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news you can trust I ** monDAY 01 june 2020 I vol. 19, no 574

Here are 3 steps Nigeria can consider in reopening its economy … in order to protect lives, safeguard livelihoods ENDURANCE OKAFOR

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5 years on, still no ‘light’ to see Buhari’s power sector achievements See story on page 27

he Federal Government, after a 35-day lockdown to contain the spread of the deadly coronavirus, began to gradually reopen the economy on May 4, 2020. The economic pain of the restrictions was becoming acute and unbearable Continues on page 27

At Aregbesola’s Colloquium, stakeholders suggest keys to unlocking mass prosperity in Nigeria - Businessday NG

Inside Zenith Bank emerges ‘Best Bank in Nigeria’ in Global Finance World’s Best Banks Awards 2020 P. 15

Babajide Sanwo-Olu (m), Lagos State governor, flagging off the construction of Lekki Regional Road in Eti-Osa Local Government Area of the state, as part of activities to commemorate his first year in office. He is flanked by (L-R): Folasade Jaji, secretary to the Lagos State government; Aramide Adeyoye, special adviser on works and infrastructure; Obafemi Hamzat, deputy governor, and Oba Saheed Elegushi, Kusenla III, Elegushi of Ikateland.

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NEWS

Why power firms increased monthly bill in April OLUSOLA BELLO

he desire to further exploit Nigerian public has informed the latest crazy bill by electricity companies knowing fully well that there is no regulatory authority that would call them to order. The issue of crazy bills is as long as the privatisation of the electricity companies, however, rather than the problem getting abated, it is on the rise simply because the power firms want to make up for the losses they felt they have incurred for the period under lockdown occasioned by the advent of COVID-19. Of particular interest is the bill for the month of April, which in most cases went up astronomically by about 300 percent. BusinessDay’s interactions with some workers of some of the companies reveal that the major reason the firms decided to up their April bill was just to make up for the presumed losses they have incurred, not minding the consumers have also incurred losses in the period under lockdown. They are trying to make up for the losses they have

incurred from their maximum demand users from small and medium scale entrepreneur, and even household customers who probably they can coerce to pay whatever bill they are given, Emmanuel Olorunfemi, who operates a laundry factory in Ikorodu, Lagos, says. This attitude by the electricity firms is not only outrageous but also a direct opposite of the government plan to alleviate poverty in the country. Gbolahan Adetutu, who operates a provision store in Alapere, a suburb of Lagos under Ikeja Electric, states that his bill was raised from N6,000 to N21, 000. He says he has gone to the area’s customer centres to see if they can reverse the bill but was told to go and pay what he was paying before until when the issue is resolved. A young man who shares his experience on social media states that after several attempts to a get pre-paid meter from Ikeja Electric Distribution Company in Lagos, he was given an outrageous bill that was unrealistic. The young man, named Fisayo in his twitter handle, states that he was given a bill of N34,000 to pay for electricity consumption in

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April. He paid N10,000 and the company still disconnected his power supply. He had to terminate their abusive relationship with him as he told them not to bother reconnecting him to the source of power. He further states that he doesn’t even use electricity that much as he is a bachelor that rarely stays at home. “I will not pay N34,000 for 4 weeks of electricity,” Fisayo says, “N34,000 for only me when I don’t run a bakery house. “It is fraudulent not to give me a pre-paid meter. Despite all my best efforts yet send me an estimated billing worth at least 6 times my billing consumption. This fraud is now well and truly over”. Some Nigerians concerned by this situation also aired their views. Another person, @AyamBash said after Buhari, the other problem of Nigeria is electricity companies, especially; the Discos Electric is the second problem of this country. “Is this not daylight robbery by Ikeja Electric? “Billing someone who doesn’t consume that much electricity N34,000. Nigerian electricity companies are another frustration in this country”, he said.

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NEWS CBN dollar supply to BDCs accumulates to $3.18bn in 2 months lockdown HOPE MOSES-ASHIKE

ollar supply to the Bureau De Change operators (BDCs) by the Central Bank of Nigeria (CBN) has accumulated to about $3.18 billion in two months. This is as a result of the suspension of dollar sales to BDCs following the Covid-19 lockdown. What this means is that the accumulated amount has helped in building the foreign exchange reserves, giving the CBN more firepower to defend the naira. Nigeria’s external reserves have increased by 9.19 percent to $36.49 billion as of May 28, 2020, from $33.42 billion as of April 29, 2020, data from the CBN’s website show. The CBN sells $20,000 to each BDC operator numbering over 5,300 members three times a week - Mondays,

Wednesdays and Fridays. Also, on November 30, 2018, the CBN introduced special intervention of cash dollar sales to the tune of $15,000 to each BDC operator every Thursdays. “It is accumulating in the reserves. It is from the reserves that the CBN sells dollars to BDCs. If it is not selling, it is building back the reserves,” Johnson Chukwu, managing director/CEO, Cowry Asset Management Limited, said. The Monetary Policy Committee (MPC) noted in its meeting last Thursday the improvement in crude oil prices which stood at about $34.8 per barrel as at May 28, 2020. Godwin Emefiele, governor, CBN, said the moderate recovery in crude oil prices would reduce the pressure on the external reserves and government revenue. A dollar is currently trading at N435, which represents

N10 gain for naira when compared with N445 traded on Friday on the black market. The reason for the naira appreciation is increased dollar liquidity and low demand, as currency hoarders are bringing out dollars on hearing the news of the CBN resuming dollar sales to the BDCs. This implies that foreign exchange users will have enough dollars at a reasonable rate to meet their obligations. Chukwu attributes the naira appreciation to the confidence engendered by the CBN governor, who said the reserves had accrued and that the CBN would be in a position to defend the naira. There is low demand for dollars by importers, and in absence of travel, demand has moderated as people are not placing new orders, he said. CBN said on April 29, 2020, that it had made com-

plete arrangements to resume foreign exchange sales to the BDC segment of the market for business travels, personal travels, and other designated retail uses as soon as international flights resume. Expectations are high that the Federal Government may ease border restrictions this week. The Federal Government on March 2020 banned entry to arrivals from 13 of the countries worst affected by the coronavirus epidemic. Chukwu admits that many countries have begun to lift some restrictions on travel but thinks the first thing government needs to do is lift the restrictions in phases. This means that government can lift the restrictions on local flights first and subsequently the International flight. The CBN on April 29, 2020, resumed dollar sales for school fees and Small and Medium Enterprises.

L-R: Bill Pollyn, head of Pollyn chieftaincy houses in Kalibiama Grand Bonny, receiving food palliative from Thompson Emmanuel, director of operations of Eroton E&P, with them is Joshua Mitchell, community affairs manager, Eroton, during the presentation of food palliative by Eroton/NNPC Joint Venture to host communities in Rivers State.

MainOne partners World Bank to deliver connectivity in Burkina Faso SEGUN ADAMS

ainOne, West Africa’s premier connectivity and data centre solution provider, has been entrusted by the State of Burkina Faso, backed by the World Bank, to provide bulk connectivity services to a consortium of operators through the PAV-Burkina Cooperative, for the next three years. Following an international bid to select a preferred operator, MainOne was chosen by the government of Burkina Faso (with financial backing from the World Bank) to provide PAV-Burkina with bulk capacity to nodes in Ouagadougou and Bobo Dioulasso. A landlocked country, Burkina Faso has faced difficulties in accessing world-class connectivity and maintaining ubiquitous broadband internet access due to the lack of infrastructure and the reluctance of major operators to explore operational broadband service delivery models favourable for socio-economic development of the country. To address this challenge, the PRICAO Initiative was created by the Burkina Faso government, in collaboration with a consortium of internet service providers and mobile operators. The purpose of the initiative is to facilitate the creation of virtual landing points as a platform for the extension of broadband network coverage in the country, with a view to improving the quality of connectivity in the region; increase internet penetration and improve the performance of ICT services. In order to set up an in-

dependent and competitive framework for connectivity services, the Ministry of Digital Economy and Postal Services (MDENP) with the support of the World Bank, created a Cooperative Consortium (SCOOP PAVBURKINA). The consortium brings together key electronic service stakeholders to deliver a turnkey project that will provide fibre optic transmission infrastructure between Ouagadougou and Dakola, to be delivered in two phases within a threeyear period. This Cooperative has the huge task of managing and administering the infrastructure judiciously in order to ensure a fair distribution for the various marker players. The World Bank’s $20 million plus support of the PRICAO initiative has enabled the Burkinabe State set up a 200km fibre optic transmission link from Ouagadougou to Dakola. The first phase of the project commenced in 2018, with the initial stage providing capacity in Ouagadougou over three years. Phase 2 of the project will commence in quarter two of year 2020 and will lead to the provision of additional internet capacity in Ouagadougou and Bobo Dioulasso within another three-year period. Main One has been selected to deliver Phase 2 and will provide 10Gbps broadband capacity in Ouagadougou, together with 5Gbps in Bobo Dioulasso. Prior to this, MainOne had been selected in 2019 through a restricted bids process and currently deliver an additional capacity of 2.5Gbps to Ouagadougou to strengthen and secure the capacity initially delivered in Phase I of the project.

4th Mainland Bridge, Lekki Regional Road, OLAM Group contributes N1bn to CACOVID relief fund, state governments, NCDC, NIMR others to commence under Sanwo-Olu JOSHUA BASSEY

agos State government on Wednesday listed the Fourth Mainland Bridge, L ekki Regional Road among key projects that would commence under the administration of Governor Babajide Sanwo-Olu. The state government also reaffirmed the determination to complete some ongoing landmark projects including Agege Pen Cinema flyover, Agric-Ishawo Road and the Lagos-Badagry Expressway before the end of the administration. The special adviser to the state government on works and infrastructure, Aramide Adeyoye, who stated this at a briefing to mark first anniversary of the Governor Babajide Sanwo-Olu’s administration, said these projects were geared

towards enhancing vehicular movement and seamless connectivity across the state. Lagos, Nigeria’s biggest commercial city with a burgeoning population put at about 21 million people facing daunting challenge of infrastructure and traffic jams, all of which impact negatively on ease of doing business and standard of living. The government’s ability to deliver these highly desirable infrastructural projects, especially the long proposed Fourth Mainland Bridge and Lagos-Badagry Expressway with its accompanying light rail, is expected to give the state leverage in terms of ease of movement. The state government recently short-listed 10 companies from the list of 32 others that expressed interest in the construction of the Fourth Mainland Bridge.

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But aside these key projects, Adeyoye said the government in the last one year had taken the construction of 37 roads and carried out repair works on 354 other roads in various part of the state to ease traffic flow. She said the government recently commissioned network of 31 roads in Ojokoro local council development area and the completed AradagunImeke-Ajido-Iworo-Epeme road (Phase II) in Badagry, Fadipe/Salami/Eyiowuawi/ Odubanjo in Shomolu and Akinwunmi in Mushin. She said that infrastructure upgrade remained a critical development vehicle for realising the Babajide Sanwo-Olu led administration’s T.H.E.M.E.S. agenda and the greater Lagos vision of Africa’s model smart city and the government would not shy away from it.

DANIEL OBI

lam Group, one of the country’s largest food and agri-business companies, has contributed N1 billion in cash and kind to support the fight against COVID-19 in Nigeria. A cash donation of N600m was made to the private sector-led Coalition Against COVID-19 (CACOVID), N300m of foodstuffs to states across the country and N100m of medical supplies to the Nigerian Centre for Disease Control (NCDC), the Nigeria Institute for Medical Research (NIMR) and the Lagos State government, the group said in a statement. This donation by Olam, through its group of companies, is an expression of its commitment to contrib-

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uting to the national efforts to cushion the spread of the COVID-19 pandemic through support of health facilities and medical equipment, particularly in the area of testing, isolation and treatment, as well as the provision of food supplies. “We believe as a major private sector agro and manufacturing player in Nigeria for the last 31 years, we need to educate and create awareness among the indigent and vulnerable in our society by complementing government efforts. Our donation of cash and food relief will support the collaborative response to combat COVID-19 which has altered our health, well-being and food security,” Mukul Mathur, country head of Olam Group Nigeria, said while announcing the do@Businessdayng

nation. CACOVID has acknowledged Olam’s contribution as being very significant and timely, saying it would boost CACOVID’s efforts to put together an effective national response to the pandemic in Nigeria. The cash donation to CACOVID builds on support already provided to states across the country with food supplies ranging from Mama’s Pride Rice, Crown Pasta, Tasty Tom Noodles, eggs, OK biscuits, amongst others. Additionally, Olam has donated medical kits such as masks, medical overalls, infrared thermometers and protective goggles to frontline medical staff at the NCDC, the Nigerian Centre for Medical Research as well as the Lagos State government.

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NEWS Chamber seeks review of obsolete Nigeria-India trade pact to grow $10bn trade volume HARRISON EDEH, Abuja

resident of Abuja Chamber of Commerce and Industry (ACCI), Adetokunbo Kayode, has called for a review of the obsolete trade agreement between India and Nigeria in order to expand current $10 billion trade volume between both countries. Kayode made the call on Tuesday in Abuja while speaking as a panellist at the webinar meeting tagged: “India - Nigeria Business Promotion, Challenges and Opportunities - Post Covid-19,” emphasising that in a rejigged relationship, winwin situation should be the watchword. “We have enjoyed a good economic relations with Nigeria and it is estimated that $10 billion investment in the development of the Nigeria

economy, which are channelled into development and commercial banks. “The Covid-19 disease pandemic has impacted negatively on the relationship between the two countries, especially in one of the key areas where Nigerians travel to India, which is medical tourism. “Some of us attended schools that Indians were teachers. For us to move forward, we need to rejig the already existing obsolete 1973 Trade Agreement between Nigeria and India. In doing so, we have to bear in mind that Nigeria has several more areas that it can do business with India. “Nigeria is ready to use Indian technology. India should also help Nigeria to diversify its economy into agriculture, mining, manufacturing amongst others,” Kayode stated.

He recalled that in his participation in Great Gujarat gathering in 2019, it was discovered that several Indian companies were rather using Indian firms in Nigeria to carry out activities in a manner that tend to undermine local legislations, particularly in the area of trading in retail and distribution services. On the challenges in the trade relations, he pointed out that the absence of Indian manufacturing hubs in Africa in general and Nigeria was particular as well as intrusion into local businesses bordering on retailership and distribution services needed to be addressed to strengthen the ties. Earlier in his remark, the Indian High Commissioner to Nigeria, Abbay Thakur, reminded participants that Nigeria was one of India’s biggest trading partners for several years.

NDDC 2019 budget expires in days without any single project execution due to delay IGNATIUS CHUKWU

iger Delta Development Commission (NDDC) says its 2019 budget of about N300 billion would elapse on May 31, 2020, without executing any single project therein, all due to budget approval delays and other intrigues at the National Assembly. According to the acting managing director (chairman of the Interim Management Committee), Kemebradikumo Daniel Pondei, the hard copy of the budget was sent in April, 2020, thus, making it impossible to advertise any project as required by law within six weeks at least. For this reason, Pondei lamented that the Commission would hardly touch the budget because there was no time to act and no time to follow due process. In an interaction with the

press on Tuesday, May 26, 2020, the MD said the 2020 budget would start the same rat race and it may be till middle of 2021 before it would be approved and also dumped. The National Assembly seems to constitute 50 percent of obstacle to the NDDC, he said, saying some persons hide in the parliament to commit all manner of havoc, saying if nothing was done, the NDDC could continue to lie waste while individuals would continue to loot the place. He also said the place has been turned to honeycomb by politicians. He said the NASS stifles the Commission in three ways; one is by delaying the budget and rendering it non implementable. The second is by bastardizing the budget by cutting amounts on subjects to hand over to others. The thirds, he said, is by massive budget padding. He said in the 2019 budget, almost 400 items

were added. “I could not recognise the budget we went when it came back.” He said the rule did not allow the parliament to alter a budget beyond five per cent, but wondered why the NASS writes its own budget and hands down to the Commission to implement. “They adjust the budget by 1000 per cent”. A case in hand, according to him, is the provision of N1.32 billion sent in the 2019 budget but when it came back, the NASS approved a mere N100 million for the counterpart funding of an international partnership in Agric. “How do we go to IFAD and tell them we have only N100 million instead of N1.32 billion as agreed. How will they bring their own counterpart fund?” The worst case scenario, he lamented, is that the lawmakers forced the Commission to pay their contract debts and after that, they ordered stop in paying any further debts.

NNPC silent on state of origin, contract staff as it reveals 6,621 nationwide staff HARRISON EDEH, Abuja

igerian National Petroleum Corporation (NNPC) was conspicuously silent as it disclosed it currently has 6,621 staff, both at its headquarters and across all its subsidiaries, division and offices nationwide. The corporation was notably silent on the states of origin of the staff and the number of contract staff it currently engages in the discharge of its duties and operations, while disclosing further that it has 13 divisions/Strategic Business Units nationwide. A report, contained in a document, is part of NNPC’s report of compliance to the Extractive Industries Trans-

parency Initiative’s (EITI) Open Data requirements, reveals that 81.7 percent of the corporation’s workforce, comprising 5,410 individuals, are male, while 1,211 are women, representing 18.3 percent of its total staff strength. In addition, the document points out that the three moribund refineries — Kaduna, Port Harcourt and Warri refineries — have 1,898 staff, representing 28.7 percent of NNPC Group’s total workforce. Analysing NNPC Group’s staff distribution by occupation, the document shows that 1,869 staff, comprising 28.2 percent of its total workforce are involved in operations engineering across all the Divisions and Strategic Business Units (SBU); folwww.businessday.ng

lowed by human resources, with 818 staff, comprising 12.35 percent of its total workforce; while 684 staff are Health, Safety and Environment officers, representing 10.3 percent of its total workforce. Finance, Accounts, Audit, Tax and Insurance staff across all its divisions and SBU are 605; commercial staffers are 506; general engineering staff are 466; supply chain management staff, 337; information technology personnel are 301; medical staff are 204; leadership staff are 196, while NNPC Group’s geosciences staff are 142. Others are: public affairs staff 108; petroleum engineering staff 74; legal personnel 55, and well engineering staff 48. https://www.facebook.com/businessdayng

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An empty seat for Koleade Adeniji Abayomi, SAN; OON – a gifted orator with a sense of humour

Bashorun J.K Randle

his is an excellent opportunity to put to test the thesis of Edward De Bono, a Professor at Cambridge University, the visionary who conceived the principle of “Lateral Thinking” (as opposed to Linear Thinking) – in dealing with challenging situations and making the right choices. You have to think outside the box. In addition to his numerous talents and sterling endowments, Kole was also a gifted orator. At the lecture he delivered on: “Federalism: Myth or Reality - The Nigerian Experience” at the Yoruba Tennis Club, Onikan, Lagos. He spoke for one and a half hours ex tempore without once referring to any notes or Teleprompter. He held the very distinguished audience spellbound. He did the same thing when he delivered the “The Law May Not Always Be Justice” Lecture at the Law School. In spite of the advanced age of quite a number of legal luminaries in the audience, nobody dozed off. At the public lecture Abayomi delivered at the Law School on “Succession” he was simply phenomenal. He waxed lyrical. It was a feast fit for scholars. Much of his presentation was on “Adebajo versus Adebajo” He then delved into KPMG /Arthur Andersen/ Akintola Williams versus Bashorun J. K. Randle. The climax was Trustees of Musical Society of Nigeria (MUSON) versus Bashorun J. K. Randle!! At the valedictory dinner in honour of Justice (of the Supreme Court) Anthony Anagolu at the Law School, it was very gracious of Abayomi (chief

host and Director-General of the Law School) to insist that I as the President of The Institute Of Chartered Accountants Of Nigeria (ICAN) should sit at the top table right next to the erudite judge and his wife. Before the evening was over, Anagolu whispered to me that as a mother of 10 children she belonged to a special class in her village/town in the East who were entitled to wear elephant tusks around their legs as confirmation of their superlative achievement in making babies!! Shortly after the dinner, Kole accosted me at The Metropolitan Club and confided in me his frustration and anguish over the obduracy of the government regarding land belonging to his family (Taiwo Olowo) at Broad Street/ Tinubu Square, Lagos which had been compulsorily acquired by the government for the construction of The Central Bank Of Nigeria and The Ministry Of Finance. According to the outcome of his research, the government had similarly compulsorily acquired “The Love Garden “ which belonged to J. K. Randle – ostensibly for public purpose only to hand it over to the Musical Society of Nigeria (MUSON) a private entity. Hence, the legal and moral position had converged to establish that where property compulsorily acquired by government (or bequeathed to government) is no longer being used for public (or the intended) purpose, it should revert to the estate / family of the original owner. Therefore, having regard to the 1978 Land Use Act, and the demolition of both Chief J.K. Randle Memorial Hall and Dr J. K Randle Swimming Pool by the government, the invader/trespasser and its bulldozers and caterpillars are clearly on the wrong side of morality, justice and the law. Another matter that intrigued Kole Abayomi was why The Ministry of Justice and The Administrator-General (Public Trustee) of Lagos State would not transparently and diligently account for the disbursement of huge donations of N100 million each from the Estate of late Chief J. K. Randle

