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news you can trust I **MONDAY 09 JULY 2018 I vol. 15, no 92 I N300

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Dangote to make history with Nigeria oil refinery, fertilizer IPO How buyers of Yola … refinery valuation estimated at $34.5bn, Fertilizer plant at $4.67bn DIPO OLADEHINDE, EMEKA UCHEAGA & SOBECHUKWU EZE

he largest indigenous industrial conglomerate in Sub-Saharan Africa Dangote group has announced plans to have an Initial Public Offering (IPO) listing of both its fertilizer and refinery plant. The IPO is the first of its kind in Nigeria and if successful could set the stage for other companies to test the

TONY AILEMEN, Abuja

document detailing the report of a fact-finding adhoc committee of the National Council on Privatization (NPC) indicates how the Yola Electricity Distribution Company, one of the 11 distribution companies (DisCos) carved out of the now defunct PHCN, which serves the Nigerian northeast, exploited a loophole in the

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Inside

DBN deploys $1.3bn balance sheet for MSMEs, shortlists partner banks P. 2

DisCo exploited loophole to declare ‘force Majeure’

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MARKETS

L-R: Okechukwu Enelamah, minister, industry, trade, and investment; Mohammed Hayatu-Deen, founding partner, African Capital Alliance; Pascal Dozie, founding partner; Adeyinka Shonekan, representing Ernest Shonekan, founding partner; Dick Kramer, founding partner, and Cyril Odu, CEO, during the send-forth dinner in honour of the founding partners of African Capital Alliance, Nigeria’s premier private equity firm which has to Pic by Olawale Amoo date raised over $1.3bn in funding.

Can Nigerian firms beat the record dividend pay-out of 2016?

Businesses delay decisions on uncertainty over 2019 elections N

BALA AUGIE

LOLADE AKINMURELE

igerian businesses are putting critical investment decisions on ice ahead of the 2019 elections amid rising uncertainty over the outcome of the elections

and its economic impact. Africa’s largest economy will hold presidential and governorship elections between February and March 2019 but the increasing fragmentation of the leading political parties means that no one is now certain of the final outcome of the elections.

Incumbent President Muhammadu Buhari is certain to pick the ticket of the ruling All Progressives Congress (APC) as the party is banking on his perceived popularity in the North East and North West to give them another four years in power. However, it is still uncertain

who will pick the presidential ticket of the main opposition Peoples Democratic Party (PDP). Even though former vice president Atiku Abubakar appears to be the leading candidate to pick the PDP’s ticket, other major Continues on page 46

igerian largest companies have been steadfast in rewarding shareholders out of distributable profit as evidenced in increased dividend payment in 2017, but the distribution out of profit is below the record level of 2016.

The payout ratio of Nigerian Stock Exchange (NSE) 30 Index,

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2 BUSINESS DAY NEWS Nigeria economy threatened as Trump fires first shots of trade war David Ibidapo

igeria being an oil dependent nation is largely at risk of getting hit by crossfires between U.S and China in the on-going trade war. The Trade war between US and China has become more certain as Donald Trump threw the first blow. At 12.00am on Friday 6th of July, US officials imposed tariffs on $34 billion Chinese industrial goods coming into the U.S after previous warning by the U.S government that Chinese goods compete unfairly with domestic goods due to high subsidized price by the Chinese government. BusinessDay analyst forecast growth in the world economy could be threatened if the trade war escalates and emerging markets may see major macroeconomic variables adversely affected by this with major pass through in oil and pressure on currency. Oil exporters like Nigeria, with over 93 percent of its export being crude oil, may witness a decrease in global demand of crude oil with a resultant effect on a drop in oil price from $72.94. This to a large extent may cause a drop in the foreign reserve earnings of Nigeria. The trade war according to Bismarck Rewane, CEO of consulting firm Financial Derivatives (FDC)

will lead to a redefinition of global alliances. With the recent move of China to move from an investment led economy to a consumption led economy, oil and ferrous metal exporters such as Nigeria are likely to witness a decline in demand as China remains the largest trading partner to Africa. Despite the recent trade war, the U.S dollar had grown stronger amongst other currencies of emerging markets despite signifying a weakening of these currencies against the dollar. Nigeria is likely to witness pressure on its foreign exchange (FX) which could cause a further devaluation of its currency if this war persists. According to a Rewane, Nigeria may emerge as a loser in the global trade war on-going. He pointed out that Nigeria sells products that are fairly inelastic and over 30 percent of economic activity is informal hence, making Nigeria a ‘perverse beneficiary’ of this global economy anarchy. Also the refusal of Nigeria to sign Africa free trade agreement also renders her immunity low. With move by U.S officials, analysts expect that soon enough China will also respond with their threat to also impose tariffs on U.S goods therefore discouraging importers from importing. This may grow worse as Trump vowed last month to impose an additional $200billion on Chinese industrial goods.

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Nigeria’s cassava output set to spike on increasing Chinese demand JOSEPHINE OKOJIE

igeria’s Cassava output is set to increase threefold as a result of rising demand from China for cassava products, used in food and pharmaceuticals and as a bio-fuel, according to the Nigerian Cassava Growers Association (NCGA). The NCGA plans to increase output to 200 million tons annually on 5 million hectares (12 million acres) by the end of 2021, using a new growing technique and a crop variety that yields an average of 40 tons a hectare, its president Segun Adewunmi said. The variety now commonly used produces about 30 tons per hectare. “Chinese firms are demanding

for Nigeria’s cassava pellets and we are positioning ourselves to meet this demand in the next three years,” Adewunmi told Bloomberg. “For instance, we just got an import request from China and other countries for 10 million tons of cassava chips.” Nigeria is the world’s leading grower of cassava, producing 57.6 million metric tons in 2017, exporting about 3.2 million tons annually and earning a record $136 million in 2013, the last time export value was made available. About 60 percent of global exports of cassava products now go to China, after it overtook the EU in 2007 as the leading importer of the source of animal feed, ethanol, industrial starch and syrup used in sweeteners, according to the World Bank. Oil-dependent

Nigeria is seeking to diversify its sources of export income after a plunge in crude prices from 2014 triggered the country’s worst economic contraction in 25 years in 2016. About 70 percent of global cassava exports are in the form of pellets and chips used for animal feed, while the rest are shipped as starch, syrup for food and pharmaceuticals. Japan, Malaysia, Indonesia, Singapore, the U.S. and the Philippines are among the major importers of cassava products including industrial starch and flour. In Nigeria, Africa’s most populous country, cassava is produced mainly by small-holder farmers using rudimentary implements, according to the Food and Agriculture Organization.

Investors expect lower returns in H2 as trend set to continue Iheanyi Nwachukwu

a 42percent gain, many market watchers had expected 2018 to follow a similar trend notwithstanding weaker positive path. Their views were predicated on positive oil price outlook and the anticipated domestic economic recovery, both of which were expected to buoy company earnings and support market sentiment. The overall narrative of the year has however been an underwhelming one, best represented by a bear run in the equity market that wiped 14percent off the market between February and May, almost eroding a 16percent surge in January. The All Share Index (ASI) inched up by only 0.09percent in H1 to 38, 278.55points. Equities market yearto-date (YtD) returns stood negative at 1.61percent as at Friday July 6, 2018 even as value of listed equities stood at N13.629trillion. The value of listed Nigerian equities which opened the year 2018 at N13.609trillion rose to N16.019trillion last Friday. As at January end, it stood at N15.896 trillion. Though, stable and recovering macro environment, and earnings support bullish outlook, but analysts insist they are still faced with some downside risks. “We encourage investment with a long term view as we believe selloffs over H2 will enhance the attractiveness of equities, and will expand opportunities for new highs in 2019, amidst continued favourable currency conditions, supportive macro environment, and improving earnings”, Cordros analysts added.

tock investors are increasingly looking out for a much lower return in the second half of the year (H2) following a painful first-half (H1) when early year gains were wiped-off. Many stock buyers were bullish at the start of this year with a recordhigh gain of 15.95percent in January 2018, the highest monthly gain since May 2009 when it recorded 39.09percent gain. Given analysts near-term negative outlook for equities, they encourage investor to build strategic exposure to equities by taking risks only where long-term opportunities exist. “Looking into H2, we forecast minus 2 percent return for the market, equating approximately 2 percent loss for the year,”said Christian Orajekwe-led team of analysts at Lagos-based Cordros Securities. Their outlook for H2 is underpinned by external risks, the absence of near term catalysts, and a traditional bearish second half. “We now look for much lower return for the year,” Cordros Securities analysts said in their recent outlook. In the first-half of 2018, Nigerian economy saw some important wins such as high oil prices which helped maintain foreign exchange (FX) stability and supported Federal Government spend. Also, inflation declined significantly in the first six months which triggered yield moderation in the fixed income market. Coming off an impressive 2017 where the Nigerian Stock Exchange (NSE) All-Share Index (ASI) booked Continues on wwwbusinessday online.com

L-R: Fola Akande, company secretary/chief counsel; Atedo Peterside, chairman, and Amir Shamsi, managing director, all of Cadbury Nigeria plc, at the 53rd annual general meeting of the company held in Lagos on Friday.

DBN deploys $1.3bn balance sheet for MSMEs, shortlists partner banks ENDURANCE OKAFOR

he Development Bank of Nigeria (DBN) is ramping up its operational roll out and activities to deliver on its mandate to provide credit to qualified micro, small and medium enterprises (MSMEs) on a structured and sustainable basis. According to DBN’s Managing Director Tony Okpanachi, the bank is on course to meet its target to provide N5billion to 20,000 MSMEs in its first full year of operation. The DBN boss said that lending started in November 2017 with loans to 3 of the largest Microfinance Banks in Nigeria. However, the development institution says it will do its job with a strict eye on standards and that only entrepreneurs who meet the necessary requirements will have access to its loans. Speaking on DBN’s current priorities within the context of the institution’s long-term mandate, Okpanachi stated that “DBN management is taking this phenomenal responsibility very seriously indeed and we are determined to ensure that serious entrepreneurs get the support

they need to grow so that the positive impact is felt in their businesses and the economy as a whole.” On repayment terms for DBN loans, Okpanachi stated that the institution will “provide funds for up to 10 years in terms of actual repayment period but when necessary we also provide a moratorium of up to 18 months.” Commenting further, Okpanachi emphasized “DBN loan cuts across all sectors of the economy. Our mandate and operations seek to achieve the Nigerian Sustainable Banking Principles (NSBP) of the Central Bank of Nigeria (CBN), where financial inclusion ranks high, as well as the United Nations Sustainable Development Goals and is in line with the Economic Recovery and Growth Plan of the Federal Government of Nigeria.’’ Another notable step taken by the bank was the recent shortlisting of seven banks for loan disbursement to entrepreneurs across the country who meet DBN requirements. The initial banks whose numbers are expected to be boosted by other banks currently being processed include commercial banks - Wema Bank, Ecobank,

Sterling Bank, Diamond Bank, Fidelity Bank UBA and FCMB. The others are microfinance banks: Microcred, Infinity, NPF, Bosak, Fortis, Hasal, AB, Seedvest, Parallex, Addosser and La Fayette. Also significant is the recent equity investment in DBN by the European Investment Bank (EIB) and the African Development Bank (AfDB) to with the tune of $70m which is directed to strengthen lending for business and agriculture investment in the country. In another boost to its institutional credentials, DBN has also obtained the approval of the Central Bank of Nigeria to set up a credit guarantee scheme through a wholly owned subsidiary. It would be recalled that Nigeria has over 37 million MSMEs contributing to over 50 percent of Nigeria’s GDP. However, less than 5 percent of these businesses have access to credit in the financial system. The development finance institution was established to contribute to alleviating financing constraints that hamper the growth of domestic production and commerce by providing targeted wholesale funding to fill identified enterprise financing gaps in the MSME segment.

Monday 09 July 2018

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6 BUSINESS DAY NEWS

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Port congestion imminent as truck drivers embark on strike over extortion, brutality AMAKA ANAGOR-EWUZIE

ruck drivers operating at the Apapa and Tin-Can ports on Thursday went on strike over allegations of extortion and brutality by security personnel controlling the traffic in the port area. The strike action, if not put to an end, can lead to congestion in the two Lagos ports based on the fact that over 95 percent of cargoes in the ports are being evacuated by road. Remi Ogungbemi, president, Association of Maritime Truck Owners (AMATO), said individual truck owners and drivers who were tired of the situation under which they operate embarked on the strike action. According to Ogungbemi, the situation is getting chaotic despite government intervention and introduction of call-up system. “It has not been announced officially but truck drivers have down tool on individual basis but in the next 48 hours, there will be an announcement and we want to inform authority before going on strike. “The drivers are not only protesting because of extortion but because of brutality including beating of drivers, smashing of wind screens, breaking lights, among others,” Ogungbemi said. However, sources at various

terminals in the ports have called on government to resolve the impasse because it may lead to congestion at the seaside of the port. Recall that government officials - Nigerian Navy, Nigerian Ports Authority (NPA) and Lagos State Transport Management Authority (LASTMA), who are managing the traffic situation through a call-up card system, have been accused of massive extortion of hapless truck drivers. The traffic management system, which is being coordinated by the Nigerian Navy through a call-up card system introduced in March 22, to stem the perennial traffic lockdown at Apapa port, has been a huge success since its introduction as it has restored sanity to the Apapa port access road. However, the system is currently enmeshed in controversy over truck owners, drivers and Customs, who have unanimously accused these traffic officials of subjectingtruckdriverstohorrendous objects of ‘money-making machine’ through unabashed extortion. Ibrahim Tanko, vice-president, Seaport (Western Zone) of National Association of Government Approved Freight Forwarders (NAGAFF), accused the naval officials in the traffic management system of collecting N70,000 on 40-foot container and N40,000 on 20-foot container.

He alleged that naval officers collude with other officials to collectthisun-receiptedmoneyfrom truck drivers before they could be issued call-up card to access the port. “If any driver refuses to pay, he would stay in queue till eternity, and because these drivers want toentertheporttogetjob,theywill be forced to pay,” he said. Joe Sanni, national publicity secretary, Association of Nigerian Licensed Customs Agents (ANCLA), corroborated the claims, which he described as unfortunate. “We don’t even know that the money they collect has increased to N70,000 and N40,000, itusedtobebetweenN30,000and N40,000,” he said. He however blamed the truck drivers of being the ones inducing both the Naval and NPA officials in a bid to enter the port with their empty containers and load other ones. Reacting to this, Isah Suwaid, assistant general manager, corporateandstrategiccommunication of NPA, said the Apapa and Tincan ports management of NPA were aware of the threat and the NPA management was engaging with them. He assured that the NPA management was ready to deal with any staff of the authority found to have been involved in bribery allegation.

Monday 09 July 2018

African nations take cue, as Ivory Coast signs deal to digitise government services JUMOKE AKIYODE-LAWANSON

vory Coast has set the tone for West African economies to become digitised as the country has now signed a memorandum of understanding (MoU) with Visa, a leader in digital payment, to digitise its government services and ensure that financial services are accessible to more Africans. Adama Koné, the Ivorian minister of finance and economy, signed the agreement with Andrew Torre, Visa’s regional president for central and Eastern Europe, Middle East and Africa (CEMEA) on behalf of the government, at a ceremony held in Abidjan, in conjunction with the US Department of Commerce President’s Advisory Council on Doing Business in Africa (PACDBIA) fact-finding mission. BusinessDay confirms that this is the first of its kind agreement signing in Francophone country that will most likely spur other nations to further embrace digital payment and e-government services in order to grow their economies with technology. Speaking at the signing ceremony, Torre said: “This MoU signing represents an important milestone in our ongoing cooperation with the Ivorian government. It is a major step forward in our effort to bring more Ivorians into the formal financial system with all the as-

sociated benefits. “Our shared vision for enhancing the quality of services and employing the latest payment technologies makes this partnership a great opportunity for Ivorians, the financial services industry, merchants and the government alike. “The use of electronic payments will bring greater payment security and convenience to Ivorian families, while lowering costs and bringing increased transparency to the financial system.” Visa is the first global payments provider to open an office in the region. The company has been working closely with local governments, financial institutions and merchants across UEMOA, CEMAC & the entire Western and Central Africa area to bring the benefits of innovative electronic payments to the region, including its security, mobile and consulting capabilities. Koné said: “We consider this MOU a breakthrough in our greater plans for the development of Cote D’Ivoire by 2020. It reflects the government’s resolve to address the challenges and improve the lives of Ivorians by collaborating with companies like Visa. It is a testament that we are seeking international standards when it comes to the services offered to our citizens.” The Ivorian government says it will work with Visa to review current financial services

programs in the country and create informed action plans to aid adoption of electronic payments. With this agreement, Visa is making six commitments. – To roll out Visa Mobile push payments for the more than 1.1 million cocoa, coffee and cashew nuts farmers whose work amounts to 20 percent of Cote D’Ivoire’s GDP. For the first time these farmers will be able to make and accept digital payment on their mobile device and transfer funds directly from bank account to bank account. And by being connected to a bank via an app, they will be able to apply for the credit and loans they need to help grow their businesses – To enable around 35,000 transit vehicles to accept mobile payments, helping the transport sector flow more efficiently by minimizing queues and ensuring the payment of all journeys – To work with Cote d’Ivoire’s government to assess and develop government prepaid solutions for student scholarships and government employees’ salaries and travel expenses – To partner with Cote D’Ivoire’s more than 200 post offices to digitize aid and support for the elderly and less privileged, as well as helping people pay digitally for their utilities and government services bills as part of the “House of Citizen” program of the Cote d’Ivoire Post Office.

Air passenger demand continued strong growth in May - IATA IFEOMA OKEKE

Chairman, Board of Directors of VDT Communications Limited, Tokunbo Talabi (m), flanked by the managing director, Biodun Omoniyi (l), and a director, Tunji Gafaar, after the appointment of the new chairman, during the company’s AGM 2018 and board meeting held recently in Lagos.

Minister’s upcoming Ogoni restoration dialogue may crash due to mention of oil resumption IGNATIUS CHUKWU

acts have emerged that the much-expected peace meeting between the minister of state for petroleum, Ibe Kachikwu, with Ogoni leaders aimed at reaching understanding for proper stage of clean up to start may crash after all. This is as the umbrella body for the Ogoni has pulled out of such talks. This may be due to alleged link by the office of the minister to resumption of oil business in Ogoni and the clean up. The Ogoni activist body, the Movement for the Survival of the Ogoni People (MOSOP), understood the minister to mean that the meeting would discuss resumption of oil activities in Ogoni. Such issues do touch the soul

of Ogoni. Now, MOSOP said in a statement by its publicity director, Fegalo Nsuke, that the body wished to clarify on what it called “misrepresentations in an invitation letter from the petroleum ministry for a stakeholder meeting with the minister of state for petroleum, Ibe Kachikwu, on Monday, July 9, 2018 at the home of King G.N.K. Gininwa, the Gbenemene of Tai in Ogoniland. “Whereas the invitation letter referred to an earlier agreement for oil resumption and the Ogoni clean up to run simultaneously. We want to state emphatically that we had no such agreement with the minister.” MOSOP said it considered the comment on oil resumption in Ogoniland not only as a deliberate ploy to frustrate the focus of their petition to the minister but

‘mischievous means’ to delay the process of restoring our polluted environment. MOSOP went on: “We note our disapproval and disappointment in this statement as it clearly indicates the dishonesty of government and questions the integrity of the Ibe Kachikwuled process. “We recall that the meeting with the minister of state for petroleum was sequel to our petition complaining about the constant harassment of the Ogoni people by some oil industry actors notably Robo Michael Limited, and Belema Oil Producing Limited and the threat their actions posed to the life of the president of MOSOP and other key members of the organisation. “The Abuja meeting was the

first we had with the minister, Ibe Kachikwu, and their was no possibility at all that such decisions could be taken without consultations with the Ogoni people and getting their consent through a congress and a general assembly. “The misrepresentations in the invitation letter are therefore not only deceitful; they are a deliberate and mischievous attempt to incite the people against the leadership of MOSOP.” The statement declared: “After a thorough assessment of the situation, MOSOP has decided to dissociate itself from the meeting of July 9, 2018 as the manipulations to favour oil resumption in Ogoniland dents the credibility and integrity of the entire process.”

he International Air Transport Association (IATA) announced global passenger traffic results for May showing that demand (measured in revenue passenger kilometres, or RPKs) rose 6.1 percent compared with the same month in 2017, a slight pickup from 6 percent year-overyear growth for April 2018. Capacity climbed 5.9 percent andloadfactorrose0.1percentage point to 80.1 percent. “Maywasanothersolidmonth in terms of demand growth. As had been expected, we saw some moderation, as rising airline costs are reducing the stimulus from lower airfares. In particular, jet fuel pricesareexpectedtobeupnearly 26% this year compared to 2017. “Nevertheless, the record load factor for the month signifies that demand for air connectivity is strong,” Alexandre de Juniac, IATA’sdirector-general/CEO,said. International passenger traffic demand rose 5.8 percent, which was up from 4.6 percent growth in April.Allregionsrecordedgrowth, led by Asia-Pacific airlines. Total capacityclimbed5.4percent,with load factor rising 0.3 percentage point to 78.7 percent. African airlines’ traffic rose 3.8 percent in May compared to the year-ago period, which was an 8-month low. Capacity rose 3.2 percent and load factor edged up 0.4 percentage point to 66.4 percent. The region’s two largest economies, Nigeria and South Africa, may be moving in opposite directions again, with higher oil prices bolstering the Nigerian economy, while business confidence in South Africa has weakened again. Asia-Pacific airlines saw their

traffic rise 8.0% in May compared to the year-ago period, slightly downonan8.1%increaseinApril. Capacityincreased7.6%,andload factor edged up 0.3 percentages point to 77.9%. Passenger traffic has continued to trend strongly upwards in seasonally-adjusted terms, buoyed by a combination of robust regional economic growth and increases in the number of route options for travellers. European carriers’ May demand climbed 6.2% over May 2017, well above the 3.4% yearover-year growth recorded in April. Capacity rose 5.1% and load factor was up 0.8 percentage point to 83.5%, which was the highest among regions. Despite the impact of strikes in the region and mixed signals regarding the economicbackdrop,trafficgrowth is healthy. Middle East carriers’ May demand growth slowed to 0.8% comparedtoayearago,from2.9% annual growth recorded in April. TheearliertimingofRamadanthis year may have affected the result, but more broadly, the upward trend in traffic has slowed compared to last year. May capacity increased 3.7%, and load factor fell 1.9 percentage points to 67.5%. North American airlines’ traffic rose 4.9% in May compared to May 2017, a strong rebound from 0.9% annual growth in April (which was a 36-month low). Capacity climbed 3.4% and load factor increased 1.2 percentage points to 82.0%. Given the comparatively strong US domestic economy, April’s weak demand performance likely was more reflective of unfavourable yearto-year comparisons with April 2017, when the current upsurge in growth began.

Monday 09 July 2018

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Monday 09 July 2018

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The conversations that Elumelu’s young entrepreneurs had with Macron

ANTHONY OSAE-BROWN Osae-Brown is the editor of BusinessDay @osaeB

was one of those that got an invitation to be part of the audience to listen to the young president of France, Emmanuel Macron hold a conversation with about 2000 young entrepreneurs drawn from across the African continent, most of whom have been beneficiaries of the Tony Elumelu Entrepreneurship Programme (TEEP). The event was hosted by the Tony Elumelu Foundation (TEF), which drives TEEP through which Elumelu has set aside US$100 million to create 10,000 young African entrepreneurs over the next 10 years. For me, the highlight of the whole event was the signing of a onebillion-euro agreement between the TEF and Agence Française de Développement (AFD), the development arm of the French government. This will see the creation of “a risk-sharing guarantee framework granted by AFD to commercial banks in Africa for their loans to young entrepreneurs.” The main idea is to improve access to capital for young entrepreneurs, especially those under the mentorship programme of TEF. It is understood that the AFD will be providing guarantees of up to 70 percent for loans under this programme. From his answers to some of the questions he was asked at the event, it is clear why France is investing in

African entrepreneurs. And this has mainly to do with the wave of immigration hitting European shores and the need to tackle it from its root source. “We need to have more Africans succeeding in Africa. We have Africans thinking that they cannot succeed in Africa. That must change” Macron explained. The wave of immigrants hitting the shores of Europe, Macron explained, is creating anxiety in the middle class in Europe, who fear that their jobs and lifestyles are being threatened. This is what has created resistance, which is fuelling populism in Europe. He rightly noted that immigration is being fuelled in Africa because most Africans have lost hope that it is possible to succeed in Africa. This is why even the middle class are migrating. He believes that by restoring hope in the continent, by making Africans see that they can succeed here, could reverse the wave of migration. It would also change the perceptions of those who have already migrated and even Europeans about the continent. Basically, Macron is preaching Afrocapitalism, the concept that led Elumelu to create TEEP, which is the idea that you can reduce poverty on the continent by creating entrepreneurs who in turn create jobs and wealth for everyone. It is therefore not surprising that Macron decided to sign the MOU with TEF, which has already funded 3,000 entrepreneurs through the programme, many of whom have gone on to create very strong businesses. There is no doubt that TEEP is a great programme and as usual, as it is with many local initiatives, it is taking a foreign validation to help us realize the potential of the programme. Macron expressed the view that the private sector has the

“The only way to disrupt the system and make your life better is to innovate. There is no cap on innovation. I am here today because I decided to innovate and take a risk on my political life. Just dare. Just innovate now” biggest potential for reducing poverty in the country, through their capacity to create jobs. “I am a strong believer in the private sector, because I think that is the best way to make an impact. A strong private sector is the best way to have an inclusive growth” he said. Macron says that African youths are not lazy. He says what youths on the continent need, is access to capital. This, he said, is the reason the French government is signing the MOU with TEF to provide one-billioneuro funding for the continent’s young entrepreneurs. But he also charged the continent’s young entrepreneurs to be “Obsessed with innovation.” “The only way to disrupt the system and make your life better is to innovate. There is no cap on innovation. I am here today because I decided to innovate and take a risk on my political life. Just dare. Just innovate now” he said. Macron also disclosed that it is in a bid to push innovation that France is introducing another project, the digital initiative on the continent. This

is because the future is about innovation and the continent’s young population has an edge in creating that future and in the process build a new image of Africa. He also had some strong views on the potential impact that a fast growing population has on the rising incidence of poverty in the country. There is no way a country that has birth rates of 5 to 7 per woman, expect to see poverty decline ‘even if it is growing at five percent”, Macron said. This view seems to answer the federal government’s recent criticism of the World Poverty Clock prediction of rising poverty in the country. There is no way that a country with an economy that is expanding at less than two percent per annum, but has a population growing at an average rate of 3.2 percent, expect that poverty would be on the decline. Definitely, we do not need the World Poverty Clock to let us know that this mismatch between economy and population growth rate will fuel ‘extreme poverty.’ Even when the country’s economy was growing at five percent, poverty was rising. Therefore, it is obvious that now that the economy is growing at less than two percent, even after contracting in 2016, that poverty will rise even faster. We do not need a Macron or Brookings article to let this fact sink in. But it was not all about the economy and immigration that Macron discussed at the very engaging discussion with African entrepreneurs. He also offered some useful advice to the young entrepreneurs in the audience. He urged young entrepreneurs to strive to make a difference globally. “Take your risk. There is no one model to succeed anywhere. Just be sincere and take your own risk.” This advice, he said, applies in both business and politics. Young people

should not expect that the older politicians will encourage them to seek political positions. In fact, he said, he was discouraged and told to wait for his turn. But he decided not to listen to them. “If you want to be a leader, if you want to create, then you have to take your risk” he advised. “Never stop at the first failure. Because when you try, you can fail. But always learn from your own failure. I succeeded because I learnt from my failure and because so many people told me it was impossible.” But he also urged young entrepreneurs to ensure that they have a vision that is sustainable for everyone. “Now people are connected. You must have an inclusive vision that carries everyone around you” he said. However, perhaps, the biggest takeaway for me was his statement that your nationality cannot determine your success. “I do believe that you if you think yourself that being a Nigerian makes you unable to succeed, then you cannot succeed. It is true that the Nigerian environment can constrain you, but if you dare and you are determined, you will succeed. Your nationality is not a determinant of your ability to succeed.” This statement was apt because on stage with him was Tony Elumelu, and in the audience, was Jim Ovia, and Atedo Peterside, men who, at a very young age, broke new grounds in banking and succeeded in building financial empires that have now gone global. They did it without stepping a foot out of Nigeria, other than going for holidays. They recognised the opportunity of their time and took it. They succeeded despite their nationality and perhaps even because of it.

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Brexit, Macron’s visit: Opportunities and new alliances for Nigeria addressed, requiring effective stakeholder communications on both sides.

NKIRU BALONWU Dr. Balonwu is Managing Partner at RDF, a strategic communication and stakeholder engagement firm that provides strategic counsel to brands, public institutions and Csuite executives.

t its peak in 2012, UKCommonwealth trade accounted for US$120 billion. While this figure has fallen away in recent years, Brexit undoubtedly offers the UK an opportunity for better trade relations with Commonwealth nations and other emerging economies. With its existing UK relationship and large (and growing) population, Nigeria stands well placed to be at the forefront of this growth. However, to actualise these opportunities, a number of key considerations need to be

Earlier this year the Chairman of the Commonwealth Enterprise and Investment Council (CWEIC), Lord Marland of Odstock, spoke of the potential for growth in the UK-Nigeria trading partnership once Brexit occurs. When asked which products Nigerians might be particularly interested in purchasing, he reportedly replied: “Everything.” While this may seem like a bombastically optimistic approach to future trade relations, it does pay homage to the level of business already being done between the two countries, and the potential for more. Last year, the UK Foreign & Commonwealth Office put out a press release based on a speech by Paul Thomas Arkwright, the British High Commissioner to Nigeria, titled Brexit - Lessons, Challenges and Opportunities for Nigeria. The 2,000+ word article covers everything from encouraging more Nigerians to apply for visas in the UK, to exactly what Brexit could mean for the Nigerian economy,

to a bilateral trade relationship that was, at the time of writing, still worth £3.8bn per annum. Cleary, the economic relationship between Nigeria and the UK remains strong, and there is an appetite to make it even stronger. When you factor in Nigeria’s own economic struggles in recent years - namely migrating a previously heavily gas and oil-dependent economy into new areas of industry - then it is easy to see how these two large, transitioning economies, could benefit from more exchange. But for this blueprint to become a reality, a number of key considerations need to be addressed that require effective communications from senior stakeholders on both sides. Firstly, Nigeria needs to communicate itself better, not only to the UK but more widely on the international stage. For example, just two months ago, Nigeria’s President Muhammadu Buhari faced major backlash on social media for insinuating that Nigerian youths are lazy: “We have a very young population. More than 60% of the population is below the age of 30. A lot of them haven’t been to school, and they are claiming that Nigeria has been an

oil-producing country; therefore they should sit and do nothing and get housing, healthcare, education free,” he said at a Commonwealth event in London. This is, of course, unhelpful, but it is only a small piece of the reputational puzzle that Nigeria must solve if it is to thrive in an increasingly globalised economy. In actual fact, the Government has sent strong anti-corruption messages to the international community, and we see an increasing amount of investment into new areas of technology and innovation. For example, at the 2018 Direct Investors’ Summit, which held in Abuja in May, the Vice President, Professor Yemi Osinbajo, spoke to the current administration’s efforts on the creation of an enabling business environment in Nigeria, efforts which have led to the World Bank recognising Nigeria as one of the top 10 most improved economies in the world in 2017, and the International Monetary Fund (IMF) citing Nigeria’s business climate reforms as a significant contributor to lifting the economy out of recession last year. Also, Nigeria’s CEOs are beginning to stand up and take greater re-

sponsibility for safeguarding the Country’s reputation, and where those building blocks are being put in place, investors and trading partners will undoubtedly follow. However, a second issue arises in the form of the UK’s international aspirations, and how it sees itself within the economy of the wider world. UK Prime Minister, Theresa May it could be argued, could do with taking a leaf out of Emmanuel Macron’s book. The French President has now visited Africa six times including his most recent trip to Nigeria. On the other hand, no British Prime Minister has been to the Continent since 2013, and former Prime Minister, David Cameron, certainly did not express a huge wish to do so when describing Nigeria as a ‘fantastically corrupt’ country to none other than Her Royal Highness The Queen, coincidentally just before the Brexit vote took place in 2016.

