BusinessDay Aug 01 2018 by BusinessDay

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news you can trust I **WEDNESDAY 01 AUGUST 2018 I vol. 15, no 108 I N300

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Market Spot ($/N) 3M 6M I&E FX Window 362.40 -0.28 -0.09 CBN Official Rate 305.90 % 10.87 12.72

5 Years 10 Years 20 Years 0.04% -0.04% 0.18% 13.87% 14.32% 14.18%

tight 2019 elections

Election momentum shifts to pdp

Owede Agbajileke (Abuja); Olamide Sikirat (Ilorin) & IniObong Iwok (Lagos)

igerian Senate President Bukola Saraki finally dumped the governing All Progressives Congress (APC), with elections only months away, making him the highestprofile personality to leave President Muhammadu Buhari’s party. It is a move that may spark market volatility as the 2019 elections increasingly look to be a tight race.

#APCtoPDP

Ahmed Ibeto -Nigeria’s Ambassador to South Africa resigns and joins PDP Bolaji Abudllahi - APC publicity Secretary (Later denied) Aminu Tambuwal -Governor Sokoto State, expected to dump APC today

0.00% 362.68%

0.00% 363.58%

ANALYSIS

Investors ignore MPR as treasury yields track inflation Emeka Ucheaga

or years, the monetary policy rate (MPR) has been the anchor that has influenced interest rates in the country but no more. Since the second quarter of 2017, the correlation between treasury yield and MPR broke as the monetary authorities chose to hold interest rate at 14 percent despite the steady monthly drop in inflation since

Inside

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Abdulfatah Ahmed Governor of Kwara State,

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“Typical of pre-election years,

Bukola Saraki - Senate President

NGUS OCT. NGUS JAN. NGUS JUL. 30, 2019 24, 2019 31, 2018

Saraki’s defection signals To spark market volatility

Currency Futures ($/N)

fgn bonds

L-R: James Benoit, chief executive officer, FCMB Bank (UK) Limited; Adeolu Adeboye, customer of FCMB; Femi Bakre, executive director, institutional banking (UK & Nigeria), FCMB; Olasubomi Balogun, founder of FCMB Group, his wife, Olori Abimbola Balogun, and Adam Nuru, managing director of First City Monument Bank, during the launch of the Personal and Business Banking proposition of FCMB Bank (UK) Limited in Lagos.

‘We will innovatively change the narrative of financial services in Africa’ Pgs. 20/21

Palm oil makers’ profits slump to five-year low on supply glut BALA AUGIE & ENDURANCE OKAFOR

he relative stability in the foreign exchange (FX) market which has led to cheaper imports has dealt a blow to oil palm producers as their earnings slumped the most in five years. Hitherto, firms like Okomu

and Presco made money when the regulator imposed ban on importers from accessing foreign exchange for certain product including palm-oil and textiles in June 2015. However, they started losing market share when the introduction of the Importers’ and Exporters’ (I & E) Window in June 2017,

which strengthened liquidity in the foreign exchange market and paved the way for customers to import product. “Foreign exchange has been more available compared to the past and the importers of agricultural input that used to patronize these firms during scarcity now have alternatives,” said Kayode

Tinuoye, Fund Manager for Institutions and Private Clients at United Capital Asset Management, Limited. “The weaker the naira the more revenue they can make from exports, but when the currency stabilizes, import will be-

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13 sectors record growth as PMI prints at 56.8 in July HOPE MOSES-ASHIKE

he Purchasing Managers Index (PMI) of the manufacturing sector printed at 56.8 index points in the month of July, indicating the sector was still in expansion but at a slower pace than the 57 index points recorded in June. The data showed that 13 out of 14 sub-sectors reported growth. A composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and below 50 points indicates that it is generally contracting. The report revealed that the production level, new orders, employment level and inventories grew at a slower rate; while supplier delivery time grew at a faster rate in July 2018. The sub-sectors which reported growth in the manufacturing sector include petroleum and coal products; printing and related support activities; paper products; electrical equipment; primary metal; furniture and related products; non-metallic mineral products; transportation equipment; textile, apparel, leather and footwear; chemical and pharmaceutical products; food, beverage and tobacco products; cement; and fabricated metal products. The Plastics and rubber products subsector declined in the review month. However, the composite PMI for the nonmanufacturing sector stood at 57.7 points in July 2018, indicating expansion in the Nonmanufacturing PMI for 15 consecutive

months. The index grew at a faster rate when compared to 57.5 index point recorded in June 2018. Under non-manufacturing sector, business activity, employment level and inventories grew at a faster rate; while new orders grew at a slower rate in July 2018. The manufacturing and nonmanufacturing PMI Report on businesses is based on survey responses, indicating the changes in the level of business activities in the current month compared with the preceding month. A total of 16 out of 17 non-manufacturing sub-sector recorded growth in the review period. These include order: information and communication; finance and insurance; water supply, sewage and waste management; wholesale/ retail trade; health care and social assistance; educational services; agriculture; real estate rental and leasing; arts, entertainment and recreation; professional, scientific, and technical services; transportation and warehousing; accommodation and food services; repair, maintenance/washing of motor vehicles; utilities; electricity, gas, steam and air conditioning supply; and construction. The management of companies subsector recorded contraction in the review period. The July 2018 PMI survey was conducted by the Statistics Department of the Central Bank of Nigeria during the period July 12 - 20, 2018. The respondents were purchasing and supply executives of manufacturing and non-manufacturing organizations in all 36 states in Nigeria and the Federal Capital Territory (FCT).

Oil theft losses larger than combined 2018 education, health budgets – report Conrad Omodiagbe

il theft losses from the Niger Delta region estimated at about N3.8 trillion in 2016 is higher than the combined budgetary allocations to both the education and health sectors for the year 2018. According to a report commissioned by the Nigeria National Resource Charter (NNRC), the combined allocations of both sectors amount to N189.4 billion, which is a measly 8.4 percent of the total value of the losses experienced in the oil sector within the last two years. The report indicates that those losses arose from crude oil theft, sabotage and pipeline vandalism, principally as a result of the force majeure declared at the Forcados terminal, combined with wider pipeline infractions and theft. The government’s share of this loss was approximately 42 percent or about N1.6 trillion. The Nigeria Natural Resource Charter (NNRC), a non-governmental organisation, provides policy options to guide governments and societies in their use of natural resources for maximised and sustain returns for citizens. In the light of the report, ‘Oil Theft in Nigeria,’ the NNRC urges the Federal Government to address oil theft with the urgent attention it deserves and intervene with more

effective action. The report focuses on the consequences of weak governance structures on the Nigerian economy and the Nigerian people. It also provides credible information on revenue losses from oil theft and its impact on the economy and the average Nigerian. The report notes that though oil theft has been a nagging problem in the sector, it was relatively insignificant until the 1970s, which saw an increase in pilfering level. It eventually evolved into a budding cottage industry on the basis of rising oil prices, which rose to as much as $100 a barrel in the early 2000s, causing consequential socio-economic problems. Oil theft has recorded an unprecedented growth over the last decade peaking between 2011 and 2014. The NNRC report also identifies several factors responsible for the emergence of oil theft in Nigeria over the years from poverty level, unemployment, poor governance, corruption to the disenfranchisement and neglect of the people of the Niger Delta region. Focusing on the consequences that weak government structure has on the Nigerian economy and people, the report also provides credible information on revenue losses experienced in the oil sector and its resultant effect on the average Nigerian. Continues on wwwbusinessday online.com

Wednesday 01 August 2018

L-R: Bala Ibn Na’alla, deputy majority leader; Udoma Udo Udoma, minister of budget and national planning; Vice President Yemi Osinbajo; Jumoke Odunwole, special assistant to the president on industry, trade and investment, and Babatunde Fashola, minister of power, works and housing, during the Presidential Enabling Business Environment Council Meeting at the Presidential Villa in Abuja, yesterday. NAN

Investors bid insurance stocks as index outperforms peers in H1 2018 David Ibidapo, Omobola Adu, Sobechukwu Eze & Emeka Ucheaga

he Nigeria Stock Exchange (NSE) insurance index increased by 7 percent in the first half (H1) of 2018 making it the best performing index on the bourse for the period according to the data compiled from Bloomberg. The insurance index also outperformed general market performance as the market maintains a bearish state despite a 4 percent growth in the All Share Index (ASI) in H1 2018. BusinessDay analysis shows that on a year to date YTD basis, the insurance index grew from 140.66 index points to 150.44 index points amongst other sectoral index on the Nigerian Stock Exchange(NSE)despitetheoverallbearish state of the stock market in H1 2018. Speaking about the insurance index, Dolapo Ashiru an investment analyst opines that “regulations soon to be passed which would put insurance companies into tiers has made the index see a rally in anticipation of consolidations among these companies.” Amongsts companies listed in the insurance index, YTD company performance reveals that companies such as AXA Mansard Insurance Plc, Custodian and Allied Insurance and NEM insurance were the main market movers. Topping the chart was AXA Mansard with 13.1432 index points,

Custodian with 11.86 index points and NEM with 11.08 index points. Other index such as the industrial index and the banking index have shown resilience with more opportunities expected during the second half of the year, providing both domestic and foreign investors the opportunity to reconsider their investment options and rebalance their portfolios. YTD performance reveals that the industrial index appreciated by 1.48 percent from 1979.4 points in January to 2008.7 as at end of June making the index the second best performer on the NSE. The banking index also struggled to witness an appreciation of 0.17 percent in its H1 performance from 475.26bps to 476.05bps. Abdulrauf Bello, Investment Research Analyst, WSTC Financial Services opines that, “i expect an uptick in banking index as whatever

liquidity that would be released into the economy will go through the banking sector” The consumer index and the oil and gas index on the other hand stood as the worst performing indexes on the Nigeria Stock Exchange Market. The consumer Index declined by 5.21 percent from 978.67bps to 927.72bps as at June 2018. The oil and gas index performance dropped by 1.89 percent from 329.43bps to 323.22bps within the same period under review. Paul Uzum, stockbroker at the Nigerian Stock exchange market believes that despite the bearish state of the market, the oil and gas index should pick up in the second half of 2018 as a result of the soon to be completed oil subsidy payment moves by the federal government of Nigeria to oil companies. Likely increase in Continues on wwwbusinessday online.com

BPE begins review of port concession agreements KEHINDE AKINTOLA, Abuja

lex Okoh, Director- General of Bureau of Public Enterprise (BPE) on Tuesday disclosed that the agency has commenced the review of all the concession agreements of Nigerian ports signed between Federal Government and private concessionaires in 2006. Okoh stated this during an investigative hearing into the status and performance of the ports, held at the instance of House Committee on Privatization and Commercialization. Okoh explained that holistic review of the concession agreement was to ensure that the ports were put into optimal performance, adding that the agency is also partnering the World Bank to provide needed capacity and technical assistance in that regard.

He observed that the Bureau plays an intermediary role between NPA and private concessionaires with the view to ensure adherence to the terms of agreements by both parties. “We are undertaking a complete review of the ports concession agreements to ascertain and harmonize the issues affecting the optimal performance of the ports. The World Bank is to provide the capacity and the BPE is to serve as a confirming party,” Okoh stated. The BPE helmsman further noted that the review will also help to re-assess the values of leased assets as well as factors that inhibit the realization of objectives of the concession such as poor dredging, inaccessible roads, inconsistent government policies and lack of regulatory framework. In his remarks, Ahmed Yerima, Chairman of the Committee un-

derscored the need to ensure successful implementation of the agreement in order to attract more foreign direct foreign investments into the Nigerian economy. The lawmakers mandated the BPE and the NPA to submit copies of the supplemental agreements to the concessionaire terminal operators within 10 days and to conclude the agreement review within 30 days. The lawmakers also tasked BPE to expedite and operationalize the concession agreement in a win-win situation and in line with global best practices. During the presentation, some of the concessionaires operating in Lagos, Port Harcourt and Calabar ports, frowned at the poor condition of the ports, high lease fees and incidence of piracy in Nigerian territorial water, which were making them run at a loss.

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Launch of ‘Patients’ Bill of Rights to ensure health funding translates to quality care - Osinbajo HARRISON EDEH, Abuja

ice President Yemi Osinbajo says the Federal Government’s launch of Patients Bill of Rights (PBoR) will ensure that the increasing funding that is coming into healthcare in Nigeria translates to qualitative health care for all. The Vice President gave the assurance at the launch of the ‘Patients’ Bill of Rights on Tuesday in Abuja, which is a Consumer Protection Council (CPC) initiative to ensure patients demand for quality healthcare from providers according to basichealthcareprovisions of the National Health Act. The Patients’ Bill of Rights, the Vice President said, is a timely complement to the policy and funding interventions of the Federal Government. The bill, among other things, is hinged on promoting quality, equality and dignity in healthcare service. According to Osinbajo,” The Bill will ensure that the increasing funding that is coming into healthcare in Nigeria translates into a direct improvement in the quality of the final output at what one might call the ‘last mile’ phase of healthcare delivery, the very personal arena of interaction between health personnel and the beneficiaries of the healthcare.” A breakdown of the ‘Patients’ Bill of Rights guarantees the health consumers the following rights: “Right to relevant informa-

tion in a language and manner the patient understands, and right to timely access to detailed and accurate medical records and available services.” It further contains rights to transparent billing and full disclosure of any cost, right to privacy and confidentiality of medical records and right to clean, safe and secure healthcare environment. Others are, right to be treated with respect regardless of gender, race, religion, ethnicity, allegations of crime, disability or economic circumstances. Also, it includes right to receive urgent and sufficient intervention and care in the event of an emergency, and right to reasonable visitation in accordance with prevailing rules and regulations. It contains further the rights to decline care, rights to decline or consent to participation in medical research, right to quality care in accordance to prevailing standards and rights to express dissatisfaction regarding services received. He pointed out further stating that in terms of policy and funding, the government was aware of the challengesofNigeria’shealthsector. “That is why we are singlemindedly pursuing the attainment of Universal Health Coverage in Nigeria. For the first time ever, our 2018 budget allocates 1 percent of the Consolidated Revenue Fund towards the funding of key health initiatives, in compliance with the National

Health Act,” he said. Speaking on the basic provisions of the bill, Babatunde Irukera, director-general, CPC, said the PBoR would assist healthcare professionals and profession associations identify and eliminate quacks in the sector. Irukera said for any meaningful change to occur, patients and their families must become conversant with their rights and responsibilities. He said providers must also be familiar with their roles and duties to patients to ensure change in the sector, saying, “Today, we take a definite step in ensuring people’s right in the healthcare sector are truly respected and protected as no one is insulated from needing medical services. “This calls for an opportunity to change the entire landscape, protect consumers, save lives, prevent injury and inculcate fundamental value for people. “This is the transformation that calls for urgent action; there is an urgency to protect the right and dignity of people on this nation. “There is an emergent reason to ensure citizens are lifted up from poverty, there is an unequivocal responsibility to humanise all and pay attention to the most vulnerable. “The PBoR is our boldest step yet in soft infrastructure in healthcare. It is a vital vehicle upon which physical infrastructure must ride to truly deliver services”.

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COMMENT SMALL BUSINESS HANDBOOK

EMEKA OSUJI Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

popular truism of medical science is that the effective treatment of an ailment begins with a successful diagnosis. As though to amplify the idea, an Igbo adage puts it more graphically (and I warn that some people might not like their choice of words), that those who wish to stop anyone from vomiting must begin by locating and fighting whatever it is that pushes from under the chest of the victim. As the saying goes, from the mouth of two witnesses, the truth is established. These advisories, as they may be described, are now of general application, and have been well adopted in many fields other than medicine. The point of these advisories is that we need strong intuitions to delivery national programmes and policy support for such institutions must not be lacking. As late Chief Moshood Abiola, the undeclared winner of the June 12, 1993 Presidential

Wednesday 01 August 2018

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Poverty generators and the challenge of microfinance in Nigeria (1) Election in Nigeria cancelled several operators had also been have not stood the players in As at December by the then military President, shown the way out. In all, there good stead. Add to these, the General Ibrahim Babangida, 46 of them that were closed challenge of poor governance 2016, the Nigerian were used to say, one cannot clap down by the same review period; reflected by the weak board with one hand. One needs two all in a bid to strengthen the oversight evident in the indusDeposit Insurance industry for effective delivery try. Probably most import, the hands to clap effectively. The matter of rising volumes of noncorollary to it is that we cannot of services. clear only one side of a pathway Evidently, the times have performing loans, and insider Corporation (NDIC) and say that the path has been been quite hard for these opera- abuses. These drawbacks have properly cleared. With regard tors, as reflected in the mortality been aided by poor internal reports that it to microfinance and poverty, figures just presented. And the controls and record keeping to we cannot successfully tackle hard times were not limited to do in some operators. had withdrawn Furthermore and particupoverty if we do not bother the microfinance and mortgage about the factors pushing peobanking sectors. The deposit larly for the PMBs, the inability the licenses of ple into poverty - what I may money banks have also paid of some institutions to honour call poverty generators. dearly for their citizenship of withdrawal request from depos127 microfinance the Nigerian financial system, itors and shortage of long term It is now more than a decade since the federal government at a time of global economic and funds, weak leadership and of Nigeria introduced microbanks that became financial turbulence, as recently substandard loan books and finance as an official strategy witnessed. But for the ability of deliberate financial misreportfor poverty reduction. That was insolvent and unable the NDIC to manage the crisis, ing have promoted the growth in 2005. How time flies. This much more damage would have of non-performing loans and strategy has led to the develbeen done to the wider econo- advances· As a result of these to continue in opment of a whole new world my. Early resolution of problem challenges, many operators and channel of financing the banks, and timely payment of have downgraded the business operation Nigerian economy by permitpremiums and dividends, has of risk assets creation to deposit ting the growth of microfinance banks - a group of financial institutions that are intended to be smart, quick and patient to handle the challenges of financing the economically active poor. Over these past years, the microfinance industry has grown steadily, though not as rapidly when compared to the experience of other climes. We now have over 1000 licensed microfinance banks spread all over the country, making loans, supporting capacity building and helping the poor in business. The industry has however had its fair share of the vicissitudes of economic downturn and other complications that the Nigerian economy has been passing through. As a

result, there has been a lot of casualties among the operators, many of whom have exited the market. As at December 2016, the Nigerian Deposit Insurance Corporation (NDIC) reports that it had withdrawn the licenses of 127 microfinance banks that became insolvent and unable to continue in operation. That is a large number by any standard and probably symptomatic of some fundamental flaws in the system. With regard to Primary Mortgage Institutions (Mortgage Banks), which are also part of the war chest of arsenals lined up by government to fight poverty,

come handy to mitigate the hardship of customers. It has been pretty hard to pinpoint any particular reason for the poor performance of many of the operators in the microfinance industry. However, the NDIC has fingered certain indivisibilities that keep plaguing the sector. Among them are the issues of inappropriate business model, of which we have written very extensively in this column, and equally inappropriate corporate culture as reflected in operators’ excessive overhead. There is also the issue of poor capitalization. Many operators are not financially prepared to play the roles they are taking on. Low capital funds, which have been further diminished by recent bouts of devaluation,

placement. There is now a preponderance of funds invested by way of placements with and among other banks rather than credit to clents and customers. There are many things that hasten the journey of our people into poverty. They create more poverty stricken people. They are poverty generators. Any pursuit of poverty alleviation without confronting these elements will hit a brick wall. We shall, in the coming weeks, look at some agents of poverty in Nigeria and name them as such. That way we are better able to fight poverty from its source.

now. Even the Thais have outdone us. It was as if the whole country remained at a standstill until they finally rescued their boys from the cave. Needless to say here that a Thai diver lost his life in the process. He was fully aware of the risks but he too selflessly chose life. Ethics is anchored on the most basic of principles and that’s the Golden Rule which says “do unto others as you would have them do unto you”. I don’t see anyone in his right senses and this includes the culprits in the afore mentioned cases, wishing that he would be at the receiving end of all these thoughtless and often callous actions and yet they don’t think twice before doing it to others. The two most prominent theories of Ethics, Utilitarianism and Immanuel Kant’s Categorical Imperative, clearly spell out what they believe amounts to a morally correct act and what an individual should consider before taking a particular course of action. The former says you should ask yourself what would produce the best result for the greatest number

of people while also producing the least harm. This in fact represents a major guiding principle of the legal system. What are the rules that will ultimately benefit society and the majority of people in it? The latter says you should not only refrain from treating your fellow man purely as a means to and end but you should treat him as an end in himself; as he is a human being after all, which makes him a sentient being( beings that have feelings). Secondly and just as importantly, you need to apply the Universalizability principle which says you should ask if it was to be made a law for everybody to do what you are about to do, would it be acceptable to you? So if you think it’s okay for you to lie you must will it to be made a law that everyone must lie at all times. Let’s see if you’ll like it then! Somehow I don’t think so. Kant’s belief was that we should always do the right thing for no other reason than it is our moral duty to do so. I believe so too. Send reactions to: comment@businessdayonline.com

Send reactions to: comment@businessdayonline.com

Let’s choose life

DAPO AKANDE Dapo Akande, author of the acclaimed book, “The Last Flight...a personal journey to rediscovering values”, is also the Founder of MINDS Reform Initiative, a NGO focused Character Education. Contact:dapsakande25@gmail.com

society that doesn’t value the life of its citizens can never do well. This is a given. Is it the danfo driver who stops abruptly? Not because he’s arrived at a bus stop but because his overriding interest to pick up passengers is the only thing that matters, thereby giving not a second’s thought to whether his action may imperil those coming behind him. Or is it

the importer of medicinal drugs who in cahoots with equally unethical manufacturers, sells fake drugs to the unsuspecting, not giving a toss (kindly mind my language) about the potentially dire consequences? Or do we look at recent happenings where some hapless Nigerians bought what they thought were return tickets to Russia to watch the World Cup only to discover to their total dismay that they had been conned? They were in fact only one way tickets. What may eventually happen to these innocent people doesn’t matter a jot to the culprits. It certainly doesn’t keep them up at night. The only thing that may well keep them up is the excitement that comes over them as they consider the array of goodies they can use their ill-gotten largess to spoil themselves with. “Yes o, it’s my turn to ‘show them’!” “These haters go gba!” All at the expense and possibly the life of others. Can you really blame them all though? It’s not only children who learn to do what you do rather

than what you say. Adults do too. It’s not the tired, empty and what at times appears to be a pre-recording of the mantra, “we will leave no stone unturned” that will convince the people of government’s genuine concern for them but simple, and I mean simple actions. Simple because all you need do is the right thing and in most cases even a child knows what that should be. I daresay that by now there can’t be any more stones in Nigeria standing the right way up. Surely they must have started turning stones in neighbouring Republic of Benin, Niger and so on too. It’s common knowledge that the US army will risk the lives of tens of soldiers just to save one civilian life. They choose life. And we wonder why the average American is so patriotic; willing to go the ends of the earth to defend his country. I was amazed when I visited the US for the first time in 1992 and noticed the unmistakable star spangled banner proudly hoisted outside almost every other house. I couldn’t really fathom it then but I certainly do

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CBN’S DCRR: Beyond the primacy of price stability

UCHE UWALEKE Uche Uwaleke is a Professor of Finance & Capital market and the Chair of Banking and Finance Department at the Nasarawa State University Keffi

n a salutary move that transcends its primary mandate of maintaining price stability, the Central Bank of Nigeria through its Monetary Policy Committee recently unveiled plans to adopt a ‘’heterodox approach’’ to strengthen the flow of credit to the private sector. This novel approach includes tweaking the reserves requirement for real sector-friendly Deposit Money Banks in what it terms the ‘’Differentiated Dynamic Cash Reserve Requirement regime’’. This was one of the highpoints of the recently concluded 262nd meeting of the MPC held on 23rd and 24th July, 2018. Citing concerns about the liquidity impact of the 2018 expansionary fiscal budget, increasing FAAC distribution arising from rising prices of crude oil, the build-up in election related spending ahead of the 2019 general elections, the effects of the sustained monetary policy normalization in the United States with implications for capital flow reversals as well as the threat to disinflation posed by incessant herdsmen-

BISI OLUFUWA Olufuwa is Director, Public Affairs, Lagos State Ministry of Local Govt. & Community Affairs

n-spite of being cosmopolitan in outlook, Lagos has its fair share of rural communities. Approximately 12 percent of people in the State dwell in suburbs, and country sides. It is; therefore, in an effort to ensure even and accelerated development in all parts of the State that the Ambode administration anchors its development drive on ‘all inclusive governance’. The administration’s idea of an all inclusive government is one in which “no one or segment of the society, irrespective of colour, race, faith, status, ability or disability is left behind”. One area in which this philosophy is actually being radically reflected is in the State government’s partnership with Community Development Associations, CDAs. The establishment of a virile and vibrant system of community associations, has, over the years, enabled democratically elected government to partner with communities, sensitize them on its priorities and receive feedback on public policies. The fact that no development can take place in any society without peace and harmony further underscores the need for this corporation with CDAs, who are actually closer to the various communities than elected government. Universally, true development is

farmers crisis in some major food producing states, the MPC had compelling reasons to leave the policy parameters unchanged in order not to jeopardize the primary mandate of the Central Bank. At the same time, the MPC took cognizance of the need to strengthen the country’s weak economic recovery against the backdrop of a shallow intermediation system (measured by the ratio of private sector credit to GDP – well below that of peer countries) and so saw the wisdom in incentivising Deposit Money Banks to increase the flow of credit to the real economy. Addressing a long-standing concern of the DMBs and ‘’the preference of the public for loosening’’ the MPC had stated in its communiqué that ‘’a heterodox approach to reform the market in order to strengthen the flow of credit would be appropriate at this time. Consequently, credit constrained businesses, particularly the large corporations are encouraged to issue commercial paper to meet their credit needs and the Central Bank of Nigeria may, if need be, buy those instruments to complement the efforts of the DMBs. In addition, as a way of incentivising deposit money banks to increase lending to the manufacturing and agriculture sectors, a differentiated dynamic cash reserves requirement (CRR) regime would be implemented, to direct cheap long term bank credit at 9 per cent, with a minimum tenor of seven (7) years and two (2) years moratorium to employment elastic sectors of the Nigerian economy’’. Through these initiatives, the CBN has demonstrated a willingness to be flexible

There is no doubt that the DCRR will create conditions for DMBs to reduce interest rates on loans and improve access to credit. Together with the Collateral Registry already in place, this initiative will manifest in a higher ranking for Nigeria in the World Bank Ease of Doing Business index for 2019 and responsive to the yearnings of the public while at the same time keeping a handle on its primary mandate of maintaining price stability. A number of studies have shown that unremunerated reserve requirements act as a tax on banks and thus push up cost of credit. By extension, reserve requirements act as a limitation on DMB’s capacity to make loans. According to an IMF Working Paper on ‘’Central Bank Balances and Reserve Requirements’’, prepared by Simon Gray in February 2011, some central banks have applied differential CRR to different types of banks. In fact, China, India, Brazil and many other emerging economies have used CRR to direct credit towards sustainable investments. For instance, the central bank of Lebanon has used differentiated reserve requirements to funnel credit to critical sectors. According

to the Banque du Liban, its target is to “facilitate financing investments in specific economic sectors by exempting banks from part of the required reserve requirement to finance these projects at low cost”. With respect to Green Finance, the Banque du Liban supports green credits by lowering the reserve requirements of a commercial bank by 100 - 150 per cent of the loan value if the bank can provide proof of the energy savings potential of the financed project. Such a policy, introduced in 2010, where banks with a higher share of green lending are subject to lower reserve requirements, has proved a remarkable success in the country’s Green initiatives. Quoting a report by China’s state news agency Xinhua, Reuters had disclosed that “since the start of 2011, the central bank has already started using dynamic differentiated required reserve ratios as a tool in its monetary and credit controls,” adding that ‘’the Xinhua report served to underscore that differentiated reserves have, in fact, become an essential component of China’s monetary policy toolkit’’. China had previously imposed differentiated reserve requirement ratios on banks as a way to punish unbridled lending. In a study on the ‘’effects of differentiated reserve requirement ratio polcy on the earthquake-stricken area in China’’, Guo Xiaohu and Tajul Ariffin noted that the Peoples Bank of China had actually introduced Differentiated Reserve Requirement Ratio (DRRR) policy since April, 2004. The initial purpose of the policy was to limit loan expansion of those financial institutions with

inadequate capital and poor asset quality by imposing a higher CRR. Following a devastating earthquake in the Sichuan Province in May 2008, a lower CRR was applied to financial institutions operating in the Province to help with reconstruction efforts. Guo Xiaohu and Tajul Ariffin equally documented that the Central Bank of Brazil, the Banco Central do Brasi, had in the past used heterogeneous reserve requirements in order to facilitate credit and foster growth in poorer regions of the country. There is no doubt that the DCRR will create conditions for DMBs to reduce interest rates on loans and improve access to credit. Together with the Collateral Registry already in place, this initiative will manifest in a higher ranking for Nigeria in the World Bank Ease of Doing Business index for 2019. It will be recalled that the country was placed 145th position out of 190 countries in 2018 with the best performance recorded in the area of ‘getting credit’ in which Nigeria ranked 6th out of 190 countries from 32nd position in 2017. An improved ranking will boost foreign investors’ confidence in the economy. The extra liquidity released as a result of implementing the DCRR has the potential of increasing corporate earnings and shareholders wealth, a positive development for the capital market as the unlocked funds feed into the process of capital formation.

Note: the rest of this article continues in the online edition of Business Day @https://businessdayonline.com/ Send reactions to: comment@businessdayonline.com

Lagos and the gains of inclusive governance measured by the even distribution of basic amenities to both urban and rural areas. For a fact, urban dwellers enjoy the proximity of a metropolitan ambiance as well as the Corporate Social Responsibility, CSR, from various corporate organizations in the areas of provision of basic amenities. Sadly, this doesn’t seem to be usually the case with hinterland dwellers. It is, indeed, the quest to bridge perceived infrastructural gap in rural communities that gave rise to what is today known as CDAs and this explains why governments not only reach out to this group in a mutually beneficial developmental partnership, but also explores ways to further solidify the relationship. Currently, in Lagos State, conscious efforts are being made by appropriate government agencies to encourage more communal spirit as it is being exemplified by the current dispensation in Lagos State. Before now, Lagos only boasts of 2,500 CDAs but within the last three years, the number has increased to 3,935. This is largely due to the support being given various CDAs in the State by the Ambode administration. The administration not only gives the CDAs grants, but also encourages them to oversee government projects and infrastructure within their neighborhood. Most of these communities have embarked on many self-help projects ranging from construction of community halls, installation of

street lights, transformers, building of police posts, drainage and health centres construction as a way of complementing the efforts of both State and Local Governments to engender growth and development. In the last three years, the State government had integrated the CDAs into all its programmes such as the handover of 114 roads, as well as the management of generators powering streetlights among others. Recently, in what could be described as unprecedented in the history of CDAs in the State and the country as a whole, the sum of Five Hundred Million Naira (N500, 000,000) was provided as empowerment grant to 275 CDAs in the State for them to complete some ongoing self-help projects within their respective localities. Some of the CDAs that benefitted from the grant include; Sowhekoji, Badagry; Olera , Ojokoro; Alaiyabiagba , Ajeromi; Gbaga Olorunda, Ikorodu; Orile Seriki; Oko-Ito Phase 1; Jibode, Ifako-Ijaiye; and Anifowoshe, Ikeja. Others are Onibaba, Ajeromi Ifelodun; Ogoitan Phase I, Epe; Ifelodun Surulere, Olorunda; Ofiran Phase 1, Ibeju Lekki; Equitable Estate, Igbogbo Baiyeku; Anuoluwapo, Ojota among others. As noble as the gesture appears, Governor Ambode, at the presentation of the grant held at De Blue Roof, Ikeja remarked that it was in line with his promise of inclusion saying that making government felt at the

grassroots is a major focus of his administration. He also disclosed that the gesture would be a yearly thing and that more CDAs are to benefit. It should be stressed that in line with United Nations Initiative, the State Government on a yearly basis usually set aside a day as Community Day to recognize the developmental contributions of the various CDAs in the State. Last year edition witnessed the distribution of three vehicles to the best three CDAs, among other largesse. This yearly celebration has been identified as a way of promoting healthy rivalry among the various CDAs with all of them striving to emerge and be recognized as the best CDA. In the area of community electrification, some rural communities in the State that have been without light for over 13 years now enjoy power supply due to the intervention of the state government. These are Fidiso, Elepete, Alakun, Abule-Panu Gbarada, Gbetu, Agbele, Odogbonle, Government Technical College, Odomola, Lowa/Haruna, Odo-Agba/OfinIle, Ajumose in Agbede, and OkeIbujeun. Some communities along Seme-Gbaji area of Badagry were also liberated from the perpetual darkness that had enveloped the communities for close to eighteen years The community electrification projects were just a few of the numerous projects the current government has bequeathed on various communities in the last two years. But then, government has exemplified his in-

clusive mantra in different instances and diverse areas. The construction of the Aboru Link Bridge, the 114 community roads across the various council areas; construction of bridges to connect the arteries; and the latest, construction of over 20 border communities roads in Alimosho areas of the State are a few of the many initiatives being put in place to make life meaningful for rural dwellers. In the Badagry axis, the Imeke Bridge in Olorunda LCDA has been completed while the construction of a 17km network of roads connecting Aradagun to Whispering Palms, a major tourist resort in the State is ongoing. With all these, it could be affirmed that the State government has a systematic strategy of accelerating development in Lagos rural communities. Cheerfully, government is not resting on its oars as more developmental projects are still ongoing in several parts of the State. Undoubtedly, Lagos population is huge and there is need to curb rural-urban migration through the provision of necessary amenities for the comfort of community dwellers. This explains why CDAs will continue to be an integral part of community administration in Lagos State.

