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Ignoring Nigeria’s fiscal realities, Senate raises 2019 budget by N90.3bn OWEDE AGBAJILEKE & MICHAEL ANI

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he Senate on Tuesday demonstrated Nigeria’s penchant for ignoring fiscal realities as it passed the 2019 budget, raising it by over N90.3 billion to N8.916 trillion, from an earlier draft of N8.826 trillion that was submitted by President Muhammadu Buhari five months ago.

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Inside DisCos start meter distribution today, but payment doesn’t confer ownership P. 39

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NGUS apr 29 2020 362.41

g L-R: Patrick Pouyanne, group CEO/ chairman, Total, presenting a model of the Egina FPSO to Vice President Yemi Osinbajo, and Ibe Kachikwu, minister of state for petroleum resources, during a visit of Total management to the Vice President at the State House, Abuja, yesterday.

... approves N23bn for outgoing, incoming lawmakers

Watch out for BusinessDay special report on insurance industry, ‘Overview of the Nigerian Insurance Industry: Unleashing Vast Potential’, tomorrow

fgn bonds

Treasury bills

Why WEMPCO Group seeks to offload Oriental Hotel A

ODINAKA ANUDU, ENDURANC OKAFOR & OLUFIKAYO OWOEYE

major debt burden is weighing heavily on Western Metal Products Company Limited (WEMPCO) Group as it plans to sell its flagship five-star Oriental Hotel, BusinessDay has learnt.

According to a document seen by BusinessDay on Tues-

Asking price $250m, may exit Nigeria entirely 14,000 jobs could be lost at steel plant alone

day, owners of the Luxury Oriental Hotel, situated in-between the Lekki and Victoria Island areas of Lagos, are asking for $250 million (N90 billion).

The group has fallen on hard times and is considering an exit

from Nigeria along with its steel plant, which has 700,000 tonnescapacity and employs about 14,000 people, mostly Nigerians, sources said.

“When deep, long-term guys like these are exiting, then it is a

very worrying sign. People like these are not supposed to exit,” an economic analyst, who asked not to be quoted, said.

Founded by Lewis Tung and Continues on page 38

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news Apapa: Beyond opening of truck parks, corruption concerns remain CHUKA UROKO

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he planned opening of the Lilypond Terminal and the trailer park in Apapa in Lagos on Thursday and Friday, respectively, has been commended by stakeholders, especially residents, business owners and port users, as a major step towards solving the gridlock and congestion problems that have become unmistakable features of the port city.

Concerns, however, remain over the large-scale corruption taking place on Apapa roads and bridges where numerous checkpoints manned by all categories of uniformed men make large sums of money per minute

through extortion.

“Opening the two terminals to take trucks off the roads and bridges is a good development in the search for solution to Apapa problem, but there is a missing link and that is the monumental corruption that has ensured Apapa does not work,” said a business owner who pleaded anonymity.

“Frequently, we hear President Buhari tell us that as you fight corruption, corruption fights back. If that observation is anything to go by, how are we sure that the corruption going on now in Apapa will not fight back if the perpetrators are asked to leave the scene, which is the next best

analysis

L-R: Alex Osunde, group chief executive officer, LSINIGERIA; Olayemi Cardoso, chairman, board of directors, CitiBank; Ademola Adebise, managing director, Wema Bank, and Ayo Ajayi, MD/CEO, Trusted Edge Consult, at the Aston University Alumni Global Celebration, Nigeria chapter in Lagos.

Nigerian grain farmers miss out on Southern Stanbic IBTC, FBN attract most inflow from money market investors in 2019 Africa opportunity on weak irrigation system Continues on page 38

...as money-market funds rake in highest NAV ... as irregular rainfall delays 2019 planting season Endurance Okafor

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tanbic IBTC and FBN funds have attracted the most inflow from money marketinvestorssofarthis year, a BusinessDay year-to-date analysis of the 19 money market funds listed on the Security and Exchange Commission (SEC) shows.

Out of the total N554.98 billion asset managed by money market funds, Stanbic IBTC reported a Net Asset Value (NAV) increase by 0.76 percent from 47.19 percent market share it recorded for the week ended January 4, 2019 to N266.13 billion or 47.95 percent for the week ended April 18, 2019.

SEC figures also showed that FBN money market fund was next after Stanbic IBTC in terms of NAV as it reported 28.33 percent or N157.25 billion for the review period.

ARM, AXA Mansard and Afrinvest Plutus Money Market Funds also made the list of funds with the highest NAV as a share of the entire asset managed by the fund with 9.97 percent, 4.76 and 3.64 percent, respectively.

The need to analyse the funds in the money market asset class arises from the fact that the investment portfolio has the highest market share of the mutual funds listed on the Exchange.

Money market funds as a percentage of total mutual funds increased by 0.41 percentage points from 75.64 percent or N487.5 billion for the week ended January 4, 2019 to 76.05 percent or N554.99 billion for the week ended April 18, 2019.

“Funds managers will prefer to put investments of unit holders in instruments that have the highest yield and lowest possible risk,” Johnson Chukwu, MD, Cowry Asset Limited, said.

Money-market funds are open-ended mutual funds that invest in short-term debt securities such as treasury bills, certificate of deposits, and commercial paper. They are usually managed by skilled fund managers who are competent to optimise shareholder returns by arranging a balanced mix of portfolio.

The closest to the money marketfundswithrespecttoNAV isfixed-incomefunds.Itreported asset under management of N70.44 billion or 9.65 percent shareoftheentireNAVmanaged by the listed mutual funds.

Real estate funds and mixed-income funds were next in line as they both reported market share of 6.75 percent and 3.78 percent, respectively.

For the week ended April 18, 2019, bond funds, equitybased funds and ethical funds reported the least share of the mutual funds asset as they had 2.23 percent, 1.8 percent and 0.81 percent, respectively.

On the reasons why money market fund reported the highest AUM in the review period, an analyst from Alpha Morgan Capital Managers Limited, who asked not to be identified, said it attracts the highest investors because it is risk-free.

“That is, the return will always be positive and it is shortterm. Investors are sure that they will get their return at the end of the day, no matter how small it is,” the analyst said.

markets

•Continues online at www.businessday.ng www.businessday.ng

JOSEPHINE OKOJIE & BUNMI BAILEY

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he drought that has ravaged Southern Africa since 2018 as well as floods from the Cyclone Idai incident are opportunities for grain-growing Nigerian farmers and exporters, but weak irrigation system and dysfunctional dams have hindered the maximisation of these opportunities.

The widespread flooding and drought have caused crop losses and low production in several Southern African countries including South Africa, the region’s largest maize supplier.

But Nigerian farmers are unable to seize the moment of opportunity because of their over-reliance on rain-fed agriculture and the fact that 96 percent of dams in the country are dysfunctional.

“We are not prepared to leverage the opportunity of exporting grains to Southern African countries to meet their current shortfall despite being the second largest

commodities

maize producer in Africa,” AfricanFarmer Mogaji, chief executive officer, X-Ray Farms Consulting, told BusinessDay. “This is because most of our farmers are yet to commence 2019 planting season owing to irregular rainfall we are currently experiencing and the dams that were supposed to be an alternative are not functioning optimally,” Mogaji said.

Apart from the current flooding, South Africa, the continent’s largest maize producer, had in January predicted a decline in its 2019 production as dry conditions hit main growing provinces in the country. Many experts saw that as an opportunity for Nigerian grain farmers, but that has not materialised.

The Nigerian government has repeatedly said it is committed to reviving the agricultural sector, yet 96 percent of dams located across the country are dysfunctional.

Experts say the idea behind construction of dams was in

line with the need to boost water supply, provide reservoir for flood control, irrigation farming and hydroelectricity.

But this has not been the case for irrigation farming as most of the dams across the country do not have the needed facilities to irrigate farms as they have since been neglected by various levels of government.

Nigeria has a total of 264 dams with a combined storage capacity of 33 BCM of water for multipurpose uses, of which 210 are owned by the Federal Government, 34 by the states and 20 by private organisations, according to the Federal Ministry of Water Resources.

However, experts say only five of the 264 dams in the country are fully functional.

Nigeria currently has irrigation land potential of about 3.1 million hectares out of which only 150,000 hectares have been developed, according to a document on the Federal Ministry of Water Resources website.

Prince Oyefeso, chief executive officer of Oyefeso Farms, said “the weak irriga-

tion structure and issues with the dams are the reason why farmers still depend on rainfed agriculture”.

“The few dams that are functional are underutilised. If the government is really serious aboutrevivingagriculture,thenit must ensure that all dams across the country are functional and fully utilised,” said Oyefeso.

He stated that the country has been unable to earn more foreign exchange through the sector because of the overreliance on rainfall for farming activities.

“Lots of traders from neighbouring countries have always cometomopupourgrainsespeciallymaize.So,withthedrought and flood incident we are supposed to have more markets for our grains, especially as one the top-growersinsomegrains,”said Victor Iyama, president, Federation of Agricultural Commodity of Nigeria (FACAN).

“Nigeria should start looking at boosting its own production to meet local and export demand. It takes only three months to grow most grains and we have both the

Transcorp’s N105.3bn bid wins Afam Power auction ISAAC ANYAOGU

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ransnational Corporation of Nigeria plc, a publicly quoted company with diversified investments in hospitality, agribusiness and energy sectors, has emerged the preferred bidder for the Afam Power plc, beating two other contenders – Diamond Stripes Consortium and Unicorn Consortium – with a

N105.3 billion bid.

In the same bid auction held Tuesday, Quest Electricity won the bid for 60 percent equity in Yola Electricity Distribution plc with a bid of N19 billion. It beat Sandstream Nig Limited, who was disqualified for not submitting a bank guarantee alongside the commercial proposal as required by the Bureau of Public Enterprise (BPE).

M. K. Ahmed, chairman,

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Technical Committee of the National Council on Privatisation (NCP), announced Transcorp Power Consortium as the winner of the commercial and financial bid for the privatisation of Afam Power plc. Diamond Stripes emerged the reserve bidder with a bid of N102.4 billion.

This means that the company has acquired 100 percent shares in the Afam Electricity Generation Company (Afam @Businessdayng

Power plc and Afam Three Fast Power Limited), bringing Transcorp available power generation to over 1,051MW, the second biggest after Egbin with 1,320 MW capacity.

“I think this is a good omen for the power sector,” Chuks Nwani, an energy lawyer, told BusinessDay by phone. “It means some players still have confidence in the power sec-

Continues on page 38

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NEWS

Nigerian pharmacists search for ‘disruptive innovations’ to industry’s challenges Anthonia Obokoh

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hile low percentage of local manufacturing of drugs still burdens the pharmaceutical industry, the National Association of Industrial Pharmacy (NAIP) wants stakeholders to think about churning out disruptive innovations capable of solving the country’s health problems.

Ignatius Anukwu, national chairman, NAIP, says Nigerian companies are currently producing only 30 percent of drugs consumed in Nigeria, while 70 percent is being imported.

So, the association will be holding a conference in Anambra State to further drive the conversation on innovation in the industry by way of manufacturing using local resources available in Nigeria.

The conference, themed “Disruptive Innovations: Unleashing the Nigerian Pharmaceutical Industry” will hold at Golden Tulip Hotel, Agulu, from May 1 - 4, 2019.

It hopes to propel stakeholders to “look inwards” for local manufacturing.

The keynote address will be delivered by the Chief of Party, PQM, United States Pharmacopeia (USP), Chimezie Anyakorah. The address is expected to explore and recommend bold initiatives that would bring about the desired boom of the Nigerian pharmaceu-

tical industry.

“The theme of the conference is a bit of a fallout of the theme of the National Conference of Pharmaceutical Society of Nigeria (PSN), which we are a technical arm, and that is “Disruptive Innovation: A case study of Nigeria,” Anukwu said at a media briefing.

“So, we are taking this theme and making it a continuity from our previous conference. Last year, we looked at imperatives –drug security in Nigeria. So in the event that we can’t import, what happens to our 180 million population,” he further said, regarding the low rate of drug production in Nigeria.

He told journalist that buying the raw and packaging materials from abroad before producing increased cost and make the industry less competitive.

“Now, what we are looking at is that, while we improve on the capacity of what we produce in Nigeria, let us innovate, because it is by innovation that we can earn more and add more value.

“What we are advocating with this conference is disruptive innovation –how can we begin to look at the things we have here, and get something that will be worthwhile for the international community and put Nigeria on the international map. To say ‘that medicine came from Nigeria’, that we can import it to Europe, and Asia, and get foreign exchange,” he said.

Dangote Flour investors shun fundamentals, react to acquisition plans by Olam … share price hit all-time high as investors gain N35bn David Ibidapo

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hunning performance, investors in Dangote Flour has consistently mounted buy pressure on the company’s stock, which has seen stock price maintain an 11-day upward spree on the Nigerian Stock Exchange (NSE).

This has seen price of the company rally to its all-time high as of close of trading on Tuesday, with share price closing at N18.80 after rising 9.94 percent in the early hours of trade from N17.10.

This is despite a declining performance in the company’s bottom line as shown in its recently released Q1 2019 result.

According to financials released by Dangote Flour on the NSE for the period ended Q1 2019, numbers show a loss after tax of

N2.89 billion from a profit of N1.58 billion recorded in Q1 2018.

Analysts believe the reaction is on the back of information towards the acquisition of Nigeria’s third largest miller by market capacity,

by Olam, a Singaporean company.

Gbolahan Ologunro, “investors’ interest in the stock is due to the offer by Olam to acquire the outstanding shares of Dangote Flour.”

The acquisition by Olam will possibly increase resultant company’s market share to a potential 43 percent overtaking Flour Mill of Nigeria (FMN) with a market share of 32 percent.

Analysis of company’s financials shows that the decline by 283 percent in Dangote Flour’s bottom line was a resultant effect of a sharp decline by 13 percent in revenue and growth by 6 percent in cost of sales, pulling down significantly gross profit by 99 percent to N51.8 million in Q1 2019.

Since the acquisition of Tiger Brand Consumer Goods plc by Dangote Flour in 2016, data collated have shown a year-on-year average decline in revenue by 11 percent in the first quarters in the last 3 years.

Meanwhile, cost of sales during the last 3 years has increase at an average rate of 2 percent, but grew the most in 2019 at 6 percent.

Also, during the stated period, Dangote Flour has recorded consistent decline in its bottom line at an average of 161 percent.

Dangote Flour Mills has been recording double digit growth in earnings since 2016 - a year after Aliko Dangote repurchased it from South Africa food giant, Tiger Brand Limited.

However, recorded its first full year loss in 2018 after it posted a loss of N1.15 billion, from a profit of N15.13 billion the previous year depicting a tough and

unpredictable macroeconomic environment.

Analysts say Africa’s richest man Aliko Dangote is selling the subsidiary because he wants to exit an industry he cannot have market leadership, and not because the company is underperforming or under serious financial threat.

“If you are selling a business within the space of seven years, it then means you want to exit.

It is obvious they do not want to be part of a business they do not have market leadership,” Ifedayo Olowoporoku, consumer goods research analyst at Vetiva Management Limited, said.

Since the announcement of receipt of binding offer released

by Dangote Flour on the exchange, investors have seen their wealth grow by N35.25 billion to N94 billion as of close of trading on Tuesday.

Toni Kan’s Nights of the Creaking Bed makes UK debut

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assava Republic has announced the release of the UK edition of Nights of the Creaking Bed, Toni Kan’s critically acclaimed and award winning short story collection.

The book hits stores April 30, 2019, in the UK as the first book to be released under the company’s new imprint, Cassava Shorts.

First published in 2009, the UK edition features new stories and a brand new cover that appropriates the yellow of Lagos danfos.

Winner of the Saro Wiwa/ NDDCprose prize in 2009, Nights of the Creaking Bed has received praise from home and abroad.

Chika Unigwe, author of On Black Sisters Street, NLNG prize winner and Booker Prize International judge, describes the books as “a brash and vibrant collection that brims all at once with sadness and humour; suffering and compassion; longing and loss.

Toni Kan is an astute observer of human nature and writes convincingly about the ineluctable grasp of poverty and culture on his characters.

Zukiswa Wanner, Zambianborn Kenyan-based author of London, Cape Town, Johannesburg, has said, “In Nights of the Creaking Bed, Toni Kan holds a mirror to humanity’s ability to love tenderly one minute and destroy cruelly in the next, thus capturing with style the complexity and unpredictabil-

ity of not just his characters but ourselves. A necessary addition to the library of any discerning reader.”

For Michael Sears, one half of the Michael Stanley tag team, the collection’s “Lyrical prose and harsh insights make each story a sweet and sour treat.”

Sefi Atta, author of Every Thing Good Will Come pand Caine prize judge, says, “Beginning with deliberate brevity and ending on a note of lush lyricism, these fascinating vignettes of Lagos life showcase an array of peripatetic characters who are hopelessly stuck in their dilemmas.”

Expressing his delight in a series of social media posts, the author hailed by fans as Mayor of Lagos wrote: “New look. New Imprint. New stories! The UK edition of my award winning short story collection, Nights of the Creaking Bed, hits the shelves from today.

“This news makes me happy on several levels. Nights was published 10 years ago but it has never gone out of print and has been used by over 30 people I know for their theses or dissertations. Secondly, it was my first properly published book with a proper publisher, contract and royalties.

“But above all it is the first book to be issued under Cassava Republic’s new imprint; Cassava Shorts. Every writer wants to publish a work that endures and defines him, It is early days yet but Nights remains a gift that keeps giving.” www.businessday.ng

L-R: Tinuade Awe, non-executive director; Haruna Jalo-Waziri, MD/CEO; Oscar Onyema, chairman, and Charles Ojo, company secretary, all of Central Securities Clearing System (CSCS), at the 25th annual general meeting of the company in Lagos.

Pic by Pius Okeosisi

Nigeria’s population crosses 200m mark, but 23.1% can’t find job … 54% falls under working age group Endurance Okafor

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igeria’s population has now climbed to 201 million in 2019, figures compiled from the State of World Population Report released by the United Nations Population Fund (UNFPA) show.

According to the data by UNFPA, a UN organisation that focuses on population activities around the world, more than half of Nigeria’s total population falls in the working age bracket.

Africa’s most populous nation has 54 percent of its total population within the age bracket 15 - 64 years old; this is spurred by the 2.6 percent average annual growth rate the

country has reported in the last nine years.

“Nigeria has a dynamic economy and a large population expected to double in the next two decades,” UNFPA said.

The recent data by UNFPA are in line with the projections of an earlier report in 2017 by the UN Department of Economic and Social Affairs, which projected that Nigeria will overtake US and become world’s third most populous country by the year 2050.

Although Nigeria is currently the seventh most populous nation in the world, with more than two decades to the projection of 400 million, the country has already attained more than half of the UN forecast.

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The large population of the country, which many economists have said is a huge opportunity, owing to its young people who provide market for the foreign and locally manufactured products, also comes with its nightmares.

Nigeria’s almost 3 percent annual population growth rate leaves the country’s 1.93 percent GDP growth for the full year 2018 anything not desirable.

GDP growth has underperformed population growth since 2015, according to data compiled by BusinessDay, following the collapse in oil prices.

Most recent data from the National Bureau of Statistics (NBS) show that Nigeria’s un@Businessdayng

employment rate ballooned to a nine-year high of 23.1 percent in the third quarter of 2018.

Unemployment is the proportion of those in the labour force who was actively looking for work but could not find work for at least 20 hours during the reference period, to the total currently active population, as defined by the International Labour Organisation (ILO).

“Unemployment rate will not reduce when the country is producing more than it can feed. It would require about 6-8 percent or more in GDP growth for there to be a decline in the continuous rise of unemployment in the country,” Bismarck Rewane, managing director of Lagos-based Financial Derivatives Company, said.

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WEF ranks Nigeria among IIM Africa to assist regulatory 103 countries with economic bodies develop progress but low social impact framework on as having the highest numDaniel Obi information ber of people in extreme recent research on poverty. governance Jumoke Akiyode-Lawanson

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nstitute of Information Management (IIM) has indicated its readiness to assist regulatory agencies to identify information gaps, information management needs, and develop the required framework for effective data/information governance.

The Institute is also poised to assist the regulatory bodies on setting the parameters for data/information management and usage, creating processes for resolving data/information issues and enabling regulatory bodies and other stakeholders make decisions based on high-quality data and well-managed information assets.

Oyedokun A. Oyewole, president/chairman, governing council, IIM Africa, says these are part of the council’s bid to promote data and information management standards and governance across sectors in Nigeria, as it plans to host the 2019 IIM Africa Information Management and Literacy Week, with activities lined up at different locations in Lagos.

The Information Management and Literacy week, he says, is aimed at promoting information management literacy across cultures, people, educational institutions, organisations, policies, professions, initiatives, and nations.

“These include intergovernmental organisations, education institutions, technological intermediaries, development organisations, associations, NGOs, research groups, educators, media professionals, library, archive and information professionals, policymakers, regulators, and practitioners in the country,” Oyewole states.

According to him, this year’s theme; ‘A reformed and renewed society through information literacy’, recognises all the ways that information supports organisations and institutions in effective governance, providing intelligence and analytics of functions and processes for effective operations, profitability, mitigation of risks, effective and judicious use of resources, knowledge preservation which all results to effective decision making.

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Inclusive Development Index (IDI) undertaken by the World Economic Forum (WEF) in 2018 has ranked Nigeria among 103 countries globally with slow social progress, even in the presence of economic progress in those countries.

Figures from National Bureau of Statistics (NBS) indicate that Nigeria’s GDP advanced 2.4 percent yearon-year in the last quarter of 2018, following a 1.8 percent expansion in the previous period while Foreign Exchange Reserves stood at $42 billion in February 2019, indicating some progress in Nigeria’s economic trajectory.

In its report, WEF says although Nigeria’s economic growth has increased steadily in previous years, but in spite of receding oil production, such growth has not benefitted Nigerians, as the poverty rate stands at 77.6 percent and the daily median income level is $1.80.

This view is equally held by other stakeholders and social groups that despite stable growth, Nigerians are still left wanting in areas of healthcare and basic infrastructural facilities, having to deal poverty.

In mid-2018, Brookings Institution ranked Nigeria

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At the end of May 2018, the report said Nigeria had about 87 million people in extreme poverty, compared with India’s 73 million. It also said that extreme poverty in Nigeria is growing by six people every minute.

This is in spite of abundant resources in the country.

A year later, precisely late March 2019, a report by Steve Hanke, an economist from John Hopkins University in Baltimore, United States, ranked Nigeria as the sixth most miserable country in the world. The Misery Index was calculated using economic indices including unemployment, inflation and bank lending rates.

“Despite having the second lowest level of public debt among emerging economies (18.6%), geopolitical instability in Nigeria due to ethnic and religious factions will impede the government’s efforts to translate investments in infrastructure into inclusive growth”, WEF said.

WEF, which ranked Nigeria among other 19 African countries, says the slow social progress has further widened social inequality that has led to political polarisation and erosion of social cohesion.

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comment The real haters of Ndi Igbo

Tochukwu Ezukanma

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am incontrovertibly Igbo, and I am unwaveringly committed to the good of the Igbo. However, I am unrepentantly anti-Biafra. I am opposed to Biafra because the Igbo have the most to lose in the case of a break up of Nigeria. Secondly, Biafra is not realizable. It is a fantasy championed by a few narrowminded, self-serving individuals, not genuinely motivated by the good of the Igbo. These bigots and their followers, in their opinionated obstinacy, cannot understand that you do not have to be pro-Biafra to be a true Igbo. Therefore, to them, any Igbo that is not pro-Biafra is a saboteur, sellout or slave, fathered by a Hausa/Fulani. Interestingly, it is the pro-Nigeria Igbo that have contributed the most to the peace and prosperity of the Igbo, and the pro-Biafra Igbo that have continually brought the Igbo untold calamity.

Nnamdi Azikiwe, who made the greatest contribution to the advancement of Ndi Igbo, was not pro-Biafra.

When the Igbo adhered to his One Nigeria philosophy, we held sway over Nigeria. The Igbo-dominated political party, National Council of Nigerian Citizens (NCNC), controlled two of the then four regions of Nigeria (Eastern and Mid Western Regions); they had Igbo premiers. Also, the NCNC was a partner in the federal coalition government. In

addition, the Igbo distinguished themselves and established a preponderant influence over the entire spectrum of the Nigerian social life: business, academia, federal bureaucracy, army officer corps and the professions. And the other ethnic groups of Nigerian lamented “Igbo domination”. Somewhat intoxicated by success, the Igbo boasted of extending their preponderant sway beyond Nigeria to across the whole of Africa. A onetime American president, Ronald Reagan, once said, “I do not quarrel with success”.

Chukwuemeka Ojukwu quarreled with success. He jettisoned the One Nigerian policy of Azikiwe and the other earlier Igbo leaders that had been magnificent for us; he treaded the path of secession. There were powerful, almost insurmountable, local and international, obstacles in the path to Biafra. It was unambiguously opposed by the Igbo military and political elite, the ethnic minorities of Eastern Region, the federal government of Nigeria, African countries as represented by the Organization of African Unity (OAU), and the British and American governments. In his reckless and senseless extremism, and in total disregard for the advice of the experienced, knowledgeable and farsighted Igbo and other concerned Nigerians, Ojukwu declared Biafra. It was that suicidal political move that sparked off the civil war. As predicted by those opposed to Biafra, and were castigated, arrested, imprisoned, and sometimes, murdered as “saboteurs”, the war utterly trounced Biafra; it surrendered unconditionally.

In place of our earlier accomplishments, hopes and goals, Ojukwu’s Biafranism brought us death, destruction, dispossession and despair. It brought us sorrow, pains, and, worst of all, psychological depredation. As Biafra

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collapsed and Ojukwu ran away, the consequences of his recklessness, senselessness, and disdain for reason and advice were palpably and pervasively evident all over the former land of Biafra. It laid prostrate and powerless at the feet of a conquering army flush with victory. With a collective physiognomy that revealed contortions of pains and sorrow, and a blank stare of despondency, the Igbo stumbled out of the last hold-outs of Biafra. The war had decimated the youths, the flower and promise, of Igbo land; hundreds of thousands of their skeletal remains were strewn around makeshift graves and former battlefields. More than one million men,women and children had died from starvation and other afflictions of war. In the encircling gloom, the entire Ndi Igbo mourned: in subdued tone, fathers groaned and, with deafening din, inconsolable mothers and widows wailed.

To give what was one man’s selfish ambition a coloration of a struggle for Igbo survival demanded excessive falsehood. The falsehood of the Biafran propaganda taught us that the rest of Nigerians were murderous vandals, who, unified by their relentless hatred for the Igbo, have a master plan to exterminate us. Feeding on this instilled fear of our complete extermination, it propelled us to fight to a finish but stripped us of the desiderata for coexisting with other ethnic groups of Nigeria in a heterogeneous country: trust of, and the appreciation of the good in, other Nigerians. The psychological damages of the the Biafran propaganda on Igbo minds was not readily evident because at the collapse of Biafra, Igbo leaders from the First Republic, were again at the helm of Igbo political affairs. Having never believed in Biafra, their concept of Nigeria and the place of the Igbo in Nigeria were neither

‘

...neoBiafranism is endangering Igbo lives, casting us as irredeemable rebels and implacable trouble makers, and imperiling all we have managed to build from scratch in the last 50 years

shaped nor tinged by Biafranism. They were confident in the Nigerian system and its obvious advantages for Ndi Igbo. As usual, Igbo commitment to one Nigeria paid off. By 1979, we had re-constituted ourselves politically; there emerged an Igbo Vice President and Speaker of the House.

The golden ages – the most flourishing periods - of Ndi Igbo were those times we were unambiguously committed to one Nigeria. On the other hand, the worst evils that ever befell the Igbo were all associated with Biafra.

Like Ojukwu, Nnamdi Kanu, for selfish reasons, is treading a path that will offer the Igbo nothing but death and disaster. And like Ojukwu, Kanu, in his recklessness and senselessness, is disdainful of reason, caution and advice, and ignores the prevailing sentiments amongst Nigerians, including the Igbo; the unwavering obligation of the African Union and the United Nations to respect the territorial integrity of its member countries; global geo-political dynamics; and the interests of most of the Western Powers in the continued existence of a corporate Nigeria. Like Biafranism, neo-Biafranism is an absurdity that portends nothing but catastrophe for Ndi Igbo.

Already, neo-Biafranism is endangering Igbo lives, casting us as irredeemable rebels and implacable trouble makers, and imperiling all we have managed to build from scratch in the last 50 years. Driven by selfish ambitions and personal aggrandizement, the leadership of the Indigenous People of Biafra (IPOB) has no qualms in bringing incalculable calamity on Ndi Igbo. In essence, they are the real haters of Ndi Igbo.

Ezukanma wrote from Lagos, Nigeria maciln18@yahoo.com 0803 529 2908

Nigeria: A country in the grip of bloody violence Chiedu Uche Okoye

L

ord Fredrick Lugard, a one-time governor general of Nigeria, didn’t get the consent of the people(s) of Nigeria before he cobbled the northern and southern protectorates together. And, his wife, Christine Shaw, christened the geographical space Nigeria. That’s how the disparate ethnic entities came together to become Nigeria. So, owing to our country’s heterogeneous nature, we embraced and adopted the federal system of government. Federalism is thought to be suitable for countries with heterogeneity.

However, today, not a few federal nationstates have collapsed. The USSR that was made up of fifteen republics dismembered irrespective of its implementation of the policy of perestroika and glasnost. Yugoslavia broke up, too.

And some countries emerged from Czechoslovakia after it had disintegrated. On the African continent, Eritrea pulled out of Ethiopia while Somaliland emerged from Somali. After suffering years of bloody conflicts, Sudan was bifurcated with South Sudan emerging from it.

Till now, countries on the African continent with heterogeneity are still being buffeted by bloody conflicts. In Kenya, the Lou and Kikuyu people(s) who are acutely aware of their different ethnic origins are still locked in the battle for political dominance and supremacy. In Cameroun where Paul Biya is in the saddle of power for

a very long time, the English-speaking people there are ceaselessly agitating for state-hood .Like the afore-mentioned African countries, Nigeria has had its fair share of violence and ethnic troubles dating back to the colonial era.

In 1953, the northern people threatened secession in their nine point programme. Adaka Isaac Boro declared the Niger-Delta republic in 1963; however, it was short-lived. And, the NigeriaBiafra war raged between 1967 and 1970 with its calamitous and devastating consequences.

Millions of human lives were lost on both sides in the senseless fratricidal war.

Since the end of the Nigeria-Biafra civil war, Nigeria hasn’t known true peace, as ethnoreligious and political troubles have become features of our national life. After the cancelled June 12, 1993 Presidential election, Sani Abacha shoved aside Ernest Shonekan, the interim President then, and instituted a reign of terror in Nigeria. Members of NADECO like Alfred Rewane, Kudirat Abiola, and others were killed.

And in the past, the north would erupt in a religious frenzy. So, Gideon Akaluka was decapitated by Islamic fundamentalists for allegedly desecrating the Koran. His head was hoisted on a pole. Till now, waves of religious violence have been sweeping through the northern part of Nigeria resulting in needless deaths of people.

Today, Boko Haram, a deadly insurgent group, has emerged in the north. Their hatred or distaste for western education underpins their philosophy. Brainwashed and indoctrinated with distorted version of Islamic teachings, they’ve embarked on a mission to establish Islamic theocratic government in the north of

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Nigeria, and beyond. The crazed and murderous insurgents have seized the north-east of Nigeria by the jugular, killing people and taking female students captive. Some years ago, the Boko Haram group raided Chibok Girls’ Secondary in Borno state and took many school girls captive. It took intense negotiations between the federal government and members of the Boko Haram group before the girls were released from captivity.

Lately, the insurgents raided Dapchi Girls’ Technical College, Yobe and abducted school girls. While other girls who are Moslems had been released and united with their families, Leah Sharibu is still in captivity for holding fast to her Christian faith. Leah Sharibu has become a symbol of resilience and resistance to the Boko-Haram’s act of forceful proselytizing of people. Her non- release from captivity by the Boko Haram group has outraged the peoples of the world. But is the Nigerian government making concerted efforts to eradicate insurgency in the northern-east of Nigeria?

While the Boko-Haram insurgency has remained unabated, the Fulani herdsmen are causing havoc in every nook and cranny of Nigeria. The Fulani cattle herders, who have encircled proprietary hands of kinship around Aso rock, the seat of power, are emboldened in their despicable acts of homicide because of the indifference and inaction of President Buhari, a Fulani man. From Lafia to Taraba, and from Enugu to Anambra, the Fulani cattle herders have run amuck, killing people and destroying the farmlands of farmers in their host communities. In the past week, they raided a community

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in Anambra West Local Government in Anambra State and killed six people. Where are the killers? Have they been arrested and arraigned as demanded by the law?

In addition to this, in Zamfara State where governance is on recess for many years, the state government is conceding the state to the rampaging bandits. In Zamfara, anarchy reigns while Governor Yari, a globe-trotter, is keen on satisfying and fulfilling his wanderlust desires.

In other states like Kastina and Kaduna, pockets of violence do erupt there causing loss of human lives and property.

Nigeria has returned to the hobbessian state of nature where life is short, brutish, and nasty.

In today’s Nigeria, we do not place high premium on human lives. That’s why a trigger-happy policeman shot and killed Kolade Johnson, recently, for violating no laws of Nigeria. Now, teenage school boys, who are cultists relish listening to mordant tales instead of imbibing the habit of reading. They kill one another in the name of rival cult fights. Now, the entire southeast is suffering from the infestation of cultism with its attendant deaths of young people.

However, it is our political leaders at different levels of government who arm and sponsor the cultists to unleash harm on their political opponents and rivals during electioneering and on election days. But he who sows wind will reap whirlwind. Nigeria has now become an infinity of unsolved murder cases because our political leaders are complicit in the deeds.

Okoye is a poet and wrote Uruowulu-Obosi, Anambara state

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Wednesday 01 May 2019

BUSINESS DAY

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Combining functional education with fearless entrepreneurship Small Business handbook

Emeka Osuji

T

here are some problems with the educational system in Nigeria, as probably with almost everything else in the world. However, where most people look for the problems is not where they are. Nigeria itself is still a nation in the making. That station of life, being a nation in the making, has its own add-ons and challenges. A poorly developed reward system and a criminal justice system that is incapable of delivering justice, ensure that people do what they like. Those who work the system for their own good do so in the hope that corrupt national institutions can be manipulated successfully. A thriving documents faking industry, and the traditional incompetence of most employers in the simple act of verification of certificates, makes it possible for people to work from trainee to director, with fake certificates undetected, and retire with handsome pensions. These are the reality of most people still struggling with nation building as we are.

Successful reforms in the reward system continue to be urgent predecessors of those in the educational system.

The link between education and the prosperity of nations and individuals has long been established, despite overwhelming evidence of the sterling performance of some school dropouts, especially in the digital world. But we must differentiate between happenstance and the natural course of events. We must compare the chances of success for dropouts and those who complete their prescribed training.

Some blame the universities and

others point to the politics of the national educational system. These may share the blame but there are more fundamental issues to address. The primary question however is, what kind of education do we really need today in our country to push forward its prosperity and development? The answer is simple. We need productive education -education that is functional and useful for our station of development. This implies that we seek education for what it can deliver not for its own sake as we currently do.

Some of our youths have luckily read the famous book, Rich Dad Poor Dad, written in 1997 by Richard Kiyosaki. The book teaches something in the manner of a rebuttal of what most parents teach their kids. Parents teach kids to take schooling very seriously, so as to make good grades and get good jobs. Having got good jobs, the kids are to climb the corporate ladder and get to the top.

Many are beginning to question, and rightly so, some of the things they are taught in school, as unemployment ravages university graduates, while school dropouts are making it especially in politics. Is there more that we can learn?

Yes. We need to learn more about entrepreneurship and the nature of money in the economy. We need financial literacy.

The current and persisting top priority challenge of every youth in Nigeria is to win their financial freedom and gain economic independence from those who played guardian to them over time.

That those who bore the burden of their education are continuing to do so, years after higher education in Nigeria, is not just sad for the youth but a national anti-climax.

We mostly blame the educational system for the rising unemployment of the youth. Some say what the schools teach are not job-making skills. Granted that there is a large room for improvement, with regard to matching output with industry needs, the failure of successive governments to expand the economy is a bigger national shame that dwarfs the errors in the educational sys-

tem. An expanding economy is always followed by a rise in entrepreneurship and private investing. Many of us witnessed the boom in entrepreneurship in Nigeria during the decade of the 1990s, when many youths, especially those with financial education and some experience, took the plunge to set up businesses. The reforms of those years led to expansion and gave vent to the entrepreneurial spirit of the youth.

The Nigerian economy is not expanding but we are investing heavily in entrepreneurship development. We need to also create the space for them to blossom.

While a growing economy fires up the entrepreneurial spirit, there is need for us to give more economic and financial education to our children, even if they study Science, Technology, Engineering and Mathematics (STEM).

Such technical education will produce more prosperity if laced up with an understanding of money, its biology and habitat – a skill presently not democratised in Nigeria.

Actually, Richard Kiyosaki told his story of his two dads from whom he had learned valuable lessons. One, the poor dad, was his own dad (but it has been established that in reality, Richard’s father was not poor), taught him to be studious and climb the corporate ladder. The rich dad was his friend’s Mike’s, taught him to get financial education and how to make money. Richard’s two fathers taught him the art of success but each of them had his own prescribed route to success. Of course he later revealed that his rich dad taught him the better lessons of life, with regard to the business of prosperity, especially the lessons on money and investment.

The gist of Richard’s story is that the idea of getting good grades in school, getting a good job and then climbing the corporate ladder is good but cannot compare to the idea of learning smart business acumen; and they are not mutually exclusive. The poor dad does not know this. His kids are highly educated and professionally schooled but may be poor because they form the

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We must nationalize the can-do attitude of the Igbo and their fearless enterprise that created islands of prosperity in many places they are

leading members of the world team of Rat Racers who work from pay cheque to pay cheque. Before the pay cheques come, bills are already waiting, and once settled, more bills accrue. They have to work for the next pay day so as to settle the ever waiting bills. Life becomes a rat race. They cannot invest and saving money is hard ball because there is nothing to save. They get the good grades and the great jobs but may end up working for drop outs that have training on money and its pathology- the kids of the rich dad. The rich dad teaches his children to study to be prepared in order to understand phenomena, especially money and other economic issues, and to play the system according to its own rules. They covet financial literacy.

In Nigeria, the Igbo are probably the most financially literate. They understand money and its workings. They know the pathology and medical history of money. This is why, despite their obvious disadvantages in terms of national opportunities, they survive better than others, when conditions get difficult.

They make money from dust and can fish it out from any dirt hole. They turn their disadvantages to opportunities. Like the Chinese, they see opportunity in every danger. Unfortunately, this portrays them as too aggressive. Their neighbours, often mostly out of ignorance or envy, have issues with this aggression that is born out of difficulties and innate creativity.

Those who want prosperity must get to know money and the traps that catch it as the Igbo do. We must develop the can-do attitude and fearless entrepreneurship that have taken them to all corners of the world. We must redirect our youth to learn how to make money legitimately by being creative, inventive and painstaking. We must nationalize the can-do attitude of the Igbo and their fearless enterprise that created islands of prosperity in many places they are. It should be our national heritage.

Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

On Lagos satellite cities’ initiative

RASAK MUSBAU

R

ecently, a 1000-hectare modern satellite city in the Epe-Ibeju Lekki axis was launched by the Lagos State government.

The idea of the new city, named Alaro Satellite City, was conceived to alleviate the city centres from the pressure of enormous growth.

Specifically, Alaro City is situated on the LekkiEpe Expressway for ease of transportation to Lagos Island or towards other parts of the country. It is directly across from the proposed Lekki-Epe International Airport, near the Deep Sea and Container Port, it is one hour drive from Victoria Island and one hour drive from Lagos-Ibadan Expressway.

The logic of this laudable initiative of the State government could be better understood from the new research that postulated that if Nigeria’s population continues to grow and people move to cities at the same rate as now, Lagos could become the world’s largest metropolis, home to 85 or 100 million in the next 50 years. This is why the state government policies are focusing on today

and the future.

Observably, unlike Ogba, Surulere, Lagos Island and Maryland, in view of their locations, presently Epe/ Ibeju-Lekki are not really densely populated, but every discerning mind will agree that the whole of Epe division has the potentials to play a significant economic role in the near future.

One can also say same of Ikorodu and Badagry divisions of the State.

Lagos was caught in the web of some unpalatable features such as difficulty in waste management, human health concerns, traffic congestions, deteriorating and aging infrastructures among others, largely because it has developed independently of the efforts of city planners, through unstructured urbanism. Hence, going for satellite cities with required infrastructural investment is a good planning tool to partially decongest the metropolis and precipitate a rise in property valuations in the projected new towns.