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Corporate governance: The imperatives for board independence in Nigerian banks

TONY ANONYAI Dr. Anonyai is a Co-CEO of Planet Capital Limited, a Nigerian Investment Banking Firm

t is no longer a matter of debate that strong corporate governance mechanisms in a bank positively impact not just the financial performance of the bank, but are also essential to achieving and maintaining a sound and stable banking system, which is critical to the proper functioning of the banking sector and economy as a whole. Empirical evidence suggests that weak governance in banks was one of the causal factors of the last global financial crisis. Similarly, it has been suggested that the 2008/2009 banking crisis in Nigeria is related to weak corporate governance. Therefore, strengthening governance mechanisms is essential for banks. Following the global financial crisis, there has been renewed emphasis on the need for board independence. Governance literature defines board independence from two perspectives. More broadly, it is expressed as the proportion of non-executive directors (NEDs) to the whole board. In a narrow sense, it is measured as the proportion of Independent Non-Executive Directors (INEDs) to the board. We focus

INWALOMHE DONALD Inwalomhe Donald, writes from Benin City, inwalomhe.donald@yahoo.com

de Cocoa Processing Plant, Osun State is the only attracting cocoa factory for Nigeria’s remaining five cocoa processing factories to tap export demand for butter, cake and powder. Ede Cocoa Processing Plant has no debt burden and it is now producing Nigeria’s cocoa cake, powder, chocolate and butter. This makes it easy for Nigeria’s processed cocoa to compete favourably. Ede Cocoa plant remains one of the fastest selling and most desirable agricultural commodities in the international market due to the rapid growth and expansion of chocolate confectioneries and other products. Ile Oluji Nigeria Limited, Nigeria’s oldest cocoa processing firm has only processed 2,000 metric tons of Cocoa since the beginning of the year, which is by far below its 30,000 metric tons installed capacity. FTN Cocoa Processors PLC, a company listed on the Nigerian Stock Exchange with a 20,000MT processing capacity showed that it has only being able to process 600MT between January and June. Multi-Trex Integrated Foods PLC, Nigeria’s largest cocoa processing factory with a production capacity of 65,000MT per annum, has since

on the later. Theoretically, INEDs are thought to be more effective than other NEDs in oversight functions because (i) they are appointed on account of their expertise (ii) being free from the clutches of controlling shareholders are expected to be more objective and independent minded, and (iii) they wish to remain relevant in the directorship market would seek to maintain their professional reputation. Accordingly, it is expected that a higher proportion of INEDs on the board would enhance board independence and therefore board performance. To be sure, global best practices advances board independence with recommendations such as that: (i) a large proportion of directors should be INEDs (ii) important board committees should be chaired by INEDs, and (iii) membership of key committees should be composed of mostly, if not entirely, INEDs. Although some empirical evidence contradicts the positive impact prediction, the predominant view is that, all things being equal, enhanced board independence premised on higher proportion of INEDs is value maximising. On the contrary, it has been suggested that boards dominated by NEDs, who are typically major shareholders and/or their representatives, are prone to conflicts of interest in their dealings thereby heightening corporate governance problems. Transparency International in its 2015 Report documents that corruption is endemic in Nigeria, ranking 136 out of 176 countries in the Global Corruption Index. As a

We argue that higher regulatory diligence is required in the appointment of INEDs with emphasis placed on competence and character. Also, the CBN Code on directors’ compensation does not allow for appropriate remuneration for INEDs, which is inconsistent with the responsibilities assigned and expectations consequence, governance problem is potentially exacerbated. In 2006, the CBN issued the Code of Corporate Governance for Banks in Nigeria Post-Consolidation, which has been subsequently revised in 2010 and 2014. The increasing responsibility of the board as the cornerstone of a bank’s internal governance mechanism is visible in successive codes. While some progress has been made, a lot still needs to be done. For example, the Nigeria Deposit Insurance Corporation (NDIC) recently indicated that weak corporate governance in the Nigerian banking industry is exposing the financial system to another round of distress. But are bank’s boards as currently constructed capable of providing strong governance? It is in the attempt to

answer this question that we argue the imperatives for enhanced board independence in the governance architecture of Nigerian banks. Our governance codes including the 2011 Code of Corporate Governance for Public Companies in Nigeria issued by the SEC, and the 2014 Code of Corporate Governance for Banks issued by the CBN require board composition to include INEDs. The SEC and CBN require a minimum of one and two INEDs respectively. A review of the corporate governance reports of most banks shows compliance with the CBN, and of course, SEC. However, the 2015 Corporate Governance Principles for Banks issued by the Basel Committee on Banking Supervision (BCBS), advances the idea of board independence recommending as stated above: (i) a higher proportion of INEDs on the board and board committees, and (ii) chairmanship of strategic board committees. Comparatively, it is clear that the extant codes on which the governance practices of Nigerian banks are based are somewhat defective and do not promote board independence. In a recent research, using a sample of unbalanced panel of Nigerian listed banks for the period 2006 to 2016, we investigated the impact of board independence on bank performance and loan asset quality. Our data showed the mean size of bank boards is 14.26. Board independence was measured as the proportion of NEDs to the total board. We did not distinguish between INEDs and NEDs because it was observed that most banks acted to meet the regulatory

requirement of a minimum of two INEDs. Also, where a former CEO/ ED who having retired from executive function becomes a chairman/ NED, the individual was considered as an ED. In our view, a former CEO becoming a Chairman essentially portends CEO-duality, which is a subject of another investigation. We found that higher board independence, as defined and consistent with extant codes had a negative and statistically significant relationship with bank performance, measured by return on assets and loan asset quality. Our finding confirms the view that a higher proportion of NEDs not being INEDs does not support bank performance. Indeed, NEDs are potentially conflicted. For example, the NDIC recent alarm on the twin issues of bourgeoning non-performing loans and weak corporate governance may not be unrelated. Arguably, it may be the case that higher board independence as currently defined did not yield the expected result because (i) most NEDs, as major shareholders are driven by self interest (for example, relatedparty loans and insider dealings) at the expense of other stakeholders interests (ii) some NEDs may have been appointed to do the bidding of their principals, and so, do not have the independence of mind required in making contributions to decisions, and (iii) may not have the

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Ede: Nigeria’s only surviving cocoa processing factory been shut down and thereafter taken over by the Asset Management Corporation Organisation of Nigeria (AMCON) over a N5 billion non-performing loan the processor acquired from Sky Bank. Osun State is putting a stop to billions of Naira that Nigerians are using to import chocolate and other cocoa products from EU countries. Osun Cocoa Processing Plant, Ede is now producing “Made in Nigeria” Cocoa Butter, Cocoa Cake, Cocoa Powder and Chocolates and set to flood world market with “Made in Nigeria” chocolates. Osun Cocoa plant, Ede is back after more than 30yrs of wobbling and fumbling. Despite living in one of the world’s biggest grower of cocoa beans, Nigerian residents have never quite embraced chocolate as part of the national diet. Aregbesola has provided lifeline for cocoa farmers in Nigeria Interestingly, Osun is a major producer of chocolate today and a major cocoa-producing state, and chocolate manufacturing center is in Ede. Osun State is the third largest cocoa producer in the South West after Ondo and Oyo states. The state largely draws its rising profile as a big role player and producer of the cash crop from Cocoa Farms. The arrival of a new chocolate factory in Osun State will also allow Nigerian planters to finally access the pleasure of chocolate.” Osun chocolate is targeting the local

market, then progressively expand to the sub-region. The factory is initially producing cocoa powder and chocolate. Despite its Chinese ownership, the plant represents a small victory in the continent’s battle to profit from its natural resources instead of exporting them to be processed elsewhere. The African country’s first major chocolate factory hopes to change all that. Osun Cocoa powder can be used in so many ways; you can buy cocoa powder from a retail store and make a semi-sweet chocolate at home through some easy procedures. Remember, a semi-sweet or raw chocolate comes with little or no sugar and they contribute little calories to your daily diet. Cocoa powder itself is obtained from cocoa beans by first cleaning the beans and then partially drying them before roasting at high temperatures. Cocoa powder is obtained from the milling and separating cocoa butter from the liquid. Cocoa butter is used for making chocolate while the liquid is further processed to obtain other products including the powder. Smallholder cocoa farmers and other stakeholders are happy over the establishment of an elaborate cocoa processing plant that produce chocolate in Ede, Osun State, and the third largest cocoa producing state in the country. They are happy that the plant will be able to check the bleak future of the business which is presently facing stiff international

competition as well as government overbearing influence, so the smallholder famers will stop to lament daily. With Ede cocoa processing plant, Governor Aregbesola has expanded assistance to cocoa farmers and numerous stakeholders within the cocoa value sequence regarding the development of cocoa in Nigeria. Governor Aregbesola has brought innovation and localized the processing of cocoa products in the 14 cocoa producing states in Nigeria. With over twenty million cocoa farmers in Nigeria, OsunChina’s cooperation over Ede cocoa processing plant has given lifeline to Nigerian cocoa farmers who could not export their products before now. The partnership with one of China’s Most popular politicians and business leaders Qizan Zhao; Deputy Leader of the Communist Party of the People’s Republic of China and one of the leading businessmen in China is producing a N10bn investment in Osun and over 1000 jobs for local people in the next two years in the state especially Youths and this will help to support the industrialization efforts of Governor Aregbesola The once moribund Cocoa Processing Company in Ede, Osun state, received a lifeline with the intervention of Governor Aregbesola and two Chinese firms who have resuscitated the comatose industry. Governor Aregbesola is providing

a lifeline for 14 cocoa producing states in the country through the cocoa processing plant which is the only plant that is functioning today in Nigeria. With this plant farmers can now distribute new high yield cocoa seedlings to cocoa farmers, and continues to allow the purchase of chemicals and inputs at 50% subsidy. Nigeria is one of the largest cocoa producing countries in the world. With 14 states producing and harvesting the crop Nigeria exports well over 242,000 tons of Cocoa. Governor Aregbesola has connected Nigerian cocoa farmers to the Ede cocoa processing plant and they can source cocoa easily here for Osun buyers. Resuscitation of the company and the production of cocoa products is creating jobs and generating revenue for Osun state and Nigeria, which have been hit by severe budget crisis that has left government with revenue deficit. In Nigeria, We are not producing enough Cocoa and with Ede cocoa processing plant, there will be more participation in cocoa farming in Nigeria which will enhance proper management to get the best yield.

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Monday 09 July 2018

Threat from the presidency: A need for communication overhaul

re sident Buhari often struggles to convince Nigerians he could not be impartial or encouraging the killings in NorthCentral Nigeria. On Thursday, July 5th, while receiving members of the Christian Association of Nigeria (CAN) from the 19 northern states and Abuja at the presidential Villa, he wondered why anyone in his right senses could suggest that he, being Fulani, must be encouraging these satanic acts (herdsmen killing) even as he, “an elected President even with substantial votes in the affected areas, will for any reason do harm by an act of omission to those same people?” But most of the words and feelers coming out of the presidency indicate that the government is firmly on the side of the killer herdsmen. For instance, the defence minister, Brigadier-General Mansur Dan-Ali, has virtually assumed the position of spokesperson for the Miyetti-Allah Cattle Breeders Association, berating states for passing the antiopen grazing law and calling for its suspension or abrogation as the only panacea for peace in the troubled region. Ditto the Inspector General

of Police. As if the damage done by the partisan slant of key members of the administration on the crisis wasn’t enough, the spokesperson for the president, Femi Adesina, last week, charged those against the administration’s cattle ranching and colony programmes as solutions to herdsmen killings, to have a rethink, noting that they are better off living with the ranches and colonies than dying through persisting conflicts. The National Economic Council has recommended ranching of cattle and creation of cattle colonies as a solution to the constant killings and urged states to donate lands. Against the background of protest from some states that they had no land to donate for ranches and colonies, the presidential spokesman issued a direct threat to those resisting. Speaking on an AIT programme in response to a question on ancestral attachments to land, Adesina went berserk: “Ancestral attachment? You can only have ancestral attachment when you are alive. If you are talking about ancestral attachment, if you are dead, how does the attachment matter?” He continued: “If your state genuinely does not have land for ranching, it is understandable; not every state will have

land for ranches. But where you have land and you can do something, please do for peace. What will the land be used for if those who own it are dead at the end of the day?” Of course, many interpreted that to mean a threat from the presidency for them to surrender their lands for cattle ranches and colonies or face death. How can a sensible government ever make such comments? Even if that was not the intent, how can a government whose main dramatis personae are of the Fulani ethnic stock and who are already being seen as biased towards the Fulani herdsmen, the main aggressors in the conflict, be so careless as to be seen as threatening people who have suffered tremendous physical and psychological violence from the killer herdsmen and who have been alleging that the ultimate intention of the herdsmen is to dispossess them of their lands? This is a major communication mishap by the government that calls for the complete overhaul of the government’s communication team. By engaging in such reckless talk, the government may have unwittingly hardened the minds of those already opposed to the idea, created in them the feeling that they are indeed, under siege and deepened the suspicions

and disunity among the various groups in the country. Added to the inability of the president to build bridges across all parts of the country, this totally irrational and senseless talk by the administration’s minders is actively hurting the country and giving ammunition to ethnic champions to continue to call for and work for mobilisations along ethnic lines while actively working to subvert the goal of building a united and strong nation. It is more unfortunate that such blunder should come from an otherwise respected journalist who should choose his words carefully and should always present the government in as good a light as possible. Clearly, Adesina has lost himself in the job and will go down as perhaps, the worst presidential spokesperson who does more damage to the government anytime he opens his mouth to speak on behalf of the government. We urge the government not only retract the threat, apologise for the damage done, but also overhaul its entire communication team and replace them with communication experts who would be trusted to convey the views and thinking of the government to the populace in an urbane and compassionate manner as possible.

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Monday 09 July 2018

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Monday 09 July 2018

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The traffickers’ lament

Transgender rights

On the edge of the Sahara, people mourn the decline of people-smuggling The flow of Africans through Niger to Europe is being shut off. Those who profited from it are unhappy

N JUNE 14th the Sultan of Aïr, the traditional leader of the Touareg people of Agadez, came out to pray. It was a grand spectacle. Thousands had gathered to mark the end of the Muslim fasting month of Ramadan at a huge open ground. When the Sultan had finished praying, he rode back to his palace, flanked by nobles on horseback and tootling trumpeters. In the streets everyone was smiling and waving. It must have been a relief for the Sultan: a few blessed hours of not having to listen to his subjects moaning about the collapse of the people-smuggling trade. For centuries Agadez, home to perhaps 200,000 people, has lived off trans-Saharan commerce. Once camel trains set off from here with slaves, pilgrims, salt and gold. More recently it has prospered from a boom in the traffic of people north across the sands to the Mediterranean and onward to Europe. Many Europeans think of this flow of people as a vast, terrifying flood. It has prompted Italy to close its ports to rescue ships, and almost led to the collapse of Germany’s governing coalition this week.

Yet as anyone in Agadez will tell you, it has now dried to a trickle. Over the past four years some 600,000 people are thought to have crossed the sea from Libya to Italy. Most of those probably reached Libya via Agadez, crossing Niger at a rate of about 100,000 a year on average since 2000, reckon researchers at the Clingendael Netherlands Institute of International Relations. After the fall in 2011 of Muammar Qaddafi, Libya’s late dictator, the numbers crossing shot up, peaking at 330,000 in 2016. Now the number making their way

north from Agadez could be fewer than 1,000 a month. This is largely because of bigger efforts to restrict migration through Niger. The European Union (EU) has pressed the Nigérien government to stanch the flow. Its own people have demanded action, too, after the deaths in 2013 of 92 Nigériens, mostly women and children, who had been dumped in the desert by smugglers. In 2015 Niger passed an anti-trafficking law. In 2016 it began seriously to enforce it. Drivers carrying migrants north were jailed and their cars were confiscated. In return the EU has stepped up aid to Niger. Rhissa Feltou, the mayor of Agadez, says that, in effect, the Nigérien police checkpoint outside the town has become the new southern frontier of the EU. And with it has come hardship for his town. At the peak of the migrant boom some 6,000 people were directly employed in ferrying people north or providing food and lodging on the way, according to the Dutch study. In addition, young men earned a living driving motorcycle taxis that ferried migrants around town as they bought food, water, turbans and sunglasses for the desert crossing. Indirectly one in two households in Agadez benefited. Since the slump bus companies have fired 75% of the staff who worked on the route from Niamey, the capital, to Agadez. The flow has not halted completely. But migrating has become more dangerous, and more expensive. Officials demand bigger bribes to look the other way. Smugglers avoid the main road, which is so infested with bandits that traders move in convoys,

escorted by the army. The crackdown has made people-traffickers nervous. When they think they are about to be caught by the police or army, they abandon their passengers in the desert to avoid being prosecuted and losing their trucks. The International Organisation for Migration (IOM) has rescued 8,255 people stranded in the desert since August 2016. Many more are doubtless never found. Goge Maimouna Gazobi, the head of Niger’s anti-trafficking agency, insists that stricter enforcement has reduced the number of people being left in the desert, because fewer set out in the first place. No one knows for sure. Although the number of people heading north from Agadez has plunged, a few thousand each month pass through in the other direction, having failed to make it to Europe. Some of those now being cared for in IOM transit centres report that lawless militias in Libya are kidnapping migrants and holding them for ransom. Many of those who flow back south do so indirectly. After being blocked in Libya thousands of migrants have gone to Algeria, hoping to find work, or to Morocco, hoping to find an alternative route to Europe. But Algeria is ever less welcoming. It is “vomiting” migrants into Niger, says Alessandra Morelli of the UNHCR. Since 2014 Algeria has deported 31,697 Nigériens. Recently it has also been illegally deporting citizens of other west African states to Niger. Typically people are arrested on the street and not allowed to collect their belongings, savings or sometimes even children before being loaded onto lorries. Since September more than 13,000 people have been discarded in the desert several hours’ walk from the Nigérien border post. When they straggle across the IOM puts them on buses to Agadez, where they join a hotch-potch of nationalities who have come here via circuitous routes. Among these are some 2,000 Sudanese from Darfur, most of whom had gone to Libya before being sent back south to Agadez. Hundreds now live on the streets. Elsewhere in Niger the UN is caring for almost 58,000 Malian refugees and more than 250,000 people displaced by Boko Haram, a jihadist group in Nigeria, or by fighting in Niger near the border with Mali.

A culture war comes to Westminster Both the Conservatives and Labour agree on trans rights. Now they just have to convince the voters

ITH a wince, Theresa May said she was sorry. Asked about her record on gay rights, the prime minister apologised for refusing to support the repeal in 2003 of a law which banned teaching children “the acceptability of homosexuality as a pretended family relationship”. A year earlier she had voted against adoption by gay couples. Yet today, “I want to be seen as an ally of the LGBT community,” said the prime minister. “We want a country where people are able to be open about who they are, who they love and how they identify.” The Conservative

Party, once a generator of anti-LGBT laws, has belatedly wrapped itself in the rainbow flag. Mrs May was speaking at the launch of a consultation on reforming the Gender Recognition Act, which dictates how people can change their legal gender. Supporters of reform argue that the current system is slow and demeaning. To obtain a Gender Recognition Certificate, a person must have spent two years in their new gender. They need a doctor’s diagnosis of gender dysphoria, must submit medical reports, sign a legal undertaking and pay £140 ($185). Only 4,910 people have bothered since 2004, when the law came into force. The government wants the process to be “streamlined and de-medicalised”. Beyond that, details are thin. But the destination is clear: a looser regime. “Trans women are women; trans men are men,” Penny Mordaunt, the minister in charge, told Parliament. Labour supports the plan to liberalise the law, criticising only the government’s sluggishness. Normally, unanimity in the House of Commons is reserved for unconContinues on page 15

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In Association With

A culture war comes to...

Transatlantic rift

The Western alliance is in trouble

Continued from page 14

That should worry Europe, America and the world

MERICA did as much as any country to create postwar Europe. In the late 1940s and the 1950s it was midwife to the treaty that became the European Union and to NATO, the military alliance that won the cold war. The United States acted partly out of charity, but chiefly out of selfinterest. Having been dragged into two world wars, it wanted to banish Franco-German rivalry and build a rampart against the Soviet threat. After the Soviet collapse in 1991, the alliance anchored democracy in the newly liberated states of eastern Europe. Today, however, America and Europe are separated by a growing rift. The mood before the NATO summit in Brussels on July 11th and 12th is poisonous. As President Donald Trump accuses the Europeans of bad faith and of failing to pull their weight, they accuse him of crass vandalism. A second summit, between Vladimir Putin and Mr Trump in Helsinki on July 16th, could produce the once-unthinkable spectacle of an American president treating his Russian opponent better than he has just treated his allies. Even if the two summits pass off without controversy—as they might, given how Mr Trump delights in confounding his critics— the differing priorities, divergent beliefs and clashing political cultures will remain. The Western alliance is in trouble, and that should worry Europe, America and the world. Every alliance has its tensions, but the Western one is strained on a bewildering number of fronts (see article). Mr Trump, and his generals, are exasperated by the feeble efforts of many NATO members to honour their promise to raise defence spending towards 2% of GDP by 2024. The American right tends to condemn European support for the Iranian nuclear deal (which Mr Trump quit), and what it sees as a bias against Israel. And policymakers from both parties think that, as the world’s attention shifts to Asia, whining, sanctimonious Europeans deserve less of their time. As if that were not enough, Mr Trump fatuously accuses the EU

of being “set up to take advantage of the United States” and chastises it for unfair trade. Meanwhile, Europe is divided. Italy has a new populist coalition that is proPutin. So, increasingly, is Turkey, a member of NATO (but not the EU) which is hostile to the liberal democratic values that bind the alliance. Worse could be in store. A Labour government in Britain under Jeremy Corbyn, who has a long history of opposing the use of arms by the West, would treat America with deep suspicion; he could even try to leave NATO. SACEUR punch This newspaper believes that the Western alliance is worth saving. In a dangerous and increasingly authoritarian world, it can act as a vital source of security and a bastion of democracy. But the alliance does not have a Godgiven right to survive. It must continually earn its place. The question is: how? The first step is not to make the job harder. Europe should do everything it can to resist Mr Trump’s instinct to lump trade with security. Wrapping them up together will only make the West less secure as well as poorer. Next, supporters of the alliance need to be practical. That means paying up. Mr Trump is right to complain about countries like Germany and Italy, which spent just 1.22% and 1.13% of GDP on defence in 2017. Indeed, he could go further. Too little of defence spending is useful—over a third of Belgium’s is eaten up by pensions. More should go on

R&D and equipment. For America’s allies, being practical also means keeping up. Collaboration in areas like cybersecurity will make the alliance more valuable to America. More urgently NATO must continue to sharpen its response to the tactics of misinformation and infiltration that Russia used in Crimea and eastern Ukraine. Politics waxes and wanes. Lost military understanding is hard to rebuild. Exercises that cement NATO’s remarkably close working military relations are more vital than ever. And being practical means sticking together. Negotiating over Brexit, the EU is minded to shut Britain out of the union’s security structures because it will no longer be a member. Given Britain’s military experience, its arms industry and its intelligence agencies, that is self-defeating. Instead, the EU’s members should seek to bind Britain in by, for example, promoting the European Intervention Initiative, proposed by France, which aims to create a force that can act in crises. Once America would have seen such a plan as a threat to NATO. Today it would stand both as insurance and as a sign that Europe is willing to take on more responsibility. Fighting for the mind Last is the battle of ideas. If NATO and the EU did not already exist, they would not be created. Since the Soviet collapse, the sense of threat has receded and the barriers to working together have risen. Yet that does not make

the transatlantic alliance “obsolete”, as Mr Trump once claimed. America’s alliances are an asset that are the envy of Russia and China. NATO is an inheritance that is all the more precious for being irreplaceable. The need for security remains. Russia is not the Soviet Union but, as a declining power, it feels threatened. It has modernised its forces and is prepared to deploy them. The need to anchor European democracy remains, too. As authoritarianism creeps up on Poland and Hungary, the EU and NATO can once again help limit its advance. And there is the extra benefit of how Europe helps America project power, by providing bases, troops and, usually, diplomatic support. NATO is more fragile than Mr Trump thinks. At its core is the pledge to treat an attack on one member in the North Atlantic region as an attack on them all. His vacillation and his hostility to Europe weakens that promise, if only because it reveals his scorn for the idea that small countries have the same rights as big ones. Asia is watching, as is Mr Putin. The more Mr Trump bullies his allies, the more the world will doubt America’s security guarantees. Because great powers compete in a grey zone between peace and war, that risks miscalculation. Mr Trump believes he is a master negotiator in pursuit of a stronger America. With Europe, as with so much else, he gravely undervalues what he is giving up.

troversial topics. This time, Labour and the Tories have ended up on the same side of a brewing culture war. The consultation exercise has provoked complaints that women-only spaces, from toilets to domestic-abuse shelters, could become vulnerable to sexual predators if rules are loosened too much. Supporters of reform argue that single-sex spaces are protected by the Equality Act, and that trans people could still be excluded if necessary. The consultation will examine whether changing rules on gender recognition would affect these protections. The row is bitter. Insults fly online. One offline debate ended in assault. Women wearing fake beards invaded the men’s bathing pond at Hampstead Heath, to protest against trans women’s use of the ladies’ pond. Arguments have erupted over changing rooms, all-women MP shortlists and even the cabin arrangements of the Caledonian Sleeper train. The viciousness stems partly from a difference between trans rights and other social-justice movements. Most of the opposition to changing the law has not come from the authorities, as in the gay-rights movement. Instead, the main struggle is with women, who argue that their own interests are jeopardised by the reforms. That the government has waded into such a controversial area has left some MPs perplexed. For most voters, trans rights fall low on the agenda. Data are poor, but by the government’s rough estimate 200,000-500,000 trans people live in Britain. “Most people now know a gay person,” says Benjamin Cohen, chief executive of Pink News, a website. “But almost no one knows any trans people.” The Tories, however, are keen to atone for their past mistakes on LGBT rights, and to shake off an illiberal reputation. At last year’s election the party lost support in metropolitan areas, undoing a decade of patient work by David Cameron to woo socially liberal voters. Enacting gay marriage was one of the main achievements of his six years in office. Some Conservative MPs suggest that improving the lot of trans people would win back lost votes.

BUSINESS DAY

C002D5556

Monday 09 July 2018 In Association With

Françafrobeat

Emmanuel Macron pays tribute to Fela Kuti, a Nigerian musician But it wasn’t all singing and dancing

HE old Afrika Shrine, a music venue in Lagos, the commercial capital of Nigeria, was burned down by soldiers in 1977. Its founder, the late Fela Kuti, a musical megastar, had called them “zombies” in a song. The soldiers beat Kuti badly and threw his mother from a first-floor window. But Kuti’s children, Yeni and Femi, rebuilt a nearby venue in 2000. Ever since, the New Afrika Shrine has attracted hip Nigerians and expats, including a young Emmanuel Macron, who once worked as an intern in the French embassy in Abuja. Mr Macron, now president of France, seems to have developed an attachment. When visiting Nigeria on July 3rd he went out of his way to visit the nightclub, known for its gyrating dancers and counterculture vibe. “What happens in the Shrine remains in the Shrine,” Mr Macron told the unusual crowd. Musicians,

artists and stars from the Nollywood film industry drank champagne with government dignitaries, few of whom had ever visited the club. (The day before Mr Macron’s visit, the potholed road to the Shrine was blocked by steam rollers pressing hot new tarmac.) Fela Kuti is best known in

the West as the king of Afrobeat, which mixes African music with jazz, soul and funk. But across Africa many people also remember him as the self-styled “Black President”, an anti-establishment musician who wrote protest songs and was a thorn in the side of Nigerian military regimes until his

death in 1997. Nigeria’s current president, Muhammadu Buhari, was head of a military government that threw Kuti in jail in the 1980s. At the time, Amnesty International listed him as a prisoner of conscience and campaigned for his release. For Mr Macron, it may have been astute politics to honour a musician who had slammed former colonial powers with lyrics such as: “Colomentality…De ting wey black no good” (roughly: “Colonial mentality says anything black is no good”). A year ago he was criticised for saying that Africa’s problems were “civilisational”. This visit was not all fun. Whereas France previously focused mainly on relations with French-speaking Africa, Mr Macron is trying to strengthen ties with Anglophone countries. Before visiting the Shrine, he met Mr Buhari and promised

to help him fight Boko Haram, a jihadist group that uses children as suicide bombers. France has about 4,500 troops conducting counter-terrorism operations in Africa, mostly in French-speaking countries in the Sahel. Mr Macron warned of growing ties between jihadist groups in the Sahel and Boko Haram. “The challenge for us is to manage the conflicts…and stop them joining together.” As the dignitaries left in their big cars in the early hours, the Shrine’s young regulars—fat joints in hand and demanding entry after being locked out of the party—forced their way through the turnstiles. Many may well have had some of Kuti’s lyrics on their mind. Of the colonial elites, he sang: “Dem go turn air condition/ And close dem country away” (“They will turn on the air conditioning/ And suck the life out of the country”).

The coming storm

A court with a solid conservative majority could reshape American life Here’s how

HEN Anthony Kennedy announced his retirement from the Supreme Court on June 27th, Democrats rushed to the barricades. “This is the fight of our lives,” announced Senator Elizabeth Warren of Massachusetts. Senator Kamala Harris proposed delaying confirmation hearings for Mr Kennedy’s successor until after the next election, which falls in November 2018, just as Mitch McConnell, the Senate majority leader, did with Barack Obama’s nominee in 2016. In practice, Democrats cannot stop Mr Trump from placing his second justice on the country’s highest court. Mr McConnell is serenely untroubled by the precedent he set, and President Donald Trump plans to announce his nominee on July 9th. When the nominee is confirmed in the autumn, he or she should cement a reliable conservative majority that could, among other things, make abortion less accessible and federal agencies less powerful, though not quite in the way that many seem to expect. The next justice will almost certainly be young (Mr Trump talked of wanting his nominee to serve for 45 years) and farther to the right than Mr Kennedy, a libertarian conservative whose moderate social views made him the court’s swing vote. Predicting a jurist’s voting patterns used to be harder. David Souter, appointed by a Republican (George H.W. Bush), became a reliably liberal jurist. Hugo Black, a former Klansman from Alabama, ruled school segregation unconstitutional. Today’s Republican appointees, though,

grounds could find their actions protected, for example. What was once the law of the land could end up applying only in some places. A Kennedy-less court would probably be less hospitable to all sorts of regulation. The Affordable Care Act looks secure for now, because the block that upheld it (Mr Roberts and the court’s four liberals) remains intact. But conservative jurists are sceptical of the doctrine known as Chevron deference, which tells courts to defer to government agencies in their interpretations of ambiguous statutes, as long as they are reasonable. Conservatives complain that, in effect, this lets agencies make laws as well as enforce them, usurping power that properly belongs to Congress.

come up through a conservative legal pipeline that was in its infancy a few decades ago. They have reliable paper trails and are thoroughly vetted. Republicans have learned the “no more Souters” lesson. To shore up his standing with white evangelicals, the president released lists of potential nominees during the campaign, and has met at least seven people on those lists, though Mr Trump, an inveterate showman, may choose someone else entirely. The president has stoked Republican hopes by musing about the Supreme Court overturning Roe v Wade, which found that a constitutional right to privacy protects a woman’s decision to terminate her pregnancy. That seems unlikely. It would be political self-harm, galvanising the left

while removing a longtime inspiration for religious conservatives. Justices also tend to dislike simply overturning past rulings (though the court’s five conservatives, including Mr Kennedy, displayed no such squeamishness in a recent case that overturned decades of precedent to weaken public-sector unions). Nothing seems to fit The court need not explicitly overturn Roe to functionally outlaw abortion, though. It could simply approve onerous state-level restrictions. In 2016 Mr Kennedy voted with the Court’s four liberals to strike down, as an undue burden on a constitutional right, a Texas law requiring that abortion providers have the right to send their patients to nearby hospitals

and that abortion clinics have similar facilities to surgical centres. Several similar cases are wending their way through the federal-court system. Under a more conservative justice, abortion may not become explicitly illegal, just inaccessible in many states. A similar pattern may hold for gay rights, a cause that Mr Kennedy helped not just with his rulings on gay marriage, but going back to 1986, when he struck down a Colorado law that would have exempted gay people from anti-discrimination protections. Here, too, the risk is less that his successor renders gay marriage illegal than that the court permits various religiously inspired opt-outs. State clerks who refuse to sign marriage certificates for same-sex couples on religious

Monday 09 July 2018

BUSINESS

COMPANIES & MARKETS

DAY

‘Financial independence at retirement is what every individual should aim for’

Pg. 18

C o m pa n y n e w s a n a ly s i s a n d i n s i g h t

WAICA Re woos Nigerian investors, targets capital raise …brings AGM to Lagos Modestus Anaesoronye

or the first time, WAICA Reinsurance Corporation Plc (WAICA Re), a West African company is bringing its 2018 Annual General Meeting to Lagos, Nigeria, with expectation to reinforce the confidence of its shareholders in Nigeria, as well as encourage them to increase their shareholding in the company in future capital raise.

The company, which has as its headquarters Freetown, Sierra Leone with a Nigeria Managing Director, Abiola Ekundayo believes that Nigerian companies who are his critical shareholders could strengthen their holdings, and patronage to make the reinsurance firm a force to reckon with in Africa. Ekundayo who spoke to journalists at the sideline of the last African Insurance Organisation (AIO) Conference in Accra, Ghana said it’s continuing its capital raise

until paid up capital reaches a $100 million. According to him the Company currently has a paid up capital of about $65 million, having progressed steadily from $12.5 million to $30 million dollars and presently $65 million. He said the company’s share price currently is over 1.8 to a dollar, adding that by the time the additional share capital is raised the value will be significant. On performance of the business, he said they have

AFC names Samaila Zubairu third president/CEO

frica Finance Corporation (“AFC” or “the Corporation”), the leading infrastructure development finance institution in Africa, has announced the appointment of Samaila Zubairu as the Corporation’s 3rd President &CEO, succeeding Andrew Alli who comes to the end of his tenor, having successfully served in the position since 2008. Samaila Zubairu is a distinguished Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and an accomplished Infrastructure development finance specialist with over 29 years of professional experience. He is the CEO of Africapital Management Limited, in which position he established a joint venture with Old Mutual’s African Infrastructure Investment Managers (AIIM) to develop the Nigerian Infrastructure Investment Fund1 (NIIF1) for

infrastructure private equity across West Africa. He also recently coordinated the $300 million acquisition of Eko Electricity Distribution Plc. He was the pioneer CFO for Dangote Cement Plc, during which he launched Africa’s largest syndicated project finance facility for a local corporate to actualize the Obajana Cement project and managed the watershed unbundling of Dangote Industries Limited to listed subsidiaries on the Nigerian Stock Exchange. He has led finance transactions for over $3 billion covering: green-field project finance facilities, acquisitions, corporate transformation initiatives, privatization and equity capital market transactions. Samaila is an Eisenhower Fellow and sits on the Eisenhower Fellowship’s Global Network Council as well as the President’s Advisory Council.

He is also an Advisory Board member for KSE Africa a leading Operations and Management provider of captive power plants in the mining sector of Botswana and Nigeria and is the Chairman of MDSA Nigeria Limited, a fintech company providing micro loans across sub-Saharan Africa. Samaila is the Independent Director and Chairman Statutory Audit Committee as well as a member of Finance and General-Purpose and Establishment and Governance Committees of Aiico Insurance Plc. He also serves as an Independent Director and Chairman of the Finance Committee for New Nigeria Commodity Marketing Company. The appointment of Zubairu follows a six-month search process that saw over 100 candidates apply for the role. Zubairu will formally take the post imminently.

Sterling Bank declares Day-Off for voters’ card

terling Bank Plc, is cementing its reputation as a great place to work with its recent workfree day announcement for all employees across the country. This is in line with the bank’s Active Citizens Programme (ACP) philosophy encouraging employees to register and collect their Permanent Voters’ Cards. Beyond promoting voting rights, the bank’s Active Citizens Programme also motivates employees to be productive, responsible, caring and be contributing members of their communities in alignment with its purpose of enriching lives. Commenting on the programme, Abubakar Suleiman, chief executive officer, Sterling Bank Plc remarked that the bank is passionate about

promoting active citizenship among employees as a business of wholly Nigerian origin which makes it important to place national interests above individual preferences. “We believe that when more citizens are active and perform their duties to the nation, the country becomes a better place for all. These duties include abiding by the law, tax remittance and more importantly participating in the electoral process to strengthen our democracy. In addition to obeying the law and tax remittance, we believe that Nigerian businesses can help strengthen her democracy by encouraging their employees to register, get their PVCs and turnout in numbers to vote which on the other hand, empowers us as individuals

to shape our future.” He further explained that the bank’s confidence in Nigeria’s future is the reason why employees who are eligible to vote in the upcoming elections are being encouraged to do so. “As a result, each employee across Nigeria will get a workfree till the end of the year to enable them register and collect their Permanent Voters Cards (PVC)”. The most exciting outcome of this drive is not just about the eligible voters in Sterling Bank who will be able to participate in the forthcoming elections, but the ripple effect it will have on our society as our highly engaged employees will use their voice to enlighten their communities on the importance of active civic engagement in the electoral process.” Suleiman opined.

gone beyond Africa progressively, while noting that the company has been able to approach the business of reinsurance globally. He added that the company has done very well in English West Africa speaking countries, and needed to go beyond Africa for new businesses. Kofi Duffor, chairman WAICA Re had said that the capitalisation process embarked by the company in 2016, through a Rights Issue, involved the issue of 14,472,816 ordinary shares at $1.52 per share at a ratio of 0.5669 new share for every one existing share held. “At the end of the off e r, 1 3 , 0 3 1 , 1 9 0 s h a r e s were subscribed valued at $19,807,408.80, representing a success rate of 90 per cent”, said Duffor.

WA I C A R e i n s u r a n c e Corporation Plc is a public limited liability company incorporated under the laws of Sierra Leone (Companies Act 2009) on 7th March 2011. In the years following the creation of West African Insurance Companies Association (WAICA) in 1973, the founding fathers had the desire to establish a reinsurance organisation to help mitigate the effects of the lack of reinsurance capacity within the West African insurance industry. To fulfill this ambition, the founding fathers considered it prudent to start off by creating a reinsurance pool which hopefully will someday metamorphose into a fully fledged reinsurance corporation. Today, the WAICA Reinsurance Pool has turned into WAICA

Reinsurance Corporation Plc, a dream come true. There is no gain in saying that there is lack of reinsurance capacity in the West African sub region, which situation is compelling insurance companies to seek reinsurance protection in other parts of the world where the treaties offered are not exactly competitive and/ or affordable and the service sometimes almost non-existent. To give impetus to the development and realization of the idea of establishing a fully fledged reinsurance institution decision has been reached to locate the headquarters of WAICA Reinsurance Corporation (WAICA Re) in Freetown, Sierra Leone, and to have major operating centres in Accra, Ghana and Lagos, Nigeria.