Note: the rest of this article continues in the online edition of Business Day @https://businessdayonline.com/ Send reactions to: comment@businessdayonline.com

BUSINESS DAY

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EDITORIAL PUBLISHER/CEO

Frank Aigbogun

EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan

The sad narrative of poverty in Nigeria

igeria slipped into infamy in June by being named the poverty capital of the world, a tag previously worn by India. The report by the Brookings Institute, drawing its data from the World Poverty Clock, shows that Nigeria now has over 87 million of its citizens living in extreme poverty compared to India’s with just 73 million. But whereas, India, with a population of 1.35 billion, has continued to see a rapid decline in the number of its population leaving under extreme poverty, Nigeria, with just a population of under 200 million, has continued to see its desperately poor population rising at an alarming rate. According to the report, extreme poverty is growing by six people every minute in Nigeria while poverty in India continues to fall. This is not too dissimilar from the report of the National Bureau of Statistics, which, in 2016, estimated that over 70 percent of Nigeria’s population then (112 million) live below the poverty line. Although the Buhari administration has continued to operate in denial of the reality of the growth of extreme poverty in Nigeria, it is clear from the indications and economic

indices that Nigerians have never been this poor and desperate since independence. And make no mistake about it, the poverty problem in Nigeria is directly a result of the nebulous and illintentioned economic policies the Buhari administration has pursued, which have squeezed enterprises and even more, citizens, have seen their real income more than halved in a twinkle of an eye and prices of food, goods and services skyrocket beyond the reach of most Nigerians. The problem started shortly after the president took over in 2015. His ascension of office was followed with a groundswell of optimism and the markets reacted appropriately hoping the president would urgently roll out the promised market reforms and provide direction for the economy. But the president did nothing, allowed the economy to continue to drift without any direction or leadership whatsoever and when the tides began to turn and the markets started reacting appropriately, the administration rolled out a series of damaging command and control policies which sought to controlthe foreign exchange market and the economy. The effect was that foreign investors were forced to repatriate their investments and halt new ones, resulting in a crippling foreign exchange scarcity

that led to severe job losses, hyper inflation, and severe dislocations in the economy. But despite these clear evidences, the government continued to live in denial, choosing to blame the past administration for the economic downturn and recession it directly caused. What is more, the administration’s import substitution policies that have seen it ban the importation of some agricultural products and food in preference for promoting local production has been one of the leading factors increasing poverty in Nigeria. The world over, the standard means of lifting people out of poverty is ensuring that their disposable incomes are enough to buy them food and other necessities. So, governments that have successfully lifted most of their people out of poverty do cash transfers to their poorest or ensure the prices of foods are especially low so that the poor could be able to afford them. But Nigeria is not only discouraging free trade, which has the capacity to lift people out of poverty, but is encouraging monopoly and the flourishing of inefficient local industries that exploit the poor by unnecessarily raising food prices. Take for instance the unwise decision to ban the importation of rice into the country to encourage

local rice producers. The result has been the skyrocketing of the prices of local rice, which is way beyond the reach of most of Nigeria’s poor. What is more, most consumers have continued to shun local rice because of its low quality compared to imported ones. No wonder the smuggling of rice from across the border is rife. And to show the government is hell-bent on increasing the misery of the poor, it is succumbing to the demands of the Nigerian rice cartel to shut the borders and employ drones to monitor and totally stop the import of rice into the country to allow the cartel the freedom to continue to squeeze the poor out of existence. No serious government that wants to address poverty will at the same time be encouraging or supporting monopolies in food production that always results in higher prices of food for the poor. No wonder an OECD report on Nigeria avers that “Nigerians would save 30% of their income if they bought their food at Indian prices.” For the country to make any progress on poverty alleviation, the government needs to accept the realities on the ground and begin to fashion policies that not only tackle the fundamental reasons why poverty is spreading at an alarming rate, but ensure productivity and competitiveness.

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo

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Wednesday 01 August 2018

BUSINESS

COMPANIES & MARKETS

DAY

Dangote Sugar attribute earnings decline to smugglers’ activities

Pg. 14

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

Seplat announce plans to expand operations amid increasing revenue …confirms licenses renewal on OMLs 4, 38 and 41 from DPR DIPO OLADEHINDE

espite recording a 160 per cent growth in revenue from contracts with customers to N105 billion in half year 2018 from N40 billion in half year 2017; Seplat Petroleum Company one of the front runners in Africa’s rapidly emerging independent oil and gas companies has announced plans to further expand profitability and increase operations by drilling its first well in its OML 53 asset. “The second half of this year will see us accelerate field development activities across the existing portfolio as we start to drill the first wells on our OML 53 asset,” Austin Avuru, Seplat’s chief executive officer said in its just released second quarter 2018 results. On the OML 53, Seplat said it plans to re-enter, complete, and bring on-stream two oil production wells at the Ohaji South oil field and work over one oil production well at the Jisike oil field. : “The Company continues to high grade the large inventory of production drilling opportunities within the existing portfolio with a view to scaling up the forward work pro-

gramme to efficiently capture the highest cash return production opportunities,” Seplat said. On its other oil fields at OMLs 4, 38 and 41, Seplat announced plans to redeploy rigs into it oil fields by undertaking certain facilities upgrade and obtain projects optimisation while it drills one new gas production well that will also incorporate an exploration and appraisal tail to test potential in deeper zones. “In addition to this one workover of an existing gas production well will be undertaken; Seplat will also install Non -Associated Gas (NAG) booster compression, a second condensate train at the Oben gas processing plant and make upgrades to the Sapele gas plant,” Seplat announced in its H1 2018 report. The only Nigerian indigenous Oil and Gas Company listed on London Stock Exchanges also said it had received confirmation of approval from the Department of Petroleum Resources (DPR) for renewal of licenses on OMLs 4, 38 and 41 for a period of 20 years although still subject to final consent of the Honourable Minister of Petroleum Resources. The Company’s policy of creating multiple export routes for all of its assets has resulted in it actively pursuing alternative

crude oil evacuation options for production at OMLs 4, 38 and 41 and potential strategies to further grow and diversify production in order to reduce any over-reliance on one particular third party operated export system. “It is Seplat’s ultimate intention to utilise all three independent export options to ensure there is adequate redundancy in evacuation routes, reducing downtime which has adversely affected the business over a number of years, significantly de-risking the distribution of production to market,” Seplat said. Seplat acknowledges that due to slower than expected progress the firm have revised the timeline for delivery of the Amukpe to Escravos pipeline and FID at the ANOH gas condensate project to later in the year. “The fundamentals of the underlying business remain very strong as we continue to focus on delivering on our promises,” Seplat said in its half year report. In its half year 2018 result released yesterday, BusinessDay investigations showed operating profits increased to N48 billion from N2 billion in H1 2017, while gross profit increased by 222 percent to N53 billion from N16 billion in 2016 as Net profit also increased to

L-R: Borokini Olutayo, director general, Chartered Insurance Institute of Nigeria (CIIN); Eddie Efekoha, president/chairman of council, CIIN, his wfe Oghenenyoreh Efekoha, and Bola Temowo, captain, Ikeja Golf Club, at the dinner in honour of the 49th president, CIIN in Lagos. Pic by Olawale Amoo

N32 billion from N8 billion net loss H1 last year. Also,Net cash flow from operating activities spiked by 131 percent to $245 million (N75 billion) from $1o6 million (N32 billion) recorded in H1 last year. “The results today continue to demonstrate our ability to generate cashflow and profitability from our assets and we are on track to deliver our 2018 production guidance in both oil and gas,

Diamond Bank drives growth with three million digital customers in Q2

iamond Bank has released its second quarter unaudited financial report for the period ended June 30, 2018 to the management and stockbrokers of the Nigerian Stock Exchange (NSE), emphasising its strong focus on the Nigerian market, especially the retail business segment through its digital penetration strategy. The report showed that the Bank’s digital strategy is paying off as the institution recorded a milestone figure of three million digital customers as well as a significant increase in its mobile platform transaction fees. Non-interest income of the Bank went up 6.4 percent to N18.8 billion on higher fees from retail transactions on mobile platform while

customers loan volume decreased by 3.6 percent to N728.7 billion as maturities exceeded new loans during the period but investments in fixed income securities increased 8.0 percent to N241.7 billion over the same period, according to the report. Although the Bank’s net interest income reduced yearon-year by 14.4 percent to N46.2 billion due to lower interest income from loans and investments, and higher interest expense on deposits; impairment charges declined 2.9 percent to N18.39 billion. The Bank’s profit after tax for the first half of the year stood at N2.2 billion. Commenting on the result, Uzoma Dozie, chief executive officer of the Bank said: “At a macro level the Nigerian economy con-

tinued to record improvements because of stable, higher than anticipated oil prices. We have witnessed 15 months of expansion reflected in monthly PMI data, but investor sentiment has remained mixed caused in part by the election season factor. We have capitalised on the positive macro environment to sustain interest income in the short run with positive prospects for growth and have made progress in growing non-interest income. Importantly, we have continued to build awareness of Diamond Bank in the wider financial ecosystem to develop new frontiers in retail banking. Amongst this activity were the Beauty Souk and TechFest events, targeted at entrepreneurs and emerging businesses in

the fashion and technology sectors respectively. Our partnership with Lagos Business School’s Enterprise Development Center to support young entrepreneurs continued with the seventh season of the Building Entrepreneurs Today program. “In addition to retail banking, we are investing more resources in our mid-market business banking services to seize the opportunities emerging in that segment. In the second half of 2018, these investments will lead to improved profitability overall, he said. Despite a tough six months being reported, the outlook for 2018 remains bright for the Bank as we continue to focus on a return to strong profitability and improvement in other KPIs.”

with gas now contributing a significant portion to the bottom line,” Avuru said. Despite hitting a new high record of $45.8 million in q2 2018; Seplat’s gas business continues to make an increasing revenue contribution as it generates $85.3 million revenue at an average gas price of $3.04/Mscf in H1 2018 which is a 57 percent increase compared to $54.4 million in the same period last year.

Having commenced the deliveries of commissioning gas to the 459MW AzuraEdo IPP in December 2017, when the first turbine was synchronised to the national grid, Seplat anticipates the commissioning phase to be completed in Q3 2018 after which deliveries will move to the contracted level of 116 MMscfd gross under takeor-pay and credit enhanced terms.

CBN governor to speak at 2018 LAPO Institute conference IDRIS UMAR MOMOH, Benin

he management of LAPO Institute says the Central of Bank of Nigeria governor, Godwin Emefiele will deliver a keynote address in her 2018 Conference on Microfinance and Enterprise Development (CMED). The conference which is the 4th in the series is slated to hold in Benin-City from August 7-8, 2018. The conference , with the theme, “Indigenous Technology Value and Chain Development”, will be chaired by Mike Obadan, non-executive director, CBN and

member, monetary policy committee while Betsy Bene Obaseki, first lady of Edo State will be Special Guest of Honour. A statement by Christian Okojie, chairperson, Conference Planning Committee said the conference “is a unique platform for technologists, academia, researchers, innovators, entrepreneurs, regulators among others”. Okojie, said this year’s conference will primarily focus on harnessing indigenous technology in value chain development as a way to boost domestic production and reduce import dependency in Nigeria.

BUSINESS DAY

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Wednesday 01 August 2018

COMPANIES & MARKETS Dangote Sugar attribute earnings decline to smugglers’ activities Sobechukwu Eze

he earnings of Dangote Sugar Refinery Plc dipped by 26 percent in first-half (H1) when compared to the same period of 2017, and this according to the company is attributed to activities of smugglers who illegally import the commodity, as well as logistics encumbrances on account of traffic congestion in Apapa where the company’s production facility is located. The company’s financial report for first half of the year (H1) showed Profit Before Tax (PBT) and Profit After Tax (PAT) fell by 21 percent and 26 percent respectively as the groups PBT reduced from 25 billion in H1 2017 to 20 billion in H1 2018. Revenue reduced by 29 percent, as its income fell from N118.7 billion in H1 2017 to N84.1 billion in H1 2018. Although, its cost of goods sold fell by 34 percent from N91 billion in H1 2017 to N60 billion 2018, it was not enough to give the company’s H1 2018 a much higher gross profit than the corresponding period in 2017 as it declined by 13.4

percent. The market may already be reacting to the company’s financial standing, as the share price fell by 9.3 percent from N17.7 which was the closing price on the 23rd of July, to N16.05 at the close of trade last week Friday. Abdullahi Sule, managing director of the company, while speaking in a video interview monitored by BusinessDay correspondent, blamed the weak performance recorded in H1 2018, on challenges arising from unlicensed sugar importation that is being smuggled into the country. This he said is especially rampant in the northern part of the country, and sold nationwide, thereby making them lose key market shares. Sule also lamented the logistic challenges brought about by the Apapa access roads traffic gridlock which has hindered the smooth flow of transportation of the company’s products, from its production facility that is situated there. The company in a press statement, reiterated Sule’s views, emphasising that the influx of smuggled sugar which is of lower quality, has severely affected their

market share and competitive pricing. This has created a ready alternative that is sold to customers who are not mindful of the quality implications of the product due to its lower price. It has in turn, led to a continuous downward pressure on prices and sales volumes. Year on year there has been a reduction in the average selling price, the company said. Although the company’s earnings seem to have fallen in the first half of the year, it still maintains market leadership in the sugar sector, with improvements in its margins year on year, as its net margin and operating margin were 15 percent and 23 percent in 2018 H1 an improvement from 14 percent and 20 percent in 2017 H1. The company also says it intends to increase refining and production efficiency, energy and cost saving projects and the relentless implementation of its Sugar Backward Integration Projects plan, which Sule believes would make the business more profitable, stronger and alleviate their concern of reduction in market shares from smuggled products.

Medview experiences tough time over slump in ticket sales IFEOMA OKEKE

edview Airlines Nigeria Plc, the only indigenous airline quoted on the floor of the bourse is experiencing tough time due to slump in ticket sales. This company had listed 9.70 billion shares on the 31st of January 2017, at the Nigerian Stock Exchange Experts are of the view that the disappointing results could end soon to enable investors earn returns, as the company has recently acquired a new fleet to boost its flight operations. Analysts believe that urgent and responsible efforts will take the company out of its current woes, but without which could cause a burst in the foreseeable future like most local airlines in the past. Recall that incompetence, mismanagement and corruption were responsible for the collapse of Okada Airline, ADC Airline, GAS Airline, Nigerian Airways and Home Trade Airline, that all closed shops due to mismanagement and corruption.

For the first six months through June 2018, the indigenous airline’s sales dipped by 58.46 percent to N5.0 billion from N13.0 billion the previous year. The firm was unable to utilize sales in generating higher profit as margins were squeezed. Net margins, a measure of profitability and efficiency fell to 47.12 percent in the period under review from 6.60 percent as at June 2017. A lower ratios means a firm is inefficient. The indigenous airline is also operating in a tight corner, as cash flow from operations has hit a negative figure of N923.16 million in the period under review, from a surplus cash of N3.69 billion the previous year. The disappointing results can be attributed to shortage of aircrafts in Mdeview’s hanger, which is believed will ease soon with the new acquisition. Medview was among the domestic operators whose aircraft were grounded by Nigeria Civil Aviation Authority, (NCAA) over maintenance issue and expired insurance. BusinessDay’s checks show that the fall out of this develop-

ment has seen Medview enter an interline agreement with Dana Air to help them carry their passengers while the former struggle to get their aircraft operational again. Medview came into the business with six aircraft but currently has three operational aircraft. However, the airline boosted its fleet with its acquisition B777-200ER. The aircraft with registration number - 5N-BVY is wholly owned by Medview Airline and has a capacity of 323 passengers, with 38 being Business Class The jumbo jet will be deployed to Hajji Operations soon when the airline begins airlift of pilgrims to Mecca and Medina The airline is expected to airlift about 10,000 Nigerian Pilgrims during this year’s Hajj. Further analysis of Medview’s financial statement shows profit after tax declined by 73.91 percent to N223.62 million in June 2018 from N857.34 million the previous year. The company share price closed at N1.93 on the floor of the exchange, valuing it at N18.19 billion.

L-R: Abasi-Ekong Udobang, senior manager, program implementation, MTN Foundation; Nonny Ugboma, executive secretary MTN Foundation; Segun Adefila, co-founder and artistic director, Crown Troupe of Africa; Dennis Okoro , director, MTN Foundation, at the opening ceremony of the 2018 Eko Theatre Carnival in Lagos. Pic by Pius Okeosisi

Statista report shows uptake for washing machines over rising middle class CHINWE AGBEZE

espite the slowdown in economic growth in Nigeria, the last 24 months has seen an uptick in the purchase of washing machines which close market watchers say is consistent with the rise of the country’s middle-class population. According to Statista, an online provider of market and consumer data, global washing machines market grew to $34,160 million in 2016 from $29,830 million in 2013, and it’s projected to hit $42,680 million by 2021. Statista estimates that the average middle-class household spends four hours a week washing clothes or N3, 000 outsourcing their laundry. This means that the use of washing machines saves the family about 16 hours or N12, 000 a month on time and money

that would have been spent on laundry. However, the rise in the uptake of the machines is rendering many washer men and women jobless. “All my customers are gone. I wash for laundry firms now,” said Richard, a washer man in Oke-Afa, Lagos State. “ I get paid N40 per cloth and N100 for one duvet”, he revealed. This development is telling, particularly, on the women many of whom are old widows without other skills. Sarah, a widow who took care of her family with proceeds from the washing business, could do that no more. “I made enough money washing people’s clothing in the past. But, most of my clients own washing machines or prefer to patronise dry cleaners,” said Sarah. Some washing machine vendors such as LG are interfacing with co-operatives to

avail the washer women with machines on soft terms. This is expected to help the women do more volumes and earn more money. “We give cooperatives 5-10 percent discount on washing machines purchased. Their actual discount rate will depend solely on the volume of machines they buy,’’ said Momodu Abdulrasheed, manager, LG Apapa said. ‘‘Fifty washing machines attracts 5 percent discount but they have to make outright payment before the machines will be released to them. We get more of cooperatives coming in which is a clear indication that we have been helpful,” said Abdulrasheed. Also, an autonomous servicing industry is crystallizing around the washing machine market. These manifest in clusters, especially in the bigger cities and the practitioners have gained competence over time.

Naira depreciates as CBN official exchange rate increases in July 2018 Endurance Okafor

he naira depreciated in the Investors’ and Exporters’ (I&E) foreign exchange window for the reporting week ended July 27, 2018, while the Central Bank of Nigeria’s (CBN) official rate rose in the same period. At the I&E foreign exchange window, the naira reduced in value, losing N0.68 to close at $/ N362.28 when compared to $/ N361.60 recorded the previous week, resulting in a spread of $/ N2.28 between the BDC market rate and I&E foreign exchange window rate. Meanwhile, for the reporting week ended July 27, 2018,

the CBN official rate rose by N0.05 to close at $/N305.90, indicating a 0.02 percent depreciation when compared to $/ N305.85 recorded the previous week-ended July 20, 2018 The total value of trades recorded at the I&E foreign exchange window for the weekended July 20, 2018 however stood at $0.83 billion. This represents a decrease of 9.78 percent ($0.09 billion) when compared to the $0.92 billion traded in the previous week, bringing the total value traded at the Window year-to-date to $32.90 billion, as compiled from FMDQ weekly market data report. Although, in the Bureau de Change (BDC) market, still at

the end of reporting week -end 27 July 2018, the exchange rate remained the same as the week before, closing at $/N360.00 While in the spread between the BDC market rate and the CBN official exchange rate, it fell by N0.05 to close at $/N54.10, indicating a 0.09 percent decrease from the $/N54.15 recorded in the previous week. In the same week under review, CBN however intervened through its periodic supply of U.S Dollars in the FX market, offering $100.00 million at a marginal rate of $/N344.00 via a Single Secondary Market Intervention Sales (SMIS) Wholesale session held during the week-ended July 27, 2018.

Wednesday 01 August 2018

BUSINESS

HBSAN Abuja & Northern Chapter’s Mid-Year Event

he Havard Business School Association of Nigeria (HBSAN) Abuja & Northern Chapter held its MidYear Event themed “Leveraging our Endowments: The Way Forward for Nigeria’’ on Tuesday, July 10, at the Ivory Event Center, Abuja. The event which was a non-political discussion centered on the HBS case “Malaysia: Standing on a Single Leaf”, was organized by HBSAN in its pursuit of strengthening entrepreneurship and developing suitable policies in governance in Nigeria. The Chairman of the event, His Excellency Mallam Nasir El-Rufai, the Executive Governor of Kaduna State, was represented by Mr. Muhammed Sani Dattijo, Commissioner for

Budget and Planning, Kaduna State. In his speech which was delivered by Mr. Muhammed Sani Dattijo, the Chairman encouraged members to participate more actively in politics and governance. The event featured a panel of discussion that was moderated by Mr. Niyi Omojola, Programs Secretary, HBSAN, and Partner, Constant Capital Partners, and included Mrs. Fola Laoye, Director, Investment Fund for Health in Africa; Dr. Tayo Aduloju, Senior Fellow, Public Policy & Institutional Development, Facilitator and Head, Governance & Institutions Policy Commission, The Nigerian Economic Summit Group (NESG), who represented Mr. Laoye Jaiyeola, CEO, NESG; and Dr. Umaru Farouk Aminu,

Muhammed Sanni Dattijo, Commissioner for Budget and Planning Kaduna State delivering the Chairman’s speech on behalf of His Excellency Mallam Nasir El-Rufai, the Executive Governor of Kaduna State

DAY

Business Event Head, Research & Strategy Management Department, National Pension Commission (PENCOM), who represented Hajia Aisha Dahir-Umar, Acting Director General of PENCOM. The panel discussion bordered around leveraging the endowments of Nigeria as a nation, especially her population strength, in achieving a clearly defined national agenda. HBSAN is the HBS alumni group of Nigerians and resident non-Nigerians driven by a primary objective to provide members with resources, relationships and opportunities to enable them build and lead organizations that will create transformational impact in Nigeria and beyond. Pictured below are some faces at the event.

Sarki Ayonote of National Pension Commission, and Abuja Board Member Rep., HBSAN.

L-R: Umaru Farouk Aminu, Head, Research & Strategy Management Department, PENCOM, Tayo Aduloju, Senior Fellow, Public Policy & Institutional Development, Facilitator and Head, Governance & Institutions Policy Commission, NESG, and Fola Laoye, Director, Investment Fund for Health in Africa.

L-R: A guest at the event, Niyi Omojola, Programs Secretary, HBSAN, and Partner, Constant Capital Partners, and Maduka Emelife, Abuja Board Member Rep., HBSAN, and Director, Oasis Management Company.

L-R: Adebayo Shittu, minister of communications; Shola Adeyemi, director, legal and regulatory affairs/company secretary, Airtel Nigeria, and Olusola Teniola, president, Association of Telecommunication Companies in Nigeria (ATCON), during the presentation of certificate to Segun Ogunsanya, MD/CEO, Airtel Nigeria as one of the top personalities in the book titled “100 leading Telecom & ICT Personalities in Nigeria”

L-R: Anselm Alokha , zonal business manager, Nigerian Breweries East Zone; Ezeonyebuchi Kosisio, winner star united We Shine Millionaires Promo; Nkem Nwankwo and Regional Business Manager Onitsha, Kenneth Ediale at a regional prize presentation in Onitsha , Anambra State.

L-R: Femi Ekwuyasi, CEO/founder, Kaara; Adedamola Otuyalo, director operations, Kaara, and Godson Nkeokelonye, chief technical officer/co-founder, Kaara, during the media launch of currency exchange platform kaara.io in Lagos.

L-R: Alero Imo, CEO, Cyrus limited; Nnamdi Imo, Initiator of Imagine Lagos Fair; Sylva Ifedigbo, client & markets development, PWC and Bunmi Oke, CEO/lead consultant Ladybird limited, during the maiden edition of Imagine Lagos fair theme; The Beauty of Nigeria and the Limitless opportunities held in Lagos, recently

BUSINESS DAY

Wednesday 01 August 2018

Leadership Shaping people into a team

Why the U.S. Trade deficit can be a sign of a healthy economy Roger L. Martin

“

e lose $800 billion a year on trade, every year,” President Trump said in March when he announced his new tariff plan, referring to the size of the U.S. trade deficit in goods. Trump has lamented the U.S. trade deficit repeatedly, tweeting that as a result of it, “our jobs and wealth are being given to other countries.” The trade skirmishes that have broken out as a result have the potential of becoming a fullscale trade war of the sort that the Smoot-Hawley Tariff Act of 1930 started, which is widely credited with either triggering or deepening the Great Depression. But what is the trade deficit, and what causes it? And is it a bad thing? For decades, the United States has run a deficit in the trade of goods — in other words, importing more goods than it exports. The dominant narrative is that the steadily increasing U.S. “trade deficit” is a function of two things: (1) the availability of cheaper labor overseas and (2) the unbridled consumption habits of Americans. As a consequence, the narrative goes, the U.S. has had to import increasing amounts of capital from investments by foreign governments, businesses and individuals to “fund the trade deficit,” thus becoming a debtor nation. Although this is a compelling narrative, there is in fact no evidence to support the conclusion that a deficit in traded goods causes a net import of capital. It is true that there is plenty of evidence that these two things happen together, but that simply confirms macroeconomic measurement convention, ac-

cording to which three components of a country’s balance of payments must sum to zero: a country’s balance in the trade of goods, its balance in the trade of services and its balance of capital inflows/outflows. So, if trading in goods and services is collectively in deficit, then capital inflows must be positive by an equal amount. But that statement does not affirm that the trading deficit causes the capital inflow. It could equally be true that the inflow causes the trading deficit. So which causes which? It is not possible to tell for certain. It is, however, instructive to remember that the last time America ran a persistent and sizable (relative to the economy at the time) goods trade surplus was when it was exporting vast amounts of capital to Europe to fund the Marshall Plan after World World II. Imagine that your country is the world’s most attractive in which to invest capital, because it has the biggest and richest market in the world, and the world’s most used and tradable currency, and it is scrupulous about protecting the rights of investors. Imagine further that

its advanced economy is leading the world in the transition to a service-based economy, and as a result, it runs the world’s biggest services trade surplus — by a factor of more than two over the next biggest surplus in the world. Per standard macroeconomic theory, this imaginary country would run the world’s biggest deficit in traded goods. And it would have absolutely nothing to do with its being uncompetitive or its people profligate. It can’t be the best place to invest and the best service exporter without running a huge goods trade deficit. (Because, remember, all three things have to sum to zero.) Well, the mystery country is, of course, the U.S. — and the U.S. trade deficit, according to this argument, is a logical consequence of America’s success and superior know-how relative to other countries. On this basis, the trade deficit should be something to brag about rather than denounce. In an inflows-causes-deficits narrative, the trigger for the rise in the U.S. trade deficit is not cheap overseas labor or American profligacy. Rather, it is President Nixon’s 1971 deci-

sion to take the U.S. off the gold standard and end the postwar Bretton Woods period of fixed exchange rates. That decision launched what has turned out to be a nearly half-century period of upward-trending deficits in the trade of goods with other nations. What President Nixon could never have guessed is that when he triggered the end of Bretton Woods, he made it much more important for global investors to choose wisely when deciding where to invest their capital internationally. Prior to August 15, 1971, it didn’t matter as much because your currency was fixed against the U.S. currency, and the U.S. promised to give you one ounce of gold if you used your currency to buy $35. So, you could invest in France and not have to worry about your francs becoming worth less in U.S. dollars than when you first invested. After 1971 it was really helpful to invest your capital in the most robust and open market in the world, and the world’s investors have increasingly figured that market is the U.S. — not Japan, with its shrinking population, or China with its rampant corruption, or Europe with its eco-

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nomic sclerosis. Since 2000 the U.S. has received, on average, a net capital inflow of over half a trillion — per year! And to put more upward pressure on the goods trade balance, the U.S. services trade balance, which was trivial as late as 1985, is now in the neighborhood of one-quarter of $1 trillion dollars per year. Don’t get me wrong: I am 100% supportive of going after unfair trade practices. For example, it is truly ridiculous that Japan erects such an incredible array of barriers to U.S. car imports that GM and Ford have all but given up attempting to sell vehicles in Japan, while Toyota, Honda, and Nissan import millions of vehicles a year profitably into the open U.S. market. However, if the U.S. economy keeps growing at 3% to 4% a year with close to zero structural unemployment, nothing that President Trump accomplishes on the front of making trade fairer for U.S. goods exporters will do a thing to reduce the U.S. deficit in traded goods, which is his avowed goal. In 2017, robust U.S. economic growth widened the capital flow surplus — and unsurprisingly, the goods trade deficit widened in step. If President Trump actually wants to decrease the goods trade deficit, he would need to take a page from the presidencies of Jimmy Carter and George H.W. Bush. In the post-1971 era, they were the presidents who were the most successful in reducing the goods trade deficit. Both accomplished that feat by inheriting a U.S. economy doing reasonably to very well and leaving it performing considerably worse, making it considerably less attractive to net foreign capital inflows. I suspect that is the kind of economic sacrifice President Trump would want to assiduously avoid.

Politics & Policy Wednesday 01 August 2018

C002D5556

BUSINESS DAY

APC appeases Okorocha with fresh Congresses

Despite Lawan’s claims, PDP controls majority in Senate OWEDE AGBAJILEKE, Abuja

ontrary to claims by the Senate Majority Leader, Ahmad Lawan, that the All Progressives Congress (APC) controls majority in the Senate, checks by BusinessDay has revealed that the upper legislative chamber is dominated by the People’s Democratic Party (PDP). This followed the defection of 14 members of the All Progressives Congress (APC) on the floor of the Senate last Tuesday. Recall that 13 APC senators cross-carpeted to the PDP, while one other defected to the African Democratic Congress (ADC). They cited the crisis in the APC as reason for their defection. Although the 1999 Constitution provides for 109 senators, there are currently 107 senators, occasioned by the death of Ali Wakili (Bauchi South) and Bukar Mustapha (Katsina North). Breakdown of the composition shows that the People’s Democratic Party (PDP) now has 55 senators; APC 50; All Progressive Grand Alliance (APGA) and African Democratic Congress (ADC) one each. Although a few senators have defected in their respective con-

Lawan

stituencies, they are yet to formally announce their decision on the floor of the upper legislative chamber. In line with Senate Standing Orders, for their defections to become valid, their defection letters will be read on the floor by the Presiding Officer, which would enable them to be re-allocated with new seats.