(my father) who was a Christian to two Moslem schools: Ahmadiyya College, Agege and Ansar-ud-Deen College, Isolo as well as two Christian schools: C. M.S. Grammar School and Holy Cross School, Lagos for the development of sports and education. Even more baffling is that none of the beneficiaries has ever disclosed what amounts were actually handed over to them or what they did with the funds. Amazing. My Dad’s expectation was that by following in the footsteps of his father, Dr. J.K. Randle, his noble gesture would create goodwill especially as those who would rule Nigeria in the future (after his death at the age of 47 on 17th December 1956) would come from diverse backgrounds without necessarily being familiar with power and wealth or subscribing to the ideal that along with privilege comes huge responsibilities – generosity, empathy, compassion, justice and integrity. Chief J.K. Randle really believed that many others would emulate his noble gesture. To the best of my knowledge, nobody has replicated his genuine concern about the wellbeing of the underprivileged, the down trodden, the oppressed and the under-class. On the contrary, what we are contending with are animosity, hostility, vindictiveness, mendacity and treachery as the reward for sacrifice and benevolence. What a raw deal. I must also place on record my eternal gratitude to Kole for his unflinching support during my campaign to be elected as the President of St. Gregory’s College Old Boys’ Association Worldwide. It was his considered opinion that it is precisely that delicate freedom of association and unabridged rights as well as Doctrine of Necessity that are prescribed and protected in the 1979 Constitution!! Kole also had a great sense of humour. One of his favourite stories was about the occasion when Her Majesty Queen Elizabeth II of England invited members of her Privy Council (the highest honour in the realm) for a meeting at Buckingham Palace, London. Kole’s father Kofo Abayomi being

‘

To the best of my knowledge, nobody has replicated his genuine concern about the wellbeing of the underprivileged, the down trodden, the oppressed and the underclass. On the contrary, what we are contending with are animosity, hostility, vindictiveness, mendacity and treachery as the reward for sacrifice and benevolence

a member of the Council duly attended. Ahead of the meeting, high tea was being served when one of the Queen’s most senior advisers announced that Her Majesty would join them in fifteen minutes (exactly at the appointed hour). However, protocol required that all the Privy Councillors should rise to their feet as the Queen made her entrance. Kole’s father beckoned to the Queen’s adviser and let him know that it was an abomination for an African chief of the status of Babasale of Lagos to rise from his seat to greet a younger lady regardless of her status. The penalty would be the demise of the young lady within seven days!! This alarming message was duly discreetly conveyed to the Queen. To the utter astonishment (and bafflement) of all, when Her Majesty the Queen was ushered in, she went directly to where Kofo Abayomi was seated and insisted that he must remain on his seat!! Kole was not extravagant. However, he was not averse to the occasional grand gesture as he demonstrated when he sponsored a trip by late Oba Adeyinka Oyekan, the Kabiyesi of Lagos along with his wives and some of his White Cap Chiefs to Paris and London. He was the perfect host and he took care of all their expenses. In similar fashion, he took his entire family on an unforgettable trip to Dubai going by the following snippet from “ The Punch” newspaper of 1st July 2017: “I am 77 years old now, so I have toned down in most of these things. Most times I just swim in my pool at home. I have eleven grandchildren. When I was 75 years old, I took all my children, their spouses and my grandchildren to Dubai for two weeks, that is about 23 of us and that is the sort of thing that I like. I have a picture in my house that shows the 23 of us, there is nothing more memorable than that.” J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services. Email: jkrandleintuk@gmail.com

Some simple lessons amid the expert opinions

n these depressing times we look for reassurance from specialists and experts that a “new normal” lies ahead. Doctors, scientists, behavioural analysts, health economists, political scientists, macroeconomists and risk students are enjoying a degree of visibility far beyond what they have previously known. Yet we are not reassured because the experts, like the rest of us, are operating in unknown territory. SARS and MERS, both respiratory illnesses, have been and gone but they did not have a global impact. Experts are struggling and disagreeing with one another. Whenever we arrive at the postCOVID world with a vaccine that is widely available, they will have the material for many academic treatises. Was it right to avoid a lockdown like Sweden and Ethiopia, albeit for different reasons? Having imposed lockdown, on what grounds should a government have started to ease the restrictions? The medics could analyse the effectiveness of Madagascar’s herbal drug for the prevention and cure of the virus. How would a country league table of excess deaths look? Our favourite questions would be how can we best avoid a next time and, if there is to be one, how can we be best prepared for it beyond the obvious steps of securing stockpiles of medical and safety equipment? Returning to the COVID world, we offer a layman’s view on what African governments may have got right. Africa is set for its first reces-

sion in 25 years. At this point deaths from the virus per head are running well below other continents. We can say that those economies most integrated within the global economy through international travel and tourism, South Africa and Cape Town in particular being good examples, are vulnerable. Egypt falls into this category but its response has been helped by a tradition of centralized, often military, government. We are looking for governmental and societal factors. A smallish population helps of course but it appears that Senegal has benefited from a functioning system of local government, lessons learnt from Ebola, and a strong research capacity deployed to develop cheap test kits and produce ventilators. Faith groups have been supportive. In these circumstances government policies make limited impact unless its citizens buy into the agenda and demonstrate civic responsibility. Anecdotal evidence suggests that Senegal ticks this box. Donald Kaberuka, former president of the African Development Bank and an AU envoy, has also singled out Kenya, Rwanda and Côte d’Ivoire for praise for their resilience in the face of the virus. Another success could be Ethiopia, not least because it has a population of 110 million. In mid-May it had recorded a total of about 700 cases of COVID-19. The government has kept it simple. It decided against a lockdown and has built its strategy around a countrywide www.businessday.ng

network of community health employees to ‘track, test and trace’. Millions of text messages have been sent to stress the importance of handwashing and social distancing. Rather than close its airport, the government introduced temperature checks for arriving passengers. Rather than ground its national airline, it has converted some of its aircraft for cargo and secured new business transporting medical equipment around the world. From its limited resources, the government has targeted funds on the manufacturing and other export sectors. The relative success of the policies can be traced to the effectiveness of government. Ethiopian history can be instructive. Never genuinely colonized, power has been centralised, with long periods of authoritarianism. The Imperial order was followed by more than a decade of a pro-Soviet regime under President Mengistu Haile Mariam, which was toppled in turn by force by a coalition led by the late Meles Zenawi. The latter was a darling of the World Bank and the leading light in the emergence of the “developmental state” that has presided over a long period of double-digit growth and dragged millions of people out of absolute poverty. (Rwanda under President Paul Kagame can be put into the same category.) The people of Ethiopia seem more likely to buy into the programme of their government than counterparts in many countries. Some might say that they have not tasted the fruits of

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Gregory Kronsten

Western-style democracy. This is correct. More significant in the context of fighting the virus in our view, however, is that they are prepared to align themselves with official thinking and the give the government the benefit of the doubt. We could talk of civic responsibility or duty, which has clearly enhanced the government’s delivery of its COVID-19 policies. For a comical exercise in make-believe duty, we recall the institution of salongo practiced on Saturday mornings in Zaire (DRC) under President Mobutu Sese Seko: the idea was that citizens cleaned the area in front of their homes and did not go out onto the roads out of gratitude for their full and happy lives made possible by their president and government. Kronsten is the head, macroeconomic & fixed income research at FBNQuest

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Growth concerns take centre stage as MPC signals markets with rate cut

Patrick Atuanya

he Monetar y Polic y Committee (MPC) of the Central Bank of Nigeria (CBN) cut its key Monetary Policy Rate (MPR) to the lowest in four years last week as it tries to pivot to growth and away from its inflation fixation over the past four years. Of the 10 members of the monetary policy committee who attended the meeting, seven voted to cut the rate to 12.5 percent from 13.5 percent, Governor Godwin Emefiele said in a briefing broadcast online on Thursday. The rest of the panel favored even more aggressive easing, with two voting for a 150 basis-point reduction and one for 200 basis points. That’s a major turnaround from March, when the decision to hold was unanimous. The CBN retained the Cash Re-

serve Ratio (CRR) at 27.5 percent and also left the Liquidity Ratio (LR) at 30 percent. So why is the CBN taking such drastic reversal of actions from 2 months ago, despite the still elevated level of inflation in the country? One answer would be that the threat of an economic depression and need to stimulate broad based growth, currently outweigh any negatives that would come from higher inflation expectations by market participants. The International Monetary Fund (IMF) estimates the Nigerian economy will contract by 3.4 percent this year because of the coronavirus and falling oil prices. Some deceleration in economic activity has already been captured by official data. Growth in the first quarter of 2020 increased by 1.87 percent year on year (YoY) in Q1 2020, compared to 2.55 percent YoY growth in Q4 2019. Services and Oil sector GDP posted growth of 3.5 percent and 5.1 percent YoY respectively in Q1. The services sector however should see steep contraction in Q2, as a result of the lockdowns enacted in Lagos, Abuja, Ogun, Kano, Kaduna, Port-Harcourt, Aba and Onitsha, which are the major hubs of industry and population centers in the country. The Oil sector growth in Q1 also suggests crude oil production averaged 2.07 million barrels per day (mbpd), higher than average of

2.00mbpd in Q4 19 and 1.99mbpd in Q1 19. That oil sector growth will also come to a halt in Q2, due to the cuts enacted by OPEC+ and low demand as a result of diminished global economic activity as most of the world enacted lockdowns to fight the coronavirus. It must be noted that the MPR itself is a weak transmission mechanism tool for CBN monetary policy and as such the biggest thing the CBN has succeeded in doing is signaling markets of its thinking and of possible additional policy levers it can pull to achieve its aims in coming months. An obvious one would be to cut the cash reserve ratio (CRR) for Banks, which is currently set at 27.5 percent of deposits. That would serve to free up trillions of Naira sitting Idle at the CBN for possible onwards lending by Banks. Some banks have in the recent past complained about excessive CRR debits by the CBN and it would make sense for the regulator to take a look at easing some of the tight money policy it has undertaken through the CRR. Last month, the CBN debited N1.47 trillion from banks as additional reserves for missing CRR and loan-to-deposit thresholds. Currently the country has one of the highest CRR in the world with the 27.5% CRR in Nigeria more than 10 times that of South African banks and six times their Kenyan counterparts.

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It must be noted that the MPR itself is a weak transmission mechanism tool for CBN monetary policy and as such the biggest thing the CBN has succeeded in doing is signaling markets of its thinking and of possible additional policy levers it can pull to achieve its aims in coming months

One obvious worry would be the possibility that excess naira in the system would stoke inflation, which has been above the CBN’s target range of 6 percent to 9 percent for five years. Nigeria imports most of its machinery, plant and equipment used in manufacturing goods as well as Premium Motor Spirit (P.M.S) used as energy for most households. Because crude oil accounts for about 90 percent of exports, it means that the current slide in oil prices has seen dollar liquidity disappear and attendant devaluation of the naira in the official and black markets. The CBNs dollar reserves fell to a low of $33.4 billion last month but have since risen to $36.4 billion as at May 27, as a result of an emergency $3.4 billion IMF loan to the country. Emefiele said on Thursday Nigeria could escape a recession thanks to fiscal and monetary measures and “if concerted efforts are sustained to stimulate output.” A bigger problem for the CBN however would be the structural impediments to growth in Africa’s largest economy. Decrepit infrastructure, low levels of financial intermediation and inadequate health facilities, means the impact of the Pandemic may be worse than expected, despite the best efforts of the CBN. Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Ideas for a new Nigeria: The question to rule all industrial policy questions

ECONOMIST

(third in a series of five volumes)

f you had to pick one factor which is correlated with almost all periods of significant growth around the modern world, it would be productivity growth. From the industrial revolution in Western Europe to the rise in incomes in North America to the slow but steady growth in the Nordic countries to the rapid rise of Japan, the Asian tigers, and more recently China, to the advancements in Chile. Almost every case of sustained economic growth is associated with productivity growth. In fact, you would struggle to find any country that has witnessed sustained economic growth without productivity growth. With the exception of the few who find enough of something in the ground. But what is productivity growth? What is productivity? First, it does not mean producing more. This is something that many of our current policy makers seem to misunderstand. You can actually produce more and have reduced productivity. Productivity is the amount produced given a certain set of inputs. It is all about how well you are able to combine some inputs to produce some output. For instance, if a farmer used to produce 10 tons of tomatoes on one hectare of land and that farmer gets access to an extra hectare but only produces 18 tons, that farmer has produced more but productivity has actually declined. If that

farmer managed to produce 12 tons on that one hectare then productivity has gone up. All other things remaining equal. If a pattern cutter used to cut fabric for ten shirts everyday but then changes techniques and now cuts fabric for 12 shirts a day, then that is productivity growth. Economists have learned a lot about what kinds of things positively influence productivity growth. The first of these is innovation. This goes without saying. If you invest time and effort into figuring out how to do things better, that typically helps you do things better. The second is market efficiency and competition. How easy is it for new business to join an industry and compete? How easy is it for old firms who cannot compete to die and have their resource reallocated to other productive areas? How easy is it for capital to be reallocated? How easy is it for labour to shift away from less productive ventures to more productive ventures? Needless to say, market disruptions such as bans on competitors or absence in export markets or the presence of monopolies focused on domestic markets all tend to reduce productivity growth. The third factor is infrastructure and that should be self-explanatory. The fourth is the institutional arrangement. The governance of businesses and the economy serves as one the key pillars of productivity growth and encompasses things from the www.businessday.ng

monetary policy framework to the justice system. The final key factor is education but that deserves a whole column on its own so stay tuned. What factors do not actually aid productivity growth? Many things don’t matter but two are worth mentioning here. The first is import restrictions or bans. They typically do not increase productivity. There are specific instances when they are clearly temporary with sunset clauses and when there is robust internal competition where import restrictions can be useful. In general, they tend to do nothing for productivity growth. The second factor which tends to not impact productivity is government grants such as tax credits and direct loans. Again, there are instances such as when they are directed at specific productivity enhancing activities such as research and development, or when they are targeted towards export firms. In general, though, they make no difference when it comes to productivity. I mentioned these two factors which do not positively influence productivity growth because they have been the corner stone of our industrial policy in the last decade or so. If you could summarize our industrial policy into a simple phrase it would be “restrict imports and funnel money to preferred firms”. Given the evidence from experiences around the world, it is no surprise that we

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NONSO OBIKILI

continue to stumble along without any kind of sustained growth. If we really want to promote sustainable growth then every single industrial or agriculture policy has to pass this simple litmus test: does this policy increase productivity growth. If it doesn’t then there is no need really. And of course, the answer to the litmus test should not depend on who is proposing the policy but, on the evidence, to support it. Evidence based on credible published research or on a credible theory of change. Every policy comes with its risks of failure for sure. But in theory at least it needs to pass the litmus test. Dr. Obikili is the chief economist at BusinessDay

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Presidential chief of staff: Gambari is a global icon, but can he a local hero? global Perspectives

OLU FASAN

brahim Agboola Gambari’s recent appointment as the Aso Rock chief of staff is a shot in the arm for President Buhari’s government. It has given the government a much-needed stardust. This is so because the appointment is the only weighty and undisputedly meritocratic one that President Buhari has made since he assumed office in 2015. Over the past five years, President Buhari’s administration, which marked its fifth year in power last Friday, on 29 May, has been run by a powerful but unaccountable kitchen cabinet, a bunker of close confidants, known as cabal, instead of the formal but lightweight, supine and ineffectual cabinet. Both the powerful inner circle and the mediocre first-and-second term cabinets were chosen for their utter loyalty to the president or their roles in his party’s electoral fortunes. In 2015, Buhari defended the lopsided composition of his inner circle thus: “These are people who have been with me through trying times”, adding: “What then is the reward for their dedication and suffering”. As for his cabinets, he said last year that he didn’t know most of his first-term ministers before he appointed them, describing them “strangers”. He then vowed regarding his second term: “This time around, I’m going to be quite me”, adding: “me in the sense that I will pick people I personally know.” But who did he pick? Well, politicians, who, even now, are more interested in scheming about the 2023 general elections than doing their current job. Cicero, the Roman orator, said that a country must be run by its brightest and

best. Governing a country is about making the right decisions, the right policy choices, and, in doing so, every leader needs the best people, the best advice. Unfortunately, President Buhari wanted a government of the most loyal, not the best; a lightweight cabinet, not a heavyweight one. As a result, over the past five years, he has run a very lacklustre and uninspiring government, whose machine, the presidency, has been utterly messy and dysfunctional. But a government of Lilliputians, of ministerial doormats, who cannot challenge the president’s wrong orthodoxies but simply take their steers from his preferences, predilections and body language, is bad for good governance and will not command the respect of the international community and foreign investors. Sadly, that has been the problem with the Buhari administration over the past five years; it simply lacks intellectual giants, technocratic linchpins and people of international clouts that could give the government any semblance of weight. You could hardly point to anyone in its first-term cabinet and now in its secondterm one with demonstrable technocratic ability and international stature. Which is why Gambari’s appointment as the president’s new chief of staff is significant. It bucks the ugly trend of appointing loyal but incompetent people, and represents a breadth of fresh air. The appointment attracted a lot of euphoria and public interest in large part because of Gambari’s personality. Of course, it was also due to the legacy of his predecessor, the late Abba Kyari, who had untrammelled power and was seen as the de facto president! Recently, it was reported that Kyari made several appointments and approvals without the president’s knowledge or permission! But few believe that Gambari would indulge in such power grab or empire building. In fact, the view of some commentators is that he would bring maturity and good temperament to the job and probably undo the damage that Kyari allegedly did. Of course, as Nigeria’s Ambassador/Permanent Representative to the UN for 9 years and later UnderSecretary General and special adviser to four UN Secretary-Generals, Gambari is undoubtedly one of Nigeria’s brightest

and best, who will use his world-class bureaucratic skills to reorganise the government machine and bring order to the chaotic presidency. The responsibilities of the president’s chief of staff are described in Aso Rock’s website as “managing the President’s schedule and correspondence”. That job description plays into the narrative that the chief of staff is the president’s “gatekeeper.” But President Buhari doesn’t need a gatekeeper anymore; he has isolated himself from Nigerians enough. As a Chatham House report noted in 2019, Buhari is “an aloof and disengaged leader, who is walled off from Nigerians”. Yet, leadership is about visibility, being seen by those you lead. Bashorun J K Randle, a distinguished business leader and columnist for this newspaper, while hailing the appointment of Gambari, said (BusinessDay, 13 May 2020): “For us in the private sector, it is an aberration to think of the chief of staff as a gatekeeper”, adding: “To succeed as head of an organisation, you need to keep the gate even more open, so the leader is able to hear and see all that is happening around him.” Of course, he is right. As a senior Government adviser in the UK, I experienced first-hand how British prime ministers and ministers maintained an open-door policy with the private sector, without being captured. They recognise businesses as the wealth and job creators and dominant taxpayers. But in Nigeria, government-business relationship is frosty and perfunctory, with access to the government restricted to those with political connections. So, one of the areas where Gambari must make a difference is in steering President Buhari away from his strange insularity. He must not be the gatekeeper who shields Buhari from Nigerians but one that, as Chief Randle said, keeps Buhari’s gate more open so he can engage with Nigerians, including the private sector. Yet, it would be a waste of Gambari’s enormous talent to see him only as a “gatekeeper”, a glorified office and diary manager. He must also be the president’s chief strategist. As he himself said, he hoped to give “a very loyal, dedicated and efficient service to the

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He must not be the gatekeeper who shields Buhari from Nigerians but one that, as Chief Randle said, keeps Buhari’s gate more open so he can engage with Nigerians, including the private sector. Yet, it would be a waste of Gambari’s enormous talent to see him only as a “gatekeeper”, a glorified office and diary manager

president in terms of his priorities and legacy.” The key word there is “legacy”. But given that President has barely three more years in office, without anything he can so far claim as an enduring legacy, he is really in a race against time to make a difference. So, what legacy could Gambari help his new boss secure? Well, the answer must be political restructuring. If President Buhari could help transform Nigeria’s fundamentally flawed politico-governance structure, the main cause of its political instability and underdevelopment, he would earn an indelible legacy for himself. The question is whether Gambari, who is widely hailed for the constructive role he played as delegate to the 2014 National Conference, can persuade President Buhari to support the process of properly restructuring of Nigeria. If he can, he would secure an indelible legacy for Buhari and also for himself! Of course, Gambari is not without a tarnished past. His defence of the despotic General Sani Abacha’s hanging of Ken Saro Wiwa and his other Ogoni environmental activists in 1995 by describing them as “common criminals” was condemnable. Interestingly, the most powerful rebuke came from Femi Adesina, President Buhari’s senior media adviser, who wrote a damning article in 2008 in which he said “Gambari enslaved himself to please his paymasters” and described him as a “fawning bootlicking groveller”. In life, the key moral question is: “Whose side are you on?” Sadly, Gambari was on the wrong side of history during one of Nigeria’s darkest moments. But now, Gambari has a chance to redeem himself. He is a global icon, who has been given an intractably difficult local challenge of helping to overhaul the government machine in Nigeria. If he can transform President Buhari’s presidency and steer him towards building a national consensus for restructuring Nigeria, he will be not just be a global icon, which he already is, but also a local hero. I wish him well! Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Meeting compliance obligations in unusual times

here is no doubt that we are living in unusual times. The COVID-19 pandemic has impacted various facets of life and changed the way things are being done. A lot of changes have been witnessed in day to day operations of businesses across the world. Some businesses were ground to a complete halt while some carried out skeletal operations to within permissible limits. There are still compliance obligations which businesses are expected to meet regardless of the current state of things. These obligations include tax payments, filing and reporting of information, holding of statutory meetings, court appearances, etc. It is undeniably true that with the current state of things, businesses may not be able to meet these obligations for obvious reasons ranging from financial constraints to safety concerns. Therefore, there is a need for necessary adjustments to be made to enable businesses meet their obligations in this regard. Some regulatory bodies and government agencies have rolled out guidelines and concessions regarding compliance for this period. This article will attempt to look at some of these areas where measures have been put in place to enable companies meet their compliance obligations in these present times. Tax obligations The Federal Inland Revenue Service (FIRS) has given some concessions to tax payers and

they are as follows; Value Added Tax (VAT): The time for filing VAT and withholding tax has been extended from 21st to the last working day of the month, following the month of deduction. Companies Income Tax (CIT) returns: The due date for filing CIT returns has also been extended by one month. Unaudited accounts: Businesses may now file returns using unaudited accounts but must subsequently submit audited accounts within two months after the revised due date of filing. Interests and penalties: The FIRS will also be waiving interests and penalties on outstanding tax debts if businesses pay their debts in full on or before 31st May, 2020. Late returns penalty: This has been waived for businesses that pay early and file later. They can also email the supporting documents to the designated email addresses or submit hard copies to the offices. Suspension of field audits, investigations and monitoring: The FIRS has suspended its regular Field audits, investigations and monitoring exercises till further notice. Corporate governance obligations Annual General Meetings: The Corporate Affairs Commission (CAC) released guidelines on holding of Annual General Meetings of Public companies by proxy. Highlights of the guidelines are as follows; Obtain approval of the CAC; Ordinary Business of an AGM as www.businessday.ng

provided in S.214 of the Companies and Allied Matters Act (CAMA) shall only be discussed at the Meeting. In the event that there are any special business which is considered very urgent and necessary, the application letter shall provide the justification and the nature of the special business; Notice is to be sent to every member of the Company in accordance with the provisions of CAMA and evidence of same is to be shown to CAC; All the members shall be advised in the notice for the meeting that in line with the Government directive on physical distancing and the permissible limits on the maximum number of people in every gathering due to the Covid-19 pandemic, attendance shall only be by proxy with list and particulars of persons willing to act on their behalf as proxies for them to select therefrom. The Companies will bear the cost for issuing the notices as well as the stamp duties which shall be prepaid by the Company. The proxies do not have to be members of the Company; The Articles of the Company or provision of CAMA shall be relied upon with regards to a quorum for the Meeting. However, for the purpose of determining quorum, each duly completed proxy form shall be counted as one. Board, committee and management meetings The Nigerian Stock Exchange (NSE) released some guidance notes on holding of virtual Meetings by businesses. The key points from