BUSINESS DAY

C002D5556

Monday 09 July 2018

COMPANIES & MARKETS

‘Financial independence at retirement is what every individual should aim for’ Wealth management is critical for any successful financial planning to take place, underscoring why people needs guidance of professional to achieve financial independence. Sulaiman Adedokun, managing director, Meristem Wealth Management Limited, who also doubles as the Deputy GMD of Meristem Securities Limited in this interview with Modestus Anaesoronye, looks at activities of the company, planning for retirement, investment opportunities in Nigeria and the economy in 2019. Excerpt: Tell us about Meristem Wealth Management and what you do as a company? eristem W e a l t h Management Limited (MWML) is a licensed Fund and Portfolio Manager registered by the Securities and Exchange Commission (SEC). Meristem Wealth Management Limited was established in 2008 as a subsidiary of Meristem Securities Limited; a company incorporated in 1994 to deal in securities trading. MWML is a full service firm in the wealth management industry. Wealth Management is a comprehensive financial plan/solution that is targeted towards High Networth Individuals and their families for the purpose of helping them achieve life financial goals of wealth growth and enhancement, preservation as well as a smooth transfer to the next generation. Our cardinal focus is therefore about growing wealth, preserving same and transferring it to loved ones. Ours is a holistic solution that covers the financial lifestyle of our various clients. In delivering this service, we provide a whole lot of services that covers the core wealth management, asset and portfolio management, asset tracking and consolidation, goalbased investment management as well as investment advisory services. Our Core Wealth Management Services includes Succession Planning, Estate Planning, Retirement Planning, Legacy and Philanthropic Planning as well as tax planning with a passion to provide life financial peace of mind to our various clients. We are driven by the quest to be the distinct and preferred wealth management services provider with bespoke solutions to our clients. Our asset management unit has a solid reputation as a highly professional and client-centric fund and portfolio management division in the provision of tailored fund management services to various classes of investors. We have an excellent track record of good performance and professional service delivery.

An attestation of this is the exceptional growth we have recorded in our Asset under Management (AUM) over the years and is currently in excess of N188 billion as at December 2017. In managing people’s assets, a lot of planning is tilted towards retirement or end of work life. What does planning for retirement actually mean? Let me start by saying that financial independence at retirement is an objective that every individual should aim for. The ability to maintain a desired lifestyle at retirement without being a burden to family or friends is a satisfying experience and a worthy gift to self after active service years. It is always saddening to see individuals who during their active years were well-off and could afford the luxuries of life but whose financial fortune fall drastically immediately after or some years after retirement. Hence, we see it as important and imperative to educate people on the need to plan for retirement. To achieve a desired retirement goal, it takes planning, it takes discipline and it needs hand-holding. It involves setting the lifestyle target (financial and non-financial), putting in place the right action plans to achieve the ideal targets and implementing those plans. At Meristem, we guide our clients through these processes so they could retire well and make their life in retirement the best stage of their lives. Another aspect of retirement planning service we render is succession. This is because who takes over the business wheel/mantle from you could affect your legacy and the quality of your postretirement days. Succession planning involves assisting a business founder with alternatives/strategies for his business continuity decision at retirement or death. We help identify, develop and ensure smooth transition of the right individual(s) to ensure business continuity. Many people are confused as to who should think retirement so tell us the appropriate age to start planning retirement? R e t i re m e nt p l a n n i n g should start from the time an

Sulaiman Adedokun

individual receives his/her first pay check. Retirement planning is never too early, as a matter of fact, the earlier one starts the better. For someone that starts early, he has more years of saving and would require less monthly saving (because of the compounding effect on savings and interest) to achieve a retirement goal than someone that started in his forties or fifties. So it is advisable to start early. Starting early affords the opportunity to save for longer period which reduces the risk of insufficient assets post retirement towards meeting one’s lifestyle goals. It also enables fine-tuning retirement objectives as you progress in your career. What are your expectations for the Nigerian stock and bond markets this year, given it’s a pre-election year? My expectation is cautious optimism. Historically, the Nigerian financial markets are usually greeted with high volatility and panic sell pressure across all asset classes. However, in the midst of this volatility lies an opportunity for savvy investors’ especially long term investors. While we note that the performance of the Nigerian bourse was not encourag-

ing in the first half of the year, we expect H2:2018’s performance to be driven by increased bargain hunting activities following several periods of profit taking, as prices of counters have fallen to attractive prices. We expect that the 9-Month financial scorecards will provide better direction on expected full year performances, thus the expectation of impressive results at this period should drive the market’s performance. Also, the largest telecom operator in the country is set to be listed on the floor of the Nigerian Stock Exchange by the end of September 2018 and this should result in significant inflows into the market and we expect this to positively impact other counters as investors consider other value stocks for investment. Finally, the newly introduced multifund structure by PenCom which allows PFAs increase their exposure in the equities market should drive market activity in the second half of the year. However, given that it’s a pre-election year, increased economic and political instability usually experienced in this period may continue to drag foreign portfolio investment (Foreign portfolio investment in the Nigerian

equities market averaged 47 percent of total FPI in the first four months of the year). Furthermore, the recent spate of attacks and ethnic clashes in various parts of the country may place Nigeria’s country risk even higher. I expect a better performance of the market in the second half of the year despite the downside risks typically faced during preelection periods. With respect to the bond market, the recent hike in the US Fed rate makes it imperative to maintain an attractive domestic yield environment. As such, we expect rates to remain relatively high in the short term. Furthermore, the lower risk advantage of investing in the fixed income space should continue to drive investors’ interest in the Nigerian fixed income market. The government is expected to raise Eurobonds as part of its plan to source cheaper debt and restructure its debt portfolio to accommodate more foreign debt. We expect such auctions to remain oversubscribed, given that it should be offered at higher rates than what is offered in other economies. Where do opportunities currently lie for investors trying to adjust to lower yields of 10 percent in government treasury bills? During periods of low interest rate, it is natural that one will have to consider other investment vehicles, both traditional and alternative. Equities is one of the options especially stocks with good fundamentals that are able to harness growth stories within their industry. Also there will be increased consideration for real estate because the lower interest rate environment would mean that the return on real estate might be attractive enough if it covers the illiquidity premium. Non-interest yielding investments with good return are always a consideration for ethical investors. There are also structured investment products in naira, dollar and pounds with attractive returns. Low interest rate environment is never a reason to stop investing because there are several other investment

options. What is your outlook for the Nigerian economy in Q2 after a less than expected turn out in the first quarter, which though saw growth of 1.9 percent, though a decline quarter on quarter? My outlook is for a slightly stronger growth for Q2:2018 hinged on improved growth outlook in the non-oil sector. During the period, the manufacturing PMI indicated an expansion in manufacturing activities throughout the quarter, while the stable exchange rate and lower inflation figures also support the higher growth projections for the economy. Also, given the Government’s increased attention towards the agricultural sector, through the various agricultural policies and support funding programs, I expect improved activities within this space to drive non-oil sector growth. The high oil price environment (oil price reached a high of USD79.80pb in May) and relatively stable oil production levels should also drive growth in the oil sector in Q2. The higher growth expectation is however expected to be modest, given the untimely passage of the 2018 budget. You are currently managing clients assets in excess of N180 billion, what does this mean for the company? It underscores the confidence of our clients in our offerings, service and the value we create on their investments. We believe that value creation, transparency and confidentiality are essential to our clients and our management of the assets is based on this tripod. The consistent and exponential growth of our asset under management attest to the value creating relationship we have with our clients. We are a constantly evolving company and our institution is structured to always deliver the best-inclass products and services to our clients. We believe that every satisfied client becomes our “unpaid business developer” who will refer at least 2 other potential clients to us which in turn adds to our growth success story. We do not intend to rest on our oars because we will continue to be a client focused company that creates wealth and add value to our clients.

Monday 02 July 2018

C002D5556

BUSINESS DAY

COMPANIES & MARKETS New insurance policy shift underway, Business Event to focus on operators abilities CHUKA UROKO

he federal government is planning a new insurance policy that will see a shift from the rulebased classification system, where operators only come on with their capitals, to a riskbased system that will restrict them to areas of competencies and abilities. The implication of this for both the industry and the operators is that, when fully rolled out, companies with capital base of about N2 billion would restrict operations to insuring, say, motor cars, buildings for fire and the like, while those with higher capital base can go into oil & gas, ship, aircraft and engineering equipment. The aim of this move is to trigger growth in the insurance industry and position it on the path of relevance. “What we are coming out with is going to force companies to operate within their abilities and capital asset so that the policy holder and companies are protected against their wishes to go into areas where they cannot afford”, Mohammed Kari, commissioner for insurance and chief executive Officer of NAICOM, explained

in an interview in Lagos. “We are used to classifying companies with the capital they can bring in but we are reaching to the process of introducing risk-based classification which will try to see what your asset or capital can cover. “I don’t see the stock market growing again; of course, it is dry now; I don’t see the banking sector growing bigger but the insurance penetration is under 1 per cent and under 1 per cent contribution to the nation’s Gross Domestic Product (GDP)”, he added. What this means is that there is a lot of potential the Nigerian economy which is the largest in Africa. With the country’s population, if it is able to increase its earnings and make companies responsible, that will help the economy, create employment and bring financial support to businesses and government. Right now, majority of the risks in Nigeria are funded by government, whether building collapse, flood, deaths “when people can take insurance in all of these things”, Yari said. Pascal Dozie, the president of Society for Corporate Governance Nigeria, is worried with wrong positioning of the insurance industry in Nigeria, saying that no nation could be devel-

oped through banking industry without capital formation. According to him, it is within the insurance sector that capital can be formed to develop the country. Rather than focus on the banking, there should be a shift to the insurance sector, because in some climes, insurance firms own bank and not the other way round in Nigeria, where the banks own insurance firms. Dozie, a former banker, stressed the need to provide the industry to play a role they should play for the development of the country. “As a banker, I am not happy, unless we get insurance capital formation; it is going to be difficult for us as we always look for abroad for loans when we could get it from the insurance sector”, he added. Stressing further on the new policy, the NAICOM boss said in Nigeria, there are some companies that can take big deals “but the issue is not whether we have them, once we bring out the policy, clearly companies can come together, then they will be better capitalized”. Continuing, he said, “companies that feel that they can raise money to qualify for the bigger deals, investors who are watching proceedings will come out to put their money.

First Bank enhances customer experience with digital Lab HOPE MOSES-ASHIKE

n its determination to delight customers with new products and services and improve their overall experience, First Bank of Nigeria limited has unveiled its first digital Lab at “Yabacon Valley,” Yaba, Lagos. The digital Lab is designed to serve as a platform for FirstBank to collaborate and advance with the rapidly evolving Financial Technology (FinTech). Also, it is designed to rapidly stimulate innovative solutions to real-life challenges. It provides “faster and more efficient” banking products to its customers. The new digital Lab empowers the bank to champion innovation, create new digital products, enhance existing products and processes, strengthening its capabilities and competitiveness within the industry. There is a section of the Lab meant for collaboration with FinTechs and non FinTech start-ups. Also, there is an area for tech tops, where key industry players from the FINTECH community would be invited to give insightful talks on pressing issues in the financial technology space in Nigeria. “Technology is disrupting the entire financial market especially the digital one, our role as the oldest, the largest bank and the bank that has always continuously reinvented itself is to ensure that we are at the fore front of those people disrupting

the industry”, Adesola Adeduntan, managing director/CEO said at the official launch of the digital lab. Responding to Journalists on the implication of the digital Lab on the economy, Adeduntan said, when the velocity and the efficiency of the market is improved, the economy has a whole benefit, more people would get employed, the money in the system would circulate faster and in a more efficient manner. The FirstBank Digital Lab will bring together technologies and methods to transform ideas into feasible solutions in record time. Speaking to journalist at the event, Chuma Ezirim, group

head, e-business, called on many young Nigerians who are very good in computer science or engineering who have ideas to come and work with the bank to get those ideas into a reality. Lola Ekugo, head, digital Lab said, “here in First Bank customers are first and we intend to carry that out here in the lab. For every product we design and process, we want to ensure that we connect directly with our customers, so from time to time we will invite some customers here for key things like focus groups. We have prototype of projects and products that we want to do. We want to ensure that the customers’ voice is in each and every thing that we do within the bank”.

L-R: John Ajayi, publisher/ CEO, Marketing Edge; Yaw Nsarkoh, CEO, Unilever Nigeria/Ghana/ guest speaker ;Argan Mirchandani, chairman, Sona Group of Companies; Ashok Manghnani, group operating officer, Sona Group of Companies, and Udeme Ufot, MD, SO and U Limited, during the Marketing Edge national marketing stakeholders summit with the theme, marketing paradigms in the age of digitization in Lagos. Pic by Pius Okeosisi

L-R: Chris Baywood Ibe, president/CEO, Tropical Arctic Logistics Limited; Odain Ajumogobia, chairman; Femi Adeniji, chief operating officer, and Reinoud Klinkhamer, director, duaring a press conference to announce the launch of the newly acquired AW139 Helicopter for offshore services in Lagos. Pic by Olawale Amoo

L-R: Adesola Fadiora, product manager, GSK Pharma; Ahmed Yakasai, president, Pharmaceutical Society of Nigeria; Sunday Afonja, Marketing Manager (Access Portfolio) GSK Pharma, and Julius Ihonvbere, at the 37th annual national conference of the Association of Community Pharmacists of Nigeria in Benin.

Charles Onyuku , service delivery manager, JC International Ltd, receiving the certificate of induction into the Nigerian Society of Engineers during the induction ceremony of new members/fellowship celebration held in Port Harcourt recently.

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MOHAMMED A. ABUBAKAR

BUSINESS

A seasoned lawyer and administrator, is the executive governor of Bauchi State

Interview with Public Sector Leaders

How Governor Abubakar is stimulating Bauchi’s economic development on four fronts Mohammed A. Abubakar, a seasoned lawyer and administrator, is the Executive Governor of Bauchi State in North Eastern Nigeria. In this exclusive interview with BASHIR IBRAHIM HASSAN, General Manager, Northern Operations, BusinessDay, he sheds light on the deliberate efforts his administration has so far made in reforming the civil service of the State as a concrete measure towards the sustainable economic growth and development of the state. His focus is on agriculture, tourism and solid minerals. “Movement from Ground Zero to Ground Success Project” is the term used to describe the administration’s unique reforms and the successes recorded in the last three years of the life of the administration. Excerpts:

hat was the level of economic development of Bauchi state on your assumption of office compared to what it is today? Simply put, Bauchi State was at ground zero in relation to economic development. By this, I mean all facets of the administration of the state were in tatters. The Civil Service, which should normally constitute the engine room of the development of the state, was in tatters. So, we had to begin at the beginning by re-jigging the Civil Service. We employed the services of a consultant who looked at the Civil Service for us generally and then, with regards to the heads of the various MDAs, the Accounting Officers, who themselves constitute the engine room of the various MDAs of the state, these are the permanent secretaries. We inherited up to 60 of them when we took over in the state that has twenty local governments areas; we inherited a total of 26 ministries in the government. We needed to do something to be able to re-jig because whatever you want to do, be it the economy, agriculture or tourism, whatever you want to do in government, the engine room that thrives those policies and turns them into reality is the Civil Service. We cut down the number of ministries immediately to 16 from 26 and then we brought down the number of permanent secretaries from 60 to 28. We did this not by sacking anybody by the executive fiat of the governor; rather, we adopted a scheme, similar to one employed by the Federal Government at one time on the tenure system for permanent secretaries and directors. We were able to advise those that had little time to spend in the service to just take an early exit. Without quarrelling with or sacking anybody, we were able to take care of that. After re-jigging the service, we took a global look at our state and determined for ourselves the areas of comparative advantage. We had earlier on keyed into the resolve of Mr. President’s diversification goals of the economy of the country, taking it away from its dependence on oil, especially with the volatility of the prices of oil in the international market. We immediately identified agriculture areas of comparative

advantage because we occupy 1/5th of the total land mass of Nigeria. Between 80-85% of our people practice one form of agriculture or the other. There was also the potential yo provide employment for our teeming youth via large scale agriculture. Another area of comparative advantage for Bauchi State is solid minerals. The states is replete with solid minerals, which are to be found in one part of Bauchi State or the other. These include hydrocarbons in different parts of the state. Indeed, where I used to believe that only gold was yet to be discovered, by last year, gold was discovered in Bauchi. And we are talking of gold of very high grade! The third area is tourism, for the simple reason that we are host to the foremost Yankari Game Reserve. Also, we have the Sumu Game Reserve, one of its kind in the West African sub-region, simply because the animals you find there, unless you go to zoos somewhere, there’s nowhere you can find them in the wilderness. They were imported in 2006 to Bauchi from the East and South-African sub-regions. Those in charge of the reserve went to Namibia and Kenya and requested to be allowed to take some species of animals that are rare to the WestAfrican sub-region, and they were allowed to be trotted and brought them to a place called Sumu, about 48 kilometres from Bauchi metropolis. Government has been supplementing their feeding since then. They have increased in numbers, to the extent that you can now find Giraffes, Zebras and other herbivorous in Sumu Game Park. So it complements the famous Yankari Game Reserve. We have approached agriculture from two angles. First is the challenge of improving the lot of the small-holder farmer, who constituted 80-85% of the population. Today, we practice agriculture the same way our forefathers did -- using the hoe and the cutlass. If we hope to turn agriculture into a business that will not only sustain our people, but will allow them to leverage and participate in economic activities, we have to change the way we practice agriculture. The way forward is mechanization of agriculture. We took the bold step of procuring 500 tractors for the state. From the inception of the state till date, if you count the number of tractors that have been procured for the state, they may not be up to 500, but at one go,

we procured 500 tractors and these 500 tractors are going to be sold to small-scale farmers who can afford them, big time farmers and agriculture companies operating within Bauchi State at subsidized rates. Mechanization will help grow the economy of the state because it will now encourage our people to participate in economic activities of the state, instead of agriculture remaining at subsistence level. We want those people to be able to know how to use agriculture to sustain their livelihoods. We also want to attract the teeming youth into agriculture and the only way is by removing the drudgery from agriculture. If we allow agriculture to go on the same way, there is no way we will be able to attract these youngsters into it. We are already on. Apart from the tractors, we have also procured power tillers, because many soils in the northern part of our state do not require heavy-duty tractors. Even power tillers can easily do this work. Even ox-driven ploughs can easily do the work of a tractor for them. What we are doing is that, at the same time we are procuring heavy-duty tractors, we are also procuring power tillers. Recently, when Mr. Presi-

dent visited for the state visit, he launched the state’s agricultural entrepreneur programme that involves a huge array of equipment. We are in the process of revolutionizing agriculture in the state. In this we have keyed into all the programmes of the Federal Government aimed at boosting agriculture. The Anchor-Borrow Scheme, for example, has received the commendation from the Minister of Agriculture. We have also gone outside the fore of Nigeria to establish collaboration. Are there Agricultural Companies Within Bauchi State? Well, we are hoping to attract them. We have signed an MoU with one such company to grow sugarcane and refine sugarcane and turn it into sugar in a place in Warji local government area in the state. I recently travelled to the Kingdom of Morocco on the invitation of a company called OCP Africa, which is the largest phosphate producer in the world and the largest phosphatebased fertilizer producer in the world. I had a one-week stay with them during which they took me round all their operations and then we were able to enter an understanding with them. They came to commence

One aspect of agriculture that we have not been utilizing in Nigeria; testing our soil before we plant, testing it to determine the best crop of plant, the best combination of fertilizer to use on that land. We have started that a programme in Bauchi called the School Lab programme. This School Lab programme entails the utilization of a mobile lab for soil testing which was either not too done. One aspect of agriculture that we have not been utilizing in Nigeria; testing our soil before we plant, testing it to determine the best crop of plant, the best combination of fertilizer to use on that land. We have started that, I launched it on behalf of four states: Kano, Kaduna, Katsina and Bauchi. On why launch in Bauchi for Kano, Katsina

and Kaduna? Bauchi was the last to key into that programme, Kano, Katsina and Kaduna had already done it, the plan was on when I caught the wind of the plan and I keyed in. What I did differently was that I went to Morocco myself, I did not wait for OCP to come look for me, I went to look for OCP and when I did, I was now able to surpass the readiness of some of these three states which started earlier. In fact, at the time of launching, Kano state was not ready to even start the programme, so the Lab they brought for Kano, they said it will commence operation in Bauchi and when Kano is ready, they will take the Lab to Kano.

What this Lab does is that they will come to your farm, pick your soil and test it there to determine the nutrients that are contained in your soil and what nutrients are needed to be added to your soil for it to be productive, what combination of fertilizer to use. This programme has started already; the second programme we agreed on with OCP is a programme to boost the production of maize in my state, which will soon commence. This will entail not only the supply of improved seedlings, not only the teaching of modern methods, including this soil testing, to the farmers of Bauchi State but it will also facilitate for the farmers to be able to obtain agricultural loans from the banks. The company will facilitate for them. This is in a bid to turn agriculture into a full-blown business. When these take roots, there will be an immediate transformation of the economy of the state. You said you started from level zero, what was the IGR of the state when you started and what is it today? I may not be able to give you figures but I can assure you that our IGR was a non-starter. There is an index that was circulated recently. As far as the percentage of IGR through the budgetary requirement of the state is concerned, we are the second poorest in Nigeria. The IGR was a non-starter. I had to do so many things. Immediately on taking over power, I relieved the Executive Chairman of the Revenue Board of his appointment, I appointed a new one, I tested that new one and I had been on his neck throughout. Recently too, I had to fire him. I picked another one from the Federal Board of Inland Revenue because the Federal Board of Inland Revenue is doing wonders as far as revenue gen-

eration is concerned, anybody I pick from there is assumed to possess the entire wherewithal to be able to raise the IGR. I assure you that as I am speaking now, the IGR of Bauchi state has already improved. The problem initially is twofold. Even for I who is a layman, as far as revenue generation and collection is concerned, I know two things that are key. One, you must improve your collection, that is the basis of revenue generation in Nigeria, even at the federal level. Good as the system is at the federal level, we are still under-collecting even VAT. In a bid to improve your collection, you must go the way of technology to remove as much as possible the human factor in this. Secondly, you must widen the tax net, and, in widening the tax net, you must bring in the informal sector. You may dismiss the informal sector by the wave of a hand, the man who has a kiosk maybe at the beginning of your street; you can generate some revenue from that person. The tendency is for us to dismiss such people and that is the informal sector that we need to bring into the tax net. I must say as far as collection is concerned, the current Executive Chairman of the Revenue Board is doing very well, I know he has started sealing places, which was hitherto not experienced before. You go to business premises and seal them up for non-payment of taxes. I know he is on the necks of the federal institutions operating within Bauchi who in the past had not been paying. One institution alone owes overNI Billion in taxes. He is devising several means, even while I was here, he

came to me with letters that he has written to the AccountantGeneral of the Federation, trying to see if he can be able to collect these taxes at source, and the law allows him to do that. There is a great improvement in revenue generation in the state. Considering the crisis on IGR, not only in Bauchi State, but almost every state in the country, and generally in the country, you need more investments coming into Bauchi State, which will help you generate more income in terms of revenue. What strategies did you employ in attracting both local and foreign investors and the major investment opportunities in Bauchi State which are not in other states of the country? Outrightly, I will tell you agriculture and solid minerals. Agriculture, for the reasons I have earlier given. We have this vast cultivable land that is available, the bulk of which is not under cultivation, vast irrigable land, the bulk of which is not under irrigation, for this reason, agriculture is one of them. Secondly, solid minerals. Like I said, there is not any solid mineral that I know under the sun that is not found under one part of Bauchi State or the other. The NNPC is commencing drilling. I am rebuilding the road leading to the area where they are going to commence drilling. Indications are that this time around, hydrocarbons in commercial quantity are going to be found in Bauchi State. In the past, twenty or more years back, when Shell and Cheveron came and did a wishy-washy prospecting, I call it wishy-washy

because only one well was drilled. They wrote off Bauchi State and said hydrocarbons are not found. That is not done. Nowhere in the world will you go prospecting oil, drill one well and then turn your back and say oil is not found there. Even Colman in River 1, they saw oil but said it was not in commercial quantity, but they saw natural gas. I am a witness, I was in government at that time as a commissioner and I knew that it was just politics. Like I said, all other mineral resources: iron ore, limestone, columbite and recently, gold. I took a sample of this gold to the Czech Republic because what I am doing with solid minerals is that I am making progress slowly and quietly. Why? Because what Nigeria never did with the abandoned solid minerals that it has is to do what in international business is called developing or producing bankable reports, which are scientific reports that are produced by experts on the particular solid minerals that you have in your state. First, to determine the quantity, whether it exists in commercial quantity. Second, to determine the quality of these solid minerals. What the federal government of Nigeria in the past failed to do was to do this. Without this, you can go wherever you want to go to in the world, you will just be wasting your time, and they will not come to invest unless you are able to give them bankable reports. Bankable to them means that they can take it to their financiers and be able to get funding to come and invest Continues on page 26

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How Governor Abubakar is stimulating Bauchi’s economic development... Continued from page 25

in your state. That is what I am doing quietly. I have engaged an internationally renowned consultancy firm called GET, it’s based in Czech Republic. As I am talking to you now, they have come and taken samples, done initial studies and are trying to develop these reports for us. I took a tiny sample of that gold to them. I spent five days and before I left, they were able to tell me first and foremost that the gold was 94.5% pure. Also, that where that sample I took to them was picked is about 20 kilometres away from the main source of the gold. Science can be able to tell you all these, these are what are missing in Nigeria and that is why we have not been able to take our mineral sector to the next level. This is what we are doing in Bauchi State. I am in the process of engaging another reputable company called NOREAN, which is a Britainbased company. That one will do studies also over some minerals and it will also help us to develop what is called buying centres. Buying centres are beneficiation plans -- they are like factories. When you go, you dig for a precious stone as an individual miner and you bring it out, you bring it to this buying centre which will test it for you to determine the purity, it will lean it up for you and then it will display it for you and international buyers will come. This time around, they will pay you the correct price of those things, rather than what operates now where you will go, dig for the precious stones and hide them inside your pocket, a Chinese man will take you under the tree, you’ll open it for him, they will look and tell you

Nigeria, but it is a common phenomenon. Because you cannot wish them away, the next best thing you can do is to organize them. When you organize them very well, then you entice them through giving them protective cares, rudimentary intermediary machines that will reduce the drudgery and danger for them in mining these minerals. When you do that for them, you will able to tax them no matter how little. NOREAN is also going to do that for us using international best practices organized in these manners What are you doing in inviting investors to invest in tourism sector of Bauchi State? Because I was in Manchester and I had a talk with a friend

For our drive to attract foreign direct investment, the first thing we did as a government was to introduce a Bill in the House of Assembly for public-private partnership which will now be able to determine the parameters of whatever collaboration with whoever is coming into Bauchi with the intention of investing. The next thing we did was to introduce another Bill setting up the Bauchi State Investment Promotion Agency. This Investment Promotion Agency is a one-stop shop for anybody coming into Bauchi with the intention of investing. We engender the ease of doing business for that person. Rather than carrying his briefcase and going to, first

of comparative advantage that we have chosen for ourselves for the reasons I have stated’ Yankari, Somu and many other tourism attractions in Bauchi State. I have made a move to add value to the Yankari Game Reserve. Today, I have constructed an airstrip in Yankari Game Reserve which was not there before; I started the construction of an 18 whole golf course in Yankari Game Reserve. But, I have a big problem with tourism, which is of course, the location of Bauchi State within the North-Eastern sub-region of Nigeria. Bauchi State, even if I am the one saying it, is the safest, most peaceful of the North-Eastern sub-states, but that is between you and I. For the man in Man-

Right now, there is something going on in Yankari in Bauchi State that has never been done before; Nollywood is shooting an A-rated movie in Bauchi State. It is going to be about Bauchi State and part of the time they are spending in Bauchi, they are spending it in Yankari Game Reserve it costs N100,000, it may not be N100,000 but N1 Million but you wouldn’t know. That is what we are trying to change and in the process, we also want to organize artisanal miners because artisanal miners are phenomenal that you cannot wish away. Wherever in the world where mining is going on, you’ll see artisanal miners, maybe not in the scale that we see them in

who had been to Nigeria only three times but had heard about Yankari Game Reserve. That was somewhere in the world, somebody talking to me about what is to me as a financial and business journalist or practitioner is that this is an investment opportunity in Bauchi State. How much do you do in inviting investors, local and foreign, to invest in the tourism sector of the state?

the Ministry of Land to see if he can be able to acquire land, go the Ministry of Finance to obtain whatever permit, go to the Ministry of Justice, the Investment Promotion Agency is a one-stop shop; they will do all that for whoever is coming to invest. That is for investment generally. For tourism, of course like I stated, tourism is the third area

chester, he does not know this. Before he ventures out from Manchester to Nigeria to go to Yankari Game Reserve, the first place he will go to will be to his Ministry of Foreign Affairs, which will take advisement from the High Commission here in Nigeria. His High Commission will tell his Ministry of Foreign Affairs that there is a travel ad-

visory against Bauchi State because Bauchi is located within the North-Eastern sub-region. I always tell people a story of the current American Ambassador, when he first came into the country; he travelled to Bauchi without my knowledge. In fact, I was here in Abuja, then I got a call from a strange number, I picked it, it was the American Ambassador and he told me he was in Bauchi State and that he did not inform me because he wanted to get a first-hand feel of the place. When I asked him what he had found out, he said the people are hospitable, the place is peaceful and secured. I thanked him and then asked him to tell them on his next travel advisory that Bauchi is safe for them to come, which he said he was going to consider, of which I know he will not. This is the only drag we have as far as tourism is concerned. For local tourism, we have improved a great deal from the time we took over. The clientele that Yankari has been receiving has increased many folds because internally, when I took over, I turned myself into the number one marketer for Yankari on social media and that payed off a great deal. Right now, there is something going on in Yankari in Bauchi State that has never been done before; Nollywood is shooting an A-rated movie in Bauchi State. It is going to be about Bauchi State and part of the time they are spending in Bauchi, they are spending it in Yankari Game Reserve. So, there will be a sort of advertisement of Bauchi State in a way that so many Nigerians will realis that there is such a place and that Bauchi is such a peaceful state. The main character in the movie is Banky-W. I met him while they were shooting and asked him how he had found Bauchi and he said it was beautiful and peaceful. I then told him that he’ll be our ambassador, that when he gets to Lagos, he should tell them all about this. We are doing everything within our powers to promote tourism, but we know our limitations and that is why we are proceeding cautiously. W hat are the major achievements of your administration as it is gradually moving into its 4th year? The number one achievement, which is priceless, is the peace and security we have engendered in the state. The second achievement is in the area of education, which is the bedrock of development. When we took over, education was in tatters. Particularly, basic education was nowhere and that is the foundation, if you do not get basic education right, then you are a non-starter. We paid special attention to basic education. We did that by improving on the learning environment, wherever you go to in Bauchi State, every big

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ple. I have done that in respect of an estate called Larix estate, I took it over and completed and I am going to do the same with all the other housing estates. We have already concluded discussions with the developer and the Federal Mortgage Bank. These were projects that were done on a PPP basis with the last government. Developers took loans from the Federal Mortgage Bank to come to the state, the state provided the land, the state was supposed to provide the infrastructure so that a modern estate can be developed but the state reneged on all the promises and there was nothing the developers could do, they had to abandon and then they now have this huge debt hanging on their heads. The structures are sore to the eyes; you see them every day you pass. I decided that we will not leave them but we will complete them and in the process, we will key into the APC manifesto of providing housing for the teeming Nigerians. In terms of empowerment of youth and women, we have done so much. We have an outfit called Bassiworld that is set up primarily to cater for women and youth and we have been training and empowering youth in acquisition of skills. We have established a security outfit which at the onset

took 1,700 youths off the streets, trained them and gave them uniforms. They are operating in both government establishments and private establishments within the state. They form a source for us to pick whenever recruitment into the Army, Police and other paramilitary agencies come. We will pick these youngsters and we send them because they have already received rudimentary training, so they have an advantage over someone who has not done that one before. In a nutshell, this is what we are on. You cannot talk about economy without talking about politics. Are you contesting for a second term? If you are, what is your motivation? I haven’t said that yet but if you recall, I said i hate the phenomenon of abandoned projects, so, I should not be the one to leave abandoned projects. If that is anything to go by, I may ultimately make up my mind to recontest. What legacy generally do you plan to leave behind in Bauchi State? What I want to leave as a legacy is transparency in the running of the affairs of government and I say this with every sense of responsibility because what the state has gone through before I took over was completely devoid of this very vital element of transparency in the running of the affairs of the State. Apart from transparency, I am a stickler for obedience of the rule of law. Till date, nobody has ever been arrested in Bauchi State in defiance of the rule of law and I think at a point I was one of the most vilified governors on the pages of the papers and social media. While, I know for a fact, that the laws of libel are still in our statutes, I’ve never sought to utilize them. What I want to engender in my politics of Bauchi State is the removal of bitterness and rancour in the practice of politics and I have started on that and I am moving slowly but surely to engender this. My legacy is transparency and accountability in the running of the business of government

GOVERNMENT

settlement, having a blue roof is my work, and these are everywhere. We did what many other governments failed to do. Yes, you can come and reconstruct dilapidated buildings, put in desks, build new ones, unless you pay attention to the welfare of the teachers, then you are a non-starter. We did all that. We realized, like any other state, that we have this problem of untrained teachers but rather than sending them out by fiat, we thought we could be able to turn them round by retraining them, so we embarked on a rigorous programme of retraining. We first selected the good ones out of them and sent them to National Teachers’ Institute (NTI) in Kaduna to be trained as the trainers. They came back home and we started the retraining of our entire teaching force batch by batch. We also paid attention to the school-based management committees. They are very important if they know and perform their roles very well. They play a part in the disciple of the pupils. They play a part to the security of even the premises. In the past, what happens is, you rebuild a primary school, or you build a new classroom and equip it and then in broad-day light, somebody will come with a pick-up and start packing the desks, nobody will care, it is government property, so it is nobody’s property. So, with the reorientation we are giving to the school-based management committees, we have taken care of that and it can never happen. This we did and results have started showing. When we took over, in NECO and WAEC, our percentage of success was 3.5%. By 2016, we took it up to 17.6% and by 2017, we took it up to 27.8%, results have started showing in basic education. The next area is health. Again, primary health care is the key -- when you get it right, then the other levels can even go to sleep because getting primary health care right is preventive. A lot of the diseases that would have been compounded and then taken to the secondary or tertiary institutions will not even prevail. We keyed into the federal government policy of ensuring an efficient primary healthcare centre in each of the wards of the state. We have 326 wards; we paid attention to this to ensure that we have one efficient primary health care centre. We did this by adding into the mix 19 brand new primary healthcare centres equipped with all the full compliments of equipment, with staff quarters, latrines, boreholes in all the local governments except Bauchi, the capital which has its own fair share of these kinds of institutions. We ensured the policy of the federal government of primary healthcare under one roof to increase efficiency and training of the personnel that is required to man all these primary healthcare centres. We have consistently been allocating over 15% of our total budget to health. The Abuja Declaration re-

We keyed into the federal government policy of ensuring an efficient primary healthcare centre in each of the wards of the state. We have 326 wards; we paid attention to this to ensure that we have one efficient primary health care centre quires at least 15%, I have been allocating over 15% from the time I became governor till date, it is known all over the world. We have been doing that to the health sector. Infrastructure development, at the beginning, we set out to do what we call an urban renewal because there was a lot of decay particularly in our urban areas, the state capital. You will find roads with big potholes that can swallow a mini-Morris in them. We set out to do an urban renewal. I started dualizing the roads in the capital so that we can turn the capital into a modern city. Apart from easing the movement of goods, men and materials, this will also beautify the cities and turn them into modern and attractive cities. We are doing quite a number of these in the state capital, but then, we have not restricted that to the state capital, we are doing that also in the second largest town in the state, Azare and also the third largest, which is Misau. There is a major road we are doing that transcends two senatorial districts. This major road is so dear to the people who live around that place and people from neighbouring states. It is a 105 Kilometre road starting from Misau to a place called Gamawa, with two major bridges which we

have since completed over a year and a half ago and the laying of asphalt is three quarter complete now. We have not restricted this to only urban areas, we are also doing roads in virtually all the other local governments, we have commenced and they are going on in earnest. We are doing a road in Darazau Local Government, called Darazau Gapchari, one in Itasgadau Local Government called Itas-Atafawa Magariya, one in Jama’are Local Government called Anafari Garin Babali, one in Turu Local Government, Das Local Government, from Das to Bornu in Tafawa Balewa Local Government, one in Ganjuwa Local Government, starting from kamfanin Kutare. We are doing so many other works and that is as far as infrastructure is concerned. We have done so many rural electrification schemes. What I have as a policy is that I abhor the phenomenon of abandoned projects and that is one of the reasons causing the retrogression and lack of development of Nigeria. This is found only in Nigeria, even sister African countries that are smaller than us, you go and you won’t find abandoned projects. I made up my mind that I will not leave any abandoned project and that I will complete abandoned projects left by other peo-

BUSINESS DAY

Monday 09 July 2018

Access Bank Rateswatch Market Analysis and Outlook: July 06 - July 13, 2018

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.95

Q1 2018 — lower by 0.11% compared to 2.11% in Q4 2017

Broad Money Supply (M2) (N’ trillion) Credit to Private Sector (N’ trillion)

25.17 22.21

Increased by 2.64% in May 2018 from N24.52 trillion in Apr’ 2018 Decreased by 0.21% in May 2018 from N22.25 trillion in Apr’ 2018

Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y) Monetary Policy Rate (%)

1.93 11.61 14

Decreased by 1.36% in May 2018 from N1.96 trillion in Apr’ 2018 Declined to 11.61% in May’ 2018 from 12.48% in Apr’ 2018 Raised to 14% in July ’2016 from 12%

Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel)

14 (+2/-5) 47.80 76.72

Lending rate changed to 16% & Deposit rate 9% July 4, 2018 figure — an increase of 0.03% from July start July 6, 2018 figure— no change in 1 week

Oil Production mbpd (OPEC)

1.71

May 2018 figure — a decrease of 3% from Apr’2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday 6/07/18

NSE ASI

37,625.59

Market Cap(N’tr) Volume (bn) Value (N’bn)

Friday

Change(%)

38,278.55

(1.71)

13.87 0.47

(1.71) (31.90)

3.07

5.82

(47.17)

NIBOR Friday Rate

Change (Basis Point)

(%)

6/07/18

29/06/18

OBB O/N

11.3300 12.9200

13.1700 14.0800

(184) (116)

CALL 30 Days

16.0625 13.7969

14.7000 14.4552

136 (66)

90 Days

14.7586

15.0040

(25)

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

6/07/18

29/06/18

6/06/18

Official (N) Inter-Bank (N)

305.70 346.17

305.80 344.94

305.95 341.44

BDC (N) Parallel (N)

360.50 361.00

360.00 362.00

360.00 361.00

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Gold ($/t oz.) Silver ($/t oz.) Copper ($/lb.)