Senators affected by this include: Hope Uzodinma, Fatimat Raji-Rasaki, Sonni Ogbuoji, Stella Oduah, who were elected on the platform of the PDP but decamped from the party outside the floor of the hallowed chamber. In line with the Senate Standing Orders, until their defection letters are read on the floor, they remain PDP members, as they sat on seats

JAMES KWEN, Abuja

allocated to the party as of the last day of sitting on July 24. Also affected is Lanre Tejuoso who defected from APC to PDP but was among members of APC Senate Caucus who met with President Muhammadu Buhari last week. By the same token, although Senate President Bukola Saraki has been linked with a return to PDP, the nation’s Number Three Citizen remains a member of APC until he formally announces his decision on the floor of the Senate. Last week, Lawan had claimed that the APC still controls majority in the Senate with 53 lawmakers, as against 50 of the PDP. “Out of the 109 senators, APC has 52, the PDP has 50, ADC has three and APGA has two. And you will recall that we lost two of our colleagues. So we have two vacant seats and the total gives you 109,” Lawan told journalists after a twohour meeting of the APC caucus when 14 members left the party. He argued that when lawmakers announced their defection in their respective constituencies and in the case of Oduah, Uzodinma, Raji-Rasaki, Ogbuoji, they become members of the new party, irrespective of whether the Presiding Officer has read their defection letter.

esults of the fresh All Progressives Congress, APC ward, local government and state Congresses in Imo state have indicated that the party has appeased Governor Rochas Okorocha. This is as the ward, local government and state officials of APC elected during the earlier congresses which did not favour Okorocha were voted out and his candidates voted in. In the build up to the May/ June APC congresses, there was a fierce war in the party in Imo State between the then APC National Organizing Secretary, Osita Izunaso camp and Okorocha camp. The war was taken to the congresses where it was said Izunaso using his vantage position then as a National officer of APC hijacked the exercise and planted people in his camp as party executives in the state leaving the Governor with no structure. All protests allegedly sponsored by Okorocha to the then John Oyegun led National leadership of the APC were of no effect as the party went ahead and inaugurated the disputed Hillary Eke led Imo State EXCO of the party. Fortunately however, for the Okorocha group, the Federal High Court Owerri squashed the Oyegun/Izunaso supervised congresses and ordered for fresh congresses to be conducted to the admiration of the Imo state.

Return to work, BMO urges legislators

‘Kwara APC Exco remains intact under Ishola - Balogun’

he National Assembly has been called upon to consider national interest above all other considerations in the conduct of their legislative business. The federal legislature has also been asked to cut off its recess and resume, if only to consider President Muhammadu Buhari’s request for virement in order to successfully execute the 2019 General Elections. In a statement signed by its Chairman Niyi Akinsiju and Secretary Cassidy Madueke, the Buhari Media Organisation (BMO) said that the federal lawmakers have every reason to suspend their recess now that the calendar for the 2019 election is set go into operations. It noted that according to the time-table released by the Independent National Electoral Commission (INEC) earlier in the year, political parties are expected to begin to collect forms for the 2019 elections from August 17, yet the National Assembly plans to be on recess till September 25. “How do Nigerians expect INEC

SIKIRAT SHEHU, Ilorin

to kick-start processes leading to the election when federal lawmakers are busy at holiday spots across the world. “We wonder why they have to be prevailed upon to do a duty Nigerians elected then to do,” BMO said. The group pointed out that the period the National Assembly is meant to resume from recess is a time political activities ahead of next year elections are expected to begin. “From September 25, politicians including federal lawmakers would be in the thick of efforts to get return tickets at party primaries and may not be readily available in the Chambers, so when will they have the time to consider the request?” BMO urged the federal legislators to toe the path of honour in national interest and set a date for consideration of President Buhari’s virement proposal and other pressing matters. It also encourages the Special Assistant to the President on National Assembly Senator Ita Enang to engage his former colleagues on the wisdom of cutting short their recess to attend to matters of urgent national importance.

lected leaders of the All Progressives Congress (APC) in Kwara State have denounced the call for dissolution of their executives by the Minister of Information, Lai Mohammed, saying that the ruling party remains intact in the state. Addressing a press conference in Ilorin, the state capital, the Kwara South senatorial chairman of APC, Jimoh Balogun, flanked by local government and ward chairmen as well as state secretary of the party, Christopher Ayeni, said that the state party executive, led by Ishola Balogun-Fulani, remained loyal to the party at the national level. It would be recalled that the minister had signed a communiqué where he said that the decision to request for the dissolution of Ishola Balogun-Fulani led executive committee of APC was taken at a stakeholders’ meeting held in Oro, Irepodun Local Government Area of the state on Sunday. The APC senatorial chairman, who said that the Kwara APC was

committed to working assiduously to deliver electoral victory for the APC in the state come 2019 general election, urged the national headquarters of the party to disregard the purported release by the minister. He also enjoined all APC members in Kwara South senatorial district of the state, where the minister hails from, to disregard the said release and remain steadfast with the party, “as we prepare to win landslide for APC”. Balogun, who revealed that members of the state executive committee of the APC had not left the party as being speculated in some quarters, added that members of the party always wait for directive from their political leader, Bukola Saraki. He clarified that the members of the National Assembly from Kwara who defected to the PDP last week on the floor of their chambers did so on personal instances. The party leader also said events had overtaken a call by three senatorial chairmen of the party on the Senate President to take them out of APC, explaining that

series of meetings had been held on grievances raised, adding that the outcome of those meetings was being awaited. Balogun said: “That Lai Mohammed should know that all executives from the wards to the state level were duly elected under the supervision of the officials of the APC national headquarters with INEC officers in attendance, sworn in accordingly and has taken oath of office to serve for a tenure of four years (2018-2022) “That we advise Lai Mohammed to join hands with the authentic elected APC executive in Kwara State led by Hon. Balogun Fulani as we prepare for 2019 general election. “ That lai Mohammed is a Kwaran in Diaspora with antic of surfacing during election period only. “That Lai Mohammed did not vote in Kwara State during the presidential election that brought in President Muhammadu Buhari. “That Lai Mohammed has contributed nothing to APC in Kwara State since he becomes federal minister.”

BUSINESS DAY

C002D5556

Wednesday 01 August 2018

Politics & Policy

Vital takeaways from National Assembly Open Week OWEDE AGBAJILEKE, Abuja

he maiden National Assembly Open Week has come and gone, it also left some vital lessons for relevant stakeholders in the Nigerian democratic project. For the first time since the return to civilian rule in 1999, the National Assembly opened its doors to participants which included state assemblies, civil society organisations/non-govermental organisations, private sector, media groups and organisations, researchers/academia, traditional and religious leaders, development partners, ministries, departments and agencies, judiciary, trade unions/pressure groups, lobby groups among others. This was intended to broaden the public understanding of legislative functions and processes by enabling participants interface with legislators and National Assembly committees, highlight the achievements of the Eighth National Assembly to advance legislative openness, create an avenue for interaction between legislators and key stakeholders as well as improve public confidence in democratic institutions, particularly the legislature. In the same token, organisers hoped that the event would address the perennial negative public perception of the Legislature. The four-day event featured interactive sessions with the Executive arm of government, where the Minister of Budget and National Planning, Udoma Udo Udoma, made a presentation on the Economic Recovery and Growth Plan (ERGP); sessions with the Judiciary on Preand Post-Elections Adjudication and Constitutional Separation of Powers; State Assemblies on Constitutional Separation of Powers; Trade Unions on Economic Growth and other segments of the society like traditional rulers, socio-cultural groups, civil society organizations among others. The programme also witnessed exhibition by committees from both chambers of the National Assembly, the National Institute for Legislative and Democratic Studies (NILDS) - initiator of the Open Week - Federal Fire Service and the National Assembly Clinic which offered free health check to participants. Nollywood actor, director and member of the Lagos State House of Assembly, Desmond Elliot and other select-members of the Nigerian movie industry staged a drama skit entitled ‘Imbroglio’ which called for cohesion between the two arms of government. Similarly, the event witnessed the presentation of awards to zonal and central winners of the 2018 NILDS Quiz Competition, even as a documentary on Nigeria’s Legislature was also aired to participants. Analysts have expressed con-

Saraki

cern over the unending tensions between the Executive and the Legislature since the inauguration of the Eighth National Assembly in June 2015. For instance, some of the issues that have worsened the friction between both arms of government include the Senate’s refusal to confirm Executive appointments not expressly stated in the 1999 Constitution of the Federal Republic of Nigeria (as amended), controversy over the 2016, 2017 and 2018 budgets, trial of Senate President BukolaSaraki at the Code of Conduct Tribunal (CCT) over false declaration of assets, alleged inhuman treat meted out to the Chairman, Senate Committee on Federal Capital Territory, Dino Melaye by the police and refusal of Hameed Ali, the Comptroller General of the Nigerian Customs Service (NCS) to wear customs service uniform as requested by the upper legislative chamber. Others are: refusal of the Inspector General of Police, Ibrahim Idris, to honor Senate invitation over the rising spate of killings across the country, police invitation of Saraki over his alleged role in the April 5, 2018 armed robbery incident in Offa, Kwara State, siege on the residence of the Deputy President of the Senate, Ike Ekweremadu by operatives of the Department of State Services (DSS) and Economic and Financial Crimes Commission (EFCC), National Assembly’s opposition to the recently signed Executive Order Number 6, which it argued usurped its functions and that of the Judiciary among others. While some analysts view the impasse as the malfunctioning of Nigeria’s political system, others argue that the development is healthy for the nation’s democracy, as the principles of checks and balances are simply at work. Aware of the impact of the frosty relationship between the Executive and the National Assembly in slowing down governance, President MuhammaduBuhari called for harmonious work-

ing relationship between the two arms of government. Declaring the event open, President Buhari said it was regrettable that the ExecutiveLegislative collaboration was not reflected on time in the 2018 Appropriation Act. Represented by the Secretary to the Government of the Federation (SGF), Boss Mustapha, the President stressed the need for more harmonious working relationship between the Executive and the Legislature in other to deliver peace, security, and sustainable development to all Nigerians. His words: “I must also mention that government has noted the detailed response to the issues raised at the signing ceremony of the 2018 Appropriation Bill. The point to underscore firmly is that, a stronger and more cordial Executive-Legislative relationship must exist in the interest of the nation and the people that elected us into office. It must be a win-win situation for all Nigerians. “The importance of oversight activities of the Legislature to ensure efficient, equitable and the judicious use of resources to bring about delivery of service by the Executive cannot be overemphasized. Operationally, this involves visits by members of the relevant Committees to the project sites of the MDAs under their purview and in addition may involve holding public hearings in order to deepen understanding, appreciate the opportunities and challenges and subsequently agree on areas requiring legislative intervention and other forms of support/advocacy by the legislature. It is the expectation of this administration that the processes of over sight would be given adequate time for discussion during the week in other to fine tune it. “The Nigerian Constitution has clearly enshrined the principles of separation of powers. I wish to state that since my assumption in office in May 2015, I have maintained a position

that favor and supports the true independence of the various arms of government, including National Assembly, perhaps, more than any administration in this country. You are all aware of my open commitment to working with any set of leadership of the National Assembly that emerges, and I have remained true to it. This commitment is expected to take us beyond politics when dealing with the wellbeing of our citizens. We must continue to demonstrate our resolve to work harmoniously, while respecting the principles of separation of powers”. On his part, Saraki called for closer partnership between the executive and legislative arms to ensure effective governance in the country. The nation’s Number Three Citizen said it was imperative for both arms of government to better understand each other through compromise, consultation and engagement. “It is also my hope that we will be able to better represent what we are doing to Nigerians,” Saraki said. “It is my hope that the Executive arm will also be able to get a better understanding of National Assembly’s role.” He added: “Let us work together. Let us understand each other. Let us understand that compromise, consultation and engagement are the factors that will ensure that as a government, we work together effectively. “The message that I would like us to take away from here is: We must work together. We must understand our responsibilities and we must put Nigeria first. The President of the Senate also noted that Parliaments all over the world act as unifying forces in democratic society since the manner of their conversation makes them the true representatives of the people. “It follows therefore that the National Assembly, is the closest arm of government to the Nigerian people,” he said. “The widerange of activities that we have planned for this week will ensure that we remain the closest arm of government to the people and that our doors will remain open.” In his remarks, Speaker of the House of Representatives, YakubuDogara, made a case for strict adherence to democratic principles, even as he canvassed for improved synergy between the three arms of government. Dogara who frowned at the unfriendly disposition of the Executive arm towards the Legislature in the discharge of its statutory activities, warned that any leader who does not understand democratic principles should have no business leading a democracy. While acknowledging the importance of the event, the Speaker harped on the need for the three arms to “work in an orderly, synchronised and complementary form for development to really thrive. But this can only happen if the foundational principles of democracy are preserved.” He also expressed optimism

that the new phase of openness being launched by National Assembly bureaucracy will “afford the people of Nigeria the opportunity to better understand the workings of the Legislature in proper perspectives. “I say this because many Nigerians do not quite understand the functions of the Parliament in carrying out its constitutionally assigned roles and responsibilities. The Parliament does its works through Legislation, Representation and Oversight. Through Legislation, we make Laws for the peace, order and good governance of the country. Through representation, we advance the particular interests of the people of our constituencies and the interests of Nigerians generally, while through oversight, we oversee or monitor the activities of the other Aarms of Government. “Permit me to use this occa sion to reiterate that the Legislature is the paramount Arm of Government because the whole idea of limited government and representative democracy begins and ends with Law making and execution of laws. This reality has not dawned on many Nigerians mainly because of our Military era experiences during which the elected Legislature was always disbanded, at the slightest sound of martial music”. The lawmaker called on the two other arms of government to open their doors for legislative scrutiny. In their separate presentations, while the Ooni of Ife, Oba Adeyeye Enitan Ogunwusi (Ojaja II), called for amendment of the 1999 Constitution to allow traditional institutions to play advisory roles in political formation in the country, the Sultan of Sokoto, Sa’ad Abubakar III, emphasised the need for the inclusion of six traditional leaders from the six geopolitical zones in the membership of the National Council of State. Also in their presentations, other experts called the National Assembly to abrogate the Land Use Act from the constitution to promote economic reforms and wealth creation in the country, even as they urged lawmakers to revisit the recommendations of the 2014 National Conference. Other keynote speakers including the Catholic Archbishop of Abuja, Cardinal John Onaiyekan, Catholic Bishop of Sokoto Diocese, Matthew Hassan Kukah, President, Nigeria Union of Journalists (NUJ) Abdulwaheed Odusile, Director-General, Lagos Chamber of Commerce and Industry (LCCI) Muda Yusuf, commended the National Assembly for the initiative, even as they urged the Legislature to create a regular platform for engagement with citizen groups. As pundits look forward to the second edition of the programme, it is hoped that the organisers would improve on the successes of the programme. One of such is the suspension of plenary and committee meetings to allow for full participation by all National Assembly members.

Wednesday 01 August 2018

C002D5556

BUSINESS DAY

Politics & Policy

Buhari has failed in the fight against corruption - Yakassai Chairman of Northern Leaders and Stakeholders Assembly, Tanko Yakassai, has said that the much touted anti-corruption fight of the President Muhammadu Buhari’s government has failed as the President has demonstrated lack of integrity and capacity to fight corruption. In this interview with INNOCENT ODOH, the 93-year-old former chairman of the defunct Northern Elders Council (NEC) also said that the current gale of defections of politicians from the ruling All Progressives Congress (APC) to the main opposition Peoples Democratic Party (PDP) is nothing to cheer about as both parties are birds of a feather. Excerpts: What is your take on the gale of defections in the National Assembly and what does it portend for Nigerian democracy? t is history that is repeating itself in the sense that it was defection that brought about APC. So what goes around comes around. APC benefited from the defection from the PDPand thatenabled it to form government and to get majority in a number of states. But unfortunately politics in Nigeria is largely about self-interest rather than national interest. The APC and the PDP are birds of a feather, they understand each other better. That explains that we are far away from ideal politics in Nigeria. They (APC) promised to address the security challenges and when they came to power initially it was Boko Haram, now the security challenges have multiplied as armed robbery, car theft, kidnapping and so on are now rife. The security problem previously was located in the north east with the problem of Boko Haram, now it has spread. Even the Boko Haram that we thought we have reduced their power only recently kidnapped large numberof school girls. The government has failed to put food on the table of the common man, unemployment,poverty and hunger are pervasive.Even those who form government at the state level under the APC did not address the need of the ordinary in Nigeria. I cannot see why a government in Nigeria cannot introduce a programme for irrigation in Nigeria when there are so many dams all over the country. About 40 years ago, former governor of Kano state, Audu Bako, built so many dams buttoday no body is using those dams that Audu Bako constructed. Nobody is addressing how to modernise agriculture so that Nigeria can grow enough food. The quickest way to empower citizens is to develop agriculture. With agriculture, you will empower millions of people because it will improve their income.

The gale of defection is attributed to the alleged division President Buhari introduced in his party the APC and the country. What is your take on this? President Buhari came to power

Tanko Yakassai

on his own personality, not on any programme. People who voted for Buhari voted for him as an individual. The only thing I can say is that when he was military head of state, he set up military tribunal and jailed people for 500 years and the ordinary man was happy with him for that not because he brought any development. That was why people voted for him in 2015 and that is why he has embarked on the same trajectory of arresting people and putting them in jail. He is not bothered about any programme that will change the lives of the commonpeople; job creation is not his priority. I said few years ago that from my own observation that Buhari is lacking in capacity to change things for the better, he and his party are lacking in competence. They are all lacking in vision to change the narrative of the country. I said that they have no plan and they have no integrity even as they promised a lot of things. But when I said it people started abusing me and I kept quiet. Butnow everybody is speaking about it. So the people who defected from PDP to APC are now disappointedand they are going back to the PDP. We keep having this recurring crisis in leadership. Is it that we don’t have the right leadership model

or that those recruited to lead don’t know how to form a vision? If people could easily defect back to a party they felt was bad and in just three years return to the same party.Are they to be trusted? The problem is that people use politics in order to get to position of authority and use that position to make money. How many people are in politics today with a programme on how to change the situation in Nigeria? Most of those in politicalparties see political office as instrument to get to political power to make money. Tell me how many people are elected into political office in Nigeria and are not rich at the end? Some pretend that they have no money but they have. Some said that Nigeria needs restructuring. Do agree with that notion? There is a belief in Nigeria that the fault of Nigeria is not that of the system, not that of the constitution but with the people. Restructuring whatever anybody will say needs changing the constitution of Nigeria. Those who are advocating for restructuring are yet to produce their own blueprint. When you restructure the country how will the county look like? In whatever a human being does there is the fear of the unknown, if a man does not know how the country will look

like if it is restructured, he will not support you. I told them to come out with a blueprint, let them tell Nigerians how they are going to change lives for the better. In fact most of them you hear them shout restructuring but at the end of the day you find them looking for positions and they want to contest election to various positions withoutprogrammes. Afenifereare the arrowhead of the restructuring mantra. They said they wanted the 1963 constitution to be reintroduced in the country and yet they wanted the six geopolitical zones to be retained. In 1963 we only had four regions, if you are bringing back to the 1963 constitution, how do you bring in the six geopolitical zones which are not there?So let them take the trouble to work out the details of what restructuring is and bring about the blueprint and how to change the country back to the era of politicians of the likes of Azikiwe, Ahmadu Bello,Awolowo and TafawaBalewa.Each one these former leaders made a mark. Unfortunately we don’t have this type of leaders now. I am wondering if those agitating for restructuring are really serious about it because restructuring Nigeria or any other country entails constitutional changes. In Nigeria, to change our constitution in tandem with our current realities we have to engage members of the national legislature.You need 2/3 support of the National Assembly and 2/3 support of the States houses of assembly to change the constitution. They have never taken any step along that line. And there are only two ways to change the Nigerian constitution either to follow the provisions of the constitution or to go for a coup d’état. I don’t think that coup d’étatis an option. What is your reaction to what appears to be a partisan involvement of the police in the blockade of the President of the Senate and his Deputy because they wanted to stop the mass defection in the National Assembly? And do you think that judging by the disaffection, hunger and poverty in the country; President Buhari has any chance of being reelected in 2019? When President Buhari came to

power, he made slogan that he is going to fight corruption. I think that corruption is a big issue. However, fighting corruption will not end poverty, fighting corruption will not develop agriculture, and fighting corruption will not bring power all over the place. He said he is going to fight corruption and he started by arresting people. Butunfortunately most of the people he arrested weremembers of the opposition parties. In fact even people in the opposition who were arrested for corruption, once they declared for the ruling party they are let go. Some of them are at the forefront of campaigning for the Buhari and the ruling party. Even the issue of the former Secretary to the Government of theFederation (SGF), who was accused by the Senatecommittee on IDPs of embezzling money for the IDPs with which he was said to have used to cleared grass,was found to be true but nothing was done to the former SGF.He has never been arraigned. If Buhari and his team are genuinely fighting corruption at least he should be arraigned to show integrity in the fight against corruption. My regret is that there was tremendous enthusiasm for APC and Buhari that they will fight corruption in Nigeria. People genuinely believed in them. There was a tremendous good will for them on account of that. Today that goodwill has been squandered. I am not convinced that Buhari is fighting corruption and there are millions of Nigerians who are disappointed. The problem now in Nigeria both now and in the future is that when somebody comes again to say that he is going to fight corruption how many Nigerians will believe him? They will think that he is only playing to the gallery. Fortunately or unfortunately I am 93 years old now. The best I hope for is to live another 5 to 10 years. I am becomingweaker. So the challenge is on you the young people who should try and change the narrative. There are countries that have experienced some worst situations like Indonesia, Brazil, Singapore and Korea and in the course of time, they got better leadership and their nations changed for the better, so let’s be hopeful.

plans” of thwarting the will of the people, the Local government Secretariat, the PDP said had been arranged to serve as a rigging field, but warned that insider sources have exposed their plans. The PDP called on INEC to exonerate itself from the plans, by making the local government headquarters of INEC as collation centres, stressing that any attempt to test the will of the people would be resisted, pointing out that the

PDP is positioned to win the forthcoming bye-election, and that the people of the federal constituency having been impoverished by the APC administration in the state were resolved to vote against the APC. The PDP therefore called on the people of Lokoja and Kogi LGAs to be ready to vote and protect their votes, saying that “They know that a vote for the APC is a vote for hunger, poverty and suffering.”

Kogi PDP uncovers alleged plot to rig Lokoja/ Kogi bye-election VICTORIA NNAKAIKE, Lokoja

lleged plans to rig the Kogi State forthcoming bye-election by the ruling party All Progressives Congress (APC) has been uncovered by the opposition party People’s Democratic Party (PDP). In a statement by the party issued and signed by Kabiru Mohammed, on behalf of Bashiru Abubakar campaign organisa-

tion, PDP said it had it on good authority that the APC, working in concert with the Independent National Electoral Commission (INEC), has relocated the local government collation centres to Lokoja and Kogi LGA Secretariat. “This would be the first time in the history of the state that local government council Secretariat would be used as coalition centres”

The PDP said it had been briefed that the administrators who were interested parties in the byeelection, were to use their offices in the secretariat to manipulate the results. According to the party, part of the plan to manipulate the poll is for security agencies who would be working for government, allow staff and government agents access in and out of the secretariat. To be able to hatch their “evil

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CEO INTERVIEW

Wednesday 01 August 2018

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BUSINESS DAY

Peter Ashade

Group CEO, United Capital plc

Interview with Private Sector Leaders

‘We will innovatively change the narrative of financial services in Africa’ Peter Ashade is the Group CEO, United Capital Plc. In this wide ranging interview with a select group of reporters including BusinessDay, the CEO speaks on his strategy for the company to attain the next growth phase, low capital markets depth and the state of the economy among other issues. Excerpts:

et’s meet you and kindly tell us about your background. I’m Peter Oladele Ashade, the Group Chief Executive Officer of United Capital Plc, an integrated financial services group currently operating in these business areas: Investment Banking; Asset Management; Trustee Services; and Securities Brokerage Services. I hold a Bachelors’ degree in Banking and Finance, an MBA in Marketing and an MSc in Finance. I am also an alumnus of the Lagos Business School’s Chief Executive Program. I am a Fellow of The Chartered Institute of Bankers; The Institute of Chartered Accountants of Nigeria and The Institute of Capital Market Registrars. Also, an Associate of The Chartered Institute of Taxation of Nigeria and The Institute of Directors. I am currently the 1st Vice Chairman of the Chartered Institute of Bankers, Lagos State Branch where I also serve as the Vice Chairman of the Membership Development and Services Committee and a member of the Grants and Funds Committee. I am a Trustee of the Investors Protection Fund of the Nigerian Stock Exchange; the Treasurer of the Institute of Capital Market Registrars. I’m also a member of various capital market reform committees of the Securities and Exchange Commission. What was your journey like to get where you are? I started my career in the capital market 29 years ago at Union Bank of Nigeria Plc – Registrar, the capital market unit of the Bank. Since then, I have been involved in various capital market offers and other key capital market activities at different levels. I have worked with various operators on different capital market transactions and projects. Before now, I was the MD/ CEO at Africa Prudential Plc, a leading share registration and investor services firm where I spent 12 years of my career. During the period, the company experienced significant growth and transformation in its operations. We pioneered the disruption in the Registrars business landscape in Nigeria by midwifing and the launch of several innovative products. Personally, I see opportunities in every challenge or threat; where others are complaining about the

challenges, I find opportunities in those challenges. This mindset aided the significant strides in my previous roles and I intend to replicate it at United Capital as well. In one word, describe yourself Self-motivating. I am a selfstarter, a go-getter. Once I set my mind to do something, I ensure that I do it and I do it well. I thrive so much on self-determination. I believe that our limiting factor is not external, but internal; our biggest competition is self and once you are able to conquer the limiting factors that lie in you, the opportunities are endless. These theories have proven true throughout the course of my career. From early on in my career, my determination always stood me out and opened the doors for career progression at different points in time. United Capital has soared in recent times with a lot of accolades to boot. With your recent appointment as Group CEO, what will be your strategy to keep the flag flying? How do you intend to build your own legacy with United Capital? I must start by thanking my predecessor who did a lot of work which brought the Group to where it is today as one of the market leaders in the Nigerian financial services landscape. Going forward, we are not going to rest on these laurels; we will work on continuous improvement of products and processes structure. We will innovatively change the narrative of financial services in Africa. We will pursue with clarity our pan-African strategy; we are currently in Nigeria but building a critical mass that will enable us operate in other African countries. Furthermore, we shall strongly support the initiatives to improve the depth of the capital market in Nigeria and thereafter in Africa by engaging in product development as a means of broadening invest-

ment opportunities in our market. We shall equally focus on consistent increase in the wealth for our teeming shareholders while also ensuring that we keep a healthy relationship with other stakeholders. In driving all these, we shall keep in mind our three core values of Excellence, Enterprise and Execution. We shall also place premium on our people. Our people are one of our key assets. Bearing this in mind, we will ensure that our people are motivated, exposed and trained as required to

Personally, I see opportunities in every challenge or threat; where others are complaining about the challenges, I find opportunities in those challenges. This mindset aided the significant strides in my previous roles and I intend to replicate it at United Capital as well

deliver the expected value. What are the factors that would drive solution to banking and the broader financial services sector challenges, for the second half of the year? The key challenges facing the banking sector currently include the weaker macroeconomic environment, high level of nonperforming loans, asset quality concerns, pressure on capital adequacy ratios and elevated risk outlook which continue to drag credit growth. Clearly, the performance of the banks reflects what is happening to the overall economy. While gradual recovery in the macro space is supporting performance so far, pre-election activities which are expected to dominate H2-2018 is a concern for loan growth, hence, resolving the challenges confronted by the banks is rooted in restoring the economy to the pre-2014 era of solid growth. For the financial services sector, specifically on increasing investor confidence, the concerns are broadly linked to political un-

certainties, absence of reforms to drive market activities and the dominance of foreign portfolio investors in our market. For instance, low capital market depth reflects the poor disposition towards the market and this is evident in the absence of operators in the key sectors of the Nigerian economy such as upstream Oil & Gas, Retail Trade and Wholesale, Power, Telecom, and Agriculture in the market. On the other hand, weak local participation rate, high transaction cost and socio-political/economic concerns also constrain demand for Nigerian equities, lowering market capitalization. To resolve this, we must stabilize the economy, drive reforms in critical sectors and boost investor education Nigeria’s External reserve is on the increase. What is the implication for the nation’s economy? Nigeria’s external reserves added a whopping $9.1bn in the first half of the year to close at $47.8bn – its highest level since 2013. This dramatic rise in gross external reserves was driven by a number of factors including Eurobonds worth $5.0bn that was issued between Nov-17 and Feb-18; oil export

proceeds driven by stability in domestic production; higher oil prices which rose to $79.4/b as at the end of H1-18, and Net capital flow which surged over the last 12 months, thanks to the introduction of the I&E FX window. Although events in the political space ahead of the 2019 general election and the external environment (in light of the policy normalization in the US) may push the CBN to do more in terms of defending the Naira, we believe the current reserve level would provide succour to any potential volatility that may arise. At $47bn, the CBN can conveniently cover 12 months of Nigeria’s import. This projects a stable outlook for the second half of 2018, given that the continuous improvement in external balances will support sustained stability of the exchange rate. What is your take on the multiple exchange rate system? The Central Bank was able to resolve the protracted crisis in the FX market by opting for a multiple window solution. The other option proposed by the market was an outright devaluation or a more marketfriendly flexible exchange rate regime.

Clearly, the gains recorded in the currency market over the last 12 to 15 months is a testimonial to the success of the CBN’s strategy. For instance, as at June 2018, the total transaction at the I&E segment topped $32.6bn since it was introduced in April 2017. Similarly, FX rates across market segments have converged around N360/$ compared to pre-April 2017. Foreigners will not necessarily come in. FDI and FPI flows dropped simply because there are certain policy issues that don’t balance and they don’t see it in the future. We are stuck between the rock and a hard place, while inflation is 15.3, how can the Private sector thrive with this situation? Actually, a lot has changed in the macroeconomic space over the last 12 months. Although FDI flows have remained lean, the adoption of the I&E FX window has triggered a massive inflow of FPI funds, at least up until May 2018. And the economy has also witnessed significant improvement in terms of headline inflation, currently at 11.4% compared to the number quoted in your question. However, for the private sector to thrive, the government still needs to create that enabling environment. The Vice president’s office is doing a lot in terms of ease of doing business (PEBEC) but more is still required. Overall, what the economy really needs now are bold reforms (in the power, infrastructure, oil & gas, healthcare sectors, among others) to spur mid-to-high single digit growth and boost national productivity. What Policy change will you advice the authorities to take us on a firm recovery and sustainable growth path? Current concerns for Nigeria in our view are long-term structural challenges – not much of policy issues, but implementa-

tion issues.The business environment remains tough, continued focus on politics seems to be dissuading the implementation of meaningful structural reforms. For instance, the Oil & Gas sector remains at the mercy of badly needed policy reforms that could boost more investments into the sector. The delayed passage of the Petroleum Industry Bill (PIB) is the ever-present risk creating uncertainty to the long-term investment in the sector. The PIB was broken down into four separate units governing regulation (PIGB), administration (PIAB), fiscal terms (PIFB) and a host community bill (PHCB). The idea is that a clearer breakdown of the bill will enable at least certain parts of it to progress through the

For the financial services sector, specifically on increasing investor confidence, the concerns are broadly linked to political uncertainties, absence of reforms to drive market activities and the dominance of foreign portfolio investors in our market

House of Representatives, Senate and President, unimpeded. As we speak, only the PIGB has reached the President’s desk. These bills have the capacity to add momentum to new investments given the potential improvements to fiscal terms, and clarity around local content costs that could be addressed. The downstream oil and gas sector remains crippled by policy inertia as the regulatory bodies are resistant towards deregulating the pump price of fuel. As such, fuel prices in Nigeria do not reflect the landing cost. On the Agriculture Sector, while policy directives such as the Commercial Agriculture Credit Scheme (CACS); Presidential Fertilizer Initiative (PFI); CBN’s Agribusiness Small & Medium Enterprises Investment Scheme (AGSMEIS) and the Anchor Borrowers Program (ABP), have aided the sectors’ growth in the space, there are issues yet to be addressed. For instance, storage, distribution and processing is hampered by poor transportation network, access to finance, poor local processing facilities and low investment in technology. In addition, the recent crisis between Herders and Famers is a major downside risk which is already weakening the Agric sector GDP as at Q1-18 while pushing food in-

flation northwards. The onslaught of the Boko Haram insurgents remains a concern in the northeast with economic activities in the region still considerably low. Other areas include heath care, education and the issue of brain drain, which is negative for manpower development. We need to invest in education, technology, healthcare and correct the decadence in our social system. With the Crude oil price soaring in recent times, how do we best manage the proceeds, will you clamor for a revisit of the ECA? The ECA is still in use, hence, proceeds from excess crude will continue to be remitted in the ECA. However, Nigeria can learn from economies such as the UAE, where proceeds from oil were deployed into investment in Tourism, Real Estate and so on. Oil revenues should be integrated and managed with a view of mitigating the overall impact of oil market volatility on the broader economy. Nigeria is rich in agriculture, human capital, mineral resources and immensely blessed with historical and cultural features that can boost tourism. Accordingly, Nigeria can focus on deploying the excess from oil into investments in these sectors.