From a land use perspective, satellite cities and urban infill de¬¬vel¬¬opment are the best ways to accommodate population growth while preserving open space and farmland. The alternative is urban sprawl. Of course living in the planned Alaro Satellite Town is not everyone’s cup of tea.

Billed as the most ambitious, strategic and grand project in recent history, the $250 million Alaro Satellite City, situated at the northwestern part of Lekki Free Trade Zone (FTZ) is a government wellplanned project that would not only open up the Epe corridor, but would transform its economic landscape by providing jobs, reducing poverty

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and contributing significantly to socio-economic development of the state, especially in terms of the gross domestic product (GDP) of the state, and the country in general.

The project, a partnership involving the North West Quadrant Development Company (NWQDC), Rendeavour (Africa’s acclaimed largest urban land developer) and Lagos State, is projected to create over 200,000 jobs as well as housing schemes for all the major projects within the zone. Alaro Satellite City is a mixedincome, city-scale development and a premium industrial, logistics, housing and leisure location, complemented by high quality commercial office complexes, homes, schools, healthcare facilities, hotels, entertainment centre and 150 hectares of parks and open spaces.

In averting future chaotic traffic jams within this corridor and avoid similar incidences such as is being experienced in the Apapa axis, government have initiated the process of constructing the 7th Axial Road from the Lekki Deep Sea Port, en route the FTZ to the Sagamu/Benin Expressway.

The design for the construction of a 50-hectare truck park within the Lekki/Epe corridor is also in progress.

Critics of new cities may argue or be looking at high cost involve in it. But everyone in the State and Nigeria in general should know that the cost of urban sprawl is higher, with hidden costs like traffic congestion, and the cost of pollution, in the cost/benefit analyses. With the world population expected to surpass 9 billion by 2050, infill develop-

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ment alone will not come close to meeting future housing needs. A limited number of new mediumsize and large cities makes sense in countries with extreme housing shortages like Nigeria.

The highlights of the sprawling satellite project include secure land title with certificate of occupancy, designated mixed use development such as residential, industrial, commercial, social like schools, health and recreational amenities. Others are industrial plot sizes from 5,000 sqm, residential plot sizes from 500 sqm, industrial grade roads, street lighting, and drainage system, pedestrian walkways, jogging and cycling trails, power, gas, water, sewerage connections and ICT. There are also significant areas of green spaces to ensure no resident or worker is more than five minutes away from a park or green space.

Naturally, there would be a perceived disadvantage for those using their home in the satellite town to travel to their workplace in the central city.

Also, buying a home in a satellite town can lead to a sense of isolation and general dissatisfaction if the location does not feature the kind of social life and entertainment that would be seen as necessary lifestyle. This should be a perceived disadvantage that people who can think outside the box must turn to advantage. Or who says Epe cannot be turned into entertainment capital of Lagos?

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Musbau is of Features Unit, Lagos State Ministry of Information and Strategy, Alausa, Ikeja

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Wednesday 01 May 2019

BUSINESS DAY

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So who’s to blame?

Character Matters with Daps

Dapo Akande

I

’ve heard of a country far away, I’ve seen it on the television, sometimes spoken of on radio, but mostly when the elders talk. At times I catch glimpses of it. Oh, yes I do. Surprisingly vivid but most times ever so faint, shrouded by the thick canopies of time.

This distant land, the gulf seemingly untraversable. This is one chapter of history I wish would repeat itself. Our dear motherland, where did you go?”

We’re ever so quick to castigate the average Nigerian for being so unruly and just in case you’re wondering, yes, I’m just as guilty of this as the next person. Recently though, I chose to suspend my usual verdict and ponder over it a little. The conclusion I came to was that we’re not entirely to blame.

There’s almost nothing more demoralising than being treated as a subhuman when others, with the same one head, two legs and two arms like myself are treated as gods. To constantly witness others flout the law, laid down procedures and the system at will can be most disheartening. Especially when they’re even aided to do so by those constitutionally responsible to prevent such. Everyday, we wonder why the same unruly individual transforms in an instant, once he finds himself in a society that works. It’s because all those

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who operate in such a system know the application of the law is uniform across board. It’s there for everyone to see. Whether the person who flouts it is poor, rich, a high profile celebrity or a senior government official, the punishment is not only the same but it will be applied without “fear of favour” as we like to say. This has to be one of the most vacuous terms in this land as it often remains just that, a term.

An individual who very rightly feels the pangs of injustice everyday, as a result of our penchant to apply the rule subjectively rather than objectively, will be less than motivated to be consistent in doing what’s right. Yes, he too will want to see what he can get away with. In many ways it’s a psychological thing because for that moment, he too can feel like one of the gods. Obeying rules, honesty and the like, belong to the same family, integrity. Just because you don’t steal doesn’t automatically bestow upon you the right to adorn the toga of integrity. Subverting the system because you have the means and the clout smacks of a lack of character, of which integrity is an integral element.

Equal application of rules, no matter the person’s social status, who he knows or which side of the Niger river he comes from, is essential if we desire to live in a harmonious society.

A government Minister in the UK is just as likely to be pulled over by the police, questioned and asked to take an on the spot breatherlizer test if he’s caught driving recklessly or found breaking the speed limit, as the average Joe. More importantly, if he fails it, he is just as likely to be disciplined instantly by way of a fine; worse still, his driving licence may be suspended. And he dare not drive without it because if he gets caught, bribing the authorities is not an

option. So all who live in such systems enjoy the dignity of being treated like human beings, no matter their status.

You won’t find one rule applying to the “haves” and another to the “have nots”.

Of course such a society will work and everyone, almost without exemption will condemn and vilify anyone who portrays himself as superior to others and above the law. This “Lala land” is where we need to get to.

Right on cue and as if to buttress my position while I was writing this piece; as I approached a traffic light on Mobolaji Bank Anthony Way which was on green, two LASTMA officials overzealously jumped out to literally stop us in our tracks. “What could it be?” I wondered. A split second later, a police escorted vehicle coming from another direction ignored the red light and crossed. “No wonder” I sighed. A god too big for traffic lights needed to pass so of course the rest of us mere mortals just had to wait. I often ask myself why someone so concerned about his safety and obviously that “big” doesn’t just purchase a bullet proof vehicle? Once you have that, there’s really no need for the blaring sirens and the battalion of policemen, is there? But then I pinch myself back to reality. What’s the essence of being a big man if you can’t announce your presence? That’s the “koko” now.

I find it incredulous when Government wonders why investments aren’t flowing into Nigeria as they would like.

It doesn’t take a genius to work it out though. Why would someone invest his hard earned money in a system where the ruling authorities flout the law at will. A nation where due to your political associations, you can wake up one morning and find the policy has been changed; the goal post moved half way

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As hard as I try I can’t think of any logical reason why one would feel any sense of loyalty to a system so blatantly skewed against both their interest and the collective interest of the society itself

through the game; making total nonsense of your investment. And what’s the remedy? Institute a court case that can be on for the next 15 years! As the saying goes, justice delayed is justice denied. International investors are smart people who do adequate research and only go where their money is safe.

Sadly, this sense of injustice has become a norm to the average Nigerian as he’s had to grapple with it day in day out. Our governments are so quick to breach contracts with just about everyone. Sitting comfortably in the driving seat, they breach contracts at will with the people, making one promise today but doing another tomorrow. Just as children learn from the most influential authority figures in their lives, their parents, so do members of a society learn from governments.

As hard as I try I can’t think of any logical reason why one would feel any sense of loyalty to a system so blatantly skewed against both their interest and the collective interest of the society itself. Subjective application of rules is totally antithetical to the progress of any organization or society because all those who feel this pinch will do everything possible to find themselves on the side of the gods who carry on with impunity. Why wouldn’t they present fake academic certificates in order to get that juicy job or appointment? Given the chance, why wouldn’t they embezzle to their heart’s content? After all, it’s a matter of doing whatever it takes. By hook or by crook, they must get there.

Changing the nation...one mind at a time Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

Revisiting the idea of a coordinating minister for the economy

UCHE UWALEKE

U

nlike the situation in 2015 when he was in no hurry to assemble his team many months after being sworn in, President Buhari is expected to constitute a new cabinet sooner than later. His second term in office provides an opportunity to revisit the jettisoned idea of appointing a coordinating Minister for the economy. It will be recalled that the practice of having a coordinating Minister was introduced by former President Goodluck Jonathan when he made Dr. Ngozi Okonjo Iweala the Minister of Finance with an additional responsibility of coordinating economic activities of other Ministries. Her appointment, it seemed then, pointed to the need to address the negative spillovers from inadequate synergy among Ministries, Departments and Agencies of government to the extent that in many instances ‘’the right hand did not know what the left hand was doing”. This unique coordination role for Ngozi Iweala was criticized at the time not least because it had no constitutional basis. Being the first of its kind in Nigeria’s history, her elevated office was seen as equivalent to that of a Prime Minister, which placed her in a position to superintend over every other ministry, department

and agency of government. She was, arguably, the next most powerful cabinet member in that administration after President Jonathan and Vice President Namadi Sambo. Against this backdrop, it was not difficult to understand why the Buhari administration chose not to continue with the practice. The Vice President, Yemi Osinbajo, made it clear from the onset that there would be no such designation as “coordinating minister for the economy” in President Mohammadu Buhari’s administration.

Nonetheless, there is an economic sense in having some sort of framework for policy coordination. Since the fortunes of key Ministries such as Petroleum, Power, Transport, and Agriculture are heavily interwoven, it would be difficult to have a clear roadmap, with respect to any one of them, until some level of integration in economic policy is achieved. Citing an example with the power sector, Muhammadu Sanusi II, the Emir of Kano, was reported to have said during a stakeholders’ workshop on Road Transport Management and Mass Transit Operations in Nigeria, organized by the Federal Ministry of Transportation in Abuja in July 2016, that ‘’one of the reasons why we have not made much improvement on power is due to a lack of coordinating mechanisms.” According to him: “very often in this country, we do not give as much focus as we should to the organic link between the objectives, our strategies, processes, procedures and our results. The Minister of power cannot boast that he will deliver 1,000 megawatts because he can actually build a gas powered turbine and not have the gas. This is because the gas is under the control of a different ministry’’. The Emir also mentioned the case of hydro power where the dams belong to the Federal Ministry of Water Resources while the sites around the dams belong

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to the state governments. His conclusion: “we need to have some framework for coordination and harmonization for a clear division of roles and responsibilities and also for ensuring that everything is mainstreamed into one strategic objective” What could be more spot-on?

Indeed, the importance of a coordinating Ministry for the Economy has since been recognized in many developed and emerging economies. In Turkey for instance, an Economic Coordination Board was established in 2009 to strengthen coordination among ministries. The Board comprises the Deputy Prime Minister for Economic Affairs as Chairman, together with the Ministers responsible for Finance, Development, Customs and Trade, Science, Industry and Technology, Labour and Social Security while the Treasury acts as the secretariat of the Board. In South Korea, the coordination role is vested in the Minister of Economy and Finance. In 1994, the Economic Planning Board and the Ministry of Finance were merged into the Ministry of Finance and Economy (MOFE) when the government recognized the need for an integrated approach to implementing the government’s functions on economic affairs in an efficient and coherent manner.

Similarly, Italy has a Ministry of Economy and Finance which in addition to ‘conducting the tasks and responsibilities of the State in the fields of economic policy, financial policy, budgeting, and tax policies also carries out all activities related to the coordination of public spending and its oversight’. Indonesia’s Coordinating Ministry for Economic Affairs has responsibility to ‘coordinate, synchronize and control ministries’ responsibilities in economic affairs’. The ministry is led by a Coordinating Minister for Economic Affairs, who is the Deputy Prime Minister for

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Economics, Finance and Development. Ditto for Singapore where the Deputy Prime Minister is designated the Coordinating Minister for Economic and Social Policies.

While it is true that the practice of having a coordinating Minister is popular in countries running parliamentary system of government, there is evidence to suggest that it has also been embraced by countries under the Presidential system. As observed by Richard Allen et al in an IMF working paper titled ‘The Evolving Functions and Organization of Finance Ministries’, ‘most advanced countries have developed mechanisms for coordinating policy decisions between the finance ministry and these other ministries and ensuring that the financial costs and benefits of such policies are fully appraised and approved by the finance ministry’’. He argues that ‘finance ministers have to take responsibility for, or at least a strong interest in, activities of the state across the board, since all such activities have fiscal implications of one sort or another which the finance ministry cannot afford to ignore’. What is clear from the experience of many countries is that the position of a coordinating minister is always created to address a complex policymaking environment and the need to coordinate responses to challenges involving multiple ministries- which is why the position is, in most cases, occupied by a powerful minister with the clout and experience to provide the needed push for coordinated action across government ministries, departments and agencies.

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Uche Uwaleke is a Professor of Capital Market and the Head of Banking & Finance department at the Nasarawa State University Keffi

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Wednesday 24 April 2019

BUSINESS DAY

Editorial Publisher/CEO

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

A true May Day for Nigerian workers

M

ay Day 2019 ushers in the joyful news of an increased minimum wage for the Nigerian worker and hopes for better conditions of service.

As the workers march out, however, significant concern still exists about the implementation of the new salaries particularly at the level of the states. States still owe their workers for many months, with a notorious case of outstanding wages of 38 months in Kogi State.

Officials at Federal, State and Local Government levels owe the Nigerian worker the responsibility of ensuring full compliance with payment of the new agreed minimum wage. It is the minimum duty and one that they can discharge with diligent application to their duties and oath of office.

May Day 2019 should be cause for rejoicing but also a reflection for the labour movement in the country and employers in both the public and private sectors.

Both parties need to think about managing the new wage structure, agreeing on a framework for future reviews to avoid it becoming a recurring source of conflict and

ensuring industrial harmony.

Congratulations to the Nigerian Labour Congress and affiliated unions as well as to the Trade Union Congress and its affiliates for securing through the legislature and executive affirmation an upward review of remuneration for Nigerian workers. The Minimum Wage Repeal and Re-Enactment Act 2019 mandated an upward adjustment of wages after eleven A rise from N18000 to N30 000 ordinarily represents a significant 67 percent increase. Due to the time it has taken between the old and the new minima, however, the increment suffers from the effect of inflation. Even so, it would translate to higher income for all levels of workers.

There are compelling concerns about the new minimum wage.

There is the possibility of wage-push inflation because the new salary would put pressure on employers who would in turn increase prices and thus lead to an overall rise in the cost of goods and services. Employers in the private sector may be forced to accommodate wage increases in consequence of the public sector one.

Analysts have already tried to pour cold water on the increment based on purchasing power. With the cost of fuel as a base, the analysis

shows that the previous minimum wage of N18000 fetched 206.89 litres of fuel atN87 per litre. Fuel now sells for N145 per litre while minimum wage at N30000 would bring the same quantity of petroleum. On the positive side of this sum is the fact that the new figure at least ensures the worker does not lose out due to inflation. He maintains his capacity to meet basic needs. Similarly, comparisons of the exchange value of the minimum wage versus the dollar show the new wage fetches lower than the old one.

Existing structural challenges would limit the impact of the new wage. For one, analysis by BudgIT shows that only 18 out of the 36 states are in a strong position to carry the load from their federation account allocations and internally generated revenue. There may thus be issues with compliance by state governments. Labour is already drawing attention to this possibility and threatening showdowns.

The increment comes against the backdrop of weak fiscal revenues and declining consumer purchasing power. The private sector will struggle with demands for similar action. The labour market is slack, and unions in the private sector would be cautious in making demands.

Data from the National Bureau of Statistics show that unemployment increased to 23.1% in the third quarter of 2018. Operating surplus in the economy similarly weakened.

All of this coupled with the fact that productivity has not kept pace.

Per unit labour productivity, an index of the real output of the employed population per hour) recorded a marginal growth of 1.2 percent between 2011 and 2016. For the Federal and State governments, a higher wage bill may translate to deepening the unfortunate situation of higher expenditure on recurrent rather than capital spending. It would mean less money available for the infrastructure and high impact projects Nigeria needs to jumpstart the economy.

Prudent management is the call on the governments. Private sector employers would have to juggle their balls to ensure a balance between positive response to the imperative of wage review and maintaining price stability as well as employment levels. Then there is the call for higher productivity of the workforce, particularly in the public sector.

All parties must work on ensuring that the joy of the wage increment does not translate to a May Day call.

GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo

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BUSINESS DAY

COMPANIES & MARKETS

13

Caverton Helicopters’ net profit surges 170% in Q1

COMPANY NEWS ANALYSIS INSIGHT

Pg. 14

OIL & GAS

Total shares shed N5.4bn as investors digest after tax loss of N474mn DAVID IBIDAPO

U

nimpressed investors reacted negatively to Total Nigeria’s stock with a massive selloff that peeled N5.4 billion off the downstream oil company’s market value following a decline in profit after tax of the downstream oil company.

Shares of Total dipped 8.74 percent at the close of trading on Monday to close at N166.10, its lowest level in the last one year. This saw the company’s year to date stock performance dip further to 18.17 percent.

Total Nigeria Plc, in its financial statement for the period ended 31 March 2019 released on the Nigeria stock exchange (NSE) recorded a loss after tax of N474.08 million against a profit after tax of N1.66 billion in the corresponding period 2018, a 128 percent decline.

The oil and gas company recorded a significant decline in its other incomes as gains on disposal of property, plant, and equipment declined to N1.8 million from N920

million the previous year.

During the period, Total Nigeria received no other sundry income related to royalties received from dealers for services rendered at the stations different from the company’s

core line of business.

The company’s costs increased by 4 percent to N76.06 billion in Q1 2019 from N72.98 billion in Q1 2018 to include the cost of sales, distribution cost and administrative cost.

Meanwhile impaired loss on trade receivables and contract assets during the period grew significantly by 449 percent to N221.08 million from N40.28 million.

Also, finance cost in-

creased by 179 percent during the period to N1.91 billion from N686.46 million in the previous year.

This cost was incurred on bank overdrafts and loans in form of interest.

According to data col-

lated from Bloomberg, Total Nigeria has witnessed a consistent decline in its net income since the second quarter of the year 2018 reaching as low as N295.2 million in the fourth quarter of 2018.

BANKING

Union Bank’s non-interest income surge rescues bottom-line in Q1 ISRAEL ODUBOLA

U

nion Bank of Nigeria Plc, ended the first three months of 2019 with a profit of N5.3 billion, thanks to a 39 percent surge in non-interest income which helped offset the impact of a double-digit contraction in interest income on bottom-line.

Interest income in the review quarter stood at N26.9 billion, indicating a 15 percent decline over N31.7 billion reported in the previous comparable period, driven by waning yields in interest rate environment.

Interest on loans and advances to customers as well as investment

securities plunged 25.4 percent and 20.1 percent respectively and given a 7 percent rise in interest expense, net interest income plunged 32.4 percent to N12 billion.

However, the 39 percent surge in non-interest income to N10.8 billion, rescued after-tax profit, which declined some 26 basis points to N5.3 billion, from being significantly battered from a sharp contraction in interest income.

The lender’s impressive growth in non-interest income was buoyed by sharp appreciation in net fee and commission income (14.9%); cash recoveries (819.1%) and other operating income (37%).

“In a low yield environment, the Group’s noninterest income growth compensated for the slowdown in interest income stemming from the optimization of our loan portfolio in 2018,” said Emeka Emuwa, Chief Executive Officer of the bank.

Emuwa added that the bank is focused to leverage its platform to deliver efficiency and maximize value across all areas.

Union Bank registered minimal improvement in key profitability tickers as return on assets up 2.5 percent points to 9.3 percent, with return on equity and earnings per share remained unchanged at 1.5 percent and 18kobo respectively.

The lender’s operating expenses hit N18.4 billion in the review quarter, indicating some 4 percent increase over N17.9 billion posted a year earlier, attributable to elevation in staff compensation to enlarge workforce, and increased depreciation expenses from technology investment.

Cost efficiency of the bank worsened in the review period, reflective in the 11.2 percent points increase in the cost-toincome ratio, due to the fact that operating expenses outpaced operating income, which grew 1.72 percent.

Gross loans advances climbed 5 percent to N494.4 billion in the

review period, while customer deposits grew slightly 1 percent to N867.2 billion, driven by low-cost current & savings accounts deposit balances, which accounted for 73.1 percent in total deposits, thereby extending loanto-deposit ratio by 1.6 percentage points to 62.6 percent.

The lender reported improvement in its asset quality, as non-performing loans ratio was down some 96 basis points to 7.79 percent. “In line with our priorities, we recorded improvement of 819 percent in loan recoveries with N2.8 billion recovered during the period”, Emuwa disclosed.

Union Bank’s total assets appreciated by N58 billion to N1.52 trillion in the review quarter compared with N1.46 trillion in the previous period. Total liabilities up N50 billion to N1.29 trillion and shareholders’ fund grew N7 billion.

Shares of the lender gained 2.74 percent to N7 after Monday’s trading, outperforming the all-share index and NSE banking index that shed 0.74 percent and 1.15 percent respectively.

The bank began operations in the country in 1917, serving individual, small and medium-sized companies, as well as large corporates and organizations.

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

14

Wednesday 01 May 2019

BUSINESS DAY

COMPANIES&MARKETS AVIATION SERVICES

Caverton Helicopters’ net profit surges 170% in Q1

I

OLUFIKAYO OWOEYE

ndigenous aviation support company, Caverton Offshore Support Group Plc, had a good outing in the first quarter of 2019.

The company’s revenue surged 83 percent from N4.56billion in Q1 2018 to N8.34billion in Q1 2019.

Operating expenses rose 73percent from N2.75billion in 2018 to N4.77billion. However, operating profit ballooned from N1.8bilion in Q1 2018 to N3.59billion in the same period 2019.

T h e c o m p a n y ’s profit before tax surged 156percent from 476million to 1.21billion while P ro f i t A f te r Ta x i n creased 170percent from N293million to N793mil-

lion in 2019.

The aviation support company also benefitted from 2019 general election and campaign activities as patronage from politicians for helicopters charter surged during the period.

Revenue from Helicopter charter ballooned from N30.19million in Q1 2018 to N597million in the same period in 2019 while revenue from Helicopter and Airplane contract also doubled from N4.47billion to N7.69billion.

Recall that one of Caverton’s helicopters, Augusta AW139, conveying the vice president Prof Yemi Oshinbajo crashed-landed in Kogi State in February this year. The incident which occurred in Kabba

where the VP had visited during the re-election campaign of President Muhammadu Buhari.

Commenting on the company’s impressive performance, Bode Makanjuola, CEO Caverton Helicopters said the management of the company is looking forward to favourable government policies in the oil and gas sector, financial services to enable it to enjoy the services of its clients.

Caverton Offshore Support Group Plc operates in the marine and aviation logistics sectors of the Nigerian oil and gas industry. Shares of Caverton traded at N2.75 Monday on the floor of the Nigerian Stock Exchange with its one year return down by 12.50percent

L-R: Calistus Egwakhide, coordinator, HSE, WalterSmith Petroman Oil Limited; Rowland Ogundu, assistant general manager; Peter Ekhaesomhi, executive director, and Abdil Isa, export crude/HSE manager, at the closing day of Waltersmith Petroman Oil Limited Health Safety and Environment Week 2019 in Imo state Nigeria recently.

LOGISTICS

Trans-nationwide Express Q1 profit up 304 percent on increase mass mailing income SEGUN ADAMS

T

rans-Nationwide Express plc, a transport and distribution services company has reported a 304.29 percent increase in profit driven by improvement in revenue as it starts the year on a high note.

Profit rose to N2.92 million in the first three months of 2019, as against N723,000 in the comparable quarter of 2018, buoyed by a 22 percent jump in revenue to N213.31 million in the first quarter of 2019.

The surge in revenue was on account of a 398.64 percent spike in Mass mailing income which generated N43.76 million in the quarter from N8.78 million noted twelve months before.

Other income segments that improved include courier services (7%), logistics (7%), and Internal mailing (10%)

while mailbag (-37%), Freight (-14%) and Warehouse (16%) declined.

Gross profit for the transportation and logistics company increased 33.25 percent from N138 million to N103 million year-on-year in the recently concluded quarter while other income dipped 84.46 percent to N207,000.

Administrative expenses were higher compared to 2017 as Transnat i onw i d e i n cur re d N134 million compared to N103 million over the period. Total finance cost saw an uptick of 3.47 percent to N566,000 from N547,000.

Profit before tax however ballooned 222 percent to N2.92 million compared to N908,000 recorded previously in the first quarter of 2018.

Profit for the year remained at N2.92 million, 304.29 percent more than N723,000 the company earned in the first three

months of 2017 where it also paid a tax of 185,000.

Shares of the transportation company remained flat at 81 kobo as trading closed for the week on Friday. On year to date basis, the shares have gained 25 percent since it opened at 65 kobo for the year.

Trans-Nationwide Express is a Logistics Company engaged in domestic and International Express delivery, haulage, freight, and other ancillary transportation and storage services.

It is a wholly owned Nigerian company which was established in 1984 as TNT Skypak Nigeria Limited. In 1992 the name was changed to Transnationwide Express Plc. With a share capital of N250,000,000 and over 3,600 shareholders, it sought and obtained listing on the Nigeria Stock Exchange (1st tier) in 1993.

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L-R: Sujeendra Prasad, head, sales and marketing, Apple Business Redington, Nigeria; Nnamdi Ezeigbo, CEO, SLOT Systems Limited; Jonathan Uzomba, head, marketing and communications, SLOT Systems Limited, and Fayaz Ahammed, sales head- retail, Redington Nigeria, at the grand finale of the SLOT-Phonea-Car raffle draw in Lagos.

L-R: Director-General, Delta State Innovation Hub, Chris Uwaje presenting the best 4G LTE provider of the year award to Marketing Manager, Spectranet 4G LTE, Samson Akejelu; and Head, Digital Marketing & Social Media Strategy, Muyiwa Faseluka at the 10th Beacon of ICT awards held in Lagos...weekend.

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Wednesday 01 May 2019

COMPANIES&MARKETS

BUSINESS DAY

15

Business Event

APPOINTMENT

Ecobank appoints Ayo Adepoju acting CFO amid impressive 2018 result OLUFIKAYO OWOEYE

E

c o b a n k Group has announced the resignation of its Chief Financial Officer, Greg Davis, the group also announced Ayo Adepoju, Vice President, Group Finance as acting CFO. The new acting CFO is an Accounting graduate of the University of Lagos where he earned a Bachelor of Science degree with First-Class Honours. He also has an MBA from Warwick Business School, United Kingdom and also attended executive courses at both Harvard Business School and London Business School. Adepoju is a fellow of the Institute of Chartered Accountants of Nigeria (ICAN).

Prior to joining Ecobank, he had a career at PricewaterhouseCoopers in London and Lagos as an Assistance Manager in financial services practice.

Ecobank recently appointed Dr. Aasim Ahmad Qureshi to its Board of Directors as a NonExecutive Director and nominee of Qatar National Bank, and to replace

Mr. Abdulla M. Al Khalifa on the Board of Directors of the Company.

Earlier this month Ecobank group sold $450 million of Eurobonds at yields that rank among the highest from emerging markets this year.

According to Renaissance Capital, one of the arrangers, Econbank’s five-year senior unsecured notes was priced at 9.75 percent. Also, the bank raised $200 million in loans last year, which are due for repayment in November 2019.

The bank in its recently released 2018 full year result reported a profit increase of 46 percent for the year ended December 2018 compared to the year before.

Analysis of the bank’s financials revealed that its operating income decreased by 20 percent, while excluding the impact of FX transactions, the operating income declined N39.4 billion, led by declines in both net interest income and non-interest revenue.

In the review year, the lender’s net interest income decreased by 22 percent driven by lower average yields on inter-

est-earning asset and decline in earning asset balances.

Non-interest revenue was also down 18percent, owing to the growth in fees and commissions income which was largely offset by the impact of the lower yields on fixed income trading and significant lower spreads in FX sales, following normalisation in the currency market.

According to the bank’s financials, operating expenses of N99.13 billion fell by N3.9 billion or 4percent. Excluding the FX transactions, expenses fell by N1.44 billion, benefiting from on-going cost containment initiatives.

The lenders’ cost-toincome ratio was 61.9 percent for the review year compared to its reported 51.2 percent value the previous year, owing to lower revenues.

The bank’s non-performing loan (NPL) ratio stood at 13.7 percent in 2018, a marginal drop by 0.8 percentage points from the 14.5 percent it reported in 2017. The bank’s target is to reduce its NPL ratio to a single digit by the year 2020.

L-R: Ibikunle Amosun, governor, Ogun State; Michael Daramola, legal and corporate affairs director, and Tolulope Adedeji, marketing director, West Africa, both of International Breweries at the African Drum Festival sponsored by International Breweries in Ogun State.

L-R: Bimbo Odimayo, brand manager, OTC, May & Baker Nigeria Plc; Chukutem Chukuka, executive director, Pharma sales and marketing, May & Baker Nigeria Plc; Vivian Elifoh, brand manager, anti-infectives, May & Baker Nigeria Plc, and Femi Laleye, business development manager, May & Baker Nigeria Plc; at the malaria testing and drug distribution exercise to residents of Agege to mark World Malaria Day by May & Baker Nigeria Plc

COMPANY RELEASE

MainOne announces plan to build data center in Cote D’ivoire

F

ollowing the issuance of a submarine cable landing license to MainOne by the government of Cote D’Ivoire, the company has announced that it is on schedule to land the cable and launch services in Abidjan by October 2019.

MainOne has made significant progress in the project implementation process.

All critical surveys have been completed, and work is ongoing at the Cable Landing Station and Data Centre in Abidjan.

MainOne’s Regional Executive, Kazeem Oladepo, made this known during the company’s Annual General Meeting in Abidjan, where members of the Board of Directors of the Group visited the VITIB location to observe the on-going construction of the data centre and the cable landing station.

The data centre and landing station will provide the necessary infrastructure to support the growth of the broadband ecosystem in Cote D’Ivoire and the Francophone region, improve Internet access in the region, reduce bandwidth prices and make digital services more accessible. “By investing in this infrastructure, we hope to bring meaningful and much-needed technology solutions to businesses and enable them in their quest for improved productivity and efficiency through dedicated and reliable connectivity services. We are prepared to collaborate with operators to expand capacity in Cote D’Ivoire and neighbouring countries to enhance regional integration and global access,” he continued.

The strategic location of the data center in the www.businessday.ng

Grand-Bassam technology free trade zone, VITIB, will further strengthen the digital ecosystem in the zone, and attract more businesses and Foreign Direct Investment (FDI) to the region.

MainOne is committed to deepening broadband access across West Africa via fibre infrastructure and data centres. With service delivery in 10 countries including Nigeria, Ghana, Cote D’Ivoire, Burkina Faso, Togo, Cameroun, Benin, Niger, Senegal and Chad, MainOne operates up to 10Tbps international submarine cable system which guarantees highly reliable connectivity to support the growing demand for Internet access and bandwidthintensive applications such as eCommerce, Content providers, OTT players and electronic banking and payment services.

L-R: Jude Agu, HR/admin manager, Evans Industries Limited; Oche Christopher, quality assurance officer; Abimbola Osinowo, programme manager, Lagos State Malaria Elimination Programme; Osas Ajibade, founder, Joyful Joy Foundation; Joseph Okonkwo, director, Evans Industries Limited, and Obaparusi Gbenga, brand manager, Emzor Paracetamol Industries Limited, at the Meditol World Malarial Day walk in Lagos.

L-R: Salawot Fasasi, Wecyclers controller; Olawale Adebiyi, CEO, Wecyclers; Soromidayo George, corporate affairs and Andrew Decker, sustainable business director, Unilever Ghana and Nigeria, and product group director, supply chain, Unilever Africa, at the MoU signing, and Unilever Facility visit to Wecyclers office in Lagos Island.

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Wednesday 01 May 2019

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Wednesday 01 May 2019

BUSINESS DAY

BANKING

17

In Association with

When CBN repositions microfinance banks for real sector growth … Interest rate my lower on intense competition Hope Moses-Ashike

T

he vision of the Central Bank Nigeria (CBN) under the leadership of Godwin Emefiele, governor, is to create a peoplecentred Central Bank, delivering price and financial system stability as well as promoting sustainable economic development.

“We will collaborate with commercial banks to significantly improve the credit culture in the Nigerian banking system”, Emefiele said in his maiden speech as he assumed office in June 2014.

It was on this basis that the CBN and the bankers committee agreed in December to establish a national Microfinance bank across the 774 local governments, leveraging the Nigerian Postal Service (NIPOST).

Microfinance is about providing financial services to the economically active operators of the base of the income pyramid who are either undeserved or not served at all by conventional financial institutions.

Consistent with its developmental role the CBN in 2005 formulated the Microfinance Policy, Regulatory and Supervisory Framework. The policy was aimed among other at bringing microfinance institutions and activities into greater focus in order to deepen financial inclusion and alleviate the financing needs of micro, small and medium enterprises (MSMES).

The CBN since then worked towards increasing access to financial services for the economically active poor in order to enhance job creation and poverty reduction. The target is to increase the share of micro credit as percentage of total credit to at least 20 percent by 2020.

To further deepen the understanding of the media on the policy and other CBN’s policies and interventions for the benefit of the society, the CBN last week engaged finance correspondents and business editors, in capacity building focusing on the theme, “Repositioning Microfinance Banks for Real Sector Growth”.

Recently, the Bank took some actions including a thorough review of the subsector, increased surveillance and revocation, where necessary. These measures

Godwin Emefiele, CBN governor

were intended to revitalise the sector, ensure the institutions remain missionfocused and to grow public confidence in sub-sector.

“In a developing economy like ours the link between microfinance and the real sector is quite strong. Microfinance banks are conceived to serve as critical financial lubricants for the real sector, which is the pillar of sustained economic growth. At the moment economic policy in Nigeria faces a major challenge of reviving growth which is the (only) sure path to ending pervasive poverty. Microfinance has worked in this regard in many climes and promises to work in Nigeria, if we get it right”, Emefiele said in his keynote address at the seminar.

Represented by Edward Lametek, deputy governor, corporate services, he said the Bank remains committed to the economic empowerment of disadvantaged groups including women and actively seeks to achieve this through the instrumentality of microfinance amongst other initiatives.

At the seminar, Emefiele disclosed that

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an aggregate loans granted by MFBs was N482.896 billion and that loan sizes that are below N 1.4 million accounted for 72 percent of the total.

According to him, data from the licensed credit bureaus indicated that the operations of micro finance banks have helped to improve financial inclusion amongst smallholder peasant farmers.

However, the challenges remain, inadequate spread in the location of the MFBs in relation to their target beneficiaries, demand for immoveable collaterals for loans, high interest rate, and absence of a credit reporting system.

“We are committed and working assiduously to address these limitations”, Emefiele said, adding that the Bank, in collaboration with other agencies of Government, is implementing various intervention schemes in addition to promoting microfinance.

The Bank, he said has since then worked towards increasing access to financial services for the economically active poor in order to enhance job creation and poverty reduction. The target is to increase the share of micro credit as percentage of total credit to at least 20 percent by 2020.

Tokunbo Martins, director, Other Financial Institutions Department, CBN, noted that the regulator is doing a lot to derisk the sub-sector by introducing collateral registry and credit bureau to enable them to lend to potential borrowers.

In 2008 the CBN released the guidelines for the licensing, operation and regulation of credit bureaus, which was revised in 2013.

The objective of the guideline is to define the licensing, operational and regulatory requirements for a privately owned credit bureau under the CBN Act 2007, No. 7.

Also, in 2015 the CBN created the National Collateral Registry (NCR), which enables easy access to credit by small businesses.

Earlier in the year, Emefiele noted that as at January 31, 2019, 628 financial institutions comprising 21 deposit money banks, four merchant banks, one non-interest bank, four development finance institutions, 551 microfinance banks, 13 nonbank financial institutions, and 34 finance companies had been registered on the Registry’s portal.

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Speaking during the colloquium on the topic, ‘Real Sector Credit Delivery: Catalyst for Sustainable Economic Growth’, Isaac Okorafor, director, corporate communications department, expressed happiness that the CBN is working with the bankers committee, NIRSAL, and NIPOST to realize the national Microfinance bank project.

Responding to questions on loan refinancing, he said no refinancing is allowed rather through supply side they will push credit into the sector to bring down interest rate.

The CBN in collaboration with the bankers committee agreed in December 2018 to establish a National Microfinance Bank using NIPOST outlets in 774 local governments.

In the National MFB establishment plan, the CBN and the Bankers Committee will utilize the sum of N5 billion as equity from N60 Billion Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS) Fund, while NIPOST will contribute its offices in the 774 local governments.

However, this was not welcomed by microfinance operators as they opined that that the decision runs counterproductive to the salient objectives of the National Microfinance Policy, Regulatory and Supervisory Framework for Nigeria as well as the objectives of the National Financial Inclusion Strategy.

The leadership of NAMB led by Rogers Nwoke, president, had said in a statement the CBN and the Bankers Committee should utilize existing touch points and offices of existing microfinance banks which meet approved criteria to disburse its intervention funds including but not limited to the ACGSMEIS, Micro Small and Medium Enterprises Development Fund (MSMEDF).

Reacting to concerns on the national microfinance bank -NIRSAL MFB crowding out the existing microfinance banks, Emefiele said, “the existing microfinance banks are doing their best. I have heard this is an attempt to crowd them out. This is not an attempt to crowd them out but to complement their services and see to it that whatever service is being provided by these microfinance banks should be seen to be fair to their customers.”

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Wednesday 01 May 2019

BUSINESS DAY

AGRIBUSINESS

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Low use of tech, poor seeds hinder Nigeria’s ginger potential Josephine Okojie

L

ow use of technology and low quality seeds have continued to hinder the Nigeria’s ginger potential as the country has seen its production stagnated over a period of time, farmers say.

The demand for ginger locally and for export has been on the rise but production has not been growing on the same trajectory, owing to the inability of farmers to access good quality seeds to increase their yield per hectare.

Innovation and technology use is still low in ginger production despite the country being the fifth largest producer of the crop, data for the WorldAtlas show.

“Most ginger farmers are not using tractors and other machines for land preparation. This is hindering our ability to increase our ginger production because farmers cannot increase their farming areas owing to the huge manual labour involved but with tractors we can farm on a larger scale,” said Zackari Mohammed, a ginger farmer in Kastina.

“We are still using local knife to split harvested ginger rhizomes but in China and India there is a machine for that. We lack modern processing machines for washing, peeling, splitting and drying kilns.

“Getting quality seeds is also a major issue for us farmers. It is difficult to get quality ginger seeds and most of the seeds in the

country are of low quality. These are some of the reason why we are yet to increase our yield per hectare.

He stated that the demand for the country’s ginger is increasing yearly but the production to meet up with the huge demand has been stagnant.

Ginger is one of the most widely used food seasonings in modern

Crown Flour set to launch ‘Bakers App’ …unveils Raji Omotunde as brand ambassador

C

rown Flour Mills, a subsidiary of Olam Grains Nigeria, says it will soon launch an exclusive app for bakers and caterers in the country.

The bakers’ app which is expected to be inaugurated before July, will allow bakers across the country interact directly with the company.

Anurag Shukla, managing director, Olam Grains Nigeria, made the disclosure during the unveiling of Raji Omotunde as the company’s brand ambassador for its Mama Gold Flour, recently in Lagos.

“We all know digital technology is the way to go and we want to ensure that baking remains profitable for bakers,” said Shukla, who was

represented by Rohit Chugh, deputy managing director of the company “With the app we will be able to connect and engage with bakers. We will take their feedback and respond to bakers’ complaints. We believe with this we will be able to make them more profitable,” he said.

He stated that bakers just need to download the app on their mobile devices to connect and take the Mama Gold Flour to the next level.

Als o sp eaking dur ing the unveiling, Bolaji Anifowose, vice president - commercial, Crown Flour Mills, said that the choice of Omotunde, who is the chairman, Lagos State Chapter of Master Bakers and Caterers Association of Nigeria as the brand ambassador for

L-R: Bolaji Anifowose, vice president, commercial, Crown Flour Mills; Rohit Chugh, vice president, flour, Olam Grains; Raji Rasheed Omotunde, brand ambassador, Mama Gold Flour, his wife Betty, and John Olaoye, general manager, sales and marketing, Crown Flour Mills, during the unveiling of Omotunde as Mama Gold Flour brand ambassador in Lagos recently. www.businessday.ng

its Mama Gold Flour was to promote the brand.

“The firm has been looking for ways to better relate with the bakers and the opportunity presented itself in the selection of Omotunde,” Anifowose said.

