NG Clearing debuts, aims to be Nigeria’s top counterparty clearing house iheanyi nwachukwu
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G Clearing Limited has secured approval in principle from the Securities and Exchange Commission (SEC) to launch clearing and settlement of Exchange traded derivative
products, as Nigeria’s premier Central Counterparty Clearing House (CCP). NG Clearing’s role as a CCP in Nigeria’s financial ecosystem is to ensure safety of the market by managing counterparty credit risk, which in turn, reduces systemic risk in the Nigerian capital
market, by guaranteeing settlement of trades. Speaking about the purpose of NG Clearing Limited, the Board chairman, Oscar Onyema, said: “Our main role is to improve the safety of our financial market by delivering best-inclass post-trade services that
manage counterparty credit risk and reduce systemic risk. “To mitigate these credit risks in an efficient and robust manner, we will interpose ourselves as a guarantor to both parties in a transaction, thus ensuring the successful execution of derivatives and other trades from vari-
ous trade points in Nigeria. We intend to deliver an unparalleled CCP experience for the Nigerian financial market.” The company will optimise deployment of its resources to achieve long-term value creContinues on page 39
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At 60, Nigeria still struggles to justify ‘giant’ status CALEB OJEWALE he year of Africa as it was called, Nigeria was not the only African country that attained
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independence in 1960, but one of 17 countries that secured freedom from erstwhile colonial rulers over the course of that year. Nigeria’s large population
was supposed to help propel it to greater heights, but while economic growth rate in the other countries has been higher than the population growth rate,
the reverse is the case in Nigeria.
See full story/Independence Day report on pages 17 - 23
Happy 60th Independence Day Anniversary to our Dear Readers
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Health experts explain ways to reduce rate of heart disease ANTHONIA OBOKOH
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ealth experts say physical activities along with sustaining health nutrition can reduce the risk of heart diseases. They made the submission at an event to mark this year’s World Heart Day. The day is marked September 29, every year, to raise awareness and mobilise international action against cardiovascular disease (CVD), the leading cause of death globally. “This year particularly is important; at a time when maintaining good heart health is extremely essential, physical activities and nutrition is very important as also all the aspects of prevention of heart disease,” said Kinsley Akinroye, executive director, Nigerian Heart Foundation (NHF). According to Akinroye, this year’s theme, “use heart to fight cardiovascular disease,” is meant to ask individuals, communities, and governments to “use heart” to make better choices for society, loved ones and our-
selves. “The call to action is about using our head, influence and compassion to beat cardiovascular disease, the world’s number one killer. Given the current situation, WHF is also calling for recognition and urgent protection of frontline healthcare providers.” “Today, over 100 countries are joining together to encourage individuals, families, communities and the government to take action to reduce the risk of heart disease, in spite of all our challenges including Covid-19 Pandemic,” he said. According to the 2018 WHO country profiles, NCDs accounted for 29 percent of all deaths in Nigeria of which CVD, predominantly hypertension is responsible for 11 percent of all the NCDs deaths. Most of the deaths occurred prematurely in persons below 70 years. “Nutrition plays a major role in heart health and can impact your risk of heart disease. Worldwide the most important word to fight Covid-19 is boost immune because we have learned
on what we have seen, that COVID affected people particularly from heart disease,” said Dolapo Coker, food scientist and nutritionist and past president Nigerian institute of food science of Technology(NFST). According to Coker, food is the primary health care if you know the proper nutrition. “We are blessed in Nigeria because we have this in abundance.” We need to educate the populace that they should not depend on fast food; we should depend on God-given organic food.” She continued: “Everyone can prevent heart health disease; the basic thing is good nutrition, exercise, reduce salt intake, alcohol, and a healthy lifestyle. The science of food is the science of survival.” R e s e a rc h s u g g e s t s a strong association that people with heart disease are at higher risk with Covid-19. Ismaila Shuaibu, president, NHF pointed out that cardiovascular disease which encompasses hypertension, heart disease, and stroke are the major non-communicable diseases (NCDs).
Bill to move NSIA to first line charge scales second reading at Senate KAMARUDEEN OGUNDELE, Abuja
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bill to move Sovereign Wealth Fund (SWF) and the Nigeria Sovereign Investment Authority (NSIA) to first line charge on the federation account has scaled second reading at the Senate. The bill is tagged, ‘An Act to Amend the Allocation of Revenue (Federation Account) Act Cap A15 Laws of the Federation of Nigeria 2004 and for Other Related Matters, 2020’. Leading the debate during plenary on Wednesday, the sponsor of the bill, Akpan Bassey (PDP Akwa Ibom North-East) recalled that the first reading took place on May 12. He said: “This bill seeks to amend the allocation of revenue (Federation Account, Etc.) Act CAP A 15 LFN 2004 to make the Nigeria Sovereign Investment Authority (NSIA) a first line charge beneficiary of the federation account for saving purposes. “The bill seeks to amend section 1 of the principal Act to provide for additional funding for the Nigeria Sovereign
Investment Authority (NSIA) by including the NSIA as a firstline charge beneficiary of the monthly distributable funds from the federation account.” Akpan said the foundation for the passage of the bill had been made with the proposed amendment to section 162(3) of the 1999 constitution (as amended) to provide for the inclusion of the SWF established under the NSIA (Establishment, Etc). He added that the Senate had also proposed an amendment to sections 30(1) and 47(2) of the NSIA (Establishment, Etc.) Act Cap A 15 Laws of the Federation, 2004 to provide additional funds for the SWF through a statutory allocation of funds from the monthly revenue accruing from the federation account. Akpan said the bill would strengthen the operations and withdrawals from the SWF by the federation to further boost the confidence of the federating units in the operations of the Fund to the benefit of all. He stated that the bill proposed that 20 percent of money due for remittance into the
federation account less the statutory 13 percent of the revenue accruing from natural resources be allocated to the NSIA on monthly basis. “The proposed amendment as contained in this bill is therefore to complete the series of amendments in this regard by developing a constitutional and consistent monthly saving culture for the federation against the rainy day while guarding against constitutional breaches and or conflict of laws. “Mr Senate President and distinguished colleagues, let me strongly emphasise the need for a dedicated saving culture to safeguard the Nigerian economy going forward due to the rapidly changing dynamics and volatility of the global oil market. “Let us learn our lessons now with the outcome of the Covid-19 pandemic because none of us knows tomorrow.” The Senate President, Ahmed Lawan, referred the bill to the committee on transportation for further legislative duties and to report back within two weeks.
Osinbajo, Abayomi seek action to improve environmental health KELECHI EWUZIE
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or Nigerians to continue to enjoy the benefits that healthy living offers and prevent climate change, they need to embrace modern lifestyles in their approach to environmental health. Wife of the Vice President, Dolapo Osinbajo has said. Nigerians’ love and regard for environmental health cannot be achieved by mere words; it needs to be backed up by action because of its many benefits to life. Osinbajo, who stated this while delivering an address at the DAWN Project prizegiving webinar organised in celebration of the World Environmental Health Day on Tuesday, stated that Nigerians cared about nature, especially when used in local cuisines, medicines and for artworks. She said, “the theme is ‘a plea for a green Nigeria: Does anybody care?’ Yes, we care. I believe this question is posed to provoke an answer. But not just an answer: a drive to find a solution, not just a solution, but a plan of action that is powered by those who care.” Osinbajo further noted that green-white-green in the national flag, represented a good and green Nigeria. Yes, we care about
our green, our plants, vegetables, and vegetation, adding this is further reflected in the taste and aroma of cuisine of such amazing variety as diverse as our tribes and tongues. Akin Abayomi, Lagos State commissioner for health speaking at the programme, explained that the THEMES development agenda of the Babajide Sanwo-Olu-led administration and its merger of health and environment was strategic. According to Abayomi, “with great vision and futuristic thinking, we have lumped health and environment together. That personifies the one-health agenda. We link health to the environment. I think that is incredibly futuristic of this government.” The DAWN Project, in the prize-giving portion of the event, noted that it had received 1,648 entries for its poetry competition. In the ‘7 to 14’ age group, Ada Udeh came first; Satomi James, second; and Daniel Eta, third, while in the ‘15 to 18’ age group, Favour Ajileye came first; Baki Adams, second; and Adams Olajumoke, third. Similarly, the winners in the Adult Category were Esere Gibson (first), Ayeba Priye (second) and Chinonye Onukwugha (third). www.businessday.ng
L-R: Mobolaji Fakayode, finance director; Olanrewaju Jaiyeola, managing director, and Yewande Giwa, company secretary, all of Honeywell Flour Mills plc, at the 11th annual general meeting of the company, in Lagos, yesterday.
Federal Government disburses N993m to 24,929 poor households in A/Ibom ANIEFIOK UDONQUAK, Uyo
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he Federal Government says it has disbursed some N993 million to 24,929 vulnerable households in nine local governments of Akwa Ibom State, under its Conditional Cash Transfer programme. Minister of humanitarian affairs, disaster management and social development, Sadiya Umar Farouq disclosed this during the disbursement/flag off of the scheme at the Holy Child Primary School, Nung Udoe Ntak, in Ikono local government area of the state.
Farouq said the select local government areas represented 30 percent of the council areas in the state, adding that each of the beneficiaries will receive between N30,000 and N40,000. She named the benefiting council areas in the state to include Eastern Obolo, Ikono, Mkpat Enin, Nsit Atai, Nsit Ubium, Onna, Oruk Anam, Ukanafun and Uruan. She said the conditional cash transfer programme, a component of the social protection schemes of the President Muhammadu Buhari-led administration, was aimed at taking 100 million Nigerians out of poverty in 10 years.
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“Apart from the war against corruption, President Buhari has prioritised social protection interventions to pull 100 million people out of poverty over the course of 10 years. The minister apologised the delay in the disbursement of monies to beneficiaries, adding that, ‘’the payment cycle could have started in September in 2019, but issues faced with the payment service provider delayed payment has now been resolved’’. One of the beneficiaries, Christiana Umoh expressed gratitude to the FG, saying’’ the money will help me feed @Businessdayng
myself and start business to support my family’’. The state commissioner for women affairs and social welfare, Ini Adiakpan appreciated the federal authorities and urged the beneficiaries to make judicious use of the stipends. Akwa Ibom state keyed into the programme in the middle of 2019 which nine pilot local government areas. The state operating coordinating unit enumerated about 126,000 households with almost 80,000 making the list, and from which 24,929 households are benefitting in the first phase of the disbursement.
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Nigeria: Always been divided, more divided now, will soon be divided?
ik MUO
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oday is October 1, 2020, 60 years after Nigeria became ‘independent’ and 60 years of being potentially great. One should not be sulking on a day like this, when we should be joyously counting our blessings oneby-one and seeing what God has done. Surely, the good Lord was (and is) favourably disposed towards Nigeria as evidenced in all that he did to and for Nigeria (large and diverse population, awesome natural endowments, including large expanse of fertile land). I am convinced that some countries are accusing Him of barefaced partiality. Unfortunately, because of what we have done and what we have failed to do, the blessings to count are few, and are getting fewer by the day. We have allowed ourselves to be burdened (did we actually?) with accidental leaders, with each of them adopting the ‘Rehoboamic model’ (imposing more oppressive burdens than their predecessors1kings,12:1-15:). Sadly, we the people have adopted and continue to adopt a pusillanimous, docile, whatever Oga does is right attitude. Thus, while the leaders have done the wrong things with impunity, we the people have failed to do the right things for ourselves and for the forthcoming generations. We have thus become accomplices! Multiple choice Questions (MCQs) appear easy, because at worst, the student would just choose an option and if there were just 3 options, has a .33 probability of being correct. It is however difficult because at times all the options appear correct and differ only in degrees of correctness. The above MCQ (in the title) was derived from the response by the ‘presidency’ to those who are warning that Nigeria is on the brink (it has been there several times) and that this time, we may not be so lucky. The voices crying in the wilderness about and the unflattering situation of Nigeria and ‘to your tents oh Israel
scenario include’ Bishop Kukah, Archbishop Onayekan, Prof Soyinka and our Chief Letter-writer, Chief Obasanjo. Soyinka and Obasanjo, age-mates and brothers, are strange bedfellows who have probably only agreed on two issues in recent years: That Jonathan was the worst ever President and that PMB was the Messiah for Nigeria (with OBJ publicly tearing his PDP card) and now that PMB was a failed Messiah, and that the country should be saved from him. Obasanjo based his multidimensional warning on insecurity and believed that restructuring is the panacea failing which a breakup is imminent. For this, Garba Shehu said he had descended to the lowly level of Divider-in-Chief’. Soyinka followed up that ‘The nation is divided as never before under President Buhari who went to sleep while communities were consistently ravaged by cattle marauders, and that ‘We are close to extinction as a viable community of people. Bishop Kukah had in January 2020 described the government as a BokoHaram without bombs because it was using different methods to achieve the same goal of Islamic dominance.; a statement the great Lai described as unfortunate, divisive, incendiary and insensitive. Last weekend ( 26/9/20) he further declared that Nigerians are sadder and more frustrated than ever, accusing PMB of “greatest degree of insensitivity in managing the country’s diversity” especially as lopsided appointments are against the spirit of a united Nigeria and that “We have never had it this bad in our history where power is privatised and shared based on religious and ethnic considerations.” Earlier that week (20/9/20), John Cardinal Onaiyekan, the immediate past Catholic Archbishop of Abuja gave his own brief punchy warning that Nigeria’ can break up even before 2023, if we continue to be irresponsible and reckless.’ It was around the same time that Bishop of Anglican Communion, diocese of Kaduna, Timothy Yahaya lamented that life in Nigeria has become nasty, brutish and short, owing to an increasing rate of insecurity across the nation. Rtd Lt Gen Akinrinade who recalls the ‘pervasive belief’ that PMB is an ethnic bigot, an irredeemable religious fundamentalist, with pro-fulanisation agenda, who treats the Fulani armed gangs ‘with deodorant’ and argued that
he has woefully failed in the war against BH and failed to reflect ‘the heterogeneous composition of our country when it comes to appointments to sensitive positions in his government’. As this is going on, MASSOB, the former leading Biafranist group declared that ‘Under President Muhammadu Buhari, the Nigeria state has turned to a Fulani empire where every other major and minor ethnic nationalities are not regarded. Subsequently, Apapo Oodua Koya, (AOKOYA), a coalition of several Itsekiri, Edo and Yoruba groups wrote a love letter to the Sultan as the head of the 7m Fulani in Nigeria, complaining and warning that they have had enough from the 7m Fulani in Nigeria and that Having Yoruba or Igbo Republics is imminent and inevitable. Around this same time, Gen Buratai assumed Executive and Legislative powers, and threatened to impose a state of emergency in the South East, if his men were attacked again. Ohanaeze wondered why he had not issued such warnings in the, where army posts are attacked incessantly by sundry NonState Actors who overrun military bases, kill and maim our soldiers and who gave him the powers to say so. I cannot remember when our pre-Independence Day discussions were inundated with such dreadful and doomfully declarations. But the reaction of the government was most unfortunate. Instead of assuaging feelings and assuring that we shall look into it (which they will never do), they reminded us of the past. Femi Adesina – who has put fire on everything he ever wrote as a journalist – since becoming the SA talk-talk to PMB gave it back to all these people, and indeed to all of us, reminding us that “Nigeria had always been divided right from the inconvenient amalgamation of 1914. …and there is no time in the history of this country that the country was not divided. As at 2015 when President Buhari came, Nigeria was terribly divided; divided along ethnic, religious and political lines; divided along language; divided hopelessly and terribly. So, if they say Nigeria is divided today, it is because Nigeria has always been divided. And all efforts to unite Nigeria and Nigerians never worked. But these warnings about the future of Nigeria did not start today. In 2013, Soyinka had warned that ’if we are to remain as a country, we have to treat one
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Because of what we have done and what we have failed to do, the blessings to count are few, and are getting fewer by the day. We have allowed ourselves to be burdened (did we actually?) with accidental leaders, with each of them adopting the ‘Rehoboamic model’
(To be continued) Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye
NNPC showing creativity, transparency in project conception and delivery
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here is a sense in which the current management of the Nigerian National Petroleum Corporation (NNPC) is unlike previous ones. Since taking over the affairs of the corporation last year, Mallam Mele Kyari, the Group Managing Director and his team have exhibited neither the lethargy nor ineptitude common with public officials. The Kyari team has demonstrated a fertile inventiveness that has repositioned the NNPC as the leader in the oil and gas industry. The Corporation opened yet another chapter of creative solutions to the challenges of product distribution on Friday 18th September, when it undertook a public bid opening for the rehabilitation of its pipelines, depots and/or terminal infrastructures. These include nine pipeline network systems with a total of about 5,120kilometres of pipelines and 23 products depots nationwide. Some of these infrastructures had been yearning for rehabilitation for long, having been constructed more than 40 years ago and suffered massive pipelines vandalism and tampering at several points. Successive governments and past managements of the NNPC
had dragged on despite the obvious problems, and only finding adhoc solutions when under public pressure probably because of the huge resources required to fix the problem. That is why the step being taken to rehabilitate these infrastructures at a time of great financial difficulty for the nation is highly commendable. The ravaging COVID-19 pandemic is not helpful either, further constraining government’s revenue substantially. This is the more reason why taking on such a project at this time is intriguing for its audacity and ingenuity. So, how would the NNPC finance such a project? Where would it raise the huge funds needed to deliver the project without squeezing the industry and further depleting national revenue? This is why it is remarkable that despite the lull in the global economy, the Mele Kyarii led Management has found a way to work around financing the infrastructural revamp. The project, as revealed by the GMD, would be executed through private partnership financing. Private companies would construct, operate and ultimately hand over the facilities to government after a recoup of their investment from tariff earned during the period that they
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run the facilities. It is a form of infrastructure concessioning which enables quicker upgrade of the facility, assures of their integrity and boost their efficiency. Seventy-eight companies took part in the opening bid, which in itself is an indication of confidence in the viability of the project and the integrity of the process. There is a remarkable feeling in the industry that the NNPC would ensure a level playing ground for all bidders so that only the best would win the offer. That is a positive development for the industry and for Nigeria. This would certainly bolster investorconfidence to raise finance for other projects of national importance of this nature without jeopardising the liquidity of government. The process also highlights the corporation’s commitment to the Accountability, Transparency and Performance Excellence (TAPE) principle which has remained the mantra of NNPC since July 8, 2019 when Mallam Kyari assumed office as the 19th GMD. Mallam Kyari himself admitted this much when he declared that the bid offer was conducted in fulfillment of NNPC’s commitment to
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another as equals; we have to accept the same set of protocols. Nobody can say that these protocols do not apply to him/ her; or that he has immunity and can act with impunity to hurt the rest of the nation (Certain Mindsets must change for Nigeria to stay united. Guardian, 1/6/13, p10-12). Emeka Anyaoku had raised the alarm that Nigeria was more divided than before during his 85th Birthday (Guardian, 18/1/18). He blamed it on a defective governance structure that fostered the militancy and separatist tendencies across the country, ‘which promotes intense competition (religious and ethnic) for the control of the centre, which exacerbated the divisive factors in Nigeria’ He had advised Nigeria to learn from Canada, India and Malaysia, which had experience in such matters. Surprisingly, another warning about the possible breakup of Nigeria came from a strange quarter. Our Vice President Professor, Barrister, Pastor Osinbajo has joined the fray by warning that Nigeria will soon break up if the various cracks in the polity are not adequately treated. He was speaking at the independence interdenominational service. The President of the Christian Association of Nigeria, Dr Samson Ayokunle, supported the motion by saying that “For us, all to be on the same page, have a sense of belonging and be happy, the doctrine of equality, that is equal access to employment, governance and education, must be available to all. The principle of inclusivity must be adopted. Nobody or region must be excluded from the scheme of things in Nigeria’. Ohaneze and Afenifere gave a thumb to the VC while the Arewa block condemned the declaration. I am still awaiting the response of Garba Shehu or Femi Adesina Meanwhile, on the MCQ with which we started, I agree with Femi Adesina, (for the first time) that Nigeria has always been divided. That was why some people spoke of Araba; that was why some people described ndi-Igbo as intruders; that was why we had Biafra, that was why some governors adopted Sharia law in a secular state and that was why some people called Nigeria a mere geographical expression and a mistake…:
Adams Aliyu transparency and accountability as an Extractive Industries Transparency Initiative (EITI) partner company, adding that the corporation was only taking a cue from President Muhammadu Buhari’s “directive that all NNPC’s operations must be guided by integrity.” The Director General of the Infrastructure Concession Regulatory Commission (ICRC), one of the agencies represented at the occasion, Engr. Chidi Izuwah, could not hide his admiration for the transparency of the process. He was quoted as saying that the administration of the public bid was not only in line with the ICRC infrastructure drive, it equally demonstrated that things could be done rightly in this part of the world to enable value-addition for Nigerians. Note: The rest of this article continues in the online edition of Business Day @https:// businessday.ng Adams Aliyu wrote from Federal Housing Estate, Kubwa, Abuja
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Pay attention to the science: A response to Martin Ihembe
CHRISTOPHER AKOR
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s I was preparing to write the concluding part of the article on why Parliamentarism can offer Nigeria an escape from bad governance and weak institutions, I was notified that a dear friend and ardent student of political science, Martin Ihembe, has sent in a rejoinder to my article. Luckily, I was copied and I decided to respond to his rejoinder immediately so that readers can have the benefit of reading from both sides at once. I honestly think his rejoinder is based on misconception – and it appears right from the very first paragraph where he stated: “I think the parliamentary versus presidential debate in Nigeria is one that has been repeated ad nauseam without considered reflection.” As a student of political science myself, I am well aware of the parliamentarism vs presidentialism debate and do not wish to prolong it. My interest wasn’t on the structures but on which is best suited for building strong institutions, institutions of restraints and delivering good governance – and that was what I preoccupied myself with in the article. Ihembe preoccupied himself with the parliamentarism vs presidentialism debate throughout but produces no single argument or empirical evidence to show that presidentialism is better at building strong state institutions or
indeed, fostering good governance. As is the usual practice with those arguing for presidentialism, the one and only “go to” example of the success of this system is the United States of America. But they conveniently forget that the circumstances of the foundation of the United States are totally different from virtually every other country in the world. The thirteen colonies that met in Philadelphia were virtually independent states on their own rights and the first government that was established was a confederacy after the “articles of confederation” came into force on March 1, 1781. A guiding principle of the articles was the preservation of the independence and sovereignty of the states and the establishment of “a weak central government”. The United states remained a country under formation since then with other independent states joining the union one after another throughout the 18th and 19th century right up to the 20th century – precisely 1959 when Alaska and Hawaii signed up to make up the present 50 states of the union. But supporters of presidentialism revel in making an exception to the rule. Why have they been finding it extremely difficult to come up with another success case of presidentialism? Even Americans were aware of their unique circumstances and exceptionality that after World War II, they did not attempt to impose their presidential system on occupied West Germany and Japan or on South Korea after the Korean war but encouraged those entities to develop strong parliamentary governments that not only saw to their quick recovery from the ravages of the war but also ensured their speedy development. Of course, the foremost American founding fathers were excellent political philosophers. Most of the arguments in the parliamentarism
vs presidentialism debate are also mostly philosophical and normative. Tired of the cyclical nature of the arguments John Gerring and his associates decided to do a scientific/empirical study using a global data set to test the relationship between a historical measure of parliamentary rule and 14 indicators ranging across three policy areas: political, economic, and human development. The result revealed a strong relationship between parliamentarism and good governance and had clear advantages over presidentialism. To dismiss the result of this study with anecdotal and normative arguments without any empirical data is to show clear disdain for science. There is a reason the discipline is called political science. The science isn’t just honourific. Ihembe would have certainly come across the saying “if it cannot be measured, it cannot be improved.” Some science fanatics would even say “if it cannot be measured, it doesn’t exist”. Well, if Ihembe is not satisfied by the evidence adduced by Gerring and his associates even though no one has yet challenged the validity of their data set or conclusions, I am happy to point him to another empirical study done this time by two economists – Richard McManus and F. Gulcin Ozkan – in 2018 titled: “Who does better for the economy? Presidents versus parliamentary democracies.” They used data from 119 countries across the period 1950 to 2015 and examined an extensive set of macroeconomic data, and the result was clear: “presidential regimes consistently are associated with less favourable outcomes than parliamentary regimes: slower output growth, higher and more volatile inflation and greater income inequality.” Ihembe disagreed with my criticism of the “49 wise men” that drafted the 1979 constitution and concluded instead that “it is by far one of the most ingenious constitution making exercise
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Yes, there is corruption and state capture in South Africa. But in the 21st century alone, two South African presidents have been removed from office not by the parliament but by their party peacefully and seamlessly. Is that possible in a presidential system?
the world has ever seen in modern history” The only evidence he adduced to support that audacious conclusion was the views of some “established scholars.” Well, maybe I should remind him that “established scholars” also supported military dictatorships, autocrats and all sorts of banality around the world. It was also “established scholars” who strongly argued for the establishment of a Diarchy (a government by both the military and civilian politicians) in Nigeria shortly after the civil war, and they basically convinced General Yakubu Gowon to scrap the return to civilian rule. Ihembe also disagreed with the recommendation of the South African model arguing that there is also personalisation of power in South Africa. Yes, there is corruption and state capture in South Africa. But in the 21st century alone, two South African presidents have been removed from office not by the parliament but by their party peacefully and seamlessly. Is that possible in a presidential system? Even the United States has not been able to successfully remove any president from office for corruption or other crimes. I followed Ihembe’s arguments with great interest. But where he totally lost me was in his conclusion: “The solution...is not a switch to parliamentary democracy as Akor submits, but attitudinal change...” This takes us right back to our starting point. Our institutions should not be built for only good men. As James Comey, former FBI director argued recently; “Since the beginning, the United States has built a system with bad and incompetent leaders in mind. Fredrick Douglass made the point clear when he said: “Our government may be in the hands of a bad man...We ought to have our government so shaped that even when in the hands of a bad man we shall be safe.” That is the function of strong institutions.