YTD Change

Tenor

Friday

Change

(%)

(Basis Point)

6/07/18

29/06/18

3-Year 5-Year

0.00 13.57

0.00 13.05

0 52

7-Year 10-Year 20-Year

13.90 13.88 14.15

13.43 13.60 14.06

47 28 9

19.02 (7.07)

2,416.00 108.00 82.05 11.35 504.25

(1.71) (6.61) (2.03) (6.74) 3.54

24.79 (17.05) 5.87 (25.96) 16.32

1,254.90 16.06 282.05

0.34 0.06 (5.21)

(4.76) (6.57) (13.96)

Friday

Change

(%)

(Basis Point)

29/06/18

12.07 11.39

12.66 12.87

(59) (147)

6 Mnths 9 Mnths 12 Mnths

12.66 12.99 13.09

13.03 13.21 13.19

(37) (22) (10)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Change

(%)

(Basis Point)

6/07/18

29/06/18

2,658.35

2,670.60

(0.46)

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr) YTD return (%)

8.47 5.49 8.22

9.10 5.84 8.72

(7.01) (5.99) (0.50)

YTD return (%)(US $)

-46.96

-46.51

(0.45)

Index

TREASURY BILLS (MATURITIES)

Disclaimer

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

0.00 (3.40)

6/07/18

Tenor This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

76.72 2.84

1 Mnth 3 Mnths

AVERAGE YIELDS Friday

(%)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

BOND MARKET Tenor

1-week Change (%)

13.63 0.32

Friday Rate

6/07/18

29/06/18

MONEY MARKET Tenor

Indicators

Amount (N' million)

Rate (%)

Date

91 Day 182 Day

5,395.70 20,000.00

10 10.3

20-June-2018 20-June-2018

364 Day

14,614.11

11.5

28-June-2018

Global Economy In the U.S., the Federal Reserve officials reiterated their commitment to raising interest rates gradually during their meeting on June 12-13, 2018, recently released minutes show. However, they noted that uncertainty and risks that are associated with the country’s trade policy have intensified. They opined that these risks could eventually have negative effects on business sentiments and investment spending. Industry contacts also expressed concerns about the possible adverse effects of tariffs and other proposed trade restrictions, both locally and internationally on future investment activities. Contacts in some industries indicated that plans for capital spending had been scaled back or postponed as a result of uncertainty over the trade policy. Elsewhere in the Eurozone, the unemployment rate remained at 8.4% in the month of May 2018. The rate remains at its lowest since December 2008, even as the number of unemployed continues to fall, figures from Eurostat revealed. The number of unemployed in the Euro Area dropped by 125,000 to 13.66 million. Meanwhile, in the European Union, the unemployment rate stood at 7% in May same as the previous month but down from 7.7% a year ago. Among EU member states, the lowest unemployment rates recorded in May were in Czech Republic (2.3%) and Germany (3.4%). The highest were recorded in Greece (20.1%) and Spain (15.8%). In a separate development, Brazil’s trade surplus narrowed by 18% to $5.88 billion in June 2018 from $7.2 billion in June 2017. According to the Ministry of Development, Industry and Foreign Trade (MDIC), exports rebounded in the reference month growing by 2.1% year-on-year to $20.20 billion, driven by higher sales of manufactured goods. Imports also climbed but at a higher rate of 13.7% year-on-year to $14.32 billion, supported by higher purchases of intermediate goods, consumption goods and capital goods. Exports rose to China and the U.S. and imports rose from China, Argentina and Mexico. Local Economy The Nigerian Stock Exchange (NSE) in its monthly Domestic & Foreign Portfolio Investment report for the month of May 2018 revealed that transactions at the nation’s bourse accelerated by a whopping 49.96% to N318.27 billion from N212.23 billion recorded in April 2018. Total foreign transactions also increased by a significant 57.47% to N192.95 billion from N122.53 billion the prior month. Total domestic transactions towed the same path, rising by a rate of 39.71% to N125.32 billion from N89.70 billion in April. A breakdown of foreign transactions showed that there was a decline in foreign inflows in the reference month by 3.45% to N62.06 billion from N64.28 billion in the preceding month. However, foreign outflows grew by 124.70% to N130.89 billion in May from N58.25 billion in the previous month. The cumulative transactions from January 2018 to May 2018 ascended by 97.13% to N1.41 trillion compared to the same period in 2017 (N714.99 billion). In a separate development, the Manufacturing Purchasing Managers' Index (PMI) stood at 57 index points in June 2018, the latest PMI report of the Central Bank of Nigeria (CBN) showed. This indicates an expansion in the manufacturing sector for the fifteenth consecutive month. The index grew at a slightly faster pace when compared to the previous month (56.5 points). A composite PMI above 50 points indicates that the manufacturing sector is generally expanding, while a reading below 50 points indicates a contraction. Ten of the fourteen sub-sectors surveyed reported growth during the month. However, the transportation equipment; fabricated metal products; primary metal; and cement subsectors declined in the review month. Stock Market The bears continued to upstage the bulls at the local bourse as most stocks depreciated in price, causing the market volume and value traded to plunge by 31.90% and 47.17% respectively to 319.63 million trades and N3.07 billion in that order when compared to the previous week. The bearish

performance was due to profit taking by investors. Market breadth also came out negative as decliners (24) outnumbered advancers (21) in the market. This was evidenced by the All Share Index (ASI) dropping steeply by 1.71% or 652.96 points to 37,625.59 from 38,278.55 points the previous week. Likewise, market capitalization declined by 1.71% to N13.63 trillion from N13.87 trillion the preceding week. The decline reflected losses in the stocks of companies in the industrial goods and oil & gas sectors. This week, low price attractions may encourage investors to reposition in anticipation for the expected Q2 2018 financial scorecards. Money Market Rates moderated across most tenors in the week ended July 6, 2018. The market was awash with inflows from Open Market Operation (OMO) maturity of about N307 billion with no corresponding OMO auction to mop up liquidity during the week. Open Buy Back (OBB) and the Over Night (O/N) rates dipped to 11.33% and 12.92% from 13.17% and 14.08% respectively the previous week. Longer tenured interbank rates did same. The 30-day and 90-day Nigerian Interbank Offer Rates (NIBOR) stood at 13.80% and 14.76% from 14.46% and 15% respectively. This week, rates may trend northwards due to expected Retail Secondary Market Intervention Sales (SMIS) as well as likely OMO auction. Foreign Exchange Market Foreign exchange rates ended on mixed notes in the preceding week. The interbank window depreciated to N346.17/$ from N344.94/$ representing a drop of N1.23kobo. However, the parallel market rate appreciated by N1 to settle at N361/$ from N362/$ the previous week. The official rate appreciated for the fourth consecutive week by 10 kobo to settle at N305.70/$ from N305.80/$ the previous week. The appreciation witnessed at the official and parallel segments of the market is attributed to the FX liquidity provided by the apex bank. This week, rates would likely remain around prevailing levels. Bond Market Average bond yields picked up last week due to sell-offs by local and international counterparties in the market. Yields on the five-, seven-, ten- and twenty-year debt papers finished at 13.57%, 13.90%, 13.88% and 14.15% from 13.05%, 13.43%, 13.60% and 14.06% respectively the previous week. The Access Bank Bond index plummeted by 12.25 points or 0.46% to close at 2,658.35 points from 2,670.60 points the previous week. This week bond yields may decline slightly on maturing bonds. Commodities Oil prices slipped after U.S. government data showed an unexpected build in crude oil stockpiles. According to the U.S. Energy Information Administration (EIA), oil inventory rose by 1.3 million barrels during the week. The Organization of the Petroleum Exporting Countries (OPEC) reference crude fell marginally by 48 cents to $75.21 per barrel. However, Bonny light, Nigeria’s benchmark crude, remained unchanged at $76.72 per barrel from the previous week. The prices of precious metals traded in a narrow range last week, recording gains and losses due to increased concerns of a full blown trade war between U.S. and China. China has initiated additional tariffs on some import products from the U.S. immediately after U.S. tariffs on $34 billion in Chinese imports took effect. Gold gained 0.34% or $4.19 to settle at $1,254.90 per ounce. Silver also added 0.1%, to settle at $16.06 an ounce. This week, escalating tensions between the U.S. and China may weigh on oil prices. For precious metals, further gains may be recorded in the week ahead due to a weakening dollar amidst escalating trade tensions. MONTHLY MACRO ECONOMIC FORECASTS Variables

Jul’18

Aug’18

Sept’18

Exchange Rate (Official) (N/$)

346

347.02

348

Inflation Rate (%)

9.34

9.00

Crude Oil Price (US$/Barrel)

76.75

76.00

77.00

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

Monday 09 July 2018

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This is M NEY A daily guide to your Personal Finance

BUSINESS DAY

• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

Winning sales process: Converting prospects to high paying clients Iyore Ogbuigwe

etworking is not the sole determinant of your success in the world of sales though it plays a crucial role in getting you and your products the visibility it needs. The key determining factor of your success in sales is the quality of your prospects and how quickly you can convert them to loyal clients. Before going further, it is important to know who a prospect really is, so who is a prospect? A prospect is someone (be it a person, a department in a company or a whole company) who has the financial capacity plus potential interest in your business or your product. Simply put, a prospect is someone who represents your customer profile and has not yet expressed interest in your product or service. So let’s say you paid hundreds of thousands to secure a booth at a business fair, acquired several pages of contact information of prospects but are unsure how to take it further and garner sales, here is how to convert them to lifelong paying clients quickly: 1. Sell benefits instead of features Prospects always have one thing in mind when

they’re being sold to “what’s in it for me.” As a sales person, you should be careful not to get engrossed in talking about features of your product instead of benefits to the prospect. You should talk about the features then its corresponding benefits to your prospect and how the benefits apply to the prospect’s current situation. 2. Close sale at the beginning, in the middle or at the end The law of 3 states that in every sales engagement with a prospect there are 3 opportunities to close the sale. At the beginning: Only close at the beginning when it is obvious the prospect is sold out to you or your product. This could be as a result of your testimonials, a referral or even your attention-grabbing statement. A few months ago, I had a conversation with the owner of a conglomerate; she was coming out of a hall and I was walking in, so I quickly greeted her, told her what I do and she said, “wow! Why don’t you come and do some sales training for us?” I said, “Fantastic, when would you like us to start?” Sale closed at the beginning. In the middle: When you’re engaging a prospect, ask open-ended questions to look for opportunities to build rapport based on common interests, beliefs or background. Move on to asking questions to iden-

tify their needs, after which you can then explain the benefits of your product and how it can be applied to their situation. At this point, after explaining your product’s benefit you can ask a question like, “is this applicable to your current situation?” If the prospect says, “Yes it is!” You can close simply by asking, “so how many do you want? Or “what colour would you like?” That is a sale closed in the middle. At the end: If you didn’t close at the beginning or in the middle then don’t miss it here. If the prospect says, “It isn’t making sense yet” or if the prospect isn’t convinced or if the prospect asks questions (or objections) then you can either give more benefits of your product (the more benefits explained the higher your chances of increasing buying desire). You can also answer the objections by asking, “Is this your only concern before you pay?” If he or she says, “yes,” answer then ask for the money. That is how to close a sale at the end. 3. Convert customers to clients My wife went to the pharmacy to get some medication. We both knew the price of the drug but she came home with a much more expensive one. When I asked why she bought that, she said the lady at the store convinced her that the brand is of better quality and will give better results.

I immediately thought to myself, “she converted my wife from a customer to a client.” This is because she didn’t just allow her walk in, ask for what she wanted, pay and leave. Rather she asked questions to be sure what she was requesting for could solve her problem. We need to approach our business this way. There is a difference between customers and clients. Supermarkets have customers, Lawyers have clients. Customers will give you an income, clients will make you a fortune. So how do you convert your customers to clients? Improve Your Language. Start by calling your customers clients and treating them that way because your intentions will always influence your outcomes. Once you begin to consciously do this, they will act and pay you like clients. 4. Use tag-team selling A few years ago, as a salesman (‘marketer’ like most people called us) for a Nigerian bank, I walked into a prospect’s office having booked an appointment. I had started studying the subject of selling so I knew how to prospect, get appointments then give sales pitches. The prospect’s office was spacious and well-decorated; it was more like an apartment. While I waited at a section of her office seated on a sofa, a lot of people walked in and out of her office giving her documents to sign. After about 7 minutes

she called me, “young man come this way” (this was the beginning of trouble in the sales process; she saw me as a young man). I walked to meet her all dressed up fastidiously with my pocket handkerchief sticking out briskly from my suit jacket (all that razzmatazz didn’t move her). I started by greeting her, gave her a few compliments while trying to build rapport but her face was like a brick wall. I went on to ask a few questions to know what her needs were but she just said, “please go straight to the point. What do you want?” Then I did what I wasn’t supposed to do which was to start talking about my product like a TV commercial. Seeing that it wasn’t working, I took it a step further by taking charge. I took a pen and paper from her desk to show her a few calculations of what the product would do to multiply her money and she was impressed. I thought her being impressed meant I was making progress until she asked me, “how old are you?” I didn’t know what I know now if not, I would have closed the sale from that question. So like a lamb led to the slaughter, I answered her. Apparently, all she wanted was a much older person to sell this product to her so I got a senior colleague of mine to do so and he closed the deal instantly! That is what tag- team

selling is about. There are times you meet a prospect and you can’t seem to build rapport or the prospect doesn’t like you or you don’t seem to get along well with them or you feel the opposite sex would probably do a better job in persuading this prospect. People buy from those they like, so don’t let the sale go. Instead, move it to someone else or get someone else to close the sale for you or preferably with you. Remember, if you’re not receiving enough leads, it is probably because you’re not giving others enough leads. Practice tag- team selling today and experience a dramatic improvement in your sales process. With these tips you’ve read thus far you will definitely convert prospects to high paying clients. Selling is all about action and as long as your salespeople act on quality information like these shared today, their sales won’t remain the same. Iyore Ogbuigwe is a highly sought after sales and persuasion expert for local, international and multinational corporations. Iyore is the CEO of Ultravantage& Founder of the Iyore Ogbuigwe Sales Academy (IOSA). He holds sales seminars in Nigeria, Ghana and the USA and has written 5 books on selling. Connect with Iyore: Emailadmin@iyoreogbuigwe.com Instagram & Twitter: @ iyoreogbuigwe

BUSINESS DAY

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Monday 09 July 2018

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BUSINESS DAY

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CEO INTERVIEW

Monday 09 July 2018

Interview with Private Sector Leaders

‘As rates trend downwards and inflation moderates, clients The Managing Director, and Chief Executive Officer of Zenith Capital Limited, JUBRIL ENAKELE, shares his insight with BusinessDay News Editor PATRICK ATUANYA, Senior Capital Markets Correspondent IHEANYI NWACHUKWU and Analyst ENDURANCE OKAFOR about the Nigerian capital market, the challenges it encounters in preparing companies to tap from the market, its future prospects and the reforms that could make it more attractive to investors.

hat is the deal flow in the pipeline for Zenith Capital and do you anticipate a drop off in deals as 2019 approaches with its election related activities? Last year was a busy and successful year for Zenith Capital in terms of the deals it executed. We were a joint adviser to NIPCO Plc, a downstream oil & gas in its acquisition of shares in the former Mobil Oil Nigeria Plc. We also worked on Prudential Plc’s investment in an insurance company in Nigeria. We advised on the acquisition of majority stake in Federated Steel Mills Limited and we were advisers to Emzor Pharmaceutical Industries Limited on an equity sale and debt raise. All these transactions were the most notable in each of the sectors represented and it gave us a good opportunity to partner with a wide range of investors in closing these deals. On the capital market side, Zenith Capital was one of the issuing houses that raised circa N100 billion for the Lagos state government, through two bond issuances under the State’s current bond programme. We were also joint issuing house on the first ever bond transaction in the power sector that was brought to the capital market in 2017, issued by Viathan Engineering Limited. This deal is significant because it is the first deal by a power company brought to the debt capital market. It was also guaranteed by InfraCredit, which is also a first. So this year, as interest rates trend downwards and inflation moderates, clients are readying themselves to enter the debt capital markets. Cost leadership is on the mind of our clients now, so it is not just about being a leader in market share but also in cost management. A significant part of this is the cost of borrowing.

We have been mandated on various advisory and capital market transactions. Already in this year, we were joint advisers to Flour Mills of Nigeria on their Rights Issue, another notable transaction on the equity side this year. We are pregnant with a few more transactions and those will come to the market in due course. What value does Zenith Capital bring to the table for prospective clients in terms of the company’s strength? For Zenith Capital, our core competence is in structuring and executing transactions across sectors and complexities. For capital markets, we are very good at bringing issuances, (both first-time and experienced issuers) to the market, whether in debt or equity. As you can see from our activities last year, we have been very successful in advising clients in raising non - listed equity and debt, even convertibles. Within the firm, we have experienced individuals who have worked locally and internationally, and as such have knowledge of best-in-class advisory solutions and international debt solutions. The value we bring is not just visible in our capital market transactions but is also in advisory mandates, which also includes the restructuring of existing loans, acting as Buy-Side and Sell-Side Advisors. In addition, we have a transaction management team that assists clients review their transaction documents prior to regulatory filing. This team also undertakes regulatory filings. Transaction management is something Zenith Capital has become very good at. In summary, we are particularly good at executing capital market transactions, whether equity or debt, financial advisory, mergers and acquisitions, valuations, transaction management, and non-public aspects of transactions. As well as deal structuring and restructuring.

MTN is listing shares worth of $140billion in the NSE via an IPO, do you have any interest in it? It is a transaction that both market operators and regulators in the capital market are anticipating. I think any opportunity to deepen the Nigerian capital markets is welcome. How are your fund management assets doing?

I am the Managing Director of Zenith Capital; however, I am a non-executive director of the asset management business (Zenith Assets Management Limited), the securities business (Zenith Securities Limited) as well as the trustees’ business (Zenith Trustees Limited) and these are different from Zenith Capital Limited. However, the Asset Management business has grown over

five times over the last three years. The introduction of the Money Market Fund last year has contributed a great deal to this. How do you see the private equity business in Nigeria? There are local indigenous private equity players that are doing quite well. Last year like I mentioned earlier, we closed a deal for Emzor Pharmaceutical Industries Lim-

Monday 09 July 2018

C002D5556

BUSINESS DAY

JUBRIL ENAKELE

MD/CEO Of Zenith Capital Limited

are readying themselves to enter the debt capital markets’ ited, the investors in that transaction included a local private equity firm. I think the local private equity space is very interesting as we have pockets of capital coming from local private equity firms. That is significant because they understand how things are done locally, and yet have access to international relationships and capital. As such, I think the local PE space is growing and we are very pleased that they have become a new source of capital which can be approached and engaged for deals in Nigeria. Do you raise money for foreigners or Nigerians? The clients we raise money for are exclusively Nigerian based firms; our mandate is limited to Nigeria. As Nigeria is such a big market, one can be very busy in Nigeria doing deals here. Increasingly, we see more local players form part of the investor base, including the pension funds. However, pension funds are restricted by the nature of transactions and regulatory limitations, so it is not every deal they are permitted to get involved in. Regarding our investor universe for non-capital markets transactions, we see more Nigerian firms come into play but, it is still the international firms that lead the pack. Not just because they have deeper pockets and larger sized funds; but also because most of them have extensive experience in some of these transactions from other parts of the world, e.g. other parts of Africa, Europe, Middle East and North America and they can bring this experience and value to bear in transactions locally. The collaboration with local firms has other benefits including improved environmental standards; corporate governance; knowledge exchange etc. We continue to see foreign interest but increasingly we have local firms stepping into the market as well, and that is encouraging. How soon are your deals in the pipeline going to be executed considering we are already in the second quarter of 2018? The circumstances surrounding a transaction timeline are often outside our control. For example, a firm that wants to issue a bond would wait for clear market conditions and the most optimal environment for the issuance. So, some transactions do take time. Zenith Capital Limited was how-

ever Joint Advisor to Flour Mills on their successful N40Billion Rights Issue in Q1, 2018. How do you carry out a deal with Nigerian firms which are not listed on the NSE? It depends on the nature of the transaction and the client involved. However, for every sector, we identify who we see as a national champion, whether it’s in the oil & gas or agriculture or consumer health care or fast moving consumer goods sectors etc. The challenge with some firms is that they are not “ready”, in terms of financials, operating processes and standards, human resource matters, governance etc. It is our job to work with the clients to overcome these challenges, and handhold them to a successful deal. As the CEO of Zenith Capital, what are your growth plans for the company? Our aim and objective for the company is to be the most respected investment banking firm in English speaking West Africa. That is the goal we set for ourselves since 2015 when I joined the company. We have come a long way and I think the market is beginning to recognise Zenith Capital as a leading player in Nigeria’s investment banking space. Clients, issuers and investors accept Zenith Capital as a trusted advisor and partner. The growth plan for this year 2018 is to deepen our presence in all markets where we operate in to be one of the top 3 players across board, and to be a trusted adviser to our clients. We have done well so far, but there is more to accomplish. We are

on the right path and the plans are to deepen this and spread across broader sectors.

job has been to work with them through that to make them investment-ready.

What are your operating challenges? Over the past 18 to 24 months in this country there have been challenges from the macro economic stand point; these are however easing. By far one of the greatest challenges is dealing with clients or companies that need either capital or advisory services but are generally unprepared for the process. Our

What are you doing to fill in innovation gap in the sector? Last year, Zenith Capital acted as one of the advisors on the N10billion bond issued by a power company. It is the first deal guaranteed by InfraCredit, and widely considered to be one of the most innovative deals done in 2017. I feel with time more issuers will become comfortable with innovations which are already happening. I also feel that more can be done in regards to bringing innovation to the investment banking sector.

The challenge with some firms is that they are not ‘ready’, in terms of financials, operating processes & standards, human resource matters, and governance

How many deals are you looking at executing this year? It is not about the number of deals but rather the significance of the deals done. The power deal of N10billion bond, was not the largest deal that was done last year, but it was significant because it was the first time that a company in the power

sector was able to access the bond market. It shows that it can be done and it lays the foundation for other issuers in the power sector with the right structure to access the capital market. So for me, it is not necessarily about the number of the deals we execute but how significant the deals are. Do you see a time you will begin to deploy your own balance sheet to some of these deals? That is under consideration. What kind of reforms would you like to see happening over the next 2 or 3 or even may be 4 years? There are quite a few but the ones I would very much love to see would be opportunities for the pension funds to participate in infrastructure financing and to also be able to channel some of their AUM for private equity solutions. I think if those two are done, they would serve as a catalyst to the market.

BUSINESS DAY

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Monday 09 July 2018

Stocks

Currencies

C002D5556

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

BUSINESS DAY

Watchlist

ECONOMY

Shareholders smile as 10 insurers’ dividends surge 108.75% to N9.70bn BALA AUGIE

en largest insurance companies have rewarded shareholders with N9.70 billion for the 2017 financial year; this represents a 108.75 percent surge from N4.65 billion paid in 2016, a sign of economic recovery. Companies in Africa’s largest economy slowed down on dividend payment to owners of the business in 2016 as a sever dollar shortage brought on a sharp drop in oil price of mid 2014 undermined cash flows. A breakdown of the figures into individual components shows custodian and Allied paid a total dividend of N1.88 billion in the 2017 financial year, which represents a 113.23 percent increase from N882.27 million paid the previous year. Law Union and Rock’s dividends to its owners increased by 206.97 percent to N528 million in December 2017 from N172 million the previous year. Leadway Assurance, the largest insurer by income, assets and total equity, paid dividend of N5.38 billion in December 2017, which represents a by 258.66 percent surge from N1.50 billion paid the previous year. The company’s dividend payout ratio increased to 42.15 percent in December 2017 from 19.43 percent as at December 2016, signalling an aggressive policy. Leadway said will seek shareholders’ approval to increase its authorized share capital from N5 billion to N10billion as the recapitalization would put the company in the state of readiness for the implementation of transition to the Risk Based Capital model proposed by the regulator. AIICO Insurance Plc paid a dividend of N346 million for the financial year ended December 2017 but did not reward shareholders the previous year due to losses it recorded. Lasaco Insurance paid

dividend of N292.80 million for the financial year ended December 2017, a 33.330 increase from the N219.60 million paid out last year. Insurance companies are using income from bonds, short term government securities and real estate to underpin profit as they continue to thrive amid a tough and unpredictable macroeconomic environment. In the insurance parlance, firms rely on such income to bolster earnings since rising claims most times results in slim underwriting profit. However, analysts are of the view that insurers should be cautious on how they invest the money to generate investment return since the environment is fraught with risks such as interest rates. They added that if anything happens to the investment in the future, profitability could be under threat as those monies will be used to meet obligation to policy holders in form of claims payment. “There is a guideline on how you invest the money in Treasury bills, bonds and real estate,” said Moronfola Monsuru, actuarial analysts with Wapic Insurance. “It deals with a lot of risk and firms are usually cautious because the money belongs to policy holders and it will be used to settle claims,” said Monsuru. For the year ended December 2017, investment income of 17 insurers that have reported results spiked by 53.24 percent to N48.39 billion from N31.58 billion the previous year. Investment income comprises fixed income securities, Treasury bills and real estate. Analysts have tasked managers of firms to judiciously and ingeniously invest premium income in securities that will magnify shareholders earnings. For instance, in the United States, insurance firms own skyscrapers and generate income in form of rent to augment bottom line. A cursory look at the books of Nigerian firms shows four of them: Leadway, and First-

P.E

SHORT TAKES $210mn Nigeria’s central bank said on Wednesday 20th June that it had injected $210 million into the interbank foreign exchange market, extending efforts to boost liquidity and alleviate dollar shortages. The bank said in a statement it had released $100 million earmarked for the wholesale market, $55 million for small businesses and individuals, and $55 million for certain dollar expenses such as school fees and medical bills.

IV funds A breakdown of the new fee structure showed it was divided into IV t fund segments. Fund one is an optional fund, which means interested contributors, must write to take part in it. Fund two and three are the default fund for contributors aged 49 & below, and aged 50 & above respectively. The fund four is for retirees, as stated by PENCOM

Bank Insurance, AIICO, and AXA Mansard make up over 77 percent of the combined investment income of N48.39 billion. Leadway Assurance, the largest insurer in Africa’s largest economy by assets, profit and premium, realized N17.20 billion in investment income as at December 2017, which represents a 61 percent jump from last year’s figure. Income from investment income and net fair value gain on assets helped the insurer absorb an underwriting loss of N10 billion brought on by increase in annuity fund of N49 billion. A breakdown of Leadway’s investment income shows it made N13.65 billion from investment on debt securities, N1.17 billion in profit on sale of investment securities, and N9.12 billion in income from fair value gains from listed

debt securities. AIICO’s investment income increased by 18.95 percent to N8.63 billion in December 2017 from N7.25 billion as at December 2016. AXA Mansard’s investment income grew by 32.95 percent to N5.12 billion in December 2017 from N3.83 billion the previous year. It made N2.01 billion income from investment securities. Zenith Insurance’s investment income grew by 56.57 percent to N3.63 billion in the period under review from N2.31 billion the previous year. Financial institutions in Africa’s largest economy made money from short term government securities when yields were between 22 perent and 18 percent for the most part of 2017. However, federal government’s decision to slow down

on domestic borrowings late last year when it embarked on an aggressive Eurobond issuance resulted in a sharp drop in yields. “Yield on FGN Bonds dipped during the year closing with an average yield of 14.05% on all Federal Government maturities versus 16.12% (average) that it opened the year with,” said Leadway in page 40 of its 2017 audited financial statement. “The main driver of the market yield contractions were improving macroeconomic environment as Nigeria’s economy emerged from 5 consecutive quarters of negative GDP growth in addition to stated fiscal policy of reducing cost of funds of the federal government through issuance of more Eurobonds than local papers to fund government activities,” it said.

2018-2020 The fee structure for Nigeria pension industry was revised by the National Pension Commission (PENCOM), and it is valid for the period between 2018-2020, as compiled from the commission’s statement,released last week Thursday, 21 June 2018. The revised fee structure which will be effective from 1st of July, 2018 cover charges by the commission, Pension Fund Administrators (PFAs), Pension Fund Custodian (PFCs) and the commission itself

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: DIPO OLADEHINDE, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: DAVID OGAR )

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Email the BMI team patrick.atuanya@businessdayonline.com

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Markets Intelligence ECONOMY

Treasury bill yields edge higher BALA AUGIE

n addition to foreign investors selloffs across the money market space, average treasury bill yields edged higher by 69bps to 13.25%, largely supported by higher CBN’s FX sale and selloffs by banks. For context, CBN’s FX intervention to the various segment of the market rose 20.2% MoM to $2.2 billion in order wade off depreciation on the naira. This in addition

to its decision to increase its frequency of dollar sales to the BDCs (from 2 to 3 times) strained liquidity from the market. Furthermore, the market also witnessed flashes of selloffs from banks as they unwind ahead of H1 18 financial reporting. Based on the foregoing, average stop rates at the June NTB auction (June: +17bps to 10.6%) tracked higher despite lower paper issuances (-20% to N40 billion in June). For the second consecutive

time this year, the US FED raised interest rate by 25bps to a range of 1.75% - 2% at its June FOMC meeting. Also mirroring patterns from the FED dot plot, the monetary authority signaled additional two rates increases this year which could bring total rates hikes to four in 2018 (vs three times earlier signaled at the start of the year). While this decision resounds FED’s commitment to gradually increase interest rates to historical normal levels, the major driver reflects heightening concern over looming inflation-

ary pressures in the US over 2018 stoked by impressive growth—Q1 18 GDP (2.2% YoY) reading and ebbing jobless claims. To buttress, economic projections of the Federal Reserve Board Members reveal upward revision to 2018 Real GDP estimates (to 2.8% from 2.7%) as well as Inflation (to 2% from 1.9%), and downward review to Unemployment rate for 2018 to 3.6% from 3.8%. This cascaded into FPI flight from Nigeria’s FI (fixed income) market with knock on effect driving average yields higher by 50bps to 13.38% in June 2018 as FPIs take advantage of attractive yields in the US.

Consumer goods firms’ debt falls on FX Stability

onsumer goods firms are clearing the backlog of foreign currency debt owed to suppliers or creditors as total trade payable has fallen, thanks to a new foreign exchange regime that eased the flow of foreign currency. Also, their debts to equity ratio- a measure of gearing- have improved, signalling a gradual improvement in financial conditions. Companies operating in the sector were the hardest hit when a sharp drop in oil price of mid 2014 resulted in a severe dollar shortage that hindered them from meeting obligations as at when due. The introduction of a flexible exchange rate policy in June 2017 combined with a rebound in crude oil price and output was a boon to firms as foreign currency was available for

them to meet obligations, import raw materials and equipment to meet production. The trade and other payable of 13 largest consumer goods firm quoted on the floor of the bourse dipped by 5.04 percent to N495.85 billion in December 2017 from N522.22 billion as at December 2016. Cadbury’s trade and other receivable were down 29.58 percent to N8.86 billion in December 2017 from N12.58 billion the previous year. Nestle’s trade and other payables fell by 24.10 percent to N49.05 billion in the period under review as against N64.47 billion as at December 2016. Flour Mills’ trade and other payables dipped by 29.15 percent to N66.42 billion in December 2017 from N94.56 billion the previous year. Nigerian Breweries’ trade and other payables were down 14.81 percent to

N75.65 billion in the period under review from N88.81 billion the previous year. 90 percent of these firms recorded marked improvement in short term obligation as they continue to intensify strategies with a view to bolstering liquidity position. “At the height of the foreign exchange scarcity, a lot of them couldn’t access dollars so they had trade creditors in their books,” said Johnson Chukwu, managing director and CEO of Cowry Assets Management. “Now that FX has improved, a lot of them were able to settle suppliers,” said Chukwu. The decision of firms to raise capital to retire debt has yielded fruit as the level of debt in their capital structure has reduced, paving the way for them to borrow and fund future expansion plans.

