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news you can trust I ** MONDAY 02 DECEMBER 2019 I vol. 19, no 447

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FX reserve unlikely to fall to $30bn, no devaluation on the horizon – CBN

L-R: Isioma EziAshi, non-executive director, Globus Bank; Elias Igbinakenzua, MD/CEO; Babajide SanwoOlu, governor, Lagos State; Augustine Okere, non-executive director, Globus Bank, and Nixon Iwedi, executive director, during a courtesy visit by the Lagos State governor to the Globus Bank head office in Lagos.

Pic by Olawale Amoo

Investors navigate maze of funds amid lack of clarity on fees

See story on P.2

igeria does not see its foreign exchange reserve level falling to $30 billion and so is not contemplating a currency devaluation anytime soon, a senior Central Bank (CBN) official told BusinessDay last night. It had been reported last week that CBN Governor Godwin Emefiele had told investors in London the apex bank would consider a review of its exchange rate management mechanism if the reserves were to fall below $30bn. However, the senior CBN of-

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Inside Unclaimed dividends surge on absence of ‘central portal’ for investor data P. 2

Monday 02 December 2019

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news Unclaimed dividends surge on absence of ‘central portal’ for investor data

L-R: Ezinne Nwazulu, managing partner, 234finance; Francis Sani, acceleration programme manager, CcHUB; Mitchell Elegbe, GMD/founder, Interswitch; Seyi Akinkugbe, CEO, Goodwealth, and Noimot Abiola Balogun of Nigerian Institute of Medical Research, Yaba, at the November Breakfast Chat series at CoCreation Hub, Yaba, Lagos.

…registrars still rely on stockbrokers for physical delivery of transfer forms …situation renders SEC’s efforts in vain

Insurers’ underwriting profit falls by 22.10% in Q3 as expenses mount BALA AUGIE

he largest listed insurance companies’ underwriting profit for the first nine months of 2019 fell by 22.10 percent compared to the same period last year, while industry combined ratio weakened from the prior period, according to analysis by BusinessDay. The industry underwriting income reached N21.87 billion in September 2019, which is lower than the N28.11 billion recorded last year, thanks to rising underwriting and management expenses, while claims continue to mount. “We are making profit but we are not efficient, as evidenced in rising combined ratio, which means management expenses have to be curtailed,” said Owolabi Salami, executive director, Allianz Nigeria.

MARKETS The combined ratio for the 18 largest listed insurance companies climbed to 111.11 percent in September 2019 from 108 percent the previous year, as a range of persistent market pressures continue to challenge the profitability of operators in the industry. The combined ratio is the sum of an insurance company’s loss ratio and its expense ratio. The industry norm is to achieve a combined ratio of less than 100 percent and the target is to bring it as low as possible. The implication is that a combined ratio of over 100 percent equates to an unprofitable company, though insurance companies can still be profitable with combined ratios of 100 percent by having other income streams, such as fee income from asset man-

agement subsidiaries. The continued deteriorating combined ratio underscores analysts’ view that companies have to be more cost-efficient so that they deliver higher returns to shareholders in form of bumper dividend and share appreciation. However, some of them have bucked the trend. NEM, Mutual Benefits, Regency, and AIICO Insurance recorded a ratio of 92.0 percent, 99.40 percent, 92.50 percent, and 96.90 percent, according to BusinessDay calculations. Insurers’ return on equity can’t cover their cost of capital because of rising operating expenses. However, it is expected that all Nigerian service industries have high costs thanks to inefficient energy supply and transportation. Analysts at Coronation Merchant Bank said that cau-

tious underwriting can pass up on growth opportunities and that high costs can also mean high levels of investment in technology to prepare for future growth The cumulative management expenses of insurers quoted on the bourse increased by 22.97 percent (higher than October inflation figure of 11.24 percent) to N46.06 billion while combined average expense ratio moved to 33.0 percent in the period under review from 30.80 percent as at September 2018. A high ratio means a firm is spending more in running its operations to generate each unit of revenue. Tope Smart, executive director, NEM Insurance, said the company’s expenses in each year are based on the topline (revenue) performance, which has enabled it grow profit.

Investors navigate maze of funds amid lack of clarity on fees OLUFIKAYO OWOEYE & OLUWASEGUN OLAKOYENIKAN

egun Peters, a 37year old architect, is considering investing in one of the numerous fixed income-based mutual funds available to investors in Nigeria’s capital market. He has cause for pause, though, as there are close to 50 different fixed incometype funds, ranging from money market funds to bond funds, currently available in the market. “I really have no way of knowing which of these funds have performed well in terms of total returns when compared against each other or who charges the lowest fees,” Peters told BusinessDay on phone. “I think I will just go with the one a friend recommended.” In a world where global fund managers like Van-

Iheanyi Nwachukwu & Olufikayo Owoeye n every 100 investors’ signature specimen forms (transfer forms) a registrar requests from stockbrokers to enable proper identification of a shareholder, less than 50 will be received within the required timeframe. Unclaimed dividend in Nigerian capital market has, as such, risen to over N120 billion, despite initiatives by the Securities and Exchange Commission (SEC) to eradicate or reduce it. Factors seen hindering the total elimination of unclaimed dividend include investors’ identity management, investors’ lethargy in handling dividend-related issues, multiple account holding, moribund stockbroking firms and their customers, and the time it takes the key parties to securities transactions – Central Securities Clearing System (CSCS), stockbrokers and registrars – to respond to requests. Till date, stockbrokers still engage in physical delivery of the transfer forms. The time it takes to deliver

guard and Schwab are competing by dropping fees to zero, Nigerian fund managers are largely not wooing investors on the basis of that metric. Retail investors have been a force behind mutual funds’ growth in Nigeria in the past five years, with assets under management (AuM) up 250 percent since 2015, data from the Securities and Exchange Commission (SEC) show. Money market funds have been the major attraction for investors with the fund type making up 73 percent of AuM as at November 22, according to data from SEC. However, mutual fund investors have no clear way of judging the performance of Nigeria’s fund managers to compare and make informed decisions, a situation that has resulted in a lack of competition among players in the industry. Checks by BusinessDay to www.businessday.ng

various fund management companies reveal fund managers often show a lack of willingness to disclose vital information of charges to prospective investors. Nigeria has seven different types of funds comprising money market, equitybased, bond, fixed income, real estate, ethical, and mixed fund. The total value of managed funds stood at N924.23 billion as of November 22, 2019, according to SEC. In Nigeria, fund managers charge a certain proportion of total managed funds called management fees which are borne by the investors who have little or no information about the performance of these funds. Nigeria ranks among the most expensive countries in the world in terms of fees charged on equity, money market, and other mutual funds or collective invest-

ment schemes, according to data compiled by BusinessDay. For instance, PAC Asset Management charges 1 percent of their assets under management (AUM) annually, and 15 percent of accrued interests for withdrawals within the first 30 days, while Afrinvest Asset Management charges 20 percent of returns accrued on investment for early withdrawal within the lockdown period of 90 days. For SCM Capital Limited, a Lagos-based fund manager which plans to float its money market fund in 2020, the fees come at higher costs. The manager charges 1.5 percent of AUM per year, while any withdrawal made before an agreed period would attract 20 percent of accrued interests. Similarly, Investment

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this form slows the circle of processing unclaimed dividend payments. One of the initiatives by SEC to eradicate or reduce unclaimed dividends is the electronic-Dividend Mandate Management System (e-DMMS), which allows investors’ accounts to be credited immediately they are mandated with the registrars and the relevant banks. The other mechanism is the dematerialisation of share certificates. Already, about 2.82 million investors have enrolled in e-Dividend Mandate Management System. An informed source told BusinessDay that several factors are responsible for unclaimed dividends which he acknowledged remains one of the undesirable features of the Nigerian capital market denying investors the gain of participating in the capital market. He said that while SEC makes efforts to address other causes, it should not ignore the importance of allowing a “central portal” for investors’ data which could

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Several economic development plans fail to lift Nigeria

...as poor implementation stalled Visions 2010, 2020 DANIEL OBI & MICHAEL ANI

he deliberate failure of implementation of a country’s well thought-out visions designed to emancipate its citizens from poverty is clearly an indication of its lack of seriousness. Nigeria, Africa’s largest economy and most populous country, is a clear example of a country that is quick in policy formulations but slow in implementation. Nigeria had in 1996 and 2007 crafted all-inclusive plans embodied in Visions 2010 and 2020, respectively, to launch it into reckoning in the comity of nations, but most of the plans of both visions were either abandoned or haphazardly implemented, leaving the country still struggling with poverty and infrastructure decay. Barely a month from now, for instance, Vision 2020, an economic development plan aimed at catapulting Nigeria into the league of top 20 global economies by 2020, will come to an end without any noticeable form of implementation of the agenda outlined in the plan. The policy document, @Businessdayng

Analysis which was drafted by technocrats in 2007 under the administration of the then President Olusegun Obasanjo, was supposed to, among other things, make efficient use of Nigeria’s human and natural resources to achieve rapid economic growth and translate the economic growth into equitable social development for all citizens. However, 14 years after its documentation, hopes of a better nation as encapsulated in the plan are fading, with Nigeria still faced with several economic maladies including epileptic power supply, weak infrastructure and institutions, among others. The country has now become the poverty capital of the world, according to data from World Poverty Clock, with about six citizens falling into the poverty trap every minute. Beyond Visions 2010 and 2020, Africa’s largest economy has spent huge resources to design other economic development plans but, apparently, without the political will to implement the set agenda.

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Again, Nigeria loses slot in IMO Council seat to Kenya AMAKA ANAGOR-EWUZIE

or two consecutive years, Nigeria has lost an opportunity to return to the Category C of the International Maritime Organisation (IMO) after losing the IMO Council election held in London on Friday to Kenya by one vote. The country polled 110 votes to come 21, one short of the 111 polled by Kenya, which came 20, which is the cut off point for Category C membership of the Council. By implication, West Africa lost its chance to be among the decision making members in the Council, as Egypt, Morocco, South Africa, and Kenya retained their seats in the 20-member Category C of the IMO. Being in the Council brings opportunities and openings for nations to be involved in various decisions that will impact on the maritime sector globally and the country in particular. Gbemisola Saraki, minister of state for transportation, who led the country’s delegation to IMO, said the campaign for the 2021 bid had begun, saying it was a matter of paramount national interest that “Nigeria gets a

seat on the maritime table.” She said the countr y would, as a first task, appraise the factors behind its narrow loss, noting, “We are going to go back to the countries that voted to ask them why they did not think we have done well or why they did not vote for us.” She insisted Nigeria had done remarkably well in reforming its maritime sector to meet the United Nations Sustainable Development Goals (SDGs). She pointed out the milestones in recorded on maritime safety and security, gender equality, and environmental responsibility. However, she was delighted by the determined effort of the Nigerian delegation to campaign for the Category C seat. The Nigerian delegation also included Dakuku Peterside, dirirector general of the Nigerian Maritime Administration and Safety Agency (NIMASA), whose Agency was the lead anchor. Others include Hadiza Bala Usman, managing director, Nigerian Ports Authority (NPA), and among others. It is expected that Nigeria will have another chance for a shot at the Council in 2021, during the next biennial Session of the IMO Assembly.

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Businesses rate facilities at Kano Airport new terminal high Adeola Ajakaiye, Kano

conomic activities in Kano, northern Nigeria biggest market, is expected to scale up in the coming days on the heels of the near completion of construction work at the new international terminal being developed at Mallam Aminu Kano International Airport Kano. The airport, the oldest in West Africa sub-region, established by the British colonial administration during the Second World War, is on the edge of being fully re-branded and made more functional. At the moment, preparations are in top gear towards test running the several worldclass navigation and landing facilities being put in place at the airport, and in no distant future, the terminal would be commissioned for public use. The development of the new terminal at the airport, one of the five situated in

Lagos, Abuja, Port Harcourt and Enugu airports, is funded through a loan secured from China Export Import Bank. The construction work of the five new terminals at the airports, which started under the administration of former President Goodluck Jonathan in 2016, is being handled by Chinese companies. The planned arrangement for the commissioning of the new terminal was gathered by BusinessDay when a delegation of the Kano Chamber of Commerce, Industry, Mines And Agriculture (KACCIMA) led by its acting president, Usman H. Darma, inspected the airport last week. According to observations, one brand new facility near completion at the airport, is a Cargo Terminal, being developed as part of the deliberate effort by the Federal Government to re-invent cargo services at the airport. Kano is a well- known com-

mercial city, and as well as a major market that attracts patronage from as far as Sahel region of West and Central Africa, which depends on an active Cargo Terminal for it survival. Other facility inspected by the delegation, includes a brand new two story building housing the Arrival and Departure Operations at the terminal, which aviation experts said has the capacity to service six aircrafts simultaneously. The delegation also inspected all other facilities provided at the terminal geared at making boarding aircrafts seamless, and pleasant to air passengers. Mohammed Bello Sabogiade, zonal director of FAAN in charge of the airport, told the KACCIMA delegation, during the visit that all forms construction work at the terminal is almost being completed. Sabogiade, revealed that the Chinese Contracts executing

the project are on the verge of handling over the terminal to the management of FAAN, and that President Muhammad Buhari, would in the next few months be visiting the airport to formally commission to the project. “We are glad to be part of the great transformation taking place at the MAKIA airport. Work at the new international terminal which started about five years ago is almost completed, and it impact on activities at the airport cannot be overemphasised. “As you will see in the course of your inspection, all the aviation infrastructure which the Chinese Company handling the project have in place are of International Standard. “The Cargo section of the Terminal is also about being completed, the benefit of this huge federal government investment on commercial activities, and air travel generally in Kano is going to be very huge” Sabogiade stated.

FG announces free passenger service on the new Lagos-Ibadan standard gauge rail corridor MIKE OCHONMA

igeria’ transport minister, Rotimi Amaechi, weekend, announced free train ride for travellers along the

Lagos-Ibadan standard gauge rail line. Amaechi made the announcement on his Twitter handle and corroborated it during the inaugural test run of the service this weekend.

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He noted that the free train ride which started on Saturday, November 30, would end on the first quarter of 2020. He tweet explained that the take-off point was the Iju train

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station in Lagos while the free ride would last beyond the festive period, and urged commuters in the region to take the advantage by saving cost of transportation within the period.

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Nollywood boom hints at needless FG’s protectionist policies LOLADE AKINMURELE

igeria’sprotectionist economic policies have the most unlikelydetractor–the local film industry. In three weeks, Nigerian movie “Living in Bondage” set a box office record of N103 million, the mostofanyothermovie,localand foreign, in that period, according to data by Cinema Exhibitors Association of Nigeria. That’s happened without the Federal Government forcing people to watch only local movies or prohibiting them from watching foreign movies. The box office numbers of

“Living in Bondage”, the sequel of a local movie first shot in the early 90s, beats that of the secondhighest grossing movie, Disney Studio’s “Maleficent”, despite taking twice as many weeks as “Living in Bondage”, six weeks, to hit N96 million. In not-too-distant third is American science fiction “The Terminator:DarkFate”whichtook four weeks to gross N78 million. Previous records set by other Nigerian movies “King of Boys” and “The Wedding Party” show that the dominance of local movies over their foreign counterparts is no flash in the pan. It has been a consistent trend for over two years now. As the quality of local movies

grew, so did appetite for them by Nigerians who are perhaps wrongly adjudged sometimes to be hooked on foreign items. “Nigerians are not necessarily hooked on foreign items; instead they are hooked on quality and affordable items be it foreign or local and the movie industry is proof of this,” an entertainment lawyer at a Lagos-based law firm told BusinessDay. “The government did not have to persuade any one to watch the Wedding Party or Living in Bondage, yet they opted to watch them over foreign movies. That should serve as an example that protectionism is not the only way to go to boost

local industries,” the person who could not immediately secure official permission to speak publicly said. Protectionism refers to government actions and policies that restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition. Typical methods of protectionism are tariffs and quotas on imports and subsidies or tax cuts granted to local businesses. From an abrupt land border closure to restrictions on importation of some items, the Federal Government has been keen to protect local industries against foreign competition. “Investors are confused over

Nigeria’s border closure and are left wondering why the country is building a wall around itself when trade is key to economic development,” one foreign investor told BusinessDay. Nigeria’smovealsocontradicts why it is a party to the ECOWAS Treaty and the Africa Continental Free Trade Agreement (AfCFTA). As the reason for the border closure, the government said it was bothered about the smuggling of rice from neighbouring country, Benin Republic, which left local rice producers with rising inventories. It, therefore, shut the borders altogether to stem the illegal importation of a staple food that the government is determined to

Udensi emerges Most Outstanding Security expert of 2019 IFEOMA OKEKE

ounder of Sheiks and Bishop Limited Security Limited, Chikwe Udensi, has emerged the most outstanding security expert of 2019. The CEO of Sheiks and Bishop Limited emerged the winner at Leadership Excellence Award of Igbere TV. Sheiks and Bishop Limited is a security expert and prime INTERPOL systems consultant in Nigerian. Udensi was honoured after a thorough process of evaluation and assessment, considering every security anatomy of international standards. He was honoured alongside Godwin Maduka, Governor Ifeanyi Ugwuanyi, Senate president, Ahmed Lawan, Sam Onyisi (Peace Mass), Linda Ayade (Cross River State first lady), Chinedum Orji (Abia speaker), Ajibola Abiola (director, Nigeria Broadcast Academy), Femi Adesina, Nkeiruka Onyejiocha, ex-Governor Ibrahim Dankwambo, Satguru Maharaj Ji, Cosmos Ndukwe, among others. Udensi, before now, has won several recognition both locally and internationally. On National and Global security, Udensi is the only INTERPOL Registered Subject Matter expert in Nigeria. His company won Gold at the INTERPOL Innovation Conference in Singapore as the company with the Most Innovative Ideas in Systems Security around the world. In recognition of all his efforts in promoting educational advancements around the country, the University of Nigeria Nsukka in 2018 awarded him a Fellow of Ethical Leadership. In reward of this uncommon administrative prowess, he was awarded a Fellow of Corporate Administration (FCAI) by the Institute of Corporate Administration. Udensi’s immense contribution towards building a robust security architecture in Nigeria and Sub-Saharan Africa, has earned him several outstanding accolades. www.businessday.ng

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produce locally. That may be unsustainable. While rice production has grown over the last decade, local productionvolumesof3.7million metrictonnes,accordingtotheUS department of Agriculture, can only meet around half of total demand of 7 million metric tonnes. The high tariffs on the importationofricehavetriggeredasurge in smuggling, with the relatively higher price of local rice curbing demand. While foreign rice cost about N14,000 prior to the border closure, local rice was going for N18,000, no thanks to a gaping infrastructural deficit from power to transport that drives up the cost of local producers and renders them non-competitive.

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FG set to develop salt deposits in Ebonyi Again, Governor Okowa tasks revenue Expired, spoilt rice being repackaged laboration with the governor board on reforms to enhance IGR found during NAFDAC raid NKECHINYERE OGINYI, Abakaliki

he Federal Government on Friday said it would develop salt deposits located in some parts of Ebonyi State and by so doing generate thousands of jobs for the people, especially youths. Uchechukwu Ogah, minister of state, Mines and Steel Development, who said this during a courtesy call on Governor David Umahi, explained that by the development, salts would be produced in commercial quantities to boost the country’s Gross Domestic Product (GDP). Ebonyi State has large deposits of salt in Ikwo, Uburu and Okposi in Ohauzara and Abakaliki area. As one of the states with solid minerals, Ebonyi is one of the states that the Federal Government would benefit from to diversify the nation’s economy, Ogah said. According to him, the Federal Government had started a project called Presidential Initiative on Development of Salts, and that consultants had been brought into Ebonyi State to look at how salts could be developed. He described the Presidential Initiative on Development of Salts as the first in the history of the country driven by Governor Umahi which, according to him, confirms President Muhammadu Buhari’s love for the South East. “We are here to seek col-

in terms of optimisation of our revenue, working closely with the state government to see how we can increase the revenue of the federal government through royalty,” Ogah said. With Ebonyi as one of the forerunners in terms of solid mineral, Ogah said there are great potentials in the state that fit into the President’s objective of diversifying the Nigerian economy through agriculture and mining to raise the country’ GDP and create jobs. “There is a federal government project which is called Presidential Initiative on Development of Salts in Ebonyi state which we have brought consultants to look at how they can develop the salt project which is the first in the history of this country coming to South East and being driven by the Ebonyi State Governor. This shows that Mr. President loves the South East and the project is to ensure that Nigeria is producing salt in large quantity. So, we want to turn salt into a commercial quantity for the interest of Nigeria. “President Muhammadu Buhari has gladly granted opportunity for this project to be established. Number two reasons of my visit to the state is to discuss with the governor on how to enhance the revenue from the mining sector for the minerals that are being mined in the state,” he said.

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Mercy Enoch, Asaba

overnor Ifeanyi Okowa of Delta State has again tasked the state’s Board of Internal Revenue (BIR) to carry out reforms that would enhance revenue generation by the state government. He challenged the board to ensure that all those who were supposed to be in the tax net were captured. The governor gave the charge on Friday in Asaba while inaugurating Austine Igbine as a member of the Revenue Board. Four members of the fivemember board were inaugurated on Monday by the governor, who announced that the fifth member who was going through confirmation in the House of Assembly would take his turn during the week. Okowa said there were lots of businesses in the state that were doing well, which the revenue board should include in its tax net instead of relying solely on Pay-As-YouEarn (PAYE) for tax revenue. He stated that funds were needed by government to execute its mandate to the people, but deplored prevailing situation where the state was yet to meet its internal

revenue generation target. “It is very important that we increase our taxes without impacting negatively on the lives of our people, particularly those who are living below the poverty bracket. “The journey before you and to others in the DBIR is to find ways of reforming the place and generating revenue in a smart manner where we are able to bring those who ought to be in the tax net to the net. “We must ensure that our people who have viable businesses pay appropriate taxes; we know that it will require a lot of ingenuity to succeed. “It is my hope that you will work with other members of the board to reach out to our people because, our IGR as at today is mainly limited to those who are in the PAYE circle. “There is no doubt that we have improved the tax administration in our state, but there is a lot of room for improvement, because we have not been able to meet the set target. “We should be able to meet and surpass the tax target, because most states of the country have been able to achieve that, so there is no reason why Delta cannot

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CALEB OJEWALE n alarm has been raised on the activities of some people who re-bag expired, spoilt rice into new bags and sell them to unsuspecting members of the public. The National Agency for Food and Drug Administration and Control (NAFDAC) issued this alert in a statement, where it warned the general public on the unscrupulous activities of some business men and traders who revalidate expired rice and also repackage local rice as foreign rice. The agency said its Ogun State office received a report from the Department of State Services (DSS) in the state, of ongoing food fraud at Oke-Aje market in Ijebu Ode. Following this, Enforcement Officers

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of the Agency and its Federal Task Force team stormed the market in company of DSS officials on November 14, 2019. At the market, NAFDAC says miscreants were sighted who took to their heels. However, “Bags of expired rice, caked rice, bags of local rice, bags of popular foreign rice and sealing machines were found in the shops,” according to the statement, after the NAFDAC Enforcement team finally gained access. Three shops were sealed during the operation, according to NAFDAC. The agency emphasised that “expired and caked rice are unwholesome as they contain moulds and microorganism that cause diseases which are of immense Public Health concern.”

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Why should we care: Debts yielding no results Sixth in the series of address delivered at Dowen College, on 7th October 2019

Bashorun J.K Randle

he front-page report of “Nigerian Tribune” newspaper of October 2, 2019 headlined: “Nigeria owes over $90 billion debt with nothing to show for it” – Peter Obi “Vice Presidential Candidate of the People’s Democratic Party (PDP) in the last general election, Mr Peter Obi, on Tuesday lamented that Nigeria has a $90bn (N28tr.) debt portfolio with nothing to show for it. Obi made the disclosure while speaking in Lagos as the guest speaker on the theme: ‘Redesigning the Nigerian Economy with New Ideas,’ on The Platform, a programme of The Covenant Christian Centre. This was just as he equally disclosed that Nigeria, in 2017 spent over N1,6tr to service debt and a total of N2.9 to service debt in 2018, adding: “Yet, there was nothing to show for it.” Obi, who is former governor of Anambra State, said while other nations borrowed to embark on developmental projects, Nigeria borrowed to consume, contending that such situation made growth impossible, just as he pointedly noted that “the problem is not about debt, but what you use your money to do.” According to the former governor, more people now live in extreme poverty in Nigeria than both China and India, the nations with the highest populations in

the world combined, declaring that 98 million people in the country now live in extreme poverty, indicating a growth of over 5per cent annually. “Nigeria is home to the highest number of poor people living in extreme poverty in the world. Nigeria now has more people living in extreme poverty than any other country in the world. Every minute, six Nigerians fall into extreme poverty,” he disclosed. Obi warned that the country is like a keg of gunpowder on the verge of exploding with over 22 million young people in their productive years unemployed, adding: “It is worrisome.” Lagos state governor, Babajide Sanwo-Olu, who also spoke at the forum, appealed to residents for patience over the poor state of roads in Lagos, attributing the condition to the continuous rainfall since he was sworn-in about four months ago, which he said had been slowing down rehabilitation/palliative work on the affected roads. Sanwo-Olu promised that there would be extensive and massive rehabilitation of roads after the rainy season, but added that all the roads cannot be fixed at the same time. What followed on the next day was a bombshell!! Also, on its front page, “Vanguard” newspaper of October 3, 2019 carried the following headline: “Ambode left huge financial debts for Lagos – SanwoOlu.” “Governor Babajide Sanwo-Olu of Lagos State, yesterday, said paucity of funds and huge debts he inherited from his predecessor, Akinwunmi Ambode, were hindering execution of projects. Sanwo-Olu, who said his administration had various programmes to address the current challenges in the state, lamented that the implementation of his development agenda had largely been slowed down by a number of ir-

revocable financial liabilities tied to the state’s resources by Ambode. Beyond a short-term fix that resulted in the ongoing rehabilitation of highways and arterial roads, the governor said Lagos would be expanding the capacity of its water transportation and leveraging Information and Communication Technology to address various challenges in the mass transit system. The governor spoke as a guest at The Platform Nigeria, a yearly programme to mark the Independence Day organised by the Covenant Christian Centre, Orile- Iganmu, Lagos. The church’s senior Pastor, Poju Oyemade, coordinated the session. Sanwo-Olu said: “We have to look at the finances of the state. But I know I cannot give excuses to Lagosians that I met the state in financial mess. It would be meaningless stories. And nobody will ever know the real status of finances of any state until they get there. It is until I got there that I realised how bad we are in terms of outstanding liabilities, financial commitments to local banks and Federal Government’s bonds.” The governor, however said that efforts were on to widen the tax net and amount improve the Internally Generated Revenue (IGR) of the State, which, he said, would be used to fund some of the pending capital projects. Sanwo-Olu, who cautioned critics of his four- month old government, said that the period was “too short” to measure the impact of the administration. “I believe in proper planning of key programmes implementation decisions that would affect lives of the people. Giving details about why Lagos would continue to experience congestion, Sanwo-Olu said more than 10 per cent of the nation’s 180 million population reside in the state.” The repercussions of Sanwo-Olu’s

‘

Nigeria is home to the highest number of poor people living in extreme poverty in the world. Nigeria now has more people living in extreme poverty than any other country in the world

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

Planning a transition from a middle-level manager to an executive leadership role (1)

lmost every role transition – whether in personal or professional life – requires adjustments. Think about it, your role changes when you go from single to married, to when you become a parent and also a grandparent. Likewise, the employee’s role changes as the employee moves from one key organisational bar to the next. The transition from middle-level to executive leadership positions in formal organisations is particularly interesting because many people spend much time working hard to get to transition point that they hardly take the time to prepare for the transition itself. Here are a few points to consider as you plan for this transition. Differences in roles Both roles are different. Executive leaders decide the strategic direction of the organisation and create policy; middle managers lead the execution of strategy and policy. Also, by its nature the executive leadership role covers a wider scope. Therefore, the things you did when you were in a middle manager role that were considered great work may not be considered great work in the executive leadership role. In fact, some of the skills that enable high performance in the middle-manager role can be an impediment to high performance in the executive leadership role. Your organisation’s view of the role My description above of both roles is somewhat generic. Although across organisations there is a fundamental set of tasks associated with the middle manager role and another associated with executive leadership role, some differences in role definition will also exist across

organisations. For example, the role in a smallto-medium enterprise will differ from that same role in a conglomerate; and the role in a hospital will differ from that same role in a fast-moving consumer goods company. It is therefore important that you understand the role from the lenses through which your organisation defines it. Change in focus Across organisations, the transition from the middle-manager to executive leadership role requires a shift in focus from functional to corporate leadership. This means the prospective migrant is expected to engage not just as a master of their function (IT, Finance, HR and so forth) but also as a master of the business. So, you will be required to think strategically, to understand your organisation’s business model, change agency, group dynamics, budget planning and so forth. You will be expected to have a good grasp of function integration – the relationship between all divisions that form the corporate structure, how one arm of the organisation contributes to another and how this can impact the big picture. You will be required to have considerable institutional knowledge – particular and holistic perspectives of the organisation. You will need to understand more deeply the organisation’s technology, its finance, its culture and major sub cultures, its competitors as well as the existing relationships between the organisation and its influencers. There will be attributes specific to your industry and your geographic location – you will need to know that. All this means you will go from wearing one cap – the tactical engagement cap – to wearing two – the strategic engagement cap with which you engage your new bosses, peers www.businessday.ng

and external stakeholders and the tactical cap with which you will continue to engage your reports. Rethinking and redefining relationships The broadness of the executive leadership role means that you will have many questions. Quality relationships will help you find answers quickly. Improving the quality of your relationships means you will have to develop new relationships, retain and walk away from some old ones. You will have to firm up your relationship 360 degrees because you will rely on some of the relationships for information. Particularly your critical North – fellow executives who are senior to you – they have the experience to paint you a picture of what success at your new role looks like and can also point you to the doors that you need to open and those you need to shut for you to do well in your new role. You will also need to firm up your relationship with critical external stake holders – your organisation’s industry regulators, top customers and clients, consultants, key vendors, and so forth – those people and groups who can make your organisation “catch cold when they sneeze.” You will also need developmental relationships – mentors, coaches and in some cases sponsors – to support you through refining your leadership voice and resting your leadership feet firmly on the ground. To connect to the world which – if I may cliché a little – is now a global village, you will need to attend more industry events like conferences in order to engage with people who operate in your organisation’s spaces of interest. Change in leadership style Since the executive leader is required to

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audit report under caption: Post Balance Sheet Events and Key Audit Matters have attained the gravity of nuclear fallout. If we are indeed convinced that we can rely on those who have been awarded prizes at the 22nd Prize-Giving Day of Bowen College as being sufficiently equipped to deal with the mess we have created, so be it. why should we care, anyway? Perhaps we should pause to reflect on the extent to which parents are willing to go in our desperation to ensure that our children gain admission to the best universities in the world in order to get them into the lane reserved for the elite in their pursuit of their future careers. A case in point is the scandal unfolding in America which has engulfed famous names such as Felicity Huffman, Lori Loughlin and her husband Mossimo Giannulli among others and has embarrassed several Universities including Georgetown, Yale University, Stanford University, the University of Texas, and the University of California Los Angeles etc. We cannot but commend Dowen College, especially the teachers and parents for their tradition of excellence and enduring commitment to be the best – by developing exceptional talents who can hold their own anywhere in the world. They are the ambassadors – having been found worthy in learning and character. Added to this of course is the spiritual dimension which has been captured in the message from the desk of the Principal, and Head of School, Adebisi O. Layiwola: “Great indeed is God’s faithfulness.”

Nnimmo UCHORA Bassey UDOJI make apt judgments and decisions on a broad range of issues you will be compelled to delegate more – to spread the load. This implies that you will not be as “hands on” on task details as you were in the middle manager role. The quality and timeliness of your decisions will depend on your teams; your performance will depend on their performance. Therefore, you will need to ensure the growth and development of the leaders at the different layers below you. Especially if you typically tend to seek task perfection, you will also have to learn to let go and trust that others will carry out tasks well; and, while not tolerating mediocrity, you will have to learn to live with task outcomes which while imperfect are suitable for purpose. To get your teams to deliver on top quality and on time, you will have to apply a variety of leadership styles. So, for instance, your communication style will have to change. You will need to understand how to communicate with purpose, to listen more and speak less, and when you do speak, to speak to listen. And because you will more frequently work with teams of peers, you will also need to adopt a change in tone and style when you assign team tasks. Dr Udoji is a Senior Lecturer in Organisational Behaviour and Human Resources Management, Lagos Business School, Pan- Atlantic University. She has written this article in conjunction with the Christopher Kolade Centre for Research in Leadership and Ethics (CKCRLE) at Lagos Business School. CKCRLE’s vision is creating and sharing knowledge that improves the way managers lead and live in Africa and the World. You can contact CKCRLE at crle@lbs.edu.ng.

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Nigeria’s fast growing but opaque funds management industry

Patrick Atuanya

oney Market and other funds have grown fast in Nigeria in recent times, because for as low as N5, 000 (five-thousand naira), they provide an attractive alternative to savings or fixed deposits with banks, due to higher interest rates (between 10% and 13%) investors can earn, compared to savings deposit rates of about 3 percent or fixed deposits at 8 percent on average. Mutual funds work as collective investments that join various individual contributions of investment capital to create a large pool of funds. It spreads the pool of funds across dozens of investment instruments in the stock market and other predetermined investment targets. The investment target where the fund will be invested is clearly stated, which enables investors select the funds that meet their own desired investing characteristics. Total assets under management (AuM) by Mutual fund

providers in Nigeria including ETFs stood at N929.3 billion ($2.5 billion), as at November 22, 2019, according to latest data from the Securities and Exchange Commission (SEC). Of this amount Money market funds made up a hefty 72 percent of the total, followed by fixed income funds 13.52 percent, Real Estate 4.99 percent, Bond funds 3 percent, mixed funds 2.58 percent and Equity based funds 1.14 percent. The first modern-day mutual fund, Massachusetts Investors Trust, was created on March 21, 1924. By 1929, there were 19 openended mutual funds in the U.S.A competing with nearly 700 closedend funds. In 1971, William Fouse and John McQuown of Wells Fargo established the first index fund, a concept that John Bogle would use as a foundation on which to build The Vanguard Group, a mutual fund powerhouse renowned for low-cost index funds. Today in the U.S. alone there are more than 10,000 mutual funds. In Nigeria, there are about 90 different types of Mutual Funds and ETFs currently available for investors to buy into, however scant data (on expense ratio, relative performance or fund manager history) is available, which prospective investors can use to rank or rate these funds to enable them make informed buy decisions.