Re-Parliamentarism can offer Nigeria an escape from bad governance and weak institutions
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n his September 24th piece, Christopher Akor penned down a thought-provoking piece in a fashion that was every inch laced with scholarly dexterity. However, in my opinion, his claims and conclusion were fundamentally problematic. In Akor’s opinion, the governance problem that besets Nigeria is structural in nature. To paraphrase him, the best constitutional design that would offer Nigeria good governance and address the dictatorial tendencies of presidentialism is the Westminster style parliamentary democracy the country practised in the First Republic. As a budding institutionalist who has followed this debate by scholars and public commentators, I think the parliamentary versus presidential debate in Nigeria is one that has been repeated ad nauseam without considered reflection. In scholarly writings, the debate has its origins in the scholarship of one of the harshest critics of presidentialism, Juan Linz, in what he dubbed “the perils of presidentialism”. This generated series of responses from some of the finest political scientists the world has ever seen. Essentially, the Linzian critic of presidentialism was premised on the following maladies: democratic instability, party indiscipline, rigidity of presidential terms, dual legitimacy (executive and legislature) which engenders gridlock in the process of policy formulation, and the proclivity to exploit presidential power(s) for private benefit. Hence, Linz submitted that “the vast majority of the stable democracies in the world today are parliamentary regimes, where executive power is generated by legislative majorities and depends on such majorities for survival.” Drawing on the Linzian view, other scholars who probed further seem to
have formed a virtual consensus that suggests a preference for parliamentary systems over presidential systems. Akor drew insights from this consensus in making his claims and conclusion, having read John Gerring and Strom Thacker’s research extensively. He posits that considering that merits of parliamentarism – high level of policy predictability, good governance, and stronger party system – “conflict state desirous of building strong institutions should naturally opt for parliamentary system that forces all actors to act within the confines of the party.” The problem is, such a conclusion is often blind to the drawbacks of parliamentarism, which of course both the framers of the American Constitution and the 1979 Constitution in Nigeria took into cognisance. In the case of America, a careful reading of the federalist papers – a profound exposition of political science – clearly shows what the framers thought they were doing for 9 months in Philadelphia. Critics of presidentialism hardly pay attention to this. As I respond to Akor’s claims and conclusion, I will also point out what I term “the perils of parliamentarism”. In parliamentary systems, the Chief Executive (the Prime Minister) is the creature of the legislature (not the sovereign) who does not enjoy “plebiscitary legitimacy” as is the case in presidential systems. Consequently, there is hardly disagreement between them to ensure policy formation and outcomes serve wide interests. When they disagree, the legislature just kicks the PM out using a no confidence vote, have another election, and get a new PM who agrees with the legislature. Is that simple! The mechanism of checks and balances
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which limits the exercise of executive power and dominance of an organ of government in presidentialism is literally ineffective in parliamentary systems. For instance, the United Kingdom which is the paragon of parliamentarism has the House of Lords, but it has no substantial powers like the Senate in presidential systems. The House of Lords can just make the Commons pass the Bill a second time and get what they want. On the issue of presidential system’s proclivity to instability, research in comparative politics has shown that parliamentary systems are not immune to democratic breakdowns as Akor and others suggest. In their examination of democratic failures in the 20th century, Matthew Shugart and John Carey argued that “there have been two waves of breakdowns of democracy in this century, one between World War I and World War II and the other in the 1960s. The first wave claimed mostly parliamentary regimes (and no true presidential regimes). The second claimed mostly, but not exclusively, presidential systems.” Nigeria’s first democratic experience falls into the second wave. While Linz argues that parliamentary democracy is more conducive in stabilising democracy and apt for societies with deep cleavages and numerous political parties, his assertion was proved wrong in the case of Nigeria’s First Republic. This consideration preoccupied the minds of the “49 Wise Men” while drafting the 1979 Constitution. Akor berates and dismissed the 1979 Constitution put together by the “49 Wise Men” in what he referred to as a mere attraction by the “structural elegance” of American presidentialism. Well, from his piece, I doubt much if he
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Martin Ihembe
knows the worth of that Constitution. Beyond the “conflict of personality and authority” that led to the collapse of the First Republic, there were other pressing issues the framers of the 1979 Constitution were confronted with. Due to space constraint, I cannot venture into details. But suffice to say that while the Constitution was not a perfect document, it is by far one of the most ingenious Constitution making exercise the world has ever seen in modern history. This view is shared by established scholars such as Donald Horowitz and Larry Diamond. Given the careful and painstaking exercise that produced the 1979 Constitution, it can unarguably be likened to what the framers of the American Constitution did in Philadelphia in 1787. However, Nigerians conveniently dismiss that ingenious effort when countries battling with how best they can manage the challenges occasioned by diversity have sent a delegation to understudy Nigeria’s innovative structural design. Note: The rest of this article continues in the online edition of BusinessDay @https:// businessday.ng Ihembe is a postgraduate student in the Department of Political Sciences, University of Pretoria. He can be reached via martinihembe@gmail.com
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Sales Coaching-the peaks and valleys mentality (2) Leadership Shepherd with Babs
Babs OlugbemI
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t is a surprise to me that you are reading the second part of the article that generated many responses from business leaders a month after the first episode. I was at the valley when Emeke Iweriebor died, it was a valley experience for me because Emeke was among a few of the leaders I had worked with who truly understood and appreciated relationships. After my tribute to Emeke, I could not write the article you are reading because I drifted into a plateau. The plateau in peaks and valleys mentality is a temporary place of rest when the feelings are neither that of the peak nor that of the valley, My plateau was the Edo election, and I wrote two articles on Philip Shaibu, the man I referred to as the deputy man of the year and the ‘Obesere’ of the Edo politics. I besiege the youth of Nigeria to be different just as Shaibu did and make the change we deserved. Now It is the time to revert to my foresales and leadership coaching, I did also mark the second anniversary of this column with a change of name, this column, after two years of inspiring engagements with my readers, has changed from Positive Growth with Babs to Leadership Shepherd with Babs. The core of what you will be reading here is to achieve two principal objectives, the first is to develop the leadership view, capacity, and influence of the readers, the second is my life call, to help individuals and organisations operate at their best productive, innovative and wellbeing state. Yes, wellbeing is also applicable to organisations. As a coach my job is to ensure your employees and other functional experts think and act like the owners of the
business and develop into sustainable, productive assets for your organisation. Recall the story of Johnson, who used the peaks and valleys mentality to change the performance of his branch within 30days to the end of the financial year. Please read the first part of this article published on August 27, 2020, for you to be on the same page with me. How do you apply the peaks and valleys concept to performance optimisation and productivity in your organisation? How can a sales leader navigate his team through a tough time like COVID-19 and deliver on his or her numbers? Let us start from the most dreaded side of the coin- the valleys. You are at the valley when your performance is at the lowest point. When the sales figure is in deficit with your region or branch in negative variances. You are likely to be threatened with sanctions including being replaced. When you are the valley, the first thing to know is the fact that you did not get to the valley by error. It is what you have failed to do or did wrong that accumulated into your present performance. So, take responsibility even if you inherited the valley. For new leaders, it is not an excuse that you have just been appointed. Any change of leadership is expected to come with immediate adaptation, change significantly in process or customer experience and result, including growth in the key performance indicators within the first 60days. I was at the valleys of poor performances at a time. What moved me into the peaks is the mindset I exuded and the knowledge of the phase I was passing through. I was chasing a billion naira within 30days like Johnson. I took responsibility for the performance and openly declared a riot for the next 30days. A riot in my creation is a period where you put in triple efforts in a coordinated way to generate results faster than expected. I stood in front of my team, inspired them, certified, and declared them as riot starters for the remaining days of the year. We identified who was at a similar situation in the past and how they got back to the peaks. I charged them to join me in the race to fight for survival. I
looked into their eyes and expressed my beliefs in their capacity to turn the low statistics around if they push as I pushed. One of the mistakes sales leaders made when the figures are not on their side is to start using abusive languages and threats. You cannot run down your working tools with negative comments and expect them to generate positive energies that deliver results. As a team leader, the knowledge of your team is vital. In my valley situation, I knew one of my team members would likely not deliver or contribute to the result. So, I play to her strengths. She will be in the office attending to the reporting and coordinating requirements to keep the business running. To my other five team members, I charged them and decided to visit five to ten of their customers with them. In my case, I call my staff by their middle names whenever they do something remarkable for the team. I noticed they love that. I switched to the use of their middle names within the 30days, and every day we move out to make sales; I will tell them what to expect. Another big mistake most of the sales leaders do during the valley period is to over monitor their team. It is appropriate for everyone to be counted during a difficult time, but the psychology of selling has it that no salesperson wanted to be treated like a process person. Salespeople want to retain their initiatives always. During my coaching engagement with one of the sales leaders of a bank, I realised he was fond of monitoring and calling his staff’s customers, and yet the performance was not improving. I told him the effects of his action. His team surrendered the result and focused on the process. They stopped thinking about the outcome since he was busy monitoring them. Within two weeks, the performance improved because he demanded results and allowed them the initiatives for execution. At the valley, it is easier to move to the peak if you lead from the front and apply yourself to the demands of the occasion. I remember how Late Stephen Keshi requested Ademola Adeshina to stay at the defence while he overlapped to get the winning goal for the team. At
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Being at the peaks of performance is more dangerous than the valleys. At the peaks, it is easy for complacency to set in. At the valley, you can only go in one direction
Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.
Power tariff: Why we should give the government a chance
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f you picked a random Nigerian with a decent grasp of the economy and asked what major issue they wanted the Nigerian government to fix, most respondents will say “power”. This was also my choice when some fourteen years ago, I was, in the recruitment process of a Finance firm, asked to write an essay on what I would give priority if given the chance to rule Nigeria in one hundred days. While many Nigerians agree that the power sector needs to be fixed to jumpstart our economy, it does appear that most people have not given thought to what it takes to achieve that. This is the only reason why processes to fix the sector have been met with counterproductive reactions from the same people that call government to action on the challenges of the sector. One of such ill-advised reactions is attempt by labour unions and some section of the citizens to force government to reverse the recently introduced measures to put the power sector on the path of recovery. As citizens, I think we need to agree on what we want, because we cannot be asking for results and at the same time truncating the process that leads to the results we desire. As a case in point, Nigerians are quick to point to the United Kingdom as a model of effective transport system, but when what we forget is, these things are not free. UK has a higher personal income tax rate than Nigeria, yet you pay more for basic utilities in the UK than in Nigeria. An efficient system comes with a cost.
Anyone familiar with the power value chain knows that the critical point in the chain that has held back the entire system is the distribution phase, where the power distribution companies have failed to deliver on their remit. This has fed backward on the entire value chain as operators in this phase are unable to meet their financial obligations to the generating companies and the generating companies unable to meet their obligations to their own suppliers, especially gas companies, leading to these companies also struggling to meet their obligations to providers of their funding. A key cause of this far reaching inefficiency at the distribution phase has been identified to be subsidised pricing at that stage. Before this price review, the Nigerian government subsidised electricity price by over 40 percent. With fall in price of crude oil and the attendant serious pressure on government revenues, such subsidy regime is clearly unsustainable. About seven percent of Nigeria’s 2019 budget is said to have been spent on this subsidy. True to the well-known shortfall of subsidy as a form of resource allocation, the rich has benefitted more, with over 60 percent of the subsidy benefitting the richest 10 percent according to World Bank and NERC sources. Market distortion, especially by way of price control, has been proved not only to discourage or stifle investment in certain sectors, but also an inefficient way of allocating resources. A move towards cost-reflective electricity pricing
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Suraj Oyewale
is therefore the way to go. The current service based tariff introduced by the NERC, being a step in that direction, therefore deserves our support. A cost-reflective system removes the inefficiencies associated with pricing in a sector and encourages investment in that sector. As long as the price of electricity is controlled, that sector will continue to perform sub-optimally and the desire to have improved electricity supply will be a mirage. To protect the poorest section of the population, the government is applying this service based tariff structure based on electricity consumption classes, for a start. The class of consumers that receive less than 12 hours of electricity per day will not be impacted by the new structure. I think this is fair enough. To make the new structure work, the electricity regulatory body has also come up with stiff punishment framework for the distribution companies that renege on the service level commitment. From a business angle, subsidy encourages laziness, even racketeering, cost-based pricing drives efficiency. From a government angle, subsidy hardly achieves the intended economic goal as we have seen in this case where the rich benefits more. It is because of these evidence-based pitfalls of subsidy that development and financing institutions like the World Bank make them condition precedents to certain financial support. He electricity regulator has also repeatedly
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the time of performance crisis, what we do in terms of accepting responsibility and inspiring our team will determine how quickly we leave the valleys for the peaks. Being at the peaks of performance is more dangerous than the valleys. At the peaks, it is easy for complacency to set in. At the valley, you can only go in one direction. But at the peaks, it is easy to slip into the plateaus, a place of temporary rest and stop developing new markets, or deepening the existing relationships. It is easy to be carried away by the praises and accolades. I told one of my friends who is enjoying the honours of the peaks to remember that some people were praised yesteryears. As sales leaders or leaders generally, we should not stop the efforts and tenacity of purpose that got us to the peak. At the peak, it is easy to fall into the valley of poor performance. If you stop doing what brought you to the peak or you do not modify your action to reflect the current market reality, you will be back at the valley earlier than expected. In summary, what you do when you are at the peaks of performance will determine how long to stay at the peaks. What you fail to do when at the valleys of poor performance will determine how long it will take you to get out of the valleys. In two scenarios; be it at the peaks or the valleys, the concept of value chain mapping and marketing is a veritable tool to avoid slipping into the valleys and sustaining the peaks for as long as your emotional and mental toughness permits it. There are no permanent high or low periods of performance; it is your mindset that determines how quickly you turn the circumstances into your favour. I expatiate more on the peaks, and valleys sales approach in my book- the value chain banking (a practical guide to winning customers’ business and loyalty). My pen is about to hibernate and will meet you again next week. Until then, be a leadership shepherd to your team and colleagues.
said that the tariff adjustment is only a part of the holistic efforts in removing the bottlenecks to steady power supply in the country, it is not the only measure. More than any government in recent time, the current government has shown a good deal of commitment to tackling the monstrous challenges militating against reliable power supply in the country. The Payment Assurance Guarantee to partly bail out the generating companies, the Presidential Power Initiative aka the Siemens Project, and the current effort at moving towards cost-reflective electricity tariff structure are some of the bold moves in that direction. I am confident that these measures have great potential to fix the power sector challenges and move the sector towards the path of recovery. Power sector is critical to any economy, measures to improve it deserve citizens’ support, not industrial action, especially when the measure adopted does not significantly make the vulnerable section of the population worse off. Nigerians therefore need to support the government on this. Rather than our labour unions threatening to bring down the roof on the government for these initiatives, I think they need to see the big picture. Oyewale, a chartered accountant and public policy analyst, lives in Lagos
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Editorial
Publisher/Editor-in-chief
Frank Aigbogun editor Patrick Atuanya
DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule NEWS EDITOR Osa Victor Obayagbona NEWS EDITOR (Online) Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)
Bashir Ibrahim Hassan
GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan
EDITORIAL ADVISORY BOARD
After six decades, Nigeria failing at things that really matter
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ixty years after independence, Nigeria has not significantly moved the needle on some of the most important metrics to measure social and economic growth. An analysis of some of the key Sustainable Development Goals show that Nigeria’s many untapped potentials may have begun to wither. The Sustainable Development Goals (SDGs), were adopted by all United Nations member States in 2015 as a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030. Eradicating poverty in all its forms is the first of the SDGs and our biggest challenge. Across Nigeria, 95.9 million people live in extreme poverty -- that is, people living below the poverty line of $1.90 per day. This represents 48 percent of the population according to the World Poverty Clock as of 3 March 2020. Successive Nigerian governments have not prioritised ending poverty. There have been some bright spots like Obafemi Awolowo’s development of the south west in the 1960s, Muritala Muhammed’s short-lived reforms, and the forwardlooking policies of President Olusegun Obasanjo’s government like privatisation of the telecoms sector and financial sector reforms. The majority of Nigerian leaders have done little to justify power. Foremost writer, Chinua Achebe blamed Nigeria’s follies on poor leadership and it is true today as it was over 20 years ago when he
Not too old to correct past mistakes
wrote a book on it. The current Buhariled government has ambitions to cut poverty but its poor policies and dated economic outlook have tipped more Nigerians into poverty than any other government in the past 60 years. Though resources are thin considering an out-sized population, poverty and inequality in Nigeria are largely due to misallocation and misappropriation of resources. This fuels extreme hunger in the country. In Borno state, the International Committee of the Red Cross estimates that 300,000 children are expected to suffer from severe acute malnutrition. The world has made progress against several leading causes of death and disease. Life expectancy has increased dramatically; infant and maternal mortality rates have declined and the tide seemed to have turned on HIV and malaria deaths have halved. According to the 2019 World Malaria Report, Nigeria had the highest number of global malaria cases (25 percent) in 2018 and accounted for the highest number of deaths (24 percent). During that period, case numbers have fallen between 292 and 296 per 1,000 of the population at risk between 2015 and 2018. Deaths fell by 21 percent from 0.62 to 0.49 per 1,000 of the population at risk. Nigeria’s poor primary health care system and limited funding for the health sector were obstacles to progress in the past six decades. According to the UN, there are 57 million primary-aged children that are out of school in the world, more than half of them in sub-Saharan Africa. Nigeria accounts for a large number of
these -- over 13 million children are out of school. In northern Nigeria, hordes of school age children are dumped at the feet of an Islamic scholar in a failed Almajiri system long due for reforms. Goal number five seeks to achieve gender equality, ending all discrimination against women and girls. Nigeria has moved beyond the days when girls were told that their place is in the kitchen. More women now bestride corporate offices, have key positions in government including the finance minister and higher numbers of girls now go to school. But gender-based violence especially rape of girls and women is seeing an uptick. Worse still, our laws have failed to keep pace. States in northern Nigeria have refused to domesticate the child rights law and poor parents still pawn off prepubescent girls to old men using religion as a pretext. The sixth SDG focuses on clean water and sanitation, this is important because water scarcity affects more than 40 percent of people and could worsen as temperatures rise. The reality of this is felt in the Lake Chad region which has shrunk by 90 percent since the 1960s, due to climate change, an increase in the population, and unplanned irrigation. Thousands are sickened by poor sanitation. And in Nigeria’s commercial capital, Lagos, slums bask in the shadows of multi storey offices and homes. Another important metric is affordable and clean energy of which Nigeria still underperforms. At independence, Nigeria had fewer than 100MW of power through hydropower. In sixty years, Nigeria has raised generation capacity to 13,000MW, its creaking
grid can move between 5,000 and 6,000MW and consumers can hope for at most 4,000MW. Yet the population has risen from less 50m at independence to over 200m. Billions of naira have been poured into the power sector but the peculiar Nigerian problem of shoddy policymaking, corruption, weak governance systems and an unproductive economy has paralysed the sector. Power sector privatisation in 2013 failed on account of a meddling government, inefficient operators and a weak regulator. Today over 80 million Nigerians still lack access to electricity. On the occasion of Nigeria’s 60th anniversary, our leaders renowned for their glitz and bling-bling should ponder rather over why the country is failing. While the British colonial system may have wreaked havoc on our collective psyche, current efforts at self-immolation by perverse sectionalists, corrupt politicians, and marauders who pretend to herd cattle, will only hasten our demise. The Buhari-led government can snatch victory out of the jaws of defeat, by bequeathing Nigerians a system of conducting free and fair elections, reviewing obsolete provisions in the constitution including powers for various tiers of government. It must manage better dwindling crude oil earnings, and jettison obsolete land laws. It should harness ideas from the private sector on improving the business environment, reform the civil service, cut down on government waste, and attract investments. Perhaps this failing project called Nigeria can still be salvaged.
Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong
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Thursday 01, October 2020
BUSINESS DAY
COMPANIES&MARKETS Insufficient capacity dampens air cargo in August IFEOMA OKEKE
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he International Air Transport Association (IATA) has released data for global air freight markets in August showing that improvement remains slow amid insufficient capacity. Demand moved slightly in a positive direction monthon-month; however, levels remain depressed compared to 2019. Improvement continues at a slower pace than some of the traditional leading indicators would suggest. This is due to the capacity constraint from the loss of available belly cargo space as passenger aircraft remain parked. Global demand, measured in cargo tonne-kilometers (CTKs*), was 12.6 percent below previous-year levels in August (-14 percent for international operations). That is a modest improvement from the 14.4 percent year-on-year drop recorded in July. Seasonally-adjusted demand grew by 1.1 percent month-on-month in August. Global capacity, measured
in available cargo tonne-kilometers (ACTKs), shrank by 29.4 percent in August ( 31.6 percent for international operations) compared to the previous year. This is basically unchanged from the 31.8 percent year-on-year drop in July. Belly capacity for international air cargo was 67 percent below the levels of August 2019 owing to the withdrawal of passenger services amid the COVID-19 pandemic. This was partially offset by a 28.1 percent increase in dedicated freighter capacity. Daily widebody freighter utilization is close to 11 hours per day, the highest levels since these figures have been tracked in 2012. Economic activity continued to recover in August reflected, among other things, in the performance of the Purchasing Managers’ Index (PMI) indicator of economic health in the manufacturing sector: The new export orders component of the manufacturing PMI rose by 5.1 percent year-on-year, its best performance since late 2017. The PMI tracking global
manufacturing output increased month-on-month and remained above the 50mark, indicating growth. Air cargo demand improved by 1.8 percentage points in August compared to July. That’s still down 12.6 percent on previous year levels and well below the 5.1 percent improvement in the manufacturing PMI. Improvement is being stalled by capacity constraints as large parts of the passenger fleet, which normally carries 50 percent of all cargo, remain grounded. “The peak season for air cargo will start in the coming weeks, but with severe capacity constraints shippers may look to alternatives such as ocean and rail to keep the global economy moving,” Alexandre de Juniac, IATA’s Director General and CEO said. August regional performance Asia-Pacific airlines saw demand for international air cargo fall 18.3 percent in August 2020 compared to the same period a year earlier. After a robust initial
recovery in May, month-onmonth growth in seasonallyadjusted demand declined for the second consecutive month. International capacity is particularly constrained in the region, down 35 percent. European carriers reported a decrease in demand of 19.3 percent compared to the previous year. Improvements have been slight but consistent since April’s performance of -33 percent. Demand on most key trade lanes to / from the region remained weak. The large Europe–Asia market was down 18.6 percent yearon-year in August. International capacity decreased 33.5 percent. African airlines saw demand increase by one percent in August. This was the fourth consecutive month in which the region posted the strongest increase in international demand and only an instance of year-on-year growth among all regions in international volumes. Investment flows along the Africa-Asia route continue to drive the regional outcomes.
Oyegbola elected as new president of Association of Professional Bodies JOSEPHINE OKOJIE
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kinloye Olufemi Oyegbola has been elected the new president of the Association of Professional Bodies of Nigeria (APBN). Oyegbola, who was the first deputy president of the association, was elected president during the association’s Annual General Assembly (AGA) which was held recently in Ibadan, Oyo state. The new APBN president, during his inaugural speech, promised to uphold the virtues of the association and also engage in activities that would ensure that the body contributes immensely to the development of the country. Olumuyiwa Ajibola, the immediate past president, appreciated members of APBN for their cooperation in the last two years, while pledging his continuous assistance to the association. Meanwhile, Dame Gladys Olajumoke Simplice, president of the Chartered In-
stitute of Taxation (CITN), stressed the need for APBN to be in strong partnership with the government in order for the country to witness allround development. Simplice, made the admonition while speaking with journalists on the sideline of the 2020 APBN presidential retreat themed ‘Deepening Awareness of APBN Among Stakeholders.’ “Government both state and federal should have APBN as the contact for professionals. If they want to appoint people, be it on professional or political basis, they should go to the APBN to confirm the kind of person that they want,” she said. “If they want a minister for works, for example, they should go to the APBN to look for somebody in that area of endeavour such as engineers in the area of architecture, surveying and so on that can work with government,” Simplice, who doubles as the chairman, planning committee of the event added.
Social Enterprise Thankyou launches bold initiative to help end extreme poverty IFEOMA OKEKE
Some participants at the flag off of the Enugu Youth Empowerment Scheme(eYES) at Universal Hotel Enugu on September 28, 2020.
Samsung targets energy efficiency with technologically advanced 2020 consumer products KELECHI EWUZIE
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outh Korean leading producers of electronic devices, Samsung Electronics Company says it energy-efficient advanced 2020 consumer range of products demonstrates its determination to continuously redefine the living space and entertainment of its customers. Caden Chiyeon Yu, managing director, Samsung Electronics Nigeria, while speaking in Lagos when the company showcased the latest in its revolutionary and innovative QLED and Crystal UHD Television Series,Wind Free Air Conditioners, Side by Side Refrigerators and Drum Washing Machines said this
is in keeping with its resolve to utilise its transformative ideas and technologies to shape the future and inspire the whole world. According to Yu, “QLED uses exceptional and revolutionary technology which offers an unparalleled visual and auditory adventure from the comfort of your living room. QLED series is available in 4K or 8K and from 58” to 98”, and was designed with options to fit any space and budget”. For Crystal UHD Television, Yu said, with cutting-edge Crystal Display, the new Crystal UHD TV will bring high-resolution content to life in a whole new way, delivering a viewing experience like never before in a mainstream UHD TV. Also showcased at the
launch were the new Windfree Air Conditioner, Drum Washing Machines and Side by Side refrigerators. The Windfree Air Conditioner is designed specially with the latest technology to provide coolness in quick time while ensuring that users don’t experience any chills throughout its use. It also has an in-built digital inverter which reduces energy consumption by 73 percent. The newly introduced drum washing machine of 2020 from Samsung is very efficient and is built with eco bubble technology which allows it to provide cleaning of very dirty garments or clothes without the use of water. Furthermore, the new Side by Side Refrigerator was built with Spacemax technology which has enabled Samsung
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to offer more spacious interior without increasing the external dimensions or compromising energy efficiency. Also speaking at the event, Oluwaremilekun AdesolaOgunsan, head, Consumer Electronics, Samsung Nigeria stated that “Samsung understands the economic difficulties currently being experienced in the country and has consistently produced pocket-friendly premium consumer products. We are very consistent in our approach as we understand that our customers like the good things of life and we have provided that without compromising our standards”. “So I can say boldly that there is a Samsung for everybody regardless of your income stream” She added.
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ustralia-based social enterprise Thankyou has announced an invitation to P&G and Unilever - two of the world’s largest and most influential consumer goods companies - to make and distribute Thankyou products globally to help end extreme poverty. To convince these companies to take this bold move, Thankyou is asking people around the world to get involved and show the collective power of the many who believe in this change, through its campaign aptly named “No Small Plan.” Thankyou offers consumer products - personal care and baby product ranges for the sole purpose of funding life-changing projects. Thankyou was created to close the gap between the 736 million people living in extreme poverty around the world and the $63 trillion spent on consumer products each year. After all the costs in running a business to get great consumer products to people are taken care of, every last cent that Thankyou makes goes toward ending extreme poverty. With this model, Thankyou seeks to flip consumerism for good. “With $63 trillion spent on consumer goods each year while 736 million people are stuck in extreme poverty, we believe that business as usual @Businessdayng
is broken,” Daniel Flynn said, who founded Thankyou in 2008 along with Justine Flynn and Jarryd Burns. “But we also believe that we, together with people and a partnership with one of the two biggest companies in the world can change this by funneling the dollars spent on consumer goods into helping end extreme poverty.” Currently, Thankyou only sells its products in two of the world’s smallest countries - Australia and New Zealand but with COVID-19 increasing both global poverty numbers and demand for personal care products such as hand sanitizer, the company feels that now is the time to expand, and quickly. If either P&G or Unilever choose to accept Thankyou’s invitation, together they could change the course of history and route millions of consumer dollars to ending extreme poverty. Thankyou has set virtual meetings with both P&G and Unilever to take place at the end of the campaign. On November 5, Thankyou will announce which company is “in” on one of the largest digital billboards in the world, in New York City’s Times Square. Thankyou’s launch campaign is titled “No Small Plan” because changing the course of history by redirecting millions of consumer dollars to go toward ending extreme poverty in this lifetime is, indeed, no small plan.
