BusinessDay 02 Jan 2020 by BusinessDay

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news you can trust I ** thursDAY 02 january 2020 I vol. 19, no 469

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Buhari promises better power supply by 2021, but obstacles remain ISAAC ANYAOGU

resident Muhammadu Buhari on Wednesday said significant improvement in electricity service supply is expected in the next 12 months, banking on new public and private investments into the sector.

In his New Year’s Day letter to Nigerians, the president acknowledged that “power has been a problem for a generation” and that there was need “to pick up the pace of progress”. But seven years into the power sector privatisation, analysts say throwing money at problems has not led to better outcomes.

They say an inability to create an efficient electricity market and fix regulatory gaps that compel the regulator to kowtow to government intervention and allow indiscipline by market operators could upend the president’s expectations. “Power has been a problem for a generation. We know we

need to pick up the pace of progress. We have solutions to help separate parts of the value chain to work better together,” Buhari said. In reality, however, the electricity sector value chain has already been separated into generation, transmission and distribution. The Nigerian Bulk

Electricity Trading Company (NBET) runs the market, the Nigerian Electricity Regulatory Commission (NERC) regulates the sector and a standard organisation was created. Trouble is getting the parts of the value chain to work together. In Nigeria’s power reforms, Continues on page 4

What amendment of Land Use Charge Law 2018 means to Lagos residents, economy CHUKA UROKO

he Lagos State House of Assembly, by a resolution of the house, on Tuesday amended the state’s Land Use Charge (LUC) Law 2018, bringing reprieve to millions of residents of the state who were already edgy with what they described as the “punitive and insensitive” provisions of the law. Among other things, the amendment has redefined “Pensioner” in the law to include all retirees resident in the state, from federal and state institutions and from both private and corporate organisations domiciled in the state. This is a huge relief for pensioners other than retirees of the state civil service who were captured in the amended law. Other pensioners domiciled in the state would have been under intense pressure to pay the charge which they would find difficult, if not impossible, in their circumstance. For them, therefore, the amendment means longer life, not just the money saved. Akinwunmi Ambode, former governor of the state, had on February 7, 2018 signed the Land Use Charge (LUC) Law 2018 into Continues on page 4

Inside

Inflation premiums in T-bills primary market dropped 6 percentage points in 2019 P. 2

L R: Ben Idume, sub dean, Church of Nigeria Anglican Communion; Kayode Ajulo, former national secretary, Labour Party; Nicholas Okoh, primate of the Church of Nigeria Anglican Communion, and Tim Menakaya, former minister of health, during the New Year’s Day thanksgiving service in Abuja, yesterday. Pic by Tunde Adeniyi

Manufacturing faces big test in 2020 on oil price, border closure, AfCFTA ODINAKA ANUDU & GBEMI FAMINU

il price, border c l o su re, i mp l e mentation of the African Continental Free Trade Area (AfCFTA) and Central Bank of Nigeria’s policies are critical issues, analysts say, will make or mar Nigeria’s manufacturing sector in 2020. The AfCFTA implementation will begin in July 2020 and all manufacturers are keen on what the trade treaty holds out for them. While it provides op-

portunity for Nigerian firms to leverage broader continental market, it also promises to pressure firms to either innovate or die. Other than what firms do, Nigeria’s preparedness is also a major factor that will redefine manufacturing in Africa’s most populous country. Bismark Rewane, CEO of Financial Derivatives Company, said last July that the AfCFTA would favour Nigeria, Kenya, Egypt and Ghana and other big countries, but warned that any government that was not effective would fail within the AfCFTA

environment. Across the manufacturing sector, there is consciousness that AfCFTA will increase competition for their products, and export-oriented firms are consolidating to leverage the trade pact. “Our group presence in the export trade zone, especially in the oil and vegetable oil, is an indication that we are ready,” Osaro Omogiade, managing director, Nosak Distilleries, which manufacturers foodgrade ethanol, told BusinessDay. “We have commenced ex-

port of food-grade ethanol to the neighbouring West African countries, particularly Ghana. It is an expression of our readiness. We believe in living global because of the associated advantages. If you do export, you will hedge against the foreign exchange problems,” Omogiade said. Also, manufacturers are keeping a close eye on the oil price in the global market, which ended at $68.67 per barrel on Monday. A drop in oil prices, as expeContinues on page 4

Thursday 02 January 2020

BUSINESS DAY

news FG directs DisCos to embrace cashless platforms in transactions HARRISON EDEH, Abuja

ederal Government has directed all the 11 power distribution firms (DisCos) in the country to embrace cashless settlement platforms with respect to the collection of electricity bills from residential, industrial and commercial customers. The government said beginning from January 2, 2020, the distributors had till January 31 and March 31, depending on the class of customers, to comply with the order, which was issued by the Nigerian Electricity Regulatory Commission (NERC) in a document with reference ‘Order No/NERC/183/2019’. This directive was contained in a document dated December 30, 2019, and officially issued by the NERC and signed by James Momoh, chairman, and Dafe Akpeneye, NERC commissioner legal, licensing and compliance. Accordingly, in the document, the commission noted that the Federal Government issued a policy directive that required the mandatory transition of certain classes of enduse customers of DisCos from direct cash settlement of bills to cashless settlement platforms. It said this was in order to reduce collection leakages/ losses and improve overall revenue assurance in the Nigerian electricity supply industry. “The commission notes that this policy directive complies with the EPSRA (Electric Power Sector Reform Act) and

the laws of the Federal Republic of Nigeria,” it stated. “The commission hereby orders that without prejudice to the provisions of section 10 of the Meter Reading, Billing, Cash Collections and Credit Management for Electricity Supplies Regulations, 2007, all DisCos shall transit to cashless settlement platforms for the billing/collection of industrial and commercial customers by 31 January 2020,” it said. The regulator stated that without prejudice to the provisions of Section 10 of the Cash Collection Regulation, all Discos should transit to cashless settlement platforms for the billing/collection of the R3 class of residential customers by March 31. The NERC stated that all Discosshouldleverageavailable banking channels approved by the Central Bank of Nigeria in complying with the directive. It stated that all collection agents, super agents, subagents, payment solution service providers and payment terminal service providers engaged by Discos in compliance with the order shall be duly registered with both the commission and CBN. The regulator further stated that all duly registered collection agents and other service providers should operate dedicated accounts strictly for the purpose of billing/collection of revenues from customers of the Discos.

•Continues online at www.businessday.ng

Businesses’ confidence on economy in January rises 58.6 index points HOPE MOSES-ASHIKE

i g e r i a n f i r m s’ outlook for January 2020 showed greater confidence on the macro economy, with 58.6 index points. The major drivers of the optimism for January were services (30.8 points), industrial (20.3 points), wholesale/retail trade (5.5 points) and construction (2.0 points) sectors. The Business Expectations Survey (BES) of the Central Bank of Nigeria (CBN) also showed that confidence index (CI) on the overall macro economy in the month of December 2019 by companies stood at 30.3 index points. “Domestic economic recovery remained positive regardless of prevailing global headwinds,” GodwinEmefiele,CBNgovernor, said in his personal statement at thelastMonetaryPolicyCommittee(MPC)meetinginNovember. For the domestic economy, short-term outlook remained modest, as output growth recovery is expected to trudge on beyond 2019, Emefiele said. Year-end growth for 2019 is projected at about 2.3 percent by the International Monetary

Fund (IMF) and 2.2 percent by in-house estimates. The December 2019 Business Expectations Survey was conducted by the CBN from December 10-14, 2019 with a sample size of 1,050 businesses nationwide. A response rate of 97.1 percent was achieved, and the sample covered the services, industrial, wholesale/retail trade, and construction sectors. The respondent firms were made up of small, medium and large corporations covering both import- and exportoriented businesses. The optimism on the macro economy in December was driven by the opinion of respondents from services (16.3 points), industrial (9.8 points), wholesale/retail trade (3.2 points) and construction (1.0 points) sectors. Further analysis showed that businesses that are neither import- nor export-oriented (21.2 points), both import- and export-oriented (5.2 points) import-oriented (3.6 points), and those that are export-related (0.6 point)drovethepositivebusiness outlook in December 2019.

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

Betty Anyanwu Akeredolu, wife of Ondo State governor, carrying the first baby of the year (male) delivered (time: 1:10 am) at the Mother and Child Hospital, Oke-Aro, Akure, yesterday.

Inflation premiums in T-bills primary market dropped 6 percentage points in 2019 IFEANYI JOHN

hat a difference a year makes! From 3.13 percent inflation premium at the start of the year, inflation premiums on treasury bill rates in the primary market have crashed by more than 6 percentage points to -3.48 percent. The sharp drop in inflation premiums occurred as treasury bill yields declined precipitously and inflation rose marginally during the year off the back of aggressive credit expansion policies by the Central Bank of Nigeria (CBN).

With treasury yields now very low, only the Federal Government appears to be the winner in this shocking rate decline as the high borrowing rates on local government debt have been drastically lowered. Banks and other financial institutions that had taken fixed deposits at double-digit interest rate are now forced to continue paying high interest on deposits until the maturity period even though the financial institutions are only making single-digit returns investing in treasury bills and other safer financial instruments. “We expect to see a sharp decline in our investment income in the first quarter of 2020 and

negative net investment return as a lot of money we are currently holding in our books was collected at interest rate between 12-18 percent,” said a top executive in a leading microfinance bank in Nigeria. “As you can see, one-year treasury yields are now barely 7 percent which means that we will be paying out much more in interest expense than we will earn through investment income. The outlook for us isn’t good at all.” The impact of the reinvestment risk is still reverberating gradually in the private sector as investors who had invested in investment notes with double-

digit returns are now forced to reinvest their funds at ridiculously low rates, painfully lower than inflation rate for most retail investors. “I am not sure what to do with my investments with rates this low,” Joshua Obayan, a retail investor, told BusinessDay. “I am considering all my options with finding investments that will still deliver double digits even though I know that it may be very risky chasing high yields at this time. We all know that treasury yields lower than inflation discourages savings, but I guess we have no choice now.”

•Continues online at www.businessday.ng

FX reserves decline in December for 6th consecutive month IFEANYI JOHN

he Central Bank of Nigeria (CBN) may be swimming against the tides this year if it refuses to devalue the naira after the country’s external reserves slid for the 6th consecutive month in December 2019. In the last six months, the reserves have declined by $6.46bn from $45bn in June 2019 to $38.6bn as at year-end 2019. Nigeria’s external reserves have declined by $9.2bn (almost enough to pay P&ID’s $9.6bn settlement charge) since reaching a five-year high of $47.8bn in May 2018. The significant drop in the reserves can be traced to the decline in crude oil prices which dipped from a high of $84 in October 2018

to $66 as at market close on Tuesday, as Nigeria continues to suffer from its overreliance on crude exports to grow its external reserves. Foreign exchange reserves are cash and other reserve assets held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence the foreign exchange rate of its currency, and maintain confidence in financial markets. Sinking foreign external reserves are very disastrous for a country seeking foreign exchange rate stability as a loss of confidence in the country’s ability to cater for its import obligations and meet foreign debt obligations as and when due usually leads to a currency devaluation to regain some

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form of stability. At an investor meeting in London, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), told foreign investors that the apex bank would meet all foreign exchange demands so long as the nation’s external reserves are above $30 billion and the international prices of crude oil do not go below $45 per barrel. While $45 Brent crude oil price is well below even the most bearish crude oil price forecasts, Nigeria’s external reserves falling below $30bn is looking like an increasing possibility. Based on the current pace of the depletion of the external reserves by at least $1bn monthly, Nigeria’s reserves may slip below $30bn by September 2019 @Businessdayng

if there are no new foreign debt issues to replenish the reserves. An oil price rally could also provide support for the country’s external reserves but the oil price outlook isn’t supportive of any rally in the near term. US Energy Information Administration (EIA) forecast Brent crude oil price to average $61/b in 2020. JPMorgan forecast a slightly higher price of $64.5/b. Both are below current oil price of about $66/b. As the external reserves continue to decline, Nigeria must either find a way to increase crude oil production and exports significantly enough to cover the monthly $1bn shortfall in foreign exchange demand or devalue its currency for the first time in four years to discourage growing import demand.

Thursday 02 January 2020

BUSINESS DAY

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Thursday 02 January 2020

BUSINESS DAY

news Buhari promises better power supply... Continued from page 1

NBET buys electricity from the generating companies (GenCos) through Power Purchase Agreements (PPAs) and sells to the distribution companies (DisCos) through Vesting Contracts. The Transmission Company of Nigeria (TCN) wheels this power to the 11 distribution companies across Nigeria who then distribute to homes and businesses. This chain, however, is fraught with challenges. GenCos who sell power to NBET barely get 30 percent of their market invoice which constrains their ability to buy gas from gas companies, fix faulty turbines and make additional investments. DisCos who buy the power from NBET and sell to end users, including residential buildings and factories, remit far less than they collect. “The level of collection efficiency during the quarter under review indicates that as much as N3.09 out of every N10 worth of energy sold during the second quarter of 2019 still remained uncollected as and when due,” NERC said in its 2019 second quarter report released in December 2019. “Similarly, during the second quarter of 2019, out of the total invoice of N180.08 billion issued to the 11 DisCos for energy received from NBET and for service charge by MO, the sum of N55.10 billion of the total invoice was settled, representing 30.60 percent remittance performance,” the commission said. Buhari also referenced the deal with Siemens signed on July 22, 2019 by which the German company is expected to upgrade transmission and distribution network to double Nigeria’s electricity generation and raise distribution capacity three-fold to 11,000 MW by 2023. Investigations, however, show that little headway has so far been made on the deal which financial close was expected in November 2019. NERC agreed to a tariff adjustment to take effect this month which is only part of the conditions for the deal to proceed. The president said that the government in the past few months has engaged extensively with stakeholders to develop a series of comprehensive solutions to improve the reliability and availability of electricity across the country. “These solutions include ensuring fiscal sustainability for the sector, increasing both government and private sector investments in the power transmission and distribution segments, improving payment transparency through the deployment of smart meters and ensuring regulatory actions (to) maximise service delivery,” Buhari said in the letter.

But in the past weeks, key officials of government agencies including Marilyn Amobi, former managing director of NBET, and Damilola Ogunbiyi, former managing director of the Rural Electrification Agency (REA), have been suspended. These decisions, analysts say, are potent enough to roil the sector as they signal undue government interference which pisses off the investors government banks on to fund its plans. “As I see it, it is very doubtful that the suspensions would bring the much-needed stability in the power space. On the contrary, it could darken the cloud of uncertainty currently hanging over the sector,” said Wolemi Esan, energy lawyer and partner at Olaniwun Ajayi LP, a leading Nigerian law firm. The president further said the projects that would be implemented this year would be under close scrutiny and transparency and there would be no more extravagant claims that end only in waste, theft and mismanagement – an apparent gibe at Babatunde Fashola’s era as minister of power. In his January 1, 2018 speech, President Buhari, taking a cue from Fashola, had said more Nigerians across the country were experiencing improved power supply to their homes and businesses. He had claimed that generation had reached 7,000MW and DisCos could deliver 5,155MW. In reality, power supply on the day the speech was read hovered around 3,500MW. Fashola’s tenure as minister of power was marked by fantastic claims that maintained a tenuous relationship with reality and using a fluke occurrence to represent reality. This was demonstrated in the claim that TCN could wheel 7,000MW of power when any generation close to 5,000MW triggers a system collapse. In his January 1, 2018 speech, Buhari had also said the Mambilla Hydroelectric Power Project, “a landmark project”, was at last taking off. “This project has been on the drawing board for 40 years, but now the engineering, procurement and construction contract for the 3,050MW project has been agreed with a Chinese joint venture company with a financing commitment from the government of China. Completion is targeted for 2023,” he had said. Two years later, on January 1, 2020, President Buhari announced “commencement of the construction of the Mambilla Power project by the first half of 2020”. In other words, no inch of progress has been made since Buhari’s 2018 speech. www.businessday.ng

L-R: Wasiu Sanni Eshilokun, deputy speaker, Lagos State House of Assembly; Shulamite Olufunke Adebolu, commissioner for tourism, arts and culture; Babajide Sanwo-Olu, governor; Obafemi Hamzat, deputy governor; Hakeem Muri-Okunola, head of service, and Desmond Elliot, member, Lagos House of Assembly, during the Greater Lagos Fiesta at the Eko Atlantic, Victoria Island, on Tuesday.

Manufacturing to face a big test in 2020 on... Continued from page 1

rienced in late 2015 and 2016, will shrink the foreign exchange available for the economy and manufacturers for the importation of inputs, machinery and packaging materials. About 54 manufacturing firms shut down during the oil market crisis of 2016 as they could not access their inputs, according to Frank Jacobs, president of the Manufacturers Association of Nigeria (MAN) at the time. A report released by NOI Polls in association with Centre for the Studies of Economies of Africa in 2017 showed that dollar crunch forced 272 firms to shut in one year. Should oil price fall, manufacturers will, again, increase local input sourcing or scale

down operations. Earlier in August 2019, the Federal Government gave a directive to shut Nigeria-Benin borders in a bid to reduce smuggling of rice, petrol and arms. Some manufacturers welcomed the idea as it drastically raised the competitiveness of their products. Protectionists argue that by shutting borders, imports are restricted and local manufacturers have the space to scale and make profits. On the flip side, many exporters can no longer ship out their products to the African markettoearnforeignexchange, and manufacturers have resorted to the more expensive seaports and waterways for the movement of their goods. “Eighty percent of Nigerian manufacturers are comfortable with the border closure.

What amendment of Land Use Charge Law... Continued from page 1

effect, citing need to raise revenue to meet increasing demand for infrastructure

and other social services for the state’s over 20 million people. The 2018 law repealed the Land Use Charge Law 2001 and consolidated all property and land-based rates, including tenement rates law, the land rates law and the neighbourhood improvement charge, but it raised much dust from all segments of the society. The state assembly’s response to the public outcry led to the setting up a six-man ad hoc committee at its plenary session on Monday, March 19, 2018. The committee chaired by Rotimi Olowo was mandated to look into the law and report its findings. The findings of the committee, which involved public hearing, have led to the amendment that Lagos residents have commended for its forward-looking recommendations. The Land Use Charge Law 2018 had based its charges on the current market value of eligible property in which case

owner-occupied residential property attracted increase of 0.076 percent per annum of the assessed property value and industrial premises of manufacturing concerns 0.256 percent per annum of the assessed property value. These increases, along with other charges including vacant plot of land and unoccupied properties, which are now exempted, are generally perceived to be arbitrary and unrealistic in a recessed economy, hence the advice by the lawmakers for the state to revert to status quo of the Land Use Charge for 2017. “In my view, what this amendment implies is that the rental market in the state would continue to be stable as against the volatility that the new law would have brought into the market,” Yemi Madamidola, an estate manager, told BusinessDay on phone. According to him, it was expected that the new law would push rent up by 50 percent as landlords would readily pass on the increase in the Land Use Charge to the tenants and this would have causes friction in many homes.

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Howbeit, the border closure has increased the menace of smugglingastheborderlackstheright infrastructure to function effectively,” Vincent Nwani, CEO, RTC Advisory Services, said. Nwani explained that it was difficult to manufacture some goods locally as they required raw materials that were not available in the country. Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said in a statement that while protectionist policies might help local industries stay afloat, it would make them remain less competitive to their foreign counterparts. “It is probable that government will leave the land borders shut till it gets the desired level of commitment from neighbouring countries,” Yusuf said. Continuous closure of the border may favour manufac-

turers, but it will hurt some depending on the border for inputs, including exporters that must ship their products to the West African market through the border. More so, the CBN loanto-deposit ratio of 65 percent, which was recently raised from 60 percent, may favour manufacturers in 2020 as analysts predict more aggressive funding for the sector. However, some manufacturers might be hurt if the CBN continues to increase the list of items ineligible for foreign exchange, experts say. “We believe manufacturing sector will continue to benefit big from CBN’s aggressive credit push to the real sector. In furtherance, we see scope that competition between foreign and local producers will fade on prolonged closure of land borders,” Yusuf further said.

“This amendment has taken care of that; it means less pressure on landlords and it is good for tenants too who would now have more money in their pockets,” he reasoned. Madamidola pointed out that charges on vacant plots of land and unoccupied properties were senseless as that would discourage investment needed to grow the state’s economy and provide infrastructure for the residents. Lagos, with over 20 million population, is burdened with a deficit of 3 million housing units. It has an active rental market. According to ‘The State of the Lagos Housing Market’ report compiled by Pison Housing Company, about 80 percent of the Lagos population are renters, spending over 50 percent of their income on house rent. A tenant in Surulere said at the onset of the new law, he received a notice from his landlord through a lawyer notifying him of increase in his rent from N600,000 to N800,000 for a three-bedroom apartment. The tenant, who gave his name as John, said he was already considering relocating to his uncompleted property in Egbeda area of the state to

escape the rent increase. There were so many similar instances of tenants already under pressure to relocate, but with this amendment and the lawmakers’ advice to revert to status quo ante, many families would have more money to meet other needs such as health, school fees, feeding, etc. The amendment of the law is also good for the Lagos economy. The state would raise more revenue from property tax “if the charge is affordable, flexible and friendly,” Chudi Ubosi, principal partner at Ubosi Eleh + Co, told BusinessDay. “Take, for instance, using the market value of a property to assess its LUC on an annual basisamountstoasubtleformof double taxation as capital gains tax is paid every time the property is sold or bought,” he noted. Ubosi explained that when property tax was affordable, it would bring more people into the tax net because more property owners would be encouraged to pay as that is in their own interest. “And, don’t forget, the more people pay, the more revenue for the government and the better for the economy of the state,” he said.

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Thursday 02 January 2020

BUSINESS DAY

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Kwara to launch SIP, build innovation hub 2020 SIKIRAT SHEHU, Ilorin

wara State governor, Abdulrahman Abdulrazaq, has disclosed that the state will launch Social Investment Programme (SIP) to empower the people across various social strata in year 2020. Abdulrazaq, however, said the New Year would be decisive for Kwara in terms of socioeconomic and human capital development. In a statement Wednesday by Rafiu Ajakaye, chief press secretary to the governor, Abdulrahzaq said, “We spent substantial part of the outgoing year trying to stabilise a state that was left in ruins because of years of neglect — whether in the area of water supply, basic healthcare, primary education, workers’ welfare, and other basic amenities. “We changed the water situation to an appreciable extent, restored some sanity to the primary health sector with hundreds of millions of counterpart funds, and returned Kwara back to reckoning at the Universal Basic Education Commission. We are resuscitating dying state institutions, restoring dignity and running cost back to the civil service, returning life back to the sports sector, and gradually stopping the bleeding of public resources, among others. “Nonetheless, Kwarans must know that we are still up against a pocket of groups that are reeling against either their lack of access to the public till or those who regard public office as an avenue to feather their own nests. These forces will throw in everything in the New Year,

including blackmail and fake news, to misinform the public and distract the government. Kwarans should rest assured that we are up to the task and shall never give in to them amid renewed determination to free up resources for development. “In 2020, we are laying a solid foundation for a greater Kwara, one that works for all. The first quarter will record official launch of the Social Investment Programme to empower the people across various social strata. “We will build innovation hub for our tech-savvy youths to unearth latent potentials and contribute to building solutions to local and global challenges, construct garment factories to rejig our economy and generate employment, key into various agricultural initiatives, invest in mechanised farming, rehabilitate and equip our primary schools and basic health centres, open up our state with roads, train and retrain workers to keep them on top of their game, and launch our e-Government initiative for ease of doing business, among others.” He said his administration would insist on using public funds to advance public interest only and encourage a new political culture of probity and modesty in the spirit of the Otoge revolution. The governor had while calling for more support from the citizens, assured that he would work with the progressive leadership of the state House of Assembly to fast-track the passage of the Freedom of Information Bill to deepen transparency and accountability.

Kebbi Rep assures constituents of dividends of democracy, pledges support to FG in 2020 James Kwen, Abuja

ember representing Koko- Besse/ Maiyama Federal Constituency of Kebbi State, Shehu Koko, has reassured his constituents of his unwavering commitment to deliver dividends of democracy in the area of infrastructure development. Koko called on Nigerians to see the year 2020 as a year of hope and peaceful coexistence among one another. Koko, who is also the chairman House Committee on Airforce, made this known in a message to celebrate the New Year tagged ‘A year of hope,’ especially to his constituents. “I want to use this medium to extend my greetings to Nigerians, the good people of Koko- Besse/Maiyama Federal Constituency as well as my party the All Progressives Congress. “I also want to appreciate the President of the Federal Republic of Nigeria President Muhammadu Buhari and his sacrificial time for his country in the past years and in the New Year,” he said. He used the occasion to ask Nigerians to continue to pray for the progress and peaceful coexistence and one United Nigeria, saying, “the year 2020 has ushered in a new year

and a new hope for a country blessed with her natural resources as I look forward to delivering dividends of democracy promised during my campaign. “However as the chairman of the House Committee on Airforce I will also discharge my constitutional duties effectively for the development of Nigeria. “The House Committee on Airforce will do all within her powers to carry out our legislative business to support the Nigeria Airforce in our oversight functions in the New Year and beyond. “The nation needs to begin the year with prayers and supplications for more commitment and sustenance of achievements made in the previous years and in the New Year. “I call on all of us and my Constituents to continue to offer prayers for our nation and our leaders; and to be hopeful that the year 2020 will usher in peace as we continue to make laws that will improve the living condition of our people. “I hereby wish every Nigerian a peaceful and prosperous New Year as we continue to pray and support Mr president’s administration and policies in making Nigeria a country like no other.” www.businessday.ng

L-R: Osaro Idah, special adviser to the governor on political and community matters; Godwin Obaseki, governor, Edo State, and Anselm Ojezua, chairman, Edo State chapter of the All Progressives Congress (APC), during a meeting of ward leaders from Oredo Local Government Area of Edo State, in Benin City.

