BusinessDay 01 Jan 2019

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What the big 5 investment banks think of Nigeria, EM in 2019 H T

COMMODITIES

Wheat farmers bank on govt support for price stability, off-take TEMITAYO AYETOTO

LOLADE AKINMURELE

he central theme in the investment outlooks for 2019 by Goldman Sachs, Bank of America Merrill Lynch, Morgan Stanley and CitiL-R: Basirat Adegbesan, mother of the first baby of the year; Bolanle Ambode, wife of the Lagos State governor, carrying the baby of the year; Jide Idris, commissioner for health, Lagos State, and Femi Onanuga, special adviser to the Lagos State governor on primary health care, during the 2019 baby of the year born 12:00am, weighs 3.7kg, at Lagos Island Maternity in Lagos, yesterday.

Pic by Olawale Amoo

group is for a recovery in emerging market assets, particularly, equities.

JP Morgan Chase, however, was the only one of the five investment banks surveyed by BusinessDay to adopt a cautious stance, as it cast a worrying look

on the impact of a stronger dollar in the early part of the year and volatile oil prices.

While global growth accelerated, 2018 was harsh to emerging market assets, including Nigerian equities. Although the naira was relatively unscathed

compared to other currencies, Nigerian equities lost 18 percent, as foreign capital fled emerging markets on the back of rising interest rates in the United States and slower global growth.

Continues on page 4

aving trudged through a year that saw prices decline by 10.3 percent to N130,000 per metric tonne and limited off-taking channel controlled by flour millers, Nigeria’s wheat farmers are banking on the federal governments intervention to open a new chapter in price stability and off-taking of the cereal grain.

The lack of price stability and adequate off-taking has been a source of concern for farmers as the benchmark price fixed by millers only pared the profitability on local production, according Salim Saleh the President Wheat Farmers Association of Nigeria (WFAN).

In 2017, millers and farmers related on the basis of N145, 000 metric tonne agreement but this was slashed to N130, 000 in what appeared an expensive deal when import particularly from the US at that time was cheaper at $218 (N78, 480) per metric tonne.

“There is no stability for wheat Continues on page 4

Inside CBN inflation attitudes survey points to weaker economy P. 2

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Ghana leads Africa’s top economies in MSMEs’ contribution to GDP ISRAEL ODUBOLA

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espite efforts by the Nigerian government to promote small and medium-sized (MSMEs) enterprises, Ghana is leading the rest of Africa in the contribution of these organisations to total output of goods and services, figures show.

A BusinessDay analysis of the contributions of MSMEs production in five African economies showed that those in Ghana contributed more to GDP, compared to Nigeria, South Africa, Kenya, and Egypt.

According to International Finance Corporation (IFC), MSMEs account for up to 90 percent of all businesses in developing markets, and the ones operating in the formal sector contribute about 60 percent to total employment and account for 40 percent of national income in developing economies.

The Nigeria economy expanded slightly by 1.81 percent in the third quarter of last year, according to the National Bureau of Statistics. Dikko Radda, DirectorGeneral, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) said in 2018, that MSMEs operating in Nige-

ria are 37.1 million, while their contribution to GDP and export earnings stood are 48.7 percent and 7.2 percent, respectively.

Things seem to be auguring well for the Ghanaian economy, as GDP expanded by 7.4 percent, year-on-year in the third quarter of 2018, following a 5.4 percent expansion in the previous period. MSMEs contribute 70 percent to GDP in Ghana and account for 92 percent of businesses, data from Bank of Ghana (BoG) showed.

Africa’s second largest economy, South Africa, recorded 2.2 percent growth in GDP in third quarter of the year, up from 0.7 percent in the previous quarter.

According to the South African Ministry of Trade and Industry, MSMEs account for between 52 percent to 57 percent in GDP and 60 percent in employment.

In Egypt, Minister of Finance, Mohammed Ma’it, said the achieved an increase in GDP of 5.3 percent in 2017/2018, up from an average of 2.3 percent between 2011 and 2014. In a disclosure made by the General Authority for Investment in Egypt, MSMEs account for 80 percent of all enterprises, but their contribution to GDP is below 25 percent.

Why FG should change its stance on business in 2019

... anti-business perception hitting real estate CHUKA UROKO

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he federal government has a burden to correct the impression that it is anti-business. This sentiment has prevailed in some quarters of the business community in the last three and half years. In some cases, those who could not cope with the changed business environment have had to relocate from the country.

Experts cite as reasons for this impression the unfavourable tax policies, the continued delay in signing the Petroleum Industry Bill (PIB) into law to attract private investment into that sector, and punitive and anti-investor policies as reflected in recent cases involving government agencies and companies.

The implication of this perceived stance of the government, which does not support growth in both the services and real sectors of the economy, is that many companies and individuals have had to leave the country, and many more may leave, depending on what happens in the days and months ahead.

Besides the locals who are leaving the country, relocating their children and putting them in schools abroad, many expatriates, especially those working in oil and gas, telecoms and other service companies, are either returning to their home countries

or relocating to other African countries.

The expectation is that these developments might increase in tempo if the status quo persists this new year and for real estate which is struggling at the moment, there are grave implications. The boom that this sector witnessed in the past was as a result of the good business climate in the country before now.

“Businesses leaving the country has implications for the property market; it means that the high vacancy situation in the market is going to worsen; more buildings will be empty and that will affect their market value,” Roland Igbinoba, President/ CEO, Pison Housing Company, said in a telephone interview.

The real estate sector in Nigeria has been in negative growth territory for quite a while. Indeed, the sector has been in recession for 11 consecutive quarters, long after the wider economy exited recession in the second quarter of 2017.

By the last count, it was estimated that over 300,000 square metres commercial and 200,000 square metres residential real estate space are unoccupied and, according to Broll Property Services’ recent (Q3,2018) Viewpoint on the office market, about 40,000 square meters office space will be coming into Continues on page 4

Picnickers having fun at the Apapa Amusement Park, during the 2019 New Year celebration in Lagos, yesterday.

Pic by Olawale Amoo

CBN inflation attitudes survey points to weaker economy HOPE MOSES-ASHIKE

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he Central Bank of Nigeria (CBN)’s inflation attitudes survey report for the fourth quarter of 2018 is pointing to a weaker economy, as 44.0 percent of Nigerian households have raised concern that the economy would end up weaker if inflation rate increase further.

The Q4 2018 Inflation Attitudes Survey was conducted during the period November 24 -December 7, 2018 from a sample size of 1770 households randomly selected from 207 Enumeration Areas (EAs) across the country, with a response rate of 99.2 percent.

However, 14.2 per cent of the respondents believe that the economy would be stronger, 18.3 per cent said it would make a little difference, while 22.8 per cent did not know. The responses opined considerable

support for price stability, as majority (44.0 per cent) agreed that the economy will end up weaker. This is consistent with the notion that inflation constrains economic growth.

Godwin Emefiele, governor of the CBN, said in November 30, 2018 that Nigeria’s rate of inflation is projected to rise slightly to about 11.4 percent for the rest of 2018 and towards mid-2019 and then moderate thereafter.

The Nigerian households asked how prices have changed over the past 12 months, respondents gave a median answer of 3.8 per cent. The report show that 23.9 per cent of the total respondents thought prices had gone down or not changed, 53.7 per cent felt that prices had risen by at least 3.0 per cent, while 17.0 percent felt that prices inched up by more than 1.0 per cent, but less than 3.0 per cent. Those that had no idea were 5.3 per cent.

On median expectation of price changes over the next 12

months was that prices would inch up by 2.3 percent. From the total responses, 48.2 percent of the respondents expected prices to rise by at least 3 per cent over the next 12 months, 14.3 per cent expected prices to increase by more than 1 percent, but less than 3 per cent. However, 30.9 per cent of the respondents were optimistic that prices over the next 12 months would either go down or remain the same.

The consumer price index, (CPI) which measures inflation increased by 11.28 percent (year-on-year) in November 2018. This is 0.02 percent points higher than the rate recorded in October 2018 (11.26) percent, according to the National Bureau of Statistics (NBS).

On the issue of interest rates, the percentage of respondent households who felt that interest rates had risen in the last 12 months declined by 0.7 points Continues on page 4

Nigeria’s terms of trade rose marginally in 2018 Q3, NBS report shows ... motorcycles, motor spirit dominate imports ADAMS SEGUN AMAECHI

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igeria’s all-products terms of trade for Q3 2018 rose marginally by 0.52 percent as the indices averaged 99.29 in the quarter. Correspondingly, the all- region group export index rose by 1.05 percent with a quarterly average of 101.73 owing to its surge in August.

The terms of trade (TOT) is a ratio of the price of a country’s export commodities relative to the price of its imports commodities, expressed in percentage terms. In other words, it measures the worth of a country’s exports in terms of its imports.

An increase in the terms of trade over two periods or when the value is greater than 100 percent indicates that the country receives more

value for its exports than it gives for its imports. Conversely, a value lower than 100 percent indicates an unfavourable terms of trade, as the importing country has to exchange more of its product for the same value of exports.

The data which was released by the National Bureau of Statistics reported that the all-product terms of trade stood at 98.85, 99.64 and 99.37 in July, August and September of the quarter, respectively.

The slight improvement in the all-commodity terms of trade resulted from a decrease of 1.76 percent in the all-commodity group import price index owing chiefly to cheaper vegetable products and an increase of 1.26 percent in the all- commodity group export price index which was driven by prices of foodstuffs, beverages,

spirits, tobacco and some products.

Similarly, advances in the allregion group export index which rose by 1.05 percent following improved trade with Asia raised the all- region terms of trade marginally by 0.10 percent, although the all-region group import index rose in the same period by 1.22 percent.

The all region terms of trade surged 5.71 percent from 99.9 in July to 105.6 in August while the index nosedived to 99.7 in September, a decline of 5.59 percent from August.

Nigeria’s largest trading partners for the quarter were India, China, Spain, France, and the Netherlands, with crude petroleum and natural gas, both primary products as Nigeria’s main export while motor spirit (ordinary) and motorcycles accounted for the bulk of Nigeria’s imports.

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What the big 5 investment banks think of...

Continued from page 1

The New Year, however, holds

better prospects for emerging markets, as asset prices and market expectations have adjusted significantly lower versus a year ago, offering a better deal and creating the potential for positive surprises.

Goldman Sachs “Valuations look more attractive after a challenging year for assets and we believe 2019 offers some important advantages relative to 2018,” the asset management unit of Goldman Sachs said in an outlook report.

“We remain pro-risk heading into 2019 until we see clearer signs of a deterioration in fundamentals.”

Goldman has a “preference for equities, especially in emerging markets, where the period of growth moderation is likely behind us.” The US-based bank however emphasises dynamism and selectivity in investing.

Goldman also sees potential return particularly in Emerging Market currencies. Based on estimates of fair value, EM currencies appear undervalued by 12 and 23 percent, when

aggregated using the MSCI EM and GBI Indexes respectively.

“The magnitude of this undervaluation is similar to what we observed in early 2016 and in the early 2000s. Both periods were followed by good returns for EM currencies.

EM equities are trading at an attractive 25 percent discount to DM equities, while offering potentially higher expected earnings growth,” the Goldman team said.

Morgan Stanley The bearish run is over for emerging markets, according to James Lord, an investment strategist at Morgan Stanley, who says he sees brighter days ahead where total fixed income returns should be comparable with 2017.

“It has been hard slog for EM investors in 2018 but we believe that markets have turned a corner and a better year waits ahead,” Lord said.

According to Lord and his team, weaker growth outlook in the US should help to rebalance capital flows back into EM that in recent quarters have left seeking the higher returns provided by USD assets.

The expected rebalancing in

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global growth and capital flow dynamics comes at a time when valuations in EM are cheap.

“We turn bullish on EM local markets and raise EM credit to neutral from bearish.

“Our US economists expect the first quarter of 2019 to be the high point, which suggests that the biggest risk to our bullish local markets view is in 1Q,” Lord added.

On appetite for sovereign credit, Lord said credit selection is important in Sub Saharan Africa, as a lot of the cheapness is on back of rising concerns about debt sustainability.

Citigroup Like the others, Citigroup expects the sharp emerging market equity underperformance in 2018 to reverse, at least partially in 2019.

“Underpinning our view is the likelihood of on-going Asian growth accompanied by contained inflation, moderating US growth limiting the extent of US rate rises and dollar strength, and significant easing in China helping to offset most of the drag from trade tensions,” said David Bailin, the Chief Investment Officer at the American investment bank.

Also, strongly bearish investor positioning – particularly in China – is

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likely to reverse as investors diversify away from the US market.

“Against this backdrop, we believe the markets and sectors that sold off most heavily in 2018 - but which still have solid growth prospects - are likely to outperform,” Bailin added.

Bank of America Merrill Lynch BoA Merrill Lynch Global Research forecasts modest gains in equities and credit, a weaker dollar, widening credit spreads and a flattening to inverted yield curve, signalling a tighter squeeze on liquidity that calls for higher levels of volatility.

This comes against a backdrop of slowing, but still-healthy economic growth; mild inflation, except in the U.S. where inflationary pressures are building; and a notable slowing in global EPS growth from the torrid pace of 2017 and 2018.

JP Morgan Chase JP Morgan was probably the most conservative of the five banks in its outlook.

Expectations of further dollar strength early in the year will likely restrain EM assets, according to David Kelly, Managing Director and

Wednesday 02 January 2019

Chief Global Strategist at JP Morgan.

However, Kelly admits that as Chinese data stabilizes, the Fed pauses and the dollar’s climb reverses later in the year, EM assets may finally have some room to take off.

He however warns that as global liquidity continues to be drained next year, not all EM planes will fly at the same altitude.

“Investors are likely to continue being very selective, focusing on countries where economic growth differentials are widening versus developed markets, fiscal policy remains responsible and external vulnerabilities are kept in check,” Kelly said.

Moving into 2019, Kelly thinks bond yields may rise relative to stock dividend yields and earnings growth should slow, given that rising interest rates historically drag on equity performance.

In conclusion, JP Morgan fingered good quality fixed income exposure and dimming down credit risk in 2019. The bank will maintain equity exposure but also urges investors to stay diversified in anticipation of elevated volatility.

CBN inflation attitudes survey points to...

Continued from page 2

Responses on what the impact of a rise in interest rates in the short and medium terms would have on prices showed that 35.2 per cent thought a rise in interest rates would make prices in the street rise slowly in the short term, as against 11.5 per cent that disagreed. While in the medium term, 33.6 per cent agreed that a rise in interest rates would make prices in the street rise slowly, 12.8 per cent disagreed.

Analysts at the FSDH Merchant Bank limited believe that A peaceful election will ensure stability of the Nigerian economy and pave the way for the flow of investments, both Foreign Direct Investments (FDIs) and Foreign Portfolio Investments (FPIs) into Nigeria. Certain longterm business and investment decisions may be taken immediately after the election if the current government retains power.

Abiola Ajimobi, governor, Oyo State, presenting 2019 budget proposal at the Oyo State House of Assembly in Ibadan. NAN

to 28.6 points in the current quarter when compared to 29.3 points attained in Q3, 2018. On the other hand, 9.0 per cent of respondents believed that interest rates had fallen, 16.8 per cent of the respondents were of the opinion that the rates stayed about the same in the last 12 months, while 45.6 per cent of the households had no idea.

The result revealed that more households had no idea on the direction of interest rate in the past 12 months.

On the expected change in interest rates on bank loans and savings over the next 12 months, some respondents (23.0 per cent) were of the view that the rates will rise, while 17.4 per cent believed that the rates will fall. However, more respondents (59.6 per cent) of the respondents either expected no change or had no idea.

Wheat farmers bank on govt support for...

Why FG should change its stance on...

Continued from page 1

pricing in the country and it is not stable either on the international market. But our off takers are flour millers and they are not giving us good prices. Selling at their offer is a loss for us,” Salem groused.

“For a farmer to sustain his business, he is supposed to have got N18, 000 per 100 kilogramme and in a worse case, N15,000. But surprisingly flour millers offered N13, 000.”

Global wheat prices inched higher at the end of November on the heels of improved export demand and unfavourable weather in some exporting countries but plunged by 0.12 percent to $5.24 per bushel at the end of December on higher production from the Black Sea region.

The United States, a major exporter to Nigeria has been working hard to accelerate the below-average pace of Hard Red Winter (HRW) exports to attain its current export forecast of 8.7 million tonnes (320 million bushels), according to the Foreign Agricultural Service, United states Department of Agriculture (USDA).

AsofNovember29,HRWtotalcommitments inclusive of accumulated exports and outstanding sales were downcomparedtolastyear,particularly

to Mexico and Nigeria. But sadly for the local wheat market, they have begun to improve in recent weeks.

And in fact, Nigeria’s wheat imports in 2018/19 marketing year (MY) are forecast at 5.4 million metric tonnes (MMT), up four percent from the MY 2017/18 import figure of 5.2 million metric tonnes. This is attributed to greater increase in millers’ access to foreign exchange.

What this means is that local pricing may not experience an upward review as being clamoured by farmers in that the renewed commitment of leading exporters is likely to make import even more attractive.

Salem who described the grain as a political crop urged the government to support local production by establishing a guaranteed minimum price between farmers and millers or introduce interventions that can make up for the difference in pricing.

“For instance where a farmer is seeking N15,000 and the off-taker is insisting on N13,000, then the government should augment the N2,000 balance between. This will ensure the farmers do not sell at a loss, while the buyer will not bear higher cost burden,” he explained.

The association also craved for government support in terms of im-

proved seeds, saying it needed new varieties to update its quality.

However, Olabanji Oluwasina Executive Director of Lake Chad Research Institute, Maiduguri, said the problem with wheat production does not lie in the seed variety but everything to do with the lack of political will to develop the crop as is being done with rice.

Although he admits that the Lake ChadResearchInstitutehastheresponsibilitytoreleasenewvarietyeverythree years, he insist the variety currently available to farmers (Norman) , was of good quality and could yield about two metric tonnes per hectare.

He said Reyna 28, a high yielding variety capable of 5.5 tonnes under standard agronomic conditions, with early maturity and good baking qualities, is currently being multiplied in Jigawa and Abuja.

“Reyna 28 is another improved variety but we didn’t have enough foundation seeds to multiply to farmers and seed companies until now. However, all these things we are talking about are just paper work except we can have the political will. The government has relegated other crops for rice production which shouldn’t be so,” Olabanji said.

He also substantiated the idea that government needs to subsidise wheat processing in order to fix the shortfall in local wheat pricing.

Continued from page 2

the market this year.

Igbinoba stressed that there would be increased vacancy rate in the Grade A office market and his reason was that the expatriates who were leaving the country coupled with those who may leave in the aftermath of the general elections are the ones that rent such office space.

“The upper residential market will suffer the same fate because it is only the corporates and expatriates that rent houses in that segment of the market,” he said, adding that even retail would continue to struggle because of the drop in consumer purchasing power which is affecting that space.

However, what is happening or is going to happen, according to Igbinoba, is beyond election or Buhari as president. “What we are looking at here is political risk, but it goes beyond that. Macro-economic factors also play a major role and so focus should be more

on them,” he posited.

MKO Balogun, CEO, Global Property and Facilities International Limited, agrees, arguing that if people and companies are leaving Nigeria, it is not because of Buhari as president or his government’s alleged anti-business stance or the likelihood of his return to power after the February elections.

“People are leaving the country because of our economy which is a rent-economy; the economy is not standing on a sustainable model, so people come from outside, make what they can make and move on.

That is what is happening. The economy has a weak super structure,” he noted.

Balogun also believes that some of the companies reacting to the government’s stance on corruption. “Some of the companies that are leaving the country are running away from the anti-graft stance of the Buhari government which is making Nigeria uncomfortable for them.

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Sanwo-Olu assures on Lagos-Badagry Expressway, Blue Line rail project completion …seeks professionals, business community support to build Lagos infrastructure CHUKA UROKO

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s part of his promised ‘THEME Lagos,’ which includes traffic management and transportation, health and environment, education and technology, making Lagos a 21st Century economy, entertainment and tourism, Babajide Sanwo-Olu says, if elected governor of Lagos State in 2019, he would tackle the state’s collapsing infrastructure head-on.

Sanwo-Olu, who is the governorship candidate of the All Progressives Congress (APC) in the state, assures that his government will move very fast to complete the ongoing Blue Line rail project from Okokomaiko-Marina and, in the process, aggressively prosecute the rehabilitation of Lagos Badagry Ex-

pressway.

He adds that they would explore the realization of the Red line from Agbado to Marina, pointing out that, in preparing for rehabilitating various inner roads, the three Asphalt plants in the state would be turned around and made ready to put people to work in order to make state roads motorable.

The governorship candidate who spoke at the annual end of the year dinner and award night organised by the Nigerian Institution of Civil Engineers, Lagos chapter, where he was represented by his deputy, Obafemi Hamzat, notes that Lagos as a megacity had serious infrastructure challenge.

Lagos population is currently over 20 million with a projected figure of close to 30 million in the next decade.

This is despite it being the

smallest state in Nigeria with a land area of 3,577 square kilometres, which is just 0.4 percent of total land area of Nigeria estimated at 923,768 square kilometres.

The National Bureau of Statistics (NBS) estimates show that about 260,000 people come into Lagos daily, and only about 20-25 percent goes back to their original places.

This huge influx into the city is overstretching the existing infrastructure and facilities, leading to an urgent need for the state to be innovative in providing infrastructure.

Hamzat, who was the immediate past commissioner for works and infrastructure in the state, said he understood the state’s infrastructure challenge very well, pointing out, however, that though the internally generated revenue (IGR) of the state has increased from N7.2 billion

in 1999 to about N333 billion in 2017, it was still a lot lower than what was required to build a Lagos of the residents’ dream.

“The government of Sanwo-Olu will explore options that will increase the state’s IGR. But most importantly, technology and rule of law will play a bigger role in virtually every sector of our economy.

It is these applications of technology and rule of law that makes the difference between the advanced nations and the developing worlds, such as Nigeria”, he said in response to journalists’ questions.

“Our plan is to expand and improve on existing infrastructure project. Government is a continuum and we will continue with existing projects to the benefit of Lagos. Our focus remains ‘Towards a Greater Lagos: A Collective Effort,’” he assures.

Godwin Obaseki, governor, Edo State (m); Ukinebo Dare, senior special assistant to the governor on skills development and job creation (l), and Feb Idahosa (r), during the governor’s inspection of an abandoned state-owned warehouse in Benin City, Edo State.

Edo okays multipurpose production centres to boost activities of MSMEs

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n a concerted effort to support Micro, Small and Medium Enterprises (MSMEs) in the state for increased productivity, the Edo State government through its skills development platform, EdoJobs, with development partners, are set for the launch of the Edo Production Centre, a multipurpose, one-stopshop for small businesses.

The centre is the brainchild of the Governor Godwin Obaseki-led administration and will be managed in partnership with the Market Development for the Niger Delta (MADE) II programme, Benson Idahosa University (BIU) and the Des Moines Area Community College in Iowa, the United

States of America.

Senior special assistant (SSA) to the Governor on Skills Development and Job Creation, Ukinebo Dare, said a number of production centres are going to be sited in the three senatorial districts of the state, noting that the pilot centre is situated in Benin City.

She added that a stakeholders’ meeting has been schedule for January 7, after which different small and medium business owners will be allowed into the centre, which is equipped with 24 hours electricity and other support structures to make them more productive.

Small businesses expected to be hosted at the centre

include welding and fabrication, recycling and waste management, polythene makers, printing press, clothing factories, bakeries and confectionaries, packaging companies, among others. The centre is fitted with factory space, security and office space.

She said there will be live-in desks for relevant government agencies to engage, support and provide services to small businesses at the centre, noting that the agencies to be hosted are the Bank of Industry (BoI), Corporate Affairs Commission (CAC), National Agency for Food and Drug Administration and Control (NAFDAC), Edo Internal Revenue Service (EIRS), among others.

@Businessdayng

Wednesday 02 January 2019

Nigeria records 9% crude oil production in 2018 … promises to stick to repayment agreement with JVs OLUSOLA BELLO

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mid anxiety over crude oil glut worldwide and the fear that the country may not be able to meet the 2.3 million barrels per day production as projected in the 2019 budget, the Nigerian National Petroleum Corporation (NNPC) claims the country’s crude oil was in the upward swing in 2018.

According to the NNPC, the daily production was about 2.09 million barrels in out-gone 2018, translating to a 9 percent increment, compared with the 2017 average daily production of 1.86 million barrels.

The corporation did not however disclose the exact volume of crude oil and also the volume of condensate that does fall under the control of OPEC quota produced.

According to Maikanti Baru, group managing director, NNPC, pitched against the low-level daily crude oil production in 2016 and what obtains now, the nation had maintained a line of consistent year-on-year improvement.

For the crude oil increment and other milestones recorded by the NNPC in the out-gone 2018, who made the submission in a comprehensive end of year message to staff of the corporation, touted the new business models his team had put in place in the national oil company’s old and new business entitles as raison d’être for the giant strides.

A press release signed by Ndu Ughamadu, NNPC group general manager, group public affairs division, said the Nigerian Petroleum Development Company (NPDC), Nigerian Gas Company (NGC), Petroleum Products Marketing Company (PPMC), Duke Oil, NIDAS and Integrated Data Services Limited (IDSL), were among the re-engineered companies listed by the NNPC

boss in his statement.

Ughamadu said Baru singled out NPDC, the corporation’s upstream flagship company, as the major contributor to the Industry’s success story in 2018, expressing enthusiasm on the 52 per cent daily crude oil production growth by the company vis-à-vis its 2017 performance.

The NNPC boss in the endof-year statement explained that the average production from NPDC’s operated assets alone grew from an average of 108,000 of oil per day (bod) in 2017 to 165,000bod in 2018, describing the feat as the strongest production growth within the Oil Industry in recent times, even as he added that it was worth being celebrated.

He said NPDC’s equity production share which stands at 172,000bod, representing about 8 per cent of national daily production, was no less impressive, saying the desired results are outcomes of initiatives his Management team emplaced, among which, he noted, are the Asset Management Tea (AMT) structure, Strategic Financing, Units Autonomy and security architecture framework.

Of the Industry milestones in the outgone year, the corporation stated that $1.7 billion was saved by NNPC, with corporation’s Joint Venture (JV) partners over a five-year tenor repayment plan, saying already the corporation has defrayed $1.5 billion of the arrears.

He made the promise that NNPC would stick to the Repayment Agreement with the JV Partners while transiting to self-funding IJV modes with the corporations partners, saying that tiding up the Cash Call issues has led to increased commitment and enthusiasm to invest in Nigerian Oil and Gas Industry even as it has also boosted NNPC’s credit profile internationally.

Edo urges CP to investigate Benin Ring Road shooting incident

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overnor Godwin Obaseki of Edo State has urged the Edo State Commissioner of Police, Johnson Kokumo, to investigate the shooting incident at Ring Road, Benin City, on New Year’s Day, which reportedly claimed one life.

In a statement, special adviser on media and communication strategy to the governor, Crusoe Osagie, said, “The governor has asked the Police CP to thoroughly investigate the incident and assured that anyone found culpable will be brought to book.”

Osagie said, “The gov-

ernor is disturbed by the incident and wants a clear report on what actually transpired and the condition under which the reported shooting took place.”

He noted that the Obaseki-led administration had prioritised the security of life and property with the huge investment in the state’s security architecture and trust fund, launched recently, and would stop at nothing to get to the root of the Ring Road shooting incident.

“Unconfirmed reports trending on some news platforms claim the inci-

dent at Ring Road happened during the frenzied celebration of the crossover to the New Year. It is alleged that a life was lost, but we are yet to get the full detail of the incident from the Police and other concerned security agencies.

“The governor has urged the police commissioner to investigate the incident thoroughly. I am confident that we will have the true picture of what transpired after the investigation. I can assure you that the state government will take a decisive action on the matter,” the governor’s aide said.

Wednesday 02 January 2019

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Joint venture, stock, bonds seen as viable financing options for ship acquisition AMAKA ANAGOR-EWUZIE

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s commercial banks continue to restrict lending to shipping companies owing to regulatory and risk management considerations, Nigerian ship owners have been advised to consider structures such as high-yield bonds, joint venture partnership and capital market listing as viable options to funding ship acquisition.

Experts, who took turns to assess the state of Nigeria’s shipping business at a recent industry event tagged NISFCOE 2018, say Nigeria’s maritime industry is still at its infantile stages in terms of funding and indigenous participation, since local shipping companies cannot access the requisite funding to acquire ship infrastructure and do business.

According to them, the volume of ship financing transactions undertaken in Nigeria is still very low despite the increasing volume of trade and the number of

foreign ships that calls Nigeria’s territorial waters.

Speaking while presenting a paper tagged, ‘Innovative Concepts and Sustainable Approaches to Effective Ship and Maritime Infrastructure Financing in Nigeria: A Critical Review,’ Fabian Ajogwu, a senior advocate of Nigeria, says traditional lenders like banks have reduced their commitment to ship infrastructure projects following the financial crisis and their high aversion to risk to take on such transactions.

According to Ajogwu, access to credit remains a challenge for ship-owners and other operators as very few Nigerian banks have the financial and technical capacities to undertake such transactions; while high interest rates and liquidity issues keeps funding out of the reach of the intending shipowners.

Ajogwu discloses that private equity funds now targets small and medium sized shipping companies to enter joint ventures with shipowners and, sometimes lend

directly to these companies through primary or mezzanine financing.

“Another financing option for major players in the industry has been the capital market. The US and Norwegian capital markets as well as the Norwegian bond market have been favourable for shipping assets. The London markets are also looking to attract their first shipping listings since 2006/2007,” he says.

Ajogwu however advises Nigerian ship owners to embrace International Financial Reporting and Accounting Standards in order to be able to attract other forms of finance in the form of private equity, and be better positioned to be listed on the Stock Exchange.

BusinessDay understands that in 2017, the Federal Government, which through the Nigerian Maritime Administration and Safety Agency (NIMASA) concluded plans to disburse $100 million Cabotage Vessel Financing Fund (CVFF) to indigenous ship owners at a single digit

interest, has failed to disburse the funds till date.

The CVFF was aimed at promoting Nigerian ship acquisition and ownership, ship charters, development of shipyards and other infrastructure, ship construction, repairs and maintenance and other schemes for the development of indigenous tonnage capacity.

In his view, Bashir Yusuf Jamoh, executive director, Finance and Administration of NIMASA, lists lending from commercial banks, sole lending & syndicated loans, proposed maritime bank, CVFF, NCDMB loans and leasing as funding options for ship acquisition.

“Despite the huge potential in the Nigerian maritime sector, harnessing these assets has been constrained due to the absence of an effective financing option. Filling the funding gap therefore remains critical. Unless Nigeria takes the issue of ship financing seriously, few foreign firms will continue to dominate activities in the shipping sector,” Jamoh warns.

L-R: Folashade Atiba, legal secretary, The Diocese of Lagos; Adejoke Orelope-Adefilure, senior special assistant on Sustainable Development Goals (SDGs) to President Buhari; Humphrey Bamisebi Olumakaiye, bishop of Diocese of Lagos, his wife Motunrayo, and Segun Ajayi, deputy registrar, Diocese of Lagos, during the 2019 New Year service of the Cathedral Church Marina Lagos, yesterday.

Pic by Olawale Amoo

VAT generated in Q3 2018 jumped by 2.54% on quarter-on-quarter basis ISRAEL ODUBOLA

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ata on the sectoral distribution of Value-Added Tax (VAT) for Q2 and Q3 2018 showed that N273.50 billion was generated as VAT in Q3 2018 compared with N266.73 billion generated in the second quarter and N269.79 billion generated in Q1 2018, indicating a positive growth of 2.54 percent quarter-onquarter and 9.16 percent year-on-year.

BusinessDay analysis of the report found that manufacturing generated the highest amount of VAT in Q3 2018 at N31.483 bil-

lion, down by N975 million from N32.458 billion generated in the second quarter of2018.

Out of the 24 sectors covered in the report, 13 recorded a negative growth (quarter-on-quarter) in VAT generated in Q3 2018 compared with the previous period, the report shows.

After manufacturing, professional services and commerce and trading generated the second and third highest amount of VAT in the period of concern. For professional services, VAT generated rose quarter-on-quarter by 27.73 percent to N25.567 billion in Q3 2018 from N20.016 billion in Q2 2018.

Commerce and trading recorded a slight decrease of 0.68 percent quarter-onquarter from N16.108 billion in Q2 2018 to N15.998 billion in Q3 2018.

VAT generated from banks and financial institutions declined by 4.87% to N4.516 billion in Q3 2018 from N4.747 billion in the previous quarter.

VAT realised from properties and investments surged by 18.8% to N1.278 billion in the period of concern from N1.075 billion in the preceding quarter.

Although, VAT generated from mining expanded by 10.14% quarter-on-quarter to N52.701 million in Q3

2018 from N47.849 million in Q2 2018, the sector generated the least amount of VAT in Q3 2018.

Building and construction recorded the biggest quarter-on-quarter decline of 34.76% to N2.506 billion in Q3 2016 compared to N3.841 billion and N3.246 billion generated in the previous two quarters.

Out of the total amount generated in Q3 2018, N128.62 billion was generated as non-import VAT locally while N58.84 billion was generated as non-import (foreign) VAT. The balance of N86.04 billion was generated as NCS-Import VAT.

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As FG yet to transmit minimum wage executive bill to N/Assembly … labour, OPS warn of implication of strike on election, economy JOSHUA BASSEY & KEHINDE AKINTOLA

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ore than one month after receiving the report of the National Minimum Wage Committee, the Presidency is yet to transmit an executive bill to the National Assembly as procedure demand or name the highpowered technical committee President Muhammadu Buhari promised to look into the N30,000 recommended by the Ama Pepple-led committee.

This is also as the ultimatum issued by organised labour to the Federal Government to transmit the report of the national minimum wage committee to the National Assembly expired on December 31, 2018, thus setting the stage for a nationwide strike that could cause severe damage to the fragile economy early in the New Year.

Checks by BusinessDay as of Monday, December 31, 2018 confirmed no executive bill had been sent through the senior special adviser to the president on National Assembly matters (Senate and House of Representatives).

The leadership of the three labour centre- Nigeria Labour Congress (NLC); Trade Union Congress (TUC) and United Labour Congress (ULC), had rejected the president’s proposal to set up a technical committee to assess the ability of government to pay the N30,000 recommended by the Ama Pepple committee, insisting that the report be transmitted to the National Assembly on or before December 31, 2018.

Labour had since commenced mobilisation of workers and their civil society allies for a nationwide strike from January 8, 2019 to press home their demand.

“We are reaching out to our allies in the civil societies. We are also discussing modalities to make the strike effective and impactful should the government failed to accede to our demand. Our demand clear; transmit the N30,000 recommended by the National Minimum Wage Committee to the National Assembly for action,” a member of the labour movement told BusinessDay. Analysts observed that the industrial action if carried out may truncate ongoing preparation for the 2019 general elections which is expected to commence in February, 2019.

According to the timetable released by the Independent National Electoral Commission (INEC), the Presidential and National Assembly elections hold on Saturday, February 16, 2019 across the country. The Governorship, State Houses of Assembly and Federal Capital Territory Area

Council elections hold on Saturday, March 2, 2019, respectively.