Take the expense ratio which represents all of the management fees and operating costs of a fund. A mutual fund’s expense ratio is very important to investors because fund operating and management fees can have a large impact on net profitability. It is calculated by dividing a mutual fund’s operating expenses by the average total naira value for all the assets within the fund. Currently a lot of funds do not have this data readily available for prospective investors. Another major issue that confronts prospective investors is relative performance of a fund. Assuming an investor wants to put N1, 000,000 into an equity based mutual fund because he/ she does not trust his/her stock picking abilities. Today there are twelve (12) such funds available on the market from fund managers that include Stanbic IBTC Nigeria Equity Fund, Chapel Hill Denhams Paramount Equity fund, Meristems Equity market fund, FBN Smart beta equity fund and Axa Mansards Equity Income Fund to name a few. The problem lies in the inability of the prospective investor to make an informed choice from these set of funds. Questions such as which equity fund manager outperformed its benchmark or other funds in its class over a 1, 3 and 5 year period or comparing expense ratios to gauge cost of investing in each

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In Nigeria, there are about 90 different types of Mutual Funds and ETFs currently available for investors to buy into, however scant data (on expense ratio, relative performance or fund manager history) is available, which prospective investors can use to rank or rate these funds to enable them make informed buy decisions

Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Delayed policy gratification and another flashback to the 80s

y last column was on the difficulty in reversing bad policy and how decision makers, thanks to politics and other issues, find it difficult to backtrack even when they know a policy has failed. This week I want to take it further and talk about policy lags. As you may expect, policy takes time to work its way through the economy. If you implement a policy today it takes some time before you start to see the results, whether positive or negative. For example. If policy makers decide that they want to raise interest rates to reduce inflation, it takes time from when they announce and implement the interest rate increase until the effects on inflation start to show up. Sometimes it takes months or even years. This delayed outcome is a feature of most policies, even those whose outcomes turn out to be negative. If policy makers decide to close the border for instance, it will take time before the negative effects on inflation and productivity start to show up. Or if policy makers decide to split the securities market into two, it takes time for the dislocation in the market and the outflow of

liquidity to flow into other less desirable alternatives. Or if policy makers decide to force banks to lend using regulatory muscles. It takes time for the new risky lending practices to show up as non-performing loans. You probably get my drift. Any policy, even if it has good or bad outcomes, takes time to mature and show results. And as the famous saying goes “time waits for no man” or woman. The implication is that policy makers have to think about policy properly before deciding on a path. Especially policy makers who have a fixed four-year mandate to deliver. There really is no time for experimenting. But this is a real conundrum for the electorate: if all policy takes time to show results then how do you know if you are being led in the right direction or down a destructive rabbit hole? Another debt flashback to the 80s The current administration has tabled a request to the National Assembly to allow it borrow some 30 billion US dollars externally. The borrowing is to allow them to execute some key infrastructure projects across the country. Projects which are “critical”. For context, Nigeria’s total external debt as at June of this year was just over $27 billion. So, this prowww.businessday.ng

ECONOMIST

posal is essentially seeking to double the current external debt. For even further context, the federal government spent 54 percent of its actual revenue in 2018 and the first half of 2019 servicing already existing debt. I will leave you to solve the math here. There are of course significant infrastructure challenges which need to be tackled. Power plants, railways, bridges, and so on need to be built. No one can debate that. But there are two ways to tackle this. The “easy” unwise way which is essentially government borrowing money against its balance sheet hoping that it will generate enough tax revenue to service and repay those loans. Then the hard more prudent way, which is to structure these infrastructure projects so that they generate revenue on their own and allow the private sector to invest in them. So far, the government seems to want to go the “give us money to build it” way. We all know how that ends. As my friend likes to say, “it will end in tears”. It is not only that the government will borrow that amount and the infrastructure will fail to materialise, but that kind of borrowing will cripple the government’s balance sheet. And because the debt is in

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fund is pretty much impossible to discern. Nigeria’s fund management industry must step up and make sure these data sets are available in a public, timely and easily accessible manner, to enable the investing public make the best possible investment decisions. Today most investors continue to retain their mutual fund provider, not for any major reason such as superior returns, or lower expenses, but intangibles like familiarity. This is something the fund management industry as a whole should be worried about as FinTechs gradually sweep the financial services space, bringing a promise of innovative services that can lead to churn for entrenched providers. The Pension Funds Administrators (PFAs) with some N9 trillion in assets under management are also candidates for disruption in terms of bringing more clarity and competition to the space. Most Pension contributors today cannot switch PFAs, and are stick with those who are underperforming compared to benchmarks or peers. This is a situation that the regulators should be bold to bring about change of behavior for the benefit of investors and the industry as a whole.

NONSO OBIKILI US dollars, every devaluation of the Naira which historically is at 14 percent a year, will put the mostly Naira earning government further into debt. And as much as we want infrastructure, we know that a country with a bankrupt government is worse than one lacking infrastructure. If all this sounds familiar it is because we have been here before. It is a replica of the borrow dollars to build infrastructure policies of the 80s which left us with no infrastructure but with the debt around our necks. Debt that crippled government and the economy for almost three decades until we successfully begged for forgiveness. Unfortunately, it seems like the current National Assembly shares many characteristics with a rubber stamp so there may be no resistance to this new debt binge. Which way Nigeria? Dr. Obikili is the chief economist at Business Day

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Monday 02 December 2019

EDITORIAL Publisher/CEO

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

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GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Powering economic growth through gas

as can catalys e e c on omic growth. Nigeria has more potential in gas than oil. It has natural gas in abundance – 202 trillion cubic feet (TCF) of proven gas and 600 TCF of unproven gas, the largest in Africa and the ninth largest in the world. The reserves in gas are estimated to be three times the value of its crude oil. Yet just over one-quarter of those reserves are produced or used. Nigeria’s gas potential offers opportunities in the upstream, midstream and downstream of the value chain. The future of the country, it’s aspirations for industrialisation and socio-economic development depend on harnessing this potential. Oil majors and independents as well as other players along the value chain are keen on the evolution of gas as the world prepares for a world after oil. Yet there are barriers to tapping this potential. Nigeria, though energypoor, has the capacity to generate 12GW of electricity but

less than half is available. An ineffectual power infrastructure is hampering economic and social development. Nigeria spends N5.74bn daily as interest on money borrowed from foreign and local lenders. The economy is forecasted to grow by a marginal 2 per cent if oil prices remain around $60 a barrel. Our laws, like the domestic supply obligation which puts a cap on the price of gas sold locally, are outdated and obsolete. Investors eye Africa’s gas. The continent is considered the dominant investment destination for gas in 2019. As much as $103 billion could be invested in Greenfield gas projects in Africa – one-third of the total planned globally. Other than the $12 billion investment plan to expand Nigeria LNG which could see production increase from 22 million to 30 million tonnes per year; Nigeria isn’t on the radar. To attract more investments in the oil and gas sector, responsible for a significant portion of government revenue, must

be reformed. A review of electricity tariffs based on market prices that reflect the costs of inputs must factor the price of gas, among other variables. Gas is central to electricity generation as 50 percent of power generated in Nigeria is from gas-fired plants. Attempts to reduce gas flaring through a commercialisation programme coincide with efforts to ramp electricity production in Nigeria. Unlocking and harnessing gas potential in order to increase power supply to homes and factories is a priority of the federal government. Nigeria’s huge gas potential could support the aspirations of government to raise living standards through sustainable economic growth and diversification In addition to gas-to-power, demand for petrochemicals, fertilisers, and infrastructure for the gas value chain are among the potentials of gas as a catalyst of economic development. Experts say what is missing is “smart regulation” to move Nigeria from being an oil-depend-

ent economy to a gas-driven one; regulations that encourage long term investment. Regulatory reforms must be bold about solving challenges such as gas pricing, unreliable gas supply, poor gas infrastructure, and power sector liquidity issue, ineffective regulation of the energy value chain, and concentration and control of gas resources within a limited set of license holders in the country. The reforms must be focused on catalysing regular power supply, keeping the lights on in factories and other gas-based industries, making it easier for entrepreneurs to thrive and generate jobs. While Nigeria seems to be dilly-dallying, Trinidad and Tobago is a good example of a country that has accomplished much with its gas resources. With a small population of 1.4 million and only 11Tcf of proven gas reserves, the country has developed a globally competitive petrochemicals industry. Today, Trinidad and Tobago is the world’s largest exporter of ammonia and second-largest exporter of methanol.

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Monday 02 December 2019

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Where are Buhari’s economic gurus when Nigeria needs them? global Perspectives

OLU FASAN

n September this year, President Muhammadu Buhari constituted an Economic Advisory Council, EAC, headed by Doyin Salami, an academic at the Lagos Business School and, for eight years, member of Monetary Policy Committee of the Central Bank of Nigeria. Other members of the council are Chukwuma Soludo, former governor of the CBN; Ode Ojowu, an economics professor and former chief executive of the National Planning Commission; Bismarck Rewane, a respected financial expert and commentator; Shehu Yahaya, chairman of the Development bank of Nigeria; Iyabo Masha, a former IMF official; and Mohammad Sagagi, a development economist. The constitution of the EAC is, arguably, the most positive decision that President Buhari has taken on the management of Nigeria’s economy since he assumed office in 2015. Throughout his first term, Buhari shunned economic technocrats; he did not have any credible economic team or advisers. And he started his second term by appointing a cabinet made up entirely of career politicians and party loyalists, none of whom can remotely be described as a reputable economist. The acute lack of economic technocracy was a gaping hole in Buhari’s government, which is why it’s hard to underestimate the significance of his decision to constitute, if belatedly, a high-profile team of economic advisers. But here’s the question: can they really influence the substance and delivery of economic policies? In a sense, the EAC members are “technopols”, a term coined by the economists Jorge Dominguez and Richard Feinberg to describe economic technocrats who operate in a political environment. And, according to John Williamson, the renowned economist, technopols

must have two sets of skills. The first is that they must be applied economists who can judge what institutions and policies are needed to achieve positive economic outcomes. Then, second, they must have the political skills to persuade others to adopt the policies that they have judged necessary to bring about the desired economic outcomes. Few would doubt that at least some of the members of the EAC possess the skills of successful applied economists. But are they able to persuade the president and his government to adopt the policies needed to turn Nigeria’s ailing economy around? Put more specifically, can they turn Nigeria from a dirigiste, statist, mercantilist, closed economy to an open and competitive economy where the markets, not the state, allocate resources? The sole objective of economic policy is to promote the general good. But how? Well, as Williamson argues in the book “The Political Economy of Policy Reforms”, the general welfare will be promoted by a combination of competitive markets and integration into the world economy through open trade policy. Price stability and a unified exchange rate are also part of the toolkit for a welfare-enhancing economic system, as are the rule of law, property rights, economic deregulation and privatisation. These economic institutions and policies create the incentives for the emergence of a free enterprise, wealth-creating and poverty-reducing economy. The market economy system is the route to prosperity! However, President Buhari’s statist, interventionist and protectionist instincts run contrary to the necessities of an open, competitive market economy. He believes more in the power of the state than in that of the market to drive economic progress. When President Buhari called for “homegrown” solutions to Nigeria’s economic challenges, what he really meant were unconventional or unorthodox policy measures, such as those favoured by the central governor, Godwin Emefiele, which isolate Nigeria from the world economy. But how many members of the EAC share Buhari’s economic worldview? It is not clear how many of them have

the post-war development mindset, popularised by Latin American development economists, such as Raúl Prebisch and Hans Singer, that importsubstitution and the attendant protectionism, rather than a free market economy, are the solutions to Nigeria’s underdevelopment. Given that members of the EAC were invited to help revive Nigeria’s comatose economy, it’s important that they are be able to judge correctly the institutions and policies needed to do so. But they can’t judge rightly if, like Buhari, they believe in import-substitution and the Utopian idea of economic self-sufficiency. That said, we know that at least one member of the EAC does not believe that Nigeria should become an autarchy. Professor Soludo stands out as someone who, through his writings and speeches, is a strong advocate of the market economy system. Indeed, he’s called for a holistic approach to tackling Nigeria’s economic underdevelopment. In a recent speech titled “Economic and institutional restructuring for the next Nigeria”, Soludo argued that “it will be difficult to have a competitive and prosperous post-oil economy of the future with the same legal and institutional foundation designed for consumption of oil rent”. He has long argued that to create a post-oil competitive economy, the existing constitution must be fundamentally altered. In an earlier speech, titled “Avoiding the mistakes of the old Buharinomics”, Soludo cautioned against the return of the protectionist measures that Buhari introduced as military dictator in the 1980s, such as indiscriminate bans on imports. There are other members of the EAC, such as Doyin Salami and Bismarck Rewane, who hold broadly liberal economic views. But what advice are the EAC members giving to President Buhari? Of course, they are not expected to give their advice to the president on the pages of newspapers or shout them from the rooftops. But we should know what advice they are giving, or what influence they have, by the actions of the president and his government. So, for instance, what advice did members of the EAC give to the president on the recent closure of Nigeria’s land borders? Given that, as the Financial Times recently reminded

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But what advice are the EAC members giving to President Buhari? Of course, they are not expected to give their advice to the president on the pages of newspapers or shout them from the rooftops

us, “the blockade echoes one that Mr Buhari instituted as military dictator in the 1980s”, does Soludo see it as one mistake of the old Buharinomics that should have been avoided? Well, the truth, let’s face it, is that the EAC is constrained in many ways. First, its members are unlikely to have a common, coherent view of what should be done. Second, they do not command what Williamson calls “the instruments of concentrated executive authority”. Third, they have at the top a political master, the president, who is impervious to the vision of Nigeria as an open, competitive market economy. Finally, they operate in an environment where there is no desire, let alone the urgency, to embark on a comprehensive programme for transformation of the economy, the type that Soludo advocates. The late economist Marcur Olson propounded the crisis hypothesis, arguing that a major crisis opens the door to policy reform. But what policy reform has emerged from the ashes of a crisis in this country? None! Nigeria has suffered repeated oil-price shocks, putting its economy out of kilter, but has that triggered a reform to build the country’s non-oil export competitiveness? No. Take the “widespread” smuggling and dumping that the government blamed for closing Nigeria’s land borders. Shouldn’t the smuggling/dumping crisis trigger a reform to build critical institutions, such as transforming Nigeria’s corrupt and ineffective customs and border agencies and creating a robust trade remedies regime? But instead of such institutional and policy reforms, there’s a knee-jerk, counter-productive response: border closures! Which inevitably raises the question: Where are Buhari’s high-profile economic gurus? Surely, they should be steering the government away from bad policies. If they can’t influence the substance and direction of policies, one might wonder what they are all about. Yet, they’ve put their technocratic credentials on the line. They must guard them jealously! Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Dealing with conflicts of interest in the boardroom

conflict of interest occurs when an individual is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other. It is inevitable that Directors will face situations of potential conflict of interest with the companies they serve. The “Agency Theory” postulates that shareholders are principals and Management their agents. The agents therefore need to be monitored in order to ensure that they protect their principals’ interest effectively. Corporate governance principles aim to curtail the agent’s “propensity for self-interest” and misconduct by having an independent board which should ensure that Management delivers value to the owners and all stakeholders. Accordingly, the Director as a member of an “independent board” is expected to subject his interest to that of the company. The interest of the Company shall at all times be the dominant interest. The Companies and Allied Matters Act places the Director in a fiduciary relationship towards the company and requires him/her to ensure that his/her personal interests do not conflict with his/her duties as a Director.

He/she must act with utmost good faith, in the company’s best interests and cannot fetter his discretion nor make secret profits. The SEC Code of Corporate Governance provides that companies should “adopt a policy to guide the Board and individual directors on conflict of interest situations”. A Director is required to disclose any conflict of interest that he/she may have and abstain from discussions on such matters. Where he/she is not certain whether he/she is conflicted, it is best to seek guidance from the Chairman or the Company Secretary. Similarly, Directors who are aware of a conflict of interest on the part of a fellow Director, have a responsibility to raise the issue. Disclosure by a Director of a conflict, or a decision by the Board as to whether a conflict of interest exists should be recorded in the minutes of the meeting at which the notice of interest was made. The NAICOM Code of Corporate Governance extends disclosure requirements to employees, whilst the CBN Code of Corporate Governance obliges Directors to disclose the fact where they or entities related to them provide services to the respective bank on whose Board they serve. www.businessday.ng

Directors do not live within the prism of their Board membership but have a range of other personal and professional interests. It is no surprise, then, that they will come across real, potential or perceived conflicts of interest. Indeed, the interests of a Director’s or his/ her nominator to the Board may sometimes conflict with the overall interest of the Company. A typical example is where the Board is considering a proposal to commit substantial funds to developing a new product weighted against a proposal to recommend a dividend. Depending on which hat they choose to wear, Directors may find themselves struggling with meeting the interests of returnseeking shareholders (including themselves) or looking at the long-term benefits which could be in the overall interest of all stakeholders. Hence the need to have more independent Directors who would typically bring a balanced perspective as well as some neutrality and objectivity to decision-making. It is important to note that disclosure and abstinence from deliberations will not always cure conflict of interest. There will be situations where the presence of the conflicted Director on the Board will be enough reason

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Bisi Adeyemi to say no to a proposal. There will also be situations where it may be in the overall interest of the enterprise to have the conflicted Director leave the Board. It is better to avoid conflict of interest situations, rather than have to deal with the often far reaching consequences. The Board should strive to ensure that the interests of Directors are aligned with and indeed subject to those of the Company at all times. Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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A slender chance for peace in Darfur

Sudan’s revolution could end the conflict in Darfur The transitional government is opting for talks instead of force

EN WITH guns fill the town of e l - Fa s h e r i n western Sudan’s troubled Darfur region. At the airport dozens are boarding or disembarking from planes, wearing uniforms of the Rapid Support Forces (RSF), a unit formed from Sudan’s murderous militia known as the Janjaweed. Down the road is the headquarters of UNAMID, the UN peacekeeping force that was brought in 12 years ago to stop a genocide by the Janjaweed and Sudan’s army, whose base is in the centre of town. Seven months after the fall of General Omar al-Bashir, the Sudanese president accused of orchestrating that genocide, el-Fasher still looks like a town on the edge of a war zone. But it has become more colourful of late. Mud walls along dusty streets are daubed with murals of the national flag and revolutionary slogans like “Sudan is for all”. They reflect a burst of optimism that a revolution that swept through Khartoum, the capital, in April may bring peace to a region synonymous with suffering. This hope has been fuelled by a power-sharing agreement signed in August between leaders of the protest movement and the generals who had staged a coup when it was clear that Mr Bashir would fall. The deal committed the interim government to negotiating a “comprehensive peace” in Darfur and other states afflicted by conflict within six months. The new government, headed by Abdalla Hamdok, an economist-turned-primeminister, has since set up a peace commission and revived talks with rebel groups in Darfur. Sudan has been at war almost without interruption since its independence from Britain in 1956. For years an Arabdominated Islamist government

battled rebels from the Christian and animist south. Perhaps 2m people died in these wars before South Sudan was recognised in 2011 as Africa’s newest country. In 2003 armed groups began a rebellion in Darfur, a relatively prosperous region the size of Spain where black African locals complained that the government in Khartoum was oppressing them. In response, Mr Bashir armed nomadic Arab cattleherders, turning them into the Janjaweed, a horse-mounted militia that was unleashed upon black farmers with such savagery that in 2010 the International Criminal Court (ICC) indicted Mr Bashir on charges of genocide. Many of those who were chased from their homes languish in camps near towns like el-Fasher or in neighbouring Chad. Their lands are occupied by armed Arab tribes that the victims still call the Janjaweed. Abdulrazig Abdallah, an elder in el-Fasher, says four people from his camp were killed in early September when they ventured to their farms for the harvest. Such incidents are commonplace. The new government has declared a ceasefire with rebels, which even the most recalcitrant seem to be observing. “This time both sides are serious,” says a UN official. Rebel leaders have been invited back from exile. And the

government has markedly improved access for humanitarian organisations and journalists. Jeremiah Mamabolo, who heads the UN’s operation in Darfur, reckons a peace deal between the government and the rebels will be signed by early next year. But to have any chance of success it needs the support of Abdel Wahid al-Nur, the most influential but least compromising Darfuri rebel leader, who may soon return to the region after more than a decade in Paris. His faction of the Sudanese Liberation Army has, by some estimates, 2,000 fighters who are holed up in Darfur’s Jebel Marra. Resolving some of the issues fuelling the fighting will be tougher still. When the new prime minister visited a camp for displaced people in November, angry victims demanded their land and compensation. They also want to see the perpetrators of the attacks—in particular Mr Bashir—held to account. Whether any of these demands will be met depends on the balance of power between generals and civilians in the transitional government. Although Mr Hamdok runs a largely civilian administration, it is overseen by an 11-member Sovereign Council currently led by Lieutenant-General Abdel Fattah al-Burhan. The general is unwilling to hand Mr Bashir over to the ICC.

Also on the council is Muhammad Hamdan Dagalo (known as Hemedti), an Arab Darfuri who controls the RSF, which added to its many crimes by slaughtering more than 100 protesters in Khartoum in June. The former camel-rustler has been steadily extending his influence over the peace process. When the two sides met in Juba, South Sudan’s capital, in October, Mr Dagalo led the government’s delegation. Diplomats note wryly that its two civilian representatives were not even introduced at the table. It is hard to see how Mr Dagalo would benefit from a peace agreement that might reduce the influence of the RSF, which he has recently been expanding, and could lead to scrutiny of his business interests—such as gold mines, an industry that has fuelled the conflict. Even if the talks lead to a lasting peace in Darfur, Sudan will need to address an issue that contributes to wider instability: little of the country’s wealth gets spread very far beyond Khartoum. Under Mr Bashir some 65-70% of state spending went on security. Almost nothing went to providing services such as schools in remote areas. “People in Khartoum don’t know anything about the rest of the country,” sniffs Said Shareef, a rebel commander. In recent months protesters in Darfur have begun demanding everything from free education to better public transport. “Until now we haven’t felt the change that has come to the rest of Sudan,” complains Haroun Nemir, a local leader. Each of Sudan’s previous uprisings against military dictatorships—in 1964 and 1985—failed either to produce stable democracy or to solve the problem of governing distant, unruly places whose inhabitants resent the rulers in Khartoum. Now the country has a chance to do things differently. But it is a slender one.

A Balkan The twilightbetrayal of the WTO

The trading system’s referee is about to leave the field Disputes are bound to get nastier

NE WAY of thinking about the world’s trading system is as a sports match featuring a sprawling, brawling international cast of players, each with their own tactics and tricks. The game works best when there is a referee, and for nearly 25 years a group of seven judges at the World Trade Organisation (WTO) has done the job. But on December 11th this body will cease to function, because America is blocking new appointments to it. The referee’s departure will make cross-border commerce unrulier and, in the long run, invite an anarchy that would make the world poorer. The WTO’s appellate body is one of those institutions that most people have never heard of, but which will be missed when it is gone. Set up in 1995, it hears appeals over trade disputes and grants the right to limited retaliation where there has

been wrongdoing. Some 164 countries and territories follow its rulings, and the body has prevented some of the nastiest rows from spiralling into outright tariff wars—for example, the epic spat between America and the European Union over subsidies for Boeing and Airbus. Since it was created, it has been the enforcer-oflast-resort for over 500 cases (see article). Before 1995 the system was less stable and less fair. The General Agreement on Tariffs and Trade, the WTO’s predecessor, had rules but no judges to enforce them. Big countries had bullying rights. The legal clarity and independence provided by the appellate body is one reason why trade rose from 41% of world GDP in the year before it was created to 58% in 2017. The immediate cause of the Continues on page 15

Monday 02 December 2019

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Egalitarianism

The trading system’s referee is about...

Inequality could be lower than you think

Continued from page 14

But there is plenty to do to make economies fairer

VEN IN A world of polarisation, fake news and social media, some beliefs remain universal, and central to today’s politics. None is more influential than the idea that inequality has risen in the rich world. People read about it in newspapers, hear about it from their politicians and feel it in their daily lives. This belief motivates populists, who say selfish metropolitan elites have pulled the ladder of opportunity away from ordinary people. It has given succour to the left, who propose ever more radical ways to redistribute wealth (see article). And it has caused alarm among business people, many of whom now claim to pursue a higher social purpose, lest they be seen to subscribe to a model of capitalism that everyone knows has failed. In many ways the failure is real. Opportunities are restricted. The cost of university education in America has spiralled beyond the reach of many families. Across the rich world, as rents and house prices have soared, it has become harder to afford to live in the successful cities which contain the most jobs (see Free exchange). Meanwhile, the rusting away of old industries has concentrated poverty in particular cities and towns, creating highly visible pockets of deprivation. By some measures inequalities in health and life expectancy are getting worse. Yet precisely because the idea of soaring inequality has become an almost universally held belief, it receives too little scrutiny. That is a mistake, because the four empirical pillars upon which the temple rests—which are not about housing or geography, but income and wealth—are not as firm as you might think. As our briefing this week explains, these four pillars are being shaken by new research. Consider, first, the claim that the top 1% of earners have become detached from everyone else in recent decades, which took hold after the “Occupy Wall Street” movement in 2011. This was always hard to prove outside America. In Britain the share of income of the top 1% is no higher than in the mid-1990s, after adjusting for taxes and government transfers. And even in America, official data suggest that the same measure rose until 2000 and since then has been volatile around a flat trend. It is easily forgotten that America has put in place several policies in recent decades that have cut inequality, such as the expansion of Medicaid, government-funded health insurance for the poor, in 2014. Now some economists have re-crunched the numbers and concluded that the income share

of the top 1% in America may have been little changed since as long ago as 1960. They argue that earlier researchers mishandled the taxreturn data that yield estimates of inequality. Previous results may also have failed to account for falling marriage rates among the poor, which divide income around more households—but not more people. And a bigger chunk of corporate profits may flow to middle-class people than previously realised, because they own shares through pension funds. In 1960 retirement accounts owned just 4% of American shares; by 2015 the figure was 50%. The second wobbly pillar is the related claim that household incomes and wages have stagnated in the long term. Estimates of inflation-adjusted medianincome growth in America in 1979-2014 range from a fall of 8% to an increase of 51%, and partisans tend to cherry-pick a figure that tells a convenient story. The huge variation reflects differences in how you treat inflation, government transfers and the definition of a household, but the lowest figures are hard to believe. If you argue that income has shrunk you also have to claim that four decades’ worth of innovation in goods and services, from mobile phones and video streaming to cholesterol-lowering statins, have not improved middle-earners’ lives. That is simply not credible. Third is the notion that capital has triumphed over labour as ruthless businesses, owned by the rich, have exploited their workers, moved jobs offshore and automated factories. The claim that inequality is being driven by the rich accumulating capital was a central thesis of Thomas Piketty’s book, “Capital in the Twenty-First Century”, which in 2014 made him the first rock-star economist

since Milton Friedman improbably filled auditoriums in the 1980s. Not all Mr Piketty’s theories caught on among economists, but it is widely assumed that a falling share of the rich world’s GDP has been going to workers and a rising share to investors. After a decade of soaring stock prices, this has some resonance with the public. Recent research, however, suggests that the decline in labour’s fortunes is explained in most rich countries by exorbitant returns to homeowners, not tycoons. Strip out housing and the earnings of the self-employed (which are hard to divide between capital and labour income), and in most countries labour shares have not fallen. America since 2000 is an exception. But that reflects a failure of regulation, not a fundamental flaw in capitalism. American antitrust regulators and courts have been unforgivably lax, allowing some industries to become too concentrated. This has enabled some firms to gouge their customers and book abnormally high profits. The last pillar is that inequalities of wealth—the assets people own, minus their liabilities—have been soaring. Again, this has always been harder to prove in Europe than America. In Denmark, one of the few places with detailed data, the wealth share of the top 1% has not risen for three decades. By contrast, few deny that the richest Americans have sprinted ahead. But even here, wealth is fiendishly difficult to estimate. Not so rich pickings The campaign of Elizabeth Warren, a Democratic presidential contender, reckons that the share of wealth owned by the richest 0.1% of Americans rose from 7% in 1978 to 22% in 2012. But a plausible recent estimate suggests that the rise is only half as big as this. (For connoisseurs, the difference

rests on the factor by which you scale up investors’ wealth from the capital income they report to the taxman.) This imprecision is a problem for politicians, including Ms Warren and Bernie Sanders, who want wealth taxes, since they may raise less revenue than they expect. The fact that dubious claims are made about inequality does not reduce the urgency of tackling economic injustice. But it does call for ensuring that the assumptions on which policies are based are accurate. Those, like Britain’s Labour Party, who favour the radical redistribution of income and wealth ought to be sure that inequality is as high as they think it is—especially when their policies bring knock-on costs such as deterring risk-taking and investment. By one estimate, Ms Warren’s wealth tax would leave America’s economy 2% smaller after a decade. Until these debates are resolved, it would be better for policymakers to stick to more solid ground. The rich world’s housing markets are starving young workers of cash and opportunity; more building is needed in the places that offer attractive jobs. America’s economy needs a revolution in antitrust enforcement to reinvigorate competition. And regardless of trends in inequality, too many high-income workers, including doctors, lawyers and bankers, are protected from competition by needless regulation and licensing, and senseless restrictions on highskilled immigration, both of which should be loosened. Such an agenda would require governments to take on NIMBYS and corporate lobbies. But it would reduce inequality and boost growth. And its benefits do not depend on a set of beliefs about income and wealth that could yet turn out to be wrong.

judges’ downfall is the Trump administration’s refusal to appoint new judges to replace those who are retiring, a symptom of the president’s suspicion of multilateral institutions. But it is a mistake to blame everything on him. The WTO’s troubles expose deeper problems. Most countries like independent arbiters, until they suffer a critical ruling. American unease predates Mr Trump. The Bush and Obama administrations tried to influence outcomes by blocking the reappointment of judges. The WTO is also unwieldy. Ideally the rules would be updated every decade or so, giving countries a chance to modernise them and take on judgments they dislike. But the WTO’s membership has doubled since 1995, and because each country has a veto it has been impossible to update the rules to reflect, say, the disruption caused by China’s state-led model (it joined the WTO in 2001). Instead, grumbles have festered. What happens from December 11th? Some WTO members are trying to concoct an unofficial appellate body, drawing on retired judges, to resolve disputes. A new president elected in 2020 might reverse America’s stance, although several Democratic presidential contenders are lukewarm on free trade. Most likely, the appellate body will die, or remain dormant for years. If so, expect a deterioration in conduct—Japan and South Korea are already in an ugly spat. Some Americans believe that their country’s size gives them the raw clout to impose rules on others, but it has yet to wrest any big concessions from China. Indeed, as the legal framework for trade decays, even America will be vulnerable to escalating tensions. So far, trade frictions have not caused a global recession. But trade has stopped growing and long-term investment by multinational firms dropped by 20% in the first half of this year. If there is a recession, the temptation of tit-for-tat tariffs will rise across the world. When the referee leaves the field, anything goes.

Monday 02 December 2019

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Israel’s charged politics

Binyamin Netanyahu’s allies reconsider their indicted leader The prime minister faces corruption charges–and a leadership challenge

HE RALLY’S organisers feared that turnout would be low. Even after a flurry of text messages and a big internet campaign, an underwhelming crowd of several thousand people showed up in downtown Tel Aviv on November 26th to protest against the “coup d’état”. That is how Binyamin Netanyahu, Israel’s prime minister, refers to the legal campaign against him. Five days earlier he was charged with bribery, fraud and breach of trust stemming from three corruption cases. Mr Netanyahu is the first sitting prime minister to be indicted. He denies all charges. The prime minister claims to be the victim of a left-wing conspiracy. Biased courts, police and media are to blame for his problems, he says. But after a decade in power, his grip on Israeli politics is weakening. His coalition of nationalist and religious parties failed to win a majority in two successive elections, in April and September. The opposition, led by the Blue and White party, has also come up short. Yet it has frustrated Mr Netanyahu’s

attempts (and failed itself ) to form a government, pushing the country towards another election. Cracks are even showing in his own Likud party, where he faces the most immediate challenge to his rule. Likudniks stuck with Mr Netanyahu even as it became clear earlier this year that the charges against him were coming. Many believe he is indeed a victim. Others think his political acumen gives them the best chance of winning elections. But some are starting to question both notions. It “isn’t an attempted coup,” says Gideon Saar, a former Likud

minister. “Not only is it wrong to say that, it’s also irresponsible to say that.” He plans to challenge Mr Netanyahu for the party’s leadership: “I haven’t heard one person who thinks that after a third election, or a fourth, or a fifth, or a sixth, Prime Minister Netanyahu will succeed in forming a government.” Other Likud bigwigs are steering clear of the prime minister. The rally on November 26th was organised by the party, yet most of its members of the Knesset (parliament) didn’t show up. Mr Netanyahu has conceded that a vote on his party leadership is

needed. Mr Saar wants it to be held immediately, so that a new leader would have a shot at negotiating a government with Blue and White before the December 11th deadline, after which another election must be held. Mr Netanyahu prefers to delay in order to guarantee himself more time in power. Even if he loses control of the party, he would remain prime minister until a new government is formed. Since its founding by Menachem Begin and Ariel Sharon in 1973, Likud has had only four leaders. It has never voted one out. Most have been successful: prime ministers from Likud have led Israel for 30 of the past 41 years. Having grown accustomed to power, some members now fear losing it. Mr Netanyahu no longer resembles the political “magician” who won four elections and became Israel’s longestserving leader earlier this year. But he is still popular with the party’s rank and file. And, so far, no high-ranking Likudnik other than Mr Saar has called for him to go. Mr Netanyahu could lose his

job in other ways. The law does not explicitly require an indicted prime minister to step down, but many Israelis question Mr Netanyahu’s ability to run the government while mounting his defence, and note the potential conflicts of interest that come with his power over the justice ministry and the police. His decision to remain in office is therefore likely to be challenged in court. Israel’s president, Reuven Rivlin, may also refuse to ask Mr Netanyahu to form a government even if he wins another parliamentary election. The prime minister is already preparing for one. His rhetoric is strikingly similar to that used by President Donald Trump, who is fighting his own battle against impeachment in America. “This is an attempted overthrow of a prime minister with a biased investigation,” says Mr Netanyahu, ignoring the fact that his former cabinet secretary, who is now attorney-general, brought the charges. Critics say Mr Netanyahu, like America’s president, is sowing division and damaging institutions—but perhaps not for much longer.

want to change the behaviour of candidates, the levers are in their hands. It is their job to make the laws under which everyone else— technology firms included—must operate. Partisan rancour and shortterm self-interest, particularly in America, may make that difficult. But history offers hope. Politicians have agreed in the past on whether and how to regulate other media technologies such as radio, television and newspapers. The rules created for analogue democracies offer a relatively uncontroversial starting-point for digital ones. In America, for instance, the source of political television ads must be disclosed. The same should be true online. Facebook’s decision to stand back looks more in keeping with the traditions of American democracy than Twitter’s or Google’s commitment to step in. Britain is much stricter. Political advertising is mostly banned on television and radio, with the exception of a limited number of tightly regulated “party-political broadcasts”. Again, it is not clear why the rules for online videos should be more relaxed than those for pitches that appear on television. New media offer new possibilities and hence raise new dangers.

One is the ability to run “microtargeted” ads, aimed at small groups thought to be most receptive to their message. To the extent that it helps politicians deal with particular worries among voters, this can be beneficial. If abused, though, it could amplify exactly the sort of two-faced campaigning the telegraph was supposed to have banished.