The industry debt to equity ratio stood at 81.36 percent in 2015, and then it reduced slightly to 81.15 percent in 2016 before dropping further to 64.97 percent in 2017. The industry average total liability to total assets ratio, another measure of gearing or capitalization ratio, fell to 61.73 percent in December 2017 from 66.12 percent the previous year. Unilever’s total debt (both long and short term borrowing) reduced by 97.78 percent to N454.52 million in December 2017 from N20.50 billion the previous year. Nestle’s total debt dipped by 59.47 percent to N20.47 billion in December 2017 from N50.51 billion as at December 2016. Nigerian Breweries’ total debt decreased by 52.94 percent to N8 billion in the period under review from N17 billion the previous year.

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Monday 09 July 2018

Start-Up Digest

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Inside Haowa Bello’s dairy farm and handbags factory ODINAKA ANUDU

strode into 1436 Sanusi Fafunwa, Victoria Island, on Tuesday afternoon like a soldier. I inquired about how to get to Haowa Bello’s office, but many people around obviously didn’t know her by that name. I described her and was directed to an office upstairs. “Ah, you are looking for Madame Coquette,” said the security man. I waited for over 30 minutes before asking a neighbour to help call her. My phone’s screen had earlier been broken by two young men who were fighting at Idowu Taylor Street. As a Good Samaritan, I had gone to separate the two, only to get a big shock. One of them landed a blow on my screen. Few minutes later, Haowa entered. She had asked me to call her when I was close, but I could not do so owing to the nature of my phone. She apologised and felt sorry about my phone. Hoawa is business-like. She is also always willing to explain everything to her customers, who she sees as partners. While sitting down in her office, two young men entered, willing to buy what she describes as ‘meticulously handcrafted handbags’. She went outside twice to get more samples for them. She took time to explain every detail, including the production process, to them. Hoawa is an exceptionally talented entrepreneur. This may sound hyperbolic, but the proof of the pudding is only in the

Haowa Bello in her farm

Haowa Bello

eating. This 35-year-old entrepreneur produces Madame Coquette (MC), which is a line of handbags and small leather goods. She set up this business 10 years ago. She uses local raw materials like snakes in making these bags. Yes, she buys snakes and uses them as raw materials! She also uses crocodile skins. Before you cringe away, Hoawa also uses locally available leather, importing some from other countries. “We use indigenous snake

and crocodile skins from Kano and Kaduna. We hand- dye and colour the skins we use in making these products,” she says. She produces these bags and purses with few machines and traditional tools. Her products have been sold in North America and Europe. MC products range from N15, 000 to N55, 000. In the last ten years, the firm has sold over 1800 bags. “I didn’t start with a lot of capital. I got a N30, 000 loan from

my sister to start my business,” she tells Start-Up Digest. When Hoawa started 10 years ago, patronage of made-in Nigeria goods, especially handbags, was low. Then, the market was flooded with a variety of imported products, most of which were designer replicas. “The concept of locally produced bags was not one that was widely known or accepted. I had to work twice as hard and charge half as much to get customers to give the products a chance,” she says. Today, the story is different. She was awarded best accessories designer in 2013 by Exquisite Magazine, and was featured on CNN’s African Voices in November 2015, giving her business an international exposure. Hoawa is currently contributing to Nigeria’s dairy development, creating jobs for a number of women who ordinarily would be jobless. She founded Fula Farms in early 2015. This farm, located in Lekki part of Lagos, boasts of over 50 cows. Hoawa produces milk, cheese and the local ‘fura’. A number of women make both ends meet from Fula Farms. Her business has taken a new dimension since the CNN interview, she admits. “Most of the women were home makers and their primary objective was to take care of their children. They didn’t have a source of income and most of their time was spent in their homes. A majority of them were nursing mothers. I decided to change the scope of the business and tailor it to empower the women in the community we work in,” she says. “We have 90 percent female workforce. The farm stands as one of the few dairy farms in Lagos and it supplies small businesses and individuals with raw (fresh) milk and locally produced cheese,” she discloses. By extension, Hoawa is providing Nigerians with good nutrients and serves as a raw material supplier to some small dairy firms. She is planning to expand and go into full-scale production of yoghurts in no time. She works closely with a group of rural women who produce a specific type of cheese popular in Nigeria. The cheese is produced and packaged by the women in surrounding settlements under a cooperative. “The role of these women in their various communities is highly under-valued. They not only provide physical and emotional support, their contributions feed

their families,” he states. Her work at Fula Farms has been recognised by the Federal Ministry of Agriculture and Rural Development (Nigeria) and by the African Development Bank. In July 2017, Hoawa was invited to the United Nation’s Food and Agricultural Development (FAO) headquarters in Rome to discuss the role of rural women in agriculture. Later in the year, the entrepreneur sat on panel at the World Food Prize in Des Moines, Iowa, to discuss the benefits of women in agriculture in Africa. In the first quarter of 2015, she emerged as one of the one 27 recipients of the Youth Employment in Agriculture Programme (YEAP) grant. It was the programme of the Federal Ministry of Agriculture, and she won N5 million for her work in Madame Coquette and Fula Farms. Technology has played and continues to play a huge role in her business. According to Hoawa, marketing the business has become a lot easier as her target market and customer base are reached through online marketing. “Eighty percent of sales are made from social media, Instagram in particular. We use our online platform to market and sell our dairy products as well,” she states. Fula Farms faces some peculiar challenges such as access to market, affordable financing, and economic volatility. Exchange rate fluctuations affect the MC business as all the hardware parts are imported, because the locally available ones do not meet international specifications. “Our heavy dependence on generators makes our day-to-day operations more expensive, affecting the overall cost of production,” she adds. Hoawa wants all the young women out there to dream, saying that no dream is too big if they have a plan of execution. Hoawa is a story of grit and shows that a woman can do what a man does.

Start-Up Digest Team ODINAKA ANUDU Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Angel James Joel Samson Graphics

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Start-Up Digest

Blessing Achu: Providing start-ups with co-working spaces JOSEPHINE OKOJIE

or over a decade, Blessing Ebere Achu worked as an ICT professional. But deep down in her heart, she wanted to do something different, something that would provide solutions to societal problems. In 2016, she quit her job with a broadband internet service provider to establish 360 Creative Hub. Her aim was to provide co-working spaces for creative entrepreneurs in Nigeria. Blessing was inspired to establish this business by the gap she saw in the country’s co-working spaces for small business operators. Co-working is a system of providing a shared workplace or office for people not working for the same organisation. To do this, she took courses and trainings on fashion and designs and started out a fashion outfit before eventually establishing her co-working business. According to her, most coworking spaces in Nigeria only cater for ICT businesses with very little or nothing left for operators of other sectors. “I noticed that while we have many co-working spaces catering to the IT crowd, not many were centered on the creative arts, which is a sort of problem, because when you look at the index of innovation, creativity itself is a major factor,” Blessing says.

Blessing Achu

“Also, our fashion industry is gaining international recognition now and there is need to develop the sector. All these considerations led to the establishment of 360 Creative Hub,” she adds. She notes that her aim is to build a community around the fashion industry, through the provision of working places for creative and all adjacent professionals that can contribute to a new cohesive movement. Blessing, a graduate of Education from the University of Nigeria, Nsukka, was able to raise her initial capital from savings and family

members as well as friends to start her business. According to her, since starting, the business has grown as it can now pay for its own running cost. She currently has six full- time employees. Speaking on the maiden edition of its fashion acceleration programme, the young entrepreneur says with 20 fashion start-ups already part of the system, the goal is to yearly train 50 start-ups in that space across the country. “Because this concept is new, it has been embraced by few. We currently have 20 fashion designers

Lidya powers start-ups to deepen financial inclusion ….as LCCI, experts call for use of data to deepen financial inclusion ODINAKA ANUDU

i d ya say s i t p rov i d e s working capital to startups and small business in Nigeria within 24 hours. Speaking at the 2018 breakfast meeting organised by the Financial Services Group of the Lagos Chamber of Commerce and Industry (LCCI), Tunde Kehinde, co-founder of Lidya, said the company has been around for 18 months and works with small business owners or those in the value chain. Kehinde said despite having existed for just 18 months, over 100,000 businesses have so far signed off for its loan. According to him, the fintech lent N150 million to small businesses last year and plans to do N4 billion this year. “If Nigeria is going to meet its financial inclusion target, it is not only going to rely on commercial banks and fintechs. Everybody needs to be involved,” he said. He pointed out that the traditional process of getting credit in Nigeria is cumbersome and takes time, adding that Lidya’s

non-performing loan rate is only 0.5 percent, which is a plus for a firm that lent so much last year. “There are parts of Europe that enable you get money in 30 seconds. We are doing one day, but we want to reduce it further,” he stated, adding that the lender of the future is going to be more than a bank. He pointed out that there is a need to democratise data to enable more people have access to internet services, including credit. “The faster we can bring things like data into this market, the faster we leapfrog,” he stated, citing the case of a woman fish seller who was able to access funding from Lydia, despite not initially having a bank account. “She makes N12 million but did not want to go to the bank. We were able to analyse her, help her open an account and gave her credit. She was subsequently able to grow her business by 40 percent,” he added. The event was not only about Lydia. Stakeholders agreed that Nigeria needs to upscale its broadband to increase financial inclusion, especially among the

rural populace. “Information and communications technology has continued to drive entrepreneurship, innovation and sustainable business models in Nigeria and beyond. Technology-driven service delivery and mobile payment solutions have transformed the way we do business today,” Babatunde Paul Ruwase, president of LCCI, said. Ruwase said if there is any sector that has leveraged technology in a robust way, it is the financial services sector, citing the case of electronic payment which grew by 35 percent in 2017 as a case in hand. Ayotunde Coker, managing director of Rack Centre Limited, said having a broadband helps to increase business and gross domestic product (GDP) growth. Represented by Nosy Banda, Coker said there is a need to invest in IT infrastructure, pointing out specific IT enablers as broadband, cloud/ big data and mobile telephony. He stressed the need for businesses to migrate to cloud to cut down on capital expenditure on IT.

and we are growing daily. We do not want to serve only those who can access our physical space. We are setting up a virtual community to ensure that everyone around the country can benefit from some of the services we hope to offer with some partners,” she says. Answering questions on some of the business expansion plans, Blessings says 360 Creative Hub plans to train people on various opportunities in the country’s fashion value chain. She also wishes to train established designers on ways of using technology to scale up their businesses. She says that 360 Creative Hub hopes to create a one-stop shop for fashion professionals across the country. “By the year 2020, our 360 Creative Hub will have produced at least 50 global brands from local communities throughout Nigeria, which can conveniently compete in the global market,” she projects. She tells Start-up Digest that the country’s fashion industry has the potential to diversify the economy in an era of globalisation. “Globalisation has placed the fashion industry in a position where it is possible to design clothes in Lagos, email the technical specifications to Asia, and then (hopefully) receive quality samples in just two weeks,” she states. She adds that the world is fascinated by African culture and designs, yet the continent’s fashion industry, which South Africa and Nigeria currently lead, has failed

to make global impact because of the domination of China in the continent. “The world is fascinated by African culture and design. So why isn’t the fashion industry on the continent blowing Paris out of the water? The issue is as complex as the patterns of African prints,” she says. Speaking on some of the major challenges confronting her business, she says getting an affordable big working facility is one of the issues confronting her business. She notes that most big office facilities are way too expensive. To address this, Blessing has got a smaller work place, which she has creatively renovated and partitioned with modern structural designs. Similarly, she says irregular power supply in the country is a bane to her business. She points out that it has increased her production cost tremendously as the business mostly runs on diesel. She calls on the government to bridge the country’s huge infrastructural gaps especially in the power sector, noting that Nigeria’s industrialisation depends mostly on infrastructures and technology. Blessing also urges the government to create access to the market for small businesses, absence of which has ruined many start-ups. On advice to other entrepreneurs, she says “Never take ‘no’ for an answer. Be consistent and persistent. Solve a problem and have integrity.”

LCCI calls for review of CAMA bill to support SMEs, businesses ODINAKA ANUDU

he Lagos Chamber of Commerce and Industry (LCCI) says the recent amendments of the Companies and Allied Matters Act (CAMA) do not address the concerns of the Nigerian business community. They called for a review to reflect the views and perspectives of the business community. The stakeholders also argued that the bill lacked wider consultations from key sectors of the economy. Babatunde Ruwase, president, LCCI, said at a stakeholders’ forum on repeal and re-enactment of the CAMA 2018 in Lagos that there are areas that need to be fine-tuned on the bill to ensure that the desired outcomes are realised. “The Bill has passed by the Senate and currently awaiting the consideration by the House of Representatives. This is a window of opportunity that we would like to explore to make the necessary inputs,” Ruwase said. He acknowledged that many provisions in the nation’s laws were not in tune with current realities, but stressed that recent amendments to the CAMA was not perfect to address concerns of the business

community. “Some of these provisions have been in our statute books for 30 years or more and yet we are operating in a business environment which is very dynamic. Things are changing almost on a daily basis and shaping the way businesses are done,” he said, adding that Nigeria cannot afford a static legislation in a dynamic investment environment. He commended the National Assembly and other stakeholders in the private sector and civil society for their role in the review of CAMA, but stated that the amendment was not perfect. Also speaking at the event, Adekunle Aina, professor of commercial Law, University of Ibadan, said the bill was obsolete and lacked a comprehensive review by key stakeholders, saying the bill did not address some concerns such as minority protection, denture holders and floating charges. “Sustainable governance has not been touched. Corporate Social Responsibility (CSR) is almost non- existent under our laws. We are not even talking about sustainable governance to cater for the nation’s unborn generation. These are issues that should have been addressed in the bill,” Aina said.

BUSINESS DAY

Monday 09 July 2018

Start-Up Digest

Enitan Oguntola: The extraordinary textile manufacturer BUNMI BAILEY

nitan Abayomi Oguntola is the CEO of Olive Garment Factory located in both Lagos and Abuja. The firm provides branded urban and native clothing services to targeted clients such as fashion entrepreneurs, schools, private companies and government organisations. He renders s er vices such as fashion tailoring, fabric merchandise and branding. Like most creative entrepreneurs, Enitan found an opportunity somewhere and decided to take advantage of it. He discovered that most people who wanted to go into the fashion world did not have the required resources to mass produce them. “We seek to turn their fashion clothing idea into reality with our state-ofthe-ar t manufactur ing equipment,” he tells StartUp Digest. “The goal is to make it possible for people who have unique ideas in the fashion world to be able to see their works come to fruition without being involved in the manufacturing process,” he says. According to him, Ni-

gerians go as far as China, Bangladesh, USA, Turkey and many other countries to mass produce a clothing idea, without knowing that Olive Garment can do this efficiently, urging them to look inwards to boost the Nigerian economy through employment generation, GDP growth, and favourable balance of trade, among others. “ We e q u a l l y hav e a clothing brand named ‘Oliver Wears’ to cater for street fashion of the Nigerian youths,” he discloses. Enitan is currently working with three fashion entrepreneurs, making their dreams a reality. How did he come about this idea? “Well, the idea struck when I was an undergraduate student back in the University of Lagos, Akoka. At 200 level, when I started fending for myself, I stopped taking ‘pocket money’ from home. I discovered at the end of the week, I would get times 10 times my weekly allowances from making clothes and other branded items in school,” he says. He has bachelor of science degree in Economics, graduated in 2015 and has been self employed till date. The young entrepreneur says he started with nothing.

Enitan Oguntola

“I liaised with those who could make these things happen. This was how it started. For now, it’s still self funding, that is, we are reinvesting profit earned from jobs done into the business. I have applied for many grants funding, but I am yet to get response from any. But delay is not denial,” he states. On why start-ups fail at the early stage, the entrepreneur says, “I read somewhere that failure is part of the DNA of startups. However, most start-

ups fail for various reasons such as lack of funding to scale; hostile playing environment because of the big guns trying to stiffen the market from new entr y; lack of policies by the Nigerian government to support the growth of small businesses; and porous borders which allow all sort of things, even the ones that can be produced locally at cost effective prices,” he explains. He adds that wrong business model, where mone y is taken as the major goal, is also a major

reason why businesses fail. Like other enterprises, his business is confronted with the raw materials sourcing challenge. “We are rarely lucky to get similar materials used for a job continuously in the market. Also, authenticity of the materials is also an issue, because most of these materials are not produced in Nigeria. I also recently confirmed that fellow Nigerians will go to China to produce counterfeit products, and ship it into the country, causing problems for upcoming entrepreneurs like us,” he laments. He says that finding committed tailors to reproduce ideas and instructions is a big issue, adding that his manufacturing equipment, from industrial sewing machines to the branding machines such as D2G machines, monogramming machines, is capital intensive. “Power supply is a challenge too because most of the equipment being used needs power to work. Funding for expansion is an issue currently being faced,” he explains. He suggests that government can help by making policies to strengthen the borders, stating that enforcement agents

should also be empowered to make policies work. “Access to loans should be made a lot easier for start-ups. G overnment should also pay attention to reviving the textile mills just the way they’re doing to Ajaokuta steel mill,” he states. He adds that the global textile and garment industry (including textile, clothing, footwear and luxury fashion) is currently worth nearly $3 trillion. “The textile industries in Turkey, Bangladesh and other countries drive their economies. I sorely believe that if the textile industry is seriously looked into here, the Nigerian economy will be eternally blessed for it,” he says. The young entrepreneur is happy with the level of progress made in his business. “Well, God be praise. We are moving, but there is still a long way to go. We are not yet where we want to be. We moved from one client to about 10 clients, including both private and individual organisations,” he states. He wants upcoming entrepreneurs to start early, treat their business as business. “Only then will it pay you as a business. Consistency is key,” he concludes.

Why I founded Rivah Beauty Yejide Elugbaju is the founder and CEO of Rivah Beauty Limited. She is a make-up artiste and plays in the beauty care industry. In this interview with JOSEPHINE OKOJIE, she reveals what inspired her to establish her business and what start-ups like her must do to ensure their business is sustainable. Why did you set up this business? s much as this may sound like a cliché, my love for fashion and wanting to make people look good led to the establishment of Rivah Beauty. I really love looking good and also want to make others look good as well. This brought my interest in beauty care products. Initially, I was just doing it for fun, experimenting on my face, family and friends who were willing to allow me make them up. I was getting a lot of recommendations, so I decided to improve my skills. I took some classes free of charge on YouTube, watching a lot of videos to experiment what I have learnt. I also enrolled in a make-up school to learn more. I began to get contracts from friends

and family to make them up on special occasions which I was doing with a lot of passion. I began to see the opportunities and the huge desire of people wanting to look good. This was why I established Rivah Beauty in 2016.

high preference for foreign beauty products. Trying to change my client preference of foreign beauty products and convincing

What was your initial start-up capital when you started? I started my business with N50, 000 and am still investing in it. Ever since I started, my business has grown so well, and also the demand for our services. What are some of the challenges you have faced since starting? Despite that we have local beauty care products that are as good as the imported ones, most ladies still have

Yejide Elugbaju

them that our local brands are as good as the ones imported is a big challenge. Most of them believe that they cannot look beautiful

once the products are local brands. Another challenge is the high competition in the industry. In Nigeria everybody thinks they are experts when it comes to applying make-up and this is killing the industry. You talked about high preference for imported products. How can government address the issue? Things are far better now, but truth needs to be told. Government needs to support those growing local brands so that their prices can be competitive. We have a lot of imported beauty products that are far cheaper than our local brands. The issue of standards must not be compromised. The various regulatory agencies must ensure that our local brands meet international

standards. What will you tell your younger self? Stop procrastinating and do what you have to do because opportunities don’t wait for you to be ready. You just have to take it when it comes. Have you taken any loan? No, I have not. Luckily, I have family members that have been very supportive. What is your advice to other entrepreneurs? If you must continue to stay in business, you must be creative to continue to meet the needs of the people. There is a lot of competition in the industry, so it is only creativity and innovation that can help you sustain your business.

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How to prepare for a panel want to plan out your talking points. Dive into research mode and make a list of relevant key statistics, questions you suspect the host will ask and major points you want to be sure to include. By preparing these materials in advance and having them top of mind, you are able to make a compelling case when you present. A side benefit is that knowing likely questions and key talking points enables you to be flexible and answer gracefully during open Q&A periods, if your conference allows for questions from the crowd. Another tip for panel success is to try to speak first. The person who speaks first often sets the tenor of the debate, and you eliminate the risk that the per-

DORIE CLARK

ompared with the nervewracking prospect of giving a lecture, presenting on a panel may seem a safer option. But there are often hidden challenges. Here are four strategies you can employ to ensure your turn in the spotlight goes smoothly. First, connect with the moderator beforehand. You’ll be able to prepare far more effectively if you understand how they intend to run the session. That information allows you to picture how the panel will run and steel yourself if, for instance, you’re a bit shy and aren’t used to fighting for airtime. To that end, you’ll also

son speaking before you will steal the key point you wanted to make. Finally, it’s also important to monitor the balance of time. If you know that you tend to be verbose, especially under stress, consciously try to limit your remarks. If, conversely, you’re the one suffering at the hands of a monopolizer, it’s important not to get cowed into silence or submission. Prepare mentally in advance for the possibility that you’ll need to break into the conversation. Presenting on a panel may sound like an easy lift compared with giving a solo talk. But much like in public speaking, there are potential minefields.

(Dorie Clark teaches at Duke University.)

Glowing reviews aren’t always the most persuasive DANIELLA KUPOR AND ZAKARY L. TORMALA

nline reviews can play a big role in influencing people’s decisions, but what makes a review most persuasive? Our research on persuasion and marketing is the first to find that a moderately positive review can be more persuasive than an extremely positive one, and is even more persuasive when the default review selection is extremely positive. This is because reviews that deviate from a default review selection are perceived to be more thoughtful, and thus more accurate, than reviews that conform. We tested this phenomenon by showing participants a consumer review

for a brand of granola bar. The review platform preselected a 10-star rating for the bars, but previous customers who wished to lower the rating could change it. We had participants read a single review from a previous customer and we varied whether that review gave 10 stars or eight. When we offered participants the choice between a free granola bar or a commensurate amount of money, we found that people who viewed the eight-star review were more likely to choose the granola bar. We also found that the moderately positive reviews were seen not just as more persuasive, but as more helpful. Again, less positive reviews appear to be more persuasive than

than extremely positive reviews could increase sales. Second, if a review system has a five-star default, firms that receive moderately positive reviews on that platform should highlight that the default is extremely positive. Doing so could increase the perception of a moderately positive review’s accuracy, and as a result heighten sales.

more positive reviews in the context of an extremely positive default. In a follow up study we found that extreme reviews regain their persuasiveness if they are lengthy. Consumers are largely unaware of how influenced

they can be by moderate reviews. In another study, we found that when consumers want to persuade another shopper to make a similar purchase, they will often leave the highest possible rating, even when they know that this high-

est rating is the default. The takeaway for marketers is twofold. First, when consumers perceive that a review platform’s default rating is extremely positive, publicizing at least some moderately rather

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(Daniella Kupor is an assistant professor at Boston University. Zakary L. Tormala is a social psychologist and professor at Stanford University.)

Monday 09 July 2018

REAL SECTOR WATCH C002D5556

BUSINESS DAY

Lagos eyes AfCFTA to drive exports JOSEPHINE OKOJIE

kinwunmi Ambode, governor of Lagos State, has strongly given his support for the African Continental Free Trade Agreement (AfCFTA), saying that the free trade deal will help to drive exports from the country. Ambode made the assertion during the technical committee meeting on the 2nd National Committee on Export Promotion held in Lagos recently. The governor said that the country must seek ways to improve its balance of trade, adding that international trade has been the basis for the wealth of any nation. “I support that Nigeria should sign the African Continental Free Trade Agreement (AfTCA). The whole of Africa is waiting for Nigeria and the cornerstone of Nigeria’s export policy should be Africa because Africa must sell to Africa,” Ambode said. “The export policy strategy is one of the ways to draw Nigeria on the world map. Wealthy nations export more than they import and usually have multiple export products. So, for Nigeria to achieve the status of a wealthy nation, it is obvious and imperative that we grow our export. “We must put in place the

R-L: Oluwatoyin Akomolafe, president, Nigerian-American Chamber of Commerce (NACC); Sylvanus Nsofor, Nigerian Ambassador to the United States; Joyce Akpata, director-general, NACCm and Fred Oladeinde, chair, AGOA Civil Society Organization Network and president, Foundation for Democracy in Africa, Washington DC, at a business2-business matchmaking meeting in USA recently

infrastructure and the framework to support the industries,” he said. Speaking on what Lagos is doing to grow the country’s export, Ambode said that the state has focused on coconut, fish and vegetable production to develop for export and support the Federal Government’s zero oil economy. He added that the state has developed the Lekki Free Trade Zone to create a one-stop export zone, saying that the state has

made progress in that area. The AfFTA is targeted at removing barriers to free trade on the continent. Nigeria is yet to sign, while South Africa, which initially did not sign in Kigali in March, has agreed to the treaty. Chiedu Osakwe, chief negotiator, Nigerian Office for Trade Negotiations (NOTN), while giving an update on AfTCA, said that across the country there is a significant and strong support for

the treaty. Osakwe, who was appointed to lead the team to widen and deepen domestic consultations to ensure all concerns were addressed, said that the team has had meetings with 28 dedicated meetings with various industries and 1,900 persons involved in business. He stated that it is not an option for the country to stay out of the agreement, while noting that

Nigerians and businesses have urged the government to improve the business environment, provide predictable cost effective power supply, provide effective boarder policy, deal with dumping and smuggling, organise the domestic markets and establish a coordinated and implementation business mechanism before signing the trade agreement. Also speaking, Segun Awolowo, CEO and executive director, Nigerian Export Promotion Council (NEPC), said that the nation is gradually coming into acceptance of the diversification programme of the Federal Government based on the Industrial Revolution Plan, Zero Oil Plan and now the Economic Recovery Growth. Awolowo noted that the establishment of such plans is the right way to go but the country must now scale it up by raising productivity across all sectors. He stated that the Federal Government, the states, agencies, and business operators will harmonise to drive them together. “The Manufacturers Association of Nigeria (MAN) still has its concern on the AfTCA, but we would continue to sensitise more. A trade agreement itself has remedies, if all these do not work. This is what MAN is calling for, to work it out,” he said. “Not that there is a rejection of it but there are concerns,” Awolowo added.

How SON combats substandard products ODINAKA ANUDU

he Standards Organisation of Nigeria (SON)’s Surveillance, Intelligence and Monitoring operatives have swooped on another warehouse in Lagos where over 21 containers of stuffed imported tyres were unstuffed, wrapped and labelled before being dispatched to markets all over the country. Osita Aboloma, director general, SON, said at an enforcement exercise at the weekend in Lagos that the agency has been reinvigorated— courtesy of SON act 2015— to go after any suspected good or inspect premises and factories in its quest to rid the Nigerian market of substandard products. The SON boss, represented by Isa Suleiman, deputy director and coordinator of its Surveillance Investigation and Monitoring (SIM) Unit, disclosed that the 21 containers of imported tyres, estimated at over N1 billion, were discovered and seized at a warehouse in Abule Osun, off the Lagos-Badagry Express Way, opposite the Interna-

tional Trade Fair Complex. The consignments translate to about 100 containers of imported tyres rather than 21 on the import documents, he said. He disclosed that the discovery and seizure of the SON regulated products was a result of surveillance and information given to the agency and followed up by the SIM Unit, inaugurated two months ago by the director general. “We have found out that these unscrupulous people bring in the containers from the seaports, lock themselves in warehouses to forcefully unstuff the tyres, wrap and label them before loading to markets all over Nigeria”. According to him, in the processes of forcefully stuffing and unstuffing, the tyres became unusually expanded, others unduly compressed, bending the wires around the helms and creating sharp points that make them vulnerable to bursts on slight contacts, having been squeezed and weakened, thus leading to avoidable road accidents and loss of lives. “These are acts of clear economic sabotage of the nation

through evasion of duties and taxes payable on the imports, an affront on the regulatory regime in Nigeria and danger to the lives of all road users in the country,” he said. ‘‘This practice has become commonplace as another container of similarly stuffed tyres were apprehended about the same time at Iddo, in Ebute Meta, where they were also being forcefully unstuffed for loading into various trucks on standby”.

Osita Aboloma

He recalled a similar seizure of stuffed tyres by the organisation in Lagos in 2017, stating that SON would be unrelenting in going after the agents of death disguised as businessmen in Nigeria. “We have discovered some locations in Lagos where these tyres are taken after escaping at the seaports, forcefully unstuffed, wrapped and labelled before being sent to different markets across the country. Consequently, we will continue to search for others

through our information network wherever they are to apprehend them,” he said. According to him, the tyres, though new, are dead on arrival due to forceful stuffing and unstuffing. “Tyre ordinarily is a life endangering product and the act of forceful stuffing into and unstuffing from each other automatically makes them unsafe for use.’’ He recalled that SON recently inaugurated the SIM Unit with the sole objective of reducing the influx of substandard goods into the country by at least 30 per cent before the end of 2018. At the inauguration, Osita Aboloma, director general, said the move had become expedient for SON to have independent intelligence gathering, monitoring, assessment and intervention from time to time to further promote transparency and accountability in standards enforcement activities. The SON DG stressed that the inauguration was also expected to promote effective service delivery and faster turnaround time in standards enforcement operations.

BUSINESS DAY

C002D5556

REAL SECTOR WATCH

Monday 09 July 2018

NBCC targets £8bn trade between Nigeria, UK by 2020

ODINAKA ANUDU

rade between Nigeria and the United Kingdom is currently estimated at £4 billion, but the Nigerian-British Chamber (NBCC) expects it to hit £8bn by 2020. Speaking at the annual general meeting of the chamber, Akin Olawore, president of the NBCC, said the chamber was determined to expose Nigerian businesspeople to opportunities in the UK. Olawore also told BusinessDay that the chamber was equally committed to showing British businesses vistas of opportunities in the Nigerian economy. “The AGM is meant to inform our members and report back to them on what we have done. The takeaway is for members to see the door that is open for them through chambers of commerce relationship and Commonwealth Business of Europe,” he said. “These two relation-

L-R: Bunmi Afolabi, director-general (NBCC); Akin Olawore, president; Kayode Falowo, deputy president, and Surakat Alani, senior assurance manager, Ernst & Young Nigeria, at an AGM held last Thursday in Lagos recently

ships enable us to match our members business-forbusiness with their international counterparts. We are letting our people know the opportunities available beyond the shores of the country,” he noted. The chamber embarked

on a trade mission between June 11 and 15. The trade mission featured participation at the Business-toBusiness Networking Conference, International Business Festival (IBF) with an NBCC booth. “We combined our trade

Nigerian-American Chamber’s trade mission targeted at trade, industrial growth ODINAKA ANUDU

he NigerianAmerican Chamber of Commerce (NACC) recently embarked on a trade mission to Washington DC, USA. The trade mission was themed, ‘Partnership for Prosperity’ and it came to a close on June 27, 2018. The trade mission, which is an annual commitment of the chamber to promote the development of trade, commerce, investment and industrial technological relationships between the public and private sectors of Nigeria and the United States, held from June 20 to 27, 2018, in Washington DC, USA. The six-day trade and investment mission was led by Oluwatoyin Akomolafe, national president of the chamber, had delegates participate in a business-to-business matchmaking session at the Nigerian embassy.

In attendance to re ceive the delegation was Sylvanus Nsofor, Nigerian ambassador to the United States. Participants at the session included various business leaders in the areas of project and infrastructure finance, health, tourism, agrobusiness and also representatives of the Nigerian Diaspora Organization, America. A statement by the chamber says that dele gat e s a l s o v i s i t e d t h e Center for International Private Enterprise, an affiliate of the United States Chamber of Commerce; US Africa Development Foundation (USADF ); Foundation for Democracy, among others, for partnerships and collaborations in various sectors, with focus on agribusiness, financial services, logistics, real estate and infrastructure. To wrap up, delegates participated at the African Trade and Investment Global Summit (ATIGS), which provided network-

i ng o p p o r tu n i t i e s w i t h a larger audience from a rou n d t h e g l o b e w i t h interest in Africa. The trade mission pres e nt e d a n o p p o r t u n i t y for sector presentations, round-table B2B meetings and engagement with t h e Ni g e r i a n D i a s p o ra via Nigerians in Diaspora Organization Amer icas (NID OA), providing an opportunity for market expansion, networking, m a r k e t k n o w l e d g e e xchange, further generating new businesses and deals. “The chamber will continue to serve as an important catalyst in bringing together businesses and ideals to bolster bilateral commercial relat i o n s b e t w e e n Ni g e r i a a n d t h e Un i t e d St at e s, f u r t h e r f o ste r i ng t ra d e and commerce investment between Nigeria and the USA and liaising with the Nigerian government and its agencies throughout the country on trade and industry related matters,” the statement adds.

mission with the International Business Festival,” he said. “We worked on the image of the country because we needed to change the narrative on the business environment there. We had a networking event, where

we presented the reformed incentives available for businesses. We were with Nigerian Investment Promotion Council (NIPC) and with all of these, we were able to generate a traction. It was through that mission that we concluded our negotiation

with the Europe,” he stated. He pointed out that Nigerian firms had what it would take to compete with UK firms in the own country, stressing the need to improve the business environment in Nigeria to attract more investors. Olawore stressed the need to make processes easier for businesses in Nigeria, especially for new investors, adding that this would boost the confidence of the business community. “Going forward, the Executive Committee is committed to executing strategies aimed at improving members benefits that will ensure that we add value to the business of our members in a manner that justifies membership,” he said, adding that the chamber would continue to reach out top British businesses in Nigeria to bring them into the fold. He stated that the chamber forged a strong partnership with the NIPC in 2017, assuring members that the NBCC would continue to provide value for them.

How Zhengzhou plans to revive Nigeria’s palm oil mills ODINAKA ANUDU

hinese machine maker Zhengzhou QI’E Grain and Oil Machinery Co Limited is planning to invest over $10 million in smallscale palm oil mills in five states in Nigeria. Zhengzhou has already approached the Oil Palm Growers Association of Nigeria (OPGAN) for partnership that will see the former provide funds and machines to the latter. Igwe Hilary-Uche, president of OPGAN, told BusinessDay exclusively that the company wants to provide hi-tech machineries to small-scale millers, provide funds and enter an off-taker agreement with them. “They are planning to invest something around $10 million and wants to export palm oil from here,” Uche said. He pointed out that the company plans to redefine palm oil business in Nigeria. Five states have been picked for a pilot project: Anambra, Imo, Akwa Ibom,

Cross River and Ogun. “They want to make oil relevant in Nigeria. Nigeria suffers because we don’t know the use of oil palm,” Uche said. Letters have been sent to state governors of these five states to provide land for smallholder farmers for this purpose, BusinessDay learnt. Nigeria produces 900,000 metric tonnes (MT) to 1.3 million MT of palm oil, with national demand standing at 2.1 million MT. Large and established firms such as PZ Wilmar, Okomu and Presco cultivate about 400,000 hectares of land, while smallholders farm above 900,000, according to Henry Olatujoye, national president, National PalmProduce Association of Nigeria (NIPPAN). Small-scale palm oil millers are currently struggling to get fresh fruit bunches (FFBs), otherwise known as oil palm fruits, in many states such as Imo. Irregular supply of FFBs, which are raw materials for the mills, is slowing production and reducing output. In contrast, in Akwa Ibom State, particularly in Okim-Ejijor village,

Ikom Local Government Area, oil palm plantation owners have a lot of FFBs but no buyers, prompting many of them to sell off their palm trees for less than N20, 000. More so, many smallscale millers are still stuck in crude machines despite being responsible for 90 percent of output in the country. They are willing to buy motorised or mechanised tools and own their own plantations to guarantee regular supply of FFBs but are hindered by poor funding and absence of formal finance scheme. They claim that the Central Bank of Nigeria (CBN) promised to fund palm oil as part of its Anchor Borrowers Scheme but is reluctant because palm oil has a gestation period of five to seven years. In terms of production volume, Nigeria is the fifth largest palm oil producer today, behind Indonesia with 36 million MT, Malaysia with 21 million MT, Thailand with 2.2 million MT and Colombia with 1.3 million MT, data from the global oil palm industry shows.

