place last Saturday seemed to attract any

journalist beyond the dreads of the rough sea.

Kula is an oil-rich town bathed by the Atlantic Ocean. The biggest news around the area is the coming of Belemaoil in the past two years and what the first-ever truly indigenous oil (E & P) is doing and plans to do there. There is a stamped plan to build an Atlantic Economic City, an airport, an Atlantic Island, Belema Industrial Base, Belema Atlantic Office, Billionaire Atlantic Island, and Belema Trading Island. There is a highway to be constructed from Port Harcourt to Kula all along the water, and many more. There is a plan to create 35,000 jobs in Kula and environs, healthcare centres, skill acquisition centres, and many more.

The noise of the upcoming projects unveiled in Kula less than two months ago made it irresistible to any business journalist to ignore if there is any hint that the only obstacle blocking these dream projects is the factionalised nature of Kula with two kings and plenty fractious incidents, deaths, violence, setbacks, etc.

This Reporter was privy to underground moves to re-unify the two factions so they can jointly sign off on many project deals and memorandums. They are to even be part of foreign trips to showcase the culture and people of Kula to international investors. With some support, some newsmen set out to Kula last Saturday, the day the much-expected and desired meeting by both kings to ratify the agreements was scheduled.

The news crew boarded two commuter buses from the NUJ House on Moscow Road where the statue of the late Ernest Ikoli usually stares at us with his mighty pen in his hands. With our hearts in our bare hands, we braved it through the Emohua forests to Abonnema. Relief, but worse was ahead. Two boats were on hand but where was the gunboat that once escorted us there?

This writer was in one of the boats and it soon

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developed engine problem. They tried twice to put it alright.

The next bad news was that the reunification meeting delayed till 5pm, just to start. The implication was that we would leave by late evening and travel by night. At the jetty to go back, our own boat coughed endlessly before starting. Ten sea escorts were dispatched in two flying boats to escort us to Abonnema that night and return to Kula. First trouble was that the boat stopped twice in the vast waters until the escorts transloaded us into theirs.

The two boats then rode in total darkness, apparently to enable them pass unnoticed while they searched the horizons looking out for the much feared pirates. The second escort boat, now overloaded, soon developed engine fault, now riding slowly. Ours had to slow down for it, and so we crawled in the dark along. To most of us, every approaching boat was a pirate’s boat.

Fear was uncontrollable.

When we eventually got out of oceanic waters and got to the meandering creeks, the

King Kroma Amabibi Eleki...Chairman, Kula Supreme Council of Traditional Rulers

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fear grew fiercest. Every turn looked like a boat would spring out and attack us. Shadows turned to ghosts. We lived in our skin all through, until we got to Abonnema. As we disembarked and stepped onto the road beside the jetty, two men passing by screamed at our risk level. One shrieked a disapproval against night boating on Kula waters even in the day, let alone night. He asked if we did not know that many boats were snatched few days back.

The two flying boats turned and flew back to Kula, saying they must go and standby to escort the hundreds that stayed behind. The press crew was the only ones that dared the waters that night, and that was because our team leaders insisted we must head back. The boat boys were something else, flying with reckless abandon and intoxicated disinterest.

The next danger was how to drive through Emohua Road and the forests to PH. I tried to stop that foolhardiness but nobody saw reason in it. I gave up, and PH there we came. We kept searching every thickness in the forest for signs of people about to spring out and attack us. It never came, except our hearts attacking us with extreme fears.

It was a huge miracle that we got back to the NUJ House by 10pm and our homes far after.

This replayed the trip one week earlier to Bonny in NLNG boat, and back. The protected boat looked like Hommer Jeep in water and Boeing by luxury standards. The difference between the two trips showed how much risk out there in the waters and the huge tourism and business opportunities waiting to be harnessed, if the dangers could be cleared.

A super boat travelling business is waiting to start. Protection services in those waters would create mega businesses; but, who is getting close to the idea.

@Businessdayng

46

Thursday 09 May 2019

BUSINESS DAY

Investing in Rivers State

At last, Rivers set for informal sector tax drive Stories by Ignatius Chukwu

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t last, the Rivers State International Revenue Service (RIRS) is set to move into the informal sector for tax collection.

The RIRS expects to tap some into uncharted revenue territories to boost its IGR which at the moment hovers at N10Bn per month.

The executive chairman of the Service, Adoage Norteh, told newsmen in his office in Port Harcourt on Monday, May 6, 2019, that a lot of education needed to be pumped into the tax-paying public before actual collection begins.

He said informal sector tax collection is more difficult because not a lot of persons know that tax is for all. “Those who sell things (traders) do not believe they should pay taxes.

They do not know that taxes are different from levies and dues which they pay for putting their shops out there.

Instead, they call it multiple taxes.

They do not care to know that workers that pay taxes from their salaries also pay other taxes when purchasing items, yet, they do not complain of multiple taxes”.

He said the RIRS is set to move into what people do, in peoples private businesses and trades. “In doing this, we are going to collaborate with the Ministry of Transport because of parks and other businesses that do with movement of people. If you use any portion of the roads, you pay for it. Some of the new roads are now looking old and dirty from misuse and poor sanitation habit. If we can’t stop you using our facilities, we tax you.

There should be levies and rates for those who make use of our facilities for themselves alone such as stores, posters on public buildings, etc.”

Norteh said the RIRS in the past

Gov Nyesom Wike (R) with Chairman of RIRS, Adoage Norteh, at the launch of tax reforms in Port Harcourt

couple of years has achieved sanity in tax administration and has stopped harassment of citizens for tax.