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Wednesday 01 August 2018

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Processors pledge support for food fortification JOSEPHINE OKOJIE

n a bid to tackle issues of malnutrition, CEOs of leading processing companies in Nigeria have committed to the fortification of all processed food and beverage products in the country. The CEOs made the commitment at the Nigeria Food Processing and Nutrition forum organised by the Dangote Foundation in collaboration with the Bill &Melinda Gates Foundation and Technoserve in Lagos recently. According to the CEOs, committing to high quality fortification of essential vitamins and minerals is a critical step in addressing the deficiency of basic nutrients in children’s health development. “We are all committed to ensure that we fortify our products and comply with standards,” Aliko Dangote, president and CEO, Dangote group said. “We have all agreed that if the regulatory agencies enter our markets and find food products with less than required nutrients or not fortified at all, the firm producing them should be shutdown,” Dangote said. He called for the removal of import duty on the importation of

premixes (micronutrients) used by processors for fortification. Dangote also urged the government to tackle the issue of smuggling, noting that most of the food products imported into the country are not fortified, while calling on regulatory agencies to be

more aggressive in implementing the policy. According to the United Nations International Children’s Emergency Fund (UNICEF) about 2.5 million children under the age of five are malnourished and have stunted growth in Nigeria.

NBMA urges firms to comply with import guidelines JOSEPHINE OKOJIE

he National Biosafety Ma n a g e m e n t A g e n c y (NBMA) has once again urged importers of grains to compliance with the country’s import guidelines. Rufus Ebegba, director general and CEO, NBMA made the appeal during an interactive session with grains importers recently in Abuja. Ebegba noted that over the years most companies have been importing grains from countries where most grains are genetically modified. “Some companies still feign

ignorance about where GM grains are produced across the globe and continue to import from such countries, this meeting is to enlighten the companies and ensure that everybody key into the biosafety system,” Ebegba said “Companies have been importing GMOs for years even before the establishment of NBMA. Now that a regulatory agency is in place, the need to abide by the NBMA Act 2015 is necessary,” he said. H e s a i d t h a t t h e Fe d e r a l Government is interested in providing a conducive environment for businesses to

thrive but it is the responsibility of the business community to comply with the necessary laws and guidelines provided by the government. He informed the companies that border agencies of the federal government would not allow any bulk importation of GMO seeds or grains into the country without a biosafety permit. The director general who noted that some companies have already been granted biosafety permits by the agency said that NBMA would not compromise its stand in ensuring that the health of Nigerians and the environment are not threatened by any potential risk posed by GMOs. In a message, Mathew Dore, country coordinator, Program for Biosafety Systems (PBS) urged the companies to work together and cooperate with NBMA for the successful execution of the import guidelines. The participants at the meeting, which attracted over 50 grain importing companies, and representatives of ministries and agencies, agreed to work with NBMA for the formation of a strong and viable seed and grains importer’s network that will allow for effective monitoring and supervision.

Aisha Abubakar, Minister of State, Ministry of Industry, Trade and Investment said that it is a government policy that all processed food products should be fortified because of its enormous benefits in a child’s development. “We had meetings with the CEO’s

and they have commit to fortify their food products and the government also commit to making sure that every challenge that they have in the industry which basically have to do with the cost of premixes is address to reduce their production cost,” Abubakar said. Also speaking to journalists, Shawn Baker, director-nutrition programme, Bill and Melinda Gates Foundation stated that the Nigeria has one of the largest burdened of malnutrition in the world which needs to be addressed. “Most children in Nigeria do not get enough essential vitamins and minerals in their diets that the child needs for brain and immune system development, eye sight and building adequate blood supply,” Baker said. “One of the most cost effective ways is to get essential vitamins and minerals to children-is by adding these micronutrients to the food we eat,” he said. He stated that the foundation is supporting the fortification of food at different level- both at the farm and processing levels. “We support food processors with direct technical assistant, independent monitoring and we work in partnership with the Dangote Foundation on the advocacy of fortification in Nigeria,” he added.

Experts caution farmers against adulterated pesticides YOMI AYELESO, Akure

xperts in the agricultural sector have cautioned farmers against using adulterated pesticides, identifying it as a threat to sustainable farming in the country. A c c o r d i n g t o t h e e x p e r t s, counterfeited pesticides pose risk to water and soil quality, resulting in low yield and can also lead to crop damage or total loss of farm. The experts who spoke at a sensitisation forum on the regulation of agro-input business in Ondo state called on all and sundry to join forces together to curtail the activities of agro traders dealing in counterfeited pesticides. Speaking on the negative impact of counterfeited pesticides on crops, Bode Famose, director National Orientation Agency (NOA)- Ondo State, warned farmers to steer clear of the counterfeited pesticides which have deadly effects on human health and agricultural production. He noted that the fight against counterfeiting pesticides is the duty of every Nigerian while adding that a lot of people are taking up agriculture owing to FG’s renewed efforts. Solomon Ogunbuyide, a farmer in Akure North Local Government Area, charged government to enact a law that would help prevent counterfeiting pesticides into the country, adding that

the menace is a big corruption. He added that most farmers can not differentiate between counterfeit and original, hence the need for enlightenment is very vital. Adeola Adegoke, national secretary, Cocoa Farmers Association, who said farmers are the people suffering the consequences of counterfeit pesticides, called on farmers to stop buying cheap products adding that every stakeholder should be enlightened. Abdulazeez Sogbesan, chairman of West Agro Inputs Dealers Association, charged Harvestfield, makers of pesticides to make its products available to all and not to those who can pay in advance alone. He also charged them to stop changing their label often as it confuses the buyer at the point of purchase. Reacting to the influx of substandard pesticides in the country, Kenneth Azikiwe of National Agency For Food and Drug Administration and Control, (NAFDAC), said the agency is ready to partner with manufacturers of pesticides by giving number to their product, adding that such products are safe. Similarly, Jonathan Olariche, assistant commandant of corps, Nigerian Security and Civil Defence Corps said everyone involving in counterfeit pesticides is a criminal, adding that his Organisation has an agro ranger unit.

Wednesday 01 August 2018

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BUSINESS DAY

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NFGCS: An inclusive agribusiness model with investable opportunities OBINNA EMELIKE

t may be difficult getting lots of enterprising corporate youths involved in agriculture going by the tedious nature of farming, old techniques still in place and even more difficult with less attractive business models that hardly assure good return on investment. While the above are some reasons many shy away from agriculture, an innovative agribusiness startups has allayed the fears with an inclusive and trendy model that now woos many Nigerians across the world to invest in agriculture without necessarily being on the farm or raise an implement. With over 1,000 hectares of land leased from local owners at Gaate in Nasarawa State, the Nigerian Farmers Group and Corporative Society (NFGCS) has offered many Nigerians opportunity to farm and empower people by subscribing to the corporative society’s investment widows. The NFGCS, which started in 2017 with N1.5 million seed funding provided by KiaKia, a financial lending outfit, now employs over 300 famers who work on different sections of the farm daily to ensure that crops are nurtured from planting, harvesting to warehousing and eventually sales. With the subscription, a member has access to land where the farmers work on their behalf to grow high yield crops ranging from maize, cowpea, groundnut, melon, yam, rice, ginger among others. The subscription has also provided funding for the procurement of locally fabricated implements such

as dryers, planters, sprayers and also tractors just within its first year of operation of the farm. The model also hosts ranching facilities for subscribers who are interested in cattle rearing in the most modern, peaceful and profitable way. Another reason to invest in the farm is the cheap loan from KiaKia, a young Nigerian company that is involved in micro lending. So far, members of the corporative have grown their investment portfolio through loans from Kiakia with very low interest rate of less than 10 percent. The uniqueness of the model is that it was a vision of some young activists who rather than occupying the streets and the National Assembly, decided to occupy the farms by creating a platform where many can pool resources together to create values; pay people to farm on their behalf, create jobs by so doing, boost food security and also earn

profit from their investments. Retson Tedheke, national coordinator and secretar y general, Nigeria Farmers Group & Cooperative Society, said NFGCS is model that works because it is thrives on the principles on modern business and investments. “For instance, if we put the cost of farming one hectare of maize at N280,000, all you need to do to become a member of the corporative from anywhere you are in the world is just to pay N280,000 into your subscription account and we will farm for you. “After that, you expect return on your N280,000 once every year. Instead of doing it in the farming season, we do it annually because you prepare the land, plant, harvest, warehouse and all that. So, we stretched the timing to have comfort. So, the bulk of the money used in paying workers, to support and manage the farm come

FACAN, Agriexpo collaborate to transform Nigeria’s agriculture

grikexpo , Africas premium expo for agrofood products and services has collaborated with the Federation of Agricultural Commodity Associations Of Nigeria (FACAN) to transform the country’s agriculture through its upcoming agribusiness event. According to Victor Iyama, national president, FACAN, the association is determined to foster harmonised level of engagement between the various associations and stakeholders which includes primary producers, processors, channel distributors, logistics, and service providers, including Research and Development among others. Iyama stated that Agrikexpo is commendable and has evolved continuously to a reference platform for agrofood promotion & development ,which is made better

by strategic location and nearness to actual famers , project decision makers in government and sundry processors Similarly, Akin Sawyer, secretary general, Agricultural Fresh Produce Growers and Exporters Association of Nigeria (AFGEAN) sees the opportunity of conferences as good chance for creative conversations on moving agriculture forward in Nigeria, while also commending the organisers. Sawyer noted that a platform for trade exchange would definitely augur well for both users and sellers of various agro-food solutions. The upcoming agricultural event is expected to host delegations from the diplomatic trade community and various bilateral chamber associations, including very high level speakers f ro m t h e a g r i c- f i n a n c e a n d insurance community.

Also, plenary session would hold and issues around lending to farmers and agribusiness would be featured in partnership with the Chartered Institute of Bankers. Communiqués would be issued in the end with a view to enhancing policies inclusiveness at various levels. Consequently, the three day expo would be a carnival of agrofood solutions and products. Abdullahi Yakubu, project manager, Agrikexpo & Conferences said that several overseas and local delegates are expected at the expo to herald Nigeria’s Independence at 58 and the sustained focus of government on transforming the sector. “Visitors and exhibitors should rest assured of best value for both time and money as arrangements are in top gear for best results,” Yakubu said.

from our subscribers”, Tedheke, a repentant Niger Delta militant explains. As well, subscribers are not limited to one crop or size of land, but as much as their investment portfolio and risk appetite are. Considering the experimental ranching model at farm, which has worked, Tedheke said some subscribers have over 54 cattle that are reared by Fulani herdsmen who are paid to do so on same farm without any clash because the model is inclusive. “The NFGCS is a model that works because it is an inclusive model that brings people together irrespective of their tribe and religion to create a value chain for every single person. It is an innovative project which government should copy to resolve the Farmers and herdsmen prolonged issues. “Besides, we have been doing our business peacefully here because we leased the land from the locals, employed their children, engaged them in security and do community services. It is difficult to have issues because their livelihood will be threatened”, the agricultural entrepreneur explains further. Beyond the inclusiveness of the model, the farming technique is research-based farming and has resulted in planting high yield variants, reduction on cost per hectare and improving soil fertility through several tests, including soil texture. As well, Nigerian Framers Group and Corporative Society encourages local fabricators by using locally fabricated equipment from Enugu, Ibadan, Ilorin to boost its production process aside partnering research

institutes across the country on crop trends and innovative techniques. However, the excitement for Tedheke and the management of the corporative society is that the farm, which is now in its third circle, has fulfilled its financial commitments to the subscribers , especially returns. “We are in our third farming circle now and all those who committed their funds to us in the two circles have been taken care of successfully”, he enthuses. The financial probity and profitability has also wooed new investment flow. With the impressive results, KiaKia is furthering its micro credit lending to members, while Apical Limited is partnering with the farm in buildings additional and more modern warehousing and processing facilities in view of rapid expansion of the farm. Apical’s investment is even more interesting. While signing the investment deal at the farm recently, Abasiama Idaresit, managing director, Apical Limited, said, “The Nigeria Farmers Group Cooperative has been very instrumental in building out a well organised and thriving farming community in a sustainable way. We identify with their vision and efforts and we are looking to build a winwin partnership in the coming months and years. As an outgrowers partner, we look to ensure agro value chain is sustained and improved in partnership with the cooperative”. All that Tedheke is asking those who consider farming as a dirty job is to invest their money, allow the farmers to do the dirty thing, and smile to their banks at the end of a framing circle.

France to boost agribusiness ties in Nigeria …set to launch support programme for agriprenuers

igeria is making frantic efforts to ensure that agriculture and allied services play a key role in its quest for economic and revenue diversification. To s u p p o r t t h e c u r r e n t diversification drive and mitigate the impact of oil price, the French government is increasing its agribusiness ties with Nigeria. Recently, the French government established the Franco-Nigerian Business club to boost business relations between both countries. President Macron’s visit to Nigeria recently, was indeed another step towards greater collaboration and support between both countries. Agreements worth about $475 million were signed and witnessed by both presidents which include Urban Mobility Improvement Programme, sustainable water supply and reforestation among others. The long-term benefit expected is a dramatic shift from bilateral trade characterized by majorly petroleum products to one where other sectors, particularly the agricultural and

creative sectors. Following the President Macron’s visit, Friends of Nigeria (FON) a French-based organisation has also announced its plan to launch an entrepreneurship support program for SMEs in Nigeria, which will be championed majorly by Nigerian entrepreneurs running successful businesses in Europe. The support project will be launched during the Spotlight Nigeria Forum- largest forum for France-Nigeria Business and its schedule to take place in Paris, France by early October. The program would provide capacity building and funding for SMEs in non-extractive sectors, with agribusiness being one of the major areas of focus. Beyond France being an export trading partner with Nigeria, there seems to be asynchrony between the present French government and the Nigerian government on diversifying economic growth in Nigeria by focusing more on revenue generation through non-oil sectors.

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Wednesday 01 August 2018

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BUSINESS DAY

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Wednesday 01 August 2018

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Pension Today

BUSINESS DAY

In Association with

Pension, capital market operators parley for increased liquidity, stability …set eyes on new multi-fund structure

ension Fund Operators Association of Nigeria (PenOp) and the capital market community, including regulators and the players are working on collaborations that will support growth, increase market liquidity and stability of the country’s bourse. PenOp, who manages the countries thriving pension assets currently standing at over N8.1 trillion, believes that the collaboration with capital market operators will further boosts Nigeria’s investment market. According to the PenOp, the recently introduced Multi-fund Structure will spike activities in the capital market, and further increase market liquidity for the benefits of the investment community. Susan Oranye, executive secretary of PenOp said the association recently performed the closing gong ceremony at the floor of the Nigerian Stock Exchange(NSE) on the invitation of the management of the bourse. Oranye said the two organizations that are among the strongest players in the Nigerian financial sector met to discuss partnership opportunities and ways in which the capital market can be developed especially in light of the Multi Fund Structure that was recently kicked-off by the pensions industry. She said the meeting was attended by members of PenOp’s Executive Committee led by the President, Ronke Adedeji and members of the NSE’s Senior Management Team led by Tinu Awe, executive director, Regulations.

Multi-Fund Structure, a fall out of the new amended investment guidelines of the pension industry brings flexibility in the investment and risk appetite of contributors and retirees based on their age and preference, under the Contributory Pension Scheme(CPS),and has became effective since 1st July 2018. The new investment structure targets to transform the country’s pen-

sion industry and bring enhanced returns to contributors and retirees based on their risk appetite. “Fund I is targeted at people of 49 years and below who want higher returns, and are willing to take higher risks. Membership into this fund is strictly based on request. Fund 2 is aimed at people who are aged 49 years and below and still working but are satisfied with moderate

According to the Pension Reform Act (PRA) 2014, the minimum rate of pension contribution is 18 percent of monthly emoluments, where 8 percent is to be contributed by employees and 10 percent by employers

RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

returns and levels of risks. Fund 3 targets people 50 years and above but still working and have very low risk appetite. While Fund 4 are retirees who have the lowest risk profile of all categories.” According to experts, multi-fund will create stability in the market, as a lot of funds will come from the PFAs, which will help absorb the market of shock from mobile foreign funds. “We have seen in the past where the prices of stocks crashed because foreign equity investors pulled out their funds. Multi-fund will help to bring stability in the market against this kind of development, experts said. As at May 2018, the total pension fund assets under management has hit N8.14 trillion, PenCom stated in its monthly reports which detailed the summary of pension fund assets as at May 31, 2018.

According to the pension regulator, Retirement Saving Account (RSA) retiree fund stood at N619.59 billion; RSA active fund, N5.51 trillion; Closed Pension Funds N1.08 trillion and Approved Existing Schemes (AES) N9.26.85 billion. PenCom posited that 70.08 per cent of the N8.14 trillion pension assetswere invested in Federal Government’s securities, which amounted to N5.71 trillion. A breakdown of the investment according to the commission, revealed that FGN bonds got N3.96 trillion; treasury bills, N1.68 trillion; agency bond ( NMRC & FMBN) N6.54 billion; Sukuk bonds, N51.98 billion and green bonds, N8.26 billion. PenCom maintained that state government securities gulped N154.02 billion; corporate bonds, N393.27 billion; corporate infrastructure bonds, N8.36 billion; banks, N662.80 bil-

lion; commercial papers, N71.75 billion and estate properties, N228.86 billion. Other classes of assets include, supra-national bonds, N8.21 billion; open/ close end funds, N10.16 billion; mutual funds, N1987 billion; private equity fund N3727 billion; infrastructure fund, N8.95 billion and cash & other assets N96.13 billion. According to the Pension Reform Act (PRA) 2014, the minimum rate of pension contribution is 18 percent of monthly emoluments, where 8 percent is to be contributed by employees and 10 percent by employers. However, an employer may choose to bear the full responsibility of the scheme provided that in such a case, the employer’s contribution shall not be less than 18 percent of the employee’s monthly emoluments. The key objectives of the Contributory Pension Scheme are to ensure that every person who has worked in either the public or private sector receives his retirement benefits as and when due; assist improvident individuals by ensuring that they save to cater for their livelihood during old age; establish a uniform set of rules and regulations for the administration and payment of retirement benefits in both the public and private sectors; and stem the growth of outstanding pension liabilities. CPS is contributory, fully funded, based on individual accounts that are privately managed by Pension Fund Administrators with the pension funds assets held by Pension Fund Custodians.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

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Wednesday 01 August 2018

E-mail: insurancetoday@businessdayonline.com

Insurers convene emergency board meetings over new capital requirements Stories by Modestus Anaesoronye

he announcement by the industry regulator, the National Insurance Commission (NAICOM) recently on the Tierbased recapitalization, in line with the sectors risks based solvency capital is causing jittery among insurance companies’ boards and management. BusinessDay findings show that insurance companies’ boards are urgently convening meetings to get proper interpretation of the new directive, and also put in place strategies on how to go about it. NAICOM by the recapitalization timetable has given directors time frame on when to meet and communicate to the commission, what they have decided on which Tier-level their company will play. Transition guideline according to the commission will be released 3rd August 2018; while issuance of notification letters (Tier assessment Advice to all operators) on assessed capital level will be given on 13th – 17th August, 2018. Submission of Board’s decision by operators (on choice of Tier-Level)

L-R: Festus Izevbizua, chief financial officer; Ekpe Ukpabio, executive director; Val Ojumah, managing director/CEO, all of FBNInsurance; Bode Opadokun, managing director/ CEO and Shola Osho, head, Business Development both of FBN General Insurance at a press conference held recently in Lagos.

will be sent to NAICOM not later than 14th September 2018. The new capital requirement, which will commence 1st January 2018, will require insurance companies willing to play big in the market to either raise fresh capital, embark on mergers and acquisition for higher Tier-levels, or remain with low level capitals and underwrite small premium risks. Under the new capitalisation structure, life insurance firms need

a capital level of N6 billion for Tier 1; N3 billion for Tier 2 and N2 billion for Tier 3: For non-life business, the requirement is N9 billion for Tier 1; N4.5 billion for Tier 2 and N3 billion for Tier 3. While for composite companies (combination of life and general business), the new capital requirement is N15 billion for Tier 1; N7.5 billion for Tier 2 and N5 billion for Tier 3. The recapitalisation according to the Commission will also open

doors for fresh licensing to investors willing to play in the higher Tier 1 capital levels. New license was issued eight years ago and FBNinsurance was the last license issued by the regulator. According the Bareneka Thompson, director supervision at NAICOM, the recapitalization scheme is aimed at developing and applying appropriate tools that consider the nature, scale and complexity of insurers, as well as

non-core activities of insurance groups, to limit significant systemic risk and thereby achieve soundness of insurance companies and contribute to the achievement of stability of the financial system. The last recapitalisation in Nigeria took place in 2007 when the industry’s paid up capital was increased to N2 billion for life; N3 billion for non-life; N5 billion for composite and N10 billion for reinsurance.

Continental Re shows resilient GNI gets shareholders approval to delist performance despite lull in economy from Nigerian Stock Exchange ontinental Reinsurance during the same period in 2017. Plc has released its half “We are pleased with our value …Grew profit by 202% year results for the period creation evolution in the first half of

ending 30th June 2018 with a momentum growth in volume. The result shows that the consolidated Gross Premium of the Group was 27 percent up fromN15.19 billion in 2017 to N 19.26 billion, a reflection of a supportive market environment. Despite a competitive pricing environment, higher frictional costs and a higher claims ratio, 2017 underwriting performance, although 36 percent lower, remains strong due to tighter portfolio management. Claims incurred amounted to N 6.76 billion compared to N 3.52 billion, with the incurred loss ratio deteriorating from 36 percent to 46 percent Negative technical performance factors were partially offset by positive performance on investments, at N 1.23 billion, slightly lower by 6 percent, cost savings and efficiency improvements. The Company continues to enjoy a highly favourable 91 percent combined ratio. Profit before tax was N 3.24 billion representing a 4 percent modest year-on-year growth, which is 31 percent higher than budget. Shareholders’ funds improved markedly by 24 percent to N 25.77 billion compared to N 20.77 billion

2018. Claims settlement excellence remains our key value proposition. We will continue with our efforts to increase our internal capacity and implement quality assurance measures that underpin the superior client experience we are known for.”, said group managing director, Femi Oyetunji. With a diverse and dedicated workforce, Continental Re is committed to implementing its 2020 strategy that complements Africa’s aspirations for higher insurance penetration and enhances value for its shareholders. The Group has put in place measures to improve revenue while optimizing costs and anticipates the 2018 performance to be in line with budget projections. The Group is also on course to completing the ongoing construction of its headquarters building by December 2018. “One thing is certain,” said DOyetunji, “We are adapting quickly to changing market conditions and the Company has built strategic momentum to deliver solid results. We have learned over the years that our defining characteristic is that we are a responsive partner and, on this premise, our year-end expectations for growth and profitability remain unchanged.”

nderwriting firm, Great Nigeria Insurance Plc has received the approval of its shareholders to go ahead with its planned voluntary delisting of its ordinary shares from trading at the Nigerian Stock Exchange. The shareholders, who spoke to our correspondent, gave their total support to the bard, said delisting from the Exchange at this time was wise decision taken by the board to enable it reposition the company and move it on the part of profitability. According to them, board and management need time to concentrate and rebuild the company, instead of pre-occupying its self with looking for how to meet regulatory and compliance requirements, where other things needed to be done. Speaking at the extra ordinary general meeting (EGM) held today in Lagos, Sunday Solomon Akinsoye a member of the independent shareholders Association of Nigeria (ISAN) said that the continued fining of the company by NSE is destroying the investment of minority shareholders. He noted that the shareholders are not pleased with the regulator,

adding that if such funds paid as fines are channel as dividend or for investment, shareholders will be better for it. Also, Alex Adio, a shareholder also applauded the board of directors for the bold step they have taken to delist the company voluntarily from the exchange, adding that the company has what it takes to survive after the delisting. According to him remaining at the exchange has not in any way benefited the company, while assuring that shareholders will support all move by the company. Bada Aluko, chairman of the Company said that the decision to delist the company from NSE was as a result of no trading on the shares of the company for over 5 years now. “Over the last 5 years, there is little or no trading activity with only 0.50 percent of shares held by the minority shareholders being traded. There has also been a measurable fall in trading volumes over the last 12 months with an average daily volume of circa 1,200 units during the period January 2017 to December 2017. “Neither our company nor you, our esteemed shareholders are benefiting from the continued

listing as shares are not getting any exit opportunity and their investments have been locked up and they find it difficult to dispose of their shareholders, Moreover, the company is bearing unnecessary cost in complying with its listing obligations The shareholders also adopted the 2016 and 2017 financial accounts of the company at the annual general meeting which took place immediately after the EGM. On its financial performance, he said its profit grew massively by 202 percent from a loss of N442.7 million in 2016 to a profit of N449.7million in 2017. Gross premium of the company rose also to N3.02 billion in 2017 as against N2.21billion reported in the previous year of 2016; indicating a growth of 36.59 percent. The company’s investment income appreciated 30.89 percent from N306million to N401 million in 2017; while value of the company’s total assets appreciated by 1.2 percent to stand at N10.12billion when compared to N10billion reported in 2016. Shareholders fund also witnessed a 7.7 percent growth to stand at N5.89 billion as against N5.43billipn reported in 2016.

Wednesday 25 July 2018

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BUSINESS DAY

E-mail: insurancetoday@businessdayonline.com

L-R: Oladimeji Alo, non-executive director; Stephen Alangbo, managing director/CEO; Dapo Oshinusi, chairman and Rotimi Aju, company secretary, all of ARM Life during its 20th Annual General Meeting in Lagos

L-R: Seun Tubi, director, Prorisk Insurance Brokers Limited; Nurudeen Fagbenro, director; Derin Agbabiaka, director; Aderemi Adekile, chairman; Oluwagbemiga Olawoyin, managing director; and Idorenyen Enang during the company’s board meeting in Lagos

Have you considered insurance as an asset class?

Lagos Golfers give their backing as Efekoha, new president of CIIN drives agenda

Consider insurance as an asset (investment) class!

mong other bodies and professional arms, the Ikeja Golf Club has given their backing and support to Eddie Efekoha, a top notch golfer, to his tenure as the 49th president and chairman of Council of the Chartered Insurance Institute of Nigeria (CIIN). The golfers, at a dinner organized in honour of their Efekoha at the Ikeja Golf Club to crown his investiture as CIIN President, said they were not surprised at his achievement having found in him, a focused and committed personality, even in the golf course. Bola Temowo, captain, Ikeja Golf Club said Efekoha is a committed golfer whose passion and love for the game is remarkable, assuring the club’s support throughout his tenure. Meanwhile at the CIIN investiture ceremony held in Lagos, Efekoha said the theme of his presidency shall be ‘Advancing Insurance Education and Professionalism’. He said the programmes to be executed under the theme have been carefully selected while being guided by the doctrine of continuity, which entails concluding on-going positive projects and policies by successive leaderships in addition to embarking on new projects and plans. One of the key projects he plan to embark on is Infrastructural Development at the College of Insurance. “The Institute has achieved so much infrastructural development at the College of Insurance and Financial Management Studies within a short time. We have to sustain the tempo to make the College the pride of our efforts. It is against this background that we have chosen to commence work on the construction of

ver the past 8years, I have preached the message of multiple streams of income within my circle of influence. Like many financial advisers, I agree that earning multiple streams of incomeis the only mean for people in paid employment to achieve financial freedom. People in paid employment earn salary income which represents their first stream of income; they will be working towards their financial independence if they invest some of their salaries in building other income streams. The rule here is simple, “don’t eat all your eggs.” set some portion of your salary aside as periodic investments in money market instruments. Money market instruments include tenor deposits in banks, treasury bills, and Bonds. These instruments pay regular interests or coupons that could become a second stream of income. “Never ignore the capital market.” As scary as an investment in shares or quoted equities might appear, In-

vestment analysts have argued that equity investments outperform fixed income or money market investments over the long term. Investment in shares of well-managed companies may yield regular dividend and capital appreciation that may become the third stream of income to people in paid employment. Real Estate and Entrepreneurship are the fourth and fifth streams of income I have shared details with friends and families. But the focus of this write-up is not about the five streams briefly summarised above; I believe Nairametrics and other analysts have written many good articles on these five streams. My focus today is to introduce Insurance as an asset class or an investment that can be purchased and combined with other assets classes or income streams mentioned above, to provide downside risk protection or a lifetime income opportunity. Until I joined the Insurance industry some 18months ago, I have shared a subtle agreement with

ARM Life to drive market share through product innovation, digital transformation

ife specialist underwriting firm, ARM Life Insurance Plc is committed to growing its market share in the nation’s insurance space with focus on product innovation and digital transformation. Dapo Oshinusi, chairman of the company said at its 20th Annual General Meeting in Lagos strategies have been put in place to ensure that the company customers enjoy the best of service delivery. He said, “We remain focused on the implementation of our strategic objectives. Some of the objectives

are centered on product and service innovation to improve customer experience and to cater for their evolving needs; focus on digital transformation to improve operational efficiency; and increasing distribution channels and market reach.” Despite the challenges in the economy, he said the company was convinced that there exists huge opportunities which it will continue to explore towards

many outsiders who considered insurance as a waste of money or a necessary evil at best; these people would not buy an insurance product, except it is made compulsory by law! But the reality is that insurance is a risk transfer mechanism that ensures adequate financial compensation is paid to the insured, who has suffered an insured loss, caused by events beyond the control of the insured party. People in paid employment who desire financial freedom must consider personal insurance which includes motor insurance, household insurance, travel insurance, private medical and personal accident insurance (where the employer does not provide cover) among several other beneficial insurance policies. Having some of these policies protect the wealth of the insured, fire damage to property or automobile could set the owner backwards by several millions of naira if an insurance cover is not in place. A friend who works in

continuously increasing shareholders value. “As we progress in our quest for leadership in the retail segment of the market, we remain mindful of building a sustainable business that will continue to engender the trust of our clients and other stakeholders,” he said. While presenting the financial performance of the company, he said that despite the operating chal-

the oil industry once took ill while on holiday abroad, unfortunately, he didn’t buy a travel insurance policy that covers medical treatment, he spent half a million naira in credit card debt, where a planpriced at not more than five thousand nairawould have provided sufficient cover! Life assurance policiesare promisingproducts I will recommend to anyone seeking future financial protection. Nigerian insurance companies offer four main types of life assurance policies; term life, whole life, endowment life and annuity. The primary benefit of these insurance products is to provide a predictable cashflow following the occurrence of an insured event. Another friend bought a funeral policy on his aged father, “unfortunately” he lost his father some months afterwards, but the insurance company paid the insured sum, which was sufficient to give dad a befitting outing. Isn’t that smart investing? Article by Afolabi Lawal, who works in the insurance industry.

lenges of 2017, the company recorded another profitable year. He said that its gross premium written increased by 31.5 per cent from N2.75bn in 2016 to N3.62bn in 2017. Stephen Alangbo, managing director/CEO of the company said recently that the company is now ready to deliver new consumer experience with innovative products and efficient claims services.

the Auditorium, complete on-going development of the sporting facilities and furnishing of the Rector’s lodge. These will be the major projects at the College during my tenure, while not neglecting all other areas of need.” On advancing insurance education, Efekoha said this will be achieved through making the Chartered Insurance Institute of Nigeria Examination more accessible and affordable for students; promoting the emergence of a new generation of insurance professionals; reviewing the Insurance Textbook for Secondary Schools; Institution of Best Graduating Insurance students Awards in accredited Institutions;” Others include equipping accredited insurance departments in Tertiary Institutions; re-invigorating and continuing existing programmes on Insurance Awareness; accreditation and establishment of new Insurance Program m e s/ De par tment in Tertiary Institutions in Nigeria, example University of Lagos – MSC Risk Management, B.Sc. In s u ra n c e i n Ba b c o c k University, University of Jos amongst others. - Insurance Lectures & Workshops. Efekoha further stated that other areas of focus during his tenure will be professional development through collaboration with National Insurance Commission and other arms of the industry to enhance post-qualification development of practitioners; continuous development of the manpower, process and physical structure of our Institute to ensure we are responsive and efficient; and Sustain established working relationship with the CII London, among others.