Off-grid development as panacea to Nigeria’s power challenges

xperts are of the opinion that off-grid development will address Nigeria’s power challenges. They say that development of off- grid power distribution solution, otherwise, known as standalone power system, will open up the power sector to more investment opportunities. They said the use of minigrid and off-grid renewable energy solutions have the potential to become a gamechanger in providing power to rural communities and businesses, which are not served by traditional transmission infrastructure. According to them, the off-grid system creates opportunities across the entire power sector value chain, as it

enhances the end-to-end productivity of all players within the sector. The term `off the grid’ refers to living autonomously without reliance on a utility for power. Off-grid living is often ideal for rural locations where there is lack of reliable grid access. Off-grid electrical systems can power individual residences or a community linked in a shared arrangement known as micro-grid. In addition, they may be powered by renewable energy sources or by conventional fossil fuels. Renewable energy is from a source that is not depleted when used, and is naturally replenished on a human timescale, such as sunlight, wind, rain, tides, waves and geother-

Be patient with Governor Abiodun, Speaker pleads with Ogun indigenes

peaker of Ogun State House of Assembly, Olakunle Oluomo, has pleaded with indigenes of the state to be more patient with Governor Dapo Abiodun in his quest to take the state to a new level of prosperity. Oluomo said this in a statement in Abeokuta on Wednesday. The speaker promised that 2020 would be known f o r q u a l i t y g ov e r n a n c e tailored toward bringing dividends of democracy to people of the state, especially the masses. He said it was the collective resolve of the state legislators to give the executive arm the appropriate synergy it required in order to fast track developmental plans in Ogun. He said the ninth legislature under his leadership had resolved to work in unison toward ensuring that the electorate was not disappointed. “Deliberately, we gave the 2020 Appropriation Bill an urgent attention and ensured its speedy passage into law, thereby continuing

with the January to December fiscal year which we inherited. “Mr Governor has signed it into Law. The budget is now a legitimate document designed to put government on its toes, in a bid to bring the desired and much awaited development to the gateway state. “Undoubtedly, the teeming youths of our state will have reasons to smile in this New Year. This is because of the Sports Commission and Sports Trust Fund Laws that were passed on the last legislative day in the year 2019. ” These Bills too have gotten the assent of Mr G o v e r n o r. T h i s m e a n s our youths will now have enough spor ting activities to engage themselves, thereby bringing crimes to the barest minimum in our state. “Similarly , the Public Private Partnership Law which was also passed by this ninth assembly will further open the state to genuine investors and investments which will further reduce unemployment in the state, ” he said. NAN

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mal heat. Kunle Olubiyo, the president of Nigeria Consumer Protection Network, an NGO, said that government agencies should focus on investment in renewable energy. Olubiyo said that agencies like the Niger Delta Power Holding should focus on investment in renewable energy so that many people could have power driven by clean technology. “Each senatorial district in the country should have off-grid power generation that will be hybrid and best suitable for that area at the rate of 10 megawatts.’’ Ifeoma Malo, CEO of Clean Technology Hub, an energy innovation centre, urged the Federal Government to har-

ness renewable energy resources to address challenges in the power sector. She stressed the need to think beyond the grid or building of power plant to drive energy access to solve electricity challenges as well as assist small businesses to grow. According to her, harnessing renewable energy, which is easier to spread, will boost the country’s electricity supply, as it takes an average of nine to 10 years to build a power plant, unlike renewable energy that takes about nine months to construct. She noted with concern that there were plants built that had not been inaugurated as a result of non-availability of gas to power them or enough coal to fire them.

2020: Lagos residents optimistic of better times

ome Lagos residents have expressed optimism that the New Year would be better than previous years in diverse ways. Some of them who spoke with News Agency of Nigeria in Lagos on Wednesday said they were not able to fulfil their resolutions for the year 2019. They said it was filled with high and low moments and hoped for a better 2020. Olatunbosun Ajayi, a civil servant, said he hoped his hanging benefits in the previous year would be delivered to him in 2020, saying, “My first expectation is that God should spare my life and my family to witness the year in good health and sound mind. “I also pray that all my hanging benefits in the previous year would be delivered to me by the first quarter of the year.” Precious Nelvis, a businessman, said he believed the New Year would bring about new opportunities and economic turnaround. “The year 2019 was very good to me because I accomplished most of the things I set out to do. I got a car, rented an apartment, and I got engaged @Businessdayng

to the love of my life. “In 2020, I want to acquire more property, expand my business and move on as a young man,” he said. Saint Paul, a filmmaker, said, “2019 like any other year was very hectic, but I thank God that I survived it. My expectation for 2020 is that my family and I move closer to God and be in Christ.” Similarly, Ann Ologbese, a Customer Service Consultant, said her desire was to move closer to God, get a part time job and acquire more skills. Peter Lawson, a mechanical engineer, said his resolution was to get married and bid bachelorhood farewell. “I had so many dreams in 2019 and I was able to achieve them. “The only thing I was not able to achieve was to get married. In 2020, I am bidding bachelorhood farewell,” he said. Also, Solomon Odewale, a teacher, said he hoped to get married, establish a business, and expand his career. Benedicta Chuwah, a beauty consultant, said the year was going to be a learning year for her, as she would take on new adventures and businesses.

Thursday 02 January 2020

BUSINESS DAY

news My pact with Edo people is to defend their interest, dethrone godfatherism – Obaseki

do State Governor Godwin Obaseki says his pact with Edo people is to defend their interest and dethrone godfatherism, which threatens to deprive them of their democratic right. Governor Obaseki said he came into office with a mission to further the fight against godfatherism started by the former governor of the state, Adams Oshiomhole, but that it was unfortunate that the latter was reneging on the mandate. The governor disclosed this while hosting ward leaders of the All Progressives Congress (APC) in Oredo Local Government Area of Edo State, calling on them to join him as he continued to fight godfatherism in the state. According to Obaseki, “Comrade Oshiomhole came to me, asking that we join forces to fight and bring an end to the practice of godfatherism in the state. The partnership helped us in changing the narrative of development in the state. This led me into politics. I am into politics to better the lives of Edo people. We believed Oshiomhole, and followed him to fight godfatherism. “He said godfatherism is not good but today he is saying godfatherism is good. He said let the people lead but today he

wants to lead the people, against their interest.” “Noting that he would always stand with the people irrespective of the circumstance, the governor said, “Any politics that doesn’t benefit the majority of the people is bad politics. The resources we have in the state is to be used for the benefits of the people of Edo State, not a few politicians.” Obaseki urged APC members and supporters in Oredo Local Government Area not to be worried as he is not bothered because no man is God, stating, “When they say I am a mosquito, I was never worried; I told them that mosquitoes can bite. The bite can cause malaria and if not well-treated, it can kill someone. Those bitten are already on life support but we pray they don’t die.” The governor wondered what antics and strategy would be deployed to make the minority’s decision supersede that of the majority in a democratic system. “The last time an incumbent ran for governorship in our party in the state, it was a consensus. It will happen again; we will all agree on consensus. Whether direct or indirect primary, you, the people will vote. Our plan is on the election, not the primaries.” He said with the resources

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available in the state, the people have no business being poor, as the bad leadership style adopted in the past was responsible for the poverty. “Our people have no business being poor but our leadership has brought us here. I am in politics to improve the life of Edo people. We have done more in three years with less resources. Imagine what will happen in eight years. “I am not trained to abuse elders or my seniors. But we will not allow anything that will negatively affect Edo people. I will fight with everything to make life better for my people. God has continued to fight for us. All the strategies and antics against this government has failed. We will build this party and you will be the envy of all others who are not in our party but we are sure they will join us soon,” he said. Chairman Edo State chapter of the APC, Anslem Ojezua, called on the ward leaders in Oredo to support the Governor who is their son. He said no other Edo State Governor has supported the party as Obaseki has done in the last three years, noting, “I urge you to support your son and never allow anyone to treat him anyhow. Possess your possession!”

Final passage of PIB expected by mid-2020, says Sylva

inister of State for Petroleum Resources, Timipre Sylva, says review of the Petroleum Industry Bill (PIB) is at an advanced stage and full passage of the bill is expected mid-2020. Sylva made the announcement on Wednesday, in a statement to mark the New Year, which was made available to the News Agency of Nigeria in Lagos. The minister, while reviewing the performance of the petroleum ministry, described 2019 as a very busy and prosperous year for the ministry and its agencies. According to Sylva, the ministry’s achievements included

Amendment of the Deep Offshore (and Inland Basin Production Sharing Contact) Act, and signing of Final Investment Decision on the Nigerian Liquefied Natural Gas (NLNG) Train 7 project. He said others were the discovery of crude oil in the Upper Benue Trough and the hosting of the Extraordinary Session of the Council of Ministers of the African Petroleum Producers Organisation and the emergence of Nigeria’s Omar Ibrahim as its secretary general. “We thank every Nigerian, all our key stakeholders, heads of agencies of the ministry: Nigerian

National Petroleum Corporation, Department of Petroleum Resources, Petroleum Technology Development Fund and Nigerian Content Development and Monitoring Board. “Petroleum Products Pricing Regulatory Agency, Petroleum Equalisation Fund (Management) Board, Nigerian Nuclear Regulatory Authority and the Petroleum Training Institute) and every member of staff, for all the support. “We look forward to delivering on all our aspirations as we remain committed and focused in the New Year,” he said. NAN

‘Nigerians deserve better roads in 2020’ James Kwen, Abuja

eputy Minority Leader of the House of Representatives, Toby Okechukwu, has expressed serious concern over Nigeria’s decrepit road infrastructure. Okechukwu, who made his viewsknowninhisNewYearmessage to Nigerians on Wednesday, urged the Presidency to support National Assembly’s effort to provide lasting solutions to the challenge in the New Year. The lawmaker observed that the ugly state of Nigerian roads

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could only change if the nation also changed her approach to road governance and funding, saying experience over the years had shown that the road needs could not be met through annual budgetary provisions. He noted that annual budgets for the roads were not only very marginal when compared to the challenges, but were also never substantially released. “Finding lasting solutions to the poor state of Nigerian roads should take pre-eminence in 2020 because Nigerians deserve good roads to meet their socio-

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economic needs. “Therefore, the House of Representatives passed the National Roads Fund Bill and Federal RoadsBillaspermanentsolutions to the poor road infrastructure. “While the National Road Fund Bill will establish a National Roads Fund to provide predictable and sustainable funding for road maintenance in order to promote the sustainable development and management of the nation’s road network, the FederalRoadsBillwillestablishan agencytogovernandmanagethe nation’s federal roads network.

Thursday 02 January 2020

BUSINESS DAY

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The Nigerian middle class and the second exodus CHRISTOPHER AKOR

efore the second phase of military rule in Nigeria in the mid 1980s, Nigeria had a secured and flourishing middle class. Keith Richards, in an article in BusinessDay of 27th February 2016, presented the picture more eloquently: “When I first visited Nigeria in 1981 there was still a fairly robust middle class. It had been impacted by the turmoil of the Civil War and subsequent military governments but was still visible, resident in places like Yaba, parts of Surulere, Palm Grove in Lagos and often in GRA’s around the country. Professionals were relatively financially secure. Doctors, teachers, professors were still respected. Their salaries, not yet decimated by the devaluation of the Naira in the mid 80’s, were generally paid on time. Universities had slipped from earlier standards but still offered a solid education. Government colleges were still functioning. Socially, there were cinemas in most cities, Lagos had a smattering of decent restaurants and social clubs were still prestigious and smart.” But then the military struck on December 31, 1983 and things were never the same again. Although the

Buhari government ended the corrupt Shagari government, it and the subsequent military regimes of Ibrahim Babangida and Sani Abacha were to inflict the greatest damage on the middle class. Starting with his ruinous and crude jack-boot economic policies, Buhari sucked the life out of the Nigeria’s economy and sent virtually all Nigerians, except connected military officers of course, queuing for days to buy mere sugar, milk and bread. For instance, his strategy of controlling inflation was to send out soldiers with koboko into the market to force traders to sell essential commodities at a fixed price regardless of costs. Of course, prices fell in the first few weeks of the coup due to fear of the soldiers and producers and traders took on huge losses. However, as scarcity began to bite, prices went northwards, exceeding their levels before the coup. Unable to access forex to import raw materials and spare parts to keep factories working, industries closed down and unemployment became rife. What was more, wages of public sector workers were delayed for several months. This was in addition to the closure of the borders throughout his rein and his resort to trade by barter to solve the biting scarcity of forex to import essential commodities and machineries needed by the country. It was therefore a thoroughly relieved nation that welcomed General Babangida when he put an end to the insufferable regime in August 1985. But Babangida sealed the fate of the middle class by devaluing the Naira leading to a collapse of their living standards. But beyond economics alone, the

destruction of the middle class was also psychological. In their bid to prevent intelligent debate and criticism, the military regimes with no exception, implemented policies to whittle down the autonomy of universities and economically disempower both staff and students, compromised the quality of the civil service and shackled civil society. The effect on the academia was particularly severe and it marked the collapse of the Nigerian university system. Professors and solid academics were knocked off their perch, struggling to survive like every poor Nigerian and unable to afford any of the luxuries they were used to. Most of the solid academics left for foreign universities leaving behind mostly the dregs of the system who could not hope to function outside of the dysfunctional Nigerian system. As Richards attests, “Many of Nigeria’s best minds went onto exile. Gradually those who had the opportunity to move abroad, the professional middle class, did so. By the time democracy resumed some 68,000 Nigerian Doctors were practicing in the USA and the UK had 18,000 Nigerian health professionals in the NHS. The brightest of our students studied overseas and stayed to work and raise families.” Continuing, Richards attest that unlike their colleagues that went on exile and were excelling, Nigerian professionals that remained at home suffered the effect of collapsed medical as well as educational infrastructure, losing “their valued position in society and their professional self respect and saw their income plummet.” He concluded that: “By the late 1990’s those desired lo-

‘

Many of Nigeria’s best minds went onto exile. Gradually those who had the opportunity to move abroad, the professional middle class, did so. By the time democracy resumed some 68,000 Nigerian Doctors were practicing in the USA and the UK had 18,000 Nigerian health professionals in the NHS

cations on Lagos Mainland or in GRA’s became run down and shabby, as the shadow of what middle class had not fled was fully demoralised. Following economic disenfranchisement the middle class lost its self-confidence and individuality.” The rehabilitation of the middle class really began around 2003 when the Obasanjo administration realised it needed really knowledgeable and professional economic managers to reform the economy. By 2010, Nigeria had again a bubbling middle class driving the economy. What was more, many Nigerian organisations were actively recruiting Nigerians and foreigners abroad offering them competitive wages. Many of the professionals on exiles and their families started coming back to take opportunities emerging in the country. Things were looking so bright for the middle class until 2015 when Buhari returned, this time, as a civilian president. Sadly, his coming coincided with the collapse of the Naira, economic depression and stagflation. In just a year, all the progress made by the middle class came crashing: the devaluation of the Naira and hyper-inflation had wiped away their earnings and all of a sudden, they are back to square one, scrambling for survival like everyone else. And just like in the 1980s and 90s, they are leaving in droves. Those with second passports, green cards and permanent residencies outside the country have checked out while those with the means are doing everything in their powers to check out as well. · To be continued...

Driving a sustainable environment for Lagos

hen we talk about our environment, there is a lingering question of how sustainable it is and whether the impact of our daily activities as individuals and industries positively or negatively affect the surrounding we live in and the universe as a whole. Recently, there have been continuous conversations on climate change as a result of these environmental activities and different levels of government are coming together to discuss this risks and how we all have a role to play in saving the world from this growing concern. Lagos State accounts for over 60 percent of Nigeria’s commercial and industrial activities such as refining, construction, manufacturing, production, automation, utilities, oil & gas amongst others. All of these activities are on a clock work with visible effects on the environment comprising land, air, water and a long term influence on the global climate due to changes in average weather patterns. As a rapidly developing city with a steady increase in population size which is estimated to hit over 35million people by 2050 according to the United Nations, industrialisation have become an extension of our economy. This involves a lot of manufacturing and the large scale use of energy and the alteration of natural systems from their original state. Industrialisation in Lagos has involved many technological innovations, economic and social transformation. However, because of the adverse shift in climate systems due to these heavy industrial activities, areas such as crop production, livestock production, fisheries, forests and rainfall patterns will be altered, resulting in changes in our current livelihood. There is also a threat of rise in water levels, flooding and storm surges, which will destroy farmland as well as increase in temperature and humidity which can increase pests’ activities and an outbreak of diseases. The underlying fact is that our livelihood, as we know

it, is posed to be altered and damaged causing severe harm to life and property. What this means is that the impact of climate change is no longer as distant as people think it is and we must pay urgent attention to the activities in our immediate environment. There is a need for committed efforts from individuals and institutions, providing sustainable solutions, implementation and control to clean up our environment. At the Lagos State Environmental Protection Agency (LASEPA), we have a responsibility to protect and improve the environment, through regulations and clean development with emphasis on how we all own the environment. Within the state, we focus on ensuring that activities across the different aspects of our environments are closely monitored to ensure compliance with the laws and regulations. Land and water pollution is constantly a growing issue and we ensure that guidelines in these areas are looked into on a frequent basis to ensure compliance. The impact of land pollution especially with indiscriminate waste disposal by residents is a daunting risk with blockage of the drainage systems which has contributed to adverse flooding in the state. Incidences of air pollution relating to emissions into our atmosphere and the burning of fossil fuels is also a great concern. Research has actively linked the major causes of climate change and global warming to events relating to air pollution and we must be intentional about the use of more alternative sources in the area of manufacturing and production. As an Agency, we advocate for inclusion of more green energy sources by companies operating within the state. In response, some industries have adopted combined heat and power systems in their operations, which saves energy and cost to the company and the environment. Ecology and conservation is also a very important aspect of environmental protection we

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pay close attention to because we believe that there is a strong opportunity to build and repair the earth through ecology and conservation. Our surveillance and monitoring team runs an ongoing check on conservation centres within the state, sensitize communities on erosion and flooding, active advocacy programmes on wildlife conservation and coordination of tree planting exercises which plays a huge role in reducing and eliminating the harsh effects associated with deforestation. Just recently, we advised residents to adequately prepare for an upsurge in heat waves arising due to the change in season. From a domestic point of view, activities such as burning of refuse, poorly serviced generators and use of other ozone depleting materials in our homes, can also contribute to greenhouse gas emissions. We have also began a major crackdown on generators that emit significant pollutants into the air and are collaborating with other agencies to ensure that vehicular emissions are within acceptable limits. From an industrial point of view, we have partnered with relevant international development agencies to inform, educate and empower local small and large scale industries with information on alternative materials and technology to ozone depleting substances and processes respectively. In sustaining a green environment for Lagos state, and reducing the impact of climate change which not only affects us but the world in general, we must first of all imbibe the culture of taking care of our environment through our domestic activities and our larger scale industrial activities. We must begin to see climate change and global warming as an existing threat with severe consequences, if we do not play a part in saving the environment. We must also actively engage the 6 R’s - refuse, rethink, reduce, reuse, repurpose and recycle in guiding our actions towards environmentally sustainable outcomes. If there is an opportunity

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Dolapo Fasawe to refuse materials and activities that affect our environment negatively, we should actively do so. More importantly, we must attempt to always rethink our activities and processes to ensure that our footprint on the environment is reduced as well as making sustained efforts to extend the life of materials by repurposing and recycling them for further use. From a global perspective, we understand that tackling the issue of climate change is a collaborative effort with active participation from governments, industry, pressure groups and research institutions, on a long term path to reclaiming earth from impending chaos and winning the war against climate change. The future of a world free from the effects of climate change is encouraging as we would have cleaner air to breathe and nature would be in recovery; there would be less noise, access to healthier foods and an increase in disposable income because we would buy less items as a result of reuse and recycling of products. While we are active as a government in regulating and addressing issues associated with climate change through LASEPA, we all as individuals must understand that we own the environment and when we save the environment, we save ourselves. Dr. Fasawe is the General Manager of the Lagos State Environmental Protection Agency (LASEPA).

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Thursday 02 January 2020

BUSINESS DAY

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Fit to lead: The 2020 difference Positive Growth with Babs

Babs OlugbemI

ongratulations for making it to the year 2020 and for reading the first edition of fit to lead series. I am optimistic as you are for the year 2020 but will start with a question and an analogy that might make me look like a pessimist. No, I’m not a pessimist but a leadership coach carrying out fitness and reality checks on leaders. The question is: where is Nigeria’s vision 2020? Where is the slogan “housing for all by the year 2000”? Vision 2020 was Nigeria’s economic transformation blueprint released in December 2009 with three key pillars and multi-dimensional strategic objectives to make Nigeria great. According to the document and the promise of the political leadership of Nigeria, “By 2020, Nigeria will have a large, strong diversified, sustainable and competitive economy that effectively harnesses the talents and energies of its people and responsibly exploits its natural endowments to guarantee a high standard of living and quality of life to its citizens”. If you check the reality on the ground, the three pillars of guaranteeing the productivity and wellbeing of people, optimising the critical sources of economic growth and fostering sustainable social and economic development are far from been achieved. The most pathetic aspect of the vision is that it has been abandoned as there are no measurable milestones released

for the euphoria project that expended enormous resources and human efforts to develop. We all know that some of the objectives are now in the current focus, and the song is now the sustainable development goals (SDGs). The possibility of having no quantifiable measures of the impacts and outcome for the SDGs in Nigeria is high if the United Nations develops another ‘good to use’ project or slogan for our leaders. The problem is therefore not resources or human capacity, nor is it religion or multiple ethnicities. I have unrepentantly positioned that the problem we have is leadership. At the root of our misplaced priorities, cultural misalignment and imbalance political structures is a defective leadership, with which no massive progress can be seen until the paradigms are changed. A country with considerable resources to achieve the SDGs or a business with the potential to dominate the market or a team with high-efficiency quotient will fail to live up to expectations if there are defects in the way leaders are selected, positioned and engraved to deliver the desired outcome. As leaders or aspiring leaders in 2020, the difference we will make is in our approach to leadership. The same paradigm that failed to achieve Nigeria’s vision 2020 outcome cannot meet the SDGs even if we teach them in schools as curriculums. Your 2020 leadership difference is to start with a new mindset leveraging on past successes and failures. The knowledge of the essence of being a leader, which is to advance others and the organisations through positive and purposeful engagement, the expected outcome to be achieved together with your willingness to put your team first is the starting point. That’s the knowledge and responsibility question you must answer vividly. The next is your priorities as a leader. What’s the essence of achieving the team’s objectives? If it is to benefit you, and not others, then you will destroy the world to get what you

want. Setting the right priority will align you with your posterity. If your vision creates a system where only the leaders benefit from the outcome and not the followers, then something is wrong with the leaders or the system. Setting the priority that rewards people outside you is an essential element of an institutional leader. Having an outcome that will leave the system a better one than you met it will answer the vision and priority question succinctly. There is nothing that lasts forever. There is a timeline for your leadership exploits in 2020. What will happen when you are out of the leadership position? Having people who have been developed to take extreme ownership of your team’s objectives and with a blended mindset of leadership beyond self will answer the legacy and continuity question of the leadership litmus test. Are you making the journey more comfortable for your team to achieve the stakeholders’ objectives? There are linkages among all the resources required to see a positive outcome in a process. The work of a leader is to create and improve the system of interaction among resources continuously. This function is hinged on the effectiveness of the leader’s decision making and ability to embrace changes. The process question must be answered for you to make the 2020 difference this year. An important question that will enable your team to sustain the result of the past years and improve on them is the development question. Your leadership personality requires continuous development to be effective. I recently visited a friend who is a level C leader in a bank. He had been travelling on the job across multiple territories for the past four months. As we settle to discuss his team performance which was 98% of the budgeted profit and in some of the key performance indicators, I focused on testing his leadership personality with a question. How will you ensure this performance continues even if you are to be redeployed to other

‘ The problem is therefore not resources or human capacity, nor is it religion or multiple ethnicities. I have unrepentantly positioned that the problem we have is leadership

division of the bank? His response was a sort of development to a level 9 out of 10 on the leadership litmus test. He said, though I travelled to represent the team, these are the people doing the work (pointing to his team on the shop floor). I have been identifying and empowering them to function without my input. I have ensured that every little improvement is rewarded and celebrated. I have minimum unhealthy inter-team competition which is not improving the corporate bottom-line of the entire business. You mean you are establishing a culture of collectivism among your teams, I interjected. Your development as a leader is the focus of this column Positive Growth with Babs and my fit to lead series. We will be sharing thoughts on different elements of institutional leadership and mastermind on how to be useful in our leadership journey. One thing is clear. The success of your rating and growth on all the fitness test questions-knowledge and responsibility, vision and priority, legacy and continuity, process and development are based on the culture you entrenched among your teams. culture is the decisively indicative test of your leadership efficiency, effectiveness and legacy. If you want to be a good and effective leader with a legacy that outlives your time, reward behaviours that will create a culture of extreme ownership and develop every member of your team to think like the owner of the team, the business and the organisation. I, Babs Olugbemi pledge to be your friend and partner in the journey leading to developing your team and making you an effective leader in 2020. Happy new year to all my readers as I look forward to more of your responses to the articles on this column. Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

On Bigi and Pepsi – like Jekyll and Hyde: The dynamics of competitive strategy! “I don’t know what would have happened to Wal-Mart if we had laid low and never stirred up the competition. My guess is that we would have remained a strictly regional operator.” – Sam Walton ompetition is a good thing, as it drives businesses to do their best; while monopoly renders people complacent and at times mediocre. It was therefore surprising to see some social media reactions to the leaked email sent by the MD of Seven-Up Bottling Company (Pepsi or SBC) to his team, with some alleging racism, monopoly, etc. Some even calling for government intervention. The debate showed how deeply ignorant many Nigerians are about competition dynamics and free-market economics. For starters, it is important that we understand the ownership structure of Pepsi & Coca-Cola in Nigeria. Despite being international brands, they are bottled by indigenous companies, who are franchise owners of the brands - Seven-Up bottling Company (SBC) & Nigerian Bottling Company (NBC). Whilst SBC is the franchise bottler of Pepsi along with with 7up, Mirinda, Teem, etc., their main competitor, NBC is the franchise bottler of Coca-Cola, Fanta, Eva, etc. Both employ thousands of Nigerians and were quoted on the Nigerian Stock Exchange (NSE) – until SBC recently delisted, with hundreds of Nigerian

shareholders owning various proportions of the businesses along with their foreign counterparts. SBC alone employs over 3000 people who are predominantly Nigerians. To therefore approach a competition debate involving them, from a foreign company vs. local company angle, requiring “government intervention”, to enable “indigenous companies” thrive is at best laughable and ignorant of how free-market economy and competitive strategy works. The leaked email was a simple operational tactic aimed at rousing the Pepsi team for competitive war. These companies have maintained their investments in the Nigerian market and have enjoyed over five decades of success in the industry when other players either stayed away or failed. Both early competitors have had to consistently battle for market share; consistently innovating to capture and retain customers. It is also key to note that despite these two being the biggest players, the Carbonated Soft Drinks (CSD) industry is not a monopoly, and in fact has about 18 various product variants competing for customer wallets, both from the big and small players. Interestingly, two of the new entrants’ emergence in recent times declared war on the incumbents – a brutal price war. Big Cola (a Peruvian brand) was one, while Bigi (a Nigerian brand) was the second, more enduring one. Bigi launched its CSD beverage into the

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market in 2016 (barely 3 years ago) with initial six flavors; tailored along the product-lines of the incumbents. Bigi’s market entry was brutal, they changed the market dynamics in terms of volumes and price, forcing the incumbents to either reduce prices or introduce new product variants at lower prices. Using the Porter’s five forces of competition, Bigi has made, and is continuously making the market unbearable for incumbents; their intensity of competition is getting fiercer; they have increased the threat of substitutes, increased the bargaining power of buyers which were hitherto low; and somewhat lowered the barriers to new entrants. This is not a market scenario that requires just backpatting from SBC; so, the email was at best a bonus-deserving one. The A-Brand leaders in the Nigerian Carbonated Soft Drinks Industry are seriously facing threats of being disrupted, especially from a low-end market disruption standpoint, as the B-Brand players are targeting the Nigerian mass market (over 60 percent of whom are in the bottom of the pyramid), with more volumes and lower prices, with Bigi selling its 60cl drink at N100, while same goes for N150 for Coca-Cola and N100 for Pepsi’s 50cl. This is obviously yielding results as Rite Foods (makers of Bigi) has had to increase their production volume for soft drinks by over 300 percent to meet up with the increasing demand.