In line with the communiqué jointly issued by the three labour centres at a meeting held in Lagos state penultimate week, all affiliate unions in public and private sectors have affirmed readiness to join the nationwide strike.

Fortune Obi, public relations officer of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), an affiliate of TUC, affirmed readiness to join the industrial action, urging the Federal Government to do the needful in order to avert another economic crisis.

Peter Ozo-Eson, the general secretary of NLC, said the position of the three labour centres remained sacrosanct.

Disturbed by the development, the Nigeria Employers’ Consultative Association (NECA) has warned on the negative implication of the proposed nationwide strike by the organised labour, saying that the Nigerian economy cannot absorb any further shocks from such action.

Timothy Olawale, directorgeneral of NECA, said the economy was still struggling from the impact of the recent recession and urged the Federal Government to avert the proposed strike.

“It is worrisome that in a nation whose economy is still reeling under the effects of recent recession, government would needlessly further drag the economy into avoidable abyss. The colossal loss borne by businesses during the warning strike in September 2018 is yet to be recovered and further disruption of business activities might sound the death knell for many enterprises.

The DG further expressed worry at the indecisive disposition of the Federal Government towards concluding the process leading to the implementation of a new national minimum wage.

He said: “Globally, there is a recognised and acceptable process of setting a National Minimum Wage as enshrined in the ILO Convention 131.

This process had been adopted in previous National Minimum Wage setting in Nigeria and was meticulously applied by the National Minimum Wage Committee inaugurated by the President in December 2017.

It was expected that following the submission of the National Minimum Wage Committee’s report to the President on Tuesday, November 6, 2018, expedited action would be taken in transmitting a bill to the National Assembly as promised by President Muhammadu Buhari.”

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Wednesday 02 January 2019

Investment in technical education should top FG priority list in 2019 - experts Governor Obaseki’s New Year message KELECHI EWUZIE

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s the Federal Government settles for business this year, concerned education experts have called on government to priority investment in technical education to boost youth empowerment and job creation.

They observe that over the years, government attention in terms of investment have been channelled to conventional universities to the exclusion of other special institutions.

According to them, government needs to have a rethink as the year 2019 progresses.

Maurice Ukachukwu, a teacher at Enugu State College of Education Technical, says the role of technical education in national development across the globe cannot be overemphasised, especially

when juxtaposed against the growing technological advances in the 21st Century.

Ukachukwu urges the Federal Government to support this critical but overlooked aspect of education, which according to him is the only key to entrepreneurial development and employment generation in the nation.

He states that government should realise that technical education and vocational institutes and colleges are the solutions to the present unemployment challenge that the nation is facing.

According to Ukachukwu, “If the youths acquire skill at an early stage before graduation, they can live productively when they channel such skill to various endeavour thereby helping their parents, community and society at large.”

Yinka Adeoti, a professional in technical drawing, notes that despite its role in employ-

ment generation, technical education is being shunted to the back burner.

Adeoti opines that the role of technical education is to provide a nation with human resources that will develop its technologies, adding that the field is one of the surest ways of making the economy richer, prosperous and resourceful.

“Government support for good technical education is the best way to prepare a nation for excellence. Without this form of education, how would people grow, develop and compete effectively in the rapidly changing global economy?” he wonders.

To him, “What is required in stemming this tide is a policy shift on the part of government, which should be targeted at implementing the technologies learnt by students in the course of their studies at polytechnics and universities of technology.”

Samuel Eze, a student of Yaba College of Technology, Lagos, advocates for more government support in infrastructural development, stating that across the world, he is aware of the enormous role that technical education plays in any nation desirous of achieving its education goals.

“Technical education covers a wide spectrum of educational training programmes such as trade and commerce, medicine and sciences, engineering and agriculture, which are all essential to the development of the human and natural resources of any forwardlooking country,” he says.

Eze further explains that he is convinced there are more career opportunities in fields under technical education, for which reason he can not help wondering why government has been rather slow in its efforts to improve that aspect of education.

Akinwunmi Ambode (2nd r), governor, Lagos State; Adeniji Kazeem (r), attorney general and commissioner for Justice; Anofiu Elegushi (2nd r), special adviser to the governor, Central Business District; Nurudeen Solaja-Saka (l), member, Lagos State House of Assembly, and others, during the One Lagos Fiesta Grand Finale at the Eko Atlantic City, Victoria Island, Lagos, yesterday.

Elumelu Foundation opens applications for 5th cycle of $100m entrepreneurship programme

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he Tony Elumelu Foundation (TEF), a leading Africanfunded and founded philanthropy committed to empowering African entrepreneurs, is now accepting applications for the 2019 cohort of the TEF Entrepreneurship Programme.

The programme is a 10-year, $100 million commitment to identify, train, mentor and fund 10,000 African entrepreneurs. The programme’s objective is to generate at least 1,000,000 new jobs and create at least $10 billion in new business revenue across Africa.

Now in its fifth year, the TEF Entrepreneurship Programme has empowered 4,470 entrepreneurs, using a bespoke and robust selection, training and implementation process to create visible and sustainable impact across all 54 African countries.

Outstanding African entrepreneurs running existing start-ups with high growth potential and aspiring business owners with transformative ideas are invited to apply. We are particularly looking to grow representation from French, Arabic and Portuguese speakers, as well as female entrepreneurs.

Inspired by Tony Elumelu’s economic philosophy of Africapitalism and his vision to institutionalise luck and democratise opportunity for a new generation of African entrepreneurs, the Foundation has implemented one of the most ambitious entrepreneurship programmes globally.

Selected entrepreneurs from previous years have transformed their businesses and their communities after gaining from the Programme’s 7 pillars: $5,000 in seed capital; business development training; one-

on-one mentoring; access to TEFConnect; pan-African meetups; TEF network membership; and participation at the annual TEF Entrepreneurship Forum, the largest convening of the African entrepreneurship ecosystem.

Founder, Tony O. Elumelu, stated: “The private sector must be the core driver of Africa’s economic transformation, but this sector cannot attain its full potential if entrepreneurs are left behind.

We call on all stakeholders – policymakers, business leaders and development agencies – to actively commit to creating a better future for our young Africans who have demonstrated intellect, skill, and passion, to empower them to succeed because their success is Africa’s success.

Parminder Vir, CEO, TEF, said: “Our entrepreneurs illustrate the Foundation’s commitment to transform

the African economy, by building on the intelligence, skills and resourcefulness of Africans. I encourage all ambitious young Africans to take advantage of this unique opportunity.”

The TEF Entrepreneurship Programme is open to citizens and legal residents of all African countries, who run for-profit businesses based in Africa that are no older than three years. The deadline for applications submission is March 1, 2019.

Applications will be judged based on criteria including: feasibility, scalability and potential for growth of the product/service; market opportunity for the idea/business; financial understanding, leadership potential and entrepreneurial skills.

Applicants can apply on TEFConnect - www.tefconnect.com - the largest digital networking platform for African entrepreneurs.

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s we usher in 2019, there is every reason to celebrate this gift of a new Year and to thank God Almighty not only for preserving us to see this new year, but more importantly for His mercy and the achievements we recorded in 2018.

As we reflect on 2018, we have reasons to celebrate the modest achievements, which we accomplished despite the challenges, which we still face as a nation.

With assistance and support of Mr President and the Federal Government, we were able to pursue our goals and ambition to make Edo State a model for economic development and good governance.

My priority as your governor is to ensure that we emphasise and focus on policies and programmes which will enhance the wellbeing of majority of our citizens by creating the enabling environment and building the necessary social and physical infrastructure for our people to achieve their aspirations.

In order to achieve our promise, we have continued to invest in those areas, which would make life better for our people.

Education and healthcare received a lot of our attention last year and we rolled out Edo Basic Education Sector Transformation (EDOBEST).

EDOBEST has been hailed locally and internationally as a revolution in Basic Education in Nigeria with huge potential to aid our children to learn. I thank the over 7,000 digital teachers who are changing the future of our children and the hundreds of our school-based management committee members who have volunteered to ensure that we change education outcome in Edo State.

This year we expect to roll out EDOBEST in every public basic school in the state.

Similarly, our desire to improve healthcare of millions of Edo Citizens by emphasizing primary healthcare took off with the pilot of our first 20 model PHCs equipped with electricity, technology, properly trained health personnel and adequate security. The plan is to have 100 of such PHCs in 2019.

We want Edo to be a centre where we will be able to access quality health care services, without the troubles of travelling out. The New specialist hospital will be opened this quarter under a Public Private Partnership (PPP) management agreement.

In December, we launched the New Edo State Security architecture, which is an innovative approach to fight violent crimes in the State in a sustainable way by involving the communities in the security arrangements and also getting the private sector to participate in fund-

ing security in Edo. Henceforth, up to 25% of the Security vote of the state will be committed to the Security Trust Fund. With the contributions of Edo Citizens and commitments by private companies, we can stamp out crimes from our dear state and make it the safest place to live and do business.

We are still very committed to the creation of jobs so that we can keep our young ones across the three senatorial districts engaged and productive. Even though we have created well over 77,000 jobs in the last two years, including the over five hundred graduate employment into the Edo State Civil Service, we plan to do more this year as we invest in production and processing centers where artisans and entrepreneurs can go and produce goods and services.

With the rapid progress, which we made with our partners in our investments in the modular refinery, the Benin Industrial and Enterprise Park and the Benin River Port, we expect that construction will commence on the park this year and that the Modular refinery would also be installed this year.

We are very pleased with the progress we have made in housing, especially with the construction of the 74 hectares, 1,800-unit Emotan Garden Estate, where 100 units are now ready for occupation. I encourage Edo Citizens to take advantage of this opportunity to own property in this unique project.

We are mainstreaming more women and physically challenged persons in governance, in our effort to create an inclusive system that is responsive to the needs and aspirations of all classes of people in our state. We demonstrated this recently when I approved the employment of all persons living with disabilities, that applied for civil service jobs in the state.

The Edo of our dream is a place where everyone can actualise their God-given potential and contribute to our collective growth and development as a nation.

I must at this point commend the Omo N’ Oba N’ Edo, Uku Akpolokpolo, Oba Ewuare II, for his fatherly guidance, especially his support for the fight against human trafficking and illegal migration in our state.

The positive response of the traditional institution, the clergy, our mothers and sisters in our various markets, the international community and other stakeholders, to curtail the scourge of human trafficking, has been remarkable. These efforts have begun yielding success such that the European Union announced that Edo State has dropped from the first to sixth position, in illegal migration to Europe.

Wednesday 02 January 2019

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comment Small Business handbook

Emeka Osuji Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

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o much has been said and also done concerning the development of the SME sector, not just in Nigeria but in several other parts of the world. At the African continental level, for instance, the Africa Union Commission (AUC), in its search for the evolution of “competitive, diversified and sustainable economies in Africa underpinned by dynamic, entrepreneurial and industrial sectors that generate employment, reduce poverty and foster social inclusion”, established the Enterprise Africa Network (EAN). The Network is a flagship initiative of the AUC, which aims at implementing the Business Development pillar of its Africa Master Plan for 2017-2021.

The initiative would provide services relating to the developmental needs of African SMEs, including international partnerships with the private sectors of other economic groupings, including the European private sector. It will also offer advisory services for international growth as well as support for business innovation.

The Enterprise Africa Network therefore becomes a strategic institutional resource, to facilitate the realization of the objectives of the AUC by confronting the key obsta-

Victoria Abuto Abuto writes from Abuja and sent this piece via vic.abuto@gmail.com

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igeria is a place of firm beliefs. We believe in our religions firmly, dogmatically, and wholeheartedly. We believe in our family and tribal traditions and have great respect for where we come from. But one thing we don’t believe in is our politics, or in fact our politicians. And quite rightly so.

There is no firm ideology, no left or right. Can you tell me what the difference is today between the core ideas and worldviews of our leaders and the various candidates? The answer is clearly no.

So when we go to vote in these historic elections, what are we looking for, if not ideology and ideas? Let’s remember what sort of state our country is in right now.

Wednesday 02 January 2019

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Key success factors for SMEs in 2019 cles hindering SME development and growth. It hopes to promote the participation of SMEs in the formal economy of their respective countries, as well as in regional and global trading spaces by tackling lack of access to markets and market intelligence, stifling regulatory barriers and hostile environment.

Domestically, several funding and capacity building initiatives have been implemented. The Central Bank, the Bankers Committee and other stakeholders have established several on-lending facilities for the benefit of SMEs. It is now a popular view that the availability of funds is no longer a major challenge of SMEs, even though accessing such funds may still be a bit of a problem. It is most probable that this challenge prompted the Central Bank to contemplate the establishment of a nation-wide government microfinance bank – an idea not supported by this column. We have unsuccessfully used that route before through the Peoples Bank. Besides, the scares of government’s incompetence in business is “everywhere dense” in Nigeria As 2018 closes, there is need for operators in the SME sector, which has the most positive impact on the masses, to brace up, rethink its strategies and retool its operational modalities, so as to maximally profit from the opportunities that may arise in 2019. In this regard, we attempt here to highlight some of the attributes and strategies that must be manifest in the affairs of those SMEs that will click Champaign glasses this time in 2019.

Before that, a cursory look at some aspects of the environment.

The Nigerian economy is growing at less than 2 per cent per annum as against its population, currently estimated at 198 million people and growing at a rate of 2.6 per cent – a growth deficit. Ghana’s

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As 2018 closes, there is need for operators in the SME sector, which has the most positive impact on the masses, to brace up, rethink its strategies and retool its operational modalities, so as to maximally profit from the opportunities that may arise in 2019

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population of about 29 million people is growing at the rate of 2.2 per cent while its economy grew at the rate of 8.5 per cent in 2017–a surplus and the fastest in five years. Ghana was the first country in Sub-Saharan Africa to achieve the Millennium Development Goal 1 - the target of reducing extreme poverty by half. We never did. Ghana has also become a middle income country. Although Nigeria is not among the 37 Heavily Indebted Poor Countries, debt service is gulping about a quarter of its 2019 budget (N2.14 trillion). The problem is not debt or its service but where the money was put.

The oil market is still soft, with many traditional buyers of Nigeria’s crude, including India, either slowing, looking elsewhere or seeking alternative energy sources. Currently below 2millionbarrels/d output is projected to reach 2.3 million barrels a day – some kind of miracle jump. In short there is no certainty in this rapid production increase.

This could negatively impact revenue,

cut jobs and put more pressure on the beleaguered households. Relatedly, 2019 will bear the brunt of the general elections activities, which have already negatively impacted the economy. SMEs must therefore guard their loins and brace up for all sorts of negative externalities, including possible delays in the formation of cabinets, depending on who wins the presidential election.

All considered, growth may be minimal and there is no need to restate that SMEs have little or no prospects when an economy is stagnant.

The dividends of the failed strategy of neglecting the Warri and Port Harcourt ports and concentrating almost all import trade in Lagos have come to roost. Almost all businesses in the hitherto highbrow Apapa GRA have shut down. Nobody of any economic substance lives in Apapa now, except hapless landlords without an alternative. The economy of Lagos is bleeding but strangely the state is not complaining. Its economists seem to have little understanding of the Apapa disaster on Lagos economy. Nigerians need to know why we neglected the ports in the South-South to ruin Lagos.

Even more important, SMEs must understand and embrace the reality of the time – the world has gone digital. Services are being migrated to the digital space. There is no hiding place for those that hang on to the dying analogue age. On this matter, there will be no standing on the fence. One is either in or out.

Furthermore, exploration, discovery and deep utilization of digital platforms, the social media and marketing strategies will be imperative. In this regard, investment in capacity development is vital. Many free offerings have been made in this area but operators must realize that there is actually no free lunch. A small training budget even if it is for the key man alone, is unavoidable.

Continuous effort to create bankable

projects, the lack of which is a major cause of the financial starvation of SMEs, and of course, general selfimprovement of SMEs’ internal processes is important. The time has come for SMEs to differentiate themselves and embrace creative thinking and innovation.

SMEs are not famous for their customer-centricity. The need for repeat business has never been their priority. It is time for SMEs to hold on to the customers they have been able to garner. The only way to do this is first to know who the customers are; listen to them and try to hear what they are saying. This guides the development and deployment of products and services. Owing to the fact that we have never been interested in whether the customer repeats or disappears, we are unable to innovate. Need identification precedes innovation. SMEs that close in on their customers, listen to them and constantly interact through various digital channels will be better able to offer goods and services that meet customers’ needs.

The state of unemployment, which hit 23 per cent in the third quarter of 2018 is not likely to abate.

It is probable that more entrepreneurs, willing and unwilling, from the ranks of those structured out of the formal sector by a stagnant economy, will throng the SME space. Competition will heighten and market shares will shrink. In essence, SMEs should expect little or no special favours from government beyond the hard-to-access financial packages still trending. There is also no need to wait and hope that governments will do what they say.

The only hope that makes sense is the hope in God. Otherwise, hope is the absence of strategy with an indeterminate outcome.

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Nigeria needs businessmen not bureaucrats We are in total and utter crisis: The lack of jobs; crisis. The lack of affordable healthcare; crisis. The lack of basic foodstuffs crisis. The endemic violence; crisis. And of course, the bleeding jugular of our economy, our governance, and our polity; corruption, the lynchpin of our contemporary crisis.

When living in a truly existentially crisis, both on a national and individual level, it is incumbent upon us all to first recognise that the status quo is unsustainable. Things must change. 99% of the country, who aren’t the corrupted super wealthy, or the lucky heirs of a family fortune, come home daily to their families frustrated.

And for all those who recognise that change is necessary, they must ask themselves, how will that change come about? Who is qualified, experienced, and driven to move this behemoth in the right direction? Who understands the economy. Who is experienced in

business and succeeding against all the odds? Who enshrines democracy, freedom, and productivity?

There are many new and interesting candidates in the race this time around. But we all know that this is a two-horse race. It’s the APC against the PDP, and no matter how many more acronyms are thrown into the ring, or how many individuals put up billboards and commercials, the choice we are making lies between those two parties. It’s Buhari versus Atiku.

The APC came to power four years ago with grand promises, and of course, the PDP are making the same noises today. But if you are like me and don’t trust promises, or campaign pledges, if you think politicians are full of hot air, then look for something more substantial. Look directly at the candidate.

Look at his character, look at his background, look at his experience.

Look for a track record!

The current president has been at the helm twice already, and has

failed. He has failed to deliver on his two most basic pledges; security and corruption. Today we are jobless and we are hopeless.

The president, of course, is not alone in his decision making apparatus, yet despite a huge support network of supposed experts, the military minded Buhari is making no ground. Perhaps he is stuck in the mindset of a leader of a military government, blinding him from taking on board consultations from ‘lower ranking officers’ or in this case advisors. Or perhaps, he has been stifled by his years of experience in public sector and military roles whereby bureaucracy places barriers to progress, and there is nothing the so called decision maker can do about it.

Whatever is the reason for Buhari’s failures, he has had his chance. He has failed. It is now time to look beyond his failed leadership and the APC, and towards a leader’s whose track record is the polar opposite of the corrupt and

inefficient bureaucrat.

Which brings us to the PDP. Whether you like the party or not, Atiku gets things done. He may not be the young Barack Obama we have all been dreaming of, but in a two horse race, he is the stronger horse. He may not be perfect, but he is certainly the more likely candidate to lead us out of these multiple crises in which we find ourselves. Why? Because he is a doer. A businessman. An entrepreneur. A man who understands the pitfalls of the public sector, privatises where necessary, and puts efficiency and productivity above all.

And when we are mired in crisis, struggling from day to day, what could be more important for a nation the size of Nigeria than efficiency and productivity. It’s time we had a businessman not a bureaucrat. It’s time for change.

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Wednesday 02 January 2019

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comment Character Matters with Daps

Dapo Akande Graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.”

Contact: dapsakande25@gmail.com

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o great mind has ever emerged as a result of its contentment to remain within the confines and conventions of its time. To put it another way, every great man goes ahead of his time and some measure of his greatness is his ability to drag his society out of the suffocating but altogether accepted norm by the scruff of the neck, into a new paradigm, a new norm and an altogether novel way of thinking. This is where greatness often lies. Albert Einstein, Henry Ford, Walt Disney, Barak Obama, Nelson Mandela and our very own Otunba Subomi Balogun (the first to establish a wholly Nigerian merchant bank) to name just a few, all believed the impossible was indeed possible.

The greatness of this time can begin with you and I. Not only when new inventions are made or by winning elections against all odds but by simply believing our noble cause for a better Nigeria, starting with a better you and I will succeed. Enough

Bankole Allibay Dr. Allibay is the Global Social Performance Lead, Translantic Development Limited

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he term sustainability has long been tied to the concept of development and other esoteric narrative.

Sustainability is not particularly a trigger for crises and conflict but in some political circles and ethnically sensitive arenas it has been described as ethnic cleansing which is the case of farmers and herdsmen conflict in Nigeria. This discussion paper establishes the nexus between exceeding population growth across Africa, particularly Nigeria, the poor sustainability practices and the weak investment in agricultural value chain, which creates these conflicts that daily threaten national security in Nigeria.

About 68% of African population engage in agriculture. Agriculture here means direct cultivation of the earth – farming. About 66% of these farmers are only able to produce at subsistence level, using crude farm implements (simple farm tools), poor quality seeds, suffer poor access to markets (for the little they are able to push to the market) and ultimately lose an average of 27% of their produce targeted at the market. In Nigeria, specifically, approximately 70% of the about 193million Nigerians are involved in agriculture[1]. Significant percentage of these farmers are found in the Northern part of the country, which consists two thirdsof the country

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Mindset always makes the difference ‘ This society we complain of giving in to that well worn mantra of “this is Nigeria”. I get so tired of hearing that from those who feel this is it. Those who feel this is the best we should ever expect. Society as an entity in itself doesn’t just decide this is how it wants to be. Whatever life it possesses and the colouration it takes on are implanted by us, its individual components. Obediently, it assumes the shape we collectively give it. The bible says: ”For as he thinketh in his heart, so is he”. Otunba Subomi Balogun thought in his heart, “yes it may not have been done before but I can set up a wholly Nigerian owned Merchant bank”. He refused to give in to the prevailing belief that it was too much, too big, too difficult for a Nigerian to do without the assistance of a foreign partner. He refused to accept that ” this is it”. No, he turned a deaf ear to those who said it, “fine, it can be done over there but this is Nigeria”. Anyone fortunate enough to have heard or read his story will readily admit his remarkable success wasn’t a “miraculous” story of instant breakthrough much like the majority of Nigerian youths endlessly search for but is the culmination of dogged determination, perseverance, great sacrifice, persistent hard work and the crowning of all these, the favour of God. Thirty five years ago this pioneering mogul of our banking industry transformed the Nigerian mindset. We can do it again.

This society we complain about speaks of who we are. Let’s do something about who we are, how we think, how we behave, how we treat

about speaks of who we are. Let’s do something about who we are, how we think, how we behave, how we treat each other and let’s see whether our nation will remain the same

’

each other and let’s see whether our nation will remain the same. I can assure you it will not. If things can work elsewhere then they will work here.

How do we proceed? By first pursuing the common good. By learning to view the success of your society as your success. That’s the crux of the matter. That is, for want of a better expression, the beginning and the end all.

Nigerians are not inherently corrupt. I don’t care what anyone says, we are not born with corruption running through our veins. There is a latent but definite desire for things to be different but unfortunately many have come to see corruption as the only way to get ahead. Nigerians who live abroad don’t desire for their country of residence to become corrupt. Admittedly there are a few bad eggs amongst them but the

great majority are indeed grateful to live in a society that works. Those who enjoy the benefits of a robust social welfare system wouldn’t want it any other way. They certainly wouldn’t want to swap the comfort of regular power supply for incessant darkness and neither would they want the motorable roads they have become accustomed to to degenerate into death traps. For this reason I would only concede that we cannot change if we were born corrupt. If Nigerians like you and I can change when we travel abroad, to adapt to a sane society, then change here is possible too.

After giving it regular and deep reflection I’m utterly convinced that if indeed we want our children to embody the right values when they grow up, if we want them to hold themselves to a higher standard and if we want them to rejuvenate our society, then we must catch them young.

We must, during their formative years infuse them correctly.

As part of a continuous effort to teach our children to be more responsible, my wife and I insist they must clear the kitchen rack of all washed crockery after every meal, before washing another set. One simple reason amongst others is so there’ll be enough room for the new set about to be washed. Expectedly, as children, many a time they forget. However, to our amazement every time they forget to obey this instruction they somehow creatively find space to accommodate everything. Space that you and I would almost certainly overlook. Why? In their innocence, their minds and

outlook on life aren’t clogged up with notions of limitations or impossibilities and neither do they even stop to consider the very distinct possibility of everything coming crashing down.

They just do it and somehow it works.

No wonder Mark Twain made this silly sounding but insightful comment: “All you need in this life is ignorance and confidence and then success is sure”.

This, I believe is also why Jesus Christ admonished in Matthew 18:24 where he said, “Truly I tell you, unless you change and become like little children, you will never enter the kingdom of heaven”. Children exhibit a level of faith rare to find in adults. They just believe. It is because of this propensity to believe and not doubt that we need to teach them the way to go early enough. Once they are properly schooled to know right from wrong; to pursue the cause of right always and summarily dismiss the wrong, whether it is expedient or not, whether they are being watched or not, whether they can get away with it or not, then when they grow up, with the help of God they will not depart from the right path.

Contrary to the erroneous position of the average Nigerian adult, I believe it can be done and that’s why I will end with this quote: “Nothing splendid has ever been achieved except by those who dared believe that something inside them was superior to circumstances” – Bruce Barton Changing the nation...one mind at a time

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Farmers and herdsmen clashes in Nigeria: Crises cycle fuelled by sustainability gap both in terms of land mass and human population. In the northern part of Nigeria, the average birth rate is 6.3 - 7 per woman and due to the high incidence of polygamy, the average number of children per household is 10.5. Correspondingly, the cumulative poverty rate in this part of the country is nearly 66%.

Because agriculture is the main stay of the Northern Nigeria economy, very much like many Sahelian countries in Africa, majority of the population are farmers and they often farm unsustainably. They engage in slash and burn techniques, often fail to conserve water, do not engage in minimum tillage and ultimately, cut down trees to increase cultivatable areas. Consequently, these practices encourage flooding and fast desert encroachment which significantly reduces the amount of arable land, even in the medium term. Due to this scarcity of fertile arable land, the survival of the households drives them further to deforestation which makes the situation worse.

On the leadership side, the extension service system is weak.

Farmers are not taught on minimum tillage systems or any other sustainable farming practices to keep them from destroying the emerging forest areas to drive survival. A more strategic damage in this context is the lack of invest-

ment in agricultural value chain system. 90% of agricultural produce are consumed or sold without processing. This drives a hydra-headed challenge. First, it limits the food optionsfor the people due to lack of food sovereignty, which causes poor dieting and malnutrition. Secondly, it stagnates the economy because the value chain is supposed to create jobs which should naturally take some households out of the direct cultivation into value chain and agro-processing, which should create specialisation and knowledge transfer. By not investing in the value chain, the entire advantage to this sector is lost. This then negatively drives further deforestation.

Another independent agent in this narrative is the lack of participatory urban planning, or as it is in many states, zero urban planning.

This is another complex issue. The law of eminent domain, an obvious character in the Nigerian 1999 Constitution as evident in the land use decree 1978 is a major culprit here.

The State governorshave statutory right to give land on behalf of the state for overriding public interests.

This instrument is often used as a political tool, not necessarily a developmental tool, which arguably, is the idea behind the concept. Often times when these decisions are made, the politicians override the existing land use, the natural contours, the current

livelihoods of the people, the future expansion plans and other critical issues such as the cattle route, the traditional land holding systems, the social network parameters in land holding among several others. Ultimately, lands are allocated for political reasons without any recourse to the plans of other stakeholders along the area – the growing number of subsistence farmers (due to exceeding population growth without alternative livelihoods options) who are often usufruct title holders, traditional land owners who own traditional lands on behalf of their people and in some case the throne they represent, the herders who have age-long agreed access rights to grazing route and grazing reserves among several others, land speculators for urbanisation, project developers, and several other actors.

This unilateral decision of the state governors issuing land without due consultation and adequate strategic planning often lead to trampling on the interest of these other stakeholders. Of these stakeholders, farmer and herdsmen are the most concerned parties because their survival is dependent on access to land. Farming involve direct tillage of land, while and herding involving livestock grazing on the land. In most cases, they hold usufructuary rights which when interest clashes, they resort to confrontation and

physical combat.

Because of poor planning or as it is in some cases, the lack of it, the route designed / agreed by stakeholders as cattle routes are continually being encroached upon by farmers and other actors, which obstructs the movement of cattle herders, affecting their livelihoods and indirectly their survival. This naturally triggers crises. Unfortunately, this situation, coupled with the proliferation of small arms across the Sahelian nation due to the uncontrolled exhaust from the Arab-Spring had helped create and sustain the Fulani Herdsmen and Famers Crises for the most part.

The entire chain of event in this discourserequiresurgent attention.

It warrants a solution that is flexible enough to accommodate the needs of all relevant stakeholders, in an organic manner to manage the crisis etymologically. This would require significant capacity building, essentially on the need for family planning to address the issue of population control. More so, there is an urgent need for land use management and planning and equally important, investment in agricultural value chain and significant investment in afforestation to control desertification and further protect green areas.

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Editorial Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo

EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

Wednesday 02 January 2019

Living in the past

L

ast month the Nigerian Senate passed a bill to provide for the withdrawal of $1 billion from the Excess crude Account (ECA) for the completion of the Ajaokuta Steel Company. The bill titled: An Act to Provide for the Ajaokuta Steel Company Completion Fund for the Speedy Completion of the Project also puts a stop to government’s planned concession of the steel plant.

The bill, which had earlier been passed by the House of Representatives, also makes provision that additional appropriation can be made from the budget, and also loans and grants can be taken by the federal government to complete the Ajaokuta Steel mill. Effectively, the federal government is being given almost a blank check to get Ajaokuta working again.

This does not make sense.

Since its inception in 1979, the Nigerian government has spent $8 billion on the plant and it is yet to produce an ingot of steel.

It was built to be the nation’s

turning point for industrialisation but has become a sinking hole of government spending. It is grandiose dream that has become a nightmare. Sadly, the Nigerian government is failing to wake up from the nightmare. For most private businesses, when they make a bad investment, the first advice is to cut your losses and run. In the Nigerian government case, it is obvious that there is no cap on the losses that the government can make on an investment before deciding when to cut and run.

It is difficult to understand the rationale behind the National Assembly’s decision to pass a special purpose bill to complete Ajaokuta.

Why do you need a bill to complete a plant? When the plant is completed, what happens to the bill?

Even more concerning in the bill is the provision that the federal government must complete the repairs of the plant and make sure it starts ‘production at a very significant stage’ before it can be concessioned. In this case, the National Assembly is assuming that, the purchase price of the Steel Mill would be enough to cover what-

ever cost of repairs are incurred.

This is a very faulty assumption because a buyer would pay a market price for the plant, which would be based on projections of potential returns on the plant and not based on what the government has spent getting the plant into shape, if it ever gets into shape.

This means that, even where the US$1 billion plus is sunk into repairing the plant, there is no guarantee that the government would be able to recover the money at the point of sale or even the US$8 billion that has been sunk into the plant from construction to date. Why this insistence on throwing good money after a bad investment?

Sadly, this attitude of holding onto a bad investment is not totally strange. It is the same rationale that has inspired the federal government holding onto the refineries despite the fact that they have been making losses for more than two decades now. For more than two decades, the federal government has consistently shown that it has no capacity to make the country’s refineries

work. This is despite several commissioned turnaround maintenance that ends up swallowing billions of naira but fails to deliver refined products from the country’s three refineries located in Port Harcourt, Warri and Kaduna with a combined capacity to refine 445,000 b/d.

It must come to a point when the government must accept that it has no capacity to run some of these assets that it keeps holding on to. What is the benefit to the government and the people of Nigeria that the government is holding on to assets that are consuming money that could be used to provide other social needs like healthcare and education, when it could easily dispose of those assets and allow the private sector to turn it into a money making venture that creates lucrative jobs for Nigerians and boost revenues going to the government?

The government has no business in running a business. It is not suited to doing so and the sooner the government realises that fact, the better for us all as a country.

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

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Wednesday 02 January 2019

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Shaping people into a team

Will the Huawei arrest influence the US-China trade talks?

Clyde Prestowitz

T

he arrest of Meng Wanzhou, chief financial officer of the Chinese technology company Huawei,

by Canadian police upon the request for extradition by the U.S. Federal Bureau of Investigation has resulted in confusion regarding U.S.-China trade negotiations.

Some believe hard-line national security elements of the U.S. government ordered the extradition request in order to sabotage the trade talks, or at least to disregard them in the historic tradition of U.S. national security agencies putting their concerns above trade issues.

Some believe that President Donald Trump ordered the extradition request as a way of pressuring the Chinese President Xi Jinping for further trade concessions.

Some believe the U.S. has a vendetta against Huawei and senselessly got carried away by its hatred in a way that may undermine the trade discussion.

As it happens, the truth is almost certainly much less exciting.

Let’s start with the last issue.

It is true that the U.S. government has a deep concern about Huawei. But that concern is not entirely without foundation.

Huawei is the world’s largest telecommunications-equipment maker. Its founder came from the People’s Liberation Army and has maintained a close relationship with the PLA as well as with other security agencies of the Chinese

government. It has been the beneficiary of extensive government subsidies, contracts, protection, and, some say, governmentsponsored hacking of foreign technology companies and of the U.S. government.

The U.S. government has charged Huawei with illegally selling U.S. components to Iran, and the FBI has been tracking Huawei executives for the purpose of making an arrest. It was fortuitous that Meng happened to be in Canada when she was, but the FBI move was not made in a sudden fit of anger. The warrant for arrest had been out for some time.

Did a group of national security hawks deliberately try to sabotage the trade talks? The Chinese probably wouldn’t mind if this view were widely believed, but it seems unlikely. For starters, the true hawks are the adminis-

tration’s trade negotiators led by U.S. Trade Representative Robert Lighthizer and Peter Navarro, an assistant to the president.

They certainly didn’t want to sabotage themselves. Moreover, since the timing of the arrest was fortuitous, it was not something that could have been purposely arranged to sabotage the trade talks.

If it’s true that Trump and Lighthizer did not know of the arrest in advance, it would raise the issue of why no one told them.

There are two possible explanations. One is that the FBI was focused on its case and simply didn’t think of the arrest in the context of the trade talks. However, National Security Adviser John Bolton was informed but did not pass the information on to the president. Informing the national security adviser would be a natural thing to do in this

situation.

Why didn’t Bolton inform the president? One possible answer is that he saw it was a case of the FBI simply doing its job and thus there was no reason to interrupt the president, who was in the midst of discussions with Xi. Another is that Bolton is a national security hawk who might prefer a breakdown in trade talks that might relieve pressure within the U.S. government to take more vigorous defense measures against China. Or maybe it was a combination of the two.

What about the notion that the president ordered the arrest precisely in order to wring more trade concessions from Xi? This is unlikely. First, the timing was unpredictable, and the president could not have known in advance that an arrest was even possible.