30 BUSINESS DAY

Wednesday 01 August 2018

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Transforming public transport hubs key to better city living, says US Page 31 professor

Toyota mulls latest technologies ahead Tokyo 2020 New marketing, Stories by MIKE OCHONMA

service, sales boss named at Ford SA

ith two years to go until the Olympic and Paralympic G a m e s To k y o 2020, Toyota Motor Corporation (TMC) is outlining the mobility concept that will become the basis for its Tokyo 2020 Games activities. The event is being organized around three main pillars that is made up of mobility for all; and sustainability which seekd to center on the realization of a hydrogen society, with the environment and safety as core principles; and the third pillar being transportation support of staff, media and athletes between games venues using a Toyota Production System (TPS)-based system. Against this backdrop, Toyota believes that giving unprecedented access to people including those with impairments brings the notion of mobility back to its most fundamental meaning of the freedom to move. In collaboration with the International Olympic Committee (IOC), the International Paralympic Committee (IPC) and the Tokyo 2020 Organising Committee, the company would like to help make Tokyo, the first host city to welcome both the olympic and the paralympic games for the second time, a global showcase for “Mobility for All,” contributing to making those Games the most innovative in history. Citing reasons for this initiative, Akio Toyoda, Toyota President said, “The freedom of being mobile is at the heart of being able to participate in society. If someone wants to take on a challenge and moving is what is preventing them from doing so, Toyota would like to help tackle that problem’’. Akio Toyoda noted that Toyota

ord Motor Company South Africa (FMCSA) has announced the appointment of Conrad Groenewald as its new director of marketing, sales and service. At the start of July 2018, the 43-yearold stepped into the role vacated by Neale Hill, who named managing director after Casper Kruger was left to “take on a new personal endeavour”. Since January 2018, Groenewald has held the time of general manager of Ford’s newly created “consumer and dealer experience division”, with a focus on “enhancing the sales and service experience” for customers and dealers in South Africa, Namibia, Botswana, Lesotho and Swaziland. “This is a wonderful opportunity, and I look forward to leading Ford’s marketing, sales and service team as we embark on a new phase in Ford’s proud South African history with an exciting new product portfolio, and a stronger focus on customer satisfaction in sales and service,” Groenewald said. He holds a Bachelor of Technology in Mechanical Engineering from Pretoria Technikon, as well as an MBA from the University of Pretoria. Groenewald joined Ford Motor Company of SA as a graduate trainee in 1996 and has held various positions within the company over a career spanning more than two decades. He started out in product engineering and manufacturing, and subsequently moved into marketing and sales in 2002 first as product manager and then brand manager, before taking over responsibility for Ford Commercial Vehicles between 2003 and 2006. After a brief stint at an independent motor retail group, he rejoined Ford in April 2008 as the product strategy manager before becoming regional marketing launch manager for commercial vehicles in 2011 in the Asia Pacific region. Three years later he was appointed regional manager for Mpumalanga, Free State, North West and Kwazulu-Natal, a position he held until December 2017.

... Wants mobility as possibility, not an obstacle - Toyoda

as a corporate citizen would want mobility to be a possibility, not an obstacle. By being involved with the olympics, the paralympics and the special olympics games, Toyota will come to respect everyone’s uniqueness and embrace diversity. Once that is realized, he pointed out, Toyota will be able to take a step closer to its goal of “mobility for all” and ensure, like athletes show us every day, that being mobile equals having a chance to make one’s dreams come true. It would be recalled that Toyota became the first worldwide mobility partner of the IOC and the IPC in 2015 with the aim to contribute to “creating a peaceful society without discrimination through sports” and “a commitment to creating a sustainable society through mobility”. Additionally, from last year, Toyota launched its first global corporate initiative, “Start Your Impossible,” to bring people together and contribute to a society where all people can challenge

what is possible. The product categories covered by the Toyota sponsorship are: vehicles, mobility services and certain transportation and mobility support products (including robots). At Tokyo 2020, Toyota’s support will be deployed in three main areas: “Mobility for All”, Sustainability, with the environment and safety as core principles, centered on the realization of a hydrogen society. With this, Toyota plans to contribute to sustainable games by providing a fleet of over 3,000 passenger vehicles for official use and others, equipped with the latest environmental and safety technologies to minimize environmental burden and traffic accidents. It is estimated that 15 million visitors will join Tokyo’s 15 million citizens during the Games period. While the Tokyo Metropolitan Area will surely live up to its reputation as one of the most efficient cities for urban mobil-

ity, Toyota will support the Tokyo 2020 Organising Committee to help ensure a safe and effective transportation between venues for those using the official fleet. To do this, the company will provide the knowledge it has garnered over years of experience applying the Toyota Production System. Cities around the world currently face challenges surrounding mobility, having to solve issues ranging from traffic congestion to air pollution, traffic accidents, and access for people with impairments. Starting from Tokyo 2020 and through Beijing 2022 and Paris 2024, Toyota is hoping to help tackle these challenges in collaboration with stakeholders around the world, and contribute to creating legacy to realize a sustainable mobility society. Plans and contributions, including those related to new mobility products and solutions, moving forward between will be disclosed between now and Tokyo 2020.

Uber driver-partner wins brand new car with uberFREEKICK

lucky driver-partner signed on to Uber, today drove home a brand new car courtesy of Uber’s uberFREEKICK campaign. The presentation of the car was done at the Uber Greenlight Hub - a dedicated support centre for driver-partners in Lagos. Speaking at the presentation, Lola Kassim; General Manager West Africa, Uber said: “Our unique brand proposition at Uber is that we are committed to creating business and economic opportunities, especially for driver-partners. We value our driver community and are always looking at ways in which we can make their experience more memorable on Uber. We’re excited to continue stimulating growth across a broad range of sectors within the Nigerian socio-economic space.” The lucky driver-partner, Banjo Olayemi couldn’t hide his joy and

surprise at being announced the winner of the brand new car. “I am very happy to be the winner of the brand new car; I almost didn’t believe it, but my name was called repeatedly. My appreciation goes to the management of Uber for this great initiative and for truly supporting drivers in word and in deed. Owning a new car means I can be more efficient with my work, and offer my riders excellent service.” According to Osi Oguah; Senior Driver Operations Manager for Nigeria, Uber “This competition was open to all driver-partners with active accounts in Lagos or Abuja.” Shedding more light on the metrics for selecting a winner, he said: “The winner of the uberFREEKICK competition needed to complete 40 trips per week in Lagos or Abuja during the competition period, in addition to meeting other criteria.”

From L-R: Osi Oguah; Senior Driver Operations Manager Nigeria, Uber, Banjo Olayemi; Driver-Partner, Lola Kassim; General Manager West Africa, Uber and O’Yoma Ukueku; Greenlight Operations Manager West Africa, Uber at the presentation of the brand new car to Olayemi to mark the culmination of the uberFREEKICK campaign.

Soon, the uberFREEKICK train will move to Abuja, where another lucky driver-partner will go home

with a brand new car. Uber recently commemorated its Fourth year of operations in the city

of Lagos. The global technology brand also unveiled its new advert campaign tagged “Moments that Matter”.

Wednesday 01 August 2018

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BUSINESS DAY

Local and global rail news as it breaks

Itakpe-Warri rail project to be completed on schedule – FG

MIKE OCHONMA & STELLA ENENCHE, Abuja

igeria’s minister of transportation, Rotimi Amaechi has announced that the ItakpeAjaokuta-Warri standard gauge rail project which has reached 80 percent completion stage at the time of filing this report will be completed ahead of schedule. Amaechi, who disclosed this while inspecting the on-going Itakpe-AjaokutaWarri rail project recently said it would be completed before the scheduled date. On making the coaches passenger friendly, he explained that, this is possible with funds available. The transport minister told newsmen during a visit to the project corridor that, the 302 kilometer project is between 70 to 80 per cent completion stage, although the job is meant to be completed in 2019. However, we are compelling them (the contractors) and because we are pushing, they are working day and night to have it done. While pointing out those sources of funding of rail projects is through borrowing, the minister said the government had no apology when it comes to borrowing to fund infrastructure in Nigeria. The minister also disclosed that the government of President Muhammadu Buhari has obtained credit facility of $1.6billion for the 156 kilometer Lagos-Ibadan standard gauge rail project. He added that, the past administration of former President Goodluck Jonathan obtained foreign credit facility of $500 million in addition to another $500 million counterpart funding from the federal government for the 186 kilometer AbujaKaduna rail project. The minister also expressed satisfaction that the project was following the stipulated time frame. According to him, “If it is time frame, the contractors are well ahead of schedule’’. It is meant to be completed in 2019 and what we are doing here is what we are doing in Lagos-Ibadan standard gauge

rail modernisation project which is meant to actually a three-year contract. But we are forcing them to a one-year completion period. “Just like this is supposed to end by 2019 but we are saying no, you must leave site before October. Although we had a verbal agreement with them to quite site by June 2018. However, in terms of contract, it is 2019.” The minister said the contractors handling the Itakpe-Ajaokuta-Warri rail project might be asked to stretch the rail line to Lokoja so as to ensure seamless travel experience so that passengers don’t travel and get stranded at Itakpe. The service he said, must not only have to be passenger-friendly, but must meet the presidential directive that all rail lines must connect every

state capital in the country. On provision of communication facilities on-board train the train services, the minister said, it is not the responsibility of government to provide communication network to passengers in the train. He said what government needs to do is to provide communication between the train driver and the outside world and not those who are passengers in the train. Although the minister could not provide information on how much it has cost government, Amaechi said, he could only recall that the over $100 million contract was awarded to CCECC to rehabilitate the stolen tracks and build the stations. There was no station before as it was mainly built for steel workers and steel materials to

transport them to the sea port. It would be recalled that, the Itakpe-Ajaokuta-Warri rail project which was supposed to be the first standard gauge rail in Africa had been abandoned for close to 34 years and that the government was trying to complete it. Amaechi said the federal government was funding the revival of the Itakpe-Ajaokuta-Warri rail project and impressing it on CCECC to complete it in 2019, just as the federal government is pushing for the completion of the $1.5 billion Lagos-Ibadan rail project to be completed by December this year or first quarter of next year. In his words, ‘’We are pushing, and because we are pushing, they are working day and night to make sure it is completed on or before schedule’’.

DB freight records steep profit drop mid 2019

erman Rail (DB) recorded a 17.4 percent drop to €974m during the first half of 2018 which Richard Lutz, DB’s chief executive officer attributed to bad weather and the French rail strikes which impacted rail freight traffic. Under the period, rail tonne-km fell by 6.7 percent from 47.8 billion in the first half of 2017 to 44.5 percent in the first half of this year. The CEO explained that, ‘’Our rail freight business did not have an easy first half of 2018. Rail strikes in France made things particularly difficult. A serious storm in January was an additional challenge. We also faced problems of our own making, however, and we will be addressing those problems in a lasting way.” Conversely, long-distance passenger traffic grew by 6 percent from 19.5 billion passenger-km in the first half of 2017 to 20.6 billion this first half, despite a continuing decline in punctuality which has fallen from 78.9 percent in 2016, to 78.5 percent in 2017 and 77.4 percent for the first half of 2018. DB now plans to invest €100m to improve punctuality. Regional passen-

UK plans hydrogen train trial in 2019-20

ger traffic was almost static at 20.6 billion passenger-km. First half revenue grew by 2.3 percent to €21.5bn and Lutz predicts a similar growth for the full year to reach €43.7bn. Lutz remains optimistic that the German Rail will match its

2017 performance this year when it achieved an Ebit of €2.15bn. “The fact that we expect full-year Ebit to be roughly on par with last year’s figure despite a weaker first half of the year is due first and foremost to our expectations that

we will catch up by the end of the year,” Lutz says. “After all, you may remember that the Rastatt tunnel closure, and Cyclones Xavier and Herwart, made the second half of 2017 particularly difficult.” He concluded.

hydrogen-powered train could be operating in the UK as soon as 2019, according to the rail safety body RSSB. The agency was responding to a speech presented by the rail minister Jo Johnson, who said he wants to see diesel trains phased out by 2040. During a speech at the British Museum recently, Jo Johnson said: “I would like to see us take all diesel-only trains off the track by 2040. “If that seems like an ambitious goal – it should be and I make no apology for that.” The government is advocating bi-mode, battery and hydrogen technologies as alternatives to diesel. Mark Phillips, chief executive of RSSB, said: “We welcome the Minister’s ambition to reduce carbon emissions from the railways. RSSB is leading the way through our research and innovation programmes, and by facilitating the Sustainable Rail Programme. “In 2015, we co-funded a £7 million pilot of a battery-powered train with industry partners, and we are working with Alstom to pilot a hydrogen powered train in late 2019 or early 2020. “We look forward to continuing to work with the government to realise the vision of a cleaner, more efficient and more sustainable railway.” He concluded.

Nigerian Railways launches procurement project

he Nigerian Railway Corporation (NRC) has invited suppliers and consultants to pre-qualify for several projects under its 2018 budget for its narrow and standard-gauge networks, including new trains. The projects include procurement of locomotives, coaches, freight wagons, railway inspection vehicles and cranes, procurement of rolling stock consumables such as lubricants and spare parts. Others include the procurement or rehabilitation and installation of mechanical/electrical, signalling and telecommunications, security, operation, and ICT equipment. The list are also made up of procurement of tools, equipment and materials for emergency track and structure repairs and maintenance, renovation and upgrading of stations and other buildings nationwide, facilities management, and provision of project management consultancy services. Invitations are also extended to such areas as training and human resources development, and generation of alternative revenue for NRC. The closing date for bids is September 5, 2018.

32 BUSINESS DAY Financial Inclusion

& INNOVATION

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Wednesday 01 August 2018

Supported by:

BusinessDay Radio programme; Financial Inclusion Today Aired yesterday by 11:30am on Rhythm 93.7 FM ENDURANCE OKAFOR Theme: Mobile banking and its effects on financial inclusion ith spec i a l guest; Ibukun Taiw o from Lagos Business School, and BusinessDay analysts; Patrick Atuanya, Bala Augie, Lolade Akinmurele and Endurance Okafor. Anchored by Lehle Balde Speaking on how mobile money affects financial inclusion, Ibukun Taiwo, the guest on the radio show said mobile money is financial innovation where mobile wallet is attached to a phone number, and as such one does not need a bank account, as money is stored on the phone. “The problem now is that a lot of people do not have bank accounts and the numbers are increasing. Mobile money has been successful in bringing financial services to unbanked people all over the world. Mobile money started out in Kenya and it was really big, before everyone started catching up and developing their own products. Our hope in Nigeria is that mobile money can help us bridge that financial gap.” He further explained that Nigeria currently has about 21 mobile money operators, some of which are independent without any bank affiliation and others with bank affiliation. “In other markets, we have telecoms delivering mobile money, but then, CBN does not allow telecoms to deliver mobile money in Nigeria which is a big debate that has been going on for years,” Ibukun said. On the best model to drive financial inclusion in Africa’s largest economy, the guest said the bank-led model currently in play only allow telecoms to participate, but they cannot lead mobile money in the countr y. So basically, they only p rov i d e i n f ra st r u c tu re because one have to use phone to access mobile money, so the telecoms are the ones providing the

technology that powers the financial innovation. “But then, the telecoms will like to lead it because it means more revenue for them. The mobile money business is not lucrative as other enterprises, it might take you five years or more to make profit because the profit margin is quite small. But then you have telecoms powering the technology and the innovation being led by someone else which means you all have to split the profit accruing from it. Another problem with mobile money is that, it is not really catching up. Last time, CBN pegged the amount of mobile money customers at 3.84 million and mobile money has been in Nigeria since 2009/10, so it is looking not rosy for ever ybody as investors are tr ying to skeptical about that space,” Ibukun explained. As to why CBN has not given licences to Telecoms to become mobile money operators, the financial inclusion analyst said “you will have to take

an holistic approach from all possible angles. For telecoms, it makes a lot of sense for them, because they already have an infrastructure in place which they will just need to layer their mobile money business on and get the ball rolling. From the regulator’s perspective, financial services is the organ that powers the economy and you cannot just run experiment on it, otherwise things will collapse, which is their reason for being extremely careful. The regulators are trying to play it safe as much as possible which is also a reason why they had to stall bitcoin when it was introduced to Niger ia, because as a regulator, they never understood it, which is a tenable reason. Then also, we have the banks who are trying to protect their turf, so everyone is just trying to play safe as much as possible. At the end of the day, we believe that when there is enough information and enlightenment, the CBN will be charting the best course for ward for the

whole ecosystem.” The Lagos-based analyst also believes data is key, considering for every one that has a mobile number, the telecom already has all the information they need about the person. So a better collaboration between the two regulators, CBN and NCC will make inclusion of more Nigerians possible. Although the guest said both parties have their own reservations, coming together to create a synergy, will mitigate against all the concerns that they have and therefore move the train forward. This he said was critical in this part of the world, because Nigeria can not be great as a nation until every individual is really great. So the government needs to draft a clear cut strategy with specific milestones to ensure that more people are banked because right now, there is a lot of income disparity and one way to bridge such gap is through technology and financial inclusion. While on new find-

ings in terms of financial ser vices, and their differences across regions Ibukun said “the truth is, everyone needs financial services whether they know it or not, because most unbanked are technically in the financial space through their borrowings, co-operatives and things like that. Our major problems in Nigeria are the fact that we do not experiment enough and inadequate data. We do not experiment enough, in that we are very conservative and play safe a lot and it is understandable because it is money and everyone is cautious, but until we start failing forward, we can not really make much headway in this ecosystem. There was collaboration betw e en the g overnment and one MMO which was designed solely for farmers. They built an innovative platform where farmers have an account and they will use the money sent into it to buy farming items, fertilizers, seed etc and it was really a big hit. One of the

things we found out was that you can go through that route using government initiatives to address individual segments and not just generalizing creating specific products for specific people. Another thing we found out was the informal society. We notice d that women gather and they do the “ajo”. The person that holds the ajo goes to the bank to keep the money there, indirectly, they are banked. So the money they drop for the “ajo” yields interest but it only goes to the account owner who keeps the money at the bank. So since they are already informally banked, we can possibly skip the whole process and bring them directly into the financial ecosystem. There are a lot of things going on there with differing peculiarities and with research we can find out their needs and tailor products to suit their taste.” On why Nigerian banks are not taking advantage of the opportunity in innovation of engaging more young people and getting more customers the financial inclusion analyst explained by saying that the Nigerian Financial ecosystem is very conservative, “We just want faster seamless use, we want you guys to reduce the amount of bank charges they collect. Another issue that deters the entering into the financial system is the amount of money it cost to actually be in the banking system. If you are going to bank the poor people you have to give some concessions but if a banker hears that he will immediately lose interest because a bank is not a charity.” The guest on the show concluded on the question saying “Last year, we gathered all the stakeholders in the ecosystem together and we tried to brainstorm to find how to make Financial inclusion work and this issue of high banking charges came up and one of the suggestions was cross subsidization whereby the banked, subsidize for the unbanked and that sort of made sense and everybody was on the same page with that.”

Wednesday 01 August 2018

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Financial Inclusion

BUSINESS DAY

& INNOVATION Nigeria needs level playing field to boost financial inclusion Supported by:

To salvage Nigeria’s low financial inclusion rate there needs to be a level playing field that allows Mobile Network Operators (MNOs) obtain mobile money licenses as opposed to a system that favours only the commercial banks, according to Gbenga Adebayo, the Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), who spoke to Business Day’s Lolade Akinmurele on the state of financial inclusion in Africa’s most populous nation. According to the World Bank data, the percentage of adults with an account in Nigeria declined to 40 percent in 2017 from 44 percent in 2014. For context, the 40 percent inclusion rate was below the average account ownership of 43 percent for Sub-Saharan Africa and even further below the 58 percent average for lower middle-income countries. Excerpts:

Correlation between economic development and financial inclusion here have been a range of studies that show a clear link between economic development and financial inclusion. The Consultative Group to Assist the Poor has found that ‘the accumulating body of evidence supports policy makers’ assessments that developing inclusive financial systems is an important component for economic and social progress on the development agenda.’ Other organizations such as the World Bank and African Development Bank also prioritize financial inclusion as a tool for social and economic development. In 2016 Mckinsey, the global management consultancy, wrote a report which sought to quantify the economic dividend that Nigeria could realise from increasing financial inclusion.This includes a 12.4% boost to GDP over a four-year period, with 3 million new jobs, $2 billion reduction in government leakages and $57 billion in new credit for small and medium scale enterprises. It’s a really important time at the moment for the Nigerian economy as the government implements its strategy to reduce reliance on the oil and gas sector. We believe that opening up the Digital Financial Services sector can be the basis for a transformative change in the structure of growth in the Nigerian economy, especially given that services constitute of 50% of economic activity in the country. We need to be thinking about how to ensure strong and sustainable growth in the sector that delivers that much of our economic productivity.

What must happen to improve access to financial products and services This is something that the regulatory system, led by the CBN and NCC, and the broader government have been considering for some time, in consultation with the private sector. There have been lots of discussions and lots of collaboration. Impor-

tantly, the NCC and CBN signed an MOU earlier this year to govern how they will collaborate and regulate mobile money, and the grey areas between telecoms and financial regulation. So I think we are seeing important steps being taken. You may have also seen that the CBN recently released the exposure draft of its refreshed National Financial Inclusion Strategy (NFIS), for broader public consultation and input. This draft will be the basis for the new strategy, which seeks to learn from the experiences of the last 6 years, to understand the numbers that we are seeing from the World Bank and EFInA, and why Nigeria is regressing and to chart a course to ensure Nigeria achieves the 2020 target the CBN has set. We believe that there are two elements that need to be in place for access to financial services to be improved in Nigeria. The first, is proximity. The service provider needs to be close to the unbanked and needs to have a pre-existing relationship with them. Often this means that they have already invested in infrastructure to serve this market, and so the cost of entry is lower. The second is price. Digital financial services only work if they can be made cheaper, or more efficient than the alternative, and so we need to look at the way mobile money services, and the agent networks that support them, can charge fees and ensure that their operations are commercially viable. At the moment there are unrealistically low caps on the fees that can be charged. Ultimately, for Mobile Network Operators to bring the full value of their networks and experience in other markets, there needs to be a level playing field, allowing MNO’s to access mobile money, or similar, licenses. Constraints to the growth of mobile money As it stands today, Mobile Network Operators who manage that subscriber base, are excluded from mobile money licenses and so there is a disconnect between the customer relationship owner

specialist knowledge and understanding, so there are not that many investors globally in a position to invest. That’s why there are so few purely ‘mobile money’ operators in the world. Most are part of a broader network offering either telecoms, banking or e-commerce services. I say this, because I’m not sure it is possible to put a value on the amount of investment that would be unlocked specific to mobile money. Yes, some of our members have mobile money propositions globally, or under development, and have indicated that they would apply for licenses if the regulation allowed them to, and we have heard of other international investor interest, but I can’t quantify it.

Gbenga Adebayo

and the ability to deliver the service. We believe that if Mobile Network Operators were able to provide mobile money services, then not only would we see rapid growth in the use of mobile money, but there would be an equally positive effect on the number of bank accounts. Opening up the system should, and will be, beneficial to both banks, and Mobile Network Operators. Ultimately, it will then deliver the economic value that I highlighted earlier. Country lessons for Nigeria I think the Kenyan model is perhaps the wrong one to use as the basis for analysis. It was the pioneer market for mobile money, and took a very loose regulatory approach. Lessons were learnt through that process, on how first mover advantage can create monopoly’s, how to monitor and control the volume of money in circulation and how to regulate mobile money providers, so that they offer the same protections to consumers that banks do. When Nigeria was first issuing mobile money licenses I think the Kenya experience, and some of the issues that they faced, was very much at the forefront of the decision making process to exclude telecommunications companies, but much has changed in the 9 years since that decision was made. Other markets have begun to show us

how introducing structures that allow the participation of MNO’s can exponentially increase activity. For example, in Ghana, the Central Bank opened up the sector to wider involvement- allowing Telecommunications companies to participate in digital financial services via independent legal entitiesin which they could have majority shareholding. This resulted in the emergence of many digital financial services players including MTN, Airtel and Vodafone. Consequently, we have seen huge strides in financial inclusion and rapid adoption of mobile money, with inclusion rates rising from 41% in 2014, to 58% in 2017, and mobile money usage rising from 13% to 39%. It is clear the same thinking that was applied in 2009, cannot be applied anymore. I think that is why the CBN is focused on refreshing its financial inclusion strategy and charting a new path towards achieving its targets. Potential investment to be unlocked by policy update that allows non-bank institutions provide financial services I think it’s important to understand that even when initiated by Mobile Network Operators, the mobile money business and serving the poorest of society is a business model that takes time to return a profit. It takes

Role of fintech in deepening financial inclusion and the CBN’s plan to revoke the license of some 15 mobile money operators who do not meet a N2bn minimum capital requirement I think we have to look at this in a broader context. Clearly the original structure for the mobile money market, with independent operators and relatively small resources, has not worked. The financial inclusion numbers tell us that, as do the size of agent networks in the country. No mobile money operator, whether a bank or independent, has more than 10,000 agents in their network today, and that is 9 years after the issuance of those licenses. They have not achieved the scale required for success, and so some new thinking is needed. I don’t believe that simply increasing their capital base is the solution, but it might give them greater financial resources to expand a little faster. The challenge is that the number of agents required to have a significant impact on financial inclusion levels is in the hundreds of thousands, and that requires a step change in investment levels, or the ability to leverage existing networks where the investments have already been made. That’s why Mobile Network Operators, or other companies with existing operations in those areas, are the logical partner for rapid expansion.

Financial literacy can not happen in isolation I think financial literacy is vital, but it cannot happen in isolation. It must be accompanied by access to and availability of the services themselves. There is no point educating somebody about a service that he has no way to access currently. So we need integrated solutions that roll out services in areas, accompanied by strong and sustained education initiatives so that use of the service is sustained and delivers a long term solution. The CBN is probably not going to attain its 80 percent financial inclusion target by 2020. If you were hired by the CBN as an independent consultant this week, what would you do differently to achieve the set goal in record time? I would provide a level playing field for all market participants, and so give everyone an equal opportunity to contribute towards attaining the target. We have seen how transformational this can be in Ghana, which provided that level playing field some months ago and has seen financial inclusion increase from 41% in 2014, to 58% in 2017. Benefits of inculcating a formal savings culture in a country where the savings to GDP ratio is about 5 percent Low savings rates, and pension assets, mean that the assets that banks have to deploy for lending, which supports broader economic growth, is lower than it should be. If we are able to attract millions of new mobile money accounts, with those deposits mirrored and protected in bank accounts, then we are opening up a significant low cost deposit base for the banking sector. The McKinsey report that I referred to earlier estimates that achieving Nigeria’s financial inclusion target would mobilise $3X billion in new deposits in the banking sector, and so make an additional $5X billion available as credit. Those are transformational numbers in an economy that needs its banks able to support significant infrastructure projects.

BUSINESS DAY

Wednesday 01 August 2018

INTERVIEW

We have a robust Edo State revenue administration system Igbinidu Inneh, Chairman, Edo State Internal Revenue Service Sir, can we have a brief of your background? rom the professional stand point, I have experience in investment banking, project finance, assurance and business advisory, institutional banking. I started my career with one of the big four professional services firms in the world at a time, I moved from Deliotte to another of the big four KPMG where I worked in Assurance and Business Advisory. And I worked for a number of blue ribbon companies in advisory and capacity. I also worked for one of the respected banking institutions in the country Access Bank, where I was part of the enterprise transformation team. I worked for one of the highly regarded and respected investment bank in Nigeria Afrinvest and after my stay in private sector; I spent the last 9 years working for the public sector for Edo State government. My first appointment in Edo State government was coordinator of the economy team and subsequently, The Chief Executive of the Private Partnership Office (PPO) where we incubated a number of ground breaking projects signs and transactions including the Edo Azura Independent Power Plant (IPP) and then, subsequently, as The Chairman Edo State Internal Revenue Service. Am married, have three children, I play golf, I like to swim and I watch movies a lot.

What are some of the challenges faced by the service and what have you done to overcome them? I will say that as a professional, if there are no challenges, then I don’t have a job because I am employed to look at challenging situations and advice on how to turn things around and convert them into clear opportunities to the extent that we are where we are, rather, to come in here as the Chief Executive of Edo State Internal Revenue Service. One of the areas that we clearly identified as a meet was in terms of data sufficiency. So what we find with most revenue services across the country is that, at the end of the month, they are able to report on their collection and hardly with any if there is any at all up still now would able to tell you what was not collected and that is because the data that is required for planning, in terms of generating those assessment values, measurement of your success rate, in terms of collection and determining what is left unpaid is not there. Data sufficiency has always been a biggest challenge as far as revenue administration is concern and that is why you would find that year in, year out, government in, government out in most jurisdictions. They terms to be that tendency to activate previously inactive revenue streams reported by law. But in terms of administration, they go to the same people who have

previously been identified by the administering authority and therefore people who talk about the issue of multiple taxation that is because you see a few people continue to pay why a large chunk of citizens get away without paying. So if you underline the population of Edo State for example, we are estimated to be about 4.2 million people. The National Bureau of Statistics tells us that 59.3% of your population forms your economically active population. That is the core from whom government generates revenue. However, 74% of this same number, the economically active make up your labour force. That is where you have people who are engaged up to 40 hours a week and those who are not fully engaged, who work less than 40 hours a week, about 7% up not to work at all. If you derive the numbers, 59.3% of you 4.2 million people come to about 2.49 million and that is approximately two and half million Edo people are in the economically active bracket between the ages of 15 to 65. Conservatively, if you take 70% of that population, you have about somewhere between 1.7 and 1.8 million potential tax payer which will be in your net but today, we understand that less than two hundred thousand are in the tax net. When taking in to consideration the max the Lagos State governor and the recent submit, that was a ground breaking for one of the Lagos State projects. They needed 25% that is out of the potentials close to 10 million people which would be paying tax in Lagos but only about seven hundred thousand are in the tax net. It is investment in data storage and retrieval systems. So they didn’t have cutting edge reference data management systems certainly which would be able to bring more people into the net and manage your relationship with each of this tax payer using a single tax payer identification (ID) to administer all the government revenue across board. Sir, you talked about multiple taxation, now what has the service down to eliminate the issue of double taxation in the state? Am not one who is quick to admitting that there is double taxation. What most people interpret to be double taxation is that they have to pay certain taxes, levies, rates and charges. In government Independent Financial Structure which is what we call IGR comes from taxes, levies, rates and charges. The tax element is derived based on economic activities. So it is the volume of economic activity that drives how much tax you pay. Some of the levies, rates and charges are local government related; it is either for owning an asset or for owning a business or a development levy to drive development at the grass root level. For most people, the various stream that applied have been activated to see as

Igbinidu Inneh

multiple taxation and not all of them are actually taxes and sometimes it is also a push back from the people because they know of the existence of some other potentially paying public that have not been captured in the net. So am not very quick to agreeing that there is double taxation because the taxpaying member of the public will interpret any payment to government as tax. Am sure the average man even when he infringes on the provision of the law and he is fined, he will say is tax. What are some of the innovation that you brought on board that has brought about the successes recorded in the state internally generated revenue? To be successful, you have to do certain things extra ordinary and to my mind, it about sitting down today physical and being a tomorrow person and what tomorrow people do is they envision. So you look at where you are today, you envision where you should be in the future and how you want to be perceived as an organization in the future and then you put in place those processes, procedures and tools that would ensure that you build that kind of institution. So very quickly, when we came on board a year ago, I identify the 6 critical success factors that would enable us achieve the vision we met which remains adequate as it is today and to sustain the reforms that were commenced by our predecessor in office in 9 years the overall vision and one of those critical success factors was technology. Just like I mentioned earlier, data sufficiency has being a problem and so we sat down and analyzed the entire revenue admin-

Naturally, we would also like to see a situation as against the past where businesses hard a tendency to patronize nonresident institutions

istration process in a manner that has never been done before in this country, across the 36 states and the Federal Capital Territory (FCT). We have a distributed revenue administration system which we have built in house that no other revenue services have put in place. So that is the whole essence of being a tomorrow person. We did not say let us look at what is on ground and take a clue from what others might have done right or wrong but we have envisioned Edo State Internal Revenue Service of the vision, the one that would be a troy blazer, the one that others will take a clue from and so today we have a robust Edo State Revenue administration system that takes into consideration all government revenue streams, takes into consideration all tax payer profile from the very high and tax payer who can use cutting x technology to those in the most remote parts of the states. So we have a solution that offers no whole payment platforms including the use of scratch cards which are a prepaid form of tax settlement from the perspective of financial inclusion. So those that un banks are provided for, those that are banks have been provided for, those that are school are provided for, those that are not school have been provided for. For me, it is the biggest innovation we have brought to the table and we believe by the time we are done, it becomes a model for other sub-nations to base their own revenue administration systems on as we get along.

data base of mobile assets (motor vehicles) and we have a data base on fixed assets. So what the Voluntary Assets and Income Declaration Scheme (VAIDS) does is that, it enriches the body of data you have for businesses, links to the owners which is your data base ownership and asset because of the rental income stream that is so associated, and some of the assets are not in the country but as a potential income source for those individuals, you just provide a whole lot more information on the profile of the individual we have in our individual data base.