Thursday 01 October 2020
BUSINESS DAY
15
Investor Helping you to build wealth & make wise decisions
Market capitalisation
NSE Premium Index
The NSE-Main Board
N13.365 trillion
2,222.57
N13.755trillion
2,303.42
NSE All Share Index
Week open (18- 09–20)
25,572.57
Week close (25- 09–20)
26,319.34
Percentage change (WoW) Percentage change (YTD)
2.92 -1.95
3.64 -1.73
NSE ASeM Index
NSE 30 Index
NSE Banking Index
NSE Insurance Index NSE Consumer Goods Index
1,085.47
728.51
134.13
1,110.18
1,085.51 1,123.50
292.01
728.51
135.58
2.28 -1.73
0.00 -0.88
3.50 -4.61
1,123.50
NSE Oil/Gas Index
NSE Lotus II
432.78
189.79
1,852.54
1,133.79
989.52
458.69
191.99
1,888.10
1,161.46
1,035.79
3.59
1.08
5.99
-4.61
7.76
-22.63
4.68 -26.87
1.92 2.91
NSE Ind. Goods Index
2.44 7.98
NSE Pension Index
4.68 -1.73
GTBank: Strong fundamentals drive BUY rating for the stock Iheanyi Nwachukwu
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Segun Agbaje, MD/CEO, GTBank
of this result, Return on Equity (ROAE) and Return on Assets (ROAA) stood at 26.8percent and 4.6percent respectively. Maintains dividend payout amid mixed earnings Before now, stock investors are advised to take position in high quality dividend paying stocks like GTBank. For the H1’20 period under review, directors of the bank proposed the payment of an interim dividend in the sum of 30 kobo per ordinary share on the issued capital of 29,431,179,224 ordinary shares of 50 kobo each. The interim dividend valued at N8.83billion is payable to shareholders on the register of shareholding at the closure date. The bank closed the half year ended June 2020 with total assets of N4.511trillion and Shareholders’ Funds of N720.9billion. Management comments on H1 results “These are undoubtedly tough and trying times for people, bu s i n e s s e s a n d e c o n o m i e s the world over. Our financial performance in the first half of the year reflects the quality of our past decisions which have broadened our earnings and strategically positioned us to thrive, thus far, through the current global health and economic crises”, said Segun Agbaje, Chief Executive Officer of Guaranty Trust Bank Plc. “Underpinning this financial www.businessday.ng
performance is our commitment to being there for our customers and the communities we serve, and over the past six months we have lent the full weight of our franchise to safeguarding lives and livelihoods of our staff and customers by leading from the front in the fight to curtail the Covid-19 outbreak and offering
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We expect GUARANTY to sustain its solid net interest margin (NIM) and cost of funds (COF) positioning due its huge and growing retail customer deposit base
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uaranty Trust Bank Plc (GTBank) is an attractive stock that will continue to reappear in the basket of many investment managers who are constantly seeking higher returns. Despite the impact of Covid-19 lockdown on most listed companies’ scorecards, GTBank still gets BUY rating from equity research analysts who consider it highly undervalued, “but with strong fundamentals”. Recently, GTBank released its audited financial results for the half year (H1) ended June 30, 2020 to the Nigerian and London Stock Exchanges. The results still reflects GTBank’s leading position as one of the best managed financial institutions in Africa. The H1’20 scorecard S nap s h o t o f t h e g rou p’s operating results for the H1’20 period shows gross earnings i n c re a s e d by 1 . 4 7 p e rc e n t to N225.138billion as against N221.869billion in H1’19. The bank’s loan book grew by 8.1percent from N1.502trillion recorded as at December 2019 to N1.624trillion in June 2020 and customer deposits increased by 18.5percent to N3.001trillion from N2.533trillion in December 2019. Profit before tax (PBT) closed at N109.7billion, representing a decrease of 5.2percent over N115.8billion recorded in the corresponding period of 2019. GTBank’s profit for the H1’20 period stood at N94.271billion, d ow n by 4 . 9 p e rc e nt f ro m N99.133billion recorded in H1’19. In terms of asset quality, nonperforming loan (NPL) ratio and Cost of Risk (CoR) closed at 6.8percent and 0.4percent in June 2020 from 6.5percent and 0.3percent in December 2019 respectively. Overall, asset quality remains stable with adequate coverage of 118.1percent, while Capital remains strong with capital adequacy ratio (CAR) of 22.9percent. On the backdrop of this result, Return on Equity (ROAE) and Return on Assets (ROAA) stood at 26.8percent and 4.6percent respectively. Overall, asset quality remains stable with adequate coverage of 118.1percent, while Capital remains strong with CAR of 22.9percent. On the backdrop
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grace periods on loans to our small business customers,” Agbaje said. “Going forward, our focus is not just to survive this pandemic, but to thrive beyond it. That is why we are going ahead with our plans to reimagine how we create value for all our stakeholders. We know that making financial services work for customers goes beyond banking, and in line with our long-term strategy, we will seek to create and drive innovative financial solutions that go beyond banking,” he further stated. Restructuring into a Holding Company Ahead of the completion of its CEO’s regulatory 10-year term, GTBank has gone far into its arrangement to have a Holding Company (HoldCo) structure by first-quarter (Q1) of 2021. GTBank is working to secure all regulatory approvals from the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC) and in other regions to achieve the HoldCo structure. Operationally, GTBank will split it into three when the HoldCo structure is achieved. This will lead to having Guaranty Trust Bank Nigeria; Guaranty Trust Bank East Africa, almost operating as a region and Guaranty Trust Bank West Africa operating as a region. The HoldCo will have other business units like Asset Management, a Pension Fund Ad m i n i st rato r ( P FA ) a n d a payment company. Hopefully this week, GTBank would put in its application for final approval for the payment company, according to Agbaje. “In terms of the work we are doing on it, the operational model for the HoldCo is set. You will have the centre, which is the controlling or holding company and you have a couple of business units. Operationally, what you would see is that in terms of HoldCo, we are going to do a one for one exchange, which means that the shares of GTBank would move up to the HoldCo”, the Managing Director had said. Research analysts’ comments Ve t i v a e q u i t y r e s e a r c h analysts in their September 4 note maintained BUY rating for GTBank with set Target Price (TP) of N41.79. “It was generally expected that second-quarter (Q2) performance would be affected by the pandemicinduced lockdown. GUARANTY’s Q2 performance was a mixed @Businessdayng
bag, with the bank recording flat Interest Income quarteron-quarter (q/q) whilst Interest Expense grew 5percent q/q. “Meanwhile, provisions grew in excess of 300percent q/q to N5.5 billion, eclipsing the whole of 2019 provisions (N4.9 billion) in a single quarter. Looking forward and based on previous years’ pattern, we expect provision growth to moderate in third-quarter (Q3) before another uptick in the final quarter”, Vetiva research analysts stated. Also, research analysts at Lagos-based United Capital said, “The future looks interesting for the GTBank following its recent guidance to restructure into a HoldCo”. “In terms of market valuation, Price-to-earnings (PE) and priceto-book (PB) ratios came in at 4.1x and 1.0x, which is well below 3year historical averages of 5.8x and 1.7x, presenting an attractive entry point at current price ahead of FY-2020 earnings and dividend declaration. “We expect the Bank to maintain a dividend per share (DPS) of N2.5/share. Our target price (TP) revision to N31.9 from the previous N41.7 reflects increased country risk premium due to the currency market concerns and the coronavirus pandemic. Compare to current price of N24.3 this continues to portent a 31.3percent upside,” United Capital research analysts further said in their September 9 note. “We retain our BUY rating o n G UA R A N T Y at a t a r g e t price of N31.9/share. This is on the basis of the historical operational efficiency, balance sheet optimisation, sound risk management strategy, robust p ro f i t a b i l i t y a n d d i v i d e n d consistent. “We expect GUARANTY to sustain its solid net interest margin (NIM) and cost of funds (COF) positioning due its huge and growing retail customer deposit base”, United Capital said. Shares trading information At N 2 7 th e sto ck clo s e d o n Mo n d ay S e p t e m b e r 2 8 , GTBank’s market cap is in excess of N794.64billion on shares outstanding of 29,431,179,224 units. The stock had reached a 52-week high of N34.40kobo and a corresponding period low of N16.70. This year, the stock has yielded negative return of -9.1percent year-to-date (ytd).
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Thursday 01 October 2020
BUSINESS DAY
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Thursday 01 October 2020
BUSINESS DAY
At 60, Nigeria still struggles to justify ‘giant’ status T CALEB OJEWALE
he year of Africa as it was called, Nigeria was not the only African country that attained independence in 1960, but one of 17 countries that secured freedom from erstwhile colonial rulers over the course of that year. The other African countries that got independence in 1960 were Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Congo, Democratic Republic of Congo, Republic of the Congo, Cote d’Ivoire, Gabon, Madagascar, Mali, Mauritania, Niger, Senegal, Somalia, and Togo. Outside Africa, one other country, Cyprus, also got its independence in 1960. Nigeria’s large population was supposed to help propel it to greater heights, but while economic growth rate in the other countries has been higher than the population growth rate, the reverse is the case in Nigeria. From recording an annual GDP growth rate of 25 percent in 1970, a decade after independence, Nigeria’s economy as at 2019, only grew at 2.2 percent, and by the end of 2020 is predicted to relapse into its second recession within a five-year period. The pomp and pageantry that accompanied Nigeria’s independence celebration was for many at the time, in commemoration of the country’s potentials that were assumedly under-utilised during colonial rule. At 910,770 square kilometres out of which Agricultural land is 610,304 square
kilometres, representing 67 percent of the total land mass, Nigeria’s potentials spanned from agriculture, the economic mainstay at the time, to human resources due to population, and other untapped natural resources. While Nigeria’s land area places it 6th after Democratic Republic of Congo, Niger, Chad, Mali, and Mauritania, it has more agricultural land than any of the other countries. Today, with barely half of its agricultural land put to use, Nigeria remains largely unable to ensure food security, having 86.4 million people facing moderate or severe food insecurity according to this year’s state of Food Security and Nutrition in the world. Considering Nigeria’s size in all ramifications, BusinessDay analysis of several economic indices between 1960 and 2019, through data mined from archives of the World Bank show the country has not grown commensurate with its assumed potentials since 1960, particularly when compared with the other countries that embarked on their nationhood journeys around the same time. Data comparisons are done between 1960 and the most recent year with available data, either 2018 or 2019. Where data was unavailable for 1960, it is picked from 1970, a decade after. At independence in 1960, Life Expectancy at birth in Nigeria was 36 years, a figure that ranked it 12th among 17 other African countries that got independence the same year. 60 years later, Life expectancy in Nigeria has increased to 54 years, but the country now ranks
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15th, ahead of only Chad and Central African Republic. Senegal with 67 years now tops in Life Expectancy at Birth, followed by Madagascar and Gabon with 66 years. Nigeria in 1960 had a population of 45 million people, the highest not just among the ‘class of 1960’ but across the continent. The population has now ballooned to 200 million as at 2019. As at 2019, the country had a population growth rate of 2.56 percent, whereas the economy is growing at 2.2 percent. With the exception of The Republic of Congo with a contracted economy, Nigeria is the only one among the 17 countries, whose population is growing faster than its economy. At independence, Nigeria’s GDP of $4.1 billion put it ahead of others, growing over the decades to remain at the top of the list with a GDP of $448 billion by 2019, which may not be surprising considering the country’s population over time, and exploration of other sectors beyond agriculture, notably crude oil. As 1960 was the base year, there was no data available to show the GDP growth, so we start from 1970, a decade after independence and Nigeria was blazing the trail with an annual GDP growth rate of 25 percent, followed a distant second by Mauritania with a growth rate of 11.98 percent and Cote D’Ivoire with 10.37 percent. By 2019, Nigeria’s annual GDP growth rate had slowed to 2.2 percent, placing it in 16th position at the far bottom of the table, only ahead of The Republic of Congo.
There was no data for Somalia. Among the ‘class of 1960’, The Republic of Benin as at 2019 now leads in annual GDP growth rate with 6.86 percent, followed by Cote D’Ivoire and Mauritania, with 6.85 percent and 5.93 percent respectively. These last two countries were the same that followed Nigeria in 1960, except they have swapped positions on the table. Among the 17 countries, Nigeria has the highest inflation rate with 11.39 percent in 2019, while Burkina Faso has the lowest inflation rate, with -3.23 percent in 2019. Interestingly, both Nigeria and Burkina Faso are the only countries that had data for 1960 available, and while Burkina Faso’s inflation has declined from 7.78 percent in 1960 (to its current state),
Nigeria had a history of an economy driven by its agricultural output and in 1970, food exports as a percentage of merchandise exports accounted for 31.34 percent but by 2018 had crashed to 1.95 percent
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Nigeria has seen inflation increase from 5.44 percent in 1960 to 11.39 percent in 2019, and predicted to increase further in 2020. Nigeria had a history of an economy driven by its agricultural output and in 1970, food exports as a percentage of merchandise exports accounted for 31.34 percent but by 2018 had crashed to 1.95 percent. In terms of Foreign Direct Investment, net inflows as percentage of GDP, in 1970, a decade after independence and available data, Nigeria ranked 4th with 1.63 percent. By 2018, Nigeria had dropped to 15th place, with FDI inflows now 0.5 percent of GDP, only ahead of Togo with a negative growth of 3.3 percent, and Somalia with no available data. In dollar value, The Republic of Congo was 1st with $4.3 billion, while Nigeria followed with $1.9 billion, Democratic Republic of Congo (DRC) with $1.2 billion, Senegal $847 million, and Gabon with $845 million. Yet, Nigeria’s GDP is more than all the other countries combined, even in excess of $150 billion. In terms of Net trade in goods and services (BoP, current US$), Nigeria has the largest trade deficit and sits at the bottom of the table with -$5.59 billion as at 2018. However, it should be noted that with the exception of Cote D’ivoire, all the other countries have trade deficits while data was unavailable for CAR, Chad, Congo, Gabon and Somalia. In Ease of Doing Business score, Nigeria ranks 4th on the list, with a score of 56.87, coming after Senegal, Cote @Businessdayng
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D’Ivoire and Togo. Following Nigeria in 5th position is Niger Republic with a score of 56.75. Nigeria has not fallen back in all indicators over the years, either making measured growth in some instances. In 1960, Senegal had the highest GDP per capita with $312, followed by Gabon, DRC and Cote D’Ivoire while Nigeria with $92 trailed it in 11th position (excluding Mali and Mauritania with no data). By 2019, Gabon had the highest GDP per capita with $7,667, followed by Cote D’Ivoire with $2,286 and Nigeria in 3rd position with $2,229. Senegal had dropped to 7th position, with per capita GDP of $1,446. Also, Nigeria had the lowest food imports in 1970 (when data was available following 1960), with 8.24 percent when represented as a percentage of merchandise imports. While the country’s food imports had increased to 10.9 percent in 2018, it remained the lowest among the 17 countries, a positive outcome no doubt. In comparing Nigeria’s growth over the decades with that of other countries that attained independence in the same year, it is hard to refer to the country as a giant, much less, that of Africa. The country’s economy has grown, its population has grown, but quality of life when viewed from the prism of diverse economic indicators has not improved correspondingly. The large population and resources have not turned Africa’s most population nation to the land of prosperity the world expected it to become at independence.
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Thursday 01 October 2020
BUSINESS DAY
nigeria@60
A big economy with baby steps Endurance Okafor & Favour Olarewaju
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f Nigeria were to be a public sector employee, it would have retired this year, going by the mandatory retirement age of 60 years. This would mean that it’s time for the country to start reaping the fruit of her labour. The case is however not the same for Nigeria, a country that is 60 years old which has the largest economy in Africa but is likened to a new-born baby who is still learning to crawl and it is looking forward to the day it will be able to stand. Since Nigeria’s independence in 1960, the country has seen a total of 14 years where annual Gross Domestic Product (GDP) growth rate was negative, as analysed from the World Bank data. “Nigerian economy remains well behind its age,” Ayorinde Akinloye, a Research Analyst at CSL Stockbrokers said, linking the reasons to “poor economic policies and in some cases poor implementation of economic plans by economic managers.” While acknowledging the fact that Nigeria’s economy seems on track, Akinloye explained that the country’s economic managers should cease from making the same mistakes that the “current economic powerhouses made in the past” as they should have learnt from their experiences. BusinessDay’s analysis of World Bank’s data put Nigeria’s average economic growth between 1961 and 2019 at 3.78
percent but analysis for the last decade shows the economy of Africa’s most populous country has been deteriorating. For instance, economic growth in Nigeria averaged 1.2 percent between 2015 and 2019. Problem with that is the population grew two times faster at an average of 2.6 percent per year. Those five years were a painful squeeze for Nigerians who grew progressively poorer, as economic growth was too slow to create sufficient opportunities for a rapidly rising population. For over 180 million Nigerians who are not fortunate to be among the 10 percent of the country’s rich cycle, a deteriorating economy means a tough standard of living. The GDP per capita level in Africa’s most populous nation has seen diverse fluctuations over the years to $2,387 in 2019, about 1 percent decline from $2,396 in 2018, according to World Bank statistics. This amounts to about N862,000 per year (using the exchange rate of N361 for those years), N72,000 per month, and N2,400 daily (assuming 30 days monthly). When considering Nigeria’s inflation rate which has mostly been at double digits, particularly, the last four years which saw the average of 13.9percent within the years 2016 and 2019, the country’s per capita income of N2,400 daily is grossly insufficient due to eroded purchasing power. The most recent report by the National Bureau of Statistics (NBS) reveals that Nigeria
hit yet a higher level of monthly inflation of 13.2% in August 2020, which was the highest inflation recorded in 29 months since March 2018. The high cost of living in Nigeria which has continuously been on an upward trajectory has made it almost unbearable for millions of Nigerian who have become poorer due to lack of jobs and poor earning capacity. Exacerbated by the outbreak of COVID-19, Nigeria’s joblessness rate of 27.1 percent is 4 percentage points higher than the 23.1 percent reported in Q3 2018 and 19.7 percentage points more than 7.4 percent recorded in Q2 2014. Since 2017 when oil-dependent Nigeria emerged from its economic recession, not only has the country’s economic growth been sluggish but only
a few sectors triggered the expansion, further undermining the country’s capacity to create enough jobs to meet the growing number of labour market entrants. “Nigeria has demonstrated that the private sector remains the most organized controller of resources. Thus, the government needs to allow the private sector to control more resources in the country while the public sector acts as a policymaker and regulator for checks on manipulative practices,” a Lagos-based analyst said. Long before the pandemic started spreading across the globe late last year; Nigeria’s economy had been gasping for breath for five years. While health experts have warned that persons with an underlying health con-
dition are likely to contract COVID-19, economists have explained that countries with underlying economic challenges are expected to be hit the most by the impact of the pandemic. Nigeria retains a long list of economic reforms that can unlock economic growth and reduce poverty but have been stuck. Decrepit infrastructure and the lack of a functional rail system, for example, means Apapa, which houses Nigeria’s main port, remains a crying shame. Infrastructure deficit in Nigeria has been a key challenge as the nation’s capital stock has been plummeting from a peak of N105.06 billion in 1981 and has since struggled to rise back up, according to the analysis of World Bank’s statistics. Data
by the world lender puts the capital stock of Nigeria at N70.3 billion as of 2018, barely 70% of the infrastructure capacity in 1981. This is not so surprising considering that capital stock as a percentage of GDP has also been on a downward trend, from accounting to 89.4% of GDP in 1981 to a mere 19% in 2018 and 14.7% in 2017, which represents a decline of over 70 percent points in 39 years of data records availability. The lack of infrastructure in Africa’s largest economy has been highlighted by many analysts as one of the key reasons why it is finding it difficult to attract the long term Foreign Direct Investment (FDI). Nigeria’s net FDI in terms of the balance of payment has been negative for over four decades from 1977 till 2019 except for just 1980 which was a positive balance. A look at FDI net inflows as a percentage of GDP shows that Nigeria has been struggling in this regard, hovering between 0 and 2% as the average from 1970 till 2019 was 1.52% of national GDP for the nearly 50-year period. “It is easy to be pessimistic because the country has not made enough progress as we would have liked,” Andrew S. Nevin, Partner - West Africa Financial Services Leader and Chief Economist said, adding that even though it’s not where it is supposed to be, the economic progress has been good, particularly in the last ten years that he has been in the country.
Aviation sector still at infant stage IFEOMA OKEKE
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s countries across the world invest in airlines and aviation sectors to facilitate the movement of people and cargoes across the world, Nigeria is yet to find its feet after 60 years of independence, as it has failed to leverage its population and geographical advantages to develop an aviation hub for Africa, thereby losing huge revenues annually. Aviation hubs serve as transfer (or stop-over) points to get passengers to their final destination. Experts say for a country to become a hub, it has to have strong airlines, have adequate airport infrastructure and be a good connecting location to other destinations. While Nigeria is blessed with strong geographical location for connectivity, the country has failed to build
strong airlines and invest in airport infrastructures to get it to the status of an aviation hub. In the last 50 years of commercial air travel in Nigeria, over four dozens of airlines have come and gone as a result of politics, mismanagement of funds, corruption, high cost of aviation fuel or financial loss. Aviation experts over the years have expressed worry over the unfortunate development in the aviation industry; which they said portend a bleak future for the industry in Nigeria. Some of the defunct airlines include ADC Airlines, African International Airways, African Trans Air, Afrijet Airlines, Afrimex, Air Atlantic Cargo, Albarka Air, Al-Dawood Air, Arax Airlines, Barnax Air, Bellview Airlines, Capital Airlines, Central Airlines, Chanchangi Airlines, Chrome Air Service, Dasab Airlines, Earth Airlines, EAS www.businessday.ng
Airlines, Easy Link Aviation, First Nation Airways, Freedom Air Services, GAS Air Nigeria, Hamzair, Harco Air Services, Intercontinental Airlines, Kabo Air, Meridian Airlines, Nicon Airways, Nigeria Airways, Okada Air, Pan African Airlines, Skypower Express Airways, Sosoliso Airlines, Trans-Air Services, Triax Airlines, UAS Cargo, Virgin Nigeria and Wings Aviation. Seyi Adewale, chief executive officer of Mainstream Cargo Limited told BusinessDay that airlines fail because they do not understand the realities of aviation as a very principled, controlled and scheduled industry regarding airline checks and its cost. Adewale explained that domestic airlines do not have prior and appropriate savings, appropriate pricing due to competition, no proper cost outlay at the outset and continue to battle with undulating or increasing aviation
fuel cost. John Ojikutu, a member of an aviation industry thinktank group, Aviation Round Table (ART) and chief executive of Centurion Securities, told BusinessDay that poor and ineffective oversight of compliant on the economic or financial earnings and management of the airlines by the responsible agency have continued to hinder growth of domestic airlines. Ojikutu further explained that poor management of the government policies on BASAs and Commercial Agreements by the responsible officials has continued to strangulate government revenue earnings and the domestic airlines. Seyi Adewale recommended that the government implement policies that will impact the industry positively. He said the policies will include encouraging partnerships with local airlines, increasing
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the barrier of entry such that only well-funded, structured airlines operate. He suggested that regulators look at airline lease contracts where applicable more closely and minimum number of aircrafts to start an airline. Adewale mentioned some of the prospects for airlines to include growth of the middle class, increase in air traffic and general movement of goods and services as a result of African Continental Free Trade Area and increase in fleet size. John Ojikutu explained that except for Nigeria Airways and Aero Contractor, there had been over forty domestic airlines in this country at various times between 1980 till now but not more than six have operated for more than ten years. Ojikutu suggested that Nigeria needs to review its policies and government and private partnership on commercial aviation especially @Businessdayng
for the concession of the government owned airports and national flag carriers. Airports concession should be limited only to the non-aeronautical facilities especially the terminal buildings, cargo terminals, carparks, etc. “No airline should be designated for regional, continental or intercontinental routes and therefore flag carrier except it has regularly fulfilled the requirements of the national economic regulations at regulated intervals of minimum of three years from the national routes to regional, continental to the intercontinental routes. “Airlines so designated as national flag carriers must be quoted at the Nigerian Stock Market and may be called upon for national assignments and be entitled to government palliatives in the event of any global or national emergency,” he added.
Thursday 01 October 2020
BUSINESS DAY
19
nigeria@60
Housing: 60 years of development defined by slow growth CHUKA UROKO & ENDURANCE OKAFOR
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erhaps, it will take great energy and effort to sustain an argument that Nigeria’s housing sector has not seen any change and growth in the past 60 years of the country’s independence. If anything, many of the houses that were built in the country at independence have given way to modern, architecturally sophisticated structures, especially in the cities. But, given the tremendous change in demographics and the startling housing and homeownership situations in the country today, it could be safely said that housing development in this part of the world has remained very slow, even as demand continues to grow in multiples, outstripping supply. T h o u g h t h e re w e re great strides in housing development within the first three decades after independence, the slack that followed the period is amply reflected in the home ownership level in the country today with all the sounds and fury from private initiatives. As against 72 percent home ownership level in the US, 78 percent in UK, 60 percent in China; 54 percent in South Korea and 92 percent in Singapore, homeowner-
ship level in Nigeria, 60 years after independence, is estimated at 25 percent. Arguably, Nigeria started out well after independence with forward-looking national development plans that had ambitious housing development components. A few samplers may suffice here. The first National Development Plan of 1962 – 1968 saw ‘young’ Nigeria establishing state-owned housing corporation which was for the provision of urban infrastructure and industrial estates in three key areas— Lagos in South West, Port-Harcourt in South East and Kaduna in the North. The second National Development Plan from 1970 to 1974 saw the establishment of National Council on Housing and the creation of Federal Housing Authority (FHA) in charge of housing Nigerians and the establishment of National Housing Programme (NHP) to construct about 59,000 housing projects. That was when the Staff Housing Loans Board was established. The third National Development Plan from 1975 to 1980 saw activities of federal government’s direct intervention in housing when about 220,000 dwelling units were proposed. 50,000 units in Lagos, then 8,000 units in each of the then 19 states. At the end, only 15 percent of the projection was achieved.
There were other housing programmes such as the establishment of committee on standardization on housing types and policies in 1975. There was also an anti-inflation task force in 1976. There was also a Rental Panel in 1976, and then the Land Use Panel in 1977. The Nigeria building society was also converted to Federal Mortgage Bank of Nigeria (FMBN) in 1976 with a special capital base of about N20million, then increased to about N150million later on in 1979.. The last of these government housing programmes seemingly ended with the second civilian administration from 1979 to 1983 during which period there was an elaborate national housing programme based on the concept of affordability and citizens’ participation. This was the period of low cost housing by the President Shehu Shagari at the federal level and Lateef Jakande in Lagos. The return of the military junta to governance (led by the present President Muhammadu Buhari) marked the beginning of where Nigeria finds itself today in the housing sector. Things have gone so bad that the statistics send chilling waves down the spine. With a growing population of 200 million and high urbanization growth rate estimated at 4-5 percent per annum, housing stock in
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Nigeria is said to be between 12 million and 15 million units while an unconfirmed record shows that about 25 million households with six members each don’t have homes of their own. A report by BusinessDay Research and Intelligence Unit (BRIU) on Nigerian Real Estate says that out of 200 million Nigerians, only 8 million people qualify for the luxury property market, adding that while there is more than enough for the latter, hardly any thought is spared for the remaining 192 million citizens. According to the report, over 80 percent of Nigerians are living in ‘unplanned residences’ and those in the urban centres are living in rented accommodation that takes away almost 40 percent of their income with no adequate facilities for water or electricity. Even though the federal government is in denial of this fact, housing deficit in the country today is over 20 million units. This deficit, according to experts, requires building over 700,000 housing units yearly for the next 20 years and spending about N56 trillion to close, meaning that, to effectively house its citizens, Nigeria needs to spend its annual budgets for over five years on housing development alone. Views are mixed on why Nigeria’s housing sector is in this sorry state. While Terver Gemade, former managing
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director of Federal Housing Authority (FHA), blames it on policy summersault, and Femi Akintunde, GMD of Alpha Mead Group, blames it on infrastructure, others say it is about the country’s undeveloped mortgage industry. Experts worry that, six decades after independence, Nigeria’s mortgage industry has remained underdeveloped owing to the same challenges that have stunted the sector’s growth since the Nigerian Building Society, the first mortgage institution that was set up pre-independence. According to Omozokpia, Nigeria would have to learn from how the US, UK and some Africa countries were able to grow their mortgage industry because “the sector is huge and has a lot of potential for Nigeria’s economy.” Nigeria’s mortgage to Gross Domestic Product (GDP) rate at about 0.6 percent is one of the lowest in not just Africa but in the world. While neighbouring Ghana has 2 percent mortgage to GDP rate, South Africa with 30 percent is coming behind the US and UK with 60 percent and 70 percent respectively. “The underdevelopment of Nigeria Mortgage sector in driving homeownership is worrisome as more than 90 percent of new homes utilise funds from personal savings,” the Association of Housing Corporation of Ni@Businessdayng
geria (AHCN), a real estate body said. “In Nigeria, the housing finance market has not fared any better,” a report titled ‘Housing Market Dynamics in Africa’ said. According to the report, mortgage loans account for less than 1 percent of the loan portfolio of commercial banks, and only about 5 percent, or 685,000 of the housing units in Nigeria are financed using mortgages, “because Nigeria’s Federal Mortgage Bank (FMBN) has failed to meet expectations.” For these and more reasons, despite its large population size, Nigeria is crawling behind its peers in terms of homeownership level. While the level is 84 percent in Indonesia, 75 percent in Kenya and 56 percent in South Africa, Nigeria, Africa’s most populous nation, has only 25 percent. Funke Okubadejo, Director, real estate at Actis, advises that to address its housing challenges, Nigeria needs to have a functional mortgage industry that has to be at an affordable interest rate. On his part, Deji Alli of Mixta Africa, says the country needs clearly articulated targets, need-based resource allocation, reviewing of existing development guidelines, development of integrated infrastructure and encouragement of PPP as a viable development initiative.