On the rates to be imposed on the informal business operators, the executive chairman said the Service would be fair and would hold extensive meetings with trade groups, unions and associations on this matter to educate them and reason with them. “We, however, expect people to kick against this; but fairness is the key.”

He sees the IGR of Rivers State doubling in the near future if all those who should pay taxes could comply.

“The informal sector is where the bulk of the taxpayers are and where the revenue is.”

BusinessDay can report that the RIRS in the past had eyed the informal sector and even designed a system to collect taxes and probably double the revenue size of the state.

The take off of this project has always been affected by political crisis to this time.

On whether taxing traders and market people would not bring clashes with local councils and touts that

have been ruling in these areas, the chairman said the law is clear on who collects what. “We curtailed touting and that is why we are to meet with the trade groups to strengthen procedures and clarify who does what.

There is no touting in Rivers Revenue system anymore. We are running a professional revenue management service now. If we allow touts, it can rubbish all the work we have done in the past couple of years. It’s the duty of the business operator to know who is coming to collect any revenue.”

He admitted that markets are under LGA revenue management except one built by the state government. “Some governments can however build and hand over to a LGA to own and manage. In the city, markets built and run by the state government will be under the state’s revenue board but in Rivers State, the LGA and RIRS in a city need to collaborate”.

He went on: “Our cardinal principle is to ensure that taxpayers pay with ease. The business people should be vigilant against those trying to collect government’s revenue.”

On what his agency is doing to collect taxes in other areas such as capital gains, luxuries and hotels, Norteh said it is unfortunate that a lot of people seal property deals under the table and evade tax. He said hundreds of transactions are done every year without being registered and that luxury tax is still untapped.

“We will be meeting with hotels soon to strengthen the collection system there. People are always afraid of tax.

The tax people pay is very poor and the payers need much education.”

He admitted that annual returns filing has improved. “Before, it used to be about 5,000 filings, but it is now in hundreds of thousands. At least it is important to file, even if some had nothing to pay. Those who have not registered in the system still have time to do so but they will not be allowed to collect tax clearance certificates.”

He warned the tax payers especially those coming into the tax net for the first time (informal sector people) not to dare pay cash to anybody. “We will provide point of sale (POS machines) to accredited collection agents who would pay deposits and collect taxes according to their capacities reflected in the amounts they deposited. You will not collect more than the deposit you paid.”

NDDC imbroglio On the sealing of the headquarters of the Niger Delta development Commission (NDDC) for one week now due to N50Bn tax bill and the heat it has generated, the RIRS boss said the matter is in court and that he would not want to comment on it. He would not want to be drawn into why the NDDC may have broken the seal and opened their offices.

He rather said: “The tax master will have to collect his money. He will write you a letter or send you a notice. If you allowed him to examine your books, his assessment will

be accurate, if not, he will use Best of Judgment (BoJ) method to send you a demand notice. If you do not accept his assessment, you provide evidence. If you do not accept and you do not submit superior evidence or open your books for assessment, it is assumed you have accepted the BoJ. Merely saying you object does not amount to an objection except it is backed by contrary evidence. The tax payer can say, see my own selfassessment or calculations or simply submit your books for examination.’

He went on; “The rule is simple. If you are not happy, you go to court. It is not a social media campaign. Gov Nyesom Wike has not asked me to go here or go there to collect taxes or to intimidate any person. It’s my duty to protect the integrity of a government that has not done such a thing from undue insinuations.”

He said if anyone uses force to obstruct an order of the court, contempt proceedings can be initiated against them. He said tax authorities have two ways to approach the court, either to seek an order to shut down the offending premises or to obtain an order to attach the assets and hand it over to the state government. If any taxpayer is aggrieved, he can go to court, not take the law in his hands.

BusinessDay gathered that the talks between the RIRS and the NDDC over the sealing have broken down and the courts may have to handle it.

Norteh, also a tax consultant, advised tax payers not to allow the tax master to come to their doorsteps first, saying it is advisable to do the needful early because when the tax master comes, you must answer him.

He said federal tax agencies do visit his private business and he files early and they meet to resolve grey areas. He said he has not used his position as a state revenue boss o block the federal counterparts.

Exploring investment opportunities in Nigeria’s medical business environment The managing director/CEO of Elshcon Group Of Companies, chairman Princess Medi-Clinics Ltd, chairman Clearline International HMO and immediate past president, Port Harcourt Chamber of Commerce, the doctor, Emi Membere-Otaji, at the 41st annual international conference of the Association Of General And Private Medical Practitioners of Nigeria (AGPMPN) in Yenagoa, Bayelsa State, gave a presentation; ‘Exploring the Investment Opportunities in the Medical Business Environment of Nigeria. Excerpts: Introduction: igeria has a population of about 190 million people, with an annual population growth of three per cent.

The country’s current statistics shows that Nigeria is in the unenviable bottom percentile in the hunger, misery, and human development index. With the above facts, it’s obvious that there are bound to be health challenges in so many scopes and extent needing the attention of the healthcare practitioners.

Also, Nigeria has over the decades, been dependent on oil and gas that accounts for over 90 per cent of our foreign exchange and 70 per cent of our exports. Today the significance of oil and gas in the global economy is being seriously challenged by renewable energy; thus the fall in oil price and the negative future outlook of

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crude oil relevance. Today, governments and serious individuals are looking beyond oil and navigating in other paths of diversification of their economies.

