BusinessDay 02 Aug 2018 by BusinessDay

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news you can trust I **THURSDAY 02 AUGUST 2018 I vol. 15, no 109 I N300

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as Buhari’s London trip raises concerns over his health again

Innocent Odoh, James Kwen, & Tony Ailemen, Abuja

he high profile defections that has hit the All Progressives Congress (APC) has altered the balance of power among the country’s two main parties ahead of the 2019 elections. Before the current defections, APC was the dominant party in most parts

Inside UBA launches Leo on WhatsApp P. 2

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Lagos in back and forth battle against waste JOSHUA BASSEY

t would seem the Lagos State government and its appointed waste managers are in for a long-drawn battle with garbage in the ‘centre of excellence’ as there’s a gradual resurgence of heaps of refuse in different parts of the metropolis. Lagos, Nigeria’s commercial

Disagreement over offshore fiscal terms deters new IOCs investments

APC PDP APGA

Stocks slump 1.1% as politics takes toll

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Continues on page 38

he Nigerian Stock Exchange opened the month of August negatively as the All Share Index fell 1.09 percent Wednesday, marking the big-

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

Defections alter balance of power ahead 2019

Emeka Ucheaga, Sobechukwu Eze & Cynthia Ikwuetoghu

Currency Futures ($/N)

fgn bonds

Treasury Bills

gest single day decline in equity prices in over a month. The index tumbled by more than 400 points as investors sold off stocks in 3 of the 4 largest companies on the exchange.

Abdulrauf Bello, investment research analyst at WSTC Financial Services said, “the bearish perfor-

mance of the market is not affected by investors’ earnings but by macro-economic issues which does not necessarily affect the companies. They include, political tensions and capital outflow although, political tensions is the major factor that affects the market.” On the reason why investors are

selling off, Bello said “it is because of political tension as investors do not like to be locked-in to equities in a period close to election as they are unsure of who will win the election.” “If the incumbent government remains in power in 2019, it might

Continues on page 38

…. Multinationals kick at proposed royalty rates, gas terms ISAAC ANYAOGU

isagreements regarding the right fiscal term for production in offshore deep water fields is a sticking point in the plans of International Oil Companies (IOCs) to conclude Continues on page 38

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UBA launches Leo on WhatsApp ENIOLA GIWA

an-African Financial Institution, United Bank for Africa (UBA) which recently clinched the Euromoney awards as the Best Digital Bank in Africa, is once again asserting itself as a pace setter, and moving in unchartered territory. UBA’s chat banker, Leo has launched in pilot mode on WhatsApp and will be fully available to customers by September 1st, 2018. With Leo now on WhatsApp, customers who are on the app will be able to open new accounts, check their balances on the go and carry out basic banking services. Speaking about the launch of Leo on WhatsApp, Kennedy Uzoka, Group Managing Director, said: “Our customers are at the heart of our business and we as a bank, are never relenting in matching our words with equal action. In today’s fast paced world with demands for quick responses, our aim is to make banking seamless and effortless for our millions of existing and potential customers.” Also speaking on the launch of Leo on WhatsApp, Group Head of UBA’s Online Banking, Austine Abolusoro, stated ‘United Bank for Africa is a technology-driven institution with vast knowledge in the business that we do and Leo, being a tested dependable and intelligent personality, will replicate on WhatsApp, the suc-

cess it has experienced on the Facebook Messenger platform. It is a solution that is from the customer’s standpoint, easy to use by anyone regardless of your demography.’ ‘Leo is ready and waiting to help with any form of banking services’ continued Abolusoro. “WhatsApp has been in existence for over 9 years, reaching more than 1.5 billion people in over 180 countries. The premium private chat platform has assured that there will be no spam messages as the development is to enable businesses serve their customers with useful and helpful information. Leo already present in over 12 African subsidiaries, including Nigeria, and available in three languages, will be fully rolled out to customers on WhatsApp in September 2018 with all its regular features and extended attributes for WhatsApp. UBA is one of Africa’s leading banks with operations in 20 African countries and in London and New York, with presence in Paris. Adjudged to be at the forefront of innovation and convenient banking, UBA is one of the first financial services institutions on the continent to deploy Finacle 10x, a new information technology platform that boosts its services and electronic banking channels. Today, UBA provides banking services to more than 15 million customers globally, through over a thousand touch points and other diverse channels.

Oando shares fall to 5-year low as negative sentiment builds up David Ibidapo

egative sentiment has driven the share price of Oando down by 69 percent between 2013 and 2017, even as Average annual earnings growth analysis of companies listed in the oil and gas index of the Nigerian Stock Exchange market (NSE) reveals Oando plc as the best performing company in the index. The NSE oil and gas sectoral index comprise of the top most capitalised and liquid companies in the oil and gas sector. BusinessDay analysis using compound annual growth rate shows that Oando earnings grew by 69.89 percent from about N1.4 billion in 2013 to N19.7 billion in 2017 hence, leading the chart. Abdulrauf Bello, Investment research Analyst, WSTC Financial, asserted that Oando’s growth in earnings during the period under review may be due to the fact that the organisation is involved in several line of business which seems to be different from peers in the index. In contrast to the earnings performance of Oando between 2013 and 2017, analysis revealed that its share price plunged compared to most stocks in the index. During the period, Oando share price declined by 69 per-

cent from N19.43 in December 2013 to N5.99 in December 2017. This saw Oando as the worst performing stock in the index during period under investigation. Paul Uzum, a stock broker on the NSE, explains that the declining performance of Oando is majorly a function of its acquisition of Conocophillips Nigeria oil and gas business in 2014 and internal management crises within the organisations. In his words, “the acquisition of Conocophillips had a significant negative effect on the organisation which almost led to their collapse and currently the effect of this acquisition still abounds”. He also added that “the fight to remove current management led by Wale Tinubu by two major shareholders of the organisation due to perceived inefficiencies in the running of the firm also affected their performance”. In agreement to Uzum position, Bello noted that issues around Oando explain the inverse relationship between its earnings and share prices. He added “in 2014, Oando made a strategic mismatch trying to concentrate more on the upstream which led them to acquisition of Conocaphillips. Continues on wwwbusinessday online.com

Thursday 02 August 2018

L-R: Deji Oduntan, CEO, Gokada Rides Limited; Esohe Urhoghide, member of the management and board of directors, Crédit Afrique, and Endurance Okinedo, product development manager, Crédit Afrique, during the MoU signing of a strategic partnership to provide Asset Finance Loans to qualified members of the public.

ANALYSIS

CBN asks banks, large corporates to do the impossible Emeka Ucheaga & Omobola Adu

n Tuesday last week, Central Bank of Nigeria called on banks and large corporate organisations to issue new debt at single digit in an investment environment where the risk-free rate is around 13 percent. Specifically, Godwin Emiefele, CBN governor asked banks to provide loans to institutions in employment elastics sectors of the economy looking to fund new projects at 9 percent interest rate while he also called on corporate institutions to issue long dated commercial papers with interest rate below 10 percent. This request was formally communicated to these institutions through the CBN communiqué of the monetary policy committee (MPC) meeting held this month, the same meeting where the MPC chose to hold its own monetary policy rate at 14 percent. The monetary policy rate is the rate of interest at which CBN lends to commercial banks to sure up liquidity in the banks. In a rational investment environment, it is virtually unthinkable for investors to invest in risky securities that provide a negative risk premium or in simpler terms nobody will invest in things that cannot at least match the Treasury bill rate.

But the Central Bank has a plan to ensure this new policy succeeds. CBN told banks that as a way to as a way of incentivise them to increase lending to the manufacturing and agriculture sectors, a differentiated dynamic cash reserves requirement (CRR) regime would be implemented, to direct cheap long term bank credit at 9 per cent, with a minimum tenor of seven (7) years and two (2) years moratorium to employment. Emiefele explained further that when banks create these loans for the real sector, the Central Bank will reduce the bank’s reserve requirement, thus channelling cash that would have ordinarily earned nothing parked in the vaults of CBN to interest earning loans for the real sector. Banks will be very careful in taking up this invitation as earning nothing on reserved cash may be better than lending at a single digit rate in a country where 2017 industry non-performing loans was as high as 15.1 percent according to World Bank. CBN is yet to provide full details on how this new lending policy will work but analysts expect it to increase the industry credit risk when the policy takes effect as the fragile economic recovery still poses risks to lending to the real sector. More disturbing for analysts is the request for large corporate

institutions to sell long dated commercial papers with tenure of 5-7 years at single digit interest rate when the 5 year and 7 year federal government bond yield is currently at 13.69 percent and 14.09 percent respectively. Henry Ogbuaku, Group Head, Asset Management, GDL Asset Management told BusinessDay by phone that while the request is an attempt by the CBN to boost funds to the real sector, the modalities on how it will be done remains a huge question. It will virtually be impossible for such commercial papers to float successfully in the money market where average issue yield on commercial papers is currently 15.96 percent. No sane investor will buy uncollaterized or even collaterized 5 year commercial papers at a rate lower than the FGN 5 year bond yield. Investors will rather invest the money in risk free assets which will allow them earn decent returns above inflation than assume a default risk without any form of compensation. CBN stated in the communiqué that credit constrained businesses, particularly the large corporations are encouraged to issue commercial paper to meet their credit needs and the Central Bank of Nigeria may, if need be, buy these commercial papers. Continues on wwwbusinessday online.com

FEC approves N72.9bn contract for Apapa roads JOSHUA BASSEY & Tony Ailemen

ome level of relief from the traumatised experiences in Apapa and its environs is to be expected, as the Federal Executive Council (FEC), on Wednesday approved a N72.9 billion contract to ease the traffic problems bedevilling the area. Lai Mohammed, minister of information and culture, said this to State House correspondents shortly after the weekly FEC meeting presided over by President Muhammmadu Buhari, yesterday in Abuja. Vice President Yemi Osinbajo during a stakeholders’ meeting in Apapa, last week, had promised the Federal Government within two weeks (from last Thursday) would grant an approval for the commencement of full rehabilitation of collapsed sections of Oshodi-Mile 2-Apapa Expressway, a major artery to the nation’s premier ports in

Apapa. It was the second time the Vice President would be in Lagos in the quest to find a lasting solution to the Apapa gridlock The last two weeks had been particularly troubling for businesses and residents of Apapa and the adjourning areas, as thousands petroleum tankers and containerised trucks entering Lagos from different parts of the country, locked down the expressway from Tin-Can Port in Apapa to Oshodi, leaving no space for other road users. Stakeholders at the meeting, which included relevant unions within the transport and maritime sectors such as Amalgamation of Container Truck Owners Association, Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), National Association of Transport Operators (NATO), Association of Maritime Truck Owners (AMATO), among others, had criticised the Federal Government for

abandoning the expressway despite the trillions it earns from activities within the two ports in Apapa. Lagos State governor, Akinwunmi Ambode, who was part of the meeting, had also pledged the readiness of the state to take up any responsibility assigned to Lagos, in the quest to resolve the crisis, and reiterated the need to decentralise port operations in the country so that shipping activities were not concentrated in Lagos alone. Rotimi Amaechi, minister of transportation, had on his part blamed the congestion partly on activities of terminal operators and threatened to push for the review of the concession agreement between the Federal Government and the port concessionaires due to the alleged failure of the terminal operators to abide by the spirit of the agreement. Continues on wwwbusinessday online.com

Wednesday 01 August2018

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Nigeria has potential to produce 2.7m barrels per day … as crude measurement at wellheads remains difficult OLUSOLA BELLO

igeria has the potential to produce 2.7 million barrels per day (mbpd) as against 2.1 million barrels of crude oil per day for the various security challenges, a Department of Petroleum Resources (DPR) document reveals. Among the reasons is that meters are not placed on the crude oil wellheads to measure the volume of crude produced each day. The cost implications of fixing meters and the challenges of separating water, gas and crude oil at wellheads have made it difficult for appropriate measuring instruments to be put in place and measure the exact volume of crude oil produced from the onshore and offshore fields. This has been the major constraint why Nigeria is not measuring the volume of crude oil produced at wellheads, thereby creating the impression that it does not know the volume of crude oil that is being produced on a daily basis. What is produced from wellheads, industry analysts say, is a mixture of water, gas, crude and sometime sand, and this combination makes it difficult for separation to happen. The measurement is better done at the flow stations, where these elements are separated. According investigations, the meter is about $500,000, while the cost of re-working the development of field is about $16 million per well. This means that works that have been done on the wells over the years would have to be

readjusted on each well. The investigations reveal further that if the meters had been placed on the well from when they were developed several years ago, it would have been easy to measure the volume of crude produced by each well. The total wells in the Niger Delta are about 2,800, both in onshore and offshore, and reworking their developments would amount to huge sums against that of the joint venture owners. They however say that some of the deep-water wells have what is called mutual meters that allows for proper measurement of the volume of crude oil that is produced. However, an official of DPR that spoke with BusinessDay, says there is a system through which crude oil produced is measured with just a few merging differences. He says the situation in which some people are saying that the country does not know the volume of crude produced is not true. Let us assume that there is meter to measure the crude oil, how can you separate water, crude oil and gas at the well head, he asks. There are 44 oil producing companies in Nigeria, and between 270 and 280 flow stations where the volume of crude oil produced by the companies are measured. The agency says the Federal Government approved the renewal of 25 oil bloc licences and approved 16 new field development plans in 2017. According to a report pre-

pared by the agency, the Federal Government earned N748 billion from taxes and royalties paid by oil and gas companies operating in Nigeria in 2017, and $1 billion from the oil licences renewal. “We renewed 19 expired leases in 2017 to enhance upstream investment influx and accelerate oil and gas reserves and production growth,” the report read. “We actively supported the implementation of a major gas commercialisation programme, which seeks to create a regulatory framework to facilitate gas flare monetisation to end gas flaring by 2020,” it read further. The agency says it issued 10 licences and approval for the development of gas production and processing facilities, and initiated an early lease renewal programme to accelerate revenue generation for government. It adds that this was meant to fund national budget and incentivise upstream investment by ensuring the security of tenure, long gestation and payback period for oil and gas investments. “We increased national gas reserve base from 192.07 trillion cubic feet to 197.74 trillion cubic feet, representing 3.5 percent increase over the preceding year. “We increased operator compliance on National Production Monitoring System (NPMS) by commencing the upgrade of the NPMS to realtime data captured in 26 crude oil terminal locations. “This improved the efficiency in the administration of crude oil export and production accounting.”

Thursday 02 August 2018

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Thursday 02 August 2018

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Housing women, housing our future

CHINWE AJENE-SAGNA Chinwe Ajene-Sagna is an expert in the real estate industry with over 20 years of experience, including strategic advisory, asset/portfolio management and transactional services primarily with JLL (Fortune 500, S&P listed). She has a Harvard MBA, Dartmouth BA (H. Honors) and is an MRICS (chartered surveyor).

s part of the 12thAbuja Housing Show, the Women in Housing Sector initiative (WISHI) was launched. The initiative is to serve as a platform both for mentorship and networking for professional women in real estate, and for home management and ownership training for marginalized women (widows, divorcees etc.) in our society. Several dignitaries and power house personalities in the sector, both men and women, participated in the launch that introduced two flagship programs – “Empowering women, empowering our future” and “Housing women, housing our future”. In support of the Empowering women, the key note speaker Mallam Ibrahim Aliyu, the Chariman Board of Directors Urban Shelter gave a powerful speech concerning women professionals in the real estate sector. It just makes business sense was the

PATRICK UKASE Dr Ukase is of the Department of History and International Studies, Kogi State University, AnyigbaNigeria. Contact patrickukase@ yahoo.com

n Monday, 16th July, 2018, the people who constitute what is supposedly referred to as the Middle Belt Region (MBR) of Nigeria converged on Makurdi, the Benue state capital. The assemblage of these leaders had just one agenda- to examine the plethora of issues and challenges bedeviling the region and to also drum support for the restructuring of the country. Several prominent sons and daughters of the region attended this August gathering including two governors, Samuel Ortom of Benue State and DairusIshaku of Taraba State. But the delegations from South-West and South-Eastern parts of the country, on solidarity participation in the parley, were reportedly denied landing rights by the aviation authorities’. Apart from lamentations of denial of political patronage and development generally, one speaker after the other took turns to condemn the incessant and endemic

theme of his speech. Mallam Aliyu spoke about women who had played a pivotal role in his life and his business, from his maternal grandmother who raised him - a very successful business woman in her own right who participated in trade across all regions in Nigeria (Kano, Irobo, Ibadan) to Accra, to his most able daughter Mrs Saadiya Aliu Aminu who now serves as the Urban Shelter MD/CEO. Women have the innate ability to match their male peers in the housing sector thanks to their key strengths including budgeting, multitasking, negotiation and client relationship management. The best Project Manager he had personally worked with at Urban Shelter was a woman.. Malam Aliyu also quoted studies by both McKinsey and Morgan Stanley in support of why having women in businesses enhances results. The Morgan Stanley report stated that “more gender diversity particularly in the corporate setting can translate to increased productivity, better decisionmaking, higher employment retention and satisfaction”. Mckinsey’s study took this argument a step further with a statistic that stated “companies with at least a quarter representation of women on their board make an average of 20% higher earnings than the industry average” – this is significant! Echoing Malam Aliyu’s sentiment were the female and supportive male industry leaders who took part in the panel sessions including Mrs

The Women in Housing Initiative is a worth-while cause for women in the real estate sector. Its multifaceted programs will not only strengthen the network of professional women in the industry ensuring that their voices are heard, but by utilizing this combined knowledge and reach, they will in turn empower marginalized women by giving them training and access to home ownership Tokunbo Martins a Director at the CBN, Yemi Shonubi, MD/ CEO of Savant, Uzo Oshogwe, MD of Afriland, Isoken Omo, Executive Chairman of the Edo Development and Property Agency (EDPA), Mrs. Mercy Lortyer, The First female president of the NIESV, Adeniyi Akinlusi, CEO of TrustBond Mortgage Bank and Kola Balogun CEO Mixta, amongst others. Running their own statistics, Urban Shelter noted an increased drive in female entrepreneurial activities through the sales of their commercial/retail units – 40% were bought by women. Unfortunately, whereas professional women were increasing their

activities in the sector, this was not the case for women with less purchasing power. For affordable residential units, only 10% were acquired by women. These results from Urban Shelter give credence to the 2nd flagship program of the WISHI –Housing Women, housing our future. The program is targeted towards marginalized women who do not have access to housing finance instruments, nor understand the fundamentals of facility management to assure capital appreciation for their houses. In the Nigerian society still, women and their children stand to lose their homes in the event of a divorce or adverse family circumstances such as the death of a spouse. These women and their children are the ones most at risk of turning to crime or becoming negative contributors to society argued Nike Osilaja the founder and Chairman of WISHI. Homeownership can become a solution for both housing and financial empowerment/stability for these women and their children. Training, education as well as financial support are key requirements for these women. WISHI’s goal is to go beyond the current “gifting” plans being put in place by the government and organizations such as Dangote Foundation. Many of these women have never managed the affairs of the housing structure and hence stand to lose their homes or their home values due to poor maintenance. WISHI is working with the mortgage banks, Mixta, Urban Shelter and other select

organizations to establish “Operation earn your own home”. Based on the premise that if you pay you value/retain, the aim of the program is not to “gift” these affordable homes to the women, but instead have them “earn” their homes through a credit system which will be a series of homeownership training courses. WISHI will provide housing pre-education classes on savings programs for downpayments and to improve mortgage credit worthiness. Other training courses will include housing facility management to assure capital appreciation, entrepreneurial education on how to utilize the home for business opportunities and other financial tools. Through the credit system, these women will work towards homeownership and in the process gain the training and education they need to maintain their home and potential increase the capital values of their investment. The Women in Housing Initiative is a worth-while cause for women in the real estate sector. Its multi-faceted programs will not only strengthen the network of professional women in the industry ensuring that their voices are heard, but by utilizing this combined knowledge and reach, they will inturn empower marginalized women by giving them training and access to homeownership. The initiative will overtime, help ensure that women are no longer invisible in the housing sector.

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The “resurgence” of the Middle Belt Forum: Matters arising attacks on communities within the region by Fulani herdsmen. Such attacks have annoyingly led to the loss of thousands of l lives, destruction of properties and also, the displacement of thousands of citizens from their ancestral homes. Given the spate of the attacks and the dimension it has taken since 2015, several analysts have come to the conclusion that these attacks are well calculated and executed with a view to not only annihilating the people of the Region, but also taking over their ancestral lands. The way and manner the perpetrators of these dastardly acts have been provided cover by the State seems to validate this claim. While calling for the restructuring of the Nigerian State to give more powers to the component units, various representatives at the Makurdi gathering harped on the need for minorities in the region to be united and remain focused with a view to achieving set goals. I am glad that finally the region is beginning to wake up from its lackluster with the aim of charting a new course for its people. This, to me, has been long in waiting. As it is often said, it is better late

than never. As an academic and an historian to be precise, I am aware that the Middle Belt has been through this path before now and what the conference is trying to do is really nothing new. Founding fathers in the region tried it before, successes were achieved and grave challenges encountered in the process, but the journey truncated mid-way. We are bound to commit same mistakes again, if not today, then in future. The geographical entity called the Middle Belt (MB), or if you like Central Nigeria (CN) is a very complex region which faces definitional challenges, as to where the Middle Belt begins or ends. In one of my coauthored articles titled: “From Opposition to Mainstream Politics: Central Nigeria in National Politics, 19602015” in S. Fwatshak (ed), The Transformation of Central Nigeria: Essays in Honour of ToyinFalola(AustinTexas: Pan-African University Press), 2017; I alluded to this challenge. For instance, using historical and cultural criteria rather than mere geographical features or descriptions, the area extends to no fewer than fourteen states. They include Kebbi, Southern Kaduna, Plateau, parts of Bauchi, Southern Gombe, Adamawa, all of Taraba, Benue and

Kogi and possibly Kwara States. However, given Nigeria’s present constitutional cum geographical arrangements which presently serve as a basis for power sharing, Central Nigeria/Middle Belt comprise Benue, Kogi, Kwara, Nasarawa, Niger and Plateau States. Regrettably, only two governors in these states attended this August meeting. Why? The region is sharply divided along ethnic, but more seriously, along religious lines. Unlike other regions that enjoy some semblance of homogeneity linguistically and religiously, the Middle Belt region is not so. This largely explains why it is the only region that does not have a forum where their governors meet to discuss issues of common interests. Away from that, there is a sense in which historically, the region has experienced what I would call a fragile unity shortly before and since the attainment of independence. For instance, the idea of a separate Middle Belt Region originated from the Northern Nigeria Non-Muslim League (NNNML) formed by a small group of Christian leaders in 1949. The League aimed to counter the Islamist expansionist moves

towards the region. It was this League that later metamorphosed severally and finally, as the United Middle Belt Congress (UMBC). It became the fulcrum of mobilization in the region particularly in the years leading to independence and thereafter. Fundamentally, the foundation of the group which had a Christian root appears to be out of sync with many ethnic groups or individuals within the region, which professes Islam, given that its original modus oparandi at formation was essentially to counter the Islamist expansionist moves towards the region. Though dissenting minority ethnicities professing Islam in the region also experience the challenges the Christian groups face, the absence of many governors at this occasion amplified this disunity in the MBR and apathy to MBF. With it came the aversion to the only common denominator and desire to do something about their status in Northern Nigeria. Note: the rest of this article continues in the online edition of Business Day @https://businessdayonline. com/

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In need of the visible hands: affordable housing market

AMAMCHUKWU OKAFOR Okafor is a policy researcher and strategist with an M.Sc. from Friedrich Schiller University, Jena, Germany. He wrote via amam. okafor@gmail.com

ot all statistics are worth losing sleep over. Some are just for the informational content. The homeownership rate is one such: it is a measure of the proportion of people who live in their own houses. It indicates the strength of mortgage market and at best, a measure of aggregate prosperity. When it is low, it implies that something has to be done to increase prosperity – not homeownership per se – in the expectation that prosperity would bring the wealth and motives to acquire homes. However, at some point in our development path, we took the wrong approach towards increasing the level of homeownership. The government, instead of investing in housing, conducted ‘fire sales’ of public lands to the highest bidders, increasing the relative scarcity of land and its prices. Soon, everyone wanted to own lands, it had become popular as the ‘best investment’ irrespective of its high capital-output ratio. Private individuals flooded the housing market.

THE DEBT MANAGEMENT OFFICE

he attention of the Debt Management Office (DMO) has been drawn to the Editorial on Page 12 of BusinessDay Newspaper Edition of Wednesday, July 25, 2018 titled “As Nigeria marches into another debt peonage”. The Editorial attempts in its own understanding to highlight the challenges of increasing external debt stock and external borrowing at high rates and advised Nigeria to approach the International Monetary Fund for cheaper funding. Firstly, it is important to state that, in line with the provisions of the law, Domestic and External Borrowings by the Federal Government are approved by the National Assembly. The borrowings, which are typically a function of the deficit in the Budgets(which by definition is the difference between revenue and expenditure), are approved through the Budgetary Process. The New Domestic and New External Borrowings required to be sourced by the DMO on behalf of the Government are expressly provided for in the Appropriation Acts, which also includes expenditure items, and are therefore transparent. The public should be guided by the fact that borrowing is not an ad-hoc activity, rather it is determined jointly by the Executive and Legislative arms of the Government. Also, borrowing by the Government is governed by legislations,

The government eventually exited the market as it became difficult to regulate. Today, the effects of this unstructured deregulation include illegal sales, land grabbing, collapse of urban planning, rise in squatter settlements, unhealthy competition for lands, uncontrolled factor pricing, cost-push inflation, and rising housing deficit. These made other public infrastructure – water, sewage system, and transportation – necessary for urban planning almost impossible to develop. This approach to increase the rate of homeownership does not reduce the rate of homelessness, rather increases it. There is a housing deficit of about 17 million. It would take the production of one million units per annum over a 20 year period to close this gap. But overall annual fulfilment is 100,000 units and a corresponding deficit of 900,000 units which carries a potential cost of US$ 16 million. The mortgage market is somewhat labyrinthine with 57 players, but mortgage financing to GDP is 0.58% (South Africa, 31%), home-ownership is 24% (Kenya, 73%). Mortgage conditions are stringent: interest rates are as high as 20%anda 25% down payment on an average mortgage size of US$ 18,000 – in country where 87 million people live below US$ 1/ day. The focus should be eradicating extreme poverty not increasing homeownership. Presented with evidence of market failure, the visible hand of government is necessary to restore equitable distribution and social optimum in the housing market. But governments too have failed. A number of state govern-

Housing, like education and health is a critical sector in which the government cannot laissez-faire. The high capital-output ratio in housing investments implies that unchecked markets would not yield socially optimum outcome. The visible hand of government is necessary both as a player and regulator to steer the market to desirable outcome ments have attempted mass housing schemes: it is typically a few blocks of bungalow houses built in remote locations, deserted and often unliveable to those for whom they were intended. And when these governments realize their failures, they enter into a quasi-partnership with government compradors who connive with other individuals, in the guise of estate developers, to off-take the lands being sold out by government ministries and local communities under shady negotiations – with no pretension to transparent market process. These pseudo-developers go on to build luxury houses for themselves and the upper class. No consideration for the vast poorly-housed lower class. Ogun state is a classic case: the government

and communities are off-loading the lands to churches, private developers and foreign businesses in a fate of competition with Lagos state, ignorant of the current challenges Lagos state faces. They are losing the opportunity as a sparsely populated state to initiate urban planning and city development. So while these estate developers continue to build for the top 1 per cent that could afford homeownership and already own estates, nobody builds for the ordinary man. A subtle paradox ensues: a simultaneous development of luxury estates and slum estates; whereas the former is largely unoccupied, the latter is well overcrowded. The results of markets is not always optimal: no wonder while there are slum cities to revamp, scarce resources were rather directed towards building a new luxurious Eko-Atlantic city despite the number of unoccupied apartments in Ikoyi, Victoria Island and the environs. It was only recently that we realized that these empty buildings served other purposes as cash vaults to hide away stolen monies. This partly explains why rental prices are downwardly rigid these environs where there is a glut of albeit, luxury homes. Housing, like education and health is a critical sector in which the government cannot laissezfaire. The high capital-output ratio in housing investments implies that unchecked markets would not yield socially optimum outcome. The visible hand of government is necessary both as a player and regulator to steer the market to desirable outcome. Housing is a major part of household consumption and savings motives in developing countries. Therefore, improving housing

conditions would have positive implications for standard of living. Concluding remarks Sadly the housing production model continues to be about luxury homes even though it is not working! The diaspora city plan of the Federal Housing Authority to build estates for Nigerians living outside of Nigeria is a case of government betrayal of the majority of Nigerians living in Nigeria with no decent roof over their heads. Government needs to return to the market: they need to increase the percentage of total land stock in the government’s possession even if it means revoking certain land titles. They need to provide proper incentives to local authorities, housing associations, private establishments and community organizations that have the resources and can endure the long-term risk-return nature of housing investments to produce standard rental units at affordable prices. Housing units could be built and then sold apartment by apartment in which case the overall assets still remains in public ownership, allowing therefore for integrated maintenance and urban planning. This was the Jakande model in 1983 Lagos state. These sorts of collaboration and coordination are necessary to correct the market distortions and provide affordable homes for Nigerians. However, the rhetoric needs to be changed: everybody cannot be homeowners. Therefore, there should be provision of a minimum standard of housing unit for lifestarters and those who cannot afford luxury homeownership.

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Re: As Nigeria marches into another debt peonage principal of which are the Fiscal Responsibility Act, 2007 and the Debt Management Office (Establishment, Etc.) Act, 2003. For instance, the Fiscal Responsibility Act specifies that the Budget Deficit must not exceed 3% of the Gross Domestic Product in any particular year. This already and directly imposes a limit on the size of the Budget Deficit and consequently, the level of new borrowings that can be undertaken by the Government. Regarding the utilisation of borrowed funds, it is on record that the present administration has spent more on capital projects than any previous administration in any fiscal year. As an example, whereas the sum of USD2.80 billion (equivalent of N854 billion at the CBN Exchange Rate of USD/N305) was raised in 2017 in the International Capital Market (ICM) to finance the 2017 Budget Deficit, a total of N1.58 trillion, almost double the size of the external borrowing, was released by the Government for capital projects. The Government also released about N1.2 trillion for capital projects in 2016. It shows that the Government is committed to bridging the infrastructure gap in order to improve the business environment and create more jobs. Furthermore, to judiciously utilise the New Domestic Borrowing in 2017, the DMO introduced two (2) new products in the Domestic Market, whose proceeds were project-tied. In this regard, the N100

billion Sovereign Sukuk issued in September 2017, was used to finance twenty-five (25) key economic road projects across the six (6) geo-political zones of the country. The works on the twenty-five (25) road projects are visible to the public, and indeed the Government has received commendations for reconstructing and rehabilitating these roads, some of which had either been abandoned for many years or were unusable. Also in that direction, the N10.69 billion Green Bonds issued in December 2017 was tied to specific environment-friendly projects, which were certified eligible by Climate Bond Initiative. The Sukuk and Green Bond received international accolades; the Sukuk received the EMEA Finance Achievement Award of Best Naira Bond in 2017, while the Green Bond was rated GB1 Excellent by Moody’s Investors Service. The BusinessDay Editorial also made reference to Government borrowing from external sources at ridiculous interest rates. Nothing could be further from the truth. For each capital raising in the ICM, Nigeria has secured the best pricing relative to its peers, that is, countries with similar sovereign ratings. Any keen follower of securities issuances by emerging markets and frontier countries would have observed that the pricing obtained by Nigeria were very competitive compared to its peers. A good example is the 30-year Eurobond that was priced at a Coupon of 7.625%, whereas Ghana and Kenya

which issued 30-year Eurobonds did so at Coupons of 8.625% and 8.25%, respectively. Indeed, in terms of security issuances in the ICM, Nigeria has been a pacesetter of some sort in Sub-Saharan Africa (excluding South Africa). For instance, Nigeria was the first to issue a 30-year Eurobond, which made it possible for other African countries to access the ICM for the same tenor. It should be remembered that the ICM has enabled the Sovereign to access long-tenored funds (up to 30 years) which is most appropriate for financing infrastructure, while also enabling the Government to create more borrowing space in the domestic market for the private sector and reduce the level of interest rates. External capital raising has also contributed to External Reserves. The increase in Nigeria’s External Reserves from USD26.09 billion on January 1, 2017 to USD38.77 billion on December 31, 2017 was attributable in part to the USD4.80 billion external borrowing in the ICM in 2017. The Editorial also alluded to high Debt Service Ratio, but ignored the fact that the Government has also embarked on several revenue boosting initiatives with a view to increasing the size of the revenue available to finance the Budget and reduce the Debt Service to Revenue Ratio. Some of the initiatives aimed at widening the tax net and improving collection efficiency include Voluntary Assets and Income Declaration Scheme

(VAIDS); Intensive Registration of Tax Payers and Extensive Nationwide Tax Audit Exercise; and, Revision of National Tax Policy. A keen observer of the Domestic Market would have observed that the Rates at the Federal Government of Nigeria Bonds and the Nigerian Treasury Bills Auctions, which represent the rates at which the Government borrows in the Domestic Market have dropped significantly from over 18.50%in January 2017 to 13-14% in December 2017 and about 11-14% since May 2018. This positive development is the outcome of the implementation of the Debt Management Strategy which entails substituting high-cost Domestic Debt with External Debt, and it has helped to moderate Debt Service Costs. The advice in the Editorial that the Government should approach the International Monetary Fund (IMF) for cheaper external funds displayed poor understanding of the lending policies of the IMF. This is because the IMF only lends to countries which have Balance of Payment crisis. Since Nigeria is not in a Balance of Payment crisis situation, it has no reason to approach the IMF for support. Nigeria’s current External Reserves of over USD47 billion, which is about 16 months import cover, is far above the minimum threshold of 6 months import cover prescribed by the IMF.

