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Investors await Buhari’s plans to kick-start economy

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2 BUSINESS DAY NEWS

Investors await Buhari’s plans to kick-start economy As stock selloff signals lack of policy clarity LOLADE AKINMURELE

igerian stocks are down some 4 percent since President Muhammadu Buhari’s re-election in February as investors struggle to find positive triggers to swoop for stocks at a time when the allure of double-digit yielding fixed income government securities has proved difficult to resist. Although the bearish stock market mirrors a global shift from risk assets to safe-havens, analysts say Nigeria has contributed to the stock downturn with its policy inaction at a cru-

cial time when peer countries are implementing the type of reforms capable of sending positive signals to investors. Egypt is talking up energy and investment reforms while Kenya is in the middle of repealing a regulation that caps bank lending. Those reforms mean both markets have done better than the Nigerian stock market this year. Back home in Nigeria, President Buhari is pushing for reforms in the oil and gas sector from the gas commercialisation programme which will put an end to gas flaring, even as Production Sharing Contracts (PSC) with International Oil and Gas

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companies are being reviewed. Both reforms have the potential to attract private investments and create fresh revenue sources for the cash-strapped nation. But investors have not been impressed. Critics say the big ticket reforms that need to happen to boost economic growth are still stalling, whether it is the need to ditch expensive fuel subsidies or pass the Petroleum Industry Bill. “Nigeria is best summed up by investors as a country with a developed market growth rate but emerging market risk, so it is not exciting enough for stock investors. Instead, they are piling into fixed income where they are

taking much less risk,” said Wale Okunrinboye, head of research at Lagos-based pension fund manager, Sigma Pensions. “Buhari has not done much to change that story. He hasn’t convinced investors enough that the economy will fare better in his second term,” Okunrinboye added. Lagos has been the weakest performer year to date of the three biggest stock markets including Nairobi and Johannesburg. Jo’burg, being the most developed and liquid of the three markets, appears to have benefitted Continues on page 46

Moody’s confirms Access Bank’s longterm deposit rating, withdraws Diamond Bank’s rating OLUFIKAYO OWOEYE

lobal credit rating agency, Moody’s has confirmed Access Bank’s long-term local currency deposit rating of B2, longterm foreign currency deposit rating of B3, long-term issuer ratings of B2, local currency senior unsecured rating of B2, local currency national scale deposit ratings of A1.ng/NG1, foreign currency national scale deposit ratings of A3.ng/NG-2, and national scale senior unsecured rating of A1.ng. Moody’s also affirmed Access Bank’s short-term bank deposit ratings, issuer ratings and counterparty risk ratings (CRR) at Not-prime and affirmed the short-term counterparty risk assessment (CRA) at Notprime(cr). The outlook on the bank’s long-term deposit ratings, long-term issuer ratings and senior unsecured rating was changed to stable from ratings under review. It also downgraded Access’ baseline credit assessment (BCA) to b3 from b2, its long-term CRRs to B2 from B1, long-term CRA to B2(cr) from B1(cr), and national scale CRRs to Aa3.ng from Aa1.ng. The BCA is a measure of the probability that a bank will require support to avoid default beyond the support provided by its affiliates. Diamond Bank’s baseline credit assessment was upgraded to b3 from caa3 and all Diamond’s ratings have been aligned with the ratings of Access. The outlook on Diamond’s long-term deposit and issuer ratings was changed to stable from ratings under review. Diamond’s ratings were subsequently with-

Continues on page 46

Inside Banks’ income from investment securities hit N655bn in 2018 P. 4 L-R: Umar Hamisu, MD, Investment Development Company, Kebbi State; Ladi Balogun, group chief executive, FCMB Group plc; Ahmed Karfi, MD, Investment & Property Development Company, Katsina State, and Misbahu Yola, MD, FCMB Pensions Limited, at the Annual General Meeting of FCMB Pensions (a subsidiary of FCMB Group) in Lagos.

NNPC records poor performance in 2018 despite $71 average oil price ... Brazilian, Chinese, Russian, Norwegian peers take the shine DIPO OLADEHINDE

hen Nasir El-Rufai said in 2015 that Nigeria must do away with its “corrupt” oil company or stand the risk of being destroyed by it, not many stakeholders took him seriously. However, a deeper look at latest financial result of Nigerian National Petroleum Corporation (NNPC) shows the Kaduna State governor could be right after all. With international benchmark Brent crude averaging $71.19 per barrel in 2018, 31.5 percent gain from 2017 when it averaged $54.15 a barrel, state-owned NNPC performed poorly compared to its peers in China, Brazil, Russia and other

countries. BusinessDay analysis of NNPC’s full-year 2018 report shows between January and December 2018, Africa’s biggest oil producing country spent N730.9 billion on under-recovery, popularly called subsidy, while N140.6 billion was also spent on old, perennial problems such as pipeline repairs and management cost. Figures from the corporation’s operations and financial report for 2018 actual show gains of N393.5 billion made by its upstream and gasprocessing subsidiaries – Nigerian Petroleum Development Company (NPDC), Integrated Data Service Limited (IDSL), National Engineering and Technical Company Limited (NETCO), Nigerian Gas Company

ANALYSIS Limited (NGC), and Nigerian Gas Marketing Company (NGMC) – were wiped off largely by its downstream subsidiary operations which recorded deficits north of N351.7 billion. “If we do not kill NNPC, NNPC will kill Nigeria,” El-Rufai said at the 2015 Wole Soyinka Media lecture series. “Any organisation that takes 50 percent of federation revenue for itself and gives you the change has no right to exist. It is evil, it must die; it is just the manner of the death that we must talk about.” In full-year 2018, Nigeria recorded N24.9 billion on product losses, while cash call payment for the development of joint venture oil

and gas assets ate into the Federal Government’s revenue last year as a total of N1.829 trillion was paid to oil companies. The government generated N3.11 trillion from the sale of crude oil and gas in 2018, out of which N1.829 trillion was transferred into the joint venture cash call account while the balance of N1.28 trillion went into the Federation Account, the NNPC data revealed. “There is a lot of secrecy with NNPC. Also, despite doing so much under-recovery, how come a lossmaking organisation has not gone bankrupt?” said Luqmon Agboola, head of energy and infrastructure at Sofidam Capital. “Nobody is even asking questions surrounding the

revenue for the 450,000 barrels they get daily.” The combined value of output by the three refineries (at import parity price) for the month of December 2018 amounted to N10.86 billion while the associated crude plus freight costs and operational expenses were N8.89 billion and N19.29 billion, respectively, resulting in an operating deficit of N17.32 billion by the refineries. “There are people working in these refineries that are being paid and promoted for not doing anything but yet receive hefty salaries, so the refineries are loss centres and not profit-oriented compared to other oil producing countries which is a

Continues on page 46

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Concerns as FG gradually relegates MTEF/ FSP, abuses Fiscal Responsibility Act ...document spends 142 days in NASS without passage …We’ll revert to January-December budget cycle by 2020 – Udoma OWEDE AGBAJILEKE, Abuja

he Federal Government is gradually making the Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) less relevant by not allowing that very important document which sets out key assumptions for the expenditure planning to be passed before the budget is even sent to the National Assembly for appropriation. Findings by BusinessDay show that since President Muhammadu Buhari assumed office in 2015, he has consistently presented the national budget to the National Assembly while the MTEF/FSP is still being considered by the lawmakers, indicating what analysts now see as a flagrant violation of the Fiscal Responsibility Act, 2007. “This has been the case for the past three or four years. The relation between the MTEF and budget has broken because you are supposed to consider and pass the MTEF before considering the budget. We are beginning to see a pattern in which the MTEF is becoming irrelevant,” Ogho Okiti, chief executive officer of leading economics consulting firm, Time Economics, told BusinessDay. The MTEF/FSP, an annual, rolling three year-expenditure planning sets

out the medium-term expenditure priorities and provides the basis for the preparation of the annual national budget. Specifically, Section 11 (b) of the Fiscal Responsibility Act stipulates that the MTEF/FSP be submitted to the National Assembly “not later than four months before commencement of the next financial year”. But findings show that since assumption of office in May 2015, President Buhari has not adhered to the law. For instance, in 2015 and 2016, rather than submit the MTEF/FSP by September as provided in the FRA, President Buhari submitted the 2016-2018 and the 2017-2019 MTEF/FSP to the National Assembly on December 8, 2015 and October 4, 2016, respectively. Also, the President submitted the 2018-2020 MTEF/FSP on October 17, 2017, while the 2019-2021 MFEF/FSP which is currently being considered at the NASS was received by both legislative chambers on November 6, 2018. Experts who spoke to BusinessDay described the side-by-side consideration of the MTEF/FSP and the budget as an aberration. This, they said, has negated the essence of the fiscal documents, describing the submission of the budget while

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Nigeria in early lead as frontier rally seen moving to local-currency bonds DAVID IBIDAPO

assive inflows witnessed in the Nigeria fixed income market space as investors take advantage of CBN’s aggressive policy stance on mopping excess liquidity in the system are seeing Nigeria emerge as one of the best performing local bonds markets among peers. Returns on Nigeria yield currently stands at 14.14 percent, while the likes of Kenya and Ecuador join in the bond rally as more dovish Federal Reserve triggered a global riskon environment and a hunt for yield. Frontier nations have all posted returns above 13.5 percent, far above the global sovereign average of 2.4 percent, Bloomberg data show. Last year, frontier markets saw a decline in the performance of their bonds on the heels of hawkish United States Fed which, amongst other factors, made the risky developing market asset less attractive. However, since the Fed announced a pause in rate hikes earlier in January, there has been renewed interest in frontier markets. Fear of a slowing global economy which has seen a cut in the growth projection for many developed countries, including the United States which may possibly cut rates in 2019, is a factor analysts have bet to favour emerging markets as many central bankers have taken a dovish stance on policy rates. The optimism that crude oil, which has had a strong year-to-date performance, will reach $70 per barrel and exceed budget benchmark of many oil producing frontier markets has strengthened positive sentiment

of investors towards the markets. Overseas notes from the least-developed countries are the world’s best performing bonds this year. Securities denominated in local currencies may be about to play catch-up. With a lot of good news already priced in, some money managers and analysts, including Aberdeen Asset Management’s Edwin Gutierrez and Oppenheimer&Co.’sNathalieMarshik, say that concerns about a global growth slowdown could start to erode returns from frontier-market overseas bonds. Marshik says that in a low growth environment, investors should look to developing countries with the strongest balance sheets and external positions, recommending the local-currency bonds of emerging markets including Egypt, and frontiers such as Nigeria and the Dominican Republic. “Local-currency debt is what looks interesting, because it has been the big laggard year-to-date,” said Gutierrez, a London-based money manager. He says he’s still long on frontiers, but has turned his focus to domestic markets and is trimming risk after the rally. “If you believe that EM still has legs, this is the next stage of the rally.” While a strong dollar last year put pressure on emerging-market currencies across the board, a newly dovish Federal Reserve may change that calculation. If the dollar falls, currencies from developing countries will have space to outperform. “The Fed slowing down the pace of hiking will help for sure,” Oppenheimer analyst Marshik said in an interview from New York. “Global growth is definitely something to consider, but in general, low U.S. rates mean a strong carry trade.”

L-R: Larry Ettah, non-executive director, Coronation Merchant Bank; Cornelia Utuk, company secretary; Babatunde Folawiyo, chairman, and Abubakar Jimoh, MD/CEO, at the 4th annual general meeting of the company in Lagos. Pic by Olawale Amoo

FG targets $3.5bn revenue from flare sites in NGFCP … allays investors’ fears over movement of gas from remote locations OLUSOLA BELLO & HARRISON EDEH, Abuja

he Federal Government is targeting to generate an overall inward investment of around $3 billion-$3.5 billion and a potential annual revenues/gross domestic product (GDP) impact of around $ 1 billion per annum from Gas Flare Commercialisation Programme (NGFCP). The NGFCP could also generate approximately 300,000 direct and indirect jobs and unlock and supply around 600,000MT of Liquefied Petroleum Gas (LPG) product to 6 million homes in Nigeria. The government has also allayed the fears being expressed about how investors participating in the NGFCP would move out gas from remote locations where they are sited because of the complexities of their terrain, even as it is optimistic that its National Gas Policy will address concerns of gas flaring. Emmanuel Ibeh Kachikwu, min-

ister of state for petroleum resources, made these revelations when he spoke exclusively to BusinessDay through Justice Derefaka, programme manager, Nigeria Gas Flare Commercialisation Programme (NGFCP), in the office of the minister of state for petroleum resources. He confirmed further that third party investors are to access and utilise flared gas that is currently being sent to flare and convert same into flare-gas-to-market-products (FG-2-MP). “As at today, over 700 investors have registered to download our issuance of request for qualification (RfQ) against the backdrop of the publications of the National Gas Flare Commercialisation Programme (NGFCP) adverts on the 26th of November, 2018 by the Federal Government calling for the expression for Expression of Interest (EoI) in the NGFCP and the issuance of request for qualification (RfQ) package to conduct the first bid

round for the largest market-driven flare gas monetisation and utilisation programme,” Kachikwu said. The NGFCP is designed as the strategy to implement the policy objectives of the Federal Government for the elimination of gas flares from Nigeria’s oil and gas fields in the near term (2-3 years), with potentially enormous multiplier and development outcomes for Nigeria. Kachikwu said the NGFCP is also designed as the contribution of the petroleum sector to Nigeria’s intended nationally determined contributions (INDC) under the Paris agreement (COP21). He stated further that the NGFCP is an approach to eliminate gas flaring through technically and commercially sustainable gas utilisation projects developed by competent third party investors who are to be invited in a competitive and transparent bid process.

•Continues online at www.businessday.ng

Banks’ income from investment securities hit N655bn in 2018 BALA AUGIE

nalysis of the 2018 audited financial statements of nine lenders that have released full-year results shows income from investment securities increased by 8.45 percent to N655.88 billion, from N604.76 billion as at December 2017, according to data compiled by BusinessDay. That compares with a 49.011 percent growth in income from bond and treasury bills in the 2017 period, when a drop in crude price stoked a severe dollar scarcity that grounded business activities and tipped the country into its first recession in 25 years. “In 2016 and 2017, we were in a recession and Treasury yields were at an all-time of 23 percent and the same was for bonds that were as high as 16 percent and 17 percent,” said Ayodele Akinwunmi, head, research and atrategy at FSDH Merchant Bank. “With improvement in the econ-

omy, we will expect loan growth and that will lead to an increase in interest income on loans and advances,” said Akinwunmi. Lenders in Africa’s largest economy are ingenious as they manage to shield earnings from a volatile macro-economic landscape, by investing in government securities and avoiding lending to all but the blue-chip companies. Banking sector credit to the economy declined 2.9 percent quarter on quarter from N15.6 trillion in the third quarter of (Q3) of 2018 to N15.1 trillion in fourth quarter of 2018, according to data from the Nigerian Bureau of Statistics’ (NBS) banking sector report. On a year-on-year (y/y) basis, total banking sector credit to the economy declined 2.5 percent to N61.7 trillion in 2018, from N63.3 trillion in 2017. Analysts at CSL Stock Brokers Ltd are, however, of the view that banking sector credit to the real economy

will remain subdued for as long as yields on government instruments remain attractive. “Even in the event of a moderation in yields on fixed income instruments, many banks believe that as long as yields remain above 10 percent, they still remain attractive considering that fixed income instruments have no Capital Adequacy Ratio (CAR) implications, are tax free and do not result in NPLs,” said the analysts. Johnson Chukwu, managing director and CEO of Cowry Securities Ltd, said that banks would make money from investment securities this year but not as they did two years ago. “Yields have been contracting in the past couple of weeks. A reduction in borrowing cost by the central bank means that returns from fixed income will contract,” said Chukwu.

•Continues online at www.businessday.ng

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Infrastructure, education, tax moral seen driving Nigeria’s tax compliance rate ENDURANCE OKAFOR

aced with the hurdles of slow e-filing platform and low contribution to Nigeria economy, experts have suggested infrastructure, education, and good tax moral in driving tax compliance level. In the quest to reduce budget deficit and end the country’s rising debt profile, Nigeria government increased the revenue target from tax remittance by 56.02percent to N8.3 trillion in 2019, N3 trillion more than

Edojobs expands training portfolio, as Obaseki’s skills initiatives berth in rural areas

s part of efforts to deepen skills development and create sustainable means of livelihood for people in rural communities across Edo State, Governor Godwin Obaseki’s job creation and skills development initiative, Edojobs, has announced training programmes scheduled for different rural communities in the three senatorial districts of the state. Senior special assistant to the Governor on Skills Development and Job Creation, Ukinebo Dare, said the training, which will be held in different local government areas, was sponsored by the Edo State government through EdoJobs. She said interested persons were to apply for any of the training through the EdoJobs website:www.edojobs. edostate.gov.ng. According to Dare, “EdoJobs in partnership with Genius Hub will organise bead making and cosmetology training, which includes how to make soap, perfume, ointments, body lotion, beads, among others, in Ome-Ora, Owan-East Local Government Area. Another batch will be trained in Fugar, Etsako Central LGA, between 8th – 18th April 2019. We also intend to train people in Agenebode, Etsako East LGA. There is also one holding in Afuze, Owan East LGA and another in Iguobazuwa, Ovia South East.” She added that there would be intensified training on catfish processing for 350 youths each in Illushi, Esan South East LGA and Agenebode, Etsako East LGA. Noting that there is an existing partnership with Genius Hub for more training programmes, she said a tilling and Plaster of Paris (POP) training which will hold at Okada, in Ovia North East LGA, to enable youths get professional certification within one month.

the N5.32trillion tax revenue in 2018. But issues of trust in the government to judiciously manage the public funds and the lack of information on the part of the tax payers, are some of the challenges noted by tax experts to be dragging the sector. Kenneth Erikume, Partner at PWC with focus on tax reporting and strategy, while speaking on how Nigeria can grow its tax sector through the use of technology, said it was possible for the country to achieve significant results like some other countries.

“The first thing is to have biometric system for identification that is conferred from birth. Our National ID is not automatic. You grow up and then decide whether or not to register,” Erikume told BusinessDay on the side-line of the March edition of the PricewaterhouseCoopers (PwC) Tax Academy. This year’s theme was: ‘Technology and Tax - the Way Forward for Tax Administration and Compliance.’ Also commenting on the need for the tax industry to expand its infrastructure, a senior manager at one of

Nigeria’s biggest tax advisory firms said the use of bandwidth will help the IT platform to excel. “So, when you click on the platform, it is supposed to be fast and seamless, instead of just loading continuously,” the manager who asked not to be quoted because of his company policy stated. In 2018, the Federal Inland Revenue Services (FIRS) in line with improving the ease of doing business in Nigeria, upgraded its online platform to provide a wider range of services to taxpayers.

The submission by the manager was affirmed by another tax analyst from Kenya as he said Nigeria can achieve a seamless technology-driven tax system. “What it needs to do is to work on the infrastructure. Yes, Nigeria may have more traffic on its platform than any other country in Africa due to its large population, but other countries have done it, so it can. With better infrastructure, the e-platform will be able to record fast and seamless transactions,” the senior tax analyst from Kenya who pleaded anonymity,

said. On what FIRS is doing to better provide infrastructure which will make tax remittance smooth, Adamu Kudu, Project Manager at the agency, said the regulator was building the capacity to expand its online infrastructure. “When the traffic was not too much, it took just 10 minutes to file a return endto-end. Because so many people are now using the system, as they have embraced it, it gets to slow down once it is the 10th day of the month through to month end,” Kudu told BusinessDay.

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Aso Rock Villa ditches DisCos, to buy power directly from GenCos ISAAC ANYAOGU

so Rock Villa, the official residence of Nigeria’s president, is quitting power distribution companies (DisCos) to buy power directly from power generation companies (GenCos), the Federal Government has said. Rising from the Federal Executive Council meeting last Wednesday, Babatunde Fashola, minister of Power, Works and Housing, said this came as a response to a memorandum his ministry

Inconsistency in government policies stalled Nigeria’s mining industry growth – Okunlola JOSEPH MAURICE OGU

he underdevelopment of the Nigeria mining sector has been attributed to the inconsistencies in government policies in the past because policy makers did not consult professionals before taking decisions, a university don has said. “The problem with mineral industry in Nigeria is not policy. It is the inconsistency in the policy that is the problem,” said Gbenga Okunlola, a professor of geology at the University of Ibadan, and a fellow of Nigerian Mining and Geosciences Society (NMGS). To move the mining sector forward, all the policy makers should always consult professionals because mining is a knowledge-based industry. “Without professionalism, quackery and inconsistency of policies from government and other stakeholders in the sector cannot move the sector forward,” Okunlola said. According to the University of Ibadan don, some of the actions and reforms Nigeria undertook led the nation to where mining industry finds itself today. For example, the indigenisation policy of government in 1972 where foreign investors in the country woke up to a new decree that they must forfeit their investment by 30% to government, caused the decline of mining industry till today. Foreign investors brought in their investment, competence, technicalities, equipment since 1920s, but had to leave because of the indigenization policy. “The indigenisation policy of 1972 by the Federal Government was a mistake,” he said. Okunlola argued that because the investors could not cope with the new policy, they left the country. Since then, the mining industry in Nigeria has been struggling to survive, he stressed.

submitted earlier seeking approval to include the Villa in the Distribution Expansion Programme earlier approved by the Council to enable 2,000MW of currently unutilised generation capacity to be distributed to targeted metered customers. Approved alongside the Villa project is the final payment for the completion of the Afam 240MW Power Plant in Rivers State, the construction of dedicated Solar Power System for the Federal Ministry of Power, Works and Housing Headquarters in Mabushi, and the concession

of five hydro dams to facilitate electricity supply to rural and agrarian communities across the country, a release from the ministry said. The Eligible Customer Regulation, which was issued by the Nigerian Electricity Regulatory Commission (NERC) in mid-2017, permits electricity customers to buy power directly from the GenCos in line with the provisions of Section 27 of the Electric Power Sector Reform Act 2005, whereby Eligible Customers are permitted to buy power from a licensee other than electricity distribution

companies. The ministry had earlier obtained approval from the Bureau of Public Procurement (BPP) following its letter to the Bureau intimating it of the Council’s approval of the Distribution Expansion Programme with the intention of the ministry to procure civil works that would facilitate uninterrupted power supply to the Aso Rock Villa and curb the present erratic supply of power in spite of the availability of power by the GenCos. The project would be executed by Messrs Dextron Engineering Limited, the

ministry said, and would be completed within six months under the Distribution Expansion Programme. “An arrangement has also been put in place such that a GenCo, North-South Power Company Limited, will procure the dedicated supply to the Villa from the national grid while the Abuja Electricity Distribution Company (AEDC) has indicated interest to ensure success of the project,” the ministry said. The approval of the final payment for the completion of the Afam 240MW power plant was also sequel to a

memorandum by the ministry seeking Council’s approval for the award of contract for additional works at the 132KV switchyard for the evacuation of power from the 240MW Afam Three Fast Power Project following the observation that the gravelling of the switchyard and the outside cable trenches with concrete enforcement and slab, earlier excluded from the scope of work by the BPP, were necessary for safety and operation of the sub-station. The project is to be executed by Messrs Power System and Automation Solutions Limited.

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The black monk (3)

Bashorun J.K Randle

• Continued from last week

hat was hilarious was how when the coup that toppled President Shehu Shagari on 31st December 1983 was being planned, one of the ring-leaders Major-General Ibrahim Babangida was despatched to go and brief the Chief of Army Staff, Lt-General Mohammed Inuwa Wushishi who was his kinsman. Babangida informed Wushisi that a coup d’etat was imminent but he would come to no harm and that he would become the new Head of State. Little did Wushishi realise that he was being sold a dummy. As soon as the coup was successfully executed, Lt-General Wushishi was dumped and replaced by none other than Major-General Ibrahim Badamosi Babangida. The military have a long history of mysterious deaths – from friendly fire to air crashes. Till today, the C130 air crash which occurred on 26 September 1992 remains a mystery although there is no shortage of wild speculation. In one fell swoop an entire cadre of top military officers were wiped out. As for the ADC crash which claimed the lives of the former principal (Headmaster) of King’s College, Lagos, Mr. Ajumogobia and one of the most distinguished old boys of the college, Professor Claude Ake who was a fierce and unrelenting critic of the military, the rumour mill went into overdrive that it was the handiwork of the military. As for the bombing of journalist Dele Giwa who was one of the founders of the formidable “Newswatch” magazine, the film went to great lengths to dwell on both the circumstantial and substantive evidence of the military getting its own

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back – a reversal of the long-standing dictum that the pen is mightier than the sword. Obviously, whoever came up with that conclusion did not reckon with prevailing circumstances and the availability of lethal weapons ranging from AK47s to bombs as well as an arsenal of non-detectable poisons and toxins. Another remarkable aspect of the film is the menu of several accounts of the assassination of General Murtala Mohammed on Friday 13th February 1976. Here are a few samples: “How G eneral Murtala Muhammed was assassinated on Friday, February 13, 1976” By – Tunde Ososanya On the fateful day that life was snuffed out of the head of head state and his ADC, Lt Akintunde Akinterinwa, they had left Murtala’s personal house in Ikoyi for Dodan barracks, the seat of government, when the coup plotters attacked them. According to the lone survivor and orderly to the head of state, Staff Sergeant Michael Otuwu, who recalled the event of that day in an interview with The Authority Daily, the head of state was seated beside his ADC, Lt Akinterinwa, and he (Otuwu) was directly seated in the front passenger’s seat, while Sergeant Adamu Michika was behind the wheels. In the interview, the orderly disclosed that their vehicle stopped before a row of cars at a junction, adding that there was a man in traditional attire (who would later be identified as Dimka) who approached the vehicle, removed his robe and pulled out an AK 47 rifle, shooting the driver in the head. The vehicle had automatically been disabled after the driver was killed, then other soldiers dressed the same way as Dimka, ran toward the car sprayed bullets on it. The orderly said: “The Head of State, his ADC and I all ducked while the shooting lasted.” He said he heard the gunmen running towards the Radio House, adding that a few minutes later he noticed that the injured ADC opened his door, apparently to come to the aid of the equally injured Commander-in-Chief. It was the opened door, the orderly said, that alerted the assailants that the

people in the vehicle were not dead. So, they returned and opened fire on the car to finish the job. The orderly said that Generals TY Danjuma and Olusegun Obasanjo were lucky because they were also targets but escaped because they did not leave for their offices as early as Murtala, adding that they heard the radio announcement which may have altered their movement plans. Otuwu added: “I was his orderly throughout to his last day during the Dimka coup. I was inside the car with him when he was killed. On the morning of that February 13, we were going to the office. Sergeant Adamu Michika was the driver; Lt. Akintunde Akinterinwa, his ADC, sat behind the driver. As an orderly, I was in front with the driver. While the head of state sat behind me - I was the one who opens the door for him. That fateful day I came up in the morning to carry him to the office in Dodan barracks. We got to the former secretariat, now at Ikoyi, which was under construction. Before the place they call Alagbon junction, near the labour office. The official car was a Mercedes Benz 600. It is still at the national museum. There were about four or five vehicles in front of us. You know at that junction there was traffic. We didn’t go with sirens. During his time, we didn’t go with escorts with the accompanying out-riders, road-closed signs and all that. So, when we got to the Alagbon junction, the traffic warden stopped the vehicle and we were in the queue. We were the fifth or sixth vehicle behind the forward vehicles that were stopped. That secretariat was under construction. They put zincs around the compound behind that secretariat. Then some soldiers came in Agbada carrying AK47 rifles. They wore uniforms but covered them with Agbada. They had their Kalashnikovs with Agbada cover-up in form of camouflage. We never knew they were even waiting for us. Then one soldier from Golf Road shot and got our driver, Sergeant Michika. Our motor was neutralized. Between me and the driver was an arm-rest. On that arm-rest was Oga’s brief case. In this brief case he puts civil dress he could use as needed. When he wants to go to Mosque, he does not

‘

Babangida informed Wushisi that a coup d’etat was imminent but he would come to no harm and that he would become the new Head of State. Little did Wushishi realise that he was being sold a dummy

like going back to Ikoyi to change. Then some other soldiers converged on us. I can’t recall their number. They began to spray us from the back. All of us took cover. I fell on top of the driver; the blood of the driver covered my head. They thought the bullet got my head. After the first shooting and without return of fire they must have assumed that we were all dead. The shooting was actually in two phases. They ran to the NBC to announce the assassination. They shared themselves into three. There was a group waiting for Obasanjo when he was about to go to the office. Also another group was waiting for T.Y. Danjuma at Bourdillon - our own was at Ikoyi Road. It happened we were the first target that moved early from the house to the office. Before Obasanjo and T.Y. Danjuma moved to their offices they have already heard the radio announcement. By the time of the first shooting, we being the target and their running to NBC to go and announce that they have already finished their assignment, the ADC who was still alive, thinking they were gone, opened the door of the Benz. In the first spraying of the car, except the driver who was killed, the three of us were injured but not dead. On observing the car door opening, one of the attackers, still within range, a major, called to the others: ‘he never die, he never die’. He was calling his group to return. This time around when they came back they finished their entire magazines. That was what happened. They carried everybody to the mortuary at Igbosere hospital, not far from Kam Salem police headquarters. Because of the extreme cold of the mortuary, my left hand started shaking and one of the attendants saw it and called the nurses or doctors and said somebody was still alive. From there they checked and confirmed that I was still breathing. So, they had to look for a vehicle to carry me to Dodan barracks. From Dodan barracks they looked for an ambulance and carried me to a hospital, Awolowo road hospital, a military hospital.” Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Telling the African story

Ellana Lee

frica and CNN’s reporting across the continent has been a longstanding and essential component to the success of the network since CNN International launched in 1985. As the global leader in news, alongside expertise from anchors and correspondents such as Robyn Curnow, David McKenzie, Eleni Giokos, Zain Asher and Farai Sevenzo, CNN is well placed to provide both a global and simultaneously local perspective when reporting on stories that originate in Africa. This approach was recently recognized by the Royal Television Society, when CNN’s coverage amongst the celebrations in the streets following Robert Mugabe’s resignation in 2017

was awarded a prestigious Breaking News Journalism Award last month. Described as a “journalistic and technical triumph that caught the excitement of the moment”, it was the latest accolade that reinforced our reputation for how we report breaking news in Africa. But how does an international news brand go beyond the headlines and best reflect the cultural transformation taking place across the continent? As head of CNN Vision, the creative production arm of CNN International, it’s my job to translate this proven understanding of Africa and deliver that to our global audience. Last year, CNN Vision contributed more than 1300 hours of original programming on CNN International, with three individual shows being dedicated to Africa alone. These programmes, ‘African Voices’, ‘Marketplace Africa’ and ‘Inside Africa’, aim to spotlight the business, cultural movements and changemakers who are shaping the continent. Now in 2019, CNN is celebrating ten years of ‘African Voices’ – a culture show which has sought to bring a diverse range of the biggest and brightest personalities from across the continent to the rest of the world. Every week, ‘African Voices’ highlights three different figures from Africa, who lead the narrative to show ‘their Africa’ to our viewers.

Ten years’ worth of programming is a significant milestone for any programme and it also provides a chance to reflect on some of the highlights during that time. ‘African Voices’ has traced numerous stories from the start of their careers to international recognition, such as the likes of Trevor Noah, Sanaa Hamri, and Lupita Nyong’o, and highlighted the talents of Chimamanda Adichie and Akon. To make a show like ‘African Voices’ successful for that length of time, you need the scale and the audience – and CNN has both. By applying our journalistic principles to these long-form series, documentaries and specials, we are able to find these authentic stories on the ground and accurately portray the changing narrative around the continent. In the decade since ‘African Voices’ first aired, CNN has developed into a truly multiplatform media company in line with a younger, more tech-savvy Africa, who increasingly approach the world with a digital-first outlook. We can see from studies like Ipsos’ Affluent Survey Africa that social media is the first point of call for news and many more are now watching TV on mobile devices. CNN is already the most-followed social news brand, but we also have dedicated platforms for our Africa content with around 1.5

million followers on Facebook, Twitter and Instagram. Another example of this is through the latest addition to our African portfolio – a series titled ‘Africa Avant-Garde’, with digitallyled coverage which highlights the continent’s rich and vibrant contemporary arts scene both on TV and online. Nowadays the concept of commissioning a show to an African viewership alone is redundant and limiting. A story may originate in Africa, but may also have wide-ranging interest in Europe, Asia or the Americas. At CNN, it is our role to apply our expertise and reach from around the world, such as in-depth reporting on China’s role in infrastructure and investment on the continent. Our job is to tell Africa’s story. Whether that’s in the form of breaking news or across CNN Vision’s programming output, CNN has consistently been at the forefront of African coverage and trends. As we celebrate ten years of airing ‘African Voices’ across digital and social during March, we will continue to use our global footprint to tell the stories of the people, technologies and businesses shaping Africa’s future in the years ahead. Lee is senior vice president, CNN International and head of CNN Vision.

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Mirror, mirror…who’s the biggest of them all?

Patrick Atuanya

ompetition has be en intensifying lately in Nigeria’s financial services industry, particularly in its banking system. A merger between tier-one lender, Access and mid-tier Diamond bank has catapulted the new entity which begins operations as a single firm today, into Nigeria’s largest bank by a couple of metrics. The new Access Bank will have total assets of just over N6trillion, and 29 million customers, giving it enough levers to pull to drive profitability going forward. While Access Bank will now stake its claim as the biggest in the 2 areas (asset base, customers), it will still play catch up, compared to other banks in some ratios and measures of profitability. Five tier one lenders, Zenith Bank, Guaranty Trust Bank (GTB), United Bank for Africa (UBA), Access Bank and FBN Holdings (FBNH), combined control about 70 percent of banking assets and deposits in the country. As at full year (FY) 2018, the bank with the biggest return on equity (ROE), however, was Stanbic IBTC holdings (not even a Tier one bank), at 34.5 percent. The return on equity or ROE is a profitability ratio that investors regularly look at, that measures the ability of a firm to generate profits from its shareholders investments in the company.

In other words, the ROE ratio shows how much profit each naira of common stockholders’ equity generates. The ROE for other Tier one lenders as at FY 2018, stood at 30.9 percent for GTB, 23.8 percent for Zenith, 19 percent for standalone Access Bank (Diamond Bank has not released FY 2018 results), and 15.2 percent for UBA. Note that the higher the ROE the better, and FBNH has also not released FY, 2018 results (so the firms ROE is unavailable to be computed) as at time of writing. Ability to control costs is another area that banks will be competing on which should help them to drive profitability. By this measure, GTB takes the top spot with a cost to income ratio of 36.6 percent as at FY, 2018. The cost-to-income ratio is a key financial measure, particularly important in valuing banks. It shows a company’s costs in relation to its overall income. The ratio gives investors a clear view of how efficiently the firm is being run, and the lower it is, the more profitable the bank will be. For instance Access Bank’s gross revenues of N528.7 billion as at FY 2018, was 21 percent higher than

GTB’s which came in at N434.7 billion for the period. When one drills down to profits which is where returns to investors and shareholders flow from, Access Bank’s pre-tax profits of N103.2 billion was only 48 percent of GTB’s which came in at N215.6 billion. The major reason for this was how efficiently GTB is managing its affairs and controlling costs. Other Tier-one lenders cost-toincome ratios were Zenith Bank 49.3 percent, Access Bank 62.2 percent and UBA 63.9 percent. Zenith Bank still maintains its top spot as the most profitable bank overall with pre-tax profits of N231.7 billion, while in terms of non-performing loans (NPL), Access has the least exposure with an NPL ratio of 2.5 percent, Zenith (5%), UBA (6.4%) and GTB (7.3 %). The NPL ratio is a measure of a bank’s nonperforming loans to the total amount of outstanding loans in the bank’s portfolio, expressed as a percentage. We expect Access Bank’s NPLs to rise once Diamond Bank has been fully digested. The four Tier-one banks had combined net loans of N7.02 trillion, with

‘

For Nigerian Banks the bigger the size, the better able they are to drive profitability and make investments necessary to stay competitive and remain innovative

Access Bank leading the pack at N2.1 trillion, Zenith N1.8 trillion, UBA N1.72 trillion, and GTB N1.40 trillion. In terms of loan growth UBA led with a 3.9 percent increase for the period, followed by Access at 3 percent. Zenith and GTB recorded negative loan growth of 13 percent respectively, a sign of the difficult macro environment, opportunity for risk free investments in government securities and general risk averseness. For Nigerian Banks the bigger the size, the better able they are to drive profitability and make investments necessary to stay competitive and remain innovative. However size is still relative, when compared to lenders in the rest of sub-Sahara Africa and South Africa in particular, which vies with Nigeria as the largest economy on the continent. The four banks (Zenith, GTB, Access and UBA), had combined total assets of N19.1 trillion or $53 billion as at year end 2018. One of South Africa’s biggest banks First Rand had total assets of R1.2 trillion or $84 billion as at 2018. Furthermore when measured as a percentage of the economy (GDP)Nigerian banks are lagging most frontier and emerging markets peers in terms of size (total assets as percentage of GDP) or loan book (credit to private sector as percentage of GDP). This goes back to the argument for Nigerian Banks to fundamentally change their strategy and become more relevant to the needs of the everyday Nigerian, by providing solutions beyond just being keepers of demand deposits for a fee. Any bank able to crack this model will surely become the biggest of them all, in all the major metrics used in measuring bank size and profitability. Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

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‘Gbe body e’ as an antidote to procrastination

TAJUDEEN AHMED

t was during the Access Bank Lagos City Marathon 2019 which held on Saturday, February 2, 2019 that I heard, for the first time, the ubiquitous refrain in Lagos, ‘gbe body e’ (Yoruba statement for any of:‘arise’, ‘be active’, ‘pick up yourself’, ‘do not relent’), depending on the context of its use. As we(runners) approached the Admiralty Circle Plaza, close to Oriental Hotel, we were assailed with the constant shout of ‘gbe body e’ by very excited bystanders from both ends of the Lekki-Epe expressway, as their own distinct way of encouraging us to push harder regarding the marathon, against the natural/human tether of fatigue. The encouraging slogan also reverberated through other routes, especially on Akin Adesola and Bishop Oluwole streets in Victoria Island, until we ended the run at Eko Atlantic. I did a mental interpretation of the phrase and I thought about it in the context of avoiding procrastination, which I loosely define as “postponement of actions and tasks that a person needed to perform or execute”. Only recently, many Nigerians and members

of the academic, literary, and media communities across the world passionately mourned the demise of Professor Pius Adesanmi, a Nigerianborn Canadian, raised in Ilorin, Kwara state, but of the Okun ethnic descent in Kogi state. He was an academic;a writer, columnist, satirist, public affairs commentator, public policy analyst, husband, and father, and was also the Director of Institute of African Studies at Carleton University, Ottawa, Canada. Prof. Adesanmi, born in 1972, and who died at 47, was a member of my age range, my generation. Having graduated at a very young age of 20 in 1992, with a First Class B.A. degree in French Language at the University of Ilorin, at a period when such a class of degree was a herculean task due to so many factors, Pius set out in life as though he was in a hurry to achieve so many things before 50. Truly, the life Pius lived was an example in ‘gbe body e’ in many ramifications. He was awarded Masters and Doctor of Philosophy (PhD) degrees in record time, from University of Ibadan and Canada’s British Columbia University respectively, and he capped it all with the rank of Professor of Literature and African Studies at Carleton University, Canada, in 2006 at age 34. He received many global recognitions and awards, which some people may not have received in two lifetimes. At personal and professional levels, procrastination is a major hindrance to progress, and it has been documented as one of the human frailties that are difficult to tame. Procrastination occurs owing to legion reasons. Some of these include setting unclear/vague goals, being indecisive, anxiety, having too many things to do, excessive likeness of perfectionism, being afraid of failure, lack of

self-motivation, regularly acting on a whim, lack of coordination, and the “what people may say” factor. The following are practical steps to combat procrastination. First, set clearly defined goals along with realistic deadlines. The tendency to set abstract goals such as ‘I will write the proposal tomorrow’, ‘I should have it forwarded to you sometime soon’, etc may actually aid procrastination. Second, goals should be made smaller and actionable. Having highfalutin goals that tend toward the abnormally impossible is an exercise in self-deceit. When goals are broken down into bits that are truly actionable, the probability of conquering the malaise of procrastinating is more assured. Third, do a self-introspection to determine why you procrastinate. Is it laziness? Is it a lack of self-motivation? Is it a laissez-faire attitude? Is it about your personal ‘productivity cycle’? Productivity cycle largely means periods of better performance of tasks by an individual. For some people, it is early morning at the office before most other employees resume with a view to avoiding distractions of telephone calls, emails, a knock on the door, meaningless gossips, etc. For others, it is very late at night when most ‘normal human beings’ are asleep. Once you know why you procrastinate, at a personal level, the solutions are no longer far-fetched. Fourth, it is wise to conquer your fears and tendency to give excuses. The fear I referred to might be in the form of likely negative feedback, unanticipated consequences, etc, while excuses for not executing tasks could be ‘manufactured’ by anyone. Once you combat these two, focus, which is essential for preventing procrastination, is easier to achieve. Fifth, you should be

accountable to yourself, directly, or through a trusted person. Self-accountability is desirable, but when other factors inhibit this, having someone else to monitor your progress on a task, is a good alternative. Sixth, you should learn a way of rewarding yourself for progress attained. This kind of personal reward might be in the form of taking time off, having fun with friends, getting a personal gift, moderate self-indulgence, etc. Seventh, discountenance distractions, which come in many ways, including long hours spent on watching TV (movies, multiple football games, soaps, especially the ubiquitous Telemundo/Novelas), browsing social media, notably in these days of too many disruptive WhatsApp platforms and groups; indoor and outdoor drinking, etc. Lastly, you should recreate and refresh your self-motivation by visualizing the future- the ‘post-execution’ phase.This could arise in the form of imagining your state of mind and positive emotions after having delivered a project, written and launched a book, organized a ‘tough’ event, met a target, won a trophy, etc. Concluding, I dare to modify that popular axiom: procrastination is the thief of time, to my version, namely: “procrastination is the thief of life”. You! Yes, you, that is reading this piece; regarding your career, family life, love life, relationships, aspirations, spirituality, aptitude, etc, etc: ‘gbe body e’! Tajudeen Ahmed, a strategy expert, with several years of senior management experience in consulting, commercial banking, and FMCG, is the General Manager/Group Head Business Development at BUA Group.