The Facts: It is therefore no brainer, from all the above, that significant opportunities abound in the country to keep the teeming Nigerians healthy by healthcare entrepreneurs providing solutions and running their businesses. These are always looking for and identifying legitimate opportunities. They thus create wealth and employment, either as start-ups or doing what is on ground differently for better productivity or performance.

The entrepreneur is a risk-taker as he creates the process and makes legitimate profit from the business ventures created therefrom, often building it from bottom-up. www.businessday.ng

Like any other industry, funding, inadequate infrastructure including poor power supply, insecurity, some actions/inactions and policy flip flops

Emi Membere-Otaji, MD/CEO, Elshcon Group of Companies

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of the various tiers of government may hamper ease of doing business, but they are to an extent, surmountable. Also, healthcare policy and regulatory administration in the country are major challenges.

Opportunities in the Healthcare Value Chain: In the light of the above, one can play in any of the healthcare value chain in the country; some of which are listed below: Specialist and General Outpatient Clinics; Hospitals; Pharmaceutical Distribution Services; Retail Pharmacy; Medical Laboratory Services; Radiology Services including scanning centres; and Medical Emergency Evacuation Services. Others beckoning for attention include Health Insurance Services; Healthcare Personnel Training Institutes; Health @Businessdayng

Management Systems Providers; DNA Testing Facility; and Egg and Sperm Banks.

We also have Medical Waste Disposal Services; Laboratory and Medical Equipment and Accessories Supplies and Repairs; Assisted Reproduction Clinics; Medical Billing Services; Physiotherapy Services; Fitness and Health Club; Weight Loss Clinics; and Healthcare Value Chain.

Some persons can also explore the Body Enhancement Services side; Home Care Services (for the elderly, disabled, etc.); Mobile Medical Screening (mini-health clinic in motion); and Skin Care Centres.

These varied services and opportunities can fit into various geographic and economic (urban, rural, poor or rich) neighbourhoods, in a no-one-cap-fits-all model.

Thursday 09 May 2019

BUSINESS DAY

47

POLITICS & POLICY 2019 election: Cartel not parties endorsed INEC - Afenifere, ADP …Say only holistic restructuring can save Nigeria Iniobong Iwok

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he Pan-Yor uba socio-cultural group, Afenifere, and the Action Democratic Party (ADP) have criticised Monday’s endorsement of the 2019 general election result and the performance of the Independent National Electoral commission (INEC) by 75 opposition political parties.

Recall that 75 opposition parties, after a two-day round-table on the evaluation of the 2019 general election, said the results of the polls were credible and acceptable.

They also passed a vote of confidence in the National Chairman of the Independent National Electoral Commission (INEC), Mahmood Yakubu.

The pa r ti e s h ow e ve r, pleaded with President Muhammed Buhari to sign the Electoral Amendment Bill into law when represented to him by the National Assembly.

But speaking in separate

Yinka Odumakin

interviews with BusinessDay, Wednesday, Afenifere and ADP took exception to that endorsement, saying that the endorsement was not done by political parties but by a cartel. They expressed dismay over the endorsement despite perceived lapses which they claimed marred the 2019 general election.

National Publicity Secretary of the Afenifere, Yinka Odumakin, noted that the

endorsement showed that most of the political parties in Nigeria were still appendage of some individuals.

Odumakin added that the country was generally sick and urgently needed a holistic restructuring and electoral reforms before the 2023 general election, if some of the challenges were to be curtailed.

According to him, “We have said our position on the

Tribunal sets dates for hearing on Atiku, 3 others’ petitions against Buhari’s victory Felix Omohomhion, Abuja

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he Presidential Election Petition Tribunal on Wednesday set date for the hearing in the petitions filed by candidate of the People’s Democratic Party (PDP) in the 2019 presidential election, Atiku Abubakar, his party, the PDP and three other political parties and their presidential candidates against the victory of President Muhammadu Buhari and his party, the All Progressives Congress (APC) in the February 23 presidential election.

The tribunal adjourned petitions of Atiku and PDP against INEC, Buhari and APC, to May 15.

However, the tribunal appealed to the litigants to shun actions that may put the panel in a negative light.

Atiku and three other presidential candidates are challenging the outcome of the February 23 presidential election in which President Buhari was declared winner by the Independent National Electoral Commission (INEC).

Chairman of the 5-member panel, Justice Zainab Bulka-

chuwa, who made the appeal, at the special sitting of the panel, specifically warned counsels and parties in the various petitions to avoid discussing daily proceedings of the tribunal in the media and other public space.

Bulkachuwa how ever, warned that the tribunal would not hesitate to wield the big stick against anyone found culpable in that regards, adding that the task of the tribunal is a serious national assignment and must be seen as such by all.

The chairman, who stressed that no matter how an election was conducted, there are bound to be complaints, hence the establishment of the tribunal to give speedy hearing on such complaints.

Bulkachuwa disclosed that there are currently 786 petitions against the outcome of the 2019 general election, with Imo State having the highest number of 76 and 6 tribunals.

The presiding judge assured that the panel would be fair to all and would give equal time to all litigants, in its efforts at ensuring that justice is done and done expeditiously in all the cases before it.

Responding, counsel in the matters promised to play by www.businessday.ng

the rules and give maximum cooperation to the panel.

While Senior Advocate of Nigeria, Levi Ozoukwu is leading the legal team of Atiku and the PDP, Wole Olanipekun (SAN) and Lateef Fagbemi (SAN) are leading that of Buhari and APC, respectively.