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AYO BANKOLE AKINTUJOYE Large incumbents are therefore in desperate need to review their route-to-market strategies to adopt more disruptive methods if they still intend to maintain leadership in the long term. To therefore, expect SBC to fold their arms, while smaller competitors shrink its market share is at best ridiculous. To also isolate the use of the term “war” as a basis for criticism, is ignorant of strategy lingua. Competitive strategy is WAR - you win, or you struggle at best; and at worst, you die. So, every business has a Jekyll and Hyde character – good to the customers, evil to the competition. Perfectly normal. Competition only forces industry players to continuously innovate, stimulate competitive pricing, improve on quality and economic growth. Therefore, let the war continue, ultimately, we, the customers and the economy WIN! Akintujoye is a strategist and business transformation expert with a decade of experience advising multinationals and indigenous companies on strategy & operational efficiency, working with some of the world’s largest consulting firms and leading Strategy teams in Nigeria’s financial services industry. He is also the Convener of the Lagos SME Bootcamp. He tweets from @AyoBankole.

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BUSINESS DAY

Thursday 02 January 2020

Editorial Plaudits for NLNG Train 7 Publisher/CEO

Frank Aigbogun editor Patrick Atuanya

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

any accolades h av e a ttended the sig ning on Friday, December 27, 2019, of the Final Investment Decision to build Train 7 at the Nigeria LNG plant in Bonny Island for $10 billion. They stem from the many positives of the action. We commend the principal stakeholders of the NLNG, being NNPC, Shell Petroleum Development Company, Total and Eni, and all Nigerians on this significant milestone. Train 7 will increase the capacity of the plant from 22.5 million Metric Tons Per Annum (MTPA) to 30 million. The new liquefaction train will contribute the bulk of the additional capacity while about 3.4MTPA will come from the debottlenecking of existing trains. Nigeria’s share of the global LNG market would continue its rise beyond the current approximately seven per cent. Nigeria LNG is a worldclass six-train LNG plant

operational since 1999. It took off as the country was returning to the path of democracy. It was a long journey to its take-off as plans for the plant commenced in the 1960s. The expansion will make NLNG one of the essential gas hubs in the world, thus allowing the partners to leverage Nigeria’s abundant gas resources further. NLNG is a Nigerian success story and a model in several areas. Experts often cite its equity structure and ensuing management as one of the best ways to ensure public-private sector collaboration works. It has been an upright corporate citizen, paying over $7 billion in taxes to the government. It has also run a well-regarded corporate social responsibility and social investment scheme, contributing to education, arts and sciences and turning its host into a Nigerian model community. Despite this, the FID for Train 7 suffered 14 years of delay out of the 20 years of the plant. Between 20002006, NLNG was the fastestgrowing LNG operation in

HEAD, HUMAN RESOURCES Adeola Obisesan

the world. It grew from one train to six quickly. Then the Nigerian Factor set in. Political leaders, including a son and daughter of the Niger Delta, would not approve the FID. While Nigeria tarrie d inexplicably, Qatar that took off in 1997 rallied to become the global market l ea d e r. Q a ta r p ro d u c e s 78.7MTPA or 24.7 percent of the world market and plans to add 30MTPA. Train 7 will create 12, 000 direct jobs and additional indirect 40,000 jobs. It will have multiplier effects on several areas. One of the fields will be in local content where NLNG has reached many agreements with the Nigerian L ocal Content Development and Monitoring Board. President Muhammadu Buhari earns deserved kudos for approving the FID as both petroleum minister and head of state. The action is most welcome as it signals Nigeria’s readiness to play the investment game and once again return to the arena where companies and countries allocate their resources.

Many projects have been hanging in this most critical of sectors for Nigeria, and the FID for Train 7 should restore confidence and open doors. Train 7 is better late than never. In the 14 years of delay, significant developments happened in the gas market. About 19 markets export LNG in the world. Our neighbour Cameroon joined in 2018 with its 2.4MTPA Kribi Floating Liquefied NLNG project. Demand for gas is secure with an average yearly growth rate of LNG demand at 6.4 percent since 2010. China and South Korea are the current drivers of import demand globally. These factors informed efforts at building additional NLNG plants in the country that have now ente re d t h e v o i c e ma i l o f inexplicable delay. The dynamics of the market dictates that Nigeria must take advantage of available opportunities and make the most of its gas resources as nations diversify energy sources. Congratulations to the Nigeria LNG Limited on the FID for Train 7.

EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong

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Thursday 02 January 2020

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Obinwanne as the spirit of the season The Public Sphere

CHIDO NWAKANMA

erry Christmas, dear reader, on this Boxing Day. It is exciting to converse with you as one of those lucky to see this day and the coming end of the tough year 2019. December 26 has additional significance for me beyond the sharing of gifts in the received tradition. December 26 is Umuode Day, the day my community of Umuode Nsulu, Ikenna community in Isiala Ngwa North LGA gathers for brotherly conversations with a focus on bonding, development and reconciliation. It is the season of obinwanne in Ala Igbo. Brotherly love is the philosophical underpinning of all that the Igbo do throughout this period. Love actuates the travels across the world to unite with kith and kin for a few days. Love makes the stresses and strains of that journey bearable and worthwhile. Wherever we are, whether in the homeland or in the local and international diaspora, obinwanne is the rhythm of our hearts. During this period of obinwanne,

also known as Christmas and End-ofthe-year celebrations, Ndigbo dream new dreams communally. They launch development projects in the land of self-help: schools, town halls, clinics and hospitals, and sundry medical and other missions. In recent times, this is also the season for commissioning of ambitious projects in the areas of infrastructure: roads, bridges and similar high-impact and high cost projects. Most would be sponsored by the akajiakus of the community or by associations and groups who taxed themselves. Obinwanne is a powerful force. It is the spirit of One Love that Keeps Us Together. Obinwanne is uplifting. It is redemptive. It unifies and brings out the best in each man and the community. As we come to the end of a decade and prepare for another, Obinwanne calls Ndigbo to higher standards in doing what they do. There are two dimensions to the new paradigm. Ndigbo must review the self-help that translates to the abdication of responsibility by their governments. We must stop the self-help that means citizens pay no heed to what elected public officials do. Citizen indifference explains the outrage that is the handling of NNDC projects in Abia State. Indigenous contractors connived with officials of the intervention agency to rape our people violently. They stole root and branch. They signed for projects, collected the funds, did NOTHING but wrote in the books various degrees of completion, some as bold as claiming 100 per cent. They had no spirit of obinwanne,

the idea that it is a high trust to take charge of projects for the entire community. We need to redirect the sense of community in our communities to one that holds our public officers accountable and responsible. For too long, Igboland has suffered the shortage of facilities and the preponderance of low standards because of this indifference. Instead, the wicked persons in charge deployed marginalisation and federal prejudice against the South East as a handy excuse. Enough of all that. Whether public or private, we really should raise the bar for infrastructure and other projects in Ala Igbo. I observed this in a note to my kindred recently. It is the season of goodwill and excellent cheer, so I join in extolling those of our public officials and philanthropists who are doing road projects in various parts of Igboland. Citizens have hailed these efforts on social media platforms. Closer inspection, however, shows that most of the roads receiving all the acclaim are mere earth roads. The praise is for grading the roads to smoothen the surface. Grading does not add much beyond that. We thank those who are moving the needle. These kinds of roads were what the old DFFRI offered our people more than 30 years ago. We lamented the decline from the pioneering work of a son of Ngwaland the Honourable Ururuka who gave us the macadam named after him. It lasted for at least 25 years in good condition. Earth roads represent the first level in road works. We can and should do

‘

Whether it is the local or state government, we should aim higher than the grading of the earth surface. We should add at least a stone base. No, we should go all the way and tar those roads

n an environment where project work requires iterative and incremental development of valuable products in short sprints, a lightweight framework that places individuals over tools, focuses on working technology over comprehensive documentation, values customer collaboration over contract negotiation and welcome changes as requirements evolve, is of absolute importance. That summarily, is The Agile Framework. Although, the agile method was a response to a quest on how to run software projects effectively in a way that allows development teams to adapt changes to recent requirements rather than following a plan (as in the more traditional waterfall methodology), it can be applied to other management activities, regardless of the industry. To align conventional project management with the needs of more technical types of project, the exponents of agile methodology put together, four guiding principles (not rules or formal processes) known today, as The Agile Manifesto. The values of this manifesto are very specific and simply stated without a need for expatiation. Agile, in the first of its four central tenets, prioritizes individuals and interactions over processes and tools. That is, while we ascribe value to organisational processes, tools and maybe techniques, we value individuals and their interactions more. This is in sharp contrast with the staunch best practices found in heavier methodologies that most organizations are used to. Think about this. Without interactions, the processes and tools do not always work. It is time organisations focused on collaboratively delivering value to customers on time, rather than placing restrictions on creativity and innovation because certain laid down processes and tools must be followed and used respectively. Agile allows the development team to

evolve experimentally. That is, employees can attempt new methods, make mistakes, learn from them, improve and move on without anyone blaming them for it. In fact, team members must be as free as to come up and say, “we have toed this path over and over without result or with inadequate results, we need to step out and do agile”, and it does not matter who on the hierarchy said this. The second guiding principle of the agile manifesto places premium on working software (valuable product) over comprehensive documentation. This is the primary measure of progress. If the product does not work, excessive documentation that characterizes up-front-planning methods amounts to waste. Responding to changes over following a heavily documented plan (fourth focus of the agile manifesto), is a very important principle of agile. The value is seen in a product that meet business requirements and conform to technical specifications, and not in the setting and documentation of baselines and hard due dates that will change as the project evolve. Because we get to work after a short planning session devoid of excessive documentation, mistakes are made quickly, corrections are made quickly, changes are responded to and adapted quickly, impact on project cost and schedule are minimised or controlled easily, the processes are modified quickly, employees learn constantly, and collaboratively, everyone improves for the benefit of the project and overall fulfilment of organisational objectives. This is called “Failing Fast”. Why waste days (even months depending on the project size) documenting a rigid plan when requirements will change as project progresses? Why do we not focus on delivering value in short increments, adapting changing requirements as they evolve. Why do we not simply plan at the ‘last responsible

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time’? In an agile methodology called scrum, the development team, which is self-organising, work out the best way to achieve every portion of the entire work. They pick what they can accomplish within a set time. Oh! Did you just think “they determine the volume of work they can accomplish per time?” Well, not just that! Members of this crossfunctional team with different knowledge and skill levels, have no distinct titles. They are usually called “developers”. “Though we have testers, business analysts and quality assurance experts among us, we are all developers!” An agile team manages its own work, evolving its approach at any time to better meet changing needs. This is geared towards building a sense of ownership, bolstering shared vision, retaining buy-in among team members and ultimately keeping focus on delivering valuable products. A load of available statistics has shown that agile mind-set is settling with businesses globally, and Nigerian companies should dive in early. In a recent survey sponsored by CA Technologies, three-quarters of IT and business executives admitted that agile methodologies have the potential of delivering the right products and services, accelerating decision making and speed to market, while also improving the customer experience and staying ahead of competition (Source: Harvard Business Review). Eighteen percent of the companies surveyed, later called The Agility Masters, do not only practice agile development, they have incorporated agility throughout their organisations; from research and development to sales and marketing, production and operations and even HR and finance. The agility masters were found to be 4.1 times more likely to have the right vision and strategy, and 2.3 times more likely to have a culture of supporting risk. They are 2.3 times more likely to provide training for

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better at this age. We really should not be dancing backwards in our developmental journey. Whether it is the local or state government, we should aim higher than the grading of the earth surface. We should add at least a stone base. No, we should go all the way and tar those roads. The macadams that the Abia State Government have done in parts of Isiala Ngwa North speak eloquently for the need to maintain that standard. Let us not go below it. On this score, our people hold out much hope concerning the Commissioner for Works Barr. Bob Chiedozie Ogu. Many believe that in Barr Ogu, we might have another Ururuka. What great expectation. Ogu has the discipline, commitment, knowledge and exposure to deliver better infrastructure in our land. I pray the Lord to lead him aright. The Nsulu Games Village project is an opportunity to make a statement of quality. It should be ambitious and be a project that would attract commendations 30 years from now. Please deliver a world-class project. Asphalt roads should be the minimum standard we should accept from the government as infrastructure projects. No one in the new decade should offer us sub-standard infrastructure. 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.

Encouraging organisational agility for continued team buy-in

SEGUN AKANDE continuous skill development and 2.9 times more likely to have teams skilled in the latest tools and trends. The big deal is, they are also achieving 60 percent higher revenue and profit when compared to organisations that have only gone agile in part. According to Gartner in a July 28, 2017 publication, by 2030, artificial intelligence will automate 80 percent of routine agile work. KPMG reported that 76 percent of businesses in the Netherlands and Belgium believe that agile projects will outnumber waterfall projects by 2020. Atlassian surveyed and concluded that 50 percent of team members are motivated more by team success than the company’s (27 percent) or individual’s (23 percent) personal goal. Remember! Individuals and interactions (the team) over processes and tools. Managers should go agile by encouraging team members to collaborate and work together to lower risks around knowledge silos (hoarding of knowledge) and reduce bottlenecks. Emergent leadership is also encouraged within the team by establishing a safe and respectful environment in which innovative approaches can be tried, to make room for improvements and foster self-organization and empowerment. In such a robust, yet lightweight approach, projects are built around motivated individuals who have the needed support and trust to get the job done. Unlike the rigid detailed up-front planning style of delivery, agile processes harness changing requirements, even late in development, for the customer’s competitive advantage. Organisations that will stay afloat competition in this highly innovative age, must go agile. This is the crux of the matter! Akande wrote via segunolaakande@gmail.com

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Thursday 02 January 2020

BUSINESS DAY

cityfile EFCC nab ex-convict with fake $10,100 traveller’s cheque

he Economic and Financial Crimes Commission (EFCC) has arrested one Mark Obisesan, an ex-convict, for possession of suspected fake traveller’s cheque worth 10,000 US Dollars. The anti-graft agency in a statement by its spokesperson, Wilson Uwujaren, said the arrest was effected by its Lagos zonal operatives. According to Uwujaren, the suspect, who had served a 12-month jail term for Internet fraud in UK, was arrested recently at his residence in Banana

Island, Lagos. He said that Obisesan was arrested following intelligence from concerned members of the public about his alleged criminal activities. “At the point of arrest, a Ferrari 488 car, two iphones, one Samsung phone, a laptop and Automated Teller Machine (ATM) cards were recovered from the suspect, whom investigation revealed does not have any known source of livelihood.” Uwujaren said that the suspect would soon be charged to court.

Enugu: Police parade 77 criminal suspects Butchers prepare meat for sale at Wuse Market in preparation for the New Year celebration in Abuja.

NAN

Police smash serial burglary gang in Aba, arrest 2 GODFREY OFURUM, Aba

ba area command of the Nigeria Police has smashed a burglary gang said to be responsible for numerous burglary incidents in warehouses, stores and supermarkets in Aba, the commercial hub of Abia State. It was gathered that a team of crack detectives, led by Alphonsus Ayang, a Superintendent of Police (SP) and Divisional Police Officer (DPO), in charge of Ndiegoro Police Division, arrested two prime suspects; Nkemakolam Ibe (46) from Nkwere in Imo State and Uche Mathias (45), a native of Obehie in Ukwa West local government area of Abia State. The duo were said to be the ring leaders of the gang after painstaking monitoring. They were nabbed, while perpetrating burglary in a warehouse in Aba main

town with other three members of the gang, now at large. A police source at Aba Area command headquarters told Cityfile that the arrest of Ibe and Mathias, was influenced by the charge of the state Commissioner of Police (CP), Ene Okon to all DPO’s to ensure free crime during the yuletide. The source said that the Aba Area command had noticed a rise in the number of break-ins at many business premises and instructed all the eight DPO’s under it to monitor, track and get the hoodlums arrested. Night burglary has been the biggest problem for many importers and traders, who own warehouses in the Aba business zone, as several break-ins have reportedly taken most importers out of business and left many traders perpetually indebted. Cityfile gathered that luck ran out on Ibe and Mathias,

when the team of detectives from Ndiegoro Police Division, who have been monitoring their burglary activities through intelligence gathering. It was further learnt that their arrest came few days after they successfully broke into three warehouses located at Pound Road, by East Street, Jubilee Road by Mosque Street and also at Jubilee Road by George’s Street, where they carted away assorted textile materials, foreign wines and energy drinks worth millions of naira. It was gathered that the Ayang-led team of detectives also discovered and raided the gang’s two different safe houses, at Umule and Factory Road, where they kept stolen goods, including, textile materials, wines and energy drinks. The Ndiegoro DPO’s team also recovered two vehicles: a Toyota SUV with number plate, Lagos AKD 270 DA and a Peugeot J5 van

with number plate, Abia EZA 365 YF and one industrial cutter used by the gang for their operations. Cityfile’s visit to Ehi Road, Market Road, St Michael’s Road, Hospital Road, Jubilee Road and Azikiwe Road, showed that these areas have high concentration of warehouses. One of the traders, who spoke anonymously, described the arrest of the gang, as victory for the entire Aba business community, stressing that they have lost goods worth hundreds of millions to the burglars. “When I heard about the arrest I was happy. It seems God wants to help us recover losses in 2019. I don’t know if those arrested are the only people involved in the burglary activities going on in Aba. But with what I learnt were recovered by the police at Cameroun Barracks, I have no doubt that this gang ruined a lot of businesses here,” said the trader.

Clubs now to write, obtain approval for events from LASG JOSHUA BASSEY

vent centres and club houses operating in Lagos are now to seek and obtain approval from the state government to hold their events. The latest directive is an addition to an earlier, also issued by the state government to operators of event

centres and clubs, to, going forward, notify Lagos State Traffic Management Authority (LASTMA) for adequate traffic management and parking arrangements, when they are to hold events. The government says henceforth any operator that flouts the directives shall be sanctioned accordingly. Frederic Oladeinde, the commiswww.businessday.ng

sioner for transportation, who issued the latest directive, said it has become imperative for event centres, clubs and similar organisations in the state to obtain a written consent of LASTMA for their party/ events at least a week before such event or party is held. He said the directive became necessary to allow LASTMA have enough time

to plan for the management of traffic in the area to avoid obstructions of traffic by the attendants. Oladeinde observed that illegal parking of vehicles by event attendees and other merry makers have always resulted in traffic gridlocks in the metropolis, adding that with this new arrangement, LASTMA would work with

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he police in Enugu have paraded 77 criminal suspects arrested in the state within the last four months. Parading the suspects before newsmen in Enugu, the Commissioner of Police (CP), Ahmad Abdurrahman, said that 16 assorted arms were also recovered from the suspects during the period. Abdurrahman said that the command also recovered 122 rounds of ammunition of various types and 30 live cartridges. The command, he added, also recovered six different brands of cars, six tricycles, two motorcycles, five handsets, five wraps of cocaine, one small axe and toy gun. The police boss said that the command achieved the feat under “Operation Puff Adder” and through the commitment of its officers and men. He thanked Governor Ifeanyi Ugwuanyi for his logistics support, adding that the 65 vehicles he donated to the command had greatly helped in crime fighting and security surveillance. Abdurrahman said that on December 23, operatives of the Special Anti-Robbery Squad arrested one Ogbonna Nwasibe, 19, for un-

lawful possession of firearm while conducting a stopand-search. He said that one locallymade double-barreled gun was recovered from Nwasibe. He further said that the State Criminal Investigation Department (SCID) arrested one Christopher Ede in Enugu for unlawful possession of 72 rounds of 9mm ammunition. Abdurrahman said that Ede was suspected to be a member of Aye confraternity. “We have made many arrests while investigations are currently ongoing on the level of involvement of the suspects as well as how to track down their cohorts that are presently at large. “We will surely get at them because we will meticulously do our job. “With the help of information and feedback from members of the public, especially journalists, we will be on top of our game,’’ he said. He expressed joy that the state had regained its enviable status of being rated the most peaceful, secure and calm state in the country and thanked residents for their cooperation and support during the year. NAN

the event centres to plan for efficient traffic management during and after such events for free flow of traffic. Urging operators of event centres, clubs and other places of attraction across the state to abide by this rules and regulations, the commissioner warned that any commercial event centre, club/lounge that failed to obtain written approval from LASTMA for effective traffic planning would henceforth, be shut down and

may not be re-opened. He stated that the relevant provisions of the state’s traffic laws guiding operations of event centres/ clubs were still in force, warning that the government would not hesitate to apply the law on any erring event centre/ club that failed to comply with this directive. The commissioner appealed to the residents to support the six-pillar development agenda of the state government for efficient traffic free flow.

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Thursday 02 January 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

MARKETS

These numbers summarize NSE in 2019 OLUFIKAYO OWOEYE & SEGUN ADAMS

020 is here. That doesn’t mean we cannot look back to see some unique trends that shaped the market last year. -66.03% International Breweries shed 66 percent in the year and was the worst-performing stock. -14.6% The stock market declined by nearly 15 percent in 2019 extending a decline that started in 2018. Nigeria’s bourse is one of the worstperforming among emerging and frontier markets. -2.33% The biggest daily decline in the market last year was 2.33 percent on January 9 2019.

1 Only one tier-one lender closed the year in positive region. Access Bank which concluded its merger with Diamond Bank in the year gained 43.38 percent making it the only big lender that returned capital gain to investors in 2019. 2 Two Telcos joined Lagos’ bourse in the year; MTN and Airtel both listed on the stock exchange although MTN Nigeria in May listed by Introduction while Airtel Africa in July had an Initial Public Offering (IPO). 3 According to information in the NSE’s X-Compliance, M&A announced in 2019 include the followings: The merger between Access Bank Plc and Diamond Bank Plc.

The merger between the Cement Company of Northern Nigeria Plc and Obu Cement. Ellah Lakes acquisition of shares in Telluria Limited. 3.68% The stock market’s biggest daily gain last year was 3.68 percent on May 28, 2019, a day before President Muhammadu Buhari’s inauguration for a second term. 7 Seven Rights Issue took place in the year and they include: UACN Property Development Company Plc: Application for the Proposed Rights Issue of 15,961,574,145 Ordinary Shares of 50 Kobo Each at N1.00 Per Share on the Basis of Forty Three (43) New Ordinary Shares for Ev-

ery Seven (7) Ordinary Shares held as at 30 September 2019 Red Star Express Plc Prop os e d R ights Issue of 336,855,291 Ordinary Shares of 50 Kobo Each at N4.00 per Share on the Basis of Four (4) New Ordinary Share for Every Seven (7) Shares held as at 21 August 2019 Sovereign Trust Insurance Plc Rights Issue of 4,170,411,648 ordinary shares of N0.50 each at N0.50 per share on the basis of 1 new ordinary share for every 2 ordinary shares held as at 15 January 2019 Wapic Insurance Plc Application for approval of a Rights Issue of 15,613,194,623 ordinary shares of 50 Kobo each at N0.38 Kobo per

share on the basis of seven (7) new ordinary shares for every six (6) ordinary shares held as at the close of business on 19 September 2019 C & I Leasing Plc Proposed Rights Issue of 539,003,333 ordinary shares of N0.50 each at N6 per share on the basis of 4 new ordinary shares for every 3 ordinary shares held as at 4 September 2019. Fidson Healthcare Plc Rights Issue of 750,000,000 ordinary shares of N0.50 each at N4.00 per share on the basis of 1 new ordinary shares for every 2 ordinary shares held as at 28 December 2018 International Breweries Plc on 14 November 2019 Proposed Rights Issue Of 18,266,206,614 Ordinary Shares Of 0.50

Kobo Each At N9.00 Per Share On The Basis Of 17 New Ordinary Share For Every 8 Ordinary Shares Held 8 The market’s best run was eight trading days which started from February 1 through February 12. This was in the buildup to February 16, the initial general elections date. 9 The longest losing streak was nine trading sessions from September 30 to October 11. 224.82% D a n g o t e Fl o u r ’s share price rose the most in the year. The stock rose by more than 200 percent to N22.25 per share. Dangote Flour has delisted following its acquisition by Olam’s Crown Flour Mills.

NDUSTRIALS

Vitafoam grows profit by most in over 5yrs to exceed billion-naira mark SEGUN ADAMS

isted manufacturer of foam products, Vitafoam has announced its profit quadrupled and crossed a record billion nairamark in 2019 after company sales jumped 14 percent. Vitafoam posted an annual profit of N2.46bn for the business year ended 30 September 2019. This is 309 percent more than it made in the previous year and the fastest bottom-line growth in at least five years. Price of Vitafoam shares rose by 10 percent, the maximum allowable limit for a trading session, to N4.4 per unit following the announcement of the results on Tuesday. The stock beat the general market performance with a year’s return of almost 20 percent while the NSE’s main equity gauge lost nearly 15 percent in 2019. The manufacturer grew revenue by 14 percent to

N22.28bn with sales from foams and other products up by 10 percent year-on-year while Freight income which was dormant in 2018 contributed N779.328m in 2019. The addition from the latter segment was a significant boost to Vitafoam earnings. Cost of sales declined by 1.15 percent which resulted in an increase in gross profit by almost 50 percent to N8.76bn. The results meant that for every N100 sales Vitafoam was able to retain N39.33 after settling direct costs. This is an improvement compared to a gross margin of 29.98 percent or N29.98 per hundred naira sales. Profit from operating activities was 112.44 percent higher in 2019 compared to N2bn recorded in the preceding year. Vitafoam also noted a 27.62 percent rise in its finance income although net finance income slumped almost 27 percent after finance cost rose by 23.79 percent.

Net finance income stood at N948.67 million compared to N1.298bn in 2018. Profit before tax grew by 340.36 percent while Earnings Per Share (basic)

jumped 222.1 percent from 56.64 kobo to N1.8244. Vitafoam announced that its board recommended a dividend of N525m which would translate to 42kobo

per share for the 2019 business year. The dividend is subject to shareholders approval and withholding tax. The manufacturer also

advised the Exchange and investing public of the appointment of Achike Charles Umunna as a non-executive director with effect from December 19, 2019.

L-R: Muyiwa Ebitanmi, director mobile financial services at Airtel Nigeria; Nath Ude, executive director, service and technology, Union Bank; Carlos Wanderly, aurthor of “ A Smarter Way to do Business”; Emeka Okonkwo, executive director, corporate banking and treasury, Union Bank, and Olu Akanmu, executive director, retail FCMB, at the book launch of A Smarter way to do Business’ in Lagos.

Thursday 02 January 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

TECHNOLOGY

Huawei revenue surges 18% but U.S pressure signals challenging times ahead OLUFIKAYO OWOEYE

orld’s biggest maker of tele com network equipment, Huawei shrugged off a challenging operating environment in the U.S and Western markets as full year revenue surged 18percent to 850 billion yuan ($121.72 billion) a slight increase from 2018’s 19.5 per cent growth rate. It has been a difficult year for the second largest manufacturer of smartphones, following a ban by the U.S from doing business with U.S companies, preventing its access to technology such as Google’s android operating system. In defence of its action, the US government alleges that Huawei equipment pose national security risks because they could be used by the Chinese government to spy on users. A claim Huawei has repeatedly denied. In his New Year message

addressed to employees, Huawei’s chairman Eric Xu said survival would be the company’s priority next year just as the US government was in the midst of a “strategic and long-term” campaign against the company that would create a “challenging environment for Huawei to survive and thrive T h e c ha i r ma n a l s o played down expectations for 2020, saying the company would not grow as rapidly. “It’s going to be a difficult year for us,” he wrote, adding that Huawei would remain on the US list of sanctioned companies. Huawei announced that it shipped 240m smartphones in 2019, up from 206m the previous year. Analysts warn that the company faces its toughest challenge in the overseas smartphone market, where Huawei’s new phones are sold without access to the Google Play app store because of US sanctions. Huawei was dragged into the spotlight a year ago when the founder’s daughter and a senior Huawei

executive Meng Wanzhou, was arrested in Canada at the request of the United State. European telecommunications operators including Norway’s Telenor and Sweden’s Telia have also passed over Huawei as a supplier for their 5G networks as intelligence agencies warned against working with them. Australia and Japan have meanwhile taken steps to block or tightly restrict the firm’s participation in their rollouts of 5G networks. Earlier this month, Prime Minister Boris Johnson also strongly hinted that Britain would follow suit. Chinese law requires individuals and organisations to assist and cooperate with national intelligence efforts. Xu also said cybersecurity and user privacy were at the “absolute top” of Huawei’s agenda, and that the company would “continue to adhere to all related laws and regulations in the markets where we operate”.