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nigeria@60
Political development: So far, how well?
igeria had a population of 45.1 million in 1960 and GDP of $4.2 billion. The population rose to 56 million in 1970 with GDP also rising to $12.6 billion with economic growth at over 11%. This was a robust period. Within this period, there was discipline in governance, according to Philip Asiodu now 86 who joined the Civil Service in 1964 when he was 30 years old and later became the Federal Permanent Secretary, and first served under General Yakubu Gowon before and during the NigeriaBiafra war. The government then followed the development plan religiously as the public service that was an outgrowth of colonial masters was still strong and intelligent without partisanship. The three main regions were relatively competing in agricultural produce, so there was much to eat which reduced insecurity. Asiodu recollects that under the first and second development plans, pre-independence, and immediately after independence, the country’s economy was growing on the average at about 6% per annum and inflation was around 2%. “One could see the visible improve-
From mid 70s, as Chinua Achebe would say, things started falling apart. Why? The military coup that brought Murtala Mohammed and Obasanjo saw the destruction of the public service especially the civil service. Over 10,000 public servants, according to Asiodu were cashiered, sent away, with all the institutional memories, international contacts forgetting that people in the world deal with people they know. “They did not only send them away, but the other terrible thing that happened was that the 1975-1980 development plan which was meant to lay the basis of a self-sustaining economic development through industrialisation, adding value in the critical sector of agriculture among others was abandoned”. This was the beginning of the economic crisis for Nigeria. Chief Asiodu described the 1975 coup as a ‘tragic disruption’ that had very negative impact on the economic growth leading to negative growth rate at -1% by 19801981 period. Asiodu who later became Special Adviser to former President Shehu Shagari on economic affairs believed that if Nigeria had sustained its growth rate just for another 7-10 years, the country would have, like
former chairman of Nigerian Breweries, “The need for a vision 2010 was as a result of abandonment of a development plan to work with in Nigeria”. Lack of vision, dearth of planning, abandonment of achievements of preceding administrations, destruction of civil service, low GDP growth at 1.87% as at Q1 2020 % in the face of growing population at 3.5% , corruption, enthronement of ineptitude, ineffective institutions, weak education sector, poor infrastructure, high unemployment and abandonment of agriculture have all combined to crown poverty in the land. As at 2019, ironically Nigeria’s GDP was $448.2 billion and the population is about 200m but Nigerians are hungrier and unhappy. NBS last year said 40 per cent of Nigerians live below poverty line of N137,430 ($381.75) per year. This represents 82.9 million people out of a population of about 200 million. Poverty has heightened insecurity, kidnapping, corruption, drug peddling which have also combined to tarnish Nigeria’s image from internal and external views.
ment in the standard of living. Even though the population growth rate was 3%, the economy was growing faster than that. There was improvement pre-independence and immediately after” Between 1970 and 1975, the Nigerian economy was growing at average of 11.75% per annum and Nigeria’s per capita income at $1,000 was higher than that of India, Korea, North and South and Nigeria was at par with so called Asian Tigers. At this period, Nigerians were proud of their country and getting visa to anywhere in the world was easy.
Asian Tigers, escaped from poverty. Since then, Nigeria has been struggling to get the economy back on track with several developmental plans from Structural Adjustment Programme, SAP of late 1980s to Vision 2010, Vision 2020 and other plans which had really not made the necessary impact as expected. This is compounded by population growth, low GDP and inability of successive governments to follow through with development plans and achievements of preceding administrations. As said by Felix Ohiwerei, a shrewd industrialist and
to positions based on sentiment; allow corruption to thrive, unemployment to increase, killing and kidnapping to rise and infrastructure to decay, Nigerians will not be happy for their land. Therefore, Nigeria needs to fund its education sector through PPP to equip graduates on self-reliance, refocus on agriculture through states and regional active participation as it was in pre-independence era, enthrone credible candidates in civil service, make its institutions effective and reduce corruption to create a new brand image for the country.
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igeria gained independence in 1960 from Great Britain after years of struggle and agitations by the founding fathers. Nigeria was among the 16 African countries which were liberalised and had their independence that same year. Blessed with abundant human and natural resources, the country had so much promise at independence. At that time there was optimism among the founding fathers and among Nigerians that the country would soon fulfil its potential. The post-independence government was a coalition between the Nigerian People’s Congress (NPC) and the National Council for Nigeria Citizens (NCNC) with Abubakar Tafawa Balewa as the prime Minister and Nnamdi Azikiwe as the head of state. This was outcome of 1959 general election in which the NPC captured 134 out of the 312 federal parliament seats.The NCNC won 89 seats, while the Action Group (AG) had 73 seats. However, the gradual progress that was being made was cutshort by the nation’s first military coup of January 15, 1966. Mutinous Nigerian soldiers led by Chukwuma Kaduna Nzeogwu and Emmanuel Ifeajuna killed 22 people including the Prime Minister of Nigeria, many senior politicians, and many senior army officers. The coup plotters also attacked the cities of Kaduna, Ibadan, and Lagos while also blockading River Niger and River Benue. Subsequently in 1966 there was a counter-coup, or the socalled ‘July rematch’, which was the second of many military coups in Nigeria. The coups snowballed into Nigerian civil war which was fought between 1966 and 1970. This subsequently led to the emergence of Yakubu Gowon who chose to lead the country in 1966. G ow on subs e quently moved quickly to initiate the creation of twelve new states to replace the four regions. Six of these states contained minority groups that had demanded state creation since the 1950s. However, Gowon regime was preceded by subsequent military regimes of Murtala Mohammed and Olusegun Obasanjo which heralded the Second Republic in 1979 led by Shehu Shagari. However, another 19 years of military
Despair on Nigerians’ faces, 60 years after Independence
interregnum, culminated in the birth of the Fourth Republic and democratic rule in 1999. Since then, the country has had four different administrations, Olusegun Obasanjo, Umaru Musa Yar’Adua/; Goodluck Jonathan and the incumbent Muhammadu Buhari. While it is worthy of commendation that despite these challenges the country has managed to stay together as one for 60 years, observers are however, of the view that after 60 years of independence Nigeria has not fulfilled the enormous potentials it had in 1960. There is the perception in some quarters that the country has stagnated, becomes more divided over the years, while there was little to celebrate. “At the period of independence there was a lot of hope; we had been through almost ten years of development especially in the Western region. “Similar situations exist in the Eastern region; the North had started slower than the other regions under the leadership of Ahmadu Bello but is coming up gradually. “Generally, Nigerians were happy with a decade of independence in the 50’s, the country had hope and promise; of course, the events after that are well documented for all to see,” Banjo Akintoye, professor of history and Second Republic senator, said. Akintoye further said that Nigeria at its current state was a different country and was more divided than it was in 1960, while suggesting that ethnic nationalities must urgently renegotiate the future of the country. “It seems Nigeria is no longer one country today, or the same country we knew then; there was a great deal of hope in 1960, we love ourselves, there was no fear that one part of the country was invaded, like killing across the middle belt and rest of the South now. “Personally, I am of the view that what we need now is serious-minded www.businessday.ng
negotiation among the people who own the territories called Nigeria and among the different nationalities. “They should sit down and negotiate; can we continue like this? If the answer is yes, but I am sure most people would say no. “Some people think we should break into smaller countries; let the nationalities go and break into smaller countries. I am suggesting that, with all sense of responsibility,” Akintoye added. The agitations for restructuring of Nigeria as a solution to the numerous challenges bedevilling the country by political leaders have intensified in recent years, though largely unpopular in the North and among their political leaders. However, observers are of the view that perhaps President Muhammadu Buhari needs to give the suggestion a second thought to be among the several solutions aimed at salvaging the country. Ayodupe Odugbo, a political analyst, thinks that despite the challenges, the country should celebrate its unity since 1960, stressing that the current challenges have been there since its formation without being resolved by successive leaders. According to him, “We need to celebrate our unity. Whatever threat of disunity we have today is the same we had during the formation of our nationalism which we failed to tackle back then, problems like Biafra are just ideologies we need to clip. “May be, we need to restructure, but Nigerians need to put Nigeria first in everything and not ethnic groups, if this ideology is promoted the country would move forward.” “The only solution is redefining the constitution. The cost of running the nation should be cut down, it’s time to cut down the salaries of government officials, let every Nigerian join in the fight against corruption. Nigerians should invest more in the economy of the country instead of boosting foreign economy,” Odugbo said.
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Way out When leaders do not manage Nigeria’s diversity appropriately, appoint people
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nigeria@60
Nigeria: Yet to live the ‘giant’ name with its Capital Market Iheanyi Nwachukwu
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apital market is the barometer of every economy. It mobilises private and public savings from surplus spending units and channels them to the deficit units for the production of goods and services; as well as financing infrastructure. Suffix to say the importance of capital market in Nigeria’s economic growth and development cannot be over emphasised. Not yet living the name with its capital market Nigeria has till date not risen to the challenge of living up to its name –the giant of Africa. The nation has failed to have a robust capital market that correlates strongly with enhanced and economic stability and a broader market that presents varied options to project and programme funding for both the private and public sectors in an economy while presenting a liquid platform for assets preservation. At 60, Nigeria should have a broader capital market that offers large and liquid equities and debt instruments that will increase the competitiveness of the nation’s capital market as a global investment destination. The hard truth
Most decisions of Nigerian government, the capital market regulators, operators and even investors have in one way or the other not helped the growth of the capital market of Africa’s largest economy. In many aspects, the Nigerian capital market is behind global as well as some regional peers, thereby signposting the need to broaden and deepen the market. There is still low level of diversity and sophistication of the products in the Nigerian capital market. Asset classes that are available for trade are predominantly limited to equities and very recently to bond and ETFs. Much has been said about trading Futures, Derivatives, and other variant asset classes but that hasn’t kicked
off thereby limiting investors to diversify investments and also impede desired economic functions such as risk management, price discovery and transactional efficiency. For equities, issues such as rising unclaimed dividend, market infraction, capital loss due to impact of negative economic growth on companies’ earnings, etc have made investors’ appetite for stocks to remain low. For debt instruments, the main macro theme affecting it has of course, been rising interest rates. This is forcing spreads wider as portfolios are reconfigured on the investor side. Though, Nigeria’s debt capital markets have proven resilient in a challenging environment. Confidence build-
ing over the last few years and strong market liquidity have resulted in noteworthy transactions from previously unrepresented sectors. However, there is still a lot of room for growth. Our best is not good enough On its part, government is expected to adopt fiscal and monetary policies that would stimulate private sector investment and increase patronage for issuance and fundraising in the nation’s capital market. Also, government has not done enough to attract more multinational companies in key sectors of the economy to float offerings and ultimately, revive the primary market segment of the capital market
thereby improving on the current illiquid position. For the apex capital market regulator and the self-regulatory organisations (SROs) there is need for continuous interface with the government to explore various options that would facilitate the listing of all major enterprises like the Telcos and Oil & Gas that occupied the commanding heights of the Nigerian economy. There is no doubt that increased representation of the Nigerian economic structure would imply stronger capacity to drive growth through the creation of established templates for companies to access long term capital that is suitable for their specific needs. The importance of attracting more listings cannot be overemphasized. The capital market Nigeria should have The full implementation of Nigeria’s capital market master plan remains a priority. The master plan has been designed for 10 years. The year 20202025 is the second part of the master plan. At 60 years, Nigeria should have a capital market that is internationally competitive, bearing the hallmark of high level of relevance, productivity and innovation. The nation’s capital market should not box investors into few asset classes but must be flexible and easily
adaptive to an ever changing environment while providing market participants with a wide range of products and services comparable with the leading financial centers in the world. The Nigerian capital market should be seen to be much relevant in all core areas necessary to develop the economy. The nation’s capital market must actively pursue deliberate growth, scale, robustness, flexibility and improved practices. Regulators must also have the right competences and skills to move the capital market forward and leverage technology in doing so. Robust systems are expected to be established in risk management, surveillance as well as transactions. Nigeria capital market operators are expected to conduct their activities fairly and ethically, and ensure also be supported in their activities to develop the market. In this new age of Nigeria, her capital market regulators must pursue great ideals, not just for its own benefits but within and in tandem with the need and aspirations of the larger economy. Local and foreign investors must be attracted and educated, assured of their rights and protection. Nigeria must pursue capital market growth that translates into and even drive development in the real sector across its entire economy.
refineries produce value added products from crude oil. Nigerian legislators are promising the passage of longawaited reforms to overhaul the entire sector. The Petroleum Industries Bill has been floating around Abuja for the best part of two decades, holding back investment into an industry vital to Nigeria’s success. The bill is meant to make the opaque national oil company Nigerian National Petroleum Corporation (NNPC), an epicentre of corruption, more transparent by breaking it up, establishing an independent
regulator and stripping the oil minister of the ability to award, renew or revoke licences. Improving Nigeria’s relationship with the international oil companies which has been strained for more than half a century will also be a discussion that deserves national attention going forward. The government has struggled to pay for its share of oil production costs while pumping barrels has caused environmental devastation in the Niger Delta. The state oil company hopes to follow the model of Nigeria LNG, the gas company in which it has a 49 per cent stake, Shell has 25.6 per cent, Total 15 and Eni 10.4 per cent. That company has become a rare bright spot in a moribund industry. This autumn, Nigeria moved closer to a potential $10billion investment in the Train 7 project that will expand its liquefied natural gas plant in the Niger Delta. But few expect such blockbuster projects in the crude sector without a catalyst like the long-awaited petroleum bill and progress in the national oil’s divestment scheme.
Oil sector groans from a weak value chain DIPO OLADEHINDE
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fter years of independence and over five decades of oil exploration, crude oil accounts for less than 10 percent of Nigeria’s GDP but represents about 90 percent of foreign exchange earnings and more than half of government revenue, an indicator of a sector in dire need of succor. Recent modest gains such as fuel subsidy removal, gas monetization, and renewal of marginal bid rounds are stunted by non-passage of the Petroleum Industry Bill (PIB), an inefficient national oil company, loss-making refineries, and troubled downstream sector. Local content development has accelerated after the enactment of the law in 2010 as sever-
al indigenous operators such as Atlas Petroleum International, Oranto Petroleum, Shoreline, Aiteo Group, Eroton Exploration Production Company and Seplat Petroleum Development Company, among others, have made substantial contributions to the country’s hydrocarbon output. Pre-Covid-19, independent firms were producing 400,000 barrels per day (bpd), accounting for about one-fifth of the country’s crude oil production. By 2020, independents were aiming to add 250,000 bpd of additional output, after Nigeria’s largest independent oil producer, Aiteo Eastern E&P announced plans to invest $5 billion over the next five years to drill new oil wells and re-open existing ones, to boost oil and natural gas production.
Nigeria’s economy is staring down a recession as Brent value has dropped by half since the worst pandemic in recent history started early this year. Declining oil price forced the government to deregulate the downstream sector after over N10trillion burnt on petrol subsidies within the last 10 years. Stakeholders have long called for an end to the costly subsidy regime because it mainly benefited the elites with multiple cars. With dark clouds of an imminent economic recession gathering and not many visible silver linings, the recent drop in oil prices will hit Nigeria hard, making a big dent in government revenues and threatening the viability of upstream projects, thanks to the non-domestication of the value
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chain in the oil and gas sector. For most experts, value addition in Nigeria’s petroleum sector could be the value created in by-products in the course of processing exclusive of the cost of crude, packaging or overhead. “With value addition the total money revenue, or price, for which a by-product will sell sometimes quadruples,” Luqmon Agboola, head of energy and infrastructure at Sofidam Capital said. Other experts claim refining makes an integral part of the oil and gas value chain that delivers products to consumers as
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BUSINESS TRAVEL People are eager to fly again as long as safety concerns are met - Sikuade Adejoju Sikuade is the Head of Business for FCM Travel Solutions Nigeria. In this interview with IFEOMA OKEKE, she speaks on the unique service offerings of FCM Travel Solutions and how the company has continued to thrive despite the impact of COVID-19 in the industry. What is FCM Travel Solutions about? What are its offerings and differentiate the brand from its competitors? CM is a global travel management company that provides a wide array of travel services using tools and technology tailored to the needs of our corporate clients, majorly multinationals. We are headquartered in Australia with a global presence in over 98 countries. We have nine Regional Head Offices, over 500 offices and 6500 staff under our belt. FCM Travel Solutions offers varieties of services which includes multiple options for best fare/rate on all travel routes, 24/7 emergency assistance, local and multinational account management, corporate travel policy advisory, meetings, incentives, conferences & events, group bookings, charter services, online booking tool implementation and support, traveller safety and security services, VIP executive service, leisure travel service, MIS reporting, door to door transfers, airport meet & greet, assistance with visas, passports and travel insurance. We also provide complete logistics services through the use of the New Distribution Capability (NDC). Speaking of the uniqueness of FCM, that would be our people. They are our greatest assets! They are at the heart of what we do. Also, our global presence helps us provide personalized services. It gives us the expertise and local market knowledge our clients need. Knowing that FCM Travel Solutions has its brand presence in over 90 countries in the world, the operating environment will surely differ. Can you please tell us how the organization’s global best practices have imparted or strengthened your operations at FCM Travel Solutions Nigeria? The idea is to have our clients feel at home in whichever FCM Travel Solutions Office they find themselves in. We pride ourselves on being a one stop shop for all travel solutions
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regardless of the country the request is being made from using the HUB approach. We have our travel managers sit in one location servicing several countries and ensuring all travel needs and Management Information System (MIS) reports are met. We take the FCM brand very seriously. We communicate the same exceptional services across the globe albeit in different languages. We have monthly virtual calls across departments within the Middle East and Africa Region and Annual Meetings/Conferences on a Regional level. Last year, we met in Dubai for Office Portfolio Reviews and a meeting themed “Think Fluid”. We also have a yearly global meeting of all regions (North America, Latin America, Asia-Pacific, Europe, Middle East & Africa) together in one location. We call these our Focus meetings and spend days discussing the Brand, its operations, tools, and technological advancements to support our ever-
diversifying clientele and strategy and intense bonding sessions. Can you please tell us about some of the companies that you have worked with and what has been the experience? Our portfolio is quite diverse. We have clients cut across several industries. From the Oil and Gas sector to Telecommunications, Finance, Fast Moving Consumer Goods (FMCG), Construction and some Power Generating companies as well, to mention a few. It’s been a truly humbling experience providing tailored travel solutions for these respective giants in their various industries. The Coronavirus Pandemic has come to disrupt life as we knew it. How did FCM Travel Solutions Nigeria pull through the lockdown and the whole COVID-19 disruption on businesses? A lot of businesses and industries were quite hit by the advent of the pandemic. However, with the travel
industry being one of the most severely hit, we understood the need for keeping hope alive and remaining positive for better days ahead. In light of this, at FCM Travel Solutions Nigeria, we had weekly inspiration quotes to motivate our clients and industry updates to keep them abreast of all the happenings within the industry. We had various Virtual meetings to discuss the impact of the pandemic on their businesses and how FCM Travel Solutions could assist to come up with cost-saving mechanisms ahead of the lift of the travel ban. Now that flight operations have started to resume all over the world, what does it mean for your business? This is a positive light that has started to shine after being on lockdown for months without business. Travel is a necessity especially for the multinationals who need to move staff and clients across the globe. We are particularly excited at the resumption of flight operations as we get to work with our clients to get their businesses done seamlessly. Still on the resumption of International flight operations, are there any challenges that you face as a business? First, I will say that the pandemic has created fear in the minds of many people and the willingness to travel has reduced drastically. Another thing is that the protocols and restrictions in countries where the COVID-19 wave is still high has also limited travel destination options, for example there are still restrictions on South Africa and America. I would like to commend the Nigerian Government on its efforts so far, without also forgetting the recent launch of the Nigeria International Travel Portal. However, there is still a need to embark on advocacy and sensitization of the general public on all safety measures being adopted to assure travellers of their safety as they fly. The safety measures established by the Government should be sus-
tained to prevent a second lockdown which will not be in the best interest of the people and the economy. In addition, everyone including the VIPs should subject themselves to the same level of scrutiny to enable an effective approach to the COVID-19 protocols. Since the restart of International flight operations, what has the turnout rate in terms of patronage and inquiries been? We have experienced a surge in the number of travel requests as a result of the lockdown that has kept so many people stranded for months. People are eager to move again as long as they feel safe and have enough information. FCM Travel Solutions Nigeria is relatively new in the downstream sector of the Nigerian Aviation Industry, what growth prospects are you looking forward to? Let me say that travel has become an essential part of business and life, which means the sector will continue to grow in leaps and bounds. The current population of Nigeria stands at well over 200 million people. Our focus is to be a partaker in the 10% growth of the flying public and that will grow our position significantly. Secondly, we look forward to a time when FCM Travel Solutions will be listed amongst the top 5 Travel Management Companies in Nigeria. Taking a cue from how the organization’s global network has strengthened FCM Travel Solutions Nigeria, what new innovations should we expect to see here in Nigeria? We have the SAM mobile app that is a travel assistant in the pockets of our clients i.e on their mobile devices such as their laptops, smart phones, tabs etc. SAM is a unique travel assistant powered by artificial intelligence. We also have several online booking tools at our disposal for our clients as well as the FCM Secure which acts as our ‘duty of care tool’ which we are sure would be very useful for the clients post COVID-19.
Experts advise prioritizing aviation recovery for economic rebound Gbemi Faminu
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xperts in the aviation sector have called for the need to prioritize the recovery of the sector which will significantly impact economic rebound following the impact of the Coronavirus pandemic. Speaking at the Pre-NES26 webinar themed “Positioning Nigeria’s Aviation Industry for Global Competitiveness” hosted by the Nigerian Economic Summit Group (NESG) held recently, Hadi Sirika,
Minister for Aviation said just like other sectors, aviation activities was also disrupted by the COVID-19 pandemic and is yet to fully recover. He added that in reviving the sector, it is necessary to grow the number of national air carriers which is a critical part of Nigeria’s aviation roadmap and is still awaiting approval by the Federal Executive Council. “About 80 percent of air carriers in Africa are not of African origin and this makes it pertinent to establish a robust national carrier that can take advantage of the potentials of Nigeria, www.businessday.ng
The second aspect of the roadmap is concerned with Airports concession. Currently about $1 billion has been borrowed for the reconstruction of four airports and we intend to concession them going forward for a specified time. It is our hope that by 2023, Aviation will begin to contribute up to about 5 percent of Nigeria’s GDP” Niyi Yusuf, Vice-chairman of the NESG, in his remark said reports have shown that there will be an overall reduction in air and passenger traffic as a result of the COVID-19 pandemic which will cause a significant revenue dip in the industry, he
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called for the need to reform the industry in line with global standards. “in 2020, an estimated loss of about $97 billion representing a significant 57 percent of revenues will be lost due to the reduction in passenger traffic, ultimately This means that Nigeria has to rethink how the aviation industry is set up and prepare it to be more resilient for what will be an increasingly competitive industry” Yusuf stated. Similarly, Adefunke Adeyemi, regional director, Advocacy and strategic relations, Regional Head for Airline and Relations – Africa and Middle East, International @Businessdayng
Air Transportation Association (IATA), said that aviation is a means of mass transportation and data analysis showed that aviation carried 7.5 billion people in 2019 however; the pandemic disrupted the industry activities leading in losses especially in revenue and employment “The aviation industry has lost about $420 billion since the COVID-19 pandemic started and the economic situation for African and Nigerian airlines remain dire without adequate government and private sector collaboration and intervention,” she explained
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BUSINESS INSIGHT How to bankrupt-proof your business during an economic downturn (part 2) Akin Monehin
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Defer that huge spend that will bring dividends much later because it is a business that is alive tomorrow that will enjoy market share or competitiveness
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y last article introduced the concept of economic downturn/recession at a very high level; the key lesson there is that, as entrepreneurs, business owners, or individuals, downturns are not within our control, however, they are normal and should be expected. The good news, however, is that downturns don’t last forever – on the average about eighteen (18) months. That is long enough to permanently close down about two million (2,000,000) businesses in the United States of America this year alone. Bankruptcy happens when a business literally runs out of cash, even though it may be profitable. An individual or a family can also go bankrupt – if they are unable to pay their personal bills; rent, school fees, electricity, and so on. Since economic downturns are exogenous and inevitable then the African proverb, “an imminent war doesn’t catch the cripple unawares” is quite relevant. Businesses need to be prepared when hit by bad times. Businesses (& individuals) should apply the following when hit by financial crises. Defer Capital Expenditure
(CAPEX) Indeed, the Net Present Value (NPV) of the project is positive but do not under-estimate its impact on your cash flow in the short to medium term. If you cannot meet your short-term obligations you become bankrupt. Most business revenues dip during recession. Leading Macro Economists appear to be converging that recovery from the current economic crisis will be ‘U’ Shaped (lagged recovery) and not ‘V’ shaped (rapid recovery) as many initially predicted. You need to reconsider that expansion project that will improve your market share or competitiveness. Defer that huge spend that will bring
dividends much later because it is a business that is alive tomorrow that will enjoy market share or competitiveness. Focus on saving your business in the short to medium term. I was speaking, some weeks ago, to a former colleague who now runs a haulage business. The business did well in 2019 showing good prospects if he had more vehicles, tapping from the gains of economies of scale, so he, using a facility, planned to expand his fleet by almost 40% early this year. Thankfully, though he had the credit line approved, he hadn’t drawn it so he instinctively called his bank to defer the transaction, “until this COVID wahala is over”. He paid some charges, which is a far cry from the losses he would have incurred if he went ahead with the investment. That singular act saved his business, as revenue dropped by about 90% between March-August. He is now struggling with about 30% of what he was earning eight (8) months ago. As his investments are not diversified, he said, “that is the best decision I have made in my entire life!” During an economic crisis, defer projects, except of course you have deep pockets or the investment will actually take advantage of the downturn, in which case you should go ahead. Look out for Part 3 on 22 October 2020.
About the Author:
Akin Monehin is a thought leader, writer, speaker and business strategist. He is privileged to have worked in leading organisations like British Airways, Virgin Atlantic & Nigeria LNG Ltd. He is a 2015 recipient, Choiseul Institut France’s Award of Top 100 African Business Leaders under 40 Years old and has worked in over 10 countries including French and Arabic speaking ones. He can be reached on akin. monehin@chicagobooth.edu Views expressed in this article are personal and do not represent the views of any institution.