There is so much being done by the federal government through the ministry of Finance and the federal internal revenue service to increase the country’s IGR, are there any that you would like to duplicate here in your state? Whatever initiative is been driven at the federal level always takes in to consideration due to the fact that Nigeria is constituted of smaller parts been the state. So it is the sum of the 37 states including the FCT and we do have a common platform under the Joint Tax Board (JTB), so quite a bit of conversations that happened around this initiatives are deliberated upon by the chairman of the Federal Inland Revenue Service who is also our chairman at the JTB and the chairman of the Internal Revenue Service’s of the 36 states. There are a lot of synergistic benefits that we derive. At the end of the day, it’s part of the benefits of exchange of information in enriching the body of data that we have for administrating government revenue. We obviously would rely on any process that throws up politic, clean and verified data. As far as government revenue is concerned, there are four data sets that you deal with. You have the individual data base, you have the data base of business, you have a

What is the future of internally generated revenue in your state in correlation with the economic situation in the country? We exist as parts of the country so whatever happens at the top level is naturally expected to have a trickledown effect on every state. However, what happens at the top level does not happen in isolation of the state. So I see a situation where the Nigerian negative will change in the next couple of years base on the development strides of the current government, where we can now say let’s focus and rebuild Edo State and reposition our economy for comparativeness and there for, instead of the trickledown effect which was the bordering of the past will now have a push up effect. So we will be in the nest contributor to overall national economic growth, while also being the biggest beneficiary of our own internal economic growth because as you open up the economy, you create more employment and taxable opportunities internally. Naturally, we would also like to see a situation as against the past where businesses hard a tendency to patronize nonresident institutions. For now, we are going to build these expectations locally so that they can together improve on our local infrastructures share services.

What is unique about Edo State Tax Law and how has it assisted in fulfilling the duties of the service? What is unique about Edo State Tax Law is the tax payer (the Edo people). The tax laws are meant basically to guide the relationship between government and citizens as far economic activities are concerned and when it comes to government generating revenue from its citizens. The existing body of laws in Edo State has significantly protected the rights of citizens by also sufficiently enhancing the work of the revenue admitting authorities including ourselves. The legislative arm, considering the bills that translated into these laws ensures that they play the true and faire umpires, then legislating on laws that specific to the rule so that the rights of the citizens are protected over there. They also enhance the work of the revenue authorities.

Wednesday 01 August 2018

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BUSINESS DAY

In Association with

As financial sector shows commitment to health, safety, environment … NIBSS leads staff for HSE week HOPE MOSES-ASHIKE and AGNES IBOROMA

here is a saying that ‘health is wealth’ and ‘cleanliness is next to godliness’. It was on this premise that banks and other financial institutions are tailoring their programmes to focus on provision and maintenance of a safe, clean and healthy work environment. Many of the Nigerian banks have in the past engaged in such activities as part of their corporate social responsibility (CSR). This is also observed in other jurisdiction, specifically, European Central Bank (ECB) ensures good environmental management and minimises the risks to the health and safety of the general public and the workers involved in the production of euro banknotes. The Nigeria Inter-Bank Settlement System (NIBSS) was not left out in this move as it dedicated last week for community safety and healthy walk as of the activities marking its Health, Safety and Environment (HSE) week. Staff of NIBSS came out in mass including senior executives to observe this

years’ HSE week with the theme “A Clean Environment, A Healthy Workforce At Its Peak”. NIyi Ajao, NIBSS executive director in charge of business development told BusinessDay that the HSE week was in partnership with Lagos Waste Management Authority (LAWMA) and a deliberate effort to support cleaner Lagos initiative. “The whole idea is to keep health and safety in the minds of all the staff. “As

we go out we want to spread this information to the public that we need to take our health serious and we need to take safety serious and we want to really show support to the cleaner Lagos initiative. Yesterday we had a free medical check-up for all staff so we have many partners that are working with us incidentally. We are not paying them we just called on them and they all willingly decided to partner with us on this”, Ajao said.

Chinasa Jonathan is the head of human capital at NIBSS, who has been in the organization for 24 to 25 years. She said the health of the staff and the environment is very important to the payment institution. “We also believe in work life balance and because of that we have created different activities/ programs to ensure that it is not all about work, life has to be balanced”, she said. “Part from the fact that we

believe in work life balance which we try to demonstrate through different activities, the management of NIBSS also buys the idea or the concept that a healthy mind is a more relaxed mind to create and innovate things that can make an organization have a cutting edge”. “Some time ago, we came up with the HSE week, which simply means health, safety and the environment the human capital management introduced this to the executives, they gave us their whole heartened buy in, because everybody understands that a healthy mind is a fertile ground for a lot of things to grow. The aim of every business is to make profit, and in this E payment terrain, we have other competitors and we must be at the top of our mental alertness to be able to come up with innovative ideas to be able to reach out to our end users, that is why you can see how excited we are to take up the walk which is part of the activities of our HSE week this year”, she added. Some of the staff who also spoke with BusinessDay said, “as we went out to clean the environment we realized that the most affected area, were areas inhabited by people who were just hanging on without a rented accommodation. They were

people living in uncompleted buildings around were we walked, we realized that they were absolutely irresponsible to ensuring that their environment were healthy. You could see that they defecated in trash here and there; the gutters were not cared for. “One would advise that the government should either find a way to take either census or find a way to get the people living in such places to be more responsible or made to leave such environment; because whatever effort made towards cleaning and they are not committed to it will be an effort in futility. “My advice is that government should actually do something to crop this kind of people, you find out that they are located here and there in the Lagos metropolis and that is not very good for a mega city like Lagos, because what that means is that whatever the effort put into the cleaner Lagos project it might not actually achieve its purpose when there are a set of people who just hang around and they are not committed in keeping the environment clean, all they want to do is to hang on, eat and drop their trash wherever they want and are just absolutely insensitive to the cleaner Lagos project”.

Fidelity Bank partners WorldRemit for instant money transfers to Nigeria

orldRemit customers in over 50 countries can now send money instantly to millions of Fidelity Bank accounts directly from their mobile phones Leading digital money transfer service WorldRemit has joined forces with Fidelity Bank, one of Nigeria’s top financial services providers, for instant money transfers to four million Fidelity Bank accounts in Nigeria. The new partnership fur-

ther expands WorldRemit’s footprint in the country and allows the 15 million-strong Nigerian diaspora living in over 50 countries - including the United States, the United Kingdom, and Germany - to send money directly from their phones to recipients in Nigeria. The deal supports WorldRemit’s plan to serve 10 million customers connected to emerging markets by 2020. Fidelity Bank is one of the largest banks in Nigeria with an extensive network of

branches across the country. The bank is committed to innovating its digital products to provide convenience and ease of banking for its customers. The collaboration with WorldRemit supports Fidelity Bank’s dedication to innovation and increasing financial inclusion. Remittances play an increasingly important role in Nigeria’s economy. The World Bank estimates that in 2017 alone Nigeria received

over $22 billion in remittances, making it the largest recipient in Africa and fifth largest recipient globally. Andrew Stewart, Regional Director of Africa and the Middle East at WorldRemit, comments: “Nigeria remains our largest and fastest growing market in Africa, and WorldRemit’s second biggest market globally. We are delighted to be partnering with Fidelity, a leading bank in Nigeria and a major player in the remit-

tance business, to introduce its customers to our best in class online money transfer service, which offers a safer, faster and more cost-effective way to send and receive funds.” Nnamdi Okonkwo, managing director and Chief Executive Officer at Fidelity Bank Plc, said “WorldRemit offers a low-cost way to send and receive money. The opportunity for our customers to receive money from over 50 countries in a quick,

affordable and convenient manner with WorldRemit is in line with our promise to deliver a new standard of service in the financial services industry.” Last year, WorldRemit became Arsenal FC’s first-ever online money transfer partner in a global sponsorship deal. WorldRemit customers complete one million transfers every month from over 50 countries to over 145 destinations. More than half of its transfers go to Africa.

BUSINESS DAY

SHIPPING

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LOGISTICS

Wednesday 01 August 2018

MARITIME e-COMMERCE

Tin-Can Customs’ revenue profile hits over N162bn in six months Stories by UZOAMAKA ANAGOR-EWUZIE

he Nigeria Customs Service (NCS), Tin-Can Island Port Command said it has generated over N162 billion in the first six months of the year, January to June. This revenue represents a difference of over N32.7 billion above the N130 billion generated in the corresponding period of 2017. A statement signed by Uche Ejesieme, Public Relations Officer, disclosed that the revenue declaration was made by Musa Baba Abdullahi, Customs Area Controller of Tin-Can Island Port, during a chat with some stakeholders in his office recently. According to Abdullahi, the command has been repositioned to be the most business friendly Port where all compliant importers are given special preference. “We are deploying multilayered approach in addressing the issues of compliance

L-R: Isaiah Emehweke, senior supervisor, Marine Services, Nigerdock Nigeria; Kayode Ogunwole, general manager, IT, SIFAX Group; Juan Gonzalez, facility manager, Nigerdock Nigeria and Felix Omojoye, assistant manager, SIFAX Ferry Terminal during the facility inspection tour of SIFAX EbuteOjo Ferry Terminal, Ojo, Lagos by officials of Nigerdock Nigeria Limited recently.

which is panacea to trade facilitation. We reward compliant importers and ensure that they are given expeditious attention in line with the Presidential directive on Ease of Doing Business,” he explained. Abdullahi pointed that the command is at the verge

SIFAX gets Nigerdock commendation for quality ferry services

igerdock Nigeria Limited has commended SIFAX Group for putting excellent facilities in place at the recently-launched ferry operations and for rendering quality services to its customers. The ferry service, which is currently available on Ebute-Ojo-Apapa and Mile 2 – Apapa routes, has Nigerdock, as one of the corporate clients that SIFAX provides daily service to its staff to and fro Apapa on a daily basis. The commendation was made after a facility inspection of the Ebute-Ojo terminal by a delegation led by Juan Gonzalez, Nigerdock facility manager, who expressed absolute satisfaction with the facilities at the terminal and the condition of the ferries. “During our inspection today, we found out that SIFAX Ebute Ojo jetty facility and the ferries comply with all the regulations in capacities and status. We certify the boats safe enough for all our personnel and operations. The ferry conveys our staff from the office to differ-

ent jetties. The idea of this inspection was to ensure it was safe for our staff. The SIFAX ferry service is of great benefit to the Nigerdock staff because it makes it easier to convey the staff from their homes to the office and vice versa in comfort and style,” Gonzalez said. Isaiah Emehweke, senior supervisor, Marine Services, said that the inspection team was very satisfied with what they saw at the terminal. “With the SIFAX ferry operations, stress will be taken off the highway. We didn’t expect to see anything less than the standard we have seen today because the consultant heading the SIFAX ferry terminal, Ibrahim Olugbade, is a mariner of repute with proven track records both in Nigeria and overseas. None of the safety equipment is outdated, they all function very well,” he said. Felix Omojoye, assistant manager, SIFAX Ebute-Ojo jetty, who thanked the team for their kind words, assured that the terminal will continue to do more to improve on the services it offers.

of fully automating key seats to ensure seamless operations, adding that the just concluded training of officers on E-Transire and NSA-End User Certificate Procedure, would help the command in achieving full automation. On seizures and deten-

tions, he disclosed that the command seized assorted items ranging from used clothing; children toys; assorted furniture; bags of rice; shoes; handbags; used vehicles with Duty Paid Value (DPV) of N138.8 compared to the seizures recorded the same period in 2017 with

DPV of N88.1 million. Abdullahi, who recalled that the Command also seized a large quantity of ammunition and other military hardware recently, promised that his team will not lower their guards in ensuring that such illicit consignment does not come into the country. While appreciating the support of the Customs management, officers of the command and other stakeholders, he pointed out that the command will continue to leverage on the already harnessed competences of its hard working personnel to remain outstanding in delivering its statutory mandates. On the issue of multiple alerts on non compliance trades, he assured that with the completion and take off of the ‘One-Stop-Shop’ area currently under construction, the issue of multiple alerts would become history. “We are encouraged by the steady progress in compliance by importers and we are optimistic that the trend will continue.

Ahmadu, African Circle COO clinches NIM fellowship

hmadu Fidi Ahmadu, chief operating officer (COO) of African Circle Pollution Management Limited (ACPML), has been conferred with the fellowship of the Nigeria Institute of Management (Chartered). According to a letter approved by Olukunle Iyanda, president/chairman of the Council of NIM and signed by Tony Fadaka, registrar/ CEO, Ahmadu’s conferment was based on his contributions to the development of the Institute, management profession and the society. Ahmadu is an experienced manager of over 15 years in all aspects of human resources including recruitment, staff appraisals, policies, salary implementation and reviews. This confirms why ACPML has made several strides since Ahmadu became its COO. ACPML is a maritime firm that has a 15-year contract with the Federal Government on build, operate and transfer (BOOT). The contract gives it the responsibility of installing

marine pollution facilities at the Lagos, Port-Harcourt, Calabar, and Warri ports with DV Howells of Milford Haven Pembrokeshire as its technical partners. As the COO, Ahmadu is responsible for developing, recommending and implementing personnel policies and procedures, compensation and performance evaluation programmes, preparation of handbook on policies. He is also responsible for communicating and enforcing company policy and developing recruitment strategies for all personnel. Ahmadu, who is a gradu-

Ahmadu Fidi Ahmadu

ate of Business Administration from Ahmadu Bello University (ABU), Zaria, has also worked in senior positions in the public and private sectors of the economy. Besides ACPML, he has worked as the Releasing Officer with RoRo Oceanic Shipping Services, a sole representative of Grimaldi Lines, which is the largest fleet of roll-on-roll-off (roro) vessels in Nigeria. He cut his teeth in the Finance and Account Department of Nigerian Telecommunication Limited (NITEL) at its Maiduguri Territorial Headquarters. Besides NIM, Ahmadu also belong to other professional bodies including the Nigerian Institute of Personnel (NIP), and the Nigerian Gas Association (NGA). He is also a Board Member of National Sports Federations of Nigeria – Rowing, Canoeing and Yachting where he represents the North East geo-political zone of the country. Besides academic qualifications, Ahmadu has undergone training in the relevant areas of the industry in Nigeria and overseas.

NPA to host IAPH African Regional Confab in September

he Nigerian Ports Authority (NPA) is perfecting plans to host the International Association of Ports and Harbours (IAPH) Africa Regional Conference in Abuja. Scheduled for 17 - 19 September, 2018, the conference themed ‘African Ports and Hinterland Connectivity,’ is expected to draw stakeholders from ports in Africa and other parts of the world. “The IAPH Africa Conference, which will be declared open by the Vice President Yemi Osinbajo, will assemble stakeholders in the port, logistics and transport industry to provide deep understanding of the concept of port and hinterland connectivity; assess the present landscape of Africa’s port sector and the challenges faced in hinterland connectivity; discuss the experiences in other parts of the world; explore possible critical solutions, and recommend best models that would enable Africa to improve on its port and hinterland connectivity as well as intraregional trade,” a statement signed by Ugo Madubuike, chairman of the organising committee, said. The theme of the conference will be discussed under four categories namely: port and hinterland connectivity: components, modal options; funding options for hinterland connectivity - hard and soft infrastructure; Africa’s ports landscape: infrastructure, governance models, and landlocked transit corridors and sustainability and facilitation of the logistics and transport supply chain. The International Association of Ports and Harbors headquartered in Tokyo, was founded in 1955 as a global professional group for seaport operators across the world. Hadiza Bala Usman, managing director of the NPA, was elected Vice President of IAPH (Africa Region) in July 2017 after an election involving other heads of port authorities in Africa. The Conference will attract local participation from Nigeria’s maritime and trade sectors, and international participants from the World Trade Organization; the International Maritime Organization; UNCTAD; the Lagos-Abidjan trade corridor and the Walvis Bay Corridor Group; Antwerp Port Authority; Guangzhou Port Authority and Port of Miami (Florida).

Wednesday 01 August2018

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BUSINESS DAY

38 BUSINESS DAY NEWS

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Wednesday 01 August 2018

Investors ignore MPR as treasury yield tracks.... L-R: John Jonah, deputy governor of Bayelsa State; former President Olusegun Obasanjo, and Seriake Dickson, governor, Bayelsa State, during the 1st Infant Mortality Summit at the Government House in Yenagoa, Bayelsa, yesterday. NAN

Saraki’s defection signals tight ... Continued from page 1 we are entering an era of distorted prices and increased fiscal spending which may drive headline inflation rate northwards. Also, the build-up to the 2019 election is looking like a tight contest that may spark market volatility,” said United Capital research analysts in a late note to clients yesterday. Saraki made the announcement to leave the APC via his official Facebook page on Tuesday. “I wish to inform Nigerians that, after extensive consultations, I have decided to take my leave of the All Progressives Congress (APC),” Saraki said. The Senate president is Nigeria’s third highest-ranked politician after the president and his deputy, the Vice President. This came less than a week after the APC lost its majority in the Senate after the defections of more than a dozen lawmakers to a swelling opposition coalition that’s seeking to unseat Buhari in February elections. Saraki is not leaving the APC alone. The governor of Kwara State, Abdulfatah Ahmed, simultaneously also announced his exit from the APC. This is not surprising because where Saraki goes, Kwara goes. But unlike Saraki, Ahmed not only announced his exit from the APC, but he also announced that he is moving to the People’s Democratic Party (PDP). “Following due consultations with the people and in response to calls by major stakeholder groups in the state, Kwara State Governor, Alhaji Abdulfatah Ahmed today defected to the People’s Democratic Party (PDP), having realized that the All Progressive Congress (APC) can longer serve as a platform for achieving the aspirations and expectations of his people,” a statement from the governor’s media aide said. Nigerian equity markets have sold off since an early February peak. The broad market index is down -3.2 percent this year, after surging by over 40 percent in 2017. Johnson Chukwu, CEOof investment firm Cowry Assets Management told BusinessDay that political uncertainty will further affect the situation of the market. “The government will not take economic decisions or reforms which might hurt people prior to election period even though they will be of benefit later on but rather focus more on political policy so as to not hinder their chances in the next election.”

In a statement personally signed by him afterwards, a copy of which was made available to BusinessDay, the Senate President enumerated his reasons for seeking another platform. Recounting his ordeals in the APC, Saraki said that “governance principles had been deliberately violated and undermined.” According to him, “The experience of my people and associates in the past three years is that they have suffered alienation and have been treated as outsiders in their own party. Thus, many have become disaffected and disenchanted. “At the same time, opportunities to seek redress and correct these anomalies were deliberately blocked as a government-within-a-government had formed an impregnable wall and left in the cold, everyone else who was not recognised as ‘one of us’ This is why my people, like all self-respecting people would do, decided to seek accommodation elsewhere.” Also, the National Publicity Secretary of APC, Bolaji Abdullahi also resigned his appointment and followed the Senate President to the People’s Democratic Party. Abdullahi later denied that he had left the APC. It would be recalled that two senators from the State, Shaaba Lafiagi from Kwara North and Rafiu Adebayo Ibrahim from Kwara South alongside all members of the House of Representatives from the state had defected to the opposition party. Our correspondent who was at Saraki’s house in GRA where the Senate President met party chairmen across the sixteen local government areas of the state, local governments chairmen, stalwarts of the party and loyalists, reports that his supporters have started chanting PDP slogans. Reacting to the development yesterday, Atiku Abubakar, a former vice president and presidential aspirant, said he offered Saraki “a right hand of fellowship”. According to Atiku, “Senator Saraki’s ordeal at the hand of the All Progressives Congress is all too familiar to lovers of democracy in Nigeria and around the world. Leaving a party which maliciously prosecuted him and subjected him to the most degrading treatment, notwithstanding his status as the na-

tion’s number three citizen, took courage, and I commend him.

“What the APC did to Senator Saraki is what they have also done to Nigeria as a nation. They have degraded our democracy and our economy. “Bukola Saraki is a product of the Peoples Democratic Party, under whose banner he became a

Presidential Adviser, Governor and Senator. The PDP’s ideology and political philosophy is conducive to Senator Saraki’s political leaning.” “I therefore, not only welcome Senator Saraki’s resignation from the APC, I also urge him to go one step further and join the only party capable of enshrining genuine democracy in Nigeria as well as lasting economic progress. I urge Senator Saraki to join our great party, the People’s Democratic Party,” he further said. Yinka Odumakin, publicity of secretary of pan-Yoruba cultural group, Afenifere, said that Saraki’s defection was expected considering that he has had a running battle with the party since he assumed office. “His defection is natural and expected; he has been fighting several battles and won in courts in the last three years. In his state, the APC has dissolved the party executive, if he supported the party now what would happen to him after the election next year. “I really don’t think he should resign as the Senate President, whoever occupy the leadership of the House depended on the party that has the majority and for now it is the PDP that has the majority,” Odumakin said. With Saraki’s defection, APC is now effectively the minority party in the Senate. PDP will have 56 Senators to the APC’s 49. But things may even get worse for the APC going forward. In the House of Representatives, more reps are expected to defect from the ruling party after 37 of them defected last week. Rumours have it that the Speaker of the House of Representatives, Yakubu Dogara is one of those who is also likely to announce his exit from the APC. Meanwhile the Deputy Senate President Ike Ekweremadu is currently being grilled by operatives of the Economic and Financial Crimes Commission (EFCC) over some assets allegedly linked to him. Ekweremadu, the most senior Peoples Democratic Party (PDP) elected official in the present administration, was said to have appeared at the headquarters of the anti-graft agency in Abuja on Tuesday around 10am for interrogation. Sources say this may not be unconnected with some assets linked to him in the United States of America, United Kingdom and United Arab Emirates. It was gathered that the Commission had earlier delivered a fresh invitation to Ekweremadu after a siege at his Apo Legislative Quarters, Abuja, failed to produce him. Continues on wwwbusinessday online.com

Continued from page 1

Q1 2017.

The Central Bank of Nigeria chose to retain the benchmark rate at 14 percent last Tuesday, explaining that “the holding policy stance will support growth and further moderate inflation”. Still economic grow th has performed below expectation, growing at less than 2 percent while inflation has moderated considerably to 11.65 percent in June from as high as 16.1 percent in June last year. As inflation trended downwards, so did treasur y yields. Even the CBN admitted in the MPC communiqué that the MPR may have lost its signalling effect to the market. Investors are now asking why CBN is waiting to play catch up as money market and fixed income yields have already dropped considerably since inflation began its southward march last year. The ten year average yield on federal government bond has also dropped from 16.1 percent in June 2017 to 14.3 percent yes-

terday, giving investors a risk premium of around 265 basis points as at yesterday compared to zero basis point in June last year. The observed repricing in the risk free rate provides the Central Bank with enough leeway to cut interest rates as foreign investors whom the Central Bankers are protecting are already earning lower returns in the treasury bills and FGN bonds regardless of their decision to hold the benchmark rate. Since the goal to keep foreign investors with higher yields won’t work if inflation keeps dropping and pulling treasury yields along with it, it will make sense for the MPC to re-evaluate its monetary policy stance. CBN forecasts inflation to drop below 10 percent sometime later in the year. If inflation falls further, it won’t be too long before only the MPR remains in double digit while the rest of the market operates in single digit borrowing rate. Possibly then, the MPR will be dropped to be more market reflective and restore its position as the anchor for all other borrowing rates in the country.

Palm oil makers profits slump to five... Continued from page 1

come cheaper. So exports are not as lucrative as it used to be,” said Tinuoye. For the First six months through June 2018, after tax profits for the 2 major palm oil producers that have reported results fell by 28.15 percent to N3.98 billion from N5.55 billion the previous year. Combined sales were down 2.78 percent to N24.59 billion in the period under review, this compares with 70.25 percent growth in the 2017 periods. The market reacted to the weaker than expected results as the share price of major palm producer’s fell. This is in stark contrast to last year when both companies were star performers on the floor of the exchange as investors reacted positively to the slew of earning growth. Okomu’s shares have shed 3.27 percent since the start of the year while it dropped 10 percent to close at N74.70 on the floor of the exchange. Presco’s shares have dropped 22.87 percent since the start of the year. Experts attribute slow sales to weak consumer income, supply glut brought on by illegal shipments of products to neighbouring West African countries and a plunge in global CPO prices. “FEWSNET is reporting an 11% quarter on quarter QoQ deceleration in refined CPO prices. This is in consonance with plunging global CPO prices—an off shoot of widening surplus in the global CPO market,” ARM research said in a July 31 note to clients.

Domestic CPO prices have faced a downtrend in line with global CPO prices, with prospect of widening CPO surplus. The USDA forecasts a 51 percent jump in global surplus to 4.9 million MT) dragging global CPO prices with pass through effect on domestic CPO prices down -27% YoY to around N91,969.44/MT, according to ARM. “There are fears the situation may get worse if the government gives import waivers “to some people for political reasons” ahead of 2019 general elections, as happened in the past,” said Okomu Chief Executive Officer Graham Hefer. Oil palm firms were unable to turn each naira generated in sales into higher profit as margins dropped. Okomu’S net profit margins fell to 45.83 percent in the period under review. Presco saw a drop in net profit margin to 34.19 percent in June 2018 from 43.29 percent the previous year. Okomu, which currently mills 30 metric tons of palm oil per hour, plans to double its capacity by 2020 on the completion of a $50 million plant. The company operates 33,000 hectares (82,000 acres) of oil palm and rubber trees, according to its website. Presco trades at a current price to earnings (P/E) ratio of 10.8x versus 8.0x for main peer Okomu. “Okomu will be in a better position to generate positive earnings when yields at its plantations start to pick up,” said Damilola Olupona, analyst at Investment firm Asset & Resource Management.

Wednesday 01 August 2018

BUSINESS DAY

NEWS

HIV/AIDS: EDOSACA lauds Obaseki for agency’s revamp, as disease trends downward

xecutive director, Edo State Agency for the Control of Aids (EDOSACA), Flora Oyakhilome, has praised Governor Godwin Obaseki’s repositioning of the agency, noting that the constitution of the agency’s board and deployment of staff for its operations have improved their response to the fight against Human Immunodeficiency Virus and Acquired Immunodeficiency Disease Syndrome (HIV/ AIDS) in the state. Oyakhilome said the revamp of the Agency would further reduce the prevalence rate of the virus in the state. She disclosed this during a chat with journalists in Benin City, Edo State capital, noting that with the board in place, the agency was working to improve HIV/AIDS response and provision of better services to People Living With HIV/AIDS. She said, “Improved funding and resource mobilisation in the last few years have seen the prevalence rate in the state reduce from 5.3 to 4.1. Though higher than the national rate, of 3.1, efforts are in top-gear to see

further reduction.” She attributed the downward trend to, “support given to Civil Society Organisations (CSOs) for awareness creation in the 18 local government areas in the state, reach out to vulnerable children who lost their parents to HIV/ AIDS as well as to other groups working to check the spread of the virus and providing support for people living with the virus.” She said the state government deployed 15 personnel to EDOSACA to strengthen its workforce, noting, “We are also working with the National Agency for the Control of Aids (NACA), at the national level, and the Local Agency for the Control of Aids, which operates at the grassroots in the 18 local government councils of Edo State.” “In all the local government council headquarters in the state, we have HIV/AIDS desk officers. Before now, the World Health Organisation (WHO) adopted a ‘Top to Bottom’ strategy, which did not help much. So we have now adopted the ‘Bottom-to-Top’ approach,” she added.

L-R: Christopher Ezeafulukwe, executive director, Transcorp plc; Valentine Ozigbo, MD/CEO, Transcorp Hotels plc; Adim Jibunoh, president/CEO, Transcorp plc; Owen Omogiafo, executive director, Transcorp plc, and Kalyana Sundaram, CEO, Transcorp Power Limited, during the Analyst/Media Parley hosted by Transnational Corporation of Nigeria plc in Lagos, yesterday.

Nigeria’s external borrowing secured best pricing relative to peers - DMO ENDURANCE OKAFOR

ebt Management Office (DMO) says Nigeria’s external borrowing interest rates are secured at the best pricing compared with its peers of similar sovereign ratings. “For each capital raising in the Institute of Commercial Management (ICM), Nigeria has secured the best pricing relative to its peers, that is, countries with similar sovereign ratings,” the DMO told BusinessDay in a mail response. This is DMO’s response to BusinessDay’s editorial of Wednesday, July 25, 2018 publication, titled: ‘As Ni-

geria marches into another debt peonage.’ The government agency says any keen follower of securities issuances by emerging markets and frontier countries would have observed that the pricing obtained by Nigeria was very competitive compared with its peers. It however cites an example of the 30-year Eurobond that was priced at a Coupon of 7.625 percent, whereas Ghana and Kenya, which issued 30-year Eurobonds, did so at Coupons of 8.625 percent and 8.25 percent, respectively. “Indeed, in terms of security issuances in the ICM, Nigeria has been a pacesetter of some sort in subSaharan Africa (excluding South Africa). For instance,

Nigeria was the first to issue a 30-year Eurobond, which made it possible for other African countries to access the ICM for the same tenor,” the debt office says. Under the new Debt Ma n a g e m e n t St rat e g y (DMS) unveiled by the DMO for the next four years, Africa’s largest economy plans to borrow more in favour of external debt than domestic borrowing. The domestic and external borrowings will now be in the ratio of 60:40 percent as against the previous ration of 84:16 percent, respectively. Meanwhile, the ICM enabled the Sovereign to access long-tenored funds (up to 30 years), which is most appropriate for financing infrastructure, while also

enabling the government to create more borrowing space in the domestic market for the private sector and reduce the level of interest rates. Experts familiar with the debt market say external capital raising has contributed to external reserves. Therefore, the increase in Nigeria’s external reserves from $26.09 billion on January 1, 2017, to $38.77 billion on December 31, 2017, has been attributed in part to the $4.80 billion external borrowing in the ICM in 2017. The BusinessDay’s editorial addressed by the DMO attempted to highlight the challenges of increasing external debt stock and external borrowing at high rates and advised Nigeria to approach the International

NECA breakthroughs with global certification body in Nigeria JOSHUA BASSEY

igerian companies can now look inward to secure international certification that enhances their global competitiveness, as Nigeria Employers’ Consultative Association (NECA) together with United Nations Industrial Development Organisation (UNIDO) have established the first indigenous globally recognised certification body in Nigeria. Timothy Olawale, director-general designate of NECA, says the new certification organisation known as NECA’s Global Certification Limited (NGCL) having successfully gone through the process of international accreditation, is here to add value to the Federal Government’s approved National Quality Infrastructure Project (NQIP), launched in 2014. Before now, Nigerian com-

panies seeking international certification did so either outside Africa, or in Egypt through the Egyptian Accreditation Council (EGAC), which is a recognised member of International Accreditation Federation (IAF). But with the NGCL, Nigerian companies can secure international accreditation locally. “NGCL has been internationally accredited as the first indigenous certification body in Nigeria to provide certification and training services for companies locally and internationally. “The establishment of the NGCL and its accreditation as a certification body by the Egyptian Accreditation Council (EGAC) assures us of better access to certification of management systems, standardisation, enhanced business competitiveness and removal of technical bar-

riers to global trade,” Olawale says. According to Olawale, the accreditation has come at a time when the focus of the government is on diversification from the oil sector and the promotion of exports from the sectors. He said this major milestone would enhance business competitiveness, impact the quality infrastructure landscape in Nigeria and break barriers to global trade. The DG designate, who addressed the media, Tuesday, further stated that the NGCL would improve the business management systems processes and growth, enhance productivity, profitability, marketability of goods and services and compliance to statutory and regulatory authorities. Speaking on behalf of Shaukat Hussain, technical

adviser to UNIDO, Rotimi Olaoluwa, lead consultant ISO 9001: 2015 and lead auditor, ISO 1400:2015, said the international body was interested in better standards of Nigerian companies and products to enable them compete in the global marketplace. On her part, Celine Oni, the CEO of NGCL, noted that businesses needed to align with emerging trends in global marketplace. Oni explained that while the implementation of the ISO standards in business has brought about improved efficiency and effectiveness of processes as well as adherence to regulatory and statutory requirements, the NGCL would further add to promote quality, remove technical barriers to trade, and advance economic growth through certification and training locally and internationally.

Monetary Fund (IMF) for cheaper funding. The government agency however refused the advice cited in BusinessDay’s editorial on the basis that the IMF only lends to countries that have Balance of Payment crisis. “Since Africa’s largest economy is not in a Balance of Payment crisis situation, it has no reason to approach the IMF for support,” the DMO says. The government agency however cites Nigeria’s current external reserves of over $47 billion, which is about 16 months import

CHANGE OF NAME

I, formerly known and addressed as Onah Gloria Kelechi now wish to be known and addressed as Nwosu Gloria Kelechi. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Alagbaoso Anne Nkechinyere now wish to be known and addressed as Mrs Ozongwu Anne Nkechinyere. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Michael Nicholas now wish to be known and addressed as Michael Luther Nicholas. All former documents remain valid. General Public please take note.