Second, intertwining the arrest with the trade talks would be

c 2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

more likely to undermine the talks than lead to greater concessions.

Of course, the president subsequently has thrown doubt into the equation by stating that he would intervene to halt proceedings against Meng if he got a really big trade deal from Xi. But the fact is that the president does not have the authority to intervene in the legal proceedings against Meng. So his statement seems to be something he thought of subsequent to, rather than before, the arrest.

A key part of the equation is Lighthizer’s strong insistence that the talks and the arrest are two different and unrelated activities.

He knows the Chinese would probably like the public to perceive that there is some kind of relationship because that would weaken his negotiating hand. So he is emphasizing that the talks and the arrest are not entangled.

Since Lighthizer would be the big loser in the case of any entanglement, it is easy to believe he was not part of any nefarious scheme.

The degree to which the Chinese government and the Trump administration allow Meng’s arrest to become part of the trade negotiations remains to be seen. I just hope that the Trump administration keeps them separate.

Too many times in the past, the U.S. government has needlessly sacrificed crucial trade priorities to the goals or concerns of national security agencies. It would be a shame for that to happen again.

Prestowitz is founder and president of the Economic Strategy Institute in Washington, D.C.

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Wednesday 02 January 2019

In association with

a g @ bu s ines s dayo nl ine. co m

Nigeria’s agric output drags in 2018 as flood, insecurity stalls growth Stories by Josephine Okojie

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igeria’s agricultural output for 2018 declined, aided by the spate of insurgency in the war-torn NorthEastern states, farmers-herders crisis in the middle belt and floods that destroyed farmlands across the country.

Data from the National Bureau of Statistics (NBS) GDP report shows that growth in the sector has been on the decline since first quarter 2017, with marginal recorded growth only in the fourth quarter of the same year.

The GDP report shows that growth in the sector contracted from 3.06 percent in q3 2017 to 1.91 percent in q3 2018 year on year. The development is a major setback to government’s efforts in boosting food production in the country.

“The North-Central region has become a den of herdsmen and kidnappers,” said Dele Ogunlade, chief executive officer, Crest Agro Products.

“If the issue of herdsmen is not addressed then we should be ready for a food crisis because a lot of farmers are not farming large areas like before due to the high rate of insecurity in the region,” Ogunlade

said.

The continuous onslaught by herdsmen has led to the destruction of agro raw materials and drop in output of major crops such as cassava, grains, oranges, mangoes and other commodities that serves as food and inputs for manufacturers in the food and beverage industry.

In 2016, 55 hectares of cassava farmland belonging to Oamsal Nigeria Limited were destroyed by herdsmen.

The firm lost N23 million, yet no arrests were made and no compensation was given to it up till today. “ We re c e i v e d n o f o r m o f compensation and up till now we are unable to plant cassava. Farmers are still sceptical to farm because their farms can be destroyed overnight by herdsmen and there is no form of compensation either through insurance or the government,” Oluwafemi Salami, chief executive

officer, Oamsal Nigeria Limited, told BusinessDay. Similarly, the flood incident that submerged farmlands across the country also impacted on agricultural output for the year.

This affected the country’s rice production and this led to a shortfall of the crop.

According to experts when severe floods occur, farmers incur huge losses, as their crops get submerged

beyond a level they could thrive.

Furthermore, fungal diseases usually become more rampant when extensive flooding overtakes farms, making diseases and pests infestation rampant.

“During flood there’s a lot of fungi development, which leads to a lot of fungal diseases in crop production,” said AfricanFarmer Mogaji, chief executive officer, X-ray Farms Limited.

In the four subsectors that makes up agricultural sector, growth in crop production contracted from 3.16 percent in q3 2017 to 1.87 percent in q3 2018. Also, growth in the forestry subsector contracted from 3.9 percent in q3 2017 to 3.6 in q3 2018.

The solutions proffered by experts to address the issue of flood include the need to construct more and better drainage systems across the country, and more dams to be developed to take up water from presently overworked reservoirs.

The experts further pointed out the need for farmers to adopt humidity resistant seeds and effective fungal chemicals, which they described as important in managing crop loss.

“We need to engage more seeds that are resistant to high humidity,” Mogaji said.

Jumia Foods’ order volumes rise 120% on more offerings, payment options

Why Nigerian farmers are unable to easily access fertilisers timely

…launches late night delivery service

espite the Niger ianMorocco fertiliser deal that has helped in increasing the country’s local blending capacity and reduce the prices of fertilisers, farmers are still unable to easily access the soil fertility booster as at when needed.

Farmers across the country have continued to complain about the late arrival of fertilisers after farming processes have begun.

As a result, lots of farmers are forced to either grow their crops without the application of sufficient fertilisers or wait for the next planting season as farming is seasonal.

Experts in the fertiliser industry have attributed this to the poor network of fertiliser distribution and the huge infrastructural gaps in the country.

According to them, fertilisers are available in most blending plants, but the poor road network across the country and the bulkiness of the product has made it difficult to distribute to farmers timely.

They noted that the issue is even more serious in some states compare to others and that the challenge has made agro dealers spend more on transportation of fertilisers to farmers.

“There are lots of fertilisers in the country but the distribution network is a big problem to farmers

J

umia Foods, a market place for restaurant has recorded 120 percent increase in its volume of orders made on the platform in 2018 owing to the provision of more food offerings and payment options.

Jumia has also launched a latenight delivery service to enable customers to order food up until midnight.

“We have been around for six years and 2018 is our best year. The late night delivery combined with initiatives like greater customer accessibility, more payment options, more locations, lunchtime deals, seasonal deals and new related

Jumia Party led to over 120 percent increase in the volume of orders,” Guy Futi, managing director, Jumia Foods said during a press briefing in Lagos recently.

“We are getting many assortments as possible by bringing KFC, Krispy Kreme amongst others on board. Our focus is to expand the food offerings and we have seen lots of sale on the Jumia party where clients can order the kind of drinks they want from alcoholic to non-alcoholic drinks to their homes.

“Our delivery has been very efficient through our push to integrate the riders into the Jumia

L-R: Guy Futi, managing director, Jumia Food; Chioma Odimegwu, head of marketing and vendor success, Jumia Food and Jumia Party Nigeria; Omolara Adagunodo, managing director, Jumia Travel and Olukayode Kolawole, headpublic relations, Jumia Nigeria during a press briefing recently in Lagos.

family. We have worked with our third party vendors to provide our drivers with bikes and incentives to improve on delivery time,” Futi said.

Speaking on how the organisation ensures that quality foods are being supplied in its market place by restaurant’s on board, he stated that Jumia conducts a routine checks on vendors and restaurants as well as a monthly customer satisfaction survey.

Chioma Odimegwu, head of marketing, Jumia Foods said “we are trying to be the convenient option for people in places that is not convenient to easily get food to eat.

We are soliciting for restaurants that runs for 24 hours to ensure people get the options they want.”

On what to expect in 2019, Odimegwu said that operational efficiency will be an integral part of the company’s focus in 2019.

“In 2019, we are looking forward to welcoming a new and exciting restaurant/vendor on board within the month. We will also be engaging new partnerships across other industries to provide added value to customers, on-boarding more restaurants with longer and later open hours, more focus on corporate catering offerings, encouraging closer relationships with our customers and restaurant vendors.”

D

and the fertilisers companies,” said Muhamed Hettiti, managing director, OCP Africa Fertilisers Nigeria Limited in a chat with the Food and Agricultural Writers (FAWON) members in Lagos recently.

“We have a challenge between the ports and the blending units but we still have a bigger challenge after the blending units. Farming is timely and if farmers do not get fertilisers at the right time, it will affect their output,” Hettiti said.

To provide a solution to the challenge, he said that OCP has established a one stop shop to be sure that farmers get fertilisers easily.

One of the greatest problems confronting rural farmers and communities in Nigeria is the absence of critical infrastructure such as ‘motorable’ roads.

Nigeria continues to suffer low levels of agricultural productivity due to infrastructural deficit across the country. Due to the deplorable state of roads, agro dealers find it difficult to transit fertilisers to the farms for farmers.

“It is difficult to get fertilisers despite we produce more now. The dealers keep promising to supply early but most times they do not.

The fertilisers comes most time when we are a month or two into the season,” Ademola Olagoke, a vegetable farmer in Ogun state said.

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Poor allocation, system failure stalls agric research potentials Josephine Okojie

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gricultural r e s e a r c h institutes operating in the countr y have failed to provide technologies that will improve farmers output as low yield per hectare of most food and cash crop still persists, Businessday investigations have shown.

Analysts attribute the inability of agric research institutes to reach its potentials to poor funding, system failure, corruption and total neglect of the institutions by the government.

According to them, there is need for the government to address this issue if it wants agriculture to play a leading role in the diversification process.

“The research institutions are underfunded and they lack basic facilities. Equipment for research are obsolete or not in existence in many of these institutes,” said Micheal Oluwole Ajala, professor of Seed Technology, Federal University of Agriculture Abeokuta (FUNAAB).

“Corruption is also a big problem. Most of the money allocated to these institutions in the budget doesn’t get to the institutions. One third of the total allocations finally get to

these institutions. The money gets into private hands instead of the research institutions,” Ajala said.

Data obtained from the budgetary allocation to the agricultural ministry shows that the research institutions get an average of N19.6 billion yearly in the last three years.

This means that the country cumulatively spent N59 billion on research institutes in the last three years without

commensurate result.

In its bid to increase agricultural productivity, improve the lives of rural communities and make Nigeria sufficient in food, the federal government established various agric research institutes with a focus on food and cash crop, mandated to provide technologies that will increase farmers’ productivity and boost food production.

Yomi Ayeleso, Akure

T

he Okitipupa Oil Palm Company has bounced back to life and has commenced production after been in comatose for many years.

The new management committee of the Okitioupa oil palm Plc in Ondo state has said that the company had been restructured and repositioned for a better service delivery for its customers.

Addressing journalists in Akure ,the Ondo state capital , Wale Osomo , director and chairman of the management committee ,said about 12,474 hectares of the company has suffered due to bad management ,adding that the new board was undergoing what he described as corporate restructuring.

According to him,

adds.

The research institutes have blamed the inability of them to improve farmers output on failed government structures that does not allow effective and efficient translation of what the researchers are doing to the farmers.

According to Celestine Ikuenobe, director of research, Nigerian Institute of Oil Palm Research (NIFOR), “despite p o or funding, we still provide some technologies for farmers but the government structures has failed to translate the technologies to farmers.

Most of the seedlings used by farmers across the federation are imported from other countries and this has led to the importation and distribution of fake seeds in the country. Many research institutes are redundant and are not conducting any research.

“Because you don’t produce, people smuggle or import various types of vaccines into this country. We need more vaccines,” Audu Ogbe, Minister of Agriculture and Rural Development said to researchers when commissioning the Biosafety level three laboratory at the National Veterinary Research I n s t i t u t e ( N V R I ) , Vo m recently.

AFAN cautions FG against concession of silos, sale of BoA

Okitipupa oil palm bounces back, begins production technology would be deployed to further enhance the production level of the oil palm company.

Flanked by Taiwo Adewole, chief executive officer the company and Kayode Araloye ,a member of the management committee , Osomo noted that four areas were identified to help return the company to profitability.

He gave the areas as finance, operations, personnel and the shareholders.

“When we took over this company few months ago, we quickly noticed four areas that needed to be worked upon. We discovered that the company was lacking adequate funding, no internally generated revenue, Illegal harvesters, breakdown of the mills, and miss-management of fund.

You would not believe the company does not have a

But today, the dream has become dead, the vision blurred and the mission a mere statement of expression as majority of the institutes are mere shadow of themselves. “ We h av e a t o t a l o f 13,000,000 staff members and 90 percent of the yearly allocation goes into salaries and emoluments. Only 10 percent goes into research.

This is why the institutes have not been able to improve

farmers output,” said Baba Yusuf Abubakar, executive secretar y, Agricultural Research Council of Nigeria (ARCN).

Despite the country’s large size of agriculture in relation to other African nations, Nigeria lags behind its peers in the sector in terms of research funding.

For every $100 of agricultural output, Nigeria invests only $0.42 into agricultural research, as compared to $0.94 and $1.40 in Ghana and Uganda respectively, according to a 2015 report by ActionAid. “The agricultural research institutions in the country are not working. They have not improved farmers’ output in any way,” said Tunde Oyelola, c ha i r ma n , M A N E x p o r t Group.

Nigeria has the highest agricultural research system in Africa though, in terms of investments and number of researchers, with over 80 government and high education institutes and over 2,000 researchers engaged in research. However, official fraud limits funds from reaching their points of critical need.

“Government needs to fund them adequately because research is not cheap and to ensure that the funds get to the institutions,” Oyelola

SIKIRAT SHEHU, Ilorin

bank account for six years.

Those working there are not effective and do not have the focus of the company at heart.

“In the last 16 years no dividend was declared and we are concerned about it.

The survival of the company is paramount for us to make a viable company and compete favourably in the industry.

“What we are doing is corporate restructuring which is going to be continuous. Part of it was to get rid of ineffective and inefficient workers. Over 8.4 million bunches are lost annually. Our IGR has improved over these months and we are getting in touch with our shareholders,” he said.

He added that the company was poised to provide employment opportunities and be a catalyst for economic transformation in the area and the state at large.

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u n d e A ro s a n y i n , national technical adviser of the All Farmers Association (AFAN) has cautioned the Federal Government against plan to concession silos in the country and to sell the Bank of Agriculture (BoA).

Arosanyin, who stated this in an interview with journalists in Ilorin, noted that the expectation of farmers was that government would create more storage centres across the 774 local government councils across the country.

Speaking with BusinessDay correspondent, he said “we heard that the silos built by the previous administration were going into concession, sales and leasing by this government.”

“We have thought otherwise that this government will spur food production and then mop

the excess at the point of har vest at the minimum guarantee price to ensure that the farmers make profit and their investments in various farms.

“We expected government to even create additional storage centres in all the 774 local governments as being advocated by the last administration and even incorporate the cold system where even the Fulanis that have milk.

“This milk can be bought and stored there and then people and the dairy people and companies can come and buy directly from these silos”, he said.

Arosanyin, who is a former chairman of AFAN in Kogi said such plan amount to conflict of opinion within the robust policy of addressing hunger.

“We felt that government should have been able to reactivate these silos and use it judiciously to ensure that

farmers get more money and during the increase in price of grains and commodities, government can release from these strategic silos to cushion the effect and the burden of increase in food crisis for the average Nigeria to buy at affordable prices.

On the purported plan to sell Bank of Agriculture, the AFAN chief explained that the advocacy at the last National Council on Agriculture was that the bank should be recapitalised.

“It was advocated that Bank of Agriculture needs to be recapitalised; ditto the Bank of Industry because these two banks have critical roles to play if this country must move forward.

“The Bank of Agriculture is to interface in primary production to be able to give loans to rural farmers at a single digit interest rate. The bank presently is undercapitalized”, he said.

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CITYFile Police arraign man over N1m land fraud

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A man working on an Electricity pole at Moshood Abiola Way, Ebute Metta in Lagos. NAN

Environmentalist warns of epidemic in Lagos ... as Visionscape waste trucks disappear from roads JOSHUA BASSEY

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n Environmentalist, Glory Williams has warned of the possibility of an epidemic in various parts of Lagos State due to the indiscriminate dumping of waste on major streets and roads in the state.

Williams, who spoke on environmental conservation in Lagos, said the dumping of waste on major streets and roads especially in Okokomaiko area of the state was reaching an alarming rate and posed a threat to lives.

The warning comes as the BusinessDay that waste trucks owned by Visionscape, the municipal waste management company with which the state government signed a deal last year to cart away refuse from the metropolis, are no longer on the roads.

The company had come under severe criticisms by the public and particularly members of the Lagos State House of Assembly, who claimed the introduction of the company into the waste management system of the state by the executive, did not have their full endorsement. Following attacks on its personnel and equipment, Visionscape had threatened to withdraw its services from the state.

Against the increasing heaps of waste in some parts of the state, Williams said the government should urgently evolve measures to avert what she called looming danger.

Williams said that, “it seems to have become a tradition in many parts of the state for people to dispose of their domestic waste on the roads and the stench was making life unbearable for both passersby and nearby residents.

“The worst case scenario is the Alaba

Rago axis where cart pushers have turned the area into a huge dumpsite, within a neighbourhood of over 4,000 inhabitants.

“It is unfortunate that most of the perpetrators of this environmental nuisance are oblivious of their acts or inactions.

“We must not wait until we are consumed before we halt the ugly trend that is creeping into our living standards.

“It is time both the public and private social health workers go on to the field and educate the masses on the dangers of such actions,’’ Williams said.

She called on the local and state authorities to move to action and forestall what she referred to as a human-induced danger.

Checks showed that heaps of refuse have taken over Alaba Rago, a major link road to the Alaba International Market, making the road impassable for motorists.

Unidentified gunmen kill 4, injure 2 in Plateau

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nidentified gunmen have attacked and killed four persons in Nding community of Barkin Ladi local government area of Plateau State.

Spokesperson of the police in the state, Terna Tyopev, who confirmed the incident to journalists on Monday, said the incident occurred Sunday evening.

He said the villagers were attacked while returning to the village in a Peugeot 504 station wagon.

“At about 6: 15 pm, we received a distress call from one Samson Bitrus of

Gwom Nding village that at about 6 pm on Sunday, some unknown gunmen attacked a Peugeot 504 Station Wagon on the way to the village.

“On receipt of the information, Austin Agbonlahor, the Commissioner of Police in the state assembled a team that went to the scene of crime but discovered on arrival that the attackers had fled.

“The team found three persons motionless and they were immediately taken to the Barkin Ladi General Hospital where they were confirmed dead by the doctor

on duty.

“Of the three injured persons taken to the hospital, one later died while the remaining two are still receiving treatment,” he said The police spokesman said the command has commenced investigation on the matter and called on citizens with useful information that could lead to the arrest of the perpetrators to urgently avail it to the police.

He advised residents of the state to be law abiding as they go about their lawful businesses.

he police in Kano have arraigned a 36-year man, Tahir Ahmad, for allegedly defrauding a man of N1 million.

Ahmad, who resides at Darmanawa Quarters, Kano is facing a charge of forgery and cheating before a Senior Magistrates’ Court in the Kano metropolis.

The prosecutor, Yusuf Sale, told the court on Monday that one Salisu Garba of Ribado Road, Kano, reported the case at the Filin Hockey Police Station in Kano on December 15.

Sale said the accused sold a plot of land situated at No. 637, Naibawa Quarters, Kano to the complainant at the sum of N1 million.

“The accused collected the money and gave the complainant a fake document for the land,’’ he said.

According to the prosecutor, the offences contravened Sections 320 and 362 of the Penal Code.

The accused, however, pleaded not guilty to the charge. But Aminu Fagge, a senior magistrate, remanded the accused in prison and adjourned the case until January7, 2019 for mention. (NAN)

Ambode mourns Femi Pearse

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agos State governor Akinwunmi Ambode has expressed sadness over the demise of Ayodeji FemiPearse, founder of the popular Badagry resort, Whispering Palms.

Femi-Pearse, a former provost, Lagos University Teaching Hospital (LUTH), acting vice chancellor, University of Lagos (UNILAG) and prochancellor, Lagos State University (LASU) died last Friday at the age of 86.

Ambode, in a statement by his Chief Press Secretary, Habib Aruna described the death of the late professor of medicine as a great loss to the academic community as well as the hospitality industry.

“Professor Femi-Pearse was a man of many parts. From the academic world to the hospitality industry, he wrote his name in gold. His brilliance in the academia was well known as he contributed in no small way in enhancing research especially in the medical profession.

“His contributions in the hospitality industry cannot be underestimated.

Through the popular Whispering Palms resort he founded with his late wife, he attracted visitors and tourists to the ancient town of Badagry and the State. He also spearheaded some community projects which today have greatly enhanced the standard of living in the town,” he said.

The governor, while commiserating with the family of the late professor, urged them to uphold the ideals he stood for and preserve the legacies which would continue to serve as an inspiration for generations to come.

“His death is a sad loss especially coming a few months after the demise of his wife, Ibilola. Indeed, a good man and a great man has gone home, the State and nation has lost a rare gem. I want to urge the entire family to take solace in the fact that he lived a well fulfilled life and his sterling contributions would never be forgotten in a hurry.

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How CCNN, Unity Bank, Sterling Bank emerged best performing stocks in 2018

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C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

MANUFACTURING

Vitafoam hits 2yr high after N601.92m profit in 2018 OLUWASEGUN OLAKOYENIKAN

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itafoam N i g e ria Plc, manufacturers of foam and flexible/ rigid polyurethane products, rose to the highest in more than two years on Monday on the floor of the Nigerian Stock Exchange (NSE), as investors cheered the c o m p a n y ’s i m p r e s sive financial scorecard.

Vitafoam shares gained 10 percent to N4.40 per share to close for the year after the consumer goods fir m declared a profit of N601.93 million; this brings its return for the year to 33.33 percent.

The volume and value of Vitafoam shares traded rose significantly by 6,153 percent and 7,353 percent on Monday to 2.69 million units and N11.82 million

as against 42,974 units and N158, 625 recorded at the close of business on Friday respectively.

The recent surge in p r i c e p u t s Vi t a f o a m as the eleventh best performing stock for the year after Cement Company of Northern Nigeria, Unity Bank, Sterling Bank, Learn Africa NEM Ins u ra n c e, Sky e Ba n k , Caverton Offshore Su p p o r t G ro u p, C & I Leasing, Continental Re-Insurance and Fidson Healthcare.

In the last two (2) years, Vitafoam recorded unimpressive financial performance, posting a loss of N127.69 million in 2017 down from a loss after tax of N32.03 million in 2017.

BusinessDay analysis of the Vitafoam’s financial statements for the year ended September 30, 2018 reveals the comp a n y ’s r e c o r d e d a strong financial performance as revenue surged 10.38 percent

to N19.53 billion as against N17.69 billion recorded in the previous year.

Profit before tax ballooned by 4,278 percent to N793.85 million in 2018 from N18.13 million in the p r e v i o u s y e a r. T h i s

was largely driven by 56.85 percent inc re a s e i n t h e f i r m’s operating profit to N2.09 billion.

Vitafoam grew its profit for the year by 571 percent to N601.92 million from a loss after tax

of N127.69 million posted in 2017 despite paying N191.03 million as tax, this is about 32 percent increas e when com pared with N145.82 million paid in the previous year.

The grow th in the

c o m p a n y ’s p r o f i t s triggered its earnings per share to rise by 480 percent to 57 kobo in 2018 from a loss per share of 15 kobo in 2017, while net assets rose by 15.09 percent to N3.88 billion.

APPOINTMENTS

Edu Okeke replaces Ladipo as new Azura Power MD LOLADE AKINMURELE

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du Okeke will resume as managing director of Azura Power Ltd in the New Year as David Ladipo calls time on an eight year stay at the helm.

Ladipo, under whose watch the company developed, built and commissioned the 461 MegaWatts Azura-Edo IPP, Nigeria’s first privately-financed

independent power plant, had told investors in 2017 of a succession plan that will see him relieved by Okereke at the end of 2018, who at the time was deputy managing director.

“I have been tremendously proud of the performance exhibited by Edu and the rest of the management team this year. They’ve really outdone themselves,” Ladipo said in an email to BusinessDay. Okeke takes up

the mantle at a time when Nigeria turns to privately-financed independent power plants like the Azura IPP to help end decades of power shortages that have dogged businesses and households, as well as subdued economic growth in Africa’s most populous nation.

Okeke joined Azura in 2014 as its Chief Operating Officer before becoming Deputy Managing Director in 2016. Prior to

joining Azura, Okeke headed the sub-saharan Power generation sales division of General Electric, having joined the American Conglomerate in 2008 as West Africa Regional manager. He also had stints at Lafarge, Schlumbeger and Guinness.

He holds a BSc in Electronic Engineering from the University of Nigeria, Nsukka and an MBA from Imperial College, London.

In preparation for

Okeke’s promotion to MD, Azura broadened the composition of its senior management team by promoting Fela Somoye and Victor Agboh to senior manager status earlier in 2018.

The Azura-Edo IPP is a 461 MW gas-fired open-cycle power plant near Benin City, South of Nigeria, in Edo state. The facility comprises an open cycle gas turbine power station; a short transmission line connecting

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

the power plant to a local substation; an 800m spur line that connects to the country’s main gas pipeline network ; and a gas pressure reduction and metering station.

The construction of the facility was completed in a record 8 months ahead of schedule and became fully operational on 1 May 2018.

During peak dispatch hours, the plant produces up to 10% of all the power on the Nigerian Grid.

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COMPANIES & MARKETS MARKETS

How CCNN, Unity Bank, Sterling Bank emerged best performing stocks in 2018 OLUWASEGUN OLAKOYENIKAN

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he year 2018 turned soar for equity investors as the market r e c o r d s i t s w o r s t p e rformance since 2009 when the valuation of l i s t e d s t o c k s d i p p e d by 3 3 . 7 8 p e rc e n t .

I n s p i t e o f t h e b e a ri s h n e s s t h a t t o o k ov e r the Niger ia’s stock market i n t h e ju st c o n cl u de d y e a r, q u o t e d s t o c k s like Cement Company of Nigeria (CCNN), U n i t y B a n k a n d S t e rl i n g B a n k w e re a b l e t o show their tolerance by withstanding the downturn that caused t h e ma rke t t o s h r i n k by 1 7 . 8 1 p e rc e n t .

CCNN emerged the best performing stock for the year even as its s h a r e s s h e d 2 . 7 6 p e rcent to close at N19.40 p e r s h a re, re t u r n g re w by 110 percent after the l a s t t ra d i n g s e s s i o n o f t h e y e a r.

The company had in an emailed statement made available to BusinessDay Monday disclosed that the Securities and Exchange Commission (SEC), t h e Ni g e r i a n S t o c k E xc ha n g e ( N S E ) , a Fe d e ra l Hi g h C o u r t s i t t i n g i n Lagos, and the share-

h o l d e r s h av e g i v e n a p proval to a planned merger between it and B UA C e m e n t .

The merger raises the total installed capacity of the merged entity to two million metric tonnes per ann u m, a c c o rd i n g t o t h e statement. The develo p m e nt a l s o b r i ng s t h e t o t a l c a p a c i t y o f B UA’s cement operations to eight million tonnes per annum, followi n g t h e g ro u p’s re c e n t c o m p l e t i o n o f i t s t h re e million M TP O bu II Cem e n t P l a n t i n O k p e l l a, E d o St a t e, i t s a i d .

Unity Bank Plc t ra i l e d w i t h 8 4 . 9 1 p e rcent return for the year to close at N1.07 per s ha re d e s p i t e t h e c o m p a n y ’s u n i m p r e s s i v e financial performance i n 2 0 1 7 w h i c h s aw t h e bank recording negative capital.

The stock recently recorded 6-day streak of gains to hit over 5-month high after holding its 12th Annual General Meeting (AGM) on December 17, 2018 and over inc rea si ng h o p e s o n p o ssible capital injection aimed at stabilising, a top executive of the bank who asked not to be named as he was not au t h o r i s e d t o s p e a k o n

L-R: Clement Osuji, chairman, CIBN Rivers State Branch; Uche Olowu, president/chairman of council, CIBN and Eze Noble Worlumanekwe, OhaOmasi De 2nd, the paramount ruler of Rumuomasi, Oropotoma, Kingdom during the 2018 CIBN Rivers Stater Annual Bankers Dinners and Awards Night held at The Arrium Event Centre, Port Harcourt, River State recently.

the matter told Busin e s s D ay .

T h e b a n k ’s g r o s s income for the first nine months in 2018 fell by 59.82 percent to N26.13 billion as against N65.03 billion recorded in the same period in 2017.

Net interest income dropped sharply by 7 4 . 2 3 p e rc e n t t o N 9 . 9 3 billion from N38.52 posted in 2017, largely driven 67.52 percent shortfalls in interest

and similar income to N20.51 billion.

Although the bank showed prudency by effectively reducing i t s o p e ra t i n g e x p e n s e s to N15.41 billion in th e nine - month p e r io d ended September 30, 2018 as against N18.62 expended in the same period in 2017, but its profits were greatly washed off as profit before tax fell from N2.72 billion in the first nine months of

2017 down to N643.78 million in the review p e r i o d , w h i l e p o s t- t a x profit shed a whopping su m o f N 1 . 8 6 b i l l i o n to N585.84 million.

Sterling Bank Plc was the third-best performing stock at the NSE in 2018, the stock appreciated by 7 1 . 3 0 p e rc e n t t o c l o s e a t N 1 . 8 5 p e r s h a re o n Mo n d ay .

Shares of Sterling Bank began to rally f e w d ay s a f t e r t h e t i e r-

two lender notified its s h a re h o l d e r s o n p l a n s to issue up N35 billion in Series 6 and Series 7 commercial paper under its N100 billion c o m m e rc i a l p a p e r p rogramme that was established in 2016. “ Th e p ro ce e d s o f th e CPs are intended to boost the working capital financing needs of the Bank,” the financial institution said in a no tice filed at NSE.

proposed merger with Access bank. Subsequently, Unity Bank and Linkage Assurance gained 9.18 percent and 9.09 percent respectively to close at N1.07 and 72k per share respectively.

On the contrary, Stanbic Ibtc holdings lost the most in the day’s trading after depreciating 9.95 percent to close at N47.95 per share, while Forte Oil lost 9.89 percent to close at N28.70 per share.

Neimeth international pharmaceuticals joined the lag-

gards dropping 9.30 percent to close at 78k per share, while Equity Assurance and Aiico insurance each lost 9.09 percent and 8.70 percent to close at 20k and 0.63k per share.

Across sectors, the performance was bullish as all five sectors closed in the green. Oil and Gas (3.73%) and Consumer Goods (1.42%) gained the most for the day although with YtD losses of 8.61 percent and 23.28 percent respectively.

MARKETS

Positive close to 2018 fails to mask year-long rout SEGUN ADAMS

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rading activities on the floor of the Nigerian Stock Exchange (NSE) closed for the year on Monday, 31 December on positive note as the All Share Index rose by 1.27 percent to close at 31,430.50 points, moderating the YtD loss to 18 percent.

Investors have lost a whopping N1.9 trillion in 2018 as market capitalisation shed 13.88 percent to close at N11.72 trillion compared to N13.61 tril-

lion at the beginning of the year, following political uncertainties and hawkish rates in the United States which trimmed gains enjoyed in the 2017 market rally.

At the close of trading for the year, Industrial sector had lost the most, spiralling 37.34 percent YtD while Consumer goods (23.28), Banking sector (16.09%) followed with Insurance (9.25%) and Oil and Gas (8.61%) performed relatively better.

‘There is no certain

forecast for next year until the elections are concluded as political uncertainties bother investors. There is presently a risk off sentiment towards the local bourse’’ Samuel Sunday, a Lagos based analyst at United Capital explained, adding that : ‘’Market should start rallying late Q1 2018 and it should close relatively up for the rest of the year as US plans to be dovish with fed rates come 2019.’’

Union diagnostic and clinical services,

Diamond bank and Nem insurance were the hottest stocks for the day.

Vitafoam Nig Plc. led the advancers after gaining 10 percent on its share price to close at N4.40 per share.

The rally followed its declaration of N601.9 million profits after tax which was its best performance in two years.

Champion Brewries gained 9.94 percent to close at N1.99 while Diamond Bank gained 9.55 percent to sustain the price rally resulting from news of its

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TRAVEL

How the indefinite shut down of US embassy affects you IFEOMA OKEKE

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housands of Nigerians from students to business people who need to travel to the United States anytime from now are stranded after the United States embassy in Abuja and its consulate in Lagos have been shut down with no specific timeline for re-opening.

The US embassy in Nigeria said in a Facebook post that the development was caused by the government shutdown in the US. The statement read, “Due to the current US government shutdown, the American centres located in the embassy, Abuja

and Consulate-General, Lagos are unfortunately closed.

They will re-open once the US government shutdown is resolved. Sorry for any inconvenience to our valued patrons.”

Thousands of Nigerians are currently on the queue for visa appointments to get the United States visa for study, business, tourism, health and other purposes. However these engagements may be put on hold pending when the United States embassy reopens.

Students who had come back to Nigeria to renew their visas are currently stranded over inability to get visa appointment dates.

“I have fulfilled almost everything needed to process my ad-

mission into the Massachusetts Institute of Technology in Boston except my visa. I had been scheduled to attend a visa interview early next month. However, with this recent development, I do not know what to do, especially as school resumes soon” Chike, a graduate of University of Ibadan told BusinessDay. A travel expert who craved anonymity told BusinessDay that this is not good for the economy and business because a lot of businesses will be put on hold as a result of this development.

The travel expert further wondered how those with serious health challenges who had referred to hospitals abroad will cope with the situation.

L-R: Mark Okoye, Future Awards Africa Young Person Of The Year 2016; Biodun Shobanjo, chairman Troyka Holdings; Samson Itodo, winner Of The Future Awards Africa For The Young Person Of The Year; Adebola Williams, co-founder, The Future Awards Africa, and Ngozi Nkwoji, Portfolio Manager, Non-Alcoholic brands, Nigerian Breweries Plc., presenting the Young Person Of The Year award at The Future Awards Africa 2018.

BANKING

Moody says Nigeria risks weak investor confidence over political uncertainty …sees improved foreign-currency liquidity and rising loan quality OLUWASEGUN OLAKOYENIKAN

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o o dy’s investors service, a leading credit rating and research agency, said Nigeria could risk weak investor and consumer confidence over political uncertainty and social unrest.

The global rating agency, in its 2019 outlook on Africa - banks and sovereigns, identified Nigeria alongside South Africa and Tanzania as one of the African countries bedevilled with such “an ever-present” challenge.

As a result, Moody’s said Nigeria’s growth will be more subdued at 2.3 percent as “more stable oil prices will

drive economic acceleration” in the country.

Nigeria goes to the polls next February to decide its President among ruling President Muhammadu Buhari, former Vice President, Atiku Abubakar, the presidential flag bearer of the opposition party and 57 other aspirants.

The country is also expected to conduct elections for governors as well as state and federal lawmakers.

Growth in Africa’s largest economy stood at 1.81 percent year-on-year in the third quarter of 2018, according to data by the National Bureau of Statistics (NBS) and has been projected to hit 1.9 percent in 2018 and 2.3 percent in 2019 by the International

Best performing listed companies and the worst performers

Source: Meristem

Monetary Fund (IMF).

In spite of these, the rating agency sees banks showing strong financial resilience in 2019 but warned that tightening global financial conditions are a key downside risk.

It said although its outlook for African banks is stable, risks are tilted to the downside even though external shocks such as falling commodity prices, drought, or an escalation of global trade wars, could hurt African corporates and their ability to repay debt.

According to Moody’s outlook, rising US interest rates leading to capital outflows across emerging markets, in conjunction with rising government debt and currency depreciation, could significantly harm banks’ loan quality and access to foreign currency.