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e-YES commences to boost digital economy in Enugu OBINNA EMELIKE
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fter weeks of registration and vetting of the intending participants, the Enugu Youth Empowerment Scheme (e-YES) has commenced with training, mentorship and skills acquisition for youths across the state. Organised by the Enugu State government under the auspices of the Enugu SME Centre and in partnership with Wild Fusion Digital Centre, the scheme opened doors to the first batch of participants on September 28, 2020 at Universal Hotel in Enugu. In its first edition, the scheme, which is a novel initiative of the Enugu SME Centre, under the Enugu Human Capital Develop-
ment Loan Program (HCDLP), is expected to run for seven weeks, while training and empowering over 273 participants with digital skills in areas such as: advertising, digital marketing, internet promotion, SMS marketing, search engine optimization (SEO), PPC, and analytics. Others skills in the scheme include: mobile advertising, email marketing, content marketing, among others. The first day of the training witnessed exciting activities, especially the exposure of the participants to the opportunities in digital marketing and technology, inspirational video messages from industry experts such Hilda Kabushenga Kragha, CEO, ROAM Africa and Ayode Akinfemiwa, Google Agency Business Manager, Nigeria. www.businessday.ng
As well, Abasiama Idaresit, CEO, Wild Fusion Digital Centre, the facilitators of the training, also shared his inspiring experience with the Baby M project, a marketing campaign success story that attracted members of Google to Nigeria in 2009. Earlier in his opening remark, the CEO of Wild Fusion Digital Centre reiterated the place of technology and digitization in career and business, noting that they are the new currencies in the world today and hence guarantee employment for the participants. Idaresit, a digital marketing and technology expert, further explained that the training would run from September 28, till November 6, 2020, and that during the period, the participants would acquire internationally recognized
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certifications with Google, Facebook, Twitter, among others. “In addition, they will be trained in all aspects of digital marketing and provided jobs upon completion of the programme”, Idaresit said. Also speaking at the flag off ceremony, the participants expressed their gratitude to Governor Ifeanyi Ugwuanyi for making the opportunity a reality in their lifetime. They also expressed their enthusiasm at becoming digital/tech savvy as the world has become digital. “We are a generation that lives on the internet and the opportunities in here are enormous. One cannot afford to isolate oneself from this but must embrace the opportunities to connect with the world and earn a living”, one of the participants said. @Businessdayng
Speaking at the event, Arinze Chilo-Offiah, special adviser, SME Development and head, Enugu SME Center, noted that the training is in line with the development and youth empowerment agenda of Governor Ifeanyi Ugwuanyi, and that the high-income skills the participants would acquire at the training would enable them to thrive in today’s digital-first world, become innovative entrepreneurs and strategic valuable assets to the state and the international community at large. “Technology will continue to drive change in the workplace, and for one to be a game-changer, one must be able to use technology to solve everyday problems. With this initiative, the Enugu SME Centre is giving the youth an edge, starting now”, Chilo-Offiah said.
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BUSINESS DAY
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BUSINESS DAY
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Alegeh, others represent 36 state attorneys general in court against Malami
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ormer President of the Nigerian Bar Association (NBA), Augustine Alegeh SAN has on behalf of the Attorney General of Abia State and his counterparts from 35 other states dragged the Attorney General of the Federation and Minister for Justice, Abubakar Malami, before the Supreme Court challenging the provisions of the Presidential Executive Order No. 00-10 of 2020 compelling the state attorneys general to fund the High Court and other courts in their various states. The Order which was signed by President Buhari on May 22, 2020 is no being challenged by the state A-Gs as being in violation of Sections 6, 80, 81, 120 and 121 of the Constitution of the Federal Republic of Nigeria, 1999. Amongst other reliefs sort by the 36 plaintiffs are: • A declaration that by virtue of Sections 6 and 81 (3) of the 1999 Constitution (As Amended) the defendant is constitutionally obligated and charged with the
responsibility for funding all capital and recurrent expenditure of the High Courts, Sharia Courts of Appeal and Customary Courts of Appeal of the states, being courts created by Section 6 of the Constitution.
• A declaration that the refusal of the defendant to fund state courts is unconstitutional. • A declaration that the Presidential Order No. 00-10 of May 22, 2020 compelling the 36 states to fund their own court is unconsti-
tutional. • An order compelling the defendant to fund all capital and recurrent expenditure of the High Courts, Sharia Courts of Appeal and Customary Courts of Appeal of each state. • An order compelling the Defendant to refund to refund to the Plaintiffs all sums expended by them on capital and recurrent expenditure on courts on their various states from January 31, 2020 until the date of delivery of the judgment by the Supreme Court. • An order to set aside the Presidential Executive Order No. 00-10 of May 22, 2020 on the ground that it violates the express provisions of the 1999 Constitution. In the statement of facts, the Plaintiffs noted that they are currently being saddled with the responsibility of funding their state High Courts, Sharia Courts of Appeal and Customary Courts of Appeal, apart from the salaries of judicial officers which is paid by the National Judicial Council. They further noted that this obligation has tremendous impact on the finances of their individual states, as it currently accounts for a significant portion of the revenue
accruing to the states on a continuous basis. The Plaintiff states have been made to provide courtroom, residential quarters, furniture, vehicles, generators and other capital expenditure as well as recurrent expenditure of the respective states. They also invoked the original jurisdiction of the Supreme Court to seek a resolution of the dispute and determine the respective constitutional rights, duties, responsibilities and obligations of the parties under the Constitution. The plaintiffs therefore call on the Apex Court to interpret the constitutional provisions on the funding of capital and recurrent expenditure for the judiciary. The legal team of the plaintiffs led by Augustine Alegeh SAN include, Babajide Koku SAN, Solomon Umoh SAN, Garba Tetengi SAN, Tawo Eja Tawo SAN, Seni Adio SAN, Ekeme Ohwovoriole SAN, Paul Harris Ogbole SAN, Aikhunegbe Malik SAN, Olawunmi Nwano, Oroma Azeez, Kelechi Onwuegbuchulem, Chinwe Onumonu and Abdulhakeem Ibrahim Badamasi.
Highlights on the emergency economic stimulus bill, 2020 cal goods and deferral of mortgage payments to the Federal Mortgage Bank of Nigeria for a fixed term.
MICHAEL EZEH AND LATIFAT MORADEYO
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lthough, the primary target of the COVID 19 pandemic is public health, its impact on the global economies is quite calamitous and unprecedented. Business process functions across most industries are severely deterred due to the immense pressure resulting from the effects of the Covid-19 pandemic, therefore, many multinationals, complex and businesscritical services running a global scale as well as the Micro, Small and Medium Enterprises (MSMEs) must be reassessed to meet the realities of our time. Countries around the world have put in place monetary and fiscal measures to cushion the hardship of the deadly virus on businesses, individuals, and households. In a bid to cushion the effect of the COVID- 19 pandemic, the House of Representatives on the
24th March, 2020 passed the Emergency Economic Stimulus Bill, 2020 (“the Bill”). According to Section 1 of the Bill, the objectives of the Bill are as follows: 1. To provide temporary relief to companies and individuals and alleviate the adverse financial consequences of a slowdown in economic activities as a result of Covid-19; 2. To protect the employment status of Nigerians who might otherwise become unemployed; 3. To provide a moratorium on
NBA president intervenes in
INSIDE NBA Ikeja branch election crisis
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mortgage obligations for individuals; 4. To eliminate additional fiscal bottleneck on the importation of medical equipment, medicines, personal protection equipment, etc.; and 5. To cater to the general wellbeing of Nigerians pending the eradication of the pandemic and a return to economic stability. The Bill provides for three relief which are; reduction of income tax liability of an employer, waiver of import duty on medicines and medi-
NBA interacts with association of lawyers with disabilities in Nigeria (ALDIN)
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Reduction of Income tax liability of an employer By Section 3 of the Bill, any employer that does not retrench any of its personnel but maintains the same employee status from 1st March, 2020 till 31st March 2020, such employer will be entitled to 50% reduction on Personal Income Tax remittances due or paid on its employee’s behalf from its income tax liability. For the purpose of the Bill, an employer qualifies to benefit from this tax relief if there is a reduction in number of employees due to death arising from natural causes, voluntary disengagement, or disengagement by virtue of a breach of the Labour Act Cap L1 LFN 2004. According to the Bill, this tax rebate is only open to business registered either as an incorporated company pursuant to Part A of Companies and Allied Matters
Powers of the Courts to Interfere with the Exercise of CAC’s Discretionary Powers
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Act (“CAMA”) or a business name under Part B of the Act. with an exclusion of Employers that are partly or wholly under the Petroleum Profit Tax (“PPTA”) Act are not eligible for this relief. Import duty waiver on medicines and medical goods Section 10 of the Bill provides for import duty waiver on medical equipment, medicines, personal protection equipment, and other medical supplies and such medical necessities that may be required for the treatment and management of the COVID-19 disease in Nigeria. Import duty waivers shall take effect from 1st March 2020 to 31st 2020. However, this period may be further extended by the President in line with section 13(1) (a) of the Customs, Excise, Tariffs etc (Consolidated) Act. To be Continued next week Michael Ezeh and Latifat Moradeyo Associates (KMO Legal)
Arbitral awards as sovereign debt risks: Impact of P&Id and eurafic cases
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Thursday 01 October 2020
BUSINESS DAY
THEBAR
BD
NBA president intervenes in NBA Ikeja branch election crisis …directs postponement of branch elections
LegalBusiness
NBA president visits Kano state Grand Khadi, commends affirmation of Aminu’s constitutional right of appeal
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he President of the Nigerian Bar Association, Mr. Olumide Akpata on Monday 28 September, 2020 intervened in the brewing crisis threatening to engulf the Ikeja Branch of the Nigerian Bar Association as a result of the Branch’s 2020 elections. It would be recalled that the immediate past NBA President, Mr Paul Usoro, SAN had on 30th June, 2020, dissolved the Ikeja Branch Election Committee constituted on 14th May, 2020 and appointed a Caretaker Committee composed of Messrs Olabisi Ade-Ademuwagun, Esq., Adebamigbe Omole, Esq., and Monday Ubani, Esq to manage the affairs of the Ikeja Branch for a period of three (3) months and organise the Branch Elections. Accordingly, the Caretaker Committee fixed 29 September, 2020 for the Branch elections. Following the appointment of the Caretaker Committee, various disputes and controversies have emerged, including disputes around the qualification or otherwise of one of the candidates for the Branch Chairmanship position, which resulted in at least two separate lawsuits challenging the Branch elections, as well as the recent resignation of Monday Ubani, Esq. a former Chairman of the Branch, from the Branch Caretaker Committee. In a bid to ensure that the con-
troversies do not further degenerate and throw the Branch, which is one of the largest in the Association, into a full-blown and intractable crisis, the NBA President Mr. Olumide Akpata on Monday 28 September, 2020 convened a Stakeholders meeting where, together with the General Secretary of the NBA - Mrs. Joyce Oduah, he met with the Caretaker Committee to resolve the impasse. Also in attendance at the meeting were past Chairmen of the Branch, Senior Advocates of Nigeria and a cross section of other members of the Branch. At the meeting, it was agreed that in view of the pendency of the various actions pertaining to the Branch elections, postponing the elections was the best course of action in
order not to render the decisions of the court nugatory and also to allow for the possibility of the amicable resolution of the cases. Consequently, the NBA President directed that the Branch elections, which was scheduled for today, be postponed to a later date. The President also stated that in line with Article 11 of the Uniform ByeLaws for Branches contained in 3rd Schedule to the NBA Constitution 2015 (as amended), a new Caretaker Committee will be appointed before close of business on Wednesday 30 September 2020, when the tenure of the current Committee will elapse, to manage the affairs of the Branch in the interim and organise the Branch elections.
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s part of his bid to ensure the NBA works for all, the NBA President, Olumide Akpata, recently paid a courtesy visit to the Grand Khadi of Kano State, Alhaji Tijani Yussuf Yakassai. Mr. Akpata who was in Kano for an Interactive Session with members of the
tice within the Sharia Court system and a close working relationship between the Court and the NBA would be in the best interest of these members of the Association. He said “My visit to the Grand Khadi is both timely and important. We cannot afford to leave anyone behind. Many Nigerian lawyers practice within the
Bar in Kano State was accompanied on the visit to the Grand Khadi by the Attorney General of Kano State, Musa Lawan Esq and the Chairmen of the Kano and Ungogo Branches of the NBA. In his welcome address, the Grand Khadi noted that Mr. Akpata’s visit to the Sharia Court of Appeal was historic being the very first by a serving President of the NBA. He was hopeful that the momentous occasion would herald enhanced cooperation between the NBA and the Sharia Court and ultimately engender a mutually beneficial working relationship between both institutions. In his remarks, the NBA President stated that it was important for him to visit the Grand Khadi because many members of the NBA prac-
Sharia Court system and so the Court is an important part of our justice system. I believe that a cohesive and close working relationship between the Sharia Court and the NBA is pivotal to the progress of the NBA.” The NBA President went ahead to commend the Grand Khadi for championing many lawyer-friendly policies including ensuring that Khadis in the Sharia Courts at all levels are qualified Legal Practitioners. He also expressed his personal delight that all parties involved in the trial and sentencing of Yahaya Aminu, the Kano-based musician who was recently sentenced to death by a Sharia Court, have affirmed that Mr Aminu has the inalienable right to appeal this conviction and that this right will not be abridged.
NBA interacts with association of lawyers with disabilities in Nigeria (ALDIN)
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n Wednesday, the 23rd of September 2020, the leadership of the Nigerian Bar Association (NBA), met with a delegation from the Association of Lawyers with Disabilities in Nigeria (ALDIN) led by its President, Daniel Onwe to discuss issues affecting members of ALDIN. Some of the issues raised by ALDIN were the inaccessibility of courts in Nigeria by lawyers with disabilities; discrimination against lawyers with disabilities by most law firms as well as inhumane treatment faced by lawyers with disabilities in court. Also discussed were the absence of sign language interpreters in courts; non-representation of lawyers with disabilities in the NBA and failure of NBA branches to make attendance to branch meetings easy for lawyers living with disabilities. In his reaction, the NBA President Mr. Olumide Akpata, tendered an unreserved apology on behalf of the Association to all lawyers with disabilities for the neglect historically suffered by them and promised that the NBA will henceforth take steps towards a paradigm shift in the mindset of members of the NBA and the Nigerian populace at large, in their relationship with persons living with disabilities. He also pledged that the NBA will be more sensitive to the needs of not just lawyers with
disabilities but also every senior citizen in the NBA. The President further pledged that the NBA will ensure that the Lawyers with Disabilities Forum (LWDF) gets more active and promised to introduce an annual event dedicated to the LWDF where issues faced by lawyers with disabilities will be discussed and solutions proffered. Also, in line with his campaign promise to make the NBA more inclusive, the NBA President www.businessday.ng
promised to pursue an amendment of the NBA constitution to ensure that the Chairman and Secretary of the LWDF are made statutory members of the NBA National Executive Committee (NEC). The NBA President further harped on the need for capacity building and promised to create specifically tailored programmes that would help to shore up the capacity of lawyers living with disabilities in Nigeria.
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Thursday 01 October 2020
BUSINESS DAY
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LegalBusiness
Powers of the Courts to Interfere with the Exercise of CAC’s Discretionary Powers
…The case of Musical Copyright Society Nigeria (Ltd/Gte) v. Copyright Society of Nigeria (Ltd/Gte) & 2 Ors TEMILOLUWA OLADELE (Associate, Aelex)
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n a judgment delivered on 25 March 2020 in Musical Copyright Society Nigeria (Ltd/Gte) v. Copyright Society of Nigeria (Ltd/Gte) & 2 Ors., the Lagos Division of the Federal High Court (“the Court”) held, inter alia, that: (i) although the Corporate Affairs Commission (“CAC/the 2nd Defendant”) has discretionary powers, the Court has the power to intervene where the discretionary powers are not properly exercised; (ii) it is unlawful for the CAC to approve a name for registration, which is the same as or similar to another reserved name during the approved reservation period; and an organisation whose scope of copyright is restricted to musical rights could not be legally permitted to use the name ‘Copyright Society of Nigeria’ which encompasses rights arising from literature, arts, music, drama, cinematography, broadcast, architecture, computer programmes, and so on.
validation of the name. However, they were told that they could not re-validate the name because the 2nd Defendant had approved ‘Copyright Society of Nigeria Ltd/ Gte’ in favour of the Performing and Mechanical Rights Society of Nigeria (“PMRS/the 1st Defendant”) who intended to change its name from PMRS. The approval was reported granted on 23 November 2009, which was still within the reservation period for the name ‘Copyright Society of Nigeria’ granted in favour of the Plaintiff. The change of name and registration of PMRS’ new name was effected on 9 December 2009.
BACKGROUND FACTS On 4 October 2009, the Plaintiff applied to the 2nd Defendant to reserve the name ‘Copyright Society of Nigeria’ for registration, and the said name was approved by the 2nd Defendant. The name was reserved for 60 days, with the reservation set to expire on 4 December 2009. Thereafter, the Plaintiff decided to add ‘Ltd/Gte’ to the name and submitted another application for availability and reservation of the new name, attaching the earlier approved availability/ reservation certificate in respect of ‘Copyright Society of Nigeria’. However, the 2nd Defendant refused reservation of the new name and advised the Plaintiff to apply under Part C of the Companies and Allied Matters Act (“CAMA”) for the registration of the entity. The Plaintiff then decided to revert to registering an entity with the name ‘Copyright Society of Nigeria’ instead of applying for a new name under Part C of CAMA. However, due to the absence of some of the Plaintiff’s trustees who were unavailable to append their signatures to the registration forms, their solicitors were unable to file the registration documents before the expiration of the reservation period on 4 December 2009. The name reservation for ‘Copyright Society of Nigeria’ in favour of the Plaintiff, therefore, expired on 4 December 2009. Thereafter, the Plaintiff, through its solicitors, went for re-
THE PLAINTIFF’S POSITION The Plaintiff submitted that by the Regulations of the 2nd Defendant, an applicant is allowed to reserve a name for registration over a period of 60 days. During that period, no other applicant is allowed to use the name. The Plaintiff stated that it had reserved the name ‘Copyright Society of Nigeria’ for 60 days from 4 October 2009 to 4 December 2009. Therefore, the 2nd Defendant had violated its own Regulations by permitting a change of name from PMRS to the ‘Copyright Society of Nigeria Ltd/Gte’ at a time that the Plaintiff had duly reserved the name. This is more so because there were pending petitions with the 2nd Defendant and the 3rd Defendant (the Attorney-General of the Federation) dated 13 November 2009 against the use of the name ‘Copyright Society of Nigeria’. The Plaintiff also submitted that there is evidence that it attempted to register the name ‘Copyright Society of Nigeria Ltd/Gte’ as far back as 1984, but was refused by the 2nd Defendant on the ground that the name was too broad and generic to be incorporated by a private or sectional organisation. As such, it would be a violation of Section 42 of the 1999 Constitution for the 2nd Defendant to permit the change of name from the defunct PMRS to the name ‘Copyright Society of Nigeria Ltd/Gte’. The Plaintiff further submitwww.businessday.ng
ted that an organisation whose genre of copyright is restricted to musical rights ought not to be permitted to use the name ‘Copyright Society of Nigeria’, being a term encompassing rights arising from literature, arts, music, drama, cinematography, broadcast, architecture, computer programmes, and so on. The Plaintiff also argued that changing the name of PMRS to ‘Copyright Society of Nigeria Ltd/Gte’ amounts to merely dropping the word ‘musical’ from the Plaintiff’s name (Musical Copyright Society Nigeria (Ltd/Gte), which can be considered as passing off and is capable of causing confusion with the Plaintiff’s identity. On the whole, the Plaintiff urged the Court to hold that the approval and subsequent registration of ‘Copyright Society of Nigeria Ltd/Gte’ in favour of the 1st Defendant was unlawful and make orders to reverse the unlawful acts. THE 1ST DEFENDANT’S POSITION The 1st Defendant contended that, by the Plaintiff’s own admission, the Plaintiff ’s name reservation expired on 4 December 2009. The 1st Defendant also argued that the Plaintiff was only trying to mislead the Court when it said that it was informed that the 1st Defendant’s name was approved on the 23 November 2009 when the Plaintiff ’s reserved name was valid and subsisting. The 1st Defendant submitted that it was registered as Copyright Society of Nigeria Ltd/Gte on the 9 December 2009, as opposed to 23 November 2009 and that by 9 December 2019, the Plaintiff’s name reservation had expired. The 1st Defendant was, therefore, registered five (5) days after this reservation expired. Thus, the Plaintiff ’s purported application to revalidate the expired reservation as contained in its letter to the 2nd Defendant, dated 22 December 2009, was after the registration of the 1st Defendant. The 1st Defendant further submitted that the discretion of
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deciding whether a name to be registered offends an existing name on the Register of the 2nd Defendant is a discretion to be exercised solely by the 2nd Defendant and the Court does not have the jurisdiction to interfere into such exercise. On the whole, the 1st Defendant asked the Court to dismiss the Plaintiff’s case. THE JUDGMENT In its judgment, the Court ruled as follows: (a) it is clear from the submissions of parties and the documentary evidence before the Court, that the 2nd Defendant approved the name ‘Copyright Society of Nigeria’ in favour of the Plaintiff to last for 60 days, between 4 October 2009 and 4 December 2009. Consequently, it was only after 4 December 2009 that the name would cease to be reserved for the Plaintiff. Also, according to the provisions of Section 32 (2) of the Companies and Allied Matters Act Chapter C20, Laws of the Federation of Nigeria 2004 (CAMA) [now repealed by CAMA 2020), no other name which, in the opinion of the CAC, bears too close a resemblance to the reserved name shall be registered for the period of reservation. It is therefore a misnomer to give the name which the Plaintiff has applied to register, or similar to what the Plaintiff seeks to register, to the 1st Defendant on 23 November 2009 when the time allowed for the Plaintiff to complete their registration had not expired. (b) The Court stated that even though CAMA confers the discretionary right to reject or accept a name on the CAC, the Court has the powers to intervene when such discretionary powers are not properly exercised. (c) The Court raised the question ‘are the names “Copyright Society of Nigeria” and “Copyright Society of Nigeria Ltd/Gte” not similar and capable of misleading the public as expressed in the opinion of the 2nd Defendant?’. The Court answering the @Businessdayng
question in the positive held that the two names are similar and that the 2nd Defendant ought not to have approved ‘Copyright Society of Nigeria Ltd/Gte’ for the 1st Defendant while the reservation of ‘Copyright Society of Nigeria’ for the Plaintiff had not elapsed. The Court further stated that the issue of whether the Plaintiff’s present name is similar to that of the 1st Defendant is of no moment because the 1st Defendant’s present name was illegally approved. (d) The Court accepted the Plaintiff’s argument that an organisation whose genre of copyright is restricted to musical rights could not legally be permitted to use the name ‘Copyright Society of Nigeria’, being a term encompassing rights arising from literature, arts, music, drama, cinematography, broadcast, architecture, computer programmes, and so on. The Court, therefore, declared the approval and registration in favour of the 1st Defendant unlawful, gave injunctive orders against the Defendants on the use of the ‘Copyright Society of Nigeria’ name, and made an order directing the 2nd and 3rd Defendants to take necessary steps to rescind the 1st Defendant’s name change and registration as ‘Copyright Society of Nigeria Ltd/Gte’. TAKEAWAY The takeaway from the Court’s decision is that courts will not hesitate to invoke their supervisory powers over regulatory agencies and other administrative bodies who may have discretionary administrative powers, where it appears that such discretionary powers have not been exercised lawfully or properly. In the present matter, although the CAC had purportedly exercised its discretion under section 32(2) of the CAMA, the Court invoked its supervisory powers, especially in light of the Court’s exclusive constitutional powers to entertain all civil causes and matters arising from the operation of the CAMA. CONCLUSION The discretionary powers given to administrative bodies are not boundless and should be exercised within the confines of the relevant legal frameworks. Where there is a departure from the letters of the law, the courts are able to investigate and review such exercise of discretion. As such, the administrative bodies should refrain from inconsistent application of laws and regulations, which are indicators of arbitrariness.