“The unveiling of Omotunde will create that platform to relate with bakers and to personify the brand in the ambassador. Omotunde has shown tremendous support for the brand in over 20 years. It is a welldeserved honour,’’ he added.

Dominic Daniels, national president, Association of Master Bakers and Caterers of Nigeria (AMBCN), commended Crown Flour Mills for maintaining and strengthening a cordial relationship with bakers.

Daniels, who was represented

by Kabiru Hassan, said that the association would also like to encourage the firm to continue a good price regime and maintain the quality of the Mama Gold Flour.

“We are soliciting for a good price regime to help bakers become profitable is maintained and sustained for the progress of the flour industry in Nigeria,” he said.

In his acceptance speech as brand ambassador for Mama Gold Flour, Raji Omotunde said he was delighted to have been honoured with the duty as an ambassador.

Omotunde urged bakers to continue to use Mama Gold Flour and pledged on behalf of the association to promote the company’s products.

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diets. It is actually part of the plant family that includes turmeric cardamom that has huge health benefits.

Ginger can be consumed in different forms which include in powder form, refrigerated or frozen or fresh which is peeled before consumption. The plant is used as a spice and a major ingredient in a wide array of dishes.

It serves as a by-product to numerous food and beverage industries. It is used for the production of ginger wine and also for food seasoning in most Asia countries.

Powdered ginger is used in the production of flavour which is utilised in a variety of recipes such as cakes, cookies, bread, crackers, ginger ale, and beer.

Its root used as raw material in manufacturing health products, drinks and by bakery industry.

Nigeria’s ginger production is put at 31 million metric tons while demand is put at 65 million MT, leaving a supply-demand gap of 34 million MT, according to data from the Ministry of Agriculture.

The country exports majority of its ginger which makes Nigeria the third highest exporter of the crop globally.

Ginger is produced in six states of the Federation namely, Kaduna, Nasarawa, Benue, Niger and Gombe with Kaduna as the major producing state.

Nigeria ginger season lasts from October to February. Currently, a ton of fresh ginger is sold for $1,000 at the international market.

Lagos to host coconut summit as farmers position to tap global market

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he Lagos State Government has announced its plans to host the first ever International Coconut Summit in the country to aid farmers tap into the $4billion global coconut market.

Olayiwole Onasanya, permanent secretary, Ministry of Agriculture, stated this during the inauguration of the Local Organising Committee (LOC) members recently in Lagos.

Onansanya said that the state government, in an attempt to remove the bottlenecks in the coconut subsector and sustain the production, utilisation and commercialisation of the crop, set out to host the summit.

“The summit will be able to increase awareness and sensation on the economic potentials of coconut and attract high net worth investors into coconut value chain while providing platform for stakeholders in the value chain to network,” he said.

“It will ensure that Nigeria taps from the global coconut market exposing and training stakeholders on best practices to enable them boost the country’s foreign exchange earnings by exporting the crop.”

He stated that the state through the Lagos State Coconut Development Authority (LASCODA) has helped in the rehabilitation of old trees, provision of seedlings to farmers and empowering of processors on processing of the crop, among others.

Onansanya added that the state is naturally blessed with avalanche of coconut resources of 180km @Businessdayng

coconut belt, two million trees, large domestic and trans-border markets, innumerable coconut value chain actors with a net worth of about N100 billion annual trade.

He charged the local organising committee instituted for the summit to leave no stones unturned and work in the spirit of comradeship while discussing critical issues concerning the summit.

Coconut is a cash crop that is grown in 22 of Nigeria’s 36 states, with Lagos State having the largest production area.

The crop serves as a raw material for numerous industries such as pharmaceutical, cosmetics and food and beverage with limitless domestic and export potential.

Speaking also, Toyin Suarau, commissioner for Agriculture on behalf of G overnor Akinwumi Ambode, inaugurated the LOC and promised total support to ensure the success of the summit.

“The proposed summit is unique in the sense that it is the first of its kind in the country that will be focusing solely on coconut value chain development,” he said.

On his part, Dapo Olakunlehi, general manager of LASCODA in his vote of thanks said that the authority and members of the LOC were ready to work hard at achieving a memorable summit.

He also said that the proposed date of the summit would be October 22-23, 2019, and that planning had commenced in earnest and thanked the commissioner and permanent secretary for their support.

Wednesday 01 May 2019

BUSINESS DAY

19

AGRIBUSINESS ag@businessdayonline.com

Cocoa farmers, exporters earn N179bn in 2018 Josephine Okojie

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igeria’s cocoa farmers and exporters have earned about N179 billion from export of raw cocoa beans in 2018, according to data obtained by BusinessDay from the International Cocoa Association (ICCO).

The average price of cocoa for 2018 season was $2,294 per Metric Ton, and Nigeria’s production for the period was put at 255,000MT by the international organisation.

Nigeria exports 85 percent of its annual cocoa produce.

This means that 85 percent of 255,000MT is equal to 216,750MT. Multiplying by the average price of $2,294 is equal to $497million (N179 billion).

“We would have earned far that what we did. We had good midcrop season in 2018 but the main crop season was badly affected by the flooding of last year and farmers were unable to dry their crops,” Sayina Rima, president, Cocoa Farmers Association told BusinessDay from his Ikom Farm in SouthSouth region.

Rima stated that high

yielding lowlands where taking over by last year floods which cut the country’s production for the period.

The ICCO also predicted that the country’s 2018/2019 season will dip by 10,000MT. Stakeholders in the industry attributed the decline in the 2018/2019 prediction by the international agency to extreme weather conditions

that could manifest its self in crop failures, pest and d i s e a s e s o u t b re a k a n d degradation of land.

“I believe that ICCO prediction of a lower cocoa output for Nigeria in 2018/2019 season is as a result of weather issues,” Rima added.

The Nigerian Metrological Services (NiMET) had earlier in 2019 predicted late onset of

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and country manager, Aller Aqua Limited said during the training in Agege – Lagos.

“On this note, we are training farmers on the value chain and how to diversify their marketing by using innovation, social media and other platforms to sell their fish instead of just relying solely on the monopoly market which is the fish mongers,” Lasisi said.

“We are training them on how they can diversify their sales to improve their return on investment,” he added.

He stated that Nigerians consume less catfish because they see it as luxury or for special occasion, saying that farmers are now being encouraged to grow smaller size for households to drive local consumption.

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Speaking also during the training, Tiamiyu Nurudeen, a facilitator and vice president o f Ti l a p i a A q u a c u l t u re Developers Association of Nigeria (TADAN), said that one of the greatest challenges confronting aquaculture production in the country was the market.

“The greatest challenge to fish farmers is the market.

Nigeria has a deficit of about 2.4 million metric tons, so you would expect that there should be a market for your fish but this is not the case for farmers and this is because of the high rate of fish imported into the country that are cheaper,” Nurudeen said.

“Farmers have to create their own market for their fish to remain in business. We have to do things differently.

We realise that it is the fish mongers that are making the profit out of the sweat of the farmers.

“So now the farmers need to use that same structure that the market women have used over the years to create their own market and eliminate the market mongers by putting their own structure in place to service the same market they service at a better percentage to remain in business,” he further said.

He said that the training was to teach farmers to use different models in getting their fish across to consumers at cheaper prices than the market women are currently doing .

He noted that in the long

very old tree stocks with most over 30 years results in low yields, often less than 400 kg and ha and vulnerable to pest infestation,” said Peter Aikpokpodion, an expert in cocoa improvement and value chain development.

“Limited use of pesticides to control black pod disease at the right time and recommended rates also lead to severe loss of yield on the farm. A recent field visit shows that the cocoa swollen shoot virus (CSSV) disease which is a major yieldlimiting disease, has become a significant constraint that needs urgent attention,” Aikpokpodion said.

Currently, farmers in major cocoa growing regions are harvesting for the midcrop season which has commenced since late March.

Farmers to access advisory services on cassava production via mobile phone

Aller Aqua trains fish farmers on innovative marketing to drive sales n a bid to improve f a r m e r s’ l i v e l i h o o d and boost their sales, A l l e r Aq u a L i m i t e d has trained fish farmers on innovative marketing to boost local production and reduce the country’s annual fish import.

Aller Aqua organises t ra i n i ng ye a r ly f o r f i s h farmers across the country on different aspect of fish production to educate them on techniques to make them remain profitable in business.

“Despite Nigeria being the largest catfish producer, farmers’ livelihood is yet to be impacted on, and this is because their profit margins are being eroded by the monopoly market they sell in,” Nurudeen Lasisi, managing director

rainfall and early cessation of rainfall in most parts of the country.

Nigeria has two cocoa harvests which include the smaller midcrop from April to June, and the main crop from October to December.

The main crop normally accounts for 70 percent of Nigeria’s cocoa output while the midcrop accounts for the remaining percentage.

Africa’s most populous nation now ranks fourth with 255, 000 metric tons production in the 2017/2018 cocoa season, ICCO data states.

Similarly, experts identified ageing cocoa trees and limited use of pesticides a s o t h e r maj o r f a c t o r s responsible for the prediction of a fall in the country’s 2018/2019 estimates.

“The preponderance of

run farmers would increase their production as they find more market for their produce.

Nu r u d e e n d e b u n k e d the belief that catfish consumption makes consumers prone to cancer, saying that Nigerian farmers do not use anti-biotics in their fish production but pro-biotics.

He stated that the Nigerian catfish are very safe for consumption and that the association was working to put a modality in place to accredit farms that are adhering to global best practices in fish production.

Lanre Ogunshina, a fish famer and a consultant to farms, who was one of the facilitators for the training, said that farmers are trained on how bridge the gap and get across to the consumers directly.

“If farmers adhere to the ways they have been trained to produce catfish, it will bring down their production cost and all their products can compete effectively and efficiently with imported fish,” Ogunshina said.

“This will make more Nigerians consume cat fish and reduce the country’s reliance on imported fish,” he said.

Other facilitators spoke on practicing fish processing as a business and sustainable dinning for catfish farming in partnership with the Development Finance Office, Central Bank of Nigeria.

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igerian farmers can now access extension and advisory services related to weed control, best planting practices and other aspects of cassava production on their cell phone free of charge, the African Cassava Agronomy Initiative (ACAI) says.

The mobile telephony service is powered by Airtel using the 3-2-1 Service of Viamo.

Farmers with Airtel sim cards who want to access the service and get good advice on cassava production can simply dial 3-2-1 and listen to all the information they need to make the most out of cassava production.

Alfred Dixon, director for development &delivery, International Institute of Tropical Agriculture (IITA) sa i d t h e u s e o f m o b i l e phones would give farmers especially women access to the knowledge they need to improve their livelihoods.

“The mobile approach will also enable the recommendations contained on the “Six Steps to Cassava Weed Management and Best Planting Practices to reach the hard-to-reach terrains in Nigeria,” Dixon said in a statement made available to BusinessDay. The cassava information on weed control and best planting practices on the 3-21 service are the combined recommendations from the now merged IITA Cassava Weed Management Project (CWMP), and the IITA African @Businessdayng

Cassava Agronomy Initiative (ACAI).

The recommendations from these projects were validated during a stakeholders’ meeting involving the National Root Crops Research Institute (Umudike), and the two p re m i e r u n i ve rsi t i e s o f agriculture in Abeokuta and Makurdi.

Also, state extension agencies from Abia, Benue, Ogun and Oyo were part of the initial message development.

There were also development partners such as GIZ, Catholic Relief Services, and the Market Development in the Niger Delta project (MADE) who gave useful insights into the message development process.

Pieter Pypers, coordinator, ACAI said the release of evidence-based messages on the 3-2-1 service provides farmers the tools they need to improve cassava yield and make more profits.

Similarly, Harriet Blest, country manager of Viamo said they were excited to work with IITA in the framework of ACAI to transform cassava in Nigeria using the 3-2-1 service of Airtel.

With a subscriber base of 43.1 million, Airtel is one of the top three telecommunication companies in Nigeria, the statement said.

Godwin Atser, digital extension &advisory services specialist with IITA who coordinated the messages w i t h Vi a m o, sa i d t h e development was a new dawn for cassava farmers.

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Wednesday 01 May 2019

BUSINESS DAY

Wednesday 01 May 2019

BUSINESS DAY

CEOINTERVIEW

21

NNAMDI OKONKWO MD/CEO, Fidelity Bank Plc

Interview with Private Sector Leaders

‘We are driving our 5-year plan and numbers show we are making progress’

NNAMDI OKONKWO, Managing Director/CEO, Fidelity Bank Plc, during a recent interactive forum in Lagos, spoke with BusinessDay analyst, MICHEAL ANI, as well as business editors from leading newspaper publications in Nigeria on the bank strategies in joining the league of Tier 1 lender by 2022

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indly give us an overview of how the bank has evolved since your assumption as CEO in 2014 Two years ago, we set out at Fidelity Bank, to drive a five-year strategic plan, beginning from last year that would see us migrating to a Tier 1 bank in the country by 2022. We want to break into the league of Tier 1 banks and grow organically, keeping in mind that other banks are also growing.

This is my sixth year as Chief Executive of the bank and by God’s grace we are driving the plan and the numbers show that we are making steady progress, year-on-year, in terms of balance sheet size, deposit and profitability.

As we are doing this, we are keeping our eyes on the safety of the bank. We have thus kept our eyes on the bank’s capital adequacy, liquidity ratios, risk management framework, governance and compliance practices. For instance, as a result of our prudence in building up capital, we were able to cushion the impact of the implementation of IFRS 9 so we took the charge outrightly.

On deposits, we grew by 26 per cent last year. In fact, in one year, we grew deposits by about N200 billion, which means that our market share, is increasing. Two years ago, our desire was to make sure that low-cost deposit constitutes a larger percentage of the total deposit. Today, we have largely achieved that as low-cost deposits now constitute about 82 per cent of total deposits.

On governance, you would have noticed how our Board has been strengthened. We brought on board some seasoned professionals. For instance, the Chairman of the Board is a former Chief Executive of a bank and a former Deputy Governor of the CBN for 10 years. We also have with us the former Managing Director of Guinness Nigeria and another former MD of a bank. As a deliberate strategy, each time a Director retires, we replace with yet another very experienced one.

We also ensure diversity.

We are also very serious about succession. Therefore, we plan ahead. As you are aware, we recently appointed three Executive Directors at a go, subject to CBN’s approval. That is an outcome of a planned succession.

We are driving our retail banking with digitization. About 81.5 per cent of our transactions are now done through digital channels. That is why you will see us building just one or two

new branches in a year. In the past, we used to do like 15 to 20 branches.

I can’t remember the last time I went to commission a new branch or even wrote a cheque. Digitization has made things more efficient. Still, on digitization, we have also taken into cognizance, customers who may not have data to do their transactions, so we in-

in our domiciliary accounts because people built up funds so that when they want to transfer they can easily use it. We also have corporates that are in foreign currencies earning businesses. The increase in oil prices also impacted on our deposit growth as it favoured our oil and gas upstream customers.

What are you doing to sustain loans and advances above 10 per cent?

The environment is so challenging that growing loans double-digit as we have done have prompted some people to ask us: How come we grew double-digit. In 2018, we took advantage of opportunities in some sectors to grow loans. For this year we are guiding for between 7.5 per cent to 9 per cent. Still talking about last year, a lot of those were to the real sector of the economy which encourages growth and creates employment.

‘‘

We are also very serious about succession. Therefore, we plan ahead. As you are aware, we recently appointed three Executive Directors at a go, subject to CBN’s approval. That is an outcome of a planned succession troduced our USSD *770#, which does not require you to have smartphone or data to carry out some banking transactions. These categories of customers do not need android phones to operate their accounts, just basic phones. This has made our cost-to-income ratio to

improve significantly. Ultimately, our cost-to-income ratio is likely to drop by about 50 per cent by 2022. Digitization will play a key role in achieving this. Having said this, IT comes with a lot of risks. Any bank that does not pay attention to cyber risks is living dangerously and I doubt if any bank will even try that.

Statistics have also shown us that even in some of the areas of the north with security challenges, we have a very high adoption of electronic banking because people are sending and receiving money using their phones.

What is a challenge actually leads to innovation and opportunity?

You were a leading investment bank before the consolidation in the banking industry, but are you de-emphasizing corporate banking for retail banking?

We have just appointed a new Executive Director, Corporate Banking and that should tell you how seriously we take Corporate Banking. Fidelity Bank used to be Fidelity Union Merchant Bank and that was why most

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multinational companies in the country have continued to bank with us. Supporting business in this niche segment comes at is at huge costs. Therefore, building up low-cost deposits from the lower end of the market helps support lending to the corporate segment at rates lower than higher-risk segments. We have grown our savings deposit account base from N75 billion when I became CEO on January 1, 2014, to N226 billion at present.

What is your take on cybersecurity in the industry and what is your bank doing to tackle it?

The entire industry is as strong as a bank with the weakest security measures. Therefore, no bank should toy with cybersecurity measures because there is a contagion effect if fraudsters can penetrate one bank.

What it means is that they can also affect other banks. At the Bankers Committee, we have discussed this several times. Therefore, even at the regulatory level, there are certain measures you are compelled to take.

For instance, building a Security Operations Centre and appointing people with certain qualifications and executive level personnel as Heads of IT Security.

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What plans do you have to grow the bank organically and inorganically?

A company’s strategic initiative for growth might be driven by either organic growth or inorganic growth. Our five-year plan was crafted to be based on organic growth, based on the projections we made. We also purposefully decided that we will not expand outside Nigeria until after 2022.

So, our plans are based on organic growth.

We also left a window that allows us to take advantage of emergent opportunities though. When these happen, we will sit down and look at them and go back to our Board to see if we need to alter anything to take advantage of such opportunities or to continue with on the organic growth path.

Fidelity Bank recorded about 28 per cent growth in deposit base in 2018, what was responsible for this?

The deposits came from a combination of growth in savings, growth in current and domiciliary accounts. We have a new product where you can transfer foreign exchange with your mobile phone up to the regulatory limit. It means that we have also seen growth

What is your take on payment service banks?

You know it has been a prolonged push by the Telcos to come into the banking space. We don’t have a problem with that. Let them be subjected to the same regulatory conditions that we have because you are talking about depositors’ money. So, once all of us are subject to regulatory control, we will all do banking together. I think the sky is big enough and as banks, we are not sleeping, that is why you see some of us deepening our digital platforms.

‘‘

Today we have several millennials that are IT savvy, working at solving problems with innovative solutions, under flexible hours and work environment, at our digital lab

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Nigerian stock market is still experiencing heavy foreign capital outflows post-election, what is your opinion on this?

We just got back from London on a no-deal roadshow and the outlook on Nigeria is quite positive. Indeed, based on some of the sentiments, we were being advised to raise Eurobonds because they want to increase their emerging markets investments especially the fixed income managers.

On the flows, you know European Central Bank raised rates. With the increase in rates, capital will always follow where margins have just popped up.

People generally move money to those areas just the same way when we had our treasury bills going for about 20 per cent, everybody rushed in. So, that is the constant dynamics of inflows and outflows.

What measures have you put in place to ensure that your bank is not threatened as you grow to become a Tier 1 Bank?

We are keeping our eyes on our capital, on risk management, on governance and sustained profitability. This explains why, for instance, we had enough buffers to absorb the impact of the implementation of IFRS9.

Do you plan to raise Eurobond to support capital?

We do not plan an immediate increase in Eurobond. We are not doing any Eurobond this year but we may consider the local bond issue if necessary as part of Tier 11 capital but no size yet.

How is Fidelity Bank leveraging Fintech to grow its franchise?

Under our five-year plan which was crafted in 2017 and commenced on January 1, 2018, we got one of the big four consulting firms to do a full global analysis of Fintechs and how we can collaborate with them.

Part of our engagement strategy is a partnership. This partnership has been on several fronts including the deployment of a solution for a major customer of ours; an airline. We are bankers to an airline that controls about 40 per cent of the industry. Initially, they had challenges with ticketing on the electronic system they were using, and they came to us. Through collaborating with a Fintech, we migrated their entire transactions to the cloud. This has worked so efficiently well in the last one and half years without fail.

Aside from partnering with Fin-

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techs, we then decided that there was a need for us to develop our internal capacities as well. We decided to build a digital lab as part of the outcomes of the strategic studies we had done with the consulting firm in the last six years.

Today we have several millennials that are IT savvy, working at solving problems with innovative solutions, under flexible hours and work environment, at our digital lab.

@Businessdayng

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Wednesday 01 May 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

NSC moves to attract investors, funding for proposed dry port projects amaka Anagor-Ewuzie

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oncerned over the slow pace of work at the sites of the proposed Inland Dry Port (IDP) projects, the Nigerian Shippers Council (NSC) has moved to assist concessionaires of the ports in attracting investors as well as the needed funding for the projects.

Inland Dry Port, also known as Inland Container Depots (ICDs), is a Federal Government’s Public Private Partnership (PPP) project, to be situated across the six geo-political zones of the country in Kano; Jos, Plateau State; Isiala Ngwa, Abia State; Borno, Maiduguri; Kaduna and Ibadan.

Concessionaires of these six ports include Duncan Maritime Ltd – Jos; Eastgate Inland Container Terminal Ltd – Isiala Ngwa, Abia State; Dala Inland Dry Port – Kano; Migfor Nigeria Ltd – Maiduguri; Catamaran Logistics Ltd – Ibadan and Equitorial Marine Ltd - Funtua.

Bu s i n e s s D ay u n d e rstands that apart from the Kaduna IDP which has taken off since January 2018, the rest are being delayed due to lack of funding for project execution.

To facilitate the completion of these projects, Shippers Council has approached the Commonwealth Enterprise Investment Council (CWEIC) to be involved in the search for interested investors for the IDP projects.

Source: Nigeria’s Maritime Industry Forecast 2019 - 2020 It was gathered that Hassan Bello, executive secretary of NSC, has already visited the London office of the body, which was established in 2014 with the mandate of promoting intracommonwealth trade and investments across the 53 member countries.

Bello also led the management team of the Council to attend the Advisory Council Meeting of CWEIC held recently in Lagos during which a lot of business opportunities across and beyond Nigerian were laid bare.

According to the Council, the aim was to attract investors from other Common-

wealth countries to show interest in the IDP projects in order to achieve speedy completion.

Apart from IDP projects, the Council is also interested in getting investors for development of other transport infrastructure such as Truck Transit Parks (TTP) and Border Information Centres.

Meanwhile, Bello said that both IDP and TTP projects would have multiplier effects on the national economy with thousands of jobs created on completion.

“The dry port project is imperative to trade facilitation as it will enable shippers in the hinterland to import and export without having

to travel to Lagos seaports or other seaports in Nigeria,” Bello said.

Citing example, he said that with the already built Kaduna IDP, importers in any part of the world can bring in their consignment Kaduna as Port of Destination. “Similarly, exporters within the zone can export their goods using the dry port without having to go through Lagos ports.”

Recall that the Council had over two years ago expressed concerns about the delay in construction works and ordered the concessionaires to quicken work on the sites or lose their licenses.

“If for any reason, we

see some unwillingness to execute this project the government will not hesitate to terminate this concession. The government has an obligation to bring out consistent policies that will encourage the private sector to perform. The concessionaires too have an obligation,” Bello said.

He further described government as an enabler that will do everything possible to ensure that these projects come on stream, adding that there was need to see some level of seriousness on the side of the concessionaires.

“The private sector must show some responsibil-

ity because now we have in that agreement, new time lines and we have to act according to the time lines.

Anywhere you want us to intervene for you to grow, do not hesitate to tell us. We want to see action and if we don’t see action, we will not hesitate to cancel any concession in accordance with the agreement,” he warned.

Though the Council had taken a hard position to ensure that the concessionaires complete their projects, it has also shown commitment to lending a helping hand to accelerate investments in the IDPs and TTPS for the concessionaires to succeed.

“The ultimate goal of the Council is to see that the projects come to fruition as soon as possible, considering the benefits to the national economy and states where they are sited,” a source close to NSC, who does want his name in print, told BusinessDay. The source further disclosed that the Council wants to use its contacts to link the concessionaires to possible investors in either the IDP or TTP projects.

However, Bello had late last year assured concessionaires of rail connection to the dry ports through the seaports to ensure ease of cargo movement.

He said that the Federal Government through the Transport Ministry was working hard to ensure rail connection to the dry ports, adding that lack of adequate rail infrastructure would affect the dry ports negatively.

Reasons Customs cannot grant zero duty on imported vessels – DC Nnadi amaka Anagor-Ewuzie

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overnment fiscal policy has mandated the Nigeria Customs Service (NCS) to impose a14 percent duty on vessels imported into the country by Nigerian ship owners, which subsequently raises the cost of importing vessels into the country.

The policy also enabled Customs to persistently grant waivers to foreignowned vessels in line with the provisions of Coastal and Inland Shipping Act (Cabotage).

In view of this, Dera

Nnadi, deputy controller of Customs in charge of Enforcement at the Tin-Can Island Port command, who spoke to newsmen in Lagos recently, explained why Customs cannot grant zero duty on imported vessels in Nigeria as being requested by the indigenous ship owners.

Nnadi, who reacted to issues raised by shippingindustry stakeholders in Lagos recently, said that it was not in the place of Customs to grant such a request as the service only implements government policies and not formulate them.

“Besides implementing policies, we take feedback from stakeholders and we www.businessday.ng

give them to government.

We also take government policies, interpret them and share with stakeholders.

Some of those feedbacks, sometimes, may not be very complimentary,” he added.

According to him, stakeholders could not understand why it should be cheaper to bring in vessels on temporary importation basis whereas much more was being paid as duty on vessels imported by indigenous ship owners.

“The truth is that there is a little misconception about waivers. It is not totally true that when you are bringing vessel under TI (Temporary Importation) it is almost

free. No, I think that if they calculate the duty, the importer would have paid on that item assuming it was brought in for home use.

The importer is supposed to deposit that same amount in a bank as bond and then present the bond to the Nigeria Customs Service and on that basis, you are granted waiver,” Nnadi said.

Explaining further, he said: “The waiver is for a period ranging from six months to two years renewable. However, it cannot be renewed for more than twice. So, if you are granted waiver for first two years, you come back for renewal, of course, after the second

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two years, you are expected to re-export and when you are coming back, you pass through the rigours of obtaining the documentation process again.

On stakeholders’ request that there should be complete waiver on duty on commercial vessels, Nnadi said that it is for government to do and not Customs as in the case of commercial airlines that do not pay duty.

He added that just like private airlines pay duty because they are considered luxury, Yatches also pay more as duty for being luxury.

On the allegation that Customs may not want the duty on imported vessels to @Businessdayng

go as it helps boost its annual revenue target, Nnadi said that target setting is a function of government and the money made by Customs is paid into Treasure Single Account (TSA).

“Customs operates on a budget and does not have the prerogative to spend the money collected. Most of the money collected by Customs also goes back to government for development of other sectors of the economy. The question is that if all the money has been collected as tax from commercial vessels, can we also divert part of that money to developing the shipping sector?” he questioned.

Wednesday 01 May 2019

BUSINESS DAY

23

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Chamber seeks more private investment, comprehensive policy to devt shipping amaka Anagor-Ewuzie

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he Nigerian Chamber of Shipping (NCS) has identified more private- sector investment and involvement as well as comprehensive shipping policy implementation as ways of developing shipping business in Nigeria.

The chamber pointed that Nigerian costal trade is currently dominated by foreigners, and unfortunately, this is not being adequately addressed due to government’s politicisation and lack of political will to develop shipping.

The private sector should drive the development in shipping to enable government to work in that direction. There is need for corporate governance to be done right without ignoring regulatory compliance and international best practices to deal with negative perception, said a communiqué issued at the end of a focus group meeting on National Shipping Policy organised by the Nigerian Chambers of Shipping in Lagos, last week.

The communiqué also said there is need for a policy design team that involve fi-

nancers, ship owners, young practitioners in the maritime sector, engineers and surveyors among others.

“This can be presented to the public sector and the relevant agencies to drive policy implementation in that direction. The Cabotage Vessel Financing Fund (CVFF) can be used as guarantee to help in financing ship building and assist in balancing the risks in ship finance. Insurance can be handled in Nigeria and build expertise in this field,” the

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communiqué said.

According to the communiqué, shipping is at the core of transportation but the Nigerian government is yet to recognise the importance of shipping, adding that government needs to address ‘shipping blindness’ that was exhibited in the work done on Vision 2020, which did not have any reference to shipping.

“Nigeria should decide which area in the maritime industry it wants to develop and become a global leader

in, by developing its comparative advantage in that area.

The areas include shipping, maritime finance and law, maritime technology, port and logistics as well as seafaring,” the communiqué said.

“Nigeria does not have seagoing Nigerian flagships when countries like Sierra Leone and Togo are already sending their ships out to outer waters. This shows the dearth of Nigerian flagships and the attendant disadvantage that Nigeria has for not having flagship oceangoing

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vessels,” it pointed.

It further blamed multiplicity of agencies in maritime industry for creating more problems rather than developing the industry.

“The first step in the development of the industry is the need to dominate domestic shipping business before venturing into international trade,” it suggested.

The communiqué further suggested the need to address the business psychology of operators in the shipping industry which has unfortunately developed by reason of the harsh business environment.

“There is need to develop security infrastructure and apparatus alongside developing maritime infrastructure. Nigeria’s Customs laws should address the balance between regulation and trade facilitation. It needs to address trade liberalisation and globalisation and reflect international best practices,” the communiqué added.

Noting that oil and gas exploration can become the basis for developing seafarers in Nigeria, the chamber said that this can enable Nigeria become an export market for seafaring professionals.

“International Oil Com-

@Businessdayng

panies (IOCs) will be willing to outsource the manning of their ships and finance the training of seafarers. This will help reduce their tax exposure while Nigeria can take the advantage to develop manpower in the shipping industry.

It further advised that ship owners should procure fleet and come up with a depreciation policy that would allow them liquidate these ships in good time. “This way such companies can remain competitive and ensure continuity.”

The Chamber however added that there is need for capacity building for the trainers of those operating in shipping particularly at university and polytechnics, and to develop the syllabus of tertiary institutions.

“This will assist in making manpower in the shipping industry internationally competitive. Schools outside the country can be brought into Nigeria to partner on the training of seafarers,” the communiqué added.

It further pointed at the need for time line strategy, for example, every five years, that recognises ship development life cycle namelyoperations, maintenance, building and financing.

24

Wednesday 01 May 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

The Big Idea: What makes geisinger’s destination care program tick (part 1) programs like ours for spine surgery end up not needing it. It can be more work to convince a patient that they don’t need a procedure, but doing that results in the best care.

GARDINER MORSE

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efore he arrived at Geisinger in 2016, Jaewon Ryu, an emergency medicine doctor with a law degree, held a raft of leadership roles in health care, insurance and government, including at Kaiser Permanente, Humana and the Centers for Medicare and Medicaid Services. He joined the Pennsylvaniabased health system as an executive vice president and chief medical officer, and this December became interim president and chief executive officer when its former CEO David Feinberg headed to Google to lead its health care strategy.

Geisinger is huge — it has 13 hospital campuses, two research centers, a medical school and a commercial health plan — and is famously innovative. Its best-practice approaches have been widely adopted, and it is spearheading one of the largest DNA-based precisionhealth projects in the world. So it’s little surprise that Geisinger is a pioneer in another area, so-called centers of excellence (COE) destination-care programs.

In these arrangements, employers such as Walmart, Lowe’s and McKesson fly employees to selected COEs for complex care — with remarkable results.

HBR’s Gardiner Morse spoke with Ryu about the benefits and challenges for providers of embarking on COE programs, and their implications for both employers and insurers. Following are edited excerpts of their conversation.

Why is Geisinger engaging in these arrangements with employers to fly their employees in for care?

Partly it’s about growth. Being a destination-care provider for employers like Walmart allows us to reach a patient population that isn’t already getting its care within Geisinger and is beyond our backyard. So it’s a good way for us to expand the scope and reach of what we’re doing.

But it also aligns really well with how we deliver care. We’re big believers in developing best-practice protocols and then designing workflows to deliver them. We have developed care protocols for many clinical scenarios, including areas like cardiac surgery, spine surgery, chronic obstructive pulmonary disease, diabetes management and many others, and they yield the best combina-

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tion of quality and patient experience.

It’s a program that began years ago, and we’ve been refining the protocols and adding new ones ever since. It’s a chassis, if you will, that these new centersof-excellence programs can easily build on. We have the resources, culture and processes already in place to develop, say, a joint-replacement bundle with an employer. And doing that reinforces our culture and processes. There’s a positive feedback loop.

Where does the destination-care program fit in that feedback loop, reinforcing how people work?

We’ve seen that sometimes after you go live with a protocol you can get what we call “beach erosion,” where over time people can become less diligent or deliberate about making sure everyone follows the protocol. Being one of the centers of excellence for employers in programs like these helps prevent that erosion because it’s yet another area where the protocols are applied. It keeps us on top of our game, as employers are paying close attention to how we perform. So the program reinforces their consistent use.

What would you say to other providers who maybe don’t have smooth-running protocols like Geisinger’s about the risks of these types of programs?

That’s the ultimate question for any system that wants to embark on this journey.

For us, it made sense because it was already ingrained as our approach to care, so there weren’t the same startup costs and culture-change challenges that you might see in an organization that didn’t

already have the culture and protocols in place. Also, we like reimbursement models like bundles where we’re taking risk, because we tend to do better with those in driving overall value than we do under an episodic, per-widget model. But that’s part of the calculus for any provider: Do you have the culture and operational programs and processes in place to succeed with this kind of model?

There’s a huge opportunity for a provider that doesn’t yet have these capabilities fully in place to pursue direct arrangements with employers as a way to jump-start the shift. Delivering value is the direction that health care is going — whether to patients, employer groups, the payers you’re partnering with or the government. Building the chassis I’ve been talking about positions any health system better for what’s coming in the future, and what is in many ways already here. In time, every system is going to need to have this capability, and this kind of program is a way to get started.

I’m assuming doing programs like these reflects well on a provider?

Well, it can help the provider tell the story about the value they’re offering.

For instance, we work hard at making sure that we’re not doing unnecessary procedures, so we find that a significant number of patients referred to us for a surgical procedure actually don’t need it after all. We take a lot of pride in that because it shows that we’re focused first and foremost on determining what is the best care rather than on how many procedures we can do. Data from Walmart shows that more than half of their employees referred to centers-of-excellence

Let’s talk about the challenges.

This can’t be easy.

That’s right. Make no mistake — even if you have the chassis in place there’s still a lot of work you need to do on the culture to go live with a program like this.

We were lucky — we had a running start, if you will. But even so, it’s not something you turn on overnight. We’ve been on this journey for more than a decade.

It takes constant work and vigilance. For instance, even when you recruit physicians you need to make sure they are brought along into our organizational approach and don’t introduce unwarranted variation into how we approach care.

It also requires constant attention to make sure your protocols are up-to-date and to assure that everyone’s aligned with them. It turns out that if you follow evidence-based best practices reliably, great things happen for patients. So you need physician leadership that is committed to pursuing these protocols and tracking performance, and updating them as the science changes.

What’s an example?

Well, the conventional wisdom that many doctors were taught in medical school was that patients should have nothing by mouth in the hours preceding surgery, and should be eased back on a clear liquid diet after surgery. So essentially you’d starve them before and starve them after surgery.

But so-called enhanced-recovery-after-surgery, or ERAS, protocols showed that patients do better if you give them enriched-nutrient shakes before and after. Complication rates go down, length of stay goes down, and they’re up and mobile more quickly. It runs counter to the traditional teaching and so it makes some physicians uncomfortable, but we incorporated this into our own protocols and it’s how we do many elective procedures now. It’s easier to launch an approach like this systematically when your culture embraces the need to continuously seek better ways to do things and to do them more consistently.

Gardiner Morse is a senior editor at Harvard Business Review.

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Wednesday 01 May 2019

Harvard Business Review

BUSINESS DAY

25

MANAGEMENTDIGEST

The Big Idea: Why do employers provide health care in the first place?

MELISSA THOMASSON

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n 2017, Americans spent $3.5 trillion on health care — a level nearly equal to the economic output of Germany, and twice as much as other wealthy countries spend per person, on average. Not only is this a problem for the people seeking care; it’s also a problem for the companies they work for. Currently, about half of Americans are insured through an employer, and in recent years companies have borne the financial brunt of rising costs. Frustrated, many employers have shifted the burden to workers, with average annual deductibles rising by more than 50% since 2013.

How did the United States end up with such an expensive system? In order to understand the cost conundrum of America’s health care system today, you have to understand where the system began — and how increasing costs and technological advances have created new pressures and incentives over time.

EARLY 1900s: THE FIRST HEALTH INSURANCE PLANS TAKE SHAPE In the 19th and early 20th centuries, medical care was largely ineffective.

Many hospitals were charity institutions that functioned as shelters for people who could not be cared for at home, rather than places for people with acute injuries and illnesses to be treated.

In some European countries, health insurance developed earlier than in the U.S., but not because of the high cost of medical care. In 1883, German Chancellor Otto von Bismarck enacted a health insurance system to stem socialist sentiment as he cemented German unification. The German system enabled workers to see a physician if they were sick, but, even more important, provided what we would today consider disability insurance: giving workers money if illness or injury prevented them from being on the job.

In the first decades of the 20th century, medical treatment shifted out of the home. As more people sought treatment in hospitals, health care costs began to rise.

Existing fire and casualty insurance companies were reluctant to offer medical coverage, because they viewed health as uninsurable and feared that people who might be more likely to need medical care would be the only ones buying insurance. This problem — known as adverse selection — was a big problem for insurance markets in the 1920s and 1930s (and still is one today).

1930s: ENTER HOSPITAL PAYMENT PLANS Employment-based insurance developed in the U.S. primarily because offering insurance to groups of workers mitigates adverse selection. Ironically, it was not insurance companies that figured this out. Rather, the problem was solved in 1929 when Justin Ford Kimball, an

administrator at Baylor University Hospital, devised a means to alleviate the financial pressure the hospital faced from unpaid hospital bills.

As the nation sunk into the Great Depression, hospital occupancy rates plummeted to as low as 50%. Desperate for revenue, numerous hospitals began to form their own prepayment plans.

Eventually, the American Hospital Association developed a logo for these plans to use, and the “Blue Cross” plans were born.

In addition to stemming adverse selection, Blue Cross also helped control costs by limiting so-called moral hazard, which occurs when having insurance coverage causes people to increase their use of health care services. Blue Shield, which separately provided coverage for physicians’ charges, turned to a different method: paying a fixed dollar amount of a bill, with patients paying the difference.

Commercial insurance companies, which had initially been reluctant to offer health insurance, witnessed the success of the Blues in conquering adverse selection and moral hazard and soon began to compete with the Blue Cross plans by offering insurance to employee groups.

WORLD WAR II: THE RISE OF MODERN HEALTH CARE BENEFITS The tax treatment of employer-sponsored health insurance fostered the rapid growth of coverage. Employers were permitted to deduct health insurance contributions from their taxes as a cost of doing business, just like wages. But unlike wages, employer contributions to employee health insurance premiums were (and still are) considered exempt from employees’ taxable income, a ruling codified in the 1954 Internal Revenue Code The tax treatment of health insurance led more Americans to be covered, and the coverage became more generous.

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1946-1965: HEALTH CARE COSTS RISE In the years following World War II, when the economy was strong, hospitals began placing an emphasis on expansion. In 1946, the Hill-Burton Act was passed, pumping billions of dollars into the construction of new hospitals.

But even as health insurance became more generous and more expensive, consumers were still insulated from health care costs, due to the reimbursement systems developed by Blue Cross and Blue Shield.

1960-1990s: AFTER THE INTRODUCTION OF MEDICARE, COSTS RISE AGAIN Unfortunately, the health insurance system didn’t change in response to increased expenses; in fact, a task force set up in 1963 by the AHA and the Blue Cross Association affirmed the use of a “cost-plus” reimbursement system, where hospitals were reimbursed for the cost of treating patients. Hospitals thus had carte blanche to charge patients at will, passing the bill along to insurers and employers.

The passage of Medicare in 1965 added even more fuel to the fire. To ensure physician participation in the program, Medicare reimbursed physicians based on a calculation of the “customary, prevailing and reasonable” fees within any given geographic area. With the program underwriting whatever fees doctors charged, the rate of increase in fees doubled.

In an attempt to stem medical cost inflation, Medicare switched from its cost-based reimbursement system to a system of fixed prospective payment in 1983. Under the new system, which most commercial insurance companies began following as well, Medicare reimbursed hospitals according to a predetermined fee schedule based on diagnosis.

2000 TO TODAY: CONSOLIDATION @Businessdayng

AND MORE CONSOLIDATION Over the past 20 or so years, consolidation among both providers and insurers has reduced competition in health care.