Democracy and the internet

How to police political advertising Lawmakers, not tech bosses, should take the lead

HE NEW YORK TIMES noted in 1859 that the telegraph was doing a lot to clean up politics. “The telegraph gives the speaker in the furthest East or West an audience as wide as the Union,” it wrote. That made it harder for politicians to promise to relax drinking laws in one city and impose Prohibition in another. A century and a half later the internet, the telegraph’s distant descendant, has once again transformed politics. Social networks have become the platforms of choice for politicians hoping to get their messages out and to give their opponents a kicking. The results can be seen in both the American and British elections. Online advertising, modest a decade ago, now accounts for around half the total. This time there is less happiness about the results. Elizabeth Warren, a contender for America’s presidency, has accused Facebook of “taking money to promote lies”, referring to the social network’s decision not to pass judgment on the content of the political ads it shows to its users. (To demonstrate her point, Ms Warren bought an ad stating, falsely, that Mark Zuckerberg, Facebook’s boss, had endorsed

Donald Trump for re-election.) In Britain the ruling Conservative Party has embraced disinformation. During a televised debate on November 19th, the party’s Twitter account rebranded itself as “factcheckUK”, in an attempt to present party-political talking-points as disinterested truth. All this is merely one part of a greater worry that the internet, far from being a benevolent source of useful information, has become a swamp of lies, misdirection and conspiracy theories that is harming politics. Spooked—especially by the irritation of American politicians, who regulate them—some tech firms have changed their rules.

Twitter is to ban nearly all political advertising. Google, which owns YouTube, says it will ban ads that make egregiously false claims, and restrict the precision with which political ads can be aimed at specific groups of people. For now, Facebook is sticking to its guns, saying it will not regulate political speech—though there are signs it is wavering (see article). Mr Zuckerberg is an unpopular man these days. Yet in this case he is right. The rules of digital democracy should not be set by unaccountable bosses in the boardrooms of a handful of American firms—let alone, in future, Chinese ones. If politicians

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COMPANIES & MARKETS

Company news analysis insight

BANKING

Access Bank, others urge businesses to pursue sustainability strategies for secure future Josephine Okojie

inancial institutions and businesses have been advised to identify and integrate sustainability strategies into their operations to ensure a secure future for them and attainment of the UN’s Sustainable Development Goals (SDGs). These and many more dominate discussions at the Access Bank Sustainability awareness week with the theme ‘Together for a Sustainable Future.’ Access Bank and other experts who spoke at the conference stated that businesses can do so by developing An Environmental and Social System that can be integrated into their existing risks management framework including risk assessments process for transactions. “A well-developed environment and social management system can lead to decrease exposure to environmental and social

risks and increased market opportunities and social reputation which helps contribute to a sustainable business,” said Tayo Taiwo, an environmental expert. Taiwo, who is also the MD of Xploits Consulting Limited explained that considering environmental and social risks as part of the risk appraisal process for transactions helps a financial institution to decrease its exposure to overall risk and contributes to its long-term financial viability. He identified environmental, social and financial risks as factors why financial institutions must embrace Sustainable Development Goals (SDGs) because of its ambitious and wide-ranging set of global environmental, social and economic targets. Also speaking during the weeklong event, Omobolanle Victor-Laniyan, head -sustainability, Access Bank, on why her financial institution has chosen to adopt sustainability practice, she ex-

plained that the is totally committed to sustainability because they believe that sustainability is the only and the right way to do business. ‘We formalised this commitment about 11-years ago when we established our Standard Sustainability Function and ever since then, we have been going along on the journey. Five years into our journey, we initiated the legal development of the Nigerian Sustainability Banking Principles which today is adopted by World Bank that operates with the Central Bank of Nigeria,” she said. “So, on an annual basis we celebrate what we refer to as the Sustainability Awareness Week and bring onboard stakeholders to share experiences, share knowledge and hold our various stakeholders to go together on the sustainability journey,” she added. Abiola Oshunniyi, chief responsibility officer,Parallel Point Con-

TECHNOLOGY

LandWey launches CrowdOwnership, an online investment platform for real estate co-ownership IFEOMA OKEKE

n a bid to create a profitable, vibrant and viable entry into real estate investment by pooling intending real estate investors together to collectively own size allotments of real estate, LandWey has launched CrowdOwnership. CrowdOwnership, with office headquarters in Lagos Nigeria, is an online platform geared towards providing investors access to wealth by bringing a carefully curated crowd mix of investment savvy folks, and affording them a myriad of real estate investment options. Leveraging on specialized knowledge in real estate value investment strategy, while giving key insight to investors, Crow-

dOwnership grants the most profitable edge in the real estate market. Speaking on the launch of this new initiative, Olawale Ayilara, CEO/ Founder of LandWey as well as CrowdOwnership explained: “Real Estate investment remains the surest path to creating true and lasting wealth. Many are often put away by the huge capital investment required to participate in the real estate space. A lot of investors are forced to place their focus on low-hanging investments. To bridge this gap, we at Landwey have an launched an initiative that makes room for flexible and easy access to real estate investment through crowd ownership. Expatiating more on the

initiative, Olamide Opadiran, Financial Controller LandWey explained: “This initiative is an offshoot of the company’s commitment to make real estate investment readily accessible and available to all. “Crow dO w nership offers flexible options to match the investment appetite and needs of the general public. However, it is open to only members of the Crowd Ownership Club, and works on a crowd ownership basis/co-ownership arrangement. According to her, the initiative has options for land and home ownership either as individuals or as a group. The initiative which was officially launched on the 28th of November 2019, has applicable terms and conditions.

sult, said there is a broad consensus that the financial services industry, of which Access Bank plays an important role has a vital role to play promoting sustainable development. He said given the strategic importance of banks in the value chains of critical sectors such as agriculture, energy, and trade, the role of banks in the sustainable development of Nigeria cannot be un-

derestimated. According to him, the goals are chiefly designed to promote the transition to a more viable future. “These goals are ambitious and embrace a wide range of environmental, social and economic issues, including climate change, energy, water stewardship, marine conservation, biodiversity, poverty, food security, sustainable production

and consumption, gender equality and economic growth,” he said. Rhoda Robinson, executive director, HACEY, also a member of the panel, said leading financial services companies should identify and measure their contributions to the SDGs, integrate their achievements into sustainability reporting processes and commission comprehensive external monitoring.

Monday 02 December 2019

BUSINESS DAY

COMPANIES&MARKETS

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L-R: Nnaemeka Nwachukwu, head, Executive Support & Corporate Strategy, Grooming Centre; Ronke Kuye, MD/CEO, Shared Agent Network Expansion Facility [SANEF], Olubanjo Adetunji, Lagos Business School [LBS and moderator, Future of Financial Inclusion session]; Bunmi Lawson, MD/CEO, Edfin Micro Finance Bank; Yele Okeremi, MD/CEO, Precise Financial Systems (PFS) and Faith Adesemowo, MD/ CEO, Social Lender all discussants at the Future of Financial Inclusion session held at Inclusive Financial Nigeria Conference & Awards in Lagos with the theme is it time to Reinvent and Push the Boundaries in Lagos. Pic by Pius Okeosisi

TECHNOLOGY

CheckMyPeople moves to tackle insecurity with new identity verification services MICHAEL ANI

n online community policing platform, CheckMyPeople Limited, has developed an Identity Verification Services (IVS) that would help in tackling the increasing risk faced by Nigerians from employing unknown and unverified persons. The online platform which was launched recently, in Nigeria’s commercial city, Lagos, would leverage data of the over 40 million Nigerians registered under the National Identity Management Commission (NIMC), to verify, provide information’s and records of an individual. With the platform, employers of labour can verify the information of individuals they want to employ. “Most families and employers recruit people by word of mouth to undertake a certain task for them, with many of these employees who in turn inflict pains by leaving a mark of terrible experience to those who employ them,” said Chudi Obiofume, founder, CheckMyPeople. “With this platform hope to “prevent” the risk faced by Nigerians, families and employers of labour from the alarming cases of kidnapping, murder, theft, poisoning,” he added. Aside from such extreme cases, it would also help in tackling cases of poor services, job abandonment, and incompetence is seen from the services provided

by domestic staffs, he said. The Identity Verification Services by the firm was launched under the verification licence with the NIMC, for the verification of the National Identity Number (NIN). The platform seeks to ensure better communication within a community by allowing registered users, document their domestic staff as well as record their professional and personal interactions with them. This data generated, will constitute work history and background information on each domestic employee, which will be available for search by prospective employers within the community. The platform does not work in the interest of the employers alone as employees are also afforded with enough background information of an employer they wish to work under to guide them in making informed decisions. Obifume noted that CheckMyPeople adopted the NIN as the unique identifier on the platform because it is associated with stringent biometric data collected by the National Identity Management Commission, and hence, uniquely identifies every registered Nigerian. He urged employers to demand NIN from their employees before getting them employed as this would enable them to establish upfront, the veracity of people’s claim. Kayode Adegoke, Regional Director, Lagos NIMC,

said the online community platform is a welcome development as it would aid in national planning, strategizing and implementation. He assured that NIMC is bent on increasing the enrolment number by ensuring that enrolment centres are established in at least every two streets in Lagos. “At present, Lagos state has about 90 enrolment centres, we are working assiduously to increase the number to 300,” he said. According to him, the commission is adopting an “ecosystem” approach in partnership with the World Bank, Agence Française de Dévelopement (AFD), European Union (EU) and the federal government. This partnership would among other things, scale-up enrolment, extend enrolment coverage nationwide, and reduce cost in data collection, speed of delivery, digital verification of identity anytime and anywhere in Nigeria through secure and protected channels, he said. Also present at the commissioning was Nosa Mamman-Odey, Acting Zonal Commander, National Agency for the Prohibition of Trafficking in Persons NAPTIP, said the agency has collaborated with CheckMyPeople, to bring to the barest minimum, crime especially those done by domestic staffs. She noted also that with the platform, the agency would better tackle the incidence of forced labour, human trafficking and underaged employees, which is in line with its vision.

Monday 02 December 2019

BUSINESS DAY

COMPANIES&MARKETS

CSR

Prime Atlantic trains Surulere NYSC members on first aid, CPR DIPO OLADEHINDE

igeria based Oil servicing f i r m Prime Atlantic, a subsidiary of Prime Atlantic Limited has organized a capacity building training for Surulere members of National Youth Service Corps (NYSC) in basic First Aid and Cardiopulmonary Resuscitation (CPR). CPR is a life-saving technique that is useful in many emergencies including a heart attack or near drowning during which someone’s breathing or heart has stopped. While many countries of the world have incorporated the teaching of CPR into their school’s curricula, there has been little or no effort made towards this in Nigeria, which is why Falck Prime Atlantic is trying to fill the knowledge gap by offering professional training services in many schools and workplaces. One of the beneficiaries of the training Victor Elendu, a youth corp member in Surulere Local government said the training was very informative and expository which will help people in times of danger and also help people react fast in saving lives. “ There are many avoidable death situations in Nigeria which would have been prevented if people were well trained on the importance of CPR and First Aid,” Elendu said at the event. Another corp member, Chiamaka Chijbata narrated how she lost a friend in a fatal domestic accident, a scenario

which would have been avoided if there was adequate knowledge of CPR and First Aid. “Attending the class have really raised my awareness and prepare me better to render help,” Chijbata told BusinessDay. Falck Prime Atlantic said it was evident that most Nigerians lacked the necessary skills required to respond to medical emergencies, adding that it had resulted in many preventable deaths. Isaac John, executive committee representatives of the Surulere Local Government said the program because some of the corp members might have basic knowledge of First Aid or CPR, however, it might not be of international standard. “It’s an advantage for us because it will allow Nigeria youths understand the importance of First Aid and CPR,” John said. The Marketing and Communications Manager at Falck Prime Atlantic, Aderonke Adebanjo said the company had set out to change the narrative, adding that many Nigerians would be equipped with life-saving skills to save lives at any time. She said the company would train individuals from different walks of life, including market traders, commercial drivers, students, celebrities, youth corps members, and government officials for free. “This will ensure that across the city of Lagos, a variety of individuals are able to potentially save lives when faced with medical emergencies,” Adebanjo added. “This is a training that

is very expensive and cost a lot of money to do. This year we have a target of training 400 Nigerians which we

might exceed before the end of the year.” Re ca l l e a r l y t h i s month, Falck Prime Atlantic organized a ca-

pacity building training for bus drivers and conductors at CMS motor park, youths at Oshodi local government and

staffs of Lagos State Waterways Authority (LASWA), in basic First Aid and CPR.

Monday 02 December 2019

BUSINESS DAY

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Monday 02 December 2019

BUSINESS DAY

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Monday 02 December 2019

BUSINESS DAY

real sector watch

Manufacturers bet on ACFTA to expand market reach ODINAKA ANUDU & GBEMI FAMINU

igeria manufacturers are banking on the African Continental Free Trade Area (AfCFTA) to expand their market reach and raise capacity. They told Real Sector Watch over the weekend that they are ready and are eagerly awaiting the AfCFTA to capture the African market. “Our group presence in the export trade zone, especially in the oil and vegetable oil, is an indication that we are ready,” Osaro Omogiade, managing director of Nosak Distilleries, which manufacturers food-grade ethanol, said. “We have commenced export of food-grade ethanol to the neighbouring West African countries, particularly Ghana. It is an expression of our readiness. We believe in living global because of the associated advantages. If you do export, you will hedge against the foreign exchange problems,” he said. He said the firm now focuses on countries such as Togo, Benin Republic, and Cote d’ivoire as the AfCFTA nears. “We are also looking at Angola and Central African Republic. Those are the countries we are looking at, and we have the capacity to do that.” The African Continental Free Trade Area(AfCFTA) is

a trade treaty that promises to liberalise trade among African countries and create a single market for goods and services on the continent. It is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda 2063. The treaty is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 and liberalise 90 percent of products manufactured in Africa. This means that a country can only protect 10 percent of its local industries. Nigeria’s President Muhammadu Buhari signed the AfCFTA in July after months of dilly-dally. He had earlier refused to sign it owing to

protests by the Manufacturers Association of Nigeria (MAN) who said it would harm their sector. But some of the players in the Nigerian manufacturing sector have welcomed the agreement, expressing satisfaction about its potential. They, however, say some policies need to be in place to protect local manufacturers. Oluwafunmilayo Bakare Okeowo, chief executive officer of FAE Limited, which produces envelopes, said in a phone interview that the signing of the agreement is a good idea as it provides better market opportunities for manufacturers. She said, however, there is a need to protect the lo-

cal producers from possible unexpected downturns and the economy from becoming a dumping ground. Speaking on the capacity of FAE envelopes, she said, “At FAE, we produce 10 million envelopes daily and we had a sizeable market in Ghana before the border closure. We are capable of supplying a much larger market. We just need protection and policies to create an enabling and competitive environment.” She further said local manufacturers need better infrastructure to reduce their cost of production, stressing that the issue of tariffs should be properly addressed. Segun Ajayi, chief execu-

tive officer of Luxury Feet, a small-scale shoe production company, said working with the agreement will provide a larger platform for locallymade products to thrive. “For producers of our kind, it will provide a larger market. However, meeting with demand might be quite tedious, considering the hurdles it takes to produce for a local market, because lack of basic infrastructure has increased our cost of production and reduced daily output,” he said. Export-focused companies and small businesses in Nigeria are expected to gain from the imminent AfCFTA, according to experts. Companies that are likely to take a large chunk of the AfCFTA include: Flour Mills of Nigeria, De-United Foods, British American Tobacco, Indorama Eleme Fertilizer & Chemicals and Dangote Group. “Mostly multinationals and large enterprises are in a better position to gain from AfCFTA because their economies of scale will improve. They have the big market and the capacity,” Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said in a telephone interview. “The continental trade is more about economies of scale and the amount of what you produce. The higher you produce, the lower the unit cost, which is why small companies will benefit but not as much as large firms,” Yusuf said.

British American Tobacco Nigeria Limited has dominated the tobacco space in Africa, earning $145.48 million in 2017 from exporting tobacco products to Liberia, Guinea, Ghana, Cameroun, Cote D’ivoire and Niger, according to the CBN Annual Report. Indorama exports urea to South America, Brazil, West Africa, Central Africa and other parts of the world. De-United Foods Industries Limited exports noodles to Ghana and Cameroon. In 2017, it earned $30.568 million from exporting to these countries, including the United States. Analysts say the AfCFTA provides an opportunity for companies like De-United to double or triple their earnings with free trade across the continent. Guinness Nigeria Plc will be a big beneficiary with some of its products selling like cakes in some African countries. The brewer earned $15.06 million just for exporting Malta Guinness and Guinness FES to Ghana and Cameroon, including the United Kingdom. Dangote Agrosacks Limited sells printed cement sacks (S50 X 69 X 11cm), printed laminated cement sacks to Djibouti, Ethopia, Ghana, Sierra Leone. It earned $15.5 million in 2017 exporting to these markets. Beta Glass shipped out bottles estimated at $14.134 million to Sierra Leone, Ghana, Liberia and Cape Verde.

Stakeholders make case for improved exploration of Nigeria’s solid minerals SIKIRAT SHEHU, Ilorin

he need for Nigerians to explore the abundant solid minerals deposits in the country has been stressed. Stakeholders in the nation’s solid minerals sector and associated industries stated this recently in Ilorin, Kwara State, at Nigerian International Materials Congress (NIMACON 2019) jointly organised by the Materials Science and Technology Society of Nigeria (MSN), the Raw Materials Research and Development Council (RMRDC) and the University of Ilorin. They, however, identified solid minerals as a way of boosting economy, considering the decreasing demands for crude oil in the

international market. Declaring the conference with the theme ‘Sourcing and Management of Materials Resources for Sustainable Economic Diversification’ open, Sulyman Age Abdulkareem, vice-chancellor of the University of Ilorin and professor of Chemical Engineering, said it was high time Nigeria gave the exploration and exploitation of the nation’s huge solid minerals serious concern in view of the decreasing dependence on crude oil by the nation’s hitherto customers, particularly the advanced nations at the global oil market. Abdulkareem, who was represented by Timothy Olarewaju Adedoyin, provost, College of Health Sciences of the university, explained that “oil will dry up soon and if not, it will become irrelevant,” saying www.businessday.ng

that in view of that reality, Nigeria must begin to diversify its economic base in the interest of the present and future generations. While stating that the University of Ilorin has taken that reality into cognizance longago with the establishment of relevant well-manned academic departments and resourced research outfits

to assist in the generation of much-needed manpower and material wherewithal in the field of Materials Science and Technology, the vice-chancellor urged the government not to waste further time in encouraging organised large-scale mining of solid mineral resources the nation has been blessed with, to address increasing

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economic challenges. In his lead presentation at the event, Suabu Hassan, director-general/chief executive of the Nigerian Institute of Mining and Geosciences, Jos, stressed the need for Nigeria to seriously explore and exploit her vast natural resources to stimulate its economic growth. Hassan pointed out that the nation’s over-dependence on oil in the last six decades accounted for its slow development, saying that the discovery of the crude oil in commercial quantity in the late 1950s led to the abandonment of the exploration of solid minerals, which started in 1902, by the country’s successive governments. The renowned scholar predicted that very soon oil and gas wiill be of no use, adding that little revenue @Businessdayng

will be generated from the oil sector in view of the increasing technological innovations being recorded in the advanced countries, which will lead to low demands for oil in the next few years. He said if solid mineral materials exploration remains neglected, the nation would remain poor, noting that there is hardly any local government area or state across the country that does not sit on high-grade but untapped solid mineral resources. Hassan disclosed that “as at the last count, the nation has no fewer than 44 known mineral resources and that, if and when fully exploited, can provide 5 million jobs and generate between 3 and 6 percent GDP and about $27 Billion revenue by the year 2025.”

Monday 02 December 2019

BUSINESS DAY

real sector watch

BUA to produce 200,000MT of refined sugar, ethanol in Kwara …state govt pledges support for investors SIKIRAT SHEHU, Ilorin

bdulsamad Rabiu, chairm a n o f B UA Group, has disclosed that the sugar plantation and the refinery in Kwara State are among the most advanced anywhere in the world. He said the plantation has a capacity to produce 14,000 tonnes of canes per day when completed. He said when completed, the refinery will generate over 10,000 direct employment and produce over 200,000 tonnes of refined sugar together, with 200,000 litres of ethanol and 35 megawatts of power – using the bye product of sugarcane. “Kwara State is one of the states with land, water

and climate and we set up our business here because we know sugar refining will succeed here,” he said. “Instead of importing raw sugar and processing it in Nigeria, we decided to establish sugar plantation

and refinery in Nigeria, and Kwara State happens to be the best located state for the investment,” he further said. Rabiu lauded the efforts of the state in attracting investments, saying, “This is the only sugar plant in

Nigeria with plantation and refinery and will be completed by the end 2020.” Abdulrahman Abdulrazaq, Kwara State governor, said his administration would support the upcoming BUA Sugar Factory and

other investors in the state to succeed by creating the right environment. According to him, the strategies to attract and keep investors in Kwara would include sustaining the state’s peaceful environment and putting in place the necessary infrastructure and policies to ease the business climate. He, however, commended BUA Group for siting its multimillion dollar sugar plant in Lafiagi in Edu Local Government Area of Kwara, stating that the facility would make the local government the richest in the North Central region. “BUA today is the biggest investor in North Central Nigeria and we are happy that their investment is in Kwara State. I am, in fact, happy that it is in Lafiagi, Edu Local Govern-

ment,” Abdulrazaq said, as he toured the facility in company of its chairman Rabiu and other officials of the conglomerate. He further said the plant would produce about 25 percent of Nigeria’s sugar needs when it begins operation later next year and 75 percent of the country’s sugar needs in the next 10 years. “Kwara wants to be the epicentre of sugar production in Nigeria and we are creating a peaceful environment for business to thrive,” Abdulrazaq added. Such investments, he said, would cut poverty rate and strengthen Kwara’s capacity to achieve the United Nations Sustainable Development Goals, since the issues of water and electricity would be tackled once the factory begins operation.

UNIDO’s new blueprint will boost Nigeria’s Industrialisation– FG … Government pledges total support for implementation Odinaka Anudu

he Federal G overnment has said that the new UNIDO Country Programme (2018-2022) would help Nigeria to achieve inclusive and sustainable industrial development. Niyi Adebayo, minister of industry, trade and investment, , stated this during the Partnership Round Table Meeting organised by the Ministry of Industry, Trade and Investment, and the Ministry of Finance, Budget and National Planning, in collaboration with the United Nations Industrial Development Organisation (UNIDO), in Abuja, weekend. Adebayo noted that the new UNIDO -Nigeria Country Programme aligned with the Federal Government’s current economic and industrialisation priorities and agenda. “We want to commend UNIDO for its sustained efforts in supporting Nigeria’s industrialisation drive. The Federal Government of Nigeria recognises UNIDO as a reliable partner which has continued to support the country’s efforts towards achieving inclusive

and sustainable industrial development. “The new UNIDO -Nigeria Country Programme, which comprises nine pragmatic areas, is in alignment with the Federal Government’s economic diversification and industrial development agenda. We believe that the full implementation of the new country programme will help Nigeria to achieve inclusive and sustainable Industrial Development,” he said. Also speaking during the Partnership Rountable, Clem Agba, minister of state for budget and national planning, said the Federal Government would support the new fiveyear Country Partnership Programme of UNIDO The minister, who was represented by Elizabeth Egharevba, director, International Cooperation Department in the ministry, noted that partnership with UNIDO would complement government’s economic programmes aimed at diversifying the economy through industrialisation. He pledged government’s commitment to the Country Partnership Agreement signed with UNIDO and assured that government would do its best to fulfill its part of www.businessday.ng

the agreement by contributing its counterpart fund. “We are happy with UNIDO’s technical support to Nigeria towards achieving inclusive and sustainable industrial development. As a government, we will do our best provide the necessary support for UNIDO,” he said. In his introductory remarks, Mr. Edward Kallon, resident and humanitarian

coordinator, United Nations System in Nigeria, stressed the importance of industrialisation as a critical tool for poverty reduction, job creation, and economic prosperity. “The trajectory for inclusive and sustainable economic growth and development in Nigeria and Africa can only be possible with industrialisation. UNIDO and other UN agencies are ready to support Nigeria to

achieve inclusive and sustainable industrial development as well as the Sustainable Development Goals,“ Kalon said. In his keynote address, Jean Bakole, UNIDO representative to ECOWAS and regional director, Nigeria Hub Office, commended the Federal Government for its strong commitment and support to UNIDO’s activities in Nigeria. He said that the new UNI-

L-R: Abubakar Atiku Bagudu, Kebbi State governor; Jean Bankole, UNIDO representative to ECOWAS and regional director, Nigeria Regional Office Hub, and Edward Kallon, resident and humanitarian coordinator, United Nations System in Nigeria, during the Partnership Roundtable organised by the Ministry of Industry, Trade and Investment, and the Ministry of Finance, Budget and National Planning, in collaboration with the UNIDO, in Abuja, last Friday. https://www.facebook.com/businessdayng

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DO-Nigeria Country Programme was designed in line with Federal Government’s economic and industrialisation policies. “Nigeria is one of the countries that have provided a substantial part of its contribution to our country programme.UNIDO’s last country programme was about $30m and Nigeria contributed about $10m. “Nigeria is ready to contribute its counterpart funding to this new Country Programme. We want all of us, including our donors and partners, to assist the country industrialise its economy. We can’t stop migration without creating jobs for our people. We can’t create industrialisation without supporting MSME. We will work with all partners and no one will be left behind,” he said. The UNIDO – Nigeria Country Programme, which covers 2018-2022, was signed in November 2018 . It has a budget of $60m and the Federal Government is expected to provide half of it as government counterpart contribution while UNIDO would work with the government to mobilise the balance from other partners.

Monday 02 December 2019

BUSINESS DAY

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Monday 02 December 2019

BUSINESS DAY

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Monday 02 December 2019

BUSINESS DAY

cityfile CIPM leads charge on labour law review SEYI JOHN SALAU

A flooded neighbourhood at Sampou, a settlement by River Nun, which overflows its banks, in Kolokuma-Opokuma Local Government of Bayelsa on Friday. NAN

LSSTF seeks increased funding for security of lives, property

…as Sanwo-Olu hosts town hall meeting JOSHUA BASSEY

xecutive Secretary, Lagos State Security Trust Fund (LSSTF), Abdurrazaq Balogun has made a case for increased support to the fund to enable it continue play the critical role of funding safety and security architecture in Nigeria’s most populous state. The call comes as Governor Babajide Sanwo-Olu leads members of his cabinet to host the 13th edition of the Lagos security town hall meeting. The meeting holds tomorrow, December 3, at the Civic Centre, on Victoria Island. Balogun, who spoke with journalists, weekend, ahead of the security summit, said that in the last thirteen years, the LSSTF had invested over N23 billion in the security architecture of the state. The bulk of this sum, he said, came from the state government through regular purchases of patrol vehicles, motorbikes, communication

equipment, bullet-proof vests, arms and ammunition, boots, among several other safety and security gadgets to the police and other security agencies to secure and keep Lagos safe for residents and businesses. Balogun acknowledged the role played by corporate organisations and private individuals, who have over the years supported the LSSTF with their donations. He n o t e d , h o w e v e r, that the N23 billion which amounts to an average of N2 billion a year, was inadequate to effectively police a state with over 22 million people, with insufficient security personnel, hence the need to continue to inflate the fund. According to the ES, there had been a setback in the donations received by the LSSTF between August 2018 and August 2019, but the intervention of Governor Sanwo-Olu in the last three months attracted donation to the LSSTF in excess of N1.5 billion.

“The body language of the governor shows that he is deeply concerned about security issues. Apart from having security and governance as one of the pillars of his administration, the governor was one of the founders of the LSSTF some years ago as the commissioner for establishments, training and pensions at that time. “The governor was a pioneer member of the board of trustees of the LSSTF and fully understands the mission and vision of the fund and requirements for securing Lagos State.” The ES maintained that though the office had received donations into several billions since its inception, the donations still did not match the huge investment in the state. “What I am saying is that huge resources are still very much needed for us to meet the security needs and challenges of a city like Lagos. Because security issues are not static, there is the need for us to be

dynamic and strategically innovative in addressing these changes.” He said that supporting the LSSTF was not limited to cash alone but also in kind, like offering of advisory services, training, media partnership among other.” On the essence of the town hall meeting, he said that the meeting would provide a platform for LSSTF to render account of stewardship for the year in review “The governor will share his administration’s policies as regards security in the state and the new Commissioner of Police will give a report on the activities of the command and his strategies for crime prevention.” Balogun said conversation around security has to change from being reactive to truly being proactive, and this requires the cooperation of all,” adding that the introduction of technology and artificial intelligence into the security architecture of the state has become imperative.

Oyo to rehabilitate Awotan dumpsite REMI FEYISIPO, Ibadan

o prevent environmental hazards in parts of Oyo State, the government is to rehabilitate the Awotan dumpsite, off Apete/Akufo Road Governor Seyi Makinde made the pledge while speaking during a visit for an on-the-spot assess-

ment of the site in Awotan, Apete, Ibadan, assuring the residents of the area a n d c o nt ra c t o r s at t h e dumpsite that all identified challenges at the site would be addressed. Th e g ove r n o r state d that the Ap ete/Aw otan axis would witness huge government presence in 2020 fiscal year. According to him, the Apete/Akufo road would www.businessday.ng

also be fixed in 2020, having already been captured in the budget. He also said that the road would benefit from the planned uplift of the Akufo Farm Settlement, which government plans to transform to farm estate. The project, he said, would begin in the new year. He said: “We recognise the environmental impact

on our people, especially w ith the potable water facilities within about two kilometres radius of the dumpsite. We will make sure that the road is fixed soon because it leads to Akufo Farm Settlement. And you know we have said that the money we will spend on the rehabilitation of the road has been captured in the 2020 budget,” he said.

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s the custodian o f hu ma n re source practice in Nigeria, the Chartered Institute of Personnel Management of Nigeria (CIPM) has indicated its resolve to lead the charge on the Nigerian labour law review, as a way of bridging human management, resource and organisational goals. “We have had conversations with the President of the National Industrial Court (NIC) for support on the review of the Nigerian labour law for which we are commencing a one-million signature campaign soon. So, if you want the outdated labour law reviewed, make sure you append your signature when the time comes,” said Wale Adediran, president and chairman of governing council of the CIPM. Adediran stated this at the 36th induction ceremony of the institute, held recently in Lagos where he assured the inductees of the institute’s readiness to continually update and implement progressive initiatives that will further

improve human resources practice in Nigeria. “On the part of the institute, we are not relenting in giving the best value that will be beneficial to your career, organisation and the society,” Adediran said. According to Adediran, it is currently non-negotiable for practitioners to portray professionalism in executing their duties within the workplace irrespective of sector. He believed that practitioners should be constantly reminded of the institute’s core values that have upheld the CIPM for over five decades; hence HR practitioners should continually apply this to their daily dealings. Adediran disclosed that the CIPM have set up an Ad hoc committee, led by Musa Rabiu, for the accreditation of the institute’s diploma in the scheme of service Victor Banjo, CEO, Omari Consulting Ltd., and guest speaker said leveraging strategic partnership; human resource managers should be able to align human resources and business strategy.

Allow your children to be immunised, monarch tells parents

istrict head of Wakama in Nasarawa St a t e, Ad a m s Makka-Nangba, has urged p a re nt s t o a l l ow t h e i r children be immunised against measles and meningitis in order to boost their health and standard of living. Makka-Nangba, made the call on Friday, while speaking with newsmen after a sensitisation meeting with the Wakama ward immunisation focal officer, Martina Namo. He called on the parents to ensure that all children of between ages nine months and 59 months were left out of the immunisation as scheduled for November 30 by the state government. The traditional ruler said that the importance of child immunisation to societal development could not be over-emphasised, hence the need for parents to embrace it. He promised to continue to mobilise parents to bring out their children for immunisation as part @Businessdayng

of his efforts at complementing g overnment ’s efforts towards improving the health status of the children. “ Me a s l e s a n d m e n ingitis are deadly diseas es, hence the ne e d for parents to mobilise their children for the exercise, as it has been said that a healthy nation is a wealthy nation. “I also want to call on all entire Wakama village heads, traditional titles h o l d e r s, w o m e n l e a d ers, youths, churches and mosques as well as all the residents to participate fully in the exercise. “I also want to commend the federal, state and local governments for paying adequate attention to the programmes targeted at eradicating measles, meningitis and other health challenges being faced by the people,” he said. Makka-Nangba called on the focal officer to ensure effective coverage of all the communities in the district by health workers during the exercise. NAN

Monday 02 December 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Have a stress-free Christmas that have been so kind or particularly helpful through the year. Shopping with a list helps curb or manage impulsive spending. It takes a great deal of will power to not cave in to the temptation amidst the flashing lights and Christmas music. Build in some indulgence; its too dull to have to watch every single penny at Christmas; it takes away some of the fun and excitement; but leave your credit card at home; avoid going into debt for Christmas. What do you already have? Make the time to rifle through your cupboards and store; you will be surprised to find lots of items from birthdays or past Christmases that are still un-opened years later. These can make ideal gifts for friends and family as long as you don’t give Aunty Matilda the same ghastly beaded floral clock that she gave you three years ago! You can’t use it, but someone else might just love it. It’s the thought that counts, not the amount Don’t feel obliged to buy expensive gifts just because they are expensive. A thoughtful gift, something that demon-

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‘

Don’t feel obliged to buy expensive gifts just because they are expensive

‘

e all know t h a t Christm a s Day falls on 25th December each year, yet somehow many of us seem to be caught unawares and spending gets out of control. Do we put ourselves under far too much social and financial pressure at Christmas? Money issues are one of the leading causes of stress during the holiday season. Gift buying, travel and entertainment are some of the major culprits that increase the financial burden. Here are some tips that I am following closely this year. Do join me! Set three goals Just because it’s Christmas doesn’t mean that you shouldn’t have SMART goals to accomplish during the period. Don’t have too many so you can achieve them. It could be about relationships; there may be things that you love to do with your family but just don’t find the time. It could be about your business; setting aside important time with your team to reflect on the year gone by and the approaching the new year 2020 and a new decade. It could and should be about you; building in some precious me time to just be; to reflect and give yourself some focus. Make a Christmas budget and stick to it How much can you afford to spend this Christmas? The key is to make a budget and to do all you can to limit your spending within it. Start with your usual obligations and expenses so you do

not fall short on priorities and due payments such as home or office rent, utility bills, insurance premiums, debt etc. Once these items have been taken out of your budget, you can work out how much you can afford to spend on gifts. The Christmas trappings will include gifts, decorations, food and drink, clothes, entertainment, phone calls, transport costs, charitable donations and travel. It is so easy to get carried away with all the festivity but you will enjoy it so much more if your spending is within limits. If you are prone to spending all that you have, transfer the Christmas money into a separate bank account that you seldom use and pay for your Christmas spending from that account; it will help you keep track of your expenses. Make a list You want to buy presents for everyone but can you afford to with everything else that you have going on including school fees due in January? Make a list of friends and family for whom you wish to or feel obliged to purchase gifts. How much can you afford to spend on each person? It’s a nice way to show appreciation to those

strates love and care, is of far greater value than one that is meant to impress. Gifts of sentimental value, such as framed photographs, a potted plant, or a special book, aren’t that expensive. We must find ways to teach our children by example that thoughtfulness is more important than price and that its not all about money. Encourage them to use their talents to create handmade gifts for loved ones who will treasure them. This is an opportunity to talk about value and values. Give the gift of stock The gift of stock or a lump sum mutual fund investment managed by a reputable fund manager is a thoughtful financial gift to a young child. This introduces them to the world of saving and investing and could be the start of a rewarding

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long-term investment plan. A mutual fund is a professionally managed fund that pools money from several investors to invest in securities including stocks, bonds and money market instruments both in local and foreign currency. You can invest in a mutual fund for as little as N5,000. Why not make an investment for yourself this Christmas? Perhaps you’ve been sitting on the sidelines all year ignoring the markets? Take advantage of stock prices that have left some valuable stocks underpriced. If you are fortunate and have received a bonus or some windfall, close the year by adding to your financial security. Touch a life We’ve all been moaning about how difficult 2019 has been for business. The truth is that there are millions of people far worse off than you are. Think of something that you can do in the run up to Christmas and beyond. that will make a difference and bring a smile to someone’s face. Give some thought about the way you give; will it be one off, or something more sustainable that has a long term social impact and keeps giving. Be mindful of where you channel your resources to ensure that it is handled appropriately. Give of your time There are people amongst us that are very lonely and would cherish a visit from you. Make @Businessdayng

the time; the value of that time with a widow or widower, or an old person is immeasurable. It could be a friend that is going through significant challenges. Invest in relationships; this is a far greater investment than gold and silver. A visit to a loved one that you haven’t seen in a long time, a phone call that you’ve been delaying, a handwritten note of appreciation; these are the seemingly little things that make all the difference in our frenetic world. Our time is so precious, so this makes the gift of time one of the most precious. Many Nigerian families will still be paying for their Christmas indulgencies well into 2020. Don’t be one of those that starts the new-year utterly broke and looking to borrow from friends and family for school fees, because you overspent in December. In the midst of all the festivity, find a moment to stop and reflect on the true essence of Christmas and what truly matters.