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Thursday 01 October 2020
BUSINESS DAY
ARBITRATION
BD
LegalBusiness
Arbitral awards as sovereign debt risks: Impact of P&ID and eurafic cases
D
er iving from the sovereignty principle, sovereign debt literar y refers to how much a country’s government owes. Often times, the primary source is through outside borrowing; hence it can be defined as national or government debt because the word “sovereign” connotes national government. However, due to its nationalistic nature and the fact that internal national borrowing is rarely existent especially in developing economies like Nigeria, it generally refers to how much a country owes to external creditors. While borrowing remains the principal source of sovereign debts, debts also accrue from other sources and one of such is judgment debt(s) from court cases or arbitral awards arising from arbitral proceedings in disputes involving federal government. Simply explained, it implies what a national government owes to foreign judgment creditors. It is imperative that developing nations focus on mitigation, reduction or management of judgement debts or arbitral awards that are of such critical importance or volume that they portend risk for a country in form of sovereign debt risk. The reason is that huge exposure to national debts of whatever nature and form has adverse economic and investment implications. P&ID and Eurafic Power Cases In January 2017, an ad-hoc arbitral tribunal sitting in London by a majority of two is to one made a final award of $6.597 billion, together with interest at the rate of 7% starting from 20 March 2013 until the payment is made, in favour of Process and Industrial Development Limited (“P&ID”), a company based in the British Virgin Islands and against the Federal Government of Nigerian (“FGN”). This was following an alleged breach of a gas supply and processing agreement between the FGN and P&ID, which was signed on 11 January 2010, based on which, FGN was to supply natural gas to P&ID’s production facility over a 20-year period. In return, P&ID would process the wet gas by removing natural gas liquids and return approximately 85% of the processed gas to the government at no cost to the Nigerian government. However, according to P&ID, FGN renounced their obligation under the agreement by failing to take any steps to supply the wet gas to the processing facility for three years. Consequently, in March 2013, P&ID commenced arbitration proceedings against the FGN pursuant to Clause 20 of the agreement and a final award of $6.597 billion was made by the tribunal. P&ID was granted leave to enforce the arbitral tribunal’s final award which now stands at about $9.6 billion by the Queen’s Bench Division of the English Commercial Court. However, on 4 September 2020, Sir Ross Cranston
of the Queen’s Bench Division of the High Court of England granted an application made by FGN for extension of time to challenge the award. The application was granted on the ground that there is prima facie evidence that the award was obtained by fraud and that Nigeria ought to be allowed time to prove the allegation of fraud. Also, on 28 January 2017, an arbitral tribunal sitting at the London Court of International Arbitration (“LCIA”) awarded a combined sum of ₦1.12 billion to Eurafric Power Limited (“Eurafric Power”) against FGN for the alleged breach of a share sale agreement between Eurafic Power and FGN over the assets of Sapele Power Station. A High Court in United Kingdom presided over by Justice Popple Well subsequently recognized the award as a court judgment on 15 January 2018. As at 23 October 2019, Eurafric Power has identified about 33 assets belonging to the government of Nigeria and situate in England over which it intends to enforce the award if the Nigerian government fails to pay the award sum. These incidents generated massive public interest, accusations and counter-accusations of professional negligence and how an execution of such heavy judgements would affect a large chunk of Nigeria’s revenue position. The economy is already bleeding and the nation became wary of further economic pillage. Expectedly, it has revived or shown the need for Nigeria to review her arbitration policy especially as it affects to international commercial agreements to which Nigeria is a party. This article therefore examines the impact of these arbitral awards and the consequent enforcement proceedings commenced in foreign jurisdictions vis-à-vis the sovereignty of Nigeria and the impact of these debts on the nation’s economy. Enforcement of Arbitration Awards Arbitration as a dispute resolution mechanism is only valuable to the extent that parties can enforce an agreement to arbitrate and a resulting award. Ordinarily, interwww.businessday.ng
national law does not recognise the obligation to arbitrate or enforce an arbitral award. However, contracting states can by agreement impose such obligation on themselves. Therefore, where a state enters into a bilateral treaty which provides for arbitration in the event of dispute, the state is bound by the agreement to arbitrate and an award from such arbitration will be enforced accordingly. This is in line with the principle of pacta sunct servanda in international law. Further to the foregoing, the New York Convention of 1958 (“the Convention”) makes provisions for the direct recognition and enforcement of arbitral awards as judgments of the courts of any state party, subject to review by that court on the grounds of fairness, non-arbitrability, public policy and due process. As at August 2020, the New York Convention has 165 state parties. By Article III of the Convention, these state parties have the obligation, subject to the conditions set forth in the Convention, to recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied on. Thus, foreign arbitral awards are enforced by state parties to the Convention in the same manner and without additional obligations as domestic arbitral awards. A person against whom an arbitral award is sought to be enforced has the burden of establishing the invalidity of the award. This burden may be discharged by proving one of the grounds provided in Article V of the Convention. These grounds include: absence of a valid arbitration agreement, lack of fair hearing, award in excess of jurisdiction of the arbitral tribunal, improper composition or procedure of the arbitral tribunal, where the award has not yet become binding on the parties or has been set aside or suspended by a competent authority in the country where it was made or under the law of the country in which it was made. In addition to the above grounds, the court may on its own motion refuse to recognise and enforce an arbitral
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award on the grounds that the subject matter of the dispute is not arbitrable and/or that recognition and enforcement of the award will be contrary to the public policy of the country of enforcement. Generally, the courts recognise and enforce international arbitral awards whenever possible. Thus, application for recognition and enforcement under the New York Convention is seldom refused. Sovereign Immunity Under the doctrine of sovereign immunity, a sovereign state may not, without its consent, be made a defendant in the courts of another state. The policy behind this doctrine is that national interest will be better served if disputes with parties who are related to foreign powers are resolved through diplomatic negotiations rather than by the compulsions of judicial proceedings. This doctrine has a number of exceptions. The first is that where a vessel is the subject of controversy, a claim of immunity will only succeed if the foreign government is able to show that at the time the suit was filed, the ship was actually in its possession and control. Secondly, foreign state-controlled corporations engaged in commercial activities are usually subject to local jurisdiction. In addition to the foregoing, sovereign immunity can be waived. In National City Bank v. Republic of China 348 U.S. 356 (1955), the Republic of China had brought suit to recover a bank deposit. The bank filed a counterclaim based on defaulted treasury notes of the Republic. The plaintiff claimed sovereign immunity as a defense to the counterclaim. The Court held that the Republic had waived its immunity by bringing suit, and that the counterclaim would be permitted even though it did not arise out of the same transaction as the original claim. The doctrine of sovereign immunity has evolved over time and states have gradually shifted from Victor Akazue Nwakasi Partner/Head– ADR/Arb. Group Olisa Agbakoba Legal @Businessdayng
of the court approved, in principle, the restrictive theory of sovereign immunity. It must be noted that in arbitral proceedings, arbitrators derive their powers from the arbitration agreement. The arbitration agreement constitutes a waiver of immunity from jurisdiction. However, in the absence of express words to that effect, immunity from execution is not waived by entering into an arbitration agreement. Therefore, while a sovereign may waive his immunity from being a defendant before a foreign court, such waiver hardly applies to execution of judgments and awards. The asset of a sovereign is usually immune from execution except where the sovereign consents to the execution in writing or where the relevant property is used or intended to be used for commercial purposes. In Donegal International v. Republic of Zambia [2007] EWHC 197 (Comm), the English court accepted the following waiver of immunity clause as effective consent to execution, “If proceedings are brought against it or its assets, no immunity from those proceedings (including without limitation, suit, attachment prior to the judgment, other attachment, the obtaining of the judgment, execution or other enforcement) will be claimed by or on behalf of itself or with respect to its assets”. On the other hand, in L R Avionics Technologies Limited v. The Federal Republic of Nigeria [2016] EWHC 1761, proceedings were brought to enforce a judgment (together with an arbitration award) against the Federal Government of Nigeria. L R Avionics was granted permission to register the judgment in England and it subsequently obtained a final charging order in respect of premises located in London, which were owned by Nigeria. The London premises were leased to a company for the purpose of providing Nigerian visa and passport services, amongst other things. Nigeria applied to set aside the charging order on the basis that the property was immune from enforcement. It was accepted that the use by a state of its own premises to carry out consular activities such as providing visa and passport services, could not be said to be a use for commercial purposes within the meaning of Section 13(4) of the State Immunity Act 1978. However, the Court had to consider the position if, instead of handling the applications itself, the state had granted a lease of the premises to a privately-owned company, to which the processing services were outsourced. The court held that the London premises were not being used for commercial purposes within the meaning of theState
To be continued next week Ugochukwu Eze Associate Counsel, ADR/Arb.Group Olisa Agbakoba Legal
Thursday 01 October 2020
BUSINESS DAY
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Thursday 01 October 2020
BUSINESS DAY
RESEARCH&INSIGHT
In association with
A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)
briu@businessday.ng
08098710024
Making LPG affordable to more households in Nigeria NAOMI MBAMA
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he use of cooking gas over the years has witnessed a steady progress as many households have left behind the use of kerosene stoves and firewood for a healthier and more economical method which is the cooking gas. Though, there has been an increase in the number of households using cooking gas, the percentage of households employing this means of cooking still doesn’t match up to the amount of cooking gas being produced in Nigeria. For instance, in the latest statistics published by the National Bureau of Statistics (NBS), captured under Nigeria Living Standard Survey 2018-2019, the nation’s data agency reported that 51.5 percent of Nigerian household cooked with 3-stone/open fire, and the rural area having 70.8 percent of their households using this mean of cooking. Compared with LPG usage, only 17.1 percent of the households in the country use LPG for cooking. Its usage is dismally poor in the rural area where only 5.1 percent rural households were reported to be using LPG. Based on available data, Nigeria is the largest producer of cooking gas in Africa, but not one of the top consumers of this cooking gas, as most households are still heavily reliant on kerosene stoves. The year-on-year graph shows the growth in price of cooking gas across the thirty-six states in Nigeria between August 2019 and August 2020. It can
Source: NBS
be seen from the above graph that majority of the states saw a decrease in the price of cooking gas, while some of the states saw an increase instead in the price of cooking gas within this period. In comparing the various quarters, however, the average price of cooking gas as at December 2019 was N4,176.20 and at the first quarter of the year 2020, it was N4,180.68, showing that there was a marginal increase in the price of cooking gas by 0.11%. The average price of gas in the second quarter of 2020 however was N4,145.87 showing a decrease in the price of cooking gas between the first quarter and the second quarter by 0.83% and a decrease in price of cooking gas between December and the second quarter by 0.73%. The highest average price for cooking gas in 2020 was in March at N4,181.22, while the lowest average price of cook-
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ing gas was recorded in July 2020 at N4,126.82. The drop in the price of cooking gas around the second quarter could be attributed to the lockdown that ensued due to the coronavirus pandemic, as demand for cooking gas reduced. The top ten states that
experienced growth in price of cooking gas between August 2019 and August 2020 were Niger, Delta, Taraba, Ebonyi, Edo, Nasarawa, Lagos, Kogi, Anambra and Borno. Niger State, with a growth rate of 3.93%, recorded the highest growth rate in LPG price and it was followed by Delta with a growth rate of 2.14%. Taraba State saw price increase to the tune of 1.91%; Ebonyi, 1.48%; Edo, 1.45%; Nasarawa, 1.14%, Lagos, 0.90%; Kogi, 0.78%; Anambra, 0.53%, and Borno with a growth rate of 0.21%. Amongst all the states in Nigeria, the three states that had the highest average price of LPG in the first quarter of 2020 were Cross River, Akwa Ibom and Bayelsa. Cross River had an average price of N4,678.11; Akwa Ibom had an average price of N4,670.62, and Bayelsa had an average price of N4,679.62, while the states with the lowest average price in the first quarter were Kano, Zamfara and Kaduna N3,716.67 in the first quarter of 2020 while
Zamfara and Kaduna had N3,768.79 and N3,823.17 respectively. In the second quarter of 2020, Cross River, Bayelsa and Akwa Ibom emerged as the states with the highest average price of cooking gas. Cross River had an average price of N4,612.99 as it experienced a decrease of 0.08% from the previous quarter’s price. Bayelsa had an average price of N4,609.99 as it experienced a decrease of 1.46% from the previous quarter’s price, and Akwa Ibom had an average price of cooking gas of N4,596.46 leading to a decrease of 1.59% when compared with the previous quarter’s price. Unlike the top 3 states of the first quarter which remained the same for the second quarter, the last three states for the second quarter in terms of average price changed. They were Oyo, Lagos and Zamfara. Oyo had an average price of cooking gas at N3,777.54; Lagos had an average price of cooking gas at N3,836.12, and Zamfara had an average
Source: NBS
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price of cooking gas at N3,841.89. Over the years, the federal government has continually subsidized kerosene, making it cheaper than the cooking gas, and so, a huge hindrance to the growth of cooking gas. The government also put in placed harsh tariffs and tax policies on cooking gas and its related equipment, making the product quite expensive. Other than the taxation and tariff policies, the government also put in place very strict conditions on the certification to import LPG equipment. Importers of LPG equipment are made to pay the flight and accommodation fees for government agency workers to inspect the standard of the equipment to be imported, according to information gathered from Energy Mix Report, an online energy publication, news service and resource centre for petroleum industry professionals. During importation they are made to pay a percentage as the import charge. These caused the importers of cooking gas to increase prices so at to make profit, making cooking gas expensive. As such, to solve the problem of high price of cooking gas, the government would have to get involved. The tariffs and taxation policies would have to be relaxed. Subsidies be made available for importers of cooking gas related equipment such as gas cylinders, etc. The conditions for certification to import would also have to be relaxed, so as to reduce the burden of importers and the eventual cost of the cooking gas.
Thursday 01 October 2020
BUSINESS DAY
35
news
Mass sack looms as Shell plans 9,000 job cuts worldwide DIPO OLADEHINDE
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any oil workers in Nigeria may struggle to retain their jobs in a low oil price e nv i ro n m e nt a s R oy a l Dutch Shell announced on Wednesday it plans to cut 7,000 to 9,000 jobs worldwide. Shell, which employs more than 4,500 Nigerians directly and another 20,000 indirectly through the network of companies that provide supplies and services, said “reduced organisational complexity” is to save between $2 billion and $2.5 billion by 2022 on an annual basis.
Shell’s CEO Ben van Beurden described it as an “extremely tough process” but said “reducing cost is essential”. He referred to bringing technical support staff for its global assets “all into one place”, and there being “too many people in the middle” of the organisation in terms of management “layers”. “In some cases there are good reasons for that, but as a principle we are looking to remove that complexity, and cost, so we can be the nimble, efficient and customer-focus e d company we need to be,” Van Beurden said. The move comes five months after it cut its divi-
dend for the first time since World War II. Battered by the travails of the coronavirus pandemic and a fall in oil prices, managing costs has emerged the biggest issue in Nigeria’s oil and gas sector as many producers are drilling at costs higher than the price of oil in the international market. Oil majors have been rocked by the dual shock of Covid and the oil price crash. In July, Shell announced an $18 billion loss in the second quarter of the year due to the impact on its business. The job cut figure has been released in an update ahead of its third-quarter results.
In its update, Shell said it expected adjusted earnings losses for its Integrated Gas and Upstream segments, while the Oil Products and Chemicals divisions will be $200400m and $100m worse off, respectively, compared to Q2. Post-tax impairment charges of $1.0 billion to $1.5 billion are also expected for the third quarter, Shell said. Following news earlier this year that BP planned to cut 10,000 jobs, Rystad Energy predicted all oil majors would be seeking to cut roughly 15 percent of their workforces in response to the current crisis.
L-R: Moses Duku, group head, media relations office; Zubairu Ibrahim Bayi, executive director, admin; Oliver Berger, divisional manager, and Ismaila Mohammed Amodu, project coordinator, all of Julius Berger Nigeria plc, at the commissioning of the Itakpe-Warri railway line and facilities at Agbor, Delta State.
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he Federal Government has lifted ban on Emirates Airline, saying the airline would now be allowed to operate into Nigeria. Hadi Sirika, minister of aviation in his twitter handle @hadisirika stated, “UAE has written to state that they agree to issue visas to Nigerians, consequently a decision has been reached to allow Emirates fly into Nigeria. Commencement of the visa issuance is condition precedent. Please bear
with this unusual situation.” Few weeks ago, the government barred Emirates Airlines from operating in Nigeria. It was learnt that the decision to withdraw the approval is due to the refusal of United Arab Emirates (UAE) government to lift visa ban on Nigerians and as a result the Federal Government reciprocated by withdrawing the approval given to Emirates to operate into the country. This was made known by Hadi Sirika in a tweet. He explained that the decision to revoke the approval was www.businessday.ng
arrived at after a meeting with the Presidential Task Force on Covid-19 had with European Union Ambassadors, who wanted to review their status. “The PTF sub committee met today with EU Ambassadors to discuss Lufthansa, Air France/KLM ban. The meeting progressed well. Emirates Airlines’ situation was reviewed and they are consequently included in the list of those not approved, with effect from Monday September 21, 2020”, the tweet reads. The government had two months ago vowed to
ANIEFIOK UDONQUAK, Uyo
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ommunities in Akwa Ibom State are littered with abandoned projects awarded by the Niger Delta Development Commission (NDDC), some of them spanning over 15 years. The communities submitted that the intended positive impact of the NDDC has not been felt in the state. The trend, according to them, has denied the oil rich region and the people better standard of living and the benefits that should accrue to them. Checks by BusinessDay, revealed, for instance, that a comprehensive water project in Nduo Ndu Okon Eket in Eket local area awarded in 2017 by the NDDC to provide potable water for the people is far from being completed, leaving the community at the mercy of water-borne diseases and other health hazards. According to the residents, the sign post bearing the contractor’s details on site has been removed by the contractors so they could not be traced. In Usung Udo Odueyang, Eket local government area, the non-completion of a two kilometre road connecting Nduo Ndo one and two villages awarded in 2014 has become a nightmare to the dwellers in these villages, as the areas are often flooded whenever it rains while the road remains impassable. Also several road projects, including Friday Tom Inyang, lkot Ibiok Afaha Atai, Ikot Udofa Roads as well as remedial works on the failed section of Helen Esuene Mkpok Way in Ikot Udoma and Afa Idung Inyang Usoekong communities in Eket, are all in a sordid state following
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enforce the principle of reciprocity in granting permission to airlines to resume operations. Before the resumption of international flights in the country, the government had announced t hat A i r F ra n c e, K L M , Etihad, RwandAir, Air Namibia, Royal Air Maroc, Lufthansa, TAAG Angola Airlines were not granted approval to commence flight operations. Cabo Verde and South African airlines were also denied approval as international flights had yet to resume in their countries.
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their none completion. Ita Udoh, a community leader blamed the abandoned projects and the alleged poor performance of the NDDC on the lack of supervision, commitment and synergy with various state governments across the Niger Delta region. He called for a complete overhauling of the NDDC through the ongoing forensic audit for the wellbeing of the region. At Ikot Itak in Ibeno local government area, the hope of commuting on a good road has been dashed as the Inua Eyet Ikot-Itak Ukpa Okposo Road has been completed after four years after commencement of work. Awarded in 2016 the road project was meant to link over 20 riverine communities in Ibeno, host community to ExxonMobil, a major oil producing firm. In Oron local government area, a number of abandoned NDDC projects littered various communities. They include Mary Hanney Road and Oron Jetty Road. A community leader, Essien Effiong said the contractor has been using ‘off and on’ approach leaving some stretch of the road uncompleted. Also, residents of Enwang, headquarters of Mbo local government alleged abandonment of several projects in their communities after the contractors had collected mobilisation fees. Some of the projects have to do with roads, jetties and schools. According to George Antai, a community leader, Enwang community is littered with so many abandoned projects by the intervention agency. He said “it is appalling that some of the contractors abandoned the projects after collecting mobilisation fees.
Johnians to commission N50m projects Saturday DESMOND OKON
FG lifts ban on Emirates, says UAE now to issue visas to Nigerians IFEOMA OKEKE
Abandoned NDDC projects litter A/Ibom
ld students of St John’s Grammar School, IleIfe, Osun State will, on Saturday, commission projects worth N50 million and formally hand them over to the school’s management. The projects include gated fence worth N18 million; a fullsize bronze statue of the founder, Rev. Father Fabian Cloutier, N5.1 million; modern toilets, N12.5 million; library renovation, N5 million and renovation of two blocks of classrooms at N15 million. Osun State governor Isiaka Oyetola and Oba Enitan Ogunwusi, the Ooni of Ife are expected at the event. According to a statement by Kehinde Bamigbetan, a former Lagos State commissioner and publicity secretary of the old students’ association, while the gated fence was funded from the purse of the association, @Businessdayng
individual sets and philantropic old students facilitated the renovation of facilities. Among the old students who sponsored projects is Ayodele Alabi whose bronze statue of the founder welcomes visitors to the main grounds of the school. The statue, atop a marble structure, is 4.3m (13ft) in height. Besides, Ayodele also renovated a wing of a block of classrooms. Another old student, Iyiola Omisore, former deputy governor of Osun State, donated a computer class and generator while Babajide Omoworare, a senator renovated the administrative block. The 1973/77 and 1976/81 sets renovated blocks of classrooms while the 1979/84 set renovated the library. Bamigbetan said the association would also confer on the governor and the monarch the grand patron awards of the association to appreciate their contributions to educational development of the state.
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Thursday 01 October 2020
BUSINESS DAY
Corporate Social Impact
Onuwa Lucky Joseph Editor, (08023314782)
NIGERIA@60:
Corporate Nigeria’s Contribution to Nigeria’s Sustained Unity ONUWA LUCKY JOSEPH
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020 was supposed to be the magical year when everything came together for Nigeria. This was after it had been moved from the original 2010 date. After it became apparent that by 2010, we’d still be laggards in the comity of nations, we concluded that by the 2020 of our febrile imagination, we would be one of the top 20 economies in the world. Things have turned out a lot different. It’s become obvious that our Vision 2020 was all mouthing and little by way of movement. But that’s not to say we haven’t chalked up a few milestones. For whatever it’s worth, we are Africa’s biggest economy in terms of nominal GDP. But at the rate our currency is getting devalued and with our doing a lot less exporting, only time will tell how long that title stays ours. However, we must give the corporate sector its due for
Atedo Peterside
playing its part towards keeping this giant (yes, giant) of a country together despite the myriad contending interests and usually woeful national leadership. The private sector through its
adherence to merit as against government’s nepotistic hiring methods has brought Nigerians from different quarters and backwaters together to form a strong workforce that’s taking
Africa by storm. Without significant government input, Nigerian businesses are berthing in different parts of the continent (and the world, it must be said) and doing good business in those places. Aside that, the private sector has also done an excellent job of partnering with government at various levels to ensure a measure of infrastructure development that would not be there were it not for their input. Hopefully, there will be reinvigorated interest in ensuring the upgrade of schools, health centres, water supply, roads, etc. as more corporates burnish their CSR credentials with support in those critical areas. Our corporates are also in the forefront of sourcing, refining and deploying Nigeria’s human capital which is recognized worldwide for its immense worth. It’s true we could have made 60 years count for more. A lot more. Let’s mull that over even as we commemorate the occasion.
World Clean Up Day:
FBRA Calls for Collaboration towards a Waste Free Future ONUWA LUCKY JOSEPH
I
“
t was the 3rd of September, that day I’ll always remember…” Who doesn’t remember that intro to ‘Papa was a Rolling Stone’; a classic song by the fabled group, The Temptations. Sad story, the song. The father referenced was a rolling stone that gathered no moss. “Wherever he laid his hat was his home.” Pretty much what plastics do in today’s environment, wouldn’t you say. They nestle anywhere until another force comes that pushes them somewhere else. They are here, there and everywhere, to channel another old song. So how apt it is that 3rd of September was chosen as World Clean Up Day; a civic
Agharese Onaghise, Executive Secretary Food and Beverages Recycling Alliance (FBRA)
local communities on the need to collaborate with community collectors to care for our environment. Over 2,000kg of waste was removed from the environment through these clean-up activities to mark World Cleanup Day 2020. Volunteers from member companies including Nestlé, 7-up Bottling Company
Simi Nwogugu Becomes CEO of JA Africa ONUWA LUCKY JOSEPH
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ffective November 2020, Simi Nwogugu, currently CEO Junior Achievement (JA) Nigeria, becomes the Chief Executive Officer of JA Africa. With this landmark announcement made by the Board of Directors of JA Africa, Mrs. Nwogugu is expected to bring to her new role, valuable entrepreneurship and consulting knowledge, and 23 years of experience at JA—including as a volunteer, board member and executive director of JA Nigeria. As CEO of JA Africa, Simi will provide leadership and strategic execution for JA’s youth development agenda on the continent. She will drive JA’s regional initiatives and programs, including the organization’s expansion into new markets, while securing the partnerships and resources needed for JA’s education and digital skills development programs in Africa. Reacting to her appointment, Simi acknowledged that “the new role offers me an exciting opportunity to work more closely with colleagues on the continent as we deepen and expand JA’s mission of empowering young Africans for a successful future.” She is grateful to the JA Africa and JA Worldwide board of
Simi Nwogugu
directors, she says, “for entrusting me with this responsibility”; further remarking that she looked forward “to working with stakeholders and partners to make their vision a reality.” Simi stated her goal as being “to increase the impact of our work to significantly reduce youth unemployment and poverty across the continent.” A graduate of Mount Holyoke College in Massachusetts and Harvard Business School, Nwogugu is a Goldman Sachs alumna. She also holds a professional certificate in Organizational and Executive Coaching from New York University. Born and raised in Nigeria, Simi helped bring JA to the country in 1999. JA Nigeria has since grown to become one of the strongest JA member countries in Africa, reaching 1 million youth across Africa’s most populous nation. In recent years,
JA Nigeria has been particularly focused on communities in northern Nigeria, especially youth displaced by the Boko Haram crisis. What JA is about is preparation of young people for the work force and life in general. JA is about entrepreneurship, giving young folks responsibility at an early age, mentoring them and ensuring that they make mistakes early and in easily remediable situations. This gives them gumption to lead lives that are bold and inventive. Simi has done an excellent job of getting thousands of young Nigerians to go this route. It’s no wonder she gets this higher calling to make of the continent’s youngsters a huge entrepreneurial force. According to Charles Olumuyiwa Moyela, JA Africa Board Chair, “Simi’s appointment as CEO of JA Africa is timely and heralds a new era of growth and accelerated development for JA in Africa. She comes well prepared for the tasks ahead and is poised to scale up and surpass the laudable accomplishments of the JA Nigeria team, which she led passionately.” He believes “Simi’s leadership, energy, vision and partnership credentials will be pivotal to the delivery of JA’s work readiness, financial literacy and entrepreneurship offerings to Africa’s fast-growing youth
population,” The JA Africa network currently spans 14 countries, namely, Botswana, eSwatini, Gabon, Ghana, Côte d’Ivoire, Kenya, Mauritius, Nigeria, Senegal, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. JA programs and activities in The Gambia, Mozambique, Namibia, and Rwanda are scheduled to be flagged off in 2021. Asheesh Advani, CEO of JA Worldwide, sees Simi as a natural fit in her new role. “JA helps prepare entrepreneurial leaders for the global economy. Simi is a leader of leaders with a proven track record of serving the youth of Nigeria, and we are delighted to have her join the Senior Leadership Team of JA Worldwide and oversee JA Africa,” Advani said. The leading nonprofit organization, which marked its 100th year anniversary in 2019, reaches over 250,000 African youth each year, equipping Africa’s fast expanding youth population with the knowledge and skills required to start their own businesses, succeed in the global job market, and make sound financial decisions as adults. JA’s mandate in Africa, and globally, aligns with the United Nations Sustainable Development Goals, specifically SDGs 4, 8 and 17.
The WorkBooth Magazine celebrates anniversary with major milestones
T
he pan African digital management magazine, The WorkBooth Magazine has rolled out plans to celebrate its first anniversary of publication with major milestones to show. Tunde-Success Osideko, publisher, The WorkBooth Magazine, said in less than a year, the magazine has been endowed with an eightmember pan-African board, reached 3,500 readers, published six editions, organized a monthly virtual learning series, and launched an award program to recognize 50 career
Tunde-Success Osideko
influencers across Africa. It has also added a new section to the magazine called “Living and Working in Africa” to enhance its readers cultural understanding of the 54 countries in Africa. It has also upgraded the user interface www.businessday.ng
of the website and deployed a mobile application to enhance reader’s experience. The magazine since its launch in October 2019, has continued to provide businesses and professionals, access to insights and knowledge on workplace issues within the African context and added its voice to advance the world of work through its innovative initiatives. Activities planned will include social media challenges to explore our resilience as Africans in the face of the COVID-19 imposed restrictions and will climax in a 90 minutes
conference with keynote delivered by an accomplished HR Professional. The conference theme is ‘Accelerate:PositioningforRelevance in a Connected World’. And will hold on October 3, by 4 pm WAT. Additionally, as part of the celebration, the seventh edition of the magazine will be released to the public on 1 October, themed, Going Global. This edition features contributions from professionals across Africa and it explores the subject of globalization and its impact on talent and business in Africa.
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Nestle Nigeria Volunteers at Badagry on World Clean Up Day
movement uniting 180 countries and millions of people to clean up planet earth in one symbolic day. It is also a social action program aimed at combating the global solid waste problem, including the problem of marine debris. As it turns out, the number one item on the clean-up rakes and brooms and gloves are wayward plastics that should be bagged for recycling or safe disposal to ensure they neither mess up earth’s aesthetic nor its environmental integrity. On World Clean Up Day 2020, members of the Food and Beverage Recycling Alliance (FBRA) decided on the to come together to create awareness on the need for collaborative action. Established in 2018 as the Producer Responsibility Organization (PRO) for the food and beverage sector with a focus on enabling the collection, recovery and recycling of post-consumer packaging waste in compliance with the Extended Producer Responsibility (EPR) guidelines, part of FBRA’s mandate is promoting behavior change through consumer education and the empowerment of the recycling ecosystem. Working with other concerned stakeholders including Geocycle of Lafarge Group, Green Janitors, Kids Beach Garden, Recycledge, NESREA and LAWMA, the FBRA organized clean-up activities at Badagry, Ojo and Bonny Camp, in Lagos, and at Agbowo in Ibadan to raise awareness within the @Businessdayng
and International Breweries were on ground at the three locations to sensitize residents. While Agharese Onaghise, Executive Secretary, FBRA, promised that “We will continue to lead this change as well as the adoption of practices and partnerships to advance this important mandate,” Victoria Uwadoka, Corporate Communications and Public Affairs Manager, Nestlé Nigeria, reaffirmed, at the Badagry Cleanup exercise the Nestlé vision that “none of our packaging, including plastics, ends up in landfills, in oceans, or any waterways”, purpose being “to enhance quality of life for everyone today and for generations to come. ” FBRA members – Nigerian Bottling Company Limited, Nestlé Nigeria Plc., Nigerian Breweries Plc., Seven-Up Bottling Company Limited, Guinness Nigeria Plc., Intercontinental Distillers Limited, International Breweries Limited, Tulip Cocoa, Prima Caps and Preforms, DOW Chemicals, Tetrapak West Africa, The LaCasera Company Limited and Engee PET Manufacturing Limited provided incentives and support to reach a maximum number of people and to motivate the community collectors. Hopefully, 3rd of September next year should witness a much larger turnout.