CONFIRMATION OF NAME

This is to inform the general public that Benjamen Oluwakemi Christianah and Adewale Adebambo refers to same and one person. All former documents bearing any of the two names remain valid. General public please take note.

cover, as being far above the minimum threshold of six months import cover prescribed by the IMF. Meanwhile, Africa’s largest producer of crude oil currently have a total debt of $74.2 billion (N22.7trn) as of March 31, 2018, as compiled from the DMO website.

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I, formerly known and addressed as Rabiu Ajasa Kolade Kolonbo now wish to be known and addressed as Rabiu Ibrahim Kolombo. All former documents remain valid. Banks & General Public please take note.

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I, formerly known and addressed as Mercy Enehireba Ogbidi now wish to be known and addressed as Mercy Enehireba Philip-Iria. All former documents remain valid. and General Public please take note.

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I, formerly known and addressed as Miss Dorcas Iriemiuan Akhimie now wish to be known and addressed as Mrs Dorcas Anani. All former documents remain valid. General Public please take note.

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CORRECTION OF NAME

This is to inform the general public that my name was wrongly written as Ajaelu Jessica Ada instead of my correct name which is Ajaelu Jessica Chidiebere. All banks and genral public please take note.

Wednesday 01 August 2018

C002D5556

BUSINESS DAY

1(:6 FG to inject N300bn into Nigerian auto sector MIKE OCHONMA

he Federal Government plans to inject N300 billion into the nationâ&#x20AC;&#x2122;s vehicle assembly plants as part of measures to accelerate the development of the automotive industry. Already, contributions into the support fund initiated to facilitate the vehicle production finance scheme have risen to N11 billion. Director-general, National Automotive Design and Development Council, Jelani Aliyu, who gave the indication at a forum in Lagos, said the funds would â&#x20AC;&#x153;support assembly operations at the Completely Knocked Down level and encourage local content development.â&#x20AC;? Aliyu said presently, the auto industry activities were largely characterised by the Semi-Knocked Down operations with limited employment generated. Aliyu spoke on â&#x20AC;&#x153;Achieving 2013-2020 Nigerian Automotive Industry Development Plan under the current regime: How feasible?â&#x20AC;? at a capacity building workshop for motoring journalists in Lagos. He said the Federal Government was worried by the slow pace of development in the auto industry subsector of the economy, even though government had given 35 automobile firms â&#x20AC;&#x153;bona-fide manufacturing status and many of them have started assembly operation.â&#x20AC;? This is coming about five

years after the government commenced the implementation of the Nigerian Automotive Industry Development Plan implementation, which was meant to encourage local production and purchase of new vehicles. Aliyu, who was represented by the director, special duties at the NADDC, David Oyetunji, said the auto support fund was an indication of the governmentâ&#x20AC;&#x2122;s resolves to provide the necessary encouragement for the development of the sector. He said, â&#x20AC;&#x153;The automotive industry is the cornerstone for establishing a self-sustaining economy and upgrading the standard of living both in the developing and developed economy.â&#x20AC;? According to Aliyu, the NAIDP provides for a credit purchase scheme to provide loans for civil servants, haulage and passenger commercial companies and other members of public to patronise made-inNigeria vehicles. â&#x20AC;&#x153;The council has accordingly applied to the CBN for the proposed entity operating licensee and concessions to attract additional funding from the Development Finance Institutions,â&#x20AC;? he said. He also spoke on complaints of high costs of vehicles assembled locally, saying, â&#x20AC;&#x153;All assemblers have been directed to include a low-cost vehicle in the models they roll out. This is for ease of ownership by Nigerians. So far, Hyundai, Kia, Nissan and others have all assembled brand new low-cost vehicles.â&#x20AC;?

Oil majors ramp up exploration, production but not in Nigeria â&#x20AC;Ś higher oil prices improve Q2 earnings STEPHEN ONYEKWELU

econd quarter reports of oil majors - Shell, ExxonMobil, Eni, Total, Chevron and BP show increase in crude oil production and improved earnings due to higher oil prices, but Nigeria is not on their investment map, BusinessDay analysis shows. People with knowledge of the oil and gas industry say this is due to both political and legal uncertainties in Nigeria, Africaâ&#x20AC;&#x2122;s largest oil producer. â&#x20AC;&#x153;Every investor wants to be able to plan before investing and needs clarity. At the moment, this is lacking in Nigeria with elections approaching. But the biggest disincentive is the lack of passage of the decade old Petroleum Industry Bill (PIB),â&#x20AC;? Ayodele Oni, energy partner at Bloomfield Law Practice, said in phone interview. â&#x20AC;&#x153;Investors are watching because the PIB will provide legal backing to whatever fiscal

framework will become operative in the industry in terms of, returns on investment, taxes and royalties. It is less of technical issues, more of political and legal uncertainties,â&#x20AC;? Oni said. In a demonstration of improved earnings and balance sheet strength due to higher oil prices, Shell and ExxonMobil have announced share buyback programmes. â&#x20AC;&#x153;Today, we are taking another important step towards the delivery of our world-class investment case, with the launch of a $25 billion share buyback programme,â&#x20AC;? Ben van Beurden, Royal Dutch Shell CEO said. â&#x20AC;&#x153;Our financial framework remains unchanged. Our free cash flow outlook and the progress we have made to strengthen our balance sheet give us the confidence to start our share buyback programme.â&#x20AC;? But the reports show Nigeria is not on the long-term investment radar of any oil

majors. Oil exploration and production activities of these oil majors have been concentrated in the Gulf of Mexico and some African countries. Meanwhile, exploration and production activities in Nigeria have stalled for 12 years. Royal Dutch Shell, during the quarter, announced a large deep-water exploration discovery in the US Gulf of Mexico with its Dover well, 100 percent Shell interest. In May, Shell announced the start of production of Kaikias Phase 1, a subsea development in the US Gulf of Mexico with estimated peak production of 40 thousand barrels of oil equivalent per day boe/d with 80 percent Shell interest. In July, Shell signed production-sharing contracts with the government of Mauritania for the exploration and potential future production of two offshore blocks, with 90 percent Shell interest. Italian oil major Eni, said

its oil and gas production rose 5.2 percent on the year to 1.86 million boe/d in the quarter, due to improve in production at the giant Zohr gas field off Egypt and helped by new fields in Indonesia, Congo and Ghana. Higher production at the giant Kashagan project in Kazakhstan and the Val dâ&#x20AC;&#x2122;Agri fields in southern Italy also contributed to volume addition. ExxonMobil is strengthening its portfolio and announced its eighth oil discovery offshore Guyana at the Longtail-1 well, creating the potential for additional resource development in the southeast area of the Stabroek Block. The company continued to rapidly advance the Liza Phase 1 project with the start of development drilling offshore Guyana. Development drilling began in May for the first of 17 wells planned for Phase 1, laying the foundation for production startup in 2020.

Edo, group launch apps to fight girl-child social vices IDRIS UMAR MOMOH, Benin

irl Effect, a non-governmental organisation, in partnership with Edo State government, has launched a mobile app code name â&#x20AC;&#x153;Girls Connectâ&#x20AC;? geared toward stemming the increasing cases of girl-child related social vices in the society. The mobile app, an innovative Interactive Voice Responses service, is aimed at connecting and empowering the girl-child to have access to information and support to enable them make informed decisions about their lives. Betsy Obaseki, Edo State first lady, launched the project in Benin City on Tuesday. In her address, Hadeezah Haruna-Usie, deputy country director, Girl Effect, who said the mobile app was being powered by 9Mobile Telecommunications Company, noted, â&#x20AC;&#x153;A girl growing up in Nigeria faces many barriers such as early marriage, pressured to become economically active, trafficked and prostitutions, among others.â&#x20AC;? Usie, who said there were over 15 million vulnerable girls living in Nigeria, noted that there was a pressing need to scale up interventions to reach and meaningfully engage the population, and equip them with the capabilities to be able to find answers to their questions and access quality support systems.

According to Usie, Girls Connect, which is currently being piloted in Nigeria, combines the power of storytelling witch one-to-one support and created in a unique partnership between iSON, one of Africaâ&#x20AC;&#x2122;s largest IT services, and BPO companies with a presence across almost 25 African countries. â&#x20AC;&#x153;Girls Connect is an innovative use of Interactive Voice Responses (IVR) technology that enables girls to explore and express their curiosities about growing up, by providing girls with on-demand storytelling and one-on-one conversations with role models in anonymity. â&#x20AC;&#x153;But as girls in Nigeria become more connected o the world around them, there is opportunity for them to be heard and to become ore visible. At the moment, over 11 million girls and young women aged 10-24 in Nigeria are connected to be Internet, but thatâ&#x20AC;&#x2122;s expected to reach 19.9 million by 2020,â&#x20AC;? she said. She said the pilot scheme was launched across five locations - Kano State in 2017, and that Edo State was the second state in the country where the project was being launched. She said 44,000 calls were made to the mobile apps service during the eight months campaign, and currently available in both Hausa and Pidgin English languages for Northern people and Edo people.

Unity Â Bank Â MD/CEO, Â Tomi Â Somefun Â receives Â customers Â who Â emerged Â Top Â Performing Â Mcash Â merchants Â in Â Nigeria. Â (L-ÂR): Â regional Â manager Â Maiduguri, Â Lawan Â Abubakar;Íž Â zonal Â head, Â Mustapha Â Mohammed;Íž Â representive Â of Â Electrical Â and Â Electronics Â Ltd, Â Potiskum, Â Musa Â Umar Â Mohammed;Íž Â MD/CEO Â Unity Â Bank Â plc, Â Tomi Â Somefun;Íž Â MD Â AI Â Hussaini Â Global Â Ent, Â Isah Â Alhaji Â Hussaini, Â and Â head Â E-Âbusiness, Â 2OXUHPL 7LQXROD DW WKH EDQNÂśV FRUSRUDWH KHDG RIÂżFH LQ /DJRV

Expectation gap threatens $1bn Ogoni clean-up project IGNATIUS CHUKWU

unger for compensation for Ogoni oil spill impacted communities over clean up may threaten the $1 billion United Nations recommended exercise. A painstaking survey on the best way to handle clean up of the 66 Ogoni oil spill impacted communities has rather shown signs of problems ahead, as the people have put need for compensation ahead of clean up and remediation. The report however warns that the United Nations Environment Programme (UNEP), which handed a $1 billion clean up task to Federal Government in 2011, did not recommend compensation. The Muhammadu Buhari adminis-

tration flagged off the exercise in 2016, setting up structures that would receive and handle the fund. The non-governmental organisation (NGO) that conducted the survey, the Centre for Environment, Human Rights and Development (CEHRD), led by Kabari Sam, fears that the expectation gap may cause anger in Ogoni areas should the exercise begin proper. In the survey, the communities clearly indicated desire for cash compensation but put clean up last in their scale of preference. Presenting the report to NGOs and community-based organisations (CBOs) from Ogoni in Port Harcourt on Tuesday, Sam named other priorities by the Ogoni communities over clean up as

adequate funding of the clean up, skills training of the youths, and employment. The community people also said they expected improved standards of living from the clean up exercise, and indicated that mere clean up would not satisfy them. CEHRD said the discovery has raised concerns that the Ogoni areas may remain volatile even after clean up due to mismatch of expectations. Sam said whereas the communities want cash compensation, jobs, skills, social amenities, good life, etc, the mandate to the Hydrocarbon Pollution and Remediation Project (HYPREP 2) did not include compensation. The experts said this has necessitated the need to seek common ground and negotia-

tions between the 66 impacted communities and HYPREP to ensure that the outcome of the clean up would satisfy all parties. Sam said it was important to initiate schemes to convince the communities that working out compensation would bring chaos because it would be based on impacted parcels of land, which would exclude majority of the people whereas pollution proper affected everybody. He said clean up and remediation would throw up a healthy environment that would restore and support farming, fishing, water, and new economic lifestyle. He said training the Ogoni youths would create skills that would boost their economy for decades over immediate cash.

A2 BUSINESS DAY NEWS

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NMRC beats economic headwinds, grows PBT 58.3% to N1.9bn in 12 months CHUKA UROKO

igerian Mortgage Ref i na n c e C o mp a ny (NMRC) has demonstrated resilience in Nigeria’s weak economic and business environment with an impressive and profitable outing in its financial year ended December 31, 2017. Besides a 31.4 percent rise in net interest income to N3.97 billion in 2017 from N3.02 billion in 2016, the company, within the period under review, grew its profit before tax (PBT) to N1.9 billion, up from N1.2 billion in 2016, representing 58.3 percent increase. Kehinde Ogundimu, acting chief executive, who disclosed this Tuesday at the company’s fourth annual general meeting in Lagos, also revealed that their balance sheet increased

to N42.54 billion, up from N40.79 billion in 2016. “Our cost-to-income ratio, capital adequacy ratio, and other regulatory and performance metrics were significantly better in 2017 than 2016,” Ogundimu told shareholders who commended the performance, and also approved all the resolutions presented at the AGM, including the resolution for the upscaling of the company’s debt issuance programme from N140 billion to N440 billion to enable the company deliver on its mandate of making housing finance more affordable and accessible. Notwithstanding the slow, fragile and vulnerable recovery of the economy, the company is optimistic of a better outing in 2018, believing that the economy will pick up on the back of pro-growth policies

and structural changes being implemented by the government. The company is not unmindful of the uncertainty surrounding the 2019 general election and its attendant risk to economic growth. But, according to Charles Okeahalam, the company’s chairman, “we believe that our company is well positioned to adapt and benefit from the improvements in the economy in 2018 and beyond”. Inaugurated in January 2014 with the mandate to not only increase access to housing, but also make it affordable to a good number of low income and home-seeking Nigerians, NMRC, which is Nigeria’s only secondary mortgage institution, has left strong footprints in the country’s fledgling mortgage market. The company is a private

sector-led company with the public purpose of developing the primary and secondary mortgage markets by raising long-term funds from the capital markets, encouraging and promoting home ownership in Nigeria. Recently, it completed its N11billion 13.80 percent Series 2 Bond Issuance under its N440 billion Medium Term Note Programme. The net proceeds from this issuance will be used to refinance eligible mortgage loans originated by the participating mortgage lending banks. Before now, the company had raised its inaugural N8 billion 14.9 percent Series 1 Bond issue in July 2015 – which was fully deployed towards refinancing legacy mortgage loan portfolios of the participating member-mortgage lending banks.

Wednesday 01 August 2018

Why Nigeria’s coalition of political parties may struggle in 2019 INIOBONG IWOK

ecently, the People’s Democratic Party (PDP), in conjunction with about 34 other political parties signed a memorandum of understanding (MoU) to field a common presidential candidate for the 2019 general elections. A political coalition is a temporary alliance of distinct parties to capture political power. In Nigeria, however, the challenge is that disparate parties are forced to form mergers with the capture of political parties as their common objective. Nigeria’s political parties have at different times formed alliances to capture power, but have had limited success in achieving cohesion. In 2013, four leading political parties: the Action Congress of Nigeria (ACN), a faction of the All Progressive Grand Alliance (APGA) and the All Nigerian People’s Party (ANPP) merged to form the ruling All Progressives Congress (APC), which eventually dislodged the PDP from power in the 2015 general elections. Three years after capturing political power, this coalition has faltered with political bigwigs from the party jumping ship back to the PDP and others forming a splinter group within the APC. As for the current coalition formed by the PDP, cracks have already emerged. Few days after the signing of the agreement, Mike Omotosho, the national chairman of the Labour party

(LP), and Yusuf Sanni, the national chairman of the Advance Democratic Party (ADP), in separate statements distanced their parties from the coalition, saying the PDP was composed of individuals who were responsible for the current woes bedevilling the country. Political strategist, Ayo Kusamotu, says the coalition may suffer cracks within it ranks regarding who it picks as presidential candidate in next year’s election. The PDP, which is spearheading the coalition, is expected to present a candidate from the numerous aspirants in its fold namely: former Vice President Atiku Abubakar, Sule Lamido, Hammed Markafi, Turaki Tanimu, just to mention a few. However, these smaller political parties who formed part of the coalition are also keen to present presidential candidates for the election. The question is; which of these politicians would be willing to sacrifice his ambition for the success of the coalition? A lot of horse-trading would have to be involved before a compromise is reached, and if it is not handled properly, has a potential of destroying the union. There is also the perception that since the incumbent President Muhammadu Buhari hails from the Northern part of the country and would have spent one term in 2019, it is expected that power should naturally return to the southern part of the country in 2023, after the north would have completed the remaining four years in 2023.

Sanitation law nullification: Edo complies, to challenge judgment

L-R: Anthony Osae-Brown, editor, BusinessDay; Faith Ogedengbe, research analyst, Growth and Development Asset Management Limited; Henry Ogbuaku, group head, asset management; Ibukun Akintubi, head of retail team; Emeka Ucheaga, analyst, BusinessDay, and Chuka Uroko, property editor, at the BusinessDay Knowledge Sharing Lecture Series in Lagos, Pic by Olawale Amoo.

First-hour breastfeeding after Bayelsa receives N23.5bn birth can save 78m babies FAAC allocation for June, July ANTHONIA trums,alsocalledthebaby’s‘first OBOKOH SAMUEL ESE, Yenagoa

total of N23.5 billion came into the coffers of Bayelsa State government from the Federation Accounts Allocation Committee (FAAC) as allocations for the months of June and July. Commissioner for finance, Maxwell Ebibai, who made the disclosure in a statement on Monday, said the state had earlier received N12.7 billion as June allocation before N10.8 billion in July. Ebibai said though there was a shortfall of about N2 billion in the July allocation, the state government would give priority to the payment of workers’ salaries in consonance with the emphasis placed on workers by the administration. He said ongoing capital projects would attract priority attention before other state expenses would be treated on their scale of importance, and that the disclosure was in line with the transparency policy of the administration. He recalled that the state government had to generate funds through alternative sources to pay June salaries and other duties due to the delay in resolving issues at the FAAC meeting in June.

In his words: “Last month, the Federal Accounts Allocation Committeemeetingwasdelayed. But the state government generated funds to pay workers’ salaries and other responsibilities of government through alternative sources of revenue. That was an expression of commitment. “The state got N12.7 billion for the month of June and N10.8 billion for July. The June receipts indicated a shortfall of about N2.0 billion in federal receipts for the month of July. “In line with our covenant with workers, their salaries would be on first line charge. Our capital projects would also get attention. Other expenses will be treated on a case by case basis.” He said the shortfall in federal receipts had brought to the fore the fragile state of the economy in spite of the massive drive to boost the internally generated revenue profile of the state. He called for further commitment and efforts from stakeholders to give the deserved attention to the creation of a sustainable financial base, which would not be dependent on FAAC allocations and the need to manage the cost of doing business in the state.

new report by the United Nations Children’s Fund (UNICEF) and World Health Organisation (WHO) says 78 million babies, an equivalent of three in five, can get better survival chances and protection against diseases when breastfed within the first hour of life. Mostofthesebabiesareborn in low- and middle-income countries including Nigeria. Improving breastfeeding can help Nigeria reach its full human and economic potentials bypreventing10millioncasesof childhood diarrhoea and pneumonia, saving 103,742 children each year and reducing the cost to the health care by $22 million a year, the UNICEF report notes. The report notes that newborns that breastfeed in the first houroflifearesignificantlymore likely to survive. Even a delay of a few hours after birth could pose life-threatening consequences. Skin-to-skin contact along withsucklingatthebreaststimulates the mother’s production of breast milk, including colos-

vaccine,’ which is extremely rich in nutrients and antibodies. “When it comes to the start ofbreastfeeding,timingiseverything. In many countries, it can even be a matter of life or death,” says the report. Henrietta H. Fore, executive director,UNICEF,said,“Millions of new-borns miss out on the benefits of early breastfeeding and the reasons all too often are things we can change. Mothers simply don’t receive enough support to breastfeed within thosecrucialminutesafterbirth, even from medical personnel at health facilities.” Breastfeeding rates within the first hour after birth are highest in Eastern and Southern Africa (65%) and lowest in East Asia and the Pacific (32%), the report says. However, Thompson Kobata, the public health nutritionist attheFederalMinistryofHealth, Nigeria, said adequate nutrition during infancy and early childhoodwasfundamentaltochild’s survival, growth and development to full potential.

do State government says it will respect and comply with the recent judgment delivered by the state High Court, which nullifies the Edo State Sanitation and Pollution Management Law No. 5, 2010. In a statement, Secretary to the State Government, Osarodion Ogie, noted, “The government is aware of the Judgment in Suit No. B/460/2014 in the case of Johnson Osagie Igbinedion and Another vs. Edo State House of Assembly and 6 Ors, recently delivered by the High Court of Edo State in which a declaration was made, nullifying the Edo State Sanitation and Pollution Management Law No. 5, 2010.” Ogie said, “The state government and its lawyers are currently studying the pronouncement and also making effort to obtain a certified true copy of same.” He maintained that “in line with the provisions of the Constitution of the Federal Republic of Nigeria (1999), as amended, the Edo State Government intends to

challenge the said decision at the appropriate Appellate level.” He assured that “in the interim, Government intends to respect and comply with the pronouncement of the court concerning the said law.” The SSG further said to exercise its primary duty of ensuring an orderly and decent society and to prevent a catastrophic collapse of public health and sanitation system, “it is the intention of Edo State government to continue to enforce all other unrepealed statutes and provisions relating to public health, nuisances and sanitation as currently provided for in the following laws: the Public Health Law; the Criminal Code; the Bye-laws of the different Local Government Councils in Edo State; and the provisions of the Administration of Criminal Justice Law relating to nuisances.” He urged all citizens to continue to be law abiding, particularly on matters that affect sanitation, cleanliness, health and decent living of the generality of the people.

Wednesday 01 August 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Trump’s former campaign manager to face trial Paul Manafort has been charged with tax and bank fraud by special counsel Mueller Kadhim Shubber

ury selection in the case of Donald Trump’s former campaign manager will begin on Tuesday, launching the first trial of Robert Mueller’s investigation into Russian election interference. Paul Manafort, 69, who ran the Trump campaign for three months in 2016, is accused of tax and bank fraud in the eastern district of Virginia. The trial is the first of two that Mr Manafort faces, with another set to begin in Washington in September. A conviction would complete the remarkable downfall of Mr Manafort, a longtime lobbyist and Republican strategist whose work for the pro-Russian former president of Ukraine attracted the attention of Mr Mueller, the special counsel. If he is acquitted, it would deal a blow to the credibility of Mr Mueller’s investigation, which is under near daily attack from the president as part of a public-relations campaign designed to sow doubt among voters about the Russia probe. Mr Manafort, who could spend the rest of his life in jail if convicted, has so far been the only American to fight Mr Mueller’s charges all the way to trial instead of pleading guilty and co-operating with the special counsel’s investigation. He has denied wrongdoing. The former Trump campaign chair has been in jail awaiting trial after his bail was revoked by the judge in his Washington case in June. He previously worked on the Republican presidential campaigns of Gerald Ford, Ronald Reagan and George HW Bush, and joined the Trump

campaign in March 2016. Mr Mueller’s prosecutors said that Mr Manafort earned more than $60m in Ukraine between 2005 and 2014 through his work for Victor Yanukovych, the former pro-Russia president, and his Party of Regions. Mr Manafort is accused of hiding at least $30m of that money from US tax authorities in offshore bank accounts in Cyprus, Saint Vincent & the Grenadines and the Seychelles. Between 2015 and 2017, when his income from Ukraine dried up following Mr Yanukovych’s ousting from office in the Orange Revolution of 2014, Mr Manafort is alleged to have fraudulently obtained almost $25m in loans from three banks. The US government claimed that he misrepresented his income and that of his consulting company, and failed to disclose existing loans on his properties when seeking additional mortgages. In October 2017, he was indicted along with Richard Gates, the former deputy chair of the Trump campaign and a longtime business associate of Mr Manafort, in Washington. The charges in Virginia followed in February 2018. Mr Gates ultimately pleaded guilty to charges of conspiracy and failure to register as a foreign agent. He will appear as a witness against his former boss. Tad Devine, a political consultant who worked as Bernie Sanders’ chief strategist in the 2016 presidential race, is also due to testify in the case. He worked with Mr Manafort in Ukraine in 2010. Mr Devine is not accused of any wrongdoing.

All eyes on Apple as Faangs lose their bite Strong third quarter could see it beat rivals in race to trillion-dollar market cap Tim Bradshaw

he past month has been a volatile one for tech stocks, with Facebook, Netflix and Twitter suffering share-price plunges after reporting their latest earnings. Apple, however, could yet outdo them all in the stock-price drama. If an unexpectedly strong set of results puts a rocket under its shares, the world’s most valuable company could quickly become the first to hit a market capitalisation above a trillion dollars. Getting there, however, will mean shaking off the usual summer doldrums in gadget sales, as customers await the next iPhone launch in September, and looming concerns about the impact

of US President Donald Trump’s trade war with China. Here are five points to watch for in Apple’s third-quarter results on Tuesday. iPhone sales The first numbers that investors usually turn to are iPhone sales. Unit sales of Apple’s most profitable product are estimated to be 42m, up just 2 per cent from a year ago. Handset revenues, on the other hand, will register much faster growth due to the higher price of the iPhone X. Apple said three months ago that the iPhone X had been its best seller, inspiring greater confidence in the company’s ability to keep increasing revenues even in a Continues on page A4

Turkish central bank sharply increases inflation forecast Central bank hits back over concerns about its independence Laura Pitel

urkey’s central bank sharply lifted its annual inflation forecast on Tuesday to 13.4 per cent just a week after keeping interest rates on hold as it grapples with a weakening currency. The move to raise the outlook from a previous forecast of 8.4 per cent in April comes amid concerns by investors about the independence of the central bank, which has come under pressure from Recep Tayyip Erdogan, the Turkish president, who is a selfdeclared “enemy” of high rates Murat Cetinkaya, the central bank governor, pushed back against claims that political interference is limiting his ability to tackle soaring inflation. Consumer price inflation hit 15.4 per cent in June — a figure three times higher the official 5 per cent target. Speaking at a quarterly inflation briefing, Mr Cetinkaya said the move to raise the inflation outlook reflected the impact of the plunging lira, which has lost a fifth of its value since the start

of the year, and soaring food and energy prices. Asked by the Financial Times whether investors were wrong to worry about political interference, Mr Cetinkaya insisted that the central bank and its monetary policy committee “make decisions based solely on the inflation outlook.” He pointed to a trio of three rate rises in April and May as evidence of “serious and significant tightening.” “The law clearly grants the central bank independence in its objectives and tools,” he added. “In order to promote price stability and contribute to the wellbeing of society, the central bank takes the necessary steps at the necessary time based on its own assessments. It will continue to do so.” Economists voiced scepticism at the governor’s remarks, which came a week after the bank held rates at a meeting that was seen as a critical test of its independence following the re-election of Mr Erdogan, which has allowed the president to consolidate power. “If they were basing their assessments solely on inflation dynam-

ics, they would have hiked rates last week,” said Jason Tuvey, senior emerging markets economist at the consultancy Capital Economics. “It’s clear that President Erdogan is influencing monetary policy. He’s a long time proponent of lower interest rates and now that he’s in a strengthened position, where he has much more control of the central bank and economic policy in general, he’s making sure he drives the agenda.” Concerns about the management of the country’s $880bn economy have weighed heavily on the Turkish lira. The plunging currency has in turn put pressure on a corporate sector burdened with foreign currency debt and has fuelled a cycle of inflation that analysts fear is spiralling out of control. Mr Cetinkaya predicted that Turkey’s economic output — which grew at 7.4 per cent in 2017 — would decelerate in the second half of this year. He said that a slowdown would be accompanied by rebalancing, which would naturally bring down high inflation and lower Turkey’s wide current account deficit.

BoJ defies global move to roll back crisis-era stimulus Global bonds rally as changes to Japan’s vast easing programme prove minor Leo Lewis, Kana Inagaki & Emma Dunkley

he Bank of Japan made clear it would not join the world’s other major central banks in rolling back crisis-era stimulus policies on Tuesday, announcing it would maintain “extremely low” interest rates for an extended period. After being forced three times in a week to intervene to cap bond yields amid expectations policymakers would signal a willingness to tighten its easy money regime, the central bank instead declared it was strengthening the framework for “continuous powerful monetary easing”. Reinforcing its commitment

to its programme, the BoJ introduced a forward guidance for policy rates for the first time, saying that the extremely low levels would remain “for an extended period of time”. “This will fully counter speculation among some market participants that the bank is heading towards an early exit or an increase in rates,” Haruhiko Kuroda, BoJ governor, said at a news conference in Tokyo. Analysts agreed he had bought himself at least six to nine months before the market again began to speculate about further changes to the programme. Having been on edge in the days leading up to Tuesday’s announcement, bond markets rallied during the Tokyo trading

day, with the yield on Japan’s benchmark 10-year debt falling 5 basis points to 0.04 per cent. In the early European afternoon, the 10-year US Treasury yield declined 1.5bp to 2.9598 per cent and the equivalent German Bund was unchanged, yielding 0.452 per cent. The yen weakened by as much as 0.5 per cent in the approach to the start of US trade, reaching ¥111.58 per dollar, a six-session nadir. Tokyo-listed banks fell, with the Topix closing down 0.8 per cent, the biggest decline among Asia-Pacific indicies. Banks led the selling, as hopes were dashed for more of a move away from ultra-loose monetary policy, which has hit profits in the financial sector.

BUSINESS DAY

C002D5556

NATIONAL NEWS

FT All eyes on Apple as Faangs lose their...

US tech sell-off sweeps up China bellwethers

Continued from page A3 flatter smartphone market. Wall Street consensus forecasts are that total revenues will be $52.3bn for the three months ending in June, up 15 per cent year on year. “If Apple reports more than $52.5bn of revenue, [it] would mark the company’s seventh consecutive quarter of accelerating revenue growth,” noted Neil Cybart, Apple analyst at Above Avalon. Services How much has Apple profited from the Fortnite gaming craze? That is among the wild cards in assessing the performance of its profitable services division, which includes the App Store, its music service and iCloud. Services have been a bright spot for several quarters, especially when iPhone sales growth slowed last year. Apple is targeting $50bn in annual services revenues by 2020 as it ramps up investment in online video, news and other digital extras for iPhone owners. CFRA Research predicts quarterly services revenues rising 28 per cent to roughly $9.3bn, but acknowledges that the “pace is unlikely to be sustainable”. After climbing 31 per cent in the previous quarter, services growth will slow to 21 per cent next year and 16 per cent by 2020, CFRA forecasts. Trade war High on the list of many analysts’ questions will be the potential impact of tensions between China, where most of Apple’s products are made, and the US, believed to be its largest source of revenues. Apple’s fast-growing accessories business, including Watch, AirPods and HomePod, could be hit with a 10 per cent import duty in the US under the Trump administration’s latest proposed tariffs. Mr Cybart estimates that the “other products” unit will report $3.8bn in global revenues. So far, the iPhone has remained unscathed but as the trade war intensifies, investors will be eager to learn how it might continue to evade the tariffs. Apple said in January that it would make a $350bn “direct contribution” to the US economy over the next five years, including spending with suppliers, capital expenditure on a new campus and data centres, and tax paid on its repatriation of overseas cash. However, its $5bn fund to accelerate “advanced manufacturing” in the US is unlikely to build capacity for domestic production of hundreds of millions of iPhones anytime soon. Looking towards September Analysts will be scrutinising guidance for clues about what happens in the final weeks of Apple’s next quarter. Three iPhones are expected to be unveiled in September, including a largerscreened version of the iPhone X and a more affordable model with a lower cost LCD display. But last year, while the iPhone 8 launched in September, the iPhone X did not hit the streets until November, falling into Apple’s subsequent financial year.

Wednesday 01 August 2018

Tencent in bear territory after dropping 25% from January peak Louise Lucas & Hudson Lockett

Mnangagwa and Chamisa both hint at Zimbabwe election victory Official results may take days to process, especially from rural areas Joseph Cotterill & David Pilling

he two leading candidates in Zimbabwe’s election both hinted on Tuesday that they had won the country’s first poll without Robert Mugabe, seen as crucial to attracting billions of dollars in foreign investment. As results from Monday’s closely fought election were still being counted, Nelson Chamisa, the main opposition leader, said that his Movement for Democratic Change had done “exceedingly well”. President Emmerson Mnangagwa, who took over as head of the ruling Zanu-PF after an army coup overthrew Mr Mugabe last year, also said signs on the ground had been “extremely positive”. Official results may take days to process, especially from rural areas, with the election commission promising a final verdict by Saturday at the latest.