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Frank Aigbogun EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya

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Thursday 02 August 2018

Absence of IPOs on the stock exchange

he sparse initial public offers on the Nigerian S t o c k E xchange over the years calls for great concern. Since 2016, there has not been a single IPO and the hope that this year may b e d ifferent n o w appears misplaced. One will ordinarily expect that in a countr y boasting thousands of medium and large scale enterprises the only stock exchange in the country should have hundreds of publicly listed entities with dozens waiting to join in every year. Besides, in a country like Nigeria where banks are unable to provide long term loan facility to corporations and businesses at single digit interest rates, the stock exchange is supposed to be a credible alternative for these corporate institutions to raise capital at a fairly reasonable cost. Somehow, this hasn’t happened. So far, Nigeria Stock Exchange has been unable to attract some of the biggest names in Corporate Nigeria to the stock market and after more than 40 years of existence, NSE has only

164 members listed and trading on the Exchange. Th e n e w l i s t i n g p e rformance of the Stock Exchange in the past few years has been abysmal. Between 2013 and 2017, there were only four initial public offers (IP O) in Nigeria. This pales in comparison to other African economic giants like South Africa (44), Egypt (13) and Tunisia (23) during the same period. Even Ghana and Tanzania managed to hold 7 and 8 IPOs respectively between 2013 and 2017. Although the NSE has b e en star v e d of IP O of late, th e four IP O s b e tween 2013 and 2017 manag e d to rais e a total of $760 million out of which $538 million was contributed by proceeds of Seplat Petroleum IPO in 2014. Commendably still, this was the third largest amount rais ed through IPOs in Africa during the p e r i o d . H o w e v e r, t h i s was significantly behind South Africa who pulled in $4.77 billion through IPOs and Egypt who managed to raise $1.25 billion through IPOs in the five years under review. The slow-down in IPOs in the country began after the sto ck market crash

in 2008. Since the crash, investors have shied away from the capital markets, causing corporate institutions to doubt their ability to still raise millions or billions in long term capital from the stock market. Only the very large corporate institutions like Seplat have dared to attempt an IPO in recent years. What the market has s een more of is further offerings by already listed companies seeking to raise additional capital in the market.. Even the further offerings have mostly been issued through private placement. Instead of making the listing process easier for company institutions to come to the public market, the NSE’s decision to make the process more stringent has ensured that only a few big national c ompanie s are el ig ible to list while the smaller companies who need capital from the stock market have effectively been locked out. In 2011, after Os car Onyema was appointed CEO of NSE, the institution changed the two imp ortant listing rule s which made the eligibility status a lot more exclusive: The NSE Green book

on listing requirements demands that companies wishing to list must have a cumulative net profit over the last three years of around N300 million minimum and d a not less than N100 million profit in two of these years. Also the company must have shareholder ’s equity of not less than N3 billion. These new rules raised the bar so high that comp anie s hav e b e en unable to list. In a countr y where large scale enterprises are very few, one would exp ect the sto ck exchange to create rules that will encourage medium enterprises to list and fund their growth and expansion with proceeds received from the stock market. Instead of doing this NSE raised the requirement on profit and shareholder’s equity from zero to N300 million and N3 billion respectively. The product of this new legislation has been less than a handful of IPOs in the last five years. If the policy doesn’t change quickly to allow more medium scale enterprises have easier access to listing in the stock market, the IP O low c ount may continue for the foreseeable future.

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Thursday 02 August 2018

BUSINESS

COMPANIES & MARKETS

DAY

Wapic Insurance underwriting profit up 112% on increased premium

Pg. 14

Co m pa n y n e w s a n a ly s i s a n d i n s i g h t

Law Union & Rock half year result beats 2017 performance Emeka Ucheaga

aw Union & Rock Insurance Plc has continued on the trend of improved earnings among publicly traded securities as the company posted half year earnings, which were slightly better than its figures in the half year of 2017. The insurance firm grew its profit after tax for H1 2018 to N364.2 million from N318.7 million in H1 2017, recording a growth of around 14.4 percent. This surge in profit occurred despite low gross premium underwriting growth. Although gross pre-

mium under written increased marginally from N2.73 billion in H1 2017 to N2.79 billion in H1 2018, net premium income increased significantly by around N200 million from N1.21 billion in H1 2017 to N1.41 billion in H1 2018, a change of around 16 percent. The uptick in net premium income was primarily aided by the significant drop in premiums ceded to reinsurers, which fell from -N947 million to -N731 million. The savings of around N236 million helps explain a similar increase in net premium income during the first six months of 2018. Investment income also rose significantly from

N394.8 million to N488.9 million as total assets increased by around N400 million from N10.03 billion to N10.43 billion. The growth in investment income could be attributed to a rebalancing of the capital allocation of the firm. The company reduced its cash pile from N3 billion in H1 2017 to N2.6 billion in H1 2018 and increased its investment securities holdings from N3.12 billion in H1 2017 to N3.52 billion in H1 2018. Again the change in both cash holdings and security holdings were around N400 million. Law Union & Rock Insurance recently released more retail products to

meet the need of its customers. The new products are travel insurance card and Teen Personal Accidents (TPA). This is part of the Company’s ongoing efforts to deepen penetration and reach a larger population of consumers. Olasupo Sogelola, executive director, Technical/Operations, Law Union & Rock had said the introduction of the two products was part of the company’s strategic plans to meet the need of its retail customers. According to him, the Teen Personal Accident otherwise called (TPA) was the company’s innovation, but has now been repackaged in four variants with premium

ranging from as low as five hundred naira. The new variants provide customers with the benefit options depending on the customers’ choice. The policy provides a cover for children of age between two and twenty-five years. The benefits include medical expenses and permanent disability resulting from accidents sustained by the insured child within and outside their school premises. NAICOM has also granted the company an approval to underwrite Travel Insurance Card, a retail policy for regular travellers within Nigeria. With as low as seven hundred naira only, a

traveller would be covered against accident arising in the course of his/her traveling by road, rail, water or air. The product comes in four variants - drivers travel card, passengers travel card, students travel card and executives travel card. The policy benefits, which include medical expenses, emergency care, accidental death and permanent disability is expected to provide succour to the accident victims/family and also reduce the level of uninsured economic losses from accident in the country. Law Union and Rock Insurance of Nigeria Plc offer life and non-life insurance services in Nigeria.

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Thursday 02 August 2018

COMPANIES & MARKETS

Wapic Insurance underwriting profit up 112% on increased premium BALA AUGIE

apic Insurance Nigeria Plc’s innovative product introduced with a view to increasing a share of the market has paid off an increase in premium income helped underpin underwriting performance. Also, the Nigerian insurer’s investment across each business segment is driving strong growth in earnings. For the first six months through June 2018, Wapic Insurance’s underwriting profit surged by 112.19 percent to N1.32 billion from N622.08 million the previous year.

The growth in underwriting profit was largely driven by improvement in revenue as the firm continues to surmount the heads. Gross premium written (GPW) and gross premium income (GPI) increased by 18.16 percent and 19.52 percent to N6.96 billion and N5.45 billion in the period under review from N5.89 billion and N4.57 billion as at June 2017. Net premium income followed the same growth trajectory as it increased by 43.26 percent to N3.96 billion in June 2018 as against N2.76 billion as at June 2017. A breakdown of Gross premium written (GPW) shows the revenue from Motor insurance grew by 68.68 percent to N1.19 billion while the

Nigerian insurer generated N1.07 billion from individual life business. Wapic Insurance’s good underwriting is a major driver of combined ratios. Wapic insurance was founded in 1950 and listed on the Nigerian Stock Exchange (NSE) in 1998. The company has two subsidiaries Wapic Life insurance and Wapic insurance Ghana. Chairman of the company, Aigboje Aig-Imoukhuede took a majority stake in the firm shortly after stepping down as MD of Access bank. Intercontinental bank which was acquired by Access bank had a majority stake in the insurance firm. Access bank had earlier spun off Wapic shares to its shareholders.

C&M L-R: Rotimi Olaoluwa, national expert, UNIDO; Titilayo Eko, executive director, representing NECA’s Network of Entrepreneurial Women; Timothy Olawale, chairman, NGCL, and Celine Oni, CEO,NECA’S Global Certification Limited (NGCL) during the press conference on NECA’s new value proposition :Enhancing Business Competitiveness in Lagos. Pic by Pius Okeosisi

Guinea Insurance assure shareholders of efforts to reposition for growth Modestus Anaesoronye

oard of Directors, Guinea Insurance Plc has affirmed their commitment to reposition the underwriting company for growth and higher profitability. The company, which marks its 60 years anniversary this year, says it has resolved to use the celebration to further stamp its footprints and landscape across different parts of the country. Godson Ugochukw, chairman of the company who spoke at its 60th Annual General Meeting held in Benin, the Edo State Capital said noted that 60 years is a major mile-

stone in the life of any institution, stating that, there are only a few insurance companies in Nigeria that can boast of such a rich history, wealth of experience and consistent longevity. Ugochukw said that the underwriting firm’s gross premium income went up 11.7 percent from N913.4 million in 2016 to N1,020.4 billion in 2017, while net premium income also grew by 15 percent from N649.5 million in 2016 to N747.1 in 2017. Underwriting Profit grew from N453.4 million recorded in 2016 to N501.1 in 2017 representing a growth rate of 11 percent. Claims paid by Guinea Insurance on various classes of insurance decreased by 47 percent from N304.9 mil-

lion in 2016 to N161.5 million in 2017, which according to the company was due to operational efficiency in terms of people, processes, technology and communications. Investment Income recorded a marginal decline of 3 percent from N215.5 million in 2016 to N208.3 million in 2017. The company’s profit before tax increased by 35% from N176.3 million in 2016 to N237.8 million in 2017, while the profit after tax increased by 518 percent from N40.6 million in 2016 to N251.0 million in 2017. The underwriter’s zest to be over and done with the challenge of solvency margin received a boost in the year under review, as sharehold-

ers’ fund rose 16 percent from N2.9 billion in 2016 to N3.4 billion in 2017. Ugochukwu also further noted that the company’s philosophy of delivering value to its shareholders without compromising service standard remains sustainable. He said: “we are an upwardly mobile company, peopled with skilled professionals, our strength is made manifest in our passion for high standards and the single-minded determination to emerge a world class enterprise, one with the scope and economies of scale necessary to drive home our unflinching mandate of returning Guinea Insurance on the path of sustainable profitability”.

Heritage Bank promises greater support to MSMEs for growth, value creation

eritage Bank Plc, as part of its innovative services, has assured promoters of Micro, Small and Medium Enterprises (MSMEs) of support to enable them grow their businesses into generational conglomerates. Ifie Sekibo, managing director/CEO of the bank disclosed this in a statement signed by the divisional head, Corporate Communications of the bank, Fela Ibidapo According to him, Heritage Bank is poised to collaborate with operators of MSMEs to grow them into generational conglomerates, remarking that their desire is for Nigerian businesses to be listed on the

stock exchanges and eventually become global brands and household names. Sekibo noted that surviving in the face of all odds as a business in Nigeria with the present economic situation is not an easy feat, adding that tenacity is a key characteristic of a sustainable business. He remarked that notable businesses such as Quaker Oats and KFC went through trying times, overcame them, and are now global brands. “We believe that businesses like yours are the backbone of the economy because you create jobs and play a huge role in moving our country out of this present recession. I encourage you to rise up to this challenge facing every Nigerian entrepre-

neur and make our economy vibrant again,” Sekibo said. The head of corporate communication noted that the Heritage Bank would support operators in the MSMEs sector to broker new deals and partnerships, adding that a contact today could lead to a business opportunity tomorrow. He said the bank would create a platform to propel a network of fast growing businesses and urged them to seize the opportunity, network with others as well as engage the bank’s SME consultants in their bid to build and develop sustainable businesses. It will be recalled that in recognition of Heritage Bank’s commitment to Small and

Medium Enterprises (SMEs) and Youth development, the bank has been adopted by the Central Bank of Nigeria (CBN)as the sole pilot bank for the Youth Innovative Entrepreneurship Development Programme (YIEDP). The programme is aimed at harnessing the latent entrepreneurial spirit among the teeming youths by providing timely and affordable loans to implement their business ideas. The major objective of the scheme is to provide a sustainable mechanism to stimulate employment, contribute to the non-oil Gross Domestic Product (GDP) as well as address the challenge of youth restiveness in the country.

Dangote disburses scholarship funds in Benue Godgift Onyedinefu, Abuja

he Dangote Cement Plant in Gboko has disbursed scholarship funds to host communities in Benue State. The scholarship is part of the company’s annual Corporate Social Responsibility (CSR) scheme for host communities, and it has been running for upward a decade. Last year, the Dangote’s cement Plant in Gboko paid a staggering N700milliom in tax to the Government of the State. The excited State Governor Samuel Ortom had said without the Dangote Cement Plant in Gboko, there would have been a vacuum in the State’s economy. The Dangote Group is adjudged to be Africa’s largest donor, and second biggest employer of labour after government in Nigeria. Only recently, the Aliko Dangote Foundation donated 150 fully kitted operational vehicles to Nigeria Police, and as well launched a N2billion ‘Dangote Village’ built in Maiduguri for the Internally Displaced Persons (IDPs). The Gboko Cement Plant Director Rama Srinivasan who represented Dangote Group’s President Aliko Dangote presented the symbolic cheque to the representatives of the communities. He said the scholarship scheme was part of the Dangote Cement’s contribution to host communities, adding that the programme will be sustained. President of the Yion Development Association (YIDA)

Ande Per who received the cheque on behalf of the communities commended the management of the company for the gesture. Per however appealed for a review of the scholarship fund so that more students can benefit. He said the Dangote Cement plant is a blessing to the Gboko Communities, as it has created direct and indirect jobs for the people, and thereby addressing insecurity in the State. Speaking separately, President of Yion Students, Comrade Msor Tsea; President of Youths of the host community Comrade Kuleve Kokoiwen and representatives of the community’s Royal fathers His Royal Highness Nyamnongu Abeva hailed the Dangote Cement Plc for supporting education in the state. In their separate responses, General Manager Human Resources Management and Administration George Ofurum and the Assistant General Manager Corporate Affairs and Special Duties Jonathan Kunde enjoined the community to make judicious use of the money and advised the students to study hard to justify the purpose for the scholarship. CSR projects by Dangote Cement in Benue State include: Electrification of villages at Masaje, Ipav, Gaando, Mbayion, Quarry Community, IgyulaMbayion, Amua- Mbayion, Tsekutsa-Mbayion, some communities at Ukpekpe- Mbayion; procurement of 50 motor cycles on a revolving scheme basis and construction of 14 blocks of classrooms in different host communities.

BUSINESS DAY

Thursday 02 August 2018

CityFile

A’Ibom: 32 filling stations shut over hoarding

Officials of the National Pension Commission verifying prospective retirees of the Federal Government in Lagos. NAN

…as marketers sell N170, N200 per litre ANIEFIOK UDONQUAK

o fewer 32 filling stations have been shut in Akwa Ibom State by the industry regulator; Department of Petroleum Resources (DPR), for hoarding and selling fuel above the approved pump price of N145 per litre. Kingsley-Sundaye Tamunoiminabo, operations controller, DPR, Akwa Ibom, explained the decision of the industry regulator to wield the big the stick. “We sealed 32 filling stations for related offences such as hoarding, and selling above pump price. Some marketers ran away upon sighting the DPR staff,” Tamunoiminado said, adding that the department was aware of the artificial scarcity that started last week in the state and efforts ongoing to end the crisis. “We are ensuring that filling stations that have the products do not hoard or sell above approved pump price of N145 per litre”. According to him, the filling stations had to be sealed because their actions aggravated the artifi-

cial scarcity caused by an industrial action embarked upon by the National Union of Petroleum and Natural Gas Workers (NUPENG), in solidarity with some of its members, who were downsized by a private serving company, Universal Energy Resources Ltd. The operations controller warned the marketers against capitalising on the artificial scarcity to cheat the public. He said the department has taken inventory of filling stations, which have products and locked their underground tanks in the state, noting that such filling stations would be appropriately sanctioned. He decried the situation where some filling stations would sell their products at the early hours in the day and late at night. He said that the state government had convened several meetings to solve the lingering crisis in the state but to no avail. NUPENG had embargoed supply of petroleum products to Akwa Ibom with effect from July 23, leading to the scarcity of product with marketers taking advantage to sell between N170 and N200 per litre.

59 suspected traffickers nabbed in Osun

aniu Agaran, the zonal commander, National Agency for the Prohibition of Trafficking in Persons (NAPTIP), Osun, says 59 suspects have been ar rested for unlawful trafficking of 103 persons. Agaran told newsmen at a workshop to mark this year’s World Day Against Hu m a n T ra f f i c k i n g o n Monday, in Osogbo that the victims were, however, rescued from the traffickers,. “The rescued103 victims comprise 35 males and 24 females. We have also taken about 23 cases to the court in which 15 had been legally executed while eight cases are still pending,” Agaran said. He further disclosed the command secured conviction in about 352 cases of human trafficking while 8,000 victims had been rehabilitated since its inception. The zonal commander warned the public to beware of recruitment agencies and traffickers who lured young girls and boys with promises of lucrative jobs abroad. He said trafficking in humans had become worrisome and urged sister agencies to collaborate with non-governmental organisations, traditional

rulers, religious organisations to fight the menace. Femi Adefila, the guest speaker at the event, who is also the executive officer of Rave FM, Osogbo, said human trafficking had become a national embarrassment requiring an urgent intervention. Ad e f i l a c o m m e n d e d the NGOs for their role towards sensitising the public on the dangers of human trafficking and urged them to do more to deliver rather than leave the fight to the government. He urged the media to highlight trafficking matters to rescue those being lured into second slavery. Olayinka Ibrahim, the NETNOS president, comm e n d e d t h e c o m ma n d for the collaboration with NGOs to fight human trafficking. Ibrahim said human trafficking had become a fast growing business with over 150,000 dollars being generated from it yearly. He said quality education, employment and sustainable social mechanism would help to curb the menace of trafficking in persons. Ibrahim also called for the support of the general public in the fight against human trafficking rather than leaving it to the government alone.

Zamfara to rebuild villages destroyed by bandits

anusi, speaker, Zamfara State House of Assembly, says the government plans to rebuild villages recently destroyed by bandits in Zurmi local government area of the state. No fewer than 18 villages in the three districts of Kwashabawa, Birane and Mashema were attacked by bandits last week and scores of people killed. Following the attacks, over 12,000 villagers from the affe cte d areas de serted their homes and now camped in schools, hospitals and offices in

…as over 12,000 displaced Zurmi, the local government headquarters. Rikiji who disclosed the plan to rebuild the villages described the Zurmi attack as the worst in the state since 2012. “As we speak, these districts are no longer under government but bandits control and we are mobilising with security personnel to go and flush them out.” He pending the rehabilitation of the affected villages, the villages would remain at the local government headquarters where

they would be catered for. “At this moment, even if they go back to their villages, there will be no food or shelter for them because the bandits have burned down most of the houses along with foodstuff and animals,” he said. “We are also going to bring doctors so that the victims will be treated out of the trauma they went through especially the women and children,” the speaker further said, adding that both the state and the national emergency

agencies were providing services to the victims. The speaker said the IDPs would remain until the arrival of a Federal Government delegation which he said was being expected for an onthe-spot assessment of the situation. He said another camp in Shinkafi was holding 7,500 IDPs persons. President Muhammadu Buhari last weekend approved the deployment of 1,000 forces of the Nigerian Army to Zamfara to check the nefarious activities of the attackers.

Abia to seal buildings over environmental offence GODFREY OFURUM

bout 18 landlords in Aba, the commercial hub of Abia State, found culpable of indiscriminate disposal of human waste have been given 30 days to correct such or face the wrath of environmental law. It was alleged that they channeled their toilets to public drains, rather than provide septic tanks for their properties. Michael David, a senior health officer at the health department of Aba South Local Government, who revealed this to newsman in Aba, explained that affected buildings are on 16 Eme Street, 13A Eme Street, 12 Eme Street, 9A Eme Street, 8 Jajah Street, 9A Jajah Street, 12 Jajah Street, 12B Jajah Street, 14 Jajah Street, 16 Jajah Street, 8/10 Egwundu Street, 9 Egwundu Street, 9B Egwundu Street, 7 Egwundu Street, 12A Egwundu Street, 3 Ahunanya Street and 8 Onyike Street, all in Aba

South LGA. According to him, “They have all been seen with the various nuisances discovered in the course of our inspection and we’ve given them abatement notice in respect to the nuisances detected, which are: improper channeling/discharge of sewage/ waste water from their premises, to the public streets, which has formed puddles and are favourable for mosquitoe breeding and is giving rise to offensive odour and unsightliness of the streets. “And these conditions are prejudicial to the health of man. Particularly number 7 Egwundu Street, which has an overfilled septic tank and this tank has a pipe through which they soak out the sewage content of the septic tank into public domain. “And this is going directly with the flood you usually see when it rains, because as it rains, the storm water flowing on the public roads, carries this sewage to different destinations on the roads of which people deep their feet into flood on daily

basis, here in Aba. And most of them are infected with so many diseases, like elephantiasis. “The abatement notice will expire in thirty days, starting from July 9, 2018 to August 9, 2018. And if they fail to do the needful, this office shall use every means available to really ensure that the instructions given to them in the notice is carried out to the last alphabet written on it. “What we asked them to do, is to block those channels connecting sewage from their premises to the public roads, construct trenched type of soak-away pit within their premises, which will be capable enough to receive the waste water emanating from their premises, because what they are doing is detrimental to their health and that of other people, “he stated. Onyinyechi Nwaigwe, director of environmental health, Aba South local government, observed that whenever it rains, these landlords, with the use of pumping machines, would pump out human wastes (Excreta)

into the drains, thereby polluting the environment. Nwaigwe, frowned at this practice and warned that henceforth anyone caught in the act, will be thoroughly dealt with, stressing that the unhygienic lifestyle of some of these landlords, are endangering the lives of other residents. According to her, using pumping machine to soak out excreta and other sewages into public drains, especially during rainy season, where storm water carries such poisonous substances to different locations, could lead to possible outbreak of diseases, contracted through contact with faeces (Faecal Oral Disease). The health expert revealed that about 18 buildings have been served with abatement notice with specified date to correct such unhealthy practices and warned others involved in constituting such inhuman public nuisance, to desist from such wicked acts or face very hot music, from the health department of the State.

BUSINESS DAY

Thursday 02 August 2018

BUSINESS DAY

C002D5556

Investor

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Helping you to build wealth & make wise decisions NSE All Share Index

Year Open

38,243.19

Market capitalisation

N13.609 trillion

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

2,564.13

1,713.69

1,087.32

Week open (20 – 07–18)

36,603.44

N13.260 trillion

2,663.89

1,609.44

798.75

Week close (27 – 07–18)

36,636.97

N13.272 trillion

2,659.58

1,614.64

810.39

Percentage change (WoW) Percentage change (YTD)

0.09 -4.20

-0.16 3.72

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

330.69

2,560.39

1,975.59

1,379.74

858.39

309.15

2,512.08

1,864.82

1,383.86

856.75

297.58

2,526.94

1,782.73

1,376.05

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

1,746.68

475.44

139.37

1,642.22 1,642.22

449.05

143.63

457.89

146.73

NSE 30 Index

0.32

1.46

0.00

-5.78

-25.47

-5.98

1.97 -3.69

2.16 5.28

976.10

-0.19 -12.23

-3.74

0.59

-4.40

-0.56

-10.01

-1.31

-9.76

-0.27

Investors in bargain hunting as more H1 scorecards berth HEANYI NWACHUKWU

any investors who hitherto sat on the fence at the Lag os B ours e are now leveraging the widow of opportunity which record sell-offs created around value stocks. Th e s e i nve sto rs who a re mostly bargain hunters have gone back to Custom Street buying stocks that they considered their prices to be below fair value. Na ï v e i nv e s t o r s n e e d t o trade cautiously with them as their actions are not without the possibility of profit-taking activities. A na l y s t s at L a g o s - b a s e d Financial Derivatives Company had in their July presentation noted that first-half (H1) 2018 results of listed companies will drive stock market performance, adding that investors will take position in stocks with robust interim dividend payment history especially banking stocks. They also noted that growing uncertainty and speculations in the economy will exert pressure on the bourse thereby reducing the upsides for short term gains. Mild bargains had last week h e l p e d t h e Ni g e r i a n St o c k Exchange (NSE) All Share Index (ASI) which appreciated by 0.09percent to close at 36,636.97 points while the value of listed

GDL targets N1bn from memorandum listing of Money Market Fund

increased to N13.272 trillion. Summar y of stocks pr ice changes show 31 equities appreciated in pr ice in the trading week to July 27, higher than 16 in the preceding trading week; while 48 equities depreciated in price, lower than 59 equities in the preceding week. Meanwhile, ninety (90) equities remained unchanged lower than 94 equities recorded in the preceding week. The Nigerian stock market opened this week on a positive note (+0.84percent) as more investors move d in to take positions in value counters following their impressive first-

half (H1) scorecards. “Though the market managed a positive performance at the end of last week, we believe the outcome of earnings releases will remain the major determinant of market direction this week. That said, we foresee a mildly positive start to the week, noting the widely positive market breath at the end of last week”, research analysts at Vetiva Capital Management said in their July 30, 2018 ‘Breakfast Report’. Afrinvest research analysts in their stock recommendation for the week noted that the marginal uptick in market performance

last week was largely due to investor reaction to positive first-half 2018 results releases. “This week, we expect bargain hunting to be sustained as investors take position ahead of the release of more H1’ 2018 earnings scorecard”, Afrinvest analysts added. “We expect investors to hunt for more bargains in banking stocks ahead of their H1’ 2018 corporate earnings releases”, said analysts at Lagos-based United Capital in their July 30 note to investor. They did not rule out the possibility of profit-taking activities later in the week.

rowth and Development Asset Management (GDL) is aiming to get N1billion by listing 100million units of its Money Market Fund at N10 each. The Nigerian Stock Exchange (NSE) on July 18, 2018 gave its approval for the application for memorandum listing of the GDL Money Market Funds. The NSE listings report shows Goldbanc Management Associates Limited is the issuing house(s)/financial adviser(s), while Greenwich Securities Limited is the stockbroker to the Money Market Fund. Growth and Development Asset Management is a company licensed by the Securities and Exchange Commission (SEC) to manage financial and non-financial assets (infrastructure) through collective investment schemes/specialised vehicles. The company also provides unique and personalised investment products and ser vices in order enable its clients to meet their distinctive investment objectives and aspirations.

BUSINESS DAY

C002D5556

Thursday 02 August 2018

Investor

Helping you to build wealth & make wise decisions

United Capital investment views

Investor’s Square

Bulls override bears

he Nigerian bourse halted the recent weekly bearish streak as the NSE-All Share Index (ASI) trended northwards on 3 of the 5 trading days in the week to 28th of July 2018. The bullish performance was largely driven by price appreciation in bellwether Banks, as investors take positions ahead of their firsthalf (H1) 2018 earnings release. Thus, the benchmark Index was up 0.1percent week-onweek (w/w) to 36,637points (pts) while year-to-date (YtD) return stood at -4.2percent. Also, market capitalisation added N12.2billion to end the review week at N13.3trillion. Activity level was mixed as average volume traded declined 14.9percent w/w to 283.5million units while average value traded advanced 12.8percent w/w to N3.3billion. Sectoral performances were mixed with a bearish skew as 3 of the 5 sectors under coverage declined w/w. The Industrial Goods(-4.4percent)andOil&Gas (-3.6percent) Indexes suffered the most, on the back of w/w losses in Lafarge (-15.4percent), Forte (-14percent), Oando (-5.4percent) and Seplat (-3.9percent),whiletheConsumer Goods Index (-0.2percent) also trailed, consequent on w/w price declines in Dangote (6.8percent) and Nigerian Breweries (-3.4percent). We highlight that sell-offs can be linked to poor H1-18 earnings releases by some of the top decliners. On the other hand, the Financial Services Index (+4.2percent) - Insurance (+2.2percent) and Banking (+2.0%) Indexes - was the sole gainer, owing to price appreciation in MANSARD (+3.9percent), AIICO (+1.4percent), FBNHoldings (+10.5percent), GTBank (+4.2percent) and Zenith (+3percent). I n v e s t o r s’ s e n t i m e n t remained underwhelming as market breadth closed the week at 0.6x (previously 0.3x); 30 stocks advanced while 47 declined w/w. This week, we expect investors to hunt for more bargain in Banking stocks ahead of their H1-18 corporate earnings release. Also, we do not rule out the possibility of profit taking activities later in the week. Money Market: Underwhelming demand at bond auction pushes marginal rates to 14percent Liquidity conditions were robust for most parts of the week as money markets averaged 8.0% (compared to 9.3percent in the preceding week), thanks to inflows from bond coupon payments (c. N67.8bilion), outstanding FAAC payments, as well as OMO maturities (N404.32billion) which trumped efforts by the CBN to regulate liquidity levels via two OMO auctions which were carried out. Average stop rate at the auction ended at 11.6percent (against 11percent in the preceding week). Overall, money market rates closed the week lower; OBB (down 7.8percent to 7.3percent) and O/N (down 8.8percent to 6.8percent) w/w. During the week, the Debt Management Office (DMO)

conducted its monthly auction of FGN bonds for July. The monetary authority planned to raise a total of N90billion (N25billion each in the 5-year and 7-year tenors and N40billion in the 10-year tenor)), but due to an underwhelming demand in the 5 and 7 - year bills (bidto-cover ratio: 0.5x apiece), the monetary authority was only able to fill its offer by 74.3percent, even though the 10-year tenor was modestly oversubscribed (bid-to-cover ratio: 1.3x). The auction was carried out at the following marginal rates: 5-year (13.69percent vs. 13.50percent at the last auction), 7-year (14percent versus 13.80percent at the last auction) and 10-year (14.30percent versus 13.81percent at the last auction). Looking into the new week, a sizeable maturity to the tune of N539.9billion is expected to hit the system (Primary Issuance maturities: 215.6billion and OMO issuance maturities: N324.3billion – which the CBN is expected to completely refinance). Fixed Income Market: CBN

market, the naira continued to experience stability as movements across FX windows remained muted. The parallel and official FX market traded sideways to settle at N358.5/$1 and N305.9/$1. Elsewhere, the domestic currency saw a 19bps downtrend in the Investors & Exporters FX window to finish at N362.3/$1. Looking ahead, the outlook of the naira is expected to remain tied to the spate of CBN’s intervention in the spot and forward market, as well as the better price discovery in the I & E FX window. Global stocks largely bullish as trade tension cools-off In the week that ended 27th July 2018, major global equity indices closed the week bullish as trade tension continued to ease on the back of positive U.S/E.U trade news. Equities in the US market trended northwards as Q2-18 GDP number for the US economy surged 4.1percent, spurred by increased consumer spending as a result of the tax cut. Thus, the DJIA and S&P 500 rose 1.6percent and 0.6percent w/w respectively, while the NASDAQ

RSA fund price of PFAs as at July 13, 2018 S/N 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

PFAs CrusaderSterling Pensions Premium Pensions ARM Pension Mgrs. Stanbic-IBTC Pensions Legacy PFA PAL Pensions NLPC PFA First Guarantee Pension Trustfund Pensions SigmaVaughn Pensions Leadway Pensure PFA AIICO Pension Managers APT Pensions Fidelity Pensions AXA Mansard Veritas Glanvlls Pensions OAK Pensions Investment One Pension Mgrs. IEI Anchor Pension Managers Radix Pension NPF Pensions

OMO sale spur profit-taking in the T-bills space Thebeginningoftheweeksaw a quiet theme as Inflation came out above expectation and as players waited on the outcome of the MPC meeting. Nonetheless, as the week progressed bearish activities began to gain steam – particularly in the T-bills space – on the backdrop of interventions by the CBN. Consequently, average T-bill yield inched higher by 34bps w/w to close the week at 12.3percent. (91-day (up 29bps to 11.3percent), 182day (up 43bps to 12.7percent) and the 364-day (up 39bps to 12.7percent). In the bonds space, was relatively quiet with a bearish skew as average bonds yield edged higher fractionally by 1bp to end the week at 14percent. In the week ahead, we expect fixed income players to trade sentiments around the NTB auction that would be taking place on Wednesday. We also expect players to trade on the robust liquidity profile that is anticipated, as well as any other CBN guidance in the form of fiscal paper supply. Currency Market: Naira appreciates in the I & E window In the Foreign exchange

CURRENT PRICE 3.9864 3.9705 3.8994 3.7408 3.6349 3.4473 3.4430 3.2980 3.2830 3.1608 3.0733 3.0479 2.7911 2.7407 2.7040 2.6523 2.5712 2.4770 2.3381 2.0434 1.4687

Composite which tracks the technology sector was down 1.1percent w/w on the back of FACEBOOK and TWITTER unimpressive H1-18 earnings release. In Europe, thanks to moderation in trade tension and spree of the impressive corporate earnings release, most of the region’s equity Index closed the week in the green territory. Also, the European Central Bank (ECB) kept interest rates unchanged. Thus, Germany’s DAX (+2.4percent), France’s CAC (+2.1percent), Pan European STOXX (+1.7percent) and UK’s FTSE (+0.3percent) all trended northwards w/w respectively. Emerging markets indices were also bullish. Russia’s RTSI (+3.3percent), India’s Sensex (+2.3percent), Brazil’s IBOV (+1.6percent), China’s SCHOMP (+1.6percent), and South Africa’s JALSH (+0.3percent) all ended the week in the green territory. This week, In the US, the Fed and jobs data will be the key focus. The Fed is expected to leave interest rates on hold but would confirm if a further hike in September is consistent with ongoing momentum in the US economy.