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

Monday 02 December 2019

BUSINESS DAY

insurance today

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Analysts see Uber licence loss impacting negatively on insurtech sector Modestus Anaesoronye

he loss of Uber’s licence to operate in London could have a damaging impact on insurtech firms that have developed products for the ride sharing market, according to data and analytics firm GlobalData. UberTransport for London (TFL) recently informed that Uber’s will not be granted a new licence to operate in London following repeated safety failures. “TFL’s decision will not only have impacts on the thousands of drivers and millions of passengers that use the service, but also specialized insurtechs that have developed products to specifically cater to the ride sharing market,” said Yasha Kuruvilla, analyst at GlobalData. “Companies like Inshur and Zego are built around providing quick and flexible insurance to the ride sharing and ride hailing economy,” Kuruvilla explained. “Inshur entered into a partnership with Uber in May of this year while Zego recently became the first UK insurtech to be granted its own insurance licence, allowing it

L-R: Abisola Onigbogi, ED Technical, ARM Pension Managers; Babatunde Phillips head, States Operations Department, PenCom; Peter Aghahowa,head, Corporate Communications Department, PenCom; Carol Alex-Uzomah, AGM, Corporate Communications Department; Kunle Odebiyi, head, Micro Pensions Department, PenCom; Eniola Adebulehin , SM, National Databank Management Department; Sola Adeseun, acting zonal head, South-West Zonal Office, PenCom and Elochukwu Nwankwo, Legal Department, PenCom during the 2019 Journalist Workshop organised by the National Pension Commission (PenCom) in Benin, Edo State

greater flexibility when creating its products.” “However, following today’s news, these two companies, and others like them, will be worried that one of their core customer groups may soon be non-existent.” Uber initially lost its licence in 2017 but was granted two extensions, the most recent of which expired on Sunday. But the firm has said it will

appeal the decision by TFL, and it’s 45,000 drivers in London can continue to operate during that time. GlobalData said the move from TFL represents part of a wider trend, whereby regulation often lags behind the market. “Once new economies grow to a size where regulators can no longer ignore it, decisions will likely be made that will negatively af-

fect businesses acting within them,” Kuruvilla continued. “Insurtechs will be disproportionally affected by new regulation in the short term because of their highly specialized nature compared to the larger incumbent players. While it may be Inshur and Zego that feel the brunt of it today, it is simply a matter of time before new regulation hamstrings another insurtech in the market.”

NAICOM approves new directors for Standard Alliance Insurance BUNMI BAILEY

he National Insurance Commission (NAICOM), Nigeria’s insurance regulator has approved the appointment of Haruna Mohammed and Uzoma Igbonwa as the non-executive directors for Standard Alliance Insurance Plc. According to the company, the directors are undoubtedly coming on board

with vibrant enterprising mind-set coming from the vast experience of driving entrepreneurship, diversified background spanning from banking and international equity market. Haruna Mohammed is an economist and ardent investor with an interest in financial services and agriculture. The Kaduna born indigene has over 20 years’ experience in Commercial and development banking rising to the position of deputy general

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manager. He is a member of the prestigious Institute of Directors of Nigeria and a Certified Independent Director. Uzoma Igbonwa, an Anambra indigene who is also an economist has over 28 years’ experience in Internal Control System and Foreign Exchange and Treasury management. He was the general manager of Mazola Vegetable oil and edible Products Inc. in the USA before returning to Nigeria to establish

his own business. He is the Chairman Board of directors of several companies. NAICOM also approved the appointment of Richard Ododo as the managing director and Odusi Niyi as the executive director of the company. Ododo is an Insurance Practitioner with over 30 years’ experience in the Industry cutting across various functional areas specifically insurance brokerage, insurance underwriting and risk management.

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ON THE MONEY 6 things you must consider when buying a car

or most individuals, buying a car is usually the first major purchase upon the attainment of financial stability and independence. However, before you buy that dream vehicle, we have identified six things that would help you make a well-informed buying decision. Consider your average usage: Ask yourself a simple question. Where will I drive the car to and how often? In the city or on dirt tracks? If the answer is a daily commute to work, then do you need an SUV? For most people, a car is not just about utility but also about self-expression, a way of showcasing your identity. That is perfectly natural, and if you want to spend a little more on this, it’s completely fine. But think about challenges like the cost of ownership, high maintenance, among other things before you make the final decision. Automatic or Manual: Automatic transmission cars are great if you drive yourself around, have a long commute and often get stuck in traffic jams. However, automatic transmission variants cost more and give a lower mileage. Take all these factors into account before making a choice. Do you want a new or preowned car: This is also a consideration that will depend on your budget. A new car will be more expensive than a used car. For most people, a used car is what they can afford. If you are considering a pre-owned car then make sure it is in excellent condition; get an expert to review the car and check its roadworthiness. Ensure to ask the owner about the history of the car. Where did they drive it to and for how long have they owned the car? Has the car suffered any damages? Test drive: When buying a car, you need to test drive it. Don’t just look at the interior

@Businessdayng

and exterior then select the car you want. Drive it for a distance to see if you feel comfortable when you drive it. Pay attention to unusual sounds from the engine or the wheels. Ensure that the internal components are in good condition – A/C, audio system, light and wiper controls, etc. If the car doesn’t feel like a good purchase, pull out of the deal while you still can or ask the dealer to make the necessary repairs before the final purchase. Research: Researching your car dealership is very important especially if it is your first-time doing business with them. Make sure you look at more than one car dealership and do a comparison. Ask questions and address any concerns before any purchase agreement. If there is a model you would like, research it thoroughly before making your final purchase. Insurance: In Nigeria, it is mandatory for you to have third-party motor insurance, at least. An insurance policy will provide financially support to you if your vehicle is involved in an accident or if anyone is hurt in the accident. Insurance will also replace your vehicle if it is stolen or destroyed by fire, depending on your insurance package. To get an Insurance Cover for your vehicle, look no further than Old Mutual. For more financial education like this, you can call Old Mutual on 01-2719393 to arrange a free financial education session for your team, or on a one-on-one basis. Our financial advisers can help you with the right kind of financial and insurance advice. For more information, visit your nearest Old Mutual branch or go to www.oldmutual.com. ng or follow our social media pages @oldmutualng on Facebook and Instagram and @oldmutual_ng on Twitter. We look forward to helping you with your money matters.

Monday 02 December 2019

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Listed insurers claims expense jump 22.40% to N86.29bn in Q3 BALA AUGIE

laims are mounting for insurers even as operators are more cautious of the businesses they admit into their books so as not to erode shareholders’ value. The cumulative claims expenses of the 18 largest listed companies that have released third quarter results increased by 22.40 percent to N86.29 billion, from N70.48 billion the previous year. The N86.29 billion mandatory obligation is 53.45 percent of total net premium income of N161.32 billion as at September 2019. The claims emanated from the oil and gas, marine and aviation risks, and BusinessDay had reported the industry exposure to Egina FPSO, a flagship offshore project driving local development in Nigeria, hit N50 billion in 2018. In order to fend off the effect of declining underwriting profit brought on by unhealthy competition and rush for corporate accounts, some insurers resort to rate cut, which is inimical to premium volume. Insurers are in business to meet claims obligations to their customers as at when due, but it is not every risk they accept. They have to be cognizance of pricing; otherwise it will be practically difficult for them to reward owners in form of share appreciation and bumper dividend. Analysts say premium income has to grow at a fast pace to absorb mounting claims and that only those with a solid capital base can take on more risk. According to the Nigerian Insurers Association (NIA), the number of policy holders is currently at 1.80 million, which is abysmally poor for a country with a population of 200 million, and underscores the low penetration level. The insurance industry paid over N207 billion as claims to some policy-

holders in 2018. “An average Nigerian is supposed to have one insurance policy or more but at the end of 2018, we only have 1.8 million policyholders,” said Yetunde Ilori, Director-General of NIA. Ilori stressed that in order to avoid non -payment of claims or delay in claims payment, insurance consumers must avoid under insurance, comply with policy terms and conditions, update their knowledge on insurance, pay their premium when due and seek professional advice. Insurance is the least of the problem of Nigerians, a country where over 50 percent of a population of 200 million live on less than $1.98 a day. Unemployment at 23 percent is one the highest in the world, while a hike in fuel and Value Added Tax (VAT), combined with a rising inflation has put consumer spending in check. Nigeria’s inflation recently rose to a 17 –month high of 11.60 percent. As a result of these challenges, Nigeria’s insurance penetration is at 0.31 percent, which is extremely low, even compared with countries with similar GDP per capita, for example India with insurance penetration at 3.69 percent. Of course, there is positive correlation between economic posterity and the propensity to purchase insurance, as wealthy people are likely to protect themselves and their families. Head of Asset Management at J.P Morgan, Alexandra Treves told CNBC in an interview that Asian Insurance is poised for growth as consumers grow wealthier. “As people get wealthier, they are going to spend more money on insuring, not just their goods and their livelihoods, but also of course their health and their lives,” said Treves, who is managing director and investment specialist of emerging markets and Asia Pacific equities at the firm. Drilling down the financial statement

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of listed insurers show Custodian Investment’s claims expenses spiked by 84.23 percent to N18.39 billion in September 2019 from N8.41 billion the previous year. Its loss ratio or claims ratio increased to 85.96 percent in September 2019 from 70.90 percent the previous year. A high loss ratio means a company is spending more on claims to generate each unit of premium income, and it is a sign of operational inefficiency. NEM Insurance’s claims expenses surged by 248.40 percent to N2.73 billion in September 2019, while loss ratio increased to 26.25 percent in the period under review from 7.53 percent the previous year. AxA Mansard’s claims expenses were up 45.74 percent to N13.12 billion as at September 2019, while loss ratio increased to 68.58 percent in the period under review from 62 percent the previ-

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ous year. Continental Reinsurance’s claims expenses were up 10.83 percent to N2.15 billion in the period under review, while loss ratio increased to 48.39 percent in September 2019 from 44.55 percent as at September 2018. However, some insurers bucked the trend, but industry still suffers from deteriorating margins that limits growth prospects. Wapic Insurance’s claims expenses were down 29.21 percent to N2.20 billion in September 2019, while loss ratio fell to 39.50 percent in September 2019 from 57.07 percent the previous year. Mutual Benefit’s claims were down 25.82 percent to N3.62 billion in the period under review, while loss ratio fell to 34.21 percent in September 2019 from 49.25 percent as at September 2018.

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Monday 02 December 2019

BUSINESS DAY Harvard Business Review

MondayMorning

In association with

Superstar firms are running away with the global economy Matej Bajgar, Sara Calligaris, Chiara Criscuolo, Luca Marcolin and Jonathan Timmis

magine a dynamic economy. Businesses compete for customers under the constant threat of new competitors entering the market. If firms want to survive, they need to constantly innovate and upgrade the quality of their products while keeping their prices low. Resources keep flowing to the firms that use them best. We seem to be drifting away from this ideal. In two new studies, we find signs of a weakening competitive environment for a large number of countries using two distinct measures: firm markups and industry concentration. These studies suggest that the trends first observed in the U.S. are part of a broader phenomenon, likely caused by factors that are common to many developed economies. One candidate is merger and acquisition (M&A) activity, which has reached record highs in recent years. Our preliminary results indicate that some M&As, especially large ones, are correlated with increases in industry concentration measures. Another candidate is the rise of “superstar” firms — a minority of firms that are more innovative, productive and profit-

able than the others. This view is supported by the data: In line with other papers, we find that large firms in the concentrating industries display a faster, not slower, productivity growth compared with large firms in industries where concentration is stable or decreasing. “Superstar” firms are often big investors in intangible assets — such as advertising, training, management, R&D

and data. Indeed, we find that firms operating in industries with more intangible assets tend to have higher markups, once the role of other firm and industry features in shaping markups is taken into account. Finally, digital technologies may be the elephant in room, though their influence remains hard to pin down. They determine the winners and losers and allow star firms to scale up

and become the superstars. But they also present challenges to researchers trying to measure them. The jury is still out on the relative importance of M&As, intangibles and digitization, together with other factors such as globalization and anti-competitive regulations. For firms, however, the message is clear: This is a superstars’ economy, and the scope for being average

is becoming increasingly narrow.

(Matej Bajgar, Sara Calligaris, Chiara Criscuolo and Luca Marcolin are economists at the Organization for Economic Cooperation and Development. Jonathan Timmis is an economist at the International Finance Corporation — World Bank Group.)

3 ways to motivate your sales team — Without stressing them out Scott Edinger

t’s widely accepted that if you are in sales, you will have a quota. Achieve your quota, good job. Miss your quota, bad job. Miss your quota by a lot or miss it multiple times: no job. This creates stress for individual sellers and the sales organization as a whole. While it is the sales team’s job to bring in business, simply cranking up the heat to get the numbers you want can backfire. Too much stress in any professional situation will mask talent and lead to poor decision-making. Stress does help us get the job done, but only to a point. Too little stress, and you’re in the weak performance zone; too much anxiety, and performance is impaired. In the middle, an optimal level of stress produces what we’d call

peak performance. The technical term for that zone is eustress, which is exactly where leaders should set the pressure to create optimal results.

Leaders can maximize performance by engaging with sellers in these three areas: — FOCUS ON CREATING AN EXCEPTIONAL EXPERI-

ENCE: The sales experience is a vital differentiator when customers evaluate their options. — FOCUS ON THE SALES

PROCESS: If you want to create a process that will help your sellers sell, match it to how buyers buy. In each phase of the sales process, there are a few key actions that influence whether an opportunity will progress to the next stage. — FOCUS ON COACHING: Leaders can provide good models of what to do, followed by practice, clear feedback on specific skill improvements and follow-up to incorporate feedback into performance — not just once, but over and over again as a skill set is honed to proficiency and then mastered. As a leader, you have the greatest influence on the stress levels of your team. Pressure may create diamonds out of coal, but you are working with people.

(Scott Edinger is the founder of Edinger Consulting Group.)

Monday 02 December 2019

Harvard Business Review

BUSINESS DAY

MondayMorning

In association with

The delicate balance of making an ecosystem strategy work Michael G. Jacobides

usiness ecosystems re becoming all the rage. To execute an ecosystem strategy, you must understand how to make an ecosystem work. This means not only offering a seamless value proposition but also doing the hard work of brokering attractive partnership arrangements and ensuring value capture. These two seemingly opposed yet interlinked forces form the yin and yang of ecosystem success. All successful ecosystems have a strong yang — a value proposition that rests on seamlessly integrating various services for a customer. Consider Tencent, whose WeChat platform bridges the gap between Chinese mobile subscribers’ lives and their activities, from social media to payments. In Europe, Tencent built WeChatGo, which provides a prepaid SIM card

that saves Chinese customers from costly roaming charges — but also offers an interface connecting Chinese tourists to local shops, museums and attractions. It offers them discounts in the app and delivers a seamless and intuitive experience. Underpinning this simplic-

ity for the customer lies a less visible but critically important challenge of careful strategic planning: the ecosystems’ yin. This refers to building the intricate, strategically calculated web of relationships that make an ecosystem work. When Tencent set up WeChatGo in Europe, it contracted with

KPN, the Dutch telco operator, to obtain European SIMs with prepaid airtime that Tencent could send to Chinese tourists before they even stepped on a plane. Then, Tencent built an entire platform around KPN, hammering out deals with European retailers and attractions to make their offering

truly valuable — both to Chinese tourists and those who wished to serve them. Of course, companies can’t just build a system that benefits customers and aligns with partners. The orchestrator must also derive some value, sooner or later. Some ecosystems generate cash. Others rely on building future success by increasing customer stickiness, facilitating growth or heightening excitement for the customer. Ultimately, all ecosystems need to create some tangible value for the orchestrator. As the world of ecosystems matures, we will see both impressive success stories and spectacular failures. Successful ecosystem strategy means shaping a yin that matches your yang.

(Michael G. Jacobides is a professor of strategy at London Business School.)

How marketers can overcome short-termism of marketing: The more marketers can demonstrate their impact, the more likely they are to receive additional resources to promote strategic planning. — Don’t compete on price — build value: A buoyant economy can create such a shift as customers worry less about debt and more about quality. It’s human nature to focus on easy tasks that keep business humming, but over time this short-term mindset delivers diminishing results. Marketing can lead into the future with the right support and right focus.

Christine Moorman and Lauren Kirby

arketing is all about strategy — or is it? To find out, the August 2019 CMO Survey asked U.S. marketing leaders: “How much time do you spend managing the present versus preparing for the future of marketing in your company?” Overall, 341 leaders responded by reporting they spend 68.5% of their time “managing the present” and only 31.5% of their time “preparing for the future.” This finding holds across company size, sector and industry. We’ve identified four drivers causing marketers to focus on the present at the expense of the future: 1. PRESSURE FOR SHORTTERM EARNINGS: Marketing’s role is often viewed as a lever for driving short-term sales instead of long-term growth. 2. TOO FEW STRATEGIC ROLES: Marketers are often assigned only tactical roles, such as managing social media or promotions. 3. ROLE AMBIGUITY: Marketers may focus on immediate priorities to make quick wins and protect what they can con-

(Christine Moorman is a professor at Duke University’s Fuqua School of Business, where Lauren Kirby is a second-year MBA student.). trol. 4. COMPENSATION STRUCTURE: Short-term success can lead to performance bonuses; long-term strategic objectives can help build equity in the firm. So, what should you do if your marketing organization is caught up in the chaotic whirlwind of the present? ADOPTING A FUTURE FOCUS — Allocate time every week

to think long-term: Strategic planning should not be something that happens once a year. — Invest in marketing capabilities: Organizational-level knowledge and skills embedded in key processes are engines that drive success. — Drive decisions from data: Marketers report using marketing analytics to make decisions only 39.3% of the time. This is too low. — Focus on growth: Market-

ers should be encouraged by senior leadership to take calculated risks that align with corporate growth. — Deepen cross-functional ties: When marketing partners with R&D, digital, technology, operations and finance, its sights are set on critical firmlevel outcomes. — Fund marketing for the long-term: Building growth takes sustained investment. — Demonstrate the impact

Brought to you courtesy of First Bank Nigeria

Monday 02 December 2019

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: November 29 – December 06, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.28

Q3 2019 — higher by 0.17% compared to 2.12% in Q2 2019

Broad Money Supply (N’ trillion)

35.26

Increased by 0.66% in Oct’ 2019 from N35.03 trillion in Sept’ 2019

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

25.80 2.06

Increased by 1.30% in Oct’ 2019 from N25.47 trillion in Sept’ 2019 Increased by 2.51% in Oct’ 2019 from N2.01 trillion in Sept’ 2019

Inflation rate (%) (y-o-y)

11.61

Increased to 11.61% in October 2019 from 11.24% in September 2019

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5 Adjusted to 13.5% in March 2019 from 14% 13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5%

External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

39.83 64.05 1.81

November 27, 2019 figure — a decrease of 1.49% from November start November 29, 2019 figure— an increase of 0.23% from the previous wk October 2019 figure — a decrease of 2% from September 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

29/11/19

22/11/19

27,002.15 13.03

26,991.42 13.03

Change(%)

0.04 0.04

Volume (bn)

0.23

0.21

9.54

Value (N’bn)

3.66

2.84

28.99

MONEY MARKET NIBOR Tenor

Friday Rate

Change

(%)

(Basis Point)

29/11/19 OBB

3.7140

O/N CALL 30 Days

4.5000 4.6250 12.4500

4.4300 4.4500 13.6066

7 18 (116)

90 Days

13.0300

12.7589

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

22/11/19

29/10/19

29/11/19

Indicators

29/11/19

Energy Crude Oil $/bbl) 64.05 Natural Gas ($/MMBtu) 2.46 Agriculture Cocoa ($/MT) 2597.00 Coffee ($/lb.) 118.45 Cotton ($/lb.) 0.00 Sugar ($/lb.) 12.81 Wheat ($/bu.) 526.75 Metals Gold ($/t oz.) 1457.27 Silver ($/t oz.) 16.93 Copper ($/lb.) 266.65

Official (N) Inter-Bank (N)

307.00 362.45

306.95 362.40

306.95 362.01

BDC (N) Parallel (N)

360.00 360.00

Tenor

(%)

0.23 (5.75)

(0.63) (19.50)

(0.69) 2.47 (100.00) 0.55 2.53

34.14 (9.02) (100.00) (16.44) 21.51

(0.89) (1.40) 0.64

10.60 (1.51) (18.65)

Change

(%)

(Basis Point)

22/11/19 0 (32) 12 (16) (8) (5)

Disclaimer This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

Friday

Change

(%)

(Basis Point)

29/11/19

22/11/19

13.47 13.80

10.87 13.32

259 48

6 Mnths 9 Mnths 12 Mnths

10.14 13.95 14.77

12.21 13.97 13.85

(207) (2) 93

Indicators

Friday

0.00 11.79 12.05 12.31 12.74 13.36

Friday

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Friday

0.00 11.47 12.18 12.15 12.66 13.31

(%)

1 Mnth 3 Mnths

AVERAGE YIELDS

29/11/19

YTD Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

BOND MARKET

3-Year 5-Year 7-Year 10-Year 20-Year 30-Year

1-week Change

22/11/19

3.7900

Tenor

Global Economy In the U.S, gross domestic product (GDP) growth rate came in at a revised 2.1% yearon-year in Q3 2019, following a 2% expansion in the previous quarter. Private inventories were revised higher and business investment fell. According to the Bureau of Economic Analysis (BEA), consumer spending growth was unchanged as net exports fell. Personal consumption expenditure contributed the largest to growth, boosted by spending on goods and services. Net external demand weighed on growth for the second straight quarter even as exports rose by 0.9% and imports increased by 1.5%. Elsewhere, Eurozone inflation accelerated 1% in November from a near three year low of 0.7% in October. Prices increased at a faster pace for services and processed foods. Core inflation, which excludes the volatile prices of energy rose to 1.3% from 1.1% the previous month.

Friday

Change

(%)

(Basis Point)

29/11/19

22/11/19

Index Mkt Cap Gross (N'tr)

3,181.44 9.94

3,166.01 9.89

0.49 0.51

Mkt Cap Net (N'tr) YTD return (%)

6.49 29.51

6.46 28.89

0.46 0.62

YTD return (%)(US $)

(26.32)

(26.93)

0.61

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day

4,384.18

7.7998

13-Nov-2019

182 Day

12,920.90

13-Nov-2019

364 Day

107,938.48

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

13-Nov-2019

Domestic Economy In the third quarter of 2019, the total value of capital importation into the country stood at $5.37billion, a decrease of 7.78% over the previous quarter. The largest amount of capital importation by type was received through Portfolio Investment (55.88%), followed closely by Other Investment which accounted for 40.39% and Foreign Direct Investment (FDI) accounting for 3.73% of the total capital imported into the nation in Q3 2019. The United Kingdom emerged as the top source of capital investment during the period, accounting for 37.47% ($2.01billion) of the total capital inflow. Lagos emerged the top destination of capital investment in Nigeria, accounting for 92.71% ($4.98billion) of the total capital inflow in Q3 2019. In other news, the Manufacturing Purchasing Managers' Index (PMI) stood at 59.3 index points in November 2019, indicating an expansion in the manufacturing sector for the thirty-second consecutive month. The index grew at a faster pace when compared to the previous month (58.2 points) as shown in the latest PMI report by the Central Bank of Nigeria. A PMI above 50 points indicates that the manufacturing sector is generally expanding, while a reading below 50 points indicates a contraction. Thirteen of the subsectors surveyed recorded growth during the month, however, the paper products subsector alone recorded decline in the review period. Stock Market The local bourse witnessed a marginal increase in the last trading week of November, supported by gains in the consumer, industrial goods, financial services and Information and Communications Technology (ICT) sectors. Consequently, the All Share Index (ASI) added a marginal gain of 0.04% to end at 27,002.15 points from 26,991.42 points the preceding week. Similarly, market capitalization rose 0.04% to N13.03 trillion from N13.02 trillion the prior week. We envisage that investors would target fundamentally sound and dividendpaying stocks for possible capital appreciation as the year draws down. Money Market Interbank rates rose marginally in the week ended November 29, 2019 as the market remained liquid due to Open Market Operation (OMO) maturity of about N337billion during the week. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates increased marginally to 3.79% and 4.50% from 3.71%

and 4.43% respectively the previous week. The longer dated instruments such as the 30day and 90-day Nigeria Interbank Offered Rate (NIBOR) stood at 12.45% and 13.03% from 13.61% and 12.76% the prior week. This week, rates, especially for short term tenors, are expected to trend upwards whilst remaining in the single digit range due to the expected retail SMIS auction during the week. Foreign Exchange Market At the CBN official window, the Naira depreciated against the greenback to close at N307/US$ from N306.95/US$ the prior week. Likewise, at the Nigerian Autonomous Foreign Exchange (NAFEX) segment, the local currency depreciated by 5kobo to close at N362.45/US$ from N362.40/US$ the week before. The local currency remained unchanged at the parallel market segment, trading at N360/US$. The maturing futures contract of $1.47 billion led to pressure in the market as market participants sought for dollars to cover their positions, thus resulting in the marginal depreciation at the NAFEX end of the market. This week, we expect rates to trend around current levels without a significant change due to the expected apex bank's intervention. Bond Market The bond market witnessed modest decline in average yields across tenors last week as market participants anticipated the outcome of the Monetary Policy Committee (MPC) meeting and the Treasury Bills Primary Market Auction (PMA). Nonetheless, minimal demand was observed for select maturities thus resulting in a marginal decline in the average yields. Yields on the five-, tentwenty- and thirty-year debt papers closed at 11.47%, 12.15%, 12.66% and 13.31% from 11.79%, 12.31%, 12.74% and 13.36% respectively, the previous week. The Access Bank Bond index rose marginally by 15.43 points to close at 3,181.44 points from 3,166.01 points the prior week. Yields are expected to continue the current trend given surfeit liquidity in the system. Commodities Oil prices rose marginally on concerns that arose from U.S. President Donald Trump signing into law a bill backing protesters in Hong Kong, fuelling tensions in China. Bonny light, Nigeria's benchmark crude gained 0.23% or 15 cents to close the week at $64.05 per barrel. For precious metals, optimism about a deal between Beijing and Washington dampened demand. Consequently, gold slid 0.89% to $1,457.27 per ounce and silver dropped by 1.40% to $16.93 per ounce. This week, oil prices may soar on expectations of the December meeting by the OPEC+ (Organization of the Petroleum Exporting Companies and Russia). Hopes for an interim U.S.-China trade deal may stifle demand for precious metals in the new week.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Dec’19

Jan’20

363

362

363

Inflation Rate (%)

11.70

11.81

12.1

Crude Oil Price (US$/Barrel)

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

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https://www.facebook.com/businessdayng

Feb’20

Exchange Rate (NAFEX) (N/$)

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Monday 02 December 2019

BUSINESS DAY

Start-Up Digest

In association with

Entrepreneurs need exceptional leadership skills to succeed in business — Kolawole

Tony Aspire Kolawole is the president of Billionaire Realtors Group, a leading real estate brokerage firm in Africa that boasts of a team of over 20,000 realtors. Kolawole, in this interview, tells JOSEPHINE OKOJIE about his entrepreneurship journey and the Billionaire Realtors Group. Tell me about your entrepreneurship journey? rom the outset, I was involved in entrepreneurship. While I was on a teaching job after my secondary education, I could not survive with the low wage of the teaching profession, thus, I started supplying books to students as another stream of income. I could do this because I spotted a problem and created a solution. The problem was that most students did not have literature books and all I needed to do was to provide some for them. Afterward, I went on to start a telecommunications company, Aspire Talknet, offering SIM swap solutions to people in my neighbourhood. We partnered with top network providers to aid our work. The rationale behind this was to help people find solutions faster, rather than going to head offices of these telecommunications companies at Ikeja and Surulere. This was how my entrepreneurship journey started.

What happened to your telecommunications company and why are you in the real estate business now? In 2015, I lost my telecommunications company because of changes in government policy. Things got hard and it was the same year I went into the real estate industry as a marketer. That period was not a season of wine and roses for me. It was time for hard work, but more importantly, the quest for survival was a goal. Well, I did not sell any property for months when I

started as a marketer in the real estate business. In December 2015, I made my first sales. I was already in debt so the commission seemed insignificant. Nevertheless, in February of 2016, I made huge sales and my commission was in millions. Immediately I saw the alert, I knelt on the main road and raised my hands to praise God. I am sure some people thought I was crazy, but the craziness is still working for me till date. How did you start the Billionaire Realtors Group? After I made my first millions from real estate, I started organising real estate marketing training events for aspiring realtors, and from a thirty-seater capacity, we rose to thousands performing realtors in a short time. We registered Billionaire Realtors Group (BRG) as a brokerage firm and started partnering with firms like Veritasi and Landwey in 2016. Today, we sell the properties for all the top real estate companies in Nigeria. What are some of your expansion plans? I started Aspire Heights in 2016. We needed to do something interesting and offer more creative solutions. Our first property was Beachfront Courts. After a while, we changed the name Aspire Heights to Tribitat. ‘Tri’ means three, depicting the past, present, and future of real estate. ‘Bitat’ stands for habitation. BRG is the sales and marketing business; it handles sales and marketing for Tribitat and other top real estate firms.

started a phone call business. It took a while to pick up but it did. This time, I was an undergraduate at Lagos State University and before then, I already had an Ordinary National Diploma (OND) from Lagos State Polytechnic.

Tony Kolawole

What new project is Tribitat involved in now and what major projects have you done asides Beach Front Courts? We are working on three projects: Royal Bay at Ibeju Lekki, Lekki Boulevard at Ibeju Lekki, and Lekki Pearl Garden Abijo/Lekki. What is the most interesting fact about you? I read a lot and I invest in personal development. As a low salary earner when I taught, I spent most of my salary on books and this eventually shaped me as a person. I read myself out of poverty before coming out of it in physical reality. Reading also taught me good leadership skills, especially how to manage people and it is proving effective in the business right now. Why do you think Nigeria in the diaspora should invest in real estate here in Nigeria? Real Estate in Nigeria flour-

ishes even in recession. When you buy real estate in dollars, it grows and can skyrocket within a short period. The huge Return on Investment (ROI) covers up for the devaluation of the Naira. Also, Rental income as a passive income is a very good investment. Finally, land banking is a good reason for Nigerians in the diaspora to invest in real estate. What is the biggest risk you have ever taken? I risked all my savings to start a business, I was not sure of anything. While I was still in paid employment, we moved from Ajegunle to Okokomaiko in Lagos State. On getting to Okoko, I told my mum I would not be going back to paid employment as I wanted to become an entrepreneur. She advised me against it but I took funds I had saved from teaching job to start my telecommunications business. I bought a land line when the phone just came out and

How do we ensure avoidance of fraud in real estate, especially for Nigerians in the diaspora? Every real estate investor has to do due diligence. Before you buy a property from someone, try as much as possible to learn about the company - the CAC, social media pages, and the company’s website. If you are not in the country, get a trusted person on the ground to do these investigations before investing your hard-earned money. Our staff are trained to follow up on clients until sales are completed. We also provide after-sales services to ensure clients’ satisfaction. What is your next big move? At Tribitat, we are set to deliver very affordable houses in Lagos. We want to marry real estate and technology in a way that simplifies transactions in real estate. How many employees do you have? For Tribitat, we are three founders. We started together and right now we have 15 people in our employment, while BRG has over 20, 000 realtors at the moment. What are the challenges you have faced? One of the major challenges of doing business in Nigeria is inaccessibility to capital to

carry out major projects. Real estate companies outside Nigeria enjoy access to funds and the mortgage system works well for them, but here we struggle for funds. Banks and investors offer us loans with high-interest rates that are not realistic. Another challenge that we face is the high cost of property development due to the difficulty of getting skilled labour, building materials and proper documentation of properties. Bribery and corruption add up to the list. Most property developers have cut corners to get the property documentation for their properties. This, in turn, results in inflation of property prices. The government initiates a straightforward process of getting property documentation easily. How have you been able to overcome these challenges? If your sales force is strong, it will help the business to stand in the face of financial challenges. At Billionaire Realtors Group, we have a sales team that spans across the nation and beyond—a team of 20,000 is not a joke. In solving the challenge of getting skilled labour, we strive to work with skilful Nigerians instead of importing labour. Our partners ensure that they train their staff from time to time. We are getting fantastic results at lower rates. What’s your advice for anyone starting a business? Business is not as easy as it seems or as it is being painted. You need to have a lot of iron-clad determination, courage, and exceptional leadership skills.