However, because civil society groups are releasing results from individual polling stations and others are compiling a parallel count, observers said there would be huge pressure on the electoral commission to release results earlier. Just how topsy-turvy Zimbabwean politics has become was underlined when on the eve of the poll Mr Mugabe, who fronted Zanu-PF for decades, said he could not vote for the party that had unceremoniously driven him from power. It was unclear whether his backing for Mr Chamisa would encourage or discourage voters to switch to the opposition candidate. If no candidate wins more than half the vote, a run-off will take place in September. One informed observer said that votes for independent presidential candidates — there are 23 presidential hopefuls in all — appeared to be very low, making a run-off less likely. Unofficial early tallies com-

piled by civil society groups are indicating a lead for Mr Chamisa, a 40-year-old lawyer and pastor, in urban areas that are opposition strongholds, and some rural districts. But most of the rural heartland, where twothirds of the electorate reside and Zanu-PF has had a strong grip, is yet to declare. Mr Chamisa has said for weeks that he can only lose through a repeat of the Zanu-PF rigging that marred elections under Mr Mugabe, who ruled Zimbabwe in evermore despotic style for 37 years after independence. Mr Chamisa and Mr Mnangagwa made pro-investment promises central to their campaigns following decades of economic mismanagement and isolation, particularly after Zimbabwe fell into debt arrears some 15 years ago. Critical cash shortages and collapsed infrastructure have crippled what had formerly been a strong regional economy by African standards.

Presidents Club’s hostess agency agrees shake-up Artista agency to overhaul its working practices following controversy Barney Thompson

he founder of the agency that provided hostesses for the Presidents Club dinner has agreed to overhaul her company’s working practices, despite saying she saw no sign of guests acting inappropriately towards women at the event. An FT investigation in January into the Presidents Club, a menonly black tie event held at the Dorchester hotel in London, revealed that a number of hostesses were groped, sexually harassed, subjected to lewd comments or propositioned during the course of the evening. Women hired by the Artista agency to work at the event were told to wear supplied black dresses with black underwear and “sexy shoes” with high heels. They were instructed to sign a fivepage non-disclosure agreement, but were not given time to read it

properly and were not permitted to keep a copy. Shortly after the revelations were published, the Presidents Club closed down and the charities it supported sought to distance themselves from the group. The Equality and Human Rights Commission, an independent equality watchdog, said on Tuesday that it had contacted Caroline Dandridge, the founder of Artista, after the FT’s reports were published and had now reached a legal agreement with her. The EHRC said such agreements are “often an effective alternative to other formal enforcement action”. “Ms Dandridge did not witness any [inappropriate] behaviour by [Presidents Club] guests and no formal complaints were received,” the commission said. “Nevertheless, she has willingly entered into the agreement . . . to ensure best practice by

undertaking additional training and working with the EHRC to ensure that she has updated her policies and procedures.” The commission said Ms Dandridge had agreed to the changes “in recognition of the duty on all employers to protect their staff” but did not give details of the training or the policy updates. Anyone reaching such a deal with the EHRC has to make regular progress reports. Under UK law, a person or company who fails to abide by such an agreement can face enforcement action in the courts, but the commission does not have fining powers. In the EHRC’s statement, Ms Dandridge was quoted as saying: “l remain committed to providing an appropriate working environment for all my staff and welcome this opportunity to update my policies and procedures with which the commission is assisting me.”

he sell-off in Facebook and Twitter has washed up on China tech shores, pushing shares in national titans like Tencent down more than a quarter from its peak in January and into bear market territory. But while sour sentiment over slower user growth has scythed $280bn off the S&P 500 technology sector in the US, Chinese tech stocks are battling additional demons: the trade war being waged by Washington and Beijing; currency depreciation and tightening liquidity. “The current round of decline in [China’s] entire internet space is more macro driven,” says David Dai, senior analyst at Bernstein Research. Valuations, he adds, remain at the higher end of the historic range — not in bubble territory, but enough to make investors “jittery” when negative news strikes. As in the US, there have been several instances of those — particularly when it comes to the “BAT” triumvirate of Baidu, Alibaba, and Tencent that dominate the country’s tech scene. Tencent, set to report quarterly earnings in two weeks has investors fretting over slowing growth in gaming and new regulations that will erode interest income from its third party payments business. The latter also impacts rival Alibaba, whose shares are down 12 per cent since mid-June. Gaming, for Tencent, is the engine that turbocharges growth.PlayerUnknown’s Battlegrounds, in which players have to survive on a virtual island by scavenging for weapons and killing fellow island dwellers, has proved superbly popular with gamers. However, making money off it is proving more elusive. “The rise of PUBG Mobile is . . . cannibalising other legacy titles on both time and money spend,” note Morgan Stanley analysts. The analysts forecast total game revenues will rise just 2 per cent year-on-year in the second quarter, a 16 per cent decline on a sequential basis. The hugely popular Honour of Kings, where teams of five distinctive heroes clash in a bid to take over each other’s bases, “is entering a mature stage after reaching its peak in March,” they said. Tightening regulations on third party payments — mainly aimed at the slew of peer-topeer lenders that burst on to the market in the last five years or so — will also erode income; from January customer deposits must be parked in custodial accounts, rather than earn interest. More broadly, tighter regulations are pummelling the once feted fintech sector, slashing the value of the likes of Qudian and Ppdai, down 68 and 64 per cent respectively since listing late last year. “What’s not hot in tech right now is fintech,” says one banker.

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Live @ The Exchanges Strong earnings updates seen driving gains at Lagos Bourse Stories by Iheanyi Nwachukwu

he Nigerian stock market on Tuesday July 31, 2018 sustained previous day’s gain as more investors raised wagers on large cap stocks such as Nestle Nigeria Plc, Seplat Petroleum Development Company Plc, and that of Cement Company of Norther Nigeria. As strong first-half (H1) earnings updates continue to drive gains at Lagos Bourse, the value of listed equities (Market Capitalisation) closed at N13.410 trillion as against preceding day close of N13.384 trillion, representing an increase of N26billion. With the H1 earnings season, most analysts believe for now that the positives outweigh the negatives at the equities market as investors continue to hunt for bargains in value stocks that are priced low. At the close of trading on the Lagos Bourse,

seven (17) stocks gained as against 24 losers while the Year-to-Date (YtD) return still remains negative at 3.20percent. The Nigerian Stock Exchange (NSE) All Share Index (ASI) increased by 0.19percent to close at 37,017.78 points as against the preceding day close of 36,946.05points. The volume of stocks traded decreased by 23.3percent, from 319.4million to 244.9million, while the total value of stocks traded increased by 47.45percent, from N3.04billion to N4.49billion in 5,943 deals. Nestle Nigeria Plc recorded the biggest advance after moving from N1, 502 to N1, 600, up by N98 or 6.52percent. Seplat Petroleum Development Company Plc also increased from N687.5 to N704, up by N16.5 or 2.40percent; Cement Company of Northern Nigeria Plc rose by N1, from N30 to N31, up 3.33percent; while Nigerian Breweries Plc advanced from N104.5 to N105, up by 50kobo or

0.48percent. Champion Breweries Plc gained 11kobo or 5.88percent, from N1.87 to N1.98. On the laggards table, Okomu Oil Palm Plc occupied topmost position after its share price declined from N83 to N74.7, down by N8.3 or 10percent; followed by Beta Glass Plc which dipped from N78 to N76.95, down by N1.05 or 1.35percent; while PZ Cussons Nigeria Plc which opened at N16 declined to N15.1, recording 90kobo decline or 5.63percent. Zenith Bank Plc stock price lost 70kobo, from N23.7 to N23, down by 2.95percent; while Flour Mills Nigeria Plc declined from N29.4 to N28.7, dipping by 70kobo or 2.38percent. In 5,943 deals, stock traders exchanged 244,965,442 units valued at N4.494billion. GTBank Plc, United Bank for Africa Plc, Sterling Bank Plc, FBNHoldings Plc and United Capital Plc were actively traded stocks on the Nigerian Stock Exchange (NSE) on Tuesday.

NSE lifts suspension in shares of Universal Insurance

he Nigerian Stock Exchange (NSE) has listed the suspension it earlier placed in the shares of Universal Insurance Plc. The NSE had in its market bulletin dated July 5, 2018 notified the public of the suspension of eight (8) listed companies for noncompliance with the postlisting Rules. Rule 3.1, Rules for Filing of Accounts and Treatment of Default Filing, Rulebook of The Exchange (Issuers’ Rules) (Default Filing Rules) provide that; “If an Issuer fails to file the relevant accounts by the expiration of the Cure Period, The Exchange will: Send to

the Issuer a “Second Filing Deficiency Notification” within two business days after the end of the Cure Period; Suspend trading in the Issuer’s securities; and (c) Notify the Securities and Exchange Commission (SEC) and the Market within twenty- four (24) hours of the suspension.” Universal Insurance Plc (the Company) which was one of the companies suspended has submitted its audited financial statement for the year ended 31 December 2017, the NSE said in a statement signed by Godstime Iwenekhai, Head, Listings Regulation Department. “In view of the submission of its accounts and

pursuant to Rule 3.3 of the Default Filing Rules, which provides that; “The suspension of trading in the issuer’s securities shall be lifted upon submission of the relevant accounts provided The Exchange is satisfied that the accounts comply with all applicable rules of The Exchange. “The Exchange shall thereafter also announce through the medium by which the public and the SEC was initially notified of the suspension”; the general public is hereby notified that the suspension placed in the trading of the Company’s shares has been lifted effective July 30, 2018,” the notice reads.

Honeywell Flour Mills records N18bn revenue in Q1

oneywell Flour Mills Plc, a leading foods manufacturer in Nigeria has released its financial results for the first quarter (Q1) ended June 30, 2018. The company reported revenue of N17.7billion from net sales of flour, semolina, wheat meal, pasta and instant noodles products. This represents a 3percent decline from the N18billion achieved in the same Q1 period of 2017. Its Profit before Tax stood at N127million. The key impediment to the earnings growth dur-

ing the period was the Apapa Traffic Gridlock which has virtually crippled business activities in Lagos State. The dilapidated road infrastructure and chaotic traffic situation in and around the nation’s premier port has made it inordinately difficult and enormously expensive to transport goods out of the factory in Tincan Island. This challenge has resulted in an effective freight cost increase of about 25percent. Cost of Goods Sold increased by 1percent relative to same period last

year following rising prices of wheat; a major raw material input and this contributed to a decline in Gross Profit from N3.8 billion to N3.2 billion. Operating Profit was about N1 billion after netting off Selling and Administration costs in the period. However, the company was able to manage its finance cost which declined from N1.3 billion in the equivalent quarter of the previous year to N892 million for the quarter. Consequently, a reduced Profit before Tax of N127 million was recorded.

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EFG Hermes takes position in People & Perspectives Nigeria as investor interest swells

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ACA buys Daraju stake as consumer deals eclipse N22bn LOLADE AKINMURELE

rivate equity investor, Africa Capital Alliance (AC A) has invested an undisclosed amount in Nigeriabased consumer goods company, Daraju Industries, the private equity firm disclosed in a statement on its website last week. ACA’s single investment size typically ranges from a minimum of $20 million to $80 million, according to data available on its website. Daraju plans to ramp up its production capacity with the investment, with the dream of expanding its portfolio offering to reach every Nigerian household who demand locally manufactured quality products. The Daraju deal takes the total number of consumer goods deals in Nigeria this year to four. Tw o o f t h o s e d e a l s were valued at N22 billion, while the other two are undisclosed. Affelka’s N21 billion investment in 7up, last January, is the larger of the two deals with disclosed amounts, trailed by Dufil’s N775 million acquisition of Mimee noodles in April. Echo venture capital’s

investment in online fresh food shopping firm, Easy Shop Easy Cook and now ACA’s investment in Daraju make up the numbers for consumer goods deals in 2018 alone. “Nigeria has a large population of about 190 million, and Daraju seeks to position itself to meet the needs of this population,” said Peeyush Garg, the company’s founder and chairman. “We are at the early stages of what we seek to achieve for and with the people of Nigeria, and with our partner (ACA), we hope to continue to provide high quality locally produced products which will rival any internationally imported personal care product,” Garg added. The consumer goods sector in Nigeria has been tipped to continue to attract private equity interest, given its fast growing population which the UN estimates to hit 300 million by 2050, only behind China and India. However, latest data from the Nigerian Bureau of Statistics (NBS) showed that in real terms, consumer spending fell 1 percent year-on-year in 2017, despite an 11.4 percent increase in employee in-

come, the first increase since 2015. “We believe there is a huge opportunity for good quality locally produced consumer products in Nigeria which can eventually be sold to neighboring countries,” Paul Kokoricha, a partner at ACA, said. “Bringing customers good quality and affordable products is the thesis underpinning this investment in Daraju Industries limited but most importantly we seek to support the growth of local manufacturing to help in building local skill transfer and competency locally,” Kokoricha added. Peeyush Garg, founder and chairman of Daraju, commented Garg said the company also seeks to build the local manufacturing capacity in Nigeria, train and impart valuable skills to the younger generation who will be empowered to build and grow other manufacturing businesses locally. Daraju Industries has produced local household and personal care products in Nigeria since 2008. Some brands of the company include MYMY and Extreme brands of toothpaste, Fressia Brands of Soap, Fressia Brands of Petroleum Jelly, as well as

MYMY, Soft & Clean and Rana brands of washing detergent. The company’s vision is to become a leading local household and personal care manufacturing company, according to founder, Garg. “The company also seeks to build the local manufacturing capacity in Nigeria, train and impart valuable skills to the younger generation who will be empowered to build and grow other manufacturing businesses locally,” Garg added. The company, Garg says, has invested significantly in its distribution and logistics network and is able to provide valuable products to all its suppliers and customers across hubs nation-wide. Daraju’s funding will come from ACA’s CAPE IV fund designed to make equity and equity-related investments in high-growth target sectors in West Africa and the Gulf of Guinea region. The Fund’s target sectors include Fast Moving Consumer Goods (FMCG), Business Services, Energy, Financial Services, and Telecommunications, Media & Technology (TMT). ACA has over US$1 billion assets (at cost) under management.

Wednesday 01 August 2018

COMPANIES & MARKETS

Abraaj’s unusual business model generates $1 billion debt … leaving a trail of losses, legal actions, shattered reputation Oluwatosin Dokunmu

n the release of Abraaj’s control by Ariq Naqvi in June, it was revealed that the company could not cover its operating costs from the revenue generated in its unusual business model as it had borrowed to fill gaps, which has resulted to a debt of over $1 billion. The court appointed liquidators - PricewaterhouseCoopers (PwC), claim to have found key statements of the troubled private equity firm missing, while identifying certain unusual borrowing practices in their books. Going through the books of the Dubai-based private equity firm, PWC asserted that, “Abraaj’s use of loans to cover operating expenses left it sensitive to volatility and potential crises,” with ongoing investigations on “mismanagement of funds and misappropriation of assets” “Abraaj’s reliance on multiple levels of leverage created a “highly unstable” business model that’s unusual for the private-equity industry,” the liquidators in charge said, in a report seen by Bloomberg. From the liquidation report, Abraaj is found to have a debt of at least $1.1 billion. The creditors list of the private equity firm includes; Kuwait Public Institution for Social Security ($205.3m) Auctus Fund/Hamid Jafar ($200m) Mashreqbank ($177.5m), Commercial Bank of Dubai ($166.3m), Noor Bank ($100m), Societe Generale ($100m) Air Arabia ($75m) ,First Gulf bank ($28.6m) and Arab National Bank ($21.1m). In a Bloomberg report, Abraaj claimed that “Borrowing was a necessity because most of its clients, especially early on, were family businesses that were not always timely in making payments.” “In hindsight, the pace of growth should have been more measured,” the email said. “The back office was not keeping pace in terms of sophistication or best practice.” The back office in a private equity firm solely provides administrative and vital services, with departments like accounting, operations, I.T, compliance etc. According to the liquidation report, Abraaj’ has an estimated realizable value of $1,064 million which has already started getting offer bids from interested buyers. The assets for sale includes 12 funds and holdings in K-Electric, Spinneys, Entertainer and Wamda. Abraaj has also received several lawsuits in Turkey and UAE from bounced cheques and other legal cases. The private equity firm established in 2002, filed for provisional liquidation in June with stakes in select markets in Africa, Asia, Latin America, Middle East, Turkey and Central Asia. The Pakistani founder, Ariq Naqvi, has though remained outside the UAE, with the issuance of a warrant for his arrest by a public prosecutor.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: David Ogar ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

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BUSINESS DAY

People & Perspectives EFG Hermes takes position in Nigeria as investor interest swells

PrivateEquity & fundraising

Having acquired the securities trading business of Lagos-based financial advisory services firm, Primera Africa, Nigeria will now become a directly traded market for EFG Hermes, after the country accounted for the largest share of the Egypt-based investment firmâ&#x20AC;&#x2122;s capital market brokerage executions and revenue among all frontier markets in which it indirectly executed during 2017. Ali Khalpey, the London-based Chief Executive Officer of EFG Hermes Frontier, in this interview with BusinessDayâ&#x20AC;&#x2122;s Private equity and Fundraising editor, Lolade Akinmurele, talks about the continued interest the firm is seeing in Nigeria and why the acquisition of Primera Africa is a strategic move. The amount EFG will pay for the acquisition was not given, as the financial and legal due diligence required for deal closure would not be finalised until August 30.

Rising Nigeria interest e continue to see ongoing interest in Nigeria, as well as other key Frontier markets like Bangladesh, BRVM and more recently, Zimbabwe. We expect Nigeria to continue to feature prominently, although it will now be a directly traded market for EFG Hermes like Kenya and Pakistan. Before entering Nigeria via this acquisition, you were operating in Pakistan, Kenya and Bangladesh. Why did you wait till now to enter the Nigerian market; one of the largest frontier markets globally? We have been keen on entering Nigeria for over 18 months and it has been one of our priority markets for the Frontier business since inception. We have been looking for the ideal opportunity which has taken some time, but we are extremely optimistic on the development of the Nigerian capital markets and EFG Hermes contributing to its growth EFG expects to complete the acquisition by 31 August 2018, subject to regulatory approval and the satisfaction of certain conditions precedent. What are these conditions? These are due diligence conditions which are normal for any transaction. As with any acquisition there are always legal and financial due diligence ahead of deal closure. This is done during the course of the closing process. Primera Africa operates in four major business areas: Securities Trading, Financial Advisory, Principal Investments and Consumer lending, where do you see the most opportunity in these four areas and what changes can be expected with your acquisition of the firm? We have not acquired the entire company, just the securities trading business. Primera Africa gives EFG Hermes the ideal platform from which to build a world

class securities business and investment bank in Nigeria. Our aim is to expand the business over the first year with key hires on the trading side and substantially increase the market share that Primera currently has. Additionally, we will look to expand the research team in Lagos, adding to our already established No 1 rated frontier research team. We will continue to build on Primeraâ&#x20AC;&#x2122;s established relationships with the PFA and Asset Management community, who are key clients for EFG Hermes. On the investment banking side, we anticipate initially utilizing our frontier markets IB team from Dubai, with an on the ground presence in due course. We are very excited about the opportunities in Nigeria and EFG Hermes is committed to building the leading securities and investment bank in Nigeria. The Nigerian equity market has been on the decline in the past month or so, on account of foreign exits, that has made company valuations even more attractive. Is this the best time to enter or exit the stock market, bearing in mind that elections are barely seven months away? Love for the banking sector We are very positive on the Nigerian market, and in particular the banking sector which remains robust in terms of profitability, and extremely attractive on valuation. We do not see the forthcoming elections as a reason not to invest in Nigeria. Frontier and Emerging markets are suffering from rising interest rates in the US, which has led to massive fund flow reversals. The US plans two more rate hikes this year which may mean more pain for Frontier and Emerging markets, making them less attractive for investors, how is this a good time for EFG to deepen its footprints in frontier emerging markets? Fund flows for EM have certainly been negatively af-

Khalpey

fected, but Frontier Emerging Markets continues to see

interest from asset allocators, with a number of new

funds launching in 2018 and existing investors looking to allocate more to these markets. Our build out into these markets is not predicated on short term opportunities. We see long term growth potential in the markets we have chosen to enter, and our businesses are not only focused on international investors, but also the growing institutional and pension fund assets in these countries. Nigeria and Kenya have seen enormous asset growth in the last few years and this is expected to continue. EFG Hermes has a

very strong retail platform and we hope to introduce these and other products as the market matures. How will your newly acquired FCA license to operate in the UK impact your business? This will enable our recently opened London office to provide advisory services to UK and European institutional investors who are large investors across our markets. The UK presence will also enhance EFG Hermes presence and visibility in this key market.

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Wednesday 01 August 2018

BUSINESS DAY

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NEWS YOU CAN TRUST I WEDNESDAY 01 AUGUST 2018

Opinion â&#x20AC;&#x2DC;I take full responsibility for this decisionâ&#x20AC;&#x2122; Threats beyond

the Press Council Bill

Full text of press statement by Saraki, announcing his exit from the APC

BUKOLA SARAKI Saraki Â is Â the Â Nigeria Â Senate Â President

wish to inform Nigerians that, after extensive consultations, I have decided to take my leave of the All Progressives Congress (APC). This is not a decision that I have made lightly. If anything at all, I have tarried for so long and did all that was humanly possible, even in the face of great provocation, ridicule and flagrant persecution, to give opportunity for peace, reconciliation and harmonious existence. Perhaps, more significantly, I am mindful of the fact that I carry on my shoulder a great responsibility for thousands of my supporters, political associates and friends, who have trusted in my leadership and have attached their political fortunes to mine. However, it is after an extensive consultation with all the important stakeholders that we have come to this difficult but inevitable decision to pitch our political tent elsewhere; where we could enjoy greater sense of belonging and where the interests of the greatest number of our Nigerians would be best served. While I take full responsibility for this decision, I will like to emphasise that it is a decision that has been inescapably imposed on me by certain elements and forces within the APC who have ensured that the minimum conditions for peace, cooperation, inclusion and a general sense of belonging did not exist. They have done everything to ensure that the basic rules of party administration, which should promote harmonious relations among the various elements within the party were blatantly disregarded. All governance principles which were required for a healthy functioning of the party and the government were deliberately violated or undermined. And all entreaties for justice, equity and fairness as basic precondition for peace and unity, not only within the party, but also the country at large, were simply ignored, or employed as additional pretext for further exclusion. The experience of my people and associates in the past three years is that they have suffered alienation and have been treated as outsiders in their own party. Thus, many have become disaffected and disenchanted. At the same time, opportunities to seek redress and correct these anomalies were deliberately blocked as a governmentwithin-a-government had

formed an impregnable wall and left in the cold, everyone else who was not recognised as â&#x20AC;&#x153;one of usâ&#x20AC;?. This is why my people, like all self-respecting people would do, decided to seek accommodation elsewhere. I have had the privilege to lead the Nigerian legislature in the past three years as the President of the Senate and the Chairman of the National Assembly. The framers of our constitution envisage a degree of benign tension among the three arms of government if the principle of checks and balances must continue to serve as the building block of our democracy. In my role as the head of the legislature, and a leader of the party, I have ensured that this necessary tension did not escalate at any time in such a way that it could encumber Executive function or correspondingly, undermine the independence of the legislature. Over the years, I have made great efforts in the overall interest of the country, and in spite of my personal predicament, to manage situations that would otherwise have resulted in unsavoury consequences for the government and the administration. My colleagues in the Senate will bear testimony to this. However, what we have seen is a situation whereby every dissent from the legislature was framed as an affront on the executive or as part of an agenda to undermine the government itself. The populist notion of anti-corruption became a ready weapon for silencing any form of dissent and for framing even principled objection as â&#x20AC;&#x153;corruption fighting backâ&#x20AC;?. Persistent onslaught against the legislature and open incitement of the people against their own representatives became a default argument in defence of any short-coming of the government in a manner that betrays all too easily, a certain

complicit in the subversion of the institution that remains the very bastion of our democracy. I am a democrat. And I believe that anyone who lays even the most basic claim to being a democrat will not accept peace on those terms; which seeks to compromise the very basis of our existence as the parliament of the people. The recent weeks have witnessed a rather unusual attempts to engage with some of these most critical issues at stake. Unfortunately, the discord has been allowed to fester unaddressed for too long, with dire consequences for the ultimate objective of delivering the common good and achieving peace and unity in our country. Any hope of reconciliation at this point was therefore very slim indeed. Most of the horses had bolted from the stable. The emergence of a new national party executives a few weeks ago held out some hopes, however slender. The new party chairman has swung into action and did his best alongside some of the Governors of APC and His Excellency, the Vice President. I thank them for all their great efforts to save the day and achieve reconciliation. Even though I thought these efforts were coming late in the day, but seeing the genuine commitment of these gentlemen, I began to think that perhaps it was still possible to reconsider the situation. However, as I have realized all along, there are some others in the party leadership hierarchy, who did not think dialogue was the way forward and therefore chose to play the fifth columnists. These individuals went to work and ensured that they scuttled the great efforts and the good intentions of these aforementioned leaders of the party. Perhaps, had these divisive forces not thrown the cogs in the wheel at the last minutes,

Unfortunately, Â the Â discord Â has Â been Â allowed Â to Â fester Â unad-Â dressed Â for Â too Â long, Â with Â dire Â consequences Â for Â the Â ultimate Â objective Â of Â delivering Â the Â common Â good Â and Â achieving Â peace Â and Â unity Â in Â our Â country contempt for the Constitution itself or even the democracy that it is meant to serve. Unfortunately, the selfserving gulf that has been created between the leadership of the two critical arms of government based on distrust and mutual suspicion has made any form of constructive engagement impossible. Therefore, anything short of a slavish surrender in a way that reduces the legislature to a mere rubber stamp would not have been sufficient in procuring the kind of rapprochement that was desired in the interest of all. But I have no doubt in my mind, that to surrender this way is to be

and in a manner that made it impossible to sustain any trust in the process, the story today would have been different. For me, I leave all that behind me. Today, I start as I return to the party where I began my political journey, the Peoples Democratic Party (PDP). When we left the PDP to join the then nascent coalition of All Progressives Congress (APC) in 2014, we left in a quest for justice, equity and inclusion; the fundamental principles on which the PDP was originally built but which it had deviated from. We were attracted to the APC by its promise of change. We fought

hard along with others and defeated the PDP. In retrospect, it is now evident that the PDP has learnt more from its defeat than the APC has learnt from its victory. The PDP that we return to is now a party that has learnt its lessons the hard way and have realised that no member of the party should be taken for granted; a party that has realised that inclusion, justice and equity are basic precondition for peace; a party that has realised that never again can the people of Nigeria be taken for granted. I am excited by the new efforts, which seeks to build the reborn PDP on the core principles of promoting democratic values; internal democracy; accountability; inclusion and national competitiveness; genuine commitment to restructuring and devolution of powers; and an abiding belief in zoning of political and elective offices as an inevitable strategy for managing our rich diversity as a people of one great indivisible nation called Nigeria. What we have all agreed is that a deep commitment to these ideals were not only a demonstration of our patriotism but also a matter of enlightened self-interest, believing that our very survival as political elites of this country will depend on our ability to earn the trust of our people and in making them believe that, more than anything else, we are committed to serving the people. What the experience of the last three years have taught us is that the most important task that we face as a country is how to reunite our people. Never before had so many people in so many parts of our country felt so alienated from their Nigerianness. Therefore, we understand that the greatest task before us is to reunite the county and give everyone a sense of belonging regardless of region or religion. Every Nigerian must have an instinctive confidence that he or she will be treated with justice and equity in any part of the country regardless of the language they speak or how they worship God. This is the great task that trumps all. Unless we are able to achieve this, all other claim to progress no matter how defined, would remain unsustainable. This is the task that I am committing myself to and I believe that it is in this PDP, that I will have the opportunity to play my part. It is my hope that the APC will respect the choice that I have made as my democratic right, and understand that even though we will now occupy a different political space, we do not necessarily become enemies unto one another. Thank you. Dr. Abubakar Bukola Saraki, CON President of the Senate

hree years ago, I concluded that there are more threats to the profession of journalism in an essay on â&#x20AC;&#x153;Nigerian journalism and the Cybercrimes Act, 2015â&#x20AC;? in which I raised the alarm about the danger the Act posed to the profession. The Cybercrimes Act 2015 poses a threat to journalists because of its provisions concerning the protection of personal reputation. It turns civil libel into a criminal offence, contrary to existing legislation in the statute books. Libel and slander fall within the tort of defamation. Under defamation law, libel arises when a published material causes damage to the reputation of a victim. The offended party takes the offender to court. He earns an apology, reparation or fees for damage. In Part Three, Section 24, the Cybercrimes Act steps into the territory of libel, otherwise captured in extant laws. It criminalises â&#x20AC;&#x153;message or other matterâ&#x20AC;? sent using computer systems or network by anyone. The offence happens when â&#x20AC;&#x153;he knows to be falseâ&#x20AC;?. It also qualifies the motive as â&#x20AC;&#x153;for the purpose of causing annoyance, inconvenience, danger, destruction, insult, injury, criminal intimidation, enmity, hatred, ill-will or needless anxiety to another.â&#x20AC;? Offences that contain a threat to harm the property or reputation of the addressee would attract incarceration for a term of 10 years andor a minimum fine of N25m.The Cybercrimes Act 2015 creates a situation of double jeopardy. There are now two laws in the Statute books on defamation, one civil and the other criminal. There was no response to the Cybercrimes Act from the Nigerian Press Organisation and its constituent bodies of the Newspaper Proprietors Association of Nigeria, Broadcasting Organisations of Nigeria, the Nigerian Guild of Editors and the Nigerian Union of Journalists. There is still no formal suit challenging the obnoxious provisions of that Act. It is thus refreshing that on the matter of the Nigerian Press Council Act 1992 (Repeal and Enactment Bill 2018) the Guild of Editors has risen to voice critical objections. Well done, in the belief that the complaint was a formal notification to the National Assembly and did not begin and end with a press statement. The NGE objection is the same as in the past. Nigerian journalists have fought the existence of a Governmentsponsored Press Council from time but mainly from 1978. The complaints held despite the Council having within its leadership respected journalists such as late El HadjAladeOdunewu, Prince Tony Momoh. Godwin Omole, a senior journalist, was Executive Secretary. The NGE raises issues with these aspects of the Press

CHIDO NWAKANMA Nwakanma Â is Â a Â Visiting Â Member Â of Â the Â BusinessDay Â Editorial Â Board Â and Â serves Â on Â the Â Adjunct Â Faculty Â at Â the Â School Â of Â Media Â and Â Communication, Â Pan Â Atlantic Â University, Â Lagos. Â Email Â chidon-Â wakanma@gmail.com. Â

Council Bill. They are its attempt to â&#x20AC;&#x153;criminalise journalists and journalism practiceâ&#x20AC;?, to constitute the Council into a court, and to serve as a regulator of both journalism and journalism training, aspects of which lie within the purview of the National Universities Commission and the Nigerian Broadcasting Commission. Objection noted. Now what? The Nigerian media continues to allow a vacuum in media regulation that provides an opportunity for others to intervene. There should be advocacy, negotiation and all the tools in the handbook to shoot down the Press Council Bill. What happens after that though remains the question. There are many threats to the media and the profession of journalism. There are economic threats. There are threats from obnoxious legislation, existing or proposed, and from various angles from Federal to State and Local. Then there are internal threats arising from the poor management of issues around the media, one of which is the ethical environment of practice. Media regulation is imperative. There has always been a need for some form of control. Across the world, the media have taken on self-regulation as the best approach to the challenges posed by its power and influence. Codes of conduct developed in response to this need. In the digital age, media have become even more pervasive, powerful and influential. The potential for damage has grown. Citizens are increasingly in awe nay dread of the capacity of the media to cause harm to persons, institutions, careers and lives. According to a UNESCO study, Codes of ethics serve several functions. They are an essential instrument of media self-regulation. Codes of ethics guide journalists on their role, their rights and obligations and how they can best perform their job.They present a standard against which to assess the work of journalists.Codes are useful for publishers and owners of media outlets, for their protection against legal claims and critics. Codes contribute to the accuracy, fairness and reliability of information, therefore also benefiting readers in general. see conclusion online: www.businessdayonline.com

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