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ULOAKU EKWEGH the guidance notes are as follows; The Articles of the company or its board, committee, and management Charters or Terms of Reference should provide for and authorise virtual meetings; There must be adequate technology/equipment to enable a hitch free virtual meeting; The Agenda must be precise and circulated to all stakeholders. It must be strictly adhered to; The company secretary should work with the technology and information security team/personnel to come up with means of protecting virtual meetings from being hijacked, infiltrated, or manipulated. Note: The rest of this article continues in the online edition of Business Day @https:// businessdayonline.com/ Ekwegh is a private legal practitioner with over 15 years legal experience in law firms and as in-house counsel. She is also a fellow of the Institute of Management Consultants. Email: uloekwegh@yahoo.com

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EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

COVID-19 has disrupted business as we know it Opportunity for “big rethink”. To re-imagine path to “next normal”

DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule NEWS EDITOR Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

he impact of the novel coronavirus, COVID-19, on sectors of the Nigerian economy and ways to manage this crisis has dominated discourse in the last three months. However, prior to the pandemic, Nigeria suffered some underlining challenges which have further exposed her status as the giant of Africa as a mere mirage. These fundamental limitations have also played in determining the severity of the current crisis on the economy. The COVID-19 pandemic has revealed basically gaps in the society, businesses and government which explains years of snailpaced growth and development. Proactive economies are focusing on closing up these gaps to unlock economic potentials and ultimately development. Even as the Nigerian government and businesses respond to the COVID-19 crisis and execute reopening strategies, leadership and foresight will also be required to shape the path to the “next normal” reckons McKinsey, in a recent report.

One path will be to accelerate digital investment and transformation in Nigeria. The emergence of COVID-19 pandemic has disrupted activities, hence the need for a paradigm shift to digital transformation. Impressive growth in the telecommunication and fintech space gives an insight to the growth potentials a digital-driven Nigerian economy could unlock. The adoption of digital processes in every sector of the economy will boost sectoral output, plunge cost and impact remarkably on the bottom line of firms, giving them better valuations in the capital market. Also, Nigeria has largely been import dependent, with little activities in her export space. This has largely pressured down the value of the naira against the dollar given the high demand from importers and manufacturers. The response of the central bank was the restriction of foreign exchange for 43 items and the closing the land borders in a bid to lessen demand and stimulate local production. This hasn’t fixed the problem. Many domestic manufacturers have raised concerns over how less competitive and below standard

their products are in the international market. This points to the fundamental challenge of low productivity and competitiveness in the Nigerian manufacturing sector. As a result, growth in the sector has been unimpressive in the last 4 to 5 years. The sector has barely recorded a 2 percent growth across quarters in the years under review. Fixing this will require efforts from the fiscal and monetary authorities as well as businesses within the sector to tackle longstanding barriers to industrialisation and cooperate to seize new opportunities. Nigeria cannot rely on doing business as usual to come back from the brink. The aim will be to strengthen the sector’s competitiveness through consolidation and innovation while reshaping manufacturing with a focus on self-reliance. In the words of Ngozi OkonjoIweala, former Finance Minister of Nigeria and one of the African Union’s COVID-19 special envoys, “this crisis has shown that globalisation may have led us to over rely on global supply chains. There will be a big rethink worldwide – not just because of politics, but also

because of countries’ ability to meet their basic needs.” Nigeria must develop stronger supply chains locally to become more competitive globally. Lastly, another path to Nigeria’s development will be the formalisation of her informal sector. The Nigerian informal sector is a major contributor to the Nigerian economy, accounting for a significant portion of employment and GDP. The IMF says the sector accounts for some 65 percent of the nation’s GDP. In other words, we can afford the collapse of one or two large corporates, but not the informal sector. The COVID-19 pandemic has put the survival of many small businesses under threat and may result in job losses for many. The consequences of COVID-19 present an opportunity to accelerate the formalisation of micro, medium and small enterprises – and so improve their productivity, access to finance, and integration into the supply chains of larger businesses and the public sector. This will also improve the tax income of the government when these businesses are captured in the tax net.

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NEWS

PAC Capital announces management changes

anagement of PAC Capital Limited is pleased to inform of the following management changes within the company. Humphrey Oriakhi, formerly the head, Specialised Finance Division, has now assumed the position of managing director with effect from May 1, 2020. He will be supported by Babatunde Oyekunle as the deputy managing director. Due to his invaluable contributions over the last years, Eric Okoruwa, erstwhile managing director

Dapo Abiodun, governor, Ogun State, (3rd r), in audience with Abdulmajid Ali (2nd l), the deputy inspector-general of police, who was on a courtesy visit to the governor in Abeokuta. The DIG was accompanied by Kenneth Ebrimson (l). commissioner of Police, Ogun Command. NAN

Works start on $2.8bn gas pipeline as Oilserv moves pipes to sites OLUSOLA BELLO

igeria is finally on the verge of unlocking the huge economic benefits arising from its natural gas endowment as the construction of the NNPC-sponsored Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline project by a leading indigenous EPC contractor, Oilserv Limited, is almost set to take off. The company, according to sources close to it, has achieved significant progress in a short time including ongoing detailed engineering design, topographical and geotechnical surveys. It has already commenced haulage and stacking of line pipes in preparation to commence construction activities to some strategic sites for the $2.8 billion project. The company has been awarded the engineering,

procurement, construction, installation, testing, and commissioning of the first segment of the 614km x 40-Inch gas pipeline, which is from Ajaokuta to mid-way between Abuja and Kaduna. For many years, the country had been hindered by absence of gas transmission pipelines in it bid to harness its abundant gas reserves for provision of gas to generate electricity and stimulate rapid industrialisation using gas as feedstock for fertilisers, ammonia and other petrochemical applications. The commencement of the gas pipeline project has caused for renewed optimism in the execution of the Nigeria Gas Master Plan. Oilserv was awarded the engineering, procurement, construction, installation, testing, and commissioning of the first segment of the 614km x 40-Inch gas pipeline, which is from Ajaokuta

to mid-way between Abuja and Kaduna. The second segment has been awarded to another company. Commenting on the project, Mele Kyari, group managing director of NNPC, he said: “The AKK project is key to resolving the power deficit challenge of the country. Its multiplier effect on the economy and provisions of jobs will be unprecedented. NNPC will give all necessary support to the contractors to enable them deliver the project within time and within budget.” Chairman of Oilserv Limited, Emeka Okwuosa, pledged that his company would leave no stone unturned to partner the NNPC and make the dreams of 200 million Nigerians come true by delivering the AKK project to global quality and standards. “The capability of Oilserv has been honed in the course of successful delivery of landmark EPC con-

Zenith Bank emerges best bank in Nigeria in Global Finance World’s Best Banks Awards 2020

enith Bank plc has emerged as the Best Bank in Nigeria in the recently released Global Finance Magazine World’s Best Banks Awards 2020. The awards, which was published in the May 2020 edition of the Global Finance Magazine, was based on the performances of the banks in their respective regions and countries over the period from January 1 to December 31, 2019. Global Finance’s “World’s Best Banks Awards” are recognized amongst the world’s most influential banking/ finance and corporate professionals as the most coveted and credible awards in the banking industry, with winners chosen in more than 150 countries across Africa, AsiaPacific, Central & Eastern Europe, Latin America, the Middle East, North America and

Western Europe. Founded in 1987, Global Finance regularly selects the top performers among banks and other providers of financial services and the awards have become a trusted standard of excellence for the global financial community. Commenting on the recognition, the group managing director/chief executive of Zenith Bank, Ebenezer Onyeagwu, said, “This award is a clear demonstration of the bank’s market leadership, occasioned by our superior product offerings, best-in-class service and top-of-the-range technology which create value for our teeming customers.” The bank has clearly distinguished itself in the Nigerian financial services industry through superior service quality, unique customer experience and sound financial inwww.businessday.ng

dices. The bank, with a knack for setting the pace and raising benchmarks, is a clear leader in the digital space with several firsts in the deployment of innovative products, solutions and an assortment of alternative channels that ensure convenience, speed and safety of transactions. As a testament to its resilience and market leadership, Zenith Bank announced an impressive result for the year ended December 31, 2019, with profit after tax (PAT) of N208.8 billion, achieving the feat as the first Nigerian Bank to cross the N200 billion mark. In the recently released Q1 2020 unaudited financial results, the bank also recorded an improved result over the corresponding period in 2019, with gross earnings rising by 6% to N166.8 billion and profit before tax (PAT) growing 3% to N58.8 billion.

tracts such as lot B of the 48-inch OB3 gas pipeline system,” Okwuosa said. The optimism and hope that this development represents is a clear elixir that is surely needed by the entire nation at this time, he said. The AKK project is a very unique project, not just what it would achieve, which is to be able to move gas to Northern Nigeria and create availability of energy to drive industries and create job opportunities. Secondly, he said, “The project is significant because it is the first time a project of such magnitude is being done as EPC and Finance. It is not like the previous projects where NNPC and other international oil companies (IOCs) award you a project, which you go ahead and execute and then collect your money. In this case, we are providing the money. The total value of the money for the two lots comes to $2.8 billion.

at PAC Capital Limited will remain within the Group as an executive director overseeing the Financial Services and Health Care verticals. While this elevation comes with bigger responsibilities, we are confident that Okoruwa will replicate the successes recorded during his time as managing director at PAC Capital. “To all our clients, we want to assure of our unwavering commitment in ensuring a smooth transition as we continue to serve you,” according to the company in a press release at the weekend.

Relief coming to adjoining towns as Lagos flags off construction of Lekki regional road JOSHUA BASSEY

otorists and residents in towns and c o m mu n i t i e s bordering Eti-Osa-Lekki corridor of Lagos can get relief from traffic congestion, as construction works have begun on the proposed Lekki regional road. At a ground-breaking ceremony held at the project site on Saturday, the Lagos State governor, Babajide Sanwo-Olu, described the development as “a manifestation” of his administration’s commitment towards improving socio-economic activities on the Lekki-Epe axis by the provision of supporting infrastructure. With the flag-off of the construction works, Sanwo-Olu is seen starting his second year of his four-year tenure with infrastructure development drive. The 8.75-kilometre road, being handled by Messrs Hi-Tech Construction Company Limited, will link

Lekki-Epe Expressway at Victoria Garden City (VGC) junction to the Freedom Way in Eti-Osa. The road, according to the state government, is a precursor to the proposed Fourth Mainland Bridge that will hopefully take off from that axis. It is expected to further open up the Lekki area and bring relief to the highly congested corridor, as it will serve as alternative route. When completed in the next 24 months, the regional road will also change the entire landscape of Eti-Osa and improve journey time for commuters. “With the flag-off of the construction of this critical road infrastructure, we are keeping the promise we made to Lagosians. As a government, when we give commitments to our people, we do not shy away from it. Our word is our bond. Today’s event is a manifestation of our pledge to address infrastructural challenges on the Eti Osa axis.

Siemens report gives damning verdict on power generation in-country OLUSOLA BELLO

iemens has given a damning verdict on power generation in Nigeria in its Technical and Commercial report, where it stated that the subsector will continue to require subsidies and face harsh financing conditions for new projects. The Technical and Commercial report on the Nigeria power sector, dated May 9, 2020, based its verdict on the fact that there is insufficient collection of revenues, high technical and commercial losses and below optimal performance of the existing power plants fleets. It states that deficits of the power generation sector will result in multi-billion dollar economic losses. The report explains that removing the ‘Aggregate Technical and Commercial Collec-

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tion’ (ATC&C) losses will result in positive earnings of the power generation sector after only a few years lead time. “Still, without additional expansion of generation capacity, accumulated earnings will only become positive after 2028,” the report states. Further to electrifying Nigeria, it states that ATC&C will lead to a sound business environment in the power generation sector that will benefit local companies as well as attract additional foreign investment into Nigeria. According to the report on consumption of electricity, it states that while 13 gigatwatts (GW) of power generation capacity is available, only 3.4GW is reaching final customers (households, commercial and industrial users) on average, with a peak operating capacity of 5.2GW achieved in 2018 (versus 5.1GW in 2016). It described the existing @Businessdayng

assets as partly idle and do not actively participate in the energy system, stating that removing severe bottlenecks within the transmission and distribution grid is necessary to allow free flow of electricity. “This includes rehabilitating defective connections of key substations to the existing control centre in order to improve the operation of transmission network and to unlock its potential. “On this background, the Federal Government of Nigeria and Siemens have defined the Nigeria Electrification Roadmap, which is the outcome of series of workshops with the Federal Ministry of Power, Nigerian Electricity Regulatory Commission (NERC), and Transmission Company of Nigeria (TCN) to shares thoughts and ideas on the power sector situations and align on critical solutions,” according to the report.

Monday 01 June 2020

BUSINESS DAY

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Monday 01 June 2020

BUSINESS DAY

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Monday 01 June 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Will the ECB expand its bond-buying programme?

Market Questions is the FT’s guide to the week ahead FT REPORTERS Will the ECB expand its bondbuying programme? nvestors will be paying close attention to the European Central Bank’s monetary policy meeting on Thursday, focusing on economic growth projections for the eurozone and any extension of the bank’s bond-buying programme. In April, the ECB indicated that the euro-area economy could contract by between 5 and 12 per cent this year, depending on the success of coronavirus containment measures. Economists at ING expect the eurozone to shrink by 8 per cent in 2020, and countries such as Germany, Italy, Spain and France all anticipate big budget deficits as they seek to counter the economic effects of Covid-19. Investors will also be watching what decision the ECB takes on its €750bn asset-purchasing programme, which many believe will still be needed even if European leaders finalise a €500bn EU recovery fund proposed by Germany and France and agree to the €250bn in extra firepower sought by Brussels. Known as PEPP, the ECB’s bondbuying programme is designed to hold down borrowing costs for Europe’s increasingly indebted governments, but it is likely to be exhausted by October at the current rate of purchases. The market, therefore, is expecting the size of the programme to be increased: the questions are when, and by how much. Analysts at Nomura are forecasting it will rise on

European Central Bank, led by Christine Lagarde, meets on Thursday, while US job figures for May are announced on Friday. Iron ore, meanwhile, has surpassed $100 a tonne. © FT montage; Adrian Petty/ECB/dpa; Getty Images; Bloomberg

Thursday by at least €250bn and possibly up to €500bn. Further complicating the issue is the ruling in early May from the German constitutional court that effectively limits the participation of the Bundesbank in some ECB assetpurchasing programmes. The court did not rule on PEPP, but investors will be looking for indications that the ECB is mindful of a potential legal challenge. Philip Stafford Will easing US job losses boost markets? The release of US employment data for May is expected to show an easing of job losses following a spike in April, offering encouragement for investors that the world’s largest economy is recovering from

the Covid-19 crisis. Non-farm payrolls data for April revealed that 20.5m Americans had lost their jobs, pushing the unemployment level to 14.7 per cent — its highest since the second world war. Job numbers for May, out on Friday, are expected to record a further fall of 8m, according to economists surveyed by Bloomberg. Slowing job losses could add fuel to the rally in the US stock market, which has regained more than a third of its value from its low two months ago in the depths of the coronavirus sell-off. The number of Americans collecting unemployment benefits fell by 3.9m to 21.1m for the week ending May 16, the US Department

of Labor said last week. The drop was better than economists had expected and comes despite a further 2m Americans applying for benefits, pushing the total over the past 10 weeks beyond 40m. Ian Lyngen, head of US rates strategy at BMO Capital Markets, said “certain sectors of the labour force are starting to get back to work”, adding: “This does not preclude a second round of job cuts in the higher-earning brackets, but it is encouraging that some of the jobs lost to Covid-19 are returning.” Richard Henderson Can iron ore stay above $100 a tonne? Iron ore has had a turbocharged run over the past month, rising more

than 18 per cent and breaking out of the narrow range between $80 and $90 per tonne where it has traded for most of the year. On Friday, the steelmaking ingredient, regarded by many as the second most important commodity after crude oil, broke above $100 for the first time since July 2019. Two factors have been behind the recent advance: weaker-thanforecast supply from Brazil, where shipping patterns have not recovered as usual from the rainy season; and expectations that China, the world’s biggest iron ore consumer, would unleash a huge stimulus package to boost growth. But there are reasons on both sides why many traders and analysts reckon it will be difficult for iron ore prices to stay in three figures. On the supply side, weekly shipments from Brazil have picked up in recent weeks, say analysts and traders, and the measures announced during China’s National People’s Congress last week did not match the lofty expectations. While Beijing revealed plans to issue an extra Rmb1.6tn ($224bn) in local government bonds in 2020 to ramp up infrastructure investment, this is unlikely to boost steel production from already elevated levels. Moreover, its announcement of stimulus for the real estate sector — the largest driver of steel use in China — was limited. “Market expectations have become a little more cautious since t h o s e a n n ou n c e m e nt s,” sa i d James Campbell, analyst at consultancy CRU. “This is a stimulus package aimed at getting the economy back on course and not creating bubbles.”

Protests rage across US cities over George Floyd’s death Minnesota deploys more National Guard troops as other local authorities impose curfews LAUREN FEDOR AND CLAIRE BUSHEY

rotests swept across dozens of US cities on Saturday as demonstrations triggered by the death of an unarmed black man, George Floyd, while in police custody raged throughout the country. Angry crowds clashed with police as the authorities in several large cities, from Los Angeles to Philadelphia, imposed curfews in a bid to stem the chaos. In Washington, men and women chanted, “Hands up! Don’t shoot!”, a rallying cry from the early days of the Black Lives Matter movement, as they gathered outside the White House, with some trying to push past security barricades. In Minnesota, the centre of the protests following the death of Floyd on Monday, Tim Walz, the governor, sent in the National Guard in the biggest domestic deployment in the state’s history. The unrest erupted after a video showing a white policeman kneeling on the neck of Floyd on May 25 for several minutes went viral. The 46-year-old, who was unarmed, died shortly afterwards. His death

reminded many Americans of similar high-profile cases involving black men and women dying at the hands of white police officers. The Pentagon has taken the rare step of putting active-duty members of the US Army on standby for possible deployment to Minnesota. President Donald Trump told reporters on Saturday that “we have our military ready, willing and able if they ever want to call our military”. “We can have troops on the ground very quickly. They have to be tough, strong and respected,” Mr Trump said. “Because these people, this Antifa, there’s a lot of radical left bad people, and they’ve got to be taught that you can’t do this,” he said, referring to claims that anti-fascist protesters had joined the demonstrations. The Minnesota National Guard said the state would deploy nearly 2,500 guards on the streets of Minneapolis on Saturday night, more than three times the number on duty on Friday night. The number could swell to 10,000 in coming days. Mr Walz, a Democrat, said that in the Twin Cities of Minneapolis and St Paul peaceful protests in response to the “tragedy” of Floyd’s death had www.businessday.ng

given way to violent demonstrations and looting that were a “mockery of pretending this is about George Floyd’s death or inequities or historical traumas to our communities of colour”. “The situation in Minneapolis is no longer in any way about the murder of George Floyd. It is about attacking civil society, instilling fear and disrupting our great cities,” Mr Walz said. He warned that the unrest would get worse, despite the imposition of curfews. Congresswoman Ilhan Omar, whose congressional district includes Minneapolis, also urged restraint. “We can be angry,” she said. “We can take it to the streets, we can blow up the phones of people that represent you, but what we cannot do is start a fire that can take lives.” William Barr, the US attorneygeneral, echoed Mr Trump on Saturday, saying: “Groups of outside radicals and agitators are exploiting the situation to pursue their own separate and violent agenda.” He added: “In many places, it appears the violence is planned, organised and driven by anarchic and left extremist groups, far-left extrem-

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ist groups, using Antifa-like tactics, many of whom travelled from outside the state to promote the violence.” Earlier on Saturday, Mr Trump, who has attracted criticism for his handling of the Floyd case, lashed out at demonstrators, including some outside the White House. “They were just their [sic] to cause trouble,” he said on Twitter. “The Secret Service handled them easily,” he said, describing the federal law enforcement agents as “totally professional, but very cool”. On Friday, Mr Trump provoked anger when he suggested the military could fire on protesters, saying in a tweet: “When the looting starts, the shooting starts.” The post was hidden by Twitter, which said it violated the platform’s rules on glorifying violence. Floyd died after Minneapolis police received a 911 call about the attempted use of a forged banknote. He was arrested by four police officers, was handcuffed, and held face down on the street with a knee on his neck, until he became unresponsive and was moved on to a stretcher. The officers were sacked by the Minneapolis police department this week. Derek Chauvin, one of the officers, was taken into custody @Businessdayng

on Friday and charged with thirddegree murder and manslaughter. Mr Chauvin’s lawyer did not respond to a request for comment on Friday. Floyd’s death has prompted rare public interventions from corporate America. Mark Mason, Citigroup’s chief financial officer, said on Friday: “Even though I’m the CFO of a global bank, the killings of George Floyd in Minnesota, Ahmaud Arbery in Georgia and Breonna Taylor in Kentucky are reminders of the dangers black Americans like me face in living our daily lives. “Racism continues to be at the root of so much pain and ugliness in our society — from the streets of Minneapolis to the disparities inflicted by Covid-19,” Mr Mason added. “As long as that’s true, America’s twin ideals of freedom and equality will remain out of reach.” More than two dozen business leaders in Minnesota, including Best Buy chief executive Corie Barry and Land O’Lakes chief executive Beth Ford, signed a letter saying: “It is hard to watch the video of the event as it is clearly evident Mr Floyd was not treated with the dignity and respect he was due as a human being.”