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The squabble over Senate leadership

he words and a l l e ga t i o n s b e ing traded of late between members of the ruling party over the choice of the would-be leader of the Senate should worry every wellmeaning Nigerian. Viewed lightly it could pass as the typical Nigerian way of disagreeing; braggadocio. But Nigeria’s democracy is at stake, particularly in an era where representative form government is losing ground to different shades of autocracy. And Nigeria’s young democracy needs to be inoculated against this streak of dictatorial democracy. Squabbles within the ruling party over who the preferred choice as Speaker of the Senate is presage turmoil in the National Assembly. Nigeria can’t afford to have another ineffectual arm of government. With the sack of the Chief Justice of Nigeria on spurious grounds, one of the three arms of the government is weakened already.

Internal party politics is a good barometer of how whatever party in power will run the government. Naturally every political party has its criteria for selecting who leads in the legislature. If a party considers seniority, loyalty, experience and zoning (given Nigeria’s peculiar make-up) as part of its “democratic principles”, no qualms. If other party members complain it’s democracy by imposition, there are ways to build consensus. There are ample examples from other presidential systems of democracy. Ta ke h o w Na n c y P e l o s i emerged Speaker of the US Hous e of Repres entatives. Almost certain to run for and win the post, yet she clinched the post with 220 votes out of 430 (only 15 voted against her). Did she have to cajole other Democrats? Certainly. Did she make concessions to rebellious party members? Of course. Democracy, they say, is the art of the possible. In all of this there were no public threats to dissenting

party members or the opposition who, besides, didn’t have the numbers to oppose Pelosi. There was no press conference organised to read them the riot act; to smugly insist that voting would be unnecessary for electing the Speaker and officials because the occupiers of the positions will be presented or to decide which ‘juicy’ and ‘strategic’ committees won’t be shared with the opposition. And there was certainly no party spokesperson threatening ahead of the yet-to-be inaugurated Assembly that bipartisan politics was off the table. It’s unclear if the APC press conference, reported in local press last week, was just grandstanding similar to how Nigerians (especially Lagosians) resort to swagger and bombast in the face of imminent wahalas. It’s to prevent what happened four years ago when some APC members colluded with the opposition to elect a Speaker against the party’s wish. Whatever the intention behind the press conference, it projects a winner-takes-all

mentality. A zero-sum version of democracy and the statements give worrying indications of things to come. It’s the opposite of a healthy democracy. Unfortunately this tactic of haranguing dissenters publicly can backfire and may set the Ninth Assembly to a roiling and combative start. Delays in passing budgets and critical bills like the PIGB were some of the reasons the Presidency blamed the outgoing Senate for. Besides the immediate risk to the economy, the real worry is that it could set off a do-me-Ido-you political culture. There are many advantages of being in the majority; stirring political brawls however, isn’t one of them. Being in the majority is a mandate from Nigerians (increasingly made up young and unemployed youths, a generation for whom democracy is the only form of only form government they’ve ever known) to fast-track reforms by passing bills that will reset the economy on an even and stable growth path.

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Half a million ghosts

Too many Twilight of thechallengers bureaucrats

How well has Rwanda healed 25 years after the genocide? Not well enough, apparently, for President Paul Kagame to ease his grip

WENTY-FIVE YEARS after the genocide, Rwanda is still an enigma. Its recovery in economic, social and psychological terms is hotly debated. Almost every aspect of the past and present is still argued over. What exactly caused the genocide (which started after a plane carrying Rwanda’s president, Juvénal Habyarimana, was shot down by unknown assassins)? How many people died? Could outsiders, in particular the UN, have halted it? More recently, has President Paul Kagame, the Tutsi rebel commander who stopped the genocide at gunpoint and has ruled ever since, genuinely sought to heal the wounds? Or does he cynically exploit the horror to legitimise his ruthlessly authoritarian and predominantly Tutsi regime? Are the Hutus, still a large majority, quietly determined to take over again one day? Could democracy ever take root in Rwanda—or is a firm grip on government the least bad option? What is undisputed is that the killing that began on April 7th 1994 was genocide. Probably three-quarters of all Tutsis in Rwanda—men, women, children and babies—were murdered. The true number is unknown. The UN guesses 800,000: mostly Tutsis, but also 30,000 or so moderate Hutus. Mr Kagame prefers a round figure of a million. The meticulous Alison Des Forges of Human Rights Watch was able to substantiate 500,000 deaths. She was later barred from Rwanda for criticising Mr Kagame’s regime. The slaughter was shockingly swift, lasting only 100 days. Probably most adult Hutus took part or witnessed the killing without objection. Hutus were then 84% of Rwandans, so their Tutsi neighbours had nowhere to run. As Philip Gourevitch, a journalist, put it: “The entire Hutu population was called upon to kill the

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Millions of retiring Arab civil servants need not be Governments could save billions if they resist the urge to hire more

T A MUNICIPAL parking garage in Cairo, a row of freshly painted machines wait to dispense tickets to drivers. But the machines are turned off. Attendants stand next to them and hand out tickets manually. It is one of many useless government jobs in the Egyptian capital. Stamping passports at the airport can be a three-person affair. Offices are full of functionaries who make photocopies or brew tea (few do both). More than 5m Egyptians work in the civil service. Each serves fewer than 20 citizens, if “serves” is the right word. Other developing countries get by with a far less populous public sector.

entire Tutsi population.” Hutus with babies on their backs hacked down Tutsi women similarly encumbered. Hutu priests oversaw massacres of Tutsis in their congregations. Hutu husbands killed Tutsi wives. Hutus were told that if they failed to kill, they would themselves be killed. Though the Rwandan army often lobbed grenades into churches and schools and fired on Tutsis cowering there, most murders were carried out by civilians wielding machetes and clubs. The issue of justice still reverberates and rankles. A year after the genocide about 120,000 suspected perpetrators were put in prisons built for 45,000. Another 300,000 were eventually incarcerated in appalling conditions. Some 46,000 Rwandans, most of them génocidaires, are still behind bars. Such was the scale of the genocide that from 2002 until 2012 a huge web of community courts known as gacaca (pronounced “gatchatcha”) was set up, under trees and in village courtyards, to dispense justice in a more

traditional fashion, by asking witnesses to tell their stories before amateur judges. “No one claims that gacaca justice was perfect but very few here doubt that it saved Rwanda,” says Nick Johnson, a British law professor. With justice has come a measure of reconciliation. “No other country today has so many perpetrators of mass atrocities living in such proximity to their victims’ families,” writes Phil Clark of the School of Oriental and African Studies in London. Mr Kagame’s great claim is that there has been no largescale violence inside Rwanda for the past 24 years. Mr Clark, who has conducted more than 1,000 interviews with Rwandans on both sides of the Hutu-Tutsi gap in the past 16 years, says his respondents nowadays describe “peaceful but uneasy community relations”. In part this has been achieved through a widely understood, if unspoken, contract whereby people have traded political freedom for peace and economic development. The economy has recovered rapidly. Infant mortal-

ity has halved since 2000, a feat UNICEF rates as “one of the most significant in human history”. In 1995, when the country lay in ruins, GDP per person was $125. Today it is around $800, though some economists question Rwanda’s rosy statistics. Few Rwandans have the nerve to dissent. A Rwandan journalist warns that “no one will ever tell you truly what they think.” A Western diplomat concurs. “People just won’t talk freely.” Mr Kagame may have slightly loosened his elaborate system of spies and social controls of late, yet there is precious little space for political competition. He won 99% of the vote in 2017. A compliant Green Party was allowed seats in parliament last year, but its members recall how, in 2010, unknown killers cut off its vice-president’s head. Last year two opposition leaders who had sought to run for president were freed from prison, including Victoire Ingabire, a Hutu who had been sentenced to 15 years on trumped-up charges of inciting “divisionist” (ie, Hutu v Tutsi) rebellion. Her spokesman was murdered this month.

The president, Abdel-Fattah alSisi, thinks little of his workforce. At a conference in May he suggested that 1m employees could do the work now accomplished by 5m. (Anyone who has dealt with Egyptian bureaucracy would probably agree.) He worries that firing them would cause unrest, however. Instead, his government has a better solution: do nothing and let the bureaucracy shrink itself. About 2.2m of Egypt’s civil servants are in the top two pay brackets, which usually require decades of service to reach. The prime minister, Mustafa Madbouly, wagers that at least 35% of the workforce will retire within a decade. That would reduce a wage bill that consumes 27% of government revenue, freeing billions for badly needed investment. Many of these jobs plainly do not need to be filled. Egypt is dragging itself into the digital age. Citizens can renew their national ID cards online, and other documents will be available later this year. The state is installing new electricity meters that can Continues on page 19

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King Bibi

Binyamin Netanyahu: A parable of modern populism In Israel, as elsewhere, politics is a perplexing mix of sound policy and the cynical erosion of institutions

IS DEVOTEES call him “The Magician”, “The Winner” and—the ultimate accolade— melekh yisrael, “King of Israel”. Binyamin Netanyahu is Israel’s most gifted politician in a generation. He is his country’s secondlongest-serving prime minister and, if he wins his fifth election on April 9th, may beat the record of the country’s founding father, David Ben Gurion. “Bibi”, as he is known by all, is important beyond Israel, too, and not only because he speaks in perfect soundbites in both Hebrew and English and stands tall in today’s chaotic Middle East. He matters because he embodied the politics of muscular nationalism, chauvinism and the resentment of elites long before such populism became a global force. Mr Netanyahu counts among his friends and allies such nationalists as Donald Trump and Narendra Modi, not to mention European ones from Viktor Orban in Hungary to Matteo Salvini in Italy. The reign of King Bibi is thus a parable of modern politics: the rise of a talented politician and a long success based on a perplexing mixture of carrying out sound policy and cynically sowing division. As his power is threatened, he has turned to railing more loudly against the free press, the judiciary and shadowy forces. Now Bibi faces his greatest danger, in the form of criminal charges for corruption. In a different age he would have had to resign, and would now be defending himself as an ordinary citizen. But he is intent on remaining in office, and hopes that voters will yet save him from the policemen, prosecutors and judges. Israeli politics is turning into a contest between genuine achievement and demagoguery on one side and the rule of law on the other. All who care about democracy should watch closely. Little Israel commands attention because it has a big history: biblical romance and technological talent ; the slaughter of the Holocaust and military prowess; energetic democracy and the long occupation of land claimed and inhabited by Palestinians. That said, Mr Netanyahu is a big figure in his own right (see article). He is more intel-

ligent and capable than many populists, and can claim plenty of successes. By shrinking the bloated state he has helped Israel’s economy flourish, particularly its tech startups. With deft use of diplomacy and the mostly cautious use of military force, he has boosted security without being sucked into disastrous wars. Thanks to that and a shared hostility to Iran, relations with many Arab rulers are better than at any time in Israel’s history. Yet Mr Netanyahu is also worryingly dogmatic. He has paid lip service to peace with Palestinians but has taken no meaningful steps towards it. He has denounced any Western co-operation with Iran, even if it served to limit Iran’s nuclear programme. In Bibi’s pessimistic view, Israel is surrounded by wolves in sheep’s clothing and wolves in wolves’ clothing. Israel can only manage conflicts, not solve them, he believes, so it must rely on an iron wall and the passage of time. Such “anti-solutionism” risks storing trouble for the future. It increases the danger of war with Iran, or of its hardliners making a dash for nukes. The more Israel entrenches itself in the West Bank, the more its “temporary” military occupation looks like the permanent subjugation of Palestinians under a separate law, even apartheid. This is made worse by the absence of America’s restraining influence. Mr Netanyahu has warmly embraced Mr Trump, who in turn has showered him with gifts, most recently his endorsement of Israel’s annexation

of the Golan Heights. Might Mr Trump also back Israel’s annexation of bits of the West Bank, so denying Palestinians the hope of statehood? In the long run Bibi’s overt alignment with America’s Republicans and the evangelical right endangers the bipartisan pro-Israeli consensus in Washington that is the foundation of Israel’s security. But the greatest threat from Bibi’s reign has been at home. He has kept power not just on the strength of his record but also by seeking political advantage at the cost of eroding Israel’s democratic norms. In claiming that no peace with Palestinians is possible (or desirable), members of his right-wing coalition outbid each other to pass measures asserting Jewish supremacy. Mr Netanyahu pushed for an electoral pact with the hitherto untouchable far-right Jewish Power group, which wants to annex all the occupied territories and “encourage” Arabs, including Israeli citizens, to leave. He has played us-and-them politics for so long that he has exacerbated the country’s many schisms—between Jews and Arabs, diaspora Jews and Israelis, western Ashkenazi and eastern Mizrahi Jews, and secular and religious ones. By casting himself as uniquely able to protect Israel against its enemies, he often treats those who say otherwise as wimps or traitors. Mr Netanyahu and his friends denounce as backstabbers any Jews who stand in their way. The free press peddles fake news. Political opponents, even the generals who pack the new Blue

and White opposition party, are in cahoots with the Arabs. Bibi has flirted with the conspiracy theory beloved of anti-Semites that George Soros, a Jewish billionaire, is plotting to undermine nationalist governments around the world. The corruption charges against him, says Mr Netanyahu, amount to a “blood libel”—a vile medieval canard that accused Jews of mixing the blood of murdered Christian children in their Passover bread. Yet the police chief who investigated the charges, and the attorneygeneral who ordered his indictment, were both hand-picked by Mr Netanyahu. His allies want a law that would grant a prime minister immunity from prosecution. Israel is an outlier among Western democracies. It was born as the state of the Jews; Zionism and Palestinian nationalism claim the same land. Israel must contend with a genuine “other” and existential threats, not the bogeymen invented by populists elsewhere. The left, in disarray in many countries, suffered a bodyblow in Israel because its attempt to negotiate a land-for-peace deal with Palestinians collapsed into bloodshed. Yet precisely because of these pressures, Israel offers an important test of the resilience of democracy. On April 9th Israeli voters face a fateful choice. Re-elect Mr Netanyahu and reward him for subverting the independence of Israel’s institutions. Or turf him out in the hope of rebuilding trust in democracy—and aspiring to be “a light unto the nations”.

Millions of retiring Arab civil servants need... Continued from page 18

be recharged via smart cards. Even the notoriously archaic courts are buying computers. All of this will reduce the need for cadres to collect bills and scribble notes in ledgers. Many Arab countries are in a similar situation. Cushy state sinecures were once seen as a birthright. Anwar Sadat and Hosni Mubarak bloated Egypt’s public sector to keep the middle class loyal. Gulf governments started a long hiring spree during the oil boom of the 1970s. For a generation, though, public-sector hiring has not kept pace with population growth. Though Egypt’s workforce has swollen by 7.7m since 2005, the bureaucracy registered a net increase of just 190,000. Hiring has slowed in Saudi Arabia too, but a whopping 45% of citizens still work for the state (in the OECD, a club of mostly rich countries, the average is 18%). As in Egypt they skew old, with 31% aged 45 and over versus just 7% under 30. The crown prince wants to steer young Saudis into the private sector, but few firms want to hire them on the cushy terms they demand. Over 30% of under-30s are jobless. Unemployed young people scare autocrats: they start protests. If economies stay sluggish, governments will be loth to cut their payroll, despite the cost. For every young Arab keen to start a tech firm or a small business, another is happy to accept a make-work job. A poll in 2016 by Asda’a BursonMarsteller, a PR firm, found that half of Arab youth want government gigs. In the Gulf the figure rises to 70%. State jobs are seen as more secure, more lucrative and less demanding than private ones. Publicsector pay is 39% higher in Saudi Arabia and 60% higher in Egypt. In Egypt the wave of retirements may also create a different problem. The public-pension law stipulates a maximum payout of 30% of a worker’s final salary. With average wages of 5,000 pounds ($289) per month, a typical pension would appear to be a paltry 1,500 pounds. Even that figure is misleading, because base salaries make up a small fraction of public-sector pay; the bulk of it comes from regular bonuses.

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Trump resurgent

Lessons of the Mueller report Every political scandal sets a precedent for the next

OBERT MUELLER toiled over his report for two years, slightly longer than it took Herman Melville to write “Moby Dick”. Going by a summary provided by the attorney-general, though, the endings are the same: the whale gets away. The special counsel did not find that members of the Trump campaign conspired with the Russian government when it interfered in the 2016 election. The president is crowing. Democrats in Congress point out that Mr Mueller did not exonerate the president over obstruction of justice, which is also true. But make no mistake: this is as good an outcome as Donald Trump could have wished for. For the rest of his first term, and perhaps long into his second, he will be able to point to an exhaustive investigation and say he was right all along. The president thrives on grievance—against the media, the federal bureaucracy, or anyone he suspects of feeling superior. The outcome of the Mueller report will feed that. As a result, the silver harpoon that some Americans hoped would finish off Mr Trump may in fact strengthen him. A few lessons can be drawn from

this episode. The first is not to confuse a legal process with a political one. Ever since Mr Trump won power, those Americans who could not bear the idea of him as president have dreamed of some non-political way to erase the result—of a jurist who could simply declare it all over. Mr Mueller seemed the likeliest candidate for this role, just as Kenneth Starr did in the campaign to remove Bill Clinton. In fact the fate of Mr Trump’s presidency will depend on politics,

probably through the ballot box in 2020. Even those Democrats who cling to the fantasy of using Congress to impeach and remove him need to understand just how political this process would be. The fevered speculation during the two years of the Mueller investigation has often masked that. The other lesson Democrats should heed is to keep quiet about a legal process until it is over. That is worth bearing in mind as House

committees under Democratic control pursue their own investigations, and courts and prosecutors look into allegations about Mr Trump and his family. Some of his opponents have prejudged these investigations. If it turns out that he did not commit the crimes they expect, they risk not just having distracted voters from the real agenda, but also giving him a boost. They should not make the same mistake twice. The Mueller investigation also holds lessons for those Republicans emboldened to seek vengeance for what they say was treason against their president. Thanks to Mr Mueller, the president’s campaign manager and personal lawyer are both heading to prison. His national security adviser pleaded guilty to lying to the FBI about his conversations with the Russian ambassador. Since Watergate, nothing like this has happened in American politics. By revealing duplicitous and corrupt behaviour among Mr Trump’s team, and by bringing prosecutions, Mr Mueller has helped cleanse political campaigning. The investigation also revealed that the president misled voters about

his business interests in Russia. While the candidate was rewriting orthodox Republican Party policy towards Vladimir Putin, his company was trying to build a skyscraper in Moscow. His retrospective justification was that he might have lost the election, in which case it would have been a shame to give up on a deal. This conflict of interest did not amount to criminal collusion or conspiracy, in the special counsel’s view. It is nevertheless the sort of transgression that America’s political system would not have tolerated before Mr Trump came along. There is a last reason to be thankful to Mr Mueller. Each time America’s political system goes through an upheaval, it sets a precedent for how its institutions will handle the next one. Mr Mueller’s conduct was exemplary. If widespread misconduct once again occurs in an American presidential election, the expectation will be that a special counsel will investigate. Though Mr Trump repeatedly denounced the investigation as a witchhunt, he did not fire the witch-finder. Mr Mueller was able to finish his work. For that, at least, Mr Trump deserves credit.

Inversions and aversions

Europe’s economy is more worrying than America’s yield-curve inversion Bond markets are sounding warnings on both sides of the Atlantic. But the message is much worse in Europe

N MARCH 22ND Germany’s worst manufacturing survey in seven years sent investors rushing to buy bonds. For the first time in three years yields on German ten-year government debt fell below zero, meaning that investors are willing to pay to hold it. And later that day in America the yield on ten-year Treasury bonds fell beneath that on the three-month variety. The last time that happened was 2007, one of the “inversions” in bondmarket yields that preceded each of the past seven American recessions. These bond-market blues are fuelling concern that the global upswing in 2017 and 2018 is making way for a slump. There are reasons to worry. Tax cuts have boosted demand in America but will not be repeated; China has slowed; the trade war grinds on. However, indiscriminate global gloom is a mistake. America and Europe are in vastly different positions. Only Europe should be a cause of deep concern. America’s inverted yield

curve suggests that the Federal Reserve’s interest-rate rise in December, its ninth in three years, will be its last for now. But that does not mean recession is imminent. The Fed has recognised—belatedly—that the risks to growth have risen, as Jerome Powell, its chairman, confirmed on March 20th. And America is in a position of relative strength. Unemployment is low; consumers are flush with cash; and underlying inflation is close to the Fed’s 2% target (see article). Europe is in a tighter spot. Although America may have finished raising rates, the euro zone has never got started. Growth

this year could be little more than 1%. Wage growth is muted, inflation is below target and Italy is in recession. With rates close to zero, the response of the European Central Bank (ECB) has been to postpone monetary tightening and to provide more cheap funding for banks. Its willingness to do more may be limited. On March 27th Mario Draghi, its head, said that the ECB sees its inflation forecast as having been “delayed rather than derailed”. The primary cause of Europe’s slowdown—and particularly Germany’s—is falling global trade, notably China’s slackening

demand for goods. The continent relies on Asian markets far more than America does and China slowed in late 2018. Policymakers there are now trying to stimulate the economy. A rebounding China could yet come to Europe’s rescue, especially if Donald Trump and Xi Jinping strike a trade deal. That the fate of the euro zone should depend on Beijing and Washington is a dereliction of duty. It is an economic superpower with its own fiscal and monetary levers. It should be countering downturns itself. More unconventional monetary stimulus will be hard thanks to northern Europe’s horror of appearing to create money to finance deficits. But the euro zone has room for fiscal stimulus. Its aggregate budget deficit was just 0.6% of GDP in 2018. Its net public debt was 69% of GDP. Because Europe lacks a centralised fiscal policy—itself a failure of politicians—the onus is on individual countries. Those with healthy finances, such as Germany and the Netherlands, could enact a co-ordinated budgetary loosening. They should

focus on tax cuts and boosting public-sector infrastructure and defence spending. Unless they do, the euro zone risks falling back into stagnation—the trap it faced after the financial crisis. For the euro zone to tolerate that risk in the name of prudence is self-defeating. Astonishingly, the chances are that it will.

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BUSINESS DAY

Custodian’s PBT hits 5-year high despite tough operating environment Pg. 23

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

FINANCIAL SERVICES

Five major takeaways from Africa Prudential’s AGM ISRAEL ODUBOLA &

vice offerings, plus its major segment – registrars business. For its registrar business, which is its linchpin, the com-

pany plans to automate the entire registrar process, and penetrate other viable markets in Africa. For its digital technology, the company intends leveraging technology to change the dynamics of digital solutions in its coverage. Its drive to use technology develop major sectors of the Nigerian economy, made the service provider joined Fintech Association of Nigeria. For its cooperative business, the firm intends partnering with key stakeholders in cooperative space in Africa to have the narratives of cooperatives business rewritten in the continent. Stellar performance Africa prudential posted an impressive full year outing as gross earnings was five-year high at N4.48 billion in FY 2018, indicating 35 percent rise over N3.31 billion reported in the previous year. Growth in revenue was buoyed by elevated income from professional fee, subscription and investment. Profit before and after tax notched higher to N2.39 billion and N1.95 billion in FY 2018 compared with N2.06 billion and N1.71 billion in FY 2017. Earnings per share grew 12 kobo higher to 98 kobo, and raised approved dividend 25 percent higher to 50 kobo per share. Although after-tax profit surged, albeit profit margin, which represents how much was retained as profit for every N100 revenue generated

slumped to N43.54 in FY 2018 compared with N51.72 in FY 2017, driven by 48 percent spike in operating expenses. To this end, shareholders raised concern on increased operating expenses and urged the management to look into it. The entity also grew shareholders fund to its highest level at N8.6 billion since 2014. Market performance The directors noted that although the company’s shares lost 10 percent in value in FY 2018, it still outperformed the benchmark index by 3.90 percent. Shares opened and closed in 2018 at N4.3 and N3.87 respectively. African prudential hit its highest value at N5.19 on 26th February, 2018 and lowest point at N3.51 on 14th December 2018. Africa Prudentials gained 0.78 percent year-to-date, to close trading at N3.90/share at the Lagos bourse on Wednesday, March 27, 2019. Board Changes The shareholders approved the appointment of Obong Idiong to join the Board as a Director. Idiong took over from Peter Ashade as MD/ CEO in July 2018. Two Non-executive directors – Peter Elemelu and Peter Ashade and Ammuna Ali, an Independent Non-Executive Director, were voted as members of the audit committee. Three shareholders were elected out of 82 that signalled interest as members of the committee.

Beta Glass to produce lighter weight non-returnable glass bottles, for the first time in West Africa. The project is expected to become operational by 2020.

Beta Glass is a subsidiary of Frigoglass Industries Limited, exporting glass packaging materials to 13 countries. The company has manufacturing

plants in Ughelli, Delta State, and Agbara, Ogun State, with three furnaces that exceed 600 tons of produced glass containers per day

DAVID IBIDAPO

frican Prudential Plc, a Lagos-based share registration service provider in the Nigerian capital market had its 6th Annual General Meeting on Tuesday, March 26, 2019, where the directors rendered stewardship to shareholders. Here are the major takeaways from the meeting Outlook for 2019 The company believes that Nigerian capital market has good fundamentals, and remains an attractive investment destination for investors with longterm profit vision and cheap source of finance for corporate and government. The service provider expects the Nigerian Stock Exchange (NSE) to sustain its mixed performance in the first half of 2019 on the back of corporate action activities of listed firms among others. Africa Prudential’s projects slight rally at the Lagos bourse in the final six months of 2019 as well as elevated foreign capital investment inflows on the back of waning political risks. The firm aims to take advantage of emerging opportunities such as issuance of Green Bonds, proposed listing of some telecom giants at the domestic bourse and new regulatory framework for Fintech business in Nigeria, in 2019. Plans for Business Lines

The CEO/MD, Obong Idiong, in his report, disclosed that the following the change of the company’s name from

Africa Prudential Registrars Plc to current name, the firm added digital technology and cooperative business to its ser-

MANUFACTURING

Beta Glass’ profit spikes on increased finance income OLUFIKAYO OWOEYE

surge in finance income underpinned Beta Glass Plc’s full year profit as the Nigerian glass maker continues to use price adjustments and exposure to the export market to drive growth and profitability. For the year ended December 2018, Beta Glass’ revenue surged 18.6% from N22.18 billion in 2017 to N26.32billion in full year 2018. Profit after tax increased from N4.12billion in 2017 to N5.05billion in 2018. Export sales also increased from N1.43billion in 2017 to N1.62billion in 2018, while local sales also increased from

N20.75billion to N24.69billion in 2018. The company has been recording double digit growth in revenue amid recession in 2016 while delivering returns to shareholders. The growth in profit was driven by 11.3% percent surge in finance income to N1.40billion as at December 2018, making up for an 61.4 percent drop in foreign exchange gains to N132billion in the period under review. The company made N344 million foreign exchange gain in 2017 owing principally to its export sales to Cameroon, Cape Verde, Gambia, Ghana, Guinea, Liberia and Sierra Leone.

Frigoglass Plc, its parent company recently announced plans to invest between €25€30 million to expand the furnace capacity at the Beta Glass Guinea plant, located in Agbara, Ogun State. The new investment is to increase the capacity of the pant to 35.000 tons per year. The new furnace will be installed to replace the current one which has reached the end of its working life. An additional production line will also be added in addition to the upgrade of the existing production lines. Quality inspection equipment will also be installed. The new plant when installed will enable

L-R: Ashish Bakhshi, head of markets, (EY); Adesimbo Ukiri, CEO, Avon Healthcare; Olubayode Awosika, Med-in Specialist Hospital, and Olufemi Alabi, partner/leader, Transaction Advisory Services Leader for West Africa, (EY), at the EY Nigeria Healthcare Roundtable event with the theme ‘Unlocking stranded value in Nigerian Healthcare sector’ in Lagos

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: David Ogar

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Agusto & Co projects less growth for insurance in 2019 on economic slowdown ENDURANCE OKAFOR

gusto & Co, a credit rating agency has projected a slower growth for the Nigeria insurance industry in 2019 on the back of expected slowdown in economic activities in this election year. “Our forecast for insurance industry in 2019 is a 10 percent growth in Gross Premium Income (GPI),” Ada Ufomadu, a Senior Financial Institutions Analyst at Agusto & Co, told BusinessDay on Tuesday. This is however two percentage points less than the 12 percent reported by the industry in 2018. Explaining the reason for the lower expected growth, Ufomadu said it is because, “like we all know 2019 is a political year. Although it is a re-elected administration, it will take a while for them to settle in and we think it may slow down a bit on In 2018, the Nigeria insurance industry generated premiums of about N448.6 billion, which reflected a 12 percent growth year- -on-year. With the 10 percent growth projection by Agusto & Co the Industry’s GPI is expected to be at N493.4 billion in 2019. While the Lagos-based rating agency is optimistic that there will be a growth, it is also

sure the political environment may slow that growth down. “However, growth will come from a slightly better operating environment driven by an improved operating climate as well as opportunities in oil & gas (particularly refinery) and engineering considering the Dangote projects that are ongoing - the refinery and fertilizer manufacturing plants. At about 40 miles east of Lagos, on a more than 6,700 acres of former swampland bound by a lagoon and the Atlantic Ocean, lies the Dangote fertilizer plant valued at $5 billion which is in the final phase. Next to it is the construction of a vast oil refinery-a $12-billion project which, according to Africa’s richest man, Aliko Dangote, will be ready by 2020. “By 2020 I will finally dispatch oil,” he said in January. With the volume of GPI reported in 2018, the penetration ratio of Nigeria insurance industry stands at 0.5 percent, one of the lowest in Africa compared with countries like South Africa (17%), Kenya (2.8%) and Ghana (1.1%). According to industry sources, the low penetration ratio presents huge opportunity for growth and as such the sector is tagged as one in a growth phase. “The penetration ratio of 0.5 percent means that it is a grow-

ing industry, it has potential for growth in the near term,” Ufomadu said. She added that the ratio has been on that level for as long as she could remember, “although it is improving as GDP is also growing, and so GPI is growing but at a very slow pace. It has been in the region of 0.3, 0.4, 0.5 and 0.6.” BusinessDay checks revealed that out of the about 99.6 million adult population in Nigeria, a 2018 survey by the Chartered Insurance Institute of Nigeria (CIIN) showed that about 86.6 million Nigerians do not have any form of insurance cover. Among other factors responsible for the poor insurance patronage is low disposable income on account of the sluggish economic growth. “More Nigerians won’t and don’t intend to take up any form of insurance cover if given the choice,” CIIN noted. Explaining why many Nigerians don’t consider acquiring an insurance cover as a priority, Jim Ovia, the Founder/Chairman of Zenith Bank Plc, said in a statement that the major problem “we see in the Nigerian market is that per capita income of the people is very low and people tend not to take insurance as a priority against other things related to them.”

OIL&GAS

LEKOIL requires ministerial consent for OPL 310 interest – Court SEGUN ADAMS

Federal High Court sitting in Lagos, presided by Justice Sule Hassan has ruled that Lekoil’s acquisition of an interest in the OPL 310 block still requires consent from the Minister of Petroleum Resources. Justice Hassan stated that the Executive Order issued by the Nigerian Acting President, Prof. Yemi Osinbajo in 2017, which should have deemed the Consent to have been granted, could not supersede the powers of the Minister of Petroleum Resources to grant such Consent. More specifically, the Judge disagreed that the Consent could be deemed granted and obtained in default which Lekoil believes is contrary to the provisions of the Executive Order. The Judge further noted that the Executive Order was signed in 2017, while Lekoil’s application for the Consent to acquire the 22.86% participating interest in the block was made in 2016 and so could not be applied ret-

roactively. Justice Hassan further ruled that the Sale and Purchase Agreement executed by and amongst Lekoil 310 Limited, Afren Nigeria Holdings and the administrators for the purchase of AIOGL was inchoate based on the fact that Consent is pending. Based on the judgement, the OPL 310 interest is still held by the seller, Afren Investments Oil and Gas Nigeria Ltd. Lekoil still holds a 17.14% participating interest in the block, however, which received ministerial consent back in 2017. Commenting on the development, Lekan Akinyanmi, CEO of Lekoil said: “The company is yet to receive the judgement in writing, and believes it has strong grounds to appeal against this judgment by the Federal High Court; and intends to file a notice of appeal, and a stay of execution of this judgment with the Court of Appeal within a week. The company will take all necessary action to preserve its right to the 23% interest in OPL 310.”

The OPL 310 license originally ended in February, but Lekoil has applied for the license to be extended due to regulatory issues. The Department for Petroleum Resources has recommended that the extension be granted, although it is still awaiting presidential approval. “The company believes that the OPL 310 license is still in good standing given that the extension is in process and there has been no communication from the regulators to indicate that an extension will not be granted,” Akinyanmi said. Lekoil is an Africa focused oil and gas exploration company with interests in Nigeria and Namibia. The company was founded in 2010 by a group of leading professionals with extensive experience in the international upstream oil and gas industry as well as in global fund management and investment banking. Lekoil owns majority of Block 2514B in Namibia and is successfully listed on the AIM market of the London Stock Exchange.

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COMPANIES & MARKETS

Custodian’s PBT hits 5-year high despite tough operating environment DAVID IBIDAPO

ustodian Investm e n t ’s p r o f i t before tax hit a 5-year high despite tougher operating environment witnessed in 2018. As released on the Nigeria Stock Exchange (NSE) Market, in 2018, profit before tax rose to N9.5 billion from N8.9 billion posted in 2017. Further review of the results showed a strong financial performance across all business lines. Gross revenue for the year grew by 16.6 percent to N50.2billion from N43.1billion reported in 2017. Me a n w h i l e, t o t a l a s set base and shareholders’ funds also remained strong at N98.1billion and N40.5billion with year-on-year growths of 21.8 percent and 13.2 percent, respectively. In line with the company’s tradition of reciprocating its

shareholders’ loyalty, the Board of Directors has recommended, however subject to shareholders’ approval at the upcoming Annual General Meeting, the payment of a final dividend of 35 kobo, in addition to the 10 kobo interim dividend that was previously paid to its shareholders. This making it a total dividend of 45 kobo per ordinary share of 50 kobo to be paid out of the results achieved in 2018. In the words of Wole Oshin, Managing Director of Custodian Investments, ‘‘I am optimistic that the company will continue to thrive in all sectors in which it operates as it will be guided by its vision to always exceed stakeholders’ expectations in the delivery of services to its esteemed clients, observance of high corporate governance standards and the recruitment and retention of highly skilled personnel while leveraging on innovation and bespoke tech-

nology for excellence.’’ To this end, he expressed satisfaction with the result considering the operational headwinds of the year 2018. Also, more from the income statement showed that gross premium income from the insurance subsidiaries was up by 14.8 percent to N36.7billion in 2018 from N32.0billion reported in 2017. Fees and commission also rose to N4.1billion from N3.4billion, an increase of 18.6 percent. Investment income grew by 20.5 percent to N7.7billion in 2018 from N6.4billion in 2017. Meanwhile profit after tax declined by -2.78 percent to N7.11 billion, against N7.31 billion recorded in 2017. This was due to increased provision for taxes during the period. Total assets grew by 21.8 percent to N98.1billion in 2018 from N80.6billion in

2017. Financial assets witnessed a year-on-year growth of 19.8 percent to N59.2billion in 2018 from N49.4billion in 2017. Net assets per share rose from N6.09 per share in 2017 to N6.89 in 2019, up 13.1 percent. Share price of Custodian was up 0.83 percent as at close of trading on Friday at N6.10. Year to date analysis shows that stock was up 7.96 percent as at the close of market on Friday, outperforming the all share index. One year analysis also revealed that the stock was up 47.27 percent as at Wednesday outperforming the market which is down by 20.89 percent in the last one year. Custodian Investment currently trades at a P/E ratio of 4.82x and EPS of 1.26 with a price to book of 0.93 as stock is on its way to recording highest price in the last 5 years.