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators? Let us know and investor will help you investigate and report back. E-mail: iheanyi.nwachukwu@businessdayonline.com

FCMB Group stock: Vetiva sees upside potentials …favours ‘Buy’ rating amid impressive H1 scorecard IHEANYI NWACHUKWU

ecent firsthalf (H1) 2018 scorecards of FCMB Group which came in line with Lagos-based Vetiva Capital research analysts’ estimates prompted the Olalekan Olabode-led team to assign a ‘Buy’ rating for the stock. Interestingly, Vetiva says that FCMB Group stock has the potentials to reach a target price (TP) of N4.86 (previously N4.66). As at Friday July 27, 2018, the stock was priced at N2.04 on Lagos Bourse. The analysts ‘Buy’ rating is given to the stock that they consider highly u n d e r va l u e d , bu t w i t h strong fundamentals, and where potential return in excess of or equal to 15percent is expected to be realised between the current price and analysts’ target price. In a recent results released at the Nigerian Stock E xchange (NSE), FCMB Group Plc recorded a profit before tax (PBT) of N7.1 billion for the six months ended June 30, 2018. The record H1 profit represents an increase of 86percent from N3.8billion FCMB Group Plc achieved for the same period in 2017. From the details of its unaudited results announced on the floor o f t h e Ni g e r i a n S t o c k Exchange (NSE), the Group’s gross revenue rose to N83.9 billion as at the

end of June 2018, compared to N77.5billion in the corresponding period of 2017. Similarly, net interest income rose by 9percent Y e a r - o n -Y e a r ( Y o Y ) from N32.5billion to N35.3billion, while noninterest income grew to N16.5billion, an increase of 29percent, from N12.8billion for the same period of last year. In their July 30 equity note title d “O n track for recovery, strong q/q performance maintained” send to stock investors, Vetiva research analysts said that with FCMB Group earnings “coming well in line with our estimates, we have marginally revised our estimates across most line items.” “FCMB released i t s H 1 ’ 1 8 re s u l t s, w i t h earnings coming in line with our estimates, following stronger quarter-on-quarter (q/q) performances. Although gross earnings came in relatively flat q/q at N42 billion in second-quarter (Q2) 2018, the top line for H1’18 closely tracked our estimate at N84 billion – 8percent ahead of previous y e a r ’s f i g u r e ”, Ve t i v a analysts said. Before now, FCMB Group sto ck pr ice had re a c h e d 5 2 - w e e k h i g h of N3.65 from a 52-week l o w o f N 1 . It s t ra d i n g information at the Lagos Bourse show FCMB Group has market capitalisation of N39.605billion with

shares outstanding of 19,802,710,754 units. “We remain optimistic about the medium to long term outlook on FCMB and believe the stock remains largely undervalued. FCMB trades at an FY’18 P/E and P/B of 2.4x and 0.2x versus our coverage banks’ averages of 4.9x and 0.8x respectively”, Vetiva analysts stated. FCMB Group Plc is a non-operating financial holding company (HoldCo), regulated by the Central Bank of Nigeria (CBN). It is made up of operating companies divided along three business groups – Commercial and Retail Banking (First City Monument Bank Limited, C re d i t D i re c t L i m i t e d , FCMB (UK) Limited and FCMB Microfinance Bank Limited); Investment Banking (FCMB Capital Markets Limited and CSL Stockbrokers Limited); and Asset & Wealth Management (Legacy Pension Managers Limited, First City Asset Management Limited and CSL Trustees Limited). The Commercial and Retail Banking group (which comprises First City Monument Bank Limited, C re d i t D i re c t L i m i t e d , FCMB (UK) Limited and FCMB Microfinance Bank Limited) generated a 32.2percent increase in PBT to N2.9billion for half year 2018 from N2.2billion at the end of first quarter 2018. Revenue increased 3.7p ercent year-onyear (YoY), driven by an 8.1percent YoY increase in non-interest income and an 8.7percent YoY increase in net-interest income. The latter’s increase was largely due to reduction in cost of funds from growth in Personal Banking and SME deposits. This i n c re a s e d n e t i n t e re s t margin to 7.7percent for HY’18 from 7.5percent in HY ’17. Moreover, noninterest income increased by 6.3percent QoQ to N6.7billion, due to mobile banking income earned.

Thursday 02 August 2018

C002D5556

BUSINESS DAY

Investor Fidson Healthcare begins journey to boost working capital

Helping you to build wealth & make wise decisions

…gets regulatory approval for N4.5bn Rights Issue IHEANYI NWACHUKWU

idson Healthcare’s drive to increase its working capital has finally gained traction following the approval on July 11, 2018 by the Nigerian Stock Exchange (NSE) for the company’s N4.5billion Rights Issue. Fidson, one of the l e a d i ng p ha r ma c e u t i ca l manufacturing companies in Nigeria, will be issuing to its existing shareholders a total of 900million ordinary shares of 50 kobo each at N5 per share. The Rights Issue which is on the basis of 3 new ordinary shares for every 5 ordinary shares held as at July 5, 2018 will help Fidson cushion negative effect of a depreciated Naira on its working capital. Meristem Stockbrokers Limited is the stockbrokers to the Rights Issue while CardinalStone Partners Limited; Financial Derivatives Company Limited and FSDH Merchant Bank Limited are issuing house(s)/ financial adviser(s). The shareholders of Fidson had about a year ago approved a plan by the company to raise N6billion in new capital to boost its working capital and support its expansion plan.

The share price of the company at the Exchange remains at N6.15kobo, near its 52-week high of N6.24, from a 52-week low of N2.83. At the annual general meeting in 2017, shareholders had authorised the board of directors of Fidson Healthcare to “raise further capital of up to N6 billion through an offer whether by way of public offering, rights issue, private and special placement of shares”. The meeting also authorised the dire ctors to abs orb oversubscription and to convert existing loans due to any person from the company towards payment for any rights or shares subscribed for. Shareholders also increased the authorised share capital of the company from N1.2 billion to N1.5 billion by the creation of additional 600 million shares of 50 kobo each. Founded in 1995, Fidson Healthcare Plc has relentlessly pursued its goal of becoming a leading player in the pharmaceutical landscape in Nigeria. The company was incorporated as a private limited liability Company on 13 March 1995 and commenced business activities on 15 March 1995.The principal activities of the Company include

manufacturing and distribution of pharmaceutical products. The company’s shares were quoted the Nigerian Stock Exchange on 5 June, 2008. Ever since, the company has built and cultured an organisational framework that has steadily helped it gain ascendancy in the industry. The company’s new factory had come on stream at the tail end of 2016 and the company needs additional capital to realise the full potential and utilise the new factory to full capacity. Lagos-based CardinalStone researchers had in their report titled “Fidson Healthcare Plc: New plant is Delivering Enormous Value” provided an update on the company following the opening of its World Health Organisation (WHO) certified manufacturing plant and the organic expansion into a new product category both of which were expected to deliver sustainable earnings growth for the company. Based on this development, CardinalStone researchers had revised their full year 2017 to 2020 estimates higher and increased their target price (TP) on Fidson Healthcare stock to N6.54. Theirnewpricetargetimplied

LBIC shareholders approve admission to NASD OTC Securities Exchange

he Lagos Building Investment Company Plc (LBIC) held its 13th Annual General Meeting at LBIC House ASSBIFI Road Lagos where in addition to the ordinary business at the meeting, the shareholders passed a special resolution to have the company fully admitted to the NASD OTC Securities Exchange. An admission of a company on the NASD OTC market is equivalent to a full listing. The company is bound by the rules and governance requirements of the securities exchange which includes scheduled financial reporting and requirements for full dematerialisation. With this development, shareholders in Lagos Building Investment Company Plc are the ultimate beneficiaries as they will have better access to liquidity and greater transparency into the

operations of the company and its share price. NASD OTC Securities Exchange lauds the Board and shareholders of LBIC on the decision to be admitted to the OTC market and look forward to providing an efficient liquidity platform for shareholders in the company. NASD tends to develop a great working relationship that enables the company meet its financing structure requirements. It notes that on admission, LBIC will be placed in the financial services segment that includes Nigeria Mortgage Refinance Company Plc, AG Mortgage Bank Plc and Trustbond Mortgage Bank Plc. A full admission of company also meets the requirements of the Securities and Exchange Commission (SEC) that all public securities must trade on a SEC registered

trading platform. Last week, NASD OTC Securities Exchange concluded the bi-annual categorisation of securities admitted to trade on the OTC Market. This activity results in a classification of admitted securities into “Blue Securities”, “Pink Securities” and “Red Securities” and is aimed at providing the capital market community with information on securities that satisfy general requirements of a Public Limited Liability Company. Blue Securities are shares of companies with a history of sound financial performance. These companies display a high level of corporate governance by timely disclosure of their financial statements, regular communication with shareholders and are actively traded on the OTC market.

a 92.9percent upside potential from then current market price hence, they upgraded their recommendation on the company to a ‘Buy’ from their previous ‘Hold’ rating. The key risks to the analysts valuation include: higher than envisaged competition in the pharmaceutical sector particularly for intravenous fluids which they expected to negatively impact on sales volume growth; delay in the expansion of production

capacity as production lines reach full capacity; and a weakening in the Naira which impacted negatively on the company’s production costs. At the Nigerian Stock Exchange, the recent unaudited financial statement of Fidson Healthcare Plc for the first-half (H1) period ended June 30, 2018 shows the company revenue increased to N7.43billion against N6.66billion in H1’17. Gross profit for the H1’18 period was N3.458billion

against N3.419billion in H1’2017. Operating profit stood higher at N1.239billion from N1.092billion in H1’17. The company’s profit before tax (PBT) in H1’18 period was N766.76million against N685.394million in H1’2017; while profit after taxation (PAT) is H1’18 period was N521.401million as against N466.068million recorded in H1’17. It is worth noting that Fidson Healthcare Plc has crafted the pharmaceutical architecture of the industry over the years of its existence, playing very defining roles in the emergence of the new generation of industry players. Its long standing certification as an NIS: ISO 9001:2008 is a good evidence of Fidson’s high standards of processing and operations. In the full year 2017, Fidson reported an outstanding growth of 84percent in turnover from N7.6billion in 2016 to N14billion in 2017. The company’s cost of sales increased by 91percent from N3.6billion in 2016 to N6.9billion in 2017. Its full year PBT, which increased from N443million in FY’2016 to N1.57billion in FY 2017, ultimately saw the Earnings Per Share (EPS) increased over three-fold from 21kobo to 71kobo. Following this impressive result, the company paid dividend per share of 20kobo, a 400percent increase compared to the preceding year.

C&I Leasing says strong H1 results driven by cost reduction, optimal utilisation of assets

&I Leasing Plc has released its unaudited results for the first-half (H1) period ended June 30, 2018. The consolidated income statement shows gross earnings of N12.8 billion, up 10.7percent year-on-year (June 2017: N11.5 billion); and lease rental income of N8.8 billion, up by 8.6percent year-onyear (June 2017: N8.1 billion), according to the results at the Nigerian Stock Exchange (NSE). Also, personnel outsourcing income increased by 7.2percent to N3.23 billion year-on-year (June 2017: N3.01 billion); lease rental expense grew by 24.7percent to N4 billion year-on-year (June 2017: N3.2 billion); and net operating income of N3.7 billion, up 8.3percent year-on-year (June 2017: N3.4 billion). The company’s profit before tax of N723 million, represents an increase of 17.6percent yearon-year (June 2017: N614.9 million); and profit after tax of N682.2 million, up 17.6percent year-on-year (June 2017: N580million). C&I Leasing Plc basic earnings per share (BEPS) of 42.19 kobo, represents an increase of 17.6percent yearon-year (June 2017: 35.87 kobo). Its consolidated statement

of financial position shows total assets of N51.2 billion, up 13.9percent year-to-date (December 2017: N45 billion); operating lease assets of N28.4 billion, up 4.6percent year-onyear (December 2017: N27.2 billion). Shareholders’ fund of N9.8billion represents an increase of 7.2percent yearon-year (December 2017: N9.1 billion). “The Company will continue to pursue a clear and consistent strategy to deliver a strong performance for its shareholders. Our firsthalf year performance was commendable and driven by a recovery in the operating environment”, said Andrew Otike-Odibi, Managing Director/CEO of C&I Leasing Plc. He said, “We recorded an increase of about 11percent in revenue from N11.5 billion in the corresponding period of 2017 to N12.8 billion and a stronger improvement in our profit after tax (up by 18percent from N0.58 billion in 2017 to N0.68 billion in 2018). This was achieved through a combination of cost reduction initiatives and optimal utilization of assets”. In June 2018, C&I

Leasing successfully issued a N7 billion bond; the largest ever raised by the Company, which was also fully subscribed. The funds will be used by the company for debt refinancing and for business expansion. Commenting further on the results, Otike-Odibi said “We expect to see the effect of a lower interest cost through the bond issuance in the second half of the year. As at 30 June 2018, the capital adequacy ratio still stood at 10.8percent below the CBN minimum requirement of 12.5percent. However, this is due to the pending conversion of $10 million loan stock from Abraaj which is expected to be completed through 2018 and will result in our CAR returning to normalized levels”. “ We a r e c o n t i n u a l l y appraising the opportunities presented by the current economic conditions with a view to optimizing group synergies. In the first half of 2018, our two overseas subsidiaries (Leasafric, Ghana and EPIC International FZE, United Arab Emirates) increased their contribution to the Group’s revenue to 34percent from 27percent in the same period in 2017,” he said.

BUSINESS DAY

C002D5556

Thursday 02 August 2018

BUSINESSTRAVEL

n support of the United Nations world day against trafficking in persons, Airports Council International (ACI) World and the International Air Transport Association (IATA) emphasized their joint commitment and work to help combat human trafficking. Aviation connects the world, carrying more than four billion passengers a year, but this global network is also used nefariously by traffickers to transport people against their will. Airlines and airports are said to also be determined to assist authorities by reporting suspected human trafficking cases and making it as difficult as possible for the global air transport network to be exploited for this evil trade, which affects some 25 million people annually. The industry is committed to raising awareness, helping to train staff to recognize the signs of trafficking and putting in place reporting protocols to alert the appropriate authorities. “Human trafficking creates misery for millions, and helps fund criminal gangs and terrorism. Aviation is the business of freedom. And we are taking action to help authorities ensure that our global network is not exploited for evil ends. As an industry, we have our eyes open, and are working with governments and law enforcement to stop trafficking. “Through a joint campaign with our airport colleagues, we hope to further mobilize the aviation industry in the fight against this abhorrent trade in people’s lives,” Alexandre de Juniac, IATA’s Director General and CEO said. “People trafficking is an appalling crime which we should do all we can to combat. The safety and security of passengers remains all airports’ number one priority and the airport community is determined to work with border authorities and our partners across the world in helping to put a stop to this activity.

Airlines, airports urged to open eyes on human trafficking …as IATA, CFM sign agreement on engine maintenance Stories by IFEOMA OKEKE “We stand together with our airline colleagues in keeping our eyes open to the signs of human trafficking. Many of our airport members are already demonstrating their commitment to the campaign. We continue to strengthen our combined efforts in awareness, training, and reporting,” Angela Gittens, Director General, ACI World said. To mark the United Nations world day against trafficking in persons (30 July), ACI and IATA invited airline and airport co-workers, colleagues and industry partners and supporters to raise awareness of aviation’s commitment to fight trafficking. IATA has also announced that it has entered into an agreement with CFM International (CFM) that will lead to increased competition in the market for maintenance, repair and overhaul services (MRO) on engines manufactured by CFM, a 50/50 partnership between GE and Safran Aircraft Engines. “Airlines spend a tremendous amount of money on the maintenance and repair of aircraft and engines to ensure we are always operating to the highest levels of safety and reliability. This milestone agreement with CFM will lead to increased competition among the providers of parts and services related to the servicing of CFM engines.

“We expect increased competition will reduce airline operating costs and help to keep flying affordable. And we hope that this agreement will be an example for other manufacturers to follow,” Alexandre de Juniac, IATA’s Director General and CEO said. Under the agreement, CFM has adopted a set of “Conduct Policies” that will enhance the opportunities available to third-party providers of engine parts and MRO services on the CFM56 and the new LEAP series engines. Among the many elements of the agreement, CFM has agreed on the following: License its Engine Shop Manual to an MRO facility even if it uses

Africa World Airlines to expand operations within Nigeria

frican World Airlines (AWA) has disclosed plans to expand its operations within Nigeria, thereby connecting more cities within the country. The airline which currently operates only the Lagos and Abuja route to Accra, says in the next few years, some other states in the country will be covered by the airline. Speaking during the airline’s Top travel agents trade forum, Kingsley Chima, Country manager, Africa World Airlines Nigeria, told BusinessDay that in the next few years, the airline plans to connect more cities in Nigeria with its eyes on Port Harcourt and Kano airports. “With the new Ghana airport terminal which will be launched and open for business next month, we want to bring passengers from there to the rest of the world. Next year, we will start our expansion growth. London flight will come in, followed by United States operations,” Chima said. Speaking on the growth of the company in Nigeria, he said “This year marks our five years of operations in Nigeria. We came in December 2013 and we have been operating on the

Lagos route since then. We currently do four daily flights from Lagos to Accra, while from Abuja, it is once daily. In all, we do five daily flights from Nigeria. “We have grown over the years. When we came in, we were doing a single flight daily into Lagos but now we are doing four each day into Lagos. Our Abuja routes started last year June.” Chima said the airline has a total of six aircraft and is currently operating from Nigeria to Accra, Accra to Freetown, and to Monrovia, adding that its long haul flight is planned for next year. He noted that the airline is leveraging on its safety records, on time

departure and choice as its unique selling points. On its contribution to the Nigerian market he said, “We have done a lot in Nigeria. We have created employment in Nigeria and all our personnel here are Nigerians. We have created 21 direct employments and over 80 indirect employments. For our Corporate Social Responsibility, we are focused on education. We visit schools and see where we can help. “We have given out stationaries to schools and discounted tickets to personnel. The Ghana community at Ilupeju, Lagos recommended a school we could help, so we are doing a project at the school in conjunction with the Ghana community.”

non-CFM parts, permit the use of non-CFM parts or repairs by any licensee of the CFM Engine Shop Manual and honour warranty coverage of the CFM components and repairs on a CFM engine even when the engine contains non-CFM parts or repairs. Grant airlines and third-party overhaul facilities the right to use the CFM Engine Shop Manual for without a fee and sell CFM parts and perform all parts repairs even when non-CFM parts or repairs are present in the engine. The agreement includes specific provisions ensuring the implementation of CFM’s commitments with regard to CFM56 series engines

which power some 13,400 singleaisle aircraft flying today. CFM has, however, committed to apply the agreement to all commercial engines produced by the company, including engines in its new LEAP Series. GE, moreover, has agreed to apply the Conduct Policies to other commercial aircraft engines that it produces in its own right. Beneficiaries of the agreement include IATA, CFM’s airline customers, aircraft lessors, third-party MRO facilities and parts manufacturers. Based on the agreement, IATA has withdrawn a formal complaint it filed with the Competition Directorate of the European Commission in March 2016.

Ethiopian, DHL to build the leading cargo logistics facility

HL Global Forwarding, the leading international provider of air, sea and road freight services, and Ethiopian Airlines, the largest aviation group in Africa, has signed a new agreement to form a joint venture company – DHL-Ethiopian Airlines Logistics Services Ltd., to build the Leading Cargo Logistics provider JV Company in Africa. The company will be based in Ethiopia and do business in the entire continent of Africa, enhancing Ethiopia’s logistics infrastructure and connections. Ethiopian Airlines, which assumes a majority stake in this joint venture, will provide regulatory and operational support as DHL Global Forwarding establishes air, ocean, and road freight connections between Ethiopia’s main trade hubs and the rest of the world. Pramod Bagalwadi, a DHL veteran with over two decades of experience in management roles within the logistics industry, has been appointed to lead the new organization. This will be an additional portfolio for Pramod, who currently leads the

Industrial Projects Team for DHL in Sub-Saharan Africa and a strategic business partner for the company in the region. “With its GDP growth, Africa is stepping into the spotlight as production hub. Recent moves to open up the economy will continue to boost Ethiopia’s position as the fastestgrowing economy in Africa, and under Pramod’s leadership, the company will be able to provide a scalable and durable logistics infrastructure to safely handle the sensitive needs of its core industries,” Amadou Diallo, CEO, DHL global forwarding Middle East and Africa said. “Logistics is key to support Africa’s fast economic growth and industrialization drive. Ethiopian has therefore partnered with DHL who has a proven expertise and experience in the logistics sector, with a view to avail the right logistics solutions in terms of cost, time and quality. “We have had a longstanding and mutually rewarding partnership with DHL, and with this JV we aim to make the country a logistics hub for Africa,” Tewolde GebreMariam, CEO, Ethiopian Airlines Group said.

Thursday 02 August 2018

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BUSINESS DAY

Investing in Rivers State

How Rivers State is cutting unemployment downwards Ignatius Chukwu & Innocent Eteng

ob creation seems to be the new direction of the government in power in Rivers State. Already, there is enough reason to pursue this objective. In its 2017 unemployment data report, the National Bureau of Statistics (NBS) placed Rivers as the state with the highest number of unemployed. The report said out of 4.3 million people constituting the state’s working population, only 1.91 million were employed full time and working 40 hours per week. This winds up to a 41.8 percent unemployment rate. But those figures might soon reflect a downward slope. This is because the state is utilising several avenues to ramp up employment. For example, recently, the state government carried out employability need assessment and it was observed that most Rivers citizens and residents - including graduates - lacked the necessary potentials to market themselves for employment and even survive in the workplace. To intervene, the state launched an initiative called RivsJobs, a web portal - www.rivjobs.ng - that functions on two fronts. First, potential employees register on the platform; they are then invited and trained by state-organised facilitators on such areas as career development, building a marketable resume, cultivating requisite confidence for winning during job interviews and tests, as well as how to observe optimum work ethics and behaviours. Some training courses are also available on the site. “We carried out employability need assessment and we found out that in most instances, our young

Governor Nyesom Wike

graduates do not have confidence and capacity to present themselves before interview panels and we thought it necessary that we should do this (training) for them,” Lawson Ikuru, the Permanent Secretary at the state Ministry of Employment Generation and Empowerment, said during a recent training organised for 900 jobseekers at the state ICT centre in Port Harcourt. Second, the portal serves as a meeting point for jobseekers and employers within and beyond Rivers State. The platform allows the

potential employees to upload their credentials and documents, which are made accessible to employers advertising job vacancies on the portal. If a jobseeker’s skills set matches the employer’s demand, the potential employee is then contacted by his would-be-employer for interview. Yielding fruits The story of Sike Princewill shows that the initiative is already bringing the required results. For more than

six months, she was jobless until she heard about RivsJobs. “I heard from a friend about this platform called RivsJobs, that it is for jobseekers. So I was like ‘let me give it a try’. I decided to login into the website and I saw the interface, I read through and registered on the portal. I went through the normal process and I got a mail and a call also, inviting me for an interview,” she said. Today, Princewill works as a data analyst for Cinfores Limited, an information and communication firm based in Port Harcourt. Commenting on how good the initiative is and the ease-of-use of the portal, Princewill seemed lost in words. “It is actually solid. It is actually true. It is feasible. Everything is fast. It is just straight to the point. Follow the process and that is it,” she said. For years, it has been held that over 70 percent of Nigerian graduates are unemployable. This assertion is attributed to observed inability of many graduates to convert the theory that is mostly taught in most

tertiary institutions to productive job delivery. To this end, Victor Briggs, a human resource consultant who also trains Rivjobs participant, said graduates must take a leap beyond their university grades if they must win in today’s competitive market. “It is important that graduates understand that we are in a new age where beyond the fact that they are graduates, they need to add value to themselves by getting skills, getting qualifications and certifications that would make them acceptable and give them an advantage in the workplace. “Also, creating the right attitude; because if you do not have the right attitude, you might have all the skills - maybe you are not the kind of person that is teachable, you are not the kind of person that has a good work ethics, that is not hard working - it will affect you. That is why we are doing what we are doing,” Briggs said. Meanwhile, those who participated in Rivjobs trainings said their horizons have been broadened as they could now see gray areas in their resumes that possibly kept them from being employed. “This is fantastic! I don’t think any government has done this in terms of giving this opportunity. Even as a graduate, just like what I am seeing here (in the training), there are basic things in my CV that as messed up,” “I have to go back now and delete most things in my CV. I believe that these things are what is causing most organizations not to reply me (after submitting a resume). With what I have learnt here, I am even crying in my heart. So I thank God for this opportunity, it would really help me,” said Godwin Totie. But whether or not initiatives like RivJobs would significantly down-step River State’s numbers in the next NBS’ unemployment data is yet to be seen. But for Ikuru, the Permanent Secretary at the Employment Generation and Empowerment ministry, preparing citizens to brace up against current challenges is all-comforting. “The basic essence of this journey now is to prepare our people to be able to meet the challenges,” he said

Editorial Coordinator’s corner This Thursday, and every Thursday, BusinessDay brings across the hidden opportunities and investment opportunities that may have been covered up in the rubbles of political crisis and fierce narrative. It seems time is now to return to building the Garden City, restoring the alluring cosmopolitanism and metropolitan splendour that attracted the world to Port Harcourt. Garden City Business Digest brings the evidence of the new reality. Keep a date every Thursday. - Ignatius Chukwu (Regional Editor)

BUSINESS DAY

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Thursday 02 August 2018

GARDEN CITY BUSINESS DIGEST PH Soot: Research shows near 50% rise in respiratory infection among children

hildren now come down with breathing problems in Port Harcourt much often. Even young ladies are scratching along the roads and in offices. It is the new epidemic around the city. Soot is causing skin infections and respiratory illnesses. Experts say the number has almost doubled. Our Correspondent, INNOCENT ETENG writes that the health implications of soot in Port Harcourt are no longer left in the court of public guesses. His report… This is because a recent research has confirmed that in the past two years, acute respiratory infection (ARI) jumped by nearly 50 per cent among under-five children. The study, which was carried out by a consultant pediatrician, Agnes Fienemika, focused on 11,178 children seen at the Braithwaite Memorial Specialist Hospital (BMSH) in Port Harcourt, between March 2015 and February 2017. Comparing the rate of ARI prevalence before (November 2016) and after the soot outbreak, Fienemika, who worked many years at the Community Health department of the University of Port Harcourt Teaching Hospital (UPTH) before moving to work with an NGO, said: “In 2015, some 5,517 was the total number of cases seen at BMSH, but the number of ARI

cases was 1107. Then for 2016, the number of cases was 5,661 but the number of ARI cases was 1095, giving a prevalence of 20 per cent in 2015 and 19.3 per cent in 2016. “Concerning ARI cases and black soot, my findings reveal that there was an increase in the prevalence of ARI cases among under five children between September and December 2016. “For each month, between September and December (2016), the prevalence was 7.4

per cent, 11.2 per cent, 9.7 per cent and 7.3 per cent when compared to same months in the year 2015. In the same months, September to December in 2015, prevalence of ARI cases was; 5.2 per cent, 7.8 per cent, 7.6 per cent and 5.7 per cent respectively.” Put together, these figures represent a near 50 per cent increase in ARI cases. Fienemika says the fact that the jump coincides with the period of soot emergence shows that the effects of the soot are already here.

What really is soot? Soot is also called black carbon or particulate matter (PM). It comprises solid and liquid fine particles trapped in the air as a result of incomplete combustion. The World Health Organisation (WHO) says soot is more dangerous than any other pollutant and that outdoor pollution, to which soot belongs, kills at least three million people globally, every year. These tiny particles, when inhaled, have a lot of health impact; including lungs cancer, cardiovascular diseases, birth defect, respiratory infections and bronchitis. Skin cancer is also feared because the soot deposits on people’s skin and paint other surfaces - like floors and cars - black. However, the implication of soot depends on the particle size a person is exposed to. For example, particles with diameter of 10 microns (PM10) are considered dangerous, while PM 2.5 or less is seen as extreme situation. Already, experts have said that the case in Port Harcourt falls within the extreme, beating WHO’s safely limit of 20 micrograms per cubic metre (μg/m). So solution may be far from reach The soot particles in Port Harcourt are linked to remote causes like long years of gas flaring by multinational oil compa-

nies and thick carbon emissions from refineries and industrial plants. There are also immediate causes like sustained detonation of illegal refineries by the joint military task force working to end oil theft in the Niger Delta, as well as street burning of tyres and other toxic substances. While the Rivers State government says it is working with industrial plants to cut down emissions, carbon sky-fly has increased in recent times owing to indiscriminate burning of tyres. For example, the night preceding this year’s World Environment Day on June 5, while the world went wild preparing for environmental safety sensitization, thousands of tyres were set ablaze near Mile One flyover at Diobu. The tyres were those collected for about two years from street vulcanizers and dump at the said site by a Rivers State government task force. Such has been the case with even more tyres dump by the same task force at another location in Nsukka Street, still at Mile one. With the soot continuing unabated, there are fears that long term complications might be underway. “They (soot particles) contain carcinogens and that means that they affect vital organs in our body like the lungs, kidneys, our spleen and worse now, they affect our testicles. We are not even dealing with

the issue of sterility, now we are even thinking of the ability of a man to perform,” says Uyobong Uko, a public health scientist working at the Federal Ministry of Agriculture. Brushing aside such fears can throw the-over-seven-million residents of Rivers State into a situation skin to the 2012 China experience, where outdoor pollution contributed greatly to a hike in long term problems like congenital malfunction (birth defects), low birth weight and others. Increased awareness of such possible long term complications has spurred more individuals and civil society organizations to join forces with the ‘Stop the Soot’ campaign group to protest on the streets of Port Harcourt, demanding immediate halt to the crisis. “I am a mother, I have children. I use mosquito nets in my home. When you put up mosquito net, use it for one month and you cannot use it again. That tells you what goes into our lungs. The children are down with cough and catarrh, I also have been battling with respiratory diseases for a long while now. since last year, I have been to the hospital severally, so why shouldn’t I come out to protest?” said Stella Amanie, director of Society for Women and Youth Affairs, whose organization joined the May 19 protest march to the government house in Port Harcourt.

Real reason why Ortom fled APC: Ditching the elite to follow the Tiv masses Port Harcourt by Boat With IGNATIUS CHUKWU

herever there is a river, Port Harcourt by Boat can get there; and so it was that this column paddled to Makurdi through the River Nun that touches the ocean and to Orashi River, to River Niger, passed through the risky Confluence at Lokoja, switching into the Benue River, and paddled straight down to Makurdi. Parking at the Wadatta Market, we trekked to New Garage down to the Post Office and rested at Akilu Street near the Bishops quarters. There was no plan to get to the Government House because there was enough gist in town, especially at the ‘atte’ joints’ that dominate the state capital and determine the flow of political narrative in Benue State. In fact, any one who wants to know the next governor of the state simply

sits and eats at some ‘atte’ joints and the ‘results’ would be obvious. That is why anybody who wished to win the masses over in any elections would first cultivate the habit (or is it culture) of eating with the masses at various ‘atte’ points, or at least sponsor some ‘atte’ goers to drop his name and allow it permeate the grassroots network. That could explain why the best dishes are found at the joints, especially opposite the IBB Square in High Level area or at the spot close to Benue Hotel. This was the strategy the late Father Moses Oshio Adasu discovered and used effectively over Igbetar and Ayua. In most Benue elections, its always a fight between the Tiv elite versus the masses. All a clever person needs to do is start early and cultivate the image of a man of the masses: dress down with ‘anger’ cloth, make yourself available at ‘atte’ joints and burials, start a farm, help out with fertilizer access and tractors, show huge anger against the Government and the rich, and hate cows that eat crops. Should a very good elitist man emerge for governorship, the masses would first ‘eat’ him (fleece him) and make him lose. Then, they pardon him, if he wants to try again, that is. That

would be the fine he paid for ignoring the critical masses over the years. After that, he could now be allowed to win an election. Ortom was and still s a member of this masses movement far before he became a minister, an elite. He was a salesman with Pepsi at a time it was the rave of the city and mixed with the boys at the picnic venues on Gboko Road. That was enough initiation. He later became a LG boss, party boss, grassroots businessman owning cyber-cafes, etc. Later he became big and a minister. When it was the turn of his MINDA zone to produce governor, after they had lost the Tor Tiv throne that is equated to governor for the sake of rotation, he simply walked up and picked it, despite borrowing a garment (party) because he was never an APC member for a day. Now, the herdsmen came with their guns. If there is anything that unites the Tiv, it’s war, especially if that war comes from the Fulani. They have a history of fights. It did not start with Jonathan, it could not have started with Buhari, but, presidents or prime ministers pay for it; ask Tafawa Balewa, ask IBB (Orkar coup and brief expulsion of the north), ask Jonathan. Feel free to ask Buhari in May 2019, too.