Higher oil prices and partial liberalisation of the foreignexchange market have eased pressures on “unhedged” borrowers and normalized foreign-currency liquidity, according to the credit agency “Capital buffers are strong for the bigger banks, but weaker for smaller banks,” Moody’s forecasted adding that it expects most rated banks to maintain stable profitability, build up their capital buffers and retain ample local currency funding in 2019.

“Asset risks will remain high, while we also expect some renewed tightening of foreign currency liquidity; banks are, however, in a better position to withstand pressures following efforts to reduce foreign-currency lending.”

L-R: Joshua Ajayi, editor-in-chief Brand Communicator; Yomi Badejo-Okusanya group chief executive officer, CMC Connect; Uche Ajene, managing consultant, Quadrant MSL, and Nike McMedal, wife to Chairman NIPR Lagos State Chapter, at the Lagos PR Industry Gala and Awards (LaPRIGA) in Lagos.

L-R: Ajuma Ademu, Modern Trade Manager, Indomie Relish; Ginny Tewatia, Brand Manager, Indomie Relish; Ado Adams, participant in the Indomie Relish game, and Mary Talabi, Indomie Relish Sales Team Manager, Abuja, during the official launch of Indomie Relish at the Jabi Lake Mall, Abuja.

L-R: Funbi Emiola, RnB/soul musician; Chinwe Greg-Egu, brand manager, International Brands, and Emmanuel Oriakhi, marketing director, NB Plc., at the Uncage Series in Lagos.

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In Association with

New Year begins with uncertainties in banking, financial sector Stories by Hope Moses-Ashike

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esterday, Tuesday marked the beginning of another year for the banks and other financial institutions with outlook and expectations tied to the Nigerian political environment.

The key event that will shape the Nigerian political environment this year is the general elections scheduled to commence in February.

“Should the political outlook go smoothly and the parties accept the electoral outcomes, there will be stability in the economy, we will witness the return of foreign portfolio investors and the capital market recovery”, said Johnson Chukwu, managing director/CEO, Cowry Asset Management limited.

Chukwu told BusinessDay by phone that market recovery could enhance further if there is a policy shift either from a new government or the existing one ruling again.

For the banking industry, Chukwu said if oil prices should drop further, the sector may see an uptick in the Non-Performing Loans (NPLs) of banks.

Brent Crude, the major benchmark price for oil pur-

chases worldwide, increased by more than 20 percent in the first half of 2018, before hitting a four-year high of $86.07 a barrel in early October. It traded at $53.23 per barrel as at Monday.

“We could see increases in default rates and the currency should be subjected to devaluation”, he said adding that if there is a policy shift, the sector becomes more robust.

Taiwo Oyedele, head of tax and regulatory services, PWC, said the banking sector faced many challenges in 2018 but managed to end the year without any major mishaps, thanks in part to some interventions by the CBN. The financial market

struggled with significant downward pressures due to the decline in economic confidence, mostly as a result of pre-election activities.

“The headwinds are likely to continue in the first quarter of 2019 with a turnaround expected for the rest of the year as the level of uncertainty reduces and economic policy directions become clearer”, Oyedele told BusinessDay. For the insurance sector, Chukwu said capitalisation would be the major focus, while the pension fund would continue to grow; largely tied to how the economy grows.

He said the microfinance bank sub-sector would continue to be under pressure

because of low customer confidence and increases in NPLs. The CBN had said it would in due course take action that would directly bring banking services to rural communities through licensing of a national Micro Finance Bank to be located in all local governments in Nigeria, through which credit can be channeled to the country’s rural communities. “We will continue to explore ways in partnering with the fiscal authorities, on how we can best provide farmers and SMES with the support they need to expand their operations”, Godwin Emefiele, governor of CBN said in November at the bankers dinner.

Sterling Bank to extend credit facilities to winners of empowerment scheme

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terling Bank Plc has assured its customers who participated and emerged winners in the first edition of its youth empowerment scheme.

This is coming as the bank has unveiled the champions of the recently concluded iCreate Skills Festival and about ten of them would be representing Nigeria in Russia in 2019.

The winners are Otareh Alvin who won in the cooking category, Nejo Tolulope (graphics), Silas Adedoyin (web design), Patrick Obafemi (app development), Barnabas Kudi (robotics), Afolabi Caleb Kayode (art), Malissa Onojo (tailoring), Yusuf Abdullahi (barbing), Kingsley Ihejirika (hair dressing), Faiza Usman Adamu (make up), Joshua Olalekan (carpentry), Oladoja Peter (tilling), Kumshuan Talgang (plumbing) and Prince Isitua (bricklaying).

The bank had partnered with iCreate Skill Fest 2018 to host the premier youth empowerment festival in Abuja with the aim of transforming skill acquisition across the continent.

Speaking at a press conference in Lagos, Suleiman Abubakar, Chief Executive Officer of Sterling Bank, said following the huge success of the premier edition the bank

has decided to sponsor the second edition, adding that they will also extend credit facilities to the winners of the first edition and that such loans will be fast track within two weeks.

He said, “Bright Jaja, the CEO and founder of iCreate Skills Festival gives him hope for the future of this country,” adding that, “there is an on-going conversation about which generation of Nigerians will salvage this country.

I have started to worry if my generation will be able to do it, which is debatable, it may or may not. But it is clear to me that your generation will do it.

“I have no doubt in my mind and I only need to meet one young man (Bright) and the belief he has in the future of the country and the energy he brought to it as well as the sacrifices he has made. I have watched the project over the last couple of months and I have started to see some of the winners come out and every single one of you have convinced me completely that generation that will salvage Nigeria is here,” Abubakar said.

The CEO who also commended the winners, remarked that, “I don’t think we prepared you for this and I don’t think we gave you a ladder to climb up.”

Saturday of the month.

He said only amateur members who registered when the portal is opened are eligible to play and it is based on handicaps, which is the rating level of the players.

He said handicap starts from one to 28 for men and there are two categories. Category one is from handicap one to 13 while category two is from handicap 14 to 28.

Each category produces two winners, that is, a winner and a runner-up, making a total of four winners every month and each of them are presented with mugs.

M. Walsh emerged the overall net winner of the October mug competition with 81- (12)=69 and was awarded a mug and also be entitled to park his car in a special slot in the car park of the park for this month.

In the division one, Walsh won with 81- (12)= 69, followed by C.E.O. Ekeocha with 79 - (08)=71 as first runnerup, while in the division two, Macaulay Magnus came first with 91- (21)= 70 and. K. Aderibigbe was first runner-up with 88- (15)=73. The other winners were only awarded with mugs respectively.

Heritage Bank growing business base with Ikoyi Club 38

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s part of efforts to grow its business base, Heritage Bank Plc, has partnered with Ikoyi Club 38 to host the monthly mugs competition of the golf section.

Speaking at the event, Ifie Sekibo managing director/ CEO of Heritage Bank, said the bank partnered the club because, “we need to pitch our tent where it matters, need to be visible and to put our footprint in the sands of time.”

Sekibo, who was represented by the Regional Head, Lagos Island 2 of Heritage

Bank, Abiodun Agbaje, remarked that while the lender could not do everything at the same time, it was specifically looking at some events that are educative and have high calibre of people to deal with, adding that as a bank, they need to grow their business base with the kind of people that are at the event, who are high-calibre business people.

He said the event was one where a lot of business people gathered together in one place at the same time, stressing that Heritage Bank’s purpose is to create, preserve and transfer wealth

across generations.

Also speaking, Joe Oduah, Chief Executive Officer of Resource Churchill, one of the players who contested in the competition, described the mug competition as a monthly tournament played by members only, adding that the winners are usually presented with a gift, which is a mug.

He said it is a medal play, which meant that the player with the lowest net emerged the overall winner, which entitled him to a mug and a special parking slot in the car park of the club.

Oduah, who also doubles as CEO of 3M, a safety equipment stockist and service centre and who has been playing in the tournament for about ten years and won on several occasions, said it is an interesting tournament that brings all the amateurs players together to compete against one another.

In his contribution, Fabian Kenni, manager of the Golf Section of the Ikoyi Club 38, said the monthly mug competition is a tradition in golf worldwide and is usually done every month, either on the first Saturday or the last

22

BUSINESS DAY

Shipping

C002D5556

Logistics

Wednesday 02 January 2019

Maritime e-Commerce

Dock labour: How NIMASA drives sustainable port operation Stories by Uzoamaka Anagor-Ewuzie

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efore the cargo handling aspect of port business was ceded to private terminal operators in 2006, port operations were constantly interrupted by industry unrest executed by the then members and leadership of the Maritime Workers Union of Nigeria (MWUN).

Most of the unrests that took place at that time were fuelled by bitterness as a result of general poor welfare package given to dockworkers including poor salary, poor retirement benefits as well as lack of guaranteed pension scheme.

For instance, in 2006, an average dockworker earned between N10, 000 to N20,000 per month, but today, research has shown that the payroll of Nigerian dockworkers has improved tremendously as many now earn between N100, 000 and N150, 000 per month.

Today, stoppage of ship operation has become a thing of the pass and dockworkers, who in the past rarely know their employers, now meet regularly with the leadership of the Seaport Terminal Operators Association of Nigeria (STOAN).

The above listed developments were made possible by the unrelenting efforts of the Nigerian Maritime Administration and Safety Agency (NIMASA) in partnership with terminal operators, maritime work-

ers union and stevedoring companies.

NIMASA is statutorily empowered under section 27(1) (b) of NIMASA Act 2007 to facilitate the NJIC meetings, circulate signed agreements and ensure strict compliance on implementation. While NJIC is the body responsible for negotiating and reviewing of minimum standards for dock labour.

It was constituted in 2008 following the need to establish minimum standards for the dockworkers after the ports were concessioned in 2006.

As the Federal Government agency and a regulator saddled with responsibility of overseeing the wellbeing of dockworkers for healthy port operations, NIMASA facilitated the establishment of the National Joint Industrial Council (NJIC) for dockworkers in Nigeria, as well as the recent signing of a Collective Bargaining Agreement (CBA), aimed at improving the welfare of dockworkers in line with international best practices.

The CBA provides for increase in wages, allowances, emoluments and benefits, including payment of redundancy and retirement benefits by terminal operators to aged dockworkers.

It also covers payment of specified allowances to deceased dockworker’s next of kin and pension contribution scheme for dockworkers among others.

BusinessDay understands that the beauty of this new agreement is

L-R: Bolaji Sunmola, president of the National Association of Stevedoring Companies; Gambo Ahmed, chairman, National Joint Industrial Council (NJIC) and executive director, Maritime Labour and Cabotage Services, NIMASA; Adewale Adeyanju, president general, Maritime Workers Union of Nigeria (MWUN), and Ibrahim Jibril, director, Maritime Labour Services Department of NIMASA, during the signing ceremony of the Collective Bargaining Agreement for dock labour by the NJIC in Lagos.

that dockworkers will now have retirement benefits.

They would be gainfully employed and their retirement benefits, pension and gratuity would be paid by terminal operators.

Speaking at the signing ceremony in Lagos recently, Gambo Ahmed, chairman of the NJIC, who doubles as the executive director, Maritime Labour and Cabotage Services of NIMASA, said that dockworkers are the integral part of the maritime business, hence the need to prioritise their welfare.

Ahmed, who represented the director general, Dakuku Peterside, urged operators to put the welfare of the dockworkers’ into proper perspective in order to continue having healthy maritime sector and ensure robust economy.

In her view, Vicky

Haastrup, chairman of the STOAN stated that without dockworkers, there will be no ports, because the workers play a major role in the development and growth of the economy of the ports.

“STOAN discovers that to have smooth operations in the port means to maintain good relationship with dockworkers that discharges the vessels – they are critical to our operations. It is important to us that they are well taken care of. We had the first requisition in 2008 and every two years, the stakeholders sit down to deliberate on how to improve the wellbeing of dockworkers,” she said.

According to her, the initiative has brought about understanding among stakeholders in the ports and also given room for peace and orderliness in the

maritime sector.

“We must all work together to ensure that the interest of dockworkers are protected. It is a thing of joy to see that our dockworkers are doing well and getting compensated. We commend their leaders for the relationship with terminal operators,” she said.

She however assured that terminal operators will ensure that dockworkers are well compensated for services rendered.

On his part, Adewale Adeyanju, president general of the MWUN, said that with the supervision of NIMASA through the NJIC initiative; the industry is witnessing a new dawn even as he pleaded with all parties to endeavour to fulfill their obligations as contained in the CBA agreement.

He also pledged that the

leaders of the Union will continue to ensure the sustenance of peace and harmony in the maritime sector in the interest of the sector and the Nigeria economy as a whole. The agreement, he said, means that the life of dockworkers in the nation’s seaport has come to stay.

“Twelve years after the port was concessioned to private operators, the seaport terminal operators have substantially increased the wages earned by dockworkers. We now enjoy better working conditions, compared to what obtained in the pre-concession era.

Adeyanju, who lauded terminal operators for increasing the wages of dockworkers in spite of the low volume of import in the country, listed issues of poor state of the port access road as one of the operational challenges facing business of terminal operators.

“The roads to the seaports have contributed to most of the problems that our members are facing today. Because of the bad roads, some of the vessels that are supposed to come to the port are sometimes diverted to neighbouring countries,” he decried.

Ibrahim Jibril, director, Maritime Labour Services of NIMASA, expressed that the agency believes that all parties will ensure full implementation of the agreement. This, he said, will help the Ease of Doing Business initiative of the Federal Government as well as improved turnaround time in port business.

NIWA installs N2.5bn cargo equipment in Baro River Port

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he National Inland Waterways Authority (NIWA) said that it has completed the installation of new cargo handling equipment in Baro river port, Niger State.

Baro River Port, which is the flagship port in the North, will be commissioned in no distant time by President Muhammadu Buhari.

The contract for the River port, which was awarded in 2011/12 at a cost of N2,563,499,248.00 by the

Federal Executive Council (FEC) to Messrs CGGC Global Projects Ltd, was completed but abandoned before the current management resuscitated it for use.

Adeleke Olorunnimbe Mamora, managing director of NIWA, said at the weekend, that the river port, which is ready for commissioning, would soon start operation.

Mamora, who expressed satisfaction with the work progress, received assurance from the contractor

that all the equipment will be ready in another one week or two. He commended the contractors for a job well done and the community for being a good host, even as he encouraged them to ensure the safety and security of the River Port.

“The equipment at the Port is first class and will bring glory not only to the community and the state but the entire nation.

Recall that Mamora directed the authority’s engineers to rehabilitate the

access road to Baro Port in order to enable the contractors move their equipment to site and that has been achieved.

Meanwhile, Mamora while delivering a speech at the NIWA 2018 end of year party, which took place at the NIWA headquarters promised to improve staff Welfare. He said that the NIWA amendment Act is still with the National Assembly and all efforts are being made to ensure the successful passage of the

Amendment Act. The highlights of the event was the award of the best Area office which went to the Lagos Area office and best staff of the year 2018 that was given to Jethro John Jalgi, also from Lagos Area Office.

Also, three senior retired managers and one deputy were all honoured by the management and staff of the Authority. They include Festus Ojimba, former general manager Engineering Department; Elias Amago, general manager (Project

Management and Special Duties); Bawa Zakari, former general manager, Audit and White, who until his retirement was deputy general manager (Marine).

In his response, on behalf of the retired general managers, Ojimba thanked the organisers for considering them worthy of being honoured while Jethro John Jalgi expressed gratitude to the management and staff of NIWA for recommending him as the best staff of the year 2018.

Wednesday 02 January 2019

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BUSINESS DAY

23

Tax Issues

VAT revenues still largest source of consumption tax revenues in OECD ‌as tax mix shifts further IHEANYI NWACHUKWU

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alue Added Tax (VAT) revenues are stabilising at a high level in Organisation for Economic Co-operation and Development (OECD) countries.

Standard VAT rates in the OECD reached a record level of 19.2 percent on average in 2015 and have remained stable since.

Ten OECD countries now have a standard VAT rate above 22percent, against only four in 2008.

Most OECD countries have implemented or announced measures to for the effective collection of the VAT on the ever-rising volume of online sales to private consumers by offshore vendors, in line with the international VAT/ Goods and Services Tax (GST) guidelines and the BEPS Action 1 Report.

Tax revenues in advanced economies have continued to increase, with taxes on companies and personal consumption representing an increasing share of total tax revenues, according to new OECD research.

The 2018 edition of the OECD’s annual Revenue Statistics publication shows that the OECD average tax-to-GDP ratio rose slightly in 2017, to 34.2percent, compared to 34percent in 2016. The OECD average is now higher than at any previous point, including its earlier peaks of 33.8percent in 2000 and 33.6percent in 2007.

An increase in tax-to-GDP lev-

els was seen in 19 of the 34 OECD countries that provided preliminary data for 2017, while tax-toGDP levels fell in the remaining 15 countries.

Tax-to-GDP levels are now higher than their pre-crisis levels in 21 countries, and all but eight (Canada, Estonia, Hungary, Ireland, Lithuania, Norway, Slovenia and Sweden) have experienced an increase in their tax-to-GDP ratio since 2009.

Consumption Tax Trends 2018 highlights that value-added tax (VAT) revenues continue to be the largest source of consumption tax revenues in the OECD, and have now reached an all-time high of 6.8percent of GDP, representing

20.2percent of total tax revenue, on average in 2016.

After experiencing an upward trend since the economic crisis, standard VAT rates stabilised at 19.3percent on average in 2014 and have remained at this level since. Ten countries now have a standard VAT rate above 22percent, against only four in 2008.

Two countries (Greece and Luxembourg) increased their standard VAT rate between January 2015 and January 2018, while two countries (Iceland and Israel) reduced their standard VAT rate over this period.

With less scope to raise already relatively high standard VAT rates, countries are increasingly im-

plementing or considering base broadening measures to protect or increase VAT revenues. This includes increasing some reduced VAT rates, limiting or narrowing their scope and curbing VAT exemptions. A growing number of tax authorities have implemented or are considering implementation of measures to tackle the challenges of collecting VAT on the ever-rising volume of digital sales, including sales by offshore vendors, in line with new OECD standards.

Revenue statistics also contains a Special Feature that measures the convergence of tax levels and tax structures in OECD countries between 1995 and 2016. The Spe-

cial Feature highlights ongoing convergence across the OECD toward higher tax levels, with greater reliance on corporate income tax (CIT), VAT and social security contributions, and a slight downward shift in personal income taxes.

The latest data confirms this convergence, with CIT, as a share of total taxes, now reaching its highest levels since the global economic and financial crisis, increasing on average from 8.8percent in 2015 to 9.0% in 2016.

CIT revenues are still lower than their peak in 2007 (11.1percent of total revenues), but are now higher than at any point since 2009 (8.7percent). Between 2015 and 2016, personal income tax revenues decreased from 24.1percent to 23.8percent of total tax revenues.

The increase in the average share of CIT was driven by increases in revenues from CIT in 23 countries in 2016, while the fall in personal income tax was seen in 20 countries.

In 2017, the largest increases in the overall tax-to-GDP ratio relative to 2016 were seen in Israel (1.4 percentage points, due to tax reforms which increased revenues from taxes on income) and in the United States (1.3 percentage points; due to the one-off deemed repatriation tax on foreign earnings, which increased revenues from property taxes). Nineteen countries had increases but no other country had an increase of more than one percentage point.

Ease of Doing Business: Impact of multiplicity of tax audits (2) ADEDOLAPO ADEBAYO; senior tax adviser in KPMG Nigeria

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he department also handles tax audits and reviews, payments of tax refunds while also enforcing the national minimum wage, administering anti-money laundering registrations for Money Service Businesses and collection and publication of the trade-in-goods statistics.

The department is a one-stop shop for taxes in the UK and this has its huge advantages.

As a result, all forms of tax audits are carried out by the same office and this removes the unnecessary burden of having more than one authority audit the records of a business. In addition, the HMRC has a standard process

for providing tax refund to taxpayers who qualify for such.

The tax refund is verified by means of the audit conducted.

Therefore, there is no need for to conduct a separate audit to establish the accuracy of the tax refunds requested by the taxpayer.

For the Nigeria tax administration environment to be more favorable for both foreign and local investments, there needs to be a simplification of the tax system, better clarity about taxes that are payable and to whom it is due. Centralization of tax administration is also pivotal to achieving progress in the area of tax administration. Rather than have different agencies/ committees drill companies and businesses on their tax records and compliance, it is more effective for companies to answer

to one centralized authority.

For ease of administration, the central agency could have teams in different regions who are able to carry out tax audits on businesses in such regions.

The central agency should also ensure that the audit process and methodologies are consistently applied across the all the regions. There should be no need for more than one team to audit the records of a company for either a tax refund or a general audit to make it convenient for the taxpayer.

This simplifies the process of compliance while also providing assurance on the tax to be paid, when it is to be paid, whom it is to be paid to and whom to discuss tax planning positions with.

It should be recognized that, for adequate tax compliance to be achieved, both taxpayer and

tax authority have to comply with the provisions of the tax laws. There is no compliance when taxes are imposed arbitrarily, administered without following set rules or standards and people are subject to penal sanctions without due process. Absolute compliance would mean that the taxpayer, tax authority and their advisors would do the right thing at the right time. A tax system should be simple in order to aid compliance. Where the tax system is unnecessarily complex, it increases the cost of administration for government and cost of compliance for the taxpayers.

An increase in tax incentives will encourage voluntary compliance. Continuous improvement in logistics for better record keeping, and better conditions of service would

also alleviate the challenges faced by tax authorities. Furthermore, the general populace must be continuously educated on tax compliance and tax laws must be regularly reviewed and modified for ease and minimal enforcement costs.

The issue of multiplicity of tax audits continues to be a challenge to Nigerian businesses and by extension, the Nigerian economy. Consequently, a quick resolution is required to ensure that this head of the hydra is cut off. It is in the interest of not just the businesses, but also that of Government and the Nigerian economy, that businesses are able to operate more efficiently and contribute their value to the economy without the additional burden of multiplicity of tax audits.

24

BUSINESS DAY

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Wednesday 02 January 2019

In association with E-mail: insurancetoday@businessdayonline.com

Wapic Insurance boosts travel protection for international travellers

L-R: Humphrey Ozegbe, head, Human Resources; Tony Saiki, head, Oil and Gas; Daniel Braei, Ag managing director/CEO; Joyce Ojemudia, general manager, marketing; and Moses Omoregbe, company secretary, all of Linkage Assurance Plc at the Company’s 2018 End of the Year Dinner and Awards Ceremony held in Lagos

Allianz international ratings reaffirm capacity for specialty insurance Stories by Modestus Anaesoronye

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lobal insurance giant, Allianz, have reaffirmed capacity to bear special risks across continents following the release of their 2018 international ratings. Best in class insurer financial strength ratings - AA (‘Very Strong’) from Standard & Poor’s, A+ (‘Superior’) from A.M. Best - reassure clients of financial security “Currently we provide engineering insurance for clients all over the world, supporting them not only with flexible policy coverage, but also with the backing of our AA S&P and A+ A.M.Best credit ratings – ensuring confidence for the long term”, explains Chris van Gend, global head of Engineering at Allianz.

He adds: “Our risk consulting, claims and underwriting teams are among the most technically accomplished of any major insurer and can lead the largest engineering risks and construction projects across the globe, giving us a reputation earned through years of practical experience.

Allianz’ Global Corporate and Specialty (AGCS) boasts a network of offices in more than 70 countries plus network partners in other locations that enables them service clients in more than 210 countries

and territories worldwide. An experienced team of around 4,700 expert staff, from risk consultants to claims specialists make this possible As a leading global insurance program provider, Allianz manages 2500+ lead programs with approximately 19,000 local policies attached.

The Allianz Group -headquartered in Munich, Germany - is one of the world’s leading insurers and asset managers with more than 88 million retail and corporate customers. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from Property, Life and Health

insurance to Assistance services to Credit insurance and Global business insurance. The Allianz Group manages over 650 billion euros on behalf of its insurance customers and an additional 1.4 trillion euros of third-party assets.

Allianz holds the leading position for insurers in the Dow Jones Sustainability Index and in 2017, over 140,000 employees in more than 70 countries achieved total revenue of 126 billion euros and an operating profit of 11 billion euros for the Allianz Group.

In July 2018, Nigerian insurer, Ensure Insurance, was acquired by the Allianz Group and rebranded to Allianz Nigeria in December 2018.

payment of medicals bills or accident sustained while travelling or even cost of repatriation in a worst case scenario.

“As we launch the Travel Insurance product, Wapic plans to invest in sensitizing our customers and prospects about the benefits of buying travel insurance through our various digital channels. The idea is to increase product awareness and patronage and also to elicit interest and ongoing debate in the public domain on the relevance and importance of Travel Insurance for the protection of life and personal property,” she said.

She said the firm will ensure the engagement with the product is hassle-free, adding that sales of the product will be done directly to consumers through the firm’s digital platform and other touch points, as well as through partnership with leading digital channels, travel agencies, airlines, and other agencies within the travel value chain.

Bode Ojeniyi, executive director of the firm said the goal of the company is to lead and transform customers experience, adding that the firm will leverage technology and other superior technical competencies to develop products to enhance its value proposition.

“Wapic has an uncompromising commitment to our customers’ peace of mind. This is evidence in our commitment to continually improve the value we bring yo life ur customers through offering inventive, customizable products that make travel safe and protect travel investments,” he said.

He maintained that as at today, the travel insurance product which features holistic coverage for travelers to help protect themselves, their belongings and travel investments, is available for purchase via www.wapic.com.

Bankole Bernard, National President, National Association of Nigeria Travel Agencies, said the association will continue to partner Wapic and ensure customers get the best from the product.

He noted that the association has over the years, built a robust relationship with the underwriting firm.

2015

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nderwriting firm,Wapic Insurance Plc has unveiled an innovative travel insurance product specifically designed to cover individuals against unforeseen incidents during international travels.

Adeyinka Adekoya, chief executive officer of firm said the product was unveiled after an extensive period of detailed review of consumer- detriment issues in travel insurance, stressing that the product was released to ensure better consumer protection during travel.

She posited that the firm produced the product after thorough investigation and engagement with key stakeholders, adding that the company is proud that the product addresses the issue of accessibility and that the product is pocket friendly and pricing is based on duration of trip and destination, thereby according access to a varied range of consumers.

She noted that the company’s solid reputation for delivering topnotch insurance services, coupled with institutional knowledge, quality and customer services, makes the product an ideal travel insurance option of choice.

Adekoya noted that the product covers compensation for inflight loss of checked-in luggage; compensation for delay of flight; payment of medical assistance for illness or accident sustained while traveling; transport or repatriation for medical reasons for the insured and/or family members traveling with the insured; accidental death cover, transport or repatriation of mortal remains of insured and emergency return to home following the death of a close member.

“The ability to access pocket friendly and sound travel insurance is critical for travelers to fully enjoy their international trips with peace of mind. Before we decided to launch this product, we had observed over time very little or no awareness of travel insurance and its benefits and thus travelers would be at a disadvantage if they ever had an emergency during their trip. From simple issues such as inflight or checked-in baggage loss or more complex issues such

Wednesday 02 January 2019

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Pension Today

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BUSINESS DAY

25

In Association with

Contributors concerns and the answers

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wareness and continuous education on the benefit and workings of the country’s contributory Pension Scheme (CPS) would go a long way in sustaining the achievements of the scheme and building more confidence for higher penetration.

Therefore, providing explanations and answers to questions and concerns of contributors and the larger public is an issue that must be taken seriously by operators and stakeholders.

Here, this edition will look at some of the questions raised by contributors and members of the public and what operators’ responses are: How can I be sure that my contributions are safe?

All those managing or keeping custody of pension funds and assets will be licensed and continually regulated and supervised by the National Pension Commission.

What is the guarantee that the pension funds under the CPS will be well managed and not diverted for other purposes?

The functions of the Pension Fund Administrator (PFA) and custodian are clearly spelt out in the Pension Reform Act 2014. The Act provides adequate safeguards against the misuse of the pension funds and assets by any operator.

What happens if a PFA fails or is liquidated?

The pension funds and assets in the Retirement Savings Account (RSA) are kept by the PFC and as such the liquidation of the PFA will not affect the funds and assets. Besides, every PFA is expected under the Pension Reform Act 2014 to maintain a statutory reserve funds as contingency fund to meet claims for which it may be liable as may be determined

by National Pension Commission.

Who can I complain to if I have a problem with a PFA? The Pension Act 2014 allows any employee to complain about any PFA to the National Pension Commission.

What is the role of the government in the new pension scheme?

The federal Government

L-R: Onyii Wamah, head of Service, Abia State and Paddy Ezeala, regional manager, South East, Premium Pension Limited after a meeting on the Contributory Pension Scheme recently in Umuahia

has established the National Pension Commission and charged it with the responsibility of regulating and supervising new pension scheme.

Can the government take or use the money in my RSA for any purpose?

The Government cannot temper with the pension funds in you RSA, because the Government cannot have access to the account. Besides, the Government is primarily concerned with ensuring the safety of the money in your RSA through the enforcement of strict rules and regulations.

Will inflation and devaluation of the naira not erode the value of the pension contributions?

It is the duty of the PFAs to administer the contributions and invest in such a way that will ensure safe and reasonable returns on investment.

The reserve fund created by the PFAs under the Act would compensate for any erosion of the value of the contributions.

How compulsory or voluntary is retirement especially in the armed forces to be handled under the new scheme, if this happens before the age of 50 years?

Under the Pension Re-

form Act 2004 as amended in 2014 a person can voluntarily retire or be compulsorily retired before the age of 50 years on the ground of medical advice, permanent disability or due to particular terms and conditions of employment. If any person retires under any of the foregoing circumstances, he is entitled to withdraw from his RSA even though he was under the age of 50 at such retirement; provided that, in the case of retirement due to particular terms and conditions of employment, the contributor does not secure another employment after four months from the last employment.

What is the minimum of pension guaranteed under the new scheme?

The minimum pension guarantee shall be determined from time to time by the National Pension Commission.

Is there adequate representation of all stakeholders on the board of the commission, or is it dominated by government appointees?

There is adequate representation of relevant stakeholders in the board of the National Pension Commission,

RC634453

Diamond Pension Fund Custodian Limited

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

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

which comprises of Representatives of the Government, Nigeria Labour Congress, The Nigerian Union of Pensioners and The Nigerian Employers Consultative Association.

Does the pension reform act reflect the application of the principles of transparency and accountability?

Yes. The new pension scheme entrenches the principles of transparency and accountability as reflected in the reporting requirement of the PFAs and PFCs to both the contributor and the National Pension Commission. An employee has the right to choose who manages his RSA and the right to receive statements of his account on quarterly basis with details of contributions made and returns on investments.

What is the minimum period required by an employee to qualify for pension under the new pension scheme?

There is no qualifying period for pension. If an employee works for an employer for one month, his pension contribution will be paid by the employer into the employee’s retirement savings account for that month. If

the employee moves on the work for another employer for another year, his pension contribution will be paid by the second employer for another 1 year and it goes on and on like that.

When will I have access to money in my RSA? Access to the RSA will only be allowed upon retirement. If an employee retires at the age of 50 years or more he/she can have immediate access to the RSA. similarly, if an employee retires before the age of 50 years due to mental or physical incapacity, he or she can have immediate access to his/her RSA. Whereas an employee who retires under the age of 50 years in accordance with the terms and conditions of employment will not access the RSA until after four months of such retirement if he/she does not secure another employment.

Will gratuity be paid under the new scheme?

Upon retirement, an employee can withdraw a lump sum (by whatever name called) from the balance standing to the credit of his/her RSA provided the balance after the withdrawal could provide an annuity or

fund monthly payment that would not be less than 50 percent of his monthly pay as at the date of his retirement.

However, an employer may choose to pay any other severance benefits (by whatever name called) over and above the retirement benefits payable to the employee subject to the terms and conditions of his employment.

Should gratuity be included in the actuarial valuation for purposes of determining accrued pension rights to be transferred from the old scheme into the RSA? If at the commencement of the Pension Reform Act 2004, the employee is entitled to gratuity (if he were to retire on that date), the gratuity shall be computed and included in the actuarial valuation as part of the accrued pension rights of such employee.

Are pension contributions taxes free?

Contributions to the new pension scheme are tax free.

Will tax be paid on the profit made from trading with the money in the retirement savings account (RSA) Tax will be paid on the profit made from trading with the money in the Retirement Savings Account.

How will I benefit from the new pension scheme?

The new pension scheme will ensure that you receive your pension after retirement without delay.

How will the new pension scheme help the economy?

There will be a huge pool of long term funds available for investments, which will lead to national economic development.

How can I know what is happening with my money?

Pension Fund Administrators (PFAs) will issue regular statements of accounts and profit from investments to the employees.

Can I withdraw any portion of the amount in my RSA before retirement?

Withdrawals from the RSA can only be made upon retirement. However, where an employee makes additional of voluntary lump sum contributions into the RSA, he can withdraw such money before retirement or attainment of the age of 50 years.

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

If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

26

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Wednesday 02 January 2019

E-mail: insurancetoday@businessdayonline.com

Population is an advantage, but purchasing power of the consumer is critical to purchase of insurance - Kari Mohammed Kari, commissioner for Insurance in a recent interview with the communications team of The Nigerian Council of Registered Insurance Brokers shred his thoughts on recent developments in the insurance industry, and where the market is going. Modestus Anaesoronye reports. Excerpt:

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also, awareness of the benefits of insurance. I am sure you are aware that the insurance industry has commenced campaign to make the consumers aware of the benefits of Insurance. We believe that when this is done, it will improve on the penetration, the penetration does not only depend on the population. However, there still a huge potential because of that population size and that is why the industry now is realizing they need to do more retail, personal line of insurance against the corporate, which has almost reach its limits, because you cannot go beyond what exists, but individual classes are yet to be tapped into, and when this is done, then the penetration will increase.

Some Industry stakeholders believed that the industry is over regulated, what is your take on this?

No, I don’t think so, go and ask any operator. They used to say over regulated three years ago, but not anymore. Insurance is a business that is licensed, and any business that is licensed will have to be supervised. Regulator set out the Operating rules and ensures everybody operates within it. For example, majority of drivers on the Nigerian roads are not licensed drivers, they just take car and drive, from being thought privately, most of them don’t go to driving school, no learners permit, but the day the VIO comes on the road to check, they will complain of their disturbance, that is the perception of any illegal operator, so even the licensed companies, who had been licensed by regulator, you want them to have free hand to operate without rule, it doesn’t work like that, that can be dangerous.

It is a known fact that huge management expenses in the books of Insurers are responsible for their low profitability, what is NAICOM doing to tackle this?

If I may answer the second part of your question is to allude to the fact that, the industry was recapitalized in 2007 and the following year there was financial meltdown internationally,, which affected the insurance stock, with other stocks. Agreed, some have marginally bounced back, but the control of management is the responsibility of the board of directors, not that of regulator.

How should the industry address the issue of Quacks activities?

Who is a quack? There is a different between what people assumed as quack in other profession and those who are

Mohammed Kari, Commissioner for Insurance

quacks in insurance. There were days when you have certifications and documents of insurance companies that are not licensed in circulation, not any more. You find people faking genuine company certificates, genuine company’s documents; so, they cannot consider those as quacks, you can just consider them as criminals. And they are not part of, because a quack is a professional who doesn’t do his job properly. Those are not professionals, they just come into the industry to fleece on the big names that operate, and you find most of the big names being counterfeited more than the small name. Technology

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It is not a matter of believe, it is factual.