LCCI launches mentoring alumni association, graduates 2019 mentees Gbemi Faminu

he Lagos Chamber of Commerce and Industry (LCCI) last week completed the 2019 edition of its mentoring programme for entrepreneurs while it also launched the mentoring alumni association presided over by selected people among the graduates. Babatunde Paul Ruwase, president of the LCCI, during the event last Thursday, expressed delight at the determination and innovation of the graduates while congratulating them on the completion

of the programme, saying they were focused and resilient. He said the programme, which commenced in 2013, has groomed a total of 293 entrepreneurs in its seven years, adding that the introduction of the alumni association will support the parent organisation’s goals and strengthen the ties between alumni, the community, and the parent organization. Ruwase, who was represented by Toki Mabogunje, deputy president of the LCCI said, “Creating an engaged, supportive alumni network is crucial to an institution’s success and most especially the business community. It is www.businessday.ng

important that the mentoring alumni form a formidable team that can lend support to one another and thus give that competitive edge in today’s tough business environment.” Michael Olawale-Cole, chairman, board of Business Education Services and Training (BEST) unit of the LCCI, said the LCCI has continued to wax stronger in its Corporate Social Responsibility, especially in the development of youths and SMEs through its Mentoring Programme which started in 2013. “To us at the Lagos Chamber of Commerce and Industry, focusing on developmental initiative of the youth is a

means of investing in their future, thereby guaranteeing better tomorrow for our country,” he said. In an interview, Mabogunje said that the graduates have got solutions to growing their business and the alumni association will help She advised them to take over the business environment as they have the necessary capacity and knowledge to grow their business and take advantage of the opportunities abundant in the Nigerian economy. She further said that the alumni association will provide a pipeline of young entrepreneurs which will drive the goals of the

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LCCI. She stated that despite being equipped with capability, the entrepreneurs need easy access to finance and improved infrastructure to enable them perform excellently and also attract clients and investors. Baruwa Adebukola, interim chairperson of the alumni association, said, while delivering her inaugural speech, that the association was created in order to promote the welfare of its members and also provide opportunities for the members of the association. She said, “We have a baby in the LCCI organisation that will ensure the continuity of @Businessdayng

the vision and mission of the organization. This will create an engaging, supportive and protective network that is crucial to the success of our business as well as a positive impact to the LCCI.” Oladehinbo Abosede, CEO, Boslabos Global Concept and a graduate, said that the programme positively impacted her business and provided opportunities for a larger clientele, partnership and business expansion. The 2019 Graduate Mentees Programme, which commenced earlier in March, had a total of 50 mentees. However, only 43 people completed it.

Monday 02 December 2019

BUSINESS DAY

Start-Up Digest

How I grew N3, 000 to N3m in less than one year as food seller - Ajibola RAZAQ AYINLA

t can only take innovation, creativity and good managerial skills for someone like Bimpe Ajibola, a 29-year old Physiologist, to excel by selling foods and catering for people within the country’s seemingly harsh business environment where epileptic power supply, multiple taxation and other logistics challenges are order of the day. This is a young lady who has worked in flagship retail outlets and a logistics firm in Nigeria such as Jumia, Polo Luxury and African Courier Express as the head of sales, business development; retail coordinator, client relationship manager, among others, having bagged Bachelor of Science in Physiology from the University of Ibadan (UI) in 2012. She joined all these firms immediately she finished at the College of Basic Medical Sciences, College of Medicine, University of Ibadan (UI), where she was able to gather the capital for which she set up foods business in 2015. But she couldn’t succeed for lack of managerial skills and probably innovation and creativity. She had to pack up and eventually

Bimpe Ajibola

left Lagos, having run into a big loss. The Owo, Ondo Stateborn Ajibola, had to resurface in 2017 to start all over again and learn the rules of the game in a very hard way, though taking

various courses in business management, investing in personal development. In less than one year, she grew a paltry N3, 000 to N3 million with Ivie’s Kitchen and caterers for Lagosians. She also opened Ivie’s Food

Business Hub where over 40 people have been empowered with skills acquisitions in less than four months. “I initially wanted to be a Paediatric Surgeon, but there is a difference between what you really have

passion for and what you think you like. I have always loved cooking or anything that has to do with foods. I have always experimenting when it comes to foods,” she says. “My mother, being an Edo woman, is basically what inspired all of this in me and along the line, since what I studied seems not getting me what I want. I worked in companies but everything I have done is not in line with what I studied. I had a Bsc to get a job, that was it,” she discloses. “In January 2015, I started my food business, and not up to a year, the business crashed. The business crashed because I did not have fundamental knowledge of running a business properly. The business crashed and I had to move out of Lagos. But in 2017, I came back and was now stronger. I later realised that food business is capital intensive but at the same time, it’s a business that you can start with nothing. “N3,000 to N3 million? Yes, having proper structure put in place helps me increase my profit margin and I’m pumping the money back into the business. All I need is to get is the orders. Once you have made payment and I have it confirmed, we can go ahead

with your orders and that is how it all started. “That was why I said I didn’t need much money to start it and it grew to 10 - 20 orders, catering for small parties, for companies and individual parties, and less than a year I generated over N3 million. I know it could do better. Food business is a good business if you are running it properly.” Speaking on Ivie’s Food Business Hub, which was established by Bimpe Ajibola to teach women and girls rudiments of food business - cooking, food catering and food business management, Ajibola says critical missing links, such as legal aspects, market intelligence, access to information, collaboration opportunities, government policies, among others, are taught to influence the Nigerian food business better. The recipe creator, who describes herself as selfthought chef, discloses that over 40 women and girls have been taught and empowered by Ivie’s Food Business Hub in last four months. She says to be in food business one has to be innovative and creative. The entrepreneur says she is out to ensure that food business is improved in Nigeria in order to improve people’s lives.

According to her, marketing her craft has not been too difficult as she enjoys referral from clients who have been dazzled by her brand offering. “If there’s one thing we don’t fail to do, it is exceeding our client’s expectation per time, which has paid off,” she says. Speaking on the challenges in her line of business, she says, “The challenges are many, but to mention but a few. We know that some fruits are seasonal. It can be challenging getting them when needed. Also, the state of our fruit markets is nothing to write home about and it can be tough getting there,” she notes. “Pricing is also an issue as well as fruit preservation. Then you also talk about the tools of the trade. They are very expensive,” she explains. On how she has given back, the entrepreneur says

she runs periodic training sessions for those who want to learn fruit craft and so far has trained about 130 people, many of whom are doing well for themselves. Lending her voice to entrepreneurship in Nigeria, she says business growth is an ongoing concern. “Businesses are birthed daily, but growth and sustainability is the main issue. Truth is, being an entrepreneur in Nigeria is quite demanding, most especially because of the poor enabling environment. In spite all of the odds, I encourage more Nigerians, especially youths, to embrace entrepreneurship and not give up on their dreams.” Speaking on her future plans, the Fruities World boss says her dream is to be the leading Fruit Styling brand in West Africa and put Nigeria in the world map of exceptional Fruit Stylists.

Foluke: Creative fruit stylist, dogged entrepreneur ODINAKA ANUDU

dedokun Foluke is a fruit stylist that is a cynosure of all eyes at major events. As an exceptional entrepreneur, her creativity speaks volumes. Her expertise at her fruit craft has opened doors for her in the event industry as well as gained the attention of high profile clientele from a business she learnt from a mentor. According to her, she started out about four years ago with a seed capital of N10,000. Foluke, who is the CEO of Fruitie World, says her love and passion for eating healthy, especially fruits, made her venture into the fruit craft. This year, Foluke was among the nominees and eventual winner for the Award of Fruit Stylist and Smoothies of the year by the Association of Professional Party Plan-

ners and Event Managers (APPOEM). She was also a one-time winner of the City People Magazine’s best Fruit Dessert Stylist of the year. “About four years ago I made a decision to venture into fruit styling as a result of my lifestyle, that is, healthy living through healthy eating. I decided to make a business out of my lifestyle and my dream is that everyone would make healthy living through fruit consumption a lifestyle,” she says. The fruit stylist says her business has given her the privilege to meet with some Nollywood celebrities such as Mercy Aigbe who engaged her to provide fruit services during her 40th birthday. Also, her brand, Fruitie World, was engaged by the planners of the 80th birthday party of Chief Ade Ojo, founder of Elizade Motors, sometime back. She was also a fruit vendor at this www.businessday.ng

year’s Access-Lagos Marathon. If there’s one thing the Fruitie World boss does not take for granted, it is her presentation and the level of hygiene she puts in the preparation of her fruits.

“In my line of business, I don’t compromise safety, which was why I had to undergo the level 1 and 2 of Food Hygiene and Safety course of the London Professional Training Centre, Lagos,” she says.

Adedokun Foluke https://www.facebook.com/businessdayng

@Businessdayng

Monday 02 December 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 29 Novemberr 2019

Top Gainers/Losers as at Friday 29 November 2019 LOSERS

GAINERS Company

Closing

Change

N40.1

N38.15

-1.95

DANGCEM

N143

N142.8

-0.2

CUTIX

N1.58

N1.45

-0.13

VOLUME (Numbers)

0.5

IKEJAHOTEL

N1.25

N1.13

-0.12

VALUE (N billion)

0.4

FBNH

N6.8

N6.7

-0.1

Closing

Change

N1299.9

N1350

50.1

MTNN

N118

N120

CCNN

N19

N20

UACN

N7.5

N30.05

N30.45

NESTLE

GUARANTY

Company

ASI (Points)

Opening

STANBIC

27,002.15

DEALS (Numbers)

3,246.00 227,181,386.00

MARKET CAP (N Trn)

3.659

Iheanyi Nwachukwu

Nikkei 225 23,293.91JPY -115.23-0.49%

S&P 500 Index 3,146.38USD -7.25-0.23%

Deutsche Boerse AG German Stock Index DAX 13,247.51EUR +1.93+0.01%

Generic 1st ‘DM’ Future 28,083.00USD -65.00-0.23%

Shanghai Stock Exchange Composite Index 2,871.98CNY -17.71-0.61%

NSE says engaging FG on tax incentives for listed companies, others

T L–R: Jordi Borrut Bel, Chief Executive Officer, Nigerian Breweries Plc; Monica Hemben Ejmunieze, director registrar & regulation affair, National Agency for Food and Drug Administration and Control (NAFDAC); Ayoola Olukanni, director general, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA); Oscar N. Onyema, OON, chief executive officer, The Nigerian Stock Exchange (NSE); Mary Uduk, acting director general, Securities and Exchange Commission (SEC) and Ade Adefeko, vice president, Corporate & Government Relations, Olam Nigeria during the NSE CEO Interactive Session for Consumer Goods Sector, theme: The Role of the Capital Market In Unlocking Value in the Consumer Goods Sector at The Civic Centre, Victoria Island, Lagos.

ASeM Index closed flat. Stock traders exchanged 1.161 billion shares worth N13.174 billion in 18,142 deals in contrast to a total of 1.416 billion shares valued at N17.249 billion that exchanged hands the preceding week in 20,303 deals. The Financial Services industry (measured by volume) led the week’s activity chart with 801.229 million

shares valued at N6.219 billion traded in 10,415 deals; thus contributing 68.98percent and 47.20percent to the total equity turnover volume and value respectively. The Conglomerate industry followed with 139.940 million shares worth N585.927 million in 943 deals, and Consumer Goods industry with a turnover of 84.546 million shares worth

N3.445 billion in 2,674 deals. Trading in the top three equities – Law Union & Rock Insurance Plc, Zenith Bank Plc and United Bank for Africa Plc (measured by volume) accounted for 369.396 million shares worth N3.086 billion in 3,360 deals, contributing 31.80percent and 23.43percent to the total equity turnover volume and value respectively.

Seplat says Brown’s appointment as next CEO complies with Nigerian Content Development Act eplat Petroleum Development Company Plc (SEPLAT) has informed the Nigerian Stock Exchange (NSE) that the appointment of Roger Brown as its next CEO is in full compliance with the Nigerian Content Development Act and is not in breach of any applicable law in Nigeria. Seplat Petroleum Development Company Plc is a leading indigenous Nigerian oil and gas exploration and production company with a strategic focus on Nigeria, listed on the Main Market of the London

FTSE 100 Index 7,366.90GBP -49.53-0.67%

13.032

Stock market appreciates by 0.04% n the trading week ended November 29, 2019, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation appreciated by 0.04percent to close at 27,002.15 points and N13.033 trillion respectively. The NSE ASI and Market Capitalisation had opened the review trading week at 26,991.42 points and N13.027 trillion. Investors gained N6billion. Thirty-one equities appreciated in price during the review week, lower than 40 equities in the preceding week. Thirty-two equities depreciated in price, higher than 23 equities in the preceding week, while 102 equities remained unchanged, same as in the preceding week. All other indices finished lower with the exception of NSE Main Board, NSE-Afrinvest High Dividend Yield (NSE-AFR Div Yield), NSE Meristream Growth (NSE Meri Growth), NSE Consumer Goods, NSE Lotus II and NSE Industrial Goods indices which appreciated by 1.83percent, 2.21percent 1.81percent, 4.69percent, 2.72percent and 0.35percent respectively, while the NSE

Global market indicators

Stock Exchange (LSE) and Nigerian Stock Exchange (NSE). Brown has been with the Company for six (6) years and has since his joining, served in the capacity of Chief Financial Officer (CFO) of the Company. In a statement sent to the NSE signed by Edith Onwuchekwa, Company Secretary, Seplat Petroleum Development Company Plc noted that its activities as a corporate citizen are in fulfillment of all applicable laws. The company which made the announcement in accordance with Rule 17.10, Rulewww.businessday.ng

book of The Nigerian Stock Exchange, 2015 (Issuers’ Rule), expressly refuted all allegations in a newspaper publication (not BusinessDay) which alleged that the appointment of Roger Brown negates the provisions of the Nigerian Oil and Gas Industry Content Development Act, 2010 (the Nigerian Content Development Act). SEPLAT urged the Nigerian Stock Exchange and the public to disregard the publication in its entirety. SEPLAT had in an announcement on November 18, 2019 informed the public

of the appointment of Roger Brown as the successor to Austin Avuru as CEO, when Avuru steps down on July 31, 2020. “SEPLAT is a law-abiding corporate citizen that maintains the highest level of corporate governance standards”, the company said in a November 29 statement at the NSE. SEPLAT is pursuing a Nigeria focused growth strategy and is well-positioned to participate in future divestment programmes by the international oil companies, farm-in opportunities and future licensing rounds.

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he Nigerian Stock Exchange (NSE) has said that it continues to engage the Federal Government on tax incentives for listed companies and exemption relating to investments in the capital market. Oscar N. Onyema, Chief Executive Officer, Nigerian Stock Exchange disclosed this in Lagos on Friday November 29 at the CEO interactive session for the Consumer Goods Sector. “We are delighted to note that we have made some strides in our discussions, some of which are evident in the proposed amendments to The Finance Bill 2019, which has now been passed by both Houses of the National Assembly. “Some notable points include; tax exemptions on distributions made by Real Estate Investment Trusts from rental income and also Securities Lending Transactions in order to promote capital market activities. We however remain mindful of the legislative process and are optimistic of future implementations,” Onyema said. “It is my strong belief that one of the things that Nigeria (and indeed Africa) needs to sustain its growth, is a solid and vibrant capital market ecosystem that will attract investment and unlock the potential that exists in the economy,” he added. The theme of the conference is “the role of the capital market in unlocking value in the consumer goods sector”. Nigeria’s consumer market is one of the fastest growing markets in Africa. As far back as 2013, the market was valued at about $377 billion and is now expected to reach about $454 billion by 2025. This growth is driven by three major factors - population, urbanisation and increased spending power. The country’s estimated population of over 200 million, with 72percent under the age of 30, presents a huge potential for future investment in con@Businessdayng

sumption activity. NSE believes that there is considerable opportunity for the consumer goods sector to contribute to Nigeria’s sustainability agenda by tapping into the Green and Sustainable Finance Market. “This represents a new stage in development of the Nigerian capital markets and opens the way to expanded international investments. “The NSE is playing a key role to help develop this enormous opportunity for Nigeria and fulfill one of our key objectives as a member of the UN Sustainable Stock Exchange Initiative. “This is evident in our recent partnership with the Luxembourg Stock Exchange to facilitate cross listing of green bonds and provide domestic issuers global visibility to attract international inves-

Oscar N. Onyema, chief executive officer, Nigerian Stock Exchange

tors”, the NSE CEO stated. Creating and sustaining the growth trajectory of Nigeria markets and the economy at large requires a strong commitment from each and every one of us, Onyema said “It is not an easy journey, but it is one we have no choice but to embark upon individually and collectively, in order to develop and guarantee Nigeria and indeed Africa’s competitive advantage in today’s interconnected world. In 2019, the NSE Consumer Goods Index in particular has recorded a significantly higher negative return of (-29.01percent) year-to-date (ytd).

Monday 02 December 2019

BUSINESS DAY

MARKETS INTELLIGENCE Supported by Asset Management Corporation of Nigeria (AMCON)

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Week Ahead

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Banks grab the lion share of NSE 30 profit BALA AUGIE

anks have continued to grab the lion share of Nigerian Stock Exchange (NSE) 30 index profit, while consumer goods firms are the worst performers among the most liquid companies on the bourse. The pie chart show lenders profit make up 70 percent of the N1.06 trillion bottom line, leaving cement makers with 17 percent, Consumer goods firms (5 percent), Oil and gas; (7 percent), and Agriculture, (1 percent), analysis of their third quarter financial statement shows. Deposit Money Banks have benefitted from a high yield environment and they always take

advantage of monetary policies to underpin earnings. Between 2014 and 2016, gains from foreign exchange transaction added impetus to earnings, thanks to the devaluation of the

currency that ballooned dollar denominated assets. The combined net incomes of NSE 30 firms increased by 13.34 percent as at September 2019, but investors have dumped shares due to lack of policy direction on the part of government. The growth was largely underpinned by a combined 12.14 percent, 18.24 percent, and 40.722 percent uptick in the cumulative bottom lines (profit) of the Banks, cement makers, and the oil and gas sectors to N731.18 billion, N174.13 billion, and N75.85 billion respectively, according to data compiled by BusinessDay. Nigerian corporate earnings might have recorded an even stronger growth in the third quarter but the consumer goods firms were a drag on the list. “High unemployment and

SHORT TAKES low consumer demand is hurting many businesses. The banks have benefited from the favourable yield environment but the new central bank rules on Loans to Deposits (LDR) could result in deteriorating asset quality,” said Johnson Chukwu, managing director and CEO of Cowry Asset Management Ltd. Deteriorating consumer purchasing power, hike in petrol price, and decrepit infrastructure that has made it practically difficult for companies to transport their goods to the factory warehouse, is largely responsible for a 21.54 percent drop in the cumulative net income of fast moving consumer goods firms. International Breweries and Pz Cussons are the only firms to record a loss among the NSE 30 firms, and analysts see a bleak future for the sector as federal government has hiked Value Added Tax (VAT) to 7.50 percent from 5.0 percent. Profit margins of consumer goods are thinning as costs spike and revenue grows at a slow pace. Cumulative net margins for the sector fell to 5.79 percent in September 2019 from 10.54 percent the previous year. “Our overall outlook for the consumer goods sector in Q419 is not overly positive due to myriads of macro bottlenecks that continue to weigh on operating performance,” said Yinka Ademuwagun, equity analyst with United Capital Ltd.

Lafarge Africa uses materials, labour to generate higher profit than peers BALA AUGIE

afarge Africa Plc has used its materials and labor to produce and sell products profitably more than peers, as cement makers are poised to take advantage of government capital expenditure spend to bolster earnings. Lafarge Africa’s recorded gross profit expansion of 7.51 percent as at September 2019, which compares with Dangote Cement’s 0.68 percent contraction and Cement Company of Northern Nigeria (CCNN)’s decline of 0.63 percent. The gross profit ratio is important because it shows management and investors how profitable

the core business activities are without taking into consideration the indirect costs.

In other words, it shows how efficiently a company can produce and sell its products. This gives

P.E

investors a key insight into how healthy the company actually is. Lafarge Africa has spent less on input cost to produce each unit of product as its cost of sales ratio declined, while peer rivals saw this ratio spike. Its cost of sales or cost of production reduced by 37.72 percent to N111.11 billion as at September 2019, that compares with a 0.82 percent increase in Dangote Cement’s cost of sales and CCNN’s 119.96 percent surge in cost of production. Lafarge Africa’s impressive margin expansion amid a tough

7.04% The stock market Thursday gained the most since late May as big domestic investors who are facing limited investment options returned, pushing the banking index to highest daily gain since January 2016. The banking index rose 7.04 percent, while the main equity gauge advanced 1.91 percent as attractively priced banking stocks returned much-needed liquidity to one of the worst performing stock markets globally. The market-frenzy follows a move by the CBN to limit participation in high-yielding OMO market which sent real returns on T-bills below zero, forcing big domestic investors back to equities. The move to restrict the OMO market to banks and foreign investors have left big domestic investors, mostly pension funds and insurance companies, with idle funds and caused heavy demand at a primary market NTBills auction on Wednesday. However banking stock fell 1.68 percent Friday.

$1bn Last week, US-based global retail electronic network, Visa, announced a strategic partnership with Interswitch to acquire a significant minority equity stake in the Nigerian-based paymentsprocessing company, valuing Interswitch at $1 billion. Visa agreed to pay $20 million for a 20 percent stake in Interswitch, said to be planning a London Stock Exchange (LSE) debut next year. The investment makes Interswitch Nigeria’s first home-grown unicorn (a startup valued at $1bn or more) and one of few in Africa

N3bn C&I Leasing Plc last week notified its shareholders, stakeholders, the Nigerian Stock Exchange (NSE) and the general public, that the Company has obtained an approval from the Securities Exchange Commission (SEC) to conduct the signing ceremony with regards to the proposed Rights Issue of 539,003,333 ordinary shares of 50kobo each at N6 per share.

Continues on Page 41

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: FIFEN FAMOUS)

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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Monday 02 December 2019

BUSINESS DAY

MARKETS INTELLIGENCE

FTN Cocoa stops publishing financials after losses of N3.5bn in 7.5 years IFEANYI JOHN

ll companies publicly listed on the Nigerian Stock Exchange are mandated by the Exchange to publicly disclose their financial performance on a quarterly and annual basis to investors. However, FTN Cocoa Processors, one of Nigeria’s most popular cocoa processing companies appears to have given up on disclosing its financial performance after accumulating losses of as much as N3.5 billion between 2011 and H1 2018. It is now more than a year since FTN Cocoa last reported its financial performance and many analysts believe that the company’s finances are still well in the red which may be the reason why the company is delaying publishing its results.

Before going AWOL on publishing results, the company had posted loses for 7.5 consecutive years between 2011 and the first half of 2018. The yearly loses which accumulated to about N3.53 billion during the period

caused dividend payment to be suspended since 2011 and zero taxes to be paid to the government since 2009 as the company continues to struggle to generate sufficient revenue to cover its expenses.

Shareholders have had to bear the brunt of the poor company financial performance as their shareholders’ funds have declined from N2.6 billion in 2010 to as low as N472 million in H1 2018, representing around N2.1

billion (or 81%) decline in value for investors. At the current pace of decline in shareholders’ funds, analysts expect that there will be no shareholders’ fund left by year end 2019 to continue to fund the loses the company has so consistently generated since 2011. Debt funding in the company already appears to be far stretched as company’s borrowings have grown from as low as N713 million in 2013 to as high as N3.45 billion in H1 2018, representing a surge of around 384 percent as the company seeks alternative ways to fund operations seeing that profits are no longer forthcoming. Obinna Uzoma, chief economist at EUA Intelligence told Businessday that “The financial struggle that FTN Cocoa is facing could potentially put it into a box of acquisition targets in the radar of companies like Nestle,

Promasidor and Cadbury in a backward integration move as the companies rely on cocoa processing companies like FTN Cocoa for its cocoa ingredients in making its chocolate drinks. So, there is an interest in bigger confectionary producers to ensure that companies like FTN Cocoa survive. It will not be in the interest of these large firms to turn to importing cocoa in a country that is increasing pressuring companies to focus on sourcing its raw materials locally. So, I think the acquisition conversation will have to happen at some point in the near future before the FTN Cocoa enters bankruptcy.” FTN Cocoa has acknowledged that the company already has an established relationship with Nestle Nigeria Plc and Promasidor Nigeria Limited as suppliers of processed cocoa for their chocolate drinks.

Strong Q3 performance gives Livestock Feeds investors hope Lafarge Africa uses... …may declare first full year profit in 3 years IFEANYI JOHN

ivestock Feeds look set to post its first profit in three years after a surge in revenue growth in the last 3 months has helped turn a small profit for one of Nigeria’s largest manufacturers and suppliers of animal feeds products. In the last two years, the company had posted a loss of about N1.35 billion before an improved financial performance in the third quarter this year helped create a small profit of N14 million in the last 3 months which covered a loss of around N6.5 million in the first half of the year. The company which saw its revenue grow by around 35 percent between Q3 2019 and Q3 2018 from N5.5 billion in Q3 2018 to N7.4 billion in Q3 2019 managed to move from a loss position of N475 million in Q3 2018 to a small profit of N9.4 million in Q3 2019. A slowdown in demand for animal feeds caused the company’s profit to decline sharply from N11 billion in 2016 to N7.8 billion in 2018, as sales fell by up to N3.2 billion in just

2 years. Based on trends in the last 3 months and expected growth in demand for livestock products and their feeds during the festive period, revenue now look set to surpass N10.1 billion for the first time in 3 years, strengthening hope that Livestock investors may get a profit as their Christmas gift this year. Accumulated losses of around N1.35 billion in the last 2 years caused the

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Continued from page 40 shareholders’ funds to decline from N2.09 billion to N1.45 billion, as shareholders’ cash had been used to cover some of the loses. Livestock Feeds have seen their stock price decline from 84 kobo at the start of 2017 to 51 kobo at market close on Friday, representing a decline of 39 percent in the last 35 months. Analysts expect that a return to profitability for the

firm could trigger a strong positive impact on the firm’s stock price. In the last one year, the stock has returned -1.92 percent as the selloff has slowed down owing to improved financial performance in the company this year. The company is still very far off from its glory days in April 2015 when the stock peaked at N2.60, more than 5 times higher than its price at market close last Friday.

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and unpredictable macroeconomic environment can be largely attributed to an excellent energy mix. Hitherto, the company used gas to power plant at the factories, but it now uses coal, a cheaper source of energy. It has substituted imported coal which was relatively expensive and susceptible to foreign exchange risk, with locally sourced coal. Lafarge shares have been appreciating since the start of the year as it has a year to date (YTD) return of 12.45 percent, even amid a stock market rout. Cement makers in Africa’s largest economy have the financial strength to fund future expansion plans as the country’s infrastructure deficit and Federal Government aggressive capital expenditure spending will spur demand for cement. Dangote Cement, Lafarge Africa, and CCNN have a combined N356.90 billion in cash from operat@Businessdayng

ing activities as they have spent N21.61 on the acquisition of property and plant and equipment. Dangote, Nigeria’s biggest listed company with operations in 10 African c o u n t r i e s i s i nv e s t i n g heavily in markets in cluding Tanzania and the Democratic Republic of Congo and has earmarked $350m for capital projects this year. In Nigeria, the company is building export facilities to boost shipments to West African neighbours. Lafarge Africa bought a plant in Calabar, in southeastern Nigeria, that can produce 5million tons of cement a year as it seeks to increase capacity to 17.5million tons from 14million tons. BUA Group, one of Africa’s largest conglomerates, has announced plan to merge its 2million metric tons Cement Company of Northern Nigeria Plc (CCNN) with 6million metric tons Obu Cement Company Plc in a bid to consolidate its cement business.

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BUSINESS DAY

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news

TAJBank Launches Nigeria’s 2nd non-interest financial institution SEGUN ADAMS

AJBank, Nigeria’s second non-interest financial institution, has announced the launch of its services at its state of the art facility in Abuja on December 2, 2019. The launch, which held at the bank’s head office in Abuja, had in attendance the chairman of the Board of Directors, Tanko Isiaku Gwamna, prominent guests, members of the TAJBank Board of Directors, staff and the media. Speaking at the ceremony, the chairman, Gwamna, said, “At TAJBank, we are excited at the possibilities before us; the opportunity to significantly boost financial inclusion in Nigeria, the opportunity to empower millions of Nigerians and also, just as importantly, the opportunity to engender a much needed mind shift with regards to non-interest banking, not just with our customers but the country at large. We have an inspired and extremely industrious team who have worked tirelessly to bring this dream to fruition and I am eager to see the impact that TAJBank will make in the financial sector and in the lives of Nigerians.” In his remarks, Hamid Joda, founder/chief opera-

tions officer, said, “We’ve built this brand based on excellent service. A brand that our customers can be extremely proud of. This is a defining moment for all of us, one that we have worked tirelessly to achieve. We have an incredible team behind us and the future – in our humble opinions- not just of the bank, but the financial industry, is indeed bright. “TAJBank also offers a number of innovative products and services that will delight our customers. As said before, excellent service to our customers is our benchmark and we aim to deliver.” TAJBank offers an array of products and service offerings that are widely available to all Nigerians. Some of the products include: Partnership (Mudarabah) Term Deposit, Lease (Ijarah) Finance, Partnership (Mudarabah) savings/current accounts and much more. The bank received its licence from the Central Bank of Nigeria on July 12, 2019, for array of products and services that span private banking, retail banking, business banking, development finance and the public sector. TAJBank has its head office in Abuja and a branch in Kano with major plans for expansion across the country.

Buhari’s $30bn borrowing plan will raise Nigeria’s debt burden - LCCI Odinaka Anudu

ag o s C ha mb e r o f Commerce and Industry (LCCI) on Sunday said President Muhammadu Buhari’s $30 billion request would increase Nigeria’s debt burden with negative impacts on the citizens. In a statement, Muda Yusuf, director-general, LCCI, said the opportunity cost of high debt service commitment for the economy and citizens was very high, as there was an exchange rate risk inherent in the exposure to mounting foreign debt which Nigerians need to worry about. “The growing national debt is a cause for concern as the debt profile grew from N12.6 trillion in 2015 to N25.7 trillion in 2019 second quarter, an increase of 104 percent,” Yusuf said. “There is also the bigger worry about the capacity to

service the debt. For instance, the debt service provision in the 2019 budget was a whooping N2 trillion, whereas the total capital budget was N2.9 trillion. This implies that the debt service commitment was 70 percent of capital budget allocation. Debt to revenue ratio was about 30 percent, which is also on the high side,” he said. He explained that in the 2020 budget, debt service commitment and recurrent spending are already beginning to crowd out capital expenditure, stressing that the trajectory is not consistent with Nigeria’s national aspiration to build infrastructure and a competitive economy. He further said debt service of N2.45 trillion was more than the capital budget of N2.14 trillion in 2020 budget, which was bad news for the economy.

“That is 114 percent of capital budget. It is against this background that the new request for $30 billion is troubling. Care should be taken to avoid a full blown debt crisis,” he said. “As the currency depreciates, the burden of servicing foreign debt would intensify. This is a major problem with increasing the stock of foreign debt,” he noted. He said the situation underlines the need for appropriate policy choices to attract domestic and foreign private sector capital for infrastructure financing, pointing out that the government needs to look beyond tax credit in its quest for more complimentary funding sources for infrastructure. “We should be looking more in the direction of equity financing. But for this to happen, the policy and regulatory

environment must be right.” He said it is critical to review the spending structure of government and the cost of governance, alerting that the ballooning recurrent expenditure, in the face of declining revenue, is a cause for concern. “There is a need to clarify place of the new loan request in relation to the 2020 budget and the 2020 -2022 medium term expenditure framework. Additionally, borrowing should strictly be in line with section 41 of the Fiscal Responsibility Act which stipulates that ‘Government at all tiers shall only borrow for capital expenditure and human development, provided that such borrowing shall be on concessional terms with low interest rate and with a reasonable long amortisation period,” he said.

Waltersmith wins bid for acquisition of bloc EG-23 in Equatorial Guinea STEPHEN ONYEKWELU

ollowing a competitive bidding process in Equatorial Guinea’s 2019 licensing round (EGRONDA 2019), Waltersmith Petroman Oil Limited, Nigeria’s integrated energy company, was recently awarded bloc EG-23 in Equatorial Guinea’s Niger Delta basin. The government of the Republic of Equatorial Guinea offered to the international industry a total of 27 oil and gas blocs and the entire Continental Region of the country for mining exploration and received 21 offers. Following the evaluation of the different packages of offers received from interested companies, Bloc EG-23, which hosts the Estaurolita gas discovery was granted to WalterSmithHawtai Energy- GEPetrol SA. GE Petrol, EG’s national oil company has a 20 percent participating interest in EG-23, while Waltersmith and Hawtai Energy Hongkong have 40 percent participating interest each. The EG-23 bloc is a shallow offshore bloc with water depths of about a 100m. The ministry of mines and hydrocarbon in its website issued a press release stating, “The Ministry of Mines and Hydrocarbons is pleased to announce the

award of 9 Oil and Gas blocs and 15 Mining Blocs to selected companies that participated in the Petroleum Bid and the first Mining Bid in the Republic of Equatorial Guinea (EGRONDA 2019).” Speaking at the award ceremony, the minister of mines and hydrocarbon, Gabriel Obiang stated that the EG-23 bloc was a very strategic bloc for the Equatorial Guinea in view of the recently signed MoU for its LNG train, as the gas reserves from the bloc would be needed for LNG gas supply and expressed confidence in the competence and experience of Waltersmith to deliver on the development of hydrocarbons. In his response, the chairman of Waltersmith Petroman Oil Limited, Abdulrasaq Isa, expressed his appreciation to the government of Equatorial Guinea for having confidence in Waltersmith as a company, and affirmed its readiness to bring its experience and capacity to Equatorial Guinea and collaborate with its partners. The commercial agreements are expected to be ratified by all parties, the Equatorial Guinea Ministry of Mines and Hydrocarbons and the Equatorial Guinean Parliament in the coming weeks and signed by the President of Equatorial Guinea.

L-R: Uche Olowu, president /chairman of council , Chartered Institute of Bankers of Nigeria (CIBN); Godwin Emefiele, governor, Central Bank of Nigeria (CBN), and Emeka Emuwa, MD/CEO, Union Bank, at the 54th annual bankers dinner in Lagos, Pic by Pius Okeosisi

Nigeria’s automotive lubricant market gets first commercial laboratory STEPHEN ONYEKWELU

akers and users of automotive lubricants in Nigeria now have an independent commercial laboratory where they can test the quality of products made. Owned by Pacegate Limited, a subsidiary of the Hana Group and makers of steel drums, PG Labs, which is located in Ilupeju, Lagos, is the first and only commercial facility that can run the shear stability test in Nigeria. Shear stability is a measure of the resistance of an oil to change in thickness. Big oil companies such as Total and 11 plc that play in Nigeria’s lubricant market have laboratories, but these are not open to the public and in cases of dispute, an independent laboratory is needed. BusinessDay had on Novem-

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ber 6, 2019 reported that there was as yet no independent commercial lubricant laboratory in the country. The reporter was, however, later invited to inspect PG Labs which was launched recently. The laboratory offers a broad array of tests to suit lubricant makers, regulators and consumers. It is ISO 17025-certified and registered with the Institute of Public Analysts of Nigeria (IPAN). The laboratory complies with relevant test procedures and cross-references with samples from the American Society of Testing and Materials (ASTM). Osita Aboloma, directorgeneral, Standards Organisation of Nigeria (SON), says over 70 percent of the lubricants in the market fail the quality parameters of the Nigerian Industrial Standard. There has to be a way that users can protect themselves,

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check themselves, know what is right and what is not right. There has to be a way that regulators can also check. SON has been trying to come out with standards that to a very large extent can protect the end-user, but the problem with these standards is that most manufacturers do not have the capacity to test in line with SON requirement. PG Labs offers S.G ASTM D 1298, ASTM Colour ASTM D 1500, COC Flash Point ASTM D 92, Kinematic Viscosity @ 100C ASTM D 445, Kinematic Viscosity @ 40V ASTM D 445 and Viscosity Index ASTM D 2270. Others are TBN ASTM D 2896, TAN ASTM D 664, Fresh & Water Metals XRF, Shear Stability ASTM D 6278, Evaporation Loss ASTM D 5800, Sulphated Ash ASTM D 127, Worked Penetration ASTM D 127 and Homogeneity & Miscibility ASTM D 6922. “Pacegate is delighted to @Businessdayng

launch the first laboratory dedicated to the lubricants market. This laboratory will further enhance our technical offerings to our lubricant suppliers, customers and partners, and provide them with local services with an international standard. This is part of our ongoing commitment to providing strong technical support,” said Umesh Amarnani, managing director, Pacegate Limited. Experts say oil mix-up is one of the most common lubrication problems contributing to machinery failure. Putting the right lubricating oil in the equipment is one of the simplest tasks to improve equipment reliability. Checking the viscosity, brand and grade of incoming new oil, and checking any contamination of alien fluids help reduce the chances of oil mix-up and keeps the machine operating. This is why laboratories matter.