Monday 01 June 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

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US pension plans warned they will run out of money by 2028 Seven struggling public funds could have a severe impact on state finances as their funded ratio drops CHRIS FLOOD

he weak financial condition of seven US public pension plans threatens to deplete their assets by 2028, leading to severe risks for the living standards of thousands of American employees and retired workers. Many US public pension plans had not fully recovered from the 2007/08 financial crisis before coronavirus struck, triggering turmoil across financial markets. The correction in the US stock market has increased the long-term structural problems across the entire US public pension system, particularly for the weakest funds. “Public plans with extremely low funded ratios in 2020 may face the risk of running out of assets in the foreseeable future if markets are slow to recover,” said Jean-Pierre Aubry of the Center for Retirement Research at Boston College, which carried out a detailed study on the plight of US public pensions. More than 320,000 members of the New Jersey Teachers and Chicago Municipal public pension plans face the biggest risks as severe cash outflows are draining

Thousands of employees and retired workers in the US are facing uncertainty © Bloomberg

the assets of these two schemes. A slow recovery for the US stock market could result in Chicago Municipal’s funded position falling from 21 per cent this year to just 3.6 per cent by 2025. This would leave assets to cover just three months of the fund’s retirement payments, according to CRR’s analysis. New Jersey Teachers is also burning through cash, with its

funded position projected to decline from 39.2 per cent to 23.2 per cent over the next five years. By that time, New Jersey Teachers would have assets to cover 19 months of retirement payments. Mr Aubry did not expect any US public pension plan to run out of money over the next five years, but more severe problems could then emerge. If stock market weakness persists, the public pension

plans of Kentucky and Providence along with Dallas Police and Fire, Charleston Fire and Chicago Police could all end up with less than three years of retirement benefit payments saved as assets. The Chicago Teachers fund, which is also bleeding cash, might have enough assets to cover a little more than three years of benefit payments. Thomas Aaron, a senior credit officer at Moody’s, the rating

agency, said that the unfunded liabilities of Chicago’s pension funds would continue to grow for more than a decade even if investment return targets were met. “Chicago has particularly high pension risks. The city has built up very large unfunded liabilities through years of very weak pension contributions,” said Mr Aaron. The crunch point of a plan running out of assets is known as the “depletion date”. After this point, a US plan would move to a so-called “pay-as-you-go” arrangement where retirement benefits are paid solely from contributions by employers and employees. “Reaching an actual depletion date can have a severe impact on a state’s finances because a sudden transition to a pay-as-you-go plan may result in costs [benefit payments to retirees] that far exceed recent employer contributions,” said Les Richmond, an actuary at Build America Mutual, a New York-based bond insurer. Mr Aubry noted that pay-asyou-go costs for both New Jersey Teachers and Chicago Municipal were more than 50 per cent higher than their contributions, emphasising the high costs that both states would face if assets in these vulnerable plans became exhausted.

Pro-Kremlin entrepreneur buys leading Russian business newspaper Media executive Ivan Eremin to acquire Vedomosti after censorship row sinks alternative deal MAX SEDDON

little-known Russian media executive with close commercial ties to the state has bought leading business newspaper Vedomosti after a deal to sell it to different buyers collapsed in a row over censorship. Staff at Vedomosti say the eleventh-hour appearance of Ivan Eremin to rescue the sale is unlikely to ease their standoff with the paper’s new acting editor, whom they claim banned writing on topics that the Kremlin considers taboo. The clash over Vedomosti, according to its reporters, shows the Kremlin wants to increase its control over what little remains of the nominally independent media. In recent years, several other outlets have been sold to Kremlin-friendly owners and have installed pliant editors, prompting staff to quit en masse. A consortium led by publisher Demyan Kudryavtsev took over Vedomosti — co-founded and formerly co-owned by the FT and the Wall Street Journal

Staff at Vedomosti say the eleventh-hour sale is unlikely to ease their stand-off with the paper’s acting editor © Andrey Rudakov/Bloomberg

— in 2015 after Russia limited foreign ownership of media to 20 per cent. Mr Eremin’s purchase “looks like the manifestation of the unnamed figures who are really behind the official buyers of Vedomosti and look at the publication as an instrument of influence, not a business”, the paper wrote in an editorial after the deal was announced on Friday. “Examples of editorial staff resisting pressure from owners . . . are rare exceptions that www.businessday.ng

prove the rule: a change in ownership means editorial policy will make a sharp turn or a smooth drift in the direction of more loyalty to the authorities and state companies.” Vedomosti’s reporters have been in open revolt since March against Andrei Shmarov — who was appointed acting editor as part of the failed deal to sell the newspaper — after they said he began censoring articles in favour of the Kremlin and staterun oil company Rosneft.

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The row with Mr Shmarov in effect torpedoed the sale to publisher Konstantin Zyatkov and Arbat Capital chairman Alexei Golubovich, according to people involved in the talks: each side accused the other of appointing him, prompting Mr Golubovich to drop out in April. Vedomosti then teamed up with three other Russian outlets to investigate the consortium that bought the paper in 2015. Vedomosti’s parent company owes about Rbs2bn ($28m) through a complicated structure of debt to the Russian Regional Development Bank, a lender owned by Rosneft, according to the joint report. Rosneft said the company played no role in the sale or Mr Shmarov’s appointment. Mr Zyatkov said on Friday that he had also decided against buying Vedomosti and had instead brought Mr Eremin into the deal. “Buying the publisher outright would be too risky in current conditions” during the coronavirus pandemic, he said in a statement. “You have to be prepared to risk spending more than the purchasing price.” @Businessdayng

[This] could be a milestone in destroying what remains of the free media Person involved in the talks Mr Shmarov in April denied being influenced by the Kremlin, saying: “I make all my decisions at my own discretion.” He also said he was not “at war” and hoped to repair his relationship with staff. Mr Eremin — whose FederalPress agency has won hundreds of advertising tenders with the government and state-run companies, including Rosneft, according to government data — did not say how much he had paid for Vedomosti or whether he had taken on its debt to Rosneft’s bank. The FT has approached Mr Eremin for further comment. “[The sale to Mr Ermin] could be a milestone in destroying what remains of the free media. They’ll destroy the business, including the subscriber base,” said a person involved in the talks to sell Vedomosti. “It’ll be hard to restore it, and you can’t do it from abroad, so the screws will be tightened further.”

Monday 01 June 2020

BUSINESS DAY

Start-Up Digest

In association with

Covid-19: How Aba fashion designers turn adversity into opportunity GODFREY OFURUM, Aba

ashion designers in Aba, the comm e rc i a l n e r v e centre of Abia State, are among several groups that are negatively affected by lockdowns occasioned by the coronavirus pandemic. Fashion designers in the city have had to stop production as most of their patrons come from other parts of the country, especially Lagos, Abuja, Port Harcourt, and other parts of the West coast. Up till now, the traders who depend on Aba fashion designers for their clothing needs cannot access Aba owing to inter-state restrictions. This has resulted in loss of jobs and income for over 20,000 artisans engaged in tailoring and fashion designing in the city. The good news, however, is that the designers with their ingenuity have turned their adversity into opportunity. They are now taking advantage of the scarcity of barrier masks (face masks) in Nigeria to launch into the production of what is now known as madein-Aba personal protective equipment (facemasks and hazmat suits). The made-in-Aba PPEs are now in high demand in the country as they help in the fight against the dreaded coronavirus pandemic. This new line of business has also kept the artisans in business, thereby reducing hunger and unemployment in Abia State. BusinessDay checks revealed that Aba tailors are producing for Abia State Government and also for individuals. It is important to note that Aba tailors supplied 400,000 units of face masks to Danjuma Foundation, while the military is to take delivery of a truckload of face masks from the industrial city. The masks are meant for Abuja and the Defence Industries Corporation of Nigeria (DICON) in Kaduna. BusinessDay also gathered that some state governments have shown interest in sourcing PPEs from Aba. Klotplanet Global Lim-

ited, a garment manufacturing outfit, which spearheaded mass production of facemasks and personal protective equipment (PPE) in Aba, is appealing for the state government’s support to sustain production. Obinna Anoruo, manager, Klotplanet, in an interview with BusinessDay in Aba, explained that the company branched into protective kits for Covid-19 production to meet the needs of Nigerians and reduce the cost of imported ones. He stated that the production costs of the kits and masks were high, which explained his call for government’s support to reduce the cost of production. He further said that since demand for the masks would reduce after Covid-19 infections, only government support could make the venture a viable business for them to remain in it. “After Covid-19, we will like to sustain the production of these masks and PPEs, especially for hospitals and eateries. “That is why we need to align with government; we need its support to produce and supply to hospitals which will continue to need the kits after coronavirus infections ceases,” he said. Anoruo noted that Klotplanet had been in operation for more than 20 years, creating garments of different www.businessday.ng

kinds for its customers. “We ventured into the production of PPEs and facemasks to make them available to the people at affordable prices,” he said. He noted that Klotplanet produced masks in a pack of 50 pieces, sold for N7,500, stressing that the company had the capacity to produce up to 500, 000 pieces daily. “Our facemask product has a hydrophobic dense layer (water-resistant) and a second filter layer, which is combined to make the protective mask,” he said. “We sell a pack of 50 pieces at N7, 500, because the cost of production pushes the price that high, but if government can help in terms of cost of raw materials, the cost of production

will reduce.” He noted that the price of threads and other materials had also risen. He explained that the production of facemasks and PPEs, which had become a new business line for the outfit, would not be a oneoff thing but sustained after Covid-19 if he would get funding. On his part, Johnson Obasi, who specialises in suit making, explained that he ventured into PPE production to avoid staying idle, but suddenly found it very interesting as it had attracted clients from different parts of the country. “I’m a regular tailor that specialises in suit making. However, Covid-19 pandemic came and affected my

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line of business drastically. And because I don’t want to stay idle, I decided to go into production of facemasks since it was in high demand. “The patronage has been encouraging, but we need more patronage because our workforce is strong. I produce 500 pieces of facemasks, daily. “My clients come from all over Nigeria, especially Lagos and Onitsha, because I produce customized facemasks for some cooperate bodies. “Since the state government has made facemasks compulsory, we need financial assistance from government to acquire modern machines to produce seamlessly. “You can see the ma-

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chines we are using as against what the Chinese use. If we have better machines, our production quality will improve. We will also produce more and employ more hands, thereby helping government to reduce unemployment in the country. “It’s a pity that some persons are still moving about unprotected. I appeal to them to try and get facemasks. Yes, it’s not a fashionable thing and nobody is comfortable with it, but it’s for our own safety. It goes beyond fashion. It’s a matter of life and death,” he advised. To ensure that these products meet set standards, the Standard Organisation of Nigeria (SON) has said it is working with designers in Aba to ensure that their PPE products meet standards. According to Oluyomi Lad-Alabi, state coordinator, SON, “Our mandate is to ensure that whatever is coming out from any quarter complies with our regulations, because we have our guidelines. It is our own little contribution in combating this invisible enemy, the coronavirus.” He said the concern of the SON was primarily to ensure that the qualities of PPEs coming out from Abia State meet its standards. “I’ve sent samples of some of the products from Aba to our laboratory for test, but from my own observation, the products look okay. But we have to subject them to scientific proof to see the level of their compliance. “But so far, the ingenuity of Aba artisans is awesome. I’ve seen some that look okay, but that does not really mean that they have passed the test until the test result is out. “Aba tailors are wonderful. The only thing I noticed was that most of the sizes they started with were for small faces, but that issue has been taken care of as they now have different sizes for different face circumferences. “Most of the earlier barrier masks were small, because they were manufactured in China where the circumference was so small. They were not made for large faces, but we are beyond that level now,” he further said.

Monday 01 June 2020

BUSINESS DAY

Start-Up Digest Emmanuel Alade: Fashion designer, face mask producer Josephine Okojie

n recent times, the demand for Africaninspired facemasks needed to contain the spread of the novel coronavirus has been on the rise. Many brands have leveraged the current opportunity to create well-designed facemasks that support Nigeria’s onslaught against the deadly virus. Among these designers is Emmanuel Alade, CEO and creative director of Kodasilver Couture, a fashion brand that specialises in unisex clothing and training. Since the coronavirus outbreak in Nigeria, the young entrepreneur has produced a number of facemasks and distributed them to remote communities within Lagos State for free as part of his efforts to curb the virus spread. “The affliction of the mother earth by the deadly Covid-19 pandemic is not new any longer as we all know, and it’s our collective efforts as humans that will

help curb the spread of the virus,” Emmanuel says. “As a brand into clothmaking and a proud Nigerian, as part of our efforts to help curb the spread, we decided to go into mask production and supply for free to our customers, friends, and families,” he adds. Alade started his facemask production using available raw materials in his storeroom, but he now sources locally online to produce the face mask. “At first we made use of our available materials which we had at hand before the lockdown, but as time went on we had to source online and they got delivered by courier services,” the geographer-turned-entrepreneur says. He says the business derives joy in helping to curb the spread of Covid-19. “We cannot say exactly how much has been expended on the production of face masks as we derive joy in helping curb the spread by our gesture. So we do it as an act of kindness,” he explains. The business, which

Emmanuel Alade

started six years ago and registered in 2018, was established by Emmanuel and his wife, Aderoju. The entrepreneur was inspired to establish his business by his mother who was also a fashion designer.

Abhulimhen: Providing online marketplace for entrepreneurs Josephine Okojie

urit Abhulumhen is the founder of Spangler Market and Vent Sq, an online market place for Nigerians. Purit was inspired to establish this platform owing to the constant frustration experienced by SMEs when trying to sell their products. She was prompted to set up an online market platform where people could sell and buy anything and get them delivered to their choice locations. “I started planning states’ trade fairs to support my clients to easily access the markets with their products while also getting more visibility,” she says. “But at the end of the day we concluded that we can do better without spending money unnecessarily just to get buyers to come and buy,” she explains. “In the quest for searching for something different, the idea of an online market place was conceived,” the young entrepreneur adds. Since Abhulumhen launched her online trade fair in October 2019, she has had over 300 vendors showcasing their products and has held three editions of it. She urges buyers to take

Purit Abhulumhen

advantage of the opportunity to shop at discounted prices. She recently held an online trade fair that attracted many buyers. T h e c o m m u n i c a t o rturned-entrepreneur has had over 148, 000 SMEs participate in the online fairs held by her organisation. The entrepreneur started this business small from her savings and those of family and friends. The business has expanded since starting and has continued to grow its return on equity consistently. Answering questions on how she was able to convenience vendors to showcase their products, she says it was quite difficult at first as most on them found it strange. “When I introduced it to vendors, it sounded weird. But I had to teach them how to go about it and also teach buyers how to visit vendors’ stands from the comfort of www.businessday.ng

He has over 20 years’ experience in fashion and designs, having started sewing as a child. “Well, I will say I have been in this business since I was a child because my late mother was a fashion

designer,” he says. “I grew up with the fashion business but years after her demise and after I graduated from school I took it as a very serious deal and established my outfit in 2014. It was registered in 2018,” he notes. Currently, his business has over 12 employees and several apprentices who also work as part-time employees. He says the business plans to expand its fashion outfit in the short run and have its showrooms across strategic locations in the country to showcase Kodasilver Couture designs. He explains that in the long run, the business plans to establish a fashion school to teach and mentor young fashion entrepreneurs and designers. Speaking on some of the challenges confronting the business, he says poor power supply has remained the major problem limiting his business. He also identifies inadequate access to single-digit finance as another challenge limiting his business.

He urges the government to bridge the country’s huge infrastructural gaps while calling on them to make available single-digit credits to entrepreneurs across various sectors and not just agriculture. He also asks the government to increase local patronage of fabrics. According to him, Nigeria’s fashion industry, if given adequate attention, can create millions of jobs while contributing to the country’s foreign exchange through the export of local fabrics and designs. “Our tailors need to be encouraged. Look at Aba, for example, which is a large haven for fashion and tailoring supplies,” he says. On his advice to other young and aspiring entrepreneurs, he says, “Seek knowledge first, be focused, strong, determined, persevere and work hard. But make sure you work smart, and be patient, as Rome wasn’t built in a day.” “It takes a lot of process, brainstorming, fall, and rise and sleepless nights to be successful,” he adds.

5 things SMEs must do to survive coronavirus-induced crisis

their homes,” she explains. “The most interesting part is that vendors on the platform are from different states in the country and countries of the world,” she says. She advises brands that are yet to utilise the online fair to take advantage of it, saying that the platform also gives brand visibility. “These days, visibility is very expensive. Having to show yourself and your services to over 147,000 people is a wise business decision entrepreneurs should never miss,” she says. “Through time, vendors have shared testimonies of how they have made huge money from the comfort of their homes, and this alone warms my heart,” she adds. On the challenges limiting the business, the young entrepreneur says that huge infrastructural gaps have remained the major challenge facing the business. She calls on the Federal Government to provide the needed infrastructure for businesses to thrive. She also urges governments at all levels to support small businesses with grants and capacity building. On her advice to other entrepreneurs, she says, “Do not give up because you can do anything you set your mind on.”

Gbemi Faminu

he micro, small and medium enterprises (MSMEs) are a critical and vital part of the growth and development of any economy. However, these businesses are fragile and susceptible to shocks which are damaging. The outbreak of the coronavirus pandemic is hurting economies and affects will lead to shut-downs. Therefore, it is important that MSMEs make a move to survive the pandemic and also improve their business. There are five things the MSMEs can do to secure the survival of their business. Being informed: Information is key, especially in this period. It is important for business owners to remain informed about new policies, events and opportunities as they relate to their business as well and global economy. Furthermore, they should be familiar with economic reports and business forecasts. Armed with the right and necessary information, the business owners will be able to make the right decisions that will help them

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remain relevant and grow. Innovation: this is also another major activity an entrepreneur should engage in this period, regardless of the products and services provided. The pandemic is creating a new normal and businesses should innovate along this axis. Businesses should be flexible enough to adapt to change. Innovation can be gained through knowledge and by replicating successful business models. Database update and brand reformation: Now is the time for entrepreneurs to evaluate and update their database and profile. Some businesses have continued to use the same profile since they started years ago, and they have been engaging with the same type of clients. This is a period when businesses should adopt profitable business models in line with global practices. In addition to this, brand reformation and revamping are important this period especially for businesses that want to resume with a bang and hit the ground running. Self and business development activities: Business owners should fully utilise @Businessdayng

this period to develop their businesses and themselves as well. This can be done by attending trainings, reading widely and improving the use of technology as well as social media platforms. The outbreak of the pandemic has enforced the use of technology and digitization. Therefore, businesses need to reach a wider audience through social media platforms as well as digital marketing outlets. If necessary, the entrepreneurs can employ affordable professional third parties like lawyers, auditors, digital marketers and graphic designers to develop their business and network with people and organisations to grow clientele and boost opportunities. The essence of networking cannot be too stressed, especially with the current business environment. Entrepreneurs need to grow their people-network and join relevant organisations and bodies that will help in growing their business. This activity can help in expanding clientele and also provide opportunities for the entrepreneurs to thrive amid and after the pandemic

Monday 01 June 2020

BUSINESS DAY Harvard Business Review

MONDAYMORNING

Is your business Masquerading as data-driven? SUDHEESH NAIR

eing a data-driven organization takes more than great technology and quality data. Like other aspects of digital transformation, it requires the right internal processes and culture — where the business properly guides incentives and takes steps to ensure that data is driving decisions appropriately. Failing to do this can lead to data misuse, which can be costly and hard to identify. Here are some common symptoms that your organization is merely masquerading as data-driven: — YOUR EMPLOYEES ARE MAKING DECISIONS BASED ON THE TYRANNY OF AVERAGES: Treating customers, suppliers and other stakeholders as a whole and making decisions based on averages can have harmful consequences. Your organization may be acting on data, but if the aggregate belies the reality underneath, the data is not giving you the full picture. Nuances are lost, which can lead to lost income and damaged relationships. — EVERYONE HAS THEIR OWN VERSION OF THE TRUTH: When employees ar-

gue that “my truth is better than your truth,” it’s a sign you’re just pretending to be data-driven. Each team may be acting on data, but if they have different information, they are bound to disagree and some may even be misled. The cause may be siloed data, where each team looks at their own slice of reality. — DECISIONS PRECEDE

DATA: First, recognize that instinct and experience are still critical in business. The key is not to mislead others by applying numbers to justify a position. This sets a bad precedent when leaders should be setting an example. — EMPLOYEES HAVE MISGUIDED INCENTIVES: Data is often tied to bonuses and other

rewards, but incentives backfire if they’re not applied judiciously. If sales leads know they’ll be rewarded for securing a second call, they’ll take the call even if it’s unlikely to generate a sale. People game the system; it’s human nature. Targets should be used to motivate, not punish, or they will encourage bad behavior.