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BUSINESS DAY

Ecobank Transnational Incorporated Ecobank Group Reports Audited Full Year 2018 Result

Profit before tax up 51% to $436.0 million (Up 53% to NGN 135.5 billion) Profit for the year up 44% to $328.6 million (Up 46% to NGN 102.2 billion) Gross earnings down 0.2% to $2,487.6 million (Up 1% to NGN 773.3 billion) Operating profit before impairment losses up 0.4% to $702.4 million (Up 2% to NGN 218.4 billion) Total assets up 1% to $22.6 billion (Up 20% to NGN 8,223.9 billion) Loans and advances to customers down 2% to $9.2 billion (Up 17% to NGN 3,339.0 billion) Deposits from customers up 5% to $15.9 billion (Up 25% to NGN 5,803.6 billion) Total equity down 17% to $1.8 billion (down 1% NGN 660.1 billion) Year ended 31 December 2018 US$’000 NGN’000

Financial Highlights

Year ended 31 December 2017 US$’000 NGN’000

% Change US$

NGN

Income Statement: Gross Earnings 2,487,615 773,338,157 2,493,343 Revenue 1,825,171 567,400,654 1,831,202 Operating profit before impairment losses 702,404 218,360,082 699,651 Profit before tax 435,977 135,534,498 288,340 Profit for the year 328,649 102,168,869 228,534 Earnings per share from continuing operations attributable to owners of the parent United States cents / kobo per share): Basic (cents and kobo) 1.06 330.0 0.72 Diluted (cents and kobo) 1.06 328.0 0.72

Financial Highlights

As at 31 December 2018

Statement of Financial Position: Total assets Loans and advances to customers Deposits from customers Total equity

22,582,196 9,168,669 15,935,999 1,812,491

8,223,984,226 3,339,045,876 5,803,572,116 660,073,027

763,633,786 -0.2% 1% 560,840,492 -0.3% 1% 214,281,445 0.4% 2% 88,309,617 51% 53% 69,992,891 44% 46% during the period (expressed in 222.0 220.0

47% 47%

As at 31 December 2017 22,431,604 9,357,864 15,203,271 2,172,083

% Change

6,864,070,824 2,863,506,384 4,652,200,926 664,657,398

1% -2% 5% -17%

Ade Ayeyemi, Group CEO said, “Our financial performance in 2018 was remarkable in many ways and reflected the meaningful and significant progress that we have made against the priorities that we set in our ‘Roadmap to Leadership’ strategy. We delivered a 51% growth in profit before tax to $436 million and generated a return on tangible equity of 21%. Our cost-of-risk of 2.4% was an improvement on 2017 and demonstrated the progress that we have made addressing credit quality issues and enhancing internal control processes. “In Francophone and Anglophone West Africa regions we delivered sustainable growth and value for shareholders. While in Nigeria, and the Central, Eastern and Southern Africa, regions we are spurred on by the gradual progress being made. Our businesses continued to serve customers diligently and with purpose and all delivered profit growth in 2018, with Commercial Bank overturning the loss before tax made in 2017. “We continued to invest in the technology platforms to accelerate our shift from ‘physical’ to ‘digital’ and we are supporting our customers with digitally innovative products to enrich their engagements with Ecobank. To meet a key goal of expanding financial services to the unbanked, we have increased the number of Xpress Points, our agency network, to about 14,000 and we plan to grow this number. Our cash management and trade finance products, such as, Omni and e-Trade, are providing our customers with the convenience and efficiency of executing their cross-border transactions across Africa.“Overall, we are excited about the prospects for the firm and for Africa. Yes, risks remain, and economic cycles come and go, but we will remain steadfast in serving our customers well. I am proud of the work that Ecobankers have done in the last three years to stabilise the firm and position it for longterm success. I am very grateful to them. ”The financial statements were approved for issue by the board of directors on 22 February 2019. The Group CEO and Group CFO who are both signatories to the financial statements of ETI, were granted a waiver by the Financial Reporting Council (FRC) of Nigeria allowing them to sign the ETI financial statements (without indicating their FRC registration numbers) together with the Chairman on behalf of the board.

Condensed Audited Consolidated Income Statement Year ended 31 December 2018 US$’000 NGN’000

Year ended 31 December 2017 US$’000 NGN’000

% Change US$

NGN

Gross Earnings 2,487,615 773,338,157 2,493,343 763,633,786 0% 1% Interest Income 1,528,410 475,144,977 1,570,320 480,940,411 -3% -1.2% Interest Expense (598,650) (186,105,522) (593,001) (181,617,852) 1% 2% Net Interest Income 929,760 289,039,455 977,319 299,322,559 -5% -3% Fee and commission income 507,434 157,748,717 469,520 143,799,443 8% 10% Fee and commission expense (62,993) (19,582,970) (69,140) (21,175,442) -9% 8% Net trading income 381,885 118,718,629 415,725 127,323,700 -8% -7% Other operating income 69,085 21,476,823 37,778 11,570,232 83% 86% Non-interest revenue 895,411 278,361,199 853,883 261,517,933 5% 6% Operating income 1,825,171 567,400,654 1,831,202 560,840,492 0% 1% Staff expenses (512,455) (159,309,622) (515,040) (157,740,810) -1% 1% Depreciation and amortisation (97,444) (30,292,937) (95,820) (29,346,700) 2% 3% Other operating expenses (512,868) (159,438,013) (520,691) (159,471,537) -2% 0% Operating expenses (1,122,767) (349,040,572) (1,131,551) (346,559,047) -1% 1% Operating profit before 702,404 218,360,082 699,651 214,281,445 0% 2% impairment losses and taxation Impairment losses on : Imprmnt losses on fincl assets (263,915) (82,044,665) (411,054) (125,893,117) -36% -35% Operating profit after 438,489 136,315,417 288,597 88,388,328 52% 54% impairment losses Share of profit of associates (2,512) (780,919) (257) (78,711) 877% 892% Profit before tax 435,977 135,534,498 288,340 88,309,617 51% 53% Taxation (108,129) (33,614,640) (60,757) (18,607,989) 78% 81% Profit for the year from 327,848 101,919,858 227,583 69,701,628 44% 46% continuing operations Profit for the year from 801 249,011 951 291,263 -16% -15% discontinued operations Profit for the year 328,649 102,168,869 228,534 69,992,891 44% 46% Attributable to: Owners of the parent 261,647 81,339,672 178,585 54,695,068 47% 49% - Continuing operations 261,214 81,205,063 178,071 54,537,787 47% 49% - Discontinued operations 433 134,609 514 157,281 -16% -14% Non-controlling interests 67,002 20,829,197 49,949 15,297,823 34% 36% - Continuing operations 66,634 20,714,795 49,512 15,163,843 35% 37% - Discontinued operations 368 114,402 437 133,980 -16% -15% Profit for the year 328,649 102,168,869 228,534 69,992,891 44% 46% Earnings per share from continuing operations attributable to owners of the parent during the year (expressed in United States cents / kobo per share): Basic (cents and kobo) 1.06 330.00 0.72 222.00 47% 49% Diluted (cents and kobo) 1.06 328.00 0.72 220.00 47% 49%

ecobank.com

49% 49%

20% 17% 25% -1%

Audited Consolidated Statement of Comprehensive Income Year ended 31 December 2018 US$’000 NGN’000

Year ended 31 December 2017 US$’000 NGN’000

Profit for the year 328,649 102,168,869 Other comprehensive income: Items that will be subsequently reclassified to profit or loss: Exchange diff. on translation of foreign ops. (295,361) 18,993,985 Fair value (loss) in investmts. securities (FVOCI) (75,962) (27,663,913) Fair value gain on AFS financial asset Taxation relating to components of other 2,695 981,465 comprehensive income that will be subsequently reclassed to profit or loss Items that will not be reclassified to profit or loss: Property & equipment - net revaluation gain (643) (234,166) Fair value in equity instrmts designated at FVOCI 348 126,905 Remeasurements of defined benefit obligations1,374 500,383 Taxation relating to components of other (4,342) (1,581,271) comprehensive income that will not be subsequently reclassed to profit or loss Other comprehensive (loss) / profit for the (371,891) (8,876,612) year, net of taxation Total comprehensive profit for the year (43,242) 93,292,257 Total comprehensive income attributable to: Owners of the parent (65,289) 69,517,415 - Continuing operations (65,226) 69,537,000 - Discontinued operations (63) (19,585) Non-controlling interests 22,047 23,774,842 - Continuing operations 22,101 23,791,695 - Discontinued operations (54) (16,853) (43,242) 93,292,257

Cash and balances with central banks Trading financial assets Derivative financial instruments Loans and advances to banks Loans and advances to customers Treasury bills and other eligible bills Investment securities Pledged assets Other assets Investment in affiliates associates Intangible assets Property, plant and equipment Investment properties Deferred income tax assets Assets held for sale and discontinued operations Total Assets Deposits from banks Deposits from customers Derivative financial instruments Borrowed funds Other liabilities Provisions Current tax liabilities Deferred income tax liabilities Retirement benefit obligations Liabilities held for sale and discontinued operations Total Liabilities Equity Capital and reserves attributable to the equity holders of the parent entity Share capital and premium Retained earnings and reserves Shareholders Equity Non-controlling interests Total Equity Total Liabilities and Equity

US$

NGN

228,534

69,992,891

44%

46%

101,172 43,970 (1,805)

30,985,845 13,466,654 (552,816)

-392% N/A N/A 249%

-39% N/A N/A 278%

6,255 (6,064) (3,144)

1,915,713 (1,857,199) (962,910)

N/A N/A 123% -38%

N/A N/A 127% -64%

140,384

42,995,287

-365%

-121%

368,918

112,988,178

-112%

-17%

304,611 304,097 514 64,307 63,870 437 368,918

93,292,944 93,135,509 157,435 19,695,234 19,561,254 133,980 112,988,178

-121% -121% -112% -66% -65% -112% -112%

-25% -25% -112% 21% 22% -113% -17%

Condensed Audited Consolidated Statement of Financial Position As at 31 December 2018 US$’000 NGN’000

% Change

As at 31 December 2017 US$’000 NGN’000

% Change US$

NGN

2,797,417 122,283 49,914 1,717,575 9,168,669 1,828,251 4,568,262 240,434 739,168 6,147 278,334 827,165 29,787 118,715 22,492,121 90,075 22,582,196 1,465,646 15,935,999 29,907 2,059,690 996,557 52,979 52,076 55,099 3,896 20,651,849 117,856 20,769,705

1,018,763,323 44,533,023 18,177,681 625,506,464 3,339,045,876 665,812,449 1,663,669,655 87,561,254 269,190,202 2,238,699 101,363,676 301,236,950 10,847,830 43,233,629 8,191,180,711 32,803,515 8,223,984,226 533,758,960 5,803,572,116 10,891,531 750,097,898 362,926,006 19,293,892 18,965,038 20,065,954 1,418,845 7,520,990,240 42,920,959 7,563,911,199

2,661,745 36,557 39,267 1,685,806 9,357,864 1,718,977 4,405,240 298,561 760,724 9,964 283,664 924,163 43,514 121,715 22,347,761 83,843 22,431,604 1,772,414 15,203,271 32,497 1,728,756 1,210,908 52,450 58,107 64,269 24,064 20,146,736 112,785 20,259,521

814,493,970 11,186,442 12,015,702 515,856,636 2,863,506,384 526,006,962 1,348,003,440 91,359,666 232,781,544 3,048,984 86,801,184 282,793,878 13,315,284 37,244,790 6,838,414,866 25,655,958 6,864,070,824 542,358,684 4,652,200,926 9,944,082 528,999,336 370,537,848 16,049,700 17,780,742 19,666,314 7,363,584 6,164,901,216 34,512,210 6,199,413,426

5% 234% 27% 2% -2% 6% 4% -19% -3% -38% -2% -10% -32% -2% 1% 7% 1% -17% 5% -8% 19% -18% 1% -10% -14% -84% 3% 4% 3%

25% 298% 51% 21% 17% 27% 23% -4% 16% -27% 17% 7% -19% 16% 20% 28% 20% -2% 25% 10% 42% -2% 20% 7% 2% -81% 22% 24% 22%

2,113,957 (577,005) 1,536,952 275,539 1,812,491 22,582,196

353,511,708 206,215,472 559,727,180 100,345,847 660,073,027 8,223,984,226

2,113,957 (233,213) 1,880,744 291,339 2,172,083 22,431,604

353,511,708 221,995,956 575,507,664 89,149,734 664,657,398 6,864,070,824

0% 147% -18% -5% -17% 1%

0% -7% -3% 13% -1% 20%

The financial statements were approved for issue by the board of directors on 22 February 2019. The Group CEO and Group CFO who are both signatories to the financial statements of ETI, were granted a waiver by the Financial Reporting Council (FRC) of Nigeria allowing them to sign the ETI financial statements (without indicating their FRC registration numbers) together with the Chairman on behalf of the board. Due to the listing of Ecobank Transnational Incorporated on the Nigerian Stock Exchange, the Financial Reporting Council (FRC) of Nigeria requires that the signatories to the financial statements should be registered members of the FRCN. However, since ETI is not an incorporated entity in Nigeria, the signatories to the financial statements of our Nigerian entity, Ecobank Nigeria Limited, (whose results are consolidated in the group financial statements) are registered with the FRCN and details shown below: Designation

Name

MD/CEO

AKINWUNTAN Patrick

FRC/2013/ICAN/00000002861

Acting Chief Financial Officer

Abiola Aderinola

FRC/2018/ICAN/00000017827

Emmanuel Ikazoboh Group Chairman

Ade Ayeyemi Group Chief Executive Officer

FRC registration number

Greg Davis Group Chief Financial Officer

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Abiodun faces task of retaining aggrieved investors at Ogun industrial clusters Stories by ODINAKA ANUDU

apo Abiodun, Ogun State governorelect, faces a daunting task of retaining aggrieved investors and attracting new ones to Ogun State industrial clusters when he is finally sworn in. Ogun has beaten Lagos as a favourable investment destination in the last six to eight years, but this is gradually changing as major issues that scared investors from Lagos are now happening in Ogun. The state has several industrial clusters such as Agbara/ Igbesa, Otta, Ibafo, Mowe, Abeokuta, Ikebu-Ode, and Sango-Otta, among others. However, many manufacturers in these clusters are unhappy with the poor level of infrastructure there. A case in hand is the Agbara/ Igbesa axis. During rainy season, trucks ferrying raw materials and products are stuck in mud in this cluster as the state government, which takes the large chunk of taxes, refuses to rehabilitate the dilapidated link roads. Manufacturers have complained severally to the state government, but the complaints have always fallen on deaf ears.

Obi Ezeude, CEO of Beloxxi Industries, whose biscuit factory is located in Agbara, complained on February 8, 2018, during a factory commissioning, that poor state of roads in Agbara was hurting manufacturers as vehicles often got stuck. Similarly, at the 9th quarterly interactive Session with Ogun State government in Abeokuta in March 2017, Wale Adegbite, chairman, Manufacturers Association of Nigeria (MAN), Ogun State Chapter, had noted that apart from poor state of roads which were causing economic and man-hour losses, multiple taxation were also rife in the state. Ogun State had come up with a 70/30 formula, whereby investors put down 30 percent while the state catered for the rest 70 percent for road construction, but manufacturers say this makes little sense. “This does not make any sense,” said an executive director of a manufacturing company based in Agbara, when the idea was mooted in 2018. “You collect taxes and other levies from us, yet you refuse to do the little things for which the money is meant for,” he added. Manufacturers in the state also say that things ( like land titles) are becoming more predictable in Lagos and less so in Ogun as

channelled to Ikeja, while 20 percent or N35.33 billion went to Apapa zone. In the first and second half, Ogun got N144.87 billion out of the total N506.63 billion, representing 28.59 percent. However, Apapa got N144.2 billion (28.46 percent, while Ikeja got N109.73 billion (21.65 percent). This means that Ikeja and Apapa got N253.93 billion, representing 50.11 percent. But before 2017, Ogun alone often dwarfed both Apapa and Ikeja put together. In 2014, for instance, manufacturers invested N691.77 billion, out of which N514.87 billion went to Ogun State, representing 74.42 percent of the total . Apapa and Ikeja in Lagos contributed N15 billion and N85 billion to the investments respectively, representing a combined 15 percent of the total. Similarly, manufacturing investments worth N309.33 billion were made in the second half of 2015, out of which N302.26 billion went to Ogun, representing 97.7 percent of the total. Apapa and Ikeja shared the remaining less than three percent with other industrial zones across the country. Also, out of the N180.12 billion invested in the manufacturing and agro-allied industries in Nigeria in the first six months of 2015, N128.3 billion went to Ogun, repre-

senting 71.23 percent. Ikeja and Apapa industrial zones got N15.74 billion and N6.98 billion, representing 8.7 percent and 3.9 percent share of the total respectively. In the first half of 2016, total investments estimated at N54.55 billion were made by manufacturers in the country, out of which N37.51 billion moved to Ogun within the period. This means that 69 percent of all investments within H1 of 2016 were channelled to Ogun State. Apapa and Ikeja shared the remaining 31 percent with other industrial zones such as Edo/Delta, Imo/Abia, Oyo/ Ondo/Osun/Ekiti, Kano/ Sharada/ Challawa, Kano Bompai, Anambra/Enugu, Bauchi/Benue/Plateau, Rivers, Kwara, and Abia. In the second half of 2016, MAN survey showed that N313.62 billion worth of investments were directed to Ogun out of the total N448.94 billion. This represented 70 percent of the total. Like in the first half, Apapa and Ikeja industrial zones scrambled for the remaining 30 percent investments with other zones. MAN is the largest manufacturing association in West Africa with over 2,000 companies as members. “It is true that the current government attracted a lot of us here, but the incoming government should learn from its mistakes,” an investor in Otta industrial cluster said.

L-R: Ashwin Prabhu, marketing head, OK Foods Limited; Adenike Lawrence, brand manager, Sweets, OK Foods Limited; Murali Krishnan, managing director, OK Foods Limited; Folarin Falana ‘FALZ’, Topmint Menthol Candy brand ambassador; Rajesh Rajurkar, sales head, OK Foods Limited and Kuldeep Kulshreshtha, general manager, OK Foods Limited, during the signing and unveiling of FALZ as the official brand ambassador for Topmint Menthol Candy in Lagos recently

witty, smart and creative. That’s what I always strive to be with everything that I do. I am excited about this and I am positive that the collaboration between Topmint Candy and my brand will produce amazing results”. Falz’s personality and style resonate with what the brand is about - #staysharp - a campaign that the brand recently ran on social media attracting attention from a large number of Falz’s followers and social media savvy community. Users can continue to visit and engage with Topmint Candy on @topmintng (Twitter, Instagram and Facebook) and also visit and stay sharp with games on the website www.topmintng.com

Dapo Abiodun

many government agencies are now asking for similar fees and levies in Ogun. They say Ogun, which, in the past, benefitted from proximity to Lagos and poor doing business in Nigeria’s economic capital, must begin to do more in order not to lose existing investors and discourage incoming ones. Between 2014 and 2016, more than 70 percent of investments in agro processing, heavy and light manufacturing went to Ogun, while Lagos, which is mainly made up of Ikeja and Apapa industrial zones, often attracted less than 20 percent of the total, according to data from MAN. But the trend changed in

2017 as data showed that the state posted only 28.59 percent of all the investments last year, whereas Lagos got 50.11 percent of total investments that year. The MAN data showed that out of N329.94 billion invested by manufacturers in the first half of 2017, 32.9 percent (N108.87 billion) went to Apapa zone. Ogun zone attracted 28.4 percent (N93.76 billion), while Ikeja got N67.27 billion (20.4 percent of total investment). In the second half, manufacturers made investment estimated at N176.69 billion. While 28.9 percent or N51.11 billion worth of investments went to Ogun zone, 24 percent or N42.46 billion was

OK Foods continues to lead the pack …as Topmint Menthol Candy unveils brand ambassador

K Foods Limited has continued to be a leading player in the confectionery and biscuits category in Nigeria for many years and is well known for some of its key brands such as OK POP and Chic Choc, among many others. The company recently launched a new menthol flavored candy under the brand name ‘Topmint ;, signing Folarin ‘Falz’ Falana—popularly known as FalzTheBahdGuy— as brand ambassador. The official signing event took place recently at the Radisson Blu Hotel, Ikeja. Topmint Candy’s taste delivers on its promise of being a strong menthol candy. The product, when checked with

consumers, has been testified as superior with unique packaging that makes it stand out on the shelves. Speaking at the event, Murali Krishnan,MD of OK Foods Limited, stated that Topmint Candy is a winning product that has been tested among consumers and rated higher on parameters such as taste, size and mint strength when compared with other mint brands available in the Nigerian market. He also stated that the team is very positive that the chosen brand ambassador will help drive brand awareness and association with core consumers. Commenting on his appointment, Falzsaid said: “I love the idea of being sharp,

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Dufil’s success shows opportunity in Nigerian foods industry ODINAKA ANUDU

ufil Prima Foods, also known as De United Foods Industries Limited, maker of Indomie noodles, is going from strength to strength. The company is currently the market leader in the noodles sub-sector, which is a testament to opportunities in Nigeria’s food industry. Key success drivers are Nigeria’s demography, the rural-urban migration and changing consumer tastes, said Ike Ibeabuchi, a manufacturing sector analyst. “You can do anything with 200 million people, half of who are under 30—obvious noodles consumers,” he said. Dufil has a large customer base that has come to love the taste of its noodles. The company has a long history in Nigeria. It entered the noodles industry in 1996, with a manufacturing plant in Ota, Ogun State. When it first produced Indomie, Nigerians gave a veiled protest, saying that the company was trying to make them eat worms. But this perception soon evaporated. Five years after, the company incorporated its Choba, Port Harcourt, plant. As of 2004, it was already producing one million cartons of Indomie per month. The company continued expansion, incorporating Insignia Print Technology LFTZ

Gbagada Jasmine Lions Club members recently visited and donated items to the Children’s ward of the Gbagada General Hospital in commemorating the Childhood Cancer Day.

Enterprise in 2007 as a subsidiary of Dufil Prima Foods Limited at Lekki, Lagos. In 2008, Dufil Prima Foods was converted into public limited company and became the holding company of the group. This was also the year the noodles maker started the seasoning division at Ota. With demand for its noodles rising, Dufil reached the production of one billion packs of Indomie noodles in 2010. That is not all, as the firm incorporated and commenced operation of Northern Noodles Limited as a subsidiary of Dufil Prima Foods Plc at Kaduna. The company is today the leader in the industry, acquiring two production lines of Dangote Noodles Limited for

N3.75 billion ($12.26 million) in November 2017. Dufil signed an agreement with Dangote Noodles to buy its plants at Ikorodu and Calabar factories. The firm was also to buy stock worth N383.94 million. In May 2018, the company acquired May &Baker’s Mimee noodles, with its production line, in a deal worth N775 million. “We are pleased to announce this transaction, which delivers immediate value to our current shareholders and reflects the successful alignment, partnership, and commitment of our board, employees and suppliers,” Girish Sharma, chief operating officer of Dufil Prima Foods, said while confirming the deal.

Sharma had at an earlier meeting said that the company was on an expansion drive that would see it investing additional N20 billion in Nigeria after its initial N10 billion investment. Dufil acquired 100 percent of May&Baker’s food division, and less than 10 percent of its total balance sheet size, Sandra Aduba, May and Baker’s head of communication department, said. “The noodles industry is a red ocean and a loss contributing unit for us hence the decision to sell. The board and shareholders approved the sale at an EGM held on 23rd Nov. 2017,” Aduba said in an emailed response to BusinessDay questions. Many Nigerians may not

know that this company exports noodles to several markets, including the United States and Europe. Africans, especially Nigerians, in the Diaspora consume this product in large quantity. Little wonder why the company’s export to the United States alone reached about $30 million in 2013, said Deepak Singhal, chief executive officer of the company, at an event that year. Also around that year, it was gathered that Dufil was already a $600 million company. Unconfirmed sources said the company, in 2012 alone, sold 1.6 billion packets of noodles between N35 and N95, which was then more than what wasconsumed in any country outside Asia, except the US, Brazil and Russia. In 2017, Dufil, following the approval granted by the FMDQ Board Listings, Markets and Technology Committee, listed the Dufil Prima Foods N10bn Series 1 Fixed Rate Bond under its N40bn Bond Issuance Programme on the OTC Exchange. The Series 1 issuance achieved a 100 percent subscription level with participation from a wide array of domestic (pension fund administrators, fund managers and commercial banks) and foreign investors. The proceeds of the issuance were to be used to refinance existing debt obligations and finance partial capital expenditure plans of the company. “Dufil, as a company op-

erating in the Nigerian market for over two decades, is pleased to have taken this additional step in expanding and diversifying its financing options beyond the conventional commercial bank debt market by establishing relationships with non-bank institutional investors in Nigeria. Dufil bond received participation from both domestic and foreign Investors. In case of domestic investment, a wide range of top- notch pension funds, asset managers and banks participated. Furthermore, Dufil is also extremely pleased to have had foreign investor participation in the bond issue as this is a testament to the company’s adherence to international best practices and standards, which the company employs in all aspects of its business operations,” Madhukar Khetan, then chief operating officer for Dufil, had said. Apart from the noodles maker, there are other major players in Nigeria’s food industry, including Dangote, Flour Mills of Nigeria, Chagoury, Honeywell, Nestlé, PZ Wilmar, and OK Foods, among many others. “Fast food is expected to grow, driven by urbanisation and the increasingly rapid lifestyles of Nigerians, which encourages them to choose a quick fix for their meal requirements. This is especially so, given that the average age of Nigerian consumers is below 30 years,” Euromonitor International said in its April 2018 report.

to exports will generate more foreign exchange and contribute to the country’s GDP

growth. It will provide jobs, thereby reducing high unemployment rate, which stands at 23.1 percent currently. But this will require some basic facilities, especially infrastructure, to happen. In the view of Ahmed of MAN, infrastructure remained one of the main components of a successful manufacturing sector, meaning that adequate investments should be made in this area to revamp power, roads, railways and soft infrastructure such as the business environment. Tayo Omidiji, head, strategic planning at Nigerian Export-Import Bank, said recently in Lagos that there was a need to improve competitiveness by bridging infrastructure gap, increase funding for research and development to aid innovation and develop intellectual property.

Why value-addition is critical in 21st century economy Gbemi Faminu

igeria has abundant raw materials but these are mostly exported as raw commodities or products. As a result, the country loses billions of naira and thousands of jobs to countries which do the real value addition. A report released by Nigerian Export Import Bank (NEXIM), using cocoa as a case-study, shows that Africa accounts for over 70 percent of the global cocoa production with Nigeria as one of its key producers. The global value of raw cocoa export is $10 billion while the total value of all finished goods from cocoa annually is $200 billion, with chocolates alone having $100 billion. This shows that Africa accounts

for 73 percent of global production but enjoys less than five percent of the wealth in the value chain. Ogbonnaya Onu, minister of science and technology, said recently that the Nigerian leather industry could be worth about $900 million in export in the coming years provided that further action was taken and value addition intertwined with the export process. Mansur Ahmed, president of the Manufacturers Association of Nigeria (MAN), said recently in Lagos that value addition was key to success in manufacturing, as it involved transforming raw materials into finished goods. “For instance, you produce cocoa, turn it into cocoa butter and you export it. What you get from that cocoa butter, they convert into chocolates and for the same

quantity of cocoa butter, the manufacturers of chocolate will make more profit a

thousand times more than you do.” Experts say value addition

L-R: Rashida Adebiyi, head, retail division, AXAMansard, presenting an award for Women Empowerment to the directors of AgroEknor, Timi Oke and Attah Anzaku at SMEAfrica Women’s Day event in Lagos recently

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ON THE MONEY: Values the big five animals in Africa can teach about money management (part 2) Insurance industry stakeholders at the IFC, Africa Re Agric Scheme launching in Lagos.

Industry excited as Africa Re, IFC agric financing deal drives uptake for insurance …sector rising to support food sufficiency Modestus Anaesoronye

layers in the nation’s insurance industry are excited about the new partnership agreement between Africa Re, a leading reinsurance company in Africa and the IFC, a member of the World Bank Group, that targets to help insurers in Nigeria develop innovative agricultural insurance products for small holder farmers. Under this agreement, Africa Re will work with IFC’s Global Index Insurance Facility to provide technical support to insurance companies who are licensed to underwrite index insurance products. Index-based agricultural insurance, which pays out on the basis of transparent parameters like rainfall and does not require costly field visits to verify losses, provides an innovative and more efficient solution for small holder farmers to protect their crops against losses. This initiative will also engender financial inclusion of the small holder farmers. Mohammed Kari, commissioner for Insurance and CEO, National Insurance

Commission (NAICOM) while launching the scheme at Africa Re’s headquarter in Lagos, commended IFC and Africa Re and promised that NAICOM will do everything possible to ensure the success of the scheme and even exceed expectations. He said from four insurance companies providing agricultural cover two years ago, the Commission has increased the number to 11, with another five applications already waiting approval, stating that he has no doubt that the target set for the project will be surpassed in two years. Ken Aghoghovbia, deputy managing director/ COO of Africa Re, speaking at the launching also said : “We are excited to be partnering with IFC in assisting Nigerian insurers develop appropriate insurance products to protect small holder farmers. This initiative would certainly go a long way in moving Nigeria towards its goal of food security and is in line with the Corporation’s mission to support African economic development.” Eme Essien, IFC Country manager for Nigeria said: “60 percent of Nigerians rely on agriculture for their livelihood. Affordable

and accessible risk management tools like index insurance are needed to help farmers mitigate the effects of climate-related shocks, protecting them against catastrophic losses and unlocking access to finance.” Essien said “IFC’s support for affordable and accessible agricultural insurance will help Nigeria’s farmers mitigate the effects of climate-related shocks, protecting them against catastrophic losses and unlocking access to finance. Developing a sustainable agricultural insurance industry also requires a strong commitment from regulators, such as NAICOM, who embrace innovation to help farmers manage their risks.” Oye Hassan Odukale, managing director/CEO, Leadway Assurance Company Limited said the agricultural insurance space is huge with a lot of potentials, urging the regulatory authority to further create a level playing ground so that many other companies that have interest could come in. He applauded the technical support so far received from IFC, while urging them to give more.

Kunle Ahmed, managing director/CEO, AXA Mansard Insurance Plc stated that given the huge potential in Nigeria’s agric space, this partnership to enable insurance play actively in the sector is not a misguided priority. Ahmed noted that NAICOM has begun to create the enabling environment with through this journey. Edwin Igbiti, managing director/CEO, AIICO Insurance Plc said for the Commissioner of Insurance presence at the launch is a clear indication that the project has got the Commission’s backing, stating that the penetration currently standing at 15,000 contracts, with 75,000 farmer beneficiaries will double The technical support provided to insurance companies in Nigeria will include specialized product design and developing digital platforms that will enable a prospective policyholder to view index insurance products on offer, compare different products from various insurers, review the term sheet and documentation, and select their preferred policy. The aim of this agreement is to provide thousands of farmers with access to insurance by the end of 2020.

ast week, we started a series on what the big five animals in Africa can teach us about Money Management. We learned the secret of saving, from the Lion; the secret of planning, from the Leopard and the secret of budgeting from the Elephant. This week we would be learning how to better our money management skills from the Rhine and the Buffalo. 1. The Rhino; Take charge of your debt: Debt is a scary word for many people. For those who do not properly manage their debt, they find themselves sinking under the weight of unsettled loans. The Rhinos are fairly peaceful animals and do not have many enemies, yet the mother Rhino often has to protect her calves from predators and danger. In situations where she is threatened, the rhino weighs up her options and charges towards the predator to protect herself. It is the same with your money; loans can be expensive and sometimes you need to take charge of your financial security by reducing your debt. If you must take a loan, borrow responsibly after doing some research on the available options, repay high interest loans before others and make sure you spend the loan on what you borrowed it for. 2. The Buffalo; Grow

your money safely: Buffaloes form one of the biggest herds in nature. Even though building a large herd takes a great deal of time and patience, it pays off in the end in terms of extra security. Indeed, just like the buffalo’s herds takes time and patience to grow, so do investments. To invest your money safely, make sure you set financial goals you want to achieve in the future and choose a trusted financial adviser who will help you identify which investments are right for you. As a responsible business, Old Mutual is committed to affecting its communities positively and enabling positive futures for its stakeholders. Old Mutual believes that with greater financial knowledge, individuals are better equipped to make sound financial decisions that will impact positively on their lives. By implementing these five principles from the Big Five Animals into your financial lifestyle and with Old Mutual as a financial partner, it is safe to say that you are on your way to a financially secure future. The time to start is now! So, call Old Mutual today on 01 271 9393 to or send an email to customercare@oldmutualnigeria.com for more information on the free Financial Education workshop.

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Allianz Africa launches core IT system transformation in Ghana Stories by Modestus Anaesoronye

llianz Africa has launched the transformation of its core IT Platform with the introduction of the Allianz Business System (ABS). The system was adapted for the African market and is now operational in Ghana for motor insurance products. ABS was developed by the Allianz Group with customer centricity at its core. It connects Allianz, with its customers and partners and all parties with a 360-degree view of all transactions. This is made possible through a single platform. Its layered and flexible design makes it easy to adapt for marketspecific requirements and processes. The main benefit for clients is the quick

Darlington Munhuwani, chief executive officer, Allianz Insurance Ghana

turnaround time in handling both claims and underwriting transactions. This project is at the heart of Allianz Africa’s core operational strategy. One of the first milestones was the launch of a new operational hub in Abidjan to steer the business

transformation. The launch of ABS in Ghana will be followed by a phased-out implementation across Africa. “ABS will transform how Allianz does business in Africa by enabling us to be more productive and to give our African customers a superior

experience. It has also been adapted to support mobile money transactions which is a unique way of buying insurance in Africa,” said Delphine Traoré Maïdou, chief operating officer and regional executive board member of Allianz Africa. According to Darlington Munhuwani, chief executive officer of Allianz Insurance Ghana, “The decision to pilot and implement ABS in Ghana speaks volumes about the Allianz Group’s confidence in Ghana’s economy and the need for differentiation in the local insurance market. The use of technology to interact with both our customers and partners enhances efficiency and the speed of doing business.” The first phase of the ABS rollout for Allianz Ghana is in respect of motor insurance and will be extended to other classes of insurance products and countries throughout 2019 and 2020.

Sigma assures contributors, retirees’ seamless retirement

leading pension fund administrator in Nigeria, Sigma Pensions Limited has assured its contributors and retirees that it is prepared to guide them towards a seamless transition to retirement, stating that this remains its priority as an institution. John Igiehon, senior business development manager (West) of the company, said at a sensitisation forum for retirees and prospective retirees in Ondo and Ekiti states, that the welfare of contributors being managed by the company remains priority of the organisation Igiehon, who urged contributors not to hesitate in pointing out any problem they may encounter in their dealings with the company, stated that the company would not relent in efforts to satisfy contributors. The event tagged “Agenda for the Retirees” had in attendance over 500 par-

that when it comes you will know what to do. “ We have been in operation since 2005 and we doing our best to give our pensioners a deserved benefits after retirement. We ensure that all our books are correct and we don’t involve in fraudulent acts,” he said. Also speaking, Mabel George, head Business Development Division (West), noted that Sigma wants to show that pensioners are still relevant in retirement. She added that the company also ensures that those still in service have seamless path to retirement, stressing the need for them to be properly educated. “We want to keep in the touch with the retirees and let them know that though, they are retired we care for them. “The second category of people we also cater for are those nearing retirement to enlighten them on the requirements and the steps they need to take before

ticipants from the two states and who interacted freely with the company’s management. Igiehon said Sigma which was licensed in 2005 was preparing the retirees for the future on what they should know as regards their pensions and be able take critical decisions. “The main purpose of us bringing you together today is to educate our retirees and prospective retirees on what they should know about their pensions so

they retire. “We want to have better educated retirees and for us to show that care benefitting from our medical services and the rest. We are here today for Ondo and Ekiti and our next stop is Kwara state. “These people are important to us as an administrator and their happiness after retirement; this is what we want. We educate them how to access retirement savings, their duties and the rest.”

Leadway Assurance applauds Nigerian Special Olympics Team performance in Abu Dhabi

eadway Assurance has described the Nigerian contingent to the just-concluded 2019 Special Olympics World Games in Abu Dhabi as true heroes who deserve to be celebrated by the nation at large. Speaking during a reception hosted in Lagos by the Special Olympics Nigeria for the team and various sponsors that made the team’s participation at the Abu Dhabi event possible, Ademola Ayodabo who represented Leadway Assurance’s head of Corporate Communications, Olubunmi

Adeleye, said the team’s total haul of sixty-three individual medals in eight sporting activities was a testament to the irrepressible Nigerian spirit. He noted that Leadway Assurance was proud to be associated with the great success story of the team both as a sponsor and also for being represented on the Board of Special Olympics Nigeria. He also promised that the company was committed to sustaining its CSR support for Special Olympics Nigeria. Earlier in his welcome remarks, Victor Osibodu, chairman, Special Olympics Nigeria, said the Nigerian

contingent to the Games earned global respect for their “magnificent achievements” in Abu Dhabi. “I’m proud to inform you that we returned home with 63 medals, 32 gold, 21 silver, and 10 bronze medals. These numbers may sound odd but in Special Olympics we celebrate individual athletes and not the event. Therefore, the medals are not counted as per sport but as per athletes,”Osibodu stated. He commended the sponsors, coaches, caregivers and the medical personnel for their dedication and hard work in ensuring the

team was in top shape for the Games. A breakdown of the Special Olympics team’s 63 individual medal haul shows that the athletes won four gold and two bronze medals in athletics, two gold, seven silver and two bronze in badminton, 10 silver medals in Unified Basketball, one gold in cycling, 12 gold in Unified Football, three silver and one bronze in table tennis, one gold, one silver and five bronze in swimming, and 12 gold in Unified Volleyball, totaling 63 individual medals in eight sporting activities.

Custodian Investment gross revenue hits N50.2bn …recommends dividend payout

ustodian Investment Plc, formerly Custodian and Allied Plc, a leading non-bank financial institution quoted on the Nigerian Stock Exchange (NSE) with investments in life and nonlife insurance, pension fund administration, trusteeship and property holding businesses, has announced its

audited result for the year ended 31st December 2018. A review of the results shows strong financial performance across all business lines, reaffirming the resilience of the Company’s business model. Gross revenue for the year grew by 16.6 percent to N50.2 billion from N43.1billion reported in 2017. Despite the challeng-

ing business environment in 2018, Profit before tax rose to N9.5billion from N8.9billion posted in 2017. Total asset base and shareholders’ funds remained strong at N98.1billion and N40.5billion with year-onyear growths of 21.8 percent and 13.2 percent respectively. In line with the compa-

ny’s tradition of reciprocating its shareholders’ loyalty, the Board of Directors has recommended, subject to shareholders’ approval at the upcoming Annual General Meeting, the payment of a final dividend of 35 kobo, in addition to the 10 kobo interim dividend that was previously paid to its shareholders, thereby making it a

total dividend of 45 kobo per ordinary share of 50 kobo to be paid out of the results achieved in 2018. Wole Oshin, managing director, expressed satisfaction with the result considering the operational headwinds of the year 2018 and he is optimistic that the company will continue to thrive in all sectors in

which it operates as it will be guided by its vision to always exceed stakeholders’ expectations in the delivery of services to its esteemed clients, observance of high corporate governance standards and the recruitment and retention of highly skilled personnel while leveraging on innovation and bespoke technology for excellence.