Less competition in markets causes prices to rise. Numerous regulatory barriers to competition exist in the pharmaceutical market, too, providing very little pricing transparency for both physicians and patients.

As a result of these trends, employers have shifted costs to employees; one common example is the implementation of high-deductible insurance plans, which increase consumers’ out-of-pocket costs.

The history of health insurance in the United States is a lesson in good intentions with unforeseen consequences — along with an inability or unwillingness to act when the consequences become clear. The combination of governmentprovided and private health insurance, including the Affordable Care Act and Medicaid, now covers 90% of the population, but as long as health care providers lack competition and profit from volume-based care, it’s unlikely that costs can be constrained. And when it comes to employer-based plans, costs are becoming untenable — and increasingly are shouldered by employees.

Melissa Thomasson is a professor of economics in the Farmer School of Business at Miami University.

26

Wednesday 01 2019

BUSINESS DAY

E

XECUTIVE MOTORING

Toyota leads DENSO, SoftBank Vision Fund $1bn Uber deal Pg 27

N87.5m Cayenne Turbo heralds Porsche return ...Nigerian dealership only allocated 50 units in 2019 MIKE OCHONMA mikeochonma@gmail.com

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he premium league of the the Porsche SUV segment came alive last week with the arrival of the latest generation of Porsche’s most successful SUV model line.

Its availability continues the exciting story of the brand since 2002 when it debuted as Porsche’s first off-road variant and first vehicle in the German automaker’s line with four doors.

Available at Porsche Centre Lagos, Victoria Island with the prices ranging from N46. 3million for the base model, N53.2million for customised version of the Cayenne S and N87.5million for the Cayenne Turbo, the franchise said the brand is admired by many high profile customers.

Completely redesigned from ground to up, the Cayenne brings closer its racetrack roots and offers greater versatility and more performance than ever before.

Powerful turbocharged engines, enhanced chassis systems, a range off-road modes and a sharper design underpin the model’s credentials as a true sports car in its segment.

Additional enhancements to the latest generation also include intelligent assistance systems and more connectivity features aimed at offering improved driver and passenger comfort.

General manager, Porsche Centre Lagos, Anurag Shah, said: “Since its initial launch, the Cayenne has been one of the most popular models in Nigeria, and I have no doubt that the third generation, which offers even more sports car performance and practicality, will continue this success story.

“For me, the new Cayenne’s versatility is truly unique. It is at home on any road, but it is equally

ready to explore new terrain. It enjoys a short sprint as much as a long road trip, and the commute to work as much as a lap on the track. It is capable of producing a superb drive experience virtually anywhere, and that is really what sets the Cayenne apart from any other SUV. We’re very excited to be welcoming it to Nigeria today’’.

The Porsche general manager said.

The bold new design evolution of the brand does not only stay true to the unmistakable identity of the Cayenne but delivers a more streamlined, athletic impression to complement an increased length and lower height.

It combines powerful and efficient engines with a new, responsive eight-speed Tiptronic S gearbox which enhances capabilities thanks to shorter response times and sportier ratios in the lower gears.

The six-cylinder turbo engine delivers 450 Nm of torque and 340 hp, a 40 hp increase on its predecessor and reaches 100 km/h in 6.2 seconds, or just 5.9 seconds with the optional Sport Chrono Package, and has a top speed of 245 km/h.

The Cayenne S is powered by a 2.9-litre, biturbo-charged V6 engine with 440 hp (an increase of 20 hp) and 550 Nm of torque. It reaches 100 km/h in 5.2 seconds (4.9 seconds with the optional Sport Chrono Package) and boasts a top speed of 265 km/h.

Furthermore, the pronounced bonnet, redesigned headlight contour and trademark large air intakes underline the Cayenne’s improved driving dynamics from the front. Narrower side windows, a redesigned rear wing, wide rear end with integrated light strip and wider alloy wheels further enhance and emphasise its sports car genes.

The new Cayenne offers a spacious cabin, with several comfort and convenience features throughout.

Luggage compartment has been increased by 100 litres, just as the advanced cockpit concept brings the vehicle and the occupants closer through increased connectivity and intuitive controls, even as the entre console with direct touch control (DTC) and a new 12.3-inch touch display for the Porsche Communication

Management (PCM) act as the driver’s interface to all vehicle functions.

PCM can be configured for up to six individual profiles to store a large number of interior settings, as well as specifications for lights, driving programmes and assistance systems.

For the first time, the Cayenne is available with rear-axle steering as an option, and a mixed tyre configuration. The tyres are also larger than before, ranging from 19 to 21 inches. Both developments are derived from the 911 to improve agility, stability and safety, whilst rear-axle steering also reduces the turning circle by 0.6 metres for even greater practicality.

Adaptive sports seats with 18way adjustment, unique stitching and raised side bolsters come as standard in the top-of-therange model. The Turbo comes equipped with a BOSE® Surround Sound System to deliver true clarity of sound to all five seats for even more drive enjoyment.

BKG makes final push on Lagos auto/parts exhibition ...As more participants sign on

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his year’s Lagos Motor Fair & Autoparts Expo will take off next week May 6, 2019 at the Federal Palace Hotel, Victoria Island, Lagos with a good number of automobiles, spare parts, accessories, lubricants, additives, financials and security gadgets particiapants getting ready to showcase different classes of modern and innovative models, brands and services from their stables.

Ifeanyi Agwu chairman organizing committee and managing director, BKG Exhibitions, stated this in Lagos while giving more insigts on the forth coming 14th Lagos Motor Fair and 8th Autoparts Expo Africa.

In what has become an Auto mundial and show of strength among indigenous and foreign firms in the auto business, more firms are confirming their participation in the events.

He revealed that “virtually all the major brands of automobiles, spare parts, accessories, lubricants, banking, insurance, regulatory and policy making agencies and bodies are being expected and the response so far has not been bad’’.

According to him, some of the latest confirmed participants are: Toyota Nigeria Limited, Coscharis Motors, Elizade Autoland [JAC] PAN Nigeria, 11 Plc [Mobil], C- Woernman [Nigeria] Limited, R & G Automotives, Golden Tripod International Limited, Michelin Tyres and National Automotive Design and Development Council (NADDC) and companies from Turkey, China, India, Germany and United Arab Emirates.

The BKG boss said that this edition is holding despite the current challenges confronting the sector and the local economy to continuously utilize its platform to bringing the relevant stakeholders to a point where the country can all forge a future for the growing sector.

Agwu said that for over a decade now the event has played the role of a unique forum to access and assess the capacities and potentials of the nations’ automotive sector; and always Nigerians get this information at the exhibition venue. It is a pillar of the future strategic goals for the automotive and other allied sectors.

Ford plans Ranger Pick-Up sales surge in Nigeria

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ord Motor Company said it is optimistic of increasing its market presence in Nigeria.

This renewed interest was declared

by Neale Hill, managing director of Ford South Africa and Ford Sub-Saharan Africa, in George, South Africa venue of the historic media launch and rest drive of the upgraded new Ford Ranger.

During a press launch in George, South Africa last month, Neale Hill, managing director of Ford Motor Copany, South Africa (FMCSA) assured that, the updated Ranger pick-up would in the future also be assembled in Nigeria at the Ford plant inaugurated by Coscharis Motors in October, 2017.

“When we were building the Ford plant in Nigeria, we were looking forward to having a good volume of production. Nobody had

expected the present economic situation’’.

He was, however, optimistic that the market would bustle again, and that the coming of the new Ranger would stand Ford and Coscharis Motors in good stead in the Nige-

rian market.

The Managing Director and other Ford officials at the press launch attended by journalists from 15 countries said the out-going generation of Ranger has been a phenomenal success in the light

commercial vehicles segment, both in South Africa and internationally.

Hill further explained that the investment of billions of Rands to operations at the Silverton Assembly Plant in Pretoria made it possible for Ford to produce a wider range and higher volume of vehicles, including the Ranger, for the South African market and export to {other} African and European markets.

Last year, international demand for the trend-setting Ranger pickup reached an all-time high, with the Silverton plant shipping a total of 68 364 units to export markets – a substantial 16.2 per cent increase compared to 2017.

The managing director described last year as an extremely busy and successful year for Ford export business, asit attained the highest-ever production volume

for the Ford Ranger, boosted our export volumes of 16.2 percent to retain our undisputed leadership of the light commercial vehicle (LCV) export segment.

The new Ranger is also a strategic product in the brand’s drive to enhance its position in the Sub-Sahara Africa region, including Nigeria, where Ford’s partner, Coscharis Motors Limited, operates an assembly plant.

Combined Ranger production for the domestic in South Africa and export markets for 2018 ended on 98,505 units which is about 8,383 more than the previous year’s.

This is the highest annual production volume to date for Ford’s South African operations, with December 2018 reaching a new monthly record of 11,091 combined Ranger sales.

Wednesday 01 2019

BUSINESS DAY

27

EXECUTIVEMOTORING

Toyota leads DENSO, SoftBank Vision Fund $1bn Uber deal ...To accelerate automated ridesharing services MIKE OCHONMA

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apanese car giant Toyota, investment fund SoftBank Vision Fund Toyota Motor Corp.

(Toyota) and DENSO Corporation (DENSO) and are to invest $1 billion in Uber Technologies Inc.’s Advanced Technologies Group (Uber ATG). The transaction is expected to close in Q3 this year.

The investment, in a newly formed ATG corporate entity, aims to accelerate the development and commercialization of automated ridesharing services.

Under the terms, Toyota and DENSO will together invest $667 million and SVF will invest $333 million, valuing the new Uber ATG entity at $7.25 billion on a postmoney basis.

In August 2018, Toyota invested $500 million in Uber, when the two companies announced their intention to bring pilot-scale deployments of automated Toyota Sienna-based ridesharing vehicles to the Uber ridesharing network in 2021, leveraging the strengths of Uber ATG’s self-driving technology alongside the Toyota Guardian advanced safety support system.

The additional investment and expanded partnership builds upon the progress made to date, deepening the companies’ collaboration in designing and developing next-generation autonomous vehicle hardware.

It will also prepare the companies and industry for mass production and commercialization of automated ridesharing vehicles and services. Toyota will also contribute

L-R: DENSO Corp Executiveb Vice President Hiroyuki Wakabayashi, Head of Uber ATG Eric Meyhofer, CEO of Uber Technologies, Inc, Dara Khosrowshahi, Toyota Executive Vice President Shigeki Tomoyam and Managing Partner of SoftBank Vision Fund Ervin Tu at a press conference at Uber headquarters in San Francisco.

up to an additional $300 million over the next three years to help cover the costs related to these activities.

According to Dara Khosrowshahi, CEO of Uber, the investment and our strong partnership with the Toyota Group are a testament to the incredible work of Uber ATG team to date, and the exciting future ahead for this important project, alongside great the partners. ‘’The development of automated driving technology will transform transportation as we know it, making our streets safer and our cities more livable. The, along with ongoing OEM and supplier relationships, will help maintain Uber’s position at the forefront of that transformation.” He said.

Shigeki Tomoyama, Toyota executive vice president and president

of Toyota’s in-house Connected Company maintained that Toyota is dedicated to realizing a safe and secure future mobility society.

He also noted that leveraging the strengths of Uber ATG’s autonomous vehicle technology and service network and the Toyota Group’s vehicle control system technology, mass-production capability, and advanced safety support systems, such as Toyota Guardian, will enable the automaker to commercialize safer, lower cost automated ridesharing vehicles and services. ‘’We believe that the combined work of Toyota, DENSO, and Uber ATG on developing next-generation autonomous vehicle hardware will accelerate the timeline for and early success of automated ridesharing services.” The company official said.

Hiroyuki Wakabayashi, execu-

tive vice president of DENSO said, “Among the biggest challenges facing automated driving, most lie in how to implement both the hardware and the software at scale.

DENSO, as a global automotive supplier, is excited to collaborate with Uber ATG and Toyota to develop advanced automated driving hardware that we believe will transform future mobility.”

Rajeev Misra, CEO of the SoftBank Vision Fund said, “The team at Uber ATG has made significant progress developing highly robust automated ridesharing technology. With a comprehensive platform of hardware and software, the largest global ridesharing network and Toyota’s partnership, this collaboration is well-positioned to deploy automated ridesharing services at scale.”

On/off-road Jeep Wrangler flaunts strength, poise at MMA2 …To the delight of local air travellers

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ravellers and other users of the ever busy Murtala Muhammed local terminal 2 in (MMA2) Lagos are daily becoming excited by the display of the Jeep displayed at the terminal by Kewalram Chanrai, sole distributor of FCA brands in Nigeria.

This is in a move by the dealership to create public awareness about the market presence and tattributes of the FCA brands in the country.

Hence, the FCA brands comprising Jeep, Fiat, Dodge, Dodge, Chrysler, Ram, Fiat, Alfa Romeo, Maserati, amongst others are currently in the eyes of the public following the takeover of the brand’s dealership by Kewalram Chanrai group recently known for its solid pedigree in auto distributing and after-sales in Nigeria.

The Jeep Wrangler comes in a series of compact and mid-size (Wrangler Unlimited and Wrangler 2-door JL) four-wheel drive offroad sport utility vehicles (SUVs), manufactured by Jeep since 1986, and currently in its fourth generation.

Known for its toughness and rigidity, the SUV, once taken as

only meant for off the road terrain, has metamorphosed into an urban vehicle that can adapt to all kinds of terrain be it city or country side.

The model which can easily adapt from being a work vehicle to a leisure accompli, has won a lot of admirers over the years that it has become a household name needing little review about its offerings.

It comes in a full time four wheel drive system, with a 7-inch touch screen display that enhances its aesthetics and promotes one of its major concerns, which is-safety.

Owners can also availed of the

use of a park view/rear back-up camera, complemented with air bags fitted round the award winning vehicle.

Different occupants of the vehicle do not only enjoy the powerful air conditioning system the vehicle offers, but also have the automatic temperature controls to play around with.

Because of the need to ensure maximum comfort for all occupants irrespective of the terrain, the Wrangler comes with heavy duty suspension and shock absorbers.

Other specs in this vehicle are

almost endless, but a few more that can be mentioned are traction control that keeps the driver focussed and in lane, deep tint sun screen glass, premium lighting among a host of other amenities.

Apart from Nigeria, only recently, readers of one of the most famous Russian motoring magazines, Za Rulyom (Behind the Wheel), named the Jeep Wrangler as winner in the premium crossovers and SUV category of its Grand Prix awards, which crowned the best new cars of 2018.

According to more than 25,000 readers who took part in the voting, the best newcomer in the premium crossovers and SUVs category was the Jeep Wrangler.

It vehicle was appraised through online voting across three criteria including equipment, design and practicality.

And because the Jeep has consistently been associated with laurels, Juventus the soccer team with the Jeep brand on its jerseys has beaten its own record by winning the Italian championship for the eighth time in a row, with five days to go before the end of the Italian football season.

Tipping feature now available in Nigeria for Uber

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his week Monday in Lagos, Uber announced that riders in Nigeria will now be able to tip their driver after every trip to show appreciation for excellent service delivery.

This new tipping feature will be 100% optional and riders will be given optional tip values as well as an option to customise an amount for their driver.

Lola Kassim, general manager for Uber West Africa explains, “Driving is more than just getting people from point A to B. Every day, driver-partners do their best to make riders lives easier such as from getting them to that big business meeting, first date or must-see match. This is why im-

proving the driving experience has been a key priority for us over the last few years’’.

According to him, the tipping feature comes as a result of the feedback Uber received from driver-partners through our various engagement sessions with them. With this feature, it moves to ensure that drivers that often go above and beyond for their riders are being recognised and rewarded. ‘’This could be the driver that waits for riders to safely enter their home, assists with inserting and removing luggage from the trunk or simply a pleasant driver that is warm and friendly and helps you get through Lagos traffic,” Kassim adds.

This feature will be made available below the rating and compliments section in the app and will remain completely optional. Payments will be deducted from the rider’s registered credit or debit card, cash-paying riders are free to tip an additional amount of their choice. All tips from riders will go directly to driver-partners and Uber receives no service fee.

How to tip your driver is simply by downloading the latest version of the app.Add a tip after rating your trip. Select from a range of pre-set amounts or enter a custom amount and tap done to send your tip. These tips will go directly to the driverpartner, Uber receives no service fees.

28

Wednesday 01 May 2019

BUSINESS DAY

tax issues Elumelu urges Govt to create favourable tax policies Iheanyi Nwachukwu

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ony O. Elumelu, Chairman, Heirs Holdings and Founder, Tony Elumelu Foundation has called for far reaching tax reforms and for the National Assembly to urgently pass the Executive Tax bill into law.

Elumelu made this statement as he delivered the keynote address at the 21st Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN), titled, “National Development: Unlocking the Potentials of Taxation”.

Speaking on the challenges that stifle small businesses, Elumelu quoted a young entrepreneur beneficiary of the Tony Elumelu Foundation, “The average business owner in Nigeria is a local government authority on his own because he caters for his own electricity with generators, he builds his own borehole, handles his own waste disposal, and the government can make his life easier by creating favourable tax policies that support SMEs.” Elumelu also lamented the plight of SMEs at the mercy of the tax system revealing, “The average number of taxes businesses pay in Nigeria is 48, compared to 33 in other Sub-Saharan countries. In Hong Kong, it’s just 3; multiple taxation remains a significant burden for SMEs and corporates operating in the country.”

Elumelu continued: “With a population of close to 200 million people in Nigeria, we have only 75,000 registered SMEs in the country. No

one needs to tell us that people are avoiding tax or refusing to be a part of the system”.

With high cost of compliance, complex and costly business registration processes, many SMEs are choosing to remain informal, which in turn results in a low tax base and low tax contribution to GDP. “Nigeria’s tax to GDP ratio is only circa 6percent, compared to far smaller populations like Rwanda at 16percent. Imagine the economic transformation we can achieve as a country if we can move our Tax to GDP ratio by 10percent. We will raise an additional $40billion in government revenue - identical to the sum of our foreign reserves,” Elumelu explained.

But it won’t be easy. Elumelu

advised government to educate, inform and raise tax awareness, “Government should drive mass mobilisation of citizens - let citizens know why they need to pay taxes and give them the assurance that their tax will be properly utilised.” In addition he stated that, “government should employ the use of smart tax incentives to attract and incentivise local and foreign investors.”

Elumelu also tasked the country’s ambassadors and embassies with a two year timeline to increase the number of double tax treaties between host countries and Nigeria.

“Nigeria has 14 taxation treaties while a country like South Africa has 79 double taxation treaties, and we are the largest economy in Africa. Our

embassies should adopt a target in the next two years to sign Tax treaties with our top 100 trading partners in the world.”

Speaking as the leading proponent of entrepreneurship in Africa and an advocate for entrepreneurs, Elumelu charged government to put in place tax systems to encourage SMEs-— the engine for job creation in the economy.

“Until there is a reduction in what SMEs pay as tax, elimination of multiple taxation, abolition of minimum income tax and excess dividend tax, it will be difficult for us to expand the tax base. It will be difficult for us to attract investors into this country, and it will be difficult for us to retain the ones already in the country. It will be

difficult for us to mobilise our SMEs to help create employment that we need so much in this country. It will be difficult for us to have the citizens hold leaders accountable.”

In conclusion, he reminded the National Assembly members of their mandate in office, “We must encourage government to pass the Executive Bill immediately. Let’s get the National Assembly to fulfill their obligation to society and pass the bill immediately, so we can start making progress”.

Speaking in response to the presentation, Former President of the Chartered Institute of Taxation in Nigeria, Mark Anthony Dike emphasised the urgency for the Executive Tax bill to be passed into law.

He said: “Every year during the military regime, there was a Finance Miscellaneous Provision Decree aimed at looking at what has happened and review the areas that need to be amended. As they say, the taste of the pudding is in the eating. We may conceptualise, but in order to know the efficacy of a theory, we have to test it. Until the provision of the Executive order is tested, we cannot know how efficacious it will be.”

Also present at the event were Ikemefuna Nwobodo, President, Chartered Institute of Taxation in Nigeria, Permanent Secretary, Ministry of Finance, Mahmud Isa-Dutse, Babatunde Fowler, Executive Chairman, Federal Internal Revenue Service, Ayo Subair, Chairman, Lagos Internal Revenue Services, Members of the council of CITN and the Auditor General of the Federation, Anthony Ayine.

Tax steps into the light …rapid changes in tax controversy

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s demands increase for tax transparency, the business of tax is undergoing a fundamental shift. Rob Hanson, EY Global Tax Controversy Leader explores six steps to manage the risk.

Enhanced transparency measures and new reporting requirements, many brought about by base erosion and profit shifting (BEPS), have had profound implications for businesses’ tax compliance and reporting functions, audits and controversies, and reputational risk.

This in turn has increased the need for companies to develop a cohesive approach to tax risk and controversy management.

At the same time, tax administrations are harnessing the power of digitalization to make better use of limited resources and extract more value from the information they receive. Tax authorities are increasingly relying on digital methods to collect taxpayer data, and they are using data analytics to mine this data to help them boost tax collections, target compliance initiatives and improve overall efficiency.

Tax authorities are making strategic use of data analytics to make compliance and audit determinations and are increasingly sharing this data with tax authorities in other jurisdictions. This exposes businesses to more risk if their people, processes and systems are dated or out of sync with government requirements and expectations.

And just as companies are adjusting to the rapid changes to tax policy and enforcement brought by BEPS and the digital revolution, a wave of political uncertainty has added a new wrinkle to the tax risk environment.

These “unknowns” have prompted many businesses to analyze the potential impact these events could have on their tax strategy and business operations.

US Supreme Court Justice Louis Brandeis famously called sunlight the greatest disinfectant. But sunlight can also harm those who aren’t prepared to face the intensity of the sun’s rays. Our 2017 Tax Risk and Controversy Survey series indicates businesses around the world are currently regarding the compliance environment as a prism through www.businessday.ng

which they interpret demands for greater transparency.

The sunlight is being dispersed into a spectrum of red, orange, yellow, green, blue, indigo and violet. Each color deserves its own contemplation. And those who step into the light should consider the risks and take the necessary precautions before stepping into this new (and hostile) environment.

Six steps to take to manage tax controversy In analysing our survey results, we identified six areas where organisa-

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tions can focus to adapt to this changing environment.

Adopt a strategic approach to tax risk management The survey shows long-anticipated drivers of tax risk have become a reality, so it’s important that businesses be prepared to confront whatever form it takes, from responding to aggressive audits or challenges to transfer pricing arrangements, to managing tax-related reputational concerns, or examining existing business and cross-border structures.

An integrated, holistic, global

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and end-to-end approach can help businesses stop controversy before it occurs through the use of top-down governance, systems and processes that enhance monitoring and compliance. This approach also helps businesses track for visibility, oversight and risk assessment so they can better manage controversies that do occur.

And choosing the most appropriate dispute resolution mechanism — whether it’s exam management, appeals management, arbitration or litigation — allows for faster resolution so businesses can resume focus on their core mission.

Be proactive in managing tax and reputational risk To cope with BEPS-driven enhanced reporting and disclosure requirements and greater audit scrutiny, ensure your tax department has adequate knowledge, staffing, budget and other necessary resources to meet the new demands on the tax function. Assess reputation risks that may arise and ensure the board and C-suite stakeholders fully understand that their company’s tax profile is both a financial and reputational issue.

Wednesday 01 May 2019

BUSINESS DAY

PENSION today

Executive Members of the Pension Fund Operators Association of Nigeria (PenOp) lead by its president, Ronke Adedeji during media parley in Lagos

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In Association with

L-R: Umar Sanda Mairami, managing director/CEO; Kemi Oluwashina, executive director, Business Development South & Strategy; Kabir Ahmed, executive director, Business Development North & Investment; and Sadi Abdu, executive director ,Operations and Services at the 14th Annual General Meeting (AGM) of Premium Pension Limited held at the Corporate Headquarters of the Company in Abuja

Pension operators confirm enrollees in new micro pension scheme …as industry seeks to address data capturing challenges

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igerian pension fund operators say they have commenced registration of enrollees under the micro pension scheme after its formal launch by President Mohammadu Buhari a few weeks ago.

They said though the enrolled number is still insignificant as a result of the teething challenges of data capturing, which they are working together with the National Pension Commission (PenCom), the industry regulator to address.

We have started selling, some people have been enrolled, but as result of operational challenges, it is still insignificant, members of the Pension Fund Operators Association of Nigeria (PenOp), said during an interaction with journalist.

The PenOp members led by their president, Ronke Adedeji said “we are learning from our experience with CPS in the formal sector in terms of data capturing and registration.”

Adedji said the expected uptake and enrolment will come as soon as the opera-

tional challenges are addressed, stating that PFAs will hit the market for subscribers as soon as the initial challenges are addressed.

The PenOp members noted that, to reach the informal sector target, a combination of strategies will be deployed including direct marketing by staff of PFAs, through the agents and also through electronic platforms.

Adedeji joined by other executive members of PenOp said the industry is excited about unbundling the micro pension plan to carter for a larger population of Nigerians, who hitherto has got no form of savings for old age.

“Pension is a necessity in every nation because any nation that cannot take care of its citizens at old age will definitely run into crises. So, we see this as significant step towards reducing old age poverty among the citizens”.

The next growth phase in the nations Contributory Pension scheme (CPS), is hinged on bringing on board over 60 -70 percent of the informal sector population, and this is key to industry plans and

strategies. Operators, including Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) are very enthusiastic and eagerly waiting to harness the potential.

At the moment, operators are initiating strategies and programmes to court this population of the uncovered Nigerian workforce whose economic activities can best be described as huge but largely un-captured.

Interaction with key players in the industry suggests that a lot can be achieved if this scheme is unbundled. “We are optimistic about the new growth phase in the industry as the informal sector will catapult the CPS to its next level, an operator said.

The micro pension plan, which is an initiative of the PenCom is aimed at the provision of pension services to self-employed persons in the informal sector and employees of organisations with less than three staff.

The informal sector constitutes an estimated 69 million work force in the country and represents an estimated 88 per cent of

Nigerian workers that lack pensions and safety nets for their old age.

The goal of the commission is to achieve coverage of 30 million people in the informal sector by 2024.

Aisha Dahir-Umar, acting directorgeneral of PenCom said during the official launch in Abuja that this is the first time such window of opportunity is being opened to self-employed Nigerians and those working in the informal sector, to participate and enjoy the benefits inherent in the Contributory Pension Scheme.

She said the launch is remarkable because it unveils a unique financial product, which democratizes the savings culture in Nigeria in a systematic and efficient manner.

“The product also perfectly aligns with the current social empowerment prgrammes of the Federal Government as it seeks to ensure, in the long term, the sustainability of the benefits of the empowerment programmes for the participants, who may seize this opportunity to save for their old age.”

This section is created to increase awarness and deepen knowledge about the contributory pension scheme.

If you have enquiries or contributions, send to this e-mail:

RC634453

Diamond Pension Fund Custodian Limited

1A, Tiamiyu Savage Street, Victoria Island, Lagos State.

Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com www.businessday.ng

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diamondpfcbusday@yahoo.com

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30

Wednesday 01 May 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

African insurers, UN experts seek increased action for sustainable development …believes action will increase protection gap, boost insurance uptake Modestus Anaesoronye

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L-R: Femi Oyetunji, group managing director/CEO Continental Reinsurance Plc; Butch Bacani, programme leader, UNEP PSI; and John Melvile, executive head: Underwriting and Reinsurance, Santam , at the UNEP Principles for Sustainable Insurance (PSI) 2nd African Market Event hosted by Continental Reinsurance Plc in Lagos.

proached this with sense of urgency because we are still thinking there is enough time. But with the effort we have made in bringing these experts to Nigeria who have enabled us realise that we are in a perilous time, I believe it is a step in the right direction.

“We need to work with the government, we need to work with the regulator

‘

We are proud to host the 2nd PSI African Market Event in Lagos and look forward to working with our peers in the African insurance industry and the UN to move from awareness to action, and deliver positive impact

‘

frican insurers and the United Nation’s are engaging on the need to embrace sustainable development in the Continent that will enable build a resilient, inclusive and sustainable communities for economic prosperity.

They believe that insurers have a role to play by ensuring that risks that will be undertaken in the future are not allowed to deteriorate as a result of environmental and climate changes by doing nothing, while efforts must also be geared towards closing the protection gap amongst citizens to enhance standard of living.

At a stakeholders meeting hosted in Lagos by Continental Re Plc under the auspices of the United Nations Environment’s Principles for Sustainable Insurance (PSI), the largest collaborative initiative between the UN and the insurance industry, experts canvassed the need for cooperation among operators in the industry, regulators and the government.

The Annual PSI African Market Event, now second in the series provided the platform for stakeholders to share experiences and ideas on how to support the growth, profitability, responsibility, resilience and sustainability of the African insurance industry, and to drive sustainable development on the continent.

Areas of focus includes - Closing the Risk Protection Gap; Resilient Cities and Sustainable Food Systems and Agriculture.

Femi Oyetunji, group managing director/ CEO of Continental Re plc, the first African reinsurer to sign the UN’s PSI principles, said: “As risk managers, insurers and investors, the insurance industry has an important role to play in making communities and economies inclusive, resilient and sustainable. The recent devastation wrought by Cyclone Idai, and now Cyclone Kenneth, is yet another wake-up call for the urgent need for action and collaboration to better manage risk and support sustainable development.”

He said that Continental Re joined the United Nations Principle of Sustainable Insurance in 2012 because at Continental we believe that it is in our interest to protect the environment we live and operate in.

“So as insurers and reinsurers, it is our responsibility to ensure that the risks we undertake are not deteriorating, so we must make sure we mitigate the impact of the global warning because we will be the one to bear the brunt when claims come.”

It could get to a point where we will no longer charge appropriate rate if things deteriorate beyond a reasonable level, and in the long run we may not be able to make profit for the shareholders again, Oyetunji said.

“For us in Nigeria, we have not ap-

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and other operators in the market, this being an advocacy step which I believe will start to raise the consciousness and embed in us the sense of sustainable development. I also see this leading to forming a sustainable movement in Nigeria, Oyetunji said.

Oyetunji added: “Whether it’s the cyclones in Mozambique, the droughts and wildfires in South Africa, Ebola and malaria across the continent, or the floods in Lagos, there is no question that we must urgently meet the sustainability challenge.

“We are proud to host the 2nd PSI African Market Event in Lagos and look forward to working with our peers in the African insurance industry and the UN to move from awareness to action, and deliver positive impact.”

Butch Bacani, who leads the PSI Initiative at UN Environment, said: “The world is facing an increasing number of sustainability challenges, from climate change, environmental degradation, and pollution; to social inequality, financial exclusion and major health risks. This is why world leaders have committed to delivering prosperity for all on a healthy planet through global goals such as the UN Sustainable Development Goals and the Paris Agreement on Climate Change.

In this context, we are delighted that the African insurance industry is working to-

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gether and demonstrating the leadership and ambition needed to drive sustainable development.”

John Melville, chief underwriting officer of Santam Insurance, said: “Sustainability issues such as climate change and environmental degradation are leading to diverse, interconnected and complex risks, but also present new opportunities for collaborative action to mitigate risk and improve physical and financial resilience. This is why it’s crucial that African insurance leaders, the UN, and key stakeholders are gathering in Lagos to find solutions to tackling the continent’s most pressing sustainability challenges.”

Endorsed by the UN Secretary-General and insurance industry CEOs, the Principles for Sustainable Insurance (PSI) serve as a global framework for the insurance industry to address environmental, social and governance risks and opportunities—and a global initiative to strengthen the insurance industry’s contribution as risk managers, insurers and investors to building resilient, inclusive and sustainable communities and economies. Developed by UN Environment’s Finance Initiative, the PSI was launched at the 2012 UN Conference on Sustainable Development, and is the largest collaborative initiative between the United Nations and the insurance industry.

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Wednesday 01 May 2019

BUSINESS DAY

31

insurance today E-mail: insurancetoday@businessdayonline.com

PTAD strives to end plight of pensioners, fight fraudsters Stories by Modestus Anaesoronye

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he Pension Transitional Arrangement Directorate (PTAD) said the ongoing verification exercise of pensioners across the country was to ensure that the pensioners are paid what is due them, as well as to ensure that only genuine pensioners are collecting money.

The directorate said the verification will also enable it update records of the pensioners, either for previous increments in salary, on promotions that were not properly captured.

“It will also enable us know the appropriate pension liability that we will take to government for payment or for inclusion in supplementary budgets, the directorate said.

Meanwhile, PTAD has frowned against any fraudulent practice in the pension sector, assuring that it is

committed to entrenching zero tolerance to pension fraud. This is even as the Directorate commenced the Verification of 104,133 pensioners and Next of Kin of 270 Federal Funded Parastatals.

Sharon Ikeazor, PTAD executive secretary, while alerting the general public of the fraudulent activities of pension scammers who call pensioners to request fees or cash to track their complaints for payment of outstanding entitlements, informed pensioners that PTAD will never request for processing fees to process any complaint and urged them to report any fraudulent or corrupt act by calling 08144607574.

Ikeazor noted that the number of pensioners who reported receiving scam calls in 2018 reduced from over 200 in 2017 to 160, out of which only 34 actually paid the money to the fraudsters.

She reassured pensioners of the Directorate’s com-

Lloyd’s prospectus expected to change market dynamics

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he Lloyd’s of London insurance and reinsurance market is set to be a focus in the coming days, with a new strategy and reform agenda set to be revealed in the awaited “Prospectus” that’s due to be published this week.

The Lloyd’s Prospectus is expected to include details on a range of measures designed to help Lloyd’s become a more competitive and innovative place to place and underwrite insurance and reinsurance business, as well as to make it more appealing to capital providers, including new sources of third-party capital.

Among these measures are expected to be a focus on modernisation, use of technology, performance improvement, a renewed focus on core markets, and a more welcoming and lower friction policy to attract new sources of capital and capacity.

Automation of processes is likely to receive considerable attention, as to is better management and

more efficient payment of claims.

In addition, some further rules around the amount of catastrophe tail risk syndicates hold is also possible, our sources suggest.

A focus on broker remuneration and intermediation costs is another area Lloyd’s is expected to take a long, hard look, to identify where money can be saved and efficiency can be added to its processes. Among the items previously revealed was a desire for Lloyd’s to have in place an electronic front-end for certain types of risks.

Lloyd’s ambition is to have a risk exchange in place, expected to be for the more standardised risks to begin with, enabling insurance and reinsurance deals to be placed and transacted much more efficiently into the market.

The idea is that such an electronic exchange could make transacting with Lloyd’s markets more efficient, simpler and quicker, while also providing a pipeline to risk for the syndicates in the marketplace. www.businessday.ng

Sharon Ikeazor

mitment to safeguarding their interest and pension funds.

She disclosed that the directorate made arrest of three impersonators who attempted to fraudulently get enlisted into PTAD’s payroll, adding that efforts were being made to apprehend the individuals who gave the

impersonators the forged documents.

The verification exercise which started in Lagos on April 23rd is expected to round off Thursday, May 9 2019 in centers located in Ikeja, Ketu, Akoka, Ebute Metta and Lagos Island.

Other phases of the exercise will be held in states

in the different geopolitical zones on the following dates: South South (May 20th – June 1st, 2019), South West (June 10th – June 26th, 2019), North Central (July 8th – July 24th, 2019), North East (August 5th – August 9th, 2019), North West (August 19th – September 2nd, 2019), South East (September 16th – October 2nd, 2019).

Amongst the pensioners undergoing verification were the defunct/privatized agencies namely Nigeria Aviation Handling Company ( NAHCO), Assurance Bank, Nigerian National Shipping Line (NNSL) and Aluminium Smelter Company Of Nigeria (ALSCON) PTAD explained that the exercise is to validate inherited payrolls from the various defunct pension boards and offices which handled payment to the pensioners under the Defined Benefit Scheme and to create a comprehensive digital database of pensioners.

According to the Directorate, “The exercise will also facilitate easy access and retrieval of records for computation and prompt complaints resolution. It will also ensure that monthly pension is accurately calculated and reflects application of relevant pension statutes, policy and salary structures.”

A verified NEPA now PHCN pensioner, Yusuf Jimoh who worked under the Staff Clinic department for 25years shared his satisfaction on the exercise with newsmen at the Ikeja center.

He said: “I went through three stages. The exercise is very nice and orderly. I was asked to provide letter of appointment, retirement, last promotion and last payment. I am satisfied with the exercise; there was no problem with their performance.

I urge the Federal Government to pay our pensions on time so we would be alive to eat the fruit of our labour.”

FBN General Insurance achieves N615.6m PBT in 2018

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BN General Insurance Limited has released its financial report for the year ended 31 December 2018, achieving gross premium written (GPW) of N4.63 billion, a year-on-year growth of 32 percent from the corresponding performance

of N3.51 billion recorded in 2017.

In the same vein, the profit before tax (PBT ) peaked at N615.6 million, with a marked YoY growth of 91 percent from the N322.8 million realised as at the same period in 2017.

Over the same period,

the company grew its total assets YoY by 31 percent from N7.24 billion in 2017 to N9.45 billion in 2018, realising a significant improvement in capital efficiency as it nurture robust liquidity and solvency margin above the required benchmark.

Commenting on the

L-R: Tosin Adefeko, chief executive officer, At3 Resources; Austin Okere, founder and chief executive officer, Ausso Leadership Academy (ALA); Aishah Ahmad, deputy governor, Central Bank of Nigeria (CBN) and Michael Oyeyiola, head, Treasury Sales, Ecobank Nigeria, when the Deputy Governor visited ALA head office in Lagos.

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company’s performance, Bode Opadokun, managing director/CEO, FBN General Insurance attributed the performance to the underwriting firm’s commitment in putting its clients first and resilience in achieving remarkable milestones.

“The business gained momentum in 2018 as results across key performance metrics clearly validate FBN General Insurance commitment to the delivery of profitable growth and unwavering dedication to our clients, communities and stakeholders,” he said.

It will be recalled that FBN General Insurance last year won the Best Customer Service Award (Insurance Category), at the 2018 Nigeria Brand Award held in Lagos.

FBN General Insurance was acquired in 2014 by FBNInsurance Limited, an FBNHoldings Company associated with the Sanlam Group (SA) and was incorporated to transact general insurance business in Nigeria and currently operates out of several outlets nationwide.

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Wednesday 01 May 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

CBN, EFInA partner to establish reasons for women’s financial exclusion …exercise to aid financial inclusion policy

nior colleague who asked not to be identified as he said “without a survey, you might not really know the reasons behind why women are most financially excluded.”

According to the World Bank study of 2017, men remain more likely than women to have an account.

The Washington-based lender said, “while account ownership has surged in some economies, progress has been slower elsewhere, often held back by large disparities between men and women and between the rich and poor.”

Responding to the recent development, a Lagos-based financial inclusion analyst who pleaded anonymity said it is rather

unfortunate that the CBN is at this point in time trying to point out the problems when it should have been at the point of providing solutions.

“After all these years, we are still in the stage of finding out the problems, even though there is a department set aside to handle financial inclusion. Well I wish them best of luck, although it is better late than never,” the analyst said.

Checks by BusinessDay revealed that illiteracy, cultural barriers, poverty, lack of incentive from banks, proximity to financial institutions and cumbersome requirement by banks are some of the challenges that limits women, especially those in the rural and northern part of the country from coming on board the financial inclusion space.

Faced with barriers to attaining the set target of ensuring 80 percent of Nigerian adults have access to financial services, CBN revised its 2012 National Financial Inclusion Strategy (NFIS) to spur inclusion rate.

“The review of the NFIS identified a range of barriers to increased financial inclusion,” the apex bank had said in its revised strategy.

Speaking on the revised strategy during the panel session at the powering financial inclusion through Fintech event, Ambore said

the central bank did not factor for example “technology into its plans when it implemented it in 2012.”

However, the apex bank on the 5th of October 2018 released an exposure draft guideline in which it proposed Payment Service Banks (PSB) aimed at deepening financial inclusion in a country that is lagging its African peers in financial inclusion rate.

According to the apex bank, the PSB initiative is aimed at providing financial services to especially the excluded Nigerians who are mostly in the rural area.

The PBS license will avail Banking agents, Mobile Money Operators (MMOs), Retail chains (Supermarkets), and Telecommunications companies (Telcos) the opportunity to carry out payment service to the excluded segment in the country.

According to BusinessDay findings, no less than 30 business names are currently waiting on the CBN to give them license to; maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittance (including cross-boarder personal remittance) services through various channels within Nigeria; issue debit and pre-paid cards, and operate electronic purse.

the set 80 percent financial inclusion target by the year 2020.

Nigeria apex bank established the National Financial Inclusion Strategy (NFIS) in 2012, in it the lender stated that it will ensure that only 20 percent of Nigerian adults remain outside the financial inclusion net.