Ortom is a man from the ‘atte’ background and the message of the ‘atte’ is always loud and clear. Before now, this column said that those he talked to at the grassest roots did not want to hear none of Ortom, not with butchered bodies of Tiv women and children, or displaced farmers now begging in Makurdi. Anyone who forces the Tiv to lose their farms and eat lowly like eastern visitors is their worst enemy. They say the Tiv people are very hospitable, such that if they loved their strangerfriend a lot, they would give him warm blanket (you get what I mean?) but when they hate you so much, they give you warm arrows, poisoned arrows. What would the Tiv likely give APC and Buhari in 2019? So, Ortom would not like to take any warm arrows along with anybody or any party. His escape must be to dodge the anger of the Tiv masses, lest, another man’s injury becomes his own. Voting Ortom out would destabilize the untouchable Tiv zoning practice. So, voting him in seems the only option, but it must not be in that party, the ‘atte’ jointers hissed to their cherished stranger. Now, the war of guns and knives seem to have moved to

the war of politics in the state, my ‘atte’ sources tell me. Groups now loyal to different leaders in the Benue equation are marching on the state’s House of Assembly where impeachments are the latest political password. The killings by herdsmen seem to have caused angst in the state and caused a shift in political choice away from the ruling party to the former ruling power bloc. As if to align with the new opinion shift in the state, Ortom, decamped from the APC to the PDP, apparently realizing that many voters in the state would not touch thumps anywhere near the party in the ‘odza’ room. So, according to insiders, instead of wooing the Benue people over to his ruling party, the governor rather ran faster than his supporters to wherever they were running to. The grouse with his former lords in the state was that he said they gave him a red card. The national body intervened to nullify the red card like in Video Assisted Referee (VAR) match, but Ortom refused to see any green card anymore. Now, his special adviser on media and ICT, Tahav Agerzua, seems to confirm the speculation. It is now clear that the ‘red card’ was the least of the

reasons for the escape but a seeming strong desire not to be abandoned by his people on the exodus. The Governor on Sunday, speaking through his Special Adviser on Media and ICT, Tahav Agerzua, mentioned the reasons for his departure, chief among which being the desire of the Benue people to fight against the return of Buhari. Ortom would not want to be against the move of his people and thus acted locally wise. Agerzua was George Akume’s chief press secretary. Now, he is special adviser to Ortom who is fleeing from Akume. He revealed thus: “Besides, major stakeholders in the state advised Governor Ortom to leave the APC because of the federal government’s alleged complicity in the ongoing killings in the country, including Benue state. They advised him to change platform so that they can fight against the return of President Buhari in 2019. The stakeholders are scared that if Buhari comes back in 2019 the killings would be worst because it is clear that he supports the conquest and occupation agenda of his ethnic group, the Fulanis.” The ‘atte’ masses have spoken.

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BUSINESS DAY

Thursday 02 August 2018

Google free Wi-Fi: New headache for broadband providers in Nigeria FRANK ELEANYA

he dust kicked off by Google’s announcement that it will be providing free Wi-Fi in 200 different locations throughout Nigeria by the end of 2019 may not be settling just yet. In fact, it could be raising a new worry for entrenched players that need to depend on broadband infrastructure to provide their services. Niger ia’s broadband history has been mired in murky waters that are proving very difficult for many of the stakeholders to swim. Since 2013 when the quest to reach 30 per cent penetration by 2018 began, the country is 8 per cent adrift; haven attained 22 per cent. In 2013, Nigeria developed a five-year strategy (The National Broadband Plan) to drive internet and broadband penetration by scaling up the country’s broadband growth to 30 per cent by 2018. The achievement, according to World Bank’s report, will boost Nigeria’s GDP by at least 1.38 per cent, as well as translate into increase productivity across several industries. Ever since, stakeholders have faced several impediments including a lack of uniformity in Right of Way (RoW) charges. Although the government came up with a policy on RoW charges which stipulate N145 per meter

Bank IT Security

for laying fibre network in every part of the country, majority of the states in the country are yet to adhere to the resolution. The Nigeria Communications Commission said it lacks the power to enforce the resolution; hence players are to hold faith that one day the federal government will remember to meet with states to address the problem. With seven months of 2018, already gone, it is looking unlikely that the meeting will happen, which means achieving the remaining 8 per cent, as things stand, is highly unlikely by the end of the year. The Google free Wi-Fi may have just offered the government a means of escape and created a big competitor for local players. In other words, achieving the remaining 8 per cent has just acquired a new hurdle. Prior to the announcement, the government led

by Professor Yemi Osinbajo had visited Google headquarters in Silicon Valley to convince the big tech companies that Nigeria was ready for business. Whether Google’s significant response was due to the VP’s visit is not the point, the message sent to foreign investors is that the government is willing to support them to relieve it of most of the problems impacting the growth of the economy. For millions of Nigerians without access to internet living in the 200 locations the company hopes to launch, Google’s announcement is good news, but local internet providers which depend on revenues from customers that pay for it, will be forced to go back to the strategic room. Would Google take away their launch? Google from all indications have the blessings of the government and there-

fore could leverage it big time. But that is not all. If Google’s free Wi-Fi prove more stable and available than the services provided by local players, the latter will lose majority of their paying customers real soon. How do you compete with a deep pocket tech company like Google? Forbes makes the point that while Google Station has the potential to bring the web to places where connections may be unrealizable, it can also boost its reach in those areas, potentially benefiting Google’s lucrative online advertising business. The Google Station was first launched in India, 2015, where new Wi-Fi spots are now operating in 400 railway stations. Picture Google’s free Wi-Fi in that light in 2019 across 200 locations in Nigeria, the local players do need a new strategy as soon as possible.

Ifedayo’s new book seeks to address startups’ funding problems FRANK ELEANYA

ow to address the problems Nigerian startups face with accessing funding for their business is the main focus of a new book ‘Accessing Grants for Startups’ by Ifedayo Durosinmi Etti, alumni of the Tony Elumelu Entrepreneurship Programme. According to the author who has had first-hand experience helping startups apply for opportunities available on the African continent, many startups are not aware that it is possible to apply for funding without having prior connections or seeking help from third party. The goal of the book therefore is to provide a do-it-yourself manual for startups including those in technology to take advantage of every opportunity on their way. “The grant application answers to frequently asked questions from writing a personal profile to unique selling propositions, what kind of a problem you aim to solve, and how to articulate your response to questions in a way that would guarantee that grantors and assessors select you,” Etti said at a press conference. Majority of the funding applications fail because they are not tailored to solving specific problems in the society. Etti noted that startups whose products are tailored towards solving problems of poverty in Nigeria or promote economic growth, financial inclusion are often preferred ahead of others. “I have also interviewed a couple of people who have

received grants and other business opportunities and how those opportunities have affected their business and helped them to scale their businesses,” she disclosed. “So there are about 8 or 9 people whose stories you will read about, and some of them have actually gone global right now because they took advantage of the opportunities around them.” The book also helps women founders that want specific funding opportunities. Etti’s firm Parliamo Bambini, also launched a pitch competition called ‘The AGS Enterprise Challenge’ to help female led businesses – to showcase them and reward them with grants, a free work-

Ifedayo Durosinmi Etti

space for 3 months and training and mentorship to help take their businesses to a new level. “We started the campaign two weeks ago and have shortlisted the best 10,” Etti noted. “There will be a live pitch to the judges and audience. The judges will select the top three. The first prize is N1.5 million, the first runner up will get N1 million and third prize is N500,000. All three get free workspace for 3 months along with training and mentorship from top business coaches across Nigeria.”

900 northern youths trained on digital skills in Kaduna CALEB OJEWALE

training programme to empower some young people in the north has seen 900 participants getting trained on digital skills. The training - ClickOn Kaduna – was organised by the state government in partnership with Digital Naija, to bridge the youth unemployment gap, particularly in Northern Nigeria with a focus on empowering women. Organized by the Kaduna State Government with the support of the World Bank and the Rockefeller Foundation amongst others, the workshop which according to organisers, hosted

over 900 participants had representations from not only Kaduna. There were participants from Kano and Plateau states, coming to tap into the huge economic and social benefits available in a digital economy. A statement after the training, noted that there were representatives of the Elance platform at the venue, to take beneficiaries through different sessions about the virtual space. Professional Freelancers took the participants on Elance strategies and platforms, pricing, negotiation and payment methods. There were also breakout sessions, which saw every participant to a computer, to enable them create free-

Muhammad Sani, commissioner for Planning & Budget, Kaduna; Nasir El Rufai, Kaduna State Governor, and Zoe Cordelia Lu of the World Bank at the 3-day Click-On Kaduna Digital Skills Workshop sponsored by the World Bank & The Rockerfella Foundation in Kaduna recently.

lancing profiles on the international and local Elance platforms. Mohammed Abdullahi,

commissioner for Budget and Planning, Kaduna State in an opening speech, congratulated the participants on

taking the huge step to be part of the workshop as the next step to self-reliance. In his remarks two day later, when the training had been concluded, Abdullahi, urged the beneficiaries to make the best use of the skills learned, not only to earn income but create more jobs. He expressed appreciation to the World Bank team, the Rockefeller Foundation, Digital Naija and other partners that made the workshop a success. Nasir El-Rufai, the Kaduna State Governor, also visited in the course of the programme while participants were on a breakout session. Lauding the efforts of Click-On Kaduna initiative, El-Rufai said the workshop will make the partici-

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com

pants globally competitive with other ICT experts in the world. On his part, Rachid Benmessaoud, the World Bank country director, Nigeria, African Region pledged on the last day of the programme, that the World Bank would support the effort of the Kaduna State Government in equipping the youth with digital skills, to tap from the income generation potential of the virtual economy. In the same vein, Hafsat Baba Mohammed, the state’s Commissioner of Women Affairs, encouraged beneficiaries to connect with themselves, share opportunities and experiences, in order to make the best of the newly imparted knowledge.

BUSINESS DAY

Thursday 02 August 2018

INTERVIEW

An open door to enriching your spiritual life and business - FGBMFI Businessday analyst Sobechukwu Eze had the privilege to meet and discuss with some leaders of the Full Gospel Business Men’s Fellowship International Nigeria including the Regional Vice President (South West) of Fellowship, Adeniyi Ogunnusi, at the Lagos office of the Fellowship. Others in attendance are Fola Aguda, District Coordinator of South West 3 District and Chairman Convention Planning Committee of 2018 Lagos National Convention, Clifford Onyeje, District Coordinator South West 4 Distinct, Tom Ogboi, District Coordinator South West 7 District and Ebere Uwadoka, Secretary Convention Planning Committee. About Full Gospel Business Men’s Fellowship International hen aske d how the organisation was started Adeniyi Ogunnusi ( Regional Vice President, South West) began by correcting the impression that many people have when they hear of the Full Gospel Business Men’s Fellowship International, “we are not a church but a Fellowship, a Fellowship which was founded in the United States of America by Demos Shakarian who escaped the Holocaust in Armenia with his family and made their home in Downey, California where they started a 20-Acre dairy farm with three cows”. He had a vision from God which led him to start the Full Gospel Business Men’s Fellowship International in 1952. He started with the farmers and businessmen around, men who would rather spend time at the club than with God. After initiating that one Chapter in Clifton Cafeteria in the United States of America in 1952 the Fellowship has spread all around the continents of the world with Chapters in most major cities.

The fellowship in Nigeria The Fellowship came to Nigeria in the early 1980s. The headquarters of the Fellowship is in Port Harcourt. From a humble beginning it has grown from one Chapter to many Chapters all over the country. We are happy to say we now have close to four thousand Chapters in Nigeria with 500 Chapters in Lagos alone. A Chapter is made up of men and women from various church denominations in Nigeria. The Goals of the fellowship Our major goals include but are not limited to: ARCH. Ifeanyi Odedo. National President FGBMFI- Nigeria 1. To reach men in all nations for Christ 2. To call men back to God. 3. To help believers to be baptized in the Holy Spirit and to grow spiritually 4. To train and equip men to fulfil the Great Commission. 5. To provide opportunity for Christian fellowship 6. To bring about greater unity among all people in the body of Christ. The goal is to bring back men

L-R: Ebere Uwadoka, secretary, Convention Planning Committee; Clifford Onyeje, district coordinator, South West $ District; Adeniyi Ogunnusi, regional vice president, South West Region; Fola Aguda, district coordinator, South, West 3 District and chairman, Convention Planning Committee; and Tom Ogboi, district coordinator, South West & District).

back to be reunited with Christ and accept him as their personal lord and saviour helping them also to grow spiritually, encourage them to live by the scriptures and run their business in that manner. And by men we mean businessmen and women who are ready to make that commitment. Membership of the fellowship The number one requirement for being a member of the Fellowship is that one must have accepted Jesus as his/her personal Lord and Saviour. The second requirement is that one has to be baptized in the Holy Spirit. It is also required that one has a means of livelihood either as an employer or an employee. Accomplishments On our accomplishments, we have seen a lot of men give their lives to Christ, and with proper mentoring they are living changed lives. Our members are groomed to do their businesses with high level of integrity and honesty. Many of our members are also serving in different positions in government, ministries, forces and other spheres of human life in the country. Members have also been able to learn, grow and boost their spirituality, and through organised seminars and programs members are able to improve on their ability to run businesses in ethical manner. Praises and acknowledgement have come in from various church leaders on the performance of members of their congregations who are also members of the Full Gospel Business Men’s Fellowship International especially in the area dedication and commitment.

On youths development We have been able to reach out successfully to the youths in the country. We believe that they are the future of not only the Fellowship but the nation at large. Therefore we organise programs targeted at the youth. The Fellowship visits the youth at NYSC camps in many States of the federation. We organize programs at NYSC camps to teach Corpers to live a life of purpose and integrity. We have New Generation Chapters of the Fellowship with programs and activities designed to help the youth grow into responsible adults. Our impact on the environment With well over one hundred thousand members nationwide, we are very much interested in what happens in the society in which we operate and in the welfare of our members. Although we try not to run parallel with government as we are not a political body but as an organisation that has an interest in helping its members, we sometimes have to take our positions by way of pronouncements on policies of the government that are perceived not to be in the interest of their members and the general public at large. Challenges Every organisation will experience challenges, we have our own share of these challenges; of finding the right people to fill positions in the Fellowship; on our members to live a godly life and on this we organise seminars and programs we call ‘advances’ where we groom our members and teach them godly principles. On financial challenges,

members of the Fellowship all have something they do as this is one of the requirements to join therefore funds are gotten from members to finance our programs and projects such as Conventions. About 2018 Lagos National Convention We’ve always had conventions since the 80s and we are trusting God that by far, this 2018 Lagos National Convention will be the largest. In 2012, we had a similar convention in Lagos and it was very successful with large attendance, but we believe that the 2018 national convention will by far be the largest in terms of attendance and impact and we are supporting it with prayers and fasting. There are several committees and sub-committees that we have put together to ensure that no stone is left untouched. This convention is the national convention and we hold regional conventions in between in the 6 geopolitical regions in Nigeria. This is going to be like the 75th convention since it started in Nigeria. This convention has a theme called “An Open Door” which is taken from the scriptures in Revelation 3:7. We are creating a door for every person to step up in the knowledge of God, business, governance and marriage. Our speakers are drawn from a mix of men in the business cycle and the clergy. The convention is going to span through four days (Nov. 14 to Nov. 17) at the Police College ground Ikeja, Lagos. We are expecting an attendance of about 35,000 at every rally, people who will be coming from all over Nigeria and from outside Nigeria.

About the convention speakers We have tried to source our speakers from around the country, because people coming are not from Lagos alone. We will be having a Mr Isaac Okpachi, a barrister and a National Vice President of the Fellowship based in Abuja, Mr Paul Enenche, and an Abuja based pastor, Arch. Ifeanyi Odedo, who is the National President of the Full Gospel Business Men’s Fellowship International Nigeria. We also have Mr Supo Ayokunle, the president of the Christian Association of Nigeria (CAN) among other pastors and businessmen with experiences that they can share with participants. Who is expected for this convention? Interestingly, our conventions are targeted at both members of the Fellowship and non-members. Most of our members have families and many of them are youths. There is always a section for the youth, children and adults. The Full Gospel Business Men’s Fellowship an International is a testimony based organisation, if you do not have one when you are coming in, after one of the sessions, you will definitely have testimonies. In fact, in our meetings people tell stories of how their lives have changed and everyone has a story to tell. So in a typical meeting of the Fellowship, that is what you will hear. How we fund the convention Because this is of God, when God gives a vision, there is always an allocation for it. No one funds us from outside, the government does not give us grants, and we also fund the convention ourselves, through donations and contributions from members. Programs of the Fellowship are funded by members, which is why one of the criteria for membership is being economically active. You are either employed or running your business. Final word Every society is a reflection of the units that make up that society. Change in a society is not in the hands of government. When every person who runs a small unit of a society runs it in a godly manner, the society will become good. So when you are taught how to run your life and family well, you can be better about the society and that is what the Full Gospel is all about.

Thursday 02 August 2018

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BUSINESS

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INTERVIEW ‘Pubic, private sectors need right accounting frameworks that support economy growth’ The Institute of Chartered Accountants of Nigeria (ICAN) is strategically driving the adoption of Information and Communication Technology (ICT) in all her accounting operations to suit the present and next generation of professionals. In this interview, Razak Jaiyeola, 54th president of the Institute explains the strategic thinking behind this, importance of Accountability Index and the plans of the Institute for members. He speaks with KELECHI EWUZIE. Excerpt: How would you assess the accounting profession in Nigeria, in terms of its contribution to the growing economy? he Institute of Chartered Accountants of Nigeria (ICAN) contributes a lot to the development of the economy because we have active members working as accountants across all sectors of the economy. Whatever form of business being carried out in the public sector, we have our members there. We provide insurgency practice, tax services, corporate services, secretariat services among other pivotal services. In terms of the economy, we have what we call economy discourse or forum where we take critical look at the budget with the view of advising government before a budget is released. Furthermore, after the release of the budget, we hold seminars for very important top government officials in the Ministry of Finance; Ministry of Trade and Investment, and sometimes organise visit to Vice President among other programmes. We annually hold Accountants Conference where critical national issues are picked and professionally discussed with solutions proffered. The Accountants’ Conference is the flagship of our activities for the year where we gather over 4,000 Accountants from all over the world. The fight against corruption by the Federal government is on going, as a professional, what factors would be instrumental to achieving success in this fight? The administration of President Muhammadu Buhari has made some progress in the fight against corruption which was his main mantra when he assumed office. However, the progress is not as much as a lot of people expected. I believe that one of the ways Mr President can make progress in the fight against corruption is through the deployment of special courts to trial cases in order to accelerate these cases. The Federal Government’s whistle blower policy is good, but incidentally, ICAN first introduced its own in 2015 as a way of assuring ICAN members to be bold to expose any financial wrong doing they notice in the

Razak Jaiyeola

course of carrying out their duties because the Institute will support such actions. So, when the Federal Government introduced its own whistle blower policy, we were very happy, and we realised that government is already making some recoveries through this process. ICAN is also introducing Accountability Index. This is a way of ensuring the assessment of public sector financial management. We are introducing this index to rate the Federal, State and Local Governments. We have some indicators that we are going to monitor to rank performance and it is going to be done professionally at the end of the day. The first rep or t w ill b e launched in September, 2018. We are very much on course and we believe the index report will introduce competition. The Accountability Index report is one weapon which a lot of organisations have welcomed. Some governors have already bought into the idea. We have also gotten collaborations with other professional

bodies like International Federation of Accountants (IFAC). They have invested into the project. We are doing this as our own contribution to the fight against corruption. In your inaugural speech, you talked about the idea of job creation through ICT. What are some of the programmes you hope to put in place to ensure creation of jobs for ICAN members? The Institute has several faculties such as audit, forensic, IT, tax, public finance and consulting faculties. It also has mentoring platforms for ICAN members. The platforms consist of very experienced members of the ICAN, whose duties are to provide practical assistance to members who want to set up a practice of their own. Experienced professionals in the platform guide members through processes to use the instrumentality of the Institute in taking off. For example, the first six months, members registered on the platform have access to ICAN’s common secretariat pool

and other facilities that the Institute can provide. Another avenue of job creation for ICAN members has to do with pure entrepreneurial initiatives. The Institute will continue to train its members on entrepreneurial skills. We are not going to dabble into areas that are not of our core competence. On the issue of funding, we are going to collaborate with funding agencies. We have had arrangements with the Bank of Industry (BoI) and so many other organisations to facilitate these processes. I noticed that packaging an appropriate bankable loan proposal remain an issue for some members of the ICAN. So, we are working very hard to ensure that at the end of this presidential year, we want to be able to develop a sizeable number of our members to become entrepreneurs. It will also be clear that the empowered members were able to achieve it through the effort of the Institute because we are going to set up units in the districts that have already bought into the idea. As ICAN president, what are some of the proper Accounting frame work you plan to implement to spur progress for not just your members but also for the economy? For the economy, we have International Federation of Reporting Standards (IFRS). For the public sector, we have International Public Sector Accounting Standards (IPSAS). Those who have integrated reporting bring to bear some other parameters that are not visible in ordinary financial statement. These are the key frame works upon which any other thing is built, but more importantly, we have introduced a lot of ICT skills into our members, we have already started our technology competence initiatives. The reality of today is that businesses are being driven seriously by ICT, and there are lots of new developments in the world of information technology such as artificial intelligence, block chain etc. The Accountants we are producing today have to be digitally skilled; we made sure we injected a lot of IT into our syllabus because IT is very key. These are the totality of what we

are trying to do. The Federal Government plans to merge polytechnics with universities and some polytechnics are still offering accounting as a course. What are your plans to continue the development of manpower in the university and polytechnics? We have Mutual Corporation with tertiary institutions. The kernel of the programme is that we are looking at a situation where all tertiary institutions syllabus will be unified. Secondly, we have to buy into ICAN syllabus such that by the time the current university students are graduating they will be qualified having passed through uniform syllabus. Again, we are engaging with the management of National Universities Commission (NUC) to develop syllabus for them at the moment, which is more or less ICAN syllabus. We will be sending ICAN members to universities to monitor the standards of ICAN examination and ensure that they meet a number of criteria.We have scheme put in place. These universities should have computer laboratories and we will monitor it. We believe that with all these processes, we will continue to produce high profile digital Accountants that will impact positively on the economy. What is the progress report concerning ICAN’s on-going investments in tertiary institutions? We developed lecture theatres in several institutions across the geo-political zones of Nigeria. This is also a kind of model in institutions where such structures are set up. ICAN have built a couple of them, but we are currently assessing the impact of that viz-a-viz other measures to put in place to ensure that we get maximum return on investments. You have one year tenure as ICAN president, what would you want to be remembered for after you finish your tenure? I want to be remembered as the ICAN president that produced the highest number of Accountants that are digital in nature. There are also some projects that are very dear to my heart that I do not want to make public yet. But I am sure that at the end of my tenure, they will be visible.

BUSINESS DAY

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Thursday 02 August 2018

Spending Trends

U.S. retail sector rebound boosts workers’ wages, executive bonuses

fter one of its toughest years ever, U.S. “brick and mortar” retailers are witnessing a rebound and boosting wages for hourly workers and bonuses for senior executives, according to two separate studies released on Tuesday. Wages have grown for cashiers and retail buyers among others, a sign that a tight labor market is finally translating into base-pay gains for workers at retailers, according to data gathered from millions of U.S. worker salaries by Glassdoor, a job website operator. A separate study by consultant and executive search firm Korn Ferry showed nearly one-third of retail corporate executives received at least 100 percent of their targeted bonus, more than double the 15 percent during the same

period in early 2017. A record number of middecade store closures and bankruptcy filings, along with rapid growth of online sales, especially at Amazon. com Inc , led investors to sour on the sector over the past two years. But stronger-thanexpected earnings in the previous three quarters from many department stores, bargain outlets and apparel brands have started to turn things around. Growth for retailers comes as the U.S. economy expanded in the second quarter at its fastest pace in nearly four years thanks to a boost in consumers spending, much of it by the bottom 60 percent of income earners - a break with a decades-old trend where the top 40 percent primarily fueled consumption growth, a Reuters study found. The Glassdoor study shows wages for retail cashiers in July

grew by 5.4 percent to $28,145 from a year earlier and rose 2.1 percent to $58,090 annually for retail buyers, who

purchase merchandise from manufacturers. “Despite weak hiring ... retail jobs experienced pay

gains above the national average, likely caused by the increasing demand for workers who specialize in cus-

plans to launch an e-commerce department after it announced earlier this year that it will invest USD 2.69 billion into online activities. Meanwhile, the retailer calls it quits in China and will sell some of its five department stores, two months after offloading most of its 99 Chinese supermarkets. Supporting farmers: Australian supermarket giant Woolworths has partnered with non-profit organisation Rural Aid to support the country’s farmers and rural communities impacted by drought. The retailer invested AUD 1.5 million into a programme that will deliver hay for cattle feed and provide other essential items. Performance results in

US: Following Facebook’s devastating results, Amazon investors are breathing a collective sigh of relief after strong half yearly reports boosted the company’s stock to record levels. On the other hand, the online behemoth is dealing with harsh criticism of its facial recognition technology which falsely identified 28 Congress members as criminals. Shifting loyalties After much deliberation, Walmart has ended its decades-long relationship with Synchrony Finance and opted to go with Capital One for its storebranded credit card program. Meanwhile, John Schnatter is suing Papa John’s as he seeks documents to prove the board staged a ‘coup’

against him. Trump tariff fiasco McDonald’s and Coca-Cola have both expressed concern over the trade war between the United States and China. The fizzy drink major is seeing cost pressures as a result of the taxes on steel, and the ‘Golden Arches’ is experiencing reduced customers in its Chinese restaurants. Sweet treat Hershey has posted a pleasing 5.3% rise in sales, beating Wall Street expectations. The chocolatier is reaping the benefits from its SkinnyPop acquisition, as well as increased American demand for its chocolate. Name and shame in Europe: Lidl and Asda are among a host of brands slammed for ignoring pleas

tomer service and integrate more technical knowledge,” Glassdoor chief economist Andrew Chamberlain said in a statement. Chamberlain said he did not expect wage growth to slow anytime soon as low unemployment spurs competition for workers Korn Ferry senior partner Craig Rowley told Reuters that the current fiscal year has reversed a five-year trend of fewer executives receiving bonuses. Senior retail executives who received no bonuses grew from 10 percent in 2013 to 29 percent last year but have fallen to 5 percent in 2018, he said. Rowley said Korn Ferry analyzed data from 65 North American retailers, with median annual sales of approximately $5.2 billion. Culled from Reuters

Global retail update

alf yearly results are flooding in and Amazon has come out on top with record profits on the back of cloud computing and advertising. Walmart has opted to drop Synchrony in favour of Capital One as the provider of its store credit cards. Meanwhile, the plot continues to thicken with Papa John’s as the company is sued by its founder John Schnatter, who is mounting a legal challenge against the board. Even the most successful retail giants have to deal with pitfalls and obstacles in everyday business life. German discounter Lidl is struggling with its expansion in the US and has some serious real estate issues, while Walmart stumbles with its last mile package delivery plan. As expected, both companies are determined to solve their problems. Below are the updates : Ambitious plans in US: Following its USD 1.9 billion remodelling initiative, Aldi plans to add more than five additional stores in New Jersey, where it currently operates more than 40 locations. The German discounter runs nearly 1,800 US stores in 35 states. This number could increase to 2,500 by the end of 2022. Under investigation: Lidl’s stagnating US expansion (in German, paywall) keeps the justice system busy. In an exclusive report, Lebensmittel Zeitung reveals that several lawsuits against the German discounter are pending because the company is said to

have breached contracts with local real estate developers. Lidl denies the accusations. Delivery issues: Walmart has quietly retreated from its initiative to have its store employees courier items after their usual shift. It was described as an attempt to tackle the challenging ‘last mile’ of delivery. Ride-hailing company Uber also abandoned a project and announced that it will stop developing selfdriving trucks. Staff scientists in Europe: British icon Marks & Spencer wants its workers to become digitally savvy and has announced that it is establishing a data academy to train staff to ensure that it is “fit for the digital age”. The retailer has enlisted tech educator Decoded to teach more than 1,000 employees in the first 18 months. Brexit ramifications: Aldi has asked its food suppliers to begin contingency planning in case the UK crashes out of the EU with no deal. The German discounter, which operates 700 stores in the UK, asked suppliers questions around what proportion of EU staff they employ and the implications of tariffs for their products. Lucrative partnerships Starbucks and Alibaba are joining forces on coffee delivery, as the American coffee chain seeks to rebound from a sales slump in China. Meanwhile, the Chinese e-commerce powerhouse wants to invite 200 top overseas brands to the China International Import Expo 2018 in November in Shanghai. South Korean decisions: Retail conglomerate Lotte

by environmental watchdogs to switch over to suppliers of viscose who sustainably produce the fabric. Many viscose producers dump toxic wastewater in lakes, wreaking havoc on local communities. Tesco makes changes: The supermarket major has appointed Naomi Kasolowsky, formerly of Marks and Spencer, as its foresight and insight director. Meanwhile, following on from its recent beef announcement, Tesco is also introducing new contracts to lamb farmers that will see them paid well above market rate. Discussing discounts: Shoppers in the UK are missing out on savings and deals because they are ‘too British to barter’. Annually, Brits lose out on average by GBP 496 per person, or GBP 6.5 billion collectively, because of a feeling of awkwardness around negotiating prices. Closing down in Australasia, Asia: Dick Smith Foods is set to close its grocery offerings in Australia, with the company founder blaming increased competition from Aldi for its demise. Entrepreneur Dick Smith believes the German discounter’s business model could undermine supermarket majors Coles and Woolworths in the future. Poultry promise: Filipino chicken great Jollibee is planning extensive Middle Eastern expansion of its brand. The fast food retailer identifies the United Arab Emirates as a ‘key market’ and intends to open 25 stores in the area by 2020.

Compiled by Chinwe Agbeze

Thursday 02 August 2018

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How digital payment solutions are transforming smaller retailers

maller retailers, street traders, corner cafes, and cabbies have relied on the cash economy for decades, and could not afford to buy card reader devices or pay the fees associated with processing electronic payments, especially in developing countries. However, things have started to change rapidly over the past few years, most noticeably in India. As the Modi government launched a demonetization program and withdrew major banknotes from circulation overnight without warning, consumers were forced to use electronic payments, though cash did not completely disappear. As a result, all types of retailers including small/independent ones understood the need to offer cashless payment methods to remain competitive. Digital wallets have revolutionised payments in India and China PayTM emerged as a popular digital wallet in India, which can be used for payments across all major stores, online retailers, utility bills, and metro cards, as well as auto rickshaws and food stalls. The service has over 200 million users and enables them to make payments conveniently by using their smartphones to scan the retailer’s QR code. The wallet’s balance can be topped up via credit or debit cards, as well as through online bank transfers. It can also be integrated with most point

of sales (PoS) solutions. In China, many consumers prefer to use the all-round app WeChat for payments and no longer carry any cash. WeChat offers various payment methods as a digital wallet, with the most popular being QR code based, whereby vendors scan customers’ QR codes that are shown on their mobile devices via the app. It also works the other way round – customers can also scan vendors’ QR codes to get more information about products and special offers, and can then initiate payment when required. In addition, WeChat offers in-app and web based payments, as well as options for splitting bills and paying friends and family members without any hassle. Mobile contactless pay-

ments are gaining popularity in Europe Another popular solution that many smaller retailers, cafes, and restaurants use, especially in Europe, is offered by iZettle, a Swedish company. Unlike PayTM and WeChat, it is not a digital wallet, but features a mobile card reader that is primarily aimed at contactless debit and credit card payments, although it also offers traditional chip & PIN. The card readers have robust battery life so they do not usually need charging while used on mobile stalls. They connect via Bluetooth to smartphones or tablets that run the company’s mobile app, and payments are then transferred to the merchant’s bank account with a small fee deducted for

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Electricity companies supplied over 90,000 meters in first three months of 2018 payment processing. Even some charities, buskers, and beggars have adopted these mobile card readers to take contactless payments for suggested amounts, which has led to more people donating and also giving higher amounts compared to cash collection trays. In addition, iZettle also offers an e-commerce platform that small retailers can set up with minimal effort. Trust and convenience drive cashless and digital wallet based payments Safety and trust are important factors for the increased adoption of cashless payment solutions in addition to greater convenience including the speed of the transaction. While counterfeit bank notes, coins, checks, and credit/debit cards remain a worry for consumers and retailers, the new digital wallets provide a notion of increased security. They feature advanced encryption technology, and secret keys used in payment transactions do not reveal any passwords or other sensitive information such as credit card numbers. Retailers including small street traders are recognising the need to accept the payment types that customers prefer if they do not want to lose out on business. Adoption rates are likely to rise for digital wallets, as well as for contactless card-based payments as they are becoming the standard in many countries. Culled from retail insights

BUNMI BAILEY

he number of prepaid meters supplied by the electricity distribution companies (Discos) in Nigeria increased by 6.2 percent quarter-onquarter to 1.59 million to 1.50 million in Q4 2017,according to the National Bureau of Statistics (NBS) power sector report released on July, 27th 2018 “Benin Disco has the highest percentage with 17.79% of the total customers metered. This is closely followed by Abuja Disco with 16.40% and Ibadan Disco with 15.99% respectively while Yola Disco recorded the least percentage of the total customers metered with 2.35% and closely followed by Jos Disco and Kano disco with 3.42% and 3.97% respectively,” said the report. However, players in the meter industry have said that the rate of distribution by the Discos is still too low to bridge the over 4.7 million metering gap that currently exists in the country as at December 2017. Chantelle Abdul, managing director of Mojec International Limited, an indigenous prepaid meter manufacturing company in Lagos said, “The Discos have a contractual obligation to get meters to their customers. The issue is that their collection is not meeting their target and that will make them not to have enough money to use in paying back

the market operators for the energy that they consume,” “For example, if they are rolling out a minimum N100,000 meter contract for utility ,you are talking about billions of naira,” Abdul added. The DisCos were obligated by NERC virtue of their performance contracts to provide meters for customers however they were constrained by foreign exchange challenges which sent the price of meters through the roof. They further said they were handicapped by poor collections and low tariff due to refusal of the government to allow them raise electricity tariff. Meanwhile, the prepaid metering system provides an effective mechanism for measuring electricity supplied in the country as the device makes it possible to accurately measure power consumption. This is why NERC came up with a Meter Asset Provider (MAP) regulation that allows for third party investment in electricity metering which consumers would offset after an agreed period based on instalments. “I am expecting that the number of prepaid meters will continue to increase due to the Meter Access Provider (MAP) regulation introduced by NERC which we are about to embark on. This will mean more meters will be distributed and investors will come into the market to invest and buy more meters,” Abdul said.