Other members of the presidential panel include, Justices Abdul Aboki, Samuel Osiji, Joseph Ikyegh and Peter Olabisi-Igeh.

The tribunal in stating that proceedings would be on a daily basis called the first case, the petition of the Hope Democratic Party (HDP) and his Presidential candidate, Albert Owuru.

At the end of the identification and regularisation of processes filed in the HDP petition, Justice Bulkachuwa fixed May 14 for pre-hearing of the petition.

The tribunal fixed May 15 to hear the petitions of Atiiku and PDP. However, the tribunal declined to give definite date for hearing in the petition of Coalition for Change (C4C) and People’s Democratic Movement (PDM), following the inability of the two petitioners to serve processes on Buhari and other respondents.

2019 general election, that it was marred by irregularities, but when you talk about this endorsement it is surprising; most of these people are cartel, they are not parties; they are not serious people.

“It shows they do not understand what is on ground.

Nigeria is sick and the only way forward is restructuring and electoral reforms, until this is done, election will continue to be like this,” Odumakin said.

Similarly, Sanni Yabagi, the national chairman of the ADP and the presidential candidate of the party in the just concluded election, said the endorsement of INEC and the election result showed that the political parties did not take part in the 2019 elections and were only acting out some scripts.

“I am not sure these political parties took part in the election. I was a candidate and I know how the election went. So, when you are talking about endorsement of INEC chairman and the result, it sounds like a child’s play. They are just acting out a script,” Sanni said.

Akwa Ibom bars commissioners, special advisers from granting press interviews ANIEFIOK UDONQUAK, Uyo

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he Akwa Ibom government has barred commissioners, special advisers and board members from granting press interviews without the permission of the Governor, Udom Emmanuel.

In a statement by Emmanuel Ekuwem, secretary to the state government, a copy of which was made available to BusinessDay in Uyo, the state capital, it stated that the decision was part of “efforts to streamline and ensure a

coordinated approach to information management and dissemination,” in the state.

Those also affected in the ban include personal aides to the governor and board members of governmentowned commissions.

The statement added that both the commissioner for information and strategy as well as the Chief Press Secretary “will continue to carry out their functions accordingly as the spokespersons to the State Government and the Governor respectively,” adding that the directive takes immediate effect.

Udom Emmanuel

Ugwuanyi swears in 3 high court judges, one customary court of appeal judge Regis Anukwuoji, Enugu

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overnor Ifeanyi Ugwuanyi of Enugu State has sworn in three High Court Judges and a Customary Court of Appeal Judge.

This followed their recommendations by the National Judicial Council (NJC).

The newly sworn in High Court Judges are Chinedu Vincent Ezeugwu, Chukwunweike Anukenyi Ogbuabor and Mathew Chukwujiofo Onyejife Eluke, while Nnenna Celia Madu was also sworn in as a Judge of the Customary Court of Appeal.

Ezeugwu and Eluke until their elevation were private legal practitioners. Ogbuabor was a senior lecturer at the University of Nigeria, Enugu Campus. Madu until her appointment was the Secretary, Magistrate Association of Nigeria, Enugu branch.

Swearing in the new Judges, Governor Ugwuanyi said that the action was in compliance with section 271 subsection 2 of the 1999 Constitution of the Federal Republic of Nigeria as amended, which provided that “the appointment of a Judge of the High Court of a State, shall be made

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by the governor acting on the recommendation of the National Judicial Council (NJC)”.

The governor added that section 281 sub-section (2) of the said Constitution also provided that the appointment of a Judge of the Customary Court of Appeal of a state shall be made by the governor acting on the recommendation of the NJC. He disclosed that the appointment of the new judges and their swearing in came as “a welcome relief to the Enugu State Judiciary and the people of the state who had for long endured the difficulties occasioned by the death of judges in the state”.

Ugwuanyi also said that approval has been given for the construction of two model customary courts for each of the 17 local government areas and that his administration had gone far in repositioning the State Judiciary for more efficient service “especially through the provision of suitable infrastructure and essential tools and equipment”.

He noted that renovation works had commenced at the State Judiciary Headquarters, among other interventions, expressing optimism that “these measures, coupled @Businessdayng

with the appointment of new judges would help in no small measure to further enhance the efficient administration and speedy dispensation of Justice in Enugu State”.

Earlier, the Chief Judge of Enugu State, Priscilla Emehelu said the procedures was observed in line with the provisions of Rules 3 and 4 of the NJC guidelines, stating that the commission considered sound knowledge of the Law, seniority at the Bar and Bench, geographical spread, good character, reputation, consistent adherence to professional ethics and satisfactory and consistent display of mature judgment in the office as a Chief Registrar or Chief Magistrate, in the appointment of the new judges.

Emehelu on behalf of the State Judicial Service Commission acknowledged and commended the remarkable contributions of Ugwuanyi’s administration in providing facilities for the Judiciary, stressing that the gesture attests to His Excellency’s resolve to reposition the State Judiciary for effective, efficient and speedy dispensation of justice in spite of paucity of funds and the competing needs of other sectors.