L-R: Francis Wasa, deputy director, payment system management, CBN; Obiora Atuokwu, director of marketing, Global Accelerex; Liman V. Liman, DG, Nigerian Office for Trade Negotiations/acting chief trade negotiator; Kayode Ariyo, ED, business development & operations, Global Accelerex; Ibrahim Musa, chairman, NEPC, and unde Ogungbade, MD, Global Accelerex at the PoS Innovation Summit organised by Global Accelerex, in Lagos.

L-R: Omooba Micheal Oyedele, chairman, Royal Initiative for the Development of Sagamu Community (RIDSCo) helping Folake Odegbami, head of safety, health and environment, Lafarge Africa plc to unveil the renovated and re-equipped Owode-Epota Primary Health Centre in Sagamu which was undertaken by Lafarge Africa plc

POWER

Schneider Electric, others donate solar inverters to children with disabilities DIPO OLADEHINDE

igeria’s energy management giant, Schneider Electric, in partnership with some organisations have donated a premium solar inverter to the Hearts of Gold Children’s Hospice, Lagos, a development in line with the spirit of Yuletide season and investing in physically challenged children. The inter vention, done under the auspices of Schneider Electric Foundation, is a gesture to mark the 2019 “Giving Tuesday’’, a movement that symbolizes the International Day of Charitable Giving. Partnering with Schneider Electric are JustStandOut and Bolamark Engineering Ltd. The Giving Tuesday

which involves Schneider Electric’s employees in about 40 countries with the objective of promoting giving were also inaugurated in November 2018 and it is done in the countries where Schneider Electric operates. Speaking at an interactive session with journalists, the Project Coordinator, Isaac Adeleke, said Giving Tuesday serves as a platform to transform the communities by giving back to them. He express e d the hope that the solar solution would improve the quality of lives of the children and their caretakers as it provides uninterrupted, clean power supply. “This is an integral part of the Schneider Sustainability Impact,

Schneider Electric’s global aim of ensuring that all can benefit from safe, reliable and clean energy while acting towards inclusive growth. In 2018, the Foundation executed about 100 projects and 1,591 skills sponsorship programmes as well as supported 200,000 young people across the world. “So, let us spread the joy this season by giving back to the society,” Adeleke said. The inauguration of the project held at the premises of Hearts of Gold was witnessed by Schneider Electric’s Head of Building BU Sales, Mojola Ola, JustStandOut’s Joseph Inyang, and the CEO of Bolamark Engineering Ltd, Bola Azeez, and B. Adedoyin of Hearts of Gold.

Obasi Eziaku Rita, principal, Alpha Rehoboth College; Moturayo Olusanya, head, quality assurance, Chi Limited, and Amit Aneja, category head, juice, Nectar and Still Drinks, Chi Limited, at the presentation of Brand of the Year Award to Chivita 100% at the Global Quality Excellence Award to mark the World Quality Day in Lagos

L-R: Obinna Frank, third ranked dealer of the year; John Onyela, second ranked dealer of the year; Vishant Dalamal, GMD, Bhojsons Plc, and Suleiman Mohammed, 2019 dealer of the year, at the 2019 annual Bhojsons Dealers Conference in Lagos.

Thursday 02 January 2020

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Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

TECHTALK

Broadband Infrastructure

Bank IT Security

Despite MTN’s trial, Nigeria’s readiness for commercial 5G a doubt in 2020 Stories by FRANK ELEANYA

s the world prepares for the transition of 5G technology from a mere concept to commercial reality in 2020, the government through the Nigerian Communications Commission (NCC) said it is among the countries that are ready for the commercial launch of the technology. The NCC claimed it dedicated specific spectrum bands to network operators for the trial of 5G telecom services. MTN’s successful trial of the technology in three locations across the country is mostly responsible for the government’s confidence. While the commission is yet to reveal how many spectrum bands it has set aside, 5G needs a significant amount of new harmonised mobile spectrum, hence experts recommend that regulators make available 80-100 MHz of contiguous spectrum per operator in prime 5G mid-bands (i.e. 3.5 GHz) and around 1 GHz per operator in millimeter wave bands. The NCC has also not specified when in 2020 it plans to kick-off the launch, but Nigeria goes into the year it expects to deploy 5G technology without a plan in sight for infrastructural development. The Minister of Communication and Digital Economy had in December set up a committee to draft a new five year National

Broadband Plan which sets a 70 percent broadband penetration target for the country. However, antecedents have shown that the government may not fully comply with the provisions of a new plan much less do all that is urgently necessary to take Nigeria anywhere near full commercial 5G in 2020. “5G is not just another generation of wireless connectivity - it will have an incredibly broad scope, supporting billions of connected devices and services across a wide range of industry sectors,” Libby Plummer an official from a global technology company, ITEL noted in a company post. “It will enable the develop-

ment and deployment of developing innovations such as IoT (Internet of Things) technology, Artificial Intelligence (AI), and immersive technologies such as Virtual Reality (VR) and Augmented Reality (AR). What’s more, it will provide the backbone for the smart cities and autonomous vehicles of the future.” For countries in Africa, like Nigeria, experts expect 5G technology to enable faster and more stable mobile internet without having to lay fiber-optic cables that deliver high-speed broadband. In terms of boosting the economy, 5G is capable of not only meeting the evolving needs of consumers but also bring about a

transformative impact on businesses to the extent that it is seen as vital to the fourth industrial revolution. A recent GSMA report projects that by 2025, there will be commercial services in at least seven markets, including Kenya, Nigeria, and South Africa, with 28 million 5G connections (equivalent to 3 percent of total mobile connections) between them. “5G in sub-Saharan Africa is inevitable; it is a natural progression from previous technology generations,” the authors of the report noted. “However, the 5G era is not imminent in most markets in the region as existing technologies are capable of supporting current use cases and demand for mobile in-

ternet connectivity.” Just over half of Africa’s population lives within 25 kilometers of a fiber network. In Nigeria, estimates put it even lower at around 14 percent. It is important to note that countries approving trials of the technology have intentionally built the infrastructure to enable the rollout to a certain level of efficiency. This is not the case in Nigeria where the burden of poor infrastructure that powers technology innovations has set many operators back in millions of dollars in investment. To be sure, 5G Technology is an umbrella term used to categorize the fifth generation of wireless communication, offering networks that are 100 times faster than 4G, support 100 times more devices and feature five times lower latency 5G technology comes with a unique architecture different from previous generations of wireless infrastructure. Importantly, the infrastructure transits from traditional large cell towers stretched over long distances to a network of smaller cells sited more closely together. According to politico.com, to make that infrastructure change, a country like Nigeria will likely need close to a million new cell sites by 2025 to remain competitive in 5G. Additionally, the new cells will have to be connected by a robust wire network. 5G antennas, while being able to handle more users and data, beam out over

shorter distances. In that case, providing access to rural communities will be as much of a challenge as it has been with LTE. Even with antennas and base stations getting smaller in this scenario, more of them would likely have to be installed on buildings or homes, according to experts at futurithmic. com. Cities will probably need to install extra repeaters to spread out the waves for extended range, while also maintaining consistent speeds in denser population areas, the experts said. Interestingly, during the MTN 5G demo stakeholders had expressed concerns over the spectrum availability and protection of telecommunications infrastructure, as well as lack of fiber link between base stations. In many communities where operators have built towers in the past, the equipment was vandalised because adequate provisions were not made for their protection. Older generations of wireless communications such as 3G and 4G have not fared any better in Nigeria. For example, only about 4 percent of mobile internet users pay for 4G services while more than 40 percent use the cheaper, but slower, 3G internet even though Nigeria has an extensive 4G network. Nonetheless, the NCC said the MTN 5G trial only confirms its commitment to ensuring that Nigerians are able to access all variants of telecommunications services as they unfold and in line with their needs.

are standing alone, are still unable to secure funding. As the year 2020 begins, the government would do well to address the problem of funding these entrepreneurs face. The Central Bank of Nigeria’s mandate for banks to increase their loans to deposit ratio may be a step in the right direction, but interest rate at double digits remains a turn off for most small businesses. Against a northward-looking inflation rate, startups that are in need of money would be very reluctant to look in

the direction of bank loans. The Ministry of Communication and Digital Economy also have work to do to ensure that more startups are exposed to not only foreign investments but local funding. Foreign investors have accounted for more than 90 percent of the total funding raised by Nigerian startups so far. Local investors are yet to take advantage of the many opportunities that abound in the tech space. The ministry has an opportunity to change that in 2020.

How ICT sector’s GDP growth can work for startups in 2020

hat ICT was one of the best performing sectors of the Niger ian economy in 2019 is no longer news. Nigerian government officials in the newly minted Ministr y of Communication and Digital Economy paraded the figures at every given opportunity. The sector accounted for 13.9 percent in nominal gross domestic product (GDP) in the second quarter of 2019 compared to 11.22 percent in the same quarter in 2018. The

growth also meant that the ICT surpassed the oil and gas sector which nominal GDP stood at 8.6 percent. Nevertheless, oil and gas contributed more to government revenue than 1CT which had more productive activities. A significant por tion of the activities in the ICT sector came from tech startups. Nigerian startups took 53 percent (nearly $500 million) of the entire $1.25 billion raised by 91 startups in Africa from a total 100 deals in 2019, according to data compiled by Maxime

Bayen, company builder for GreenTec Capital. Consequently, Nigeria was the top choice destination in Africa for investors. Interswitch and OPay were also the largest receivers of investments in the year. The remarkable feat nonetheless, Nigeria still lagge d in ter ms of the number of startups that secured funding. Only about 22 startups were able to secure over $1 million in investment in the year. A fewer than 60 startups received investment below $1 million.

For context, a fourthquarter report on technology hubs in Africa showed that the Nigerian tech ecosystem has about 90 hubs making it the largest on the continent. Africa currently has 643 hubs including coworking spaces, incubators, accelerators, and hybrid innovation hubs affiliated with government, universities, or corporations. Lagos with over 40 hubs is the top innovative city in Africa. But the majority of the entrepreneurs being incubated in these hubs, including those that

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

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Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

N11.721 trillion

Week open (20 – 12–19)

31,924.51 26,526.35

N12.804 trillion

2,119.55

Week close (27 – 12–19)

26,416.48

N12.753 trillion

2,075.07

Year Open

Percentage change (WoW) Percentage change (YTD)

-0.41 -15.95

2,241.37

-2.10 -5.47

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

1,122.33

734.99

120.44

551.01

233.97

1,761.69

1,051.59

1,018.93

734.99

1,133.49 1,150.16

355.42

1,137.82

354.50

122.15

555.68

582.11

1,810.91

1,048.29

1,027.01

-0.26

1.42

4.76

1,456.29

1.38 -20.97

0.00 -7.41

1.47 -18.84

-11.14

-3.42

-22.26

0.71

2.79

-0.31

0.79

-22.54

-18.94

-15.32

-14.94

Nigeria’s capital market: Ceasing opportunities in a downturn Iheanyi Nwachukwu

apital markets are by their nature indicators of the economic landscape of their host countries, and in an increasingly interconnected world, capital markets are exposed to the impact of prevailing global macroeconomic trends. Before now, the Nigerian capital market has experienced volatility in equity trading resulting from the declining oil prices at the international market and foreign exchange challenge in the country. Taking a cue from a year 2019 that ended on a bearish note, Jude Chiemeka, Divisional Head, Trading Business, the Nigerian Stock Exchange, stated that whilst the present market reality might seem volatile, “it provides a good opportunity for investors who take a portfolio management approach to investing”. He stated that “taking a portfolio approach to investing provides the best risk adjusted alternative for participating in the capital market. As such, we want to ensure that the NSE will continue to provide a repertoire of products that will allow investors to create well diversified portfolios of uncorrelated asset classes.” Chiemeka also advised that investors carefully build strong portfolios that a take a long term view on returns, as he highlighted that while equities often present the highest potential for gains, investors in this market need to explore the risk adjusted alternative by taking

a portfolio approach. In light of the current performance of the equities market, he implored investors to explore risk adjusted alternatives in their portfolio building, stating that “It is, therefore, essential that investors explore other safer investment instruments such as ETFs, bonds, mutual funds, etc., which are all available in the market.” The year 2019 saw the equities market close on a bearish note with the Nigerian Stock Exchange’s All Share Index (NSE ASI) in negative of circa -15percent. However, this is not different from present global trends, as a recent analysis by Mathias Althoff, Portfolio Manager at Tundra Fonder, shows the current state of the equities markets presents an opportunity for forward-thinking investors to come into the market with stocks trading at price-to-earnings (P/E) and priceto-book (P/B) ratios at 10-year lows. A careful analysis of historical

performance will show that while a bear market is upon us now, the tide will turn. When it does, only proactive investors will be ready to ride the waves. Consequently, it is important that investors in the equities market are careful to neither hit the panic button nor sell when stock prices begin to decline, nor go on a buying spree in the euphoria of rising prices. While it may appear counterintuitive, the notable investor Warren Buffet advises that as an investor, it is wise to be, “fearful when others are greedy and greedy when others are fearful.” The rationale is simple: a bear market is characterised by declining prices. It is more profitable to buy a stock when it is cheap at say, N2.50 then sell when the price increases to N4, than to wait till the price rises to N3.80 only to sell at the same N4. For investors who are averse to

trading equities in a bearish market, The Nigerian Stock Exchange offers an array of asset classes for portfolio building. In 2011, The NSE introduced Exchange Traded Funds (ETFs) into the market to allow retail investors to diversify their portfolio, minimise risk and optimise returns. Much like mutual funds, ETFs can be made up of stocks, bonds, commodities, or even a mix of securities. The fundamental difference is that ETFs can be traded live on The Exchange just like regular stocks. There are presently9 ETFs listed on The Exchange – 2 thematic ETFs providing access to Pensioncompliant and Shariah-compliant stocks, 2 broad equity market ETFs tracking the NSE 30 Index, 3 sectorbased ETFs, 1 commodity ETF, and 1 bond ETF tracking exposure to benchmark FGN Sovereign Bonds. The beauty of the ETF, therefore,

lies in its capacity to accommodate various risk appetites, investment objectives and strategies, and industry preferences. Furthermore, ETFs listed on The Exchange have a history of paying dividends which generates income for the investor. The diversity and accessibility in today’s capital market also affords investors the option of fixed income investments. In 2017, the Debt Management Office in collaboration with The NSE introduced the FGN Savings Bond allowing investors to come into the market with as little as N5,000. This product has helped to debunk the primary myth that investing is the preserve of the affluent by opening up the market to all income classes. The FGN Savings Bond can alsobe traded in the Secondary Market on the trading platform of The NSE. Chiemeka also highlighted the efforts of The Exchange to deliver value to investors. He said, “The NSE on its part continues to deploy initiatives that maintain the highest level of regulation and protect investors’ interests including the: Investors’ Protection Fund (IPF) that will compensate investors with genuine claims of pecuniary loss against dealing member firms. Listed companies are also required to undergo the Corporate Governance Rating System (CGRS) that measures listed companies against the highest levels of governance and anticorruption standards.” In its efforts to enhance market activities and increase access to information, the Exchange has no doubt made some noteworthy advancements.

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Equity Market: Late Santa visit fails to lift market into the green territory

n the prior week, the equity market extended its recent bearish run as a late Santa visit on Friday failed to erase losses recorded on Monday and Tuesday, preceding the two-day Christmas holiday. Accordingly, the NSE-ASI declined 0.4percent weekon-week (w/w) to settle at 26,416.48 points and yearto-date (YtD) loss worsen to -16percent (previously: -15.6percent). Also, market capitalisation fell by N51.3billion to close the week at N12.7trillion. Activity level was depressed as average value and volume traded declined 23.3percent and 11.2percent w/w respectively to N3billion and 245.2million units. Performance across sectors was mixed as three out of five sectors under our watch closed in the green territory. The Consumer goods led the green campaign (+4.8percent), followed by Insurance (+1.4percent) and Oil & Gas (+0.7percent) indices,

market breadth closed at 1.9x (previously 1.4x), with 28 stocks advancing, while 15 stocks declined. This week, we expect end of the year portfolio rebalancing to drive prices northwards in last two trading days of 2019. This may however be erased on Thursday and Friday as the market opens for the year. Money Market: Penalty CRR debit keeps liquidity in check During the holiday shortened week to 27th Dec19, system liquidity remained largely buoyant even as naira outflows mildly matched inflows. Notably, the major liquidity inflow which came in via a sizable OMO maturities (N907.8billion) on Friday offsets the liquidity squeeze from CBN’s penalty CRR debit (N650.0bn) on Monday and N250.5bn OMO sales on Friday. Overall, the average interbank funding rate (OBB & O/N) closed the week higher by 1.7percent w/w to settle at 4.3percent. At the OMO auction on

thanks to price appreciation in Nestle (+10percent), U n i l e v e r ( + 8 . 9 p e rc e n t ) Cad bu r y (+ 6 . 8 p e rc e nt), NEM (+10percent), Linkage Assurance (+8.2percent), Oando (+6.8percent) and Japaul Oil (+5percent). On the flip side, Banking (-0.3percent) and Industrial goods (-0.3percent) sectors closed the week negative owing to the sell-offs in GTBank (-2percent), FBNH (-3.9percent) and CCNN (-2.9percent).

Friday, demand was nonexistent for the short and mid tenor bills as eligible investors piled into the high yielding long tenor bills. Accordingly, the apex bank sold N250.5billion of the 361-day bill, with stop rates maintained at 13.28percent. Elsewhere, activities at the secondary money market was mixed. This was as some of the non-eligible OMO market investors reinvest excess fund from OMO maturities in FGN Treasury Bills with relatively unattractive yields. Accordingly, average NTB yields dropped by 22bps

Investors sentiment stayed above the water as

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w/w to settle at 5.6percent. Meanwhile, secondar y OMO market sentiment was lackluster as the penalty CRR debit on Monday spurred selling interest in short-dated OMO bills by some of the affected banks. Also, the CBN’s OMO sale on Friday further doused the secondary market demand. In all, average OMO yields tracked higher by 19bps w/w to close at 13.3percent. With another sizable O M O m a t u r i t i e s (c i rc a N518.1billion) expected this week, we expect the CBN to float at least one OMO auction to mop-up excess liquidity. Also, the reduced number of trading days due to the New Year holiday should dampen trading activity for the week. Meanwhile, we expect the non-bank local investors to continue to position at the short end of the curve to reinvest proceeds. Bond Market: Eurobond players in holiday mood During the prior week, we saw strong demand for FGN bonds, as local investors took position ahead of the expected liquidity inflow. The activities were concentrated at the midto-long-end of the yield curve. Notably, the 2027s, 2028s, 2036s, and 2049s were most actively traded maturities for the week. Overall, average yields declined by 24bps w/w, to settle at 10.8percent. Elsewhere, activities at the secondary Eurobond market was lethargic as most market participants have closed their books for the year. Consequently, average yield across the sovereign yield curve remained static at 6.3percent. However, we saw little activity at the corporate segment on Monday as some market players hunted for bargains. Consequently, average yields at corporate Eurobond segment was down by 4bps w/w to 6.3percent. This week, we expect market liquidity to continue to stimulate demand at the secondary bond market. Meanwhile, we expect activities at the Eurobond segment to remain lackluster as investors remain in the New Year holiday mood.

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

Economy & Markets

The outlook for market in 2020 is attractive

Sola Oni

Introduction he Nigeria’s Capital Market operated under a tough economic climate in 2019 as evident in incessant bearish trend until the policy of the Central Bank of Nigeria (CBN) on Open Market Operations (OMO) crashed yields on fixed income securities. Expectedly, investors took flight for safety and reverted to purchase of equities with multiplier effects on the rise in many performance indicators. The Nigerian Stock Exchange remains an investment destination. Outlook for 2020 The outlook for the market in 2020 is attractive. But this is contingent on fixing of Nigeria’s weak economy where the Gross Domestic Product (GDP) currently grows at 2.3 percent while the country’s population grows at 2.6 percent, a misnomer. We expect faithful implementation of 2020 budget which was approved on record time. Government at all tiers should also take advantage of the market to mobilise fund for development projects. However, we expect the market to be driven by a mix of factors. Effects of negative real return on fixed income securities following the new policy on OMO will continue to enhance demand for equities and attract more investors into the market. We expect consolidation to

be the hallmark of Insurance Sector as the market shall witness a flurry of mergers and acquisitions as well as business combination in a bid by insurance companies to recapitalize in line with the new policy of the National Insurance Commission (NAICOM). Many stocks are still trading below intrinsic values, hence, attractive valuation will attract more investors. We expect intense competition among Securities Exchanges with the emergence of FMDQ as a fullfledged Exchange and Lagos Commodities and Futures Exchange (LCFE) which is set to commence as a Pan African Exchange. Already, NASD Plc has raised the bar of OverThe-Counter (OTC) trading in Nigeria. But we expect the government to intensify efforts on creating conducive business environment through its policy on ease of doing business and building security The Securities and Exchange Commission (SEC) has just released the rules on trading in Derivatives and this is consistent with the plan by the Nigerian Stock E xchange to commence trading in Derivatives in 2020. This is expected to enhance price discovery and usher investors on The Exchange to modern risk management whereby they can hedge against volatility. We expect introduction of more innovative products to accompany derivative trading. Barring unforeseen circumstances, The Exchange is likely to commence demutualization and this will change the structure of the market as the current owners, the dealing member firms shall become shareholders and thus bring a new era of

corporate governance on The Exchange. With the crash of yields on fixed income securities, pension funds may opt for high-yielding stocks in the secur ities market and this is expected to boost market activities. Sectors to watch Regardless of the nature of the economy, in 2020, financial, health, technology and agriculture sectors have strong potentials to provide good returns for investors. Financial Sector is noted for liquidity. The sector is fast attracting millennial customers through innovative services that thrive on technology. Health Sector is recording advancement in medical equipments while pharmaceutical sector is evolving on daily basis. We therefore expect Health Sector to provide investment opportunities in 2020. The Technology Sector itself is ruling the entire business world. The relevance of Artificial Intelligence (AI) is already gaining momentum. Also, innovative investments such as blockchains and Cryptocurrency are highly dependent on technology. Trading on the securities market is technology-driven. The Sector holds potential for good returns. The Federal Government is committed towards reactivating agriculture and other forms of Small and Medium Scale Enterprises in Nigeria through its policy of Anchor Borrower Programme. The success of the programme will be measured on its impact on the GDP and its ability to increase export in order to generate foreign exchange for the country and increase external reserve. Sola Oni is CEO, Sofunix Investment and Communications

NSE lifts suspension placed on trading in shares of Omatek Iheanyi Nwachukwu

he Nigerian Stock Exchange (NSE) on Tuesday December 31, 2019 lifted the suspension it earlier placed on trading in shares of Omatek Ventures Plc. Omatek Ventures Plc is one of the 17 companies that were suspended on July 5, 2017. The NSE had in its market

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bulletin dated 5 July 2017 notified Dealing Members of the suspension of 17 listed companies for noncompliance with Rule 3.1, Rules for Filing of Accounts and Treatment of Default Filing which provides that “If an Issuer fails to file the relevant accounts by the expiration of the Cure Period, The Exchange will: send to the Issuer a ‘Second Filing Deficiency Notification’ within 2 business @Businessdayng

days after the end of the Cure Period; suspend trading in the Issuer’s securities; and notify the Securities and Exchange Commission (SEC) and the Market within 24 hours of the suspension. The company is said to have filed its outstanding financial statements with The Exchange, according to a circular signed by Godstime Iwenekhai, Head, Listings Regulation Department.

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Notore Group’s full year pretax loss increases to N10.250bn Iheanyi Nwachukwu

otore Chemical Industries Plc has released its annual report and financial statements for the year ended September 30, 2019. While the company’s reported muted revenue, its pretax loss widened. The group revenue decreased to N21.418billion in 2019, from a high of N26.823billion in 2018. Gross profit decreased to N3.964billion in 2019 financial year from a preceding year level of N9.606billion. Loss Before Income Tax (LBT) printed higher at N10.25billion from preceding day low of N3.52billion. The group’s reported loss for the year 2019 also stood higher at N 5.75billion, from loss of N1.906billion in 2018 financial year. The principal activities of the company are to manufacture, treat, process, produce, supply and deal in nitrogenous fertilizer and all substances suited to improving the fertility of soil and water. The Company has a 500,000 metric tonne Urea Plant in Onne, Rivers State, Nigeria. Notore was incorporated in Nigeria on November 30, 2005, as a private limited liability company, and is domiciled in Nigeria. On June 13, 2014, the Company was re-registered as a public limited liability

company and was listed on the Main Board of the Nigerian Stock Exchange on August 2, 2018. The company’s 1,612,066,200 ordinary shares of 50kobo each were listed by introduction on the Nigerian Stock Exchange at N62.50kobo per share. According to the company’s register of members as at September 30, 2019, Notore Chemical Industries [Mauritius] Limited

he ongoing Rights Issue of C&I Leasing Plc has been extended to January 13, 2020, thereby giving existing shareholders of the company more time to take up their rights. C & I Leasing Plc is currently shopping for N3.2billion by way of Rights Issue of 539,003,333 ordinary shares of 50 kobo each at N6 per share. The acceptance list for the Rights Issue which opened on Monday November 18, 2019 will close on January 13, 2020. The company is offering existing shareholders 4 new ordinary shares for every 3 ordinary shares held as at the close of business on September 4, 2019. The Rights Issue which is for the company’s existing shareholders who have been with them over the year offers gives them the opportunity to key into opportunity in the low priced shares. The company is currently the only leasing company listed on the Nigerian Stock Exchange (NSE). Already, the N6.6 per share which the stock had traded on the Nigerian Stock Exchange before the Rights Issue commenced implied 270.8percent gain in 2019. Over the years, C & I Leasing Plc has enjoyed consistent growth and has expanded its scope of business to cover major sectors of the Nigerian economy, providing specialized services, in Marine, Telecommunications, Oil and Gas, Equipment Rentals, Manpower Outsourcing and Transportation. Currently, the Company has three divisions and two subsidiaries under its auspices, making up the C & I Leasing group of companies. The Company’s divisions include its

eney GP IV Ltd – Trading (23,972,150 units or 1.49percent), Blakeney Investors SICAV – Trading (10,296,370 units or 0.64percent), and Al-Yuma Ventures & Investment Limited (4,730,000 units or 0.29percent). It also includes Okmine Global Services Limited (4,218,670 units or 0.26percent), R AND Partners Ventures Nig Limited (3,152,500 units or 0.20percent), and Blakeney Optima LP – Trading (1,665,550 units or 0.10percent).