(Kindly send feedback to 08023314782 / csrmomentum@gmail.com)
Thursday 01 October 2020
BUSINESS DAY
37
POLITICS & POLICY
NIGERIA at 60: Towards the land of our dreams
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IGERIA is 60- despite all that shehas been through as a nation. For some, it is a time to hit the street incolorful dresses for a carnival to exhibit what many a critic have described asour proclivity for flamboyance. To others, it is a time to get on our knees,thank The Almighty for bringing us this far as a united nation and, thereafter,reflect on our tortuous journey to adulthood. How have we fared? Have wedisappointed our forefathers? Are we more purposeful as we were atIndependence? Are our youths happy? Are the elders smiling? What is the stateof our infrastructure? Are we proud of our democracy? Is the world leaving usbehind? How long will our teething problems last? When will our security challengesabate? When are we going to fully recover from the terrible effects of COVID-19that has dealt our world a lethal blow? These are some of the many questions onmy mind as I reflected on Nigeria’s Diamond Anniversary. It all began here at the old RaceCourse, Tafawa Balewa Square on that rainy October 1, 1960 morning. Lagosserved as the cradle of our sovereignty and the capital of Nigeria as aprotectorate, then a republic (from 1914 to 1991). The unique topography ofLagos - its islands, sandbars and lagoons; our heterogeneous nature as a townthat is the melting pot of cultures – has positioned our state for itsleadership role in the economic, political, social and cultural development ofour great country. What originated as a fishing village on an island hasmetamorphosed into a thriving seaport and megacity. Lagos is no longer the nation’spolitical capital, but it is undoubtedly its business and financialengine-room. Indeed, it is West Africa’s commercial nerve centre. Lagos contributes30% of Nigeria’s GDP and holds no less than 80% of the country’s industrialcapacity. This is quite remarkable, considering the fact that Lagos is home to10% of Nigeria’s 200 million+ population on a landmass representing less than1% of our great Nation. Realizing early that long-terminvestment in critical infrastructure is an intrinsic part of economicdevelopment, Lagos pioneered many key projects, such as the early rail transitsystem, which yielded a corresponding growth in urbanization along the line ofthe railway on which towns, such as Ebute-Metta, Yaba, Surulere, Ijora, Ikejaand Agege, sprouted. We witnessed the population boom of the 1970s as a resultof the growth in the oil industry. This signaled a paradigm shift in our history– a period which opened up our coastal city with the influx of thousands ofpeople seeking greener pastures and jobs in the oil industry as well as theconstruction of a social housing programme. It was the crystallization of anidea that would go on to define the very essence of life in the sprawlingmetropolis – the hot chase for “The Lagos Dream”. As far back as the 80s, with risingunemployment statistics, we had understood the need to maximize theopportunities inherent in a citystate such as ours by diversifying
Babajide Sanwo-Olu
theabundant economic potential and harnessing human capital for better growth. Theroad to actualizing this was a dedicated will to develop alternate industriesin agriculture, technology, hospitality and entertainment, among others, aswell as in the informal sector. Our founding vision of a megacity in whichthere are opportunities for all, regardless of race and colour, remainsstrong. Today, a population of over 21million residents is evidence of the unprecedented rate at which Africa’slargest city is growing. Our urban footprints in the last 60 years provide awindow into the urbanization of Lagos, illustrating a story of the social,economic, environmental and political factors that have reciprocally shaped ourcity. Research suggests that these changes may be nothing compared to what wewill witness in the next 60 years. Maintaining the current growth and migrationrates, Lagos could become the world’s largest metropolis, home to 85 or 100million people. How are we poised to further steerNigeria through the next decades of her independence? We must look to thefoundational pillars which define good governance in any democracy. Ouradministration condensed this to six cardinal indices of development particularto Lagos State, yet adaptable to any city of the world, namely: TrafficManagement and Transportation; Health and Environment; Education andTechnology; Making Lagos a 21st Century Economy; Entertainment and Tourism;Security and Governance. These are encapsulated in the acronym T.H.E.M.E.S.Agenda for a Greater Lagos. What do you see when you close youreyes and imagine the Nigeria of the future, say 5, 10, 20, 50, 60 www.businessday.ng
or even 100years from now? This is the question I ask myself daily in the discharge of myduties and in implementing policies which are designed to be adapted for aworld beyond our present circumstances and realities. The litmus test for anycourse of action is to objectively answer whether a policy would be of benefitto our children and generations yet unborn. Afro-futurism is a concept that islargely shaping developments around the continent, Nigeria inclusive. In ourquest for a semblance of what a utopian African society would look like (ourvery own Wakanda if you like), Lagos is making monumental strides in thetransport and housing sectors. These are the two behemoths which often posegreat challenges to a city with a sprawling population such as ours. Some ofthe priorities of my administration are solutions which accommodate people andmove them efficiently from one place to another, significantly reducing lostproductivity time associated with current commute challenges. The Lagos Light Rail system is oneof such projects which will redefine our commuting experience and overhaul theentire transport system. Gleaning lessons from the railway operations of oldand infusing ultra-modern technology, this will open up Lagos like neverbefore, easing the movement of people and goods within the metropolis. We arein the final phase of delivering the 27km Blue Line, which connects Marina inthe heart of the city with Okokomaiko on the outskirts. It is set for test-runin December 2021. This will pave the way for the Red Line from Agbado-Marinaand six other planned routes, which are part of our transport masterplan. Thefuture of transportation is the
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ability to connect from opposite sides of themainland to Lagos Island in minutes. This will not only positively impact theease of doing business within Lagos, but promote enhanced interstate commercewith better opportunities for all. We are making the most of our uniquetopography by investing aggressively in an operational water transport system.Commuters are being ferried across Lagos waterways along various routes,comprising Ikorodu, Ebute-Ero, Apapa, CMS, Ikoyi and Ajah, with LAGFERRYservices. We launched 14 boats earlier this year and are set to double thefleet by the end of first quarter of 2021. We extended the campaign to safetyof passengers by removing water hyacinth from the water channels and creatingnavigation routes through the use of directional balls. These are all gearedtowards easing the pressure on our roads. We recently flagged off the 13.68kmlong BRT corridor from Oshodi-Abule Egba, which has drastically reduced traveltime from an average two hours during peak periods to approximately 30 minutes. This is in addition to an upgraded eticketing system, which will be integratedinto the BRT, LAGFERRY and Light Rail services. Acknowledging the need forpartnership in meeting the demand for commuting services, we have engagedride-hailing companies to develop regulatory guidelines which meet this demandand prioritize safety of passengers. These are all aimed at improving thepublic commuting experience and increasing productivity of an averageLagosian. Occupying just 0.38% of Nigeria’sland mass and one-third of that figure under water, it would seem the odds arestacked against us in housing. With our sight set firmly on the future, we aredeveloping Lagos Homes housing projects in many parts of our dear state. Somehave been delivered in Ikorodu, Igando, Lekki and Badagry. Besides, we areimplementing policies which make the creation of housing solutions easier, butwe are not oblivious of the limitations of the government to solely reverse thehousing deficit. We are continuously seeking partnership with the privatesector and real estate developers to jointly address this problem. One such venture is the Eko AtlanticCity, a mega real estate project which challenges our perceptions of what ispossible in the realm of city architecture. Popularly referred to as the “GreatWall of Lagos”, this entirely new coastal city being developed on landreclaimed from the Atlantic Ocean will become home to a quarter of a millionpeople and provide 150,000 with jobs. This template will set the stage for usto join the league of smart cities; this would have been inconceivable decadesago. Our commitment to providingsustainable energy and affordable power is challenging the traditionalstereotypes. A few months ago, the Lagos State Government launched aninnovation challenge (Lagos Smart Meter Hackathon), which is leveraging thetech community to find crowdsourced solutions to our metering gap throughlocally developed prototypes for prepaid meters. @Businessdayng
Similar initiatives aimed ataccelerating the pace of technological advancement are constantly incubatedthrough dedicated programmes at the Eko Innovation Center. In the same vein, we expanded theOlusosun landfill, one of Africa’s largest dumpsites, by 42 acres toaccommodate increased activity and plans to harness energy from the naturalgases which build up there. This is one example of the ways in which Lagosapplies homegrown solutions to problems, in this case waste management. To Lagosians, I cannot overstate thecrucial roles we all have to play as individuals in the achievement of theLagos of our dream. We rely on you, because you are our greatest resource –thedemographic dividend which is only payable when our young, vibrant workforceexert their full capacities to driving economic growth. When I close my eyes and think ofNigeria of the future, it is one that has largely been influenced by theadvancements we make here in Lagos. And so, my imagination is filled with theendless possibilities of an intermodal transport system that optimizes the useof road, rail and water as well as intracity aerial modes of transport. I seethe fantastic buildings that will dominate the city’s skyline as wecontinuously build up and also our coastline with the advent of floatingcities. But, most especially, I see you: thecreative, passionate, resilient people, who will make these dreams come truewith your output and advancement in commerce, industrialization, servicedelivery and commitment to excellence. I see a Lagos that becomes a netexporter of talents with ambassadors whose names reverberate from all cornersof the world. Our art and fashion gracing the runways of coveted shows andadorning the closets of icons; a pristine environment devoid of pollution andwhite sand beaches that will be the toast of the tourism industry; ourAfrofusion music and Nollywood works driving global conversations, dominatingthe screens of an enthralled audience from Sydney to California, Amsterdam andMumbai. Ever present in my mind’s eye are upscaled levels of export productionand much needed foreign exchange from the industrious merchants of theinternational markets at Ladipo or Balogun; and the sophisticated innovationsthat pop out of Yaba, our own Silicon Valley. Encompassing these socio-economicadvancements is the infectious warmth of our people and their boundless energy,their calmness in the organised buzz that characterises our city and, perhapsmost importantly, a cohesive security infrastructure that promotes peace. I refuse to accept that this is allthe fruit of my fertile imagination. No. I truly believe in our inherent powerto advance the course of Lagos and, by extension, Nigeria’s path towardsrealistic dreams. Adapting the lingo that has come to be associated withanother metropolitan city, I make bold to say that “You can make it here, andwin everywhere”. .Babajide Sanwo-Olu is the executive governor of Lagos State
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Thursday 01 October 2020
BUSINESS DAY
news With 600 road projects, President Bill to make NNPC limited liability company passes first reading “Fiscal terms for new deBuhari sets unbeaten record KAMARUDEEN OGUNDELE, Abuja requirement for the Nigerian a board as prescribed under National Petroleum Company Companies and Allied Mat- velopment investments based GARBA SHEHU
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s we mark the 60th Anniversary Day, the record-setting, mega roadways infrastructure development projects by the Buhari administration numbering up to 600 that are undergoing major upgradation or rehabilitation call for public attention and appreciation. The size and magnitude of the road projects notwithstanding, the clamour by Nigerians for more motorable roads is not abating, and neither is the President Muhammadu Buhari Government’s commitment to delivering on an improved national road network, which it inherited at different stages of disrepair from previous administrations. When there is a will, as the adage goes, there will be a way or two. Since 2015, the Buhari administration has done more than its predecessors to rehabilitate Federal Roads despite other competing infrastructural funding needs. For an Administration willed to funding numerous other critical national infrastructure projects aimed at economic self-reliance and increased domestic output, it is indeed commendable how the Buhari Administration devised economically sound fiscal strategies to fund the redevelopment of various Federal Highways, including those nearing completion. A quality road network being the most critical component of a national multimodal transportation plan is the foundation of a thriving economy. Good roads link up the national socioeconomic arteries, centres and hubs. People move about and perform everyday activities, mostly by road. It is also by the road that people go to earn a living, farm, or access other transportation modals like rail, air, and water. Essential social services such as education, healthcare, hospitality, community integration, neighbourhood security, religious and private interactions are majorly accessed by roads. A quality road network is therefore the mainstay of any thriving economy. Nigeria’s 108,000km of surfaced roads of which those categorised as Federal Roads make up 32,000km or 18 per cent had steadily deteriorated in the period preceding this administration through a combination of official neglect, a poor maintenance culture, and perhaps more fundamentally, the absence of a legal and policy framework for private sector participation in funding, management and maintenance of Federal Highways. Despite the recent drop in revenues due to lower oil prices and the aftershock of the Covid-19 shutdown, Nigeria’s economic potentials are enormous. Although the Buhari Administration is mindful of the pains the average Nigerian is passing through due to the coronavirus-induced
recession, it has nonetheless been resolute in continuing with its economic recovery plans which have as a key component the rebuilding of national infrastructures. It is therefore highly commendable the ceaseless fiscal and administrative stimulus this Administration puts into the timely completion of major roads and bridges across the six geopolitical zones of the country to stimulate economic growth. Th e Ad m i n i st rat i o n is achieving this objective through the establishment of the Presidential Infrastructure Development Fund (PIDF), in 2018, to fast-track the completion of critical infrastructure projects. In addition, President Buhari, in January 2019, signed Executive Order 7 (the “Companies Income Tax Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme) which is aimed at attracting PPP financing for road construction across Nigeria. It was through this laudable scheme that infrastructural funding is sourced from the Sukuk Bond. Some of the 600 on-going federal road projects whose completion will immediately impact economic activities include the Apapa-OshodiOworonshoki Expressway, which is being reconstructed as a concrete road, for the first time since it was built 40 years ago. This vital economic gateway can be likened to the nation’s spinal cord, the backbone of our import and export business. When this road is choked and vehicular traffic snarls in gridlock, as it often is, the economy of Nigeria, and indeed the entire West African region, is effectively paralysed. The Buhari Administration is committed to reconstructing the Expressway to benefit national and regional economic development. Both the ApapaOshodi-Oworonshoki Expressway and the Bodo-Bonny Bridges and Road, (which was conceived in the 1980s, but actual construction started in 2017), were executed under the Executive Order 7 projects. Other projects being funded under PIDF include the Second Niger Bridge. Main construction for this vital gateway into the South-South and South East regions started in 2018, and completion is scheduled for 2022. As it stands today, the construction company, Julius Berger is claiming 57 per cent completion. There is also the reconstruction of the 375km Abuja-KadunaZaria-Kano Expressway and its transformation to a six-lane configuration; reconstruction of the Benin – Ofusu – Ore – Ajebandele – Shagamu Expressway; the Enugu-Port Harcourt Expressway, and the Kano-Maiduguri Expressways. The Loko-Oweto Bridge, linking Benue and Nasarawa States, an important interstate
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igeria’s Petroleum Industry Reforms Bill just sent to the National Assembly passed its first reading Wednesday, an indication of the fast-paced approach of legislators to a law that has been more than 20 years in the making. The bill proposes a number of strategic changes to the oil and gas sector, including a
(NNPC) to transform into a limited liability company, which will be able to sell its shares. The law envisages that a national oil company to be known as Nigerian National Petroleum Company should be registered within a period of six months. In two years, the bill says there must be a determination of the assets, interests and liabilities of the successor company and it will have
A 25-storey Nigeria Independence building abandoned in Lagos Island. This building was commissioned by the British Government as a testimonial to and a goodwill support to Nigeria’s independence in 1960. Pic by Pius Okeosisi
ters Act (CAMA) with executive appointments to be made by the president. All assets with the NNPC are to be liquidated and thereafter NNPC as we know it today shall cease to exist, according to the longawaited Bill. As a company, NNPP shall be able to sell its shares subject to an open, transparent and competitive bidding process and at fair market value. The new company shall be independent of the government and will be self-financing and without recourse to government funds. The company is empowered to sell petroleum products at free market prices, thereby bringing an end to decades of an opaque subsidy system. The Bill prescribes that NNPC Limited shall own, operate and manage assets responsibly and commercially. It shall maintain a profit-oriented management of government assets and operate a transparent system that is accountable and free from public burden. The Bill appears to acknowledge the declining fortunes of the global oil industry and in particular, Nigeria’s peculiar position that is characterised by declining investment. On fiscal terms, the Bill says, “In order for the Nigerian oil industry to survive facing this challenging future, the PIB has to create an environment in which Nigerian oil companies will continue to invest and prosper. “This means that the fiscal terms for oil have to be based on a conservative framework of the future. This framework is based on a long-term oil price of $50/bbl in real terms.
on a 45 percent cost/price ration, which means costing $22.50/bbl, need to be marginally economic, while lower cost projects should be economically attractive. “If future prices turn out to be higher, the benefits should be shared betweenthe investors and the Federal Government.” The new Bill permits a wide range of petroleum development arrangements, including concession agreement, production sharing contracts, profit sharing contracts, risk service contract and any accepted international petroleum arrangement. Under the arrangement, joint ventures with the NNPC will no longer be required and NNPC will no longer play the role of concessionaire under production sharing contracts (PSCs). The Bill permits current holders of oil prospecting licences (OPLs) and oil mining licences (OMLs) to voluntarily convert to the new terms prescribed in the law and if companies wish they can maintain their current terms until the renewal of their leases. The industry shall have only two independent regulators one for upstream and the other for midstream, and the Bill offers a strong rationale for this choice. The Bill notes that the industry is currently defined by divestments by majors, deferment of core investments, lack of focus on the midstream part of the sector, inadequate funding for joint venture operations, lack of funding for decommissioning and abandonment as well as insignificant direct social and economic benefits accruing to host communities.
Fixing market, infrastructure, regulation are ways to restore Nigeria’s power sector - experts ISAAC ANYAOGU, STEPHEN ONYEKWELU & DIPO OLADEHINDE
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usinessDay virtual energy conference ended yesterday and three top recommendations by experts to mend Nigeria’s power sector challenges are fixing the inefficient market, repair and replace broken infrastructure and enact smarter regulations. Nigeria’s electricity market does not guarantee commercial returns because power is priced below the cost of production. So, power generation companies (GenCos), gas suppliers, the transmission company, and power distribution companies (DisCos) get less than 35 percent of their market invoices. The Federal Government pays the difference. Since 2015, it has spent over N1.75 trillion to defray this shortfall.
Crude oil sales, which pay for this subsidy, is no longer as viable as it once was. Prices have fallen and now producers are forced to lower their output. This is why the electricity tariff was reviewed, according to the minister of power whose representative, Abba Aliyu, made a presentation. He also said that 60 percent of those enjoying power subsidy are among the wealthy who can pay. Over 80 million Nigerians do not even have access to grid-connected power. The Federal Government spends an average N12 billion monthly on electricity subsidy, the minister said. However, on Tuesday night, NERC issued an order suspending the electricity tariff hike from September 28 to October 11, 2020, after the government and labour unions agreed on a two-week truce to avert a strike action that would shut the economy. Dafe Akpeneye, NERC commissioner, legal, licens-
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ing and compliance, said the suspension was done to allow for further engagement on the novel tariff methodology, but indicated that the government’s subsidy would continue for the two-week period. “For every decision that we make as a government for customers not to pay a cost-reflective, it creates a liability and it has to be settled by someone. The practice for the past five years is that the government has written the check for the liability,” Akpeneye said. Onyeche Tifase, CEO of Siemens Nigeria, outlined the plans by the company to support Nigeria in fixing its electricity infrastructure leveraging the company’s experience in Egypt. President Muhammadu Buhari had on July 22 signed a power agreement with Siemens, which would double Nigeria’s electricity generation and raise distribution capac@Businessdayng
ity three-fold to 11,000MW by 2023. In Nigeria, Siemens would carry out a comprehensive upgrade of Nigeria’s weak electricity grid capable of wheeling less than 5,000MW and reduce technical and non-technical losses. It would also aggregate all DisCos’ investments in their network including cables, switches, transformers, and substations to raise the distribution above the current 4,000MW. In his presentation titled “Moving the market to viability” at the conference, Mohammed Wakil, World Bank’s energy specialist, said policy and regulatory stability through consistent and predictable implementation of tariff regulation by avoiding delays and tariff reversals were some of the best ways to improve efficiency in the sector. “There is a need to conduct integrated resources planning,
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Thursday 01 October 2020
BUSINESS DAY
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News NG Clearing debuts, aims to be Nigeria’s... Continued from page 1
ation for its stakeholders
using a state-of-the-art risk management framework, which complies with global best practices for mitigating settlement risk. Its risk based additional collateral requirement will ensure that capital deployed by clearing members is always optimal. The company intends to deploy a competitive lowcost clearing fee regime for members. The company has sufficient financial resources, including settlement guarantee fund, to cover participants’ risk exposures. Members will have access to a wide range of financial reports that equip them with extensive knowledge and enable them make informed decisions. Reiterating the company’s aim, the managing director, Tapas Das, said: “NG Clearing shall be playing a key role in the financial market ecosystem in the region, upholding stability and safety of
the marketplace, through efficient and timely settlement of derivative trades. “The aim is to strengthen the country’s investment environment through solutions that systematically reduce risks, enhance operating efficiency, and minimise costs for all market participants, thereby serving as a catalyst to national development”. NG Clearing is Nigeria’s first CCP, providing Clearing & Settlement of Exchange traded derivative instruments in the Nigerian Capital Market. NG Clearing is promoted by The Nigerian Stock Exchange and Central Securities Clearing System along with key stakeholders like the Nigeria Sovereign Investment Authority, Access Bank, Consonance Kuramo Special Opportunities I. Others include Coronation Merchant Bank Limited, Greenwich Trust Limited, Union Bank, UBA and Association of Securities Dealing Houses in Nigeria.
With 600 road projects, President Buhari... Continued from page 38
project started by the Goodluck Jonathan administration, is being completed by President Buhari. In 2017, the Buhari Administration identified and marked out 63 roads across the country, including 44 Federal Highways. These roads which linked up trade, commerce, port, and agricultural centres across the six geopolitical zones of the country were classified under Critical Economic Routes and Agricultural Routes, and accorded budgetary priority. The roads include the Apapa/Tincan Port, NNPC Depot (Atlas Cove) to Mile 2 Accessed Road, Apapa-Oshodi Road, Third Mainland Bridge, Apapa/ Tincan Island Port-NNPC Depot Access Road, Benin-Ofosu-Ore Ajebandele-Shagamu Road, Obajana Junction-Benin Road Phase 2: (Sections i-iv), Sapele-Ewu Road Sections 1&11, Second Niger Bridge, Onitsha-Enugu Expressway (Amansea-Enugu State Border), Yenegoa Road JunctionKolo-Otueke-Bayelsa Palm and Bodo-Bonny Road with Bridge. Included are the AbujaLokoja Road Sections i&iv; Suleja-Minna Road Section 11; Kaduna Eastern Bypass; KanoMaiduguri Road Section 1-1V; Hadejia-Nguru-Gashua-Bayamari Road and Kano Western Bypass; Odukpani-Itu-(Spur Ididep-Itam)-Ikot Ekpene Federal Highway Sections 1&11; Ikom Bridge; Enugu-Port Harcourt Dual Carriageway Sections i-iv; Calabar-UgepKatsina-Ala Road; VandeikyaObudu-Obudu Cattle Ranch Road; Oshegbudu-Oweto Road; Oju/Loko-Oweto Bridge with approach roads; and the Nassarawa-Loko Road. Others are the Kano-Katsina Road (Phase 1: Kano Town at Dawanau Roundabout to Katsina State Border); SokotoTambuwal-Jega-Yauri Road;
Ilorin-Jebba-Mokwa-Bokani Road; Ilorin-Kabba-Obajana Road (Sections 1&11); Ibadan-Ilorin Road, Section11 (Oyo-Ogbomosho); LagosShagamu-Ibadan Dual Carriageway, Sections 1&11, and Lagos-Otta Road. Others are the Zaria-Kano Road, Abuja-Lokoja Road (Sections i-iv), Ilorin-JebbaBokani Road, Ibadan-Ilorin Road (Sections `1&11), Lagos-Shagamu-Ibadan Road (Sections1&11), Benin-OfosuOre-Ajebandele-Shagamu Road, and Obajana-Benin Road (Sections i-iv). The Kaduna-Zaria Road, Otukpo Township Road, Kaduna-Katsina Road, Onitsha-Enugu Road (Section 1&11), Enugu-Port Harcourt Road (Sections i-iv), CalabarOdukpani-Itu Road (Section 1), Calabar-Ugep-Katsina-Ala Road (Sections 1&11), AlesiUgup (Iyamoyung-Ugup) Road, Ogoja(Mbok Junction) Abuochichie Road, KanoMaiduguri Road(Sections i-v), among others, were also among those listed. There is no doubt the completion of the reconstruction of these roads will heighten the tempo of national economic recovery and achieve one of the cardinal objectives of the Muhammadu Buhari Administration. With a government determined to provide smooth and motorable roads, it is the hope that we will achieve a mitigation of the wear and tear of vehicles, enhance the country’s socio-economic development, improve road safety, ensure smooth traffic, reduce travel time and traffic congestion, make for better connectivity in and around the federation. The movement of people and goods is also improving substantially, even if gradually.
•Shehu is SSA to the President, media and publicity. www.businessday.ng
L-R: Tope Ogunniyan, team lead, Ajao Estate Isolation Centre; Grover Anil, medical coordinator/executive member, Sanyukt Bhartiya Association (SABHA); Mukesh Bhatt, project manager, Indo Eye Care Foundation, and Disu Ahmed, deputy team lead, Ajao Estate Isolation Centre, at the formal hand over and opening ceremony of Ajao Estate Isolation Centre to Lagos State government, delivered by SABHA in association with Indo Eye Care Foundation in Lagos, yesterday. Pic by Olawale Amoo
Budget: FG proposes N13.08trn for 2021 US dollar and inflation rate of 11.95 percent, Ahmed explained, saying the 2020 budget had a 68 percent revenue performance as at July. “The performance of expenditure, on the other hand, was 92.3 percent and that is to say salaries were fully paid, pensions were paid, debt service was made, as well as transfers classified as statutory. According to the minister, oil production is projected at 1.86mbpd, with an exchange rate of N379 to $1. The gross domestic product (GDP) growth is projected at between 3 percent and 5 percent, while inflation rate is 11.95 percent, as well as a revenue projection of N7.89 trillion. “What is unique about the 2021 budget is that we have brought in the budgets of 60 government-owned enterprises. If you recall, in 2020 we brought in 10, now we have brought it to 60. “These 60 exclude NNPC and the Central Bank, and the reason being that the NNPC is a national oil company,” she said. She explained that internationally national oil companies were not included in the national budget, saying,
“Also, the CBN is an autonomous body. Only those two are excluded. That is to say their revenue and all categories of expenditure are now integrated in the budget.” The government expects that Nigeria’s economy will recover to the path of growth early in 2021, so the total aggregate revenue projected for the 2021 can be realised, the minister said. “We have total aggregate revenue of N7.89 trillion and also an aggregate expenditure of N13.08 trillion for 2021. The fiscal deficit of N4.489 trillion represents 3.64 percent, slightly above what is required by the Fiscal Responsibility Act of 3 percent, while the total capital expenditure that is projected in the budget is 29 percent of the aggregate expenditure. “This is an improvement of over 24% of the 2020 budget, but slightly below the 30% that was targeted in the economic recovery projections,” she explained. The minister said with the 1.86mbpd crude oil production, including 400,000 condensate, Nigeria had complied with the OPEC quota placed at about 1.5mbpd. The explanation is impor-
tant to Nigerians “ because as you report, if you just report the 1.86mbpd, some members of the OPEC appear to think that we are exceeding OPEC quota, whereas we are reporting oil and condensate,” she said. Minister of state for budget, Clement Agba, said the economy too had also now been opened, the lockdowns been lifted, economic activities had picked up and we have also selected some sectors in the economy that we are putting a lot money that would create activities and hence the multiplier effect of it. “In terms of funding, like the minister mentioned, there is a deficit of financing of N4.486 trillion and we also expect that oil prices will be much more stable, Agba said, recalling that the revised 2020 budget was at $28 per barrel, “but now oil is averaging about $40 and we have used an exchange rate that is higher N379, benchmark of $40 per barrel and then the production is also much more better. So we expect to have more revenues to fund the budget.” Ben Akabueze, director-generalofBudgetOffice, noted that the overall budget implementation expenditurewise, as of July was 92.3%.