Data holds tremendous potential to improve customer service, innovation and efficiency, but organizations need the right environment to leverage its potential.

(Sudheesh Nair is CEO of ThoughtSpot.)

How sales data can help Non-Sales Teams MOMENTUM SIGNALS: At a macro level, insights gleaned from sales data can help businesses shape their growth strategies, focusing on entirely new segments of a market or moving away from unprofitable areas. Within specific accounts, business momentum signals — like hiring, raising capital or opening new offices — can shed light on an increase in the total addressable market.

ALYSSA MERWIN

t’s no secret that technology has upended B2B sales, and in our current environment the use of technology and data is more critical than ever. A data-driven sales organization can create value for nearly every business function, from marketing and customer support to product and corporate strategy. Leaders need to recognize this trove of untapped insights — and take steps to put sales data and analytics into action across the organization. Here’s how: — CLOSE THE DATA GAP BETWEEN MARKETING AND SALES: Aligning Marketing and Sales is notoriously challenging precisely because of the data. The first challenge is to get the right data sets: Feedback from Sales on behavior throughout the buying process can help Marketing more effectively qualify and target leads. — GAIN FIRSTHAND INSIGHT FROM BUYERS: Sales

conversations tend to be a source of rich insights about gaps in the product and objections to pricing structures, among others. With today’s machine learning and speech analytics tools, it’s possible to analyze large volumes of calls, then funnel feedback to the www.businessday.ng

Product and Pricing teams. — SEGMENT AND PRIORITIZE ACCOUNTS BASED ON CUSTOMER METRICS: Sales, Customer Support, Marketing and Product teams can all benefit from insight into which accounts are poised for growth, which are ready for

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cross-selling, and which are likely to churn. This insight can drive marketing campaigns or commercial offers that compel customers to stay or engage differently with the product. — IDENTIFY GROWTH OPPORTUNITIES THROUGH @Businessdayng

LOOKING FORWARD In the months and years to come, companies will need to focus even more on solving their customers’ biggest business problems and proving their value over the long term. It is time for leaders to guide their organizations down a data-driven path that starts with sales and extends throughout the business.

(Alyssa Merwin is vice president of sales solutions at LinkedIn.)

Monday 01 June 2020

BUSINESS DAY

POLITICS & POLICY Edo guber: APC local govt bosses, group back Obaseki on indirect primary election IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

hairmen of the All Progressives Congress (APC) in the 18 local government areas of Edo State have thrown their weight behind Governor Godwin Obaseki’s choice on indirect primary election for the nomination of the party’s governorship candidate. The state chapter of the party, Edo State Governor, Godwin Obaseki and the National Working Committee of the party are divided on the mode of the party’s primary election for the nomination of its candidate for the governorship election slated for September 19, 2020. While the national working committee adopted direct primary, the state leadership of the party and the state governor adopted the indirect method. In a press briefing at the

state headquarters of the party in Benin City, the 18 local government chairmen of the party said the endorsement of indirect primary was in accordance with the resolution of the State Executive Committee. Benjamin Oghumu, APC chairman, Orhionmwon local government, who briefed the press said the resolution of the State Working Committee was duly passed on May 22, 2020 as authorised by the National Executive Committee (NEC) of the party in August 2018. Oghumu, who also pledged the chairmen’s support for the reelection of Godwin Obaseki for second term in office, added that they tend to actualise their support in the forthcoming governorship primary election scheduled for June 22, 2020 through indirect primary election. He however, described the purported agreement for Osagie Ize-Iyamu to return to the party as a consensus

Godwin Obaseki

candidate a false and lacks foundation. “Pastor Osagie Ize-Iyamu is not a member of our party, he led his followers out of All Progressives Congress in 2014 and even contested the governorship election on the platform of the People’s Democratic Party (PDP) in 2016 election which he lost. “The purported waiver

Gbajabiamila, Abayomi, others seek more synergy among states in tackling pandemic Iniobong Iwok

emi Gbajabiamila, Speaker of the House of Representatives, has called for more synergy among states and agencies in the country to aid the fight against the covid-19 pandemic. Gbajabiamila disclosed that the House was working with the Senate to enact a legislation aimed at offering tax relief and other stimulus packages for companies to cushion the effect of the pandemic. He stated this Friday while featuring in a webinar interactive session organised by the Emmanuel Chapel Methodist Church with the titled, ‘State of bio-system; national emergencies and covid-19 disruption’. The interactive session also featured Akin Abayomi, commissioner for Health in Lagos State, Abdulrazaq Garba Habib, an infectious disease physician; Major-General Lucky Irabor, Chief of Defence Training and Operations. The programme was held to inform the public on the state of bio-security in the country and attempt to update laws on the preventing and containment of infectious diseases. Gbajabiamila stressed that

the House was desirous about strengthening necessary laws to help tackle outbreak of pandemic and diseases in the country, which informed moves to pass the infectious diseases bill. He stressed that the House had also taken moves to collaborate with the executive to expand the social investment programme to touch more vulnerable Nigerians. According to him, “We are working at passing the infectious diseases bill and working on legislation that would allow companies to cut 50 percent of their tax; I mean tax reduction and other stimulus packages for companies; that bill is in the Senate. “We are also working on social investment to take care of vulnerable Nigerians, but the geographical spread would be determined by law.” In his contribution, Akin Abayomi, commissioner for Health in Lagos, said the state was able to respond rapidly to the coronavirus pandemic because it had set up a biosystem infrastructure and policies to shape in place together with the required professionals. Major-General Lucky Irabor, in his speech, expressed the readiness of the military www.businessday.ng

to deal with security threat in any part of the country that could arise from the deaths associated with the covid-19 pandemic. Irabor stressed that the military formations had taken extra precaution by carrying out a general enlightenment on the covid-19 pandemic, and fumigation of most Army barracks, while officers who had gone on course outside the country were often isolated upon return to the country. Abdulrazaq Garba Habib, however, called for the strengthening and enactments of relevant laws in the country so that containment of infectious diseases and pandemic in the country would be made easier. He called for more synergy among state government and security agencies so that the enforcement of inter-state restriction of movement could be effective to curtain the spread of the pandemic. “It is important that we explore and review existing laws to meet urgent demands, the House of Representatives has to work with stakeholders to strengthen the Infectious Disease Bill to meet the demand of Nigerians, if we are serious about tackling pandemic in Nigeria,” Abdulrazaq said.

granted to him by the National Working Committee of the party is ultra vires, null and void as Article 31 of the party constitution confers that power on the National Executive Committee of the party. “Besides, the conditions for waiver prescribed by the party constitution have not been met. The party has a

constitution and the constitution makes provisions on how things are done including registration of new members”, he said. Meanwhile, Edo Unity League (EUL), while also supporting the adoption of indirect primary election, however, called on President Muhammadu Buhari to call the National Working Committee of the All Progressives Congress to order, to reject the proposed direct primary for the party in the forthcoming governorship election in Edo State amid rising coronavirus cases. Aiyamenkhue Edokpolo, a chieftain of APC and the facilitator of the group at a press conference in Benin City said indirect primary is the most result-oriented and in line with the social distancing measure in curtailing the spread of the disease. Edokpolo, who alleged that 95 percent of APC primary elections have been indirect prior to COVID-19, wondered why the NWC

would propose direct primary when COVID-19 is ravaging the world with serious fatalities. “The group position on the primary election is without prejudice to the opinion of most members of APC that Governor Obaseki is positioned to secure a landmark victory in the direct primary mode. “We called on the governor to factor the health safety and interest of the people into his decision. “The party’s constitution doesn’t give unilateral power to the NWC to fix primary as it need ratification from National Executive Council (NEC) of the party,” he said. According to him, “President Buhari is the head of APC NEC which is the approving authority of all proposals by NWC; it is appropriate for the president to sensitise them that direct primaries is antithetical to all known protocols of security and health safety in the era of COVID-19.”

Udom’s giant strides in power generation for industrial development Michael Dada

ive years ago, Governor Udom Emmanuel took the oath of office. It was expected that he would sustain the economic activities and provision of infrastructure set in motion by his predecessor. Sustainable infrastructure development would eventually industrialise Akwa Ibom State, however, without steady power supply, industrialisation is beyond the realm of reason. It is probably the reason Governor Udom Emmanuel put so much into the development of power infrastructure in the last five years. First, it appears the Governor hit the ground running when barely eighteen months into office, he inaugurated a newly built 33/11KV, 2 X 15MVA injection sub-station in Uyo, the state capital. His predecessor and former Senate Minority Leader, Godswill Akpabio cut the ribbon at the commissioning. The new electricity substation provided more than 18hours daily power supply to Shelter Afrique, Ewet housing, Osongama, Nwaniba, Edet Akpan Avenue, Brooks street and Ibom Hotels to mention but a few. Widespread commendations trailed the improved electricity supply in these parts of Uyo, which the Akwa Ibom online community dubbed ‘Ikang Udom’ (Udom’s light). Thereafter, the Governor built

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a similar 33/11KV, 2 X 15MVA substation to provide dedicated grid power supply to the stateowned Victor Attah International Airport with a dedicated 33kv line from Ibom Tropicana. In addition, when the Transmission Company of Nigeria (TCN), energised 132/33KV electricity transformers in Calabar and Lagos, Governor Emmanuel collaborated with TCN to commission a 132/33KV, 1 x 60MVA transformer at Afaha Ube in Uyo. This 60MVA transformer increased the state’s available power for distribution from 96megawatts to 144megawatts. According to the Governor’s aide on power, Engr. Meyen Etukudo, the upgraded substation provides steady power to ten local government areas in the state including Uyo, Ikot Ekpene, Essien Udim, Obot Akara, Ini, Ikono, Ibiono, Etinan, Abak and Ukanafun. TCN, the sole electricity transporter and link between generation companies and distribution companies in Nigeria, lauded the Governor for the partnership, which they said aligned with the incremental power policy of the Federal Government (FG). Not done, Udom Emmanuel, again, collaborated with TCN and entered into an agreement to build a 132/33KV, 2 x 60MVA transmission substation at Ekim in Mkpat Enin Local Government Area. The last time a transmission substation was constructed in Akwa Ibom state was twenty years @Businessdayng

ago. As part of activities to celebrate the state’s 32nd anniversary, the Governor invited Vice President, Professor Yemi Osinbajo to commission Ekim 132/33KV, 1 x 60MVA substation. The substation, which receives power from the stateowned Ibom Power Plant, has 33kv dedicated lines to Onna industrial hub, the location of Jubilee Syringe factory, King Flour Mills, Metering Solutions Manufacturing Services and the plywood industry. It also provides steady power supply to Akwa Ibom State University and five local government areas including Onna, Mkpat Enin, Ikot Abasi, Eastern Obolo and Orukanam. In addition, Akwa Ibom State Government has secured a 30MVA transformer for the proposed construction of the Ikot Abasi substation. In spite of these investments in the last five years, some residents of the state have decried the total blackout or epileptic power supply in their areas. Unfortunately, due to the privatisation of power distribution assets and Federal Government’s total control of power transmission, Akwa Ibom State government does not have much say on the assets’ utilisation. Nevertheless, the governor’s intent to fulfil his promise seems clearly expressed in the power infrastructure development across the state. • Dada is with Ibom Power Company Limited

Monday 01 June 2020

BUSINESS DAY

INTERVIEW ‘In three and half years, Obaseki has transformed socioeconomic and infrastructure sectors of Edo State’ Crusoe Osagie is the Special Adviser to Edo State’s Governor Godwin Obaseki on Media and Communication Strategy. In this interview with Idris Umar Momoh & Churchill Okoro, he speaks on the achievements of his principal and the chances of securing a second term in office. Excerpts.

Edo born teachers were taken to Canada to spend a year or two years to be trained on how to deliver technical instructions. After their training they were brought back to the school by the Canadians to train people on Vocational and Technical education. That is why in South- South, Edo, particularly Benin has some of the best artisans. Sadly, after about 30 years , the school was completely abandoned and dilapidated, but as of today, the school has been completely rebuilt from scratch, equipment installed, teachers trained and Edo is beginning to turn out very competent personnel in the state. Still on human capital development, the civil servants are being trained. Also, Infrastructure has been massive. In Edo south, every community has a road or two tarred across the 192 wards in the Edo state. There is no community that doesn’t have a minimum of one or two roads that have been constructed in Edo South, Edo Central and Edo North senatorial districts. If you want to transform a system, you have to start with the bureaucracy, and the system that runs the bureaucracy is the civil service. On assumption of office, the governor saw that if we are to increase civil servants productivity, we have to improve where they live and work. As a result, the governor embarked on massive transformation of where they work. One of such transformation is the block C and D of the secretariat complex. We also worked on the law and order segment of our society which is fundamental to development. A new court complex has been built and the old court renovated. Also, the living standard of judges have been enhanced. If you go down Aiguobasimwin road in Government Reserved Area (G.R.A) you will find the judge’s quarters have been completed. In terms of agriculture, there is massive rice farming in Ekperi, Agenebode. The government has co-operated with the Central Bank of Nigeria (CBN) and we have started a complete revolution in agriculture like planting crops such as maize. We are www.businessday.ng

Godwin Obaseki

now moving into oil palm. With huge amount of money invested, farmers are now equipped with inputs like fertilizer and seeds. There is a lot of transformation going on in agricultural sector in the state. There is also transformation in the sports sector. The former Ogbe stadium now Samuel Ogbemudia stadium was essentially built from the scratch to world class standard. We now have elaborate tennis courts where you can play global tournaments. In the past three and a half years, this government has placed priorities on the people and has tremendously transformed the socio-economic and the infrastructure sectors of the state. What are those key selling points of the Governor Godwin Obaseki-led government that will encourage electorate to re-elect him for another four years in the forthcoming election? The first thing is accountability and integrity. Some people believe that the state money should be given to them both within and outside the state. Though they are few and they are not happy that all the funds have been directed to projects that will improve the lives of the multitude. I would say that the integrity of this government and the

methodical approach which the governor uses to implement his projects is what we would consider as our biggest selling point. Since we came on board civil servants have earned their salaries on or before 26th of every month; same applies to pensioners. We met a huge pension debt. Local government employees, especially, were owed salaries and pensions. As at today, we have cleared all of them up till

‘

Since we came on board civil servants have earned their salaries on or before 26th of every month; same applies to pensioners. We met a huge pension debt. Local government employees, especially, were owed salaries and pensions

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‘

In the past three and a half years, Godwin Obaseki has been saddled with the responsibility of governing Edo state. How would you rate his administration? s a matter of fact, unprecedented performance by the governor in less than four years is attributable to one cardinal principle of this government which is prudent administration of resources; prudent use of taxpayers’ money. The government approached development through different dimension. First, the government ensured that human capacity was in the forefront. There is also focus on infrastructural and social development. Under human capacity development, we have education; where we have done tremendously well, so much that governors from other states have openly adopted the strategy we are using in Edo state to transform our basic education, and we are now moving it into secondary education which is Edo Basic Education Sector Transformation (Edo-BEST). The Edo-BEST has completely revolutionized the way we learn in Edo state. If you go to an average primary school you will find that the teacher has a tablet in his or her hand, and inside that tablet you have all the coursework and learning schemes for that class. Also, the tablet contains names of pupils, addresses, among others. This has made teaching easier. There is also a new approach to teaching which makes the children very confident, bold and engage their peers in other states in terms of competition. Under the scheme too, about 12,000 teachers have been trained, several schools have been built as well as the completion of a basic education training centre in Abudu, the administrative headquarters of Orhionmwon Local Government Area. There is also a focus on technical education. If you remember about three to four decades ago, Edo state had a very unique technical school called Benin Technical College. The school was established by the Canadians.

last month, and that cannot happen unless you prudently manage resources. Today, anytime we have event, the pensioners put on white in celebration of how they have been treated. All these added together to score and speak to the integrity of the governor and his commitment to improving the lives of the people on whose mandate he is governing the state. Governance isn’t a cakewalk, there are always challenges, what are those challenges and how has the government tackled them? There have been challenges and those challenges are mostly with some old brigade of politicians - a small group of individuals. We also have very excellent politicians even among the old brigade who are forward looking. Those creating challenges don’t want to adjust to the new consciousness of this government, which is that, people’s resources are meant for improving the lives of the people. It is only when you spend government money judiciously that everybody will benefit instead of people coming to government house every weekend and leaving with bags of money to settle their people. For instance, instead of giving them, for instance, N20million or more as a gift in the name of settling their own people why not use the money to construct roads in order to ease movement within their localities. So while they created problems for us ; it also created large following for the governor across party lines. As we speak today, not less than 80 percent of the people in the state are rooting for the governor’s re-election for second term, but we are dealing with a small group of politicians who are powerful on their own because they have been there for a long time. But the beauty of it, is that the governor has more people who want the state to move forward than those who think of themselves than the interest of the state. Apparently, Edo state government under the leadership of Godwin Obaseki has touched all sectors and will likely brighten his @Businessdayng

chance at the poll. What do you think he needs to focus on in the next four years when elected? The next four years is going to be consolidation and scaling. Though we have done a lot but it hasn’t yet covered the entire state. We intend to scale our achievements up to other areas of the state. For example, we have built a fantastic stadium in Benin city but you see Auchi is a distant place from Benin city and people cannot be coming from there to do competitions here on a weekly basis. We will be looking at what we have done in the last three years, and identify the areas we need to scale up so that it will spread round the state . For example, in education we have covered primary schools and we intend moving into secondary schools. We are trying to transform the College of Agriculture, Iguorhiakhi and set up campuses in Uromi and Agenebode. The plan is already set, the system of governance is in place and what we now need is to deploy these principles and systems to expand the benefits that people are getting from government to every nook and cranny of the state. That is essentially the target and vision going forward. As we begin the process for the second term election. What message do you have for the people and politicians? For the politicians, we believe that the ones who are in the majority, who understand the principles and method of this government should engage the few ones who are stuck in the past and convince them and let them see that doing things for the many is better than doing for the few. We are very confident that the governor is going to fly the flag of his party in the forthcoming election. We know that the gubernatorial election is going to be easy because as we speak we are confident of the support of the people of Edo state, for the governor. For the people, we ask them to keep hope alive and get ready to do their civic responsibility of re-electing governor Godwin Obaseki in September, 2020 for a second term.

Monday 01 June, 2020

BUSINESS DAY

MARKETS INTELLIGENCE

Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

COVID-19 to tip Brewers over the edge BALA AUGIE

he lockdown measures imposed by government in order to curb the spread of Covid-19 pandemic could tip beer makers over the edge as the measure grounded nightlife to halt, with restaurant stuttering. Carlos Brito, CEO of world’s largest brewer, Anheuser-Busch InBev (AB Ibev), was on point when he told reporters that the company’s business is about going to restaurant, to nightlife, and going out with friends. Before the pandemic snaked out from Wuhang city of China to ravage global economy, the brewery industry was the problem child of the fast moving consumer goods sector. Higher excise duty, closure of on-trade channels, weak consumer purchasing power, and volatile currency, have remained a drag on growth. A few years ago, investors were optimistic that the sector was the next growth phase of the economy, thanks to burgeoning population and rising middle class that craved for consumption. In 2015, AB Ibev made an inroad into Nigeria when it acquired SAB Miller (owner of Pabod Beverages, of IntafactBreweries, and International Breweries).

Two years after, a AB Ibev, merged three of its subsidiaries to stoked a beer war with competitors, and its share price appreciated as investors were confident that the company’s strategic plans would spur their investment. However, a protracted economic downturn caused by lack of transformation policy by government squeezed consumer spending and cast a pall over the future of consumer goods firms. Brewers started to feel the pang of a weak economy in 2017 as they could not raise the price of key product because consumer wallets had been squeezed. The three dominant brewersNigerian Breweries, Guinness Nigeria International Breweries, and Champion Breweries- saw combined operating expenses fall by 61.10 percent to N8.29 billion as at March 2020, from N21.31 billion the previous year. Cumulative net income slumped 83.81 percent to N1.35 billion as at March 2020, the decline was stoked by a loss of N5.65 billion International Breweries posted. Soaring debt of International Breweries that resulted in the huge loss was a drag in industry efficiency level the dominant players recorded a negative net profit margin of (1percent) in the period under review from a positive territory of 8.49 percent.

P.E

SHORT TAKES N312m After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

The parent companies of these local producers are struggling with lockdown across the globe. Anheuser-Busch InBev had forecast a 10 percent decline in first-quarter profit on after the coronavirus outbreak hit beer sales during the Chinese New Year. Diageo, parent company of Guinness and world’s largest producer of black beer, had estimated the COVID-19 outbreak will have a negative impact on organic net sales of between £225 million ($286 million) and £325 million ($414 million) in the company’s

current fiscal year. The drinks company added that organic operating profit is expected to take a hit of between £140 million ($178 million) and £200 million (US$255 million). Since COVID-19 outbreak will lead to job loss and salary cut in Nigeria, drinkers will downgrade to cheaper brand. And that compounds the woes of companies operating in a tough and unpredictable macroeconomic environment. The insidious virus has shattered Nigeria’s economy as Brent crude oil fell from $70 per barrel at the dawn of 2020 to $20 per barrel as of April 22, 2020. That forced the ministry of Finance to cut the budget benchmark to $25 a barrel from $57, which further compounds the woes of operators in the industrial goods sector that depend on government capital expenditure spending to jerk up revenue. The external foreign reserve has shed over 12 percent from $38.54 billion on Januar y 1, 2020, to $33.63 billion as of April 23, 2020. To shield the external reserves from continued bleeding, the central bank was forced to weaken the currency to $360 from $306. The first quarter GDP report released by the National Bureau of Statistics (NBS) shows Nigeria’s economy grew 1.87 percent but that represents deterioration from the previous quarter as oil prices and international trade fell due to the coronavirus pandemic.