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Monday 01 April 2019

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You and your executive coach are a bad match. Now what? SHARON DOUGHERTY

hile much has been written a b o u t how to select an executive coach, there’s very little information out there about another common situation: picking the wrong coach. Leaders mismatch with coaches for a variety of reasons. They may not be sure what to look for when selecting a coach, or they may not even be given their choice of coaches. Whatever the cause, the coaching relationship may not work out, and considering a new coach is important if leaders are determined to achieve the results they want. Here are three steps I have seen work for cli-

ADDRESS YOUR SPECIFIC CONCERNS WITH YOUR COACH. Ask for what you want: more or less input, more or less of an agenda, more or less direct feedback. Good coaches are open to this feedback. If your conversation with your coach isn’t productive or if you remain dissatisfied after a few meetings, take the steps necessary to switch to a different coach.

ents when they realize they have matched with the wrong coach. DETERMINE WHY IT

DOESN’T FEEL LIKE A MATCH. Is it a chemistry issue, or are you just not making progress? Does the coach talk too little

or too much? Is she too structured or too vague in her approach? Has some of her feedback not landed well with you?

SHARE YOUR RATIONALE WITH THE PERSON SPONSORING YOUR COACHING. If you decide the relationship isn’t a fit, schedule a conversation with the person responsible for your coaching engagement — either your boss or a human resources expert. Be

transparent and specific about your concerns. Expect them to ask about any tough feedback you may have received and how that plays into your thinking about the coaching engagement. Executive coaching should be a transformative experience for you as a leader and as a person. It can actually change the trajectory of your life and relationships. If you follow these steps, you can make sure you have the right coach along for the journey.

(Sharon Dougherty is the CEO of Priority Coaching.)

Why businesses should know where their densest markets are EDDIE YOON AND MICHELLE

Maximum Density Market is a category subsector that has an unusually high concentration of demand in a small arena on a per capita basis. Demand density is extremely important, as it provides a shortcut to scalability with far less investment than is required to achieve it in a mass market. It makes wordof-mouth exponentially faster and more powerful, so fewer marketing dollars are needed. And because a denser market offers a chance to grow sales more quickly via deeper penetration, it can change the math as companies calculate whether they can afford to launch a minimum viable prod-

uct, allowing them to get to market more quickly. MDMs are also highly correlated with the presence of superconsumers, who are not just the most profitable and passionate consumers in the category, but are also the most prescient. The result: Speed plus scale plus lower marketing dollars plus access to the smartest consumers creates the primordial soup necessary for successful category creation. There are three versions of MDMs to consider when thinking about your own launch. One is a local geography where demand per capita is very high. These are not just opportunities to double down where a market is hot to drive near-term growth, they are learning opportuni-

a common life event or trigger. This kind of MDM is not defined by proximity but rather by affinity; with digital advertising, social media and directto-consumer business models, affinity is amplified and is far easier to scale. For a new innovation, beginning life in an MDM can make a lot of strategic sense, and can provide a steppingstone toward an eventual mass-market introduction.

ties to kick-start growth elsewhere. The second version is a subsector of a category, often a business-tobusiness market. Keurig, for instance, got its start in the $4 billion office-

coffee market; its early “minimum viable product” brewer cost $10,000. But focusing on this initial market made strategic sense. The office-coffee market was extremely concentrated from a dis-

tribution standpoint — products were sold by office-goods distributors — and coffee drinkers would gladly try a new product paid for by the office. The third version is via

Expertise It’s in our DNA

In an ever changing economy, with 125 years of serving YOU, we remain strong, trustworthy, dependable, safe and consistent. You can be conﬁdent that we will continue to deliver innovative banking products and services which seamlessly and conveniently suit your lifestyle needs.

Visit www.ﬁrstbanknigeria.com to learn more about us.

(Eddie Yoon is the founder of Eddie Would Grow. Michelle Stacy is a speaker, consultant and director.)

Monday 01 April 2019

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Putting customer trust at the center of competition ANDREW BURT

f you’re selling a product, you’re now selling trust. That’s thanks to two conflicting trends: our increasing reliance on software across nearly every dimension of our lives and the inherent privacy and security vulnerabilities related to software itself. A few years ago, the Norwegian government realized that it bought almost all of its critical technology from outside of Norway. This raised pressing national security questions: How could the government trust the technology it was increasingly reliant upon? What could Norway actually do to verify that it could depend on the software it was using? In 2014, Olav Lysne, a Norwegian security researcher, was tasked with leading a commission to answer these questions, an effort that culminated in a seminal book published last year. Lysne’s answer: Norway’s govern-

ment simply could not verify as trustworthy the software it used. In fact, no one can. The very nature of our current software systems — the complexity underlying them, their supply chains and more — makes it impossible to detect vulnerabilities intentionally inserted into software.

This makes trust both the most important aspect of any commercial interaction and the hardest to measure. And because trustworthiness cannot be proven, it must be signaled — through branding, marketing and more. Tim Cook of Apple is one of the few corporate leaders to

understand the implications of Lysne’s conclusions. He has spent the past few years leading the charge in seeking to make trust the core of his company’s public identity. While Cook cannot fix the problems Lysne identified — indeed, no one can — he can demonstrate that Apple will

do everything in its power to minimize them. So how can other companies put these same lessons into practice? To start with, trust must now be considered a key feature of every product containing software. Second, clear and demonstrable processes must be put in place to illustrate the importance of data protection, both inside and outside every organization. Once these processes are in place, companies can then signal their emphasis on protecting customer data to the outside world, just like Tim Cook. Because software systems are inherently vulnerable and the insights data might yield at scale cannot be predicted, no one should sugarcoat the dangers of digital technologies.

(Andrew Burt is chief privacy officer and legal engineer at Immuta.)

Getting the most out of a freemium business model freemium model, including online media sites, cloud services or digital services, can use this research to drive product revenues and create a more sustainable business.

XIAN GU, P.K. KANNAN AND LIYE MA

t’s hard to resist the allure of free. When done right, the freemium business model can help drive massive traffic to companies’ websites, offer a “try before you buy” experience that overcomes user resistance to paying and convert free users to paying customers. So how can companies better position themselves to succeed? Past research demonstrates that adding new, high-quality products as premium offerings can cause customers to elevate their perception of the brand overall and be more willing to pay for premium alternatives. However, freemium products often subvert this strategy. Simply put, when customers anchor on free, it can be hard to dislodge them. In the Software as a Service space, this strategy is called versioning; different versions of the premium product or service can be made available to the market. Does this strategy work in moving customers to let go of the free and move to premium versions?

Our research, published in the Journal of Marketing, assessed the effectiveness of this strategy by analyzing the sales of scholarly content by the National Academies Press, which offers free online PDFs of its book titles, but charges a price for paperback versions. We found that extending the premium product line, either with a hardback or an e-book, led to a positive impact on the sales of the existing premium

option, the paperback. When customers were offered a new premium product that was of higher quality and was higher priced, such as the hardback, they chose the paperback more often. That is, they chose the “compromise” option more often, moving away from the free PDF. When customers were offered the lower-quality, somewhat lower-priced product, such as the e-book, they also moved

away from the free PDF and chose the paperback more often. Adding a similarly priced lower-quality e-book made the paperback more attractive, leading to higher sales. This is the “attraction effect,” and occurred only when the price of the e-book was closer to that of the paperback. When the prices of the e-book were much lower, they cannibalized the paperback sales. Any company that uses the

Brought to you courtesy of First Bank Nigeria

(Xian Gu is a doctoral candidate at the Robert H. Smith School of Business, University of Maryland at College Park, where P.K. Kannan is a professor and Liye Ma is an associate professor.)

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Live @ The Exchanges Market Statistics as at Friday 29 March 2019

Top Gainers/Losers as at Friday 29 March 2019 LOSERS

GAINERS Company

Company

Closing

Change

N68

N62.75

-5.25

N10.9

N10

-0.9

N36.9

N36.05

-0.85

VOLUME (Numbers)

N12.95

N12.2

-0.75

VALUE (N billion)

N10.2

-0.3

MARKET CAP (N Trn)

Closing

Change

NESTLE

N1497.9

N1580

82.1

SEPLAT

N540

N590

CADBURY

MOBIL

N170

N178

GUARANTY

N10.5

DANGCEM CCNN

PRESCO

N190

N191

WAPCO

N19

N19.9

0.9

DANGFLOUR

ASI (Points)

Opening

DEALS (Numbers)

31,041.42 3,455.00 266,861,510.00 3.153 11.672

Global market indicators FTSE 100 Index 7,267.47GBP +33.14+0.46% S&P 500 Index 2,825.11USD +9.67+0.34% Generic 1st ‘DM’ Future 25,845.00USD +108.00+0.42%

Deutsche Boerse AG German Stock Index DAX 11,499.36EUR +71.20+0.62% Nikkei 225 21,205.81JPY +172.05+0.82% Shanghai Stock Exchange Composite Index 3,090.76CNY +95.82+3.20%

Analyst identifies factors slowing stock market’s growth es, exchange rate movement and stability; and inflation rate”, Nevin, who spoke in Lagos at the breakfast meeting of Association of Corporate Treasurers of Nigeria (ACTN) further said. The breakfast meeting themed “2019 Economic and Business Outlook” was supported by FMDQ OTC Securities Exchange. He said, “In 2018 we predicted a moderate increase in foreign portfolio investment (FPI) and a slowdown in by first-half of 2018, driven by uncertainty ahead of the elections. We expect FPI growth in first-half 2019 to remain low and lower than pre-2018 level”, said the Chief Economist at

PwC who also added that, “We expect FDI flows to be dampened by lackluster implementation of policy reforms.” He identified key risks to foreign investment in Nigeria to include: declining interest rate differentials as advanced economies continue to tighten policy rates; political instability following the 2019 elections; unfavourable investment climate; and broad macroeconomic instability. Global FDI flows fell by 19percent in 2018. However, 2018 FDI flows to Africa increased by 6percent from $38billion to $40billion. South Africa grew by 446percent; Egypt by 7percent. Nigeria, on the other

L-R: Zeal Akaraiwe, MD/CEO of Graeme Blaque Advisory/Chairman Interim Council, Association of Corporate Treasurers of Nigeria (ACTN); Andrew Nevin, chief economist and advisory partner at Pricewaterhouse Coopers (PWC)/ keynote speaker; and Patrick Ajunwoko, executive secretary/CEO, Association of Corporate Treasurers of Nigeria, during ACTN’s breakfast meeting held recently in Lagos.

hand, fell by 36percent (to $2.2billion) and was overtaken by Ghana with $3.3billion. Speaking further at the breakfast meeting held on Thursday March 29, Nevin noted that Nigeria is not among the fastest growing economies in SubSaharan Africa (SSA) by percentage growth in GDP. “The largest economies in Sub-Saharan Africa offer opportunities for business growth, particularly when considering an expansion into new regions,” he added. In his remark, Zeal Akaraiwe, MD/CEO of Graeme Blaque Advisory who is also the Chairman Interim Council, Association of Corporate Treasurers of Nigeria noted that the Association fosters the interests of Corporate Treasurers in Nigerian by providing a platform for policy advocacy, discussions on issues of mutual interest, education and standard development of the corporate treasury function. He said that as part of the efforts of the association towards the education and enlightenment of its members, it regularly host breakfast meetings where issues on economic policies as well as policy directions and their impacts on the activities of the corporates are reviewed and discussed with regulators, economists and financial markets experts as lead speakers/discussants.

Transcorp Group unveils strategy to drive 2019 projections

Custodian Investment posts 17% increase in earnings

igeria’s leading conglomerate, Transnational Corporation Plc has set strategies to maintain the strong business performance displayed in the recently released 2018 yearend results. The company articulated its robust growth projections for the year 2019 at its Facts Behind the Figures presentation which held on Tuesday, March 26, at the Nigerian Stock Exchange. The presentation which comes on the heels of the recently released financial results for Transcorp Plc and Transcorp Hotels in the year 2018 was anchored by the

ustodian Investment Plc (formerly Custodian and Allied Plc), has reported an increase of 17 percent in earnings in its audited result for the financial year ended December 31, 2019. Custodian Investment is a leading non-bank financial institution quoted on the Nigerian Stock Exchange (NSE) with investments in life and non-life insurance, pension fund administration, trusteeship and property holding businesses. A review of the re-

Stories by Iheanyi Nwachukwu

he outcomes of Nigeria’s 2019 election, policy implementation slowdown and sell-offs by foreign investors in 2018 will slow the growth in the nation’s stock market in this firsthalf (H1) 2019, said Andrew Nevin, Chief Economist and Advisory Partner at Pricewaterhouse Coopers (PWC). The analyst’s view comes amidst monetary tightening by members of the frontier markets. “Overall, key drivers for the market from H1’2019 include: commodity pric-

CEO of the Nigerian Stock Exchange, Oscar N. Onyema. He commended the Transcorp Board of Directors for taking giant Corporate Governance strides by meeting up with its post–listing requirements of filing its financials and for being the first to present its Facts Behind the Figures to the Capital Market community in 2019.

Emphasising the importance of an enabling environment as the engine that drives private sector growth, President/Chief Executive Officer, Transcorp Plc, Valentine Ozigbo, reiterated the importance of boosting the investment landscape and projecting Africa as an investment destination to the world. Speaking on the social impact milestones of the Group, Ozigbo stated “Today, we own and manage Transcorp Hilton Abuja, the best business hotel in Africa, as well as Transcorp Hotels Calabar, and are intent on improving tourism in Nigeria and beyond.

SEC extends issuance of dividend warrants to Dec. 2019

he Securities and Exchange Commission (SEC) has extended the deadline for the discontinuation of the issuance of dividend warrants to December 31, 2019. This, the SEC said is to enable relevant stakeholders deliberate on and address all outstanding issues. According to a circular on the Commission’s website, the decision of the Commission is in furtherance of its overriding mandate to ensure that all categories of shareholders and investors are adequately protected. However the SEC stated that the e-dividend initiative remains critical to the complete elimination of the phenomenon of unclaimed dividend and Management of the Commission encourages all shareholders who are

sults shows strong financial performance across all business lines, reaffirming the resilience of the company’s business

yet to do so, to get mandated on the e-DMMS platform before 31st December 2019. The Commission said that the SEC recently conducted a strategic assessment of the implementation of the e-dividend initiative across the country and reviewed feedback/observations received from stakeholders and the general public. “The assessment revealed that while remarkable progress has been recorded in concerted efforts through robust enlightenment campaigns to mobilize more shareholders to get mandated on the eDMMS platform, there remain a few pertinent issue that need to be resolved as a precursor to the total discontinuance of the issuance of dividend warrants by Registrars” the Circular added.

model. Gross revenue for the year grew by 16.6 percent to N50.2billion from N43.1billion reported in 2017.

Monday 01 April 2019

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Raphael James: A phenomenal social, education entrepreneur Stories by ODINAKA ANUDU

aphael James is a man of many parts. An exceptional social entrepreneur, the Abia Stateborn academic has written 53 manuscripts and published 23 books. He is a graduate of Psychology from Ondo State University, AdoEkiti, and holds a certificate in Conflict Resolution from California State University. He is founder and director-general of the Centre for Research, Information Management and Media (CRIMMD), an institution that runs free public library and free skills programmes for women. He has received 113 awards from across the world, including the UK, the USA, China, and Spain. James has received commendations from former USA President Bill Clinton, Queen Elizabeth of England, and, recently, President Barack Obama. The education entrepreneur has served as registrar of African Institute of Entrepreneurship, Lagos, and has visited over 31 states since March 2015, when he commenced educational tours targeted at documenting historic and tourist sites

Raphael James

in Nigeria. He explains that the idea of the institute started while he worked in the presidency under General Sani

One of James’ skills acquisition sessions

How US supported 2019 YALI TechCamp Reconnect workshop

he United States Consulate in Nigeria recently brought together 48 alumni of the Young African Leadership Initiative (YALI) Network from 16 African countries, all of whom had earlier participated in previous TechCamps. During the three-day workshop, participants worked with local and international experts on best practices in applying low-cost technology tools and digital strategies to design and implement projects that would promote good governance, transparency, and citizen engagement across the continent. “It is not an exaggeration to say that each and every day we see evidence of the critical need for greater efforts in good governance. In fact, you will not have to go far outside of the doors of this institution to find confirmation of the need for real solutions to some of the most vexing issues facing government in Nigeria and elsewhere,” said Russell Brooks, public affairs officer, United States consulate general, Lagos. “I am speaking of the need for bet-

ter healthcare, more efficient transportation, better schools, improved sanitation, a healthier environment, in other words, a better quality of life and a more prosperous lifestyle for the citizens of Lagos or cities like Lagos throughout the continent,” he said. He explained that finding lasting, sustainable solutions to these problems was hampered by corruption, the absence or misallocation of resources, and simple mismanagement. “I am sure it is your hope that your skill and experience, the wisdom of the facilitators, or perhaps your commitment and passion will lead you and your colleagues to share some best practices or identify technological innovations that will help us in our quest to improve governance at all levels and ensure greater transparency and accountability,” he said. “The task is huge but every journey must begin with that first step. Perhaps sometime in the future, someone will cite this TechCamp as one of those first steps toward finding solutions to today’s problems,” he added.

Abacha in 1996. He once told his colleagues that Nigeria’s problem was lack of proper documentation. He tried to set up a documentation centre in his office then, but this did not work out. He eventually started CRIMMD in 2003. “At CRIMMD, we manage information; media and political research; biographical and autobiographical writings; documentations, exhibitions and script editing. We are a non-political, non-governmental, non-profit making but standard research developmental institution,” he tells Start-Up Digest. He says CRIMMD reaches out to the public through participations in seminars, workshops, publications, conferences, excursions, humanitarian services, courtesy visits and

awards presentations to deserving Nigerians. “We run the richest photo museum on Nigeria’s history in Nigeria with over 36, 000 photos,” he discloses. He explains that in less than one year of existence, CRIMMD donated a free public library to the Ejigbo community, in its effort to empower the youth. James runs a free skills acquisition center for women, which started in February 2016. By end of February 2019, he had trained 5,034 women free of charge in different vocations. “I started the centre after I had a funny experience of a lady who had visited me for financial help but offered her body for sex in order to feed her kids,” he recalls. “The lady was a widow who claimed that after her husband’s death almost all his friends slept with her before they could offer financial help. So I wondered how many other women were going through such ordeal and decided that the only way to help was to set up a place where I can help by encouraging them to learn a skill and be equipped for the challenges ahead in life if the unexpected should happen to them,” he explains. In February 2016, the centre started with five sewing machines, four laptops and one computer desktop, for computer training, and some catering equipment. He later convinced his wife Princess Folasade to join him in the project. His women skill acquisition centre trains women and the girlchild on tailoring/fashion designing, computer training, bead-making, and soap-making, among others. Initially, he made it strictly for married women and widows and provided teaching equipment and materials for practical, free. But the

programme now accommodates spinsters and the girl-child. Since 2017, his ‘Free Skill Acquisition Training Center for Women’ team visit schools to train girls and have visited 17 secondary schools for skill training programmes to empower the girl-child and the women. He was voted as the Most Reliable Man in Africa in 2016 by a Chinese company— SDLG— and was awarded a cash prize of $1000 for the skills centre. “So far all the funding is from my private pocket and maybe friends,” he says. “A Facebook friend of mine, Lola, was so impressed with what I do that she sent me N50, 000 last year. I am not a rich guy in Nigerian standard, but I am open for assistance because I know if I get sponsors I will do more,” he states. When asked how much N10 million can do for his institute, he says, “If we are offered N10 million, we will build more nations. We will train more women, more girls. We will visit more schools and empower them to start their own business, which we shall monitor on regular basis to help them grow.” He says his centre has massive plots of land to build CRIMMD structure, which will be a stopover for information management and historical documentation. For him, the only major challenge he faces is lack of funds. He admonishes that skills acquisition should be introduced in higher institutions across the country. “Look at China today taking over the world in practically all human endeavours,” he references. “Universities should stop teaching us 1950 theories in 2019. We need more practical and more skills in Nigeria and even Africa,” he says. He adds that being an entrepreneur in Nigeria gives him a sense of fulfillment, knowing that he is an employer of labour.

Experts canvass industry-specific skills to spur economic growth

xperts say industry-specific skills, driven by the private sector, have the capacity to bridge gaps in the Nigerian economy and drive development. This was the consensus at a social impact discussion organised by a non-profit organisation, United Way Greater Nigeria, in Lagos. The event was themed, ‘The Education Agenda: Rethinking Vocational Training’. Kehinde Awoyele, coordinator, German Dual Vocational Training Partnership, AHK, said the German government had been involved in various skills-acquisition training for Nigerians to enhance the country’s labour market. “We realise that a lot of companies want to establish ventures in Nigeria, but the skill-set of the workforce has been a major concern. “In December 2012, the German government funded the Dual Vocational Training Partnership for Nigeria because we look at a private sector driven partnership as the only way to mobilise vocational education in Nigeria,” he said. Awoyele said that the training had improved employability of the

Nigerian youths, enhance quality and performance of the participating companies and better services to entrepreneurs along the value chain. Olawunmi Gasper, executive secretary, Lagos State Technical and Vocational Education Board (LASTVEB), said government alone could not deliver the training needed to catalyse Nigeria’s development. Olayide Olumide-Odediran, executive director, United Way Greater Nigeria, reaffirmed the organisation’s commitment to Nigeria’s development by bringing lasting solutions to critical sectors of the economy. “Our three core areas— health, education and income generation— ensure that people escape poverty cycle, assist more Nigerians attain independence and add their quota to the development of the country. “Our goal is to ensure that more Nigerian children are in school and have access to quality education, more Nigerians have access to healthcare and can escape poverty through access to entrepreneurship and employment to make a sustainable living,” she said. Juliet Tuakli, director, United

Way Worldwide, said United Way Worldwide, adjudged as the world’s largest privately-funded non-profit organisation, had raised $4.7 billion worldwide to respond to global issues, adding that the organisation had about 1,800 autonomous organisations in more than 40 countries targeted at tackling challenges in education, financial stability and health.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Start-Up Digest

How Rotimi makes his mark in business GBEMI FAMINU

deiza Shamoos Rotimi is one of Nigeria’s youths who cannot be classified as lazy. A very active entrepreneur, he has tried his hands on many things and is focused on creating value in Nigerian and African economies. Although he hails from Kogi State, he was born in Lagos and has lived his entire life there. He attended a technical school in 2007 to learn Computer Networking & Engineering before proceeding to study Business Administration at Tai Solarin University of Education, Ogun State. He describes himself as a lover of art, music, technology and people. His thirst for learning and self-development has made him yearn more and more for avenues to learn both formally and informally-- as an autodidact. He started his entrepreneurship journey in 2008 when he established PE-BYTE Computers where he sold, repaired and maintained computers. Overtime, he incorporated various sectors into his business and, later in 2016, he registered his business name as Pergola Cachet PEC. Currently, Rotimi is involved in so many things, including agriculture, media production, real estate and ITrelated services. Rotimi was inspired to start

Adeiza Shamoos Rotimi

these businesses because of the opportunities he found in the country. He was also inspired by his love for his country as he feels Nigeria deserves more than currently gets. He, therefore, wants to be a part of those changing the status quo and contributing to the development of the country and its economy. He also discloses that when he was about to start his business, his mum supported him by getting his first computer. He was

also supported by other friends along the line. Giving an overview of his business, he mentions that he started with the agro food processing and sale of residential and commercial properties but he always had a bigger vision in mind for real estate. He said, “In the area of agrofood processing, we harvest, process, package garri (cassava flakes) and the 3-in-1 ‘bloom chips’ which hasve well-pro-

Carrot.ng emerges only Nigerian startup on UN’s shortlist Jumoke Akiyode-Lawanson

or its outstanding innovation, Carrot.ng has been shortlisted by the United Nations’ World Summits Awards as one of the ‘40 Most Innovative Startups’ in 2018. The delivery platform developed by Carrot Advisory Limited, a fintech company with special focus on helping families with innovative and affordable financial planning services, was shortlisted from among 400 companies that participated in the competition from all over the world, and is the only Nigerian startup on the list. Luqman Balogun and Odunayo Williams, founders of Carrot.ng expressed delight at being shortlisted for the prestigious awards which held in Cascais, Portugal between March 11 and 13, 2019. Balogun and Williams said the shortlist proved that Carrot offered unique services capable of solving inheritance challenges. “Estate planning is a very serious issue in Nigeria as most of us would have experienced the

negative impact, especially on women and children when our parents, family members, friends, colleagues, etc, die intestate (without a Will). “We can reasonably deduce that intestacy accounts for about $10bn ‘trapped’ in dormant accounts, treasury bills, unclaimed dividends, unclaimed insurance policies, pension funds, NHF, NSITF, etc, in the financial system. You will also agree that getting a letter of administration is not a ‘walk in a park’,” the founders said in a press statement. According to the statement, “Carrot.ng is here to correct this narrative and we have simplified access to writing a Will online. It is convenient, affordable and secure. Between 10 and 15 minutes, your Will is completed and Carrot.ng will deliver the document to your home or office as well as process at Probate after execution. Everyone over 18 years old must have a Will irrespective of their societal status, religion or tribe.” The company encouraged Nigerians to protect their legacies and cautioned them to prepare for

uncertainties. “Life is so full of uncertainties; hence, there is a need to consider having an estate plan to mitigate expected and unexpected challenges associated with securing the financial future for your loved ones. “Putting in place a valid Will offers adequate protection of your legacies, especially for those you truly love should the need arise. An estate plan helps you to realise the famous saying of ‘what we do in life echoes in eternity,” it said. Carrot.ng says it helps individuals to create, update and schedule execution of Wills and or other testamentary instruments such as Deed of Gifts, Living Wills, Trusts and Power of Attorney, etc, on a convenient, affordable and secure platform in real time, anywhere. “For a one-time fee, you can become a subscriber, create a valid Will in few minutes, and we process at Probate and have it delivered to your desired location. All our subscribers are also rewarded with a free personal accident cover and medical expense cover from our insurance partners.”

cessed and organically-flavoured potato, plantain and cocoyam” “The idea around the real estate is the rent-to-own properties which involve renting a room, apartment or building for a specific period of time (10-15years) and at a fixed rate and you own it later.” Speaking on his business expansion plan, he says that “I just incorporated logistics and transport services into my business group. I am currently working on a business model that will have a major impact on the real estate sector and, if perfectly executed, can also impact positively on other sectors in the country”. He adds that plans have also been set in motion for the rentto-own housing and commercial property plan which has its financing centred on sponsorship in the course of its establishment. Evaluating his business growth since he started, he says it has not been easy. He explains that he almost gave up on everything, especially when his business was at some point threatened by people he trusted. “I outsource jobs more now than having permanent staff members. I believe more in collaboration and partnership. Moreover, it costs more to retain staff members these days,” he says. When he started his business, he did not have any problem with funding because he understood that service-related business required very little or no startup capital except for the tools

involved. Furthermore, he leveraged other people’s resources, instead of using his money, to source for tools or materials and he also did a lot of field studies and applied the ‘Know Your Customer/Consumers (KYC)’ approach before launching projects. He states that although institutions like Paylater, Branch International and Renmoney have been helpful, it is advisable to remain determined, focused and objective when loans are involved. He further says that there is a need to always have a back-up plan in case previous plans encounter hitches. “My business was recently almost sabotaged by a trusted staff member of mine, and this almost cost me everything. All I had left, and never knew could come in handy, was the understanding of what my clients saw in me.” Advising other entrepreneurs, he says, “Let that eagle in you fly. It’s not going to be easy. You will experience shedding of old wings and the birth of news ones. People will aim guns at you with words or with any negative instrument. You will also meet great minds, experience pain but also fulfilment when you succeed.” The outstanding entrepreneur says that he is inspired by various people including Steve Jobs, Bashar Masri, Mike Adenuga and Aliko Dangote, adding that he does not pick mentors based on their character, rather on their achievements and the value they offer.

Why you need to invest in yoghurt production Josephine Okojie

ith the growing middle class in Nigeria who are sensitive about their nutrition, yoghurt is one of the dairy products which are highly demanded. However, Yoghurt production is a neglected area, but statistics show that 98 percent of Nigeria’s dairy needs, including milk, are imported into Nigeria. According to operators in the dairy industry, the nation grapples with about $1.3 billion import bill for dairy products for a population of over 170 million people. This shows the huge opportunity in the subsector for potential investors. With strong population growth, particularly amongst children and young people, consumption of milk products has been on the increase in recent years. Yoghurt continues to be one of the more dynamic categories in packaged food, in trendy and flavoured formats that is widely available. Some companies have invested in the processing of milk into several products such as ice cream, ghee, powdered milk and yoghurt, among others.

Aliko Dangote, president of Dangote Group, who is also a dairy maker, stated that only two percent of the country’s dairy needs are met by local companies. With dollar scarcity and roadblocks to importation in the country, yoghurt production is a sure bet. Yoghurt is a healthy source of milk, and capacity to produce a low-sugar brand for the aged and diabetic as well as a moderately sugar type for other classes is an advantage. Producing yoghurt could cost between N2 million and N10 million, depending on the type of equipment used and their sources. The major raw materials used to make yoghurt include: Milk, milk powder, stabilisers, sugar, flavour, colour, among others. Also, Yoghurt production requires major machinery such as motorised stainless steel mixer, incubator, pasteuriser, filling machine, UV Lamp, transfer pumps, PH Meter, shrink wrapper and weighing machine. Some of the machines are imported into the country, but many of them are fabricated locally by the Federal Institute of Industrial Research Oshodi in Lagos or Projects Development Institute Enugu (PRODA). Local fabricators can also help.

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Start-Up Digest

Meet Sunday Eze, innovative furniture designer Josephine Okojie

n 2016, Sunday Stephen Eze quit his pharmaceutical job to start a furniture business. His company, Pasich Furniture, designs, produces and installs furniture for clients across the country. Sunday was inspired to establish his business owing to his love for drawings and creativity as well as his desire to be an entrepreneur. “I was inspired by my urge for creativity and the mere fact that I have always wanted to be an entrepreneur, designing and creating things that will be used for interior furnishing,” he says. To further broaden his designs and creativity skills, Sunday took up a job in a furniture business. The pharmacist-turned-entrepreneur started his business small from his personal savings, which he used on registration and purchase of basic carpentry tools. He notes that through the profit he got from his first contract, he was able to purchase more carpentry tools for the business. “As shocking as it may sound, our initial start-up capital was basically the money used in registering the company back then and buying some carpentry tools,” Sunday says. “After the first job we did, the profit made was used to buy the first set of hand-held tools for carpentry and from there came other equipment and tools. Our modus operandi till date is to make money and plough it right back into business,” he

Sunday Eze

explains. The young entrepreneur says the business has grown tremendously since starting, as its client base keeps expanding. “The business has grown tremendously. We have worked in over 18 states in Nigeria and our client base keeps expending.” Currently, Pasich Furniture has 19 permanent employees and 10 contract staff members. “We have

19 permanent staff and about10 contract staff. The contract staff members are mostly made up of carpenters who help us to carry out installation of already produced furniture in situations when we have clashing deliveries to make,” the young entrepreneur says. He tells Start-Up Digest that he sources the majority of his raw materials overseas.

Sunday says that Pasich Furniture plans to expand the size of the furniture factory by almost five times its current size before the end of 2019. Also, the company plans to open a showroom in Abuja and subsequently other cities in Nigeria and Africa at large. “Presently our factory is a 400 square metre size. We have plans to move into a 1,900 square meter

size-factory sometime next year. Next year, as we move into a bigger factory, we plan to open up our first showroom in the city of Abuja. From there we can gradually open other branches across Nigeria and later Africa,” he says. Sunday states that poor power supply has remained the major challenge facing his business and has continued to increase his cost of production. Similarly, he identifies lack of employees’ dedication to job as another problem facing his business, while he adds that this has led to continuous engagement and disengagement of staff. He calls on the Federal Government to create an enabling environment for indigenous businesses to thrive and grow the economy of the country. He also pleads with authorities to remove the stringent requirements to accessing government finances, especially for start-ups. “The Bank of Industry (BOI) will ask you to get a reference from your village chief and a guarantor that is a director in a government ministry and other near-impossible things,” he says. He says the Nigerian furniture industry has the potential to be a foreign exchange earner for the country if the government can provide the right environment for the industry to grow. When asked what he would tell his younger self, Sunday says, “I will tell my younger self not to ever give up, to be always positive, hardworking and to prove anyone wrong when they say you cannot achieve this or that.”

Favour Nwankwo: A seasoned event planner Jonathan Aderoju

or individuals and organisations, the thought of organising events can be a nightmare, but for Favour Nwankwo, managing director of Platonic World Ushering Services, it is a pleasure. Favour was inspired to establish Platonic World out of passion and necessity in 2013. “It was necessity and passion that inspired me to establish the business,” she says. “I needed to make money to assist my parents add up to what they had for my undergraduate education and today, I am a graduate of Mass Communication,” she explains. The young entrepreneur started her business with N10, 000 which she got from family members and friends. “I started the business with N 10,000. I was able to raise the fund from friends and family members. Every one of them contributed what they could because

Favour Nwankwo

I did not have a massive start-up capital.” Favour says that creativity and innovation have helped the busi-

ness evolve since starting. The graduate of Mass Communication says that the customer base has continued to expand

owing to her ability to embrace creativity and innovation in service delivery. Getting the right employees to work with has also helped her. “It has been a mixed bag. We are in a business that hinges on marketing and visibility. Therefore, it has not been rosy, but with tenacity and creativity, the business has been able to come over a lot of bumps to keep moving ahead. The competition is fierce but we have been able to grow and relatively so.” Favour currently has six fulltime employees working in her event management business. “I have a team of dedicated people that I work with at Platonic World. These are men and women that have bought the vision from inception and they have been able to offer effective operational service. “These dedicated persons working with Platonic World are six in number and they work in different sections of the company ranging from videography, pho-

tography, beauty makeup and recruitment,” she says. Responding to a question on major challenges limiting the business, she says, “The major challenges confronting the business are lack of sustainable marketing, increase in operational cost due to infrastructural gaps and payment of multiple taxes” She urges the government to bridge the country’s huge infrastructural deficits to help businesses drive down their operational costs. Speaking on the business expansion plans, she says, “Our expansion plan is to use technology to drive growth for the business. Also, we plan to expand into other sectors of entertainment management and media blogging from the third quarter of 2019.” On her advice to other entrepreneurs, she says, “It would not come easy, but if it is worth it don’t let go. There is power in starting small and never despise the days of little beginnings.”

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Monday 01 April 2019

CITYFile Orphanage home demolition: FCTA to care for displaced children

Cross-section of participants, at the campaign against corruption, organised by Upright for Nigeria in Kaduna.

NAN

How policemen killed my husband in Uyo - Widow ANIEFIOK UDONQUAK, UYO

argaret Udofia, wife of late Uyo chairman of the National Union of Road Transport Workers (NURTW), Ubong Udofia, has fingered policemen in the death of her husband during a fracas in a motor park. Udofia told newsmen in Uyo on Friday that her husband died in controversial circumstances in the hands of some policemen. The incident happened on March 28. According to her, the death of the family bread winner has left her to take care of nine children left behind. “I have nine children to take care of and the eldest is just 15 years and none has entered the university yet. My appeal is that the police should not be ignored as all the evidences point to deliberate and premeditated murder because my husband and the task force members did not beat the policeman as alleged. “All they did was to direct the policeman to comply with the regulations of loading in the park and not to constitute road nuisance by loading his vehicle on the road side because touting is illegal in Akwa Ibom,” she said. She said her husband, 45-year Udofia

popularly called ‘Evolution’, was alleged to have been clubbed to death with guns by four policemen, after trying unsuccessfully to kill him through direct shooting. She explained that her husband met his untimely death when a minor argument with a policeman resulted in full blown brawl at the Uyo motor park. “I was returning from the market when I was called suddenly to come and witness what happened to my husband. When I got to the place, my husband was already gasping for breath until he gave up in my presence,” she said. According to her, a policeman had parked his car and was loading passengers near the Itam motor park, when members of the task force working for my husband accosted him. “The victim’s task force directed that he (policeman) should enter the park and load so others don’t join him in loading on the road. The policeman, on mufti, resisted and the task force members demanded for the car key and he refused. The car, it was gathered, was pushed into the park on the orders of the deceased to adjudicate on the matter. “My husband was inside another vehicle waiting for the car owner, not knowing he (policeman) had called four of his

colleagues, who arrived and immediately opened fire on him,” she narrated. According to her, they opened fire but when the bullets could not penetrate his body; they resorted to using their gun butts to club him till he became unconscious. She explained that several other policemen attached to a construction firm were called for more reinforcement and more sporadic shootings followed, leading to people scampering for safety including the task force officers. “Luckily, one of the policemen who participated in my husband’s death was trying to escape from the scene and unfortunately for him, his identity card fell off his shirt and was picked up as evidence on the scene. The name of the policeman is Sergeant Nwafor Silas, from Ebonyi State police command and attached to a construction company with service number “425015”, she said. The Divisional Police Officer (DPO) of Itam Division, Francis Irabor, who visited the deceased at the God’s Own Hospital, Park Road, near Itam park before he died, confirmed the incident. However, spokesperson of the police in the state, Odiko Macdon, when contacted said he was busy and would not comment on the issue.

he Federal Capital Territory Administration (FCTA) says it will provide a temporary accommodation for over 150 orphaned children left homeless following an earlier demolition exercise in Kubwa satellite town of Abuja. Director, FCTA department of development control, Muktar Galadima, assured that the FCTA was concerned about the welfare of the children, hence the need to provide the accommodation. “We are looking for a way forward for the children, on how to cushion their hardships by relocating them so that they do not feel that they are rejected by the society. That is why the most important thing at this moment is the welfare of those children, which we are working seriously on. “We want to provide succour for them, by getting them a temporary accommodation, even if it is for one year, so that our children will have a safe place to stay. The director said the demolition of Divine Wounds of Jesus Christ orphanage and rehabilitation home, Kubwa, was because the property failed to comply with development control requirements in the nation’s capital. He alleged that the owner disregarded ‘several stop work’ and other notices served on the property, including a demand for the title document of the plot. However, owner of the orphanage, Victoria Ezemoka at a briefing produced a title document for the same property. She denied claim by the department that she failed to produce the documents after several notices and demands.

Navy rescues 2-month baby from drowning

he Nigerian Navy in Port Harcourt says it rescued a two-month baby and 11 others from drowning in Ngo waterways in Rivers. Ernest Jim, Base Information Officer, Nigerian Navy Ship (NNS) Pathfinder, Port Harcourt, made the disclosure at the weekend. He said troops on routine patrol of the waterways sighted a capsized boat and immediately intervened to rescue the 12 passengers. “The boat mishap happened at about 1330 hours on Thursday, March 28 around Nigerian Liquified Natural Gas (NLNG) Map Jetty in Ngo, Andoni Local Government Area of Rivers. “It is gratifying to state that all 11 passengers and the baby were rescued with no casualty recorded,” he said. Jim said the rescued passengers were later taken to a nearby NLNG medical facility for check up. The navy spokesman said that preliminary investigation showed that the boat was loaded above capacity, advising operators against taking passengers beyond the capacity of their boat. NAN

Oil spillage: Bayelsa communities welcome commission of inquiry

ome oil rich communities in Bayaelsa have applauded the state government for setting up a commission of inquiry on environmental degradation to investigate years of negative impact of oil exploration. Governor Seriake Dickson inaugurated the commission last week to find evidence of oil spillages and damage to the environment of Baylesa and the Niger Delta region. Some residents, who spoke with jour-

nalists in Azuzuama, Southern Ijaw local government area, decried the harmful effects of oil spills to their land. According to Otubo Jonathan-Kpeli, the traditional ruler in Azuzuama community, the spillage has caused more damage to their livelihood. He said oil exploration in the Azuzuama community was no longer a blessing to the people because there is no more farmland to cultivate. “The sources of water, our rivers have

been polluted. We don’t have potable water to drink except only when we buy water from the city. “This is suffering and smiling, the common aliment here is cancer and kidney disease,” the chief said. In Ikarama community, the youth president, Benjamin Walter, described the spills occasioned by oil exploration as worrisome. Walter said that the decision by the Bayelsa State government to investigate the harmful impact of

environmental degradation would go a long way in checkmating the wrongs of the multinational oil firms in their host communities. Bob Keniyinboh, the scientific officer, Bayelsa ministry of environment said that the cause of spillage was mainly equipment failure of the oil company and commended the setting up of commission of inquiry in the state. The commission is made up of foreign experts, diplomats and forensic experts.