Fixing market, infrastructure, regulation...
energy fund,” he said. To sustain the renewable energy projects in rural communities, Salihijo said the agency established renewable electricity users’ cooperative society, in every community. It is a structured mechanism where community members play a key role in securing the deployment of systems, enlightening community members, and ensuring payment of light bills. The agency is working with DisCos too and gathering data to help with innovation. State governments were urged to take up an active role in the sector as Nigeria’s constitution has empowered them to generate, transmit, and distribute power. Habeeb Alebiosu, a nonexecutive director at Viathan Engineering Limited, said one of the states’ role in setting up Independent Power Plants is revenue assurance. The other is contractual off-take, with the state as an anchor tenant. Other areas include licensing,
Environmental Impact Analysis certificate, and identifying load centres. “For instance in Ogun State, the government has metered all government parastatals and agencies to ensure they are adequately billed. Lagos has guaranteed contractural off-take,” Alebiosu said. In Kano, 10MW solar project has been built on a 24-hectare parcel of land provided by the state government. This is a project that is happening as a result of the collaboration between the Nigeria Sovereign Investment Authority (NSIA) and the Kano state government. “COVID-19 has slowed down the progress of the project. However, we are getting all the necessary licenses, working on the engineering, procurement, and construction (EPC) contracts and by the fourth quarter of 2021, the solar project would be fully operational,” Aisha Abba Kyari, vice president, Renewables, NSIA, said.
Tony Ailemen, Abuja
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igeria’s Federal Government has proposed a budget of N13.08 trillion, with a deficit of N4.48 trillion for 2021. Zainab Ahmed, minister of finance, budget and national planning, stated this after the meeting of the
Federal Executive Council (FEC), presided over by President Muhammadu Buhari on Wednesday, in Abuja Government is incorporating the budget of 50 government owned enterprises into the 2021 budget, the minister said. Already, 10 of such enterprises were incorporated into the 2020 budget. The Federal Government has a proposed benchmark of $40 per barrel of oil at a daily production of 1.86 million barrel per day, including 400,000 of condensate for the 2021 budget. The 2021 budget, expected to be transmitted to the National Assembly this month for passage, has a projected growth target of 3 percent, foreign exchange rate of N379/
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which will ensure alignment of capacity across generation, transmission and distribution while also ensuring investments are directed into most important areas,” Wakil said. Concerning realigning and enforcing market contracts, Wakil recommended that contracts should not be top-down but bottom up, which implies Discos should be specific on their demand and reflect it in the vesting contracts. “Revised contracts must align Genco and Disco risks, interests, and priorities by enabling contract enforcement and also encouraging Gencos to invest in Discos to improve output,” Wakil said. “Discos have submitted Performance Improvement Plans (PIPs) with over $2 billion of investment needs over the next five years; how will Discos fund their investment?”
He urged the government to provide seed funding while other funding could be obtained through PPI, such as the Siemens deal and the Nigerian Distribution Sector Recovery Programme through the World Bank and African Development Bank Group. Analysts at the conference commended the increased focused attention various governments and private sector players were giving the renewable energy. In the recent Nigeria Economic Sustainability Plan, the government set a target to deliver 5 million solar home systems (SHS)acrossthecountrybylocal manufacturers and assemblers. Ahmad Salihijo, MD/CEO, REA, said the agency wanted new private players to come in, in line with the executive order on local content. “This is a space that private sector developers should look out for as we roll out the renewable
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NEXIM Bank, C/River partnership to boost cocoa production for export MIKE ABANG, Calabar
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he Nigeria Export-Import (NEXIM) Bank on Wednesday said a memorandum of understanding (MoU) will soon be sign between the bank and officials of the Cross River State government as part of efforts to achieve the zero oil plan of the Federal Government by boosting investment in cocoa value chain. Regional head, South South of NEXIM Bank, Obol Ofem, disclosed this in Calabar during a day export workshop on enhancing meaningful export performance through export readiness. Addressing participants, Ofem said NEXIM was established by Act 38 of 1991 as an export credit agency, saying the bank was collaborating with Nigeria Export Promotion Council (NEPC) and the Cross River government to promote export of Nigerian products. According to Ofem, Cross River is seeking N2 billion through ‘One State One Product’ scheme of
the Central Bank of Nigeria (CBN) because of its cocoa factory at Ikom. The intention of the government is to buy cocoa from the small-holder farmers and export to other part of the world through the Cross River State Investment Promotion, he said. In his remarks, the NEPC promotion advisor, Calabar office, Emmanuel Etim, said the workshop was a further demonstration of NEPC continued efforts to spearhead the diversification of the Nigerian economy away from the oil sector through increasing and expanding non-oil exports. “Considering that, the Calabar office has registered over 90 exporters and several would-be exporters whose potentials can be profitable harnessed and developed for meaningful export business,” Etim said. The workshop with the theme – ‘Enhancing Meaningful Export Performance Through Export Readiness’ - is geared towards export awareness, exposing newly registered exporters, among others, he said.
Itakpe-Warri rail line testimony of Buhari’s resolve to improve infrastructure – Julius Berger TEMITAYO AYETOTO
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he success of the Itakpe-Warri rail line project, which was inaugurated by President Muhammadu Buhari on Monday, is a clear testimony of the president’s resolve to provide and improve lasting infrastructural amenities that impact positively on lives of citizens across the length and breadth of Nigeria, Julius Berger Nigeria Plc has said. Lars Richter, managing director, Julius Berger Nigeria Plc, said this in a goodwill message for the inauguration of the Itakpe-Ajaokuta-Warri railway facilities. Richter, who was represented by Zubairu Ibrahim Bayi, Julius Berger’s executive director (Administration), congratulated the president as well as the minister of transportation on the success of the project. Tracing the history of the
Itakpe-Ajaokuta-Warri railway project, Richter said it began in 1987 when the contract for the construction of 51Km railway line linking the Itakpe Iron Ore mine with Ajaokuta Steel Mill was awarded to Julius Berger. The contract was later extended to include from Ajaokuta to Warri (Aladja Steel Plant and Jetty). The contracts which were originally domiciled with the then federal ministry of mines, power and steel, he said, were eventually transferred to the federal ministry of transport when the project was restructured to include transportation of passengers along Itakpe-Warri corridor in addition to the original concept of freight movement service for the steel industry. The further expanded scope of work included construction of a section of railway formation and laying of tracks from near Agbarho to Delta Steel Mill at Ovwian/ Aladja; completion of 20 over-
passes and bridges; and construction of level crossings, hydraulic drainage structures and associated works, he said. He announced that the 22km track-laying work from Ovu to Aladja has been completed and the overbridges and overpasses have also been successfully accomplished. The completed railway and railway service facilities, he said, include the maintenance workshop and warehouse, the vehicle maintenance depot and workshop; the railway trucks refuelling station; first aid station, and the furnished railway station offices. Other completed works are the renovation and refurbishment of the railway village comprising school building, clinic, recreational facilities, fire station, police station, and other ancillary buildings. “I am humbled to announce to this gathering that these structures mentioned
above were constructed in accordance with international due diligence and best practice, a hallmark of Julius Berger Nigeria Plc,” Richter said. He prayed that the end users of the facilities would put them to use with the highest maintenance culture as a guide with a view to justifying the huge investment made by the government to put up these structures and its services. He acknowledged the m i n i ste r o f tra n sp o r t, Rotimi Amaechi, “for his kind and selfless work as well as nationalistic zeal” which lead to the successful realisation of the project, and also expressed Julius Berger’s gratitude to all the hardworking civil servants, community leaders, suppliers, youths, the company’s highly valuable workforce, and every stakeholder who contributed to the success of the project.
‘Innovative financing key to closing funding gap for SDGs post-COVID-19’ BUNMI BAILEY
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xecutive director, risk management division, Access Bank Plc, Gregory Jobome, has called for the adoption of a range of non-traditional mechanisms to raise additional funds for development aid. Jobome made this known while addressing delegates at the first World Development Finance Forum (WDDF) held on September 29, 2020. Jobome provided insights on the scale of financing required for post-Covid-19 development, providing the perspective of commercial banking. Likewise, he shared thoughts on building synergy between government, regulators and commercial banks to strengthen the economy of Nigeria and the financial sector. Commenting on the importance of developing a common and universally accepted framework to address fundamental funding issues, he said: “There is a differential capacity in the ability of advanced and developing countries to cope with the effects of Covid-19. Also, there is a multi-speed factor in the ability of countries to recovereconomicallyfromthecrisis. This differential ability means that we must have the capacity to bring together all the different speeds – the fast-paced economies must unify with those that are slower paced and those with unique conditions must work togetherwiththosewhodonothave
those peculiar circumstances. This is one way to truly optimise our response capacity and make the most of globalisation.” As a sustainability-focused event, WDFF 2020 brought together various stakeholders for financing development in the aftermath of the outbreak of the pandemic. Governments, central banks, commercial banks, development finance institutions, large-scale microfinance banks, and the international development sector were represented on the high-level panel. According to Jobome, domestic funds mobilisation would reduce the cost burden by international organisations noting that commercial banks can take a cue from Access Bank’s execution of the firstever Climate Bonds Initiative (CBI) certified corporate Green Bond in Africa. “In addition to the funding of the Bond fully mobilised domestically, our issuance also served as the pioneer green bond cross-listed on the Nigerian and Luxembourg Stock Exchanges,” he stated. Other panellists at the forum are Arshad Rab, CEO, European Organisation for Sustainable Development; Matia Kasaija, minister of finance, planning and economic development, Republic of Uganda; Jesimen T. Chipika, deputy governor, Reserve Bank of Zimbabwe, and Romani de Silva, deputy chairman/ CEO, Alliance Finance Corporation, Sri Lanka. www.businessday.ng
L-R: Ralph Tamuno, co-founder, Wakanow; Yomi Badejo-Okusanya, group managing director, CMC Connect Limited; Richard Ajayi, co-founder, Synlab Nigeria (formerly Pathcare); Bukky George, founder/CEO, Healthplus, and Obinna Ekezie, co-founder, Wakanow, during a media briefing organised by Business Founders Coalition in Lagos.
Enugu boosts digital business with wifi franchise model OBINNA EMELIKE
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o position Enugu as the digital/business hub of the South-East geopolitical zone, the Enugu State government has rolled out a metro Wifi project, a statewide wireless network. The low-cost Wifi hotspot connection project, which runs under a first-of-its-kind franchise model, offers job opportunities to Enugu youths as independent data resellers, who are deployed across various locations within the state known as Wi-Fi zones. With the Wifi data, which is sold at N250/GB by agents in 22 Wifi zones of the state, users can have more access to the internet via their mobile phones or personal computers. The project, which is a
…engages independent data resellers boost to the digital economy of the state and the medium and small scale businesses, is part of Governor Ifeanyi Ugwuanyi’s job creation initiatives, as well as, his commitment to the betterment of Ndi-Enugu. Speaking on the project, Arinze Chilo-Offiah, special adviser to the governor on SME development and head, Enugu SME Centre, explained it was to enable youths in Enugu State become gainfully employed by reselling internet data at lower rates, as well as, driving a lot of users to subscribe for data using mobile apps. Enumerating the socioeconomic benefits of the initiative, Chilo-Offiah noted that, “It will boost employment
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opportunities, which is part of the job creation initiatives of Governor Ifeanyi Ugwuanyi and also provide data at lower cost”. According to the special adviser to the Governor on SME Development and head, Enugu SME Center, the Enugu Wifi franchise model is a business model that enables individuals or groups to acquire the Enugu Wifi devices for the purpose of reselling internet to people within their Wifi zones at a cheaper rate for the purpose of making profit. The project is coming at a time there is an urgent need to bridge the digital gap and the state seems to be taking the lead. Moreover, the coronavirus @Businessdayng
pandemic has prompted a surge in the ongoing efforts to bridge the digital divide between those who do and those who do not have access to internet connections necessary for distance learning, remote work, telemedicine and dayto-day essential services. According to Chilo-Offiah, the Covid-19 pandemic is shining a bright light on what was already a significant challenge for the state such as delivering ubiquitous, scalable broadband connectivity to people in the state, as well as, businesses. The crisis has fueled the energy around seeing these deliverables come to fruition as broadband is no longer a luxury, but critical infrastructure for all.
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“Mr. Bola Onadele. Koko is the Chief Executive Officer of FMDQ Group - Africa’s first vertically integrated financial market infrastructure group - which provides a one-stop platform for the listing, trading, clearing, risk management, and settlement of financial market transactions across the fixed income, foreign exchange, derivatives and equities markets, as well as depository of securities, through its wholly owned subsidiaries – FMDQ Securities Exchange, FMDQ Clear, FMDQ Depository and FMDQ Private Markets. In this piece, he shares insights, amidst mixed feelings of disappointment and optimism, on the future of Nigeria and considerations that will facilitate restoring her to all her former glory.” Nigeria @ 60 – A Future of Endless Possibilities? Nigeria, the proverbial giant of Africa, with a teeming population of about 200 million people, a rich multicultural diversity of over 520 ethnic dialects and endowed with many natural and cultivated resources as evidenced in its burgeoning but under-tapped sectors of agriculture, manufacturing, mining, tourism, entertainment, human capital, financial markets, etc., has great capacity to generate wealth and indeed, take a stance as the true giant of Africa, but has failed its citizenry; with an economy lagging at frontier market status 60 years down the line from its independence. As we celebrate the 60th anniversary of Nigeria’s sovereignty, it is probably easier to recount the myriad of issues facing this potentially great nation than it is to count the feats achieved. As the order of globalisation continues to stir the world’s economies and new issues emerge in the horizon, it is pertinent for Nigeria to take stock yet again, and prepare for a fortified and prosperous future, if it is to remain relevant for the future. A liquid domestic financial market, solid demographic dividends, pool of talent, adequate infrastructure and related linkages, re-engineered mindset, unity amongst the various multicultural groups, and most of all, visionary leadership are some of the key focuses to be immediately entrenched if Nigeria is to move beyond its ailing state and maximise the opportunities that the future brings. I will start by looking at the future of Nigeria’s purported means of livelihood – oil, and then at other considerations which have strong potential to shape Nigeria’s future. The Inevitable Demise of Oil Oil, responsible for circa 90% of Nigeria’s foreign currency earnings, is gradually being relegated to the background owing to the emergence of regulatory pronouncements and new innovations emerging in the sustainability-conscious global economy. Beyond the global crash in oil prices, some other considerations include: • Exxon Mobil, the oil giant, was kicked out of the Dow Jones Industrial average • Energy stocks as a percentage of the S&P 500 capitalisation are at the lowest levels, at circa 2.63% • California is set to ban petrol cars by 2035 and will be the world’s 6th largest economy assuming it were a country of its own, with many states choosing to adopt its green vehicle mandates • Europe also appears to be following suit with mandates on renewable energy, with Total SE set on replacing one of its major oil refineries with clean fuel, amongst others The handwriting of ‘cyclical stagnation’ is all over the wall, and sooner than later, and in fact, as can be seen already, Nigeria will struggle with a downward pull on oil prices, causing a major erosion in the economy should the country continue with its over reliance on oil. Therefore, to attract the much-needed investments, grow jobs and stimulate a thriving economy, Nigeria would need to make tough and conscious choices, as well as diversify its economy right now. Most Populous Nation in Africa: The China
Bola Onadele. Koko - October 1 Publication
Advantage? Nigeria’s population is well on course to double in about 30 years to 400 million people. A large domestic market when harnessed can be a very attractive source of growth as has been seen in the case of China, whose economy has been engineered partly by its pivot in domestic growth. Other countries like India, Indonesia, the US, as well as the European Union, all have large domestic markets. Nigeria’s large domestic population and market must be optimised for trade with the rest of Africa and indeed, the world. This sought-after resource, if properly managed and effectively engaged, would translate into economic advantage for Nigeria, especially in the manufacturing sector, with the production-consumption value chain benefitting from this boom. The flip side will encourage current trends of unemployment, insecurity, amongst others, wrecking economic havoc and distress to Nigeria and Nigerians. There could be a contagion factor to other parts of the Africa and the rest of the world, with Europe being the most vulnerable due to proximity. Domestic and foreign companies must be incentivised to build factories in Nigeria to produce the goods and services that will be demanded by Nigeria’s growing population and the Rest of Africa. Infrastructural development, favourable and balanced policies, and stable political and security climate, will be chief amongst the factors that will drive growth in the domestic market. The Commanding Heights: Infrastructure Development With Nigeria’s growing population, infrastructure has gone from being recorded as a deficit to being at the brink of collapse, and this is being kind. It is pertinent to note that no economy in the world has achieved sustainable growth and development without first fixing its infrastructure. Indeed, there will be no ease of doing business, nor will significant foreign direct investments be attracted into Nigeria if the provision of adequate hard infrastructure, including transportation, power, and other value chain of logistics required for trade, commerce, entrepreneurship, and ingredients necessary for
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economic development to thrive, are not addressed. Nigeria is endowed with land mass, water ways, and the brilliance to deliver herself from this deficit; but will continue to be held back and live in years past. Furthermore, the unavailability of soft infrastructure comprising the healthcare, information and communications technology, and human capital requirements, including manpower, skills, and quality education, remains a challenge to economic development. How do you build a thriving financial market, and indeed a developed economy with an unskilled workforce? How will the healthcare sector be sustained without adequate investment and infrastructure? Or how won’t human capital flight and medical tourism remain on the rise? According to research, over 10% of the 75,000 Nigerian-trained doctors registered with the Medical and Dental Council of Nigeria are currently practising in the United Kingdom alone, compared to India with only 0.3% of her doctors in the United Kingdom. The same trend applies to other professional sectors, as Nigeria continues to subsidise education in Nigeria, but loses her graduates and professional workforce to other countries in search of greener pastures. With the new normal, which is technology-driven, the need for increased focus on ICT investments, both physical and intellectual capacity, cannot be emphasised. Also, technology innovations such as electric cars, renewable energy and artificial intelligence are already redefining the future, and Nigeria must have a plan to not only play in these new fields but also develop and empower home grown companies, tech hubs and champions that would innovate and provide domestic solutions for the country’s businesses and regulatory bodies. The private sector must also rise to the challenge and work with the public sector, through structured partnerships, to build purpose-driven infrastructure. The Elephant in the Room: Liquid and Deep Financial Markets Now, bringing these all considerations together – capital is the lifeblood of growth and development of any economy. As new innovations are empowered to become businesses, and businesses in turn seek to
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deepen and expand their activities, whether through equity financing or debt capital, the urgent need for a credible, liquid, and deep financial market cannot be overemphasised. The financial market acts as a catalyst, providing an avenue for the efficient allocation of resources and funds required for sustainable development and growth. Access to capital is crucial if the opportunities in the agriculture, mining, manufacturing, entertainment, fashion, tourism, energy, services, and other sectors, are to be maximised, and both the private and public sectors have clear responsibilities in this regard. Playing a key role in facilitating the development of the Nigerian financial market, the financial services regulators, and market stakeholders, including FMDQ Group, have continued to innovate with new products and initiatives to make the markets globally competitive, operationally excellent, liquid and diverse, bringing the market’s standards at par with global counterparts. The advocacy for coordinated and stable policies, effective legal and regulatory frameworks, and other key factors of liquid and deep financial markets must be spearheaded and driven by the market to facilitate exponential growth in the nation’s financial market, the nervous system of commerce. Nigeria: The Opportunities Abound It is evident that Nigeria has all it needs to regain its rightful place as the giant of Africa, and the government and citizenry must harness these opportunities to build a formidable nation. Our government needs to be more visionary and purpose driven. With the right focus on enhancing ease of doing business in Nigeria, improving regulatory and legislative agility, investing heavily in both hard and soft infrastructure, and upgrading service-oriented delivery, amongst other initiatives, the attractiveness of the country to both domestic and foreign investors will be at its peak, culminating in the desired growth, development and prosperity we all yearn for in our dear country, Nigeria. Happy Independence Day! www.businessday.ng
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PHOTOSPLASH Speakers at the BusinessDay Energy Series: Nigeria @ 60 - Harnessing Nigeria’s Energy Potential for the Future
His Excellency Chief Timipre Sylva Hon. Minister of State for Petroleum Resources
Dr. Timothy Okon Teno Energy
Dr. Layi Fatona Niger Delta Group
Oge Peters Accugas
Enorense Amadasu DPR
Adegbite Adeniji ADVISORY Legal Consultants
Tony Atta NLNG
Audrey Joe-Ezigbo NGA
Patrick Mgbenwelu FBN Quest
Dr. Jumoke Oduwole PEBEC
Justice O. Derefaka Ministry of Petroleum Resources
Dayo Adeshina National LPG Expansion Plan
Omotunde Hassan Solad
Ed Ubong Shell Nigeria Gas
Edwin Devakumar Dangote Cement Industries Ltd
Mavis Animashaun, NLNG
Dr. Effiong Okon Seplat Yemisi Awonuga Templars
Ahmad Salihijo Rural Electrification Agency
Omosede Imohe Abuja DisCo
Dolapo Kukoyi Detail Solicitors
Israel Aye Primera Africa Legal
Dafe Akpeneye Commisioner, NERC
Olalere Odusote Hon. Commisioner, Energy & Mineral Resources, Lagos
Abba Aliyu S.A. Policy, Minister of Power
Dr. Mathew Aneke Winner, Nigeria Prize for Science 2019
Olasupo Agbaje NGEP
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industry Insight
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Achieving national integration: The role of film and video helpful. Applauses also goes to Sons & Daughters of this great Nation who showcase values of nationhood and merits of togetherness while still keeping us entertained.
ADEDAYO THOMAS
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dedayo Thomas is the current Executive Director of the National Film & Video Censorship Board (NFVCB). As boss of the NFVCB, Alhaji. Adedayo’s strategic leadership quality is reflective of the achievements and progress made so far by NFVCB. In this piece, the ED examines in detail the specific role of Film & Video in the National Integration discourse of Nigeria. Introduction Indeed, the Russian leader could not but re-echo the outstanding results achieved with film in his desire to win Russian. Moving Pictures not pamphlets became his number one medium of spreading propaganda, Lenin understood that his revolutionary notes will only thrive if all of Russia began to sing in harmony. Almost a century after Lenin’s statement, there still exist a vibrant nexus between national integration and film and video. The audiovisuals have not lost its power or its relevance. Film & video continue to influence human thinking and behaviour owing to its inherent ability to inspire very quickly the emotions of both young and old. The success of the American film industry (Hollywood) is not only linked to empirical evidence such as the number of viewership or revenue generation. In my opinion, the real success of Hollywood is in the industry’s ability to translate the “American Dream” mantra into compelling and mind-shifting films with a high ability to capture imagination, shape, and direct the sense of what is real, true, and preferable. Hollywood has skillfully used her films to tell stories of hope, peace, security and social wellbeing that captivate audience admiration of being or wanting to be “American”. Movies like “Forrest Gump” and several others is a testament of Hollywood’s influential role in projecting American greatness. That being said, George Barkas “Palaver” (1929), widely regarded as the first made in Nigeria film was essentially shot to persuade the British public to embrace London’s imperial policy in Nigeria. Although made in Nigeria, “Palaver” was certainly not made to enhance unity or progress of the Nigerian people. The Nigerian Situation The negative narratives in “Palaver” and the efforts of hero’s past to debunk such perceptions are worthy of admiration.
Notwithstanding, we cannot rest on the laurels of these brave icons, we must continually push forward the Nigerian agenda of togetherness through our films and videos. Since “Palaver”, Nigeria’s large population, rich culture and a plethora of raw talents made the outstanding growth of her film & video industry a certainty. With such an unprecedented outreach, Film & Video has played a significant role in fostering Nigeria’s national integration. Films such as, “Cock Crow at Dawn”, “Second Chance”, “the New Masquerade”, are classic examples of films that echoed sounds of Nigerian culture, heritage and togetherness. For instance, “Second Chance” portrayed our oneness to attain a common goal with its unique characterization cut across Nigeria’s ethnic regions. The movie “76” in many ways also illustrates values of patriotism. Film & Videos is indeed the warp and wept of Nigerian’s national integration. Its ability to appeal to the intellect, emotions, and will of citizens gives it primacy of place in the business of enhancing Nigeria’s national integration. With stories that hold a mirror to our society of history,
‘‘
Of all the arts, the most important for us is the cinema -Vladimir Lenin-
crime, comedy, inequality, ethnic relations, religious tolerance, and everything in between, through films and video we are blessed with the opportunity to impact positive change. The change that influences minds, challenges misconceptions, expands our worldview, and allows us to learn more than we did before pressing play. Integration and unity are rooted in understanding one another and films are viable ways to teach and enlighten. Take the movie “October 1st” and how it immersed viewers onto what it is like to be a police officer from another region solving inexplicable murders at the tail end of colonialism. Or “The Wedding Party” which displays Nigeria’s excellent diversity using humor and drama to show that our similarities outweigh our differences. Films and videos are not mere escapism, their impact is profound. A careful study of the main demographic consuming films and videos, reveals that young people are the drivers of change and those challenging negative stereotypes. “The Voice” is a widely viewed reality musical show that has exemplified to Nigerians that it is possible to live and progress together in spite of differences, and showcases our innate talents to a large audience. The outreach capabilities of films and videos opens up the possibility of influencing millions of minds towards unity and community. Seeing a lead actor or actress take centre-stage and strive towards a shared national ambition, like in the movie “Up North” inspires the same attitude. With diversity and crafty messaging, the movie taught
positivity and enlightened viewers against some negative stereotypes built from ignorance. In the same vein, the didactic and moral lessons drawn from Nigerian movies remind viewers of the grave consequences of engaging in crime. This ability to admonish through entertainment is a cogent tool of creating sustainable peace without force. Notwithstanding, in the wrong hands, film and video can be exploited for evil. My service to Nigerian as the Executive Director of the prestigious National Film & Video Censors Board (NFVCB) has been a humbling and transforming experience. It has equipped me with the apparatuses to contextualize both the challenges and realities of fostering National unity through film & video industry. As a regulatory body, NFVCB encourages Film & Video producers to tell “unity” stories in ways in which citizens could see and feel the connection between them and national integration ideas that may have been otherwise abstract. Our mandate of regulating content and promoting positive values while maintaining originality puts us at the forefront of fertilizing change and shaping minds towards unity and compassion. A lot of progress has been made, which could not have been possible without the transformative leadership of President Muhammadu Buhari whose devotion to ensuring the peace, security and togetherness of Nigeria remains priceless. The invaluable supervision and advice of the Ministry of Information and Culture under the leadership of Alhaji. Lai Mohammed has also been tremendously
Concluded Thoughts With the exponential growth of the internet in Nigeria, it is forecasted that, Video On Demand (VOD) services such as Netflix Naija, IROKO TV, Ibaka TV, EbonyLife ON, SceneOne TV will continue the upward mobility and upsurges in subscribers and user demand for Nollywood content. More than 40 million Nigerians currently have access to smartphones and by 2025 not less than 140 million people will be mobile smartphone users with access to high speed internet connectivity. With these developments, the future of film and video will be majorly propelled by internet broadcasting mediums and the financial turnover of the industry will be at record highs. This opens up a wide range of investment prospects and will also offer great opportunities to exact significant influence on a growing audience. It is therefore imperative for industry stakeholders to start re-evaluating their strategies in a manner that incorporates the realities of a social media age towards a more united Nigeria. The Board on its part will continue to set up structures that will strengthen her capacity to tackle issues of piracy and distribution of unwholesome films, musical and video works that are disadvantageous to national development and integration. It is true, that censorship alone, cannot singlehandedly encourage reflections of patriotic values in our films & videos. It will also rely on the collective efforts of relevant stake holders to launch a serious campaign against disunity, disharmony, and disintegration. Therefore, We must be consistent in our approach, ignore momentary gains and focus on exploring avenues for launching the unity agenda of this Great Nation. TOGETHER we can win.
Adedayo Thomas Executive Director, NFVCB
Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.