48

Thursday 09 May 2019

BUSINESS DAY

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Thursday 09 May 2019

BUSINESS DAY

49

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 08 May 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 248,816.58 7.00 -2.10 330 46,413,492 UNITED BANK FOR AFRICA PLC 225,716.18 6.60 0.76 255 59,700,699 ZENITH BANK PLC 642,058.30 20.45 -0.49 395 32,215,715 980 138,329,906 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 269,214.70 7.50 0.67 188 9,048,072 188 9,048,072 1,168 147,377,978 BUILDING MATERIALS DANGOTE CEMENT PLC 3,050,250.83 179.00 -1.10 67 65,977 LAFARGE AFRICA PLC. 177,185.75 11.00 - 33 168,945 100 234,922 100 234,922 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 341,239.00 579.90 - 9 5,960 9 5,960 9 5,960 1,277 147,618,860 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 1 700 1 700 1 700 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 700 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 6 2,032,000 OKOMU OIL PALM PLC. 66,773.70 70.00 - 11 13,148 PRESCO PLC 58,000.00 58.00 - 4 33,385 21 2,078,533 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,890.00 0.63 6.78 9 455,335 9 455,335 30 2,533,868 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 688.30 0.26 -7.14 2 120,000 JOHN HOLT PLC. 182.90 0.47 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 2 1,895 TRANSNATIONAL CORPORATION OF NIGERIA PLC 49,590.55 1.22 3.39 69 4,379,383 U A C N PLC. 20,169.08 7.00 1.45 86 2,500,981 159 7,002,259 159 7,002,259 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 32,868.00 24.90 - 23 76,335 ROADS NIG PLC. 165.00 6.60 - 0 0 23 76,335 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 - 5 40,248 5 40,248 28 116,583 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 11,196.18 1.43 - 1 1,390 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 109,519.14 50.00 - 34 30,907 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 8 39,715 NIGERIAN BREW. PLC. 523,797.08 65.50 -0.76 76 6,059,987 119 6,131,999 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 84,000.00 16.80 5.00 237 4,908,516 DANGOTE SUGAR REFINERY PLC 168,000.00 14.00 1.82 51 549,889 FLOUR MILLS NIG. PLC. 65,606.07 16.00 -0.62 48 528,994 HONEYWELL FLOUR MILL PLC 9,278.33 1.17 - 16 492,944 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 1 10 NASCON ALLIED INDUSTRIES PLC 47,557.42 17.95 - 20 58,871 UNION DICON SALT PLC. 3,321.07 12.15 - 2 110 375 6,539,334 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,660.22 11.00 2.80 19 176,254 NESTLE NIGERIA PLC. 1,204,837.50 1,520.00 - 37 54,120 56 230,374 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 1 10 VITAFOAM NIG PLC. 4,940.83 3.95 -1.00 16 538,106 17 538,116 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 35,734.29 9.00 2.78 35 463,595 UNILEVER NIGERIA PLC. 178,095.17 31.00 - 21 13,190,149 56 13,653,744 623 27,093,567 BANKING ECOBANK TRANSNATIONAL INCORPORATED 185,330.47 10.10 1.00 22 309,298 FIDELITY BANK PLC 53,603.37 1.85 1.65 95 4,690,689 GUARANTY TRUST BANK PLC. 950,627.09 32.30 -2.12 191 15,031,155 JAIZ BANK PLC 15,616.05 0.53 -1.85 22 1,905,740 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 77,734.13 2.70 1.89 48 40,282,709 UNION BANK NIG.PLC. 203,845.27 7.00 2.19 59 2,546,982 UNITY BANK PLC 8,767.00 0.75 -6.25 6 250,112 WEMA BANK PLC. 28,159.36 0.73 1.39 22 2,170,600 465 67,187,285 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 100 AIICO INSURANCE PLC. 5,197.65 0.75 -1.33 30 1,961,742 AXAMANSARD INSURANCE PLC 19,425.00 1.85 - 2 150 CONSOLIDATED HALLMARK INSURANCE PLC 2,357.70 0.29 - 4 281,696 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 6 811,518 GOLDLINK INSURANCE PLC 1,228.49 0.27 -10.00 1 2,500,000 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 17 9,509,291 LAW UNION AND ROCK INS. PLC. 1,976.31 0.46 - 7 304,364 LINKAGE ASSURANCE PLC 3,840.00 0.48 -5.88 10 371,162 MUTUAL BENEFITS ASSURANCE PLC. 2,569.73 0.23 4.55 10 722,414 NEM INSURANCE PLC 12,620.40 2.39 - 16 299,679 NIGER INSURANCE PLC 1,625.29 0.21 5.00 10 424,678 PRESTIGE ASSURANCE PLC 2,529.80 0.47 - 6 9,878 REGENCY ASSURANCE PLC 1,667.19 0.25 -3.85 29 4,796,711 SOVEREIGN TRUST INSURANCE PLC 1,918.39 0.23 -8.00 4 733,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 1 200 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 4 15,200 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 2 66,100 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 3 17,900 WAPIC INSURANCE PLC 5,219.27 0.39 - 21 257,542 184 23,083,325 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,224.16 1.41 - 25 421,920 25 421,920