L – R: Joseph Ogbeide, brand manager, The Nigerian Stock Exchange (NSE); Olufemi Shobanjo, head, Broker Dealer Regulation, NSE; Elsie Okpocha; Bola Adeeko, divisional head, Shared Services, NSE; Bright Okpocha aka Basketmouth, Ace Comedian; Ann Obaseki, talent manager; Kenneth Nwafor, head, Market Operations, NSE; and Opeoluwa Adesanya, head, State Owned Enterprise Listings, NSE at the End of Year Closing Gong Ceremony which held at The Exchange in Lagos.

C&I Leasing Rights Issue extended to January 13, 2020 Iheanyi Nwachukwu

hold 1,234,055,768 units (76.55percent of the entire equity shares), TY Holding Limited (129,629,630 units or 8.04percent), Africa Finance Corporation (77,265,575 units or 4.79percent), and Employee Stock Option [ESOP] Stanbic IBTC (48,358,420 units or 3percent). Others are Blakeney GP III Ltd – Trading (38,140,000 units or 2.37percent), Orugbo Mike (34,333,330 units or 2.13 percent), Blak-

Market in review

Hertz/Fleet Management, Marine Services and Personnel Outsourcing. The N3.2billion projected proceeds from C&I Leasing Plc Rights Issue will be used to expand the company’s business and meet its working capital requirements. Summarily, leveraging the Rights Issue, the company wants to enhance its capital structure for optimum performance, provide working capital support in a timely manner, and capture potential attractive growth opportunities. C & I Leasing Plc was incorporated in 1990 as a limited liability Company and duly licensed by the Central Bank of Nigeria to offer operating and finance leases and other ancillary services. Today, it is the foremost brand for finance leases, and other ancillary services in Nigeria. With a current market capitalisation of over N3 billion (approximately $10 million), a staff strength of over 5,590 people and operational offices at key locations in Nigeria, Ghana and UAE, the company takes pride in its track record of exceptional and qualitative service delivery. Its total assets stood at N52.61billion as at December 2018. “Nigerian leasing industry is vibrant and can thrive during periods of both economic boom and recession” said Andrew Otike-Odibi, Managing Director/CEO, C&I Leasing Plc. Otike-Odibi noted during a conference call on the Rights Issue that it allows the Company’s shareholders to increase their equity holdings at a discount while creating an avenue for capital gains. “It is expected that appetite for the equities market will be renewed by both domestic and foreign players, following the just concluded election as market fundamentals remain supportive of growth”, Otike-Odibi added.

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Fixed income, currency market turnover rose to N21.61trn in November Iheanyi Nwachukwu

urnover in the Fixed Income and Currency (FIC) markets for the month ended November 30, 2019 was N21.61trillion, FMDQ monthly report shows. The record turnover represents a monthon-month (MoM) increase of 29.95percent (N4.98trillion) on the turnover recorded in October 2019 (N16.63trillion). On a year-on-year (YoY) basis, it increases by 61.87percent (N8.26trillion) in comparison to the turnover recorded in November 2018 (N13.35trillion). Foreign Exchange (FX), Repurchase Agreements /Buy-Backs and OMO bills were the most traded products jointly accounting for 78.44 percent of the total FIC market turnover recorded in November 2019. FX Market Total FX market turnover in November 2019 was $20.61billion (N7.47trillion), representing a 47.54percent ($6.64billion) MoM increase from the turnover recorded in October 2019 driven jointly by the increase in turnover of Member-Client FX Spot and Member-CBN FX Derivatives transactions. Analysis of FX market turnover by trade type indicated MoM increases across all categories, with Member-CBN trades recording the highest percentage MoM increase at 116.96percent ($2.95billion), while Member-Client trades recorded the highest MoM increase in dollar (nominal) terms, at $3.65billion (43.17percent). Additionally, analysis by product type indicated that the MoM increase in FX turnover was mainly driven by the 69.66percent ($3.57bil-

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lion) increase in FX Derivatives turnover, while FX Spot turnover recorded a MoM increase of 34.70 percent ($3.07billion), accounting for 53.77percent and 46.23percent of the MoM increase in total FX market turnover respectively. In November 2019, the Naira-settled OTC FX Futures Contract (NGUS NOV 27 2019) with a total open contract value of $1.47billion matured and was settled, and a new contract, NGUS DEC 30 2020 for $1billion at $/N366.87 was introduced. This brings the total value of open OTC FX Futures Contracts to c.$9.74billion, while the total value of contracts settled from inception to date stands at c.$31.98billion. In November 2019, the CBN Official Spot rate for $/N remained constant at $/N3070. Similarly, the parallel market rate remained constant at $/N360, while the Naira depreciated against the US Dollar at the Investors’ and Exporters’ (I&E) FX Window by $/N0.15 to close at $/N362.81 in November 2019 ($/N362.66 in October 2019). Fixed Income Market (T. bills, OMO bills and FGN bonds) In November 2019, the average outstanding value of OMO bills decreased by 1.21percent (N0.18trillion) MoM to N14.69trillion, whilst the average outstanding value of T.bills remained flat at N2.58trillion. Conversely, the average outstanding value of FGN bonds increased MoM by 0.45percent (N0.04trillion) to close at N8.94trillion in November 2019. Trading intensity for T.bills and OMO bills decreased to 0.36 in November 2019 from 0.39 recorded in October 2019, conversely, trading intensity for FGN bonds increased to 0.26 in November 2019 from 0.11 recorded in October 2019.

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Thursday 02 January 2020

BUSINESS DAY

RESEARCH&INSIGHT

In association with

A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

briu@businessday.ng

08098710024

Global trends in the Insurance Industry commodity and oil prices. Emerging Asia is the main growth drivers in global life premiums with China alone accounting for 58 per cent of the total 76 per cent of emerging Asia’s contributions to emerging market’s life premium. Growth in life premium was also recorded across countries like India, Indonesia, Thailand, Malaysia, the Philippines and so on , attributed to various strategies ranging from the implementation of bancassurance, government policies, sales of unique products, etc. Despite the fact that non-life insurance premium is expected to grow in 2018 and 2019 by 6 per cent to 7 per cent driven by activities in emerging markets, the low interest rate is equally expected to lower investment income which in turn could cause Return on Equity (ROE) to sink. In Africa, insurance is still at a nascent stage as shown by relevant indices. Between 2010 and 2016, the continent’s average insurance penetration rates, insurance density rate and the gross premium written

ADEMOLA ASUNLOYE

he reality today is that most people go through life with the mind-set that the likelihood of risks prevalent around them is either minimal, negligible or wholly not in existence. Nevertheless, in a world with increasing risk of living and carrying out business activities, there is need to embrace insurance as a mechanism and/or a tool to stay afloat when catastrophic events strike. For businesses, it serves as a measure of financial security as it helps in avoiding permanent closure of business activities as a result of occurrence of certain insurable risks. Risks whether negative or positive permeates our everyday activities. As a result, man has always been careful of whatever risks he is susceptible to as he carries out his daily undertakings. Risk—the probability of damage, injury, liability, loss, or any other negative occurrence—is the variation between actual outcome and expected outcomes. Risk which could either be low or high is yet, a vital component of insurance. As Andrew Beattie puts it, “If risk is like a smouldering coal that may spark a fire at any moment, insurance is the fire extinguisher.” Insurance on the other hand, which has been widely held to be as old as man, is simply a step taken to indemnify against risk, albeit a universally acceptable definition is not easy to come by. The global insurance market recorded improved performance in 2017 compared to the corresponding year. The gradual global economic recovery from the torpid performance recorded in 2016 (especially in emerging market economies like Brazil and Russia) saw a moderate rise in nonlife premiums in most countries in 2017 although the natural catastrophe in most

Source: OECD, BRIU

countries (hurricanes in some US cities, earthquake in Mexico and wildfires etc.) has raised concerns of the likely impact on prices and by extension, profitability, according to Swiss Re Institute of Global Insurance Review in 2017 and outlook for 2018/19. The United States with 11.2 per cent penetration rate leads the pack by far in 2017 with a total gross premium of $2.8 trillion; a growth of 4.88 per cent from $2.7 trillion in the previous year. Next to it is the United Kingdom with a gross premium of $394 billion. However, penetration rate was highest in Ireland at 13.6 per cent in 2017 though the country recorded a gross premium of $45 billion. The degree of susceptibility of Asia countries to natural catastrophes ranging from monsoon, landslide, flooding, etc. coupled with the low level of insurance

Source: Swiss Re Institute, BRIU

penetration gives course to worry about. For instance, while the average insurance penetration rate in developed Asia stands at 2.4 per cent, that for India, Indonesia and the Philippines combined ranges from 0.5 per cent to 0.6 per cent with property insurance for emerging Asia recording 1.1 per cent slightly above that for Sub-Sahara Africa (SSA), based on the submission of Roland Eckl. Notwithstanding, non-life insurance premium has continued to grow particularly in emerging Asia and also in Latin America amidst a favourable environment. In emerging Asia, premium growth in nonlife insurance was 10 per cent in 2017, up from 8.7 per cent in 2016. Latin America and Sub-Saharan Africa recorded an uptick from a decline experienced in 2016 as a result of the recession caused by fall in

Source: Swiss Re Institute, BRIU

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were 3 per cent, $60 and $67 million compared to the world’s value of 6.1 per cent, $625 and $4.6 trillion respectively. In 2016, the fall in the prices of commodities had adverse effect on the economy of Africa with major commodity exporting economies like Nigeria, Angola and South Africa recording a low GDP growth. The insurance sector was not spared in this crisis. However, Africa’s life premium grew from 1 per cent in 2016 to 2 per cent in 2017 linked to South Africa’s insurance market growth, the insurance premiums written in Sub-Saharan Africa (excluding South Africa) reached $10billion in 2016 bolstered by the non-life insurance segments which contributed 62 per cent to the total. Kenya and Nigeria were the only country that crossed $1 billion premium per annum.

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Thursday 02 January 2020

BUSINESS DAY

BUSINESS TRAVEL A ten-year development plan should be created for aviation infrastructure upgrade in Nigeria - Nnolim Nnaji Nnolim is the Chairman House of Representatives Committee on Aviation. In this interview with IFEOMA OKEKE, during the committee’s last visit to Lagos airports, he speaks on how a ten-year development plan can help address aviation infrastructure in Nigeria, the position of the committee on airport concessions and national carrier.

have been a hear-say because officially we have not seen any document on concession. We just hear it like other people that there will be concessions. So, until we get the documents and study it at the committee level and the entire national assembly, then we can talk about concession. Is this the same situation with the national carrier project? This is the same situation. We do not act on hear-say. We act based on documents available to us and that is why we cannot really comment on it. However, I can speak as a person but because I am chairman of House of Committee on aviation, I will not like to speak as a person. I will rather like to speak as an authority. Have you been updated as a committee on the second runway for Abuja airport? Not yet. No documents have been made available to us on the second runway but there is also a need for a second runway. Officially, it is always better for such issues to be handled based on the available documents. On the issue of second runway, we have it in the budget and there are some funds for it in the budget but I’m also aware that that particular amount may not be able to execute the project fully. What is the situation with the Enugu airport? I hear that the land issues will probably delay the completion of the airport? This is not true. The state government is doing a lot on that issue. I can tell you that the land cannot be a problem because the custodian of land is the government and the governor has said it many times that whatever land is needed to get the Enugu airport runway back, he will provide. Work www.businessday.ng

Nnaji Nnolim

is on-going. The minister never said the delivery date is April next year. When minister came for budget defence, he said if the fund is available, the runway will be complete before Christmas but because the funds didn’t come out as agreed, the minister now said the runway will be ready before the Easter season. He did not specify the month, but I believe that the Enugu airport runway will be ready

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If you understand our positions, we have had committees before and they have never talked about creating this 25 percent remittance

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After your visit to the airport, what is your impression? asically, after our oversight, which is also part of our legislative responsibilities, we visited the agencies and tried to find out their needs and challenges and how we can come in to assist as legislators. Fortunately, also, before now, Mr President submitted bills for amendments, we have them and by early next year, we will start public hearing of all those bills and try and much as possible to do it fast and get them ready for passage. We are going to work with our senate counterpart to make sure we are ready for passage of the bills. The oversight was quite interesting and it gave us an idea of what is happening in the aviation industry. When you are inside the airport, you see a lot of things that you may not be able to see outside. Most times, you see the non-aeronautical aspects of the industry. Now, we have an opportunity to see the aeronautical aspects that involves Nigerian Airspace Management Agency (NAMA), FAAN, airside and all the equipment like the total radar coverage, the control towers, runways, air field lightening, Instrument Landing System, (ILS) and other equipment they have. They are rebranding and doing a lot of work. Now we have passed the budget and from next year, we will start engaging them in full oversight of what we are going to do with the budget that we approved for them. We are going to work closely with the ministry and the agencies to make sure that they do what we passed for them. What is the position of the committee on airport concessions? The issue of concessions

March, 2020. What are your significant take-away from your last three months tour of the airport? The aviation industry is very critical and the funds in the budget cannot solve the problem we have and the Internally Generated Revenues (IGR) of FAAN and other agencies cannot solve the problem. And you recall that FAAN and other agencies remit 25 percent IGR to federal government and we are asking that instead of remitting the 25 percent to federal government, they can create a consolidated account where this 25percent will be remitted into and form a committee and from that 25 percent, they do a 10year developmental plan, where they can list projects that they can do for 10 years because if you look at it, one of the problems we are having is that when a particular MD comes in, he will want to do a project and by the time he leaves and another MD comes in, the person will want to do another project. But if we have a 10year developmental plan, it will continue. That is why

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we are saying that we should create a 10-year plan for aviation infrastructures. This is very critical considering the fact that the roads are part and there is insecurity. So, the airport is the next port of call. If you look at any investor coming into Nigeria, the first port of call is the airport. The environment of the airport will determine how much they can invest and how serious they think the country is. If the airport is good, they can double their investment but if the airport is not looking good, they can go back with their money or cut the amount they want to invest. It is a major issue and I think airport development should be a major concern for Nigeria and not just for the aviation industry. It should be a concern for federal government because it is going to boost our economy and create employment. There are a lot of support services at the airport. Most countries are developing the nonaeronautical aspects of the airport and this is where you have the hotels, offices, meeting rooms, shops, malls and car parks amongst others. So with these, you can be sure that they can double their investments and whatever they are getting. We need federal government to put a lot of money in aviation. Everything in the industry is expensive because they are all offshore components, therefore they are dollar based. So, the federal government needs to develop the infrastructure. Investors in the industry don’t invest in non-aeronautics. They can invest in airplanes but government should get involved in developing the critical infrastructures. What are the assurances that the promise you have made to assist FAAN, NAMA and AIB and ensure @Businessdayng

that the infrastructures in the sector are upgraded? If you understand our positions, we have had committees before and they have never talked about creating this 25 percent remittance. This is our campaign and what we think will be the best way to go. We will continue to put pressure. We will bring it up and lobby at the national assembly and we will also get the ministry to come into it fully and push it. Outside this, the IGR is not enough, the budgetary allocation is not enough because it is not only aviation that we have in Nigeria. We need to look at other sectors and how to increase their budget and one of such ways is for federal government to invest that 25 percent in critical infrastructures. We also need to amend some bills because if you look at those bills, some have not been amended for several years. So the bills need to be amended for them to conform to the new standard. There has been this lingering problem between FAAN and the concessionaires at the airport over the contractual agreements to the extent that people are running away from investing in aviation because they are accusing federal government of not honouring agreements. What are you looking at doing to address this? As legislators, once we have cases in court, we don’t comment. What we can do as legislators is to intervene. We are not going to take side at the moment because the matter is in the court. We can intervene between FAAN, Bi-Courtney and others but we cannot comment fully on that. I know that it is a very huge burden on FAAN because they provide a lot of facilities and support services to Bi-Courtney and something needs to be done.

Thursday 02 January 2020

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Changing face of local content development as exemplified by MG Vowgas Olusola Bello

he visitation of MG Vowgas fabrication yard in Por t Harcour t was the climax of the 2019 Practical Nigerian Content conference and exhibition held in Yenagoa, Bayelsa State recently. As it is the practice, the closing ceremony of the conference always end with a tour of a designated local facility by participants so that some of them can have a firsthand experience of what such a local company can do in the areas of fabrication and Marine services. MG Vowgas was the one designated this time around by Nigeria Content Development and Monitoring Board (NCDMB). The fabrication yard marks a new dawn in the issue of local content development in Nigeria. It has every facility for any form of fabrication in the country. The facilities there would convince anybody, including the international oil com-

panies that never believe that indigenous companies can do anything great and complex works that meet international standards. The international oil companies will now have no excuse to carry their jobs outside the country or contract them to international companies on the excuse that there no Nigerian companies that can do it. Surprisingly, while many fabrication yards have either folded up or struggling to stay afloat because of lack of jobs, MG Vowgas has in-

stalled high tech equipment that reduces the timelines for even difficult jobs. From next year the company will begin to fabricate modular refinery and boilers for both refineries and oil companies. Fabricating modular refineries would go a long way to solve the problems of raise foreign exchange for promoters of modular refineries in the country. The company which is purely is an indigenous one is into EPC projects such as fabrication of topsides,

building of structural steels, platforms, pressure vesselsm and has also been active in flow lines repairs. It also provides marine support services by building marine vessels. All of these activities are carried out under the supervision of ASMES. The yard has graduated from four workshops in two years ago to having eight workshop today which are equipped with sophisticated machines that are capable of doing various fabrication works of international standards.

However what baffles many of the visitors was the level of underutilisation of the yard despite all the investments that has gone in there. Azikwe Ajounuma, one of the visitors told BusinessDay that just like many other yards across the country, MG Vowgas fabrication yard is not getting the required jobs to justify the level of investments that has taken place there. He said what is happening in the yard is a reflection of the general lull in the oil and gas industry which the government must address. “There is need for government to ensure that more foreign direct investments (FIDs) are sanctioned so that many companies like this can get jobs and increase employment opportunities in the country.” If a few projects like Bonga South West, Zabazaba and NLNG train 7 can come on stream many of these yards would be engaged. G o dw in Izomor, the group managing director of MG Vowgas Nigeria Limited

said it was the negative attitudes of the international oil companies that indigenous companies cannot carry out jobs that would meet international standards, that challenged him to push for the establishment of this massive yard that is sitting on around 85,000 square meters of land covering marine warehouse and fabrication yard. He expressed appreciation to the Nigeria Content Development and Monitoring Board NCDMB for its encouragement as regard the activities in the yard, despite the lull in the industry The greatest asset of the company is the quality of its personnel. Around 98 percent of the work force is Nigerians. With all these investments put in place if necessary projects are not sanctioned by the government and other stakeholders, such as the international oil companies sustaining such facilities may be a challenge. Patronage is very important for the sustenance of the facility.

Benin Disco to partner embedded Dangote Refinery: Placing Nigeria Firmly on the Global Landscape Dangote Petroleum Re- in a unique method called latest processing, analytical, power generation companies Olusola Bello finery is setting a pace in the the Mediterranean moor, automation, and environmenOlusola Bello

n the bid to improve the quantum and quality of power being supplied to customers, BEDC Electricity Plc. BEDC seeks to engage with power generation companies within and outside Nigeria specializing in embedded generation in order to achieve its aims and objectives. According to the Management in a statement, BEDC desires to partner such companies that are willing to build, operate and evacuate power lines (11KV or 33KV) from their facilities to BEDC’s designated take-off points. “This invitation is open to existing generation companies within BEDC’s franchise areas and those operators with genuine intention to site their generating facilities within our franchise area which covers Delta, Edo, Ekiti and Ondo states in Nigeria” the management asserted. BEDC explained that for the purpose of Expression of Interest (EoI), the sites were divided into lots as follows: Lot A; Asaba, Lot B; Warri, Lot C; Benin, Lot D in Akure, Lot E in Okitipupa and Lot F in Ado Olusola Bello, Team lead,

Ekiti, all with various sub areas. Each stated Lot location will be parcelled into sub- areas under the Lot and interest expression while the bid will be based on these sub areas. Among the preliminary requirements listed by BEDC for submitting the proposal are; that the minimum capacity of power generation shall not be less than 5megawatts (MW) and that the minimum power availability from the plant shall be above 90 per cent. The point of take-off BEDC said, shall be at 33KV or at 11KV voltage level, while the substation up to grid shall be required to be maintained by the respective party, such as up to the 3KV or 11KV feeder (from power plant to linking point of BEDC network). BEDC explained that the measure was aimed at solving the problem of power supply in some of its franchise states as the power generation companies are expected to produce power through embedded generation/off national grid to augment shortfall from the Transmission Company of Nigeria (TCN). The initiative BEDC argued, will permanently improve power supply in such locations within the shortest possible time

Graphics: Joel Samson.

or decades, most advanced refineries and petrochemical plants globally have been coming online in China, Saudi Arabia and India. These include world-scale projects such as Reliance Industry’s Jamnagar Refinery in India; the Zhanjiang Refinery in China; the Yanbu Refinery in Saudi Arabia; and the Sadara Chemical Complex, also in Saudi Arabia. But while Asia and the Middle East had been dominating the recent refinery project landscape, there are changes in the narratives as Dangote Petroleum Refinery is bringing in the best and biggest refinery equipment ever built in global refining history to ensure that Nigeria joins the league of biggest global refiners.

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global refining sector by exploring new technology in its choices for the biggest and best equipment in the history of global crude refining. Dangote’s appetite for the best refinery equipment was showcased recently with the importation of the world’s largest Crude Oil Distillation Column, specially constructed to handle the 650,000 barrelsper-day single-train refinery located in Lekki Free Trade Zone in Lagos, Nigeria. Due to its size, while loading the equipment on the vessel from China, it first had to be transported from the fabrication unit on a barge to a river port where a special RoRo vessel was hired. The equipment had to be transported using Self Propelled Modular Transport. The vessel was also moored

wherein the equipment was rolled in straight from the aft of the vessel. With the latest development, the Dangote Petroleum Refinery project is in the process of upstaging other recent high-profile projects, such as the majority of hydrocarbon processing plants previously commissioned in the more developed regions of the world. Earlier this year, the company installed the biggest Residual Fluid Catalytic Cracker (RFCC) ever known in the global refining sector; an attestation of its desire to ensure that Nigeria becomes a petroleum refining hub in Africa. Supposedly one of the most important conversion processes used in petroleum refineries, Dangote Petroleum Refinery is sparing no expense to implement the

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tal technologies at the new single-stream refinery. The refinery is being designed to accommodate multiple grades of domestic and foreign crude (including shale oil) and process these into high-quality gasoline, diesel, kerosene, and aviation fuels that meet Euro V emissions specifications, plus polypropylene. It will include a crude distillation unit, single-train residual fluid catalytic cracking unit, diesel hydro-treating unit, continuous catalyst regeneration unit, alkylation unit, and a polypropylene unit. Speaking during arrival of the vessel, which conveyed the Crude Distillation Column to Dangote jetty, Head, Maritime and Port Infrastructure of Dangote, Capt. Rajen Sachar, told the newsmen that the equipment is the biggest single-train facility used for refining crude According to him, the refinery equipment, which was manufactured by Sinopec in China, is the primary unit processor of crude oil into fuels. He said the equipment was capable of refining 650,000 barrels-per-day (bpd) and added that the refinery was designed to be Africa’s largest, with potential to transform the country from an importer of fuel to a net exporter.

Thursday 02 January 2020

BUSINESS DAY

Markets + Finance

‘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.’

Zenith Bank, UBA, Dangote Cement, United Capital, and Lasaco are high dividend stock BALA AUGIE

nvestors typically prize high dividend players in a low rate, low growth environment, as they search for high yielding and stable instruments. Shareholders crave for the stock of an entity that pays steady dividend as it signals sound financial health, but dividend is irrelevant in a corporate finance world since the value of a firm depends on the discounted expected future cash-flows. But average investor doesn’t care about the finance jargons but the money that trickle down into his pocket, a reward for investing his hard earned money in a corporate entity. The companies that will be paying higher dividend to their owners from distributable profit in 2020 are: Zenith Bank, United Bank for Africa, and Dangote Cement Plc, LASACO Insurance, and United Capital Plc. The dividend yield is the ratio of a company’s annual dividend compared to its share price. The dividend yield is represented as a percentage and is calculated as follows. Zenith Bank, the largest lender by profit in Africa’s largest economy has a yield

of 15.05 percent, as it had paid an interim dividend of N9.14 billion as at Half-Year 2019. This means that an investor will get N150,00o for every N1 million invested in the company. But the lender shares has not been rallying since the start of the year as it has a year to date (YTD) of -20.17 percent. Zenith Bank’s shares are cheap and attractive as it has a price to earnings ratio of 2.92 times and a price to book ratio of 0.67 times. United Bank for Africa (UBA)’s stock yields 11.89 percent, and it had paid a final dividend of N10.26 billion. This means that an inves-

tor would get 118,900 if he invested N1 million in the company. The lenders closed 2019 financial year with an YTD of -9.09 percent. United Capital Plc has a yield of 12.50 percent, and it shares are attractive as price to earnings ratio stood at 3.58 times to end 2019 financial year. Lasaco Insurance Plc has a dividend yield of 20.00 percent as it has met the minimum capital requirements by the regulator. Dangote Cement has a dividend yield of 11.27 percent, and it had paid a financial dividend of N272.64 billion in 2018.

The largest producer of the building material in the country and most capitalized firm plans has revealed plans to buy back 10 per cent of its entire issued shares from shareholders. The exercise is to help underpin its stock price and bolster earnings per share (EPS), as the company had issued commercial papers with a view to reducing finance cost and strengthening working capital position. Dangote Cement, which currently has 17.04 billion fully paid up ordinary shares of 50 kobo each, would be buying back 1.70 billion shares. It said the share buy-back was going to be on terms and

conditions determined by the board of directors. “They feel that the stock is too cheap and they want to suck up liquidity. In the long run stock price will go up. They are not happy that the stock price is between N140 and N160,” said Paul Ozim, a stock broker. Ozim said that Guaranty Trust Bank’s good corporate governance and transparent shareholdings makes the largest lender by market capitalization a value stock even as it yields “You hardly find a director that owns more than 5 percent of shares or stocks; hence it is difficult for someone to take a decision that will rattle the market. Foreign investors like such as stock as it gives boost their confidence,” said Ozim . GTBank is trading at a price to earnings ratio of 4.38 times and it has a yield of 9.48 percent. Lack of good corporate governance is inimical to the capital market especially when a shareholder holds majority of the shares. Nigerian billionaire, Femi Otedola, who held majority stake in Forte Oil, sold the downstream oil and gas firm after stripping off all of the assets and left the trading carter while lot of investors were short changed. Absence of structural re-

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forms in strengthening the resilience of the domestic economy, rising vulnerabilities to external shocks, poor corporate earnings delivered mostly by consumer goods companies and in recent times, dampened foreign investors’ appetite for Nigeria equities. Also, the flurry of regulatory guidelines from the CBN which has raised uncertainties in the banking sector, which means 2020 will be a tough year for lenders. The equity market extended its recent bearish run as a late Santa visit on last week Friday failed to erase losses that had been recorded before the Charismas. The NSE-ASI YTD return worsened to -14.60 percent as the local bourse continues its lackluster performance. Niger ian Stock E xchange (NSE) data on domestic and foreign investor participation for November revealed that foreign investors’ outflows from Nigerian equities outpaced inflows for the second consecutive month. The higher decline in Foreign outflows (down 19.3% m/m to N53.2bn) when compared to the reduction in Foreign inflows (down 11.3% m/m to N33.6bn) led to lower net outflows (N19.6bn in November compared to N28.0bn in October).