Less than 2 years to that deadline, Nigeria currently have financial exclusion rate of 36.8 percent, 16.8

percent from actualising its objective.

In its quest to achieve the set target, the central bank also proposed to give mobile money license to Telcos, banking agents, Mobile Money Operators (MMOs), and Retail chains (Supermarkets).

With the license, the PSBs will be able to maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered

by the deposit insurance scheme; carry out payments and remittance (including cross-boarder personal remittance)services through various channels within Nigeria; issue debit and pre-paid cards; and operate electronic purse.

Although since October 2018 when it proposed for qualified businesses to apply for license, no companies out of the 30 known business names have been given license by CBN.

Stories by Endurance Okafor

T

he Central Bank of Nigeria (CBN) and Enhancing Financial Innovation and Access (EFInA), an organisation that promotes financial inclusion among the poor, are partnering on a project aimed at establishing the factors responsible for women being the most financially excluded in the country, the executive officer of the organisation has said.

EFInA is conducting a sur vey, on CBN‘s request, that would enable them know the reasons for women exclusion from the financial services, according to Esaie Diei, the Chief Executive Officer of EFInA. “We started the survey to know why women are most financially excluded two months ago and it should be out by the end of June, we want to move fast and be able to give CBN some credible information so that they can come out with policy recommendation,” Diei told BusinessDay in Lagos on the side lines of the organisation’s financial empowerment event on Thursday.

Nigeria currently has 36.8 percent of its adult population excluded from the financial cycle, this means the CBN has 16.8 percent gap to bridge for it to achieve the set 20 per-

cent exclusion target by the year 2020.

Out of the 36.6 million excluded Nigerian adult population, 44.1 percent are male and 55.9 percent are female, this leaves the gender gap at 11.8 percentage points, EFInA’s figures analysed by BusinessDay show.

Figures from the World Bank’s global Findex database revealed that the financial exclusion gap in Nigeria widened by 24 percentage points in 2017.

According to the report, 51 percent of Nigerian male adult population had a bank account in 2017 compared to the 27 percent recorded for female. The gender gap reported for 2017 is 4 percentage points

wider than the 20 percent gap that was recorded in 2014 when the total male adult with bank account was at 54 percent with female at 34 percent.

But with less than two years to achieve its 8o percent financial inclusion deadline, the CBN said it’s yet to know why women are most excluded from the financial cycle.

“We don’t know the reasons why women are most financially excluded,” Stephen Ambore, Head of Digital Financial Services at the CBN said during a panel session at the EFInA’s powering financial inclusion through fintech event on Thursday.

Ambore’s submission was affirmed by his se-

SANEF records over 70,000 partner agents

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owered by the Central Bank of Nigeria (CBN), deposit money banks, Nigeria Inter-Bank Settlement Systems (NIBSS), and licensed mobile money operators, Shared Agent Network Facility (SANEF) has claimed over 70,000 partner agents located nationwide.

The initiative involves on-boarding 40 million low-income and underserved Nigerians into the financial system, increas-

ing financial access points from the current 50,000 to 500,000 by 2020 and deepening access to mobile and digital financial products and services such as savings accounts, micro loans, insurance and pensions by Nigerians.

According to the information gathered from Innovectives, an integrated Fintech Company, the financial inclusion project by the central bank has recorded milestones.

Checks by BusinessDay revealed that other members of the network include: Innovectives, Capricom Digital, Cellulant, eTranzact, Inlaks Interswitch (IFIS), Pagatech and Unified Payment.

Powered by the various stakeholders in the financial space, SANEF has a primary objective of accelerating financial inclusion in Nigeria.

It is also one of the strategies aimed at achieving

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Wednesday 01 May 2019

BUSINESS DAY

33

FINANCIAL INCLUSION

& INNOVATION

How do we transition to a cashless society in Nigeria?

Ibukun Taiwo & Olayinka David-West

I

n the second week of April insight2impact, Lagos Business School and Data Science Nigeria hosted an event at the Lagos Oriental Hotel. The topic for the evening was “The future of digital payments in Nigeria”.

Earlier that day, the insight2impact staff (who are from South Africa) needed to pay a local service provider for the event. The first hitch was, while the service provider owns a bank account, they did not have a POS device to accept onthe-spot digital payments.

The visiting team attempted to transfer money directly into the provider’s account but were unable to transfer from a South African credit card to a Nigerian bank account. The team then attempted to withdraw cash from an ATM. They were again unsuccessful, as the amount was too high – they were unaware of the withdrawal limits at ATMs in Nigeria. They even attempted to swipe for cash at the bureau de change, but there was no POS at the time, nor enough cash.

Eventually, multiple staff members withdrew many small amounts – enough to pay a deposit (about half the total fee) and guaranteed the remainder via international transfer.

The POS challenges or the ATM withdrawal limits will not come as a surprise to many Nigerians, but it did remind us that while we are excited about the potential of digital payments in Nige-

ria, the reality is much more sobering. With this incident in mind, the burning question posed at the event was “How do we transition from where we are to a cashless future?” Or, more realistically, how do we become a cash-lite society/economy?

The nationwide push for adoption of digital payments is admirable, but we must first consider our infrastructure – a challenge across many areas of our lives. If the underlying payments infrastructure discourages those who have already adopted digital payments, imagine how much it discourages those who still prefer cash.

The gaps in our infrastructure continually come to the fore, for example whenever we encounter problems with POS machines in stores or restaurants, or whenever the

dreaded “dispense error” occurs at the ATM. There has, however, been a response from industry players. NIBSS, for example, introduced the innovative instant payment product that allows adults with bank accounts to transfer value instantly by using their smartphone or feature phone via either app or USSD. The insight2impact analysis of NIBSS transactional data shows that the number of unique users of the instant payment channel has grown by 71% in just one year. The central bank has also ensured that banks create adequate complaint-resolution desks that can attend to consumer complaints about service failures.

The central bank has also continued to engage the industry, understand the challenges and evolve its

approach for transitioning to a cashless society – highlighted in the recent editorial in this newspaper. One of these new approaches allows new entrants, like subsidiaries of telcos, to extend payment services throughout the country by obtaining a payment service bank licence.

This response from the industry and regulators in Nigeria should be encouraged and celebrated, as it is the first step in the transition to a cashless society – unlocking robust distribution networks and developing better payment products. But, issues remain in this transition – issues that we have to address.

First and foremost is the inadequacy of digital payments infrastructure. While it is true that the NIBSS instant payment product has made inroads in improving

payment services, it still relies on third-party networks, including mobile-network connectivity, that are unreliable in many areas of the country.

Secondly, products and payment channels must be designed with the Nigerian context in mind. POS devices may be unreliable and may discourage card use, but instant payment products also have their challenges. Poor connectivity means data-enabled smartphones aren’t always an option for making digital payments (several regions still only have 2G coverage).

This leaves users with feature phones having to utilise USSD codes, which require long strings of numbers and symbols that take time to input (to only have the session time out) and have a high likelihood of mistakes, thereby discouraging use.

Thirdly, the instant payment product is currently only available to clients that are already utilising formal financial services (banked or mobile). This may change as new providers enter the space under new regulation, but there will still be challenges. Furthermore, the largest group we should extend digital payments to – merchants – is rather slow in digitising; many digital payment solutions are not affordable.

Other complaints have included that it slows down purchases – due to POSdevice issues or the time needed to insert the correct payment information. It also doesn’t help them in managing their cash flow.

Of course, using digital

payments would also make their transactions visible and therefore taxable – a major deterrent for those surviving day to day.

By overcoming these challenges, Nigeria could lead the way for developing nations to compete in digital economies. Nigeria cannot take the same route to a digital economy that other nations have. Rather, we must look at why people choose to use cash – convenience, ease of access, security – and create and encourage the use of digital mechanisms that mimic cash. It is critical that we bring the right ecosystem actors together to do this.

The event with Data Science Nigeria, Lagos Business School and insigh2impact featured contributions from NIBSS, the Central Bank of Nigeria, Open Banking Nigeria, industry operators and the Fintech Association of Nigeria. This event was one example of how we are bringing together different perspectives to find solutions for these problems. This will continue as we engage with the central bank through its fintech and payment working groups.

Our immediate aim is the transition to a cashless Nigeria, but our broader ambitions are to create a model that can be exported to Africa and beyond.

Dr. Olayinka David-West (Senior Fellow, Information Systems at Lagos Business School & Digital Financial Services Specialist) and Hennie Bester (i2i programme lead and Director at Cenfri)

FirstBank reports N176b worth of mobile money transactions Endurance Okafor

N

igerian lender, First Bank has reported $490 million (176.65 billion) worth of transactions through its mobile money agents.

The commercial bank said through its effort to deepen financial inclusion in Nigeria, its agent network which is currently at more than 22,000 has been able to record the above mentioned worth of transactions.

“After a successful roll out of the Firstmonie Agent network 2018, the business has grown to a network of over 22,000 agents processing over $490 million worth of transaction in monthly value and a unique transaction count of 10 million monthly,” Gbenga Shobo, deputy managing director, First Bank, said recently in Lagos during the Future of Finance West Africa Conference.

The financial institution mentioned that with over four million customers, the

Firstmonie wallet platform is expected to its mobile money agents to 50,000 in 2019.

“Firstmonie has had a transformational impact on reaching low-income and historically unbanked households in Nigeria. It is integrating them into the wider financial system by providing access to a range of banking services including account opening, fund transfer capabilities, Identity management (BVN) and savings,” Shobo said.

Also, Chidinma Lawanson, Consultant, Inter-

www.businessday.ng

national Finance Corporation (IFC/World Bank) said that impressive growth recorded in Africa’s financial inclusion was driven by mobile money and agent banking.

She disclosed that mobile money users in Nigeria increased from 1.6 per cent in 2016 to 3.3 per cent in 2018, adding that adoption of mobile money in the country was still low.

According to EFInA , about 36.6 million Nigeria adults do not have access to financial services; this

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represents 36.8 percent of the total adult population of Africa’s most populated nation.

The Central Bank of Nigeria (CBN) therefore has about 16.8 percent financial exclusion gap to bridge in order for the country’s apex bank to achieve its target of 20 percent exclusion rate by the year 2020.

Lawanson said that more women should be financially included to achieve Nigeria’s target of 20 per cent financial exclusion adult population by 2020. @Businessdayng

Out of the financially excluded Nigerian adult population, 44.1 percent are male and 55.9 percent are female, this leaves the gender gap at 11.8 percentage points, EFInA’s figures analysed by BusinessDay show.

Victor Olojo, national president, Association of Mobile Money and Bank Agents in Nigeria, said that factors that would drive financial inclusion included - access, convenience, affordability, right technology and consumer protection.

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Wednesday 01 May 2019

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING The size of Nigeria’s consumer market and its large supply-demand gaps make it a country of huge potential for PE investment AVCA hosted its 16th Annual conference this April which was attended by investors across the globes who collectively manage over US$1.5trn in assets. In this interview with BusinessDay’s LOLADE AKINMURELE, AVCA’s director and head of research, Enitan Obasanjo-Adeleye reviewed the conference; shared key milestones achieved and made projections for the PE space in 2019.

O

Conference in review ver the years, AVCA has worked hard to convene key stakeholders in the industry, bringing fund managers, institutional investors, service providers and others together to discuss the issues, showcase the opportunities and identify key trends.

This year was another successful year of doing so, with themes such as gender parity, gender-lens investing, blended finance and the importance of attracting greater local capital being on the agenda.

A notable achievement this year was the record number of US LPs that attended the conference, with the likes of the Chicago Teachers’ Pension Fund, the New York State Insurance Fund and the Board of Education Retirement System of the City of New York, among others, using the conference to gain a better understanding of the African PE landscape.

The conference was also attended by a number of Nigerian LPs, including pension funds, the Nigerian Sovereign Wealth Fund, and insurance firms. It is a great opportunity for them to connect with LPs and GPs from other countries and regions, to identify and discuss matters of mutual relevance and importance.

What motivated AVCA into tracking private equity deals across Africa?

At the time of AVCA’s reboot in 2011, a major challenge that faced the industry was the lack of data regarding African PE, which made it difficult for investors to make informed decisions.

In 2014, the research desk was established to tackle this issue and began gathering information relating to PE activity on the continent. Our research now covers deals, exits, fund managers, fundraising; institutional investors, industry investors and performance benchmarks and we are continuously looking for ways to better serve the industry through our research and data.

In your 2019 report, why was Nigeria ranked as the most preferred destination for Private Equity deals in Africa over the next three years The size of Nigeria’s consumer market and its large supply-demand gaps make it a country of huge potential for private equity investment. The nation’s fast-growing, youthful population is also driving investor interest.

Moreover, Nigeria has a large population of educated professionals that have worked in the PE industry in developed markets and are keen to replicate in their home country the successes that they have been involved in.

These factors, combined with the plethora of opportunities in the country to back good managers to grow their businesses in a sustainable and impactful manner,

panies and opportunities with talented management, and good growth prospects, investors will invest in Africa. Demonstrating the ability to skillfully navigate the PE investment lifecycle by buying, growing and exiting these companies to realize value is key to sustaining confidence in Africa’s PE industry.

Enitan Obasanjo-Adeleye

make Nigeria an attractive country for PE investment.

Give us a brief overview of Nigeria’s evolving private equity market Since the establishment of the PE industry in Nigeria in the 1990s, Nigeria’s PE market has grown to 16 PE firms headquartered in the country, including African Capital Alliance, Verod, and Sahel Capital, and a similar number of non-domestic PE firms with a local presence.

The country is the second largest PE market in Africa after South Africa, and the main market in West Africa, representing 54% of West Africa’s deal volume and 73% of its deal valued for 2013-2018.

Pension Fund Administrators need to reconsider the approach to PE investment PE investment is different from the passive form of investing that many of the PFAs are accustomed to, with a very different return profile. It does not necessarily have a steady, predictable stream of cash flows as with fixed-income investments, and quite often the value will largely be realised on exit.

Given this, the PFA need to consider the asset class on the basis of returns as well as other considerations: its diversification potential, the opportunities for developmental impact provided by its active, hands-on approach, and the alignment with their liabilities in terms of time horizon, particularly in areas such as infrastructure.

It requires a learning curve, but the efforts are worthwhile. Part of the work that AVCA does relates to educating LPs in Nigeria and elsewhere on the continent about the asset class, and we are furthering this through the development of the AVCA

Academy.

There have been great PE success stories in Africa, such as ACA’s investment in Wakanow, which was recently exited to the US PE buyout firm The Carlyle Group, or Helios’s investment in Interswitch, which led to TA Associates, one of the oldest PE firms in the US, acquiring a stake in 2017, and DPI’s investment in Mansard, which led to the French multinational insurance firm AXA entering the Nigerian market through its acquisition.

There is a need to continue to build the industry and establish further PE successes for the PFA to become more comfortable with the nature of the asset class.

Data shows PE activity in Africa is succeeding and expanding, contrary to one-off instances It should be noted that the reporting regarding the activity of PE giants in Africa often seems to adhere to a predetermined storyline that does not align with the data.

The Carlyle Group completed four notable transactions through its sub-Saharan Africa fund in 2018 – NOSA, Tessara, Abacus and Wakanow.

In the same year that KKR exited its sole investment in Africa to another foreign PE firm, TA Associates made its first foray into Africa with two investments – Interswitch, and the education platform, Inspired.

Warburg Pincus, a 50+-year-old US PE firm with over US$440bn in AUM, has made a number of investments into African infrastructure over the last few years.

These firms are all peers of KKR and the Blackstone Group and they continue to be active in Africa. In addition, large Africa-focused PE firms such as Actis, DPI, ECP and Helios, to name a few, all made noteworthy deals in 2018.

As long as there is a pipeline of com-

Nigerian capital market yet to prove itself as a viable route for PE exits There are several reasons for this. For instance, there is a lack of sufficient liquidity to enable a full exit.

According to the Nigerian Stock Exchange’s fact sheet, the average daily value traded as of Q3 2018 was approximately US$9mn, compared with over US$160bn on the New York Stock Exchange and around US$6.5bn on the London Stock Exchange.

Moreover, the Nigerian equity capital markets have not been particularly buoyant. These facts have prompted PE investors to seek alternative exit routes or to seek to list in other jurisdictions.

There are initiatives underway to address these, by the stock exchange as well as development institutions such as the IFC. There are internal and external factors that affect the capital markets.

There needs to be a strong, enabling environment exemplified by market autonomy, macroeconomic stability, legal frameworks and effective regulatory regimes. There also needs to be further strengthening of the capital market functions in terms of investor diversity, internationalisation and improved efficiency and robustness of market infrastructure to enable the development of the capital market.

Projections for 2019 In recent years we have noted a rise in the share of investments in Information Technology deals, from 10% in 2016 to 19% for 2017 and 2018. These tend to be smaller investments in earlier stage companies, which resulted in a lower overall value of deals despite the rise in the number of deals.

Large deals tend to be rather more sporadic while the aggregate value of deals that are less than US$250mn tends to be fairly steady at around US$2bn per year.

We expect this trend in rising Information Technology transactions to continue, as PE investors are seeking the ability to grow businesses by improving access to products and services such as finance, health and education.

There was a cluster of large infrastructure transactions in 2014 which contributed to a peak in the deal value that year, some of which are now being considered for an exit. In addition, we have seen a significant amount of sector-specific fundraising, particularly for infrastructure, which we expect to lead to increased activity in this area going forward.

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 01 May 2019

BUSINESS DAY

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cityfile Festac Rotary Club lifts indigent persons SEYI JOHN SALAU

I

L-R: Mena Ogor, representing, GGM, NNPC; Charles Ngeribara, GM, corporate social responsibility and sustainable development (CSR/SD), Total E & P Nigeria Limited; Olubunmi Popoola-Murdi, executive general manager/company secretary, Total Country Services Total E & P Nigeria Limited, and Mabuyaku Albert, country internal services, Total E & P Nigeria Limited, at the Malaria Awareness Campaign in Kutunku Community Area, Gwagwalada in Abuja. Pic by Tunde Adeniyi

Police nab 264 suspected killers, kidnappers in Anambra REGIS ANUKWUOJI with agency report

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he police in Anambra have arrested 264 suspects including kingpins said to have been behind two high profile kidnap and murder cases from April 1 to date in the state.

The Commissioner of Police (CP) in the state, Mustapha Danduara, who addressed newsmen during the parade of the suspects in Awka, Monday, said 231 of the suspects are cultists, 16 ‘one chance’ robbery syndicate, four car snatchers, three kidnappers and 10 armed robbers.

According to Danduara, the arrests of the suspects were effected by the combined effort of the police’

striking units, including SARS, Special Anti-Cultism, ‘Operations Udoka’ and Divisional Patrol teams.

The CP explained that one suspect from Nimo was arrested in connection with the murder of one Frank Igboka, president-general of Nimo community in Njikoka local government area of the state, on April 16.

He added that another ‘notorious suspected kidnapper’, believed to be behind the kidnap and murder of 85-year Pa Iloanyusi was arrested on April 27 at Anaku community in Ayamelum local government area. Iloanyusi was the father of an ex-Super Eagles’ player.

Danduara said patrol team attached to ‘Operation Udoka’ rescued unhurt one Davidson Obin-

na, a victim kidnapped on April 25, at Oba community, following intelligence reports from Owerri.

According to him, the intelligence report had it that gunmen suspected to be kidnappers abducted Obinna with his Lexus car.

“On April 27, operatives attached to the command’s anti-robbery squad arrested one Chijoke Okeh, aged 26, and one Ugochukwu Nweke, aged 23, both from Uruagu at a criminal hideout in Oba. “The suspects had on April 25, 2019 at about 8.15p.m robbed at gunpoint, one Rev. Fr. Chukwunonso Anosike of his HP laptop and Samsung A7 phone. They also robbed him of two Infinix phones, one Techno phone and one power bank,” he said.

Giving more details on

the arrest of the suspected killer of the president-general of Nimo community, Danduara hinted that Aniegbu volunteered information to the police. He said the information revealed that three other persons involved in the murder of Igboka were still at large.

Danduara listed two AK47 riffles, one berretta pistol, two double barrel pistol, two revolver pistol, two fabricated guns, 160 live ammunition among others as some of the exhibits recovered from the suspects.

Other items recovered include two Toyota Corrolla vehicles, one Toyota RAV4 car stolen from Rivers State, three L-300 Mitsubishi buses used for ‘one chance’ robbery and two drums of dry leaves suspected to be cannabis sativa.

N-power begins training of 132 builders in Northeast

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he second phas e training under Federal Government’s N-power build programme, has com-

menced in the northeast, with the training of 132 builders drawn from 46 centres in the zone.

The training, which is in collaboration with www.businessday.ng

the Council of Registered Builders of Nigeria (CORBON), is aimed at training the trainers.

At t h e t ra i n i n g o n Monday, Yunusa Yakubu,

the northeast zonal lead facilitator, said the objectives of the exercise was to have standardised delivery model across the nation, as well as

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n line with the corporate social responsibility (CSR) initiative, the Rotary Club of Festac recently donated several items as part of the district’s grant project to some members of the Festac community.

Grinding, sewing machines and popcorn making machines valued at about N1 million were among the items donated.

The donations were in addition to skills acquisition training to help the beneficiaries better utilised the items.

Felix Nnamezie, the 2018/19 president of the Rotary Club of Festac said rotary is all about selfless service to humanity. “In everything and any project you do, the aim is to touch lives; so long as the

beneficiaries came here today and show appreciation that is the joy and that is the essence of it.

“If you are coming into Rotary, one important thing on your mind would be to render service, and you do not render service by words of mouth,” he said.

According to Nnamezie, rotary is an organisation of professional men and women committed to the ideal of service to humanity. He said that being a rotarian does not require being rich and wealthy; all it requires is to have a mind in tune with humanity as it affects the weak and vulnerable in the society.

“I believe that our purpose on earth is to be a blessing to others. We need to give back to the society no matter how small,” said Nnamezie.

Jigawa donates to school gutted by fire

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igawa Islamic Education Bureau on Monday donated relief materials worth N1.1 million to 62 students affected by a recent fire incident at Government Girls Arabic Secondary School, Kaugama.

Presenting the materials to the school’s principal, Jimmai Jibrin, in Kaugama, the executive secretary of the bureau, Ahmad Abubakar, sympathised with the victims over the unfortunate incident.

He expressed the hope update the knowledge of the participants from the previous training, who were expected to train others in their states.

He advised the participants to pay attention to enable them train other @Businessdayng

that the materials would cushion their losses and prayed God to prevent reoccurrence of the disaster.

Jibrin said that 62 students had lost all their belongings to the April 23 fire incident, which engulfed part of the students’ hostel.

She said the blaze was triggered by electric spark when a technician was welding some windows in the hostel.

Each student received a mattress, bucket, bag, shoes, two sets of uniform, cups, books and N2, 000 cash. NAN N-power beneficiaries in their respective states.

Yakubu added that the two-day training was going to be interactive and therefore urged the participants to participate fully.

36

Wednesay 01 May 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Tuesday 30 April 2019

Top Gainers/Losers as at Tuesday 30 April 2019 LOSERS

GAINERS Company

Opening

Closing

Change

SEPLAT

N568

N575

7

FO

N32.1

N35.3

3.2

JBERGER

N24.7

N26.95

2.25

MOBIL

N175

N177

2

DANGFLOUR

N17.1

N18.8

1.7

Company

ASI (Points)

Opening

Closing

Change

N1550

N1520

-30

DANGCEM

N186

N180

-6

STANBIC

N45.1

N43.4

-1.7

N15.35

N14

-1.35

VALUE (N billion)

N19

N18.1

-0.9

MARKET CAP (N Trn)

NESTLE

CCNN NASCON

DEALS (Numbers) VOLUME (Numbers)

29,159.74 4,682.00 543,924,121.00 8.199 10.958

SEC says plans underway to align Master Plan with current economic realities Stories by Iheanyi Nwachukwu

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he Securities and Exchange Commission (SEC) has disclosed plans to align the 10 Year Capital Market Master plan with current economic realities as well as ensure the planned review is concluded in record time.

Acting Director General of the SEC, Mary Uduk stated this during a meeting with stakeholders in the capital market in Abuja, weekend.

Uduk disclosed that this review is intended to align the master-plan with current realities on macroeconomic, political and market development fronts.

On implementation efforts so far, Uduk said over 90 initiatives outlined in the Capital Market Master Plan, 66 initiatives have commenced since 2015 out of which 13 have been successfully completed.

Some of the concluded initiatives include dematerialis ation of shares, recapitalisation of capital market operators, setting up of a National Investment Protection Fund and the establishment of the West African Securities Regulators

Mary Uduk, acting director general, SEC

Association among others.

55 initiatives are at various stages of implementation and it is hoped many of them will be concluded before the end of the year.

Other achievements include e-dividend mandate, Direct Cash Settlement, Roadmap on commodities ecosystem, new listing, financial literacy, law reviews, non interest capital market products among several of the initiative that you have collectively worked on.

Uduk while commending Stakeholders in the capital market for their cooperation and support, also disclosed that the Commission has approved the rules on Green

Bonds, and would in the nearest future introduce the rules on derivatives trading which she said are necessary to move the market forward.

The Acting DG said the implementation of the 10 Year Capital Market Master Plan commenced in earnest under the guidance of the Capital Market Master Plan Implementation Council chaired by Olutola Mobolurin and have made great strides in its implementation efforts.

Uduk said the SEC and market Stakeholders have taken up the initiatives outlined in the Master Plan document in a systematic manner while also painstak-

ingly engaging with the government, its agencies and other critical stakeholders whose support and collaboration is required to achieve the objectives outlined in the Master Plan.

According to her, “All of these would not have been possible without your support, cooperation and collaboration. We are indeed grateful to the different committees through which a lot of the work on these initiatives has been carried out. It would have been impossible without your commitment of time, energy and resources; your drive and focus.

“I want to recognise that the work that has been done

by CAMMIC and indeed the key players in the capital market directly and contribute to the development of not only the Nigerian capital market but the financial system at large.

She said the Commission appreciates the tremendous support and collaboration it has received from market operators and various stakeholders in the capital market adding that the partnership has advanced the collective aspiration to accelerate the growth of the market and contribute to the development of the nation’s economy.

CIS explains strategic initiatives to attract students to Securities Markets

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oised to grow investor base through encouragement of the youths, the Chartered Institute of Stockbrokers (CIS) has explained some key strategic initiatives designed to attract students of higher institutions to the securities and investment profession in Nigeria.

Besides, the Institute’s Council has urged stockbrokers to deploy their diversified talents to boost its activities for enhanced global competitiveness.

Addressing stockbrokers at the Institute’s 26th Annual General Meeting (AGM) in Lagos at the weekend, the Presi-

dent and. Chairman of the Council, Adedapo Adekoje explained that the Council had taken some strategic decisions to boost Investor Education, especially, among the students in the higher institutions.

According to him, today’s youths are the future investors and should be exposed to the culture of

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savings and investment He noted that activities such as career talks, debate competition, use of promotional videos organising weekend revision classes and provision of study packs to assist them in preparation for examination.

“The Institute implemented some key strategic initiatives to attract

students of Nigerian higher institutions to the securities and investment profession during the year. Career Talks were delivered in several universities including Obafemi Awolowo University, Ile Ife; Augustine University; Covenant University, University of Lagos, Kogi State University, University of Abuja, University of Nigeria, Nsukka and Nasarawa State University, Keffi to sensitize students to opportunities in the profession.

“In addition, a test run of the CIS Inter-Tertiary Institutions Debate Competition was held at Obafemi Awolowo University.

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Global market indicators FTSE 100 Index 7,418.22GBP -22.44-0.30% S&P 500 Index 2,937.51USD -5.52-0.19% Generic 1st ‘DM’ Future 26,511.00USD -37.00-0.14%

Deutsche Boerse AG German Stock Index DAX 12,344.08EUR +16.06+0.13% Nikkei 225 22,258.73JPY -48.85-0.22% Shanghai Stock Exchange Composite Index 3,078.34CNY +15.84+0.52%

Union Bank reports N5.4bn pre-tax profit in Q1’19

U

nion Bank Plc has released its unaudited financial statement for the first-quarter ended March 31, 2019.

The group financial highlights show Profit Before Tax (PBT) unchanged at N5.4billion (N5.4billion in Q1 2018).

Gross Earnings wend down by 5percent to N37.7billion (N39.5billion in Q1 2018); driven by a lower loan book base and declining yields in the current interest rate environment.

Net Interest Income (NII) after impairment was down by 17percent to N12.9billion (N15.5billion in Q1 2018), a result of lower volume of earning assets. Non-Interest Income went up by 39percent to N10.8billion (N7.8billion in Q1 2018); an outcome of ongoing debt recovery efforts, improved fees and commission income and dividends from investments.

Net Operating Income was up 3percent to N23.9billion (N23.3billion in Q1 2018). Operating Expenses went up by 4percent to N18.5billion (N17.9billion in Q1 2018); driven by investments to strengthen our workforce and our treasury and transaction banking platforms. Gross Loans rose by 5percent to N494.9billion (N473.5billion December 2018).

Customer Deposits rose by 1percent to N867.2billion (N857.6billion December 2018); driven predominantly by low cost deposits.

Key Operational Highlights show 42percent increase in active debit cards (versus Q1 2018), highlighting the bank’s focus on customer penetration through digital products and channels.

Commenting on the results, Emeka Emuwa, CEO, Union Bank Plc said: “Our focus in 2019 is to leverage our platform to deliver efficiency and seek @Businessdayng

to maximize value across all areas of the Bank.

In a low yield environment, the Group’s NonInterest Income growth compensated for the slowdown in interest income stemming from the optimization of our loan portfolio in 2018. Consequently, Profit Before Tax (PBT) was maintained at N5.4 billion, consistent with Q1 2018.

“Customer Deposits continue to grow, up 14percent year-on-year (YoY) to N867.2 billion compared to N759.1 billion at the end of Q1 2018, driven by a 3percent increase in our low cost current and savings accounts deposit balances”.

Emuwa further said, “Rebalancing our deposit mix is key as we push to conservatively rebuild our loan book with high quality risk assets. In line with our priorities, we recorded a material improvement of 819percent in loan recoveries with N2.8 billion recovered during the period.

Our asset quality continues to improve, with NonPerforming Loans (NPLs) down to 7.8percent from 8.7percent as at December 2018. We are employing a multi-pronged approach focused on increasing revenue and optimizing cost to ensure we deliver enhanced performance in 2019.”

Speaking on the Q1 2019 numbers Joe Mbulu, Chief Financial Officer, Union Bank Plc said: “The Group’s resilience in a challenged environment is demonstrated in these first quarter numbers.

While Gross Earnings declined by 5percent to N37.7 billion from N39.5 billion in Q1 2018 due to loan book resolutions from the previous year, our Non-Interest Income grew by 39percent from N7.8 billion to N10.8 billion driven by recoveries, credit-related fees and dividends from investments.

Wednesday 01 May 2019

BUSINESS DAY

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@Businessdayng

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Wednesday 01 May 2019

BUSINESS DAY

news Why WEMPCO Group seeks to offload...

Continued from page 1

his brother Robert Tung,

WEMPCO Group has been in Nigeria for over 40 years with established manufacturing companies that produce roofing sheets, galvanised pipes, wire nails, plywood, ceramic tiles and sanitary ware. It is also actively involved in agricultural and hospitality sectors through which it currently employs over 13,000 workers across its 11 subsidiaries.

The Tungs were among the four Chinese families that came to Nigeria in the 60s.

“If they leave there will be only one left,” an industry expert said on the condition of anonymity.

Chaired by Lewis Tung, a Chinese-born, US-trained entrepreneur, WEMPCO has made some of the biggest foreign direct investments in Nigeria in recent years.

Top directors in the steel and hospitality sectors who are familiar with the situation, however, told BusinessDay that the reasons for the group’s ordeal are poor corporate governance, over-dependence on government policy, inability to consider Nigerian realities before making key decisions, and harsh business environment.

They say there is poor corporate governance at the Luxury Oriental Hotel as directors’ children interfere in the financial operations of the business.

More so, the group relied so much on government policy and Olusegun Aganga, the then minister of industry, trade and investment, for its survival. This has turned out to be part of its Achilles Heel.

In 2015, BusinessDay exclusively reported that the then outgoing government of Goodluck Jonathan, under the

supervision of Aganga, classified WEMPCO, Midland and Kam Wire as upstream manufacturers of cold-rolled steel.

They were to produce for the downstream segment which would use the cold-rolled steel for further production.

These companies were granted import waivers that would allow them to import any shortfall (the demand gap) to complement what they would produce locally to meet the demands of the downstream segment.

Downstream manufacturers wishing to import the cold rolled steel coils were mandated to pay 20 percent import duty.

At some point, WEMPCO and co raised prices of coldrolled steel, forcing some of the manufacturers in the downstream segment to set up cold-rolled plants.

“WEMPCO had invested heavily in this segment. So when the manufacturers who

were supposed to buy from them set up cold-rolled lines, it became a problem for the likes of WEMPCO. As this was happening, a new government of Muhammadu Buhari came and cancelled the waivers,” a reliable source in the steel sector said.

Sources added that WEMPCO calibrated a production line in its N236 billion rolling mill in Lagos to produce a thick cold-rolled of 0.2mm, which is more expensive than the 0.8mm or 0.4 mm seen in the West African market.

“It became difficult for them to be competitive in a market where low-quality products are rife,” another industry source said.

However, some analysts say the company’s problem shows Nigeria’s weak business environment.

Babatunde Paul Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI), recently said busi-

nesses are generally burdened with the challenges of infrastructural deficiencies and macroeconomic blows, as most investors are saddled with huge cost of providing electricity, poor access to good roads, insecurity and other industry-specific issues amid poor access to affordable credit, high exchange rates and multiple taxation.

Ken Udoh, a Lagos-based public affairs analyst, said the sale of the hotel by its owners could be as a result of a tough operating environment and the increase in the cost of doing business in the country.

“This further confirms our fears about the economy and the decrepit infrastructure in the country,” Udoh said.

Ademola Feranmi, an economist, said the service industry is really struggling currently. The shrinking consumer wallet has reduced the patronage and the profitability of these companies while the

cost of operation keeps rising.

“Most hotels now have large halls to host social events on weekends and corporates to boost their revenue,” he said.

The Manufacturers CEOs Confidence Index (MCCI) report released on Tuesday by the Manufacturers Association of Nigeria (MAN) shows that confidence of business owners in Nigeria’s manufacturing sector stands at 51.3 percent in the first quarter of 2019 as 200 CEOs interviewed said access to dollars, credit, electricity and fair taxes were major drawbacks.

The sale of Oriental Hotel is coming after Four Points

by Sheraton was acquired in 2018 by Actis, an investment firm, and Westmont Hospitality Group. The 231room hotel is targeted towards business travellers and small conventions. It was owned by Starwood Hotels & Resorts, which is a subsidiary of Marriott International.

Ignoring Nigeria’s fiscal realities...

Continued from page 1

This is coming at a time the country’s revenue from oil, its major foreign exchange earner, has remained below projections, plunging 57.4 percent to $18 billion in 2018, from as high as $42.7 billion in 2014, according to data obtained from the Central Bank of Nigeria’s quarterly reports.

“The upward adjustment to the budget estimates by the legislative arm will be a source of concern to the executive given the weak fiscal position of the government,” Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers, said.

“More importantly, it is coming at a time when debt servicing to revenue ratio is elevated, implying that there could be further increase in the level of government borrowing in the current fiscal year, with its attendant impact on further exacerbating the weak fiscal buffers of the government,” Ologunro noted.

The increase in the budget figures, according to Danjuma Goje, chairman, Senate Committee on Appropriations, arose from the provision of severance benefits for outgoing lawmakers and legislative aides, induction/orientation

and the inauguration of lawmakers-elect in the Ninth Assembly, as well as more provision for security agencies to deal with unforeseen security challenges in the country.

Highlights of the 2019 budget as approved by the Senate include capital expenditure of N2.094 trillion, recurrent expenditureofN4.055trillion,statutory transfers of N502 billion, fiscal deficit of N1.908 trillion, special interventionofN500billion,and deficit to GDP of 1.37 percent.

A breakdown of the N2.094 trillion capital expenditure showed that Federal Ministry of Power, Works and Housing has the highest allocation of N394 billion, followed

by Transportation which got N179 billion, Defence N159 billion, Agriculture N107 billion, Water Resources N92 billion, Trade and Investment N63 billion, Education N58 billion, Health N57 billion, Niger Delta N35 billion, Presidency N18 billion, among others.

The budget report also revealed that lawmakers approved the sum of N23.7 billion as severance gratuity for outgoing legislators and allowances for incoming legislators and legislative aides.

In the same token, the deficit was increased from N1.86 tril-

Apapa: Beyond opening of truck parks...

Continued from page 2

thing to do now?” the business owner asked rhetorically.

The Nigerian Ports Authority (NPA) on Monday disclosed at a stakeholders’ meeting in Apapa that the

Lilypond Terminal would be made available to service trucks carrying containers that have business to do in Apapa Port while the trailer park would serve trucks going to Tin-Can Island Port.

Transcorp’s N105.3bn bid wins Afam...

Continued from page 2

tor despite the market challenges. I have no doubt that Transcorp will find a way to succeed as the company has proven resilient in the power sector.”

Transcorp bought Ughelli Power Plant from PHCN with

only four units poorly contributing an average of 160MW. “With the systematic recovery of gas turbine units, Transcorp reached 340 MW by end of 2013. Transcorp power continued the journey in 2014 and was able to recover seven units in 12 months and total available capacity hit www.businessday.ng

L-R: Rahman Oshodi, senior associate, Banwo & Ighodalo; Yetunde Adesanya, High Court Judge/chairman, Lagos State Judicial Committee on the Small Claims Courts; Okechukwu Enelamah, minister of industry, trade and investment/PEBEC vice-chair; Jumoke Oduwole, senior special assistant to the president on industry, trade and investment/PEBEC secretary, and Tolu Sonaike, assistant director, Corporate Affairs Commission (CAC), at the Stakeholders’ Forum on Ease of Doing Business Reforms in Lagos.

lion contained in the President’s proposal to N1.908 trillion.

The Appropriations Committee adopted the Medium Term Expenditure Framework/ Fiscal Strategy Paper (MTEF/ FSP) with the following assumptions: 2.3 million barrels daily oil production, a benchmark oil price of $60 per barrel, and exchange rate of N305/$1.

In passing the MTEF/FSP, the Senate also approved a GDP

growth rate of 3.0 percent and inflationgrowthrateof9.98percent.

While Africa’s biggest oil producer has overtime battled with closing up the fiscal deficit in its budget, it would be recalled that the 8th National Assembly, after a seven-month delay, increased the 2018 budget by 6 percent to a record N9.12 trillion from the N8.612 trillion presented by the President.

For the past four years since 2016, Nigeria has never met a revenue target specified in its budget due to fiscal expansion and so funds a larger part of it by borrowing externally.

Ologunro explained that in order to avert this brewing fiscal crisis, government will have to fashion out ways to expand revenues, particularly from non-oil sources, or embark on fiscal consolidation to

improve fiscal buffers In the 2018 budget proposal, the Buhari-led executive projected revenue of N7.16 trillion but could only achieve N4 trillion within the period, according to data obtained from the Central Bank of Nigeria’s quarterly report. This represents a shortfall of N3.16 trillion.

Expectedly, these parking spaces will help to decongest the roads and bridges by taking away the trucks which are parked indiscriminately by their mindless drivers. While the trailer park has capacity for about 400 trucks, the Lilypond Terminal will ac-

commodate over 1,000 trucks.

The Senate Committee on Works had, at an expanded stakeholders’ meeting last weekend, committed to ending the congestion and gridlock in and around Apapa, assuring that it would employ every means possible to en-

force measures put in place to end the Apapa embarrassment.

But stakeholders are concerned about the ongoing corruption on the roads and bridges leading into Apapa.

Even the July 2018 visit by Yemi Osinbajo, then acting

president, giving a 72-hour presidential order directing a taskforce that was set up immediately to clear the Apapa gridlock left no positive mark.

560MW by the end of 2014,” the company said.

In 2015, Transcorp Power Limited in collaboration with GE (General Electric) replaced 100MW gas turbine, GT15, with a 115MW upgraded capacity. In March 2017, GT15 was commissioned by Babatunde Raji Fashola, minister of Power, Works and Housing, and tied to the national grid. In 2017 it add-

ed an additional 105MW from GT20 and ultimately reached 701MW available capacity from 16 November, 2017.

Recall that the National Council on Privatisation chaired Yemi Osinbajo, Nigeria’s vice president, had at its meeting on April 12 given approval for the four firms to proceed with the financial bids opening for the two re-

maining companies carved out from the defunct Power Holding Company of Nigeria.