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,620.00 3.81 - 32 240,393 CUSTODIAN INVESTMENT PLC 38,232.12 6.50 - 13 148,400 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 35,644.88 1.80 -5.26 94 7,878,535 ROYAL EXCHANGE PLC. 1,183.44 0.23 - 9 157,090 STANBIC IBTC HOLDINGS PLC 445,464.05 43.50 - 24 119,611 UNITED CAPITAL PLC 15,360.00 2.56 -1.54 59 975,476 231 9,519,505 905 100,212,035 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 2 224 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 4.35 6 1,350,000 8 1,350,224 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,900.00 4.60 - 4 30,500 GLAXO SMITHKLINE CONSUMER NIG. PLC. 10,762.89 9.00 - 9 17,307 MAY & BAKER NIGERIA PLC. 3,916.28 2.27 - 14 439,786 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,158.49 0.61 - 13 137,265 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 2 71 42 624,929 50 1,975,153 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 959.04 0.27 3.85 72 16,388,111 72 16,388,111 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 3 5,498 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 6 105,970 9 111,468 PROCESSING SYSTEMS CHAMS PLC 2,254.11 0.48 -9.43 48 6,765,349 E-TRANZACT INTERNATIONAL PLC 11,088.00 2.64 - 1 1,200 49 6,766,549 130 23,266,128 BUILDING MATERIALS BERGER PAINTS PLC 2,130.20 7.35 - 4 9,742 CAP PLC 23,800.00 34.00 - 12 12,997 CEMENT CO. OF NORTH.NIG. PLC 201,095.56 15.30 - 29 144,453 FIRST ALUMINIUM NIGERIA PLC 907.45 0.43 2.38 7 1,025,133 MEYER PLC. 313.43 0.59 - 3 8,059 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 4 600 PREMIER PAINTS PLC. 1,156.20 9.40 - 1 10 60 1,200,994 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,258.45 1.85 -0.54 18 575,743 18 575,743 PACKAGING/CONTAINERS BETA GLASS PLC. 34,473.07 68.95 9.97 15 461,872 GREIF NIGERIA PLC 388.02 9.10 - 1 100 16 461,972 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 94 2,238,709 CHEMICALS B.O.C. GASES PLC. 1,731.58 4.16 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 55.00 0.25 - 1 82 1 82 1 82 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,878.81 0.30 -9.09 59 9,087,395 59 9,087,395 INTEGRATED OIL AND GAS SERVICES OANDO PLC 57,806.07 4.65 1.09 70 921,190 70 921,190 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 62,382.98 173.00 -1.14 17 53,263 CONOIL PLC 13,948.44 20.10 - 30 148,885 ETERNA PLC. 5,346.99 4.10 5.13 33 558,132 FORTE OIL PLC. 45,521.71 34.95 - 7 51,276 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 3 2,666 TOTAL NIGERIA PLC. 55,002.54 162.00 - 25 22,130 115 836,352 244 10,844,937 ADVERTISING AFROMEDIA PLC 1,997.57 0.45 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 1 50 1 50 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 376.43 0.32 - 1 3,236 1 3,236 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 3 2,015 TRANS-NATIONWIDE EXPRESS PLC. 361.01 0.77 - 1 100 4 2,115 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 6,000 1 6,000 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 3,014.25 1.45 - 8 63,847 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 8 63,847 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 1 600 1 600 PRINTING/PUBLISHING ACADEMY PRESS PLC. 181.44 0.30 - 1 11 LEARN AFRICA PLC 1,033.74 1.34 - 3 52,487 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 798.11 1.85 0.54 6 315,160 10 367,658 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 497.31 0.30 - 8 108,510 8 108,510 SPECIALTY INTERLINKED TECHNOLOGIES PLC 764.54 3.23 - 2 40 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0 2 40

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50

Thursday 09 May 2019

BUSINESS DAY

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Thursday 09 May 2019

BUSINESS DAY

51

cityfile

DSS rescues teenage sex workers MIKE ABANG Calabar

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Members of the Nigeria Society for Asthmatic, University College Hospital (UCH) Branch, on awareness rally to mark the World Asthma Day in Ibadan. NAN

NDLEA destroys Indian hemp farms in C/River MIKE ABANG, Calabar peratives of the National D r u g s L aw Enforcement Agency (NDLEA) have destroyed 10 hectares of Cannabis Sativa (Indian hemp) farms in Cross River.

The destroyed farms, according to Anthonia Edeh, state commander of the agency, were located at Esok Odot community in Odupkani local government area.

Edeh said four suspects

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have been arrested in connection with the cultivation of the illicit weeds.

“The four suspects are Emmanuel Usen, 40; Effiom Emmanuel, 37; Abraham Emmanuel, 18 and Okon Effiong, 27.

“Processed hemp totalling 194.8kg, 14.5kg of cannabis seeds and 14.5kg of fresh cannabis weed, with grand total of 223.8kgs were seized from the suspects, while 10 hectares of hemp cultivation were destroyed,” she added.

The commander lauded the operatives of Ni-

gerian Security and Civil Defense Corps (NSCDC) for their support and cooperation during the operation.

“This kind of synergy, if sustained, will go a long way in curbing all forms of criminality, especially illicit drug trafficking and abuse in Cross River,” said Edeh, even as she decried the continued activities of hemp cultivators in the state in spite of regular sensitisation and awareness campaigns by the NDLEA. She, however, restated

the resolve of the agency to rid possibly rid the state of illicit hemp farmers.

Edeh appealed to community heads, chiefs and youth leaders to remain vigilant and be mindful of who they lease their lands to, warning that “ignorance will not be an excuse when indicted’’.

According to her, anyone found culpable will be prosecuted as accomplice regardless of how highly placed.

The arrested suspects are to be charged to court after investigation.

Residents lament as armed bandits pound Aba

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esidents of Aba, the commercial hub of Abia State, have cried out over the continuous invasion of homes and business offices in different parts of the town by armed bandits.

Some of the residents who spoke in Aba on Tuesday said that within one month, robbers had hit Abayi, Ogbor Hill and other parts of the city unhindered.

Their complaints followed the latest robbery attack of a betting office at number 18 Asa Road by St Michael Road, a few metres from a military checkpoint on Monday.