Thursday 02 January 2020

BUSINESS DAY

Garden City Business Digest Why RIMA wants N1Bn recapitalisation to support more entrepreneurs – Sogules The Rivers Microfinance Agency (RIMA) has started making profit but it has put a request for recapitalization of at least N1Bn from its sponsors, the Rivers State government, to make more impact in 2020. The managing director, Ipalibo Watson Sogules, in an interview on the sidelines of the 2019 annual retreat, reveals why the management presses for this instead of demanding for the one per cent of annual capital budget of the state government budget. He told IGNATIUS CHUKWU the Agency’s Microfinance bank, RIMA Growth Pathway, also urgently needs recapitalisation.

What is the essence of this retreat? his is our annual retreat and this edition is to strategise for 2020. We are setting targets for ourselves and also measuring performance of the outgoing year. You will recall that prior to 2016, RIMA was posting losses up to N1bn cumulative. Its flagship products, Rural Finance Initiative (RFI) and City Finance Initiative (CFI) witnessed unsustainable overheads, thereby threatening the sustainability of the agency. Coordination of staff was weak and there was no objective performance management system in place. RIMA started with a takeoff grant of N500m and capital of N2Bn in 2008, but all of this was eroded by 2015, leaving the agency to use financial engineering to survive; through interest on capital placement and an epileptic interest on an unsustainable RFI/CFI scheme. You said you gave out N4.7Bn loans between 2015 and 2019,and that you are trying to reach 2,812 entrepreneurs in Rivers State? In 2015 when we came in, they were operating a programmes called RFI/CFI which was not suitable for RIMA because of huge costs and strength of staff not adequate. So we changed to Market Traders Loan system which helped us to reach the N4.7Bn to that number. We have also introduced loan recovery schemes in col-

Ipalibo Watson Sogules, MD of RIMA

laboration with the judiciary and the police. It is working well. You said you recorded some giant strides and you made projections in 2020? Yes, we said we want to achieve N1.644Bn

to different enterprises. That will need strategies. So far, we have made about 95 per cent recovery of loans. We also left some structures on ground such as police to recover loans and special court. Our recovery has been good. We are still doing more. What are doing to introduce proficiency in 2020? We are asking for recapitalisation and it will come as a booster to us. The governor mentioned recapitalisation in the budget. We are going to adopt risk management to help recover all loans. Between recapitalisation and asking for RIMA’s one per cent of annual capital budget, which is better or easier? Going by the law setting up RIMA, it is difficult to ask for that because it was not categorical. For us to pursue that, the law has to be amended. We cannot pursue that. So, we say, let’s recapitalise and move on. If the governor can give us N1Bn, it will be very good. The last time RIMA was capitalised was 2008, and this has since been eroded. What has given RIMA advantage in the industry? Its our staff strength and we have gone into the real micro and small market. Te market has accepted RIMA and that is a huge stride. The

demand for our loans is higher than what we can offer. Do you say your bottom line for 2020 will be positive? Of course, even in 2019, we broke even and made some profit (about N3m) and we are going to consolidate on this and increase profitability. This is the first time a government agency is giving profit. You used to have external funding sources such as CBN and some banks, are they all dried up? First of all, we are a government agencies and any loan we want to go for, we must get the nod of the government for a guarantee. That, we have not got. Once we get the nod, we move because we are working on that. The MFB was established some years ago, what is the summary of their own side? Yes, the RIMA Growth Pathway MFB Limited is doing very well and we are also pursuing their own recapitalisation and the CBN has given a deadline for recapitalising all MFBs. But if you look at the bank, 90 per cent of our transactions are done through it. It is being recapitalized and about to open another branch. It is profitable right now. We have instituted ATM system and we have Interswitch; meaning they can transfer funds. These are signs of doing well.

Information: Paulinus Msirim mounts the stage Port Harcourt

IGNATIUS

ew commissioners, 13 of them, were at last sworn in to form the Rivers State Executive Council with effect from December 30, 2019, but the highpoint is the appointment of a consummate journalist and professional practitioner, Paulinus Msirim, until now the permanent secretary, Ministry of Information. Msirim, a pastor, is a man who seems to know the rivulets of Rivers media practice, the private sector, the public sector, investigative type, the uncompromising brand, and all types that are known to the good books. He has now been named the next commissioner of information. This could be why the moment he was sworn in, the NUJ House on Moscow Road exploded in jubilation, ending in a reception. Msirim was a one-time chairman of the NUJ in Rivers State before becoming the chief press secretary (CPS) to a military governor. He was to bounce back to serve as CPS to Celestine Omehia but it was short-lived due to the Supreme Court magic verdict. He remained a director in the information ministry, seeing the good, the bad and the ugly along. He even ran into a commissioner who never wanted to see his face. He survived. He

eventually served as perm sec when Emma Okah was commissioner of information and both honourable men managed the most sensitive ministry during a tempestuous political period. So, to serve as reporter, editor, union leader, administrator, image manager, and now commissioner for information is one of the most graduated professional careers ever. Most other commissioners had one or two of his attributes but none was so rounded. And he worked well with almost all of them in the past 15 years. Many now ask, what does Msirim lack in public information management? And what does he lack in life that his God will not provide for a coolheaded and honest cleric like him, with a wife that can best be described as the shoe that never pinches. Few men have such companions. And now, the journey begins. Msirim will step into the shoe once worn in recent years by famous names like Magnus Abe (lawyer), Ogbonnia Nwuke (journalist/publisher), Ibim Semenitari (international journalist/publisher), and Emma Okah (lawyer/writer). Each of these fellows contributed building blocks upon which Msirim will build his labyrinths. There were some others who occupied that seat with little or no impact but rather left cantankerous footprints. Its clear Msirim will not follow such footsteps. Whatever the case, the tenure of any information commissioner would be determined by the kind of governor he serves. In that case, know your principal, know his body language. A theory says the image of a state is determined by the actions and words of the chief executive (governor); the information commissioner, and the chief press secretary. Often, it is a governor that says or does things that ruin the reputation

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capital of his state, but the information commissioner may pay the price. Often, a governor has his own way of dealing with a matter while the chief information officer (Commissioner) has a different idea, but succumbs, but takes the rap. Budget is also another matter. Some governors may not agree on the amount needed to do a good reputation management and building job. Information management often is a difficult project to quantify and budget for. Its contribution to bottomline is often difficult to calculate. The worst case is that what everybody knows is no job. Often, every person or relation that comes across a governor would tell him his information managers are not helping him. Some governors get excited and listen, and then, toxic deal is sold. Before one knows it, there are many managers competing with the information boss. This is because everybody thinks he or she knows something about media management, even those who only have a blog. Sad!

Paulinus Msirim

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Msirim is coming in with huge applause and that too is an issue. It means expectation is high and different persons have different expectations. How is he going to fulfill all? The good thing is that many senior practitioners already know what Msirim stand for and against, and where his red line is. Msirim thus has his task cut out for him. Rivers State needs a briefing policy. For now, only the governor is speaking for himself and his administration. There should be a monthly briefing moment by the information commissioner with a commissioner of a targeted ministry for that month. Media focus would be on that ministry and few other important activities of government for that period. This way, the full details of what is happening in government will be professionally communicated and journalists would ask questions and get answers that would reduce speculation. Budgets should be clearly communicated and quarterly reviews should be encouraged. If the relevant commissioners would not be disposed to regular briefing, the information commissioner can be doing it regularly. This is how it used to be in the Peter Odili days and at the federal level right now. This helps to illuminate all sections of the work of the administration. Msirim is coolheaded and loaded. He can do it. He has experience in public and private sector information management, he has all the contacts he needs, he enjoys the confidence of his principal, he knows who can do what for him at whatever level. He knows how to approach his principal and how to deliver well and gain more confidence. He seems to have all what it takes. Many believe he will succeed exceedingly. The ball is now in his court. Goodluck, man of God!

@Businessdayng

Thursday 02 January 2020

BUSINESS DAY

Investing in Rivers State People now flock to hotels in South-South to enjoy themselves • NHA leader in the zone says hotels are safe, boost life expectancy • Grace Maxwell Efeoghene reveals deeper values of hotels beyond just passing the night Ignatius Chukwu

otels in the south-south especially in Port Harcourt have bounced back from the trauma of killings few months back and are now safe heavens offering bubbling experiences and leisure services better than before. The national vice president of the Nigerian Hotels Association (NHA), Grace Maxwell Efeoghene, who made this disclosure, said hotels in the oil region have bounced back to dish out new experiences that now make the region an attractive zone. In an exclusive interview in Port Harcourt, the pastor and CEO of Prince Kin Hotel located on Ikwerre Road near Rumuokoro area hotels in the region lost almost 80 per cent of the market during the killings spree in hotels. Now, the NHA is out to prove to the hospitality world that the industry in the region is safe and back. With a vision and goal to let Nigerians know how to live, the pastor said most persons do not understand the hospitality industry, and that many do not believe in hotel life. The industry is out to give adequate comfort, to help people understand how to live and use hotels. “You need it for travelling, for rest, and for many activities. Holiday makers are taken care of by hotel facilities.’ She went on: “Our mission is to show you have to rest and how to have a comfortable lifestyle. People must learn to rest instead of working all year round and slump and die. If you work all year, you do not last, but if you rest, you prolong your life. “With moderate prices, we give you rest, good stay, good security system. The notion is that people

Grace Maxwell Efeoghene, National vice president of NHA

have fled the region but it is not true. People come and enjoy their lives. You need to understand your environment. There is recreational value in the region. Beaches abound. “South-south is a place to live and rest. Most hotels offer you parties, peace, joy, etc. Happiness is essential in life and we boost the happiness index. The hotels are safe. It’s not true that its where they kill people.” Killing in hotels took events away from the region On the impact the scandalous killings in hotels had on the industry, the woman of God said; “The issue of women being killed is no more. The suspected killer has been arrested. Now, CCTV rules the hotels. We are working with government agencies to sanitise and protect the industry. The NHA moved in and worked with the

police to arrest the situation. We did everything humanly possible. “We found out that this trend came. We now put in check-in and check-out policies, data, camera, etc, to monitor their movement. We also stopped under-aged girls. We began to find out the relationship of partners coming to hotels and the police was informed. “Hotel occupancy was down because of fear, panic, bad mouth. It affected the returns. After the arrest, people returned to hotel life. Drop was much. It was dramatic. Hotels were deserted, almost 80 per cent drop occured. Hotel is a social matter. Big programmes were being taken away from PH. Now, the market is returning.” Looking ahead The Nigerian Hotels Association

Ambassador Bosinde launches ‘Security Tips Album’ By Sam Esogwa

security activist and public relations agent, the ambassador, Bosinde Araikpe, recently launched the first edition of his ‘Security Tips Album’ series at Golden Tulip Hotel, Port Harcourt. The album, which features security tips to help people stay out of troubles, attacks, kidnap and armed robberies, also has the 36 states’ emergency numbers as well as the FCT Abuja control room/ emergency numbers. Addressing the guests briefly before the launching of the album, Bosinde Araikpe, who said he is a United Nations ambassador for peace, said he was inspired to put the album together because of the missing gap between the public and the police. He said the need to bridge the gap and help people to become more security conscious informed his decision to compile the album, adding that his plan is to share it

to over one million, five hundred thousand Nigerians free of charge. He therefore appealed to the guests to support the project in order to make the vision of sharing it free to the public a reality. In their various brief remarks,

Bosinde Araikpe www.businessday.ng

some of the security agents at the event commended Araikpe and implored the public to take advantage of the opportunity offered by the project to get more informed about security, which they said would make their work easier. Some of the guests launched the album generously. Speaking with BusinessDay shortly after the launching, Araikpe said the album is the product of his working relationship with the police that dates back to 2014 when he embarked on The Police Is Your Friend Campaign with Bosinde Dinner with the Commissioner of Police, now an annual event. He said in the course of his work, he has discovered, to his shock, that many people are not aware of simple security tips that could help them escape trouble spots and situations hence his determination to bridge the gap with the album. “The album also contains a song entitled: No Gain in Gangster, featuring Dr Barz and another song – My Case Is Different which featured Kella Kay,” he explained.

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has held training, sensitization, etc, to make hotel workers understand security measures in hotels, she said. “People should watch one another. Wherever you are, you must watch out and know how to alert the police. Working with the police has been a good experience. The CP and team have given us good orientation. In recent times, we have had keen interest. We are now watchful with CCTV. We see everything now. We stop anything before it ever happens. “We are enjoying the job because of safety and we now feel that our businesses are safe. We watch from afar. People should look forward to south-south and enjoy the region. Let them enjoy this season in hotels. International events can hold easily and safely in the region now”. Hotel run by a woman of God The national vice president said hers is a hotel run by a woman of God. Her younger brother, the person actually managing Prince Kin Hotel on day-to-day basis, is also a pastor. That could explain why men of God often feel safe and free at Prince Kin. She said: “A pastor too needs rest. If they invite you, go to a hotel and rest before going to preach. Many people shun hotels as if that is the essence of Christianity. Mindset is to make people know that hotel is home. We help soldiers, students, families, and the masses. Hotelling is about catering for everyone. Stop staying with relatives when you travel. You need your rest, privacy, dignity, etc. “In Nigeria, we seem not to respect rest and privacy. Most pastors suffer trauma when they go to preach. Hotel is your best safe outlet.” Prince Kin Hotel started with her grand parents and later to their parents and now to their generation. The experience is incrementally in

the family. Now, she says; “Going out increases the happiness index. The society is being robbed of happiness. The environment can reduce your tension. Hotel is your best bet. “Image of hospitality industry has been battered. A woman can go to a hotel, relax, and check out. Most domestic violence can be avoided by escaping to a hotel room to come back better. Choking homes kill men quickly.” Calling it a gold mine beyond sleeping at night, she said to rest, and to relax save lives. She called it buying back your life once in a while. You stress yourself a lot, so how do you buy back your life? A house can be low in oxygen. So, go to eco-friendly environment, a hotel and relax and buy back your life. Step away from work and rest. “Companies should include rest moments and force their workers to rest. Jesus always took time off to rest. Rest and reset your head. House wives should leave their environments and go rest somewhere. We are not resting at all in this country.” Efeoghene can be described as a hotelier who lodges in other hotels in the same city. She said she often escapes from drudgery and stress to lodge in another hotel and rest and buy back her life. “Hotel is not a bad place. Yes, bad things happen in hotels but bad things happen at home, in the office, etc. Its not hotels that do bad, it is people that do bad. The hoteliers have to control things.’ She gave insight into one of the challenges in hotel business, pilfering and nasty behaviours. “Yes, customers steal towels, beddings, spoons, plates, etc. We manage human beings and teach them manners.”

Group to mobilize 1m Niger Delta youths against human rights abuse Sam Esogwa

he age-long battle to save the Niger Delta environment has now gone beyond mere rhetoric to take an entirely different dimension. This is because a move to mobilize, sensitize and unleash no less than one million youth volunteers to champion the all important battle has begun. As a matter of fact, the vision was launched weeks back at Grand Monticito Hotel on Abacha Road, GRA Phase II, Port Harcourt. It was to commemorate this year’s International Human Rights Day. In her keynote address, a professor, Julie Umokoro, of the department of Theatre Arts, University of Port Harcourt, noted that environment is very important in the life of human beings and therefore deserves to be protected by everybody for continued sustenance of life. Umokoro, who is also the President, United States Government Exchange Programme Alumni Association, Rivers State Chapter, commended the organizer of the pro@Businessdayng

gramme for his vision. In his goodwill message, another professor, the former vice chancellor of the Rivers State University of Science and Technology (RSUST), Barineme B. Fakae, harped on the importance of environment to the society and the need for the youths to safeguard it. He lauded the effort of the initiator of the programme and his plan to mobilize one million youths to work as volunteers in the quest to save the environment from destruction. Speaking with BusinessDay shortly after the programme, the organizer of the programme and Executive Director of Youth Environmental Advocacy Centre, Fyneface Dumnamene, said his reason for mobilizing one million youths was for them to help campaign and defend human rights in the Niger Delta.Dumnamene explained further: “We’re motivated to do this because the human rights space in Nigeria is shrinking. In the Niger Delta where oil mining has been on since the 1950s, the rights of the people are being violated, molested and abused in the process of carrying out their activities.

Thursday 02 January 2020

BUSINESS DAY

Corporate Social Impact

Peak, Coca Cola, Zenith, amongst corporates that lit up the season Stories By ONUWA LUCKY

hat would Christmas be like without the lights, the gifts and the hearty cheers from beneficiaries of the sumptuous giveaways? That wouldn’t be Christmas, surely. That wouldn’t be end of year. Which is why in most parts of the world, a huge effort is put into ensuring that as much as possible, no one is left behind at Christmas time. This year, as in other years in the immediate past, lots of Nigerians had enough reasons to complain and gripe about the state of their finances. The economic recession is not over although statistics from the Federal Government claim otherwise. For most Nigerians, it’s been a long winding road to nowhere. Scorched earth. Drought. All the scary words that bring to mind images of futility and an abiding sense of standstill. As usual, though, there was optimism aplenty. Nigerians don’t lack that at all. Things were going to get better, things were always going to get better. But before they knew it, it was December, and things were worse than ever. Worse yet is that many fared worse this year than they’d done in previous years. And this, despite the effort they put in to change what’s become somewhat of a trend; something their religious sensibilities would not have them describe it that way. But life goes on. And many still traveled for the yuletide, to visit with folks and family in the villages and towns in other parts of the country. A change of scene is always a good idea. It was also time for weddings and introductions and those other things reserved for when there’s enough human traffic and a sizeable swell of witnesses and well-wishers. Good thing is that even though things were parlous on a personal level for many, Nigerian corporates stepped in to give folks good reasons to cheer. Zenith Bank “Let There Be Light!” First up was Zenith Bank which lit up Ajose Adeogun Street on Victoria Island Lagos. This being the 14th edition of what has become a highly anticipated Light-Up ceremony, Ebenezer Onyeagwu, Zenith Bank MD was quick to chime in that “Ajose Adeogun Street has come to be recognized by not only Lagosians, but Nigerians in general as an iconic place and tourist attraction because of the beautiful decorations adorning its length and breadth during the yuletide season. In fact, people from all walks of life visit with their friends and families to take pictures of this wonderful spectacle, especially at night and enjoy the ambience of the street and season.” “Let there be Light!” was the theme for 2019. And so it indeed was, with lots of people dropping by to bask in the light and take photo-

to run out on Christmas day, “We encourage everyone to #BeSanta to someone else this season. This is the best way to make a difference this Christmas.” Very true, that! Coke cannot be Santa to everybody so everyone ought to reach another one with the gifts and good cheer that Santa traditionally dispenses.

graphs against the luminous background. And as one would expect, some resourceful vendors, (some of them of the mobile/guerilla variety) were quick to set up stands to cater to the different tongues and stomachs that thronged the street. Coca Cola #BeSanta Next up was Coca Cola Nigeria and its #BeSanta Campaign that was designed entirely to advocate the spirit of sharing and caring at Christmas. Happy holiday makers in Ibadan, Lagos, Enugu and Abuja were delighted to bump into the #BeSanta Train, an easily recognizable caravan with iconic twinkling Coca-Cola Christmas trucks and a fleet of Santa-like outriders. And though they weren’t expecting it, they had a great time sharing exciting goodies - including complementary beverages. www.businessday.ng

#BeSanta was a holiday tour of selected towns and cities across the country with specific stops in 4 major cities with one mission: To Bring to Life the Message of Christmas - Sharing and Caring. While flagging off the campaign, Gbolahan Sanni, Franchise Marketing Manager, Coca-Cola Nigeria, said what we all know about Christmas: It’s all about sharing special moments with family, friends and loved ones and nothing defines Coca-Cola better than the festive spirit and cheer!” For which he reason he said “We are therefore thrilled by our #BeSanta campaign and we hope to get as many people to share some smiles and show some love to those around them this season!” Yesss! Gbolahan added that although #BeSanta Campaign was expected

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Peak Milk’s 12 Days of Peakmas And then there was Peak Milk with its “12 Days of Peakmas” campaign. Don’t you just trust these marketing folks to come up with these creative coinages? The company described the essence of the campaign as “exemplifying love and kindness to everyone, everywhere”. And the campaign began with asking the public to nominate unsung heroes, who through their selfless and often unrewarded service make our societies a better place. The Peak train, joined by celebrities like Ayo Makun, popularly known as “AY”, Nollywood Actress, Eniola Badmus and Actor, Williams Uchemba, visited these “Peakmas Heroes” in a surprise of carols, praise and rewards for their selfless acts, enabling the common man reach for their peak. The campaign also took to open markets and superstores to reward customers with shopping vouchers, cash and lots of exciting gifts. One of the unsung heroes nominated and celebrated during the campaign was Segun Awosanya popularly known on Twitter as “Segalink”. His effective advoca@Businessdayng

cies are renowned for spurring the social needs of the common man and on several counts, have brought about the needed succour required for upping the standard living. Another Hero, Sergeant Solomon Dauda (popularly known as “Emergency”), a traffic warden stationed at the NNPC junction in Garki, Abuja, is widely appreciated for the energy and entertainment he has brought to passers-by in 13 diligent years on the role. According to Grace Onwubuemeli, Marketing Manager for Peak, Peakmas is Peak Milk’s rendition of the spirit of Christmas. The campaign emanates from the purpose of the Peak brand, which enjoins all Nigerians to “reach for their Peak”. For the period of the campaign, Peak visited various cities including Lagos, Abuja, and Port- Harcourt; thanking lots of consumers and shoppers for being there throughout the year. For Onwubuemeli, “It was rewarding to watch the smiles on the faces of our Peakmas Heroes as they received their gifts, and we look forward to creating more avenues for celebrating Nigerians doing exceptional work. The gratitude and emotion from giving to everyday people like our unsung heroes and consumers, is nothing short of the happiness the season brings”. CSI will do an encore before the end of January to highlight the efforts of other corporates towards making the yuletide the sweet success it turned out to be. Here’s to many more Christmases on God’s good earth. HAPPY NEW YEAR!

Thursday 02 January 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Citibank, Rite Foods Limited partner with Junior Achievement Queen Elizabeth was a mechanic. Nigeria to mark World Savings Day in Schools Prince George will be a wood carver

orld Savings Day is an event created to increase public awareness of the importance of savings both for modern economies and for individuals alike. It focuses on the relevance of savings in the global economy and how every depositor contributes to its development. “Saving” aligns with JAN core pillar of “financial literacy” and a day like this allows Junior Achievement Nigeria to further raise awareness and reiterate the strategic importance of saving and financial literacy; particular for young minds and how cultivating the right saving

habit affects their financial well-being. Speaking on the significance of the day, Director of Marketing & Innovation, Junior Achievement Nigeria, Ms. Oduolayinka Osunloye, said “World Savings Day is a financial literacy initiative aimed at celebrating the benefits of being thrifty. It is an opportunity for JAN as an organization to further deliver on our Financial Literacy Pillar. Through our #SaveWithJAN initiative, we are partnering with various organizations and individuals to inform primary school students and youths about financial responsibility, the idea of saving their money in a bank and other financial

tools to ensure they become leaders of their own lives”. According to her, JAN, over the last 20 years, has implemented economic education programs that develop attitudes and skills necessary for personal success and social responsibility and delivers practical, experiential hands-on programs under the three pillars of financial literacy, work readiness and entrepreneurship. She, however, reiterated JAN’s commitment to teaching financial literacy and other economic education programs to young people as the organization continues in its race to reaching 1,000,000 young people by the end of 2019.

The 2019 World Savings Day program was done in partnership with Citibank Nigeria Limited (Citi), a longstanding partner of JAN. According to Akin Dawodu, CEO Citi Nigeria, “Initiatives like World Savings Day are aligned with Citi’s Mission of Enabling Growth and Progress through investments made in the communities Citi operates in. It’s important that we nurture fiscally responsible youth as this will positively impact our economy in the long run”. Dawodu applauded the continued efforts of JAN in empowering youth across Nigeria. Visit www.ja-nigeria.org to find out how you can donate or volunteer.

FunDonor: A youthful approach to supporting charities

hima Ezeilo is the Director of Kambani Arts, a UK based NGO centred on promoting African art and empowering young people. A few years ago on a sunny morning in Malawi, he had a Eureka moment. He was on Safari and had heard of a school being built for charity and went to have a look. Problem was, there was no school, no building, nothing, just a crumbling old sign board. On digging deeper it became clear that monies had been misused and the project abandoned. This made Chima sad but it got him thinking and not long after, he had a Eureka moment, resulting in a start-up idea called FunDonor. Chima always felt his calling was to give back and with FunDonor he wanted to create a way to do that with young people whilst making charities more accountable to donors. He wanted to inspire people to donate with confidence and he wanted to engage young

Simon Rydings, CEO, Zaffo.

rince George will learn how to kindle fires using stones, something I’m unafraid to bet you can’t do. As well, he’s also going to learn how to carve wood, (as in wood carver!) like those guys you know who approach you at the beach with stuff they hope you can shell a few bucks for. He’s a Prince, you know, from the royal house of Windsor, a legit, if distant, heir to the throne of England. But that’s how those guys roll who rule the world and that’s why they dominate their world and ours. Before him, his great grandmother, the redoubtable Queen Elizabeth was a mechanic during World War2. The English royal family had the option of evacuating to Canada, but their mom was adamant despite repeated bombings of the English palaces. She stayed put in Buckingham Palace while moving the princesses round till they finally settled in Windsor Castle. And when she turned 18, the then Princess Elizabeth decided she was going to enlist with the Auxiliary Territorial Service, training as a truck mechanic. Responsibility is better internalised when learnt from the ground up. Our civilization will not advance until we learn that basic truth. The sad situation we have in our country where children

Chima Ezeilo, Fun Donor Brand Ambassadors

people in giving back. That was the hard part, engaging young people (who tend to be suspicious of such initiatives). Chima concluded that for it to work, it had to be fun, it had to leverage a medium that young people identify with, something they enjoy doing. The obvious medium was social media, something that make young people buzz. So he built the idea centred on social media, including real financial rewards as an incentive. How it’s meant to work is actually quite simple. Young people will use social media to engage with their role models, encouraging them to offer their fans a unique personal experience in exchange for their donations. Anyone can donate $1 (N360) to try to win this personal experience, proceeds going to the role model’s charity. For any role model that takes part, the young person gets a reward - a 1% stake of monies received, www.businessday.ng

Chima Ezeilo

most of which can only be used for charity or to fund their education. That’s cool. And don’t forget, Chima’s main goal was to increase charity accountability. The initiative promises this through a tracking and transparency protocol with all charities who must sign up by agreeing to be accountable to donors. If a charity does not sign up, any donated monies will be withheld and awarded to a charity willing to comply. The initiative is loosely modelled around the Red

Nose Day charity fundraising phenomenon in the UK. Even better, it will be run in partnership with Zaffo, the company behind the Red Nose Day platform. Zaffo’s CEO is Simon Rydings and he is on the FunDonor implementing team. He enthuses that “The initiative adds a fun filled dimension to the business of giving”. The whole initiative is aimed at promoting charities and changing young lives by encouraging acts of kindness. To learn more, please visit fundonor.com. The initiative will be formally launched after their crowdfund campaign on Indiegogo early in 2020. You can follow developments on the FunDonor website and on social media. “I believe young people will love this – being rewarded for having fun… Who wouldn’t?