The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run. Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month. Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week. “Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early. According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; Graphics: FIFEN FAMOUS

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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Monday 01 June 2020

BUSINESS DAY

news

What wave of bankruptcies in US shale industry means for Nigeria, OPEC BALA AUGIE & DIPO OLADEHINDE

here is light at the end of the tunnel for Nigeria and OPEC+ countries as the biggest independent shale oil groups in the US are bracing for a wave of bankruptcies. The Financial Times of London reports that these firms reported a record combined loss of $26 billion in the first quarter as the collapse in the oil demand and crash in oil market brought about by coronavirus pandemic forced more than $38 billion in write-offs. Analysts predict 250 companies could go bust before the end of next year unless oil prices rise fast enough to start generating cash for producers wilting under punishing debt loads. According to Haynes and Boon, in Houston Texas, 17

EXPLAINER smaller US oil and gas producers with a total debt of $14 billion have filed for chapter 11 bankruptcy this year. Also, analysts at Rystad Energies estimate that the total could rise to 73 before the year is out and another 170 would follow next year if prices remain around current levels. “Shale growth will really never go back to a million barrels per day again,” Energy Aspects Chief Oil Analyst Amrita Sen tweeted. Although a recent rally has taken the price of West Texas Intermediate, the US marker, back above $30 a barrel, having traded in negative territory last month, it, however, remains down by half since January — and well beneath average breakeven oil prices in the shale

patch, leaving many more producers teetering on the brink of bankruptcy. “Many of these shale companies won’t survive the next year or two, and Wall Street may not throw them a lifeline this time around,” said Exness’s market analyst Michael Stark in comments on the market situation. The Paris-based autonomous intergovernmental organisation, International Energy Agency (IEA), wrote in its new World Energy Investment 2020 report that some of the most dramatic cuts in the oil and gas sector – in many cases above 50 percent – have been among highly leveraged shale players in the US, for whom the outlook is now bleak. “The fall in the oil price also means that companies that use reserve-based lending face a significant revision in their value of available

debt. This will hit small and medium-sized companies particularly hard (not just in shale),” IEA said. Immediately after the 2008 financial crisis, the shale oil producers caused a supply glut that sent the price of oil crashing to a historic low in mid-2014, plunging most OPEC countries into a recession, while contemporaneously making the US the largest producer of the commodity. But these companies rely on debt or monies borrowed from financial institutions to finance drilling activities, as the process of extraction is expensive since it involves blasting rocks. “They were in trouble before COVID even happened,” said John Kempf, senior director at Fitch. “There are a couple of pretty big names that are probably going to file for bankruptcy pretty soon.”

Dangote wins World Travel Market award with CNN commercial

arely a week after emerging the most admired brand in Africa, the pan-African conglomerate, Dangote Industries Limited (DIL), has won yet another award through its television commercial on the Cable Network News (CNN) detailing its business processes. The award, dubbed “Most Compelling Agency Story” by the World Travel Market (WTM),waswonwiththe‘Farm to Table’ commercial, which detailed the process of food metamorphosis from the farm as raw material to final process as food on the tables at home. The commercial, which is part of the ‘Touching Lives’ documentary aired weekly on CNN, was shot by the CNN International Commercial to show how Dangote, through its businesses, have been touching the lives of the people in more than one way. “We are extremely pleased to announce that Dangote Industries and CNN International Commercial are the winners of the WTM Africa Awards for the ‘Most Compelling Agency Story’,” Varshmi Arasalingam, CNN International Commercial account executive, said. “The organisers had entered us into this category additionally, for which this is certainly a proud moment for

the entire team. This award recognises our powerful storytelling capabilities, affirming that the Touching Lives Farm To Table campaign holds a prominent socio-economic impact for which Dangote Industries continues to empower and improve the lives of people in Africa,” Arasalingam said. Anthony Chiejina, DIL Group chief branding and corporate communications officer, in his comment on the award said the management was delighted and the award only shows that the company is living up to its billing as the most diversified conglomerate in Africa. He said the commercial shot by CNN, which has won the award, depicted the businesses of the company and gave vent to “how we arrive at our mission statement of meeting the expectation of the people by providing for their basic needs”. “It simply demonstrates how it starts from the farm through which our people are engaged in every process before it gets to table at home,” Chiejina said. WTM, in explaining the award, said in winning the ‘Most Compelling Agency Story’, marketing and effective PR campaign in tourism industry requires exceptional expertise to effectively execute campaigns with the right story to the right people.

FirstBank leverages technology to promote virtual bank account opening for customers BUNMI BAILEY

Lai Mohammed (m), minister of information and culture, flanked by special assistants (media) attached to the office of the minister, Williams Adeleye (l), and Segun Adeyemi, during a news conference on the first anniversary of President Muhammadu Buhari’s second term in office, at the National Press Centre in Abuja. NAN

COVID-19: Fayemi addresses Ekiti people, announces fresh relaxation of lockdown

ith effect from Monday, residents of Ekiti State now have opportunities to pursue their businesses Mondays through Friday from 6am to 8pm. Governor Kayode Fayemi who disclosed this in a state-wide broadcast Sunday evening also revealed that consultations are underway to reopen religious worship centres, schools and big markets in the state. Also with effect from Monday, public officers on Grade Level 8 and above are to resume for duty while those on Grade Level 7 and below are to remain at home till further notice. The Governor also stressed that the dusk-to-dawn curfew will resume daily at 8pm and will last till 5.59 am of the fol-

lowing morning. The Governor also announced that the state’s molecular laboratory will be commissioned on Monday to facilitate testing for covid-19. Fayemi urged residents to give maximum support to the medical experts conducting the tests as modalities have been devised to ensure a seamless exercise. He said: “I therefore urge you to willingly submit yourselves for testing when the officials get to your neighborhood. “This also provides an opportunity for those who might have had symptoms associated with COVID-19 to freely come out for testing at no cost to them.” The Governor in the broadcast also reiterated his earlier www.businessday.ng

order that all Ekiti boundaries will remain on complete lockdown daily pending further review at national level. Speaking on likelihood of resumption of public worship, Fayemi promised that religious centres will reopen “very soon” revealing that a committee will be engaging with religious organisations to fashion out a workable protocol. The workable protocol, he said, will enable religious houses to reopen very soon without jeopardising the lives and health of worshippers. On the fate of schools in Ekiti, the Governor explained that efforts to reopen them are also ongoing “as the committee set up to appraise the protocols, resources, conditions and modalities for reopening

has concluded its work.” The Governor also said government is considering reopening major markets to permanent shop owners, after the outcome of the engagement process that is ongoing on the relocation of roadside traders to available alternatives. The reopening of the major markets, the Governor said further, will be subject to compliance with specific conditions and protocols that are being determined. On when the state will be totally opened up its economy, Fayemi said: “Once the report of the random testing shows that we are safe generally, it would further give fillip to our confidence to fully open up our state and return to our normal way of life.”

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irst Bank of Nigeria Limited, Nigeria’s premier and leading financial inclusion services provider, has announced that it has reinforced its technology infrastructure to enable anyone in the country to open a FirstBank account through their mobile phones without visiting any of its branches nationwide. The investment in its mobile banking infrastructure, the bank said, is in furtherance of the need to deepen financial inclusion in the country, enabling account opening to be carried out on its *894# USSD banking, FirstMobile (self-service telephone banking), its website, as well as the bank’s staff through the Direct Sales Executive (DSE) application installed on their mobile phone, ATMs and the bank’s over 55,000 FirstMonie agents spread across the country. Opening an account with FirstBank through any of these means is seamless, convenient, fast, and user-friendly, the bank said. “Beyond opening an account in any of our over 700 branches, we are delighted with the investments at reinventing our business processes over the years, especially with the use of @Businessdayng

technology,” said Chuma Ezirim, group executive, e-business and retail products, First Bank of Nigeria Limited. “This has been critical to staying relevant in the industry for over 126 years and being the financial partner of the first choice to all our customers and Nigerians, irrespective of where they are,” Ezirim said. The DSE App is an end-toend encrypted mobile application installed on the phone(s) of FirstBank staff which enables them to open an account for to-be customers, FirstBank explained. Upon the completion of the account opening process via the DSE App, the customer is notified of his or her account number through a text message on the mobile phone used to register the account. With FirstBank’s *894# USSD banking, various banking activities are carried out on a mobile phone – across the four major GSM network operators in the country – without the use of the internet, the bank said. To open an account via this means, customers are required to dial *894#, then select ‘open an account’ to provide the information required or by simply dialling *894*0#. The bank currently has over 9.5 million of its nearly 20 million customers on its USSD banking platform.

Monday 01 June 2020

BUSINESS DAY

news Here are 3 steps Nigeria can consider in... Continued from page 1

for Nigerian households. Almost one month after easing the five-week lockdown in the Federal Capital Territory, Lagos and Ogun States, the economy is still constrained by the restriction on interstate travel and a nationwide curfew. The country, meanwhile, continues to record rising number of COVID-19 cases. As of Sunday, Nigeria has recorded 9,855 confirmed cases of COVID-19, with 2,856 recoveries and 273 deaths. Due to the measures targeted at flattening the coronavirus curve in Africa’s most populous nation, analysts say the economy is under risk of contraction

as a lot of businesses and industries have been disrupted and an unemployment rate, already at a high level, has increased. According to the National Bureau of Statistics (NSB), Nigeria’s weakest GDP growth in one year, at 1.87 percent in Q1 2020, reflects “the earliest effects of the COVID-19 disruption”. Like other Africa countries, the Nigerian government is taking immediate steps to strengthen the health system and restart the economy that has been battered due to the pandemic that has accelerated trends such as digitisation, market consolidation, and regional cooperation, with important new opportunities – for example, to boost local manufacturing, formalise small businesses, and upgrade urban infrastructure. As Nigeria edges towards a full reopening of its economy, global consulting firm, McKinsey & Company, has suggested ways of doing so while safeguarding lives and livelihoods. McKinsey’s strategies, from its global and Africa analysis, suggest that the government can follow a threestep process in designing local response measures to release restrictions in a calibrated way tailored to the country’s unique circumstances. Define a tiered set of local response measures The first step cited by McKinsey towards finding a smart approach to reopening economy in a calibrated way that brings key industries back into operation while ensuring safe ways of working is to define a tiered set of local response measures, from the least restrictive to the most restrictive. According to the New Yorkbased firm, each tier would include measures to protect both the general population and high-risk populations (the elderly and people who are immuno-compromised), and would also specify which sectors can open and operate. “Depending on a country’s

geographic diversity, several tiers can be established; South Africa, for example, has implemented a five-tier system,” it said. It said a four-tier system, for example, could include measures such as Tier 1 (the least restrictive), which would entail no restrictions beyond physical distancing and would allow all sectors to operate, and Tier 2 could involve closure of schools and the prohibition of mass gatherings, while high-risk populations would be encouraged to stay at home. “A broad set of sectors would be allowed to operate, such as construction, mining, manufacturing, banking, and retail – provided they can comply with health and safety protocols such as the use of personal protective equipment (PPE) and temperature checks. But sectors at high risk of transmission would be closed or restricted; those might include education, transport, food services, and entertainment,” McKinsey said. Tier 3 could involve restrictions on travel between regions of the country for the general population, and mandatory stay-at-home directives for the at-risk population. A narrower set of sectors would be allowed to operate, including agriculture and information and communication technology (ICT). For Tier 4 (the most restrictive), McKinsey said it could entail a full lockdown on movement for the general population, and quarantine encouraged for those at risk. In this situation, it explained that only essential sectors would be allowed to operate, including health and public administration. ‘Triage’ regions The second step highlighted by McKinsey is to “triage” regions or subregions across the country to determine which tier each of the geographic areas would fall into. “The triage process would be dynamic and would incorporate new data as they emerge,” it said. It added that it would be based on two criteria. First, the severity of virus spread in a region, a measure which takes into account the extent of ongoing transmissions as well as the severity of cases should there be high transmission. And the readiness of the public health system in the region – both the ability of the system to test, trace, and isolate cases and contacts, and its medical capacity to treat severe cases. McKinsey suggested that the regions should be split into the Y and X-axis. Y-axis should cover the severity of virus spread, considering both the day-to-day growth in case counts as well as the clinical severity of cases (as influenced by factors such as demographics and comorbidities in the population). www.businessday.ng

Nasir el-Rufai (m), Kaduna State governor, flanked by Hadiza Usman (r), special adviser on internally generated revenue, and Hanatu Dalhat, senior special assistant on internally generated revenue, at a briefing of State House correspondents after a meeting with President Muhammadu Buhari at the Presidential Villa in Abuja. NAN

5 years on, still no ‘light’ to see Buhari’s power sector achievements ISAAC ANYAOGU

resident Muhammadu Buhari on Thursday released a 62-page document highlighting his achievements in office within the past five years, but the section on power was as brief as his government’s footprints in the sector. According to data from the National Electricity System Operator, an arm of the Transmission Company of Nigeria (TCN), Nigeria’s energy generation on Thursday hovered at around 3,400MW, the same average generation in the past 10 years. The Federal Government touted its Energising Economies Programme, a publicprivate partnership led by the Rural Electrification Agency (REA) to deliver stable power supply to markets and economic clusters across the country, as its key accomplishment. “The initial phase is ongoing in Ariaria Market in Aba, Abia State (32,000 shops), Sura Shopping Complex in Lagos (1,000 shops), Shomolu Printing Community in Lagos (4,000 shops) and the Sabon Gari Market in Kano (12,000 shops) ,” the presidency said. “The 21 Sura Shopping Complex project was completed in August 2018, and commissioned by Vice President Yemi Osinbajo in October 2018.” The Energising Economies Programme, it must be noted, is an intervention to allow private operators deliver power to clusters within the franchise areas of the distribution companies. The government had to browbeat the DisCos into submission to carve out these spaces from their fran-

analysis chise areas. The beneficiaries in Ariaria, Sura, Sabon Gari and Iponri markets where these projects are sited pay market rates for power, something the Nigerian Electricity Regulatory Commission (NERC) has denied DisCos from charging consumers, thus creating the conditions that allow the Federal Government waste trillions of naira on bailouts to operators. Yet, in a country of over 200 million, where irregular power supply is costing the economy over $29.3 billion yearly, according to a World Bank study, touting this programme which benefits less than 1 percent of the population and adds insignificant value to the economy as accomplishment by a government that spends billions on power yearly is evidence of a poverty of ambition. The Federal Government also said it has launched a N1.3 trillion Payment Assurance Programme designed to resolve the liquidity challenges in the power sector by guaranteeing payments to generating companies and gas suppliers. Considering that the power sector has been privatised since 2013, it actually ranks as a misnomer to shell out over N1 trillion to bail out private businesses in an economy where hospitals lack aspirins and schools have no running water. Worse still, this bailout has not significantly improved the electricity market. In 2017, the government paid over N701 billion as assurance to the power sector and in 2019 was forced to pay another N600

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billion in intervention fund because the market does not recover the costs involved in generating and distributing power. Nigeria’s electricity market is still grossly illiquid. The 11 DisCos recorded cumulative losses of N787 billion in their 2018 financials, a 10 percent increase from the previous year. DisCos collect only about 60 percent of the value of the electricity generated and sent to them even when consumers do not pay a cost that reflects the price of generating it. They also keep over a quarter of what they collect. The Nigeria Bulk Electricity Trader (NBET) which pays market operators worsens the situation, some operators say, by prioritising payment to the TCN, owned by the government, and the Market Operator (MO), which sometimes get the full value of their invoice at the detriment of GenCos. Gas producers who generate the critical feedstock required to produce over 75 percent of Nigeria’s electricity are being owed billions of naira by GenCos. GenCos in turn only get a quarter of their invoices settled by the Nigerian Bulk Electricity Trading Company. This leaves the Federal Government with the responsibility of settling the shortfall. This has led to a situation where the power sector is privately owned but nationally financed. Analysts say this pattern of bailout poses system risk to the economy because it excludes other critical sectors where funds can be better deployed to achieve measurable impact. “Giving out these bailouts without evaluating the impact @Businessdayng

they are having is like pouring water into a bottomless pit,” Chinwendu Enechi, senior manager, oil, gas and power at Anderson Tax, told BusinessDay earlier. Enechi said that unless Nigeria wakes up to the real issue which is fixing the electricity market by having a costreflective tariff in place, these bailout funds would halt efforts to diversify the economy and reduce funding for critical sectors including agriculture. In a privatised market, the government’s role is limited to providing effective regulation, but operators accuse NERC of being ineffectual and easily amenable to government’s control. Many Nigerians want to see their homes metered so that electricity bills are accurate. The Buhari government came up with a pragmatic Meter Asset Provider (MAPs) programme, where private investors provide meters to consumers at a cost, but the same government scuttled the programme when the Ministry of Finance introduced over 35 percent tariff on meters imported into the country shortly after the policy took off. Though the government claims as an achievement the issuance of an order by NERC to DisCos capping estimated billing, customers still report being issued crazy bills. It would seem a mere declaration of intent is being passed off as an achievement. The Federal Government is also touting as accomplishment the implementation of a ‘Willing Buyer, Willing Seller Policy’ for the power sector, which it claimed has “opened up opportunities for increased delivery of electricity to homes and industries”.

Monday 01 June 2020

BUSINESS DAY

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Monday 01 June 2020

BUSINESS DAY

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Monday 01 June 2020

BUSINESS DAY

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The American way

How the world’s most powerful country is handling covid-19 Contrary to what many Americans think, the death rate in America is about the same as in Europe Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our coronavirus hub

MERICA HAS passed a grim milestone: 100,000 deaths from a novel coronavirus that began to spread half a year and half a world away. Many Americans think their president has handled the epidemic disastrously, that their country has been hit uniquely hard and that there is a simple causal relationship between the two. The 100,000, which does not include excess deaths mistakenly attributed to other causes, is higher than any other country’s. It has routinely been compared with the 60,000 American casualties in the Vietnam war. A Trump Death Clock in Times Square purports to show how many lives the president’s ineptitude has cost: as we went to press it stood at 60,262. Yet this widespread conviction that America has failed because of Donald Trump is not supported by the numbers. Or, at least, not yet. The official death rate in America is about the same as in the European Union—which also has excess deaths, but has less erratic leaders and universal health care. Overall, America has fared a bit worse than Switzerland and a bit better than the Netherlands, neither of which is a failed state. New York has been hit about as hard as Lombardy in northern Italy; California acted early and is currently similar to Germany; so far, rural states have, like central Europe, been spared the worst. This reflects two things, both of which will matter now that America is reopening before it has the virus fully under control. The first is that covid-19, when it first hit, displayed an indifference to presidents and their plans. Around the world it has killed in

large, dense and connected cities like New York, London and Paris, and where people are crammed together, including care homes, slaughterhouses and prisons. In some countries, including America, testing was snarled up in red tape. Having seen what was happening in China, Mr Trump could have acted sooner—as Taiwan, Singapore and Vietnam did. He has failed to do things ordinarily expected of an American president in a crisis, such as giving clear government advice or co-ordinating a federal response. Instead, he has touted quack remedies and spent the days when America passed its sombre milestone spreading suspicion of the voting system and accusing a television host of committing a murder that never happened. All this is reprehensible and it may have been costly. Yet, tempting as it is to conclude that the president’s failures bear most of the blame for covid-19’s spread through America, the reality is more complicated (see Briefing). That leads to the second feature of the country’s response to covid-19. The virus was always

going to be hard on a population with high levels of poverty, obesity and diseases such as diabetes, especially among minorities (see Lexington). But, to a remarkable degree, other layers of government have adapted around the hole where the president should have been. The federal system has limited the damage, thanks to its decentralised decision-making. Lockdowns vary by state, city and county. California responded as soon as it saw cases. In the northeast governors largely ignored the White House and got on with coping with the disease, earning the Republican governors of Maryland and Massachusetts the president’s enmity, but high approval ratings. In Florida, though the governor was reluctant to impose a lockdown, county officials went ahead and did so anyway. Contrary to demands for nationwide rules, this is a strength not a weakness, and will become more so as the pandemic runs its course. In the best-organised states, which have built up testing capacity, it helps ensure that flare-ups can be spotted quickly and rules adjusted accordingly.

Because each region is different, that is more efficient than a nationwide approach. One way democracies can deal with the virus is to draw on reserves of trust. People must behave in ways that protect fellow citizens whom they have never met, even if they themselves are feeling fine. Americans trust their local officials far more than the president or the federal government. And when it comes to public health those local officials have real power. Without this balancing feature, America might today look like Brazil, where a president with a similar love of hydroxychloroquine and distaste for face masks is wreaking havoc (see article). If the public-health response in the United States so far matches Europe’s, its economic response to the virus may turn out better. True, the unemployment rate in America is 15%, double that in the EU. Yet in Europe most governments are protecting jobs that may no longer exist once lockdowns end rather than focusing help on the unemployed as America’s has. The EU is probably delaying a painful adjustment. Congress, not

known for passing consequential legislation with big bipartisan majorities, agreed on a vastly bigger fiscal stimulus than in the financial crisis a decade ago. With a Democrat in the White House and a Republican-controlled Senate, America might not have mustered a response that was either so rapid or so large. America still has a hard road ahead. Were daily fatalities to remain at today’s level, which is being celebrated as a sign that the pandemic is waning, another 100,000 people would die by the end of the year. To prevent that, America needs to work with the system it has, trusting local politicians to balance the risks of reopening against the cost of lockdowns. In the next months the infrastructure built during the lockdown must prove itself. Because the virus has yet to decline in some states, it may flare up in new places, which will then need targeted lockdowns. The capacity to test, vital to spotting clusters of infection, has increased, but is still lacking in some places. Almost all the states lack the contact tracers needed to work out who needs testing and quarantining. When it considers how to withdraw fiscal support, Congress should remember this. That America and Europe have fared similarly in the pandemic does not absolve Mr Trump. This is the first international crisis since 1945 in which America has not only spurned global leadership but, by cutting funds to the World Health Organisation, actively undermined a co-ordinated international response. That matters, as does Mr Trump’s inability to cleave to a consistent message or to speak to the country in words that do not enrage half of the population. Yet four years after Mr Trump was elected, the time to be surprised by his behaviour has long gone. Luckily, he has mattered less than most Americans think.