Living under poverty line How Nigerians are struggling to survive

If you want to contact the writer of this story call: +234(0) 803 889 1567, +234(0) 8155184838 chinwe.agbeze@businessdayonline.com

Cancer patient needs help to pay medical bills Name: Patricia Ebenuwa State of Origin: Delta Age: 38 Dependents: Parents and siblings Occupation: Trader After trying to get a job with my University degree without success, I started dealing in female clothing and accessories. With the proceeds from the business, I took care of my aged parents and siblings. But I quit trading when I took ill and all the money I had went on

medical bills. What was the nature of the illness? I was diagnosed of cancer of the breast in June 2017. I completed my chemotherapy in January, 2018 and had a mastectomy (surgery to remove the breast) in April, 2018. My doctor said I need at least two sessions of chemotherapy before I could proceed to Abuja for radiotherapy, but I am still trying to raise money for both the chemotherapy and radiotherapy. What is the cost implication? I need N188,000 for chemotherapy, and radio-

therapy costs N600,000. I have to travel to National hospital in Abuja because that’s only hospital that has a functional radiotherapy machine in the country. I still have to worry about transport fare and where to stay for a month while receiving radiotherapy. How have you coped so far? It has not been easy. When I exhausted all my savings, I had to rely on my poor family for financial aid. My family has incurred over N800,000 debt since I commenced treatment last year, and they can borrow no more because no one is

Analysts: Chinwe Agbeze, Stephen Onyekwelu, David Ibemere, Graphics: Fifen Famous

willing to lend. What’s your greatest challenge? I spent all I have, and had to go borrowing for more to enable me pay for my medical bills. My family and I are currently in debt, but the treatment is not yet over. I was told to commence chemotherapy after which I have to go to Abuja for radiotherapy. All these cost the money that I, my aged parents and siblings don’t have. I am appealing to kind-hearted Nigerians to assist me get this treatment so I could return to business and be able to take care of my family.

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Harvard Business Review

Thursday 02 August 2018

Global Business Perspectives Connec ting

Th e

World

One

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time

A field guide to the hurdles facing blockchain adoption Nathaniel Popper

lockchains mean a lot of different things to a lot of different people. For bitcoin fanatics, the original blockchain was a way to create a currency that could circumvent and eventually supersede central banks. For central banks, the blockchain has become a promising way to record their own currencies in an effort to retain their dominant place in society. For some cryptocurrencies, like Monero and Zcash, the blockchain is a way to ensure total privacy and anonymity. For others it is a way to make anonymity a thing of the past in financial transactions. Beneath all these conflicting goals, the blockchain is just a new way to record data, generally in a communal fashion, with a bunch of people keeping the records, rather than just one central institution like a bank or government. This basic idea, though, can be configured in countless different ways. And companies, startups and governments around the world have been engaged in what sometimes looks like a race to try out as many applications as possible, with billions of dollars chasing the promise. What has not become clear, so far, is whether the blockchain design will really be able to accomplish any of the big promises that have been made for it. Essentially every big category of project in the blockchain realm has run up against obstacles that have so far barred the way to real breakout success. That has led to a big decline in the price of many blockchain-based cryptocurrencies over the last six months — the price of bitcoin is down nearly two-thirds from the peak in December. But while we don’t yet know if blockchains will really work in the long run, we are starting to understand the problems they will have to overcome if they want to have a chance at working. The blockchain we know the

most about is the original one, linked to bitcoin. In a simple sense, this blockchain has been a resounding success. Since it began recording every bitcoin transaction in 2009, the bitcoin blockchain has more or less seamlessly kept the records of a currency that is now worth over $100 billion — and with no institution or person in charge. But bitcoin has so far failed at its goal of becoming a new kind of digital cash, which was the ambition described in the original documentation. So far, almost the only thing bitcoin has been used for is as a speculative commodity, like a digital gold, with lots of trading on the price. (The one place where bitcoin has been used for regular real transactions is in the black markets.) There are many reasons bitcoin has not been more useful so far. The monetary policy and economics of bitcoin — with only 21 million of the coins ever created — are a particularly fascinating question mark hanging over the project. As are the security issues that arise when every holder is responsible for keeping their own password, or private key. But no problem has been more immediately stubborn than the limits on how many transactions the bitcoin blockchain can handle. It turns out that when a whole bunch of people are keeping the records for something — as the blockchain design requires — there are limits on how many transactions all those computers can share and store in a set

amount of time. This issue — the so-called scaling problem — is now something that confronts essentially every major cryptocurrency out there. While bitcoin can handle only around seven or so transactions each second, the second most valuable network, Ethereum, can do only double that, and none of them are getting close to the 50,000 a second that Visa manages. Developers working on bitcoin and Ethereum have been building several different solutions that might address this. Most of them involve adding new databases, with more capacity, on top of the ground level blockchain ledgers. So far, though, it’s not clear if these can work without introducing new problems or sacrificing the qualities that attracted followers to these projects in the first place. Ethereum, and a bunch of other valuable cryptocurrencies that have been inspired by it, have a separate set of problems that they will have to figure out. The creator of Ethereum, Vitalik Buterin, wanted to build a system that would house a virtual currency like bitcoin, but with the added ability to create programs, directly on the blockchain, that could make some of the currency’s movements automatic. In the simplest type of transaction, the Ethereum blockchain will record money moving between wallets (which are like individual accounts) only in response to a particular event. In one simple type of transaction,

for example, money would move between wallets only if a specific team won the World Series. These so-called smart contracts inside Ethereum are now being copied by many other projects. Ethereum, though, has been dogged by new complexities that smart contracts have introduced into an already fiendishly complicated system. Ethereum smart contracts have been hacked and rigged in unexpected ways that have allowed for multiple thefts of tens of millions of dollars. That is a small minority of all the transactions, but it makes many people worry about whether blockchain smart contracts have, in the language of hackers, created too great a surface area for attack. Some worry that these sorts of smart contracts are just not the sort of thing that a shared database is equipped to handle. Many of the problems facing cryptocurrencies like bitcoin and Ethereum arise from the fact that these systems are open to anyone with internet access. Anyone can go online and create a wallet and begin helping to keep all the records for these systems that run on so-called public blockchains. That creates a security headache that cryptocurrencies were designed to deal with, but that never goes away. What do you do when North Korea, or some other actor under sanctions, starts moving money on the system? That kind of question has led most newcomers to the blockchain world — many of them from the corporate and government worlds — to take an interest in newer kinds of blockchain databases that aren’t as open. The world of private or permissioned blockchains has taken off over the last two years, with projects like Hyperledger and the Enterprise Ethereum Alliance getting a lot of attention (the latter is working on private versions of the Ethereum software). These systems have fewer people keeping track of any given blockchain. That makes it easier to scale up these systems to handle lots of transactions, because there are fewer computers that have to communicate. It also can

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make it easier to bar bad actors from getting access to the system because only people with permission have access to it. Companies like IBM and Walmart have said that blockchains, even when they are open only to a select number of people, still can produce more reliable records of information — that everyone can access at any time — than the old systems that relied on a central bookkeeper. But fans of bitcoin and other so-called public blockchain systems have mocked these projects. The often-heard criticism is that a blockchain that is being maintained by only a few institutions is less at risk of an attack from the outside but much more at risk if one of the institutions on the inside is compromised, allowing one of the participants to fudge the old records. These private blockchains can lose the resilience to attack that is part of what made blockchains so attractive in the first place. For now, private blockchains are too new to have gone through the security gantlet that bitcoin has already passed through. Many private blockchain projects have been tested in pilots, but almost none have entered into real commercial production. As private blockchains begin to be used daily to track supply chains or copyrights, the other big question is whether they will be economically attractive enough to persuade companies to replace their old database systems — with one person in charge — with the inefficiencies that come with multiple people keeping records. But the bitcoin blockchain faced much more significant questions when it began, like why would any serious person pay attention to some digital tokens that are worth nothing more than the ledger they are written on. Now there are lots of serious people paying attention to bitcoin and everything that has spun out from it; the latest blockchain research center is about to be opened by professors at Stanford University. All those serious people make solving problems a lot easier.

Thursday 02 August 2018

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BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

INSIDE Photos from Launch of the Patients’ Bill of Rights

31 Hon. Justice P.O Aderemi JSC, the Uncommon Jurist and Father

Getting a HGB-focused Bourse to Adegboro’s Epic Status: Tax and Other Incentives to the Rescue? Bidemi Olumide

Yoruba saying goes: “eni ti o le se alabaru l’oyingbo ko le se bi Adegboro l’oja oba”; translated, he who cannot work as a porter at Oyingbo cannot act as Adegboro at the King’s market The saying is derived from the story of Adegboro who had a humble beginning as a porter at Oyingbo Market, and through diligence and tact, became the owner of a glamorous building at the King’s Market in Ibadan. The story underscores the virtues of diligence, tact and patience. At higher registers, it retells the universal values of sacrifice and process. Nothing just happens; a formidable strategy anchored on sustainable values is most important for creating desired positive results. In this piece, we set out to chart a formidable strategy anchored on fiscal and other incentives, to birth a public platform for the funding of the capital needs of high growth businesses (HGBs) in Africa. First Things First: What is a High Growth Business? We will go with the OECD that defines a HGB as: “All enterprises with average annualized growth greater than 20% per annum, over a three-year period. Growth is thus measured by the number of employees and by turnover.” Speaking of employees, the OECD places the number at ten or more. At a 20% annual growth rate, a HGB typically grows faster than the economy in which it finds itself; for example, Nigeria, with its average annual gross domestic product (GDP) growth rate of 3.88% in the last 35 years. The hue and cry over HGBs is found in their eponymous essence -

their growth rate. The logic is simple. Take for example, Nigeria; the more HGBs Nigeria is able to churn out yearly and sustain, the more the potential of an increase in its GDP’s annual growth rate. Put simply, the growth of Nigeria’s GDP is tied significantly to the number of HGBs it creates and sustains. Hence the rather simplistic node that Government must take a keener interest in the protection and promotion of its HGBs. Funding HGBs - The Private vs. Public Capital Debate To rehash an earlier made point, growing companies are the lifeblood of any economy due to the twin incidences of productivity and job creation. The fact and nature of funding such business attract is important. Given their nature, particularly the need to remain growing over a period, they require relatively patient capital. Capital that cannot easily bail out, if dividends are not paid. Capital that cannot easily seek to change control because it no longer aligns with the vision and proclivities of the bearers of the vision of the business. Capital that is publicly dispersed such that control is securely with the promoters of the business that sought the capital in the first place. All these are the characteristics of public capital, relative to private equity. Growing companies require platform for the mobilisation of this public capital, hence the need for securities exchanges. Holistically, the securities exchanges are platforms that allow businesses showcase their intrinsic value and attract much needed public capital. Securities exchanges are business enablers. The public versus public capital debate does not require winning. It is not an “either or” but a “and” situ-

ation. A major argument in favour of private equity is the probability of greater valuation; but then, it is quickly retorted, at what cost? Public equity assures that it should not be at the cost of having no leverage particularly in control-related controversies. But then private equity does not lose out in the public markets as the latter provides a veritable opportunity for the former to offload all or some of its interests. Good public pricing provides a platform for future acquisitions/ expansion. It is safe to conclude that both markets require and deserve each other; each with its positives and negatives. I ascribe to the view that the positives of public capital vide public listings outweigh the negatives. The typical downside is that, from a competitive perspective, you have to disclose more than you might want to. On the upside however is building the business on relatively patient capital while having a good global appeal due to the governance that regulation should bring. Incentivizing Public Markets Government’s inducement of investment activities through tax cuts is a globally-acceptable practice. Extending this practice to both investees and investors in HGBs (Recognised HGBs), that is, HGBs that list on a HGB-focused public bourse (Recognised Exchange), is at the centre of this piece. It is important that appropriate definitions are provided on what will constitute a Recognised HGB and a Recognised Exchanged for the application of the incentives. We advocate for massive and meaningful incentives for investees and investors in the HGB space. Some of the proposed incentives are enumerated below: Regulatory + Tax Amnesty: Grant-

ed that some HGBs have backlogs of compliance gaffes to regularise, we propose that an amnesty window be opened to Recognised HGBs that seek to list on a Recognised Exchange within a period; we propose 12 months. The relevant regulators will refrain from imposing ordinarily applicable penalties and interests, while giving the HGBs sufficient time (24 months from the date of declaration) to offset all owed principal amounts. These amnesties would typically include those from the following Government agencies - the Securities and Exchange Commission, the Corporate Affairs Commission, all tax and fiscal authorities (including the Federal Inland Revenue Service, States Internal Revenue Services, Industrial Training Fund, Pension Commission, Nigerian Social Insurance Trust Fund, National Housing Fund etc.) and all specialised regulators. Transaction Taxes: The following transaction taxes should be exempted from transactions on a Recognised Exchange: Value Added Tax (VAT): The existing VAT Exemption Order 2012, which exempts commissions earned on brokerage fees and those paid to each of SEC, NSE and CSCS from VAT expires on 24th July 2019 and needs to be extended for another 10 years in the case of transactions on a Recognised Exchange. This incentive does not require the intervention of the Nigerian Legislature and can be effected by the Honourable Federal Minister of Finance. Stamp Duties: All transactions on a Recognised Exchange should be exempt from payment of the current Stamp Duties of 0.075% on the value sell and buy deals on exchanges. This incentive requires a

In honour of Hon. Justice P.O Aderemi

legislative amendment of the Stamp Duties Act. Income Taxes: The following income tax reliefs should be available to investors and investees in a Recognised HGB that is listed on a Recognised Exchange: Companies Income Tax (CIT): The existing CIT Exemption Order 2012, which exempts interests earned by corporate bondholders from CIT, expires on 1st of January 2022 and needs to be extended in relation to (i) equities, that is, dividends earned by corporate shareholders of Recognised HGBs should be CIT-exempt – the CIT is normally collectible way of the Withholding Tax (WHT) system; and (ii) time, that is, the incentive needs be put in place for 10 clear years for Recognised HGBs. This incentive does not require the intervention

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GLOBALreport

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BDLegalBusiness

2018 Working Mother 60 Best Law Firms for Women ... Honoring law firms that encourage women to rise to the top

or 11 years, Working Mother has recognized the U.S. law firms that utilize best practices to retain and promote women lawyers. This is its second year collaborating with the ABA Journal as a knowledge partner in recruiting firms and publicizing results. At these 60 law firms, almost half of associates and more than a third of partners are women, on average, while one-fifth of equity partners are women. These firms also increasingly offer extended parental-leave benefits and encourage more lawyers to work remotely and use flexible hours. A few key parental-leave, work-life balance and careeradvancement initiatives taking place at firms featured on the list include: Several firms offer generous parental leave policies. One firm, for example, offers a gender-neutral parentalleave policy, giving all lawyers and professionals 26 weeks off with up to 18 weeks

at full pay. Another firm created a formal sponsorship program that identifies junior women and ethnically diverse attorneys and pairs them with senior firm members; that same firm began offering to ship home breast milk for attorneys who travel for work. Backup care and in-home care for family members of all ages, from infant through elderly, is offered by a firm, where up to 80 hours may be used at an affordable rate. At one of the firms, a Balanced-Hours employee-resource group provides guidance on mentoring and development of attorneys with reduced hours. At Arnold & Porter Kaye Scholer, Fifty percent of attorneys promoted to partner were women, a 12 percent increase over the previous year. Women at Baker McKenzie make up of 22% of its equity partners, while 33% make up its non-equity Partners. Hogan Lovells has women make up 23% of its equity partners and 29% as Non-equity Partners.

TheBar

Perspective on 2018 NBA elections …As voting commences at 10:00pm today Theodora Kio-Lawson

n just a few hours, voting will commence nation-wide for the election of new officers to steer the affairs of the Nigerian Bar Association (NBA). However, the mood within the bar is one of doubt as the entire process has from the beginning met with great discontent and dissatisfaction from various quarters. It started with the appointment of the association’s electoral committee (ECNBA); the selection of an Information Communication and Technology (ICT) Service provider; the clearance of candidates and verification of voters. All of these have been plagued with numerous controversies and disputes, as several members continue to challenge the decisions of national officers of the NBA. Charged with the responsibility of organising and managing the elections – including the selection of the ICT service (e-solution) provider, the NBA constitution requires the Electoral Committee (ECNBA) to be credible and act independent of all interests and interferences – particularly from the ExCo of the NBA. However the ECNBA seems to have fallen short in this regard, with dispute trailing all its actions. First, the committee has been accused of the unjust disqualification candidates; then it was the of

was the issue of the appointment of an ICT service provider, which according to members of the NBA, did not go through due process. According to reports, CHAMS PLC, a public company formally wrote to the NBA introducing itself and offering its e-voting platform to the NBA – an offer which the NBA ExCo apparently accepted without due regard and approval from its highest decision-making organ: NEC. By the requirements of the NBA constitution, such an offer and onward selection should have been disclosed to the leadership or National Executive Committee (NEC), which will in turn approve after receiving and evaluating other bids with similar offers. Its next hurdle was the verification of voters, which as at the time of filing this report still seemed like daunting and humongous challenge for the ECNBA. Indeed, the election process has been in a downward state from the very moment it began. Affirming this state of affairs, members report that the continuous outcries stem from a wide range of l issues, such as ExCo interference with the roles of the ECNBA; unjust disqualification and maligning of the least favourite candidates (many of whom have gone to court); conflict of interests, lack of transparency with the voting system adopted by

initial ICT Service provider CHAMS among other things. When it became obvious that members would not back down in theor resolve to get fairness, the ECNBA and the ‘President’ of the bar had to suspend the initial verification process by CHAMS, thereby appointing an entirely new ICT firm for fresh data verification of all eligible voters across NBA branches, nation-wide. Unfortunately this new process has not been without its fair share of troubles, as the ECNBA seems to be overwhelmed by the entire electronic system. Thus, the discontent among members has continued. Now, as the minutes run into seconds; ticking away to voting time, some members are concerned as to the leadership that would emerge in the midst of these glitches and obvious lapses. The question is, “Is the bar headed in the right direction or is about to experience a free fall? A Chat with key members of the bar reveals the mindset and present mood hours before the election. Some members have even called on the current administration to handover the affairs of the association to a caretaker committee. Excerpts… SILAS JOSEPH ONU: “The ECNBA’s mandate to conduct election also elapsed. All the rescheduling presently done with-

Augustine Alegeh, SAN

Mazi Afam Osigwe

out NEC are a total waste of time. Section 6 (2) Of the NBA constitution states that Failure to conduct an election in July, for any reason including emergencies, ends the tenure of the EXCO.” Onu goes on to explain that Article 2.3 (a) of the 2nd Schedule envisaged a situation where it is the

10-member caretaker committee that can approach the NBA NEC for ratification of any other new date outside July. CHUKWUMA EZEALA, LAGOS BRANCH: “My view is that what is worth

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PHOTOSFILE

BUSINESS DAY

BDLegalBusiness

NBA President visits Governor Shettima to discuss lawyers’ support fund The President of the Nigerian Bar Association Abubakar Balarabe Mahmoud, SAN was in Maiduguri Monday to acquaint Governor Kashim Shettima of the establishment by the NBA of a support fund for Lawyers affected by the insurgency in North-East Nigeria and to invite him to it’s official launch on August 10, 2018. The support fund shall be utilised by the Nigerian Bar Association to provide assistance to verified legal practitioners who have been affected by the insurgency in North-East Nigeria in the following areas: a. Granting financial assistance (scholarships and petty trade loans) to their surviving relatives; b. Granting infrastructural support (furniture, office equipment, books and practice materials) to help set up law offices and justice sector institutions; c. Establishment of pro-bono desks in NBA North-East Branches for the defence of incarcerated legal practitioners; d. Provision of capacity development (training and mentoring) opportunities for young Lawyers across the North-East. -SEE PHOTOS FROM EVENT BELOW:

Photos from Launch of the Patients’ Bill of Rights, where the director general of the Consumer Protection Council, Babatunde Irukera spoke on the them, “Patients’ Bill of Rights: Empowering the Consumer”

Director General of the Consumer Protection Council (CPC), Babatunde Irukera giving his open- The Vice President, Prof. Yemi Osinbajo with other guests at the launch of the Patients’ Bill of ing remarks at the event. Rights

QUOTE FROM THE DG’S REMARKS… “Protecting rights in the healthcare sector is of particular importance, and is a defining feature of how society should, and must operat e. The reason is not farfetched. Like I said earlier, needing medical attention is many times the most vulnerable or weakest point for both patient, and many times family. It necessarily connotes desperation, and a combination of these lead to significant impairment in decision making and exposure to abuse and exploitation. How people are treated at that time of need; through that process, including after it, are features in measuring the quality and values of society and attention to our shared humanity.

“The Patients’ Bill of Rights (PBoR) is our boldest step yet in soft infrastructure in healthcare. It is the vital vehicle upon which, even physical infrastructure must ride to truly deliver service. In the absence of a humane, attentive and secure approach by healthcare professionals, we neglect inclusiveness, and in reality, lessen access. “…Today, we take a definite step in ensuring peoples’ rights in the healthcare sector are truly respected and protected in part because no one in our country is insulated or immunized from needing medical services.

“The launch of the PBOR is a watershed in our history and in our journey to being the best society we can be. It represents our collective commitment to improving care. This turning point in our development as a nation has been a long time coming, and I am glad that it is finally here. It represents a point where we set a new culture for ourselves. It is now up to us to ensure the culture survives. We must preach, practice and defend it, only then will it perpetrate and perpetuate.”

Getting a HGB-focused Bourse to Adegboro’s... Continued from page 1 of the Nigerian Legislature and can be effected by the President of the Federal Republic of Nigeria. Personal Income Tax (PIT): The existing provisions of the 5th Schedule to the Personal Income Tax Act (Amended in 2011) which exempts interests earned by bondholders from CIT needs to be extended in relation to equities, that is, dividends earned by individual shareholders of Recognised HGBs should be

CIT-exempt – the CIT is normally collectible way of the WHT system. This incentive requires a legislative amendment of the Personal Income Tax Act. HGB Investment Account Scheme (HIAS): We propose that similar to the United Kingdom’s Investment Savings Account Scheme (ISA), HIAS be set up and managed by any relevant existing Government Agency, for example, SEC or PenCom. HIAS is proposed to be an income tax-exempt investment ac-

count, that is, both monies paid into an HIAS Account and interest earned thereon will be income tax exempt. Similar to the ISA, we propose that payments to a HIAS Account, up to a monetary limit (for example, N10million per annum) to be set by either the Ministry of Investment, Trade and Industry or the Ministry of Finance (FMoF) in every fiscal year, be exempt from personal income tax. The HIAS Account should be an account wholly devoted to investing in the Recognised HGBs.

We need a big battery to jumpstart Recognised Exchanges for Recognised HGBs, and we submit that massive cuts on income and transaction taxes is that battery. These incentives should be made available for a minimum period of 10years to allow for the growth of the Recognised HGBs on Recognised Exchanges. In the circumstances these incentives will impact on Government’s budgeted revenues, howbeit that we are unsure of the extent thereof, seeing the apparent lack

of tax revenue figures on a sectoral/ industry basis, it may be prudent that Government through its FMoF and the Joint Tax Board engages with a think tank as Project Acl8’s to negotiate and appropriately structure these incentives. AIM in Perspective AIM was 23years on June 19. It started in 1995 with 10 companies and a market capitalization of £82.2million. It rose to 524 listed

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tribute Hon. Justice P.O Aderemi JSC, the Uncommon Jurist and Father

Tolu Aderemi, Partner, Perchstone & Graeys LP

t is often said that the valiant never taste of death but once. The truth, sinking in, is that Hon. Justice Pius Olayiwola Aderemi JSC CON, is gone home to a well-deserved rest. In my feeble attempt to sum up his life, I can only conclude that never will you meet a man with such a high sense of character and one more dedicated to humanity than My Lord, the JSC (as I fondly called him). Justice Pius Olayiwola Aderemi, I dare say, was one such man. Anytime I find myself in a position of decision, the only question that came to mind was, ‘what would Dad have done in this circumstance? His character was the foundation of my conscience. I have read many beautiful things about him since he breadth his last on June 18, 2018 at 9.35am, just before I arrived the hospital to set up what would have been a beautiful room-space in his Doctor’s private clinic somewhere in the calm city of Ibadan, Oyo State. Indeed, he breath his last and entered into eternal retirement. I am not writing a Tribute (traditionally to be published) just yet. Reflecting during an early morning studies, the thought of life-afterdeath sped through my mind. Anyone who has a rare opportunity to make the difference while alive should take heed lest he finds himself on the wrong side of history. Everyone will be called upon to account at the appropriate time; my Dad has received his call and I am particularly assured of a gallant account to his Creator. This Creator, in moulding My Lord, took the strength of a mountain, the majesty of a tree, the warmth of a summer sun, the calm of a quiet sea, the generous soul of nature, the comforting arm of the night, the wisdom of the ages, the power of the eagles flight, the joy of a morning spring, the faith of a mustard seed, the patience of eternity, the depth of a family need, combined these qualities, when there was nothing more to add, and called it Akanni Pius Olayiwola Aderemi, the man we all celebrate his exit today. In reading through the many beautiful posts and messages, many have called him incorruptible, steadfast philanthropist, disciplined, fine gentleman, jurist per excellence, an adroit and quintessential jurist, a devoted man of God and the list is endless. This notwithstanding, chroniclers of events are yet to fully record the existence of the deeds of man which surpass time other than those etched in the minds of their fellow men, either good or bad. Aderemi did far more than ever imagined. In celebrating My-Lord therefore, it is pointless to ask how you died, but how you lived; not what you gained on earth but what you gave on earth; not which Church did you worship but what was your creed; not what the papers said about you but the true testimony(ies) of lives you affected whilst on this divide. Dad, it is therefore no goodbye because your values continue to live forever as we walk towards a befitting

Late Hon. Justice Pius Olayiwola Aderemi

burial for the Patriarch and Hero of The Aderemi dynasty from August 2nd - 4th, 2018. In honour… In July, his Lordship, the Chief Justice of Nigeria, the Hon. Justice Walter Onnoghen GCON and other Justices of the Supreme Court bade farewell to their brother, Hon Justice P.O Aderemi JSC CON at a Special court Session held in the Supreme Court. In attendance was the full compliment of Justices of the Supreme Court, Body of Senior Advocates of Nigeria, the immediate past Chief

Justice of Nigeria, Hon. Justice Aloma Muktah GCON, retired Justices of the Supreme Court, Justices of the Court of Appeal, the Chief Judges of Oyo and Imo States, the Attorney General of the Federation, Attorney General of Oyo State, and representatives of the Abuja, Lagos and Ibadan Branches of the Nigerian Bar Association. The late Justice Aderemi’s family was also fully represented including Mr Tolu Aderemi, a Partner with the Commercial Law Firm of Perchstone & Graeys LP. May his gentle soul rest in peace. See Photos Below…

Thursday 02 August 2018

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Perspective on 2018 NBA... Continued from page 30 doing is worth doing well. At this stage we don’t have to continue with this Election for want of transparency and preparation hence we now call for a Caretaker government that can commence a fresh process and conduct Elections within 3 months as provided in our ‘holy book’. Those disqualified unjustly just by mere mortals playing God shall be given the opportunity to be tested. Nothing short of this can guarantee credible transition and hence shall deprive the necessary legitimacy required in the leadership of the Bar. Please Pause and think about this. The ECNBA is desperately looking for a ‘fall guy’ for its own failings. It sought to go into an election with no plan and no credibility. Having been stopped, it then manufactured an election timetable that was clearly not feasible to anyone with any idea of what was required. Now it subjects us all to the electoral equivalent of the sighting of the new moon. This is incompetence on a rank scale.” EZENWA ANUMNU, FORMER CHAIRMAN, NBA ABUJA BRANCH: It’s Obasanjo that reminded us

that you do not reinforce failure. Current administration (#BraveNewBar) should hand over to a Caretaker Committee and just ‘go away’...they should remember to take all the ‘latter day’ crusaders in their Exco with them. Such a terrible lot. Shame! OBIOMA EZENWA: “What is all this? I take it that there is a deliberate plan by NBA ExCo to scuttle this election so as to caste a dark shadow on Universal Suffrage. The current president, AB Mahmoud, SAN had made his intention known right from day one that he prefers succession to election. Even IBB never maneuvered elections the way this administration is doing.” CONCLUSION With this development and unfolding drama, one is indeed forced to wonder what the future of Bar holds for its members. It would be recalled that the Nigerian Bar Association during the last administration made provisions in its constitution for universal suffrage against a delegate system of voting, thereby giving every eligible member of the bar the right vote in its elections. To this end, members of the Nigerian Bar for the first time in July 2016, elected a new leadership through electronic voting.

Getting a HGB-focused Bourse to... Continued from page 31 companies and a capitalisation of £14.9billion in its first 5 years. As at May 2018, 941 companies were listed on AIM with a capitalisation of £111.3billion. In April 2014, HMRC exempted transactions in securities admitted to trading on a “recognised growth market” from stamp duty. LSE’s AIM has been granted the status of a “recognised growth market” (RGM). To qualify as an RGM – (i) majority of companies on the market must each have a capitalisation less than £170million; (ii) admission rules require the companies to demonstrate 20% annual growth in revenue or revenue over the last 3 financial years. Companies that qualify for the exemption should also not be listed on a recognised stock exchange. According to the LSEG, it, together with market participants and stakeholders, “ … called for removal of stamp duty tax on growth markets as a measure to help reduce the cost of capital for issuers over the medium to long term. Removal of the tax reduces transaction costs for investors and will therefore have a significant signalling impact to the investor community, helping to widen the pool of investors and improving liquidity in these companies.” AIM has succeeded overtime to plug into such incentive schemes as the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT). Companies traded on AIM are regarded by Her Majesty’s Revenue and Customs as “qualifying unquoted companies”. Last Words Similar to LSEG’s AIM, Africa needs a Bourse that is dedicated to the securities of and investments in HGBs. A Bourse that combines the

twin features of flexible regulations and tangible tax incentives for both investors and investees is desired to mobilize the patient capital that Africa’s HGBs need. HGBs do not require just a platform where their equities and debts can be traded, they require an Exchange where they will be properly aided in implementing the governance structures required for running world class organisations. The governance conversation is not just limited to politics in Africa – corporate governance also poses a big challenge. An Exchange that understands the complexities and commits itself to helping HGBs surmount the challenge has become a necessity. It is strategic for Government to actively participate in a process that democratizes the wealth inherent in HGBs. It is strategic to democratize the wealth inherent in high growth businesses through their access to public equity. Much as private equity is desired at early stages, the insufficiency of the coverage of such capital provides opportunities to Exchanges that can be innovative and ambitious. Government should be seen to aid the mobilization of public capital into HGBs. The deliberate and not cavalier incentivisation of running and investing in HGBs is a path that needs to be trodden well. The incentives in the Nigerian capital market need to be reinforced to change current market reality of raising capital privately or from the money market at prohibitive and debilitating cost. The possibilities of the Nigerian capital market, especially in providing the required infrastructure for mobilizing capital and show-casing African businesses, is endless. It only requires a great dose of diligence, tact and sustainable processes. Granted

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Live @ The Exchanges Stocks trading activity down in Q2 as investors weighed elections risks Stories by Iheanyi Nwachukwu

t the Nigerian Bourse in secondquarter (Q2), average daily volume of stocks traded declined by 7.29percent to 384.10million units against a high of 414.29million units recorded in Q2 of 2017. The NSE Facts Sheet shows total volume of stocks traded in Q2 declined by 5.71percent to 23.05billion, while average daily transactions in Q2 at 4,382.52 represent a decline of 2.93percent. Some analysts did not rule out the impact of rising uncertainty ahead of Nigeria’s 2019 general election on equities trading activities and the decisions of foreign investors to repatriate their matured fixed income investments due to low yields. “Due to a strengthening US dollar, higher US interest rates, and treasury yields, naira assets began to experience marked pressure by Q2-18. De-

spite political concerns, we believe risk-off sentiment may be exaggerated given that economic fundamentals in Nigeria remain broadly supportive”, the analysts said in their recent daily insight “how intense will the foreign bears be in H2-18?”, according to Kayode Tinuoye-led team of research analysts at Lagos-based United Capital Plc. Though, the decline seen in trading activities in second-quarter runs contrary to record great flows in 2017 and first-quarter (Q1) of 2018, but the research analysts at United Capital still expect a continued flight from equity to fixed income investments “as coping strategies for higher volatility in the financial market”. Trading figures from major custodians and market operators at the NSE showed that foreign investors outperformed domestic investors by 9.07percent in June 2018. Total domestic transactions reduced by 31.87percent, from N125.32billion in May to N85.37billion in June 2018. Foreign transactions also re-

duced by 46.92percent from N192.95 billion to N102.41 billion within the same period. There was a 22.71percent decrease in foreign inflows from N62.06billion in May 2018 to N47.96 billion in June 2018. However, there was also a significant reduction in foreign outflows which reduced by 58.40percent from N130.89billion to N54.45billion within the same period Total transactions at the nation’s bourse reduced by 41percent from N318.27 billion recorded in May 2018 to N187.78billion (about $614.1 million) in June 2018. Month-on-month (Mom), the total transactions which stood at N212.23billion as at April 2018 and N318.27billion in May 2018 declined remarkably to N187.78billion as at June 2018. The Nigerian Stock Exchange services the largest economy in Africa, and is championing the development of Africa’s financial markets.