A source said that the robbery which took place about 6:pm left a staff of the betting house and several passers-by critically injured.

According to the source, the robbers carted a huge sum of money from the betting office and escaped

without hindrance.

The source said that the armed robbers, who were four in number, came in a tricycle and shot sporadically before robbing the betting shop without any response from a nearby military checkpoint.

The robbers also seized the opportunity to attack most of the mobile phone shops at Saint Michael Road and took away many phones using polyethylene bags.

“It is high time our government looked into what is really happening in Aba. “What is the work of these soldiers who mount checkpoints everywhere?

Look at their checkpoint at Park Road and tell me if an ordinary whistle from here would not be heard at that checkpoint “These armed robbers attacked and shot severally into the air without any response from them.

“All the soldiers is to use www.businessday.ng

motorcycle to go into the city to settle business disputes, leaving the city unsecured,” the source said.

Another resident, Adindu Amarachukwu described the incident as unfortunate saying it happened in a place that should ordinarily be considered secured.

He said that the robbery scene was close to a military base and the Aba Central police station, yet they did not come out during the robbery.

“They claimed they have launched ‘Operation Puff Adder’ yet armed robbers are terrorising us here.

“A young man who grabbed one of the robbers while calling for help was shot by one of the robbers because he could not get help from anybody until one of the robbers came to rescue his colleague by shooting him on the leg.

“It was later when the robbery was over that the

young man was taken to the police clinic at Aba Area command,” he said.

He urged Abia State government to consider re-establishing a vigilante group similar to what the city had around 1999.

He said the state of insecurity in Aba was about what it was in the early 1990s which led the then government to establish the Abia State Vigilante Group called Bakassi which reduced security threat.

“From what I am seeing now, nobody in Aba is safe, neither can we trust these military men and police here in Aba because, they are no longer interested in security jobs,” he said.

When contacted, Geoffrey Ogbonna, Abia State police public relations officer confirmed the incident.

He added that there was no life lost as injured persons were responding to treatments.

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ver 59 girls ages between 13 and 15 have been rounded up from hotels in different parts of Calabar metropolis by the operatives of Department of State Security (DSS).

Adebayo Ilupeju state director of the DSS who briefed journalists in Calabar, alleged that the girls were involved in prostitution.

He also paraded 16 young men allegedly caught in the same hotels patronising the girls, some, he said were suspected to be homosexuals, cultists, kidnappers and armed robbers.

According to Ilupeju, the DSS acted on the information they got from members of the public, disclosing that they stormed the two hotels located along the Murtala Mohammed Highway.

“These places look like normal hotels, nothing to indicate that illegality such as teenage prostitution was being perpetuated in these places.

“On a tipoff we decided to move in in the wee hours of Saturday, May 4. We discovered that behind the hotel there were many tiny rooms of about 50 partitioned with plywoods. We had to forcibly gain entrance into the rooms. We were told that most of them had gone to Peace Garden hotel where we met all of them naked.

Before arresting them alongside the men and a cripple who is said to be the owner, we forced the teenage girls to cover their nakedness before we arrested them all.”

He said they have profiled each of the teenage prostitutes, and also contacted the zonal office of NAPTIP in Uyo , Akwa Ibom State, whose men were already in their office to take over the case and evacuate the suspects.

Ilupeju said that most of the teenage girls have volunteered information that certain persons, some women, ‘conscripted’ them into the illegal job, and they were making returns every week to them. He said they were going after these persons.

One of the girls, Chinasa Emmanuel, 15, said she is from Abia State; that her parents had separated and she cannot trace them. She said she needed money to pay for her WAEC examinations She claimed that she first came to Calabar last December with a friend to attend a religious event but returned on her own last month to engage in prostitution.

“I cannot trace my parents. I don’t have their contacts. They had separated. I needed money to register for my WAEC exams. I returned to Calabar on my own last month. I have saved above N70,000 but I cannot access it because it is with our madam.”

31-year fraudster bags 3 months

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n Ilorin High Court has sentenced 31year Wale Oladoja to three months imprisonment for an internet fraud attempt.

Justice M. Abdulgafar ordered that the accused should serve three months in prison or pay a fine of N150, 000.

Abdulgafar passed the sentence in his ruling on a plea bargain agreement entered into by the convict with the Economic and Financial Crimes Commission (EFCC).

Prosecuting counsel, Andrew Akoja had earlier urged the court to convict and sentence the accused based on the plea bargain agreement.

“My Lord, the defendant was charged before this court on offence bordering on internet fraud, I urged your Lordship to convict and sentence him accordingly,” Akoja said.

The convict pleaded guilty to the one count @Businessdayng

amended charge brought against him by the antigraft body.

The accused was formerly arraigned before Justice Sikiru Oyinloye on a six-count charge brought against him on March 28.

JOyinloye transferred the case back to the registrar on the request of the defendant’s counsel, T. A. Amid, for sentence.

The prosecutor, Nnaemeka Omewa, had told the court that sometimes in March, Oladoja of No. 10, Olusoji Street, Ogba, Lagos State, had the intention to defraud.

Omewa said the defendant had in his possession a document containing false presence to wit: Hangout with Luca Ruggeri, Hangout with Sasa Amorusopro, and Hang out with Allen Perkias, Hangout with Singh Ranjeet.

He said that all the documents contained representation that the defendant knew to be false.

industry Insight

BUSINESS DAY Thursday 09 May 2019 www.businessday.ng

Do CEOs have confidence in Nigerian economy?