Chima Ezeilo – Founder, FunDonor

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Prince George @Businessdayng

Queen Elizabeth as mechanic

of civil servants and government officials fly first class to and from schools abroad gives little room for confidence; because whether we like it or not, these privileged young folks will form the bulk of the leadership for the coming generation. Their sense of entitlement is so deeply imprinted it has become an integral part of their makeup. Not a great future to contemplate. What makes great countries are the mechanics and the wood carvers; folks whose calloused hands help build, repair and beautify. Until Nigeria’s elite recognize this as the true path to growth, our governors and legislators will keep travelling to other countries to learn how to do everything.

(Kindly send feedback to 08023314782 / csrmomentum@gmail.com)

Thursday 02 January 2020

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

CONSUMER SPENDING

For the worst performing Industry of 2019, the only way out is Buhari BALA AUGIE

or the consumer goods firms to bounce back after a bruising year, President Muhammadu Buhari led administration will, as a matter of urgency, formulate policies that will help galvanize the economy and invigorate consumer wallet. Last year, it was clear the industry felt the pang of a harsh regulatory and macroeconomic environment that saw margins some of the postal child of the industry wither, while those that hadn’t recorded losses in close to a decade fell of the cliff. While the borders were closed to curb smuggling and influx of fake and substandard products into the country, it prevented companies from importing raw materials and shipping finished products to neighboring countries. The consequences were that revenues shrank while cost of production spiked as companies resorted to a more expensive alternate

route, sea. The gridlock at the Apapa ports and decrepit infrastructure undermined the industry in 2019, as goods were trapped at the terminals for an interminable period of time, resulting in high cost of production. President of Dangote Group, Aliko Dangote has disclosed that his company lost N25 billion to the poor state of Oshodi-Apapa Expressway. Across the globe, consumer spending is pivotal to economic growth because it shows people- who are employed- have money their pockets to go out shopping. For instance, the United States of America would have sipped into a recession save for strong consumer spending as the trade war with China heightens. The reverse is the case in Nigeria where rising inflation and fuel hike have put consumer spending in check as unemployment rate is at an all-time high of 23 percent, while the country overtook India to become the poverty capital of world. Some companies are mulling cutting operations,

Muhammadu Buhari

as there are mixed reaction from analysts about the outlook of the industry. As result competition especially in its Home Care Products segment and harsh operating environment, PZ Cussons UK (the parent company of PZ Cussons Nigeria) has disclosed plans to streamline the Nigerian operations over the near to medium term.

The company has released its first quarter 2020 financial statement that showed it posted a loss of N1.58b billion, and increased consumer preference for second hand electrical appliances will undermine future earnings. Dangote Sugar may be hit by slowdown in demand for sugar and increased

smuggling after the borders are re-opened, according to Chapel Hill Denham Limited. Continuous weakness in consumer spending, increased competition from other companies and continuous increase in prices of input commodities could damp Nestle Nigeria’s future earnings. Nestle Nigeria is the only consumer goods firms to maintain consistent earnings growth even amid the tempest. Management of the company has ascribed its revenue growth to be results of consistent investment in its brand, marketing and route-to-market initiatives which are delivering stable demand for the company’s products. Also, the growing sales volumes of Maggi, Milo and Nescafé are the key drivers of revenue growth with average prices largely unchanged year-to-date. The risk to valuation to Unilever Nigeria Plc includes: further weakness in consumer spending, uptrend in the input commodity prices and increased competition from smaller

HPC producers in Nigeria. For Cadbury Nigeria Plc, a company that revert to path of profitability in 2019, continued rally in cocoa input prices and stiffer competition for peer rival Nestle are downside risks. Consumer goods stocks were the worst sector on the NSE 30 indexm (the list of most capitalized and liquid firm on the bourse. Consumer goods index opened for the year at 748.83 index points but has shed 20.83 percent to close in 2019 at 592.85 points. Meanwhile the All Share index depreciated by 14.6 percent to 26,842.07pts Despite a torrid macroeconomic environment, there are untapped opportunities in the country. For instance, a fast growing young population that crave for consumption is expected to propel earnings of companies, but this can only be so if government creates an enabling environment that makes business thrives. The U.S. Census Bureau says that at that rate, there will be an estimated 402 million people in Nigeria in 2050.

COMPANY

Nike’s quarterly profit surges on strong sales in China OLUFIKAYO OWOEYE

ike reported resilient quarterly sales in 2019 on the back of strong sales in China, however, a lower than expected growth in North America, its biggest market, is a source of concern for the American footwear and sport accessories maker. In its 2020 financial results for its second quarter ended November 30, 2019, the world’s largest sneaker maker’s revenue surged 10percent to $10.3 billion in the second quarter, up 10percent on a reported basis, up 13percent on a currency-neutral basis. Revenues for Converse were $480 million, up 15percent

on a currency-neutral basis, mainly driven by doubledigit growth in Asia and Europe, as well as through digital globally. Nike’s revenue from North America rose 5.3per-

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cent to $3.98 billion in the second quarter, compared with the previous year’s 9percent rise. However, in China, the fastest-growing market for Nike, revenue rose 20per-

cent to $1.85 billion. The company recently introduced its app in the country, which outgoing Chief Executive Officer Mark Parker said on Thursday was downloaded 1 million

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times. Revenue from Europe, Middle East & Africa increased 10percent to $2.5 billion the second largest revenue after North America market. Inventory rose 15percent to $6.2bn, an all-time high. Nike said the jump was a result of strong global demand, as well as a higher rate of on-time deliveries from factories. Intense competition in the market The Oregon-based footwear has continued to face intense competition from brands such as Adidas, Skechers, and VF Corp’s Vans in North America, even as it pushes to sell exclusive merchandise through its tap-and-buy SNKRS app and retail stores. @Businessdayng

In a bid to ramp up sales, Nike collaborated with celebrities with increased marketing around major sporting events. In November, the company ended a two-year-old partnership with Amazon to sell Nike’s merchandise directly on the online retailer’s website, to focus more on sneaker launches on its own digital platforms. Industry watchers remain optimistic about Nike’s digital transformation, specifically its push to sell more products directly to consumers, without a retail middleman. In 2019, Nike Direct sales grew twice as fast as its wholesale business and now account for about 32percent of all sales. It is expected that the number would continue to grow.

Thursday 02 January 2020

BUSINESS DAY

FEATURE How 9mobile is making roaming affordable, attractive for Nigerian travellers When in 2001 the global system of mobile (gsm) telecommunications services were launched in nigeria, owning a gsm phone was tough and challenging because it was quite expensive using same, especially when it involved roaming from outside the country. But over time, the story has changed. Today, one of the frontline operators, 9mobile, has lowered the barrier to roaming service with the launch of its low-rate three roaming packages, writes CHUKA UROKO

L-R: Lekan Fatusa, head, 9mobile enterprise sales; Jerome Gasic, head of sales, BICS West & Central Africa; Stephane Beuvelet, Ag. MD, 9mobile, and David Mertens, product development expert, BICS, at the 9mobile enterprise customer forum

number, you’re deemed to be roaming and charged a higher rate when you access the internet to check your emails, or you make or receive calls. It also applies if you send or receive an SMS.” In response to these pain points, Mobile Network Operators (MNOs) in Nigeria have been innovating with solutions that lessen the burden for their customers when they roam their lines. One of the ways they respond is by introducing various roaming packages that suit the pockets. Since it commenced operations in Nigeria over 11 years ago, customer-friendly telecom company, 9mobile, has stood out by consistently offering pocket-friendly roaming rates amongst other innovative products and services. The company recently affirmed commitment to enabling its subscribers to stay in touch with their loved ones anywhere they are across the world with the launch of affordable three roaming packages that offer lowest voice calls This includes SMS and data rates for customers travelling to the United States, United Arab Emirates, and 44 other European and African countries. www.businessday.ng

n the early days of the launch of Global System of Mobile (GSM) telecommunications services in Nigeria, almost two decades ago, many customers suffered high incidences of bill shock anytime they roamed their telephone numbers while overseas due to limited knowledge of roaming service. Those travelers usually received higher bills than expected when they roamed their phones. It should be pointed out however that even with increased knowledge over the years, a significant number of subscribers are still ignorant of how roaming works, hence such subscribers still experience bill shock. Some subscribers who must be in touch with loved ones whenever they travel out of Nigeria due to some exigencies, often resort to devising creative workarounds. To avoid paying exorbitant roaming charges, some use free WiFi at the airports, lounges or business hubs. Some purchase local SIM cards and temporarily drop their local numbers. Some travellers send only text messages for urgent and important information while they avoid online activities such as browsing until they return home. An entrepreneur, Ade Otunla, while recalling how he coped in the early days of GSM in Nigeria, said he didn’t know how to reduce roaming charges. “I only sent text messages to my wife when I travelled. I didn’t make voice calls or use the internet except it was available for free. Retrospectively, I can’t believe I really did all those when I could have approached my network provider to get an affordable plan,” he said. There are many more Nigerians that share similar experiences to Otunla’s. Indeed, roaming one’s mobile telephone line while overseas can be a pain point due to the associated high costs. According to Otunla, “from experience, once you step into another country and the local network detects your phone

We know that customers can be genuinely concerned about voice and data tariffs outside the country and, as a result, many Nigerians refrain from roaming their lines while abroad. However, these packages always deliver superior roaming experience without having to worry about excessive bills or spend

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The roaming packages are US Super 50 Offer, UAE Super 50 Offer and Euro Afrique Offer. With the Super 50 Offer, customers on the network can now make or receive calls for as low as N50 per minute, send or receive SMS at N50 per page, as well as use data at N50/MB on a pay-as-you-go basis. These latest offers enable the telco’s customers travelling to any of these 46 destinations to stay connected with their loved ones back home without any inconvenience. The US Super 50 Offer is currently the lowest package offered by any Nigerian network operator to customers travelling to the USA. Calls within the US and calls to Nigeria are charged at N50 per minute; incoming calls at N50 per minute; SMS at N50 per page; while PAYG data is now N50/MB. The offer is in partnership with renowned US telecom company, AT&T, and Etisalat UAE, amongst others. On the UAE Super 50 Offer roaming package in partnership with Etisalat UAE, customers enjoy discounted rates for voice calls at N50 within UAE and calls back to Nigeria, SMS at N25 per SMS, and data at @Businessdayng

N25 per MB. Customers also benefit from free 100 minutes per month to receive calls on attaining a recharge threshold of N5000. The Euro Afrique Offer is available in 44 top European and African destinations. It offers customers the opportunity to make local calls within these destinations at N100 per minute and calls back to Nigeria at the same price. The offer is currently available in partnership with carriers like Vodafone, Orange, Vodacom, and Airtel Networks in Germany, Ireland, the United Kingdom, Spain, Portugal, Sweden and The Netherlands. Nigerians travelling to African countries including Egypt, Congo DR, Botswana, Morocco, Mozambique, Ivory Coast and South Africa, will also enjoy the offer. To enjoy 15GB of data in Nigeria or 200MB while roaming in these destinations, all a subscriber needs to do is to dial the activation code *4184*1# at the cost of N5,000 with 30 days’ validity. Commenting on the roaming offers, ‘Layi Onafowokan, the company’s acting director, marketing, said they aligned with 9mobile’s unwavering commitment to boost superior customer experience by enabling subscribers to stay connected with family, friends, and business partners while in the US, UAE, Europe, and Africa on very affordable rates. “We know that customers can be genuinely concerned about voice and data tariffs outside the country and, as a result, many Nigerians refrain from roaming their lines while abroad. However, these packages always deliver superior roaming experience without having to worry about excessive bills or spend,” He said, Indeed, 9mobile customers embarking on foreign trips to the selected 46 countries during this holiday period and beyond need not worry. Their ever-reliable and caring network has got their back. Staying in touch with folks back home in Nigeria will be a piece of cake.

Thursday 02 January 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper DAVID KEOHANE

rench unions have vowed to continue with a wave of punishing public sector strikes over Emmanuel Macron’s flagship pension reforms after the president pledged that the changes “will be carried out” but called for the government, employers and workers to find a compromise. In his traditional new year address to the nation on Tuesday night, Mr Macron urged his government to find a speedy compromise with the unions. “I am aware that changes can often be unsettling. But worries cannot lead to inaction because there is too much to do. I will not give in to pessimism or paralysis.” He added: “With the trade unions and employers’ organisations who want to find one, I expect the government of [prime minister] Edouard Philippe to find the way to a rapid compromise.” But Philippe Martinez, leader of the leftwing CGT union, dismissed the call for compromise and called for “strikes everywhere”. “I was under the impression of having heard this speech a thousand times before,” said Mr Martinez on French television channel BFMTV on Wednesday. “We have the impression of a president stuck in his bubble . . . who thinks that everything is OK in this country.” “We call on all French people to go on strike,” added Mr Martinez. “The alarm signal must be stronger.” A new round of talks between unions and the government is scheduled for January 7 ahead of a planned day of national protest

French unions vow to push on with strikes despite Macron plea President says pension reforms that sparked stoppages ‘will be carried out’

French President Emmanuel Macron delivers his new year wishes in a televised address to the nation from the Elysée Palace in Paris © AFP via Getty Images

on January 9. The strikes, which are about to enter their fifth week, are over Mr Macron’s plan to replace France’s existing 42 pension schemes — some of which bring early retirement and generous benefits — with a unified points-based system touted as fairer and more financially sustainable. In response to the speech, far-

left opposition politician Jean-Luc Mélenchon tweeted that it had not been a new year’s address but “a declaration of war to millions of French people who refuse his reform”. Mr Macron — who struck a conciliatory but firm tone and defended his reforms and his record on job creation during his address — wants to encourage

French people to keep working until 64, past the retirement age of 62, incentivised by the prospect of a full pension. Even more moderate union leaders are angered by this proposal, which they think amounts to a de facto increase in the retirement age. The government has previously suggested a delay to raising the retirement age from 62 to 64 if

another way can be found to balance the books. It has also offered concessions to certain sectors as it looks to take the sting out of the strike movement. Despite a call for a truce by the French president this month, the holidays brought little respite as the strikes continued while union leaders and the government attacked each other in the press. Mr Martinez said in French weekly newspaper Le Journal du Dimanche that Mr Macron “wants to be the man of the new world, but he is copying Margaret Thatcher”, referring to the former UK prime minister who fought Britain’s labour unions. In the same paper, the secretary of state for transport, Jean-Baptiste Djebbari, accused Mr Martinez and his union of obstructionism and intimidation. Support for the strikes, which have caused gridlock in Paris, has softened slightly but in polls taken just before Christmas a slim majority either supported or was in sympathy with the protests. While transport remains severely disrupted because of a larger number of key staff walking out, only 7.7 per cent of staff at state railway company SNCF were on strike on Tuesday, compared with more than 50 per cent when the protests began on December 5.

Warren Buffett spurned Tiffany Google to end use of ‘double Irish’ as tax loophole set to close Internet company to consolidate all of its intellectual property in the US as deal drought continued Berkshire shares underperform as investor passes on big deals, balking at prices ERIC PLATT, RICHARD HENDERSON AND JENNIFER ABLAN

hen Tiffany & Co was looking for an alternative suitor after receiving a takeover approach from LVMH, the US jeweller turned to a longtime admirer: Warren Buffett. But although Mr Buffett had bailed out Tiffany during the financial crisis, he politely rejected its advances this time, according to people briefed on the matter. Mr Buffett confirmed the conversation took place. That cleared the way for LVMH to press ahead with its acquisition of Tiffany in November, eventually agreeing to pay $16.6bn, including debt, after raising its bid to win board approval. It also left Mr Buffett’s Berkshire Hathaway in a familiar position: sitting out a blockbuster deal. The company has not made what its 89-year-old founder calls an “elephant-sized acquisition” for four years, and its cash pile has swollen to a record $128bn, earning little interest with rates near historic lows and acting as a drag on profits. The cash building on the Berk-

shire balance sheet now represents nearly a quarter of its market capitalisation and provides enough firepower to buy all but a few dozen of the companies on the S&P 500. Class-A shares of Berkshire have gained 11 per cent this year, trailing the 31.5 per cent rise of US stocks with dividends invested, making 2019 the company’s worst year in a decade in comparison with the broader market. “There are investors that are frustrated,” said Jim Shanahan, an analyst with investment company Edward Jones. “He’s flush with liquidity and will be ready when opportunities emerge, but we need a pullback here for those opportunities to emerge.” Column chart of Berkshire Hathaway share price relative to S&P 500 (percentage point difference) showing Buffett’s worst year in a decade Since agreeing to pay $32bn for Precision Castparts in 2015, the doyen of the investing world has warned his shareholders repeatedly that he may struggle to clinch another big acquisition, saying in his annual letter in February that “prices are sky-high for businesses possessing decent longterm prospects”. www.businessday.ng

RICHARD WATERS

oogle has overhauled its global tax structure and consolidated all of its intellectual property holdings back to the US, signalling the winding down of a tax loophole estimated to have saved American companies hundreds of billions of dollars. The internet search company said on Tuesday the move was designed to simplify its corporate tax arrangements and was in line with OECD efforts to limit international tax avoidance, as well as recent changes to US and Irish laws. Google’s actions came ahead of the close of the so-called “double Irish” tax loophole, which has been used by US companies to channel international profits through Ireland and on to tax havens like Bermuda — putting them outside the US tax net. That led American companies to amass more than $1tn offshore as of the end of 2017, when President Donald Trump’s tax reform changed the treatment of overseas profits. Ireland bowed to international pressure five years ago and agreed to close the scheme, which was popular with technology and pharmaceutical businesses, but com-

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panies that already used it were given until the end of 2020 to end the practise. Most companies acted well ahead of that deadline, replacing their double Irish arrangements with new structures that have the same benefits, said Ed Kleinbard, a tax law professor at the University of Southern California, Los Angeles. Google’s move was unusual in that it suggested the company had acted later than others, he added. A lack of disclosure requirements mean that little is known about how specific companies have adjusted their tax arrangements, said Chris Sanchirico, a law professor at the University of Pennsylvania. “Based on what we have been able to see in the past, there is no reason to think that planning [by multinationals] hasn’t already evolved several generations beyond the kind of classic double Irish that is now officially coming to an end.” According to a report from the IMF last year, one popular new avoidance arrangement involved companies injecting intellectual property into new subsidiaries in Ireland, known as IP onshoring. Under double Irish arrangements, companies could place IP like patents and trademarks in separate subsidiaries that were legally based in Ireland, but not @Businessdayng

treated as domiciled there for tax purposes, as long as they were managed and controlled from abroad. That IP could then eventually be channelled through to tax havens like Bermuda. Google said by moving its IP from Bermuda to the US it was reacting to changes in US tax law designed to limit the ability of companies to cut their US tax bills by holding intangible assets offshore. The Trump administration’s tax reform, passed two years ago, imposed new taxes on companies’ excess profits from IP held overseas, partly to encourage American businesses to bring IP back to the US. American companies have in the past taken advantage of favourable Irish tax arrangements to shift profits out of the US tax net, even when their IP is held in the US. Apple, for instance, keeps its IP in the US, but has used a research and development cost-sharing arrangement with a subsidiary in Ireland that allowed it to ascribe a large part of its international profits to the unit. Because the subsidiary was managed from Apple’s headquarters in Cupertino it did not fall into either the Irish or US tax net. The Apple structure had most of the same benefits of the double Irish, which came later, said Mr Kleinbard.

Thursday 02 January 2020

BUSINESS DAY

NATIONAL NEWS

FT Carlos Ghosn’s escape from Japan: the big questions

A French passport and wild theories: Former Nissan chairman’s vanishing act leaves many stunned LEO LEWIS, KANA INAGAKI AND CHLOE CORNISH

arlos Ghosn said he arrived in his home country Lebanon, fleeing what he called “injustice and political persecution” in Japan. The stunning escape was achieved while the former Nissan chairman was under strict bail conditions and daily surveillance by police and prosecutors as he awaited trial to defend himself against charges of financial misconduct. Here are the key questions: 1) How did he escape? When the full details finally emerge, Mr Ghosn’s escape may rank as one of the great vanishing acts of all time. How, exactly, could one of the most recognised faces in Japan, whose every move outside his apartment was watched by the authorities, and whose three passports are still in his lawyers’ possession, slip through all of these and make it from central Tokyo to Beirut? Speculation in diplomatic and legal circles has produced theories over how the escape was engineered. One theory involving Mr Ghosn exiting his Tokyo house in a box used for musical instruments was denied by people close to him. He may have hired a private security firm to help him evade his police

on Wednesday. 2) What is the reaction in Japan? Official Japanese reaction has been muted to Mr Ghosn’s flight, which came a week after a visit to Beirut by Keisuke Suzuki, minister of state for foreign affairs who spent time with the Lebanese president and other officials. Japanese foreign ministry officials say that the possibility of Mr Ghosn travelling to Lebanon was not discussed during the meeting. Some in Japan, meanwhile, have questioned just how enraged the Japanese prosecutors will be that their highest profile suspect for many years is now very unlikely to stand trial. In theory they will be furious that Mr Ghosn humiliated them, say legal experts. But privately they may feel they have dodged a potentially greater blow to their pride from a trial that would have also put their conduct under intense and protracted global scrutiny. Japanese prosecutors, under immense pressure to maintain their 99 per cent conviction record, tend to take on the cases they know they can win: in many instances, they are only comfortable heading into court when they already have a confession. They did not have one from Mr Ghosn and, according to some legal experts, were anticipating a

tail — he was not required to wear an electronic bracelet — and make it to the international airport in Osaka where he boarded a private jet. Security experts say it is unlikely Mr Ghosn could have engineered such a daring exit without a false passport and a significant level of organisational assistance and planning at all stages. In the aftermath of his escape, a growing chorus of government officials and diplomats in Japan, Lebanon and France professed dumbfounded amazement. However it seems unlikely, as one diplomat who has dealt with a similar issue in Japan suggested, that the 65-year-old could have done this alone — raising the question of whether he benefited from direct or indirect help from any governments. Junichiro Hironaka, who heads Mr Ghosn’s legal team in Japan, said his flight to Lebanon “came out of the blue.” “A very large organisation must have acted to pull this off,” he said. A Lebanese official confirmed a local media report that Mr Ghosn entered the country with a French passport. Lebanon’s General Security Directorate said there was no reason to take legal proceedings against him, according to state news agency NNA. French authorities were not available for comments

knife-edge trial at which Mr Ghosn’s lawyers were explicitly planning to attack the way that the prosecutors built their case and the alleged political motivations behind it. The Tokyo District Public Prosecutors Office and the Immigration Services Agency of Japan, which are closed ahead of the new year holiday, could not be reached for comment. 3) Can Mr Ghosn travel and work? In a brief statement on Tuesday, Mr Ghosn appeared to make an immediate start on shaping his image beyond Japan, the indignity of his arrest and the trial he will now likely avoid. He is not, according to this narrative, a fugitive from justice, but from an unjust system — language that seems calculated to secure him a quick rehabilitation in some circles. Could the once famous embodiment of “Davos Man” make a surprise return to the World Economic Forum in (neutral) Switzerland next month? Probably not. Friends of Mr Ghosn say it is likely that he will base himself exclusively in Lebanon in coming months. But the travel restrictions he faces may not hold him there indefinitely since Japan only has an extradition treaty with South Korea and the US.

French President Emmanuel Macron and his Ivorian counterpart Alassane Ouattara, a leading supporter of the outgoing CFA franc © AFP via Getty Images

A revolution in Africa’s relations with France is afoot The abandonment of the CFA franc is a potent symbol of change DAVID PILLING

ou could call it west Africa’s Brexit. In what amounts to be the biggest shift in the region’s relations with France since independence, eight west African countries will in 2020 ditch the CFA franc in favour of a new currency to be called the eco. It cannot be long before the six central African states, members of a separate CFA franc union, follow suit. The symbolism is important, though the changes go beyond that. It is no small matter for eight nations, seven of them former French colonies, to rid themselves of a currency whose acronym originally stood for Colonies françaises d’Afrique, or “French colonies in Africa”. Nor is it a trifle that the countries concerned — Ivory Coast, Senegal, Mali, Burkina Faso, Benin, Niger, Togo and Guinea-Bissau — no longer have to keep half their reserves in France or have a French emissary occupying a seat on their central bank. As if to underline the message, Emmanuel Macron, president of France, chose the day he announced the end of the currency to declare French colonialism in Africa a “profound mistake”. The first French leader born after African independence, Mr Macron had already, during the 2017 election campaign, deemed France’s activities in Algeria a “crime against humanity”. If there is symbolism in the dismantling of the CFA franc, there is also risk. Although the eco will remain pegged to the euro and guaranteed by France — prompting some to complain that the changes are little more than cosmetic — that peg will only be

tested in a time of crisis. The new arrangement has been presented as a smooth transition. France will nominate an “independent” representative to the regional central bank and will monitor reserves daily. Yet if there is a commodity shock or a political crisis, the eco could come under sustained pressure. Only then will France’s resolve to protect a currency that no longer bears its imprimatur be truly tested. In the absence of French resolve, fiscal and monetary discipline by African states alone will preserve the peg. Not a few francophone commentators have looked warily at neighbouring countries, where high inflation, devaluation and depreciation have been the norm. When Nigeria’s currency replaced sterling in 1973 it was valued at two naira to the pound. Today you need roughly 470 naira to make the same transaction. Alassane Ouattara, president of Ivory Coast and a former central banker himself, was a strong supporter of the CFA franc, ritually praising its stability and solidity. For a certain class of entrepreneur, the currency has indeed been excellent news. Large French companies — such as Bolloré, EDF, Orange, Total and Veolia — could invest knowing that they were protected against devaluation by the French state. For the African elites that did business with them, the overvalued CFA franc in their pocket could easily pay for imported luxuries. The arrangement has arguably been less beneficial for those with ambitions to make things in Africa, particularly if they wanted to export them. The price for CFA stability may have been to smother industry in

its crib. The shift to the eco is more political than economic. African elites hope they can head off popular resentment, which focused on the currency as a talisman of French hegemony. Paris hopes that it can now be rid of the colonial taint that makes its omnipresence in west Africa the object of deep anger among many. The end of the CFA franc is the most concrete sign yet that Mr Macron is serious about abandoning the vestiges of Françafrique, a murky arrangement that bound France’s business and political interests with those of the people who ran its former colonies. Mr Macron has recognised that this system, already crumbling, needs jettisoning — paradoxically if only for the benefit of French business. Besides, the main commercial prizes in Africa are to be found outside the relatively unpopulated francophone zones. In 2019, Mr Macron visited Nigeria and Ethiopia, whose combined population of roughly 300m people is more than double that of all francophone west Africa. France’s special relationship is far from over. As recently as 2013, France sent troops to northern Mali to dispatch jihadist militants who were occupying vast swaths of the country. Those troops are still there, fighting an Islamist threat that, if anything, has intensified right across the Sahel. Like the CFA franc, French soldiers breed resentment. Some argue they help bring stability, others that they foster the very resentment they have been sent to quell. If the special relationship is over, more people could start asking what they are doing there.