The privatisation of Afam Electricity Generation Company could not be concluded during the first round of the power privatisation in 2013 due to inability to secure feedstock to the gas plant.

Yola DisCo, on the other hand, was successfully priva-

tised and handed over to the core investor in 2013, but the investors declared a force majeure in 2015 citing insecurity in the North-East region of the country.

The nullification of the bid from Sandstream Nig Ltd made Quest Electric the sole bidder for the acquisition of Federal Government 60 percent shares in Yola DisCo.

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news NAFDAC debunks reports on 70% fake medicines in Nigeria CALEB OJEWALE

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ational Agency for Food and Drug Administration and Control (NAFDAC) has debunked a media report that 70 percent of all drugs in Nigerian markets are fake.

NAFDAC in a statement says the claim is “categorically untrue and grossly inaccurate.” The agency says over time, it had collaborated with stakeholders such as the World Health Organisation (WHO), Department for International Development (DFID) and United States Pharmacopeia (USP), to conduct series of studies on quality of medicines in Nigeria.

Some of the findings in the past included a 2005 survey, which found counterfeit medicines stood at 16.7 percent against 40 percent in 2001.

In 2012, NAFDAC conducted the National Survey on Quality of medicines using

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Truscan® device across 29 states including FCT, Abuja, from January 2010 to April 2012.

The medicines involved in the survey included antibiotics, antimalarials and antidiabetics. A total of 5,790 samples of medicines were tested, and 5,419 samples of medicines, which is 93.6 percent passed quality tests while 371 samples, which is 6.4 percent failed.

In more recent findings NAFDAC says a survey on quality of antimalarial medicines conducted in 2015 revealed that 771 samples, representing 96.4 percent out of 800 samples passed. A Round Two survey in collaboration with USP in 2016, showed the level of substandard antimalarial medicines in circulation to be 4.33 percent (39 out of 900 samples) as against 3.6 percent in 2015.

By the fifth survey, which its results were presented this year (2019), 98.7 percent of tested medicines passed quality tests while 1.3 percent failed.

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to be known and addressed as

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Maryam Isiaka Ahmed. All for-

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L-R: Eugene Konguyuy, country director/representative, United Nations Population Fund (UNPF); Omobolanle Victor-Laniyan, head, sustainability, Access Bank; Olajumoke Adefulire, senior special adviser to the president on sustainable development goals; Ndidi Nnoli, group chief, sustainability and governance, Dangote Industry Limited, and Ameachi Okobi, group head, corporate communication, Access Bank, at the Access Bank Sustainability Summit at its head office in Lagos, yesterday.

DisCos start meter distribution today, but payment doesn’t confer ownership ISAAC ANYAOGU

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lectricity distribution companies (DisCos) will begin the process of distributing meters to customers today under the Meter Asset Provider (MAP) regulation enacted by the regulator, the Nigerian Electricity Regulatory Commission (NERC), but those who pay for meters will not own them and may not move them.

Customers have raised concerns on whether they will be allowed to pay in instalment for the meters and if they would be able to take them along with them when they move away from their residence.

NERC has said that customers would have the option of paying for the meters in instalment but some third-party investors who have been outsourced the task of providing the meters by the DisCos have said a prompt payment for the meters will help them meet their obligation to their bankers.

“Customers can either pay outright for a meter, or they can pay for the meter over a 10-year period via a monthly metering services charge

for the meter and the associated metering services that would be provided by the MAP to the customers,” said Odion Omonfoman, managing director, New Hamshire Capital Ltd, whose firm is one of the MAPs for Ikeja DisCo. “For customers who pay outright for a meter, the DisCo owns the meter. For customers who pay in instalment for the meter, the MAP owns the meter until the customer fully pays for the meter.

In this instance, the ownership of the meter reverts to the DisCo,” Omonfoman said.

Yet, the process is not automatic.

“Customers would still need to apply for a meter first from their respective DisCos or the MAP. This is to ensure that DisCos carry out a proper KYC on the customer and to ensure the customer’s details are properly registered on the DisCo’s database,” Omonfoman said.

“Thereafter, the customer’s premises will be surveyed by the MAP to assess the metering needs of the customer. After the survey, the MAP then installs the meter at the customer’s premises.

“Customers who cannot pay

upfront for their meters can choose to pay for the meter over time.

Such monthly payment starts immediately after the meter has been installed and commissioned by the MAP,” he said.

But the MAP Regulation is not clear on what should happen if a customer who paid for the meter moves to a new location.

“The possibility of allowing a customer move with his/her meter to a new location is for the DisCo to decide. If the customer moves to another flat within the same area covered by the DisCo, then it is possible that the DisCo would allow the customer move with the meter. In this instance, the DisCo would update the customer’s account information on its backend and also the meter information as well,” said Omonfoman.

“But if a customer moves to a new flat which is covered by a different DisCo, he cannot move his meter – i.e., if a customer moves from Ikeja (covered by Ikeja DisCo) to Lekki (covered by Eko DisCo), he/she would not be allowed to move his/her meter. He

would have to buy a new meter in Lekki,” he said.

This, Omonfoman said, is because meter relocation does not only involve the removal and relocation of the physical meters.

“There is also the migration/ update of the customer’s information and meter information in the DisCo’s backend system to reflect the new location of the customer,” Omonfoman said.

“Given the legacy backend systems being used by many DisCos, such movement of meters from one location to another may require the DisCo to de-activate the customer’s former account and create an entirely new account for the customer so as to capture the new location,” he explained.

Electricity customers in Nigeria have always got the short end of the stick when it comes to metering.

Though it is an aberration that a customer will provide the facility to measure a product sold to him, NERC allowed the practice through a Credited Advance Payment for Metering Implementation (CAPMI) which failed and is now replaced

by MAP.

Nigeria is an extremely important market to Diageo – Guinness CEO … as firm celebrates 69th anniversary SEGUN ADAMS

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anaging director/CEO of Guinness Nigeria, Baker Magunda, says Nigeria is an extremely important market to Diageo.

Magunda also says Guinness Nigeria, a subsidiary of Diageo, has done well for the country and for consumers of the company’s products.

This is coming ahead of the celebration of Guinness Nigeria plc’s 69 years of driving growth and success in the country.

“From the start of Guinness’ operations in Nigeria, we have not only consistently produced high-quality products, we’ve also modelled our business with the aim of driving local economic growth,” said Magunda.

Established in 1950 as the first and only total beverage alcohol

(TBA) company in the country offering a wide range of products across categories, Guinness Nigeria, a subsidiary of Diageo, has been contributing to the economic and societal development of the nation for nearly seven decades.

“As the first country to produce Guinness outside of Ireland, Nigeria is an extremely important market to Diageo. This year, we also celebrate being the first country to launch and produce Baileys Delight, a variant of the popular Baileys Cream liquor, and also the first country to produce Guinness Gold, a premium lager beer product,” Magunda said.

“We are proud that Guinness Nigeria has the most expansive range of brands to offer as compared to any other player in this category. We’ve done well for Nigeria, and we’ve done well for our consumers,” he said.

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Guinness Nigeria, through various initiatives and investments in community development and sustainability, continues to be committed to the social and economic growth of the country, according to the company.

The company’s ‘Water of Life’ initiative, for instance, has provided clean water facilities to over 1.5 million Nigerians across communities, Guinness Nigeria said, while it supports agriculture through its ‘Grow with Nigeria’ programme, a local raw materialsourcing scheme, which empowers indigenous farmers.

Currently, Guinness Nigeria’s local content sourcing stands at 75 percent, and there are plans in place to increase this significantly in the coming years, it said.

Every year the company, in partnership with the Federal Road Safety Corps (FRSC), holds the

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‘Ember Months’ Campaign to educate key stakeholders, especially commercial drivers, on responsible drinking and the choice to never drink and drive. It has also provided the FRSC with breathalysers to assist it in executing its responsible drinking campaigns.

Beyond these acts, the company said it continues to strive to consistently meet the needs of Nigeria’s ever-evolving consumer base. It recently expanded its portfolio with several products including the iconic White Walker

by Johnnie Walker.

“In 69 years, Guinness Nigeria has tremendously impacted the market, the socio-economic development of the country, and the well-being of Nigeria’s people. The company looks forward to expanding and positively impacting many generations to come,” it said.

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POLITICS & POLICY After defecting from PDP to APC, Lagos lawmaker says ‘I am ready to return to my profession’ Iniobong Iwok

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he last People’s Democratic Party (PDP) lawmaker in the Lagos State House of Assembly who defected to the ruling All Progressives Congress (APC) on Monday, Hon. Dipo Olorunrinu, has said that he would resume his profession after his tenure in June.

Olorunrinu, representing Amuwo-Odofin Constituency I at the Lagos Assembly, announced his defection to APC during plenary, citing lack of structure in the main opposition party, PDP, as reason.

The first term lawmaker, who resisted all pressure to defect alongside seven of the PDP lawmakers that moved to APC in 2017, lost his seat with 278 votes to Mojisola Alli-Macaulay of APC, during the March 9 general election.

Speaking with NAN on Tuesday, Olorunrinu said: “I am a developer by profession. I am going back to my business and I will be running politics alongside my business.

“Politics, to me, is the ability to impact and affect lives. Politics is service not a profession, I am going back to the reality of life. I will continue serving the downtrodden even outside public office.

“The day I lost election with 278 votes was a Sunday; I said to myself, life moves on even if I lost it with one or two votes. For me, service to ordinary people is an in-born thing; we will continue to serve school children, youths and others.”

According to him, his free school bus services resumed operation on Monday after the Sunday he lost election because of his love for the people.

APM petitions, rejects Justice Coker’s reconstituted gov’ship petition tribunal in Ogun RAZAQ AYINLA, Abeokuta

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he Allied People’s Movement (APM) has rejected the newly constituted Ogun State Governorship Election Petitions Tribunal being led by Justice Josephine Coker of Lagos State Judiciary through a petition to President of Court Appeal, Justice Zainab, Bulkachuwa.

The petition submitted before the Court of Appeal’s President by Yusuf Dantalle, the National Chairman of the Party on behalf of the Allied People’s Movement (APM) and Adekunle Akinlade, Ogun State governorship candidate in the March 9, 2019 election.

While addressing a press conference in Abeokuta on Monday, Yusuf Dantalle, the National Chairman of APM, alleged that the disbandment of the Justice Chinwe Onyeabo’s panel was unfair, wrong and mischievous.

The Court of Appeal President was reported to have disbanded the Justice Onyeabo-led Ogun State Governorship Election Petitions Tribunal and replaced same with Justice Josephine Coker of the Lagos Judiciary.

Although no particular reason was given for the disbandment, the All Progressives Congress (APC) had earlier filed a motion asking the President to disband the Panel for which the Secretary of the Tribunal, Nyior Henry Sekulla, confirmed that the reshuffle was across the country and Ogun State was also affected.

Dantalle alleged that the dismissal of the initial panel was targeted at frustrating the petition of APM against emergence of Dapo Abiodun of the All Progressives Congress (APC), saying Justice

Coker was appointed a judge in Lagos State by both APC National Leader, Bola Tinubu and Vice President Osinbajo, who are stakeholders in the ongoing petition at the tribunal.

It was further alleged that APC’s motion heralded the exit of Justice Onyeabo’s panel via a motion dated 15th April 2019 wherein the party prayed, among others, the disbandment of the panel, adding that despite the fact that the motion was slated for hearing on May 8, 2019 as a memo was reportedly received by the tribunal that the panel be disbanded and replaced with new one.

The party however, said that the timing of the decision of the Court of Appeal and the choice of the new tribunal panel brings to bear that fact that the whole process seems predetermined and he who seeks equity must come with clean hands.

The petition partly reads, “Obviously, their craftily contrived application not only envisaged Adekunle AbdulKabir Akinlade/APM’s petition no EPT/OG/GOV/01/19 but demanded a complete change of members of the panel, and in their place, ‘a new panel’. My Lord, to this end, the new panel is totally unacceptable to the Allied Peoples’ Movement (APM).

“I have, within the narrow paginations in this petition/complaint against the unfair, wrong, and mischievous dismissal of Onyeabo’s panel provided the basis/grounds/ reasons why this newly contrived panel should be done away with.

“Politicians of influence and particularly those in the exalted offices must not be allowed to interfere with the due administration of Justice. Their obvious design is to engender injustice against APM and her governorship candidate. www.businessday.ng

“I didn’t say because I lost election, the school buses should stop.

They are still working till today; you can make your findings in my constituency.

“It is not the children that didn’t vote for me; these are the people we are in government for. Most of them knew I lost election. We win some, we lose some.

“God crowns every effort and He alone chooses leaders. I have served the people and set a standard of what good representation should be. I have always been a man of the people,” the lawmaker said.

Olorunrinu, who expressed readiness to support the new lawmaker-elect, Alli-Macaulay, said that he had a good relationship with his predecessors and that this has enabled him to succeed as a lawmaker.

Dipo Olorunrinu

Atiku felicitates with Nigerian workers on May Day Innocent Odoh, Abuja

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residential candidate of Peoples Democratic Party (PDP) in the 2019 election and former Vice President of Nigeria, Atiku Abubakar has congratulated Nigerian workers on this year’s Workers Day, saying that the workers unions in Nigeria have been a critical partner in the economic development of the country.

Atiku, in a goodwill message personally signed by him on Tuesday noted that “the labour and sweat of Nigerian workers constitute the engine and lubricants of our economic growth and national development.”

The former Vice President eulogised the various labour unions in Nigeria for being dependable watchdogs that serve the interest of the Nigerian people.

“Over the years, the various labour unions in Nigeria have played pivotal intermediary role between the government and the people and the most recent of which is the agitation for increased minimum wage of N30,000. I congratulate the labour unions in Nigeria for this feat and I believe that with the same kind of determination, it is possible to further improve the lots of the Nigerian worker.

“With the efforts and creative energies of Nigerian workers, I believe that it is very possible to create

economic buoyancy in Nigeria and redefine our destiny in the world as a centre of prosperity and refuse to be the capital of the world’s poor people.”

“I want to join several other well-wishers to celebrate with Nigerian workers on today’s Workers Day and also to assure the labour unions of an acknowledgement of their great sacrifices for the country,” Atiku said.

The former Vice President therefore urged the organised labour under their various professional unions to embrace the paths of peace, harmony and national unity in all their engagements with employers of labour and governments at all levels.

PDP’s allegation of N14trn sleaze under Buhari is laughable, says group

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he Buhari Media Organisation (BMO) has accused the People’s Democratic Party (PDP) of taking opposition to a ridiculous level with its latest claim of wasteful expenditure and stolen funds running into N14trillion under the President Muhammadu Buhari administration.

According to the group, allegations that such an amount was stolen under the President’s watch have no real basis.

In a statement signed by Niyi Akinsiju, its chairman and Cassidy Madueke, secretary, BMO said that the latest act by the opposition party could only have come from comic characters.

“PDP’s latest claim is just a rehash of what this same party put out in a statement sometime in August last year when it demanded an explanation from President Buhari on an alleged

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N9trillionn contract said to have been awarded by the Nigerian National Petroleum Corporation (NNPC).

“We recall that back then, the Information Minister, Lai Mohammed urged the party to direct all questions to the Minister of State for Petroleum Ibe Kachikwu who made what looked like the original allegation in a letter to the President.

“Kachikwu had even as far back as October 2017 clarified that the issue had more to do with governance, not fraud at the NNPC, at a three-day Nigerian content workshop organised by the Nigerian Content Development and Monitoring Board in Owerri, Imo State,” the group said.

According to BMO, “In spite of this, PDP has continued to raise the claims to tar the integrity of the Buhari administration with the hope that, like mud it would stick”. @Businessdayng

The pro-Buhari group also said that the statement has over the years been debunked as fake news.

“The claims made in the PDP statement are cock and bull stories, just like the allegation that Keystone Bank shares belonged to President Buhari and his family. Of course, opposition elements were gleefully spreading this as part of their campaign for the Presidential election.

“The N14trillion the party claimed was stolen is just slightly higher than N11.5trillion, Nigeria’s annual total revenue from crude oil sales since June 2015.

“Even the so-called oil subsidy sleaze was investigated by Federal lawmakers at the instance of Senate President Bukola Saraki, and it was discovered that the NNPC has a revolving fund of $1.05billion which it used to directly import and distribute fuel,” it said.

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NEWS Strategic career advancement, critical business concerns catalyst for balanced HR practice - CIPM SEYI JOHN SALAU

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hartered Institute of Personnel Management of Nigeria (CIPM) has identified a significant overhaul of the process and delivery approach of learning programmes to cover more of people-related issues bordering around strategy, career advancement and critical business concerns as catalyst for a well balanced Human Resource (HR) practice in Nigeria.

The launch of the CIPM elearning programme has given members of the institute an opportunity to learn on the go and access best practice content and technology aided instructional materials for HR practice. This deployment encouraged the radical change in learning approach impacted by the institute’s HRs’ professional development.

“CIPM has been playing an important role in defining the global standards for the practice of Human Resource Management as part of the technical committee defining ISO TC260 standards.

Four of those standards were

gazette in Nigeria in 2018, and we launched the four standards at the 2018 Annual National Conference,” said Udom Inoyo, the president/chairman of governing council of the CIPM at the 2018 annual general meeting of the institute.

According to Inoyo, despite the economic challenges in the country, 2018 has been a year of significant and consolidated progress for the institute at a pace that is most encouraging.

“Despite different challenges facing businesses in the year under review, the institute continued to grow with a 43.5% increase in Net Surplus which stood at N99 million in 2018 as against N69 million in 2017. Net Asset Base stood at N1.3 billion at the end of the year under review, representing a 10%bgrowth as compared to N1.2 billion in 2017.

“For the year under review, another achievement is our increasing visibility and acceptance by the public sector. This is evidenced in the fact that 42% of the delegates at the 2018 conference were from the public sector,” he said.

May Day: Labour wants FG to tackle insecurity JOSHUA BASSEY

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s Nigerian workers join their counterparts around the world to mark this year’s May Day, a labour group, Federation of Informal Workers’ Organisations in Nigeria (FIWON) has stressed the need for the Federal Government to devise workable means of ending mass killing of Nigerians and re-route the economy on growth path in order to create jobs for the growing population.

The latest estimates by the United Nations (UN) put Nigeria’s population at 201 million people. This is amid rising wave of insecurity, unemployment, decayed infrastructure, poor sanity, inadequate transportation and healthcare facilities.

The group believes that unless the issues are adequately tackled, despondency among the population will continue to grow.

Gbenga Komolafe, general secretary of FIWON, who raised concern about the deteriorating living condition of Nigerians, especially workers in both the informal and formal sectors of the economy, as they join the rest of the world to celebrate workers’ day (today), said it

was high time government at all levels set their priority right to restore hope to the people.

According to Komolafe, while critical services such as electricity and potable water supply have defied solution, essential services, especially functional public education, healthcare services, sanitation, basic shelter and modern transportation infrastructure - especially roads and railways remain in the realms of endless promises.

He also decried high rate of youth unemployment and the harassment of those working in the informal sector.

“We use the occasion of the 2019 May Day to express our solidarity with the working masses in the Nigerian informal economy. Apart from the indignities of daily harassments on the streets, we deplore the institutional criminalisation meted out to informal workers.

It is against this backdrop that we condemn unequivocally the passage of a new bill by the Nigerian Senate to clamp down on informal workers.

“We also use this occasion to call on the Federal Government to make the recently launched Micro Pension Scheme for the self employed meaningful,” Komolafe said.

Over taxation, weak regulation, quackery, others ravage nation’s housing sector – experts IFEOMA OKEKE

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xperts in Nigeria’s real estate sector say over taxation, weak regulation, quackery, among others, are ravaging the nation’s housing sector.

Speaking at a talk show organised recently by Photizo Properties in Lagos, Patrick Oriyomi, CEO, Photizo Properties, said some investors shy away from investing in real estate because of lack of trust.

According to Oriyomi, real estate in Nigerian, especially in Lagos, has been bastardised by lots of quacks that embezzle investors’ money, leaving the investors in misery.

He noted that over taxation on properties and difficulties in getting Certificate of Occupancy (C of O) were also parts of the challenges disrupting investment in the real estate sector in Lagos.

“I have a property that is free and gazetted already but the process has taken us more than four years and yet, the C of O has not been gotten. This also shows that some C of Os have not been gotten in Lagos.

“There should be a regulatory body in the real estate sector that would regulate how things are done. Everything should not be left for the court to handle, because some of these challenges can be handled without getting to court.

“In UK, from the day you put in money into real estate, you can actually calculate your return on investment for the next 10 years, but it is not so in Nigeria.

“In Nigeria, one can buy a

property for N100 million and sell it the same day for N120 million and this is because we don’t have strong laws that regulate investors and investments in the sector.

“There should be a body that regulates realtors and property agents in Nigeria if quackery must be stemmed. There should be certain exams and training, which realtors should undergo and they should have the regulatory identity to distinguish professionals from quacks.”

In her remarks, another real estate expert at Photizo, Maureen Okpoebo, noted that ignorance of some people to understand the importance of real estate was also a challenge facing the nation’s housing sector.

She said Nigeria as a country had not properly harnessed the opportunities that could come from giving comfortable homes to its masses.

“If you check in other countries, they no longer sell lands itself. They sell rooftops and spaces. Nigeria has not properly seen the importance of real estate and is yet to tap into its enormous benefits.

“A lot more needs to be done in terms of housing, lands and procurement of spaces. The government should create awareness by educating people on the importance of lands, good environment and having convenient homes,” she said.

She urged the government to look into land laws in terms of land surveying, land registry and property taxation to enable low-income earners benefit from investing in the nation’s housing sector.

Oxford economist calls for clearer policies to attract FDIs Modestus Anaesoronye

Biodun Omoniyi (m), MD/CEO, VDT Communications, flanked by Olusola Teniola, ATCON President (l), and Gbenga Adebayo, ALTON President (r), when Omoniyi was inducted into Beacon of ICT Hall of Fame, during the recently held BoICT Awards at Eko Hotel, Victorial Island, Lagos.

UBA celebrates 70 years of excellent services to customers at its special CEO Awards gala

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nited Bank for Africa (UBA) plc with operationsin20Africancountries and in the United Kingdom, the USA and Paris, over theweekend,celebrated70yearsof operations in an event that was as exciting as it was nostalgic.

Clients, friends and well-wishers from all works of life joined the UBA Group led by the chairman, Tony O. Elumelu, to commemorate 70 years of legacy with the organisation which has over the decades,emergedasoneofAfrica’s topmost financial firms.

The platinum anniversary of UBA was combined with the bank’s annual CEO awards ceremony as members of staff from all 23 countries of operations who

hadexcelledoverthepastyearwere rewardedinthemidstofthousands of guests.

In attendance at the epic night of activities, were royal fathers, captains of industry, political leaders, clients and friends of the bank.

Someoftheguestspresentwerethe Ooni of Ife, Oba Adeyeye, Enitan Ogunwusi; the Emir of Kano represented by the Sarkin Shanun of Kano,ShehuMohammed;former and Present Governors of Cross RiversState,DonaldDukeandBen Ayade; Governors-elect of Lagos, Ogun and Kwara states, Babajide Sanwo-olu, Dapo Abiodun and AbdulRahman AbdulRazak.

AlsopresentwereTundeBakare; Emeka Anyaoku; Gbenga Daniels; Segun Osoba; Niyi Adebayo; www.businessday.ng

Jim Ovia; Oba Otudeko; Nnamdi Okonkwo; Rasheed Olaoluwa, among many others.

Former presidents Olusegun ObasanjoandIbrahimBabaginda who could not attend the event sent in letters of congratulations to commend the bank on its landmark achievements.

Tony Elumelu, accompanied by his wife Awele, remarked that UBA remains a leading financial institution on the continent and hitting the 70th year mark was a laudable achievement.

Hesaid,“Itisatimetocelebrate UBA’srichheritageandlegacyover 70 years and to tell everyone who has contributed to what UBA is today, that we appreciate all they have been doing and how they

have ensured that the investment put into the bank over the past decades have paid off.”

Tony Elumelu who invited all past chairmen, board members and management as well as senior staff both past and present on stage said “These are cherished moments for us, and we’d like to thank all of you who have made it possible for us to be where we are today. Thank you to everyone, our customers, stakeholders and those who have passed through UBA and worked hard to lay a solid foundation for creating a foremost institution. It is an evening worth celebrating for us all. 70 years is a huge number, a milestone achievement” he enthused.

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o attract more foreign direct investments (FDIs) into the Nigerian economy, policy environment needs to be strengthened by the implementation of more liberal and clearer policies.

This call was made by Cobus de Hart, chief economist for North and West Africa, Oxford Economics, who was a guest speaker at the ICAN/ICAEW Joint Economic Insight event held in Lagos.

Speaking on the theme: ‘Nigeria: The African Giant Crawling Back on its Own and its Untapped Technological Potential’, Hart states that the Nigerian business environment is still seen as very unfriendly, especially since the wrong policies were implemented after the oil shock. He however notes that the economy has witnessed a progressive shift to nonoil outputs.

He says: “The non-oil sector is now the main driver of growth.

The non-oil sector has expanded from 0.8 percent to 2.7 percent.

That is actually progressive,” explaining that diversification can be accelerated with even more @Businessdayng

liberal policies.

Hart also says the near-term outlook was encouraging with PMIs, noting at a solid start to 2019, FX risks which have eased off considerably and the loosening of the monetary policy.

According to Hart, despite the 2019 general elections, portfolio investor appetite is still strong, and this has prompted the Central Bank of Nigeria (CBN) to change policy direction.

Taking a cue from a 2017 World Bank report, he notes that Nigeria is still largely unbanked with only 39 percent of adults having accounts in financial institutions. Nevertheless, according to him, there is still a huge mobile money opportunity in Nigeria because of her population. Sadly, this is not the case with mobile penetration.

“As of 2017, Nigeria only had 39 mobile money accounts per 1,000 adults and saw only 447 mobile money transactions per 1,000 adults.

In China, guess what the transactions figure was? 52,000!

Despite such as a large market, Nigeria is lagging far behind its peers,” he says.

Wednesday 01 May 2019

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news Review of bilateral investment treaties CBN to embark on mop-up of to ensure improved benefits for Nigeria mutilated naira banknotes soon HARRISON EDEH, Abuja

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he Nigerian Investment Promotion Commission (NIPC) on Tuesday said its efforts to review as well as validate bilateral investment treaties entered by Nigeria with several other countries were to ensure Nigeria harvest maximum investment benefits from such bilateral trade deals.

Yewande Sadiku, executive secretary of NIPC, gave the information during an interaction with newsmen on Tuesday in Abuja.

The executive secretary, who expressed concern that the commission during the review exercise noted that 17 out of 21 bilateral investment treaties scored less than 10 over 20 in ratings, as she noted that the review had become necessary to ensure Nigeria draw maximum benefits from various trade agreements.

“Some of the investment treaties agreements was negotiative long time ago. Some of them need to be reviewed

in line with sustainable development goals. Some of them were negotiated in early 90s and may not factor in some current challenges we are facing now, such as terrorism and illicit flow concerns,” Yewande explained.

She spoke of the efforts of the commission to review the NIPC Act, which she said needed some review to ensure it fitted into the demands of global investment promotion standards.

“The NIPC Act is certainly due for review because it has been a long while since the Act was enacted in 1995, and the demands of modern trade and investment deals had necessitated the demand for a new investment drive,” she said.

The NIPC Act was drafted in 1995, and some of the demands of 2019 investment drive are not captured in the Act. Already, we are engaging the Legislators in terms of what is required to make the review and we are making progress, she stated.

The executive secretary informed further that the commission had embarked

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on and completed some initiatives that would aid in the inflow and facilitation of investment into the country.

These initiatives include iGuide Nigeria: Compendium of Investment Incentives in Nigeria; Daily NIPC Intelligence Newsletter and Report on Investment Announcements in 2018.Others are, Investment Opportunities Profiling; Direct Investors Summit Nigeria (DISN) 2018; Nigeria Investment Certification Programmes for States (NICPS); CountryFocused Investment Promotion Strategy; Pioneer Status Incentive (PSI) reforms, a revamped website and one stop Investment Centre (OSIC) Lab, among others.

She disclosed further that the IGuide Nigeria is an easyto-use online investment guide that provides investors with up to date and pertinent information on the processes, procedures and basic costs of doing business in Nigeria and ‎provides information on starting business, labour, production factors, land, taxes, investor rights, growth sectors and opportunities.

… currency-in-circulation rises by 5.39% y-on-y HOPE MOSES-ASHIKE

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entral Bank of Nigeria (CBN) is planning to embark on a project that will enable mopup of the over-circulated and mutilated banknotes from circulation, its governor, Godwin Emefiele said on Tuesday.

Mutilated banknote is a local currency note that is passively or permanently damaged. In other words, it is a banknote that has become dirty due to usage.

Nigeria’s currency-in-circulation rose by 5.39 percent yearon-year (y-on-y) to N2.15 billion as of March 31, 2019, from N2.04 billion in March 31, 2018, data obtained from the CBN show.

On a quarter-by-quarter basis, currency-in-circulation declined by 4.02 percent from N2.24 billion in February 28, 2019 to N2.15 billion at the end of March 31, 2019. The CBN no longer prints its currency abroad.

Emefiele, who spoke at the unveiling of the Clean Notes Policy and Banknotes Fitness Guidelines in Lagos, did not give the time for the mop-up of the unfit naira notes but said the bank would continue to embark

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on sustainable institutional reforms and enact policies that would promote efficient currency management in Nigeria.

Represented by Ade Shonubi, deputy governor, operations, he said the effective use of these documents by relevant stakeholders would ensure that banknotes in circulation were clean and of high quality.

He mentioned some key policy measures being pursued by the bank towards promoting effective and efficient currency management in Nigeria.

Consequently, the CBN has registered eight companies to carry out cash-intransit (CIT) and two cash processing companies to operate in Nigeria. Deposit money banks (DMBs) are expected to patronize only these registered companies for CIT and sorting services.

He said more private sector participation in the currency management value chain would further strengthen the efforts toward ensuring availability of clean banknotes.

“I wish to use this opportunity to inform the industry that the Central Bank of Nigeria, as part of its effort towards devolv-

@Businessdayng

ing the retail cash management to the private sector, has approved the revised guidelines for registration of CIT/CPCs”, Emefiele said.

These guidelines he said provide for the operation of CITs and CPCs at both National and Regional levels, hopping that this would encourage unregistered companies to come under the regulatory purview of the Central Bank and ensure a nationwide coverage of these services.

The Bank has also put in place strategies to enable direct disbursement of lower banknotes to various market associations and merchants through their respective Deposit Money Banks (DMBs). The intervention commenced in Abuja and has been extended to Lagos, Kano, Enugu, Umuahia, Yola, Jos, Gombe, Asaba, Ibadan, Kastina, Uyo, Minna and Port Harcourt.

Furthermore, the Bank re d u c e d t h e p ro c e ssi ng charges for DMB deposit of lower denomination banknotes (N5 – N50) to encourage the return of unsorted banknotes to CBN for processing.

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Wednesday 01 May 2019

BUSINESS DAY

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Wednesday 01 May 2019

FT

BUSINESS DAY

FINANCIAL TIMES

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World Business Newspaper

Trump sues Deutsche Bank and Capital One to stop release of financial records President and his children move to stymie congressional investigation into financial affairs KADHIM SHUBBER

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S president Donald Trump has sued Deutsche Bank and Capital One in a bid to stop them from handing over financial records in response to congressional subpoenas issued by Democrats.

Mr Trump filed the suit late on Monday in a federal court in New York to stop the banks giving Congress years of records about his business dealings. The move is the latest attempt by the president to frustrate efforts by Democrats to dig into his personal affairs.

The lawsuit asked the court to declare invalid the subpoenas from the House intelligence and financial services committees, and prevent Deutsche Bank and Capital One from complying with them.

The president was joined in the suit by his sons Donald and Eric, his daughter Ivanka, who is also a White House adviser, and several related entities, including the Trump Organization.

The filing claimed the subpoenas were issued to “harass” Mr Trump and “to ferret about for any material that might be used to cause him political damage”.

“No grounds exist to establish any purpose other than a political one,” said the filing.

Deutsche Bank said on Tuesday: “We remain committed to

providing appropriate information to all authorised investigations and will abide by a court order regarding such investigations.”

Capital One did not immediately respond to a request for comment.

The move by Mr Trump was the latest salvo in a battle between the president and Democrats in the House of Representatives who are investigating his administration and his business dealings.

Earlier this month Mr Trump sued Mazars USA, his accounting firm, and Elijah Cummings, the Democratic chairman of the House oversight committee, after Mr Cummings issued a subpoena to the firm for records regarding the president.

Democrats are also seeking Mr Trump’s tax records, using a law that gives the House ways and means committee the right to access any individual’s tax returns. The Trump administration has missed two deadlines to hand over the president’s tax filings.

Last week, Mr Trump made clear his intention to resist requests for records from Democrats in Congress, telling reporters: “We’re fighting all the subpoenas.”

Maxine Waters, chair of the House financial services committee, and Adam Schiff, who chairs the House intelligence committee, said in a joint statement on Monday that Mr Trump’s latest

Government wants to escape traffic-clogged megacity built on a swamp that is sinking fast

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hat is a government to do if its capital city has been brought to a standstill by traffic and is sinking?

Indonesia’s answer: move it.

President Joko Widodo said on Tuesday that the country is considering spending $33bn to move its seat of government out of Jakarta, examining three cities away from the archipelago’s main island of Java as alternatives.

“These past three years, we have been going there continuously,” Mr Widodo said on Tuesday, referring to the three cities that he did not name.

“In Java, the population is 57 per cent of the total for Indonesia, or more than 140m people, to the point that the ability to support this, whether in terms of the environment, water or traffic in the future, will no longer be possible so I decided to move outside Java,” he told local media.

The capital also sits on a swampy piece of land at just 8 metres above sea level, with parts of it sinking fast, according to the World Economic Forum. At the current rate, 95 per cent of north Jakarta will be underwater by 2050, affecting 1.8m people.

The proposal comes almost two weeks after Indonesia, the fourth most populous country in the world and south-east Asia’s largest econo-

my, went to the polls for presidential and parliamentary elections. Indonesia’s electoral commission will announce official results on May 22.

But unofficial counts by mainstream pollsters show Mr Widodo is set to beat former general Prabowo Subianto by about 10 percentage points. Mr Prabowo has refused to concede defeat, alleging electoral irregularities and arguing that he has won about 62 per cent of the vote based on his team’s internal counting.

This is not the first time Mr Widodo or former presidents have hinted at moving government functions away from Jakarta, home to more than 10m and a metropolitan area that is three times bigger.

The three likely candidates are Palangka Raya, Tanah Bumbu and Penajam, all on the island of Borneo, according to a government official.

The person added more details could be disclosed in a development plan once the election results were announced.

Palangka Raya, a city of 200,000 people, has been named in the past as a potential alternative to Jakarta. It was designed in the 1950s by Sukarno, Indonesia’s founding president and an architect, who intended it to become the new national capital.

But the announcement was met with scepticism, with critics questioning whether such a move should be an urgent priority for Indonesia. www.businessday.ng

lawsuit was “meritless”.

“This lawsuit is not designed to succeed; it is only designed to put off meaningful accountability as long as possible,” they said.

Ms Waters and Mr Schiff had issued subpoenas earlier this month to Deutsche Bank and other banks as part of their investigations into illicit finance and foreign influence in US politics.

Mr Trump’s lawsuit said the subpoenas to Deutsche Bank sought a broad sweep of banking and financial records about himself, his family and his busi-

nesses stretching bank to 2010.

For some types of records, such as account applications, the subpoenas placed no time limitation, according to the lawsuit.

Both Deutsche Bank and Capital One had intended to begin handing over documents in response to the subpoenas by May 6, the lawsuit said.

Mr Trump’s relationship with Deutsche Bank has been a key area of focus for congressional investigators, particularly after Michael Cohen, the president’s former lawyer, told Congress that

documents Mr Trump submitted in connection with a potential loan in 2014 had “inflated” his wealth.

Mr Cohen is due to begin a three-year prison term in May for crimes including campaign finance violations, lying to Congress and tax evasion.

Deutsche Bank has been a longtime lender to Mr Trump, continuing to work with him even after other financial institutions were put off by a spate of Trump business bankruptcies in the 1990s.

Occidental’s Hollub shows her radical side in fight for Anadarko

Indonesia is ready to spend $33bn to move capital from Jakarta STEFANIA PALMA

Deutsche Bank has been a longtime lender to Donald Trump © AFP

Chief’s stance on climate change raises prospect of big additional pay-off in the long term ED CROOKS

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hen Vicki Hollub was starting out in her career in the oil industry in the early 1980s, one of the few women working on the rigs in Mississippi and Louisiana, she helped establish herself through her command of data. Specifically, data on US college football teams playing in the Southeastern Conference, the SEC, which include her own alma mater, the University of Alabama.

“I was an avid football fan,” she told a conference at Columbia University this month. “I knew just about every statistic there was for any team playing in the SEC. So I had a way of talking and connecting with the men I was working with, out on location and on the rigs.”

Almost four decades later, as chief executive of Occidental Petroleum, she is making the bet of her career on another set of numbers: the data on the performance of Anadarko Petroleum’s US shale operations.

Ms Hollub last week launched a bid for Anadarko worth about $55bn, roughly 15 per cent higher than the $48bn deal that the company’s board agreed with Chevron earlier in the month. She looks increasingly likely to succeed with

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that bid, particularly after the announcement on Tuesday that Warren Buffett’s Berkshire Hathaway is backing the deal, committing to invest $10bn in Occidental in preference shares if the acquisition goes through. Success in the takeover battle will be only the beginning, however. In the years that follow, Ms Hollub is going to need to deliver a sharp improvement in the performance of Anadarko’s operations to justify the price she is paying.

The bid is an ambitious move that fits with what is emerging as a characteristic of Ms Hollub’s leadership: her defiance of expectations. In her plan to transform the company, and in her embrace of action to address the threat of climate change, she has been a much more radical leader than seemed likely when she took over at Occidental three years ago.

When her appointment was announced in 2015, there was a widespread sense in the industry that Ms Hollub would be a steady if unexciting chief executive who would bring stability to the company after some turbulent years. Tensions between Ray Irani, chairman, and Stephen Chazen, chief executive, had flared out into the open in 2013, and after a boardroom battle and a shareholder vote Mr Irani was forced out. A long-serving insider — she joined Occidental in 1982 — with a @Businessdayng

measured and undramatic personal style, Ms Hollub looked like the safe pair of hands the company needed.

“She is unpretentious and thoughtful. There’s no chest-pounding,” said one industry observer. “She doesn’t need to assert herself. She’s a very smart, confident person.”

That style has led some in the industry to underestimate Ms Hollub, according to another person who knows her. “A lot of people thought that this was a diversity hire, just a PR stunt,” he said. “They sure know different now.”

The performance of Occidental’s shares, which were at about $75 when Ms Hollub took over, and are about $60 today, has been unremarkable. But the company’s operational performance, especially in the Permian Basin of Texas and New Mexico, has been more impressive. On average, Occidental’s shale wells in the region have produced 74 per cent more oil in their first six months than Anadarko’s.

Michael Wirth, chief executive of Chevron, sniped at that record last week, saying “some operators” put too much emphasis on impressivelooking early results, and missed the fact that “short-term production is not the goal”. Even so, Occidental seems to be doing something right. Over 201618 its cost per barrel in New Mexico dropped 23 per cent.

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Wednesday 01 May 2019

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NATIONAL NEWS

US software company UiPath hits $6.4bn valuation Specialist in automating administrative tasks was valued at just $70m two years ago RICHARD WATERS

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wo years ago, US software company UiPath was valued at $70m, and the technology it specialised in — known as robotic process automation, or RPA — was a little-known corner of corporate IT. On Tuesday, the New Yorkbased company announced it had raised $568m in a financing round that valued it at $6.4bn, catapulting it into the top 10 most valuable private tech companies in the US. UiPath’s rapid rise reflects the corporate world’s interest in a form of technology designed to directly replace white-collar workers who carry out low-level administrative tasks.

Others in the field include Silicon Valley-based Automation Anywhere, which pulled off a massive $550m first round of funding last year that valued it at $2.3bn, and UK company Blue Prism, which has a £1.5bn market capitalisation.

The flood of cash into the RPA companies comes as banks, insurance companies and others with large back-office workforces have started to make greater use of socalled “software robots”.

The technology is designed to replace office workers who spend much of their time on screens, often on administrative tasks that involve taking information from one location and entering it in

another.

As companies digitise more of their work processes, that has made RPA a quick way to plug the gaps between different software applications.

UiPath said its annual recurring revenue — a measure used by subscription-based software companies that includes all the revenue they are set to receive in a given year from contracts — stands at more than $200m, up from only $8m two years ago.