That is why we have released minimum premium rate for certain classes of business that we feel it is not up to the companies to just charge anything, because there are some expectations to pay some liabilities

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Before the last government induced recapitalization exercise, Insurance Industry was being referred to as “poor cousin” of Banking Sector, What is the situation now? hat terminology did not start in 2005, the first ambitious restructuring of financial sector started in early 1990’s when IMF directed the restructuring of financial sector, and government appointed Technical Committee on Privatization and Commercialization ( TCPC), and that committee dictated that all financial operators, bank and insurance industry were asked to increase their capital, the banks did, but insurance industry refused. They even took government to court that was when it started. When the bank recapitalized, the banks have enough capital to even buy out insurance investment, so they are not actually poor cousins, they are children of banks. And the recapitalization exercise of 2005/2007 was suppose to mitigate that wide gap, unfortunately, at the end of it, it did not achieve what it was set out to achieve because, there were lot of compromises along the way, insurance companies were given wavers, and were allowed to continue in business even while capital verification was required of some of them.

The banks with their excessive capital were able to take interest in insurance businesses, even took control of eleven insurance companies, until CBN came out with policy that they should concentrate on banking business, some of them divested, real divestment, some did not do proper divestment. But that notwithstanding, any business providing service like insurance is a public figure, because it is the business of risk taking and we believe that with the policy we are just coming out with of categorizing insurance business into the area where they can operate, that problem will be solved.

It is believed that Nigeria with over 180 million population should have a very robust insurance industry, why is the industry still backward when compared with other developing nations?

It does not only depend on population, it is more dependent on spending power, which is power of consumers. That of Nigeria is much lower to some of those countries we keep comparing Nigeria with; level of education and enlightenment of the insured is a factor, and

is helping us a long way, we are trying to conclude on our portal now to ensure every business is registered through that portal, so illegal business can easily be identified. As it is now, the policeman on the road has the ability to check whether insurance policy is genuine by just using some technological gadgets, so we are getting there.

Technology is helping us and the market associations are also working together to ensure that they fight against such activities.

It is believed that one of the major challenges of Insurance Industry today is the issue of Risk Pricing, what precisely is the Industry doing to tackle this challenge headlong?

It is not a matter of believe, it is factual. That is why we have released minimum premium rate for certain classes of business that we feel it is not up to the companies to just charge anything, because there are some expectations to pay some liabilities. If you don’t charge right premium, you will not be able to pay, your liabilities will not be able to meet your expectations. So we have already dictated, which has always been in the law, but never enforced, the minimum on certain classes of business. It is not in the interest of the companies to continue charging this, because it always has effect at the end of the day on their ability to pay claims. So, that has been taken care of to a large extent.

Obviously, it is your desire

as the Commissioner to see Insurance Sector as an Industry Contributing immensely to the growth of Nigeria economy, what is the Commission doing to see this dream come true?

Those are the things we have been doing recently. We have identified that, to improve the penetration of insurance, you have to have a change of perception of the consumers and all stakeholders. So working with the market, we have agreed to do the Marketing Awareness campaign which had been started.

We also identified that we need to open more distribution channels, because at the moment, we use the basic which includes the Brokers Channel and the Agency Channels which is not seriously explored. So we are introducing many other channels through which business can come like baccassurance, like NGOs, like Micro Insurance agents, and we are also open up to classes of financial inclusion like micro insurance, agric index insurance, and takaful, these are all new initiatives that have oppened in the last twelve months. We believed there is already optimum saturation from what can come through the Brokers, so we are looking for any other source, we have identified those sources, we have released guidelines, we have released new improved guidelines of the operation of such classes of insurance, and I believe it will have some impacts.

Insurance Industry lacks accurate Data, any step towards the direction of having accurate data to work with?

If insurance need data to work with, they have to create their data. They have to ensure they collect their data beyond what is expected from federal office of statistics. And the industry, you can agree with me, has gone a long way to doing that, they have a database which they use for motor insurance which they have extended to marine insurance also. Virtually, all vehicles insured on third party, you can check on phone whether it is genuine or not. But we as regulator are developing a portal where every class of business will be registered through that portal, so at a glance, any day, you can know how many policies are issued for how much, how many claims are being paid, how long did it take, you can know all that analysis. And with the synergy we have been trying to create between the regulator and operators, that is going to be very easy when it’s completed, data is going to be available and without data, you cannot make good projections.

Wednesday 02 January 2019

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27

FEATURE

Why CBN named Access Bank ‘Most Sustainable Bank of the Year’ FRANK ELEANYA

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entral Bank of Nigeria (CBN), the country’s apex bank has for over a decade advocated for players in the industry to think beyond just the numbers and making shareholders happy but also the environment they work in as well as the people/customers they serve so as to commit resources towards initiatives that seek to better these sets.

This vision informed the bank’s support and enforcement of the Nigerian Sustainable Banking Principles put together by Access Bank and scores of other global industry players. Years after the declaration, practitioners in the industry have continued to show commitment to the cause, albeit on different levels, but one of the few that have stayed the course is the Herbert Wigwe-led financial institution which explains the Bank’s recent grand victory, winning in all five (5) categories at the 2018 edition of the Sustainability awards organized by the CBN. The awards which was set up primarily to reward banks who have showed most commitment in certain key areas especially CSR and Sustainability, adjudged Access Bank for the second time in a row, winner in four (4) categories including Sustainable Transaction of the Year (Oil and Gas), Sustainable Transaction of the Year (Power), Sustainable Transaction of the Year (Women Economic Empowerment) and Most Sustainable Bank of the Year and second best in the category of Best Sustainable Transaction in Agriculture.

In a recent interview with BusinessDay, the Bank’s Head of Sustainability, Omobolanle VictorLaniyan attributed the success to the premium placed on sustainability and responsible business practice

by Access Bank. She expressed gratitude to the organizers for the recognition and described it as a validation of the Bank’s leadership position in the area of Sustainability and others.

“This is not the first award we are receiving this year for our efforts in CSR and Sustainability, but this is certainly one that we sure cherish because it is from the industry regulator. A recognition as grand as this reinstates the Bank’s position as a true industry leader and it sets us up for more responsibility as the spotlight is now on us to keep up,” she said.

“Access Bank’s uncommon com-

Omobolanle Victor-Laniyan, head of Sustainability, Access Bank

mitment to the ethos of Sustainability and responsible banking serve as a leverage in achieving these objective. We understand how important it is for us to consider our people and planet even as we yearn to make profit. Our deep respect for these three pillars guide our activities daily and expectedly,

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is yielding desired outcome one of which is this recognition from the Central Bank,” she added.

Looking critically at the category of women economic empowerment, one of the four in which the Bank was adjudged best, Access Bank stays leading in this regard, launching initiatives that seek to

We have stayed true to our vision of creating an enabling environment for all our customers to succeed irrespective of their gender, and that is because we understand that the power to create wealth is not gender based, however, we are not oblivious of the fact that women in this part of the world are largely marginalised which explains why we birthed a number of pro-women initiatives

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bridging the economic gap between men and women. One of such is the adherence for the Central Bank of Nigeria’s directive of ensuring more than 30 percent of its directors are women. Another is the W Power loan, a product that offers business women access to specialized loans as well as business mentorship through its W initiative which has since empowered and educated over 55,000 women since inception.

According to Omobolanle Victor-Laniyan, winning the category is one of the highlights for the Bank this year, seeing how actively it has continued to champion pro-women initiatives.

“We have stayed true to our vision of creating an enabling environment for all our customers to succeed irrespective of their gender, and that is because we understand that the power to create wealth is not gender based, however, we are not oblivious of the fact that women in this part of the world are largely marginalised which explains why we birthed a number of pro-women initiatives’’, she said.

“Not just that, within the bank are several policies to further promote work-life balance of staff one

of which is the extended maternity leave which is a first in our industry.

We also recently hosted players in the industry to a session put together by the NSBP to advance conversation about equality in the workplace. All these things and several more are not just activities for us, but our contribution towards ensuring a safer, more equal and inclusive society,” Omobolanle Victor-Laniyan concluded.

But this is only one of the several areas, the Bank has shone. There are several others which speak largely to why the apex decided to honour it with the Most Sustainable Bank of the Year title for the second year.

Worthy of note is the Bank’s pledge to donate 1% of its annual profit before tax, towards several sustainability initiatives including the save paper agenda with which it has continued the ambitious move to reduce printing and paper use. The adoption of solar as a viable alternative to powering some of its branches is another initiative many have described as noble, especially giving the clamor for corporate bodies and individual to choose environment friendly options when need arises.

With this initiative, the Bank now has about four branches and 413 ATM points powered solely by solar and its early shutdown policy, has resulted in about 11.37% reduction in the diesel consumption.

On the economic front, the Bank is doing very well, extending support to families via its Maternal Health Service Support Scheme which seeks to advance the course of a healthy nation. Also, the Beta Mama Beta Pikin initiative provides opportunities for mothers and their children to access health insurance.

The same passion saw the Bank break barriers to make remarkable feat in the social space, impacting over 20,071,453 lives in over 853 communities through strategic partnerships with over 358 NGOs. Interestingly, is the fact that the Bank’s staff clearly understand and have an interest in CSR as being pivotal to the organisation’s vision. They happily apply themselves through employee volunteering and have put in a total of 1,761,156 hours into 142 strategic community initiatives across 6 geo-political zones.

As the year gradually winds down and companies take stock of how well they have fared, Access Bank has more reasons to cheer and this isn’t because the Central Bank of Nigeria honoured it with several awards - but because the Bank’s impact is being felt and its efforts recognized.

28

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Wednesday 02 January 2019

INTERVIEW ‘CWG is in a new growth phase that meets expectation of our stakeholders’ Adewale Adeyipo, executive director, Sales and Marketing Development, CWG Plc has just been appointed the acting CEO of the Company. In this interview with Modestus Anaesoronye shared his thought on his previous role as executive director, Sales and Marketing through 2018, and how prepared he is to assume the new responsibility. Excerpt: You were recently promoted in the company, what does the job entail? his position requires me to be responsible for the entire sales operations and engagement for existing and new product development; which ranges from conceptualization to market research, product development, go-to market strategy and if necessary, partnership with other stakeholders to achieve the end result of generating incremental revenue /profit for the organization.

In this role which you took on early this year (2018) what would you say has been the most challenging times for you?

I would say identifying opportunities and ensuring delivery to achieve speed to market is the most challenge I have seen so far.

With our current traditional way of doing business, deploying new platforms timely requires a major cultural change in the delivery of our services and I think we have successfully dealt with that and we are doing very well right now.

How would you say CWG PLC has fared in the industry in the last half year?

I dare say we have not done badly, though we can do better.

It also depends on who is asking and what exactly you are measuring and what yardstick you are measuring with. Looking at the global products and services scale, CWG has been able to joggle the market in the last twelve months with some of the developmental initiatives

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I am very confident about the team here at CWG Plc and of their support in ensuring that we deliver to the highest standards we preach and achieve a more profitable organization

that had been brewing in the last three years.

I think this has been one very successful year, we have more products in the market, some other products have gotten into their maturity state where we can start to earn revenue; whilst we have a whole bouquet of products that have been in R&D for eighteen months and in 2018, alone we have had over four to five of these products successfully launched into the market.

An example is our Smart Metering Utilities Solution which is our 4G WIFI enabled metering solution; one we have worked on launching with other key Stakeholders in alliance with the Office of the Vice President, to be able to provide Independent Power Plants using our Smart Utility Systems in some strategic markets in Nigeria. A few short weeks ago, we were able to join in the commissioning of the Sura-Market Metering Project, in Lagos Island; that was one major and successful project we achieved this year. Our Enterprise Resources Planning (ERP) platform which we call SMERP is also one major successful platform, which had been previously launched, but with key features for the Logistics Industry launched this year. These and many more projects which have been on for over 18 months, but have gained major traction this year, gives me confidence to push on for greater achievements to set the tone as the major player in that field come 2019.

So, we have heard that there will be a change in CWG Management come January and sources have told us that you will be assuming the post of the MD/CEO of CWG PLC, how true is this?

Yes, you are not far from it, I will be assuming the role of the Acting CEO from January 1st, 2019 and that is because our current CEO’s tenure has been concluded as at 31st December 2018 and he has decided to move over to some other very strategic line up for the organization, coupled with some other personal goals he has lined up. So the Board of CWG PLC has appointed me to take over the reins as the Acting MD / CEO. Do you have any fears for 2019?

If anybody tells you they do not have fears, then they prob-

Adewale Adeyipo

ably do not give it their all. 2019 will be another interesting year for us as a country, which Is way beyond the organization. So with it comes a lot of anticipations and uncertainties; one major one are the elections. We all know the risks and exposures these events bring; yet in the midst of all these also are the many opportunities.

So, the best we could do as an organization is to understand our strength, create scenarios for varying outcomes, good or bad and be prepared for it. So, it is not so much fear, but more of being better prepared for any economic ups and down. I think as an organization we have been on this road many times before and we clearly know what needs to be done at times like this and I am sure CWG is prepared to weather all outcomes that the year brings.

Would you say you have the support of the staff of CWG PLC? I have been around for a while, and I have been in CWG PLC for over ten years, so I will be working with individuals that I know very well. People that I have had daily interactions with as a regular staff as well, delivered several projects and initiatives as a team; so, from where I stand now, I would tell

you, yes, as CWG Plc overall is like one very big family. There will be some tough times, but we are all matured enough to know the demands of each others roles, appreciate the deadlines and work with the organization’s key values in mind. I am very confident about the team here at CWG Plc and of their support in ensuring that we deliver to the highest standards we preach and achieve a more profitable organization.

Do you have the support of your family also, with this new position?

So, there are somethings you get immediately and there are some other things you get as you progress. With my family, support is definite; but I cannot tell you yet if they clearly understand what this entails. I however have a very supportive wife; I mean, she has been a very constant and strong pillar over the years. I am sure she is capable and I could say that, yes, I have her support and backing when it comes to this.

Profile Adewale Adeyipo is a proficient, technology enthusiast and Business Executive with extensive experience in Strategy, Management and Leadership. A proven tactician who began his journey into professional Con-

sultative Sales and Management at Discount Microcredit Finance House in 2004.

Adewale is known for his knack in proffering diverse angles on innovation and aggressive drive for new ideas, revenue generation, and market penetration. Over the years in CWG and other engagements, his achievements range from identifying opportunities to sustaining and growing businesses and revenue streams. He has utilized his extensive leadership, business, and strategic planning experience to identify and build teams responsible for developing businesses through both short and long-term initiatives Adewale holds a BSc in Computer Science from University of Ilorin, he is an Alumni of Lagos Business School (LBS), with Management and Leadership trainings and Certifications from several Institutions locally and internationally; including Lagos Business School, Business School, Netherlands, Massachusetts Institute of Technology (MIT) and London Business School Adewale has held several leadership positions including Business Sector Director (CWG) for the Telecommunication arm in 2010 and Business Director (CWG) for PAN Africa Initiatives in 2014. The PAN Africa Initiatives was a brainchild, set to produce CWG’s strategic delivery partnerships in 23 Africa operations. He had also previously served as a Director in Consultative Sales and Managed Services Engagements for Telecommunication Companies Adewale belongs to several organizations responsible for social needs and welfare of young adults. A passion he is able to nurture through direct mentorship, scholarships, sponsorships, interventions and trainings across Nigeria. He is the co-convener of the New National Initiative ‘Train a Child’ and also serves as a Facilitator at the CWG Academy set to further groom young Technology savvy Professionals.

As John F Kennedy rightly said ‘Our progress as a Nation can be no swifter than our progress in education. Free society cannot help the many who are poor, it cannot save the few who are rich’.

Adewale Adeyipo is married and lives in Lagos, Nigeria.

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Wednesday 02 January 2019

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BUSINESS DAY

Markets + Finance

29

‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

These charts show CCNN delivers higher return on investment for shareholders BALA AUGIE

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t is visible to the blind and audible to the deaf that Cement Company of Northern Nigeria (CCNN) is of sound financial health.

This is because the cement maker has been growing profit at a double digit since it rebound from a recession low; it has strong margins and the level of debt in its capital structure does not expose it to financial risk.

Its robust free cash flow means it can finance future expansion plans, reduce debt, and reward shareholders in form of dividend payment.

A first glimpse of the financial statement of CCNN shows it grew third quarter net income by 96.05 percent, this compares with Dangote Cement’s profit growth of 2.61 percent, while Lafarge Africa recorded a loss of N10 billion as the company continues to grapple with rising costs, mounting debt and ebbing sales.

CCNN has consolidated its market share by merging with BUA owned Kalambaina Cement Company Limited Plant, in a deal consummated by the Nigerian Stock Exchange (NSE).

With this merger, the new entity will own a combined 2 million metric tonnes per annum cement plant. This is because CCCN (subsidiary of BUA) has 500,000 metric tonnes per annum Sokoto cement plant while Kalambaina owns the newly built 1.5million tonnes per annum Kalambaina cement plant in Sokoto State.

Consolidating its cement plant capacity means CCNN has consolidated its position as a cost saver, as it has shifted from the use of the Low Pour Oil Fuel (LPFO) to coal - which is a cheaper source of energy to power plant at factory.

Kalambaina Cement’s 1.5 million metric tonnes per annum multi-fuel, which is powered by coal, heavy oils and gas will provide alternative source of energy with limited downtime while contemporaneously paving the way for further opportunities for growth and expansion.

CCNN has been efficient in utilizing investment in fixed assets to generate revenue than peer rivals.

The cement maker has a fixed asset turn on 1.45 times, this is compares with Dangote Cement’s 0.57 times and Lafarge Africa, 0.30 times earnings respectively.

In general, a higher fixedasset turnover ratio indicates that a company has more effectively utilized investment in fixed assets to generate revenue.

Financial performance for Q3 For the first nine months through September 2018, CCNN’s revenue increased by 43.61 percent to N19.57 billion from N13.62 billion the previous year.

The growth in revenue was largely driven by excellent distribution channel across the country and a profilic marketing strategy. The growth is higher than peer rival Dangote cement and Lafarge Africa’s top line uptick of 13.53 percent and 4.75 percent respectively.

CCNN’s net income spiked

BD MARKETS + FINANCE Analysts: BALA AUGIE

by 96.69 percent to N4.01 billion in September 2018, from N2.03 billion the previous year, but profit fell by 53.65 percent to N1.14 billion in 2016 from N2.46 billion in 2015.

2016 was horrendous for companies in Africa’s largest economy as a precipitous drop in oil price that stoked a severe dollar scarcity and damped government revenue tipped the country in its first recession in 25 years.

However, a rebound in crude oil price and output couple with the introduction of a flexible exchange rate system by the central bank helped the country exist recession in the third and fourth quarter of 2017.

The rebound in economic activity was a boon to the com-

pany as it was able to magnify shareholders’earnings.

CCNN’s gross profits were up 65.13 percent to N8.62 billion in September 2018 from N5.22 billion as at September 2017; this means the company is able to control cost attributable to projects.

Earnings before interest and taxation (EBIT) increased by 96.57 percent to N5.74 billion in the period under review from N2.92 billion the previous year. Profit before tax surged by 100.48 percent to N5.72 billion in September 2018 from N2.85 billion as at September 2017.

CCNN has utilized every Naira invested in sales in generating higher profit as evidence in margin expansion amid a tough and unpredictable macroeconomic environment.

Gross margins increased to 44.04 percent in September 2018 from 38.25 percent the previous year.

Net profit margin increased to 20.49 percent in September 2018 from 14.91 percent as at September 2017. A 21 percent net profit margin indicates that for every Naira generated by CCNN in sales, the company kept N0.21 as profit.

A higher profit margin is always desirable since it means the company generates more profits from the company’s sales.

EBITA Margins increased to 29.33 percent in the period under review from 21.63 percent the previous year while pre-tax margin moved to 29.22 percent in September 2018 as against 20.92 percent as at September 2017. CCNN is spending less to produce each unit of product as cost of sales ratio fell to 55.91 percent in September 2018 compared to 61.67 percent as at September 2017.

The merger with Kalambaina plant is expected to further reduce costs and bolster profit margin while shareholders wealth will be maximized.

CCNN has utilized the resources of its owners in generating higher profit as return on equity (ROE) increased to 23.49 percent in September 2018 from 14.20 percent as at September 2017.

The cement maker closed at N19.55 as of 2:00 pm Tuesday, representing a gain of 9.83 percent, valuing the company at N24.56 billion.

It is trading at 12 month price to earnings ratio of 4.73 times, which means its shares are undervalued and there is room for investors to buy the stock because it is cheap.

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BUSINESS DAY

C002D5556

Benue, Taraba govs tackle boundary crimes Benjamin Agesan Makurdi

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enue State Governor, Samuel Ortom, and his Taraba State counterpart, Darius Ishaku have taken steps to curb criminal activities in communities along the border of the two States.

The two Governors at the weekend led their various executive and security councils to a joint security meeting at the Federal University, Wukari, where useful deliberations were made to combat the criminal activities including kidnapping, armed robbery and banditry.

Governor Samuel Ortom reiterated the need for people of the two states to ensure peaceful coexistence especially at the border areas and to expose criminal elements within their vicinities.

He lamented the spate of kidnappings in the two states, pointing out that but for the cordial working relationship that existed between him and his Taraba counterpart, the insecurity in the area would have been worse.

The Governor appealed for restraint even as he urged the communities not to embark on reprisals on either side, saying doing so would only expose the innocent members of the affected

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head of 2019 election, the Fulani community in Kwara State has pledged its allegiance to the President of the Senate, Abubakar Bukola Saraki.

The Fulani community comprising of the indigenous Fulani and Bororo assured Saraki of their support ahead of forthcoming general elections.

The leaders of the Fulani community, Garba Dembo (Jowuro Oyun) and Usman Garba( the Fulani/Bororo union’s secretary) gave the assurance at the weekend when they paid a solidarity visit to the Saraki at his Iloffa, GRA residence in Ilorin.

Jowuro Oyun promised that his people will deliver their votes 100 percent to all Peoples Democratic Party’s (PDP) candidates in next year’s general elections.

“We’re in full support of Bukola Saraki. We gathered at the palace of the Emir of Ilorin, Ibrahim SuluGambari from where we marched down to Saraki’s residence to assure him of our 100 percent support.

“The late Olusola Saraki during

APGA mourns its National Organising Secretary, Mike Kwentoh Innocent Odoh, Abuja

T Ortom

communities to untold hardship.

He stated that he and his counterpart were endangered species as a result of their stand for justice and the sanctity of the constitution of the country adding that it would be unwise for the people of the two states to take arms against one another for whatever reason.

Taraba State Governor, Ishaku had earlier decried the spate of criminality in the southern parts of his state which shares boundary with Benue State.

He identified community based intelligence gathering and collaboration among security agencies and all stakeholders as the

Ishaku

panacea to the criminal activities in the area.

Governor Ishaku also acknowledged the efforts of the two state governments to create employment opportunities for the youth as a way of discouraging them from engaging in criminality adding that such will be sustained.

The Tor Tiv, James Ayatse and the Aku Uka of Wukari, Shekarau Angyu, represented by Tor Kwande and Garan Donga, Chiefs Ambrose Iyortyer and Stephen Bayonga, restated the commitment of the traditional institutions to help combat criminality in their domains.

2019: Kwara Fulani community pledges support for Saraki SIKIRATSHEHU, Ilorin

Wednesday 02 January 2019

his life time contributed immensely to the growth and development of Kwara State. As a result of this, we the Fulani and Bororo are prepared to reciprocate the kind gesture of the late Saraki by giving his son, Bukola Saraki 100 percent support.

“Baba Saraki loved and cared for us, so, it’s natural that we should also love and support his son who is also following the footsteps of his father.

Also speaking, the Secretary of Bororo/Fulani community, Usman Garba said: “We have been waiting for this day. We are going to support

Saraki

you 100 percent. When your father was alive, he did a lot for us. We are ready to reciprocate Baba’s kind gesture to us by supporting you, his son. There is nothing anyone can do for us to vote for the people we don’t know.”

Responding, Saraki, who was adored with Fulani’s hat thanked leaders and members of the Fulani community for identifying with his leadership.

While assuring them of his continued support, Saraki reminded them that the relationship which exists between them and the Saraki political dynasty had been a long standing one.

“The Fulani community’s relationship with Saraki political dynasty has been a long standing one and it shall continue to flourish,” he added.

The President of the Senate assured his visitors and Nigerians in general that the PDP government come 2019 will fulfill all its campaign promises.

He emphasised the need for the people of Kwara state to vote for the PDP’s presidential candidate, AtikuAbubakar, because “PDP has great plan for the people of the state.”

Former Governor of Benue State, Gabriel Suswam, and other speakers from the two states suggested the constitution of security committees with membership drawn from among the various communities to identify and expose criminal elements among other steps as solutions to the insecurity in the two states.

Governors Ortom and Ishaku later visited Abako and Sai in Benue and Dogon-Gawa in Taraba where they preached peace to the communities, saying they have a bigger and common enemy which was insecurity and should not be fighting among themselves.

he All Progressives Grand Alliance (APGA) has expressed deep shock at the news of the passing away of the National Organising Secretary of the party, Akunwata Mike Kwentoh, describing it as “irreplaceable”.

In a statement issued by the National Director of Publicity of the party, Iheanacho Oguejiofor, in Abuja on Saturday, APGA National Chairman, Ozonkpu Victor Ike Oye said he never expected the news of Kwentoh’s demise in spite of the fact that he was very sick.

He said with deep pain that Kwentoh died when his sagacity, commitment, and experience were most needed.

“Kwentoh was a strong pillar to our party and we would miss his wise counselling and dexterity”, Oye said.

He recalled with deep pain the short telephone exchange he had with the deceased early this week and said that nothing in his voice betrayed his sudden exit.

The APGA National Chairman thanked God for a life of service the Late Kwentoh led having held key positions in his community and our party, the statement added.

He prayed God to grant his soul eternal repose and the family the courage to bear the irreparable loss.

Restructuring will set Nigeria back to greatness, says traditional ruler ...Also supports creation of state police Akinremi Feyisipo, Ibadan

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traditional ruler in Ibadan, Taye Ayorinde, has lent his voice to the call for the restructuring of the country, saying failure to do this may lead Nigeria sitting on a keg of gun powder.

Ayorinde who is the Baale of Ekotedo, Ibadan explained that with restructuring the country will be set back on the path of greatness with the states developing at their own pace, stating that those against restructuring do not want the progress of the country as most of the states will go down.

Speaking with journalists on what he called, ‘Making Nigeria great again’, said the country has been great in the past with Nigeria depending on agriculture from the Western region, groundnut from the North and palm oil, tin and coal from the East.

According to him, the country is copying wrongly the American federal system which is productive with its states and people having the necessary environment to flourish, noting that apart from Lagos and probably Rivers States, virtually all the states in the country are lagging behind economically.

He said, “In the past Nigeria were adjudged very great and rich in every aspect, commerce, culture, tradition and united patriotic instincts and actions. Nigeria has no need to record poverty in the midst of plenty of human resources, vegetation of different types and mineral resources.”

While insisting that more power should be devolved to the states with the Federal Government handing off most of its responsibilities, Baale Ayorinde said history should be reintroduced back to the curriculum in our schools so that the young ones can know where the country is coming from and where it is supposed to be.

Speaking on other things that the country needs to do to be great again, he called for the adoption of Option A4 to elect political leaders in order to unite the country, stating that the system encourages mutual understanding, public and human relations in politics.

He said, “Religious intolerance will be banished during the primaries and election. Our unity should be forged by making the Houses of Assembly to be a part time basis as the present American system of government is too expensive for Nigeria and it encourages corruption.

Wednesday 02 January 2019

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Oil price drop shows why reforms are urgent ODINAKA ANUDU

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he pr ice of Brent Crude has been on a downward trend, fluctuating between $50 and $55 per barrel in the last one week.

Nigeria’s budget benchmark for crude oil is $60 per barrel, which is beginning to look unrealistic in the new year.

Analysts believe that should Brent Crude trend lower than $50 per barrel, Nigeria may begin to brace up for 2016 crisis, which saw the economy go into recession and many firms exit.

Nigeria is a mono-product economy, relying on crude oil for over 90 percent of foreign exchange and 75 percent of revenue.

The current government has made a series of efforts to diversify the economy in terms of increased agric sector funding in rice production through the Anchor Borrowers Programme.

However, this has not resulted in significant change in the economy as rice is just one commodity out of many. In terms of jobs, for example, unemployment rate rose to 23.10 percent in the third quarter of 2018 from 18.8 percent in the second quarter of 2018, according to latest date from the National Bureau of Statistics (NBS). The gross domestic product (GDP) growth in the third quarter of 2018 was 1.8 percent, which is lower than 2.11 percent reported in the fourth quarter of 2017.

An analyst pointed out that another reason why these activities have not impacted the economy is that some of the loans have not been repaid.

“For that to make impact, farmers must repay them and the loans must also be given to many more people. The cycles have to be repeated for it to make meaningful impact. Secondly, how much is the loans when compared with the GDP?” John Boazue, an economist, asked.

Nigeria urgently needs reforms in all sectors, with the next President likely to face worse economic scenario.

Countries like Ethiopia, Rwanda and Ghana are growing by 8.5 percent, 7.8 percent and 7.6 percent respectively owing to reforms carried out by their governments.

“It is exciting to see three African countries topping the list of world’s fastest growing economies, and seven among 18 fastest growing in the world. But it is also worth noting that these African

countries, particularly the top three, are the liberalists and reformists on the continent. Reforms work,” Olu Fasan, international trade negotiator and visiting fellow at the International Relations Department of the London School of Economics (LSE), said on his Twitter handle on January 1.

Nigeria is still subsiding petrol, with $1 billion set aside for it in 2019 budget. This makes no sense to analysts, especially when the subsidy benefits only the middleclass and the rich that can afford cars and generator sets. Nigeria has 87 million people living below $1.90 per day. By assumption, these people cannot afford generators and cars, with their basic needs being food, shelter and clothing.

The country is also unable to sign the African Continental Free Trade Area (AfCFTA) agreement, which is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994, targeted at creating a single market for Africa’s 1.2 billion people and exposing each country to a $3.4 trillion opportunity.

Experts say the AfCFTA will likely raise Africa’s nominal GDP to $6.7 trillion by 2030 if all African countries sign up.

The treaty will liberalise 90 percent of products produced in the continent. This means that a country that is bound by the AfCFTA can only protect 10 percent of its local industries.

Nigeria needs urgent reforms, as any hit on the Brent Crude could hurt manufacturers who need greenback to import inputs.

Manufacturers cut down on their local content in the first half (H1) of 2018, as domestic input sourcing fell by 4.12 percent due to manufacturers’ decision to look outwards for raw materials.

Data from the Manufacturers Association of Nigeria (MAN) show that local sourcing declined from 60.72 percent in H1 of 2017 to 56.6 percent in the H1 of 2018.

The 56.6 percent represents 9.1 percentage fall from 65.7 percent recorded in the second half (H2) of 2017.

“Local sourcing of raw-materials sourcing in the manufacturing sector slowed in the first half of 2018 with the exception of motor vehicle and miscellaneous assembly group. This may be adduced to the general sluggishness of the economy and a renewed ability for importation of raw-materials considering the tranquillity in the foreign exchange market,” MAN discloses.

This portends danger to the Nigerian economy.

South Africa, Africa’s second largest economy, earned 164.9 billion rand (about $13 billion) from exporting automobiles alone in 2017, according to the 2018 Automotive Export Manual.

Bangladesh, often regarded as one of the poorest countries in the world, rakes in $28 billion just

from textile export annually.

In 2016/17, Brazil, with almost Nigeria’s demographic size (209 million),exported 28.15 million metric tonnes (MT), earning over $38 billion just from sugar.

Sugarcane alone contributed $43.8 billion to Brazil’s gross domestic product (GDP) – equivalent to almost two percent of the entire Brazilian economy. Even India, which was projected to grow as fast as Nigeria by the Goldman Sachs in 2012, is set to produce 35 million tonnes of sugar next year.

For Nigeria, data from the National Bureau of Statistics (NBS) show that the country earned N577 billion from total export in the first quarter of 2018 and N218.98 billion in the second quarter (if you factor out what the body calls ‘other oil exports’). This is about $2.20 billion for the halfyear of 2018.

BudgIT carried out a simple research in 2016 using data from Indexmundi, the United States Department of Agriculture (USDA) and Vetiva Research. It was found that Nigeria had a 45 per cent share of world’s palm oil market in 1960. The numbers showed that if Nigeria maintained its 45 percent share in 2016, it would be earning $17.5 billion annually from just one product—palm oil— assuming that it exported all of its output. As of October 2018, one ton of palm oil was around $499.15, using Malaysian prices.

Total palm oil output was 58.84

million metric tonnes. Assuming that Nigeria was still controlling 45 per cent of the global palm oil market last month, the country should be producing 26.48 million metric tonnes. Local demand is about 2.1 million metric tonnes, meaning that Nigeria would be able to satisfy local demand and still export 24.38 million tonnes, earning $12.17 billion Today, the oil sector is yearning for reforms. Nigeria is yet unable to use its gas conformably, yet the Petroleum Industry Bill is not passed.

The transport sector, notably sea and rail movements, need urgent reforms. The non-oil sector needs reforms to bring in more foreign exchange. The stock market needs reforms after a string of losses in 2018.

The insurance industry needs reforms to contribute more to the GDP. The education sector needs reforms to produce quality graduates that meet the needs of industry. The health sector needs urgent reforms to check outbreak of diseases and reduce high death rates in hospitals that look like glorified mortuaries, analysts say.

“The next president needs reforms more than ever before.

The motto should be: Reform or die. This is why the next election should be about issues. We do not need a repeat of the 2016 experience, where oil price fall crashed the whole economy,” said Ike Ibeabuchi of MD services Limited.

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of the APC. There is a consensus that the All Progressive Congress state primaries in Imo and Ogun states were bedeviled by many logistics challenges but what bothers the populace in both states is why the governors are going about the situation the wrong way.

The premise is that no individual or governor can be greater than the party under which they rode to power. The situation is further worrisome because the performance of the governors during their tenures in office in the eyes of their masses leaves much to be desired.

Rochas Okorocha in the last eight years as governor of Imo has struggled, if not failed to improve the fortunes of the pensioners and civil servants in Imo state. This has left many in the state in distress and they do not expect any improvement with the candidate of the governor.

The same scenario played out in Ogun. What Amosun in his pursuit of political godfatherism failed to realize, was that since the advent of democracy in Nigeria in 1999, no governor has successfully foisted his candidate on the people of Ogun State.

The outcome of the state primary was a pointer to that effect.

Consequently, Adams Oshiomhole, National Chairman of the APC, likened the behaviour of Amosun as that of an emperor who wanted to manipulate the party primaries to his advantage and also carpeted the Imo governor for allegedly trying to create a dynasty, saying it was an effort in futility.

What they however fail to realise is that apart from the fact that Okorocha and Amosun themselves symbolically represent a fair spread of the geosocial and political tendencies of the country, they owe their present offices to the magnetic pull of the APC presidential candidate in 2015.