Monday 02 December 2019

BUSINESS DAY

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Monday 02 December 2019

BUSINESS DAY

IFAC names Isma’ila Zakari as board member KELECHI EWUZIE

nternational Federation of Accountants (IFAC), representing Africa and the Middle East, has announced the appointment of Isma’ila Muhammadu Zakari, a past president of Institute of Chartered Accountants of Nigeria (ICAN) and the managing partner, Ahmed Zakari & Co. (chartered accountants) to serve on the Board of the IFAC. According to a statement from ICAN made available to BusinessDay, Zakari will join IFAC and accounting professionals across the globe to support global economic growth and development, as he brings to IFAC his over 30 years continuous professional experience in various aspects of accounting, finance entrepreneurship, audit and assurance, tax advisory and insolvency. IFAC is the global organisation for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC comprises more than 175 members and associates in more than 130 countries and jurisdictions, representing almost three million accountants in public practice, education, government service, industry, and commerce. Zakari until this appointment served as the managing

partner of Ahmed Zakari & Co. (chartered accountants), a firm he co-founded in partnership with other professional colleagues in 1998 providing Auditing & Assurance, Tax, Advisory, Insolvency, Business Consulting and Business Valuation services to a wide range of clients in Nigeria. Zakari is a Fellow of ICAN and a member of the ICAN Governing Council since 2004. He has served on many ICAN committees as chairman or member at different times. He is also a Fellow of the Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN) where he also serves as Council Member. He graduated from Ahmadu Bello University Zaria in 1986 and Kings College Lagos in 1982. He is a member of the National Institute for Policy and Strategic Studies (NIPSS) Kuru Jos having successfully attended the Senior Executive Course No. 33 in 2011. Zakari has attended numerous training courses in Nigeria and overseas. He is a regular speaker in the fields of Accounting, Auditing, Taxation, Corporate Finance, Insolvency, Leadership and Practice Management. He is actively involved in serving the public interest and the development of his community. He serves on the Board of Trustees of Jigawa Forum in his home state – Jigawa State. www.businessday.ng

news

NHIS reviews service charges, drug prices FG commits to promote equality, ....Considers branding NHIS drugs

inclusiveness in power, other sectors

Godsgift Onyedinefu, Abuja

KELECHI EWUZIE

he National Health Insurance Scheme (NHIS) on Thursday said the scheme had completed the upward review of extant professional service charges, drug list and prices in the face of inflation which has rendered some of the prices in the current list unrealistic in the market. The Executive Secretary of the NHIS, Mohammed Sambo who made this known at a meeting with pharmaceutical companies, said that with the upward review, the scheme would increase its capitation fee to make drugs, services, available, accessible and affordable to enrolees. Sambo also said new drugs and products had been introduced in the list, especially cancer drugs. He decried the fact that enrolees have over time complained that drugs were neither accessible nor affordable and the drugs under the scheme are cheap and substandard. Sambo noted that without drugs, which must also be affordable, health insurance would mean nothing to the enrolees, but said the rising costs of drugs for treatment of communicable and non-communicable diseases had become a challenge. If the NHIS could address the problem of drugs, the scheme

would be able to contain 50 percent of the problems confronting Nigeria’s health care delivery. The ES further urged enrolees to use generic drugs over brandnamed drugs to help it live up to its mandate of providing easy healthcare services to all Nigerians at an affordable cost. “Unfortunately, there has been outcry amongst some enrolees that generic drugs are substandard. In this country, there is often this belief that anything cheaper is of no quality, but this is the driving mentality that creates this distortion, misleading comments about drugs that are used under NHIS. What is trending is that generic drugs do not work because they are counted and delivered across the counter. “It is important to note that, countries like Canada, England, France and Germany have been concerned about pharmaceutical spending for many years, they have explicitly negotiated and worked with pharmaceutical companies on prices and polices on the promotion of the use of generic drugs.” The ES said the scheme is considering branding drugs, as NHIS drugs, to the curb the mentality that generic drugs are substandard. He also spoke on the need to arrest the infiltration of fake and adulterated drugs into the market space.

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inister of state for power, Goddy Jedy-Agba, says the Federal Government is committed to promoting equality and inclusiveness in the power sector as well as other sectors in the country. Jedy-Agba also assures that the present administration is working to ensure that plight of women are mitigated Delivering an address at the first female Science Technology Engineering and Mathematics (STEM) workshop in Lagos State, organised by Rural Electrification Agency, Jedy-Agba says Nigeria cannot hope to reform the power sector without the skills, innovation and expertise of our women. “To the young women who have participated in the STEM Internship Programme, I want you to know that gender and social exclusion will soon be a thing of the past. The importance of events like the one we are having today cannot be overemphasised. I therefore urge you to take charge of your future and make good use of the platform that has been established for you,” Jedy-Agba says. The workshop was organised by the Agency in partnership with leading private sector developers, and was attended by power sector stakeholders and business professionals with the aim of bringing together young women in the @Businessdayng

same room with top power sector and business professionals to share knowledge and discuss the opportunities for women in the industry. The Energising Education Programme (EEP) being implemented by the Rural Electrification Agency to provide sustainable and clean power supply to 37 Federal Universities and seven University Teaching Hospitals across Nigeria creates an avenue for the training of 180 female STEM students (20 from each benefiting university) during the construction phase of the project, which serves as a catalyst towards ensuring sustainability of the project and building young women for the future in renewable energy. Damilola Ogunbiyi, managing director/CEO, in her opening remarks, states, “This Workshop is designed to facilitate the increase in leadership and development of professional women. It is also a platform for the 180 female students and professionals present to network, share their knowledge, discuss achievements and encourage the advancement of women across the energy sector.” The final activity of the workshop was the Project Shark Tank competition between the participating universities in which students of Bayero University, Kano, emerged first and won a prize of N1 million.

Monday 02 December 2019

BUSINESS DAY

news FX reserve unlikely to fall to $30bn.... Continued from page 1

ficial said “the bank does not see reserves falling to that level given the stability in oil prices”. “In any case, the talk about setting the reserve level as a trigger for an adjustment of the Central Bank position on the exchange rate must also be linked to oil prices. The Central Bank closely watches this as well as the reserve level,” the official said. According to the high level CBN official, “Our view is that both have to be taken together. For as long as oil prices remain in the $50-60 per barrel range, we do not think there should be any panic and even then we do not think reserve levels will fall to below $30bn. Remember that the last devaluation took place at a reserve level of $23bn.” He said the current government “came in at a time the reserve was $31bn and we did not devalue, so there is no question of a devaluation simply as a result of the reserve level falling to $30bn”. Also speaking on Friday evening at the bankers’ dinner in Lagos, Emefiele highlighted Nigeria’s healthy reserve level as well as improved foreign exchange inflows into the country. He attributed this to “the impact of a tighter monetary policy regime, attractive yields in the money market, and our efforts at

supporting domestic productivity in the agriculture and manufacturing sectors, along with improvements in oil production”. “In the I&E window, over $60 billion worth of transactions have taken place since the inception of the window in April 2017, and our foreign exchange reserves are above $40bn as at October 2019, relative to its low point of $23bn in October 2016,” Emefiele said. “We have been able to build our reserves in the midst of lower oil prices, as strong reserves aid the confidence of domestic and external investors. Today, our current stock of external reserves is able to finance nine months of current import commitments,” he said. On exchange rate, Emefiele said “with a moderated inflation rate, positive GDP growth and improvements in our external reserve position, the naira-dollar exchange rate at the I&E window has remained stable for the past 29 months at N360$1 and we have witnessed significant convergence in the exchange rate across the various market windows”. BusinessDay analysis shows that the futures market has remained at the spot level for a long spell and traders said savvy investors have been using the market to hedge, a clear indication of a much-improved forex situation and of the absence of panic.

L-R: John Everington, Middle East and Africa editor for The Banker; Omobolanle Victor-Laniyan, head, sustainability, Access Bank plc; Julie Soyinka-Sonuga, deputy head, commercial banking, Access Bank UK, and Michael Buerk, english journalist and host of The 2019 Bank of the Year Award Ceremony, where Access Bank emerged as ‘Bank of the Year Nigeria’ in London.

Investors navigate maze of funds... Continued from page 2

Unclaimed dividends surge on absence... Continued from page 2

be under the custody of the CSCS, updated by stockbrokers and easily accessed by registrars. This, he said, will help eliminate the bottleneck resulting from the time it takes registrars to receive transfer forms from stockbrokers as needed. “Registrars don’t have luxury of Know Your Customer (KYC). They rely on stockbrokers to give that information which is delivered physically. The law doesn’t allow registrars to do KYC. BVN helped but it was not foolproof and has not delivered 100 percent,” the source said. Because the e-dividend initiative remains critical to the complete elimination of the phenomenon of unclaimed dividend, the SEC management encourages all shareholders who are yet to do so to get mandated on the e-DMMS platform before December 31, 2019. Mary Uduk, acting director-general of SEC, said the commission encourages investors to take advantage

of the regulatory window to regularise their multiple accounts and claim their dividends. The value of unclaimed dividends rose from N5.1 billion to N103.1 billion between 2002 and November 2016, compared with the value of N2.09 billion in 1999. As at September 2018, it remained high at N100 billion, and stood at N126.03 billion as at March 2019. One of the interesting resolutions at the just concluded third Capital Market Committee (CMC) meeting in Lagos was the decision for registrars to discontinue the practice of requesting for confirmation of bank signature during the e-DMMS process. SEC is yet to communicate to the relevant parties its decision on the request made by Association of Stockbroking Houses of Nigeria (ASHON) to extend the time for its members to comply with the transfer of complete investor data among operators –brokers, registrars and CSCS.

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

One Limited charges 1.5 percent of AUM but investments into any of its funds can only be redeemed after a minimum period of six months, else a pre-termination charge of 10 percent of accrued interests will be borne by the investors. Stanbic IBTC Asset Management Limited, the biggest player in Nigeria’s fund management industry with seven funds, appears different with a processing fee of 0.5 percent of redemption proceeds for withdrawals made within the 30 days, while the fund manager charges an annual management fee of 1.5 percent. Vital information such as expense ratio which represents all of the management fees and operating costs of a fund was not available on most of the funds’ websites. A mutual fund’s expense ratio is very important to investors because fund operating and management fees can have a large impact on net profitability. The expense ratio is calculated by dividing a mutual fund’s operating expenses by the average total naira value for all the assets within the fund. Further checks on the fund managers’ financial results show Stanbic IBTC Asset Management Limited, a subsidiary of Stanbic IBTC Holdings, garnered N20.33 billion from management fees in 2014. This rose steadily to N41.15 billion in 2018. Zenith Asset Management Limited grew fees from N4.34 billion to N7.7 billion in 2018. First Bank of Nigeria Capital Asset Management, which generated N1.53 billion from management fees in 2014, grew the income to N2.95 billion, while AXA Mansard Investments Lim-

ited rose from N50 million to N723 million within the same period. A look at returns of different fund managers shows that some have outperformed their peers which could be a basis for attracting investors. Stanbic IBTC Nigerian Equity Fund had total returns of -11.85 percent as at Thursday, November 28, compared to Zenith equity fund which returned -9.55 percent, United Capital equity fund -9.09 percent, and AXA Mansard equity income fund year-todate total returns of - 4.54 percent, according to data from the Fund Managers Association of Nigeria. The benchmark Nigeria Stock Exchange (NSE) All Share Index (ASI) has returned -14.09 percent for the period. “The challenge is that there are not much of investment assets that can accommodate the growth in managed funds,” Gbolahan Ologunro, research analyst at CSL Stockbrokers, said. “Some of the asset classes used in advanced nations are still largely underdeveloped in Nigeria.” The outlook of performance of the fund managers looks glimmer as they face fresh hurdles with the central bank’s restriction of local non-bank players from participating in the open market operations (OMO) bills market, a move that made the return on alternative Nigerian government Treasury-bills crash to single-digits for the first time since 2016. Exchange-traded funds (ETFs) which promise lower expense ratios still represent a small portion of Nigeria’s fund industry, with AuM at N5 billion or 0.5 percent of total mutual fund managers assets.

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CBN projects 11.7% inflation end 2019, GDP to grow by 2.5% in Q4 ...to grow non-oil export earnings to $4bn by 2020 HOPE MOSES-ASHIKE

he Central Bank of Nigeria (CBN) on Friday projected inflation to increase slightly by 11.7 percent by the end of 2019 from 11.6 percent currently, and then moderate thereafter supported by the apex bank’s efforts at improving domestic production of staple food items. Also, the current tight monetary policy stance of the CBN is expected to continue in the near-term, especially in view of rising inflation expectations. From 2.28 percent in quarter three of 2019, growth is projected to quicken to 2.5 percent by the fourth quarter of 2019. Godwin Emefiele, governor of CBN, gave these projections while delivering a keynote speech at the bankers’ dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) at the weekend. Though the CBN has so far managed to maintain exchange rate stability, Emefiele said the current capital flow reversals from emerging markets are expected to continue to exert considerable pressure on market rates. “Notwithstanding these pressures, the CBN is determined to maintain its stable exchange policy stance in the near to medium term given the relatively high level of reserves,” Emefiele said. In the I&E window, he said over $60 billion worth of transactions have taken place since the inception of the window in April 2017. “We intend to address some of the barriers faced @Businessdayng

by non-oil exporters in producing goods for the export market,” he said. Working with the Nigerian Export Import Bank, he promised to improve access to the N500bn facility designed to support the growth of Nigeria’s non-oil exports. “Part of our emphasis will be on increasing export of value-added goods relative to raw materials. Firms that have access to these facilities would be able to obtain loans at single digits,” he said. In order to reduce the time lag required to export non-oil products, Emefiele said the CBN had launched an automated NXP portal, which will reduce the time it takes to process critical export documents from two weeks to less than 10 minutes. This measure will support efficiency gains for firms primarily focused on the non-oil exports market. “We believe by taking these actions, we can improve Nigeria’s non-oil export earnings from close to $2bn in 2019 to $4bn by 2020,” he said. Emefiele noted that Nigerian banks are some of the most reluctant lenders in major emerging markets, with an average loan-to-deposit ratio below 60 percent. “I say this because, in comparison with our peers, South Africa has an LDR of 90 percent and about 76 percent in Kenya. Our LDR rate is therefore low. Our efforts so far are, however, yielding fruit as gross credit increased by 5.3 percent to N16.4 trillion ($45.5bn) by the end of September 2019 from May 31, 2019,” he said.

•Continues online at www.businessday.ng

Monday 02 December 2019

BUSINESS DAY

Monday 02 December 2019

BUSINESS DAY

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 328,793.34 9.25 1.09 210 6,608,539 UNITED BANK FOR AFRICA PLC 241,105.92 7.05 -0.70 243 40,661,797 ZENITH BANK PLC 583,974.78 18.60 -0.81 447 27,184,407 900 74,454,743 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 240,498.46 6.70 -1.47 217 5,083,567 217 5,083,567 1,117 79,538,310 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,442,541.57 120.00 1.69 67 1,221,919 67 1,221,919 67 1,221,919 BUILDING MATERIALS DANGOTE CEMENT PLC 2,433,384.46 142.80 -0.14 80 3,220,632 LAFARGE AFRICA PLC. 225,509.14 14.00 - 51 571,872 131 3,792,504 131 3,792,504 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 323,467.98 549.70 - 20 18,437 20 18,437 20 18,437 1,335 84,571,170 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 11,873.80 4.45 - 1 780 1 780 1 780 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 780 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 47,361.63 49.65 - 9 2,722 OKOMU OIL PALM PLC. PRESCO PLC 37,850.00 37.85 - 5 4,315 14 7,037 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,530.00 0.51 - 22 686,822 22 686,822 36 693,859 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 953.02 0.36 9.09 3 242,457 JOHN HOLT PLC. 217.92 0.56 - 1 10,702 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,054.47 1.01 -1.94 64 15,855,095 U A C N PLC. 23,050.37 8.00 6.67 255 42,607,788 323 58,716,042 323 58,716,042 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 1 140 1 140 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 25,080.00 19.00 - 12 109,152 ROADS NIG PLC. 165.00 6.60 - 0 0 12 109,152 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,598.40 1.00 1.01 6 312,900 6 312,900 19 422,192 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,986.09 1.02 - 5 42,200 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 1 432 GUINNESS NIG PLC 67,901.87 31.00 - 41 155,938 INTERNATIONAL BREWERIES PLC. 80,801.10 9.40 - 11 400,358 NIGERIAN BREW. PLC. 408,241.85 51.05 0.29 54 21,044,902 112 21,643,830 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 165,600.00 13.80 - 44 110,018 74,831.93 18.25 - 26 82,025 FLOUR MILLS NIG. PLC. HONEYWELL FLOUR MILL PLC 8,485.31 1.07 0.94 22 1,079,470 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 37,092.14 14.00 - 5 12,000 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 97 1,283,513 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,594.20 9.90 - 24 84,380 NESTLE NIGERIA PLC. 1,070,085.94 1,350.00 3.85 46 225,537 70 309,917 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,878.29 3.90 1.56 37 8,392,484 37 8,392,484 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 20,845.00 5.25 - 15 44,650 UNILEVER NIGERIA PLC. 92,494.59 16.10 - 34 63,407 49 108,057 365 31,737,801 BANKING ECOBANK TRANSNATIONAL INCORPORATED 128,446.86 7.00 - 44 794,526 FIDELITY BANK PLC 59,398.33 2.05 2.50 72 8,068,689 GUARANTY TRUST BANK PLC. 896,179.41 30.45 1.33 170 3,592,147 JAIZ BANK PLC 19,446.40 0.66 4.76 32 1,675,252 STERLING BANK PLC. 56,717.12 1.97 1.03 50 4,032,480 UNION BANK NIG.PLC. 203,845.27 7.00 - 32 875,927 UNITY BANK PLC 8,299.43 0.71 9.23 14 622,020 WEMA BANK PLC. 27,773.62 0.72 2.86 54 4,221,175 468 23,882,216 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,851.14 0.70 1.43 41 5,752,833 AXAMANSARD INSURANCE PLC 17,850.00 1.70 -2.86 8 251,714 3,170.70 0.39 8.33 2 458,419 CONSOLIDATED HALLMARK INSURANCE PLC CONTINENTAL REINSURANCE PLC 22,820.04 2.20 - 0 0 CORNERSTONE INSURANCE PLC 11,636.31 0.79 2.60 6 566,057 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,904.09 0.26 - 5 175,000 LAW UNION AND ROCK INS. PLC. 2,792.61 0.65 - 11 303,029 LINKAGE ASSURANCE PLC 4,080.00 0.51 - 4 18,181 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 3 10,300 NEM INSURANCE PLC 10,561.01 2.00 - 19 598,723 NIGER INSURANCE PLC 1,547.90 0.20 - 1 5,570 PRESTIGE ASSURANCE PLC 2,745.10 0.51 - 0 0 REGENCY ASSURANCE PLC 1,333.75 0.20 - 4 312,712 SOVEREIGN TRUST INSURANCE PLC 1,834.98 0.22 - 1 12,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 3,200.00 0.20 - 2 20 UNIVERSAL INSURANCE PLC VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,085.44 0.38 - 21 711,151 128 9,175,709 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,538.17 1.11 - 5 130,250 5 130,250

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,200.00 1.00 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,400.00 4.20 - 22 316,102 CUSTODIAN INVESTMENT PLC 35,291.19 6.00 - 21 666,184 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 39,803.45 2.01 - 50 967,495 1,183.44 0.23 - 1 2,188 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 399,562.19 38.15 -4.86 38 3,385,440 UNITED CAPITAL PLC 14,100.00 2.35 -0.84 36 656,637 168 5,994,046 769 39,182,221 HEALTHCARE PROVIDERS EKOCORP PLC. 1,994.40 4.00 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 4 26,200 4 26,200 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,823.85 3.75 -9.33 10 1,183,364 7,474.23 6.25 - 20 189,990 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 3,536.73 2.05 - 6 32,746 1,386.38 0.73 - 10 191,775 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 46 1,597,875 50 1,624,075 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 852.48 0.24 -4.00 5 297,833 5 297,833 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 486.00 4.50 - 2 1,926 TRIPPLE GEE AND COMPANY PLC. 316.77 0.64 - 0 0 2 1,926 PROCESSING SYSTEMS CHAMS PLC 1,643.62 0.35 -7.89 29 2,740,543 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 5 24,565 34 2,765,108 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 4 82 4 82 45 3,064,949 BUILDING MATERIALS BERGER PAINTS PLC 2,173.68 7.50 - 1 475 CAP PLC 17,010.00 24.30 - 18 296,915 CEMENT CO. OF NORTH.NIG. PLC 262,870.02 20.00 5.26 87 2,648,112 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 106 2,945,502 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,553.92 1.45 -8.23 16 1,263,790 16 1,263,790 PACKAGING/CONTAINERS BETA GLASS PLC. 26,898.49 53.80 - 8 10,170 GREIF NIGERIA PLC 388.02 9.10 - 0 0 8 10,170 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 130 4,219,462 CHEMICALS B.O.C. GASES PLC. 2,547.42 6.12 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 1 30 1 30 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 83.60 0.38 - 0 0 0 0 1 30 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,315.17 0.21 - 20 975,005 20 975,005 INTEGRATED OIL AND GAS SERVICES OANDO PLC 46,617.80 3.75 0.81 43 697,926 43 697,926 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 12 5,611 CONOIL PLC 12,838.11 18.50 - 7 7,700 ETERNA PLC. 3,651.61 2.80 - 10 84,864 FORTE OIL PLC. 23,574.91 18.10 - 19 9,621 MRS OIL NIGERIA PLC. 4,663.23 15.30 - 4 4,207 TOTAL NIGERIA PLC. 37,652.97 110.90 - 6 1,800 58 113,803 121 1,786,734 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 270.56 0.23 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 2 700 TRANS-NATIONWIDE EXPRESS PLC. 421.96 0.90 - 0 0 2 700 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,349.04 1.13 -9.60 6 324,500 7,862.53 3.50 - 0 0 TOURIST COMPANY OF NIGERIA PLC. TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 6 324,500 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 0 0 LEARN AFRICA PLC 972.03 1.26 - 1 11,472 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 1 5,100 UNIVERSITY PRESS PLC. 629.86 1.46 - 3 93,375 5 109,947 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 679.66 0.41 - 2 22,770 2 22,770 SPECIALTY INTERLINKED TECHNOLOGIES PLC 757.44 3.20 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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Insecurity: Alumni donate security towers to Rivers varsity

o assist the institution’s management in tackling issues of insecurity that may arise on campus, the Set 98 - 99 Special Whales of the Rivers State University Alumni Association has donated two security towers to their Alma mater in Port Harcourt. The donation of the fully constructed towers to the university is part of the associations 2019 three-day ‘Reunion Programme’ that has as its theme; Security and Development. Vice Chancellor of the university, Professor Opuenebo Owei, while commissioning the project, says the university management is committed to ensuring the safety of staff and students on campus at all time. Professor Owei thanked the Set 98-99 alumni batch for having a heart of coming together and giving back to the institution after graduating for about 20 years now, promising that the structures will be judiciously used for the purpose for which it was built. Earlier in his address, chairman, Set 98 - 99 of the RSU alumni association, Kennedy Barango, states that the project was c o n s i d e re d , a n d p u t i n place by the body following the request made by the institution management during the inauguration of the group. Barango says the project was a dream conceived and pursued vigorously by members of the association as a way of projecting the image

of their Alma matter. He calls on other graduates of the institution, to in the spirit of collegiality, respond to the call by the institution by taking up projects that address a touching need to the benefit of the university community, and Rivers State in general. Fu b a r a S a m - B a n i g o, chairman of the 2019 reunion committee, notes that it is usually part of the group’s activities to donate to the university during re-union meetings, noting that the donation this year is the third by the group to the University since the set was inaugurated from the national and state chapter of the alumni. According to Sam-Banigo, the towers were built by the body to ensure the school was protected and safe for students, lecturers, and all the carry on legitimate business within the University community, as the school has faced some security challenges in the recent past. He charges students to always work within the confine of the law to ensure that peace reign on the campus at all times, and challenged other alumni sets to emulate the group. It will be recalled that the university recently had it fair share of major security challenges in the country, before normalcy was restored, but not without a change of guard in the office of the Vice Chancellor at the end of the 2018/2019 academic session.

NNPC confirms NLNG Train 7 FID to be executed in December 2019 HARRISON EDEH, Abuja

n an effort to further grow the Nigerian Liquefied Natural Gas (NLNG) in the country, Mele Kyari, group managing director, Nigerian National Petroleum Corporation (NNPC), says the Final Investment Decision (FID) for NLNG Train 7 would be executed next month. Kyari made this disclosure in Abuja while receiving Patrick Jean Pouyanné, chairman/ group CEO, Total Group, and other top management of the Group, a release by NNPC acting group general manager, group public affairs, Samson Makoji, notes. Kyari stated that the corporation would continue to align its business processes with its partners in accordance with global best practices for the benefit of the investments and for the good of Nigerians, who, he noted, remained the key shareholders of the National Oil Company. “We see Total Exploration and Production as a total partner. Total is one of the few multinational oil companies in Nigeria that are fully integrated with their visible footprints from the Upstream to the Down-

stream Oil and Gas Sector,” Kyari averred. He described Nigeria as the best investment destination in Africa with the largest growing economy and with a population of over 200million that made it the largest market for Oil and Gas products in Africa. Kyari applauded President Muhammadu Buhari for creating an enabling investment environment for the Oil and Gas Industry and urged the Total Group and other International Oil and Gas companies to take advantage of the abundant conducive opportunities in the Petroleum Sector. The NNPC helmsman assured the Total Group of the corporation’s unflinching partnership and implored them to bring to fruition all their ongoing investment portfolios for the benefit of the Joint Venture. Earlier, Pouyanné said Nigeria was very important to the Total Group, saying that the Egina FPSO was currently producing 200,000 barrels per day. He reassured that the Total Group would continue to invest in more deep-water projects in Nigeria and described the NLNG project as a very important asset that his company was deeply committed to.

L-R: Jordi Borrut Bel, CEO, Nigerian Breweries plc; Monica Hemben Ejmunieze, director, registrar and regulation affair, National Agency for Food and Drug Administration and Control (NAFDAC); Ade Adefeko, vice president, corporate and government relations, Olam Nigeria; Oscar Onyema, CEO, the Nigerian Stock Exchange (NSE); Mary Uduk, acting director-general, Securities and Exchange Commission (SEC), and Ayoola Olukanni, director-general, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), during the NSE CEO Interactive Session for Consumer Goods Sector, theme: The Role of the Capital Market In Unlocking Value in the Consumer Goods Sector at The Civic Centre, Victoria Island, Lagos, at the weekend.

Alakija says her foundation has empowered over 3,500 widows BUNMI BAILEY & MICHAEL ANI

igeria’s richest woman, Falorunso Alakija, says her foundation, established to reach out to widows and orphans, has so far succeeded in touching the lives of over 3,500 of such women. Alakija, who spoke on the side line of the fifth edition of a youth empowerment programme organised by her non-governmental organisation, the Rose of Sharon Foundation, said about 10,000 households had also been indirectly impacted positively by the vision of the foundation. “Since we started 11 years ago, we have directly touched the lives of 3500 widows whom to a large extent were

left stranded then due to situations of life, and this has also indirectly rubbed positively on over 10,000 households,” Alakija said. Alakija, 68, launched the Rose of Sharon Foundation in 2008, with the vision of providing help and succour to widows and orphans in Nigeria as well as the rest of the world. These widows who are members of the foundation are provided loans at zero percent interest to enable them start business and pay at a much later date. The foundation has also succeeded in training several widows through school for those who wish to go further as well as their children. According to Alakija, the mandate to start the foundation was a ‘call from God.’

“The foundation was birthed out by the call of God after he showed me James 1 vs 27, a verse of the Bible, which is to look after widows and orphans to help them out in the challenge they face,” she said. According to Alakija, many of these women are traumatised and depressed after they are left with nothing from the hands of their in-laws hence, the need to provide a platform that they can leverage on to explore “At first when we started, we had only three widows, the number increased to 900 and here we are having thousands of them across the country doing great with their children working,” she said She is the managing director of Rose of Sharon Group

and executive vice chairman, Famfa Oil, with investments across different sectors of the economy, including real estate, oil and gas, printing and fashion. In 2015, she was ranked by Forbes as the richest woman in Nigeria, with a worth of over $1 billion, and second most influential woman in Africa after Okonji NgoziIwela, a one-time finance minister under the Goodluck Jonathan’s administration. In her words, the billionaire urged Nigerians to extend love and reach out to the poor always. She noted that one need not be a billionaire to be able to reach out to the poor, “as little as your worn clothes can go a long way in saving the lives of people in the country,” she said.

200 million population. While Nigeria’s population is estimated to rise by more than double of its current size, according to a US projection, the lecturer said the problem comes with the lack of capacity to move the country forward and strategic skills acquisition, which could ultimately turn the country around in not too distant future. “One of the ways in which this problem can be resolved is this: people should be able to perceive problems, especially societal challenges as opportunities that can be turned into goods and services of commercial value,” he said. During the lecture, he listed the purpose of entrepreneurship, education, youth empowerment in Nigeria, as some concepts youth should have

in mind. He also encouraged the youth to develop different characteristics such as zealousness, curiosity, hard work, ego and ambition “that would distinguish them from other generations.” “The youth are the engines that actualise national development if their mindsets are channelled in the right direction,” he said. Furthermore, while stating that entrepreneurship education has received a boost as a source of job creation, empowerment for the unemployed and underemployed, he pointed out that poor entrepreneurial culture, lack of fund, poor lack of entrepreneurial teachers were part of the challenges hindering entrepreneurship education in Nigeria.

Other problems, according to him, are non-inclusion of entrepreneurship practical programmes in the school syllabus, poor societal attitude to technical and vocational education, inadequate facilities and modern equipment for teaching and learning, Insensitivity of government to enterprise creation and expansion strategy. “The development of any country is dependent on how productive and creative its youths are. Parents, teachers and governments have the obligation to ensure that the youths are empowered. “The problem with Nigerian educational programs is the too much emphasis on the value on certificate rather than the skills required in the career,” he said.

Skill acquisition, knowledge driving force for economic development - analyst Desmond Okon

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n a world where skill and knowledge are vital to driving economic growth, Nicholas Mandla, a lecturer and public affairs analyst, says the investment commitment of Nigerian youths to skill and knowledge acquisition is abysmally low. Speaking at the Earn-Power Meet-up Event organised by Dakoru Voice International recently in Lagos, he said the situation was fuelling poverty in Africa’s most populous nation. Mandla urged the youth to prioritise empowerment programmes as it possess the capacity to liberate them from poverty, which currently embroils almost half of Nigeria’s

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TAJBank Launches Nigeria’s 2nd non-interest financial institution SEGUN ADAMS

STEPHEN ONYEKWELU

Buhari’s $30bn borrowing plan will raise Nigeria’s debt burden - LCCI Odinaka Anudu

Nigeria’s automotive lubricant market gets first commercial laboratory STEPHEN ONYEKWELU

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Dangote Refinery takes delivery of world largest crude distillation column equipment … to add value to crude oil refining in Africa Olusola Bello

W L-R: Chikezie Nwosu, CEO, Waltersmith Petroman Oil Limited; Jason Zhang, an official of HAWTAI Energy Limited; Cai Xianhe, president of HAWTAI Energy (HK) Limited; Abdulrazaq Isa, chairman, Waltersmith Petroman Oil, and Danjuma Saleh, executive vice chairman, Waltersmith Petroman Oil, during the acquisition bid ceremony for oil bloc EG-23 in Equitorial Guinea.

Four years after, Sirika fails to inaugurate aviation agencies’ boards despite appointments IFEOMA OKEKE

our years after the cur rent administration came on board in the sector, Hadi Sir ika, minister of aviation, is yet to inaugurate boards of directors into respective agencies, despite their appointments and approvals. President Muhammadu Buhari about two years ago approved the appointment of boards of directors to five out of the six agencies in the sector, while Adams Oshiomhole, chairman, All Progressives Congress (APC), also gave a deadline for the inauguration of the board members over a year ago. But in spite of the approvals and directives, Sirika is yet to inaugurate the board members. The agencies with board of directors, according to the Acts setting them up, are the Nigerian Airspace Management Agency (NAMA), Federal Airports Authority of Nigeria (FAAN) and the Nigerian College of Aviation Technology (NCAT). Others are the Nigerian Meteorological Agency (NiMET) and the Nigerian Civil Aviation Authority (NCAA), while Accident Investigation Bureau (AIB) does not have a board of directors. It was gathered that the Act setting up NCAA stipulated the appointment of professionals as chairman and members of the board, as well as representatives from three ministries. A source close to the ministry said at the weekend that the inauguration of the boards was stalled by Sirika, who claimed that their compositions and appointments negated the Acts setting up some of the agencies. It was learnt that the minister said that the Acts establishing the agencies stipulated the qualification of the persons to be appointed into the boards, a requirement he alleged the Federal Government did not consider when

announcing their compositions. Besides, another source in one of the agencies confided in our correspondent that “some people in the ministry are not comfortable with having a board to direct their affairs, rather they want to be the only ones regulating and controlling activities in the agencies without supervision”. The agency source said if the composition of the appointees negated the Acts setting up some of the agencies

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as claimed by the minister, he ought to have officially met with the appropriate authorities to address the perceived challenge in the composition, saying the minister had always been reluctant to inaugurate the board members. Some of the stakeholders said that the non-inauguration of the boards would have adverse effect on the agencies as the chief executive officers had a limit of what they could spend without recourse to the board of directors.

o r l d ’s l a r g e s t crude distillation column equipment designed for crude oil processing for Dangote Refinery has arrived Lagos. The Crude Distillation Column is the largest in terms of distilling capacity, which is 650 thousand barrels per stream day. Presently, this is the world’s largest single train refining column. The significant equipment weighs 2250MT; Length, 112.5m; Width, 14.036m; and Height, 13.752m. The above mentioned weight does not include the weight of the internal trays, which is approximately 536MT. Rajen Sachar, head, Maritime and Ports Infrastructure of Dangote, told newsmen during the arrival of the facility in Lagos that the equipment was the biggest single-train facility used for refining crude. The refinery equipment, which was manufactured by Sinopec in China, is the primary unit processor of crude oil into fuels. Sachar said the crude oil consists of various chemical components that have different molecular sizes, molecular

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weights and boiling temperatures. He added that the crude distillation column works on the principle of fractional distillation leading to separation of various components in the mixture on the basis of their different boiling points. According to Sachar, “Crude oil enters the top of the column, where the inlet temperature is 165 deg C gradually increasing to 357 deg C at the bottom of the column. “During this passage the crude and its vapours pass through a complex web of internal trays to increase the contact time and surface area within the column with the hot vapours travelling upwards through bubble caps which allow the vapour to pass through the tray with the cooler liquid flowing downward the column. “When the vapour reaches the height within the column where its boiling point is equal to the temperature of the column at that height it condenses to form a liquid. “The liquid then collects on various trays in the column at differing heights from where it is extracted out of the column. It is therefore critical to control the heat load of the column to optimize the crude crack.