Monday 01 June 2020

BUSINESS DAY

In Association With

Dragon strike

China has launched rule by fear in Hong Kong The rest of the world should worry, too

HE PEOPLE of Hong Kong want two things: to choose how they are governed, and to be subject to the rule of law. The Chinese Communist Party finds both ideas so frightening that many expected it to send troops to crush last year’s vast protests in Hong Kong. Instead, it bided its time. Now, with the world distracted by covid-19 and mass protests difficult because of social distancing, it has chosen a quieter way to show who’s boss. That threatens a broader reckoning with the world— and not just over Hong Kong, but also over the South China Sea and Taiwan. On May 21st China declared, in effect, that Hong Kongers deemed to pose a threat to the party will become subject to the party’s wrath. A new security law, written in Beijing, will create still-to-be defined crimes of subversion and secession, terms used elsewhere in China to lock up dissidents, including Uighurs and Tibetans. Hong Kong will have no say in drafting the law, which will let China station its secret police there. The message is clear. Rule by fear is about to begin. This is the most flagrant violation yet of the principle of “one country, two systems”. When the British colony was handed back to China in 1997, China agreed that Hong Kong would enjoy a “high degree of autonomy”, including impartial courts and free speech. Many Hong Kongers are outraged (see article). Some investors are scared, too. The territory’s stockmarket fell by 5.6% on May 22nd, its biggest drop in five years. Hong Kong is a

global commercial hub not only because it is situated next to the Chinese mainland, but also because it enjoys the rule of law. Business disputes are settled impartially, by rules that are known in advance. If China’s unaccountable enforcers are free to impose the party’s whims in Hong Kong, it will be a less attractive place for global firms to operate. China’s move also has implications far beyond Hong Kong. “One country, two systems” was supposed to be a model for Taiwan, a democratic island of 24m that China also sees as its own. The aim was to show that reunification with the motherland need not mean losing one’s liberty. Under President Xi Jinping, China seems to have tired of this charade. Increasingly, it is making bare-knuckle threats instead. The reelection in January of a China-sceptic Taiwanese president, Tsai Ing-wen, will have convinced China’s rulers that the chances of a peaceful reunification are vanishingly small. On May 22nd, at the opening of China’s rubber-stamp

parliament, the prime minister, Li Keqiang, ominously cut the word “peaceful” from his ritual reference to reunification. China has stepped up war games around Taiwan and its nationalists have been braying online for an invasion. China is at odds with other countries, too. In its building of island fortresses in the South China Sea, it ignores both international law and the claims of smaller neighbours. This week hundreds, perhaps thousands of Chinese troops crossed China’s disputed border with India in the Himalayas. Minor scuffles along this frontier are common, but the latest incursion came as a state-owned Chinese paper asserted new claims to land that its nuclear-armed neighbour deems Indian (see article). And, as a sombre backdrop to all this, relations with the United States are worse than they have been in decades, poisoning everything from trade and investment to scientific collaboration. However much all the regional

muscle-flexing appals the world, it makes sense to the Chinese Communist Party. In Hong Kong the party wants to stop a “colour revolution”, which it thinks could bring democrats to power there despite China’s best efforts to rig the system. If eroding Hong Kong’s freedoms causes economic damage, so be it, party bigwigs reason. The territory is still an important place for Chinese firms to raise international capital, especially since the SinoAmerican feud makes it harder and riskier for them to do so in New York. But Hong Kong’s GDP is equivalent to only 3% of mainland China’s now, down from more than 18% in 1997, because the mainland’s economy has grown 15-fold since then. China’s rulers assume that multinational firms and banks will keep a base in Hong Kong, simply to be near the vast Chinese market. They are probably right. The simple picture that President Donald Trump paints of America and China locked in confrontation suits China’s rulers well. The party thinks that the balance of power is shifting in China’s favour. Mr Trump’s insults feed Chinese nationalist anger, which the party is delighted to exploit—just as it does any tensions between America and its allies. It portrays the democracy movement in Hong Kong as an American plot. That is absurd, but it helps explain many mainlanders’ scorn for Hong Kong’s protesters. The rest of the world should stand up to China’s bullying. On the SinoIndian border, the two sides should talk more to avoid miscalculations, as their leaders promised to in 2018. China should realise that, if it tries the

tactics it has used in the South China Sea, building structures on disputed ground and daring others to push back, it will be viewed with greater distrust by all its neighbours. In the case of Taiwan China faces a powerful deterrent: a suggestion in American law that America might come to Taiwan’s aid were the island to be attacked. There is a growing risk that a cocksure China may decide to put that to the test. America should make clear that doing so would be extremely dangerous. America’s allies should echo that, loudly. Hong Kong’s options are bleaker. The Hong Kong Policy Act requires America to certify annually that the territory should in trade and other matters be treated as separate from China. This week the secretary of state, Mike Pompeo, declared that “facts on the ground” show Hong Kong is no longer autonomous. This allows America to slap tariffs on the territory’s exports, as it already does to those from the mainland. That is a powerful weapon, but the scope for miscalculation is vast, potentially harming Hong Kongers and driving out global firms and banks. It would be better, as the law also proposes, to impose sanctions on officials who abuse human rights in Hong Kong. Also, Britain should grant full residency rights to the hundreds of thousands of Hong Kongers who hold a kind of second-class British passport—much as Ms Tsai this week opened Taiwan’s door to Hong Kong citizens. None of this will stop China from imposing its will on Hong Kong. The party’s interests always trump the people’s.

No-frills education

Trust, slavery and the African School of Economics Leonard Wantchekon is trying to build a world-class university in Benin

S LEONARD WANTCHEKON was having breakfast with his wife, Catherine Kossou, in 2007, she recalled how one friend could not trust anyone. Even as a child her friend would say: “That person is going to sell you,” or “He will make you disappear.” The words struck a chord with Mr Wantchekon. Now a professor at Princeton University, he was born in Zagnanado in central Benin. Some of the music he listened to in his youth—such as that of Orchestre Poly-Rythmo de Cotonou—had songs that warned against trusting those close to you. He wondered: “Does this have something to do with slavery?” Benin was a hub of the slave trade. More than 1m people were trafficked from the interior to the port of Ouidah, and then to America, Brazil or the Caribbean. Alongside Nathan Nunn of Harvard University, Mr Wantchekon looked for a relationship between the intensity of the slave trade and low levels of trust (and thus commerce). He found one. The resulting article is

in the top 1% of most-cited economics papers. The story of the paper has broader relevance, explains Mr Wantchekon (pictured). It was his data-mining skills that helped him find the answer. But it was his Beninese background that raised the question. Mr Wantchekon is one of just a few African economists at elite Western universities. Most scholarship about Africa is done by academics www.businessday.ng

who are neither African-born nor based in Africa. Influential development journals have few African scholars on their boards. Most major conferences about Africa do not take place there. The imbalance is partly a result of bias in overseas universities. But it is also because of conditions at African ones. Higher education is not a priority for politicians, who often send their children abroad, or donors, who prefer to fund schools.

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The result is underfunded and overcrowded universities that do not equip enough African graduates with the skills required to get into worldclass doctoral programmes. The consequence is a profound loss, argues Mr Wantchekon. Countless young African intellectuals do not get a fair chance. The world gets a skewed picture of African countries because many of the best researchers come from elsewhere. That may be changing. In 2014 Mr Wantchekon founded the African School of Economics in AbomeyCalavi, Benin. Its aim is to offer African students the highest standards of mathematics and economics teaching, ensuring they can compete with graduates overseas. It is refreshingly drab, with no splurging on a flashy campus or needless technology. The 100 or so students pay $2,400 per year, about the same as at a public university. “This is not about doing something grandiose,” says Mr Wantchekon. It is a model that can be replicated. Another campus was opened this @Businessdayng

year in Ivory Coast. The school draws on several influences. The name nods to the London School of Economics. Princeton is one of more than a dozen “academic partners”. But another institution serves as an inspiration, too.

Monday 01 June, 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Beauty, self-worth & net-worth respect they do deserve. As materialism becomes endemic and a society equates self-worth with net-worth, with far too much emphasis placed on money, power, position and possessions, and acknowledges and celebrates wealth without questioning its source, there is a tendency for people to go to extremes in order to increase their net-worth at all costs and by any means possible leading to dishonesty and corruption. As people compete to build the trappings of wealth and put these on display, the seeds of corruption are sown. Greed and the insatiable love for materialism are at the root of bribery and corruption, which have eaten deep into the marrow of our society. The endless desire of all strata of society, both rich and poor, for possessions, inevitably leads to moral decadence. Name-dropping Some people can’t complete a sentence without name-dropping. It gives a sense of worth that they know “someone” as they think it comes with admiration from others. Does a long list of “contacts” that people would die for, or a non-stop social calendar, make you feel important? It is dangerous to base

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‘

It is natural to feel good about your achievements and accomplishments, but don’t base your self-worth and self-esteem on this or you will be constantly chasing “success” and never stop to live

‘

ow do you feel about yourself? Being locked down under lock and key caused us all, I hope, to really take the time to reflect on who we really are. How did you measure up to your own expectations of yourself, when so much of your freedom has been taken away so suddenly? Did you fall short of your expectations? Has your self-esteem been affected? How is your bank balance faring? “Beauty is in the eye of the beholder” So much marketing sends the message that beauty comes with a particular “look”. If you don’t meet those “requirements”, then you simply are not beautiful. This play on our minds, particularly women, can be extremely damaging to the way you view yourself; from your weight, to your complexion to the size of your “assets”, to aging. This can cause many women to have serious insecurities that can lead to health challenges as they battle with one aspect or the other, of their bodies. Certainly, being good looking comes with advantages but if your selfworth depends only on your looks, you are in for a challenging time as you change through ageing or otherwise. Physical appearance can be fleeting; it is the content on the inside that is timeless. Self-worth versus networth Net-worth is an external measure of how much we are worth in financial terms, while self-worth is an internal measure of how much one values oneself. In our society, there is a tendency to attach self worth and other people’s approval to material things and shows of ostentation. The truth is that those that measure

their self-worth by their net-worth never really feel valuable. It is never enough. Many people live beyond their means in an attempt to feel good about themselves. Getting into debt just to keep up appearances seldom ends well. All the goods and possessions that you possess just don’t reflect who you truly are. The dangers of materialism A society that celebrates a person’s worth based on his or her financial assets, connections and influence is materialistic as it builds social strata based on material things. When people are “encouraged” to amass and cling to possessions, when our pursuit is on making profit, pursuing pleasure, and obtaining position, it leaves little energy, time, and ability to focus on our real purpose and the things that really matter. Materialistic societies rate individuals not on personal character and achievement, but rather on the fantastic display that they are able to put on, and other extreme shows of ostentation. In Nigeria, a societal value system has evolved where material fortune is more widely celebrated than diligence, honesty, honour and integrity; these virtues are seldom accorded the

your worthiness on other people’s success. We must all dig deep and work on ourselves and appreciate ourselves for who we are. If there is one positive that has come from the dramatic change in our lives and lifestyles at this time, it should be that it has helped us address some of those questions around what truly matters. It is the small wins, relationships and seemingly smaller moments that matter and make one feel fulfilled. Who are you beyond the fancy job-title? What do you do? Your

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job title is another area to watch. We often base our self-worth on a job title. “Communications Director”, “Executive Director, Finance”, “I’m an investment banker”, “I’m an attorney in a leading oil company”. Don’t let your job define you; don’t let your job title consume you and forget who you really are. Basing your self-worth on a title comes with huge risk to your psyche; when you shed the title, it could be hard to adjust. A pandemic, a recession causing a sudden shift in the job market, or a major health concern can end your career in the twinkling of an eye and lead to an identity crisis. Look at who you are without the fancy titles and learn to be comfortable with that. Does your self-worth come from your job and all its perks, your money, your position in government or in the private sector and the attendant trappings, or your position in society? Your achievements It is natural to feel good about your achievements and accomplishments, but don’t base your selfworth and self-esteem on this or you will be constantly chasing “success” and never stop to live. Many successes give you a temporary lift and

@Businessdayng

then you are racing on to the next thing. What really matters to you at your core? It is your sense of values and ethos that will give you that life of meaning and purpose. Why is self-worth important? Have you ever thought of how you measure yourself? Reflect on whether you have measured yourself through your looks, your job, your money, your position, or your possessions. Life is not about looking beautiful or accumulating wealth and possessions, because in the end, you cannot take them away with you. We often feel a false sense of security by having a large net worth or more wealth than our neighbor. Net-worth and fortunes can change dramatically; wealth can be transient. Our lives and livelihoods can change in an instant. Wealth is nice to have, and can and does bring pleasure, but it is important to keep it in perspective. In order to develop a sense of well-being beyond material success and its outward trappings, an internal appraisal is necessary; a strong sense of self-worth is the key to true contentment and lasting fulfillment.

Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance. For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

Monday 01 June, 2020

BUSINESS DAY

BD Money Money Brain with JR

Investing

The 4 pillars of personal finance mastery (1 of 4) JR Kanu

n last week’s column, I ended it by stating the importance of deeply understanding and mastering your personal finances. Doing so is the surest way to discover excitement and curiosity in your career rather than being a slave to bills and never-achieved dreams. The first pillar of a mastered financial life is to track your inflows and expenses. This means knowing where your money comes from and where your money goes. I am still in awe of what my mother accomplished with our family’s meager household income. She had a few secrets to making things work and one of them was her impeccable personal accounting. At every point in time, she could tell you how much she had taken to the market and how much she had spent on specific items. This was back in the day before electronic money transfers and ATMs. She was paid in cash and then had to do the deposits herself. Whatever money was meant for the house was then fastidiously tracked. After doing the month’s shopping, she would write out what she had bought and their corresponding prices. She could see where she had spent more than usual or where she had cut down spending. Even after her salary was paid via transfer and ATM cards became commonplace, she did not abandon her discipline of tracking her spending.

When I started earning money, I tried ignoring my mom’s example. Once I received that monthly paycheck, I just wanted to spend and splurge as the spirit leads. As soon as I started tracking my spending, my financial life transformed immediately. For one, my spending dropped dramatically. Simply being aware of your buying has the added benefit of making you less likely to indulge impulse buying. Second, I eliminated all forms of buyer’s remorse by being more deliberate and thoughtful about my purchases. Finally, I found that I was much happier with the things I did choose to buy. Tracking my expenses also enabled me to direct my energy and savings toward big life goals. As the new month kicks off, I challenge you to spend the next 30 days tracking your inflows and expenses. You may not have my mother’s discipline - very few humans do - but there are apps and tools to help you track your spending. In fact, I so believe in the

power of expense tracking that I’ve devoted my professional life to helping people enjoy its benefits. Visit my website - www.REACH.africa - or download the REACH app on your phone and let it help you track your expenses in these next 30 days of June. To join this challenge, here are the steps I recommend: 1. Take a personal financial health check - https://reach. africa/health-check 2. Download an app or set up an excel sheet to document your expenses - if you’ve got an Android, I recommend you check out the REACH app. 3. Identify where most of your money goes each week, month, year - you may need to edit or update details on certain expenses to categorize your transactions. Again, an app is really good for this kind of task. 4. Once you see where most of your money goes, it’s time to assess whether or not your spending aligns with your life goals. If it doesn’t, you now know and are equipped

to make the necessary adjustments. 5. Pro-tip, save your receipts and write notes and memos to yourself after each shopping experience. Users of our app that do this are 80% more likely to stick to their financial goals than users that do not save receipts or write notes. The simple act of notetaking and saving receipts can boost your odds of success by a whopping 80%. The year is basically half done but your goals need not be a bust. Challenge yourself these next 30 days to be vigilant and diligent about your personal finances. Next week, we’ll be discussing passive income and some ways to make your money do more work. About the column Every Monday, JR discusses topics focused on career and money management, seeking to highlight the lessons being learned by young professionals navigating similar paths. If you would like to submit a topic or question, please send a DM to his social media handles - jrkanu on Instagram or email stories@reach.africa About the author JR Kanu is the creator of the app, REACH: Expense & Money Manager - www.reach.africa. This app has helped thousands of young people across Africa to better understand and manage their money. He is also the author of the book, Money Brain: Career & Money Management in Your 20s and 30s - moneybrain.reach.africa He lives in Lagos with his wife and son

Personal Finance

How to Win in a Recession Segun Adams

ooms and busts are part of the normal cycle for every economy but hardly anyone loves a recession. Unfortunately for Nigeria, it is imminent this year and many are expected to lose their source of income, investments and assets too. This will cause demand or spending to drop and firms to shut down, downsize or cut wages leading to lower income and outputs for a period, some economists predict. While the economy surprised with a 1.87% growth from a year ago in the first quarter of 2020, it was the slowest pace of growth in five quarters including Q1 2019 where the general elections slowed economic growth. The CBN last week said it expects a softer blow to the economy than the IMF had

predicted. While the best is hoped for, one thing people do not usually associate with recessions is the creation of wealth. As economic activities slow, prices typically fall allowing savvy investors purchase assets and make investments that would grow in value when the economy eventually recovers. For instance, if you had invested in Nigerian stocks during the 2016 recession, you would have earned over 40% returns by end of 2017, when the economy rebounded. This strategy has proven wise for investors like Warren Buffet, who during the 2008 financial crisis, announced plans to buy US stocks despite falling prices. Today, his advice to “be fearful when others are greedy, and be greedy when others are fearful.” still rings true. This is because while everyone else is selling off during www.businessday.ng

a recession, it usually is a good time to jump on attractive discounts and cheap valuations of fundamentally sound assets - without throwing caution to the wind. Investments in real estate (like in the hospitality class), gold, stocks and perhaps bitcoins might be unnerving but many times, patient investors get rewarded for buying dips in the markets. The prevalent thought during hardships is for people to sell their properties or assets to generate cash thereafter save the proceeds (people become prudent during downturns) but these should be replaced with buy/invest startegy for savvy investors. When the economy starts recovering people will tend to “redeem” assets they had lost or sold during downturns and that’s when the value begins to rise for the new property or investment owners.

Today, the SovereignWealth Fund of oil-producing Saudi Arabia is doing the same spending $7.7 billion dollars on shares of the world’s best companies (Disney, Citibank, Boeing, Bank of America, Facebook etc) amid a global crisis that chopped down oil prices and weakened demand. It is noteworthy that not all shares or financial assets will perform well during a recession; the outbreak of the Coronavirus and socialdistancing measures being adopted will also have unique effects on businesses. This is why consulting with your a financial advisor or investment expert will prove essential. Disclaimer: This article not an advice to buy, sell or hold any asset. Also for economies like Nigeria where many businesses rely on dollar, period of downturns could see inflation surge.