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Access Bank Rateswatch Market Analysis and Outlook: March 29th – April 5th, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.38

Q4 2018 — Higher by 0.57% compared to 1.81% in Q3 2018

Broad Money Supply (M2) (N’ trillion)

27.07

Decreased by 14.38% in Dec’ 2018 from N31.79 trillion in Nov’ 2018

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

22.72 23.29

Decreased by 1.54% in Dec’ 2018 from N23.08 trillion in Nov’ 2018 Increased by 10.93% in Dec’ 2018 from N2.1 trillion in Nov’ 2018

Inflation rate (%) (y-o-y)

11.31

Decreased to 11.31% in February 2019 from 11.37% in January 2018

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

14 14 (+2/-5) 44.14 67.55

Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% March 26, 2019 figure — an increase of 4.32% from March start March 29, 2019 figure— an increase of 2.3% from the prior week

Oil Production mbpd (OPEC)

1.74

February 2019 figure — a increase of 0.58% from January 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

NSE ASI Market Cap(N’tr)

Friday

Change(%)

29/03/19

22/03/19

31,041.42 11.67

31,139.35 11.61

(0.31) 0.51

Volume (bn)

0.27

0.23

15.41

Value (N’bn)

3.15

2.62

20.51

MONEY MARKET NIBOR Tenor

Global Economy In the US, the final estimate of fourth quarter GDP rose at a 2.2% annual rate, Commerce Department data showed, less than the initial 2.6% reading. That marked a slowdown from a 3.5% year-on-year increase in the third quarter. Consumer spending, the biggest part of the economy, grew at a downwardly revised 2.5% pace. Business investment also helped drive overall GDP growth in late 2018, contributing 0.73 percentage point to the fourth quarter's 2.2% growth rate. In another positive sign for the U.S. economy, growth in exports was revised slightly higher from the previous estimate, to a 1.8% annual pace, while the rate of imports was revised down to a 2% annual rate. Elsewhere, in the Eurozone, economic sentiment weakened in March, mainly due to a bleaker outlook among manufacturers and services, European Commission data showed. The Commission said in its monthly survey that its index of economic sentiment in the 19 countries sharing the euro eased to 105.5 points in March from 106.2 in February. The decline shows that business confidence continues to suffer and that the start of a growth recovery hasn't really happened so far. Q1 GDP is therefore set to disappoint again. The European Commission forecast in February that Eurozone growth would accelerate to 0.3% quarter-onquarter in January-March from 0.2% in the last three months of 2018, and then speed up to 0.4% in subsequent quarters.

Friday Rate

Change

(%)

(Basis Point)

29/03/19

22/03/19

Indicators

29/03/19

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.)

1-week Change

YTD Change

(%)

67.55 2.70

0.00 (2.88)

4.79 (11.65)

2260.00 95.15 76.65 12.61 462.50

5.26 0.16 (0.78) 0.40 (12.98)

16.74 (26.92) (1.10) (17.74) 6.69

1298.84 15.17 294.35

(0.98) (1.94) 1.99

(1.42) (11.75) (10.20)

9.8600

14.2500

(439)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

10.6700 11.4000 12.2000

14.8300 15.1200 10.4700

(416) (372) 173

Tenor

90 Days

12.9200

13.2200

(30)

1 Mnth 3 Mnths

10.86 11.18

9.60 12.08

126 (90)

6 Mnths 9 Mnths 12 Mnths

14.10 14.43 14.45

13.75 14.44 14.74

35 (1) (29)

OBB

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

29/03/19

22/03/19

Friday

Change

(%)

(Basis Point)

29/03/19

29/02/19

Official (N) Inter-Bank (N)

306.95 360.68

306.90 360.43

306.85 360.99

BDC (N) Parallel (N)

0.00 360.00

0.00 360

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

BOND MARKET AVERAGE YIELDS Tenor

Friday

Change

(%)

(Basis Point)

29/03/19

22/03/19

3-Year 5-Year

0.00 14.15

0.00 14.63

0 (48)

7-Year 10-Year 20-Year

14.13 14.29 14.27

14.38 14.38 14.34

(25) (8) (7)

Disclaimer 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.

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

Friday

Change

(%)

(Basis Point)

29/03/19

22/03/19

2,811.91

2,800.11

Index

0.42

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

8.43 5.30

8.40 5.28

0.43 0.40

YTD return (%) YTD return (%)(US $)

14.47 -41.34

13.99 -41.80

0.48 0.46

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day 182 Day

3,000.00

10.3

8,385.20

12.2

20-Mar-2019 20-Mar-2019

364 Day

37,176.06

12.345

20-Mar-2019

Domestic Economy The Central Bank of Nigeria (CBN) concluded its 2-day Monetary Policy Committee (MPC) meeting on March 22. The apex bank for the first time in two years adjusted the benchmark interest rate downwards by 50 basis point to 13.5%. The MPC however retained the cash reserve requirement (CRR) ratio at 22.5%, the liquidity ratio at 30% and the asymmetric corridor around the MPR at +200 bps/-500 bps. The Committee observed the tepid output growth in 2018, but noted with satisfaction that it strengthened in the last quarter of 2018 to 2.38%. In a separate development, data by the National Bureau of Statistics (NBS), revealed that the Federation Accounts Allocation Committee (FAAC) disbursed the sum of N660.37 billion among Federal, States and Local Governments in February 2019 from the revenue generated in January 2019. The amount distributed was from the statutory account, value added tax (VAT), excess charges FOREX distribution and exchange gain differences comprising of N497.12billion, N104.47billion, N8.12 billion, N50 billion and N654.70 million respectively. A breakdown of the sum disbursed among the three tiers, revealed that the Federal Government received N275.33 billion, states received N182.17 billion and the local governments received N136.83 billion. The oil producing states received N48.49billion as the 13% derivation fund. Revenue generating agencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS) and Department of Petroleum Resources (DPR) received N5.66 billion, N7.62 billion and N4.07 billion respectively as cost of revenue collections. In a separate development, the Manufacturing Purchasing Managers' Index (PMI) stood at 57.4 index points in March 2019. This indicates an expansion in the manufacturing sector for the twenty-fourth consecutive month. The index grew at a slightly faster pace when compared to the previous month (57.1 points). This was shown in the latest PMI report by the Central Bank of Nigeria. A PMI above 50 points indicates that the manufacturing sector is generally expanding, while a reading below 50 points indicates a contraction. Eleven of the sub-sectors surveyed recorded growth during the month, while the textile, apparel, leather & footwear; petroleum & coal products and primary metal subsectors recorded decline in the period under review.

Stock Market The Nigerian stock exchange index slumped further on heightened cautious trading and indecision among market players as they interpreted the impact of the cut in Monetary Policy Rate by the Central Bank of Nigeria (CBN) on the economy. The All Share Index (ASI) shed 0.31% to 31,041.42 points from 31,139.35 points the preceding week. In contrast, market capitalization gained 0.51% to N11.67 trillion from N11.61 trillion the prior week. This week, gauges of market performance may nudge higher as investors swoop on attractively priced counters. Money Market Rates in the money market moderated last week as liquidity flooded the system from OMO maturities and Federal allocations. Accordingly, short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates slipped to 9.86% and 10.67% from 14.25% and 14.83% respectively. Meanwhile, longer-tenured interbank rates, such as the 30-day NIBOR jumped to 12.20% from 10.47% while 90-day dropped to 12.92% from 13.22% the previous week. This week, rates may trend slightly higher as OMO auctions are conducted. Foreign Exchange Market The local unit took a beating against the greenback unit across most market segments last week. At the Investors' and Exporters window, it shed 25 kobo to settle at N360.68/$ from N360.43/$ the previous week. Similarly at the official window, it depreciated by 5 kobo to settle at N306.95/$ compared to N306.9/$ the prior week. The parallel market remained unchanged at N360/$ from the prior week. The weakening seen in the interbank market reflects increased demand for the greenback from some foreign investors looking to take profit on T-bills. This week, we expect the naira to continue trading within current rates in all markets as the CBN continues to supply FX. Bond Market Average bond yields declined in the week ended March 29, 2019 as market participants revised their quotes upwards in reaction to the monetary policy rate (MPR) reduction. Yields on the five-, seven- and twenty yeardebt papers closed lower at 14.15%, 14.13% and 14.27% from 14.63%, 14.38% and 14.34% respectively the preceding week. The Access Bank Bond index rose by 0.42 points to close at 2,811.91 points from 2,800.11 points the previous week. This week, we expect a cautious trading session with mixed sentiment across the curve in the near term. Commodities Oil prices rose last week as supply declines brought on by US sanctions on Iran and Venezuela, continued to support the market. Bonny light, Nigeria's benchmark crude rose $1.52, or 2.3% to $67.55 per barrel. In contrast, precious metals prices retreated last week as global worries over Brexit and US-China trade tension increased demand for the US Dollar as a safe haven asset. Consequently, Gold shed $12.82, or 0.98%, to $1,298.84 an ounce. Similarly, Silver dropped 30 cents, or 1.9%, to $15.17 an ounce. This week, we expect oil prices to remain firm as market participants keep an eye on Middle East tensions around Gaza. For precious metals, US dollar strength will likely continue to strip the safe-haven assets of their appeal thereby pressuring prices.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Apr’19

May’19

Exchange Rate (Interbank) (N/$)

363

Inflation Rate (%)

11.3

11.35

Crude Oil Price (US$/Barrel)

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

Jun’19 363 11.39 62

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Monday 01 April 2019

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

How to marry for wealth growth and preservation The Solid Wealth Messenger

Grace Agada

arriage is a very important part of our lives. The right partner can make your life better, but the wrong one can lead you to years of pain, frustration, and regret. Whether you want to believe it or not, money, wealth and finances should be considered in choosing who to marry. Your parents, siblings, and even the society would applaud you if you married up the wealth ladder and you would generally be seen as a failure if you married down the wealth ladder. The prince charming you fantasized about getting married to as a child is definitely not a poor man. Men also want to be able to provide for the woman of their dreams. So, deep inside we all crave to be wealthy and to marry into more wealth. The problem, however, is that we have been conditioned from childhood to mute the voice of money and this has caused us to develop certain aversions to acquiring wealth for fear of being judged. Being wealthy and marrying into wealth is not a bad thing. The problem only comes in marrying solely for money. If you go about it the right way, there is a lot you can do to stack the odds in your favor. This is the real definition of two being better than One. A popular question I ask is: “If you had to travel on a long trip for two years and your spouse was to sit at the helm of your business or Wealth affairs, would your wealth plummet or would it blos-

Objectives • Solid wealth • Groomed Heirs • Undying legacy and Name • Rich relationships • Personal development • Healthcare Planning • Giving.

som?” This question should be considered before you choose who to marry. The lack of preparation in choosing a suitable partner is one of the greatest causes of struggles in marriages today. People tend to marry based on accessibility, availability, love or simply because they were asked without thorough consideration of the things that matter. If you fail to marry well, the future of your finances and wealth is put at risk. Marrying well involves finding the person who makes you better. This person is willing to motivate you towards becoming the best version of yourself. In every relationship, you are either going forward or backwards. You rub off on each other the good, the bad, and the ugly. This rubbing off will either make you better or worse. So how do you know who to marry? You have only four options to choose from and only one is good for you. They include: The Hunt and Kill, The Gold Digger, The Maintainer and The Transformer. The Hunt and Kill is any type of person that wants you to reduce your standard, water down your values and ambition, be apologetic about your success and change who you truly are. I

call them Hunt and Kill because they are like bird hunters who see a beautiful and healthy bird flying high in the sky, get attracted to the beauty of the bird then shoot. They then strip the birds off their beautiful feathers, break their wings, put them in cages and take away everything that attracted

them to the bird in the first place. They do this because of their own insecurities. In a relationship, this can be a man or a woman. Stay away from these people because they will not only destroy your capacity to create wealth but will also destroy the wealth you already have. They are usually the ones that seek you out and they are constantly using the phrase, “you are too”. They would say, “you are too ambitious”, “you are too hardworking” and the likes. The Maintainer would not harm you like the hunt and kill but won’t let you move forward either. This person has not fully discovered their life’s purpose

‘

A smart gold digger can hide under the weakness of a wealthy person’s ease in spending without the person realizing it. You need to intentionally resist the urge to always be the spender even when you can

so they drag you behind, suppress and stiffen your growth. Since they are not willing to pull their weight and move, you need to do the work of two people using your energy and resources to support yourself and to support them. They are laid back and unmotivated. They will deplete your finances, energy and waste your wealth. The Gold Diggers are the people who come to you for what you have. There are usually looking for people to throw their burdens and failures on. It takes a lot of observation and intentional testing to spot this group of people especially if you are already wealthy. A smart gold digger can hide under the weakness of a wealthy person’s ease in spending without the person realizing it. You need to intentionally resist the urge to always be the spender even when you can. With the Gold Digger, you will be left with nothing. The only set of people to marry are the Transformers. The Transformers add value to you and make you better. They judge their success by the quality of their spouses and derive happiness and fulfillment from making their spouses do more and achieve more. They are full of life, success and passion. They bring so much to the table, are willing to grow, and are self-sufficient and purpose-driven. These are the ones that will increase and preserve your wealth and life. The next challenge is in finding a Transformer. Transformers are indeed few and hard to find within the mix of other groups. You will generally meet many of the other type of people on your way to meeting a transformer. If you give up half way and bend to pressures, you will not only be sacrificing your peace but also your wealth future. However, you also need to be a transformer in order to attract one. It is for this reason that I created a platform where Transformers can meet. If you are a transformer out there, this is an opportunity for you to find that man or woman of your dream. Text Transformer to 08101860042 and let’s build a Community of Transformers. Your wealth is an important part of your life; guard it with all you have. Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer. Email:info@createsolidwealth.com Tel: 08101860042

Monday 01 April 2019

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Big Banks earn N2.01trn in income from investment securities in 4 years BALA AUGIE

igeria’s largest banks have earned N2.01 trillion in four years in income from investment securities as they continue to buy up local government bonds and treasuries that offer among the highest yields in emerging markets. The yields are offering short term respite for lenders even as they’ve slowed down credit to the economy, but analysts are skeptical that such momentum will continue because the central bank will continue to mop out excess liquidity with Open Market Operations (OMO). For the year ended December 2018, Zenith Bank’s income from investment securities was flat at N152 billion, this compares with 40.67 percent increase between 2017 and 2016 and 25.44 percent uptick between 2016 and 2015 financial years. In the last four years, the lender has raked N501.13 billion from income from short and long term securities. Guaranty Trust Bank (GTBank), the largest lender by market capitalization earned N329.56 billion in income from investment securities. A breakdown of the figure shows income from short and long term securities fell by 9.23 percent to N101 billion as at December 2018, but this compares with an 88.56 percent increase in income from investment securities between 2017 and 2016. Access Bank’s income from short and long term securities increased by 24.74 percent to N103.81 billion in December 2018 from N83.22 billion as at

December 2017, this compares with 85.43 percent increase in investment securities between 2017 and 2016. From 2015 to 2018, the lender realized N276.74 billion in interest income from short and long term securities. United Bank for Africa (UBA)’s income from investment securities was up 34.16 percent to N154.15 billion in December 2018 from N114.90 billion as at December 2017. Juicy yields have hindered Banks from lending to the economy as companies and businesses are increasingly becoming a risky investment. Nigeria’s bonds have returned 6 percent this year and are the second best performing local debt in emerging market for the month of February, according tom

data gathered by Bloomberg. The DMO offered for subscription a total of N100 billion worth of bonds spread across 4-year (2023), 6-year (2025) and 9-year (2028) maturities at the auction. Investor appetite for the 2028 bond was strong as the bids were concentrated on the instrument. The bids on the 2028 maturity were worth 5x (N100 billion) the offered amount (N20 billion). The DMO applied a stop rate of 13.5% across all the offered maturities, a moderation of no less than 100bps apiece from the stop rates applied at the February auction. At the auction, only N29 billion worth of bonds was sold out of the N100 billion on offer while the 2028 bond was fully allotted at N20 billion.

… Analysts say they expect 2018 performance to beat N7 billion mark

he four biggest audit companies in Nigeria received remunerations in excess of N6.8 billion in 2017 according to data compiled

P.E

SHORT TAKES US$2.8 million The provisional Balance of Payments (BOP) estimates for Q4 2018 showed a significant improvement in the BOP outcome as the overall balance of payments recorded a surplus of US$2.80 million compared to a huge deficit of US$4,542.08 million and a surplus of US$6,180.40 million recorded in the preceding quarter and corresponding period of 2017.

52.49%

The Big Four made a kill auditing NSE 30 in 2017 grossing over N6.8bn IFEANYI JOHN

from the annual reports of the top thirty companies listed on the stock exchange. The Big Four (Deloitte, Ernst & Young (EY), KPMG and PricewaterhouseCoopers (PwC)) are the four biggest professional services

networks in the world, offering audit, assurance services, taxation, management consulting, advisory, actuarial, corporate finance and legal services. They handle the vast majority of audits for public companies as well as

many private companies. Of the thirty biggest firms listed on the Nigerian Stock Exchange (NSE), only four failed to employ the services of largest international accounting firms leading to a Big Four market share of 87

percent on the NSE 30. PwC had the best year, grossing over N2.9 billion in remunerations, 42.2 percent of the big four revenues on the NSE 30. This was followed Continues on page 40

Federal Government Bonds has the highest weight percentage of 52.49% of the total pension fund assets, and closely followed by treasury bills with 19.37%, local money market securities with 8.21% and foreign money market securities 0.04%.

2.02%

The All commodity group export price index went down by 2.02% due to falling prices in trade with Asia and within Africa. The All commodity group import price index rose 0.89% due to a rise in the prices of prepared food stuff.

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: FIFEN FAMOUS)

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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Monday 01 April 2019

Markets Intelligence

ABC Transport, Dangote Flour, Mc Nichols, best performing stocks in Q1 2019 Ifeanyi John

he Nigerian Stock Exchange (NSE) ended the first quarter of the year on a negative note. In the first quarter of 2019, the index closed in the red posting a decline of 1.24 percent. Regardless of the index drop, two stocks on the local bourse have returned in excess of 50 percent and Mc Nichols is a close third recording a 48.94 percent increase since the beginning of the year. ABC Transport, local bus service providers, led the market in terms of returns, recording 82.76 percent increase from N0.29 at the start of the year to close at N0.53 at the end of the first quarter on Friday. This stellar performance started in the last week of January and the stock recorded positive growth in all but one week in February and closed at a year high of N0.57 on the 25th of February, 2018.

On Friday, ABC Transport Plc released results showing the financial performance for the 2018 calendar year. The result was not appealing as the company posted a post-tax loss in excess of N100 million compared to a N500 million profit in 2017. Dangote Flour was the second-best performing stock quar-

ter-to-date closing at N10.20 at the end of the first quarter of 2019 from its year opening price of N6.85. This 53.28 percent return in the first three months of the year would have had investors smiling regardless of the fact that on the 26th of February, the stock hit a year high of N12.05. At the close of business for the

first quarter of the year, Dangote Flour had not released the full year statement of the 2018 financial performance. Other top performers in the first quarter were Mc Nichols (48.94 %), Julius Berger (36.82 %), Union Diagnostics (32.00%), Royal Exchange Plc (31.82 %), Redstar Express (30.95%), Livestock Feeds

The Big Four made a kill ...

GTBank’s dividend grows faster than peers SEGUN ADAMS & ISRAEL ODUBOLA

u a ra nt y T r u st Ba n k (GTB) dividend has been growing at a Compound Annual Growth Rate (CAGR) in the last six years compared to rivals as the lender continues to ensure that owners get a favourable minimum return.

Nigeria’s largest lender by market value, GTB saw dividend grow at CAGR of 11.11 percent compared to Zenith Bank’s 7.39 percent, UBA’s 5.38 percent and Access Bank’s recorded -0.065 percent. GTB, which stood out as the only first-tier bank with a double digit returns on dividend growth, proposed a final dividend of N2.45

kobo for the full year 2018 compared to N1.45 dividend per share paid in 2013. Zenith Bank which delivered the second highest return, albeit a single digit growth in the halfdecade period has a dividend per share of N2.5 for the 2018 full year compared to N1.75 paid in 2013. Meanwhile UBA has been able

(28.57 %), Wema Bank (26.98 %) and Sterling Bank completes the list of companies that recorded gains in excess of a quarter of their year start market capitalization with 25.79 percent. There were 46 stocks that recorded positive gains in the first quarter of the year which is 27 percent of the companies listed on the local bourse. On the flip side, 56 stocks were in the red led by Resorts Savings and Loans who lost 60 percent of its market value in January and has not recovered since then. Four other stocks lost more than a quarter of their market value since January, Academy Press lost (34.0 %), E-Tranzact (33.16 %), Champion Breweries (27.14%) and GSK Consumer Nigeria (25.52%) Investors lost over N48 billion as the All Share Index lost 389.08 index point in the first quarter of 2018, closing with a market capitalization of N11.67 trillion from N11.72 trillion at the beginning of the year.

Continued from page 39 to pay 75 kobo more than it did six years ago when N1.75 kobo per share was paid out to its shareholders. Access Bank which recently completed its merger with Diamond Bank last month has been unable to maintain a consistent increment in its dividend per share. For 2018 full year, the bank announced a final dividend per share of 25 kobo, compared to 0.35 paid in 2013. Dividend is a good indicator of the financial health of a stock or a company as only firms making profit can pay dividend. In fact, the Dividend Discount Model (DDM) calculates the value of a company as the discounted value of all its future dividend payments. With value accretion to investors in form of consistent dividend growth, the expected return on such stock increase. BusinessDay analysis using the using the Gordon growth model estimates that GTB offer investors the second highest minimum return for their capital at 18.55 percent while Zenith with 18.76 percent lead the pack. UBA’s cost of equity according to the analysis was 13.76 while Access had a negative of -2.60 percent of the four tier one banks covered. The unavailability of its full year 2018 financials for First Bank as at the time of the analysis resulted in the exclusion of the bank from the analysis. BusinessDay arrived at the estimations based on analysis of the Banks’ dividend data using the Gordon growth model, which is used to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate.

by KPMG (N1.93 billion), Ernst & Young (N1.05 billion) and Deloitte & Touche with an estimated N980 million for services rendered in 2017. “The numbers are not surprising,” said Maju Eldad, a chartered accountant. “I think 2018 figures will exceed N7 billion because the auditors will be able to charge more money seeing that companies financial performance improved last year.” In terms of number of clients, Deloitte & Touche, the oldest indigenous professional services firm in Nigeria, led its peers, by a hair, controlling 8 of the firms classified under the NSE 30 index. The firms managed by Deloitte & Touche include Dangote Flour, NASCON, Nestle, Nigerian breweries, Presco, PZ Cussons, Dangote Cement and Ecobank. KPMG and PwC were tied at second place auditing the books of 7 companies each. Flour Mills of Nigeria, Stanbic IBTC, Total, Union Bank, Unilever, Lafarge Africa and Zenith Bank were all being audited by KPMG while Access Bank, Dangote Sugar, Guaranty Trust Bank, Guinness, First Bank, Transcorp and UBA’s financials were under the scrutiny of PwC. Ernst & Young was in the employ of four of the companies on the NSE 30, completing the firms managed by the Big Four. The companies were Oando, Sterling Bank, Seplat and Fidelity Bank. PKF Professional Services and Grant Thornton jointly audited the books of Fidelity Bank and Ecobank respectively while individually managing 11 Plc and Forte Oil. Okomu Oil whose books were managed by Horwath Definone and International Breweries (Baker Tilly Nigeria) complete the top 30 companies on the Nigerian Stock Exchange. Public companies and banks are required to change auditors once in 10 years, and another 10 can be added if the company holds a tender but then reappoints the same auditor.

BUSINESS DAY

Monday 01 April 2019

INTERVIEW

Satellite connectivity can help scale Nigeria’s broadband to unreached communities

In this interview, LIBBY BARR, Chief Operating Officer at Avanti Communications, a leading provider of satellite data communications services in Europe, the Middle East and Africa (EMEA) and FUNKE OPEKE, Chief Executive Officer at MainOne, an African connectivity and data centre solutions company, speak on their recent partnership to improve broadband penetration in Nigeria. BusinessDay’s FRANK ELEANYA captured the interview.

hat is the purpose of the partnership between Avanti and MainOne? This partnership aims to provide affordable broadband access to all Nigerians irrespective of their location at affordable prices. Avanti will be providing the latest Ka-band satellite communication services to ensure that enterprises, public locations including schools and hospitals, as well as individuals in the most remote areas of the country benefit from the digital inclusion that reliable broadband connectivity provides. The ultimate goal is to provide access to the internet in difficult to reach areas which has the power to improve everyday life by creating jobs, growing the agricultural sector, enhancing access to educational opportunities and resources, improving social wellbeing, improving public services and enhancing healthcare for Nigerians. This partnership will foster the development of relevant broadband services to meet the needs of millions of consumers across Nigeria who are currently without internet capacity. Now, we have the opportunity to make accelerated broadband expansion possible via satellite, to overcome last-mile gaps experienced in fibre infrastructure and meet our broadband penetration targets. We see strength and greater opportunities in the combination of fibre, which has almost unlimited data bandwidth, and Ka- band satellite with minimal geographical restriction. Before this partnership, was there any converged broadband solution with coverage across Nigeria? In the past, there have been public–private partnerships and alliances that have tried to address the concerns of broadband access in Nigeria. However, this is the first time we are seeing such collaboration at this scale. Firstly, both partners have a huge investment in-country to drive this. MainOne has extensive subsea and terrestrial fibre infrastructure while Avanti has invested a lot in the country and is the first Kaband satellite operator to build a Gateway Earth Station in Nigeria. This is the first time we are seeing an alliance that combines both fibre and satellite technologies as opposed to the traditional operators using Mobile Networks to address the broadband solution in Nigeria.

not emulate global best practices and ensure broadband infrastructure deployment extends to rural areas in the country as quickly as possible. Nigeria needs rapid deployment of connectivity and satellite broadband communications will complement fixed infrastructure and create a level playing ground to achieve meaningful social development, irrespective of location or distance from civilisation. This partnership will support the country’s targets by increasing broadband penetration with the combination and complementary use of fibre and Ka-Band satellite technologies ensuring that access is not limited by infrastructure. Our cost efficient Ka-Band satellite solution will help drive the cost of broadband down especially in rural areas, further improving affordability of the service to end users.We believe that the access conundrum can only be resolved by collaborative solutions and shared services which have come to stay as the world converges into one large digital economy.

Funke Opeke

Where else has this solution worked? Avanti’s broadband solutions are implemented throughout EMEA. We have worked across Europe, Cyprus, Turkey and several countries in Africa, especially South Africa, Kenya and Tanzania.

‘‘

No longer will internet access be limited by infrastructure. With satellites orbiting the earth from space, satellite-based internet can provide access to education, healthcare, banking and business, wherever you are on the surface of the earth

The HYLAS 4 satellite has a strong focus and coverage in West Africa and delivers High Throughput Satellite (HTS) connectivity to complement existing fibreoptic networks. For instance, our iKnowledge project (launched in 2015) has deployed high-speed satellite broadband connectivity to Tanzanian schools. The project provides ICT equipment and digital skills training for teachers. Students have access to the computer labs to learn basic ICT skills and access eLearning platforms. The schools are also provided with additional laptops for teachers and projectors, for them to access eLearning, information and educational content and use it straight in the classrooms. The project has connected over 312 primary and secondary schools across 25 regions in Tanzania bridging the digital divide for up to 18,000 teachers and 216,000 students. Through satellite internet connectivity and ICT training, teachers can now access the latest educational content online and deliver it straight into classrooms. School children are now able to access computer labs and eLearning platforms, positively impacting their learning outcomes. In Kenya, where we launched the iMlango project with our

partners, UK Department for International Development (DFID), sQuid, Whizz Education and Camara Education, we developed an e-learning partnership, created to deliver improved educational outcomes in maths, literacy and life skills for marginalised children. The project has improved education and life outcomes for about 150,000 pupils, with some of the pilot schools now working with Tyndall University in Dublin to promote Young Scientists competitions and Skype experiments. In addition, we have partnered with the Kenyan Government to provide hub facilities for young adults and entrepreneurs to develop their ICT skills and help bring them into the digital world. 120 sites are currently live, with a target of 1160 sites by project completion. How can this partnership help achieve Nigeria’s broadband penetration targets? Despite a fairly articulate Broadband Policy, Nigeria struggled to attain the 30% fixed penetration target set for 2018. As Africa’s biggest economy, Nigeria stands the risk of being left behind on the global technology map if it does

Shared infrastructure and competencies will create efficiencies in both services cost and operations and enhance competition and the competitiveness of the ICT sector as a whole. How will this work in remote areas? Avanti’s HYLAS 4 satellite covers the whole of Nigeria and provides connectivity everywhere, even in the most remote locations. This will complement MainOne’s fibre infrastructure and backhaul partners to ensure that everywhere in Nigeria has some form of connectivity to the digital transformation that the internet brings. No longer will internet access be limited by infrastructure. With satellites orbiting the earth from space, satellite-based internet can provide access to education, healthcare, banking and business, wherever you are on the surface of the earth. Avanti andMainOne plan to install built-in Wi-Fi hotpots in Oil and Gas companies, schools, communities and government agencies and offer support to remote Onshore, Offshore and Deep Offshore locations where connectivity services and power availability remain a challenge. We hope to impact and foster better eGovernment, eLearning, eCommerce, eHealth and eBanking services in urban and rural areas across Nigeria.

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FIFA scribe Samoura arrives as Lagos WISCAR outline solutions to achieving diversity and inclusion in workplace rocks for 2nd AITEO-NFF Awards ANTHONY NLEBEM

IFA Secretary General, Fatma Samoura, arrived Nigeria on Saturday, ahead of more than 20 Presidents of FIFA’s Member Associations across the African continent for Monday’s 2nd AITEONFF Football Awards taking place at Eko Hotel & Suites, Victoria Island, Lagos. At lunch on Sunday with the bigwigs of the NFF and a number of stakeholders of the Nigeria game, the Senegalese-born former UN top official expressed her delight with being invited to Nigeria for the Awards and also for being considered worthy of a special award on the night. She will receive the NFF Order of Merit award. At a press briefing on Friday, NFF 1st President and chairman of the Awards Organising Committee, Seyi Akinwunmi, lauded sponsor - AITEO - for continued support for the annual event and assured that both organisations were set to put on a great show Monday

night. AITEO’s general manager, finance, Taiye Eyewuoma, said the sponsor, and NFF’s Official Optimum Partner, is committed to continuing sponsoring the awards ceremony as the partnership “is yielding good dividends for AITEO.” AITEO is also the sponsor of the Federation Cup competition and the annual African Football Awards. Monday’s event will be broadcast live by SuperSport and Africa Independent Television (AIT). Among the highlights of the night would be the special honour to the 1994 set of Super Eagles – the squad forever referred to as the ‘Golden Generation’ for being the first to qualifying Nigeria for the FIFA World Cup finals, winning the Africa Cup of Nations in Tunisia and reaching the Round of 16 at the World Cup finals in America. A good number of the squad members teamed up with the Dream Team of 1996 that became Africa’s first winners of the men’s football gold at the quadrennial Olympic Games. Governor Akinwunmi

Ambode of Lagos State will be presented with the Lifetime Achievement Award, while internationallyrenown business mogul, politician and avid football financier and supporter, Moshood Kasimawo Olawale Abiola, who died in 1998, will be honoured posthumously with the NFF Presidential Award. A welcome remark by NFF 1st VP/chairman, Organising Committee, Akinwunmi, will be preceded by a performance by internationally respected dancer, Kaffy, before brief remarks by President of NFF, Amaju Melvin Pinnick, and AITEO’s deputy managing director, Francis Peters. Superstar musicians D’ Banj, Ricardo Banks and Timi Dakolo are among those to entertain on the night. Former Nigeria captain, Olusegun Odegbami, Super Falcons’ legend Maureen Madu, former Super Falcons’ coach Edwin Okon, former FIFA referee Faith Irabor, and chairman of the Nigeria Women Football League, Aisha Falode, will be among the presenters at the event.

BUNMI BAILEY

oing for mentorship programmes, having the right support system, self-awareness and understanding strengths and weakness are among the solutions outlined by women experts in tackling workplace problems and ensuring diversity and inclusion at the Women in Successful Careers (WISCAR) talk series. The talk series that held weekend was themed “Towards Better Balance; Promoting Diverse and Inclusive Workplaces,” in line with the International Women’s Day theme “BalanceforBetter.” The series is held twice yearly. WISCAR is a non-profit 12-month structured mentoring programme focused on empowering and developing professional women in diverse careers in the formal and informal economy to contribute to nationbuilding in Nigeria “This discussion is a human rights issue, it is about development and moving the Nigerian identify forward. If we want to increase

our GDP and social economic growth, we should ensure that we include the women and ensure that the labour force is properly utilised,” Amina Oyagbola, founder, WISCAR said at the event. It is believed that women make up nearly 50 percent of the population in Nigeria, but they are poorly represented in decision and management areas in the workplace, she said. One of the panellists, Ronke Onadeko, a principal consultant, DRNL Limited, identified selfimpose limitations as one of the challenges affecting diversity and inclusion in the workplace. “Women see themselves as women and not as people. For example, when you go job-hunting, you put yourself in a woman type of role in an organisation. But this gives you a slim choice to where you can fit into,” Onadeko said. “So, I advise women to just let their minds wonder and go anywhere. Worst case scenario, if you don’t fit it then leave. But you have at least learnt something about yourself and

the environment and you will be better placed to find something better to do,” Onadeko said further. Nkiru Olumide-Ojo, executive head, regional marketing and communications, Standard Bank Group, said the maternal work that mothers face and not having the right support or system to run an active career add to the challenges women face. There are several reports and data that show that improvement in national, productivity and economic growth can improve if there is diversity and inclusion of women in the workplace. Adekanla Adegoke, head, Oando Foundation, suggested that women need to change the space in their workplaces by speaking up and also going for mentorship programmes. “We need to ask for help if we have a problem, go for mentorship programmes and be self-aware. A lot of women don’t know their strengths and weaknesses, and the impact they have on others. We need to understand that these are very important in the workplace,” Olumide-Ojo said.

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Exportation of raw minerals untidy, but Nigeria lacks infrastructure for processing JOSEPH MAURICE OGU

igeria has continued to export raw minerals instead of processed products from them as a result of lack of requisite infrastructure locally, experts have said. Nigeria has identified at least 34 solid minerals that are available in the country in commercial quantities, but most of them end up being exported in their raw states, which reduces their export values. Ime Ekrikpo, director of steel at the Ministry of Mines and Steel Development, expressed concern over this at an event in Lagos recently. “Minerals are available in Nigeria and are being exploited either formally or informally. But the big question is: why are we not adding values to these commodities prior to export?” he queried, when he represented the Minister of State, Abubakar Bwari. According to him, a significant quantity of the mineral resources is being mined on small and artisanal scale and exported in raw form.

MMIA road construction: FAAN advises passengers to get to airport early IFEOMA OKEKE

he Federal Airports Authority of Nigeria (FAAN) has advised passengers to leave their homes early, owing to the ongoing reconstruction of the road leading to the Murtala Muhammed International Airport (MMIA), Lagos. The advice has become necessary due to the traffic jam experienced by road users along the axis. In a statement, Yakubu Henrietta, general manager, corporate affairs, FAAN, says the authority is appealing to passengers that leaving their homes early will ensure they get to the airport in good time and go through all check in formalities with ease. “We apologise for the inconveniences being encountered by passengers due to the situation, the Authority has already mobilised security agencies to ensure that the situation is effectively managed,” Henrietta states.

He noted that if more value chains were added from mining to exportation, the industry would create more jobs and significantly contribute to the nation’s economy. “One or two additional values to them will generate a lot of employment, an improved skills and technical capacities of Nigerians,” he said. He posited that the mining sector has been identified as the sector that will help in repositioning and facilitating government ef-

forts and source as additional revenue for the nation. However, lack of infrastructure has been identified as the major reason why mineral resources are not locally processed in Nigeria. Oyewola Oworu, a consultant geologist at Walled Resources, Lagos, said the nation lacks infrastructure to support the processing operations locally. Some of these are good roads for transportation, electricity and machinery. “It is not that the technology

is not available; we know the technology. But the environment is not friendly to encourage local processing,” he said. In addition to infrastructure, according to Oworu, government needs to formulate workable policies that can encourage local productions. Policies that will discourage people from taking raw minerals out of the country without having facilities to process such materials in the country will facili-

tate local production, which will create enormous jobs and increase the nation’s income. According to Ekrikpo, as at 2016, mining sector contributed 0.6 percent to the nation’s Gross Domestic Products (GDP), improving from the initial 0.03 percent. According to the director, the figures for 2017 and 2018 were not yet out as the ministry was still liaising with the relevant government agencies for the. According to him, the

revenue is purely the income from the license fees, taxes and royalties paid by investors in the mining industry. To promote ease of doing business, the ministry has created a department to facilitate mining investment in the country. “We’ve strengthened ease of doing business by establishing a specific department to help promote mineral trade and investment in mining and steel industry in Nigeria,” he said.

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Investors await Buhari’s plans to kick-start... Continued from page 2

the most from the signals that the normalisation of US monetary policy has slowed, if not stalled. Nigeria hasn’t shared in that rally. Data from the Nigerian Stock Exchange put the foreign investor share of turnover in February at 53 percent but show that their trading over the month amounted to a net outflow of N11 billion. The stock market has rallied in the month after every election since Africa’s biggest oil producer ended military rule 20 years ago, until now. It also marks a departure from Buhari’s first tenure in 2015 when the stock market rallied more than 10 percent. “Many equity investors may have hoped for an Atiku victory

on the grounds that his campaign stressed his private-sector credentials and insisted that he would somehow get things done,” said Gregory Kronsten, head of fixed income research at FBN Quest. “In stark contrast, fixed-income players responded very positively with a surge in buying,” Kronsten added. The question on the mind of some analysts is what would act as a trigger for sizeable new flows into the Lagos market, and thereby counter the removal of the minimum equity holding for PFAs as well as a generally uninspiring set of first quarter 2019 results, with exception to some of the banks. There are expectations that an oil price at a higher and

sustainable level may as well be the much-needed trigger for the market, as indicated by the wellknown linkages between the price and the non-oil economy, which was demonstrated by the healthy GDP growth posted in 2010- 2014. Another possible trigger, according to FBN Quest, is evidence that the banks are achieving the loan book growth of around 10 percent for the year, which has been their guidance. That currently looks unlikely, with most banks cutting their loan books in an economy still recovering from a contraction in 2016 and remains fraught with risks. Surprises on the upside in the Federal Government’s reform agenda, and sizeable new listings such as MTN Nigeria, could also be the trigger.