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“These separated fractions are mainly middle distillates namely, Naphtha, Jet Fuel, Kerosene, Gasoline and Gas Oil.” The company’s captain said that the refinery when completed will produce EuroV quality gasoline and diesel, as well as jet fuel and polypropylene, saying that the crude column will enhance the economy of Nigeria and all neighbouring countries in Africa by making available refined petroleum products meeting world standards emission norms of Euro 5 and Euro 6. The captain said the strategic location of Nigeria in West Africa continent will help in reducing the transportation costs of these fuels to other countries in the African subcontinent. “Thereby providing cost effective high grade petroleum products to them. This Refinery with a capacity of 650kbpsd is higher than the total demand of Nigeria. “Thus catapulting Nigeria position from net importer of petroleum products to a net exporter of petroleum products. Thereby redefining Nigeria’s position in the global petroleum product market.”

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FINANCIAL TIMES

World Business Newspaper Tony Barber

he election of two littleknown leftwingers as leaders of Germany’s Social Democratic party brings closer the moment when the nation is likely to be governed by a coalition never seen in the Federal Republic’s 70year history. On present trends, the pivotal member of such a coalition will be the Greens, which has replaced the SPD as Germany’s dominant leftof-centre party. As a result, a less inflexible line on balanced budgets, a bolder approach to public investment and more imaginative ideas on European integration may be on the horizon in Berlin. The timing of this long-anticipated change remains uncertain. It could happen as early as next year, depending on how much longer Chancellor Angela Merkel’s demoralised government clings to power and whether Germany holds snap elections. But the crucial point is that change is coming. In fact, Germany is approaching a political transition that could be as significant as 1969, when the SPD led a government for the first time in the postwar era, and 1998, when the Greens first took national office. For it is not only the era of Ms Merkel, chancellor since 2005, that is drawing to an end. So, too, is the era of “grand coalitions” uniting her Christian Democratic party with the SPD. This partnership has provided three of Germany’s four governments during the Merkel era. But the third, which was cobbled together after the 2017 Bundestag elections, has proved to be the

SPD result heralds the end of Germany’s ‘grand coalition’

Leadership vote looks likely to hasten Merkel’s exit and bring the Green party into power

unhappiest of them all — for both parties. The SPD leadership contest was won by Norbert Walter-Borjans and Saskia Esken after what amounted to a grassroots leftist protest against the party establishment and its co-operation with the CDU. It is the latest sign that the CDU-SPD grand coalition formula has reached the end of the road. For the CDU contains

America needs a coherent strategy to compete in a world with ascendant state capitalism

nyone who still doubts that the US is economically decoupling from the rest of the world should take a look at a proposal the commerce department put forward last week. This would allow its secretary Wilbur Ross to prevent imports of any new technology deemed a “national security threat”. The broad language could apply not only to Huawei chips or Chinese dot-coms, but to European hardware, software and data services, too, if they are deemed to be linked to a “foreign adversary”. Such a link is very possible now Europe is being pulled into China’s technology orbit via the 5G standards and technologies that make up part of the Belt and Road Initiative. I spoke recently to a senior executive at a strategically important US technology company who told me it is becoming legally tricky for him even to speak to his counterparts in Europe, because of the various restrictions that the Trump administration has put in place.

That’s scary, because one of the most important things the US could do right now to ensure both national security and its own position in the 21stcentury digital economy would be to work with allies on transatlantic standards for emerging technologies like 5G, artificial intelligence and so on. In fact, that was a key recommendation in a recent Council on Foreign Relations task force report entitled “Innovation and National Security: Keeping Our Edge.” The title indicates that decoupling is no longer a fringe idea. The CFR has traditionally been the seat of neoliberal economic thinking; most of its members are older, wealthy, business and policy types who have shaped and benefited from globalisation — in particular the free movement of capital across borders — over the past four decades. The fact that the CFR is now admitting that we are in a more fragmented world — one that won’t reset to the 1990s — and advocating what amounts to a US industrial policy, is a major shift in thinking. www.businessday.ng

The stage is therefore set for change after the next Bundestag elections, due by September 2021. Should the new SPD leadership decide to pull the plug on Ms Merkel’s government, Germans could go to the polls earlier — in the first half of next year, or in early 2021. A snap election in the second half of next year appears unlikely because that is when Germany will hold the EU’s six-month rotating presidency.

Rising Pete Buttigieg struggles to win over African-Americans

Consciously decoupling the US economy Rana Foroohar

nu merou s c ons er vative mal contents who, like their leftwing SPD counterparts, complain that such coalitions blur their party’s distinctive identity. The SPD languishes in opinion polls with about 15 per cent support, vying for third place with the rightwing populist Alternative for Germany. It is a humiliating position for Europe’s most venerable social democratic party.

In any event, the fragmentation of Germany’s party political landscape over the past decade means that one of three varieties of coalition will most probably come to power after the next Bundestag polls. Arguably, the most plausible is a coalition of the Christian Democrats and Greens. At present these are Germany’s two most popular parties. The Greens are not only the most internally disciplined party on the German left, but have a credible potential candidate for chancellor in Robert Habeck, their co-leader. The second possibility is a broad left-of-centre coalition bringing together the Greens, SPD and radical left party Die Linke. Up to now, the first two parties have refused to contemplate sharing office at national level with Die Linke, owing to its roots in former communist East Germany and its hostility to Nato. But such a three-party coalition seems the only way that an authentically left-of-centre government can come to power in Germany. A third possibility is a coalition of the CDU, Greens and liberal Free Democrats. But this option was explored to no avail after the 2017 elections. The outcome was the third CDU-SPD grand coalition — a combination that has disappointed the parties themselves, a majority of voters and Germany’s EU allies.

Young moderate candidate has failed to make inroads into a critical Democratic community Demetri Sevastopulo

nce a long shot in the Democratic presidential race, Pete Buttigieg has emerged as the frontrunner in the early voting states of Iowa and New Hampshire by appealing to educated white elites looking for an alternative to Joe Biden, the former vice-president. But the 37-year-old Harvard graduate is struggling to win over a crucial voting block in Democratic politics: African-Americans. Once the Democratic primary moves beyond Iowa and New Hampshire, where roughly 90 per cent of voters are white, Mr Buttigieg hits a hurdle in the southern states such as South Carolina, where black voters comprise about 60 per cent of the Democratic electorate. A recent poll in South Carolina found that Mr Biden led with 33 per cent, with Mr Buttigieg far behind on 6 per cent. When it came to black voters, however, Mr Buttigieg was at zero. When Mr Buttigieg recently held a rally in Rock Hill, South Carolina, a city where two-fifths of the residents are black, few African-Americans came, a recurring problem in the state.

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Nikita Jackson, a black city council member who introduced Mr Buttigieg at the event, said he, and some others, needed to show up at African-American community events rather than waiting for black voters to come to rallies after working long days in their jobs. She said that while his team had attended a string of recent community events, Mr Buttigieg was nowhere to be seen. “It would have been a great look to have him there,” said Ms Jackson, who added that Mr Biden would be more resilient in South Carolina because black voters associate him with former president Barack Obama. Mr Buttigieg plans to run his first television ads in South Carolina next week, and was due to visit a black church across the border in North Carolina this weekend to bolster his support. The former mayor of South Bend, Indiana, a rust belt city of 100,000, rose from obscurity in the Democratic nomination contest with a message of moderate generational change. “The generational change aspect is incredibly important. We need a bench full of new leaders,” said Maria Robinson, a Massachusetts politician who introduced Mr @Businessdayng

Buttigieg at a rally in Durham, New Hampshire, last month. But as Mr Buttigieg has vaulted up the fundraising table — raising $19m in the third quarter, placing him third after his leftwing rivals Bernie Sanders and Elizabeth Warren — he has remained in single digits in national polls, trailing far behind Mr Biden. A focus group conducted for his campaign over the summer in South Carolina found that many African-Americans, and particularly black men, were uncomfortable with him being a gay, married man. Earlier this month, Jim Clyburn, a South Carolina lawmaker and number three Democrat in the House, said many older AfricanAmericans struggle with the fact that Mr Buttigieg is gay. “A lot of people my age . . . feel that way,” said Mr Clyburn, 79, before adding that younger African-Americans would be more tolerant. Mr Buttigieg has tried to damp down any negative impact by arguing that his experience as a gay man growing up in a conservative state makes him sensitive to discrimination, a claim that has earned mixed reviews from African-Americans. He also says that conservative voters can overlook it if you focus on their issues.

Monday 02 December 2019

BUSINESS DAY

NATIONAL NEWS

Iranians left with questions after worst violence in decades At least 143 people killed and hundreds of buildings torched in week of protests Najmeh Bozorgmehr and Monavar Khalaj

s Iran counts the cost of the most violent protests in four decades of Islamic rule, many Iranians have been left asking what happened. In a week of clashes hundreds of thousands of Iranians frustrated with months of economic hardship, unemployment and then a sudden jump in fuel prices, poured on to the street across the country. Seemingly leaderless and drawn largely from Iran’s unemployed working classes, the men and women voiced a shared sense of hopelessness among Iranians. They chanted anti-regime slogans and then some attacked banks, petrol stations and government buildings. The state responded with a brutal security crackdown, sending armed officers to confront the crowds and shutting down internet access for five days. When the smoke settled and the information blackout was lifted, Amnesty International said at least 161 people had been killed across 10 provinces, many shot with live rounds. Iran has experienced periods of civil unrest before: the Green Movement of 2009 and, more recently, protests in 2017 and 2018. But eyewitnesses said the latest demonstrations quickly became riots that were more violent than anything Iran had experienced since its revolution in 1979.

“They were like a gang, marching in the streets with faces covered destroying specific targets like banks,” said Hamed, a theatre actor who lives in the town of Fardis in west Tehran, a hotspot during the violence. Iran’s interior ministry says up to 200,000 protesters were involved and set on fire more than 700 bank branches, hundreds of cars and motorbikes and 140 other public properties. After the government regained control it blamed familiar enemies : the US, Saudi Arabia and Iranian opposition groups overseas. The US had supported the demonstrations through the deployment of “psychological warfare” and “local mercenaries” in an attempt to exert “maximum pressure”, the head of Iran’s elite Revolutionary Guards told thousands of regime supporters at a state-organised rally in the capital last week. Although blaming the US and Saudi Arabia is a familiar reflex for Iran’s leaders, some Iranians said there was more reason than normal to be suspicious. US secretary of state, Mike Pompeo, expressed support for the protesters from the start and then publicly criticised the security response. The level of violence and the apparently co-ordinated attacks on banks and petrol stations also suggested that something unusual had taken place, some witnesses said.

Cyber Monday tipped to break US ecommerce sales record

Falling Black Friday footfall raises concerns for future of weaker chains Alistair Gray

yber Monday is shaping up to be the biggest day ever for US ecommerce sales after fewer shoppers visited bricks and mortar stores on Black Friday, according to initial data that highlight Amazon’s continued disruption of retail. Visitor numbers across the US retail sector on Thanksgiving and Black Friday combined dipped 3 per cent from last year, according to analytics company ShopperTrak. The findings were echoed by RetailNext, which uses a different methodology. It recorded a 2.1 per cent drop in traffic and a 1.6 per cent decline in in-store sales on Black Friday. In contrast, Adobe Analytics found that online sales were setting new records. Internet shoppers were projected to splash out $9.4bn on Monday, about 19 per cent more than last year, having spent $7.4bn on Black Friday. The combined amount will still fall well short of last month’s Single’s Day, where Chinese ecommerce group Alibaba raked in more than $38bn of online sales. Amazon emerged as a big winner from the US online boom as separate figures released over the weekend by Edison Trends showed its Thanksgiving and Black Friday sales jumped 49 per cent from last year. Yet the figures showed betterperforming store chains are finding

some success in taking on Amazon, by far the biggest internet retailer, by integrating their online and physical presence. Adobe recorded a 43 per cent year-on-year rise in online orders for goods that customers planned to pick up from stores. Greg Maloney, chief executive of JLL’s Americas retail business, said some US retailers were doing “extremely well” and that traffic and sales were declining at those companies that “haven’t embraced the changes”. Black Friday store checks in Minnesota, Ohio and New York by retail analysts at KeyBanc Capital Markets found footfall had been strong at Walmart and Target, as well as the fashionable athletic clothing brand Lululemon. But they found that traffic was “somewhat muted” at shopping malls, even though several retailers, including Gap, Banana Republic and Express, were offering discounts of up to 50 per cent. Falling footfall during the peak shopping season will raise concerns that weaker mall-based and department store chains will be forced to cut more stores and jobs in the new year. US retailers have announced 9,270 store closures so far in 2019, including Gap, Payless ShoeSource and Gymboree, according to Coresight Research. That is more than double the number of openings and follows 5,840 closures last year. www.businessday.ng

China is the pacesetter in facial recognition technology, particularly in Africa, which means the International Telecommunications Union must consider its standards © FT illustration w

Chinese tech groups shaping UN facial recognition standards Companies hope to gain an edge by laying the groundwork for global rules Anna Gross, Madhumita Murgia, and Yuan Yang

hinese technology companies are shaping new facial recognition and surveillance standards at the UN, according to leaked documents obtained by the Financial Times, as they try to open up new markets in the developing world for their cutting-edge technologies. Companies such as ZTE, Dahua and China Telecom are among those proposing new international standards — specifications aimed at creating universally consistent technology — in the UN’s International Telecommunication Union (ITU) for facial recognition, video monitoring, city and vehicle surveillance. Standards ratified in the ITU, which comprises nearly 200 member states, are commonly adopted as policy by developing nations in Africa, the Middle East and Asia, where the Chinese government has agreed to supply infrastructure and surveillance tech under its “Belt and Road Initiative”, according to experts. “African states tend to go along with what is being put forward by China and the ITU as they don’t have the resources to develop standards themselves,” said Richard Wingfield, Head of Legal at Global Partners Digital, a company working on human rights on the internet. Europe and North America have their own regional standards setting bodies, such as the IETF, IEEE and 3GPP, which are dominated by domestic industry players. The ITU, on the other hand, is a space where companies outside of North America and Europe tend to shape and drive standard development. Standard writing gives companies an edge in the market by aligning global rules with the specifications of their own proprietary technology, say experts. Over the past few years, Chinese surveillance infrastructure has swept across regions from Angola to Zimbabwe. For example, earlier this year South African company Vumacam installed 15,000 surveillance cameras with facial recogni-

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tion capabilities in Johannesburg, supplied by Hikvision. In August, Uganda confirmed the nationwide installation of Huawei surveillance cameras with face recognition capabilities. Similarly, the Singapore government plans to install facial recognition cameras on its lampposts, a contract that Chinese start-up Yitu has bid for, according to local reports. Graphic showing the use of facial recognition technology around the world ITU standards are increasingly being authored by companies as opposed to government officials, according to members of international ITU delegations, and China’s influence in drafting and setting the standards at the UN has grown in recent years. ITU standards, which usually take around two years to be drafted and adopted, are highly influential in setting the rules around how tech is developed and used, particularly in the developing world. Drafts are put forward by companies and governments, and are then discussed at meetings involving representatives from several member states, before final approval. “A number of Chinese companies have really started to rise and seize market share around the world in these areas [such as face recognition and visual surveillance],” said Steven Feldstein, a fellow at the Carnegie Endowment for International Peace, an American think-tank, where he recently published a study about the global expansion of AI surveillance. “It’s a deliberate investment prioritisation by the Chinese state to help flourish the [AI] sector, and we are now seeing the fruits of that.” Data from African markets is of particular interest to Chinese companies, who are looking to improve the accuracy of their facial recognition algorithms, particularly to identify people of colour. For instance, a deal between Chinese facial recognition company CloudWalk and the government of Zimbabwe means the latter will send data on millions of African faces to the Chinese company to help train the technology. Developing standards to improve the quality of AI products and services may also increase social @Businessdayng

acceptance of new technologies in new markets. “Specifying methods for testing and assessing facial recognition systems or service robots to prevent high-profile accidents could cultivate societal trust in these new technologies,” according to a 2018 report from US think-tank the New America Foundation. According to academics, the Chinese government views standards as playing a significant role in the country’s aspirations for AI leadership. “The drive to shape international standards . . . reflects longstanding concerns that Chinese representatives were not at the table to help set the rules of the game for the global Internet,” the authors of the New America report wrote. “The Chinese government wants to make sure that this does not happen in other ICT spheres, now that China has become a technology power with a sizeable market and leading technology companies, including in AI.” The proposals currently being discussed at the ITU have been criticised by human rights lawyers as crossing the line from technical specifications to policy recommendations, including outlining use cases and data requirements for facial recognition and other surveillance technologies. “There are virtually no human rights, consumer protection, or data protection experts present in ITU standards meetings so many of the technologies that threaten privacy and freedom of expression remain unchallenged in these spaces,” said Mehwish Ansari, who leads ITU work at Article 19, a digital human rights non-profit. “When it comes to facial recognition [these standards are] extremely dangerous from a human rights perspective.” “The impacts on people’s lives, their ability to live — it’s not at a mature enough space to enable standards to be set.” Requirements in the draft standard for facial recognition, which is expected to be completed before the end of 2019 and will be fast-tracked for approval, stipulate a requirement to store detected facial features in a database, including race, skin colour, face style, birthmarks, scars and other demographic features.

BUSINESS DAY

Monday 02 December 2019

FINANCIAL TIMES

COMPANIES & MARKETS

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Glencore’s African copper division to take centre stage Analysts will be seeking update on key Katanga asset at commodity trader’s investor day Neil Hume

lencore’s African copper business will be in the spotlight when the miner and commodity trader holds is annual investor briefing on Tuesday. The Swiss-based company, which is led by billionaire Ivan Glasenberg, has been grappling with a string of issues in the Democratic Republic of Congo and Zambia, which contributed to a sharp drop in half-year profits. In response it has set out a detailed turnround plan for Katanga — its biggest mine in the DRC — and said production at Mutanda — its other asset in the central Africa country — will be suspended for at least two years. Analysts and investors will be seeking an update on Katanga, where Glencore is targeting a large increase in copper and cobalt production by 2021, and also Zambia, where it is sinking three new shafts at its Mopani mine. If Glencore can get the African copper business firing on all cylinders it will be one of the miners best placed to benefit from the shift to a greener economy. Copper and its byproduct cobalt will be crucial to the electrification of cars and cities, according to analysts. “The part of the Glencore investment case where investors could get some comfort is around African copper,” said Myles Allsop, an analyst at UBS. “There is a $2bn delta in cash flow if they can fix the operations.” A year ago, responsibility for Glencore’s industrial, or mining assets, was handed to Peter Freyberg, the former head of its coal division, who has been tasked

with improving performance and lowering costs. Under the turnround plan for Katanga, Glencore is aiming to increase production of copper and cobalt from 235,000 tonnes and 12,000 tonnes respectively in 2019 to 290,000 and 36,000 tonnes in 2021. As well as an update on African copper, Glencore is expected to use the briefing to provide production and capital expenditure guidance for the next three years and outline a pipeline of internal growth options. It is also likely to discuss the outlook for its key commodities — copper, thermal coal, zinc and nickel. Analysts expect Mr Glasenberg, who turns 63 in January, to face questions about succession. The South African-born executive, who has been at the helm since 2002, has previously said he plans to retire in the next two to four years if he has found a suitable replacement. Potential candidates to take over are Kenny Ives, the head of nickel, Gary Nagle, who runs Glencore’s coal business, and Nico Paraskevas, head of copper trading. There is also likely to be interest in the company’s $2bn share buyback programme, which could be completed by the end of the year. “Glencore have been quite clear that they want to reduce leverage to one times earnings before interest, tax, depreciation and amortisation, which implies a $3bn reduction. Some of that could come through in the second half of the year but it probably means buybacks are on hold for the time being,” said Mr Allsop. “But Glencore is cash generative business and they could sell a few assets.”

Nuns berate SEC over planned shareholder rules Two religious communities say changes will leave them ‘without a voice’ at corporate meetings Attracta Mooney

wo groups of nuns, including one that puts living a life of peacemaking at the centre of its work, are gearing up for a fight with the US financial regulator over proposed shareholder rules. The Ursuline Convent of the Sacred Heart in Toledo and the Dominican Sisters of Peace based in Columbus, Ohio, want the Securities and Exchange Commission to reverse its plans to introduce rules that would make it harder for smaller shareholders to submit proposals at annual meetings of public businesses in the US. In a letter addressed to SEC chair Jay Clayton, Sister Barbara Kane, justice promoter at the Dominican Sisters of Peace, which has about $300m in assets, said: “Changing the rules governing shareholder resolutions is a solution without a problem.” She added: “I understand that the SEC must balance the needs of shareholders with those of businesses but these changes are putting the scale on the side of business which puts our investments in danger.” A divided SEC voted along po-

litical lines in November to require investors to hold more shares for longer before they can submit proposals. Currently shareholders must hold $2,000 worth of shares for a year, but the SEC plans to change this to a $25,000 holding for at least a year, declining to $2,000 for three-year holdings. It also wants to raise the thresholds for resubmitting unsuccessful proposals. Sister Sandra Sherman, president of Ursuline Convent of the Sacred Heart in Toledo, which has an investment pot of about $20.6m, warned in a letter to the SEC that the proposed rule changes could leave congregations such as hers “without a voice” at corporate meetings. She said the $2,000 ownership threshold enabled a variety of investors to have their voices heard. “These smaller investors have had great impacts on corporate practice throughout the history of the proposal process.” She pointed out that small shareholders through their proposals have been instrumental in encouraging many companies to consider climate change, human rights assessments and governance reforms. “The proposed

changes could prevent significant topics from even being suggested and considered, a loss to all shareholders,” said Sr Sherman. “We strongly urge the SEC to reconsider the proposed rule changes.” According to data from the Interfaith Center on Corporate Responsibility, a coalition of investors with $400bn in assets, more than a third of ICCR members’ 277 proposals during the 2019 annual meeting season resulted in changes to corporate policies and practices. The figures also show that of the 114 shareholder proposals that went to a vote this year, 10 achieved majority backing, while more than 60 per cent received at least 25 per cent support. Sr Sherman said shareholders engaged on environmental, social and governance risks “precisely because we are concerned about the long-term health of the companies in which we are invested”. “Engagement enables them to mitigate reputational, legal and financial risks, and build value. The filing of shareholders resolutions by investors big and small is a crucial part of the engagement process,” she said.

Self-interest demands better policing of limited liability Its routine abuse is fuelling both bubbles and populist politics Jonathan Ford

ere is a story about money and responsibility. How financial investors routinely make messes and leave others to pick up the tab. Let us start with a lurid recent case: that of Toys R Us, the US retailer that collapsed into liquidation last year after more than a decade of private equity ownership. Bad news for the investors? Well, yes, of course they lost the slender equity stakes they had contributed (albeit as part of larger diversified funds). But it was far worse news for the workforce. Tens of thousands not only lost their jobs, but their entitlement to severance pay as well. The private equity firms later made a $20m payment into a workers’ hardship fund to try and quell the ensuing rumpus (staff repre-

sentatives claimed they were owed $75m). But that merely served to highlight the disparity between what the buyout bosses felt they owed and what they had extracted. Over the 12 years of the buyout, they had banked riskless management fees of $470m. Toys R Us is far from the only example of this sort of “heads I win, tails you lose” capitalism. Think of the UK “turnround” investor Greybull, which has three times in the past decade left the taxpayer on the hook for clearing up after its unsuccessful investments, most recently with British Steel in May. Or the vast bonuses paid to bank executives pre-financial crisis on the basis of assets that later turned out to be valueless. Or, indeed, the dividends and bonuses shelled out by UK-listed companies such as Carillion and Thomas Cook, which www.businessday.ng

have caused uproar in light of their vestigial equity capital and crushing debt liabilities. Since the 19th century investors have been able to avail themselves of limited liability — the ability to cap their losses at the amount of their equity commitment. So why the strong sense now that this privilege is routinely abused? According to a forthcoming paper* from the academics Charles Goodhart and Rosa Lastra, one big reason is the fashion for paying executives in equity to “align” their interests with those of other investors. Markets work when there is a fair balance between greed and fear. But when bosses whose tenure is generally short get paid in stock, they give priority to policies that maximise short-term equity valuation. The only check is reputational; there is

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no threat of personal bankruptcy. So they logically pile on more risk — either in the form of dicey assets or debt. Mr Goodhart and Ms Lastra focus their analysis on banking, where high leverage is endemic, and regulators the only line of defence against feckless risk-taking. But private equity presents no less of an opportunity for debt-heavy strategies. Indeed, in some ways there is more scope for mischief. Buyout firms are both lightly regulated and able to shun external scrutiny. They are also expanding quickly as a share of the corporate sector, growing twice as fast as public markets this century amid triumphal talk that they run companies better. As of 2017, there were about 8,000 private equityowned businesses in the US. That is nearly twice as many as there were @Businessdayng

listed firms. The abuse may be clear. But snuffing it out is not simple. Earlier this year, the US presidential candidate Senator Elizabeth Warren came up with a blunderbuss measure of simply withdrawing limited liability from private equity firms. The answer Mr Goodhart and Ms Lastra have devised is more supple. They propose breaking down equity holders into two categories: insiders and outsiders. Insiders with power to direct the firm, including senior management, would lose limited liability. They might end up with unlimited exposure in the case of the chief executive, or multiple liability (ie an exposure greater than their original equity commitment) in the case of influential investors, such as activists and dominant holders.

Monday 02 December 2019

BUSINESS DAY

ANALYSIS FT Assets held in exchange traded funds surge to record $6tn Failure of most traditional active managers during the crisis prompted many investors to seek less volatile strategies Chris Flood

lobal assets held by exchange traded funds have climbed to a record $6tn, doubling in size in less than four years, in a surge turbocharged by the lengthy US stock market bull run. The sector’s explosive growth has attracted heightened scrutiny by regulators who are concerned about the influence of ETFs as they spread deeper and wider into financial markets worldwide. “Passing the $6tn milestone is a historic moment but we are still in a relatively early stage of the industry’s development as ETF adoption rates across Europe and Asia are well below those seen in the US,” said Deborah Fuhr, co-founder of ETFGI, a consultancy. ETFs, which provide a low-cost way to invest in a basket of assets by tracking an index, were seen as an insignificant niche before the financial crisis. But the failure of most traditional active managers to avoid damaging losses during the crisis prompted many investors to seek less volatile strategies built with ETFs. These financial instruments have gathered more than $3.5tn in new cash over the past decade. Inigo Fraser-Jenkins, a senior analyst at the brokerage Bernstein, said the penetration of index-tracking ETFs into financial markets still has “a lot further to go”. “Allocation decisions to passive [index funds including ETFs] don’t appear to be slowing at all,” said Mr

Fraser-Jenkins. Global ETF assets could reach $12tn by the end of 2023, according to BlackRock. The rise of ETFs has helped BlackRock and Vanguard, the pioneer of index-tracking funds, to develop into the asset management industry’s two biggest and most influential players. BlackRock’s iShares ETF arm has attracted at least $125bn in new cash so far this year, pushing the unit’s assets above the $2tn mark in October. Rapid growth for iShares has propelled BlackRock’s total assets to a record $7tn. ETFs inflows have helped Pennsylvania-based Vanguard to retain the title of world’s fastest-growing fund manager for seven consecutive years. Vanguard’s ETF arm has gathered at least $88bn in new cash this year, lifting its total assets to $5.9tn. The rivals have led a cut-throat price war on fees which has sucked in smaller competitors including State Street, Charles Schwab, DWS, Lyxor, UBS and Amundi. The battle has created unrelenting pressures on profit margins across the fund industry and forced greater consolidation. After a record year for deals in 2018, more mergers and acquisitions are widely anticipated as smaller players attempt to reconfigure their business models to better withstand the competitive pressures exerted by BlackRock and Vanguard. ETFs now regularly account for a third of the trading on the US stock market and an even larger share in periods of high volatility.

Maltese businessman charged over murder of journalist Yorgen Fenech accused over 2017 killing of anti-corruption campaigner Daphne Caruana Galizia

Josephine Cumbo

prominent Maltese businessman was on Saturday charged in connection with the 2017 murder of the anti-corruption campaigner and journalist Daphne Caruana Galizia. Caruana Galizia was killed in 2017 when a bomb exploded in her car minutes after she had left her home in Malta. Over the summer, three men were arrested and charged with placing and detonating the bomb that killed the journalist. They have pleaded not guilty and are awaiting trial. On Saturday night, Yorgen Fenech was charged with complicity in the murder, including promoting or financing a criminal organisation and conspiracy to commit a crime. He has denied the charges. Mr Fenech is one of Malta’s most prominent businessmen and comes from a family that runs one of Malta’s most powerful business groups, the Tumas Group. Mr Fenech was arrested onboard his luxury yatch two weeks after it was intercepted by authorities off the Maltese coast. The charges against Mr Fenech follow a dramatic week in Malta in which three senior figures in the government stood aside in connection with investigations in to the death of Caruana Galizia.

The killing of the prominent blogger shocked Europe and led to widespread calls for tough action against the alleged high-level corruption she documented in the EU’s smallest state. Joseph Muscat, prime minister, is under pressure to resign after his chief aide was questioned, but not charged, by police. No charges were laid against Mr Muscat’s ministers. On Saturday night, Paul Caruana Galizia, son of the murdered journalist, called for Mr Muscat to step down and to be properly investigated, alongside Keith Schembri, the prime minister’s chief of staff, over his mother’s death. Opposition politicians have called for the resignation of Mr Muscat, who has denied any wrongdoing in his handling of the murder case. The Caruana Galizia probe has gathered pace after the emergence of a suspected middleman in her murder, who was granted a presidential pardon this week in exchange for information about the case. Shortly after the middleman’s arrest, Mr Fenech — whose commercial activities range from property to a large power station concession awarded by the government — was detained before dawn as he attempted to sail away from the Maltese coast. A delegation from the European Parliament will on Monday travel to Malta on an urgent fact-finding mission into the investigation of the murder. www.businessday.ng

Donald Trump’s struggle to revive the US rust-belt Trade tariffs were supposed to lift the steel industry and boost the president’s re-election bid, but many producers are struggling James Politi

s the daytime shift ends at the sprawling Great Lakes Works steel plant south of Detroit, there are only a dozen or so customers at Mr K’s Saloon, huddled around a few tables after a friend’s funeral. Behind the counter, Amanda, the 29-year-old owner of the bar, where a beer costs just $1.50, bemoans the poor state of business. The number of burgers she’s been serving to hungry workers has plummeted since the factory idled one of its blast furnaces and announced plans for 200 lay-offs this year. “In the steel industry, it’s not always perfect. Some years are good and some years are bad,” she says. “But I feel like this has been one of the worst in a long time.” The struggles of the factory, run by Pittsburgh-based US Steel Corporation, reflect the torpor that has descended on US manufacturing in 2019. Industrial activity has stagnated across the US economy, but particularly in several rust-belt states that could determine the outcome of Donald Trump’s reelection bid next year, in a worrying sign for the White House and its trade policies. After entering office in 2017, the US president pressed ahead with an aggressively protectionist agenda, including 25 per cent levies on imported metals in early 2018 and an escalating tariff war with China. The aim was to regenerate pockets of blue-collar, industrial America left behind by globalisation like the so-called “downriver” towns near Detroit. The upheaval to global commerce driven by Mr Trump has delivered a significant hit to the world economy, exacerbated geopolitical tensions with China, heightened volatility in global markets and angered allies in Europe, North America and Asia. But for all the economic and diplomatic fallout, the domestic economic returns have been small for the US president, especially in the rust-belt. Employment levels in primary metals production — and US manufacturing overall — made solid gains last year, but have fallen back in 2019. The ISM’s index of US manufacturing activity has contracted for the past three months. In Michigan, where Mr Trump prevailed over Hillary Clinton by a tiny margin of just 10,704 votes in the 2016 race, manufacturing jobs dropped by 4.2 per cent in

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October, or 26,800 positions, on a year-on-year basis, according to US labour department figures. Although the data was depressed by a strike at General Motors that has since been resolved, there is little to cheer about in the state. “There’s softness in the auto industry, there’s softness in the steel industry and we’re beginning to feel the ripples of the tariffs,” says Marick Masters, a professor of business at Wayne State University in Detroit. “The climate is much more uncertain and much more doubtful about what the future holds.” The background to such uncertainty is Mr Trump’s trade war. For the past two months, the US and China have been locked in discussions about pausing the dispute and avoiding a further escalation in tariffs. But any accord would be limited in nature if it happens. China is expected to boost its purchases of US farm goods and make some commitments on intellectual property, currency and market access, in exchange for a reprieve from American levies. But it is not prepared to revamp its economic model to turn away from industrial subsidies and the forced transfer of technology, along the lines that Mr Trump has been seeking. US officials insist that the thornier issues will be tackled in a subsequent stage of negotiations, but this is unlikely to take place before the 2020 election, if at all — further exposing the US president to criticism that his trade bluster has delivered paltry results for industrial America. The suffering at US Steel, a staple of industrial America since its founding by John Pierpont Morgan in 1901, will be particularly jarring for Mr Trump and his team. Robert Lighthizer, the US trade representative and an Ohio native, spent years as the company’s top external trade lawyer, waging its battles against imports. In July 2018, Mr Trump chose a once-idled US Steel plant in Granite City, Illinois, to declare that his policies had succeeded, adding symbolic significance to the company’s downturn in fortunes. “After years of shutdowns and cutbacks . . . workers are back on the job, and we are once again pouring new American steel back into the spine of our country,” the president said. But those words may have been @Businessdayng

spoken prematurely. Since then the benchmark price for hot-rolled band steel in the US, which had spiked after the tariffs were introduced, has fallen from above $1,000 a metric tonne to about $567 in November. Meanwhile, US Steel’s shares are now trading at less than a third of their value in early 2018. The company reported a loss of $84m in the third quarter of this year, its first since 2017. Beyond the lay-offs in Michigan, US Steel cut jobs in Gary, Indiana, East Chicago, Illinois, and the Iron Range of Minnesota, blaming “challenging market conditions”. Line chart of Manufacturing employees as a % of total showing Manufacturing jobs have picked up in Michigan, but not in the US It is hardly the only steel company to be in trouble. In recent months, AK Steel of Ohio has shut a facility in Kentucky, and Bayou Steel of Louisiana has filed for bankruptcy. Steel companies such as Nucor of North Carolina which are less reliant on traditional blast furnaces than nimble electric arc furnaces called “mini-mills” have been performing better. US Steel itself made a $700m investment in an Arkansas steel plant that is more technologically advanced than its existing facilities. but analysts say the sector’s difficulties are clear. “Last year was the party, and this year was the hangover,” says Timna Tanners, Americas mining and metals analyst at Bank of America Merrill Lynch. “When the tariffs went in place mills were emboldened to add more supply and there was a ramp-up in utilisation . . . but then demand softened, and the excessive inventories led to destocking.” The steel country woes are the result of a confluence of trends that damped demand for their products this year. US business investment dried up after companies preferred to use proceeds from Mr Trump’s 2017 tax cuts to reward shareholders rather than boost capital expenditure. Meanwhile, exportoriented manufacturers took a hit from the global slowdown that was partly driven by the US trade war with China. “We didn’t just do steel, we did aluminium, then we did China tariffs, then we threatened auto tariffs,” says Simon Lester, trade policy analyst at the Cato Institute, a libertarian think-tank. “The end result is the steel industry is struggling and manufacturing is struggling”.