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How to identify a Ponzi scheme BUNMI BAILEY

he COVID-19 pandemic has disrupted business activities globally making countries affected to be navigating uncertain times. And as the disruption in economic and business activities bites harder into the pockets of people, this presents an easy opportunity for illegal fund managers to lure unsuspecting but gullible people to fall prey to their fraudulent activities (Ponzi schemes) A Ponzi scheme is essentially a pyramid scheme that operates on the basis of ‘robbing Peter to pay Paul’. The promoter (or the fraudster setting up the Ponzi scheme) pays the initial investors enormous returns using the investments of later investors rather than from business profits. Named after the 1920s fraudster, Charles Ponzi, who promised investors in New England a 40 percent return on their investments in 90 days, compared with 5 percent interest earned in savings accounts, the Ponzi scheme is the oldest and most common type of investment fraud. Ponzi schemes attract all types of investors. From novices to savvy investors, rich and poor, everyone who is looking to cash in. In Nigeria, Ponzi schemes has always been around. In 2016, many people were entranced by the euphoria of MMM which was lured into the process by premised on a false foundation. And then in December of that year, everything came crashing down. So, if you are looking into a new investment opportunity and you don’t want to fall prey to Ponzi schemes, here are some few tips to guide you. The abnormal high investment and quick returns: For Ponzi schemes, investors are promised that they will make a much higher return than what can be achieved through any conventional investment opportunity. For example, invest N50,000 and get N100,000 in four hours. That is why any investment with “guaranteed” high returns should be carefully examined. Make sure you check out the credentials and background of the person who has approached you about any investment. @Businessdayng

Unregistered Investments and sellers: Most cases of fraud investments that have not been registered are also not recognised by regulators. Unlike most investment schemes such as mutual funds, pension funds, etc., which are all recognised and regulated by the Security and Exchange Commission (SEC), Ponzi schemes do not have such oversight. They have hidden Information and excuses about missing paperwork, errors, or secretive strategies The need for more investors: Ponzi schemes’ survival depends on its ability to continually attract new investors. Without new investors, the fraudster is unable to pay the previous investors, and the whole scheme will unravel. They usually attract people by words of the mouths starting from family and friends, and social media platforms. They hardly place adverts Pressure to act now and reinvest: Ponzi fraudsters pressure people by creating a false sense of urgency by leading them to believe that the deal is only valid for a limited time. The investment opportunity is often

shrouded in secrecy, and the investor is pressured to ‘act now’ while the ‘oncein-a-lifetime’ window of opportunity stands obscurely and suspiciously ajar. Vague business model: Warren Buffett, a famous investor has a saying: “Never invest in a business you can’t understand.” If you don’t understand the business model of how they make their returns, then stay away. According to Gareth collier, a director and shareholder at Crue Invest (Pty) Ltd, the investment’s business model should be easy to understand and, as an investor, one should be clear where and how returns are generated. “Fraudsters are notorious for using complicated verbal constructs such as ‘hedge future trading’, ‘high yield investment’ and ‘offshore investment program’ to intimidate wouldbe investors,” He says

Monday 01 June, 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 29 May, 2020

Top Gainers/Losers as at Friday 29 May 2020 LOSERS

GAINERS Company

Opening

Closing

Change

Company

Opening

Closing

Change

BUACEMENT

N39

N42

DANGSUGAR

N14

N12.9

-1.1

FLOURMILL

N20

N21

ZENITHBANK

N17.45

N16.9

-0.55

CADBURY

N8.65

0.65

VITAFOAM

N5.55

-0.45

DANGCEM

N138.5

N139

0.5

GUARANTY

N24.4

N24

-0.4

MANSARD

N1.85

N2.03

0.18

N5.45

N5.1

-0.35

ETI

ASI (Points) DEALS (Numbers) VOLUME (Numbers)

25,267.82 5,647.00 325,612,379.00

VALUE (N billion) MARKET CAP (N Trn)

4.477

...mixed sentiments trail market

igeria’s stock investors booked gain of about N32billion in the shortened trading week ended May 29. Investors traded for just three days after the public holidays. Market watchers say the gradual re-opening of economic activities following Covid-19 lockdown by the government supports activities at the equity market. The equity market has continued to function seamlessly and positively too despite the global pandemic as dealers remotely trade listed stocks. After sessions of bargains and profit taking, the Nigerian Stock Exchange (NSE) All Share Index (ASI) inched up

by 0.25percent week-onweek (wow) to 25,267.82 points from week open low of 25,204.75 points. Also, the market’s negative return year-todate stood lower at - 5.86 percent. The value of listed stocks increased to N13.168trillion from week

open low of N13.136 trillion. In a new trading week from June 1, the market may witness mixed performance as investors react to more first-quarter (Q1) corporate earnings releases. This may result to some

bargain hunting activities in favour of fundamentally sound stocks and profit taking actions on some counters that have recorded gains recently. “The ASI closed the week positive due to price increases in a number of large cap which neutralised the effect of profit taking witnessed in the last two trading sessions. “We expect a similar pattern next week as investors continue to take position in some counters while taking profit in others which had gained in recent times”, according to Lagos based analysts at Vetiva Securities. “We expect the overall interest in African market equities to strengthen as more countries begin to ease lockdown policies and businesses begin to re-open”, United Capital research analysts said in their recent note to investors.

United Capital research:

African Equity Market: On the path of recovery

espite the Covid-19 pandemic that has engulfed the African continent since Feb-2020 and the associated lockdown measures that were put in place by the government across the continent, major equity markets across the region have continued to recover from their March low, especially in the month of May 2020.

Although on a year-todate (YTD) basis, all the ten exchanges that we track within the continent remained in the red territory, stock market performance in five (South Africa, Nigeria, Tunisia, Morocco and Mauritius) of the countries recorded a month-onmonth (m/m) gain in May2020. The recovery has been boosted to a large extent by the expansionary policies

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that have been adopted by both the fiscal and monetary authorities to combat the negative impact of the lockdown/Covid-19 outbreak. Also, the gradual reopening of economic activities by the government in Nigeria, South Africa, Tunisia, Egypt, and Mauritius have since supported activities at the equity market. Similarly, rebalancing in the global commodity market amid output cut by

Oil exporting countries, easy monetary policy, and gradual reopening of business activities in China, Germany and increasing number of States in the US have since spurred some risk-on sentiment. Looking ahead, we expect the overall interest in African market equities to strengthen as more countries begin to ease lockdown policies and businesses begin to re-open.

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FTSE 100 Index 6,076.60GBP -142.19-2.29%

Nikkei 225 21,877.89JPY -38.42-0.18%

S&P 500 Index 3,017.39USD -12.34-0.41%

Deutsche Boerse AG German Stock Index DAX 11,586.85EUR -194.28-1.65%

Generic 1st ‘DM’ Future 25,178.00USD -279.00-1.10%

Shanghai Stock Exchange Composite Index 2,852.35CNY +6.13+0.22%

13.168

Stock investors gain N32bn in shortened trading week Stories by Iheanyi Nwachukwu

Global market indicators

IOSCO encourages issuers’ fair disclosure about Covid-19 related impacts

h e B o a rd o f t h e International Organisation of Securities Commissions (IOSCO) issued a public statement highlighting the importance to investors and other stakeholders of having timely and high-quality information about the impact of Covid-19 on issuers´ operating performance, financial position and prospects. The pandemic and the uncertainty it has caused have material implications for financial reporting and auditing, including issuers’ disclosures of current and reliable information material to investment decisions. Current circumstances may make disclosures outside the financial statements more challenging and hence make high quality disclosures that much more important. In light of Covid-19, IOSCO confirms its commitment to the development, consistent application and enforcement of high-quality reporting standards and disclosure

regulations, which are critical to the proper functioning of the capital markets. In its statement on importance of disclosure about Covid-19, IOSCO reiterated the importance of disclosure of the impact on amounts recognised, measured and presented in the financial statements. IOSCO also highlighted the importance of transparent and complete disclosures, noting that in an environment of heightened uncertainty, disclosures should be entityspecific and transparent, particularly when involving significant judgments and estimates. The Board restated that in the current environment, it is important that issuers are mindful of the elements of reliable and informative non-GAAP measures and noted that interim financial information will require more robust disclosures of material information and management’s response to the changing circumstances.

NSE, IFC highlight gender implications of Covid-19 ...in inaugural seminar under Nigeria2Equal Programme

he Nigerian Stock Exchange (NSE) in collaboration with the International Finance Corporation (IFC) launched the Nigeria2Equal Programme with an inaugural seminar on Monday May 25, 2020. The virtual seminar, themed, “Gender Implications of COVID-19: Supporting Women as Employees in the New Normal” highlighted the differential socioeconomic impacts the Coronavirus, COVID-19, will have on men and women, with women predicted to face more negative impacts. In addressing concerns around women at home and in the workplace during this crisis, the Head, Shared Services Division, NSE, Bola Adeeko said, “The Covid-19 pandemic has brought about unprecedented changes in our lives @Businessdayng

and businesses. There is, however, the valid concern that the current economic challenges will exacerbate gender inequality, especially because women are inappropriately represented in the informal sector and they are equally underrepresented in more senior levels of management in the corporate world. This seminar, therefore, features a panel of seasoned and experienced experts to discuss best practices on how companies can develop the appropriate actions during and after this pandemic while re-aligning their business structures to the new realities.” Speaking to the critical need to advance gender equality today, the Country Manager, IFC Nigeria, Eme Lore Essien share “In times of crisis, gender issues can sometimes be relegated to the backseat.

Monday 01 June 2020

BUSINESS DAY

abujacitybusiness Comprehensive coverage of Nation’s capital

Benue Frames of Honour: Executive Writers Ltd constitues Advisory Board

L-R: Raquel Daniel, founder, Beyond the Classroom Foundation; Salomi Jermia, member Tabitha Girls Club (TGC); Tayo Erinle, executive director, Tabitha Cumi Foundation (TCF), and Oladipo Funke, representing minister of Women Affairs and Social Development, during the presentation of menstrual kits to TGC in commemoration of 2020 Menstrual Hygiene Day, theme “ It’s Time to take Action” held at VTC Durumi Comumunity Mpape in Abuja. Pic by Tunde Adeniyi

James Kwen, Abuja

Aliyu forfeits salary to secure release of five prisoners in Abuja James Kwen, Abuja

ederal Capital Territory (FCT), Minister of State, Ramatu Aliyu has forfeited her May salary to secure the immediate release of five inmates who could not pay for their fines at the Kuje Correctional Service, Abuja. Aliyu who made the donation while felicitating with the inmates as part of activities to celebrate this year’s Eid-el Fitr (Sallah day) said it would go a long way to decongest the Correctional Service already overcrowded with inmates in the face of COVID-19 pandemic. The Minister also assured the inmates that the FCT Administration would take further legal steps to see to the decongestion of the Kuje Correctional Service. “I will not only support the reduction, but I will also lend my voice in the reduction of prison inmates by picking up some bills. I will carry out the campaign and speak to well

meaning Nigerians because you cannot leave the burden of good governance to government alone. “We know that some of you are awaiting trial, we know that some have not been tried at all, but provided there is law, we will not be lawless. We will go by the law and get in well meaning Nigerians and pay up the fines. This will also go a long way to reduce the number besides government pronouncements. “Government pronouncement as we all know does not come easily in every nation. If government pronouncement comes very easily, then definitely, the name correctional centre will be misplaced. We know Mr. President recently spoke our minds when he spoke about the need to decongest our prisons. “And I know my Minister, a God fearing man, and a man with a heart of gold, he will certainly sent message across. God willing, FCT Administration will make moves to decongest our prison based

on merit. I in my own capacity, I stand here personally on this Sallah day, I want to donate my salary for the release of 5 inmates”, she said. Aliyu affirmed that the Correctional Service has been positioned to refine the inmates in the rebuilding of a better society, noting that they could make the best out of the experiences gained at the service. “There are times in our life that we erred, but to err is human, and to forgive is divine. There are times in our life that we are put to test, sometimes, we passed the test, sometimes we failed the test. For various reasons, we might have found ourselves at the correctional centre. But you know what, you can make the best out of it. “As we appreciate you, we pray for you to come out to be a better citizens that will give us a Nigeria of our dreams. Somebody else cannot give us Nigeria of our dreams and you cannot give us Nigeria of our dreams from outside, you can only give us Nigeria of our

dream from within and I know you are already at the preparatory stage. When you leave here either by amnesty or whatever pronouncements, you can only become better citizens,” she added. Earlier in his welcome remarks, the Comptroller of Correctional Service, FCT Command, Mustapha Atta commended the Minister for her visit but expressed displeasure over the number of inmates awaiting trial with 70% of the inmates on awaiting trial list. Atta disclosed that the Kuje Correctional Service with a capacity of 560 inmates, now accommodates no fewer than 866 inmates and appealed to relevant authorities to work towards the decongestion of Correctional Service. Items donated at the visit include 250 packs of cooked jollof rice, 500 bottles of soft drinks, 500 bottles of table water, 1000 face masks, 50 bags of rice, 50 cartons of spaghetti and 100 cartons of indoomie noodles.

NITDA to create over 1 million jobs by 2025 via ICT Gift Wada, Abuja

he Director General of National Information Technology Development Agency (NITDA), Kashifu Abdullahi has disclosed that the Agency is targeting the creation of over 1 Million jobs in Nigeria by 2025 through Information and Communication Technology (ICT). Abdullahi made this known at the draft presentation of the National Outsourc-

ing Strategy for Nigeria 20202025 designed as a response to Covid-19 in Abuja. He said the framework provides a veritable opportunity for promoting an enabling institutional, legal, regulatory, technological and infrastructural environment for sustainable development and rapid growth of ICT enabled outsourcing industry in Nigeria. “NITDA is presenting a draft National Outsourcing Strategy to you the expert for review. The strategy is in line www.businessday.ng

with Government initiatives and priority projects such as the Economic Recovery and Growth Plan, Digitization of government services, lifting Nigerians out of poverty and transforming Nigeria to a knowledge based economy in the wake of the current global pandemic” “The strategy aims to foster an enabling institutional, legal, regulatory, technological and infrastructural environment for sustainable development and rapid growth of IT

enabled outsourcing industry in Nigeria. And we targeting creating over a Million jobs in Nigeria by 2025”, Abdullahi stated. He said to achieve these ambitious targets, the plan is focused on seven critical pillars including; infrastructure, skill and human capital development, branding and promotion, digital finance and incentives, innovation and entrepreneurship, trust, privacy and security as well as multi stakeholder governance.

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he Management of Executive Writers Limited has constituted an Advisory Board for her Who’s Who project, tagged Benue Frame of Honour (2020) with David Iornem as Chairman. Executive Writers Limited, is a composite communications outfit engaged in a broad spectrum of specialist consultancies and has Frames of Honour as its flagship project for the year. A statement by Simon Imobo-Tswam, Editor/Team Leader of Benue Frames of Honour said other members of Advisory Board include: Terhemba Nongo, Egbe Emmanuel, Sam Abah, Mike Utsaha, Chris Alashi, Rodney Adzuanaga, Betty Anyiman, Josephine Wanger and Imobo-Tswam. According to him, Iornem

who chairs the Board, is a world-class Professor and would bring to the table his impeccable political, managerial, educational and journalistic credentials in the project. Imobo-Tswam explained that Nongo, is the immediatepast Managing Director of Nigeria Export Processing Zones Authoritaty ((NEPZA) and thoroughbred professional of unimpeachable standing is the Zone ‘B’ (BenueNorthnorthwest) Deputy Chairman and Abah, an accomplished businessman, media personality and international author is the Zone ‘C’ (Benue South) Deputy Chairman. “The others are professionals or entrepreneurs in their own rights, including ImoboTswam, a seasoned journalist who has just left public service as the Head of Corporate Communications in a Federal Government agency.

Troops rescue 241 Boko Haram captives as terrorists surrender Godsgift Onyedinefu, Abuja

he Nigerian military says it’s troops of Operation Lafiya Dole, have rescued 241 captives abducted by the Boko Haram terrorists and killed 14 of their fighters in the country’s North-east region. John Enenche, Coordinator Defence Media Operations (WHO) who disclosed this in a statement said a clash took place between the troops and Boko Haram in Mudu town, Gamboru area of Borno State on May 24. Enenche stated that following the clash, the Army rescued 136 children and 105 women in an operation against the ter-

ror group, and 14 Boko Haram members were neutralized duringtheoperation,whileatop terrorist kingpin surrendered. He added that a remarkable amount of ammunition was also but the Army suffered no losses or injuries during the operation. The Co-ordinator said the rescued persons have been safely evacuated from the village and are currently under medical observation, while the village has been cleared. Enenche also disclosed that the troops of 151 Battalion on 26 May 2020 successfully killed several Boko Haram Terrorists, including several suicide bombers, while numerous others fled with gun shot wounds.

COVID-19: Cadbury, PWC support FCTA with palliatives James Kwen, Abuja

ad bur y Nig e r ia Plc and Price Waterhouse Coopers (PWC), have donated assorted palliative items to the Federal Capital Territory Administration’s (FCTA) food bank to help vulnerable communities in the battle against COVID-19 pandemic. The items donated by Cadbury Nigeria Plc include 500 cartons of bournvita beverage, while PWC donated 600 bags of 10kg rice, 300 cartons of indoomie and 42 cartons of vegetable oil. Presenting the items to the Administration, the Territorial Commercial Manager of North West, Cadbury Nigeria Plc, Ladi Sonuga, com@Businessdayng

mended the steps taken by the administration to manage the COVID-19 pandemic in the Territory, noting that it is indeed a challenging period for all Nigerians. While calling for a concerted efforts to sustain the fight against the spread of COVID-19 in the country, Sonuga revealed that the lockdown announced by President Muhammadu Buhari, has severely hampered operational efficiency of most companies. On his part, the Spokesman of Price Waterhouse Coopers (PWC), Tolu Adeleke also appreciated the efforts of government at all levels in the battle against the pandemic, stressing that PWC has supported government efforts at different strata.

Company IN FOCUS

BUSINESS DAY Monday 01 June 2020 www.businessday.ng

Fidson Healthcare plc: Turning the Corner to Profitability Path Segun Adams

eading drug maker Fidson reversed previous year losses in a profit-making 2019 where moves by the company to deleverage its balance sheet and cut the high cost of borrowing, coupled with improved cost efficiency, helped offset lower sales. Fidson made a profit of N407.19m compared to a loss of N97.45m 2018. The drugmaker blamed its revenue and profit woes in 2018 on an increase importing raw materials, Nigeria’s port congestion and Naira devaluation, all of which, he said the impact on operating costs that could not be passed to consumers. The company also faced a high cost of borrowing which ate into its profits. Finance costs eroded 94% of operating profit of Fidson in 2018 contributing directly to its first loss in at least five years. This prompted Fidson to take steps in ensuring that cost pressures especially borrowing cost were reduced. The company said plans were in top gear to reduce energy cost by moving from diesel to gas-fired power generators, introducing new products and cutting out middlemen. The company also announced a right issue to inject fresh N3billion capital of which about 38% would be deployed as working capital and the remaining N1.8 billion would go towards paying off parts of its most expensive debts. Fidson as at the time of announcing its Right Issue planned to pay down lease facilities worth N223m obtained separately from Financial Derivatives and Frontline, overdraft of N541m obtained separately from FSDH, FCMB, GTBank and Access Bank, and roughly N1bn of Import Finance Facility from independently from FCMB, GTBank, Access Bank and FSDH. In all, N1.817bn worth of loan was planned to be taken off the company’s balance sheet. As at the end of 2019 the company’s result showed a decline in the current and non-current portion of all existing interestbearing loans and borrowings, although new liabilities pushed total 8% higher to N6.3bn. Finance cost of the company fell about 10% to N1.74bn which is 77% of operating profit versus 90% in the previous year, thus aiding a return to profit path. Interest on bank loans declined 6% to N1.58bn and interest on bond slumped 62% to 51.77m, while interest on lease

loan fell 4% to N105.87m. The year however saw continued a double-digit slide in sales by 13% to N14bn, as all business segments experienced a slowdown. Consumer Unit was the worsthit business segment, plunging by as much as 97% in the year. The business unit introduced in 2016 represents household items and contributed less than half-apercent to total revenue. On the other hand, Ethical segment for sales of drugs, injectables and infusion, remained dominant despite a 13% slowdown as it contributed 56% of total revenue. The third segment Over-theCounter sales of drugs decline 13% to contribute 44% to overall revenue. Cost of sales fell 21% thanks to better cost management across all business segments and a 29% cut in energy cost and a 43% decline in factory overheads in the year. This meant Fidson earned roughly N44 from every N100 sales which is higher than N40

made per N100 in 2018. Overall, addressing its pain points has helped Fidson bounce back, but there is revenue has slowed down. With Fidson’s state-of-the-art factory in Ogun State and increased capacity utilization, the company is positioned to enjoy from renewed government interest in local drugs manufacturing following the outbreak of the novel coronavirus. Fidson was the first beneficiary of a N100bn healthcare intervention fund by the Central Bank of Nigeria. Governor Godwin Emefiele in March told journalists that from the N100bn health sector facility, the bank had approved for Fidson Healthcare N2.5 billion to expand its plant into the production of ethical drugs and intravenous. This support would provide capital for expansion of Fidson’s activities and lift outlook for the Pharmaceutical and Health Sector which according to indications have become top priorities for Nigeria going forward.

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Fidson currently runs a Current Good Manufacturing Practices (CGMP) compliant manufacturing facility and are one of a few Nigerian pharmaceutical manufacturers that are candidates for the WHO GMP certification

In the first quarter of 2020 Chemical and Pharmaceutical Products GDP grew 0.58% yearon-year compared to 0.92% in Q4 and 1.66% in Q1 2019. Health and Social Services grew 1.06% versus 0.56% in Q4 and 0.16% in Q1 2019. The broader economy surprised with a 1.87% growth in the quarter. Fidson in History Started as a local distributor of pharmaceutical products in 1995, barely a year after Fidson moved into the importation of its own brand of finished medicines. Determined to make an impact on Nigeria’s growing population, Fidson set up its first local manufacturing facility in July 2002. In March 2005, Fidson became the first company in subSaharan Africa to manufacture Antiretroviral (ARVs) drugs. In February 200, Fidson set up a second manufacturing facility and ceded the former manufacturing facility to an international joint venture project, which led to setting up of Ecomed Pharma Limited. Fidson currently runs a Current Good Manufacturing Practices (CGMP) compliant manufacturing facility and are one of a few Nigerian pharmaceutical manufacturers that are candidates for the WHO GMP certification. The GMP certification is the aspect of quality assurance that ensures that medicinal products are consistently produced and controlled to the quality standards appropriate to their intended use and as required by

the product specification. Fidson’s shares were quoted on the floor of the Nigerian Stock Exchange on June 5, 2008. As of December 31, 2018, the issued share capital is held 38.86percent directly by its directors and 5.74percent indirectly by directors while 54.94percent by the investing public. The company realises its revenue from the sale of Ethical Products, sale of Over the counter drugs and sale of paper products and diapers. Fidson shares have gained 39% in the last one month and are trading at N3.4 a unit, the highest since early December 2019. Leadership Fidelis Ayebae, a 1976 graduate of civil engineering from the Mainland Institute of Technology is the founder, CEO& MD. Fidelis has worked in various capacities with a number of organizations among which is CitiBank Limited. As of December 31, 2018, Fidelis owns a 35.44percent stake in the healthcare company. He also doubles as the chairman of Nem Insurance Plc and as of December 31st, 2018, Fidelis owns a total of 24.37million units of shares in the insurance company. He is an Associate of the Chartered Institute of Administration and also a member of the Nigeria Institute of Management. His wife, Funmilola is a non-executive director of the company. Other non-executive directors include Emmanuel E. Imoagene, Mabel Ndagi, and Segun Adebanji, who is the chairman.

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