The company’s sudden success follows years of development.

It was founded 14 years ago by Daniel Dines, a Romanian software developer who had worked at Microsoft.

Besides providing a quick way to cut their employee costs, RPA has emerged as one of the most promising ways for companies to employ artificial intelligence to enhance their operations. The software was designed from the outset to follow simple rules — for instance picking information out of one application and entering it in another — but supporters say it can be refined as the technology advances to make more intelligent decisions about how to treat information it processes.

UiPath’s latest funding, led by Coatue, takes the amount it has raised to $1bn. Earlier investors including Accel, Sequoia and CapitalG, part of Alphabet, also joined the round.

What to expect when Apple reports earnings Shares in iPhone maker have soared despite warnings of smartphone slump

RICHARD WATERS

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pple has stormed back into favour on Wall Street, but its latest financial results are expected to reveal a continuation of the iPhone slump that shocked investors at the start of the year.

Shares in the consumer technology giant have added about $300bn since their lows after an early January profit warning, at one point last week getting within 1 per cent of the $1tn mark the company first crossed last summer.

Yet the fall in iPhone sales is expected to dominate the picture again when Apple reports its latest quarterly figures on Tuesday.

Wall Street is expecting iPhone revenues to come in 17 per cent below the year before, even worse than the 14 per cent fall in the previous quarter.

That is expected to leave the company with a 5 per cent drop in overall revenue, at $57.4bn — matching the decline of the previous three months, and a stark contrast to the 16 per cent growth of its past fiscal year, when the iPhone X cycle made Apple the first company worth more than $1tn.

The change in mood on Wall Street in recent weeks reflects growing confidence that the January iPhone shock represented a one-off adjustment in the prospects for Apple’s most important business, rather than the start of a steady deterioration.

Analysts have also shifted more of their attention away from the handset business to other parts of Apple’s operations, which hold the

best chance of returning the company to growth.

According to an estimate from Goldman Sachs, the smartphone that has defined Apple’s business for more than a decade is set to represent only 54 per cent of revenues in the latest quarter, compared to the more than 60 per cent of recent years.

The signs of stabilisation for the iPhone follow small price cuts in some international markets, helping to offset some of the negative impacts seen from pricing actions taken last year with the launch of the latest handsets.

The successful launch of the iPhone X in 2017 had enabled Apple to boost the average selling price of its smartphones by more than $100, to $766, over the following 12 months. But an attempt to repeat the trick last year fell flat, as consumers gave a collective yawn to the new models and Apple ran into a sharp decline in consumer spending in China.

After big losses late in 2018, Apple’s market share in China recovered during the first quarter of 2019, according to analyst Neil Cybart at Above Avalon. Apple’s financial guidance for the quarter, of revenue of $55bn-$59bn, may not have factored in the recovery that came late in the quarter, he said, adding to the chance of a positive surprise on Tuesday.

The step down in iPhone sales of the past six months is expected to weigh on the guidance Apple gives for the third quarter of its fiscal year, to the end of June. Most analysts expect revenue of $50bn-$52bn, compared to $53bn in the same period a year before. www.businessday.ng

From left, Cyril Ramaphosa of the ANC, Julius Malema off the EFF and the DA’s Mmusi Maimane lead South Africa’s three biggest political parties © FT

Disenchanted voters yearn for South Africa’s ‘new dawn’

The ANC has failed to transform the lives of the black majority after 25 years in power JOSEPH COTTERILL

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yanda Kota is determined to cast his ballot next week, honouring the struggle that finally overcame apartheid and gave all South Africans the right to vote.

This time, however, the middleaged activist will also place something else in the ballot box — his own curriculum vitae. His planned protest, 25 years after the first democratic election, symbolises a growing despondency over the African National Congress government among many in the black majority.

When South Africans head to the polls on May 8, more than a third of working-age voters, nearly all of them black, will not have a job. For 20m young people who came of age under the ANC, unemployment is even higher. Africa’s most industrialised economy has failed to grow faster than the population. The official unemployment figure is put at 27 per cent but the figure rises to 37 per cent if those who have given up looking for work are taken into account.

“After 25 years of a so-called democratic dispensation, it’s only politicians that have access to the good life, the better life. We haven’t seen this new dawn. We haven’t experienced what you call freedom,” said Mr Kota, who chairs the Unemployed People’s Movement, a grassroots NGO based in the Eastern Cape, the ANC’s heartland.

Mr Kota’s belief that South Africans have become “spectators” to democracy explains the apathy that has greeted the country’s most competitive election since 1994.

The “new dawn” is being prom-

ised by President Cyril Ramaphosa, the ANC’s relatively new leader. Yet the term refers to turning the page on a decade of egregious looting of the state by his own party under Jacob Zuma, his predecessor. It leaves voters in a quandary. In South Africa’s parliamentary system, they can only vote in favour of Mr Ramaphosa by voting for an ANC that still harbours Mr Zuma’s cronies.

And while a record 47 parties are competing against the ANC this year, no single party is considered a threat to its reign. The main opposition grouping, the liberal Democratic Alliance, is polling about 20 per cent, not much changed from its 2014 result.

Mr Zuma’s exit last year removed an easy target. But the opposition’s malaise goes deeper, said Ralph Mathekga, an independent political analyst.

“South Africa has a politics of many choices, but no alternatives,” Mr Mathekga said. “Lack of trust in the ANC translates into a lack of trust across political parties. Elections are never about the opposition winning, but the ANC losing.”

The ANC’s vote will probably fall this election, from 62 per cent in 2014 to something between 55 per cent and 60 per cent, according to pollsters. Radical parties, representing the ANC’s extremes, could benefit the most, Mr Mathekga said.

The hard-left Economic Freedom Fighters is widely expected to double its vote by appealing to the disaffected, jobless youth. Julius Malema, the EFF leader, is a former ANC youth leader turned “son of the soil” in campaign posters that promise “our land and jobs now”.

In the past five years the party

used its 25 seats in the 400-member parliament to lead calls for Mr Zuma’s exit, and for altering the constitution to allow expropriation of land without payment. The ANC eventually bowed to both demands.

If it can double its seats, Mr Malema’s party would have even greater influence to outflank Mr Ramaphosa on contentious economic legislation such as land, which will “portray him as a weak leader beholden to the opposition”, Darias Jonker, an analyst at Eurasia Group, said.

Mr Kota is not convinced by the EFF’s red berets and fiery language.

The party is “militaristic” and “authoritarian” in its rhetoric, he said.

Instead he will vote for the Socialist Revolutionary Workers’ party, an offshoot from the national mineworkers’ union — which, in a historical irony, Mr Ramaphosa helped establish as a young lawyer in the days of struggle against apartheid.

Mbekezeli Benjamin has already voted. The 27-year-old lawyer cast his ballot abroad at South Africa’s consulate in Los Angeles on Saturday — Freedom Day, the anniversary of 1994’s first democratic poll.

“It was exciting . . . I didn’t think that it would be,” said Mr Benjamin, who felt a sense of civic duty. He read several party manifestos and was undecided as he entered the booth.

But one thing was clear. “I believe in the power of multi-party democracy.

It’s worth reducing the dominance of the ANC.” He voted for a smaller party outside the big three, none of whose economic plans impressed him. Nor did the case for handing Mr Ramaphosa a large majority to implement reforms make any sense.

Buffett backs Occidental bid for Anadarko with $10bn investment Support comes after US oil group gatecrashed Chevron’s bid with $55bn offer ED CROOKS

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arren Buffett’s Berkshire Hathaway has pledged to invest $10bn in Occidental Petroleum to back its $55bn bid for rival Anadarko Petroleum, in a vote of confidence for the ambitious deal.

Berkshire has said that if the takeover goes through, it will invest $10bn in new Occidental preferred shares that will pay an 8 per cent dividend. In addition, it will have a warrant to buy up to 80m common

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stock, about 11 per cent of the total equity.

Vicki Hollub, Occidental’s chief executive, said in a statement: “We have long believed that Occidental is uniquely positioned to generate compelling value from Anadarko’s highly complementary asset portfolio. We are thrilled to have Berkshire Hathaway’s financial support of this exciting opportunity.”

She added: “We look forward to engaging with Anadarko’s board of directors to deliver this superior transaction to our respective @Businessdayng

shareholders.”

Anadarko is on course to accept the offer from Occidental, which gatecrashed its previously agreed $50bn sale to Chevron.

Anadarko said on Monday that its board had “unanimously determined” that Occidental’s cash-and-stock offer would probably be deemed superior to the Chevron deal.

However, Occidental’s bid has raised concerns about the size of the debt that the company would have to take on.

Wednesday 01 May 2019

BUSINESS DAY

47

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Russian oligarch Alexei Mordashov declares victory on Lenta Severgroup buys 42% of its retail rival, seeing off bid by Magnit MAX SEDDON

R

ussian oligarch Alexei Mordashov’s Severgroup declared victory in his battle to acquire control of hypermarket chain Lenta, after buying a 42 per cent stake in the company and launching an offer to minority shareholders.

Severgroup’s offer comes after it agreed to buy a large stake in Lenta from US private equity group TPG and the European Bank for Reconstruction and Development.

Some minority shareholders in Lenta had urged its board to consider an eleventh-hour nonbinding bid by rival retailer Magnit for 100 per cent of Lenta’s stock at a slightly higher price.

Mr Mordashov, who made his $13bn fortune through his controlling stake in steel producer Severstal, is using Severgroup to diversify his holdings away from commodities.

Analysts have pointed to strong potential synergies between his company Utkonos, Russia’s largest online food retailer, and Lenta’s distribution network and purchasing power.

Mr Mordashov said in a statement that Lenta would remain a public company after the tender offer to minority shareholders at $3.60 per global depositary receipt closes.

“We are convinced that our expertise in technology and online retail will enable us to contribute significantly to unlocking the great potential of the company, which is unique both in terms of its business model and the strength of its professional team,” he added.

The deal had been criticised heavily by minority shareholders, who accused TPG and EBRD of ne-

gotiating in secret with Severgroup and undervaluing the retailer.

In a letter earlier this month, a group of minority investors — including Aberdeen Standard Investments and Prosperity Capital — urged Lenta’s board to consider Magnit’s offer at the slightly higher price of $3.65.

Magnit had been in unofficial discussions for months over a potential deal, but only went public with its proposal after Severgroup had agreed its deal with TPG and EBRD and never made a formal offer for Lenta, said people familiar with the talks.

The news is a further blow to Magnit, which hired longtime Lenta chief executive Jan Dunning in January in a newly created role as president to turn its fortunes round after ceding top spot to rival X5 and a steep fall in its stock price in recent years.

Magnit on Tuesday reported net income fell by 52.5 per cent year-on-year to Rbs3.5bn ($54.1m) in the first quarter of 2019, significantly missing market expectations.

Revenue grew 10.1 per cent to Rbs310bn, boosted by an aggressive store growth programme that led to a 15.2 per cent increase in floor space, but like-for-like sales grew by a weak 0.6 per cent after a 3.5 per cent decline in traffic.

The sluggish growth and a rise in operating expenses saw Magnit’s earnings before interest, debt, tax, and amortisation fall 6.6 per cent year-on-year to Rbs19.1bn.

The company also paid more interest on debt and a higher tax rate, eating heavily into its net profit.

Mr Dunning said the results “reflect the stage of transformation we are in, as we dismantle and rebuild the whole customer value proposition”.

Whitbread leads FTSE 100 fallers over Brexit uncertainty BRYCE ELDER

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hitbread led the FTSE 100 fallers after the Premier Inn owner warned that Brexit uncertainty was having an increasingly severe effect on corporate demand outside London.

Pub operator Greene King slipped after revealing that sales growth had slowed in recent weeks, in spite of favourable weather over Easter.

Glencore led the mining stocks lower after its first-quarter production update showed the effects of bad weather in Australia and problems at its Katanga copper mine in Democratic Republic of Congo. Mixed

Chinese manufacturing sector data weighed elsewhere, with Antofagasta and Anglo American retreating.

Sirius Minerals hit a threeyear low after the developer of a Yorkshire fertiliser mine launched a discounted share placing as part a package to raise $3.8bn of project financing.

Chemicals maker Elementis fell after cautioning that price rises had led it to lose market share.

DS Smith dropped after the packaging maker flagged up volume weakness in export-led markets including Germany.

The update weighed on sector peer Smurfit Kappa, which has an update scheduled for Friday. www.businessday.ng

Bart Chilton spoke out against rampant ‘Ponzimonium’ in financial markets © Bloomberg

Cable operator Altice USA gobbles up Cheddar for $200m Deal gives Altice deeper foothold among young professional audiences MAMTA BADKAR

C

able operator Altice USA on Tuesday said it agreed to buy millennial-focused video streaming news service Cheddar for $200m.

The company behind networks like News 12 Networks and i24NEWS, has been an investor in Cheddar since 2017. The all-cash acquisition extends Altice’s portfolio of news offerings to hyperlocal, national, business and overseas content and helps it tap the young professional market that Cheddar serves.

As part of the deal Cheddar founder and chief executive Jon Steinberg will lead Altice’s news unit, including Cheddar, News 12 and i24NEWS. “Cheddar has demonstrated an innovative approach to live news while building an engaged audience, solid followership and a strong brand,” said Altice USA chief executive officer Dexter Goei. “As one of Cheddar’s early investors, we have enjoyed our partnership with Jon and admire the entrepreneurial spirit, energy and smart disruptive mentality that he brings to the news business.”

Cheddar’s streaming viewership is

most concentrated in ages 25 to 34. Its networks are available in about 40m homes through multichannel video programming distributors (MVPDs) like YouTube, Sling, Hulu Live and DirectTV Now. The company currently broadcasts live news for 19 hours a day through two networks: Cheddar Business and Cheddar News.

The transaction, which is subject to regulatory approval, is expected to close in the next two months LionTree Advisors served as exclusive financial adviser to Cheddar, and Cooley served as legal counsel to Cheddar.

UK pound zips higher with Brexit angst receding Bank of England meeting later this week also in focus ADAM SAMSON

B

ritain’s currency rallied against its main counterparts on Tuesday with concerns over Brexit continuing to ease.

Sterling rose 0.7 per cent against the US dollar to $1.3029 — leaving it on track for the biggest rise in more than a month. It rose 0.6 per cent against the common currency to €1.1632.

Investors in recent weeks have taken a more constructive view on Brexit, particularly after an extension in the date of the UK’s divorce from the EU to the end of October.

“The near-term downside risks

to sterling have declined with the deadline extension, but Brexit uncertainty remains and should keep it range bound over the next six months,” Dean Turner, economist at UBS Wealth Management said.

The fund manager expects the pound to appreciate further to $1.38 over the next 12 months, mostly due to dollar weakness.

Echoing that sentiment, Paul Meggyesi, currencies strategist at JPMorgan, noted that he remained “constructive for the pound” even if factors that yanked it below $1.30 earlier this month from highs above $1.33 in midMarch have “room to extend”.

Beyond Brexit, investors are also keenly awaiting the latest Bank of England policy decision and inflation report, due on Thursday.

Stephen Gallo, analyst at BMO Capital Markets, noted that while policymakers are broadly expected to keep rates unchanged, they may decline to “fully echo the dovish postures adopted by other major central banks in recent months”. He said part of the reasoning for taking a slightly more hawkish approach would be to help keep downward pressure on sterling under control. Typically more hawkish policy is associated with a stronger currency.

Brake specialist Knorr Bremse shares drop on abrupt chief executive exit PATRICK MCGEE

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erman brake specialist Knorr Bremse suffered a 6 per cent share price fall on Tuesday after chief executive Klaus Deller abruptly resigned owing to “different views regarding leadership and co-operation.”

The resignation comes just half a year after the group — founded in 1905 — went public by selling a 30 per cent stake in the company worth nearly €4bn.

The other 70 per cent is still held by Heinz Hermann Thiele, the honorary chairman who purchased a controlling stake in

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the mid-1980s, before becoming sole owner and chief executive.

Mr Deller, CEO since 2015, joined Knorr Bremse as a board member in 2009 and has generally been viewed with favour.

Since the IPO in October, shares have risen from €81.64 to €102.80 — before the 6 per cent drop on Tuesday — fuelling speculation that a personal rift must have occurred between Mr Thiele and Mr Deller.

In a statement to shareholders the supervisory board said it “fully supports the successful strategy” of management, adding that “current business is fully in @Businessdayng

line with expectations.”

The company declined to offer details on the resignation, though a spokesperson acknowledged it was unexpected and that the search for a successor only begins now.

Knorr had 30 manufacturing plants across 100 countries.

The company is a leader in compressed air or “pneumatic” brakes used in commercial vehicles and railway vehicles. It claims a global market share of 50 per cent in braking systems for rail vehicles and 42 per cent in pneumatic braking systems for commercial vehicles.

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Wednesday 01 May 2019

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FT

ANALYSIS

Global economy shrugs off latest rise in oil prices Strong demand and shale growth have changed the way markets react, say economists DELPHINE STRAUSS

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spike in the oil price has preceded every big meltdown in the world economy since the 1970s. The 2011-2014 spell of high prices delayed global recovery from the financial crisis.

So a rise of 45 per cent in benchmark prices within five months would generally be cause for alarm.

But oil’s steady climb since an unexpected soft patch at the end of last year — fuelled by Opec production cuts, conflict in Libya and US sanctions against Venezuela and Iran — has barely troubled the markets: instead, global stocks have rallied as recession fears waned.

Last week, Donald Trump’s threat to block Iran’s remaining exports briefly helped send the price of Brent crude above $75 a barrel for the first time since last October, although it slid back on Friday after the US president claimed he had extracted promises from Saudi Arabia and other producers to increase supplies.

But despite last week’s upheaval, US equities hit highs and currency

ago and barely changed from 40 years ago, he added.

But some analysts say that an oil shock, even if less damaging than in the past, could pose a threat to the fragile global expansion.

Jason Bordoff, a professor at Columbia University who advised the Obama administration on energy, said prices could be higher and more volatile in the longer term.

US shale production would not grow fast enough to absorb new demand indefinitely, he said. Nor could shale companies be relied on to crank up production whenever prices rose.

Although their ability to do this has helped cap prices in recent years, as established oil groups took over from smaller producers they might be less inclined to carry the costs of scaling up and down.

Analysts at Oxford Economics, the consultancy, argue there is a risk of a more immediate, if shortlived, price rise, saying it would take only “one more shock to supply”, such as unrest in Nigeria’s Delta region, to push prices above $100 a barrel this year.

Many economists say the transformation of the oil market since 2010, with falling production costs and rapid growth of US shale, mean future supply shocks will be smaller and more shortlived © FT montage

markets were calm.

There are two main explanations for the apparent lack of concern, say economists. First, some argue, recent price gains reflect an improved outlook for global growth, and so for oil demand, as well as disruptions to supply. If this is the case, oil-consuming economies should be strong enough to cope with higher prices.

“Consumers can take a modest burden in their stride. Labour markets are in good shape on both sides of the Atlantic. Credit conditions remain favourable,” said Kallum Pickering, economist at Berenberg.

Secondly, many energy economists say the transformation of the oil market since 2010, with falling production costs and rapid growth of US shale production, mean future supply shocks will be smaller and more shortlived. “[There] would have to be a very big shock . . . a long and sustained cutback from major producers, to see a [price] spike of the sort we’ve seen in the past,” said Nick Butler, visiting professor at King’s College London.

He argued that cuts by exporters such as Iran and Venezuela could rapidly be replaced by US shale oil, or by Russia or Opec states that have struggled to diversify their economies and are desperate to raise revenue.

As recently as five years ago, taking a large producer such as Venezuela out of the market would have pushed prices above $100, but now the impact was limited, Prof Butler said. If oil prices settled around $70 a barrel, they would in real terms be 50 per cent below their level five years

They estimate this would leave global growth 0.6 per cent lower by the end of 2020 and drive the sharpest increase in global inflation since 2011.

Although most analysts think $100 oil is very unlikely at present, Oxford Economics’ analysis illustrates the effects any price rise could have on the global economy.

Both the overall impact, and the pattern of winners and losers, has changed significantly in the past decade. Oil producers, whose public finances were strained following the 2014 drop in prices, might now be more likely to spend extra budget revenues, cushioning the impact of price swings on global demand.

The eurozone is likely to be less vulnerable. Consumption and production have become less oil intensive, with growth increasingly driven by services, and labour markets are in better shape. The European Central Bank said last September that a stable price of $75 a barrel would have little effect on real incomes or consumption.

The biggest losers would be oilimporting emerging economies. With oil at $100, both Turkey and Argentina would lose close to 1 per cent of GDP, according to Oxford Economics.

The hit to growth in China and India would be similar, it said. An oilinduced slowdown in these countries would be far more damaging now than in the past, since they are more integrated into the global economy than previously.

But the most significant change in the past decade has been in the link between oil prices and US growth. www.businessday.ng

Sudan: protesters plot the next stage of the revolution

After ousting Omar al-Bashir, civilian groups and military leaders are locked in power-sharing talks over the country’s future DAVID PILLING

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n April 6, after months of protests across Sudan, tens of thousands of mostly young people marched through the searing heat of Khartoum towards the military headquarters near the confluence of the Blue Nile and White Nile. Many were professionals — doctors, lawyers, teachers and nurses — who had joined a national uprising determined to end the repressive 30-year regime of Omar al-Bashir.

Among them was Muzan Alneel, a slight 33-year-old mechanical engineer, who had been part of the demonstrations in Khartoum since they started in December, when most of those taking part had been women. She had been arrested in January and imprisoned for six days, but had immediately gone back out on to the streets. While she was in a cell, several protesters in Khartoum had been shot, galvanising more people to join what was rapidly becoming a mass uprising.

“It’s nothing new for this regime to kill people, but they are not used to doing that to the kids from the class they usually get support from,” says Ms Alneel, referring to middle or upper-middle class figures like herself. “There was no other way to have a good life other than to bring down this regime. Every step we took was one step towards that goal.”

On that April morning, something strange happened. Though Ms Alneel’s section of the march was teargassed and beaten back by members of the ruthless National Intelligence and Security Service, messages were flashing up on her phone that other protesters had broken through to the gates of the military headquarters itself. That suggested there were cracks in the military machine that had protected Mr Bashir unflinchingly for 30 years. The struggle had entered a new phase.

That night thousands of demonstrators sat in front of the military compound, waiting anxiously to see how soldiers would respond. At one point, shots crackled through the air, but they were answered by gunfire from lower-ranking soldiers who appeared to have thrown their lot in with the protesters.

Hend Gomaa, a 22-year-old anaesthetist, had taken a bus from her home in South Kordofan, several hours south of the capital, to take part in the sit-in. Over the next several nights, Ms Gomaa and other medical volunteers treated dozens of victims of gunshot wounds, as elements of Mr Bashir’s security forces attempted to

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disperse the crowd under the cover of darkness. “Twelve to 15 people died right here,” says Ms Gomaa, pointing to a tent where they desperately tried to save lives.

For now, at least, the shooting has stopped. On April 11, generals mounted a coup. Lieutenant General Mohamed Hamdan Dagalo, better known as Hemeti, the commander of a paramilitary group called the Rapid Support Forces, said he had received orders from Mr Bashir to clear out the square, no matter what the cost in lives. He refused. He and other generals instead put the president under arrest and established a transitional military council. Declaring themselves “not greedy for power”, they said they would let civilians run the country — when the conditions were right.

Ms Alneel and Ms Gomaa are just two of hundreds of thousands of young people who have astonished Sudan’s older generation by seizing history with both hands. In a country with a median age of just 19 — the same as in sub-Saharan Africa as a whole — Sudan’s young people mounted a sustained uprising, turning what had been rural bread riots into a regime-toppling revolution.

How they did it, and what happens next, could have profound implications not only for Sudan but for nations everywhere, particularly in Africa and the Middle East where millions of talented but frustrated young people have access to information and technology but not to jobs or opportunity. Only a week before the Sudanese coup, in Algeria, big demonstrations persuaded the military to oust Abdelaziz Bouteflika, the 82-year-old president, who had wanted to run for yet another term.

In Sudan, a new generation, tired of a corrupt and economically incompetent regime, was stirred to action not by traditional political parties but by a network known as the Sudanese Professionals Association. In pushing out Mr Bashir through peaceful means, the demonstrators won where countless armed rebellions on the country’s restive periphery had failed.

The association used social media, posters and neighbourhood committees to mount a well co-ordinated campaign of protests leading up to the decisive April sit-in.

“The uprising was really amazing,” says Nabil Adib, a human rights lawyer who has represented many of those imprisoned and tortured over Mr Bashir’s 30-year tyranny. “It took four months and, even though the regime confronted it with violence, the young people remained adamant to bring it down.” @Businessdayng

Spearheaded by middle class youth, Sudan’s uprising — which some are calling the Nile spring — has an open, secular and liberal feel. In the days since Mr Bashir’s fall, a carnival atmosphere has developed at the area in front of the military headquarters as people sporting a dizzying array of looks celebrate Sudan’s ethnic, social and religious diversity. Men and women mix freely in defiance of what had been a strict sharia code imposed by the Bashir regime.

“I don’t think Sudanese people have seen anything like this before. It’s reshaping the whole national psyche,” says Amin Mohamed, a teacher who participated in the protests. “Sudan is going to be a very enlightened society.”

These are heady days for the northeast African country of 40m people, but the way ahead is far from clear.

“Nobody can answer the question, what happens next?” says Osman Mirghani, a prominent journalist who was imprisoned for 37 days during the protests. “Is this a military intervention or a military coup? There’s only one centimetre between the two.”

Referring to popular revolts in 1964 and 1985, in which the military ended up reasserting control, Mr Mirghani asks: “Is this going to take Sudan to a new future of real political reform, or is it just going to repeat what happened in the last two uprisings?” The military council may say it does not seek power, he says, but “they have the weapons; that is their power”.

For now, the council is talking to a broad coalition of signatories to a document known as the Declaration of Freedom and Change, signed, among others, by the Professionals Association.

Some want the military to step aside and hand power to a three-tier civilian structure to run a transitional government of technocrats for four years, until meaningful elections can take place. They argue that the democratic institutions are so broken it will take that time to repair them.

The demonstrators’ only bargaining power is numbers. Nearly three weeks after the overthrow of Mr Bashir, tens of thousands continue to congregate daily in front of the army headquarters. Unless the military council is prepared to shoot them, that gives them leverage.

So far, the military has made concessions. Just 24 hours after the coup, it dismissed the original head of the council, an Islamist closely associated with Mr Bashir. His replacement, Lieutenant General Abdel-Fattah Burhan, is thought to be more moderate and has already accepted the resignation of three further council members with Islamist leanings.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 01 May 2019

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@businessDayNG

@Businessdayng

BUSINESS DAY

OIL

Nambia: ExxonMobil acquires more exploration acreage offshore Namibia Page 50 GAS

Mozambique: Mozambique expected to become a top 10 global LNG supplier Page 51 Market Insight

L-R: James Shindi, CEO, Brevity Anderson; Ibe Kachikwu, minister of state for petroleum/president, Africa Petroleum Producers Organization (APPO) & Folasade Yemi-Esan, permanent secretary, Ministry of Petroleum, during strategic preparatory meeting for Nigeria International Petroleum Summit (NIPS2020) held in ABUJA recently.

Debrief

Nigeria-Saudi energy cooperation: Beyond paparazzi FRANK UZUEGBUNAM

Oil prices fall after successive Page 55 OPEC weekly basket price DAY

PRICE

26/4/19

72.38

25/4/19

74.04

24/4/19

73.43

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73.37

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72.44 Source: OPEC

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ollowing talks between Saudi energy officials and Ibe Kachikwu, Nigeria’s minister of state for petroleum resources, there is a plan to draft a memorandum of understanding on an oil and gas partnership that could lead to the construction of a new refinery and investments in liquefied natural gas.

Kachikwu visited Riyadh recently where he met with his counterpart Khalid al-Falih and also held meetings with Amin Nasser, Saudi Aramco CEO. An early draft of a memorandum of understanding for the two OPEC countries would be ready in the first week of May. “Areas of interest will cover

the existing refinery revamp, building of a brand new refinery, LNG investments and product supply trading in crude and refined products,” Nigeria’s ministry of petroleum resources said in a statement.

The statement added that Khalid Al-Falih, Saudi energy minister, had reiterated the possibility of establishing an independent refinery in Nigeria, considering it the best hub from which to reach other African countries.

But this is not the first time talks about Nigeria-Saudi energy cooperation is being mooted.

As recent as 2016, the issue of energy cooperation between Nigeria and Saudi made headlines at a bilateral meeting in Riyadh when King Salman Bin Abdul-Aziz hosted President Muhammadu Buhari. The mantra resonated in November 2018 when Al-Falih visited Nigeria.

On both occasions, the cooperation did not go beyond media headlines. However, there is a marker this time; Nigeria’s petroleum ministry promised a draft MoU would be ready by first week of May. Beyond that, other timelines were not stated. No figures or volume of investment has been touted.

Saudi Aramco is expanding its downstream operations such as refining and petrochemicals production as part of its drive to become the world’s largest integrated energy firm. Saudi Arabia is on a drive to increase its downstream presence internationally. There is hope that Nigeria would benefit from Saudi Aramco’s recent aggressive oil sector investments.

Aramco recently announced plans to build refineries in India, Pakistan and South Africa.

Indian state-run oil com-

panies and Saudi Aramco are teaming up to build a $44 billion refinery.

In Pakistan’s deepwater port of Gwadar, the plan is for a $10 billion oil refinery while in South Africa it is an oil refinery and a petrochemicals plant as part of $10 billion of investments in the country.

Nigeria has been courting Middle Eastern nations to help develop its refining sector, to bolster local fuel supplies and end imports as the West African country is in urgent need of investment to revamp its ailing refining sector. The country’s four refineries, which have a combined capacity of 445,000 b/d, have operated irregularly mainly due to corruption, sabotage on pipelines carrying crude to the plants and technical problems after years of neglect.

Nigeria imports the bulk of its petrol, despite being Africa’s biggest crude oil producer.

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Wednesday 01 May 2019

BUSINESS DAY

oil

WEST AFRICA

Outlook

Nambia: ExxonMobil acquires more exploration acreage offshore Namibia

Brief

Africa: Tullow Oil cuts output guidance

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xxonMobil has grown its footprint in the deep waters offshore Namibia, adding approximately 28,000 square kilometers of exploration acreage in in the frontier region, the supermajor said in a statement.

ExxonMobil said it signed an agreement with the government of Namibia and the National Petroleum Corporation of Namibia (NAMCOR) for blocks 1710 and 1810, and farm-in agreements with NAMCOR for blocks 1711 and 1811A. The blocks extend from the shoreline to about 215 kilometers offshore Namibia in water depths up to 4,000 meters.

Exploration activities, including acquisition of seismic data and analysis, are slated to begin in 2019, ExxonMobil said.

ExxonMobil will operate blocks 1710 and 1810 and hold a 90 percent interest; NAMCOR will hold a 10 percent interest. ExxonMobil will assign 5 percent of its interest to a local Namibian company.

ExxonMobil will be operator of blocks 1711 and 1811A, and will hold an 85 percent interest. NAMCOR will retain a 15 percent interest.

“These agreements provide ExxonMobil with an opportunity to explore for hydrocarbons using advanced technology in the frontier Namibe basin,” said Mike Cousins, senior vice president of exploration and new ventures at ExxonMobil. “We will employ our significant upstream experience and technological expertise and work in close collabora-

T

tion with NAMCOR in exploring these blocks.”

ExxonMobil already holds a 40 per-

cent interest in the PEL 82 license offshore Namibia, comprising about 11,500 square kilometers.

ullow Oil downgraded its 2019 output guidance to 90,000-98,000 barrels of oil per day (bpd) due to problems at its Ghana fields and sees final go-aheads for its Uganda in the second half while its Kenya project timeline was “ambitious”.

“Ghana’s performance was below expectations due to gas compression constraints on Jubilee during February and a delay in completing the Enyenra-10 production well at the TEN field. Both issues have now been resolved,” Tullow said.

It had previously expected to produce between 93,000 and 101,000 bpd.

“The ~3 percent reduction in 2019 net production guidance provides a headline, but should not concern investors in our view,” Barclays said in a note.

With much focus on Tullow’s threewell drilling programme offshore Guyana, this year is also crunch time for Tullow’s East African projects.

Final investment decisions for its Ugandan project had been planned around mid-year and Kenya by the end of the year, which Tullow called “an ambitious target”.

The shipment of a first cargo of Kenyan oil to test the market, which was originally planned in the first half as well, is expected to sail in the third quarter, Tullow said.

In Uganda, a $208 million payment after selling a stake in its onshore fields to Total in a so-called farm-down deal was delayed last year because the country asked for more tax on the deal than expected.

“These discussions are expected to conclude shortly and will enable completion of the farm-down,” Tullow said.

Algeria: Sonatrach will not extend crude-for-products deal with Vitol

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lgerian state energy company Sonatrach has decided not to extend its crude-for-oil products deal with trading house Vitol that ends this month, sources said.

The move comes as Sonatrach’s 175,000 barrel per day (bpd) Italian oil refinery, which it acquired from US major Exxon Mobil last year, returns from maintenance. The maintenance began on February 21 and is scheduled to last for 45 days.

The refinery will cut OPEC member Algeria’s fuel import bill, giving it more access to petroleum products such as gasoline and gasoil.

The Vitol deal, which started in February 2018 and was due to end in December, was extended until the end of April.

Under the agreement, Vitol takes up

to 2 million barrels of crude per month from Sonatrach and provides refined products to the Algerian firm.

Sonatrach has made a big downstream push in recent months to achieve self-sufficiency as its growing population drives demand for petroleum. The Augusta refinery acquisition was such a move.

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But the company’s future strategy could face changes due to the political upheaval in the country.

Mass protests which forced out longtime president Abdelaziz Bouteflika continue, with calls for the removal of the elite that has governed Algeria for decades.

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Algeria’s interim president sacked Abdelmoumene Ould Kaddour as Sonatrach chief executive, replacing him with its head of production and exploration, Rachid Hachichi.

The move has created uncertainty for foreign investors who had started to return to the oil and gas producer in recent months, and it remains unclear whether Sonatrach will go ahead with a trading joint venture with a foreign partner.

Vitol was one of the four companies that Sonatrach had shortlisted for the project. Swiss trader Gunvor, France’s Total and Italy’s ENI were also in the running. Sonatrach also held talks with Gunvor about buying a stake in the trading house. Algeria’s produces around 1 million barrels per day of crude and around 135 billion cubic metres of gas per year, according to Sonatrach’s figures.

@Businessdayng

Wednesday 01 May 2019

BUSINESS DAY

gas Brief Aramco sells first LNG as oil giant expands into liquid gas market

S

audi Aramco, the world’s biggest oil exporter, dipped a toe into the natural gas business by selling its first cargo of the fuel.

Aramco sold the shipment of liquefied natural gas from Singapore, CEO Amin Nasser said, without giving additional details.

State-run Aramco seeks to become a “major player” in the gas industry and is looking for potential joint ventures and partnerships, Nasser said in Riyadh.

“There is a lot of potential to grow our gas in the kingdom. At the same time, we are looking at international gas.”

The LNG deal is the latest example of Aramco’s effort to expand outside its historical business of pumping and selling crude. The company plans to buy a controlling stake in the Middle East’s largest petrochemicals maker, Saudi Basic Industries, and is investing in refineries in Asia and beyond.

While it does not produce LNG itself, Aramco has been looking at gas assets in Arctic Russia and Africa, Saudi Energy

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ENERGY intelligence

Mozambique: Mozambique expected to become a top 10 global LNG supplier

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ozambique is expected to become one of the world’s top 10 largest LNG producers by the mid-2020s, when over 30 million tpy of LNG comes on stream, on a par with capacity in African leaders Nigeria and Algeria.

The feed gas for new LNG projects will come from the ultra-deepwater Rovuma Basin, where over 125 trillion ft3 of recoverable natural gas resources have been discovered to date.

This consists of 75 trillion ft3 in block Area 1 and 50 trillion ft3 in block Area 4. Participants in Area 1 and 4 are now progressing towards final investment decisions (FID) for the onshore LNG terminals.

“The development break-even gas price of around US$4-5 per thousand ft3 for the onshore LNG projects in Mozambique is competitive compared to current Japan spot LNG prices of US$9.24 per thousand ft3. This is due to the relatively low expected CAPEX per million tpy in comparison to other integrated LNG projects around the world, and the low upstream cost compared to non-integrated LNG projects in the Americas,” Cao Chai, Oil and Gas Analyst at GlobalData, said.

Both external and internal Mozambique-specific challenges have slowed progression of LNG developments in the country. However, positive signs

such as securing additional gas sales and purchase agreements have formed the majority of the activity from Mozambique and Rovuma LNG participants so far in 2019. These contracts are a key part of the projects progression towards the construction phase, as they provide some certainty about future revenues to underpin the massive CAPEX of nearly $40 billion required to bring these facilities online.

Chai concludes: “The advancement

of LNG business in Mozambique will transform the country to a major global LNG supplier. It will also bring direct revenue to Mozambique government and promote the growth of local industries through a domestic gas component of the initial project and follow-on expansions. Furthermore, construction on the LNG megaprojects is expected to last for over a decade providing significant employment and training opportunities for Mozambicans.”

Qatar to start construction program for 100-plus LNG ships

Q Minister Khalid Al-Falih said. In January, it hired an employee from Singapore’s Pavilion Energy Pte to develop its LNG business, focusing on trading and marketing.

Aramco also wants to develop Saudi gas resources and plans to almost double gas production in the kingdom over the next 10 years, Nasser said.

“For the first time ever, we will be exporting gas either by pipeline or as LNG from Saudi Arabia,” he said. “For gas, we will be a major player.”

Gas emits less carbon than oil or coal when burned and is expected to be the fastest-growing fossil fuel, with global demand forecast to rise 43 percent through 2040, compared with 10 percent for oil, according to the International Energy Agency. Saudi Arabia plans also to boost its use of gas at home to replace crude as a fuel for power plants.

atar Petroleum said it has issued an invitation to tender for the construction of more than 100 LNG vessels to help meet its expected output increase to 110 million mt a year by 2024 from 77 million mt/year now.

The tender also includes shipping requirements for the offtake agreement of Ocean LNG, the Qatar Petroleum joint venture with ExxonMobil, from the Golden Pass terminal in the US, which is under construction and will be completed by 2024.

The shipping tender also includes options for replacing Qatar Petroleum’s existing LNG fleet, which include 45 Qflex and Q-Max ships.

“With this significant step, Qatar Petroleum is embarking on another major LNG ship-building campaign expected to initially deliver 60 LNG carriers in support of the planned production expansion, with a potential to exceed 100 new LNG carriers over the next decade,” Saad a-Kaabi, Minister of State for Energy Affairs and Qatar Petroleum CEO said in a statement.

“This important initiative reinforces Qatar Petroleum’s commitment to its global reputation as a safe and reliable LNG producer at all times and under all

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circumstances.”

Qatar plans to tap its offshore North Field, the world’s largest gas field which it shares with Iran, to boost its LNG exports after lifting a 12-year moratorium on the development of the field in 2017.

Earlier this month, Qatar Petroleum invited bids for an engineering, procurement and construction contract for the North Field Expansion project.

The tender package was issued to three EPC consortiums: one compris-

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ing Japan’s Chiyoda Corporation and France’s Technip, another comprising Japan’s JGC Corporation and South Korea’s Hyundai Engineering & Construction, and a third comprising Italy’s Saipem, McDermott Middle East and Taiwan’s CTCI Corporation.

The EPC contract includes building four new LNG mega-trains, which can also produce LPG, a helium plant and supporting infrastructure. The contract is scheduled to be awarded in January 2020.

@Businessdayng

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Wednesday 01 May 2019

BUSINESS DAY

power

WEST AFRICA

ENERGY intelligence

Guinea: Guinea boosts power output to foster bauxite refining

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uinea expects to boost its energy production capacity by nearly four-fold over the next six years as it pushes mining companies to refine their bauxite output locally, Cheick Taliby Sylla, energy minister said.

The West African nation, Africa’s biggest producer of the aluminium ore, is in the midst of a mining boom that has seen bauxite output explode, mainly on

the back of demand from China. It now accounts for more than half of China’s bauxite imports.

Seeking to use the mining sector to fuel economic development, the government is pressuring mining companies to commit to building facilities that will refine bauxite into higher value alumina, which is used in smelters to produce aluminium.

“Mines are, quite simply, development. And the mines cannot develop

without energy,” Sylla said on the sidelines of a mining conference in Guinea’s capital, Conakry.

Guinea currently has power production capacity of just 658 megawatts.

Much of the country has no access to electricity, and even the capital experiences frequent blackouts.