Hopes for reforms took a blow after the Central Bank of Nigeria (CBN) unexpectedly cut its monetary policy rate (MPR) by 50 basis points (bps) to 13.5 percent from 14 percent, Tuesday, citing the need to boost growth. The move by the CBN to cut rates at this time creates more questions than it answers, according to Razia Khan, Africa chief economist at Standard Chartered. “While FX stability has benefitted both from rising oil prices and rising portfolio inflows into Nigeria, the cut today raises important questions about the government’s broader reform intent,” Khan said, pointing to

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two concerns. First, the MPR cut comes following Senate approval of a sizeable minimum wage increase. Second, it remains to be seen what the move suggests about the likelihood of an imminent VAT hike or fuel price deregulation, according to Khan. “Both are pressing, muchneeded reforms – but the CBN’s rate cut today appears to suggest that these reforms, which may both exert upward pressure on the price level in the short term, may not necessarily be imminent. This would be disappointing, especially for investors hoping for stronger reform impetus post-election,” Khan said.

Moody’s confirms Access Bank’s long... Continued from page 2

drawn. This withdrawal was sequel to the announcement by Access that Diamond’s assets, liabilities, and undertakings have now been assumed by Access. According to Moody’s report, Access Bank’s’ funding profile will benefit from Diamond’s large retail deposit base. “As of September 2018, about 75 percent of Diamond’s deposits were inexpensive retail deposits while Access has a higher reliance on

more confidence-sensitive corporate deposits,” Moody’s said in the report. The rating agency expects the cost of deposits for Access to lower by 100-150 basis points in the next 18 months, which will support the bank’s net interest margins. Additionally, in the long-term, the acquisition will enhance Access’ profitability through a broadened product offering and efficiency savings relating to branch network, workforce, procurement and support and IT services.

NNPC records poor performance in 2018... Continued from page 2

Philip Shaibu (l), acting governor, Edo State, presenting souvenir to Nicola Clase, coordinator for migration and refugee issues, Swedish Ministry for Foreign Affairs, during a courtesy visit by the Swedish delegation to the Government House, in Benin City.

Concerns as FG gradually relegates MTEF... Continued from page 4

MTEF/FSP is still being considered as an anomaly. Attributing the delay in approving the MTEF/FSP to the 2019 electioneering campaigns, Okiti said lawmakers devoted more time to their reelection bid. “We are in a crisis,” he said. “The point I am trying to make is that whether it is the MTEF, budget or economic policy in general that you talk about, in the last three to four years, we have not had a semblance that the people in charge of economic policy understand the implication (of simultaneous consideration of MTEF and national budget).” BusinessDay also finds that not only is the document consistently presented late, it also stays longer than necessary at the National Assembly before approval. While the 2016-2018 MTEF/FSP spent eight days at the National Assembly (December 8 to December 16, 2015) before approval, that of 20172019 lasted for 107 days (October 4, 2016 to January 19, 2017). President Buhari submitted the 2018-2020 MTEF/FSP on October 17, 2017 and it was passed by both chambers on December 5, 2017, spending 49 days. The current MTEF/FSP which was submitted by the President since November 6, 2018 had spent 142 days as at March 28, 2019. But speaking at an event organ-

ised by the National Assembly in Abuja, Udoma Udo Udoma, minister of Budget and National Planning, said the Federal Government will collaborate with the legislature to revert to January-December budget cycle beginning with the 2020 national budget. Udoma said the government was ready to comply with the provisions of the Fiscal Responsibility Act 2007 by submitting the (MTEF/FSP) to the National Assembly in time. He added that this would not only make planning easier for both the public and private sectors but would also ensure proper oversight by relevant committees of the National Assembly. He attributed delay in submitting and passing the 2019 budget to the fact the both the executive and legislative arms of government relegated governance to the backseat as politics occupied centre stage during the 2019 elections. “But I believe that going into 2020, this is a year that we should be able to achieve it. This is year that we should beabletositdownwiththeNationalAssembly and achieve it. The President is determined to achieve it,” Udoma said. “We will be sitting down with the National Assembly so that we can achieve. And we don’t need to do it be legislation. I think it is better to do it by cooperation,workingtogether,”hesaid. Senate President Bukola Saraki

had assured mid-March that the document would be presented and approved in a week’s time, but the Committee on Finance was unable to submit its report before the Senate adjourned sitting till April 2. “The plan was to submit the report by Wednesday. In fact, that was why we did not join the House of Representatives in adjourning by Tuesday (March 19). But due to circumstances beyond our control, the report was not ready,” a member of the Senate Committee on Finance told our correspondent on condition of anonymity. This situation, said Austine Aigbe of the Centre for Democracy and Development (CDD), is unhealthy for the economy. He said the best way to avoid simultaneous consideration of the MTEF/FSP and the national budget is for the executive to comply with the Fiscal Responsibility Act. “The challenge with the Nigerian budget is priority. When a policy that is supposed to be used to guide the process of budget is taken side-byside with the budget, then we lack the impetus to properly implement the budget,” Aigbe said. “We need to prioritise on issues. And I think it is important that we start it now. That next year, heading towards 2020 national budget, we must, as a matter of urgency, submit the policy that guides the budget earlier before the budget proposal so that we don’t end up going back and start having side-by-side consideration of MTEF/FSP and the budget.”

shame. But we hope the Petroleum Industry Governance Bill (PIGB) will help address all of these lapses,” Adeola Adenikiju, a gas and policy analyst for the World Bank and professor of Economics at University of Ibadan, said. Group operating revenue for the month of December 2018 stood at N731.88 billion, N439.59 billion higher than the previous month performance, while expenditure for the month surged by N429.52 billion. “This month revenue is far more than the budgeted revenue which resulted in marked increase in trading surplus despite the drag in operating expenditure in the month,” NNPC said in its December report. But while Nigeria’s state-owned oil company underperformed despite higher oil prices, Brazil’s stateowned Petrobras posted its first positive annual result in five years which is also the highest since 2011, with a 2018 net income of $6.84 billion. “Petrobras’ performance in 2018 was undoubtedly the best in many years, which includes the achievement of some historical records, namely free cash flow and adjusted EBITDA, and breaking a four-year sequence of losses,” said Roberto Castello Branco, Petrobras’ CEO, in a letter. With Brazilian oil and gas production reaching 2.53 million barrels of oil equivalent per day, Petrobras posted adjusted EBITDA of $30.44 billion and, for the fourth year in a row, a positive free cash flow of $14.17 billion in 2018. It generated $40.14 billion in municipal, state and federal taxes, in addition to government take. Also, China’s state-owned Sinopec Group registered a 22.09 percent year-over-year growth to achieve $426 billion of operating revenue in 2018. The company’s refinery and distribution segment accounted for approximately 60 percent of 2018 revenue which increased by 2.31 percent to 244 million tonnes (Mt), while total domestic sales volume of

refined oil products increased by 1.4 percent to 180.24Mt. State-owned Rosneft, Russia’s biggest oil and gas company, boosted revenue by 31.4 percent to $133.7 billion in 2018. Fully owned by the Russian government, the company’s oil and liquids production increased by 2.1 percent to 4.7Mbpd while gas production averaged 1.12Mboed during the year. Norwegian state-owned Equinor’s full-year 2018 net profit jumped 64 percent, hitting $7.5 billion, compared to $4.6 billion in 2017, while total oil production hit 2,170mboe per day as at Q4 2018. “Strong operational performance and high production gave solid results and cash flow in a quarter with significant market volatility,” said Eldar Sætre, president and CEO of Equinor. Cash flows provided by operating activities before tax amounted to $27.6 billion in 2018 compared to $21.0 billion in 2017. Equinor’s Reserve Replacement Ratio (RRR) reached an all-time high of 213 percent in 2018, mainly driven by sanctioning of new fields, positive revisions and acquisitions. The Petroleum Industry Bill (PIB) that should solve the problem of Nigeria’s petroleum industry has been going back and forth from the National Assembly to the Presidency for close to two decades now. For some strange reasons, no Nigerian president has been courageous enough to sign it. To remove all the stumbling blocks against the bill, the National Assembly decided to disaggregate it into four parts: the Petroleum Industry Governance Bill (PIGB), the Petroleum Industry Fiscal Bill, the Petroleum Industry Administrative Bill, and the Petroleum Industry Host and Impacted Community Development Bill. A barrel of Brent oil, the benchmark for Nigerian crude, sold for $68.30 on Friday, March 29, according to data obtained from the Bloomberg terminal.

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FCT Minister frowns at blockage of walkways JAMES KWEN, Abuja

inister of the Federal Capital Territory, FCT Muhammad Bello has frowned at the attitude of some individuals and organisations that block pedestrian walkways around Abuja city and convert them to their personal uses, preventing their use by other members of the public. Bello consequently directed all the relevant agencies and departments of the Federal Capital Ter-

ritory Administration, FCTA to immediately recover all the blocked walkways and revert them back to their original use. This directive was issued during the FCT Executive Committee meeting which took place at the conference room of the FCT Minister’s residence in Abuja. According to the Minister, “these walkways or pavements are there not only to beautify the areas but they also serve as foot paths for residents taking strolls, running for exercise purposes or even dog walking”

On the standardisation of road markings and signs in the FCT Bello also directed that all the relevant Departments and Agencies in the FCT should collaborate with the Transportation Secretariat during the planning and execution of road markings and signage projects. He further directed that all the relevant agencies and departments should with immediate effect step up the enforcement of all extant rules and regulations guiding life within the city. The FCT Boss reminded the heads of the various

Secretariats, Departments and Agencies that with elections now over, there was a need to clean up Abuja by removing all posters and other such electioneering materials that tend to litter the city. He als o noted that with the inauguration of Mr President coming up in May, Abuja is expected to play host to many dignitaries, many of whom will come from outside the country and reminded them of the need to ensure that the FCT looks its best not just during that event but at all times.

We promote Moral discipline in Veritas University – VC CYNTHIA EGBOBOH, Abuja

yacinth Eme Ic h o ku , V i c e Chancellor, Veritas University Abuja, said the core value of the school is to promote moral discipline and build inner strength in the students. Ichoku speaking at the press briefing to mark the 7th convocation ceremony of the university said that the university was formed as result of the commitment of the Nigerian college of Catholic Bishops to promote access to education in Nigeria. “The University started as an Idea of the college of bishops of Nigeria with the aim of training and raising highly competitive graduates in Nigeria”. The Vice Chancellor, speaking further said efforts

are on-going to expand the accredited programmes as well as expand the buildings of the school to better serve the need of the public “We currently have over 2000 students, we offer under graduate programs in social science, education, humanity sciences, post graduate programs and masters programs amongst others. Over 13 new programs will be added by next session 2019/2020 academic session which will commence in October 2019”. “All our programs are NUC accredited, by next session we will be opening up the faculty of law, medicine, Theater and film art and computer engineering as the demand of the public is increasing, and we have skilled professors that are ready to chair the course”.

CBN upbeat about 2020 financial inclusion targets, takes campaign to Abuja schools CYNTHIA EGBOBOH, Abuja

L-R: Stephane Beuvelet; acting MD, 9mobile; Faruk Muhammed; N5million Prize winner of 9mobile Magic Hour Promo; Tosin Olulana, director, regional sale, North, 9mobile, and Adebisi Idowu, vice president, marketing, 9mobile, during the presentation of prize to winners of the 9mobile Magic Hour Promo in Abuja. Pic by Tunde Adeniyi

9mobile wows Abuja customers in ‘Magic Hour Promo’ as father of five wins N5m CYNTHIA EGBOBOH, Abuja

fterrecentlysplashing its Lagos customers with stunning prizes in the ongoing ‘Magic Hour’ promo, 9mobile telecommunications received a new set of winners emerging in and around Abuja, carting home fabulous prizes. The prize redemption, which took place at the Mall Atrium, Jabi Lake Mall, Abuja, witnessed a surprise shopping spree in which many participants, who had accompanied the promo winners to the event as friends and loved ones, went home with amazing

items which they purchased from the Mall free of charge by gesture of 9mobile. Just like the Lagos edition, 9mobile customers who participated in the promo won many fantastic prizes including free airtime, smartphones and cash prizes running into millions of naira as part of the rewards given out by the telco under its customer reward scheme, Magic Hour Promo, in celebration of customers for their loyalty to the network over the past ten years. Stephane Beuvelet, Acting Managing Director, 9mobile, speaking at the prize presentation, said that the

Magic Hour Promo is one of the ways the telco is fulfilling its promise to make this year as fulfilling as possible for its subscribers. “This promo was introduced by 9mobile to mark its tenth anniversary and a way to reward the loyalty of our customers. This is very much a recognition initiative from 9mobile as we want to change the lives of our customers; we created this opportunity to make an impact in their lives which you all are seeing today. “This is very significant, and we are very happy with it. With just N100 our customers can do extraordinary

he Central Bank of Nigeria (CBN) hopes to achieve its 2020 financial inclusion target of getting at least 80 percent of Nigerian adults embrace the financial system, especially as it intensifies efforts and promotes financial literacy in schools. In commemoration of the Global Money Week, the CBN took its financial literacy campaign to secondary schools across the country to educate school children about money, savings, investment, budgeting and entrepreneurial skills.

The campaign is one of those strategies the CBN has adopted not only to raise awareness on its cashless policy but reasonably increase financial inclusion levels in the country by educating particularly the children and youth on how money works. Aisha Ahmad, CBN Deputy Governor in charge of Financial System Stability, led some CBN directors to visit some schools in Abuja where students were taught topics in financial literacy. The schools visited were the Government Secondary School, Wuse Zone 3 and the Staff Community Secondary School, Asokoro.

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NSE aeronautical division commends Nigeria’s airspace infrastructure IFEOMA OKEKE

eronautical Division of the Nigerian Society of Engineers (NSE) has expressed confidence in the capacity of the nation’s navigational infrastructure to guarantee safety of air travel in the country. This declaration came at the end of an airport tour of

facilities at the Nigerian Airspace Management Agency (NAMA) in Lagos. Speaking on behalf of the visiting team, Patrick Achurufe, the chairman, Aeronautical Division, NSE, said their findings had boosted the confidence of members on the safety of the Nigerian airspace, adding that their on-the-spot assessment of the nation’s navigational tools and

Fitch says Lagos’ credit rating unaffected by Visionscape’s missed payments JOSHUA BASSEY & TEMITAYO AYETOTO

itch Ratings, a global credit rating agency, has retained Lagos State economic ratings at B+ status, saying there’s been no negative impact on the state’s credit ratings arising from the recent missed contracted service payments by Visionscape, a municipal waste management company, to its bond holders. The agency said the state’s B+/(AA+(ngn)/ ratings remained stable and unaffected by the default of the SPV Municipality Waste Management Contractors Limited (MWMCL) led by Visionscape, in a statement seen by BusinessDay. “Under Fitch’s criteria, Lagos’ ratings are not impacted because the defaulted debt is not Lagos’ direct debt, as well as because its multi-annual commitment towards Visionscape is unlikely to qualify as a PPP counterparty obligation. This would make the credit quality of the bond and its issuer detached from that of Lagos,” Fitch said. The outgoing administration of Governor Akinwunmi Ambode engaged Vision Sanitation Solutions Limited to rid Nigeria’s economic capital of festering wastes and also agreed to guarantee the company’s medium-term bond programme of N50 billion. Visionscape missed the semi-annual principal and coupon payments for about N800 million on the first tranche of N4.85 billion which it sold to high net worth individual and fell due on March 5. The default had raised concerns among the bondholders with the investing public fearing possible consequences on the state’s credit ratings of B+, AA+ (ngn)/stable). But Fitch has dismissed the fears, saying the ratings have been unaffected by the default. The bond was issued by Visionscape to raise funds to purchase recycling trucks and equipment, linking debt service to the proceeds coming from Lagos for the implementation of the waste recycling contract. In a statement it issued regarding the transaction,

Fitch said, “Some market participants deem Visionscape’s default to imply also the default of Lagos, given the state’s Irrevocable Standing Payment Order (ISPO) whereby a stream of its own internally generated revenue was remitted to the Special Purpose Vehicle (SPV) account for debt servicing.” According to Fitch Ratings, the ISPO, and similar arrangements in other countries, is a mechanism enhancing the predictability of payment flows from an administration, potentially enabling it to address liquidity stress by prioritising the payment of certain liabilities. It added, however, that such a mechanism normally falls short of the senior, unconditional, and irrevocable features qualifying it as a solvency guarantee, i.e., a guarantee of timely repayment of long-term financial liabilities, such as bonds and loans, over extended periods. “In short the ISPO is seen as a commitment to set aside resources for debt service, making it a risk-mitigating factor in case of liquidity stress by an administration rather than a credit enhancement,” it said. Fitch outlined its view in a report published in 2013, where it stated that “ISPOs issued against states’ own revenue may not adequately protect lenders from the risks associated with a change in government priorities” and that “despite being an irrevocable commitment on behalf of lenders, courts have occasionally ordered cessation of payments backed by an ISPO”. It noted that by Fitch’s best understanding, it was dubious that the particular commitment underlying the Visionscape bond may meet the rateability tests under its PPP counterparty obligation criteria as Lagos lacks the control of the asset: instead it is the grantee (Visionscape) that appears to have the option to put to the state the waste recycling trucks in case of contract termination, rather than the state having the control that will enable it to operate them at the end of the PPP arrangement if it so chooses.

how these facilities were being deployed by the personnel in operations revealed that “a lot has been done by NAMA both in terms of acquisition of critical infrastructure and training of appropriate personnel.” He commended staff of the agency for their diligence and hard work, saying members were amazed at the dexterity and efficiency with which critical personnel discharged

their duties both in communicating with pilots, vectoring aircraft and surveillance of the airspace in general. While extolling the Federal Government on the “massive investment” in the Total Radar Coverage of Nigeria (TRACON) project, Achurufe however called for a sustained upgrade of the facility. “Given that aviation is dynamic, most components of these facili-

ties need to be upgraded from time to time in line with world best practices and International Civil Aviation Organization (ICAO) specification,” he said. Also in his remarks, Godwin Balang, the vice chairman of the group, advocated for uninterrupted power supply from the national grid to ensure that the facilities operate at optimum capacity, even as

he urged the Federal Government to ensure adequate supply of spares for effective maintenance of the systems. With membership drawn from all engineers working in the aviation sector, the NSE, Aeronautical Division, was established to promote the growth of the profession and to ensure standards and best practices are maintained in the aviation sector.

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Peterside affirms confidence in judiciary over judgment on $55m NLNG/NIMASA case AMAKA ANAGOR-EWUZIE

irector-general of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dakuku Peterside, has commended the appeal court judgment in the case between the Agency and the Nigerian Liquefied Natural Gas (NLNG) Limited over levies payable to the maritime regulator, saying it has reaffirmed confidence in the Judiciary. Recall that the Court of Appeal in Lagos on Friday set aside an earlier judgment of the Federal High Court, which exempted NLNG from the levies, on the grounds that NIMASA was not given fair hearing at the lower court. Justice Mohammed Lawal Garba, who delivered the judgment, ordered that the case be sent back to the high court for fresh trial under a different judge. Reacting on Sunday in

Lagos, Peterside said NIMASA remained law abiding and would continue to work closely with the judiciary in matters that need clarity and interpretation. “This judgment has further shown that the judiciary is unbiased and remains a beacon of hope for Nigerians. On our part as responsible government agency, we will continue to work closely with the judiciary and other stakeholders to ensure that we realise our mandate of creating a robust maritime sector in line with best global practices,” Peterside said. According to Peterside, “NIMASA and NLNG are neither foes nor competitors. We are corporate cousins working together for the common good of our great country. Judgements like this only serve to strengthen our institutions and ensure greater bonding.” NIMASA had in 2010 commenced an action against NLNG, wherein it

sought for interpretation of relevant provisions of the Nigerian LNG (Fiscal Incentives, Guarantees and Assurances) Act, CAP N87, Laws of the Federation of Nigeria 1990, and the NIMASA Act of 2007. In January 2013, the action by NIMASA was withdrawn in a bid to settle the dispute out of court. In May 2013, NIMASA requested NLNG to pay all statutory levies accruable to the Agency, including the 3 percent levy on gross freight on inbound and outbound international cargo and 2 percent Cabotage levy and Sea Protection levy. NIMASA stated that NLNG was not exempted from payments of statutory levies after its tax holiday ended many years ago. Following the continued disregard of the provisions the NIMASA Act and other relevant laws by the NLNG, their vessels were detained for noncompliance. Upon agreement between

both parties, on July 12, 2013, before Justice Idris Mohammed of a Federal High Court in Lagos, NLNG agreed to pay outstanding levies attributable to the Free on Board (FOB) and Cabotage vessels if the companies fail to make payment to NIMASA within three months from Friday July 12th 2013. On the other hand, NLNG also agreed to continue to pay all applicable levies in line with the NIMASA mandate. The court order also gave NIMASA liberty to collect levies directly from FoB and Cabotage vessels without recourse to NLNG. Surprisingly, NIMASA received a pre-action Notice on the 18th of June 2013 from Counsel to NLNG, giving 30 days notice of their intention to commence legal action in accordance with Sections 53(2) of the NIMASA Act. Hearing of the substantive issue continues after, which the Federal High Court ruled in favour of NLNG.

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Monday 01 April 2019

African companies mull Glo partnership at CEO Forum in Kigali SEGUN ADAMS

everal businesses around the African continent visited Globacom’s stand at the just-concluded Africa CEO Forum in Kigali, the Rwandan capital, to seek the telephone service provider’s superior network to facilitate their business growth. The businesses, represented by their top executives, held talks with company officials at the Globacom stand on the possibilities of harnessing Glo solutions like internet connectivity, mobile money solutions, wide area connectivity (WAN), credit check for postpaid subscribers, and bundled mobile solutions to run their various organisations. The business leaders who were at the Glo stand during the conference included Kunle Elebute, chairman, KPMG Africa; Ade Adeyemi, group CEO of Togo-based Ecobank; Colin Mukete, chairman of MTN Cameroon; Ugo Ikpeazu, CEO, Ark Hudson, and James Kasugi, head of business, Mara Phone. Others who held talks with the company’s officials were Jameelah Sharrieff, group CEO, Credit Registry; Djo Falanga, CEO of Sodeico of Congo Democratic Republic, and Jean Obambi, director-general of Azur of

Gabon. At the digital economy session, Bella Disu, Globacom’s executive vice chairman, called on governments across the continent to create the enabling environment for telecommunication companies to connect cities and rural communities to the internet. She said this would help operators adopt digital solutions that would make Africa catch up with global trends. Rwandan President Paul Kagame had initiated the enquiries into Globacom’s hitech solutions at an exclusive meeting with Disu. Disu said businesses must innovate because the world was experiencing rapid digital transformation. “We live in an exponential world, it’s no longer a question of ‘do I have to innovate’; we must innovate. So telecom operators will spearhead this innovation,” Disu said. “First, we provide the infrastructure, the network, the platforms and connectivity for digital transformation to occur, and the resulting effect is big data, virtual reality, artificial intelligence, cloud computing and internet of things which connects everything to everybody. So businesses must run on new business models to stay in business,” she said.

Lagos slashes penal fee on building by 50% JOSHUA BASSEY

I L-R: Zulf Mir, executive director, The International Securities Consultancy (TISC), Mary Uduk, acting-director general, Securities and Exchange Commission (SEC), and David White, senior consultant, TISC, after a meeting between SEC and TISC in Abuja. Pic by Tunde Adeniyi

Why Edo is embarking on luxury apartments devt in Benin - EDPA

he Edo Development and Property Agency (EDPA) has said its foray into luxury apartment development in Benin City, the Edo State capital, is a response to the changing dynamics in the business community in the city ushered in by the booming private sector presence. Executive Chairperson, EDPA, Isoken Omo, in a chat with journalists, said that the state government was backing the project because it aligned with its vision to open up the state for development and provide a

conducive environment for investors to do business. The agency recently signed an agreement with Iron Projects Limited for development of 18-unit luxury apartment in Central Road, Government Reservation Area (GRA), Benin City, being the first of such project in the state. Omo said that the state government’s contribution to the project is just the landed property and provision of necessary support for the realisation of the project, as there was no funding commitment on the side of government.

“The project will meet part of the housing requirements by providing shelter, but more importantly, it will create economic activities which will drive employment and encourage people to come and live, work and enjoy Benin. Businesses in the state will also benefit hugely from this investment. New lines of businesses will open up as a result of this project.” “We have hotels in Benin, like Protea Hotels and Best Western Hotel, which cater for high-value individuals that come to do business in the state, but

they are not sufficient because of the numbers of such visitors,” the chairman said. The chairman further noted that the development would be completely furnished and serviced to provide a home away from home for visitors. Also, its proximity to the Edo State Government House, Benin Airport and the Golf Course, coupled with the serenity of the location, would make it a must-have for frequent visitors to the State, he said, adding that there were already interested buyers for the units.

n a move seen as dusting off criticisms over placing more emphasis on revenue than safety as well as official corruption, Lagos State has slashed penal fee on planning permits from 400 to 200 percent. The move, it is believed, will go a long way to stemming illegal construction in the state, as developers are would be encouraged to approach government directly, rather than cutting corners. In the wake of Wednesday, March 13 collapse of a three-storey building on Massey Street, Ita-Faaji, Lagos Island, which claimed 20 lives, mostly school children, and left 45 others injured, the state government has come under severe pressure. Professionals in the building industry say high charges, corruption, poor quality of building materials, among others, are factors encouraging illegal construction in Lagos, as developers in their bid to avoid paying the charges, romance officials, who compromise procedures and regulations. This, they say encourage the use of

substandard materials and quacks by developers, thereby putting such development at risk of collapse. Funmi Osifuye, general manager, Lagos State Physical Planning Permit Authority (LASPPPA), who announced the reduction, said it had received the approval of Governor Akinwunmi Ambode. The reduction covers period between January and December 2019. Under the Lagos State Urban and Regional Planning Law 2010, obtaining planning permit is a must for any physical development in the state, irrespective of the landowner. The general manager believed that the reduction would ensure that structures are built in the right way and place, balance development and ensure that such development and growth are environmentally sustainable. With the development, Osifuye said applicants would be required to pay a penal fee for commencing development on site prior to obtaining planning permit, adding that the fees were not arbitrary but based on standard rates and vary with the size (volume) of the proposed development.

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Agusto & Co projects lower growth for insurance in 2019 on economic slowdown ENDURANCE OKAFOR

L-R: Essien Okon, principal, Government Secondary School Wuse; Nanre Emeje, director, Secondary School, Education Board; Kofo Salami Alada, director of consumer protection, CBN, and Aisha Ahmed, deputy governor, Central Bank of Nigeria (CBN) Financial System Stability (FSS), during the CBN 2019 Global Money week celebration at Government Secondary School Wuse, in Abuja. Pic by Tunde Adeniyi.

Nigeria may create 1.3m jobs from sharing idle facilities in oil assets - study IGNATIUS CHUKWU

eport of a yearlong study that may land on Federal Government’s lap says Nigeria stands a chance of creating almost 1.3 million jobs in two years by merely rolling out a policy on ‘colocation,’ meaning allowing idle facilities in some oil assets to be shared by new investors. The report seen by BusinessDay shows that between 1,060,000 and 1,266,877 could be created by allowing new plants and investors to share spare and idle infrastructure in oil assets, such as in Warri Refinery, Port Harcourt Refinery, Kaduna Refinery, the Nigeria Liquefied Natural Gas (NLNG), and some others. Some of the infrastructural facilities expected to

attract investors in the colocation scheme include roads, water, power supply, security, among others. According to the paper prepared by a team led by Solomon Adeleye, titled ‘Framework and Implementation Roadmap for Co-location as a Strategy for GasBased Industrialisation,’ the NLNG alone would generate 20,000 jobs if its spare facilities were leased out to petrochemical plants that would also use its wastes as raw materials. The report which has been discussed at a parley in a part of Lagos by experts showed that a fertilizer plant can be sited in some of the refineries to generate 1,800 jobs. Warri Refinery can create 200,000 by hosting at least 20 plants that would use some of dormant assets in the place. One such location is said

to be capable of generating 600,000 jobs. Kaduna Refinery is expected to generate 10,000 jobs. “Fertilizer plants can come in with 1,800 from plant itself,” the reported noted. Giving a breakdown on how the jobs would be created, the expert said in tables and graphs that transporters would be between 6,845 and 8,645; warehouses would create 7000 to 15,645 jobs; village promoters would be from 53,550 to 266,474; while farmers would create huge number of jobs. Giving additional gains of co-location, Adeleye’s report mentioned how to share existing facilities, reduce capital expenditure (CAPEX) and operating expenditure (OPEX), save huge wasting facilities, see to establishment of at least 20 petrochemical plants from the Refineries, boost the chemi-

cal industry, create over 10 carbon black plants, etc. The report shows that the NLNG can change fuel source from ethane, utilise the extracted ethane, and create the following per year: $2 billion per year from this change; 200,000 jobs from this; 20 petrochemical plants, as well as plants that make hair sprays, pipes, etc. Charles Majomi, a gas expert, told BusinessDay in reaction that the significance of the discovery was that the plan would create de-risked factors because the existing assets would remove the risk impediments that make new plants risky. He said the expected investment would be more credible, time to establish a new plant would be shorter and create about 2 million jobs in less than a decade, just by enacting a policy without the FG spending any dime.

Dickson draws global attention to negative crude oil impact in Bayelsa SAMUEL ESE, Yenagoa

ayelsa State government has drawn global attention to activities of international oil companies operating in the state by launching a major investigation into their impact on the people and the environment. Launching the investigation in Yenagoa on Wednesday under the aegis of Bayelsa State Environmental Degradation Commission of Enquiry, Governor Henry Seriake Dickson said oil companies operate with impunity in the state. “I established the Bayelsa State Environmental Degradation Commission of Enquiry to hold oil companies to account, to shift the mind-set

of multinationals operating in Bayelsa and to inspire a sustainable change,” the governor said. He also set up a commission of enquiry comprising mostly international figures led by Archbishop of York, John Sentamu, former Under-Secretary General of Humanitarian Assistance at the United Nations, Valerie Amos, and former Ghana President, John Kuffor. However, Kuffor was not present at the ceremony held inside the Bayelsa State Executive Council Chambers in the Government House, Yenagoa. The commission is expected to investigate “the environmental and human damage caused by operations of oil companies as a result of oil spills, and will analyse legisla-

tion governing the operation of multinational oil companies in Bayelsa State and in Nigeria more broadly.” It will also make recommendations for a new legal framework for more accountability and more specifically, an agreed global standard of behaviour by the oil companies comparable with their operations in “Norway, Scotland or the USA.” The governor gave the commission nine months to conclude its investigations and submit its report. Chairman of the commission and Archbishop of York, John Sentamu, in his response, said the issues raised were crucial to a prosperous future for the people of Bayelsa State, their environment, Nigeria and other oil-produc-

ing nations. “This Commission will investigate the human and environmental impact of multinational oil company activity and is crucial to the prosperous future of the people of Bayelsa and their environment, Nigeria and hopefully to other oil-producing nations”. Other members of the commission are Engobo Emeseh, head, School of Law, University of Bradford; Roland Hodler, professor of Public Economics, University of St. Gallen; Michael J. Watts, professor of Geography, University of California, Berkeley; Kathryn Nwajiaku-Dahou, former head of secretariat at OECD; Daniel Onifade, a forensic scientist, and Anna Zalik.

gusto & Co, a credit rating agency, has projected a slower growth for the Nigeria insurance industry in 2019 on the back of expected slowdown in economic activities in this election year. “Our forecast for insurance industry in 2019 is a 10 percent growth in Gross Premium Income (GPI),” Ada Ufomadu, a Senior Financial Institutions Analyst at Agusto & Co, told BusinessDay on Tuesday. This is however two percentage points less than the 12 percent reported by the industry in 2018. Explaining the reason for the lower expected growth, Ufomadu said it is because, “like we all know 2019 is a political year. Although it is a reelected administration, it will take a while for them to settle in and we think it may slow down a bit on In 2018, the Nigeria insurance industry generated premiums of about N448.6 billion, which reflected a 12 percent growth year-on-year. With the 10 percent growth projection by Agusto & Co the Industry’s GPI is expected to be at N493.4 billion in 2019. While the Lagos-based rating agency is optimistic that there will be a growth, it is

also sure the political environment may slow that growth down. “However, growth will come from a slightly better operating environment driven by an improved operating climate as well as opportunities in oil & gas (particularly refinery) and engineering considering the Dangote projects that are ongoing - the refinery and fertilizer manufacturing plants. At about 40 miles east of Lagos, on a more than 6,700 acres of former swampland bound by a lagoon and the Atlantic Ocean, lies the Dangote fertilizer plant valued at $5 billion which is in the final phase. Next to it is the construction of a vast oil refinerya $12-billion project, which, according to Africa’s richest man, Aliko Dangote, will be ready by 2020. “By 2020 I will finally dispatch oil,” he said in January. With the volume of GPI reported in 2018, the penetration ratio of Nigeria insurance industry stands at 0.5 percent, one of the lowest in Africa compared with countries like South Africa (17%), Kenya (2.8%) and Ghana (1.1%). According to industry sources, the low penetration ratio presents huge opportunity for growth and as such the sector is tagged as one in a growth phase.

South, Middle Belt leaders demand reversal of appointment of new DG of NESREA INNOCENT ODO, Abuja

outhern and Middle Belt leaders have demanded the reversal of the appointment of Aliyu Jauro as the new director-general of the Nigerian Environmental Standards and Regulatory Agency (NESREA), describing it as another case of lopsidedness and sectional appointment typical of President Muhammadu Buhari. The leaders in a statement on Thursday signed by Yinka Odumakin for the Southwest, Chihozie Ogbu for the Southeast, Bassey Henshaw for the SouthSouth and Isuwa Dogo for the Middle Belt, noted that while they were not questioning the prerogative of President Muhammadu Buhari to appoint Nigerians of his choice into top government positions, they expressed their shock and surprise that, this new case took the same sectional and lopsided nature. “We put on record that Professor Jauro, a graduate of 1997, is replacing Dr. Lawrence Anukam, a thorough professional with over 30 years of experience. Dr. Anukam was not afforded the opportunity of second

term usually extended to high performing Heads of Parastatals and Agencies. Even more surprising, the Acting Director General, Mrs Miranda Amachree, being the most senior was also sideline,” they said. “It is sad that this appointment, the first after the Independent National Electoral Commission (INEC) declared President Buhari the winner of the Presidential elections, has taken same old pattern of exclusion and discrimination against some Nigerians as if they are second-class citizens in their own country,” the statement added. The leaders pointed out that this appointment was clearly at variance with the recent promise of President Buhari to run an inclusive government. “Is that how he wants to start inclusivity at the beginning of second term while sectionalism and narrowness reign till May 29 or the promise is a deception?” they asked. “We demand the immediate reversal of the appointment of Jauro and request the consideration of either the substantive DG, Dr. Anukam or the most senior director, Mrs Amachree,” the statement read.

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Monday 01 April 2019

Gbajabiamila declares for House of Reps’ Speaker ...as Bukar-Ibrahim, Monguno, Ado-Doguwa withdraw from race James Kwen, Abuja

emi Gbajabiamila, Majority Leader of the House of Representatives has declared the intention to contest for office of the Speaker of the 9th session of the House Representatives expected to be proclaimed June 6. Gbajabiamila who represents Surulere 1 Federal Constituency of Lagos State made the declaration Sunday at the Transcorp Hiltion, Abuja where he promised to use his 16 years of experience as Member of the House and 12 years as a Principal Officer to strike a balance between the all arms of government without compromise for the progress of the Nigerian nation. In his declaratory statement the former Minority Leader turned Majority Leader said, “I stand here today before you hopefully as a symbol of encouragement and a point of contact for many young men and women out there who believe that with hard work and commitment whatever the mind can conceive is possible. “As a beacon of hope and faith and

a testimony of the endless possibilities that abound in this great country. That you can be whatever and whoever you want and with focus, hard work and perseverance, the sky can sometimes be the beginning. “I stand before you as a man with an abiding faith in the greatness of our country. Let no one tell you otherwise. We are not where we ought to be considering the abundance of talents and the blessing from God however I rest assured that slowly but surely we will get there. “It is because of this unshakeable belief in the potential and genius of Nigeria and the majesty of our democracy, that I today after wide consultations with my colleagues, friends, family, Party and stakeholders and in total submission to the will of God, today formally declare my intention to seek the position of the office of the Speaker of the 9th Assembly and offer my service to the nation in this capacity. “As many of you are aware, I ran for the same office just four years ago but it was not to be. Well four years has come and gone and now we have come full circle. “With all sense of humility, I

Femi Gbajabiamila

seek this office with a rich legislative background and pedigree and having just won a historic 5th term mandate to the House. I have in the last 16 years dedicated my life to the service of my constituents and Nigeria. I have studied and understood the intricate workings of the legislature, a critical arm of government and I have come to understand the imperative of striking a delicate balance in the relationship between the Executive and Legislative arms of government without compromising the latter’s independence. Indeed there is an essential need for a symbiotic relationship between all arms and all tiers of government if we are to make progress in nation building.

“In these 16 years I have been a principal officer for 12 years. I have occupied the office of leader of the opposition and successfully my party from opposition to majority in the House and thereafter assumed the position of house leader, placing me in a uniquely advantageous position of understanding the nuances and intricacies of this very critical arm of government and the need to for its independence and at the same time interdependence with the executive. “It is this wealth of experience and a burning desire for good governance that I bring to the table. A desire to take the legislature to the next level standing tall and shoulder to shoulder with the most advanced legislatures world over. “I have spent the last 4 years in doing my best to stabilise the House, whilst exploring and studying now how best we as legislators can unleash the full potentials of this country. I have taken copious mental and physical notes and its time for implementation. “I have tagged my campaign NATION BUILDING, A JOINT TASK because the task is onerous and can only be completed if we all come

together, in line with the legacies of our forebearers and the labour of our heroes past. Our Speakership campaign logo embodies logos of all political parties represented in the House (9thAssembly) and I humbly invite each one of them to join me so together we can build a more perfect union. I seek the buy-in of all my colleagues, political patties and Nigerians to this Joint Task. “I seek the office of the Speaker to bring our tendencies together and unite us as country. I seek the office of the Speaker to bring governance even closer to the people. I seek the office of the Speaker to mentor the next generation. I seek the office of the Speaker so I can use the bully pulpit to galvanise Honourable members to make life more abundant for every Nigerian irrespective of tribe, religion background or political persuasion. “There is so much work to be done by way of legislation in many areas of our life including but not limited to education, health, power, infrastructure and alleviation of poverty. I believe many of these deficits can be addressed through meaningful and impactful legislation.