Nwabuko, Presco Managing Director wins 2018 ‘achiever in agriculture’ award

elix Nwabuko, the Managing Director of Presco Plc has emerged winner of the 2018 Achiever in Agriculture award. Receiving the award at a colourful ceremony in Abuja on Tuesday night, Nwabuko predicted sustained growth in the sector across the country. He also used the opportunity to commend various policies put in place by the Federal Government. The Nigeria Agriculture Award (NAA) is put together by AgroNigeria for recognition and celebration of agriculture stakeholders who have contributed to the growth of the sector. “Agriculture has always been with us. Agriculture is always with us and Agri-

culture will always remain with us”, Nwabuko said. He advised stakeholders to celebrate initiatives, adding that “we will see more growth in the sector”. He dedicated the award to all stakeholders and the growth of Agriculture in Nigeria. The organisers commended Presco Plc for putting in place “time tested policies” and for ensuring growth and profitability. For the year ended December 31, 2017, Presco Plc recently informed shareholders that the company witnessed another year of significant revenue growth from N15billion in 2016 to N22.3billion in 2017, representing 42.3 percent growth. Also within the period under review, Profit after

tax was N25.40billion as against N21.74billion in 2016 while Turnover stood at N22.3billion as against 15.7billion in the previous year. The development prompted the company to reward shareholders with N2billion. President Muhamadu Buhari and Osun State Governor, Rauf Aregbesola were also honoured in absentia on Tuesday during the award ceremony with special policy award and pillar of agriculture respectively, among others. Speaking at the event, Richard-Mark Mbaram, Chief Executive Officer, AgroNigeria commended all stakeholders for their contributions to the development of Agriculture, adding that there is need to do more.

Sterling Bank first-half earnings up by 63.4%

terling Bank Plc has reported a 63.4percent surge in net profit for the first half (H1) ended June 30, 2018. The lender reported Profit After Tax (PAT) of N6.2 billion on gross earnings of N77.6 billion as against PAT of N3.8 billion on gross earnings of N57.1

billion during the corresponding period of 2017. “We sustained our momentum in the second quarter, delivering solid growth across key financial indices. We also achieved a 35.9percent growth in gross earnings to N77.6 billion from N57.1 billion in the

second quarter of 2017. This was largely driven by a 25.1percent growth in interest income and a 56.5percent growth in transaction banking revenues, emphasising our commitment to our retail drive,” said Abubakar Suleiman, Chief Executive Officer, Sterling Bank Plc.

BUSINESS DAY

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Thursday 02 August 2018

Tax Issues

EY engages stakeholders on Country-by-Country reporting for multinationals … Says game changer for tax payers, FIRS MICHEAL ANI

rnst & Young Nigeria in its knowledge sharing session held last week in Lagos, engage d industry stakeholders on the processes involved for proper reporting, filling regulations with regards to the Country-by-Country rep orting (CbCR) that was introduced in the Nigerian tax system. Temitope Oni, Senior Manager, Tax Services and Transfer Pricing, Ernst & Young (EY) noted that CbCR is a step in the right direction and a game changer for both multinational tax payers and the Federal Inland Revenue Service as it will ensure increased consistency, confidentiality and appropriate use of report fillings. “The CbC rep orting standard which took effect this year is a game changer for the FIRS. T h i s w i l l e n ab l e t h e agency exploit avenues to confirm information submitted by tax payers, increas e analysis and interpretation of CbCR

data for risk assessment,” he said. Furthermore, it will help the agency to increas e s crutiny in rep orting as well as allow the agency be able to exchange CbCR with over 70 countries who are members of The Organisation for Economic Co-operation and Development (OECD). On the implications for tax payers, he said the CbCR will help increase compliance and notification re quirement. It will also ensure the need for Multinational enterprises’ (MNEs) groups to ensure c onsistency in information prov ide d as well as increase the confidentiality of information’s provided in the CbCR. However, Oni noted that the non-compliance to the rules come with several penalties which include the payment of N10 million in the first instance and N1 million for every month the failure continues. Also, a CbCR that is filled falsely or incorrectly shall result in a penalty of N10 million, while failure to provide notification will attract

a penalty of N5 million in the first instance and N10, 000 for every day in which the default continues. The CbCR regulations took effect from January 1, 2018, and forms part of the enhanced tax disclosure requirements set out by Action 13 of the Base Erosion and Profit Shifting (BEPS) project. The regulations aim at providing tax authorities with improved information to enable them better assess international tax avoidance risks.

Under the CbCR regulations, where the Ultimate Parent Entity (UPE) or a Constituent Entity (CE) of a Multinational Enterprise Group (MNE Group) is tax resident in Nigeria, such Nigerian resident entity will be required to file a Countryby-Country Report with FIRS for an accounting year where the Group has a total consolidated revenue of N160 billion or more in the immediate preceding accounting year. Oni, while comment-

ing on the reason behind the knowledge sharing session said: “We saw the need to have our clients come together and have a knowledge sharing session to share the best practise as to how this can be done. CbCR reporting is actually a development that came from the Base Erosion and Profit Shifting (BEPS) project plan. BEPS is a tax avoidance strategy that exploits gaps and mismatches in tax rules to artificially shift profits to low or no tax locations where

there is little economic activity resulting in little or no overall corporate tax being paid. Speaking further, Oni said: “We have discovered that multinationals over the years have been shifting profit from high tax jurisdiction, to low tax jurisdiction and the reason is because they w a n t t o re d u c e t h e i r overall corporate tax rate and they have been relying on the tax laws to do that. There are loopholes in the tax laws, so what they have b e en doing was to exploit the gaps in the international tax laws to shift profit here and there. “It’s a good thing and we are c elebrating it. Taxpayers are also happy to get to know what is required of them because if you look at the penalty provisions in the regulations, they are quite huge. “What they have done is to come together and address these loopholes once and for all, so that multinational enterprises would not shift profit from high tax jurisdiction to low tax jurisdiction anymore.”

Transfer Pricing considerations for commodities transactions (2) VICTOR ADEGITE & NANA ABU Continued from last week

overnment policy: Government intervention and policies can also affect the price of goods. These may be in the form of price controls, interest rate controls, subsidies for certain sectors, antidumping duties etc., which also affect the transfer price of commodity transactions. While it may be easy for a transfer pricing specialist to suggest that the above challenges can be overcome by carrying out some form of comparability adjustments, where there are significant differences between the controlled price and comparable uncontrolled price, this may be a daunting task. Comparability adjustments is most often a mix of the use of statistical tools and judgment calls which may be contested by the tax authorities in the event of an audit. Determination of arm’s

length price of commodities The Organisation for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines (2017) recommends the Comparable Uncontrolled Price (CUP) method as the most appropriate method for determining the arm’s length price of commodity transaction. The CUP method compares the price charged for a property or service transferred in a controlled transaction to the price charged for a comparable property or service

transferred in a comparable uncontrolled transaction in comparable circumstances. However, given the above challenge of dearth of exact CUPs, the OECD Transfer Pricing Guidelines recommends that in determining the arm’s length price of commodities using the CUP method, the quoted price may be applied. The quoted price, according to the Guidelines, includes the following: •Price obtained in an international or domestic commodity exchange market in the relevant period;

•Price obtained from recognized and transparent price reporting or statistical agencies; •Price obtained from governmental price-setting agencies. The Guidelines went further to stipulate conditions under which the quoted price can be reliably applied and used as a reference index in meeting the arm’s length standard. These conditions include standardized contracts which depict similar economic characteristics as the controlled transaction such

as similarities in physical features, contractual terms, volume of the transaction, period, timing of delivery, transportation, insurance etc. However, where the above are not available, the taxpayer is expected to have a price setting policy document that forms part of its Transfer Pricing documentation. This policy should contain justifications for price adjustments such as detailed analysis of the comparability adjustments, pricing formulas, third party agreements, pricing date, evidence of freight and ancillary charges, evidence of customs and other taxes suffered etc. The way forward Clearly, analyzing commodities transactions for tax purposes may not be as easy as it seems. It is important that taxpayers carrying on these type of transactions pays more attention to the manner by which these transactions are analyzed and documented. While the 2017 OECD TP Guidelines provided more detailed

guidance and recommendations on the treatment of commodity transactions, the onus is on the taxpayers to ensure it adequately document its commodities transactions’ pricing policy and update same as and when necessary. The Federal Inland Revenue Service (FIRS) could assist taxpayers comply with the arm’s length principle on commodities transaction by publishing detail guidance for the pricing of specific commodities that are produced in and exported from Nigeria. However, before publishing any guidance, it is pertinent that the FIRS consults widely and obtain opinions of industry experts, tax practitioners and transfer pricing specialists that are well grounded in the knowledge of the commodities for which guidance is to be provided. Victor Adegite is Senior Manager and Nana Abu is Senior Adviser in KPMG Advisory Services, Lagos, and may be contacted by email at: victor.adegite@ng.kpmg.com andnana.abu@ng.kpmg.com

Thursday 02 August 2018

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BUSINESS DAY

NEWS

Nigeria’s July oil output rose 50,000 Nigeria, Turkey businesses seek to Edo emerges 3rd, beats 33 others in daily helped by Bonny Light return expand trade relations in non-oil sector Africa Report ‘State of States’ ranking pushed adherence above 160 ISAAC ANYAOGU

igeria’s oil output rose by 50,000 barrels per day (bpd) in July helped by the return of Shell’s Bonny Light crude grade, which had been under force majeure on account of outages to Nembe Creek Trunkline (NTCL) and subsequently closed for repairs. Force majeure is a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances. Nigeria’s oil exports were expected to drop to their 2018 low in July - to just 1.43 million bpd following the closure, compared with 1.796 million bpd in June. However, with production bouncing back, the country’s performance helped the Organisation of Petroleum Exporting Countries (OPEC) reach a 2018 peak oil production of 32.64 million bpd in July, up from 70,000bpd, according to a Reuters survey. OPEC and allies agreed last month to boost supply as US President Donald Trump urged producers to offset losses caused by the sanctions the US placed on Iran in order to cushion impact on oil prices, which this year hit $80 a barrel for the first time since 2014. On June 22-23, OPEC, Russia and other non-members agreed to return to 100 percent compliance with oil output cuts that began in January 2017, after months of underproduction in Venezuela, and elsewhere

percent. The outage of the Bonny Light crude led to the accumulation of lots of unsold crude. The Nembe Creek Trunkline transports 150,000bpd of Bonny Light to the terminal that Shell operates and is one of two main pipelines that carry the Bonny Light oil grade to the export terminal. After almost two months under force majeure, Shell confirmed that that it “lifted the force majeure on Bonny Light exports on July 16 following the repair and reopening of the Nembe Creek Trunkline by the operator, Aiteo Eastern E&P Company Limited.” Bonny Light, with production of between 200,000bpd and 250,000bpd, is one of the main export grades for Nigeria and is very popular among refiners globally. The two-month force majeure on exports has benefited the pricing of other key Nigerian grades such as Forcados and Qua Iboe. In June, there were disruptions to Bonny Light, Forcados, and Qua Iboe flows, but loading schedules showed that Nigeria’s August crude oil exports would likely rise from July. Exports of the Forcados grade were planned to increase to around 259,000 bpd next month, up from 195,000 bpd originally planned for July, according to loading programs seen by traders who spoke to Reuters Bonny Light crude grade traded $76.23 per barrel Tuesday rising by 2.14 percent over the previous day’s figures.

KELECHI EWUZIE

igerian business owners and their Turkish counterparts say they hope to expand the trade relation between both countries in the non-oil sector. The trade volume between Nigeria and Turkey recorded $490 million in 2017. Nigeria is Turkey’s important trade partner in West Africa. Turkey’s trade volume with Nigeria amounts to nearly 25 percent of Turkey’s total trade with ECOWAS (Economic Community of West African States) countries. According to Iyalode Alaba Lawson, president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), while speaking at a business forum in Lagos, Wednesday, Nigeria businesses see the forum as a strategic opportunity for discussion to consolidate both countries economic ties. Lawson, who was represented by Ayoola Olukanmi, director-general, NACCIMA, said forum such as this would concretise the trade relations between the two countries and effect concrete results. She observed that the visits of President Muhammadu Buhari and his Turkish counterpart Recep Tayyip ERDOAN had further strengthen the bilateral relationship between

Nigeria and Turkey. “The relationship in the economic sense has continue to grow, adding that the business-to-business discussion and what we will do here today will expand the frontiers in the areas of provision of jobs. “Nigeria remains one of Turkish biggest clients in Africa, and we sincerely hope that we will continue to work to expand the frontier of the trade, we need to continue to be innovation especially in the areas of business,” Lawson said. Abdullah Keskin, foreign trade director, Turkiye Ihracatcilar Meclisi (TIM), said as a body, TIM represented 71,000 exporters, importers and foreign investors. To him, “We act as a bridge between the exporters and the government. And we are working for a stable and sustainable increase in export and also foreign trade volume with our partners.” Keskin said Turkey, with the leadership of President Recep Tayyip ERDOAN, had been implementing a policy of opening up to African states since 2006. “This policy has been transformed into a partnership with Africa following the Second Turkey-Africa Cooperation Summit and Turkey-Africa Business and Economy Forum, which was organised in November 2016,” he said.

n what experts describe as another validation of the reforms and progress being made by the administration of Governor Godwin Obaseki, Africa Report in its July/August 2018 edition, has ranked Edo third among states in Nigeria that recorded impressive progress in recent times. The report ranked the states along the lines of multidimensional poverty index, access to electricity and Internally Generated Revenue (IGR) per capita. It ranked the 36 states in Nigeria, excluding the Federal Capital Territory, Abuja. Edo placed only behind Lagos, which came first and Kwara, which took the second position in the ranking. On specifics, Edo ranked fifth in multidimensional poverty index, and with a score of 82.4 in Access to Electricity, it placed sixth. Also, with a 76.4 score in the internet users as share of 2016 population, Edo ranked 4th among Nigerian states. Edo belonged to the group of states the report captured as the Land Cruiser states, which according to the magazine, “are making it farthest and fastest, with a few bumps

on the road. “Lagos – Nigeria’s business hub – tops the charts, but its scores on the World Bank’s Doing Business rankings show that it has much to do to cut the complications of getting construction permits and other bureaucratic tasks. “Lagos blows the competition away on collecting taxes and despite widening inequalities, it is doing better than its peers at cutting poverty and boosting education and healthcare.” Other categories in the ranking are the Danfo states, which are described as being “like the ubiquitous bus that gives them their name. “The Danfo states are getting close to their destination quickly, breaking a few rules on the way and on a smaller budget.” The states include Abia, Ekiti, Akwa Ibom, Oyo, Bayelsa, Ondo, Imo and Nasarawa. Then, there are the Okada states and Waka Waka states. The Okada states are Enugu, Plateau, Niger, Benue, Taraba, Kano, Gombe and Adamawa. The Waka Waka states, according to the Report, include Katsina, Bauchi, Borno, Kebbi, Ebonyi, Zamfara, Sokoto and Jigawa.

Edo, Facebook, Andela, Oxfam mentor youths on overcoming barriers to business success ... Tony Elumelu Fellows, Edo young icons to lead peer review sessions

ll is set for a mentoring and peer review session for Edo youths, which will be led by the Edo State governor, Godwin Obaseki, representatives of global technology companies such as Facebook, Google, Andela, as part of activities to mark the International Youth Day. Other participants lined up for the mentoring and peer review event scheduled to hold at the Edo Innovation Hub in Benin City, are Oxfam, Curators, the Tony Elumelu Foundation and young Edo icons who are excelling in their various businesses, and ready to share their experiences with budding entrepreneurs in the state, some of whom benefitted from the empowerment initiatives of the state government, through EdoJob. In a statement, the Senior Special Assistant (SSA) to the Governor on Skills Development and Jobs Creation, Ukinebo Dare, said, “Governor Godwin Obaseki will deliver the keynote remarks, while the opening remarks will be delivered by the deputy governor, Philip Shaibu.” She said the event was being organised to celebrate youths and give them a platform to share their experience from the various skills development programmes organised by EdoJobs, speak on their challenges and com-

pare notes with successful chief executives of related businesses. The event, she said, “will feature Pitch Competition, where beneficiaries of the several skills development programmes organised by EdoJobs will share the stage with the Tony Elumelu Foundation, Mandela Washington Fellows and will bear their minds on issues regarding Green/Renewable energy, Information Communication Technology (ICT), Agriculture, Climate Change adaptation.” According to Dare, “There will be a Panel Session with youth-led organisations featuring beneficiaries of skills development training programmes organised by Google, Facebook, Andela, Curators and BudgIT. Dare added that there will be a session called ‘Edo Youth Award’, where awards will be given to youth who have excelled in various endeavours, adding that some of the categories include “Best in Common Entrance, Best Graduating Student (University), Winner of Business Competition, Best Student in Sports, Young Role Model and Award for Ability in Disability. “There will be a Networking Session between youth and the fellows who are beneficiaries of other job creation initiatives,” she said.

L-R: Sola Fijabi, director, PACE Sports and Entertainment Marketing; Ekehuan Eriyamremu, deputy vice chancellor, University of Benin; Oluwatoyin Ogundipe, vice chancellor, University of Lagos, and Folashade Ogunshola, deputy vice chancellor, development services, University of Lagos, at the HiFL Star Match press conference in Lagos, yesterday. Pic by Olawale Amoo

Anambra yet to receive refunds of N43bn owed by FG EMMANUEL NDUKUBA, Awka

nambra State government is yet to receive the refunds of the N43 billion owed it by the Federal Government for projects executed by the state government. “What has just happened is that the process has just begun. We are still far from receiving the funds,’’ Ifeatu Onejeme, commissioner for finance, said. He was reacting to stories by a section of the media congratulating the Federal Government over

thepurportedrefundsofthefunds expended in executing federal road projects in the state. According to Onejeme, the Senate has merely approved a borrowing plan by the Federal Ministry of Finance, under which refunds would be facilitated. “The approved borrowing plan is a long way to actual receipt of the cash by the state. “What will now happen is that the Debt Management Office (DMO), the Central Bank of Nigeria (CBN) and the Ministry of Finance will now work out details of the borrowing plan of

the N37 billion approved, in order todeterminethesourceoffunding of the plan. “Theplanmayalsoinvolvethe Securities and Exchange Commission (SEC), if the instruments to be used will involve them.’’ The commissioner explained thatitwasthesuggestionofAnambra that since there were no immediate cash for liquidation of thedebt,theFederalGovernment could pay through the floating of bonds or promissory notes. “With payments through bonds or promissory notes, the state has the option of waiting for

maturity of instrument and goes through a group of commercial banks to choose the option of discounting the debt for cash. “Asitstandsnow,thereceiptof the cash will depend on how fast the DMO, the CBN, the Finance andSECworkhardatfast-tracking the process,’’ he said. He stressed, “It is premature therefore to talk about cash refundstoAnambra.Thosepraising the Federal Government for the purported refunds should seize deceiving Ndi Anambra that the debt has been paid. There is still a long way to go.’’

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‘Technology will rid corporate debts, boost economy’ JUMOKE AKIYODE-LAWANSON

echnology is the proffered solution to the growing incidences of corporate debts in Nigeria and will usher in an era of unprecedented boom in the country’s economy, Leo Stan Ekeh, chairman of Zinox Group, says. Speaking at the Nigerian Online Merit Awards (NiOMA) in Lagos recently, Ekeh quoted Asset Management Corporation of Nigeria (AMCON) figures that about 350 Nigerians account for 80 percent of its N5.4 trillion debt portfolio. The refusal of majority of these debtors to liquidate their indebtedness is an issue that can be easily resolved through the application of technology, if there exists accurate data of how these debts arose, Ekeh says. He acknowledges that the present debt profile should be a case study for upcoming entrepreneurs or part of the issues to be dissected by data analysts on why some of these businesses failed, noting that this may also reveal a lot of insider compromises on the part of the lenders so that sincere lessons could be learnt and better structure and systems put in place to avert a recurrence “ Wo rk i n g i n c o n c e r t

with the Nigeria Inter-Bank Settlement System (NIBSS), the Central Bank of Nigeria (CBN), Attorney General of the Federation and the Economic and Financial Crimes Commission (EFCC) for enforcement purposes, AMCON can leverage a simple technology application that makes it easy to access the bank balances of debtors across all the various banks in Nigeria. “This will be a mandatory requirement for the extension of loans and credit facilities and will foster more responsible borrowing as the lenders can easily debit the accounts of borrowers upon due date to recover sums extended. “This will not only reduce the growing profile and negative trend of corporate debts, with its attendant detrimental effect on the economy but will also expose many Nigerians who are publicly hailed as billionaires but who are only living large off depositors’ money, while frustrating further lending to start ups,” he said. Disclosing the many ways he has relied on technology to ramp up efficiency in his various businesses and simplify complex processes, he reveals that soon he would be trying out a new Enterprise application that will simplify transaction with bank-

ers, irrespective of the numbers. “This application will give us control over all of our bank accounts instead of relying on bank staff to implement our instruction at their convenience,” he states. He also discloses that the new warehouses recently acquired by e-commerce company, Konga, is being equipped with digital cameras with data analytics and artificial intelligence capabilities that can easily detect fraud and random inconsistencies such as a change in the appearance of an individual or item captured on entry into the facilities. Most importantly, these cameras are cloud based. Urging the government to commit more resources to technology in resolving the unemployment challenges and drive the nation towards rapid development, he cites the influence of technology in the political space, which has reduced post-election litigations from 87 percent to about 33 percent, noting that this will further reduce to about 11 percent with the adoption of e-voting, if funded by the government. “Technology does not lie; it is either you are right or wrong. With technology, you can do unimaginable things. You don’t even need to go through the four walls of a University to acquire quality education,” Ekeh says.

2019: Women aspirants laud Dana Air’s commitment to affirmative action

rospective women aspirants at the coming general elections have at a summit recently organised in Abuja commended Dana Air for its commitment to affirmative action. The women during the summit organised by Women Radio FM 91.7, Nigerian Women Trust Fund (NWTF) and Women in Politics Forum (WPF) commended the airline for not only contributing to the success of the summit, but for showing massive commitment to the aspirations of women in the coming general elections in 2019. The summit with the theme: Working Together for 2019, assembled women politicians who have expressed interest to contest various elective offices in next year’s general elections, was also aimedatenablingwomentowork together and strategise to win more elective positions in 2019. Speaking at the summit, the CEO of Women Radio FM, Toun Okewale- Sonaiya, said, “One critical point on the agenda was to bring women together with diverse experiences to further advance their participation in political processes and governance.

Thursday 02 August 2018

Asaba 2018: Luggage of Kenya athletes trapped at Lagos airport ANTHONY NLEBEM & IFEOMA OKEKE

uggage of some of Kenyan athletes who arrived Lagos since Monday for the 21st African Athletics Championships are still trapped at the Murtala Mohammed International Airport over the inability to get connecting flights to Asaba. The event, scheduled to commence August 1, at the Stephen Keshi Stadium in Asaba, Delta State, was delayed as a result of this development. The Kenyan delegation of about 80 athletes and officials arrived in Lagos at 2pm on Monday but were unable to get a connecting flight to Asaba, which is approximately 500 kilometres away from Lagos. With no scheduled flights to Asaba Airport, organisers have to charter aircraft to ferry delegations from Lagos. But poor organisation has seen scores of athletes, officials and journalists stranded at the Murtala Mohammed International Airport with transfers to

Asaba being handled on a firstcome-first-served basis. With the backlog going three days back, the chartered flights have been unable to meet demand with luggage either lost or misplaced in the ensuing melee. But a close source on ground in Asaba covering the games confirmed to BusinessDay that all the participating athletes for the African Senior Athletics Championships have all touched in Asaba in the early hours of yesterday. “I can confirm to you that all the participating athletes from the 50 countries are here already; the first batch of Kenya athletes arrived earlier and second batch arrived Asaba this morning.” On Monday, chairman of the Local Organising Committee for the 21st African Senior Athletics Championship, Solomon Ogba, told journalists that the ‘few places still being perfected’ would be ready ahead of the August 1 opening ceremony at the newly completed Stephen Keshi Stadium.

Credit Afrique seals partnership deal with Gokada

rédit Afrique Microfinance Bank has announced its strategic partnership with Gokada Rides Limited for the provision of affordable Asset Finance loans to qualified members of the public. The partnership was announced after the signing of the Memorandum of Understanding by the two parties at a ceremony held at the Awolowo Road, Lagos office of Crédit Afrique MFB as it opened its doors for business to the public. Crédit Afrique will provide financing in the form of microloans to trained motorbike riders. The financing scheme will be in four phases, with the first tranche commencing in August 2018. Under the MoU, Gokada will conduct both written and psychometric tests for the intended participants and train them on the operation guidelines, safety, traffic rules and maintenance of the motorbikes before recommending them to the bank for loan disbursement on the purchase and setup of the motorbikes under the scheme for operation. The companies believe that the partnership addresses transportation/mobility challenges characterised by increasing levels of congestion, widespread pollution, road fatalities, and inequity in access in urban cities. In her remarks, a member of the management and board of directors, Esohe Urhoghide expressed the bank’s excitement to partner with Gokada, “ To build safer, more inclusive, and sustainable cities of tomorrow, technology will play a crucial role in identifying mobility gaps and transforming existing transportation infrastructure as we have seen across the world. Our partnership with Gokada is in line with the bank’s mission to boost financial and social inclusion by making connections between viable financing and

innovative solutions for small and medium businesses.” Deji Oduntan, CEO, Gokada Rides Limited, also had this to say; “We are delighted with our partnership with CA and look forward to a mutually beneficial relationship. There is a synergy between our two brands that we feel will result in a profitable relationship and positively enhance the lives of all participants. “Crédit Afrique is a great partner, and this partnership reflects our desire to collaborate with companies that share our vision of disruptive innovation and convenience. Gokada’s passion and dedication to innovation are already well known, and it’s an honour to work with the team. “More importantly, our Bank takes pride in our mandate to be of service to the underserved and capturing the disorganised informal commercial sector that is unserved. A significant challenge around this has been the security of loans and high default ratios. Our focus on building a culture of creditworthiness and technology will aid our efforts in developing sustainable relationships with our customers,” Urhoghide added. Credit Afrique MFB is a customer-oriented bank, which exists to empower a wide array of customers (ranging from salary earners, the unbanked, and micro, small and mediumsized businesses - MSME’s). Providing innovative financial products and services with the aim to create value, build assets, and improve the standard of living. Gokada is a motorbike hailing service in Lagos with an agenda to revolutionise the way people move around making it safe without worries of traffic or exorbitant prices. The scheme is designed to recruit, train and profitably manage commercial motorbike riders in a fleet with the use of an app.

L-R: Patrice Alberti, chairman; Andrew Gbodume, MD/CEO, and Amina Maina, director, all of MRS Oil Nigeria plc, during the 49th annual general meeting of the company in Lagos, yesterday. Pic by Olawale Amoo

Court orders arrest of INEC chairman for contempt of court FELIX OMOHOMHION

Federal High Court Abuja, on Wednesday, ordered the arrest of Yakubu Mahmoud, chairman, Independent National Electoral Commission (INEC), for contempt of court. Justice Stephen Pam, who gave the order, said the INEC chairman had consistently disobeyed court order to appear before it to show cause why he should not be committed to prison for allegedly refusing to recognise Ejike Oguebego as the rightful chairman of Anambra State PDP. Oguebego had filed a contempt charge against INEC and its chairman for their refusal to recognise him as PDP chairman

in Anambra State in compliance with the Supreme Court judgment of December 2014. At the resumed hearing yesterday, counsel to Mahmoud, Adegboyega Awomolo informed the court that Mahmoud was not in the court because he was attending an important national assignment in Mali. The court faulted the letter by Awomolo, dated July 27 to take excuse for the contemnor on the grounds that the defendant had written through the Executive Secretary of INEC, adding that the letter of Awomolo dated contradicted that of INEC dated July 29. The grouse of the judge was that Awomolo claimed in his letter of July 27 that he had been no-

tified in writing that his client will not appear in court because of the Mali trip, whereas the INEC letter relied upon by Awomolo was dated July 29, 2018. Consequently, the judge ordered that the INEC chairman be arrested for his persistent refusal to appear in court and adjourned further proceedings to August 8. The court in a short ruling held that it can no longer tolerate the continued absence of the defedant in the court. Justice Pam dismissed the reason advanced by Mahmoud that he was unable to appear in court as ordered because he was leading a team of electoral officers from ECOWAS states to Mali and that the assignment

was crucial. Justice Pam, who was visibly angry at the refusal of INEC chief to appear before him said that the court will not fold its hands and allow it to be turned into a toothless dog by the defendant. “It is sad that the contemnor and his senior counsel has chosen not to obey the order of this court in respect of this contempt charge. “The contempt of the contemnor to this court can no longer be tolerated and he should not be allowed to continue to take court for granted,” he said. The judge therefore ordered that the INEC chairman be arrested for his refusal to attend court sessions and adjourned further proceedings to August 8.

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Thursday 02 August 2018

BUSINESS DAY

Group calls for women active participation in politics SEYI JOHN SALAU

omen in successful Careers (WISCAR), a not-for-profit organisation, has called on the Nigerian women population to come out and participate actively in politics and governance, at the recently held Meet-A-WISCAR, with the theme ‘Promoting Inclusive Governance’ in Lagos. The WISCAR initiative offers personal assistance to women allowing them to focus on their business, professional and personal needs. It also offers partnership to women in need of help to grow business, career and family, thereby creating a community of like-minded strong women. Amina Oyegbola, founder of WISCAR, said more women should participate in politics to promote inclusive governance. According to Oyegbola, there is a dearth of leadership in Nigeria, hence women must actively participate in politics to move the female gender forward. “We are trying to sensitise women and encourage them to take more active role in politics and in governance, because all our lives are governed by the

policies and laws, decisions that are taken by the politicians that affect our lives. “I feel that women have a key role to play in nation building and politics because everything starts from the family and we are the nexus of the family, and that builds out into the community and the larger society,” Oyegbola said. According to Hafsat AbiolaCostello, guest speaker at the event, the political space in Nigeria needs the energy of the women to balance things up. “It is a very difficult request to make, asking women to come out but when they are not there the needs that they have are not fully understood,” she said. Speaking on theme, ‘Promoting Inclusive Government through Political Participation,’ Abiola-Costello said Nigeria politics is costly, as she urged the women to come together and form a unified voice. “Women should stop working as individuals (silos); if women believe in ourselves, there is no intimidation that would be enough to keep women down. Nigeria currently struggles with women representation,” she said.

L-R: Usoro Usoro, general manager, mobile financial services, MTN Nigeria; Caroline Anyanwu, deputy managing director/ chief risk officer, Diamond Bank; Niyi Ajao, executive director, business development, NIBSS, and Demola Sogunle, chief executive, Stanbic IBTC Bank, at the Mcash Relaunch Event in Lagos.

Election sequence: Appeal Court upturns Federal High Court restraining order on N/Assembly FELIX OMOHOMHION, Abuja

ourt of Appeal sitting in Abuja on Wednesday upturned the April 25, 2018 judgment of a Federal High Court, Abuja, which restrained the National Assembly from taking any action on the Electoral Act (Amendment) Bill, 2018, that re-ordered the 2019 elections sequence. President Muhammadu Buhari had withheld his assent to the amendment as passed by the National Assembly on grounds that some of the sections amended were against the spirit of the Constitution. The five-member panel of justices of the appellate court presided over by the President of the Court, Justice Zainab Bulkachuwa, said Accord Party, one of the registered political parties, which filed the suit cannot stop the National Assembly from taking action on a Bill, which had not become an Act, owing to the

refusal of the President Muhammadu Buhari to assent to it. The court held that, even though the controversial Section 25 of the Bill, which seeks the re-ordering of the 2019 election sequence, was removed and its revised edition was resent to the President for assent, the trial court lacked the jurisdiction to entertain the suit in the first place. The court, while allowing the appeal filed by the National Assembly, held that the Accord Party, which brought the matter before the Federal High Court has no locus standi to institute the suit, since the Bill did not affect its rights or the obligations of the party. “The general interest available to the public did not confer the rights on the party to challenge the Bill,” Justice Bulkachuwa held in the unanimous judgment. According to the judgment, the decision of the trial court in entertaining the suit amounted to a breach of the Doctrine of

Separation of Powers. The court consequently nullified the judgment of the lower court. Justice Bulkachuwa said the suit of the Accord Party on the legality of the powers of the National Assembly on election re-ordering was an academic exercise because the party had no locus standi to have instituted the action. Specifically, the Court of Appeal President said the Accord Party failed to established how its rights and obligations were adversely affected by the election re-ordering Bill other than that of the general interest. The Appeal Court further stated that the Bill had no legal effect to expose it to being challenged on the basis of the violation of the Constitution of the country until it had been passed by the two chambers of the National Assembly and assented to by the appropriate authority. “The Constitution does not envisaged that a suit would be filed to challenge a bill at the

embryonic stage of legislation because it has no binding effect until it has been assented to,” Justice Bulkachuwa said. Although, the Attorney General of the Federation (AGF) had written a letter to the Appeal Court informing it that the controversial election re-ordering provision had been deleted by the National Assembly and thus the appeal overtaken by the deletion of the provision, the Appeal Court disagreed that the matter was overtaken by event because the appeal case had life in itself. Justice Bulkachuwa therefore upheld the powers of the National Assembly to legislate on election and dismissed the suit of the Accord Party (AGF) and the INEC. Recall that the Accord Party through its counsel, Wole Olanipekun, had dragged the National Assembly before the Federal High Court in Abuja, challenging the legality of the powers of the two chambers to legislate on election re-ordering.