Experts have therefore questioned the feasibility of establishing a powerthirsty refining sector. But Sylla said several projects in the pipeline will significantly boost output in the near future.

“By 2025, we will have around 2,600 megawatts in terms of total production,” he said. “We can dedicate a quantity to (the mining companies). We will guarantee that supply of energy.”

The 450-megawatt Souapiti hydroelectric dam is the first large-scale project expected to enter production. The dam, which is being built by China Water Electric with $1.3 billion in financing from China Exim Bank, will go online next year.

Sylla said 1.3 billion cubic meters of water will be directed into the dam’s reservoir during the country’s rainy season later this year. Around 15,000 people are being displaced by the project.

Tanzania: Tanzania to ramp up energy generation efforts by 2025 Tanzania’s deputy energy minister Subira Mgalu told Parliament that the country aims to have six times its current power generation capacity by 2025 through investment in thermal and renewable energy.

The country boasts reserves of over 57-trillion cubic feet of natural gas, but faces periodic power shortages.

“Implementation of various power generation projects will increase the capacity of our national power grid from 1,602MW presently to 10,000MW by 2025,” Mgalu said.

Last month, the 300MW Miombo Hewani wind project was announced, which once completed will generate enough to power a million people, mainly in the city of Makambako.

In addition, the first scaling phase of 11 new mini-grids are currently being constructed to bring 24/7 electricity supply to a population of more than 80,000 people.

The government awarded a tender in 2018 to a joint venture of Egyptian companies, to build a $3 billion hydroelectric plant at Stiegler’s Gorge that will produce 2,100MW upon completion in three years’ time.

West Africa: AECF launches $20m solar fund for West Africa

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he Africa Enterprise Challenge Fund (AECF) in partnership with United Kingdom Government has launched the Household Solar Round 2 competition worth $20,600,000 (£16m).

The competition seeks to accelerate access to transformative solar home systems to the rural poor households in Ethiopia, Somalia, Ghana, Nigeria, and Senegal.

“The increasing demand for electricity, high cost of power generation and limited supply of electricity to rural areas in sub-Saharan African is a narrative that constantly repeats its self across the continent,” said Christian Rogg, Head of Office, DFID Ethiopia.

“Although the situation persists, initiatives promoting household solar systems through the private sector have started to offer affordable solutions to rural communities for lighting and economic use.”

In Ethiopia, approximately 11 million rural households do not have access to electricity, making the off-grid market attractive for private sector.

“We are committed to working with AECF and DFID to support companies provide access to electricity to our rural populations. Rapid growth and transformational development requires reli-

able energy production, supply and efficiency. Without adequate and reliable supply of energy, no industrialisation, agricultural value additions, job creation, economic and sustainable growth

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are achievable,” Frehiwot Woldehanna, Ethiopia State Minister of Water, Irrigation and Electricity, said.

AECF explained that the REACT

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Household Solar-Round Two funding will provide a mix of interest free loans, repayable grants and technical assistance to the private sector. As a critical component of Africa Clean Energy (ACE) Programme, the competition seeks to increase the supply of household systems to rural markets at affordable costs, facilitated through innovative financing models, operating and distribution models such as PAYGO and micro-financed interventions.

“Renewables provide just 18 percent of Africa’s current power generating capacity, therefore developing off-grid alternatives could create many more opportunities and transform millions of lives. Solar home systems are a simple solution that do not appear in the macro-economic statistics yet they have the ability to transform the lives of millions of school children,” said Daniel Ohonde, CEO, The AECF. Over the past seven years AECF has funded private sector companies that take advantage of market drivers like mobile network and data services, mobile payment systems, growing micro- finance networks and an appreciation of social collateral to accelerate access to solar home systems in rural sub-Saharan Africa.

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Wednesday 01 May 2019

BUSINESS DAY

53

POLICY

WEST AFRICA

ENERGY intelligence

Local Content: A vehicle of hope or an el dorado?

SUNNY OPUTA

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all it resource nationalism or local content. This socioeconomic term is not nascent. It has been as old as human civilization and it is not just akin to the African economic sector. Local content in its simple terms is the value added in local oil industries by creating opportunities and encouraging indigenous oil companies to actively participate in the exploration, production, manufacturing, fabrication, procurement and allied service sectors of the oil business.

Local content if well comprehended is a win-win situation that will promote partnership among national oil companies, local companies and international organization. And it will create good business environment, through corporate social responsibility, harmony and insure maximum profit for all. The main driver of local content is the vital need to cure or ameliorate the effect of “Dutch Disease” in oil rich - nations, and ensure that the people of these resourcerich countries enjoy increase economic benefits from the domestic oil and gas industry.

The modern trend to fuse local content in national oil industries predates the period of the exploration of the North Sea in Europe and United Kingdom’s didactic policy in 1970 meant to assess local content by setting up Offshore Supplies Office to monitor and audit supplies and contracts handled by companies in order to insure that indigenous companies get sizeable share of the contracts. The takeoff of Norway’s offshore oil industry in 1962 ushered in a huge growth. In 1965, the Norwegian Petroleum Law was enacted and in 1972, Article 54 of the Royal Decree of 1972 enshrined the local content law and mandated that government should vigorously pursue the goal of insuring that Norwegian goods and services be given preference in the running of the oil and gas industry, provided they were competitive in terms of price, quality, schedule and service.

Right from the establishment of Petrobras in 1953, and the emergence of Brazil’s offshore oil industry in the 1960s with the discovery of the Guaricema field, Petrobras, the world leader in deep-water drilling has remained the dominant player in the Brazilian oil industry From the very point that Malaysian oil industry began in the 1950s, the objectives of Malaysia’s oil and gas policy have been to maximize local benefits through the development of local capabilities and industrial base to support the growing onshore and offshore oil and gas industry.

Petrobras (Brazili) and Petronas (Malysian) are two successful national oil companies that most national oil companies in Africa tend to model after.

Currently, the issue of empowering local oil industry with local content policy has began to spread in Africa like a wild harmattan fire. In Egypt, Algeria, Libya, Equatorial Guinea, Nigeria, Angola, Gabon and the new frontiers that are hoping to join the league of oil producing nations of Africa such as Ghana, local content is the love that is in the air right now.

The discovery of the Kwanza basin helped to commence production in Angola, followed by the discovery and development of oil fields off the coast of Cabinda in the 1960s. From beginning, the Angolan petroleum sector is dominated by international companies. Sonangol, the national oil company only worked towards establishing partnerships with the international oil companies through Production Sharing Agreements (PSAs) and holding joint venture stakes in few blocks.

Angolanization, the term given to the local content policy of Angola, promotes human capital development with the objective of hiring local people in positions they are qualified in the oil industry and also insuring capacity building of it human capital base through training and education.

Another key part of the policy is the www.businessday.ng

development of a local supply market in Angola which encourages sourcing materials locally or collaborating with local suppliers in the sourcing or procurement of materials in the sector.

Analysts believe that part of the growth experienced in Angolans oil and gas sector is as a result of the success of its angolanization program and the freedom given to the national oil company to operate independently without much government encumbrances.

Nigerian Content, according to the NNPC, the national oil and gas company is “the quantum of composite value added or created in the Nigerian economy through the utilization of Nigerian human and material resources for the provision of goods and services to the petroleum industry within acceptable quality, health, safety and environment standards in order to stimulate the development of indigenous capabilities.”

The government of Nigeria has made huge investment up to $10 billion USD per annum in this sector and working towards achieving 70 percent local content goal by the end of 2010 which many see as not possible due to some internal setbacks and the delay in signing the local content bill which has been passed by the countries National Assembly

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into Law and the prevalent political cogs holding back the takeoff velocity of the Petroleum Industry Bill (PIB) of this frontline producer in Africa and the world’s eleventh highest producer.

To solve the problem of employment and capacity building and ginger progress in the Nigerian Content, the Nigerian National Petroleum Corporation (NNPC) has put in a place a comprehensive Nigerian Content development strategy in the industry.

Considerable developments have been seen in the Front-End Engineering side, contract award and procurement. The fabrication sector is one of the viable arms that have shown big promise through the marvelous accomplishments of companies such as Niger Dock, Dorman Long Engineering and Freezone who have continuously shown through the quality and delivery time of certain complex projects which they achieved that Nigeria’s local companies can sustain the development of the industry.

As the trend in local content continue to permeate all African economies, Equatorial Guinea another effective producer in the Gulf of Guinea and Gabon are s about launching their local content policies.

While the buzz of local content continues to build up, the alleviation of the effects of Dutch Disease” has not been realized as expected in the resource-rich nations. Some countries have claims of increase in GDP and standard of living but when you approach an average citizen he will make a sigh and say: “it is only the few rich that continue to get richer.” It explains that local content policy has not really started to work effectively and the people have not understood how to participate in it to reap the benefits, Dearth of jobs and unemployment is still rife in many African countries with unemployment rate reaching a 22% average.

Local contractors are not well equipped with the level of training, expertise, and technology to carry out certain jobs. Reliance on foreign companies is still high and only those who have been able to break forth and get into partnership with international companies have gained access to the arena.

Problem of attracting loans is another big cog in the wheel. Local banks are either not liquid enough to give loans or are caged with multifaceted wrangling that disabled them from granting good loans. Despite all odds, local content is been visualized by many industry insiders and local players as the potential vehicle that will transform the national economy and maximize benefits of resources. However, there are some levels of pessimisms due to the nature of political volatility and instability in most African nations that the execution of some aspects of local content policies might suffer arm-twisting thereby making it and El-Dorado of a kind.

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Wednesday 01 May 2019

BUSINESS DAY

finance people appointments

WEST AFRICA

ENERGYintelligence

Aiteo announces senior leadership appointments

Brief

Tanzania makes $310m advance payment for dam on heritage site

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anzania made an advance payment of $309.65 million to a joint venture of Egyptian companies for the construction of a hydropower dam on a UNESCO World Heritage site, despite strong opposition to the project from conservationists.

In December, Tanzania signed a deal with two Egyptian companies, Arab Contractors and El Sewedy Electric Co, to build the $3 billion Rufiji hydroelectric project at Stiegler’s gorge inside the Selous Game Reserve.

The Permanent Secretary of

nal resources, mostly through tax revenues.

Covering 50,000 square km, the Selous Game Reserve is one of the largest protected areas in Africa, according to UNESCO. It is known for its elephants, black rhinos and giraffes, among many other species.

The World Wildlife Fund conservation group said in a report in July last year the proposed large-scale hydropower dam “puts protected areas of global importance, as well as the livelihoods of over 200,000 people who depend upon the environment, at risk.”

F

ollowing a review of its operational and investment objectives and in reaction to prevailing business environment, Aiteo has restructured its executive management, naming a number of critical appointments and reassignments.

In confirming the appointments its Chief Executive and Executive Vice Chairman, Benedict Peters, explained that the organisation had undertaken the exercise driven by the necessity to realign its considerable interests across the various sectors within which it currently operates,“to make the investment arms of the various businesses more effective; galvanise and enhance collective productivity to demonstrate visibly profitable outcomes for the ultimate benefit of its considerable stakeholders.”

Peters further observed that “ the uniqueness of the Group demands that an infusion of important impetus is given the necessary momentum by recognising as well as empowering key positions within the Group and realigning its considerable person-capacity to fit operational demands”, he said.

Chike Onyejekwe, the pioneer Managing Director of Aiteo E & P Limited will be retiring from the company. Onyejekwe will be replaced as Managing

Director by Victor Okoronkwo.

Currently Senior Vice President, Commercial & Gas for Aiteo E & P Limited, Okoronkwo brings over 30 years of oil and gas experience to this position. Prior to joining Aiteo, he worked in various leadership capacities with the Shell Group in Nigeria and abroad as General Manager.

Emmanuel Ukegbu the Chief Operating Officer of Aiteo E & P Limited will also be retiring from the company. In related moves, Emmanuel Ogagarue currently General Manager, Assets will become the Director in charge of Asset Development and Engineering.

James Iwoh will become the Director in charge of Production and Operations, from his

current position as General Manager, Operations. Mitchell Uchegbulam the current Chief Financial Officer, becomes Group Head, Planning, Budget and Implementation and will report to the Group Office. Taiye Eyewuoma, presently General Manager Joint Venture & Project Management becomes Acting Chief Financial Officer, Aiteo E & P Limited. Osareme Archibong, current Deputy Chief Financial Officer/ Head Corporate Finance, becomes General Manager, Joint Venture Finance, Aiteo E & P Limited.

Uzoh Anijah–Obi, currently Treasury Manager becomes Deputy Chief Financial Officer, Aiteo E & P Limited. All appointments take immediate effect.

New CEO of Algeria’s Sonatrach pledges to boost output, exports Tanzania’s Finance and Planning Ministry, Doto James, who is also the government’s paymaster general, issued the advance payment to a representative of the Egyptian companies.

“The $309.65 million payment is part of an advance payment equivalent to 15 percent of the total project cost,” Tanzania’s finance ministry said in a statement.

“This project is scheduled to be completed within three years at a cost of more than 6.6 trillion Tanzanian shillings ($2.9 billion).”

The government said it was financing construction of the 2,115-megawatt dam with inter-

Tanzania has rejected the environmental concerns, saying the dam would actually conserve water and sustain wildlife populations at the world heritage site.

An independent study said in January that the dam would likely cost more than double the government’s estimates.

Joerg Hartmann, an independent expert and assessor on the sustainability of hydropower projects, said the dam was likely to cost $7.58 billion once financing and other costs were taken into account, rising to $9.85 billion on account of cost overruns associated with such projects. www.businessday.ng

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lgerian state energy firm Sonatrach will focus on increasing production and export volumes to help develop the OPEC member country’s oil and gas-reliant economy, its newly-appointed head Rachid Hachichi said.

Algeria, a major gas supplier to Europe, has been struggling to boost output amid growing domestic consumption and a lack of foreign investment due to unattractive contract terms.

Hachichi, a former chief of production and exploration at Sonatrach, was recently named as chief executive of the company, replacing Abdelmoumene Ould Kaddour.

Algeria currently produces an estimated 1 million barrels of crude oil per day and 135 cu-

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bic meters of gas annually.

Oil and gas account for 94 percent of total exports and 60 percent of the state budget.

In a bid to improve the business climate, the government has drafted a new energy law offering tax incentives and al@Businessdayng

leviating administrative procedures as part of a bid to cut bureaucracy.

“Sonatrach is the locomotive of the national economy.

One of our objectives is to boost production and exports,” Hachichi said.

Wednesday 01 May 2019

BUSINESS DAY

marketinsight

55

WEST AFRICA

ENERGY intelligence OPEC Flakes

OPEC+ Oil cuts jeopardized

by Iran waiver termination

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Oil prices fall after successive

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il prices fell as the market retreated from its strongest bull run in at least a year amid efforts to resume Russian oil flows that were interrupted by contamination.

The US West Texas Intermediate (WTI) benchmark erased gains earlier in the week following seven weeks of rises, its longest bull run since the first half of 2015. Brent crude was set for a fifth weekly gain, representing its best run for a year.

Crude futures are up about 40 percent this year on markets tightened by an OPEC supply pact, sanctions on Venezuela and Iran as well as unreliable production in Libya.

Brent crude futures were at $73.09 a barrel, down $1.26. WTI crude futures were down $1.16 at $64.05.

The fall followed Brent’s rise above $75 a barrel for the first time this year after Germany, Poland and Slovakia suspended imports of Russian crude via a major pipeline due to contamination.

The move cut off parts of Europe from a major supply route, though Russia is holding talks with Poland, Belarus and Ukraine. It has said it expects to resume supplies of clean oil via the pipeline soon.

Russian oil company Rosneft, however, does not expect tougher sanctions on Iran to result in a global oil deficit, pointing to US

pressure on Saudi Arabia and the United Arab Emirates to make up any shortfall.

“We do not expect further price upside, even if volatility is likely to increase in coming months,” US bank Goldman Sachs said.

Many analysts expect Iran to keep exporting some oil.

“400,000 to 500,000 barrels per day (bpd) of crude and condensate will continue to be exported,” said energy consultancy FGE, down from about 1 million bpd currently.

China, the world’s biggest buyer of Iranian oil, has formally complained to the United States, while Turkey is also lobbying for exemptions. OPEC member Iraq has said it could raise its output.

s the US ends waivers that let countries buy Iranian crude, this threatens to squeeze oil supplies in an already tight market. The decision may also jeopardize the deal that OPEC and allied suppliers including Russia reached to limit output until the end of June to buttress crude and avert a glut.

The producers are to meet next month to assess the market and again in June to decide whether to extend cuts.

Curbing Iran’s production capabilities “is going to make an already tight market even tighter, especially with supply risks in Libya and Venezuela,” Petromatrix Managing Drector Olivier Jakob wrote in a report.

Recent battles in Libya put the country’s oil exports at risk, while Venezuelan exports have slumped amid a political crisis.

The US decision will make it harder for OPEC and its allies to maintain supply discipline.

Russia has already signaled that the cuts may not need to

be extended after they expire in June, and its economy minister, Yevgeny Yelin, sees the nation’s crude and condensate output increasing slightly in 2019, according to its five-year outlook.

The current output-cuts agreement was driven by Saudi Arabia after the US blindsided the kingdom last year by granting waivers, a decision that triggered a sell-off and a slide in crude prices.

Since then, the Saudis and Russia have led the so-called OPEC+ coalition in sharply cutting output. Yet if Saudi Arabia pledges to boost output to a certain level to offset Iranian losses, it will have a hard time persuading others to limit their own production.

Putin says it is unlikely OPEC will quit oil cut deal

‘Iran will not let any country replace its oil in the market’

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ran will not allow any country replace its oil sales in the global market, the Foreign Ministry said, after the United States told importers to halt Iranian purchases from May. Washington has decided not to renew its exemptions from US sanctions against Iran that it

granted last year to buyers of Iranian oil.

A senior US administration official said that President Donald Trump was confident Saudi Arabia and the United Arab Emirates would fill any gap left in the oil market.

“The Islamic Republic of Iran

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will not allow any country to replace Iran in the oil market. The United States and those countries will be responsible for any consequences,” Abbas Mousavi, Iranian Foreign Ministry spokesman said.

Mousavi called US sanctions “illegal, cruel and driven by bullying” and said “We are hopeful that those buyers of Iranian oil who stood against this unilateral move in their comments, also take action.”

China, Iran’s largest crude oil customer, formally complained to the United States over its decision to end waivers on sanctions on Iranian oil imports.

Saudi Energy Minister Khalid al-Falih said that China had “not yet” asked for more oil after the United States decided to end its waivers that had allowed Beijing to keep buying from Tehran.

After the United States reimposed sanctions on Iran’s oil exports in November, it initially allowed the eight biggest buyers of Iranian oil to keep purchasing limited imports for six months until April.

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he United States expects Saudi Arabia and its Gulf allies to boost output in order to offset the cut in Iranian supplies.

But Russian President Vladimir Putin, in Beijing to attend an investment conference, said he was unaware of any Saudi intention to increase production.

Asked about Saudi Arabia’s position on offsetting the Iranian volumes taken off the world market, he told reporters: “I hope this does not happen in the end - but theoretically speaking, we have agreements under OPEC+.”

He was referring to a global output cut plan signed by both OPEC and Russia which is in effect until the end of June.

“We have not received any information from our Saudi partners or anyone else, any OPEC members, indicating @Businessdayng

they are ready to quit the agreements,” Putin said.

He added that he had “no idea how the world energy market is going to react” to the toughening of sanctions against Iran.

Washington has said it was working with top oil exporters Saudi Arabia and the United Arab Emirates to ensure the market was “adequately supplied”. But analysts fear the US move - along with sanctions on Venezuela - will leave the world with insufficient capacity.

Putin said on Saturday he hoped Iranian oil exports would continue despite Washington’s efforts to stop them.

Washington has demanded that buyers of Iranian crude halt purchases by May 1 or face sanctions, a move to choke off Tehran’s oil revenues.

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Wednesday 01 May 2019

BUSINESS DAY

WEST AFRICA

talking points

ENERGY intelligence

What does oil at $100 per barrel indicate for Nigeria and OPEC? DIPO OLADEHINDE

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ising Brent crude the benchmark for Nigeria oil prices are prompting forecasts of a return to $100 a barrel for the first time since 2014, creating both winners and losers for Organization of Petroleum Exporting Countries (OPEC).

Brent crude has risen about 40 per cent this year and is at the highest in six months. While higher prices due to strong demand typically reflect a robust world economy, as there are more numerous reasons to think they will go higher.

Venezuela’s output is in freefall under a combination of its economic and political implosion and the imposition of US sanctions, which could get stricter in the coming weeks.

Iran also faces the prospect of tighter US sanctions from next month, while Libya is gripped again by conflict, with the head of its state oil company warning output will soon be hit.

Add in political protests in Algeria, which so far have not affected energy production but certainly retain the pros-

pect of doing so, and that is four OPEC members oil traders are already watching closely.

Although much depends on how sustainable the increase would be as exporters of oil are expected to enjoy bumper returns, giving a fillip to companies and government coffers while consuming nations would bear the cost at the pump, potentially fanning inflation and hurting demand.

The news of rallying oil prices is even cheerier for OPEC members who have had to bear the brunt of oil production cut in the past in a bid to rally up prices.

But, while countries with higher refining capacity may reap the gains of increased oil prices, same could not be said of Nigeria as the country is heavily dependent on imported petroleum products due to the poor state of the its refineries.

With such level of dependence on imported petroleum products, the gain that ought to have accrued to Nigeria is subsequently ploughed back into the payment of subsidies or what government has recently termed under-recovery.

Who wins from higher oil prices?

Most of the biggest oil-producing nations are emerging economies, which all www.businessday.ng

belong to oil cartel led by Saudi Arabia.

OPEC biggest oil producers leads the way with a net oil production that is almost 21 percent of gross domestic product as of 2016, more than twice that of Russia, which is the next among 15 major emerging markets ranked by Bloomberg Economics. Other winners could include Nigeria and Colombia.

For OPEC members, $100 oil price implies increase in revenues which will help to repair budgets and current account deficits, allowing government to increase spending that will spur investment.

The producers’ group will meet again to discuss whether to continue the supply reductions in the second half.

OPEC pumps about a third of the world’s crude, and the biggest of its 15 members is Saudi Arabia, one of America’s closest friends in the Middle East.

While the group does not target a specific oil price, it adds or removes supplies in the market and therefore can affect the cost of crude.

Since January 2017, the group and allies including Russia have cut production by about 1.2million, helping to lift international prices and prop up weak oil prices.

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Nigeria’s concern Higher oil prices have often meant Nigeria, Africa’s biggest oil producer, can earn more in foreign exchange and fund its budget deficit. This is because oil accounts for 90 percent of Nigeria’s foreign exchange. The most recent exports are led by crude petroleum which represents 76 percent of the total exports of Nigeria, followed by petroleum gas, which accounts for 13.8 percent.

More than any other country, Africa’s biggest oil producing country needs the oil price to rise and in the worst case, remain steady at any price above the $60 benchmark of the 2019 budget. To achieve this, the country needs to avoid disruptions in crude production and also hope that the alliance under OPEC achieves its objective, even though many are yet to comply with the output cut, including Nigeria.

Contrary to a production benchmark of 2.3 million barrels per day (mbpd) used for the 2019 budget estimates by the Federal Government, Nigeria needs to cut production down by 53,000 barrels to arrive at a new quota of 1.685 million bpd down from the reference production figure of 1.797m bpd recorded in January.

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Wednesday 01 May 2019

BUSINESS DAY

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@Businessdayng

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Wednesday 01 May 2019

Wednesay 01 May 2019

BUSINESS DAY

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Live @ The Exchanges Market Statistics as at Tuesday 30 April 2019

Top Gainers/Losers as at Tuesday 30 April 2019 LOSERS

GAINERS Company

Opening

Closing

Change

SEPLAT

N568

N575

7

FO

N32.1

N35.3

3.2

JBERGER

N24.7

N26.95

2.25

MOBIL

N175

N177

2

DANGFLOUR

N17.1

N18.8

1.7

Company

ASI (Points)

Opening

Closing

Change

N1550

N1520

-30

DANGCEM

N186

N180

-6

STANBIC

N45.1

N43.4

-1.7

N15.35

N14

-1.35

VALUE (N billion)

N19

N18.1

-0.9

MARKET CAP (N Trn)

NESTLE

CCNN NASCON

DEALS (Numbers) VOLUME (Numbers)

29,159.74 4,682.00 543,924,121.00 8.199 10.958

SEC says plans underway to align Master Plan with current economic realities Stories by Iheanyi Nwachukwu

T

he Securities and Exchange Commission (SEC) has disclosed plans to align the 10 Year Capital Market Master plan with current economic realities as well as ensure the planned review is concluded in record time.

Acting Director General of the SEC, Mary Uduk stated this during a meeting with stakeholders in the capital market in Abuja, weekend.

Uduk disclosed that this review is intended to align the master-plan with current realities on macroeconomic, political and market development fronts.

On implementation efforts so far, Uduk said over 90 initiatives outlined in the Capital Market Master Plan, 66 initiatives have commenced since 2015 out of which 13 have been successfully completed.

Some of the concluded initiatives include dematerialis ation of shares, recapitalisation of capital market operators, setting up of a National Investment Protection Fund and the establishment of the West African Securities Regulators

Mary Uduk, acting director general, SEC

Association among others.

55 initiatives are at various stages of implementation and it is hoped many of them will be concluded before the end of the year.

Other achievements include e-dividend mandate, Direct Cash Settlement, Roadmap on commodities ecosystem, new listing, financial literacy, law reviews, non interest capital market products among several of the initiative that you have collectively worked on.

Uduk while commending Stakeholders in the capital market for their cooperation and support, also disclosed that the Commission has approved the rules on Green

Bonds, and would in the nearest future introduce the rules on derivatives trading which she said are necessary to move the market forward.

The Acting DG said the implementation of the 10 Year Capital Market Master Plan commenced in earnest under the guidance of the Capital Market Master Plan Implementation Council chaired by Olutola Mobolurin and have made great strides in its implementation efforts.

Uduk said the SEC and market Stakeholders have taken up the initiatives outlined in the Master Plan document in a systematic manner while also painstak-

ingly engaging with the government, its agencies and other critical stakeholders whose support and collaboration is required to achieve the objectives outlined in the Master Plan.

According to her, “All of these would not have been possible without your support, cooperation and collaboration. We are indeed grateful to the different committees through which a lot of the work on these initiatives has been carried out. It would have been impossible without your commitment of time, energy and resources; your drive and focus.

“I want to recognise that the work that has been done

by CAMMIC and indeed the key players in the capital market directly and contribute to the development of not only the Nigerian capital market but the financial system at large.

She said the Commission appreciates the tremendous support and collaboration it has received from market operators and various stakeholders in the capital market adding that the partnership has advanced the collective aspiration to accelerate the growth of the market and contribute to the development of the nation’s economy.

CIS explains strategic initiatives to attract students to Securities Markets

P

oised to grow investor base through encouragement of the youths, the Chartered Institute of Stockbrokers (CIS) has explained some key strategic initiatives designed to attract students of higher institutions to the securities and investment profession in Nigeria.

Besides, the Institute’s Council has urged stockbrokers to deploy their diversified talents to boost its activities for enhanced global competitiveness.

Addressing stockbrokers at the Institute’s 26th Annual General Meeting (AGM) in Lagos at the weekend, the Presi-

dent and. Chairman of the Council, Adedapo Adekoje explained that the Council had taken some strategic decisions to boost Investor Education, especially, among the students in the higher institutions.

According to him, today’s youths are the future investors and should be exposed to the culture of

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savings and investment He noted that activities such as career talks, debate competition, use of promotional videos organising weekend revision classes and provision of study packs to assist them in preparation for examination.

“The Institute implemented some key strategic initiatives to attract

students of Nigerian higher institutions to the securities and investment profession during the year. Career Talks were delivered in several universities including Obafemi Awolowo University, Ile Ife; Augustine University; Covenant University, University of Lagos, Kogi State University, University of Abuja, University of Nigeria, Nsukka and Nasarawa State University, Keffi to sensitize students to opportunities in the profession.

“In addition, a test run of the CIS Inter-Tertiary Institutions Debate Competition was held at Obafemi Awolowo University.

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Global market indicators FTSE 100 Index 7,418.22GBP -22.44-0.30% S&P 500 Index 2,937.51USD -5.52-0.19% Generic 1st ‘DM’ Future 26,511.00USD -37.00-0.14%

Deutsche Boerse AG German Stock Index DAX 12,344.08EUR +16.06+0.13% Nikkei 225 22,258.73JPY -48.85-0.22% Shanghai Stock Exchange Composite Index 3,078.34CNY +15.84+0.52%

Union Bank reports N5.4bn pre-tax profit in Q1’19

U

nion Bank Plc has released its unaudited financial statement for the first-quarter ended March 31, 2019.

The group financial highlights show Profit Before Tax (PBT) unchanged at N5.4billion (N5.4billion in Q1 2018).

Gross Earnings wend down by 5percent to N37.7billion (N39.5billion in Q1 2018); driven by a lower loan book base and declining yields in the current interest rate environment.

Net Interest Income (NII) after impairment was down by 17percent to N12.9billion (N15.5billion in Q1 2018), a result of lower volume of earning assets. Non-Interest Income went up by 39percent to N10.8billion (N7.8billion in Q1 2018); an outcome of ongoing debt recovery efforts, improved fees and commission income and dividends from investments.

Net Operating Income was up 3percent to N23.9billion (N23.3billion in Q1 2018). Operating Expenses went up by 4percent to N18.5billion (N17.9billion in Q1 2018); driven by investments to strengthen our workforce and our treasury and transaction banking platforms. Gross Loans rose by 5percent to N494.9billion (N473.5billion December 2018).

Customer Deposits rose by 1percent to N867.2billion (N857.6billion December 2018); driven predominantly by low cost deposits.

Key Operational Highlights show 42percent increase in active debit cards (versus Q1 2018), highlighting the bank’s focus on customer penetration through digital products and channels.

Commenting on the results, Emeka Emuwa, CEO, Union Bank Plc said: “Our focus in 2019 is to leverage our platform to deliver efficiency and seek @Businessdayng

to maximize value across all areas of the Bank.

In a low yield environment, the Group’s NonInterest Income growth compensated for the slowdown in interest income stemming from the optimization of our loan portfolio in 2018. Consequently, Profit Before Tax (PBT) was maintained at N5.4 billion, consistent with Q1 2018.

“Customer Deposits continue to grow, up 14percent year-on-year (YoY) to N867.2 billion compared to N759.1 billion at the end of Q1 2018, driven by a 3percent increase in our low cost current and savings accounts deposit balances”.

Emuwa further said, “Rebalancing our deposit mix is key as we push to conservatively rebuild our loan book with high quality risk assets. In line with our priorities, we recorded a material improvement of 819percent in loan recoveries with N2.8 billion recovered during the period.

Our asset quality continues to improve, with NonPerforming Loans (NPLs) down to 7.8percent from 8.7percent as at December 2018. We are employing a multi-pronged approach focused on increasing revenue and optimizing cost to ensure we deliver enhanced performance in 2019.”

Speaking on the Q1 2019 numbers Joe Mbulu, Chief Financial Officer, Union Bank Plc said: “The Group’s resilience in a challenged environment is demonstrated in these first quarter numbers.

While Gross Earnings declined by 5percent to N37.7 billion from N39.5 billion in Q1 2018 due to loan book resolutions from the previous year, our Non-Interest Income grew by 39percent from N7.8 billion to N10.8 billion driven by recoveries, credit-related fees and dividends from investments.

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Opinion

CBN & the new banks: Where is Soludo?

Franklin Ngwu

W

ith the possible licensing of 5 more banks by the Central Bank of Nigeria, we will be having about 26 commercial banks when they all start operations. While it can be said that the more the merrier, the key question is if we really need more banks with the present state of our economy and the banks, and just 14 years after the 2005 banking consolidation. According to sources familiar with the licensing, CBN is not only concerned that the sector is shrinking but eager to attract new investment into the sector and ensure that over 50 million unbanked and under-banked Nigerians are financially included and properly served. While the adduced reasons might be perceived as cogent, a critical assessment of the sector, the economy and the purpose of a banking sector to the economy reveals otherwise. It is also important that we remember what necessitated the 2005 banking consolidation and be sure that we are not preparing for the same situation where we had about 89 banks with many mainly involved in activities that can be best described as anti-banking and anti-Nigerian economy.

The principal purpose of banks in an economy is to provide financial intermediation services mainly through col-

lection of deposits from areas of surplus and allocations of credits or loans to areas of need. In addition to other variables, a most common way to examine the extent to which the banks in any economy are achieving expected tasks is through the credit provided by the banking sector to the private sector as a percentage of the GDP. In Nigeria, the average from 1960-2017 is 12.52%. While it is 98.1% in South Africa from 1965-2016, it is 81.2% in UK from 1960-2016 where we got our banking model from. As we are gearing to about 26 commercial banks in addition to 5 merchant banks with only about 36.8 million bank account holders in a country of about 200 million people, South Africa with about 57 million people has mainly 10 local banks and 7 foreign banks with about 22 million bank account holders.

In the UK with a population of about 64 million people, there are about 150 million bank accounts (savings, deposits and current) and about 95% of adults have at least one bank account. With about 64,000 ATM machines with no withdrawal charge in over 98% of them, the financial sector employs about 1million people. Interestingly, there are only five independent British banks- HSBC, Lloyds, RBS, Barclays and Standard Chartered Bank.

From the above, it is clear that effective provision of the required financial intermediation services is not really about high number of banks in an economy. It is about the depth of the economy and financial sector, infrastructure and other critical institutions and factors for robust development of the financial sector. Using all relevant variables to compare Nigeria with other peer countries, we cannot be said to be doing well. These include inflation, financial sector contribution to the GDP, interest rate, depth of the financial mar-

‘

… it seems that what we need now might be more consolidation and regulatory reforms than new banks

ket, net interest margin, return on assets ratio, loan to assets ratio etc.

With a total domestic credit provided by the Nigeria financial sector to the private sector as a percentage of our GDP just at 23.3% in 2018 as compared to South Africa with 180.4%, it is very clear that Nigerian banks are not lending to our private sector. To make matters worse, even the very little they lend is highly concentrated with allegations that about 100 Nigerians and their affiliated companies account for over 60% of all the total credit provided by the banks.

If this is the case which is evidently true with over 80% of our SMEs maintaining that lack of finance remains one of their critical challenges, the question then is if the huge profits declared by banks are from financial intermediation or from anti-banking and exploitative activities.

Using the 2018 annual performance as announced by the banks themselves, only about 10 banks can be said to be doing well in terms of declaring good profits or paying encouraging dividends.

In a bid to survive the intense competitive environment therefore, many banks have devised all kinds of nefarious charges through which they generate significant portions of their non-interest incomes.

A friend’s experience two weeks ago tells it all. On the first day of carrying out a transaction with one of the banks after opening an account with a good deposit, he was asked to re-submit his BVN number for re-confirmation. This he gladly did only to be alerted by his phone that he has been charged N2.50 as BVN enquiry charge. As he made a transfer from his account to another account, he was further charged N210.00 for the small transfer form he used in inputting the transfer details. In addition to these two exploitative charges, he paid another N52 as transfer charge and

Misery, unemployment and population explosion Bongonomics

Bongo Adi

T

he 2018 Hanke’s Annual Misery Index which measures the world’s saddest (and happiest) countries was released at the end of March by Steve Hanke, a professor of applied economics at Johns Hopkins University. Hanke’s misery index is an adaptation of Robert Barro’s modification of the original construction by Art Okun in the 1960s. Hanke’s is the sum of unemployment, inflation and bank lending rates, minus the percentage change in real GDP per capita. Higher readings on the first three elements are “bad” and make people more miserable. These are offset by a “good” (GDP per capita growth), which is subtracted from the sum of the “bads.” A higher Misery Index score reflects a higher level of “misery.”

With the National Bureau of Statistics’ release of its 2018-Q3 labour survey results last Friday, which reports the jobless (unemployment) and near jobless (underemployment) rates at 23.1% and 20% respectively, the misery index has escalated from the 43 that Hanke gave Nigeria to more than 55 (adding

national unemployment rate of 23%, inflation rate of 11%, to average lending rate of 22% and subtracting the change in real GDP per capita of -0.5%).

In Hanke’s Annual Misery Index - 2018, Nigeria was ranked 6th most miserable country in the world with a score of 43 behind Venezuela (no. 1 with a score of 1,746,439), Argentina (no.2 with a score of 105.6), Iran (no.3 with a score of 75.7%), Brazil (no. 4, with a score of 53.6) and Turkey (no. 5 with a score of 53.3). South Africa enters at no.7 with an index score of 42. But if we revise Hanke’s computation with recent data, Nigeria’s misery is at about 55, displacing Brazil at number 4 in the world. Nigeria is presently Africa’s most miserable country according to the Hanke list.

Consumer prices and lending rates appear to be the “major contributory factors” to the high level of misery in the countries higher than Nigerian on the list. Nigeria’s is reported to be chiefly driven by unemployment. Certainly, all the factors in the misery index computation are important for growth. Low unemployment rate is a reflection of a growing economy because output (or GDP) directly depends on the amount of labour used. Ordinarily, if unemployment is high, invariably, output will be low. Low inflation, i.e. low prices, improves welfare since it preserves purchasing power and positively impacts overall growth andlower lending rate is certainly a boost to investment and capital utilization.

However, experience shows that what affects people the most in any economy is whether or not they have a job. Inflation and lending rates may be high, but what appears to have the most damaging impact on the average consumer’s welfare, and therefore her mood, is definitely the job question: no job, no income, no food and we do know that a hungry man is an angry man! The ferocious increase in the rate of violent crimes in Nigeria today and the gradual erosion of social order cannot be far removed from this high level of unemployment.

Note also that the NBS labour survey reports unemployment and underemployment rate but does not consider (neither can it, though) the hidden group of disguised unemployment. Official unemployment statistics reports the number of individuals who are actively looking for jobs during the reference period, but cannot find any as a proportion of the total labour force (population aged 15 to 64). Underemployment rate counts the number of individuals who work less than 40 hours in a week, but work at least 20 hours on average a week and or if they work full time but are engaged in an activity that underutilizes their skills, time and educational qualifications.

The labour statistics does not usually include disguised unemployment, a situation prevalent in developing economies like Nigeria where part of the labour force is either left without work or works in a redundant manner with zero

‘

The ferocious increase in the rate of violent crimes in Nigeria today and the gradual erosion of social order cannot be far removed from this high level of unemployment

his phone credit further debited N8.00 as fees for the debit alert messages.

As the above is the experience with many of our banks, it is difficult to agree that having more banks is what the economy really needs now and that the banks will be different from the existing 21 commercial banks. Given the current state and performance of our banks and as economies of scale and scope are critical factors in a sector like banking, it seems that what we need now might be more consolidation and regulatory reforms than new banks. Of the many reforms needed, a few stand out. First is the need for the development and enthronement of an effective and sustainable strategy for the integration of the informal finance sub-sector with the formal sub-sector. Second is urgency for a deep understanding and utilization of the recommendations of the recently released code for corporate governance by the Financial Reporting Council of Nigeria. Third is the need to review the current cash reserve and liquidity ratios to the see the possibility of reduction to free up some idle cash. Fourth is to explore how the banks can be helped to reduce their increasing non-performing loans and interest rates. Fifth is the necessity to eliminate the opaqueness of our foreign exchange administration either through full liberalization or a more transparent and beneficial system.

In addition to other required reforms, it is believed that the few identified above might better enhance the contribution of the banking sector to the economy than the emerging proliferation of banks and other financial institutions.

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail: fngwu@lbs.edu.ng

or near zero productivity which does not contribute to aggregate output. An economy demonstrates disguised unemployment when productivity is low and too many workers are filling too few jobs.

Supposing that this is measured in the labour statistics, there is no doubt that the jobless rate would increase beyond the reported figures of both NBS and the Hanke’s index, implying that situations could be even worse than reported.

While we are still trying to come to terms with the labour statistics and the Hanke’s index, the UNFP broke the news that Nigeria’s population has hit 201 million this week. Unemployment is 23% while GDP is barely growing at a miserly 2% while population is exploding. The challenge before policy makers is gradually acquiring the tenets of a nightmare. Add to the above scenario the delicate fiscal position where expenditures have outstripped sustainable revenues. The bulk of salaries, overheads and debt service currently borne by the government is greater than independent revenues — a situation which will definitely further deteriorate with the new minimum wage. There is therefore no doubt that the fiscal gap will continue to widen beyond tolerable levels especially with this exploding population bomb. Our next edition will deal with this delicate fiscal position and potential ways out of it.

Dr Adi is a Senior Economics faculty at the Lagos Business School

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