Odinaka Anudu & Endurance Okafor

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hief executives of multinationals, conglomerates, medium- and small-sized manufacturing companies are usually not the most vocal but their words carry weight whenever they speak.

More than 200 of them spoke recently in a most decisive way when they participated in the Manufacturers CEOs Confidence Index (MCCI) for the first quarter of 2019, which was conducted by the Manufacturers Association of Nigeria (MAN).

One major takeaway from the report is that issues that many think are over remain thorns in the flesh of CEOs managing critical firms.

Issues around foreign exchange, bank lending rate, government capital implementation, multiple taxes and sources of raw materials are some of the challenges dragging the growth of the sector, according to them.

This substantiates the need to pay attention to myriads of operating challenges hindering the sustenance of growth of the sector.

According to the MCCI, CEOs confidence stood at 51.3 points in the first quarter of the year, which is slightly above the 50 points benchmark of a good performance.

A composite manufacturing index above 50 points indicates that the manufacturing economy is generally expanding; 50 points indicates no change, and below 50 points indicates that it is generally contracting.

The data generated from the responses of over 200 CEOs of MAN member-companies across the country, as analysed by BusinessDay, revealed that the majority of the CEOs interviewed, about 92 percent of them, agreed that multiple taxes and levies depress production in the manufacturing sector.

This represents the highest percentage when compared with other issues faced by the industry.

This is substantiated by the numerous taxes, levies, fees and other charges that

Opinion Wasteful foreign jaunts by PMB and PDP governors – Chidi Nwakanma P. 33 Flashback2: Buhari’s believers and the challenge of talent portability P. 33 – IK Muo

CEOs’ votes on factors inhibiting manufacturing growth

source: MAN, BusinessDay manufacturers pay to agencies of the federal, state and local governments, MAN said.

The number of taxes paid by Nigerian companies has risen to 54 today, as against 37 in 2014, according to tax experts.

One CEO said that he received 16 different government agencies/ departments in one month, with each of them demanding compliance, which simply translates to parting with certain amount of money.

Also, 41 percent did not agree that the rate at which the sector sources foreign exchange has improved. However, 36 percent agreed while another 23 percent were not sure that foreign exchange access has improved. Today, many manufacturers, especially multinationals, say they cannot get as much foreign exchange as they need yet. Analysts think that Nigerian manufacturers must strengthen their backward integration plans to hedge against any dollar crisis that may result from oil price crash in the future. Nigeria relies on oil and minerals for over 90 percent of foreign exchange, and any hit on the market affects the amount of dollars available for use by manufacturers and other economic players.

MAN believes that the CEOs’ response suggests the need for continuous finetuning of foreign exchange policy in the country, particularly as it concerns the manufacturing sector.

Also, 63 percent of the respondents did not agree that the rate at which commercial banks lend to manufacturers encourages productivity in the sector.

About 28 percent of respondents agreed while the 18 percent were not sure if the size of bank loans to the sector encourages productivity.

Lending rate to the manufacturing

sector averaged 22.21 percent in 2018 and 22.84 percent in 2017, according to MAN. Many small and medium enterprises remain shut out from deposit money banks which lend at 20 to 35 percent rates. Tenor of funds is usually 12 months, which makes matters worse. Part of the challenge is that the monetary policy rate is 13.5 percent. This is the rate that determines the lending rate in the economy.

Nigeria may do well by looking at peers in Africa. The current repo rate (central bank lending rate to commercial banks) in South Africa is 6.5 percent while the prime lending rate (lending rate to customers) is 10 percent.

Kenya Central Bank’s monetary policy committee cut the determining bank rate in July 2017 to 9 percent from 9.5 percent.

Zambia’s central bank cut benchmark lending rate by 50 basis points to 9.75 percent in February 2018, citing lower consumer inflation and weaker economic growth.

In October 2017, the central of Ethiopia raised its benchmark interest rate to 7 percent, from 5 percent.

This shows there is a need for measures that will lower cost of borrowing in a country that has one of the highest rates of accessing loans in the world, the report said.

However, development banks like the Bank of Industry are lending at singledigit rates (of about 9 percent) but need recapitalisation, according to industry experts.

MAN’s response from the industry players focused on their position on macroeconomic and business operating environments as well as perception on the diffusion factors which include: current business condition, business

condition for the next three months, current employment condition, rate of employment, and employment condition.

The majority of respondents did not agree that government capital expenditure implementation encourages productivity in the sector.

“This claim can be justified with the available poor economic infrastructure such as inadequate power supply, bad road network, high cost of abstracting water, low patronage and many more,” MAN said.

The association suggested the need to pay urgent attention to initiatives that would improve economic infrastructure, especially those that supports productivity in the real sector.

Despite the real gross domestic product (GDP) growth recorded by the manufacturing sector for the fourth quarter of 2018, the sector’s contributions to the nation’s GDP during the period did not change from 2017 share (8.86 percent), as well as in the annual contribution, which rose only slightly from 9.18 percent in 2017 to 9.20 percent in 2018, National Bureau of Statistics (NBS) figures, analysed by BusinessDay, show.

This is the maiden edition of the report, which will now be a quarterly survey targeted at measuring the pulse of the manufacturing sector.

The responses show that while the economy sees gradual growth after exiting recession, investors want quick policy interventions that will improve the business environment. Similarly, they want to see a harmonisation of taxes and levies by federal and state governments. They want improvements at ports and sincere developments of ports outside Lagos to decongest Apapa and Tin Can ports.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.