Monday 09 July 2018

BUSINESS

Live @ The Stock Exchange Ten stockbroking firms account for N1.1trn equities deal in 6 months … Stanbic, Rencap, CSL, EFCP, FBNQuest, Cordros, others Stories by Iheanyi Nwachukwu

n six months to June, only ten (10) stockbroking firms were responsible for trading equities valued at N1.099trillion. This record amount represents 68.82percent of the total value of stocks traded on the Nigerian Stock Exchange (NSE) between January 2, 2018 and June 29, 2018. The stockbroking firms are Stanbic IBTC Stockbrokers Limited, Rencap Securities (Nigeria) Limited, CSL Stockbrokers Limited, EFCP Limited, FBN Quest Securities Limited, Cordros Securities Limited, United Capital Securities Limited,

Chapel Hill Denham Securities Limited, Cardinalstone Securities Limited, and Apel Asset Limited, according to the Nigerian Stock Exchange (NSE) broker performance report. Majority of these stockbrokers have foreign and domestic institutional investors as their major clients. In the six months period to June 29, Stanbic IBTC Stockbrokers Limited occupied topmost position, after trading N324.938billion worth of equities or 20.33percent of the total value of stocks traded in the review period. Rencap Securities (Nigeria) Limited came second after trading N203.085billion worth of stocks, representing 12.71percent of the total

value of stocks traded in the six- month period. CSL Stockbrokers Limited came third after trading equities valued at N171.861billion or 10.75percent of the total value of stocks exchanged in the six months period. EFCP Limited accounted for N140.623billion worth of traded equities or 8.80percent; FBN Quest Securities Limited was responsible equities deals worth N71.084billion or 4.45percent; while Cordros Securities Limited traded equities valued at N46.637billion or 2.92percent of the total value of stocks exchanged in the review period. Stocks valued at N40.095billion were traded by United Capital Securi

Honeywell grows full year revenue by 34% to N71.5bn

oneywell Flour Mills Plc has released its audited results for the year ended March 31, 2018. Revenue increased by 34percent to N71.5 billion as against N53.2 billion recorded in the comparable prior year period. Given the increase in production activities and higher energy costs due to major disruptions in gas supplies, cost of sales grew by 37percent to N55.4 billion. The Company also reported a gross profit growth of 26percent compared to the prior year period, from N12.7 billion to N16.1 billion while gross margin as a percentage of net sales was 22percent for the period. Selling & Distribution costs grew in line with increased volumes and reflected the increased costs associated with transporting finished goods out of its

plant at the Tin Can-Island Port, Apapa where there has been a constant traffic gridlock for months as the Federal Government and several stakeholders embarked on palliative measures to fix the roads. The ongoing rehabilitation works on the Ijora axis of the Apapa road network has reached an advanced stage and the completion of this is expected to improve accessibility inbound and outbound Apapa; this will enhance better product delivery to its customers. Profit after Tax (PAT) grew by 3percent from N4.3 billion in 2017 to N4.4 billion in 2018. The growth was primarily a result of a 15percent increase in operating profit which grew from N8.3 billion to N9.5 billion and which was partially offset by interest expenses and

taxation. Net finance costs increased from N3.7 billion to N4.6 billion during the reporting period. Providing further clarification on the finance cost, the Company explained that the increase in finance cost was largely due to the increase in interest rates and to manage the cost of borrowing, the Company was able to structure a significant portion of the business financing through development banks at concessionary interest rates. The benefit of this impacted the bottom line in the second half of the financial year and this benefit is expected to continue in the new financial year. “We started the year with a very strong momentum across our company and executed an aggressive market share recovery drive resulting in the 34percent top line growth being reported today.

FBNQuest expands financial resource centre in Lagos Business School

BNQuest Merchant Bank, the merchant banking and asset management subsidiary of FBN Holdings Plc has delivered a ‘Bloomberg Room’ at the Lagos Business School (LBS) – Pan Atlantic University. The ‘Bloomberg Room’ which the merchant banking and asset management company said it a good investment is in line with its commitment to support reputable educational establishments with strong business and finance faculties. The Bloomberg Room is a financial resource center where students can get quick access to research

tools, financial market data, analysis of banks, and other economic data to facilitate effective learning at tertiary level. The initiative commenced in 2014 with two terminals in the LBS library, and due to demand was expanded to 12 terminals. This was also driven by the identified need to equip more students and the library community with tools for knowledge in finance and research. The delivery of the initiative aligns with the group’s Corporate Responsibility & Sustainability (CR&S) focus areas of knowledge & skills development and sustainable finance/investment.

The Bloomberg Terminal is one of the financial sector’s most widely used resources for real-time financial data. It also offers access to certified online courses on markets and other financial concepts available via the terminal. “We are conscious of the role technology plays in providing people with access to information. We believe it is important to equip students with the right financial tools and research, and we want to contribute meaningfully to that”, Kayode Akinkugbe, Managing Director/CEO, FBNQuest Merchant Bank said at the media event.

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BUSINESS DAY

Monday 09 July 2018

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45 NEWS

BUSINESS DAY

ATM, Web most used channels to perpetrate fraud HOPE MOSES-ASHIKE

mong the various channels of e-banking and payment transactions, the Automated Teller Machines (ATMs) and the Web channels have consistently appeared in top three channels used to perpetrate fraud for three years running. Data from the Nigerian Electronic Fraud Forum (NeFF) show that the year 2015 had the ATM, PoS, and the Web as the top channels for fraudulent transactions perpetrated in the industry. In 2016 and 2017, ATM, Mobile, and Web were the three most used.

In terms of value, the year 2015 and 2016 had Across the Counter as the channel with the highest attempts by fraudsters, while ATM and internet banking followed closely. In 2017, the ATM channel took the lead, with Mobile following behind. NeFF stated in its 2017 annual report that ATM channel had been the focal point for fraudsters in the last four years. The sudden growth of the Mobile and Web channels in 2016 and 2017 should be closely monitored and measures put in place to check and reduce fraud occurrence within these channels, the NeFF report stated. “It is sad to note that there has been a little increase in electronic

fraud, especially in recent times. It has therefore become necessary to review and strengthen the existing rules and enact new regulations to steer the problem,” Dipo Fatokun, director, Banking and Payment System, Central Bank of Nigeria (CBN), said. In 2017, a total of 946 unique individuals were beneficiaries of fraudulent transactions consummated through the ATM, Across The Counter, e-commerce, internet banking and Mobile channels. The unique individual count was derived from the overall fraud reported on the industry anti-fraud portal. The beneficiaries of fraudulent transaction in 2016 had only 217 Bank Verifica-

tion Number (BVN) sent to the Nigeria Inter-Bank Settlement System (NIBSS) for watch listing, representing roughly 21 percent of the total number. However, 2017 had about 47 percent sent for watch listing, with a total number of 447 BVNs. The CBN in collaboration with NIBSS recently released a Framework on local Watch-list for the Nigerian banking system in order to address the increasing incidence of fraud/forgeries and other unethical practices. Additionally, the CBN on October 2017 stated that a watchlisted customer shall not be allowed access to credit facility or guarantee credit facilities as part of penalties for being involved in

fraudulent activity. The Watch-list comprises a database of bank customers’ identified by their BVNs, who have been involved in confirmed fraudulent activity in the banking industry in Nigeria. The CBN stated in a regulatory framework for BVN operations and Watch-list for the Nigerian Banking Industry stated that penalties shall apply to any bank that failed to enlist individuals confirmed to be involved in fraudulent activity, as well as stakeholders who failed to perform its stipulated responsibilities. Tracing the 946 unique individuals to other banks revealed a total of 2,304 account num-

bers. This implies that these 946 unique individuals have a total of 2,304 account numbers in the industry. Out of the many accounts linked to these unique individuals, it was confirmed that 1,994 accounts were active, which represents 86 percent of the total number of accounts. Analysing the unique individuals based on age variables, customers with the age range of 18-25 years committed more fraud by 42.1 percent. In terms of gender, the report revealed that more male benefited from frauds in 2017; the females were not left behind as 73 percent of these unique individuals were male, while the female represents 27 percent.

Airport concession value to gain momentum over certification – experts IFEOMA OKEKE

L-R: Ladell Robbins, vice principal, African Capital Alliance; Neeraj Vaidya, head of strategy, Afriglobal; Olufemi Alabi, partner, transaction advisory services, EY Nigeria; Debasis Roy, chief financial officer, Jotna Nigeria Limited, and Damilola Aloba, associate director, transaction advisory services, EY Nigeria, at EY Nigeria’s Private Equity Breakfast session in Lagos.

NCC parleys stakeholders to boost quality service EMMANUEL NDUKUBA, Awka

igerian Communications Commission (NCC) has parleyed with the consumers of telecom services in Anambra State to improve quality services in the state. This is because they are the most important in the services’ value chain, a top official of the NCC says. Head, information and reference of Consumer Affairs Bureau (NCC), Ismail Adedigba, said this at a tripartite meeting involving mobile telecoms service providers at Obosi, Idemili North Local Government Area of Anambra on Friday. These are the NCC and telecom providers – Airtel, MTN, Globacom, 9 Mobile and N-Tel and the users. Adedigba explained that the meeting was to ascertain major complaints from mobile telecom users, against service providers, so as to properly educate them on how to seek redress. He noted that providers existed solely because of the consumers and therefore,

the consumers should be accorded rights to information, education, fair hearing, choice and safety. ``We are here to provide complaints desks so that consumers can resolve issues with their service providers such as unsolicited SMS, automated renewal of data, without prior knowledge of the user and rollover of unfinished data. ``These complaints can be regulated by NCC when consumers call the 622 tollfree line or text `STOP’ to 2442 (the Do-Not-Disturb ‘DND’ short code for unsolicited SMS),” Adegbite said. Director of Consumer Affairs Bureau, Felicia Onwuegbuchulam, who was represented by the Head, Public Relations (NCC), Reuben Muoka urged mobile telecom users to utilise toll-free lines and Customer Care Centres of NCC to relay complaints taken to service providers but yet-to-be resolved. Onwuegbuchulam said that consumers were target beneficiaries and should be protected from untoward issues from providers.

Heritage Bank to boost SMEs growth via Next Titan season-5 kick-off

eritage Bank plc has revealed strategies to boost the capacity development of small medium enterprises (SMEs) as the headline sponsor of the annual entrepreneurial reality show, The Next Titan, as the season five of the programme kicks off. Fela Ibidapo, divisional head, corporate communications, Heritage Bank, said this during a press conference held to announce the official commencement of the reality TV show this year. Ibidapo assured the public that the bank would sustain its interest and sponsorship for the programme because its goal aligned with the corporate aspiration of the bank. According to Ibidapo, the management of the bank believes that banking is not only about how much money we can make from customers, but also, about adding value to aspiring individuals, groups, community and state. His words: “Banking is not necessarily about how

much we make from you, but also about encouraging success of initiatives that support economic development process.” The Next Titan is an outstanding entrepreneurial scheme that has stood out in the past four years and has immensely contributed to employment generation in Nigeria; a nation where graduates and other youth endlessly scout for job opportunities. He said the programme easily aligns with the primary focus of the management of Heritage Bank to promote every laudable entrepreneurial idea meant to broaden economic horizon of the country for the benefit of citizens and other residents of Nigeria. His words: The Next Titan is strictly SME-focused banking initiative and we are using the opportunity to enjoin people with laudable business ideas like those who participate in the annual programme to move forward. Heritage Bank will be ready, at any time to support ideas like that.”

ecent certification of the Murtala Muhammed International Airport, Lagos, and Nnamdi Azikiwe International Airport, Abuja, may facilitate the airport concessioning process and add value to the bargain from investors, experts tell BusinessDay. Hadi Sirika, minister of state for aviation, few months ago announced that Infrata, Dentons, Rebel, WSP Parsons Brinkckerhoff, Proserve, as the five Transaction Advisers for the handling of the concession of the Abuja, Lagos, Kano and Port Harcourt airports. The government appears to be very serious about privatisation of its international airports, even after the aviation union resisted through protests; the government said it was not going back on plans to concession its major airports across the country. Recently, Elysium Integrated Development Company has submitted a proposal to invest $27 million in a mass transit ground transportation structure at the Murtala Muhammed Airport(MMIA), Lagos. According to Sirika, the Federal Government is targeting about $3 billion from the concession of the MMIA Lagos, considering the passenger traffic, the aircraft movement and the volume of cargo processed through the airport. He said government was maintaining the Lagos airport and other airports slated for concession, including the airports in Abuja, Port Harcourt and Kano, and planned to raise their values to earn more money from their concession. John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, told BusinessDay that the certification of the Lagos airport was to facilitate concession and add value to concessioning bargaining. For me, $3 billion on MMIA alone for 30 years is better than nothing from FAAN in 30 years, and giving intervention funds yearly. “This translates to N30 billion to the Federal Government’s account yearly; has the FAAN ever remitted to the N10 billion to the federal account in any year? Instead, it spends the Internally Gener-

ated Revenue (IGR) and gets subventions from government to make up the unremitted charges by airlines,” Ojikutu said. If airport is not certified in compliance with the International Civil Aviation Organisation (ICAO) standards, it becomes a risk to operators, therefore the insurance on their operations to the airport will be higher than those with certification, he explained. That explains why flight tickets from Lagos to London are higher than from Accra to London. “There are investors waiting to grab the opportunity if government will be transparent about the offer. By the way, is Babalakin complaining about poor earnings from MM2? Government needs to be relieved of unnecessary spending on none aeronautical infrastructure like the terminal buildings, car parks, toll gates, car hires, among others. Government spends too much money on these than on runways and their lightings including fire and rescue services,” Ojikutu said. The Lagos airport was certified by the Nigerian Civil Aviation Organisation (NCAA) under the standard and recommended practices of the ICAO. The certification means that the airports have met the international standard of safety and security, and the certification would last for three years and if any of the conditions that were met for the certification was breached, NCAA would nullify the certification. However, stakeholders have expressed concerns that the basis of interest for investors on the planned concession is more than just the certification but also have to do with integrity of the government, in terms of their word and assessment of record as regards policy flip-flops. They say the likely conditions for the success of the current exercise is only when government resolves all the lingering issues as well as tackle some of the regulatory and environmental challenges impacting negatively on doing business in the country. “If government goes into this concession without resolving the other concessions, there will be a flurry of litigations. This needs to be fixed or dire consequences will follow.

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Businesses delay decisions on uncertainty... Continued from page 1

contenders have appeared on the scene, who look ready to snatch the ticket away from him.

The emergence on the political scene of the Reformed APC (rAPC) led by the immediate former governor of Kano State, Rabiu Kwankwaso, has further complicated the political race. Kwankwaso, who allegedly has very strong support base in Kano and other parts of the North, is also known to have presidential ambition, and is reportedly seeking some form of alliance with PDP in a bid to unseat Buhari in 2019. Behind the opposition are a group of former military generals led by former president Olusegun Obasanjo, who are also determined that President Buhari is not given a second term in Aso Rock. Faced with the rising political uncertainty, businesses and investors are taking a cautious approach to investing more money in the Nigerian economy or even raising new money to expand their existing operations. Dangote Cement and IHS towers have both postponed their planned initial public offerings on the London stock exchange and Ni-

gerian stock exchange respectively, until after the election. “These are big organisations looking to raise funds and they will be relying on large foreign institutional investors, but Nigeria is perceived a high-risk environment in the minds of those investors until after elections,” said Taiwo Oyedele, partner and head of tax and regulatory services at Price Waterhouse Coopers (PWC). “Because our democracy is not yet mature, there’s always uncertainty leading up to elections,” Oyedele said by phone. “But next year’s election will not be worse than in the past. There will be progress compared to four years ago,” he added. Dangote Cement on Friday announced that its intended listing on the London Stock Exchange will not take place until after the 2019 elections. Even though the company did not say if the date of the proposed listing has anything to do with the 2019 elections, analysts say it can be linked since Dangote Cement has its biggest operations in Nigeria and investors may be cautious about putting money in the company if there is a high level of uncertainty in its biggest market.

“Dangote’s Cement’s IPO will definitely have a better chance of succeeding if there is clarity on the political situation in his home country,” said a financial analyst who did want to be named. IHS Towers, Africa’s largest tower company, whose shareholders include Goldman Sachs Group, Wendel SA and MTN Group, has its biggest operations on the continent in Nigeria. The company is now also not considering doing any listing until after the 2019 elections. Interswitch which has also planned an IPO valued at up to US$1 billion and dual listing on the London and Nigerian stock exchange, has also said that the process will not be completed until the end of 2019. The company had told Bloomberg in September 2017 that the decision to delay its listing to the

end of 2019 was because the “market was not as favourable” as it would have liked. Sources have told BuisnessDay that many other companies that had considered riding on the boom witnessed in the stock market in 2017 to raise new money in 2018 are reconsidering their decision as sentiments turn sour. Continues on wwwbusinessday online.com

L-R: Yosola Akanbi, special adviser to Vice President; Olajide Odewale, permanent secretary, Ministry of Budget and National Planning; Olusegun Awolowo, CEO, Nigeria Export Promotion Council; Akinwunmi Ambode, governor, Lagos State; Adejoke Orelope-Adefilure, senior special adviser to President Mohammedu Buhari on Sustainable Development Goal, and Nyi Isebaaki, representative of Benue State, at the second Nigeria Export Promotion meeting in Lagos.

Can Nigerian firms beat the record dividend... Continued from page 1 which includes the top 30 companies in terms of market capitalization (96 percent of the market), stood at 211.07 percent in 2016, a figure that eclipsed 159.91 percent recorded in 2009, according to Bloomberg data compiled by BusinessDay.This is as the NSE 30 firms chose to dip into retained earnings to pay dividends. Firms paid out 35.49 percent out of earnings as dividend to shareholders in 2017, as they reinvested much of the earnings to finance future expansion plans. When investors anticipate lower rate of returns in the future, they will shift towards dividend paying firms and away from firms that use profit for internal reinvestment. For instance, payouts were high at 156.91 percent in 2009, during the financial crisis that forced the central bank to bail some banks from imminent collapse. The NSE Consumer Goods Index, which comprises the largest firms in the sector, were the most aggressive as they paid 166.69 percent of earnings as dividends in 2016, but 2017 saw a distribution out of profit of 66.01 percent. The December 2016 audited

financial statement of Nigerian Breweries showed the consumer goods giant declared a total dividend (interim and Final) of N36.47 billion, out of net income of N28.39 billion equivalent to a pay-out ratio of 128 percent. Similarly, the December 2016 audited financial statement of Nestle Nigeria Plc showed it declared a total dividend (interim and Final) of N15.64 billion, out of net income of N7.92 billion equivalent to a pay-out ratio of 197 percent. Most companies struggled with lower revenue and battered cashflow in 2016 due a severe dollar scarcity brought on by a precipitous drop in oil price of mid 2014 that tipped the country its first recession in 25 years. However, a combination of the new foreign exchange policy by the apex bank in June 2017 and a rebound in crude oil price and output helped the country exit a recession. The gradual economic recovery means firms with higher pay-outs could lower the proportion of dividend paid out of distributable profit to give them enough funds to undertake project with a positive net present value. The lower dividend pay-out ratio recorded by most companies in 2017

may be attributed to higher than expected profit after tax recorded by most of the companies, according Ayodeji Ebo, managing director/ CEO of Afrinvest Securities Limited. “I suspect the management based the dividend payment for 2017 more on last dividend per share paid than on the dividend pay-out ratio because sticking to the historical dividend pay-out may result in increasing dividend per share significantly due to the higher growth in PAT in 2017. This is positive for the companies as more of the profit reported is retained for the growth of these companies and would reduce the need for expensive capital for the business,” said Ebo. The industrial goods index, which tracks the largest producers of the building material by market capitalization, recorded nil payout in 2016 as construction activities were slow. Lafarge Africa Plc, a bellwether firm, recorded a loss in that period. Final dividend payments by Nigerian firms have garnered momentum as 20 of them have rewarded their shareholders with N412.96 billion in 2017, a 36.50 percent increase from the N303.50 billion paid in 2016. The firms under our coverage include Oil and gas, Financial Services and consumer goods and industrials goods. Continues on wwwbusinessday online.com

Monday 09 July 2018

How buyers of Yola DisCo exploited loophole... Continued from page 1

agreement to subvert the privatisation process.

BusinessDay gathered that the DisCo bought by Integrated Energy Distribution and Marketing Company Limited (IEDM) for US$59m, exploited the loophole to declare a “Political Force Majeure” and is asking to be refunded the $59m initial investment plus interests totalling $80.68 million. According to the Committee’s report made available to BusinessDay by a source in the Presidency, “the transaction utterly shows how public interest can be subverted by even a single, standard and apparently innocuous contractual clause as a result of wilfully corrupt or careless political decision and/ or legal drafting.” The IEDM had emerged a lone successful bidder for the Yola Disco

against the backdrop of the raging Boko Haram revolt in the northeast, which the company was fully aware of at the time of purchase. BusinessDay gathered however that the Company signed the agreement for the purchase with the Bureau of Public Enterprises (BPE) on the 21st of August, 2013 and after taking control of the Yola DisCo on 1st November 2013, just 10 days later, the IEDM invoked the “Political Force Majeure” provision in the Performance Agreement (PA). This is despite being privileged to the declaration of State of Emergency by former President Goodluck Jonathan in the three north Eastern state of Adamawa, Borno and Yobe states on the 14th of May, 2013, about three months before the agreement was signed and six months before the eventual takeover of the Yola DisCo. Continues on wwwbusinessday online.com

Dangote to make history with Nigeria... Continued from page 1

market.

The listing of the $2.5 billion fertilizer plant and $10 billion refinery capacity will be done differently as it will cut reliance on international markets for Africa’s largest oil producer, who imports more than 90 per cent of its fuel needs. The IPO is scheduled to commence after next year’s general election (early 2020). Valuation of Refinery BusinessDay estimates the potential market value of Dangote Refinery to be around $34.5 billion. This value was estimated using the average market valuation of some of the largest refiners in the world which are Exxon Mobil, British Petroleum, Shell, Petrochina, SINOPEC and Indian based Reliance based Industries Limited. We estimated the market value of the refinery business as a standalone from the main entity by multiplying the percentage contribution of the refinery income to total revenue of the oil and gas companies with their total market capitalization. The average percentage contribution was 80.98 percent of total revenue. We then estimated the average market value per barrel refined using the production capacity of the refinery and the estimated market capitalization of the refinery business. The average value per barrel refined was estimated to be $53,070 per barrel. To obtain the market capitalization of Dangote Refinery we multiplied the production capacity of the refinery which is 650,000 barrels per day with the average market price per barrel refined which gave us an estimated market value of $34.5 billion. Of the total firms used in the analysis, Dangote refinery had the smallest market value while the largest was Exxon Mobils refining operations which contributed 77.84 percent of revenues in 2017 with a daily refining capacity of up to 6.3 million barrels per day across multiple refineries around the world. With 650,000 bpd Dangote refinery is one of the largest refineries in the world, behind the likes of Jamnagar refinery owned by Reliance Industries Limited which produces 1.2 million bpd. Estimated Revenue Nigeria a country of almost about 200 million people currently consumes roughly 35 million litres of petrol daily; Dangote’s Refinery facility is expected to produce about 50 million litres a day of petrol which implies the refinery will have about 15 million litters for export. Dangote Refinery is expected to generate revenue of about N3.1 tril-

lion from petrol in a full operating year which we arrived at by multiplying the expected production of 50 million litres a day of petrol by landing cost of petrol of N171 by 365 days. Although, we also acknowledge that the landing cost of N171 might have increased due to higher oil prices and Dangote is expected to pump around 20,000 barrels a day from two shallow-water blocks, known as OML 71 and 72, located in the Niger River delta in south eastern Nigeria. The refinery is also expected to produce about 15 million litres of diesel which will generate about N947 billion in a full operating year. We arrived at N947 billion by multiplying the 15 million litres by landing cost of diesel of N173 by 365 days. This means the Refinery could generate annual revenues of N4.04 trillion or $11 billion per annum. Valuation of Fertilizer Plant BusinessDay estimates the potential market value of Dangote Fertilizer plant to be estimated around $4.67 billion. This value was estimated using the average market valuation US based Nutrien limited and Norway based Yara International who are among the largest fertilizer plants in the world and also generates 100 percent of their revenue from fertilizer. We estimated the market value per output of the Fertilizer plant as a standalone from the business by multiplying the percentage contribution of the Fertilizer income to total revenue of the Fertilizer companies with their total market capitalization. We then estimated the average value of per output in the fertilizer plants to be $1,556. To obtain the market capitalization of the Fertilizer plant, we multiplied the production capacity of the fertilizer plant which is 3 million metric tonnes per day with the average market price per fertilizer output which gave us an estimated market value of $4.67 billion. “It will attract foreign investor’s attentions to Nigeria and also further place the country on the worlds stage as investors will be looking to tap into the huge opportunities in the oil and gas sector, which is an area government have failed over the years,” Ayodeji Ebo CEO at Afriinvest securities Limited said. Currently being constructed on a 2, 200 hectares at the Lekki Free Trade zone in Lagos, with capacity to refine 650,000 barrels of crude per day, and a petrochemical plant of 750,000 metric tonnes of polypropylene per annum, it is 13 times bigger than the Indorama Eleme Petrochemicals Limited. Continues on wwwbusinessday online.com

Politics & Policy Monday 09 July 2018

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BUSINESS DAY

How I will tackle challenges of power, security, jobs if voted into power, by Atiku AGOMUO ZEBULON

tiku Abubakar, a former vice president and frontline presidential aspirant on the platform of the People’s Democratic Party (PDP), has given an insight into how his administration would address the challenges of power, security, job, among others if he is given the ticket by the PDP and then the mandate by the Nigerian electorate in 2019. Atiku gave the insight while responding to a thread of questions on the Twitter, bordering on how he intends to find solutions to salient problems of national unity, unemployment, security and some other topics on nation’s development. “We shall increase power generation by ensuring full participation of private sector. We shall issue licences to enable the private sector invest in mini-grid capabilities to service local communities or local govts, states, regions or target industrial clusters. “Our electricity generation plan shall be diversified to include clean energy (hydro, solar and nuclear) in addition to natural gas. As you may be aware, the transmission infrastructure of the power sector is ageing and in dire need of investment,” he said. According to Atiku, “We shall

Atiku Abubakar

provide incentives - including tax breaks to the private sector to invest in the development of multiple green field mini-grid transmission systems. “In the mean time, we shall consider concessioning to private sector segments of the national grid under some form of PPP over a period of time.” On security, he said: “We must understand the root causes of the security challenges in the North. The full economic potentials of

the region remain undeveloped resulting in high rates of youth unemployment, high levels of poverty and deprivation and income inequality. Access to education is more restricted, resulting in more out of school children in the North than anywhere else in Nigeria. Unless these issues are tackled, youth restiveness, sectarian violence and other acts of insurgency and terrorism shall continue to bedevil the region. “My first critical policy priority

therefore, is to support the northern states in rebuilding their economies and opening up economic opportunities for their citizens. This will reduce frustration and alienation and minimize grievances.” The former Vice President further said: “We shall same time undertake a comprehensive review of our security architecture and enhance its preparedness to meet challenges. As part of the review we shall commence the gradual process of instituting state police & community policing in line with principle of restructuring.” On job creation, he said: “As long as growth of the economy is driven by the oil sector, job creation is bound to suffer. To tackle the job and poverty challenges bedeviling the economy, we shall focus on four areas. First, we shall stimulate the growth of those economic sectors which are considered the domain of the poor - i.e Agriculture and Micro & Small Enterprises. “For the MSE sector, we shall set up a Venture Capital Fund to enhance their access to finance and hence their ability to grow and employ more hands. “Second, we shall set up a National Innovation Fund to support budding entrepreneurs, especially young men and women with brilliant ideas. “Thirdly, we shall promote a Special Apprenticeship Pro-

gramme that will support the training of up to 1,000,000 youth (including the NYSC) each year in diverse fields, by local master crafts persons. While they undergo the training, we shall match them with potential employers. “Fourth area of focus is the aggressive promotion of Nigeria as Africa’s leading business process outsourcing destination with potential to create two million direct and indirect jobs.” He further expained that “Our goal is to ensure that Nigeria fully explores the vast opportunities that abound in the global market for IT and IT-enabled services to create quality jobs for our youth. “Also, to lift our people out of poverty, we shall improve their access to basic services including education, health, electricity and water - by making these services not only available but affordable,” he said. On currency, he said: “The only way the Naira will be more valuable is to apply a diversified structure for our economy. This way, our economy will become more productive. We are committed to revamping the non-oil sector through increased private sector investments.We shall diversify our export base by providing export expansion incentives to manufacturers. Increasing our exports means increased foreign exchange earnings and stronger currency.”

Insecurity: Ethnic nationalities, others demand security summit in two weeks

Defection: We’re waiting for Saraki’s directive - Kwara APC chair

embers of the All Progressives Congress (APC) in Kwara State on Sunday said they were awaiting the directive of the Senate President, Bukola Saraki on whether or not to defect from the ruling party. The state APC chairman, Ishola Balogun-Fulani said at a crowded press conference in Ilorin, Kwara State that members of the party remain committed to Saraki and would follow his decision. Balogun-Fulani described the APC as a broken party, lamenting that the cord of unity amongst members has been severed due to internal wranglings and the unwarranted trial of the Senate President. The Chairman had been asked to respond to a call last week by the party’s three senatorial chairmenin the state asking Saraki to lead them out of the APC. The three party leaders were also in attendance at yesterday’s briefing by Balogun -Fulani. He clarified that:”Everyone has a right to express what he wants but as for us we wait on what our leader(Saraki) will decide “ quoting a Qur’anic verse to seek God’s guidance for the Senate President in taking any decision on the issue

...say, ‘Nigeria drifting into anarchy’

arious Nigerian ethnic nationalities, including SelfDetermination Groups, Civil Society Organisations as well as Professional and Youth Associations converged on Lagos recently to discuss the rising spate of killings across the country, especially the communal clashes, farmers/herders conflicts and attacks by bandits in Zamfara, Taraba, Adamawa, Kaduna, Benue, Kogi, Nasarawa, Plateau and across, at least, eight other states of the country. The meeting, which had representatives of over 200 other groups in attendance, and which was held with a view to proffering lasting solution to the ugly situation, declared that, “the current dangerous situation which places the younger generation of Nigerians at the receiving end of all the violent incidences is unacceptable and must be halted.” At the end of the two-day intensive deliberations, the well-attended meeting convened by the National President, Arewa Youth Consultative Forum (AYCF), Mallam Yerima Usman Yetima, resolved in a communiqué to give a two-week ultimatum to President Muhammadu Buhari and all the stakeholders in the Nigeria project to act decisively to avoid the

consequential backlash of overstressing citizens’ patience. The communiqué was jointly signed by Yerima, president, Arewa Youth Consultative Forum (Convener); Nazi Okechukwu Iziogosoro, national president, Ohanaeze Youth Council; Eric OlawOlawale (Yoruba Youth Council) and Pereotubo R. Oweilaemi, president, Ijaw Youth Council and president, Ethnic Nationalities of Niger Delta, on behalf of over 200 youth ethnic nationality groups across Nigeria and in the Diaspora. According to the communiqué, the groups further warned that, “Nigeria, Africa and indeed the entire world may not be able to cope with the consequences of a full blown religious or ethnic war in Nigeria which the current dangerous trend portends.” “The situation also portends the immediate danger of scuttling the nation’s democratic order with the dire consequences of a drift to anarchy. We therefore call on Nigerian elders, leaders of thought, theological and cultural leaders and all our international friends to step in quickly and save the situation as any further delay could be dangerous. “Clearly, the current administration of President Muhammadu

Buhari has failed in the discharge of its primary responsibility of securing citizen’s lives and properties. Consequently, we urge that the President as the Chief Security Officer of the country to liaise with critical stakeholders in the country to convene a Security Summit within two weeks to address decisively the ugly situation,” the communiqué demanded. The meeting, according to the communiqué, became necessary in view of the scary figures quoted by various national and international bodies accounting for the lives lost to series of violent situations in the last few years. “The situation is so disturbing that the UK House of Lords for instance, recently expressed worry over the inability of the Nigerian authorities to end the excessive killings, warning that ethno-religious violence in the country may escalate to the Rwandatype genocide if the Federal Government remained complacent about it. “On its part, Amnesty International, on June 27, 2018 quoted 1,813 violence-related deaths based on reported cases since January 2018 alone, with many more killings during the period which were either denied by the government, or were never reported at all.

SIKIRAT SHEHU, Ilorin

of defection. Earlier, Baligun- Fulani had expressed relief, satisfaction and justification by the decision of the Supreme Court discharging and acquitting Saraki of allegations of false asset declaration, pointing out that the party has held the same position since the now ended trial began three years ago. “As you are aware, on Friday, a five - man panel of the Supreme Court led by Justice Dattijo Muhammad unanimously ruled that the Senate President is innocent of assets declaration and sundry charges instituted against him before the Code of Conduct Tribunal. The Supreme Court further declared the evidence led by the prosecution as hearsay. “As a party, we salute the Supreme Court for delivering that landmark judgement which represents victory for democracy. We are happy that the judgement has reinforced our expressed belief that the Senate President is innocent of all the trump up charges. “You will recall that when the case began at the Code of Conduct Tribunal on September 22, 2015, I addressed press conference to alert the people of Kwara State and indeed, Nigerians that the case was politically-motivated. It was a clear case of political witch-hunting.