Kim Jong Un vows to unveil ‘new strategic weapon’ North Korean leader says US provocation means weapons moratorium deal no longer applies SONG JUNG-A

im Jong Un has vowed to continue North Korea’s nuclear programme and to introduce a “new strategic weapon”, after his year-end deadline for the US to make some concessions passed without any sign of progress. The North Korean leader, who had been widely expected to make a New Year’s Day national address referring to Pyongyang’s threat to deliver an unwelcome “Christmas gift” to the US, instead blasted Washington for making “gangster-like demands” at a meeting of the ruling Workers party, according to state media. While making these demands, the US was continuing its joint military

drills with South Korea, deploying new weapons in its next door neighbour and maintaining economic sanctions against his impoverished country, Mr Kim said “Under such conditions, there are no grounds for us to be unilaterally bound to the commitment any longer,” North Korea’s official KCNA quoted Mr Kim on Wednesday as saying at the party meeting, referring to the regime’s self-imposed moratorium on tests of nuclear weapons and intercontinental ballistic missiles. “The world will witness a new strategic weapon to be possessed by the DPRK [Democratic People’s Republic of Korea] in the near future.” Mr Kim did not clarify what the new strategic weapon was, or when it would be deployed.

Earlier in the four-day meeting, Mr Kim had said he might have to seek a “new path” if Washington failed to show flexibility in denuclearisation talks by the year-end deadline. Tension has been rising in recent weeks after North Korea fired a series of short-range missiles and ratcheted up its bellicose rhetoric. The negotiations over denuclearisation have made little progress despite three face-to-face meetings between Mr Kim and Donald Trump — the first in Singapore in June 2018. Pyongyang is seeking phased sanctions relief in return for a managed reduction in its weapons programmes. But Washington wants a total dismantling of North Korea’s weapons programme before any reduction of sanctions can begin.

Thursday 02 January 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Lloyds Banking Group customers hit by system outage Thousands of people unable to access online services at Halifax, Bank of Scotland and Lloyds CAROLINE BINHAM

he new year got off to a disappointing start for thousands of customers of Lloyds Banking Group when a system outage prevented them from accessing internet and mobile banking services on New Year’s Day. Thousands of customers across all three retail banks under the group’s banner — Halifax, Bank of Scotland and Lloyds — were affected for nearly eight hours from about 4am on Wednesday, the bank said. The failure — not thought to be caused by a cyber attack but rather down to an internal issue — was rectified by midday, a spokeswoman said. “Internet and mobile banking is now back to normal,” the bank said in a statement on January 1. “We’re sorry that some of our customers had issues with it this morning.” Customers took to social media to rail against the outage, particularly because many direct debits are due on Thursday. One customer complained that Lloyds was “taking the ‘bank holiday’ a little too literally”. Lloyds reported the incident to financial regulators and is in dialogue with them. “We are aware of the issue and are in contact with Lloyds to ensure its customers are treated fairly,” said a Financial Conduct Authority spokesman. The outage means that despite

big banks’ best resolutions — and the ire of politicians and regulators — the trend for IT failures looks set to continue in 2020. Scrutiny of IT issues at financial firms has increased since a series of high-profile problems at companies including TSB and Visa in 2018. The Treasury select committee said in October that there was an “unacceptable” level of IT failures among banks. The financial sector has been put on notice by the FCA and the Bank of England to test scenarios for dealing with system outages and cyber attacks, with senior executives placed in the line of fire and the threat of higher capital charges for lenders taking insufficient steps. TSB is still being investigated by the FCA and the BoE for its 2018 outage, one of the worst in UK banking history, which led to 2m people being locked out of their accounts. The FCA reported a 138 per cent increase in technology outages in 2018. The impact of such problems has grown as customers have moved to online and phone banking. Problems are often blamed on the complex IT systems of highstreet banks, which have been built up piecemeal through decades of incremental upgrades and acquisitions. However, several new lenders have also run into difficulties because of third-party suppliers.

Saudi Aramco/global warming: carbon bargain Innovation: oil group with world’s largest carbon footprint will not cut output as much as its peers

he world’s largest listed oil producer has the world’s largest carbon footprint. Yet it is set to do less than smaller peers to contain global warming. Saudi Aramco has not set any obvious reduction targets. Its leadership in the Opec cartel hands it an inherent limit on production plus it has very low costs. This all gives it a big advantage over peers pursuing the seemingly mutually exclusive goals of increasing oil production while reducing CO2 emissions. Consider seven of the largest oil companies — ExxonMobil, Shell, Chevron, BP, Total, Eni and ConocoPhillips. All have dutifully trotted out plans to limit their carbon output by 2040 in order to keep the global temperature increase well below 2C. But those imply some chunky cuts. Exxon would need to more than halve its annual CO2 emissions of 600m tonnes. On average the big seven need to cut emissions by 40 per cent, implying slashing oil production by a third, according to researchers at Carbon Tracker and Rystad Energy. That suggests steep cost

cuts will be necessary just to keep profits flatlining, regardless of how oil prices move in 2040. Slope chart showing production and emission reduction targets for Aramco and oil majors By contrast, Saudi Aramco and its fellow Middle Eastern producers can produce much of their crude below $35 a barrel. That beats most international oil companies and explains why Saudi Aramco’s return on capital employed, a measure of efficiency and profitability, is so high. At 36 per cent this year, it dwarfs the 10 per cent RoCE that Shell hopes to achieve in the medium term. As a result, Saudi Aramco may be one of the last producers of oil in a worst-case global warming scenario for the industry. Saudi production grows very slowly, at less than 1 per cent annually since 2000. Expect a less than 5 per cent cut to its production over the medium term. Saudi Aramco will no doubt be responsible for a lot of carbon emissions, but as a low-cost producer it is unlikely to cut its output as much as its international peers. www.businessday.ng

How investors see 2020 shaping up in US financial markets Modest equity gains, nerves over inflation and politics dominate the outlook JENNIFER ABLAN, COLBY SMITH, RICHARD HENDERSON AND JOE RENNISON

he US equity and bond rally that everyone hates will continue in 2020. That is the verdict from some of the biggest strategists and investors on Wall Street. These market-watchers also forecast modest profits in US investment-grade corporate debt and high-yield junk bonds. Aside from the 2020 presidential election, they are bracing for slowing economic growth coupled with inflationary pressures, which could mean rising volatility in financial markets. Here are edited excerpts from our interviews and questionnaires. Greg Peters, head of multi-sector and strategy at PGIM Fixed Income in New York “I see the 10-year Treasury yield [currently 1.9 per cent] at 1.60 per cent . . . I am buying triple-C credit in the high-yield junk bond market, triple-A CLOs (collateralised loan obligations) and triple-B corporate bonds. “An inflation breakout would worry me. But ultimately, any move higher in real rates is negative for risk assets. So a rise in real rates is my focus point. I think political risk is somewhat overblown. “A [Democratic] candidate with a more leftist lean would be taken negatively by the markets — less business-favourable backdrop, higher taxes, etc. However, unless you believe the Senate flips, I don’t see the markets completely freaking out.” Rebecca Patterson, former New York-based chief investment officer of Bessemer Trust (Since this interview, Ms Patterson has announced a move to Bridgewater Associates, the world’s biggest hedge fund, as senior investor) “For the S&P 500, we think a target for 2020 of 3,300 is reasonable [currently 3,221]. This assumes steady multiples and decent, albeit not very exciting, earnings growth. “We are entering 2020 holding the same portfolio tilts we have had throughout 2019. Within equities, we have a bias towards the US, and from a style perspective, towards growth and quality, though we marginally added more cyclical

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exposure this fall to hedge ourselves should a global recovery prove more meaningful than we expect. With volatility so low, we are also seeing compelling opportunities in equity derivatives, rather than holding all our equity exposure outright. “We are positioned well for a ‘muddle through’ 2020 or even a slower global growth backdrop. What worries me the most is the scenario in which we have a slowdown that evolves into a modest recession at a time in which central banks have very little room to provide offsetting support and governments are not in agreement over how much or what kind of fiscal stimulus to provide.” What might you do differently when the Democratic nominee is known? “One thing we will not do is overreact. History and common sense tell us that what is said during campaigns is not necessarily what will happen after an election.” Richard Bernstein, chief executive officer and chief investment officer at Richard Bernstein Advisors in New York “Our portfolios are positioned for a continued slowdown in US corporate profits as we are overweight consumer staples, healthcare, utilities, large-cap, and high quality and acceleration in China, primarily consumer cyclicals. We have sizeable positions in TIPS (Treasury inflation-protected securities) as well. “Our biggest fear is that the US economy demonstrably improves with no inflation and US markets outperform non-US. In other words, a complete repeat of 2019 would hurt our performance.” What will you do differently once we know who the Democratic nominee is? “I think investors need to calm down. First, if one is concerned about a leftwing presidential candidate, then one should consider whether the Senate will flip from Republican to Democratic control. That seems unlikely. Second, it’s still very early.” Scott Minerd, global chief investment officer of Guggenheim Partners in Santa Monica, California “I see 3,500 on the S&P 500, at a minimum. More interesting is the Nasdaq, which I see at 10,000, at a minimum. The yield on the 10-year Treasury can hit 2.40 per cent . . . I’m buying high-quality corporates and @Businessdayng

credit.” What worries you the most? “No doubt, the highly leveraged corporate credit market. There is more corporate debt than ever on the books. A fallen angel scenario is concerning.” Mark Grant, chief global strategist at B Riley FBR Inc in Fort Lauderdale, Florida “My target for the S&P 500 by year end is 3,382 and the 10-year yield at 1.70 per cent . . . The best sector for yield is closed-end funds with monthly dividends. Double-digit yields can still be found here. I think that double-digit yields will outperform the equity markets next year.” “I am quite concerned about the impeachment process and also negatively yielding debt . . . I think that any of the Democratic candidates for president, if elected, will have a negative impact upon the equity markets.” Ashish Shah, co-chief investment officer of fixed income at Goldman Sachs Asset Management in New York “We see global growth stabilising and an accommodative Fed. Markets are pricing some of that already, so returns on stocks and bonds should be positive but muted. I’m an investor, not someone who can predict the future, so I will try to own some of the best of both.” “We think investors have been too pessimistic on global growth, so we are buying high-yield and EM (emerging markets) that will benefit. Investors have had a good year and are playing defence into year end. That will change as we hit January 1.” What worries you the most? “Investors are desperate for returns and that can create ‘misvaluations’ in different markets. I worry about imbalances developing. If you look at the past two years, people have continued to chase whatever has worked over the prior 12 to 36 months, leading to crowded trades and vicious reversals. “We think many individual investors have been shortening the true duration of their portfolios as they seek more returns. That will be a mistake when there is actually a recession. Bonds protect your portfolio in downturns. They are your friend. We all need more friends.”

Thursday 02 January 2020

BUSINESS DAY

news

Fault in Kakuri transmission substation in Kaduna disconnects supply in 3 feeders - TCN HARRISON EDEH, Abuja

ransmission Company of Nigeria (TCN) on Wednesday informed that a transformer fault in Kakuri Substation in Kaduna had disconnected supply in three feeders comprising: Arewa, UNTL and Ungwan. In a statement, TCN noted that a fault involving an underground cable connecting 60MVA 132/33kV T3 and its grounding transformer in Kakuri transmission substation, caused slight fire incident that affected the grounding transformer, resulting in the temporal disconnection of power supply to three feeders; namely Arewa, UNTL and Ungwan Boro feeders. TCN in the statement issued by Ndidi Mbah, general manager, public affairs, noted that efforts were currently

underway by its engineers to quickly restore supply to the affected feeders in the evening of Wednesday, by reconnecting supply through another 60MVA, 132/33kV transformer T1A in the same substation. The statement informed further that there was enough redundancy at Kakuri Substation to ensure that all affected customers of Kaduna Electricity Distribution Company were reconnected to normal supply. The said customers would therefore experience only a few hours of power outage for Wednesday, while TCN diverted the load to another transformer. Meanwhile, the TCN is equally mobilising to replace the affected grounding transformer to maintain N-1 redundancy at the substation, even as it arranges to repair the faulty grounding transformer.

2020: Improve on economy to facilitate job creation, Oba of Benin urges government IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

ba of Benin, Ewuare ll, has called on government at all levels to do everything possible to improve on the economy, electricity, roads and basic social infrastructure that will facilitate job creation for the millions of unemployed youths in Nigeria. The Benin Monarch made the call in his 2020 New Year message made available to newsmen in Benin City by his acting chief press secretary, Ogiemwanre Victor. The Oba also appealed to government at all levels to be honest, transparent and accountable in order to ensure a good service delivery to the

society, and tasked the nation’s leaders to do everything possible to ameliorate the current hardship faced by the people. The Oba of Benin, who expressed confidence that in the years ahead, Nigeria political economy would improve for the better, however, enjoined Nigerians to eschew corruption, be nationalistic, patriotic in attitude and orientation in order to build a virile nation. He, however, encouraged the people to begin the New Year with fasting, prayers and sacrifices for peace to be restored among politicians in Edo State in particular and Nigeria in general, believing that the year 2020 would be better than previous years.

FCT minister of state donates items, cash to 120 babies on New Year James Kwen, Abuja

he Federal Capital Territory (FCT) minister of state, Ramatu TijjaniAliyu, donated baby items and cash to 120 babies delivered in selected Primary Health Care Centres across the six Area Councils of the territory as part of activities to celebrate the New Year. Making the donation at Chikuku Primary Health Care Centre in Kuje Area Council, the minister described the successful delivery as a bundle of joy and prayed that the joy will continue to radiate in the FCT in 2020 and beyond. Aliyu, who was represented by the acting executive secretary of Primary Health Care Centre, Iwot Ndaeyo, also tasked mothers on early training of their children, just as she emphasised that children were gift from God. She reminded mothers of the need to ensure that their babies complete the routine immunisation before the age of two years and called on them to keep the immunisation card safe and accept all vaccines given during government approved immunisation campaigns. “Note that vaccines are free in all Government Health facilities and you do not pay for cards, syringes or cotton wool.

Report to the Primary Health Care Department in the Area Council should you be charged a fee for Immunization services. “Remember to take care of yourselves and be well and fit always so that your babies grow well and be useful to you and the society. Attend Post Natal clinics and continue to take your routine medicines,” Aliyu charged mothers. The minister used the occasion to reiterate the FCT Administration’s determination to support those in genuine needs and emphasized the Administration’s desire to promote the culture of being our brother’s keepers at all times. Speaking on behalf of other beneficiaries, mother of the Star baby at Chikuku Primary Health Care Centre, Rachael Senth who delivered at 3.05am thanked the Minister for the kind gesture, adding that the items and cash donation will assist mothers at this early stage of delivery. The Ministerial team also visited Old Kutunku Primary Health Care Centre in Gwagwalada Area Council, Kunchigoro Primary Health Care Centre in Abuja Abuja Municipal Area Council (AMAC), Ushafa Primary Health Care in Bwari Area Council, Dabi Bako Primary Health Care in Kwali Area Council and New Township Clinic in Abaji Area Council. www.businessday.ng

L-R: Odunayo Sanya, acting executive secretary, MTN Foundation; Jumoke Oduwole, special adviser to the president on ease of doing business; Adekemi Adisa, general manager, organisation effectiveness and change, MTN Nigeria, and Ayodeji Ajayi, executive director, Declassical Arts and Entertainment Company, at the command performance of OMG; The Musical sponsored by MTN Foundation in Lagos.

2020: Health insurance, contributory pension, new minimum wage begin for Edo workers

t is a new dawn for workers in Edo State as Governor Godwin Obaseki has announced the immediate commencement of the state’s health insurance scheme, Contributory Pension Scheme (CPS) for local council workers and payment of the new minimum wage from the first day of the New Year. In his New Year message, Governor Obaseki reaffirmed his administration’s commitment to the welfare of workers, assuring that the state government will not relent on its efforts at infrastructural renewal, industrialisation, and social development programmes, which we are being undertaken across the state. According to Obaseki, “As a government, our workers welfare is priority. That is why payment of salaries and pensions is nonnegotiable. Our goal is to have the best motivated and trained public servants in Nigeria. Consequently, as I promised last year,

Edo State will implement the new minimum wage with effect from January 1, 2020. “Workers in the state public service will attest to the benefits and promise of the Contributory Pension Scheme, which we implemented from January 1st, 2017. In order to place the local government workers at par with workers in the state service, with effect from today, all local government workers will be enrolled under the Contributory Pension Scheme.” He added, “I am pleased to announce that beginning from today, January 1, 2020, all civil servants in the state would be enrolled in the social health insurance scheme, which guarantees efficient and affordable healthcare. The scheme, which is also open to everyone else, has already begun capturing people in other sectors, from artisans and market women to other operators of

Small and Medium Enterprises (SMEs)inthestate. Acommission has been established and funding has been provided through the Basic Health Care Provision Fund from the Federal Government, which we have complemented at the state level.” The governor maintained that his administration in the New Year would consolidate on its reforms and policies aimed at improving access to quality healthcare, creating opportunities for businesses to thrive, providing more jobs and investing in infrastructure. “Even though we have achieved successes in many of our policy areas, we still have a long way to go. From our experience so far, we are convinced that although the challenges are daunting, as a people and government, we can significantly change our circumstances and place Edo State and indeed our country where they should be in Africa.

“My dear citizens and residents of Edo State, as you are aware, our focus and emphasis in the last three years have been to improve your living conditions and make you more productive. We are improving the educational system and emphasising technical education, improving access to quality healthcare, creating opportunities for businesses to thrive, providing more jobs and investing in infrastructure,” he noted. He continued, “I want to assure you, fellow citizens, that we will not relent on our efforts at infrastructural renewal, industrialisation, and social development programmes, which we are currently undertaking across the entire state. We are committed to fixing our roads, rebuilding schools, facilitating expansion of existing businesses and ensuring a vibrant, boisterous state that we will all be proud to be associated with.

Katsina, labour agree to commence minimum wage implementation January

We will continue work with President Buhari for development of North, Nigeria – Northern governors

orthern Governors’ Forum said it would continue to work closely with President Muhammadu Buhari to create synergy critical to achieving meaningful development of the Northern region and the nation. Chairman of the forum and Governor of Plateau, Simon Lalong, stated this in the group’s New Year message issued to News Agency of Nigeria on Wednesday in Jos. Lalong called for a collective resolution to build a more united, prosperous and equitable country. “The year 2020 is full of prospects and opportunities for Nigerians to again work for the upliftment of the country by supporting government at all levels to carry out development initiatives that will strengthen the economy and its people. “All that is required is for all to demonstrate patriotism and genuine commitment to make

atsina State government and the Nigeria Labour Congress (NLC) have reached agreement on the payment of the new national minimum wage with its salary consequential adjustments to public workers in the state. Mustapha Inuwa, secretary to the state government and state NLC chairman, Hussaini Hamisu, reached the agreement according to the statement the two of them signed in Katsina. Both officials said the implementation of the new minimum wage and consequential adjustments of salaries would commence January 2020. According to them, the increase represents the following percentages for Harmonised Public Service Salary (HAPSS) structure: GL 01: 60 percent, GL 02: 60.98

percent, GL 03: 62 percent and GL 04: 60.59 percent. Others are: GL 05: 60.61 percent, GL 06: 32.63 percent, GL 07: 13.2 percent GL 08-9: 10 percent, GL 10-14: 8 percent and GL 15-17: 4 percent. They also agreed to form a committee involving labour to assist the state government in rejuvenating revenue drive to boost Internally Generated Revenue (IGR). According to them, NLC will partner with the state government to improve efficiency and productivity in the local government general administration. The labour pledged to inculcate the culture of hard work, honesty and productivity in the state, local governments and the local education authority workers. NAN

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the desired sacrifices that are needed to build a nation that is self-sufficient and strong enough to provide opportunities for its people to flourish,” he said. He said insecurity had created many setbacks in the region, saying collaborations with citizens would assure holistic measures to end the menace of criminal activities bent on unleashing terror and sorrow on Nigerians. “The Northern Governors Forum remains committed to carrying out robust initiatives toward targeting poverty, illiteracy, diseases and insecurity that are plaguing many parts of the region and the nation. “The Governors of the Northern Region will continue to peer review one another and also benchmark targets for regional development plans that will engender peaceful coexistence and people oriented programmes,” the chairman said. NAN

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BUSINESS DAY Thursday 02 January 2020 www.businessday.ng

The case for open borders in Africa Odinaka Anudu

ifty-four African countries came together in 2019 to ratify a continental trade treaty that will create an estimated $3.4 trillion market opportunity. Generally known as the African Continental Free Trade Area(AfCFTA), the trade treaty promises to liberalise trade among African countries and create a single market for goods and services on the continent. It is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda 2063. The treaty is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 and liberalise 90 percent of products manufactured in Africa. The AfCFTA is expected to start in July this year, with companies readying for competition and opportunities that come with it. Trade liberalists argue that it will favour small and mediumsized enterprises in Africa by enabling them to supply inputs to larger regional companies. They cite the South African example. Due to free trade, large car makers in South Africa source leather for seats from Botswana and fabrics from Lesotho, under the preferential Southern African Customs Union trading regime. The AfCFTA officially came into force on 30th May 2019 when the required number of ratifications—22— were obtained, making the agreement a binding international legal instrument. Negotiations are, however, ongoing. After months of consultation, Nigeria’s President Muhammadu Buhari signed the AfCFTA in July 2019, seeking fair trade for Nigeria. Speaking at an event in Niamey, Buhari noted that “Nigeria wishes to emphasise that free trade must also be fair trade.” “As African leaders, our attention should now focus on implementing the AfCFTA in a way that develops our economies and creates jobs for our young, dynamic and hard-working population,” he added. This made front pages of newspapers, but concealed a critical issue of trade readiness by Nigeria and the rest of Africa. Today, many African countries, including Nigeria, are going against the spirit and letters of the AfCFTA. In the first place, AfCFTA is targeted at open and free trade,

but Nigeria has been the biggest violator. The Central Bank of Nigeria is still increasing the list of items that are ineligible for foreign exchange access and is vehemently supporting closure of Benin borders. These two actions are antitrade, according to experts, and they fail to factor in issues like the supply-side constraints in the agriculture sector, inflation, pressure on manufacturers and exporters as well as possible impact on trade, analysts say. Olu Fasan, member of the International Trade Policy Unit (ITPU) of the London School of Economics and Political Science, said the border closure would enrich local producers, without increasing their productivity and competitiveness. It is already hurting Nigerian exporters and consumers. “Truth is, Nigeria’s deep-seated protectionism is not compatible with its international legal commitments. It would have to decide whether to comply with its international obligations, legally invoke the escape provisions in international trade agreements or withdraw from them altogether,” he said in a recent column in BusinessDay. In his article entitled, ‘Border closure: Nigeria is trampling upon the world legal order’, Fasan said the border closure is a blatant violation of Nigeria’s commitments under the World Trade Organisation (WTO) and Economic Community of West African States (ECOWAS) treaties. “Surely, by closing its land borders to stop cross-border movement of goods, Nigeria is, firstly, prohibiting or restricting

imports other than through duties, taxes or other charges, and, secondly, nullifying and impairing the benefits accruing to other WTO members, especially those in West Africa, whose legitimate exports to Nigeria are being restricted, in violation of WTO law,” he said. “What’s more, Nigeria could justify the closure of its borders on the ground of curbing smuggling or customs enforcement under Article XX or on the ground of national security under Article XXI, provided the border closure does not constitute ‘a disguised restriction on international trade’. But everyone knows that the underlying reason for the border closure was not smuggling or national security concerns, but the protection of local industries, and, thus, it’s a disguised restriction on international trade,” he further said. Bismark Rewane, CEO of Financial Derivatives Company, said on Channels TV on January 1, 2020, that Nigeria should give attention to competitiveness rather than border closures. He explained that the phenomenon would only help smugglers by opening more routes for them, making the country the smugglers’ hub. But Nigeria is not the only country in this party. Perhaps, much noise is made about Nigeria because of its strategic position as Africa’s most populous and biggest economy. Sudan, in September 2019, ordered closure of its borders with Libya and Central African Republic, citing security and economic dangers. In June 2019, Kenya shut its

borders with Somalia for security reasons one week after outlawing along the coast near the Somalia border. Kenya authorities cited increased illegal trade, as well as human and drug trafficking in the area as major reasons for the latter action. In April last year, Eritrea unilaterally closed all border crossings with neighbouring Ethiopia less than a year after the two countries made peace. Before the outright closure in April this year, Ethiopia-licensed vehicles traveling to Eritrea from the Ethiopian town of Rama had been asked for permits in December 2018, according to a Reuters report. “We did not receive any prior notice,” Reuters quoted Liya Kassa, spokeswoman for the regional administration in the Tigray region which borders Eritrea, as saying in December 2018. Earlier in March 2019, Rwanda had shut down borders against Uganda over diplomatic row that has seen the two countries antagonise each other. In June 2019, three civil society organisations sued Rwandan and Ugandan governments on behalf of women traders suffering financial losses owing to the border closure. The civil society groups said it contravened the 1999 Treaty for the Establishment of the East African Community and violated the economic rights of women to engage in trade. Deaths were reported along the border, with security forces accused of perpetrating the acts. In August 2019, Equatorial Guinea said it was building a Trump-like border wall to stop

Cameroonians and West Africans from illegally entering its territory. Kenya, Rwanda, Equatorial Guinea, and Uganda, among others, are among countries that have signed onto the AfCFTA. Eritrea is not part of the AfCFTA. Analysts believe the AfCFTA may fail unless African countries understand the impact of unilateral trade policies. Analysts say border closures are against the spirit and letters of the AfCFTA and will jeopardise its implementation. “Countries may decide to do whatever they like even with the AfCFTA. That is what these unilateral border closures imply,” he said. Though few of the reasons are understandable, given their connections with health, security and politics, decisions of border closure should not be taken without due consultations, say trade analysts. This leads to the question: Is Africa really ready for the AfCFTA? Helen Suzman Foundation, which promotes liberal constitutional democracy through broadening public debate and research, said in a publication that South Africa’s past experience of free trade paints a bleak picture. The Southern African Development Community (SADC) was founded in 1992. Despite agreement to reduce tariff, Malawi, Mozambique and Zimbabwe failed to cut tariffs on South African goods, arguing that the loss of potential tariff revenue was too great. This is despite that the SADC, unlike AfCFTA, excluded a number of important products such as vehicles, base metals, minerals and textiles. “Trade in sugar – viewed as a ‘political good’ – was a source of major dispute and eventual impasse,” the report said. Many experts are keeping mute over possible issues that could arise when the AfCFTA starts, but they are aware that it will test Africa’s readiness to trade. The continent’s intra-trade is estimated at 16 percent, which is relatively low when compared to Europe’s 59 percent, Asia’s 51 percent and North America’s 37 percent, Latin America’s 20 percent, data show. There is a potential danger, but Africa is yet to vigorously discuss it. In the face of AfCFTA, countries may be compelled to take retaliatory actions against others if care is not taken at this inchoate stage of the trade treaty to deal with border closures and other forms of trade restrictions.

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