As things stand, with the current in-fighting in the APC, along with the failure of the Federal Government to deliver on its campaign promises, chances are that if the ruling party fails to resolve the on- going crisis and prevail on both governors to back down, the party stands a big chance of losing out to the opposition in the states and this may cost the ruling party millions of votes from Imo and Ogun states.

Countering the ‘anointed’ successors syndrome in Nigeria politics KELECHI EWUZIE

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ollowing the return to democratic government in 1999, a lot of power consolidation strategies were adopted by vocational politicians in Nigeria to remain relevant in the scheme of things.

One of such strategies prevalent is the decision by incumbent governors whose tenure is about lapsing to foist a successor of their choice on the state not minding whether it was the wish of the electorate or not.

This trend played out significantly under the Peoples Democratic Party (PDP) especially ahead of the 2015 elections, as some outgoing governors appeared to have been given the go-ahead to pick their succes-

sors and also go for any other offices of their choice, provided they ensured maximum support for the then president Goodluck Jonathan.

The Peoples Democratic Party (PDP) with majority of the states and the central government for the past 16 years, allowed the ‘anointed’ successor arrangement to keep the governors happy, while throwing internal democracy out the window.

However, the emergence of the All Progressive Congress (APC) government appears to alter this practice ahead of the 2019 for governors under the current administration.

The hope of Imo State Rochas Okorocha and his Ogun State counterpart, Ibikunle Amosun continuing in the unspoken arrangement ahead of the 2019 election hit a brick wall as the leadership of the APC during the state primaries picked candidates that were not the choices of the governors.

It will be recalled that prior to the last APC State primaries, Rochas Okorocha wanted his son In-law, Uche Nwosu to succeed him, but the party picked Hope Uzodinma as the governorship flag bearer.

In the same vein, Ibikunle Amosun who wanted his ‘anointed’ successor Adekunle Akinlade saw the emergence of Dapo Abiodun as governorship candidate to his chagrin.

Since the results of the state primary was made known, Okorocha and Amosun have been in a war of words with Adams Oshiomhole, National Chairman of APC, for not letting them have their way in the choice of who to succeed them.

They even went as far as threatening to work against the governorship candidates of the ruling party if the APC went ahead to field them.

Okorocha was quick to point out that what happened in the APC primaries in many states presents an interesting scenario, as the party that according to him is known for justice, equity and fairness, has been allegedly dented by its National Chairman, Adams Oshiomhole.

On his part, Amosun at several press conferences, vowed to use everything in his power to ensure the success of Akinlade and other aggrieved members in their new party. He also said he would not support Dapo Abiodun, the governorship candidate

NEWS

Imperative of increasing manufacturing sector’s contribution to GDP OLUWAFUNKE ISHOLA, NAN

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or the Federal Government, economic experts and even ordinary Nigerians, there is a yearning for a robust manufacturing sector that will drive the country’s economic growth and development.

But for that to become a reality, the contribution of the manufacturing sector, which the National Bureau of Statistics (NBS) said stood at 8.84 percent as of third quarter of 2018, must rise substantially.

Experts opine that for Nigeria to be relevant in today’s dynamic world, it must have a GDP tending towards a trillion dollars, with the manufacturing sector contributing at least 20 percent.

Even that is by far short of the 46 percent average contribution of the manufacturing sector to GDP in most emerging economies and developed countries.

The Manufacturers Association of Nigeria (MAN) is worried that the sector that should propel job creation, productivity and economic growth is encumbered with a series of challenges.

Experts said although the Nigerian economy grew by 1.81 per cent year-on-year in the third quarter

of 2018, concerted efforts must be made to enhance manufacturing sector’s growth and encourage new investments.

Ahmed Mansur, president, MAN, noted that the economy could not grow sustainably without a strong and competitive productive sector, saying that the manufacturing sector was the engine of economic diversification and growth.

Mansur said a robust manufacturing sector should be based on coherent and coordinated efforts resulting from close collaboration between government and manufacturers.

He noted that efforts should be geared to solving the electricity supply challenge of the country, which represented a formidable problem to manufacturers.

Mansur stressed the need to review and strengthen agricultural policies, saying agriculture and manufacturing, through agro-allied industries, have huge potential for backward integration and job creation.

Also, John Isemede, United Nations Industrial Development Organisation (UNIDO) consultant, said Nigeria should emulate China’s industrialisation drive that moved over 250 million people out of poverty and unemployment within 20 years.

ANALYSIS Isemede, who was the former director-general of Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said only manufacturing could provide sustainable mass jobs and living wages.

He said if the government created the enabling environment, the manufacturing sector would generate adequate revenues for government to provide the needed infrastructure for development.

Experts insist the contribution of manufacturing to GDP and employment would have to increase significantly to provide quality jobs to the teeming unemployed in the country, which grew from 18.8 percent in third quarter of 2017 to 23.1 percent in 2018.

To accelerate the development of the manufacturing sector, the federal government introduced the Economic Recovery and Growth Plan (ERGP) to make the economy competitive and build a virile industrialised nation.

The goal of ERGP is to pursue manufacturing promotion policies that would enable the sector contribute 20 per cent to GDP and achieve

a target of two million jobs by 2020.

In spite of the lofty objectives of the ERGP of channeling more funds to priority sectors of the economy, credit to the manufacturing sector has been declining.

Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), noted that access to and cost of funds remained a big issue for many domestic investors.

“With commercial bank lending rate at between 20 to 35 per cent, the private sector, especially the SMEs could not successfully access funds for their businesses.

“We note the efforts of government through CBN and Bank of Industry (BOI) to extend intervention funds to business owners particularly SMEs, however, there are still pockets of issues with access to funds,” he said.

Yusuf said to spur growth in the manufacturing sector, access to credit at below 10 percent should be made readily available and disbursements of approved loans by banks to customers should be fast tracked.

Indeed, there is no shortage of efforts by the Federal Government to rev the manufacturing sector.

For instance, on May 18, 2017, President Muhammadu Buhari signed three Executive Orders to pro-

mote transparency and efficiency in the business environment, support local contents in public procurement and to improve the budget process.

These orders were meant to help in the recovery of many factories and to boost productivity in the manufacturing sector.

However, the orders are yet to translate to tangible benefits, as there are several complaints as regards compliance with the directives by government agencies.

Hamma Kwajaffa, director-general, Nigerian Textile Manufacturers Association (NTMA), said many manufacturers had a lot of unsold inventories due to lack of compliance of Ministries, Departments and Agencies (MDAs) to the Executive Order on patronage of locally produced goods.

Kwajaffa said timelines on budget process should be strictly adhered to in order not to slow down economic activities, adding that government should work toward changing the belief that government policies are not meant to be implemented.

Babatunde Ruwase, president, LCCI,commendedthegovernmentfor improving the business environment, but noted that government should expedite action to implement ease of doing business at the nation’s ports.

Wednesday 02 January 2019

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Financial Inclusion

BUSINESS DAY

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& INNOVATION ‘Ease of access to low-cost financial services on a daily basis is very vital’ Supported by:

Oluwatomi Ayorinde, CEO/Cofounder of CrowdForce shares insight on the role his company is playing in including more Nigerians into the financial cycle through its agent distribution network and how it recently enabled the creation of digital identities to over 1 million petty traders across Nigeria under the federal government’s TraderMoni project in this interview with Endurance Okafor.

Tell us about CrowdForce and how it is impacting Nigeria’s financial inclusion rowdForce is building Africa’s Largest agent distribution network for financial inclusion and penetrative market research. 94 percent of transactions in Africa are carried out offline and cash-based via retail outlets. By doing this, we are making it possible for businesses to deliver seamless services to the last mile and also providing an offline distribution network for businesses to thrive in Africa.

creation of digital identities to over 1 million petty traders across Nigeria under the federal government’s TraderMoni project, where we facilitated data enumeration, trader onboarding and will be carry out loan disbursement. This was made possible due to our network of agents across Nigeria who are strategically located in every ward in the country.

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As a global decentralised network of micro businesses, what are the means with which you plan to achieve the set objective of bringing the unbanked and underbanked population to the digital economy?

Micro businesses do close to $19 trillion in cash transactions every year. These small businesses are the bedrock of any economy. They are trusted and provide most of their services to the unbanked and underbanked.

They already deal with volumes of cash on a daily

Oluwatomi Ayorinde

basis. While their profits are marginal they are always open to making extra income. At CrowdForce we are leveraging mobile phones, blockchain technology and these micro businesses to deliver financial services to the mass market.

What is your view of Nigeria’s financial inclusion

rate which is currently at 63.3 perecnt as compiled from EFInA? I think the 36.7 percent financially excluded is still a very huge number. We also cannot say that people are financially included just because they have a bank account. Ease of access to low-cost financial services on a daily basis is also very

vital.

What have you done to financial include Nigerian businesses and individuals into the cycle?

We play our role by providing the infrastructure (agent network) for businesses and banks to deliver digital services to the last mile. We also recently enabled the

What kind of businesses do you focus on, and do you have provisions for businesses and corporates in rural area, especially those in the northern part of the country, considering the exclusion rate is highest in those regions?

We focus on retail outlets that have been existing for 1 to 3 years and have a good reputation in their community. We however do not exclude corporates. We are not region specific but we understand the opportunity to provide more inclusive services in the North where the exclusion rate is highest.

What are the challenges that drag your objectives?

We deal with the same issues that plague most business in Nigeria. Poor regulations, low access to capital, hiring good talent and many more. We would like to see the government, banks and other huge businesses embrace innovation faster and support more technologydriven businesses like ours.

What can government do assist a firm like yours?

Continue to create regulations that enable businesses and banks prioritize mass adoption of financial services over short-term profits.

What is your success level?

Today we have 7000 merchants on our network providing financial inclusion services and penetrative market research to FMCGs

Going forward what are your plans in including more Nigerians into the financial space and are you looking at rolling out innovative products?

CrowdForce will stay true to her vision of leveraging blockchain to create a global network of micro businesses to facilitate low-cost crossborder payments and remittances. We will work with technology startups to help them deliver their digital services or collect payments from the mass market via our agent network.

Meanwhile, in about 18 months, the Firstmonie Agent Network has expanded to almost every Local Government Area in Nigeria (98 per cent coverage).

Firstmonie Agents are positioned within rural and semi-urban locations across the country to provide basic financial services such as account opening, cash deposit, cash withdrawals, airtime purchase, bill payments and much more to every Nigerian. Through this channel, the Bank is committed to providing convenient services that endear trust, provide ease of access to financial products, thereby saving time and travel costs. Transactions carried out through

this channel are securely authenticated.

The agent banking model, which is in line with the mandate of the Central Bank of Nigeria (CBN) is targeted at ensuring individuals and members of the public, irrespective of their literacy levels, familiarity with technology or income levels can access financial services.

The FirstmonieAgent Channel delivers financial services outside conventional bank branches, often using non-retail agents – Firstmonie Agents – and relying on technology such as point-of-sale (POS) terminals or mobile phones for real time transaction processing.

FirstBank visit markets with financial inclusion Endurance Okafor

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irst Bank, the biggest bank in Nigeria by total deposits has extended its agent banking campaign to 14 major markets and business points across the country with the aim to include more Nigerians into the financial cycle.

The market activation and awareness creation of the Firstmonie Agent Network spanned between November 24 and December 16, 2018, which was an intensive period of customer engagement, education and by extension, financial inclusion.

According to Chuma

Ezirim, First Bank of Nigeria Group Head, eBusiness, “with our Firstmonie Agents spread across the country, we are aggressive at increasing the penetration of financial services, especially in the suburbs while significantly reducing the unbanked in the country.”

The location visited in Delta state include; Ogbonogo Market, Koka Junction, Bonsac Junction, Ibusa Junction, while in Calabar in Cross River State, Mobil Junction, Etagbor Junction, Watt Market, Marian and Etim Edem Markets were the various location visited.

Swali, Tomba, Opolo and Nembe communities in Bayelsa state also got a feel of the campaign impact.

“ We e n c o u r a g e t h e patronage of Firstmonie Agents irrespective of the location as these Agents

are well trained to provide the FirstBank Gold Standard Services to customers,” Ezirim said.

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LegalPerspectives

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With

Odunayo Oyasiji

Use of safeguard measure in international trade

Locus Classicus

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he defendants were hide merchants with base in London, United Kingdom. The plaintiff is a Belgian Furrier living in Brussels. The two parties discussed and agreed verbally on the sale of Argentinian hare skin at 10d per skin to the plaintiff. The defendant made a mistake in the amount that was quoted when sending the written offer to the plaintiff.

The way it was quoted was not even in the standard unit in the industry and it was far cheaper than what was orally agreed on.

The plaintiff accepted the offer and sought to enforce the offer as written in the offer letter. He claimed for loss of profit or in the alternative the difference between the contract price and the market price at the time of the breach. The defendant submitted that the offer sent to the plaintiff was by mistake.

They argued that the plaintiff

Meaning of Safeguard Measure rticle XIX of GATT 1994 and Safeguard Agreement regulate the operation of Safeguard measure. Safeguard under GATT/WTO is an instrument used when there is an emergency in the form of sudden import surge which is causing injury or threat of injury to domestic industries producing same products in the importing country. Safeguard measure is far less popular in use when compared to anti-dumping.

Under this trade defence instrument, the party invoking safeguard measure is permitted to remove or adjust trade concessions in order to remedy the injury being suffered by the domestic industry. Safeguard measure gives the local industry enough time to adjust to the foreign competition. Therefore, it’s a way of buying time for the local industry to develop enough muscle to face the might of foreign competition that might want to take over their market overnight.

There is room for the imposition of provisional safeguard when there are real threats and delay might result in damage beyond repairs. Provisional safeguard can be in place for a period not longer than 200 days. Safeguard measure can only be in place for 8 years in a developed country while in a developing country it can be in operation for 10 years.

Safeguard measure can be in the form of tariff or quota.

There must be compensation if safeguard measure is in place for three years i.e. the country using this measure must compensate the party it is being used against.

Compensation can be agreed between parties. In a situation where there is no agreement between the parties, safeguard measure gives room for retaliation by other countries. Retaliation can be in the form of an increase in tariffs on products from the country that has refused to compensate.

Elements to Establish Article 2(1) sets out the precondition for the use of safeguard measure. The said provision is

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Hartog v Colin & Shields [1939] 3 All ER 566

T quoted in extenso -“A Member may apply a safeguard measure to a product only if that Member has determined… that such product is being imported into its territory in such increased quantities, absolute or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products” From the above, it is glaring that two elements must be present- increased importation of the product and injury or threat of injury to the domestic industry. It was stated in US-Steel’s case that Article 4(2) (a) further elaborates on what is expected to be done when trying to establish the two elements earlier pointed out in Article 2(1). Article 4(2) (a) states that – “In the investigation to determine whether increased imports have caused or are threatening to cause serious injury to a domestic industry under the terms of this Agreement, the competent authorities shall evaluate … the rate and amount of the increase in imports of the product concerned in absolute and relative terms...”

The above suggests that all relevant factors should be put into consideration when evaluating whether serious injury has occurred as a result of the import surge. Article 4(2) (b) goes further to state that in establishing a causal link between increased importation of product and injury, injury triggered by other elements should be identified and separated from the injury caused

by increased importation.

for the purposes of this Act and for such good cause as may be determined from time to time by the appropriate authority, no person shall cause any glass fitted on a motor vehicle to be(a) tinted; or (b) shaded; or (c) coloured lightly or thickly; or (d) darkened; or (e) treated in any other way, so that the persons or objects in the motor vehicle are rendered obscure or invisible.”

Whatever the case is, you need the right permission to use a car with tinted glass. It

must be noted that ‘good cause’ as used in section 1 quoted above was further clarified under subsection 2 of section 1. The provision states that good cause means health or security reasons. Therefore, you must be able to establish to the police that you are seeking permission to use tinted glass for security or health reasons. This is definitely not the case in our society. People get the permit and use tinted glass for no justifiable reason.

Criticism Criticism of safeguard measure mostly relates to the ambiguity in its wordings. Some of the wordings that have been categorized to be ambiguous are “serious injury”, “increased quantities” and the requirement of a causal link between the increase in quantities and injury to domestic industry.

For example, what is meant by increased import that causes injury is unclear. Case laws have not been able to resolve this issue of increased import. More confusion has been occasioned by the interpretation given to the phrase in the case of Argentina footwear where it was stated that the phrase “is being imported” requires the authorities to look into recent imports and not just examine imports over a period of time to determine import surge.

The appellate body did not state how recent and in what quantity the increase must be for safeguard measure to be put in place.

Another area of confusion is what is meant by “serious injury.”

No precise definition exists for this phrase and what constitutes serious injury is not clear. The requirement for a causal link between increased importation and injury is also a complex one as other factors might be responsible for injury to the domestic industry.

Although, Safeguard Agreement requires that a distinction is drawn between the injury caused by increased import and other factors, how to go about this is not clear.

DO YOU KNOW? inted glass is prohibited in Nigeria except with the permission of the right authorities. There have been arguments for and against the use of tinted glass. Some believe that you do not need a permit if the car was bought with tinted glass (factory fitted).

The position of the law is clear under Motor Vehicle (Prohibition of Tinted Glass) Act. Its section 1(1) states that “(1) Except with the permission of the appropriate authority designated

Wednesday 02 January 2019

was aware of the real price based on the discussions between the parties. Therefore, the plaintiff accepted the offer fraudulently. They also stated that based on the mistake and the previous discussions with the plaintiff the offer cannot be held to be binding on the defendant.

The court held that the contract was void for mistake.

The court further stated that the plaintiff must have been aware of the mistake as Hare skin were generally sold per piece.

Why banks usually ask that you add your personal guarantee to loans obtained by your company

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ompanies and individuals do take loans for different reasons. However, it is common for banks to request for personal guarantee of the managing director of a company as part of documentation process for loans obtained by the company. Why do they do this? The main reason is to make the alter ego (director) of the company to be liable for the payment of the loan in a situation where the company fails.

Ordinarily, a company as a legal person should bear the implications of failure to pay up its debt. The liability of the shareholders is limited to the amount they invested and cannot extend to their personal belongings. With the foregoing

understanding, the personal guarantee of directors of a borrowing company usually form part of the documents required for lending to the company.

With their personal guarantee, the bank can go after them for the recovery of the loan. They bear secondary liability as directors. This provides additional security for the loan that was granted. It also forms the basis why the names of directors appears on court processes filed for the recovery of debt (at least companies can sue and be sued in their names).

When you are giving personal guarantee for loans, have it at the back of your mind that you can be held liable in case the original party defaults.

Wednesday 02 January 2019

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BUSINESS DAY

FINANCIAL TIMES

35

World Business Newspaper

Polish PM forecasts big changes for Brussels after EU elections

Morawiecki urges dropping of rule of law case against Warsaw after ECJ decision James Shotter

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oland’s prime minister has forecast this year’s European elections will lead to big changes for Brussels and compared the controversy over the rule of law in his country with the travails of French president Emmanuel Macron.

Mateusz Morawiecki called on the EU to drop disciplinary proceedings over Warsaw’s contentious judicial reform and predicted that May’s elections, in which nationalist and Eurosceptic groups are expected to make gains, would have a “strong” impact on the bloc.

“Brussels and the European Commission need to be very receptive to what is going on in different countries . . . The voice of different countries, and in particular central European countries, will need to be heard much more clearly,” Mr Morawiecki said in an interview with the Financial Times.

“The EU as an institution needs reform . . . and when I speak to prime ministers from other countries, most of them agree that a serious revamp of procedures and institutions is needed, but everyone is waiting for the European elections.”

Anti-establishment, nationalist, far-right parties have made advances in a range of EU countries ahead

of the May 23-26 elections. Polls indicate leading places for Matteo Salvini’s League in Italy and Marine Le Pen’s National Rally in France, as well as for Viktor Orban’s rightwing Fidesz party in Hungary, and the Eurosceptic Alternative for Germany.

An Ipsos poll in December forecast that Mr Morawiecki’s Law and Justice party (PiS) would emerge as the largest grouping in Poland.

Mr Morawiecki dismissed as “completely wrong” suggestions that central Europe was sliding towards authoritarianism, a characterisation based on the clampdown on civil society in Hungary, and contested judicial changes in Romania, as well as his own government’s battles with the EU over the rule of law.

“People from Brussels completely do not understand the situation in post-communist countries,” he said, arguing that the PiS’s judicial overhaul — which critics say is an assault on judicial independence — was needed to root out the last vestiges of Poland’s communist past.

He compared the controversy surrounding the Polish changes with Mr Macron’s recent struggles with the gilets jaunes protests, which have involved violent clashes between police and demonstrators.

“When I look at what is happening in France, I wouldn’t say that France has an issue with the rule of law,

Netflix pulls episode of comedy show in Saudi Arabia Second episode of ‘Patriot Act with Hasan Minhaj’ criticised crown prince and Yemen war ogy and entertainment sectors Ahmed Al Omran through big investments by its etflix has removed an epi- sovereign wealth fund, which sode of a comedy show directly owns stakes in comcritical of Saudi Arabia panies such as Uber and many after the internet streaming ser- other groups indirectly through vice received a complaint from its backing of Japan’s SoftBank the kingdom, renewing concerns Vision Fund. about government control over Later in the removed episode, freedom of expression on online Mr Minhaj criticised Silicon Valplatforms. ley for “swimming in Saudi cash” The second episode of Patriot and urged tech companies to Act with Hasan Minhaj focused stop taking investment from the on Saudi Arabia in the aftermath kingdom. of the killing of journalist Jamal The Saudi law has been previKhashoggi and included criti- ously criticised by human rights cism of Crown Prince Moham- groups as a tool to suppress med bin Salman and the Saudi- free speech and has been used led military campaign in Yemen. to convict activists using social “Now would be a good time media sites such as Twitter and to reassess our relationship with Facebook to criticise the governSaudi Arabia. And I mean that as ment in recent years. a Muslim, and as an American,” The CITC did not immediMr Minhaj said at the start of the ately respond to a request for episode. He called the Yemen war comment, but Netflix defended “the biggest tragedy of the MBS its decision. “We strongly supera”, referring to the crown prince port artistic freedom worldwide by his initials. and only removed this episode Netflix confirmed that it had in Saudi Arabia after we had removed the episode in Saudi received a valid legal request — Arabia last week, after the coun- and to comply with local law,” the try’s Communications and Infor- company said. mation Technology Commission Netflix said the Saudi telecoms made a request to take it down regulator cited Article 6 of the because it allegedly violated the law as reason for the request. kingdom’s anti-cyber crime law. The article states that “producSaudi Arabia has become an Continues on page 36 influential player in the technol-

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Mateusz Morawiecki: ‘The EU as an institution needs reform . . . and when I speak to prime ministers from other countries, most of them agree that a serious revamp of procedures and institutions is needed’

but can you imagine if those brutal interventions would happen against demonstrators in Poland how loud the voices would be in Brussels, in Berlin or . . . maybe even Paris?” Mr Morawiecki said.

“Just as every country has their challenges, so we have our challenges with the judiciary that hasn’t been reformed for the last 30 years.”

PiS’s overhaul of Poland’s judicial system has left the party at logger-

heads with Brussels for much of the past three years. Among the most contentious changes was the ousting of about two dozen supreme court judges last summer. In a bid to make Warsaw reverse course, the European Commission took Poland to the European Court of Justice over the issue. The court told Warsaw to suspend the reform and Poland reinstated the judges in November.

EU officials say that, while wel-

come, Poland’s climbdown does not address broader concerns about the judicial overhaul, including changes to the constitutional tribunal and the body that appoints Polish judges.

As well as the case at the ECJ, Brussels is running a broader probe into whether Poland complies with the EU’s core values. The probe, known as the Article 7 procedure, could theoretically lead to Warsaw’s EU voting rights being suspended.

Erik Prince to launch fund focused on electric car battery metals Blackwater founder to capitalise on the scramble for once niche metals across Africa Henry Sanderson

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rik Prince, the founder of private security company Blackwater, is launching a fund to capitalise on the scramble for battery metals across Africa and Asia, as the world’s largest carmakers gear up to go electric.

Mr Prince, a campaign adviser to president Donald Trump and brother of US education secretary Betsy DeVos, aims to raise up to $500m to invest in the supply of metals such as cobalt, copper and lithium that are needed for batteries.

“For all the talk of our virtual world, the innovation, you can’t build those vehicles without minerals that come from generally weird, hard-to-access places,” Mr Prince told the Financial Times.

Miners are pouring billions of dollars into developing deposits of the niche metals that will be increasingly needed for the global car industry to switch to electric cars.

One of the largest investors has been China, with Chinese companies buying stakes in deposits in the Democratic Republic of Congo and in Chile this year. Mr Prince also runs a Hong Kong-listed security and logistics company that is backed

by China’s state-owned Citic Group.

Mr Prince said the new fund would target unexplored deposits that could be brought into production and then sold to larger mining companies. It will look to sell its investments after four to five years, Mr Prince said. “ Chinese companies are not necessarily interested in the very upstream exploration,” he said. “They want to buy something in production which leaves that gap for us.”

Over 60 per cent of the world’s cobalt supply comes from the DRC, one of the poorest countries in the world. Chinese companies including Citic, Jinchuan Group and China Molybdenum are some of the largest investors in the African country.

Mr Prince, who wrote an opinion piece about Libya for the FT in 2017, made his name as a private military contractor in Iraq and Afghanistan with Blackwater, an operation that was eventually targeted by lawsuits and connected to civilian deaths in Baghdad in 2007. He sold the company in 2010.

Since then Mr Prince has run Frontier Services Group, which provides security and logistics services to companies in unstable countries. The company has won contracts to provide anti-piracy support to Somalia

and security to oil companies in South Sudan.

But it has also ventured into natural resources, investing in a bauxite mine in Guinea, and discovering a copper and cobalt deposit in the Congo.

A former Navy Seal who now lives in Abu Dhabi, Mr Prince’s strong Chinese connections have helped with his mining investments. This year his mine in Guinea secured an agreement to supply China’s state-owned aluminium producer Chalco with bauxite.

Mr Prince, whose father founded a company in West Michigan that supplied the auto industry, said carmakers will need vast amounts of minerals to fulfil their visions.

“When I see the R&D budgets of all the major automakers ploughing huge money into hybrid or electric vehicles, I believe the demand curve for the unique minerals that make up an electric car and battery technology will be enormously high over the coming years,” Mr Prince said.

The Blackwater founder advised Mr Trump on his election campaign and met a Russian financier with direct ties to Vladimir Putin’s family in the weeks leading up to the US president’s inauguration — a meeting that is now being examined by special counsel Robert Mueller.

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Netflix pulls episode of comedy show in Saudi...

Leading sides claim early success as Congo election count gets under way

Continued from page 35

tion, preparation, transmission, or storage of material impinging on public order, religious values, public morals, and privacy, through the information network or computers” is a crime punishable by up to five years in prison and a fine not exceeding SR3m ($800,000).

While the episode has been removed from Netflix, Saudi users can still watch it on the show’s official channel on YouTube.

Activists and rights groups warn that some governments may abuse their legal procedures in order to deprive their citizens of basic freedoms and say companies should take a more nuanced approach when it comes to addressing official takedown requests from undemocratic states.

“Banning a comedy act that brings valid criticism of a government is a counterproductive measure and an affront to the freedom of expression that all citizens deserve,” said Jillian C York, a director at the Electronic Frontier Foundation.

The incident comes as online platforms and the technology companies behind them face increasing scrutiny over their public policy and relationship with governments.

Saudi Arabia, where roughly two-thirds of the population are under 30, represents a rapidly growing market for tech companies, which can make them cautious about upsetting the authorities for fear of losing access to affluent consumers.

Twitter quietly fired a Saudi engineer in 2015 after western intelligence officials told the company that the government had persuaded him to spy on the accounts of dissidents, according to the New York Times.

The company also warned of “unusual activity” from Saudi Arabia and China last November after discovering a bug that could have revealed the country code of users’ phone numbers.

Experts say companies should be transparent about removing or restricting content, with a clear policy of conducting due diligence on government requests that follow legal procedures.

“If they are not doing all these things then they are not following established industry best practice for being accountable and responsible in handling government demands to restrict content,” said Rebecca MacKinnon, director of the Ranking Digital Rights project at the New America Foundation.

Netflix said its policy of complying with local law was consistent with how other US-based companies operated, but it did not disclose information about how many government requests it received or how many were acted upon in each jurisdiction.

Wednesday 02 January 2019

After 18 years in power many observers believe ruling coalition will still succeed Tom Wilson

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A plan put forward by the Democrats’ congressional leaders, Chuck Schumer and Nancy Pelosi, would create a five-week window for compromise on the issue of border security © Bloomberg

Democrats hatch plan to end shutdown and corner Trump Party aims to pass bills that would allow funding for federal agencies James Politi

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emocrats on Capitol Hill are planning a quick legislative blitz to try to end the US government shutdown, making the issue their first order of business when they take partial control of Congress this week.

The aim is to pressure President Donald Trump into caving in, as the budgetary stand-off over the president’s mooted border wall threatens to run into a third week.

Nancy Pelosi, who is expected to lead the Democratic majority in the House of Representatives starting on Thursday, and Chuck Schumer, the party’s leader in the Senate, said in a joint statement that they were preparing to “take action to lead our country out of this mess”. They said they would work to pass separate bills that would allow funding for the country’s federal agencies.

The US government has been partially closed since December 22, as Democrats and the White House sparred over Mr Trump’s insistence on the inclusion of funding for a wall on the Mexican border, to fulfil one of his key pledges from the 2016 presidential election campaign. Democrats have consistently said they opposed funding a wall.

The Democratic legislation due to be approved as soon as the new lawmakers are sworn in on Thursday would reopen all federal agencies until the end of Sep-

tember, except for the Department of Homeland Security. That department, responsible for border security, would be funded only to February 8 — without any new money for a wall — offering a five-week window for compromise on the issue.

There were no signs that the White House was prepared to accept the solution proposed by Ms Pelosi and Mr Schumer, meaning a rapid conclusion of the budgetary stand-off was unlikely.

“The Democrats, much as I suspected, have allocated no money for a new Wall,” Mr Trump wrote in a tweet on Tuesday morning. “So imaginative!

The problem is, without a Wall there can be no real Border Security.”

The government shutdown prompted Mr Trump to cancel his plans for a two-week stay at his Mar-a-Lago resort in Florida over the holiday period, and heralds a new period of gridlock and confrontation between the president and Congress this year following the Democratic takeover of the House in the midterm elections. Despite some misgivings among congressional Republicans about Mr Trump and his policies over the past two years, the US president had until now benefited from a benign environment on Capitol Hill.

The shutdown has added to a new phase of turmoil in Washington, amid volatility in financial markets, uncertainty over the fate of looming trade talks with China and drama in US security policy following the resignation of Jim Mattis as defence secretary.

Although the macroeconomic impact of government shutdowns tend to be small, they can begin to bite if they endure as federal employees and government contractors experience delayed payments and consumer and business confidence begins to wane.

Mr Trump’s calculation in refusing to back down on the border wall is that he cannot afford to concede defeat on one of his signature policies just as he begins preparing for his 2020 re-election campaign, in which he will need a strong turnout from his conservative base.

In addition, he may be hoping that the government shutdown could dominate the congressional agenda at a time when Democrats might otherwise prefer to focus on launching their investigation into wrongdoing inside his administration.

But Democrats still believe they have the upper hand in the fight over the shutdown, and their quick moves to tackle the issue are designed to corner Mr Trump, as well as Republican lawmakers in the Senate who are allies of the president.

Ms Pelosi and Mr Schumer said that if Republican senators, including Mitch McConnell, the majority leader in the upper chamber, refused to support their legislation, they would be “complicit with President Trump in continuing the Trump shutdown and in holding the health and safety of the American people and workers’ pay cheques hostage over the wall”.

Mark Zuckerberg’s struggle to ‘fix’ social network Facebook Embattled boss says group has ‘fundamentally altered’ its DNA after year of scandals Hannah Kuchler

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ark Zuckerberg knows that he faces an uphill struggle to fix Facebook.

As 2019 dawns, the social network’s share price has lost more than a quarter of its value in the past year, employee morale has slumped and regulators on both sides of the Atlantic are debating whether to implement more stringent rules for the virtual world it has built for 2bn people.

In a new year note published last week, Mr Zuckerberg admitted that he had plenty of work still to do. But the Facebook founder pointed to changes such as employing 30,000 people working on safety issues and investing billions of dollars in security every year.

The company has also introduced new privacy options, and made targeted advertising more transparent by publishing a database of political ads.

“We’re a very different company today than we were in 2016, or even a year ago,” he wrote in a Facebook post on Friday. “We’ve fundamen-

tally altered our DNA to focus more on preventing harm in all our services, and we’ve systematically shifted a large portion of our company to work on preventing harm.”

Yet the changes may be too little, too late, as politicians increasingly question the sheer size and influence of the company. In the US, Democratic Congressman David Cicilline, the incoming chair of the House judiciary antitrust subcommittee, believes it is time for the government to step in.

“Facebook and the other large technology platforms are incapable of regulating themselves,” he said. “There’s evidence of growing concentration and influence in the marketplace — and rising political power as a result of the tremendous concentration of economic power.”

Mr Zuckerberg began 2018 with a New Year’s resolution to repair the company, after the discovery of disinformation campaigns on its platform. He pledged to pour investment into weeding out Russian trolls, users spreading hate speech and fake news.

But by March, Facebook was forced

to issue a major public apology, after the revelation of a massive leak of up to 87m users’ information to Cambridge Analytica, the data analytics firm that worked for Donald Trump’s 2016 presidential campaign.

It was the first of many apologies the social network would make throughout the year, as it was repeatedly exposed for failing to protect people’s data from abuse, leading users, regulators and politicians around the world to question whether Mr Zuckerberg — who is also Facebook’s chairman and controlling shareholder — was up to the job.

In November, members of parliament from Argentina, Brazil, Canada, Ireland, Latvia, Singapore, France, Belgium and the UK rebuked Mr Zuckerberg for refusing to be questioned by an international committee on fake news and disinformation that convened in London.

By the end of the year, the company was the target of more criticism for the way it handled the crises, including hiring a PR firm to smear opponents such as billionaire philanthropist George Soros.

he leading sides in Democratic Republic of Congo’s presidential election both claimed early success as the count got under way on Monday, setting the stage for volatile days ahead as official results drift in.

Ahead of Sunday’s historic election the only reliable polls gave opposition leader Martin Fayulu a 28-point lead over President Joseph Kabila’s chosen successor, the former interior minister Emmanuel Shadary.

But after almost 18 years in power many observers said they believed Mr Kabila’s ruling coalition would still win.

“There is absolutely no way Mr Shadary can lose”, Barnabe Kikaya, Mr Kabila’s chief diplomatic adviser told the Financial Times, late on Sunday at a building in the capital, Kinshasa, where the ruling party was running its own vote count. The cavernous room was filled with banks of phones and computers, as party officials prepared to collate results from more than 1m ruling party election observers nationwide.

Across town, Mr Fayulu said reports from the opposition’s observers throughout the country indicated a massive vote for his campaign. “One thing is certain, what happened today has organised the definitive departure of the Kabila regime,” Mr Fayulu said.