Monday 09 July 2018

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BUSINESS DAY

NEWS Stakeholders ask FG to use $322m Abacha loot to develop real estate sector KEHINDE AKINTOLA & JAMES KWEN, Abuja

xperts and professionals who graced BusinessDay Roundtable on Real Estate in Abuja last week asked the Federal Government to use the recovered $322 million Abacha to develop the real estate sector to enable Nigerians have access to home instead spending it on the “poor.” The Federal Government plans to start disbursement of the recovered $322 million (N101.26bn) Abacha loot through Conditional Cash Transfers (CCT) to 302,000 poor households in 19 states this month. But the stakeholders while speaking at the Roundtable sponsored by the Federal Mortgage Bank of Nigeria (FMBN) said more Nigerians would benefit if the money was ploughed into the provision of houses, which would in turn create millions of jobs across the housing value chain. While addressing some of the issues raised by the participants, Sa’adiya Aminu, managing director/CEO, Urban Shelter Limited expressed the need for government’s intervention in the housing sector in the bid to boost housing delivery. “Over the last six to seven years, there has been financial involvement. There was a N200 billion voucher injected into the power and the intervention to

build the privatisation system across the power sector. “There’s a perception that housing is high end, it’s a rich man business and the government doesn’t need to intervene in it.” She however observed that despite the gamut of challenges abounding in the housing sector, the real estate had a lot of potentials that could provide employment for “two out of 10 Nigerians. So it has a huge potential of catalysts to practically change the economy.” On the Abacha loot, she canvassed thatan advocacy/pressure group should had been set up priortonow,thatwouldchallenge the executive and legislature to invest the Abacha loot into the housing sector, which was far more productive and had the capacity to generate N5 trillion in value from N1 trillion investment. While clearing air over the bad estate development loans (EDLs), Ahmed Musa Dangiwa, managing director, FMBN, stressed the need for recovery of the EDLs, in order to improve the bank’s balance sheet, which ought to attract foreign direct investment into the real estate sector, just as he expressed optimism that the proposed recapitalisation of FMBN is realisable. He said: “that is not to push the blame solely on estate developers and exonerate FMBN from taking any blame from the bad loan that we have on our

books. But the facts still remain that we have bad estate development loans on hands and this has depleted the capital base of the federal mortgage bank. “We have all agreed here that finance is very, very key to real estate development. Apart from government funds the federal mortgage bank, which is the forefront secondary mortgage institution in Nigeria should be able to, on the strength of its balance sheet, attract foreign investment into the real estate sector in Nigeria, so that underscored the reason why the Federal Mortgage Bank needs to be recapitalised. “The decision has already been taken at national Council on Lands and Housing and FMBN in collaboration with Federal Ministry of Power, Works and Housing has been working as CGSP to make a very powerful presentation to the Federal Executive Council, we are working on that currently and I believe that with the support of our minister we shall be able to push through the request for the recapitalisation of the federal mortgage bank to the tune of N500 billion. “The current N2.5 billion with only N1.5 billion paid off is quite paltry, even the primary mortgage banks that we financed to create mortgages for contributors to nation housing fund their capital base now is N5 billion over and above that of federal mortgage bank.

A2 BUSINESS DAY NEWS

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Monday 09 July 2018

National airline to take off 86 Nigerian students receive VDT Communications Cambridge Learner Awards appoints a new chairman in December – Sirika

DT Communications Limited has appointed Tokunbo Talabi as the new chairman Board of Directors of the company. Talabi took over the reins of the company’s board from the erstwhile chairman, M. A. K Smith owing to his recent appointment as chairman, Police Service Commission, and subsequent resignation from the board after five years of meritorious service as the chairman of the company. The appointment was announced during the 2018 board meeting and annual general meeting of the company, which was held recently in Lagos. Talabi is a physiotherapy graduate from University of Ife, a holder of an MBA degree from University of Lagos, and an alumnus of the Lagos Business School. He was a pioneer staff of Guaranty Trust Bank. During his eight-year stint, he served and headed various positions in the bank, such as corporate banking, retail banking, corporate services and banking op-

STELLA ENENCHE, Abuja

M Talabi

erations. He is the president/CEO of Superflux International Limited, a security printing firm in Nigeria, providing specialist secure print solutions to sub-Saharan Africa. He is a consummate entrepreneur with business interests and strategic investments in choice sectors spanning: agro-allied, steel, manufacturing, logistics, real estate and telecommunications. A publisher, notable knowledge contributor and philanthropist, Talabi will bring his wealth of experience and versatile business acumen to bear on steering VDT Communications, at the board level, to a soaring height.

inister of state for aviation, Hadi Sirika, has reiterated his pledge that the proposed national airline for Nigeria will be unveiled before the end of 2018. The minister, who gave the assurance while receiving the Outline Business Case Certificate of Compliance from the directorgeneral of the Infrastructure Concession Regulatory Commission (ICRC), Chidi Izuwah, said the presentation of the Certificate of Compliance was an official approval of the process through which the project had gone so far. According to Sirika, there is no doubt that the issue of national carrier for Nigeria is very close to the hearts of both the government and the people, which is the reason it has taken the option of a Public Private Partnership with the belief that it was the only way to deliver a national carrier that would stand the test of time. He commended the efforts of the ICRC director-

general and his team in ensuring that the national carrier project had remained on track through the observation of all legal aid regulatory frameworks. The minister also expressed satisfaction with the way the Transaction Advisers had carried out their assignments with utmost diligence and timeliness, assuring that the national carrier that would be delivered would be world class in operation and management. He used the occasion to debunk claims that the national carrier would sound the death knell for other airlines operating in the country. Nigeria, with a population of over 180 million people with so many unserviced routes offered more than enough space for all serious airlines to operate profitably, he said. Speaking earlier, Izuwah said the presentation of the Certificate of Compliance was an official green light to proceed with the procurement process. He said his Commission, in granting the Certificate reviewed the Project Structuring Report, also known as the Outline Business Case, in line with the ICRC Act of 2005.

IFEOMA OKEKE

he British Council and Cambridge International hosted the British Council Recognition and Outstanding Cambridge Learner Awards at a ceremony held in Lagos, recently. The awards re cog nise exceptional learner achievement in Cambridge examinations in the November 2016 and June 2017 Cambridge examination series. Students, parents and educators attended the event from Cambridge International Schools in the country. The winners include three students who achieve d the highest marks in the world and 60 students who attained the highest marks in Nigeria in a single subject. In total 86 students in Nigeria received 115 awards from Cambridge International. The awards covered various subjects taken in Cambridge IGCSEs, Cambridge O Levels and Cambridge International AS & A Levels in the following categories: Top in

the World: learners who have gained the highest standard mark in the world for a single subject, Top in Country: learners who have gained the highest standard mark in the country for a single subject, High Achievement: learners who have achieved outstanding results in subjects which are not so widely taken and which, under the current criteria, would not qualify for ‘Top in Country’ Awards and Best Across: awards issued to learners who have attained the highest cumulative standard marks over a set number of subjects. Juan Visser, regional director, Cambridge International, sub-Saharan Africa, said: “Well done to the Cambridge top achievers in Nigeria. We are delighted that learners at our accredited schools continue to excel year in and year out. For over 800 years, the University of Cambridge has been one of the world’s greatest centres of learning. It created our organisation, Cambridge International, 160 years ago.

Monday 09 July 2018

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A3 NEWS

BUSINESS DAY

How Lagos is addressing menace of building collapse JOSHUA BASSEY

ith not less than 149 distressed buildings identified, out of which 40 have been removed and 38 others further marked for controlled demolition, Lagos State government is seen rising to the challenge of proactive measures to check the incidences of building collapse and their attendant loss of lives and materials. Hundreds of lives and properties of unquantifiable value had been lost over the years to recurring cases of building collapse in Nigeria with majority of the cases happening in Lagos, the commercial nerve centre of the country. There has been an increase in the number of collapsed buildings in Nigeria in the last 15 years. Some measures adopted in Lagos such as the forfeiture of collapsed property to the government and testing of building materials by an authorised agency seemed to have done little in stemming the tide. According to Sola Adeigbe, general manager, Lagos State Building Control Agency (LASBCA), a total of 1,104 buildings were sealed from June and October 2016 across Lagos as a result of defective or illegal construction. Analysts and stakeholders in the built industry have blamed the collapse of buildings on a number of factors. These include poor quality building materials such as iron rods, cement, blocks; engagement of quacks, unprofessional and unethical practices by developers, weak regulation by the government, corruption, among others. As a way forward, they have advocated stricter punitive measures to be meted on persons found culpable each time a building caves in, including the withdrawal of recognition to any qualified engineer who handled a collapsed property. On the strength of such arguments, a number of measures over time have been adopted by the government with the active collaboration of some professional bodies in the built industry, including the Nigeria Society of Engineers (NSE). The government still in search of a solution to the problem established the Lagos State Building Control Agency and empowered it to test and certify

materials to be used at any construction site within the state. While this has brought about some level of success with respect to new construction sites, the challenge has remained that several buildings built decades ago stand precariously across the states, with thousands of the citizens still occupying them. Checks show that majority of such houses are located within the Lagos Island, and understandably so. Most of the houses in this part of the state

known as ‘Central Lagos’ were built in the 1950s, 60s and 70s, and over time have seriously depreciated, with little or no maintenance. According to Rotimi Ogunleye, commissioner for physical planning and urban development, apart from encouraging owners and occupants of such buildings to report to the authority for necessary action, government itself is now deploying officials to the field to identify such buildings and mark them for demolition.

Of a total of 149 earlier identified across the state, 40 have been brought down and occupants evacuated, 38 more marked for removal in the next phase of the exercise, while others will follow in due course in a proactive strategy to ensure that lives are no longer exposed to the danger posed by such building as may have been the case in the past. “It is gratifying to note that there has been a significant reduction in occurrences of building collapse in the state. A total

of 149 distressed buildings were identified at different locations, out of which 40 have so far been demolished in the last one year. Asides this, efforts are also been intensified at discouraging all forms of illegal developments and contraventions. We’re doing this with the collaboration of stakeholders as well as intensive post-construction audit of buildings by the Lagos State Building Control Agency. Giving a further insight on how the government is curbing the illegality,

he said “we embarked on intensive audit through the Lagos State Material Testing Laboratory, and in the process, visited the 57 local governments and local council development areas of the state to inspect both ongoing construction sites and completed buildings suspected to be distressed. “Consequently, 1,842 sites were visited; 1,392 test advice notices were served and information on buildings identified as distressed were forwarded to LASBCA, Ogunleye said.

NEWS

BUSINESS DAY

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Monday 09 July 2018

CBN directs banks, MMOs, super agents NSE closes on 0.31% loss as top stocks fall to render daily returns through NIBSS …suspends trading in shares of Royal Exchange, Cornerstone, STACO, others SOBECHUKWU EZE, with agency report

… reviews NFIS guideline HOPE MOSES-ASHIKE

entral Bank of Nigeria (CBN) on Friday directed all banks including microfinance banks, primary mortgage institutions that have agents, Mobile Money Operators (MMOs) and licensed Super Agents to render daily returns through the Nigeria Inter-Bank Settlement System (NIBSS), effective July 10. The directive follows the decision of the Bankers’ Committee to adopt and implement the shared agency network expansion fund initiative by the banking industry, aimed at accelerating the CBN’s financial inclusion programme.

In a circular singed by Dipo Fatokun, director, banking and payments system department, the CBN issued this regulatory requirement for data rendition for effective monitoring and evaluation purposes. The CBN said the transaction data were required daily, so as to plot the growth and type of services being offered across the country. On the other hand, the CBN on Friday released exposure draft of the National Financial Inclusion Strategy Refresh for comments and observations. The CBN has been working with various stakeholders to conduct a review and refresh of the strategy. The exercise focused on

evaluating progress, identifying gaps and developing a refreshed strategy document that serves as a roadmap for implementation till the terminal year 2020. In 2010, Nigeria made a commitment to reduce the adult financial exclusion rate in the country from 46.3 percent to 20 percent by the year 2020. In order to attain this target, the National Financial Inclusion Strategy (NFIS) was launched on October 23, 2012. In a circular signed by Mudashiru Olaitan, director, development finance department, CBN, said while some notable milestone had been achieved, overall financial inclusion stood at 41.6 percent based on the biennial Access to Financial Services in Nigeria survey (EFInA 2016).

igerian Stock Exchange (NSE) was dragged on a bearish trend as major market movers took a beating last Friday, closing for the week at a loss of 0.31 percent. Mobil Oil fell 6 percent to N165 per share with a loss of N10, topping the losers’ chart. Dangote Cement trailed with a loss of 1.3 percent to close at N225, making a loss of N3, while Cement Company of Northern Nigeria was down by 8.4 percent, making a loss of N2.05 close at N22.25 per share. Nigerian Breweries declined by 1.68 percent at N1.90 loss to close at N111.10, while PZ industries went down by 8.21 percent, making a loss of N1.70 to close at N19 per share. Consequently, the AllShare Index, which opened at 37,743.22, dipped 117.63 points or 0.31 percent to close at 37,625.59. In the same vein, the market capitalisation lost N43 billion or 0.31 percent to close at N13.629 trillion against N13.672 trillion on Thursday. The transactions on Fri-

day fell by 47.9 percent when compared with the value of N5.89 billion on 503.12 million shares achieved in 3,710 deals on Thursday, with NAHCO at the top of the activity chart with an exchange of 148.52 million shares worth N1.05 billion. Zenith International Bank trailed with an account of 17.27 million shares valued at N419.81 million, while Sterling Bank traded 16.98 million shares worth N24.78 million. UBA sold 14.31 million shares valued t N148.03 million, while GTBank traded 13.76 million shares worth N567.51 million. On the other hand, Guaranty Trust Bank led the gainers’ table, growing by 3.6 percent to close at N41.50 per share. Julius Berger followed closing at N29.50 with 1.9 percent increase, while Presco rose 0.5 percent and close at N75.50 per share. NEM Insurance appreciated by 9.6 percent to close at N3.40. UPL increased by 9.4 percent to close at N2.55 per share. In addition, seven insurance companies and RT Briscoe in the exchange were suspended for not hav-

ing yet submitted their 2017 annual reports. In a notice to dealing members, the listed insurance companies are African Alliance Insurance, Cornerstone Insurance, Royal Exchange and STACO Insurance. Others are Standard Alliance Insurance, Universal Insurance Company and Veritas Kapital Assurance. The suspension of trading in the shares of the affected companies took effect from July 5, and would only be lifted upon the submission of the relevant accounts. The exchange said the accounts must comply with all applicable rules of the exchange. Speaking on the issue, Malam Garba Kurfi, managing director, APT Securities and Funds Limited, said the companies were suspended for failure to submit their 2017 financial accounts, as companies with December 31 year-ends were meant to submit their financial year ends report by March the following year. Kurfi said because of these trading on the stocks were based on speculations and therefore not good for investment decisions, and the market in general.

Dangote promises loyal cement customers refinery distributorship licence

or their continued loyalty, the management of Dangote Cement plc, at the weekend, announced cash and kind rewards and also a priority distributorship licence as soon as Dangote’s refinery project come on steam next year for the loyal cement customers. President of Dangote Group, Aliko Dangote, who made the pledge, thanked the loyal cement distributors for their faith in the company and also assured them of consistent reward as a form of motivation for their patronage and loyalty to the brand. Dangote said: “This event today is significant in two reasons; first, it is in furtherance of our culture and practice to reward excellent performance by our customers. “Secondly, it is also meant to build stronger and abiding value relationships.

It is a night to say thank you for all your efforts in making Dangote Cement a household name in Nigeria and the number one preferred cement.” He promised that: “As soon as our new projects come on stream, the opportunity for priority distributorship will be available to you as reward for your loyalty. Thank you for your dedication and for being our support system.” The distributors’ award ceremony was in recognition of the Cement Distributors’ long standing commitment, devotion, loyalty and valuable contribution to the distribution and sale of Dangote Cement in 2017. Welcoming the distributors and other customers of the company to the award ceremony, Group Managing Director and Chief Executive of Dangote Cement, Joe Makoju said the company would forever be thankful

to the distributors and all its customers for their loyalty and for making the public see the uniqueness of the Dangote Cement brand. Makoju said the distributors must have seen that they have not made a mistake for deciding to do business with the company. He promised that the cement company would continue to show appreciation to them and urged them to strive to sell more Dangote cement this year, with a promise that they would also be rewarded more saying; one good turn deserves another. He said: “Our success story would not have been possible without you, our distributors, who work tirelessly to ensure that the product gets to our customers in every nooks and crannies of the country. We can never thank you enough! You have been an integral and vital part of our business over the years.” He further said: “We are here to explore ways of further cementing our existing cordial relationship in order to create more value for all stakeholders. In fact, our ultimate desire is to create a win-win situation for our stakeholders at all levels down the value chain. This is in line with the triple bottom line principle: people, planet and profits, which we have embraced here at the Dangote Group.”

Tuesday 10 July 2018

BUSINESS DAY

A6 BUSINESS DAY NEWS

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Why only 20% of Nigerian start-ups survive OLUWATOSIN DOKUNMU

ntrepreneurship growth is rapid in Nigeria, fuelled by high unemployment figures, but only 20 percent of these start-ups survive. Unemployment rate climbed to a six-year high of 18.8 percent in the third quarter of 2017, according to the recent data by the National Bureau of Statistics. Being an entrepreneur is rapidly being a first choice career with 73 percent of adults perceiving entrepreneurship as a good career choice in nine Middle East and African countries, according to a recent survey by Global Entrepreneurship Monitor (GEM). Despite this ambitious desires, only 40 percent of Nigerian adults have either started a business or have run one in the past three and half years, according to the 2013 GEM survey. With high influx of business people into the entrepreneurial space, over twothird of them fail the survival test in their first few years of operations. Perhaps, Nigeria’s difficult business climate is unconnected from business failures. Despite moving some 24 spots north in the last World

Bank ease of doing business ranking, Nigeria ranks a lowly 145 of the 190 countries in the database with a 52.03 distance from the frontier in 2018. New businesses have failed due to several reasons, whether it is government’s failure to provide the requite infrastructure or the business owners’ poor decisions, according to Wole Oluyemi, an accountant and business advisor with about two decades’ experience from Arthur Andersen, KPMG and Chevron Corporation where he had diversified assignments spanning across Nigeria, Cameroon, South Africa, Ghana, Congo, Angola, and the USA. After working with the defunct Arthur Andersen, Oluyemi has worked with 300 clients from domestic to multinational – small to large scale, dying and dead companies, some of which were necessitated by their own doings or incapacities and others as a result of factors beyond their control. According to Oluyemi, most start-ups have always been found to be carried away by the anxiety of their new enterprise and have no reasonable financial systems in place to track the money matters of their businesses. Based on an analysis of

101 start-up post-mortems by Forbes and Statista, poor cash flow management was found to have been the second highest reason for startup failure. In some other cases, startups run their businesses with a generic selling proposition, or one that is not unique or cannot be properly differentiated. Unique selling proposition (USP) can be easily defined as what a business has that her competitors do not have. “With an ineffective USP to strategically gain customers, new start-ups face discontinuance in their operations,” Oluyemi said at seminar targeted at entrepreneurs. Having your business at the right place, with the right clients, at the right time and with the right price could be a reason for the survival of a start-up. Business location and timing are significant contributory factors to the success of a start-up. Locating a business closer to its target market increases the chance of the business gaining traction for survival. According to a research brief from CB Insights, having a wrong business model has caused 17 percent of start-up deaths.

ECOWAS Energy Ministers approve regulation on sanctions for regional electricity market HARRISON EDEH, Abuja

inisters of Energy from the Economic Community of West African States (ECOWAS) have approved the ECOWAS Regional Electricity Regulatory Authority’s (ERERA) Rules on Sanctions, which is one of the documents critical to the functioning of the regional electricity market. Their approval of the document on June 29, 2018, in Cotonou, was on the recommendation of a preceding meeting of energy experts. The document will be submitted to the ECOWAS Council of Ministers for adoption. The Transmission Company of Nigeria (TCN), while throwing more light on the document, says in a statement that rules on Sanctions, which is one of the documents considered by the ministers at their meeting, is necessary to ensure the implementation, monitoring and control of the obligations established in ECOWAS Community legislation. Specifically, the Rules on Sanctions define the sanctions that ERERA will apply in case of breaches of the ECOWAS Regional Electricity Market Regulation. According to the approved document, “The Rules on

Sanctions are applicable to any breach of the ECOWAS Regional Electricity Market Regulation committed by any participant of the ECOWAS Regional Electricity Market, or by the System and Market Operator, or by any transmission system operator or transmission service provider of an ECOWAS Member State, or by any entity obliged to comply with the ECOWAS Regional Electricity Market Regulation.” Chair man of ERER A , Honoré Bogler, a professor, explains that there are serious, significant and minor types of breaches, and that any of these may occur during market transactions, making it inconsistent with the Regional Electricity Market Regulation. According to B ogler, Electricity Market Regulation includes all applicable decisions, rules and regulations related to the electricity market and rules ensuring cross-border exchange and transport of electricity across the 14 mainland countries of ECOWAS. These legal instruments include the Regional Market Rules, the Regional Transmission Tariff Methodology, the WAPP Operation Manual, the Model Bilateral Agreements, the Regional Market Procedures, and the Rules of Practice and Procedures.

Monday 09 July 2018

New health sector architecture to leverage PPP for sustained quality outcomes – Obaseki

do State Governor Godwin Obaseki says the soon-tobe-unveiled health sector architecture of the state will be anchored on a robust public private partnership (PPP) for sustained quality outcomes. Obaseki said this while commissioning a GE 1.5 Tesla Magnetic Resonance Imaging (MRI) machine and a GE 64 Slice CT Scan Machine at Lily Hospital in Benin City, the state capital. He maintained that his administration was working to make the state a medical hub, where the government, private health care service providers and other groups would participate. “We have developed a health master plan to holistically tackle the challenges confronting health care delivery in the state; the plan will be unveiled soon. “We are excited that as we are working to improve health care at the primary level, people are already investing at the specialist end” the governor said, noting that the private hospital’s huge investment would complement the state government’s efforts in providing quality health care services to Edo people and residents. He called for more investments in the sector, especially in specialised health care service to check medical tourism aboard. He commended the hospital for the procurement of the facilities, noting that they would improve patient care and boost health care delivery in the state and country in general.

Tribute to Oritseweyinmi Jemide

ritseweyinmiKevinJemide was the CEO of Saacrose Associates. He was passionate about influencing people positively and he did just that by impacting various organisations through executive coaching, facilitating group interactions and learning. He engaged people to find their purpose and positively influence their world. Organisations that have benefited from Weyinmi’s expertise include First Bank, Leadway Pensure PFA, Guaranty Trust Bank, Unilever, PZ Cussons, Stanbic IBTC, Radisson Blu Hotel, Central Bank of Nigeria and Mainone to mention a few. Weyinmi attended St Peter Claver’s College Aghalokpe for his secondary O’level education and then did his A’levels at Federal Government College Warri after which he graduated from University of Lagos with a second class upper degree in Economics. He was a Chartered Accountant and a Member of the International Association of Facilitators. He held a Masters in Leading Innovation and Change. Weyinmi was a Certified Master of The Leadership Challenge Workshops. He was also a Certified Master Coach from the Behavioural Coaching Institute of Australia-thefirstNigeriantoattain this certification. Weyinmi acquired more than thirty years of organisational experience in banking and profes-

sional services including diverse roles in executive management working variously at United Bank for Africa, Akintola Williams & Co (now Deloitte), NNB International Bank and Ashford & McGuire Consulting. Weyinmi was an author and a song writer...he wrote Proverbial Business, a series of insights on business and life based on the Book of Proverbs. Weyinmi’s love for God was compelling,constant,unwavering, andknowntoallwhomethimand he would always find a reason to praise God. He lived his life true to his full name “Oritseweyinmi” whichmeans“Godismysupport” or “God is behind me”.He’s faith in God was absolute. Weyinmi was a Pastor of The Redeemed Christian Church of God, City of David in Lagos where he gave full expression to his passion of influencing people positively for God. Weyinmi was happily married to Regina (Nee’ Iyamabo) for 21 years. He loved and adored her and called her “my shadow”.They were blessed to have three beautiful children; two lovely daughters, Muoyowa (20), Sisan (18) and a handsome son Laju (16). They are part of Oritseweyinmi’s beautiful legacy for us to enjoy. He was a total family man who not only fully expressed his love for his wife Regina and their childrenbutalsoshoweredhislove on his own Jemide family and the Iyamabo family he married into. “Wkay”ashewasfondlycalled by family and friends had a wonderful sense of humour and was always the clown in the house. There was never a dull moment in his company and whenever he held court the laughter was continuous and uncontrollable. Ourfondestmemoriesofhimpaint pictures of joy.

L-R: Onyemelukwe Ifenchor, MD, Lafenax Nigeria Limited, best national distributor; Aliko Dangote, chairman, Dangote Cement plc, and Joseph Makoju, GMD/CEO, Dangote Cement plc, at the Dangote Cement plc Distributors Awards and Gala Nite in Lagos.

NDDC seeks peace to deliver development

… as insecurity drives up project costs in Niger Delta IGNATIUS CHUKWU

roject managers in the Niger Delta fear that growing insecurity could further drive project costs in the oil region. Already, the region is said to be executing infrastructural projects at 200 percent higher than normal. The previous culprit for cost differential was soil condition. The region is replete with swamps and even red soil areas were swampy in the past, making it difficult to get strong soil for foundation bases. At that point, the region was already executing at 200 percent of what it was costing to con-

struct roads. For instance, when one kilometre of road was being constructed at N10 million in the 1990s, it was costing between N20 million and N30 million, depending on the nature of the soil in that particular area. Some areas are below sea level while some others were areas recovered from previous waterlogged areas or swamps. These days, it is estimated that such length of road (1km) goes for over N50 million. This is because heavily armed troops must be attached to construction teams in every project in the region to forestall abduction. In some instances, armed hoodlums still overpower the security attaches to cause havoc.

Many expatriate engineers have either been killed or k idnapped, needing huge sums in foreign exchange to bail them out. State governments in the region have continued to cry out over the rising costs of construction projects in the region, while also standing accused of padding of costs or inefficiency. Some projects have been abandoned as a result. State governments in the region have continued to cry out over the rising costs of construction projects in the region, while also standing accused of padding of costs or inefficiency. Now, insecurity and inflation have joined to drive up the cost beyond rooftops. One

of the development agencies burdened by this cost crisis is the Niger Delta Development Commission (NDDC) which has charged students and youths to join in campaigning for peace and security in the Niger Delta region to reduce costs and attract foreign investors. The executive director, projects, Samuel Adjogbe, who gave the advice on behalf of the managing director, Nsima Ekere, at the NDDC headquarters in Port Harcourt, stated that promoting awareness campaigns within the Niger Delta region remained a viable tool for development agencies that needed peace and security to deliver on their mandates.

Monday 09 July 2018

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BUSINESS DAY

FINANCIAL TIMES Can US equities ride out rising trade tensions?

BlackRock and Citi plan Paris expansion in Macron coup Page A8

Page A9

World Business Newspaper

Mattis battles to hold line with Trump as Nato summit looms US defence secretary appears increasingly at odds with the White House KATRINA MANSON

hen Jim Mattis first met Donald Trump, he warned the US president of the essential role played by Nato, the western security alliance that Mr Trump had spent months attacking for exploiting American largesse. Mr Mattis was convincing enough for the president to appoint the retired four-star general as his defence secretary. But as the pair prepare for the Nato summit in Brussels on Wednesday, they have rarely looked further apart. “There’s not much question that he’s a lonely warrior in this administration,” former US defence secretary Leon Panetta, who previously worked with Mr Mattis, told the Financial Times. “The president [now] appears to be operating much more by his own instincts when it comes to foreign policy and I think as a result advisers like Secretary Mattis have lost some of their influence.” In recent weeks, the Pentagon has appeared at odds with the White House over its request for the defence department to speed up an internal assessment of whether to withdraw some or all of the 35,000 US troops based in Germany. When the news broke, Pentagon officials rushed to inform their alarmed German counterparts earlier this month that no decision had been taken, according to national security officials and Washington observers in touch with the administration. The Pentagon, which is frustrated by restrictive conditions in Germany, including a ban on flying helicopters at night, had already been reassessing its global troop positioning. The White House’s renewed interest in scaling back the US presence in Germany came as Mr Trump

prepared to deliver a stern message to Nato leaders. Mr Panetta said he suspected Mr Mattis was “trying to do everything possible to make sure that the Nato meeting doesn’t turn out to be the disaster that the G7 meeting was . . . and that the basic message is one of unity rather than disunity.” Despite the effort by Mr Mattis — dubbed by one Washington observer as “the secretary for reassurance” — to strengthen alliances, serving and former officials warn Mr Trump could do anything during the Nato meeting. The president had refused to accept arguments from Berlin that it was boosting defence spending in line with his demands, saying projections still fell short of the 2 per cent target, they added. “All he cares about is the headline number,” said a Washington-based official. “Nobody knows what’s in his head,” added a national security official. Mr Mattis has lost battles with the president in the past, but in recent months Mr Trump has waded more heavily into defence territory. He announced a new Space Force against Pentagon advice, and failed to inform Mr Mattis the US would halt war games with South Korea. A senior defence official said Mr Mattis “was not concerned” by the prospect of suspending the military exercises. Eric Edelman, former undersecretary of defence for policy in the Bush administration, said he had received reports of a lack of inter-agency consultation on national security, coinciding with the arrival of the hawkish new national security adviser John Bolton, whom Mr Mattis jokingly told he had heard was “the devil incarnate”. “I’ve been told they haven’t been holding principals’ meetings for weeks,” Mr Edelman said of the top consultative meetings convened by the National Security Council.

Jim Mattis, US defence secretary, right, and Donald Trump, the president, are looking increasingly further apart on policy © AP

Pompeo refuses sanctions relief as N Korea diplomacy hits roadblock Pyongyang calls US demands ‘gangster-like’ BRYAN HARRIS, SONG JUNG-A AND KANA INAGAKI

S secretary of state Mike Pompeo has insisted that sanctions on North Korea would remain until the reclusive state abandoned its nuclear weapons amid growing concern that diplomacy between the two nations has hit a roadblock. The comments from the top US diplomat on Sunday came after North Korea lambasted Washington, accusing it of “robbery” and “gangster-like” demands following a high-level summit with Mr Pompeo in Pyongyang. The claims marked the first sign of discord between the two parties in months and were jumped on by many analysts as a sign that North Korea was insincere about its pledges to abandon nuclear weap-

Curbs are bad for the economy and public finances, says Tito Boeri

May’s soft-Brexit Chequers deal: What it means The policy shifts in UK prime minister’s new EU divorce plan and how the EU is likely to respond

rime minister Theresa May has strong-armed her cabinet into backing a new vision for a soft Brexit. A three-page government statement, issued after a marathon cabinet meeting on Friday at Chequers, Mrs May’s country residence, represents one of the most significant expositions of UK economic policy since the 2016 referendum vote to leave the EU. But Mrs May’s vision remains incomplete, and her statement is peppered with ambiguities that she must eventually confront as she battles to win round Brussels without losing the support of the Conservative party or parliament. What are the big policy shifts in Mrs May’s plan? The UK position crucially “evolves” in two ways that would allow for a Norway-style Brexit deal covering at least part of the EU single market. The first is Britain’s proposal for a

“free trade area for goods” involving the UK and the EU that in effect continues existing regulatory and customs arrangements for manufacturing and agricultural products after Brexit. This is achieved by the UK becoming a ruletaker, with a treaty-based commitment to “ongoing harmonisation with EU rules on goods”. Just as important is Britain’s concession on enforcement. UK courts would pay “due regard” to European rulings in cases relating to EU-set rules. In other words, while Britain is a separate legal jurisdiction after Brexit, the European Court of Justice would be supreme in interpreting the UK-EU goods rule book. There are caveats — for example the British parliament could veto changes to the rule book if it accepts the “consequences for market access”. But taken together, the safeguards offer no more freedom than Norway enjoys as a member of the European Continues on page A8

talks between the US and North Korea since Mr Kim last month pledged to work towards “complete denuclearisation” during a landmark summit with US President Donald Trump in Singapore. But the former CIA chief was barely out of the country before Pyongyang took to state media to blast the US for making “unilateral demands” that breached the spirit of the Singapore summit. Mr Pompeo on Sunday sought to play down the North’s criticism, saying that talks were conducted in “good faith”. He said he knew “actually what precisely took place” in the meetings. He stressed that, with the exception of sanctions, the US would make concessions and increase security assurances in line with progress towards denuclearisation by Pyongyang.

Italy pensions chief clashes with Matteo Salvini on immigration MILES JOHNSON AND DAVIDE GHIGLIONE

ALEX BARKER

ons and was hoping to ensnare the US in drawn-out negotiations. “It is North Korea’s typical tactic of dragging their feet on denuclearisation,” said Shin Beom-chul, a North Korea expert at the Asan Institute for Policy Studies in Seoul. However, Mr Shin and other analysts believe Pyongyang will not walk away from diplomacy and that negotiations are now likely to become more complicated, with the Kim Jong Un regime seeking concrete concessions such as a peace treaty with the US. “North Korea’s latest statement shows its true intentions on denuclearisation . . . Pyongyang wants incentives from Washington for each major step. These talks will probably take a long time,” Mr Shin said. Mr Pompeo on Saturday left Pyongyang after the first high level

he head of Italy’s national pension agency has warned that a clampdown on immigration coupled with higher pension spending would be bad for the economy and the public finances and would worry international investors. Tito Boeri, the president of the INPS, has clashed with Matteo Salvini, the farright leader and interior minister steering the tougher approach to migrants. “Where does he live? Mars?” an angry Mr Salvini tweeted last week after the academic economist issued his warning about the country’s ability to meet its pension obligations without significant growth in the working-age population. Mr Salvini also hinted he could be replaced when his term comes up for renewal next year. But in an interview with the Financial Times, Mr Boeri seemed undeterred. Italy was in a “difficult demographic phase” because of its declining indigenous population, Mr Boeri said. “Investors are worried about the state of the Italian economy in general, and its

prospects for growth with a reduction of the active labour force and a reduction in the percentage of young workers.” He also cautioned that additional pension spending could make it harder for Italy to tackle the high unemployment among young people that has prompted many to look abroad for work. “If we allow more people to retire and increase pension spending, this can become a very serious problem for the employment of young people. If we want to reduce youth unemployment, the recipe is not to reduce migratory flows, the recipe is to reduce taxes and public spending.” Pensions, just like migration policy, are an issue on which the new government has built its support and staked its reputation. Mr Salvini’s League and its coalition partner, the Five Star Movement led by Luigi Di Maio, want to roll back pension reforms that were carried out in 2011, when Italy was under pressure to show it could control its spending in the heat of the eurozone debt crisis. The 2011 pension reforms, named after then labour minister Elsa Fornero, increased the retirement age to 67 and stopped the indexation of pensions to inflation above a certain level of income.

Seeking to be friendlier to older workers, the new government’s coalition agreement pledged to allow people to leave work if the sum of their age and years of contribution was equal to 100 — allowing, for example, a 60-year-old to retire if they had paid into the system for 40 years. The question of how to implement and pay for those changes may expose faultlines in the coalition, as both parties push to deliver different outcomes to their distinct political bases — the League’s in the wealthier north and Five Star’s in the poorer south There is wider tension in the coalition between the League’s desire to cut taxes and the Five Star’s call for higher spending. “The market is questioning how expenditure can increase and taxes can come down at the same time,” said Kaspar Hense, a portfolio manager for BlueBay Asset Management and an investor in Italian government debt. Mr Boeri said that net immigration was important to offset a net decline in Italy’s population at a time when deaths are outstripping births. With net immigration falling “there is a decrease in the population, this is a problem for the new generation of taxpayers”.

BUSINESS DAY

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NATIONAL NEWS

Danske Bank’s money laundering scandal spooks Allegations of suspicious transactions at Estonian branch are damaging lender’s image RICHARD MILNE

avid Helgason, the Icelandic entrepreneur behind one of Denmark’s biggest recent start-ups, had had enough. The co-founder of Unity Technologies, a video games group reportedly valued at $2.6bn, last

week decided to move his bank account from Danske Bank. He was far from unhappy with the customer ser vice at Denmark’s biggest bank and admitted he was “not looking forward” to the months of work it would take. But he decided to take a principled stance because of a growing

money laundering scandal that has ensnared Danske and is causing its image increasing damage by the day. “Management should not just ensure that their business follows the law (as you apparently have done), but also make sure their actions can withstand the light of

day. And there you have failed so seriously that we your customers need to draw the consequences and move on,” he wrote in an open letter on Facebook. The scandal facing Danske was already serious enough but last week it intensified, forcing investors to take notice and in the final three days of the week they sent its shares down 5 per cent. The bank’s problems centre on its Estonian branch where billions of

dollars of suspicious transactions are alleged to have taken place between 2007 and 2015 involving money mostly from former Soviet states such as Russia, Azerbaijan, and Moldova. “It is very serious. If you look at this scandal, you can compare it to the most serious money laundering scandals in Europe. It’s a disaster for the bank,” said Jakob Dedenroth Bernhoft, a Danish expert on money laundering.