Transcorp sees start of exploration in 2019 underpins profit BALA AUGIE

ransnational Corporation of Nigeria plc (Transcorp) will start exploration work next year as it expects revenue from oil to bolster future profit. This was disclosed by Adim Jibunoh, CEO/president of the company, while addressing participants at the Transcorp’s investors’ conference held in Lagos, yesterday. According to Jibunoh, the company plans to convert its oil prospecting licence (OPL) 281 ASSET (located in Delta State) to Oil Mining Lease (OML) for commercial production by second quarter of 2019. “These assets have huge gas deposit more than the petrochemical. Gas constitutes about 90 percent of our

cost. It’s an asset that adds value to our business. “We are looking up to those that will invest. We are looking up to partnership. Our gas expense in a month is N3 billion,” he said. The company says it will commence production on OPL 281 at a minimum of 4,000bpd by 2022, while it plans to participate in bid rounds with a view to acquiring two more assets. Transcorp plans to begin development of petrochemical and fertilizer plant. That same year, by 2027, the conglomerate intends to acquire gas plants, complete petrochemical plant to drive generation of $5 billion in revenues. On his part, an executive director of the company, Christopher Ezeafulukwe, expressed optimism that oil and gas business would

add value to shareholders’ wealth despite the unpredictability and vagaries of oil price in recent times. Oil price fell precipitously to $26 in mid-2014 from a high of $110 due to a supply glut caused by the activities of the shale companies in the US. However, the decision of OPEC members led by Saudi Arabia and Russia to embark on aggressive output cut in November 2016 paid off, as there was an uptick in oil price to $71 per barrel. Analysts expect the price of oil to further increase in 2019 as the shale companies are experiencing stock outs as they are finding it difficult to meet global demand. Also, China, the largest importer of US crude, could impose sanctions on importation the commodity in retaliation to huge tariffs

impose on it by the largest economy in the world. The above scenario could result in increased demand for Nigeria’s crude. Trancorp business segments are contributing to Group profit amid a tough and unpredictably environment, as its performances were impressive in the second quarter. For the first six months through June 2018, Transcorp recorded sales of N54.08 billion, which is double N21.21 billion recorded in 2014. The steady growth in sales was largely driven by income from energy sent out in the last 3 years as the firm’s investment in the power plant has yielded fruit. Revenue from energy sent out hits N29.79 billion in June 2018 from N11.11 billion recorded in 2016.

Ogun urges homeowners to get building approval to avoid disaster

No reason federal allocation cannot improve - Bayelsa

TELIAT SULE

SAMUEL ESE, Yenagoa

ayelsa State government has carpeted the Nigerian National Petroleum Corporation (NNPC) over dwindling federal allocation, saying there was no reason the allocation cannot improve. John Gboribiogha Jonah, deputy governor of Bayelsa State, made comments on the impasse between the NNPC and the Governor’s Forum on Wednesday, while presenting the income and expenditure profile of the state for the months of June and July in Government House, Yenagoa. Jonah expressed worry that while every analysis showed that things had improved, the indications from the NNPC were contrary to the thinking of the Governor’s Forum with regards to remittances. He noted that crude oil exploitation had improved due to reduction in militant activities in the Niger Delta region, just as the naira was devalued by 100 percent, which ought to have resulted in improved federal allocations. In his words: “So, even if you are not increasing, the thinking of governors forum is that as long as you have devalued, you can compensate for the loss of crude oil exported. Now the oil increased, we are always the victims. Niger Delta violence, but now they are out there enjoying, having a field day. Nobody disturbs.

warning has gone to the people of Ogun State to get building approval from the government and avoid erecting structures in disaster prone areas. The state governor, Ibikunle Amosun, gave the warning at the 33rd edition of the distribution of Certificates of Occupancy (C of O) and building plan approval to another set of beneficiaries at the Arcade Ground, Oke-Mosan, Abeokuta. The governor, represented by the commissioner for environment, Bolaji Oyeleye, said people should desist from building in places not approved by the government, such as waterways, under high tension cables and oil pipeline areas. “Those that are building or yet to build should seek for building approval from the government, in order to avoid disasters, such as the flash flood that happened recently in Abeokuta. Please, don’t erect building on waterways, under hightension cables, oil pipe lines and other disaster prone areas,” he said. Earlier in his remark, Biyi Ismail, special adviser and director-general, Bureau of Lands and Survey, noted that the presentation of C of O had been consistent, adding that efforts to increase the distribution from one thousand to two thousand, was in motion. Speaking on behalf of the beneficiaries, Margaret Ebere, appreciated the state government for making them real homeowners.

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Lagos in back and forth battle ... Continued from page 1

and economic hub with an estimated 21 million people is said to be generating about 13,000 tons of waste daily.

L-R: Adeola Ajewole, advert manager and Oghenevwoke Ighure, executive director, digital services both BusinessDay; Femi Oyetunji, group managing director/CEO, Continental Reinsurance plc; Anthony Osae-Brown, editor, BusinessDay; Abimbola Falana, company secretary/legal adviser, and Abayomi Oluremi-Judah, chief risk officer, both Continental Reinsurance plc, during the BusinessDay team visit to the company yesterday in Lagos. Pic by Pius Okeosisi

Defections alter balance of power ahead ... Continued from page 1

of the country.

The APC controlled all the states in the North West (Kano, Jigawa, Kaduna, Katsina, Zamfara, Sokoto, and Kebbi). In the North East, the APC controls Yobe, Borno, Bauchi, Adamawa except Gombe and Taraba which are PDP controlled states. In the North Central, the APC was fully in control of the region until the recent defections. The PDP controlled just one state in the South West, Ekiti State, which it has now lost to APC in the July 14 elections and also 9 out of the 11 states in the South South and South East. But the recent defections from the ruling party has changed that equation. The defections have given the PDP a foothold in the North Central, with the defections of the governor Kwara State, Abdulfatah Ahmed to the PDP and also Samuel Ortom, the governor of Benue State, who also has moved to the PDP. Before the defections, the APC controlled all the states in the region. The defection of Sokoto State governor, Aminu Tambuwal to the PDP, has also given the PDP a foothold in the North West another region that before now had only APC governors. This means that for the first time, since the PDP lost the 2015 national elections, the party now has a foothold in all regions of the country, a position that could give it some leverage in the 2019 elections. Internal wrangling within the APC has also put several more states in the play ahead of the 2019 elections. Kano, the state that gave the APC and President Buhari the

highest votes in the 2015 national elections is now up for grabs by the PDP due to the defection of the former Kano State governor, Rabiu Kwankwaso from the APC. Internal wrangling in Kaduna between the governor, Nasir El-Rufai and the senators from the state also means that all is not well in the state and could impact on the party’s fortunes ahead of the 2019 national elections. Atiku’s influence in Adamawa state also means that the state could be turned against the APC in 2019. Buhari has traditionally had is strongest support in the core north which is now looking shaky with the defections. The monthly job approval rating conducted by NOI Polls shows that while Buhari’s job approval rating stands at just 42 percent nationally, in the North West, it stands at 69 percent and in the North East at 57 percent. Analysts have told BusinessDay that the defections could serve the death knell on Buhari’s ambitions in 2019 as the states, where he had maintained his traditional electoral stronghold are also swinging away from him. They note that the political forces that guaranteed victory for Buhari in the 2015 election are fast turning against him. Buhari’s former allies started the defections in earnest on Tuesday July 24 in the National Assembly when 37 members of the House of Representatives and 14 Senators left the ruling party for the main opposition People’s Democratic Party (PDP). Then came the defection of Governor of Benue State Samuel Ortom two days later, followed by Tuesdays’ defection of the President of the Senate, Bukola Saraki, Kwara

Stocks slump 1.1% as politics takes... Continued from page 1

be a good thing for stability. Investors fear that if the incumbent government does not win, there could be a change in policy or even an eruption of violence in the country which could darken the economic outlook,” Bello added. Nigerian leader Muhammadu Buhari lost a key supporter yesterday in his northern stronghold, a day after the senate president walked out of the ruling party amid a wave of defections to a swelling opposition movement ahead of elections in February. The governor of north-western Sokoto state, Aminu Tambuwal,

left the All Progressives Congress to join the People’s Democratic Party, which ruled Nigeria for 16 years until Buhari’s 2015 win. Dangote Cement, which accounts for 30 percent of the total equity capitalization fell 1.28 percent on Wednesday. Other bellwethers such as Nestle and Nigerian Breweries were also down 2.5 percent and 1.9 percent respectively. The three blue-chip companies who boast a market capitalization of around N6 trillion as at yesterday lost a total of N98.9 billion in a single day, sending the NSE index to its biggest one day loss in the last six weeks.

State Governor Abdulfatah Ahmed, and in quick succession, the Governor of Sokoto State, Waziri Tambuwal also announced his defection from the APC on Wednesday hours after the National Publicity Secretary of the APC, Bolaji Abdullahi, dumped the APC. Reacting to the gale of defections a political analyst, Katch Ononuju, told BusinessDay on Wednesday that the most significant of the defections was that of the Sokoto State Governor, which he said was notable because it indicates that the political and religious bastion of the Fulani Caliphate has also abandoned Buhari. He believes that Buhari may opt out of the presidential race to avoid the humiliation of defeat that now looks looming. “Now we have gotten the Fulani against him (Buhari) by Sokoto Governor defecting. You will now see a real implosion. Kano is gone too because Ibrahim Shekarau has been appeased to allow a working arrangement with Rabiu Musa Kwankwanso and with that now

done, they have now broken away and don’t forget the Emir of Kano is with them. So you have Kano the

political and Sokoto the spiritual and the Deputy Governor has joined them. Kaduna has also left Buhari.” When asked about the South West which appears to be for APC, Ononuju said the South west will fail Buhari because the national leader of the APC and South West political giant, Ahmed Bola Tinubu is not making serious efforts to ensure Buhari’s re-election apart from making his faction of the Action Congress of Nigeria (ACN) to take control of the ruling party. Continues on wwwbusinessday online.com

The worst performer yesterday include CAP (-10%), Royal Exchange (10%) and International Breweries (9.73%). In total, about N126 billion was lost in the market on Wednesday with the three market giants contributing almost 80 percent of the total market loss. “The selloffs is not an indication that the shares are bad rather just investors trying to cash out for different reasons; selling at a higher price than when they bought the shares, moving to safer markets and securities or just selling and keeping it awaiting when they feel the price is low again for them to enter, as these companies stocks still have sound fundamentals”, said Dolapo Ashiru, a Lagos based investment analyst.

The state was seen slowly stepping out of the menacing filth it sank so badly between 2017 and the early months of this year, which had raised serious health concerns among the residents and medical experts, who warned of an imminent outbreak of epidemics unless there was some urgent intervention. In a move to avert the looming disaster, the state government and Visionscape Sanitation Services Limited, the environmental utility company with which the Governor Akinwunmi Ambode-led administration signed a deal as part of its Cleaner Lagos Initiative (CLI), had stepped up actions, and deployed measures which saw a chunk of the refuse that littered everywhere in the metropolis, evacuated. However, a few months after the feat, the waste managers are seen struggling to sustain the tempo, as heaps of garbage are mounting again in the state even as residents continue the bad habit non bagging of waste and indiscriminate dumping in open and unauthorised places. Investigations show that street corners, roundabouts, highways and the inner communities are falling back into waste due to low turnaround time by trucks deployed by the waste managers, with the residents again raising concerns. Maimuna Maibe, Head Product Development Sustainability & CSR at Visionscape, in an interview with BusinessDay says the company has the capacity and enough trucks in its fleet and is approaching the task of giving Lagos the cleanliest environment in a scientific manner.

But Margaret Abiola, a resident of Governor’s Road in Alimoshoa area of the state, is uncomfortable particularly with development at Council Round-about linking Idimu and Liasu Roads in Ikotun, which is becoming a huge dumpsite. Abiola who spoke with BusinessDay described the situation as an ‘eyesore’. She linked the development to what called “lack of capacity” by the waste managers to regularly evacuate waste from the round-about. She observed that “the population of this area is huge, so also the waste generated, noting that “with this in mind, I would expect the waste managers put in charge of this area to be up and running. But what we see here is a situation where the refuse are left for several days decompose,” said Abiola. Chisom Iheanacho, a resident of Okota, feared that unless the government puts pressure on the waste managers, the state is bound to relapse into the filth status witnessed some months back, where motorists drove on waste-littered roads in most parts of the metropolis. Iheanacho regretted that the improvement noticed months back on the Okota Road, off Apapa-Oshodi Expressway, inward Okota Police Barracks from Cele, was fast disappearing, as heaps of refuse now litter the stretch of the road. A resident of Ikate, in Surulere, who identified himself as Solomon, also drew attention to piling waste on Ijesha Road. Solomon equally blamed the resurgence on poor turn-around time by waste trucks, saying “it takes several days for them to come and collect the waste. Most of the times the wastes are spilled on the road and see vehicles run on them,” he said. Continues on wwwbusinessday online.com

Disagreement over offshore fiscal terms... Continued from page 1

final investment decisions (FID) on oil and gas projects in Nigeria.

Major discoveries in offshore fields are yet to proceed to development as IOCs do not see a path to profitability in the proposed framework by the Nigerian government which seeks to raise royalty rates to between 3 and 8 percent and cut back taxes from 85 percent to 70 percent in new production sharing contracts (PSCs). Shell’s plan to expand develop 225,000 barrels per day (bpd) Bonga South West/Aparo, has been unable to reach FID based on disagreement over fiscal terms. The project has been suspended every year since 2016. Other projects that have stalled include 120,000bpd ZabazabaEtan project ; 140,000bpd Bosi project; 110,000bpd Uge project and 100,000bpd Nsiko deepwater project. The 1billion barrel Owowo field development is also waiting on the right fiscal terms among other conditions. In a bid to prop revenues, Nigeria which gifts oil companies zero royalties in deepwater fields, has introduced a 3-percent royalty rate for projects located in depths of over 1,000 meters and another 8-percent royalty rate for fields that produce up to 50,000 bpd on deepwater projects. But the IOCs would not hear it. In other OPEC countries, the IOCs pay royalties either based on

crude prices or production volumes. “But in these countries, they do not operate in the same difficult environment as Nigeria,” says Chuks Nwani, an energy lawyer. “In Nigeria, security is a big issue, there is regulatory uncertainty and contracting issues which raises cost of production for them.” Nigeria’s terms have remained constant since 1993 and even when it recommends adjustment based on the rise of oil prices above $20 bpd, the Nigerian government has failed to enforce it leading to multibillion dollar losses. Countries like Saudi Arabia and United Arab Emirates set their terms according to the capacity of the acreages and prevailing economic indicators such as oil price and output. Crafted in 1993 when scant knowledge about deep offshore production existed, Nigeria’s PSCs were based on less than $20 oil price with anticipated drilling depths of 1,000 metres. Two decades later, Nigeria’s biggest production is far below 1,000 meters and oil prices rose above $100 per barrel prior to 2015. The ministry of petroleum resources in March this year, released the draft of the National Petroleum Fiscal Policy (NPFP), which reviews the rate in the 1993 PSC but it is proposing rates that are not competi tive indus-

try stakeholders say.

Continues on wwwbusinessday online.com

Politics & Policy Thursday 02 August 2018

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BUSINESS DAY

You are welcome back on board, Atiku tells Abdulfatah, Tambuwal

ormer Vice President of Nigeria, Atiku Abubakar has said he was delighted to find himself again having to rejoice with another set of All Progressives Congress politicians for crossing over to the People’s Democratic Party (PDP) in just 24 hours. The former Vice President congratulates Governor Abdulfatah Ahmed of Kwara State and Governor Aminu Tambuwal of Sokoto State as they rejoin the PDP. He also welcomes back to the fold Deputy Governor of Kano State, Prof. Hafizu Abubakar and Nigeria’s Ambassador to South Africa, Ahmed Ibeto. When in December 2017, the Waziri Adamawa said that the APC has to embrace the true tenets of democ-

Uche Secondus, national chairman, People’s Democratic Party (PDP), speaking when the PDP leadership and governors paid solidarity visit to Governor Samuel Ortom of Benue State (right) at the Government House, Makurdi. Sitting from left are Ibrahim Hassan Dankwambo, governor of Gombe State and Darius Ishaku, governor of Taraba State.

racy or lose its soul, he was greeted with hostility and his warnings were scorned.

Oshiomhole swears in Imo APC factional chairman SABY ELEMBA, Owerri

mo State Governor, Rochas Okorocha has congratulated Daniel Nwafor for being sworn-in as the state chairman of All Progressives Congress, (APC), by the National Chairman of the party, Adams Oshiomhole at the National Secretariat of the party in Abuja. The governor noted that with the election of Nwafor at the repeated state congress of the party and his subsequent swearing-in as the state chairman of Imo APC, members of the party, no doubt, have got an active chairman considering what was obtainable in the party in the past four years. The governor remarked that with Nwafor’s wealth of experience in administra-

Oshiomhole

tion and his feat in education, he is fully equipped and enviably prepared to offer Imo APC the kind of leadership that befits a ruling party. He charged Nwafor to pursue with vigour his promise to party members on the day he was elected that he would be chairman to all and would provide a level playing ground for all those with aspirations. The governor equally advised Nwafor to work harmoniously with other members of the state Executive Committee since they are all partners in progress and to reposition the party so that the ugly experience that associated with the past EXCO could be forgotten so soon. He prays that God should, in his infinite mercy, grant Nwafor and other members of the APC State EXCO the wisdom, good health and all they need to do well in the positions they have found themselves in the Party at the moment. The governor thanked in a special way, the National Chairman of APC, Oshiomhole for, not only swearing-in Nwafor, but for also working hard to inject new life into the party, to the glory of God and to the delight of members across the nation.

At that time, Atiku Abubakar had warned that without justice, there could be no

unity and without internal democracy there could be no internal cohesion.

Atiku Abubakar therefore, calls on all true lovers of democracy and progress to, like Aminu Tambuwal and Abdulfatah Ahmed, emancipate themselves from the faux democracy practiced in the APC and move over to the only party capable of entrenching genuine democracy in Nigeria and economic progress for Nigerians. He further calls on the Federal Government to respect the decisions of those now voting with their feet and ensure that they are not persecuted by security officials and law enforcement agencies. Finally, he urges the powers that be to note that the PDP set up quite a number of these agencies to fight crime and criminality and not to fight democracy and democrats.

2019: INEC registers 581,366 new voters in Lagos … Adopts extra measures ahead of closing date INIOBONG IWOK

head of the 2019 general election, the Independent National Electoral Commission (INEC), has disclosed that it has registered additional 581, 366 new voters in Lagos State in the on-going Continuous Voters Registration Exercise (CVR) which began last year April in the state. Head of Publicity of Lagos INEC office, Femi Akinbiyi, stated this in an interview with BusinessDay, noting that the figures were from the twenty local government areas (LGA) in the state, while stressing that about 30, 185 new Voters had equally

changed their temporary voters card to permanent ones. “We have registered about 581, 366 new voters in the state, while people who have change their old PVCs to new ones are 30,185, and this figures are in the 20 local government areas (LGA) in Lagos state. We have also decided to extend registration in all centres in the state from 9am to 5pm, it ends 3pm before, and this new arrangement includes weekends and public holidays,” Akinbiyi said. Akinbiyi added that the commission had extend registration period in all registration centres in the state, which included weekend and public holidays ahead of the August 17th closing date, adding that the commission

decided to end the registration so it could process the large of applications it had received and display the voters register in accordance with the electoral act. He said that the collection of the old PVCs would still be carried out in all INEC offices in local government areas, (LGA) in the state. “We have also decided to extend registration in all centres in the state from 9am to 5pm including weekend and public holidays. The registration would end on 17th of August and there would be no extension, this is to allow us process the applications we have received so far, but collection of old and new PVCs would continue till the election period,” Akinbiyi added.

Osun 2018: Reprieve for Adeleke as PDP members seek withdrawal of case BOLADALE BAMIGBOLA, Osogbo

embers of the People’s Democratic Party (PDP) in Osun State that earlier approached an Osogbo High Court, seeking disqualification of Senator Ademola Adeleke as PDP governorship candidate, alleging that he did not possess the minimum requirement to vie for the post, have indicated interest to discontinue the case. At the resumed hearing on the matter on Wednes-

day, the plaintiffs, Rasheed Olabayo and Oluwaseun Idowu, through their counsel informed the court about their decision to discontinue with the case. It would be recalled that Olabayo and Idowu, approached the court that Adeleke did not possess WAEC Certificate as required by Section 177 (d) of the 1999 constitution. Part of their prayers, was that the court should set aside the July 21st, 2018 primar y election which produced Adeleke as the governorship candidate of

the PDP. When the matter came up last week, Justice David Oladimeji, declined granting the leave to restrain the PDP from presenting Adeleke as its governorship candidate over his inability to present his certificate. He said such order may subject the court to mockery if the lawmaker thereafter, presents his WAEC certificate. Justice Oladimeji, however, adjourned the matter to August 6 for hearing of all applications concerning the matter pending before him.

23 Kwara lawmakers dump APC for PDP SIKIRAT SHEHU, Ilorin

arely 24 hours after the Senate President, Bukola Saraki and Governor Abdulfatah Ahmed defected from the ruling party, 23 members of the House of Assembly on Wednesday also dumped the All Progressives Congress (APC) and embraced the People’s Democratic Party (PDP). The Speaker, Ali Ahmad, who read the lawmakers’ personal explanation on defection, said they have witnessed political alignments and realignments both at the centre and in other parts of the country. “Without any iota of doubt, keen watchers and objective analysts of political events since the All Progressives Congress (APC), assumed power in 2015 are unanimous in their conclusion that the party under which all the 24 of us in this Assembly were elected is far from being one that can lead Nigeria out of the woods. “Unarguably, the intrigues and power play that birthed the long drawn legal battle with key members of the party over fathom allegations coupled with the arbitrary use of government institutions such as the police and anti-corruption agencies for harassment and intimidation of perceived opponents of people in power since APC assumed power have dealt a heavy blow to governance, “ he said

PDP will bounce back to power - Njoku SABY ELEMBA, Owerri

ne of the People’s Democratic Party (PDP), governorship aspirants in Imo State, Jude Ejike Njoku has seen presidential electoral victory afar for PDP come 2019. Njoku an erudite scholar, administrator and a technocrat based his prediction on the recent political happenings where about 15 serving senators, 33 members of the House of Representatives and three serving governors all of the ruling APC defected to PDP. PDP had also entered into a working relationship with the African Democratic Congress, Social Democratic Party, Labour Party and about 30 other political parties with a view to dislodging the ruling APC and take over the mantle of leadership of the country in 2019.

Thursday 02 August 2018

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FINANCIAL TIMES Former HSBC trader wins extradition appeal against US

Apple’s $1tn market value is a moving target

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World Business Newspaper

Brussels willing to accept ‘fudge’ on Brexit pact Vague declaration on future ties would help Theresa May avoid ‘no deal’ departure Alex Barker

he EU is willing to “fudge” crucial Brexit negotiations — and offer Britain a vague blueprint for future ties with the bloc — if it helps Theresa May avoid a “no deal” outcome and win parliamentary backing for a withdrawal treaty. The development comes as the UK prime minister steps up talks with EU leaders, including a meeting with France’s Emmanuel Macron this week. Since the start of talks last year, Brussels, Berlin and Paris have stressed the need for a “political declaration” on future relations that would unambiguously make clear what kind of trade relationship the EU and the UK will have after Brexit. Formal trade talks will begin only after Britain is scheduled to leave on March 29 next year. But the disarray in British politics, as Mrs May contends with opposition from both Eurosceptic and pro-EU MPs, has convinced senior EU figures a change of tack might be needed. At present, they fear there is a “50-50 chance” of a draft withdrawal agreement being rejected by the House of Commons. “The priority is to get the withdrawal agreement done. That will be the dignified farewell,” said one senior EU diplomat closely involved in Brexit talks. “The rest we can see after Brexit.” The declaration on future ties will not be a formal treaty, in con-

trast with the withdrawal agreement, which spells out legally binding divorce terms on money, citizen rights and the Irish border. A fudge would make the declaration an aspirational statement designed to placate Westminster’s warring factions, rather than a blueprint for future trade talks. British officials are convinced that Angela Merkel, the German chancellor, is helping soften the EU’s approach after a more positive meeting with Mrs May earlier this month. One UK official said the chancellor was ready to give Michel Barnier, the EU’s chief negotiator, “more freedom” to close a deal. The UK is now concentrating its efforts on Mr Macron, whom Mrs May is set to meet at his Fort de Brégançon island retreat this week. Another senior EU official said: “The political declaration cannot violate our principles. But with the rest, whatever helps pass a withdrawal bill is fine.” A third EU government minister handling Brexit said: “We will do what is necessary to save the withdrawal treaty”. Under such an approach, diplomats think the political declaration could include references to exploring unprecedented models of future co-operation. The senior EU diplomat said this might include references to the hybrid models for customs that Britain claims would allow it to maintain both frictionless trade with the EU and an independent trade policy.

Facebook uncovers disinformation campaign to influence US midterms Social network removes 32 pages and accounts for ‘co-ordinated inauthentic behaviour’ Hannah Kuchler & Demetri Sevastopulo

acebook said on Tuesday it had discovered the first co-ordinated disinformation campaign aimed at influencing the US midterm elections, but stopped short of accusing Russia of orchestrating the attempt to interfere in American democracy. Facebook said it had removed 32 pages and accounts from Facebook and Instagram that were involved in “co-ordinated inauthentic behaviour”. Sheryl Sandberg, chief operating officer, said it was sharing the information now because one page was promoting a protest scheduled to take place in Washington next week. “Security is an arms race and it

is never done,” Ms Sandberg said on Tuesday. The company has been working with the FBI to address attempts to interfere in the November elections. Facebook has been co-operating with the law enforcement agency since the discovery that a group called the Russian Internet Research Agency had sought to sow division among US voters during the 2016 presidential campaign. Facebook said almost 300,000 people followed at least one of the pages that have been removed. The pages, created between March 2017 and May 2018, ran about 150 ads at a cost of roughly $11,000, but Facebook said the operatives had not been able to run ads since the introContinues on page A2

Michel Barnier, the EU’s chief negotiator, and Theresa May, UK prime minister. Some EU negotiators worry that a vague statement on future relations will store up trouble © FT montage

Ruling Zanu-PF wins majority in Zimbabwe’s parliamentary elections Tension rises as country awaits results from closely fought presidential race Joseph Cotterill & David Pilling

imbabwe’s ruling ZanuPF has secured a parliamentary majority in the country’s first election without Robert Mugabe, raising tensions as supporters from both sides await the results of a closely fought presidential race. By early Wednesday the ruling party led by President Emmerson Mnangagwa had won 109 out of 210 seats, against 41 for the main opposition Movement for Democratic Change, the Zimbabwean election commission said. The results are a blow to the MDC’s leader, Nelson Chamisa. His party has already claimed victory in the presidential contest against Mr Mnangagwa, who was installed by a military coup that

overthrew Mr Mugabe from almost four decades in power last year. Stephen Chan, professor at Soas, University of London, said the parliamentary results suggested Mr Mnangagwa was cruising to a comfortable victory, based largely on Zanu-PF’s strong rural vote. Although there has been great enthusiasm for Mr Chamisa in the cities, in the countryside, where two-thirds of the population live, Zanu-PF remained a formidable force, analysts said. A critical question will be whether the vote was deemed free and fair. EU observers said that an “unlevel playing field, intimidation of voters and lack of trust in the process undermined the preelection environment” despite the largely peaceful vote on the day. The election commission at times

appeared one-sided, said Elmar Brok, the head of the EU team. Mr Chan said the release of parliamentary election results by the election commission was part of a “softening up exercise” to get opposition supporters used to the idea of a Zanu-PF victory. “The delay is for massaging public reaction,” he said, referring to what some have complained was foot-dragging over releasing results. “They want to pull this off without violence.” On Tuesday, Tendai Biti, a senior MDC figure, accused authorities of a “deliberate delay” in announcing what he said was the victory of Mr Chamisa, a 40-year-old lawyer and pastor. Zanu-PF has accused the opposition of deliberately spreading misinformation about its supposed victory as a tactic to confuse the electorate.

Hamptons property sales slow as caution spreads to the wealthy Rising rates and tax changes hit house buying in summer playground of New York elite Ben Foldy

ome sales have slowed down this year in the Hamptons, the Long Island beach communities that serve as a summer playground for the wealthy of New York, bringing the median price below the $1m mark. Second-quarter sales fell 12.8 per cent from 2017 levels, according to data prepared for Douglas Elliman by Miller Samuel Real Estate. The median price dropped 5.3 per cent to a $975,000, compared with $1.03m a year earlier. The spring selling season is usually the high point of the year in the Hamptons, so the drop is stoking concerns that the resort areas of Long Island’s south shore

are succumbing to the pressures depressing property activity in other parts of the US. Rising mortgage rates are increasing costs for homebuyers of all stripes. Higher-end properties have been affected by the 2016 federal tax reform, which imposed new limits on the deductions of mortgage interest and state taxes — the latter a particular concern in high-tax New York. “Buyers [in the Hamptons] are behaving much like we’ve seen in much of the region,” said Jonathan Miller, president at Miller Samuel. “They’re taking longer to make their decisions, pausing and waiting to see how things shake out.” He said sales have slowed most in the “Hamptons middle”

— homes listed in the $1m-$5m range. “The middle is where you have more leverage being used in acquisitions, so rising mortgage rates are a factor, the new tax laws are a factor,” he said. “General uncertainty applies more to that segment than any other.” The inventory of homes listed at more than $4.25m rose 36.5 per cent year on year in the second quarter to 329, according to Miller Samuel. Sales in the luxury market were down 11.6 per cent from last year’s level. “The prices really ran up quickly and a lot of inventory built up,” said John F Wines, a broker at Saunders & Associates in Southampton. “Now sellers have had to get a little more realistic.”

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NATIONAL NEWS

FT Facebook uncovers disinformation...

Belgium to charge journalists €100 a year for EU summit coverage

Continued from page A1 duction of a new system to verify political advertisers. The social network did not accuse Russia of orchestrating the campaign. But Mark Warner, the top Democrat on the Senate Intelligence Committee, said it was clearly the work of the Kremlin. “Today’s disclosure is further evidence that the Kremlin continues to exploit platforms like Facebook to sow division and spread disinformation,” said Mr Warner, adding that Facebook and other companies should “continue to identify Russian troll activity and to work with Congress on updating our laws to better protect our democracy”. Dianne Feinstein, a senior Democrat on the Senate Intelligence Committee, said the discovered showed that “Russia and other outside actors continue to weaponise social media platforms to foment chaos and sow discord within the United States”. The revelation came two weeks after President Donald Trump faced intense criticism for not siding with US intelligence agencies — which believe Russia interfered in the 2016 election — during his summit with Russian President Vladimir Putin. The Russian leader denied that Moscow meddled in the election, but conceded that he had wanted Mr Trump to win because he had advocated improving ties between the countries. The latest move by Facebook comes as lawmakers continue to express concern about potential efforts to interfere with the congressional elections — over everything from attempted disinformation campaigns to efforts to tamper with the actual vote. One congressional aide said lawmakers and the administration were hampered in efforts to prevent interference since they lacked the kind of expertise and information about cyber activity on social networks that companies such as Facebook possessed. “There is nobody in the federal government that has a handle on what is going on,” the aide said shortly after Facebook’s announcement. Another congressional aide said lawmakers were worried that a lack of leadership from the White House over how to tackle cyber threats was sending a signal to adversaries that Congress and congressional campaigns were a “soft target”. Robert Mueller, the special counsel investigating Russian interference in the US election, this month charged 12 Russian intelligence officers with hacking Democratic groups. In February, he indicted the Russian Internet Research Agency, accusing it of using social media to promote causes such as Black Lives Matter and to spread allegations of voter fraud. The pages identified by Facebook in its disclosures on Tuesday included one that tried to stir up tensions by organising a counter-protest to a “Unite the Right” event in Washington on August 10-12. Inviting people to “No Unite Right 2 — DC”, they posted information on locations and transport to encourage people to attend.