“If Mr Shadary thinks he’s won, he’s dreaming,” he said.

The stakes are high. Congo has only held four elections since independence from Belgium in 1960 and has never had a transfer of power via the ballot box. Mr Kabila, in office since 2001, was due to step down in 2016 but elections were delayed and he held on to the presidency.

Mr Fayulu, backed by the wealthy opposition leaders Moise Katumbi and Jean-Pierre Bemba — both excluded from the race — was one of the few opposition candidates with the financial resources to run a genuinely national campaign, criss-crossing the country in a private jet.

Official results are not expected until January 6 but initial counts from individual polling stations indicated that Mr Fayulu probably performed best in Kinshasa — a sprawling metropolis of 11m people. The other main opposition candidate, Felix Tshisekedi, is the head of Congo’s biggest opposition party but early results suggested he had not done as well as the lesser-known Mr Fayulu.

At two polling stations in a church in Kinshasa’s Matete district, vote counts pasted to the wall on Monday showed Mr Fayulu had won 63 per cent and 69 per cent of the vote respectively.

However, delays to voting due to heavy rain meant turnout in both polling stations was less than 50 per cent.

In other opposition bastions in the capital turnout was even lower.

At one polling station in the Limete stronghold of Mr Tshisekedi, voters had to wait six hours for polls to open. To compensate, the voting station remained open until 2am the next morning but only 33 per cent of registered voters managed to place ballots, according to Joseph Matoka the senior election commission official at the site.

Across the country faulty or missing equipment and untested electronic voting machines introduced this year for the first time led to chaotic scenes.

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Cleaning up steel is key to tackling climate change Technology to make grey metal green will not be rolled out commercially until 2030s Michael Pooler

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ehind sand dunes on the Dutch North Sea coastline, clouds of smoke and steam billow from the mass of chimneys, pipes and cranes that form the imposing Ijmuiden steelworks.

Deep inside this vast industrial complex, which for almost a century has churned out metal for cars, construction and food cans, an experimental project is under way — to make steel cleaner and cheaper.

The plant’s owner, the Indian conglomerate Tata, calls its novel process a “game changer” capable of reducing both carbon dioxide emissions and energy consumption by one-fifth.

“There is a very big duty for us, as the steel industry, because we are one of the biggest CO2 producers,” said Hans Fischer, the chief executive of Tata Steel Europe.

But despite more than a decade of gestation, this new steelmaking technology is unlikely to be rolled out on a commercial scale until at least the 2030s.

“It’s not a financial reason, it is not an investment reason. In fact, it’s for technical reasons that it takes that long,” explained Mr Fischer.

At a time of renewed international efforts to avert environmental disaster, the slow pace of progress illustrates the huge task to overhaul a monolithic sector that is the single largest industrial source of climate pollution.

Globally, steel is responsible for 7 per cent to 9 per cent of all direct emissions from fossil fuels, with each tonne produced resulting in an average 1.83 tonnes of CO2, according to the World Steel Association.

And as the world’s population grows, demand is only predicted to increase.

“It’s very clear that if we want to reach [emissions reduction targets] and keep global warming to 2C, steel

would also need to become more or less emissions-neutral,” said Nicole Voigt of Boston Consulting Group.

The goal of policymakers, who negotiated the UN Paris agreement on climate change in 2015, is to ensure global temperatures do not rise more than 2C above pre-industrial levels.

Yet even as producers of the grey metal develop a spectrum of new technologies, from dealing with waste gases to rethinking core metallurgical equations, experts say a large-scale decarbonisation of the industry remains decades away.

As a basic material central to the modern economy, which is also the most traded commodity after oil, perhaps the greatest challenge is to deliver so-called green steel at a competitive price.

“In principle there are technology routes to lower emissions from steelmaking,” said David Clarke, head of strategy and chief technology officer at ArcelorMittal, the world’s largest producer by tonnage. The catch, he added, was that “society would have to accept higher costs of steel production”.

The traditional method for making iron and its tougher alloy steel, smelting raw materials at extremely high temperatures, has not fundamentally changed since the grey metal became widespread more than 150 years ago. Large blast furnaces rely on coke, a carbonrich fuel made from coal, to reduce iron ore into liquid metal, which is refined into steel.

Despite substantial efficiency improvements over the years, the laws of chemistry mean that carbon dioxide is an unavoidable output of this reaction.

“There are two ways you could reduce the carbon footprint,” said Ms Voigt. “One is you avoid CO2 in the steel production, so you try to use either scrap, or something other than carbon as a reductant agent.

December was best month for global bonds in more than a year Safest fixed-income assets turned positive for the year as economic clouds gathered Robin Wigglesworth

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lobal bond markets enjoyed their best month in more than a year in December, as rising concerns over the health of theglobal economy sent investors in search of relatively safe assets.

The Santa Claus rally that was missing from equity markets was in full swing in fixed income, bringing some respite to battered debt investors.

The global bond market has been under intense pressure for most of 2018, as economic growth fanned fears of inflation. The Federal Reserve kept raising US interest rates and shrinking its balance sheet, and the European Central Bank trimmed and ultimately ended its own bond-buying programme.

As a result, by mid-November the Bloomberg Barclays Multiverse index, a broad gauge covering $53tn worth of government and corporate debt around the world, was nursing a 3.7 per cent loss for the year. Although modest compared to the decline in some equity markets, that put the global bond benchmark on track for its worst year in more than a decade, and US bonds were heading for their worst year since 1994.

However, the equity market ructions and fading optimism over the international economic growth outlook for 2019 sent investors scrambling back into the safety of fixed income, lifting the Multiverse index by 1.7 per cent in December. That is its best monthly gain since July 2017, and pared its loss for the year to 1.6 per cent.

“The US economy is slowing, and will likely continue to slow as this long growth cycle simply runs out of gas,” said Kevin Giddis, head of fixed income at Raymond James. “The Fed will be on hold for the foreseeable future. They may not tighten at all in 2019, and may even ease if conditions deteriorate from here.”

Underscoring the rising doubts over the economy and mounting expectations that the Fed will have to ease back on its monetary tightening plans, the global bond market bounce has been powered by the safest bonds.

The yield on 10-year US Treasury bonds has dipped from a seven-year high of 3.26 per cent in early November and on New Year’s eve it fell below 2.7 per cent for the first time since February, to end the year at 2.68 per cent.

That helped the overall US government bond market to a 1.9 per cent gain in December, the best in almost two years. Yields fall as bond prices rise.

The steel sector is the single largest industrial source of climate pollution

Upmarket slipper brand Mahabis enters administration London-based start-up gained brief fame through aggressive online marketing Leila Abboud

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ahabis, the maker of highend slippers that gained brief fame by building a minimalist, Scandinavian-inspired brand through aggressive online marketing, has gone into administration.

Ankur Shah, the 37-year-old founder of the London-based startup, had touted his ambition to build the “the Nike of downtime” as recently as September in an interview with the Times. His social media savvy made Mahabis’s cozy-looking slippers with the distinctive yellow rubber sole ubiquitous on Instagram and Facebook.

He told the Times that Mahabis was on track for sales of “well over £20m” in its third year of activity, and had sold more than a million pairs of its slippers that retail for about £69.

The exact reasons for Mahabis’s collapse remain unknown, but its demise shows how the direct-toconsumer model, which bypasses

the retailer, for everything from mattresses to razors can be difficult to sustain even if a brand shoots to notoriety quickly.

Mahabis, whose tagline was “slippers reinvented”, never reported any official revenue figures with Companies House since it was incorporated in May 2015. Its unaudited financial statements as of end of June 2017 showed that it had debts worth £2.6m to creditors coming due within a year.

According to the filings, Mr Shah was the sole owner and director of the company.

The company said it had been forced to call in administrators from KRE Corporate Recovery once it entered administration on December 27. “We have, for the moment, ceased trading as the administrators take over the business. During the four years since we launched, we sold nearly a million pairs of slippers to customers in over 100 countries; we are all desperately disappointed at this outcome,” said Mahabis on its website.

Mr Shah did not respond to requests for comment on Tuesday.

The rise of Mahabis, like other direct-to-consumer brands, was enabled by online marketing, the wide availability of contract manufacturers that can make new products rapidly and the advent of cheap computing infrastructure to do everything from run servers to process payments.

Yet it remains to be seen how many of the new upstart directto-consumer brands will actually prove to be viable businesses. Many of the best known ones such as Casper mattresses, Harry’s razors and glasses manufacturer Warby Parker are private, venture capital-backed companies that do not disclose sales or profit numbers, making it difficult to gauge their sustainability.

Allbirds, a maker of eco-friendly, stripped down sneakers, for example, recently raised $50m from venture capital funds to help it expand by opening more physical stores in the US, as well in the UK and Asia.

India’s renewable rush puts coal on the back burner Investment in the fossil fuel at a standstill as focus switches to green energy Simon Mundy

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ndian power companies spent much of the past decade rushing to build coal-fired power plants in anticipation of surging electricity demand as economic growth took off.

Now, many of those projects are mired in deep financial distress and private investment in coal power has ground to a near halt. The sector has been hit by a host of problems: many plants have struggled to secure fuel supplies, and to clinch deals to sell their power to cash-strapped state distribution companies.

But the biggest driver of longterm uncertainty for the industry is one that few anticipated 10 years ago: an explosive take-off in the renewable power sector, as India joins the global push to tackle climate change by shifting towards green energy.

Soon after taking power in 2014, Prime Minister Narendra Modi’s government set a target of increasing India’s renewable energy capacity by 2022 to 175 gigawatts, equivalent to 40 per cent of the country’s total power capacity at the time of the announcement.

Mr Modi’s ambitions were stoked by a dramatic fall in the price of solar panels after a huge expansion of

production in China, which is seeking to capitalise on the international drive to cut emissions. This was steadily making the cost of electricity from solar plants — once far more expensive than coal power — more competitive with plants running on the dirtiest fossil fuel. In the 2017 financial year, newly added renewable energy capacity overtook new coal-fired capacity for the first time.

The renewable push attracted major investors such as Japan’s SoftBank, whose consortium last year sealed a deal that stunned the industry. It agreed to sell power from a northern Indian solar park for Rs2.44 per unit — well below the cost of coal power, which typically costs well over Rs3.

This shift in the industry’s economics means that coal power — once one of the hottest prospects for Indian industrialists — is now a space where most fear to tread.

“You’d have to be quite courageous to invest in coal at this point,” said Navroz Dubash of New Delhi’s Centre for Policy Research. “The speed with which the story has reversed is quite astonishing.”

India’s move away from coal power has big implications for the global climate. Per capita electricity consumption by the country’s 1.3bn people is just 38 per cent of the

global average, according to the New Delhi-based Energy and Resources Institute, with tens of millions of households still lacking grid connections, and many more suffering highly inconsistent power supply.

The government has made the push for reliable, universally available electricity a key policy priority.

The scale of the anticipated growth in power demand meant that coal would remain a vital part of the power mix, said Sajal Ghosh, an energy economist at Gurgaon’s Management Development Institute. In contrast with its heavy reliance on imported oil and gas, India has plentiful supplies of coal in its eastern region. Until major advances are made in storage, largescale coal power will be required to make up for the intermittent nature of renewable electricity, with solar plants shutting down at night and wind turbines falling quiet on still days.

But the sector is already moving quickly to respond to the rapid shift in the relative economics of coal and renewables. This year, state-run NTPC — by far the biggest thermal power producer in India — has cancelled several plans for large coal projects, including one for a giant 4GW plant in southern Andhra Pradesh state.

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ANALYSIS Brexit ‘bad or awful’ for UK economy in 2019, say economists Uncertainty expected to hit business investment and depress consumer spending Delphine Strauss and Gavin Jackson

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The future might not belong to China Replicating the success of other high-growth economies is about to become far harder Martin Wolf

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o not extrapolate from the recent past. China has had a hugely impressive four decades. After their triumph in the cold war, both the west and the cause of liberal democracy have stumbled. Should we conclude that an autocratic China is sure to become the world’s dominant power in the next few decades? My answer is: no. That is a possible future, not a certain one.

The view widely held in the 1980s that Japan would be “number one” turned out to be badly mistaken. In 1956, Nikita Khrushchev, then first secretary of the Communist party of the Soviet Union, told the west that “We will bury you!” He proved utterly wrong. The examples of Japan and the Soviet Union highlight three frequent mistakes: extrapolating from the recent past; assuming that a period of rapid economic growth will be indefinitely sustained; and exaggerating the benefits of centralised direction over those of economic and political competition. In the long run, the former is likely to become rigid and so brittle, while the latter is likely to display flexibility and so self-renewal.

Today, the fiercest political and economic competition is between China and the US. A conventional view is that by, say, 2040, China’s economy will be far bigger than that of the US, with India far smaller still. But might this view be mistaken? Capital Economics, an independent research firm, answers “yes”, arguing that China’s period of stellar outperformance might be coming to an end quite soon.

There are two powerful arguments why this view will prove to be mistaken: first, China’s has great potential for continuing catch-up on the productivity levels of the most advanced countries; and, second, it has a proven ability to generate sustained rapid growth.

It is brave to bet against both potential and capacity. But, argues Capital Economics, in its “LongTerm Global Economic Outlook”,

we should. As with Japan in the 1980s, the policies of ultra-high investment and rapid debt accumulation, which kept China growing so fast after the 2008 financial crisis, make it vulnerable to a sharp deceleration.

Crucially, China’s investment rate, at 44 per cent of gross domestic product in 2017, is unsustainably high. This extraordinary investment rate did maintain the growth of supply and demand after the 2008 crisis. But China’s public capital stock per head is already far bigger than Japan’s at comparable incomes per head. Slowing urban household formation means that fewer new homes now need to be built. Not surprisingly, returns on investment have collapsed. In sum, investment-led growth must come to an early end.

Because of its size, China has also hit the buffers on exportdriven growth, at a lower level of income per head than other highgrowth east Asian economies. The trade war with the US underlines this reality. China’s working-age population is also declining. Given the huge rise in debt as well, sustaining fast growth will be very hard.

Future demand will depend on the emergence of a mass-consumer market, while growth of supply will require an upsurge in growth of “total factor productivity” — a measure of innovation. Yet, in 2017, private consumption was only 39 per cent of GDP. If it is to drive demand, the savings rate must tumble and the share of household incomes in GDP must jump. Neither will be easy to achieve. But the biggest hurdle of all, especially to the needed upsurge in productivity growth, is the shift towards a more autocratic political system.

For one and a half decades, China has benefited from the reforms introduced by Zhu Rongji, premier from 1998 to 2003. No comparable reforms have happened since his time. Today, credit is still being preferentially allocated to state businesses, while state influence over large private businesses is growing. All this is likely to distort

the allocation of resources and slow the rate of innovation and economic progress, even if an outright financial crisis is avoided.

In sum, China may well fail to replicate the success of other east Asian high-growth economies, in becoming a high-income country in short order. It will surely be far harder for it to do so, because the distortions in its economy are so large and the global environment is going to be so much more hostile.

Meanwhile, suggests Capital Economics, the arrival of robotics and artificial intelligence might re-ignite productivity growth in the west and, above all, in the US. If one wished to be optimistic, one would also hope that experience of Donald Trump’s incompetence and malevolence will be salutary.

His hardcore supporters are a minority. Majorities of the disgusted should win and then bring about the renewal of economic competition and social concern that the US needs.

The most interesting other economy is not Europe, which seems destined for a slow relative decline, but India, due to be the world’s most populous country in the near future. India is far poorer than China and so still has great potential for fast catch-up growth.

Capital Economics forecasts 5-7 per cent annual growth until 2040.

This is at least conceivable. India’s savings rates and entrepreneurial capacity are high enough to deliver such a rate. It will need much policy reform. But India’s politics are increasingly focused on economic performance. This does not guarantee success. But it does make it more likely.

Disheartened liberal democrats must not despair. The euphoria and hubris of the “unipolar moment” of the 1990s and early 2000s were grave mistakes. But the triumph of despotism is still far from inevitable. Autocracies can fail, just as democracies can thrive. China confronts huge economic challenges. Meanwhile, democracies must learn from their mistakes and focus on renewing their politics and policies.

ncertainty will hobble UK business investment and depress consumer spending in 2019, stunting long-term growth even if Britain manages to avoid a disorderly Brexit, according to a poll of more than 80 leading economists.

The best the UK can expect over the year is uninspiring growth remaining at its current level of about 1.5 per cent, even if the economy eventually enjoys a modest rebound on the back of a deal with the EU, the FT’s annual survey on the UK’s economic outlook suggests.

A majority of the 81 economists, polled between December 17 and 21, did not give a firm prediction for growth in the coming year, despite last year correctly anticipating a slowdown to 1.5 per cent growth in 2018. Many said forecasting for 2019 was impossible given the “comprehensive” and “chronic” uncertainty that had become “a way of life” in the UK, especially when likely Brexit outcomes were binary: either no deal or no Brexit.

“Given the political shambles . . . the outlook is anything from lacklustre to catastrophic, but who knows?” said Diane Coyle, professor of public policy at Cambridge. Nina Skero, head of macroeconomics at the Centre for Economics and Business Research, said that whatever its long-term effects, “in 2019, Brexit will be either bad or awful for the UK economy”.

The majority of those who ventured

support the economy if Brexit went awry, but would otherwise keep policy on hold until a deal went through and then deliver a one quarter point rate rise.

If Britain’s leading economists seem unremittingly gloomy, it is because — as London School of Economics professor Charles Goodhart put it — “we do not know what kind of Brexit outcome will emerge from the fog”. Given the lack of clarity, the one near-certainty is that businesses will prepare for the worst.

“The UK economy now has to brace itself for a hard landing,” said Rebecca Harding, a trade economist who runs Coriolis Technologies.

The slide in business investment already visible in official data is likely to become more severe in the first quarter of 2019, as the date set for Brexit approaches, many respondents said.

Rain Newton-Smith, chief economist at the CBI, said companies were putting contingency plans in place, and “more of these plans would turn into reality, with jobs and investment in the UK lost”.

Some of the respondents said the economy could already be stalling, as smaller businesses and households, as well as larger companies, began to put plans on hold ahead of the March 29 exit date.

However, others said a fall in investment in the first quarter would be offset by higher consumption, as businesses and households hoard supplies in case of disruption at borders. “I, for one, am

Brexit uncertainty overshadows productivity, growth, sterling and the fate of the UK economy under Prime Minister Theresa May © FT montage

a numerical forecast expected growth of no more than 1.5 per cent over the course of 2019, against a backdrop of a slowing global economic expansion. With the scheduled EU exit set for March 29, a significant minority warned that the economy could stall or shrink in the first quarter of the year if the government took Brexit talks to the wire, leading businesses to freeze investments and consumers to delay spending.

A majority of respondents also said that despite continued wage growth, lower inflation and a modest easing of austerity, consumers would feel no better off by the end of 2019, with anxiety setting in over Brexit’s potential impact on jobs, house prices and equity markets.

Even the handful of economists who believe Brexit will eventually benefit the economy were cautious about the short term outlook. Gerard Lyons, who has advocated a “managed no deal”, said the economy “could easily come to a standstill in the early months” of 2019 and that plans should be in place for both monetary and fiscal stimulus in the second quarter.

The respondents were divided about the likelihood of any new fiscal stimulus. They thought the Bank of England would cut interest rates to

stockpiling,” Prof Coyle said.

If there is a relatively smooth Brexit, most of those polled expect growth to pick up later in the year. However, several respondents warned that Brexit brinkmanship was doing lasting damage to the economy, with the prolonged uncertainty leading businesses to take irreversible decisions.

“Business is now being told to prepare for a no deal Brexit and increasing numbers will relocate some operations.

These decisions may not be reversed, even in the event of the best possible outcome for the economy, which would be to remain in the EU,” said Marian Bell, a former member of the monetary policy committee who runs the consultancy Alpha Economics.

Many respondents noted that even if a disorderly Brexit was averted, uncertainty over the UK’s future trading relations will limit the potential for a rebound, with the UK unlikely to return to pre-referendum levels of growth or to perform as well as its main trading partners.

“Even if we sign a withdrawal agreement, I don’t believe this will unleash a spree of business investment. The UK is going to be approached generally on a ‘care and maintenance’ basis by multinationals,” said Mark Gregory, chief economist at EY.

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New Year: Experts want more focus on post oil economy

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conomic experts say the way forward for Nigeria in 2019 is to focus on post oil economy, build infrastructure and reduce cost of governance to revamp the nation’s economy.

Lolade Adesola, Samson Olalere and Raji Rasaki, who are economic experts, gave the advice in separate interviews with the News Agency of Nigeria in Ibadan on Tuesday.

Adesola said there was need for adjustments across board so that the country could cope well under the present economic realities of low revenue and high debt servicing.

“The reality is that our revenue is not growing and the price of crude oil is below 50 dollars per barrel. The bottom line is that the 2019 budget is lower than that of 2018; the total amount of the budget is the size of South Africa’s budget for education.

“The revenue the country made in 2018 when crude oil was sold for 70 dollars is not realistic in 2019, so there is need for creative people in govern-

ment to begin to think about ways to raise money to finance the budget because we have the largest economy in the whole of Africa.

“We need to focus on import substitution for our agricultural produces and export processed products instead of raw materials. This will fetch us more revenue.

“For instance, we need to develop our dairy business; people who are into milk production in the country have none of that milk produced in Nigeria; they import milk and just package it into tins, meanwhile we have cows in Nigeria,” she said.

Adesola further stressed the need to improve on the revenue generation, as the deficit in the 2019 budget was higher than what was expected. “The recurrent expenditure is 45 per cent, meaning we will be borrowing to pay salaries and then there is a clamour for increase in minimum wage. Borrowing to pay salaries itself is a political exigency, which is not best economic solutions.

“Salary increase should

only be for people at the bottom so they can earn a decent living. It should not be for people at the middle or at the top.

“Lip service to agriculture and showmanship will lead us nowhere; we need to improve on agriculture as well as construct rural roads because we still have produces perishing in the farms,” she said.

The economist, however, said there was need to reduce the size of the government to save cost of governance and find other ways to increase revenue. Rasaki, in his submission, said infrastructure development was key as well as creating conducive environment for foreign investors to boost the economy.

“When we put infrastructure, in place, we will have the influx of foreign investors; in the past, the cost of running business via power in Nigeria killed most of the manufacturing businesses.

“But now that we have improved on power generation and distribution, a lot of companies are showing interest in coming back; government can

give tax holiday to direct foreign investors, especially those that are creating jobs and those that source for raw materials locally for production.

“Any manufacturing company that is looking inward or that wants to engage local farmers in production of its raw materials should be encouraged through tax exemption,” Rasaki said.

Olalere, however, said the country’s focus should be on post oil economy, considering the situation in the oil market globally.

“For the leadership of this nation to take it to the next level, we must be thinking of what happens after oil fails in the global market and so we must think about human capital development.

“We have so many resources untapped in this nation, the tourism sector and others are waiting to be explored. In the next five to 10 years, crude oil will become irrelevant as far as the world market is concerned; new inventions that require non-oil usage are gaining ground,” Olalere said.

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39 NEWS

BUSINESS DAY

Customers to access 3,100 Access-Diamond Bank ATMs free by January 1 HOPE MOSES-ASHIKE

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ith effect from yesterday, January 1, customers of Access Bank plc and Diamond Bank plc can have access to over 3,100 Automated Teller Machines (ATMs) free of charge.

This implies that customers can use any Diamond Bank ATMs without paying the usual charges that apply on withdrawals from other banks’ ATMs. The Central Bank of Nigeria (CBN) on September 2014 reintroduced N65 charge on transactions at other bank’s ATM, known as remote-on us, after four withdrawals.

But with the merger of Access Bank and Diamond Bank in December 2018, the charge would not apply to customers of these banks.

“Access Bank has a strong track record of acquisition and integration and has a clear growth strategy. Access Bank and Diamond Bank have complementary operations and similar values, and a merger with Diamond Bank, with its leadership in digital and mobile-led retail banking, could accelerate our strategy as a significant corporate and retail bank in Nigeria and a Pan-African financial services champion.

“Access Bank has a strong financial profile with attrac-

tive returns and a robust capital position with 20.1 percent Capital Adequacy Ratio (CAR) as at 30 September 2018. We believe that this platform, together with the two banks’ shared focus on innovation, financial inclusion and sustainability, can bring benefits to Access Bank and Diamond Bank customers, staff and shareholders,” Herbert Wigwe, group managing director/ CEO of Access Bank, said.

“In the memorandum of agreement to get into a merger with Diamond Bank, we believe that the combined enterprise will be a large diversified bank with an extreme extensive retail foot print. Together we will have 27 million customers which is basically the largest customer base of any bank in the continent, about 33,000 Point of Sale, PoS, terminals, and 3,000 Automated Teller Machines, ATMs, as well as 13 million mobile customers,” Wigwe said.

Access Bank is a fullservice commercial bank operating through branches and service outlets located in major centres primarily across Nigeria and sub-Saharan Africa, as well as the United Kingdom (extension to United Arab Emirates (Dubai)), with representative offices in China, Lebanon, and India.

Emotan Gardens: Subscribers rally family members, friends for more slots on back of impressive benefits

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R-L: Amina Audu-Katagum, wife of Bauchi State deputy governor; Rabiatu Abdullahil, mother of the 2019 Baby-of-the-Year in Bauchi State, and Rukaiya Ibrahim, Bauchi State commissioner for women affairs, during the visit of Audu-Katagum to the Babyof-the-Year at Bauchi State Teaching Hospital in Bauchi, yesterday. NAN

Island Maternity recorded 3,493 births in 2018 JOSHUA BASSEY

… as governor’s wife welcomes first babies of 2019

sland Maternity in Lagos recorded a total of 3,493 births in 2018, and on Tuesday began the New Year with early deliveries of two babies at 12.00am and 12.01am, respectively, to become first babies of 2019 in the state.

Of the 3,493 total births at the health facility in 2018, 111 were recorded as sets of twins, 12 were triplets while one was quadruplet (four babies in one birth).

The first babies of 2019 - a male and a female child, weighing 3.7kg and 2.8kg, respectively, were presented to the wife of the state governor, Bolanle Ambode, who arrived the hospital yesterday morning with lots of gifts for babies

born at the facility and two other hospitals in the state.

At the General Hospital, Somolu, a male child was also born at 1.47 am, weighing 3kg and two females at the Randle General Hospital, Surulere, at 1.58am and 4:00am, weighing 2kg and 2.7kg, respectively.

Ambode, who visited the three hospitals to share the joy of the new births with the families, advised pregnant women to patronise government health facilities for deliveries.

She explained that the investment being made by the government on infant and maternal health infrastructure, could only be justified by commensurate use of the modern facilities, by the

I

women, their babies and children. She noted that government’s efforts in stemming maternal and infant mortality would be slow if expectant mothers did not go to the centres to use the facilities.

“I wish to note that the state government has continued to strengthen the health sector with the provision of neonatal care units, equipment and resources to our state hospitals, to enhance the quality of maternal and child care services in our state,” she said.

She also appealed to mothers to ensure they complete the full course of immunisation for their children to prevent childhood killer diseases.

“In addition, parents must avoid the use of contaminated

water, and poor sanitation, as they contribute to childhood mortality,” she said.

She urged expectant mothers to maintain good hygiene and health- promoting lifestyle in pregnancy to ensure the wellbeing of their expected babies.

Jide Idris, the state commissioner for health, said with the implementation of the Lagos State Health Scheme, more residents would have access to improved health services.

Idris said this would reduce neonatal and infant mortality and ensure safe motherhood, noting that the plan of the state government was to get all residents into the health scheme and focus on the basic healthcare in the state.

ith work advancing on Emotan Gardens, the real estate project being developed by the Edo State government through the Edo Development and Property Agency (EDPA) and Mixta Nigeria, subscribers are mobilising their close associates and family members to snap up units in the estate to enjoy from its impressive benefits.

The 1,800-unit affordable housing estate sits on a 74-hectare land in Upper Sokponba axis of Benin City and offers a mix of housing options. About 100 units of the houses are ready for occupation, even as work intensifies on other phases of the estate project.

A cross-section of subscribers on the project said that they are excited about the prospect of living in the estate, which is a novel idea by the state government, adding that they were call-

CHANGE OF NAME

I, formerly known and addressed as Talabi Sekinat Olabisi now wish to be known and addressed as Lawal Talabi Sekinat Olabisi. All former documents remain valid. General Public please take note.

ing on their friends and family members to also snap up units at the estate.

Edmund Igbinoba said the major guarantee on the project is the government’s backing, which forecloses any doubt on the deliverability of the project. He added that the growing profile of the estate and the actualisation of a number of promises made by the state government on the project have motivated him to encourage his associates to also take up units in the project.

According to Igbinoba, “I am excited about the estate project for a number of reasons, chief of which is the state government’s support, which has been reaffirmed with the award for reconstruction of the Benin-Abraka Road. I am also impressed with the rate of development.

This is why I am asking my people to join me in this journey at the estate.”

CONFIRMATION OF NAME

This is to inform the general public that Akalugwu Chikamnaele Maryjane and Akalugwu Chikamnaele Mary. refers to same and one person. All former documents bearing any of the two names remain valid. General public please take note.

40

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WEST AFRICA

ENERGY intelligence oil

gas

power

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BUSINESS DAY

OIL

Nigeria: Total poised to start exports from Egina FPSO

Page 42

POWER

Cote d’Ivoire: Cote d’Ivoire to add 643MW of power to grid by 2021 Page 44 Market Insight

L-R: Temitope Oshuntuyi, SPE Nigeria, council member; Augusta Etim, senior production technologist at Eroton E & P; Onyebuchi Okereke, SPE Lagos section chairperson; Niyi Afolabi, head, development & Wells at Eroton with Gabriel Bigwan, senior Geophysicist at Eroton E & P during the Society of Petroleum Engineers Lagos section monthly technical meeting held recently.

Debrief

What can Nigeria learn from Angolan oil reforms?

FRANK UZUEGBUNAM

Oil watchers see $70/bbl in 2019 as recession fears fade Page 46 OPEC weekly basket price DAY

PRICE

20/12/18

53.92

19/12/18

55.13

18/12/18

56.08

17/12/18

58.24

14/12/18

59.07 Source: OPEC

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ngola, in the last one year has pursued its oil reform with the kind of zest Nigeria could not must in all its effort in nearly 20 years to reforms its own oil industry through the Petroleum Industry Bill (PIB). It is projected that Angola’s economy is set for recovery in 2019, in large part due to a series of regulatory reforms opening the country to new investment.

President João Lourenço who took over mantle of leadership in September 2017 focused on cleaning up corruption and implementing aggressive reforms to transform the oil and gas sector and the economy. The reforms, which span from deep changes in tax law to changes in concession contracts and the opening

of marginal fields to African independents, have hit the books just as the oil price is stabilizing, and Angola is already attracting new interest from investors.

Lourenço has made key appointments to shift the trajectory of the oil and gas sector. The Ministry of Mineral Resources and Petroleum quickly put together a task force comprised of both international and domestic stakeholders, including the Ministry of Finance, the Office of the President, Sonangol, BP, Chevron, ENI, Esso, Equinor, and Total. The task force has proposed improvements in several areas, including: simplifying the oil concessions management process; implementing incentives for investment in marginal fields; and creating a natural gas regulatory framework.

By December 2018, several

new laws have been enacted, including: The Natural Gas Regulatory Framework, which establishes policies for the monetization of natural gas (both associated and non-associated gas) in existing and new concessions; Incentives for investments, which vary from tax reforms to contract reforms, to encourage economic exploration and development of natural resources; Improved terms to better allow for exploration within development areas in existing blocks.

Considered one of the most important changes to Angola’s oil and gas sector, an independent regulator has been created to manage the country’s oil and gas concessions, which were previously handled by the stateowned Sonangol. The National Oil and Gas Agency is the new granter and manager of concessions in a complete restructur-

ing of the management of Angola’s oil and gas industry. The move is designed to improve transparency, attract new investment and increase output.

The reforms have also addressed the downstream sector.

The government has created a task force to focus on downstream issues, similar to the upstream task force. The taskforce teams will focus on what is needed to build a high conversion refinery in the Lobito municipality and a refinery in Cabinda.

Mega oil and gas projects have achieved final investment decision since 2018, and several more are headed for FID in 2019 and 2020. A new licensing round is expected to attract new international explorers to the country, as well as promote the participation of Angola’s domestic sector by offering incentives for marginal fields.

42 BUSINESS DAY WEST AFRICA Outlook

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crude from a floating offshore production vessel have been scheduled for February, according to a copy of a loading program for the new grade.

Initial exports should be just over 100,000 bpd but could double in the following months.

Wednesday 02 January 2019

oil

Nigeria: Total poised to start exports from Egina FPSO otal SA is poised to start exports of crude from a major new offshore field in Nigeria, adding to global supplies at a time when oil prices are plunging.

Shipments of Egina

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The extra supplies will arrive at an awkward moment for an oil market that has seen prices for benchmark Brent and West Texas Intermediate grades plunge by more than $30/bbl since early October. The project will also bolster Nigerian pro-

duction when the country is meant to be restricting supplies to help OPEC and its allies avert a glut.

Egina is the first of a series of a projects that are intended to revive Nigeria’s oil production into the next decade, while also increasing the share of output from offshore facilities and thus minimizing risks from sabotage and crude theft.

Total, the field’s operator, will handle shipments from a $4 billion floating production, storage and offloading vessel, the largest facility of its kind ever built by the French major.

Nigeria agreed on December 7 to curb its output when OPEC and allied producers met in Vienna.

The nation will have to cut supplies starting in January by about 40,000 bpd under the deal.

Nigerian crude production has dipped in recent years and stood at about 1.76 MMbpd in November, according to estimates. Exports of 200,000 bpd would make Egina a bigger grade than all bar three Nigerian crudes, based on January loading-program data compiled by Bloomberg.

Brief Ghana: 16 major oil companies apply for three oil blocks in Ghana

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hana’s Energy Ministry has announced that the Licensing Round Committee, has opened applications for prequalification received from interested companies who submitted Expression of Interest (EoI) for the competitive bidding for three blocks.

The three blocks are (GH_WB_02, GH_WB_03 and GH_WB_04) in the Western Basin and direct negotiations in respect of two Blocks (GH_WB_0S and GH_WB_06), offshore Ghana.

A statement issued by the Energy Ministry said overall, 16 companies with proven track records submitted a total of 60 applications. It said two of the applications were invalidated as they were for Block GH_WB_01 which had been reserved for the Ghana National Petroleum Corporation (GNPC).

The statement said in line with this, 58 valid applications would be considered for the next stage of the process. It said the number of applications received shows a high level of interest by international companies in our Basins.

The statement said according to Mohammed Amin Adam, Deputy En-

ergy Minister in-charge of Petroleum, who observed the opening of the sealed expressions of interest, “the high level of interest shown by major International Oil Companies in our first licensing round is a vote of confidence in the Ghanaian economy under the leadership of President Nana Addo Dankwa AkufoAddo.”

“Government is determined to use a transparent process as specified by law to shortlist companies that have the capacity and will qualify based on prescribed criteria,” Dr Amin said.