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Theresa May weighs fourth vote on Brexit deal Pro-EU MPs seek to coalesce around alternative ways forward JIM PICKARD

heresa May is considering a fourth attempt to bring her EU withdrawal agreement back to the House of Commons this week as pro-EU MPs seek to coalesce around alternative ways forward. The British prime minister is hoping to persuade Conservative rebel MPs that if they do not fall in line — in a vote that could come as early as Tuesday — Downing Street will be forced into an even softer Brexit. Mrs May will hold phone calls with cabinet ministers on Sunday after her Brexit deal was voted down for the third time by the relatively narrow margin of 58 votes. In a bid to break the deadlock at Westminster, Mrs May’s team is also dangling the threat of a general election in front of Tory MPs. But that plan, which would require the backing of two-thirds of the members of the House of Commons, drew ire from Conservative MPs, with Alan Duncan, the Foreign Office minister, telling the Observer newspaper: “If we have a general election before Brexit is resolved, it will only make things worse.” A new poll from research group Delta on Sunday put Labour five points ahead of the Conservatives at 41 to 36 per cent. Mrs May is also struggling to contain growing pressure from Eurosceptic Tories, after 170 MPs — including 10 cabinet ministers —

wrote to her demanding a departure from the EU by May 22 “with or without a deal”. Unless Mrs May’s deal is approved by the Commons, the UK must decide in the next two weeks whether to ask for a long delay to Brexit — which would involve holding elections to the European Parliament. The only remaining alternatives would be to leave the bloc without an agreement or to revoke the formal Article 50 exit procedure altogether. Mrs May said Britain would need an “alternative way forward” after her deal was defeated on Friday, the day originally set for Brexit. The EU has postponed the UK’s exit until April 12 to allow Britain try to resolve the impasse over her deal, which MPs had previously rejected by 230 votes in January and by 149 votes this month. In a bid to test support for rival plans, backbench MPs will hold a round of “indicative votes” on Monday. MPs rejected all eight alternative options in a previous attempt to hold such votes last Wednesday. But the rival plans that won the most backing were a customs union with the EU and a second referendum on any deal. Both are backed by Jeremy Corbyn’s Labour party. MPs behind a softer Brexit are hoping that they can win over the 35 MPs in the Scottish National party. In the votes on the Brexit alternatives last week the SNP backed only a second referendum.

Saudis hacked Amazon chief’s phone, says security consultant Investigator accuses Riyadh of launching campaign against Jeff Bezos SHANNON BOND

security consultant for Jeff Bezos has accused Saudi Arabia of accessing the Amazon chief executive’s phone and obtaining private information about the world’s richest man. Gavin de Becker, Mr Bezos’s security chief, said in an article on the Daily Beast website that the Saudi government had launched a campaign against Mr Bezos, who also owns the Washington Post, following the newspaper’s coverage of the killing of columnist Jamal Khashoggi. “Our investigators and several experts concluded with high confidence that the Saudis had access to Bezos’ phone, and gained private information,” wrote Mr de Becker. He said he had turned evidence over to federal officials but did not describe that evidence or give further details of his claims. Mr de Becker said he had reached his conclusion about Saudi involvement following an investigation into how the National Enquirer obtained leaked messages between Mr Bezos and Lauren Sanchez, a woman with whom the Amazon chief was having a relationship. In February, Mr Bezos accused the tabloid’s parent com-

pany, American Media Inc, of “extortion and blackmail”. He said the tabloid had threatened to publish intimate photos and text messages between him and Ms Sanchez unless he called off Mr de Becker’s investigation and issued a statement saying AMI’s coverage was not politically motivated. In his article on Saturday, Mr de Becker said AMI had demanded that he publicly state “that my investigation had concluded they hadn’t relied upon ‘any form of electronic eavesdropping or hacking in their newsgathering process’.” Mr de Becker claimed the publisher had also asked him to say that the story was not “instigated, dictated or influenced in any manner by external forces, political or otherwise”. However, he said it was “unclear to what degree, if any, AMI was aware of the details” of the Saudi government’s alleged accessing of Mr Bezos’s phone. Mr de Becker claimed the Saudi government “has been very intent on harming Jeff Bezos since last October”, due to the Post’s “relentless coverage” of the death of Khashoggi, a critic of the kingdom. The Saudi embassy in Washington, AMI and Amazon did not respond to requests for comment.

Theresa May

The soft Brexit supporters hope to win a majority for a single plan before bringing forward legislation on Thursday to compel Number 10 to accept it. Number 10 is considering trying to revive Mrs May’s deal by pitching it in a Commons run-off against the preferred alternative. One critical decision will be whether Number 10 allows cabinet members to take part in Monday’s indicative votes having forced top ministers to abstain last week. Brandon Lewis, chairman of the Conservative party, said at the weekend that the government did

not support any of the rival plans. But David Gauke, work and pensions secretary said Number 10 had to listen to Parliament. “I would rather leave the customs union but we also have to recognise that my party does not have the votes to get the manifesto commitment through the Commons. Sometimes you do have to accept your second or third choice to avoid an outcome you think would be even worse,” he told the BBC’s Andrew Marr Show. “I don’t think it’s sustainable to say we’ll ignore Parliament’s position and leave without a deal.”

If Number 10 puts forward its original deal again, it faces an uphill struggle to win over the remaining rebels, made up of 28 hardcore Eurosceptics and six MPs pushing for a second referendum. Northern Ireland’s Democratic Unionist party, which provides Mrs May’s minority government with a majority in parliament, insists it will not back the deal. John Bercow, the Speaker of the Commons has also warned he will not allow further votes on the same motion unless the substance is significantly different.

Joe Biden denies claim of inappropriate touching Former vice-president is considering 2020 presidential campaign JAMES POLITI

oe Biden, the former US vicepresident who is considering a 2020 run against Donald Trump, denied on Sunday that he had made inappropriate sexual advances to a female state lawmaker at a 2014 political campaign stop in Nevada. Lucy Flores, who was 35 years old at the time and running for lieutenant-governor, wrote that Mr Biden planted a “big slow kiss” on the back of her head after putting his hands on her shoulders, leaning in and smelling her hair. “I was embarrassed. I was shocked. I was confused,” Ms Flores wrote in a lengthy article published in The Cut. “I wanted nothing more than to get Biden away from me,” she wrote about the episode five years ago. Mr Biden, who is 76 and considered to be a leading contender for the Democratic presidential nomination, said he did not remember acting improperly. “In my many years on the campaign trail and in public life, I have offered countless handshakes, hugs, expressions of affection, support and comfort. And not once — never — did I believe I acted inappropriately,” Mr Biden

said in a statement on Sunday. “If it is suggested I did so, I will listen respectfully. But it was never my intention,” he added. According to a Quinnipiac University Poll, Mr Biden is the frontrunner for the Democratic nomination to challenge Mr Trump’s control of the White House next year, with 29 per cent of Democratic voters favouring the former vice-president. Bernie Sanders, the Vermont senator, was in second place, with 19 per cent, while Beto O’ Rourke, the Texas congressman, was in third place with 12 per cent. Mr Biden has not yet formally thrown his hat in the ring. Supporters say his experience, moderate views and ability to appeal to white working class voters in pivotal Midwestern swing states such as Pennsylvania would make him the ideal contender. However, critics say a Biden candidacy would fail to elicit the enthusiasm that is needed to beat Mr Trump within the Democratic base, which has shifted leftward in recent years and is looking for a fresh face to win the White House. The allegations of inappropriate sexual behaviour risk inflicting damage on Mr Biden’s prospects

given increased sensitivity to such accusations among Democrats in the wake of the #metoo movement. “I believe Lucy Flores. And Joe Biden needs to give an answer,” Elizabeth Warren, the Massachusetts senator who is running for the Democratic nomination, said on Saturday at a press conference. Kellyanne Conway, a top adviser to Mr Trump, told Fox News Sunday that Mr Biden “has a big problem here because he calls it affection and handshakes [but] his party calls it completely inappropriate.” Dick Durbin, the Illinois Democratic senator, was more lenient, saying that the allegations needed to be taken “seriously and with respect” but one accusation was not “disqualifying”. In his statement, Mr Biden also pledged to be a fierce advocate for women’s rights if he were to be elected, in contrast to Mr Trump and his administration. “I will fight to build on the work I’ve done in my career to end violence against women and ensure women are treated with the equality they deserve. I will continue to surround myself with trusted women advisers who challenge me to see different perspectives than my own,” he said.

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FT Lira resumes slide in face of Turkey’s bid to prop up currency

Blackouts leave South Africa’s poor struggling for hope Power cuts cast a gloomy spell over the townships as the election nears

Currency drops as much as 2% just two days before key elections

JOSEPH COTTERILL

LAURA PITEL , ADAM SAMSON AND EDWARD WHITE

urkey’s currency resumed its slide on Friday with just 48 hours to go until polling stations opened across the country in critical local elections. The currency dropped as much as 2 per cent as the London trading day began, to a low of TL5.6579 per US dollar. It came after a fall of 4.5 per cent recorded during a tumultuous trading day on Thursday. Recep Tayyip Erdogan, the Turkish president, has sought to keep the embattled currency steady over the past week in the run-up to Sunday’s polls. The fight to retain control of some of Turkey’s biggest cities has been challenging for the Turkish president and his ruling party given a backdrop of high inflation and rising unemployment triggered by last year’s currency crisis. Eager to avoid adding a plunging lira to the list of voter gripes, he has railed against “speculators” and blamed the country’s economic woes on an attack by a shadowy alliance of outside powers. At the same time, Turkish officials have stood accused of adopting a series of unconventional tactics to support the currency as polling day has loomed into view. Foreign bankers claimed at the start of the week that Turkish lenders were squeezing the supply of lira to overseas counterparts — a claim denied by the Turkish banking association — and selling dollars. Turkey’s central bank has burnt through a third of its net foreign currency reserves this month, a move seen by investors as a bid to support the defence of the lira. “Such a rapid loss of reserves is consistent with that,” said one London-based banker. The measures succeeded in strengthening the currency, pushing the lira as high as 5.3 to the dollar. But it wrought havoc with Turkish stocks and bonds. “The strange market situation during the last days can leave visible effects on lira exchange rates,” warned Ulrich Leuchtmann, analyst at Commerzbank. Liquidity had returned to a key foreign London exchange market on Thursday as authorities appeared to unwind a bid to prevent short selling. The offshore overnight swap rate, which sets the cost of exchanging foreign currency for lira over a set period, soared as high as 1,200 per cent earlier this week, but had eased back towards its normal levels of around 35 per cent by midday on Thursday. “With lira liquidity gradually improving, after it evaporated completely earlier this week, market participants have the opportunity to express their disappointment that Turkey prevented the FX market from functioning properly,” said Piotr Matys, an emerging markets currency strategist at Rabobank.” Turkey’s finance minister, Berat Albayrak, told the broadcaster NTV on Thursday night that Turkish stocks and the bond markets would normalise in the days ahead. A Turkish official told the Reuters news agency: “We made it clear that this process would not continue for long. It was a step against a speculative attack and it has ended. We do not expect a new speculative attack.”

Monday 01 April 2019

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US ripe for Russian meddling in 2020 vote, experts warn

Electoral system security has not improved since Moscow’s alleged interference in 2016 COURTNEY WEAVER AND KIRAN STACEY

n the wake of Robert Mueller’s investigation into Russian interference in the US electoral system, experts warn the nation is just as exposed as it was in 2016, raising new concerns about the 2020 presidential election. More than two years after intelligence agencies exposed Moscow’s efforts to exploit weaknesses in the US democratic system, technology companies and state governments have yet to come to terms with a foreign power’s meddling in domestic affairs of state. When it comes to the 2020 presidential vote, the US faces many of the same vulnerabilities that made its electoral system a prime target In 2016 — and perhaps some new ones, said Doug Lute, a former American ambassador to Nato and retired Army lieutenant-general who has taken up the cause of US election security. “We are more prepared in the sense that we are more aware. But we are little better prepared in terms of actual security,” said Mr Lute. He noted that Russia’s strategy in 2016 resembled an age-old Russian military doctrine: to attack on a broad front, assess strengths and weaknesses, then prepare to reattack vulnerabilities — a potentially dangerous scenario for 2020. “My sense is 2016 looks, in retrospect, like a broad-front probing effort by Russian authorities to learn about our voting system, to uncover our vulnerabilities and then take those findings back into the central Russian system where they can assess their next move,” said Mr Lute. “My guess is they learned a lot in 2016, so if they intend to play us again they will come back with more sophisticated attacks in 2020.” According to the justice department’s summary of Mr Mueller’s report there were two main efforts by Russia to influence the 2016 election. The first involved a Russian organisation called the Internet Research Agency, whose aim was “to sow social discord, eventually with the aim of interfering with the election”, according to the summary. The second revolved around

computer hacking, specifically the efforts of “Russian government actors” to obtain Clinton campaign and Democratic party organisation emails and disseminate them through intermediaries, including WikiLeaks. Ahead of the 2018 midterm elections, Congress allocated $380m to safeguard the US voting system from cyber security attacks. While top US officials cited attempts by Russia to interfere in that vote, the absence of any large-scale efforts along the lines of what happened in 2016 has caused some to wonder whether Russia largely “sat out” the midterm vote, and is holding its fire. J Alex Halderman, a professor at the University of Michigan who has studied the vulnerabilities of voting machines, cited a bipartisan Senate investigation which found that Russia in 2016 had gained access to voter registration databases in many states. While those states found no evidence that Russia had used that access to manipulate the voter registration data — altering a voter’s name or street address, for instance, so that it no longer matched the voter’s ID — the fact that they had secured that access was troubling, said Mr Halderman. “Had they done that, had it gone undetected, it would have caused major chaos on election day. We were lucky that Vladimir Putin chose to not pull the trigger,” he said, referring to the Russian president. “Unfortunately, in a lot of the country there are pieces of election infrastructure where that’s still the case and where we don’t have sufficient technology to protect and it’s really a question of whether our adversaries choose to strike.” Mr Halderman noted that about 40 US states still used election technology such as voting machines that were a decade or more out of date. Many of those states were not applying software patches. Perhaps most concerningly, about a dozen states still make widespread use of machines that do not have any paper trail, he added. Technology companies, however, insist they are better prepared than they were in 2016 to deal with outside interference in elections. Facebook says it is now able to remove millions of fake accounts

every day thanks to advances in artificial intelligence. The social media company has also partnered with independent fact-checkers to verify articles posted on its platform. If the fact-checkers deem something false, it is less likely to appear on users’ news feeds, though it will not necessarily be blocked altogether. Twitter has tightened its rules on fake accounts so that it can now remove users who use stolen avatars or biographies. YouTube is also concerned about fake news spreading on its platform, especially through videos advancing conspiracy theories. The site has hired an army of users from around the country to help it decide what it should and should not accept on the platform, but admits it has a problem with videos that push its rules without breaking them. Videos that suggest certain conspiracy theories without actually promoting them, for example, are allowed to remain up, but are now less likely to feature as recommendations for users. Problems remain. Two reports delivered to Congress last year found that the level of Russian interference had been worse than previously thought, and warned that the technology industry was still not being open about the scale of the problem. The reports also found that interference was shifting. Russian cyber agents, according to the study by New Knowledge, a cyber security company, were increasingly targeting Instagram, where users engage with and share images more than any other platform. Instagram says that, in response, it is now providing users with more information about accounts, such as when they were set up and where they are located. Another problem is that in their efforts to remove disinformation, some companies risk running into different political controversies. Google, for example, has been criticised by several prominent Republicans for the way in which it deems certain news outlets to be more trustworthy than others, which some in Congress believe is being used as a way to suppress conservative voices. The company denies this.

or many South Africans caught up in severe rolling blackouts, it was the sights of dormant factories, blank traffic lights and darkened shopping malls in Africa’s most industrial nation that focused their anger. For Nomthandazo Moloi, 39, it was cold chicken. As power stations broke down and blackouts intensified last week, Ms Moloi and other white-aproned workers at Mamma’s Chicken were unable to keep lunchtime fare warm for customers in Kliptown, a suburb of Soweto, the sprawling township near Johannesburg. Business suffered. “Even the boss was here, asking how he was going to pay us because of load-shedding,” Ms Moloi said, using the term for the cuts imposed by Eskom, the state power monopoly responsible for almost all South Africa’s electricity. The utility is buckling under $30bn of debt and a fleet of ageing and creaking power plants. “This month it’s very bad. I’m asking myself how I’m going to stay alive. We are just here working for our kids,” she said. Far more than fried chicken is at stake in the crisis that has engulfed Eskom. Cloud-data centres and advanced car-assembly lines in Africa’s most high-tech economy are being held hostage by failures to maintain the ageing coal plants, and to finish giant new ones, Medupi and Kusile, which are bedevilled by faults and at a cost of $20bn are over-budget by about $10bn-$15bn. The failures reflect epic corruption at the entity under former president Jacob Zuma. Ms Moloi’s story, however, highlights how the blackouts are received within the heartlands of the ruling African National Congress among South Africa’s poorer black majority — weeks before an election. President Cyril Ramaphosa, a former trade union leader turned tycoon, had recharged the ANC’s fortunes last year when he turfed out Mr Zuma and promised to undo graft. But Eskom’s troubles are so deep that blackouts will probably recur until polling day. A brief respite this week was due to expensive diesel back-up power. Power plant breakdowns have still not received full expert diagnosis. Mr Ramaphosa has promised to break up Eskom in the longer term to rescue it, but that will do little to keep the lights on now. And his charms are fading for Ms Moloi. “I don’t feel like making my cross [on the ballot paper],” she said. “He’s the one on top at the moment. They are all arguing about Eskom. It’s always somebody else [to blame] . . . but this is affecting all of us.” Outside the shop, a crinkled poster of Mr Ramaphosa implores voters: “Let us grow South Africa together.” For the better-off in the world’s most unequal society, the blackouts have been annoyances, leaving nightlife spots and traffic lights in darkness in the well-todo suburbs far from Soweto. To mitigate the outages, the richest can install home generators or solar panels.

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Equities gain and bonds hold their nerve on trade talk optimism Ex-McKinsey managing director still has a bone to pick with Lloyd Blankfein MICHAEL HUNTER AND ALICE WOODHOUSE

tocks climbed on Friday on hopes for progress in US-China trade talks that resumed in Beijing, while the rally in sovereign bonds eased. The levels reached by global equities in their wider rally for 2019 look dependent on signs of resolution in the trade war between the world’s two biggest economies. Concern at the darkening outlook for global growth has drawn investors back into government bond markets over the last week, pushing yields lower. Optimism on the trade talks helped steady the government debt market on Friday. As investors moved out of the Treasuries, a rise of 2 basis points took the 10year benchmark yield back over 2.4 per cent to to 2.4103 per cent. It surrendered the 2.4 per cent level on Monday for the first time since December 2017, when worries about global growth reverberated across markets. According to futures trade, Wall Street’s S&P 500 was expected to add 0.4 per cent, having closed up 0.5 per cent overnight, leaving

it on course for its best quarter since 2009. The dollar slipped after US inflation data narrowly missed forecasts and hit an 11-month low. The index tracking the world’s reserve currency fell 0.2 per cent to 97.044, having been up by 0.1 per cent beforehand. European equities brightened, with gains of 0.8 per cent for Frankfurt’s Xetra Dax 30 and 0.3 per cent for London’s FTSE 100, which outperformed as the pound rebounded. The region-wide Stoxx 600 added 0.5 per cent, helped by a rise of 1.7 per cent for the mining sector, which is sensitive to sentiment on global growth. China’s CSI 300 rallied 3.9 per cent. The gain takes the mainland index up 28 per cent in the first three months of the year, putting it on track for its best quarterly performance since the end of 2014. Sterling picked up as the number of MPs pledging support for the third vote on Theresa May’s Brexit deal grew, although it remained towards the bottom of its established trading range between $1.30 and $1.33. The UK currency added 0.4 per cent to $1.3089, having hit $1.30 earlier, level it has moved under only once in March.

Lyft’s co-founders open Nasdaq trading after IPO raises $2.3bn Ride-hailing company lists in the largest US technology debut since Snap in 2017 SHANNON BOND

yft kicked off its first day as a public company on Friday at a former car dealership in Los Angeles, where its co-founders rang the bell to open trading on the Nasdaq more than 2,000 miles away. The US ride-hailing company’s shares will begin trading later on Friday, after its initial public offering raised $2.3bn on Thursday, valuing the company at $24bn on a fully diluted basis. It was the largest US technology IPO since Snap in 2017, boosting hopes for a wave of listings by the most highly valued private companies in Silicon Valley, including Pinterest, Slack, Airbnb, and the biggest so-called unicorn of all, Uber. Lyft beat its arch-rival to market, but Uber is close behind. The company is preparing to unveil its own IPO as soon as next month, according to people familiar with the matter. Investors and bankers say it could be valued at more than $100bn in one of the biggest public offerings in US corporate history. Lyft co-founders Logan Green and John Zimmer said the decision to take the company public had been driven by the company’s internal readiness, not Wall Street enthusiasm. “We thought the moment to do it was when we could go public without changing the day-to-day way we ran the company,” Mr Zimmer, Lyft’s president, told the Financial Times in an interview. “It happened to be that this a good moment in the market to do so.” He said the response was a validation for Lyft’s long-term goal of replacing private cars with a shared and, eventually autonomous, fleet. “Investors were excited to be part of this story because they saw there is

a massive shift coming from owned vehicles to transportation as a service,” he said. “We’ve seen this play out in entertainment with Netflix and Spotify. They agree with us that there’s never been a market this large make that shift.” Investors flocked to Lyft despite its steep losses since it was founded in 2012 as a spin-off of Mr Green and Mr Zimmer’s first venture, a Facebook app for long-distance carpooling. In its marketing roadshow over the past two weeks, the company pitched its rapid growth in revenue and market share, as well as the expansion of the overall ride-hailing market, as a can’tmiss investment opportunity. Lyft and Uber have battled each other in the US from their earliest days, driving up losses. But Lyft took advantage when Uber was rocked by a series of scandals in 2017, boosting its market share to about 30 per cent today, according to research group Second Measure. It still spends heavily, however, with losses rising 32 per cent to $911m last year as revenue doubled to $2.16bn. Lyft sold 32.5m shares at $72 each, the top end of its targeted range. The offering was “meaningfully oversubscribed”,according to a person familiar with the matter, leading the company to increase both its price range and number of shares on sale. JPMorgan Chase led the listing with Credit Suisse and Jefferies. Rather than travelling to Nasdaq in New York, Lyft marked the occasion in Los Angeles, the hometown of chief executive Mr Green, who said the city’s notorious traffic had convinced him car ownership is a “failing model” and inspired his interest in rethinking transportation. Los Angeles is the ride-hailing app’s largest metropolitan market.

10-year Treasury eyes best March quarter in three years PETER WELLS

he sharpest rally for US government bonds in 14 months have put Treasuries on course for their best March quarter since 2016. The rise in bond prices, which has subsequently pushed yields lower, comes in the wake of the Federal Reserve leading a monetary policy U-turn among global central banks and expectations for weaker growth in many of the world’s biggest economies. Despite a slight pullback in the rally on Friday, the yield on the benchmark 10-year Treasury has declined about 27 bps since the

start of the year, which positions it as the biggest March quarter fall since 2016, when the yield fell by nearly twice that amount. That also adds up to a substantial rally for bonds over the past six months, given 10-year yields fell 36.5 bps in the December quarter as a savage stock market sell-off had investors plumping for the relative safety of government paper. The closing stages of March have seen some notable moves in bond markets. On March 22, gloomy German economic data triggered a rally in Bunds, driving the yield on the German 10-year below zero for the first time since 2016.

That triggered a big move on the opposite side of the Atlantic, with the 10-year US Treasury yield closing almost 10 basis points lower on that same day. Two days earlier, when the Fed said it no longer foresaw itself raising interest rates in 2019, the 10-year yield dropped 8.6 bps. The rally hit a peak on Wednesday, with the 10year yield hitting a 15-month closing low of 2.3720 per cent. Those lurches resulted in one indicator of a coming recession flashing red, as the gap between yields on 3-month T-bills and 10year Treasuries last week turned negative for the first time since 2007.

Clamour for bonds highlights looming market tension With inverted and sub-zero yields, investors are clearly looking beyond the stock rally MICHAEL MACKENZIE

s the first quarter ends, equities are sitting on solid gains even as a rally in government bonds has left yields in Germany negative for the first time since 2016. The decline in yields has quickened this week, allowing Germany to sell 10-year Bunds with a negative yield. In the US, the 10-year Treasury yield has fallen below that of the three-month Treasury bill, a warning that the clock is ticking on a US economic expansion that, by sheer length, almost rivals the fabled run of the 1990s. There is a legitimate debate as to whether global economic weakness is temporary or evidence that the expansion since the financial crisis is truly waning. But the message the yield curve has started to send in recent days is hardly comforting. This debate previously played out in 2015 and early 2016. Then, hefty fiscal stimulus from China, allied to bond-buying from the Bank of Japan and the European Central Bank, managed to end the soft patch. Donald Trump’s election, and the tax cuts that followed, added momentum to global growth that eventually peaked early last year. The double-digit gains for many equity markets this year have been helped by the signals sent by central banks — still struggling to hit their inflation targets — that they

are willing to ease policy, or, in the case of the Federal Reserve, sit on the sidelines. It has had the effect of loosening financial conditions, helping equities and credit. Stock markets are fairly forgiving about weak earnings growth, or even a fall in profits, so long as there are grounds for an eventual bounce. If the global economic data improves in coming months and Washington and Beijing strike a trade deal, then financial markets could be soothed for a while. But even in such a scenario, do not expect a dramatic reversal of the trend for falling bond yields. It is notable that the decline in bond yields has been across developed economies, suggesting a slowing China is leaving a mark. Two of the bond markets spearheading the move lower in yields have been Canada and Australia. While the housing markets in both countries are under pressure, their role at the vanguard of the bond rally suggests that Beijing’s stimulus is a pale shadow of past efforts. The volume of negative-yielding debt rising back above the $10tn mark also makes the Treasury market a magnet for investors seeking higher yields. There is an argument that this is distorting the bond market, and that 10-year yields are too low given the US economy’s growth prospects for 2019. The fact that falling bond yields is a global phenomenon also eases

the selling pressure on the US dollar, as we have seen in recent weeks. A firmer reserve currency tightens financial conditions too, hardly a welcome development for US companies given the exposure of S&P 500 blue-chips to the global economy. With the Fed stuck on policy pause and still trimming its balance sheet until September, at some stage — and perhaps soon — the equity market may start fretting about “tight” policy, particularly if the dollar appreciates further. All of which is central to the debate over the significance of the 10-year yield sliding beneath the rate for a three-month bill. It certainly sends a signal to Fed officials that policy is too tight. As recently as October, the 10-year note yield stood 100 basis points above the implied three-month bill yield, which was cited by many as a good reason for not worrying about the risk of a recession. Those questioning the meaning of the first inversion since 2007 will be silenced if it becomes sustained and deeper. The bond market is not forecasting a recession; it is simply flagging a higher risk of one. Clearly the market turmoil of late last year showed the limits of the world’s most important central bank’s effort to tighten policy. The recent clamour for sovereign bonds is also a sign that tension is building across markets.

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ANALYSIS

Megadeals keep M&A market bubbling despite slowdown fears The $927bn of deals in quarter marks second strongest start to year since millennium JAMES FONTANELLA-KHAN, ARASH MASSOUDI AND DON WEINLAND

A Wirecard’s problem partners Half of the German company’s revenues come from partners but at some there is a mismatch with the reality on the ground DAN MCCRUM AND STEFANIA PALMA

gostin Antonio was mystified. A retired seaman living quietly with his extended family of 12 in a suburb of the northern Philippine city of Cabanatuan, he had no idea why a company called ConePay International had used his address. But the name did ring a bell. Avoiding the laundry drying in the front porch and stepping over his grandchildren playing at the kitchen door, Mr Antonio disappeared back into his typical single-storey home, emerging a few moments later with a large white envelope. Addressed to ConePay, the letter had arrived in the mail about a year ago, a single missive from an entity called Wirecard Bank. It was a 10-page set of statements for empty German bank accounts held in a string of currencies — Australian, Canadian and Singaporean dollars and British pounds. Mr Antonio didn’t know anything about Wirecard Bank either. “This house was my mother’s. It’s been with the family for 50 years.” It was an unlikely location for an international electronic payments business. ConePay is one of more than a dozen curious companies identified during an Financial Times investigation which, on paper at least, appear to have done substantial business with Wirecard, a digital payments group that ranks as an elite German blue-chip institution and one of the most successful fintech businesses in Europe. Wirecard often encounters online businesses for which it does not wish to process payments due to network payment rules, because it lacks the appropriate licences or other potential risks. The clients are referred instead to so-called “third-party acquirers”, which share processing fees with the German group as commission. Known internally as “referring”, it is by some distance Wirecard’s largest business line. The FT has been told by whistleblowers that at the start of 2018 it was expected to contribute half of the €2bn in worldwide sales Wirecard forecast for that year. The company confirmed the magnitude of such business, which it said was declining. It said nearly half its transaction volumes originate from countries where it does not hold the necessary payments licences, so it partners with “more than 100 processors, acquirers, issuers and local service providers” which do. Wirecard said every multinational payments processor relies on such networks, and its accounting treatment of the resultant revenues and costs is consistent with international standards. Processing payments for the murkier parts of online commerce

is highly lucrative. However, Wirecard said less than 10 per cent of its volumes “relate to lottery, gambling, dating, adult entertainment and associated business models”, and strict compliance and governance rules apply. The outsize revenue contribution of referring partnerships has not been a highlight of management commentary in recent years, as the company has explained its breakneck growth in terms of technological advances and Asia Pacific expansion. Longstanding and large commercial debts owed to Wirecard by these secret partners, revealed today by the FT, raise questions about the robustness of the sales and profits attributed to them. ConePay, incorporated at the house in Cabanatuan three hours’ drive north from the capital Manila, was the source of millions of euros in commission income accrued by Wirecard’s Singapore business in recent years — revenues that the FT has discovered often lacked the paperwork to justify them and that Wirecard’s accounts staff in the region failed to collect for more than three years. Police from Singapore’s commercial affairs department are investigating whether senior Wirecard staff have been using fake companies and doctored contracts to boost revenues artificially over several years. The probe follows a preliminary investigation last year by Singaporean law firm Rajah & Tann, which found evidence of suspected fraud, forgery and money laundering. At the end of January, the FT published details of that R&T report. Following a fall in Wirecard’s share price, it claimed manipulation by short sellers. In response, prosecutors in Munich opened an investigation into market activity and BaFin, Germany’s financial regulator, slapped a unique ban on short sales of Wirecard stock, citing risks to the economy and market stability. On Tuesday, Wirecard published its own summary of R&T’s summarised findings submitted to the company. It said a few Singapore employees may face “criminal liability”. It also said R&T “could not correlate certain payments made between business partners and Wirecard entities with agreements between them”. The company said it since had improved internal processes. Wirecard also announced that an accounting review of transactions was undertaken by an independent consulting firm. It said “the independent review made no findings of round tripping or corruption”, and that no finding had a material impact on the company’s financial results. Round tripping is the process of making money transfers in and out of a company look like revenue

derived from legitimate business. Further investigations by the FT have identified a vivid mismatch between the supposed scale of the partner businesses to which Wirecard entities have ascribed substantial revenue, and the modest reality on the ground in countries such as the Philippines. For instance, a predecessor of ConePay, Maxcone, gave as its address in 2015 what is currently an empty warehouse and office on a scruffy street in the southern Metro Manila city of Las Piñas, formerly occupied by a garage called Sam’s Autoworx and a bar called Hrai. When visited by FT reporters earlier this year, the local government office responsible for business permits knew of no payment company ever operating in its district. The registered office of two other Wirecard partners, Centurion Online Payment International and PayEasy Solutions, is found in an office building by Manila Bay, in Metro Manila’s city of Pasay. While PayEasy logos are plastered over the office, the space doubles up as the headquarters of Froehlich Tours, a bus and coach rental business that operates across the country. PayEasy and Froehlich Tours are owned by Christopher Bauer, a German former Wirecard Asia Pacific executive, and his wife Belinda Bauer, according to public filings. Centurion has made no filings since 2013. Both Bauers have represented Centurion in interactions with Wirecard. Pinned to a wall of the office was a memo to staff signed by Mr Bauer, whose Facebook profile in 2016 described him as chief executive of Froehlich Tours. He told the FT he was just an investor, and that as a board member he “does not have much to do with the day-to-day operations” of the bus company. He also denied having a managerial role in PayEasy, which he said provides payments solutions for commuter services offered by the bus firm. Wirecard describes itself as an integrated payments group which provides services such as pre-paid cards and a digital payments app. It also offers back-office support and refers business to scores of affiliated smaller companies offering payment services. What links these specific Wirecard partners in and around Manila is that their names are on stacks of unpaid bills, some lingering for years, sitting in the books of Wirecard’s accounts processing department in Singapore. Staff at Wirecard’s cash-strapped business in Singapore struggled to collect money they believed was due from ConePay and Centurion — or even produce paperwork required to justify the debts, according to whistleblowers.

flurry of US megadeals has turned the first three months of 2019 into the second strongest start to a year for dealmaking since the turn of the century. Deals worth $927bn have been agreed so far, according to data provider Refinitiv, in a clear sign that animal spirits among large companies are alive despite the looming spectre of a recession. The total is down 17 per cent from the rapid-fire start to last year, which was fuelled by the Trump administration’s corporate tax reforms. But it is up 22 per cent from the final quarter of last year, when a credit crunch and market turbulence spooked corporate bosses. The data shows the M&A bull run that commenced more than five years ago still has some room ahead of it but there are also some alarming signs, advisers said in a series of interviews. “The start of the year has been mixed,” said Anu Aiyengar, head of M&A in North America for JPMorgan Chase. “We’ve been very happy in terms of big deals but we need more deals overall.” Most of the activity has been driven by a small number of deals above $10bn. These include BristolMyers Squibb’s $90bn takeover of rival drugmaker Celgene; Saudi Aramco’s $69bn majority stake acquisition of petrochemicals group Sabic; and Fidelity National Information Services’ $43bn purchase of payments group Worldpay. In contrast the number of transactions dropped by a third from a year ago to 8,765 deals, the lowest in more than a decade. Some dealmakers believe this indicates CEOs’ fears that an economic slowdown is on the horizon. Jennifer Perkins, corporate partner at law firm Kirkland & Ellis, agreed that “everyone is talking about a recession” but she said even this would not necessarily mean the end of dealmaking altogether. “Everyone thinks there is something coming, it’s just a question of how severe, but dealmaking will continue through that although it might look a little different, with some companies making more countercyclical acquisitions,” said Ms Perkins. One alarm bell over the general state of M&A is the sharp slowdown in cross-border transactions, which fell by nearly 50 per cent as buyers tended to seek transactions in their domestic markets. Overall, the US market led the activity, with a total of $489bn worth of deals announced, 9 per cent higher than a year ago and the strongest first quarter since 2000. That pick-up stood in contrast to Europe, where activity dropped 67 per cent to $115bn as dealmakers said Brexit and questions over growth sapped enthusiasm from the C-suite. Chinese companies have done about $10.6bn in outbound deals so far this year, down from $25.2bn at the same time last year with Chinese regulators seeking to stop capital flight and countries such as the US blocking Chinese technology investments. But bankers and lawyers in Asia are homing in on another type of China deal: multinationals selling parts or all of their China units as the business environment deteriorates. Vanessa Koo, head of banking in Asia-Pacific at Barclays, said multina-

tional companies “are adjusting their strategies in China through partial of full exits. Some are partnering with national champions. Some are focusing more on their home markets.” The megadeals roll on Size and scale increasingly matters. In a world where companies are at risk of being disrupted by massive tech companies such as Amazon, Google and Netflix, striking transformative large deals has become an obvious defence mechanism. The fear of being driven out of business has been one of the key drivers for the 11 companies that agreed to spend more than a combined $400bn on acquisitions with a valuation higher than $10bn in the first quarter, according Refinitiv. “Companies are doing big deals for a number of reasons. The key drivers are growth, cheap debt and strategic motivations,” said Ms Aiyengar. She added: “Another important catalyst is that CEOs and boards are getting rewarded by shareholders for smart deals. The stock price of the acquirers has risen in most deals, which is not a given.” Danaher’s stock jumped 8.5 per cent after it agreed to buy General Electric’s life sciences unit for $21bn. Shares in BB&T jumped 4.5 per cent after announcing its $28bn merger with SunTrust. Such positive reactions were not the case for all deals. Bristol-Myers Squibb’s shares plummeted 15 per cent after revealing its $90bn Celgene deal and it is gearing up for a fight with investors who want to stop the deal from closing. The same was true for two large financial data and technology deals, FIS’s takeover of Worldpay for $43bn, and Fiserv’s acquisition of First Data for $39bn, which both suffered sharp drops in their stock after their plans were announced. James Fontanella-Khan Still waiting on the mega LBO Private equity groups remained a major feature of dealmaking in the first three months of 2019, even as a widely anticipated rush of leveraged buyouts greater than $10bn in size failed to materialise. Only one buyout registered above the megadeal hurdle, with Hellman & Friedman agreeing to buy human resources firm Ultimate Software Group in a $11.2bn tie-up. Just over $90bn has been put to work globally by private funds, representing about 10 per cent of all dealmaking in the quarter. Overall buyouts were down 8 per cent from the same period a year ago, but up slightly on the previous quarter. Other notable deals included the $6.5bn buyout of online listings company Scout24 in Germany by Blackstone and Hellman & Friedman as well as Brookfield’s $4.7bn acquisition of distressed investor Oaktree Capital. Alison Mass, who runs the financial and strategic investors group at Goldman Sachs, said that while there have been fewer big deals, the backlog of potential activity was strong. “Dry powder is at historically high levels, capital markets are wide open and we are anticipating another strong M&A year for PE firms in 2019.” Jitters in public markets last year with financing becoming less readily available for buyout deals slowed activity in the first quarter but industry insiders expect things to pick up, especially after the US Federal Reserve calmed financial markets by pausing plans to raise interest rates.

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INVESTING

Nigerian economy set to gather momentum in Q2

Overnight inter-bank rate declines 6.62 point on absence of OMO auction The banking system has been awash with liquidity in the absence of Open Market Operation (OMO) by the Central Bank of Nigeria (CBN), which has resulted in a steady decline of rates in the money market.

Seven things that wedding could cost you

How NSE 30 companies rank by year-to-date return

There are higher expectations for Nigeriaâ&#x20AC;&#x2122;s economic recovery after the fastest growth since 2015 was recorded during the fourth quarter of last year.

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Marriage is an age long institution and a sacred union in many societies. For a good number of people, it is a rite of passage which should be celebrated with family and friends in the grandest way possible.

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With the sustained bearish performance witnessed by equities listed on the Nigerian Stock Exchange (NSE), which extended into the third straight week last week, BusinessDay reviews the year-todate performance of NSE 30 companiesâ&#x20AC;&#x2122; stocks to show how they fared in delivering value for their shareholders.