Thursday 02 August 2018

Fees will offset costs of providing police and security for Brussels gatherings Mehreen Khan

T © Getty

Apple’s $1tn market value is a moving target Record buyback programme obscures exact number of shares outstanding Robin Wigglesworth

inpointing the moment when Apple will officially become the first trillion-dollar public company is trickier than it may seem, largely because of the company’s mammoth stock buyback programme. On Wednesday, shares in Apple climbed more than 4 per cent after the technology giant reported stronger than expected revenue growth on the back of the success of the top-of-the-range versions of its flagship iPhone. Overall revenues climbed 17 per cent yearon-year to $53.3bn in the third quarter, as profits jumped 32 per cent to $11.5bn. The rising share price means that Apple is moving towards a market capitalisation of $1tn, but the calculations are not clear cut given uncertainty about the number of shares in circulation owing to the extent of Apple’s

buyback programme. The buyback is one of the big reasons investors have been so enthusiastic about the tech group this year and it provides a prop to the company’s market value since Apple can go in and buy shares whenever they are weak. But the programme also obscures exactly how many Apple shares are still outstanding. As of the end of June, the iPhone maker had 4.843bn shares in issue, according to its latest earnings report. That means that Apple should have a total market capitalisation of $1tn when its shares hit $206.49. But buybacks reduce the share count, which makes the $1tn mark a moving target. Apple has already retired almost a quarter of its shares since it started repurchasing its stock in the first quarter of 2013, according to Howard Silverblatt, analyst at S&P Dow Jones Indices. The count will almost cer-

tainly fall further as the company continues to funnel money back to shareholders. For example, Apple’s share count was 5.074bn as of January 19, and at the current rate of buybacks the count will drop to 4.756bn by the time company next reports the number alongside quarterly earnings. In that case, the shares would have to reach $210.25 for Apple to smash past the trillion-dollar mark. “The more they buy, the more the shares have to go up” for Apple’s market cap to hit $1tn, Mr Silverblatt said. Data providers such as Thomson Reuters and indices such as the S&P 500 calculate Apple’s market cap in real time based on the share price and the last public share count — at the moment the April 20 count. Other companies in the race to a trillion also have counts that may be out of date, due to the use of share options, but Apple’s buyback plan makes its fluctuations the most significant.

Tech tumbles test conviction trades of hedge funds Many prominent stockpickers have made big positions in Facebook and Netflix Miles Johnson & Lindsay Fortado

he tumble in Facebook and Netflix shares in July presents a test of what has been one of the strongest conviction trades of some of the world’s best-known stockpickers. Closely watched investors including David Tepper, Dan Loeb and a group of the largest so-called “Tiger Cub” funds made Facebook one of the biggest positions in their portfolios. Viking Global Investors, a $25bn fund founded by Andreas Halvorsen, held a stake in Facebook worth $1.49bn — the fund’s single biggest position — while David Tepper’s Appaloosa held 10.2 per cent of its long US equity portfolio in Facebook, the fund’s second-largest position worth $992m at the end of the first quarter, according to the latest US regulatory filings. Both funds added significantly

to their positions after the collapse in Facebook’s value following the Cambridge Analytica controversy in March. While it is not yet public whether these funds have added to or reduced their positions since the first quarter, their concentrated bets came as an increasing number of closely followed bottom-up stockpickers argue that fast-growing tech companies are actually undervalued by the market despite trading at optically high valuation multiples. Dan Loeb, whose Third Point held Facebook and Netflix as its fifth and seventh largest holdings, commented in his fund’s letter to clients last month that “growth is where the value is”, and that Third Point was “moving from purely an event-driven, value-based universe of stocks to include ‘compounders’ and, increasingly, what are classically considered ‘growth’ stocks”. However, Facebook shares have lost 22 per cent since warn-

ing investors last week of slowing sales and user growth. Meanwhile, Netflix stock has tumbled 17 per cent since the video streaming company disclosed last month that it had added 1m fewer subscribers in the second quarter than forecast. Despite the weakness in both stocks in July, Facebook shares have climbed almost 50 per cent since the start of last year while Netflix stock has surged 180 per cent in the same period. By comparison, the S&P 500 has climbed 25 per cent. “We are happy owning these stocks for longer periods at higher multiples and absorbing the inevitable volatility, particularly in this late-cycle environment,” Mr Loeb said in his letter to clients. “We have also discussed with investors the insight that stocks with unprecedented growth rates have defensible valuations when one extends earnings out two to three years.”

he army of Belgium-based journalists covering EU affairs face having to pay €100 a year to attend the bloc’s summits, in a move that has sparked anger at the country’s government for hindering freedom of the press. Under a Belgian law that came into force on June 1, journalists based in the country will be charged €50 for compulsory sixmonthly security checks needed to attend summits of EU leaders. Journalists from outside the country attending summits will not be charged the fee. EU leaders’ summits, which are formally held every three months in Brussels, are run and organised by the European Council, which represents the bloc’s 28 member states. Policing and security costs for the summits are picked up by the Belgian state. The number of formal and informal summits has increased in recent years as the EU has tackled crises such as migration and Brexit. Literature from the council boasts that the summits “set the agenda for future policymaking and are therefore central to the life of the EU”. “That is why the meetings attract a large amount of media attention. It is not unusual for more than 2,000 journalists to flock to the Justus Lipsius building in Brussels to cover a European Council meeting,” the council says. A statement from the council said the cost for six-monthly journalist security checks would be paid “by employers of any individual undergoing security screening”. The International Press Association (API), which represents foreign correspondents in Brussels, said the law discriminated against Belgium-based journalists and would hurt freelance journalists and smaller media organisations. “[The law] is an unnecessary obstacle to the work of journalists and will restrict media access to events of great public interest,” said the API, which called on Belgian prime minister Charles Michel to reverse the law. The text of the law, which was passed as a royal decree and signed off by Belgium’s foreign, interior, justice and budget ministries, says the €50 fee “may be subject to a reassessment” and could be increased if authorities have to carry out additional investigations or security procedures. Money generated from fees will be distributed to Belgium’s federal police, the country’s national security authority and state security services. A spokeswomen for the European Commission said it did “not like the Belgian law” and that the commission would “not be introducing such a fee”.

Thursday 02 August 2018

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BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Former HSBC trader wins extradition appeal against US Stuart Scott was accused by US authorities of forexrigging Jane Croft

former HSBC currencies trader has won his extradition appeal against the US government which wants him to face forex-rigging charges in New York. Stuart Scott, the bank’s former head of currency trading, went to the High Court earlier this month in an attempt to overturn an earlier court decision that he could be sent to the US to face 11-wire fraud charges, which each carry a maximum 30-year jail sentence. He strongly denies the allegations. Mr Scott, who lives in Radlett, Hertfordshire, was charged by the Department of Justice along with Mark Johnson, his former HSBC colleague, in 2016, in a case in which the US accused the duo of making $8m in profit and fees from “front running” a $3.5bn forex deal orchestrated by HSBC in 2011 on behalf of Cairn Energy, a HSBC client. Mark Johnson, who is also British and Mr Scott’s alleged coconspirator, was found guilty of forex-rigging charges by a jury in Brooklyn last October and was later sentenced to two years in prison and fined $300,000. His was the first jury trial in the world to stem from the forex-rigging scandal, for which banks paid around $10bn in fines. Only US prosecutors have brought criminal charges relating to alleged collusion between banks on foreign exchange transactions. The UK’s Serious Fraud Office opened a probe, but decided in 2016 to drop its investigation. In his decision, Lord Burnett, the Lord Chief Justice, ruled on Tuesday that he would allow Mr Scott’s appeal because it was not

in the interests of justice for him to be extradited. The judge said there were two powerful factors against Mr Scott’s extradition to the US — namely that most of the alleged activities took place in the UK not the US, and because Mr Scott is a UK national and has no “significant connection” or links with the US other than at the time he worked for a bank conducting business internationally. “In these circumstances this court is entitled to say that the [earlier] judge’s overall evaluation was wrong . . . the appellant’s extradition is not in the interests of justice,” Lord Burnett said in his decision. In a statement through his lawyers Gunner Cooke, Mr Scott said he was “very pleased” with the decision but, because the US government had indicated it would appeal, it would not be appropriate to comment further. It is rare for judges to block the extradition of a suspect to the US but there have been a number of high profile cases in which this has happened — notably the case of Lauri Love, an alleged computer hacker accused of hacking into the FBI and US Central Bank, who won his extradition appeal earlier this year. During Mr Scott’s appeal hearing, his lawyers had argued that since the wire fraud charges are not a crime in the UK he should not be extradited to the US. However, Mark Summers QC, a barrister representing the US government, had argued that Mr Scott should be extradited to the US for a number of reasons, including the desirability of linked prosecutions to take place in one jurisdiction and because the Serious Fraud Office had decided not to pursue the forex allegations, meaning there would be no trial of Mr Scott in the UK.

Grain merchant ADM weathers agricultural trade wars Group posts strong quarterly results despite uncertain food commodities market Gregory Meyer

rain merchant Archer Daniels Midland has weathered the start of agricultural trade wars in fine shape, reporting strong quarterly results despite an uncertain market for food commodities. The Chicago-based company operates one of the largest crop trading businesses, purchasing harvests from farmers for processing or sale at destinations around the world. Traditional supply routes twisted ahead of China’s move this month to impose steep tariffs on US soyabeans, a core product for ADM. Yet in the second quarter ended June 30, ADM said operating profit in its origination division, which houses most grain and oilseeds trading, had more than trebled from the same period a year before to $189m. The boost in origination underpinned results across the company. “Our team executed exceptionally well to deliver outstanding results in

the second quarter,” Juan Luciano, chief executive, said in a statement. ADM reported net profit of $566m, or $1 per share and $1.02 adjusted for items in the quarter. Adjusted earnings per share were up 79 per cent from the same period a year before and well above consensus expectations of 78 cents, according to S&P Capital IQ. Shares in ADM rose 5.8 per cent to $50.10 before the New York market opening. The company has the most exposure to the US among global agricultural trading houses. Exports of leftover US soyabean stocks quickened before China’s soyabean tariffs took effect on July 6. Government data showed exports surged to 3m tonnes in May, the most ever for that month. “The dislocations and grain price fluctuations caused by the trade disruptions have been very positive for ADM, which has benefited from record exports out of the US ahead of trade sanctions,” said Farha Aslam, analyst at Stephens.

Stuart Scott, former head of currency trading for Europe at HSBC, departs Westminster Magistrates’ Court in London in 2017. © Bloomberg

Indian smartphone industry finds it’s what’s inside that matters Focus moves to electronics and handset production in response to influx of foreign brands Simon Mundy

t first sight, the leaderboard of India’s top-selling smartphone brands might look like a disaster for domestic industry. In early 2016 a cluster of fastgrowing homegrown companies were flying high in the sector, with domestic names such as Micromax accounting for four of the country’s five top-selling smartphone brands and 45 per cent of total sales. Today, market share estimates from Counterpoint Research show a dramatically different picture. Apart from South Korea’s Samsung, the top five smartphone brands in India are all Chinese, with domestic groups not even making the top 10. Yet the plight of these local brands masks a more encouraging picture for this important area of India’s still sub-scale manufacturing sector. Industry experts had long dismissed the homegrown brands as “glorified traders”, doing little more than assembling Chinese-made kits with even the product design mostly outsourced. Such “screwdriver technology” did little to help drive the broader development of India’s electronics sector. Just as the decline of the local phone groups is not as bad for India as it looks, the rise of the Chinese ones is far from representing a hollowing out of Indian industry.

Xiaomi, by far the top-selling Chinese smartphone brand in India, started having handsets assembled in the country by Taiwan’s Foxconn in 2015, and now says 95 per cent of those sold in India are put together there. Increasingly, this amounts to more than simply slotting together imported kits. In April Xiaomi said it had started local production of the printed circuit boards that are the heart of every smartphone. It made the announcement at a conference of dozens of international suppliers it had invited to India to discuss local investment opportunities. Xiaomi’s actions are more than just a foreign company’s attempt to score local praise. They reflect smart if belated policy moves by Narendra Modi’s government. Onshore phone assembly has boomed since the 2015 introduction of stiff tariffs on imported handsets. Crucially, the government has also taken steps to encourage domestic manufacturing of the parts inside phones. Xiaomi timed the start of printed circuit board production in India to coincide with the April introduction of an import duty on the item — part of a multiyear programme to gradually introduce tariffs on smartphone components, starting with basic accessories such as chargers in 2016 and working up to touch panels next year. By clearly spelling out a tariff

plan and sticking to it, New Delhi has given companies such as Xiaomi the advance warning needed to make investments aligned with its policy priorities. This contrasts with the notorious retrospective tax demands of previous years that gained India a reputation in global business for dangerous unpredictability. The mobile phone sector was among the victims: a giant Nokia factory was shuttered in 2014 after the Finnish company was suddenly hit with demands for Rs50bn ($730m) in back taxes. This month Mr Modi and South Korean president Moon Jae-in attended the inauguration near New Delhi of a Samsung smartphone plant billed as the world’s largest, with annual capacity set to grow to 120m units by 2020. That reflected a recovery in India’s reputation as an investment destination, as well as the sheer scale of the opportunity in its electronics sector. About 124m smartphones were sold in India last year, according to IDC, making it the world’s thirdbiggest market. Sales were galvanised by disruptive new entrant Reliance Jio, with a mobile data price war making smartphones more appealing than ever. Jio has made its own contribution to onshore manufacturing, selling more than 40m units of the $20 JioPhone — a basic “feature phone” targeted at lower-income Indians.

Bond yields and yen lower after Bank of Japan policy decision S&P 500 and Nasdaq rally after three days of losses Edward White & Michael Hunter

he Bank of Japan has defied speculation it may make big adjustments to its stimulus programme, repeating its policy to purchase bonds so that the yield on the country’s 10-year debt remains “at around zero per cent”. After the decision, the yield on 10-year Japanese government bonds (JGBs) was down 4 basis points on the day at 0.052 per cent. That took the benchmark yield off an earlier high of 0.123 per cent, reached on speculation that the BoJ

could open the way for a higher line at which it intervenes to buy the debt. The bank’s commitment to its programme leaves it as the only major central bank not tightening policy. The yield on Japan’s two-year bond held steady at minus 0.111 per cent, reducing the premium demanded by investors to hold longer term debt, once again flattening the yield curve. The yen is 0.7 per cent weaker against the dollar at ¥111.85 per dollar, a six-session low. Tokyo’s Topix was among the worst performers among Asia’s stock

markets, down 0.8 per cent, with financials under the most pressure. The BoJ’s ultra loose monetary policy has attracted criticism for hitting the profitability of banks. The yield on the 10-year US Treasury is down 1.3bp at 2.9617 per cent as investors move into US debt. The prospect of a policy shift by the BoJ carries implications for global bond markets, with any toleration of higher yields there offering a better return on safe Japanese government paper, even as the so-called “risk-free” rate on US 10-year debt remains around 3 per cent.

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Thursday 02 August 2018

ANALYSIS Iraq’s Shia militias: capturing the state The Iran-backed Popular Mobilisation Units were created to defeat Isis but now they are forming political alliances and taking control of parts of the economy

ilitiamen in pickup trucks kitted out with weapons speed through Iraq’s western desert on a mission to AlQaim, a border town that was one of the last Isis strongholds to be liberated. In the video members of the paramilitary Popular Mobilisation Units, known in Arabic as the Hashd al-Shaabi, clamber up a rocky hill in the town, some brandishing US-made M16 rifles, others with Kalashnikovs. A voiceover describes the “bravery” of the PMU and the “fierce war” it fought with Isis in Iraq. But this time, the battle-hardened men are not hankering for a fight. Instead, the video boasts of their role helping rebuild a local hospital after the jihadis were driven out of Al-Qaim in November, just a month before Iraq declared victory over Isis. The video was posted on the PMU’s website, days before the paramilitaries’ recently formed political alliance — Fatah, or Conquest — stormed to second place in Iraq’s parliamentary elections in May. Now, as politicians jockey over the composition of the next government, both the video and Fatah’s strong electoral performance point to one of the most

is the same thing as the National Guards in America . . . this is an internal affair.” The truth lies somewhere in between. Unlike the IRGC and Hizbollah, the PMU, which includes several dozen factions, is not a homogenous movement. And neither Washington nor Tehran want Iraq to become a theatre of conflict, analysts say. As regional tensions mount, with the US, Israel and Saudi Arabia intensifying pressure on Iran following President Donald Trump’s decision to withdraw from the nuclear deal with Tehran, the future role of the PMU is garnering more scrutiny. Some elements of the more pro-Iran militias in the PMU have dispatched forces to Syria to fight alongside the regime of Bashar al-Assad and have issued threats against US interests in Iraq. Mike Pompeo, US secretary of state, has accused Tehran of sponsoring “Shia militia groups and terrorists to infiltrate and undermine the Iraqi security forces and jeopardise Iraq’s sovereignty”. Abu Mahdi al-Muhandis, the PMU’s deputy leader, was designated for sanctions by the US Treasury in 2009 “for threatening the peace and stability of Iraq and the government of Iraq”, and his Hizbollah Brigades militia is

polarising questions in Iraq: will the estimated 120,000-strong PMU force have a constructive or destabilising role in the post-Isis era? To supporters, PMU fighters are saviours who defended their nation in its darkest hour as Isis seized roughly a third of the country — about 8,000 of its members died in the three-year battle, officials say. But to detractors the PMU has become a powerful Iranian proxy and a potentially subversive force in a country that has endured appalling violence over the past 15 years — much of it at the hands of militias that exploited the state’s weakness to stoke sectarian tensions after the 2003 US-led invasion toppled Saddam Hussein. Some Iraqi and western officials fear the predominantly Shia paramilitary groups could become a shadow force, modelled on Iran’s Islamic Revolutionary Guards Corps or Hizbollah, the Lebanese movement that has political and military wings. “It’s an Iranian creation led by people who follow Iran: Iran has the guards, Iraq has the PMU,” says an Iraqi general. Hadi al-Ameri, a veteran paramilitary leader-cum-politician who led the PMU into battle, bristles at such suggestions. “We [do] not accept this. This is the wrong mentality,” says Mr Ameri, who ditched his camouflage uniforms for sober suits to lead Fatah. “This

designated a terrorist organisation. The Treasury said he was an adviser to Qassem Soleimani, the commander of Iran’s Quds Force, and as recently as October a state department spokesman described Mr Muhandis as a “terrorist”. Last week, Mr Soleimani warned the US against threatening Iran: “We are near you, where you can’t even imagine,” he said, according to Iranian news agencies. It was a line that seemed to imply that Iran is prepared to use its troops and proxies outside the Islamic republic to fight the US. Yet for three years, the US, the PMU and, indirectly, Iran, were in effect partners in Iraq with the shared goal of defeating Isis. It is what happens to the PMU next that has a “huge question mark” hanging over it, says a western diplomat in Baghdad. Robert Ford, who was briefly kidnapped by a Shia militia in 2003 during the first of his three stints in Iraq as a US diplomat, believes Mr Ameri would prefer not to take sides between Iran and the US. But if hostilities between the foes “escalate sharply”, his loyalty would be to Tehran. “Ameri and nearly all the Iraqi Shia understand that the American influence in the region sooner or later will diminish, but Iran will always be their neighbour,” says Mr Ford, a fellow at Washington’s Middle East Institute.

Andrew England

Abraaj woes puts Gulf’s corporate governance under spotlight

Many experts have for years warned about weak standards of governance in the region Simeon Kerr & Andrew England

hen the pressure intensified on Abraaj over allegations that it had mishandled investors’ funds, Arif Naqvi, the private equity group’s founder, handed over the reins of the company’s fund business to “drive the necessary operational and governance changes”. The Dubai-based buyout house said the move would “ensure that the firm continues to perform at the highest levels”. But six months on, Abraaj is being broken apart as a courtappointed liquidator oversees a restructuring and Mr Naqvi’s fall from grace has renewed scrutiny on the standards of corporate governance in the oil-rich Gulf. “These developments may have an adverse effect on private equity but also broader perceptions of governance in the region since the issues around centralisation of decision making are ingrained in the corporate culture and need to be addressed across the spectrum of companies,” said Alissa Amico, managing director of Govern, an advisory firm that specialises in economic and corporate governance in the Middle East. Many experts have for years warned about weak standards of governance in a region where the private sector is dominated by powerful merchant families and wealthy individuals. Management teams are often loaded with relatives and individuals who sit across multiple boards. Businesses are

averse to listing on stock markets, which would require them to open their books and provide greater transparency. Financial controls can be weak and banks have been criticised for lending to clients based on reputation. S&P Global warned in a report last year that lagging governance standards can deter international investors. It added that closely controlled company ownership and a general lack of transparency leaves investors “open to the risk of weak management and, in extreme cases, fraud”. Tommy Trask, a director at S&P Global in Dubai, said there had not been significant change in the level of corporate governance in the Gulf since the rating agency started monitoring the issue five years ago. “There is a problem of lack of independent boards, weak control frameworks, and weak transparency and disclosure practices,” he said. “You have a limited pool of people that are qualified for the job, or act on a board, to provide effective oversight when it comes to risk management, controls and so on.” The allegations that have brought on the demise of Abraaj relate to claims it mismanaged money four investors deployed to its $1bn health fund. Mr Naqvi, who has been the dominant figure at Abraaj since he established it in 2002, has denied any wrongdoing. But critics accuse him of hubris and failing to deal with excessive debt at his business quickly enough. This month a court in Sharjah dropped criminal charges against him for issuing a $48m cheque with

insufficient funds after a settlement was reached with Hamid Jafar, an Emirati businessmen who was the complainant. The case related to a $300m loan Mr Jafar made to Abraaj. Mr Jafar was a founding shareholder in the private equity group and his son, Badr, was on Abraaj’s board. Another creditor is Air Arabia, a Sharjah-based budget airline, which made a short-term unsecured $75m loan to Abraaj personally guaranteed by Mr Naqvi, who is on the airline’s board. “We are very angry about Air Arabia,” said one senior Dubai government official. “This related party loan is bad corporate governance — we need companies to sort this out.” Abraaj declined to comment. Air Arabia said its investments in Abraaj had “no significant impact” on its business or liquidity, adding that it was engaged with the courtsupervised restructuring of the private equity group. The initial report of PwC, Abraaj’s liquidator, complains about incomplete financial records. Mr Naqvi’s brother-in-law, Waqar Siddique, was a managing partner with a responsibility for risk management at the firm. Mr Siddique declined to comment. “The conflicts were huge and clear from the beginning,” said Sabah al-Binali, an Emirati investor and commentator. “If you don’t see these warning signs, that’s an issue.” Abraaj’s travails have also brought scrutiny on KPMG, the firm’s auditor. In February, when Mr Naqvi stepped aside from the fund business, Abraaj said it had appointed KPMG to review the investors’ claims of mismanagement. But one senior partner was exasperated by the decision, immediately concerned that a conflict of interest could arise. “It was a terrible mistake,” the partner said. Abraaj’s then chief financial officer, Ashish Dave, who left the company in March, had at different times worked for the auditor and the private equity company. Abraaj returned money to the $1bn healthcare fund, with KPMG exonerating the firm, infuriating investors further. Other audits have since found that Abraaj owes $171m to two other funds under its management.

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NEWS YOU CAN TRUST I THURSDAY 02 JULY 2018

Opinion Benue killings, acute cluelessness and the undiplomatic diplomat

IK MUO Ik Â Muo, Â PhD. Â Department Â of Â Busi-Â ness Â Administration, Â OOU, Â Ago Â Iwoye, Â Ogun Â State Â Â muoigbo@yahoo.com

luelessness is an ordinary term clothed with extraordinary properties and turned into a national sing-song by Lai Mohammed et al, in their sustained and desperate effort to send lucky Goodluck back to the his ancestral village where they believed, he ought to have been, as a fisherman or brewer of illicit gin. And as if that term was factory-made for GEJ, the appellation stuck, thanks mostly to high-wire propaganda spiced with fiction and faction, and concocted by dollarized foreign consultants. Mindless human butchery in Nigeria did not start in Benue and did not start with Benue people. It started long ago in the north where Igbos (and anybody from anywhere after Otukpo was an onye-Igbo) were massacred at will starting from 1966, an action unabashedly coordinated by the northern establishment. The only difference in the recent case is that government is no as directly involved as then but its inaction has convicted it of

FELTED THOUGHTS

OLUGBENGA A. OLUFEAGBA Senior Â Consultant, Â Markets Â Practice, Â Â Kainos Â Edge Â Consulting Â Limited. Â gbengaolufeagba@kainosedge.com

hereâ&#x20AC;&#x2122;s apparently a lot riding on a name and a logo as we learnt at the recent unveiling of Nigeriaâ&#x20AC;&#x2122;s new national carrier, Nigeria Air. The chosen name is so unique that the Minister of State for Aviation, at his presentation, had to gleefully regale us with the process that gave birth to that name. According to him, â&#x20AC;&#x153;we will engage the youths of Nigeria because we do believe in the Not Too Young to Runâ&#x20AC;?.

complicity Anyway, in recent times, it started from Jos and when they have decimated the indigenes of Jos, they tested the waters here and there and then from January this year, Benue became the centre of coordinated killings. The height of it all was when Frs Gor and Tyolaha, along with 15 of their parishioners were gruesomely murdered in the morning of 24/4/18. Ortom became a modern-day weeping governor, asking the powers that be to prevent further attacks and pleading with PMB to come and see things for himself. President Buhari did not visit but rather offered explanations as to why he does not usually rush to crises-prone states and further found it more convenient to party with his support group on the day the long-planned and duly publicised mass burial took place. It is in the Benue killings that PMBâ&#x20AC;&#x2122;s cluelessness was displayed to the whole world. The government gave so many excuses and eventually ran out of excuses. The government defended the herdsmen, justified their bloody adventures, made excuses for them, tried to change the narrative in our very before, and did everything possible to even show that the Benue people, and other victims, were the aggressors. The government told a bewildered world that herdsmen were not Fulani, that they were foreigners, that they were trained by Gaddafi,

that they were bandits and criminals but not terrorists, that coordinated invasion and annihilation of Nigerian citizens was caused by climatic changes as well as cattle rustling, Benue antiopen grazing law and disgruntled politicians. In terms of solution to the non-stop and one-sided bloodletting the government resolved to provide ranches and cattle colonies, import grass for the cows, beg the herdsmen to adopt modern methods of herding. (I have not heard from/of Audu Ogbe in recent times). Its response included sending policemen (our army suddenly ran out of motorized brigade, the type that invaded Kanuâ&#x20AC;&#x2122;s home), directing the IGP to move to Benue, and he did not go and PMB told us plainly that he was unaware, pleading with the survivors not to revenge but rather live in peace with their killers, and termed it farmers-herdsmen clash. An armed group attacks another, kills every moving thing, burns down their farms and houses and then boldly occupy and the government calls it a clash? Anyway, Governor Dickson has settled that when he said Farmers clashing with herdsmen? Letâ&#x20AC;&#x2122;s call a spade a spade! And to cap it all, Femi Adesina advised that it is better to be alive than to cling to ancestral land! We will soon find out (when his tenure expires), whether he is the same Adesina that edited the Sun Newspapers or he is

just one Femi Adesina, as it had happened before in the case of Ibori. There were so many laughable contradictions in the excuses and comments of the government that even the great Lai did not know how to respond. If the carnage is caused by the anti-open grazing law, why did they attack Enugu, Ekiti and Zamfara? If they are foreigners, (which means that the government knows them), why are we treating them with kid-gloves, why should we be asked to accommodate them and give them our land? If it is caused by politicians, why not give them the Saraki-Ekweremmadu-Melaye treatment? More than two years ago (3/4/16) Femi Aribisala released A Compendium of Buhari, APCâ&#x20AC;&#x2122;s Textbook of Cluelessness. But I think he spoke too soon. PMB and his government has shown acute cluelessness in many issues (including their desperate attempt to haunt down Saraki) but the management or mismanagement of these killings stands out as the greatest act of cluelessness committed by Buhari et al. Since they are the authors and finishers of cluelessness, I donâ&#x20AC;&#x2122;t need to interpret it for them. Years ago, I learnt that a diplomat is somebody paid to lie for his government in another country. I am not sure of the source of this definition but I sure liked it and that is why it is still securely stored in my medulla oblongata! The diplomat lies

for and about his government by being tactful and tactfulness is the same thing as diplomacy. Tactfulness is the ability to tell somebody to go to hell in such a way he or she looks forward to the trip. The diplomat also indulges generally in diplomatese, saying the right things at the right time and refraining from ruffling any feathers. He cannot tell the host president that he is naked, even when the president is 100% clothless. If he dared, he would be asked to go home for consultations for interfering in another countryâ&#x20AC;&#x2122;s internal affairs. But this my age long idea of a diplomat changed recently when the outgoing French Ambassador to Nigeria, Mr Denys Gauer, identified impunity and injustice as the factors driving the killings and bloodshed in several parts of the country and that foreigners were not involved. Speaking during the 2018 French National Day in Abuja, he said among other things. I think impunity is encouraging the killings and those responsible must be punished. I donâ&#x20AC;&#x2122;t believe foreigners are involved in the killingsâ&#x20AC;Ś. When there is that kind of killing, there must be proper prosecution and perpetrators must be properly sentenced. If that does not happen, then, it cannot end.â&#x20AC;? So, that is that! Either Mr Gaur is not really a diplomat or he is tired of all the pretenses or because his tour of duty had ended, he decided, as our people

would say, to speak the truth and shame the devil. Since we always agree with all foreign opinions, the government should listen to this undiplomatic diplomat and do the right thing without any further equivocation. But whatever the case, that man has changed my opinion about diplomats. Other maters Just the other day, the government of PMB acted as if Kanu (IPOB) was the only troubler of Nigeria. After an unnecessary show of force, which every normal government should be ashamed of, Kanu disappeared and I had expected some peace but who sai! Now for the past 3 years, the government has been after Saraki, who unfortunately knows the game more than PMB and his cohorts. The CCT trial was turned into a cardinal programme of the state and when it failed, the state moved into robbery allegation. And even when the AGF advised that he saw nothing on the neck of Saraki, the pursuit continues as shown in the recent police blockade. In the past one year, Kogi state has left its demoralized staff and rather concentrated on Melaye. He was accused of gun-running; orchestrating his own attempted assassination and now accused of attempted suicide. When will our leaders face their core duties of security and development, and stop chasing shadows? And why wouldnâ&#x20AC;&#x2122;t people know when the game is up?

Whatâ&#x20AC;&#x2122;s in a name and a logo? Is that a metaphor or it actually refers to the Not Too Young to Run act? Still struggling to connect the dots. He further said â&#x20AC;&#x153;we engaged 400,000 Nigerian youths to arrive at the name of the airlineâ&#x20AC;?. With the non-availability of Air Nigeria and Nigeria Airways, one must commend the 400,000 Nigerian youths for arriving at one of the two available most common naming conventions for national carriers, thatâ&#x20AC;&#x2122;s genius, or is it? The Nigerian youths were, however, too young or is it lazy, to design the logo to go with the name they came up with; this had to be farmed out to a company in Bahrain. As an afterthought engendered by the backlash, the Bahraini company pulled down its first broadcast announcing the branding project, and put up another which

included credit to a Nigerian marketing agency which isnâ&#x20AC;&#x2122;t even incorporated with the Corporate Affairs Commission. One would think that with all the information technology hubs that the Vice President of Nigeria has been conducting photo-ops at, there would at least be one that is worthy of designing a logo for the national carrier under the guidance of a Nigerian aviation consulting firm. There is also a claim that the contract was worth $600,000, which translates to N216m at an exchange rate of N360/USD. I really want to believe thereâ&#x20AC;&#x2122;s no truth in this, but given our penchant for malfeasance, I wouldnâ&#x20AC;&#x2122;t be too surprised if it turns out to be true. Although I think there are more pressing issues the govern-

ment should deploy our hard earned resources to, the idea of a national carrier in itself isnâ&#x20AC;&#x2122;t such a bad idea if done right. For one, we can start taking advantage of all the agreements in place for many of the busy routes that are currently been served by only foreign airlines. Also, since it is meant to be a business venture and not charity, there is the opportunity to earn decent return on investment. There are also those routes that are better served by direct flights, so travelers will not have to first journey East to go West, or South to go North. Imagine a flight from Lagos to Atlanta which is about 18,120km via Dubai, but only about 9,400km on a direct flight, or Lagos to London which is a direct flight of about 5,020km but about 11,400km via Dubai

and 9,840km via Addis Ababa. The problem I see with the project is that it isnâ&#x20AC;&#x2122;t going to be done right, and the auguries are not promising. The government has already decided that it is going to own 5% of the venture, but how that figure was arrived at, nobody knows. In the 2017 budget, N555m was approved for the establishment of a national carrier, and N200m for consultancy. In the 2018 budget, N50mn was allocated for establishment of the same carrier and N20mn for consultancy. The federal government has estimated a preliminary pre-start-up cost of $8.8m and take-off cost of $300m. The name and logo have been decided, the company has been registered as wholly owned by the federal government, with nominal directors from

the ministry, and negotiation with aircraft manufacturers is currently ongoing. For a project that is meant to be private sector driven, Iâ&#x20AC;&#x2122;m wondering what contribution is left for the owners of the 95% stake to make? Will the government be responsible for the $308.8m pre-start-up and take-off costs? I hope at the end of the day we wonâ&#x20AC;&#x2122;t be asked to start praying for government to find collaborators on this project when the expenses government would claim to have made on the project donâ&#x20AC;&#x2122;t stack up. If you intend to own 5% stake in a project, common sense dictates you allow knowledgeable stakeholders with 95% of the equity make contribution from the conceptualization to the take-off stage. Enough of this stupidity!

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