The companies that expressed interest include Tullow Oil, Total, ENI, CAIRN, Harmony Oil and Gas Corporation and EXXONMOBIL. Others are CNOOC, Qatar Petroleum, BP, VITOL, Global Petroleum Group, AKER Energy, First E&P, KOSMOS, SASOL and EQUINOR.

Uganda: Uganda gives Tullow conditional approval to farm out stakes to Total, CNOOC

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rene Muloni, Uganda’s energy minister said she had given Tullow Oil conditional approval to sell part of its stake in Ugandan oilfields to France’s Total and China’s CNOOC but only after $167 million of tax on the deal is paid.

London-listed Tullow agreed early last year to sell Total most of its stake in Ugandan fields for $900 million but CNOOC later exercised its pre-emption rights to buy half of the Tullow assets on sale.

“I gave conditional consent for this transaction, subject to payment of tax obligations, as assessed by the Uganda Revenue Authority of about $167 million,” Energy Minister Irene Muloni said.

Muloni said after the deal is finalised, Tullow would be a non-operator and Total would be the operator in the northern part of License Area 2, while CNOOC Uganda would be the operator of the southern part of the area.

“Given the above progress, we now expect the licensed companies to undertake the final investment decision for the upstream projects before June 2019,” she said.

The three firms currently each hold a 33.3 percent stake in the fields and Tullow is now selling 21.5 percent of its stake, which will be split equally between Total and CNOOC. George Cazenove, Tullow spokesman said

Tullow believed it should not have to pay the assessed Ugandan tax.

“As Tullow has stated on a number of occasions, we believe that this deal should not attract

substantial tax liabilities and that this position is supported by Uganda’s tax laws,” he said.

“Tullow and its partners remain in discussions with the Govern-

ment of Uganda on this matter and the deal will only complete when those negotiations are brought to a satisfactory conclusion.”

Uganda discovered commercial crude oil deposits in the west of the country near the border with the Democratic Republic of Congo more than 10 years ago.

The start of commercial production has been repeatedly delayed due to a lack of required infrastructure such as a refinery and an export pipeline. The government said last month that it now expects oil production to start in 2021, a year later than previously expected.

Muloni said the government also planned

to do another licensing round for vacant blocks in 2020, but the number of blocks that would be auctioned has yet to be determined.

Muloni said Uganda’s gross crude reserves had also been revised downwards after new reservoir analyses, to 6 billion barrels from 6.5 billion previously. Recoverable reserves remained at 1.4 billion barrels.

The oil firms are expected to spend between $15 billion and $20 billion to develop Ugandan fields and the associated infrastructure and the East African country is banking on that investment and potential proceeds from crude exports of about 200,000 barrels per day to drive growth.

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gas

(GNPC), had said the LNG terminal project would take 18 months to complete and enable delivery of 250 million standard cubic feet/day of gas for regasification.

Using Tema terminal processing infrastructure, the project promises to supply enough gas for generation of 30 percent of Ghana total electricity demand.

German-based TGE Marine Gas Engineering GmbH said in midSeptember it had won a $350-million contract for a floating regasification unit (FRU) by Tema LNG Terminal Co. Limited, which is owned by London-based private equity firm Helios Investment Partners and China Harbor Engineering Co., an engineering contractor and subsidiary of China Communications Construction Co. TGE Marine said the contract involves the “design and supply car-

BUSINESS DAY

43

ENERGY intelligence

Ghana: Fresh attempt to revive Ghana LNG project

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Brief

hana has revived plans for construction of marine facilities for handling liquefied natural gas (LNG) at the port of Tema with the signing of agreements for the construction of a floating regasification unit and an LNG terminal as the West African country seeks to increase electricity supply by 30 percent and become the first to import the LNG in sub-Saharan Africa.

Ghana’s government, which owns Ghana National Petroleum Corp.

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go handling system and tank material package with Jiangnan Shipyard Group,” a Chinese designer and developer of liquefied steamships, product tankers, chemical tankers, and bulk carriers.

The TGE Marine’s barge-type FRU will have a capacity of 28,000 cu m and will be developed in parallel with a larger floating storage unit according to the Germany contractor. Tema LNG could not immediately confirm the cost of the 95-meter-long FRU with an annual capacity of 2.2

million tpy.

“The barge is a twotank version with an individual cylindrical tank size of 14,000 cu m,” TGE Marine stated.

“Five modular compact regas skids will provide a peak send-out rate of 335 tonnes per hour or approximately 2.9 million tpy at a sendout pressure of 65 bar,” it added.

Meanwhile, China Harbour Engineering Co. has commenced construction of a marina at Tema port that is currently being expanded by the Chinese contractor. The FRU is expected to be delivered as early as first quarter of 2020.

Gasfin, a member of the Tema LNG consortium, which also includes Gazprom Marketing & Trading Co., has been mandated to oversee the supply of the FRU and Floating Storage Unit (FSU) respectively.

Nigeria: LPG marketers cautions against locating gas plants in fuel stations

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he Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) has urged Department of Petroleum Resources (DPR) to stop approving locating of Liquefied Petroleum Gas (LPG) plants in fuel stations.

Nosakhare OgievaOkunbor, President of NALPGAM, told newsmen in Lagos that installing `ad-on skid gas plant’ in fuel stations was dangerous urging DPR to discontinue the approval of selling or locating a gas plant in fuel stations.

He said that both LPG, known as cooking gas, and fuel were highly inflammable which needed to be on separate entities, adding that LPG cylinders were potentially and highly hazardous.

The NALPGAM boss expressed worry over the increasing number of filling stations engaged in selling of gas within the stations not minding the hazardous implications.

Ogieva-Okunbor said that the proliferation of fuel and gas-filling stations across the country had raised safety concerns, considering the less

than satisfactory compliance with minimum environmental safety requirements for the operations of those facilities.

He said that there is nowhere in the DPR guidelines and regulations that stipulated operating gas plant within fuel stations.

According to him, some filling station owners are in the habit of installing ad-on gas machine later in their fuel stations, but which was not in the original building plans at the on-set.

”As matter of urgency, the DPR should commence dismantling of such gas plants in filling stations.

“Most stations have neglected the rules and regulation, they are now locating gas plant in most stations across that states.

“Today, we see some have cited plants close to eateries’ kitchen within their stations and this is dangerous while they are discharging gas and selling fuel.

“We, the association,

cannot open our eyes and watch for something drastic to happen before we raise alarm,” he said.

Ogieva-Okunbor, however, called on both the Federal and State Governments to live up to their responsibilities by checkmating the fuel stations.

He also said government should commence immediate demolition of such illegal gas plants within such stations. ”The earlier government and officials act fast, the better for Nigerians.

Angola: Angola LNG restarts operations

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ngola LNG has resumed production after a halt to operations earlier this month, a company source confirmed. The last vessel to load from the plant was the Malanje on December

4. Multiple market sources subsequently reported that the plant had been shut down due to a minor issue.

According to an email from the company, there was “conducted a controlled shutdown for a

minor intervention and plant operations have now been resumed.”

Angola LNG’s plant has a capacity of 5.2 million mt/year, and normally produces between five and six cargoes a month.

So far, for December, only

one cargo has been loaded.

Trading sources did not expect a significant market impact on spot prices, given the pervading ample availability of spot cargoes in the Atlantic Basin over the past two months.

Though the plant has resumed the production of LNG, there are currently no vessels at the company’s Soyo berth being loaded.

Two vessels, the Barcelona Knutsen and the Gaslog Huston, are currently in a holding pattern off the Angolan coast. The former has been in the area waiting for around six days, according to Platts ship tracking data.

The later vessel arrived earlier this week.

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power

Iraq: Iraq gets 90-day Iran sanctions waiver from Washington to continue electricity

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raq can continue electricity and gas imports from Iran without violating US sanctions under an extension. Washington appears satisfied with Baghdad’s intention to reduce electricity and gas imports, among other actions, and gave a 90-day waiver just as the previous 45-day waiver expired.

This provides additional time for Iraq to determine ways to pay Iran for the imports in non-dollar denominations and avoiding Iranian banks. The financial transactions technically violate sanctions, not power or gas purchases.

Iraq stopped trading in crude with Iran prior to the November 5 snapback of American sanctions, which otherwise would have violated sanctions.

Iraq does not produce enough power itself or have enough feedstock for existing power plants.

Imports from Iran account for nearly 30 percent of Iraq’s 14,000 MW of daily electricity consump-

tion. Cutting that supply would be devastating for Iraq’s economy and, considering the ferocity of summer power protests, would likely destabilize an already fragile political balance.

Around 1.25 Bcf/d is imported by pipeline feeding three power plants in Diyala and Baghdad provinces. Another 350 Mcf/d is sent by pipeline to a power plant in Basra. Iraq is also fed a total of 1,000 MW of electricity via power lines from Iran.

Negotiations began after the Trump administration made clear it would re-impose sanctions. Iraqi and Kurdistan region officials were also pressed to strike a deal to restart oil exports from federally controlled Kirkuk fields through the Kurdistan-controlled pipeline to Turkey, which began at nearly 100,000 b/d in mid-November.

It is unclear what specifically will be required of Iraq when the 90-day waiver expires.

Cote d’Ivoire: Cote d’Ivoire to add 643MW of power to grid by 2021

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ote d’Ivoire plans to add 643 megawatts (MW) of power to its network by 2021, the government said, in a bid to meet domestic demand and boost electricity exports to the surrounding region. The country which produces most of its 2,200 MW of power from oil and gas, aims to generate 4,000 MW by 2020.

In a statement re-

cently, the government said the 643 MW will be generated by expanding Azito Energie’s power station in Cote d’Ivoire, and by increasing the capacity of Ivorian electricity producer CIPREL. A 253 MW expansion of the Azito Energie plant worth 225.8 billion CFA francs ($392.9 million) is due to begin over the first quarter of 2019, it said.

The project will include a 179 MW gas

turbine, expected to be operational by the third quarter of 2020, and a 74 MW steam turbine due to begin operating the following year.

Azito Energie is owned

by Guernsey-registered emerging markets power company Globeleq and IPS (West Africa), which is majority held by the Aga Khan Fund for Economic Development.

CIPREL, a subsidiary of Eranove, will see its

capacity increase by 390 MW by the third quarter of 2021 - a 247.9 billion CFA franc project that will include a 260 MW gas turbine and a 130 MW steam turbine 60 km (37 miles) from the commercial capital Abidjan.

Cote d’Ivoire’s power exports to neighbouring countries fell by 26 percent last year to 1,225 gigawatt hours (GWh) due to a decline in demand and capacity constraints.

opment Corporation of South Africa (IDC), which will begin commercial operation in Q3 2019.

“We have continuously received purchase orders for modules from our 300MW factory in South Africa since it reached full production in September; building our own cell plant in South Africa is the ideal way to support our customer base by optimising our production and reducing lead times” commented Polaris Li, President of Seraphim.

“We are glad to cooperate again with IDC, a professional and reliable local partner. This new factory will strengthen mutual interests and optimise prosperity for our stakeholders.”

“We are very excited about the opportunities that this new cell factory opens up for our operations in South Africa”, said David Nunez Blundell, co-founder of Seraphim Southern Africa.

Blundell added: “This plant will be the first of its kind in Africa, and shall be a stepping stone towards the consolidation of a strong verticallyintegrated operation that will see additional investments materialising in the near future.

“Together with the module assembly expansion, it will launch Seraphim into a new stage of evolution, strengthening our value proposition to clients in the South African and exports markets.”

South Africa: 500MW solar cell factory to open in Coega IDZ

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frica’s first solar cell factory has been inaugurated in the Coega Industrial Development Zone of Port Elizabeth, South Africa, along with 200MW half-cell module assembly expansion in Eastern Cape.

Jiangsu Seraphim Solar System Co. Ltd. (Seraphim), a world-class solar product manufacturer, recently made the announcement of the 500MW solar cell factory, which will directly support its growing module assembly plant already operating in Eastern Cape.

According to the manufacturer, the new factory and expansion is co-developed by both Seraphim and the Industrial Devel-

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ENERGY intelligence Brief French court fines oil group Total in Iran bribery case

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Paris court fined French oil and gas group Total 500,000 euros ($570,000) for bribing foreign public officials in a case related to Iranian contracts in 1997.

Total, was charged with paying $30 million under the cover of a consultancy contract to facilitate a deal for the South Pars gas field more than two decades ago, which the Paris prosecutor said covered “corruption payments”.

Court documents said that from around 1995 to 2004, at the request of an Iranian official cited as Medhi Hashemi Rafsanjani, the son of Iran’s former president Akbar Hashemi Rafsanjani, Total and intermediaries made illicit payments to middlemen designated by Medhi to help the company.

Total’s Chairman and Chief Executive Officer Patrick Pouyanne said in a statement after the ruling that the company would no longer pursue the matter because none of the individuals under investigation were still alive.

“Anyone who knew (former Total CEO) Christophe de Margerie knows that he would never be in-

volved in any type of corruption,” Pouyanne said.

“However, given the specific circumstances of this case, which has been already judged in the US and in which none of the individuals can defend themselves, Total does not want to pursue it,” he added.

It is not the first time that Total’s business with Iran has ended in court.

In 2013 it agreed to pay $398 million to settle a US criminal and civil allegation that it paid bribes between 1995 and 2004 to win oil and gas contracts.

This was billed as the first coordinated action

by French and US law enforcement in a major foreign bribery case and at the time the Paris prosecutor recommended Total and its then CEO de Margerie face trial in France.

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Royalty, Oil and Gas Executives, and Golfers flock Bonny Island for NLNG Golf Classic

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igeria LNG Limited played host to over 100 golfers at its Residential Area golf course, on Bonny Island.

The two-day tournament is the 2nd edition of the NLNG MD’s Golf Classic.

It attracted participants from the IBB Golf Club, Abuja; Port Harcourt Golf Club, Kaduna Golf Club (KGC), Ibori Golf and Country Club, Asaba; Shell Warri Golf Club; Rumuokwurushi Golf Club, Port Harcourt and Ikoyi Golf Club, Lagos.

The event was graced by prominent royal fathers of the Niger Delta; chief executives from NNPC, Shell, Mobil, Total, NCDMB, PETAN and golf enthusiasts from various clubs in Nigeria, as well as the host Bonny Island Golf Club.

Speaking at the event, the MD of Nigeria LNG Limited, Tony Attah described the game of golf as a business game. He said the NLNG MD’s Golf Classic provides valuable opportunity for networking, building bonds of friendship and the inte-

gration of the oil and gas industry’s efforts to develop Bonny Island.

“Bonny Island is one of the most important energy corridors in Africa”, Attah said and assured participants that the event would become an annual year-end to be held every December, given the positive impact it would have on NLNG’s tourism vision for Bonny Island. In this respect, he urged companies on the Island to continue to partner on emergency response to ensure safety and secu-

rity as well as the social development of Bonny Island.

Also, Engr.

Simbi Wabote, Executive Secretary of Nigerian Content Development Monitoring Board (NCDMB) commended Nigeria LNG for the initiative, stating that “NLNG should do this continuously. It will really bring people to see NLNG as an organization that cares about people.

Just keep the golf course pristine and external parties might even want to sponsor contests on this course.”

(R-L) NLNG MD, Tony Attah presenting the tournament registeration pack to the Amanyanabo of Grand Bonny, King Edward Asimini William Dappa Pepple

Oil tanker owners scrap record number of ships

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il tanker owners scrapped a record number of ships this year. Those who did missed out on a sharp rally in rates.

Owners purged a record 100 of the industry’s main crude carriers so far, with most of that happening in the first half of the year, according to data from Clarkson Research Services Ltd., part of the world’s biggest shipbroker. That is no surprise, as up to September the vessels, which transport roughly 40 percent of the world’s crude, were on course for the worst av-

erage earnings in at least three decades.

What those demoralized owners perhaps failed to foresee was a

sudden surge in cargoes.

With the US poised to impose sanctions on Iran earlier this year, producers including Saudi Ara-

bia and Russia began adding barrels to the market.

Between May and November, the world’s largest and second-largest

exporters lifted their combined output by about 1.5 million barrels a day.

American shipments are also soaring. As well as adding demand for vessels, the increased oil supply also drove down fuel prices -- the industry’s single biggest expense.

For those owners who did not scrap, rates jumped more than threefold from late September to mid-December, according to Clarkson figures.

Up in the North Sea, ships that move 600,000-barrel cargoes earlier this week were earning $72,664 a day,

the highest in 3 1/2 years, according to data from the Baltic Exchange in London. At the start of December, giant 2 million-barrel carrying vessels were making $58,000 from delivering Middle East oil to China, the most since at least the start of 2017. West African rates also surged.

In transportation capacity terms, this year’s scrapping is the highest since 1985. But the surge in earnings doesn’t mean owners were wrong to demolish -- even if some might have benefited from waiting a little longer to do so.

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marketinsight Oil watchers see $70/bbl in 2019 as recession fears fade

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on tightening monetary policy.

Though, most commentators are not seeing an actual recession biting the oil market next year, the median forecast of 24 oil analysts in a Bloomberg survey projects that London-traded Brent will average $70/bbl in 2019. The median forecast for WTI is $61.13.

In the absence of a severe economic slump, most

analysts anticipate that world oil consumption will continue to expand at roughly the pace seen in recent years, powered by emerging economies such as China.

And although doubts remain that OPEC will cut output deep enough to prevent a surplus, the survey shows analysts are confident that the group’s strategy will ultimately

succeed. OPEC will begin implementing the curbs this month, and leading member Saudi Arabia has pledged to slash output by even more than it formally agreed to.

Some anticipate a vigorous rally. The most bullish forecasts in the survey, those of Morgan Stanley and Standard Chartered Plc, project that Brent will average $78/bbl.

Saudi Arabia needs $84/b oil price to balance 2019 budget

S

audi Arabia will require oil prices higher than $84/b to avoid running another deficit, analysts warned after the kingdom announced record government spending in its state budget for 2019.

The budget calls for spending of 1.106 trillion riyals ($350 billion) for the year, up 7 percent from 2018, despite oil prices slumping in the fourth quarter and the kingdom pledging to cut output as part of OPEC’s agreement to balance the market.

Analysts with Riyadhbased investment bank Al-Rajhi Capital said the budget implies a fiscal breakeven oil price of $84/b for 2019, which is $27/b higher than the level Brent futures were trading at present.

The budget figures spotlight the economic pressures Saudi is under to revive flagging oil prices regardless of the kingdom’s significant foreign currency reserves, which exceed $500 billion.

The world’s largest crude exporter in partner-

ship with OPEC and its allies led by Russia agreed this month in Vienna to cut a combined 1.2 million b/d for the first six months of 2019, amid tepid demand growth and surging US supplies.

Despite the weak oil market, Saudi expects total government revenues to rise 9 percent to 975 billion riyals in the forthcoming fiscal year, according to the Ministry of Finance. Oil revenues account for more than 70 percent of the kingdom’s total export income.

To achieve its budget-

Wednesday 02 January 2019

WEST AFRICA

ENERGY intelligence

T

he world’s biggest banks are reckoning on a rebound in oil prices next year as fears of a recession prove misplaced. The Brent benchmark will average $70/bbl in 2019, almost a third higher than its price.

Despite plans by OPEC and its allies to limit production next year to prevent a glut from forming, oil’s fortunes have increasingly been driven by moves in financial assets and concerns about the global economy. However, analysts expect markets are about to tighten as growth stays strong, OPEC’s supply cuts kick in, and unintended losses in Venezuela and Iran escalate.

The recent weakness in financial assets has been led by a darkening outlook for the global economy amid prolonged trade dispute between the US and China, and as the US Federal Reserve embarks

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ed revenue figure, Riyadh still requires oil to trade at $70/b, Al-Rajhi Capital estimated. Brent prices averaged about $71/b in Q4 2018 but have slid spectacularly in recent weeks due to fears of an oversupply and tepid demand growth.

Unless oil prices rebound significantly then the kingdom faces rising debt, or the demands to drain its currency reserves.

The budget has been in the red since the oil price crash in 2014, but the ministry said it expects the deficit to shrink to zero by 2023.

Boosted by a 3 percent rise in crude exports, Saudi Arabia’s 2018 oil revenues came in at 608 billion riyals, up 38 percent year on year, the Ministry of Finance said. Meanwhile, non-oil revenues totaled 287 billion riyals, up 12 percent year on year, as some of the Vision 2030 economic diversification efforts began to pay off.

The rise in revenues allowed Saudi Arabia to narrow its 2018 deficit to 138 billion riyals, down from the ministry’s previous guidance in October of 148 billion riyals.

OPEC Flakes Russian OPEC coordinator Marshavin to leave energy ministry

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oman Marshavin, one of the Russian Energy Ministry officials who orchestrated the 2016 landmark deal with OPEC, is leaving his job, the energy ministry said. The ministry said Marshavin was leaving the ministry this month to take another job but did not give more details.

“The order about Marshavin’s resignation is signed,” the ministry said in a statement. Two government sources said Marshavin may be taking up a role at the World Bank.

Alexei Gospodarev from the ministry of industry and trade may take over

as head of the Department for International Cooperation, the sources said.

Marshavin was part of the team, headed by Energy Minister Alexander Novak, which brokered a deal at the end of 2016 with the Organization of the Petroleum Exporting Countries on oil production cuts. He had led the department since June 2016.

The deal helped the global oil market to rebalance, while oil prices recovered.

Russian President Vladimir Putin honoured Marshavin last year with Russia’s Order of Friendship.

Russia dashes plans to make its oil market alliance with OPEC permanent

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ussian Energy Minister Alexander Novak poured cold water on long-simmering plans to make Moscow’s alliance with OPEC and other oil producers permanent. The group of roughly two dozen producers has been managing global petroleum supply for the last two years in order to rebalance the market after a prolonged and punishing oil price downturn.

The effort succeeded in shrinking global crude stockpiles and boosting prices to four-year highs, until the market suddenly crashed again in early October. The group has agreed to a fresh round of output cuts that begin January 1.

For at least a year, OPEC Secretary General Mohammed Barkindo discussed institutionalizing the arrangement.

That would essentially form a supergroup of oil producers comprised of the 14-nation OPEC, Russia and nine other oilexporting nations, which would be able to more quickly respond to prob-

lems in the market.

Energy ministers had been talking up progress toward the permanent arrangement as recently as their meeting in Vienna earlier in December 2018.

However, Novak said the prospects for that plan now look dim, Reuters reported. He said it would create too much

red tape and expose the non-OPEC members of the alliance to potential sanctions from the US government.

“There is a consensus that there will be no such organization. That is because it requires additional bureaucratic brouhaha in relation to financing, cartel, with the US side,” Novak told reporters.

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BUSINESS DAY

Unstable oil prices render Nigeria’s 2019 budget assumptions unrealistic ISAAC ANYAOGU

N

igeria’s 2019 budget is premised on the production of 2.3million barrels per day (bpd) and that oil prices will sell at the average price of $60 per barrel, and analysts say these are not only too ambitious targets, but falling oil prices could dampen with projected export earnings.

In October of 2018, the price of Brent crude rose $86 per barrel and in just six weeks it crashed to $57 and analysts are not optimistic of a dramatic price rise.

JP Morgan Chase and the United States Energy Information Agency are not optimistic oil prices will rise above $60 next year cutting their previous forecasts of above $80.

The implication for Nigeria is that export earnings from oil is likely to fall by at least 20 percent to $49billion next year from $61billion in 2018 if oil prices find a floor around an average price of $57 per barrel, indicating that budget assumptions may be off the mark.

“It is too ambitious,” says Taiwo Oyedele, PwC head of tax said, “Nigeria’s average production figures for 2019 is about 1.9 million; to be budgeting 2.3million bpd is overly optimistic. I would have loved to see something

more conservative but overall budget spending makes sense to me, because it is lower than what was budgeted for last year.”

On his part, Rafiq Raji, chief economist at Macroafricaintel said the projections are quite ambitious. “Crude oil production has been less than 2million bpd thus far this year; latest about 1.7mbpd I think.”

Raji adds “And even as OPEC and Russia are committed to production cuts, $60 is likely closer to the upper limit of the range of potential price increases.”

Crude oil prices averaged $49.49 per barrel in 2015, $40.68 in 2016, $52.51 in 2017 and so far this year, has sold at an average price of $71.2according to figures published by the Organisation of Petroleum Exporting Countries (OPEC).

Oil prices currently are around $56, with analysts projecting it will remain low for the medium to long-term.

Nigeria’s oil production fell to 1.2million barrel in 2015 following a militant campaign by the Niger Delta insurgents prompting OPEC to grant Nigeria exemption from a supply cap it agreed with non-members including Russia. Since 2017, Nigeria’s production has recovered slight above 1.5million barrels per day and reached a 1.7million barrels per day in November.

However, Nigeria has not made the investments needed to grow reserves or

increase production. Large projects have stalled including Shell’s plan to develop 225,000 bpd Bonga South West/Aparo, which has been unable to reach FID based on disagreement over fiscal terms. The project has been suspended every year since 2016.

Other projects that have stalled include 120,000bpd Zabazaba-Etan project; 140,000bpd Bosi project; 110,000bpd Uge project and 100,000bpd Nsiko deepwater project. The 1billion barrel Owowo field development is also waiting on the right fiscal terms among other conditions.

The Petroleum Industry Bill has still not been passed after years in the national assembly further deterring new investments.

President Muhammadu Buhari in Abuja told lawmakers that the total Federal Government’s budget for 2019 fiscal year was N8.83trillion which will be funded by revenue projection of N799.52bn from company income tax, value added tax of N229.34bn, customs duties of N302.5bn, recoveries of N203.38bn, independent revenue of N624.58bn, N710bn in sale of government equities in joint ventures and other sundry incomes of N104.1bn.

But so far this year, the government has only spent N4.59tn in the 2018 budget framework as at September 2018 which represents 67 percent of the projected

expenditure and over N800bn has been released for capital projects, according to analysis by Budgit, a non-profit campaigning for financial transparency in government spending.

The government has drawn up the budget to accommodate for possible increase in minimum wage and continued payment of Niger Delta Amnesty which will help to maintain oil production at current levels.

“If you look at it in the context of the additional expenses, trying to budget for minimum wage increase, and there is a budget for Bank of Agriculture and Industry to recapitalise them so they can give single digit loans, which I think makes sense and continue to fund Niger Delta Amnesty plan, that’s fine too” Oyedele said.

In 2019, Nigeria is budgeting to spend N4.04 trillion as non-debt recurrent expenditure, N2.14 trillion for debt service N492.36 billion as statutory transfer, N120 billion as sinking fund and capital expenditure will gulp N2.031 trillion.

“But I don’t see how far the budget spending will be at risk if the estimate of price barrel of crude oil and volume is not attained, it can mean that our deficit will be significantly be higher than what is budgeted and therefore the cost of funding the deficit will continue to go up which is already high as it is” said Oyedele.

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Opinion 2019: Key business risks and effective management strategies (1)

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the strategy formulation and execution. They work more as a reactive unit that attends to specific risk failures during the execution of a firm’s strategy and most of the time are more disposed to risk avoidance than risk taking. This approach is wrong and cannot guarantee the sustainable growth and profitability of a firm in a peculiar environment such as ours.

In a survey of risk awareness and practice across firms in Nigeria, the employees scored an average of 2.5 out of 5 with a lower score of 2 in the financial sector.

To ensure growth and profitability in 2019 and beyond amidst such innumerable risks, our firms might need to rethink their approach to strategy formulation and execution. As strategy and risks can be argued to be two sides of the same coin, strategy should be developed mainly from a risk orientation approach.Because we are in a high risk environment, the strategy should not be that of risk avoidance, rather it should be one with a risk loving disposition but with a caveat. Recalling that

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risks that are external to a firm and can be national, regional or global. The global ones are risks that can cause significant negative impacts across countries and industries if it occurs. While the known global risks include failure of climate-change mitigation, complex regulatory demands, data fraud and cyber-attacks, spread of infectious disease, weapons of mass destruction, water crises and profound social instability, the emerging ones include digital readiness and risk digitization, talent deficit and succession challenges, changing customer needs and challenges of retaining customer loyalty.

The regional ones peculiar to Africa or West Africa include risks such as rising unemployment, technology importation, voluntary and involuntary migration, lack of very skilled labour force, failure of national governments and fiscal crises etc.

Of these three categories of external risks, the one that gives the CEOs in Nigeria the greatest worry are the national risks and in 2018 KPMG re-

THE PUBLIC SPHERE

Desired attributes of Nigeria’s next CEO

FRANKLIN NNAEMEKA NGWU (PHD)

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail: fngwu@lbs.edu.ng

ith the number of calls I have received recently about the uncertainties of 2019, I can attest that Nigerian CEOs are really worried about known, emerging and unknown risks that might erode their growth and profitability in 2019 and beyond. Not only are they worried because it is an election year, they are concerned that irrespective of whoever wins the presidential election in Nigeria, there are inherent risks that are somehow outside their powers to effectively mitigate or manage. These are

CHIDO NWAKANMA Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@gmail.com.

T

he 2019 elections would be significant in several respects. It would be the sixth general election since the return to civil democratic rule in 1999.

Nigeria would be marking 20 years of continuouscivilian government in 2019. It is the longest stretch in which we have allowed choice,and the people have had a say in who governs.

By May 2019, new people would take office in two tiers of government, the federal and the states.

They would be the drivers of what happens to most of the federating units of the country. In consequence, there is an ongoing debate about choice.

C i t i z e n s a re m a i n l y

debating on a choice between the contending parties as well as that between the younger, newbreed candidates and the older established names in both the Peoples Democratic Party and the All Progressives Congress. It is a tough call on citizens because the lines are so blurred as not to make a difference among the parties. Many readily dismiss the chances of the new breed despite the sterling credentials of some of them on face value.

PDP gets the black brush deservedly for its failings in 16 years at the helm. The atrocious performance of the APC at the centre has equalled the PDP in infamy. APC has been an incubus on the people, sucking the energy of the citizenr y overnight with its gross failure in various areas including primarily the economy, welfare, security and the unity of the country. It is scandalous how the party that spoke so eloquently about the problems with the land has itself become the problem of Nigeria.

Having tried many men and parties, I submit that the challenge before Nigeria is one of finding capable managers who would drive the process of building sys-

port, the top 10 risks include foreign exchange, fiscal and monetary policy, regulatory risk, crude oil price, brand and reputational risk, customer attrition, political and liquidity risks, insecurity and interest rate risks. As no proper sustainable national mitigation strategies were developed in 2018, almost all or most of the top 2018 risks are still with us and might likely escalate in 2019. Moreover, irrespective of whoever wins the presidential election, there are other macro risks such as rising unsustainable debt, limited government revenue generation, unemployment, inflation and food security that will affect both the country and firms. In addition to the litany of external risks, every firm is also faced with some internal risks such as internal fraud, employment practices and work place safety, damage to physical assets, business disruption and system failure, execution delivery and process management.

With such myriad of risks and challenges, a friend who is a CEO lamented that it is not

‘

The leader must be quick to the draw, informed and knowledgeable. More than the stock of knowledge that he brings to the table, however, is his receptivity to ideas and innovation. The educated man is not the man who knows all the answers but the one who is willing and able to seek out solutions

,

tems, methods and teams.

Managerial competence is a catch-all phrase to capture this. The man to lead Nigeria must have some critical attributes.

They apply for the men to govern the states.

Competence. We need a leader with the capacity to execute. Execution capacity is what gets things done at the top. We do not need a man who doodles, prevaricates or can-

To ensure growth and profitability in 2019 and beyond amidst such innumerable risks, our firms might need to rethink their approach to strategy formulation and execution

,

the best time to be a CEO in Nigeria. It is really a challenging and risky environment which requires a rethink of strategy formulation and execution. While I appreciate the challenges of CEOs in a turbulent environment such as Nigeria, my engagement with many of them reveals a limited appreciation of the risks they face and as such their strategies fail when the risks start to manifest. In many firms, there is no risk unit and where there is, they are normally very separate from the strategy unit and most of the times partially involved in

notmake decisions from the melange of ideas and suggestions that he would receive. The leader must be quick to the draw, informed and knowledgeable. More than the stock of knowledge that he brings to the table, however, is his receptivity to ideas and innovation. The educated man is not the man who knows all the answers but the one who is willing and able to seek out solutions. In the Knowledge and Information Age, we need a leader who is ready to open himself and our country to know and to drive the process.

UK’s Department for International Develo p m e nt ha s i d e nt i f i e d characteristics of good governance regimes.

They include state ca pability —the extent to which leaders and governments canget things done; responsiveness— whether public bodies and institutions respond to the needs of citizens and uphold their rights; and accountability—the ability of citizens, civil society, and the private sector to scrutinise public institutions and governments and to hold them to account (DfID 2006, 22).

Conviction. The leader must be a visionary with the passion for driving

such an envisioned future.

Connectedness. The leader should be a panNigerian networker with the willingness and ability to reach out and engage all groups for the benefit of the country. The CEO of Nigeria Inc and States Unlimited must be team builders. The notion of the Governor or President as Superman is jaded and untrue. Unfortunately, both the constitution and y e a r s o f p ra c t i c e d u ri ng m i l i t a r y r u l e hav e conditioned the civil service and other groups to wait on the Governor or the President. Our law gives so many powers to them. Then our culture makes them monarchs.

We need to change this culture. Instead, we need CEOs who are facilitators and team leaders. They should build strong super teams. Super teams thrive because they have good leadership, share a common goal, trust and respect team members, have excellent communication, encourage and reinforce each other, are disciplined and demand balanced accountability.

C o m m u n i c a t o r. A leader able to persuade, convince and influence t h e maj o r i t y t o f o l l ow his vision and path is a significant attribute of

firms are created to take risks and as they say that the riskier it is, the higher the return, succeeding in a risky environment is therefore the ability of firms to take risks but effective in mitigating the negative aspects of the risks.

Thisapproachrequires firms to first scan, robustly understand and identify all their possible risks and their sources and then develop strategies (models or options) to mitigate the risks. It is an approach that rewards the firms with the privilege to see different opportunities inherent in the risks and then the insight to develop the appropriate strategic choices to exploit the risks and opportunities. With the innovation of strategic choices and models to manage the risks and opportunities, some firms are able to see blue oceans of profitability while others see only negative risks and failures. Using this approach helps firms to understand the three key risks that can disrupt strategy which are demand risk, competitive risk and capability risk. To be continued.

the CEO of Nigeria Inc. Communication is a lubricant of social relations and more so in managing complex entities such as states and governance units. Communication does more.

For the government, communication ensures the buy-in and favourability with constituents that earns continued legitimacy. Governments must w in the “legitimac y of public authority” through performance and the ability to communicate that performance both as a vision and in feedback on actual results. Government leaders must have the ability to articulate a clear vision for the country as well as the policy choices and trade-offs they have made on the public’s behalf.

Compassion. Nigeria’s leader must have a heart t h a t c a re s f o r p e o p l e.

Ki n d n e s s w o u l d ma k e him feel the pain and insult that poverty throws at our people and work to drastically reduce the burden. We are running out of time in meeting the Sustainable Development Goals after failing on most scores with the MDGs. These are the attributes I consider critical.

Dear reader, what should our next leader bring to the table, in your view?

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