BD Money

Monday 02 December 2019

economy

Three recent economic events that should interest you Last week and the preceding week were filled with updates for analysts and perhaps researchers who have been tracking Nigeriaâ&#x20AC;&#x2122;s economic data and policy decisions but may not have been too interesting for those with little knowledge of economics or finance yet passionate to know how the Nigerian economy was fairing.

COVER T-Bill rates crash to 4-year low as investors place N383bn in failed bids Fixed-income investors seeking high-yielding securities in the light of the prevailing developments in the markets have once again been disappointed, as attempts to buy the federal government short-term debt instruments at attractive rates were denied.

INVESTING

How to make an investment strategy between Growth and Value Investors have fundamentally different ways in which they seek out the stocks they think will provide higher returns on their investment. One particularly wide gulf in equity investing is betwee

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BUSINESS DAY

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Monday 02 December 2019

BUSINESS DAY

Tender

Market Wrap-up

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder. Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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Monday 02 December 2019

BUSINESS DAY

Economy

Three recent economic events that should interest you OLUWASEGUN OLAKOYENIKAN

ast week and the preceding week were filled with updates for analysts and perhaps researchers who have been tracking Nigeria’s economic data and policy decisions but may not have been too interesting for those with little knowledge of economics or finance yet passionate to know how the Nigerian economy was fairing. Nigeria’s inflation rate rises to 11.61% It all started on November 18 when the National Bureau of Statistics (NBS) released the country’s inflation figures for October 2019. The Bureau’s data which was widely reported show Nigeria’s inflation rose the most in 17 months with food inflation printing the highest in 18 months. If that sounds like the usual ‘jargon’, I will break it down for a better understanding. Inflation is a general increase in the prices of goods and services. While inflation always rises, the prices of consumer goods and services rose by 11.61 percent in October 2019 when compared with price levels in October 2018. So, assuming the price of an average commodity in Nigeria’s food basket was N10,000 in October 2018, the same commodity probably sold for N11,161 in October 2019. This means when we compare on a year-on-year basis such as this, inflation has never risen as high as it did in the review month since May 2018. This was caused by a combination of factors including seasonal effects as we move towards the festive season, the closure of the country’s land borders, as well as increased amount of money in the nation’s financial market. Nigeria’s economy grows by 2.38% in Q3 2019 Few days after Nigerians digested the inflation figures, the state-funded statistics bureau released the nation’s Gross Domestic Product data for the third quarter (Q3) of 2019. According to the data, the Nigerian economy grew in real terms by 2.38 percent in the period supported by the oil sector even though it grew slower by 6.49 percent from the same period last year, while growth in the non-oil sector expanded by 1.85 percent on a year-on-year basis. What does this mean? First, the Gross Domestic Product measures the value of goods and services produced within a country over a period. So, the fact that the country’s GDP increased in the third quarter means the value of all economic activi-

ties in Nigeria after adjusting for inflation increased by 2.38 percent. For the oil sector that grew slower compared to the previous quarter, it means the pace of value expansion in the sector on a year-on-year basis was weaker and not necessarily indicate that productivity in the sector waned. CBN’s retain interest rate at 13.5% Last week, the monetary policy committee of the Central Bank of Nigeria (CBN) at their last meeting for this year held on Tuesday and Wednesday decided to keep the key lending rate unchanged at 13.50 percent in line with the expectations of some analysts. The decision followed the committee’s consideration of developments both in the global and domestic economy, and after it reviewed the upsides and downsides of the options to increase, hold or loosen the policy rate. While a higher interest rate could further spur inflows of capital, particularly foreign portfolio investment - hot money - into the country, it has a downside consequence of eroding already gains achieved in output growth. Over the past few years, the bulk of foreign investment coming into Nigeria has been channelled into money market instruments which have relatively high-interest rates, while direct investment inflows - needed to www.businessday.ng

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The Nigerian economy grew in real terms by 2.38 percent in the period supported by the oil sector even though it grew slower by 6.49 percent from the same period last year, while growth in the non-oil sector expanded by 1.85 percent on a year-onyear basis

grow the economy - have remained tepid on the back lack of critical reforms that could catalyse growth. A higher interest rate would mean customers seeking loans from banks would be required to pay more on interest, a situation

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that could discourage people from accessing credit for their businesses and result in weaker economic growth. More so, a reduction in the policy rate will catalyze growth in the economy. “But in view of the uptick in inflationary pressures, it decided that the balance of risks was in favour of protecting price stability,” CBN Governor, Godwin Emefiele said. However, it was observed that the apex bank considered other factors beyond the uptick in the headline inflation. For instance, the real yields on the government short term debt instruments fell further to the negative region at the auction conducted last week’s Wednesday. This implies a further rate cut would dampen investor appetite for the securities such as the Open Market Operation (OMO) with interest rate as high as 13.17 percent as of Friday, November 27. This could result in capital flight, thereby mounting more pressure on Nigeria’s external reserves which recently dropped below $40 billion, a development that could make the CBN consider expanding its forex ban list to ease fx pressure or face devaluation of the currency which isn’t desirable. Consequently, the committee held the rate at its current position of 13.5 percent as it felt the decision would have more gains in the short to medium term.

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Monday 02 December 2019

BUSINESS DAY

Monday 02 December 2019

BUSINESS DAY

Cover Story

Investing

T-Bill rates crash to 4-year low as investors place N383bn in failed bids est since January 6, 2016, they compare with 7.8 percent, 9 percent and 10 percent they cleared on the 91-day, 182-day and 364-day bills at the previous T-Bills auction which saw rates crash to a single digit for the first time in 3 years. Investors jostled for the N150.6 billion the CBN sought to raise at the auction with N533.9 billion, causing about three-quarters of the total bids to fall beyond the CBN’s interest rates band, according to the auction result seen by BusinessDay. A breakdown of the result reveals that even though interest for the debt instruments waned when compared with the previous primary market auction, the Wednesday’s sale was oversubscribed by more than 3.5 times with most demand on the 182-day paper. The CBN sold N20.37 billion worth of bills for the 91-day paper, N19.16 billion worth of bills were allotted on the N182-day paper, while bills valued at N111.07 billion were sold on the 364-day paper. The Nigerian government plans to cut its cost of borrowing and ramp-up its revenue collection haven consistently failed to meet its targets in the past half a decade. To achieve this, the country’s central bank crashed interest rates on T-Bills to single digit in the last auction after restricting local corporate and individual investors from patronising its OMO bills. Performance at the secondary market was bullish following Wednesday’s Nigeria T-Bills auction as buy interest was witnessed across some selected short-dated maturities including Jan-02-2020 and Apr-16-2020bills, a move analysts say could continue as investors with failed bids may scramble for bills at the secondary market. The average benchmark discount rates dropped some 121 basis points to close at 7.58 percent. “We could associate this sentiment to the effect of the primary market auction as investors displayed interest for maturities with attractive yields having seen the stop rate lowered further at the auction,” analysts at Lagos-based Greenwich Trust Limited said in a note to clients. A similar trend was observed in the bond segment of the fixed-income market, as the average yield on benchmark bonds moderated to 12.23 percent driven by buy interest across various tenors of the curve. Meanwhile, liquidity in the nation’s financial market fell to N337.58 billion as of the close of business Wednesday from N349.73 billion recorded in the preceding day.

OLUWASEGUN OLAKOYENIKAN

ixed-income investors seeking high-yielding securities in the light of the prevailing developments in the markets have once again been disappointed, as attempts to buy the federal government short-term debt instruments at attractive rates were denied. More than N383.3 billion worth of failed transactions was recorded at the Nigerian Treasury Bills (T-Bills) auction conducted Wednesday by the Central Bank of Nigeria (CBN) on behalf of the Federal Government of Nigeria (FGN) as investors bid at rates as high as 12 percent, 11.5 percent and 14.4 percent on the 91-day, 182-day and 364-day bills. Subsequently, the apex bank lowered rates across the three tenors to 6.495 percent, 7.23 percent, and 8.37 percent, respectively. While the rates are the low-

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FX turnover on NAFEX now US$144.0bn HOPE MOSES-ASHIKE

he foreign exchange turnover on Nigerian Autonomous Foreign Exchange Fixing (NAFEX) has totaled US$144.0 billion since the establishment of the Investors and Exporters (I&E) forex window in late April 2017 by the Central Bank of Nigeria (CBN). Turnover in this context according to analysts at FBNQuest covers both sides of trades. It picked up briefly from late July through to mid/late August as the CBN became the principal supplier on NAFEX to smooth an increasing number of exits by foreign portfolio investors (FPIs) from the fixed income market. Those exits have since slowed as the worst fears for the global economy have not materialized. The decline in official reserves has slowed in tandem, FBNQuest said in a note to BusinessDay. “External reserves are moderating following weak capital inflows and current account deficits in Q1 and Q2:2019,” Ike Chioke, group managing director, while presenting the report with the theme, ‘Beyond the Precipice…Pulling Back from the Brink’, in Lagos recently. External reserves declined to $39.95 billion as at November 21, 2019, supports about 11 months of import cover (goods) – Weakest in 3 years. Two weeks after opening a special Forex window for Small and Medium Enterprises (SMEs) to enable SMEs import eligible finished and semi-finished items, the CBN on April 21, 2017, established a Forex window for investors and exporters. The purpose of the window was to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions. Oil price weakness leads to exchangerate pressures, given the predominant role of oil revenue in FX inflows (60% even when remittances are included). The MPC and CBN respond in several ways. One trend for the MPC has been to tighten banks’ cash reserve requirement (CRR) ratios. Another has been to set a policy rate designed to attract FPIs to the naira debt markets. This has been unsuccessful when that community is uncomfortable

with the making of monetary policy (and is not confident in profit repatriation). This qualification explains why the hikes of 100bps in March and a further 200bps in July 2016 did not tempt foreign investors, and why the FX reforms of April 2017 had the desired impact. The CBN also defends the exchange rate with administrative measures, a

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good example being its list of 41 banned import items in June 2015. When it can defend the naira no more, it devalues, as in November 2014, February 2015 and June 2016. The first two were intended as new levels for the CBN to manage. The regulator has continued to intervene in the foreign exchange market to boost liquidity and ensure the stability of

Aggregate foreign exchange inflow into the CBN, at US$4.10 billion in October 2019, declined by 1.1 percent, which was below the level in the preceding month. It, however, showed an increase of 44.1 percent over the level at the end of the corresponding period of 2018

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exchange rate. “Sustained intervention of US$210.0m weekly by the CBN has kept rates stable,” analysts at Afrinvest West Africa Limited said. Aggregate foreign exchange inflow into the CBN, at US$4.10 billion in October 2019, declined by 1.1 percent, which was below the level in the preceding month. It, however, showed an increase of 44.1 percent over the level at the end of the corresponding period of 2018. The fall in aggregate foreign exchange inflow into the CBN, relative to the preceding month’s level, was attributed, largely, to the fall in oil receipts, the CBN’s economic report for the month of October indicated. Aggregate outflow of foreign exchange from the Bank fell by 12.1 percent and 3.2 per cent to US$4.77 billion, below the levels at the end of the preceding month and the corresponding period of 2018, respectively. The development, relative to the preceding month’s level was attributed, mainly, to 0.5 percent and 13.0 percent decline in interbank utilisation and other official payments, respectively.

@Businessdayng

Monday 02 December 2019

BUSINESS DAY

Investing

How to make an investment strategy between Growth and Value OLUFIKAYO OWOEYE

nvestors have fundamentally different ways in which they seek out the stocks they think will provide higher returns on their investment. One particularly wide gulf in equity investing is between value investors and growth investors. Growth and value are two different strategies of equity investing that seek the same goal for equity—capital appreciation. One way to understand the difference is to look at the emphasis they place on a stock’s price and the company’s earnings, the two elements of a stock’s price-to-earnings (P/E) ratio. While Value investors are more interested in price, looking for stocks they believe are trading at a discount to their intrinsic value, based on their price, their fundamental strengths, and therefore offer a “margin of safety, and seek to capture gains when economic and market and conditions change, and the price of the stock bounces back. On the other hand, Growth investors like to buy stocks that are seeing the biggest gains in revenue or net profits. Some Growth investors focus on earlystage small-cap companies that have not even become sustainably profitable yet, seeking out the highest sales growth in the belief that eventually, earnings will follow. Also, other investors look for better-established growth stocks that are already solid yet have further potential to expand their growth. Growth investors focus mainly on earnings, looking for companies with the potential to grow their earnings, revenues or both. In terms of performance, Growth and Value have swapped leadership roles throughout the ups and downs of various economic cycles and each style is influenced by a wide variety of factors. Outperformance can continue for years, or it can be fleeting. As a category, Growth stocks perform best during the middle and late stages of an economic expansion cycle, when growth becomes scarce. For example, the recent CBN policy which included Crude Oil Palm (CPO) on the prohibited list of items from accessing FX at the in-

terbank market has seen companies such as Okomu, Presco recording remarkable growth in their earnings. Industry Expert believes there are chances for expansion in the industry. Similarly, the ban on bagged cement importation into the country has seen increased activity in the stocks’ of manufacturers in the country. The Growth strategy is advisable for established companies that are dominant players in markets that are growing. They may also be gaining market share, which leads to improving cash flows and a healthy return on capital. Their competitive advantage keeps cost contained and drives demand for their products and services without depending on the benefit of a strong economic tailwind. These companies are usually well-equipped and in some cases to “self-fund” their expansion efforts rather than relying on cheap sources of financing when the cost of borrowing is low. Value stocks performance is strongest when the economy appears to be approaching a crisis, such as a recession, because the most defensive sectors in www.businessday.ng

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The Growth strategy is advisable for established companies that are dominant players in markets that are growing. They may also be gaining market share, which leads to improving cash flows and a healthy return on capital

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the value category tend to be more resilient to economic slumps. The recent economic contraction in the country and slump crude oil prices in the international market led to sharp drop in the earnings of some oil stocks on the Nigerian Stock Exchange. Value tends to outperform after the economy has bottomed out and is starting to accelerate. The fact that value stocks are starting from a lower base than growth stocks also contributes to their outperformance. Within the value category, individual stocks can also surge when a company announces a restructuring or makes another one-time change that lifts its stock price from a relatively low starting point. For investors seeking the best gains, the best approach is to find a sweet spot between the two ends of the spectrum. The best stocks combine both growth and value, trading at a reasonable price compared to their impressive growth potential. As an investor, when you find the best of growth and value in a single stock, that’s usually a good sign that you have discovered a great investment.

@Businessdayng

Monday 02 December 2019

BUSINESS DAY

Data

Federal government Eurobond Yields on Eurobonds rose 0.03 point week on week from an average of 6.54 percent last week to 6.50 percent this Friday.

Corporate Eurobond Yields on corporate Eurobonds reduced 0.035 percent points across all tickers from 5.29 last week to 5.26 percent. www.businessday.ng

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Monday 02 December 2019

BUSINESS DAY

Forex

Nigeria foreign reserves fall in November; Markets on standby

he Naira may struggle to maintain stability against the Dollar after Nigeria’s foreign exchange reserves decreased to $39.83 billion in November from $40.55 billion in October of 2019. Falling foreign reserves could complicate the Central Bank of Nigeria’s efforts in defending the Naira against domestic and external risks. Further signs of reserves declining is likely to trigger speculation around the Naira depreciating which could translate to rising inflationary pressures. Given how inflation is already at a 17-month high at 11.61%, the CBN is seen standing pat on interest rates in the short to medium term. Markets in wait-and-see mode amid trade uncertainty Another week, another record high for US stock markets despite renewed uncertainty and mixed messages from the US-China trade front. +This negative sentiment is already being reflected Asian markets on Friday with regional shares retreating as the month comes to an end. With China threatening that it would take “firm coun-

termeasures” against the United States, investors may start questioning whether the “phase one” trade deal will be signed in 2019. Until there is fresh clarity and direction on the progress of US-China trade talks, markets may enter a wait-and-see mode as the year slowly comes to an end. Sterling outlook influenced by polls Buying sentiment towards the British Pound received and explosive boost mid-week after a closely watched poll projected a Conservative election victory. A Boris Johnson win may signal the end of a lengthy Brexit deadlock with the UK possibly leaving the European Union before the January 31 2020 deadline. Such a market friendly outcome has the potential the push the GBPUSD above 1.3000 and beyond. Alternatively, if the general elections results in a hung parliament and Brexit remains in limbo, the uncertainty is likely to weaken Sterling against every single G10 currency. Dollar supported by positive US data Encouraging economic data from the largest economy in the

world continues to support the Greenback. Sentiment towards the US economy has received a boost after third quarter economic growth and durable goods orders both exceeded market expectations. With the data surprise reducing market expectations over the Federal Reserve cutting interest rates any-

Week Ahead Ahead (Monday, December 2 – December 6, 2019) Week

time soon, the Dollar is poised to push higher. In regards to the technical picture, the Dollar Index is trading around 98.35 as of writing. An intraday breakout above 98.50 should encourage a move towards 99.00 and beyond. Commodity spotlight – Gold Gold is on track to end Novem-

ber shedding almost 4%, its worst monthly decline since November 2016. Explosive levels of optimism over US-China trade talks, positive economic data from the United States and the Federal Reserve hinting a pause in cutting interest rates reduced appetite for Gold. Although bulls have lost the battle this month, the war still rages on. Given how the next tariff deadline falls on December 15th where additional U.S levies on Chinese exports will go into effect, Gold has the potential to shine as the year slowly comes to an end. Escalating trade tensions are poised to rekindle fears over slowing global growth and speculation around central banks across the world easing monetary policy. The return of risk aversion and expectations over lower interest rates should turbocharge buying sentiment towards Gold which has gained roughly 13.50% year-todate (YTD). Focusing on the technical picture, the precious metal is attempting to rebound on the daily timeframe. A breakout above $1459 should encourage move higher towards $1463 and $1475.

Chart of the week

Commodity Week Ahead (Monday, 8th April – Friday, 12th April, 2019)

Oil: Crude oil prices dropped on Friday on rumors that OPEC’s leading members aren’t willing to deepen output cuts. Brent shed 4.05 percent to settle at $60.71 a barrel as at 8:00PM Nigerian time, while the West Texas Intermediate slumped by 4.61 percent to $55.43 a barrel. Equity The Nigerian Stock Exchange sustained its bullish trend last week to book its fourth straight week of positive performance buy interest in fundamentally strong stocks continued to spur market performance. The equities market gained marginally by 0.04 percent on a week-on-week basis to cross the 27,002.15 points psychological level following the gains recorded on three out of the five trading days of the week, moderating its year-to-date return to -14.09 percent. Cement Company of Northern Nigeria Plc will hold a Court Order Meeting at Transcorp Hilton Hotel, 1 Aguiyi Ironsi Street, Maitama, Abuja on December 4, 2019 by 11:00AM. Ellah Lakes Plc will hold its Annual general Meeting at Constantial Hotel, No. 24-26 Airport Road, Benin City, Edo State on December 6, 2019 by 12:00PM.

Currency The exchange rate was relatively stable across all market segments. It traded flat at N360/$ at the parallel market. At the interbank market, the currency hovered around N306 to a dollar, and closed at N362.81 per dollar on the Investor and Exporter window. Going forward, the naira is expected maintain stability across all windows given CBN’s continuous intervention www.businessday.ng

Nigeria’s foreign exchange reserves have dropped from a peak N45.18 billion in June 2019 to $39.82 billion as of November 28, 2019, 11.86 percent below its peak level. “While crude oil revenue which has been a major contributor to reserves has traded averagely between USD54.91/pb and USD74.57/pb in 2019, and has been supported by relatively high production, constant interventions by the CBN in the foreign exchange market has had adverse effects on the Nation’s foreign reserves,” analysts at Meristem said.

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Monday 02 December 2019

BUSINESS DAY

abujacitybusiness Comprehensive coverage of Nation’s capital

FG Launches campaign to repatriate smuggled artifacts

L-R: Yusuf Kazaure, CEO Galaxy Backbone, Ernest Ndukwe, board chairman MTN Nigeria, Olabiyi Durojaiye, chairman board of commissioners Nigerian Communications Commission (NCC) and Zhang Lulu, CEO Huawei Technologies Company Nigeria Limited during MTN’s trial launch of 5G in Nigeria held in Abuja. picture by TUNDE ADENIYI.

Godsgift Onyedinefu, Abuja

Insecurity: FCTA calls for effective collaboration amongst security agencies James Kwen, Abuja

he Federal Capital Territory Administration (FCTA) has called for more collab orations amongst security agencies to tackle insecurity in the FCT. This is as FCT Administration charged security operatives in the nation’s capital to double up efforts towards safeguarding lives and property in the territory. These directives were given at the FCT Security Committee meeting chaired by the FCT Minister of State, Dr. Ramatu Tijjani-Aliyu. Aliyu who expressed the FCT Administration’s dissatisfaction with the recent security challenges in the FCT, including the kidnap of

a traditional ruler in Rubochi however assured residents that the Administration was intensifying measures at ensuring the security of lives and property throughout the FCT. Aliyu stressed the need for more information sharing among the security operatives as a way of checking criminals and criminality in the FCT. Speaking after the security meeting, the Director, FCT Department of Security Services, Adamu Gwary, restated the determination of the FCT Administration to ensure the safety of all residents of the territory irrespective of who they are and where they reside Adding that the Minister of State has directed the Area Council Chairmen to hold regular peace and security meetings, Gwary said the out-

come of such meetings will be a major component for the planning and implementation of strategies, by his department in meeting the security challenges in the Territory. While calling on residents to share relevant information with security operatives, he said, “it is important that whenever you see something that is not in tune with your environment, it is expected that you report such to the relevant security agency. The FCT Call Centre is a platform where the identity of the informer is safeguarded, so they can rely on such window to communicate and inform the FCTA of any development that is happening within their environment”. On the issue of the notorious “One Chance” operations

in parts of the Territory, the Director said that already plans are in motion by the Transportation Secretariat to phase out unregistered taxis which, he said, were the main culprits in the one chance operation. He disclosed that with the restriction on commercial tricycle operation, crime rate is expected to reduce, adding that phasing out unregistered taxis will eventually eliminate incidences of “one chance”. Assuring that efforts were being made to rescue the traditional ruler of Rubochi, Gwary revealed that the security agencies were working hard to ensure his rescue, stating that he was confident the community leader will be returned to his family hale and hearty.

African network users to experience Cooperative Societies Contribute Over mmWave 800M with 5G N1 trn to Nigerian GDP - Oyegoke James Kwen, Abuja

frican users of digital network can now experience mmWave 800M with 5G which increases the amount of bandwidth available that is is also capable of delivering extreme data speeds and capacity which is the first of its kind in Africa. The 5G network, developed by Huawei Technology Limited, the global leading ICT infrastructure provider in a technical partnership with MTN Nigeria makes it possible for subscribers in Africa to make voice over NR (VoNR) calls. The VoNR is a voice and video solution using the 5G SA network architecture (also the first in Africa) which makes it possible to place multiple voice and video calls with 100% clarity and no interruption.

Speaking at the launch of the technology recently in Abuja Managing Director of Huawei Technologies Company Nigeria Limited, Zhang Lulu, said, the launch of the 5G Network is in line with the telco’s decision to roll out 5G in other major cities in Nigeria before 2020. Lulu stated that, 5G is a core technology in establishing the digital infrastructure of the future and will be essential in how all of the mobiles and connected devices will communicate together. According to him, 5G has low latency rate which is the amount of delay between the sending and receiving of information making it a better future available to operators and customers, adding that the trial demonstrates the capability of the new technology while giving customers a glimpse of what the future holds.

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James Kwen, Abuja

resident of the Cooperative Rating and Award Society of Nigeria (CRASON), Victor Oyegoke has disclosed that cooperative societies have contributed over one trillion naira to Nigeria’s Gross Domestic Product (GDP) within the last three years. Oyegoke who stated this at the 2nd National Cooperative Awards and Symposium in Abuja, organised by CRASON also said the cooperative have over 30 million individual members and over 300,000 cooperatives. He said CRASON survey in the last three years have indicated that cooperative sector in Nigeria contributed over one trillion naira to the Nigerian GDP. “The cooperative has come

of age and they’re doing a lot to affect Nigerian Gross Domestic Product (GDP), so we fear that is high time will begin to showcase the cooperative because they are doing well on their contribution to Nigerian GDP. “They have been excess of 950 billion in their service and share capital, and they are doing over 900 billion granted loans to their members, creating more than 600 thousand job, directly and indirectly to citizens of this nation”, he stated. Oyegoke stated that in so many ways the cooperative society is contributing to the GDP of the country but so far, the government has not given them the needed attention and that is why CRASON have said no, there is need for them to begin to see how their can blow our trumpet by ourselves.

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he Federal Government has launched a Campaign for the return and restitution of Nigeria’s looted and smuggled artifacts from around the world. The Minister of Information and Culture, Lai Mohammed who launched the campaign in Lagos, said the Federal Government will use all legal and diplomatic instruments to repatriate Nigeria’s cultural property anywhere in the world The Minister in a statement by Segun Adeyemi, his Special Assistant on Media said Nigeria cannot imagine by what logic an Ife Bronze or a Benin Bronze or a Nok Terracotta can belong to any other part of the globe except to the people of Nigeria, whose ancestors made them. He said the looting and smuggling of the heritage resources, especially during the 19th century wars for pecuniary reasons, have simply encouraged the impoverishment of Nigeria’s heritage. The Minister said the timeless and priceless pieces

of work are an important part of the nation’s past, its history, and heritage resource, and that allowing them to sit in the museums of other nations robs Nigeria of its history. He added that in its quest to diversify the economy by leveraging on the culture and tourism sector, the government considers the priceless artifacts as critical components of the diversification drive Mohammed called on every museum and person holding on to the nation’s heritage resources anywhere in the world to initiate dialogue with the federal government. “We urge them to identify what is in their collections, transparently make them public, approach us for discussion on terms of return and restitution, as well as circulation and loans. “They must acknowledge that ownership resides in us. They must be ready to sign agreements and Memoranda of Understanding in this regard, and they must be ready to release some of these antiquities for immediate return to Nigeria”, he said.

FAO, Agip donate water projects to four FCT communities James Kwen, Abuja

ood and Agriculture Organization (FAO) of the United Nations in collaboration with Nigeria Agip Oil Company Limited have donated water projects to four Federal Capital Territory (FCT) rural communities geared towards the improvement of food and nutrition security. The four benefiting communities are Wassa 2, Sherreti, Karimajiji and Malaysia Garden all located in the Abuja Municipal Area Council of the territory. Speaking at the commissioning and handingover ceremony at Sherreti community, FCT Minister of State, Ramatu TijjaniAliyu, noted that FAO, an agency of the United Nations has contributed to international efforts to defeat hunger and improve local economies by helping its member countries improve agriculture, forestry and fisheries practices. The Minister who was represented by her Senior Special Assistant in charge of Administration, Muhammad Usman, noted that the completion of the water projects in these communities will no doubt help to improve food security, hygiene and sanitation, for @Businessdayng

an estimated 4,000 persons, both among the Internally Displaced Persons (IDPs) and the host communities. “Among other things, the beneficiaries are expected to use the water to irrigate small vegetable gardens to enhance their nutrition, their incomes, and their livelihoods generally. “The boreholes are also solar-powered and equipped with plugs that residents can use to charge their cell phones. More importantly, they are well lit at night and therefore safe to access at all times while also being aggregation points within the communities,” she noted. The Minister appealed to members of the benefiting communities to jealously guard these facilities against vandals and ensure that they own the projects Aliyu used expressed the FCT Administration’s appreciation to development partners for contributing to the improvement and development of water schemes in the Federal Capital Territory, stressing that these are no small contributions to government’s efforts at addressing developmental challenges, especially Mr. President’s focused push to lift 100 million Nigerians out of poverty in a decade.

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BUSINESS DAY Monday 02 December 2019 www.businessday.ng

Nigerian Breweries plc: No slowing down for Nigeria’s biggest brewer despite intense competition, shrinking consumer pockets OLUFIKAYO OWOEYE

lcohol consumption is a big business in Nigeria with consumers spending just less than a quarter of a trillion naira in 2016. According to recent data released by the Nigerian Bureau of Statistics in 2016 alone, Nigerians spent at least N208 billion on alcohol consumption. Research shows that beer consumption on the continent would grow 5percent Annual Growth Rate between 2015-2020 and by virtue of her population, which technically translates to higher volume and liters Nigeria tops 10 biggest beer-drinking countries in Africa. With more than half of Nigeria’s 190 million people aged under 30 -- and the population expected to grow to 410 million by 2050, the prospect of the Nigerian market is not lost on major beer makers across the globe. The last economic contraction the worst in 25 years left most Nigerian consumers poorer. Sadly, two years after the country exited recession, the economy is still stuttering leaving consumers to adjust their spending and shift to cheap drink substitutes. Despite the myriad of challenges, Nigerian Breweries Plc (NB), Nigeria’s premier and largest brewer by market share is guarding its leadership of the market jealously amid mounting competition. The beer maker has also maintained a dividend payment to its shareholders in the last 12 years. Since the launch of its first bottle of Star in 1946 from its Lagos brewery plant, NB Plc has undergone several optimization processes. It commissioned its second plant in Aba in 1957 and later the Kaduna Brewery plant in 1963. while Ibadan Brewery came on stream in 1982. In 1993, it acquired its fifth brewery in Enugu. A sixth brewery, sited at Ama-eke in 9th Mile, Enugu was commissioned in 2003. Following increased activity in the Beer market in Nigeria which saw competitors expanding their plants and acquiring smaller plants, NB Plc in 2011 bought majority equity interests in Sona Systems Associates Business Management Limited, (Sona Systems) and Life Breweries company Limited from Heineken N.V. This followed Heineken’s acquisition of controlling interests in five breweries in Nigeria from Sona Group in January 2011. Sona Systems’ two breweries in Ota and Kaduna, and Life Breweries in Onitsha have now become part of Nigerian Breweries Plc, together with the three brands: Goldberg lager, Malta

Gold and Life Continental lager. In 2014, the beer-maker of both Nigerian Breweries Plc and Consolidated Breweries Plc merge their operations bringing additional seven brands into Nigerian Breweries’ portfolio. Bottomline impacted by harsh new excise duty Analysis of the company’s recently released nine-month result for the period ended 30th September shows that gross revenue increased 2.7percent year-on-year this was however affected by higher excise duty expense compared to last year. The new excise duty which came into effect on 4th June 2018 to help boost the federal government coffers imposed excise duty on beer and stout at .30 kobo per centiliter in 2018 and .35 kobo per cl each in 2019 and 2020. This translates to N30 per liter of beer in 2018 and N35 per liter in 2019 and 2020 respectively

During the period, operating expenses spiked 6.1percent, marketing and distribution expenses also increased 14.3percent as competition among other brands become more intense. The net finance cost stood at N2.9billion 141.5percent higher year-on-year, a 140.2% year-on-year increase in finance costs outweighed a 59.7% rise in finance income. And following its N30.00 billion commercial paper issuances in April NGN15.00 billion and June NGN15.00 billion, the balance of bank overdrafts and commercial papers is higher compared to Q3 2018 and Q4 2018. Corporate Governance The board of the company is headed by foremost chartered accountant, Kola Jamodu, a former minister of industries and a past President of the Manufacturers’ Association of Nigeria (MAN). As at February 2018, he owns 536 thousand units of shares.

Jordi Borrut Bel is the managing director/CEO He joined the Heineken N.V. group in 1997 as Sales Representative at Heineken Spain. From 1999 to 2006, he held various commercial positions and until his current appointment he was Managing Director, Brarudi, the Heineken operating company in Burundi. Other members of the board include Omoigui Okauru, former executive chairman of the Federal Inland Revenue Service (FIRS) as at February 2019, she owns 29.9 thousand units of shares. Other members of the board include boardroom guru, Atedo Peterside, chairman of the committee that crafted the first corporate governance code for public companies in Nigeria. He is the chairman of Cadbury Nigeria Plc and also sits on the boards of Flour Mills of Nigeria Plc, Standard Bank Group Limited, The Standard Bank of South

Africa Limited and Unilever Nigeria Plc. Oluseyi Bickersteth a fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and Chartered Institute of Taxation of Nigeria (CITN), a former Chairman of the KPMG Africa Practice and a former National Senior Partner of the Nigerian Practice. He is currently the Chairman of Andersen Tax, Africa and sits on the Board of other companies in Nigeria Ndidi O. Nwuneli, partner at Sahel Capital, an advisory and private equity firm focused on the agribusiness sector in West Africa. Faced with a double whammy Faced with a double whammy of inflationary pressures and mounting excise duty, which has eaten deep into the bottomline of beer makers in the country, beer makers are faced with the dilemma of passing the cost to final consumers who are already battling with shrinking wallets or bear the cost for the meantime. Plans by the federal government to implement the new minimum wage next year may however, force the beer maker to implement a new price regime. How this would be received by consumers who have taken solace in cheaper brands and traditional drinks remain to be seen. NB remains bullish on leadership position At its last media parley, revealed plans to regain its lost mojo and improve its topline. Among strategies mapped out include increase volumes on its key brands which have lost market share in the last three years, leverage smaller Can package and increase prices to match the cost pressures from excise duties. The management also disclosed that its premium beer, Tiger drink launched in 2018 has gained acceptance and equally employed a strategy for selling its stout brand particularly Legend Extra Stout through the introduction of 45cl bottles. For its core brands Star, Gulder management revealed that it has lost some market share over the last three years. However, there are ongoing efforts to refresh these brands to reposition and grow volumes in Nigeria. On contribution to margin, the lager segment currently contributes the most followed by Malt and Stout. In terms of local sourcing of materials, it currently sources c.58percent of its raw materials locally as at H1-19 and aims to reach 60percent local sourcing by FY-20. For Nigerian Breweries, its biggest competitive advantages include national foortprints, wide array of brands which cut across lager, stouts and malts.

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