Ethiopian and Eritrean leaders boost links as thaw advances

May’s soft-Brexit Chequers deal: What it means Continued from page A7 Economic Area. Which issues are fudged in the document? Many policy issues remain ambiguous, or unaddressed. This is most obvious in the area of customs and trade. Britain wants a “facilitated customs arrangement” with the EU, which allows the UK to control tariffs and pursue an independent trade policy. But in practice Britain also wants to continue “as if” it were within the EU customs territory. One senior EU official called the hybrid model “the fudge of the century”. Services, which cover 80 per cent of Britain’s economy, are largely skirted over. The cabinet agreed to retain “regulatory flexibility” and accept less EU market access as a result. The UK stance arouses suspicion in Brussels, with negotiators arguing it is hard to detach services from goods trade. They note that in areas such as financial services Britain still seems to want to replicate single market style access from outside. Britain’s stance also splits the four freedoms of the single market. Asked about the viability of continuing free movement for goods while limiting access for services, capital and people, one EU Brexit negotiator said: “No way, no way, no way.” What are the other policy battlefronts? The UK government statement is replete with unresolved tensions that will play out during negotiations in Westminster and Brussels. It calls for frictionless access to EU markets for UK fish products, at the same time as insisting the UK will take control of waters, potentially restricting the bloc’s access. The UK wants control of the common agricultural policy, while still automatically applying the EU’s agrifood rule book. Such goals are hard to reconcile with the EU’s insistence on a level playing field after Brexit. While the UK pledges to maintain “high regulatory standards” for environment, social and employment law, it stops short of the harmonisation the EU expects from single market participants. One other highly sensitive policy area is left in the balance: immigration. Mrs May’s cabinet agreed to end EU free movement rules, but want to offer a “mobility framework” for tourists, students and workers, which would potentially replicate some existing arrangements. What happens next? The British government’s white paper on future UK-EU relations, due to be published this week, will explain the policy “evolution” in more detail. The battle over drafting is expected to be fierce. How will the plan go down in Brussels? Senior figures on the EU side accept the Chequers deal opens a new phase in the Brexit negotiations, requiring the bloc to change too. But at present they say it will be more in tactics — through a more engaging tone and approach to UK ideas — rather than substance.

Monday 09 July 2018

Abiy and Afewerki agree deal on embassies, ports and phone lines in bid to end conflict

JOHN AGLIONBY

Emmanuel Macron

BlackRock and Citi plan Paris expansion in Macron coup US fund manager chooses French capital as new base for alternative investment services MARTIN ARNOLD, OWEN WALKER AND DAVID KEOHANE

rench president Emmanuel Macron’s charm offensive to win business from the City of London is starting to pay off as BlackRock and Citigroup join other Wall Street groups in expanding their Paris operations ahead of Brexit. Mr Macron has rolled out the red carpet for financial services companies, promising to cut taxes and red tape while talking up the economic prospects of the country with a “France is back” pitch. In a victory for the French president, BlackRock has chosen Paris over London for its new base to provide alternative investment services across Europe and Asia, as the world’s biggest money manager aims to dominate markets outside its US home. The decision by BlackRock follows months of courting by the French establishment, including a meeting between Mr Macron and Larry Fink, chief executive of the $6.3tn asset manager, at the Elysée Palace. The French leader has also persuaded Citi to expand in the country. The US bank recently poached senior investment bankers from UBS in France as part of plans to add dozens of extra staff in Paris. “The effect of Macron has lightened up the country — before his election it was pretty bleak,” said Luigi de Vecchi, chairman of corporate and investment banking in continental Europe at Citi, who is moving from Milan to Paris. “As you talk to French CEOs, they are all pumped up with tons of cash and aggressive plans.”

BlackRock, which already has nearly 50 staff in Paris and manages around €30bn for French clients, applied to the French markets regulator, the Autorité des Marchés Financiers, two weeks ago for a licence to set up an alternative investment fund management company in the country. This would enable it to sell products such as hedge funds, real estate and commodities funds to the global market from its Paris office. The company hopes to receive authorisation in September. Last month it hired Henri Chabadel as chief investment officer for France, Belgium and Luxembourg, based in Paris. London will remain BlackRock’s main European office and the company does not plan to relocate staff from the UK to Paris. Any hires will be new roles. BlackRock declined to comment. With nine months to go before the UK leaves the EU, financiers are frustrated at the lack of progress in negotiations on the terms of Britain’s departure. Many are starting to rejig their European operations to cope with any disruption. But Brexit was not the main motivation for the French expansion of BlackRock or Citi. “The question is whether in the long term banks will see the number of large corporate clients reduced in the UK,” said Mr de Vecchi, pointing out that Brexit had made British companies vulnerable to takeover by weakening the pound. “Whereas in France you are seeing the creation of European champions.” Arnaud de Bresson of the business lobby group Paris Europlace said financial companies were ramping up plans to open offices in France. “The first teams are arriving,” he added. “It’s true

for asset management companies — including coming from London — but also for international banks.” Citigroup, which employs about 160 people in Paris, said in an internal memo that it had hired Gregoire Haemmerle and Pierre Drevillon from UBS to become head of its French corporate and investment banking unit and head of French M&A, respectively. Citi plans to add 150 jobs in its sales and trading operation in Frankfurt and as many as 100 more, mostly in Paris, but also spread across Milan, Madrid, Dublin and Amsterdam. In the immediate aftermath of the Brexit vote, most Wall Street banks opted for Frankfurt or Dublin to create their alternative EU hubs. But recently some have been unveiling plans to bulk up in Paris. Lloyd Blankfein, chief executive of Goldman Sachs, said in a tweet last year that he was “struck by the positive energy here in Paris” before the bank announced last month that France was a priority in its plans to double its workforce in continental Europe. Bank of America said recently it was relocating three senior investment bankers from London to Paris. JPMorgan Chase said last week it expected to “migrate or add a few hundred roles” to the EU ahead of Brexit — many of which are set to be in Paris. Morgan Stanley also plans to add about 80 jobs in Paris after Brexit. HSBC, which already has a big French operation, has said it is likely to move up to 1,000 jobs to Paris. In addition, inter-dealer broker TP ICAP is in talks with French regulators about setting up a base in Paris in the first quarter of 2019.

he Eritrean and Ethiopian leaders have agreed to reopen embassies in each others’ capitals, reconnect phone lines between the countries and allow Ethiopians to use Eritrea’s ports. Abiy Ahmed, Ethiopia’s reformist prime minister, made the announcement at a state dinner during the first visit by an Ethiopian head of government to Eritrea since the two countries cut off ties after fighting a two-year war from1998-2000, which cost tens of thousands of lives. Mr Abiy has made striking a peace deal with Eritrea one of his priorities since coming to power in April. Neither Mr Abiy nor Isaias Afewerki, who has ruled Eritrea with an iron fist since independence from Ethiopia in 1993, gave details about when or how the breakthroughs would be implemented. Fitsum Arega, Mr Abiy’s chief of staff, said the telephone links would be re-established immediately but it was not clear if this had happened. Mr Afewerki greeted Mr Abiy at Asmara international airport. Their motorcade to Mr Afewerki’s office was cheered by thousands of people lining the streets. Pictures carried on Eritrean state TV showed crowds 10 deep lining the road in from the airport to welcome Mr Abiy. Yemane Gebremeskel, Eritrea’s information minister, tweeted: “The summit is expected to set the tone for rapid, positive changes on the basis of respect of sovereignty and territorial integrity, equality and mutual interest of both countries.” Mr Fitsum said on Twitter: “The yearning for peace was palpable and we’ll decidedly move forward for the good of our people.” Ethiopia refused to accept the terms of the peace deal that ended the conflict, and the two nations have been in a limbo state of “ no war, no peace” since then. But Mr Abiy, who took office in April, has made forging peace with Eritrea one of his priorities. Last month he said he would accept the terms of the peace deal, which requires Ethiopia to cede land to Eritrea. This was followed by the first high-level visit by Eritrean politicians to Addis Ababa. Analysts are sceptical that, despite the rapid thawing in relations — widely seen as unimaginable before Mr Abiy took power — lasting peace is imminent. Rashid Abdi, the Horn of Africa director for the International Crisis Group, a think-tank, said on Twitter: “The road ahead is tough and setbacks inevitable. But the will to peace has never been stronger, especially among young.” Mr Afewerki has made the unresolved conflict with Ethiopia one of the main justifications for turning his government into one of the world’s most repressive regimes. The country requires lifetime national service and independent media have been banned. In recent years Eritreans have, proportionally, been one of the largest national groups seeking to emigrate to Europe.

Monday 09 July 2018

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BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Can US equities ride out rising trade tensions?

The latest US jobs figures and wage growth offer a benign backdrop, but trade risks are building ROGER BLITZ AND JOE RENNISON

an Wall Street ride out an escalating trade war? The combination of robust US jobs growth but stable inflationary pressure should have proved an ideal one for US equities. And while US equities rallied on Friday after the latest US jobs report, the global trade fight is casting a shadow. “Investors have this unusual set of dual realities,” said Rebecca Patterson, chief investment officer at Bessemer Trust. “You have a risk of an escalating, truly global trade war which creates a huge amount of uncertainty. But if you look at the economic data coming out each day most of it is still suggesting robust growth — it still looks really good and that is supportive for earnings.” The likelihood of an all-out trade war is still batted away by many investors as a remote possibility. Nonetheless, there has over the past month been a rotation in US equities, out of globally exposed, growth-oriented “cyclical” stocks such as industrials, into more defensive sectors like utilities. The Russell 2000 index of smaller company stocks, which are better shielded from any tit-for-tat on tariffs, has easily beaten the S&P 500 in performance terms of late. “It is fairly clear from an equity market standpoint that the more cyclical, globally exposed sectors have come under pressure and defensive parts of the market have done well,” said David Lebovitz, global market strategist at JPMorgan Asset Management. Trade disputes could force their way further on to investors’ agendas. A potential extra $400bn of imports from China may have tariffs applied, while the US Department of Commerce is also looking at whether imports of cars and car parts threaten national security and should be subject to tariffs. That could take the total

of US imports subject to new tariffs to over 25 per cent. Yet for Mr Lebovitz, the reaction of the equity market to trade tensions may already have gone too far. The spectre of further tariffs has resulted in overselling in some parts of the market given his expectation that an all-out trade war remains unlikely. “As we get more clarity on how this will play out we think things will rally back,” he said. Others are less convinced. “You want to take risk when you have conviction that risk will be rewarded,” said Ed Keon, chief investment strategist of QMA. “We just don’t have conviction right now.” That is despite the robust economy and the prospect of US companies reporting near record earnings for the second quarter. Will trade tensions support the dollar? While trade tensions have given equity investors pause, they haven’t so far hurt the dollar. Investors’ logic has been that tariffs will ultimately prove more damaging to Europe and Asia than the US. What’s more a further rise in risk aversion should also benefit the dollar. However, last week attention was being pulled by the hawkish tones coming from central banks beyond the US. Sweden’s Riksbank led the way with an upbeat view on inflation, Bank of England governor Mark Carney nudged the market towards an imminent UK rate hike and European Central Bank policymakers were reportedly concerned about the slow pace of its rate profile. Investors are also heavily pricing in a rate hike next week by the Bank of Canada and have the Norges Bank down to raise rates in September. July may be barely a week old but it has so far seen the dollar soften against its G10 partners, and the euro hit a three-week high on Friday. “The dollar is running out of positive catalysts,” says Viraj Patel, ING forex strategist, who adds that there are no winners from the trade dispute.

US bond market especially vulnerable to QE retreat CHRIS FLOOD

he ending of a decade of easy money provided by central banks to support global financial markets will result in a profoundly challenging adjustment period for all investors. Liquidity conditions in bond markets are tightening as the US Federal Reserve and European Central Bank scale back the vast asset purchase programmes that were introduced in response to the financial crisis a decade ago. Oxford Economics, the consultancy, estimates that European investors have spent about $500bn a year buying foreign bonds after the ECB’s asset purchasing programme led to supply shortages from debt issuers in the eurozone. European investors have bought more than half of the bonds issued by US companies over the past four

years and own almost 10 per cent of the outstanding stock of US fixedincome assets. US investors, in contrast, have a significantly lower exposure to foreign debt securities after spending about $200bn a year on non-US bond purchases while the Fed pursued quantitative easing. Reductions in cross-border purchases by European and US investors as a result of the quantitative easing retreat are expected to exacerbate upward pressure on sovereign bond yields and corporate bond spreads. The US bond market could be particularly vulnerable, according to Guillermo Tolosa, an economist at Oxford Economics. This is because weaker demand from European investors is expected to coincide with an increase in the supply of US sovereign bonds to help fund the government’s rising budget deficit.

Over the past month there has been a rotation in US equities as trade war fears grow

Business welcomes Brexit breakthrough but warns of need for speed Industrial companies are upbeat but service sector fears being left at a disadvantage LAURA NOONAN, ALIYA RAM AND PETER CAMPBELL

usiness has given a broad welcome to Theresa May’s new Brexit plan, although executives and lobby groups have stressed the importance of the UK making rapid progress in its negotiations with the EU. Industrial companies that stand to benefit from Britain’s proposed UKEU free trade area for goods expressed satisfaction with the government’s plan outlined after the cabinet supported it on Friday at Chequers, the prime minister’s country residence. Executives in the City of London said it was helpful the government had set out its thinking, although some expressed concern that the three page post-Chequers statement did not give much prominence to the services sector’s strategic importance. The CBI, British Chambers of Commerce and Institute of Directors all responded positively to how the cabinet had reached an agreement on Mrs May’s Brexit plan at Chequers. In the run-up to the meeting, manufacturers including Airbus, BMW and

Jaguar Land Rover had warned they could reduce their UK operations if Brexit led to major customs and trade disruption. The Chequers statement appeared to address these concerns, and Roger Carr, chair of BAE Systems, the UK defence manufacturer, said: “A step in the direction of frictionless trade with the EU after Brexit will be welcomed by business. “What we need now is rapid progress in the negotiations between the government and the European Commission to give us all, on both sides of the Channel, the certainty we need to plan for a mutually prosperous future.” While sections of the Chequers statement focused on the proposed free trade area in goods, there were only limited references to services industries, which represent 80 per cent of the UK economy. The document said Britain’s plan for more regulatory freedom on services would mean “the UK and EU will not have the current level of access to each other’s markets”. It added that Britain would seek a model for financial services that

“preserve the mutual benefits of integrated markets and protect financial stability”. Mark Wilson, chief executive of Aviva, the insurance company, said: “Business craves certainty and the government’s progress and leadership this week is an important step in the right direction.” Simon Lewis, chief executive of the Association for Financial Markets in Europe, a trade body, said “lots of expectations” were riding on getting more details from the government’s white paper, which will outline the UK’s proposals for a future relationship with the EU after Brexit, and is due to be published this week. “There was concern in the City [after the Chequers deal] that the message needs to be re-emphasised that this [the UK] is a service economy,” he added. The Chequers statement made no mention of the UK’s technology industry, which has been lobbying for regulatory alignment between Britain and the EU after Brexit to ensure companies can continue transferring data across borders with ease.

Anglican £12bn investment funds in threat to fossil fuel companies Synod votes to sell shares in any group slow to tackle climate change from 2023 ATTRACTA MOONEY

he Church of England’s £12bn endowment and investment funds will sell their shares in any fossil fuel companies that are slow to tackle global warming from 2023 after Anglican bishops voted in support of divestment in a hugely symbolic move on Sunday. At its General Synod, the church’s parliament, bishops voted 347 to 4 in favour of selling their holdings in any fossil fuel companies that by 2023 have not aligned their businesses with the Paris Agreement to restrict global temperature rises to below 2° Celsius. The move by the UK’s established church, whose supreme governor is the Queen, marks one of toughest stances taken yet by a large religious community. The Church of England said the vote made clear “that the Church must play a leading role and exercise its moral leadership on the urgent issue of climate change”. The vote comes in the wake of warnings about the impact of global warming by religious leaders glob-

ally, including Pope Francis, who last week said climate change risks turning the earth into pile of “rubble, deserts and refuse”. Christian Aid’s head of UK advocacy Tom Viita said the vote showed that “the bell is tolling for the fossil fuel era”. “This vote puts the oil majors on notice, and strengthens the arm of those pushing the companies to move more quickly to a low-carbon future,” he added. Ahead of Sunday’s vote, 10 bishops and more than 50 members of the clergy wrote an open letter saying divestment would enable the church to “demonstrate credible leadership on one of the most important moral issues of our time”. The amendment passed on Sunday was less strict than the one initally proposed ahead of the synod. That would have forced the church to sell out of fossil fuel companies that failed to meet the Paris Agreement by 2020. Prior to the vote, the Church Commissioners and the Church of England Pensions Board, which are charged with overseeing the invest-

ments, argued such a move would be premature. “Our active engagement and collaboration with other investors are changing companies’ behaviour, providing greater leverage and influence than we could achieve simply by selling our holdings. We are not convinced that forced divestment will bring about the change we need to see,” it said last week. David Walker, Bishop of Manchester and deputy chair of the Church Commissioners, said during the debate that the divesting in 2020 would not spur companies to make change. “2023 accords better with our strategy. It gives engagement the time it needs,” he added. The Church Commissioners co-filed a motion at ExxonMobil, the oil company, last year calling for improved disclosure of climaterelated risks, which was passed by investors. The body has also been a vocal member of the Church Investors Group, a coalition of religious investors that have pledged to take a tough stance against companies over global warming.

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Ambode, Utomi recommend new skills to workers JOSHUA BASSEY

overnor of Lagos State, Akinwunmi Ambode Pat Utomi, a professor and political economist, have emphasised the need for civil servants to embrace information technology and behavioral skills so as to elevate their service to the public. They spoke at a training for select civil servants in the Lagos public service, Friday, in Ikeja, pointing out that such skills will enable them perform effectively in the discharge of their duties. Ambode, who declared the training session open said to climb the corporate ladder and be effective in new roles, civil servants needed to learn new skills and change the way they use information at their disposal. Represented by Benson Oke, the commissioner of establishments, training and pensions, Ambode said: “Decision makers must gather and consider data before making a choice.” Problem analysis involves framing the issue by defining

its boundaries, establishing criteria with which to select from alternatives, and developing conclusions based on available information. Analysing a problem may not result in a decision, although the results are an important ingredient in all decision making.” He noted that there was the need for senior level executives to appreciate the fundamental differences in the character of their decision-making responsibilities and to develop a decisionmaking style that is unique to their responsibilities and job description. “It has been observed that, “decision-making styles differ in two fundamental ways: how information is used and how options are created. When it comes to information use, some people want to mull over reams of data before they make any decision. The result is a well-informed decision, but it may come at a cost in terms of time and efficiency. The net effect is that, if public servants are well-equipped to discharge these tasks, the programmes of government will be e effectively implemented,” he said.

FRSC returns N500,000 to accident victims YOMI AYELESO, Akure

he Akoko unit of the Federal Road Safety Corps (FRSC) in Ondo State has presented N500,000 recovered from the scene of an accident to the owners. The accident occurred recently at the Oke-Maria in Oka-Akoko, headquarters of Akoko Southwest local government area, where some travellers died, property lost and many vehicles burnt with valuables. The amount was refunded to the owners and families of the deceased. The new Ondo sector commander of the FRSC, Rotimi

Adeleye, who was represented by Ikare unit commander, Jimoh Basiru, recalled that some market women returning from the north part of the country to Ibadan were involved in the accident. The sector commander, who observed that road safety was a collective responsibility of the drivers and passengers, noted that when a driver over-speeds; it was the responsibility of the passengers to check him. One of the beneficiaries, Funmi Okunola hailed the agency. She urged others to emulate the gesture, noting that in spite of the harsh economy, FRSC officials could still be honest.

Edo sickle cell centre records 7,573 patients

aroline Omoti, board chairman, Edo State Sickle Cell Centre has disclosed that a total of 7,573 sickle cell sufferers were attended to by the centre in 2017. Omoti, made the disclosure, when Tonymay Foundation Sickle Cell Aid donated self-care tool kits to sufferers in Benin, the state capital. She said the figure was 4,159 higher than the 4,000 patients recorded in 2014. The chairman, who commended the donor for the gesture, however appealed for more attention to the centre through allocation of funds, education and research to assist sufferers in the provision of

medical care. Andrew Otokhina, chairman, Tonymay Foundation Sickle Cell Aid, said the donation was part of the foundation’s contributions and investment in the health of sickle cell sufferers in the state. Otokhina said that sickle cell was not a disease but a disorder that can be managed by medical professionals. He, however, warned sufferers against patronising unqualified medical personnel in private hospitals. Meanwhile, sickle cell sufferers in the state have appealed to the state government for urgent signing of the sickle cell bill recently passed by the state House of Assembly into law.

National Coordinator of Atiku Care Foundation, Aliyu Ibn-Abbas (3rd, l); Zamfara Chairman of the NGO, Kabiru Mai-Palace and other officials of the NGO presenting relief assistance to attack victims in Yandoton-Daji town, Tsafe Local Government Area of zamfara on Friday. NAN

Oil spill destroys 50 fishing settlements in Bayelsa, says NGO SAMUEL ESE , with agency report

il and Gas Producing Areas Enlightenment and Empowerment Initiative (OGPAEEI), a nongovernmental organisation operating within the Niger Delta region, says over 50 fishing settlements have been destroyed by the recent oil spill in Aghoro 1 and 2 communities, in Bayelsa State. Aghoro is hosting an oilfield operated by Shell Petroleum Development Company (SPDC) in Ekeremor local government area of Bayelsa. It would be reecalls that Aghoro 1 and 2 settlements were affected by a spillage from SPDC pipeline network in the area on May 17. Anapunere Awoli, spokesman of the NGO, told said n Yenagoa, the state capital, on Friday that about 10,000 fish-

ing nets, sources of water and farmland with crops had also been adversely impacted and damaged. Awoli, who spoke on behalf of the president of the group, Jackson Igbabiri, listed the most affected communities in Aghoro 1 to include Famous Ama, Garden of Eden, Aya Ama, Azatitor and Birigbene among others. “From the assessment we conducted on the incident, we found out that about 10,000 fishing nets, over 50 fishing settlements, farmlands including coconut farms, plantain and water yam farms were impacted by the spill. “Some of the fishing settlements in the area are Amasese, Idolo, Semetiegbe, Yoba, Agoloudu, Ama Iyorodtugbene, and Isun Adofeye camp, among others. “We are calling on SPDC to urgently provide alternative sources of water like borehole

for the people; the people are also in dire need of medical aid and food items; the situation can lead to public health challenges if not taken care of.” He, however, commended officials of Bayelsa State government for their visit to the affected communities, describing it as ‘very encouraging’ and a show of sensitivity to the plight of the victims. Officials of the government, led by Gboribiogha Jonah, the deputy governor, had visited the impacted sites and enjoined Shell to apply standard practice to avert a recurrence. In a separate interview, Enimikem Famous, the traditional ruler of Famous Ama community in Aghoro, described the incident as “unfortunate” and urged the Federal Government, Shell and other well-meaning Nigerians to

come to their aid. Famous expressed dissatisfaction over the suffering of the people due to oil spillages, adding that the adverse effects on human health were worrisome. “We have suffered too much of spills; our people have suffered from several illnesses such as cholera, severe cough and infertility caused by the type of water we consume,” he said. Reacting to the incident, Alice Aje, manager, stakeholder relations at SPDC, said the oil firm was responding to the spill incident and sought the understanding of the community. She described the spill as “regrettable and unfortunate”, adding that efforts were underway to convene a joint investigative visit with community representatives to probe the cause of the spill.

Human trafficking: Britain establishes task force in Benin IDRIS UMAR MOMOH

he British Government has inaugurated a Joint Border Task Force (JBTF) satellite office in Benin, Edo State, as part of measures for an effective and resultoriented war against human trafficking in the country. British deputy high commissioner in Nigeria, Harriet Thompson, opened the office on Friday. The office was provided by National Crime Agency (NCA) of UK to support the National Agency for the Prohibition of Trafficking in Persons (NAPTIP) in the offensive against human trafficking. Thompson said that UK Government was collaborating with the Federal Government of Nigeria to fight human trafficking and modern slavery as the issues

…as 8,000 victims rehabilitated affect both countries. According to the deputy high commissioner, impressive successes have been achieved through years of collaboration, especially with the recent conviction of a suspected Nigerian female human trafficker in the UK. The envoy said that more of such convictions were expected, adding that Britain would look at the request by the director-general of NAPTIP, Julie Okah-Donli, to open similar office in Kano State. In her remarks, JBTF representative, Vanessa Fleming, said that much progress has been made by the body over the last two years in the war against human trafficking. She commended the UK Government and Nigeria

for the synergy between and expressed hope that the satellite office would be exceptional in service delivery. On her part, Okah-Donli said that the JBTF was officially inaugurated on September 16, 2015, with 12 staff members and another eight selected in 2017. She disclosed that presently the agency had 10 cases before Federal and State High Courts in Oyo, Lagos and Edo, at different stages of trial of the suspected offenders. The NAPTIP boss said that the agency had secured a conviction in one of the cases in Benin, adding that more convictions would be recorded. Meanwhile, NAPTIP has rehabilitated 8,000 victims

of human trafficking from 2003 to date. Okah–Donli in a statement issued in Abuja at the weekend, said that within the period under review, the agency recorded 352 convictions of traffickers for their various crimes on trafficking. She stated that in the last 15 years of the establishment of NAPTIP, the agency had processed more than 10,000 reported cases of human trafficking. According to her, the agency needs to intensify efforts to win the war against human trafficking. She said that NAPTIP would collaborate with other relevant stakeholders to mark the 2018 World Day against Human Trafficking to bring everyone on board to the fight.

BUSINESS DAY

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NEWS YOU CAN TRUST I MONDAY 09 JULY 2018

fivethings

Opinion

for your new week

2019 elections are meaningless if not about restructuring Nigeria GLOBAL PERSPECTIVES

OLU FASAN Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

igerians are evidently looking forward to next year’s general election. The battle lines have been drawn; between those who want to return President Buhari to power and those who want to deny him a second term. That’s partly what democracy is about: the ability to vote a government in and to vote it out. However, democracy requires proper foundations, otherwise you simply have the tiresome rigmarole of voting in and out governments, yet nothing changes. My view is that the purblind excitement of most Nigerians about the 2019 elections would end in tears if the elections are just another routine exercise of voting for or against politicians rather than a national referendum on Nigeria’s future. Lest we forget, we’ve been here before. In 2015, most Nigerians believed that President Goodluck Jonathan was utterly hopeless and beyond the pale, which indeed he was, and that General Buhari was the solution to Nigeria’s problems, which, of course, he wasn’t. Throughout the campaign, I wrote in this column, ad infinitum, that the difference between Jonathan and Buhari was like that between six and half a dozen, or between Tweedledum and Tweedledee! Neither could do the job. But most Nigerians voted for Buhari, amid high hopes and expectations. Three years on, the hopes and expectations have been wholly dashed. I am not assessing Buhari’s performance here, but, for context, let’s briefly consider three critical areas – poverty, corruption and insecurity. On poverty, Nigeria is now “the poverty capital of the world”, according to the US-based Brooklyn Institute, which says Nigeria has overtaken India as the nation with the greatest number of extremely poor people, with 87m extremely poor compared with India’s 73m. On corruption, Transparency International said earlier this year that the perception of corruption in Nigeria was getting worse. While Nigeria ranked 136th out of 176 in the corruption perception index in 2016, it ranked 148th out of 180 in 2017, dropping 12 places below its 2016 performance. What about insecurity? The security situation in Nigeria is worsening, but Buhari is remorseless. Recently, after

the gruesome massacre of 200 farmers by the marauding herdsmen in Plateau State, President Buhari, speaking through his media adviser, Femi Adesina, decided to play a bizarre numbers game, comparing the number of people killed under his administration with those killed under the PDP government. “More people died under PDP”, he said, as if the deaths of Nigerians are a game of numbers! As a famous British writer once said, “A civilised society treats every death equally”, adding that “any violent death is a rip in the fabric of society”. But the Buhari government is treating the deaths of Nigerians as trifles. But here is the point. Yes, President Buhari has failed woefully. Yet, if Nigerians see next year’s election as simply about punishing Buhari and electing another person as president or, for his followers, about returning him to power regardless, they would be utterly misguided. The issue is bigger than Buhari or anyone else. It is structural. You cannot build an edifice on a weak or flawed structure. I have thought very hard about Nigeria and come to the inexorable conclusion that, whoever is elected president, this country can never make progress unless it is restructured. You may say that a competent, honest and visionary leader can make a decisive difference in effective government. That’s true, but civilised societies build structures

constitutional arrangement. The truth is that Nigeria’s flawed, dysfunctional politico-governance structures have largely produced incompetent, dishonest and self-interested leaders. Nigeria has never had a national leader with the right narratives, signalling actions and institution-building ethos to unite and move the country forward. Instead, leaders and institutions in this country have mainly served narrow interests. It is why the civil service cannot be reformed. It is why customs, though completely corrupt, cannot be transformed. One can go on! Powerful narrow interests hold the country to ransom. But this erodes state legitimacy and entrenches mistrust between the government and the people. Indeed, as one international study recently put it, “The deepened distrust between government and citizens make a successful transition from poverty to prosperity harder as the history of Nigeria has shown”. But the greatest source of distrust in Nigeria is the total absence of effective checks and balances on the abuse of power and the skewed balance of power between the centre and the sub-national units. For instance, why is it that if the president sneezes in Abuja the rest country catches a cold? Why is it that if the inspector general of police gives the wrong order in Abuja, policing throughout the country suffers? Why is it that when some criminal

The issue is bigger than Buhari or anyone else. It is structural. You cannot build an edifice on a weak or flawed structure. I have thought very hard about Nigeria and come to the inexorable conclusion that, whoever is elected president, this country can never make progress unless it is restructured rather than simply put their trust in individual leaders. Even a good leader can be constrained by his environment. Thus, instead of making good action dependent upon a good decision of a leader, civilised societies ensure that it becomes routine behaviour, shaped by rules and institutions, underpinned by the right values and norms. In other words, it is better to have strong and enduring politico-governance structures, based on a common purpose and guided by right values and norms, than to hope for the emergence of a good leader in an election. Indeed, in any election, good leaders are more likely to emerge under the right governance structures than under a flawed and ineffective politico-governance or

herders attack farmers in Benue state, the governor must rush to Abuja to beg the president for help? The truth is that institutions of governance in Nigeria are too centralised and enmeshed in abuse of power and a culture of impunity. This undermines social cohesion and common purpose without which no country can develop. Now, as I said earlier, my view, strongly held, is that Nigeria cannot make progress without restructuring, without an enduring political settlement. As the UK’s Department for International Development (DfID) put it, “The political settlement is central to development”, adding that “it explains the difference between countries with apparently similar endowments or disadvantages”.

In other words, an enduring political settlement is at the heart of economic and political progress. That’s why, for me, next year’s elections must be on a single issue: restructuring Nigeria. Every political party participating in the elections must commit in its manifesto to political restructuring. To their credit, Nigeria’s two major political parties, All Progressives Congress (APC) and People’s Democratic Party (PDP), have taken some major steps in this regard. In 2014, the PDP government, under President Jonathan, set up the National Conference that produced a detailed report on restructuring Nigeria. And, in January this year, the APC’s committee on restructuring, chaired by the Kaduna State governor, Nasir El-Rufai, submitted a four-volume report setting out its recommendations. Both parties, and indeed all the parties, must make a firm manifesto commitment to support and help ensure the political restructuring of Nigeria after next year’s elections. But no single party or ethnic group alone can restructure Nigeria. President Buhari reportedly said, rather disingenuously, that once his party approved the El-Rufai report, he would implement it. Wrong. The kind of political settlement that Nigeria needs requires elite consensus and inclusivity. As we have seen, the issue of political restructuring has been politicised: The APC rejected PDP’s National Conference and the conference report, and PDP recently scoffed at the APC’s restructuring report, questioning the party’s motive. But, for the sake of the unity and progress of this country, the restructuring of Nigeria, the creation of an enduring political settlement, must not be undermined by narrow party, ethnic or sectional interests. Which leads me to my second, more radical point. The next government after the 2019 general elections must be a Government of National Unity. Every party must commit in its manifesto to form, if it wins, or to join, if it loses, a unity government. Elsewhere, major political restructuring or constitutional settlement has only taken place with a unity government. The post-apartheid political settlement for South Africa, the new constitutional arrangement for Kenya after the post-election crisis of 2007 and, indeed, the peace settlement in Northern Ireland. They all required a government of national unity to deliver the transformation! Nigeria is at a crossroads. Anyone who denies this is living in Cloud-cuckoo-land. Next year’s elections must be about starting the process of removing the structural obstacles to progress in Nigeria. Short of that, the elections would be totally meaningless!

Fascinating business facts

$9.3bn

ambia is shelving projects that aren’t almost complete and will renegotiate loans as it seeks to contain ballooning debt and entice the International Monetary Fund to restart talks on a support package. The IMF has warned the southern African nation is at high risk of debt distress, while investors have grown skeptical about the amount of external loans the country claims it has incurred, saying it may be significantly more than the $9.3 billion announced. Eurobonds of Zambia, Africa’s second-biggest copper producer, have been the worst performers this year.

$1,000

opper’s flashing a powerful warning about expectations for global growth as the trade war between the world’s two biggest economies escalates. Prices have lost more than $1,000 a metric ton since touching a four-year high on June 7 in the steepest four-week loss since 2011. Copper fell with most metals Friday as President Donald Trump slapped tariffs on $34 billion of Chinese imports, prompting the Asian country to retaliate in kind.

114%

he biggest risk investors face in the rest of 2018 is letting their emotions spook them into selling stocks, according to UBS Wealth Management. “By focusing too heavily on short-term risks and not enough on long-term growth, many investors often miss out on returns,” UBS strategists led by Mark Haefele, global chief investment officer of the wealth-management unit, wrote in a note. Over a 10-year horizon, stocks have been almost 20 times as likely to deliver a positive return than a negative one, according to UBS. And two of the mostwatched indexes prove the point: the S&P 500 Index is up 114 percent over the past decade and the Stoxx Europe 600 Index has risen 36 percent.

$7.5bn

thiopia will need $7.5 billion to finish infrastructure projects such as a massive dam and roads that the government hopes will drive industrialisation, Abiy Ahmed, the new prime minister said on Friday. Speaking to parliament before its vote on the 2018/19 budget, the reform minded leader who took office in April, said the government needed to be more efficient and prudent in its spending of public funds. He said many stateowned enterprises were heavily indebted and export earnings were a third of the $10 billion annual target.

$892m

A Brazilian federal court has ruled that state-run oil company Petroleo Brasileiro SA can subtract $892.7 million it owes in future fees to Dutch group SBM to cover fines and damages it has been ordered to pay Petrobras for its role in a graft scheme, according to a written statement prosecutors released on Friday. Under a lawsuit filed against companies in the Dutch group, federal prosecutors calculated losses incurred by Petrobras under the scheme amounted to $303 million.

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