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Opinion

Nigerian economy set to gather momentum in Q2

“

Lukman Otunuga, FXTM Research

here are higher expectations for Nigeria’s economic recovery after the fastest growth since 2015 was recorded during the fourth quarter of last year. As the nation draws further away from the worst effects of the recession, several important economic benchmarks show further signs of improving economic stability. Yearly Gross Domestic Product (GDP) for 2019 is heading steadily towards a range of 2–2.3 percent compared to 1.93 percent in 2018. In addition, Purchasing Power Parity (PPP) and GDP per capita appear stronger. On the downside, real GDP growth is underperforming on average compared to other emerging economies, possibly due to the lingering effects of global Oil price volatility and weaker growth in the manufacturing sector. In spite of the headwinds, Nigeria has the potential to grow in 2019 on the back of stabilizing Oil prices. There is new impetus to diversify away from Oil reliance and the chance to focus on economic rebuilding. Inflationary pressures are cooling off after reaching intense heights this time last year. In February

In spite of the headwinds, Nigeria has the potential to grow in 2019 on the back of stabilizing Oil prices. There is new impetus to diversify away from Oil reliance and the chance to focus on economic rebuilding

2019, inflation declined to 11.3 percent which - when compared to the level of 13.3 percent in March 2018 – is a more encouraging position. If the downward trajectory continues and inflationary spikes are avoided, prices could stabi-

Nigeria’s Gross Domestic Product (GDP) growth rate

lize further. Boosting the manufacturing sector could contribute to jobs creation and reduce unemployment which is currently high at around 23 percent. A focus on creating jobs in the manufacturing and services sectors would tap into the

massive potential in the labour market, adding to GDP growth in the long term. Stabilising Nigeria’s Oil-and-Gas sector is critical to continued growth because it accounts for around 10 percent of GDP and an estimated 83 percent of exports. There are signs of stability and improvement in the areas of foreign investment, foreign currency reserves and monetary policy. The Central Bank of Nigeria unexpectedly cut interest rates in March to 13.5% from 14% in an effort to stimulate economic growth. The latest reports show increased investment in sovereign bonds, likely due to the pause on interest rates in the US increasing attraction towards emerging economies and their investment opportunities. Foreign reserves are at the healthy level of 44 billion USD at the time of writing. While internal economic conditions are seen improving, external risks could impact on Nigeria’s growth. Global trade developments, China’s slowdown and the effect on global growth may all present headwinds. Brexit uncertainties and developments are also a factor given the level of foreign direct investment from Britain and the weaker Pound Sterling. On the plus side, a vulnerable Dollar and dovish Federal Reserve could be good news for the Naira as investors search for higher yielding instruments versus the USD.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder. Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous

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Money Market

Overnight inter-bank rate declines 6.62 point on absence of OMO auction HOPE MOSES-ASHIKE

he banking system has been awash with liquidity in the absence of Open Market Operation (OMO) by the Central Bank of Nigeria (CBN), which has resulted in a steady decline of rates in the money market. Consequently, the overnight inter-bank rate, which is the rate at which banks borrow and lend to each other, has declined by 6.62 percentage point from 17.29 percent on Tuesday March 26, 2019 to 10.67 percent as of Friday, March 29, 2019. The CBN has continued to manage liquidity in the banking system using OMO instrument but last week, the regular could not carry out any OMO auction. Also, the Open-Buy-Back (OBB), a money market instrument used to raise short term capital, declined 6.57 percentage point to 9.86 percent on Friday, from 16.43 percent as of Tuesday March 26, 2019. Ayodeji Ebo, managing director, Afrinvest Securities Limited, explained that the reason for the rates decline was due to absence of OMO auction by the CBN, adding that interest rates at the secondary market also declined. Meanwhile, an inflow of about N0.4 billion from matured OMO bills hit the financial system on Thursday last week, which helped to bolster liquidity in the market. A week before last, Treasury Bills secondary market witnessed bearish sentiments as investors sold off their positions following the CBN’s announcement of OMO Auction on Tuesday as well as a Primary Market Auction on Wednesday. Major sell offs were recorded at the shorter end of the curve particularly the 18-Apr-19 (+351bps),

09-May-19 (+147bps) and 02May-19 (+123bps) maturities. Consequently, average yields across all tenors advanced 33bps Week-on-Wek to settle at 13.7 percent on Friday from 13.3 percent the previous week, according to a report by Afrinvest Securities Limited. The nation’s currency on Friday appreciated marginally by 0.03 percent to close at N360.68k per dollar on Friday compared with N360.80k/$ traded on Thursday at the Investors and Exporters’ foreign exchange window, data from FMDQ show. Nigeria’s external reserves have risen to $44.14 billion as at March 26, 2019, following rising inflows from Foreign Portfolio Investors. The foreign exchange turnover at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) has totaled US$105.9 billion from the inception, when it was launched in late April 2017 through March 26, 2019 and US$9.7 billion since 27 February alone. The surge over the past month according to FBNQuest is attributable to foreign portfolio investor (FPI) inflows to the fixedincome market, as investors are comfortable with their ability to exit the market at will. Meanwhile, the outcome of the concluded general elections further gave the foreign investors comfort that the current foreignexchange policies are likely to remain in place. Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) said last week at the BusinessDay conference that over $6 billion has been flown into the local bond market in one month, indicating confidence in the economy. The FPI inflows have enabled the CBN to become a regular buyer of FX on NAFEX, such that gross official reserves have

increased by US$1.73 billion to US$44.04 billion since the presidential election through to 25 March. Both oil price trends, and the FPI surge into local money and debt markets provide a tem-

“

porary floor to reserves. According to FBNQuest, In the event of an unanticipated exit of FPIs from the local markets, which would make the CBN a regular seller at NAFEX, there

The reduction in MPR by 50 basis points signals the CBN’s desire to relax monetary policy to support economic growth. Obviously, it is a right response to the declining inflationary pressure and the relative stability in exchange rate which have prevailed for quite some time

is still a healthy buffer against additional shocks. Estimates on the high side put the stock of FPI monies in the market at US$17 billion. The CBN on Tuesday surprised the Nigerian analysts, economists and investors with a 50 basis point 0.5 percent reduction in its benchmark interest rate to 13.5 percent from 14 percent since July 2016. “The reduction in MPR by 50 basis points signals the CBN’s desire to relax monetary policy to support economic growth. Obviously, it is a right response to the declining inflationary pressure and the relative stability in exchange rate which have prevailed for quite some time”, Uche Uwaleke, professor of finance and capital markets, chair, banking and finance department, Nasarawa State University Keffi, Nasarawa State, said.

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Investing

Seven things that wedding could cost you

SEGUN ADAMS & ISRAEL ODUBOLA

arriage is an age long institution and a sacred union in many soci-

eties. For a good number of people, it is a rite of passage which should be celebrated with family and friends in the grandest way possible. Typically in Nigeria today, love birds budget about N5 million for their wedding to cover rentage of hall for the reception, refreshments for invited guests, wedding gown for the bride, wedding rings, bridal shower & groom’s suit, bachelor’s night and aso-ebi for the traditional ceremony. Soon-to-be couples might agree to raise N3 million between themselves, while support from friends and family, as well as borrowings, help them gather the N2million needed to complete their dream wedding budget. Notwithstanding the glamour of an expensive wedding, renowned marriage experts have advised intending couples to cut their coat in line with their cloth’ while planning for the wedding. To them, wedding is a day or two-day event, and the real deal is marriage, which is life-long. For intending couples who raised ‘huge’ sums for their wedding, here are areas a tangible amount of that sum, we estimate N5m or close, could be channelled to bring your new family benefits in the near future than expending all on aday event 1 or 2 plot of Lands in Lekki Free Zone or 4 in suburban Lagos What better financial foundation could be laid for a new family than owing landed properties The couple could use half of

our hypothecal wedding budget to get a piece of land in strategic areas like Lekki Free Trade Zone, and gradually begin to develop, or sell to get their capital gain. Why this is a big deal is because unlike other asset classes that are susceptible to risk, procurement of landed assets in a good location offers bumper returns and has high prospects for value appreciation. The price of land has risen at least 25 per cent in the last decade. I’m sure you would agree that It is not wise for soon-to-be couples to break the bank for a wedding, and run into bank-

ruptcy the following day. 24 months of Rent in a highbrow neighbourhood or 72 months in a middle-income area The average rent for a 2-bedroom apartment on the Mainland range between N150, 000 - N400, 000 per annum and on the Island, it’s between N850,000 and N7.5 million on annual basis, according to estimation from Propertypro. This means the couple can use a tangible fraction of the sum to cover about 2 years and 6 years of rent charges on the island and mainland in exchange for a wedding party.

About 2 years of family upkeep Starting a family is exciting and at the same time can be stressful, especially since bills would have to be paid to ensure the family is healthy and happy. Although many Nigerian intending couples would frown on the suggestion of toning down their wedding party, a second look at the opportunity cost show that it could be worth 1.7 years or 20 months of family upkeep after all. Assuming a newly wedded couple spends no more than N200,000 per month on food

and clothing alone, the family would be able to sustain itself for almost 2 years provided the average price level

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does not increase significantly in that time period. The only inconvenience to the couple would be denying friends and relatives the opportunity to ‘’slay’’ in the latest ‘’asoebi; an act of treason to some. Quality education for your child If you have seen the viral video of Success, a young girl in Delta sent home over non-payment of school fees, you would agree that planning for your child’s education should top your priority list pre-wedding. Forgoing your N5 million wedding might not be exciting to think about but considering what such investment would mean for your child makes it worthwhile to do. Suppose you pay N900,000-N1 Million per annum for your child’s education, your wedding expense would guarantee a quality basic education for him or her. While it would not be enough to see your child become the career person s/he desires, the amount saved would provide headroom for the couple to save for the child’s further education. N5 million investment return for your child at his or her 10th birthday Ever daydreamed about being your future child’s superhero? It might take N5m (or less) investment at 10 percent per annum over a tenyear period to double your wedding budget and make your kid the coolest in primary school. Provided that inflation remains subdued, you could make a 100% real return on your initial invest-

Notwithstanding the glamour of an expensive wedding, renowned marriage experts have advised intending couples to cut their coat in line with their cloth’ while planning for the wedding

ment based on a simple interest calculation.There are a lot of investment options for this, from a fixed deposit, government securities to investing in funds. A brand new family car Some people may not agree that a car is an asset, but if you fall into the category that believes in the stress-relieving power of four wheelers then this might be an awesome consideration for you. With N5 million or at the expense of a wedding of the equivalent cost you can get a car for your new family and cruise around town hassle-free. Whether for shopping, visiting friends and family, work, or going on family vacations, owning a vehicle has a lot of pros would definitely improve your family’s standard of living. Start-up capital for retail business In Nigeria today many families are seeing the wisdom in diversifying income stream-and you should too! If you have N5 or close to that amount, you could be forfeiting the opportunity of generating more income stream for your family should you be concerned only with throwing the best wedding party ever. N5 million can finance your business plan or even jumpstart your retail business. If you find it hard contemplating a budget cut, remember it would be just you and your spouse left to deal with financial matters after the wedding ceremony. This article is not to play down the importance of a wedding ceremony. However, given the rate at which new families struggling financially after their wedding, there is need for a more careful approach to starting a family. Intending couples can still have a memorable wedding without breaking the bank whether in a marriage court or at their worship centre.

Nigerian bonds hold opportunities for investors David Ibidapo & Segun Adams

igeria’s fixed income market is currently one of the best performing among peers, providing investors the perfect opportunity to take advantage of double digit returns. Since the start of the year, inflow witnessed in the Nigeria fixed income market space has soared as risk averse investors rotate out of equities to government bonds, taking advantage of the high yields occasioned by the CBN’s monetary tightening. Returns on Nigeria yield currently stands at 14.14 percent, while the likes of Kenya and Ecuador join in the bond rally as more dovish Federal Reserve triggered a global riskon environment and a hunt for yield. Frontier nations have all posted returns above 13.5 percent, far above the global sovereign average of 2.4 percent, Bloomberg data shows.

Meanwhile optimism that crude oil, which has exceeded the 2019 budget benchmark, will reach $70 per barrel on OPEC cut and US sanctions on Venezuela and Iran has further strengthened positive sentiment of investors towards the markets. In addition, fears of a slowing global economy which has seen the growth projection for many developed countries including the United States which may possibly cut rates in 2019, is a factor analysts have bet to favour emerging markets as many central banks have taken a dovish stance on policy rates. Nathalie Marshik, money manager and analyst says that in a low growth environment, investors should look to developing countries with the strongest balance sheets and external positions, recommending the local-currency bonds of emerging markets including Egypt, and frontiers such as Nigeria and the Dominican Republic. However, some analysts say

there is likelihood of that economic slowdown in the developed nations might have a contagion effect on emerging economies including Nigeria. Although not a strong possibility at the present moment, a bite on spending power of first world countries would affect commodity prices and nations that largely dependent on proceeds from sales of primary commodities, for instance, crude oil. If emerging markets get caught up in the haze, a likely outcome might be a divergence of monetary policy across the front as the likes of Brazil and China with better buffers might consider a pro-growth expansionary policy while Nigeria and other markets with structural issues hike rate to remain attractive. In any case, it is more likely that Nigeria’s bond market would remain favourable for investors at least in the near term especially as government borrowing is expected to increase once the 2019 budget is passed

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Investing How NSE 30 companies rank by year-to-date return ith the sustained bearish performance witnessed by equities listed on the Nigerian Stock Exchange (NSE), which extended into the third straight week last week, BusinessDay reviews the yearto-date performance of NSE 30 companies’ stocks to show how they fared in delivering value for their shareholders. NSE 30 is the price index that tracks the top 30 companies in

National Salt Company of Nigeria, and Nestle Nigeria outperformed the NSE 30 index which has so far lost 1.73 percent. Others include Unilever Nigeria, Okomu Oil Palm, Guaranty Trust Bank, First Bank of Nigeria, Fidelity Bank, Dangote Cement and United Bank for Africa. On the flipside, the other seventeen firms, which include Seplat, 11 Plc, tier-one lenders – Access and Zenith Bank – and the three major players in Nigeria’s beer space - Guinness, Nigerian Breweries and International Breweries – are currently underperforming the NSE 30

terms of market capitalisation and liquidity. The companies are reviewed based on their closing prices at the end of trading on Friday which marked the last trading session in the first quarter of 2019. Interestingly, the ranking is bothered by the two leading flour millers in the country. While one of the millers delivered the most value for investors within the review period among the NSE big firms, the performance of the other remains unimpressive. In all the thirty (30) companies, thirteen including Dangote Flour Mills, Sterling Bank, Union Bank of Nigeria, Oando,

broad index. Dangote Flour Mills Plc delivered the most value since the start of the year despite losing 30 kobo on Friday, the flour miller appreciated by almost half of its market value to close at N10.20 last week. The company is yet to release its 2018 financial result, but in the first nine months of the year, its profit after tax fell to N3.26 billion from N13 billion recorded in the same period in 2017. The flour miller was trailed by mid-tier lender Sterling Bank which has gained more than a quarter of its value within the last three months. In February,

OLUWASEGUN OLAKOYENIKAN

the bank hit N2.50, its highest level in over four years. Sterling Bank grew its profit by almost 15 percent to N9.22 billion in 2018. Union Bank of Nigeria which

stood at N6.60 came third having returned 18.75 percent this year. Flour Mills Nigeria shed 22.08 percent, making the miller the biggest loser among

the 30 most capitalised firms since the year began, Nigerian Breweries followed with 21.93 percent loss, while P Z Cussons Nigeria slumped 19 percent.

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Data

Federal government eurobond Yields on Eurobonds rose week on week by c.118bps to an average of 6.80 percent compared to 6.72 percent last week as market turned bearish amid a change in policy direction by the Central Bank of Nigeria (CBN). The CBN last week reduced the MPR by 50bps policy rate to 13.50 percent while it left the asymmetric corridor unchanged at +200bps/-500bps, the Cash Reserve Requirement (CRR) at 22.5% and the liquidity ratio of banks at 30.0 percent as 9 out of 11 members of the Monetary Policy Committee (MPC) voted for the first rate cut since November 2015.

Corporate eurobond Across board, yields on Nigerian Corporate Eurobonds fell by an average of c.347bps to an average of 8.06 percent even though in the preceding week average yield was 8.35 percent. DaimondBank saw the biggest drop among other corporates in the Eurobonds market with yields falling up to 14.46 percent while a slight sell off was observed in UBA and Access PLC III.

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Personal Finance Why you may spend more in retirement

ong before retirement, it is usually easier for people to live up to the standard they want, as much as their earnings support. However, as the years pass by, needs arise which necessitate expansion. Family expands, taste increases, and so do the bills. Earnings also increase as well; thus, depleted savings can be replaced. Activities such as vacations, entertainment and outings which takes off large chunks from financial savings are limited to certain periods of the year due to work engagement. During retirement however, there is no more regular 9 to 5 (or perhaps 10) to while away time, no business meetings, early morning flights, weekend work to meet up with client’s demand etc., and definitely no big salary at the end of the month. But there is still energy and time! There is an additional five (previously working, now free) days ex weekend, virtually all the time in the world, to do more of what you did less while employed, thus creating avenue to be more engaged in activities that require spending. People usually tend to increase their standard of living as they advance in employment and, having enjoyed that for quite a number of years, it is believed that retirement should even be better.

This is usually not the case especially for someone who has not made adequate financial plans for retirement. This is because retirement benefits may not be high enough to match late employment lifestyle. The net effect on both investments and retirement savings during this period is therefore

Week Ahead

depletion. Further diminishing retirement savings and benefits is the cost of healthcare. As people get older, the chances of spending more on healthcare is almost certain. Unexpectedly, some ailments developed require constant management, more frequent hospital visits,

medical tourism etc. Things might even get worse during late retirement years as the body becomes frail. Although one could argue that there is improvement in healthcare delivery, but this also lengthens life expectancy. By Meristem Securities

Chart of the week

Week Ahead (Monday, 1st April – Friday, 5th April, 2019) Commodities Grains – United States Department of Agriculture report on demand outlook for 2019/2020 season expected to influence the direction of grain prices. Cocoa – Expectations of a bumper harvest from Ivory Coast likely to depress prices. Fixed Income A 5-year corporate bond with 16% coupon issued by Dana on April 1, 2014 will mature on Monday, April 1, 2019. A 364-day Treasury bill at the Primary market sold for N68 billion at 14.99% stop rate will mature on Thursday, April 4, 2019. Currency The naira is expected to trade within current rates in all market segments on the back of the regular intervention of the Central Bank of Nigeria in the foreign exchange market. Data Release The National Bureau of Statistics to release Annual Abstract Statistics on Monday, April 1, 2019. Event The Sales Leadership Conference will come up between Monday, April 3 – Tuesday, April 4, 2019 at Muson Center, 8/9, Marina Road, Onikan, Lagos. The conference will converge senior sales executives across Africa to deliberate on the science and art of revenue generation.

CBN lowers policy rate to 13.5% The MPC on improving but weak domestic economic growth, stabilization of the exchange rate, improvement in the foreign reserve, and moderation in inflation, among other considerations cut rates on Tuesday for the first time in 3 years. Many Central Banks have adopted a dovish stance so far in the New Year over fears of a slowing economy.

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Government Enterprise & Empowerment Program

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Brought to you by

BOI rolls out repayment scratch-cards for TraderMoni & MarketMoni loans

he Bank of Industry has begun the roll-out of its voucher-based loan repayment recharge cards for the GEEP TraderMoni, MarketMoni, and FarmerMoni loans. Through a flexible weekly loan repayment plan of N430 per week paid over six months or N860 per week paid over three months, TraderMoni beneficiaries can use the cards to pay back their loans and qualify for the next loan of N15,000. When they pay that back, they graduate to the N20,000 stage,

started in 2016. These loans are part of the Federal government’s plan to broaden financial inclusion at the base of the pyramid, and spur economic growth at the grass-roots. However, the challenge with last-mile credit delivery is the fact that it is last-mile. In a speech by the Executive Director, Micro Enterprises Division at the Bank of Industry, Mrs. Toyin Adeniji noted that most of the beneficiaries stay kilometers away from the nearest banks, so whilst the ability to pay back the loans at any commercial bank in the country via pay-direct

lar Telco recharge cards are sold and loaded: a beneficiary buys the TraderMoni loan repayment voucher for the amount they wish to pay back, and loads it on their mobile phone using the USSD shortcode on the card. This automatically credits the beneficiary’s loan account and updates their loan position. They also get an SMS notification that they have repaid their loan to the value of the loaded voucher. Beneficiaries who complete this process and payback their loans automatically qualify for the

Mohammed Alhaji Mohammed, Chicken Seller

My name is Mohammed Alhaji Mohammed, here in Tarauni Market, Kano market. I sell Chicken. I am so happy about this money I have received; I am so grateful. The government should continue with this good thing they are doing. I have paid back the N10,000 loan and I have gotten the N15,000. I am a trader who buys and sell;

and with the profit I make, I pay back the loan so that I can stand the chance of getting the next loan. My advice for other beneficiaries is that they should utilize the loans for the purpose so it can easily be paid back and one can stand the chance of benefiting from the next phase. Thank you federal government! Thank you TraderMoni.

My name is Aishetu Adamu; earlier I was given a loan of 10,000 Naira. I am a businesswoman; I sell drugs and food condiments. I did business with the loan and I paid back and now I have received the 15,000 Naira loan. Honestly, I am very happy. Thank you Federal Government; may God bless us. Aishetu Adamu, Medicine Seller

GEEP Loan Repayment Vouchers

and then they ultimately graduate into the MarketMoni program where they can get up to N100,000. The Government Empowerment & Enterprise Program (GEEP) of the Federal government has enabled easy access to finance and working capital for as many as 1.7million traders across the country since it

works well for traders in the urban centers, their counterparts in Nigeria’s remote markets have often had to walk long distances to pay back theirs. This led the Federal Government, through BOI’s MicroEnterprises Division to develop voucher based repayment scratchcards that can be sold, and loaded the same way regu-

next loan level. The GEEP products are tools for Nigerian traders to build their credit ratings so that, even without collateral, their credit history will make them appealing to traditional lenders. Many traders have recognized this opportunity and have begun graduating up the GEEP loan levels. We spoke to a few of them:

Lucky Solomon, Provision Seller

My name is Lucky Solomon; I am very grateful. I was first given the 10,000 Naira TraderMoni loan. It was very useful to my business; I used it, made a profit and paid back and now they have given me the 15,000 Naira loan. I am very excited about this and I thank the Federal Government for this initiative. I pray it increases.

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Live @ the Stock exchange Prices for Securities Traded as of Friday 29 March 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 186,585.42 6.45 1.57 141 7,659,084 UNITED BANK FOR AFRICA PLC 263,335.54 7.70 -1.28 319 36,300,718 684,443.56 21.80 0.23 251 25,753,965 ZENITH BANK PLC 711 69,713,767 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 294,341.40 8.20 1.23 133 3,216,472 133 3,216,472 844 72,930,239 BUILDING MATERIALS DANGOTE CEMENT PLC 3,254,736.91 191.00 0.53 68 1,244,822 196,515.11 12.20 -5.79 52 1,111,996 LAFARGE AFRICA PLC. 120 2,356,818 120 2,356,818 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 347,182.29 590.00 9.26 33 706,412 33 706,412 33 706,412 997 75,993,469 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 11,300.89 45.20 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 2 32,000 2 32,000 2 32,000 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 3,312.39 103.20 - 0 0 VALUEALLIANCE VALUE FUND 0 0 0 0 2 32,000 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 76,312.80 80.00 - 10 8,606 PRESCO PLC 62,750.00 62.75 -7.72 14 389,420 24 398,026 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,890.00 0.63 - 0 0 0 0 24 398,026 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 820.66 0.31 - 0 0 202.36 0.52 - 2 2,025 JOHN HOLT PLC. 1,903.99 2.93 - 1 60 S C O A NIG. PLC. 49,184.07 1.21 -1.63 86 12,592,831 TRANSNATIONAL CORPORATION OF NIGERIA PLC U A C N PLC. 23,050.37 8.00 - 32 210,156 121 12,805,072 121 12,805,072 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 36,300.00 27.50 - 9 11,220 165.00 6.60 - 0 0 ROADS NIG PLC. 9 11,220 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,313.34 1.66 - 15 66,639 15 66,639 24 77,859 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 11,352.77 1.45 - 2 7,023 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 136,789.41 62.45 - 23 27,156 INTERNATIONAL BREWERIES PLC. 223,492.41 26.00 - 15 103,400 NIGERIAN BREW. PLC. 533,793.21 66.75 - 89 351,374 129 488,953 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 51,000.00 10.20 -2.86 61 2,503,063 DANGOTE SUGAR REFINERY PLC 170,400.00 14.20 -1.41 43 1,042,930 FLOUR MILLS NIG. PLC. 73,806.83 18.00 - 60 5,766,186 HONEYWELL FLOUR MILL PLC 9,516.24 1.20 1.67 15 1,433,108 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 4 42,932 NASCON ALLIED INDUSTRIES PLC 52,988.77 20.00 - 30 1,221,318 UNION DICON SALT PLC. 3,676.41 13.45 - 0 0 213 12,009,537 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,782.02 10.00 -8.26 25 323,241 NESTLE NIGERIA PLC. 1,252,396.88 1,580.00 5.48 54 332,878 79 656,119 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,940.83 3.95 - 8 35,235 8 35,235 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 38,910.68 9.80 3.16 26 320,038 UNILEVER NIGERIA PLC. 224,055.21 39.00 - 47 1,209,660 73 1,529,698 502 14,719,542 BANKING DIAMOND BANK PLC 56,048.14 2.42 - 0 0 ECOBANK TRANSNATIONAL INCORPORATED 242,214.08 13.20 - 27 266,783 FIDELITY BANK PLC 59,688.08 2.06 -8.85 408 58,191,981 GUARANTY TRUST BANK PLC. 1,060,994.01 36.05 -2.30 207 13,376,911 JAIZ BANK PLC 15,321.41 0.52 - 20 4,972,245 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 69,097.00 2.40 0.42 51 5,897,126 UNION BANK NIG.PLC. 193,653.01 6.65 0.76 37 1,114,072 UNITY BANK PLC 9,351.47 0.80 -4.76 6 434,461 WEMA BANK PLC. 29,702.34 0.77 -3.75 39 1,506,417 795 85,759,996 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 1,000 AIICO INSURANCE PLC. 4,920.45 0.71 - 24 944,706 AXAMANSARD INSURANCE PLC 23,100.00 2.20 - 1 1,000 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 - 4 82,600 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 3,093.20 0.21 -4.55 3 304,982 GOLDLINK INSURANCE PLC 2,001.98 0.44 - 1 100 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 7 1,059,749 LAW UNION AND ROCK INS. PLC. 2,191.13 0.51 - 2 4,741 LINKAGE ASSURANCE PLC 4,400.00 0.55 - 1 40,000 MUTUAL BENEFITS ASSURANCE PLC. 1,760.00 0.22 -8.33 9 2,261,426 NEM INSURANCE PLC 11,722.72 2.22 - 13 76,979 NIGER INSURANCE PLC 1,625.29 0.21 - 5 60,457 2,960.40 0.55 - 5 134,900 PRESTIGE ASSURANCE PLC REGENCY ASSURANCE PLC 1,600.50 0.24 - 3 204,000 SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 2 400 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 2 26,300 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 2 2,200 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 1 10,000 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,353.10 0.40 - 17 757,873 103 5,973,413

Company MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,407.09 1.49 0.68 20 821,401 20 821,401 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 2,265.95 0.20 - 2 1,112 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 2 1,112 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,600.00 3.80 -2.56 46 651,068 35,879.37 6.10 0.83 11 70,095 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 36,833.04 1.86 -3.12 256 15,915,987 1,492.16 0.29 - 1 999 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 471,065.44 46.00 - 22 286,561 17,100.00 2.85 1.79 76 4,495,084 UNITED CAPITAL PLC 412 21,419,794 1,332 113,975,716 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 1,065.94 0.30 -9.09 2 127,000 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 2 127,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,425.00 4.95 - 3 81,088 12,915.47 10.80 - 34 116,375 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 3,968.04 2.30 -4.17 17 477,440 1,177.48 0.62 - 5 13,170 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 1 30 60 688,103 62 815,103 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 0 0 0 0 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 3 110 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 381.11 0.77 - 0 0 3 110 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 40 40,897,639 11,088.00 2.64 - 0 0 E-TRANZACT INTERNATIONAL PLC 40 40,897,639 43 40,897,749 BUILDING MATERIALS BERGER PAINTS PLC 2,391.04 8.25 - 4 35,704 26,180.00 37.40 - 6 9,378 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 261,555.67 19.90 4.74 72 1,158,286 633.11 0.30 - 2 500,000 FIRST ALUMINIUM NIGERIA PLC MEYER PLC. 313.43 0.59 - 1 1,000 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,999.41 2.52 - 0 0 1,279.20 10.40 - 0 0 PREMIER PAINTS PLC. 85 1,704,368 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,258.45 1.85 -8.87 15 295,124 15 295,124 PACKAGING/CONTAINERS BETA GLASS PLC. 35,972.99 71.95 - 1 50 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 50 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 101 1,999,542 CHEMICALS B.O.C. GASES PLC. 1,577.57 3.79 - 1 5,000 1 5,000 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 50.60 0.23 - 0 0 0 0 1 5,000 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 3 14,200 3 14,200 INTEGRATED OIL AND GAS SERVICES OANDO PLC 70,237.48 5.65 -0.88 51 1,506,673 51 1,506,673 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 64,185.96 178.00 4.71 27 205,628 CONOIL PLC 15,960.90 23.00 - 13 29,854 ETERNA PLC. 6,911.97 5.30 9.28 14 200,347 FORTE OIL PLC. 36,078.73 27.70 - 16 40,183 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 3 5,472 TOTAL NIGERIA PLC. 66,546.28 196.00 - 18 14,997 91 496,481 145 2,017,354 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 411.72 0.35 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 1 71,550 TRANS-NATIONWIDE EXPRESS PLC. 323.50 0.69 - 1 20 2 71,570 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 0 0 IKEJA HOTEL PLC 3,908.14 1.88 9.94 10 427,277 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 6 3,699 16 430,976 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 1 20,000 1 20,000 PRINTING/PUBLISHING ACADEMY PRESS PLC. 199.58 0.33 - 1 7,000 LEARN AFRICA PLC 1,026.03 1.33 - 6 44,851 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 785.17 1.82 -4.21 20 551,692 27 603,543 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 878.58 0.53 - 2 11,886 2 11,886

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Insight

Brexit: The tortuous road to EU exit that is convulsing Britain global Perspectives

OLU FASAN

ew people can escape the tumultuous Brexit debate. But for those of us who live in Britain, it is our daily grind. You are gripped everyday by the high decibels of the babel of voices, the cacophonous noises, the staccato rhythm. The events over the past two weeks, during which the UK parliamentseized control of the government’s legislative agendaand the prime minister was forced to promise to resign if her Brexit deal was passed, show how Britain’s decision in 2016 to leave the European Union is convulsing the country. But the seeds of the Brexit crisis were sown in three major events that I previously captured in this column. When Britain voted on 23 June 2016 to leave the EU, after 43 years of membership,I wrote a piece entitled “Seismic shifts as Britain ends fractious relations with Europe” (BusinessDay, 4 July 2016). The problem was not the EU referendum itself – every nation has the right to decide its destiny – but the factthat the information that shaped the people’s decision to vote to leave the EU was flawed. They were told, for instance, that leaving the EU would be simple and straightforward. ButdisentanglingBritain from its43 year-oldrelationship with the EU wasn’t going to be a walk in the park! The second seed of the crisis was the lack of overwhelming support for Brexit. In the referendum vote, 17,410,742 people (51.89%) voted to leave the EU, while

16, 141,241 (48.11%) voted to remain. Of course, in a democracy, the majoritywins. But in a monumental decision to leave the EU, after 43 years, with potential adverse economic consequences, a 52/48 split wasn’t not good enough. Yes, 17m voted to leave, but what about the 16m who voted to stay in? Surely, only flexibility and a Brexit compromise that reflected the positions of both Leavers and Remainers would have been ideal. But the government hastily nailed its colours to the mast. On 29 March 2017, it submitted a letter, under Article 50 of the Treaty of the European Union, notifying the EU of its decision to leave the union. I wrote a piece, entitled “The die is cast as Britain starts exit talks with the EU” (BusinessDay, 3 April 2017). Indeed, the die was cast, because once Article 50 was invoked, the UK must leave the EU exactly two years later, whether or not it had agreed exit terms with the EU, unless the remaining 27 member states agreed unanimously to extend the two-year period to allow negotiations to continue. By invoking the Article 50 notification, just nine months after the referendum vote, without a detailed plan for the negotiations,the government sowed another seed of the Brexit crisis. As the clock ticked and the negotiations deadlocked, pressure piled on the government, which hadset 29 March 2019 in legislation as the exit date. Running against that clock and the possibility of not leaving on that date and having to ask the EU for an extension would be deeply embarrassing. But that’s how it turned outto be as the 29 March 2019 presumptive Brexit date became undeliverable. But why was the original Brexit date impossible? Well, that brings us to yet another seed of the crisis: the lack of parliamentary majority for Brexit. On 18 April 2017, just a month after invoking Article 50, Prime Minister Theresa May called a snap election with the aim of securing a large parliamentary majority to drive throughher Brexit agenda. But it backfired spectacularly. Instead of winning an ab-

solute majority, her party lost the 17-seat majority it had before the electionand had to rely on the Northern Ireland’s Democratic Unionist Party (DUP), with 10 MPs, to form a government,which gave her a miniscule majority of nine! After the election, I wrote a piece, entitled “Hard or soft Brexit? Britain’s dilemma after a chaotic election” (BusinessDay 19 June 2017). Surely, once the government lost its parliamentary majority and had to rely on a small party, the DUP, with its own vestedinterests, Brexit would be almost impossible to deliver,especially, given the irreconcilable differences between advocates of a soft Brexitand supporters of a hard Brexit. It is precisely this soft Brexit-hard Brexitschism, and the failure to find a deal that commands the majority in parliament, that have caused the convulsion in British politics and the Brexit deadlock. In November last year, the prime minister secured a deal with the EU on the terms of Britain’s withdrawal and a framework for negotiating future economic relations. But when the withdrawal deal was put to parliament on 15 January, it was overwhelmingly rejected by 230 votes. After some minor concession by the EU, the government presented the deal to parliament again on 12 March, but it was also rejected, this time by 149 votes. Last week, on 29 March, the original Brexit date, the deal was rejected again, for the third time, by 58 votes, despite the prime minister’s promise to resign if it was passed. But what are the sticking points? Well, its different strokes for different folks! Apart from playing partisan politics, Labour rejected the deal because it didn’t include commitments to the single market and some form of customs union arrangement. Some Conservatives, who favour a soft Brexit, rejected the deal for the same reasons: absence of single market and/or customs union commitments. But the DUP opposed the deal because it contained the so-called Irish backstop, designed to prevent a customs border being erected between Northern Ireland and

‘

But with the withdrawal deal now rejected for the third time, there is no immediate prospect of a deal

the Republic of Ireland, but whichwould require Northern Ireland to be treated differently from the rest of the UK by being tied closer to the EU customs union and single market. Some Conservativeswho want a hard Brexitdidn’t like the deal at all because it would still tie Britain to the EU. And, then, there are those who don’t want Britain to leave the EUand want a second referendum!So, Britain is deadlocked on Brexit. Interestingly, two-thirds of parliament don’t want Britain to leave the EU without a deal, but they can’t agree on any particular deal. Last week, MPs voted on eight different options, in the so-called indicative votes, but all of them were rejected. Of course, business hates the uncertainty, while preferring a soft Brexit deal. The EU, too, wants a deal. Although, only 15% of EU exports go to Britain, while about 50% of UK exports go to the EU, both would suffer hugely from a no-deal exit, but Britain would suffer more. According to a recent study, the UK alone would suffer income losses of Euro 57bn if it left the EU without a deal, while the rest lose Euro 22bn. But with the withdrawal deal now rejected for the third time, there is no immediate prospect of a deal. In a recent decision, the EU leaders that said that if the UK did not approve the withdrawal deal, it must leave the EU on 12 April or come up with another plan, which must include asking for a long extension, during which there could be an election or a second referendum, which could resolve the stalemate. A tough choice for Britain! The Brexit lesson, even for Nigeria, is that no country can make progress with entrencheddivergent positions and lack of consensus, and the national interest can’t be determined by the leader, but consensually through negotiations!

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

Lessons from industrial development in South Korea ECONOMIST

NONSO OBIKILI

t’s no secret that Nigeria has recently been tilting towards more protectionist policies. The logic is straight from the import substitution playbook and typically goes like this: we import too much of product x when we could be producing it locally. We don’t produce it locally because foreign competition is too fierce. If we protected our domestic firms from foreign competition by placing some prohibitive tariffs on imports, then eventually they would grow and become strong enough to compete. That’s how other countries did it. One of the countries often cited as following this strategy is South Korea. But is this the real South Korean story. Their story of industrial development starts mostly after world war two. Free from Japanese colonial rule two regimes took over the Korean

peninsula. The Russian influenced regime took over in the north in what is now called North Korea while a United States influenced regime took over in the south. Unsurprisingly the north went the communist route in terms of policy while the south went more capitalist. The economic fallout from the war was of course still significant and the south Korean regime moved to boost economic growth by supporting local industry. They selected firms in targeted industry and gave them special benefits like access to cheaper foreign exchange, loans at significantly lower interest rates, and set up tariffs on imported manufacturing goods. In short, they implemented policies that would fit the classic import substitution theories. What was the outcome? Economic stagnation. Industries remained inefficient and rent seeking by connected businesses looking for cheap profits by having their foreign competitors blocked was the norm. The stagnation in living standards would eventually lead to the collapse of the regime with the military taking over in 1961 led by Park Chung Hee. They had of course learned from the mistakes of the previous decades. They abandoned the import substitution policies and did a complete 180

‘

Did South Korea get to industrial development by simply protecting their domestic industry from foreign competition? The answer is obviously no and anyone who says otherwise should re-read the history books

towards export promotion. Every major policy was geared towards answering the question “Can we export it?” Low interest loans are now directed towards exporting firms with export performance the main criteria. Free imports for exporters was also implemented as well as rumored threats of jail time for leaders of firms that did not meet export targets. The result was that productivity growth accelerated and per capita incomes rose with it. In 1962 South Korea exported only $500m worth of goods and services. By 1972 this had risen to $2.8bn and by 1988 it was over $50bn and by 2000 over $150bn per year. But the export promotion story was not all of it. Prior to the 1960s there had been a massive education drive with the outcome being that South Korea became a source of cheap but highly skilled labour. In 1945 they had a literacy rate of 22 percent. By 1970 it was over 87 percent and by the late 1980s it was over 93 percent. By the mid 1989s the government was spending 4.5 percent of GDP or over 25 percent of its budget on education. Then there was the favorable financial sector which was incentivized to perform it’s intermediary duty by mobilizing savings to lend out. In 1960 national savings were as low as two percent until financial reforms

which enabled banks offer interest in deposits as high as 20 percent. By 1970 the savings rate had jumped to 10 percent increasing further to 17 percent by 1975 and 28 percent by 1979. All this brings us back to the question of protectionism. Did South Korea get to industrial development by simply protecting their domestic industry from foreign competition? The answer is obviously no and anyone who says otherwise should re-read the history books. Not that they did not have periods of protectionism but that was mostly a failure and they had to change direction before they started to see growth in productivity and industry. And of course they did lots of other things including massive human capital development and market friendly financial reforms amongst others. I know some will say “well they started from protectionism so let’s start from there”. But why repeat the mistakes of others? The point of learning is to avoid others’ mistakes while learning the successful parts. I wish we would copy South Korea’s human capital investment and export promotion policies instead. Dr. Nonso Obikili is Chief Economist at Business Day.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.